CRNC

SOUN has fallen 55% over 12 months despite Q2 revenue beating consensus by 45%, as investors penalize cash burn and dilution risk. Peers CRNC and AI both declined sharply over 12 months but neither matches SOUN's 70% consensus upside or H.C. Wainwright's $20 Street-high target. It sounds nuts, but SoFi1 is giving new Active Invest users up to $3,000 in stock for a limited time, and all it takes is a $50 deposit to get started.2 See for yourself (Sponsor) SoundHound AI (NASDAQ:SOUN) currently trades at $7.48, while the average Wall Street price target sits at $12.71, an implied gap of 69.92% between current price and analyst consensus. SoundHound builds independent voice and agentic AI software deployed across automotive, healthcare, restaurants, and financial services. Wall Street is watching because the top line compounds fast while losses narrow, and the pending LivePerson acquisition could reshape the revenue base heading into 2027. One prominent analyst carries the Street-high target of $20, implying roughly 167% upside from here. SoundHound has lost 54.67% over the past year. Shares traded as high as $22.17 in the last 52 weeks before drifting toward single digits. The selloff came despite strong results. Q2 FY2026 revenue of $61.9 million came in 45.02% ahead of the prior year and beat the $52.4 million consensus. Investors punished the story for cash burn and dilution risk: cash slipped from $248.5M to $202.8M over six months, stock-based comp ran at $21.5M in the quarter, and contingent acquisition liabilities of $83.6M loom over the share count. The pain was company-specific. The S&P 500 rose 20.62% over the same 12-month window while SOUN lost more than half its value. SoFi Active Invest is offering a limited-time promotion. Open an account, fund it with $50 or more, and you could receive up to $3,000 in complimentary stock for Active Invest accounts. See for yourself by clicking here now. (Sponsor) Analysts have refused to blink because the operating story keeps beating models. Of the analysts tracked, six rate SOUN a Buy and two rate it Hold, with no Sell ratings. Full-year 2026 revenue guidance was raised to $230 million to $260 million, and combined 2027 revenue with LivePerson is projected at $350 million to $400 million minimum. H.C. Wainwright's bull case sits at the top of the range. The firm highlights rapid drive-thru monetization at Church's Texas Chicken, Torchy's Tacos, and White Castle, expansion into Vision AI and the Agentic+ platform, and cross-selling voice into the Amelia and LivePerson customer bases. Operational leverage is expected to push SoundHound toward adjusted EBITDA break-even by late 2026 or 2027, backed by a debt-free balance sheet. CEO Keyvan Mohajer told investors that "our pipeline has never been this big, and our win rate has never been this good," citing an eight-figure commitment signed in less than 90 days from demo to contract. With Gartner projecting agentic AI software spending near $1 trillion by 2030, the analyst view is that SoundHound is early in a category it helped define. Recent revisions have leaned reiteration and upgrade, not downgrade. The broader enterprise and voice AI cohort is soft, but SOUN's 12-month drop is the steepest of the closest comparables. Cerence (NASDAQ:CRNC), the closest voice-in-vehicle competitor, trades at $8.61 against a consensus target of $10.75, roughly 25% upside. It has fallen 36.32% over the past year. The rating slate skews Hold at one Buy and four Holds. C3.ai (NYSE:AI) sits at $10.18 with a consensus target of $8.82, meaning analysts collectively see downside from here. Shares are off 45.27% over 12 months, and the rating mix is bearish at one Buy, seven Holds, three Sells, and three Strong Sells following downgrades tied to restructuring under returning CEO Tom Siebel. BigBear.ai (NYSE:BBAI) trades at $3.34 with a consensus target of $4.00, about 20% upside. The stock is down 42.51% on the year, with one Buy and two Holds and no meaningful upgrade momentum. The largest analyst-implied upside across the group belongs to SoundHound at 69.92% on consensus, and 167% on the Street-high case. SOUN trades at $7.48 with an average analyst target of $12.71, implying 69.92% upside. Coverage is concentrated among eight analysts, with six Buy ratings and two Hold, and no Sells. Year to date, SOUN is off 24.97%, while the S&P 500 is up 14.07%. Recent trading has been firmer, with the stock up 11.81% over the past month following the Q2 report. Reddit sentiment around the earnings release ran very bullish at 82, and insider activity is net buying with 17 recent transactions. The bull case strengthens if the LivePerson deal closes cleanly and combined 2027 revenue arrives at the $350 million to $400 million range with gross margin marching back toward the 70% level the CFO explicitly targets. The path to consensus $12.71 runs through EBITDA break-even, continued 40%-plus revenue growth, and OASIS wins that convert eight-figure demos into signed contracts. Scott Buck's $20 target stops looking like a stretch if that happens. The bear case takes hold if cash burn chews through the $202.8 million war chest faster than losses narrow, if $21.5 million quarterly stock comp turns growth into permanent dilution, or if LivePerson integration surfaces execution risk. A high beta of 2.83 means the round trip could hurt. The peer group offers less upside on worse fundamentals, the consensus gap is real, and the operating trajectory is trending the right way. This is a high-volatility bet on execution rather than a safe compounder, and position sizing matters more than conviction here. Looking to grow your money but unsure where to begin? 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SoundHound AI, Inc. SOUN has given Wall Street fresh reasons to become more positive after a record second quarter, highlighted by faster revenue growth, improving margins and strong adoption of its OASYS platform. The better-than-expected performance has led to upward estimate revisions, strengthening the investment case even as the stock remains sharply down in 2026. Over the past 30 days, the Zacks Consensus Estimate for SoundHound’s 2026 loss has narrowed to 14 cents per share from 15 cents, while the estimated 2027 loss has narrowed to 15 cents from 17 cents. The consensus estimate calls for 2026 revenues to rise 41% from the 2025 level, followed by another 14.6% increase in 2027. However, the expected 2026 loss remains wider than the loss of 13 cents per share reported in the previous year. SOUN Estimate Revision Image Source: Zacks Investment Research The bullish brokerage view is also notable. Of the eight recommendations making up the current Average Brokerage Recommendation, five are Strong Buy, accounting for 62.5% of the total. The average Wall Street price target implies 62.2% upside from the latest closing price. Image Source: Zacks Investment Research SoundHound delivered second-quarter revenues of $61.9 million, up 45% year over year and 40% sequentially. The quarter marked the company's highest revenue to date. Non-GAAP loss was 2 cents per share compared with 3 cents a year earlier. GAAP gross margin expanded to 45.1% from 39%, while adjusted EBITDA loss improved 33% to $9.6 million from $14.3 million.The quarter's strength was broad-based rather than dependent on one market. Management said growth came from healthcare, financial services, technology and automotive, while enterprise AI remained the largest contributor to revenues. SoundHound also continued to expand its automotive presence in Asia.Strong second-quarter execution prompted management to raise its 2026 revenue outlook to $230-$260 million. The guidance does not yet incorporate the planned LivePerson acquisition, and SoundHound intends to update its outlook when that transaction closes. OASYS is becoming central to SoundHound's growth story. Management attributed a significant part of the second quarter's stronger-than-expected performance to the self-learning agentic AI platform, which was launched in May. The company said it is seeing strong results across demos, RFPs, pilots and production deployments. One eight-figure commitment moved from initial demonstration to contract signing in less than 90 days, highlighting the potential for OASYS to shorten sales cycles.The platform also gives SoundHound a way to expand within existing customers. OASYS allows businesses to deploy AI agents across phones, vehicles, restaurants, retail locations and other channels rather than building separate solutions for each channel. A top-20 healthcare provider quadrupled its spending with SoundHound during the second quarter, while the company expanded or renewed relationships with several other healthcare and financial-services customers.SoundHound's proprietary technology could support margins over time as well. The company is investing in its Polaris speech foundation model, specialized LLMs and speech synthesis. Its smaller-business customers are already operating entirely on SoundHound's own stack, and management believes greater use of proprietary models can reduce costs while improving accuracy, latency and control. SoundHound is increasingly diversified beyond its traditional automotive business. During the second quarter, it added and expanded customers across healthcare, financial services, restaurants, automotive and consumer devices. Restaurant adoption was particularly encouraging, with technology expanding across Five Guys, IHOP and Jersey Mike's, while a major pizza brand had SoundHound deployed in more than 75% of its locations. The company also signed an initial eight-figure multiyear partnership covering more than 20 countries in Latin America.Voice Commerce offers another potential growth channel. SoundHound plans to pilot direct in-vehicle transactions and is working to bring agentic transactions to connected devices. If these initiatives scale, the company could move beyond software fees and participate more directly in transaction-based opportunities.The planned LivePerson acquisition could further expand SoundHound's enterprise footprint. Management expects the transaction to add relationships with 25 Fortune 100 companies and believes OASYS can provide a common platform for integrating acquired technologies. Despite the operating progress, SoundHound has not yet reached profitability. Second-quarter GAAP net loss was $42.8 million, while the non-GAAP net loss totaled $9 million. For the first six months of 2026, operating activities used nearly $60 million of cash, up from $43.7 million in the year-ago period. The company nevertheless ended June with about $203 million in cash and no debt, providing financial flexibility while it continues investing in growth.The acquisition strategy adds another layer of execution risk. Integrating LivePerson while continuing to migrate customers from previously acquired businesses onto OASYS will require careful execution. Management acknowledged that legacy customers will move to OASYS at different speeds rather than through a rapid forced migration.Valuation also leaves little room for major execution setbacks. SOUN trades at 12.34X forward 12-month sales, slightly above the Zacks Computers - IT Services industry's 12.23X. Investors are therefore paying a premium for growth despite continued losses and cash use. SOUN’s P/S Ratio (Forward 12-Month) vs. Industry Image Source: Zacks Investment Research SoundHound shares are down 25.6% year to date, underperforming the Zacks Computers - IT Services industry's 14.3% decline. The gap is much wider against the broader Zacks Computer and Technology sector, which has gained 16.9%, and the S&P 500's 12.5% advance. SOUN’s YTD Price Performance Image Source: Zacks Investment Research The weak share-price performance suggests that investors remain cautious about profitability, valuation and execution. However, the combination of stronger second-quarter results, raised revenue guidance and improving earnings estimates gives the stock a stronger fundamental base than its year-to-date performance implies. SoundHound faces different competitors across its expanding AI markets. Cerence CRNC competes directly in automotive voice AI, conversational assistants and in-car AI solutions, while Five9 FIVN competes in cloud contact centers, voice bots and customer engagement automation. NICE NICE also competes in enterprise conversational AI, contact center automation and AI-powered customer service.SoundHound's 25.6% year-to-date (YTD) plunge trails Cerence's 19.1% dip and NICE's 12.8% decline, while Five9 has surged 55.6%. Valuation makes the difference even sharper. SoundHound's 12.34X forward sales multiple is far above Cerence at 1.26X, Five9 at 1.78X and NICE at 1.71X.That premium means SoundHound must deliver much faster growth to justify its valuation. Cerence remains an important automotive benchmark, while Five9 and NICE bring established enterprise customer bases. SoundHound's advantage rests on OASYS, its proprietary voice technology and its ability to connect enterprise, automotive and physical AI experiences on one platform. SoundHound's investment case has strengthened following the second quarter. Record revenues, accelerating OASYS adoption, improving margins, a higher 2026 revenue outlook and favorable estimate revisions all point toward better operating momentum. The expansion across healthcare, financial services, restaurants, automotive and Voice Commerce also reduces reliance on any single end market.Risks remain meaningful. SoundHound is still losing money and burning cash, the LivePerson deal introduces integration risk, and its valuation carries a sizable premium to Cerence, Five9 and NICE. The stock's 25.6% YTD decline shows that investors continue to demand proof that rapid revenue growth can eventually translate into sustainable profits.Still, upward estimate revisions following a strong second quarter improve the risk-reward setup. With SoundHound currently carrying a Zacks Rank #2 (Buy), investors willing to accept higher volatility and execution risk can consider the stock for its long-term exposure to conversational and agentic AI growth. