Nuance Communications, Inc. (NASDAQ: NUAN) today announced financial results for its third quarter fiscal 2017, ended June 30, 2017.
The Company reported strong net new bookings, recurring revenue, cash flow from operations (CFFO), and overall solid third quarter performance. In particular, Nuance saw continued strength in Enterprise omni-channel offerings, Dragon Medical cloud, voice biometrics solutions, and the company’s automotive business. This performance was notable in light of the previously disclosed June 27, 2017 global malware incident that led to a disruption of the company’s worldwide operations, including its sales and order fulfillment operations, most significantly in its healthcare transcription and imaging businesses.
Absent the business disruption from this incident on Nuance’s third quarter 2017 performance, the company would have reported its second consecutive quarter of non-GAAP organic revenue growth in Q3 17. The company is including certain pro forma results in this press release, along with reported GAAP and non-GAAP results, to show expected performance had the malware incident not occurred.
Third Quarter of Fiscal 2017 Performance
Nuance reported GAAP revenue of $486.2 million for the third quarter, compared to $477.9 million a year ago. Third quarter non GAAP revenue was $495.6 million, which includes revenue lost to accounting treatment in conjunction with acquisitions, compared to $484.9 million in the third quarter of fiscal 2016. Total recurring revenue for the third quarter represented 73% of total GAAP revenue. On a non-GAAP basis, total recurring revenue represented 73% of¬ total non-GAAP revenue, compared to 71% a year ago. Nuance reported net new bookings for the third quarter of $438.5 million, up 21% from $362.9 million a year ago.
Nuance reported GAAP net loss of $(27.8) million for the third quarter, or $(0.10) per share, compared to GAAP net loss of $(11.8) million, or $(0.04) per share, in the third quarter of fiscal 2016. Non-GAAP net income was $79.2 million, or $0.27 per diluted share, down from non-GAAP net income of $83.3 million, or $0.30 per diluted share, in the third quarter of fiscal 2016. Nuance’s GAAP operating margin for the quarter was 2.9%, down from 6.0% in the third quarter of fiscal 2016. Third quarter non GAAP operating margin was 27.0%, down from 27.2% in the third quarter of fiscal 2016. Cash flow from operations was $132.0 million in the third quarter of fiscal 2017, up from $125.9 million in the third quarter of fiscal 2016.
The company estimates that, had the malware incident not occurred, third-quarter GAAP revenues on a pro forma basis would have been $501.6 million and non-GAAP revenues on a pro forma basis would have been $511.0 million. The company estimates fiscal third quarter GAAP earnings per share on a pro forma basis would have been $(0.04) and non-GAAP earnings per share on a pro forma basis would have been $0.30.
“Despite the malware incident, Nuance delivered its fourth consecutive quarter of year-over-year improvement in net new bookings, recurring revenue, cash flow from operations, and hosting and cloud revenues,” said Dan Tempesta, Nuance’s CFO. “We expect demand for our vertical and consumer solutions to gain additional traction as our customers seek to leverage AI to enhance user experiences, automate business processes, and drive improvements to their bottom line.”
