Delaware | 001-36056 | 94-3156479 | ||
(State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Emerging growth company | ¨ |
99.1 | Press Release dated May 9, 2017. | ||
99.2 | Prepared Remarks dated May 9, 2017. | ||
NUANCE COMMUNICATIONS, INC. | ||||||
Date: May 9, 2017 | By: | /s/ Daniel D. Tempesta | ||||
Daniel D. Tempesta Executive Vice President and Chief Financial Officer |
99.1 | Press Release dated May 9, 2017. | ||
99.2 | Prepared Remarks dated May 9, 2017. | ||
2017 second quarter results | May 9, 2017 | |
Press release |
![]() | © 2017 Nuance Communications, Inc. All rights reserved. |
2017 second quarter results | May 9, 2017 | |
Press release |
![]() | © 2017 Nuance Communications, Inc. All rights reserved. |
2017 second quarter results | May 9, 2017 | |
Press release |
![]() | © 2017 Nuance Communications, Inc. All rights reserved. |
2017 second quarter results | May 9, 2017 | |
Press release |
![]() | © 2017 Nuance Communications, Inc. All rights reserved. |
2017 second quarter results | May 9, 2017 | |
Press release |
![]() | © 2017 Nuance Communications, Inc. All rights reserved. |
2017 second quarter results | May 9, 2017 | |
Press release |
![]() | © 2017 Nuance Communications, Inc. All rights reserved. |
2017 second quarter results | May 9, 2017 | |
Press release |
Three months ended March 31, | Six months ended March 31, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
Revenues: | ||||||||||||||||
Professional services and hosting | $ | 258,690 | $ | 240,196 | $ | 512,107 | $ | 467,331 | ||||||||
Product and licensing | 159,258 | 158,622 | 311,010 | 337,672 | ||||||||||||
Maintenance and support | 81,625 | 79,915 | 164,114 | 159,845 | ||||||||||||
Total revenues | 499,573 | 478,733 | 987,231 | 964,848 | ||||||||||||
Cost of revenues: | ||||||||||||||||
Professional services and hosting | 164,170 | 154,712 | 329,062 | 307,971 | ||||||||||||
Product and licensing | 18,790 | 20,823 | 37,168 | 44,235 | ||||||||||||
Maintenance and support | 13,240 | 13,626 | 26,838 | 26,922 | ||||||||||||
Amortization of intangible assets | 17,218 | 16,339 | 32,760 | 31,970 | ||||||||||||
Total cost of revenues | 213,418 | 205,500 | 425,828 | 411,098 | ||||||||||||
Gross profit | 286,155 | 273,233 | 561,403 | 553,750 | ||||||||||||
Operating expenses: | ||||||||||||||||
Research and development | 66,232 | 67,226 | 132,554 | 137,751 | ||||||||||||
Sales and marketing | 93,674 | 92,837 | 195,190 | 193,427 | ||||||||||||
General and administrative | 41,518 | 45,940 | 81,308 | 86,441 | ||||||||||||
Amortization of intangible assets | 27,912 | 26,448 | 55,771 | 53,481 | ||||||||||||
Acquisition-related costs, net | 5,379 | 1,225 | 14,405 | 3,705 | ||||||||||||
Restructuring and other charges, net | 19,911 | 6,652 | 26,614 | 14,540 | ||||||||||||
Total operating expenses | 254,626 | 240,328 | 505,842 | 489,345 | ||||||||||||
Income from operations | 31,529 | 32,905 | 55,561 | 64,405 | ||||||||||||
Other expense, net | (56,196 | ) | (30,706 | ) | (93,803 | ) | (66,504 | ) | ||||||||
(Loss) income before income taxes | (24,667 | ) | 2,199 | (38,242 | ) | (2,099 | ) | |||||||||
Provision for income taxes | 9,141 | 9,245 | 19,494 | 17,012 | ||||||||||||
Net loss | $ | (33,808 | ) | $ | (7,046 | ) | $ | (57,736 | ) | $ | (19,111 | ) | ||||
Net loss per share: | ||||||||||||||||
Basic | $ | (0.12 | ) | $ | (0.02 | ) | $ | (0.20 | ) | $ | (0.06 | ) | ||||
Diluted | $ | (0.12 | ) | $ | (0.02 | ) | $ | (0.20 | ) | $ | (0.06 | ) | ||||
Weighted average common shares outstanding: | ||||||||||||||||
Basic | 291,021 | 298,012 | 289,976 | 303,050 | ||||||||||||
Diluted | 291,021 | 298,012 | 289,976 | 303,050 |
![]() | © 2017 Nuance Communications, Inc. All rights reserved. |
2017 second quarter results | May 9, 2017 | |
Press release |
March 31, 2017 | September 30, 2016 | ||||||||
ASSETS | |||||||||
Current assets: | |||||||||
Cash and cash equivalents | $ | 625,640 | $ | 481,620 | |||||
Marketable securities | 160,836 | 98,840 | |||||||
Accounts receivable, net | 385,895 | 380,004 | |||||||
Prepaid expenses and other current assets | 92,411 | 78,126 | |||||||
Total current assets | 1,264,782 | 1,038,590 | |||||||
Marketable securities | 44,697 | 27,632 | |||||||
Land, building and equipment, net | 167,985 | 185,169 | |||||||
Goodwill | 3,525,899 | 3,508,879 | |||||||
Intangible assets, net | 735,965 | 762,220 | |||||||
Other assets | 135,023 | 138,980 | |||||||
Total assets | $ | 5,874,351 | $ | 5,661,470 | |||||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||||
Current liabilities: | |||||||||
Current portion of long-term debt | $ | 366,604 | $ | — | |||||
Contingent and deferred acquisition payments | 29,795 | 9,468 | |||||||
Accounts payable and accrued expenses | 293,218 | 332,258 | |||||||
Deferred revenue | 390,039 | 349,173 | |||||||
Total current liabilities | 1,079,656 | 690,899 | |||||||
Long-term portion of debt | 2,217,869 | 2,433,152 | |||||||
Deferred revenue, net of current portion | 412,363 | 386,960 | |||||||
Other liabilities | 214,793 | 219,129 | |||||||
Total liabilities | 3,924,681 | 3,730,140 | |||||||
Stockholders' equity | 1,949,670 | 1,931,330 | |||||||
Total liabilities and stockholders' equity | $ | 5,874,351 | $ | 5,661,470 |
![]() | © 2017 Nuance Communications, Inc. All rights reserved. |
2017 second quarter results | May 9, 2017 | |
Press release |
Three months ended | Six months ended | |||||||||||||||
March 31, | March 31, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
Cash flows from operating activities: | ||||||||||||||||
Net loss | $ | (33,808 | ) | $ | (7,046 | ) | $ | (57,736 | ) | $ | (19,111 | ) | ||||
Adjustments to reconcile net loss to net cash provided by operating activities: | ||||||||||||||||
Depreciation and amortization | 58,638 | 57,551 | 116,644 | 115,826 | ||||||||||||
Stock-based compensation | 40,348 | 38,163 | 79,478 | 80,511 | ||||||||||||
Non-cash interest expense | 13,732 | 12,579 | 26,771 | 21,215 | ||||||||||||
Deferred tax provision | 3,637 | 4,089 | 5,643 | 3,738 | ||||||||||||
Loss on extinguishment of debt | 18,565 | — | 18,565 | 4,851 | ||||||||||||
Other | 11,431 | (528 | ) | 13,286 | (135 | ) | ||||||||||
Changes in operating assets and liabilities, net of effects from acquisitions: | ||||||||||||||||
Accounts receivable | 8,282 | 26,004 | (1,431 | ) | 22,110 | |||||||||||
Prepaid expenses and other assets | 3,704 | 3,332 | (12,295 | ) | (16,765 | ) | ||||||||||
Accounts payable | 20,244 | 8,637 | (1,000 | ) | 2,697 | |||||||||||
Accrued expenses and other liabilities | (16,420 | ) | 7,029 | (10,579 | ) | 7,334 | ||||||||||
Deferred revenue | (2,919 | ) | 10,112 | 72,988 | 78,792 | |||||||||||
Net cash provided by operating activities | 125,434 | 159,922 | 250,334 | 301,063 | ||||||||||||
Cash flows from investing activities: | ||||||||||||||||
Capital expenditures | (7,388 | ) | (11,680 | ) | (18,787 | ) | (32,235 | ) | ||||||||
Payments for business and asset acquisitions, net of cash acquired | (50,041 | ) | (26,725 | ) | (72,990 | ) | (27,399 | ) | ||||||||
Purchases of marketable securities and other investments | (81,054 | ) | (15,687 | ) | (153,851 | ) | (32,757 | ) | ||||||||
Proceeds from sales and maturities of marketable securities and other investments | 59,553 | 18,553 | 69,658 | 32,681 | ||||||||||||
Net cash used in investing activities | (78,930 | ) | (35,539 | ) | (175,970 | ) | (59,710 | ) | ||||||||
Cash flows from financing activities: | ||||||||||||||||
Payments of debt | (634,055 | ) | — | (634,055 | ) | (511,844 | ) | |||||||||
Proceeds from issuance of long-term debt, net of issuance costs | 343,959 | (848 | ) | 838,959 | 663,757 | |||||||||||
Payments for repurchase of common stock | (99,077 | ) | (384,758 | ) | (99,077 | ) | (574,338 | ) | ||||||||
Net payments on other long-term liabilities | (119 | ) | (233 | ) | (206 | ) | (1,084 | ) | ||||||||
Proceeds from issuance of common stock from employee stock plans | 8,553 | 8,404 | 8,598 | 8,440 | ||||||||||||
Cash used to net share settle employee equity awards | (2,993 | ) | (4,802 | ) | (43,353 | ) | (56,973 | ) | ||||||||
Net cash (used in) provided by financing activities | (383,732 | ) | (382,237 | ) | 70,866 | (472,042 | ) | |||||||||
Effects of exchange rate changes on cash and cash equivalents | 1,261 | 1,891 | (1,210 | ) | 1,930 | |||||||||||
Net (decrease) increase in cash and cash equivalents | (335,967 | ) | (255,963 | ) | 144,020 | (228,759 | ) | |||||||||
Cash and cash equivalents at beginning of period | 961,607 | 506,653 | 481,620 | 479,449 | ||||||||||||
Cash and cash equivalents at end of period | $ | 625,640 | $ | 250,690 | $ | 625,640 | $ | 250,690 |
![]() | © 2017 Nuance Communications, Inc. All rights reserved. |
2017 second quarter results | May 9, 2017 | |
Press release |
Three months ended | Six months ended | |||||||||||||||
March 31, | March 31, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
GAAP revenues | $ | 499,573 | $ | 478,733 | $ | 987,231 | $ | 964,848 | ||||||||
Acquisition-related revenue adjustments: professional services and hosting | 2,817 | 2,835 | 5,250 | 5,363 | ||||||||||||
Acquisition-related revenue adjustments: product and licensing | 8,313 | 5,715 | 14,029 | 11,708 | ||||||||||||
Acquisition-related revenue adjustments: maintenance and support | 394 | 130 | 605 | 364 | ||||||||||||
Non-GAAP revenues | $ | 511,097 | $ | 487,413 | $ | 1,007,115 | $ | 982,283 | ||||||||
GAAP cost of revenues | $ | 213,418 | $ | 205,500 | $ | 425,828 | $ | 411,098 | ||||||||
Cost of revenues from amortization of intangible assets | (17,218 | ) | (16,339 | ) | (32,760 | ) | (31,970 | ) | ||||||||
