BURLINGTON, Mass.--(BUSINESS WIRE)--Nuance Communications, Inc. (NASDAQ: NUAN) today announced financial results for its fiscal 2016 and fourth quarter, ended September 30, 2016. In fiscal 2016 Nuance saw improvement across numerous key metrics as the business continued to transition toward recurring revenue models, executed on transformation initiatives, and positioned the company for future long-term growth.
Nuance delivered a strong fourth quarter and ended fiscal 2016 with excellent performance and momentum as demonstrated by the following:
- Delivered record net new bookings in the quarter of $516.9 million, up 45% compared to Q4 15, and for the year $1,502.3 million, up 4% compared to FY15;
- Reported strong non-GAAP revenue of $512.4 million in Q4 16 and $1,979.6 million in FY16 and GAAP revenue of $506.2 million in Q4 16 and $1,948.9 million in FY16;
- Increased recurring revenue both for the quarter and the year to 70% of total revenue, an increase of 400 basis points year over year from FY15, on both a non-GAAP and GAAP basis;
- Delivered non-GAAP operating margin of 28.5% and GAAP operating margin of 7.1% for FY16;
- Generated Q4 16 non-GAAP diluted EPS of $0.41 and FY16 non-GAAP diluted EPS of $1.52 and Q4 16 GAAP diluted EPS of $0.06 and FY16 GAAP diluted EPS of $(0.04); and,
- Delivered record Cash Flow From Operations (CFFO) for FY16 of $565.8 million, up 16% from FY15.
Fourth Quarter of Fiscal 2016 Performance
In the fourth
quarter of fiscal 2016, Nuance reported GAAP revenue of $506.2 million,
compared to $504.1 million a year ago. Nuance reported non-GAAP revenue
of $512.4 million, which includes revenue lost to accounting treatment
in conjunction with acquisitions, compared to $513.3 million in the
fourth quarter of fiscal 2015. In the fourth quarter of 2016, total
recurring revenue represented 70% of total revenue, compared to 68% a
year ago, on both a GAAP and non-GAAP basis. In the fourth quarter of
fiscal 2016, Nuance reported net new bookings of $516.9 million, up 45%
from $357.4 million a year ago.
In the fourth quarter of fiscal 2016, Nuance reported GAAP net income of $18.5 million, or $0.06 per diluted share, compared to GAAP net loss of $(11.0) million, or $(0.04) per basic share, in the fourth quarter of fiscal 2015. Nuance reported non-GAAP net income of $118.6 million, or $0.41 per diluted share, flat from non-GAAP net income of $129.6 million, or $0.41 per diluted share, in the fourth quarter of fiscal 2015. Nuance’s fourth quarter fiscal 2016 GAAP operating margin was 9.0% up from 5.7% in the fourth quarter of fiscal 2015. Nuance’s fourth quarter fiscal 2016 non-GAAP operating margin was 29.9%, down from 30.2% in the fourth quarter of fiscal 2015. Nuance reported cash flow from operations of $138.9 million in the fourth quarter of fiscal 2016, down 8% from $151.6 million in the fourth quarter of fiscal 2015.
“Nuance delivered strong performance for the fourth quarter and fiscal year across key financial metrics including net new bookings, revenue, recurring revenue, earnings, and deferred revenue,” said Dan Tempesta, Nuance’s CFO. “We remained focused on our cost discipline and transitioning the business toward recurring revenue models while strengthening our competitive position in important markets through our investments in innovation and additional offerings. We believe last year’s groundwork positions us well for organic growth in fiscal 2017 and beyond.”
Fiscal Year 2016 Performance
In fiscal 2016, Nuance reported
GAAP revenue of $1,948.9 million, up from $1,931.1 million in fiscal
2015. Nuance reported non-GAAP revenue of $1,979.6 million, which
includes revenue lost to accounting treatment in conjunction with
acquisitions, up from non-GAAP revenue of $1,979.1 million in fiscal
2015. In fiscal 2016, total recurring revenue represented 70% of total
revenue, compared to 66% in fiscal 2015, on both a GAAP and non-GAAP
basis. In fiscal 2016, Nuance reported net new bookings of $1,502.3
million, up 4% from $1,450.4 million in fiscal 2015.
In fiscal 2016, Nuance recognized GAAP net loss of $(12.5) million, or $(0.04) per share, compared to GAAP net loss of $(115.0) million, or $(0.36) per share, in fiscal 2015. In fiscal 2016, Nuance reported non-GAAP net income of $454.4 million, or $1.52 per diluted share, compared to $411.6 million, or $1.27 per diluted share, in fiscal 2015. Nuance’s fiscal 2016 GAAP operating margin was 7.1%, up from 2.8% in fiscal 2015. Nuance’s fiscal 2016 non-GAAP operating margin was 28.5%, compared to 26.2% in fiscal 2015. Nuance reported cash flow from operations of $565.8 million in fiscal 2016, compared to $487.6 million in fiscal 2015. Nuance ended fiscal 2016 with total deferred revenue of $736.1 million, up 10% compared to $668.2 million a year ago. Nuance ended fiscal 2016 with $608.1 million in cash, cash equivalents and marketable securities.
Please refer to the “Discussion of Non-GAAP Financial Measures” and to the “GAAP to Non-GAAP Reconciliations,” included elsewhere in this release, for more information regarding the company’s use of non-GAAP measures.
