Soundhound's Q2 revenue growth YoY slowed to 54%, still stronger than expected. EBITDA losses expanded by 30%, which is ten times that of Q1, and the expansion rate far exceeded expectations. Due to the acquisition of AI software company Amelia AI, Soundhound raised its revenue guidance by up to 23% this year. The company is expected to turn losses into profits in the second half of next year after its merger with Amelia AI. After the financial report, Soundhound rose more than 10% after hours, then turned into a decline.
A company specializing in voice AI and language recognition in the field of artificial intelligence (AI). $SoundHound AI (SOUN.US)$ In the second quarter, performance results were mixed. Although revenue growth slowed down, it was still stronger than expected. The annual revenue guidance for this year was raised, but the severe degree of second quarter EBITDA losses expansion exceeded market expectations.
After the post-market trading on Thursday, August 8th, SoundHound released its second-quarter financial data for this year and performance guidance for the rest of the year and next year.
1) Main financial data
Revenue: Q2 revenue was about 13.5 million U.S. dollars, a year-on-year increase of 54%, with analysts predicting 13.1 million U.S. dollars and a 73% YoY increase in the first quarter.
EBITDA: Q2 non-GAAP adjusted EBITDA pre-tax, interest, depreciation, and amortization was a loss of 1.38 million U.S. dollars, a YoY expansion of 30%, with analysts predicting an 18% increase in losses to 11.9 million U.S. dollars and a 3% YoY expansion of losses in Q1.
Gross profit: After adjustment, gross profit in the second quarter was $8.95 million, a year-on-year increase of 28%, and a year-on-year increase of 57% from the first quarter.
Gross margin: The gross profit margin in the second quarter was 66.5%, a year-on-year decrease of 13.5 percentage points, with analysts expecting 63.9%, and a year-on-year decrease of 6.8 percentage points from the first quarter to 65.5%.
EPS: Q2 adjusted EPS was a loss of 0.04 U.S. dollars per share, a YoY narrowing of nearly 43%, with analysts expecting a 0.09% loss. The YoY loss in the first quarter was 0.07 U.S. dollars, a narrowing of 12.5% YoY.
2) Performance guidance
Revenue: The full-year revenue for 2024 is expected to exceed 80 million U.S. dollars, and the revenue for 2025 is expected to exceed 0.15 billion U.S. dollars.
After the financial report was released, SoundHound's stock price rose sharply by nearly 21.2% on Thursday, and further increased after hours, with an increase of more than 10% at one point, then it declined and currently dropped by nearly 5%.
Q2 revenue growth slowed down; losses far exceeded expectations due to the acquisition of Amelia AI, raising the company's revenue guidance for this year.
In the second quarter, Soundhound's revenue growth slowed by 26% compared to the first quarter, but the degree of slowing was not as much as expected by analysts. However, the level of losses before interest, tax, depreciation, and amortization was much more severe than expected. The YoY expansion rate of EBITDA losses in Q2 is ten times that of Q1 and is about 1.7 times the expected Q2 expansion rate.
In terms of performance guidance, Soundhound expects annual revenue of at least 80 million U.S. dollars this year, which is 3.9% to 23% higher than the previously provided revenue guidance range of 65 million to 77 million U.S. dollars.
SoundHound stated that the annual revenue guidance was raised when considering the impact of Amelia AI's acquisition.
Amelia AI is an enterprise AI software supplier that produces AI agents customized by companies for internal or customer use. Before announcing the Q2 financial report after hours, SoundHound first announced the acquisition of Amelia AI, and the stock price soared more than 20% that day.
After the merger with Amelia AI, the company is expected to turn losses into profits in the second half of next year.
SoundHound stated that the acquisition of Amelia AI was to accelerate the release and expansion of its own customer service products. After the merger with Amelia, the company will bring together decades of conversational AI experience to provide first-class customer service support to a wide range of new vertical industries. Customers include some of the largest multinational enterprise brands, the world's top 15 banks and Fortune 500 companies. After the merger, the company will cover nearly 200 well-known customers.
SoundHound predicts that after the merger, the company's revenue will exceed 0.15 billion U.S. dollars by 2025, including 45 million U.S. dollars in regular AI software sales from Amelia, turning losses into profits in the second half of next year. Based on the revenue guidance, after the merger with Amelia AI, SoundHound is expected to achieve at least 1.9 times this year's revenue next year.
SoundHound also expects meaningful revenue and cost synergies, as well as a large number of cross-selling and additional sales opportunities after the merger.
Editor/Somer