[Starts Abruptly] data set and deep relationships with our customers will continue to be true differentiators for Cerence. As we progress through the second half of the fiscal year, we have prioritized several objectives in order to strengthen our position in our core automotive business. First, balance our cost structure in accordance with our current levels of business while still ensuring we can successfully deliver on our Gen AI road map and customer commitments; second, release several Gen AI solutions into production with high end user satisfaction; and third, convert the deals currently in the pipeline, including some win-back opportunities. Before I turn the call over to Dan Tempesta, our new CFO, I would like to take a moment to introduce him. Dan joined us in mid-March and was previously CFO of Nuance. As such, he is very familiar and experienced with the auto business and our solutions. With Dans's track record of leadership and experience in the space, we are happy to have Dan on board at this important moment in Cerence's journey. I would also like to take the opportunity to thank Tom Beaudoin for his contributions and partnership during his tenure as Cerence's CFO and look forward to his continuing support as a Cerence Board member. With that, I would like to hand the call over to Dan to review our Q2 results in detail and share more about our guidance for Q3 and the full fiscal year. Dan?

Thank you, Stefan. Before I begin, let me just say to our shareholders that while this is clearly a challenging quarter to come on board, I am optimistic about the road map and new products that Stefan discussed. Also, I look forward to meeting with many of you during the several investor conferences and NDRs we have in the coming weeks. Turning to our results. Our Q2 revenue of $67.8 million was above the high end of the guidance, mainly due to an unplanned fixed license of approximately $5 million. This license was directly related to a settlement of an obligation created by a large customer's over-reporting of royalties discussed and reported on last quarter's conference call. In addition, our connected services revenue line also benefited from an unplanned OEM under-reporting true-up of approximately $2.6 million. Excluding these unplanned items, revenue would have landed within the lower end of our Q2 guidance range. Our adjusted EBITDA for the quarter was approximately breakeven and benefited from higher-than-expected revenue in the quarter. Our Q2 profitability was negatively impacted by approximately $6 million related to the write-off of a long-term unbilled contract asset associated with one of our nonautomotive customers that declared bankruptcy during the quarter. Our cash flow from operations was $1 million, and our balance sheet had total cash and marketable securities of approximately $115 million. As Stefan mentioned a few minutes ago, our GAAP results were also negatively affected by a $252 million goodwill impairment. This is a noncash impairment charge that only affects our GAAP results. Turning to our detailed revenue breakdown. Variable license revenue was $25.1 million, down 4% from the same quarter last year and up 21% sequentially quarter-over-quarter. Fixed license revenue came in at $10.4 million for the quarter, $5 million higher than originally expected due…

[Operator Instructions] And your first question comes from the line of Jeff Van Rhee with Craig-Hallum.

I missed the first monologue there, was -- I don't know, it wasn't live. So apologies if I'm repeating stuff here, Stefan. But if you look at the magnitude of the reduction at the midpoint on the revenue picture, I mean, obviously, a very material number. When you look at what's being taken out, how does that affect your thinking about share gains, share loss, competitive landscape? Just start to parse that a little deeper, if you would.

Yes. Okay. Maybe, Jeff, let me give you also my view, and then I will also ask Dan for his thoughts here. Yes. So after receiving the Q1 royalty reports, we observed some downward trends here. And then we conducted in Q2 a deep dive account-by-account reviews, starting in February and we finished in April. And we observed a couple of factors resulting in a reduction in forecast. So first of all, our forecast projection based on the latest data and some of the historical trends and data we have, and then we compared this also with the input from customers, the input from IHS. We still have a high penetration of 54%. But for this fiscal year, IHS is flat, yes? We assumed also a growth of 3%. And we saw also a decline quarter-over-quarter of 12%. Now bringing this together, as we mentioned also in earlier calls, right, we see also some impact of delays in programs, yes? So -- and also that means a delay in start of production and also a slower ramp of new programs here, right? And of course, this is hitting the revenue forecast and also the cost driven by a higher PPU. This goes actually into the line of the core business running royalties, but we see also another aspect here, a slower ramp in 2-wheelers than originally anticipated. That's the first part of my answer. On the second part, obviously, yes, I would like to split your market share question -- losing the market share in actually 2 parts. One is related to a real-time adjustment. Yes, and as you know, in the past, we lost some deals here. But this was already baked into our original forecast. We are completely convinced that based on our success at CES, we have a lot of opportunities also for winning back, and we believe also that the large hyperscalers are not performing. And as I mentioned also earlier, since CES, so within the last couple of months, we won 6 OEM programs, right? And currently, we are working or we are in predevelopment programs of about 14, that shows actually that we are on the right track with our new Gen AI road map.