Conference Call and Prepared Remarks
Nuance is providing a
copy of prepared remarks in combination with its press release. These
remarks are offered to provide shareholders and analysts with additional
time and detail for analyzing results in advance of the company’s
quarterly conference call. The remarks will be available at http://www.nuance.com/earnings-results/
in conjunction with the press release.
Nuance will host an investor conference call today that will begin at 5:00 p.m. ET and will include only brief comments followed by questions and answers. To access the live broadcast, please visit the Investor Relations section of Nuance’s website at http://investors.nuance.com. The call can also be heard by dialing 800-288-8961 or 612-332-0636 at least five minutes prior to the call and referencing code 405327. A replay will be available within 24 hours of the announcement by dialing 800-475-6701 or 320-365-3844 and using the access code 405327.
About Nuance Communications, Inc.
Nuance Communications,
Inc. (NASDAQ: NUAN) is a leading provider of voice and language
solutions for businesses and consumers around the world. Its
technologies, applications and services make the user experience more
compelling by transforming the way people interact with devices and
systems. Every day, millions of users and thousands of businesses
experience Nuance’s proven applications. For more information, please
visit www.nuance.com.
Trademark reference: Nuance and the Nuance logo are registered trademarks or trademarks of Nuance Communications, Inc. or its affiliates in the United States and/or other countries. All other trademarks referenced herein are the property of their respective owners.
Definitions of Bookings and Net New Bookings
Bookings
represent the estimated gross revenue value of transactions at the time
of contract execution, except for maintenance and support offerings. For
fixed price contracts, the bookings value represents the gross total
contract value. For contracts where revenue is based on transaction
volume, the bookings value represents the contract price multiplied by
the estimated future transaction volume during the contract term,
whether or not such transaction volumes are guaranteed under a minimum
commitment clause. Actual results could be different than our initial
estimates. The maintenance and support bookings value represents the
amounts billed in the period the customer is invoiced. Because of the
inherent estimates required to determine bookings and the fact that the
actual resultant revenue may differ from our initial bookings estimates,
we consider bookings one indicator of potential future revenue and not
as an arithmetic measure of backlog.
Net new bookings represents the estimated revenue value at the time of contract execution from new contractual arrangements or the estimated revenue value incremental to the portion of value that will be renewed under pre-existing arrangements. Constant currency for net new bookings is calculated using current period net new bookings denominated in currencies other than United States dollars, converted into United States dollars using the average exchange rate for those currencies from the prior year period rather than the actual exchange rate in effect during the current period.
Definitions of Non-GAAP Organic Revenue Growth
Organic
revenue growth is calculated by comparing current period non-GAAP
revenue to non-GAAP revenue from the corresponding prior-year period.
For purposes of this calculation, prior period non-GAAP revenue is
adjusted to include revenue from companies acquired by Nuance as if we
had owned the acquired businesses in all periods presented. Non-GAAP
organic revenue growth on a constant currency basis is calculated using
current period non-GAAP revenue for entities reporting in currencies
other than United States dollars, excluding United States dollar
denominated transactions recorded in those entities, converted into
United States dollars using the average exchange rates from the prior
year period rather than the actual exchange rates in effect during the
current period.
Safe Harbor and Forward-Looking Statements
Statements in
this document regarding future performance and our management’s future
expectations, beliefs, goals, plans or prospects constitute
forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995. Any statements that are not statements of
historical fact (including statements containing the words “believes,”
“plans,” “anticipates,” “expects,” or “estimates” or similar
expressions) should also be considered to be forward-looking statements.
There are a number of important factors that could cause actual results
or events to differ materially from those indicated by such
forward-looking statements, including but not limited to: fluctuations
in demand for our existing and future products; changes to economic
conditions in the United States and internationally; fluctuating
currency rates, our ability to control and successfully manage our
expenses and cash position; our ability to execute our formal
transformation program to reduce costs and optimize processes; the
effects of competition, including pricing pressure; possible quality
issues in our products and technologies; our ability to successfully
integrate operations and employees of acquired businesses; the
conversion rate of bookings into revenue; the ability to realize
anticipated synergies from acquired businesses; and the other factors
described in our annual report on Form 10-K for the fiscal year ended
September 30, 2015, as supplemented by our current report on Form 8-K
filed on May 11, 2016, our quarterly reports, and other reports we have
filed with the Securities and Exchange Commission. We disclaim any
obligation to update any forward-looking statements as a result of
developments occurring after the date of this document.
Discussion of Non-GAAP Financial Measures
We utilize a
number of different financial measures, both Generally Accepted
Accounting Principles (“GAAP”) and non-GAAP, in analyzing and assessing
the overall performance of the business, for making operating decisions
and for forecasting and planning for future periods. Our annual
financial plan is prepared both on a GAAP and non-GAAP basis, and the
non-GAAP annual financial plan is approved by our board of directors.
Continuous budgeting and forecasting for revenue and expenses are
conducted on a consistent non-GAAP basis (in addition to GAAP) and
actual results on a non-GAAP basis are assessed against the non-GAAP
annual financial plan. The board of directors and management utilize
these non-GAAP measures and results (in addition to the GAAP results) to
determine our allocation of resources. In addition and as a consequence
of the importance of these measures in managing the business, we use
non-GAAP measures and results in the evaluation process to establish
management’s compensation. For example, our annual bonus program
payments are based upon the achievement of consolidated non-GAAP revenue
and consolidated non-GAAP earnings per share financial targets. 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 also consider the use of non-GAAP earnings
per share helpful in assessing the organic performance of the continuing
operations of our business. By organic performance we mean performance
as if we had owned an acquired business in the same period a year ago.
