The voice recognition company has used a major change in its indefinite obligations.
The profit was based on what is called low quality income because they are unlikely to be repeated.
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Soundhound A(Nasdaq: Soun) There is an artificial intelligence (Ai) company specializing in a voice recognition platform. It has a lot of potential, especially with Drive-Thrus restaurants, and its technology helps to improve the efficiency of many companies.
She recently reported her latest earnings. And while investors were hoping for growth, they might not expect profit, which reported Soundhound. It was also an uncorrected profit.
This is due to a change in value, but the cause of that change may surprise you the most. The decreasing evaluation of a slightly ironic turn technology company actually helped its essence.
Image Source: Getty Images.
The big reason the investors are hesitant to buy Soundhound AI shares is due to the poor essence of the company. Business grew, but the lack of profitability is a concern.
However, in the latest report of his income in the first 2025. The quarter (which ended on March 31), it earned $ 129.9 million. USD unexpected profit. This is a huge improvement compared to the $ 33 million losses incurred in the same period last year.
So what was behind the sharp turn? Due to the indefinite acquisition of obligations, the actual value change is 176.1 million.
And what was surprised by that was The reason for a change in value. The adjustment was related to the acquisitions of Synq3 and Amelia AI companies and how much audio copying will still be paid to sellers on some purposes.
The vast majority of those payments are in stock, so as the company’s shares have decreased this year, its real value has decreased. If stock prices for rallys can be detrimental to the company’s income in the future.
The acquisitions helped Soundhound to expand their activities. But all of this can be a lot of noise in finance, as can be seen from indefinite commitments. In the first three 2025 The company’s revenue has not only increased by 151%, totaling $ 29.1 million.
But this is what the accounting world calls “low quality earnings” simply because they are unlikely to be repeated. A disposable quarter where the company announces profits is not necessarily a sign that it has turned the corner and has become a safe purchase.
Soundhound, which is experiencing many changes and is at an early stage of growth, focusing on cash flows can be more beneficial to investors. And because of his statement of cash flows, he showed only slight progress. She used $ 19.2 million from her daily activities. USD compared to $ 21.9 million. USD during the previous year. The company’s cash burning rates slow down, but not significantly.
Its activities are not yet sustainable, but the good news is that with cash and cash equivalents, which are $ 245.8 million.
This year, Soundhound stocks have fallen by almost 50%, and although it has been concentrated in recent weeks, it is still a risky investment. With a lot of competition and a lot of questions about her business and how well it will grow in the long run, I would keep waiting and looking at AI shares.
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David Jagielski has no position in any of the above shares. The Motley fool has no position in any of the above stocks. The Motley fool has a disclosure policy.
Soundhound Ai earned a profit Q1 and probably won’t guess the reason why initially announced by Motley Fool