Cost of revenues adjustments: professional services and hosting (1,2) | (8,080 | ) | (7,548 | ) | (16,490 | ) | (15,139 | ) | ||||||||
Cost of revenues adjustments: product and licensing (1,2) | (102 | ) | (122 | ) | (194 | ) | (244 | ) | ||||||||
Cost of revenues adjustments: maintenance and support (1) | (1,010 | ) | (923 | ) | (1,987 | ) | (1,991 | ) | ||||||||
Non-GAAP cost of revenues | $ | 187,008 | $ | 180,568 | $ | 374,397 | $ | 361,754 | ||||||||
GAAP gross profit | $ | 286,155 | $ | 273,233 | $ | 561,403 | $ | 553,750 | ||||||||
Gross profit adjustments | 37,934 | 33,612 | 71,315 | 66,779 | ||||||||||||
Non-GAAP gross profit | $ | 324,089 | $ | 306,845 | $ | 632,718 | $ | 620,529 | ||||||||
GAAP income from operations | $ | 31,529 | $ | 32,905 | $ | 55,561 | $ | 64,405 | ||||||||
Gross profit adjustments | 37,934 | 33,612 | 71,315 | 66,779 | ||||||||||||
Research and development (1) | 8,398 | 7,967 | 16,888 | 17,900 | ||||||||||||
Sales and marketing (1) | 11,018 | 10,460 | 22,987 | 23,297 | ||||||||||||
General and administrative (1) | 11,740 | 10,934 | 20,932 | 21,565 | ||||||||||||
Acquisition-related costs, net | 5,379 | 1,225 | 14,405 | 3,705 | ||||||||||||
Amortization of intangible assets | 27,912 | 26,448 | 55,771 | 53,481 | ||||||||||||
Restructuring and other charges, net | 19,911 | 6,652 | 26,614 | 14,540 | ||||||||||||
Costs associated with IP collaboration agreements | — | 2,000 | — | 4,000 | ||||||||||||
Other | 2,721 | 6,025 | 5,711 | 9,875 | ||||||||||||
Non-GAAP income from operations | $ | 156,542 | $ | 138,228 | $ | 290,184 | $ | 279,547 | ||||||||
GAAP (loss) income before income taxes | $ | (24,667 | ) | $ | 2,199 | $ | (38,242 | ) | $ | (2,099 | ) | |||||
Gross profit adjustments | 37,934 | 33,612 | 71,315 | 66,779 | ||||||||||||
Research and development (1) | 8,398 | 7,967 | 16,888 | 17,900 | ||||||||||||
Sales and marketing (1) | 11,018 | 10,460 | 22,987 | 23,297 | ||||||||||||
General and administrative (1) | 11,740 | 10,934 | 20,932 | 21,565 | ||||||||||||
Acquisition-related costs, net | 5,379 | 1,225 | 14,405 | 3,705 | ||||||||||||
Amortization of intangible assets | 27,912 | 26,448 | 55,771 | 53,481 | ||||||||||||
Restructuring and other charges, net | 19,911 | 6,652 | 26,614 | 14,540 | ||||||||||||
Non-cash interest expense | 13,732 | 12,579 | 26,771 | 21,215 | ||||||||||||
Costs associated with IP collaboration agreements | — | 2,000 | — | 4,000 | ||||||||||||
Loss on extinguishment of debt | 18,565 | — | 18,565 | 4,851 | ||||||||||||
Other | 2,721 | 6,115 | 5,711 | 10,125 | ||||||||||||
Non-GAAP income before income taxes | $ | 132,643 | $ | 120,191 | $ | 241,717 | $ | 239,359 | ||||||||
![]() | © 2017 Nuance Communications, Inc. All rights reserved. |
2017 second quarter results | May 9, 2017 | |
Press release |
(NEW METHOD) | (PRIOR METHOD) | |||||||||||||||||||||||||||||||
Three months ended | Six months ended | Three months ended | Six months ended | |||||||||||||||||||||||||||||
March 31, | March 31, | March 31, | March 31, | |||||||||||||||||||||||||||||
2017 | 2016 | 2017 | 2016 | 2017 | 2016 | 2017 | 2016 | |||||||||||||||||||||||||
GAAP provision for income taxes | $ | 9,141 | $ | 9,245 | $ | 19,494 | $ | 17,012 | $ | 9,141 | $ | 9,245 | $ | 19,494 | $ | 17,012 | ||||||||||||||||
Non-cash taxes | — | — | — | — | (1,987 | ) | (4,065 | ) | (5,802 | ) | (5,677 | ) | ||||||||||||||||||||
Adjustment to income tax expense: | ||||||||||||||||||||||||||||||||
Income tax effect of Non-GAAP adjustments | 50,658 | 39,627 | 93,289 | 81,684 | — | — | — | — | ||||||||||||||||||||||||
Removal of valuation allowance and other items | (18,254 | ) | (15,061 | ) | (39,001 | ) | (28,757 | ) | — | — | — | — | ||||||||||||||||||||
Removal of discrete items | (1,675 | ) | — | (1,732 | ) | — | — | — | — | — | ||||||||||||||||||||||
Non-GAAP provision for income taxes | $ | 39,870 | $ | 33,811 | $ | 72,050 | $ | 69,939 | $ | 7,154 | $ | 5,180 | $ | 13,692 | $ | 11,335 | ||||||||||||||||
GAAP net loss | $ | (33,808 | ) | $ | (7,046 | ) | $ | (57,736 | ) | $ | (19,111 | ) | $ | (33,808 | ) | $ | (7,046 | ) | $ | (57,736 | ) | $ | (19,111 | ) | ||||||||
Acquisition-related adjustment - revenues (2) | 11,524 | 8,680 | 19,884 | 17,435 | 11,524 | 8,680 | 19,884 | 17,435 | ||||||||||||||||||||||||
Acquisition-related adjustment - cost of revenues (2) | — | (209 | ) | — | (375 | ) | — | (209 | ) | — | (375 | ) | ||||||||||||||||||||
Acquisition-related costs, net | 5,379 | 1,225 | 14,405 | 3,705 | 5,379 | 1,225 | 14,405 | 3,705 | ||||||||||||||||||||||||
Cost of revenue from amortization of intangible assets | 17,218 | 16,339 | 32,760 | 31,970 | 17,218 | 16,339 | 32,760 | 31,970 | ||||||||||||||||||||||||
Amortization of intangible assets | 27,912 | 26,448 | 55,771 | 53,481 | 27,912 | 26,448 | 55,771 | 53,481 | ||||||||||||||||||||||||
Restructuring and other charges, net | 19,911 | 6,652 | 26,614 | 14,540 | 19,911 | 6,652 | 26,614 | 14,540 | ||||||||||||||||||||||||
Stock-based compensation (1) | 40,348 | 38,163 | 79,478 | 80,511 | 40,348 | 38,163 | 79,478 | 80,511 | ||||||||||||||||||||||||
Non-cash interest expense | 13,732 | 12,579 | 26,771 | 21,215 | 13,732 | 12,579 | 26,771 | 21,215 | ||||||||||||||||||||||||
Non-cash taxes | — | — | — | — | 1,987 | 4,065 | 5,802 | 5,677 | ||||||||||||||||||||||||
Adjustment to income tax expense | (30,729 | ) | (24,566 | ) | (52,556 | ) | (52,927 | ) | — | — | — | — | ||||||||||||||||||||
Costs associated with IP collaboration agreements | — | 2,000 | — | 4,000 | — | 2,000 | — | 4,000 | ||||||||||||||||||||||||
Loss on extinguishment of debt | 18,565 | — | 18,565 | 4,851 | 18,565 | — | 18,565 | 4,851 | ||||||||||||||||||||||||
Other | 2,721 | 6,115 | 5,711 | 10,125 | 2,721 | 6,115 | 5,711 | 10,125 | ||||||||||||||||||||||||
Non-GAAP net income | $ | 92,773 | $ | 86,380 | $ | 169,667 | $ | 169,420 | $ | 125,489 | $ | 115,011 | $ | 228,025 | $ | 228,024 | ||||||||||||||||
Non-GAAP diluted net income per share | $ | 0.32 | $ | 0.29 | $ | 0.58 | $ | 0.55 | $ | 0.43 | $ | 0.38 | $ | 0.78 | $ | 0.74 | ||||||||||||||||
Diluted weighted average common shares outstanding | 293,072 | 301,253 | 293,331 | 307,889 | 293,072 | 301,253 | 293,331 | 307,889 | ||||||||||||||||||||||||
![]() | © 2017 Nuance Communications, Inc. All rights reserved. |
2017 second quarter results | May 9, 2017 | |
Press release |
Three months ended March 31, | Six months ended March 31, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
(1) Stock-based compensation | |||||||||||||||
Cost of professional services and hosting | $ | 8,080 | $ | 7,757 | $ | 16,490 | $ | 15,514 | |||||||
Cost of product and licensing | 102 | 122 | 194 | 244 | |||||||||||
Cost of maintenance and support | 1,010 | 923 | 1,987 | 1,991 | |||||||||||
Research and development | 8,398 | 7,967 | 16,888 | 17,900 | |||||||||||
Sales and marketing | 11,018 | 10,460 | 22,987 | 23,297 | |||||||||||
General and administrative | 11,740 | 10,934 | 20,932 | 21,565 | |||||||||||
Total | $ | 40,348 | $ | 38,163 | $ | 79,478 | $ | 80,511 | |||||||
(2) Acquisition-related revenue and cost of revenue | |||||||||||||||
Revenues | $ | 11,524 | $ | 8,680 | $ | 19,884 | $ | 17,435 | |||||||
Cost of professional services and hosting | — | (209 | ) | — | (375 | ) | |||||||||
Total | $ | 11,524 | $ | 8,471 | $ | 19,884 | $ | 17,060 | |||||||
![]() | © 2017 Nuance Communications, Inc. All rights reserved. |
2017 second quarter results | May 9, 2017 | |
Press release |
Hosting Revenues | Q1 | Q2 | Q3 | Q4 | FY | Q1 | Q2 | |||||||||||||||||||||
2016 | 2016 | 2016 | 2016 | 2016 | 2017 | 2017 | ||||||||||||||||||||||
GAAP Revenues | $ | 177.4 | $ | 184.6 | $ | 181.1 | $ | 187.0 | $ | 730.2 | $ | 193.3 | $ | 202.2 | ||||||||||||||
Adjustment | 2.3 | 2.5 | 2.0 | 2.3 | 9.1 | 2.3 | 2.7 | |||||||||||||||||||||
Non-GAAP Revenues | $ | 179.7 | $ | 187.1 | $ | 183.2 | $ | 189.3 | $ | 739.2 | $ | 195.6 | $ | 204.8 | ||||||||||||||
Maintenance and Support Revenue | Q1 | Q2 | Q3 | Q4 | FY | Q1 | Q2 | |||||||||||||||||||||
2016 | 2016 | 2016 | 2016 | 2016 | 2017 | 2017 | ||||||||||||||||||||||
GAAP Revenues | $ | 79.9 | $ | 79.9 | $ | 82.5 | $ | 82.0 | $ | 324.3 | $ | 82.5 | $ | 81.6 | ||||||||||||||
Adjustment | 0.2 | 0.1 | 0.0 | 0.0 | 0.4 | 0.2 | 0.4 | |||||||||||||||||||||
Non-GAAP Revenues | $ | 80.2 | $ | 80.0 | $ | 82.5 | $ | 82.0 | $ | 324.7 | $ | 82.7 | $ | 82.0 | ||||||||||||||
Perpetual Product and Licensing Revenues | Q1 | Q2 | Q3 | Q4 | FY | Q1 | Q2 | |||||||||||||||||||||
2016 | 2016 | 2016 | 2016 | 2016 | 2017 | 2017 | ||||||||||||||||||||||
GAAP Revenues | $ | 115.2 | $ | 88.0 | $ | 80.9 | $ | 99.5 | $ | 383.6 | $ | 78.7 | $ | 76.5 | ||||||||||||||
Adjustment | 2.0 | 2.2 | 1.4 | 1.0 | 6.6 | 0.7 | 0.5 | |||||||||||||||||||||
Non-GAAP Revenues | $ | 117.2 | $ | 90.2 | $ | 82.3 | $ | 100.5 | $ | 390.2 | $ | 79.3 | $ | 77.0 | ||||||||||||||
Recurring Product and Licensing Revenues | Q1 | Q2 | Q3 | Q4 | FY | Q1 | Q2 | |||||||||||||||||||||
2016 | 2016 | 2016 | 2016 | 2016 | 2017 | 2017 | ||||||||||||||||||||||
GAAP Revenues | $ | 63.9 | $ | 70.6 | $ | 72.1 | $ | 79.1 | $ | 285.6 | $ | 73.1 | $ | 82.8 | ||||||||||||||
Adjustment | 4.0 | 3.5 | 3.3 | 2.7 | 13.5 | 5.1 | 7.8 | |||||||||||||||||||||
Non-GAAP Revenues | $ | 67.9 | $ | 74.1 | $ | 75.3 | $ | 81.7 | $ | 299.1 | $ | 78.2 | $ | 90.6 | ||||||||||||||
Professional Services Revenues | Q1 | Q2 | Q3 | Q4 | FY | Q1 | Q2 | |||||||||||||||||||||
2016 | 2016 | 2016 | 2016 | 2016 | 2017 | 2017 | ||||||||||||||||||||||
GAAP Revenues | $ | 49.7 | $ | 55.6 | $ | 61.2 | $ | 58.7 | $ | 225.2 | $ | 60.1 | $ | 56.5 | ||||||||||||||
Adjustment | 0.3 | 0.4 | 0.3 | 0.2 | 1.1 | 0.2 | 0.1 | |||||||||||||||||||||
