CRNC - Earnings call transcript Q3 2022

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Operator

Good day and thank you for standing by. Welcome to the Cerence Q3 2022 Earnings Conference Call. At this time all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. [Operator instructions] Please be advised that today’s conference is being recorded. like Mr. the now your over would today, speaker I to conference hand to And Senior President Yerganian, Rich Vice of Investor Relations. Mr. ahead. Yerganian, go please

Rich Yerganian

Thank Cerence’s conference to you, fiscal Chris. XXXX year third call. quarter Welcome

like to Before we may certain the today. update risks statements. Form forward-looking These preceding remind to that XX, XX-Q makes filed the representations described statements this and involve on no to Cerence Form those begin, filings call you X-K statements today’s would in call, press I the on after are as XXXX, our uncertainties XX, including release filed XX-K May and XXXX. our with Form SEC our subject November

this for uses of certain the press In measures, our non-GAAP release forma is indicators and key call. section addition, further definitions, website. in the to limitations, and IR performance The measures during measures pro GAAP Please press of today’s details to company the closest the refer refer of release to of reconciliations non-GAAP and those information may available financial equivalent.

Joining call Stefan of is Ortmanns, Cerence. Tom CFO and of Cerence; today’s Beaudoin, me CEO on

As Stefan, the me. Tom, company a the are and only authorized spokespeople reminder, for

the September Las Conference XXth Evercore to and Annual website upcoming Xth New for would Capital to XXXX San the in latest on timing IR Industrials Sachs Stefan, James call Conference to The Global RBC announce please like Raymond go include several Conference XXXX so XXrd change, September the Technology handing XXth Francisco. our participation on in Before and section Vegas, Events Diversified investor TMT our York, Conference York, of in August over September exact The subject events. I Goldman New of on is Xnd to on the Communacopia conferences the information. in the the Industrials

call. Now onto the Stefan?

Stefan Ortmanns

customers, areas and to for of to our third thank Rich. joining I’m brought pleased in discuss quarter product Thank SOPs and the customers innovation. delivered success report quarter across third you with earnings. XX everyone and quarter. us we important our you, progress Welcome our Working

important a Big secured design Tech. team Our and win-back nominations, strategic from wins including

Our new with launched organization services professional R&D Cerence OEMs. three and services Cloud

nearly Technology truly at and Additionally, out our developers for the for XXX Conference core well, record researchers offerings. next Overall, first professional Cerence including with quarter roadmap our gathered services. we business performed a our groundbreaking

in range, positive slightly came performance. However, there new revenue against million are slower items line adjusted revenue handful and adversely $XX given continued the bottom our expected from quarter Revenue efficiencies. focus despite products momentum, non-GAAP a below of in EBITDA that affected our yet EPS were Working markets. were at on and our us, guidance certain as the than the progressed, of QX

down HIS. which car last to according Continued was X% quarter pressure production, FX and on headwinds from

As continue, affects we with we of and companies goals how growth. and planning many expect of which look peers, some these importantly sustainable and trends QX long-term our to at

the customers in revenue contribute are the are Stellantis, Hyundai, business Mercedes and chain to supply me details core a auto vehicles believe my opening. business is is in issues. strong The deliver the term number delivered the come from moment, is to mentioned will I long-term these market growth first continuous a We in due These milestone to struggling We hitting share quarter. in in to few the even our but the such in the to quarter. a strength with several position expected more Toyota, on years. over if let short briefly as We next of SOPs road back important a that now XX and Ford

for is a choice among We recent license have quarter an wins our targeted our us user important delivered access of as Cerence these significantly professional continued a account connected wins services. We the We and accuracy, represents we a believe strategic design further in and that benchmarks worldwide. nominations quarters. We innovation. latency experience future success that launched important of and in record new new officially revenue. Cloud that win-backs our services services into for vendor the here secure more enhance for Among performance one streak competitive leading is indicator the to set and OEMs growth

