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Nuance Announces Second Quarter Fiscal 2014 Results

Nuance Communications, Inc. (NASDAQ: NUAN) today announced financial results for the second quarter of fiscal 2014, ended March 31, 2014.

In the second quarter of fiscal 2014, Nuance reported GAAP revenue of $475.7 million, compared to $451.0 million in the second quarter of fiscal 2013. Nuance reported non-GAAP revenue of $490.0 million, which includes $14.3 million in revenue lost to accounting treatment in conjunction with acquisitions, compared to $484.0 million in the second quarter of fiscal 2013. In the second quarter of fiscal 2014, Nuance reported bookings of $638.0 million, up 43.3% from $445.1 million in the second quarter of fiscal 2013.

In the second quarter of fiscal 2014, Nuance recognized GAAP net loss of ($39.2) million, or ($0.12) per share, compared with GAAP net loss of ($25.8) million, or ($0.08) per share, in the second quarter of fiscal 2013. In the second quarter of fiscal 2014, Nuance reported non-GAAP net income of $88.3 million, or $0.28 per diluted share, compared to non-GAAP net income of $110.4 million, or $0.34 per diluted share, in the second quarter of fiscal 2013. Nuance’s second quarter fiscal 2014 non-GAAP operating margin was 23.9%, down from 29.1% in the second quarter of fiscal 2013. Nuance reported cash flow from operations of $87.0 million in the second quarter of fiscal 2014, down from $93.1 million in the second quarter of fiscal 2013. Nuance ended the second quarter of fiscal 2014 with total deferred revenue of $504.9 million, compared to $388.3 million a year ago. Nuance ended the second quarter of fiscal 2014 with a balance of cash, cash equivalents and marketable securities of $809.5 million. As of March 31, 2014, Nuance had repurchased 11.441 million shares of common stock at an average price per share of $18.43, for a total amount of $210.8 million.

Please refer to the “Discussion of Non-GAAP Financial Measures” and to the “GAAP to Non-GAAP Reconciliations,” included elsewhere in this release, for more information regarding the company’s use of non-GAAP measures.

“We are pleased with our second quarter and first half performance, particularly in our Healthcare and Mobile & Consumer businesses. We exceeded our targets for revenue, EPS and bookings. A growing proportion of our revenue and bookings continues to shift toward recurring revenue models, which reflects in our growing deferred revenue. Balancing more aggressive moves to reduce costs and improve productivity with investments in our products and markets, we believe we are well-positioned for renewed growth and profitability,” said Tom Beaudoin, Nuance CFO.

Highlights from the quarter include:

  • Healthcare – For Nuance’s healthcare solutions, second quarter fiscal 2014 non-GAAP revenue was $237.0 million. Key healthcare customers included Acadia Health, Cerner, Charleston Area Medical Center, Children’s Hospital of Atlanta, Cox Health Systems, Franciscan Alliance, Florida Hospital, Healthtrust, Life Span, Northwestern, Palomar Health, Shannon Health, Sutter Health Support Services, Trinity Health, Universal Health Services and Vanderbilt University Hospital.
  • Mobile & Consumer – For Nuance’s mobile and consumer solutions, second quarter fiscal 2014 non-GAAP revenue was $109.8 million. Key mobile customers included Audi, BMW, Comcast, CTIN Vietnam, DT, Elektrobit Automotive, Harmon, LG, Mercedes, Samsung, TISA, Toyota and ZTE.
  • Enterprise – For Nuance’s enterprise solutions, second quarter fiscal 2014 non-GAAP revenue was $87.2 million. Key enterprise customers included AT&T, Bell Canada, Charles Schwab, Delta Airlines, eBay, Health Care Services Corp, ING Canada, KCOM Group, Manulife, Microsoft, Oracle, Telstra, Time Warner Cable, UK DWP, UK HMRevenue and Customs.
  • Imaging – For Nuance’s document imaging solutions, second quarter fiscal 2014 non-GAAP revenue was $56.0 million. Key imaging customers included ABN AMRO Bank, Canon, Falabella, Fuji Xerox, IKEA, Konica Minolta, Prince George, Ricoh, Stinson, Tetrapak and Xerox.

