JR Research is an opportunistic investor. He was recognized by TipRanks as a Top Analyst. He was also recognized by Seeking Alpha as a "Top Analyst To Follow" for Technology, Software, and Internet, as well as for Growth and GARP. He identifies attractive risk/reward opportunities supported by robust price action to potentially generate alpha well above the S&P 500. He has also demonstrated outperformance with his picks. He focuses on identifying growth investing opportunities that present the most attracti ...

SoundHound AI (SOUN) incurred a fourth-quarter 2024 loss of 69 cents per share, wider than the year-ago quarter’s loss of 6 cents. The figure missed the Zacks Consensus Estimate by 527.27%.Find the latest EPS estimates and surprises on Zacks Earnings Calendar.Revenues surged 101.5% year over year to $34.5 million, beating the Zacks Consensus Estimate by 3.14%. This growth was driven by major customer wins, expanded partnerships and advancements in generative AI. Strong adoption in quick-service restaurants, ...

Shares of SoundHound AI (SOUN 16.12%) have been beaten up in the first two months of the year. The stock broke out last year, but entered today down more than 50% so far in 2025. The provider of voice artificial intelligence (AI) solutions announced a fourth-quarter adjusted loss of $0.05 per share, with sales of $34.5 million.However, the stock is soaring today, as the company beat expectations and management also raised 2025 guidance. At 11:30 a.m. ET, shares were trading slightly off the morning high, up ...

Core Viewpoint - SoundHound AI has experienced significant stock price decline and concerns about its profitability and cash flow, despite initial investor enthusiasm driven by Nvidia's stake in the company [1][2][8]. Company Performance - SoundHound AI's stock price has fallen below $10, losing more than 50% of its value since the beginning of the year [2]. - The company has shown strong revenue growth due to acquisitions, particularly of AI companies Amelia and SYNQ3, which have diversified its customer base [2][4]. - Operating losses have often exceeded revenue, indicating unsustainable financial performance [3]. Financial Health - SoundHound is burning through cash and has indicated plans to raise up to $500 million through a mixed shelf offering, which may lead to further dilution for existing shareholders [4]. - The company's valuation remains high, with a price-to-sales (P/S) multiple of 43 and a price-to-book ratio over 12, suggesting that it is still considered expensive relative to its financial performance [6][7]. Market Sentiment - Retail investors had high hopes for SoundHound as a leading AI stock, but skepticism is growing, especially after Nvidia divested its stake [8]. - Despite a 42% gain over the last year, the volatility and lack of a clear path to profitability may deter potential investors [8][9].

Financial Data and Key Metrics Changes - Q4 2024 revenue reached $35 million, representing over 100% year-over-year growth, achieving the top-end of the revenue guidance range for the full year [7][39] - Full-year revenue grew by 85%, totaling $85 million [39] - Cumulative subscriptions and bookings backlog reached nearly $1.2 billion, up over 75% year-over-year [44] - GAAP gross margin was 40%, down year-over-year, while non-GAAP gross margin was 52% [54] - Non-GAAP net loss was $19 million, with a non-GAAP net loss per share of $0.05 [66] Business Line Data and Key Metrics Changes - Automotive unit growth was impacted by macro pressures, but projections for 2025 indicate continued strong growth [51] - Significant growth in the restaurant sector, with major customers like Burger King going live in the UK [17][52] - Expansion in healthcare with notable wins including Duke Health and Englewood Health [16] - New industry entry in energy with a large electric utility contract [20][41] Market Data and Key Metrics Changes - Company works with 30% of top quick-service restaurants and 70% of top financial institutions globally [40] - Customer concentration improved, with the largest customer representing slightly over 14% of revenue in 2024, down from nearly half in 2023 [42][53] Company Strategy and Development Direction - Company has introduced a three-pillar business strategy: voice assistant, AI customer service, and voice commerce ecosystem [11][37] - Focus on expanding into new verticals beyond restaurants, including healthcare, financial services, government, military, and energy [108] - Emphasis on leveraging Agentic AI to enhance capabilities and drive efficiencies [21][24] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the growth trajectory, expecting revenue in 2025 to range from $157 million to $177 million [69] - Anticipated ramp in revenue throughout the year, with a shift towards more predictable recurring revenue streams [70] - Commitment to achieving adjusted EBITDA profitability by the end of 2025 [72] Other Important Information - Company showcased innovations at CES, including collaborations with major partners like NVIDIA and Lucid Motors [27][28] - Strong presence in the automotive sector with ongoing POCs and partnerships with multiple OEMs [15][94] Q&A Session Summary Question: Recent breakthroughs in AI model efficiency - Management confirmed that advances in AI models allow for improved accuracy and reduced costs, with potential for edge computing [76][78] Question: Details on backlog duration and verticals - Backlog duration is slightly over six years, with balanced growth across automotive, restaurant, healthcare, and energy sectors [81][82] Question: Typical time to revenue for POCs - POCs can be executed quickly, especially in automotive, with revenue generation linked to unit shipments [92][96] Question: Economic impact of the new energy deal - The energy deal is multi-year with accelerated cash collection, indicating strong economic benefits [104][105] Question: Prioritization of secondary verticals - Company prioritizes based on potential customer benefits and market opportunities, leveraging existing technology across multiple sectors [123][125]