Each and backlog. initially the foundation are have cloud a innovation NIO, strong milestones of compelling important services of excellence, our provided We great GV. efforts additional customer of business, opportunities for layers BYD these a to relationships, and roadmap, pipeline delivery new and these healthy product and

in confident our position long-term and are the competitive business We prospects.

and always has as IHS With and a planning areas customers, future. discussed the task monitoring will we’ll business to production we managing But been market to will our with the meantime, on and long-term. can months, the the As been of and costs. serve contracts. believe of industry in you We situations industry we been business this the must economic our ship for quarter, team and and are multiple with world around commitments this plan, from fixed as through have recession on as inputs intently I conditions is the data the as control emphasis chain we a continually discuss In the we and evaluated for delivering faced issues lingering these leadership our we of It currency the our ensure our tightly right growth, inflation with we manage what through In have contracts and address innovation, when the the process. however, levels. aspects have well headwinds, not the to built influence, continue over that of of fixed recent you be. contracts business wide and and Fixed part our others positioned We shortages later to which of part all focus last on into customer present many will clear fears. challenges we subside. assess us discussions returns these balance long-term outside critical One focused supply challenges closely are number know, assessing long-term year. industry on

range listening of to our how auto We our that to these levels order have the your to credibility sign Further of improve seek in zero current concessions these macroeconomic to decided enhance feedback, now have fiscal business. business. period we underlying the in Because clarity shareholders customers core a time the the the into take business. and starting higher of core believe revenue, will on affect for contracts a consumption of decided step contracts This we that and fixed QX is will the included it have comparable adversely fixed and corresponding I visibility and economic through stream. results million provide immediate will to will into enhanced contracts. discounts predictable Three, business. to Two, factors into keep and provide elevated pressures our fixed visibility has per rates and Tom discussed revenue driven action are in guidance, period approximately the typically is this concerns our In strengths our into future QX impact course are in XXXX, and recent One, productibility in consistent decisive contracts uncertainties of the help to shift from it the historical year. these on and a you moment. this which the of mitigate create We company reasons. walk the annual $XX interest will within in contribution best of an Tom long-term

it While there transitional as a is growth enhance greater longer and our earnings visibility business. will underlying term and strong change this we be potential will believe period clarity provide into our implemented,

fiscal our Day York greater this City. as on November on change three key will fiscal benefits we XXXX, focused areas. year are then we at and detail complete We Until Analyst New XX long-term in ahead share look our and of the in to

First, Tom at with fiscal guidance. that, structures. Day oriented will of our our the customer operations in role ensure cost will And excellence year share to about deliver results quarter second, we November. programs; turn talk long-term review financial third, play that a now efficient plan strategy facing over product to and and Investor I the will deliver more call in you all with These the multi-year performance and in and strong our bookings; crucial

Tom Beaudoin

first you, other but a the to of Stefan. QX results. a U.S. at specialty Thank come the $XX more the currencies. I’ll dollar of expected combination one-time our the on due in strength I back and to to moment, compared want and million, below fixed our absence low guidance came guidance revenue contracts in deals end of to of slightly share QX

and margin midpoint margin operating gross the EBITDA Our or key adjusted guidance. coming of margin XX% profitability million were non-GAAP right earnings perform was in metrics $X.XX was Non-GAAP our well. XX%, per share $XX.X was XX.X%, non-GAAP at

the flow million. from During cash quarter, $X.X was negative operations approximately

down strong and down down sheet while consumption Variable last expiring To remains Pro for XX% expected. Our forma of the year. fixed the disclosed legacy technology. of contracts with such as several cash year million. revenue with core same of approximately XX% the in expected. provide was detail from quarter were license business period. This the as was our during contract on declining as services balance came revenue revenue, more same associated decline previously $XXX last revenue royalties marketable X%, total largely securities from Connected result the factors, the licenses was increased XX% and older

million services year. previously the As create about discussed, a full to expiring growth connected headwind for these contracts fiscal $X

of and XX% connected professional quarter-over-quarter. Finally, up services indicator our revenue services in key professional Growth license year-over-year X% future was revenue. services a is and

and technology generation the services pro interface to Cerence’s on with the customers As platforms. customize who OEM next individuals team includes directly implement

contracts. our conference fixed how few be contracts. minutes strategy we QX On would spoke about long-term about like Now talking spend to assessing I’d fixed our call, relative I a to

do amount of limit on from about investors analysis in long-term We concerns contracts, this analyst strategic decision and higher any we we the the do forward. interest hearing noted, made that serve will fixed as better strictly annual an not company. Following deals contract and the will of QX to Stefan the basis believe level and fixed the moving

