Nuance Announces Fourth Quarter and Fiscal Year 2020 Results
BURLINGTON, Mass., Nov. 18, 2020 /PRNewswire/ -- Nuance Communications, Inc. (NASDAQ: NUAN) today announced financial results for its fourth quarter and fiscal year ended September 30, 2020:
-- GAAP revenue of $352.9 million and GAAP earnings per diluted share of
$(0.08).
-- Non-GAAP revenue of $352.9 million and non-GAAP earnings per diluted
share of $0.18.
"We are very pleased with the strong end to our fiscal year, as we delivered revenue and EPS at the high end of our guidance range," said Mark Benjamin, Chief Executive Officer at Nuance. "We continued to execute on our strategic initiatives, accelerating our cloud transition in Healthcare and focusing on our AI-first approach in Enterprise. In Healthcare, we drove solid growth in our cloud offerings, ending the year at $386 million in cloud-based ARR, up 29% for the full year. In particular, we benefited from strong performance in Dragon Medical Cloud, which grew 38% compared to 2019, as well as growth in our PowerScribe One and CDE One offerings, as we continue to transition our customer base to the cloud. Enterprise revenue increased 4% compared to 2019, marking our fifth consecutive year of organic growth. This growth was driven by strength in our Intelligent Engagement offerings."
Mr. Benjamin concluded, "In a separate release today, as part of our ongoing effort to align our portfolio with key strategic growth areas, we announced the planned sale of our medical transcription and electronic health record (EHR) Go-Live services to Assured Healthcare Partners and Aeries Technology Group. With this sale, we will reach an important milestone in our journey towards a more focused strategy of advancing our Conversational AI, natural language understanding and ambient clinical intelligence solutions. This crucial step in our portfolio rationalization efforts places Nuance in a strong position to achieve levels of organic growth not seen in many years, and I look forward to continuing on this path in the quarters to come."
Q4 2020 Performance Summary
Q4 2020 results for continuing operations include:
-- Revenue of $352.9 million, compared to $387.6 million in the same period
last year.
-- Non-GAAP revenue of $352.9 million, compared to $387.8 million in the
same period last year.
-- GAAP operating income of $12.9 million, compared to $30.8 million in the
same period last year.
-- Non-GAAP operating income of $76.3 million, compared to $94.1 million in
the same period last year.
-- GAAP operating margin of 3.7%, compared to 7.9% in the same period last
year.
-- Non-GAAP operating margin of 21.6%, compared to 24.3% in the same period
last year.
-- GAAP net loss of $22.8 million, compared to a net income of $3.0 million
in the same period last year.
-- Non-GAAP net income of $54.2 million, compared to $65.9 million in the
same period last year.
-- GAAP EPS of $(0.08), compared to $0.01 in the same period last year.
-- Non-GAAP EPS of $0.18, compared to $0.23 in the same period last year.
-- Operating cash flows from continuing operations was $80.9 million,
compared to $79.3 million in the same period last year.
Capital Allocation
We remain committed to our balanced capital allocation approach. While we did not engage in any share buyback or debt retirement activity during the fourth quarter, during the fiscal year we repurchased $169 million of common stock and retired $470 million of debt principal value, all of which took place in the first half of the year. We remain confident in the strength of our balance sheet and our solid liquidity position, ending the quarter with a cash and marketable securities balance of $372 million, slightly above our target minimum cash balance range.
For a complete discussion of Nuance's results and business outlook, including our updated guidance, please see the Company's Prepared Remarks document available at http://www.nuance.com/earnings-results/. We will also be providing an update to our mid-term outlook on our earnings call today (details below).
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 by dialing 1-888-317-6003 (US and Canada) or 1-412-317-6061 (international) and referencing code 5887867.
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 a technology pioneer with market leadership in conversational AI and ambient intelligence. A full-service partner trusted by 90 percent of US hospitals and 85 percent of the Fortune 100 companies worldwide, Nuance creates intuitive solutions that amplify people's ability to help others.
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; our ability to control and successfully manage our expenses and cash position; cybersecurity and data privacy incidents or breaches, and related remediation and investigation; 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; 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 September 30, 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.
Restructuring and other costs, net.
