Nuance Announces Second Quarter 2020 Results
BURLINGTON, Mass., May 7, 2020 /PRNewswire/ -- Nuance Communications, Inc. (NASDAQ: NUAN) today announced financial results for its second quarter ended March 31, 2020.
Q2 2020 Performance Summary
-- GAAP revenue of $369.3 million and GAAP earnings per diluted share of
$(0.05).
-- Non-GAAP revenue of $369.5 million and non-GAAP earnings per diluted
share of $0.21.
"Despite COVID-19, we had another excellent quarter, with revenue and EPS exceeding the high end of our guidance," said Mark Benjamin, Chief Executive Officer at Nuance. "We achieved 11% year-over-year organic revenue growth, with strength from both our Healthcare and Enterprise segments. Enterprise reported 19% annual revenue growth, the highest in 10 years, driven by our Intelligent Engagement solutions. Healthcare revenue grew 10% year-over-year, driven by strong growth in Dragon Medical cloud and increased demand from our newer cloud-based solutions, PowerScribe One and CDE One.
In line with our capital allocation focus, we repurchased 3.8 million shares of common stock and paid down $170 million of debt during the quarter. This occurred before these programs were put on hold in March when the COVID-19 pandemic escalated. We ended the quarter with a strong cash position and remain confident in the resiliency of our highly recurring business model.
Given our compelling financial and operating position, we fully expect to weather the disruption of this pandemic. However, we also expect a near-term impact on our business, particularly within Healthcare, given the significant reduction in elective procedures and the reprioritization of initiatives by hospitals to focus on COVID-19. As such, we have revised our full-year guidance.
Despite the uncertain near-term operating environment, I believe the markets we serve will expand post COVID-19 as our customers appreciate the critical need for AI-based solutions, remote access capabilities for healthcare workers, and increased demand for telehealth, and security and fraud protection solutions. We remain an incredibly resilient company, and I am confident that we will emerge from this pandemic stronger."
Q2 2020 Performance Summary
Q2 2020 results for continuing operations include:
-- Revenue of $369.3 million, compared to $336.6 million in the same period
last year.
-- Non-GAAP revenue of $369.5 million, compared to $336.9 million in the
same period last year.
-- Organic revenue growth of 11% compared to the same period last year.
-- GAAP EPS of $(0.05), compared to $(0.10) in the same period last year.
-- Non-GAAP EPS of $0.21, compared to $0.11 in the same period last year.
-- GAAP net loss of $13.5 million, compared to a net loss of $28.4 million
in the same period last year.
-- Non-GAAP net income of $59.7 million, compared to $30.8 million in the
same period last year.
-- GAAP operating margin of 6.8%, compared to (0.5)% in the same period
last year.
-- Non-GAAP operating margin of 22.7%, compared to 17.0% in the same period
last year.
-- Operating cash flows from continuing operations was $87.9 million,
compared to $79.5 million in the same period last year.
Capital Allocation
In the second quarter of 2020, we repurchased approximately 3.8 million shares of common stock at an average price of $20.40 per share for total consideration of $76.8 million. From the beginning of the fiscal year through March 31, 2020, the Company repurchased a total of 9.5 million shares of its common stock, at an average price of $17.89 per share, for aggregate consideration of $169.2 million. As of March 31, 2020, there was $261.2 million available under our existing authorization for share repurchases.
During the second quarter of fiscal year 2020, we also repurchased $87.3 million of 2025 convertible debentures, $36.5 million 2035 convertible debentures, and redeemed the remaining $46.6 million of the 2031 convertible debentures. In addition, in an effort to protect our financial strength as the COVID-19 pandemic escalated, we drew $230 million from our revolving credit facility. This brought our total cash and marketable securities balance to approximately $526 million at quarter end.
For a complete discussion of Nuance's results and business outlook, please see the Company's Prepared Remarks document available at http://www.nuance.com/earnings-results/.
Please refer to the "Discussion of Non-GAAP Financial Measures," and "GAAP to Non-GAAP Reconciliations," included elsewhere in this release, for more information regarding the Company's use of non-GAAP financial measures.
