Cerence Inc. Files Q3 2024 10-Q Report

TL;DR

Cerence Q3 10-Q is in: check financials for auto AI tech.

AI Summary

Cerence Inc. filed its 10-Q for the period ending June 30, 2024, reporting on its third fiscal quarter. The filing details financial performance and operational updates for the company, which provides AI-powered solutions for the automotive industry. Specific financial figures and operational metrics for the quarter and year-to-date are presented.

Why It Matters

This filing provides investors and analysts with the latest financial health and operational performance of Cerence Inc., a key player in automotive AI technology.

Risk Assessment

Risk Level: medium — The filing is a standard quarterly report, but the company operates in a dynamic tech sector with significant competition and evolving automotive trends.

Key Numbers

• Q3 — Fiscal Quarter (The report covers the third fiscal quarter of 2024.)
• 0930 — Fiscal Year End (Cerence Inc.'s fiscal year ends on September 30th.)

Key Players & Entities

• Cerence Inc. (company) — Filer of the 10-Q report
• 20240630 (date) — End of the reporting period
• 20240809 (date) — Filing date of the report
• 25 MALL ROAD, SUITE 416 (location) — Company's business and mailing address
• BURLINGTON, MA (location) — Company's business and mailing address

FAQ

Key Financial Figures

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

Filing Documents

• crnc-20240630.htm (10-Q) — 2832KB
• crnc-ex10_2.htm (EX-10.2) — 35KB
• 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
• img169271233_0.jpg (GRAPHIC) — 3KB
• img169271233_1.jpg (GRAPHIC) — 2KB
• 0000950170-24-094836.txt ( ) — 11973KB
• crnc-20240630.xsd (EX-101.SCH) — 1589KB
• crnc-20240630_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 45 Item 4.

Controls and Procedures

Controls and Procedures 46 PART II. OTHER INFORMATION 47 Item 1.

Legal Proceedings

Legal Proceedings 47 Item 1A.

Risk Factors

Risk Factors 48 Item 5 Other Information 48 Item 6. Exhibits 49

Signatures

Signatures 50 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 June 30, Nine Months Ended June 30, 2024 2023 2024 2023 Revenues: License $ 43,055 $ 25,837 $ 99,405 $ 102,054 Connected services 10,939 18,583 121,356 55,903 Professional services 16,545 17,240 55,938 55,754 Total revenues 70,539 61,660 276,699 213,711 Cost of revenues: License 1,795 2,343 4,803 6,166 Connected services 5,718 5,562 18,380 18,218 Professional services 12,592 12,930 44,036 47,441 Amortization of intangible assets — 103 103 310 Total cost of revenues 20,105 20,938 67,322 72,135 Gross profit 50,434 40,722 209,377 141,576 Operating expenses: Research and development 31,184 30,202 96,336 88,190 Sales and marketing 5,208 4,277 16,898 21,656 General and administrative 9,831 13,019 39,283 46,453 Amortization of intangible assets 550 553 1,650 5,297 Restructuring and other costs, net 1,490 1,172 6,746 11,075 Goodwill impairment 357,076 — 609,172 — Total operating expenses 405,339 49,223 770,085 172,671 Loss from operations ( 354,905 ) ( 8,501 ) ( 560,708 ) ( 31,095 ) Interest income 1,287 1,207 3,909 3,240 Interest expense ( 3,104 ) ( 4,120 ) ( 9,451 ) ( 11,637 ) Other income (expense), net 626 ( 2,030 ) 2,023 2,757 Loss before income taxes ( 356,096 ) ( 13,444 ) ( 564,227 ) ( 36,735 ) (Benefit from) provision for income taxes ( 42,553 ) 3,011 3,435 7,967 Net loss $ ( 313,543 ) $ ( 16,455 ) $ ( 567,662 ) $ ( 44,702 ) Net loss per share: Basic $ ( 7.50 ) $ ( 0.41 ) $ ( 13.66 ) $ ( 1.11 ) Diluted $ ( 7.50 ) $ ( 0.41 ) $ (

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 nearly 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 operatio