Cerence Inc.
For the period ended Mar 31, 2025. Filed May 7, 2025.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 31, 2025 · Filed May 7, 2025
CRNC$8.15+1.5%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-12-31; filed 2025-02-06.
0000950170-25-015440
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-03-31; filed 2025-05-07.
0000950170-25-065890
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 120 previous paragraphs and 160 current paragraphs.
65 unchanged; 43 reworded; 44 added; 11 removed; 1 previous and 8 current paragraphs rearranged.
Tables are not compared: 14 previous and 24 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (44)
Current report
Total revenue increased by $10.2 million, or 15.0%, to $78.0 million from $67.8 million.
Current report
Operating margin increased 412.0 percentage points to positive 22.2% from negative 389.8%.
Current report
Cash provided by operating activities was $15.5 million, a net change of $14.4 million from cash provided by operating activities of $1.0 million.
Current report
For the six months ended March 31, 2025 as compared to the six months ended March 31, 2024:
Current report
Total revenue decreased by $77.3 million, or 37.5%, to $128.9 million from $206.2 million.
Current report
Operating margin increased 100.1 percentage points to positive 0.3% from negative 99.8%.
Current report
Total revenues for the three months ended March 31, 2025 were $78.0 million, an increase of $10.2 million, or 15.0%, from $67.8 million for the three months ended March 31, 2024. The increase in revenues was driven by license revenue. The increase was partly offset by decreases in connected service and professional service revenues.
Current report
License revenue for the three months ended March 31, 2025 was $51.5 million, an increase of $16.0 million, or 44.8%, from $35.5 million for the three months ended March 31, 2024. The increase in license revenue was primarily driven by a $11.0 million increase in fixed contracts and a $5.0 million increase associated with variable contract revenue, as we continue to assess the levels of fixed license contracts and make adjustments. As a percentage of total revenues, license revenue increased 13.6 percentage points from 52.4% for the three months ended March 31, 2024 to 66.0% for the three months ended March 31, 2025.
Current report
Connected services revenue for the three months ended March 31, 2025 was $12.6 million, a decrease of $1.0 million, or 7.0%, from $13.6 million for the three months ended March 31, 2024. This decrease was driven by a $2.6 million catch up recognized in the 2024 period related to amended customer royalty reports, which did not recur in the 2025 period, partially offset by increased demand for our connected services products. As a percentage of total revenues, connected services revenue decreased by 3.8 percentage points from 20.0% for the three months ended March 31, 2024 to 16.2% for the three months ended March 31, 2025.
Current report
Professional service revenue for the three months ended March 31, 2025 was $13.9 million, a decrease of $4.8 million, or 25.7%, from $18.7 million for the three months ended March 31, 2024. This decrease was driven by the increased standardization of our software product offerings, which requires less professional services effort to implement, other efficiencies in our professional services processes and, in some cases, customers opting to perform these activities internally. As a percentage of total revenues, professional services revenue decreased by 9.8 percentage points from 27.6% for the three months ended March 31, 2024 to 17.8% for the three months ended March 31, 2025.
Current report
Total Revenues
Current report
Total revenues for the six months ended March 31, 2025 were $128.9 million, a decrease of $77.3 million, or 37.5%, from $206.2 million for the six months ended March 31, 2024. The decrease in revenues was driven primarily by connected services revenue due to the early termination of a legacy contract acquired by Nuance through a 2013 acquisition and the termination of services provided to a separate customer, who in turn provided services to our legacy customer and a decrease in professional services revenue. The decrease was partially offset by increases in license revenue primarily related to fixed contracts.
Current report
License Revenue
Current report
License revenue for the six months ended March 31, 2025 was $74.2 million, an increase of $17.8 million, or 31.7%, from $56.4 million for the six months ended March 31, 2024. The increase in license revenue was primarily driven by a $11.1 million increase in fixed license contracts, a $5.2 million increase associated with variable contract revenue, as we continue to assess the levels of fixed license contracts and make adjustments, and $1.5 million associated with our Cerence Link product. As a percentage of total revenues, license revenue increased 30.2 percentage points from 27.3% for the six months ended March 31, 2024 to 57.5% for the six months ended March 31, 2025.
Current report
Connected Services Revenue
Current report
Connected services revenue for the six months ended March 31, 2025 was $26.4 million, a decrease of $84.0 million, or 76.1%, from $110.4 million for the six months ended March 31, 2024. This decrease was primarily driven by the early termination of a legacy contract acquired by Nuance through a 2013 acquisition and the termination of services provided to a separate customer, who in turn provided services to our legacy customer. The effect of these changes was an acceleration of $67.8 million and $9.9 million of deferred revenue, respectively, as well as in period revenue of $8.9 million for these terminated contracts, in the first quarter of fiscal year 2024. This decrease was offset by an increase of $2.6 million in new connected revenue during the first half of fiscal year 2025. As a percentage of total revenues, connected services revenue decreased by 33.2 percentage points from 53.6% for the six months ended March 31, 2024 to 20.4% for the six months ended March 31, 2025.
Current report
Professional Services Revenue
Current report
Professional service revenue for the six months ended March 31, 2025 was $28.4 million, a decrease of $11.0 million, or 28.0%, from $39.4 million for the six months ended March 31, 2024. This decrease was primarily driven by the increased standardization of our software product offerings, which requires less professional services effort to implement, other efficiencies in our professional services processes and, in some cases, customers opting to perform these activities internally. As a percentage of total revenues, professional services revenue increased by 3.0 percentage points from 19.1% for the six months ended March 31, 2024 to 22.1% for the six months ended March 31, 2025.
Current report
We experienced an increase in total gross profit of $13.3 million, or 28.2%, from $46.9 million for the three months ended March 31, 2024 to $60.2 million for the three months ended March 31, 2025. The increase was primarily driven by the increase in license revenues due to a higher volume of fixed contracts.
Current report
Cost of license revenue for the three months ended March 31, 2025 was $2.4 million, an increase of $1.0 million, or 73.2%, from $1.4 million for the three months ended March 31, 2024. Cost of license revenues increased due to the costs associated with our Cerence Link product revenue. As a percentage of total cost of revenues, cost of license revenue increased by 6.9 percentage points from 6.7% for the three months ended March 31, 2024 to 13.6% for the three months ended March 31, 2025.
Current report
Cost of professional services revenue for the three months ended March 31, 2025 was $10.4 million, a decrease of $3.7 million, or 26.2%, from $14.1 million for the three months ended March 31, 2024. Cost of professional services revenue decreased primarily due to a $2.4 million decrease in third party contract labor and a $1.3 million decrease in salary-related expenditures. Decreases were driven by the increased standardization of our software product offerings, which requires less professional services effort to implement, and other efficiencies in our professional services processes. As a percentage of total cost of revenues, cost of professional services revenue decreased by 9.2 percentage points from 67.6% for the three months ended March 31, 2024 to 58.4% for the three months ended March 31, 2025.
