Cerence Inc.

Good day, and thank you for standing by. Welcome to the SARINS Q2 2021 earnings call. At this time, all participants are in a listen-only mode. After this week's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star 0. I would now like to hand the conference over to your speaker today, Richard Yorganian. Please go ahead.

Thank you, Salah. Welcome to CERNS' second quarter fiscal year 2021 conference call. Before we begin, I would like to remind you that this call may involve certain forward-looking statements. These statements are subject to risks and uncertainties, as described in the press release preceding today's call. CERNS makes no representations to update those statements after the date thereof. In addition, the company may refer to certain non-GAAP measures, key performance indicators, and pro forma financial information during this call. Please refer to today's press release for further details of the definitions, limitations, and uses of those measures, and reconciliations of the non-GAAP measures to the closest GAAP equivalent. Joining me on today's call is Sanjay Dwan, President and CEO of Serence, and Mark Gallenberger, CFO of Serence. As a reminder, the only authorized spokespeople for the company are Sanjay, Mark, and me. Before handing over the call to Sanjay, I would like to announce several upcoming investor events. They are all virtual events, so the exact timing of our participation is subject to change. The conferences include the Craig Hellams 18th Annual Institutional Investor Conference on June 2nd, Niedermann Company's 5th Annual Virtual Automotive Technology Conference on June 8th, and BEARDS 2021 Global Consumer Technology and Services Conference on June 10th. Please visit the events page in the investor section of the CERN's website for the most up-to-date information on our participation. Now on to the call. Sanjay?