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report SoundHound AI, Inc. (SOUN) : Free Stock Analysis Report Nice (NICE) : Free Stock Analysis Report Five9, Inc. (FIVN) : Free Stock Analysis Report Cerence Inc. (CRNC) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Image source: The Motley Fool. Thursday, Aug. 6, 2026 at 4:30 p.m. ET Vice President, Corporate Communications and Investor Relations - Kate Hickman Chief Executive Officer - Brian Matthew Krzanich Chief Financial Officer - Antonio Rodriguez Operator: Good day. Thank you for standing by. Welcome to the Cerence Third Quarter 26 Earnings Conference Call. At this time, all participants are in a listen only mode. After the speakers' presentation, there will be a question and answer session. To ask a question during the session, you will need to press star-11 on your telephone. You would then hear an automated message advising that your hand is raised. To withdraw your question, please press star-11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Kate Hickman, Vice President, Corporate Communications and Investor Relations. Please go ahead. Kate Hickman: Hello, everyone, and welcome to Cerence's Third Quarter 26 Conference Call. Before we begin, I would like to remind you that this call may involve certain forward looking Any statements that are not statements of historical fact including statements related to our expectations, anticipation, intentions, estimates, assumptions, beliefs, outlook, strategies, goals, priorities, objectives, targets, and plans are forward looking statements. Cerence makes no representations to update those statements after today. These statements are subject to risks and uncertainties, which may cause actual results to differ materially from such statements and expectations as described in our SEC filings including the Form 8-Ks with the press release preceding today's call, our most recent Form 10 Q, and our Form 10 k filed on 11/20/2025. In addition, the company may refer to certain non GAAP measures key performance indicators, and pro forma financial information during this call. Please refer to today's press release for further details of the definitions limitations, and uses of those measures and reconciliations of non GAAP measures to the closest GAAP equivalent. The press release is available in the Investors section of our website. Joining me on today's call are Brian Matthew Krzanich, CEO and Tony Rodriguez, CFO. Please note that slides with further context are available in the Investors section of our website. Before handing the call over to Brian, I would like to mention that we will be participating in a Raymond James 26 industrial showcase on August 13 and the Needham Virtual Semiconductor and Semi Cap Conference on August 19. Now onto the call. Brian? Brian Matthew Krzanich: Thank you, Kate, and good afternoon, everyone. Now before we dig in, I would like to briefly reflect on Cerence's progress as I approach my 2-year anniversary as CEO in October. And when I stepped into the role, we established a clear road map The first year was about strengthening the foundation of the business. Improving our financial profile, restoring profitability, generating cash flow, and reducing debt. I believe we delivered on those commitments. Now we said the second year would be about execution. As we approach the end of fiscal year 26, I believe we have delivered better as well. We advanced our technology road map by bringing xUI from concept to production. We improved free cash flow, and we are continuing to create value for customers and shareholders. Most importantly, we are now beginning to see the early stages of our next chapter, xUI is entering into commercialization phase, Our energetic AI portfolio is gaining traction and our non-automotive initiatives are beginning to move from proof points toward revenue contribution. We believe that our fiscal third quarter results demonstrate us executing against its strategy. Delivering strong financial performance. And positioning itself for future growth. In Q3, we delivered another strong quarter with revenue of approximately $70 million in line with our guidance. Adjusted EBITDA above the high end of our guidance at $13.5 million and free cash flow of $20 million. Importantly, we continue to grow our recurring connect services business. With revenue up more than 20% year-over-year. This growth further increases the recurring portion of our revenue mix. Enhancing visibility into the future performance. And demonstrates the value of the connected platform we built across our installed base. Looking ahead to the rest of the fiscal year, we are again raising our fiscal year 2026 free cash flow guidance. Now to $76 million to $82 million. And narrowing most of our remaining forecast. As we approach the end of fiscal year 2026. Given the continued cash generating strength of our business, I would like to give an update on our capital allocation strategy. As mentioned in the past, we have several core capital allocation priorities, all focused on delivering returns to our shareholders. But investing organically to support growth reducing debt, managing equity dilution, and selectively pursuing inorganic opportunities that can enhance our long term growth and strategic position. And we evaluate these priorities based on the opportunities available to us. The strength of our balance sheet, and where we believe capital, can generate attractive risk adjusted return for shareholders. And with that, I am pleased to share that our board has authorized Cerence's first ever share repurchase program. And this reflects our confidence in the business the progress we have made in improving profitability and cash generation, and our commitment to disciplined, capital allocation. As we look ahead, we remain focused on creating long term shareholder value. Through execution strategic investment, and prudent capital allocation. adds another tool to that approach. The stock repurchase program while preserving our flexibility to continue investing in growth and reducing debt while also helping to offset dilution. And Tony will provide further details on the program. Now turning to updates and highlights from the quarter, We continue to see strong investment in next generation AI powered user experiences. Automakers increasingly view AI not as a discretionary investment, but as a strategic priority that reinforces the competitive position. As vehicles become more software defined, automakers are seeing a differentiated user experiences that reinforce their brand improve customer satisfaction, and create opportunities for recurring revenue. that is where we believe Cerence AI continues to be uniquely positioned and why we continue to win. We combine decades of automotive expertise, with leading AI capabilities. Enabling OEMs to bring powerful conversational experiences to market while reducing complexity cost, and execution risk. As a result, despite the dynamic industry that OEMs are navigating, customer engagement remains strong. Our pipeline continues to develop an interest in our next generation platform is growth. Cerence's xUI, which is now available in nearly 20 languages, remains the center of our automotive strategy. In Q3, we signed a new xUI deal with Stellantis. Who expects to deploy our platform across multiple brands and regions with initial production having recently started. And throughout the quarter, we continued to advance our xUI programs with JLR, a VW Group brand, BYD, Geely, and a major Japanese automaker. Several of these programs have started production Or are expected to start production in fiscal Q4. Today, we have approximately 100 thousand xUI-powered cars on the road. An important milestone in bringing this technology to market and consistent with what we have said in the past. At xUI, will begin its ramp at the end of 26. And impact revenue during fiscal year 27 and beyond. As additional programs enter production and vehicle volumes pick up. And we continue to expect xUI deployments to support higher average price per unit reflecting its broader functionality increased software content, and expanding Agentic capabilities. A testament to the value we are bringing to our customers Cerence AI was recognized at JLR's Global Supplier Excellence Award in June. JLR honored us with their exceptional creator recognition. A special category they introduced specifically to highlight truly outstanding partners. In their nominations, the JLR team highlighted how we fast tracked our partnership into a true AI era collaboration. They specifically called out Cerence's flexibility as key enabler in their ability to adopt a new AI capabilities faster and innovate with confidence. That expectation paired with our disciplined delivery and sharp road map alignment is now their blueprint for future facing technology. And we believe this recognition validates not only our technology but also our ability to serve as a trusted strategic partner as OEMs transition to next generation AI platforms. During the quarter, we also advanced our Agentic AI road map with the prospect parking, dining, and other task oriented experiences. Our goal is to evolve, the in vehicle assistant from a system that primarily responds to requests into an agentic experience that can take action and help users complete tasks in context. Of note, we reached an important milestone in this strategy. In Q3. By signing the first customer for our mobile work agent. Developed in collaboration with Microsoft. The customer is a global, premium automaker and an existing CERENCE customer. With rollout expected to begin in fiscal Q4. We believe this win is significant for 2 reasons. First, it demonstrates our ability to quickly deploy a complex agent that turns the car into a managed, trusted device with compliant access to enterprise tools in the Microsoft 365 suite. Second, it validates our strategy to sell and deploy agents on a stand alone basis. And not only can these agents be deployed within the new xUI programs, but they can also be integrated into non xUI programs and even competitive stacks. This expands our addressable opportunity. And gives OEMs a flexible path to introduce Agentic capabilities. We are in talks with several other automakers to deploy our mobile work agent in the near future. Now beyond xUI and our agent road map, we continue to win business across our broader technology portfolio. During the quarter, we signed our first customer for exterior vehicle interaction, which extends the reach of the vehicle's voice assistant outside the cabin. Allowing drivers to use their voice to perform authenticated vehicle actions like unlocking doors, or opening the trunk. We also secured wins across our stack with Subaru HKMC, and GM. We signed an emergency vehicle detection program with a Chinese robotaxi company, and a CERENCE assistant program with Stellantis, for the vehicles that will not initially use xUI. These programs have the potential to generate recurring business maintain our seat at the table within the OEM technology stack, and create opportunities to expand our role over time. Even when customers use multiple technology We are also making progress in extending our voice AI and agentic capability beyond the vehicle. We continue to focus on complex environments similar to the car. Including commercial and industrial operations, robotics, and select IoT applications. We believe our products have the ability to serve as the trusted interaction layer across a broad range of verticals. Where our edge AI reliability, security, and domain specific integration translate well and provide a meaningful competitive advantage. 