Why Cerence Stock Soared Today

Shares of Cerence (NASDAQ: CRNC) surged more than 27% on Thursday after the automotive artificial intelligence (AI) provider reported stronger-than-expected fiscal fourth-quarter results.

Cerence is meeting its operational milestones

Cerence's revenue rose by nearly 11% year over year to $60.6 million in the quarter ended Sept. 30. The gains were driven by a 27% jump in license revenue and a 17% increase in connected services revenue.

"We made significant progress with our Cerence xUI platform, including meeting all our technology milestones while driving strong customer interest and early adoption," CEO Brian Krzanich said in a press release.

Over the trailing 12 months, 52% of worldwide auto production included Cerence technology. The number of Cerence-connected cars shipped during that time increased by 14% compared to the prior year.

All told, Cerence's operating and free cash flow rose roughly threefold to $61.2 million and $46.8 million, respectively, in fiscal 2025.

There's plenty of highway for growth still ahead

Management guided for revenue of $300 million to $320 million and free cash flow of $55.5 million to $65.5 million in fiscal 2026.

Notably, Cerence's first-quarter revenue will include a $49.5 million payment from a legal settlement with Samsung. "We secured our first successful outcome in our push to protect and monetize our intellectual property," Krzanich said.

Cerence expects to generate 8% growth in its core technology business in the coming year.

Joe Tenebruso has no position in any of the stocks mentioned. The Motley Fool recommends Cerence. The Motley Fool has a disclosure policy.