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Did Nvidia Make a Mistake by Selling SoundHound AI Stock? The Answer Might Surprise You.
The Motley Fool· 2025-08-16 08:24
SoundHound AI stock is up 40% over the past month, but investors should proceed with caution.Nvidia (NVDA -0.85%) has become the world's largest company on the back of surging demand for its data center chips, which are the gold standard for developing artificial intelligence (AI) models. The chip giant occasionally puts its vast financial resources to work by investing in other AI companies, and SoundHound AI (SOUN -5.71%) was one of them.SoundHound is a specialist in conversational AI technologies, and it ...
Is SoundHound AI Stock Proving to Be the Real Deal?
The Motley Fool· 2025-08-15 16:23
Core Insights - SoundHound AI has shown significant revenue growth but faces ongoing questions regarding its profitability and sustainability in the competitive AI market [4][10]. Financial Performance - SoundHound reported a revenue of $42.7 million for Q2, marking a 217% increase from $13.5 million in the same period last year [6]. - The company experienced a net loss that doubled from $37 million a year ago to just under $75 million [8]. - Gross margin declined significantly from 63% to 39%, attributed mainly to the acquisition of AI company Amelia [8]. Business Expansion - SoundHound has expanded its customer base across multiple sectors, now serving 15 large enterprise customers with its new agentic AI platform, Amelia 7 [7][8]. - The acquisition of Amelia has diversified SoundHound's customer base and contributed to revenue growth, although it raises questions about organic growth [8][11]. Cash Flow and Sustainability - The company has been burning through cash, using $44 million in operating activities over the past six months, compared to $40 million in the same period last year [9]. - Despite impressive revenue growth, concerns remain about the sustainability of this growth without a clear path to profitability [10][12]. Market Reaction - Following the quarterly results, SoundHound's shares jumped, but the stock is still down approximately 18% for the year [13].
SoundHound AI: The Next Leg Of Growth Is Just Beginning
Seeking Alpha· 2025-08-15 06:19
Core Viewpoint - SoundHound AI (NASDAQ: SOUN) is positioned as a leading AI company with real market operations and a clear path to large-scale commercialization, indicating potential for significant revenue growth [1] Company Overview - SoundHound AI is one of the few AI companies actively delivering products in real markets, showcasing its operational capabilities [1] - The company is experiencing growing revenue, which supports its commercialization strategy [1] Investment Strategy - The investment strategy focuses on uncovering high-upside opportunities in overlooked sectors, particularly in small-cap stocks, energy, commodities, and special situations [1] - The approach is based on the CAN SLIM framework, emphasizing fundamental momentum indicators such as EPS, ROE, and revenue [1] - Additional tools like GARCH and Granger causality are utilized to analyze risk and market cycles [1] Market Positioning - The company is seen as having a disconnect between market narrative and actual performance metrics, suggesting potential undervaluation [1]
SoundHound AI Just Delivered a Major Profit to Options Bulls
Schaeffers Investment Research· 2025-08-14 19:07
Core Insights - Schaeffer's subscribers achieved a significant return on investment, quadrupling their money in less than a week due to a call recommendation on SoundHound AI Inc [1] Company Performance - On August 10, the AI stock had recently surpassed its July highs and reached a market capitalization of $5 billion, closing at its highest level since February [2] - The stock experienced a notable surge, with a 26.4% increase followed by a 17.3% gain, resulting in four consecutive daily wins before a slight pullback [4] Market Sentiment - Short interest in SoundHound AI was at near all-time highs, with 33.3% of the total available float sold short, indicating a contrarian perspective despite the stock's breakout from a longer-term basing pattern [3] - Following the quarterly report, the stock's volatility was anticipated, leading to significant price movements [4]
SoundHound Stock Soars 49% Since Q2 Earnings: Should You Still Buy?
