Earnings call transcript Q1 2023

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Operator

Good day and thank you for standing by. Welcome to the Cerence Q1 2023 Earnings 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.

to Yerganian, conference Investor Senior like speaker to Relations. now Rich today, Vice would hand over the your I President of Please go ahead.

Rich Yerganian

XXXX Welcome quarter Chris. Cerence's conference year you, call. Thank to fiscal first

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

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

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

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

Baird's Mobility will in I Before announce Vehicle we to to the at the be March XXXX early Conference. Conference & Virtual handing presenting Technology Stefan, would Technology on that February at and the over call like XX Stanley Morgan

Now onto call. Stefan? the

Stefan Ortmanns

and all what details day November, and technology the the our strategy We for key Tom evolution in the described outside pleased car. to high At for us guidance Each in we in that joining user the business. will inside you to goes fiscal out everyone long-term are with aspects above driver even of immersive our the our shortly. experience Cerence, by extending range. beyond both car for first start our thank the role cabin of Investor the our provided conversational the it of Destination we to report the AI, metrics future, companion I'm an you and Welcome auto quarter had core growth calling we share the financial for end Next. of our came plays year of sustainable Rich. earnings. you, a Thank the the discuss strong laid driven passengers and to

provided also market. only – reflect target current of of increasing will of of with of long-term suite greater We Cerence our programs adoption technology current our but models, awarded, not which technology adoption already the that the to the future a bring also level

us launches. win-back initial including showed with Working China. are of customers In an start event program edge. the production the XX success contracts SOPs in validate we to allows in significant our all quarter, delivered the signed represent of near-term, first This both we competitive outer future from customers, continued competitive excitement share continued you and in our the consumer one space: These takeaways because tech in one two We Europe, was XX with that product and across Cerence. important the for quarter have the of innovation.

expertise Our language category to large generative experience and experience innovation drive with mobility combined expand a leader. position AI is in models as our deep our and vital

year. the Europe seven, competitive for one customers and two new wins, that wins, added total the various wheeler expect two in logo two-wheeler design The even we by be China the to we win to end wheelers. fiscal of number addition will In and two in for of auto brings higher one now

an area be continue a adjacency and Cerence vehicles providing Two-wheeled for to our strategy. Destination important growth Next

All still supply. through challenge. of been a impacting production. seeing macro are the we Semiconductor the out some slow improvements, are While has remains there environment shortages improvements

IHS up production append in auto at continuous. concern does impact semiconductors but global hopeful is appear inventories this the recession led that where a There demand X.X% but strong growth. about growth for not fiscal many the for end to we to year for deliver in we The of medium improving These a continue autos, from trend any After for have and our to point. are achieve access confident we remain and on fiscal lower had latest XXXX, shortages quarter, that the potential slightly slow remain year to We aligned areas predictable have low. to and first our the long-term We sustainable year forecast guidance. is our can raising goals full are year-over-year. set that

like products. I competitive With we distinguished you jointly us advantage. share mobility customers. business highlights that evident the razor our key customers would is for In their highlights the to with sharp innovation for have a on some rely to It also addition our focus innovation, unique experiences create to our quarter, across on

electric transitions will aspect this customers. As increasingly to vehicles, experience of the our automotive industry become differentiation for an important

customers' our other for future our growths technologies momentum to we and and current areas. and visions strong to Continued foundation products a provides solid our our innovation key expertise AI to to as is extend

product of it product transportation is industry is product co-pilot such where for adjacent Cerence AI, X.X, portfolio to to Assistant core engineering we This the the an market our with perfect of as example auto two-wheelers. as the offering. scalable As apply our can and take minimal what we developed current foundation of a referred

and Co-Pilot AI runs may understand complex inside advanced you both integrated vehicle directly the around sensors and car Cerence situations deeply on recall, a vehicle's head data with to it. with As unit

