Cerence Inc. Files 10-Q for Period Ending March 31, 2024

TL;DR

<b>Cerence Inc. filed its Q2 2024 10-Q, detailing financial performance and operational updates.</b>

AI Summary

Cerence Inc. (CRNC) filed a Quarterly Report (10-Q) with the SEC on May 10, 2024. Cerence Inc. filed a 10-Q report for the period ending March 31, 2024. The filing covers the second quarter of fiscal year 2024. Key financial data and operational details are provided for the reporting period. The report includes information on revenue, expenses, and balance sheet items. Disclosures regarding risks, legal matters, and executive compensation are also present.

Why It Matters

For investors and stakeholders tracking Cerence Inc., this filing contains several important signals. Investors can assess Cerence's financial health and operational performance in Q2 2024 through this filing. The 10-Q provides crucial information for understanding the company's current financial position and future outlook.

Risk Assessment

Risk Level: medium — Cerence Inc. shows moderate risk based on this filing. The company's financial performance and future prospects are subject to various risks detailed in the filing, including market conditions and operational challenges.

Analyst Insight

Review the detailed financial statements and risk factors in the 10-Q to understand Cerence's current financial health and potential challenges.

Key Numbers

• 2024-03-31 — Period End Date (The end date of the reporting period for the 10-Q filing.)
• 2024-05-10 — Filing Date (The date the 10-Q report was filed with the SEC.)
• Q2 2024 — Fiscal Quarter (The fiscal quarter to which this 10-Q filing pertains.)

Key Players & Entities

• Cerence Inc. (company) — Filer of the 10-Q report
• 2024-03-31 (date) — Period of report for the 10-Q filing
• 2024-05-10 (date) — Filing date of the 10-Q report
• 0000950170-24-057667 (other) — Accession number for the filing
• 25 MALL ROAD, SUITE 416 (address) — Business and mailing address of Cerence Inc.
• BURLINGTON (location) — City of Cerence Inc.'s business and mailing address
• MA (location) — State of Cerence Inc.'s business and mailing address
• 01803 (postal_code) — ZIP code of Cerence Inc.'s business and mailing address

FAQ

Industry Context

Cerence Inc. operates in the software industry, specifically focusing on AI-powered solutions for the automotive sector.

Regulatory Implications

The filing adheres to SEC regulations for quarterly reports (10-Q) under the Securities Exchange Act of 1934.

What Investors Should Do

1. Analyze the financial statements within the 10-Q for revenue, net income, and balance sheet changes.
2. Review the risk factors section to understand potential challenges and uncertainties facing Cerence Inc.
3. Examine any disclosures related to executive compensation or significant corporate events.

Key Dates

• 2024-03-31: Quarterly Period End — Marks the end of the reporting period for the 10-Q.
• 2024-05-10: Filing Date — The date the 10-Q was officially submitted to the SEC.

Year-Over-Year Comparison

This is the 10-Q filing for the period ending March 31, 2024, providing updated financial information compared to previous filings.

Key Financial Figures

• $0.01 — ch registered Common Stock, par value $0.01 per share CRNC The Nasdaq Global Se

Filing Documents

• crnc-20240331.htm (10-Q) — 2805KB
• crnc-ex10_1.htm (EX-10.1) — 47KB
• crnc-ex10_2.htm (EX-10.2) — 117KB
• crnc-ex10_4.htm (EX-10.4) — 129KB
• crnc-ex31_1.htm (EX-31.1) — 16KB
• crnc-ex31_2.htm (EX-31.2) — 16KB
• crnc-ex32_1.htm (EX-32.1) — 9KB
• crnc-ex32_2.htm (EX-32.2) — 9KB
• img168347712_0.jpg (GRAPHIC) — 5KB
• img168347712_1.jpg (GRAPHIC) — 7KB
• 0000950170-24-057667.txt (&nbsp;) — 12266KB
• crnc-20240331.xsd (EX-101.SCH) — 1593KB
• crnc-20240331_htm.xml (XML) — 2384KB

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations 27 Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Quantitative and Qualitative Disclosures About Market Risk 44 Item 4.

Controls and Procedures

Controls and Procedures 45 PART II. OTHER INFORMATION 46 Item 1.

Legal Proceedings

Legal Proceedings 46 Item 1A.