Non-GAAP Revenues | $ | 50.0 | $ | 55.9 | $ | 61.5 | $ | 58.9 | $ | 226.3 | $ | 60.3 | $ | 56.7 | ||||||||||||||
Total Recurring Revenues | Q1 | Q2 | Q3 | Q4 | FY | Q1 | Q2 | |||||||||||||||||||||
2016 | 2016 | 2016 | 2016 | 2016 | 2017 | 2017 | ||||||||||||||||||||||
GAAP Revenues | $ | 326.1 | $ | 339.6 | $ | 339.7 | $ | 352.1 | $ | 1,357.4 | $ | 353.0 | $ | 370.2 | ||||||||||||||
Adjustment | 6.4 | 6.2 | 5.3 | 5.0 | 22.9 | 7.5 | 11.4 | |||||||||||||||||||||
Non-GAAP Revenues | $ | 332.5 | $ | 345.8 | $ | 345.0 | $ | 357.1 | $ | 1,380.3 | $ | 360.5 | $ | 381.7 |
![]() | © 2017 Nuance Communications, Inc. All rights reserved. |
2017 second quarter results | May 9, 2017 | |
Prepared remarks | ||
1 |
• | Net new bookings in the quarter of $410.4 million, up 31% compared to Q2 16; |
• | Organic non-GAAP revenue growth of 1% on a year-over-year basis; |
• | GAAP revenue of $499.6 million and non-GAAP revenue of $511.1 million, in Q2 17; |
• | Recurring revenue at 74% of total GAAP revenue, and at 75% of total non-GAAP revenue, an increase of 300 basis points and 400 basis points, respectively, from Q2 16; and, |
• | GAAP diluted EPS of $(0.12) and non-GAAP diluted EPS of $0.43 in Q2 17. |
![]() | © 2017 Nuance Communications, Inc. All rights reserved |
2017 second quarter results | May 9, 2017 | |
Prepared remarks | ||
2 |
• | Sustained demand for Dragon Medical cloud and integrated solutions this quarter for healthcare institutions that need cloud-based and flexible offerings that provide real-time intelligence, reduce physician fatigue, improve the patient experience, and control costs; |
• | Expanded relationship with market leading EHR, Epic, to offer virtual assistants and deeply embedded computer assisted physician documentation that provides better patient experiences; |
• | Strategic wins this quarter from Audi, BMW, Fujitsu-Ten, Melco, and Geely led by demand for our cognitive and voice capabilities within our Dragon Drive platform; |
• | Partnerships with communication service providers as they look to us to design conversational experiences for the living room and smart home, with Q2 wins such as Cablevision and Roku; |
• | Continued momentum for our Enterprise omni-channel solutions with notable wins, such as UPS, and significant launches with Nina at FedEx, Domino’s in Australia, and Santander in the UK; |
• | MFP Print and Scan partnerships to provide innovative UI and workflow solutions that enhance and extend the value of hardware platforms; |
• | Increased demand for biometrics, which continues to be one of our fastest growing products in Enterprise, with key design wins in Q2, including a large financial services company; and, |
• | Continued expansion of our telecommunications and cable service provider business globally with renewals and wins with Claro Brazil, Comcast, and T-Mobile as we empower telecommunications and cable service providers with voice, artificial intelligence and data analytics capabilities to drive more revenue for our customers. |
• | We delivered net new bookings in Q2 17 of $410.4 million, up 31% year-over-year. This growth was led by Dragon Medical cloud, Automotive, and our Enterprise omni-channel and biometrics offerings. Q2 17 was our best quarter for Enterprise bookings and second best quarter for Dragon Medical cloud bookings. |
• | We continue to see robust demand for our integrated clinical documentation offerings as they provide our customers with an optimized usage solution between transcription and Dragon Medical. |
![]() | © 2017 Nuance Communications, Inc. All rights reserved |
2017 second quarter results | May 9, 2017 | |
Prepared remarks | ||
3 |
Q1 2016 | Q2 2016 | Q3 2016 | Q4 2016 | FY 2016 | Q1 2017 | Q2 2017 | |
Net New Bookings (in millions) | $308.7 | $313.7 | $362.9 | $516.9 | $1,502.3 | $380.3 | $410.4 |
• | In Q2 17, we exceeded our guidance and returned to organic revenue growth. We delivered GAAP revenue of $499.6 million, up 4% from a year ago. Non-GAAP revenue was $511.1 million, up 5% from a year ago, and up 1% on an organic basis. Our year-over-year performance reflects strong growth across offerings in our Enterprise segment, Dragon Medical cloud, automotive, and mobile operator services. These areas of growth were offset by mix shift from perpetual to cloud revenue models, especially in Dragon Medical, headwinds from MFP Print and Scan, and continued expected declines in HIM and handsets. |
• | As of the end of 1H 17, the headwinds from our handset business and the transition from Dragon Medical perpetual to cloud are now largely behind us, and we remain on track for revenue growth from our growth businesses to surpass revenue declines in our declining businesses in 2H 17. |
• | In Q2 17, GAAP recurring revenue was $370.2 million, compared to $339.6 million a year ago. Non-GAAP recurring revenue was $381.7 million compared to $345.8 million a year ago. This was led by an increase in our cloud-based, Enterprise omni-channel solutions and Dragon Medical cloud, with hosting revenue reaching a record 40% of overall revenue in the quarter. GAAP recurring revenue increased to 74% in Q2 17 compared to 71% in Q2 16. Non-GAAP recurring revenue increased to 75% in Q2 17 compared to 71% in Q2 16. |
Q1 2016 | Q2 2016 | Q3 2016 | Q4 2016 | FY 2016 | Q1 2017 | Q2 2017 | |
Hosting | $179.7 | $187.1 | $183.2 | $189.3 | $739.2 | $195.6 | $204.8 |
% of Revenue | 36% | 38% | 38% | 37% | 37% | 39% | 40% |
Maintenance and Support | $80.2 | $80.0 | $82.5 | $82.0 | $324.7 | $82.7 | $82.0 |
% of Revenue | 16% | 16% | 17% | 16% | 16% | 17% | 16% |
Perpetual Product and Licensing | $117.2 | $90.2 | $82.3 | $100.5 | $390.2 | $79.3 | $77.0 |
% of Revenue | 24% | 19% | 17% | 20% | 20% | 16% | 15% |
Recurring Product and Licensing | $67.9 | $74.1 | $75.3 | $81.7 | $299.1 | $78.2 | $90.6 |
% of Revenue | 14% | 15% | 16% | 16% | 15% | 16% | 18% |
Professional Services | $50.0 | $55.9 | $61.5 | $58.9 | $226.3 | $60.3 | $56.7 |
% of Revenue | 10% | 11% | 13% | 11% | 11% | 12% | 11% |
Total revenue | $494.9 | $487.4 | $484.9 | $512.4 | $1,979.6 | $496.0 | $511.1 |
Total Recurring Revenue * | $332.5 | $345.8 | $345.0 | $357.1 | $1,380.3 | $360.5 | $381.7 |
% of Revenue | 67% | 71% | 71% | 70% | 70% | 73% | 75% |
![]() | © 2017 Nuance Communications, Inc. All rights reserved |
2017 second quarter results | May 9, 2017 | |
Prepared remarks | ||
4 |
• | At the end of the quarter, the Estimated 3-Year Value of Total On-Demand Contracts was $2,568.3 million, up from $2,161.3 million a year ago driven primarily by our Enterprise omni-channel solutions, Dragon Medical cloud and integrated clinical documentation solutions, and automotive and mobile operator bookings. |
Q1 2016 | Q2 2016 | Q3 2016 | Q4 2016 | Q1 2017 | Q2 2017 | |
Estimated 3-Year Value of Total On-Demand Contracts (in millions) | $2,245.3 | $2,161.3 | $2,161.1 | $2,430.0 | $2,499.4 | $2,568.3 |
• | GAAP gross margin in Q2 17 was 57.3%, an increase of 20 basis points year-over-year. Q2 17 non-GAAP gross margin was 63.4%, an increase of 40 basis points year-over-year. The increase in gross margin was driven by cost discipline and continued scale in our hosted and cloud solutions, partially offset by lower professional service margins in our Healthcare segment. |
• | Q2 17 GAAP operating expenses were $254.6 million, compared to $240.3 million a year ago. GAAP operating margin was 6.3%, a decrease of 60 basis points year-over-year. Q2 17 non-GAAP operating expenses were $167.5 million, compared to $168.6 million a year ago. Q2 17 non-GAAP operating margin was 30.6%, an increase of 220 basis points year-over-year primarily due to higher revenue while maintaining flat operating expenses as we maintained our cost discipline. |
• | As discussed in prior quarters, we continue to execute on our formal transformation program, focusing our investments on our best growth opportunities, increasing operating efficiencies, and reducing costs. |
• | GAAP net interest expense was $36.6 million in Q2 17, up $5.9 million year-over-year. Non-GAAP net cash interest expense was $22.8 million in Q2 17, up $4.7 million year-over-year. The increase in non-GAAP net cash interest expense in Q2 17 is primarily a result of capital market activities, including the issuance in December 2016 of $500 million in senior notes bearing interest at 5.625% and the issuance in March 2017 of $350 million in convertible notes bearing interest at 1.25%, net of impact from the retirement of $600 million of our high yield bonds bearing interest at 5.375% in January 2017. |
• | Our Q2 17 GAAP provision for income taxes was $9.1 million, compared to $9.2 million a year ago. |
• | Under the prior method, our Q2 17 non-GAAP provision for income taxes was $7.2 million, compared to $5.2 million a year ago. The non-GAAP tax rate under the prior method was 5.4% in Q2 17, compared to 4.3% a year ago. |
• | Under the new method, Q2 17 non-GAAP provision for income taxes was $39.9 million, compared to $33.8 million a year ago. The non-GAAP tax rate under the new method was 30.1% in Q2 17, compared to 28.1% a year ago. The increase in non-GAAP income tax rate under the new method was mainly due to the higher level of pre-tax income being generated in the United States. |
![]() | © 2017 Nuance Communications, Inc. All rights reserved |
2017 second quarter results | May 9, 2017 | |
Prepared remarks | ||
5 |
• | GAAP EPS in Q2 17 was $(0.12) per share, compared to $(0.02) a year ago. In Q2 17, non-GAAP EPS based on the prior method of calculating our tax provision was $0.43, up $0.05 from a year ago and exceeding mid-point guidance by $0.05. Non-GAAP profitability was up year-over-year due to lower expenses and higher revenue in the quarter. Using the new method of calculating non-GAAP income taxes, non-GAAP EPS was $0.32 in Q2 17, up $0.03 from a year ago. |
