Nuance Announces Fourth Fiscal Quarter 2007 Results

FOR IMMEDIATE RELEASE
(Free-Press-Release.com) November 15, 2007 -- Nuance Communications, Inc. (NASDAQ: NUAN) today announced financial results for the fourth fiscal quarter ended September 30, 2007.

Nuance reported revenues of $179.9 million in the quarter ended September 30, 2007, a 40 percent increase over revenues of $128.1 million in the quarter ended September 30, 2006. On a GAAP basis, Nuance recognized a net loss of $3.4 million, or $(0.02) per share, in the quarter ended September 30, 2007, compared with a net loss of $7.2 million, or $(0.04) per share, in the quarter ended September 30, 2006.

In addition to using GAAP results in evaluating the business, management also believes it is useful to evaluate results using non-GAAP measures. Using a non-GAAP measure, the Company reported non-GAAP revenue of approximately $187.2 million, up 41 percent from the same period last year. Using a non-GAAP measure, Nuance reported non-GAAP net income of $37.0 million, or $0.18 per diluted share, for the period ending September 30, 2007, compared to non-GAAP net income of $26.3 million, or $0.14 per diluted share, in the quarter ended September 30, 2006.

These GAAP figures exclude revenues lost to purchase accounting in conjunction with the Company's acquisition of BeVocal, Inc., VoiceSignal Technologies, Inc. and Tegic Communications. The non-GAAP net income amount excludes non-cash taxes and interest, amortization of intangible assets, non-cash amortization of stock-based compensation, and acquisition-related transition and integration costs and charges. See "GAAP to non-GAAP Reconciliation" below for further information on the Company's non-GAAP measures.

"Nuance ended 2007 on a particularly high note, delivering robust performance in several major product areas and producing strong organic revenue growth," said Paul Ricci, chairman and CEO of Nuance. "Our results in the fourth quarter reflect favorable trends and momentum the Company experienced throughout 2007. In particular, we have witnessed strong demand from customers and partners across our diverse speech markets, improved operational performance through expense discipline and operating leverage, and enjoyed strategic and operational synergies from recent acquisitions. Combined, these factors delivered results for the quarter and the year above expectations and positioned Nuance for continued achievement in 2008."

Consistent with the Company's strategy and recent trends, highlights from the quarter include:

--Enterprise Speech

Network enterprise speech revenues were a record, up sequentially and year-over-year owing to growing demand for speech solutions across multiple customer segments including telecommunications, financial services and consumer products and services. In the quarter, Nuance announced new offerings for customer care analytics, which are important contributors to speech-based automation and customer satisfaction. Significant agreements were signed with both new and existing customers including AT&T, Bank of America, State of New Jersey, Telenor and Wellpoint. Organic revenue growth for Nuance's enterprise speech solutions was up again this quarter at 25 percent over the same period last year.

--Embedded Speech
Nuance embedded speech revenues exceeded $25 million, including revenues from the VoiceSignal and Tegic acquisitions. Important new or expanded relationships in the quarter with manufacturers include Bosch-Blaupunkt, Denso, Magellan, Mitec, Samsung and TomTom. On August 24, 2007, Nuance closed the acquisitions of Tegic and VoiceSignal, expanding the Company's embedded technologies and solutions for mobile devices.

--Mobile Search and Communications

Nuance expanded its voice search and mobile communications offerings through agreements with a large Asian telecommunications company and one of the world’s largest mobile navigation providers. The Company entered into the early stages of a partnership with another Internet search firm for the application of mobile search in consumer markets. Within its directory assistance business, the Company benefited from record automation rates with Jingle Networks (1-800-FREE411), new markets for AT&T's 1-800-YellowPages service and contributions from Say Hello and Telstra. The Company also made significant progress with Nuance Voice Control, signing its first Healthcare edition customer, launching speech-based GPS search capabilities and delivering pre-loaded software on Sprint's Palm Centro devices.

--Healthcare Dictation and Transcription
Dictaphone healthcare revenues in the quarter were at record levels, surpassing $61 million, as the demand for Nuance's dictation and transcription solutions within healthcare facilities continued to grow. The Company sustained strong interest and revenue growth for its iChart hosted transcription services, signing several multi-million dollar, extended-term contracts in the quarter with new and existing customers that include Columbus Regional, Mercy Hospital and San Louis Medical Center.

--PDF and Imaging Solutions
The launch of OmniPage 16 contributed to strong year-end performance for Nuance's imaging solutions. Important customer and OEM agreements for both new and expanded deployments included Dell, the U.S. Department of Veteran Affairs, EMC, Federal Bureau of Investigation and HP.

--Operational Achievement

Nuance sustained a focus on disciplined acquisition integration, cost synergies and expense controls, which resulted in improvements and leverage in its non-GAAP operating margins. In addition, cash flow from operations was approximately $18.5 million in the fourth quarter 2007. Cash flow from operations for the fiscal year 2007 was $110.2 million, up 73 percent over the fiscal year 2006.

Nuance to Host Quarterly Conference Call at 8:30 a.m. Today

In conjunction with the announcement, Nuance will broadcast its quarterly conference call over the Internet at 8:30 a.m. ET. Those who wish to listen to the live broadcast should visit the Investor Relations section of the Company's Web site at www.nuance.com at least 15 minutes prior to the event and follow the instructions provided to ensure that the necessary audio applications are downloaded and installed.

The conference call can also be heard via telephone by dialing (800) 230-1766 or (612) 234-9960 five minutes prior to the call and referencing conference code 894553. A replay of the call will be available within 24 hours of the announcement. To access the replay, dial (800) 475-6701 or (320) 365-3844 and refer to access code 894553.

Source: http://www.nuance.com/

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