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Nuance Announces Fiscal 2014 and Fourth Quarter Results

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Nuance Announces Fiscal 2014 and Fourth Quarter Results

Revenue, EPS and Bookings Exceed Guidance

Nuance Communications, Inc. (NUAN) today announced financial results for its fiscal 2014 and fourth quarter, ended September 30, 2014. 

In fiscal 2014, Nuance reported GAAP revenue of $1,923.5 million, up 3.7% from $1,855.3 million in fiscal 2013. In fiscal 2014, Nuance reported non-GAAP revenue of $1,987.1 million, which includes $63.6 million of revenue lost to accounting treatment in conjunction with acquisitions. Fiscal 2014 non-GAAP revenue grew 1.5% over non-GAAP revenue of $1,957.7 million in fiscal 2013. In fiscal 2014, Nuance reported bookings of $2,441.9 million, up 27.4% from $1,916.5 million in fiscal 2013.

In fiscal 2014, Nuance recognized GAAP net loss of $(150.3) million, or $(0.47) per share, compared to GAAP net loss of $(115.2) million, or $(0.37) per share, in fiscal 2013. In fiscal 2014, Nuance reported non-GAAP net income of $360.1 million, or $1.12 per diluted share, compared to $428.0 million, or $1.33 per diluted share, in fiscal 2013. Nuances fiscal 2014 non-GAAP operating margin was 23.7%, compared to 27.9% in fiscal 2013. Nuance reported cash flow from operations of $358.1 million, compared to $395.0 million in fiscal 2013. Nuance ended fiscal 2014 with total deferred revenue of $548.1 million, up 32.2% compared to $414.6 million a year ago. Nuance ended fiscal 2014 with $588.2 million in cash, cash equivalents and marketable securities.

In the fourth quarter of fiscal 2014, Nuance reported GAAP revenue of $502.3 million, up 6.4% from $472.2 million in the fourth quarter of fiscal 2013. Nuance reported non-GAAP revenue of $520.3 million, which includes $18.0 million of revenue lost to accounting treatment in conjunction with acquisitions, compared to $490.4 million in the fourth quarter of fiscal 2013. In the fourth quarter of fiscal 2014, Nuance reported bookings of $619.6 million, up 24.5% from $497.7 million in the fourth quarter of fiscal 2013.

In the fourth quarter of fiscal 2014, Nuance recognized GAAP net loss of $(1.5) million, or $(0.00) per share, compared to GAAP net loss of $(32.3) million, or $(0.10) per share, in the fourth quarter of fiscal 2013. In the fourth quarter of fiscal 2014, Nuance reported non-GAAP net income of $107.6 million, or $0.33 per diluted share, up from non-GAAP net income of $95.2 million, or $0.30 per diluted share, in the fourth quarter of fiscal 2013. Nuances fourth quarter fiscal 2014 non-GAAP operating margin was 25.9%, up from 25.3% in the fourth quarter of fiscal 2013. Nuance reported cash flow from operations of $95.9 million in the fourth quarter of fiscal 2014, up 2.6% from $93.5 million in the fourth quarter of fiscal 2013.

Fourth Quarter and Fiscal Year Highlights

  • Bookings FY 14 bookings were $2,441.9 million, up 27.4% from $1,916.5 million in FY 13. FY 14 bookings exceeded our updated guidance range of $2.35 billion to $2.40 billion.
  • Revenue Q4 14 non-GAAP revenue was $520.3 million, up 6.1% from $490.4 million a year ago.
  • EPS Q4 14 non-GAAP EPS was $0.33 per diluted share, up from $0.30 per diluted share a year ago.
  • Recurring revenue Recurring revenue increased from 52% of total non-GAAP revenue in FY 12 to 58% in FY 13 and to 64% in FY 14. Perpetual licenses decreased from 38% of total non-GAAP revenue in FY 12 to 32% in FY 13 and to 26% in FY 14.
  • Deferred revenue Nuance ended FY 14 with total deferred revenue of $548.1 million, up 32% compared to $414.6 million at the end of FY 13.
  • Operating cash flow FY 14 operating cash flow equaled 99% of non-GAAP net income, up from 92% in FY 13 and ahead of our target of 95%.

“We delivered a strong finish to fiscal 2014, with revenue, EPS and bookings above our guidance ranges. In fiscal 2014, recurring revenues represented 64% of total revenue, up 6 percentage points from last year, as we continue to transition our revenue model toward more stable, predictable recurring revenue streams. The positive deferred revenue and cash flow characteristics of our recurring revenue streams also continue to benefit the business. Fiscal 2014 bookings and execution in strategic markets position us well for a return to growth in fiscal 2015,” said Tom Beaudoin, Nuance CFO. 

Highlights from the quarter include:

  • Healthcare For Nuances healthcare solutions, fourth quarter fiscal 2014 non-GAAP revenue was $238.3 million and FY 14 non-GAAP revenue was $942.7 million. Key customers in the quarter included Avera Health, BayCare, Cambridge Trusts, Cleveland Clinic, Froedtert, Group Memorial Health, Inova, Intermountain, Lahey, Providence, Scottsdale Health, and University of Colorado.
  • Mobile & Consumer For Nuances mobile and consumer solutions, fourth quarter fiscal 2014 non-GAAP revenue was $116.9 million and FY 14 non-GAAP revenue was $451.0 million. Key customers and OEM design wins in the quarter included Acer, AMD, AT&T, BMW, Bosch, Continental, Daimler, Fiat/Chrysler, Great Wall Motors, Harman Becker, Hisense (HISEF), Honda, Mahindra, Melco, Motorola, Orange, Panasonic, Parrott, Rogers, Samsung, Scania, Shoretel, TCL, Telefonica, Volvo, and Yanfeng Visteon.
  • Enterprise For Nuances enterprise solutions, fourth quarter fiscal 2014 non-GAAP revenue was $95.6 million and FY 14 non-GAAP revenue was $357.1 million. Key customers in the quarter included American Airlines, Australia Department of Human Services, Banco Santander, Bank of America, Barclays, Citigroup, Delta Airlines, Delta Dental, Health Care Service Corporation, Jubilant FoodWorks (Dominos India), Public Service Enterprise Group, Talk Talk, Telstra, UnitedHealth Group, Wellpoint, and Wells Fargo Bank.
  • Imaging For Nuances document imaging solutions, fourth quarter fiscal 2014 non-GAAP revenue was $69.5 million and FY 14 non-GAAP revenue was $236.3 million. Key customers in the quarter included ABN Amro, Ashurst, Balabit, Barclays, Brother, Citigroup, CSC, Ernst & Young, HP, Laing Rourke, Neat, NOV, UPS and Visma.