Cerence (CRNC)
NASDAQ:CRNC
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Cerence
(NASDAQ:CRNC)
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Rating:52Neutral
Price Target:
$6.50
▼(-2.40% Downside)
Action:ReiteratedDate:02/06/26
The score reflects improving fundamentals led by strong and growing free cash flow and rebounding revenue/gross margins, partially reinforced by reaffirmed FY2026 guidance. These positives are weighed down by a pronounced downtrend in the stock’s technicals, ongoing profitability fragility with a negative P/E, and earnings volatility driven by one-time IP settlement revenue and softer near-term (Q2) guidance.
Positive Factors
Free cash flow generation
Consistent and growing free cash flow provides durable financial flexibility: it funds R&D, supports debt reduction (note repurchases), and underwrites operations without reliance on equity issuance. Strong FCF cushions execution risk and funds reinvestment into product and go-to-market over the next 2–6 months.
Negative Factors
Profitability fragility & earnings lumpiness
Reliance on a large one-time IP settlement to lift reported results highlights earnings volatility. Core profitability remains fragile with negative GAAP net margins, making it difficult to confidently project sustained earnings improvement absent recurring license or connected-service growth.
Read all positive and negative factors
Positive Factors
Negative Factors
Free cash flow generation
Consistent and growing free cash flow provides durable financial flexibility: it funds R&D, supports debt reduction (note repurchases), and underwrites operations without reliance on equity issuance. Strong FCF cushions execution risk and funds reinvestment into product and go-to-market over the next 2–6 months.
Read all positive factors
Cerence (CRNC) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$316.03M
Dividend YieldN/A
Average Volume (3M)836.81K
Price to Earnings (P/E)―
Beta (1Y)2.27
Revenue Growth-24.05%
EPS Growth96.90%
CountryUS
Employees1,400
SectorTechnology
Sector Strength88
IndustrySoftware - Application
Share Statistics
EPS (TTM)0.17
Shares Outstanding45,018,080
10 Day Avg. Volume699,934
30 Day Avg. Volume836,814
Financial Highlights & Ratios
PEG Ratio0.30
Price to Book (P/B)3.57
Price to Sales (P/S)2.14
P/FCF Ratio11.49
Enterprise Value/Market Cap1.29
Enterprise Value/Revenue1.29
Enterprise Value/Gross Profit1.64
Enterprise Value/Ebitda6.96
Forecast
1Y Price Target
$10.00Price Target Upside50.15% Upside
Rating ConsensusHold
Number of Analyst Covering3
EPS Forecast (FY)0.77
Revenue Forecast (FY)$314.78M
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 ...
How the Company Makes Money
Cerence primarily makes money by licensing its automotive conversational AI software and related technologies to original equipment manufacturers (automakers) and, in some cases, automotive suppliers that integrate Cerence functionality into in-ve...
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:
The Fly
The FlyCerence Earnings Call Summary
Earnings Call Date:Feb 04, 2026
(Q1-2026)
| % Change Since: |
Next Earnings Date:May 07, 2026
Earnings Call Sentiment Positive
The call presented multiple substantial positives: double-digit (and headline triple-digit) revenue growth, record free cash flow, strong margin expansion, meaningful product and commercial momentum for XUI and AI agents, strategic customer wins, and an IP monetization milestone. However, a sizeable portion of the quarter's outperformance was driven by a one-time $49.5M patent settlement, and the company faces near-term comparability/timing headwinds (Q2 guidance decline, fixed-license timing, legal/ tax impacts and higher operating costs). On balance the operational trends (product wins, connected services growth, rising PPU expectations, production starts, and cash generation) outweigh the transient negatives, though investors should note the lumpy nature of IP revenue and tax/expense timing effects.Positive Updates
Strong Revenue Growth
Total revenue of $115.1M in Q1 FY2026, up $64.2M or +126% year-over-year. Excluding the one-time $49.5M patent license payment, core revenue was ~$65.6M, approximately +29% YoY, indicating underlying business growth.
Negative Updates
One-Time Patent Revenue Dependence in Q1
The $49.5M Samsung patent license materially boosted Q1 results; without it total revenue falls to ~$65.6M. This creates lumpy/one-time-driven quarter-to-quarter comparability risk and reliance on IP settlements for near-term performance.
Read all updates
Q1-2026 Updates
Positive
Negative
Strong Revenue Growth
Total revenue of $115.1M in Q1 FY2026, up $64.2M or +126% year-over-year. Excluding the one-time $49.5M patent license payment, core revenue was ~$65.6M, approximately +29% YoY, indicating underlying business growth.
