Cerence Beats On Q3 Earnings, Notes Margin Expansion, 13% Billings Per Car Growth - Cerence (NASDAQ:CRNC)

Cerence Inc CRNC reported third-quarter FY21 revenue growth of 28.7% year-on-year to $96.8 million, beating the analyst consensus of $96.3 million.
Segments: Revenue from License grew 54% Y/Y to $49.98 million, Connected services increased 19.3% Y/Y to $30.3 million, and Professional services declined 4.7% Y/Y to $16.5 million.
Global auto production with Cerence Technology (TTM) rose 53% Y/Y. The average contract duration (TTM) was 6.8 years. Growth in billings per car was 13%.
Margins: The gross margin expanded by 1,208 bps to 75.4%. License margin expanded 80 bps to 98.3%, Connected services margin increased 816 bps to 79.8%, and Professional services noted a positive margin of 9.4%. The non-GAAP gross margin rose 1,020 bps to 79.1%.
The non-GAAP operating margin expanded 900 bps to 37.7%, and the adjusted EBITDA margin grew 790 bps to 40%.
Non-GAAP EPS of $0.62 beat the analyst consensus of $0.54.
Cerence generated $51.1 million in operating cash flow during the nine months ended Jun. 30 and held $149.9 million in cash and equivalents.
Outlook: Cerence sees Q4 revenue of $97 million - $101 million versus the analyst consensus of $98.4 million.
With a record of over 60 SOPs in the quarter from over 15 different automakers and the bookings momentum for new products and connected services, it expects to continue to grow faster than the auto SAAR (seasonally adjusted annual rate).
Collaborations with Sirius XM Holdings Inc SIRI, Visteon Corp VC, and Harman will likely drive future growth prospects.
Price action: CRNC shares closed higher by 8.62% at $114.55 on Monday.

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