Conference Call and Prepared Remarks
Nuance will host a conference call today at 5:00 p.m. ET. To participate, please access the live webcast here, or dial (877) 273-6124 (US and Canada) or (647) 689-5393 (international) and reference code 9089263.
Nuance will provide a copy of Prepared Remarks in combination with its press release. These remarks are offered to provide shareholders and analysts additional detail for analyzing the results. The remarks are available at http://investors.nuance.com/ and will not be read on the call.
About Nuance Communications, Inc.
Nuance Communications (NASDAQ: NUAN) is the pioneer and leader in conversational AI innovations that bring intelligence to everyday work and life. The company delivers solutions that understand, analyze, and respond to people - amplifying human intelligence to increase productivity and security. With decades of domain and AI expertise, Nuance works with thousands of organizations globally across healthcare, financial services, telecommunications, government, and retail - to create stronger relationships and better experiences for their customers and workforce. 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.
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," "intends" 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: the impact of the COVID-19 pandemic, the effects of competition, including pricing pressure, and changing business models in the markets and industries in which we operate; fluctuations in demand for our existing and future products; changes to economic, political, and regulatory conditions in the United States and internationally; our ability to attract and retain key personnel; further unanticipated costs resulting from our FY17 malware incident including potential costs associated with governmental investigations that may result from the incident; our ability to control and successfully manage our expenses and cash position; potential future cybersecurity and data privacy incidents or breaches; our ability to comply with applicable domestic and international laws and policies; fluctuating currency rates; possible quality issues in our products and technologies; our ability to realize anticipated synergies from acquired businesses, to cut stranded costs related to divested businesses, and to capture the expected value from strategic transactions including the spin-off of our Automotive business; and the other factors described in our most recent Form 10-K, Form 10-Q and other filings 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 believe that providing non-GAAP ("Generally Accepted Accounting Principles") 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 not only to 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.
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 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 months ended March 31, 2020 and 2019, our management has either included or excluded items in seven general categories, each of which is described below.
Acquisition-related revenue and cost of revenue.
We provide supplementary non-GAAP financial measures of revenue that include revenue that we would have recognized but for the purchase accounting treatment of acquisition 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, that 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 incurred in connection
with acquisition activities, and
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.
Non-cash expenses.
We provide non-GAAP information relative to the following non-cash expenses: (i) stock-based compensation; and (ii) non-cash interest. 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) Non-cash interest. We exclude non-
cash interest because we believe
that excluding this expense 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. Non-cash interest
expense will continue in future
periods.
Other expenses.
We exclude certain other expenses that result from unplanned events outside the ordinary course of continuing operations, 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, and losses from extinguishing our convertible debt. Other items such as consulting and professional services fees related to assessing strategic alternatives and our transformation programs, implementation of the new revenue recognition standard (ASC 606), and expenses associated with the malware incident and remediation thereof are also excluded.
Non-GAAP income tax provision.
Our non-GAAP income tax provision is determined based on our non-GAAP pre-tax income. The tax effect of each non-GAAP adjustment, if applicable, is computed based on the statutory tax rate of the jurisdiction to which the adjustment relates. Additionally, as our non-GAAP profitability is higher based on the non-GAAP adjustments, we adjust the GAAP tax provision to remove valuation allowances and related effects based on the higher level of reported non-GAAP profitability. We also exclude from our non-GAAP tax provision certain discrete tax items as they occur.
Contact Information
For Investors
Tracy Krumme
Nuance Communications, Inc.
Tel: 781-565-4334
Email: tracy.krumme@nuance.com
For Press
Nancy Scott
Nuance Communications, Inc.
Tel: 781-565-4130
Email: nancy.scott@nuance.com
Financial Tables Follow
Nuance Communications, Inc.
