In a snapshot of the AI sector’s financial health, voice artificial intelligence (AI) pioneer SoundHound reported Q3 revenue of $25.1 million despite mounting losses, while Chinese education tech firm Youdao achieved its first Q3 profit of $15.3 million, and AI advertising company AiAdvertising saw 45% revenue growth but continued to operate in the red.
Voice AI company SoundHound reported Q3 revenue of $25.1 million on Tuesday (Nov. 12), an 89% year-over-year increase, as it expanded beyond automotive into new sectors, including restaurants, financial services, healthcare and insurance. The company’s largest customer now represents 12% of revenue, down from 72% last year.
“This is SoundHound’s largest quarter on record as the company takes its first steps into important new verticals,” said CEO Keyvan Mohajer in a news release. “Our increased scale, combined with incredible market enthusiasm for conversational AI, is allowing us to execute on the company’s vision.”
Despite revenue growth, SoundHound posted a Q3 GAAP net loss of $21.8 million, up from $20.2 million in the same quarter last year. The company’s gross margin declined to 49% from 73% year-over-year.
The company raised its financial outlook, projecting full-year 2024 revenue between $82-85 million and 2025 revenue of $155-175 million. SoundHound reported $136 million in cash and cash equivalents at the end of September.
In August, the company completed its acquisition of Amelia, an enterprise conversational AI provider, to expand into the finance, insurance and healthcare sectors.
Chinese education technology firm Youdao achieved its first third-quarter profit in 2024, reporting operating income of RMB107.3 million ($15.3 million), compared to a RMB57.7 million loss last year. Total revenue grew 2.2% to RMB1.6 billion ($224.1 million).
Online marketing services revenue increased 45.6% to RMB489.4 million while learning services revenue declined 19.2% to RMB767.9 million as the company focused on higher-return customers. Smart devices revenue rose 25.2% to RMB315.3 million.
“Our profitability significantly improved in the third quarter, marked by record-high income from operations,” said CEO Feng Zhou in a news release. “We leveraged our robust LLM capabilities to upgrade our Youdao Lingshi Intelligent Learning System.”
The company reduced operating expenses by 25.6% to RMB682.2 million through decreased marketing spending and lower headcount in research and administrative roles. Gross margin declined to 50.2% from 55.9% a year ago.
As of Sept. 30, Youdao held RMB489.4 million ($69.7 million) in cash and investments. Parent company NetEase continues to provide financial support through RMB878 million in short-term loans and a $128.4 million long-term loan facility.
AiAdvertising on Tuesday reported second-quarter 2024 revenue of $2.3 million, up 45% from $1.6 million in Q2 2023. The Texas-based company saw growth across all segments but continued to operate at a loss.
“The second quarter of 2024 was highlighted by increased revenue across our business segments and an improved bottom line as we focused on efforts to reduce costs across all expense categories while maintaining momentum,” said Jerry Hug, chairman and CEO, in a news release.
The company posted a net loss of $1.5 million, improving from a $1.9 million loss in Q2 2023. Operating expenses decreased 37% from Q1 2024 to $1.3 million. Gross loss margin improved to -6.6% from -22.6% year-over-year.
By segment, platform license revenue grew 77% to $0.3 million, creative services increased 43% to $0.4 million, and digital marketing revenue rose 41% to $1.6 million.
Cash on hand reached $0.5 million at the quarter’s end, up from $0.1 million at the end of 2023. The company projects full-year 2024 revenue between $9-10 million, citing strong customer retention and increased marketing budgets from existing clients.
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