Nuance to Spin off Automotive Software Unit

The speech-recognition specialist is focusing on its “core growth opportunities” in the healthcare and enterprise segments.
Matthew HellerNovember 20, 2018
Nuance to Spin off Automotive Software Unit

Speech-recognition software provider Nuance Communications said Monday it will spin off its automotive division to focus on its “core growth opportunities.”

The automotive business specializes in conversational AI software for smart automotive assistants. Its customers include BMW, Ford, GM, Hyundai, and Toyota, and its products can be found in more than 200 million cars, with voice commands recognized in more than 40 languages.

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Nuance said the new standalone entity will be “a pure-play, next-generation automotive software company” and the spinoff represents “an important step in Nuance Auto’s growth and the continued development of its conversational AI platform.”

“We are excited to launch this business for long-term success by separating it into an independent, focused company,” CEO Mark Benjamin said in a news release. “At the same time, the separation will help us become more focused on our core growth opportunities in healthcare and enterprise.”

The company also last week agreed to sell its document imaging business to Kofax for $400 million.

As The Boston Globe reports, Nuance was “a pioneer in the development of consumer and corporate software capable of recognizing human speech.” It was acquired by rival ScanSoft in 2005, with Nuance becoming the name of the merged company.

Nuance now derives half of its revenue from the healthcare business, which is transitioning to a cloud-based model. For the fourth quarter, revenue from the healthcare segment rose 28%, while revenue from enterprise and automotive increased 6% and 10% respectively.

The automotive segment generated $279 million in revenue for the full fiscal year, with 7% organic growth. There had been speculation Nuance would sell the unit to spare the company the expense of fending off rivals entering the automotive software market.

Nuance shares fell 4.4% in after-hours trading Monday after losing more than 3.6% in the regular session. “Strategic moves might well pay off for Nuance in the long run, but investors don’t seem ready to deal with the short-term pain that will likely result from its transformative efforts,” The Motley Fool said.

Photo: Getty Images