Headlines

Q4 Revenue exceeds high end of guidance; positive cash flow from operations of $6.1 million
Transformation plan on track to deliver net annualized cost savings of $35-$40 million
Initial FY25 revenue guidance of $236 to $247 million
Record high of 22 platform launches in FY24, including 6 for generative AI solutions and 4 in Q4

BURLINGTON, Mass., Nov. 21, 2024 (GLOBE NEWSWIRE) -- Cerence Inc. (NASDAQ:CRNC), AI for a world in motion, today reported its fourth quarter and fiscal year 2024 results for the year ended September 30, 2024.

Results Summary ⁽¹^,2⁾

(in millions, except per share data)

	Three Months Ended								Twelve Months Ended
	September 30,								September 30,
	2024				2023				2024				2023
GAAP revenue		$54.8				$80.8				$331.5				$294.5
GAAP gross margin			63.7	%			71.5	%			73.7	%			67.7	%
Non-GAAP gross margin			64.9	%			72.9	%			74.5	%			69.1	%
GAAP operating margin⁽³⁾			-35.1	%			4.8	%			-174.9	%			-9.2	%
Non-GAAP operating margin			-7.2	%			17.8	%			21.8	%			10.8	%
GAAP net loss⁽³⁾		$(20.4		)		$(11.6		)		$(588.1		)		$(56.3		)
GAAP net loss margin⁽³⁾			-37.3	%			-14.3	%			-177.4	%			-19.1	%
Non-GAAP net (loss) income		$(3.0		)		$3.8				$56.1				$14.6
Adjusted EBITDA		$(1.9		)		$16.6				$80.6				$41.5
Adjusted EBITDA margin			-3.5	%			20.5	%			24.3	%			14.1	%
GAAP net loss per share - diluted⁽³⁾		$(0.49		)		$(0.29		)		$(14.12		)		$(1.40		)
Non-GAAP net (loss) income per share - diluted		$(0.07		)		$0.09				$1.23				$0.36

(1)	As previously disclosed, Q1FY24 revenue includes the non-cash revenue associated with the Toyota "Legacy" contract and related impacts totaling $86.6M.
(2)	Please refer to the "Discussion of Non-GAAP Financial Measures" and "Reconciliations of GAAP Financial Measures to Non-GAAP Financial Measures" included elsewhere in this release for more information regarding our use of non-GAAP financial measures.
(3)	Includes a Goodwill impairment charge of $252M in Q2FY24 and $357M in Q3FY24.

Brian Krzanich, Chief Executive Officer of Cerence, commented, "The automotive industry is experiencing rapid transformation, and I am excited to have joined Cerence at this pivotal moment. We finished the fiscal year strong, with revenue exceeding the high end of our guidance."

Krzanich continued, "Throughout the course of the year, we gained critical momentum for our generative AI- and large language model-based solutions, with six generative AI program launches with leading automakers in fiscal 2024. As we work to advance and roll-out our next-gen roadmap, I look forward to leading the team toward our goals of increased efficiency and a high level of customer satisfaction, setting us up for anticipated sustainable, profitable growth in the years ahead."

Cerence Key Performance Indicators

To help investors gain further insight into the Cerence business and its performance, management provides a set of key performance indicators that includes:

	Key Performance Indicator¹	Q4FY24

	Percent of worldwide auto production with Cerence Technology (TTM)	52%
	Change in number of Cerence connected cars shipped² (TTM over prior year TTM)	16%
	Change in Adjusted Total Billings (TTM over prior year TTM)³	1%
(1)	Please refer to the "Key Performance Indicators" section included elsewhere in this release for more information regarding the definitions and our use of key performance indicators.
(2)	Based on IHS Markit data, global auto production increased 1% over the same time period ended on September 30, 2024.
(3)	Change in Adjusted total billings YoY (TTM): The year over year change in total billings adjusted to exclude Professional Services, prepay billings and adjusted for prepay consumption.

