Share count
43Mpeak FY2025
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CRNC, Cerence Inc.
Cerence is a market leader for building integrated, branded and differentiated virtual assistants for automobiles, offering an extensive solutions portfolio that includes conversational & generative AI as well as audio & communications AI.
Cerence builds conversational and agentic AI solutions that make interaction with technology feel effortless.
With decades of expertise in voice, AI, and edge-to-cloud engineering, we're trusted by many of the world's leading automakers, transportation OEMs, consumer brands, and technology companies to build voice powered-interfaces that shape the user experiences of today and tomorrow.
The business
What it sells, where the money comes from, the kind of company it is.
Revenue · FY2025
$252M
−24.0% YoY · −5% 5-yr CAGR
Vital signs · TTM, with 5-yr average
Revenue $302M 5-yr avg $319M
Revenue $64M −17.7% vs yr-ago qtr
Operating margin −3.8% yr-ago 22.2%
Net income $2M yr-ago $22M
Net margin 2.6% yr-ago 27.8%
The business in brief
read the 10-K →What this business is and what moves its needle, from its own SEC filings.
- What it is
- Revenue is License (56%), Professional services (23%) and Connected services (21%).
- Situation
- Unprofitable. No sustained operating profit across the record; an earnings multiple has nothing to rest on. What the record does show is revenue, the gross-margin trajectory, and the burn against the cash on hand. Cyclical. Margins collapse and recover repeatedly across the record; a single year, good or bad, misstates the through-cycle earning power.
- What moves the needle
- Operating margin has reached 16% at its best but run negative through the cycle (median −0.9%) on a 70% gross margin — so the question is which reading is truer: whether the median was pulled below zero by one-off charges, by the cycle, or by spending it is still growing into, and whether it settles back at a profit. Stock-based pay runs about 10% of sales, a real and recurring claim on owners that the GAAP margin understates. Read this kind of business on retention and the cost of growth. On its own account, the filing leans hardest on customer concentration, set against the numbers in what the filing emphasizes, below.
- Is it a good business?
- Return on capital has rarely cleared the cost of capital (median −1%, above 15% in 0 of 7 years). The steadier read is owner earnings: roughly 12% of revenue reaches owners as cash, consistently. The cycle and the balance sheet decide this one; the worst year tells more than the median, and the rest is in the 10-K.
Every line is arithmetic on the company's filings, shown in full in the sections below.
Where the money comes from
read the 10-K →Revenue spreads across 3 lines, the largest License at 56%.
Revenue by product line, FY2025
- License56%$141M
- Professional services23%$58M
- Connected services21%$53M
By geographyGermany31%Other Asia-Pacific27%United States15%Japan15%Other Europe Middle East And Africa11%Other Americas1%
From the segment footnote of the company's own 10-K. Shares are of total revenue; the profit bar shows each segment's share of segment operating profit, before unallocated corporate costs.
The record
Ten years of arithmetic, read across the cycle.
The record, 2018–2025
realized figures from each filing · older years to the left| 2018’18 | 2019’19 | 2020’20 | 2021’21 | 2022’22 | 2023’23 | 2024’24 | 2025’25 | TTMTTMMar 2026 | |
|---|---|---|---|---|---|---|---|---|---|
| Income statement | |||||||||
| $277M | $303M | $331M | $387M | $328M | $294M | $332M | $252M | $302M | RevenueRevenue |
| 70% | 67% | 67% | 74% | 70% | 68% | 74% | 73% | 78% | Gross marginGross mgn |
| 7% | 9% | 15% | 15% | 13% | 20% | 16% | 19% | 23% | SG&A / revenueSG&A/rev |
| 29% | 31% | 27% | 29% | 33% | 42% | 37% | 39% | 36% | R&D / revenueR&D/rev |
| $37M | $11M | $22M | $61M | ($184M) | ($27M) | ($580M) | ($2M) | $24M | Operating incomeOp. inc. |
| 13.3% | 3.6% | 6.8% | 15.7% | −56.2% | −9.2% | −174.9% | −0.9% | 8.0% | Operating marginOp. mgn |
