Nvidia's Stake in SoundHound AI: Financial Highlights and Future Prospects

Nvidia Corporation disclosed in a recent SEC filing that it owns approximately 1.73 million shares of SoundHound AI, representing less than 1% of the company. Despite Nvidia's small stake, SoundHound AI's financial performance in Q3 2024 showed significant developments.

Financial Highlights:

• Revenue: Increased by 89% year-over-year to $25.1 million.
• GAAP Operating Income: Loss widened by 133% to $33.8 million.
• GAAP Net Income: Loss widened by 8% to $21.8 million.
• Adjusted Net Income: Loss widened by 10% to $15.0 million.
• GAAP EPS: Loss narrowed by 33% to $0.06.
• Adjusted EPS: Loss narrowed by 33% to $0.04.

SoundHound AI surpassed Wall Street expectations, which anticipated a GAAP loss of $0.07 per share on $23 million in revenue. The company used $75.8 million in cash for operations in the first nine months of 2024, compared to $54.4 million in the same period the previous year. It ended the period with $136 million in cash and $39.7 million in long-term debt.

In August 2024, SoundHound acquired Amelia for $80 million in cash and shares, expanding its reach in conversational AI across various industries. Amelia is expected to contribute over $45 million to SoundHound's revenue in 2025 and positively impact earnings in the latter half of the year.

CEO Keyvan Mohajer highlighted the company's record quarter and its strategic expansion into new verticals, leveraging the growing demand for conversational AI.

Guidance:

• 2024 Revenue: Projected to be $82 million to $85 million, indicating 82% annual growth at the midpoint.
• 2025 Revenue: Projected to be $155 million to $175 million.

Investors are advised to monitor SoundHound's path to profitability and its liquidity situation, given the current cash-burn rate. The potential need to raise additional capital could dilute existing shareholder stakes.

SoundHound AI operates in a rapidly growing AI sector, making it a stock worth watching, despite recent financial challenges.