| COMPANY |
Cerence Inc. |
| COURT |
United States District Court for the District of Massachusetts |
| CASE NUMBER |
22-cv-10321 |
| JUDGE |
The Honorable Allison D. Burroughs |
| CLASS PERIOD |
February 08, 2021 - February 04, 2022 |
| SECURITY TYPE |
Common Stock |
Cerence investors may receive additional information about the case by clicking the link "Submit Your Information" above. If you are a member of the class described below, you may no later than April 26, 2022 move the Court to serve as lead plaintiff of the class, if you so choose.
A class action lawsuit has been filed on behalf of those who purchased or acquired Cerence Inc. (“Cerence”) (NASDAQ: CRNC) common stock between February 8, 2021 and February 4, 2022, inclusive (the “Class Period”).
Case Background:
Cerence builds artificial intelligence-powered virtual assistants primarily for the automotive market. Its customers include major automobile original equipment manufacturers (“OEMs”) and the OEMs’ suppliers. For example, Cerence identifies as customers, among others, BMW, Daimler, FCA Group, Ford, GM, Renault-Nissan, SAIC, Toyota, Volkswagen Group, Bosch, and Continental. Cerence generates revenue primarily by selling software licenses and cloud-connected services to its OEM and OEM supplier customers.
The Class Period commences on February 8, 2021, when, prior to the market open, Cerence issued a press release announcing its financial results for the first fiscal quarter of 2021 ended December 31, 2020. In connection therewith, Cerence increased its guidance for the fiscal year ending September 30, 2021. The complaint alleges that Cerence continued to report growing revenues and strong demand for its software licenses in the face of industry headwinds including a decline in auto-manufacturing due to supply chain issues and semiconductor shortages. Further, Cerence touted its “visibility” regarding demand for its products, which allowed Cerence to provide long-term guidance for fiscal year 2024. Throughout the Class Period, the defendants repeatedly assured investors that Cerence’s guidance took “into consideration the current risks and uncertainties of the semiconductor device shortages that are impacting auto production.”
The truth began to emerge on November 22, 2021, when Cerence announced revenue guidance for the first quarter and full fiscal year 2022 that was well below analysts’ expectations. Following this news, Cerence’s stock price declined more than 20%, from a closing price of $104.06 the prior to trading day, to close at $82.59 on November 22, 2021. As the market digested the news, Cerence’s stock price declined an additional 5% the following day, to close at $78.27 on November 23, 2021.
Then, before the markets opened on December 15, 2021, Cerence filed a Current Report on a Form 8-K announcing its Chief Executive Officer (“CEO”), Sanjay Dhawan, had resigned the prior day and that he was being replaced as CEO by Stefan Ortmanns. Following this news, the price of Cerence stock declined an additional 11%, from a closing price of $78.08 on December 14, 2021, to a closing price of $69.20 on December 15, 2021.
Finally, on February 7, 2022, Cerence issued its results for the fiscal first quarter of 2022 ended on December 31, 2021. Cerence also announced that Chief Financial Officer, Mark Gallenberger, would be retiring, effective March 11, 2022. Further, during the related conference call to discuss Cerence’s results for the quarter, new CEO, Stefan Ortmanns, announced he had conducted a review of the plans, forecasts, and assumptions for each of Cerence’s business units, and determined the “conversion from bookings to revenue will take longer than expected.” As a result, Cerence was forced to lower its fiscal year 2022 guidance. Finally, and as a further result of Mr. Ortmanns’ review, Cerence completely withdrew its closely watched guidance for fiscal year 2024. Following this news, the price of Cerence stock fell more than 30%, from a closing price of $63.58 on February 4, 2022, to close at $43.61 on February 7, 2022.
The complaint alleges that throughout the Class Period, the defendants failed to disclose that: (1) the global semiconductor shortage had a materially negative impact on demand for Cerence’s software licenses; (2) the defendants masked the impact of the semiconductor shortage on demand for Cerence’s software licenses by pulling forward sales; and (3) as a result of the above, the defendants’ statements about Cerence’s business, operations, and prospects were false and misleading and/or lacked a reasonable basis.
A lead plaintiff is a representative party that acts on behalf of other class members in directing the litigation. In order to be appointed lead plaintiff, the Court must determine that the class member’s claim is typical of the claims of other class members, and that the class member will adequately represent the class. Your ability to share in any recovery is not, however, affected by the decision whether or not to serve as a lead plaintiff. Filling out the online form above or communicating with any counsel is not necessary to participate or share in any recovery achieved in this case. Any member of the purported class may move the court to serve as a lead plaintiff through counsel of his/her choice, or may choose to do nothing and remain an inactive class member.
If you wish to discuss this action or have any questions concerning this notice or your rights or interests with respect to these matters, please contact Kessler Topaz Meltzer & Check, LLP: James Maro, Esq. (484) 270-1453 or via e-mail at info@ktmc.com. If you would like additional information about the suit, please click on the link "Submit Your Information" above and fill out the form as promptly as possible.