Nuance Announces Third Quarter Fiscal 2015 Results

Achieves Revenue and EPS above Non-GAAP Guidance Ranges; Delivers 24% Growth in Operating Cash Flow 

Nuance Communications, Inc. (NUAN) today announced financial results for its third quarter fiscal 2015, ended June 30, 2015.

In the third quarter of fiscal 2015, Nuance reported GAAP revenue of $477.9 million, compared to $475.5 million in the third quarter of fiscal 2014. Nuance reported non-GAAP revenue of $488.7 million, which includes $10.8 million of revenue lost due to accounting treatment in conjunction with acquisitions, compared to $486.8 million in the third quarter of fiscal 2014. Q3 15 revenue was negatively affected by currency fluctuations. If Q3 14 currency rates were applied to Nuances Q3 15 revenue, Q3 15 revenue would have been approximately $17 million higher. In Q3 15, total recurring revenue was $330.4 million and represented 68% of total non-GAAP revenue, compared to $314.3 million and 65% in Q3 14.

In the third quarter of fiscal 2015, Nuance recognized GAAP net loss of $(39.4) million, or $(0.13) per share, compared to GAAP net loss of $(54.2) million, or $(0.17) per share, in the third quarter of fiscal 2014. In the third quarter of fiscal 2015, Nuance reported non-GAAP net income of $101.1 million, or $0.32 per diluted share, up from non-GAAP net income of $87.6 million, or $0.27 per diluted share, in the third quarter of fiscal 2014. Nuances third quarter fiscal 2015 non-GAAP operating margin was 26.4%, up from 23.5% in the third quarter of fiscal 2014. Nuance reported cash flow from operations of $120.3 million in the third quarter of fiscal 2015, up 24% from $97.0 million in the third quarter of fiscal 2014. Nuance ended the third quarter of fiscal 2015 with $647.6 million in total deferred revenue, up 24% from $523.4 million at the end of the third quarter of fiscal 2014. In the third quarter of fiscal 2015, Nuance reported net new bookings of $484.4 million, compared to $330.4 million in the third quarter of fiscal 2014. Through the first three quarters of fiscal 2015, Nuance reported total net new bookings of $1,092.9 million, up 2% from $1,071.7 million in the first three quarters of fiscal 2014. Nuance ended the third quarter of fiscal 2015 with $488.7 million in cash, cash equivalents and marketable securities.

In our third quarter, Nuance delivered revenue and EPS that exceeded our non-GAAP guidance ranges, and net new bookings that have us on track to our full fiscal year guidance, said Dan Tempesta, Nuance CFO. Last quarter, we announced a formal transformation program with a goal of delivering $125 million in annualized expense reductions by the end of fiscal 2016. Actions taken to date under that program are expected to deliver $50 million in annualized expense reductions and contributed to improved third quarter EPS, operating margin and operating cash flow.