Item 5. Market for Registrant’s Common Equity
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
Our common stock has been listed on the Nasdaq Global Select Market under the symbol “CRNC” since October 2, 2019. Prior to that date, there was no public trading market for our common stock. A “when-issued” trading market for our common stock existed between September 17, 2019 and October 1, 2019 under the symbol “CRNCV”.
Holders of Common Stock
As of November 12, 2020, there were 540 holders of record of our common stock. This number does not reflect beneficial owners whose shares are held in street name.
Dividend Policy
We have not paid any dividends since our formation. We may evaluate whether to pay cash dividends to our stockholders. The timing, declaration, amount and payment of future dividends to stockholders, if any, will fall within the discretion of our Board. Among the items we are considering in establishing a dividend policy are the capital needs of our business and opportunities to retain future earnings for use in the operation of our business and to fund future growth. Additionally, the terms of the Senior Credit Facilities limit our ability to pay cash dividends. There can be no assurance that we will pay a dividend in the future or continue to pay any dividend if we do commence the payment of dividends.
Performance Graph
The graph below compares the cumulative total shareholder return of our common stock for the last four quarters with the Russell 2000 and the S&P Software & Services Select indices. The information presented assumes an initial investment of $100 on October 2, 2019, the date our common stock began regular-way trading on the Nasdaq Global Select Market. The graph shows the value that each of these investments would have had at the end of each quarter.
The comparisons shown in the graph below are based upon historical data. We caution that the stock price performance shown in the graph below is not necessarily indicative of, nor is it intended to forecast, the potential future performance of our common stock.
31
October 2, 2019
December 31, 2019
March 31, 2020
June 30, 2020
September 30, 2020
Cerence Inc.
$
100.00
$
147.43
$
100.33
$
266.06
$
318.37
Russell 2000
$
100.00
$
112.76
$
77.93
$
97.41
$
101.90
S&P Software & Services Select
$
100.00
$
111.69
$
90.53
$
122.93
$
131.74
Recent Sales of Unregistered Securities and Use of Proceeds
None.
Issuer Purchases of Equity Securities
Not applicable.
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Item 6. Selected Financial Data.
The following table presents certain selected consolidated and combined financial information as of and for each of the years in the three-year period ended September 30, 2020, 2019, and 2018. The selected consolidated and combined financial data as of and for each of the years ended September 30, 2020, 2019, and 2018 is derived from Consolidated and Combined Financial Statements included elsewhere in this Form 10-K. The Consolidated and Combined Financial Statements for the fiscal year ended September 30, 2020 and 2019 have been prepared under Financial Accounting Standards Board, or FASB, Accounting Standard Codification, or ASC, Topic 606, Revenue from Contracts with Customers, or ASC 606, while the Combined Financial Statements for the fiscal years ended September 30, 2018 have been prepared under FASB ASC Topic 605, Revenue Recognition, or ASC 605. In our opinion, both financial statements include all adjustments, consisting of only ordinary recurring adjustments, necessary for a fair statement of the information set forth in this Form 10-K.
ASC 606 was adopted as of October 1, 2018 using the modified retrospective approach from the previous guidance ASC 605. Our transition to ASC 606 represents a change in accounting policy that is reflected in our Consolidated and Combined Financial Statements for fiscal years 2020 and 2019. The adoption of ASC 606 limits the comparability of revenue and expenses, including cost of revenue and certain operating expenses when compared to the fiscal year 2018 and other prior reporting periods.
The selected consolidated and combined financial data presented below should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our Consolidated and Combined Financial Statements, including their respective accompanying notes thereto included elsewhere in this Form 10-K. For fiscal year 2019 and fiscal year 2018, our business was wholly-owned by Nuance. The financial information included herein may not necessarily reflect our financial position, results of operations and cash flows in the future or what our financial position, results of operations and cash flows would have been had we been an independent, publicly traded company during those periods presented. Further, the historical combined financial information includes allocations of certain Nuance corporate expenses, as described in Note 19 to the Consolidated and Combined Financial Statements. We believe the assumptions and methodologies underlying the allocation of these expenses are reasonable. However, such expenses may not be indicative of the actual level of expense that we would have incurred if we had operated as an independent, publicly traded company.
Year Ended September 30,
2020
2019
2018
(ASC 606)
(ASC 606)
(ASC 605)
Operations:
Total revenues
$
329,646
$
303,315
$
276,984
Gross profit
221,795
203,972
194,020
Income from operations
19,331
10,852
36,852
(Benefit from) provision for income taxes
(5,509
)
(89,084
)
30,917
Net (loss) income
(20,631
)
100,268
5,881
Financial Position:
Deferred revenue
325,093
353,284
348,649
Total assets
1,687,445
1,483,829
1,397,548
Total stockholders' equity
957,756
1,068,128
993,319
Selected Data and Ratios:
Net working capital (deficit)
48,374
(36,789
)
(38,839
)
Depreciation of property and equipment
9,160
7,822
9,159
Amortization of intangible assets
20,881
21,022
16,606
Gross margin
67.3
%
67.2
%
70.0
%
Operating margin
5.9
%
3.6
%
13.3
%
33