1 example of our progress is the launch of our dealer assistant agent, live at Infiniti of Grand Rapids, Michigan. Targeting a real pain point for dealerships missed and after-hours sales and service calls, that can translate into lost leads, and revenue. Our AI agent provides an always on instant response serving as a virtual expert on vehicle features, scheduling test drives, and booking service appointments. While freeing staff from routine repetitive calls. Since the program went live, dealer assistant agent, has delivered measurable business impact to the customer. With 100% of after-hour calls now being captured, there is been a 20% increase in sales opportunities driven by always on lead engagement and qualification. And nearly 30% increase in service appointments booked. Improving utilization and capturing additional service revenue. While this is an early deployment, we believe that it demonstrates the impact of our Agentic solutions can deliver. And with tens of thousands of car dealerships worldwide, we just see this as a promising growth opportunity. Consistent with our prior outlook, we expect approximately $7 million to $9 million in non-auto revenue forecasted for full fiscal 26. And the larger opportunity ahead of us in fiscal year 27 and beyond. On our next earnings call, we look forward to providing you additional details on our fiscal year 27 road map forecast, and strategy. For building a meaningful business beyond automotive. Now in terms of our intellectual property strategy, and ongoing enforcement efforts, we continue to actively protect our technology and investments as part of the ordinary course of our business. While the timing of IP related outcomes can be difficult to predict, on a quarterly basis, We believe these efforts support our broader commitment to innovation and long term shareholder value. And we will continue to keep you posted as additional progress is made. As we approach the end of fiscal 26, I wanna close with the 4 drivers. That underpin our belief in Cerence's long term value. First, as Cerence occupies an important position in the automotive AI stack. Supported by deep OEM relationships and a large install base and durable recurring revenue. Second, our x UI and Agentic AI wins provide an opportunity for ongoing growth and higher revenue per vehicle. As these programs enter production and scale. And third, we continue to deliver strong free cash flow while maintaining our focus on disciplined capital allocation. We believe that our business model supports debt reduction, balance sheet strength, inorganic growth, and the strategic and operational flexibility. Necessary to make key decisions like our stock repurchase program. And fourth, our expansion outside of automotive and our IP enforcement efforts provide additional sources of potential long term value. And with that, I will turn it over to Tony. Antonio Rodriquez: Thank you, Brian. Good afternoon, everyone. And thank you for joining us today. We appreciate your continued interest in Cerence. Today, I will review our third quarter fiscal 26 results, highlight the key drivers of the quarter, and then provide guidance for our fourth quarter and the resulting full fiscal year. For the quarter, total revenue was approximately $70 million within our guidance range of $68 million to $72 million and up 12% from $62 million in the prior year period. The increase was led by higher license revenue, including the timing of fixed license contract execution, and a positive shift to recurring connected service revenue. Total license revenue was $41.6 million up 22% year-over-year. Reflecting the higher fixed license contribution this quarter. Fixed license revenue was $12.5 million this quarter compared to no fixed license revenue in the prior year period. And above the approximately $10 million contemplated in our Q3 guidance. As we have discussed, fixed license revenue can vary quarter to quarter based on the timing of contract execution. We do not expect any additional fixed license revenue for the remainder of the fiscal year. Variable license for the quarter was $29.1 million down 15% year-over-year. 2 factors drove the decrease. First, the comparison was against an exceptionally strong prior year quarter that benefited from higher than normal production. Some manufacturers built ahead of anticipated tariff impacts. And from favorable foreign exchange rates. Second, our unit volumes came in below the broader market this quarter. Production of vehicles with Cerence Technology was down 8% year-over-year. While global light vehicle production declined roughly 2%. Based on the customer production data available to us, the difference relative to the broader market primarily reflects our specific OEM and regional mix. Much of the global markets relative resilience came from regions where we have limited presence, such as South America and South Asia. While the OEMs and regions that represent the majority of our volume saw softer production. This was compounded by a period of program life cycle transition with some programs winding down faster than their replacements are ramping. That said, we have not seen a change in pricing or economics to our existing programs, and we have continued to experience recent design win activity. Connected services revenue was $15.5 million, up 20% year-over-year driven by continued expansion of our connected installed base and a higher attach rate. We believe that this growth underscores the increasing importance of connected service revenue within our business model and provides improved visibility into future performance. Professional services revenue was $12.5 million, down 18% year-over-year, reflecting our continued focus on standardization and higher margin implementations. As well as the impact of revenue deferrals when services are bundled with license arrangements. Gross margin for the quarter was 76%. Compared to 74% in the prior year period. And in line with the high end of our guidance range of 75% to 76%. The improvement over prior year was driven primarily by favorable revenue including the higher fixed license contribution. Along with continued discipline across cost of road. Adjusted EBITDA for the quarter was $13.5 million an increase of $4.5 million or 51% year over year and ahead of our high end of our guidance range of $8 million to $12 million with revenue finishing near the midpoint of our range, this outperformance was driven by favorable margin mix and operating expenses below plan. A portion of the expense variance was timing-related and is expected to normalize in the fourth quarter. While the remainder reflects our continued cost discipline. Total non GAAP operating expenses were $43 million compared to $40 million in the prior year period. Non-GAAP R&D expense was $26.5 million up from $24.4 million reflecting lower capitalization of internally developed software rather than an increase in overall investment. Total technology spending remains stable. Non GAAP sales and marketing expense was $4.6 million down year-over-year by about 8%. But consistent with continued investment to support our customer base and long term growth initiatives. Non GAAP G&A expense was $11.5 million up from $10.1 million reflecting normalized general operating cost as well as additional legal expenses associated with our ongoing efforts to protect, enforce, and license our IP portfolio. Excluding the onetime legal costs incurred in Q1 to secure our patent license agreement with Samsung, we expect full year fiscal 26 IP related legal costs of approximately $9 million. From a GAAP profitability perspective, Q3 net income was $1.5 million with diluted EPS was $0.03. Versus a net loss of $2.7 million and a net loss per share of $0.06 a year ago. On taxes, the Samsung related withholding tax is spread across the year through our estimated annual effective tax rate. So it is not confined to the quarter in which it incurred. That front loaded our tax expense in Q1 above the expected full year total and impacts taxes even in quarters with little or no pretax income like here in Q3. We continue to model full year tax expense of approximately $20 million consistent with our prior projection range. With a significant tax benefit expected in Q4. During Q3, we generated $20 million of cash from operations and $20 million of free cash flow. Continuing our strong cash conversion performance. We ended the quarter with $128 million in cash and cash equivalents which we believe provides significant flexibility to invest in our strategic priorities while further strengthening the balance sheet. As we evaluate capital allocation, we continue to maintain a strong financial position and invest in the business, while deploying excess capital toward opportunities that offer the highest risk adjusted returns. In the current environment, that may include discounted debt repurchases, share repurchases, and selective strategic investments that support our long term growth objectives. Putting that framework into action, earlier this fiscal year we repurchased a portion of our 2028 convertible notes at a discount to par, reducing interest expense and leverage. Building on that, as Brian mentioned, today we announced that our board has approved our first share repurchase program. Authorizing the repurchase of up to $30 million of our common stock over the next 12 months. We intend to execute through open market purchases funded from cash on hand and free cash flow while preserving the flexibility to keep investing in the business. And to address our remaining outstanding convertible notes. The program does not obligate us to repurchase any specific amount and we expect to stay disciplined as we consider our capital allocation priorities. From a metric standpoint for Q3, production of vehicles with Cerence Technology totaled 11.4 million in the quarter compared to 12.4 million a year ago. Connected cars shipped increased 4% on the trailing 12-month basis, while recurring connected services revenue grew 20%. Reflecting higher attach rates and per unit economics. Adjusted total billings were $240 million, up 6% year-over-year. Pro forma royalties were $38 million compared to $43 million in the prior year period, reflecting the lower production volumes. Fixed license consumption within that quarter totaled was $8.7 million. Before turning to guidance, let me put the xUI wins Brian discussed into financial context. From an accounting perspective, we recognized revenue as licenses shipped and as connected services are delivered. So new program wins flow through our reported results in stages rather than all at once. For multi year platform transitions such as xUI, that cycle plays out over several years. As a result, the wins we have announced are not fully reflected in our current revenue run rate, And for connected services, the near term impact will show up first in billings with more meaningful revenue contribution phasing in during fiscal 27 and beyond. These programs carry attractive per unit economics that we expect to support both revenue growth and margin as they scale. Also, consistent with Brian's comments, our current outlook continues to assume only modest initial contribution from non-automotive programs as we exit