EX-99.1 2 ex991pressreleasejune302021.htm EX-99.1 Document
Exhibit 99.1
2021 Third Quarter Results
Press release
August 6, 2021

Nuance Announces Third Quarter 2021 Results

BURLINGTON, Mass., August 6, 2021 - Nuance Communications, Inc. (NASDAQ: NUAN) today announced financial results for its third quarter ended June 30, 2021:

•GAAP revenue of $336.6 million and GAAP earnings per diluted share of $(0.09).
•Non-GAAP revenue of $336.6 million and non-GAAP earnings per diluted share of $0.16.

“We are pleased to report another quarter of execution on our key strategic objectives, leading to solid Q3 results on both our top-line and bottom-line," said Mark Benjamin, Chief Executive Officer at Nuance. "In Healthcare, our shift towards cloud-based offerings across our portfolio helped drive a healthy ARR performance. This performance led in part to our second consecutive quarter of 29% year-over-year growth in Dragon Medical and DAX Cloud revenue. In total, Healthcare revenue increased by 22% year-over-year due to cloud revenue strength. In Enterprise, our Digital Engagement and Security & Biometrics solutions saw continued adoption throughout the quarter, leading to a return to year-over-year growth in Q3. Overall, Enterprise revenue increased 5% year-over-year, driven by the adoption of these solutions. We are encouraged by the company's overall performance year-to-date, and feel we are set up for a strong end to fiscal year 2021."

On March 1, 2021, we completed the sale of our medical transcription and electronic healthcare record implementation businesses. Accordingly, for all periods presented, the businesses' results of operations have been included within discontinued operations in our condensed consolidated financial statements. All commentary is provided on a continuing operations basis. A reconciliation of continuing and discontinued operations to total operations is provided in the accompanying tables.

Q3 2021 Performance Summary
Q3 2021 results for continuing operations include:
•GAAP and Non-GAAP revenue of $336.6 million, compared to $298.6 million in the same period last year.
•GAAP operating income of $4.8 million, compared to $11.9 million in the same period last year.
•Non-GAAP operating income of $74.2 million, compared to $63.8 million in the same period last year.
•GAAP operating margin of 1.4%, compared to 4.0% in the same period last year.
•Non-GAAP operating margin of 22.0%, compared to 21.4% in the same period last year.
•GAAP net loss of $26.3 million, compared to a net income of $2.3 million in the same period last year.
•Non-GAAP net income of $50.4 million, compared to $40.5 million in the same period last year.
•GAAP EPS of $(0.09), compared to $0.01 in the same period last year.
•Non-GAAP EPS of $0.16, compared to $0.14 in the same period last year.
•Operating cash flows from continuing operations was $45.8 million, compared to $14.6 million in the same period last year.

Proposed Merger with Microsoft
On April 11, 2021, Nuance entered into an Agreement and Plan of Merger with Microsoft Corporation. Subject to the terms and conditions of the Merger Agreement, Microsoft, through a wholly-owned subsidiary, has agreed to acquire all of the outstanding shares of Nuance common stock for $56.00 per share in an all-cash transaction. As a result of the Merger, Nuance will cease to be a publicly traded company. The Merger is currently intended to close by December 31, 2021. Consummation of the Merger is subject to certain conditions, including the satisfaction of certain regulatory approvals and other customary closing conditions. For additional information related to the Merger
nuancelogohorzka23.jpg
© 2020 Nuance Communications, Inc. All rights reserved
Exhibit 99.1
2021 Third Quarter Results
Press release
August 6, 2021

Agreement, please refer to the definitive proxy statement previously filed with the SEC and other relevant materials in connection with the transaction that we will file with the SEC and which will contain important information about Nuance and the Merger.

Please refer to the “Discussion of Non-GAAP Financial Measures,” and “GAAP to Non-GAAP Reconciliations,” included elsewhere in this release, for more information regarding the Company’s use of non-GAAP financial measures.

Conference Call and Prepared Remarks
Given the pending transaction with Microsoft, Nuance will not be hosting a conference call, issuing Prepared Remarks, or providing financial guidance in conjunction with its third quarter 2021 earnings release.

