Nuance Q1 falls short amid mobile deal complications

Summary:Nuance said the quarter fell short as "our relationships with mobile customers have become more comprehensive and complex, which has resulted in delayed revenues in some cases."

Voice recognition specialist Nuance Communications delivered a weaker than expected fiscal first quarter due to a longer mobile sales cycle.

Nuance reported first quarter earnings of $9.3 million, or 3 cents a share, on revenue of $360.6 million, up 18.7 percent from a year ago. Non-GAAP earnings were 34 cents a share. Nuance said revenue took a $21.4 million hit by new accounting for acquisitions. Even if you add back those sales Nuance missed estimates. Wall Street was looking for first quarter earnings of 36 cents a share on revenue of $391.5 million.

In addition, Nuance said the quarter fell short as "our relationships with mobile customers have become more comprehensive and complex, which has resulted in delayed revenues in some cases." The company added that some revenue was delayed until projects were complete and other deals were mired in negotiations.

Shares were down about 10 percent in afterhours trading.

By business line, Nuance's first quarter broke down like this:

  • Healthcare revenue was $145.3 million, up 23.3 percent from a year ago.
  • Mobile and consumer revenue was $108.5 million, up 23.7 percent. Nuance landed wins with Deutsche Telekom, Ford, HTC, Microsoft, RIM and others.
  • Enterprise revenue was $75.8 million, up 4.6 percent.
  • Imaging revenue was $52.4 million, up 33.3 percent.

On the mobile front, Nuance said that it had strong demand in its voicemail-to-text technology. Its Dragon line of voice recognition technology also performed well.

As for the outlook for the second quarter and fiscal year, Nuance reiterated that it was investing in its healthcare and mobile businesses. The company expects second quarter revenue to be between $371 million to $391 million ($395 million to $415 million non-GAAP) with non-GAAP earnings of 36 cents a share to 40 cents a share.

Wall Street was looking for earnings of 38 cents a share on $404.5 million.

For fiscal 2012, Nuance projected non-GAAP earnings of $1.55 a share to $1.62 a share on revenue of $1.59 billion and $1.64 billion ($1.66 billion to $1.71 billion non-GAAP). Wall Street was looking for non-GAAP earnings of $1.60 a share on revenue of $1.68 billion.

Topics: Enterprise Software, Banking, Mobility

About

Larry Dignan is Editor in Chief of ZDNet and SmartPlanet as well as Editorial Director of ZDNet's sister site TechRepublic. He was most recently Executive Editor of News and Blogs at ZDNet. Prior to that he was executive news editor at eWeek and news editor at Baseline. He also served as the East Coast news editor and finance editor at CN... Full Bio

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