FY 2026. With the larger opportunity remaining primarily a fiscal 27 and beyond growth driver. Turning to the fourth quarter. With respect to the sequential progression there are 2 dynamics to keep in mind. First, our third quarter results included $12.5 million of fixed license revenue. And consistent with the timing driven nature of these arrangements, we are not contemplating any fixed license revenue in the fourth quarter. Second, we expect to a normal seasonality with production volumes often stepping down a bit from the third quarter to the fourth. Together, this means we expect fourth quarter revenue to be lower on a sequential basis. For the fourth quarter, we expect revenue between $61 million and $65 million gross margin between 72% and 73%, expected EBITDA between $1 million and $5 million, net income in the range of $1 million to $5 million and diluted EPS between $0.02 and $0.10. I want to be clear that this guidance reflects the timing of fixed license revenue and ordinary seasonal patterns, not a change in the health of the underlying business. Excluding the fixed license revenue recognized in Q3, midpoint of our fourth quarter revenue outlook is higher than our underlying Q3 revenue level. Our per unit economics have remained intact, Our recurring connected services revenue up 20% year-over-year, has continued to grow, and our design win momentum is expected to support future volume. A couple of further notes on the fourth quarter. First, because the fourth quarter does not carry the high margin contribution from fixed license, we expect gross margin to normalize below the 76, percent we reported in the third quarter. Second, as we discussed previously, the Samsung IP license resulted in an unusually high tax expense earlier in the year, particularly in the first quarter. The expected fourth quarter benefit is incorporated into our Q4 and full year outlook. Taken together with our year to date results, this Q4 outlook is contemplated within the full year guidance I will walk through next and reflects the same disciplined execution we have delivered through the first 3 quarters of the year. For the full fiscal year, we now expect revenue of $310 million to $314 million gross margin of 78% to 79%, GAAP profitability in the range of net loss of $1.1 million to net income of $2.9 million Diluted EPS of a loss of $0.02 to an income of $0.06 adjusted EBITDA of $66 million to $70 million and free cash flow of $76 million to $82 million an increase from our prior outlook of $66 million to $76 million In closing, we delivered solid execution this third quarter with growth in total revenue, gross margin ahead of guidance, continued strength in our recurring connected services, and year over year profitability growth. As we look to the remainder of fiscal 26, we remain focused on disciplined execution, strong cash flow generation, and maintaining the financial flexibility to support long term profitable growth. On our next call, we expect to provide our initial fiscal 27 guidance and an update on our strategic priorities. With that, I will turn it back to Brian. Brian Matthew Krzanich: Thanks, Tony. In closing, we are proud of our performance as we approach the end of fiscal 26. We believe that our results reflect strong execution solid cash generation, and continued customer momentum. Together with a disciplined approach to capital allocation. We believe the underlying trajectory of the business remains strong. Connected services continues to be our excellent growth engine. The economics of our recent wins have been attractive and the xUI and the agent programs discussed today are expected to position us well for growth as they scale. The story of fiscal 26 has been 1 of execution. We believe that the story of fiscal 27 will be 1 of growth. Powered by the foundation we have built the customer commitments we have delivered, and the opportunities we see ahead with xUI and outside of automotive. We remain confident in our strategy and execution. And we are excited about the path ahead. And with that, we will open up the line for questions. Operator: Thank you. To withdraw your question, please press 11 again. Comes from the line of Mark Delaney with Goldman Sachs. Your line is now open. Mark Delaney: Yes, good afternoon. Thank you very much for taking the questions. Congratulations on the xUI win with Stellantis. I am hoping to better understand the financial implications of the xUI backlog, including the recent win, and now I think you have 6 in total. Understood the comment around that taking time to ramp up, but maybe you can help investors to better understand what those existing wins will mean for the business for both revenue and profits when they do fully ramp. And how long that may take to occur. Brian Matthew Krzanich: Sure. I can start. This is Brian. And then Tony can jump in probably with some of the more high level detail of the finances. But you know, we said there is about 100 thousand vehicles on the road right now with xUI. And it is really pretty good considering really starting production was just a little over a month ago. So, you know, for me, the ramp is off and going We have several more OEMs that should do start production, say, at the end of Q4, beginning of Q1, You know, we do not actually control exactly when, and there is a lot of, oh, you know, partners that have to come together to deliver the on time launch. But you know so I really think that number is going to go up significantly as we go into 02/2027. So you know, if I looked at 2027 in total, I think you should see you know, a couple million cars on the road with xUI. Versus, you know, the 100 thousand that we have today. Financially, what that will mean is that we get paid the same way we do with the prior products where we get the connect the license fee when the product the car is shipped from the factory. And then the connected fee over the life of the connection. And what we are seeing is these licenses, for connected vehicles are actually going longer. We said in the past, that our average was, like, 3-ish years. The average of the xUI deals would be more close to 7 years. So we are seeing much longer times for those. So for 2027, it will--xUI will xUI and connected will be the growth engines in automotive. For us We have not forecasted 2027, so I expect it to still be relatively minimum, you know, as they ramp up In Q4. As we go into 2027, it will fuel the growth along with connected. All the xUI models are connected, so it kind of has a double whammy. You get paid more for xUI. And they are all connected. We have not given an exact price for what the xUI deals are. The price per unit, but it is significantly higher than the current price per unit that we quote in our earnings calls for our current product. So I but we have not given an exact number for that. And part of that is because it varies depending on the features that everybody chooses and some of that, but all of them are significantly higher. Than what we are quoting today. Antonio Rodriquez: Yeah. And just to summarize that, I think it is exactly right. The impact of xUI is that it is a growth driver both to revenue and to profitability. But it does take time to ramp the old programs down. Ramp the new programs up. But, you know, it will be you know, it will result in higher PPU over time as those ramp up. And with a higher PPU and, you know, creates the operating leverage that we have talked about. Brian, I have always talked about you know, our goal is to have a growing business that is increasingly profitable, and we have shown that over the last probably, you know, 8 quarters now that we have been together. So, yeah, this will you know, xUI means, you know, again, revenue growth and increasing profitability growth. Mark Delaney: Very helpful context. My other question was about the revenue trajectory into next year. Very much recognize your comments around you need to wait for next quarter for the quantitative guidance I do think last call, the company suggested that revenue next year could grow high-single to low-double digits. So if you could speak a little bit qualitatively on how you think about the top line trajectory into 2027, if you have any early thoughts there and any key puts and takes? Thank you. Brian Matthew Krzanich: Sure. I can start again, and Tony again can give you kind of the breakdown with a little more financial detail. But again, we tried to give you a little bit of a grounding this quarter by giving you, hey. there is 100 thousand xUI vehicles on the road. And, you know, I expect nonauto to be you know, $7 million to $9 million. That kinda gives you the baseline from this year for where we are at. Right? By the time Q4 ends, expect, you know, the xUI number to be significantly higher than that 100 thousand. Right? And we will probably give you the number again at the end of the year just to, again, kind of set the baseline If I look into 2027, yeah, I think overall, you will see us in the high-single to low-double digits overall growth. But, again, what I think you will see is strong growth in connected because the xUI vehicles will be the driver of a lot of those connected vehicles. You will see strong growth in PPU as connect as xUI continues to grow more into the product base. And then, you know, we plan on having significant growth. In the non-automotive space for next year. We have not given you the forecast for that, but you can think of it as my expectation is non-automotive will grow faster as a percentage than the automotive space for next year. And so you put those together, and that is how you get to that. Well, it should be high single digits to low double digits. But then, you know, it is gonna be increasingly better as we go through the year. I expect it is gonna be growing much faster as we exit 27. Because more and more of it will be connected and more and more of it will be non-automotive. So it will it will be a nice steady ramp as we go through that year. We have not given the numbers yet. You know, I would love to give you what we are thinking right now, but I am I am held to my forecast process. But, yeah, that is what is gonna drive it and fuel the growth. Antonio Rodriquez: Yeah. And a couple caveats. Of course, when we talked about the those growth rates, that we see in our core business, it was, for the technology growth again. I think we have said before that, you know, professional services as they become more efficient will decrease as a percentage in the mix. We still think there is a strong base, in professional services, but we it is we do not believe that is growing. We think that is kind of a base number. And that it is important to the business, but it lower as a percentage of the mix. And as Brian mentioned, the non automotive will kind of be of the growth the real growth from percentage standpoint growth engine in the future. Albeit at a smaller base out of the blocks. Brian Matthew Krzanich: And then just remember, none of those And we have said that we have forecasts include anything about IP monetization. currently, efforts are going with TCL, Apple, and Amazon in that space. And we do not forecast those because we do not really we cannot absolutely predict the schedules. And so if I miss by a month because of court dates or whatever, I need to be careful. So those would all be on top of that. We have a couple of those that are due to go to the court before the end of the year. This year. And then, you know, some more into next year. So I see that as on top of everything else we have talked about from our core technology. Mark Delaney: Thank you. I will pass it on. Operator: Thank you. Our next question comes from the line of Itay Michaeli with TD Cowen. Your line is now open. Itay Michaeli: Hey. Great. This is Justin on for Itay. How's everyone doing? Brian Matthew Krzanich: Good. Itay Michaeli: So quick questions. Tony, maybe the first 1 for you. Appreciate you highlighting the, Q4 seasonality. Anything outside of normal seasonality that you might be seeing at least in current production schedules, volatilities that may be hitting kind of Q4 on the licensing side? Or have things been, like, relatively stable? Obviously, the you know, the second half production environment's a little bit more volatile at this So just trying to get a better understanding of what you might be seeing