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8-K - 8-K - Nuance Communications, Inc. | b84803e8vk.htm |
EX-99.1 - EX-99.1 - Nuance Communications, Inc. | b84803exv99w1.htm |
Exhibit
99.2
NUANCE COMMUNICATIONS, INC.
FIRST QUARTER FISCAL 2011
EARNINGS ANNOUNCEMENT
PREPARED CONFERENCE CALL REMARKS
FIRST QUARTER FISCAL 2011
EARNINGS ANNOUNCEMENT
PREPARED CONFERENCE CALL REMARKS
Nuance is providing a copy of prepared remarks in combination with its press release. This process
and these remarks are offered to provide shareholders and analysts with additional time and detail
for analyzing our results in advance of our quarterly conference call. As previously scheduled,
the conference call will begin today, February 9, 2011 at 5:00 pm EST and will include only brief
comments followed by questions and answers. These prepared remarks will not be read on the call.
To access the live broadcast, please visit the Investor Relations section of Nuances Website at
www.nuance.com. The call can also be heard by dialing (800) 230-1059 or (612) 234-9960 at least
five minutes prior to the call and referencing conference code 191234. A replay will be available
within 24 hours of the announcement by dialing (800) 475-6701 or (320) 365-3844 and using the
access code 191234.
Opening Remarks
In our press release this afternoon, we reported non-GAAP revenue in Q1 11 of $317.3 million, up
11.5% from $284.6 million a year ago. Total GAAP revenue in Q1 11 was $303.8 million, up 15.5%
from $263.0 million in Q1 10. We recognized non-GAAP net income in Q1 11 of $86.1 million,
representing $0.28 per diluted share, compared to non-GAAP net income of $84.3 million, or $0.29
per diluted share, in the same period last year. We recognized GAAP net loss in Q1 11 of ($0.0)
million, or ($0.00) per diluted share, compared to Q1 10 GAAP net loss of ($4.3) million, or
($0.02) per diluted share. Non-GAAP operating margin was 30.5% for Q1 11, compared to 32.6% in Q1
10. First quarter operating cash flow was $63.3 million, including the full payment of
approximately $23 million associated with a previously disclosed partner obligation of SpinVox,
compared to $65.1 million in the same quarter a year ago. Nuance ended Q1 11 with a balance of cash
and marketable securities of $591.5 million.
Compared to Q1 10, Nuances Q1 11 non-GAAP revenue benefited from (1) strength in our mobile and
consumer business, including product licensing and services, (2) growth in healthcare on-demand,
and (3) product licensing from our imaging business.
Discussion of non-GAAP Revenue
In Q1 11, the United States contributed 75% of non-GAAP revenue and international contributed 25%.
On-demand revenues continued to grow year-over-year, enabled by contributions from healthcare and
mobile services. Also in Q1 11, product and licensing revenue grew significantly compared to Q1 10,
due to increased Dragon NaturallySpeaking 11 and Dragon Dictate for Mac and improved contributions
from eCopy. (Please see the section below, Discussion of Non-GAAP Financial Measures, for more
details on non-GAAP revenue.)
At the end of Q1 11, the estimated 3-year value of total on-demand contracts was $1,174.4 million,
up 21.2% from $968.6 million at the end of Q1 10. Within our enterprise and healthcare solutions,
the trend toward customer preference for our subscription and transactional pricing models
continues. Within our mobile market, where additional growth is targeted towards carrier-based
services, new bookings also
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demonstrated growth in transactional models. As more of our large customers and partners
transition to these models, a greater proportion of bookings will contribute revenue over extended
periods.
Table: Non-GAAP Revenue by Market
Q1 | Q2 | Q3 | Q4 | FY | Q1 | |||||||||||||||||||
2010 | 2010 | 2010 | 2010 | 2010 | 2011 | |||||||||||||||||||
Healthcare |
$ | 106.8 | $ | 106.9 | $ | 114.3 | $ | 121.3 | $ | 449.3 | $ | 117.8 | ||||||||||||
Yr/Yr Organic Growth* |
7 | % | 13 | % | 18 | % | 17 | % | 14 | % | 5 | % | ||||||||||||
Mobile & Consumer |
$ | 66.4 | $ | 80.7 | $ | 72.2 | $ | 90.2 | $ | 309.4 | $ | 87.7 | ||||||||||||
Yr/Yr Organic Growth* |
15 | % | 32 | % | 14 | % | 28 | % | 22 | % | 18 | % | ||||||||||||
Enterprise |
$ | 75.7 | $ | 71.3 | $ | 71.1 | $ | 78.0 | $ | 296.1 | $ | 72.5 | ||||||||||||
Yr/Yr Organic Growth* |
12 | % | (6 | )% | (13 | )% | (7 | )% | (4 | )% | (8 | )% | ||||||||||||
Imaging |
$ | 35.7 | $ | 33.9 | $ | 35.8 | $ | 35.4 | $ | 140.8 | $ | 39.3 | ||||||||||||
Yr/Yr Organic Growth* |
7 | % | 11 | % | 6 | % | (11 | )% | 3 | % | 10 | % | ||||||||||||
Total revenue |
$ | 284.6 | $ | 292.8 | $ | 293.4 | $ | 324.9 | $ | 1,195.7 | $ | 317.3 | ||||||||||||
Yr/Yr Organic Growth* |
10 | % | 12 | % | 6 | % | 9 | % | 9 | % | 5 | % |
* | Organic growth is calculated by comparing Nuances reported non-GAAP revenue to revenue in the same period in the prior year. For purposes of this calculation, revenue in the same period in the prior year is adjusted to include revenue from companies subsequently acquired by Nuance, as if we had owned the acquired business in the prior period. |
Table: Non-GAAP Revenue by Type
Q1 | Q2 | Q3 | Q4 | FY | Q1 | |||||||||||||||||||
2010 | 2010 | 2010 | 2010 | 2010 | 2011 | |||||||||||||||||||
Product and Licensing |
$ | 130.2 | $ | 128.0 | $ | 121.8 | $ | 150.6 | $ | 530.7 | $ | 145.0 | ||||||||||||
% of Revenue |
46 | % | 44 | % | 42 | % | 46 | % | 44 | % | 46 | % | ||||||||||||
Professional Services
and Hosting |
$ | 104.5 | $ | 118.6 | $ | 124.2 | $ | 127.6 | $ | 474.9 | $ | 124.1 | ||||||||||||
% of Revenue |
37 | % | 41 | % | 42 | % | 39 | % | 40 | % | 39 | % | ||||||||||||
Maintenance and Support |
$ | 49.9 | $ | 46.2 | $ | 47.4 | $ | 46.7 | $ | 190.1 | $ | 48.2 | ||||||||||||
% of Revenue |
18 | % | 16 | % | 16 | % | 14 | % | 16 | % | 15 | % | ||||||||||||
Total revenue |
$ | 284.6 | $ | 292.8 | $ | 293.4 | $ | 324.9 | $ | 1,195.7 | $ | 317.3 | ||||||||||||
Healthcare Solutions. Within our healthcare business, on-demand solutions contributed to
revenue growth. During Q1 11, the annualized line run-rate in Nuances healthcare on-demand
business was approximately 3.425 billion lines per year, up 14% from 3.010 billion lines per year
during Q1 10. Nuance signed several new healthcare on-demand contracts, achieving a 149% bookings
growth compared to Q1 10. Nuance continued to make progress in implementing on-demand contracts
signed in prior quarters, which will contribute to future revenue. In addition, Nuance has
recently made several important product announcements. During Q1 11, Nuance released a new version
of PowerScribe 360, our new radiology reporting and communications platform. Technology updates in
our eScription platform enabled us to improve automation rates. Further to our cloud-based
efforts, we released the Dragon Medical Mobile Recorder and began partner trials of our Nuance
Healthcare Developer Platform, with trials and releases of additional cloud-based products
scheduled later in the year. In our Clinical Language Understanding project, we completed key user
interface and engine milestones, and began engagement with pilot customers. Key customers in Q1 11
included Methodist Hospital, Oakwood Healthcare System, Premier Health Partners, Scott & White
Memorial Hospital, St. Vincent Indianapolis Hospital, University of Iowa, and Vanderbilt University
Medical Center.