Financial Performance - SoundHound AI, Inc. reported a quarterly loss of $0.69 per share, significantly worse than the Zacks Consensus Estimate of a loss of $0.11, representing an earnings surprise of -527.27% [1] - The company posted revenues of $34.54 million for the quarter ended December 2024, exceeding the Zacks Consensus Estimate by 3.14%, and showing a substantial increase from $17.15 million in the same quarter last year [2] - Over the last four quarters, SoundHound AI has surpassed consensus EPS estimates two times and topped consensus revenue estimates four times [2] Stock Performance - SoundHound AI shares have declined approximately 51.8% since the beginning of the year, contrasting with the S&P 500's gain of 1.3% [3] - The current consensus EPS estimate for the upcoming quarter is -$0.09 on revenues of $34.42 million, and for the current fiscal year, it is -$0.25 on revenues of $162.99 million [7] Industry Outlook - The Computers - IT Services industry, to which SoundHound AI belongs, is currently ranked in the top 31% of over 250 Zacks industries, indicating a favorable outlook compared to the bottom 50% [8] - The performance of SoundHound AI's stock may be influenced by the overall industry outlook and trends in earnings estimate revisions [5][8]

Revenue and Loss - Total revenues for the year ended December 31, 2024, increased to $84.693 million, a 84.5% increase from $45.873 million in 2023[4] - The net loss for the year ended December 31, 2024, was $350.681 million, compared to a net loss of $88.937 million in 2023, representing a 295.5% increase in losses[4] - The company’s basic and diluted net loss per share for the three months ended December 31, 2024, was $(0.69), compared to $(0.07) for the same period in 2023[3] Operating Expenses - Operating expenses for the year ended December 31, 2024, totaled $426.046 million, significantly up from $114.481 million in 2023, reflecting a 272.5% increase[4] Assets and Equity - The total assets of the company as of December 31, 2024, were $553.953 million, compared to $151.122 million in 2023, marking a 267.5% increase[2] - The company’s total stockholders' equity improved to $182.653 million as of December 31, 2024, compared to $28.168 million in 2023, a 648.5% increase[2] Cash and Cash Equivalents - Cash and cash equivalents as of December 31, 2024, were $198.240 million, up from $95.260 million as of December 31, 2023, indicating a 108.3% increase[2] - Cash, cash equivalents, and restricted cash equivalents at the end of 2024 reached $198,916,000, up from $109,015,000 in 2023[8] - Total cash and cash equivalents were $198,240,000 in 2024, compared to $95,260,000 in 2023[8] Liabilities - Total current liabilities increased to $67.742 million as of December 31, 2024, from $24.223 million in 2023, reflecting a 179.5% increase[2] - Payments on notes payable increased significantly to $215,373,000 in 2024 from $35,029,000 in 2023[8] Accounts Receivable - The company reported a significant increase in accounts receivable, net of allowances, which rose to $23.159 million in 2024 from $4.050 million in 2023, a 471.5% increase[2] Financing Activities - Net cash provided by financing activities increased to $210,906,000 in 2024 from $168,237,000 in 2023[8] - Proceeds from warrants exercised amounted to $23,000 in 2024, compared to $0 in 2023 and 2022[8] Other Financial Metrics - Cash paid for interest decreased to $6,337,000 in 2024 from $11,984,000 in 2023[11] - Cash paid for income taxes increased to $2,717,000 in 2024 from $2,356,000 in 2023[11] - The conversion of Series A Preferred Stock to Class A common stock resulted in $14,187,000 in 2024, compared to $10,755,000 in 2023[11] - Fair value of contingent earnout consideration under SYNQ3 and Amelia acquisitions was recorded at $286,898,000[11] - The change in fair value of contingent acquisition liabilities for the three months ended December 31, 2024, was $220.946 million, with no comparable figure in 2023[3] - The company reported a net change in cash of $89,881,000 in 2024, down from $99,560,000 in 2023[8]

