BURLINGTON, Mass.--(BUSINESS WIRE)--Nuance Communications, Inc. (NASDAQ: NUAN) today announced financial results for its fiscal 2013 and fourth quarter, ended September 30, 2013.
In fiscal 2013, Nuance reported GAAP revenue of $1,855.3 million, a 12.3% increase over GAAP revenue of $1,651.5 million in fiscal 2012. In fiscal 2013, Nuance reported non-GAAP revenue of $1,957.7 million, which includes $102.4 million in revenue lost to accounting treatment in conjunction with acquisitions. Fiscal 2013 non-GAAP revenue grew 12.6% over non-GAAP revenue of $1,738.1 million in fiscal 2012.
In fiscal 2013, Nuance recognized GAAP net loss of ($115.2) million, or ($0.37) per share, compared with GAAP net income of $207.1 million, or $0.65 per diluted share, in fiscal 2012. In fiscal 2013, Nuance reported non-GAAP net income of $428.0 million, or $1.33 per diluted share, compared to $555.9 million, or $1.73 per diluted share, in fiscal 2012. Nuance’s fiscal 2013 non-GAAP operating margin was 27.9%, compared to 35.8% in fiscal 2012. Nuance reported cash flow from operations of $395.0 million in fiscal 2013, compared to $473.0 million in fiscal 2012. Nuance ended fiscal 2013 with a balance of cash, cash equivalents and marketable securities of $846.8 million. As of September, Nuance had repurchased 9.805 million shares of common stock, for a total amount of $184.4 million at an average price per share of $18.81.
In the fourth quarter of fiscal 2013, Nuance reported GAAP revenue of $472.2 million, compared to $468.8 million in the fourth quarter of fiscal 2012. Nuance reported non-GAAP revenue of $490.4 million, which includes $18.2 million in revenue lost to accounting treatment in conjunction with acquisitions, compared to $490.1 million in the fourth quarter of fiscal 2012.
In the fourth quarter of fiscal 2013, Nuance recognized GAAP net loss of ($32.3) million, or ($0.10) per share, compared with GAAP net income of $117.6 million, or $0.36 per diluted share, in the fourth quarter of fiscal 2012. In the fourth quarter of fiscal 2013, Nuance reported non-GAAP net income of $95.2 million, or $0.30 per diluted share, compared to non-GAAP net income of $164.9 million, or $0.51 per diluted share, in the fourth quarter of fiscal 2012. Nuance’s fourth quarter fiscal 2013 non-GAAP operating margin was 25.3%, down from 37.2% in the fourth quarter of fiscal 2012. Nuance reported cash flow from operations of $93.5 million in the fourth quarter of fiscal 2013, down from $141.5 million in the fourth quarter of fiscal 2012.
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.
“We are pleased that we achieved fourth quarter results consistent with our guidance, and executed on our strategy to enter new growth markets, deliver a new generation of solutions and enable attractive, recurring revenue streams,” said Paul Ricci, Nuance Chairman and CEO.
Highlights from the quarter include:
- Healthcare – For Nuance’s healthcare solutions, fourth quarter fiscal 2013 non-GAAP revenue was $226.7 million and fiscal 2013 non-GAAP revenue was $911.6 million. We secured new business with key healthcare customers including Adventist, Brigham and Women’s Hospital, Brooklyn Hospital, Hackensack University, Steward, SW General, Tenet, UAB, UMH, Union, Unity, US Veterans Administration and Wilson.
- Mobile & Consumer – For Nuance’s mobile and consumer solutions, fourth quarter fiscal 2013 non-GAAP revenue was $120.3 million and fiscal 2013 non-GAAP revenue was $479.2 million. We secured new business or design wins with key mobile customers including Charter Communications, Cisco, Daimler, DoCoMo, GM, Huawei, Hyundai, iMobile, Kyocera, Mahindra, Motospeak, Nissan, Nokia, Panasonic, Roadtrack, Samsung, TCL CarTel, Telstra, TIM Brazil, Toyota, Verizon, Vodafone Spain, Vonage and VW.