Along the lines of the second part there, if you look at the competitive win-backs, you said you've got a bunch of them kind of percolating here. Can you expand on that a little bit? In terms of the last couple of years, where have the competitive losses taken place and in terms of against who? And then secondly, those that you think are on path to win back, where do you see most of your win-backs coming?

So when looking back, that was actually prior to the spin at Nuance days. So we lost, for example, GM against Google, yes? There was another loss at Volvo and a few others. But I think now we have huge opportunities for winning back a lot of deals here. And also with our new product road map and also with our new AI computing platform, I think we are forward to a breakthrough here for the conversational AI in the automotive world. And that's the feedback from more or less all OEMs across the globe.

Yes. I mean, obviously, a lot of the OEM programs and particularly around software have struggled mightily. So certainly, there have been some delays, although it seems your revenue is falling short of that. Is there any reduction now versus their expectations the OEMs a year ago, 18 months ago, in terms of the quantity of your product they're taking and expecting to put into each car, the ARPU per car?

I mean, when looking at the current automotive trends, I see obviously actually 3 major trends. One is related to EV and we are all aware that there is a slowdown in the EV field. Secondly, as I also mentioned, the software-defined cars, it's creating another dimension of complexity, right? And unfortunately, we're seeing also some delays in new programs where we can provide actually a higher PPU. For us, you're right, that's missing. And the third one is the emergence of Gen AI. And this is really appreciated by more or less all carmakers across the globe, even in China, in Europe and North America.

Your next question comes from the line of Nick Doyle with Needham.

The first one on the fixed contract consumption. I understand you're talking about lower consumption over time and the drivers around that. But near-term, should we expect that same $15 million level -- $14 million, $15 million level through the fiscal year '24? And can you give a little more detail on the fiscal '25 consumption? Is maybe less than half of the rate that we're seeing in '24 a good place to be, modeling-wise?

Nick, this is Dan. Thanks for the question. I do think, in general, the remainder of the year is -- the past trends are good indicators of sort of the remainder of the year. That's the first part of your question. But remember what I said about '26. By the end of '26, we are -- we should be starting to get to close to parity of the fixed licenses that we do in those years. And our goal, of course, has always been to get to $20 million. So that's our intention next year. And if we change that intention, we'll let you know, but just take that as our expectations at this time. So if we get to a $20 million level or approximately, and we're at that run rate, you could expect that to come down over the next 2 years. So that should give you some indicators of how that's going to come down next year and the year after to get to that landing point.

Yes. That's helpful. And the base that we're running on the fixed contract base is around $60 million today?

Yes, approximately. It was a little higher last year. That number can fluctuate up and down, but that's a reasonable estimation.

And then my second question on the ASP, the average billings per car, I think we saw a nice increase off the bottom this quarter. But I mean, given all the moving pieces in your guidance, it seems like ASPs may be flat, possibly down, I mean fourth quarter could be up. I mean, just a little more detail on how the ASPs are trending through the year and -- because it seems like what we kind of come out with on '24 is a good way to model the go-forward.

I'll comment quickly, and then I'll let Stefan -- I mean, given the sort of reset, I think it's fair to say we should not be thinking about significant growth in ASPs just yet. So that's the first item. We are -- we continue to be impacted. One of the ways that ASPs get better is when we don't have the startup delay -- startup production delays because oftentimes, we're going from old program lower ASP to the new program higher ASP. And so we don't -- those startup productions impact that. But for the time being, it's relatively flat for this fiscal year.

It's relatively flat for this fiscal year, right? So overall, with the new products, we will see or I believe we will see a higher ASP because we are creating a complete solution for the new in-cabin experience with respect to conversational AI and going also beyond. So as we also said, so we will see the first launch in 4 weeks from now. That's good, yes? Secondly, also, I mean, in the era of AI or generative AI, there's also a new speed, to give you also some ideas here, we can easily integrate our new Cerence assistant based on large language models and generative AI within 1 to 2 weeks on an automotive platform, fully tested [indiscernible] in a car, but then it's all about the customization, the branding and so on and so forth. So overall, that's the path we are going here. And as Dan mentioned also in his script here, we are going for a transitioning for cost cutting approach here. But nevertheless, for us, the most important thing is also to drive innovation in the field of generative AI and large language model. And the new platform, what we call it the new AI computing platform goes far beyond automotive.

There are no questions. I will now turn the conference back over to Rich Yerganian, Vice President of Investor Relations, for closing remarks.

Thank you very much, and we will be, again, at several conferences upcoming, and look forward to speaking with you. Thank you.

Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.