Mobile and Consumer Solutions. Within our mobile and consumer business, on-demand services
contributed to professional services and hosting revenue in the quarter. In addition, Nuance
continued to secure significant design wins and expanded functionality in strategic arrangements
with the largest
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device manufacturers. In particular, Nuance had strong bookings in the automobile market, and
increased professional services revenue to support implementation of recent automotive and handset
design wins. Adoption of Nuance technology in connected car implementations increased, as
evidenced by OnStars point of interest search, Toyotas new Entune Multimedia System and Ford
SYNCs adoption of Nuance SDK to support voice-enablement of applications in its newly announced
app store. Nuance also showed momentum in direct-to-consumer launches, such as applications
released by Amazon, Ask, LG, Merriam Webster and Motorola utilizing the Nuance Mobile Developer
Platform, as well as the release of Flex T9 in the Android app store. Nuance is seeing rapidly
growing interest in the TV, set-top box and tablet markets. During Q1 11, Nuance had our highest
voicemail-to-text bookings quarter ever, entering into new or extended agreements with carriers
such as TeleFonica Spain and Vivo. In voicemail-to-text, Nuance has increased its full automation
capabilities, reducing operating costs and enabled more favorable pricing to end users. In
addition, key customers and design wins in Q1 11 included Audi, BMW, Cisco, Daimler, Fiat Chrysler,
GM, Honda, Huawei, MapMyIndia, Navigon, NEC Casio, Nissan, Olympus, Panasonic TV, Sony TV, Tele
Atlas, TomTom and Volkswagen.
In our Dragon dictation solutions, Q1 11 revenue benefited from strong holiday sales and
international growth. After a very successful launch in Q4 10, Dragon revenues were boosted by
growth in Europe. Dragon was among the top-selling software products at Amazon, Best Buy and
Walmart.
Enterprise Solutions. Within our enterprise business, customer preference for on-demand solutions
continues. Q1 11 bookings resulted in record backlog hours in enterprise professional services,
which stood at approximately 335,000 hours at the end of Q1 11, as compared with approximately
250,000 hours at the end of Q1 10. We are expanding our professional services teams in EMEA and
APAC. The estimated future value of unimplemented contracts for the Nuance On Demand solution at
the end of Q1 11 was $31.2 million, as compared with $50.4 million at the end of Q4 10, reflecting
a significant deployment at a major transportation and shipping firm during the quarter. Enterprise revenues continue to be
challenged by limited channel revenue and the gradual decline of an early on-demand customers
volume. Nuances professional services team continues to progress toward implementation of
solutions under large contracts for the Nuance On Demand solution signed during FY 10, which will
lead to future professional services and hosting revenue. Integration of PerSay expands our
customer base and capabilities in identification and authorization, and Nuance Mobile Care was
deployed at Optus. Key enterprise customers in Q1 11 included Acer, AT&T, Barclays, Centrelink,
Centrica, Energy Australia, Ergon, Jetstar, OnStar, Optus, PayPal, PNC, Premier Inn, and US Social
Security Administration.
Imaging Solutions. Within our imaging business, revenue growth was driven by sales of our PDF
product line, as well as the eCopy ShareScan product. ShareScan 5 was released in Q1 11, and
revenue contribution is expected throughout the year due to its embedded distribution model.
ShareScan 5 certification was completed on key platforms including Canon, Ricoh and Xerox, and is
underway at HP and Konica Minolta, representing a material expansion of our OEM relationships. Key
customers and design wins in Q1 11 included Bryan Cave, Canon, Christiana Healthcare, Konica
Minolta, Los Angeles County Metropolitan Transit Authority, NHN, Ricoh and Xerox.
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Discussion of non-GAAP Cost of Revenue and Gross Margins
In Q1 11, cost of revenue was $100.2 million, for a gross margin of 68.4%, down from 70.8% in Q1
10. Although gross profit increased as a result of increased revenue, gross margin declined due to
increased investments in the enterprise professional services and on-demand businesses, as well as
higher revenue contributions from product categories that carry a lower gross margin. Gross margin
for product and licensing declined to 86.5% in Q1 11 from 87.9% a year ago. Cost of product and
license revenue increased primarily due to higher cost of goods sold associated with Dragon and
imaging revenues. Gross margin for professional services and hosting declined to 41.4% in Q1 11
from 43.0% a year ago, due to increased costs associated with personnel and equipment to support
mobile services, enterprise and healthcare on-demand contracts. Gross margin for maintenance and
support declined to 83.6% in Q1 11 from 84.4% a year ago.
Discussion of non-GAAP Operating Expenses and Operating Margins
In Q1 11, operating margin was 30.5%, down from 32.6% in Q1 10. Throughout FY 10, Nuance noted
that it would increase investments in marketing, sales, implementation and technology targeted at
enhancing organic growth. Expenses increased during Q1 11 due to accelerated investments related
to strategic partnerships, recent acquisitions, and increased sales and marketing, all to support
recent product releases and future growth.
Balance Sheet and Cash Flow Highlights
Cash and Cash Flow Activities
Nuance reported Q1 11 cash flow from operations of $63.3 million, compared to $65.1 million in Q1
10. As noted earlier, during Q1 11, we retired the final material acquired liability associated
with the Spinvox acquisition, which reduced cash flows by about $23 million. But for payment of
that liability, cash flow from operations would have approximated non-GAAP net income. At the end
of Q1 11, our cash and marketable securities balance was approximately $591.5 million. Capital
expenditures totaled $8.9 million for Q1 11, and depreciation was $6.5 million for Q1 11.
