BURLINGTON, Mass. - Cerence Inc . (NASDAQ: NASDAQ:CRNC), a leader in artificial intelligence (AI) for transportation, has entered into a multi-year agreement with luxury automotive brand Jaguar Land Rover (JLR) to enhance in-car experiences through advanced AI technology. The announcement comes as Cerence’s stock shows strong momentum, with InvestingPro data revealing a remarkable 152% surge over the past six months, despite recent market volatility. The collaboration aims to develop the next generation of in-vehicle experiences, focusing on increasing enjoyment, safety, and productivity for JLR customers worldwide.
Under this partnership, Cerence will employ its AI-enabled technologies to elevate the user experience within JLR’s vehicles. The initiative is set to build upon JLR’s reputation for offering technologically sophisticated driving experiences. With annual revenue of $331.5 million and a solid gross profit margin of 74%, Cerence demonstrates strong operational efficiency in its core business, according to InvestingPro data.
Christian Mentz, Chief Revenue Officer at Cerence, expressed pride in collaborating with JLR to push the boundaries of in-car technology. Meanwhile, Christine Kemp, Chief Data and AI Officer at JLR, emphasized the importance of AI and voice technology in advancing JLR’s infotainment systems and enriching the overall journey for their customers.
Cerence’s expertise spans voice recognition, generative AI, and large language models, which have been integrated into over 500 million cars to date. The company’s focus on creating intuitive, seamless experiences aligns with JLR’s Reimagine strategy, which includes a commitment to carbon neutrality and the introduction of electric models across its vehicle collections by the end of the decade.
The partnership is indicative of the broader industry trend towards incorporating AI to enhance vehicle safety and user experience. As both companies work to expand and improve the JLR in-car experience, this agreement marks a significant step in their shared vision for the future of automotive technology.
The financial terms of the agreement were not disclosed in the press release statement. Cerence, headquartered in Burlington (NYSE:BURL), Massachusetts, operates globally and continues to drive AI innovation in the automotive and transportation sectors. JLR, a subsidiary of Tata Motors (NYSE:TTM) Limited, maintains a strong presence with facilities and technology hubs across the globe. While analysts have recently revised earnings expectations downward, InvestingPro analysis suggests the stock is currently undervalued, with additional insights available in the comprehensive Pro Research Report, which provides deep-dive analysis of over 1,400 US stocks.
In other recent news, Cerence AI has made strategic moves to bolster its financial standing and operational efficiency. The company recently welcomed Antonio Rodriquez as the new Chief Financial Officer, a move expected to drive growth and improve operating results. Rodriquez carries over 25 years of financial leadership experience and a deep understanding of Cerence AI’s business from his interim CFO role since June 2024.
In addition to leadership changes, Cerence AI reported encouraging financial results. The company generated revenue of $331.5 million in the last twelve months with a robust 73.7% gross margin. Analysts at InvestingPro forecast profitability in the coming year for Cerence AI, signaling potential turnaround for the company.
Cerence has also caught the attention of Craig-Hallum analysts who maintained a Hold rating on the company’s stock while raising the price target to $6.00. This valuation places Cerence’s stock at 19 times EV to EBITDA. Furthermore, the company has guided for $25 million in free cash flow (FCF) for the fiscal year 2025, with a projection of $34 million when excluding one-time items.
Finally, Cerence announced a strategic shift towards generative Artificial Intelligence (AI) with a goal of returning to profitability by fiscal year 2025. The company reported Q4 revenue of $54.8 million, surpassing guidance, and an adjusted EBITDA of negative $1.9 million, which was better than anticipated. These are the recent developments for Cerence.
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