About Nuance Communications, Inc.
Nuance Communications, Inc. (NASDAQ: NUAN) is a technology pioneer with market leadership in conversational AI and ambient intelligence. A full-service partner trusted by 77 percent of U.S. hospitals and 85 percent of the Fortune 100 across the globe, we create intuitive solutions that amplify people’s ability to help others.

Trademark reference: Nuance and the Nuance logo are registered trademarks or trademarks of Nuance Communications, Inc. or its affiliates in the United States and/or other countries. All other trademarks referenced herein are the property of their respective owners.


Safe Harbor and Forward-Looking Statements
Statements in this document regarding future performance and our management’s future expectations, beliefs, goals, plans or prospects constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Any statements that are not statements of historical fact (including
statements containing the words “believes,” “plans,” “anticipates,” “expects,” "intends" or “estimates” or similar expressions) should also be considered to be forward-looking statements. There are a number of important factors that could cause actual results or events to differ materially from those indicated by such forward- looking statements, including but not limited to: potential disruptions to our business caused by the proposed acquisition of us by Microsoft, our ability to complete the proposed acquisition of us by Microsoft in a timely manner or at all, the impact of the COVID-19 pandemic, the effects of competition, including pricing pressure, and changing business models in the markets and industries in which we operate; fluctuations in demand for our existing and future products; changes to economic, political, and regulatory conditions in the United States and internationally; our ability to attract and retain key personnel; our ability to control and successfully manage our expenses and cash position; cybersecurity and data privacy incidents or breaches, and related remediation and investigation; our ability to comply with applicable domestic and international laws and policies; fluctuating currency rates; possible quality issues in our products and technologies; our ability to realize anticipated synergies from acquired businesses, to cut stranded costs related to divested businesses, and to capture the expected value from strategic transactions; and the other factors described in our most recent Form 10-K, Form 10-Q and other filings with the Securities and Exchange Commission. We disclaim any obligation to update any forward-looking statements as a result of developments occurring after the date of this document.

Discussion of Non-GAAP Financial Measures
We believe that providing non-GAAP ("Generally Accepted Accounting Principles") information to investors, in addition to the GAAP presentation, allows investors to view the financial results in the way management views the operating results. We further believe that providing this information allows investors not only to better understand our financial performance, but also to evaluate the efficacy of the methodology and information used by management to evaluate and measure such performance. The non-GAAP information included in this press release should not be considered superior to, or a substitute for, financial statements prepared in accordance with GAAP.
nuancelogohorzka23.jpg
© 2021 Nuance Communications, Inc. All rights reserved
Exhibit 99.1
2021 Third Quarter Results
Press release
August 6, 2021


We utilize a number of different financial measures, both GAAP and non-GAAP, in analyzing and assessing the overall performance of the business, for making operating decisions and for forecasting and planning for future periods. Our annual financial plan is prepared both on a GAAP and non-GAAP basis, and the non-GAAP annual financial plan is approved by our board of directors. Continuous budgeting and forecasting for revenue and expenses are conducted on a consistent non-GAAP basis (in addition to GAAP) and actual results on a non-GAAP basis are assessed against the non-GAAP annual financial plan. The board of directors and management utilize these non-GAAP measures and results (in addition to the GAAP results) to determine our allocation of resources. In addition, and as a consequence of the importance of these measures in managing the business, we use non-GAAP measures and results in the evaluation process to establish management’s compensation. For example, our annual bonus program payments are based upon the achievement of consolidated non-GAAP revenue and consolidated non-GAAP earnings per share financial targets. We consider the use of non-GAAP revenue helpful in understanding the performance of our business, as it excludes the purchase accounting impact on acquired deferred revenue and other acquisition-related adjustments to revenue. We also consider the use of non-GAAP earnings per share helpful in assessing the organic performance of the continuing operations of our business. By organic performance we mean performance as if we had owned an acquired business in the same period a year ago. By constant currency organic performance, we mean performance excluding the effect of current foreign currency rate fluctuations. By continuing operations, we mean the ongoing results of the business excluding certain unplanned costs.

Consistent with this approach, we believe that disclosing non-GAAP financial measures to the readers of our financial statements provides such readers with useful supplemental data that, while not a substitute for GAAP financial statements, allows for greater transparency in the review of our financial and operational performance. In assessing the overall health of the business during the three months ended June 30, 2021 and 2020, our management has either included or excluded items in seven general categories, each of which is described below.