- Enterprise – For Nuance’s enterprise solutions, fourth quarter fiscal 2013 non-GAAP revenue was $86.4 million and fiscal 2013 non-GAAP revenue was $323.5 million. We secured new business with key enterprise customers including Allstate, Australia Department of Health Services, Barclays, Cathay Pacific, Charles Schwab, CIBC, DBS Bank, FIS, Garanti Bank, ING, Kaiser, Korea Telecomm, Nice, Optus, PG&E, Prime Therapeutics, PSE&G, Singtel, State of Illinois, TalkTalk, U.K. HM Revenue & Customs, Verint, Vodafone, VSP, WellPoint, Wells Fargo and Windstream.
- Imaging – For Nuance’s document imaging solutions, fourth quarter fiscal 2013 non-GAAP revenue was $57.0 million and fiscal 2013 non-GAAP revenue was $243.4 million. We secured new business with key imaging customers including Adidas, Bank Danamon, Bart’s, Canon, City of Edmonton, Datev, HP, Ikea, Kodak, Nationwide, Ricoh, Steptoe & Johnson and Xerox.
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.
As previously scheduled, the conference call will begin today, November 25, 2013 at 5:00 pm EST and will include only brief comments followed by questions and answers. The prepared remarks will not be read on the call. To access the live broadcast, please visit the Investor Relations section of Nuance’s Website at www.nuance.com. The call can also be heard by dialing (800) 230-1074 or (612) 288-0329 at least five minutes prior to the call and referencing code 304712. 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 304712.
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, the Nuance logo, Dragon Medical and eScription 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.
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: fluctuations in demand for our
existing and future products; economic conditions in the United States
and internationally; our ability to control and successfully manage our
expenses and cash position; the effects of competition, including
pricing pressure; possible defects in our products and technologies; our
ability to successfully integrate operations and employees of acquired
businesses; 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, 2012 and our quarterly
reports 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.
The information included in this press release should not be viewed as a substitute for full GAAP financial statements.
Discussion of Non-GAAP Financial Measures
We utilize a
number of different financial measures, both 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
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 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 revenue and earnings per share. Consistent
with this approach, we believe that disclosing non-GAAP revenue and
non-GAAP earnings per share to the readers of our financial statements
provides such readers with useful supplemental data that, while not a
substitute for GAAP revenue and earnings per share, 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, 2013 and 2012, and, in particular, in
evaluating our revenue and earnings per share, 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 Equitrac, Quantim and
J.A. Thomas for the three months ended September 30, 2013 and primarily
from Quantim, SafeCom, Equitrac and J.A. Thomas for the twelve months
ended September 30, 2013, that would otherwise have been recognized but
for the purchase accounting treatment of these transactions. Non-GAAP
revenue also includes revenue that we would have otherwise 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 are included in the following categories: (i) transition and integration costs; (ii) professional service fees; 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, earn-out payments treated as compensation expense, as well as the costs of integration-related services, including services provided by third parties.
(ii) Professional service fees. Professional service fees include third party costs related to the acquisition, and legal and other professional service fees associated with disputes and regulatory matters related to acquired entities.
(iii) Acquisition-related adjustments. Acquisition-related adjustments include adjustments to acquisition-related 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.
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 available valuation methodologies, subjective assumptions and the variety of award types, we believe that the exclusion of 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 are
the result of unplanned events to measure operating performance and
current and future liquidity both with and without these expenses; and
therefore, 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 arose outside of the ordinary course of
continuing operations. These items also include adjustments from changes
in fair value of share-based instruments relating to the issuance of our
common stock with security price guarantees payable in cash. Other items
such as gains or losses on non-controlling strategic equity interests
and contributions of $5.0 million to the Nuance Foundation, which was
established to provide grants to educational institutions and other
non-profit organizations to advance charitable, scientific, literary or
educational purposes, 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.