• | During Q2 17, we repurchased 5.8 million shares of our common stock for $99.1 million in conjunction with the issuance of a new convertible debenture. As of March 31, 2017, we had approximately $193.4 million remaining under the Board’s repurchase program authorization. |
• | Q2 17 CFFO was $125.4 million, a decline of 22% year over year, and in line with our expectations. CFFO as a percent of non-GAAP net income, under the prior method, was 100%, and 110% for the first half of FY17 also in line with our annual target of 110%. CFFO as a percent of non-GAAP net income, under the new method, was 135% in Q2 17. |
Q1 2016 | Q2 2016 | Q3 2016 | Q4 2016 | FY 2016 | Q1 2017 | Q2 2017 | |
Cash Flow from Operations (in millions) | $141.1 | $159.9 | $125.9 | $138.9 | $565.8 | $124.9 | $125.4 |
• | As of March 31, 2017, our balance of cash, cash equivalents and marketable securities was $831.2 million, a decrease from $1,137.5 million at December 31, 2016. This decrease was primarily due to paying down approximately $600 million of our high yield bonds in January 2017, offset by the issuance of a new convertible debenture in March 2017 and cash flow from operations during the quarter. |
• | In Q2 17, DSO was 69 days, up 1 day compared to a year ago. |
Q1 2016 | Q2 2016 | Q3 2016 | Q4 2016 | Q1 2017 | Q2 2017 | |
Days Sales Outstanding | 69 | 68 | 68 | 67 | 71 | 69 |
• | We ended Q2 17 with deferred revenue of $802.4 million, up 7% from a year ago. Deferred revenue growth was driven by our hosted solutions, most notably for our automotive connected services. |
Q1 2016 | Q2 2016 | Q3 2016 | Q4 2016 | Q1 2017 | Q2 2017 | |
Total Deferred Revenue (in millions) | $732.7 | $748.5 | $729.1 | $736.1 | $802.5 | $802.4 |
![]() | © 2017 Nuance Communications, Inc. All rights reserved |
2017 second quarter results | May 9, 2017 | |
Prepared remarks | ||
6 |
• | Q2 was another strong quarter for net new bookings up 28% year-over-year driven by clinical documentation offerings; |
• | We saw continued momentum for our more comprehensive integrated Healthcare offerings that combine Dragon Medical cloud and transcription solutions as marquee accounts, such as Tenet Health Systems, look to layer on additional capabilities; |
• | We expanded our partnerships with EHR vendors as they leverage our innovation in artificial intelligence, computer-assisted clinical documentation, and virtual assistants to offer more comprehensive solutions to improve the experience of patients and healthcare providers; |
• | We were named the leading vendor in two industry categories by KLAS, an independent research company: Nuance PowerScribe® 360 ranked #1 for Front-End Speech Recognition for Imaging and Nuance ranked #1 for Quality Management for the third consecutive year for Clintegrity Quality Management solutions; and, |
• | As noted previously, we expect overall revenue in Healthcare to decline in FY17 owing to continued erosion in our HIM business. We see this trend reversing in FY18 as growth businesses in Healthcare, particularly Dragon Medical, will surpass our declining HIM business. |
Q1 2016 | Q2 2016 | Q3 2016 | Q4 2016 | Q1 2017 | Q2 2017 | |
Annualized line run-rate in healthcare on-demand business (in billions) | 5.140 | 5.130 | 5.003 | 4.785 | 4.651 | 4.743 |
• | Continued strong net new bookings performance from our automotive business line, with strategic customer wins, including Audi, BMW, Fujitsu-Ten, Melco, and Geely. Our technologies continue to be core to the Human Machine Interface (HMI) innovation stack, integrating additional cognitive and voice capabilities from our Dragon Drive platform; |
• | We continued to expand our work with global telecommunications and cable service providers as we secured renewals with Claro Brazil, Comcast, and T-Mobile. We empower these operators with voice, artificial intelligence and data analytics capabilities to drive more revenue; |
• | Continued demand from Communication Service Providers for smart home and TV solutions with wins including Cablevision and Roku; |
![]() | © 2017 Nuance Communications, Inc. All rights reserved |
2017 second quarter results | May 9, 2017 | |
Prepared remarks | ||
7 |
• | We secured two customer awards underscoring our commitment to customer innovation: the Partner Excellence Award from Banma for the SAIC Roewe RX5 system (China's first Internet car), and the Good Technology award from Fujitsu-Ten. Both awards are testaments to our innovation and technology performance as well as our ability to closely partner with our customers to deploy industry-leading solutions; and, |
• | Recurring revenue across the business continued to increase led by recurring product and licensing revenue in our automotive business. |
• | Strength across many of our omni-channel cloud and on-premise solutions including our security and biometric offerings, as large enterprises want to create better and more secure experiences for their customers; |
• | Global demand for Enterprise solutions with net new bookings strength in EMEA and APAC for our biometrics and NINA offerings; |
• | Continued strength in bookings across our key channel partners powered by growing demand for our customer engagement portfolio; |
• | We received 8 Stevie awards across our Enterprise solutions including Customer Service Solutions Technology Partner of the Year; and, |
• | Our Nina solution, which consistently delivers superior customer experience and tangible business results for our clients, was ranked the number one intelligent assistant by Opus Research. |
• | Net new bookings were up for the quarter on a year-over-year basis with notable wins for our Core Imaging and MFP Print/Scan solutions in key accounts, such as Lexmark, UPMC, USDA, and Airbus; and, |
• | We saw sequential revenue and margin improvement from Q1 17 driven by the implementation of a rigorous sales management and execution strategy program with better processes and forecasting. |
Q1 2016 | Q2 2016 | Q3 2016 | Q4 2016 | FY 2016 | Q1 2017 | Q2 2017 | |
Healthcare | $248.1 | $244.4 | $241.0 | $239.8 | $973.3 | $239.2 | $238.5 |
Yr/yr. Organic Growth | 1% | 1% | (6)% | (11)% | (4)% | (6)% | (5)% |
Mobile | $96.4 | $91.8 | $91.8 | $97.2 | $377.3 | $91.8 | $100.2 |
Yr/yr. Organic Growth | (0)% | (16)% | (4)% | (9)% | (8)% | (5)% | 8% |
Enterprise | $88.8 | $94.4 | $95.2 | $109.0 | $387.5 | $112.9 | $119.4 |
Yr/yr. Organic Growth | (2)% | 13% | 10% | 16% | 9% | 15% | 14% |
Imaging | $61.6 | $56.7 | $56.8 | $66.4 | $241.6 | $52.1 | $53.0 |
Yr/yr. Organic Growth | 3% | (5)% | 1% | 7% | 2% | (15)% | (7)% |
Total revenue | $494.9 | $487.4 | $484.9 | $512.4 | $1,979.6 | $496.0 | $511.1 |
Yr/yr. Organic Growth | 0% | (1)% | (2)% | (4)% | (2)% | (3)% | 1% |
Yr/yr. Constant Currency Organic Growth | (3)% | 1% |
![]() | © 2017 Nuance Communications, Inc. All rights reserved |
2017 second quarter results | May 9, 2017 | |
Prepared remarks | ||
8 |
Q1 2016 | Q2 2016 | Q3 2016 | Q4 2016 | FY 2016 | Q1 2017 | Q2 2017 | |
Healthcare | $81.2 | $78.4 | $78.1 | $75.7 | $313.5 | $78.6 | $83.3 |
Segment Profit as % of Segment Revenue | 33% | 32% | 32% | 32% | 32% | 33% | 35% |
Mobile | $33.8 | $33.4 | $31.0 | $35.2 | $133.4 | $33.5 | $40.4 |
Segment Profit as % of Segment Revenue | 35% | 36% | 34% | 36% | 35% | 36% | 40% |
Enterprise | $26.2 | $34.1 | $31.1 | $38.6 | $130.0 | $32.0 | $41.8 |
Segment Profit as % of Segment Revenue | 30% | 36% | 33% | 35% | 34% | 28% | 35% |
Imaging | $27.0 | $22.2 | $20.6 | $31.0 | $100.8 | $17.6 | $18.5 |
Segment Profit as % of Segment Revenue | 44% | 39% | 36% | 47% | 42% | 34% | 35% |
Total segment profit | $168.2 | $168.1 | $160.8 | $180.6 | $677.6 | $161.6 | $184.0 |
Total segment profit as % of total segment revenue | 34% | 34% | 33% | 35% | 34% | 33% | 36% |
Non-GAAP Prior Method | FY 2015 | FY 2016 | Q1 2016 | Q2 2016 | Q3 2016 | Q4 2016 | Q1 2017 | Q2 2017 |
Profit before tax (PBT) | $430.9 | $480.7 | $119.2 | $120.2 | $112.9 | $128.4 | $109.1 | $132.6 |
Cash Tax ($) As a % of PBT | $19.3 4.5% | $26.3 5.5% | $6.2 5.2% | $5.2 4.3% | $5.1 4.5% | $9.9 7.7% | $6.5 6.0% | $7.2 5.4% |
Non-GAAP Net Income (NGNI) | $411.6 | $454.4 | $113.0 | $115.0 | $107.8 | $118.6 | $102.5 | $125.5 |
Non-GAAP EPS | $1.27 | $1.52 | $0.36 | $0.38 | $0.38 | $0.41 | $0.35 | $0.43 |
Cash Flow from Operations (CFFO) | $487.6 | $565.8 | $141.1 | $159.9 | $125.9 | $138.9 | $124.9 | $125.4 |
CFFO as a % of Non-GAAP Net Income | 118% | 125% | 125% | 139% | 117% | 117% | 122% | 100% |
![]() | © 2017 Nuance Communications, Inc. All rights reserved |
2017 second quarter results | May 9, 2017 | |
Prepared remarks | ||
9 |
Non-GAAP New Method | FY 2015 | FY 2016 | Q1 2016 | Q2 2016 | Q3 2016 | Q4 2016 | Q1 2017 | Q2 2017 |
Profit before tax (PBT) | $430.9 | $480.7 | $119.2 | $120.2 | $112.9 | $128.4 | $109.1 | $132.6 |
Non-GAAP effective tax | $122.6 28.4% | $137.3 28.6% | $36.1 30.3% | $33.8 28.1% | $29.6 26.2% | $37.7 29.4% | $32.2 29.5% | $39.9 30.1% |
Non-GAAP Net Income (NGNI) | $308.4 | $343.4 | $83.0 | $86.4 | $83.3 | $90.7 | $76.9 | $92.8 |
Non-GAAP EPS | $0.95 | $1.15 | $0.26 | $0.29 | $0.30 | $0.31 | $0.26 | $0.32 |
Cash Flow from Operations (CFFO) | $487.6 | $565.8 | $141.1 | $159.9 | $125.9 | $138.9 | $124.9 | $125.4 |
CFFO as a % of Non-GAAP Net Income | 158% | 165% | 170% | 185% | 151% | 153% | 162% | 135% |
![]() | © 2017 Nuance Communications, Inc. All rights reserved |
2017 second quarter results | May 9, 2017 | |
