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The Zacks Consensus Estimate for revenues is pegged at $23.68 million, suggesting growth of 78.47% from the year-ago quarter’s reported figure.
The consensus mark for loss is pegged at 8 cents per share, unchanged over the past 60 days. SOUN reported a loss of 9 cents per share in the year-ago quarter.
SOUN’s earnings beat the Zacks Consensus Estimate in one of the trailing four quarters, missing it twice and meeting once, the negative surprise being 5%, on average.
Let’s see how things have shaped up prior to this announcement.
Key Factors to Note for SOUN’s Q3 Earnings
SOUN offers conversational intelligence through independent Voice AI solutions in 25 languages in cloud-enabled and hardware-embedded devices. It is likely to have benefited from the growing demand for its conversational AI platform, owing to the increasing popularity of Generative AI and large language models.
SoundHound AI is benefiting from a strong portfolio, a strong partner base and an expanding clientele. The demand for AI-driven customer service solutions in the restaurant and auto sectors is expected to remain a key factor in driving SOUN’s performance in the to-be-reported quarter.
SoundHound's offerings, such as Smart Ordering, Employee Assist and Smart Answering, cater to this demand and are expected to have contributed to revenue growth in the third quarter.
Smart Answering, which caters to a number of different industries, has opened up a massive market for SOUN in customer service with its proprietary technology, and is expected to have boosted third quarter top-line growth.
SoundHound AI had a $723 million cumulative subscriptions and bookings backlog at the end of the second quarter of 2024, and roughly doubled year over year, with an average duration of about seven years. This reflects the strong demand for SOUN’s solutions, which is expected to have benefited third quarter results.
SOUN Stock Outperforms Sector
Year to date, SOUN shares have surged 227.8%, outperforming the broader Zacks Computer & Technology sector’s return of 31.1% and the Zacks IT Services industry’s rally of 14.2%.
NOW, INFY and VRT shares have gained 44%, 17.8% and 153.7%, respectively.
YTD Performance
Image Source: Zacks Investment Research
However, SOUN stock is not so cheap, as the Value Style Score of F suggests a stretched valuation at this moment.
In terms of the forward 12-month Price/Sales ratio, SoundHound AI is trading at 17.58, higher than its median of 15.33 and the Zacks Computer & Technology sector’s 6.41.
Price/Sales Ratio (F12M)
Image Source: Zacks Investment Research
SOUN Stock to Benefit From Expanding Footprint
SoundHound AI’s prospects benefit from a massive addressable market worth more than $140 billion that includes diverse industries like automotive, restaurants, customer service, entertainment, Smart TVs and Internet of Things powered devices. It has more than 270 patents currently, with over 155 granted and more than 115 pending.
In the second quarter of 2024, SOUN’s AI services were employed by existing restaurant customers, like Jersey Mike’s, along with several new client acquisitions. Beef ‘O’ Brady’s launched SOUN’s voice AI ordering system across all its corporate locations, with plans to expand to 20 states.
Automotive presents a significant growth opportunity for SOUN. TAM for the global light vehicle auto market is currently pegged at roughly 88 million and is expected to hit 95 million units by 2028. TAM for the restaurant market is currently pegged at roughly $3.3 trillion and is expected to hit $4.4 trillion units by 2028, offering significant growth prospects for SoundHound AI.
SOUN has strengthened its footprint in the automotive industry by introducing its advanced SoundHound Chat AI voice assistant, integrated with ChatGPT, into Peugeot, Opel, Vauxhall, Alfa Romeo, Citron and DS Automobiles vehicles across 11 European markets, including Austria, France, Germany, Italy, Spain and the U.K. SOUN’s collaborations with NVIDIA, ARM, Perplexity, Olo and Oracle are expanding its portfolio.
In the second quarter, SOUN signed a new contract and became the first company to introduce ChatGPT-style capabilities to in-vehicle voice assistants in Latin America.
SOUN’s acquisition of SYNQ3 in early 2024 bolstered its presence in the restaurant sector, contributing positively to the revenue mix and customer base expansion.
The acquisition of key assets from Allset, an online ordering platform that connects restaurants with local customers, enhanced its capabilities in Voice AI. In the longer run, SOUN aims to create a voice commerce ecosystem, allowing customers to order food and complete various transactions hands-free from their vehicles, phones and smart devices.
Exiting the second quarter, SOUN also announced its acquisition of conversational AI leader Amelia. The combined company is expected to have a clientele of roughly 200 marquee customers. The acquisition is anticipated to be earnings-accretive by the second-half of 2025, with a focus on aligning Amelia’s recurring revenue business and optimizing the lower-growth areas in the portfolio.
Conclusion
SoundHound AI is a risky bet for growth-oriented investors, given the uncharted Voice AI domain. However, its innovative portfolio makes SOUN well-positioned to benefit from the strong TAM of global automotive and restaurant markets.
SOUN currently has a Zacks Rank #3 (Hold), which implies investors should wait for a more favorable entry point to accumulate the stock.
Image: Bigstock
SOUN Set to Report Q3 Earnings: Buy, Sell or Hold the Stock?
SoundHound AI (SOUN - Free Report) is scheduled to report its third-quarter 2024 results on Nov. 12.
The Zacks Consensus Estimate for revenues is pegged at $23.68 million, suggesting growth of 78.47% from the year-ago quarter’s reported figure.
