Nuance Communications, Inc. (NASDAQ: NUAN) today announced financial results for its second quarter ended March 31, 2020.
Q2 2020 Performance Summary
• GAAP revenue of $369.3 million and GAAP earnings per diluted share of $(0.05).
• Non-GAAP revenue of $369.5 million and non-GAAP earnings per diluted share of $0.21.
“Despite COVID-19, we had another excellent quarter, with revenue and EPS exceeding the high end of our guidance,” said Mark Benjamin, Chief Executive Officer at Nuance. “We achieved 11% year-over-year organic revenue growth, with strength from both our Healthcare and Enterprise segments. Enterprise reported 19% annual revenue growth, the highest in 10 years, driven by our Intelligent Engagement solutions. Healthcare revenue grew 10% year-over-year, driven by strong growth in Dragon Medical cloud and increased demand from our newer cloud-based solutions, PowerScribe One and CDE One.
In line with our capital allocation focus, we repurchased 3.8 million shares of common stock and paid down $170 million of debt during the quarter. This occurred before these programs were put on hold in March when the COVID-19 pandemic escalated. We ended the quarter with a strong cash position and remain confident in the resiliency of our highly recurring business model.
Given our compelling financial and operating position, we fully expect to weather the disruption of this pandemic. However, we also expect a near-term impact on our business, particularly within Healthcare, given the significant reduction in elective procedures and the reprioritization of initiatives by hospitals to focus on COVID-19. As such, we have revised our full-year guidance.
Despite the uncertain near-term operating environment, I believe the markets we serve will expand post COVID-19 as our customers appreciate the critical need for AI-based solutions, remote access capabilities for healthcare workers, and increased demand for telehealth, and security and fraud protection solutions. We remain an incredibly resilient company, and I am confident that we will emerge from this pandemic stronger.”
Q2 2020 Performance Summary
Q2 2020 results for continuing operations include:
• Revenue of $369.3 million, compared to $336.6 million in the same period last year.
• Non-GAAP revenue of $369.5 million, compared to $336.9 million in the same period last year.
• Organic revenue growth of 11% compared to the same period last year.
• GAAP EPS of $(0.05), compared to $(0.10) in the same period last year.
• Non-GAAP EPS of $0.21, compared to $0.11 in the same period last year.
• GAAP net loss of $13.5 million, compared to a net loss of $28.4 million in the same period last year.
• Non-GAAP net income of $59.7 million, compared to $30.8 million in the same period last year.
• GAAP operating margin of 6.8%, compared to (0.5)% in the same period last year.
• Non-GAAP operating margin of 22.7%, compared to 17.0% in the same period last year.
• Operating cash flows from continuing operations was $87.9 million, compared to $79.5 million in the same period last year.
Capital Allocation
In the second quarter of 2020, we repurchased approximately 3.8 million shares of common stock at an average price of $20.40 per share for total consideration of $76.8 million. From the beginning of the fiscal year through March 31, 2020, the Company repurchased a total of 9.5 million shares of its common stock, at an average price of $17.89 per share, for aggregate consideration of $169.2 million. As of March 31, 2020, there was $261.2 million available under our existing authorization for share repurchases.
During the second quarter of fiscal year 2020, we also repurchased $87.3 million of 2025 convertible debentures, $36.5 million 2035 convertible debentures, and redeemed the remaining $46.6 million of the 2031 convertible debentures. In addition, in an effort to protect our financial strength as the COVID-19 pandemic escalated, we drew $230 million from our revolving credit facility. This brought our total cash and marketable securities balance to approximately $526 million at quarter end.
For a complete discussion of Nuance’s results and business outlook, please see the Company’s Prepared Remarks document available at http://www.nuance.com/earnings-results/.
Please refer to the “Discussion of Non-GAAP Financial Measures,” and “GAAP to Non-GAAP Reconciliations,” included elsewhere in this release, for more information regarding the Company’s use of non-GAAP financial measures.
SOURCE: Nuance
