SoundHound Shares Sink Despite Surging Revenue. Is It Time to Buy the Stock on a Dip?
Shares of SoundHound AI (NASDAQ: SOUN) sank following the release of its third-quarter results, despite the voice artificial intelligence (AI) company seeing surging revenue in the quarter. However, the stock is still up about 200% on the year, as of this writing.
With the company reporting strong revenue growth, let’s take a closer look at the company’s most-recent results to see if this is a good opportunity to buy the stock on this dip.
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Despite the drop in its stock price, SoundHound’s Q3 results were actually quite strong. The company’s revenue surged 89% year over year to $25.1 million. Adjusted earnings per share (EPS) came in at a loss of $0.04, which was a nice improvement from the $0.06 loss it reported a year ago. Those numbers topped the analyst consensus calling for revenue of $23 million and a loss of $0.07, as compiled by Factset.
It said that its cumulative subscriptions and bookings backlog, excluding its acquisition of Amelia, was double the year-ago period. It said that this number would be more than $1 billion, including Amelia, with an average duration of its contracts of around six years.
Within the automobile space, the company said it saw double-digit automotive unit growth in the quarter, as well as double-digit unit price expansion. It noted last year that it had a large point-in-time deal with a large customer but that it has more software-as-a-service (SaaS)-like revenue now, given its scale and greater diversification. It also said it won a deal with a new up-and-coming Middle Eastern electric vehicle manufacturer.
Within the restaurant vertical, SoundHound says it now has seven of the top 20 quick-service operators as customers. It continues to expand its drive-thru, phone orders, and employee assistance services. It also noted that it recently signed another large top-three global pizza chain.
With its recent acquisition of Amelia, the company also made inroads into a number of other verticals. During the quarter, it won or renewed deals in the telecom, healthcare, insurance, retail, and banking spaces. It also renewed deals with a branch of the U.S. military and a top multinational payment card services company.
SoundHound increased its full-year revenue outlooks for both 2024 and 2025. For 2024, it now expects revenue to come in between $82 million and $85 million, which is up from a prior outlook calling for revenue to exceed $80 million. Analysts were looking for revenue of $82.6 million.
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