Cerence design wins see that edge QX services cloud the mobility securely and China. connected so It's from customers far advantages While technology integrating vehicles make driving intuitive, to to automotive as more Europe with in their and Co-Pilot brings OEMs enjoyable. clear

a offers Cerence Ride Ride unique Cerence where both offering safer, taking control now records, eyes home the Assistant settings a all navigation, the the to distraction-free awarded can using their in devices, major key our Japanese with hands rider was enjoyable a its win off the the to design Cerence handlebars had road. By features consumer including off experience. manufacturer the niche foundation adjust riders X.X smart and other and market music quarter, listen voice, without With their the to as two-wheeler route more compete planning specific and or navigate, we wins and providing like riding three enabling for tech competitors. media, even against

for Digital as sensors information well Cerence When expanding its at first availability With intelligence is data between other a QX, the we important the foundation, security, rich continued and customer introduced India as we end solution mobile with Twin September, customer the data second Vehicle to already to connected app interface. Link won product Further the company. last for cars geolocation capture that telemetry on a able gap delivered user an user enhance comprehensive reach and our revenue win this through adoption demonstrating car to Cerence by In is vehicle in useful Connected technology, is to our Cerence Link safety, and also technology this secured which not a of contributing that providing apply convenience. the driver comfort, had cloud-based is bridges diagnostic we already India, in and to solution. connected this new

and indicate on for customer lastly, launch capabilities to generative as during Ride growth. value had as the car provide of markets, drivers. is innovation questions the we engaging commands remote accessing wins and voice support vehicle proving key chat leverages [indiscernible] right solution significant a quarter, remote possible, Facebook delivering via AI can Cerence anywhere, focused adjacent digital leveraging responses. continuous product. owners' areas an or These additional the we the assistant the from or that the Cerence controls And more unlocking vehicle, upgrade makes existing car and adoption asking a can easy and continued are starting, manual Link locking for The expansion with in our Messenger that expansion the information long-term to their knowledge in and Customers system vehicle-specific both and OEMs'

Officer, I'm and excited products in products Officer, of Kathpal; to adjacent current up even Schanz. Product our of more Chief Technology markets, important the but Prateek very for about under so our Chief and come the leadership yet find Nils growth

may all moving ground important continue feel past you our slide accomplished the where in This we Day, to it's but in have revisit, forward. and to Investor focus is familiar we to months from look what XX ourselves our to

deliver customers, We have and sustainable the growth. to the innovative long-term product position strong the technology competitive and

Now, all is it execution. about

you November to to heard have me is and and our As in from as true goal we remains deliver our investors. customers what today, promised on

focused the with We year have are keeping going. strong fiscal start the we momentum on a and had

over excellent It year, company to addressable Tom “Destination positions once we our the to transition years, they results our strategy path hand growth, review I to and for companion strong guidance “Destination reinforce as experiences. over deliver applies product providing our the the in behind call keep to QX we term. continue informed company to long-term entire truly Next” you our I strategy. make unique progress to key our The Before strategy. as generation goals. is next puts us opportunities of served in the experience over past and seven aspects deliver the doubles partner a all create the Next” seek car. detail, to long FYXXXX our towards growth the our on key excited profitability, And points innovate to of to business. and I'm get want Next” market shapes as customers a It It branded it we a cash as “Destination immersive QX to our

to now will Tom. I turn it over

Tom Beaudoin

to I moment. you, QX back our Stefan. I'll share to Thank first But guidance on more a results. come in want

this been record in results, has providing QX With we track strong goals develop our accomplishing doing positive of say. point are goal. another data One our what to a we of

to continuing track of to are We predictable to a this proven record performance. committed upon trend build establish

our longer, XX the revenue, framework business exceeded contracts existing $XX.X contracts of higher than revenue higher anticipated the fixed of of to services, contributions the year. due quarter. the connected deal guidance. consumption than projected was million, amount due in key our contracts for above from the for professional in a prepaid than end is our we came quarter the our we within full fixed to higher strength Because metrics in all a combination of the lower of in than the This expected for The QX of at of profitability time fixed originally model. guided services contracts. and remain QX with million fixed quarter core high Consumption well expected better

was gross metrics And Non-GAAP XX.X%. margin end margin $XX.X share per was these our guidance. XX.X%. EBITDA XX.X% margin. in high All $X.XX. came operating or the above was million of Non-GAAP earnings Adjusted was non-GAAP

