Cerence Inc.

day and thank you for standing by. Welcome to the CERN's fourth quarter 2025 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there'll be a question and answer session. To ask a question during the session, you'll need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To explore your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to turn the conference over to your speaker for today, Kate Hickman. Please go ahead.

Hello, everyone, and welcome to CERNS' fourth quarter 2025 conference call. I'm Kate Hickman, VP of Corporate Communications and Investor Relations. Before we begin, I would like to remind you that this call may involve certain forward-looking statements. Any statements that are not statements of historical fact, including statements related to our expectations, anticipations, intentions, estimates, assumptions, beliefs, outlook, strategies, goals, objectives, targets, and plans, are forward-looking statements. CERADS makes no representations to update those statements after today. These statements are subject to risks and uncertainties. which may cause actual results to differ materially from such statements and expectations, as described in our SEC filings, including the Form 8K with the press release preceding today's call, our most recent Form 10Q, and our Form 10K filed on November 25, 2024. 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 non-GAAP measures to the closest GAAP equivalent. The press release is available in the investor section of our website. Joining me on today's call are Brian Kurzanich, CEO, and Tony Rodriguez, CFO. Please note that slides with further context are available in the investor section of our website. Before handing the call over to Brian, I would like to mention that we will be participating in the Raymond James TMT and Consumer Conference on December 8th and the Needham Growth Conference on January 13th. In addition, Sarens will also be exhibiting at CES in Las Vegas from January 6th to 9th. Now, on to the call. Brian?