By constant currency organic performance we mean performance excluding
the effect of current foreign currency rate fluctuations. By continuing
operations we mean the ongoing results of the business excluding certain
unplanned costs. While our management uses these non-GAAP financial
measures as a tool to enhance their understanding of certain aspects of
our financial performance, our management does not consider these
measures to be a substitute for, or superior to, the information
provided by GAAP financial statements. Consistent with this approach, we
believe that disclosing non-GAAP financial measures to the readers of
our financial statements provides such readers with useful supplemental
data that, while not a substitute for GAAP financial statements, allows
for greater transparency in the review of our financial and operational
performance. In assessing the overall health of the business during the
three and twelve months ended September 30, 2016 and 2015, our
management has either included or excluded items in six general
categories, each of which is described below.
Acquisition-Related Revenue and Cost of Revenue.
We provide
supplementary non-GAAP financial measures of revenue, which include
revenue related to acquisitions, primarily from Notable Solutions and
Quantim for the three and twelve months ended September 30, 2016 that we
would have recognized but for the purchase accounting treatment of these
transactions. Non-GAAP revenue also includes revenue that we would have
recognized had we not acquired intellectual property and other assets
from the same customer. Because GAAP accounting requires the elimination
of this revenue, GAAP results alone do not fully capture all of our
economic activities. These non-GAAP adjustments are intended to reflect
the full amount of such revenue. We include non-GAAP revenue and cost of
revenue to allow for more complete comparisons to the financial results
of historical operations, forward-looking guidance and the financial
results of peer companies. We believe these adjustments are useful to
management and investors as a measure of the ongoing performance of the
business because, although we cannot be certain that customers will
renew their contracts, we have historically experienced high renewal
rates on maintenance and support agreements and other customer
contracts. Additionally, although acquisition-related revenue
adjustments are non-recurring with respect to past acquisitions, we
generally will incur these adjustments in connection with any future
acquisitions.
Acquisition-Related Costs, Net.
In recent years, we have
completed a number of acquisitions, which result in operating expenses
which would not otherwise have been incurred. We provide supplementary
non-GAAP financial measures, which exclude certain transition,
integration and other acquisition-related expense items resulting from
acquisitions, to allow more accurate comparisons of the financial
results to historical operations, forward-looking guidance and the
financial results of less acquisitive peer companies. We consider these
types of costs and adjustments, to a great extent, to be unpredictable
and dependent on a significant number of factors that are outside of our
control. Furthermore, we do not consider these acquisition-related costs
and adjustments to be related to the organic continuing operations of
the acquired businesses and are generally not relevant to assessing or
estimating the long-term performance of the acquired assets. In
addition, the size, complexity and/or volume of past acquisitions, which
often drives the magnitude of acquisition-related costs, may not be
indicative of the size, complexity and/or volume of future acquisitions.
By excluding acquisition-related costs and adjustments from our non-GAAP
measures, management is better able to evaluate our ability to utilize
our existing assets and estimate the long-term value that acquired
assets will generate for us. We believe that providing a supplemental
non-GAAP measure which excludes these items allows management and
investors to consider the ongoing operations of the business both with,
and without, such expenses.
These acquisition-related costs fall into the following categories: (i) transition and integration costs; (ii) professional service fees and expenses; and (iii) acquisition-related adjustments. Although these expenses are not recurring with respect to past acquisitions, we generally will incur these expenses in connection with any future acquisitions. These categories are further discussed as follows:
(i) Transition and integration costs. Transition and integration costs include retention payments, transitional employee costs, and earn-out payments treated as compensation expense, as well as the costs of integration-related activities, including services provided by third-parties.
(ii) Professional service fees and expenses. Professional service fees and expenses include financial advisory, legal, accounting and other outside services in connection with acquisition activities, and disputes and regulatory matters related to acquired entities.
(iii) Acquisition-related adjustments. Acquisition-related adjustments include items that are required to be marked to fair value each reporting period, such as contingent consideration, and other items related to acquisitions for which the measurement period has ended, such as gains or losses on settlements of pre-acquisition contingencies.
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 acquisitions.
Providing a supplemental measure which excludes these charges allows
management and investors to evaluate results “as-if” the acquired
intangible assets had been developed internally rather than acquired
and, therefore, provides a supplemental measure of performance in which
our acquired intellectual property is treated in a comparable manner to
our internally developed intellectual property. Although we exclude
amortization of acquired intangible assets from our non-GAAP expenses,
we believe that it is important for investors to understand that such
intangible assets contribute to revenue generation. Amortization of
intangible assets that relate to past acquisitions will recur in future
periods until such intangible assets have been fully amortized. Future
acquisitions may result in the amortization of additional intangible
assets.
Costs Associated with IP Collaboration Agreement.
In order
to gain access to a third party's extensive speech recognition
technology and natural language and semantic processing technology, we
have entered into IP collaboration agreements, with terms ranging
between five and six years. Depending on the agreement, some or all
intellectual property derived from these collaborations will be jointly
owned by the two parties. For the majority of the developed intellectual
property, we will have sole rights to commercialize such intellectual
property for periods ranging between two to six years, depending on the
agreement. For non-GAAP purposes, we consider these long-term contracts
and the resulting acquisitions of intellectual property from this
third-party over the agreements’ terms to be an investing activity,
outside of our normal, organic, continuing operating activities, and are
therefore presenting this supplemental information to show the results
excluding these expenses. We do not exclude from our non-GAAP results
the corresponding revenue, if any, generated from these collaboration
efforts. Although our bonus program and other performance-based
incentives for executives are based on the non-GAAP results that exclude
these costs, certain engineering senior management are responsible for
execution and results of the collaboration agreement and have incentives
based on those results. Costs associated with the research and
development portion of the agreements have been excluded from research
and development expense and costs for extending the marketing
exclusivity period are excluded from sales and marketing expense.