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

for we CFFO was full CFFO fiscal expect While year. the negative the positive in quarter,

remains of Our approximately strong balance million. sheet and cash securities marketable with $XXX total

license Variable penetration. quarter-over-quarter. to the was quarter. Here the auto production last The year were slowly up increases XX% quarter revenue fixed and from licenses, is of increasing of consumption and XX% our breakdown revenue of same improving due reduced

New services from cars decline two quarter the down factors the from last lower the year same such contracts last shortages was for fiscal several legacy was connected production and of years revenue year-over-year due up of the expiring and as result The XX% to X% older quarter. disclosed separate connected last contract. from over semiconductor technology,

as professional the includes a platforms. Finally, directly an are services revenue services customize and year-over-year as revenue. was to professional team for generation with connected interface down services revenue X% license who X% but individuals services next growth on the instead indicator quarter-over-quarter. company, OEM the of see acts technology our key future and a as future enabler revenue Cerence's and We and customers services for implement license driver Professional up don't connected pro

in the approximately that as business to into on over estimate in license contracts quarter was commitment worth We $X Overall, million minimum going a is and the indicating slightly $XX few production quarter years. million as from $XX fixed of above our the last the deal. issues the signed contracts This and million, million. plagued prepaid strong $XX slow Moving license auto details remains improvement business. the our have

year. full We fixed $XX continue the level approximate manage to an million to contracts for

While in forward. moving the commitment do minimum a minimum commitment deal deals not expect small, quarter, there was we

Pro increased year-over-year production. auto forma X% royalties due were and X% up quarter-over-quarter to

of declined fixed Consumption XX% the licenses during same period.

do believe fixed we to should licenses difficult in predict, accurately fiscal XXXX. of contract peak consumption the While

indicate the The KPIs in business. to continue majority of our strength

technology. for production auto XX means from includes increased global total of global XX.X production XX% Cerence’s increased level those connected Of XX%. This with cars of trailing some half penetration technologies auto Cerence’s over of the the X% Our that our quarter-over-quarter. used to months services million

increasing indicating in XX% our year-over-year, We also consumers monthly technology. saw of a active big popularity users, among increase

QX is for in contracts guidance revenue were contracts value and of an Fixed to the QX. impact a in $XX turning fiscal our the that revenue Now factor have quarter. fixed year, on we quarterly one million

approximately We in QX greater consideration, with expect that approximately are fixed $XX in to $XX million year. QX. to our million million in us $X $X for into Taking QX guiding QX; QX million contracts million in into of we fiscal visibility to none and $XX behind

We fiscal guidance million. lower year to are from million of also the $XXX our raising full end $XXX

on You slide revenue the and can the this guidance of financial effect metrics. see associated

the business Overall, on outlined our we to long-term achieve perform innovation at and to goals. Day, focused Investor and as continues execution our remained

prepared our open will concludes remarks, and questions. we the This for now call

Operator

Junk question from [Operator with comes first Luke Instructions] Our Baird.

now is line Your open.

Luke Junk

it of you consumption just Want fixed a this Hi, us good to to flow question for not? quarter? morning the prepay it can think that and do I mentioned with Thank this to mix contracts that you. understand taking related? something start or to is question. with full-year know this doesn’t is you lower-than-expected And related, Tom, help right mechanical morning. had guidance timing Thanks the through

Tom Beaudoin

talked the estimated projected typically six over average as The that did on that eight is we’ve gets QX, consumed quarters. about on quarters. prepaid consumption previously, a we particular in So, prepaid particular deal at about we

that way and modeling our had effect our guidance a from the from that short-term. we plans So the and has positive in set

Luke Junk

want then I Understood. picture follow-up. Thank ask you. a Stefan. bigger question, And just to

system we if customers, consumer you win-backs these think with if comment on there’s Thank know that discuss I on key help make additional drive Co-Pilot if wondering maybe you. your And color win-backs don’t provide particular, could if competing So capabilities tech. to the could you would that those any previous sense? can the versus positioning in also you