Restructuring and other charges, net include restructuring expenses as well as other charges that are unusual in nature, are the result of unplanned events, and arise outside the ordinary course of our business. Restructuring expenses consist of employee severance costs, charges for the closure of excess facilities and other contract termination costs. Other charges include litigation contingency reserves, costs related to the transition agreement of our former CEO, asset impairment charges, expenses associated with the malware incident that occurred in the third quarter of fiscal year 2017 (the "2017 Malware Incident") and gains or losses on the sale or disposition of certain non-strategic assets or product lines.
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 Operating Income
Our non-GAAP operating income includes acquisition-related revenue adjustments but excludes non-GAAP expenses such as stock compensation, amortization of intangible assets, restructuring and other costs, net, acquisition-related costs, net, and certain other expenses that result from unplanned events outside the ordinary course of continuing operations.
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
Michael Maguire
Nuance Communications, Inc.
Tel: 781-565-4855
Email: michael.maguire@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 Twelve Months Ended
September 30, September 30,
2020 2019 2020 2019
Revenues:
Hosting and professional
services $234,749 $235,539 $926,044 $913,643
Product and licensing 52,626 86,394 296,127 338,693
Maintenance and support 65,556 65,642 256,728 268,935
Total revenues 352,931 387,575 1,478,899 1,521,271
Cost of revenues:
Hosting and professional
services 129,362 142,160 518,145 551,419
Product and licensing 7,829 10,809 61,995 71,280
Maintenance and support 7,952 8,556 30,989 33,369
Amortization of intangible
assets 8,132 6,810 27,810 27,416
Total cost of revenues 153,275 168,335 638,939 683,484
Gross profit 199,656 219,240 839,960 837,787
Operating expenses:
Research and development 56,535 52,935 226,234 192,633
Sales and marketing 71,477 73,647 273,324 274,031
General and administrative 41,998 43,481 156,353 172,638
Amortization of intangible
assets 14,682 13,176 50,897 54,206
Acquisition-related costs,
net (721) 2,525 2,884 7,965
Restructuring and other
charges, net 2,748 2,701 17,680 29,147
Total operating expenses 186,719 188,465 727,372 730,620
Income from operations 12,937 30,775 112,588 107,167
Other expenses, net (22,646) (27,794) (102,558) (107,260)
(Loss) income before income
taxes (9,709) 2,981 10,030 (93)
Provision (benefit) for
income taxes 13,042 (24) (18,752) 12,105
Net (loss) income from
continuing operations (22,751) 3,005 28,782 (12,198)
Net (loss) income from
discontinued operations (1,194) 105,124 (7,386) 226,008
Net (loss) income $(23,945) $108,129 $21,396 $213,810
Net (loss) income per common
share -basic:
Continuing operations $(0.08) $0.01 $0.10 $(0.04)
Discontinued operations 0.37 (0.02) 0.79
Total net (loss) income per
basic common share $(0.08) $0.38 $0.08 $0.75
Net (loss) income per common
share -diluted:
Continuing operations $(0.08) $0.01 $0.10 $(0.04)
Discontinued operations 0.36 (0.03) 0.79
Total net (loss) income per
diluted common share $(0.08) $0.37 $0.07 $0.75
Weighted average common
shares outstanding:
Basic 282,556 285,754 282,644 286,347
Diluted 282,556 291,598 291,994 286,347
Nuance Communications, Inc.
Condensed Consolidated Balance Sheets
(in thousands)
September 30, 2020
September 30, 2019
---
Unaudited
ASSETS
Current assets:
Cash and cash equivalents $301,233 $560,961
Marketable securities 71,114 186,555
Accounts receivable, net 200,576 240,673
Prepaid expenses and other current assets 163,062 175,166
Current assets of discontinued operations 91,858
Total current assets 735,985 1,255,213
Marketable securities - 17,287
Land, building and equipment, net 143,428 121,203
Goodwill 2,133,712 2,127,896
Intangible assets, net 213,484 291,371
Right-of-use assets 110,276 -
Other assets 256,447 316,215
Long-term assets of discontinued operations - 1,236,608
Total assets $3,593,332 $5,365,793
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $432,209 $1,142,870
Contingent and deferred acquisition payments 4,224 17,470
Accounts payable 75,122 90,826
Accrued expenses and other current liabilities 213,264 249,570
Deferred revenue 261,323 214,223
Current liabilities of discontinued operations 130,117
Total current liabilities 986,142 1,845,076
Long-term debt 1,104,464 793,536
Deferred revenue, net of current portion 104,309 133,783
Deferred tax liability 70,116 54,216
Operating lease liabilities 107,621 -
Other liabilities 76,747 79,378
Long-term liabilities of discontinued operations - 286,654
---
Total liabilities 2,449,399 3,192,643
Stockholders' equity 1,143,933 2,173,150
Total liabilities and stockholders' equity $3,593,332 $5,365,793
Nuance Communications, Inc.