Acquisition-related revenue and cost of revenue.
We provide supplementary non-GAAP financial measures of revenue that include revenue that we would have recognized but for the purchase accounting treatment of acquisition transactions. Non-GAAP revenue also includes revenue that we would have recognized had we not acquired intellectual property and other assets from the same customer. Because GAAP accounting requires the elimination of this revenue, GAAP results alone do not fully capture all of our economic activities. These non-GAAP adjustments are intended to reflect the full amount of such revenue. We include non-GAAP revenue and cost of revenue to allow for more complete comparisons to the financial results of historical operations, forward-looking guidance and the financial results of peer companies. We believe these adjustments are useful to management and investors as a measure of the ongoing performance of the business because, although we cannot be certain that customers will renew their contracts, we have historically experienced high renewal rates on maintenance and support agreements and other customer contracts. Additionally, although acquisition-related revenue adjustments are non-recurring with respect to past acquisitions, we generally will incur these adjustments in connection with any future acquisitions.

Restructuring and other costs, net.
Restructuring and other charges, net include restructuring expenses as well as other charges that are unusual in nature, are the result of unplanned events, and arise outside the ordinary course of our business. Restructuring expenses consist of employee severance costs, charges for the closure of excess facilities and other contract termination costs. Other charges include gains or losses on the sale or disposition of certain non-strategic assets or product lines and expenses related to the acquisition of Nuance by Microsoft, offset by insurance recoveries.

Acquisition-related costs, net.
In recent years, we have completed a number of acquisitions, which result in operating expenses, that would not otherwise have been incurred. We provide supplementary non-GAAP financial measures, which exclude certain transition, integration and other acquisition-related expense items resulting from acquisitions, to allow more accurate
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© 2021 Nuance Communications, Inc. All rights reserved
Exhibit 99.1
2021 Third Quarter Results
Press release
August 6, 2021

comparisons of the financial results to historical operations, forward looking guidance and the financial results of less acquisitive peer companies. We consider these types of costs and adjustments, to a great extent, to be unpredictable and dependent on a significant number of factors that are outside of our control. Furthermore, we do not consider these acquisition-related costs and adjustments to be related to the organic continuing operations of the acquired businesses and are generally not relevant to assessing or estimating the long-term performance of the acquired assets. In addition, the size, complexity and/or volume of past acquisitions, which often drives the magnitude of acquisition related costs, may not be indicative of the size, complexity and/or volume of future acquisitions. By excluding acquisition-related costs and adjustments from our non-GAAP measures, management is better able to evaluate our ability to utilize our existing assets and estimate the long-term value that acquired assets will generate for us. We believe that providing a supplemental non-GAAP measure, which excludes these items allows management and investors to consider the ongoing operations of the business both with, and without, such expenses.

These acquisition-related costs fall into the following categories: (i) transition and integration costs; (ii) professional service fees and expenses; and (iii) acquisition-related adjustments. Although these expenses are not recurring with respect to past acquisitions, we generally will incur these expenses in connection with any future acquisitions. These categories are further discussed as follows:
(i)    Transition and integration costs. Transition and integration costs include retention payments, transitional employee costs, and earn-out payments treated as compensation expense, as well as the costs of integration-related activities, including services provided by third parties.
(ii)    Professional service fees and expenses. Professional service fees and expenses include financial advisory, legal, accounting and other outside services incurred in connection with acquisition activities, and disputes and regulatory matters related to acquired entities.
(iii)    Acquisition-related adjustments. Acquisition-related adjustments include adjustments to acquisition-related items that are required to be marked to fair value each reporting period, such as contingent consideration, and other items related to acquisitions for which the measurement period has ended, such as gains or losses on settlements of pre-acquisition contingencies.