| $6M | $100M | ($18M) | $46M | ($311M) | ($56M) | ($588M) | ($19M) | ($20M) | Net incomeNet inc. |
| Cash flow & returns | |||||||||
| $115M | $88M | $45M | $74M | ($2M) | $7M | $17M | $61M | $88M | Operating cash flowOp. cash |
| $26M | $29M | $30M | $30M | $24M | $16M | $11M | $11M | $10M | DepreciationDeprec. |
| $62M | ($71M) | ($14M) | ($62M) | $257M | $7M | $571M | $42M | $73M | Working capital & otherWC & other |
| $7M | $5M | $19M | $12M | $17M | $5M | $5M | $14M | $13M | CapexCapex |
| 2.4% | 1.5% | 5.7% | 3.1% | 5.3% | 1.7% | 1.5% | 5.7% | 4.4% | Capex / revenueCapex/rev |
| $109M | $84M | $26M | $62M | ($20M) | $2M | $12M | $47M | $75M | Owner earningsOwner earn. |
| 39.3% | 27.5% | 7.8% | 16.1% | −6.0% | 0.8% | 3.7% | 18.6% | 24.8% | Owner earnings marginOE mgn |
| $109M | $84M | $26M | $62M | ($20M) | $2M | $12M | $47M | $75M | Free cash flowFCF |
| 39.3% | 27.5% | 7.8% | 16.1% | −6.0% | 0.8% | 3.7% | 18.6% | 24.8% | Free cash flow marginFCF mgn |
| — | — | $9M | $46M | $49M | $5M | $10M | $2M | — | BuybacksBuybacks |
| 2% | 1% | — | 4% | -15% | -2% | -108% | -1% | 4% | ROICROIC |
| 1% | 9% | -2% | 4% | -44% | -8% | -417% | -12% | -12% | Return on equityROE |
| 1% | 9% | −2% | 4% | −44% | −8% | −417% | −12% | −12% | Retained to equityRetained/eq |
| Balance sheet | |||||||||
| — | — | $12M | $38M | $32M | $20M | $9M | $3M | $0 | Cash & investmentsCash+inv |
| — | $66M | $51M | $46M | $45M | $61M | $63M | $59M | $64M | ReceivablesReceiv. |
| — | — | — | — | — | $500K | $1M | $1M | $1M | InventoryInvent. |
| — | $17M | $8M | $12M | $10M | $17M | $4M | $901K | $8M | Accounts payablePayables |
| — | $49M | $42M | $34M | $35M | $45M | $60M | $59M | $57M | Operating working capitalOper. WC |
| — | $92M | $250M | $287M | $228M | $226M | $266M | $191M | $204M | Current assetsCur. assets |
| — | $129M | $199M | $165M | $147M | $148M | $217M | $101M | $107M | Current liabilitiesCur. liab. |
| — | 0.7× | 1.3× | 1.7× | 1.5× | 1.5× | 1.2× | 1.9× | 1.9× | Current ratioCurr. ratio |
| $1.1B | $1.1B | $1.1B | $1.1B | $891M | $900M | $297M | $299M | $297M | GoodwillGoodwill |
| — | $1.5B | $1.7B | $1.7B | $1.3B | $1.3B | $702M | $631M | $617M | Total assetsAssets |
| — | — | $273M | $271M | $270M | $276M | $282M | $200M | $173M | Total debtDebt |
| — | — | $261M | $234M | $238M | $256M | $273M | $196M | $173M | Net debt / (cash)Net debt |
| — | — | 1.0× | 4.3× | -12.8× | -1.8× | -46.2× | -0.2× | 3.3× | Interest coverageInt. cov. |
| $993M | $1.1B | $960M | $1.0B | $713M | $695M | $141M | $151M | $159M | Shareholders’ equityEquity |
| 8.0% | 9.8% | 14.3% | 15.6% | 8.6% | 13.8% | 7.1% | 10.9% | 8.5% | Stock comp / revenueSBC/rev |
| Per share | |||||||||
| 36.4M | 36.4M | 36.4M | 39.3M | 39.2M | 40.2M | 41.6M | 43.2M | 45.0M | Shares out (diluted)Shares |
| $7.61 | $8.33 | $9.09 | $9.85 | $8.37 | $7.32 | $7.96 | $5.83 | $6.71 | Revenue / shareRev/sh |
| $0.16 | $2.76 | $-0.50 | $1.17 | $-7.93 | $-1.40 | $-14.12 | $-0.43 | $-0.44 | EPS (diluted)EPS |
| $2.99 | $2.30 | $0.71 | $1.59 | $-0.50 | $0.06 | $0.29 | $1.08 | $1.67 | Owner earnings / shareOE/sh |
| $2.99 | $2.30 | $0.71 | $1.59 | $-0.50 | $0.06 | $0.29 | $1.08 | $1.67 | Free cash flow / shareFCF/sh |
| $0.18 | $0.12 | $0.52 | $0.31 | $0.45 | $0.13 | $0.12 | $0.33 | $0.30 | Cap. spending / shareCapex/sh |
| $27.30 | $29.35 | $26.36 | $26.27 | $18.19 | $17.28 | $3.39 | $3.49 | $3.52 | Book value / shareBVPS |
Per-share growththe realized rate an owner's share compounded
| 7-yr | 5-yr | |
|---|---|---|
| Revenue / share | −3.7%/yr | −8.5%/yr |
| Owner earnings / share | −13.5%/yr | +8.9%/yr |
| Capital spending / share | +9.3%/yr | −8.6%/yr |
| Book value / share | −25.5%/yr | −33.3%/yr |
The year, in the company's words
the filing →Verbatim from the 10-K's management discussion. Each sentence is shown only because its subject, direction, and stated figures check out against the filed numbers on this page. The words are the company's; the arithmetic is the record's.
