SoundHound AI (SOUN), a leading provider of artificial intelligence (AI) voice solutions, reported financial results for the fourth quarter that catalyzed a 17.5% jump in the share price. The reported adjusted loss of $0.05 per share on sales of $34.5 million and an announcement of a raised guidance for 2025 exceeded expectations. SoundHound’s recent earnings report shows an impressive 100% increase in revenue year-over-year, and the new 2025 revenue guidance predicts a possible doubling of sales from 2024. CEO Keyvan Mohajer has addressed investor concerns over Nvidia’s recent divestment from SoundHound, suggesting that the resulting sell-off pushing the stock down over 45% was an overreaction.
Significant Revenue Growth
SoundHound is a provider of voice AI solutions specializing in conversational intelligence. Its proprietary technology allows businesses in various industries, including automotive, TV, and IoT, to deliver high-speed, accurate conversational experiences in multiple languages. It processes billions of interactions annually for prominent businesses worldwide.
SoundHound reported strong financial results for the fourth quarter and the entire year. In Q4, the company saw a significant increase in revenue year-over-year, reaching $34.5 million. The GAAP gross margin was 39.9%, with the adjusted EBITDA for the quarter a loss of $16.8 million.
Full-year revenue surged 85% year-over-year, coming in at $84.7 million. The GAAP gross margin was higher for the whole year at 48.9%, while the adjusted EBITDA for the year marked a loss of $61.9 million. It is worth noting that an increase in SoundHound’s year-end stock price led to a rise in the fair value of contingent liabilities, significantly impacting both fourth-quarter and full-year GAAP net loss and EPS values.
Despite some financial setbacks, SoundHound is optimistic about the future, raising its full-year 2025 revenue outlook to $157 to $177 million.
Analyst Response is Mixed
Analysts following the company have had a mixed response to the recent earnings report. DA Davidson’s Gil Luria is among those whose response is bullish. He has maintained a Buy rating while increasing the price target of SoundHound’s shares to $13 (from $9.50).
Luria noted the firm’s strong financial performance towards the end of 2024, with revenue growth exceeding expectations. The company’s solutions are in high demand, leading to an expansion of their business to prominent sectors such as finance, healthcare, energy, and more. Additionally, their acquisition of Amelia has significantly increased SoundHound’s total addressable market and has brought diversity to their portfolio, according to the analyst’s note.
SoundHound AI is rated a Moderate Buy overall, based on the recent recommendations of five analysts. The average price target for SOUN stock is $15.80, which represents a potential upside of 46.03% from current levels.