Amortization of acquired intangible assets.
We exclude the amortization of acquired intangible assets from non-GAAP expense and income measures. These amounts are inconsistent in amount and frequency and are significantly impacted by the timing and size of acquisitions. Providing a supplemental measure which excludes these charges allows management and investors to evaluate results “as-if” the acquired intangible assets had been developed internally rather than acquired and, therefore, provides a supplemental measure of performance in which our acquired intellectual property is treated in a comparable manner to our internally developed intellectual property. Although we exclude amortization of acquired intangible assets from our non-GAAP expenses, we believe that it is important for investors to understand that such intangible assets contribute to revenue generation. Amortization of intangible assets that relate to past acquisitions will recur in future periods until such intangible assets have been fully amortized. Future acquisitions may result in the amortization of additional intangible assets.

Non-cash expenses.
We provide non-GAAP information relative to the following non-cash expenses: (i) stock-based compensation; and (ii) non-cash interest. These items are further discussed as follows:
(i)Stock-based compensation. Because of varying valuation methodologies, subjective assumptions and the variety of award types, we believe that excluding stock-based compensation allows for more accurate comparisons of operating results to peer companies, as well as to times in our history when stock-based compensation was more or less significant as a portion of overall compensation than in the current period. We evaluate performance both with and without these measures because compensation expense related to stock-based compensation is typically non-cash and the options and restricted
nuancelogohorzka23.jpg
© 2021 Nuance Communications, Inc. All rights reserved
Exhibit 99.1
2021 Third Quarter Results
Press release
August 6, 2021

awards granted are influenced by our stock price and other factors such as volatility that are beyond our control. The expense related to stock-based awards is generally not controllable in the short-term and can vary significantly based on the timing, size and nature of awards granted. As such, we do not include such charges in operating plans. Stock-based compensation will continue in future periods.
(ii)Non-cash interest. We exclude non-cash interest because we believe that excluding this expense provides senior management, as well as other users of the financial statements, with a valuable perspective on the cash-based performance and health of the business, including the current near-term projected liquidity. Non-cash interest expense will continue in future periods.

Other expenses.
We exclude certain other expenses that result from unplanned events outside the ordinary course of continuing operations, in order to measure operating performance and current and future liquidity both with and without these expenses. By providing this information, we believe management and the users of the financial statements are better able to understand the financial results of what we consider to be our organic, continuing operations. Included in these expenses are items such as restructuring charges, asset impairments and other charges (credits), net, and losses from the extinguishment and redemption of our convertible debt. Other items such as consulting and professional services fees related to assessing strategic alternatives and our transformation programs, and implementation of the new revenue recognition standard (ASC 606) are also excluded.

Non-GAAP Operating Income
Our non-GAAP operating income includes acquisition-related revenue adjustments but excludes non-GAAP expenses such as stock compensation, amortization of intangible assets, restructuring and other costs, net, acquisition-related costs, net, and certain other expenses that result from unplanned events outside the ordinary course of continuing operations.

Non-GAAP income tax provision.
Our non-GAAP income tax provision is determined based on our non-GAAP pre-tax income. The tax effect of each non-GAAP adjustment, if applicable, is computed based on the statutory tax rate of the jurisdiction to which the adjustment relates. Additionally, as our non-GAAP profitability is higher based on the non-GAAP adjustments, we adjust the GAAP tax provision to remove valuation allowances and related effects based on the higher level of reported non-GAAP profitability. We also exclude from our non-GAAP tax provision certain discrete tax items as they occur.

Contact Information
For Investors
Michael Maguire
Nuance Communications, Inc.
Tel: 781-565-4855
Email: michael.maguire@nuance.com

For Press
Nancy Scott
Nuance Communications, Inc.
Tel: 781-565-4130
Email: nancy.scott@nuance.com

Financial Tables Follow

nuancelogohorzka23.jpg
© 2021 Nuance Communications, Inc. All rights reserved
Exhibit 99.1
2021 Third Quarter Results
Press release
August 6, 2021

