SoundHound AI Inc., a company known for its conversational AI technology, recently experienced a decrease in its stock rally following the release of its earnings report. Despite delivering an optimistic outlook for fiscal 2025, the company fell short of expectations with its latest results, leading to a decline in its stock value.
Although SoundHound’s top-line revenue reached a record high of $17.1 million, representing an 80% increase from the previous year, it still fell short of the consensus view of $17.7 million for the fiscal fourth quarter. Furthermore, the company reported a loss of $18.0 million, or 7 cents a share, indicating that it lost more money than it made. However, these losses did show improvement compared to the previous year.
On an adjusted basis, SoundHound reported a loss of $3.7 million in terms of earnings before interest, taxes, depreciation, and amortization (EBITDA). This was a significant improvement from the $18.8 million loss recorded in the previous year. However, the FactSet consensus had estimated a loss of less than $1 million. Despite these setbacks, SoundHound’s CEO, Keyvan Mohajer, expressed confidence in the company’s ability to deliver real commercial value and highlighted their pace and agility in the AI revolution.
Looking ahead, SoundHound expects to generate revenue between $63 million and $77 million in fiscal 2024, aligning with the consensus view. The company anticipates even stronger growth in fiscal 2025, with revenue exceeding $100 million. Additionally, they expect to achieve positive adjusted EBITDA by that time.
SoundHound’s stock had experienced significant growth over the past month, surging more than 300%. This newfound awareness may be attributed to Nvidia Corp.’s disclosure of its position in the company when it filed a 13-F in mid-February.
Overall, while SoundHound’s latest earnings report may have disappointed some investors, the company remains optimistic about its future prospects. With its conversational AI technology and expectations of accelerated growth, SoundHound aims to solidify its position in the artificial intelligence market. However, it will need to address the concerns raised by its recent financial performance in order to regain investor confidence and sustain its stock rally.
