MeritValue

Cerence Inc.

CRNCdata completeness 88%8 fiscal years on file

Data notes: no data for concept 'cash'

The thesis, from the filings

Cerence Inc. earns about -15% on invested capital, but has diluted owners by 10% over 5 years — worth asking whether the growth reaches owners. The cash-flow models don't apply cleanly here — the ledger says why below.Whether it’s worth owning at today’s price is the last question — and yours to answer, below.

i. The business — what you’d actually own
FigureFY 2021FY 2022FY 2023FY 2024FY 2025
Revenue$387.2M1$327.9M2$294.5M3$331.5M3$251.8M3
Net income$45.9M4−$310.8M5−$56.3M6−$588.1M6−$18.7M6
Operating cash flow$74.4M7−$2.14M8$7.5M9$17.2M9$61.2M9
Capital expenditure$12M10$17.4M11$5.12M12$5M12$14.4M12
Free cash flow (derived)$62.3M7−$19.6M8$2.37M9$12.2M9$46.8M9
Total debt$542.7M13$540.7M14$551.9M15$563.8M16$399.4M16
Cash & equivalents—————
Diluted shares39.3M39.2M40.2M41.6M43.2M

Superscripts are receipts. Each links to the SEC filing the number came from (full list at the bottom).

ii. Your slice — ownership made literal
If you owned
shares
Net assets behind them
$34.89
your share of equity
Profit it earned you last year
−$4.33
Free cash flow it threw off
$10.84
Debt you’d be carrying
$92.49

10 shares is a claim on $34.89 of net worth that earned you −$4.33 and generated $10.84 of cash last year, against $92.49 of debt.

iii. Is this a good business?
Moat signal · return on invested capital
-15% avg · 5y
FY21 4%FY22 -12%FY23 -1%FY24 -64%FY25 -1%

It earned an average -15% on invested capital over 5 years. Compare that to what it costs to fund the business.

seeing a moat in the numbers →
Management signal · capital allocation
+10% shares · 5y

Share count is up 10% over 5 years — owners have been diluted. Worth asking what they got for it. Total debt has fallen 26% — deleveraging.

reading capital allocation →

Signals, not verdicts — read from the filings above. Numbers don’t prove a moat; they show its footprint. You decide.

iv. What it’s worth — engine v0.1.0
DCF · Growth Exit 10Y
not applicable
negative equity value — refusing to publish per-share figure
assumptions (10)
  • riskFreeRate4.7%
  • equityRiskPremium5.0%
  • beta100.0%
  • equityWeight85.0%
  • costOfDebtSpread1.5%
  • taxRate21.0%
  • terminalGrowth2.5%
  • projectionYears10
  • fcfGrowth0.0%
  • fcfBase$12.2M
DCF · Growth Exit 5Y
not applicable
negative equity value — refusing to publish per-share figure
assumptions (10)
  • riskFreeRate4.7%
  • equityRiskPremium5.0%
  • beta100.0%
  • equityWeight85.0%
  • costOfDebtSpread1.5%
  • taxRate21.0%
  • terminalGrowth2.5%
  • projectionYears5
  • fcfGrowth0.0%
  • fcfBase$12.2M
Earnings Power Value
not applicable
normalized (5y-median) earnings non-positive — EPV undefined
Graham Number
not applicable
diluted EPS missing or non-positive — Graham Number undefined

Different models answer different questions — which to trust when →

Sources — the receipts
  1. 10-K · period ending 2021-09-30 · accession 0000950170-23-066654 (RevenueFromContractWithCustomerExcludingAssessedTax)
  2. 10-K · period ending 2022-09-30 · accession 0000950170-24-130642 (RevenueFromContractWithCustomerExcludingAssessedTax)
  3. 10-K · period ending 2023-09-30 · accession 0001628280-25-053372 (RevenueFromContractWithCustomerExcludingAssessedTax)
  4. 10-K · period ending 2021-09-30 · accession 0000950170-23-066654 (NetIncomeLoss)
  5. 10-K · period ending 2022-09-30 · accession 0000950170-24-130642 (NetIncomeLoss)
  6. 10-K · period ending 2023-09-30 · accession 0001628280-25-053372 (NetIncomeLoss)
  7. 10-K · period ending 2021-09-30 · accession 0000950170-23-066654 (NetCashProvidedByUsedInOperatingActivities)
  8. 10-K · period ending 2022-09-30 · accession 0000950170-24-130642 (NetCashProvidedByUsedInOperatingActivities)
  9. 10-K · period ending 2023-09-30 · accession 0001628280-25-053372 (NetCashProvidedByUsedInOperatingActivities)
  10. 10-K · period ending 2021-09-30 · accession 0000950170-23-066654 (PaymentsToAcquirePropertyPlantAndEquipment)
  11. 10-K · period ending 2022-09-30 · accession 0000950170-24-130642 (PaymentsToAcquirePropertyPlantAndEquipment)
  12. 10-K · period ending 2023-09-30 · accession 0001628280-25-053372 (PaymentsToAcquirePropertyPlantAndEquipment)
  13. 10-K · period ending 2021-09-30 · accession 0000950170-22-025785 (LongTermDebtNoncurrent)
  14. 10-K · period ending 2022-09-30 · accession 0000950170-23-066654 (LongTermDebtNoncurrent)
  15. 10-K · period ending 2023-09-30 · accession 0000950170-24-130642 (LongTermDebtNoncurrent)
  16. 10-K · period ending 2024-09-30 · accession 0001628280-25-053372 (LongTermDebtNoncurrent)