- License+12.7%
“License Revenue License revenue for fiscal year 2025 was $140.6 million, an increase of $15.9 million, or 12.7%, from $124.7 million for fiscal year 2024. The increase in license revenue was driven by a $24.1 million increase in variable license revenue due to higher volume of licensing royalties, primarily offset by a $8.2 million decrease in fixed contracts.”
✓ figure matches the filed record - Professional services-21.2%
“Professional Services Revenue Professional services revenue for fiscal year 2025 was $57.8 million, a decrease of $15.5 million, or 21.2%, from $73.3 million for fiscal year 2024. This decrease was primarily driven by the increased standardization of our software product offerings, which requires less professional services effort to implement, other efficiencies in our professional services processes and, in some cases, customers opting to perform these activities internally.”
✓ figure matches the filed record
The record, charted
FY2018–2025Each measure over its full record; the current point and the worst year marked.
ROIC
−1%low FY2024
Gross margin
73%low FY2019
Net debt ÷ owner earnings
4.2×peak FY2023
Owner earnings vs. net income
Owner earningsNet incomeThe accountant's number, and the cash an owner can take; the gap is the tell.
$47Mowner earningsvs.($19M)net incomelow FY2022
Where the cash went
ReinvestBuybacksDividendsAcquisitionsRetainedEach year's operating cash, by what management did with it: the mix, and how it drifts.
FY2018FY2025
Net income is the accountant's number; owner earnings is the cash an owner could take out. The walk between them, off the cash-flow statement, and whether the gap is widening or holding.
In fiscal 2025 the business turned a $19M loss into $47M of owner earnings: more cash than the profit line showed, after the non-cash charges and the capital it put back in.
| FY2025 | FY2024 | FY2023 | FY2022 | FY2021 | |
|---|---|---|---|---|---|
| Reported net income | ($19M) | ($588M) | ($56M) | ($311M) | $46M |
| Depreciation & amortizationnon-cash charge added back | +$11M | +$11M | +$16M | +$24M | +$30M |
| Stock-based compensationreal costnon-cash, but a real cost | +$27M | +$24M | +$41M | +$28M | +$61M |
| Working capital & othertiming of cash in and out, other non-cash items | +$42M | +$571M | +$7M | +$257M | −$62M |
| Cash from operations | $61M | $17M | $7M | ($2M) | $74M |
| Capital expenditurecash put back in to keep running and to grow | −$14M | −$5M | −$5M | −$17M | −$12M |
| Owner earnings | $47M | $12M | $2M | ($20M) | $62M |
| Owner-earnings marginowner earnings ÷ revenue | 19% | 4% | 1% | -6% | 16% |
Owner earnings is the cash an owner could pull out without starving the business: operating cash less the capital it must spend to hold its position . The cash-flow statement also adds stock comp back as non-cash, but it is a real cost paid in shares; counted as the expense it is (less $27M), owner earnings is nearer $19M.
Maintenance capex is estimated as depreciation where a growing business invests above it; free cash flow is the figure the scorecard's free-cash margin reads.
Quality & stewardship
Returns, the balance sheet, capital allocation, and pay.
Owner’s Scorecard
FY2025 10-K · source on SEC EDGAR →
Will it survive?
