Cerence Inc. (NASDAQ: CRNC)

Sector: Technology Industry: Software - Application CIK: 0001768267
Market Cap 537.48 Mn
P/B 3.57
P/E -28.72
P/S 2.13
ROIC (Qtr) -1.51
Div Yield % 0.00
Rev 1y % (Qtr) 10.65
Total Debt (Qtr) 217.12 Mn
Debt/Equity (Qtr) 1.44

About

Cerence Inc., a leading provider of artificial intelligence-powered virtual assistants for the mobility and transportation market, operates under the NASDAQ stock symbol "CRNC." The company specializes in creating AI-powered assistants and innovations for connected and autonomous vehicles, with a primary focus on the automobile market, but also catering to various transportation modes such as two-wheel vehicles, planes, tractors, cruise ships, and elevators. Cerence's main business activities revolve around providing a conversational AI-based solution...

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Price action

Investment thesis

Bull case

  • Healthy cash reserves of 84.02M provide 19.34x coverage of short-term debt 4.34M, demonstrating strong liquidity position and minimal refinancing risk.
  • Robust free cash flow of 46.82M exceeds capital expenditure of 14.36M by 3.26x, indicating strong organic growth funding capability.
  • Robust tangible asset base of 331.59M provides 3.70x coverage of working capital 89.57M, indicating strong operational backing.
  • Operating cash flow of 61.17M provides solid 0.60x coverage of current liabilities 101.19M, showing strong operational health.
  • Cash reserves of 84.02M provide robust 0.83x coverage of current liabilities 101.19M, indicating strong short-term solvency.

Bear case

  • Operating cash flow of 61.17M barely covers its investment activities of (10.55M), with a coverage ratio of -5.80, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Investment activities of (10.55M) provide weak support for R&D spending of 97.76M, which is -0.11x, suggesting potentially insufficient investment in innovation relative to other capital deployment.
  • Operating cash flow of 61.17M provides insufficient coverage of deferred revenue obligations of 191.89M, which is 0.32x, raising concerns about future service delivery capabilities.
  • The company's operating cash flow of 61.17M shows concerning coverage of stock compensation expenses of 27.35M, with a 2.24 ratio indicating potential earnings quality issues.
  • Operating earnings of 1.40M show weak coverage of depreciation charges of 10.55M, with a 0.13 ratio indicating high capital intensity and potential reinvestment needs.

Geographical Breakdown of Revenue (2025)

Product and Service Breakdown of Revenue (2025)

Peer comparison

Companies in the Software - Application
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 SAP Sap Se 288.31 Bn 34.60 6.72 10.73 Bn
2 CRM Salesforce, Inc. 248.32 Bn 34.38 6.16 11.14 Bn
3 SHOP Shopify Inc. 212.27 Bn 119.19 19.85 1.12 Bn
4 INTU Intuit Inc. 180.73 Bn 43.89 9.30 6.78 Bn
5 UBER Uber Technologies, Inc 178.38 Bn 10.72 3.60 12.19 Bn
6 NOW ServiceNow, Inc. 146.98 Bn 84.91 11.60 2.40 Bn
7 ADBE Adobe Inc. 144.48 Bn 20.77 6.23 6.64 Bn
8 ADP Automatic Data Processing Inc 108.20 Bn 26.16 5.18 9.77 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 1.08 2.65
EV to Cash from Ops. EV/CFO 11.13 13.37
EV to Debt EV to Debt 3.13 57.69
EV to EBIT EV/EBIT 485.48 19.12
EV to EBITDA EV/EBITDA 82.42 15.00
EV to Free Cash Flow [EV/FCF] EV/FCF 14.54 14.69
EV to Market Cap EV to Market Cap 1.27 -92.28
EV to Revenue EV/Rev 2.70 4.60
Price to Book Value [P/B] P/B 3.57 4.26
Price to Earnings [P/E] P/E -28.72 -136.90
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Dividend Coverage Ratio 0.00 -3.95
Dividend Payout Ratio % Div Payout % (Qtr) 0.00 4.25
Dividend per Basic Share Div per Share (Qtr) 0.00 0.15
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 0.00 2.52
Interest Coverage Int. cover (Qtr) 0.14 -52.32
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) -187.35 -259.78
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) -30.84 9,763.58
Dividend Growth (1y) % Dividend Growth (1y) % 0.00 1.61
EBIAT Growth (1y) % EBIAT 1y % (Qtr) 100.52 -263.15
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 101.45 56.46
EBIT Growth (1y) % EBIT 1y % (Qtr) 100.25 -225.15
EBT Growth (1y) % EBT 1y % (Qtr) 98.49 -86.10
EPS Growth (1y) % EPS 1y % (Qtr) 96.95 123.84
FCF Growth (1y) % FCF 1y % (Qtr) 283.75 -36.82
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) -25.03 95.08
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.40 0.58
Cash Payout Ratio Cash Payout (Qtr) 0.00 0.02
Cash Ratio Cash Ratio (Qtr) 0.83 3.75
Current Ratio Curr Ratio (Qtr) 1.89 8.16
Debt to Equity Ratio Debt/Equity (Qtr) 1.44 0.17
Interest Cover Ratio Int Coverage (Qtr) 0.14 -52.32
Times Interest Earned Times Interest Earned (Qtr) 0.14 -52.32
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 4.70 -100.06
EBIT Margin % EBIT Margin % (Qtr) 0.56 -164.24
EBT Margin % EBT Margin % (Qtr) -3.50 -116.94
Gross Margin % Gross Margin % (Qtr) 72.70 58.20
Net Profit Margin % Net Margin % (Qtr) -7.40 -121.65