Non-Cash Expenses.
We provide non-GAAP information relative
to the following non-cash expenses: (i) stock-based compensation; (ii)
certain accrued interest; and (iii) certain accrued income taxes. These
items are further discussed as follows:
(i) Stock-based compensation. Because of varying valuation methodologies, subjective assumptions and the variety of award types, we believe that excluding stock-based compensation allows for more accurate comparisons of operating results to peer companies, as well as to times in our history when stock-based compensation was more or less significant as a portion of overall compensation than in the current period. We evaluate performance both with and without these measures because compensation expense related to stock-based compensation is typically non-cash and the options and restricted awards granted are influenced by the Company’s stock price and other factors such as volatility that are beyond our control. The expense related to stock-based awards is generally not controllable in the short-term and can vary significantly based on the timing, size and nature of awards granted. As such, we do not include such charges in operating plans. Stock-based compensation will continue in future periods.
(ii) and (iii) Certain accrued interest and income taxes. We also exclude certain accrued interest and certain accrued income taxes because we believe that excluding these non-cash expenses provides senior management, as well as other users of the financial statements, with a valuable perspective on the cash-based performance and health of the business, including the current near-term projected liquidity. These non-cash expenses will continue in future periods.
Other Expenses.
We exclude certain other expenses that
result from unplanned events in order to measure operating performance
and current and future liquidity both with and without these expenses.
By providing this information, we believe management and the users of
the financial statements are better able to understand the financial
results of what we consider to be our organic, continuing operations.
Included in these expenses are items such as restructuring charges,
asset impairments and other charges (credits), net. These events are
unplanned and arise outside of the ordinary course of continuing
operations. These items include losses from extinguishing our
convertible debt and adjustments from changes in fair value of
share-based instruments relating to issuing our common stock with
security price guarantees payable in cash. Other items such as
consulting and professional services fees related to assessing strategic
alternatives and our transformation program, and gains or losses on
non-controlling strategic equity interests, are also excluded.
We believe that providing the non-GAAP information to investors, 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 providing this information allows investors to not only better understand our financial performance, but more importantly, to evaluate the efficacy of the methodology and information used by management to evaluate and measure such performance.
The non-GAAP information included in this press release should not be considered superior to, or a substitute for, financial statements prepared in accordance with GAAP.
Nuance Communications, Inc. |
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Three months ended | Twelve months ended | ||||||||||||||||||||
September 30, | September 30, | ||||||||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||||||||
Revenues: | |||||||||||||||||||||
Product and licensing | $ | 178,540 | $ | 189,345 | $ | 669,227 | $ | 696,290 | |||||||||||||
Professional services and hosting | 245,667 | 234,552 | 955,329 | 919,479 | |||||||||||||||||
Maintenance and support | 81,997 | 80,222 | 324,347 | 315,367 | |||||||||||||||||
Total revenues | 506,204 | 504,119 | 1,948,903 | 1,931,136 | |||||||||||||||||
Cost of revenues: | |||||||||||||||||||||
Product and licensing | 21,359 | 23,341 | 86,379 | 91,839 | |||||||||||||||||
Professional services and hosting | 159,785 | 157,413 | 626,168 | 618,633 | |||||||||||||||||
Maintenance and support | 13,581 | 13,333 | 54,077 | 54,424 | |||||||||||||||||
Amortization of intangible assets | 15,799 | 17,108 | 62,876 | 63,646 | |||||||||||||||||
Total cost of revenues | 210,524 | 211,195 | 829,500 | 828,542 | |||||||||||||||||
