Nuance Forecasts a Rosy 2012

Nuance Communications sees a bright future next year across the board, driven primarily by gains in its mobile and consumer units, healthcare, and enterprise segments.

The company painted the positive picture when it released its fiscal 2011 and fourth quarter 2011 results last month.

"In the fourth quarter, Nuance delivered 23 percent revenue growth, driven by strong performance in our mobile and consumer business lines as well as improved trends in our enterprise business line," said Paul Ricci, chairman and CEO, in a statement. In fiscal 2011, he added, "Nuance delivered double-digit organic revenue growth and 21 percent growth in operating cash flow. Improved momentum across our markets, as well as strong fourth-quarter bookings for our healthcare and mobile solutions, position Nuance for continued growth in fiscal 2012."

The Burlington, Mass.-based company said global interest in its mobile and consumer technologies and solutions has "never been greater," and that the division gains were driven by sales of embedded solutions, and its Dragon product line.

"In mobile and consumer, we definitely sense that in the last six months, the awareness and acceptance of voice and language as part of the mobile experience accelerated," Ricci said in a conference call with analysts.

Nuance has partnered with several big players on the consumer side, including Amazon, Research In Motion, and Nokia. However, the company has been cagey about its relationship with Apple regarding its role in the Siri technology used in Apple's iPhone 4S. "The only thing we can say is that Apple licenses Nuance's speech technology for use in some of its products," said a company spokesperson.

Ricci, however, did elaborate in a general way about the impact he sees Apple's iPhone 4S has on Nuance. "They're [Apple] bringing attention to the capabilities of using a combination of voice and language technologies to better understand the user's intent to arrive at a desired destination in a more efficient way.… I think that is a compelling proposition, not only in the mobility segment, but more importantly in the healthcare segment, where we're applying some of those same technologies in our next generation of solutions and in the enterprise business," Ricci said during the analyst call.

Nuance's enterprise segment is also slotted for growth following a solid performance in 2011.

"The enterprise business will incorporate revenues from previously signed on-demand contracts with major brands, which have begun to offset the revenue decline associated with one on-demand customer," Ricci said. "We also expect improved license revenues from continued increase in global demand for our core speech solutions, increased demand for voice biometrics for consumer identification and verification, and the introduction of several new solutions to address the multichannel and mobile needs of our customers to address mobile customer care, text-based customer care, and business optimization through analytics. These new offerings will enable us to enhance the value we deliver to our customers and our existing channel partners, and also to forge relationships with new distribution partners."

Ricci said the company's healthcare business will garner revenues later in the fiscal year from its new clinical language understanding and analytics offerings that address the industry shift to the ICD-10 standard and support healthcare organizations in recouping appropriate reimbursement for care provided.

The company reported that in fiscal 2011, it derived 73 percent of its revenue in the U.S., and 27 percent internationally. Nuance said it plans to expand its global presence in emerging markets such as Latin America and Asia.

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