ZACKS· 2025-08-13 14:46
Core Insights - SoundHound AI, Inc. (SOUN) has experienced a significant share price increase of 49% following its Q2 2025 results, reflecting renewed investor confidence in its voice and conversational AI positioning [1][7] - Despite the recent surge, SOUN's stock remains approximately 36% below its 52-week high of $24.98, while trading nearly 270% above its 52-week low of $4.32 [2] Financial Performance - SoundHound reported record Q2 revenue of $42.7 million, representing a 217% year-over-year increase and exceeding consensus estimates by nearly $10 million [2][3] - The non-GAAP net loss per share was narrowed to 3 cents, an improvement from a 4-cent loss in the same quarter last year [2] Strategic Growth Areas - Growth was broad-based across three strategic pillars: Enterprise AI, Restaurants, and Automotive, driven by advancements in agentic AI and Voice Commerce initiatives [3][7] - Monthly query volume surpassed 1 billion, and active restaurant locations using its voice AI solutions exceeded 14,000 [3] Future Guidance - Management raised its 2025 revenue guidance to a range of $160 million to $178 million, with a target for adjusted EBITDA profitability by year-end [3][20] Sector-Specific Developments - In Enterprise AI, SoundHound launched Amelia 7, attracting fifteen large enterprise customers across various sectors including financial services, healthcare, and retail [5] - The Restaurant segment achieved significant wins, securing new clients such as Red Lobster and IHOP, while expanding existing relationships with brands like Chipotle [8] - In Automotive, SoundHound integrated its voice assistant into a major OEM's global vehicle lineup in China and expanded its presence in India with KIA [9] Technological Advantages - SoundHound's Polaris speech recognition model offers over 35% higher accuracy and four times lower latency compared to large tech rivals, enhancing its competitive edge [10] - The company is also integrating Vision AI for real-time visual understanding, broadening the applications of conversational AI [10] Financial Health - The GAAP gross margin for Q2 fell to 39% from 63% a year ago, while the non-GAAP gross margin was reported at 58.4% [12] - SoundHound maintains a solid balance sheet with $230 million in cash and no debt, targeting cost synergies from cloud optimization and legacy system migration [13] Competitive Landscape - SoundHound competes with specialized voice AI firms and large tech companies, leveraging its domain expertise and multilingual capabilities to capture high-value use cases [14][15] - The company’s omnichannel approach positions it well to gain market share in both consumer-facing and enterprise environments [14] Valuation Metrics - SOUN's forward 12-month price-to-sales ratio stands at 33.34, nearly double the industry average of 16.74, indicating a premium valuation that reflects investor optimism [16] - The Zacks Consensus Estimate for 2025 loss per share has improved to 15 cents from 16 cents over the past week, compared to a loss of $1.04 per share reported a year ago [17]
SoundHound AI: Confounding Growth Story
Seeking Alpha· 2025-08-13 08:12
Core Insights - The article emphasizes the potential of undervalued stocks that are mispriced by the market, suggesting that investors should consider positioning themselves in these opportunities as August begins [1]. Group 1 - The article encourages joining a platform called "Out Fox The Street" for insights on undervalued stocks [1].
SoundHound's Q2 NRR Hits 120% From 90%: What's Fueling the Rise?
ZACKS· 2025-08-12 17:21
Core Insights - SoundHound AI, Inc. (SOUN) reported impressive second-quarter 2025 results, highlighted by a net revenue retention (NRR) increase from under 90% to over 120%, indicating strong customer retention and upselling success [1][9] Financial Performance - The company achieved a 217% sales growth driven by increased demand for AI solutions [5] - The consensus estimate for 2025 sales suggests a growth of 98.3%, with an expected improvement in the bottom line from a loss of $1.04 per share in the previous year [12] Technology Integration - SoundHound's integration of recent acquisitions, particularly Amelia and Synq3, has led to significant improvements in accuracy, latency, and cost efficiency by utilizing its proprietary Polaris speech recognition model [2][9] - The technology enhancements have resulted in better customer satisfaction, faster deployment cycles, and higher renewal close rates [2] Cross-Selling and Partnerships - Cross-selling between business units has been a key driver, with SoundHound successfully selling solutions from its recent acquisition to a major customer of an earlier acquisition [3] - Strategic partnerships with AVANT Communications, Acrelec, and Par Technologies have expanded SoundHound's reach into global restaurant chains and enterprise service providers, driving new customer acquisitions and product adoption [4] Competitive Landscape - SoundHound faces strong competition from Nuance Communications and Cerence Inc., both of which have established market positions and significant resources [5][6] - Nuance, now part of Microsoft, has deep penetration in healthcare and customer engagement, while Cerence dominates automotive voice technology [6] Stock Performance and Valuation - SOUN shares have increased by over 48% since the second-quarter earnings release, outperforming the Zacks Computers - IT Services industry [7] - The stock is currently trading at a premium with a forward 12-month price-to-sales (P/S) ratio of 33.19 [11]
Is SoundHound AI a Lucrative Bet on Long-Term Potential on Voice AI?
