On Wednesday, H.C. Wainwright maintained a positive stance on SoundHound AI Inc. (NASDAQ: NASDAQ:SOUN) shares, reiterating a Buy rating and a $7.00 price target. Following a recent meeting with the company's management at the 26th Annual H.C. Wainwright Investment Conference in New York, the firm expressed confidence in SoundHound AI's strategy for revenue growth and cost management, anticipating a move towards operating profitability over time.
SoundHound AI has reported a significant increase in its cumulative subscriptions and bookings backlog, reaching $723.0M as of June 2024, which is about twice the amount from the previous year. This growth is seen as a strong indicator for achieving the company's revenue targets of $80.0M for 2024 and $150.0M for 2025. These targets include contributions from organic growth opportunities and recent mergers and acquisitions.
While acknowledging that recent acquisitions might delay full-year profitability until possibly 2026 or 2027, H.C. Wainwright expects investors to witness steady progress towards operating break-even. The firm anticipates benefits from improved gross margins and scaling revenue.
H.C. Wainwright highlights the potential market opportunity for conversational AI and SoundHound AI's robust financial position, suggesting that trading near-term profitability for long-term market share is a favorable strategy.
The company's recent mergers and acquisitions, such as those with SYNQ3 and Amelia AI, have positioned SoundHound AI as a leader in the conversational AI space and have enhanced its competitive edge. H.C. Wainwright advises investors to continue accumulating SoundHound AI shares in anticipation of improving operating results, standing firm on a Buy rating with a $7 price target.
In other recent news, SoundHound AI, Inc. has reported a substantial rise in earnings and revenues, marking a 54% increase in the second quarter of 2024 to reach a total of $13.5 million. The company has also made strategic acquisitions, including conversational AI leader Amelia and ordering platform Allset. These acquisitions, aimed at enhancing customer service capabilities and creating a voice commerce ecosystem, are projected to positively impact earnings in the latter half of 2025.
SoundHound's backlog of subscriptions and bookings has notably doubled year-over-year, reaching $723 million. This indicates a strong demand for its services, particularly the Polaris (NYSE:PII) model, which is gaining traction across various sectors, including the automotive industry, as evidenced by new contracts from leading electric vehicle manufacturers.
MUSC Health, in collaboration with SoundHound, has launched an AI-powered agent named Emily to streamline patient appointment management. The introduction of Emily is expected to enhance patient satisfaction and improve operational efficiency at MUSC Health. These are among the recent developments that highlight SoundHound's commitment to innovation in the voice AI market.
InvestingPro Insights
As SoundHound AI Inc. (NASDAQ: SOUN) navigates its path toward profitability, real-time metrics from InvestingPro offer a snapshot of the company's financial health and market performance. With a market capitalization of $1.72 billion, SoundHound AI holds more cash than debt on its balance sheet, which is a positive sign of financial stability. This aligns with H.C. Wainwright's confidence in the company's robust financial position and strategic revenue growth.
InvestingPro Tips highlight that analysts anticipate sales growth in the current year, which supports the firm's optimistic revenue targets for SoundHound AI. However, they also note that the company is not expected to be profitable this year and has experienced significant stock price volatility.
The company's stock price has seen a strong return over the last year, with a 113.33% increase, yet it has taken a hit over the last six months with a 41.75% decline. This suggests that while investors may be rewarded in the long term, they should be prepared for potential short-term fluctuations.
Prospective and current investors can find additional insights, with over 10 InvestingPro Tips available at https://www.investing.com/pro/SOUN, offering further guidance on SoundHound AI's financial metrics and market trends. These tips can help investors make informed decisions aligned with their investment strategies and risk tolerance.
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