Days Sales Outstanding (DSO)
Beginning Q1 11, we have updated the manner in which we calculate DSO. Our updated calculation is
as follows: Accounts receivable, net divided by GAAP revenue, multiplied by 90.
In Q1 11, DSO was 70 days, compared to 74 days in Q1 10. Below is a table providing historical
DSO using this updated calculation:
Q1 10 | Q2 10 | Q3 10 | Q4 10 | Q1 11 | ||||||||||||||||||||
DSO |
74 | 71 | 71 | 63 | 70 |
Deferred Revenue
Total deferred revenue increased from $188.5 million at the end of Q1 10 to $241.0 million at the
end of Q1 11, and long-term deferred revenue increased from $45.9 million to $76.9 million over the
same period. The increase in deferred revenue was primarily attributable to eCopy billings, as
well as upfront billings for set-up and implementation activities related to our hosted offerings.
Discussion of Q2 11 Guidance and Fiscal Year Outlook
We anticipate that strength in our healthcare, mobile-consumer and imaging business will lead
growth in fiscal 2011. We expect to benefit as well from improving relative performance in our
enterprise business. Favorable bookings and backlog achievement in fiscal 2010 as well as Q1 11
will assist across our business. Investments in sales and marketing resources, along with new
product and services offerings, should enhance revenue growth, especially in the second-half of the
fiscal year.
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Our healthcare business should benefit from a continuation of recent trends, including the momentum
within our on-demand offerings and more robust purchasing of our radiology solutions. In addition,
we expect an increase during Q2 11 in Dragon Medical license revenues in association with EHR usage, following a
seasonally down Q1 11. Nuance has additional product and service offerings slated for this fiscal
year, which we believe will further enhance institutional preference for our leading solutions.
Within our mobile and consumer business, revenues will include a materially greater proportion of
mobile services, reflecting the benefits of past bookings and the heightened interest and
acceptance for our offerings. Revenues will also benefit from substantial continued investments in
brand advertising and from large investments in global language expansion.
The enterprise business will incorporate material revenues from previously signed on-demand
contracts, particularly in the second-half of the year. We also expect improved channel revenues,
owing to increased stability and recovery among existing channel partners and contributions from
newly developed channel partners.
Bookings strength for our eCopy revenues should result in high single digit to low teens growth in
our imaging business.
We have signaled to investors in recent quarters our intention to increase expenditures in sales,
R&D and professional services personnel, primarily, but not exclusively, associated with our
healthcare and mobile business lines. Our results in Q1 11
did in fact reflect these investments. During Q1 11, we increased our sales and marketing expense
by approximately $7 million compared to Q4 10, consistent with our guidance. In addition, during
Q1 11 we accelerated our investments related to our commitments under recent strategic mobile
partnerships. Those investments will moderate in Q2 11. In addition, certain sales and marketing
expenses were unique to Q1 11 programs and will decrease in Q2 11, particularly related to holiday
advertising and our annual sales kickoff event. We believe from recent experiences that these
investments position us to leverage heightened interest in the mobile and consumer markets for
speech solutions. But the benefits will be realized over the course of the year.
With these factors in mind, we expect full-year, FY 11 GAAP revenues in the range of $1,278 million
to $1,318 million. We expect FY 11 non-GAAP revenues between $1,320 million and $1,360 million.
We expect Q2 11 GAAP revenues between $304 million and $316 million, and we anticipate Q2 11
non-GAAP revenues between $315 million and $327 million.
We expect FY 11 GAAP EPS to be in the range of $0.04 and $0.11 and FY 11 non-GAAP EPS to be in the
range of $1.29 and $1.36. We expect Q2 11 GAAP EPS to be in the range of ($0.07) and ($0.04) and
Q2 11 non-GAAP EPS to be in the range of $0.28 and $0.31.
Although we do not provide specific forecast for CFFO, we do expect once again in fiscal 2011 to
achieve substantial growth in our cash flows, based upon increased revenues, strong margins and
disciplined working capital practices. As we noted last quarter, during fiscal Q1 11, we retired
the final material acquired liability associated with the Spinvox acquisition, which reduced cash
flows by about $23 million. But for that payment, CFFO would have approximated non-GAAP net income
in Q1 11. Based on our current business, we expect CFFO to approximate non-GAAP net income during
the remainder of the fiscal year.
This ends the prepared conference call remarks.
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Definitions
Certain supplemental data provided in the prepared call remarks above are based upon internal
Nuance definitions that are important for the reader to understand.
Enterprise professional services backlog hours. Nuance defines its enterprise professional
services backlog hours as the accumulated estimated professional services hours necessary to
fulfill all of its existing, executed professional services contracts within the enterprise
business, including those that are cancelable by customers, based on the original estimate
of hours sold. Nuance believes its professional services backlog hours are useful in
forecasting its internal professional services needs, as well as for projecting future
professional services revenues.
Estimated
future value of unimplemented Nuance Enterprise on-demand contracts. Nuance
considers contracts for its Nuance On Demand solutions to be unimplemented for the time
period from execution of the contract with the customer until such time as implementation
and set-up services are complete and the customers have begun utilizing the on-demand
platform. Once a contract is implemented, the entire estimated value of the contract is
deducted from the total. Because contracts for our Nuance On Demand solutions are generally
large, multi-year contracts, the aggregate estimated value of these contracts can materially
increase or decrease from period to period as contracts are executed and implemented.
Annualized line run-rate in Nuances healthcare on-demand business. Nuance determines this
run-rate using sourced transcription net line counts, as defined in our customer contracts.
The annualized line run-rate is determined by the number of lines actually billed in a given
quarter, multiplied by four.
Estimated 3-year value of total on-demand contracts. Nuance determines this value as of the
end of the period reported, by using our best estimate of all anticipated future revenue
streams under signed on-demand contracts then in place, whether or not they are guaranteed
through a minimum commitment clause. Our best estimate is based on estimates used in
evaluating the contracts and determining sales compensation, adjusted for changes in
estimated launch dates, actual volumes achieved and other factors deemed relevant. For
contracts with an expiration date beyond 3 years, we include only the value expected within
3 years. For other contracts, we assume renewal consistent with historic renewal rates
unless there is a known cancellation. Investors should be aware that most of these
contracts are priced by volume of usage and typically have no or low minimum commitments.
Actual revenue could vary from our estimates due to factors such as cancellations,
non-renewals or volume fluctuations.
