Cerence Inc.

Good day and thank you for standing by. Welcome to the SIRENS first quarter 2026 earnings call. At this time, all participants are in listen-only mode. After the speaker's presentation, we'll open up for questions. To ask a question during the session, you will need to press star 1-1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1-1 again. Please be advised that today's call is being recorded. I would now like to hand the conference over to your speaker. Kate Hickman, Vice President of Corporate Communications and Investor Relations. Please go ahead.

Hello, everyone, and welcome to SARIS's first quarter 2026 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, priorities, objectives, targets, and plans are forward-looking statements. CERNS 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 20, 2025. 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 Krasanich, 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 38th Annual Roth Conference taking place March 20th to 24th. Now onto the call. Brian?

Thank you, Kate. Good afternoon and welcome, everyone. I'm excited to speak with you today following another strong quarter of performance for Ceres. We are pleased with our results this quarter, with revenue of $115.1 million and adjusted EBITDA above the high end of guidance at $44.6 million. And importantly, we generated record quarterly free cash flow of $35.6 million, demonstrating continued profitability. Tony will provide further details on our Q1 results later in the call. As I mentioned on last quarter's call, we have three key priorities for 2026. They are advancing our business through leading technology, including our next-gen platform, maintaining cost diligence, and driving top-line growth. First, we made important progress in driving our business through continued innovation, especially as we geared up for the CES in early January. On the ground in Vegas, we showcased the latest advancement to Saren's XUI, highlighting new LLM-powered experiences spanning both edge and cloud, We demonstrated our calm, edge, small language model running across multiple chip sets, enabling faster performance, lower latency, and reliable in-car interactions, even when connectivity is limited. And plus, we showcased XUI running live in a Geely vehicle, marking the first public demonstration of a near-production car powered by XUI. And we showed off our audio AI suite, including advanced multi-speaker and multi-zone capabilities. Importantly, within Q1, we completed development of several of our new AI agents, which are now fully integrated into XUI, but can also be implemented in non-XUI platforms. At CES, for the first time, we demonstrated our mobile work agent developed in partnership with Microsoft. This agent turns your car into a trusted device with voice-first access to Microsoft's 365 co-pilot, Teams, Outlook, and OneNote. This was incredibly well received, and we have significant customer traction and active commercial negotiations coming out of the show with OEMs who want to bring this new agent to their drivers. We also debuted two new purpose-built AI agents that expand our portfolio beyond the in-vehicle experience into broader areas of the automotive ecosystem. The new dealer assist agent helps dealerships automate sales and service workflows like lead capture, test drive booking, and service scheduling while integrating with CRM and dealer management systems to improve responsiveness and efficiency. The ownership companion agent enables OEMs to provide drivers with an always-on in-car service companion that supports diagnostics, maintenance guidance, and instant service booking, creating a more connected ownership journey and strengthening brand loyalty. The introduction of these new agents expands our reach and enables us to deliver an end-to-end full journey solution from vehicle purchase to regular in-car usage to troubleshooting and to service and maintenance. Overall, feedback from customers, partners, media, and analysts and investors was incredibly positive, including SeriousXUI being named Gizmodo's best in-vehicle assistant in its best of CES 2026 awards. We look forward to continuing the conversations we kicked off at the shows. On our second priority of cost diligence and strategic capital allocation, in Q1, we paid down $30 million principal of debt due in 2028 using cash on hand while maintaining our cash position to invest in future growth. In addition, we are continuing our attention to cost management and delivering strong cash performance. And in Q1, we completed the implementation of the previously mentioned restructuring plan related to certain foreign operations, further reducing operating expenses and positioning CERNs for profitable, sustainable future growth for the remainder of fiscal 26. We will remain diligent and maintain our attention to cost management. And lastly, in terms of our goal of driving top line growth, we believe there are three key areas of focus. increasing adoption of Sarence XUI and driving greater penetration of our stack in existing programs, which we believe will deliver increased PPU. To give you a sense of how we're progressing with customer adoption of XUI, as of today, we have now five significant customer programs for XUI. There's the previously mentioned programs with JLR and a brand within the Volkswagen group, At CES, we announced our plans with Geely for their cars shipped outside of China. And in Q1, we received a new award from another major Chinese EV OEM, leveraging XUI for their overseas development in five languages. In Q2, we received an award from a major volume global automaker, which we look forward to sharing more about in the future. These programs are currently on track to hit the road during the calendar year with strong PPU growth. There are a few important things to note about these deals. One, that we have a strong win rate for XUI and that these wins have been against big tech competition. This not only tells us that XUI is needed in the market, but we believe Office serves as a good indicator how it will perform in the outstanding RFQs we have on the table. And two, all of these programs have PPUs that are higher than our current run rate, demonstrating clear value and OEM willingness to invest. We continue to see strong customer traction outside of XUI as well. In Q1, we signed several important deals, a win that brings our generative AI app That's Sarin's chat pro and car knowledge. Traditional countries with HKMC. Audio AI wins with GM, Mercedes-Benz, and Daihatsu. And an upgrade to our latest neural TTS for Mercedes. And we contracted development of Slovenian language to help our customers meet regional language requirements. Expanding our product offerings, importantly, on the GM Audio AI deal, this was a competitive win back that brings our speech signal enhancement, one of the highest margin elements of our software stack, to GM's next generation infotainment platform across all brands. This lays out the foundation for potential adoption of additional elements of our Audio AI suite, with this major North American automaker in the future. We also saw eight programs start production, including BYD, GWM, and HKMC. Trucking programs with Scania and Ford trucks also went in live this quarter, marking continued strong momentum in adjacent transportation markets and building upon our existing work with Daimler trucks, Volvo trucks, HACCAR, and IVECO trucks. Our second area for potential growth is increasing the number of connected vehicles shipped, resulting in an expansion of our connected service business. As Tony will detail, we continue to see growth in connected services as customers continue to adopt connected solutions. And we believe this momentum will continue. This is a key pillar of our long-term growth strategy, providing high-quality, predictable revenue. And third, we have an opportunity for growth in our non-automotive businesses. In Q1, we continued to operationalize our strategy and model, and we spent time at CES meeting with new customers and validating our approach to bringing the power of the Jetpack AI and voice to new industries. including one of the leading digital signage players worldwide that is interested in integrating our solutions across their portfolio. And we have good momentum with awards expected through Q2 and beyond. As a reminder, we believe the impact of our work to expand beyond automotive will be seen in our revenue and profitability starting in late fiscal year 2026. and beyond. And this is reflected in the fiscal 2026 guidance we provided last quarter. And we believe our IP monetization strategy will continue to yield benefits for CERNs. As we mentioned on our last quarter's call, we resolved our suit with Samsung, which among other things resulted in Samsung agreeing to pay CERNs a one-time lump sum payment. of $49.5 million. We recorded this patent license revenue in Q1, and we believe the resolution of this suit marks an important milestone in our IP monetization strategy. And we have cases with Sony, TCL, and Apple outstanding. As a reminder, with most cases taking multiple years to reach resolution, This is a long-term strategy. In conclusion, we believe we have a strong technology and customer momentum and are on solid ground to execute on our future growth plans through the rest of the fiscal year 26 and beyond. For Q2, we expect revenue of between $58 to $62 million and adjusted EBITDA of $2 million to $6 million. And we're pleased to reaffirm our full year guidance that we provided on last quarter's call. And Tony will provide further details on this. We believe that CERN has the right foundation for long-term, sustainable growth. And we're incredibly proud of what our team has accomplished this quarter. And with that, I'll turn it over to Tony.