Nuance Communications, Inc.
Condensed Consolidated Statements of Operations
(in thousands, except per share amounts)
Unaudited
Three Months Ended June 30,Nine Months Ended June 30,
2021202020212020
Revenues:
Hosting and professional services$208,219 $185,555 $602,032 $541,623 
Product and licensing66,281 48,706 238,128 243,284 
Maintenance and support62,082 64,359 189,152 191,146 
Total revenues336,582 298,620 1,029,312 976,053 
Cost of revenues:
Hosting and professional services111,910 96,323 323,502 298,044 
Product and licensing4,994 10,269 27,869 53,302 
Maintenance and support7,766 7,330 22,525 23,213 
Amortization of intangible assets5,258 6,378 14,449 19,504 
Total cost of revenues129,928 120,300 388,345 394,063 
Gross profit206,654 178,320 640,967 581,990 
Operating expenses:
Research and development63,695 53,921 179,652 164,617 
Sales and marketing73,069 63,699 208,807 199,649 
General and administrative36,401 37,598 113,297 113,956 
Amortization of intangible assets10,713 8,554 31,998 26,273 
Acquisition-related costs, net699 758 2,693 3,656 
Restructuring and other charges, net17,247 1,871 28,292 14,730 
Total operating expenses201,824 166,401 564,739 522,881 
Income from operations4,830 11,919 76,228 59,109 
Other expenses, net(35,519)(22,438)(80,103)(79,912)
Loss before income taxes(30,689)(10,519)(3,875)(20,803)
(Benefit) provision for income taxes (4,422)(12,780)2,704 (40,205)
Net (loss) income from continuing operations(26,267)2,261 (6,579)19,402 
Net income (loss) from discontinued operations— 14,401 (8,427)25,939 
Net (loss) income$(26,267)$16,662 $(15,006)$45,341 
Net (loss) income per common share - basic:
Continuing operations$(0.09)$0.01 $(0.02)$0.07 
Discontinued operations— 0.05 (0.03)0.09 
Total net (loss) income per basic common share$(0.09)$0.06 $(0.05)$0.16 
Net (loss) income per common share - diluted:
Continuing operations$(0.09)$0.01 $(0.02)$0.07 
Discontinued operations— 0.05 (0.03)0.09 
Total net (loss) income per diluted common share$(0.09)$0.06 $(0.05)$0.16 
Weighted average common shares outstanding:
Basic294,388 281,281 287,826 282,674 
Diluted294,388 287,852 287,826 288,096 

nuancelogohorzka23.jpg
© 2021 Nuance Communications, Inc. All rights reserved
Exhibit 99.1
2021 Third Quarter Results
Press release
August 6, 2021

Nuance Communications, Inc.
Condensed Consolidated Balance Sheets
(in thousands)

June 30, 2021September 30, 2020
Unaudited
ASSETS
Current assets:
Cash and cash equivalents$235,757 $301,233 
Marketable securities65,157 71,114 
Accounts receivable, net171,008 175,583 
Prepaid expenses and other current assets211,402 152,563 
Current assets of discontinued operations— 35,492 
Total current assets683,324 735,985 
Land, building and equipment, net145,687 137,299 
Goodwill2,157,500 2,120,495 
Intangible assets, net141,396 167,270 
Right-of-use assets89,162 104,839 
Other assets250,458 248,414 
Long-term assets of discontinued operations— 79,030 
Total assets$3,467,527 $3,593,332 
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt$470,863 $432,209 
Contingent and deferred acquisition payments1,552 4,224 
Accounts payable85,765 71,833 
Accrued expenses and other current liabilities187,394 199,254 
Deferred revenue248,075 249,484 
Current liabilities of discontinued operations— 29,138 
Total current liabilities993,649 986,142 
Long-term debt494,665 1,104,464 
Deferred revenue, net of current portion105,534 98,696 
Deferred tax liability 7,885 70,116 
Operating lease liabilities89,936 103,996 
Other liabilities 80,903 64,597 
Long-term liabilities of discontinued operations— 21,388 
Total liabilities1,772,572 2,449,399 
Mezzanine Equity55,462 — 
Stockholders' equity1,639,493 1,143,933 
Total liabilities and stockholders' equity$3,467,527 $3,593,332 

nuancelogohorzka23.jpg
© 2021 Nuance Communications, Inc. All rights reserved
Exhibit 99.1
2021 Third Quarter Results
Press release
August 6, 2021