there. Antonio Rodriquez: Yeah. I think we kinda highlighted that a little bit in the in the call. So, you know, again, from a volume standpoint, Q3 over Q3 a year ago, I think we saw some volume declines primarily because, again, there were some volume ramp in Q3 a year ago given the tariff positions. But as we think about Q3 to Q4, I do not see really any, you know, really movement off of kind of those volumes other than potentially we have looked back in history, and there it is oftentimes a slight decrease in our, Q4 in, you know, time frame with regard to volumes, but not anything really material that we are seeing. So but you gotta remember that ours is, again, a volume business on the license variable side. So, you know, you know, we think about the broader market and our specific piece of the broader market, you know, that is volume is always important. But I do not see anything really, changing much from Q3 to Q4. Itay Michaeli: Perfect. Appreciate the color there. And then, Brian, maybe a couple for you. Maybe any update or that you could share on the BYDX UI launch? How are things progressing? what is going on there? And then maybe double clicking a little bit on that Stellantis win kind of what were the key parameters and benchmarks that you were comped against and maybe how the competitive environment was within that business quoting? Sure. Brian Matthew Krzanich: So you know, when we said 100 thousand vehicles on the road, BYD is a part of that. And there is another OEM that is a part of that as well. So there is there is more than 1 OEM in that 100 thousand. You know, what happens is they go they ramp these things by geography, and by language and sometimes by model, especially in some of the other in some of the larger OEMs where they have maybe, you know, 10 different models. Of vehicle, they will they will launch them kind of sequentially. From a BYD perspective, though, it is going well. We are we are continuing to add more geographies. And more languages. We are up to 20, we said now. And so we add them as they require based on their production ramp. And the feedback's been really good. The feedback's been very positive on xUI from a user end user standpoint and just the production capability of being able to build a vehicle in. And develop the software into the vehicle. So for us, we think the ramp's going quite well. Itay Michaeli: Very helpful. Appreciate it. Operator: Thank you. Our next question comes from the line of Jeff Van Rhee with Craig Hallum Capital Group. Your line is now open. Jeff Van Rhee: Hey, Brian Tony. This is Daniel on for Jeff. On maybe sort of if you wanna characterize how the typical sales cycle for x u y looks like, how long are these conversations, what is the competition like? Maybe you could use Stellantis as an example, but typical xUI sales cycle. Brian Matthew Krzanich: You know, boy, the sales cycle they are not short. You typically you know, it starts with the OEM producing an RFQ. And oftentimes, especially if we are already involved with that OEM, we help them generate what the RFQ should look like as far as what kind of features they wanna look for and, you know, what is what is the technology out there capable of. So that starts the process From there, you usually have to come in with a proposal that includes what the technology is, what your hardware requirements are, What we often do is bring in vehicles are actually running the technology. And bring them for example, we went into 1 large OEM back in the spring with the vehicles to their headquarters and brought their whole board of directors to the to the meeting to sit in the vehicle and actually see what was capable. And then you start kind of getting into the pricing and timing. And oftentimes, what is really important is the amount of support you are willing to give because the integration of the software, it is not a simple download like you do on your phone or your PC. there is a great deal of integration with the OEM, the tier 1, hardware providers, you know, other software providers that you all have to do to get to that point and it is the amount of support you are willing to give. So we oftentimes have engineers sitting in the OEM to really help develop the product. That all takes probably on average 6 months at least. I have got some that are going well beyond that now. Because then you are kind of waiting for their process. From a competitive standpoint, what usually happens is kind of, like, everybody shows up at the beginning, and they usually narrow it down to 1 or 2, usually 2 of us at the end. And then it is kind of a runoff. Interestingly, to me is it is not been a price war, It has not been, you know, well, we need another dollar out of this or something like that. it is really been more about features and support. You know, can you support all of the interconnects they want? The connections to other third party products, that they are trying to do to personalize the vehicle. And then the amount of support you will give in launching the vehicle and getting this thing to production. that is really been more what is kind of the debate at the end. And then, yeah, there is a little bit price. I am not gonna say there is nothing. But we have not gotten to a point where we think it is a race to the bottom. Like I said, the prices we are getting right now are quite a bit higher than what we currently quote for our PPU. Great. Jeff Van Rhee: And that is helpful. And then on kind of Q4 and just what is implied as I look at it in our model, I think the Q4 uptick x fixed license, it looks like it sort of implies a rebound in variable license in pro forma royalties, maybe something like a 10% jump in variable pro forma. Just your thoughts on Q4? what is your visibility? Are you expecting a rebound in unit volumes sort of an end customers or maybe in percentage of cars shipped with? Just what are you thinking to get you to that Q4 number? Brian Matthew Krzanich: You know, we always have pretty good insight into the numbers and, you know, we are already a little bit into the fourth quarter. Right? So we have some insight into this number set. What you are really just seeing, like Tony said, was we see kind of a return to the typical seasonal Q4 output numbers. From a production vehicles, we are seeing more and more connected We saw 20% year over year growth in the third quarter in connected. You know, we are gonna see similar kinds of growth in the fourth quarter for connected as well. So, you know, we just continue to see our kind of We are back to seasonality. We are back to a normal Q4. And you know, we are we are seeing more and more connected. And that kind of gets us to our Q4 number. Antonio Rodriquez: Tony, if there is any Yeah. The only other thing I would add is we would think about some of our non-automotive areas. We see some activity of that I really will not get into specifically or into details, but there is some non-automotive increase in the number as well. Jeff Van Rhee: Okay. that is helpful. Thanks, guys. Operator: Thank you. And I am currently showing no questions at this time. I would now like to hand the call back over to Brian Krzanich for closing remarks. Brian Matthew Krzanich: Yeah. I just would like to say thank you, everybody, for coming to our third quarter earnings call. We really look forward to our fourth quarter where we can present our 2027 road map and forecast. We are excited about the work we are already doing lining up to that. Like we said, it is it is the year of growth for 2027. Where xUI really helps fuel that growth, the connected vehicles percentage will continue to increase, as we said. And then it is going to be a year where, you know, we will see more and more of the non-automotive space growth, and we expect that space to grow at a rate much faster than the automotive portion of our business as well. So we look forward to seeing you in December for the fourth quarter results and our forecast in the 2027. Thank you for joining, and I would just like to thank the whole Cerence team for a great quarter. Really great execution and great results. And with that, I will say good evening. Operator: This concludes today's conference. Thank you for your participation. You may now disconnect. 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Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here. Management characterized fiscal 2026 as the year of execution, highlighted by the transition of the xUI platform from concept to commercial production with approximately 100,000 vehicles now on the road. Performance in Q3 was driven by a 20% year-over-year increase in recurring connected services revenue, which management views as a critical engine for long-term visibility and margin expansion. The company secured a significant xUI win with Stellantis and the first customer for its mobile work agent, validating a strategy to sell standalone AI agents that can integrate into competitive technology stacks. Variable license revenue faced headwinds due to a difficult year-over-year comparison against a prior period inflated by pre-tariff production builds and unfavorable regional OEM mix in South America and South Asia. Management is pivoting toward non-automotive verticals, including industrial operations and robotics, leveraging edge AI reliability to address pain points like missed sales leads in dealerships. Strategic positioning is shifting toward higher average price per unit (PPU) models as xUI deployments offer broader software content and expanded agentic capabilities compared to legacy products. Fiscal 2027 is projected to be a year of growth, with management anticipating high-single to low-double digit revenue increases driven by the scaling of xUI and non-automotive initiatives. The xUI ramp is expected to accelerate significantly in 2027, with management targeting a move from 100,000 vehicles currently to a couple million cars on the road by the end of that fiscal year. Guidance for Q4 assumes a sequential revenue decline due to the absence of fixed license revenue and typical seasonal production step-downs, rather than a change in underlying business health. Non-automotive revenue is forecasted to grow at a faster percentage rate than the automotive segment in fiscal 2027, though starting from a smaller absolute base of approximately $7 million to $9 million. The company's financial framework assumes a continued shift toward recurring revenue streams, with connected service contracts extending from a 3-year average to approximately 7 years for xUI programs. The Board authorized the company's first-ever share repurchase program of up to $30 million, reflecting confidence in sustained free cash flow generation and a commitment to managing equity dilution. Free cash flow guidance for fiscal 2026 was raised to $76 million to $82 million, supported by disciplined cost management and strong cash conversion from operations. IP litigation remains a strategic priority with ongoing efforts against TCL, Apple, and Amazon; however, potential settlements are excluded from formal guidance due to unpredictable court timelines. A significant tax benefit is expected in Q4 to offset the front-loaded tax expenses associated with the Samsung IP license agreement recognized earlier in the fiscal year. One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here. Management expects xUI to be the primary growth engine for 2027, noting that while only 100,000 cars are currently active, production started just over a month ago. The price per unit for xUI is significantly higher than current products, and because all xUI models are connected, they generate both upfront license fees and long-term recurring service revenue. Growth will be fueled by higher PPU from xUI and a faster growth rate in non-automotive sectors, though professional services are expected to decrease as a percentage of the total mix. IP monetization represents potential upside 'on top' of core technology forecasts, with several cases expected to reach court milestones by the end of the calendar year. The sales cycle typically lasts at least six months and is increasingly focused on technical support and feature integration rather than aggressive price competition. Cerence often assists OEMs in defining the RFQ parameters, positioning itself as a strategic partner rather than a commodity software provider.