Safe Harbor and Forward-Looking Statements
Statements in this document regarding enterprise professional services backlog, the value of
unimplemented Nuance On Demand contracts, growth in the remainder of fiscal 2011, new product and
service offerings, moderation of expenses associated with sales, services, and research and
development, increases in advertising and promotion expenses, the general economic condition,
second quarter and fiscal 2011 financial performance and Nuance managements future expectations,
beliefs, goals, plans or prospects constitute forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. Any statements that are not statements of
historical fact (including statements containing the words believes, plans, anticipates,
expects, or estimates or similar expressions) should also be considered to be forward-looking
statements. There are a number of important factors that could cause actual results or events to
differ materially from those indicated by such forward-looking statements, including: fluctuations
in demand for Nuances existing and future products; economic conditions in the United States and
abroad; Nuances ability to control and successfully manage its expenses and cash position; the
effects of competition, including pricing pressure; possible defects in Nuances products and
technologies; the ability of Nuance to successfully integrate operations and
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employees of acquired businesses; the ability to realize anticipated synergies from acquired
businesses; and the other factors described in Nuances annual report on Form 10-K for the fiscal
year ended September 30, 2010 and Nuances quarterly reports on Form 10-Q filed with the Securities
and Exchange Commission. Nuance disclaims any obligation to update any forward-looking statements
as a result of developments occurring after the date of this document.
The information included in this press release should not be viewed as a substitute for full GAAP
financial statements.
Discussion of Non-GAAP Financial Measures
Management utilizes a number of different financial measures, both GAAP and non-GAAP, in analyzing
and assessing the overall performance of the business, for making operating decisions and for
forecasting and planning for future periods. Our annual financial plan is prepared both on a GAAP
and non-GAAP basis, and the non-GAAP annual financial plan is approved by our board of directors.
Continuous budgeting and forecasting for revenue and expenses are conducted on a consistent
non-GAAP basis (in addition to GAAP) and actual results on a non-GAAP basis are assessed against
the annual financial plan. The board of directors and management utilize these non-GAAP measures
and results (in addition to the GAAP results) to determine our allocation of resources. In
addition and as a consequence of the importance of these measures in managing the business, we use
non-GAAP measures and results in the evaluation process to establish managements compensation.
For example, our annual bonus program payments are based upon the achievement of consolidated
non-GAAP revenue and consolidated non-GAAP earnings per share financial targets. We consider the
use of non-GAAP revenue helpful in understanding the performance of our business, as it excludes
the purchase accounting impact on acquired deferred revenue and other acquisition-related
adjustments to revenue. We also consider the use of non-GAAP earnings per share helpful in
assessing the organic performance of the continuing operations of our business. By organic
performance we mean performance as if we had owned an acquired business in the same period a year
ago. By continuing operations we mean the ongoing results of the business excluding certain
unplanned costs. While our management uses these non-GAAP financial measures as a tool to enhance
their understanding of certain aspects of our financial performance, our management does not
consider these measures to be a substitute for, or superior to, the information provided by GAAP
revenue and earnings per share. Consistent with this approach, we believe that disclosing non-GAAP
revenue and non-GAAP earnings per share to the readers of our financial statements provides such
readers with useful supplemental data that, while not a substitute for GAAP revenue and earnings
per share, allows for greater transparency in the review of our financial and operational
performance. In assessing the overall health of the business during the three months ended
December 31, 2010 and 2009, and, in particular, in evaluating our revenue and earnings per share,
our management has either included or excluded items in six general categories, each of which are
described below.
Acquisition-Related Revenue and Cost of Revenue.
The Company provides supplementary non-GAAP financial measures of revenue, which include revenue
related to acquisitions, primarily from eCopy for the three months ended December 31, 2010, that
would otherwise have been recognized but for the purchase accounting treatment of these
transactions. Non-GAAP revenue also includes revenue that the Company would have otherwise
recognized had the Company not acquired intellectual property and other assets from the same
customer during the same quarter. Because GAAP accounting requires the elimination of this revenue,
GAAP results alone do not fully capture all of the Companys economic activities. These non-GAAP
adjustments are intended to reflect the full amount of such revenue. The Company includes non-GAAP
revenue and cost of revenue to allow for more complete comparisons to the financial results of
historical operations, forward-looking guidance and the financial results of peer companies. The
Company believes these adjustments are useful to management and investors as a measure of the
ongoing performance of the business because, although we cannot be certain that customers will
renew their
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contracts, the Company historically has experienced high renewal rates on maintenance and support
agreements and other customer contracts. Additionally, although acquisition-related revenue
adjustments are non-recurring with respect to past acquisitions, the Company generally will incur
these adjustments in connection with any future acquisitions.
Acquisition-Related Costs, Net.
In recent years, the Company has completed a number of acquisitions, which result in operating
expenses which would not otherwise have been incurred. The Company provides supplementary non-GAAP
financial measures, which exclude certain transition, integration and other acquisition-related
expense items resulting from acquisitions, to allow more accurate comparisons of the financial
results to historical operations, forward-looking guidance and the financial results of less
acquisitive peer companies. The Company considers these types of costs and adjustments, to a great
extent, to be unpredictable and dependent on a significant number of factors that are outside of
the control of the Company. Furthermore, the Company does not consider these acquisition-related
costs and adjustments to be related to the organic continuing operations of the acquired businesses
and are generally not relevant to assessing or estimating the long-term performance of the acquired
assets. In addition, the size, complexity and/or volume of past acquisitions, which often drives
the magnitude of acquisition-related costs, may not be indicative of the size, complexity and/or
volume of future acquisitions. By excluding acquisition-related costs and adjustments from our
non-GAAP measures, management is better able to evaluate the Companys ability to utilize its
existing assets and estimate the long-term value that acquired assets will generate for the
Company. The Company believes that providing a supplemental non-GAAP measure which excludes these
items allows management and investors to consider the ongoing operations of the business both with,
and without, such expenses.
These acquisition-related costs are included in the following categories: (i) transition and
integration costs; (ii) professional service fees; and (iii) acquisition-related adjustments.
Although these expenses are not recurring with respect to past acquisitions, the Company generally
will incur these expenses in connection with any future acquisitions. These categories are further
discussed as follows:
(i) Transition and integration costs. Transition and integration costs include retention
payments, transitional employee costs, earn-out payments treated as compensation expense, as
well as the costs of integration-related services provided by third parties.
(ii) Professional service fees. Professional service fees include direct costs of the
acquisition, as well as post-acquisition legal and other professional service fees associated
with disputes and regulatory matters related to acquired entities.
(iii) Acquisition-related adjustments. Acquisition-related adjustments include adjustments to
acquisition-related items that are required to be marked to fair value each reporting period,
such as contingent consideration, and other items related to acquisitions for which the
measurement period has ended, such as gains or losses on settlements of pre-acquisition
contingencies.
Amortization of Acquired Intangible Assets.
