Nuance Communications helps machines hear and understand the subtleties of what people say to them. The company provides speech recognition systems -- increasingly based in the cloud -- used to provide customer service, embedded systems used in applications ranging from automobiles to consumer electronics, and medical dictation systems. It employs artificial intelligence, cognitive science, and machine learning in developing its products. Nuance sees as well as listens with a digital imaging line of document creation, editing, and conversion tools. It serves clients worldwide in a range of industries, including healthcare, telecommunications, financial services, and government. The company generates most of its sales in the US.
Nuance's operating segments are healthcare, mobile, enterprise, and imaging. Its healthcare segment (around 50% of sales) includes dictation and transcription software for medical information management. Among its products is the line of Dragon speech recognition products for medical application as well as for businesses and consumers. The mobile segment (about 20% of sales) includes voice command, speech-to-text, and other software for automotive automotive manufacturers, mobile devices, and computers. The enterprise segment (20% of sales) provides customer service through voice, mobile, web and messaging channels, with inbound and outbound customer service and engagement, voice biometrics, and virtual assistant capabilities. Imaging (an eighth of sales) offers document, imaging, and print management software.
Nuance generates about 70% of its sales from the US. Internationally, it has principal locations in Australia, Austria, Belgium, Brazil, Canada, China, Germany, Hungary, India, Ireland, Italy, Japan, and the UK. The company's Automatic Speech Recognition self-service system is available in about 90 languages and dialects.
Sales and Marketing
The company sells directly and through distributors, resellers, systems integrators, and telecom carriers. Distribution and reseller partners across all segments include
, Cleveland Clinic, and
, while customers include
Bank of America
Delta Air Lines
Lloyds Banking Group
Nuance has had steady, if unspectacular, revenue growth in recent years. In 2016 (ended September), revenue inched up about 1% to $1.9 billion. Revenue from the healthcare and mobile segments fell 3% and 4%, respectively, in 2016 while enterprise and imaging posted respective increases of 11% and 2% for the year. The transition of the company's Dragon Medical product to cloud and subscription sales from perpetual licensing resulted in lower revenue. Mobile sales suffered from a drop in handset sales in mature markets, although the company's automotive offerings generated more revenue.
The company reduced its net loss to about $12 million in 2016 from $115 million in 2015 with the help of decreased spending in research and development and sales and marketing. The healthcare segment was the only one to post a lower profit in 2016 compared to 2015. Its profit fell about 9%. Profit from the enterprise segment jumped about 40%.
Nuance generated about $566 million from operations in 2016, a jump from about $495 million in 2015. Cash flow in 20156 was aided by the lower net loss and changes in working capital.
Nuance has been a pioneer in helping people talk to machines. Doctors dictate patient notes that are transcribed by Nuance technology through its Dragon brand products and people wend their way through customer service options by talking to a Nuance systems. About half the company's revenue comes from its healthcare products. Now Nuance is aggressively moving into the growing field of providing the technology for talking to all kinds of machines, including cars. As technology has made the turn from speech recognition to speech understanding, Nuance has made the transition with investments in artificial intelligence, natural language, and cognitive science. While voice command technology is increasing available in a number of applications, it also means more competition for Nuance from companies like
(even if Nuance software was part of Apple's Siri digital assistant).
Nuance has moved beyond the hospital and now provides voice-command technology for a number of automakers including BMW and Fiat Chrysler . The company's mobile division, which includes the automotive products, provide about a fifth of revenue. Investments the company made in its automotive technology began to pay off in 2016 and the company expects continued growth in the connected car area. The company works with firms such as
(mapping) and Parkopedia (which helps locate a parking space) to provide information to drivers.
Other areas where the company intends to produce more revenue are voice biometrics, omni-channel customer care, unified print and scan solutions, Dragon Medical, clinical document improvement (CDI) for medical documents, and diagnostics.
The company is in another transformation: switching its revenue model to one dependent on recurring revenue gained from its cloud-based operations. Recurring revenue accounted for 70% of the total in 2016 and Nuance expects the percentage to increase as current and new products replace its older, installed base of perpetual license applications.
Nuance is well established in the medical community but emerging competition threatens it in other fields. Digital assistants like Amazon's Alexa, Google Home, and Apple's Siri have found users for applications that include smart home elements of the internet of things. Amazon has made its software available to developers who design additional applications and Google's software is available through the Android mobile operating system. Nuance has maintained a tight leash on it systems, preferring to work with original equipment manufacturers to design it technology into their products.
Mergers and Acquisitions
An aggressive acquisition strategy has been among the keys to Nuance's success. The company continues to strengthen its product offerings and expand its geographic reach via acquisitions.
In early 2017 Nuance bought mCarbon, a provider of customer engagement and value-added service products for telecom operators around the world.
In 2016, the company acquired TouchCommerce, a developer of digital customer service and engagement products for $210. Nuance and TouchCommerce have worked together and the acquisition should amplify their products.