SoundHound AI Inc, an innovator of conversational intelligence, offering an independent Voice AI platform that enables businesses across industries to deliver high-quality conversational experiences to customers, reported its financial results for the second quarter of 2024.
Performance Overview
SoundHound AI Inc (SOUN, Financial) reported a revenue of $13.5 million for Q2 2024, marking a 54% increase year-over-year and surpassing the analyst estimate of $10.10 million. However, the company posted a GAAP earnings per share (EPS) loss of ($0.11), missing the analyst estimate of ($0.09). The non-GAAP EPS was a loss of ($0.04).
Key Financial Metrics
| Metric | Q2 2024 | Q2 2023 | Change |
|---|---|---|---|
| Revenue | $13.5 million | $8.75 million | 54% |
| GAAP Gross Margin | 63% | 79.1% | -16.1 pp |
| Non-GAAP Gross Margin | 67% | 80% | -13.5 pp |
| GAAP Net Loss | ($37.3 million) | ($23.3 million) | 60% |
| Non-GAAP Net Loss | ($14.8 million) | ($16.1 million) | -8% |
Strategic Acquisitions and Business Highlights
SoundHound AI Inc (SOUN, Financial) announced the acquisition of Amelia, an enterprise conversational AI leader, to expand into new verticals such as finance, insurance, and healthcare. This acquisition is expected to significantly enhance SoundHound's market reach and capabilities.
Other notable business highlights include:
- Signing a major pizza chain to introduce AI phone ordering services across thousands of stores.
- Rolling out voice AI ordering systems to all corporate locations of Beef ‘O’ Brady’s.
- Launching Dynamic Interaction, a next-generation drive-thru AI interface, with multiple top global QSR brands.
- Expanding automotive partnerships with brands like Peugeot, Vauxhall, and Alfa Romeo.
Financial Achievements and Challenges
SoundHound AI Inc (SOUN, Financial) reported a strong cash balance of $201 million at the end of Q2 2024, reflecting a robust liquidity position. The company prepaid $100 million in debt, saving over $55 million in interest and fees over the remaining life of the loan.
However, the company faced challenges with a GAAP net loss of ($37.3 million), a 60% increase from the previous year. The GAAP gross margin also declined to 63% from 79.1% in Q2 2023, indicating increased costs.
Commentary
"This has been a milestone quarter, with strong customer momentum across all of our key industries – including several new global brands," said Keyvan Mohajer, CEO and Co-Founder of SoundHound AI. "And today we announced a significant acquisition that will expand SoundHound’s reach across multiple new enterprise verticals. We believe the demand for voice and conversational AI is increasing and are committed to strengthening our leadership position in this growing market."
"We continued to realize strong growth in the second quarter while meaningfully improving our capital structure," said Nitesh Sharan, CFO of SoundHound AI. "This is allowing us to further accelerate our organic business while capitalizing on high-impact M&A. Today’s acquisition of Amelia is a key step towards harnessing the huge growth potential in conversational AI and helps us scale even faster."
Analysis
SoundHound AI Inc (SOUN, Financial)'s strong revenue growth and strategic acquisitions position the company well in the competitive conversational AI market. The significant increase in revenue and customer base highlights the growing demand for voice AI solutions. However, the increased net loss and declining gross margins indicate that the company needs to manage its costs more effectively to achieve sustainable profitability.
Overall, SoundHound AI Inc (SOUN, Financial) is making significant strides in expanding its market presence and enhancing its product offerings, which could lead to long-term growth and value creation for investors.
Explore the complete 8-K earnings release (here) from SoundHound AI Inc for further details.
