Things appear to be falling nicely into place for SoundHound AI (NASDAQ:SOUN) and we’re not just talking about the share price. Of course, it’s hard to ignore that the stock is still up 134% year-to-date, even after cooling off from earlier highs.
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There was plenty of other pleasing stuff in the voice recognition specialist’s recent Q2 earnings report. The readout showed that growing customer demand has resulted in a bookings backlog of $723 million, almost double that seen in the same period a year ago. Meanwhile, seeing the benefits of organic demand and the input provided by the SYNQ3 acquisition (which was completed in Q1), revenue climbed by 53.8% year-over-year to $13.5 million, just edging ahead of the Street’s forecast.
But it was another acquisition the company announced on the same day as the results that grabbed the headlines. SOUN said it is set to acquire Amelia, one of the world’s biggest privately held AI software firms – for $80 million in cash and equity.
The combination should result in 2025 revenue of more than $150 million, with Amelia bringing in over $45 million in recurring AI software revenue. The deal, says H.C. Wainwright analyst Scott Buck, means 2025 revenue will not only be 50% above his pre-acquisition forecast and but also allows SoundHound to “accelerate scaling of the business by entering new markets including financial services, healthcare, and retail.”
The focus on growth likely means the profitability timeline moves to 2026. “However,” Buck goes on to say, “given the potential market opportunities and strong balance sheet positioning, we view trading near term profitability for longer-term market share favorably.”
In line with the current guide, along with expecting improving adj. EBITDA losses through 2025, Buck’s model calls for significant revenue growth ahead; his new revenue estimate for 2024 is pushed to $83.9 million, up from the prior $71.0 million.
“Given improving operating performance and secular tailwinds in AI, we recommend investors continue to accumulate SOUN shares,” the analyst confidently summed up.
As such, Buck rates SOUN shares a Buy, while his $7 price target factors in 12-month upside of 41%. (To watch Buck’s track record, click here)
Similarly, the rest of the Street takes a bullish approach when it comes to SOUN. Given the 4 Buys and 1 Hold assigned in the last three months, the consensus comes in as a Strong Buy. On top of this, the $7.5 average price target indicates 51.5% upside potential. (See SOUN stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