Gross profit | 295,680 | 292,924 | 1,119,403 | 1,102,594 | |||||||||||||||||
Operating expenses: | |||||||||||||||||||||
Research and development | 65,618 | 73,530 | 271,130 | 306,867 | |||||||||||||||||
Sales and marketing | 101,427 | 107,093 | 390,866 | 410,877 | |||||||||||||||||
General and administrative | 41,704 | 45,896 | 168,473 | 187,263 | |||||||||||||||||
Amortization of intangible assets | 27,792 | 26,104 | 108,021 | 104,630 | |||||||||||||||||
Acquisition-related costs, net | 8,740 | 677 | 17,166 | 14,379 | |||||||||||||||||
Restructuring and other charges, net | 4,967 | 10,966 | 25,224 | 23,669 | |||||||||||||||||
Total operating expenses | 250,248 | 264,266 | 980,880 | 1,047,685 | |||||||||||||||||
Income from operations | 45,432 | 28,658 | 138,523 | 54,909 | |||||||||||||||||
Other expense, net | (37,619 | ) | (28,553 | ) | (136,784 | ) | (135,381 | ) | |||||||||||||
Income (loss) before income taxes | 7,813 | 105 | 1,739 | (80,472 | ) | ||||||||||||||||
(Benefit) provision for income taxes | (10,661 | ) | 11,132 | 14,197 | 34,538 | ||||||||||||||||
Net income (loss) | $ | 18,474 | $ | (11,027 | ) | $ | (12,458 | ) | $ | (115,010 | ) | ||||||||||
Net income (loss) per share: | |||||||||||||||||||||
Basic | $ | 0.07 | $ | (0.04 | ) | $ | (0.04 | ) | $ | (0.36 | ) | ||||||||||
Diluted | $ | 0.06 | $ | (0.04 | ) | $ | (0.04 | ) | $ | (0.36 | ) | ||||||||||
Weighted average common shares outstanding: | |||||||||||||||||||||
Basic | 283,139 | 309,281 | 292,129 | 317,028 | |||||||||||||||||
Diluted | 289,371 | 309,281 | 292,129 | 317,028 | |||||||||||||||||
Nuance Communications, Inc. |
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ASSETS | September 30, 2016 | September 30, 2015 | ||||||||
Current assets: | ||||||||||
Cash and cash equivalents | $ | 481,620 | $ | 479,449 | ||||||
Marketable securities | 98,840 | 57,237 | ||||||||
Accounts receivable, net | 380,004 | 373,162 | ||||||||
Prepaid expenses and other current assets | 78,126 | 76,777 | ||||||||
Total current assets | 1,038,590 | 986,625 | ||||||||
Marketable securities | 27,632 | 32,099 | ||||||||
Land, building and equipment, net | 185,169 | 186,007 | ||||||||
Goodwill | 3,508,879 | 3,378,334 | ||||||||
Intangible assets, net | 762,220 | 796,285 | ||||||||
Other assets | 138,980 | 132,559 | ||||||||
Total assets | $ | 5,661,470 | $ | 5,511,909 | ||||||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||||
Current liabilities: | ||||||||||
Current portion of long-term debt | $ | - | $ | 4,834 | ||||||
Contingent and deferred acquisition payments | 9,468 | 15,651 | ||||||||
Accounts payable and accrued expenses | 332,258 | 281,190 | ||||||||
Deferred revenue | 349,173 | 324,709 | ||||||||
Total current liabilities | 690,899 | 626,384 | ||||||||
Long-term portion of debt | 2,433,152 | 2,103,079 | ||||||||
Deferred revenue, net of current portion | 386,960 | 343,452 | ||||||||
Other liabilities | 219,129 | 173,742 | ||||||||
Total liabilities | 3,730,140 | 3,246,657 | ||||||||
Stockholders' equity | 1,931,330 | 2,265,252 | ||||||||
Total liabilities and stockholders' equity | $ | 5,661,470 | $ | 5,511,909 | ||||||
Nuance Communications, Inc. Consolidated Statements of Cash Flows (in thousands) Unaudited |
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Three months ended | Twelve months ended | ||||||||||||||||||||||||
September 30, | September 30, | ||||||||||||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||||||||||||
Cash flows from operating activities: | |||||||||||||||||||||||||
Net income (loss) | $ | 18,474 | $ | (11,027 | ) | $ | (12,458 | ) | $ | (115,010 | ) | ||||||||||||||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | |||||||||||||||||||||||||
Depreciation and amortization | 58,381 | 58,753 | 231,474 | 230,645 | |||||||||||||||||||||
Stock-based compensation | 40,871 | 56,804 | 163,828 | 176,776 | |||||||||||||||||||||
Non-cash interest expense | 13,061 | 7,300 | 47,105 | 29,378 | |||||||||||||||||||||
Deferred tax (benefit) provision | (18,494 | ) | 9,161 | (12,014 | ) | 16,690 | |||||||||||||||||||
Loss on extinguishment of debt | - | - | 4,851 | 17,714 | |||||||||||||||||||||
Other | (586 | ) | 4,203 | (575 | ) | 9,843 | |||||||||||||||||||
Changes in operating assets and liabilities, net of effects from acquisitions: | |||||||||||||||||||||||||
