Education
About Us
Working with TipRanks
Follow Us
Cerence (CRNC)
NASDAQ:CRNC
Top Page
Cerence
(NASDAQ:CRNC)
Rating:50Neutral
Price Target:
$9.00
▼(-1.75% Downside)
Positive Factors
Financial Performance
Cerence posted a significant beat with impressive PPU, GM, OM and cash flow metrics all above estimates.
Product Development
Six GenAI SOPs went live, including several with Chinese OEMs, supporting approximately 5% year-over-year PPU increases.
Strategic Partnerships
The company won a new xUI customer within VW Group and is expanding their JLR opportunity.
Negative Factors
Earnings Call Focus
Additional details about effective PPU are anticipated to be the focus of the next earnings call.
Professional Services Revenue
Professional Services estimates come down $1-2MM per quarter on secular efficiency trends.
Tariff Uncertainty
Cerence posted a solid report and maintained the FY25 outlook, despite tariff uncertainty.
Cerence (CRNC) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$396.81M
Dividend YieldN/A
Average Volume (3M)1.87M
Price to Earnings (P/E)―
Beta (1Y)2.04
Revenue Growth-31.20%
EPS Growth95.56%
CountryUS
Employees1,400
SectorTechnology
Sector Strength98
IndustrySoftware - Application
Share Statistics
EPS (TTM)0.16
Shares Outstanding43,319,653
10 Day Avg. Volume1,765,125
30 Day Avg. Volume1,874,822
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)0.00
Price to Sales (P/S)0.00
P/FCF Ratio0.00
Enterprise Value/Market Cap1.46
Enterprise Value/Revenue2.28
Enterprise Value/Gross Profit3.25
Enterprise Value/Ebitda-1.61
Forecast
1Y Price Target
$11.00Price Target Upside20.09% Upside
Rating ConsensusHold
Number of Analyst Covering5
Cerence Business Overview & Revenue Model
Company DescriptionCerence Inc. (CRNC) is a leading provider of AI-powered voice and conversational AI solutions, primarily serving the automotive industry. The company specializes in creating innovative software that enhances in-car experiences through natural language understanding and voice recognition technology. Cerence's core products include voice assistants, speech recognition, and natural language processing tools designed to improve user interaction with vehicles, thereby elevating driver and passenger experiences.
How the Company Makes MoneyCerence 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 Key Performance Indicators (KPIs)
Any
Gross Margin by Segment
Shows the percentage of revenue that exceeds the cost of goods sold for each segment, revealing efficiency and pricing power across different parts of the business.
Shows the percentage of revenue that exceeds the cost of goods sold for each segment, revealing efficiency and pricing power across different parts of the business.
Data provided by:
Main Street Data
Main Street DataCerence Earnings Call Summary
Earnings Call Date:Aug 06, 2025
(Q3-2025)
| % Change Since: 6.76%|
Next Earnings Date:Nov 24, 2025
Earnings Call Sentiment Positive
The earnings call reflected a positive sentiment overall, with strong revenue and cash flow performance, advancements in AI, and global customer momentum outweighing challenges with fixed license revenue and production delays.Q3-2025 Updates
Positive Updates
Exceeded Revenue and Adjusted EBITDA Guidance
Cerence reported total revenue of $62.2 million, above the high end of their guidance range of $52 million to $56 million, and adjusted EBITDA of $9 million, exceeding expectations.
Strong Free Cash Flow
The company generated a strong free cash flow of $16.1 million, marking the fifth consecutive quarter of positive free cash flow.
Raised Full Fiscal Year Guidance
Cerence raised and narrowed its revenue guidance for the full fiscal year to a range of $244 million to $249 million, bringing the low end above the previous midpoint.
Advancements in AI Platform and Partnerships
Progress was made on Cerence xUI, including increased language availability, improved performance, and a deal with Volkswagen Group. They also expanded partnerships with companies like Arm and LG.
Global Customer Momentum
New design wins with Daihatsu and Hyundai, along with renewals and extensions with Great Wall Motors and GM. Six major customer programs started production this quarter.
Negative Updates
Challenges with Fixed License Revenue
No fixed license revenue was recognized this quarter, compared to $20 million in Q3 of last year, reflecting a shift away from large upfront license deals.
Program Delays and Production Challenges
Some programs continued to push out and be delayed. Vehicle volume projections are down approximately 2.5% for Q4, impacting future production.
Potential Tariff Impact Concerns
Potential tariff impacts in Q4 led to higher-than-expected production in Q3 as OEMs produced ahead of possible tariffs, raising concerns about Q4 production levels.
