SoundHound AI Drives Revenue Growth on Strong Demand in Automotive and Restaurant Sectors: Analyst

Wedbush analyst Daniel Ives maintained his Outperform recommendation on the matter SoundHound AI, Inc. (NASDAQ:SOUN) with a price forecast of $9.

Following the first quarter results, the analyst notes that the company continues to see demand for voice AI products grow in the automotive and restaurant industries, with various deals signed with major brands that are driving growth while gaining market share in conversational AI.

The company’s subscription and reservations portfolio grew to $682.0 million in the first quarter. According to Ives, this is due to high product licensing fees and strengths in the automotive segment as new and existing customers continue to show interest in the Chat AI platform.

SoundHound has fully completed its acquisition of SYNQ3 Restaurant Solutions as the company is now the largest U.S. provider of voice AI for restaurants with over 10,000 signed locations, with much more in the pipeline as the restaurant segment now represents ~30% of total revenue ahead of initial expectations of 20 % for FY24.

The company has seen strength across its partner ecosystem, highlighted by its new partnership with NVIDIA Corporation (NASDAQ:NVDA), where the company will deliver voice-enabled generative AI responses in vehicles that do not require connectivity.

SoundHound expects positive adjusted EBITDA in 2025 as the company is well-positioned to capitalize on the demand for AI chatbots, with a focus on partnerships and enabling more use cases, while expanding its voice-enabled ecosystem to accelerate growth and margins.

According to the analyst, this was an important step in the right direction for SoundHound’s story as the company continues to move towards profitable growth with stable automotive/restaurant revenue pillars and strong monetization opportunities to capture demand from businesses across industries that are looking to to optimize performance.

The analyst raised his FY24 revenue forecast to $71.6 million from $70.2 million.

Reduction: SOUN shares are up 7.3% to $5.10 on Friday.

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