Financial Tables Follow
| Nuance Communications, Inc. | ||||||||||||||||||||||
| Condensed Consolidated Statements of Operations | ||||||||||||||||||||||
| (in thousands, except per share amounts) | ||||||||||||||||||||||
| Unaudited | ||||||||||||||||||||||
| Three months ended | Twelve months ended | |||||||||||||||||||||
| September 30, | September 30, | |||||||||||||||||||||
| 2013 | 2012 | 2013 | 2012 | |||||||||||||||||||
| Revenues: | ||||||||||||||||||||||
| Product and licensing | $ | 192,302 | $ | 209,227 | $ | 753,665 | $ | 740,726 | ||||||||||||||
| Professional services and hosting | 208,436 | 196,886 | 832,428 | 673,943 | ||||||||||||||||||
| Maintenance and support | 71,505 | 62,668 | 269,186 | 236,840 | ||||||||||||||||||
| Total revenues | 472,243 | 468,781 | 1,855,279 | 1,651,509 | ||||||||||||||||||
| Cost of revenues: | ||||||||||||||||||||||
| Product and licensing | 24,285 | 21,713 | 99,381 | 74,837 | ||||||||||||||||||
| Professional services and hosting | 146,750 | 122,153 | 550,881 | 424,733 | ||||||||||||||||||
| Maintenance and support | 12,224 | 12,319 | 52,705 | 45,325 | ||||||||||||||||||
| Amortization of intangible assets | 15,476 | 15,300 | 63,583 | 60,034 | ||||||||||||||||||
| Total cost of revenues | 198,735 | 171,485 | 766,550 | 604,929 | ||||||||||||||||||
| Gross profit | 273,508 | 297,296 | 1,088,729 | 1,046,580 | ||||||||||||||||||
| Operating expenses: | ||||||||||||||||||||||
| Research and development | 77,673 | 63,311 | 292,081 | 225,441 | ||||||||||||||||||
| Sales and marketing | 105,812 | 101,298 | 420,184 | 369,205 | ||||||||||||||||||
| General and administrative | 51,126 | 47,838 | 176,654 | 163,318 | ||||||||||||||||||
| Amortization of intangible assets | 26,528 | 24,391 | 105,258 | 95,416 | ||||||||||||||||||
| Acquisition-related cost, net | 6,962 | 12,374 | 29,685 | 58,746 | ||||||||||||||||||
| Restructuring and other charges, net | 1,716 | 1,466 | 16,385 | 8,268 | ||||||||||||||||||
| Total operating expenses | 269,817 | 250,678 | 1,040,247 | 920,394 | ||||||||||||||||||
| Income from operations | 3,691 | 46,618 | 48,482 | 126,186 | ||||||||||||||||||
| Other expense, net | (36,556 | ) | (24,969 | ) | (145,162 | ) | (60,884 | ) | ||||||||||||||
| (Loss) income before income taxes | (32,865 | ) | 21,649 | (96,680 | ) | 65,302 | ||||||||||||||||
| (Benefit) provision from income taxes | (545 | ) | (95,992 | ) | 18,558 | (141,833 | ) | |||||||||||||||
| Net (loss) income | $ | (32,320 | ) | $ | 117,641 | $ | (115,238 | ) | $ | 207,135 | ||||||||||||
| Net (loss) income per share: | ||||||||||||||||||||||
| Basic | $ | (0.10 | ) | $ | 0.38 | $ | (0.37 | ) | $ | 0.67 | ||||||||||||
| Diluted | $ | (0.10 | ) | $ | 0.36 | $ | (0.37 | ) | $ | 0.65 | ||||||||||||
| Weighted average common shares outstanding: | ||||||||||||||||||||||
| Basic | 310,944 | 309,307 | 313,587 | 306,371 | ||||||||||||||||||
| Diluted | 310,944 | 322,424 | 313,587 | 320,822 | ||||||||||||||||||