Current report
Professional services gross profit decreased $1.1 million, or 24.0%, from $4.6 million for the three months ended March 31, 2024 to $3.5 million for the three months ended March 31, 2025, which was primarily due to a decrease in professional services revenue.
Current report
Total cost of revenues for the six months ended March 31, 2025 were $35.7 million, a decrease of $11.5 million, or 24.5%, from $47.2 million for the six months ended March 31, 2024.
Current report
Cost of License Revenue
Current report
License gross profit increased by $16.6 million, or 31.2%, for the six months ended March 31, 2025 when compared to the six months ended March 31, 2024, primarily due to increases in license revenues.
Current report
Cost of Connected Services Revenue
Current report
Cost of connected services revenue for the six months ended March 31, 2025 was $11.3 million, a decrease of $1.4 million, or (10.8)%, from $12.7 million for the six months ended March 31, 2024. Cost of connected services revenue decreased primarily due to a $0.7 million decrease in amortization of costs previously deferred, a $0.3 million decrease in our cloud infrastructure costs and a $0.4 million decrease in internally allocated labor costs. As a percentage of total cost of revenues, cost of connected service revenue increased by 4.9 percentage points from 26.8% for the six months ended March 31, 2024 to 31.7% for the six months ended March 31, 2025.
Current report
Connected services gross profit decreased $82.7 million, or 84.6%, from $97.8 million for the six months ended March 31, 2024 to $15.1 million for the six months ended March 31, 2025, primarily due to the decrease in connected service revenue due to the early termination of a legacy contract acquired by Nuance through a 2013 acquisition and the termination of services provided to a separate customer, who in turn provided services to our legacy customer.
Current report
Cost of Professional Services Revenue
Current report
Cost of professional services revenue for the six months ended March 31, 2025 was $20.1 million, a decrease of $11.3 million, or 35.9%, from $31.4 million for the six months ended March 31, 2024. Cost of professional services revenue decreased primarily due to a $7.6 million decrease in third-party contractor costs, a $1.7 million decrease in salary-related expenditures, a $1.7 million decrease in internally allocated labor, a $0.2 million decrease in travel-related expenses, and a $0.1 million decrease in hardware costs. Decreases were driven by the increased standardization of our software product offerings, which requires less professional services effort to implement, and other efficiencies in our professional services processes. As a percentage of total cost of revenues, cost of professional services revenue decreased by 10.1 percentage points from 66.6% for the six months ended March 31, 2024 to 56.5% for the six months ended March 31, 2025.
Current report
Historically, R&D expenses are our largest operating expense as we continue to build on our existing software platforms and develop new technologies. R&D expenses for the six months ended March 31, 2025 were $44.2 million, a decrease of $21.0 million, or 32.2%, from $65.2 million for the six months ended March 31, 2024. The decrease was primarily attributable to a $5.3 million decrease in third-party contractor costs, a $4.9 million international tax credit catch-up related to two different tax jurisdictions, a $5.9 million decrease in salary-related expenditures, a $1.9 million decrease in stock-based compensation expense, and a $3.2 million decrease in capitalized costs associated with internally developed software. The decreases are offset by a $0.2 million increase in our cloud infrastructure costs. As a percentage of total operating expenses, R&D expenses increased by 29.7 percentage points from 17.9% for the six months ended March 31, 2024 to 47.6% for the six months ended March 31, 2025.
Current report
Sales and marketing expenses for the six months ended March 31, 2025 were $9.7 million, a decrease of $2.0 million, or 17.1%, from $11.7 million for the six months ended March 31, 2024. The decrease in sales and marketing expenses was primarily attributable to a $1.2 million decrease in salary-related expenditures, a $0.5 million decrease in travel-related expenditures, and a $0.3 million decrease in professional services. As a percentage of total operating expenses, sales and marketing expenses increased by 7.2 percentage points from 3.2% for the six months ended March 31, 2024 to 10.4% for the six months ended March 31, 2025.
Current report
General and administrative expenses for the three months ended March 31, 2025 were $11.2 million, a decrease of $5.5 million, or 32.8%, from $16.7 million for the three months ended March 31, 2024. The decrease in general and administrative expenses was primarily attributable to a $6.1 million credit loss provision related to the bankruptcy of one fitness equipment manufacturer recognized in the second quarter of 2024, a $0.5 million decrease in salary-related expenditures, and a $0.4 million decrease in rent expenditures. The decrease was partially offset by a $0.8 million increase in stock-based compensation costs and a $0.7 million increase in depreciation expense. As a percentage of total operating expenses, general and administrative expenses increased by 20.7 percentage points from 5.4% for the three months ended March 31, 2024 to 26.1% for the three months ended March 31, 2025.
Current report
General and administrative expenses for the six months ended March 31, 2025 were $24.0 million, a decrease of $5.5 million, or 18.7%, from $29.5 million for the six months ended March 31, 2024. The decrease in general and administrative expenses was primarily attributable to a $6.1 million credit loss provision related to the bankruptcy of one fitness equipment manufacturer recognized in the second quarter of 2024. The decrease was partially offset by a $0.6 million increase in third-party contract labor. As a percentage of total operating expenses, general and administrative expenses increased by 17.7 percentage points from 8.1% for the six months ended March 31, 2024 to 25.8% for the six months ended March 31, 2025.
Current report
As a percentage of total operating expenses, intangible asset amortization expenses within operating expenses increased by 1.1 percentage point from 0.2% for the six months ended March 31, 2024 as compared to 1.3% for the six months ended March 31, 2025.
Current report
Whenever events or changes in circumstances indicate that the carrying value may not be recoverable, we will be required to assess the potential impairment of goodwill and other intangible assets. Examples of factors that could trigger an impairment of such assets include, but are not limited to, our market capitalization declining to below net book value, declines in our stock price for sustained periods of time, and negative industry or economic trends. Future adverse changes in these or other unforeseeable factors could result in additional impairment charges that would impact our results of operations and financial position in the reporting period identified.
Current report
Goodwill impairment for the three months ended March 31, 2024 was $252.1 million. At March 31, 2024, we concluded indicators of impairment were present due to the current macroeconomic conditions, including declines in our stock price. The fair value of our reporting unit was determined using a combination of the income approach and the market approach. We weighted the methodologies appropriately to estimate a fair value of approximately $463.4 million as of March 31, 2024. The carrying value of our reporting unit exceeded the estimated fair value. Based upon the results of the impairment test, we recorded a goodwill impairment charge of $252.1 million.
