Cerence Inc. (NASDAQ:CRNC) is one of the worst AI stocks to invest in according to Reddit. On February 5, TD Cowen lowered its price target for Cerence to $12 from $13 and kept a Hold rating. The firm characterized the recent financial results as noisy and noted that while there was a significant EBITDA beat in the FQ1 2026 and management confirmed the 2026 guidance, the figures imply an EBITDA shortfall for the remainder of the year compared to consensus estimates. A day before, Cerence announced that F ...

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Revenue Performance - Total revenue for the three months ended December 31, 2025, was $115.1 million, an increase of $64.2 million, or 126.1%, from $50.9 million in the same period of 2024[127]. - License revenue increased by 286.2% to $87.8 million, representing 76.3% of total revenue, primarily driven by an IP license agreement with Samsung, contributing $49.5 million of one-time revenue[136]. - Connected services revenue increased by 6.0% to $14.5 million, accounting for 12.6% of total revenue[136]. - Professional services revenue decreased by 11.6% to $12.8 million, representing 11.1% of total revenue[136]. - License revenue for Q4 2025 was $87.8 million, up 286.2% from $22.7 million in Q4 2024, primarily due to a $49.5 million one-time revenue from the Samsung IP license agreement[137]. - Connected services revenue increased by 6.0% to $14.5 million in Q4 2025 from $13.7 million in Q4 2024, but its percentage of total revenue decreased by 14.3 percentage points to 12.6%[138]. - Professional services revenue decreased by 11.6% to $12.8 million in Q4 2025 from $14.5 million in Q4 2024, with its share of total revenue dropping by 17.3 percentage points to 11.1%[139]. - Total gross profit rose by 200.4% to $99.4 million in Q4 2025, up from $33.1 million in Q4 2024, driven mainly by the Samsung patent license revenue[141]. - License gross profit increased by 312.7% to $86.4 million in Q4 2025 compared to $20.9 million in Q4 2024, primarily due to the Samsung patent license revenue[143]. - Connected services gross profit rose by 30.1% to $9.6 million in Q4 2025 from $7.4 million in Q4 2024, attributed to higher volumes and lower costs[145]. Operating Expenses and Margins - Operating margin improved by 58.7 percentage points to positive 25.5% from negative 33.3%[127]. - Research and development expenses increased to $24.7 million from $20.9 million, reflecting ongoing investment in technology[128]. - General and administrative expenses surged by 150.8% to $32.0 million in Q4 2025 from $12.8 million in Q4 2024, largely due to a $20.8 million increase in legal professional services related to the Samsung IP license agreement[150]. - R&D expenses increased by 18.4% to $24.7 million in Q4 2025 from $20.9 million in Q4 2024, representing 35.3% of total operating expenses, down from 41.7%[148]. Cash Flow and Financing - Cash provided by operating activities was $37.9 million, an increase of $28.6 million, or 309.5%, from $9.3 million[127]. - Net cash provided by operating activities was $37.9 million in Q4 2025, a 309.5% increase from $9.3 million in Q4 2024[184]. - Net cash used in financing activities was $27.7 million in Q4 2025, a slight increase of 2.1% from $27.1 million in Q4 2024[183]. - The company issued $190.0 million in 1.50% Convertible Senior Notes due 2028, with net proceeds of $193.2 million after transaction costs[165]. - During Q4 2025, the company repurchased $30.0 million of its 2028 Notes for $28.0 million in cash, resulting in a gain on extinguishment of debt of $1.1 million[168]. - Interest expense related to the Notes decreased to $1.7 million in Q4 2025 from $3.0 million in Q4 2024[177]. - Net cash used in investing activities for Q4 2025 was $1.8 million, a 335.7% decrease from $0.8 million provided in Q4 2024[185]. Taxation and Other Income - Provision for income taxes increased to $35.3 million in Q4 2025 from $5.7 million in Q4 2024, a change of 522.5%[159]. - Effective income tax rate rose to 117.4% in Q4 2025 compared to -30.5% in Q4 2024[159]. - Total other income (expense), net improved to $0.8 million in Q4 2025 from a $1.7 million expense in Q4 2024, driven by a gain on debt repurchase of the Notes[158]. Future Outlook and Risks - The company plans to streamline operations and focus on cost management due to challenges in the global automotive industry[135]. - The implementation of the 2025 Plan was substantially completed during the three months ended December 31, 2025, aimed at reducing operating expenses and enhancing profitability[135]. - Total material cash requirements for future periods amount to $205.6 million, with $5.9 million due in 2026[163]. - The company is exposed to market risks from changes in foreign currency exchange rates and interest rates, which could affect operating results[190]. - A 10% unfavorable exchange rate movement in foreign currency contracts would have resulted in unrealized losses of $1.0 million[194]. - Assuming a 1% increase in interest rates, interest income on highly liquid investments would increase by $0.3 million per annum[195]. - The aggregate notional amount of outstanding foreign currency forward contracts was $9.5 million at December 31, 2025[194]. - Fluctuations in deferred revenue are not a reliable indicator of future performance, and the company does not expect changes in deferred revenue to affect its obligations[184].