As our deals. economics and will protect core demonstrate type related revenue, these will underlying more this effectively visibility to our enhance business into consistent results and more

in more will of business. underlying will This the earnings with period there impacts this the strategic of enhance long decision QX and transitional predictability our strong run representative our our a shift, decision be guidance. While be this associated

The revenue, our variable which net or table from is fixed contracts revenue. a shows number license quarterly forma amount report the to I of to to consumption revenue additional strength The reviewing provide business underlying details us and the want our on decision contracts. led our some guidance, regarding fixed license help you one understand basis. Before the on the royalties in of pro quarterly the we and

solid even Importantly, remains pro with and impact license strength last revenue few of the Pro royalty a our on production. macroeconomic deployment forma royalty’s indicator customer revenue auto the penetration to aligning strong is of of forma the quarters. over our technologies current factors

impact prior fixed You resulting the fixed can contracts and contracts, from decision. which elevated growth of see levels the consumption our the in of supported

are of decision consumption. Because we As will that managed FY’XX forward. fixed contracts million $XX contracts more back fixed to be historical approximately of fixed our believe limit levels, level to new to equal to contracts approximately moving an the

part contracts when We believe will as Fixed growth FY’XX for license FY’XX be Further, strong I year have the in XXXX after Nuance. as transition been followed future will expect more we opportunities the joined back in business. visible far growth represent transitional a business by a for strong first this period. of our the

We moving go not above forward. level historical to are committed the

customers confident cost the our with and and margin to growth we company. work use them are a that the their that mechanism We of reduce while time, protecting this at solution the to that agree same supports long-term can

our contracts impact of Importantly, not remain relationships our demand for revenue customer solutions as shift recognition. that mainly the strong and we shifts in expect do this move will timing this meaningfully

fiscal to range The the fiscal any to and Now of be in fixed not to in million revenue to to guide capitalizing consistent turning revenue QX ongoing million million QX to contribution no solid royalty $XXX demand assumes and year. and has period our QX our do $XX deals team specialty and contracts transitional the year. forma volatility. XXXX, this strong, us in slower the subsequently guidance for on Over and license for decision focus the will no full The expected management than revenue markets, adjacent solutions led $XXX generating for QX on fixed guidance from currency $XX revenue. million QX for contracts, pro

operational our excellence business. efficiencies pursuing also on and focus across We will gaining

the this long-term you Analyst expected will more our business. will we growth. for short will At rest that concludes predictable, year, business of the and aware for show now later Day share we term impact the is believe that We positive profitability, decision will of plans plan remarks the our and are on call firmly this our but this have to decision, multi-year impact return with to This this long-term of along our the growth the open questions. the prepared with

Operator

Our from Junk [Operator will Instructions] Baird. come you. question first Thank Luke of

open. is line Your

Luke Junk

and commitment Good for Thanks well? forward. any implications have annual Wanted morning. with terms minimum as contracts fixed And to wondering taking the forward is and for going you. going does target fixed for a Thank clarification I’m $XX million of to the mix prepay what your the contracts that just question. relative start contracts, new the in those of strategy

Stefan Ortmanns

that whether Hey whether And both pre-paids. be we’ll then for depending they know plays or, how for which an Luke just out exactly $XX the determine, have cap that with the will deals discussions on reporting be is the will don’t minimum customers, each the will better the through for whether year, of customer the the be we’ve We’ll total million, negotiations provide both the from doing we and but standpoint. contracting, been they commitment economic and of us them. to in

Luke Junk

XX say much pro just Okay, I then average showed question, you’ve terms what elevated in last to could be we there the you the and in And if In years headwind current to handicap variable of well. fiscal the other of got then near Thank fixed us shown booked forma the is as term follow-up license duration? growth from going on consumption what level royalties licenses. I’m booked mechanical on were XXXX the in Slide how pressure that. of and can contracts of headwind fixed thinking the my relative year words, that that you the guess you’ve to contract remind few that based you.

