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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 Q2 Earnings Beat as AI Demand Fuels 217% Sales Growth
ZACKS· 2025-08-08 14:51
Core Insights - SoundHound AI, Inc. (SOUN) achieved record second-quarter 2025 results, exceeding Wall Street expectations on both revenue and earnings [1][8] - The company's strategic investments, particularly its 2024 acquisitions, have led to significant growth and operational improvements [1][2] Revenue and Earnings - SoundHound reported revenues of $42.7 million, representing a 217% year-over-year increase, surpassing the Zacks Consensus Estimate of $33 million [3][8] - The company recorded a non-GAAP net loss of 3 cents per share, which is narrower than the expected 6-cent loss [3] Margins and Profitability - GAAP gross margin was 39%, down from 63% a year ago, while non-GAAP gross margin was 58.4%, reflecting improvements in cost synergies and product mix [4] - Adjusted EBITDA loss was $14.3 million, with an adjusted EBITDA margin of negative 33% [4] Business Highlights - Enterprise AI saw its highest number of monthly go-lives, driven by the Amelia 7 agentic AI platform [5] - Restaurant AI deployments expanded to over 14,000 locations, with more than 1,000 added in the quarter [5] - Automotive growth was supported by a major OEM win in China and increased average selling prices from Generative AI integration [5] Balance Sheet & Liquidity - At the end of the second quarter, SoundHound had $230 million in cash and equivalents, with no long-term debt, indicating strong liquidity for strategic initiatives [6] Guidance & Outlook - Management raised its 2025 revenue outlook to between $160 million and $178 million, citing strong close rates and expanding AI adoption [7][8] - The company anticipates adjusted EBITDA profitability by year-end 2025, supported by ongoing cost synergies and scaling Voice Commerce opportunities [7]
SoundHound AI Stock Has Plummeted by 53%. This Move by Nvidia Is a Key Reason Why.
The Motley Fool· 2025-07-04 08:57
Core Insights - SoundHound AI specializes in conversational AI software, attracting major brands and investment from Nvidia [1][2] - Nvidia's divestment from SoundHound AI led to a significant drop in the latter's stock value, losing 53% from its peak [3] - SoundHound AI's revenue is growing rapidly, with a 151% increase year-over-year in Q1 2025, but it faces cash burn issues [9][11] Company Overview - SoundHound AI's software is designed for hands-free use, making it suitable for various industries, including quick-service restaurants and automotive [5][6][7] - Major clients include Chipotle, Krispy Kreme, Hyundai, Honda, and Kia, utilizing SoundHound's technology for customer service and in-car features [6][7] Financial Performance - The company reported $29.1 million in revenue for Q1 2025, projecting $167 million for the full year, a 97% increase from 2024 [9][10] - Despite revenue growth, SoundHound reported a non-GAAP loss of $22.3 million in Q1 2025, raising concerns about its financial sustainability [11][12] Market Position and Valuation - SoundHound's stock trades at a high price-to-sales ratio of 39.3, significantly above Nvidia's ratio of 26.1, raising questions about its valuation [13][15] - Nvidia's decision to sell its stake in SoundHound may reflect concerns over the latter's high valuation and ongoing losses [3][16]
Did Nvidia Make a Colossal Mistake by Selling SoundHound AI Stock?
The Motley Fool· 2025-05-16 08:28
Group 1: Nvidia's Market Impact - Nvidia added $2.8 trillion to its market capitalization since the start of 2023 due to soaring demand for its data center chips for AI development [1] - Nvidia sold its entire stake in SoundHound AI toward the end of last year, as noted in its 13-F filing with the SEC [2][17] Group 2: SoundHound's Business and Technology - SoundHound specializes in conversational AI and has a strong customer base across various industries, including hospitality and automotive [2][5] - SoundHound's technology is deployed in approximately 13,000 quick-service restaurants, enabling autonomous order taking and employee assistance [6] - In the automotive sector, SoundHound's Chat AI is utilized by major brands like Hyundai and Kia, and it recently launched a Voice Commerce platform [7] Group 3: Financial Performance - SoundHound reported $29.1 million in total revenue for Q1 2025, a 151% increase year-over-year, boosted by the acquisition of Amelia [9] - The company has a growing order backlog, which was $1.2 billion three months prior, and expects to convert this backlog into revenue over six years [10] - SoundHound reaffirmed its full-year guidance for 2025, projecting a 97% year-over-year revenue increase to $167 million [11] Group 4: Valuation and Risks - SoundHound's current price-to-sales (P/S) ratio is 40.8, significantly higher than Nvidia's, raising concerns about its valuation [12] - When considering future revenue potential, SoundHound's forward P/S ratio is 27.1, still higher than Nvidia's [14] - Despite reporting a profit of $129 million in Q1, this was largely due to a one-time benefit, and on a non-GAAP basis, the company lost $22.3 million [15] - SoundHound had $246 million in cash at the end of the quarter, allowing it to sustain losses for a couple of years, but future cash needs could lead to stock dilution [16]