First Quarter Performance of SoundHound AI
In the first quarter, the AI-powered voice solutions provider, SoundHound AI, observed continued revenue growth but also experienced significant losses.
Stock Performance and Financial Results
SoundHound AI’s stock saw a decline of 7.8% following the release of its first-quarter 2025 report. The decrease was primarily due to revenue falling short of Wall Street expectations, although the bottom-line results met analyst estimates.
Key Financial Metrics
| Metric | Q1 2024 | Q1 2025 | Change |
|---|---|---|---|
| Revenue | $11.6 million | $29.1 million | 151% increase |
| GAAP operating income | ($28.5 million) | $128.1 million | Turned positive |
| GAAP net income | ($33 million) | $129.9 million | Turned positive |
| Adjusted net income | ($20.2 million) | ($22.3 million) | Loss widened by 10% |
| GAAP EPS | ($0.12) | $0.31 | Turned positive |
| Adjusted EPS | ($0.07) | ($0.06) | Loss narrowed by 14% |
Investors are advised to focus on adjusted numbers, which exclude one-time items. The GAAP numbers for Q1 2025 include a noncash gain from acquisitions. The company’s acquisitions helped diversify its customer base, with no single customer contributing more than 10% of the revenue in the quarter.
SoundHound’s adjusted performance met bottom-line expectations but missed the revenue target. The company used $19.2 million in cash for operations, slightly improving over the previous year’s negative $21.9 million operating cash flow. Free cash flow was negative $19.3 million compared to negative $25.7 million in the prior year, with cash reserves standing at $246 million and no long-term debt, sustaining operations for about 12.7 quarters.
CEO’s Statement and 2025 Outlook
CEO Keyvan Mohajer highlighted the company’s expanding AI platform and growth initiatives that leverage acquisitions to create cross-sell and upsell opportunities.
CFO Nitesh Sharan reaffirmed 2025 guidance with anticipated revenue between $157 million and $177 million, indicating 85% to 90% annual growth, bolstered by recent acquisitions, including the $80 million Amelia acquisition. The company also expects to achieve positive adjusted EBITDA by year-end.
Considerations on SoundHound AI
SoundHound AI shows potential in the emerging AI market. However, concerns persist regarding its reliance on acquisitions for growth, which might obscure issues with organic growth and core product performance. Profitability remains a challenge, with adjusted EBITDA still negative. The competitive landscape, especially in the auto sector, includes major tech companies, presenting further challenges.
Investors are encouraged to remain open-minded about SoundHound AI’s future performance, considering both its cash position and market opportunities.
