Cerence Inc. reported fourth‑quarter 2025 revenue of $60.6 million, surpassing the consensus estimate of $55.24 million and representing a 10.6% year‑over‑year increase from $54.8 million in Q4 2024. The company posted a loss of $0.31 per share—better than the consensus loss of $0.45 per share—while generating $9.7 million in free cash flow.
Revenue growth was driven by a 25% rise in variable license revenue, which climbed to $31.6 million, and a 17% increase in connected services revenue, which reached $14.2 million. These gains offset a decline in professional services revenue, illustrating a shift toward higher‑margin licensing and services segments.
Gross margin expanded to 72.6% in Q4 2025, up from 63.7% in the prior year. The improvement reflects a higher mix of license revenue, which carries a higher margin, and disciplined cost management that kept operating expenses in line with revenue growth.
Management guided fiscal 2026 revenue to $300 million–$320 million, a 23% year‑over‑year increase that includes a $49.5 million patent‑license payment from Samsung. The company also expects an 8% growth in its core technology business and projects Q1 FY26 revenue of $110 million–$120 million.
CEO Brian Krzanich highlighted the company’s strengthened financial foundation, noting that the results “demonstrate the progress we have made in building a higher‑margin, AI‑centric business.” He added that the company is advancing its xUI platform, with the first vehicles expected to feature the technology in 2026.
Investors responded positively to the revenue beat, margin expansion, and the inclusion of the Samsung IP settlement in the guidance, while remaining cautious about the company’s ongoing net loss and valuation levels.
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