Slide 1: Cerence Q2FY23 Earnings Presentation
Cerence Q2FY23 Earnings Presentation Stefan Ortmanns, CEO Tom Beaudoin, CFO Rich Yerganian, SVP of Investor Relations May 9, 2023 Destination Next Exhibit 99.2
Slide 2: Forward-Looking Statements
Forward-Looking Statements Statements in this presentation regarding: Cerence’s future performance, results and financial condition; expected growth; opportunities; business, industry and market trends; strategy regarding fixed contracts and its impact on financial results; backlog; demand for Ceren
Slide 3: Q2 FY23 Business Highlights
© 2023 Cerence Inc. Strong operational focus drives revenue and profitability at high end of guidance range Global production vehicle penetration (TTM) rises to 53% First half booking of $263M includes key win-back and a strategic win in China Macro environment remains on a slow growth trend Full fi
Slide 4: Q2 FY23 Bookings Highlights
© 2023 Cerence Inc. Total first half bookings of $263M, up 11% compared to the 2nd half of fiscal 2022 Includes a win-back for connected services in North America for an international luxury OEM Strategic win with largest OEM in China Strong pipeline for second half Competitive position remains stro
Slide 5: Q2 FY23 Product Highlights
© 2023 Cerence Inc. Cerence Car Knowledge – Enhanced with generative AI Cerence Assistant (CA 2.5) – Includes several new features including Just Talk Cerence Ride – First 2 customers achieved SOP (Start of Production), 2 more expected in Q3 Pioneering AI technologies Neural emotion Text-To-Speech (
Slide 6: Company Priorities
© 2023 Cerence Inc. Continued focus on operational excellence Execute on innovation roadmap Meet or exceed product performance and delivery commitments Maintain strong competitive position Capitalize on strong sales pipeline Deliver FY23 Guidance Company Priorities Fueling Growth by Creating an Imme
Slide 7: Q2FY23 Financial Details
Q2FY23 Financial Details Tom Beaudoin, CFO Destination Next
Slide 8: Cerence Delivers Strong Q2 Results
Cerence Delivers Strong Q2 Results Q2FY23 Q2FY23 Guidance Revenue $68.4M $64M - $68M GAAP Gross Margin 63.4% 60% - 62% Non-GAAP Gross Margin 65.3% 62% - 64% GAAP Net (Loss) Income ($26.1M) ($32M) – ($29M) AEBITDA $2.5M $1M - $4M Non-GAAP Net (Loss) Income ($1.7M) ($7M) – ($5M) GAAP EPS – diluted ($0
Slide 9: Revenue by Type, Q2FY22 to Q2FY23
In millions Q2FY22 Q3FY22 Q4FY22 Q1FY23 Q2FY23 Total License: $46.3 $46.4 $19.0 $45.4 $30.8 Variable(a) $20.2 $22.3 $19.0 $26.3 $26.2 Total Fixed(b) $25.6 $23.3 $0 $19.1 $4.6 Prepaid (cash upfront) $5.7 $13.2 -- $18.0 $4.6 Minimum Commitment (no cash upfront) $19.9 $10.1 -- $1.1 $0.0 Other Markets(c
Slide 10: License Business Remains Strong
In millions FY2021 Fiscal Year 2021 FY2022 FY2023 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Fixed Contracts $10.1 $17.3 $18.2 $25.4 $20.1 $25.6 $23.3 $0 $19.1 $4.6 Pro Forma Royalties(a) $48.6 $47.4 $42.9 $34.0 $39.6 $39.7 $41.5 $39.1 $41.7 $43.1 Consumption of Fixed Contracts(b) ($12.3) ($10.3) ($11.1) ($13.2)
Slide 11: Strong KPI Performance
53% Global Auto Penetration (TTM), up from 52% 11.8M units with Cerence technology, up 4% QoQ including 2.8M connected units, up 27% QoQ 9% Decline in Billings per Car (TTM YoY) including negative Fx impact of 3% points 29% Increase in Monthly Active Users (YoY) 7.1 Years Average Contract Duration (
Slide 12: Fiscal Q3 and Full Year 2023 Guidance
Fiscal Q3 and Full Year 2023 Guidance Low End of Full Year Guidance Raised by $5 Million Q3 FY23 Guidance FY23 Guidance In millions except per share amounts Low High Low High Revenue $58 $62 $280 $290 GAAP Gross Margin 59% 62% 65% 66% Non-GAAP Gross Margin (a) 61% 63% 66% 68% GAAP Operating Margin (
