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SOUN Set to Report Q3 Earnings: Buy, Sell or Hold the Stock?
SOUNSoundHound AI(SOUN) ZACKS·2024-11-08 20:46

Earnings and Financial Performance - SoundHound AI (SOUN) is scheduled to report its third-quarter 2024 results on Nov 12, with a Zacks Consensus Estimate for revenues of 23.68million,indicatinga78.4723.68 million, indicating a 78.47% growth from the year-ago quarter [1] - The consensus mark for loss is pegged at 8 cents per share, unchanged over the past 60 days, compared to a loss of 9 cents per share in the year-ago quarter [1] - SOUN's earnings beat the Zacks Consensus Estimate in one of the trailing four quarters, missed it twice, and met it once, with an average negative surprise of 5% [2] Growth Drivers and Market Opportunities - SOUN offers conversational intelligence through Voice AI solutions in 25 languages, benefiting from the growing demand for Generative AI and large language models [3] - The company's AI-driven customer service solutions, such as Smart Ordering, Employee Assist, and Smart Answering, cater to the restaurant and auto sectors, contributing to revenue growth [4] - Smart Answering has opened a massive market in customer service, boosting top-line growth [5] - SOUN had a 723 million cumulative subscriptions and bookings backlog at the end of Q2 2024, roughly doubling year-over-year, with an average duration of seven years [6] Stock Performance and Valuation - Year-to-date, SOUN shares have surged 227.8%, outperforming the broader Zacks Computer & Technology sector (31.1%) and the Zacks IT Services industry (14.2%) [7] - SOUN's forward 12-month Price/Sales ratio is 17.58, higher than its median of 15.33 and the Zacks Computer & Technology sector's 6.41 [8] Market Expansion and Strategic Moves - SOUN's addressable market is worth over 140billion,spanningautomotive,restaurants,customerservice,entertainment,SmartTVs,andIoTdevices[10]−Thecompanyhasmorethan270patents,withover155grantedandmorethan115pending[10]−InQ22024,SOUN′sAIserviceswereemployedbyexistingrestaurantcustomerslikeJerseyMike′sandnewclients,includingBeef′O′Brady′s,whichlaunchedSOUN′svoiceAIorderingsystemacrosscorporatelocations[11]−ThegloballightvehicleautomarketTAMisexpectedtogrowfrom88millionto95millionunitsby2028,whiletherestaurantmarketTAMisprojectedtogrowfrom140 billion, spanning automotive, restaurants, customer service, entertainment, Smart TVs, and IoT devices [10] - The company has more than 270 patents, with over 155 granted and more than 115 pending [10] - In Q2 2024, SOUN's AI services were employed by existing restaurant customers like Jersey Mike's and new clients, including Beef 'O' Brady's, which launched SOUN's voice AI ordering system across corporate locations [11] - The global light vehicle auto market TAM is expected to grow from 88 million to 95 million units by 2028, while the restaurant market TAM is projected to grow from 3.3 trillion to $4.4 trillion by 2028 [12] - SOUN has expanded its footprint in the automotive industry by integrating its SoundHound Chat AI voice assistant with ChatGPT into vehicles across 11 European markets [13] - The company signed a new contract in Q2 2024, becoming the first to introduce ChatGPT-style capabilities to in-vehicle voice assistants in Latin America [14] - SOUN's acquisition of SYNQ3 in early 2024 strengthened its presence in the restaurant sector, while the acquisition of Allset's key assets enhanced its Voice AI capabilities [15] - The acquisition of conversational AI leader Amelia is expected to create a combined clientele of roughly 200 marquee customers, with earnings accretion anticipated by the second half of 2025 [16] Conclusion - SOUN is well-positioned to benefit from the strong TAM of global automotive and restaurant markets, driven by its innovative portfolio [17]