The consensus mark for loss is pegged at 8 cents per share, unchanged over the past 60 days. SOUN reported a loss of 9 cents per share in the year-ago quarter.
SOUN’s earnings beat the Zacks Consensus Estimate in one of the trailing four quarters, missing it twice and meeting once, the negative surprise being 5%, on average.
SoundHound AI, Inc. Price and EPS Surprise
SoundHound AI, Inc. price-eps-surprise | SoundHound AI, Inc. Quote
See the Zacks Earnings Calendar to stay ahead of market-making news.
Let’s see how things have shaped up prior to this announcement.
Key Factors to Note for SOUN’s Q3 Earnings
SOUN offers conversational intelligence through independent Voice AI solutions in 25 languages in cloud-enabled and hardware-embedded devices. It is likely to have benefited from the growing demand for its conversational AI platform, owing to the increasing popularity of Generative AI and large language models.
SoundHound AI is benefiting from a strong portfolio, a strong partner base and an expanding clientele. The demand for AI-driven customer service solutions in the restaurant and auto sectors is expected to remain a key factor in driving SOUN’s performance in the to-be-reported quarter.
SoundHound's offerings, such as Smart Ordering, Employee Assist and Smart Answering, cater to this demand and are expected to have contributed to revenue growth in the third quarter.
Smart Answering, which caters to a number of different industries, has opened up a massive market for SOUN in customer service with its proprietary technology, and is expected to have boosted third quarter top-line growth.
SoundHound AI had a $723 million cumulative subscriptions and bookings backlog at the end of the second quarter of 2024, and roughly doubled year over year, with an average duration of about seven years. This reflects the strong demand for SOUN’s solutions, which is expected to have benefited third quarter results.
SOUN Stock Outperforms Sector
Year to date, SOUN shares have surged 227.8%, outperforming the broader Zacks Computer & Technology sector’s return of 31.1% and the Zacks IT Services industry’s rally of 14.2%.
SoundHound AI has outperformed industry peers like ServiceNow (NOW - Free Report) , Infosys (INFY - Free Report) and Vertiv (VRT - Free Report) over the same timeframe.
NOW, INFY and VRT shares have gained 44%, 17.8% and 153.7%, respectively.
YTD Performance
Image Source: Zacks Investment Research
However, SOUN stock is not so cheap, as the Value Style Score of F suggests a stretched valuation at this moment.
In terms of the forward 12-month Price/Sales ratio, SoundHound AI is trading at 17.58, higher than its median of 15.33 and the Zacks Computer & Technology sector’s 6.41.
Price/Sales Ratio (F12M)
Image Source: Zacks Investment Research
SOUN Stock to Benefit From Expanding Footprint
SoundHound AI’s prospects benefit from a massive addressable market worth more than $140 billion that includes diverse industries like automotive, restaurants, customer service, entertainment, Smart TVs and Internet of Things powered devices. It has more than 270 patents currently, with over 155 granted and more than 115 pending.
In the second quarter of 2024, SOUN’s AI services were employed by existing restaurant customers, like Jersey Mike’s, along with several new client acquisitions. Beef ‘O’ Brady’s launched SOUN’s voice AI ordering system across all its corporate locations, with plans to expand to 20 states.
Automotive presents a significant growth opportunity for SOUN. TAM for the global light vehicle auto market is currently pegged at roughly 88 million and is expected to hit 95 million units by 2028. TAM for the restaurant market is currently pegged at roughly $3.3 trillion and is expected to hit $4.4 trillion units by 2028, offering significant growth prospects for SoundHound AI.
SOUN has strengthened its footprint in the automotive industry by introducing its advanced SoundHound Chat AI voice assistant, integrated with ChatGPT, into Peugeot, Opel, Vauxhall, Alfa Romeo, Citron and DS Automobiles vehicles across 11 European markets, including Austria, France, Germany, Italy, Spain and the U.K. SOUN’s collaborations with NVIDIA, ARM, Perplexity, Olo and Oracle are expanding its portfolio.
In the second quarter, SOUN signed a new contract and became the first company to introduce ChatGPT-style capabilities to in-vehicle voice assistants in Latin America.
SOUN’s acquisition of SYNQ3 in early 2024 bolstered its presence in the restaurant sector, contributing positively to the revenue mix and customer base expansion.
The acquisition of key assets from Allset, an online ordering platform that connects restaurants with local customers, enhanced its capabilities in Voice AI. In the longer run, SOUN aims to create a voice commerce ecosystem, allowing customers to order food and complete various transactions hands-free from their vehicles, phones and smart devices.
Exiting the second quarter, SOUN also announced its acquisition of conversational AI leader Amelia. The combined company is expected to have a clientele of roughly 200 marquee customers. The acquisition is anticipated to be earnings-accretive by the second-half of 2025, with a focus on aligning Amelia’s recurring revenue business and optimizing the lower-growth areas in the portfolio.
Conclusion
SoundHound AI is a risky bet for growth-oriented investors, given the uncharted Voice AI domain. However, its innovative portfolio makes SOUN well-positioned to benefit from the strong TAM of global automotive and restaurant markets.
SOUN currently has a Zacks Rank #3 (Hold), which implies investors should wait for a more favorable entry point to accumulate the stock.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.