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Mar 31
Cerence Q2 2025 Earnings Report
Cerence's financial results for the second quarter of fiscal year 2025
Key Takeaways
Cerence reported strong results for Q2 FY25, exceeding the high end of its revenue and adjusted EBITDA guidance. The company achieved its fourth consecutive quarter of positive free cash flow and saw significant year-over-year improvements in revenue, profitability, and gross margin. Full-year guidance was reiterated for revenue and raised for profitability and cash flow.
Reported revenue of $78.0 million and Adjusted EBITDA of $29.5 million, surpassing the high end of guidance.
Achieved the fourth consecutive quarter of positive free cash flow, totaling $13.1 million.
GAAP net income was $21.7 million, a significant improvement compared to a net loss of $278.0 million in the prior year quarter.
GAAP gross margin improved to 77.1% from 69.2% in the same period last year.
Cerence
Cerence
Cerence Revenue by Segment
Revenue by Segment
License Revenue
CapyFin.comConnected services Revenue
CapyFin.comProfessional services Revenue
CapyFin.com Forward Guidance
For Q3 FY25, revenue is expected between $52M and $56M, gross margins between 66% and 68%, net loss between $13M and $10M, and Adjusted EBITDA between $1M and $4M. Full-year FY25 revenue guidance remains unchanged, while net loss is now projected between $35M and $29M, Adjusted EBITDA between $28M and $34M, net cash from operations between $39M and $45M, and free cash flow between $25M and $35M.
Positive Outlook
- Full-year revenue guidance reiterated.
- Full-year Adjusted EBITDA guidance raised.
- Full-year net cash provided by operating activities guidance provided.
- Full-year free cash flow guidance raised.
- Company believes it is well-positioned to support customers and enhance user experiences.
Challenges Ahead
- Q3 FY25 revenue expected to decrease sequentially.
- No material fixed license contracts expected in Q3 FY25.
- Q3 FY25 projected net loss.
- Q3 FY25 projected Adjusted EBITDA lower than Q2 FY25.
- Full-year FY25 projected net loss.
Revenue & Expenses
Visualization of income flow from segment revenue to net income