The Company excludes the amortization of acquired intangible assets from non-GAAP expense and
income measures. These amounts are inconsistent in amount and frequency and are significantly
impacted by the timing and size of acquisitions. Providing a supplemental measure which excludes
these charges allows management and investors to evaluate results as-if the acquired intangible
assets had been developed internally rather than acquired and, therefore, provides a supplemental
measure of performance in which the Companys acquired intellectual property is treated in a
comparable manner to its internally developed intellectual property. Although the Company excludes
amortization of acquired intangible assets from its non-GAAP expenses, the Company believes that it
is important for investors to understand that such intangible assets contribute to revenue
generation. Amortization of
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intangible assets that relate to past acquisitions will recur in future periods until such
intangible assets have been fully amortized. Future acquisitions may result in the amortization of
additional intangible assets.
Costs Associated with IP Collaboration Agreement.
In order to gain access to a third partys extensive speech recognition technology and natural
language and semantic processing technology, Nuance has entered into two IP collaboration
agreements, spanning six years and five years, respectively. All intellectual property derived
from these collaborations will be jointly owned by the two parties, but Nuance will have sole
rights to commercialize this intellectual property during the term of these agreements. For
non-GAAP purposes, Nuance considers these long-term contracts and the resulting acquisitions of
intellectual property from this third-party over the agreements terms to be an investing activity,
outside of its normal, organic, continuing operating activities, and is therefore presenting this
supplemental information to show the results excluding these expenses. Nuance does not exclude from
its non-GAAP results the corresponding revenue, if any, generated from these collaboration efforts.
Although the Companys bonus program and other performance-based incentives for executives are
based on the non-GAAP results that exclude these costs, certain engineering senior management are
responsible for execution and results of the collaboration agreement and have incentives based on
those results.
Non-Cash Expenses.
The Company provides non-GAAP information relative to the following non-cash expenses: (i)
stock-based compensation; (ii) certain accrued interest; and (iii) certain accrued income taxes.
These items are further discussed as follows:
(i) Stock-based compensation. Because of varying available valuation methodologies, subjective
assumptions and the variety of award types, the Company believes that the exclusion of
stock-based compensation allows for more accurate comparisons of operating results to peer
companies, as well as to times in the Companys history when stock-based compensation was more
or less significant as a portion of overall compensation than in the current period. The
Company evaluates performance both with and without these measures because compensation expense
related to stock-based compensation is typically non-cash and the options and restricted awards
granted are influenced by the Companys stock price and other factors such as volatility that
are beyond the Companys control. The expense related to stock-based awards is generally not
controllable in the short-term and can vary significantly based on the timing, size and nature
of awards granted. As such, the Company does not include such charges in operating plans.
Stock-based compensation will continue in future periods.
(ii and iii) Certain accrued interest and income taxes. The Company also excludes certain
accrued interest and certain accrued income taxes because the Company believes that excluding
these non-cash expenses provides senior management, as well as other users of the financial
statements, with a valuable perspective on the cash-based performance and health of the
business, including the current near-term projected liquidity. These non-cash expenses will
continue in future periods.
-9-
Other Expenses.
The Company excludes certain other expenses that are the result of unplanned events to measure
operating performance and current and future liquidity both with and without these expenses; and
therefore, by providing this information, the Company believes management and the users of the
financial statements are better able to understand the financial results of what the Company
considers to be its organic, continuing operations. Included in these expenses are items such as
restructuring charges, asset impairments and other charges (credits), net. These events are
unplanned and arose outside of the ordinary course of continuing operations. These items also
include adjustments from changes in fair value of share-based instruments relating to the
issuance of our common stock with security price guarantees payable in cash.
The Company believes that providing the non-GAAP information to investors, in addition to the GAAP
presentation, allows investors to view the financial results in the way management views the
operating results. The Company further believes that providing this information allows investors to
not only better understand the Companys financial performance, but more importantly, to evaluate
the efficacy of the methodology and information used by management to evaluate and measure such
performance.
Financial Tables Follow
-10-
Nuance Communications, Inc.
Condensed Consolidated Statements of Operations
(in thousands, except per share amounts)
Unaudited
Condensed Consolidated Statements of Operations
(in thousands, except per share amounts)
Unaudited
Three months ended | ||||||||
December 31, | ||||||||
2010 | 2009 | |||||||
Revenues: |
||||||||
Product and licensing |
$ | 133,856 | $ | 113,227 | ||||
Professional services and hosting |
122,820 | 103,695 | ||||||
Maintenance and support |
47,153 | 46,055 | ||||||
Total revenues |
303,829 | 262,977 | ||||||
Cost of revenues: |
||||||||
Product and licensing |
17,146 | 12,591 | ||||||
Professional services and hosting |
78,212 | 61,996 | ||||||
Maintenance and support |
8,273 | 7,990 | ||||||
Amortization of intangible assets |
13,291 | 11,018 | ||||||
Total cost of revenues |
116,922 | 93,595 | ||||||
Gross profit |
186,907 | 169,382 | ||||||
Operating expenses: |
||||||||
Research and development |
41,381 | 36,950 | ||||||
Sales and marketing |
78,344 | 65,562 | ||||||
General and administrative |
31,182 | 27,451 | ||||||
Amortization of intangible assets |
22,677 | 22,126 | ||||||
Acquisition-related costs, net |
3,001 | 12,805 | ||||||
Restructuring and other charges, net |
2,051 | 615 | ||||||
Total operating expenses |
178,636 | 165,509 | ||||||
Income from operations |
8,271 | 3,873 | ||||||
Other expense, net |
(2,259 | ) | (7,811 | ) | ||||
Income (loss) before income taxes |
6,012 | (3,938 | ) | |||||
Provision for income taxes |
6,021 | 340 | ||||||
Net loss |
$ | (9 | ) | $ | (4,278 | ) | ||
Net loss per share: |
||||||||
Basic |
$ | (0.00 | ) | $ | (0.02 | ) | ||
Diluted |
$ | (0.00 | ) | $ | (0.02 | ) | ||
Weighted average common shares outstanding: |
||||||||
Basic |
298,633 | 279,068 | ||||||
Diluted |
298,633 | 279,068 | ||||||
-11-
Nuance Communications, Inc.