Conference Call and Prepared Remarks

Nuance is providing a copy of prepared remarks in combination with its press release. These remarks are offered to provide shareholders and analysts with additional time and detail for analyzing results in advance of the company’s quarterly conference call. The remarks will be available at http://www.nuance.com/earnings-results/ in conjunction with the press release.

As previously scheduled, the conference call will begin today, May 8, 2014 at 5:00 pm EDT and will include only brief comments followed by questions and answers. The prepared remarks will not be read on the call. To access the live broadcast, please visit the Investor Relations section of Nuance’s Website at www.nuance.com. The call can also be heard by dialing (800) 230-1085 or (612) 288-0329 at least five minutes prior to the call and referencing code 324540. 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 324540.

About Nuance Communications, Inc

Nuance Communications, Inc. (NASDAQ: NUAN) is a leading provider of voice and language solutions for businesses and consumers around the world. Its technologies, applications and services make the user experience more compelling by transforming the way people interact with devices and systems. Every day, millions of users and thousands of businesses experience Nuance’s proven applications. For more information, please visit www.nuance.com.

Trademark reference: Nuance, the Nuance logo, Dragon Medical and eScription are registered trademarks or trademarks of Nuance Communications, Inc. or its affiliates in the United States and/or other countries. All other trademarks referenced herein are the property of their respective owners.

Definition of Bookings

Bookings represent the estimated gross revenue value of transactions at the time of contract execution, except for maintenance and support offerings. For fixed price contracts, the bookings value represents the gross total contract value. For contracts where revenue is based on transaction volume, the bookings value represents the contract price multiplied by the estimated future transaction volume during the contract term, whether or not such transaction volumes are guaranteed under a minimum commitment clause. Actual results could be different than our initial estimates. The maintenance and support bookings value represents the amounts billed in the period the customer is invoiced. Because of the inherent estimates required to determine bookings and the fact that the actual resultant revenue may differ from our initial bookings estimates, we consider bookings one indicator of potential future revenue and not as an arithmetic measure of backlog.

Safe Harbor and Forward-Looking Statements

Statements in this document regarding future performance and our management’s 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 our existing and future products; economic conditions in the United States and internationally; our ability to control and successfully manage our expenses and cash position; the effects of competition, including pricing pressure; possible defects in our products and technologies; our ability to successfully integrate operations and employees of acquired businesses; the conversion rate of bookings into revenue; the ability to realize anticipated synergies from acquired businesses; and the other factors described in our annual report on Form 10-K for the fiscal year ended September 30, 2013 and our quarterly reports filed with the Securities and Exchange Commission. We disclaim 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

We utilize 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 management’s 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 and six months ended March 31, 2014 and 2013, 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 is described below.

Acquisition-Related Revenue and Cost of Revenue.

We provide supplementary non-GAAP financial measures of revenue, which include revenue related to acquisitions, primarily from Equitrac, Quantim and Varolii for the three and six months ended March 31, 2014 that would otherwise have been recognized but for the purchase accounting treatment of these transactions. Non-GAAP revenue also includes revenue that we would have otherwise recognized had we not acquired intellectual property and other assets from the same customer. Because GAAP accounting requires the elimination of this revenue, GAAP results alone do not fully capture all of our economic activities. These non-GAAP adjustments are intended to reflect the full amount of such revenue. We include 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. We believe 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 contracts, we have historically 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, we generally will incur these adjustments in connection with any future acquisitions.

Acquisition-Related Costs, Net.

In recent years, we have completed a number of acquisitions, which result in operating expenses which would not otherwise have been incurred. We provide 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. We consider 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 our control. Furthermore, we do 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 our ability to utilize our existing assets and estimate the long-term value that acquired assets will generate for us. We believe 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, we 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, including services provided by third parties.

(ii) Professional service fees. Professional service fees include third party costs related to the acquisition, and 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.

We exclude 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 our acquired intellectual property is treated in a comparable manner to our internally developed intellectual property. Although we exclude amortization of acquired intangible assets from our non-GAAP expenses, we believe that it is important for investors to understand that such intangible assets contribute to revenue generation. Amortization of 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 party's extensive speech recognition technology and natural language and semantic processing technology, we have entered into IP collaboration agreements, with terms ranging between five and six years. Depending on the agreement, some or all intellectual property derived from these collaborations will be jointly owned by the two parties. For the majority of the developed intellectual property, we will have sole rights to commercialize such intellectual property for periods ranging between two to six years, depending on the agreement. For non-GAAP purposes, we consider 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 our normal, organic, continuing operating activities, and are therefore presenting this supplemental information to show the results excluding these expenses. We do not exclude from our non-GAAP results the corresponding revenue, if any, generated from these collaboration efforts. Although our 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.