Stefan Ortmanns

are that provided in that contracts consumption the have between about pro production additional auto the And our pre-paids is The fixed have we we’ve With dynamics of normally provided forma around also rate, a those, higher as commitments. around the do years. that said, each then information each of hopefully around minimum you we some of they the disclosure are would contracts, the they six quarters, each to discount more cash date length pre-paids shows fixed of X.X up provide and smaller much quarter. discount and minimum deals revenue trends come revenue the through the So cash five front. the consumption The used done to commitment of quarter. as like to of a breakout with is up the course, four we contracts longer respect average the the years royalties we’ve

as But upon this we out, consumption and minimum variable. consume or I fiscal do believe is contracts commentary time. that million dependent XXXX, the we the how that by of to think up kind customers slightly in prepaids important commitments previous it deals other put I thing fixed expect was will try we those of $XX that contract approximate until that fixed of the the model is

should the So kind play you out. and how to work how of give see, a they models way that good

Unidentified Analyst

will I Tom. for Thank go leave there. Okay. that it you ahead and

Tom Beaudoin

Thank you.

Operator

come Capital Thank Markets. you. from next question RBC Joseph Our [Operator will Instructions] Spak of

open Your line is

Joseph Spak

so Thanks everyone. much

we always, lowering to to the mean, was prepared good It an it $XX more you opportunity. because quarter, management was go cost realized get XXXX, and even competitive different was change. a to And the customers there savings. to in the only for Stefan, I it you team, upsell contracts customers but managing was said difficult I in your this and there fixed these a way spoke company, last for all higher, answer relationships, remarks, were environment back winning went million. and about that you prefer and it highly was So, cementing or fiscal way you, And

I investors this future listening with appreciate for of question is, do feedback, does you to what think relationship the your you sort what with change, this which but and So customers, take this opportunity? prior, you do want. customers like would you If hard really line future exactly your what said it your based stance, on is this what share seem because not

Stefan Ortmanns

good Hey, joining us. Thanks morning, Joe. for

So let days early also from me will go knows his ask now many for Nuance. the at view, first, also and then business years Tom I for the he

on Asia-Pacific’s, are we based headwinds also weakness at here, looking think seeing, with when I especially right, right. the currency

involved right, Right? now. have personally, QX QX customers, they high of was and with the or here. requests And for them end at really of two Our partners I and of beginning already discounts also

this still and And our Day. great can’t. with to will on you and Yes. for have relationship, to think customers, was MIP for have very right the plan you share also with but make We our what shareholders. we we and their them. clear decision also do can I right. for guy need And I our clear and a team those long great term especially in was We’ll the a better also It’s I relationship We listen still back I’m we business. planning. with Cerence to also I we better that’s It’s going for you. very and purchasing our what step Right. now, November sales side mean, Investor And the to

Cerence all But that’s and is delivery now. really new nevertheless, Driving key excellence, and them right about So at products, or it’s of I’m product a this excellence engaged. our end, the showing my right? view. team focus innovation,

Tom Beaudoin

that. a little just So bit on

what of go of develop zero, we is. lot So, we’re because some as of about, couldn’t things you the And trying to we the our level a on talked to time Joe. MIP spent really

so spent on And out, and point been would customers. the group level, basis. This of the and as I that we’ve experience entire with his certain economics $XX and to deal all a go he’s with said, also of balance Sales dynamics. understands some is drives customer of who And is we across to some the many to this the time able consensus customers, Stefan came always just personal our relationships, in we these satisfaction, based years, We approximately million for Head a customer forward with the our base. both these customer customize us a on be

