Nuance Q3 misses on revenue, profit still hinges on healthcare division

Summary:The voice and language software maker said growth was outpaced by lower than expected contributions from acquisitions and underperformance in its imaging business unit.

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Nuance released its third quarter earnings report Monday after the bell.

The voice and language software maker posted a net loss of $54.2 million, or 17 cents per share (statement).

Non-GAAP earnings were 27 cents per share on a revenue of $486.8 million, with a net income of $87.6 million.

Wall Street was expecting earnings of 27 cents per share on revenue of $498 million.

The company said revenue was strong for its Dragon medical, diagnostics, automotive and enterprise OnDemand segments, but the growth was outpaced by lower than expected contributions from acquisitions and underperformance in its imaging business unit.

Nuance CFO Tom Beaudoin said in a prepared statement:

Our third-quarter results balanced strong bookings, deferred revenue, cash flow and EPS with revenue that was just below our guidance range. These results reflect continued progress in key markets, a continuing shift to recurring revenue streams and additional focus on expense control. Our bookings and deferred revenue growth are evidence that we are on the right trajectory for a return to growth.

From a segment perspective, Nuance's healthcare division once again led in overall revenue, bringing in $240.1 million. But that bright spot was dampened somewhat, as Nuance said revenue from the segment remains pressured by the migration to EMR systems.

Its mobile and consumer division came out on top of its enterprise segment, with revenues totaling $109.2 million and $85.1 million, respectively. However, Nuance admitted to weak demand for its Dragon NaturallySpeaking mobile app, and that the shift to recurring revenue streams has affected its enterprise sales.

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As for its outlook, Nuance expects Q4 revenue between $500 million and $520 million, with EPS between 24 cents and 29 cents, below a consensus of $540.5 million and 34 cents.

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Topics: Enterprise Software, Mobility

About

Natalie Gagliordi is a staff writer for CBS Interactive based in Louisville, Kentucky, covering business technology for ZDNet. She previously worked as the editor of Kiosk Marketplace, an online B2B trade publication that focused on interactive self-service technology, while also contributing to additional websites that covered retail tec... Full Bio

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