EX-99 3 exhi99-1.htm Q104 PRESS RELEASE

Exhibit 99.1

For More Information:

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

NUANCE REPORTS FIRST QUARTER 2004 RESULTS

First Quarter Revenue Grows 10% Year Over Year

MENLO PARK, Calif., April 19, 2004 — Nuance (NASDAQ: NUAN) today announced results for its first quarter ended March 31, 2004. Total revenue for the quarter was $12.7 million, up 10% from $11.6 million in the same period of the previous fiscal year.

Software license revenue for the first quarter was $5.5 million, down 9% from $6.1 million in the same period last year. Service revenue for the first quarter was $3.6 million, up 27% from $2.8 million in the same period last year. Maintenance revenue for the first quarter was $3.6 million, up 36% from $2.7 million in the same quarter last year.

Net loss for the quarter was $2.6 million, or $0.07 net loss per share. This compares to a net loss of $4.3 million, or $0.13 net loss per share, in the same period last year.

As of March 31, 2004, the Company had $105.9 million in cash, cash equivalents and investments.

“Total revenue for the first quarter improved year over year. The market continues to see growing demand for voice automation solutions in large call centers,” said Chuck Berger, president and CEO of Nuance. “At the same time, we have continued to face long decision cycles and a challenging IT procurement environment, making it difficult to predict when large prospects will close and generate revenue.”

“We remain committed to investing in R&D and delivering the industry’s best voice automation products and services. This quarter, we released three significant products, extending our leadership position in the industry. These products were designed to strengthen the value proposition for voice for customers in a range of industries and vertical markets,” continued Berger.

Nuance Enhances Product Line

In the quarter, Nuance responded to the market demand for standards-based voice automation solutions that are faster and easier to deploy and generate a rapid return on investment. As part of its efforts, the Company released a range of new products, including new versions of its speech recognition and authentication engines and an updated version of the Nuance Voice Platform™.

The newest version of the Company’s speech recognition software, Nuance 8.5, includes dramatic increases in out-of-the-box accuracy, unique analysis and tuning tools, and improved support for Voice over Internet Protocol (VoIP) and wireless calling environments. With Nuance 8.5, error rates out-of-the-box have been reduced by up to 50% for North American English systems as compared to Nuance 8.0, which can result in up to 50% fewer calls going to agents. Companies will be able to lower customer service costs, realize a greater return on investment, increase customer satisfaction, as well as significantly reduce deployment time. The combination of new features and tools in Nuance 8.5 will make it easier for channel partners around the world, such as Aculab, Aspect Communications, Edify, Intervoice, NMS Communications, SoundBite, Sun Microsystems, Inc., Syntellect, Telelogue and Utopy, to deploy voice automation solutions.

Nuance Verifier™ 3.5, the latest version of Nuance’s field proven voice authentication software, includes new capabilities that boost its performance across a range of communications environments, including wireless, hands-free and landline phones. Customers and channel partners using and deploying Nuance Verifier technology today include AIM Investments, Barclaycard, Bell Canada, Centurion, Datria, DST Systems, Edify, Envox, Gold Systems, Intervoice, Syntellect, Vocent and WorkForce Technologies.

With the release of Nuance Voice Platform 3.0, Nuance can now enable customers and partners to reduce up-front capital investment, cut development and ongoing maintenance costs, simplify system integration and accelerate the time-to-market for voice applications of all types. It features the Nuance Application Environment, a new application design and deployment environment, that can be used by either Web programmers or individuals generally familiar with IVR development environments to simplify voice solution development. Nuance is the only speech vendor to bring its vast expertise to market in an application development environment and platform. Additionally, Nuance Voice Platform 3.0 is integrated with Nuance’s latest speech engines, and includes broadened support for a range of standards and operating systems. Nuance Voice Platform 3.0 supports a range of packaged applications available through Nuance and Nuance’s application partner community.

