Cerence Shares Plunge As It Issues Q1, FY22 Outlook Below Consensus

Cerence Inc CRNC reported fourth-quarter FY21 revenue growth of 7.5% year-on-year to $98.1 million. Non-GAAP EPS of $0.66 beat the consensus of $0.56. Meanwhile, the company provided the first quarter and fiscal 2022 forecast below Wall Street view, amidst production challenges faced by its customers due to semiconductor shortages.

• Segments: Revenue from License grew 10.8% Y/Y to $51.4 million, Connected services was nearly flat at $25.5 million, and Professional services grew 8.3% Y/Y to $21.1 million.
• Global auto production with Cerence Technology (TTM) rose 53% Y/Y. The average contract duration (TTM) was 7.9 years. Growth in billings per car was 8%.
• Margins: The non-GAAP gross margin expanded 230 bps to 78.1%.
• The non-GAAP operating margin contracted 490 bps to 37.2%, and the adjusted EBITDA margin contracted 500 bps to 39.6%.
• Cerence generated $23.3 million in operating cash flow in Q4 and held $158.9 million in cash and equivalents.
• "We finished the year strong, especially considering the production challenges our customers are facing due to semiconductor shortages," CEO Sanjay Dhawan said.
• Outlook: Cerence sees Q1 FY22 revenue of $91 million - $96 million (consensus $101.3 million), adjusted EPS of $0.47 - $0.53 (consensus $0.58).
• Cerence sees FY22 revenue of $400 million - $425 million (consensus $441.37 million), adjusted EPS of $2.17 - $2.51 (consesus $2.69).
• Price action: CRNC shares traded lower by 11.6% at $92 in the market session on the last check Monday.