Nuance Slightly Misses Earnings Expectations But Beats in Revenue Post-Microsoft Acquisition News

  • Nuance reported earnings per share of $0.16, just a cent below the $0.17 projected by analysts after beating expectations the previous three quarters.
  • However, Nuance’s $336.6 million in revenue beat analyst estimates of $333.53 million.
  • This is the first report since the company announced it will be acquired by Microsoft, which is expected to close before the end of the year.

Healthy Growth

Nuance Communications (NUAN) announced Q3 FY2021 and financial results with mixed results compared to analyst projections. The company came out ahead in revenue with $336.6 million compared to $333.53 projected, but the $0.16 earnings per share fell a cent below what analysts expected. The company’s leadership pointed to growth in its healthcare offerings in particular as a driver of its success, though enterprise and security products also marked notable growth. Nuance brought on several major clients like Wings Financial Credit Union, Minnesota’s largest credit union. Wings will incorporate Nuance’s voice AI to serve as a virtual assistant and biometric security for customers.

“We are pleased to report another quarter of execution on our key strategic objectives, leading to solid Q3 results on both our top-line and bottom-line,” Nuance CEO Mark Benjamin said.  “In Healthcare, our shift towards cloud-based offerings across our portfolio helped drive a healthy ARR performance. This performance led in part to our second consecutive quarter of 29% year-over-year growth in Dragon Medical and DAX Cloud revenue. In total, Healthcare revenue increased by 22% year-over-year due to cloud revenue strength. In Enterprise, our Digital Engagement and Security & Biometrics solutions saw continued adoption throughout the quarter, leading to a return to year-over-year growth in Q3. Overall, Enterprise revenue increased 5% year-over-year, driven by the adoption of these solutions. We are encouraged by the company’s overall performance year-to-date, and feel we are set up for a strong end to fiscal year 2021.”

Microsoft Bound

Nuance is currently undergoing a $19.7 billion acquisition by Microsoft, which may have led to some flux in its success the last quarter, according to Nuance, though nothing that might impede the sale. The deal will see Microsoft acquire all of the outstanding shares of Nuance common stock for $56 per share, paid for in cash. The transaction will let Microsoft end public trade in Nuance as it absorbs the platform. The deal is expected to be complete by the end of the year, so there was no discussion of projecting Nuance’s future stock price and revenue. It will be worth watching how the completion of the sale impacts Microsoft’s earnings next quarter as it incorporates Nuance’s tech and services.


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