Accounts receivable | 2,076 | (9,333 | ) | 25,450 | 41,657 | ||||||||||||||||||||
Prepaid expenses and other assets | 2,881 | 10,778 | (9,645 | ) | (3,931 | ) | |||||||||||||||||||
Accounts payable | 13,165 | 11,429 | 38,206 | (3,218 | ) | ||||||||||||||||||||
Accrued expenses and other liabilities | 9,276 | (4,952 | ) | 27,826 | (48,118 | ) | |||||||||||||||||||
Deferred revenue | (237 | ) | 18,491 | 61,747 | 135,151 | ||||||||||||||||||||
Net cash provided by operating activities | 138,868 | 151,607 | 565,795 | 487,577 | |||||||||||||||||||||
Cash flows from investing activities: | |||||||||||||||||||||||||
Capital expenditures | (13,460 | ) | (9,880 | ) | (54,883 | ) | (58,039 | ) | |||||||||||||||||
Payments for business and technology acquisitions, net of cash acquired | (144,569 | ) | (1,244 | ) | (172,763 | ) | (83,278 | ) | |||||||||||||||||
Purchases of marketable securities and other investments | (81,389 | ) | (33,932 | ) | (117,640 | ) | (148,697 | ) | |||||||||||||||||
Proceeds from sales and maturities of marketable securities and other investments | 16,031 | 34,386 | 82,285 | 83,867 | |||||||||||||||||||||
Net cash used in investing activities | (223,387 | ) | (10,670 | ) | (263,001 | ) | (206,147 | ) | |||||||||||||||||
Cash flows from financing activities: | |||||||||||||||||||||||||
Payments of debt | - | (1,208 | ) | (511,844 | ) | (261,051 | ) | ||||||||||||||||||
Proceeds from issuance of long-term debt, net of issuance costs | (502 | ) | (2,988 | ) | 959,358 | 253,224 | |||||||||||||||||||
Payments for repurchase of common stock | - | (60,076 | ) | (699,472 | ) | (298,279 | ) | ||||||||||||||||||
Net payments on other long-term liabilities | (51 | ) | (620 | ) | (1,371 | ) | (3,003 | ) | |||||||||||||||||
Payments for settlement of other share-based derivatives, net | - | - | - | (340 | ) | ||||||||||||||||||||
Proceeds from issuance of common stock from employee stock plans | 8,389 | 13,441 | 16,850 | 25,776 | |||||||||||||||||||||
Cash used to net share settle employee equity awards | (1,589 | ) | (4,287 | ) | (68,636 | ) | (57,560 | ) | |||||||||||||||||
Net cash provided by (used in) financing activities | 6,247 | (55,738 | ) | (305,115 | ) | (341,233 | ) | ||||||||||||||||||
Effects of exchange rate changes on cash and cash equivalents | 837 | (2,866 | ) | 4,492 | (7,978 | ) | |||||||||||||||||||
Net (decrease) increase in cash and cash equivalents | (77,435 | ) | 82,333 | 2,171 | (67,781 | ) | |||||||||||||||||||
Cash and cash equivalents at beginning of period | 559,055 | 397,116 | 479,449 | 547,230 | |||||||||||||||||||||
Cash and cash equivalents at end of period | $ | 481,620 | $ | 479,449 | $ | 481,620 | $ | 479,449 | |||||||||||||||||
Nuance Communications, Inc. Supplemental Financial Information - GAAP to Non-GAAP Reconciliations (in thousands, except per share amounts) Unaudited |
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Three months ended | Twelve months ended | ||||||||||||||||||||||||
September 30, | September 30, | ||||||||||||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||||||||||||
GAAP revenues | $ | 506,204 | $ | 504,119 | $ | 1,948,903 | $ | 1,931,136 | |||||||||||||||||
Acquisition-related revenue adjustments: product and licensing | 3,710 | 6,026 | 20,095 | 32,923 | |||||||||||||||||||||
Acquisition-related revenue adjustments: professional services and hosting | 2,534 | 2,843 | 10,212 | 13,142 | |||||||||||||||||||||
Acquisition-related revenue adjustments: maintenance and support | - | 332 | 383 | 1,868 | |||||||||||||||||||||
Non-GAAP revenues | $ | 512,448 | $ | 513,320 | $ | 1,979,593 | $ | 1,979,069 | |||||||||||||||||
GAAP cost of revenues | $ | 210,524 | $ | 211,195 | $ | 829,500 | $ | 828,542 | |||||||||||||||||
Cost of revenues from amortization of intangible assets | (15,799 | ) | (17,108 | ) | (62,876 | ) | (63,646 | ) | |||||||||||||||||
Cost of revenues adjustments: product and licensing (1,2) | (90 | ) | 140 | (376 | ) | 1,020 | |||||||||||||||||||
Cost of revenues adjustments: professional services and hosting (1,2) | (7,429 | ) | (10,494 | ) | (30,129 | ) | (29,734 | ) | |||||||||||||||||
Cost of revenues adjustments: maintenance and support (1) | (1,064 | ) | (1,413 | ) | (4,138 | ) | (3,989 | ) | |||||||||||||||||
Non-GAAP cost of revenues | $ | 186,142 | $ | 182,320 | $ | 731,981 | $ | 732,193 | |||||||||||||||||