Industry Recognition

Zelos Group, a leading research and advisory firm, noted Nuance’s leadership position in the market. The Zelos Group report, “Service Providers’ Speech Enabled Services: Multiple Applications Gain Momentum,” examined the entire wireless and wireline market and determined that Nuance was the speech software leader in the global telecommunications market, owning 46 percent of the deployments across a range of application segments, including voice activated dialing, messaging, directory assistance, customer care and voice information portals. Nuance’s roster of telecommunications customers includes leaders such as AT&T Wireless, Bell Canada, Cingular, Japan Telecom, KT Freetel, Qwest Wireless, Sprint, Telia Mobile, T-Mobile and Verizon. In all, Nuance has worked with more than 100 of the world’s top telecommunications carriers to fuel voice-enabled service offerings that drive revenue, enhance operational efficiencies and elevate customer service levels.

Also in the quarter, Technology Marketing Corporation’s (TMC®) Communications Solutions® Magazine named Nuance Vocalizer a 2003 “Product of the Year.” Communications Solutions® is the premier Web publication and newsletter in the communications industry. Designed to improve caller satisfaction, while reducing application development time and costs, Nuance Vocalizer text-to-speech (TTS) software converts text in a database – such as names and addresses in a directory assistance application – into spoken words, allowing companies to automate the delivery of dynamic information over the phone.

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 closing of several significant transactions and to the business and customer benefits attainable by using Nuance’s speech products. There is no assurance that the results contemplated 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 customer adoption, deployment and development ease and speed, performance levels, cost savings, automation rates 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-K. Nuance does not undertake to update any oral or written forward-looking statements that may be made by or on behalf of Nuance.

Nuance is a registered trademark 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 March 31,
        2004
    2003
 
Revenue:    
     License     $ 5,503   $ 6,078  
     Service       3,562     2,811    
     Maintenance    3,637
   2,674
 
          Total revenue    12,702    11,563  
Cost of revenue:  
     License    88    96  
     Service    2,653    2,444  
     Maintenance    724
   646
 
          Total cost of revenue    3,465
   3,186
 
Gross profit    9,237    8,377  
Operating expenses:  
     Sales and marketing    6,274    7,062  
     Research and development    4,246    3,855  
     General and administrative    1,696    3,134  
     Non-cash compensation expense     --     74  
     Restructuring credits      (41
)   (943
)
          Total operating expenses    12,175
   13,182
 
Loss from operations    (2,938 )  (4,805 )
     Interest and other income, net    234
   466
 
 Loss before income taxes    (2,704 )  (4,339 )
     Benefit from income taxes     (97
)   (64
)
Net loss   $ (2,607
) $ (4,275
)
Basic and diluted net loss per share   $ (0.07
) $ (0.13
)
Shares used to compute basic and diluted net loss per share    35,067
   34,169
 
Reconicliation of net loss in acordance with generally  
accepted accounting principles to pro forma net loss:  
Net loss   $ (2,607 ) $ (4,275 )
Non-cash compensation expense       --     74  
Restructure credits       (41
)   (943
)
Pro forma net loss   $ (2,648
) $ (5,144
)
Pro forma basic and diluted net loss per share   $ (0.08
) $ (0.15
)
   
Shares used in computing pro forma basic and diluted net loss per share    35,067
   34,169
 





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

March 31,
2004

December 31,
2003

ASSETS          
   Current assets:          
          Cash and cash equivalents  $  46,425   $  40,206  
          Short-term investments  59,490   66,599  
          Accounts receivable, net  10,016   13,934  
          Prepaid expenses and other current assets   4,963
  4,246
 
                     Total current assets  120,894   124,985  
   Property and equipment, net  4,186   3,937  
   Intangible assets, net  889   993  
   Restricted cash  11,136   11,113  
   Other assets  466
  469
 
                     Total assets  $137,571
  $141,497
 
LIABILITIES AND STOCKHOLDERS' EQUITY  
   Current liabilities: 
           Accounts payable  $    1,096   $    1,086  
           Accrued vacation  1,744   1,513  
           Accrued liabilities  5,643   5,407  
           Current portion of deferred revenue  8,096   7,731  
           Current portion of restructuring accrual   9,363   9,554  
           Current portion of capital lease  --
  33
 
                     Total current liabilities   25,942   25,324  
   Long-term deferred revenue  537   699  
   Long-term restructuring accrual  40,727   42,891  
   Other long-term liabilities  24
  22
 
                     Total liabilities   67,230   68,936  
   Stockholders'equity  70,341
  72,561
 
                    Total liabilities and stockholders' equity  $    137,571
  $    141,497
 
-