| Nuance Communications, Inc. | |||||||||
| Condensed Consolidated Balance Sheets | |||||||||
| (in thousands) | |||||||||
| ASSETS | September 30, 2013 | September 30, 2012 | |||||||
| Unaudited | |||||||||
| Current assets: | |||||||||
| Cash and cash equivalents | $ | 808,118 | $ | 1,129,761 | |||||
| Marketable securities | 38,728 | - | |||||||
| Accounts receivable, net | 382,741 | 381,417 | |||||||
| Prepaid expenses and other current assets | 179,940 | 190,128 | |||||||
| Total current assets | 1,409,527 | 1,701,306 | |||||||
| Land, building and equipment, net | 143,465 | 116,134 | |||||||
| Goodwill | 3,293,198 | 2,955,477 | |||||||
| Intangible assets, net | 953,278 | 906,538 | |||||||
| Other assets | 159,135 | 119,585 | |||||||
| Total assets | $ | 5,958,603 | $ | 5,799,040 | |||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||||
| Current liabilities: | |||||||||
| Current portion of long-term debt | $ | 246,040 | $ | 148,542 | |||||
| Redeemable convertible debentures | - | 231,552 | |||||||
| Contingent and deferred acquisition payments | - | 49,685 | |||||||
| Accounts payable and accrued expenses | 305,441 | 328,374 | |||||||
| Deferred revenue | 253,753 | 206,610 | |||||||
| Total current liabilities | 805,234 | 964,763 | |||||||
| Long-term portion of debt | 2,108,091 | 1,735,811 | |||||||
| Deferred revenue, net of current portion | 160,823 | 108,481 | |||||||
| Other liabilities | 246,441 | 243,279 | |||||||
| Total liabilities | 3,320,589 | 3,052,334 | |||||||
| Equity component of currently redeemable convertible debentures | - | 18,430 | |||||||
| Stockholders' equity | 2,638,014 | 2,728,276 | |||||||
| Total liabilities and stockholders' equity | $ | 5,958,603 | $ | 5,799,040 | |||||
| Nuance Communications, Inc. | ||||||||||||||||||||||
| Consolidated Statements of Cash Flows | ||||||||||||||||||||||
| (in thousands) | ||||||||||||||||||||||
| Unaudited | ||||||||||||||||||||||
| Three months ended | Twelve months ended | |||||||||||||||||||||
| September 30, | September 30, | |||||||||||||||||||||
| 2013 | 2012 | 2013 | 2012 | |||||||||||||||||||
| Cash flows from operating activities: | ||||||||||||||||||||||
| Net (loss) income | $ | (32,320 | ) | $ | 117,641 | $ | (115,238 | ) | $ | 207,135 | ||||||||||||
| Adjustments to reconcile net (loss) income to net cash provided by operating activities: | ||||||||||||||||||||||
| Depreciation and amortization | 53,550 | 47,665 | 208,659 | 187,183 | ||||||||||||||||||
| Stock-based compensation | 45,217 | 58,165 | 159,325 | 174,581 | ||||||||||||||||||
| Non-cash interest expense | 11,096 | 10,709 | 40,019 | 35,497 | ||||||||||||||||||
| Deferred tax benefit | (1,293 | ) | (92,347 | ) | (2,472 | ) | (151,547 | ) | ||||||||||||||
| Loss (gain) on non-controlling strategic equity interest | - | - | 790 | (13,726 | ) | |||||||||||||||||
| Other | 4,103 | 504 | (6,537 | ) | 4,016 | |||||||||||||||||
| Changes in operating assets and liabilities, net of effects from acquisitions: | ||||||||||||||||||||||