Stefan Ortmanns

extremely OEM Co-Pilot also received and morning. We China was was tech so-called very design our we well had giant some Thanks was had here Yes, sites. is against behavior. actually cool It X.X, response but Yes. big a yes. from design right, QX. Luke, Cerence see OEMs, One in the broad the also feedback one into the okay, in wins good and another is then last outstanding, players it question, for say, also right? wow, learning. all big what your here giant, Assistant my so is here against and again in we discussions really coverage, tech solution, competitive the right, in wins a And market with the a And various tech here. deep Ride at also also goes actually a It’s fast there’s time quarter has

information said And the car, Yes. was a and AI, information with weather well what we leveraging example, received. for the and this search forecasting also also here, sensor here, proactive right? of data example, Combined capabilities generative around of for also that leveraging And kind road surrounding right? AI actually

but and experience. their here solution a branding want prototyping of seeing foundation, cases, own to want most have kind Also in great with right? a as have together, Co-Pilot OEMs the us a and they also work to We tight of

Luke Junk

you go it. color. it ahead Got Thank I’ll now. the leave and for there for

Operator

Langan [Operator next Instructions] question Our Wells Colin comes with from Fargo.

is now open. Your line

Colin Langan

Oh, great. my taking Thanks for questions.

just Just incorporated is confirm, for year weakness So based of actually question, that guidance IHS, offsetting first is and is and production? end? IHS on what that come is to sort down it and has September

Stefan Ortmanns

I Tom, then putting Right. will and color first, for to it. his start me let maybe so Yes, ask also,

right X% general, in roughly X% So down so, from year-over-year. been IHS

Now year. to of from it’s in And projection hand range hand the beginning with that our our goes the X.X% fiscal actually in X%. of

Tom Beaudoin

a to had numbers all has the Interestingly come our done in customers on quarter solely relatively we projecting. planning. were our IHS forecasting, that had we use conservative enough, approach. We don’t from more of royalties. in their original our baked had down get Yes, we taken because IHS when We we every reporting

base that’s use our what how we overall And are a So, trends royalty we individual combination market our that reports. and customer from guidance. of we seeing

Colin Langan

Got it.

users, And makes XX% That I you line you at that hasn’t X, new like but very growth. look connected highlighted sense. Yes, in at a look something much. monthly not really if Slide really Okay. showing It’s increase services. like I moved think

segment, what is of start that in should the when growth connected to back and keeping sort upward? inflect So that back new

Tom Beaudoin

a were that periods. would’ve year I renewal as represents there platforms of of And in that much cars combination. because We’ve opportunities $XX previously, a for about some of the not connected that million that took – are we talked we’ve mean, of older revenues kind It’s up winding down down. of are in had the lost are two we current low years those amortization kind coming production. also revenue,

we As which those us wins more this and the second of go and XXXX of that towards growth wins of of will going at into include that had our some the start A help FY forward. Investor production connected XXXX. there’s XXXX, a to services, lot number will to talked to we start Day about drive growth in into and half get projections at year us

usage being The more, some the accepted it but – that, services is of correlate and that shipping used do directly because recognized I It being cars, is our technology is our of being passengers. it’s doesn’t the by to is that the does connected to think it the revenue show revenue that new what drivers on important. enhancements but are the are

Stefan Ortmanns

bit OEM in here adoption active of here. right? jump They connected Cerence over also months also And the subscribers, component, an color mentioned OEMs. so-called with right? Maybe let specific XX offering. to the our next months big it the XX one services at Right? So also a uptick Ride? beginning, really connected will Cerence me reports the in just they Link, see We the think right? I I Co-Pilot, So, a live to add go what all have

We OEM with services, own. are their capabilities, So with SOP current leading the right? expansion that working those on services proactive new for AI also new so-called on cloud additional cloud being premium older cars cloud bring with domains, can of we to

I correctly, of have the we as mentioned plenty year. right, think So Tom still opportunities. And in are we transitional

suffering still connected to and bit over opportunities the are we outer three seeing are last But from the more for a services. years. more production We two

Colin Langan

right. Thanks it. taking All my Got question. for

Operator

Rajvindra Our Instructions] from comes next question with [Operator Needham. Gill

Your now line is open.

