Cerence’s CRNC shares have surged by an impressive 387.1% over the last six months, significantly outpacing the broader Zacks Computer & Technology Sector, which returned only 1.1%, as well as the Zacks Computers – IT Services industry, which saw a 13.6% increase.
CRNC’s remarkable stock performance is attributed to its successful use of generative AI (Gen AI) solutions, record-breaking platform launches, and a strong partner network. The company has shown strong revenue growth while focusing on innovations in automotive AI.
The recent partnership between Cerence and NVIDIA NVDA has further solidified its position in the automotive AI space. With NVIDIA’s advanced chip technology, CRNC aims to enhance the performance and scalability of its products.
Despite its successes, Cerence faces challenges from rising competition in the AI sector. Staying ahead in a rapidly evolving market poses a significant hurdle.
Cerence Inc. Price and Consensus
Cerence Inc. price-consensus-chart | Cerence Inc. Quote
AI Innovations and Strategic Partnerships Boost CRNC
Positioning itself at the forefront of the AI revolution in the automotive industry, Cerence is leveraging a diverse product portfolio to enhance in-car experiences. Their offerings include conversational AI, Gen AI, and audio solutions.
In fiscal 2024, CRNC secured 10 new customers and launched six Gen AI programs, reflecting a strong drive to deploy advanced technologies.
Major automotive manufacturers such as Microsoft MSFT, Volkswagen, BMW, and Renault RNLSY have integrated Cerence’s voice assistance systems to improve user interactions inside vehicles.
With CRNC’s AI technology implemented in over 500 million cars worldwide, the company shows impressive market reach and leadership in automotive AI.
In 2024, Cerence announced a record 22 platform launches, with four featuring in the fourth quarter. A notable partnership with JLR will utilize Cerence’s AI technologies to enhance the luxury automaker’s in-car experience.
Audi has also chosen Cerence’s Gen AI technology to upgrade its in-car assistant features.
Increasing Competition Affects CRNC’s Outlook
The rapid evolution of AI technologies has led to heightened competition within the automotive AI space. Companies like SoundHound AI are now major contenders, specializing in voice recognition and conversational AI.
Recent data indicates that CRNC’s technology forms part of 52% of global auto production over the past year. However, this marks a slight decrease linked to reduced production by key clients.
Sales and Earnings Outlook Mixed for CRNC
The Zacks Consensus Estimate anticipates revenues for the second quarter of fiscal 2025 to be $57.71 million, reflecting a 14.92% decline compared to the previous year.
For non-GAAP earnings in the same quarter, the consensus remains at 2 cents per share—unchanged for the last month—with a notable year-over-year increase of 122.22%.
For fiscal 2025, Cerence projects revenues between $236 million and $247 million, accounting for potential headwinds of $5 to $7 million due to a strategic pivot away from professional service projects.
The Zacks Consensus Estimate for total revenues in 2025 stands at $241.27 million, which indicates a significant year-over-year drop of 27.22%.
The projected non-GAAP loss per share for fiscal 2025 ranges from 67 cents to 92 cents. Meanwhile, the consensus for earnings is at 15 cents per share, unchanged over the past month, signaling an 87.80% decrease from the prior year.
CRNC has a strong history of exceeding quarterly earnings estimates, averaging a surprise of 110.86% over the last four quarters.
Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
Current Zacks Rank
Presently, CRNC holds a Zacks Rank #3 (Hold), suggesting that investors may want to wait for a more favorable opportunity to buy the stock. For more insights, see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.