First Quarter and Full Year Fiscal 2025 Outlook

For the fiscal quarter ending December 31, 2024, revenue is expected to be in the range of $47 million to $50 million. GAAP net loss is expected to be in the range of ($26) million to ($23) million. Adjusted EBITDA is expected to be in the range of ($9) million to ($6) million.

For the full fiscal year ending September 30, 2025, the company expects revenue to be in the range of $236 million to $247 million which includes an estimated $20 million of fixed contracts at the mid-point of guidance. GAAP net loss is expected to be in the range of ($40) million to ($29) million. Adjusted EBITDA is expected to be in the range of $15 million to $26 million.

The adjusted EBITDA guidance excludes amortization of acquired intangible assets, stock-based compensation, restructuring and other costs.

Additional details regarding guidance will be provided during the earnings call.

Cerence Conference Call and Webcast

The company will host a live conference call and webcast with slides to discuss the results today at 8:30 a.m. Eastern Time/5:30 a.m. Pacific Time. Interested investors and analysts are invited to dial into the conference call by registering here.

Webcast access will also be available on the Investor Information section of the company's website at https://www.cerence.com/investors/events-and-resources.

A replay of the webcast can be accessed by visiting the company's website 90 minutes following the conference call at https://www.cerence.com/investors/events-and-resources.

Forward Looking Statements

Statements in this press release regarding: Cerence's future performance, results and financial condition; expected growth and profitability; outlook; transformation plans and cost efficiency initiatives, including the estimated net annualized cost savings; strategy; opportunities; business, industry and market trends; strategy regarding fixed contracts and its impact on financial results; backlog; revenue visibility; revenue timing and mix; demand for Cerence products; innovation and new product offerings, including AI technology; expected benefits of technology partnerships; and management's future expectations, estimates, assumptions, beliefs, goals, objectives, targets, 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," "goal," "anticipates," "projects," "forecasts," "expects," "intends," "continues," "will," "may," or "estimates" or similar expressions) should also be considered to be forward-looking statements. Although we believe forward-looking statements are based upon reasonable assumptions, such statements involve known and unknown risk, uncertainties and other factors, which may cause actual results or performance of the company to be materially different from any future results or performance expressed or implied by such forward-looking statements including but not limited to: the highly competitive and rapidly changing market in which we operate; adverse conditions in the automotive industry, the related supply chain and semiconductor shortage, or the global economy more generally; automotive production delays; changes in customer forecasts; the impacts of the COVID-19 pandemic on our and our customers' businesses; the ongoing conflicts in Ukraine and the Middle East; our inability to control and successfully manage our expenses and cash position; our inability to deliver improved financial results from process optimization efforts and cost reduction actions; escalating pricing pressures from our customers; the impact on our business of the transition to a lower level of fixed contracts, including the failure to achieve such a transition; our failure to win, renew or implement service contracts; the cancellation or postponement of existing contracts; the loss of business from any of our largest customers; effects of customer defaults; our inability to successfully introduce new products, applications and services; our strategies to increase cloud offerings and deploy generative AI and large language models (LLMs); the inability to expand into adjacent markets; the inability to recruit and retain qualified personnel; disruptions arising from transitions in management personnel, including the transition to our new Chief Executive Officer; cybersecurity and data privacy incidents; fluctuating currency rates and interest rates; inflation; restrictions on our current and future operations under the terms of our debt, the use of cash to service our debt; and our inability to generate sufficient cash from our operations; and the other factors discussed in our most recent Annual Report on Form 10-K, quarterly reports on Form 10-Q, and other filings 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.

Discussion of Non-GAAP Financial Measures

We believe that providing the non-GAAP information 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. The non-GAAP information should not be considered superior to, or a substitute for, financial statements prepared in accordance with GAAP.

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. 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 financial statements.

