EX-99 2 exhibit99-1.htm Q204 PRESS RELEASE

Exhibit 99.1

 

Media Contacts:  
Karen Blasing, 650-847-0000 (investors) Matt Keowen, 650-847-0000 (Press)
kblasing@nuance.com mkeowen@nuance.com

NUANCE REPORTS SECOND QUARTER 2004 RESULTS

Total Revenue Grows 11% Year Over Year;

MENLO PARK, Calif. — (BUSINESS WIRE)—July 26, 2004 — Nuance (Nasdaq:NUAN) today announced results for its second quarter ended June 30, 2004. Total revenue for the quarter was $14.4 million, up 11% from $12.9 million in the same period of the previous fiscal year, and up 13% over the $12.7 million reported in the first quarter of 2004.

Software license revenue for the second quarter was $7.2 million, up 16% from $6.2 million in the same period last year, and up 31% from the $5.5 million in first quarter 2004. Service revenue for the second quarter was $3.4 million, down approximately 5% from $3.6 million in the same period last year, and down 5% from the $3.6 million in the first quarter of 2004. Maintenance revenue for the second quarter was $3.8 million, up 22 % from $3.1 million in the same quarter last year, and up 5% from the $3.6 million in the first quarter of 2004.

Net loss for the second quarter was $1.6 million, or $0.05 net loss per share. This compares to a net loss of $2.7 million, or $0.08 net loss per share, in the same period last year. Net loss for the first quarter of 2004 was $2.6 million, or $0.07 net loss per share.

As of June 30, 2004, the Company had $101.4 million in unrestricted cash, cash equivalents and investments.

“We continue to grow revenues and deliver ground breaking products to our customers and partners,” said Chuck Berger, president and CEO of Nuance. “At the same time we are focused on improving our execution, managing costs and strengthening our management team. We are particularly excited about the addition of Glenn Cross as the head of worldwide sales and professional services, announced shortly after the end of the second quarter. His experience and leadership will bring significant value to our sales and service teams.”

Expanded Product Line

In the second quarter, Nuance launched two new offerings, including Nuance Caller Authentication™ and the Nuance Flexible Application Suites™.

Introduced in April, Nuance Caller Authentication addresses the need to accurately identify callers before giving them access to data and transactions. Nuance combined the capabilities of Nuance Verifier™ with our extensive experience in speech application development to deliver an application that is easy to deploy, yet highly accurate. When combined with Nuance Call Steering™, customers can generate substantial savings and improvements in the customer experience by fully automating the first point of contact with a customer, verifying their identity and routing them to a live agent or an automated application that is appropriate for their needs. In addition, Nuance Verifier recently won an independent comparison of voice authentication software by a substantial margin, demonstrating Nuance’s leadership in this space.

Nuance Flexible Application Suites were announced in May in response to customers’ and partners’ needs to reduce the time and lower the cost of deploying speech applications. Nuance has leveraged the experience gained from more than 1000 customer engagements to deliver industry-specific, packaged application suites across a number of industries, including telecommunications, retail banking, credit card, insurance, healthcare and utilities. The application suites include a robust application design and development environment that enables customers and partners to easily and quickly configure and maintain the applications themselves. With these suites, customers will benefit from a lower total cost of ownership and significantly shorter deployment times. As a result of our market share leadership and experience, Nuance is uniquely positioned to deliver such a wide range of application suites.

Customer Wins

Nuance announced a number of key wins, worked with a range of new companies on their initial speech implements, and expanded relationships with existing customers during the second quarter. These included AUSTAR, Blue Cross and Blue Shield of Florida, Federated Department Stores, Premera Blue Cross, Vodafone Spain, TELUS Communications and others.

Contracts with these companies were won directly by Nuance and through its partners, including Edify, Holly, Nortel Networks, VerifyMe, Viecore, WorkForce Technologies, and Ydilo, amongst others.

Industry Recognition and Events

During the second quarter, the Nuance Application Environment was named the Best Development Environment at the 2004 AVIOS-SpeechTEK conference and trade show. The Nuance Application Environment helps businesses simplify design and maintenance, provides design testing, generates VoiceXML code, streamlines deployment through a Connection Wizard, and enables unified management and reporting.

Additionally, Nuance completed its seventh annual V-World Conference in Orlando, Florida. This three-day event brought together hundreds of individuals from companies that are deploying and/or reselling voice automation systems. Sponsoring partners included Aculab, Apptera, BeVocal, Brooktrout Technology, Cisco, Edify, Empirix, HTI Voice Solutions, Intel, Intervoice, Lucent Technologies, NMS Communications, Nortel Networks, Sun Microsystems, Syntellect, TekVision Communications and Versay Solutions. Keynoters included executives from AAA Minnesota/Iowa, Armstrong World Industries, Citigroup UK, Suncorp-Metway, TELUS, T-Mobile, United Utilities and Vodafone Spain. The conference enabled Nuance to showcase how its customers and partners are putting voice automation to work, boosting customer service, reducing costs and generating revenue.

