Loss Expands at Nuance Communications

SAN FRANCISCO -- Nuance CommunicationsNUAN projected a strong second half to its fiscal year Monday, even as its second-quarter loss grew.

The stock was down $1.06, or 5%, to $19.95 in after-hours trading.

The Burlington, Mass. software company projected third-quarter revenue of $229 million to $234 million, including deferred revenue to be written down from acquisitions. EPS, excluding special items, will range from 20 cents to 22 cents. Analysts were expecting revenue of $229.5 million and EPS of 21 cents.

For the full year ending in September, speech-recognition specialist Nuance said it expects revenue of $913 million to $920 million and EPS, less items, of 80 cents to 82 cents. Analysts were expecting a top line of $908.9 million and EPS of 80 cents.

Chairman and CEO Paul Ricci said on the conference call that he expects continued strong demand for the company's voice-automation software technologies even in a challenging macroeconomic environment, as customers, particularly in healthcare, look for ways to control staffing expenses.

The most important trend for Nuance in the healthcare market, to which the company has traditionally sold medical transcription software, is the accelerated migration to subscription-based hosted software, which it now offers, Ricci said.

Second-quarter revenue was up 63% to $219.9 million, including deferred revenue lost to accounting from acquisitions, from a top line of $134.6 million for the same quarter of last year. Analysts were expecting revenue of $214.3 million, according to Thomson Reuters.

Professional services, subscriptions and hosting revenue more than doubled to $72.2 million. Software license revenue grew 34% to $94.3 million.