| Accounts receivable | (1,548 | ) | (21,880 | ) | 25,165 | (55,210 | ) | |||||||||||||||
| Prepaid expenses and other assets | 23,237 | 14,861 | 10,988 | 13,881 | ||||||||||||||||||
| Accounts payable | (7,028 | ) | 153 | (26,843 | ) | 22,645 | ||||||||||||||||
| Accrued expenses and other liabilities | (12,576 | ) | (2,796 | ) | 16,506 | 8,939 | ||||||||||||||||
| Deferred revenue | 11,057 | 8,781 | 84,648 | 39,605 | ||||||||||||||||||
| Net cash provided by operating activities | 93,495 | 141,456 | 395,010 | 472,999 | ||||||||||||||||||
| Cash flows from investing activities: | ||||||||||||||||||||||
| Capital expenditures | (13,911 | ) | (10,901 | ) | (55,588 | ) | (62,910 | ) | ||||||||||||||
| Payments for business and technology acquisitions, net of cash acquired | (32,882 | ) | (229,128 | ) | (607,653 | ) | (884,945 | ) | ||||||||||||||
| Purchases of marketable securities and other investments | (38,987 | ) | - | (39,435 | ) | (15,156 | ) | |||||||||||||||
| Proceeds from sales and maturities of marketable securities and other investments | 8,768 | 778 | 8,768 | 31,789 | ||||||||||||||||||
| Change in restricted cash balances | - | - | - | 6,747 | ||||||||||||||||||
| Net cash used in investing activities | (77,012 | ) | (239,251 | ) | (693,908 | ) | (924,475 | ) | ||||||||||||||
| Cash flows from financing activities: | ||||||||||||||||||||||
| Payments of debt | (278,281 | ) | (1,626 | ) | (425,634 | ) | (6,605 | ) | ||||||||||||||
| Proceeds from long-term debt, net of issuance costs | 273,407 | 688,908 | 625,155 | 1,364,925 | ||||||||||||||||||
| Payments for repurchases of common stock | (81,352 | ) | - | (184,388 | ) | (199,997 | ) | |||||||||||||||
| Payments of other long-term liabilities | (59 | ) | (380 | ) | (1,688 | ) | (8,525 | ) | ||||||||||||||
| (Payments for) proceeds from settlement of share-based derivatives, net | - | - | (3,801 | ) | 9,020 | |||||||||||||||||
| Excess tax benefits on employee equity awards | - | 500 | - | (3,583 | ) | |||||||||||||||||
| Proceeds from issuance of common stock from employee stock plans | 11,485 | 8,884 | 30,216 | 27,747 | ||||||||||||||||||
| Cash used to net share settle employee equity awards | (6,928 | ) | (10,822 | ) | (60,517 | ) | (49,947 | ) | ||||||||||||||
| Net cash (used in) provided by financing activities | (81,728 | ) | 685,464 | (20,657 | ) | 1,133,035 | ||||||||||||||||
| Effects of exchange rate changes on cash and cash equivalents | 312 | 2,537 | (2,088 | ) | 978 | |||||||||||||||||
| Net (decrease) increase in cash and cash equivalents | (64,933 | ) | 590,206 | (321,643 | ) | 682,537 | ||||||||||||||||
| Cash and cash equivalents at beginning of period | 873,051 | 539,555 | 1,129,761 | 447,224 | ||||||||||||||||||
| Cash and cash equivalents at end of period | $ | 808,118 | $ | 1,129,761 | $ | 808,118 | $ | 1,129,761 | ||||||||||||||
| Nuance Communications, Inc. | ||||||||||||||||||||||
| Supplemental Financial Information - GAAP to Non-GAAP Reconciliations | ||||||||||||||||||||||
