Nuance Announces Third Quarter 2016 Results

Achieves Strong Cash Flows, Operating Margins, and EPS Amid Continuing Transition to Recurring Revenue Models

Nuance Communications, Inc. (NASDAQ: NUAN) today announced financial results for its third quarter fiscal 2016, ended June 30, 2016.

In the third quarter of fiscal 2016, Nuance reported GAAP revenue of $477.9 million, compared to $477.9 million a year ago. Nuance reported non-GAAP revenue of $484.9 million, which includes $7.0 million of revenue excluded from GAAP revenue due to accounting treatment in conjunction with acquisitions, as compared to $488.7 million in the third quarter of fiscal 2015. In the third quarter of 2016, recurring revenue was 71% of total revenue, compared to 68% a year ago, on both a GAAP and non-GAAP basis. In the third quarter of fiscal 2016, Nuance reported net new bookings of $362.9 million. This includes an expected decline from $484.4 million recorded in the third quarter of fiscal 2015 as the prior-year period included a significant automotive booking that caused bookings in that quarter to be unusually high.

In the third quarter of fiscal 2016, Nuance recognized GAAP net loss of $(11.8) million, or $(0.04) per share, compared to GAAP net loss of $(39.4) million, or $(0.13) per share, in the third quarter of fiscal 2015. Nuance reported non-GAAP net income of $107.8 million, or $0.38 per diluted share, up from non-GAAP net income of $101.1 million, or $0.32 per diluted share, in the third quarter of fiscal 2015. Nuance’s third quarter fiscal 2016 GAAP operating margin was 6.0%, up from 3.0% in the third quarter of fiscal 2015. Nuance’s third quarter fiscal 2016 non-GAAP operating margin was 27.2%, up from 26.4% in the third quarter of fiscal 2015. Nuance reported cash flow from operations of $125.9 million in the third quarter of fiscal 2016, up slightly from $120.3 million in the third quarter of fiscal 2015.

“Overall, we have delivered a solid performance in our third quarter and year-to-date 2016, particularly in our Enterprise segment and automotive business,” said Daniel Tempesta, Nuance CFO. “Balancing our continued initiatives to reduce costs and improve productivity with investments in our products and growth markets, we believe we are positioning the company for renewed growth and profitability.”