Dive Brief:

• Daniel Tempesta has departed from his role as CFO of automotive AI software provider Cerence effective May 17 after serving just two months in the position, the company announced in a securities filing with the Securities and Exchange Commission. Tempesta’s resignation was not the result of any disagreement with the company, according to the filing, and Cerence has engaged an executive search firm to find a permanent successor.
• In the meantime, Stefan Ortmanns, the Burlington, Mass.-based company’s president and CEO, will serve as the company’s interim principal financial officer while Cerence searches for a permanent successor, according to the filing. Katherine Roman, the company’s VP and corporate controller, will serve as interim principal accounting officer, with both appointments also effective as of May 17.
• Tempesta’s resignation comes as the company, which creates voice and AI-powered digital assistants for automotives, struggles with declining revenues and nosediving stock. The company is also embroiled in an ongoing securities class action lawsuit concerning whether certain former company officers, including a prior CFO, breached their fiduciary duties.

Dive Insight:

A 15-year alum of voice recognition technology provider Nuance Communications, Tempesta joined Cerence two months ago after most recently serving as Nuance’s EVP and CFO, according to a company filing regarding his appointment. Nuance was acquired by Microsoft in 2022 as part of the latter’s push to innovate AI technologies, per a company press release at the time.

As Cerence’s CFO, Tempesta was set to receive an annual base salary of $500,000 and was also eligible for both short-term and long-term incentive awards, but it is unclear if he will be eligible to receive compensation from his severance and change of control agreement with the company. While Tempesta is eligible to receive certain compensation if he resigns following a change of control, it is not clear if he is entitled to the same benefits should he resign for other reasons.

Tempesta’s resignation marks the latest in a series of relatively short-tenured finance chiefs for the automotive software provider, sparked by an exodus of Cerence’s executive leadership in 2022 following allegations of fraud. In March of that year, then-CFO Mark Gallenberger abruptly resigned, following Cerence’s previous CEO, Sanjay Dhawan, and its general counsel and secretary Leanne Fitzgerald out of the door, according to a report by the Boston Business Journal.

Gallenberger was soon replaced by Marc Montagner, who served in Cerence’s CFO role for only about a month before the company appointed Thomas Beaudoin, Tempesta’s predecessor in the position, to the top financial seat in May 2022, according to company filings. Beaudoin stepped down as CFO when Tempesta was appointed to the role two months ago, but has stayed on as a member of the board.

Both Gallenberger and Dhawan were named as defendants in a securities class action lawsuit against Cerence later in 2022 after they had stepped down from the company, which alleges that the two executives perpetuated a scheme to bolster share prices and breached their fiduciary duty.  

Filed in the U.S. District Court for the District of Massachusetts, the suit alleges that Gallenberger and Dhawan entered into a record number of fixed license agreements in order to artificially inflate short-term revenue and conceal slumping demand, according to an amended complaint from July 2022. In March of this year, U.S. District Judge Allison D. Burroughs denied a motion to dismiss the complaint.

Cerence is also continuing to grapple with slumping financial results in the face of industry and economic headwinds. In its most recent quarterly report, the company brought down its full-year revenue guidance by almost $40 million — representing about an 11% decrease in revenue, according to statements made by CEO Stefan Ortmanns.

The adjusted guidance followed a “deep account-by account review” of the company’s backlog after noting downward trends in its Q1.

“As a result of that review, we concluded that some customers’ production expectations are not materializing as expected or as reflected in our forecasts,” Ortmanns said. Cerence is now expecting revenues between $318 million to $332 million, with adjusted EBITDA expected to be between $58 million to $72 million. This compares to previous guidance of revenues between $355 million to $375 million, as well as adjusted EBITDA of $94 million and $109 million.

For its most recent quarter ended March 31, Cerence reported GAAP revenue of $67.8 million, compared to $68.4 million in the prior year period.  

Cerence declined to comment on Tempesta’s resignation beyond the details included in its filing.