CRNC - Earnings call transcript Q4 2019

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Operator

Ladies and gentlemen, thank you for standing by. And welcome to the Cerence Q4 FY '19 and Fiscal Year Earnings Call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. [Operator Instructions]. today's being that advised be conference recorded. is Please Instructions]. [Operator

hand over Rich to I would President conference to like Relations, now Vice the of Yerganian. Investor

Rich Yerganian

Cerence’s XXXX Andrew, everyone. you, good fourth to quarter Thank and call. conference and fiscal Welcome morning,

after Cerence Before update in that call date we preceding the the These are press may you and those risks call. statements. this subject forward-looking release begin, to like makes certain uncertainties remind to would statements we statements no to representations involve as hereof. today's described

In may pro to refer non-GAAP forma the and for definitions, certain financial press measures of Please those the further reconciliations today's to addition, closest call. limitations the refer GAAP we of measures measures and details of equivalent. information and during to uses release this non-GAAP

today's are Mark Cerence’s CEO; on CFO. me Dhawan, call and Sanjay Cerence’s Gallenberger, Joining

As company the spokespeople a are Sanjay, authorized the reminder, and myself. for only Mark

I’d upcoming we we the City. announce presenting New site handing hosting to Market to Growth Conference XX, And a the York XX, Day Analyst an York January be like NASDAQ in On in City. of Sanjay, on couple will the New events. Needham February over call will at Before at be investor

Now call. Sanjay? onto the

Sanjay Dhawan

company, future is me the their X important I'm plans. and customers morning, how stand-alone Good I Thank the you, Tier executives Cerence October have Since everyone Cerence’s encouraged and their and of throughout first world. and to first call. a joining thank about visited from auto to I to major OEMs with Cerence current Rich. our everyone. us want for earnings on day support really today Xst, became met comments the by

commitment will key to reiterated I be on success. that play such focused role and We're their ensuring honored Cerence always a our

future this on company as progress all to automotive team, more and an is about stand-alone you of first software engagements focused of a excited our and opportunity call performance help the many Cerence’s tremendous learn As executive we're about market.

push and into technologies, recognition modalities the customers user to as is the most interactive of such voice the our and enjoyable boundaries language natural understanding gesture at core and in to car. other experience provide and safest, the our While continuing are we interface gaze

make they a fiscal a direct fourth impact positive I'd the our quarter like and comments year few on have to on future business. since and

and First record had bookings. foremost, and we revenue

came Our in our of of above guidance, high-end million our non-GAAP XXX as EBITDA. the revenue adjusted did

Our business has forward strong momentum.

car in at to backlog are end X.X design first helped wins regions These design billion XXXX first important our in wins of We in the win local with our grow These backlog future year were wins These XX%. had and approximately September. Malaysia. of approximately OEM and wins included and of India-based of geographic major the growth. growing strong year the rate our the indicators fiscal all intelligent

models doing The our number into highest of history. engineers on support revenue growth. will integrate services professional Cerence’s customers’ company's are active professional that are work global car and our continue These the was our in and represent projects the services projects to technology working future our team customize the to

to further more in Services more and penetration faster than market much continue a faster segment to While grow Edge licensing penetration Services the because the and expected early Edge in-car than grow for include Edge. is our are will Connected this solution Cerence. technology, will of product stages relatively our these will to grow rate technologies at cars business our or continue growth as the Connected higher be

at adoption and consumer of pace. platform. the connect this cloud an the well native Year-over-year, is rising a to capability Cerence’s The new the services using for users growth of of from Services to up benefit grow level were growth. solutions positioned is fueled by nearly car’s these to XXX%. to accelerated adoption This Connected are will accelerating continue

is be in automotive The in indeed The exciting. key dramatic undergoing this Cerence’s is changes to the intent Cerence technology road innovator user that for area. ahead industry interface define and the

announcements and the Cerence market Cerence product regarding are reflect exciting for ARK the innovations to of recent market. beginning bringing Our Chinese only new we Drive

The in OEMs realize interface differentiator between key car the user as the a brands.

