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Nuance Announces Fourth Quarter and Fiscal Year 2020 Results
- Delivered Revenue and EPS at high end of guidance range
- Continued strength in Dragon Medical One and emerging cloud-based Healthcare offerings
- Announced divestiture of medical transcription and EHR Go-Live services
- Provided FY'21 guidance and updating mid-term outlook

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
September 30,


Twelve Months Ended
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
September 30,


Twelve Months Ended
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
operations

80,851


79,294


267,871


304,586


Net cash provided by (used in) operating activities -
discontinued operations


24,869


(13,307)


96,771


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
transaction fees

150



150


407,043


Purchases of marketable securities and other
investments

(22,029)


(92,793)


(180,005)


(349,125)


Proceeds from sales and maturities of marketable
securities and other investments

23,150


40,257


313,734


303,171


Payments for business and asset acquisitions, net of
cash acquired

(1,000)


(17,771)


(1,000)


(20,873)


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
employee stock plans

7,636


7,954


14,840


16,597


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
equity awards

(14,088)


(6,866)


(54,056)


(49,428)


Proceeds from sale of noncontrolling interests in a
subsidiary


9,863



9,863


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
equivalents

2,363


(1,589)


(814)


(353)


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
September 30,


Twelve Months Ended
September 30,



2020


2019


2020


2019

GAAP revenues


$      352,931


$       387,575


$    1,478,899


$     1,521,271

Acquisition-related revenue adjustments: hosting and
professional services



134


301


531

Acquisition-related revenue adjustments: product and
licensing



2



660

Acquisition-related revenue adjustments: maintenance
and support



83



345

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
assets


(8,132)


(6,810)


(27,810)


(27,416)

Cost of revenues adjustments: hosting and
professional services (1)


(6,637)


(8,001)


(24,887)


(26,647)

Cost of revenues adjustments: product and licensing
(1)


(127)


(262)


(510)


(855)

Cost of revenues adjustments: maintenance and
support (1)


(457)


(584)


(1,663)


(1,314)

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
September 30,


Twelve Months Ended
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
outstanding


303,689


291,598


291,994


290,125

 

Nuance Communications, Inc.

Supplemental Financial Information - GAAP to Non-GAAP Reconciliations, continued

(in thousands)

Unaudited











Three Months Ended
September 30,


Twelve Months Ended
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


 

Nuance Communications, Inc. logo (PRNewsfoto/Nuance Communications, Inc.)

 

SOURCE Nuance Communications, Inc.

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