Cerence's Q1 Earnings and Guidance Reveal Undervaluation Opportunity

Cerence (CRNC) reported Q1 earnings and updated guidance, with a 1-day share price return of 29.04% decline and a 1-year total shareholder return of 39.95% decline. The key question is whether Cerence at $7.65 is undervalued or if the market is already pricing in future growth. The ongoing rollout of Cerence's xUI AI assistant platform supports durable growth in software licensing revenue and higher average selling prices per vehicle, but softer auto demand and reliance on major OEM customers could challenge this upside story. Our DCF model estimates a future cash flow value of about $7.63, almost flat with the current share price.