Condensed Consolidated Balance Sheets
(in thousands)
Unaudited
Condensed Consolidated Balance Sheets
(in thousands)
Unaudited
December 31, 2010 | September 30, 2010 | |||||||
ASSETS |
||||||||
Current assets: |
||||||||
Cash and cash equivalents |
$ | 554,389 | $ | 516,630 | ||||
Restricted cash |
6,626 | 24,503 | ||||||
Marketable securities |
5,032 | 5,044 | ||||||
Accounts receivable, net |
235,718 | 217,587 | ||||||
Acquired unbilled accounts receivable |
3,423 | 7,412 | ||||||
Prepaid expenses and other current assets |
74,348 | 70,466 | ||||||
Total current assets |
879,536 | 841,642 | ||||||
Land, building and equipment, net |
64,452 | 62,083 | ||||||
Marketable securities |
32,091 | 28,322 | ||||||
Goodwill |
2,088,031 | 2,077,943 | ||||||
Intangible assets, net |
655,354 | 685,865 | ||||||
Other assets |
69,856 | 73,844 | ||||||
Total assets |
$ | 3,789,320 | $ | 3,769,699 | ||||
LIABILITIES AND STOCKHOLDERS EQUITY |
||||||||
Current liabilities: |
||||||||
Current portion of long-term debt and
capital leases |
$ | 7,443 | $ | 7,764 | ||||
Contingent and deferred acquisition payments |
12,603 | 2,131 | ||||||
Accounts payable and accrued expenses |
211,241 | 230,237 | ||||||
Deferred and unearned revenue |
164,075 | 142,340 | ||||||
Total current liabilities |
395,362 | 382,472 | ||||||
Long-term portion of debt and capital leases |
851,445 | 851,014 | ||||||
Long-term deferred revenue |
76,889 | 76,598 | ||||||
Other long term liabilities |
149,709 | 162,419 | ||||||
Total liabilities |
1,473,405 | 1,472,503 | ||||||
Stockholders equity |
2,315,915 | 2,297,196 | ||||||
Total liabilities and stockholders equity |
$ | 3,789,320 | $ | 3,769,699 | ||||
-12-
Nuance Communications, Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)
Unaudited
Condensed Consolidated Statements of Cash Flows
(in thousands)
Unaudited
Three months ended | ||||||||
December 31, | ||||||||
2010 | 2009 | |||||||
Cash flows from operating activities: |
||||||||
Net loss |
$ | (9 | ) | $ | (4,278 | ) | ||
Adjustments to reconcile net loss to net cash provided by operating activities: |
||||||||
Depreciation and amortization |
42,517 | 38,230 | ||||||
Stock-based compensation |
32,098 | 20,066 | ||||||
Non-cash interest expense |
3,192 | 3,279 | ||||||
Deferred tax provision |
104 | (311 | ) | |||||
Other |
(20 | ) | 691 | |||||
Changes in operating assets and liabilities, net of effects from acquisitions: |
||||||||
Accounts receivable |
(13,273 | ) | (6,267 | ) | ||||
Prepaid expenses and other assets |
(4,996 | ) | 475 | |||||
Accounts payable |
(1,530 | ) | (3,709 | ) | ||||
Accrued expenses and other liabilities |
(17,190 | ) | 7,403 | |||||
Deferred revenue |
22,443 | 9,473 | ||||||
Net cash provided by operating activities |
63,336 | 65,052 | ||||||
Cash flows from investing activities: |
||||||||
Capital expenditures |
(8,893 | ) | (2,756 | ) | ||||
Payments for acquisitions, net of cash acquired |
(13,310 | ) | (141,721 | ) | ||||
Payments for equity investments |
| (14,970 | ) | |||||
Purchases of marketable securities |
(10,776 | ) | | |||||
Proceeds from maturities of marketable securities |
6,650 | | ||||||
Change in restricted cash |
17,184 | | ||||||
Net cash used in investing activities |
(9,145 | ) | (159,447 | ) | ||||
Cash flows from financing activities: |
||||||||
Payments of debt and capital leases |
(2,069 | ) | (1,740 | ) | ||||
Payments on settlement of share-based derivatives |
(972 | ) | | |||||
Payments of other long-term liabilities |
(2,589 | ) | (2,256 | ) | ||||
Excess tax benefits from share-based awards |
3,662 | | ||||||
Proceeds from issuance of common stock from employee stock plans |
4,350 | 5,181 | ||||||
Cash used to net share settle employee equity awards |
(18,403 | ) | (7,616 | ) | ||||
Net cash used in financing activities |
(16,021 | ) | (6,431 | ) | ||||
Effects of exchange rate changes on cash and cash equivalents |
(411 | ) | 690 | |||||
Net increase (decrease) in cash and cash equivalents |
37,759 | (100,136 | ) | |||||
Cash and cash equivalents at beginning of period |
516,630 | 527,038 | ||||||
Cash and cash equivalents at end of period |
$ | 554,389 | $ | 426,902 | ||||
-13-
Nuance Communications, Inc.
Supplemental Financial Information GAAP to Non-GAAP Reconciliations
(in thousands, except per share amounts)
Unaudited
Supplemental Financial Information GAAP to Non-GAAP Reconciliations
(in thousands, except per share amounts)
Unaudited
Three months ended | ||||||||
December 31 , | ||||||||
2010 | 2009 | |||||||
GAAP revenue |
$ | 303,829 | $ | 262,977 | ||||
Acquisition-related revenue adjustments: product and licensing |
11,136 | 16,992 | ||||||
Acquisition-related revenue adjustments: professional services and hosting |
1,239 | 837 | ||||||
Acquisition-related revenue adjustments: maintenance and support |
1,058 | 3,793 | ||||||
Non-GAAP revenue |
$ | 317,262 | $ | 284,599 | ||||
GAAP cost of revenue |
$ | 116,922 | $ | 93,595 | ||||
Cost of revenue from amortization of intangible assets |
(13,291 | ) | (11,018 | ) | ||||
Cost of revenue adjustments: product and licensing (1,2) |
2,448 | 3,177 | ||||||
Cost of revenue adjustments: professional services and hosting (1,2) |
(5,515 | ) | (2,437 | ) | ||||
Cost of revenue adjustments: maintenance and support (1,2) |
(390 | ) | (215 | ) | ||||
Non-GAAP cost of revenue |
$ | 100,174 | $ | 83,102 | ||||
GAAP gross profit |
$ | 186,907 | $ | 169,382 | ||||
Gross profit adjustments |
30,181 | 32,115 | ||||||
Non-GAAP gross profit |
$ | 217,088 | $ | 201,497 | ||||
GAAP income from operations |
$ | 8,271 | $ | 3,873 | ||||
Gross profit adjustments |
30,181 | 32,115 | ||||||
Research and development (1) |
4,867 | 2,030 | ||||||
Sales and marketing (1) |
10,310 | 8,519 | ||||||
General and administrative (1) |
10,837 | 6,645 | ||||||
Amortization of intangible assets |
22,677 | 22,126 | ||||||
Costs associated with IP collaboration agreements |
4,625 | 4,000 | ||||||
Acquisition-related costs, net |
3,001 | 12,805 | ||||||
Restructuring and other charges, net |
2,051 | 615 | ||||||
Non-GAAP income from operations |
$ | 96,820 | $ | 92,728 | ||||
GAAP provision for income taxes |
$ | 6,021 | $ | 340 | ||||
Non-cash taxes |
(1,621 | ) | 1,489 | |||||
Non-GAAP provision for income taxes |
$ | 4,400 | $ | 1,829 | ||||
GAAP net loss |
$ | (9 | ) | $ | (4,278 | ) | ||
Acquisition-related adjustment revenue (2) |
13,433 | 21,622 | ||||||
Acquisition-related adjustment cost of revenue (2) |
(2,627 | ) | (3,397 | ) | ||||
Acquisition-related costs, net |
3,001 | 12,805 | ||||||
Cost of revenue from amortization of intangible assets |
13,291 | 11,018 | ||||||
Amortization of intangible assets |
22,677 | 22,126 | ||||||
Non-cash stock-based compensation (1) |
32,098 | 20,066 | ||||||
Non-cash interest expense, net |
3,192 | 3,279 | ||||||
Non-cash income taxes |
1,621 | (1,489 | ) | |||||
Costs associated with IP collaboration agreements |
4,625 | 4,000 | ||||||
Change in fair value of share-based instruments |
(7,215 | ) | (2,072 | ) | ||||
Restructuring and other charges, net |
2,051 | 615 | ||||||
Non-GAAP net income |
$ | 86,138 | $ | 84,295 | ||||
Non-GAAP diluted net income per share |
$ | 0.28 | $ | 0.29 | ||||
Diluted weighted average common shares outstanding |
311,570 | 294,711 | ||||||
-14-
Nuance Communications, Inc.