- Can it pay its interest? -0.2×Does not cover its interestOperating income ($2M) ÷ interest expense $10M
What this means
A full year of operating profit didn't cover the interest bill. This is the zombie zone: the business depends on refinancing, asset sales, or forbearance to service its debt.
- Net debt against an operating lossCash $0 + ST investments $3M − debt $200M
What this means
Netting $3M of cash and short-term investments against $200M of debt leaves $196M owed, with no operating profit this year to measure it against — understand that combination before anything else about the company. Net debt is the leverage figure that matters: the cash is already set against the debt. Strategic or illiquid investments aren't counted here.
- Long (60+ days)DSO 85 + DIO 6 − DPO 5 days
What this means
Days cash is tied up between paying suppliers and collecting from customers. Lower is better; a long cycle means growth itself eats cash.
Is it a good business?
- Below average through the cycle7-yr median, range -108%–4%; -1% latest = NOPAT ($2M) ÷ invested capital $350MIndustry peers: median -18%
What this means
The rate the business earns on the money tied up in it, Buffett's north star, because over time a stock tracks the ROIC beneath it. Above ~15% sustained hints at a moat; a return below the cost of capital (~8%) erodes value as a business grows rather than building it — the test Buffett weighs most. The headline is the median of the last 7 years (it ran -1% most recently), so one peak or trough year doesn't set the verdict. Asset-light businesses (R&D expensed, little capital) read artificially high, pair this with Owner Earnings.
- Solid through the cycle8-yr median margin, range -6%–39%; latest $47M = operating cash $61M − maintenance capex $14MIndustry peers: median 7%
What this means
What an owner could take out without starving the business: operating cash less the maintenance capital it must spend to hold its position — Buffett's owner earnings. That's 19% of revenue this year, a 8% median across 8 years. Treating stock comp as the real expense it is (less $27M of SBC) leaves $19M.
- Loss, but cash-generativeNet income ($19M) · cash from operations $61M
What this means
The company reported a net loss, so a conversion ratio isn't meaningful. What matters then is whether operations still threw off cash, here, they did.
How is the cash used?
- Reinvests most of itDividends + buybacks $2M ÷ Owner Earnings $47M
What this means
Of $47M Owner Earnings, $2M (5%) went back to shareholders, $0 dividends, $2M buybacks. But the buybacks barely exceed stock issued to employees ($27M SBC), net of dilution, little was truly returned. Returning most of it is the mark of a mature business with little left to reinvest at a high return; reinvesting most could mean a long runway, or empire-building. The split doesn't say which; the return earned on it (see ROIC) does.
- Investing or harvesting? 1.36×ExpandingCapex $14M ÷ depreciation $11M
What this means
Descriptive, not a grade. Above ~1× means investing faster than assets wear out (growth, or, sustained for years, today's earnings carrying less depreciation than tomorrow's will). Below means spending less than it's wearing out (efficiency, or a melting asset base). The ratio won't tell you which; the filings will.
Graham’s defensive tests · 0 of 6 met
Graham’s numerical criteria for the defensive investor (The Intelligent Investor, ch. 14), run on the filings. A floor of safety, not a buy signal; many fine modern businesses fail his strictest liquidity rules by design.
- Adequate size MissRevenue ≥ $2B · $252M
What this means
Big enough to weather a storm. Graham's 1972 floor was ~$100M of sales (≈ $700M today); we use a $2B revenue line as a conservative modern stand-in.
- Strong liquidity NearCurrent ratio ≥ 2× · 1.89×
What this means
Current assets at least twice current liabilities, near-term bills covered without touching the business. Strict by design: many cash-rich modern firms run leaner and miss it, holding their cushion in longer-dated securities.
- Conservative debt MissDebt ≤ working capital · $200M vs $90M WC
What this means
Graham's rule that borrowings not exceed net current assets. Capital-heavy and buyback-heavy firms routinely fail it, read it next to interest coverage, not alone.
- Earnings stability MissA profit every year (8-yr record) · 5 loss years
What this means
Graham wanted earnings in each of the past ten years, the stability a defensive owner leans on.
- Dividend record MissUninterrupted dividends · none paid
What this means
An unbroken dividend was Graham's mark of durability. He wanted twenty years; the filings show about ten, and a single suspension breaks the streak. Non-payers, many fine modern compounders, fall outside his defensive net by design.
