A company specializing in speech recognition and natural language processing in the field of artificial intelligence (AI). $SoundHound AI (SOUN.US)$ Q2 performance was mixed, with revenue growth slowing but stronger than expected, annual revenue guidance raised for this year, but the severity of the Q2 loss expansion exceeded market expectations.

After the post-market trading on Thursday, August 8th, SoundHound released its second-quarter financial data for this year and performance guidance for the rest of the year and next year.

1) Main financial data

Revenue: Q2 revenue was about $13.5 million, up 54% YoY, with analysts expecting $13.1 million and Q1 up 73% YoY.

EBITDA: Q2 adjusted non-GAAP EBITDA loss was $1.38 million, a 30% YoY increase, with analysts expecting an 18% increase in losses to $11.9 million and Q1 EBITDA losses up 3%.

Gross profit: After adjustment, gross profit in the second quarter was $8.95 million, a year-on-year increase of 28%, and a year-on-year increase of 57% from the first quarter.

Gross margin: The gross profit margin in the second quarter was 66.5%, a year-on-year decrease of 13.5 percentage points, with analysts expecting 63.9%, and a year-on-year decrease of 6.8 percentage points from the first quarter to 65.5%.

EPS: Q2 adjusted EPS per share loss of $0.04, a near-43% YoY narrowing, with analysts expecting a 0.09% loss, and Q1 YoY loss of $0.07, a 12.5% YoY narrowing.

2) Performance guidance

Revenue: is expected to exceed $80 million for the full year 2024, and exceed $0.15 billion for 2025.

After the financial report was released, SoundHound's stock price rose sharply by nearly 21.2% on Thursday, and further increased after hours, with an increase of more than 10% at one point, then it declined and currently dropped by nearly 5%.

Q2 revenue growth slowed, losses exceeded expectations, annual revenue guidance raised due to the acquisition of Amelia AI.

Q2 SoundHound revenue growth slowed by 26% compared with Q1, which was still not as much as analysts expected. However, the degree of loss before interest, taxes, depreciation and amortization was much worse than expected. The YoY growth rate of Q2 EBITDA losses was ten times that of Q1, and about 1.7 times that of analysts' expected increase in Q2 losses.

In terms of performance guidance, SoundHound expects annual revenue to be at least $80 million this year, up at least 3.9-23% from the originally provided revenue guidance range of $65 million to $77 million.

SoundHound said the revised annual revenue guidance took into account the impact of the acquisition of Amelia AI.

Amelia AI is an AI software supplier for businesses that provides AI agents that can be customized for internal or customer use. SoundHound announced the acquisition of Amelia AI before the Q2 financial report, and the stock price rose more than 20% that day.

After the merger with Amelia AI, the company is expected to turn a profit in the second half of next year.

SoundHound said the acquisition of Amelia AI was to speed up the launch and expansion of its own customer service products. After the merger with Amelia, the company will have decades of conversational AI experience and provide first-class customer service support to a wide range of new vertical industries. The customers include some of the largest multinational enterprise brands, the world's top 15 banks and Fortune 500 companies, and the merged company will cover nearly 200 well-known customers.

SoundHound expects the merged company to achieve revenue of over $0.15 billion in 2025, including $45 million in recurring AI software sales from Amelia, and to turn a profit in the second half of next year. Based on revenue guidance, after the merger with Amelia AI, SoundHound expects next year's revenue to be at least about 1.9 times this year's.

SoundHound also expects meaningful revenue and cost synergies, as well as a lot of cross-sell and add-on sales opportunities after the merger.

Editor/Somer