Slide 13: Q&A
Q&A Destination Next
Slide 14: Appendix
Appendix @cerence
Slide 15: License Business Revenue Recognition
License Business Revenue Recognition Type of Contract Description GAAP Revenue Recognition Cash Receipt Variable License applied at production Quarter car is produced. Based on volume Quarter following GAAP revenue recognition Fixed (Pre-Pay) Bulk inventory purchase ($ based) Full value of contract
Slide 16: Connected and Professional Services Revenue Recognition
Connected and Professional Services Revenue Recognition Connected Services Typical Period GAAP Revenue Recognition Cash Receipt Subscription Term 1 – 5 years Amortized evenly over subscription period Billed/collected full amount at start of subscription period (value added to deferred revenue) Usage
Slide 17: KPI Measures – Definitions
KPI Measures – Definitions Key performance indicators We believe that providing key performance indicators (“KPIs”), allows investors to gain insight into the way management views the performance of the business. We further believe that providing KPIs allows investors to better understand informatio
Slide 18: Non-GAAP Financial Measures – Definitions
Non-GAAP Financial Measures – Definitions Discussion of Non-GAAP Financial Measures We believe that providing the non-GAAP information in addition to the GAAP presentation, allows investors to view the financial results in the way management views the operating results. We further believe that provi
Slide 19: Non-GAAP Financial Measures – Definitions
Non-GAAP Financial Measures – Definitions Restructuring and other costs, net. Restructuring and other charges, net include restructuring expenses as well as other charges that are unusual in nature, are the result of unplanned events, and arise outside the ordinary course of our business such as emp
Slide 20: Non-GAAP Financial Measures – Definitions
Non-GAAP Financial Measures – Definitions Amortization of acquired intangible assets. We exclude the amortization of acquired intangible assets from non-GAAP expense and income measures. These amounts are inconsistent in amount and frequency and are significantly impacted by the timing and size of a
Slide 21: Q2 FY23 Reconciliations of GAAP to Non-GAAP Results
Q2 FY23 Reconciliations of GAAP to Non-GAAP Results Free cash flow is net cash provided by operating activities determined in accordance with GAAP less capital expenditures. Free cash flow is not a measure of cash available for discretionary expenditures. (unaudited - in thousands) (unaudited - in t
Slide 22: Reconciliations of GAAP Financial Measures to non-GAAP Financial Measures
Reconciliations of GAAP Financial Measures to non-GAAP Financial Measures (unaudited - in thousands) Q2FY23 Q1FY23 Q4FY22 Q3FY22 GAAP revenues $68,393 $83,658 $58,144 $89,041 Less: Professional services revenue 18,667 19,847 21,048 22,599 Non-GAAP Repeatable revenues $49,726 $63,811 $37,096 $66,442
Slide 23: Q3 FY23 and Full Year FY23 Reconciliations of GAAP to non-GAAP Guidance
Q3 FY23 and Full Year FY23 Reconciliations of GAAP to non-GAAP Guidance Q3 2023 FY2023 Low High Low High GAAP revenue $ 58,000 $ 62,000 $ 280,000 $ 290,000 GAAP gross profit $ 34,200 $ 38,200 $ 181,000 $ 191,000 Stock-based compensation 1,000 1,000 4,700 4,700 Amortization of intangible assets 100 1
Slide 24: Q3 FY23 and FY23 Reconciliations of GAAP to Non-GAAP Guidance
Q3 FY23 and FY23 Reconciliations of GAAP to Non-GAAP Guidance Q3 2023 FY2023 Low High Low High GAAP net loss $ (22,300 ) $ (18,300 ) $ (60,500 ) $ (53,500 ) Stock-based compensation 10,500 10,500 47,200 47,200 Amortization of intangibles 600 600 6,200 6,200 Restructuring and other costs, net (1,900