Cerence (CRNC) AI Stock Analysis

• Market Cap: $516.37M
• Dividend Yield: N/A
• Average Volume (3M): 1.95M
• Price to Earnings (P/E): ―
• Beta (1Y): 2.16
• Revenue Growth: -31.20%
• EPS Growth: 95.56%
• Country: US
• Employees: 1,400
• Sector: Technology
• Sector Strength: 88
• Industry: Software - Application
• EPS (TTM): 0.12
• Shares Outstanding: 43,319,653
• 10 Day Avg. Volume: 2,217,261
• 30 Day Avg. Volume: 1,952,587
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): N/A
• P/FCF Ratio: N/A
• Enterprise Value/Market Cap: 1.12
• Enterprise Value/Revenue: 2.36
• Enterprise Value/Gross Profit: 3.33
• Enterprise Value/Ebitda: -566.53
• 1Y Price Target: $11.50
• Price Target Upside: -3.52% Downside
• Rating Consensus: Hold
• Number of Analyst Covering: 4

• Rating: 51 Neutral
• Price Target: $9.00 ▼(-24.50% Downside)

Cerence's overall stock score reflects significant financial and valuation challenges, with high leverage and negative profitability. However, the positive earnings call, with raised guidance and strategic advancements, provides some optimism. Technical analysis suggests potential for a rebound, but the stock remains risky due to its financial instability.

Positive Factors

AI Innovation Progress

Cerence's advancements in AI technology, particularly in its xUI platform, enhance its competitive edge in the automotive industry, supporting long-term growth and market leadership.

Strategic Partnerships

The partnership with LG expands Cerence's market reach beyond automotive, diversifying revenue streams and enhancing its position in the consumer electronics sector.

Collaboration with Microsoft

The collaboration with Microsoft strengthens Cerence's AI capabilities and integration with widely-used software, enhancing product offerings and customer value.

Negative Factors

High Leverage

High leverage indicates significant reliance on debt, which can strain financial stability and limit flexibility in adverse market conditions.

Decline in License Revenue

The decline in license revenue reflects challenges in transitioning revenue models, potentially impacting short-term cash flow and profitability.

Revenue Growth Challenges

Declining revenue growth indicates potential difficulties in maintaining market share and competitiveness, affecting long-term business sustainability.

Cerence Business Overview & Revenue Model

Company Description

Cerence Inc. provides AI powered virtual assistants for the mobility/transportation market worldwide. The company offers edge software components; cloud-connected components and related toolkits and applications; and virtual assistant coexistence and professional services. It also provides conversational artificial intelligence-based solutions, including speech recognition, natural language understanding, speech signal enhancement, text-to-speech, and acoustic modeling technology. Cerence Inc. is headquartered in Burlington, Massachusetts.

How the Company Makes Money

Cerence generates revenue through a combination of licensing agreements, software sales, and recurring service contracts. Key revenue streams include the sale of its voice and AI solutions to automotive manufacturers, which integrate Cerence's technology into their vehicles. The company also earns income from ongoing support and maintenance services, as well as upgrades to its software products. Significant partnerships with major automakers and technology firms bolster Cerence's earnings, as these collaborations often result in long-term contracts and additional revenue opportunities through joint developments and integrations.

Cerence Financial Statement Overview

Summary

Cerence is facing financial challenges, with declining revenues and persistent net losses impacting its income statement. The balance sheet shows elevated leverage, which could become problematic if earnings do not recover. Cash flow has improved, suggesting some operational efficiencies, yet the company needs to address its profitability to ensure longer-term financial health.

Income Statement

Cerence has experienced a decline in revenue from $331.5M in 2024 to $254.3M in TTM 2025, indicating a negative revenue growth trend. The gross profit margin for TTM 2025 is 70.2%, showing strong product profitability. However, the net profit margin is significantly negative at -132.3%, highlighting substantial losses. The EBIT and EBITDA margins are also negative, reflecting operational challenges and high operational costs.

Balance Sheet

The debt-to-equity ratio is 1.85, indicating high leverage which could pose a risk if earnings do not improve. The return on equity (ROE) is negative, consistent with current losses. However, the equity ratio stands at 22.4%, suggesting a reasonable level of equity financing compared to total assets.

Cash Flow

Free cash flow has grown from $12M in 2024 to $37.3M in TTM 2025, indicating improvement in cash generation. The operating cash flow to net income ratio is positive, showing better cash conversion relative to net losses. However, the free cash flow to net income ratio is negative, reflecting ongoing profitability issues.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	245.95M	331.50M	294.48M	327.89M	387.18M	329.65M
Gross Profit	174.04M	244.27M	199.31M	230.72M	286.11M	221.79M
EBITDA	-1.02M	-561.43M	-5.58M	-160.42M	91.93M	29.74M
Net Income	-25.77M	-588.08M	-56.25M	-310.83M	45.89M	-20.63M
Balance Sheet
Total Assets	636.80M	702.36M	1.30B	1.32B	1.71B	1.69B
Cash, Cash Equivalents and Short-Term Investments	79.13M	126.99M	110.36M	115.16M	158.86M	147.73M
Total Debt	216.83M	295.24M	289.33M	286.82M	288.12M	296.64M
Total Liabilities	481.13M	561.26M	602.72M	605.54M	673.78M	729.69M
Stockholders Equity	155.67M	141.10M	694.88M	712.95M	1.03B	957.76M
Cash Flow
Free Cash Flow	41.74M	12.20M	2.37M	-19.58M	62.34M	25.78M
Operating Cash Flow	54.54M	17.20M	7.50M	-2.14M	74.39M	44.79M
Investing Cash Flow	-8.95M	4.38M	5.82M	-10.56M	-41.63M	-30.68M
Financing Cash Flow	-87.25M	225.00K	-5.33M	-19.61M	-41.51M	121.55M

Cerence Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 11.92
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For CRNC, the sentiment is Positive. The current price of 11.92 is above the 20-day moving average (MA) of 10.72, above the 50-day MA of 10.27, and above the 200-day MA of 10.21, indicating a bullish trend. The MACD of 0.47 indicates Negative momentum. The RSI at 58.57 is Neutral, neither overbought nor oversold. The STOCH value of 55.02 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for CRNC.

Cerence Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
MITK	79 Outperform	453.28M	30.14	6.53%	―	6.98%	―
RDVT	76 Outperform	727.82M	86.48	9.05%	―	22.14%	-45.14%
WEAV	61 Neutral	548.50M	-17.44	-38.19%	―	18.10%	4.60%
DSP	59 Neutral	534.46M	252.68	8.57%	―	30.92%	―
CRNC	51 Neutral	$516.37M	―	-16.63%	―	-31.20%	95.56%
APPS	49 Neutral	585.23M	-6.96	-53.22%	―	-2.45%	82.00%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%

Cerence Corporate Events

Cerence Announces Restructuring Plan to Reduce Expenses

On September 2, 2025, Cerence Inc. announced a restructuring plan aimed at reducing operating expenses and positioning the company for future growth, with estimated cash restructuring charges between $7.2 and $7.9 million. Additionally, the company entered into a retention agreement with Nils Schanz, Executive Vice President, offering a retention bonus and equity awards contingent on his continued service and performance metrics over the next three years.

The most recent analyst rating on (CRNC) stock is a Hold with a $10.00 price target. To see the full list of analyst forecasts on Cerence stock, see the CRNC Stock Forecast page.