Nuance Communications Earnings Call INSIGHTS: The Mobile Experience, Healthcare Opportunities

On Wednesday, Nuance Communications, Inc. (NASDAQ:NUAN) reported its third quarter earnings and discussed the following topics in its earnings conference call. Take a look.

The Mobile Experience

Daniel Ives – FBR Capital Markets & Co.: Could you give more clarity around the mobile experience, (there’s a) few big deals that came (indiscernible) this quarter (if you could) give some comments on that?

Paul Ricci – Chairman and CEO: Sure, our mobile business is driven by a large set of OEM contracts (indiscernible) you might have to mute Daniel. Our mobile business is driven by a large set of OEM contracts, several hundred and any given quarter some number of those among our larger customers contribute proportionally greater revenues and in some instances we see (indiscernible) because of deals we’ve done in that quarter (indiscernible) because of milestones reached.

Daniel Ives – FBR Capital Markets & Co.: And then just on the acquisition front, I mean obviously (indiscernible) is it because there’s a specific acquisition that you see or is it more just and then separate, how you view the acquisitions over the last few years is a number of attractable and (indiscernible).

Paul Ricci – Chairman and CEO: We decided to raise the debt now as I said in my opening comments because the credit terms are extraordinarily attractive right now and there is a window of opportunity and one can’t be certain how long these windows remain open but as I said, we were informed in pursuing the debts by the extent of our pipeline for acquisitions we’re particularly interested in the opportunities to expand our offerings in the healthcare market, but elsewhere in the business as well.

Healthcare Opportunities

Shyam Patel – Raymond James: Just a couple of questions from me. On the debt Paul, should we be thinking of the acquisition target maybe being a large transaction and if it is in Healthcare, what kind of gives you confidence that any kind of large acquisition there will be able to clear regulatory hurdles?

Paul Ricci – Chairman and CEO: Well I didn’t make a comment about the size of the transaction. I simply said that there was a robust pipeline of opportunities available in Healthcare and we were committed to pursuing those opportunities. I don’t think that we will face substantial regulatory issues in the acquisitions that we’re contemplating.

Shyam Patel – Raymond James: Then just a follow-up. You talked a little bit about fiscal ’13 in your prepared remarks. When you look out to next year, do you feel comfortable kind of maintaining the current organic growth rate, and then on the margin side, do you remain comfortable with the annual stated goal of about 100 points of expansion annually?

Paul Ricci – Chairman and CEO: We certainly are comfortable that we will continue to see the kind of organic growth that we have built up in the Company over the last couple of years, and looking at it on an annual basis is I think the right way to do that. With respect to operating margins, I think it’s a bit early to be talking about operating margin expansion. We have signaled two investors that we anticipate our operating margin expansion slowing. That hasn’t actually worked out to be the case to the extent that we had signaled, in part because we have had strong growth and strong growth in particular in areas of the business with high margins. But we are very focused on revenue growth and on reinvesting for accelerating organic growth. So, I simply without going too deeply into fiscal ’13, I would tell you to focus on the revenue potential and less on margin expansion.

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