Nuance Financial Results Beats Revenue Estimates on Strength of Medical and Enterprise AI
Nuance Communications (NUAN) beat analyst expectations of $316.5 million in revenue for the second quarter of 2020 in its financial results with $369.5 million. The company has beat analyst revenue expectations in three out of the four most recent quarters, and the company is anticipating more growth to come.
Nuance hit 11% year-over-year organic revenue growth this quarter. The company’s stock is also beating the market, rising about 8.8% since the beginning of 2020, while the S&P 500 dropped 11.8%. Much of the increase is a result of the company’s enterprise and healthcare revenue.
Healthcare revenue rose 10% in part because of the popularity of the Dragon Medical Virtual Assistant, whose work as a clinical AI for doctor’s to gather and collate information has only become more important during the current COVID-19 pandemic. The partnership Nuance and Microsoft agreed to late last year put Nuance’s tech on the Microsoft Azure cloud platform, making it more accessible to far more potential clients. There were more than half a million doctors already using Dragon Medical software even before the partnership.
“Despite COVID-19, we had another excellent quarter,” Nuance CEO Mark Benjamin said in a statement. “Given our compelling financial and operating position, we fully expect to weather the disruption of this pandemic. However, we also expect a near-term impact on our business, particularly within Healthcare, given the significant reduction in elective procedures and the reprioritization of initiatives by hospitals to focus on COVID-19.”
The enterprise segment of Nuance’s technology saw an even larger gain than healthcare, with 19% annual revenue growth. That’s the fastest the segment’s revenue has grown in a decade. The company’s AI platform is finding new and expanded places to operate. The adoption has been accelerated by the COVID-19 health crisis. For instance, the grocery store chain Albertsons is going to use Nuance’s technology to help online shoppers. The Intelligent Engagement Platform created by Nuance will support a virtual assistant and chatbot to aid Albertsons during the spike in online grocery shopping resulting from people staying home during the current COVID-19 pandemic.
Many companies are finding an increased demand for intelligent platforms and assistants like the one created by Nuance. The company’s new Nuance Mix product is designed to make it even easier for clients to build virtual assistants. The toolkit of conversational AI software for businesses doesn’t require technical knowledge for a business to create a customer service bot or connect employees to coordinate their projects. Even when the crisis recedes, the place of Nuance’s AI makes the company feel confident about its future.
“Despite the uncertain near-term operating environment, I believe the markets we serve will expand post COVID-19 as our customers appreciate the critical need for AI-based solutions, remote access capabilities for healthcare workers, and increased demand for telehealth, and security and fraud protection solutions,” Benjamin said. “We remain an incredibly resilient company, and I am confident that we will emerge from this pandemic stronger.”