Prepared remarks | ||
10 |
• | GAAP revenue between $495.0 million and $509.0 million; |
• | Non-GAAP revenue between $503.0 million and $517.0 million; |
• | GAAP EPS between $(0.08) and $(0.04); and, |
• | Using our prior method of calculating non-GAAP income taxes, non-GAAP EPS guidance would have been between $0.37 and $0.41. Under the new method, we are guiding non-GAAP EPS between $0.27 and $0.30. Effective Q3 17, we will only report results using our new method. |
• | Increased net new bookings growth to 6% to 10% from 2% to 6%; |
• | GAAP revenue between $1,994 million and $2,034 million; |
• | Non-GAAP revenue in the range of $2,030 million and $2,070 million, raising our midpoint from $2,045 million to $2,050 million, and narrowing the range from our previous guidance of $2,020 million to $2,070 million; |
• | Organic non-GAAP revenue growth of approximately 1%; |
• | Recurring revenue of approximately 73% of total revenue, narrowing our guidance from our previous range of 72% to 73%; |
• | Non-GAAP gross margin of approximately 63%; |
• | Non-GAAP operating margin of approximately 28% to 29%; |
• | GAAP EPS between $(0.32) and $(0.24); |
• | Using our prior method of calculating non-GAAP income taxes, non-GAAP EPS guidance would have been between $1.55 and $1.63, raising our midpoint from $1.58 to $1.59. Under the new method, we are guiding non-GAAP EPS between $1.13 and $1.19. Effective Q3 17, we will only report results using our new method; |
• | Using our prior method of calculating non-GAAP income taxes, CFFO as a percentage of non-GAAP net income guidance would have been 110%. Under the new method, we are guiding CFFO as a percentage of non-GAAP net income of approximately 150%. Effective Q3 17, we will only report results using our new method; |
• | Capital expenditures of approximately $50 million to $60 million; |
• | Net cash interest expense of approximately $90 million; |
• | Non-GAAP tax rate (new method) of approximately 31% in FY17; |
• | Net cash tax rate of approximately 5% to 6% in FY17; and, |
• | Diluted share count of approximately 296 million shares. |
![]() | © 2017 Nuance Communications, Inc. All rights reserved |
2017 second quarter results | May 9, 2017 | |
Prepared remarks | ||
11 |
![]() | © 2017 Nuance Communications, Inc. All rights reserved |
2017 second quarter results | May 9, 2017 | |
Prepared remarks | ||
12 |
![]() | © 2017 Nuance Communications, Inc. All rights reserved |
2017 second quarter results | May 9, 2017 | |
Prepared remarks | ||
13 |
(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 and expenses. Professional service fees and expenses include financial advisory, legal, accounting and other outside services in connection with acquisition activities, and disputes and regulatory matters related to acquired entities. |
(iii) | Acquisition-related adjustments. Acquisition-related adjustments include 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. |
![]() | © 2017 Nuance Communications, Inc. All rights reserved |
2017 second quarter results | May 9, 2017 | |
Prepared remarks | ||
14 |
![]() | © 2017 Nuance Communications, Inc. All rights reserved |
2017 second quarter results | May 9, 2017 | |
Prepared remarks | ||
15 |
![]() | © 2017 Nuance Communications, Inc. All rights reserved |
2017 second quarter results | May 9, 2017 | |
Prepared remarks | ||
16 |
Three months ended March 31, | Six months ended March 31, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
Revenues: | ||||||||||||||||
Professional services and hosting | $ | 258,690 | $ | 240,196 | $ | 512,107 | $ | 467,331 | ||||||||
Product and licensing | 159,258 | 158,622 | 311,010 | 337,672 | ||||||||||||
Maintenance and support | 81,625 | 79,915 | 164,114 | 159,845 | ||||||||||||
Total revenues | 499,573 | 478,733 | 987,231 | 964,848 | ||||||||||||
Cost of revenues: | ||||||||||||||||
Professional services and hosting | 164,170 | 154,712 | 329,062 | 307,971 | ||||||||||||
Product and licensing | 18,790 | 20,823 | 37,168 | 44,235 | ||||||||||||
Maintenance and support | 13,240 | 13,626 | 26,838 | 26,922 | ||||||||||||
Amortization of intangible assets | 17,218 | 16,339 | 32,760 | 31,970 | ||||||||||||
Total cost of revenues | 213,418 | 205,500 | 425,828 | 411,098 | ||||||||||||
Gross profit | 286,155 | 273,233 | 561,403 | 553,750 | ||||||||||||
Operating expenses: | ||||||||||||||||
Research and development | 66,232 | 67,226 | 132,554 | 137,751 | ||||||||||||
Sales and marketing | 93,674 | 92,837 | 195,190 | 193,427 | ||||||||||||
General and administrative | 41,518 | 45,940 | 81,308 | 86,441 | ||||||||||||
Amortization of intangible assets | 27,912 | 26,448 | 55,771 | 53,481 | ||||||||||||
Acquisition-related costs, net | 5,379 | 1,225 | 14,405 | 3,705 | ||||||||||||
Restructuring and other charges, net | 19,911 | 6,652 | 26,614 | 14,540 | ||||||||||||
Total operating expenses | 254,626 | 240,328 | 505,842 | 489,345 | ||||||||||||
Income from operations | 31,529 | 32,905 | 55,561 | 64,405 | ||||||||||||
Other expense, net | (56,196 | ) | (30,706 | ) | (93,803 | ) | (66,504 | ) | ||||||||
(Loss) income before income taxes | (24,667 | ) | 2,199 | (38,242 | ) | (2,099 | ) | |||||||||
Provision for income taxes | 9,141 | 9,245 | 19,494 | 17,012 | ||||||||||||
Net loss | $ | (33,808 | ) | $ | (7,046 | ) | $ | (57,736 | ) | $ | (19,111 | ) | ||||
Net loss per share: | ||||||||||||||||
Basic | $ | (0.12 | ) | $ | (0.02 | ) | $ | (0.20 | ) | $ | (0.06 | ) | ||||
Diluted | $ | (0.12 | ) | $ | (0.02 | ) | $ | (0.20 | ) | $ | (0.06 | ) | ||||
Weighted average common shares outstanding: | ||||||||||||||||
Basic | 291,021 | 298,012 | 289,976 | 303,050 | ||||||||||||
Diluted | 291,021 | 298,012 | 289,976 | 303,050 |
![]() | © 2017 Nuance Communications, Inc. All rights reserved |
2017 second quarter results | May 9, 2017 | |
Prepared remarks | ||
17 |
March 31, 2017 | September 30, 2016 | ||||||||
ASSETS | |||||||||
Current assets: | |||||||||
Cash and cash equivalents | $ | 625,640 | $ | 481,620 | |||||
Marketable securities | 160,836 | 98,840 | |||||||
Accounts receivable, net | 385,895 | 380,004 | |||||||
Prepaid expenses and other current assets | 92,411 | 78,126 | |||||||
Total current assets | 1,264,782 | 1,038,590 | |||||||
Marketable securities | 44,697 | 27,632 | |||||||
Land, building and equipment, net | 167,985 | 185,169 | |||||||
Goodwill | 3,525,899 | 3,508,879 | |||||||
Intangible assets, net | 735,965 | 762,220 | |||||||
Other assets | 135,023 | 138,980 | |||||||
Total assets | $ | 5,874,351 | $ | 5,661,470 | |||||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||||
Current liabilities: | |||||||||
Current portion of long-term debt | $ | 366,604 | $ | — | |||||
Contingent and deferred acquisition payments | 29,795 | 9,468 | |||||||
Accounts payable and accrued expenses | 293,218 | 332,258 | |||||||
Deferred revenue | 390,039 | 349,173 | |||||||
Total current liabilities | 1,079,656 | 690,899 | |||||||
Long-term portion of debt | 2,217,869 | 2,433,152 | |||||||
Deferred revenue, net of current portion | 412,363 | 386,960 | |||||||
Other liabilities | 214,793 | 219,129 | |||||||
Total liabilities | 3,924,681 | 3,730,140 | |||||||
Stockholders' equity | 1,949,670 | 1,931,330 | |||||||
Total liabilities and stockholders' equity | $ | 5,874,351 | $ | 5,661,470 |
![]() | © 2017 Nuance Communications, Inc. All rights reserved |
2017 second quarter results | May 9, 2017 | |
Prepared remarks | ||
18 |
Three months ended March 31, | Six months ended March 31, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
Cash flows from operating activities: | ||||||||||||||||
Net loss | $ | (33,808 | ) | $ | (7,046 | ) | $ | (57,736 | ) | $ | (19,111 | ) | ||||
Adjustments to reconcile net loss to net cash provided by operating activities: | ||||||||||||||||
Depreciation and amortization | 58,638 | 57,551 | 116,644 | 115,826 | ||||||||||||
Stock-based compensation | 40,348 | 38,163 | 79,478 | 80,511 | ||||||||||||
Non-cash interest expense | 13,732 | 12,579 | 26,771 | 21,215 | ||||||||||||
Deferred tax provision | 3,637 | 4,089 | 5,643 | 3,738 | ||||||||||||
Loss on extinguishment of debt | 18,565 | — | 18,565 | 4,851 | ||||||||||||
Other | 11,431 | (528 | ) | 13,286 | (135 | ) | ||||||||||
Changes in operating assets and liabilities, net of effects from acquisitions: | ||||||||||||||||
Accounts receivable | 8,282 | 26,004 | (1,431 | ) | 22,110 | |||||||||||
Prepaid expenses and other assets | 3,704 | 3,332 | (12,295 | ) | (16,765 | ) | ||||||||||
Accounts payable | 20,244 | 8,637 | (1,000 | ) | 2,697 | |||||||||||
Accrued expenses and other liabilities | (16,420 | ) | 7,029 | (10,579 | ) | 7,334 | ||||||||||
Deferred revenue | (2,919 | ) | 10,112 | 72,988 | 78,792 | |||||||||||
Net cash provided by operating activities | 125,434 | 159,922 | 250,334 | 301,063 | ||||||||||||
Cash flows from investing activities: | ||||||||||||||||
Capital expenditures | (7,388 | ) | (11,680 | ) | (18,787 | ) | (32,235 | ) | ||||||||
Payments for business and asset acquisitions, net of cash acquired | (50,041 | ) | (26,725 | ) | (72,990 | ) | (27,399 | ) | ||||||||
Purchases of marketable securities and other investments | (81,054 | ) | (15,687 | ) | (153,851 | ) | (32,757 | ) | ||||||||
Proceeds from sales and maturities of marketable securities and other investments | 59,553 | 18,553 | 69,658 | 32,681 | ||||||||||||
Net cash used in investing activities | (78,930 | ) | (35,539 | ) | (175,970 | ) | (59,710 | ) | ||||||||
Cash flows from financing activities: | ||||||||||||||||
Payments of debt | (634,055 | ) | — | (634,055 | ) | (511,844 | ) | |||||||||
