Cerence Inc. · NASDAQ:CRNC
Cerence — Investor Presentation (September 2019)
42 slides from Cerence's investor presentation, Sep 9, 2019
Slide 1: Cerence Inc. Investor Introduction
Cerence Inc. Investor Introduction Exhibit 99.1
Slide 2: Disclaimer
Disclaimer Additional Information For additional information with respect to Cerence and the proposed spin-off, please refer to the Registration Statement on Form 10 filed by Cerence with the Securities and Exchange Commission (“SEC”). The financial information included in this document may not nece
Slide 3: Today's Agenda
Today’s Agenda Company Overview Market Opportunity Product, Solutions and Customer Overview Growth Opportunities Financial Summary
Slide 4: Spin-Off Transaction Update
Spin-Off Transaction Update Cerence Leadership Team Fully in Place Separation Agreements Between Nuance and Cerence Have Been Finalized Identified 7 Members for the Cerence Board of Directors Stand-Up Activities for Cerence on Schedule Spin-Off Expected to be Complete on October 1, 2019
Slide 5: Who we are
Who we are Premier provider of A.I.-powered assistants and innovations for connected and autonomous vehicles Vision Enable a more enjoyable, safer journey for everyone Mission Empower an automotive ecosystem with digital platform solutions for connected and autonomous vehicles
Slide 6: Cerence Facts
Cerence Facts 20+ years industry experience & leadership ~1,300 employees; ~700 in R&D Boston / Silicon Valley presence 21 offices worldwide 280+ million cars with Cerence 60+ automotive customers 70+ languages supported ~1,250 patents Estimated FY 2019 revenue: GAAP ASC 606: $300 - $302 million Non
Slide 7: Cerence Company Highlights
Cerence Company Highlights Market-leading Automotive Cognitive Assistance Offerings 1 Significant Market Opportunity in AI-powered Automotive and Mobility Solutions 2 Deep Customer Relationships Provide Advantage and High Entry Barrier 3 Multiple Vectors for Growth 4 Attractive Financial Profile 5 E
Slide 8: Cerence Leadership Team
Cerence Leadership Team Mark Gallenberger Chief Financial Officer Charles Kuai Senior Vice President, Greater China Region Dr. Udo Haiber Senior Vice President, R&D Leanne Fitzgerald General Counsel Dr. Stefan Ortmanns Executive Vice President Egon Jungheim Senior Vice President, Global Automotive S
Slide 9: Cerence Board of Directors
Sanjay Dhawan CEO Cerence Arun Sarin, Chairman Former Vodafone CEO Tom Beaudoin EVP, Transformation, Nuance Marianne Budnik CMO, CyberArk Alfred Nietzel Former CDK Global CFO Sanjay Jha Former Motorola Mobility CEO Former Qualcomm COO Kristi Ann Matus Former athenahealth CFO Cerence Board of Directo
Slide 10: Market Opportunity
Market Opportunity Line on sources of distraction
Slide 11: Major Secular Trends Driving Market for Automotive Cognitive Assistance
Major Secular Trends Driving Market for Automotive Cognitive Assistance Vehicle Intelligence Real-time data and content Increased computing power onboard Proprietary OEM virtual assistants Virtual Assistants Broad smartphone and smart speaker use On-demand access to assistants and bots Portability b
Slide 12: Large Growing Market with Significant Opportunity
Large Growing Market with Significant Opportunity Adjacent Markets Autonomous Cars Driver Monitoring Car Data Monetization Smart Cities CAGR 39% 2019 2023 2025 $0.5B $1.6B Serviceable Addressable Market1 Total Addressable Market2 Source: Management estimates Source: Tractica $0.6B $2.7B $4.5B
Slide 13: Increasing Market Penetration of Edge and Cloud Products
Increasing Market Penetration of Edge (In-Car) A.I. Products Automated driving technologies are linked to the growth of edge innovations within the vehicle Increased focus on limiting distracted driving and convenience of controlling the infotainment system Expansion of solutions from premium to ent
Slide 14: Product, Solutions and Customer Overview
Product, Solutions and Customer Overview DISCUSS PRODUCT BRANDS IN CONTEXT OF FORM 10
Slide 15: Cerence Solution Portfolio
Cerence Solution Portfolio Professional Services Global organization works closely with OEMs and suppliers to tailor solutions to desired requirements of vehicle models Edge (In-Car) Products Installed within a vehicle’s head unit; tailored to customers’ desired use cases and a vehicle’s systems, se
Slide 16: Cerence Products and Solutions Platform Framework
Cloud (Connected) Services Edge (In-Car) Products Automatic Speech Recognition Natural Language Understanding Text to Speech Voice Biometrics Handwriting Recognition Speech Signal Enhancement Cloud Connector Automatic Speech Recognition Text to Speech Voice Biometrics Natural Language Generation 3rd
Slide 17: Broad Domain Expertise and Coverage
Restaurants Local Business Multi-Country Broad Domain Expertise and Coverage Flight Status Stocks City Events Sports Weather POI Knowledge News Car Manual General Knowledge Information Calling Calendar Notes Tasks Reminders Messaging Email Location Sharing Communication Control HVAC Command & Contro
Slide 18: Global Language Capabilities
Global Language Capabilities Potential future support Supported by Cerence voice technology in 2020 Supported by Cerence voice technology today UDO CHECKING AND UPDATING COVERAGE