| (in thousands, except per share amounts) | ||||||||||||||||||||||
| Unaudited | ||||||||||||||||||||||
| Three months ended | Twelve months ended | |||||||||||||||||||||
| September 30 | September 30 | |||||||||||||||||||||
| 2013 | 2012 | 2013 | 2012 | |||||||||||||||||||
| GAAP revenue | $ | 472,243 | $ | 468,781 | $ | 1,855,279 | $ | 1,651,509 | ||||||||||||||
| Acquisition-related revenue adjustments: product and licensing | 10,728 | 17,624 | 70,112 | 74,060 | ||||||||||||||||||
| Acquisition-related revenue adjustments: professional services and hosting | 6,270 | 2,775 | 27,139 | 5,864 | ||||||||||||||||||
| Acquisition-related revenue adjustments: maintenance and support | 1,148 | 908 | 5,100 | 6,632 | ||||||||||||||||||
| Non-GAAP revenue | $ | 490,389 | $ | 490,088 | $ | 1,957,630 | $ | 1,738,065 | ||||||||||||||
| GAAP cost of revenue | $ | 198,735 | $ | 171,485 | $ | 766,550 | $ | 604,929 | ||||||||||||||
| Cost of revenue from amortization of intangible assets | (15,476 | ) | (15,300 | ) | (63,583 | ) | (60,034 | ) | ||||||||||||||
| Cost of revenue adjustments: product and licensing (1,2) | 956 | 2,002 | 6,117 | 8,135 | ||||||||||||||||||
| Cost of revenue adjustments: professional services and hosting (1,2) | (4,925 | ) | (8,818 | ) | (16,139 | ) | (25,981 | ) | ||||||||||||||
| Cost of revenue adjustments: maintenance and support (1,2) | (446 | ) | (330 | ) | (3,537 | ) | (956 | ) | ||||||||||||||
| Non-GAAP cost of revenue | $ | 178,844 | $ | 149,039 | $ | 689,408 | $ | 526,093 | ||||||||||||||
| GAAP gross profit | $ | 273,508 | $ | 297,296 | $ | 1,088,729 | $ | 1,046,580 | ||||||||||||||
| Gross profit adjustments | 38,037 | 43,753 | 179,493 | 165,392 | ||||||||||||||||||
| Non-GAAP gross profit | $ | 311,545 | $ | 341,049 | $ | 1,268,222 | $ | 1,211,972 | ||||||||||||||
| GAAP income from operations | $ | 3,691 | $ | 46,618 | $ | 48,482 | $ | 126,186 | ||||||||||||||
| Gross profit adjustments | 38,037 | 43,753 | 179,493 | 165,392 | ||||||||||||||||||
| Research and development (1) | 9,548 | 10,258 | 34,957 | 29,565 | ||||||||||||||||||
| Sales and marketing (1) | 15,817 | 18,187 | 58,451 | 54,281 | ||||||||||||||||||
| General and administrative (1) | 13,532 | 20,238 | 43,687 | 63,233 | ||||||||||||||||||
| Amortization of intangible assets | 26,528 | 24,391 | 105,258 | 95,416 | ||||||||||||||||||
| Costs associated with IP collaboration agreements | 4,937 | 5,250 | 20,582 | 21,000 | ||||||||||||||||||
| Acquisition-related costs, net | 6,962 | 12,374 | 29,685 | 58,746 | ||||||||||||||||||
| Restructuring and other charges, net | 1,716 | 1,466 | 16,385 | 8,268 | ||||||||||||||||||
| Other | 3,543 | - | 9,732 | - | ||||||||||||||||||
| Non-GAAP income from operations | $ | 124,311 | $ | 182,535 | $ | 546,712 | $ | 622,087 | ||||||||||||||
| GAAP (benefit) provision from income taxes | $ | (545 | ) | $ | (95,992 | ) | $ | 18,558 | $ | (141,833 | ) | |||||||||||