Supplemental Financial Information GAAP to Non-GAAP Reconciliations, continued
(in thousands)
Unaudited
Supplemental Financial Information GAAP to Non-GAAP Reconciliations, continued
(in thousands)
Unaudited
Three months ended | ||||||||
December 31, | ||||||||
2010 | 2009 | |||||||
(1) Non-Cash Stock-Based Compensation |
||||||||
Cost of product and licensing |
$ | 6 | $ | 9 | ||||
Cost of professional services and hosting |
5,688 | 2,648 | ||||||
Cost of maintenance and support |
390 | 215 | ||||||
Research and development |
4,867 | 2,030 | ||||||
Sales and marketing |
10,310 | 8,519 | ||||||
General and administrative |
10,837 | 6,645 | ||||||
Total |
$ | 32,098 | $ | 20,066 | ||||
(2) Acquisition-Related Revenue and Cost of Revenue |
||||||||
Revenue |
$ | 13,433 | $ | 21,622 | ||||
Cost of product and licensing |
(2,454 | ) | (3,186 | ) | ||||
Cost of professional services and hosting |
(173 | ) | (211 | ) | ||||
Cost of maintenance and support |
| | ||||||
Total |
$ | 10,806 | $ | 18,225 | ||||
-15-
Nuance Communications, Inc.
Supplemental Financial Information GAAP to Non-GAAP Reconciliations, continued
(in millions)
Unaudited
Supplemental Financial Information GAAP to Non-GAAP Reconciliations, continued
(in millions)
Unaudited
Total Revenue
Q1 | Q2 | Q3 | Q4 | FY | Q1 | |||||||||||||||||||
2010 | 2010 | 2010 | 2010 | 2010 | 2011 | |||||||||||||||||||
GAAP Revenue |
$ | 263.0 | $ | 273.0 | $ | 273.2 | $ | 309.8 | $ | 1,118.9 | $ | 303.8 | ||||||||||||
Adjustment |
$ | 21.6 | $ | 19.8 | $ | 20.2 | $ | 15.1 | $ | 76.7 | $ | 13.4 | ||||||||||||
Non-GAAP Revenue |
$ | 284.6 | $ | 292.8 | $ | 293.4 | $ | 324.9 | $ | 1,195.7 | $ | 317.3 | ||||||||||||
Healthcare
Q1 | Q2 | Q3 | Q4 | FY | Q1 | |||||||||||||||||||
2010 | 2010 | 2010 | 2010 | 2010 | 2010 | |||||||||||||||||||
GAAP Revenue |
$ | 105.5 | $ | 105.8 | $ | 113.5 | $ | 119.8 | $ | 444.6 | $ | 117.4 | ||||||||||||
Adjustment |
$ | 1.3 | $ | 1.1 | $ | 0.8 | $ | 1.5 | $ | 4.7 | $ | 0.4 | ||||||||||||
Non-GAAP Revenue |
$ | 106.8 | $ | 106.9 | $ | 114.3 | $ | 121.3 | $ | 449.3 | $ | 117.8 | ||||||||||||
Mobile & Consumer
Q1 | Q2 | Q3 | Q4 | FY | Q1 | |||||||||||||||||||
2010 | 2010 | 2010 | 2010 | 2010 | 2010 | |||||||||||||||||||
GAAP Revenue |
$ | 64.1 | $ | 77.8 | $ | 66.3 | $ | 89.2 | $ | 297.3 | $ | 86.1 | ||||||||||||
Adjustment |
$ | 2.3 | $ | 2.9 | $ | 5.9 | $ | 1.0 | $ | 12.1 | $ | 1.6 | ||||||||||||
Non-GAAP Revenue |
$ | 66.4 | $ | 80.7 | $ | 72.2 | $ | 90.2 | $ | 309.4 | $ | 87.7 | ||||||||||||
Enterprise
Q1 | Q2 | Q3 | Q4 | FY | Q1 | |||||||||||||||||||
2010 | 2010 | 2010 | 2010 | 2010 | 2010 | |||||||||||||||||||
GAAP Revenue |
$ | 75.4 | $ | 70.9 | $ | 71.0 | $ | 76.6 | $ | 293.9 | $ | 71.1 | ||||||||||||
Adjustment |
$ | 0.3 | $ | 0.4 | $ | 0.1 | $ | 1.4 | $ | 2.2 | $ | 1.4 | ||||||||||||
Non-GAAP Revenue |
$ | 75.7 | $ | 71.3 | $ | 71.1 | $ | 78.0 | $ | 296.1 | $ | 72.5 | ||||||||||||
Imaging Revenue
Q1 | Q2 | Q3 | Q4 | FY | Q1 | |||||||||||||||||||
2010 | 2010 | 2010 | 2010 | 2010 | 2010 | |||||||||||||||||||
GAAP Revenue |
$ | 18.0 | $ | 18.5 | $ | 22.4 | $ | 24.2 | $ | 83.1 | $ | 29.2 | ||||||||||||
Adjustment |
$ | 17.7 | $ | 15.4 | $ | 13.4 | $ | 11.2 | $ | 57.7 | $ | 10.0 | ||||||||||||
Non-GAAP Revenue |
$ | 35.7 | $ | 33.9 | $ | 35.8 | $ | 35.4 | $ | 140.8 | $ | 39.3 | ||||||||||||
Product and Licensing Revenue
Q1 | Q2 | Q3 | Q4 | FY | Q1 | |||||||||||||||||||
2010 | 2010 | 2010 | 2010 | 2010 | 2010 | |||||||||||||||||||
GAAP Revenue |
$ | 113.2 | $ | 113.2 | $ | 108.8 | $ | 138.2 | $ | 473.5 | $ | 133.8 | ||||||||||||
Adjustment |
$ | 17.0 | $ | 14.8 | $ | 13.0 | $ | 12.4 | $ | 57.2 | $ | 11.1 | ||||||||||||
Non-GAAP Revenue |
$ | 130.2 | $ | 128.0 | $ | 121.8 | $ | 150.6 | $ | 530.7 | $ | 145.0 | ||||||||||||
Professional Services and On-Demand Revenue
Q1 | Q2 | Q3 | Q4 | FY | Q1 | |||||||||||||||||||
2010 | 2010 | 2010 | 2010 | 2010 | 2010 | |||||||||||||||||||
GAAP Revenue |
$ | 103.7 | $ | 116.2 | $ | 117.9 | $ | 125.8 | $ | 463.6 | $ | 122.8 | ||||||||||||
Adjustment |
$ | 0.8 | $ | 2.4 | $ | 6.3 | $ | 1.8 | $ | 11.3 | $ | 1.2 | ||||||||||||
Non-GAAP Revenue |
$ | 104.5 | $ | 118.6 | $ | 124.2 | $ | 127.6 | $ | 474.9 | $ | 124.1 | ||||||||||||
Maintenance and Support Revenue
Q1 | Q2 | Q3 | Q4 | FY | Q1 | |||||||||||||||||||
2010 | 2010 | 2010 | 2010 | 2010 | 2010 | |||||||||||||||||||
GAAP Revenue |
$ | 46.1 | $ | 43.6 | $ | 46.5 | $ | 45.8 | $ | 181.9 | $ | 47.2 | ||||||||||||
Adjustment |
$ | 3.8 | $ | 2.6 | $ | 0.9 | $ | 0.9 | $ | 8.2 | $ | 1.1 | ||||||||||||
Non-GAAP Revenue |
$ | 49.9 | $ | 46.2 | $ | 47.4 | $ | 46.7 | $ | 190.1 | $ | 48.2 | ||||||||||||
Schedules may not add due to rounding.