Nuance Communications, Inc.
Consolidated Statements of Cash Flows
(in thousands)
Unaudited
Three Months Ended June 30,Nine Months Ended June 30,
2021202020212020
Cash flows from operating activities:
Net (loss) income from continuing operations$(26,267)$2,261 $(6,579)$19,402 
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation8,929 7,223 24,538 22,352 
Amortization15,971 14,932 46,447 45,777 
Stock-based compensation34,654 32,487 104,436 95,023 
Non-cash interest expense8,688 11,951 33,487 37,269 
Deferred tax provision (benefit)(846)(17,383)(5,465)(58,284)
Loss on extinguishment of debt17,054 — 17,054 18,656 
Other1,731 1,503 5,503 3,853 
Changes in operating assets and liabilities, excluding effects of acquisitions:
Accounts receivable13,373 (4,004)4,289 15,656 
Prepaid expenses and other assets(15,221)(664)(28,087)3,213 
Accounts payable8,742 (8,509)15,808 (13,626)
Accrued expenses and other liabilities(15,901)(21,939)(17,020)(80,532)
Deferred revenue(5,120)(3,223)(6,091)21,415 
Net cash provided by operating activities - continuing operations45,787 14,635 188,320 130,174 
Net cash provided by operating activities - discontinued operations2,054 17,647 9,141 43,539 
Net cash provided by operating activities47,841 32,282 197,461 173,713 
Cash flows from investing activities:
Capital expenditures(12,087)(14,363)(44,806)(45,550)
Proceeds from disposition businesses, net of transaction fees— — 9,885 — 
Purchases of marketable securities and other investments(11,485)(9,096)(78,485)(157,976)
Proceeds from sales and maturities of marketable securities and other investments17,885 65,597 84,403 290,584 
Payments for business and asset acquisitions, net of cash acquired(250)— (45,425)— 
Other377 42 878 1,374 
Net cash (used in) provided by investing activities(5,560)42,180 (73,550)88,432 
Cash flows from financing activities:
Repurchase and redemption of debt(121,787)— (121,787)(513,642)
Net distribution from Cerence upon the spin-off— — — 139,090 
Payments for repurchase of common stock— — — (169,218)
Proceeds from issuance of common stock from employee stock plans— — 8,368 7,204 
Proceeds from the revolving credit facility— — — 230,000 
Repayment of the revolving credit facility— (230,000)— (230,000)
Payments for taxes related to net share settlement of equity awards(25,940)(3,480)(74,896)(39,968)
Other financing activities(2,388)(6)(4,623)(2,840)
Net cash used in financing activities(150,115)(233,486)(192,938)(579,374)
Effects of exchange rate changes on cash and cash equivalents740 1,672 3,551 (3,177)
Net decrease in cash and cash equivalents(107,094)(157,352)(65,476)(320,406)
Cash and cash equivalents at beginning of period342,851 397,907 301,233 560,961 
Cash and cash equivalents at end of period$235,757 $240,555 $235,757 $240,555 
nuancelogohorzka23.jpg
© 2021 Nuance Communications, Inc. All rights reserved
Exhibit 99.1
2021 Third Quarter Results
Press release
August 6, 2021

Nuance Communications, Inc.
Supplemental Financial Information
GAAP to Non-GAAP Reconciliations
(in thousands)
Unaudited
Three Months Ended June 30,Nine Months Ended June 30,
2021202020212020
GAAP revenues$336,582 $298,620 $1,029,312 $976,053 
Acquisition-related revenue adjustments: hosting and professional services— — — 301 
Non-GAAP revenues$336,582 $298,620 $1,029,312 $976,354 
GAAP cost of revenues$129,928 $120,300 $388,345 $394,063 
Cost of revenues from amortization of intangible assets(5,258)(6,378)(14,449)(19,504)
Cost of revenues adjustments: hosting and professional services (1)(6,327)(5,748)(19,732)(16,525)
Cost of revenues adjustments: product and licensing (1)(103)(124)(280)(382)
Cost of revenues adjustments: maintenance and support (1)(423)(360)(1,268)(1,200)
Cost of revenues adjustments: other— (2)— (2)
Non-GAAP cost of revenues$117,817 $107,688 $352,616 $356,450 
GAAP gross profit$206,654 $178,320 $640,967 $581,990 
Gross profit adjustments12,111 12,612 35,729 37,914 
Non-GAAP gross profit$218,765 $190,932 $676,696 $619,904 
GAAP income from operations$4,830 $11,919 $76,228 $59,109 
Gross profit adjustments12,111 12,612 35,729 37,914 
Research and development (1)9,230 8,530 26,402 25,274 
Sales and marketing (1)8,974 8,002 26,475 22,825 
General and administrative (1)9,597 9,723 30,279 28,817 
Acquisition-related costs, net699 758 2,693 3,656 
Amortization of intangible assets10,713 8,554 31,998 26,273 
Restructuring and other charges, net17,247 1,871 28,292 14,730 
Other753 1,866 2,457 648 
Non-GAAP income from operations$74,154 $63,835 $260,553 $219,246 
GAAP loss before income taxes$(30,689)$(10,519)$(3,875)$(20,803)
Gross profit adjustments12,111 12,612 35,729 37,914 
Research and development (1)9,230 8,530 26,402 25,274 
Sales and marketing (1)8,974 8,002 26,475 22,825 
General and administrative (1)9,597 9,723 30,279 28,817 
Acquisition-related costs, net699 758 2,693 3,656 
Amortization of intangible assets10,713 8,554 31,998 26,273 
Restructuring and other charges, net17,247 1,871 28,292 14,730 
Non-cash interest expense8,688 11,951 33,487 37,269 
Loss on extinguishment of debt17,054 — 17,054 18,656 
Other1,171 472 3,108 (1,237)
Non-GAAP income before income taxes$64,795 $51,954 $231,642 $193,374 