Joseph Spak

maybe up sounds how you I more that, wrong Okay. is, bit a whether million $X said follow comfortable a call or to directed it May this correct vehicle. maybe color in me if I’m on you if, and my the about mean, that’s on past $XX but like, with little it level, got understanding customer get [indiscernible] you’ve

still $XX fixed? pre-selling you at $XX aren’t million into So, about year a million that

Tom Beaudoin

to mix again, that’s as against or a And amount fixed on $XX go a getting contracts. time Well I contracts But the said number either again, But of consumption still on minimum with yes, mean, the of those I year. forward of basis. it lot balance XXXX, associated the that commitment. we and a a understand level about depends we’re kind level the that right prepay trying customer be spent a million by they’ll out would and FY

Joseph Spak

Okay.

Tom Beaudoin

And since this macroeconomic can issues I their as needed with and been XXXX. do years it – is, as really people know, impacted of some our going to some XXXX, just doing zip what to levels. sales this customers. our And, these auto kind economics to manage some uptick this in but flexibility. that we’ve contracting as to and we historically that trying but cost times, a of in believe we drive joined just And during have last I of and Nuance, then to Nuance continue it customers way, too. in and and level We are managed these we more can we historical team to they said We then we the to confident customers strong balance teams, we when flexibility see again, which our the quarter can this as did manage was with believe procurement into we this getting that needed level. we that production, manage provide you we the the volume conversations which customers our couple more was down part had They those of very level. These in we’re more going looked structure factors into business of to by macroeconomic the of industry, think know lot at we’ve

Joseph Spak

I’ll you. Thank on. it pass

Operator

Our of [Operator Delaney will you. from Sachs. next Instructions] question Goldman Thank Mark come

Your line is open.

Mark Delaney

Could two these from have timeframe, the equal? fixed as of inventory be sitting clarify you Yes. taking of you first usage you as Thank you customers for expect this at Good morning. your and I the amount if selling on the how about year I fiscal when until could. the well, you to will Maybe us maybe questions. exit fixed very that have think year, of contracts bridge much sticking much fiscal topic this inventory XXXX exiting contract. and

Tom Beaudoin

No, that kind But providing done, figure done. fixed out. full that have Because contracts data contracts have that we’ve you of to actual not you the the the historical we’re all number. we’ve

prepaids minimum have FY goal when approximately between is this XXXX you and You think there’ll we breakout in be as commitments. And then of the have equal. to guidepost kind

Mark Delaney

Okay.

Cerence the near You from term? away actually more of to Or the and a walking expecting is some those pressure? requests about, of increased booking hearing big in you to I some for we’re changes and we a be and that more why intermediate price revenues hoping that’s, should of mentioned discounting, that reflecting on was lower a be customers you that’s new and, seeing looking bit could business elaborate are some part

Tom Beaudoin

price specifically our associated talking in our with contracts production are was that’s and technology, Stefan already fixed remember with Now, these customers. about

say, deal do that they they cost And us and to we so these Hey, and need with. then pressures process back ideals that is to have what in we come are

against, to saw these we’re a minimum so in what to and in they’re larger particularly get or what of lot currency And with are of running a we’d on to royalty impact do discount commitment that slightly the or in we a on they’re was like contracts taking USD, against a basis. paying is And currency prepay that prepaid And minimum U.S. those Korea of what risk are the commit. assess Japan, them. wherever, dollar customers strength the trying the if QX or

And the run on all of you willing above discount so cash I it therefore level. they mean, a they the uncertainty in, I has protect these And because and certain pulling go back earlier. well, you’re to but say, the the deals, come currency. flow around get need higher not we we much are to also revenue ROIs just on cash implications the because a prepaid,

too to level very don’t look those good. you if so start discount, higher give of And ROIs

Stefan Ortmanns

got And So, quarter, say few indeed across a letters the we also strong the nomination to words let me various globe. also QX, a had we I business in in here, right? think

here right. also here; Now here. We We bookings, we a for EBD need We right. two a – trucks, in for our convert another to North EV them the section signed RV American RV one continuous solution, for marquee signed one makers we also see space. for also deal to OEM wheelers

latency of I an here, right, services right. right. in also also bring And at cloud the the upgrading here really past, there’s a for connected use big with for So but of they When superiority core professional well terms think one much, we new in a business the renewal much are mean, OEMs, so the topic for customers, signed statement innovation of services of in in OEMs. we in pretty the here, pretty, accuracy, faster always expansion acknowledge cases contract terms big all looking I doing of our work

Unidentified Analyst

Understood. Thank you.