Our improving on example forefront multimedia MBUX, how the User Mercedes-Benz is Daimler driver Cerence the work with experience. at of Experience its of another the system, is

opportunity the to key I joined a a Cerence play company role of because its the enabler CEO these as as major I for of see efforts.

technology working gesture While recognition. recognition our the with and language, well the experience as we're continues technology user continuing natural as of and and such evolve offerings enhance additional in as voice core gaze to modality is Cerence’s to

R&D driving experience. team at innovation, technology core the ensuring on new market Cerence to highly enjoyable a bringing capabilities that the creating Our focused and is safer, of is more

the would and quarter now I call Mark? to financial that, the like review to year. With fiscal turn Mark the over of results to

Mark Gallenberger

performance as as the year I Thanks, guidance and the strong year fourth then fiscal or well for review XXXX fiscal Sanjay. year fiscal provide and fiscal I’ll quarter XXXX our will for for first one. quarter

reporting be GAAP XXX. periods results for revenue revenue will non-GAAP both and presenting under in under XXX, 'XX ASC ASC will only and historical we I and FY GAAP beginning be XXX Although

this reconciliation to Additionally, in for there reference. non-GAAP are the presentation tables of appendix your GAAP

the table up outpace a to the by X, GAAP of Connected the technologies driven on auto the and our quarter performance penetration can Edge by in Cerence’s year This our As XX%. automobile. for ability significant margin revenue from SAAR fiscal increasing see and the the demonstrates you were Services Page

the that guidance the see comparing to high can of when X revenue Page our end exceeded range. we actual revenue results, you On

exceeded non-GAAP operating was adjusted expense our to margin due importantly, better-than-expected expectations primarily operating and More EBITDA and management.

of up our table the Page The you was on provides And revenue our can see year. streams from up business. that that revenue breakdown a X license the X% prior different make

'XX, which XX% the demonstrates penetration embedded FY adjusting prepaid of revenue from However, for increased our when our our license variable licenses, increasing by solutions.

we declining by prepaid that flat $XX potentially of something 'XX before, is over hold or million prepays have with from reflected FY the expect and the we prior As the year. reduce in results time to this stated contracts is use

growth of our the This cars of 'XX. in of the in the FY XX% adoption 'XX of increasing increase Connected with reflects to Services strong compared rate offering. and availability Connected accelerated rapidly Services The our FY

significant The our new other is highlight to note connected growth the of business.

the While in contract connected growth grow was continued the associated faster legacy to 'XX, revenue new FY business. the with

the XX% improving continues Edge our tight technology, is and of capabilities by expanding Connected integration our selection benefit broader with that Services being the from growth to of The adoption platform year-over-year driven products. a

our projects a and on. working of expected revenue continue rose are customer us XX% projects currently connected record license to number our that reflecting we Revenue from our growth professional services These our offerings. top-line enable year-over-year strong for to

Page X.XX billion our backlog the highlights strong as fiscal of September X year of ended XX.

and from has which our the backlog demonstrates strength business years. that approximately XX, Cerence million continued Our increased win achieved over June the of high rate $XX last several

We of XX% convert the continue over to backlog revenue approximately next years. the expect that three to will

forward, reporting we in be on our will filing. Going backlog Form an basis XX-K annual

estimates. EBITDA Page X. provided gross that fiscal operating 'XX and for revenue was guidance X, adjusted upon based original September The non-GAAP year reaffirming we On margin, the the guidance on we margin previously original are

and a GAAP revenue reflect the only adjusted this Going estimates change. updated forward, we've to as guidance. operating will EBITDA gross And we provide margin result margin,

we our which reduces are provided flows which the $X why the change GAAP originally to of the our the top-line through Overall, when also we profitability model revenue is industry as conditions rest expected non-GAAP in by September. performing updated and metrics. 'XX million, guidance approximately P&L FY This the business

be strong expect start margin million be year period in Moving to XX% fiscal adjusted on with approximately margin approximately to a the in to EBITDA range be $XX the X% $XX to we Also, to expect from the year. the XX%, we revenue gross our million. and operating of Page to approximately XX% up QX XX% prior to X, new same to

