SoundHound’s monster stock rally cools after earnings

SoundHound AI Inc. had its first big moment in the spotlight Thursday since emerging into broader consciousness as an artificial-intelligence play, but its buzzy stock was taking a tumble.

Shares of SoundHound
SOUN,
-6.79%
fell 21% in Thursday’s after-hours action after the company delivered an upbeat outlook for fiscal 2025, which is a year out, but fell short of expectations with its latest results.

The company, which offers conversational AI technology, isn’t highly covered on Wall Street, and just six analysts have revenue estimates for the company. Still, SoundHound’s “record” top-line revenue of $17.1 million, up 80% from a year before, trailed the $17.7 million consensus view for the fiscal fourth quarter.

SoundHound lost more money than it made, racking up a loss of $18.0 million, or 7 cents a share. Losses improved from the year-earlier quarter, when SoundHound posted a net loss of $30.9 million, or 15 cents a share.

The company reported a $3.7 million loss on the basis of adjusted earnings before interest, taxes, depreciation and amortization (Ebitda), whereas it lost $18.8 million on the metric a year prior. The FactSet consensus was for a loss less than $1 million.

“Our pace and agility amid this AI revolution has put us ahead of the field when it comes to delivering real commercial value,” Chief Executive Keyvan Mohajer said in a release.

SoundHound expects $63 million to $77 million in fiscal 2024 revenue, matching the consensus view at the midpoint. The company anticipates fiscal 2025 revenue will exceed $100 million, upon accelerating growth. The company also expects to record positive adjusted Ebitda then.

Analysts tracked by FactSet were modeling about $100 million in revenue for fiscal 2025, along with an adjusted Ebitda loss of about $1 million.

SoundHound’s stock has exploded more than 300% higher over the past month, seemingly picking up new awareness after Nvidia Corp.
NVDA,
+3.60%
disclosed a position in the company when it filed a 13-F in mid-February.

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