- Earnings growth MissEarnings +33% over the record · −855%
What this means
At least a third more earnings than a decade ago, averaging three years at each end. Net income (not per-share), so stock splits don't distort it, buybacks and dilution show up in the share-count line instead.
- Moderate price —P/E ≤ 15 and P/E × P/B ≤ 22.5 · decided by the price
What this means
Graham's valuation gate, the wall he kept between a sound business and a sound investment. Three-year average earnings are $-4.89/share (latest year $-0.41), the averaged base the calculator's gate runs on, and book value is $3.33/share. Enter a price in “What the price implies” just below for the P/E, P/B, and whether it clears. But this is the rule Buffett outgrew: there's no hard P/E law, and a wonderful business can deserve a far richer multiple if the thesis holds, treat it as the bargain-hunter's floor, not a verdict on the price.
Durability & moat, 2018–2025
Whether the record’s returns held, and what the capital reinvested earned.
- Profitable years 3 of 8
What this means
Lost money in 5 year(s), look at what happened there before trusting the average.
- Return on capital ≥ 15% 0 of 6 yrs
What this means
A moat shows up as a high return on invested capital that holds year after year, not one good vintage.
- Operating margin 8% → −62% (3-yr avg ends)
In the filing’s words The words explain the slip: the filing names price competition rather than pricing actions of its own — a business that looks to take its price, not set it.
What this means
Through the cycle the operating margin slipped — about 8% early to −62% lately, median −1% — competition or costs are biting in.
- Reinvestment, incremental ROIC returns capital
What this means
The capital base barely grew: this business returns cash through dividends and buybacks rather than reinvesting. Judge it on the cash returned, not on compounding.
- Owner earnings growth −16%/yr
What this means
Owner earnings shrank about 16% a year over the record.
- Worst year 2024 · −174.9% op. margin
What this means
Operations went underwater in 2024, understand why before trusting the good years.
- Share count +2.5%/yr
What this means
The share count is rising, dilution works against you on a per-share basis.
Does AI threaten the moat?
Elevated contestabilityThe product is software or information, the very thing capable AI now produces more cheaply, so the moat is more contestable than the record alone implies.
In its own filing A competitive risk, new this year
Its FY2025 10-K names artificial intelligence as a competitive threat, in language that was not in the prior year's filing.
“Alternatively, given the increased availability and effectiveness of AI technologies and other open-source development tools, existing or prospective customers may decide to develop competitive solutions entirely in-house which compete with our product offerings.”
AI has collapsed the cost of building a capable substitute for the very thing this business sells. When a credible alternative can be assembled for a fraction of the incumbent's price, it is pricing power that erodes first, not revenue tomorrow. The live question is whether the moat survives that, not whether it held in the past. Whether that question is answerable at all is yours to decide, against your own circle of competence.
Read from the filing's own risk factors, paired with the industry's structure under its SIC code; the durability is read above, the price below.
All figures as filed; the source filing is linked above.
Current Position
as of the latest quarter, Mar 31, 2026Can the business pay what it owes this year, off the freshest balance sheet: the quality of the assets, the debt actually coming due, and what a low ratio means here.
Current assets$204M
- Receivables$64M
- Inventory$1M
- Other current assets$140M
Current liabilities$107M
- Accounts payable$8M
- Other current liabilities$100M
Current ratio1.90×all current assets ÷ what's due · Graham looked for 2×
Quick ratio1.89×stricter: inventory excluded
Cash ratio0.00×strictest: cash alone against what's due
Working capital$97Mthe cushion left after near-term bills
Revenue, latest quarter vs. a year ago−17.7%the freshest read on whether the business is still growing
Current ratio, recent quarters1.3× → 1.9×
Deeper floors
Tangible book value($138M)equity stripped of goodwill & intangibles
Net current asset value($254M)Graham's net-net: current assets less all liabilities
Debt incl. operating leases$188M$15M of it operating leases
Deferred revenue$199Mcustomer cash collected before delivery; operating float
From the company's latest filing.
How the cash was used, 2018–2025
Over the record, the business generated $406M of operating cash; how management split it reads as a balanced allocator, splitting cash between the business, owners, and the balance sheet.
- Reinvested$84M · 21%
- Buybacks$121M · 30%
- Retained (debt / cash)$201M · 49%
- Returned to owners$121M
38% of the owner earnings the business produced over the span, $0 as dividends and $121M as buybacks.
