Why Cerence Shares Are Plunging After Q1 Earnings? - Cerence (NASDAQ:CRNC)

Cerence Inc CRNC reported first-quarter FY22 revenue growth of 0.8% year-on-year to $94.43 million, marginally above the consensus of $94.38 million. Non-GAAP EPS of $0.59 beat the consensus of $0.51.
Segments: Revenue from License grew 0.9% Y/Y to $46.85 million, Connected services rose 8.6% Y/Y to $28.2 million, and Professional services declined 8.8% Y/Y to $19.4 million.
Margins: The non-GAAP gross margin expanded 250 bps to 77.5%.
The non-GAAP operating margin contracted 210 bps to 36.8%, and the adjusted EBITDA margin contracted 250 bps to 39.1%.
Cerence generated $5.1 million in operating cash flow and held $145.1 million in cash and equivalents.
Outlook: Cerence sees Q2 FY22 revenue of $82 million - $86 million, far below the consensus of $100 million.
Cerence lowered the FY22 revenue outlook from $400 million - $425 million to $365 million - $385 million, far below the consensus of $413.8 million.
CFO Transition: CFO Mark Gallenberger will retire effective March 11, 2022. Gallenberger will remain in an advisory role through mid-November 2022.
Mitch Cohen joined Cerence this week and will serve in an interim role to provide oversight of the finance organization.
Cerence has retained Heidrick & Struggles, a leading international executive search firm, to assist in the search for a new CFO.
Price action: CRNC shares traded lower by 26.8% at $46.55 in the premarket session on the last check Monday.