Cerence Stock Earnings Reports

Cerence reported a strong Q2 2025: revenue of $78.0M (above guidance), adjusted EBITDA of $29.5M, gross margin of 77%, and $13.1M of free cash flow — the fourth consecutive quarter of positive FCF. The company raised full-year profitability and cash flow expectations while reiterating FY revenue guidance of $236M–$247M. Management highlighted product and go-to-market progress: market launch and early customer deals for Cerence XUI (hybrid agentic AI), demonstrated multimodal edge capabilities (with NVIDIA and MediaTek), and new non-automotive initiatives (VoiceTopping with Code Factory). Key commercial wins and programs entered production this quarter, including Mercedes‑Benz MBUX (4th gen), Kawasaki 2‑wheeler, and GenAI rollouts with Hyundai, Kia, and PSA. Operational improvements from last year’s restructuring drove a 32% decline in non‑GAAP operating expenses and contributed to margin expansion. PPU (price-per-unit) trended up (TTM $4.87 vs $4.51 prior year) driven by higher connected-vehicle attachment (29% vs 26% a year ago). Cerence flagged limited tariff impact so far but noted early customer pricing pressure and timeline shifts; the tariff situation remains fluid. Financial position: $122.8M cash & marketable securities; management plans to use cash to repay $60.1M of convertible notes due in June and expects to maintain >$70M cash afterward. Backlog remains ~ $960M (5‑year). Risks include macro/auto production volatility and ongoing IP litigation (cases vs Samsung; new action vs Microsoft/Nuance). Management expects Q3 revenue of $52M–$56M, adjusted EBITDA $1M–$4M, and FY adjusted EBITDA and free cash flow now expected to be $28M–$34M and $25M–$35M, respectively.