Cerence Clocks 30% Revenue Dip In Q3, Plans To Focus On Generative AI To Boost In-Car Experience

Cerence Inc. CRNC reported a third-quarter FY23 revenue decline of 30.7% year-on-year to $61.7 million, beating the consensus of $60.83 million. 

Non-GAAP EPS loss of $(0.04) beat the consensus loss of $(0.15).

Non-GAAP gross margin contracted 720 bps to 66.5%.

Non-GAAP operating margin was 0.5%, lower than 29.4% in the year-ago period.

Adjusted EBITDA margin declined to 4.5%, down from 32% a year ago.

The company exited the quarter with cash and equivalents worth $102.8 million.

CEO Stefan Ortmanns commented, "Our focus on operational excellence and delivering on our commitments continued to drive strong results in Q3, with revenue for the quarter, as well as most of the key profitability metrics, at or above the high end of our guidance range."

"As we look to the future of the in-car experience, we are deeply focused on leveraging generative AI and large language models at meaningful points in the Cerence product architecture."

Outlook: Cerence expects Q4 revenue of $72 million - $76 million (consensus $72.06 million).

Cerence raises the low end of the initial FY23 revenue guidance and expects $286 million-$290 versus $284.87 million consensus (Prior View: $280 million-$290 million).

Price Action: CRNC shares traded lower by 0.80% at $25.55 on the last check Tuesday.