Proceeds from issuance of long-term debt, net of issuance costs | 343,959 | (848 | ) | 838,959 | 663,757 | |||||||||||
Payments for repurchase of common stock | (99,077 | ) | (384,758 | ) | (99,077 | ) | (574,338 | ) | ||||||||
Net payments on other long-term liabilities | (119 | ) | (233 | ) | (206 | ) | (1,084 | ) | ||||||||
Proceeds from issuance of common stock from employee stock plans | 8,553 | 8,404 | 8,598 | 8,440 | ||||||||||||
Cash used to net share settle employee equity awards | (2,993 | ) | (4,802 | ) | (43,353 | ) | (56,973 | ) | ||||||||
Net cash (used in) provided by financing activities | (383,732 | ) | (382,237 | ) | 70,866 | (472,042 | ) | |||||||||
Effects of exchange rate changes on cash and cash equivalents | 1,261 | 1,891 | (1,210 | ) | 1,930 | |||||||||||
Net (decrease) increase in cash and cash equivalents | (335,967 | ) | (255,963 | ) | 144,020 | (228,759 | ) | |||||||||
Cash and cash equivalents at beginning of period | 961,607 | 506,653 | 481,620 | 479,449 | ||||||||||||
Cash and cash equivalents at end of period | $ | 625,640 | $ | 250,690 | $ | 625,640 | $ | 250,690 |
![]() | © 2017 Nuance Communications, Inc. All rights reserved |
2017 second quarter results | May 9, 2017 | |
Prepared remarks | ||
19 |
Three months ended | Six months ended | |||||||||||||||
March 31, | March 31, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
GAAP revenues | $ | 499,573 | $ | 478,733 | $ | 987,231 | $ | 964,848 | ||||||||
Acquisition-related revenue adjustments: professional services and hosting | 2,817 | 2,835 | 5,250 | 5,363 | ||||||||||||
Acquisition-related revenue adjustments: product and licensing | 8,313 | 5,715 | 14,029 | 11,708 | ||||||||||||
Acquisition-related revenue adjustments: maintenance and support | 394 | 130 | 605 | 364 | ||||||||||||
Non-GAAP revenues | $ | 511,097 | $ | 487,413 | $ | 1,007,115 | $ | 982,283 | ||||||||
GAAP cost of revenues | $ | 213,418 | $ | 205,500 | $ | 425,828 | $ | 411,098 | ||||||||
Cost of revenues from amortization of intangible assets | (17,218 | ) | (16,339 | ) | (32,760 | ) | (31,970 | ) | ||||||||
Cost of revenues adjustments: professional services and hosting (1,2) | (8,080 | ) | (7,548 | ) | (16,490 | ) | (15,139 | ) | ||||||||
Cost of revenues adjustments: product and licensing (1,2) | (102 | ) | (122 | ) | (194 | ) | (244 | ) | ||||||||
Cost of revenues adjustments: maintenance and support (1) | (1,010 | ) | (923 | ) | (1,987 | ) | (1,991 | ) | ||||||||
Non-GAAP cost of revenues | $ | 187,008 | $ | 180,568 | $ | 374,397 | $ | 361,754 | ||||||||
GAAP gross profit | $ | 286,155 | $ | 273,233 | $ | 561,403 | $ | 553,750 | ||||||||
Gross profit adjustments | 37,934 | 33,612 | 71,315 | 66,779 | ||||||||||||
Non-GAAP gross profit | $ | 324,089 | $ | 306,845 | $ | 632,718 | $ | 620,529 | ||||||||
GAAP income from operations | $ | 31,529 | $ | 32,905 | $ | 55,561 | $ | 64,405 | ||||||||
Gross profit adjustments | 37,934 | 33,612 | 71,315 | 66,779 | ||||||||||||
Research and development (1) | 8,398 | 7,967 | 16,888 | 17,900 | ||||||||||||
Sales and marketing (1) | 11,018 | 10,460 | 22,987 | 23,297 | ||||||||||||
General and administrative (1) | 11,740 | 10,934 | 20,932 | 21,565 | ||||||||||||
Acquisition-related costs, net | 5,379 | 1,225 | 14,405 | 3,705 | ||||||||||||
Amortization of intangible assets | 27,912 | 26,448 | 55,771 | 53,481 | ||||||||||||
Restructuring and other charges, net | 19,911 | 6,652 | 26,614 | 14,540 | ||||||||||||
Costs associated with IP collaboration agreements | — | 2,000 | — | 4,000 | ||||||||||||
Other | 2,721 | 6,025 | 5,711 | 9,875 | ||||||||||||
Non-GAAP income from operations | $ | 156,542 | $ | 138,228 | $ | 290,184 | $ | 279,547 | ||||||||
GAAP (loss) income before income taxes | $ | (24,667 | ) | $ | 2,199 | $ | (38,242 | ) | $ | (2,099 | ) | |||||
Gross profit adjustments | 37,934 | 33,612 | 71,315 | 66,779 | ||||||||||||
Research and development (1) | 8,398 | 7,967 | 16,888 | 17,900 | ||||||||||||
Sales and marketing (1) | 11,018 | 10,460 | 22,987 | 23,297 | ||||||||||||
General and administrative (1) | 11,740 | 10,934 | 20,932 | 21,565 | ||||||||||||
Acquisition-related costs, net | 5,379 | 1,225 | 14,405 | 3,705 | ||||||||||||
Amortization of intangible assets | 27,912 | 26,448 | 55,771 | 53,481 | ||||||||||||
Restructuring and other charges, net | 19,911 | 6,652 | 26,614 | 14,540 | ||||||||||||
Non-cash interest expense | 13,732 | 12,579 | 26,771 | 21,215 | ||||||||||||
Costs associated with IP collaboration agreements | — | 2,000 | — | 4,000 | ||||||||||||
Loss on extinguishment of debt | 18,565 | — | 18,565 | 4,851 | ||||||||||||
Other | 2,721 | 6,115 | 5,711 | 10,125 | ||||||||||||
Non-GAAP income before income taxes | $ | 132,643 | $ | 120,191 | $ | 241,717 | $ | 239,359 | ||||||||
![]() | © 2017 Nuance Communications, Inc. All rights reserved |
2017 second quarter results | May 9, 2017 | |
Prepared remarks | ||
20 |
(NEW METHOD) | (PRIOR METHOD) | |||||||||||||||||||||||||||||||
Three months ended | Six months ended | Three months ended | Six months ended | |||||||||||||||||||||||||||||
March 31, | March 31, | March 31, | March 31, | |||||||||||||||||||||||||||||
2017 | 2016 | 2017 | 2016 | 2017 | 2016 | 2017 | 2016 | |||||||||||||||||||||||||
GAAP provision for income taxes | $ | 9,141 | $ | 9,245 | $ | 19,494 | $ | 17,012 | $ | 9,141 | $ | 9,245 | $ | 19,494 | $ | 17,012 | ||||||||||||||||
Non-cash taxes | — | — | — | — | (1,987 | ) | (4,065 | ) | (5,802 | ) | (5,677 | ) | ||||||||||||||||||||
Adjustment to income tax expense: | ||||||||||||||||||||||||||||||||
Income tax effect of Non-GAAP adjustments | 50,658 | 39,627 | 93,289 | 81,684 | — | — | — | — | ||||||||||||||||||||||||
Removal of valuation allowance and other items | (18,254 | ) | (15,061 | ) | (39,001 | ) | (28,757 | ) | — | — | — | — | ||||||||||||||||||||
Removal of discrete items | (1,675 | ) | — | (1,732 | ) | — | — | — | — | — | ||||||||||||||||||||||
Non-GAAP provision for income taxes | $ | 39,870 | $ | 33,811 | $ | 72,050 | $ | 69,939 | $ | 7,154 | $ | 5,180 | $ | 13,692 | $ | 11,335 | ||||||||||||||||
GAAP net loss | $ | (33,808 | ) | $ | (7,046 | ) | $ | (57,736 | ) | $ | (19,111 | ) | $ | (33,808 | ) | $ | (7,046 | ) | $ | (57,736 | ) | $ | (19,111 | ) | ||||||||
Acquisition-related adjustment - revenues (2) | 11,524 | 8,680 | 19,884 | 17,435 | 11,524 | 8,680 | 19,884 | 17,435 | ||||||||||||||||||||||||
Acquisition-related adjustment - cost of revenues (2) | — | (209 | ) | — | (375 | ) | — | (209 | ) | — | (375 | ) | ||||||||||||||||||||
Acquisition-related costs, net | 5,379 | 1,225 | 14,405 | 3,705 | 5,379 | 1,225 | 14,405 | 3,705 | ||||||||||||||||||||||||
Cost of revenue from amortization of intangible assets | 17,218 | 16,339 | 32,760 | 31,970 | 17,218 | 16,339 | 32,760 | 31,970 | ||||||||||||||||||||||||
Amortization of intangible assets | 27,912 | 26,448 | 55,771 | 53,481 | 27,912 | 26,448 | 55,771 | 53,481 | ||||||||||||||||||||||||
Restructuring and other charges, net | 19,911 | 6,652 | 26,614 | 14,540 | 19,911 | 6,652 | 26,614 | 14,540 | ||||||||||||||||||||||||
Stock-based compensation (1) | 40,348 | 38,163 | 79,478 | 80,511 | 40,348 | 38,163 | 79,478 | 80,511 | ||||||||||||||||||||||||
Non-cash interest expense | 13,732 | 12,579 | 26,771 | 21,215 | 13,732 | 12,579 | 26,771 | 21,215 | ||||||||||||||||||||||||
Non-cash taxes | — | — | — | — | 1,987 | 4,065 | 5,802 | 5,677 | ||||||||||||||||||||||||
Adjustment to income tax expense | (30,729 | ) | (24,566 | ) | (52,556 | ) | (52,927 | ) | — | — | — | — | ||||||||||||||||||||
Costs associated with IP collaboration agreements | — | 2,000 | — | 4,000 | — | 2,000 | — | 4,000 | ||||||||||||||||||||||||
Loss on extinguishment of debt | 18,565 | — | 18,565 | 4,851 | 18,565 | — | 18,565 | 4,851 | ||||||||||||||||||||||||
Other | 2,721 | 6,115 | 5,711 | 10,125 | 2,721 | 6,115 | 5,711 | 10,125 | ||||||||||||||||||||||||
Non-GAAP net income | $ | 92,773 | $ | 86,380 | $ | 169,667 | $ | 169,420 | $ | 125,489 | $ | 115,011 | $ | 228,025 | $ | 228,024 | ||||||||||||||||
Non-GAAP diluted net income per share | $ | 0.32 | $ | 0.29 | $ | 0.58 | $ | 0.55 | $ | 0.43 | $ | 0.38 | $ | 0.78 | $ | 0.74 | ||||||||||||||||
Diluted weighted average common shares outstanding | 293,072 | 301,253 | 293,331 | 307,889 | 293,072 | 301,253 | 293,331 | 307,889 | ||||||||||||||||||||||||
![]() | © 2017 Nuance Communications, Inc. All rights reserved |
2017 second quarter results | May 9, 2017 | |
Prepared remarks | ||
21 |
NEW METHOD | |||||||||||||||||||||||||||||||
FY | FY | Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | ||||||||||||||||||||||||
2015 | 2016 | 2016 | 2016 | 2016 | 2016 | 2017 | 2017 | ||||||||||||||||||||||||
GAAP provision (benefit) for income taxes | $ | 34,538 | $ | 14,197 | $ | 7,767 | $ | 9,245 | $ | 7,846 | $ | (10,661 | ) | $ | 10,353 | $ | 9,141 | ||||||||||||||
Income tax effect of Non-GAAP adjustments | 174,238 | 158,624 | 42,057 | 39,627 | 38,360 | 38,581 | 42,631 | 50,658 | |||||||||||||||||||||||
Removal of valuation allowance and other items | (89,575 | ) | (30,517 | ) | (13,695 | ) | (15,061 | ) | (15,778 | ) | 14,018 | (20,747 | ) | (18,254 | ) | ||||||||||||||||
Removal of discrete items | 3,387 | (4,993 | ) | — | — | (800 | ) | (4,193 | ) | (57 | ) | (1,675 | ) | ||||||||||||||||||
Non-GAAP provision for income taxes | $ | 122,589 | $ | 137,311 | $ | 36,128 | $ | 33,811 | $ | 29,628 | $ | 37,744 | $ | 32,180 | $ | 39,870 | |||||||||||||||
GAAP net (loss) income | $ | (115,010 | ) | $ | (12,458 | ) | $ | (12,065 | ) | $ | (7,046 | ) | $ | (11,821 | ) | $ | 18,474 | $ | (23,929 | ) | $ | (33,808 | ) | ||||||||
Acquisition-related adjustment - revenues | 47,933 | 30,690 | 8,755 | 8,680 | 7,010 | 6,244 | 8,361 | 11,524 | |||||||||||||||||||||||