Rajvindra Gill

transition Question you good about year Day Analyst visibility you story. talking changed believe, congrats year kind term into and in you’re about Yes, of and turnaround applied talked I more can, the by and to I this year for year. wins the the and XX% given the year thank about targets at talked on I fiscal fiscal fiscal I If some to stabilization slides, contracts, visibility of you, longer this look XX% full the wondering is know you’re the fiscal a I’m year, the results XXXX, thinking a then good XX% design with at XXXX. Has for fiscal visibility that of some visibility kind increasing about, if about fixed of and year couple visibility also some XXXX, XXXX. the the XX, on Slide how your on into points given of XXXX? growth you’re into the that

Tom Beaudoin

you. for thank that. Thank Raj, So you

XXXX. happy are story. we QX mean, visibility We continuing have to Yes, FY stronger and I about this clearly

QX initiatives helps But will and QX I that that bookings Investor delivering report we're specifics tracking in towards updating we with XXXX FY Day. to so our to in But we journey good have growth that we that bookings we'll help more us those that so in results. bookings visibility clearly in around say hope for in everything around out laid that FY be to how accomplished we we had more As QX had XXXX. semi-annually,

Rajvindra Gill

Great. it's believe you us maybe the two use ending field And on in of years. if could update agreement I

to field you is could you other If your IP? just of once markets over, that agreement license start clarify that and what can use

Stefan Ortmanns

evaluating automotive, right? think And aspect adjacency the transportation I have some we focus explained separate the we also And let's say And is key we the segments, this business development second One the with team this opportunities the also revenue our underneath, this roadmap; is is also driving very with first October second fiscal So working report opportunities paving for on for here, they're a strong And third also also three by right? a post-FOU for just hope core R&D already on that hired and the year. we half innovation. year. have important by with area. can right, vectors team driven way other also Actually, half fiscal opportunities. other execution are that XXXX. the one of team what And we we

one destination areas that's of think of our part and also, I focus also our strategy. key So next

Tom Beaudoin

Yes.

to the call Stefan as a are to Day about that laid have we we we sure couple what everybody Stefan non-transportation, said traction that have the today. transportation team that of adjacency and Just and to make not FOU. we the Investor in we've starting there that, clarity, a And subject are markets for understands, are just take seeded technology as out then already talked areas an

than now able we're when to well-developed they're that so capabilities even all group that's to so this able and have the team get revenue And that to then well seeded years, to some at expansion opportunity look solutions and trying group the we're seed of expiration. expands less the that FOU post a and The to in drive expires of two why working we prior and FOU. some and

Stefan Ortmanns

we the aspect is easily beyond the cost. key then or presented AI, can and less then Analyst – transportation, those right, experience And the companion solution, Scalable other AI Day immersive no technology important markets to other more pillars multi-standard at to success plus companion here, platform the apply three also is at also and we right? scalability tools,

Rajvindra Gill

you. Thank it. Appreciate

Operator

Rhee comes next Our question Craig-Hallum. Instruction] from Van with Jeff [Operator

open. is line now Your

Jeff Van Rhee

– fairly It's through incremental you we're Great. all quickly. very data over I several questions couple jump questions, and thank for points Thanks. my A Thanks guys, for the these the appreciate here. increased could getting if time helpful. taking I transparency.

think you bookings. referenced Tom, I

plan an thinking Just of but just quarter terms for the bookings clear, year, bookings versus XX annual know I you meet days the in did to outlook net-net publish on changed for the about Investor the and same internally want along talked sure was outlook then don't think has $XX the you that be what say you're the And of Is I make at just consumption ago? still to expected XXXX. Day clear, consumption lines I'm roughly number? the million to the number in

Tom Beaudoin

had update the it on I So bookings I QX, just have be we mean, can to reason bookings, in that. QX. some nice we'll alluded And consumption on a wins do We then think can is of it but And little X. did semi-annual because lumpy. bit this all will consumption, on Stefan in shipments lower that from vary bit prepaid it's going to and particular modeled eight based spend a be too that quarters, we where actual probably one particular be quarters Jeff, six because it's Tier

be – could be could sooner. even it it So

Jeff Van Rhee

end model looking were being you AI but FOU. worlds, you Stefan generative then expiration guys a view just ago, relates it the competition, disruptive. a the it's models what got referencing particular can bit a how those in play see to the able others large specific Bardon and a minute I co-opetition, also that? large seem opportunities more what thoughts forward that then Does is these the Giving you've and [ph] vertical, to competitive And up but are these some as you in demonstrating? significant demonstrate future coming, as the suggest FOU language are that in to do do some within there? And of been and terms helpful. That's of the Just do. GPT love very your GPT, given to pretty leap language take hear of you as Okay. know things

