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Nuance Provides Update on Malware Incident and Business Impact

BURLINGTON, Mass., July 21, 2017 (GLOBE NEWSWIRE) -- Nuance Communications, Inc. (Nasdaq:NUAN) today provided an update to its prior disclosures regarding the global malware incident on June 27, 2017. The company continues to make progress in restoring its operations across the business. Since detecting the issue, the company has been remediating affected systems, enhancing the security of its networks and restoring functionality to customers.

Nuance expects the malware incident to have an impact on its financial results for third fiscal quarter of 2017, primarily owing to the loss of healthcare transcription revenues in the final week of the third quarter and the inability to fulfill partner orders for imaging products during the same period. Based on preliminary financial data, Nuance expects fiscal third quarter GAAP revenues to be between $485.0 million and $489.0 million and non-GAAP revenues to be between $494.0 million and $498.0 million. The company expects fiscal third quarter GAAP earnings per share to be between $(0.11) and $(0.09) and non-GAAP earnings per share to be between $0.26 and $0.28.

The company estimates that, had the malware incident not occurred, third quarter GAAP revenues on a pro forma basis would have been between $500.0 million and $504.0 million and non-GAAP revenues on a pro forma basis would have been between $509.0 million and $513.0 million. The company estimates fiscal third quarter GAAP earnings per share on a pro forma basis would have been between $(0.07) and $(0.05) and non-GAAP earnings per share on a pro forma basis would have between $0.29 and $0.31. The company's performance in the third quarter, notwithstanding the malware incident, owed to continued growth in Enterprise omni-channel offerings, Dragon Medical cloud, voice biometrics solutions, and the company's automotive business. Despite the effects of the malware incident, net new bookings in the quarter were strong, up year-over-year, between 20.0% and 25.0% and also owed to continued growth in Dragon Medical cloud, voice biometrics solutions, the company's automotive business, and Enterprise omni-channel offerings. Cash flows from operations were also strong at approximately $130.0 million.

While Nuance has made significant progress in remediating systems related to the malware incident, the company nonetheless expects a material effect on financial results for its fourth fiscal quarter of 2017. The impact will be primarily related to Nuance's HIM transcription business as the company continues to reactivate customers during the quarter. Nuance expects to have service restored to substantially all of its clients on its flagship HIM transcription platform, eScription LH, within two weeks, while taking all measures to bring back its clients efficiently and securely. The eScription RH and Clinic 360 solutions that reside on the cloud-based HIM transcription platform, Emdat, were restored to their full capability for that entire customer base on July 3, 2017. The Critical Test Results application, which is part of Nuance's Diagnostics radiology workflow solutions, was reactivated for all clients on July 16, 2017. As a part of the restoration efforts, Nuance has hardened its systems with enhanced security and with the latest anti-malware agents. Nuance is providing cloud-based options for its client base that were on older transcription platforms. The PowerScribe and Dragon Medical cloud solutions were not impacted and remain unaffected by the incident with Dragon Medical cloud adoption increasing as an alternative for physicians to capture patient documentation.

These preliminary expectations are subject to revision until the company reports final third quarter fiscal 2017 results on August 8, 2017. (Please see today's separate advisory for details.)

The company will host a listen-only conference call today at 9:00 a.m. ET. To access the live broadcast, please visit the Investor Relations section of Nuance's website at The call can also be heard by dialing 800-230-1096 or 612-288-0340 at least five minutes prior to the call and referencing code 427608. A replay will be available within 24 hours of the announcement by dialing 800-475-6701 or 320-365-3844 and using the access code 427608.

About Nuance Communications, Inc.

Nuance Communications, Inc. is a leading provider of voice and language 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 devices and systems. Every day, millions of users and thousands of businesses experience Nuance's proven applications. For more information, please visit

Trademark reference: Nuance and the Nuance logo 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.

Definitions of Bookings and Net New Bookings

Certain supplemental data provided in the announcement are based upon internal Nuance definitions that are important for the reader to understand.

Bookings. Bookings represent the estimated gross revenue value of transactions at the time of contract execution, except for maintenance and support offerings. For fixed price contracts, the bookings value represents the gross total contract value. For contracts where revenue is based on transaction volume, the bookings value represents the contract price multiplied by the estimated future transaction volume during the contract term, whether or not such transaction volumes are guaranteed under a minimum commitment clause. Actual results could be different than our initial estimates. The maintenance and support bookings value represents the amounts billed in the period the customer is invoiced. Because of the inherent estimates required to determine bookings and the fact that the actual resultant revenue may differ from our initial bookings estimates, we consider bookings one indicator of potential future revenue and not as an arithmetic measure of backlog.

Net new bookings. Net new bookings represents the estimated revenue value at the time of contract execution from new contractual arrangements or the estimated revenue value incremental to the portion of value that will be renewed under pre-existing arrangements. Constant currency for net new bookings is calculated using current period net new bookings denominated in currencies other than United States dollars converted into United States dollars using the average exchange rate for those currencies from the prior year period rather than the actual exchange rate in effect during the current period.

Safe Harbor and Forward-Looking Statements

Statements in this document regarding future performance and our management's future expectations, beliefs, goals, plans or prospects constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Any statements that are not statements of historical fact (including statements containing the words "believes," "plans," "anticipates," "expects," or "estimates" or similar expressions) should also be considered to be forward-looking statements. There are a number of important factors that could cause actual results or events to differ materially from those indicated by such forward-looking statements, including but not limited to: fluctuations in demand for our existing and future products; changes to economic conditions in the...