Current report
Whenever events or changes in circumstances indicate that the carrying value may not be recoverable, we will be required to assess the potential impairment of goodwill and other intangible assets. Examples of factors that could trigger an impairment of such assets include, but are not limited to, our market capitalization declining to below net book value, declines in our stock price for sustained periods of time and negative industry or economic trends. Future adverse changes in these or other unforeseeable factors could result in additional impairment charges that would impact our results of operations and financial position in the reporting period identified.
Current report
For the six months ended March 31, 2025,we recorded restructuring and other costs, net of $13.9 million, which included an $12.0 million charge related to the elimination of personnel, of which $3.0 million related to the stock-based compensation expense for the termination of our former senior management employees, and a $1.9 million charge related to our transformation initiatives. We are focused on pursuing actions intended to position us to deliver on our generative AI and LLM product roadmap and also deliver improved financial results which include process optimization efforts and cost reductions. During the remainder of fiscal year 2025, we expect additional personnel-related restructuring costs in connection with the Plan as we better align our cost structure with current levels of revenue.
Current report
Goodwill impairment for the six months ended March 31, 2024 was $252.1 million. At March 31, 2024, we concluded indicators of impairment were present due to the current macroeconomic conditions, including declines in our stock price. The fair value of our reporting unit was determined using a combination of the income approach and the market approach. We weighted the methodologies appropriately to estimate a fair value of approximately $463.4 million as of March 31, 2024.
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Removed paragraphs (11)
Previous report
Total revenue decreased by $87.4 million, or 63.2%, to $50.9 million from $138.3 million.
Previous report
Operating margin decreased 75.6 percentage points to negative 33.3% from 42.3%.
Previous report
Total revenues for the three months ended December 31, 2024 were $50.9 million, a decrease of $87.4 million, or 63.2%, from $138.3 million for the three months ended December 31, 2023. The decrease in revenues was driven by a decrease in connected services and professional services revenues. The decrease was partly offset by an increase in license revenue.
Previous report
License revenue for the three months ended December 31, 2024 was $22.7 million, an increase of $1.9 million, or 9.1%, from $20.8 million for the three months ended December 31, 2023. The increase in license revenue was driven by a $1.6 million increase in variable license revenue due to higher volume of licensing royalties. As a percentage of total revenues, license revenue increased 29.5 percentage points from 15.1% for the three months ended December 31, 2023 to 44.6% for the three months ended December 31, 2024.
Previous report
Connected services revenue for the three months ended December 31, 2024 was $13.7 million, a decrease of $83.1 million, or 85.8%, from $96.8 million for the three months ended December 31, 2023. This decrease was primarily driven by the early termination of a legacy contract acquired by Nuance through a 2013 acquisition and the termination of services provided to a separate customer, who in turn provided services to our legacy customer. These terminations resulted in a decrease of $86.6 million in revenue compared to the first quarter of fiscal 2024. The decrease was offset by a $3.5 million increase in demand for our connected services solutions. As a percentage of total revenues, connected services revenue decreased by 43.1 percentage points from 70.0% for the three months ended December 31, 2023 to 26.9% for the three months ended December 31, 2024.
Previous report
Professional service revenue for the three months ended December 31, 2024 was $14.5 million, a decrease of $6.2 million, or 30.1%, from $20.7 million for the three months ended December 31, 2023. This decrease was driven by the composition of our arrangements and the related timing of fulfilling performance obligations under the contracts. As a percentage of total revenues, professional services revenue increased by 13.6 percentage points from 14.9% for the three months ended December 31, 2023 to 28.5% for the three months ended December 31, 2024.
Previous report
Cost of connected services revenue for the three months ended December 31, 2024 was $6.3 million, a decrease of $1.0 million, or 13.6%, from $7.3 million for the three months ended December 31, 2023. Cost of connected services revenue decreased primarily due to an acceleration of $2.0 million of expenses within the first quarter of fiscal 2024 associated with the termination of the legacy contract acquired by Nuance through a 2013 acquisition. The decrease was partially offset by a one-time $0.8 million expense of previously deferred costs related to a termination agreement with an international electric vehicle maker. As a percentage of total cost of revenues, cost of connected services revenue increased by 7.7 percentage points from 27.7% for the three months ended December 31, 2023 to 35.4% for the three months ended December 31, 2024.
Previous report
General and administrative expenses for the three months ended December 31, 2024 were $12.8 million, which was flat from $12.8 million for the three months ended December 31, 2023. Within general and administrative expenses there was a $1.4 million decrease in salary-related expenditures and a $1.2 million decrease in stock-based compensation costs. The decrease was partially offset by a $1.4 million increase in professional fees, a $0.3 million increase in third-party contractor costs, and a $0.2 million increase in bad debt expenses related to a termination agreement with an international electric vehicle maker. As a percentage of total operating expenses, general and administrative expenses increased by 1.6 percentage points from 23.9% for the three months ended December 31, 2023 to 25.5% for the three months ended December 31, 2024.
Previous report
Fiscal Year 2025
Previous report
Fiscal Year 2024
Previous report
Provision For Income Taxes
Reworded paragraphs (43)
Previous wording
You should read the following discussion and analysis of our financial condition and results of operations together with our Unaudited Condensed Consolidated Financial Statements, and the related notes thereto, appearing elsewhere in this Quarterly Report on Form 10-Q (“Quarterly Report”), and our consolidated financial statements and the related notes and other financial information included in our Annual Report on Form 10-K for the fiscal year ended September 30, 2024, filed with the Securities and Exchange Commission (“SEC”) on November 25, 2024. Some of the information contained in this discussion and analysis or elsewhere in this Quarterly Report, including information with respect to our plans and strategy for our business, our performance and future success, our liquidity and capital resources, including our ability to meet our liquidity needs after the repayment of the Notes due in the third quarter of fiscal 2025, results of operations and financial condition, macroeconomic conditions, the semiconductor shortage, trends in the global auto industry and adjacent markets, including shipping and production issues, new products, process optimization efforts and cost management, and tax estimates and other tax matters, includes forward-looking statements that involve risks and uncertainties. See “Cautionary Statement Concerning Forward-Looking Statements.” You should review the “Risk Factors” sections in Part II, Item 1A of this Quarterly Report on Form 10-Q and Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended September 30, 2024 for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis. Note that the results of operations for the three months ended December 31, 2024 are not necessarily indicative of what our operating results for the full fiscal year will be. In this Item, “we,” “us,” “our,” “Cerence” and the “Company” refer to Cerence Inc. and its consolidated subsidiaries, collectively.