Consistent with this approach, we believe that disclosing non-GAAP financial measures to the readers of our financial statements provides such readers with useful supplemental data that, while not a substitute for GAAP financial statements, 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 September 30, 2024 and 2023, our management has either included or excluded the following items in general categories, each of which is described below.

Adjusted EBITDA.

Adjusted EBITDA is defined as net income attributable to Cerence Inc. before net income (loss) attributable to income tax (benefit) expense, other income (expense) items, net, depreciation and amortization expense, and excluding amortization of acquired intangible assets, stock-based compensation, and restructuring and other costs, net or impairment charges related to fixed and intangible assets and gains or losses on the sale of long-lived assets, if any. From time to time we may exclude from Adjusted EBITDA the impact of events, gains, losses or other charges (such as significant legal settlements) that affect the period-to-period comparability of our operating performance. Other income (expense) items, net include interest expense, interest income, and other income (expense), net (as stated in our Condensed Consolidated Statement of Operations). Our management and Board of Directors use this financial measure to evaluate our operating performance. It is also a significant performance measure in our annual incentive compensation programs.

Restructuring and other costs, net.

Restructuring and other costs, net include restructuring expenses as well as other charges that are unusual in nature, are the result of unplanned events, and arise outside the ordinary course of our business such as employee severance costs, consulting costs relating to our transformation initiatives, costs for consolidating duplicate facilities, third-party fees relating to the modification of our convertible debt, and the release of a pre-acquisition contingency.

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.

Non-cash expenses.

We provide non-GAAP information relative to the following non-cash expenses: (i) stock-based compensation; and (ii) non-cash interest. These items are further discussed as follows:

Stock-based compensation. Because of varying valuation methodologies, subjective assumptions and the variety of award types, we exclude stock-based compensation from our operating results. We evaluate performance both with and without these measures because compensation expense related to stock-based compensation is typically non-cash and 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)

Non-cash interest. We exclude non-cash interest because we believe that excluding this expense provides 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. Non-cash interest expense will continue in future periods.

Other expenses.

We exclude certain other expenses that result from unplanned events outside the ordinary course of continuing operations, in order to measure operating performance and current and future liquidity both with and without these expenses. 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 other charges (credits), net, losses from extinguishment of debt, and changes in indemnification assets corresponding with the release of pre-spin liabilities for uncertain tax positions.

Adjustments to income tax provision.

Adjustments to our GAAP income tax provision to arrive at non-GAAP net income is determined based on our non-GAAP pre-tax income. Additionally, as our non-GAAP profitability is higher based on the non-GAAP adjustments, we adjust the GAAP tax provision to remove valuation allowances and related effects based on the higher level of reported non-GAAP profitability. We also exclude from our non-GAAP tax provision certain discrete tax items as they occur.

Key Performance Indicators

We believe that providing key performance indicators ("KPIs") allows investors to gain insight into the way management views the performance of the business. We further believe that providing KPIs allows investors to better understand information used by management to evaluate and measure such performance. KPIs should not be considered superior to, or a substitute for, operating results prepared in accordance with GAAP. In assessing the performance of the business during the three months ended September 30, 2024, our management has reviewed the following KPIs, each of which is described below:

Percent of worldwide auto production with Cerence Technology: The number of Cerence enabled cars shipped as compared to IHS Markit car production data.
Change in number of Cerence connected cars shipped: The year-over-year change in the number of cars shipped with Cerence connected solutions. Amounts calculated on a TTM basis.
Change in Adjusted total billings YoY (TTM): The year over year change in total billings excluding Professional Services, prepay billings and adjusted for prepay consumption.

____________

See the tables at the end of this press release for non-GAAP reconciliations to the most directly comparable GAAP measures.

To learn more about Cerence, visit www.cerence.com, and follow the company on LinkedIn.

About Cerence Inc.