- Average price paid for buybacks—
Buybacks ran $121M over the span, but the filings don't tag the share count needed to deduce the average price paid.
- Net change in share count23.7%
The diluted count rose from 36M to 45M: issuance (stock pay, deals) outran any buybacks, so owners were diluted on net.
- Dividend record—
No dividend line was reported in the filing data over the span; the record here neither confirms nor rules out a payout.
Buybacks are gross of stock issued to staff; the share-count line above is the net of that, the figure that decides whether owners gained. The average price paid blends a year of purchases (and any accelerated repurchase), so it is close, not exact. The record of where the cash went and on what terms.
Acquisitions & goodwill
from the balance sheet & the 8-year cash-flow recordGoodwill grows only when a company acquires and falls only when it concedes it overpaid. The size of that bet, the cash put into buying rather than building, and how much has already been written off.
Goodwill$299M47% of all assets; the premium carried on the balance sheet for businesses acquired
Against book equityexceeds itgoodwill alone is larger than the company’s entire book equity; stripped of the acquisition premium, there is no net book worth
Cash spent acquiring$80Mover 8 years buying other businesses, against $84M of capital spent building
$823M written down across 2 years (2022, 2024): goodwill the company has already conceded it overpaid for, charged against earnings. A write-down costs no cash (the cash went out when the deal was signed), but it is management marking its own past judgment to market.
Goodwill, acquired intangibles and equity from the latest balance sheet; acquisition spend and write-downs summed across the 8-year record, from the company's own filings.
Management, ownership & pay
read the proxy →From the proxy: how much of the business the people running it own, and how they are paid, beside what the business earned for its owners in the same years.
| Fiscal year | Chief executive | Pay, as filed | “Actually paid” | Owner earnings |
|---|---|---|---|---|
| 2021 | Mr. Dhawan | $7.5M | $41.3M | $62M |
| 2022 | Dr. Ortmanns | $5.3M | −$4.3M | ($20M) |
| 2022 | Mr. Dhawan | $9.5M | −$17.5M | ($20M) |
| 2023 | Dr. Ortmanns | $14.4M | $16.0M | $2M |
| 2024 | Dr. Ortmanns | $862k | −$10.9M | $12M |
| 2025 | Dr. Ortmanns | $2.6M | $2.8M | $47M |
| 2025 | Mr. Krzanich | $8.5M | $35.1M | $47M |
Both pay figures are the company’s own, from the pay-versus-performance table its proxy statement files. “As filed” is the Summary Compensation Table total: salary, bonus, and equity awards at their value on the day of grant. “Actually paid” is the SEC’s prescribed recalculation, which re-marks those equity awards to what they became as they vested; it can swing far above or below the filed figure in either direction, and negative years occur. Owner earnings are the whole business's, from the record above, for the same fiscal years.
- Insider ownership1.4%
The stake all directors and executive officers hold together, per the 2026 proxy: skin in the game, the first thing Munger reads.
- CEO pay ratio115:1
What the chief earns for every dollar the median employee makes, per the 2026 proxy. A high ratio alone settles nothing; some businesses are genuinely top-heavy in scarce skill. A runaway figure is where Buffett starts asking whether the board is doing its job.
- Stock-based compensation$27M
The slice of the business handed to employees in shares this year, 11% of revenue. Buffett's oldest accounting fight: this is compensation, compensation is an expense, real whether or not the headline earnings admit it. One trap: the cash-flow statement adds SBC back, so the operating cash, and the owner earnings drawn from it, are flattered by exactly this amount; counted as the cost it is, what an owner keeps is lower.
Inverting the record
Invert: instead of why Cerence Inc. is a good business, the question is what would make owning it a mistake, and whether those marks are in the record. Disconfirming tests across 2018–2025.
2 of the 3 tests turned up something to look into; the other 1 came back clean.
- Look hereIs it less profitable than it was?7.7% vs 24.9%
The owner-earnings margin averaged 24.9% early in the record and 7.7% across the last three years, and the latest year has not recovered. Ask the filing whether that is a structural drift or a cyclical trough — price, mix, cost, or a competitor — and whether it is permanent.
- Look hereDid the share count rise anyway?23.7%
Diluted shares grew 23.7% over 2018–2025, even as the company spent $121M on buybacks. The repurchases were outrun by issuance — to staff, in a raise, or in a deal — and the filing says which; owners' slice still shrank. Read the buyback line beside this one, not on its own.
