SoundHound AI Surpasses Major Competitors with Robust Revenue Growth
SoundHound AI Inc.‘s SOUN speech recognition technology demonstrated superior capabilities compared to Google and OpenAI in the fourth quarter, according to CEO Keyvan Mohajer. Additionally, the company announced a significant seven-figure deal while exceeding analyst revenue expectations for the period.
Key Achievements in Speech Recognition
During the fourth quarter, SoundHound’s advanced multimodal and multilingual model, named Polaris, was said to outperform offerings from Alphabet Inc.’s GOOG GOOGL and OpenAI, which is supported by Microsoft Corp. MSFT.
Mohajer emphasized during the earnings call that Polaris underwent testing under diverse real-world conditions, evaluating performance in noisy environments with varying human speech patterns, including different accents. “We outperformed Google’s models by over 20% in accuracy and achieved four times better latency,” he stated. In comparison to OpenAI’s Whisper model, Polaris attained 26% to 36% greater accuracy across various benchmarks. Notably, all this was accomplished using models one-tenth the size of OpenAI’s offerings.
New Deals and Financial Performance
In the earnings overview, Mohajer noted, “Our largest deal in Q4 was within the energy sector.” While the details remain limited, the company confirmed this deal is valued in the seven figures and spans multiple years.
SoundHound outperformed analyst projections with fourth-quarter revenues reaching $34.54 million, reflecting a 101% increase year-over-year. Although the company reported a loss of five cents per share, it also noted an adjusted EBITDA loss of $16.8 million, concluding the quarter with $198 million in cash.
Looking ahead, SoundHound raised its revenue guidance for 2025 to a range of $157 million to $177 million, slightly increasing from an earlier estimate of $155 million to $175 million.
CFO Nitesh Sharan explained, “Revenue is expected to ramp up throughout the year due to our customer base’s nature, underlying seasonality, and the timing of significant deals.” He reiterated the company’s commitment to achieving profitability through strategic scaling and ROI-focused investments.
Market Reaction and Future Outlook
Price Action: Following these developments, SoundHound’s stock declined by 3.76% on Thursday but rebounded with an 8.9% increase in after-hours trading. This contrasts with a 2.66% decline seen in the Fidelity NASDAQ Composite Index ETF ONEQ, which tracks the Nasdaq Composite.
Year-to-date, the stock remains down 54.32%, although it has appreciated 45.27% over the past year. Analysts following SoundHound have set an average price target of $12.36, which indicates a “hold” rating. Projections for the stock vary widely, ranging from $7 to $26, with recent assessments from Northland Capital Markets and HC Wainwright averaging $20, suggesting a considerable potential upside of 99.40%.
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