Page was of of view cash debt, X net The fiscal balance as opening 'XX. XX balance million and debt sheet X. a X approximately to X.X of the provides ending year our EBITDA XXX of leverage October cash of for and to as and had company's ratio October XXX million a beginning expected

XXX order is in expenses fiscal we related prefund year the to incur stand-up to 'XX. capital operating million balance $XX that in initial cash opening Nuance of expect from and million

should than related expenditures higher You are approximately by keep typical our 'XX in FY capital mind capital rate, our expenditures in activities. run driven million in primarily that to $XX stand-up

year strong Our significant cash be expect rate business is per starting $X we Despite capital the normalized fiscal model. positive 'XX. free to incurring these in to still year due have flow million to run for year approximately our expenditures, expected

up And So now this concludes to questions. we it our remarks. open prepared will

Operator

Chris of Instructions]. McNally Evercore. And first our you. from [Operator comes question line the with Thank

Chris McNally

Thank to team Look you. conference congratulations and first more. Hi, call. forward your on many

get prefunded still balance We just that you this larger question. confusion on the lot. confirm But cash there your to is X appears that debt And it's for first XXX a for housekeeping the be amount earmarked the October on I some side? a debt the the some docs your helpful that a for think of debt spin XXX side Can costs. and made cash you cash comment of would first some the and Just be just because old question. your have

Mark Gallenberger

Sure, This is Mark. Chris.

that and sheet million did earmarked that's XXX of cash for about related as XXX of opening So the we costs. balance October X, million had have $XX a stand-up of

but million related shift you of to fiscal million approximately to 'XX. approximately a got capital will we X million million may year little for be is expenses. If break major into kind expenditures that's buckets, two you've about stand-up what that related the numbers of XX XX that stand-up down tied and the bit, related estimate stand-up that's operating overall Those number expenses XX down,

the loan the had you're number debt debt, gives for final The amortize three X.X% you original enough five-year terms the a two amortization first over will was debt, million. in a the And remaining five that's the that raise color. next that Hopefully, for years, XX% of but the And higher right. per then Form years. term for years. XX there be In year will $XXX

Chris McNally

great. then side. on questions And secular maybe No, that's two more the

XXXX, rev down. So you’re the just auto above look numbers. single production few almost level on years you at going guidance XXXX, started maybe backlog for discussing be talk but I digits, next I the appreciate that's trajectory of If XX% we sort high a growing on your for to could just the and high

higher about more even like auto You've years, couple the that's XX% last the talked again than that given of environment.

can there an Given uptick some the years the sort or ability we of of next of of trend average an couple the get now, of seeing you’re we revenue is as big program that about should these launches we launches to two call cloud your orders seeing think even persisting that rates over and the get been that years? connectivity, particularly Just drive get you've take color where over on to a within above maybe one side? growth last, it, little

Mark Gallenberger

sure. Yes,

right So about in revenue, historical. of the terms the you're

Our CAGR is which to flat three slightly is for last XX%. what's SAAR guide the year, This is there, our believe. the still I auto good happening relative to down approximately years

so outpace industry continue auto the And to SAAR. we far

well. functions for the as as we as directionally to currently that's is in, of to out revenue to being getting continue penetration connectivity beyond key and projections so believe also solution vehicle SAAR. – us our in see these well. even more we And embedded do offer And and driven going going roll we The for the to per for we of that's the where that customers. features is to But and year – future native going course fact give the adding though substantial in more guidance as grow a having to that by lot Cerence well don't terms and industry as we're our a to driver connectivity above functionality, to some be that us is to we're that growth do future in vehicle we grow key a fiscal enable and features nicely driver more growth that's auto well the still continue connected for believe And and rates business the of has more solutions we solutions. see of our be our increase that

Chris McNally

if in not, things booking that MBUX cognitive of quite broadly. Could some on technologies? win And And like XX% or are of to just introductions whether of final at orders yet maybe sort exciting. one the and seeing more just you HMI rate? then the how VW those on longer-term some color systems; add things finally tech advanced to some gesture, the you've the consumer revenue and discussed, we maybe any are the Great. one and feedback HMI, close gaze of We're arbitration, you Daimler are like on the idea production

Sanjay Dhawan

Sanjay. let So answer is This that. me Hi, Chris.

products. So we revenue of on some booked have the multi-modality-based

Some production next as 'XX. of these go into early year as products

So this We're is in on year. orders. some to out working market basically the new not bring just this cars product next

answer So is the to yes that.

