Nuance Communications Beats on EPS but GAAP Results Lag

Seth Jayson, The Motley Fool
Updated

Nuance Communications (NAS: NUAN) reported earnings on May 10. Here are the numbers you need to know.

The 10-second takeaway
For the quarter ended March 31 (Q2), Nuance Communications met expectations on revenues and beat slightly on earnings per share.

Compared to the prior-year quarter, revenue grew significantly and GAAP earnings per share dropped to zero.


Gross margins expanded, operating margins increased, and net margins dropped.

Revenue details
Nuance Communications reported revenue of $417.7 million. The eight analysts polled by S&P Capital IQ anticipated revenue of $417.3 million on the same basis. GAAP reported sales were 22% higher than the prior-year quarter's $319.0 million.

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Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.

EPS details
EPS came in at $0.43. The nine earnings estimates compiled by S&P Capital IQ anticipated $0.42 per share. GAAP EPS dropped to zero from the prior-year quarter's $0.01.

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Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.

Margin details
For the quarter, gross margin was 67.8%, 260 basis points better than the prior-year quarter. Operating margin was 12.4%, 780 basis points better than the prior-year quarter. Net margin was 0.2%, 30 basis points worse than the prior-year quarter.

Looking ahead
Next quarter's average estimate for revenue is $432.2 million. On the bottom line, the average EPS estimate is $0.41.

Next year's average estimate for revenue is $1.72 billion. The average EPS estimate is $1.64.

Investor sentiment
The stock has a four-star rating (out of five) at Motley Fool CAPS, with 5,481 members out of 5,720 rating the stock outperform, and 239 members rating it underperform. Among 1,476 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 1,439 give Nuance Communications a green thumbs-up, and 37 give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Nuance Communications is outperform, with an average price target of $30.01.

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At the time thisarticle was published Seth Jayson had no position in any company mentioned here at the time of publication. You can view his stock holdings here. He is co-advisor ofMotley Fool Hidden Gems, which provides new small-cap ideas every month, backed by a real-money portfolio. Motley Fool newsletter services have recommended buying shares of Nuance Communications. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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