Consolidated Statements of Cash Flows
(in thousands)
Unaudited
Three Months Ended
Twelve Months Ended
September 30, September 30,
2020 2019 2020 2019
Cash flows from operating activities:
Net (loss) income from
continuing operations $(22,751) $3,005 $28,782 $(12,198)
Adjustments to reconcile net (loss) income to net cash
provided by operating activities:
Depreciation 9,782 10,300 37,772 47,417
Amortization 22,814 19,986 78,707 81,622
Stock-based
compensation 35,264 34,779 133,294 119,255
Non-cash interest
expense 12,171 12,477 49,440 49,488
Deferred tax provision
(benefit) 15,689 (7,311) (39,937) (12,437)
Loss on extinguishment
of debt 18,656 910
Other (169) 5,113 2,736 4,462
Changes in operating assets and liabilities, excluding
effects of acquisitions:
Accounts receivable 15,811 (8,952) 42,075 3,366
Prepaid expenses and
other assets (12,289) (6,303) (7,259) (21,063)
Accounts payable 7,695 3,853 (8,173) 12,122
Accrued expenses and
other liabilities 686 24,568 (84,076) 27,415
Deferred revenue (3,852) (12,221) 15,854 4,227
Net cash provided by
operating activities
-continuing 80,851 79,294 267,871 304,586
operations
Net cash provided by
(used in) operating
activities - 24,869 (13,307) 96,771
discontinued operations
Net cash provided by
operating activities 80,851 104,163 254,564 401,357
Cash flows from investing activities:
Capital expenditures (15,747) (11,942) (61,297) (44,185)
Proceeds from
disposition of a
business, net of 150 150 407,043
transaction fees
Purchases of
marketable securities
and other (22,029) (92,793) (180,005) (349,125)
investments
Proceeds from sales
and maturities of
marketable 23,150 40,257 313,734 303,171
securities and other investments
Payments for business
and asset
acquisitions, net of (1,000) (17,771) (1,000) (20,873)
cash acquired
Other (227) 1,147
Net cash (used in)
provided by investing
activities (15,703) (82,249) 72,729 296,031
Cash flows from financing activities:
Repurchase and
redemption of debt (513,642) (300,000)
Net distribution from
Cerence upon the
spin-off 139,090
Payments for
repurchase of common
stock (6,003) (169,217) (126,938)
Proceeds from issuance
of common stock from 7,636 7,954 14,840 16,597
employee stock plans
Proceeds from the
revolving credit
facility 230,000
Repayment of the
revolving credit
facility (230,000)
Payments for taxes
related to net share
settlement of (14,088) (6,866) (54,056) (49,428)
equity awards
Proceeds from sale of
noncontrolling
interests in a 9,863 9,863
subsidiary
Other financing
activities (381) (689) (3,222) (2,131)
Net cash (used in)
provided by financing
activities (6,833) 4,259 (586,207) (452,037)
Effects of exchange
rate changes on cash
and cash 2,363 (1,589) (814) (353)
equivalents
Net increase
(decrease) in cash
and cash equivalents 60,678 24,584 (259,728) 244,998
Cash and cash
equivalents at
beginning of period 240,555 536,377 560,961 315,963
Cash and cash
equivalents at end of
period $301,233 $560,961 $301,233 $560,961
Nuance Communications, Inc.
