EX-99 2 prq404exhibit99-1.htm Q404 EARNING PRESS RELEASE

Exhibit 99.1

 

Investor Contact: Press Contact:
Karen Blasing Gwen Murphy
Nuance Nuance
(650) 847-0000 (650) 847-0000
kblasing@nuance.com gmurphy@nuance.com

NUANCE REPORTS FOURTH QUARTER AND FISCAL 2004 RESULTS
Demand for Market-Leading Products and Services Fuels Sequential Revenue Growth and Full Year Performance

MENLO PARK, Calif.—February 14, 2005 — Nuance (Nasdaq:NUAN) today announced results for the fourth quarter and fiscal year ended December 31, 2004. Total revenue for the quarter was $16.3 million, up 13% as compared to $14.5 million in the third quarter of 2004, and down 2.5% as compared to $16.7 million in the fourth quarter of 2003. Total revenue for 2004 was $57.9 million, up 5% from $55.0 million in 2003.

“Key customer wins and demand for our industry-leading products and professional services offerings drove our top-line revenue performance,” said Chuck Berger, president and CEO of Nuance. “We continue to focus on execution, on effectively managing our expense line, and on aggressively expanding our ability to sell and market advanced voice automation solutions.”

Net loss for the fourth quarter 2004 was $0.4 million, or $0.01 net loss per share, an improvement over the net loss of $21.6 million, or $0.61 net loss per share, in the third quarter of 2004. Net loss for the fourth quarter of 2003 was $0.2 million, or $0.01 net loss per share. Net loss for 2004 was $26.2 million, or $0.74 net loss per share, which compares to a net loss of $19.3 million, or $0.56 net loss per share, in 2003.

“Had it not been for Sarbanes-Oxley related expenses of $0.7 million, as well as other extraordinary expenses of approximately $0.7 million related to M&A and legal activities, we would have achieved profitability in the fourth quarter of 2004,” noted Berger.

The net losses in 2004 and 2003 included restructuring charges of $19.7 million and $9.4 million, respectively, primarily related to increasing the previously reported real estate restructuring accruals. Pro Forma net loss for the year, which excludes non-cash compensation expenses and restructuring charges, was $6.4 million, or $0.18 pro forma net loss per share. This compares to a pro forma net loss of $9.9 million, or a $0.29 pro forma net loss per share, in 2003.

Customer Wins

Leading North American, European, and Asia-Pacific companies, including telecommunications carriers, financial institutions, insurance carriers, government institutions, healthcare providers and others continue to turn to Nuance to improve their customers’ self-service experience and reduce costs.

During the fourth quarter, industry leaders, including American Century Investments, Bell Canada, China Telecom, Countrywide, US Cellular and Yell, expanded the capacity of their Nuance voice automation solutions or made their initial purchase of Nuance technology or services. Contracts with these companies and other Nuance customers were won directly by Nuance and with its resellers, including Avaya, Cisco Systems, Edify, Interactive Intelligence, Nortel and Syntellect.

Industry Recognition

Nuance products and solutions continue to win recognition from leading industry analysts and publications.

“In an industry where the performance of the technology directly impacts the quality of the customer experience, we are proud to see our products and services continue to be recognized as the best in class. In 2004, we were honored with more than a dozen such awards and accolades, underscoring Nuance’s unrivaled leadership in core technology, platforms, tools and applications,” said Berger.

During the quarter, the Nuance Voice Platform™, the industry’s first open, standards-based platform optimized for speech, was named a “Top Market Leader” by analyst firm Forrester Research. The Nuance Voice Platform received top honors because of the strength and scalability of the offering, Nuance’s strategy, proven track record and market presence, as well as the Company’s standards compliance and financial momentum.

As noted by Elizabeth Herrell, vice president of Forrester Research, in her December 2004 report, Evaluating Speech Self-Service Platforms, “Nuance’s experience in developing and deploying speech technology results in a robust platform that allows it to deliver advanced capabilities as soon as they become available, while maintaining high system performance…Nuance Voice Platform is a quality choice for companies demanding all-around excellence in speech platforms and applications.”

Recently, Technology Marketing Corporation’s Customer Inter@ction Solutions® Magazine named Nuance Call Steering™ a recipient of its 2005 Speech Technology Excellence Award. Selected for its ability to enhance the customer experience and improve an organization’s overall bottom line, Nuance Call Steering allows callers to speak naturally to an automated speech solution, quickly routing them to the correct destination after “listening” to their request.

Customer Inter@ction Solutions Magazine also named Nuance 8.5 a 2004 Product of the Year award winner. Nuance 8.5, the newest release of the market’s leading speech recognition software, has the industry’s highest recognition accuracy, creating a more satisfying customer experience with fewer errors and less need for re-prompting.

These awards are in addition to the numerous other awards won by Nuance throughout the year. During the year, Nuance was named the North American speech software market share leader by Gartner. Speech Technology Magazine recognized Nuance for offering the industry’s “Best Automated Speech Recognition Solution” and the “Best Verification Solution.” And TMC Labs named Nuance Caller Authentication a winner of the 2004 Innovation Award.

