Cerence (CRNC) 28th Annual Needham Growth Conference Virtual summary

Industry trends and technology evolution

• Voice technology is transitioning due to large language models (LLMs), enabling natural, conversational interactions without keyword dependence.

• Modern voice systems enhance safety, speed, and simplicity by allowing drivers to control vehicle functions hands-free.

• By 2030, 80%-95% of vehicles are expected to be connected, unlocking real-time information and new revenue streams.

• Embedded AI and small language models are prioritized for offline performance, meeting consumer demand for personalized infotainment.

• OEMs seek unique, branded experiences to counter declining brand loyalty, leveraging voice and AI personalization.

Product capabilities and market position

• Supports a wide range of languages and dialects, with expertise in automotive-specific data and applications.

• Expanding beyond automotive into wearables, TVs, and self-service kiosks, leveraging cross-industry partnerships.

• Advanced audio features include isolating individual voices in vehicles, enhancing in-car communication.

• Holds a significant share in connected vehicles, currently estimated at 75% of the connected market.

• Focused on proactive, human-like, and personalized user experiences, including facial recognition and avatars.

Financial performance and outlook

• Fiscal 2025 revenue reached $252 million with 73% gross margin, $48 million EBITDA, and $46 million free cash flow.

• Q4 2025 saw $60 million revenue, $8 million adjusted EBITDA, and $12 million cash flow from operations.

• Fiscal 2026 guidance projects $300–$320 million revenue, $60 million adjusted EBITDA, and $60 million free cash flow.

• IP monetization, such as a $49 million Samsung patent license, supplements core technology growth.

• Core technology revenue is growing at high single digits, with total business growth at 23% including IP deals.