Condensed Consolidated Statements of Operations
(in thousands, except per share amounts)
Unaudited
Three Months Ended March 31, Six Months Ended March 31,
2020 2019 2020 2019
Revenues:
Hosting and professional
services $235,514 $217,527 $465,991 $445,244
Product and licensing 69,599 58,226 194,779 174,115
Maintenance and support 64,224 60,831 126,800 136,900
Total revenues 369,337 336,584 787,570 756,259
Cost of revenues:
Hosting and professional
services 133,196 134,294 268,986 270,892
Product and licensing 9,316 9,373 43,494 41,778
Maintenance and support 7,965 8,911 15,759 16,672
Amortization of intangible
assets 6,616 6,681 13,243 14,037
Total cost of revenues 157,093 159,259 341,482 343,379
Gross profit 212,244 177,325 446,088 412,880
Operating expenses:
Research and development 57,909 45,758 114,462 92,624
Sales and marketing 71,024 67,683 137,496 135,053
General and administrative 38,376 39,857 76,690 83,323
Amortization of intangible
assets 11,821 13,824 24,370 27,666
Acquisition-related costs,
net 1,680 2,051 2,847 4,652
Restructuring and other
charges, net 6,329 9,858 13,012 24,499
Total operating expenses 187,139 179,031 368,877 367,817
Income (loss) from operations 25,105 (1,706) 77,211 45,063
Other expenses, net (23,805) (27,282) (57,474) (58,170)
Income (loss) before income
taxes 1,300 (28,988) 19,737 (13,107)
Provision (benefit) for income
taxes 14,810 (591) (21,630) 1,409
Net (loss) income from
continuing operations (13,510) (28,397) 41,367 (14,516)
Net income (loss) from
discontinued operations 105,729 (6,192) 110,938
Net (loss) income $(13,510) $77,332 $35,175 $96,422
Net (loss) income per common
share -basic:
Continuing operations $(0.05) $(0.10) $0.15 $(0.05)
Discontinued operations 0.37 (0.03) 0.39
Total net (loss) income per
basic common share $(0.05) $0.27 $0.12 $0.34
Net (loss) income per common
share -diluted:
Continuing operations $(0.05) $(0.10) $0.14 $(0.05)
Discontinued operations 0.37 (0.02) 0.39
Total net (loss) income per
diluted common share $(0.05) $0.27 $0.12 $0.34
Weighted average common shares outstanding:
Basic 282,576 285,866 283,366 286,849
Diluted 282,576 285,866 288,214 286,849
Nuance Communications, Inc.
Condensed Consolidated Balance Sheets
(in thousands)
March 31, 2020
September 30, 2019
ASSETS
Unaudited
Current assets:
Cash and cash equivalents $397,907 $560,961
Marketable securities 123,373 186,555
Accounts receivable, net 222,474 240,673
Prepaid expenses and other current
assets 148,494 175,166
Current assets of discontinued
operations 91,858
Total current assets 892,248 1,255,213
Marketable securities 4,897 17,287
Land, building and equipment, net 127,721 121,203
Goodwill 2,125,053 2,127,896
Intangible assets, net 253,414 291,371
Right-of-use assets 110,838
Other assets 242,579 316,215
Long-term assets of discontinued
operations 1,236,608
Total assets $3,756,750 $5,365,793
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $230,000 $1,142,870
Contingent and
deferred
acquisition
payments 14,676 17,470
Accounts payable 75,638 90,826
Accrued expenses
and other current
liabilities 187,401 249,570
Deferred revenue 259,639 214,223
Current liabilities of discontinued
operations 130,117
Total current liabilities 767,354 1,845,076
Long-term debt 1,512,859 793,536
Deferred revenue, net of current
portion 113,705 133,783
Deferred tax liability 63,942 54,216
Operating lease liabilities 108,420
Other liabilities 74,753 79,378
Long-term liabilities of discontinued
operations 286,654
Total liabilities 2,641,033 3,192,643
Stockholders' equity 1,115,717 2,173,150
Total liabilities and stockholders'
equity $3,756,750 $5,365,793
Nuance Communications, Inc.