Thank you, Kate. Good afternoon and welcome, everyone. I'm excited to speak with you today and reflect on my first full year as Sarens' CEO. It's been a great year for the Sarence team and our customers, and I couldn't be happier with the performance. Over the past year, we've strengthened the financial and operational foundation of the company and significantly increased positive cash flow generation, beating nearly every metric and putting us on a solid ground for executing on our future growth plans. We've made significant progress with our XUI platform, including meeting all our technology milestones while driving strong customer interests and adoption. We paid down $87.5 million of our debt using cash on hand while maintaining our cash position for the future. And we secured our first successful outcome in our efforts to protect and monetize our intellectual property. As a result, we believe that CERNS has the right foundation for long-term sustainable growth in fiscal 26 and beyond. All of this has led us to posting strong results for this quarter. Again, delivering above the high end of our guidance range with revenue of $60.6 million and adjusted EBITDA of $8.3 million. And importantly, We generated strong free cash flow of $9.7 million. For the full fiscal year, revenue was $251.8 million. Adjusted EBITDA was $48.1 million. And free cash flow grew almost threefold year over year to $46.8 million. PPU increased to $5.05 for the trailing 12-month period, up 12% from the same period last year. Tony will provide further details on our results later in the call. As you've heard us discuss in recent quarters, we are deeply committed to monetizing our intellectual property and protecting it against infringers. Last month, we resolved our suit with Samsung, which, among other things, resulted in Samsung agreeing to pay CERN a one-time lump sum payment of $49.5 million. This payment is pursuant to a confidential cross-license agreement with Samsung, which limits our ability to provide specifics. Nevertheless, we believe that it's an important milestone in our strategy and a proof point for the broad applicability of our technology across different industries and verticals. I'd also like to share a bit more about our approach to IP monetization and how it fits into our long-term strategy. While we always prefer to enter licensing deals without resorting to litigation, we expect to take all necessary steps, including litigation, to ensure that we receive fair value for our foundational IP. And this is why we currently have actions against Apple, TCL, and Sony, among others. And we have a multi-year roadmap of potential future actions and are consistently evaluating if new lawsuits are warranted. We believe IP monetization will be a continuing, ongoing revenue stream in the future. It will help to support our non-automotive business growth. The payment under the Samsung licensing agreement, as well as the expected costs related to our other active suits are incorporated into our fiscal year 26 guidance, which Tony will discuss. It's important to note that the process for these lawsuits is long. So as we move through the fiscal 2026, we will keep you apprised of any important updates. Now, taking a moment to look back at Q4, we continued to make progress on our three key deliverables, advancing our AI roadmap, growing our business with the new and existing customers, and continuing our transformation and cost management initiatives. First, in terms of advancing our roadmap, we continued our development of Saren's XUI with the additional of several new languages and ongoing advancements of our core tech and audio AI solutions, which are the basis for the XUI experience. We also hosted another successful demo at IAA in Munich in September, where we showcased our flexible agnostic approach, partnering with SEMA.AI as well as MediaTek to bring advanced low-power conversational AI to vehicles. We also furthered the advancement of our agentic AI strategy, partnering closely with Microsoft to roll out a mobile work agent that enables people who choose to work in the car to do so more safely and securely through voice-first access to Microsoft 365 Copilot, Teams, Outlook, and OneNote. With XUI's automotive-grade agentic architecture, the mobile work agent can seamlessly and proactively orchestrate between co-pilot and other domains like navigation to enable a cohesive and context aware user experience. Through our partnership with Microsoft, we're turning the car into a trusted device, something that we believe our competitors cannot deliver. Looking forward to 2026, we're gearing up for our next big milestone. CES in Las Vegas, where we'll continue to showcase the latest innovations in CERN's XUI and our core tech. We'll also demonstrate new AI agents focused on vehicle service and dealerships, part of our strategy to expand to other areas of the automotive ecosystem to drive additional revenue opportunities. In terms of customer adoption, We continued development of our two previously mentioned XUI customer programs, JLR and a brand within the Volkswagen Group. Both programs are on track and are expected to hit the road in 2026. We also continue to build the XUI pipeline with additional POCs with large global automakers, including some North American OEMs, where we are working to regain market share. Thus far, we're seeing positive momentum in converting POC programs to deals. Our second key deliverable is continuing to grow our business with new and existing customers. In Q4, we signed several important deals, including with Toyota to bring our Gen AI powered solutions into their vehicles, with Ford to expand the presence of our audio AI across their lineup and with an autonomous trucking company for our emergency vehicle detection solution. Other key wins in the quarter included BMW, Honda, and Great Wall Motor. We also saw nine programs start production in Q4, including BYD, Subaru, and Geely. Outside of automotive, we continue to operationalize our new strategy and distributor model with a focus on three key areas. First, expand our work with partners like Microsoft and Nvidia. Second, continue to double down on our work with distributors to grow in areas like voice-powered kiosk and logistics. And lastly, as mentioned, continue our IP monetization efforts. As a reminder, we believe the impact of our work to expand beyond automotive will be seen in our revenue and profitability in late fiscal year 2026 and beyond. And this is reflected in the fiscal 2026 guidance. Our third key deliverable is continuing our transformation and cost management initiatives. As you can see from our continued strong cash performance, we have driven real benefits from our work and are delivering it to the bottom line for our shareholders. Continuing our attention to cost, in Q4, we initiated a restructuring plan with respect to certain foreign operations intended to further reduce operating expenses and position for profitable, sustainable future growth. We expect to incur the majority of the restructuring expenses related to this plan and to complete its implementation in Q1. For the remainder of fiscal 2026, we will remain diligent and maintain our attention to cost management. In conclusion, we are incredibly proud of what our team has accomplished this quarter and in fiscal year 2025 as a whole. As we look to fiscal year 2026 and beyond, there are several key vectors for our ongoing growth. First, increasing adoption of CERN's XUI and driving greater penetration of our stack and existing programs, delivering increased PPU. Second, increasing the number of connected vehicles shipped, resulting in expansion of our connected services business. And third, growth in our non-automotive business towards the end of the year. This includes our IP monetization efforts, which we believe will continue to yield benefits and provide an ongoing revenue stream. And as a reminder, with most cases taking multiple years to reach resolution, this is a long-term strategy. We look forward to building on the strong foundation set in fiscal 2025 for long-term sustainable growth in fiscal 2026 and beyond. Now, while Tony will walk you through the details, we expect fiscal year 2026 revenue to be in the range of $300 to $320 million, marking a 23% year-over-year increase at the midpoint. And this reflects the patent license payment from our Samsung Cross license, as well as anticipated 8% growth in our core technology business, which excludes professional services. We expect professional services to shrink as our newer technology requires less time and engineering to deliver. And OEMs and Tier 1s continue to grow their internal capabilities. We expect adjusted EBITDA of $50 to $70 million and free cash flow of $56 to $66 million. We're motivated by all we've achieved in the last year. and believe we have an exciting path ahead of us as we transition into a new phase of growth for Sarence AI. I'll now turn it over to Tony to take you through the details.