Cerence (CRNC) came out with quarterly earnings of $0.99 per share, beating the Zacks Consensus Estimate of a loss of $0.01 per share. This compares to a loss of $0.03 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of +10,000.00%. A quarter ago, it was expected that this automotive artificial intelligence developer would post a loss of $0.66 per share when it actually produced earnings of $0.06, delivering a surprise of +109.09% ...

Cerence (NasdaqGS:CRNC) Q1 2026 Earnings call February 04, 2026 04:30 PM ET Company ParticipantsAman Gupta - Executive Director of Private EquityBrian Krzanich - CEOKate Hickman - VP of Corporate Communications and Head of Investor RelationsTony Rodriquez - CFOConference Call ParticipantsItay Michaeli - Senior AnalystJeffrey Van Rhee - Senior Research AnalystOperatorGood day, and thank you for standing by. Welcome to the Cerence First Quarter 2026 earnings call. At this time, all participants are in listen- ...

Cerence (NasdaqGS:CRNC) Q1 2026 Earnings call February 04, 2026 04:30 PM ET Company ParticipantsAman Gupta - Executive Director of Private EquityBrian Krzanich - CEOKate Hickman - VP of Corporate Communications and Head of Investor RelationsTony Rodriquez - CFOConference Call ParticipantsItay Michaeli - Senior AnalystJeffrey Van Rhee - Senior Research AnalystOperatorGood day, and thank you for standing by. Welcome to the Cerence First Quarter 2026 earnings call. At this time, all participants are in listen- ...

Cerence (NasdaqGS:CRNC) Q1 2026 Earnings call February 04, 2026 04:30 PM ET Speaker4Good day, and thank you for standing by. Welcome to the Cerence First Quarter 2026 earnings call. At this time, all participants are in listen-only mode. After the speaker's presentation, we'll open up for questions. To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again ...

Press Release Cerence Delivers Strong Q1 FY26 Results, with Record- Setting Free Cash Flow, Adjusted EBITDA Above Guidance, and Accelerating Technology and Customer Momentum Headlines BURLINGTON, Mass., February 4, 2026 - Cerence Inc. (NASDAQ: CRNC) ("Cerence Al"), a global leader pioneering conversational Al-powered user experiences, today reported its first quarter fiscal year 2026 results for the quarter ended December 31, 2025. "We delivered a strong start to fiscal 2026, with solid revenue performance, ...

Cerence Q1 February 4, 2026 Brian Krzanich, Chief Executive Officer Tony Rodriquez, Chief Financial Officer Forward-Looking Statements Statements in this presentation as well as oral statements made by Cerence management from time to time, regarding: Cerence's future performance, results and financial condition; expected growth, profitability and cash flow; outlook and momentum; transformation plans and cost efficiency initiatives; strategy; opportunities; business, industry and market trends; plans and exp ...