Core Viewpoint - SoundHound AI has experienced significant volatility, with a 150% gain over the past year but a 55% decline from its all-time high, raising questions about its investment potential [1][2]. Company Overview - SoundHound AI is a speculative company focused on developing voice and sound AI technologies for various applications, including vehicles and drive-throughs [3]. - The company has undergone growth, particularly after acquiring Amelia in late 2024, which is expected to boost revenue from approximately $85 million in 2024 to a range of $155 million to $175 million in 2025 [6]. Valuation and Market Position - The stock reached a peak price-to-sales (P/S) ratio of 110, which is considered unsustainable and reflects overly high expectations [3][5]. - Currently, the P/S ratio has decreased to about 24 based on 2025 revenue guidance, but this is still viewed as relatively high compared to other similar companies [9]. Financial Performance and Challenges - SoundHound AI has burned over $75 million in cash through the first nine months of 2024, indicating it is not close to achieving positive cash flow or net income [8]. - The company must demonstrate a clear path to profitability to maintain investor interest and valuation [8]. Market Potential - Management estimates the addressable market for SoundHound AI at $140 billion, suggesting significant growth opportunities if the company can effectively penetrate new sectors [7]. - Competition exists from other companies, including those in the "Magnificent Seven," which also offer audio-based AI technology [7]. Investment Considerations - The current high valuation of SoundHound AI presents limited upside relative to the risks involved, leading to skepticism about its potential as a "millionaire maker" stock [12].

Core Viewpoint - Nvidia's divestment from SoundHound AI raises concerns among investors, but it may present a buying opportunity given the company's strong growth potential in 2025 [2][3][4]. Group 1: Nvidia's Investment and Divestment - Nvidia sold all of its stake in SoundHound AI, which was valued at $33.7 million as of December 31, 2024, leading to a sell-off in SoundHound's stock [2]. - Nvidia's stake in SoundHound was relatively small compared to its overall portfolio, owning only 1.7 million shares [2]. - The decision to sell may not have been driven by business reasons, as Nvidia generated $16.8 billion in free cash flow last quarter and holds $38.5 billion in cash and short-term investments [3]. Group 2: SoundHound's Growth Potential - SoundHound AI's revenue increased by 89% in Q3, indicating strong growth potential [4]. - Preliminary guidance for 2025 suggests revenue could reach between $155 million and $175 million, effectively doubling from the projected $82 million to $85 million in 2024 [5]. - Despite the sell-off, SoundHound's stock is still trading at 50 times sales, which is considered expensive but may be justified by the anticipated revenue growth [6][7]. Group 3: Market Sentiment and Future Considerations - The stock faces high selling pressure as investors reassess their positions following a strong performance last year [8]. - If Q4 results do not exceed expectations, further sell-off may occur, and the stock could be reconsidered post-earnings [8]. - Investors are advised to be patient, as uncertainties remain regarding SoundHound's performance, and taking profits may be prudent for those with significant gains [9].

Core Viewpoint - SoundHound AI is experiencing significant stock sell-offs due to macroeconomic concerns and upcoming earnings reports from key industry players like Nvidia [2][3][4] Group 1: Stock Performance - SoundHound AI's stock price decreased by 6.4% as of 1:50 p.m. ET, with a peak decline of 10% earlier in the day [1] - The stock is down 55% year to date, despite being up 127% over the last year [3][4] Group 2: Market Conditions - The decline in SoundHound AI's stock is attributed to broader valuation pullbacks in growth-dependent AI stocks, influenced by new tariffs and semiconductor export restrictions to China [2] - Investors are adjusting to emerging macroeconomic risks, including concerns about inflation [2] Group 3: Future Outlook - Nvidia's upcoming Q4 report is anticipated to provide insights into the AI market's growth outlook, which could significantly impact SoundHound's stock price [3][4] - SoundHound AI is currently valued at approximately 21 times this year's expected sales, indicating a heavily forward-looking valuation [4] - Despite recent volatility, the company's sales growth and forward forecasts support a potential bullish case at current levels [5]