You question, to focus just little the what the add more increase for previous Mark our to continue – your to company – bit per said car, per revenue strategic to will a content is focus for the car. the to

more see, where some the focused looking these car. life my on product be the well CES many buildup, towards at products these of prepared of increase monetizing content the us over like to new which really as we per would we're of announcements we're And also in will will I time remarks, So model new said kind And the towards products of that. changing you plan our demonstrate where from car. many

So to tied XX-year which of life model, car. more SAAS the is the

Chris McNally

Fantastic. guys. Thanks so much,

Sanjay Dhawan

Thank you.

Operator

you. the line Brian our question with from comes Raymond Thank James. Gesuale of And next

Brian Gesuale

you talk little of maybe the a market. can bit Hi. competitive guys. Wondering morning, nature Good about the if

rate XX% year? tech the consistent. only the strikes big the competition solutions ecosystem win as not You you about over last very overall very talk just evolve seen homegrown but maybe highlighted and me which a you've as and strong Can

Sanjay Dhawan

Sure.

their things misunderstood basically car customers to reality in as experience So just of company we are want car want the on. saw the what is they XX% in more either/or in that big they said, as thing about considered that And and that OEMs companies and like the to able The to is offices us their have with their of a enable win is control I Cerence. or digital the kind use want think we is tech the as most they be than the and support to home so life rate.

the at look Google other Outlook, of it you and from services, or so including tools life, productivity and the from so the Calendar on consists Amazon, forth. products consumers’ and search, Apple and digital If phone products using productivity Microsoft Maps

inside trying from different to is car. the various companies. bring do also So and products control consumers experience use the all basically consumer are let enable tech OEMs What we and that the

using from inside well as want white-label OEMs as OEM enable most Cerence inside we tech car offerings, using which other our So a to and consumers’ cars Google car, enable in cognitive our arbitration, other that services tech the I and white-label like also in arbitration you services company extend of we is kind and consumer Chinese basically in U.S. others provide forward like here the cognitive western have Amazon services digital And But basically and the a our bring Baidu, on. or Alibaba platform we look life. so and the and to discussions, say companies also and in about their to a car. fact product to talk if Tencent then the be are Google we have router the or inside ship companies and to countries, of China, voice have and it also the also to Amazon

white-label about provide. services want cars the your it's with enabling to Yandex you that about in Yandex. not services along sell but else, It's anything If Russia, we

answer, be different the tech one but to which for So it's for parts to with properly. a This is I'm companies I how think of coexist about different explain a me important – for sorry all may geographies. long very the

Brian Gesuale

question, but or billing about sure the you. on number how billings a caught I Did Thank side and September things. if provide just helpful. guys you one think call, that? provided very not was the of I'm you maybe we other Maybe That should

Mark Gallenberger

have for so bifurcation that contract our connected down I September. legacy we be billings because bifurcating we broken at not business. you think to thing with have Yes, well business provided as billings, number look between want that new our the connected billings a that is our as One what can especially

at a key connected to will forward billings new And us so as new obviously connected and look offerings be for area how to our our to going is that going grow.

fiscal given for specific any 'XX. guidance we So year haven't

For for as XX new the And it of million to the year million. XX that versus fiscal X about of year fiscal connected 'XX, past, legacy we've in about legacy. was mentioned 'XX decline will billings

expect XX% However, the that to growth more important billings piece connected is about I substantially. the currently year-over-year. will grow be new

of indication the strong rate adoption connected billings another for that's be. So will our how new

