Performance of Healthcare, Embedded Speech and Imaging Drive Revenue and Earnings above Expectations
BURLINGTON, Mass.--(BUSINESS WIRE)--Aug. 8, 2006--Nuance Communications, Inc. (Nasdaq: NUAN - News) today announced financial results for the third quarter ended June 30, 2006.
Nuance reported revenues of $113.1 million in the quarter ended June 30, 2006, a 100 percent increase over revenues of $56.8 million in the quarter ended June 30, 2005. In addition to using GAAP results in evaluating the business, management also believes it is useful to evaluate results using non-GAAP measures. Using a non-GAAP measure, the Company reported non-GAAP revenue of $121.0 million which includes $7.9 million in revenue lost to purchase accounting in conjunction with Company's acquisition of Dictaphone Corporation.
On a GAAP basis, Nuance recognized a net loss of $9.4 million, or $(0.06) per share, in the quarter ended June 30, 2006, compared with net income of $0.2 million, or $0.00 per diluted share, in the quarter ended June 30, 2005. Using a non-GAAP measure, Nuance reported non-GAAP net income of $19.7 million, or $0.11 per diluted share, for the period ending June 30, 2006, compared to non-GAAP net income of $5.9 million, or $0.05 per diluted share, in the quarter ended June 30, 2005.
These non-GAAP figures exclude non-cash taxes and interest, amortization of intangible assets, non-cash amortization of stock-based compensation, and acquisition-related transition and integration costs and charges, and include revenue lost to purchase accounting in conjunction with Company's acquisition of Dictaphone Corporation. See "GAAP to non-GAAP Reconciliation" below for further information on the Company's non-GAAP measures.
"Strong performance from our healthcare business, including Dictaphone, embedded speech and our imaging products fueled revenues and earnings above our expectations," said Paul Ricci, chairman and CEO at Nuance. "In particular, we believe early results for Dictaphone reflect a smooth integration and strong demand for its enterprise and hosted dictation solutions. We experienced a very strong quarter in our imaging business. In addition, demand for our network speech solutions was up from the previous quarter. Our results from embedded speech are noteworthy, especially in international where we secured several important contracts and design wins."
Consistent with the Company's strategy and recent trends, highlights from the quarter include:
* Dictaphone Healthcare - After the close of the Dictaphone acquisition on March 31, 2006, Nuance established a Dictaphone Healthcare division that expands the Company's solutions portfolio, market reach and revenue streams within the large and rapidly growing healthcare vertical. In its first quarter within Nuance, Dictaphone generated revenues consistent with expectations owing to the rapid adoption of speech-based transcription solutions within its base and through new customer wins.
* Embedded Speech - Revenues from embedded speech were a record in the quarter, up more than 35 percent year-over-year. Nuance secured strategic design wins with Alpine, Audi, Casio, Ford and Samsung. Within the mobile phone market, Nuance signed an important contract with a significant handset manufacturer in Asia-Pacific.
* Enterprise Speech - The Company continued to generate revenue growth from its network speech solutions, benefiting from new and expanded agreements with enterprises and telecommunications providers, including AT&T, EchoStar, Nestle, Verizon and Wachovia. In addition, the Company strengthened its international presence through Conversations Europe, an inaugural event that drew participation from more than 200 partners, customers and industry experts.
* Dictation - Nuance's Dragon NaturallySpeaking products continued to perform well in the healthcare industry and led to expanded contracts within Kaiser-Permanente and the VA Hospital network. As expected however, total dictation revenues were down year-over-year as the Company prepared for the launch of Dragon NaturallySpeaking version 9 which launched subsequently in July 2006.
* Imaging Solutions - Nuance's imaging revenues were strong in the quarter, increasing 35 percent over the previous year. In the quarter, Nuance signed contracts with OEMs and enterprises including Brother, Kinkos, Kodak, the U.S. Chamber of Commerce and Xerox.
* Operational Achievement - Nuance continued its disciplined approach to acquisition integration, cost synergies and expense controls which resulted in additional improvements and leverage in its operating margins. The Company noted it is on track to achieve its synergy targets associated with the acquisition of Dictaphone Corporation. |