Supplemental Financial Information
GAAP to Non-GAAP Reconciliations
(in thousands)
Unaudited
Three Months Ended
Twelve Months Ended
September 30, September 30,
2020 2019 2020 2019
GAAP revenues $352,931 $387,575 $1,478,899 $1,521,271
Acquisition-related revenue
adjustments: hosting and 134 301 531
professional services
Acquisition-related revenue
adjustments: product and 2 660
licensing
Acquisition-related revenue
adjustments: maintenance 83 345
and support
Non-GAAP revenues $352,931 $387,794 $1,479,200 $1,522,807
GAAP cost of revenues $153,275 $168,335 $638,939 $683,484
Cost of revenues from
amortization of intangible (8,132) (6,810) (27,810) (27,416)
assets
Cost of revenues adjustments:
hosting and (6,637) (8,001) (24,887) (26,647)
professional services (1)
Cost of revenues adjustments:
product and licensing (127) (262) (510) (855)
(1)
Cost of revenues adjustments:
maintenance and (457) (584) (1,663) (1,314)
support (1)
Cost of revenues adjustments:
other 96 (1) (378)
Non-GAAP cost of revenues $137,922 $152,774 $584,068 $626,874
GAAP gross profit $199,656 $219,240 $839,960 $837,787
Gross profit adjustments 15,353 15,780 55,172 58,146
Non-GAAP gross profit $215,009 $235,020 $895,132 $895,933
GAAP income from operations $12,937 $30,775 $112,588 $107,167
Gross profit adjustments 15,353 15,780 55,172 58,146
Research and development (1) 8,796 6,940 34,902 22,508
Sales and marketing (1) 9,018 8,751 32,040 30,394
General and administrative (1) 10,229 10,241 39,292 37,537
Acquisition-related costs, net (721) 2,525 2,884 7,965
Amortization of intangible
assets 14,682 13,176 50,897 54,206
Restructuring and other charges,
net 2,748 2,701 17,680 29,147
Other 3,291 3,243 3,939 15,883
Non-GAAP income from operations $76,333 $94,132 $349,394 $362,953
GAAP (loss) income before income
taxes $(9,709) $2,981 $10,030 $(93)
Gross profit adjustments 15,353 15,780 55,172 58,146
Research and development (1) 8,796 6,940 34,902 22,508
Sales and marketing (1) 9,018 8,751 32,040 30,394
General and administrative (1) 10,229 10,241 39,292 37,537
Acquisition-related costs, net (721) 2,525 2,884 7,965
Amortization of intangible
assets 14,682 13,176 50,897 54,206
Restructuring and other charges,
net 2,748 2,701 17,680 29,147
Non-cash interest expense 12,171 12,477 49,440 49,488
Loss on extinguishment of debt 18,656 910
Other 3,186 7,860 1,949 19,156
Non-GAAP income before income
taxes $65,753 $83,432 $312,942 $309,364
Nuance Communications, Inc.
Supplemental Financial Information
GAAP to Non-GAAP Reconciliations, continued
(in thousands, except per share amounts)
Unaudited
Three Months Ended Twelve Months Ended
September 30, September 30,
2020 2019 2020 2019
GAAP provision (benefit) for
income taxes $13,042 $(24) $(18,752) $12,105
Income tax effect of non-GAAP
adjustments 13,262 190,352 58,752 263,334
Removal of valuation allowance
and other items (9,865) (193,925) 26,851 (220,532)
Removal of discrete items (4,844) 21,091 2,718 22,002
Non-GAAP provision for income
taxes $11,595 $17,494 $69,569 $76,909
GAAP net (loss) income from
continuing operations $(22,751) $3,005 $28,782 $(12,198)
Acquisition-related adjustment
- revenues (2) 219 301 1,536
Acquisition-related costs, net (721) 2,525 2,884 7,965
Cost of revenue from
amortization of intangible
assets 8,132 6,810 27,810 27,416
Amortization of intangible
assets 14,682 13,176 50,897 54,206
Restructuring and other charges,
net 2,748 2,701 17,680 29,147
Stock-based compensation (1) 35,264 34,779 133,294 119,255
Non-cash interest expense 12,171 12,477 49,440 49,488
Loss on extinguishment of debt 18,656 910
Adjustment to income tax expense 1,447 (17,518) (88,321) (64,804)
Other 3,186 7,764 1,950 19,534
Non-GAAP net income $54,158 $65,938 $243,373 $232,455
Non-GAAP diluted net income per
share $0.18 $0.23 $0.83 $0.80
Diluted weighted average common
shares 303,689 291,598 291,994 290,125
outstanding
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,
2020 2019 2020 2019
(1) Stock-based compensation
---
Cost of hosting and
professional
services $6,637 $8,001 $24,887 $26,647
Cost of product and
licensing 127 262 510 855
Cost of maintenance
and support 457 584 1,663 1,314
Research and
development 8,796 6,940 34,902 22,508
Sales and marketing 9,018 8,751 32,040 30,394
General and
administrative 10,229 10,241 39,292 37,537
Total $35,264 $34,779 $133,294 $119,255
(2) Acquisition-related revenue
---
Acquisition-related
revenue adjustments
$ - $219 $301 $1,536
Total
$ - $219 $301 $1,536
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SOURCE Nuance Communications, Inc.
