Cerence Reports Mixed Q2 Results; Margins Shrink Due To Automotive Headwinds - Cerence (NASDAQ:CRNC)

Cerence Inc (NASDAQ:CRNC) reported a second-quarter FY22 revenue decline of 12.5% year-on-year to $86.3 million, above the consensus of $84.6 million. Non-GAAP EPS of $0.33 missed the consensus of $0.34.
Segments: Revenue from License fell 14.8% Y/Y to $46.3 million, Connected services decreased 30.3% Y/Y to $19.3 million, and Professional services rose 24.7% Y/Y to $20.6 million.
Margins: The non-GAAP gross margin contracted 230 bps to 74.7%.
The non-GAAP operating margin contracted 1,240 bps to 25.2%, and the adjusted EBITDA margin contracted 1,200 bps to 27.9%.
Cerence generated $1.6 million in operating cash flow and held $141.6 million in cash and equivalents.
CEO Stefan Ortmanns commented, "We generated solid financial results fueled by deepened relationships with long-term customers, new wins with innovative EV makers, and expansion in newer areas like heavy trucking and two-wheelers. Despite the headwinds facing the global automotive industry, we continue to deliver on expectations as the world's leading automakers turn to Cerence as their innovation partner."
Outlook: Cerence sees Q3 revenue of $90 million - $94 million, versus the consensus of $91.6 million. Non-GAAP EPS of $0.40 - $0.47 against the consensus of $0.48.
Cerence reiterated the FY22 revenue outlook of $365 million - $385 million versus the consensus of $368.7 million. Non-GAAP EPS of $1.80 - $2.16 against the consensus of $1.92.
Price Action: CRNC shares traded higher by 2.23% at $27.06 on the last check Tuesday.

CRNCCerence Inc

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