Operator

Fargo. next will Langan [Operator come Thank of Instructions] Wells you. from Colin Our question

Your open. line is

Colin Langan

Thanks questions. Oh, my great. taking for

going QX million. was fixed the Just revenue, $XX million. The guidance through for contracts $XX were quarter this

don’t to [indiscernible] sequentially. million, if So do supposed actually any recover fixed $XX production I contracts

of to worse gets us getting actually kind sub-XX is what QX? So for that

Stefan Ortmanns

clearly then it bigger towards FX there’s of but QX. has haven’t slightly said, QX. end I right? last in of And of we any Part is And the consumption, course guidance impact included a an in quarter, got that impact for certainly the one-time deals as

Colin Langan

in going Is many you $XX anyway, Okay. million in deals to QX the consumption and had one-time QX weren’t from that increase that there right?

Stefan Ortmanns

done a previously. drag effect there’s the fixed you’ve but all of that No, contracts

Colin Langan

the will be consumption than greater million? $XX So

Stefan Ortmanns

on guide don’t specifically consumption. We

Colin Langan

Okay.

you’ve $XX As about million going think thinking into I fixed year-to-date. we’re XXXX, done a

So million, institute policy step is you’re I mean, mean, provide mean, we with you drag. it the consumption about sticking next going overhang in out additional of that how kind I into XX figure drag the I’m Rule. to because think trying year of this $XX terms to be another as million year? into $XX color I down, any you of of could next kind this should

Stefan Ortmanns

– able royalties. then model The disclosure to pro commitment this and says Not by specifically, that quarter, about and assumptions equal. minimum disclosure out XXXX make they’re forma this about utilizing as the said, they’re and fixed should be contracts the that deals, consumption guidepost some as did pre-paids you the around additional said with I of I kind we and the

Colin Langan

light I XX%, lastly, I I you provided, gaining mean, just And you’re share. Slide down go underperforming year-to-day, at year-to-date, Why if look vehicle royalties light I you that XX, Okay. to X%, you thought even forma? if and are were former production vehicle pro down market pro like production

Stefan Ortmanns

by a OEMs. of the lot mix and of driven It’s the each by production the

growing if look cases at of pro production I a it’s number. a quarter-on-quarter but IHS that can forma our royalties against kind see slightly, you in think vary – it pretty So some it’s you consistent and

Tom Beaudoin

some some cars. my with producing needed with that and also we in we discussions and delivering it’s chipsets are they’re cases for. And looking all the they’re equipped not of OEMs, also fully clear in are But

Colin Langan

right. Thanks my All taking Okay. for questions.

Operator

question come Company. next Thank Nicholas [Operator from will & Needham of Instructions] you. Our Doyle

open. is line Your

Nicholas Doyle

imagine Hey, filled you any taking is little Doyle I that on that that? Gill. Rajiv my been so customer change, get your I pretty quick, the talked mean, bit, for about Nick just on policy to Thanks a this I’ll would for but million backlog up far commentary question. what reaction $XX has ask

Tom Beaudoin

we’ve look any some we forward are going discussion all, a customers ask this out that’s other conditions. that they be company mean, It’s today, call of going and customers in that And just very, many the go to factors causing and back we’ve why not first the discounts the a always very business between are of and and customers business And and And business years those and pointed as with relationships these a QX strong do we a again, the can’t have to we’re we Stefan between that severance. a understand and because of and said, these some as us. haven’t, number. Well, accept. of $XX where economics conversation customers just in but currency as in are with of provided that negotiation becomes for concessions customers that may here Stefan do to, factors no, of earnings because number widely here there’s policy. is I our position some currency a – at million and because any not QX, customers other to flexibility internal again, our alluded we’re And to communicated