Read all positive updates
Company Guidance
Cerence guided Q2 FY2026 revenue of $58–62M with gross margins of 71–72%, GAAP net income roughly breakeven (EPS -$0.01 to $0.08) and adjusted EBITDA of $2–6M; management reaffirmed full‑year FY2026 guidance of revenue $300–320M, adjusted EBITDA $50–70M, free cash flow $56–66M and gross margins of 79–80%, while noting Q1 results of $115.1M revenue, $44.6M adjusted EBITDA, record quarterly free cash flow of $35.6M, $92.1M cash and marketable securities, an expected tax provision roughly $18–22M (117% effective rate in Q1), and a full‑year GAAP net income range of -$8M to $12M, plus an anticipated increase in PPU by the end of FY2026.Cerence Financial Statement Overview
Summary
Income Statement
46
Neutral
Balance Sheet
42
Neutral
Cash Flow
72
Positive
| Breakdown | TTM | Sep 2025 | Sep 2024 | Sep 2023 | Sep 2022 | Sep 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 315.96M | 251.78M | 331.50M | 294.48M | 327.89M | 387.18M |
| Gross Profit | 248.30M | 181.47M | 242.07M | 193.46M | 219.21M | 273.42M |
| EBITDA | 58.64M | 11.95M | -561.43M | -5.58M | -160.42M | 91.93M |
| Net Income | 335.00K | -18.71M | -588.08M | -56.25M | -310.83M | 45.89M |
Balance Sheet | ||||||
| Total Assets | 602.04M | 630.59M | 702.36M | 1.30B | 1.32B | 1.71B |
| Cash, Cash Equivalents and Short-Term Investments | 94.67M | 87.45M | 126.99M | 110.36M | 115.16M | 158.86M |
| Total Debt | 200.40M | 230.26M | 295.24M | 289.33M | 286.82M | 289.79M |
| Total Liabilities | 451.60M | 479.92M | 561.26M | 602.72M | 605.54M | 673.78M |
| Stockholders Equity | 150.44M | 150.68M | 141.10M | 694.88M | 712.95M | 1.03B |
Cash Flow | ||||||
| Free Cash Flow | 74.57M | 46.82M | 12.20M | 2.37M | -19.58M | 62.34M |
| Operating Cash Flow | 89.81M | 61.17M | 17.20M | 7.50M | -2.14M | 74.39M |
| Investing Cash Flow | -13.10M | -10.55M | 4.38M | 5.82M | -10.56M | -41.63M |
| Financing Cash Flow | -87.57M | -87.00M | 225.00K | -5.33M | -19.61M | -41.51M |
Cerence Technical Analysis
Negative
6.66
Price Trends
8.92
Negative
9.83
Negative
10.13
Negative
Market Momentum
-0.51
Negative
31.14
Neutral
14.44
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 6.66 is below the 20-day moving average (MA) of 7.29, below the 50-day MA of 8.92, and below the 200-day MA of 10.13, indicating a bearish trend. The MACD of -0.51 indicates Negative momentum. The RSI at 31.14 is Neutral, neither overbought nor oversold. The STOCH value of 14.44 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for CRNC.
Cerence Risk Analysis
Cerence disclosed 38 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
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
69 Neutral | $666.15M | 43.48 | 6.95% | ― | 4.42% | 165.42% | |
61 Neutral | $37.18B | 12.37 | -10.20% | 1.83% | 8.50% | -7.62% | |
58 Neutral | $374.37M | -20.65 | -36.38% | ― | 17.34% | -8.35% | |
53 Neutral | $2.69B | -288.59 | -3.46% | ― | 120.52% | -124.81% | |
52 Neutral | $316.03M | -22.93 | 0.22% | ― | -24.05% | 96.90% | |
48 Neutral | $256.14M | -2.44 | -367.59% | ― | -17.50% | -51.25% |
* Technology Sector Average
CRNC
Cerence
6.66
-3.20
-32.45%
MITK
Mitek Systems
14.08
5.07
56.27%
VERI
Veritone
2.61
-0.20
-7.12%
WEAV
Weave Communications
4.44
-7.51
-62.85%
SOUN
SoundHound AI, Inc Class A
6.36
-3.84
-37.65%
Cerence Corporate Events
Business Operations and StrategyPrivate Placements and Financing
Cerence Repurchases Convertible Notes to Strengthen Capital Structure
Positive
Dec 29, 2025
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 ...
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.