Company Guidance
During the Cerence Third Quarter 2025 Earnings Call, the company reported strong financial performance, with revenue reaching $62.2 million, surpassing the high end of their guidance. Adjusted EBITDA was $9 million, and they achieved a robust free cash flow of $16.1 million, marking the fifth consecutive quarter of positive free cash flow. For the full fiscal year, Cerence raised and narrowed its revenue guidance to $244 million to $249 million, bringing the low end above the previous midpoint. The company highlighted progress on key deliverables, including advancing their AI roadmap with the Cerence xUI platform and expanding partnerships with OEMs. They also secured significant deals, such as within the Volkswagen Group, indicating strong customer interest and increasing the price per unit (PPU) with these agreements. Cerence maintained a 52% penetration of worldwide auto production, shipped 12.4 million units, and increased their PPU to $4.91, reflecting improved pricing strategies and higher adoption of connected solutions. Despite macroeconomic challenges, the company demonstrated effective cost management, contributing to their positive financial outlook.Cerence Financial Statement Overview
Summary
Cerence is experiencing financial challenges with declining revenues and substantial net losses. Despite a strong gross profit margin and improved cash flow, high leverage and negative profitability indicate significant financial risks.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.42
Neutral
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.55
Neutral
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.48
Neutral
| Breakdown | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 331.50M | 294.48M | 327.89M | 387.18M | 329.65M |
| Gross Profit | 244.27M | 199.31M | 230.72M | 286.11M | 221.79M |
| EBITDA | -561.43M | -5.58M | -160.42M | 91.93M | 29.74M |
| Net Income | -588.08M | -56.25M | -310.83M | 45.89M | -20.63M |
Balance Sheet | |||||
| Total Assets | 702.36M | 1.30B | 1.32B | 1.71B | 1.69B |
| Cash, Cash Equivalents and Short-Term Investments | 126.99M | 110.36M | 115.16M | 158.86M | 147.73M |
| Total Debt | 295.24M | 289.33M | 286.82M | 288.12M | 296.64M |
| Total Liabilities | 561.26M | 602.72M | 605.54M | 673.78M | 729.69M |
| Stockholders Equity | 141.10M | 694.88M | 712.95M | 1.03B | 957.76M |
Cash Flow | |||||
| Free Cash Flow | 12.20M | 2.37M | -19.58M | 62.34M | 25.78M |
| Operating Cash Flow | 17.20M | 7.50M | -2.14M | 74.39M | 44.79M |
| Investing Cash Flow | 4.38M | 5.82M | -10.56M | -41.63M | -30.68M |
| Financing Cash Flow | 225.00K | -5.33M | -19.61M | -41.51M | 121.55M |
Cerence Technical Analysis
Positive
9.16
Price Trends
9.30
Negative
9.00
Positive
9.11
Positive
Market Momentum
-0.19
Positive
50.69
Neutral
49.84
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 9.16 is above the 20-day moving average (MA) of 9.05, below the 50-day MA of 9.30, and above the 200-day MA of 9.11, indicating a neutral trend. The MACD of -0.19 indicates Positive momentum. The RSI at 50.69 is Neutral, neither overbought nor oversold. The STOCH value of 49.84 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for CRNC.
Cerence Risk Analysis
Cerence disclosed 40 risk factors in its most recent earnings report. Cerence reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Cerence Peers Comparison
Overall Rating
UnderperformOutperform
Sector (68)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
77 Outperform | $453.50M | 30.15 | 6.94% | ― | 6.98% | ― | |
68 Neutral | ¥238.13B | 15.93 | 6.62% | 2.46% | 9.00% | -0.33% | |
58 Neutral | $642.55M | ― | 48.46% | ― | -0.81% | 9.83% | |
58 Neutral | $238.85M | ― | -25.48% | ― | -28.45% | -224.48% | |
51 Neutral | $263.19M | ― | -18.25% | ― | -0.73% | 67.98% | |
50 Neutral | $396.81M | ― | -16.63% | ― | -31.20% | 95.56% | |
50 Neutral | $209.40M | ― | -22.60% | ― | -6.88% | 15.83% |
* Technology Sector Average
Performance Comparison
CRNC
Cerence
9.16
6.78
284.87%
EGHT
8X8
1.93
0.18
10.29%
MITK
Mitek Systems
9.94
1.42
16.67%
DOMO
Domo
15.97
8.74
120.89%
ONTF
ON24
4.93
-1.08
-17.97%
SMRT
SmartRent
1.27
-0.11
-7.97%
Cerence Corporate Events
Executive/Board Changes
Cerence Appoints Marion Harris to Board of Directors
Positive
Mar 20, 2025
On March 17, 2025, Cerence Inc. announced the appointment of Marion Harris, a former Ford executive, to its Board of Directors, effective April 1, 2025. Harris, with over 25 years of experience in automotive and financial services, is expected to bring strategic insights to Cerence AI as it continues to innovate in the automotive and mobility markets. His appointment is seen as a move to strengthen the company’s leadership with his deep expertise in digital transformation and customer satisfaction.
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.