ZACKS· 2025-08-12 14:01
Core Insights - SoundHound AI Inc. reported strong second-quarter 2025 earnings, with a narrower adjusted loss of $0.03 per share compared to the Zacks Consensus Estimate of a loss of $0.06 and a loss of $0.11 per share a year ago. Quarterly revenues reached $42.7 million, reflecting a 217% year-over-year increase and surpassing the Zacks Consensus Estimate of $33 million [1][9]. Financial Performance - The stock price of SoundHound AI surged 26.4% following the earnings report, although it remains down 19.8% year to date, while the S&P 500 and Nasdaq Composite have increased by 8.5% and 10.9% respectively [2]. - Management raised the 2025 sales outlook to a range of $160 to $178 million, indicating nearly double the revenues year over year, with the midpoint representing a 99.5% growth [12]. Technological Advancements - SoundHound AI introduced Vision AI, which integrates visual understanding with its voice-first platform, aiming to penetrate the emerging voice commerce market [3]. - The company is focusing on its multilingual and multimodal foundation model, Polaris, to maintain a competitive edge in the voice AI sector, facing competition from major tech firms [5]. Client Base and Market Opportunities - SoundHound AI has a robust clientele, particularly in the automotive sector, with major clients including Mercedes-Benz, Honda, and Hyundai [10]. - The company estimates that in-car voice commerce could represent a $35 billion annual opportunity for automakers [11]. Future Projections - Sequential growth is anticipated in the second half of 2025, with the fourth quarter expected to outperform the third quarter due to seasonal enterprise and automotive momentum. The company projects adjusted EBITDA profitability by year-end 2025 [13]. - For the third quarter of 2025, the Zacks Consensus Estimate indicates revenues of $44.69 million, a 78.1% year-over-year increase, and an EPS of -$0.04, reflecting a 33.3% improvement year over year [14]. Valuation and Market Position - SoundHound AI's stock is currently trading at a 45.8% discount to its 52-week high, and the company is benefiting from accelerating adoption across various sectors, including enterprise, automotive, and restaurant verticals [17][18].
SoundHound AI(SOUN) - 2025 Q2 - Quarterly Report
2025-08-11 20:31
[PART I. FINANCIAL INFORMATION](index=6&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Item 1. Condensed Consolidated Financial Statements](index=6&type=section&id=Item%201.%20Condensed%20Consolidated%20Financial%20Statements) This section presents SoundHound AI's unaudited condensed consolidated financial statements for Q2 2025, including balance sheets, statements of operations, and cash flows, with notes on accounting policies and key financial events [Condensed Consolidated Balance Sheets](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $230,340 | $198,240 | | Total current assets | $282,022 | $255,520 | | Goodwill | $101,210 | $101,704 | | Intangible assets, net | $159,880 | $174,943 | | **Total assets** | **$579,494** | **$553,953** | | **Liabilities & Equity** | | | | Total current liabilities | $58,290 | $67,742 | | Contingent acquisition liabilities | $142,113 | $286,898 | | **Total liabilities** | **$219,735** | **$371,300** | | **Total stockholders' equity** | **$359,759** | **$182,653** | [Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Income%20(Loss)) Statement of Operations Summary (in thousands, except per share data) | Metric | Q2 2025 | Q2 2024 | Six Months 2025 | Six Months 2024 | | :--- | :--- | :--- | :--- | :--- | | Revenues | $42,683 | $13,462 | $71,812 | $25,056 | | Gross Profit* | $16,662 | $8,482 | $27,280 | $15,407 | | Income (loss) from operations | $(78,051) | $(21,985) | $50,046 | $(50,514) | | Net income (loss) | $(74,724) | $(37,322) | $55,208 | $(70,331) | | Diluted EPS | $(0.19) | $(0.11) | $0.13 | $(0.23) | *Gross Profit calculated as Revenues - Cost of revenues - The significant income from operations for the six months ended June 30, 2025, was primarily driven by a non-cash gain of **$144.7 million** from the change in fair value of contingent acquisition liabilities[17](index=17&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=11&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Cash Flow Summary for Six Months Ended June 30 (in thousands) | Cash Flow Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(43,682) | $(40,440) | | Net cash used in investing activities | $(354) | $(4,788) | | Net cash provided by financing activities | $76,606 | $137,030 | | **Net change in cash** | **$32,360** | **$91,932** | - Financing activities in the first six months of 2025 provided **$76.6 million**, primarily from the sale of Class A common stock under equity distribution agreements, compared to **$137.0 million** in the same period of 2024, which also included proceeds from stock sales but was partially offset by a **$105.5 million** repayment of notes payable[24](index=24&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=13&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) This section details