The 10-second takeaway
For the quarter ended June 30 (Q3), Nuance Communications beat expectations on revenues and beat expectations on earnings per share.
Compared to the prior-year quarter, revenue improved significantly and GAAP earnings per share grew significantly.
Gross margins dropped, operating margins increased, net margins improved.
Nuance Communications logged revenue of $448.2 million. The 17 analysts polled by S&P Capital IQ expected net sales of $438.5 million on the same basis. GAAP reported sales were 31% higher than the prior-year quarter's $328.9 million.
Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.
EPS came in at $0.45. The 17 earnings estimates compiled by S&P Capital IQ predicted $0.39 per share. GAAP EPS of $0.25 for Q3 were 92% higher than the prior-year quarter's $0.13 per share.
Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.
For the quarter, gross margin was 66.9%, 30 basis points worse than the prior-year quarter. Operating margin was 12.9%, 210 basis points better than the prior-year quarter. Net margin was 18.4%, 570 basis points better than the prior-year quarter.
Next quarter's average estimate for revenue is $500.5 million. On the bottom line, the average EPS estimate is $0.47.
Next year's average estimate for revenue is $1.74 billion. The average EPS estimate is $1.63.
The stock has a four-star rating (out of five) at Motley Fool CAPS, with 5,474 members out of 5,718 rating the stock outperform, and 244 members rating it underperform. Among 1,363 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 1,324 give Nuance Communications a green thumbs-up, and 39 give it a red thumbs-down.
Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Nuance Communications is outperform, with an average price target of $30.24.
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Seth Jayson had no position in any company mentioned here at the time of publication. You can view his stock holdings here. He is co-advisor of Motley Fool Hidden Gems, which provides new small-cap ideas every month, backed by a real-money portfolio. The Motley Fool has no positions in the stocks mentioned above. Motley Fool newsletter services recommend Nuance Communications. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.