Nuance Communications, Inc. (NASDAQ: NUAN) today announced financial results for its fiscal 2014 and fourth quarter, ended September 30, 2014.
In fiscal 2014, Nuance reported GAAP revenue of $1,923.5 million, up 3.7% from $1,855.3 million in fiscal 2013. In fiscal 2014, Nuance reported non-GAAP revenue of $1,987.1 million, which includes $63.6 million of revenue lost to accounting treatment in conjunction with acquisitions. Fiscal 2014 non-GAAP revenue grew 1.5% over non-GAAP revenue of $1,957.7 million in fiscal 2013. In fiscal 2014, Nuance reported bookings of $2,441.9 million, up 27.4% from $1,916.5 million in fiscal 2013.
In fiscal 2014, Nuance recognized GAAP net loss of $(150.3) million, or $(0.47) per share, compared to GAAP net loss of $(115.2) million, or $(0.37) per share, in fiscal 2013. In fiscal 2014, Nuance reported non-GAAP net income of $360.1 million, or $1.12 per diluted share, compared to $428.0 million, or $1.33 per diluted share, in fiscal 2013. Nuance's fiscal 2014 non-GAAP operating margin was 23.7%, compared to 27.9% in fiscal 2013. Nuance reported cash flow from operations of $358.1 million, compared to $395.0 million in fiscal 2013. Nuance ended fiscal 2014 with total deferred revenue of $548.1 million, up 32.2% compared to $414.6 million a year ago. Nuance ended fiscal 2014 with $588.2 million in cash, cash equivalents and marketable securities.
In the fourth quarter of fiscal 2014, Nuance reported GAAP revenue of $502.3 million, up 6.4% from $472.2 million in the fourth quarter of fiscal 2013. Nuance reported non-GAAP revenue of $520.3 million, which includes $18.0 million of revenue lost to accounting treatment in conjunction with acquisitions, compared to $490.4 million in the fourth quarter of fiscal 2013. In the fourth quarter of fiscal 2014, Nuance reported bookings of $619.6 million, up 24.5% from $497.7 million in the fourth quarter of fiscal 2013.
In the fourth quarter of fiscal 2014, Nuance recognized GAAP net loss of $(1.5) million, or $(0.00) per share, compared to GAAP net loss of $(32.3) million, or $(0.10) per share, in the fourth quarter of fiscal 2013. In the fourth quarter of fiscal 2014, Nuance reported non-GAAP net income of $107.6 million, or $0.33 per diluted share, up from non-GAAP net income of $95.2 million, or $0.30 per diluted share, in the fourth quarter of fiscal 2013. Nuance's fourth quarter fiscal 2014 non-GAAP operating margin was 25.9%, up from 25.3% in the fourth quarter of fiscal 2013. Nuance reported cash flow from operations of $95.9 million in the fourth quarter of fiscal 2014, up 2.6% from $93.5 million in the fourth quarter of fiscal 2013.
Please refer to the "Discussion of Non-GAAP Financial Measures" and to the "GAAP to Non-GAAP Reconciliations," included elsewhere in this release, for more information regarding the company's use of non-GAAP measures.
Fourth Quarter and Fiscal Year Highlights
-- Bookings -- FY 14 bookings were $2,441.9 million, up 27.4% from $1,916.5 million in FY 13. FY 14 bookings exceeded our updated guidance range of $2.35 billion to $2.40 billion. -- Revenue -- Q4 14 non-GAAP revenue was $520.3 million, up 6.1% from $490.4 million a year ago. -- EPS -- Q4 14 non-GAAP EPS was $0.33 per diluted share, up from $0.30 per diluted share a year ago. -- Recurring revenue -- Recurring revenue increased from 52% of total non-GAAP revenue in FY 12 to 58% in FY 13 and to 64% in FY 14. Perpetual licenses decreased from 38% of total non-GAAP revenue in FY 12 to 32% in FY 13 and to 26% in FY 14. -- Deferred revenue -- Nuance ended FY 14 with total deferred revenue of $548.1 million, up 32% compared to $414.6 million at the end of FY 13. -- Operating cash flow -- FY 14 operating cash flow equaled 99% of non-GAAP net income, up from 92% in FY 13 and ahead of our target of 95%.
"We delivered a strong finish to fiscal 2014, with revenue, EPS and bookings above our guidance ranges. In fiscal 2014, recurring revenues represented 64% of total revenue, up 6 percentage points from last year, as we continue to transition our revenue model toward more stable, predictable recurring revenue streams. The positive deferred revenue and cash flow characteristics of our recurring revenue streams also continue to benefit the business. Fiscal 2014 bookings and execution in strategic markets position us well for a return to growth in fiscal 2015," said Tom Beaudoin, Nuance CFO.
