Cerence Slightly Beats Revenue Expectations, But Lowers Expectations Leading to Stock Price Drop
- Cerence’s $94.43 million in revenue very slightly beat analyst estimates of $94.38 million.
- Earnings of $0.59 came out ahead of the $0.51 estimates.
- Shortages led to a further reduction in the annual revenue prediction to $365 to $385 million from the $400 to $425 million projected last quarter and way below the $413 million projection from analysts
- A notable drop in Cerence’s stock price followed the report.
- Cerence offered guidance for the next quarter of 2022, projecting $82 million to $86 million in revenue or $22 million to $26 million with adjusted EBITDA.
Cerence Surge
Automotive voice technology developer, Cerence (CRNC), announced Q1 FY2022 and financial results that easily beat analyst projections for earnings and very slightly came out ahead in revenue. The company reported $94.43 million in revenue, beating the $94.38 million predicted by analysts. It was the second-largest bookings quarter in Cerence’s history. The last quarter saw several significant new contracts, including a Chinese tw0-wheel vehicle maker and expansion into the fitness market. The last quarter also saw Stefan Ortmanns take over as the new CEO and the earnings were announced at the same time as CFO Mark Gallenberger announced his retirement, with Mitch Cohen taking up the role in an interim capacity.
“We had a strong start to the fiscal year. Our results underscore the strength of our business and reinforces Cerence as the global leader in unique, moving experiences for the mobility world,” Ortmanns said. “We’ve delivered important innovations and leading AI mobility solutions to customers in key markets, and our employees have demonstrated great commitment to supporting our customers and each other We remain focused on the markets, customers and products that will deliver long-term sustainable growth and that everything we do reinforces our vision of leadership in AI for mobility. We are intensely focused on bold innovation and executing at speed for our customers.”
Lowered Expectations
The company suggested that revenue for the next quarter will range from $82 million to $86 million, or $22 million to $26 million with adjusted EBITDA. The company also lowered annual expectations or the full year by 9% to between $365 million and $385 million. Cerence cited changes in the automotive industry and supply chain issues for semiconductors and the lingering impact of COVID-19 as the reason for the shift in expectations. The change in expected revenue caused a steep fall for the company’s stock price, with the dip hovering around 30% most of the day. Something similar happened during the quarter, but as the guidance was based on the potential for one-time licensing, the stock may not recover as fully until it has more good news to report.
“Although attractive opportunities remain, these may not all be realized during our fiscal year as previously expected,” Cerence wrote.
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