Consolidated Statements of Cash Flows
(in thousands)
Unaudited
Three Months Ended Six Months Ended
March 31,
March 31,
2020 2019 2020 2019
Cash flows from operating
activities:
Net (loss) income from continuing
operations $(13,510) $(28,397) $41,367 $(14,516)
Adjustments to reconcile net
(loss) income to net cash
provided by operating
activities:
Depreciation 8,967 12,689 19,150 26,368
Amortization 18,437 20,505 37,613 41,703
Stock-based compensation 33,662 24,798 64,895 54,295
Non-cash interest expense 12,574 12,388 25,318 24,686
Deferred tax provision (benefit) 1,033 (9,553) (39,255) (11,642)
Loss on extinguishment of debt 3,656 910 18,656 910
Other 2,325 493 1,576 805
Changes in operating assets and
liabilities, excluding effects
of acquisitions:
Accounts receivable 39,176 35,027 19,934 19,773
Prepaid expenses and other assets (23,760) 11,228 6,358 (14,698)
Accounts payable (4,873) (9,919) (6,219) 2,584
Accrued expenses and other
liabilities 10,055 12,236 (61,686) (7,081)
Deferred revenue 136 (2,930) 27,031 28,951
Net cash provided by operating
activities -continuing
operations 87,878 79,475 154,738 152,138
Net cash provided by (used in)
operating activities -
discontinued operations 24,190 (13,307) 51,418
Net cash provided by operating
activities 87,878 103,665 141,431 203,556
Cash flows from investing
activities:
Capital expenditures (16,983) (11,214) (31,187) (23,434)
Proceeds from disposition of
businesses, net of transaction
fees 404,045 404,045
Purchases of marketable
securities and other investments (62,181) (71,663) (148,880) (119,165)
Proceeds from sales and
maturities of marketable
securities and other investments 142,399 71,983 224,987 117,661
Other 60 (1,106) 1,332 (2,553)
Net cash provided by investing
activities 63,295 392,045 46,252 376,554
Cash flows from financing
activities:
Repayment and redemption of debt (200,142) (300,000) (513,642) (300,000)
Net distribution from Cerence
upon the spin-off 139,090
Payments for repurchase of common
stock (76,774) (16,165) (169,218) (91,321)
Proceeds from issuance of common
stock from employee stock plans 7,204 8,643 7,204 8,643
Proceeds from the revolving
credit facility 230,000 230,000
Payments for taxes related to net
share settlement of equity
awards (6,530) (6,540) (36,488) (38,191)
Other financing activities (2,109) (514) (2,834) (1,210)
Net cash used in financing
activities (48,351) (314,576) (345,888) (422,079)
Effects of exchange rate changes
on cash and cash equivalents (6,373) 391 (4,849) 782
Net increase (decrease) in cash
and cash equivalents 96,449 181,525 (163,054) 158,813
Cash and cash equivalents at
beginning of period 301,458 293,251 560,961 315,963
Cash and cash equivalents at end
of period $397,907 $474,776 $397,907 $474,776
Supplemental Financial Information - GAAP to Non-GAAP Reconciliations
(in thousands)
Unaudited
Three Months Ended March 31, Six Months Ended March 31,
---
2020 2019 2020 2019
---
GAAP revenues $369,337 $336,584 $787,570 $756,259
Acquisition-related
revenue adjustments:
hosting and
professional services 212 128 301 269
Acquisition-related
revenue adjustments:
product and licensing 120 167
Acquisition-related
revenue adjustments:
maintenance and support 91 256
Non-GAAP revenues $369,549 $336,923 $787,871 $756,951
===
GAAP cost of revenues $157,093 $159,259 $341,482 $343,379
Cost of revenues from
amortization of
intangible assets (6,616) (6,681) (13,243) (14,037)
Cost of revenues
adjustments: hosting
and professional
services (1) (6,504) (4,731) (12,045) (11,688)
Cost of revenues
adjustments: product
and licensing (1) (130) (132) (259) (396)
Cost of revenues
adjustments:
maintenance and support
(1) (453) (381) (846) (147)
Cost of revenues
adjustments: Other 66 (10) (446)
Non-GAAP cost of
revenues $143,456 $147,324 $315,089 $316,665
===
GAAP gross profit $212,244 $177,325 $446,088 $412,880
