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Key Takeaways
- SoundHound AI shares surged more than 14% in late trading on Thursday after the company surpassed analysts’ first quarter revenue estimates and raised annual sales outlook.
- Though it posted a wider loss, CEO Keyvan Mohajer said voice AI was becoming a must-have customer service tool, which had helped drive the company’s subscriptions in the quarter.
- Monitor if SoundHound shares can close above the 50-day MA, currently sitting at $5.44 — a move that could act as a catalyst for a rally to the late February swing high around $7.50.
SoundHound AI (SOUN) shares surged more than 14% in Thursday’s extended-hours trading session after the company topped quarterly revenue estimates and upped its full-year sales guidance amid growing demand for artificial intelligence (AI) speech recognition software.
For the three-month period ending March 31, the Silicon Valley-based tech company reported revenue of $11.6 million, up 73% from the prior year’s corresponding quarter and comfortably ahead of the $10.1 million expected by analysts. However, the company posted an net loss of $33 million, or 12 cents a share, wider than the 9 cents per share loss consensus view. Adjusted net loss was $19.9 million or 7 cents per share.
Demand for Voice AI Tools Lifts Revenue Outlook
Looking ahead, the company bumped up the lower end of its full-year revenue guidance and now expects the top line to range between $65 million to $77 million, up from its prior forecast of $63 million to $77 million. Wall Street had modeled annual net sales tallying $69.5 million.
“Our first quarter sets the tone for 2024 as another year of strong growth for SoundHound,” CEO Keyvan Mohajer said in the company’s earnings statement, adding “Voice AI is fast becoming a must-have tool for customer service, and that’s reflected in the demand we’re seeing for subscriptions.”
The company already has a number of partnerships across restaurants and automobile sectors for its voice AI assistant tools. Its clients include Dine Brand’s (DIN) Applebees that has rolled out use of SoundHound’s technology at its franchises. The company also has deals with Stellantis (STLA) and an unnamed U.S.-based EV maker for in-vehicle integrations of its voice AI tools.
Separately, the company announced Thursday it has partnered with AI-powered answer engine company Perplexity to bring large language model (LLM) capabilities to its voice assistant technology.
Although SoundHound has a market capitalization of just $1.52 billion, it appeared on investors’ radar this year after a regulatory filing revealed that AI chipmaker Nvidia (NVDA) had taken a stake in the company, holding 1.73 million shares as of the end of 2023.
Monitor This Key Indicator Amid Post Earnings Strength
The SoundHound share price continued to track higher for several weeks after the 50-day moving average (MA) crossed above the 200-day MA to form a golden cross buy signal back in late February, but then staged a 66% correction, highlighting the stock’s volatility. Leading into the company’s quarterly results, the price has made a recovery to trade slightly below a horizontal trendline at the key $5 level.
Following the better-than-expected sales outlook, investors should keep an eye if the stock can close Friday above the 50-day MA, currently sitting at $5.44—a move that could act as a catalyst for a rally to the late February swing high around $7.50.
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