Cerence (CRNC) AI Stock Analysis

• Market Cap: $528.49M
• Dividend Yield: N/A
• Average Volume (3M): 759.91K
• Price to Earnings (P/E): ―
• Beta (1Y): 2.18
• 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: 45,016,033
• 10 Day Avg. Volume: 756,681
• 30 Day Avg. Volume: 759,911
• 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: 1.27
• Enterprise Value/Revenue: 2.66
• Enterprise Value/Gross Profit: 3.69
• Enterprise Value/Ebitda: 56.04
• 1Y Price Target: $10.50
• Price Target Upside: -10.56% Downside
• Rating Consensus: Hold
• Number of Analyst Covering: 2
• EPS Forecast (FY): 0.77
• Revenue Forecast (FY): $314.85M

• Rating: 55 Neutral
• Price Target: $12.50 ▲(6.47% Upside)

The score is driven by mixed current financial performance (losses and leverage despite healthy gross margin and improving cash flow) and only neutral technicals. Offsetting these is a notably positive earnings-call outlook, including strong FY2026 revenue/EBITDA/FCF guidance and material debt reduction; valuation remains constrained by negative earnings and no stated dividend yield.

Positive Factors

Intellectual Property Monetization

A $49.5M settlement from Samsung demonstrates Cerence’s IP has monetizable value, validating its patent portfolio. This creates a durable non-operating cash source and strengthens negotiating leverage for future licenses, supporting long-term revenue diversification and balance-sheet resilience.

High Gross Margin and Improving Cash Generation

Sustained gross margin above 70% reflects scalable, software-driven economics in licensing voice AI. Improving free cash flow growth shows better conversion of income to cash, enabling reinvestment, debt reduction, and funding product development over the next several quarters without reliance on external capital.

Strategic OEM Partnerships and Product Deployment

Deployment of Cerence xUI by Geely is a structural win with a global automaker, validating product-market fit and increasing scale. Long-term OEM deployments tend to create recurring licensing, integration work and platform stickiness, supporting steady adoption across vehicle fleets and geographies.

Negative Factors

Elevated Financial Leverage

A D/E of 1.44 indicates material leverage that constrains financial flexibility, raising interest and refinancing risk. Even with the $87.5M debt paydown management highlighted, remaining leverage increases vulnerability to cyclical OEM spending shifts and limits capacity for large strategic investments.

Negative Profitability Metrics

Consistent negative operating and net margins along with negative ROE indicate the company still struggles to convert revenues into sustainable profits. This undermines internal funding of growth, pressures cash reserves over time, and may force ongoing cost control or capital raises to support expansion.

Declining Professional Services and Legal Headwinds

A structural decline in professional services reduces a stable, higher-touch revenue stream and may signal product-driven efficiency reducing service upsell. Concurrent legal expense guidance ($7–$8M) creates recurring uncertainty and margin pressure, making near-term profitability and cash generation less predictable.

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 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: Positive
• Last Price: 11.74
• 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 11.74 is above the 20-day moving average (MA) of 11.59, above the 50-day MA of 10.88, and above the 200-day MA of 10.14, indicating a bullish trend. The MACD of 0.29 indicates Negative momentum. The RSI at 51.49 is Neutral, neither overbought nor oversold. The STOCH value of 55.35 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	74 Outperform	$459.25M	54.36	3.87%	―	4.42%	165.42%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%
WEAV	56 Neutral	$518.87M	-15.16	-44.64%	―	17.34%	-8.35%
CRNC	55 Neutral	$528.49M	-24.64	-12.83%	―	-24.05%	96.90%
VERI	50 Neutral	$408.54M	―	―	―	-17.50%	-51.25%
SOUN	48 Neutral	$4.66B	-13.30	-90.15%	―	120.52%	-124.81%

Cerence Corporate Events

Cerence Repurchases Convertible Notes to Strengthen Capital Structure

On December 23, 2025, Cerence entered into privately negotiated transactions with certain holders of its 1.50% Convertible Senior Notes due 2028 to repurchase $30 million in aggregate principal amount at 92% of face value, plus accrued and unpaid interest up to but excluding the settlement date. The company plans to cancel the repurchased notes, reducing its outstanding convertible debt and modestly improving its capital structure ahead of the notes’ 2028 maturity, which may be seen as a proactive balance-sheet management step for debtholders and equity investors.

The most recent analyst rating on (CRNC) stock is a Hold with a $13.50 price target. To see the full list of analyst forecasts on Cerence stock, see the CRNC Stock Forecast page.

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.

The most recent analyst rating on (CRNC) stock is a Hold with a $11.00 price target. To see the full list of analyst forecasts on Cerence stock, see the CRNC Stock Forecast page.