SoundHound AI, Inc Class A ((SOUN)) has held its Q4 earnings call. Read on for the main highlights of the call.
SoundHound AI, Inc. recently held its earnings call, revealing a generally positive sentiment despite some financial challenges. The company reported significant revenue growth and a strong presence in key markets such as automotive and healthcare. Strategic advancements, including the launch of a voice commerce ecosystem, were also highlighted. However, the call acknowledged challenges with declining gross margins and increased operating expenses, resulting in an adjusted EBITDA loss. Nevertheless, the company’s robust revenue growth and strategic positioning in the AI market suggest a positive outlook.
Record Revenue Growth
SoundHound reported an impressive $35 million in revenue for Q4 2024, marking an increase of over 100% year-over-year. This achievement reached the top-end of their revenue guidance range for the full year, demonstrating the company’s strong financial performance and growth trajectory.
Expansion in Automotive and Healthcare
The company has made significant strides in the automotive and healthcare sectors. SoundHound’s automotive pipeline is stronger than ever, with the addition of four electric vehicle brands, including Lucid and Togg. In healthcare, SoundHound secured partnerships with Duke Health, Englewood Health, and Wellstar Health System, further solidifying its presence in these key markets.
Launch of Voice Commerce Ecosystem
SoundHound unveiled its voice commerce ecosystem, integrating its voice assistant with AI customer service. This strategic move has already garnered interest from major automakers and national chain restaurants, positioning the company as a leader in voice AI technology.
Strong Presence and Partnerships
SoundHound showcased its leadership in voice AI at CES, highlighting collaborations with industry giants like NVIDIA, Lucid Motors, and LG. These partnerships underscore the company’s strong market presence and its commitment to innovation.
Significant Backlog and Financial Health
The company reported a substantial backlog of nearly $1.2 billion in cumulative subscriptions and bookings, up over 75% year-over-year. With a strong cash position of $198 million and no debt, SoundHound is well-positioned for future growth.
Gross Margin Decline
Despite the positive revenue growth, SoundHound experienced a decline in gross margins. The GAAP gross margin was 40%, down year-over-year due to the business and product mix of recent acquisitions. The non-GAAP gross margin also saw a sequential decline to 52%.
Increased Operating Expenses
Operating expenses rose significantly, with R&D expenses increasing by 60% year-over-year to $20.4 million and sales and marketing expenses rising by 114% to $9.6 million. These increases were primarily driven by strategic acquisitions.
Adjusted EBITDA Loss
SoundHound reported an adjusted EBITDA loss of $16.8 million in Q4, attributed to strategic acquisitions and growth investments. This reflects the company’s commitment to expanding its market presence and technological capabilities.
Forward-Looking Guidance
SoundHound provided optimistic forward-looking guidance during the earnings call. The company achieved the top-end of its full-year revenue guidance at $85 million, reflecting an 85% annual increase. For 2025, SoundHound raised its revenue outlook to $157 million to $177 million, with expectations to achieve adjusted EBITDA profitability by the end of 2025. This positive outlook is supported by a strong pipeline, increased SaaS-like revenue, and strategic investments across various sectors.
In summary, SoundHound AI, Inc.’s earnings call conveyed a positive sentiment, underscored by significant revenue growth and strategic advancements. Despite challenges with gross margins and operating expenses, the company’s strong market presence and forward-looking guidance suggest a promising future. Investors and stakeholders can look forward to continued growth and innovation from SoundHound in the coming years.