Nuance Announces Preliminary Fiscal Fourth Quarter Results
Wednesday November 16, 7:56 am ET
Organic Growth Exceeding 30 Percent Driven by Strong Performance in Speech Business and Successful Launch of ScanSoft OmniPage 15
BURLINGTON, Mass.--(BUSINESS WIRE)--Nov. 16, 2005--Nuance Communications, Inc. (Nasdaq: SSFT - News), formerly ScanSoft, Inc., today announced preliminary financial results above its previously provided guidance for its fourth fiscal quarter, ended September 30, 2005. Nuance issued the preliminary results in advance of its formal earnings announcement in December, as the Company completes the purchase accounting for its recent acquisition. These preliminary results are subject to revision until the Company reports its final fiscal fourth quarter results. On October 18, 2005, the Company changed its name from ScanSoft, Inc. to Nuance Communications, Inc., and on November 21, 2005 will begin trading under the ticker symbol "NUAN".
Based on preliminary financial data, Nuance expects fiscal fourth quarter 2005 revenues between $60 million and $62 million and a GAAP loss between $(0.06) and $(0.05) per share. These GAAP figures include revenues and expenses associated with the acquisition of the former Nuance for the period following September 16, 2005, and include approximately $8 million of Nuance-related restructuring and non-cash tax valuation charges.
In addition to using GAAP results in evaluating the business, management also believes it is useful to evaluate results using non-GAAP measures. Based on preliminary financial data, Nuance expects non-GAAP fiscal fourth quarter 2005 revenues between $58.5 million and $60 million and non-GAAP earnings between $0.05 and $0.06 per share. These non-GAAP figures exclude revenues and expenses associated with the acquisition of the former Nuance for the period following September 16, 2005, the Nuance-related restructuring and non-cash tax valuation charges of approximately $8 million and, as applicable, non-cash taxes and interest, amortization of intangible assets, non-cash stock-based compensation, and restructuring and other charges. See "GAAP to non-GAAP Reconciliation" below for further information on the Company's non-GAAP measure.
The Company disclosed that organic revenue growth in the quarter, excluding revenues from ART, MedRemote, the former Nuance, Phonetic Systems and Rhetorical, was more than 30 percent above the period ending September 30, 2004. Revenue growth was consistently strong across most of the Company's major product lines. Total operating expenses in the quarter ran approximately $1 million above expectations. Lower than planned research and development expenses were more than offset by higher than anticipated year-end commissions and incentives, costs associated with the Company's re-branding from Scansoft to Nuance and third-party expenses associated with Sarbanes-Oxley 404 compliance, which exceeded $1 million in the quarter.
Expectations for the Fiscal Year 2006
Nuance today reiterated its previous fiscal year 2006 guidance of revenue in the range of $315 million to $325 million and non-GAAP earnings between $0.29 and $0.31 per diluted share. Due to the ongoing implementation of Statement of Financial Accounting Standards 123R and the uncertainties related to the magnitude of Nuance's equity-based compensation expense during fiscal year 2006, the Company is not able to estimate at this time the impact of the equity-based compensation expense on its GAAP earnings per share for fiscal year 2006. As such, a comparable GAAP measure and reconciliation of GAAP to the forward-looking non-GAAP earnings per share is not yet available. Excluding the impact of the equity-based compensation expense on its earnings per share for fiscal year 2006, Nuance earnings per share are estimated to be between $0.14 and $0.16 per share. Non-GAAP earnings per diluted share should not be considered as a substitute for earnings per share determined in accordance with GAAP.
Nuance will discuss expectations for its first fiscal quarter of 2006 during its quarterly conference call. The Company reminds investors as they form their estimations that historical experience suggests that material revenues are lost in the first two quarters following an acquisition owing to purchase accounting and other factors. Investors should also note that because of Nuance's focus on Sarbanes-Oxley 404 compliance in the fourth quarter, G&A headcount reductions associated with the acquisition are occurring late in the first fiscal quarter 2006.
Nuance to Announce Final Fourth Quarter and Fiscal Year 2005 Earnings on December 6, 2005 |
