Amsterdam, February 6th, 2007 – Nuance Communications, Inc. (NASDAQ: NUAN) today announced financial results for the first fiscal quarter ended December 31, 2006.
Nuance reported revenues of $132.4 million in the quarter ended December 31, 2006, a 75 percent increase over revenues of $75.6 million in the quarter ended December 31, 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 $133.8 million which includes $1.4 million in revenue lost to purchase accounting in conjunction with the Company’s acquisition of Dictaphone Corporation.
On a GAAP basis, Nuance recognized a net loss of $1.4 million, or $(0.01) per share, in the quarter ended December 31, 2006, compared with a net loss of $4.9 million, or $(0.03) per share, in the quarter ended December 31, 2005. Using a non-GAAP measure, Nuance reported non-GAAP net income of $24.0 million, or $0.13 per diluted share, for the period ending December 31, 2006, compared to non-GAAP net income of $11.4 million, or $0.07 per diluted share, in the quarter ended December 31, 2005.
The non-GAAP revenue amount includes revenue lost to purchase accounting in conjunction with the Company’s acquisition of Dictaphone Corporation. The non-GAAP net income amount excludes 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. See “GAAP to non-GAAP Reconciliation” below for further information on the Company’s non-GAAP measures.
“Nuance delivered a solid start to the new year, producing robust revenue growth and strong performance across all major product areas and geographies,” said Paul Ricci, chairman and CEO of Nuance. “In particular, demand for our speech solutions remained exceptionally strong among enterprises, device manufacturers and consumers as our speech solutions become a more effective way for people to interact with increasingly powerful information systems and consumer devices. The momentum we see across our business gives Nuance even greater confidence in capitalizing on our opportunities and accelerating growth for the Company.”
Consistent with the Company’s strategy and recent trends, highlights from the quarter include:
- Enterprise Speech – The Company’s enterprise speech revenues were up sequentially and year-over-year. Strong licenses and services revenue worldwide, across a number of industries, resulted in record revenues for the quarter. Significant agreements in the quarter for both new customers and expanded deployments including ABN Amro, Bank of America, Comcast, Orange, Time Warner Cable, United Health and XM Radio.
- Healthcare Dictation and Transcription – Dictaphone healthcare revenues in the quarter remained strong as the Company increased awareness and demand within new and existing customers. In particular, accelerating growth in the Company’s iChart® ASP operations and significant deployments or agreements with Agfa, Aurora Milwaukee, Baylor Health, GE Medical and IDEXX contributed to the quarter’s achievement.
- Embedded Speech – Nuance embedded speech revenues were at near record levels for the quarter. Performance owed to accelerated royalties and strategic additional design wins from manufacturers including Denso, Garmin, Hyundai, Samsung, Toyota and Xanavi.
- Mobile Search and Communications – Nuance’s mobile search and communications revenues were ahead of expectations as the business gained significant momentum through high-profile events including the launch of AT&T’s free directory assistance service, broad visibility for the Amazing Race at Conversations 2006 and the acquisition of MobileVoiceControl.
- Desktop Dictation – Nuance® Dragon® dictation products continued to perform well as the Company expanded the launch of Dragon® NaturallySpeaking® version 9. Revenues increased significantly year-over-year as worldwide revenues for desktop dictation were the second highest in the history of the Company.
- PDF and Document Solutions – Nuance experienced a strong quarter for its PDF solutions, up more than 70 percent from a year ago.
- Operational Achievement – Nuance maintained its focus on business operations through its disciplined acquisition integration, cost synergies and expense controls. Gross margins were above expectations, while operating expenses were at target in the quarter. In addition, cash flows from operations were approximately $26 million, compared with $27 million in fourth fiscal quarter of 2006 and use of $4.3 million in the first fiscal quarter of 2006. Nuance ended the quarter with a cash balance of approximately $130 million.
About Nuance Communications, Inc.
Nuance Communications, Inc. (Nasdaq: NUAN) is a leading provider of speech and imaging 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 information and how they create, share and use documents. Every day, millions of users and thousands of businesses experience Nuance’s proven applications. For more information, please visit
www.nuance.com.
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Trademark reference: Nuance, the Nuance logo, Dictaphone, Dragon, iChart, NaturallySpeaking, and OmniPage are 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.
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