Current wording
You should read the following discussion and analysis of our financial condition and results of operations together with our Unaudited Condensed Consolidated Financial Statements, and the related notes thereto, appearing elsewhere in this Quarterly Report on Form 10-Q (“Quarterly Report”), and our consolidated financial statements and the related notes and other financial information included in our Annual Report on Form 10-K for the fiscal year ended September 30, 2024, filed with the Securities and Exchange Commission (“SEC”) on November 25, 2024. Some of the information contained in this discussion and analysis or elsewhere in this Quarterly Report, including information with respect to our plans and strategy for our business, our performance and future success, our liquidity and capital resources, including our ability to meet our liquidity needs after the repayment of the Notes due in the third quarter of fiscal 2025, results of operations and financial condition, macroeconomic conditions, volatility in the political, legal and regulatory environment in which we operate including trade, tariffs and other policies implemented by the new administration in the United States or actions taken by other countries in response, trends in the global auto industry and adjacent markets, including shipping and production issues, new products, process optimization efforts and cost management, litigation, and tax estimates and other tax matters, includes forward-looking statements that involve risks and uncertainties. See “Cautionary Statement Concerning Forward-Looking Statements.” You should review the “Risk Factors” sections in Part II, Item 1A of this Quarterly Report on Form 10-Q and Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended September 30, 2024 for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis. Note that the results of operations for the three and six months ended March 31, 2025 are not necessarily indicative of what our operating results for the full fiscal year will be. In this Item, “we,” “us,” “our,” “Cerence” and the “Company” refer to Cerence Inc. and its consolidated subsidiaries, collectively.
Previous wording
Cerence builds AI powered virtual assistants for the mobility/transportation market. Our primary target is the automobile market, but our solutions can apply to all forms of transportation, including, but not limited to, two-wheel vehicles, planes, tractors, cruise ships and elevators. Our solutions power natural conversational and intuitive interactions between automobiles, drivers and passengers, and the broader digital world. We possess one of the world’s most popular software platforms for building automotive virtual assistants. Our customers include nearly all major original equipment manufacturers (“OEMs”) or their tier 1 suppliers worldwide. We deliver our solutions on a white-label basis, enabling our customers to deliver customized virtual assistants with unique, branded personalities and ultimately strengthening the bond between automobile brands and end users. Our vision is to enable a more enjoyable, safer journey for everyone.
Current wording
Cerence builds AI powered virtual assistants for the mobility/transportation market. Our primary target is the automobile market, but our solutions can apply to all forms of transportation, including, but not limited to, two-wheel vehicles, planes, tractors, cruise ships and elevators. Our solutions power natural conversational and intuitive interactions between automobiles, drivers and passengers, and the broader digital world. We possess one of the leading software platforms for building automotive virtual assistants. Our customers include nearly all major original equipment manufacturers (“OEMs”) or their tier 1 suppliers worldwide. We deliver our solutions on a white-label basis, enabling our customers to deliver customized virtual assistants with unique, branded personalities and ultimately strengthening the bond between automobile brands and end users. Our vision is to enable a more enjoyable, safer journey for everyone.
Previous wording
We generate revenue primarily by selling software licenses and cloud-connected services. Our edge software components are typically sold under a traditional per unit perpetual software license model, in which a per unit fee is charged on a variable basis for each software instance installed on an automotive head unit. We typically license cloud-connected software components in the form of a service to the vehicle end user, which is paid for in advance. In addition, we generate professional services revenue from our work with our customers during the design, development, and deployment phases of the vehicle model lifecycle and through maintenance and enhancement projects. We have existing relationships with nearly all major OEMs or their tier 1 suppliers, and while our customer contracts vary, they generally represent multi-year engagements, giving us some level of visibility into future revenue; however, such revenue may not materialize as expected due to delays in automobile production, changing customer forecasts, macroeconomic conditions or other factors discussed elsewhere in this Quarterly Report.
Current wording
We generate revenue primarily by selling software licenses and cloud-connected services. Our edge software components are typically sold under a traditional per unit perpetual software license model, in which a per unit fee is charged on a variable basis for each software instance installed on an automotive head unit. We typically license cloud-connected software components in the form of a service to the vehicle end user, which is paid for in advance. In addition, we generate professional services revenue from our work with our customers during the design, development, and deployment phases of the vehicle model lifecycle and through maintenance and enhancement projects. We have existing relationships with nearly all major OEMs or their tier 1 suppliers, and while our customer contracts vary, they generally represent multi-year engagements, giving us some level of visibility into future revenue; however, such revenue may not materialize as expected due to delays in automobile production, volatility in the political, legal and regulatory environment in which we operate including trade, tariffs and other policies implemented by the new administration in the United States or actions taken by other countries in response and automotive production curtailment or delays related thereto, changing customer forecasts, macroeconomic conditions or other factors discussed elsewhere in this Quarterly Report.
Previous wording
The condensed consolidated balance sheet data as of September 30, 2024 was derived from audited financial statements, but does not include all disclosures required by U.S. GAAP. In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all adjustments, consisting primarily of normal recurring accruals, necessary for a fair presentation of our financial position and results of operations. The operating results for the three months ended December 31, 2024 are not necessarily indicative of the results expected for the full fiscal year ending September 30, 2025.
Current wording
The condensed consolidated balance sheet data as of September 30, 2024 was derived from audited financial statements, but does not include all disclosures required by U.S. GAAP. In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all adjustments, consisting primarily of normal recurring accruals, necessary for a fair presentation of our financial position and results of operations. The operating results for the three and six months ended March 31, 2025 are not necessarily indicative of the results expected for the full fiscal year ending September 30, 2025.
Previous wording
Cash provided by operating activities was $9.3 million, a net change of $12.1 million from cash used in operating activities of $2.8 million.
Current wording
Cash provided by operating activities was $24.7 million, a net change of $26.5 million from cash used in operating activities of $1.8 million.
Previous wording
The following table shows the Condensed Consolidated Statements of Operations for the three months ended December 31, 2024 and 2023 (dollars in thousands):
Current wording
The following table shows the Condensed Consolidated Statements of Operations for the three and six months ended March 31, 2025 and 2024 (dollars in thousands):
Previous wording
We expect our revenue to continue to be impacted by the changing dynamics in the global automotive industry which have resulted in production delays and slowdowns. Macroeconomic conditions such as high interest rates and lack of credit availability have contributed to these production delays and slowdowns. In addition, the software and technology systems in automobiles have become increasingly complex, leading to substantial challenges and delays in production for some of our customers. Our business in adjacent markets, such as two-wheeled vehicles, trucks and AIoT, is also developing slower than anticipated due to the challenges of introducing different technology into a new market. In light of these challenges, we intend to focus on our cost structure and expect to take future cost reduction actions, which may result in additional restructuring costs and impairment charges. In particular, in August 2024, we announced a restructuring plan intended to reduce operating expenses and position us for profitable future growth (the “Plan”). The implementation of the Plan was substantially complete by the end of the first quarter of fiscal year 2025. The charges that we incur are subject to a number of assumptions, including legal requirements in various jurisdictions. For additional details, refer to the factors discussed in Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended September 30, 2024.