| Non-cash taxes | 5,065 | 97,741 | 2,450 | 160,883 | ||||||||||||||||||
| Non-GAAP provision for income taxes | $ | 4,520 | $ | 1,749 | $ | 21,008 | $ | 19,050 | ||||||||||||||
| GAAP net (loss) income | $ | (32,320 | ) | $ | 117,641 | $ | (115,238 | ) | $ | 207,135 | ||||||||||||
| Acquisition-related adjustment - revenue (2) | 18,146 | 21,307 | 102,351 | 86,556 | ||||||||||||||||||
| Acquisition-related adjustment - cost of revenue (2) | (1,905 | ) | (2,336 | ) | (8,671 | ) | (8,700 | ) | ||||||||||||||
| Acquisition-related costs, net | 6,962 | 12,374 | 29,685 | 58,746 | ||||||||||||||||||
| Cost of revenue from amortization of intangible assets | 15,476 | 15,300 | 63,583 | 60,034 | ||||||||||||||||||
| Amortization of intangible assets | 26,528 | 24,391 | 105,258 | 95,416 | ||||||||||||||||||
| Non-cash stock-based compensation (1) | 45,217 | 58,165 | 159,325 | 174,581 | ||||||||||||||||||
| Non-cash interest expense | 11,096 | 10,709 | 40,019 | 35,497 | ||||||||||||||||||
| Non-cash income taxes | (5,065 | ) | (97,741 | ) | (2,450 | ) | (160,883 | ) | ||||||||||||||
| Costs associated with IP collaboration agreements | 4,937 | 5,250 | 20,582 | 21,000 | ||||||||||||||||||
| Change in fair value of share-based instruments | 862 | (1,647 | ) | 6,615 | (7,997 | ) | ||||||||||||||||
| Loss or (gain) on non-controlling strategic equity interest | - | - | 790 | (13,726 | ) | |||||||||||||||||
| Restructuring and other charges, net | 1,716 | 1,466 |
|
16,385 | 8,268 | |||||||||||||||||
| Other | 3,543 | - | 9,732 | - | ||||||||||||||||||
| Non-GAAP net income | $ | 95,193 | $ | 164,879 | $ | 427,966 | $ | 555,927 | ||||||||||||||
| Non-GAAP diluted net income per share | $ | 0.30 | $ | 0.51 | $ | 1.33 | $ | 1.73 | ||||||||||||||
| Diluted weighted average common shares outstanding | 317,574 | 322,424 | 322,952 | 320,822 | ||||||||||||||||||
| Schedules may not add due to rounding. | ||||||||||||||||||||||
| Nuance Communications, Inc. | ||||||||||||||||||||||
| Supplemental Financial Information - GAAP to Non-GAAP Reconciliations, continued | ||||||||||||||||||||||
| (in thousands) | ||||||||||||||||||||||
| Unaudited | ||||||||||||||||||||||
| Three months ended | Twelve months ended | |||||||||||||||||||||
| September 30, | September 30, | |||||||||||||||||||||
| 2013 | 2012 | 2013 | 2012 | |||||||||||||||||||
|
(1) Non-Cash Stock-Based Compensation |
||||||||||||||||||||||
| Cost of product and licensing | $ | 271 | $ | 19 | $ | 769 | $ | 137 | ||||||||||||||
| Cost of professional services and hosting | 5,603 | 9,133 | 17,924 | 26,409 | ||||||||||||||||||
| Cost of maintenance and support | 446 | 330 | 3,537 | 956 | ||||||||||||||||||
| Research and development | 9,548 | 10,258 | 34,957 | 29,565 | ||||||||||||||||||
| Sales and marketing | 15,817 | 18,187 | 58,451 | 54,281 | ||||||||||||||||||
| General and administrative | 13,532 | 20,238 | 43,687 | 63,233 | ||||||||||||||||||
| Total | $ | 45,217 | $ | 58,165 | $ | 159,325 | $ | 174,581 | ||||||||||||||