-16-
Nuance Communications, Inc.
Supplemental Non-Financial Information
Unaudited
Supplemental Non-Financial Information
Unaudited
Q1 | Q2 | Q3 | Q4 | Q1 | ||||||||||||||||
2010 | 2010 | 2010 | 2010 | 2011 | ||||||||||||||||
Enterprise
Professional
Services Backlog
Hours (in
thousands) |
250.2 | 266.8 | 312.0 | 328.2 | 335.2 | |||||||||||||||
Estimated Future
Value of
Unimplemented
Nuance Enterprise
On-Demand Contracts
(in millions) |
41.8 | 45.0 | 47.1 | 50.4 | 31.2 | |||||||||||||||
Annualized Line
Run-Rate in
Nuances Healthcare
On-Demand Business
(in billions) |
3.010 | 3.099 | 3.242 | 3.334 | 3.425 | |||||||||||||||
Estimated 3-year
Value of Total
On-Demand Contracts
(in millions) |
968.6 | 1,025.0 | 1,083.1 | 1,143.2 | 1,174.4 |
-17-
Nuance Communications, Inc.
Reconciliation of Supplemental Financial Information
GAAP and non-GAAP Revenue and Net Income (Loss) per Share Guidance
(in thousands, except per share amounts)
Unaudited
Reconciliation of Supplemental Financial Information
GAAP and non-GAAP Revenue and Net Income (Loss) per Share Guidance
(in thousands, except per share amounts)
Unaudited
Three months ended | ||||||||
March 31, 2011 | ||||||||
Low | High | |||||||
GAAP revenue |
$ | 303,900 | $ | 315,900 | ||||
Acquisition-related adjustment revenue |
11,100 | 11,100 | ||||||
Non-GAAP revenue |
$ | 315,000 | $ | 327,000 | ||||
GAAP net income (loss), per share |
$ | (0.07 | ) | $ | (0.04 | ) | ||
Acquisition-related adjustment revenue |
0.04 | 0.04 | ||||||
Acquisition-related adjustment cost of revenue |
(0.01 | ) | (0.01 | ) | ||||
Acquisition-related costs, net |
0.01 | 0.01 | ||||||
Cost of revenue from amortization of intangible assets |
0.04 | 0.04 | ||||||
Amortization of intangible assets |
0.07 | 0.07 | ||||||
Non-cash stock-based compensation |
0.14 | 0.14 | ||||||
Non-cash interest expense |
0.01 | 0.01 | ||||||
Non-cash income taxes |
0.03 | 0.03 | ||||||
Costs associated with IP collaboration agreements |
0.02 | 0.02 | ||||||
Non-GAAP net income (loss), per share |
$ | 0.28 | $ | 0.31 | ||||
Shares used in computing GAAP and non-GAAP net income (loss) per share: |
||||||||
Weighted average common shares: basic |
300,750 | 300,750 | ||||||
Weighted average common shares: diluted |
314,250 | 314,250 | ||||||
-18-
Nuance Communications, Inc.
Reconciliation of Supplemental Financial Information
GAAP and non-GAAP Revenue and Net Income (Loss) per Share Guidance
(in thousands, except per share amounts)
Unaudited
Reconciliation of Supplemental Financial Information
GAAP and non-GAAP Revenue and Net Income (Loss) per Share Guidance
(in thousands, except per share amounts)
Unaudited
Twelve months ended | ||||||||
September 30, 2011 | ||||||||
Low | High | |||||||
GAAP revenue |
$ | 1,277,500 | $ | 1,317,500 | ||||
Acquisition-related adjustment revenue |
42,500 | 42,500 | ||||||
Non-GAAP revenue |
$ | 1,320,000 | $ | 1,360,000 | ||||
GAAP net income (loss), per share |
$ | 0.04 | $ | 0.11 | ||||
Acquisition-related adjustment revenue |
0.13 | 0.13 | ||||||
Acquisition-related adjustment cost of revenue |
(0.03 | ) | (0.03 | ) | ||||
Acquisition-related costs, net |
0.05 | 0.05 | ||||||
Cost of revenue from amortization of intangible assets |
0.16 | 0.16 | ||||||
Amortization of intangible assets |
0.27 | 0.27 | ||||||
Non-cash stock-based compensation |
0.46 | 0.46 | ||||||
Non-cash interest expense |
0.04 | 0.04 | ||||||
Non-cash income taxes |
0.12 | 0.12 | ||||||
Costs associated with IP collaboration agreements |
0.06 | 0.06 | ||||||
Change in fair value of share-based instruments |
(0.02 | ) | (0.02 | ) | ||||
Restructuring and other charges, net |
0.01 | 0.01 | ||||||
Non-GAAP net income (loss), per share |
$ | 1.29 | $ | 1.36 | ||||
Shares used in computing GAAP and non-GAAP net income (loss) per share: |
||||||||
Weighted average common shares: basic |
305,000 | 305,000 | ||||||
Weighted average common shares: diluted |
316,000 | 316,000 | ||||||
-19-