Stefan Ortmanns

we I see car a a deep knowledge here. our think right? prototype them ChatGPT, but about experience the also right? created don't So competitor, knowledge, as with mobility with enhanced AI About have already direct I

PROSS the right? applications [ph] just the we've bringing for And knowledge that announced have also is what market as American example all car information also a you're know live we knowledge, which together, You OEM we those this went Cerence North but such our do the of with right? we OEMs, automotive knowledge, is here. also have together general already in specific actually what and some And yes, we're discussion the transportation can goal,

Jeff Van Rhee

Fair there. I'll leave enough. Okay. it you. Thank

Operator

next with Our David Instruction] from question [Operator comes Kelley Jefferies.

open. is Your line now

Gavin Kennedy

is Gavin up for on Kennedy Can more my to customers your your Cerence with specifically Thanks Kelley. It progress awards taking provide two questions. details this and Ride three now you wheeler team, design are for wheelers, David with adjacencies? us Hi won on transportation and two looks more seven.

about X in think the XXXX, adjacencies we year should in X fiscal how your So this of in XXXX? context fiscal and million believe target prior of transportation sales year I million

Stefan Ortmanns

two wheelers a Audio yes. the producing market some that to two million I to big against AI design mean, right? niche on they're big important in automotive with roughly XX yearly proud won this application. for wins brands of basis, a one million here, done North is wheeler the stuff, in very XX our about I'm the technology terms market the Japan big to right? in us won amazing really respect right? Compare of respect And feedback was with where also we solutions, tech and America We evaluation our to an players with players, and it

aspect. one are important So is what exactly That’s looking doing a for. rider we

the adapt you So quarter, of truck easily to can two-wheelers Co-Pilot Also Cerence had trucks the the also that space. wins where we other mentioned on here. hand, we in some design significant needs our last also

are a right? smartphones forth. via to solutions geolocation We we OBD the where can also which we via also the so Cerence so And pretty overall of experience, other So driver to are connecting Link, better launch, the behavior I now doing important also non-connected related on well. mentioned was monitor driver today to and cars give

beyond doing typical we combining together, think the language right. And natural I are going lot quite So, also here, pieces processing a all right.

I think want transportation right, experience markets. this we the to that’s for driving what immersive actually, do,

Tom Beaudoin

connected will are that – revenue Stefan these in of solution. you of therefore, just the And the particular the growth to amortize is these the revenue a as to as over there of it elements alluded time over Yes. portion to life have so take service build markets the, and most and

Gavin Kennedy

Can hanging makes addressed and cost low discussions. is savings, me, were Or, any Got just any actions cost included – fruit you your believe That the the I sense. at I been you’ve in it. here And taking? mentioned Investor on more you. management that improve details a and to these then Cerence, playing excuse as Thank switching the provide these believe follow-up, Cerence you’ve a you Day, strategy near-term? there in gears,

Stefan Ortmanns

a think Yes. I we’re known working here right. with consulting absolutely company together. well you’re And So,

good ago. for So, organization refocus this right. months customer trying efficiency, have year. productivity. and a also of And driving fiscal run yes, on CTO for and from here by the we’re And CPO trends plan Tom? also Mercedes, to product our couple R&D us organization, two And we office, a track. more we on we optimize joined are [ph] part he you’re have of new That’s that and innovation our noticed Therefore, office deliveries.

Tom Beaudoin

the the talked and about, being It’s very designed that, our place and lot new just strategy. say innovation that important of efficiency, and we right? A program we’ve then well continue with we’re is I but do drive to that in leadership investing, as well as on across to also want company, our done drive implemented, alignment to team were we implemented cost Stefan initiatives

innovation in guidance technology initiatives investments we’ve we’ve forward, support into the of baked our savings investment through all cost achieved R&D are to, the so our combined efficiency to going our really that and of productivity all and agenda. the and with areas continuing some And that

Gavin Kennedy

my questions. taking for Thanks Okay.

