COVID-19 has had an impact, but Cerence is showing considerable resilience in its latest quarterly update.
For the quarter ended June 30, 2020, Cerence brought in revenues of $74.8 million. That’s slightly lower than the revenues of $77.6 million the company saw in the comparable period of 2019 – Cerence’s fiscal Q3 – when it was still a part of conversational AI specialist Nuance Communication; but looking to the year to date, Cerence saw revenues of $238.8 million, compared to revenues of $220.4 million in the first half of last year.
Commenting on the results, Cerence CEO Sanjay Dhawan emphasized the context of COVID-19 and its impact on the automotive sector, the target market for Cerence’s voice-based AI assistant technology.
“While the impact of COVID-19 has weighed on the global economy, our fiscal year to-date revenues are up 8% compared to the same period in the prior year,” he said. “During a period of a dramatic drop-off in auto production our revenue declined less than 4% in the quarter versus a year ago.”
That having been said, Cerence has seen a dramatic change in its GAAP net result, which went from a profit of $1.8 million in Q3 of 2019 to a net loss of $28.2 million in the latest quarter.
Still, Dhawan emphasized the ongoing progress that Cerence has been making. “While the business environment in the near term remains challenging, we are maintaining the 2024 growth targets in large part due to the strong bookings we have seen this year and the initial positive reactions by customers to our new product initiatives,” he said, adding that offerings like Cerence Pay “will play a key role in generating a new line of SaaS or transaction-based revenue” going forward.
Dhawan also highlighted Cerence’s debt refinancing, which will allow the company to save $10 million per annum in cash interest expenses.
While Cerence had withdrawn its fiscal guidance in its previous quarterly update due to the COVID-19 outbreak, in its latest report the company offered guidance for Q4, predicting that it will see revenues in the range of $76 million to $80 million, and an EBITDA of somewhere between $23 million and $26 million.