Cerence Beats Analyst Expectations Again, Raises Annual Revenue Forecast

• Cerence reported first-quarter earnings of $0.27, far above the well ahead of $0.09 predicted by analysts.
• Cerence’s $83.65 million in revenue also beat analyst expectations of $76.76 million.
• The positive numbers come with improved expectations for the year from Cerence as it looks to expand its portfolio of services and clients in 2023.

Cerence Shares

Automotive voice technology developer, Cerence (CRNC) came out 400% ahead of Q1 FY2023 analyst expectations for earnings of $0.09 with $0.27. The company similarly overshot revenue expectations, hitting $83.65 million, about $7 million above the $76.76 million forecast by analysts. Cerence projected $64 to $68 million in revenue for the next quarter. The company raised the low end of its yearly guidance discussed last quarter from $270 million to $275 million, though the ceiling of $290 million remained the same.

“We had a strong start to the fiscal year with revenue higher than projected in the core business due to stronger than expected contributions from connected services, professional services, and fixed contracts. The amount of fixed contracts are within the framework of the $40M targeted for the full fiscal year. Consumption of fixed contracts were lower than expected as well. The higher revenue for the quarter resulted in better-than-expected financial results,” Cerence CEO Stefan Ortmanns said. “We had a number of key design wins in the quarter in both the automotive and two-wheeler markets, including two win-backs from competitors,” continued Ortmanns. “These wins for Cerence Co-Pilot and Cerence Ride are important indicators of our future growth and our ability to meet the multi-year targets we set forth at our investor day event. While our customers are still navigating a cloudy macro environment due to issues such as semiconductor shortages, we remain confident in our full-year guidance. We remain focused on innovation, execution and delivery as we march toward Destination Next for Cerence,” Ortmanns concluded.

Since the last quarter, Cerence has inked a deal with iHeartMedia and Radioline to incorporate their audio content into its customizable voice assistant platform. Audio content from both providers will be native features for cars built with Cerence’s voice assistant. Cerence has been steadily expanding its range of in-house and partnership-based features. The recent Cerence Exterior Vehicle Communication tool allows drivers to control their car with their voice from outside the vehicle, operating doors, lights, and other controls. And Cerence now supports Nvidia’s Drive Concierge in-car infotainment system while preparing to upgrade BMW’s platform and embed Microsoft Teams in its voice AI system.

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