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Geoffrey Seiler, The Motley Fool
5 min read
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After a strong 2024 for SoundHound AI (NASDAQ: SOUN), it’s been a rough start to 2025. However, the stock rallied from its recent lows following a strong fourth-quarter earnings report. Shares have nearly doubled over the past year, as of this writing, but they’re down 50% year to date.
SoundHound popped up on investors’ radar after chip giant Nvidia revealed an investment in the artificial intelligence (AI) company in Feb. 2024. However, the stock has tumbled the past few weeks following the news that Nvidia exited its position late last year.
Let’s take a look at the company’s latest developments to see what may lie ahead for investors.
SoundHound continued to grow rapidly in Q4 as revenue more than doubled year over year to $34.5 million. Its adjusted net loss increased slightly from $0.04 per share to $0.05 per share. Both results easily surpassed the analyst consensus for a loss of $0.10 on revenue of $33.7 million, as compiled by Factset.
The company finished the year with a cumulative subscriptions and bookings backlog of $1.2 billion, up more than 75%. The average duration of its contracts is around six years, and the size of the backlog is a bullish sign for future revenue growth.
In its automotive segment, the company said it saw double-digit unit price expansion, but that unit growth was hurt by some macroeconomic factors pressuring the auto industry. This was helped by existing customers upgrading to SoundHound Chat AI Automotive with generative AI, which adds additional royalties per unit. It also noted that it won deals with four electric vehicle (EV) manufacturers, including Lucid and Togg, and several large automakers were pursuing proof-of-concept for its new technology, which allows drivers to discover nearby restaurants and place orders.
Within the restaurant vertical, SoundHound said AI customer-service adoption at restaurants is increasing, and it works with 30% of the top quick-service restaurants. Burger King recently went live with its solutions in the U.K., while it saw a number of other expansions and wins. It also noted that it works with four of the five largest pizza chains in the world.
However, the company is starting to win business outside of its two main verticals with the help of its Amelia acquisition. Management said SoundHound had four notable wins in the healthcare space, while it is working with 70% of the top financial institutions in the world. However, its biggest win in the quarter was in the utility sector, a completely new vertical for the company.