Current wording
We expect our revenue to continue to be impacted by dynamics in the global automotive industry which has experienced production delays and slowdowns. Volatility in the political, legal and regulatory environment in which we operate, including trade, tariffs and related policies, also has resulted in increased pricing pressure from customers and delays in program timelines. Macroeconomic conditions such as high interest rates and lack of credit availability have contributed to these production delays and slowdowns. In addition, the software and technology systems in automobiles have become increasingly complex, leading to substantial challenges and delays in production for some of our customers. Our business in adjacent markets, such as two-wheeled vehicles, trucks and AIoT, is also developing slower than anticipated due to the challenges of introducing different technology into a new market. In light of these challenges, we intend to continue to focus on cost management and may take future cost reduction actions, which may result in additional restructuring costs and impairment charges. In particular, in August 2024, we announced a restructuring plan intended to reduce operating expenses and position us for profitable future growth (the “Plan”). The implementation of the Plan was substantially complete by the end of the first quarter of fiscal year 2025. The charges that we incur are subject to a number of assumptions, including legal requirements in various jurisdictions. For additional details, refer to the factors discussed in Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended September 30, 2024.
Previous wording
Total cost of revenues for the three months ended December 31, 2024 were $17.8 million, a decrease of $8.5 million, or 32.3%, from $26.3 million for the three months ended December 31, 2023.
Current wording
Total cost of revenues for the three months ended March 31, 2025 were $17.8 million, a decrease of $3.1 million, or 14.6%, from $20.9 million for the three months ended March 31, 2024.
Previous wording
License gross profit increased by $1.7 million, or 9.0%, for the three months ended December 31, 2024 when compared to the three months ended December 31, 2023, primarily due to increases in license revenues.
Current wording
License gross profit increased by $14.9 million, or 43.7%, for the three months ended March 31, 2025 when compared to the three months ended March 31, 2024, primarily due to increases in license revenues.
Previous wording
Cost of professional services revenue for the three months ended December 31, 2024 was $9.7 million, a decrease of $7.6 million, or 43.8%, from $17.3 million for the three months ended December 31, 2023. Cost of professional services revenue decreased primarily due to a $5.1 million decrease in third-party contractor costs, a $1.2 million decrease in internal allocated labor, a $0.6 million decrease in salary-related expenditures, and a $0.2 million decrease in amortization of costs previously deferred. As a percentage of total cost of revenues, cost of professional services revenue decreased by 11.2 percentage points from 65.8% for the three months ended December 31, 2023 to 54.6% for the three months ended December 31, 2024.
Current wording
Cost of connected services revenue for the three months ended March 31, 2025 was $5.0 million, a decrease of $0.4 million, or 7.1%, from $5.4 million for the three months ended March 31, 2024. Cost of connected services revenue decreased primarily due to a $0.2 million decrease in our cloud infrastructure costs and $0.1 million decrease in amortization of costs previously deferred, and a $0.1 million decrease in internal allocated labor. As a percentage of total cost of revenues, cost of connected services revenue increased by 2.2 percentage points from 25.7% for the three months ended March 31, 2024 to 27.9% for the three months ended March 31, 2025.
Previous wording
Connected services gross profit decreased $82.1 million, or 91.7%, from $89.5 million for the three months ended December 31, 2023 to $7.4 million for the three months ended December 31, 2024, primarily due to declines in connected services revenues.
Current wording
Connected services gross profit decreased $0.5 million, or 6.9%, from $8.2 million for the three months ended March 31, 2024 to $7.7 million for the three months ended March 31, 2025, primarily due to declines in connected services revenues.
Previous wording
We experienced a decrease in total gross profit of $78.9 million, or 70.5%, from $112.0 million for the three months ended December 31, 2023 to $33.1 million for the three months ended December 31, 2024. The decrease was primarily driven by the decrease in connected service revenue due to the early termination of a legacy contract acquired by Nuance through a 2013 acquisition and the termination of services provided to a separate customer, who in turn provided services to our legacy customer.
Current wording
We experienced a decrease in total gross profit of $65.6 million, or 41.3%, from $158.9 million for the six months ended March 31, 2024 to $93.3 million for the six months ended March 31, 2025. The decrease was primarily driven by the decrease in connected service revenue due to the early termination of a legacy contract acquired by Nuance through a 2013 acquisition and the termination of services provided to a separate customer, who in turn provided services to our legacy customer.
Previous wording
Cost of license revenue for the three months ended December 31, 2024 was $1.8 million, an increase of $0.2 million, or 11.1%, from $1.6 million for the three months ended December 31, 2023. Cost of license revenues increased primarily due to costs associated with our Cerence Link product. As a percentage of total cost of revenues, cost of license revenue increased by 3.9 percentage points from 6.1% for the three months ended December 31, 2023 to 10.0% for the three months ended December 31, 2024.
Current wording
Cost of license revenue for the six months ended March 31, 2025 was $4.2 million, an increase of $1.2 million, or 40.1%, from $3.0 million for the six months ended March 31, 2024. Cost of license revenues increased primarily due to costs associated with our Cerence Link product revenue. As a percentage of total cost of revenues, cost of license revenue increased by 5.4 percentage points from 6.4% for the six months ended March 31, 2024 to 11.8% for the six months ended March 31, 2025.
Previous wording
Professional services gross profit increased $1.3 million, or 40.6%, from $3.4 million for the three months ended December 31, 2023 to $4.7 million for the three months ended December 31, 2024, which was primarily due to the composition of our professional service arrangements.
Current wording
Professional services gross profit increased $0.3 million, or 3.4%, from $7.9 million for the six months ended March 31, 2024 to $8.2 million for the six months ended March 31, 2025, which was primarily due to the composition of our professional service arrangements.
Previous wording
The tables below show each component of operating expense. Total other expense, net and provision for income taxes are non-operating expenses and presented in a similar format (dollars in thousands).
Current wording
The tables below show each component of operating expense. Total other expense, net and (benefit from) provision for income taxes are non-operating expenses and presented in a similar format (dollars in thousands).
Previous wording
Historically, R&D expenses are our largest operating expense as we continue to build on our existing software platforms and develop new technologies. R&D expenses for the three months ended December 31, 2024 were $20.9 million, a decrease of $12.4 million, or 37.3%, from $33.3 million for the three months ended December 31, 2023. The decrease was primarily attributable to a $4.2 million decrease in salary-related expenditures, a $2.9 million decrease in third-party contractor costs, a $2.5 million R&D international tax credit refund, a $2.0 million decrease in stock-based compensation costs, and a $1.1 increase in capitalized costs associated with internally developed software. The decrease was partially offset by a $1.3 million increase in internally allocated labor. As a percentage of total operating expenses, R&D expenses decreased by 20.6 percentage points from 62.3% for the three months ended December 31, 2023 to 41.7% for the three months ended December 31, 2024.