Headlines Revenue of $69.6 million and GAAP net income of $1.5 million were within guidance; Adjusted EBITDA of $13.5 million increased 50% year-over-year and exceeded the high end of guidance. Connected Services revenue increased more than 20% year-over-year. Generated $20 million in operating cash flow and approximately $20 million in free cash flow, up more than 20% YoY. Expanded AI platform momentum and adoption, including a new multi-brand Cerence xUI award from Stellantis and the first customer win for Cerence's Mobile Work Agent. Board of Directors authorized the Company's first-ever share repurchase program, permitting repurchases of up to $30 million of common stock over 12 months, reflecting confidence in the business and commitment to disciplined capital allocation. BURLINGTON, Mass., Aug. 06, 2026 (GLOBE NEWSWIRE) -- Cerence Inc. (NASDAQ: CRNC) (“Cerence AI”), a global leader pioneering conversational AI-powered user experiences, today reported its third quarter fiscal year 2026 results for the period ended June 30, 2026. The Company also announced that its Board of Directors has authorized the Company's first share repurchase program, pursuant to which the Company may purchase up to $30,000,000 of its outstanding common stock over the next 12 months. “Our third-quarter results demonstrate continued execution across the business, with solid execution, strong cash generation, and momentum across our AI portfolio,” said Brian Krzanich, Chief Executive Officer of Cerence AI. “We signed an important multi-brand Cerence xUI award with Stellantis, secured the first customer for our Mobile Work Agent, and saw 20% year-over-year growth in Connected Services revenue. Together with our first-ever share repurchase authorization - which reflects the Board and management’s confidence in Cerence AI’s strategy, cash generation ability, and long-term value - we believe these results demonstrate our progress in strengthening the business through disciplined execution, innovation, and capital allocation." Krzanich continued, “We continue to build toward a much larger opportunity. As AI continues to be a strategic priority for automakers and increasingly extends into adjacent markets, we believe Cerence AI is uniquely positioned to serve as the interaction layer between people and intelligent systems. We believe that our portfolio of conversational, agentic, and embedded AI solutions, combined with our deep domain expertise, global reach, and long-standing customer relationships, provides a strong foundation for growth as we help customers bring the next generation of AI-powered experiences to life. We look forward to providing additional perspective on our roadmap and long-term growth strategy next quarter." Stock Repurchase ProgramUnder the stock repurchase program, the Company intends to repurchase shares from time to time in the open market in compliance with Rule 10b-18 under the Securities Exchange Act of 1934, pursuant to Rule 10b5-1 trading plans, in privately negotiated transactions, through accelerated share repurchase arrangements, purchases, or by other means. The Company may repurchase shares under this program depending on a variety of factors, including, among other things, the impact of dilution from employee stock awards, market conditions, stock price, applicable legal and regulatory requirements, and other factors. Because the program is discretionary, the program does not obligate the Company to acquire any particular number of shares or any specific dollar amount, and there is no assurance as to the timing or amount of any repurchases. The Company intends to fund repurchases under the program primarily with existing cash and cash equivalents and, secondarily, free cash flow generated by operations. Results Summary (1)(in millions, except per share data) Cerence AI delivered third-quarter revenue and net income within its guidance ranges; adjusted EBITDA above the high end of guidance and up 50% year-over-year; and $19.6 million of free cash flow, up more than 20% year-over-year. Revenue increased 12% year-over-year, primarily driven by the timing of fixed license contract execution and growth in Connected Services revenue, which increased more than 20% year-over-year, reflecting continued adoption of the Company’s connected solutions. Professional Services revenue was down year-over-year, reflecting the Company's continued focus on standardization and higher-margin implementations. Cerence Key Performance IndicatorsTo help investors gain further insight into Cerence AI’s business and performance, management provides a set of key performance indicators (KPIs). The Company believes the KPIs for the quarter reflect continued adoption of its connected solutions and disciplined pricing, with year-over-year growth in connected cars shipped and Adjusted Total Billings. Fourth Quarter and Full Year Fiscal 2026 Outlook For the fiscal fourth quarter ending September 30, 2026: Revenue is expected to be in the range of $61 million to $65 million, with no fixed license revenue contracts expected to be signed during the quarter. Gross margins are projected between 72% and 75%. GAAP net income is projected to be between $1 million and $5 million. GAAP EPS (diluted) is expected to be between $0.02 and $0.10. Adjusted EBITDA is expected to be in the range of $1 million to $5 million. Adjusted EBITDA guidance excludes amortization of acquired intangible assets, stock-based compensation, restructuring and other costs. For the full fiscal year ending September 30, 2026: Revenue is expected to be in the range of $310 million to $314 million. Gross margin is expected to be in the range of 78% to 79%. GAAP net (loss) income is projected to be in the range of $(1) million to $3 million. GAAP EPS (diluted) is expected to be between $(0.02) and $0.06. Adjusted EBITDA is expected to be in the range of $66 million to $70 million. Net cash provided by operating activities is projected to be in the range of $81 million to $85 million. Free cash flow in the range of $76 million to $82 million. Cerence Conference Call and WebcastThe Company will host a live conference call and webcast with slides to discuss its results today at 4:30pm Eastern Time / 1:30pm Pacific Time. Interested investors and analysts are invited to dial into the conference call by registering here. Webcast access also will be available on the Investor section of the Company’s website at investors.cerence.com. A replay of the webcast can be accessed by visiting the Company’s website 90 minutes following the conference call at investors.cerence.com. Forward Looking Statements Statements in this press release, as well as oral statements made by Cerence management from time to time, regarding: Cerence’s future performance, results and financial condition; expected growth, profitability and cash flow; outlook and momentum; Cerence's business model; transformation plans and cost efficiency initiatives; stock repurchase program including, but not limited to, the amount and timing; strategy; opportunities; business, industry and market trends; plans and expectations regarding fixed license contracts and the impact on financial results; revenue visibility; backlog; revenue timing and mix; demand for Cerence products; innovation and new product offerings, including AI technology and Cerence xUI; expansion into adjacent markets; expected benefits of technology partnerships; IP licensing, enforcement, and protection efforts; and management’s future expectations, anticipations, intentions, estimates, assumptions, beliefs, goals, objectives, targets, plans, outlook 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,” “goal,” “objective,” “anticipates,” “projects,” “forecasts,” “expects,” “intends,” “continues,” “will,” “may,” or “estimates” or similar expressions) should also be considered to be forward-looking statements. Although we believe forward-looking statements are based upon reasonable assumptions as of the date of this press release, such statements involve known and unknown risk, uncertainties and other factors, which may cause actual results or performance of the company to be materially different from any future results or performance expressed or implied by such forward-looking statements including but not limited to: the highly competitive and rapidly changing market in which we operate; adverse conditions in the automotive industry or the global economy more generally; volatility in the political, legal and regulatory environment in which we operate, including trade, tariffs and other policies implemented by the United States, actions taken by other countries in response or other changes in law and regulation applicable to us; the ongoing conflicts in Ukraine and the Middle East; risks of international operations, including in China; automotive production curtailment or delays; changes in customer forecasts and the timing and receipt of royalty reports; our inability to control and successfully manage our expenses and cash position; our inability to deliver improved financial results from process optimization efforts and cost reduction actions; pricing pressures from our customers; the impact on our business of the transition to a lower level of fixed license contracts, including the failure to achieve such a transition; our failure to win, renew or implement service contracts; the cancellation or postponement of existing contracts; the loss of business from any of our largest customers; effects of customer defaults; a decrease in the level of professional services projects; fluctuations in our financial and operating results, including as a result of licensing transactions and litigation settlements or judgments; our inability to successfully introduce and drive customer adoption of new products, applications and services; our strategies to increase cloud offerings and deploy generative AI and large language models (LLMs) and shift to more recurring revenue streams; the inability to expand into adjacent or non-auto markets; the inability to recruit and retain qualified personnel; cybersecurity and data privacy incidents and compliance with global privacy and data security requirements; failure to protect our intellectual property; adverse developments related to our intellectual property enforcement litigation, the outcome of such litigation, or remedies that could be awarded in connection with such litigation; risks and challenges posed by the development and use of artificial intelligence; the evolving regulatory landscape governing artificial intelligence; defects or interruptions in service with respect to our products; supply chain interruptions; fluctuating currency rates and interest rates; inflation; financial and credit market volatility; restrictions on our current and future operations under the terms of our debt; the use of cash to service or repay our debt; the use of cash to repurchase shares under our stock repurchase program; the ability to repurchase shares of our common stock under our repurchase program at favorable prices or at all; and our inability to generate sufficient cash from our operations; and the other factors discussed in our most recent Annual Report on Form 10-K, quarterly reports on 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 MeasuresWe believe that providing the non-GAAP information, 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 to not only better understand our financial performance, but more importantly, to evaluate the efficacy of the methodology and information used by management to evaluate and measure such performance. The non-GAAP information should not be considered superior to, or a substitute for, financial statements prepared in accordance with GAAP. 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. While our management uses these non-GAAP financial measures as a tool to enhance their understanding of certain aspects of our financial performance, our management does not consider these measures to be a substitute for, or superior to, the information provided by GAAP financial statements. 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 and nine months ended June 30, 2026 and 2025, our management has either included or excluded the following items in general categories, each of which is described below. Adjusted EBITDA. Adjusted EBITDA is defined as net income attributable to Cerence Inc. before net income (loss) attributable to income tax (benefit) expense, other income (expense) items, net, depreciation and amortization expense, and excluding amortization of acquired intangible assets, stock-based compensation, and restructuring and other costs, net and impairment charges related to fixed and intangible assets and gains or losses on the sale of long-lived assets, if any. From time to time we may exclude from Adjusted EBITDA the impact of events, gains, losses or other charges that affect the period-to-period comparability of our operating performance. Other income (expense) items, net include interest expense, interest income, and other income (expense), net (as stated in our Condensed Consolidated Statement of Operations). Our management and Board of Directors use this financial measure to evaluate our operating performance. It is also a significant performance measure in our annual incentive compensation programs.    Restructuring and other costs, net.Restructuring and other costs, 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 such as employee severance costs, consulting costs relating to our transformation initiatives, and costs for consolidating duplicate facilities. 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. Stock-based compensation.Because of varying valuation methodologies, subjective assumptions and the variety of award types, we exclude stock-based compensation from our operating results. We evaluate performance both with and without these measures because compensation expense related to stock-based compensation is typically non-cash and awards granted are influenced by the Company’s 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. 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 other charges (credits), net (gains) losses from extinguishment of debt, net (gains) losses from foreign currency translation, and changes in indemnification assets corresponding with the release of pre-spin liabilities for uncertain tax positions. Non-GAAP total operating expenses.Non-GAAP total operating expenses reflect GAAP operating expenses excluding stock-based compensation, intangible asset amortization, and restructuring and other costs. Our management and Board of Directors use this financial measure to evaluate our operating performance. It is also a significant performance measure in our annual incentive compensation programs.Key Performance IndicatorsWe believe that providing key performance indicators (“KPIs”) allows investors to gain insight into the way management views the performance of the business. We further believe that providing KPIs allows investors to better understand information used by management to evaluate and measure such performance. KPIs should not be considered superior to, or a substitute for, operating results prepared in accordance with GAAP. In assessing the performance of the business during the three months ended June 30, 2026, our management has reviewed the following KPIs, each of which is described below: Percent of worldwide auto production with Cerence Technology (TTM): The number of Cerence enabled cars shipped on a TTM basis as compared to IHS Markit car production data. Change in number of Cerence connected cars shipped: The year-over-year change in the number of cars shipped with Cerence connected solutions. Amounts calculated on a TTM basis. Change in Adjusted total billings YoY (TTM): The year over year change in total billings excluding Professional Services and fixed license billings and adjusted for fixed license consumption. Amounts calculated on a TTM over prior year TTM basis. ____________ See the tables at the end of this press release for non-GAAP reconciliations to the most directly comparable GAAP measures. To learn more about Cerence AI, visit www.cerence.ai, and follow the company on LinkedIn. About Cerence Inc.Cerence Inc. (NASDAQ: CRNC) is a global industry leader in creating intuitive, seamless, AI-powered experiences across automotive and transportation. Leveraging decades of innovation and expertise in voice, generative AI, and large language models, Cerence powers integrated experiences that create safer, more connected, and more enjoyable journeys for drivers and passengers alike. With more than 525 million cars shipped with Cerence technology, the company partners with leading automakers, transportation OEMs, and technology companies to advance the next generation of user experiences. Cerence is headquartered in Burlington, Massachusetts, with operations globally and a worldwide team dedicated to pushing the boundaries of AI innovation. For more information, visit www.cerence.ai. Contact InformationCerence Media Relations | [email protected]    Cerence Investor Relations | [email protected] CERENCE INC. Condensed Consolidated Statements of Operations(in thousands, except per share data)(unaudited) CERENCE INC.Condensed Consolidated Balance Sheets(in thousands, except per share amounts) CERENCE INC.Condensed Consolidated Statements of Cash Flows(in thousands)(unaudited) CERENCE INC.Reconciliations of GAAP Financial Measures to Non-GAAP Financial Measures CERENCE INC.Reconciliations of GAAP Financial Measures to Non-GAAP Financial Measures (cont.)

