Cerence (CRNC) AI Stock Analysis

• Market Cap: $501.52M
• Dividend Yield: N/A
• Average Volume (3M): 1.72M
• Price to Earnings (P/E): ―
• Beta (1Y): 2.17
• Revenue Growth: -24.05%
• EPS Growth: 96.90%
• Country: US
• Employees: 1,400
• Sector: Technology
• Sector Strength: 88
• Industry: Software - Application
• EPS (TTM): -0.04
• Shares Outstanding: 44,938,760
• 10 Day Avg. Volume: 1,185,560
• 30 Day Avg. Volume: 1,722,602
• PEG Ratio: 0.30
• Price to Book (P/B): 3.57
• Price to Sales (P/S): 2.14
• P/FCF Ratio: 11.49
• Enterprise Value/Market Cap: 1.34
• Enterprise Value/Revenue: 2.66
• Enterprise Value/Gross Profit: 3.69
• Enterprise Value/Ebitda: 56.04
• 1Y Price Target: $10.50
• Price Target Upside: -5.91% Downside
• Rating Consensus: Hold
• Number of Analyst Covering: 2
• EPS Forecast (FY): 0.65
• Revenue Forecast (FY): $257.98M

• Rating: 61 Neutral
• Price Target: $13.50 ▲(20.97% Upside)

Cerence's overall stock score is driven by a positive earnings call outlook and strong technical indicators. However, financial performance and valuation concerns, including negative profitability and high leverage, weigh on the score.

Positive Factors

Revenue Growth Projections

The projected revenue growth indicates strong demand for Cerence's products and services, suggesting a robust market position and potential for increased market share.

Debt Reduction

Significant debt reduction enhances financial stability and flexibility, allowing Cerence to invest in growth opportunities and reduce financial risk.

Intellectual Property Monetization

Successful IP monetization provides a substantial cash inflow, supporting R&D and strategic initiatives, and demonstrates the value of Cerence's technology assets.

Negative Factors

High Leverage

High leverage can constrain financial flexibility and increase risk, potentially impacting Cerence's ability to invest in growth and weather economic downturns.

Decline in Professional Services Revenue

Declining professional services revenue suggests challenges in this segment, which may affect overall revenue diversification and growth potential.

Ongoing Legal Costs

Continued legal expenses can strain financial resources and distract management, potentially impacting operational efficiency and profitability.

Cerence Business Overview & Revenue Model

Company Description

Cerence Inc. (CRNC) is a leading provider of AI-powered conversational and voice recognition technologies, primarily serving the automotive and mobility sectors. The company specializes in creating innovative solutions that enhance in-car experiences, enabling drivers and passengers to interact with their vehicles through natural language processing and voice commands. Cerence's core products include voice assistants, speech recognition software, and customized mobility solutions that cater to a wide array of automotive manufacturers globally.

How the Company Makes Money

Cerence generates revenue primarily through licensing its voice recognition technologies and software solutions to automotive manufacturers and OEMs. The company typically operates on a subscription and usage-based model, where clients pay for the integration of Cerence's technology into their vehicles. Key revenue streams include software licenses, maintenance and support services, and professional services for customization and integration. Significant partnerships with major automotive companies enhance Cerence's market reach and contribute to its earnings, as these collaborations often lead to long-term contracts and recurring revenue. Additionally, Cerence may benefit from advancements in AI and increased demand for connected vehicle technologies, driving further growth in revenue.

Cerence Financial Statement Overview

Summary

Cerence's financial performance is mixed. While there is slight revenue growth and improved cash flow, profitability remains a concern with negative net income and high leverage. The company needs to enhance operational efficiency and reduce debt to improve its financial health.

Income Statement

Cerence's income statement shows a mixed performance. The company has experienced a slight revenue growth of 2.37% in the most recent year, but it has struggled with profitability, as indicated by a negative net profit margin of -7.43%. The gross profit margin remains healthy at 72.07%, suggesting efficient cost management. However, the negative EBIT and EBITDA margins highlight ongoing operational challenges.

Balance Sheet

The balance sheet reveals a high debt-to-equity ratio of 1.44, indicating significant leverage, which could pose financial risks. The return on equity is negative at -12.42%, reflecting the company's inability to generate profits from shareholders' equity. Despite these challenges, the equity ratio stands at a moderate level, suggesting a balanced asset structure.

Cash Flow

Cerence's cash flow statement shows improvement in free cash flow growth at 12.17%, indicating better cash generation capabilities. The operating cash flow to net income ratio is 0.60, which is a positive sign of cash flow stability. However, the free cash flow to net income ratio of 0.77 suggests that while cash flow is improving, profitability remains a concern.

Breakdown	TTM	Dec 2025	Dec 2025	Dec 2024	Dec 2023	Dec 2022
Income Statement
Total Revenue	251.78M	―	251.78M	331.50M	294.48M	327.89M
Gross Profit	181.47M	―	181.47M	242.07M	193.46M	219.21M
EBITDA	11.95M	―	11.95M	-561.43M	-5.58M	-160.42M
Net Income	-18.71M	―	-18.71M	-588.08M	-56.25M	-310.83M
Balance Sheet
Total Assets	630.59M	―	630.59M	702.36M	1.30B	1.32B
Cash, Cash Equivalents and Short-Term Investments	87.45M	―	87.45M	126.99M	110.36M	115.16M
Total Debt	217.12M	―	217.12M	295.24M	289.33M	286.82M
Total Liabilities	479.92M	―	479.92M	561.26M	602.72M	605.54M
Stockholders Equity	150.68M	―	150.68M	141.10M	694.88M	712.95M
Cash Flow
Free Cash Flow	46.82M	―	46.82M	12.20M	2.37M	-19.58M
Operating Cash Flow	61.17M	―	61.17M	17.20M	7.50M	-2.14M
Investing Cash Flow	-10.55M	―	-10.55M	4.38M	5.82M	-10.56M
Financing Cash Flow	-87.00M	―	-87.00M	225.00K	-5.33M	-19.61M

Cerence Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 11.16
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For CRNC, the sentiment is Negative. The current price of 11.16 is below the 20-day moving average (MA) of 11.17, above the 50-day MA of 10.81, and above the 200-day MA of 9.94, indicating a neutral trend. The MACD of 0.28 indicates Positive momentum. The RSI at 47.02 is Neutral, neither overbought nor oversold. The STOCH value of 10.27 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for CRNC.

Cerence Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
MITK	73 Outperform	$462.00M	55.44	3.87%	―	4.42%	165.42%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%
CRNC	61 Neutral	$501.52M	-22.50	-12.83%	―	-24.05%	96.90%
WEAV	52 Neutral	$544.62M	-15.64	-44.64%	―	17.34%	-8.35%
VERI	50 Neutral	$482.90M	-2.13	―	―	-17.50%	-51.25%
SOUN	48 Neutral	$4.67B	-13.17	-90.15%	―	120.52%	-124.81%

Cerence Corporate Events

Cerence Settles Patent Dispute with Samsung

Cerence, a company involved in patent disputes with Samsung, resolved its legal battles through a cross-license agreement. This agreement, reached on October 28, 2025, required Samsung to make a one-time payment of $49.5 million to Cerence, concluding a series of lawsuits filed by both parties over patent infringements.