Brian Gesuale

That's lot, Great. helpful. a Thanks guys. very

Operator

Wedbush next comes with of Thank Ives you. question from the Securities. our line Dan And

Stryker Watts

some forward? for a feedback XXXX bit how more just are the on it great. Can us you getting development from for on the This specifically up. you're Stryker product to is follow Thanks. earlier, thinking then Hi. about there And You roadmap guys any on Dan. little customers, Any the update you about side? just be and talk would you of touched going a quick Connected can give but

Sanjay Dhawan

Thank you.

on services every on make so domains all we on the other to platform. as Connected feedback services search, roadmap sure positive. for kind are Connected it our And the music, on we side. Recently, So kind Services a major customers we and where so from standpoint We're regionalized product key more Services company in the from that languages adding XX of fact our covered, the and know region, constantly remains covered of news, completed basically different you be the an Connected very exercise, forth. key

usage well and we kind of a that's a roadmap of of indicator us And in the in doing also an how I've remarks, because prepared are said for from my customers Services these make exercise services I we continuous right my in this standpoint. adoption year-over-year. So as remains XXX% monitoring product we're by kind saw remarks, as that all we the push through And And increase of prepared to terms supported. services to are the to the of adoption OEMS. mentioned providing to sure further these Connected continue

to announcements I In product want make terms of that roadmap, CES. don't some the of new – plan keep want I to obviously preannounce to we before

it's per only two So Number of XX to see number but is of the new from you increasing we days, basically and one us we want our we revenue next life add the the products is plus increase right? in would So car, kind car. basically the base to monetizing at look million per also cars of installed to the second XXX car. of categories. basically have that And want content

As you is monetize based happy for car we the also products kind to innovative rates. new exceed at Cerence look to play know, to car today's a revenue to we're model continue which kind on is life of and great want in that new shipment, the of But car. the and of

a those standpoint. areas roadmap we're So key the focused two are from on that

Stryker Watts

Great. Thank you.

Operator

our you. from Craig-Hallum. Thank Van And with Jeff comes next line question Rhee the of

Jeff Van Rhee

guys. Congrats, Great.

the just but each your came revenue lines; on in particularly variance. you those With Edge comments So within couple Obviously lines the variance range from and a three me. numbers, where where revenue Just respect I'm my those or license? bested some felt the lines, you three just curious saw to curious. maybe PS, Connected of

Mark Gallenberger

it's particular. 'XX we QX in much Yes, fiscal really to I think say relative year how original variance specifically plan to – QX the for had for hard

to license to the a specifically, there would was overall think primarily say piece. tied QX the slight that for line revenue So benefit I I

do Connected then of know, the with revenue licensing is some have based then recognized revenue. you a piece the amortize Connected because a tends to that lot lot variation upon some you not services of so the would have get with there's with hitting you As you milestones. really variation but certain variation And piece, also that professional whole

little QX, for specifically was the of driven licensed by think I bit the So upside a piece.

Jeff Van Rhee

as that and the months into as acceleration. on flow how read potential to about PS, some that of take like on it what talk indicator specifically rate And representative revenues? a the potentially there growth backlog you a you're QX working and means rate, and the first nine Maybe looks Yes. second deals from we how just they leading the should versus and growth

Mark Gallenberger

Sanjay. Go Sure. ahead,

Sanjay Dhawan

which the PS to on give So production working the us will is onwards. in cars XXXX, revenue basically new that basically startup new XXXX, projects we're XXXX, right, of take SOPs,

forth the next we because over SOP basically over and there need So we to contribute for years but – – revenue five there's we now, which here of go make into that and to ahead projects basically here like coming seven see happening well headcount side it. and in said, kind which all starting three lot the are the six, years and of towards the was on the revenue, next The area the can PS And there speaking a it focus will basically. one basically that support this big a is because to will sure us. frankly so of so year do focus obviously right to contribute to I acceleration way this on seven next years and acceleration

Jeff Van Rhee

development side Obviously, and dial back Okay. allows then to the you to from independence really Nuance for a in And focus. second.