We provide 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, we believe that the exclusion of stock-based compensation allows for more accurate comparisons of operating results to peer companies, as well as to times in our history when stock-based compensation was more or less significant as a portion of overall compensation than in the current period. We evaluate 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 Company’s stock price and other factors such as volatility that are beyond our 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, we do not include such charges in operating plans. Stock-based compensation will continue in future periods.

(ii) and (iii) Certain accrued interest and income taxes. We also exclude certain accrued interest and certain accrued income taxes because we believe 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.

Other Expenses.

We exclude 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, we believe management and the users of the financial statements are better able to understand the financial results of what we consider to be our 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. Other items such as gains or losses on non-controlling strategic equity interests are also excluded.

We believe 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. We further believe that providing this information allows investors to not only better understand our 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

 
 
Nuance Communications, Inc.
Condensed Consolidated Statements of Operations
(in thousands, except per share amounts)
Unaudited
               
Three months ended Six months ended
March 31, March 31,
2014 2013 2014 2013
 
Revenues:
Product and licensing $ 174,819 $ 173,065 $ 353,256 $ 369,796
Professional services and hosting 227,526 213,264 445,661 413,569
Maintenance and support   73,308     64,670     146,716     129,902  
Total revenues   475,653     450,999     945,633     913,267  
 
Cost of revenues:
Product and licensing 25,226 22,943 50,435 49,252
Professional services and hosting 157,437 138,534 312,017 263,690
Maintenance and support 12,359 13,098 25,196 27,895
Amortization of intangible assets   15,342     16,610     30,536     32,920  
Total cost of revenues   210,364     191,185     418,184     373,757  
 
Gross profit   265,289     259,814     527,449     539,510  
 
Operating expenses:
Research and development 84,581 69,681 165,051 138,402
Sales and marketing 98,280 97,855 217,186 214,990
General and administrative 43,682 33,355 88,158 78,139
Amortization of intangible assets 26,571 26,001 54,043 51,427
Acquisition-related cost, net 6,802 15,448 9,600 31,181
Restructuring and other charges, net   4,719     5,062     8,556     6,729  
Total operating expenses   264,635     247,402     542,594     520,868  
 
Income (loss) from operations 654 12,412 (15,145 ) 18,642
 
Other expense, net   (33,487 )   (37,586 )   (70,123 )   (74,473 )
 
Loss before income taxes (32,833 ) (25,174 ) (85,268 ) (55,831 )
 
Provision (benefit) from income taxes   6,394     674     9,372     (7,887 )
 
Net loss $ (39,227 ) $ (25,848 ) $ (94,640 ) $ (47,944 )
 
Net loss per share:
Basic $ (0.12 ) $ (0.08 ) $ (0.30 ) $ (0.15 )
Diluted $ (0.12 ) $ (0.08 ) $ (0.30 ) $ (0.15 )
 
Weighted average common shares outstanding:
Basic   316,593     315,473     315,696     314,006  
Diluted   316,593     315,473     315,696     314,006  
 
 
Nuance Communications, Inc.
Condensed Consolidated Balance Sheets
(in thousands)
Unaudited
       
 
ASSETS March 31, 2014 September 30, 2013
 
 
Current assets:
Cash and cash equivalents $ 768,302 $ 808,118
Marketable securities 41,204 38,728
Accounts receivable, net 387,715 382,741
Prepaid expenses and other current assets   188,557   179,940
Total current assets 1,385,778 1,409,527
 
Land, building and equipment, net 144,173 143,465
Goodwill 3,378,194 3,293,198
Intangible assets, net 921,653 953,278
Other assets   181,868   159,135
Total assets $ 6,011,666 $ 5,958,603
 
LIABILITIES AND STOCKHOLDERS' EQUITY
 
Current liabilities:
Current portion of long-term debt $ 251,031 $ 246,040
Accounts payable and accrued expenses 284,761 305,441
Deferred revenue   296,548   253,753
Total current liabilities 832,340 805,234
 
