Tech companies have huge opportunities right now, with fields like artificial intelligence opening up new possibilities for a wide range of players in the industry. Nuance Communications (NASDAQ: NUAN) has sought to use its prowess in voice recognition and natural language computing in a variety of different ways, but with so many areas to pursue, it's been difficult for the company to keep focus.
Coming into Monday's fiscal fourth-quarter financial report, Nuance investors had high expectations that the company would be able to chart a course toward playing a stronger role in technological innovation. Nuance's results were solid, but investors weren't entirely comfortable with the extent to which the company intends to transform itself in the near future.
Image source: Nuance.
The latest from Nuance
Nuance's fiscal fourth-quarter results were generally encouraging. Revenue was higher by 13% to $536.2 million, accelerating from its pace of just 3% a quarter ago and outpacing the 11% growth rate that most investors were expecting to see. Adjusted net income soared by 87% to $112.5 million, and the resulting $0.38 per share in adjusted earnings topped the consensus forecast among those following the stock by $0.06 per share.
Fundamentally, Nuance saw dramatic improvement from previous quarters. Organic revenue jumped 12% during the quarter, with recurring revenue making up more than 70% of its overall sales. Nuance saw net new bookings grow by 10% to $468.5 million, accelerating from its 7% growth rate in the fiscal third quarter.
Nuance saw some huge changes in its various component businesses. The healthcare segment, which has historically brought in the most revenue, saw a huge recovery, as segment sales jumped 28% on particular strength in the Dragon Medical Cloud and hosting areas. Strength in the automotive category also persisted from recent quarters, with top-line growth of 10%. Enterprise revenue climbed 6% from year-ago levels, while only the imaging business suffered year-over-year declines, falling 14%. The catch-all "other" segment experienced an 11% rise in revenue.
CEO Mark Benjamin made it clear that long-term strategy is the key priority for Nuance right now. "Perhaps most importantly," Benjamin said, "we conducted our strategic portfolio reviews and made definitive business decisions that will accelerate our future growth." In the CEO's words, Nuance's new era will require "building a global, conversational AI business that is capable of sustainable long-term revenue and earnings growth."