SoundHound AI Reports Mixed Q1 2025 Results: Stock Falls 7.8%
SoundHound AI (NASDAQ: SOUN) experienced a significant decline of 7.8% on Friday, following the company’s release of its Q1 2025 report. The revenue numbers missed Wall Street’s expectations, contributing to the stock’s fall, although its bottom-line results aligned with analyst consensus estimates.
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Image source: SoundHound AI.
Financial Overview: SoundHound AI’s Key Numbers
| Metric | Q1 2024 | Q1 2025 | Change |
|---|---|---|---|
| Revenue | $11.6 million | $29.1 million | 151% |
| GAAP operating income | ($28.5 million) | $128.1 million | Flipped from negative to positive |
| GAAP net income | ($33 million) | $129.9 million | Flipped from negative to positive |
| Adjusted net income | ($20.2 million) | ($22.3 million) | Loss widened by 10% |
| GAAP earnings per share (EPS) | ($0.12) | $0.31 | Flipped from negative to positive |
| Adjusted EPS | ($0.07) | ($0.06) | Loss narrowed by 14% |
Investors should focus on the adjusted numbers, which exclude one-time items. Q1 2025 GAAP numbers include an accounting-only (non-cash) gain related to acquisitions. Data source: SoundHound AI. GAAP = generally accepted accounting principles.
Over the past year, SoundHound AI’s acquisitions have contributed to revenue growth. However, the extent of organic revenue growth remains unclear. Positively, these acquisitions have diversified its customer base, with no single customer contributing over 10% of revenue in the quarter.
While Wall Street anticipated an adjusted loss of $0.06 per share on revenue of $30.4 million, SoundHound met expectations for earnings per share but fell short on revenue.
During Q1 2025, the company used $19.2 million in cash operations, an improvement from the negative cash flow of $21.9 million in the previous year. The free cash flow also improved, standing at negative $19.3 million compared to negative $25.7 million last year. SoundHound ended the quarter with $246 million in cash and no long-term debt, which suggests its current cash could last approximately 12.7 quarters, or just over three years.
Insights from the CEO
CEO Keyvan Mohajer shared insights in the earnings statement:
SoundHound continues to extend its reach and create new possibilities for real-world AI applications. The release of our complete AI agent platform delivers full, voice-enabled Agentic AI for customers across all industries. At the same time, our bold growth initiatives are paying dividends, and we’re realizing significant cross-sell and upsell opportunities following our acquisitions.
SoundHound AI’s Guidance for 2025
During the earnings call, CFO Nitesh Sharan reaffirmed the company’s previous guidance:
- For full-year 2025, revenue is expected to be between $157 million and $177 million, reflecting annual growth of 85% to 90%. This growth will be significantly bolstered by the $80 million Amelia acquisition.
- By year-end 2025, SoundHound anticipates achieving positive adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization).
Outlook: A Stock to Watch, Not to Buy
While SoundHound AI warrants attention due to the expanding voice AI market, its stock has attracted excessive hype recently. Despite the strong growth potential, skepticism remains regarding its long-term position in the AI-powered voice technology sector.
Though there are promising aspects, such as the company’s strong cash position, concerns persist. One major issue revolves around the reliance on acquisitions for growth, which may hinder insight into its core performance and organic growth rates. Furthermore, the lag in profitability raises questions. Initially, the company had aimed for positive adjusted EBITDA by Q4 2023, but it has yet to achieve that milestone, pushing the expectation to 2025.
Additionally, emerging competition in the conversational AI space complicates the landscape for SoundHound. Ongoing scrutiny of profitability and performance metrics will be crucial as the company moves forward.
# SoundHound AI: Navigating a Competitive Landscape in Voice Technology
Competition in the automotive voice AI market is intensifying. Major players include tech giants with substantial financial resources. Observers are left to question whether SoundHound can leverage its competitive advantages to scale revenue effectively and achieve significant profitability.
Competitors to Watch: Cerence and SoundHound AI
Alongside leading tech firms, investors should also keep an eye on Cerence (NASDAQ: CRNC). This company, which spun off from Nuance Communications in October 2019, offers a promising alternative in the voice AI sector. Nuance was subsequently acquired by Microsoft. Although Cerence has faced execution challenges, the recent appointment of Brian Krzanich, former CEO of Intel, as its leader may indicate a shift towards improved performance.
Maintaining an open-minded perspective on SoundHound AI could benefit investors as they assess its potential in this competitive arena.
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Beth McKenna does not hold any positions in the stocks mentioned. The Motley Fool holds positions in and recommends Intel and Microsoft as well as Cerence. They also issue options such as long January 2026 $395 calls on Microsoft, short January 2026 $405 calls on Microsoft, and short May 2025 $30 calls on Intel. The Motley Fool maintains a disclosure policy.
The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.