Long-term debt 2,117,522 2,108,091
Deferred revenue, net of current portion 208,304 160,823
Other liabilities   254,491   246,441
Total liabilities   3,412,657   3,320,589
 
Stockholders' equity   2,599,009   2,638,014
 
Total liabilities and stockholders' equity $ 6,011,666 $ 5,958,603
 
 
Nuance Communications, Inc.
Consolidated Statements of Cash Flows
(in thousands)
Unaudited
               
Three months ended Six months ended
March 31, March 31,
2014 2013 2014 2013
 
Cash flows from operating activities:
Net loss $ (39,227 ) $ (25,848 ) $ (94,640 ) $ (47,944 )
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization 54,308 52,147 109,417 102,576
Stock-based compensation 44,920 29,642 92,159 74,913
Non-cash interest expense 9,782 9,591 19,443 19,577
Deferred tax provision (benefit) 5,058 (20,151 ) 3,446 (24,228 )
Other 892 823 (5,258 ) (1,102 )
Changes in operating assets and liabilities, net of effects from acquisitions:
Accounts receivable 13,050 21,466 6,518 30,281
Prepaid expenses and other assets (600 ) (2,413 ) (11,695 ) (11,517 )
Accounts payable (4,065 ) 20,839 (32,097 ) 2,147
Accrued expenses and other liabilities (17,753 ) 260 (10,301 ) 9,501
Deferred revenue   20,661     6,730     88,190     61,830  
Net cash provided by operating activities   87,026     93,086     165,182     216,034  
Cash flows from investing activities:
Capital expenditures (10,553 ) (14,484 ) (24,719 ) (29,588 )
Payments for business and technology acquisitions, net of cash acquired (36,041 ) (28,067 ) (135,537 ) (474,259 )
Purchases of marketable securities and other investments (6,441 ) (275 ) (11,504 ) -
Proceeds from sales and maturities of marketable securities and other investments   8,262     -     21,634     181  
Net cash used in investing activities   (44,773 )   (42,826 )   (150,126 )   (503,666 )
Cash flows from financing activities:
Payments of debt (1,209 ) (1,288 ) (2,516 ) (146,123 )
Proceeds from long-term debt, net of issuance costs - (219 ) - 352,392
Payments for repurchases of common stock (8,435 ) - (26,435 ) -
Payments for settlement of share-based derivatives (4,254 ) (3,624 ) (5,286 ) (3,801 )
Payments of other long-term liabilities (615 ) (308 ) (1,519 ) (1,320 )
Excess tax benefits on employee equity awards - (4,974 ) - -
Proceeds from issuance of common stock from employee stock plans 10,734 11,179 11,922 13,085
Cash used to net share settle employee equity awards   (4,541 )   (5,659 )   (31,047 )   (49,518 )
Net cash (used in) provided by financing activities   (8,320 )   (4,893 )   (54,881 )   164,715  
Effects of exchange rate changes on cash and cash equivalents   (287 )   (1,153 )   9     (1,542 )
Net increase (decrease) in cash and cash equivalents 33,646 44,214 (39,816 ) (124,459 )
Cash and cash equivalents at beginning of period   734,656     961,088     808,118     1,129,761  
Cash and cash equivalents at end of period $ 768,302   $ 1,005,302   $ 768,302   $ 1,005,302  
 
 
Nuance Communications, Inc.
Supplemental Financial Information - GAAP to Non-GAAP Reconciliations
(in thousands, except per share amounts)
Unaudited
               
Three months ended Six months ended
March 31 March 31
2014 2013 2014 2013
 
GAAP revenue $ 475,653 $ 450,999 $ 945,633 $ 913,267
Acquisition-related revenue adjustments: product and licensing 7,269 23,855 18,758 45,454
Acquisition-related revenue adjustments: professional services and hosting 6,214 7,830 13,873 14,893
Acquisition-related revenue adjustments: maintenance and support   837     1,346     1,754     2,833  
Non-GAAP revenue $ 489,973   $ 484,030   $ 980,018   $ 976,447  
 