Current wording
Historically, R&D expenses are our largest operating expense as we continue to build on our existing software platforms and develop new technologies. R&D expenses for the three months ended March 31, 2025 were $23.3 million, a decrease of $8.5 million, or 26.7%, from $31.8 million for the three months ended March 31, 2024. The decrease was primarily attributable to a $2.6 million decrease in third-party contract labor, a $2.2 million international tax credit catch-up, $2.0 million in capitalized costs associated with internally developed software and a $1.7 million decrease in salary-related expenditures. As a percentage of total operating expenses, R&D expenses increased by 44.3 percentage points from 10.2% for the three months ended March 31, 2024 to 54.5% for the three months ended March 31, 2025.
Previous wording
Sales and marketing expenses for the three months ended December 31, 2024 were $4.8 million, a decrease of $1.3 million, or 21.5%, from $6.1 million for the three months ended December 31, 2023. The decrease in sales and marketing expenses was primarily attributable to a $0.7 million decrease in salary-related expenditures, a $0.6 million decrease in travel-related expenditures, and a $0.2 million decrease in stock-based compensation costs. The decrease was partially offset by a $0.3 million increase in commissions expenditures. As a percentage of total operating expenses, sales and marketing expenses decreased by 1.9 percentage points from 11.4% for the three months ended December 31, 2023 to 9.5% for the three months ended December 31, 2024.
Current wording
Sales and marketing expenses for the three months ended March 31, 2025 were $4.9 million, a decrease of $0.7 million, or 12.3%, from $5.6 million for the three months ended March 31, 2024. The decrease in sales and marketing expenses was primarily attributable to a $0.5 million decrease in professional services, and a $0.2 million decrease in commissions expenditures. As a percentage of total operating expenses, sales and marketing expenses decreased by 9.7 percentage points from 1.8% for the three months ended March 31, 2024 to 11.5% for the three months ended March 31, 2025.
Previous wording
Intangible asset amortization for the three months ended December 31, 2024 and 2023 remained flat at $0.6 million. Amortization expense for acquired technology and patents is included in the cost of revenues in the accompanying Condensed Consolidated Statements of Operations. Amortization expense for customer relationships is included in operating expenses in the accompanying Condensed Consolidated Statements of Operations.
Current wording
Intangible asset amortization for the six months ended March 31, 2025 was $1.1 million, a decrease of $0.1 million, or 9.4%, from $1.2 million for the six months ended March 31, 2024. The decrease in amortization relates to certain intangible assets having been fully amortized during fiscal year 2025 and 2024. Amortization expense for acquired technology and patents is included in the cost of revenues in the accompanying Condensed Consolidated Statements of Operations. Amortization expense for customer relationships is included in operating expenses in the accompanying Condensed Consolidated Statements of Operations.
Previous wording
As a percentage of total cost of revenues, intangible asset amortization within cost of revenues decreased by 0.4 percentage points from 0.4% for the three months ended December 31, 2023 to 0.0% for the three months ended December 31, 2024. As a percentage of total operating expenses, intangible asset amortization expenses within operating expenses increased by 0.1 percentage point from 1.0% for the three months ended December 31, 2023 as compared to 1.1% for the three months ended December 31, 2024.
Current wording
As a percentage of total cost of revenues, intangible asset amortization within cost of revenues decreased by 0.2 percentage points from 0.2% for the six months ended March 31, 2024 to 0.0% for the six months ended March 31, 2025. As a percentage of total operating expenses, intangible asset amortization expenses within operating expenses increased by 0.9 percentage points from 0.3% for the six months ended March 31, 2024 as compared to 1.2% for the six months ended March 31, 2025.
Previous wording
For the three months ended December 31, 2024, we recorded restructuring and other costs, net of $11.1 million, which included a $10.2 million charge related to the elimination of personnel, of which $3.0 million related to the stock-based compensation expense related to the termination of our former senior management employees, and a $0.9 million charge relating to our transformation initiatives.
Current wording
For the three months ended March 31, 2025, we recorded restructuring and other costs, net of $2.8 million, which included a $1.6 million charge related to the elimination of personnel, and a $1.1 million charge related to our transformation initiatives.
Previous wording
As a percentage of total operating expenses, restructuring and other costs, net increased by 20.8 percentage points from 1.3% for the three months ended December 31, 2023 to 22.1% for the three months ended December 31, 2024.
Current wording
As a percentage of total operating expenses, restructuring and other costs, net increased by 5.1 percentage points from 1.5% for the three months ended March 31, 2024 to 6.6% for the three months ended March 31, 2025.
Previous wording
For the three months ended December 31, 2023, we recorded restructuring and other costs, net of $0.7 million, which included a $0.1 million severance charge related to the elimination of personnel, a $0.1 million charge resulting from the closure of facilities that will no longer be utilized, and $0.4 million related to other one-time charges.
Current wording
For the six months ended March 31, 2024, we recorded restructuring and other costs, net of $5.3 million, which included a $4.5 million severance charge related to the elimination of personnel, $0.4 million related to other one-time charges and a $0.3 million charge resulting from the closure of facilities that will no longer be utilized.
Previous wording
Total other expense, net for the three months ended December 31, 2024 was expense of $1.7 million, a change of $1.3 million from $0.4 million of expense for the three months ended December 31, 2023. The change in Other income, net was primarily driven by a reduction in gains from foreign exchange offset by a $0.3 million gain on the extinguishment of debt related to our repurchase of $27.4 million principal value of the 2025 Notes. For further information, see “Liquidity and Capital Resources” below.
Current wording
Total other expense, net for the three months ended March 31, 2025 was expense of $1.3 million, a change of $0.6 million from $1.9 million of expense for the three months ended March 31, 2024. The decrease in interest expense was primarily attributable to a lower principal balance of the 2025 Notes. The change in Other income (expense), net was primarily driven by foreign exchange gains. For further information, see “Liquidity and Capital Resources” below.
Previous wording
Our effective income tax rate for the three months ended December 31, 2024 was negative 30.5%, compared to 59.0% for the three months ended December 31, 2023. Our provision for income taxes for the three months ended December 31, 2024 was $5.7 million, a net change of $28.6 million from a provision for income taxes of $34.3 million for the three months ended December 31, 2023. This difference was attributable to the one-time acceleration of legacy deferred revenue in the three months ended December 31, 2023.
Current wording
Our effective income tax rate for the three months ended March 31, 2025 was negative 34.9%, compared to negative 4.4% for the three months ended March 31, 2024. Our benefit from income taxes for the three months ended March 31, 2025 was $5.6 million, a net change of $17.2 million from a provision for income taxes of $11.6 million for the three months ended March 31, 2024. This difference was attributable to the impairment of book goodwill in the three months ended March 31, 2024.
