Cerence Raises Revenue Guidance to $244M-$249M Following Strong Q3 Performance

Cerence Inc. raised its 2025 revenue guidance to $244M-$249M, citing strong Q3 results and AI platform milestones. The company's Q3 revenue exceeded guidance at $62.2M, and adjusted EBITDA reached $9M. CEO Brian Matthew Krzanich attributed the success to positive free cash flow and a growing customer base.

Cerence Inc. (CRNC) has announced a significant increase in its 2025 revenue guidance, citing strong third-quarter (Q3) results and notable advancements in its AI platform. The company's Q3 revenue exceeded guidance at $62.2 million, while adjusted EBITDA reached $9.0 million. CEO Brian Matthew Krzanich attributed the success to positive free cash flow and a growing customer base [1].

Cerence's full-year revenue guidance has been raised from $236 million to $249 million, reflecting the company's robust performance in the latest quarter. The increase in revenue was driven by several factors, including the dynamic evolution of its AI platform, Cerence xUI, which now includes features like multimodality and emotion detection [1].

The company's revenue growth was bolstered by expanding partnerships with chip providers and recent deal wins with Volkswagen Group and JLR. Additionally, Cerence reported a 12% increase in the number of connected cars shipped, further underscoring its market momentum [1].

Cerence's financial health is also strong, with positive free cash flow for the fifth consecutive quarter and a cash balance of $79.1 million at the end of Q3. The company's gross margin improved to 74% in Q3, and variable license revenue grew by 48% year-over-year [1].

The company's Q4 revenue guidance was set at $53 million to $58 million, with gross margins expected to be between 68% and 69%. Despite some expected volume decreases and true-ups in Q4, Cerence remains confident in its ability to maintain operational discipline and debt reduction [1].

Cerence's strategic focus is shifting towards recurring and usage-based revenue models, with a reduced reliance on fixed license deals. The company's expansion into non-automotive markets is also advancing, as evidenced by a new partnership with LG for Cerence TTS in global television lineups [1].

Despite the positive results, Cerence faces ongoing challenges, including potential impacts from evolving tariffs and legal risks from IP infringement claims. However, the company's strong Q3 performance and raised guidance indicate a promising outlook for the remainder of the year [1].

References:
[1] https://seekingalpha.com/news/4480851-cerence-raises-2025-revenue-guidance-to-244m-249m-amid-strong-q3-results-and-ai-platform