Highlights from the quarter include:
-- Healthcare -- For Nuance's healthcare solutions, fourth quarter fiscal 2014 non-GAAP revenue was $238.3 million and FY 14 non-GAAP revenue was $942.7 million. Key customers in the quarter included Avera Health, BayCare, Cambridge Trusts, Cleveland Clinic, Froedtert, Group Memorial Health, Inova, Intermountain, Lahey, Providence, Scottsdale Health, and University of Colorado. -- Mobile & Consumer -- For Nuance's mobile and consumer solutions, fourth quarter fiscal 2014 non-GAAP revenue was $116.9 million and FY 14 non-GAAP revenue was $451.0 million. Key customers and OEM design wins in the quarter included Acer, AMD, AT&T, BMW, Bosch, Continental, Daimler, Fiat/Chrysler, Great Wall Motors, Harman Becker, Hisense, Honda, Mahindra, Melco, Motorola, Orange, Panasonic, Parrott, Rogers, Samsung, Scania, Shoretel, TCL, Telefonica, Volvo, and Yanfeng Visteon. -- Enterprise -- For Nuance's enterprise solutions, fourth quarter fiscal 2014 non-GAAP revenue was $95.6 million and FY 14 non-GAAP revenue was $357.1 million. Key customers in the quarter included American Airlines, Australia Department of Human Services, Banco Santander, Bank of America, Barclays, Citigroup, Delta Airlines, Delta Dental, Health Care Service Corporation, Jubilant FoodWorks (Domino's India), Public Service Enterprise Group, Talk Talk, Telstra, UnitedHealth Group, Wellpoint, and Wells Fargo Bank. -- Imaging -- For Nuance's document imaging solutions, fourth quarter fiscal 2014 non-GAAP revenue was $69.5 million and FY 14 non-GAAP revenue was $236.3 million. Key customers in the quarter included ABN Amro, Ashurst, Balabit, Barclays, Brother, Citigroup, CSC, Ernst & Young, HP, Laing Rourke, Neat, NOV, UPS and Visma.
Conference Call and Prepared Remarks
Nuance is providing a copy of prepared remarks in combination with its press release. These remarks are offered to provide shareholders and analysts with additional time and detail for analyzing results in advance of the company's quarterly conference call. The remarks will be available at nuance.com in conjunction with the press release.
As previously scheduled, the conference call will begin today, November 24, 2014 at 5:00 pm EST and will include only brief comments followed by questions and answers. The prepared remarks will not be read on the call. To access the live broadcast, please visit the Investor Relations section of Nuance's website at www.nuance.com. The call can also be heard by dialing (800) 230-1074 or (612) 234-9960 at least five minutes prior to the call and referencing code 340379. A replay will be available within 24 hours of the announcement by dialing (800) 475-6701 or (320) 365-3844 and using the access code 340379.
About Nuance Communications, Inc
Nuance Communications, Inc. (NASDAQ: NUAN) is a leading provider of voice and language solutions for businesses and consumers around the world. Its technologies, applications and services make the user experience more compelling by transforming the way people interact with devices and systems. Every day, millions of users and thousands of businesses experience Nuance's proven applications. For more information, please visit www.nuance.com.
Trademark reference: Nuance and the Nuance logo registered trademarks or trademarks of Nuance Communications, Inc. or its affiliates in the United States and/or other countries. All other trademarks referenced herein are the property of their respective owners.
Definitions
Bookings. Bookings represent the estimated gross revenue value of transactions at the time of contract execution, except for maintenance and support offerings. For fixed price contracts, the bookings value represents the gross total contract value. For contracts where revenue is based on transaction volume, the bookings value represents the contract price multiplied by the estimated future transaction volume during the contract term, whether or not such transaction volumes are guaranteed under a minimum commitment clause. Actual results could be different than our initial estimates. The maintenance and support bookings value represents the amounts billed in the period the customer is invoiced. Because of the inherent estimates required to determine bookings and the fact that the actual resultant revenue may differ from our initial bookings estimates, we consider bookings one indicator of potential future revenue and not as an arithmetic measure of backlog.
Recurring Revenue. Recurring revenue is the sum of recurring product and licensing, on-demand, and maintenance and support revenues as well as the portion of professional services revenue that is delivered under ongoing subscription contracts. Recurring Product and Licensing revenue is composed of term-based and ratable licenses as well as revenues from royalty arrangements.
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