the company's accounting policies and financial activities, covering operations, acquisitions, revenue recognition, goodwill, legal proceedings, equity financing, and fair value measurements - The company has a history of recurring losses and negative operating cash flows, with an accumulated deficit of **$887.9 million** as of June 30, 2025; however, with **$230.3 million** in unrestricted cash, management believes it can fund operations for at least the next twelve months[29](index=29&type=chunk)[30](index=30&type=chunk) - The company operates as a single reportable segment, with the CEO acting as the chief operating decision maker who reviews financial information on a consolidated basis[36](index=36&type=chunk) - Customer concentration risk exists, with three customers (C, F, and G) each accounting for **16%**, **13%**, and **13%** of total revenue for the three months ended June 30, 2025, respectively, while two customers (D and E) accounted for **27%** and **35%** of revenue for the same period in 2024[40](index=40&type=chunk)[41](index=41&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=51&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's business overview, strategic direction, and recent developments, analyzing results of operations, liquidity, capital resources, and cash flow activities, highlighting revenue growth and equity financing [Company Overview and Strategy](index=51&type=section&id=Company%20Overview%20and%20Strategy) - SoundHound is a leader in conversational intelligence, providing independent Voice AI solutions across automotive, TV, IoT, and customer service industries, emphasizing proprietary technology for brand control[202](index=202&type=chunk)[205](index=205&type=chunk) - The company's revenue model is built on three pillars: Product Royalties from voice-enabled products, Service Subscriptions from customer service or food ordering, and Monetization through an ecosystem model connecting services to products for transaction-based revenue shared with product creators[215](index=215&type=chunk)[216](index=216&type=chunk)[217](index=217&type=chunk) [Results of Operations](index=56&type=section&id=Results%20of%20Operations) Revenue by Type (in thousands) | Revenue Type | Q2 2025 | Q2 2024 | % Change | | :--- | :--- | :--- | :--- | | Service subscriptions | $32,057 | $3,638 | 781% | | Product royalties | $10,508 | $9,723 | 8% | | Monetization | $118 | $101 | 17% | | **Total** | **$42,683** | **$13,462** | **217%** | - Total revenue increased by **217%** YoY for Q2 2025, primarily driven by a **781%** increase in Service Subscriptions, largely due to contributions from recent acquisitions[248](index=248&type=chunk) - Gross margin decreased to **39%** in Q2 2025 from **63%** in Q2 2024, primarily due to the amortization of acquired intangible assets from the Amelia acquisition[250](index=250&type=chunk) - Operating expenses increased significantly YoY for Q2 2025, driven by higher personnel-related costs following the Amelia acquisition: sales and marketing increased by **180%** to **$15.8 million**, research and development increased by **64%** to **$25.8 million**, and general and administrative increased by **91%** to **$18.2 million**[251](index=251&type=chunk)[254](index=254&type=chunk)[257](index=257&type=chunk) - The company recorded a non-cash loss of **$31.4 million** for Q2 2025 from the change in fair value of contingent acquisition liabilities, driven by an increase in the company's stock price during the quarter[260](index=260&type=chunk) [Liquidity and Capital Resources](index=63&type=section&id=Liquidity%20and%20Capital%20Resources) - As of June 30, 2025, the company had **$230.3 million** in unrestricted cash and cash equivalents, which management believes is sufficient to fund operations for at least the next twelve months[272](index=272&type=chunk) - The company utilizes an "at-the-market" (ATM) equity program to raise capital, raising **$7.9 million** in gross proceeds during Q2 2025 under its Second Equity Distribution Agreement, with a remaining capacity to sell up to an additional **$174.4 million** of common stock as of June 30, 2025[274](index=274&type=chunk) - Subsequent to the quarter end, during July and August 2025, the company sold an additional **6.1 million shares** for **$82.2 million** in gross proceeds under the ATM program[275](index=275&type=chunk) Cash Flow Summary for Six Months Ended June 30 (in thousands) | Cash Flow Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(43,682) | $(40,440) | | Net cash used in investing activities | $(354) | $(4,788) | | Net cash provided by financing activities | $76,606 | $137,030 | [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=68&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section addresses the company's exposure to market risks, primarily foreign exchange risk, which is not currently considered material to operating results - The company is subject to foreign exchange risk but does not believe a **10%** change in the U.S. dollar's value relative to other currencies would have a material effect on its operating