GAAP gross profit | $ | 295,680 | $ | 292,924 | $ | 1,119,403 | $ | 1,102,594 | |||||||||||||||||
Gross profit adjustments | 30,626 | 38,076 | 128,209 | 144,282 | |||||||||||||||||||||
Non-GAAP gross profit | $ | 326,306 | $ | 331,000 | $ | 1,247,612 | $ | 1,246,876 | |||||||||||||||||
GAAP income from operations | $ | 45,432 | $ | 28,658 | $ | 138,523 | $ | 54,909 | |||||||||||||||||
Gross profit adjustments | 30,626 | 38,076 | 128,209 | 144,282 | |||||||||||||||||||||
Research and development (1) | 8,615 | 12,651 | 35,671 | 39,038 | |||||||||||||||||||||
Sales and marketing (1) | 12,041 | 18,134 | 49,064 | 50,310 | |||||||||||||||||||||
General and administrative (1) | 11,633 | 13,638 | 43,525 | 51,955 | |||||||||||||||||||||
Amortization of intangible assets | 27,792 | 26,104 | 108,021 | 104,630 | |||||||||||||||||||||
Costs associated with IP collaboration agreements | - | 2,000 | 4,000 | 10,500 | |||||||||||||||||||||
Acquisition-related costs, net | 8,740 | 677 | 17,166 | 14,379 | |||||||||||||||||||||
Restructuring and other charges, net | 4,967 | 10,966 | 25,224 | 23,669 | |||||||||||||||||||||
Other | 3,156 | 4,341 | 15,145 | 24,933 | |||||||||||||||||||||
Non-GAAP income from operations | $ | 153,002 | $ | 155,245 | $ | 564,548 | $ | 518,605 | |||||||||||||||||
GAAP (benefit) provision for income taxes | $ | (10,661 | ) | $ | 11,132 | $ | 14,197 | $ | 34,538 | ||||||||||||||||
Non-cash taxes | 20,550 | (6,621 | ) | 12,080 | (15,199 | ) | |||||||||||||||||||
Non-GAAP provision for income taxes | $ | 9,889 | $ | 4,511 | $ | 26,277 | $ | 19,339 | |||||||||||||||||
GAAP net income (loss) | $ | 18,474 | $ | (11,027 | ) | $ | (12,458 | ) | $ | (115,010 | ) | ||||||||||||||
Acquisition-related adjustment - revenues (2) | 6,244 | 9,201 | 30,690 | 47,933 | |||||||||||||||||||||
Acquisition-related adjustment - cost of revenues (2) | 1 | (614 | ) | (925 | ) | (2,770 | ) | ||||||||||||||||||
Acquisition-related costs, net | 8,740 | 677 | 17,166 | 14,379 | |||||||||||||||||||||
Cost of revenue from amortization of intangible assets | 15,799 | 17,108 | 62,876 | 63,646 | |||||||||||||||||||||
Amortization of intangible assets | 27,792 | 26,104 | 108,021 | 104,630 | |||||||||||||||||||||
Restructuring and other charges, net | 4,967 | 10,966 | 25,224 | 23,669 | |||||||||||||||||||||
Non-cash stock-based compensation (1) | 40,871 | 56,804 | 163,828 | 176,776 | |||||||||||||||||||||
Non-cash interest expense | 13,061 | 7,300 | 47,105 | 29,378 | |||||||||||||||||||||
Non-cash income taxes | (20,550 | ) | 6,621 | (12,080 | ) | 15,199 | |||||||||||||||||||
Costs associated with IP collaboration agreements | - | 2,000 | 4,000 | 10,500 | |||||||||||||||||||||
Change in fair value of share-based instruments | - | - | (61 | ) | 204 | ||||||||||||||||||||
Loss on extinguishment of debt | - | - | 4,851 | 17,714 | |||||||||||||||||||||
Other | 3,156 | 4,507 | 16,180 | 25,362 | |||||||||||||||||||||
Non-GAAP net income | $ | 118,555 | $ | 129,647 | $ | 454,417 | $ | 411,610 | |||||||||||||||||
Non-GAAP diluted net income per share | $ | 0.41 | $ | 0.41 | $ | 1.52 | $ | 1.27 | |||||||||||||||||
Diluted weighted average common shares outstanding | 289,371 | 317,443 | 298,292 | 323,940 | |||||||||||||||||||||
Nuance Communications, Inc. Supplemental Financial Information - GAAP to Non-GAAP Reconciliations, continued (in thousands) Unaudited |
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Three months ended | Twelve months ended | |||||||||||||||||||||||
September 30, | September 30, | |||||||||||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||||||||||
(1) Non-cash stock-based compensation |
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Cost of product and licensing | $ | 90 | $ | 185 | $ | 376 | $ | 516 | ||||||||||||||||
Cost of professional services and hosting | 7,428 | 10,783 | 31,054 | 30,968 | ||||||||||||||||||||
Cost of maintenance and support | 1,064 | 1,413 | 4,138 | 3,989 | ||||||||||||||||||||
Research and development | 8,615 | 12,651 | 35,671 | 39,038 | ||||||||||||||||||||
Sales and marketing | 12,041 | 18,134 | 49,064 | 50,310 | ||||||||||||||||||||
General and administrative | 11,633 | 13,638 | 43,525 | 51,955 | ||||||||||||||||||||
Total | $ | 40,871 | $ | 56,804 | $ | 163,828 | $ | 176,776 | ||||||||||||||||
(2) Acquisition-related revenue and cost of revenue |
||||||||||||||||||||||||