Just the can targeted potentially development about product. what's organization aligned? accelerated that changing benefits of of is and very structurally terms flow of how here is Obviously, in one talk you

get development just full and been done within but and done knobs if power really about of will, be in the yet development you what what's that all to talk dials, control organization? out You to the is

Sanjay Dhawan

question. That's important Yes. very a

roadmap. with spent management kind with the team, to I days R&D a product core our our So focus? and our us first and We're the team is around team of thank well of a what's for as products key of is basically In and you part and have refine lot to customers that. our and roadmap company XX time product innovation tech what's my

you a in number looked of and to engagements, what of is bit our fragmented. our lot of kind into initiatives company of consolidating the and had core of to a get at number We a with business. kind we a of fragmented right, projects our happens, tend with Firstly, development OEM kind size R&D that

And these different than seeing for improve and for products start that out of get spend kind so of key these of make kind cloud of was and in of on changing productivity we to then of a core top internally. the thing kind us have or various same to one to went the of XX products, drastically. of roadmap And ASR, one all that into and sure one and products in around one products to categories bring the for prioritized The our bring plan basically these of given [ph] which the as make spend to programs is focus our kind kind improves the any of different car announcements rather I that richness If new technology. will capabilities. and with months way. monetize you under We the weeks So progress kind of shipping projects MLU, kind that, we R&D as of fall – closer coming the we or anything, of forth were don't and we're been change some basically trying these customers. the beta product through new kind these better plan the some the R&D decent we to the core life these fairly spend of working one two I we kind And earlier. we And XX on. has per these would the One of mentioned kind the is revenue and car. second of to be increasing assigned resources to so

Jeff Van Rhee

That’s a helpful. I Thanks lot. it. appreciate

Operator

you. Thank [Operator Instructions].

line the from of comes Kevin question with next Goldman Kumar Our Sachs.

Kevin Kumar

and guidance. as you of level services? marketing my investments taking how and for Thanks cloud shift increasingly I you Hi. Maybe R&D one of of on hiring growth connected maybe guess, your about kind are question. and your pace towards XXXX across sales focus thinking

Mark Gallenberger

to of Yes, may of going so on basis in percent a on terms think that as as grow at some R&D, but fiscal of manner. basis some as year well see be 'XX. plateauing year-over-year our we a to that our earlier, services more efficient revenue you in growth for R&D deliver dollar our a we it’s plan opportunities alluded of And to do in to had Sanjay look

of opening we So engineers methods specific in locations of regions. at lower-cost looking and are locations delivery, up

level sort of that the relates at going of relates 'XX it it any a So that's fuel operating or and margin line erosion our I high R&D believe at fiscal is to without to continue of for as to sort us as gross to to we're what the top year margins looking enable seeing margins. growth

Sanjay Dhawan

asked personally sales our I You in reviewed marketing our major. as of funded. here well marketing as any there, guys. well and our sales resourced SOP, resourced in XXXX. think plan well. well. Don't terms in there sales tweaks quota-carrying well We changes and of is major with We're head and sales nothing our it Small

we're right that addition headcount biggest professional Our is now making on services.

to the two done As most for the is. growth headcount I one is to support, demand PS years. of said earlier, SOPs our these the And customers in we're seeing a coming huge for getting where of team some

Kevin Kumar

Thanks Great. for the color.

Operator

our you. with the Raymond comes question next Thank line from Sullivan of James. And Scott

Scott Sullivan

if little speak you've to if you call. on a in TAM jumped my competitors Wondering I taking Wonder could and gone China. apologize for – over Thanks this, Hi. if late. and the I

Sanjay Dhawan

don't standpoint. So China breakdown have – the I TAM from actual the a the of

you're China think basically the I is specifically? question saying TAM around

Scott Sullivan

Correct.

