SoundHound AI (SOUN) reported its second-quarter earnings after the market closed on Thursday, surpassing revenue expectations with $13.5 million compared to the anticipated $13.1 million, marking a 54% increase year-over-year.

Keyvan Mohajer, Co-Founder and CEO of SoundHound AI, joined Asking For A Trend to discuss the company’s latest earnings report.

During the interview, Mohajer highlighted their recent acquisition of Amelia, an AI company specializing in conversational AI for customer service. He explained, "We acquired an exceptional company, Amelia, which we announced this morning. They excel in conversational AI for customer service and operate in various verticals we aim to target. This acquisition is a crucial part of our business strategy and growth."

Mohajer also noted that the acquisition accelerates their expansion into new sectors: "Previously, we were focused on restaurants and smaller businesses, but now we're extending our reach into healthcare, financial services, insurance, hospitality, and retail."
 

SoundHound AI acquired Amelia

SoundHound AI has acquired Amelia, an enterprise AI company, with the aim of enhancing its conversational AI capabilities across new sectors and reaching hundreds of enterprise brands. Amelia has offerings that reach across a number of industry verticals, including financial institutions, healthcare, insurance, telecommunications, and travel.

According to a press release on August 8, the acquisition will allow the combined entity to provide AI-driven customer service support to a diverse array of businesses. Amelia, which already partners with nearly 200 companies, will contribute its 25 years of industry relationships, advanced AI expertise, proprietary technology, and extensive integrations with enterprise software.

SoundHound will pay $80 in cash and equity for Amelia. The publication notes that Amelia’s valuation prior to the deal wasn’t clear. However, data from PitchBook revealed that the company – which develops custom AI agents for businesses – had raised at least $189 million. This total includes a $175 million funding from asset management firm BuildGroup in March 2023.

The integration of Amelia will not only expand SoundHound AI’s customer service solutions but also speed up the development of additional voice-enabled conversational AI products for industries previously served by Amelia, such as healthcare, finance, and retail. The company also expects meaningful revenue and cost synergies, as well as a multitude of cross-selling and upselling opportunities.

It's also notable that Amelia had $160 million in cash and $39 million in debt, which makes it appear that SoundHound acquired the company at a favorable price. While acquisitions can be unpredictable, investors have reacted positively to this deal, driving up SoundHound AI's stock in response.

Shares of SoundHound AI

Shares of SoundHound AI (SOUN 21.16%) took off like a shot this morning, soaring as much as 21.9%. When the market closed on Thursday, the stock was still up 21.7%. Analysts' price targets and recommendations can vary significantly due to differing assumptions. Currently, no analysts have issued bearish recommendations for SoundHound AI. Instead, three analysts have given bullish ratings.

The highest price target on the street comes from Wedbush, set at $9, while the lowest target, from HC Wainwright & Co., is $7. Shares of SoundHound AI have an average 1-year price target of $7.67, suggesting a potential upside of 59.19%.

The strong upward movement in SOUN stock can be attributed to increased credibility following the acquisition of Amelia. Under SoundHound's umbrella, the combined company will serve approximately 200 customers, encompassing prominent banks and Fortune 500 firms. The AI company forecasts revenue of $150 million for 2025, with $45 million expected to come from Amelia’s existing portfolio.