It must be an excruciating exercise. Every three months, speech and imaging specialist Nuance Communications (NASDAQ:NUAN) has to sort through the financials of several business units, intertwined with multiple acquisitions at various stages, to give investors a precise picture of company financials. Yesterday, the Motley Fool Hidden Gems recommendation wrapped up its fiscal year and released another dose of adjusted numbers that ultimately tell the same story -- one of strong growth.
On a GAAP basis, Nuance reported a 40% jump in revenue this quarter, to $179.9 million. On the bottom line, the company lost $3.4 million, or $0.02 per share. When one-time items such as stock compensation and acquisition-related expenses are removed, the company brought in $37 million, demonstrating that there are significant costs associated with Nuance's intensive acquisition pace.
To make the operational picture a little clearer, Nuance's management also noted that organic revenue growth was 18% this quarter and 19% for the full year. This growth excludes the benefits of recent acquisitions, so investors get a flavor of growth in existing business units. Ultimately, management's goal is to maintain 20% organic growth across all business segments.
While much of the rapid growth has come from acquisitions, CEO Paul Ricci also noted that the company continues to win new designs and expand relationships with customers such as AT&T (NYSE:T), Bank of America (NYSE:BAC), and Disney (NYSE:DIS). Enterprise solutions for large clients like these have been one of Nuance's faster-growing segments, registering 26% organic growth in the quarter. Another segment registering 37% organic growth is embedded solutions, where Nuance speech technology is deployed in items such as Nokia (NYSE:NOK) phones, Ford (NYSE:F) automobiles, and TomTom navigation devices.
Even with the continued strong growth at the early stages of many speech markets, the stock certainly carries risks. One of the brightest opportunities ahead for Nuance is in mobile search, which lies squarely in the crosshairs of Google (NASDAQ:GOOG) -- a search giant that doesn't tread lightly.
And with multiple acquisitions clouding the financials, it's difficult to value the profitability of the underlying business. Management itself has even stated that it is getting more and more difficult to separate organic from non-organic revenue. Ultimately, investors need a little faith that growth in the various speech recognition markets will make up for the investments Nuance is plowing into the business today.