Cerence (NASDAQ:CRNC) is the global industry leader in creating unique, moving experiences for the mobility world. As an innovation partner to the world's leading automakers and mobility OEMs, it is helping advance the future of connected mobility through intuitive, AI-powered interaction between humans and their vehicles, connecting consumers' digital lives to their daily journeys no matter where they are. Cerence's track record is built on more than 20 years of knowledge and 500 million cars shipped with Cerence technology. Whether it's connected cars, autonomous driving, e-vehicles, or two-wheelers, Cerence is mapping the road ahead. For more information, visit www.cerence.com.

Contact Information

Cerence Inc.

Investor Relations

Email: investorrelations@cerence.com

CERENCE INC.

Consolidated Statements of Operations

(in thousands, except per share data)

	Three Months Ended						Twelve Months Ended
	September 30,						September 30,
	2024			2023			2024			2023
Revenues:
License	$	25,341		$	43,105		$	124,746		$	145,159
Connected service		12,088			19,168			133,444			75,071
Professional service		17,376			18,491			73,314			74,245
Total revenues		54,805			80,764			331,504			294,475
Cost of revenues:
License		1,257			2,356			6,060			8,522
Connected service		6,407			4,777			24,787			22,995
Professional service		12,246			15,791			56,282			63,232
Amortization of intangible assets		-			104			103			414
Total cost of revenues		19,910			23,028			87,232			95,163
Gross profit		34,895			57,736			244,272			199,312
Operating expenses:
Research and development		25,227			35,143			121,563			123,333
Sales and marketing		4,827			5,848			21,725			27,504
General and administrative		13,185			11,450			52,468			57,903
Amortization of intangible assets		553			557			2,203			5,854
Restructuring and other costs, net		10,331			842			17,077			11,917
Goodwill impairment		—			—			609,172			—
Total operating expenses		54,123			53,840			824,208			226,511
(Loss) income from operations		(19,228	)		3,896			(579,936	)		(27,199	)
Interest income		1,444			1,231			5,353			4,471
Interest expense		(3,102	)		(3,132	)		(12,553	)		(14,769	)
Other income (expense), net		503			(1,649	)		2,526			1,108
(Loss) income before income taxes		(20,383	)		346			(584,610	)		(36,389	)
Provision for income taxes		33			11,898			3,468			19,865
Net loss	$	(20,416	)	$	(11,552	)	$	(588,078	)	$	(56,254	)
Net loss per share:
Basic		(0.49	)		(0.29	)		(14.12	)		(1.40	)
Diluted		(0.49	)		(0.29	)		(14.12	)		(1.40	)
Weighted-average common share outstanding:
Basic		41,866			40,357			41,642			40,215
Diluted		41,866			40,357			41,642			40,215

CERENCE INC.

Consolidated Balance Sheets

(in thousands, except per share amounts)

	September 30,			September 30,
	2024			2023
ASSETS
Current assets:
Cash and cash equivalents	$	121,485		$	101,154
Marketable securities		5,502			9,211
Accounts receivable, net of allowances of $1,613 and $4,044 at September 30, 2024 and September 30, 2023, respectively		62,755			61,270
Deferred costs		5,286			6,935
Prepaid expenses and other current assets		70,481			47,157
Total current assets		265,509			225,727
Long-term marketable securities		3,453			10,607
Property and equipment, net		30,139			34,013
Deferred costs		18,051			20,299
Operating lease right of use assets		12,879			11,961
Goodwill		296,858			900,342
Intangible assets, net		1,706			3,875
Deferred tax assets		51,398			46,601
Other assets		22,365			44,165
Total assets	$	702,358		$	1,297,590
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	3,959		$	16,873
Deferred revenue		52,822			77,068
Short-term operating lease liabilities		4,528			5,434
Short-term debt		87,094			-
Accrued expenses and other current liabilities		68,405			48,718
Total current liabilities		216,808			148,093
Long-term debt, net of discounts and issuance costs		194,812			275,951
Deferred revenue, net of current portion		114,354			145,531
Long-term operating lease liabilities		8,803			7,947
Other liabilities		26,484			25,193
Total liabilities		561,261			602,715
Stockholders' Equity:
Common stock, $0.01 par value, 560,000 shares authorized as of September 30, 2024; 41,924 and 40,423 shares issued and outstanding as of September 30, 2024 and September 30, 2023, respectively		419			404
Accumulated other comprehensive loss		(25,912	)		(27,966	)
Additional paid-in capital		1,088,330			1,056,099
Accumulated deficit		(921,740	)		(333,662	)
Total stockholders' equity		141,097			694,875
Total liabilities and stockholders' equity	$	702,358		$	1,297,590