Acquisition-related adjustment - cost of revenues | (2,770 | ) | (925 | ) | (166 | ) | (209 | ) | (550 | ) | 1 | — | — | ||||||||||||||||||
Acquisition-related costs, net | 14,379 | 17,166 | 2,480 | 1,225 | 4,721 | 8,740 | 9,026 | 5,379 | |||||||||||||||||||||||
Cost of revenue from amortization of intangible assets | 63,646 | 62,876 | 15,631 | 16,339 | 15,107 | 15,799 | 15,542 | 17,218 | |||||||||||||||||||||||
Amortization of intangible assets | 104,630 | 108,021 | 27,033 | 26,448 | 26,748 | 27,792 | 27,859 | 27,912 | |||||||||||||||||||||||
Restructuring and other charges, net | 23,669 | 25,224 | 7,888 | 6,652 | 5,717 | 4,967 | 6,703 | 19,911 | |||||||||||||||||||||||
Stock-based compensation | 176,776 | 163,828 | 42,348 | 38,163 | 42,447 | 40,871 | 39,130 | 40,348 | |||||||||||||||||||||||
Non-cash interest expense | 29,378 | 47,105 | 8,636 | 12,579 | 12,829 | 13,061 | 13,039 | 13,732 | |||||||||||||||||||||||
Adjustment to income tax expense | (88,051 | ) | (123,114 | ) | (28,361 | ) | (24,566 | ) | (21,782 | ) | (48,405 | ) | (21,827 | ) | (30,729 | ) | |||||||||||||||
Costs associated with IP collaboration agreements | 10,500 | 4,000 | 2,000 | 2,000 | — | — | |||||||||||||||||||||||||
Change in fair value of share-based instruments | 204 | (61 | ) | — | (61 | ) | — | — | — | — | |||||||||||||||||||||
Loss on extinguishment of debt | 17,714 | 4,851 | 4,851 | — | — | — | 18,565 | ||||||||||||||||||||||||
Other | 25,362 | 16,180 | 4,010 | 6,176 | 2,838 | 3,156 | 2,989 | 2,721 | |||||||||||||||||||||||
Non-GAAP net income | $ | 308,360 | $ | 343,383 | $ | 83,040 | $ | 86,380 | $ | 83,264 | $ | 90,700 | $ | 76,893 | $ | 92,773 | |||||||||||||||
Non-GAAP diluted net income per share | $ | 0.95 | $ | 1.15 | $ | 0.26 | $ | 0.29 | $ | 0.30 | $ | 0.31 | $ | 0.26 | $ | 0.32 | |||||||||||||||
Diluted weighted average common shares outstanding | 323,940 | 298,292 | 314,371 | 301,253 | 281,786 | 289,371 | 293,909 | 293,072 |
![]() | © 2017 Nuance Communications, Inc. All rights reserved |
2017 second quarter results | May 9, 2017 | |
Prepared remarks | ||
22 |
PRIOR METHOD | |||||||||||||||||||||||||||||||
FY | FY | Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | ||||||||||||||||||||||||
2015 | 2016 | 2016 | 2016 | 2016 | 2016 | 2017 | 2017 | ||||||||||||||||||||||||
GAAP provision (benefit) for income taxes | $ | 34,538 | $ | 14,197 | $ | 7,767 | $ | 9,245 | $ | 7,846 | $ | (10,661 | ) | $ | 10,353 | $ | 9,141 | ||||||||||||||
Non-cash income taxes | (15,199 | ) | 12,080 | (1,612 | ) | (4,065 | ) | (2,794 | ) | 20,550 | (3,814 | ) | (1,987 | ) | |||||||||||||||||
Non-GAAP provision for income taxes | $ | 19,339 | $ | 26,277 | $ | 6,155 | $ | 5,180 | $ | 5,052 | $ | 9,889 | $ | 6,539 | $ | 7,154 | |||||||||||||||
GAAP net (loss) income | $ | (115,010 | ) | $ | (12,458 | ) | $ | (12,065 | ) | $ | (7,046 | ) | $ | (11,821 | ) | $ | 18,474 | $ | (23,929 | ) | $ | (33,808 | ) | ||||||||
Acquisition-related adjustment - revenues | 47,933 | 30,690 | 8,755 | 8,680 | 7,010 | 6,244 | 8,361 | 11,524 | |||||||||||||||||||||||
Acquisition-related adjustment - cost of revenues | (2,770 | ) | (925 | ) | (166 | ) | (209 | ) | (550 | ) | 1 | — | — | ||||||||||||||||||
Acquisition-related costs, net | 14,379 | 17,166 | 2,480 | 1,225 | 4,721 | 8,740 | 9,026 | 5,379 | |||||||||||||||||||||||
Cost of revenue from amortization of intangible assets | 63,646 | 62,876 | 15,631 | 16,339 | 15,107 | 15,799 | 15,542 | 17,218 | |||||||||||||||||||||||
Amortization of intangible assets | 104,630 | 108,021 | 27,033 | 26,448 | 26,748 | 27,792 | 27,859 | 27,912 | |||||||||||||||||||||||
Restructuring and other charges, net | 23,669 | 25,224 | 7,888 | 6,652 | 5,717 | 4,967 | 6,703 | 19,911 | |||||||||||||||||||||||
Stock-based compensation | 176,776 | 163,828 | 42,348 | 38,163 | 42,447 | 40,871 | 39,130 | 40,348 | |||||||||||||||||||||||
Non-cash interest expense | 29,378 | 47,105 | 8,636 | 12,579 | 12,829 | 13,061 | 13,039 | 13,732 | |||||||||||||||||||||||
Non-cash income taxes | 15,199 | (12,080 | ) | 1,612 | 4,065 | 2,794 | (20,550 | ) | 3,814 | 1,987 | |||||||||||||||||||||
Costs associated with IP collaboration agreements | 10,500 | 4,000 | 2,000 | 2,000 | — | — | — | — | |||||||||||||||||||||||
Change in fair value of share-based instruments | 204 | (61 | ) | — | (61 | ) | — | — | — | — | |||||||||||||||||||||
Loss on extinguishment of debt | 17,714 | 4,851 | 4,851 | — | — | — | — | 18,565 | |||||||||||||||||||||||
Other | 25,362 | 16,180 | 4,010 | 6,176 | 2,838 | 3,156 | 2,989 | 2,721 | |||||||||||||||||||||||
Non-GAAP net income | $ | 411,610 | $ | 454,417 | $ | 113,013 | $ | 115,011 | $ | 107,840 | $ | 118,555 | $ | 102,534 | $ | 125,489 | |||||||||||||||
Non-GAAP diluted net income per share | $ | 1.27 | $ | 1.52 | $ | 0.36 | $ | 0.38 | $ | 0.38 | $ | 0.41 | $ | 0.35 | $ | 0.43 | |||||||||||||||
Diluted weighted average common shares outstanding | 323,940 | 298,292 | 314,371 | 301,253 | 281,786 | 289,371 | 293,909 | 293,072 |
![]() | © 2017 Nuance Communications, Inc. All rights reserved |
2017 second quarter results | May 9, 2017 | |
Prepared remarks | ||
23 |
Three months ended March 31, | Six months ended March 31, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
(1) Stock-based compensation | |||||||||||||||
Cost of professional services and hosting | $ | 8,080 | $ | 7,757 | $ | 16,490 | $ | 15,514 | |||||||
Cost of product and licensing | 102 | 122 | 194 | 244 | |||||||||||
Cost of maintenance and support | 1,010 | 923 | 1,987 | 1,991 | |||||||||||
Research and development | 8,398 | 7,967 | 16,888 | 17,900 | |||||||||||
Sales and marketing | 11,018 | 10,460 | 22,987 | 23,297 | |||||||||||
General and administrative | 11,740 | 10,934 | 20,932 | 21,565 | |||||||||||
Total | $ | 40,348 | $ | 38,163 | $ | 79,478 | $ | 80,511 | |||||||
(2) Acquisition-related revenue and cost of revenue | |||||||||||||||
Revenues | $ | 11,524 | $ | 8,680 | $ | 19,884 | $ | 17,435 | |||||||
Cost of professional services and hosting | — | (209 | ) | — | (375 | ) | |||||||||
Total | $ | 11,524 | $ | 8,471 | $ | 19,884 | $ | 17,060 | |||||||
![]() | © 2017 Nuance Communications, Inc. All rights reserved |
2017 second quarter results | May 9, 2017 | |
Prepared remarks | ||
24 |
Three months ended March 31, | Six months ended March 31, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
GAAP operating expenses | $ | 254,626 | $ | 240,328 | $ | 505,842 | $ | 489,345 | |||||||
Research and development (1) | (8,398 | ) | (7,967 | ) | (16,888 | ) | (17,900 | ) | |||||||
Sales and marketing (1) | (11,018 | ) | (10,460 | ) | (22,987 | ) | (23,297 | ) | |||||||
General and administrative (1) | (11,740 | ) | (10,934 | ) | (20,932 | ) | (21,565 | ) | |||||||
Amortization of intangible assets | (27,912 | ) | (26,448 | ) | (55,771 | ) | (53,481 | ) | |||||||
Costs associated with IP collaboration agreements | — | (2,000 | ) | — | (4,000 | ) | |||||||||
Acquisition-related costs, net | (5,379 | ) | (1,225 | ) | (14,405 | ) | (3,705 | ) | |||||||
Restructuring and other charges, net | (19,911 | ) | (6,652 | ) | (26,614 | ) | (14,540 | ) | |||||||
Other | (2,721 | ) | (6,025 | ) | (5,711 | ) | (9,875 | ) | |||||||
Non-GAAP operating expenses | $ | 167,547 | $ | 168,617 | $ | 342,534 | $ | 340,982 | |||||||
GAAP research and development expense | $ | 66,232 | $ | 67,226 | $ | 132,554 | $ | 137,751 | |||||||
Stock-based compensation (1) | (8,398 | ) | (7,967 | ) | (16,888 | ) | (17,900 | ) | |||||||
Non-GAAP research and development expense | $ | 57,834 | $ | 59,259 | $ | 115,666 | $ | 119,851 | |||||||
GAAP sales and marketing expense | $ | 93,674 | $ | 92,837 | $ | 195,190 | $ | 193,427 | |||||||
Stock-based compensation (1) | (11,018 | ) | (10,460 | ) | (22,987 | ) | (23,297 | ) | |||||||
Costs associated with IP collaboration agreements | — | (2,000 | ) | — | (4,000 | ) | |||||||||
Non-GAAP sales and marketing expense | $ | 82,656 | $ | 80,377 | $ | 172,203 | $ | 166,130 | |||||||
GAAP general and administrative expense | $ | 41,518 | $ | 45,940 | $ | 81,308 | $ | 86,441 | |||||||
Stock-based compensation (1) | (11,740 | ) | (10,934 | ) | (20,932 | ) | (21,565 | ) | |||||||
Other | (2,721 | ) | (6,025 | ) | (5,711 | ) | (9,875 | ) | |||||||
Non-GAAP general and administrative expense | $ | 27,057 | $ | 28,981 | $ | 54,665 | $ | 55,001 | |||||||
![]() | © 2017 Nuance Communications, Inc. All rights reserved |
2017 second quarter results | May 9, 2017 | |
Prepared remarks | ||
25 |
Hosting Revenues | Q1 | Q2 | Q3 | Q4 | FY | Q1 | Q2 | |||||||||||||||||||||
2016 | 2016 | 2016 | 2016 | 2016 | 2017 | 2017 | ||||||||||||||||||||||
GAAP Revenues | $ | 177.4 | $ | 184.6 | $ | 181.1 | $ | 187.0 | $ | 730.2 | $ | 193.3 | $ | 202.2 | ||||||||||||||
Adjustment | 2.3 | 2.5 | 2.0 | 2.3 | 9.1 | 2.3 | 2.7 | |||||||||||||||||||||
Non-GAAP Revenues | $ | 179.7 | $ | 187.1 | $ | 183.2 | $ | 189.3 | $ | 739.2 | $ | 195.6 | $ | 204.8 | ||||||||||||||
Maintenance and Support Revenue | Q1 | Q2 | Q3 | Q4 | FY | Q1 | Q2 | |||||||||||||||||||||
2016 | 2016 | 2016 | 2016 | 2016 | 2017 | 2017 | ||||||||||||||||||||||
GAAP Revenues | $ | 79.9 | $ | 79.9 | $ | 82.5 | $ | 82.0 | $ | 324.3 | $ | 82.5 | $ | 81.6 | ||||||||||||||
Adjustment | 0.2 | 0.1 | 0.0 | 0.0 | 0.4 | 0.2 | 0.4 | |||||||||||||||||||||
Non-GAAP Revenues | $ | 80.2 | $ | 80.0 | $ | 82.5 | $ | 82.0 | $ | 324.7 | $ | 82.7 | $ | 82.0 | ||||||||||||||
Perpetual Product and Licensing Revenues | Q1 | Q2 | Q3 | Q4 | FY | Q1 | Q2 | |||||||||||||||||||||
2016 | 2016 | 2016 | 2016 | 2016 | 2017 | 2017 | ||||||||||||||||||||||
