Cerence (CRNC) AI Stock Analysis

• Market Cap: $464.82M
• Dividend Yield: N/A
• Average Volume (3M): 1.79M
• Price to Earnings (P/E): ―
• Beta (1Y): 2.20
• Revenue Growth: -31.20%
• EPS Growth: 95.56%
• Country: US
• Employees: 1,400
• Sector: Technology
• Sector Strength: 88
• Industry: Software - Application
• EPS (TTM): 0.12
• Shares Outstanding: 43,319,653
• 10 Day Avg. Volume: 1,024,870
• 30 Day Avg. Volume: 1,789,809
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): N/A
• P/FCF Ratio: N/A
• Enterprise Value/Market Cap: 1.25
• Enterprise Value/Revenue: 2.36
• Enterprise Value/Gross Profit: 3.33
• Enterprise Value/Ebitda: -566.53
• 1Y Price Target: $12.33
• Price Target Upside: 14.91% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 3

• Rating: 51 Neutral
• Price Target: $11.00 ▲(2.52% Upside)

Cerence's overall stock score is driven by a strong earnings call that highlighted revenue exceeding guidance and strategic advancements in AI. However, significant financial challenges, particularly in profitability and leverage, weigh heavily on the score. The technical analysis and valuation further reflect a cautious outlook, with negative momentum and unattractive valuation metrics.

Positive Factors

AI Innovation Progress

The advancement in AI technology, particularly in the xUI platform, strengthens Cerence's competitive edge in the automotive AI sector, potentially leading to increased adoption and long-term revenue growth.

Strong Free Cash Flow

Consistent positive free cash flow enhances Cerence's financial stability, providing the company with resources to invest in growth opportunities and manage debt effectively.

New and Expanded Customer Deals

Securing and expanding partnerships with major automakers like Volkswagen and JLR ensures a steady revenue stream and strengthens Cerence's market position in the automotive industry.

Negative Factors

Decline in Total License Revenue

A significant decline in license revenue may impact short-term financial performance, indicating challenges in transitioning to a new revenue model and potential pressure on cash flow.

High Leverage

High leverage indicates significant reliance on debt financing, which can limit financial flexibility and increase risk, especially in volatile market conditions.

Professional Services Revenue Decrease

A decrease in professional services revenue suggests challenges in maintaining custom work demand, potentially affecting overall revenue diversification and growth.

Cerence Business Overview & Revenue Model

Company Description

Cerence Inc. provides AI powered virtual assistants for the mobility/transportation market worldwide. The company offers edge software components; cloud-connected components and related toolkits and applications; and virtual assistant coexistence and professional services. It also provides conversational artificial intelligence-based solutions, including speech recognition, natural language understanding, speech signal enhancement, text-to-speech, and acoustic modeling technology. Cerence Inc. is headquartered in Burlington, Massachusetts.

How the Company Makes Money

Cerence generates revenue through a combination of licensing agreements, software sales, and recurring service contracts. Key revenue streams include the sale of its voice and AI solutions to automotive manufacturers, which integrate Cerence's technology into their vehicles. The company also earns income from ongoing support and maintenance services, as well as upgrades to its software products. Significant partnerships with major automakers and technology firms bolster Cerence's earnings, as these collaborations often result in long-term contracts and additional revenue opportunities through joint developments and integrations.

Cerence Financial Statement Overview

Summary

Cerence is facing financial challenges, with declining revenues and persistent net losses impacting its income statement. The balance sheet shows elevated leverage, which could become problematic if earnings do not recover. Cash flow has improved, suggesting some operational efficiencies, yet the company needs to address its profitability to ensure longer-term financial health.

Income Statement

Cerence has experienced a decline in revenue from $331.5M in 2024 to $254.3M in TTM 2025, indicating a negative revenue growth trend. The gross profit margin for TTM 2025 is 70.2%, showing strong product profitability. However, the net profit margin is significantly negative at -132.3%, highlighting substantial losses. The EBIT and EBITDA margins are also negative, reflecting operational challenges and high operational costs.