CERENCE INC.

Consolidated Statements of Cash Flows

(in thousands)

	Twelve Months Ended
	September 30,
	2024			2023
Cash flows from operating activities:
Net loss	$	(588,078	)	$	(56,254	)
Adjustments to reconcile net loss to net cash provided by operations:
Depreciation and amortization		10,630			16,038
Provision for credit loss reserve		3,545			3,626
Stock-based compensation		23,673			40,766
Non-cash interest expense		6,060			2,914
Loss on debt extinguishment		-			1,333
Deferred tax (benefit) provision		(4,658	)		7,597
Goodwill impairment		609,172			-
Unrealized foreign currency transaction gains		(1,454	)		(3,393	)
Other		(68	)		(3,388	)
Changes in operating assets and liabilities:
Accounts receivable		11,760			(16,964	)
Prepaid expenses and other assets		(12,466	)		28,192
Deferred costs		4,801			3,194
Accounts payable		(12,555	)		5,774
Accrued expenses and other liabilities		27,874			(408	)
Deferred revenue		(61,040	)		(21,529	)
Net cash provided by operating activities		17,196			7,498
Cash flows from investing activities:
Capital expenditures		(4,996	)		(5,124	)
Purchases of marketable securities		-			(18,025	)
Sale and maturities of marketable securities		11,112			30,324
Other investing activities		(1,737	)		(1,355	)
Net cash provided by investing activities		4,379			5,820
Cash flows from financing activities:
Proceeds from revolving credit facility		-			24,700
Payments of revolver credit facility		-			(24,700	)
Proceeds from long-term debt, net of discount		-			210,000
Payments for long-term debt issuance costs		(419	)		(17,176	)
Principal payments of long-term debt		-			(198,438	)
Common stock repurchases for tax withholdings for net settlement of equity awards		(9,865	)		(4,894	)
Principal payment of lease liabilities arising from a finance lease		(392	)		(451	)
Proceeds from the issuance of common stock		10,901			5,625
Net cash provided by (used in) financing activities		225			(5,334	)
Effects of exchange rate changes on cash and cash equivalents		(1,469	)		(1,677	)
Net change in cash and cash equivalents		20,331			6,307
Cash and cash equivalents at beginning of period		101,154			94,847
Cash and cash equivalents at end of period	$	121,485		$	101,154

CERENCE INC.

Reconciliations of GAAP Financial Measures to Non-GAAP Financial Measures

(unaudited - in thousands)

	Three Months Ended						Twelve Months Ended
	September 30,						September 30,
	2024			2023			2024			2023
GAAP revenue	$	54,805		$	80,764		$	331,504		$	294,475

GAAP gross profit	$	34,895		$	57,736		$	244,272		$	199,312
Stock-based compensation		685			1,004			2,633			3,703
Amortization of intangible assets		-			104			103			414
Non-GAAP gross profit	$	35,580		$	58,844		$	247,008		$	203,429
GAAP gross margin		63.7	%		71.5	%		73.7	%		67.7	%
Non-GAAP gross margin		64.9	%		72.9	%		74.5	%		69.1	%