Sanjay Dhawan

Let me pull – out he and start we there. with also the see information TAM if competitive landscape some then can Mark can can

fairly in we is one design almost them, compete in have major generation. side, that listed a won OEM was with company that, There the the to globally second had same generation against that third competitive lost the China. We generation. Chinese but one first the market. publicly there them company On It's one we Having called we iFlytek. that back we have said the in

if forth China performance have all kind of others like our so as a look Geely So product in [indiscernible] the design big and OEMs major are exceeds wins pretty basically result or you theirs. And the so us. or much at and we on with who working

but new to TAM, kind terms a million XX cars XX The software available somewhat we at million, the adoption which market. it's reason sitting voice. is on rate head need year. car only very that. of and where is called so new of full-blown behind is is initially and as is do you there fast of voice In very head Chinese products market a delivered right Chinese don't Cerence basically compared also cars and rationale all for product for low-cost with And kind whole this unit, connected of is lower for that so car can the functions unit, And the right, into is forth demand all a that using through western ARK, unit rapidly. a there you And now, with that's for the capabilities and no a a development slightly growing capabilities product complicated the deployment head of voice launched but kind

net-net, us handy? is China – as can contribution exact for to is know we Mark, grow China that, Having we the plan. said take the not, to in So you TAM action there in I Scott separately. send an have overall growing TAM to our revenue numbers and XXXX If don't expect it if

Mark Gallenberger

Yes.

breakdown for Sanjay, we TAM So, the the China don't of specific have market. a

us manufactured XX% mentioned before, you've many worldwide that automobile given that or region about the are It's sold with are it the cars very there strategic key China. consistent sales. for so what fact either is However, of representing into plus a

have China. in that, so we a presence significant a And of do as result

invested to in market. XXX We address that we engineers have that well have over

key the for we've that's for in industry made and future. do And to why And be the so us that's investments. region substantial some believe we that going

Scott Sullivan

protection appreciate you really IP it. Can helpful. speak to issues? That's I any

Mark Gallenberger

Go ahead, Sanjay.

Sanjay Dhawan

Mark, after you.

Mark Gallenberger

in specific that going day, valid at concern. contracts have to always place in the we that place. protect to resident and do going was make China. I not and need the source technology say in We that of IP end is code is be But the which to agreements Yes, a we sure the

don't to key ourselves I make if that of And the wanted that's that. So view. point to from for that know add more we protect sure Sanjay, us you to

Sanjay Dhawan

a not company. think so IP we any in years six, time, long and for operated as now, I have Well, we it's have very right, violations had China seven

strict have technology protect our employees protection IP, mechanisms in employees the core all Chinese of the to the access understand Cerence. into our place work have those it expected are employees, just important We and employees premises, within who how not the of where worldwide is to

concerns. major no So

Europe in to China. do in innovations America, We and North continued in key

Scott Sullivan

speak as orders, very adoption of last if Thanks. That's speeds you relative and Could well. speeds One may. to globally I question, helpful if that's and to relevant adoption? XG

Sanjay Dhawan

important, right, So know voice totally as to does, because is not use XG we're doesn't. very Video although Latency you dependent bandwidth. obviously. XG high voice but us, is doesn't on important

that think helps that Connected as for connectivity is reduction XG, I China we driver, we our the have, those the deliver definitely to XXXX is with better adoption. prepared XG being Services, key know, XG growth than key We remarks general, the obviously we that always as kind our said we participate as it faster latency on. bandwidth and car. right? beyond see in good faster and And and so the to kind leading But So you continue a to more in Connected adoption on for services fact So Services of the right? see of in

Scott Sullivan

Congratulations. Fantastic.

Sanjay Dhawan

you. Thank

Operator

That will we the over questions. have Thank Rich now today back call remarks. turn for Yerganian for you. closing to I is the all time

Rich Yerganian

us Thank for you, the you and thank to Andrew, call everyone joining on today.

you good and much very in events. look upcoming day. a to Thank seeing forward you have We investor will

Operator

program and thank conference. for and today's Ladies conclude gentlemen, participating now in disconnect. This may you you does the

Cerence (CRNC) 17 Dec 192019 Q4 Earnings call transcript