About Nuance

In an era where a focus on the customer is essential to business success, Nuance provides leading companies with voice-automation solutions that enable both an outstanding customer experience and corporate cost efficiency. Nuance is a leader in the voice automation market, providing software and solutions to more than 1,000 companies worldwide. Clients include Avon, British Airways, Nomura Securities, OnStar, Sprint PCS, United Parcel Service, Vodafone and Wells Fargo. Nuance (Nasdaq:NUAN) is headquartered in Menlo Park, Calif., and has offices around the world. For more information, visit www.nuance.com or call 1-888-NUANCE-8.

This press release contains forward-looking statements, including, for example, those relating to the business and customer benefits attainable by using Nuance’s speech products. There is no assurance that the results contemplated or implied by any forward-looking statements will be realized. The following factors, risks and uncertainties, among others, could cause actual results to differ materially from those contemplated by this press release’s forward-looking statements: the results announced in this press release are unaudited and may vary from the audited results included in our annual report subsequently filed with the Securities and Exchange Commission; the risk that one or more of our products will not achieve or produce anticipated or projected design, scalability, development and deployment ease and speed, accuracy and other performance attributes and levels, cost savings, customer experience and satisfaction, and other benefits in some or all circumstances; and other factors described in Nuance’s filings with the Securities and Exchange Commission, including in Nuance’s last-filed Form 10-Q. Nuance does not undertake to update any oral or written forward-looking statements that may be made by or on behalf of Nuance.

Nuance, Nuance Voice Platform and Nuance Call Steering are registered trademarks or trademarks of Nuance Communications, Inc. All other trademarks are property of their respective owners.


Nuance Communications, Inc.
Condensed Consolidated Statements of Operations
(In thousands, except per share amounts)
(Unaudited)

Three Months Ended
Years Ended
      December 31, December 31,
        2004
    2003
    2004
    2003
 
Revenue:    
     License     $ 7,407   $ 8,798   $ 26,409   $ 28,207  
     Service       4,554     4,184     15,806     14,266  
     Maintenance       4,352
    3,746
    15,662
    12,565
 
          Total revenue       16,313     16,728     57,877     55,038  
Cost of revenue:    
     License       79     88     396     370  
     Service       2,802     2,538     10,460     9,982  
     Maintenance       611
    639
    2,634
    2,548
 
          Total cost of revenue     3,492
    3,265
    13,490
    12,900
 
Gross profit       12,821     13,463     44,387     42,138  
Operating expenses:  
     Sales and marketing     6,967     7,243     26,727     28,179  
     Research and development     3,161     3,818     14,504     15,310  
     General and administrative     3,411     2,641     11,037     11,533  
     Non-cash compensation expense     --     9     73     28  
     Restructuring expense (credit)       (19 )   --     19,737     9,375  
          Total operating expenses     13,520
    13,711
    72,078
    64,425
 
Loss from operations       (699 )   (248 )   (27,691 )   (22,287 )
     Interest and other income, net     335
    136
    1,097
    1,180
 
 Loss before income taxes       (364 )   (112 )   (26,594 )   (21,107 )
     Expense (benefit) from income taxes     43
    75
    (415
)   (1,806
)
Net loss     $ (407
) $ (187
) $ (26,179
) $ (19,301
)
Basic and diluted net loss per share   $ (0.01
) $ (0.01
) $ (0.74
) $ (0.56
)
Shares used to compute basic and diluted net loss per share     36,039
    34,826
    35,515
    34,471
 
Reconciliation of net loss in accordance with generally  
accepted accounting principles to pro forma net loss:  
   
Net loss    $ (407 ) $ (187 ) $ (26,179 ) $ (19,301 )
Non-cash compensation expense     --     9     73     28  
Restructure expense (credit)     (19
)   --
    19,737
    9,375
 
Pro forma net loss     $ (426
) $ (178
) $ (6,369
) $ (9,898
)
Pro forma basic and diluted net loss per share   $ (0.01
) $ (0.01
) $ (0.18
) $ (0.29
)
     
Shares used in computing pro forma basic and diluted net loss per share     36,039
    34,826
    35,515
    34,471
 





Nuance Communications, Inc.
Condensed Consolidated Balance Sheets
(In Thousands)
(Unaudited)

December 31,
2004

December 31,
2003

ASSETS          
   Current assets:          
          Cash and cash equivalents  $  53,583   $  40,206  
          Short-term investments  37,493   66,599  
          Accounts receivable, net  13,953   13,934  
          Prepaid expenses and other current assets   3,839
  4,246
 
                     Total current assets  108,868   124,985  
   Property and equipment, net   4,059   3,937  
   Long-term note receivable   5,005   --  
   Intangible assets, net  580   993  
   Restricted cash  11,109   11,113  
   Other assets  636
  469
 
                     Total assets  $130,257
  $141,497
 
LIABILITIES AND STOCKHOLDERS' EQUITY  
   Current liabilities:  
          Accounts payable  $    1,328   $    1,086  
          Accrued vacation  1,495   1,513  
          Accrued liabilities  6,572   5,407  
          Current portion of deferred revenue  8,157   7,731  
          Current portion of restructuring accrual  10,203   9,554  
          Current portion of capital lease  --
  33
 
                     Total current liabilities   27,755   25,324  
   Long-term deferred revenue  544   699  
   Long-term restructuring accrual  52,705   42,891  
   Other long-term liabilities  37
  22
 
                     Total liabilities   81,041   68,936  
   Stockholders'equity  49,216
  72,561
 
                    Total liabilities and stockholders' equity  $130,257
  $141,497
 
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