Previous wording
As of December 31, 2024, we had $110.5 million in cash, cash equivalents, and marketable securities. Cash equivalents include highly liquid investments that are readily convertible to known amounts of cash and have original maturities of three months or less. Marketable securities include corporate bonds and government securities. As of December 31, 2024, our net working capital, excluding deferred revenue and deferred costs, was $91.0 million. This balance is representative of the short-term net cash inflows based on the working capital at that date.
Current wording
As of March 31, 2025, we had $122.8 million in cash, cash equivalents, and marketable securities. Cash equivalents include highly liquid investments that are readily convertible to known amounts of cash and have original maturities of three months or less. Marketable securities include corporate bonds and government securities.
Previous wording
Our ability to fund future operating needs will depend on our ability to generate positive cash flows from operations and finance additional funding in the capital and debt markets as needed. Based on our expectations to generate positive cash flows and the $110.5 million of cash, cash equivalents, and marketable securities as of December 31, 2024, we believe that we will be able to meet our liquidity needs over the next 12 months. Our assessment included the repayment of the $60.1 million of the 2025 Modified Notes due in the third quarter of fiscal 2025.
Current wording
Our ability to fund future operating needs will depend on our ability to generate positive cash flows from operations and access additional funding in the capital and debt markets as needed. Based on our expectations to generate positive cash flows and the $122.8 million of cash, cash equivalents, and marketable securities as of March 31, 2025, we believe that we will be able to meet our liquidity needs over the next 12 months. Our assessment included the repayment of the $60.1 million of the 2025 Modified Notes due in the third quarter of fiscal 2025.
Previous wording
Should we need to secure additional sources of liquidity, we believe that we could finance our needs through the issuance of equity securities or debt offerings. However, we cannot guarantee that we will be able to obtain financing through the issuance of equity securities or debt offerings or that, if such financing is obtained, that it will be on acceptable terms. Our ability to issue debt or enter into other financing arrangements on acceptable terms could be adversely affected if there is a material decline in the demand for our products or in the solvency of our customers or suppliers or if there are other significantly unfavorable changes in economic conditions. For instance, inflation and persistently high interest rates, and disruptions and instability in the banking industry have negatively impacted the global economy and created significant volatility and disruption of financial markets. An extended period of economic disruption or market volatility, could materially affect our business, results of operations, access to sources of liquidity and financial condition.
Current wording
Should we need to secure additional sources of liquidity, we believe that we could finance our needs through the issuance of equity securities or debt offerings. However, we cannot guarantee that we will be able to obtain financing through the issuance of equity securities or debt offerings or that, if such financing is obtained, that it will be on acceptable terms. Our ability to issue debt or enter into other financing arrangements on acceptable terms could be adversely affected if there is a material decline in the demand for our products or in the solvency of our customers or suppliers or if there are other significantly unfavorable changes in economic conditions. For instance, inflation and persistently high interest rates, changes in the political, legal and regulatory environment, including trade policies and tariffs, and disruptions and instability in the banking industry have negatively impacted the global economy and created significant volatility and disruption of financial markets. An extended period of economic disruption or market volatility, could materially affect our business, results of operations, access to sources of liquidity and financial condition.
Previous wording
As a result, $87.5 million of the 2028 Notes are considered a modification of the 2025 Notes and are included in the balances of the 2025 Notes along with the remaining $87.5 million of the 2025 Notes (together the "2025 Modified Notes") that were not repurchased as part of the transaction. We recorded $14.3 million of fees paid directly to the lenders as deferred debt issuance costs, and $3.8 million of fees paid to third-parties were expensed in the period. As of December 31, 2024, the carrying amount of the 2025 Modified Notes was $135.4 million, net of unamortized costs of $12.3 million.
Current wording
As a result, $87.5 million of the 2028 Notes are considered a modification of the 2025 Notes and are included in the balances of the 2025 Notes along with the remaining $87.5 million of the 2025 Notes (together the "2025 Modified Notes") that were not repurchased as part of the transaction. We recorded $14.3 million of fees paid directly to the lenders as deferred debt issuance costs, and $3.8 million of fees paid to third-parties were expensed in the period. As of March 31, 2025, the carrying amount of the 2025 Modified Notes was $136.7 million, net of unamortized costs of $10.9 million.
Previous wording
We accounted for $122.5 million of the 2028 Notes, that were not negotiated with the investors of the 2025 Notes, as a single liability. We incurred transaction costs of $2.4 million relating to the issuance of the 2028 Notes, which were recorded as a direct deduction from the face amount of the 2028 Notes and are being amortized as interest expense over the term of the 2028 Notes using the interest method. As of December 31, 2024, the carrying amount of the 2028 Notes was $120.8 million and unamortized issuance costs of $1.7 million. As of December 31, 2024, the 2028 Notes were not convertible.
Current wording
We accounted for $122.5 million of the 2028 Notes, that were not negotiated with the investors of the 2025 Notes, as a single liability. We incurred transaction costs of $2.4 million relating to the issuance of the 2028 Notes, which were recorded as a direct deduction from the face amount of the 2028 Notes and are being amortized as interest expense over the term of the 2028 Notes using the interest method. As of March 31, 2025, the carrying amount of the 2028 Notes was $120.9 million and unamortized issuance costs of $1.6 million. As of March 31, 2025, the 2028 Notes were not convertible.
Previous wording
The interest expense recognized related to the Notes for the three months ended December 31, 2024 and 2023 was as follows (dollars in thousands):
Current wording
The interest expense recognized related to the Notes for the three and six months ended March 31, 2025 and 2024 was as follows (dollars in thousands):
Previous wording
The conditional conversion feature of the Notes was not triggered during the three months ended December 31, 2024. As of December 31, 2024, the Notes were not convertible. As of this Quarterly Report, no Notes have been converted by the holders. Whether any of the Notes will be convertible in future quarters will depend on the satisfaction of one or more of the conversion conditions in the future. If one or more holders elect to convert their Notes at a time when any such Notes are convertible, unless we elect to satisfy our conversion obligation by delivering solely shares of our common stock (other than paying cash in lieu of delivering any fractional shares), we would be required to settle a portion or all of our conversion obligation through the payment of cash, which could adversely affect our liquidity.
Current wording
The conditional conversion feature of the Notes was not triggered during the three and six months ended March 31, 2025. As of March 31, 2025, the Notes were not convertible. As of this Quarterly Report, no Notes have been converted by the holders. Whether any of the Notes will be convertible in future quarters will depend on the satisfaction of one or more of the conversion conditions in the future. If one or more holders elect to convert their Notes at a time when any such Notes are convertible, unless we elect to satisfy our conversion obligation by delivering solely shares of our common stock (other than paying cash in lieu of delivering any fractional shares), we would be required to settle a portion or all of our conversion obligation through the payment of cash, which could adversely affect our liquidity.