GAAP Revenues | $ | 115.2 | $ | 88.0 | $ | 80.9 | $ | 99.5 | $ | 383.6 | $ | 78.7 | $ | 76.5 | ||||||||||||||
Adjustment | 2.0 | 2.2 | 1.4 | 1.0 | 6.6 | 0.7 | 0.5 | |||||||||||||||||||||
Non-GAAP Revenues | $ | 117.2 | $ | 90.2 | $ | 82.3 | $ | 100.5 | $ | 390.2 | $ | 79.3 | $ | 77.0 | ||||||||||||||
Recurring Product and Licensing Revenues | Q1 | Q2 | Q3 | Q4 | FY | Q1 | Q2 | |||||||||||||||||||||
2016 | 2016 | 2016 | 2016 | 2016 | 2017 | 2017 | ||||||||||||||||||||||
GAAP Revenues | $ | 63.9 | $ | 70.6 | $ | 72.1 | $ | 79.1 | $ | 285.6 | $ | 73.1 | $ | 82.8 | ||||||||||||||
Adjustment | 4.0 | 3.5 | 3.3 | 2.7 | 13.5 | 5.1 | 7.8 | |||||||||||||||||||||
Non-GAAP Revenues | $ | 67.9 | $ | 74.1 | $ | 75.3 | $ | 81.7 | $ | 299.1 | $ | 78.2 | $ | 90.6 | ||||||||||||||
Professional Services Revenues | Q1 | Q2 | Q3 | Q4 | FY | Q1 | Q2 | |||||||||||||||||||||
2016 | 2016 | 2016 | 2016 | 2016 | 2017 | 2017 | ||||||||||||||||||||||
GAAP Revenues | $ | 49.7 | $ | 55.6 | $ | 61.2 | $ | 58.7 | $ | 225.2 | $ | 60.1 | $ | 56.5 | ||||||||||||||
Adjustment | 0.3 | 0.4 | 0.3 | 0.2 | 1.1 | 0.2 | 0.1 | |||||||||||||||||||||
Non-GAAP Revenues | $ | 50.0 | $ | 55.9 | $ | 61.5 | $ | 58.9 | $ | 226.3 | $ | 60.3 | $ | 56.7 | ||||||||||||||
Total Recurring Revenues | Q1 | Q2 | Q3 | Q4 | FY | Q1 | Q2 | |||||||||||||||||||||
2016 | 2016 | 2016 | 2016 | 2016 | 2017 | 2017 | ||||||||||||||||||||||
GAAP Revenues | $ | 326.1 | $ | 339.6 | $ | 339.7 | $ | 352.1 | $ | 1,357.4 | $ | 353.0 | $ | 370.2 | ||||||||||||||
Adjustment | 6.4 | 6.2 | 5.3 | 5.0 | 22.9 | 7.5 | 11.4 | |||||||||||||||||||||
Non-GAAP Revenues | $ | 332.5 | $ | 345.8 | $ | 345.0 | $ | 357.1 | $ | 1,380.3 | $ | 360.5 | $ | 381.7 | ||||||||||||||
![]() | © 2017 Nuance Communications, Inc. All rights reserved |
2017 second quarter results | May 9, 2017 | |
Prepared remarks | ||
26 |
Total Revenues | Q1 | Q2 | Q3 | Q4 | FY | Q1 | Q2 | |||||||||||||||||||||
2016 | 2016 | 2016 | 2016 | 2016 | 2017 | 2017 | ||||||||||||||||||||||
GAAP Revenues | $ | 486.1 | $ | 478.7 | $ | 477.9 | $ | 506.2 | $ | 1,948.9 | $ | 487.7 | $ | 499.6 | ||||||||||||||
Adjustment | 8.8 | 8.7 | 7.0 | 6.2 | 30.7 | 8.4 | 11.5 | |||||||||||||||||||||
Non-GAAP Revenues | $ | 494.9 | $ | 487.4 | $ | 484.9 | $ | 512.4 | $ | 1,979.6 | $ | 496.0 | $ | 511.1 | ||||||||||||||
Healthcare | Q1 | Q2 | Q3 | Q4 | FY | Q1 | Q2 | |||||||||||||||||||||
2016 | 2016 | 2016 | 2016 | 2016 | 2017 | 2017 | ||||||||||||||||||||||
GAAP Revenues | $ | 245.4 | $ | 242.1 | $ | 238.8 | $ | 238.1 | $ | 964.4 | $ | 237.7 | $ | 237.3 | ||||||||||||||
Adjustment | 2.7 | 2.3 | 2.2 | 1.7 | 8.9 | 1.5 | 1.2 | |||||||||||||||||||||
Non-GAAP Revenues | $ | 248.1 | $ | 244.4 | $ | 241.0 | $ | 239.8 | $ | 973.3 | $ | 239.2 | $ | 238.5 | ||||||||||||||
Mobile | Q1 | Q2 | Q3 | Q4 | FY | Q1 | Q2 | |||||||||||||||||||||
2016 | 2016 | 2016 | 2016 | 2016 | 2017 | 2017 | ||||||||||||||||||||||
GAAP Revenues | $ | 95.0 | $ | 89.9 | $ | 90.2 | $ | 95.8 | $ | 370.9 | $ | 90.5 | $ | 98.5 | ||||||||||||||
Adjustment | 1.4 | 2.0 | 1.6 | 1.4 | 6.4 | 1.3 | 1.7 | |||||||||||||||||||||
Non-GAAP Revenues | $ | 96.4 | $ | 91.8 | $ | 91.8 | $ | 97.2 | $ | 377.3 | $ | 91.8 | $ | 100.2 | ||||||||||||||
Enterprise | Q1 | Q2 | Q3 | Q4 | FY | Q1 | Q2 | |||||||||||||||||||||
2016 | 2016 | 2016 | 2016 | 2016 | 2017 | 2017 | ||||||||||||||||||||||
GAAP Revenues | $ | 88.3 | $ | 93.7 | $ | 94.9 | $ | 108.1 | $ | 385.0 | $ | 109.3 | $ | 112.5 | ||||||||||||||
Adjustment | 0.5 | 0.8 | 0.3 | 0.9 | 2.5 | 3.7 | 6.9 | |||||||||||||||||||||
Non-GAAP Revenues | $ | 88.8 | $ | 94.4 | $ | 95.2 | $ | 109.0 | $ | 387.5 | $ | 112.9 | $ | 119.4 | ||||||||||||||
Imaging | Q1 | Q2 | Q3 | Q4 | FY | Q1 | Q2 | |||||||||||||||||||||
2016 | 2016 | 2016 | 2016 | 2016 | 2017 | 2017 | ||||||||||||||||||||||
GAAP Revenues | $ | 57.4 | $ | 53.1 | $ | 53.9 | $ | 64.2 | $ | 228.6 | $ | 50.1 | $ | 51.3 | ||||||||||||||
Adjustment | 4.2 | 3.6 | 2.9 | 2.2 | 13.0 | 1.9 | 1.8 | |||||||||||||||||||||
Non-GAAP Revenues | $ | 61.6 | $ | 56.7 | $ | 56.8 | $ | 66.4 | $ | 241.6 | $ | 52.1 | $ | 53.0 | ||||||||||||||
![]() | © 2017 Nuance Communications, Inc. All rights reserved |
2017 second quarter results | May 9, 2017 | |
Prepared remarks | ||
27 |
Q1 | Q2 | Q3 | Q4 | FY | Q1 | Q2 | |||||||||||||||||||||
2016 | 2016 | 2016 | 2016 | 2016 | 2017 | 2017 | |||||||||||||||||||||
Total segment revenues | $ | 494.9 | $ | 487.4 | $ | 484.9 | $ | 512.4 | $ | 1,979.6 | $ | 496.0 | $ | 511.1 | |||||||||||||
Acquisition-related revenue adjustments | (8.8 | ) | (8.7 | ) | (7.0 | ) | (6.2 | ) | (30.7 | ) | (8.4 | ) | (11.5 | ) | |||||||||||||
Total consolidated revenues | $ | 486.1 | $ | 478.7 | $ | 477.9 | $ | 506.2 | $ | 1,948.9 | $ | 487.7 | $ | 499.6 | |||||||||||||
Total segment profit | $ | 168.2 | $ | 168.1 | $ | 160.8 | $ | 180.6 | $ | 677.6 | $ | 161.6 | $ | 184.0 | |||||||||||||
Corporate expenses and other, net | (30.7 | ) | (35.9 | ) | (30.9 | ) | (30.8 | ) | (128.2 | ) | (31.0 | ) | (30.2 | ) | |||||||||||||
Acquisition-related revenues and costs of revenues adjustment | (8.6 | ) | (8.5 | ) | (6.5 | ) | (6.2 | ) | (29.8 | ) | (8.4 | ) | (11.5 | ) | |||||||||||||
Stock-based compensation | (42.3 | ) | (38.2 | ) | (42.4 | ) | (40.9 | ) | (163.8 | ) | (39.1 | ) | (40.3 | ) | |||||||||||||
Amortization of intangible assets | (42.7 | ) | (42.8 | ) | (41.9 | ) | (43.6 | ) | (170.9 | ) | (43.4 | ) | (45.1 | ) | |||||||||||||
Acquisition-related costs, net | (2.5 | ) | (1.2 | ) | (4.7 | ) | (8.7 | ) | (17.2 | ) | (9.0 | ) | (5.4 | ) | |||||||||||||
Restructuring and other charges, net | (7.9 | ) | (6.7 | ) | (5.7 | ) | (5.0 | ) | (25.2 | ) | (6.7 | ) | (19.9 | ) | |||||||||||||
Costs associated with IP collaboration agreements | (2.0 | ) | (2.0 | ) | — | — | (4.0 | ) | — | — | |||||||||||||||||
Other expense, net | (35.8 | ) | (30.7 | ) | (32.7 | ) | (37.6 | ) | (136.8 | ) | (37.6 | ) | (56.2 | ) | |||||||||||||
(Loss) income before income taxes | $ | (4.3 | ) | $ | 2.2 | $ | (4.0 | ) | $ | 7.8 | $ | 1.7 | $ | (13.6 | ) | $ | (24.7 | ) | |||||||||
![]() | © 2017 Nuance Communications, Inc. All rights reserved |
2017 second quarter results | May 9, 2017 | |
Prepared remarks | ||
28 |
(NEW METHOD) | (PRIOR METHOD) | ||||||||||||||
Three months ended June 30, 2017 | Three months ended June 30, 2017 | ||||||||||||||
Low | High | Low | High | ||||||||||||
GAAP revenue | $ | 495,000 | $ | 509,000 | $ | 495,000 | $ | 509,000 | |||||||
Acquisition-related adjustment - revenue | 8,000 | 8,000 | 8,000 | 8,000 | |||||||||||
Non-GAAP revenue | $ | 503,000 | $ | 517,000 | $ | 503,000 | $ | 517,000 | |||||||
GAAP net income per share | $ | (0.08 | ) | $ | (0.04 | ) | $ | (0.08 | ) | $ | (0.04 | ) | |||
Acquisition-related adjustment - revenue | 0.03 | 0.03 | 0.03 | 0.03 | |||||||||||
Acquisition-related costs, net | 0.03 | 0.03 | 0.03 | 0.03 | |||||||||||
Cost of revenue from amortization of intangible assets | 0.05 | 0.05 | 0.05 | 0.05 | |||||||||||
Amortization of intangible assets | 0.10 | 0.10 | 0.10 | 0.10 | |||||||||||
Non-cash stock-based compensation | 0.15 | 0.15 | 0.15 | 0.15 | |||||||||||
Non-cash interest expense | 0.05 | 0.05 | 0.05 | 0.05 | |||||||||||
Adjustment to income tax expense | (0.09) | (0.10) | — | — | |||||||||||
Non-cash income taxes | — | — | 0.01 | 0.01 | |||||||||||
Restructuring and other charges, net | 0.02 | 0.02 | 0.02 | 0.02 | |||||||||||
Other | 0.01 | 0.01 | 0.01 | 0.01 | |||||||||||
Non-GAAP net income per share | $ | 0.27 | $ | 0.30 | $ | 0.37 | $ | 0.41 | |||||||
Shares used in computing GAAP and non-GAAP net income per share: | |||||||||||||||
Weighted average common shares: basic | 288,000 | 288,000 | 288,000 | 288,000 | |||||||||||
Weighted average common shares: diluted | 290,000 | 290,000 | 290,000 | 290,000 |
![]() | © 2017 Nuance Communications, Inc. All rights reserved |
2017 second quarter results | May 9, 2017 | |
Prepared remarks | ||
29 |
(NEW METHOD) | (PRIOR METHOD) | ||||||||||||||
Twelve months ended September 30, 2017 | Twelve months ended September 30, 2017 | ||||||||||||||
Low | High | Low | High | ||||||||||||
GAAP revenue | $ | 1,994,000 | $ | 2,034,000 | $ | 1,994,000 | $ | 2,034,000 | |||||||
Acquisition-related adjustment - revenue | 36,000 | 36,000 | 36,000 | 36,000 | |||||||||||
Non-GAAP revenue | $ | 2,030,000 | $ | 2,070,000 | $ | 2,030,000 | $ | 2,070,000 | |||||||
GAAP net income per share | $ | (0.32 | ) | $ | (0.24 | ) | $ | (0.32 | ) | $ | (0.24 | ) | |||
Acquisition-related adjustment - revenue | 0.12 | 0.12 | 0.12 | 0.12 | |||||||||||
Acquisition-related costs, net | 0.10 | 0.10 | 0.10 | 0.10 | |||||||||||
Cost of revenue from amortization of intangible assets | 0.22 | 0.22 | 0.22 | 0.22 | |||||||||||
Amortization of intangible assets | 0.39 | 0.39 | 0.39 | 0.39 | |||||||||||
Non-cash stock-based compensation | 0.59 | 0.59 | 0.59 | 0.59 | |||||||||||
Non-cash interest expense | 0.20 | 0.20 | 0.20 | 0.20 | |||||||||||
Adjustment to income tax expense | (0.38) | (0.40) | — | — | |||||||||||
Non-cash income taxes | — | — | 0.04 | 0.04 | |||||||||||
Restructuring and other charges, net | 0.12 | 0.12 | 0.12 | 0.12 | |||||||||||
Loss on extinguishment of debt | 0.06 | 0.06 | 0.06 | 0.06 | |||||||||||
Other | 0.03 | 0.03 | 0.03 | 0.03 | |||||||||||
Non-GAAP net income per share | $ | 1.13 | $ | 1.19 | $ | 1.55 | $ | 1.63 | |||||||
Shares used in computing GAAP and non-GAAP net income per share: | |||||||||||||||
Weighted average common shares: basic | 290,000 | 290,000 | 290,000 | 290,000 | |||||||||||
Weighted average common shares: diluted | 296,000 | 296,000 | 296,000 | 296,000 |
![]() | © 2017 Nuance Communications, Inc. All rights reserved |
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