Good morning. Thank you, Rich. Welcome to everyone on the call, and thank you for joining us to discuss our second quarter fiscal 2021 earnings. It always amazes me how many companies call their quarterly reports earnings calls when they aren't producing any earnings. For Serence, this is truly an earnings call. For our call, I will first review our strong financial performance in Q2, followed by a review of our first half bookings. This will be followed by a few comments on some notable events that took place during the quarter. Next, I'll update our key performance indicators and then hand the call over to Mark to review the detailed financial results. In Q2, at $98.7 million, we once again delivered record revenue, representing 14% year-over-year growth. Our performance was driven by strong growth in our license and connected services product lines, with both up approximately 20% year-over-year. As you can see, there was minimal effect on our revenue from the semiconductor shortage affecting the auto industry, although our Q3 guidance does take into account a modest impact. While revenue growth is a key part of our story, we believe profitable growth is also important. Our relentless focus on cost and efficiency led to a non-gap gross margin of 77%. adjusted EBITDA of approximately 39 million, or 40% margin, and very strong non-GAAP EPS of 69 cents. Mark will share the details later in the call, but overall, we're incredibly pleased with our second quarter results and how business continues to excel. As we have done in the past, Our practice is to report bookings at the halfway point of the fiscal year and report backlog at the end of the fiscal year. Our total first half bookings were 293 million, approximately flat to the second half of fiscal 2020. Last year, we had a burst of multiple significant awards that fell within the first half of the fiscal year. We expect that burst to happen in the second half of this fiscal year. In fact, we are off to a very strong start in Q3 with over 100 million bookings already booked. Overall, our pipeline continues to be strong and our win rate remains extremely high. We had no competitive loss of notes in the first half and we won back an important multinational customer than had chosen a competitor when the business was still part of Nuance. Additional first half booking highlights include strategic customer wins with Hyundai and a prominent Japanese car company. It is important to note that bookings for our new application products were approximately $33 million. This is a solid start for building the bookings foundation to support our 75 million of applications revenue expectations in our target 2024 model. We expect these bookings to deliver initial revenue before the end of the calendar year. You may have seen our press release last week announcing P97 Network as a partner in the ecosystem of our Selens Pay application. This further solidifies Selens Pay in the market and will connect drivers to safe, seamless payments through the P97 mobile commerce platform currently available to more than 30% of the retail fuel sites across the US. Continuing the momentum in our newest offerings, we were awarded two important decisions in the two-wheeler market with one of the most prestigious and fastest-growing two-wheeler and ATV companies in China and an iconic domestic motorcycle brand that you would all recognize. We made further progress in the elevator market and expect to share more progress with you on our next earnings call. Aside from these important developments, we had several notable events and achievements in the quarter. Two electric vehicles, the Hyundai Ioniq 5 and the Daimler EQS were launched in the quarter to rave reviews. We're proud to be a key AI supplier for both of these amazing cars. We announced new product capabilities to seamlessly work with Google's Android Automotive OS, allowing Serence technology to more deeply coexist with all Google applications. With Serence's best-in-class conversational AI built on top of Android Automotive OS, automakers can now ensure their native digital assistants and seamlessly coexist with Google Automotive Services, including Google Assistant, without compromising brand ownership and while preserving their unique in-car experience. Next, Serence was a proud recipient of numerous Project Voice awards that honor global best-in-class achievement in voice and conversational AI. The awards were for Company of the Year, Developer of the Year, Executive of the Year, best use of TTS, achievement of the year, and best automotive solution for our incredible work with Daimler on the newest MBUX offerings. At CELNS, our mission is to develop a technology that's experience-focused on providing a safe, more enjoyable experience for the driver and their passengers. We do this better than anyone else because that's our sole focus. Our engineers are constantly challenging themselves about how we can do better, develop new capabilities, and leverage more information generated by the car sensors and cameras to accomplish this mission. It is why we have business with not only the long-time established automakers, but also most of the new EV car companies around the world. We appreciate the recognition of the work that we do. And finally, we made an investment in Cerebramec, a startup with deep automotive experience and a platform using connected car data and augmented learning to maximize the value of connected vehicles. Working together, our companies plan to enable OEMs to create new revenue streams based on connected car data by creating new AI-powered applications, insights, and services that improve the in-car experience and enhance safety and security. I also want to add a few comments on the all-important China car market. The indigenous China car market historically has been our least penetrated geography, but that is starting to change dramatically. We count among our customers several of the EV startups such as Xpeng and NIO, but we are also building our presence in some of the traditional OEMs in China such as Great Wall Motors, Cherry, Geely and Wuling. Wuling, the automaker in China with the highest volume, went so far as to create an ad campaign featuring Serence specifically for the Indonesia market. Wuling, like most automakers, understand the user experience inside the car is becoming the soul of the car and a key brand differentiator. No company can create that unique brand experience for a car better than Serence. Moving on to our KPIs, overall, they continue to indicate a positive outlook. Since all of the KPIs except the adoption metrics are based on trailing 12-month basis, the impact of COVID-19 still skews the data, especially the KPIs of certain technology penetration and the number of connected car shift. We would expect those KPIs to normalize with our next report. Our average billings per car, which increased 10% year over year, continues to demonstrate our value add to our customers through increasing content per vehicle. As conversational AI becomes a standard for connected car, the adoption rate of using the technology will continue to rise dramatically. This is evident in our adoption rate KPI slide, where both active users and the number of transactions are on a steep positive slope over the last two years when compared against the previous two years. When technology is easier to use, more people will use it, and that is what you see in this chart. I expect to see this continue to rise as more and more cars have conversational AI compared to the old ways of interacting with the car. In closing, I'll end in much the same way I began We're incredibly pleased at our performance in the record results we delivered. We are operating from a position of real strength with tremendous excitement and commitment from our customers, a robust product and innovation roadmap, and a significant growth opportunity on the horizon. Our long-term vision is to play a key role not only in driver AI, but also cabin and road AI. We will rely on the vast experience of our team, but also look to inorganic opportunities to help us achieve our vision. I'm pleased with what we have been able to accomplish so far, but I also believe we are still in the early stages of our potential and what CERNs will fully achieve. I would like to turn the call over to Mark to review the financial results of the quarter and our guidance for Q3. Mark?