About Nuance

In markets around the world, leading enterprises and telecommunications carriers — including Avon, British Airways, Expedia, Nomura Securities, OnStar, Sprint PCS, United Parcel Service, Vodafone and Wells Fargo — have worked with Nuance to ensure the best possible results from their investment in voice. Nuance is the global leader in voice automation, providing software and solutions to more than 1,000 companies worldwide. 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 risk that one or more of our products will not achieve or produce anticipated or projected design, development and deployment ease and speed, performance attributes and levels, cost savings, customer satisfaction, revenue increases and/or 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 Verifier, Nuance Voice Platform, Nuance Call Steering, Nuance Flexible Application Suites, Nuance Application Environment and Nuance Caller Authentication 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
Six Months Ended
      June 30, June 30,
        2004
    2003
    2004
    2003
 
Revenue:    
     License     $ 7,169   $ 6,236   $ 12,672   $ 12,314  
     Service       3,412     3,626     6,974     6,437  
     Maintenance    3,812
   3,062
   7,449
   5,736
 
          Total revenue    14,393    12,924    27,095    24,487  
Cost of revenue:  
     License    140    84    228    180  
     Service    2,374    2,521    5,027    4,965  
     Maintenance    718
   634
   1,442
   1,280
 
          Total cost of revenue    3,232
   3,239
   6,697
   6,425
 
Gross profit    11,161    9,685    20,398    18,062  
Operating expenses:  
     Sales and marketing    7,516    7,291    13,790    14,353  
     Research and development    3,740    3,972    7,913    7,827  
     General and administrative    1,827    3,005    3,523    6,139  
     Non-cash compensation (credit) expense    --    (88 )  73    (14 )
     Restructuring credit    --    --    (41 )  (943 )
          Total operating expenses    13,083
   14,180
   25,258
   27,362
 
Loss from operations    (1,922 )  (4,495 )  (4,860 )  (9,300 )
     Interest and other income, net    306
   253
   540
   719
 
 Loss before income taxes    (1,616 )  (4,242 )  (4,320 )  (8,581 )
     Benefit from income taxes    (20
)  (1,575
)  (117
)  (1,639
)
Net loss   $(1,596
) $ (2,667
) $ (4,203
) $ (6,942
)
Basic and diluted net loss per share   $ (0.05
) $ (0.08
) $ (0.12
) $ (0.20
)
Shares used to compute basic and diluted net loss per share    35,386
   34,375
   35,226
   34,272
 
Reconciliation of net loss in accordance with generally  
accepted accounting principles to pro forma net loss:  
   
Net loss   $ (1,596 ) $ (2,667 ) $ (4,203 ) $ (6,942 )
Non-cash compensation (credit) expense    --    (88 )  73    (14 )
Restructure credit    --
   --
   (41
)  (943
)
Pro forma net loss   $ (1,596
) $ (2,755
) $ (4,171
) $ (7,899
)
Pro forma basic and diluted net loss per share   $ (0.05
) $ (0.08
) $ (0.12
) $ (0.23
)
   
Shares used in computing pro forma basic and diluted net loss per share    35,386
   34,375
   35,226
   34,272
 





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

June 30,
2004

December 31,
2003

ASSETS          
   Current assets:          
          Cash and cash equivalents  $  56,730   $  40,206  
          Short-term investments  42,331   66,599  
          Accounts receivable, net  11,366   13,934  
          Prepaid expenses and other current assets   4,231
  4,246
 
                    Total current assets  114,658   124,985  
   Property and equipment, net  4,573   3,937  
   Intangible assets, net  786   993  
   Restricted cash  11,136   11,113  
   Long-term investments  2,294   --  
   Other assets  459
  469
 
                    Total assets  $133,906
  $141,497
 
LIABILITIES AND STOCKHOLDERS' EQUITY  
   Current liabilities: 
          Accounts payable  $    2,160   $    1,086  
          Accrued vacation  1,790   1,513  
          Accrued liabilities  5,732   5,407  
          Current portion of deferred revenue  6,754   7,731  
          Current portion of restructuring accrual  9,253   9,554  
          Current portion of capital lease  --
  33
 
                     Total current liabilities  25,689   25,324  
   Long-term deferred revenue  288   699  
   Long-term restructuring accrual  38,468   42,891  
   Other long-term liabilities  27
  22
 
                     Total liabilities   64,472   68,936  
   Stockholders'equity  69,434
  72,561
 
                    Total liabilities and stockholders' equity  $133,906
  $141,497
 
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