|
(2) Acquisition-Related Revenue and Cost of Revenue |
||||||||||||||||||||||
| Revenue | $ | 18,146 | $ | 21,307 | $ | 102,351 | $ | 86,556 | ||||||||||||||
| Cost of product and licensing | (1,227 | ) | (2,021 | ) | (6,886 | ) | (8,272 | ) | ||||||||||||||
| Cost of professional services and hosting | (678 | ) | (315 | ) | (1,785 | ) | (428 | ) | ||||||||||||||
| Total | $ | 16,241 | $ | 18,971 | $ | 93,680 | $ | 77,856 | ||||||||||||||
| Nuance Communications, Inc. | |||||||||||||||||||||||||||||||
| Supplemental Financial Information – GAAP to Non-GAAP Reconciliations, continued | |||||||||||||||||||||||||||||||
| (in millions) | |||||||||||||||||||||||||||||||
| Unaudited | |||||||||||||||||||||||||||||||
|
Healthcare |
Q1 | Q2 | Q3 | Q4 | FY | Q1 | Q2 | Q3 | Q4 | FY | |||||||||||||||||||||
| 2012 | 2012 | 2012 | 2012 | 2012 | 2013 | 2013 | 2013 | 2013 | 2013 | ||||||||||||||||||||||
| GAAP Revenue | $145.1 | $149.7 | $184.5 | $189.3 | $668.6 | $204.7 | $219.1 | $230.0 | $220.0 | $873.8 | |||||||||||||||||||||
| Adjustment | $0.2 | $0.2 | $0.0 | $0.4 | $0.8 | $12.7 | $10.2 | $8.1 | $6.7 | $37.8 | |||||||||||||||||||||
| Non-GAAP Revenue | $145.3 | $149.9 | $184.5 | $189.7 | $669.4 | $217.4 | $229.3 | $238.1 | $226.7 | $911.6 | |||||||||||||||||||||
|
Mobile & Consumer |
Q1 | Q2 | Q3 | Q4 | FY | Q1 | Q2 | Q3 | Q4 | FY | |||||||||||||||||||||
| 2012 | 2012 | 2012 | 2012 | 2012 | 2013 | 2013 | 2013 | 2013 | 2013 | ||||||||||||||||||||||
| GAAP Revenue | $103.4 | $110.3 | $126.0 | $143.2 | $483.0 | $128.8 | $113.0 | $108.7 | $117.2 | $467.7 | |||||||||||||||||||||
| Adjustment | $5.1 | $4.8 | $6.4 |
$9.0 |
$25.3 | $2.9 | $3.2 | $2.3 | $3.1 | $11.5 | |||||||||||||||||||||
| Non-GAAP Revenue | $108.5 | $115.1 | $132.4 | $152.2 | $508.3 | $131.7 | $116.2 | $111.0 | $120.3 | $479.2 | |||||||||||||||||||||
|
Enterprise |
Q1 | Q2 | Q3 | Q4 | FY | Q1 | Q2 | Q3 | Q4 | FY | |||||||||||||||||||||
| 2012 | 2012 | 2012 | 2012 | 2012 | 2013 | 2013 | 2013 | 2013 | 2013 | ||||||||||||||||||||||
| GAAP Revenue | $72.2 | $79.6 | $74.1 | $89.1 | $315.0 | $83.7 | $72.9 | $78.1 | $85.5 | $320.2 | |||||||||||||||||||||
| Adjustment | $3.6 | $11.8 | $0.4 | $1.2 | $17.0 | $0.0 | $1.6 | $0.8 | $0.9 | $3.3 | |||||||||||||||||||||
| Non-GAAP Revenue | $75.8 | $91.4 | $74.5 | $90.3 | $332.0 | $83.7 | $74.5 | $78.9 | $86.4 | $323.5 | |||||||||||||||||||||
|
Imaging |
Q1 | Q2 | Q3 | Q4 | FY | Q1 | Q2 | Q3 | Q4 | FY | |||||||||||||||||||||
| 2012 | 2012 | 2012 | 2012 | 2012 | 2013 | 2013 | 2013 | 2013 | 2013 | ||||||||||||||||||||||
| GAAP Revenue | $39.9 | $50.7 | $47.1 | $47.2 | $184.9 | $45.1 | $46.0 | $53.0 | $49.5 | $193.6 | |||||||||||||||||||||
| Adjustment | $12.5 | $10.6 | $9.7 | $10.7 | $43.5 | $14.5 | $18.0 | $9.8 | $7.5 | $49.8 | |||||||||||||||||||||
| Non-GAAP Revenue | $52.4 | $61.3 | $56.8 | $57.9 | $228.4 | $59.6 | $64.0 | $62.8 | $57.0 | $243.4 | |||||||||||||||||||||
| Schedules may not add due to rounding. | |||||||||||||||||||||||||||||||