Balance Sheet

The debt-to-equity ratio is 1.85, indicating high leverage which could pose a risk if earnings do not improve. The return on equity (ROE) is negative, consistent with current losses. However, the equity ratio stands at 22.4%, suggesting a reasonable level of equity financing compared to total assets.

Cash Flow

Free cash flow has grown from $12M in 2024 to $37.3M in TTM 2025, indicating improvement in cash generation. The operating cash flow to net income ratio is positive, showing better cash conversion relative to net losses. However, the free cash flow to net income ratio is negative, reflecting ongoing profitability issues.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	245.95M	331.50M	294.48M	327.89M	387.18M	329.65M
Gross Profit	174.04M	244.27M	199.31M	230.72M	286.11M	221.79M
EBITDA	-1.02M	-561.43M	-5.58M	-160.42M	91.93M	29.74M
Net Income	-25.77M	-588.08M	-56.25M	-310.83M	45.89M	-20.63M
Balance Sheet
Total Assets	636.80M	702.36M	1.30B	1.32B	1.71B	1.69B
Cash, Cash Equivalents and Short-Term Investments	79.13M	126.99M	110.36M	115.16M	158.86M	147.73M
Total Debt	216.83M	295.24M	289.33M	286.82M	288.12M	296.64M
Total Liabilities	481.13M	561.26M	602.72M	605.54M	673.78M	729.69M
Stockholders Equity	155.67M	141.10M	694.88M	712.95M	1.03B	957.76M
Cash Flow
Free Cash Flow	41.74M	12.20M	2.37M	-19.58M	62.34M	25.78M
Operating Cash Flow	54.54M	17.20M	7.50M	-2.14M	74.39M	44.79M
Investing Cash Flow	-8.95M	4.38M	5.82M	-10.56M	-41.63M	-30.68M
Financing Cash Flow	-87.25M	225.00K	-5.33M	-19.61M	-41.51M	121.55M

Cerence Technical Analysis

• Technical Analysis Sentiment: Neutral
• Last Price: 10.73
• 50DMA: Negative
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For CRNC, the sentiment is Neutral. The current price of 10.73 is below the 20-day moving average (MA) of 11.60, below the 50-day MA of 11.25, and above the 200-day MA of 10.36, indicating a neutral trend. The MACD of -0.13 indicates Positive momentum. The RSI at 43.26 is Neutral, neither overbought nor oversold. The STOCH value of 10.66 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for CRNC.

Cerence Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
RDVT	―	$749.63M	89.07	9.45%	―	22.14%	-45.14%
MITK	―	$420.41M	27.95	6.94%	―	6.98%	―
Sector *	―	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%
DSP	―	$559.01M	264.29	5.20%	―	30.92%	―
APPS	―	$697.33M	―	-46.55%	―	-2.45%	82.00%
WEAV	―	$570.84M	―	-44.64%	―	17.34%	-8.35%
CRNC	―	$464.82M	―	-16.63%	―	-31.20%	95.56%

Cerence Corporate Events

Cerence Announces Restructuring Plan to Reduce Expenses

On September 2, 2025, Cerence Inc. announced a restructuring plan aimed at reducing operating expenses and positioning the company for future growth, with estimated cash restructuring charges between $7.2 and $7.9 million. Additionally, the company entered into a retention agreement with Nils Schanz, Executive Vice President, offering a retention bonus and equity awards contingent on his continued service and performance metrics over the next three years.

The most recent analyst rating on (CRNC) stock is a Hold with a $10.00 price target. To see the full list of analyst forecasts on Cerence stock, see the CRNC Stock Forecast page.

Cerence Inc. Earnings Call Highlights Strong Growth

Cerence Inc. Earnings Call Reflects Positive Sentiment Amidst Strong Financial Performance

Cerence Inc. Reports Strong Q3 2025 Financial Results

Cerence Inc., a leader in AI-powered automotive user experiences, reported its third-quarter fiscal 2025 results, showcasing a strong financial performance. The company, known for its conversational AI technology, continues to innovate in the automotive sector with its Cerence xUI platform.