Cerence Inc.CRNC

Cerence Inc. Earnings Per Share Disclosure

10-KFiled Nov 20, 20252 min read
Earnings Per Share
Basic earnings per share is computed by dividing net loss by the weighted-average number of shares of common stock outstanding during the period. Diluted earnings per share is computed by dividing net loss by the weighted-average number of shares of common stock outstanding during the period, increased to include the number of shares of common stock that would have been outstanding had potential dilutive shares of common stock been issued. The dilutive effect of restricted stock units is reflected in diluted net loss per share by applying the treasury stock method.
The dilutive effect of the Notes (as defined in Note 17) is reflected in net loss per share by application of the “if-converted” method. The “if-converted” method is only assumed in periods where such application would be dilutive. In applying the “if-converted” method for diluted net loss per share, we would assume conversion of the Notes at the respective conversion ratio as further described in Note 17. Assumed converted shares of our common stock are weighted for the period the Notes were outstanding.
The following table presents the reconciliation of the numerator and denominator for calculating net loss per share:
September 30,
in thousands, except per share data202520242023
Numerator:
Net loss$(18,714)$(588,078)$(56,254)
Denominator:
Weighted average common shares outstanding - basic and diluted43,180 41,642 40,215 
Net loss per common share:
Basic$(0.43)$(14.12)$(1.40)
Diluted$(0.43)$(14.12)$(1.40)
We exclude weighted-average potentially issuable shares from the calculations of diluted net loss per share during the applicable periods because their inclusion would have been anti-dilutive. The following table sets forth potential shares that were considered anti-dilutive for the fiscal years ended September 30, 2025, 2024 and 2023:
Year Ended September 30,
in thousands202520242023
Restricted stock awards981 — 273 
Contingently issuable stock awards384 232 150 
Conversion option of our Notes6,401 7,495 5,402 

About Earnings Per Share Disclosures

The earnings per share disclosure breaks down the calculation from net income to both basic and diluted EPS, revealing the full impact of a company's capital structure on per-share economics. The reconciliation between basic and diluted share counts exposes how many stock options, RSUs, convertible securities, and warrants are potentially dilutive to existing shareholders.

Key signals: a widening gap between basic and diluted shares indicates growing dilution from equity compensation or convertible instruments. Anti-dilutive securities excluded from the diluted calculation deserve attention — they represent latent dilution that will materialize if the stock price rises. Watch for the effect of share buybacks on per-share metrics: EPS growth driven primarily by repurchases rather than income growth signals weakening fundamentals. Compare year-over-year changes in the diluted share count against equity compensation expense to assess whether management is effectively managing dilution.

Other Available Disclosures

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