Nuance delivers strong Q4, sees growth in Dragon Medical business

Nuance said it landed a large license deal for a Dragon Medical product during the quarter, which aided in the segment's growth.

Nuance reported better-than-expected fourth quarter financial results after the bell on Wednesday. The voice recognition software giant posted non-GAAP earnings of 34 cents per share on revenue of $487.8 million.

Wall Street was expecting earnings of 28 cents per share on revenue of $485.5 million. Nuance's shares were up just over 5% in late trading.

Nuance's Q4 revenue was driven by its Dragon Medical cloud business, with revenue climbing 42%. Nuance said it landed a large license deal for a Dragon Medical product during the quarter, which aided in its growth. Broken down, Nuance said healthcare revenue was up 9% to $264 million, while enterprise revenue was down 4% to $126 million. Automotive revenue for the quarter came to $84 million, a 12% increase.

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In prepared remarks, the company noted that it closed out its fiscal year strong by executing on its strategic plans, which includes the spinoff of its automotive business and the sale of its imaging business.

We completed this transformational year on a strong footing, delivering on our strategic and financial objectives. We delivered 3% organic revenue growth on our strategic businesses, which represent 97% of total revenue (excluding Other). By successfully driving higher growth in our cloud-based business, we achieved Annual Recurring Revenue for our Dragon Medical cloud offerings of $257 million, exceeding the high end of our guidance range, representing an increase of 38% year over year.

Looking ahead, Nuance expects first quarter revenue from $400 million to $416 million, with EPS ranging from 22 cents to 26 cents. Wall Street is looking for Q1 revenue of $390 million and earnings of 25 cents per share.