Slide 1: Cerence Q3 FY22 Earnings
August 9, 2022 Cerence Q3 FY22 Earnings Stefan Ortmanns, CEO Tom Beaudoin, EVP, CFO Rich Yerganian, SVP of IR Exhibit 99.2
Slide 2: Forward-Looking Statements
Forward-Looking Statements Statements in this release regarding Cerence’s future performance, results and financial condition, expected growth, opportunities, business and market trends, our strategy regarding fixed contracts and its impact on financial results, demand for Cerence products, and inno
Slide 3: Key Accomplishments in Q3FY22
Key Accomplishments in Q3FY22 43 SOPs Strong quarter of SOPs with 43 (Start of Production) Successful launch of new cloud services platform Key program win back formerly awarded to consumer tech First Cerence Technology Conference sparks innovation Core business delivered solid performance despite a
Slide 4: Highly Focused on Controllables
Highly Focused on Controllables Tailwinds 43 SOPs will contribute to revenue over the next few years Vendor of choice with several important design wins, including key win back Record quarter for professional services Enhanced user experience with launch of cloud services Strong pipeline and healthy
Slide 5: Strategic Decision to Return Fixed Contracts to Historical Level of Approximately $40M Annually
Strategic Decision to Return Fixed Contracts to Historical Level of Approximately $40M Annually Enhanced clarity into revenue streams and strong underlying business More predictable results that are comparable period to period Mitigate economic pressures as customers seek higher discounts and conces
Slide 6: Finishing Strong in Fiscal 2022
Finishing Strong in Fiscal 2022 Convert pipeline of opportunities to strong bookings performance for the full year Maintain strict focus on operational efficiencies Finalize planning on long-term strategy to drive FY23 guidance and multi-year plan CRNC Analyst Day November 29, 2022 | New York City
Slide 7: Financial Summary
Ocerence Financial Summary
Slide 8: Q3FY22 Financial Summary
In millions, except per share amounts Q3FY21 Actual Results Q2FY22 Actual Results Q3FY22 Actual Results Q3FY22 Guidance Revenue $96.8 $86.3 $89.0 $90 - $94 GAAP Gross Margin 75.4% 71.8% 72.8% 74% - 75% Non-GAAP Gross Margin (1) 79.1% 74.7% 73.7% 75% - 76% GAAP Net (Loss) Income (3) $5.8 ($0.5) ($99.
Slide 9: Revenue by Type
In millions Q3FY21 Q4FY21 Q1FY22 Q2FY22 Q3FY22 Total License: $50.0 $51.4 $46.8 $46.3 $46.4 Variable(1) $31.8 $20.8 $21.5 $20.2 $22.3 Total Fixed(2) $18.2 $25.4 $20.1 $25.6 $23.3 Prepaid (cash upfront) $18.2 $3.3 - $5.7 $13.2 Minimum Commitment (no cash upfront) - $22.1 $20.1 $19.9 $10.1 Other Marke
Slide 10: License Business Remains Strong
License Business Remains Strong Fiscal Year 2021 Fiscal Year 2021 Fiscal Year 2022 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Fixed Contracts 10.1 17.3 18.2 25.4 20.1 25.6 23.3 Pro Forma Royalties(1) 48.6 47.4 42.9 34.0 39.6 39.7 41.5 Consumption of Fixed Licenses(2) (12.3) (10.3) (11.1) (13.2) (18.0) (19.5) (19.2) Varia
Slide 11: Fiscal Q4 and Full-Year 2022 Guidance
Fiscal Q4 and Full-Year 2022 Guidance Q4 FY21 Q4 FY22 Guidance FY22 Guidance In millions except per share amounts Actual Low High Low High Revenue $98.1M $52 $58 $322 $328 GAAP Gross Margin 75.4% 52% 57% 70% 70% Non-GAAP Gross Margin (1) 78.1% 54% 59% 72% 72% GAAP Operating Margin 11.0% (49%) (34%)
Slide 12: Q&A
@cerence’ Q&A
Slide 13: Appendix
@cerence’ Appendix
Slide 14: License Business Revenue Recognition
License Business Revenue Recognition Type of Contract Description GAAP Revenue Recognition Cash Receipt Variable License applied at production Quarter car is produced. Based on volume Quarter following GAAP revenue recognition Fixed (Pre-Pay) Bulk inventory purchase ($ based) Full value of contract
Slide 15: 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 16: 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 17: 51% of Worldwide Production Ships with Cerence Technology
51% of Worldwide Production Ships with Cerence Technology Initial COVID impact China*, Ukraine crisis 9.8 million units (including 1.9 million connected) 15% YoY Increase in Monthly Active Users 7.7 years Average Contract Duration (TTM) 10% Growth in Billings per Car (TTM YoY) * Supply chain impact
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: Q3 FY22 Reconciliations of GAAP to Non-GAAP Results
Q3 FY22 Reconciliations of GAAP to Non-GAAP Results (unaudited - in thousands, except per share data) (unaudited - in thousands, except per share data) Free cash flow is net cash provided by operating activities determined in accordance with GAAP less capital expenditures. Free cash flow is not a me
Slide 22: Q4 FY22 and Full Year FY22 Reconciliations of GAAP to non-GAAP Guidance
Q4 FY22 and Full Year FY22 Reconciliations of GAAP to non-GAAP Guidance (unaudited - in thousands) Q4 2022 FY2022 Low High Low High GAAP revenue $52,000 $58,000 $322,000 $328,000 GAAP gross profit $27,200 $33,200 $224,700 $230,700 Stock-based compensation 800 800 3,900 3,900 Amortization of intangib
Slide 23: Q4 FY22 and FY22 Reconciliations of GAAP to Non-GAAP Guidance
Q4 FY22 and FY22 Reconciliations of GAAP to Non-GAAP Guidance (unaudited - in thousands) Q4 2022 FY2022 Low High Low High GAAP net (loss) income $(32,800) $(26,100) $(113,200) $(106,500) Stock-based compensation 6,500 6,500 25,600 25,600 Amortization of intangibles 2,500 2,500 14,500 14,500 Restruct
Slide 24: Thank you.
Ocerence Thank you.