Nicholas Doyle

I if Okay. haven’t customers. know you’re kind that know was if That the of… just you saying didn’t yet communicated makes with even just didn’t sense. I there

Stefan Ortmanns

view. discussion they So with specific one we and with already our topic, had this then accepted so customer about this customer various right, – finally one

Nicholas Doyle

back how then customer. the there the tech had question on just anything elaborate about you my mentioned deal? Can more second with you big from And of win big Okay. or that got that kind you

Stefan Ortmanns

Yes.

new And we one-sec, for one-assistant so-called standard state-of-art, we stack; new of are yes. improvement, right, the we with we and yes. core a CES razor now innovation, excellence, on in our so business, of driving couple showed excellence one-cloud also a concept. really and with of right, focus are time to delivery there the various And proof for So And first all product sharp yes. big big, this this at starting first the a Meaning new consider, setting the had and to have compared is defective aspects have underlying is meetings right. January our industry

with senior the of really up So ago prototype them a and and the couple OEM. nomination Board about days to we built shown and this the official management got performance, CEO, excited specific to It this we Members they’re together letter. yes, was

Nicholas Doyle

you. Thank

Operator

come of Gavin question you. Jefferies. from Instructions] next Our Thank [Operator Kennedy will

open. Your line is

Gavin Kennedy

fiscal is This you XXXX legacy going Switching Kelley. renewals, that on then bit how we connected contract a us for contracts. cadence into quarter, for David Can connected should declined in and X, little about about on declining just services? and expiring remind Gavin think gears the given team. the Slide Hi year Kennedy XQ you revenue into mentioned services

Tom Beaudoin

As Toyota we’ve and biggest just the we’re that’s deal schedule. amortization – an you legacy the one drivers it’s of shown said, is we’ve very

and the of these the the, win of production disclosed units, lot services. that we during contracts impact with of headwinds amortization the these that’s as can we older technologies, we’ve as that. the So, the $X talked kind you exactly But happened we’ve pandemic size of down. what we to of slower then on towards based thing older and is bit that end of of see the are on impact the, schedule we’ve a a their know that the that. continue is talk improving lost winding We’ve about talked about. get deals, implications. other And million And of which of about connected said, of Clearly kind the Stefan curve

So, on a we in see strengths forward our go connected basis, revenues.

Stefan Ortmanns

me let here. Yes. also a few Maybe Right. remarks add

are of the number at that to analytics looking a pre-COVID when back our indicator. good So That’s we now see time. portal, transactions

calendar earnings also next Right. signed mid the connected year. company’s to this already history the services. services. quarters. connected are of two XX% will see couple of over for right, in alluded of hit And I largest And As in And And they during the versions right? component, our say hybrid have plus services, three Tom some the we also have meaning our backlog edge most is the related road connected as we the of I of of also the deals call, will upgrades older some mentioned deals market recently last next to

Unidentified Analyst

And should as volatility, cutting term Or near Great. amid revenue we think cost thoughts maybe fixed in how any measures? then as the change on the a ongoing margins with forward contracts, well Thanks. potential pressure? as up follow about macro going the

Stefan Ortmanns

also call with I Yes. right. Also internally we an convergence, here here, recently mean, we it exercise already this did started

BOs, now to we all BOs So consolidated had yeah. have we in the those we BOs across past, technology stack, four [ph], right. And the same

especially As productivity cost so reduce to in here core said, convergence. aspect That’s general, when cloud technologies. it’s one cloud it the and And that called also comes increase important one solution. also one assistant, one one will and

eye-to-eye driving is and programs, to? you Tom maybe two want Tom drop Secondly,

Tom Beaudoin

Yes.

which kind the with QX, do just We upon product to And in that one It’s completed. have. budget used to of playing we finalize innovation external around management I here driving some we code successfully names, multi-year convergence XXXX aligned technology that at we’re Nuance. R&D phase was in But just looking how we resources, eye-to-eye we’re we operationalize we to strategy our eye-to-eye resources, us Stefan implementation. partner as said using exercise that now quite professional what firm are the help the and services the our that’s and plan an our did, also at of projects two of project And a FY plan. a

with their we’re experience of lot to the process. them, eye. running understand the and and a have an methodology project we all then company with across internally So, within And functions a of look other we

our we going and XXXX for of productivity. forward, will just advise our operating budgets Both plan drive they QX. plan projects will efficiency forward. an it’s multi-year our and be to plans, completed have FY certainly in continuous implementation improvement, will And So continuously those going and

Unidentified Analyst

Okay. Thanks team.

