Cerence Inc’s Revenue by Segment (2019-2022)

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This statistic highlights Cerence Inc’s Revenue by Segment, split across Connected service, License and Professional Services segments, reported on a quarterly basis from Q1 2019 onwards.
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This statistic highlights Cerence Inc’s Revenue by Segment, split across Connected service, License and Professional Services segments, reported on a quarterly basis from Q1 2019 onwards.

Cerence Inc’s Revenue by Segment

Revenue by Segment  Q4 2020  Q3 2021  Q4 2021 Contribution in Q4 2021
Connected service $25.00 $30.28 $25.59 26%
License $46.43 $49.98 $51.42 52%
Professional services $19.46 $16.54 $21.07 21%
Total $90.88 $96.80 $98.08 100%

(All the figures are in million, except percentages)

The company’s total revenue witnessed an increase of 7.92% on a year-on-year basis, from $90.88 million in Q4 2020 to $98.08 million in Q4 2021. The quarter-on-quarter growth stood at 1.32%, growing from $96.80 million in Q3 2021 to $98.08 million in Q4 2021.

Connected Service

Connected Service allows the customers to use hosted software over the contract period without taking possession of software provided on a usage basis or a fixed fee subscription basis. Connected service contract ranges from one year to five years.It includes services such as development, customisation and stand-up application for each customer.

The revenue generated by the connected service segment increased slightly from $25 million in Q4 2020 to $25.59 million in Q4 2021, growing by 2.36% on a year-on-year basis. This increase was driven by an increase in market penetration from connected service solutions as customers increasingly deploy hybrid solutions. However there has been a decline in revenue from $30.28 million in Q3 2021 to $25.59 million in Q4 2021, dropping by 15.49% on a quarterly basis. This segment contributes 26% to the company’s total revenue generated in Q4 2021.

License

License revenue consists of license royalties associated with the edge software component. Embedded software license and technology license operates without access to external network and information. Embedded licenses are sold with non-distinct professional services, to customize and integrate underlying software and technology considered as a combined performance obligation and revenue is recognized upon the progress towards completion of the project, which is measured using labor hours incurred compared to estimated labor hours to be incurred. Revenue from distinct embedded software and technology licenses that do not require professional service is recognized when it is made available to the customers.

Revenue from license increased from $46.43 million in Q4 2020 to $51.42 million, growing by 10.75% on a year-on-year basis. It also grew by 2.89% on a quarter-on-quarter basis when compared to $49.98 million in Q3 2021. This segment is the biggest contributor of revenue for the company, contributing 52% to the company’s total revenue in Q4 2021.

Professional Service

Professional service consists of porting, integrating, and customizing embedded solutions with costs comprising of compensation for services personnel, contractors, and overhead. Revenue from professional service, including training is recognized based on completion of work calculated using labor hours incurred compared with estimated labor hours.

Revenue increased from $19.46 million in Q4 2020 to $21.07 million in Q4 2021, growing by 8.27% on a year-on-year basis. It also grew by 27.39% on a quarter-on-quarter basis, when compared to $16.54 million in Q3 2021. This increase was driven by an increase in demand for the integration and customization service related to the company’s edge software and the timing of the services rendered.

About the Company

Cerence builds AI-powered virtual assistants for the transportation market mainly focusing on the automobile market. The solution provided by the business is not restricted to two-wheelers, planes, cruise ships but can be applied to all forms of transportation. Major customers of the company are big players of the automobile market such as BMW, Daimler, FCA Group, Ford, Geely, GM, Renault-Nissan, Toyota, Bosch, etc. The platform utilizes industry-leading speech recognition, natural language understanding, speech signal enhancement, text-to-speech, and acoustic modeling technology to provide conversational AI-based solutions. Virtual assistants built with the company’s platform enables a wide variety of modes of human-vehicle interaction such as speech, touch, handwriting, gaze tracking, and gesture recognition. Cerence generates revenue by selling software licenses and cloud-connected services. The company also generates revenue from professional service working with OEMs (Original Equipment Manufacturers) and suppliers during the development and design phase of vehicles and through maintenance and enhancement projects.

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