Risk Factors

Risk Factors 47 Item 5 Other Information 47 Item 6. Exhibits 48

Signatures

Signatures 49 i CAUTIONARY STATEMENT CONCERNIN G FORWARD-LOOKING STATEMENTS This Quarterly Report on Form 10-Q ("Form 10-Q"), filed by Cerence Inc. together with its consolidated subsidiaries, "Cerence," the "Company," "we," "us" or "our" unless the context indicates otherwise, contains "forward-looking statements" that involve risks and uncertainties. These statements can be identified by the fact that they do not relate strictly to historical or current facts, but rather are based on current expectations, estimates, assumptions, plans and projections about our business, operations, industry, financial results, financial condition, strategy, goals or prospects. Forward-looking statements often include words such as "anticipates," "estimates," "expects," "projects," "forecasts," "intends," "plans," "continues," "believes," "may," "will," "goals," "objectives" and words and terms of similar substance in connection with discussions of our business and future operating or financial performance. As with any projection or forecast, forward-looking statements are inherently susceptible to uncertainty and changes in circumstances. Our actual results may vary materially from those expressed or implied in our forward-looking statements. Accordingly, undue reliance should not be placed on any forward-looking statement made by us or on our behalf. Although we believe that the forward-looking statements contained in this Form 10-Q are based on reasonable assumptions as of the date of this report, you should be aware that many factors could affect our actual financial results or results of operations and could cause actual results to differ materially from those in such forward-looking statements, including but not limited to: the highly competitive and rapidly changing market in which we operate; adverse conditions in the automotive industry or the global economy more generally, including the continuation of the semiconductor shortage being experienced by the automo

—FINANCI AL INFORMATION

PART I—FINANCI AL INFORMATION

Condensed Consolidated Financi al Statements

Item 1. Condensed Consolidated Financi al Statements. CERENCE INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share data) (unaudited) Three Months Ended March 31, Six Months Ended March 31, 2024 2023 2024 2023 Revenues: License $ 35,527 $ 30,800 $ 56,350 $ 76,217 Connected services 13,597 18,926 110,417 37,320 Professional services 18,701 18,667 39,393 38,514 Total revenues 67,825 68,393 206,160 152,051 Cost of revenues: License 1,404 2,209 3,008 3,823 Connected services 5,359 6,114 12,662 12,656 Professional services 14,119 16,587 31,444 34,511 Amortization of intangible assets — 104 103 207 Total cost of revenues 20,882 25,014 47,217 51,197 Gross profit 46,943 43,379 158,943 100,854 Operating expenses: Research and development 31,846 28,494 65,152 57,988 Sales and marketing 5,619 8,217 11,690 17,379 General and administrative 16,659 19,177 29,452 33,434 Amortization of intangible assets 555 2,394 1,100 4,744 Restructuring and other costs, net 4,551 5,714 5,256 9,903 Goodwill impairment 252,096 — 252,096 — Total operating expenses 311,326 63,996 364,746 123,448 Loss from operations ( 264,383 ) ( 20,617 ) ( 205,803 ) ( 22,594 ) Interest income 1,190 1,163 2,622 2,033 Interest expense ( 3,111 ) ( 4,003 ) ( 6,347 ) ( 7,517 ) Other (expense) income, net ( 25 ) 1,074 1,397 4,787 Loss before income taxes ( 266,329 ) ( 22,383 ) ( 208,131 ) ( 23,291 ) Provision for income taxes 11,647 3,706 45,988 4,956 Net loss $ ( 277,976 ) $ ( 26,089 ) $ ( 254,119 ) $ ( 28,247 ) Net loss per share: Basic $ ( 6.66 ) $ ( 0.65 ) $ ( 6.13 ) $ ( 0.70 ) Diluted $ ( 6.66 ) $ ( 0.65 ) $ ( 6.13 ) $ ( 0.7

Business

Business Cerence Inc. (referred to in this Quarterly Report on Form 10-Q as "we," "our," "us," "ourselves," the "Company" or "Cerence") is a global, premier provider of AI-powered assistants and innovations for connected and autonomous vehicles. Our customers include all major automobile original equipment manufacturers ("OEMs"), or their tier 1 suppliers worldwide. We deliver our solutions on a white-label basis, enabling our customers to deliver customized virtual assistants with unique, branded personalities and ultimately strengthening the bond between automobile brands and end users. We generate revenue primarily by selling software licenses and cloud-connected services. In addition, we generate professional services revenue from our work with OEMs and suppliers during the design, development and deployment phases of the vehicle model lifecycle and through maintenance and enhancement projects. Note 2. Significant Accounting Policies Principles of Consolidation The accompanying unaudited condensed consolidated financial statements include the accounts of the Company, as well as those of our wholly owned subsidiaries. All significant intercompany transactions and balances are eliminated in consolidation. Basis of Presentation The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States ("GAAP") for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnote disclosures required by GAAP for complete financial statements. The condensed consolidated financial statements reflect all adjustments considered necessary for a fair presentation of the consolidated results of operations and financial position for the interim periods presented. All such adjustments are of a normal recurring nature. The results of operations for