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Nuance Announces Second Fiscal Quarter 2008 Result

Mobile, On-Demand Offerings and International Markets Fuel Record Results / Company Positioned to Exceed Fiscal Year Revenue Targets

(PresseBox) (Burlington, Mass. / U.S.A., ) Nuance Communications, Inc. (NASDAQ: NUAN) today announced financial results for the second fiscal quarter ended March 31, 2008. Nuance reported revenues of $203.3 million in the quarter ended March 31, 2008, a 54 percent increase over revenues of $132.1 million in the quarter ended March 31, 2007. In addition to using GAAP results in evaluating the business, management also believes it is useful to evaluate results using non-GAAP measures. Using a non-GAAP measure, the Company reported non-GAAP revenue of approximately $219.9 million which includes approximately $16.6 million in revenue lost to purchase accounting largely in conjunction with the Company's acquisitions of Tegic, Viecore and VoiceSignal. Using the non-GAAP measure, revenues grew 63 percent over the same quarter last year.

On a GAAP basis, Nuance recognized a net loss of $26.8 million, or $(0.13) per share, in the quarter ended March 31, 2008, compared with a net loss of $1.7 million, or $(0.01) per share, in the quarter ended March 31, 2007. Using a non-GAAP measure, Nuance reported non-GAAP net income of $41.6 million, or $0.18 per diluted share, for the period ending March 31, 2008, compared to non-GAAP net income of $23.4 million, or $0.12 per diluted share, in the quarter ended March 31, 2007.

The non-GAAP revenue amount includes revenue lost to purchase accounting largely in conjunction with the Company's acquisitions of Tegic, Viecore and VoiceSignal. The non-GAAP net income amount excludes non-cash taxes and interest, amortization of intangible assets, non-cash amortization of stock-based compensation, and acquisition-related transition and integration costs and charges. See "GAAP to non-GAAP Reconciliation" below for further information on the Company's non-GAAP measures.

"Nuance continued its momentum into its second quarter as we experienced strong demand in our mobile, healthcare and imaging markets and robust performance from our international operations," said Paul Ricci, chairman and CEO of Nuance. "Interest in our mobile solutions, continued expansion of our on-demand revenues, acceleration of our acquisition synergies and the contributions from the eScription acquisition position us to sustain revenue and earnings growth through the remainder of the fiscal year."

Consistent with the Company's strategy and recent trends, highlights from the quarter include:

Mobile and Embedded Solutions - Nuance's mobile and embedded solutions revenues were a record $46.7 million. The Company continues to benefit from strong consumer demand, the industry's most extensive portfolio of embedded solutions and connected services, and new design wins with manufacturers, including LG, Motorola, Nokia, Palm, RIM and Sanyo.

Enterprise Speech - Nuance enterprise speech revenues were up year-over-year and sequentially owing to Nuance's On-Demand and Enterprises Services offerings. Demand for enterprise solutions was robust in the European and Asian markets, offset somewhat by sluggish demand within North America. Important agreements, across the enterprise division, with new and existing customers include AIC, Air France, Deutsche Bank, Nissan Motor and T-Mobile.

Healthcare Solutions - Nuance's healthcare unit also saw year-over-year and sequential revenue growth in the quarter as demand for its dictation, transcription clinical workflow solutions continued to grow. The Company continued to experience acceleration in its healthcare revenues delivered as software-as-a-service, including iChart on-demand transcription and Veriphy critical test result management (CTRM) solutions. Contracts in the quarter with new and existing customers include BannerHealth, Children's Hospital of Pennsylvania, SunHealth, and University of California San Francisco Medical Center.

PDF and Document Imaging - Revenues for Nuance's PDF and imaging solutions were strong in the second quarter, owing largely to the launch of PDF Converter 5. The Company introduced a new Enterprise Edition of PDF Converter 5 which helped secure several enterprise licenses, including BASF and Deloitte.

Operational Achievement - Nuance increased its focus on expense controls and accelerating synergies from recent acquisitions to further improve and leverage non-GAAP operating margins. Cash flows from operations were a record, at approximately $41 million in the second quarter 2008, up 17 percent over the same period last year.

Nuance Communications, Inc.

Nuance Communications, Inc. (NASDAQ: NUAN) is a leading provider of speech and imaging solutions for businesses and consumers around the world. Its technologies, applications and services make the user experience more compelling by transforming the way people interact with information and how they create, share and use documents. Every day, millions of users and thousands of businesses experience Nuance's proven applications. For more information, please visit

Trademark reference: Nuance, the Nuance logo, Dictaphone, iChart and OmniPage are registered trademarks or trademarks of Nuance Communications, Inc. or its affiliates in the United States and/or other countries. All other trademarks referenced herein are the property of their respective owners.