GAAP cost of revenue $ 210,364 $ 191,185 $ 418,184 $ 373,757
Cost of revenue from amortization of intangible assets (15,342 ) (16,610 ) (30,536 ) (32,920 )
Cost of revenue adjustments: product and licensing (1,2) 271 2,030 925 4,013
Cost of revenue adjustments: professional services and hosting (1,2) (6,884 ) (4,095 ) (13,189 ) (6,183 )
Cost of revenue adjustments: maintenance and support (1,2)   (406 )   (430 )   (1,190 )   (2,533 )
Non-GAAP cost of revenue $ 188,003   $ 172,080   $ 374,194   $ 336,134  
 
GAAP gross profit $ 265,289 $ 259,814 $ 527,449 $ 539,510
Gross profit adjustments   36,681     52,136     78,375     100,803  
Non-GAAP gross profit $ 301,970   $ 311,950   $ 605,824   $ 640,313  
 
GAAP income (loss) from operations $ 654 $ 12,412 $ (15,145 ) $ 18,642
Gross profit adjustments 36,681 52,136 78,375 100,803
Research and development (1) 10,455 4,977 20,743 13,837
Sales and marketing (1) 10,210 12,033 25,454 28,880
General and administrative (1) 15,953 7,545 29,992 22,418
Amortization of intangible assets 26,571 26,001 54,043 51,427
Costs associated with IP collaboration agreements 4,937 5,458 9,874 10,708
Acquisition-related costs, net 6,802 15,448 9,600 31,181
Restructuring and other charges, net 4,719 5,062 8,556 6,729
Other   (71 )   -     1,061     -  
Non-GAAP income from operations $ 116,911   $ 141,072   $ 222,553   $ 284,625  
 
GAAP provision (benefit) from income taxes $ 6,394 $ 674 $ 9,372 $ (7,887 )
Non-cash taxes   (1,385 )   5,057     292     19,823  
Non-GAAP provision for income taxes $ 5,009   $ 5,731   $ 9,664   $ 11,936  
 
GAAP net loss $ (39,227 ) $ (25,848 ) $ (94,640 ) $ (47,944 )
Acquisition-related adjustment - revenue (2) 14,320 33,031 34,385 63,180
Acquisition-related adjustment - cost of revenue (2) (1,283 ) (2,592 ) (2,516 ) (5,075 )
Acquisition-related costs, net 6,802 15,448 9,600 31,181
Cost of revenue from amortization of intangible assets 15,342 16,610 30,536 32,920
Amortization of intangible assets 26,571 26,001 54,043 51,427
Non-cash stock-based compensation (1) 44,920 29,642 92,159 74,913
Non-cash interest expense 9,782 9,591 19,443 19,577
Non-cash income taxes 1,385 (5,057 ) (292 ) (19,823 )
Costs associated with IP collaboration agreements 4,937 5,458 9,874 10,708
Change in fair value of share-based instruments 72 3,015 4,222 5,525
Restructuring and other charges, net 4,719 5,062

 

8,556 6,729
Other   (71 )   -     (454 )   -  
Non-GAAP net income $ 88,269   $ 110,361   $ 164,916   $ 223,318  
 
Non-GAAP diluted net income per share $ 0.28   $ 0.34   $ 0.52   $ 0.69  
 
Diluted weighted average common shares outstanding   319,677     324,119     318,653     323,829  
 
 
Nuance Communications, Inc.
Supplemental Financial Information - GAAP to Non-GAAP Reconciliations, continued
(in thousands)
Unaudited
               
Three months ended Six months ended
March 31 March 31
2014 2013 2014 2013
 

(1) Non-Cash Stock-Based Compensation

Cost of product and licensing $ 697 $ 168 $ 962 $ 353
Cost of professional services and hosting 7,199 4,489 13,818 6,892
Cost of maintenance and support 406 430 1,190 2,533
Research and development 10,455 4,977 20,743 13,837
Sales and marketing 10,210 12,033 25,454 28,880
General and administrative   15,953     7,545     29,992     22,418  
Total $ 44,920   $ 29,642   $ 92,159   $ 74,913  

 

(2) Acquisition-Related Revenue and Cost of Revenue

Revenue $ 14,320 $ 33,031 $ 34,385 $ 63,180
Cost of product and licensing (968 ) (2,198 ) (1,887 ) (4,366 )
Cost of professional services and hosting   (315 )   (394 )   (629 )   (709 )
Total $ 13,037   $ 30,439   $ 31,869   $ 58,105  
 
