Cerence Inc. (NASDAQ:CRNC) Q3 2024 Earnings Conference Call August 8, 2024 8:30 AM ET

Company Participants

Richard Yerganian – Senior Vice President, Investor Relations
Stefan Ortmanns – Chief Executive Officer
Tony Rodriquez – Interim Chief Financial Officer

Conference Call Participants

Jeff Van Rhee – Craig-Hallum
Colin Langan – Wells Fargo
Nick Doyle – Needham & Company
Luke Junk – Baird
Mark Delaney – Goldman Sachs

Operator

Good day and thank you for standing by. Welcome to the Cerence’s Third Quarter 2024 Earnings Call. At this time all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today’s conference is being recorded.

I would now like to hand the conference over to your first speaker today Richard Yerganian, Senior Vice President, Investor Relations. Richard, please go ahead.

Richard Yerganian

Thank you, Felicia. Welcome to Cerence’s third quarter of fiscal year 2024 conference call. Before we begin, I would like to remind you that this call may involve certain forward-looking statements. Any statements that are not statements of historical fact, including statements related to our expectations, estimates, assumptions, beliefs, outlook, strategy, goals, objectives, targets, and plans, should be considered to be forward-looking statements. Cerence makes no representations to update those statements after today. These statements are subject to risks and uncertainties which may cause actual results to differ materially from such statements, as described in our SEC filings, including the Form 8-K with the press release preceding today’s call, our Form 10-K filed on November 29, 2023 and our most recent Form 10-Q.

In addition, the company may refer to certain non-GAAP measures, key performance indicators, and pro forma financial information during this call. Please refer to today’s press release for further details of the definitions, limitations, and uses of those measures, and reconciliations of non-GAAP measures to the closest GAAP equivalent. The press release is available in the IR section of our website. Joining me on today’s call are Stefan Ortmanns, CEO of Cerence, and Tony Rodriquez, Interim CFO of Cerence. As a reminder, the only authorized spokespeople for the company are Stefan, Tony, and me.

Now onto the call. Stefan?

Stefan Ortmanns

Thank you, Rich, and good morning everyone. To begin, I would like to briefly comment on our third quarter results. Our financial performance was as expected with revenue in the middle of our guidance. Due to the decline in our stock price, we performed a goodwill assessment following completion of the quarter that resulted in a goodwill impairment charge of approximately $357 million, negatively impacting our GAAP profitability. With the exception of gross margin, which was within the range, all other non-GAAP profitability metrics were above the guidance we provided on our last call. Additionally, we had a strong quarter for cash flow from operations, which came in at $12.9 million. We remain substantially on track to achieve the full year guidance we provided our last conference call and Tony will provide the details later in the call.