SoundHound AI impresses with subscription backlog surge: analysts see positive outlook despite top-line miss

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20 March 2024, 06:20PM

In BriefWedbush analyst Daniel Ives upgrades SoundHound AI Inc (NASDAQ:SOUN) shares to Outperform, raising the price target to $9.
The company's Q4 results show a slight revenue and adjusted EBITDA miss, with revenue at $17.1 million, slightly below the $17.7 million estimate.
Despite the revenue miss, the subscription and bookings backlog for FY23 surged 100% year-over-year to $661.0 million, driven by strong product royalties and automotive sector performance.
SoundHound expects FY24 revenue between $63.0 million and $77.0 million, in line with the estimated $69.7 million, anticipating positive adjusted EBITDA fueled by AI chatbot demand.
SoundHound's acquisition of SYNQ3 Restaurant Solutions strengthens its position as the leading U.S. voice AI provider for restaurants, expanding its market presence to over 10,000 locations and enhancing its generative AI capabilities. Cantor Fitzgerald analyst Brett Knoblauch reiterates an Overweight rating on SoundHound AI shares, raising the price target from $3.60 to $5.80, and highlights the company's promising backlog momentum, suggesting a higher valuation multiple is warranted.

SoundHound AI Impresses with Subscription Backlog Surge: Analysts See Positive Outlook Despite Top-Line MissWedbush analyst Daniel Ives reaffirmed an Outperform rating on SoundHound AI Inc (NASDAQ:SOUN) shares and bumped up the price target from $5 to $9.
The company's fourth-quarter results showed a slight miss on revenue and adjusted EBITDA.
Revenue landed at $17.1 million, slightly below the expected $17.7 million. However, its subscription and bookings backlog for FY23 surged 100% year-over-year to $661.0 million, driven by robust product royalties and strength in the automotive sector.
SoundHound anticipates FY24 revenue between $63.0 million and $77.0 million, aligning with the estimated $69.7 million, and predicts positive adjusted EBITDA as it capitalizes on AI chatbot demand.
SoundHound's acquisition of SYNQ3 Restaurant Solutions solidifies its position as the largest U.S. voice AI provider for restaurants, expanding its market presence to over 10,000 locations and enhancing its generative AI capabilities.
Cantor Fitzgerald analyst Brett Knoblauch reiterated an Overweight rating on SoundHound AI shares and increased the price target from $3.60 to $5.80.
Knoblauch highlights the company's evolving backlog metric, noting its momentum in the restaurant offering. However, he suggests a metric like remaining performance obligations (RPO) would provide more insight.
Although tied to NVIDIA Corp (NASDAQ:NVDA), which made an investment in 2017, SoundHound's growth prospects remain strong, potentially exceeding 40% in the future, driven by its unique position in the AI market. Knoblauch suggests a higher valuation multiple for SoundHound's shares is justified.