Voice AI recognition company SoundHound (NASDAQ:SOUN) announced better-than-expected revenue in Q4 CY2024, with sales up 101% year on year to $34.54 million. Its GAAP loss of $0.69 per share was significantly below analysts’ consensus estimates.
Is now the time to buy SoundHound AI? Find out by accessing our full research report, it’s free.
SoundHound AI (SOUN) Q4 CY2024 Highlights:
- Revenue: $34.54 million vs analyst estimates of $33.76 million (101% year-on-year growth, 2.3% beat)
- EPS (GAAP): -$0.69 vs analyst estimates of -$0.10 (miss due to a $221 million non-recurring charge)
- Adjusted EBITDA: -$239.3 million vs analyst estimates of -$17.88 million (-693% margin due to a $221 million non-recurring charge, 1,239% miss)
- Operating Margin: -744%, down from -72.3% in the same quarter last year due to a $221 million non-recurring charge
- Free Cash Flow was -$33.2 million compared to -$35.54 million in the previous quarter
- Market Capitalization: $3.54 billion
Company Overview
Founded in 2005, SoundHound AI (NASDAQ:SOUN) develops independent voice artificial intelligence solutions that enable businesses across various industries to offer customized conversational experiences to consumers.
Automation Software
The whole purpose of software is to automate tasks to increase productivity. Today, innovative new software techniques, often involving AI and machine learning, are finally allowing automation that has graduated from simple one- or two-step workflows to more complex processes integral to enterprises. The result is surging demand for modern automation software.
Sales Growth
A company’s long-term performance is an indicator of its overall quality. While any business can experience short-term success, top-performing ones enjoy sustained growth for years. Thankfully, SoundHound AI’s 58.7% annualized revenue growth over the last three years was incredible. Its growth beat the average software company and shows its offerings resonate with customers.
This quarter, SoundHound AI reported magnificent year-on-year revenue growth of 101%, and its $34.54 million of revenue beat Wall Street’s estimates by 2.3%.
Looking ahead, sell-side analysts expect revenue to grow 93.9% over the next 12 months, an acceleration versus the last three years. This projection is eye-popping and suggests its newer products and services will fuel better top-line performance.
Today’s young investors won’t have read the timeless lessons in Gorilla Game: Picking Winners In High Technology because it was written more than 20 years ago when Microsoft and Apple were first establishing their supremacy. But if we apply the same principles, then enterprise software stocks leveraging their own generative AI capabilities may well be the Gorillas of the future. So, in that spirit, we are excited to present our Special Free Report on a profitable, fast-growing enterprise software stock that is already riding the automation wave and looking to catch the generative AI next.
Customer Acquisition Efficiency
The customer acquisition cost (CAC) payback period represents the months required to recover the cost of acquiring a new customer. Essentially, it’s the break-even point for sales and marketing investments. A shorter CAC payback period is ideal, as it implies better returns on investment and business scalability.
SoundHound AI is extremely efficient at acquiring new customers, and its CAC payback period checked in at 4.9 months this quarter. The company’s rapid recovery of its customer acquisition costs indicates it has a highly differentiated product offering and a strong brand reputation. These dynamics give SoundHound AI more resources to pursue new product initiatives while maintaining the flexibility to increase its sales and marketing investments.
Key Takeaways from SoundHound AI’s Q4 Results
It was encouraging to see SoundHound AI beat analysts’ revenue expectations this quarter. The profitability miss was due to a $221 million non-recurring charge. Given the recent sharp declines in the stock, expectations were likely low, and the stock traded up 11.5% to $10.27 immediately following the results.
So do we think SoundHound AI is an attractive buy at the current price? If you’re making that decision, you should consider the bigger picture of valuation, business qualities, as well as the latest earnings. We cover that in our actionable full research report which you can read here, it’s free.
