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Nuance provides light FQ4 guidance, shares now -6.1% AH

  • In prepared remarks, Nuance (NUAN) guides for FQ4 revenue of $470M-$500M and EPS of $0.24-$0.32, below a consensus of $519.8M and $0.38.
  • The company blames its shift to recurring/subscription-based revenue streams, which leads to lower up-front sales. Mobile/consumer is singled out as an area where the shift "has the effect of elongating revenue."
  • FQ3 healthcare sales +2% Y/Y (boosted by acquisitions), even with FQ2; division made up 55% of segment profit. Mobile/consumer sales slumped: revenue -19% vs. -2%. Enterprise improved: revenue +7% vs. -20% in FQ2. Imaging -4% vs. -10%.
  • Healthcare transcription sales still weak, Clintegrity and Dragon Medical stronger. 1.8B cloud mobile/consumer transactions in FQ3, +80% Y/Y. Enterprise lifted by demand for Nina voice assistant apps.
  • Deferred revenue balance (stems from subscriptions/recurring revenue) was $396.5M, +2% Q/Q and +32% Y/Y. Operating cash flow was $85.5M vs. $141.5M a year ago.
  • $115M spent on buybacks.
  • FQ3 results, PR
Comments (4)
  • dook
    , contributor
    Comments (42) | Send Message
     
    Reaction to NUAN earnings, which exceeded analyst estimates, is typical of this market. The long term potential of the company is ignored, while the short term results determine the stock price. If a stock market was ever paranoid, this one is IT.
    6 Aug 2013, 05:03 PM Reply Like
  • dgulick
    , contributor
    Comments (1352) | Send Message
     
    We are in the very early stages of the paradigm shift to communicating with our machines using speech. Nuance is positioning itself to capture this market and its lucrative future revenue stream that will result from this inevitable transition. However, to accomplish this, they are doing so largely through strategic acquisitions that are hurting near term profitability. Yes the market is missing this one, but that is not a bad thing, good opportunity to acquire your position.

     

    I'm content to sit on this one, it will take a bit of time for their genius to be realized (i.e., seen in their quarterly), but when you add all these pieces together (growing revenue from healthcare segment with aging boomers, voice biometrics will also be a huge growth potential in a world where everyone has 100 usernames/passwords, aka Nina, Tweddle acquisition adding to their auto presence (saw Hyundai, Subaru and Toyota listed as new business), and of course as SIRI adds capability, etc, etc.

     

    Also, they are motivated to downplay this quarter until they have finished their $500M of share buybacks.
    6 Aug 2013, 06:53 PM Reply Like
  • MustangMajor
    , contributor
    Comments (97) | Send Message
     
    I was disappointed at the market reaction, so I checked the
    AH situation and found it had dropped $1.33 from the close
    to $18. That was $10 lower than my average, so I tripled
    my holdings and am now at a more comfortable $21. Some
    good will come of this analysis failure after all. According
    to data from shortsqueeze.com, NUAN has a float of 246,750,000
    and is 20.69% owned by insiders and 77.10% owned by IH.
    The NASDAQ gives the IH figure even higher 395 for 90%.
    That means only 2.21%, or 5,453,175 shares are available.
    Todays volume was 5,538,994 plus 685,444 AH, or 6,224,438.
    I think this will bounce back to $20 pretty quickly.
    6 Aug 2013, 09:14 PM Reply Like
  • jameskm03
    , contributor
    Comments (99) | Send Message
     
    Bottom line is speaking is more "natural" than typing especially when we are talking about touch keyboard inputs. If they can get this technology to the point of being foolproof the the sky is the limit. The dirty little secret is they aren't that far away now.

     

    I think another hidden catalyst is the Xbox One coming out this holiday season with voice technology taken from the Kinect and pushing it to a whole new level. I'm fairly certain that NUAN technology isn't in this piece of MSFT hardware but the exposure and the possibilities it will open to people about what is possible is very real. Why do we still have remote controls anymore anyway? Why shouldn't I be able to walk in the house and say "TV ON... ESPN" or "TV ON... Channel 13" and it just does it? The Xbox One will show us how freaking convenient this really will be. I am personally excited about buying one just so I can do that same scenario with Netflix, "Xbox On... Netflix... Breaking Bad" as an example.

     

    The market is a forward looking instrument and for some reason it seems to totally miss the potential on this one. I'm sorry forget 3D printing I want a part of the voice revolution. I am putting a buy today to add to my position on this one.
    7 Aug 2013, 09:34 AM Reply Like
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