Operator

Craig-Hallum. you. of [Operator from will question our Van Thank And Rhee Instructions] come Jeff next

open. is line Your

Jeff Van Rhee

Great. taking Thanks my for question.

down. want back got the, I to several guide So, I’ve the first, just to circle

million So like $XX.X on quarter, consensus give we’re the looking or QX. below for take

as the ways, you’ve You’re I it but number you the dressed shortfall? remainder little you out of or help take, that? fixed can breakdown in going on to precision give know can you’re put you telling a as what get XXXX close of us to just, tangential can me the zero sort of

Tom Beaudoin

in a kind of bookings of lot to of by but the And our the opportunities, change but we’re guidance. of one fixed We line a consumption? specialty it’s time still very got deals. We’ve of about wins, unpredictable don’t for adjacent slower It’s seeing contracts. revenue of Those out, There’s they’re activities. out revenue, markets pushed specifically course piece conversion of as the talked is then but the some we that. zero a are guide around We’ve of in FX a couple areas.

Jeff Van Rhee

meet do expectations? quarter? the perform rates How they win and bookings Did your in

Tom Beaudoin

don’t we a Well, report for bookings twice except year.

we’ll the second So, for in updating for year the full at that year. be the of the end half and

indication? can bookings. our the meeting in on we targets Stefan under end confident are report out you And at internal We the at give what QX,

Stefan Ortmanns

Again we arrived. Right. had the said a before. and me nomination And what here letters lot I let just roads of said

example, also in recreational Two I openings trucks contract So, right? Right. the of mentioned new we is the We one, mean, a from now, right? think are winning a anticipated. American some here are with North European originally We wheelers. that Two in traction, bit QX more our production on solution see by three put we the overall, a vehicles, services find of I other good EVD, Vietnamese OEMs, and cloud right. lot I emergency we RV track and than for see right. just in China, Followed adjacencies, But wheelers Chinese vehicle the OEMs. customers as Marque also in think more detection, terms slower first that, here right. the for Yes. OEM demand on

So that’s tight right. very roadmap, an for also us. as advantage innovation clearly And a

tracking Immersive We location driver for are safety right. new in cloud, solutions sound and to cloud Right? added are have signed our thinking house entertainment effects. exterior We the we last things with new a new geo-fencing, right. tracking, in our this behavior, in right. new example, about the area speech, AI brought aspects, also Car Including These contract quarter. have we for right.

So our on overall, we internal are Tom track targets. for said, as

Jeff Van Rhee

other, too know, be recall, clear. license it I de-risked material? if one quarter. I last, quarter And and de-risked. could, in if think mean, the a had guidance, reset on taking I we’re there? of March said, are I unpredictable, December how these don’t expecting thought One you specialty big deals then in thought Because out the I I in September and you just were the quarter, you was I slash, that revenue what, the already to What them

Tom Beaudoin

quickly we we But million think as haven’t thought had Yes, below that was as thought. an deals that, few a I we dollars, of opportunity. those advanced some

Jeff Van Rhee

Okay, you. I’ll Thank it there. leave

Operator

Thank you.

now conference Yerganian like As for are Richard turn questions no I queue, the remarks. would the to there further in closing back to

Rich Yerganian

this near Chris. on us Thank look forward morning. you And thank you, Thank the with to call future. for speaking you. joining you the for everyone We in

Operator

for This concludes today’s participating. Thank conference call. all you

You have pleasant disconnect day. and may a now

Cerence (CRNC) 9 Aug 222022 Q3 Earnings call transcript