SoundHound AI , Inc. (NASDAQ:SOUN), a Delaware-incorporated company specializing in prepackaged software services, has announced the mandatory conversion of its Series A Convertible Preferred Stock into Class A common stock. The conversion was triggered as the company's common stock maintained a minimum average closing price over a specified period.
On Monday, June 24, 2024, SoundHound AI notified the remaining holders of the Series A Preferred Stock that the conditions outlined in the Certificate of Designations for a mandatory automatic conversion had been met.
This action follows the sustained performance of SoundHound AI's Class A common stock, which achieved a daily volume-weighted average closing price of at least $2.50 for 90 trading days within the 120 consecutive trading days starting February 14, 2024.
As a result of the conversion, 58,574 shares of Series A Preferred Stock will be converted into approximately 2,134,631 shares of Class A common stock. This conversion will result in no shares of Series A Preferred Stock remaining outstanding.
The conversion is by the terms described in the Certificate of Designations, which was previously filed with the Secretary of State of the State of Delaware. The conversion is expected to increase the number of outstanding shares of SoundHound AI's Class A common stock, potentially impacting the stock's liquidity and market dynamics.
The information in this article is based on this SEC filing.
In other recent news, SoundHound AI has taken significant strides towards financial stability and growth. The company recently prepaid its $100 million debt, eliminating future interest and fees totaling over $55 million. This strategic move has enhanced SoundHound AI's liquidity and operational agility, freeing up approximately $14 million of previously restricted cash and boosting its cash reserve to about $180 million.
SoundHound AI's financial performance in Q1 was robust, with a 73% surge in revenue and earnings exceeding $11 million. This growth is attributed to the strong demand for its AI customer service solutions, particularly its drive-thru AI service and Smart Ordering offering. Despite reporting an operating loss and a net loss for the quarter, the company has shown confidence in its future performance by raising its full-year revenue guidance.
Recent developments also include partnerships with NVIDIA (NASDAQ:NVDA) and Perplexity AI, aiming to enhance SoundHound AI's voice assistant capabilities. The company's financial health is further indicated by a backlog of $682 million, demonstrating customer commitment and long-term contracts.
However, the company did report an increase in operating expenses such as R&D, sales, marketing, and G&A. SoundHound AI has set its sights on achieving adjusted EBITDA profitability by 2025, and has raised the lower end of its full-year revenue guidance to $65 million to $77 million.
InvestingPro Insights
As SoundHound AI, Inc. (NASDAQ:SOUN) navigates through its financial journey, it's essential to consider the latest metrics and insights that could influence investor perspectives. Here are some key takeaways derived from InvestingPro data and tips:
InvestingPro Data highlights the company's market capitalization at 1.31 billion USD, reflecting its relative size and investor valuation in the market. Despite a challenging financial performance with a negative P/E ratio of -13.65, the company's revenue growth is noteworthy, with a 51.31% increase over the last twelve months as of Q1 2024. This growth is even more pronounced on a quarterly basis, with a 72.86% surge in revenue in Q1 2024, underscoring the company's expanding market presence and sales momentum.
InvestingPro Tips offer a deeper analysis, revealing that SoundHound AI holds more cash than debt on its balance sheet, an encouraging sign of financial stability. Additionally, the company's liquid assets exceed its short-term obligations, providing some comfort regarding its ability to meet immediate financial liabilities.
However, there are challenges ahead. Analysts do not anticipate SoundHound AI will be profitable this year, and the stock has experienced significant volatility, with a notable decline of 21.34% over the last month. This volatility could be a point of concern for investors seeking stability, especially given the stock's poor performance over the last three months, with a 32.88% drop in price total return.
For investors looking to delve deeper into SoundHound AI's financials and future prospects, there are additional InvestingPro Tips available. By visiting https://www.investing.com/pro/SOUN, investors can access these insights and use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription. Currently, there are 11 additional InvestingPro Tips listed, offering valuable guidance for those considering an investment in SoundHound AI.
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