Cerence(CRNC)2021-11-22 21:03Financial Data and Key Metrics Changes - Revenue for Q4 2021 was 70 million higher than the midpoint of original guidance [23][25] - Non-GAAP gross margin was 78.1%, with non-GAAP operating margin at 37.2% and adjusted EBITDA margin at 39.6% [19][20] Business Line Data and Key Metrics Changes - Total license revenue increased by 11% year-over-year, with fixed license contract revenue up 53% due to larger deals [21][22] - Variable license revenue decreased by 13% due to the semiconductor shortage, while connected services revenue was flat but would have increased by 18% without a one-time adjustment [21][22] - Professional services revenue grew by 9% year-over-year, driven by an increase in customer projects [22][27] Market Data and Key Metrics Changes - The company shipped technology in over 50% of cars produced globally, with a 20% increase in cars equipped with connected services compared to a 9% total auto production growth [16][17] - The backlog reached a record of approximately 590 million for the year [8][27] Company Strategy and Development Direction - The company focuses on innovation, speed of execution, and cost management to maintain technology leadership [9] - New products introduced include Cerence Browse and Emergency Vehicle Detection, with expectations for significant revenue generation in adjacent markets like two-wheel vehicles and elevators [10][12] - The long-term vision is to become the central AI brain for vehicles, integrating voice and vision AI for enhanced driver safety and experience [18] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in maintaining guidance for fiscal 2024, citing strong bookings and new product contributions [35][36] - The semiconductor shortage continues to pose challenges, but the company expects auto production to recover gradually [33][34] - The company anticipates revenue growth in fiscal 2022 to be in the range of 3% to 10%, factoring in the impact of legacy revenue declines [29][30] Other Important Information - The company launched its inaugural ESG report, emphasizing its commitment to environmental, social, and governance principles [18] - The company has won several awards recognizing its leadership in conversational AI technology [11][12] Q&A Session Summary Question: Outlook for fiscal 2024 - Management reiterated confidence in the 1 billion in bookings, with ongoing efforts to expand into adjacent markets [39] Question: Revenue guidance for December quarter - Management explained that the revenue guide reflects a decrease due to the expected drop in fixed contract revenue, despite anticipated increases in variable licenses [44] Question: Connected services revenue decline - Management noted that the decline in connected services revenue was influenced by usage-based contracts and a one-time adjustment, but overall growth trends remain positive [55] Question: Competitive landscape and technology differentiation - Management acknowledged competition but emphasized the strength of their embedded AI technology and recent wins against competitors [56][57]