nuancelogohorzka23.jpg
© 2021 Nuance Communications, Inc. All rights reserved
Exhibit 99.1
2021 Third Quarter Results
Press release
August 6, 2021

Nuance Communications, Inc.
Supplemental Financial Information
GAAP to Non-GAAP Reconciliations, continued
(in thousands, except per share amounts)
Unaudited
Three Months Ended June 30,Nine Months Ended June 30,
2021202020212020
GAAP (benefit) provision for income taxes$(4,422)$(12,780)$2,704 $(40,205)
Income tax effect of non-GAAP adjustments19,310 6,726 49,194 39,403 
Removal of valuation allowance and other items(5,064)2,710 (13,378)36,717 
Removal of discrete items4,580 14,814 15,433 7,561 
Non-GAAP provision for income taxes$14,404 $11,470 $53,953 $43,476 
GAAP net (loss) income from continuing operations$(26,267)$2,261 $(6,579)$19,402 
Acquisition-related adjustment - revenues (2)— — — 301 
Acquisition-related costs, net699 758 2,693 3,656 
Cost of revenue from amortization of intangible assets5,258 6,378 14,449 19,504 
Amortization of intangible assets10,713 8,554 31,998 26,273 
Restructuring and other charges, net17,247 1,871 28,292 14,730 
Stock-based compensation (1)34,654 32,487 104,436 95,023 
Non-cash interest expense8,688 11,951 33,487 37,269 
Loss on extinguishment of debt17,054 — 17,054 18,656 
Adjustment to income tax expense(18,826)(24,250)(51,249)(83,681)
Other1,171 474 3,108 (1,235)
Non-GAAP net income $50,391 $40,484 $177,689 $149,898 
Non-GAAP diluted net income per share$0.16 $0.14 $0.56 $0.52 
Diluted weighted average common shares outstanding316,878 287,852 317,062 288,096 












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© 2021 Nuance Communications, Inc. All rights reserved
Exhibit 99.1
2021 Third Quarter Results
Press release
August 6, 2021

Nuance Communications, Inc.
Supplemental Financial Information - GAAP to Non-GAAP Reconciliations, continued
(in thousands)
Unaudited
Three Months Ended June 30,Nine Months Ended June 30,
2021202020212020
(1) Stock-based compensation
Cost of hosting and professional services$6,327 $5,748 $19,732 $16,525 
Cost of product and licensing103 124 280 382 
Cost of maintenance and support423 360 1,268 1,200 
Research and development9,230 8,530 26,402 25,274 
Sales and marketing8,974 8,002 26,475 22,825 
General and administrative9,597 9,723 30,279 28,817 
Total$34,654 $32,487 $104,436 $95,023 
(2) Acquisition-related revenue
Acquisition-related revenue adjustments$— $— $— $301 
Total$— $— $— $301 

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© 2021 Nuance Communications, Inc. All rights reserved