SoundHound AI (SOUN), a prominent provider of artificial intelligence (AI) voice solutions, experienced a significant surge in its stock price—a remarkable 17.5% increase—following the release of its fourth-quarter financial results. The earnings report, coupled with an announcement of raised guidance for 2025, surpassed market expectations, showcasing a strong performance by the company.
The company reported an adjusted loss of $0.05 per share on sales of $34.5 million. Notably, SoundHound’s revenue witnessed a remarkable 100% year-over-year increase, signaling substantial growth. Moreover, the recently released 2025 revenue guidance projects a potential doubling of sales compared to 2024. CEO Keyvan Mohajer addressed investor concerns regarding Nvidia’s recent divestment from SoundHound, suggesting that the subsequent sell-off, which caused the stock to decline by over 45%, was an overreaction.
Significant Revenue Growth
SoundHound specializes in conversational intelligence, providing voice AI solutions tailored for businesses across diverse sectors, including automotive, TV, and IoT. Its proprietary technology enables high-speed and accurate conversational experiences in multiple languages, processing billions of interactions annually for major companies worldwide. The company’s impressive financial results for the fourth quarter and the entire year underscore its robust performance.
In Q4, SoundHound reported a notable year-over-year revenue increase, reaching $34.5 million. The GAAP gross margin was 39.9%, while the adjusted EBITDA for the quarter reflected a loss of $16.8 million. For the full year, revenue surged 85% year-over-year, totaling $84.7 million. The GAAP gross margin for the year was higher at 48.9%, with an adjusted EBITDA loss of $61.9 million. It’s worth noting that due to the increase in SoundHound’s year-end stock price, the fair value of contingent liabilities increased, which had a significant impact on both fourth-quarter and full-year GAAP net loss and EPS values.
Despite financial setbacks, SoundHound remains optimistic about the future, raising its full-year 2025 revenue outlook to a range of $157 to $177 million.
Analyst Response is Mixed
Analysts following SoundHound AI have offered a mixed response to the recent earnings report. DA Davidson’s Gil Luria expressed a bullish outlook on the company. He maintained a Buy rating on the stock and increased the price target for SoundHound shares to $13 (from $9.50). Luria highlighted the firm’s strong financial performance at the end of 2024, with revenue growth surpassing expectations. The analyst noted the high demand for the company’s solutions and the expansion of its business into sectors such as finance, healthcare, and energy. Furthermore, the acquisition of Amelia has improved SoundHound’s total addressable market and added diversity to its portfolio, according to the analyst’s note.
Based on the recent recommendations of five analysts, SoundHound AI has a Moderate Buy rating overall. The average price target for SOUN stock is $15.80, indicating a potential upside of 46.03% from current levels.