Cerence (CRNC) came out with quarterly earnings of $0.15 per share, beating the Zacks Consensus Estimate of $0.13 per share. This compares to earnings of $0.09 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of +15.39%. A quarter ago, it was expected that this automotive artificial intelligence developer would post earnings of $0.21 per share when it actually produced earnings of $0.15, delivering a surprise of -28.57%. Over the last four quarters, the company has surpassed consensus EPS estimates three times. Cerence, which belongs to the Zacks Computers - IT Services industry, posted revenues of $69.59 million for the quarter ended June 2026, surpassing the Zacks Consensus Estimate by 1.94%. This compares to year-ago revenues of $62.24 million. The company has topped consensus revenue estimates four times over the last four quarters. The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call. Cerence shares have lost about 13.8% since the beginning of the year versus the S&P 500's gain of 12.8%. While Cerence has underperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock? There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately. Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions. Ahead of this earnings release, the estimate revisions trend for Cerence was mixed. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #3 (Hold) for the stock. So, the shares are expected to perform in line with the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. It will be interesting to see how estimates for the coming quarters and the current fiscal year change in the days ahead. The current consensus EPS estimate is $0.22 on $69.49 million in revenues for the coming quarter and $0.63 on $318.38 million in revenues for the current fiscal year. Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Computers - IT Services is currently in the bottom 40% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1. One other stock from the same industry, Stem, Inc. (STEM), is yet to report results for the quarter ended June 2026. The results are expected to be released on August 12. This company is expected to post quarterly loss of $1.76 per share in its upcoming report, which represents a year-over-year change of +52.8%. The consensus EPS estimate for the quarter has remained unchanged over the last 30 days. Stem, Inc.'s revenues are expected to be $31.6 million, down 17.6% from the year-ago quarter. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Cerence Inc. (CRNC) : Free Stock Analysis Report Stem, Inc. (STEM) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Headlines Exceeded Q2 expectations with $64.2 million in revenue and $7.2 million in Adjusted EBITDA, both above the high end of guidance; net income within range at $1.7 million; $14.1 million in operating cash flow; and $13.6 million in free cash flow Continued customer and technology momentum, with Cerence xUI-powered vehicles starting production and expanding adoption across Audio AI and generative AI solutions with global OEMs Raises midpoints of full-year revenue, Adjusted EBITDA and free cash flow guidance BURLINGTON, Mass., May 07, 2026 (GLOBE NEWSWIRE) -- Cerence Inc. (NASDAQ: CRNC) (“Cerence AI”), a global leader pioneering conversational AI-powered user experiences, today reported its second quarter fiscal year 2026 results for the period ended March 31, 2026. “We delivered another strong quarter, exceeding the high end of our revenue and adjusted EBITDA guidance while continuing to generate meaningful free cash flow,” said Brian Krzanich, Chief Executive Officer of Cerence AI. “We believe that our results for the quarter reflect disciplined execution across the business and underscore the strength of our position as a trusted AI partner to the world’s leading automakers. As the industry accelerates its adoption of advanced AI in the vehicle, customers are increasingly turning to Cerence AI for solutions that combine reliability, flexibility, and deep automotive expertise. This is driving growing momentum for Cerence's leading technology, including the first Cerence xUI-powered cars now entering production, as well as broader adoption across our portfolio." Krzanich continued, “At the same time, we are making progress in bringing our technology into select adjacent markets where our domain expertise and edge‑based approach are well suited, while actively protecting and managing our intellectual property as part of our long‑term strategy. We believe we have a durable growth profile over time, supported by disciplined execution, strong cash generation, and a continued focus on profitable growth. Based on our strong performance and improved visibility, we are raising the midpoints of our full-year revenue, adjusted EBITDA, and free cash flow guidance.” Results Summary (1) (in millions, except per share data) Cerence AI's second quarter results reflect stable core performance and continued improvement in revenue mix. Growth in recurring Connected Services and steady Variable License revenue helped offset quarter‑to‑quarter variability in fixed license timing, which the Company believes underscores the durability and resilience of its business model. Revenue and adjusted EBITDA exceeded expectations, and the company generated strong free cash flow, demonstrating disciplined execution and improved cash conversion. (1) Please refer to the “Discussion of Non-GAAP Financial Measures” and “Reconciliations of GAAP Financial Measures to Non-GAAP Financial Measures” included elsewhere in this release for more information regarding our use of non-GAAP financial measures. (2) Q1FY26 revenue included $49.5 million of IP license revenue related to our previously disclosed agreement with Samsung. Q2FY26 and Q2FY25 revenue included $5.8 million and $21.5 million of revenue from fixed license contracts, respectively. (3) Q1FY26 GAAP and Non-GAAP operating expenses included $20.8 million of expenses related to our previously disclosed agreement with Samsung. Cerence Key Performance Indicators To help investors gain further insight into Cerence’s business and its performance, management provides a set of key performance indicators (KPIs). The Company believes that KPIs for the quarter continued to reflect the strength and durability of Cerence AI’s business model. The Company maintained penetration across global auto production, with year‑over‑year growth in connected cars shipped and adjusted total billings, driven by increased adoption of connected solutions and disciplined pricing. (1) Please refer to the “Key Performance Indicators” section included elsewhere in this release for more information regarding the definitions and our use of key performance indicators. (2) Based on IHS Markit data, global auto production increased 2% TTM over prior year TTM. (3) Adjusted Total Billings excludes professional services and fixed license contracts and is adjusted for fixed license consumption. Change in Adjusted Total Billings is calculated TTM over prior year TTM. Third Quarter and Full Year Fiscal 2026 Outlook For the fiscal quarter ending June 30, 2026: Revenue is expected to be in the range of $68 million to $72 million, including approximately $10 million of fixed license revenue contracts currently expected to be signed during the quarter. Gross margins are projected between 75% and 76%. GAAP profitability is projected to be between a net loss of $1 million to net income of $3 million. GAAP EPS (diluted) between $(0.02) and $0.07. Adjusted EBITDA is expected to be in the range of $8 million to $12 million. The adjusted EBITDA guidance excludes amortization of acquired intangible assets, stock-based compensation, restructuring and other costs. For the full fiscal year ending September 30, 2026: Revenue is expected to be in the range of $305 million to $320 million (raising the midpoint to $312.5 million and narrowing the range). Gross Margin is expected to be in the range of 79% to 80% (reaffirmed). Net (loss) income is projected to be in the range of $(3) million to $7 million (range narrowed with midpoint maintained). GAAP EPS (diluted) to $(0.07) and $0.15 (range narrowed with midpoint maintained). Adjusted EBITDA is expected to be in the range of $60 million to $70 million (raising the midpoint by 8% and narrowing the range). Net cash provided by operating activities is projected to be in the range of $72 million to $78 million (raised). Free cash flow is expected to be in the range of $66 million to $76 million (raised). Cerence Conference Call and Webcast The Company will host a live conference call and webcast with slides to discuss its results today at 4:30pm Eastern Time / 1:30pm Pacific Time. Interested investors and analysts are invited to dial into the conference call by registering here. Webcast access also will be available on the Investor section of the Company’s website at investors.cerence.com. A replay of the webcast can be accessed by visiting the Company’s website 90 minutes following the conference call at investors.cerence.com. Forward Looking Statements Statements in this press release, as well as oral statements made by Cerence management from time to time, regarding: Cerence’s future performance, results and financial condition; expected growth, profitability and cash flow; outlook and momentum; Cerence's business model; transformation plans and cost efficiency initiatives; strategy; opportunities; business, industry and market trends; plans and expectations regarding fixed license contracts and the impact on financial results; revenue visibility; backlog; revenue timing and mix; demand for Cerence products; innovation and new product offerings, including AI technology and Cerence xUI; expected benefits of technology partnerships; IP licensing, enforcement, and protection efforts; and management’s future expectations, anticipations, intentions, estimates, assumptions, beliefs, goals, objectives, targets, plans, outlook 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,” “goal,” “objective,” “anticipates,” “projects,” “forecasts,” “expects,” “intends,” “continues,” “will,” “may,” or “estimates” or similar expressions) should also be considered to be forward-looking statements. Although we believe forward-looking statements are based upon reasonable assumptions as of the date of this press release, such statements involve known and unknown risk, uncertainties and other factors, which may cause actual results or performance of the company to be materially different from any future results or performance expressed or implied by such forward-looking statements including but not limited to: the highly competitive and rapidly changing market in which we operate; adverse conditions in the automotive industry or the global economy more generally; volatility in the political, legal and regulatory environment in which we operate, including trade, tariffs and other policies implemented by the United States, actions taken by other countries in response or other changes in law and regulation applicable to us; the ongoing conflicts in Ukraine and the Middle East; risks of international operations, including in China; automotive production curtailment