Gross profit adjustments 13,849 12,274 26,694 27,406
Non-GAAP gross profit $226,093 $189,599 $472,782 $440,286
===
GAAP income (loss) from
operations $25,105 $(1,706) $77,211 $45,063
Gross profit adjustments 13,849 12,274 26,694 27,406
Research and development
(1) 8,682 4,530 17,386 9,906
Sales and marketing (1) 7,991 6,616 15,019 14,868
General and
administrative (1) 9,902 8,408 19,340 17,290
Acquisition-related
costs, net 1,680 2,051 2,847 4,652
Amortization of
intangible assets 11,821 13,824 24,370 27,666
Restructuring and other
charges, net 6,329 9,858 13,012 24,499
Other (1,410) 1,402 (1,218) 5,680
Non-GAAP income from
operations $83,949 $57,257 $194,661 $177,030
GAAP income (loss)
before income taxes $1,300 $(28,988) $19,737 $(13,107)
Gross profit adjustments 13,849 12,274 26,694 27,406
Research and development
(1) 8,682 4,530 17,386 9,906
Sales and marketing (1) 7,991 6,616 15,019 14,868
General and
administrative (1) 9,902 8,408 19,340 17,290
Acquisition-related
costs, net 1,680 2,051 2,847 4,652
Amortization of
intangible assets 11,821 13,824 24,370 27,666
Restructuring and other
charges, net 6,329 9,858 13,012 24,499
Non-cash interest
expense 12,574 12,388 25,318 24,686
Loss on extinguishment
of debt 3,656 910 18,656 910
Other (1,405) 1,683 (1,709) 6,379
Non-GAAP income before
income taxes $76,379 $43,554 $180,670 $145,155
Nuance Communications, Inc.
Supplemental Financial Information - GAAP to Non-GAAP Reconciliations, continued
(in thousands, except per share amounts)
Unaudited
Three Months Ended March 31, Six Months Ended March 31,
---
2020 2019 2020 2019
---
GAAP provision (benefit)
for income taxes $14,810 $(591) $(21,630) $1,409
Income tax effect of
Non-GAAP adjustments 10,147 28,556 30,819 54,376
Removal of valuation
allowance and other
items (999) (15,245) 40,503 (21,228)
Removal of discrete
items (7,253) (7,253) 1,253
Non-GAAP provision for
income taxes $16,705 $12,720 $42,439 $35,810
GAAP net (loss) income
from continuing
operations $(13,510) $(28,397) $41,367 $(14,516)
Acquisition-related
adjustment - revenues
(2) 212 339 301 692
Acquisition-related
costs, net 1,680 2,051 2,847 4,652
Cost of revenue from
amortization of
intangible assets 6,616 6,681 13,243 14,037
Amortization of
intangible assets 11,821 13,824 24,370 27,666
Restructuring and other
charges, net 6,329 9,858 13,012 24,499
Stock-based
compensation (1) 33,662 24,798 64,895 54,295
Non-cash interest
expense 12,574 12,388 25,318 24,686
Loss on extinguishment
of debt 3,656 910 18,656 910
Adjustment to income tax
expense (1,895) (13,311) (64,069) (34,401)
Other (1,471) 1,693 (1,709) 6,825
Non-GAAP net income $59,674 $30,834 $138,231 $109,345
===
Non-GAAP diluted net
income per share $0.21 $0.11 $0.48 $0.38
Diluted weighted average
common shares
outstanding 286,949 287,866 288,214 289,012
===
Nuance Communications, Inc.
Supplemental Financial Information - GAAP to Non-GAAP Reconciliations, continued
(in thousands)
Unaudited
Three Months Ended March 31, Six Months Ended March 31,
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2020 2019 2020 2019
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(1) Stock-based compensation
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Cost of hosting and
professional services $6,504 $4,731 $12,045 $11,688
Cost of product and
licensing 130 132 259 396
Cost of maintenance and
support 453 381 846 147
Research and development 8,682 4,530 17,386 9,906
Sales and marketing 7,991 6,616 15,019 14,868
General and administrative 9,902 8,408 19,340 17,290
Total $33,662 $24,798 $64,895 $54,295
(2) Acquisition-related revenue
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Acquisition-related
revenue adjustments $212 $339 $301 $692
Total $212 $339 $301 $692
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SOURCE Nuance Communications, Inc.