Revenues | $ | 6,244 | $ | 9,201 | $ | 30,690 | $ | 47,933 | ||||||||||||||||
Cost of product and licensing | - | (325 | ) | - | (1,536 | ) | ||||||||||||||||||
Cost of professional services and hosting | 1 | (289 | ) | (925 | ) | (1,234 | ) | |||||||||||||||||
Total | $ | 6,245 | $ | 8,587 | $ | 29,765 | $ | 45,163 | ||||||||||||||||
Nuance Communications, Inc. Supplemental Financial Information – GAAP to Non-GAAP Reconciliations, continued (in millions) Unaudited |
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Perpetual Product and Licensing Revenue | Q1 | Q2 | Q3 | Q4 | FY | Q1 | Q2 | Q3 | Q4 | FY | |||||||||||||||||||||||||||||||
2015 | 2015 | 2015 | 2015 | 2015 | 2016 | 2016 | 2016 | 2016 | 2016 | ||||||||||||||||||||||||||||||||
GAAP Revenue | $ | 117.0 | $ | 121.3 | $ | 108.1 | $ | 115.9 | $ | 462.1 | $ | 115.2 | $ | 88.0 | $ | 80.9 | $ | 99.5 | $ | 383.6 | |||||||||||||||||||||
Adjustment | 2.2 | 4.6 | 3.6 | 2.4 | 13.0 | 2.0 | 2.2 | 1.4 | 1.0 | 6.6 | |||||||||||||||||||||||||||||||
Non-GAAP Revenue | $ | 119.2 | $ | 125.9 | $ | 111.7 | $ | 118.3 | $ | 475.2 | $ | 117.2 | $ | 90.2 | $ | 82.3 | $ | 100.5 | $ | 390.2 | |||||||||||||||||||||
Recurring Product and Licensing Revenue | Q1 | Q2 | Q3 | Q4 | FY | Q1 | Q2 | Q3 | Q4 | FY | |||||||||||||||||||||||||||||||
2015 | 2015 | 2015 | 2015 | 2015 | 2016 | 2016 | 2016 | 2016 | 2016 | ||||||||||||||||||||||||||||||||
GAAP Revenue | $ | 52.7 | $ | 53.2 | $ | 54.7 | $ | 73.5 | $ | 234.1 | $ | 63.9 | $ | 70.6 | $ | 72.1 | $ | 79.1 | $ | 285.6 | |||||||||||||||||||||
Adjustment | 8.4 | 4.6 | 3.5 | 3.6 | 20.1 | 4.0 | 3.5 | 3.3 | 2.7 | 13.5 | |||||||||||||||||||||||||||||||
Non-GAAP Revenue | $ | 61.1 | $ | 57.8 | $ | 58.2 | $ | 76.9 | $ | 254.0 | $ | 67.9 | $ | 74.1 | $ | 75.3 | $ | 81.7 | $ | 299.1 | |||||||||||||||||||||
Professional Services Revenue | Q1 | Q2 | Q3 | Q4 | FY | Q1 | Q2 | Q3 | Q4 | FY | |||||||||||||||||||||||||||||||
2015 | 2015 | 2015 | 2015 | 2015 | 2016 | 2016 | 2016 | 2016 | 2016 | ||||||||||||||||||||||||||||||||
GAAP Revenue | $ | 54.8 | $ | 51.2 | $ | 51.2 | $ | 52.9 | $ | 210.0 | $ | 49.7 | $ | 55.6 | $ | 61.2 | $ | 58.7 | $ | 225.2 | |||||||||||||||||||||
Adjustment | 0.4 | 0.4 | 0.4 | 0.3 | 1.5 | 0.3 | 0.4 | 0.3 | 0.2 | 1.1 | |||||||||||||||||||||||||||||||
Non-GAAP Revenue | $ | 55.2 | $ | 51.6 | $ | 51.6 | $ | 53.2 | $ | 211.5 | $ | 50.0 | $ | 55.9 | $ | 61.5 | $ | 58.9 | $ | 226.3 | |||||||||||||||||||||
Hosting Revenue | Q1 | Q2 | Q3 | Q4 | FY | Q1 | Q2 | Q3 | Q4 | FY | |||||||||||||||||||||||||||||||
2015 | 2015 | 2015 | 2015 | 2015 | 2016 | 2016 | 2016 | 2016 | 2016 | ||||||||||||||||||||||||||||||||
GAAP Revenue | $ | 171.4 | $ | 173.3 | $ | 183.1 | $ | 181.7 | $ | 709.5 | $ | 177.4 | $ | 184.6 | $ | 181.1 | $ | 187.0 | $ | 730.2 | |||||||||||||||||||||
Adjustment | 3.4 | 2.9 | 2.8 | 2.4 | 11.5 | 2.3 | 2.5 | 2.0 | 2.3 | 9.1 | |||||||||||||||||||||||||||||||
Non-GAAP Revenue | $ | 174.8 | $ | 176.2 | $ | 185.9 | $ | 184.2 | $ | 721.2 | $ | 179.7 | $ | 187.1 | $ | 183.2 | $ | 189.3 | $ | 739.2 | |||||||||||||||||||||
Maintenance and Support Revenue | Q1 | Q2 | Q3 | Q4 | FY | Q1 | Q2 | Q3 | Q4 | FY | |||||||||||||||||||||||||||||||
2015 | 2015 | 2015 | 2015 | 2015 | 2016 | 2016 | 2016 | 2016 | 2016 | ||||||||||||||||||||||||||||||||
GAAP Revenue | $ | 78.2 | $ | 76.1 | $ | 80.9 | $ | 80.2 | $ | 315.4 | $ | 79.9 | $ | 79.9 | $ | 82.5 | $ | 82.0 | $ | 324.3 | |||||||||||||||||||||
Adjustment | 0.6 | 0.5 | 0.4 | 0.3 | 1.8 | 0.2 | 0.1 | 0.0 | 0.0 | 0.4 | |||||||||||||||||||||||||||||||
Non-GAAP Revenue | $ | 78.8 | $ | 76.6 | $ | 81.3 | $ | 80.6 | $ | 317.1 | $ | 80.2 | $ | 80.0 | $ | 82.5 | $ | 82.0 | $ | 324.7 | |||||||||||||||||||||
Total Recurring Revenues | Q1 | Q2 | Q3 | Q4 | FY | Q1 | Q2 | Q3 | Q4 | FY | |||||||||||||||||||||||||||||||
2015 | 2015 | 2015 | 2015 | 2015 | 2016 | 2016 | 2016 | 2016 | 2016 | ||||||||||||||||||||||||||||||||
GAAP Revenues | $ | 308.9 | $ | 307.5 | $ | 323.6 | $ | 340.5 | $ | 1,280.5 | $ | 326.1 | $ | 339.6 | $ | 339.7 | $ | 352.1 | $ | 1,357.4 | |||||||||||||||||||||
Adjustment | 12.7 | 8.1 | 6.8 | 6.5 | 34.1 | 6.4 | 6.2 | 5.3 | 5.0 | 22.9 | |||||||||||||||||||||||||||||||
Non-GAAP Revenues | $ | 321.7 | $ | 315.6 | $ | 330.4 | $ | 347.0 | $ | 1,314.7 | $ | 332.5 | $ | 345.8 | $ | 345.0 | $ | 357.1 | $ | 1,380.3 | |||||||||||||||||||||
Schedules may not add due to rounding. | |||||||||||||||||||||||||||||||||||||||||