or delays; changes in customer forecasts and the timing and receipt of royalty reports; our inability to control and successfully manage our expenses and cash position; our inability to deliver improved financial results from process optimization efforts and cost reduction actions; pricing pressures from our customers; the impact on our business of the transition to a lower level of fixed license contracts, including the failure to achieve such a transition; our failure to win, renew or implement service contracts; the cancellation or postponement of existing contracts; the loss of business from any of our largest customers; effects of customer defaults; a decrease in the level of professional services projects; fluctuations in our financial and operating results, including as a result of licensing transactions and litigation settlements or judgments; our inability to successfully introduce and drive customer adoption of new products, applications and services; our strategies to increase cloud offerings and deploy generative AI and large language models (LLMs) and shift to more recurring revenue streams; the inability to expand into adjacent or non-auto markets; the inability to recruit and retain qualified personnel; cybersecurity and data privacy incidents and compliance with global privacy and data security requirements; failure to protect our intellectual property; adverse developments related to our intellectual property enforcement litigation, the outcome of such litigation, or remedies that could be awarded in connection with such litigation; risks and challenges posed by the development and use of artificial intelligence; the evolving regulatory landscape governing artificial intelligence; defects or interruptions in service with respect to our products; supply chain interruptions; fluctuating currency rates and interest rates; inflation; financial and credit market volatility; restrictions on our current and future operations under the terms of our debt; the use of cash to service or repay our debt; and our inability to generate sufficient cash from our operations; and the other factors discussed in our most recent Annual Report on Form 10-K, quarterly reports on 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 the non-GAAP information, 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 to not only better understand our financial performance, but more importantly, to evaluate the efficacy of the methodology and information used by management to evaluate and measure such performance. The non-GAAP information should not be considered superior to, or a substitute for, financial statements prepared in accordance with GAAP. 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. While our management uses these non-GAAP financial measures as a tool to enhance their understanding of certain aspects of our financial performance, our management does not consider these measures to be a substitute for, or superior to, the information provided by GAAP financial statements. 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 and six months ended March 31, 2026 and 2025, our management has either included or excluded the following items in general categories, each of which is described below. Adjusted EBITDA. Adjusted EBITDA is defined as net income attributable to Cerence Inc. before net income (loss) attributable to income tax (benefit) expense, other income (expense) items, net, depreciation and amortization expense, and excluding amortization of acquired intangible assets, stock-based compensation, and restructuring and other costs, net and impairment charges related to fixed and intangible assets and gains or losses on the sale of long-lived assets, if any. From time to time we may exclude from Adjusted EBITDA the impact of events, gains, losses or other charges that affect the period-to-period comparability of our operating performance. Other income (expense) items, net include interest expense, interest income, and other income (expense), net (as stated in our Condensed Consolidated Statement of Operations). Our management and Board of Directors use this financial measure to evaluate our operating performance. It is also a significant performance measure in our annual incentive compensation programs. Restructuring and other costs, net. Restructuring and other costs, 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 such as employee severance costs, consulting costs relating to our transformation initiatives, and costs for consolidating duplicate facilities. 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. Stock-based compensation. Because of varying valuation methodologies, subjective assumptions and the variety of award types, we exclude stock-based compensation from our operating results. We evaluate performance both with and without these measures because compensation expense related to stock-based compensation is typically non-cash and awards granted are influenced by the Company’s 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. 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 other charges (credits), net (gains) losses from extinguishment of debt, net (gains) losses from foreign currency translation, and changes in indemnification assets corresponding with the release of pre-spin liabilities for uncertain tax positions. Non-GAAP total operating expenses. Non-GAAP total operating expenses reflect GAAP operating expenses excluding stock-based compensation, intangible asset amortization, and restructuring and other costs. Our management and Board of Directors use this financial measure to evaluate our operating performance. It is also a significant performance measure in our annual incentive compensation programs. Key Performance Indicators We believe that providing key performance indicators (“KPIs”) allows investors to gain insight into the way management views the performance of the business. We further believe that providing KPIs allows investors to better understand information used by management to evaluate and measure such performance. KPIs should not be considered superior to, or a substitute for, operating results prepared in accordance with GAAP. In assessing the performance of the business during the three months ended March 31, 2026, our management has reviewed the following KPIs, each of which is described below: Percent of worldwide auto production with Cerence Technology (TTM): The number of Cerence enabled cars shipped on a TTM basis as compared to IHS Markit car production data. Change in number of Cerence connected cars shipped: The year-over-year change in the number of cars shipped with Cerence connected solutions. Amounts calculated on a TTM basis. Change in Adjusted total billings YoY (TTM): The year over year change in total billings excluding Professional Services and fixed license billings and adjusted for fixed license consumption. Amounts calculated on a TTM over prior year TTM basis. See the tables at the end of this press release for non-GAAP reconciliations to the most directly comparable GAAP measures. To learn more about Cerence AI, visit www.cerence.ai, and follow the company on LinkedIn. About Cerence Inc. Cerence Inc. (NASDAQ: CRNC) is a global industry leader in creating intuitive, seamless, AI-powered experiences across automotive and transportation. Leveraging decades of innovation and expertise in voice, generative AI, and large language models, Cerence powers integrated experiences that create safer, more connected, and more enjoyable journeys for drivers and passengers alike. With more than 525 million cars shipped with Cerence technology, the company partners with leading automakers, transportation OEMs, and technology companies to advance the next generation of user experiences. Cerence is headquartered in Burlington, Massachusetts, with operations globally and a worldwide team dedicated to pushing the boundaries of AI innovation. For more information, visit www.cerence.ai. CERENCE INC. Condensed Consolidated Statements of Operations (in thousands, except per share data) (unaudited) CERENCE INC. Condensed Consolidated Balance Sheets (in thousands, except per share amounts) CERENCE INC. Condensed Consolidated Statements of Cash Flows (in thousands) (unaudited) CERENCE INC. Reconciliations of GAAP Financial Measures to Non-GAAP Financial Measures CERENCE INC. Reconciliations of GAAP Financial Measures to Non-GAAP Financial Measures (cont.) Contact Information Cerence Media Relations | [email protected] Cerence Investor Relations | [email protected]

Cerence (CRNC) came out with quarterly earnings of $0.15 per share, missing the Zacks Consensus Estimate of $0.21 per share. This compares to earnings of $0.53 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of -28.57%. A quarter ago, it was expected that this automotive artificial intelligence developer would post a loss of $0.01 per share when it actually produced earnings of $0.99, delivering a surprise of +10000%. Over the last four quarters, the company has surpassed consensus EPS estimates three times. Cerence, which belongs to the Zacks Computers - IT Services industry, posted revenues of $64.19 million for the quarter ended March 2026, surpassing the Zacks Consensus Estimate by 5.38%. This compares to year-ago revenues of $78.01 million. The company has topped consensus revenue estimates four times over the last four quarters. The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call. Cerence shares have lost about 4.7% since the beginning of the year versus the S&P 500's gain of 7.6%. While Cerence has underperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock? There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately. Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions. Ahead of this earnings release, the estimate revisions trend for Cerence was mixed. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #3 (Hold) for the stock. So, the shares are expected to perform in line with the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. It will be interesting to see how estimates for the coming quarters and the current fiscal year change in the days ahead. The current consensus EPS estimate is $0.17 on $69.62 million in revenues for the coming quarter and $0.71 on $317.71 million in revenues for the current fiscal year. Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Computers - IT Services is currently in the top 34% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1. Another stock from the same industry, SAIC (SAIC), has yet to report results for the quarter ended April 2026. This information technology company is expected to post quarterly earnings of $2.26 per share in its upcoming report, which represents a year-over-year change of +17.7%. The consensus EPS estimate for the quarter has been revised 1.4% lower over the last 30 days to the current level. SAIC's revenues are expected to be $1.78 billion, down 5% from the year-ago quarter. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Cerence Inc. (CRNC) : Free Stock Analysis Report Science Applications International Corporation (SAIC) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research