CRNC · Cerence Inc.

Cerence Inc. reported strong Q2 FY2026 results, with revenue of $64.2 million and Adjusted EBITDA of $7.2 million, both exceeding the high end of guidance. Revenue was above the guided range of $58-$62 million, driven by stable core performance and improved revenue mix. Growth in recurring Connected Services ($15.3 million, up from $12.6 million a year ago) and steady Variable License revenue ($31.8 million) helped offset quarter-to-quarter variability in fixed license timing ($5.8 million). GAAP net income was $1.7 million, within the guided range of $(1)-$4 million. Gross margin of 73.7% was above guidance of 71%-72%, reflecting favorable mix. Operating cash flow was $14.1 million and free cash flow was $13.6 million, demonstrating disciplined execution and improved cash conversion. Management highlighted continued customer and technology momentum, with Cerence xUI-powered vehicles entering production and broader adoption across Audio AI and generative AI solutions. Key performance indicators showed 50% penetration of worldwide auto production (TTM), 12% growth in connected cars shipped (TTM), and 7% growth in Adjusted Total Billings (TTM). For Q3 FY2026, the company guided revenue of $68-$72 million, gross margin of 75%-76%, and Adjusted EBITDA of $8-$12 million. For the full year, the company raised the midpoints of revenue (to $312.5 million), Adjusted EBITDA (to $65 million, up 8%), and free cash flow guidance, while narrowing ranges. The full-year revenue guidance range is $305-$320 million, Adjusted EBITDA $60-$70 million, and free cash flow $66-$76 million. CEO Brian Krzanich attributed the results to disciplined execution and the company's position as a trusted AI partner to automakers, with growing momentum for Cerence's technology including the first Cerence xUI-powered cars entering production.