Benzinga - by Nabaparna Bhattacharya, Benzinga Editor.
Wedbush analyst Daniel Ives reiterated the Outperform rating on 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 its voice AI products picked up in the automotive and restaurant industries, signing various large brand deals that fuel growth while grabbing market share in the conversational AI market.
The company’s subscription and bookings backlog increased to $682.0 million in the first quarter. Per Ives, this is due to strong product royalties and strength in the automotive segment as new and existing customers continue to show interest in its Chat AI platform.
SoundHound fully closed 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 and significantly more in the pipeline as the restaurant segment now represents ~30% of total revenue ahead of initial expectations of 20% for FY24.
The company noted strength across its partnership ecosystem highlighted by a new partnership with NVIDIA Corporation (NASDAQ:NVDA) where the company will deliver in-vehicle voice-enabled generative AI responses that don’t require connectivity.
SoundHound expects to see positive adjusted EBITDA in 2025 as the company is well-positioned to capitalize on the demand for AI chatbots with a strong focus on partnerships and more use cases being provided while expanding its voice-enabled ecosystem to accelerate growth and margins.
According to the analyst, this was a major step in the right direction for the SoundHound story as the company continues to build toward profitable growth with stable revenue pillars in Automotive/Restaurant and strong monetization capabilities to capture demand from enterprises across industries that seek ways to optimize efficiencies.
The analyst raised FY24 revenue outlook to $71.6 million from $70.2 million.
Price Action: SOUN shares are trading higher by 7.3% to $5.10 at last check Friday.
Photo via Shutterstock
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.