Slide 19: Why Cerence Wins
Why Cerence Wins Competition versus Niche Market Participants Superior technology based on benchmark results Significant scale Far-reaching, global team Best-in-class portfolio of compatible languages Deep, singular focus on the automotive market Coexistence with Large Technology Companies Cognitive
Slide 20: Extensive Base of Loyal Customers
Extensive Base of Loyal Customers All Major OEMs Worldwide All Major Tier-1 Suppliers Worldwide
Slide 21: Growth Opportunities
Growth Opportunities
Slide 22: Pillars of Cerence Growth Opportunity
Pillars of Cerence Growth Opportunity Penetration Approximately 52% of all shipped cars during the nine months ended June 30, 2019 utilize Cerence, including hybrid AI solutions with 46% YoY growth Infotainment units in vehicles trending higher than projected Edge penetration increasing from 59% in
Slide 23: Innovative Product Roadmap
2021 - 2022 Enhanced Experiences Emotional AI Autonomous driving Cabin and driver monitoring Multi-modal interfaces 2020 Core Extensions Domain and geographic expansion Developer ecosystem State-of-the-art offerings such as siren detection, multi-seat intelligence and a button-free car 2023 - Beyond
Slide 24: Financial Summary
Financial Summary
Slide 25: Financial Highlights
Strong Growth Trajectory Excellent Revenue Visibility High Profitability High margin business drives strong operating leverage on incremental revenues 33% adjusted EBITDA margin (FY19 Guidance) Expanding revenue base with innovative offering and industry-leading customers FY19 ASC 606 GAAP revenue e
Slide 26: GAAP Financial Highlights
GAAP Financial Highlights ($ in millions)
Slide 27: Cerence Revenue Streams (non-GAAP)
Cerence Revenue Streams (non-GAAP) License Revenue Revenue recognized on unit shipment or on prepayments Connected Revenue Deferred revenue recorded, amortized to revenue over duration of service contract Professional Services Revenue Revenue recognized on percentage of completion Deferred Revenue R
Slide 28: Consistent Revenue Growth (non-GAAP)
Consistent Revenue Growth (non-GAAP) Trends in Revenue Increased demand for Cerence hybrid solutions Customer product portfolio expansion driving increase in license revenue Customer shifts driving growth in connected services 13% FY16 – FY19 CAGR $308 -$310 ($ in millions)
Slide 29: $1.3 Billion+ Backlog Creates High Revenue Visibility
$1.3 Billion+ Backlog Creates High Revenue Visibility ($ in millions) Backlog as of June 30, 2019 (approximately $1.3 billion+) 1 Expect 50% to convert to revenue over the next three years Wei / EVR to update pie chart on left (1) These figures are estimates and based on existing customer contracts
Slide 30: Profit Leverage Driven by High Gross Margin
Profit Leverage Driven by High Gross Margin (non-GAAP) Trends in Gross Margin Increase in total cost of revenue driven by cloud infrastructure and employee costs for professional services and connected services Connected services gross margin increased due to connected services revenue growth on rel
Slide 31: Solid Historical Adjusted EBITDA and Cash Flow Performance
Solid Historical Adjusted EBITDA and Cash Flow Performance Increased R&D investment in FY18 and FY19 (in millions) FY19 includes an estimated $10 million in non-recurring expenses to stand-up Cerence (in millions)
Slide 32: Near-term Cash Flow Headwind from Legacy Connected Program
Near-term Cash Flow Headwind Driven by Decline in Legacy Connected Program Note: Actual billings are estimated based on reported NWC changes in given periods. Legacy program: negative cash swing Acquired in 2013, legacy program was a pioneering platform with multi-media content integrated. Majority
Slide 33: Fiscal Year 2020 Guidance
Fiscal Year 2020 Guidance In order to maintain continuity with current Nuance practices, non-GAAP guidance is provided. Once Cerence is a stand-alone public company, we may reassess our non-GAAP guidance policies. Footnote: Non-GAAP includes $4-5m / year of non-GAAP revenues related to acquisitions.
Slide 34: Cerence’ |
Cerence’ |
Slide 35: Appendix
Appendix 35 ©2019Cerence In. c4arence
Slide 36: Non-GAAP Financial Measures – Definitions
Non-GAAP Financial Measures – Definitions Non-GAAP revenue We consider the use of non-GAAP revenue helpful in understanding the performance of our business, as it excludes the purchase accounting impact on acquired deferred revenue and other acquisition-related adjustments to revenue. We provide sup
Slide 37: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation
Slide 38: FY19 GAAP to Non-GAAP Reconciliation
FY19 GAAP to Non-GAAP Reconciliation
Slide 39: FY20 GAAP to Non-GAAP Reconciliation
FY20 GAAP to Non-GAAP Reconciliation
Slide 40: Cerence’ |
Cerence’ |
Slide 41: LTM Adjusted EBITDA Reconciliation
LTM Adjusted EBITDA Reconciliation 32 LTM Adjusted EBITDA(1) Adjustment Detail LTM Adjusted EBITDA as of 6/30/2019 under ASC 605 A B C D A B C D Reversal of non-cash share based payment charges Includes transition and integration costs, professional service fees, and other adjustments related to acq
Slide 42: ASC to ASC Comparison
ASC 605 to ASC 606 Comparison 42