And these came back clean
- Are "one-time" charges a yearly habit?
Each test is read from the filings and is noisy alone; a flag can mark a cyclical trough or a year of heavy investment as easily as a problem. The filing says which.
What an owner would ask, FY2025
read the 10-K →- Which reported numbers are a judgment call?Management names Revenue recognition, Credit & receivables, Acquisitions as critical estimates
each rests partly on management's judgment; the filing's note sets out the assumptionsverify →
The questions the record and the charts do not answer on their own; each carries the figure and the place to look.
Peers, Software
The same industry, side by side on owner economics. Each figure is a through-cycle median, so a peak or trough year can’t distort it; the group median at the foot is the line to read each against.
| Company | Revenue | Gross margin | Op. margin | ROIC | Owner earn. margin |
|---|---|---|---|---|---|
| MKTWMarketWise Inc. | $328M | 57% | 11.6% | — | 14% |
| DOMODomo, Inc. | $319M | 73% | -34.5% | — | -8% |
| CRNCCerence Inc. | $252M | 70% | 1.3% | -1% | 12% |
| AIC3.ai Inc. | $250M | 67% | -80.5% | -36% | -37% |
| WEAVWeave Communications Inc. | $239M | 63% | -35.0% | -111% | -10% |
| PDFSPDF Solutions Inc. | $219M | 61% | 0.0% | 0% | 7% |
| XZOExzeo Group Inc. | $217M | 40% | 28.4% | — | 35% |
| IIIVi3 Verticals Inc. | $213M | 32% | 1.9% | 1% | 10% |
| Group median | — | 62% | 0.7% | -1% | 9% |
The price
What a price has to assume.
What the price implies
reverse-DCFType today's close and see the owner-earnings growth you'd have to believe to justify it, beside what Cerence Inc. has delivered.
Cerence Inc.’s latest year runs above its own through-cycle margin — the reported figure may flatter a peak. So the tool opens on the through-cycle base, Graham’s averaging cutting both ways; clear the toggle below to read the latest year exactly as reported.
$
Through the cycle, Cerence Inc. earns about $30M on its 11.9% median owner-earnings margin. This year’s 18.6% margin runs above that; the reported figure may flatter a peak you'd be paying on. Normalize, below, values the price on that through-cycle figure rather than the latest year. It comes pre-checked here for that reason, the same rule that already normalizes a trough; clear it to price the year as filed.
Base
—
The assumptions
9.0% = the 4.55% 10-year Treasury (Jul 15, 2026) + 4.45 points of equity premium. The rate you require is yours to set.
Enter a price above to run it.
A dated snapshot of the price you typed, the assumptions you set, and what the page showed for them. A snapshot is never edited after it is saved. Your notebook is yours alone — the commitment states what is stored and what we will never do.
Implied by the price—
Owner-earnings growth · ’21→’25+8%/yr
Owner-earnings growth · ’18→’25−16%/yr
Owner-earnings growth · ’18→’25−16%/yr
Owner-earnings yield—
What a growth belief costs, in multiples
The growth each return requires, at your price
P/E (3-yr earnings ’23–’25)—
P/B—
Graham’s price gate—
Graham capped the multiple at 15×; Buffett and Munger let that rule go: a wonderful business can deserve 50× if the thesis holds. The gate marks the bargain-hunter's floor.
Against a high-grade bond: Graham’s yardstick bond yield%
Prefilled with the 10-year Treasury (4.55%, as of Jul 15, 2026). Edit it for today’s exact figure, or a AAA corporate yield.
Graham measured a stock against the bond you could own instead, the heart of his margin of safety. Enter a price above to weigh the owner-earnings yield against this bond.
Owner-earnings yield—
High-grade bond yield—
Margin over the bond—
Owner earnings $75M on 45M shares outstanding, per the 10-Q cover, as of 2026-04-30; net debt $173M. The base opens on the through-cycle figure (the latest year sits above the record’s own median, and Graham’s averaging cuts both ways); clear Normalize to use the year as filed. Net of stock comp treats option pay as the expense it is. The dials set the multiple a growth belief justifies; the price, and every dollar on this page, is yours.
Cite: Owner Scorecard, "Cerence Inc. (CRNC), the owner's record," https://ownerscorecard.com/c/CRNC, data as of 2026-07-09.
Manual order: ← CRMD its page in the Manual CRNX →
Industry order: ← CRM the Software chapter CRWD →