GAAP operating (loss) income	$	(19,228	)	$	3,896		$	(579,936	)	$	(27,199	)
Stock-based compensation		4,382			8,965			23,673			40,766
Amortization of intangible assets		553			661			2,306			6,268
Restructuring and other costs, net		10,331			842			17,077			11,917
Goodwill impairment		-			-			609,172			-
Non-GAAP operating (loss) income	$	(3,962	)	$	14,364		$	72,292		$	31,752
GAAP operating margin		-35.1	%		4.8	%		-174.9	%		-9.2	%
Non-GAAP operating margin		-7.2	%		17.8	%		21.8	%		10.8	%

GAAP net loss	$	(20,416	)	$	(11,552	)	$	(588,078	)	$	(56,254	)
Stock-based compensation		4,382			8,965			23,673			40,766
Amortization of intangible assets		553			661			2,306			6,268
Restructuring and other costs, net		10,331			842			17,077			11,917
Goodwill impairment		-			-			609,172			-
Depreciation		2,028			2,226			8,324			9,770
Total other expense, net		(1,155	)		(3,550	)		(4,674	)		(9,190	)
Provision for income taxes		33			11,898			3,468			19,865
Adjusted EBITDA	$	(1,934	)	$	16,590		$	80,616		$	41,522
GAAP net loss margin		-37.3	%		-14.3	%		-177.4	%		-19.1	%
Adjusted EBITDA margin		-3.5	%		20.5	%		24.3	%		14.1	%

CERENCE INC.

Reconciliations of GAAP Financial Measures to Non-GAAP Financial Measures (cont.)

(unaudited - in thousands, except per share data)

	Three Months Ended						Twelve Months Ended
	September 30,						September 30,
	2024			2023			2024			2023
GAAP net loss	$	(20,416	)	$	(11,552	)	$	(588,078	)	$	(56,254	)
Stock-based compensation		4,382			8,965			23,673			40,766
Amortization of intangible assets		553			661			2,306			6,268
Restructuring and other costs, net		10,331			842			17,077			11,917
Loss on debt extinguishment		-			-			-			1,333
Goodwill impairment		-			-			609,172			-
Non-cash interest expense		1,579			1,464			6,060			2,914
Other		(31	)		500			(117	)		(344	)
Adjustments to income tax expense		574			2,870			(14,030	)		7,976
Non-GAAP net (loss) income	$	(3,028	)	$	3,750		$	56,063		$	14,576

Adjusted EPS:
GAAP Numerator:
Net loss attributed to common shareholders - basic and diluted	$	(20,416	)	$	(11,552	)	$	(588,078	)	$	(56,254	)

Non-GAAP Numerator:
Net (loss) income attributed to common shareholders - basic	$	(3,028	)	$	3,750		$	56,063		$	14,576
Interest on the Notes, net of tax		-			-			4,473			-
Net (loss) income attributed to common shareholders - diluted	$	(3,028	)	$	3,750		$	60,536		$	14,576

GAAP Denominator:
Weighted-average common shares outstanding - basic and diluted		41,866			40,357			41,642			40,215

Non-GAAP Denominator:
Weighted-average common shares outstanding- basic		41,866			40,357			41,642			40,215
Adjustment for diluted shares		-			1,101			7,727			423
Weighted-average common shares outstanding - diluted		41,866			41,458			49,369			40,638

GAAP net loss per share - diluted	$	(0.49	)	$	(0.29	)	$	(14.12	)	$	(1.40	)
Non-GAAP net (loss) income per share - diluted	$	(0.07	)	$	0.09		$	1.23		$	0.36

GAAP net cash provided by operating activities	$	6,115		$	11,258		$	17,196		$	7,498
Capital expenditures		(1,446	)		(1,527	)		(4,996	)		(5,124	)
Free Cash Flow	$	4,669		$	9,731		$	12,200		$	2,374

CERENCE INC.

Reconciliations of GAAP Financial Measures to Non-GAAP Financial Measures (cont.)

