Why Nuance Communications Stock Just Popped 14%

Shares of Nuance Communications (NASDAQ: NUAN), maker of the popular Dragon Naturally Speaking family of voice-to-text (and text-to-voice) software products, are surging, up 14.3% in Thursday-morning trading circa 11:15 a.m. EST. These gains are coming after Nuance announced a modest earnings "beat" in its earnings report last night -- and despite Nuance's warning of an even bigger earnings miss in the coming year.

Expected to report pro forma profits of only $0.16 per share on sales of $345.7 million in its fiscal fourth quarter 2020, Nuance actually reported adjusted profits of $0.18 on sales of $352.9 million.

That's the good news. Now here's the bad: Sales may have exceeded expectations, but they were nonetheless down 9% year over year. Operating profit margins on those sales fell by more than half, landing at just 3.7%, and while the company "beat" earnings expectations on a pro forma basis, its actual results as calculated according to generally accepted accounting principles (GAAP) were an $0.08-per-share loss -- versus $0.01 per share in profit in last year's Q4.

Source Fool.com