 
Nuance Communications, Inc.
Supplemental Financial Information – GAAP to Non-GAAP Reconciliations, continued
(in millions)
Unaudited
                           

Healthcare

Q1 Q2 Q3 Q4 FY Q1 Q2
2013 2013 2013 2013 2013 2014 2014
GAAP Revenue $204.7 $219.1 $230.0 $220.0 $873.8 $221.6 $232.5
Adjustment $12.7 $10.2 $8.1 $6.7 $37.8 $5.7 $4.5
Non-GAAP Revenue $217.4 $229.3 $238.1 $226.7 $911.6 $227.3 $237.0
 

Mobile & Consumer

Q1 Q2 Q3 Q4 FY Q1 Q2
2013 2013 2013 2013 2013 2014 2014
GAAP Revenue $128.8 $113.0 $108.7 $117.2 $467.7 $112.5 $107.0
Adjustment $2.9 $3.2 $2.3 $3.1 $11.5 $2.8 $2.8
Non-GAAP Revenue $131.7 $116.2 $111.0 $120.3 $479.2 $115.3 $109.8
 

Enterprise

Q1 Q2 Q3 Q4 FY Q1 Q2
2013 2013 2013 2013 2013 2014 2014
GAAP Revenue $83.7 $72.9 $78.1 $85.5 $320.2 $86.6 $85.3
Adjustment $0.0 $1.6 $0.8 $0.9 $3.3 $2.6 $1.9
Non-GAAP Revenue $83.7 $74.5 $78.9 $86.4 $323.5 $89.2 $87.2
 

Imaging

Q1 Q2 Q3 Q4 FY Q1 Q2
2013 2013 2013 2013 2013 2014 2014
GAAP Revenue $45.1 $46.0 $53.0 $49.5 $193.6 $49.3 $50.9
Adjustment $14.5 $18.0 $9.8 $7.5 $49.8 $9.0 $5.1
Non-GAAP Revenue $59.6 $64.0 $62.8 $57.0 $243.4 $58.3 $56.0
 
 
Schedules may not add due to rounding.
 

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@CloudExpo Stories
ScriptRock makes GuardRail, a DevOps-ready platform for configuration monitoring. Realizing we were spending way too much time digging up, cataloguing, and tracking machine configurations, we began writing our own scripts and tools to handle what is normally an enormous chore. Then we took the concept a step further, giving it a beautiful interface and making it simple enough for our bosses to understand. We named it GuardRail after its function - to allow businesses to move fast and stay sa...
SYS-CON Media announced today that Sematext launched a popular blog feed on DevOps Journal with over 6,000 story reads over the weekend. DevOps Journal is focused on this critical enterprise IT topic in the world of cloud computing. DevOps Journal brings valuable information to DevOps professionals who are transforming the way enterprise IT is done. Sematext is a globally distributed organization that builds innovative Cloud and On Premises solutions for performance monitoring, alerting an...
SYS-CON Events announced today Isomorphic Software, the global leader in high-end, web-based business applications, will exhibit at SYS-CON's DevOps Summit 2015 New York, which will take place on June 9-11, 2015, at the Javits Center in New York City, NY. Isomorphic Software is the global leader in high-end, web-based business applications. We develop, market, and support the SmartClient & Smart GWT HTML5/Ajax platform, combining the productivity and performance of traditional desktop software ...
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"Our premise is Docker is not enough. That's not a bad thing - we actually love Docker. At ActiveState all our products are based on open source technology and Docker is an up-and-coming piece of open source technology," explained Bart Copeland, President & CEO of ActiveState Software, in this SYS-CON.tv interview at DevOps Summit at Cloud Expo®, held Nov 4-6, 2014, at the Santa Clara Convention Center in Santa Clara, CA.
The Internet of Things is not new. Historically, smart businesses have used its basic concept of leveraging data to drive better decision making and have capitalized on those insights to realize additional revenue opportunities. So, what has changed to make the Internet of Things one of the hottest topics in tech? In his session at @ThingsExpo, Chris Gray, Director, Embedded and Internet of Things, discussed the underlying factors that are driving the economics of intelligent systems. Discover ...
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