(unaudited - in thousands)

	Q1 2025						FY2025
	Low			High			Low			High
GAAP revenue	$	47,000		$	50,000		$	236,000		$	247,000

GAAP gross profit	$	27,200		$	30,200		$	158,400		$	169,400
Stock-based compensation		700			700			2,500			2,500
Amortization of intangible assets		-			-			-			-
Non-GAAP gross profit	$	27,900		$	30,900		$	160,900		$	171,900
GAAP gross margin		58	%		60	%		67	%		69	%
Non-GAAP gross margin		59	%		62	%		68	%		70	%

GAAP operating loss	$	(22,900	)	$	(19,900	)	$	(27,100	)	$	(16,100	)
Stock-based compensation		6,100			6,100			22,500			22,500
Amortization of intangible assets		500			500			1,600			1,600
Restructuring and other costs, net		5,600			5,600			8,100			8,100
Non-GAAP operating (loss) income	$	(10,700	)	$	(7,700	)	$	5,100		$	16,100
GAAP operating margin		-49	%		-40	%		-11	%		-7	%
Non-GAAP operating margin		-23	%		-15	%		2	%		7	%

GAAP net loss	$	(26,400	)	$	(23,400	)	$	(39,600	)	$	(28,600	)
Stock-based compensation		6,100			6,100			22,500			22,500
Amortization of intangible assets		500			500			1,600			1,600
Restructuring and other costs, net		5,600			5,600			8,100			8,100
Depreciation		2,200			2,200			10,200			10,200
Total other expense, net		(1,700	)		(1,700	)		(5,100	)		(5,100	)
Provision for income taxes		1,800			1,800			7,400			7,400
Adjusted EBITDA	$	(8,500	)	$	(5,500	)	$	15,300		$	26,300
GAAP net loss margin		-56	%		-47	%		-17	%		-12	%
Adjusted EBITDA margin		-18	%		-11	%		6	%		11	%

CERENCE INC.

Reconciliations of GAAP Financial Measures to Non-GAAP Financial Measures (cont.)

(unaudited - in thousands, except per share data)

	Q1 2025						FY2025
	Low			High			Low			High
GAAP net loss	$	(26,400	)	$	(23,400	)	$	(39,600	)	$	(28,600	)
Stock-based compensation		6,100			6,100			22,500			22,500
Amortization of intangible assets		500			500			1,600			1,600
Restructuring and other costs, net		5,600			5,600			8,100			8,100
Non-cash interest expense		1,600			1,600			5,500			5,500
Other		-			-			(100	)		(100	)
Income tax impact of Non-GAAP adjustments		(1,100	)		(1,100	)		(4,600	)		(4,600	)
Non-GAAP net (loss) income	$	(13,700	)	$	(10,700	)	$	(6,600	)	$	4,400

Adjusted EPS:
GAAP Numerator:
Net loss attributed to common shareholders - basic and diluted	$	(26,400	)	$	(23,400	)	$	(39,600	)	$	(28,600	)

Non-GAAP Numerator:
Net (loss) income attributed to common shareholders - basic and diluted	$	(13,700	)	$	(10,700	)	$	(6,600	)	$	4,400

GAAP Denominator:
Weighted-average common shares outstanding - basic and diluted		42,900			42,900			43,000			43,000

Non-GAAP Denominator:
Weighted-average common shares outstanding- basic		42,900			42,900			43,000			43,000
Adjustment for diluted shares		-			-			-			100
Weighted-average common shares outstanding - diluted		42,900			42,900			43,000			43,100

GAAP net loss per share - diluted	$	(0.62	)	$	(0.55	)	$	(0.92	)	$	(0.67	)
Non-GAAP net (loss) income per share - diluted	$	(0.32	)	$	(0.25	)	$	(0.15	)	$	0.10

Cerence Announces Fourth Quarter and Fiscal Year 2024 Results