Previous wording
On June 12, 2020, we entered into the Term Loan Facility. The net proceeds from the issuance of the Term Loan Facility were $123.0 million. We also entered into the Revolving Facility, which would be drawn on in the event that our working capital and other cash needs are not supported by our operating cash flow. In connection with the issuance of the 2028 Notes, in the third quarter of fiscal year 2023, we borrowed $24.7 million under our Revolving Facility and paid $106.3 million towards our Term Loan Facility. As a result, we recorded $104.9 million extinguishment of debt and $1.3 million loss on the extinguishment of debt. All principal and interest on the Term Loan Facility have been paid in full.
Current wording
On June 12, 2020, we entered into the Term Loan Facility. The net proceeds from the issuance of the Term Loan Facility were $123.0 million. We also entered into the Revolving Facility, which could have been drawn on in the event that our working capital and other cash needs were not supported by our operating cash flow. In connection with the issuance of the 2028 Notes, in the third quarter of fiscal year 2023, we borrowed $24.7 million under our Revolving Facility and paid $106.3 million towards our Term Loan Facility. As a result, we recorded $104.9 million extinguishment of debt and $1.3 million loss on the extinguishment of debt. All principal and interest on the Term Loan Facility have been paid in full.
Previous wording
Total interest expense relating to the Senior Credit Facilities for the three months ended December 31, 2024 and 2023 was $0.4 million and $0.1 million, respectively. Amounts reflect the coupon and accretion of the discount.
Current wording
Total interest expense relating to the Senior Credit Facilities for the three months ended March 31, 2025 and 2024 was zero and $0.1 million, respectively, and was $0.4 million and $0.1 million for the six months ended March 31, 2025 and 2024, respectively. Amounts reflect the coupon and accretion of the discount.
Previous wording
Cash flows from operating, investing and financing activities for the three months ended December 31, 2024 and 2023, as reflected in the unaudited Condensed Consolidated Statements of Cash Flows included in Item 1 of this Form 10-Q, are summarized in the following table (dollars in thousands):
Current wording
Cash flows from operating, investing and financing activities for the six months ended March 31, 2025 and 2024, as reflected in the unaudited Condensed Consolidated Statements of Cash Flows included in Item 1 of this Form 10-Q, are summarized in the following table (dollars in thousands):
Previous wording
Net cash provided by operating activities for the three months ended December 31, 2024 was $9.3 million, a net change of $12.1 million, or 428.7%, from net cash used in operating activities of $2.8 million for the three months ended December 31, 2023. The change in cash flows were primarily due to:
Current wording
Net cash provided by operating activities for the six months ended March 31, 2025 was $24.7 million, a net change of $26.5 million, or 1495.8%, from net cash used in operating activities of $1.8 million for the six months ended March 31, 2024. The change in cash flows were primarily due to:
Previous wording
A decrease of $70.5 million from income before non-cash charges;
Current wording
A decrease of $50.5 million from income before non-cash charges;
Previous wording
A decrease of $6.2 million due to unfavorable changes in working capital primarily related to accrued expenses and other liabilities; and
Current wording
A decrease of $9.0 million due to unfavorable changes in working capital primarily related to accrued expenses and other liabilities, accounts receivable, prepaid expenses and other assets; and
Previous wording
An increase of $88.8 million from changes in deferred revenue.
Current wording
An increase of $86.0 million from changes in deferred revenue.
Previous wording
Net Cash Provided by Investing Activities
Current wording
Net Cash (Used in) Provided by Investing Activities
Previous wording
Net cash provided by investing activities for the three months ended December 31, 2024 was $0.8 million, a net change of $0.4 million, or 36.2%, from $1.2 million of cash provided by investing activities for the three months ended December 31, 2023. The change in cash flows were primarily due to an increase of $0.4 million in payments related to capital expenditures.
Current wording
Net cash provided by investing activities for the six months ended March 31, 2025 was $0.9 million, a net change of $1.1 million, or 478.0%, from $0.2 million of cash used in investing activities for the six months ended March 31, 2024. The change in cash flows were primarily due to an decrease of $0.4 million net cash inflow related to marketable securities and $0.9 million related to additional capital expenditures.
Showing the first 40 of 43 pairs. Open the source sections for the rest.
Rearranged current paragraphs (8)
Current report — wording carried from elsewhere
The following table shows total revenues by product type, including the corresponding percentage change, for the six months ended March 31, 2025 and 2024 (dollars in thousands):
Current report — wording carried from elsewhere
Total Cost of Revenues and Gross Profits
Current report — wording carried from elsewhere
The following table shows total cost of revenues by product type and the corresponding percentage change (dollars in thousands):
Current report — wording carried from elsewhere
The following table shows total gross profit by product type and the corresponding percentage change (dollars in thousands):
Current report — wording carried from elsewhere
Intangible asset amortization for the three months ended March 31, 2025 was $0.5 million, a decrease of $0.1 million, or 3.4%, from $0.6 million for the three months ended March 31, 2024. The decrease in amortization relates to certain intangible assets having been fully amortized during fiscal year 2025 and 2024. Amortization expense for acquired technology and patents is included in the cost of revenues in the accompanying Condensed Consolidated Statements of Operations. Acquired technology and patents were fully amortized as of December 31, 2024. Amortization expense for customer relationships is included in operating expenses in the accompanying Condensed Consolidated Statements of Operations.
Current report — wording carried from elsewhere
For the three months ended March 31, 2024, we recorded restructuring and other costs, net of $4.6 million which included a $4.4 million severance charge related to the elimination of personnel and a $0.1 million charge resulting from the closure of facilities that will no longer be utilized.
Current report — wording carried from elsewhere
Total other expense, net for the six months ended March 31, 2025 was expense of $3.0 million, a change of $0.7 million from $2.3 million of expense for the six months ended March 31, 2024. The decrease in interest income was primarily attributable to lower returns on investments. The decrease in interest expense was primarily attributable to a lower average principal balance on our 2025 Notes and the termination of our Senior Credit Facilities in December of 2024. The change in Other income, net was primarily driven by a reduction in gains from foreign exchange offset by a $0.3 million gain on the extinguishment of debt related to our repurchase of $27.4 million principal value of the 2025 Notes. For further information, see “Liquidity and Capital Resources” below.
Current report — wording carried from elsewhere
Our effective income tax rate for the six months ended March 31, 2025 was negative 2.7%, compared to negative 22.1% for the six months ended March 31, 2024. Our provision for income taxes for the six months ended March 31, 2025 was $0.1 million, a net change of $45.9 million from a provision for income taxes of $46.0 million for the six months ended March 31, 2024. This difference was attributable to the impairment of book goodwill and one-time acceleration of legacy deferred revenue in the six months ended March 31, 2024.
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
Net Cash Used in Financing Activities