Cerence Q1 Earnings and Revenue Top Estimates; Lowers Guidance

Cerence (CRNC) delivered better-than-expected Fiscal Q1 2022 results characterized by the second-largest bookings quarter in its history. Revenue and earnings topped consensus estimates, but the company lowered its full-year guidance. CRNC shares fell 31.41% to close at $43.61 on February 7.  

Cerence develops automotive cognitive assistance solutions to enhance interactions between automobiles and drivers. It also deals in software licenses and cloud-connected services.

Cerence Earnings

Revenue in the quarter landed at $94.4 million, better than the $93.6 million delivered the same quarter last year and higher than the consensus estimate of $94.38 million. Diluted earnings per share in the quarter came in at $0.59, better than analyst estimates of $0.51 and higher than the $0.57 delivered the same quarter last year.

For the fiscal quarter ending March 31, 2022, Cerence is projecting revenue in the range of $82 million to $86 million. Adjusted EBITDA is expected to range between $22 million and $26 million. Full-year revenue is expected at between $365 million and $385 million, a 9% decrease at the midpoint compared to previous guidance. Adjusted EBITDA is expected to range from $119 million to $139 million.

Stock Rating

Last month RBC Capital analyst Joseph Spak downgraded Cerence stock to a Hold from a Buy and cut the price target to $77 from $95, implying 76.57% upside potential to current levels.

Consensus among analysts is a Strong Buy based on 8 Buys and 1 Hold. The average Cerence price target of $110.33 implies 152.99% upside potential to current levels.

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