results[310](index=310&type=chunk) [Item 4. Controls and Procedures](index=68&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were ineffective as of June 30, 2025, due to material weaknesses in internal control over financial reporting, with a remediation plan underway - Management concluded that disclosure controls and procedures were not effective as of June 30, 2025, due to identified material weaknesses in internal control over financial reporting[312](index=312&type=chunk) - Material weaknesses identified include a lack of sufficient oversight and experience in the control environment, ineffective controls for identifying and accounting for non-routine or complex transactions, ineffective controls to ensure proper segregation of duties, and deficiencies in IT general controls, including user access and change management[313](index=313&type=chunk)[315](index=315&type=chunk) - The company is actively working on a remediation plan, completing actions in Q2 2025 such as updating risk assessments, designing new controls for key business processes, and enhancing IT controls; however, material weaknesses will not be considered fully remediated until new controls have operated effectively for a sufficient period[316](index=316&type=chunk)[317](index=317&type=chunk) [PART II. OTHER INFORMATION](index=71&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=71&type=section&id=Item%201.%20Legal%20Proceedings) This section refers to Note 7 of the financial statements for details on ongoing legal proceedings, including patent infringement, securities class action, and shareholder derivative lawsuits - For details on legal proceedings, the report refers to Note 7 of the Notes to Condensed Consolidated Financial Statements[321](index=321&type=chunk) [Item 1A. Risk Factors](index=71&type=section&id=Item%201A.%20Risk%20Factors) This section notes no material changes to risk factors from the Annual Report on Form 10-K, except for a new risk concerning potential changes in U.S. tax laws - A new risk factor has been added concerning changes to U.S. tax laws, specifically the enactment of the "One Big Beautiful Bill Act" on July 4, 2025; the company is currently evaluating the impact but does not expect a significant change to its tax expense in the near term due to its taxable loss position[323](index=323&type=chunk) [Item 5. Other Information](index=71&type=section&id=Item%205.%20Other%20Information) This section discloses information on insider trading arrangements, noting the CEO's adoption of a new Rule 10b5-1 trading plan during the quarter - On May 16, 2025, CEO Dr. Keyvan Mohajer adopted a new Rule 10b5-1 trading plan, effective until November 30, 2025, for the potential sale of up to **2,400,000 shares** of Class B common stock and **728,124 shares** of Class A common stock[327](index=327&type=chunk)
SoundHound AI Reports Strongest Ever Quarter, Should You Buy?
ZACKS· 2025-08-11 20:01
Company Overview - SoundHound AI, Inc. (SOUN) has experienced a 31.7% decline in shares this year, primarily due to competition from Chinese AI company DeepSeek and NVIDIA's expansion plans in the agentic AI space [1] - Despite the decline, shares surged 26.4% after the company reported record second-quarter revenues that exceeded Wall Street expectations [2] Financial Performance - In Q2, SoundHound AI's revenues increased by 217% year over year to $42.68 million, surpassing Wall Street's estimate of approximately $32.9 million [3][10] - The company reduced its loss to 3 cents per share from 4 cents the previous year, while Wall Street analysts had anticipated an adjusted loss of 5 cents per share [3] Strategic Developments - CEO Keyvan Mohajer described Q2 as the "strongest ever quarter" for SoundHound AI, attributing growth to earlier strategic decisions and strong performance across all business divisions, particularly in the automotive sector [4] - The automotive division is set to integrate its voice assistant into a major OEM, targeting both Chinese and global markets [4] Outlook and Market Potential - The company raised its full-year revenue outlook to between $160 million and $178 million, up from a previous forecast of $157 million to $177 million, driven by new customer acquisitions, especially in China [5][10] - The global market for AI-powered voice-recognition systems is projected to grow from $8.6 billion in 2025 to $15.9 billion by 2030, presenting significant growth opportunities for SoundHound AI [6] Business Model and Customer Acquisition - SoundHound AI operates a successful business model based on monthly subscription services, consistently acquiring new customers, which leads to ongoing revenue and reliable cash inflows [7] - Notable clients include restaurants like Casey's General Stores and Chipotle, which are implementing voice automation to meet rising customer demand [7] Investment Sentiment - Brokers are optimistic about SoundHound AI's prospects, with an average short-term price target of $11.50, indicating a 7.3% increase from the last closing price of $10.72, and a highest target of $18, suggesting a potential upside of 67.9% [9]