SoundHound AI Reports Strong Q3 2024 Growth and Raises Guidance
SoundHound AI SOUN announced a loss of 6 cents per share for the third quarter of 2024, which is an improvement from a loss of 9 cents per share in the same period last year. This result exceeded the Zacks Consensus Estimate by 25%.
In this quarter, revenues surged 89% year over year to $25.1 million, surpassing the Zacks Consensus Estimate by 5.96%. This impressive growth was fueled by the expansion of its Generative AI capabilities and robust demand in sectors like automotive and restaurants.
During Q3 2024, SOUN completed the acquisition of Amelia, a leader in enterprise conversational AI. This move significantly broadens its presence into new sectors, including finance, insurance, and healthcare.
The company’s customer concentration also showed improvement, with only 12% of revenues coming from the largest customer, a stark decrease from 72% a year ago, indicating a more balanced client portfolio.
Price and Performance Overview
SoundHound AI, Inc. price-consensus-eps-surprise-chart | SoundHound AI, Inc. Quote
Following its strong third-quarter performance, SOUN raised its revenue guidance for 2024 and 2025, which is encouraging for investors. Year to date, SOUN shares have soared by 256.6%, significantly outperforming the Zacks Computer & Technology sector, which has returned 29.5%.
Financial Overview of SOUN’s Operations
In the third quarter of 2024, operating expenses climbed to $58.8 million, compared to $27.7 million in the previous year, mainly driven by acquisition impacts.
General and Administrative expenses reached $17 million, accounting for 67.9% of total revenues, and marked a 146% increase from last year.
Research and Development expenses were $19.5 million (77.9% of total revenues), reflecting a 53% rise year over year.
Sales and Marketing expenses amounted to $8.4 million (33.3% of total revenues), representing an 87% increase compared to the prior year.
Adjusted EBITDA loss expanded to $15.9 million, a worsening from last year’s loss of $7.3 million.
The operating loss for the quarter stood at $33.7 million, compared to $14.5 million from the same quarter last year.
Balance Sheet Assessment
As of September 30, 2024, cash and cash equivalents totaled $136 million, down from $201 million as of June 30, 2024.
Long-term debt was reported at $39 million, a stark contrast to having no debt in the previous quarter.
Updated Guidance for 2024
SoundHound now projects full-year 2024 revenues to be between $82 million and $85 million.
Looking ahead, for 2025, the expected revenue range is between $155 million and $175 million.
Investment Insights: SOUN’s Market Position
Currently, SoundHound AI is ranked #3 (Hold) by Zacks.
Adobe ADBE, BiliBili BILI, and NVIDIA NVDA are among the higher-ranked stocks in the sector to consider, each with a Zacks Rank #2 (Buy). For a complete view of today’s Zacks #1 Rank (Strong Buy) stocks, click here.
Adobe shares have declined by 11.7% year to date and is set to release its fourth-quarter 2024 results on December 11.
Bilibili shares have risen by 73.3% year to date, with its third-quarter 2024 results scheduled for November 14.
NVIDIA shares have gained an astonishing 199.5% year to date and will announce its third-quarter fiscal 2025 results on November 20.
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