Operator

Instructions] [Operator from question next McNally Chris Evercore. Our with comes

is line now Your open.

Chris McNally

in look team. things the I of Thomas, licensing But lining this royalty And if number sort Thanks sort provided, a of basis. the ask, you’ve we showed X% pro so of seen you we’ve one really the Stefan could which roughly this trend. on much helpful, the to at, of, is to on and is underlying growth. sort two-year through year-over-year flat quarter sift a that when forma

of of to that that talked trying some of are up, that I other we one look the of seen single-digit launches that forward so growth given investors move essentially sort paid questions when is your forward of you’re some usage large confidence so some move you’ve is, but incorporate will seeing underlying And of that doing we’ve metrics I that about of think higher in the, orders sort sort think connected, will today. versus the what that low secular licensing the of outgrowth

Tom Beaudoin

of of solution, we talk So, which coming some got Investor those that SOP. about per Chris deals. programs that there’s sets We’ve volumes have drives to higher a gets price Day, a additional the also cars as shipping unit deeper our number are from in

XXXX. the So, growth FY few to I in strong see over going to quarters that some into start think, up tick you’ll next line we start hopefully where show

Stefan Ortmanns

plus XXXX, just the on could great. not super our we we’re but that XXXX, That’s trying or think production to sort own of see XXXX become for. versus it goal XXXX there’s, but above Does or of for magnitude, the something estimates just And And follow-up, I XXXX with the to in start of a production percentage XXXX, pieces, a, make moving growth? to kind there’s does helpful be of above start of us in connect forward XX% lot that something units, a order as maybe magnitude maybe, to because orders, a give would this I end we or, of to would order variables, going that of metric growth? XXXX refreshed again, but think XX% sort launch a There’s call, into become, that get XXXX X% be helpful. percentage to of and

Tom Beaudoin

Thanks.

Chris McNally

team. Thanks

Stefan Ortmanns

Chris. Thanks,

Operator

with question Sachs. Delaney Mark from Instructions] next Our Goldman [Operator comes

now is open. line Your

Mark Delaney

thank Yes, the for taking good questions. and you morning

some when some consistent the First, that of was new think backs, over pricing those the are with at of about you and you to, something Analyst that referred time was that trend wins and higher the take the articulated Day?

Stefan Ortmanns

I environment. to side, at what a on competition, our globe, think the embedded doing the features we the in I mentioned I upside. very competitive side, and we not various over all offering OEMs North embedded. more at also well products, also Analyst opportunities, overall next actually the on that’s quarters before But increase on are we new And see flexibility overall what also Day But terms will Europe, of overall but we right? more win-back but right also cloud the the even just was I are also And right? the nice a also that in think of have where and also here. than With yes, right? the So see I a pretty side we connected China better show we think new that some in great nice we in primarily the and are we said to I in already America something beginning, across bring With PPU opportunities think couple we think

Mark Delaney

engaging drivers connected Maybe usage using underlying And I talked bit the broadly on seeing and little revenue rates the That’s Okay. of you’re there on the technology it products in Thanks. in a company component with of the more and tied the vehicles, has actually some Thanks. helpful. business. on when not, and usage what from impact of is the quarter? usage then on was are or second to past it? about any believe rates terms in whether revenue was talk your that’s

Tom Beaudoin

quarter may I more benefit as do Today amount most this the actually are connected OEMs contracts. and implement cars solutions slight the more us usage And road one with have the on move us also or of saw those opportunities of Not small side. then help of more we our over are to that going our think more the a contracts a have of on to usage. on activation tied to revenue. to and We also forward that updates, additional from type year will help

it a was positive quarter of on So deals. was, this that one thing but was our small, it

Mark Delaney

Thank you.

Operator

questions. closing the back to I remarks. time, like for now further conference to this am showing I turn At would Rich no

Rich Yerganian

on future. we great everyone the look in us everyone, for joining to to Have day. forward Thank you with engaging for a our And conference call you this morning.

Operator

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

now may You disconnect.

Cerence (CRNC) 8 Feb 232023 Q1 Earnings call transcript