SoundHound AI, Inc. (NASDAQ:SOUN) has a Return on Invested Capital (ROIC) of -68.13%, indicating inefficiency in capital utilization compared to its peers.
BigBear.ai Holdings, Inc. (BBAI) shows slightly better capital efficiency with a ROIC to WACC ratio of -2.11, though still not covering its cost of capital.
BuzzFeed, Inc. (BZFD) demonstrates the least negative ROIC to WACC ratio among the group, suggesting closer to breaking even in generating returns relative to its cost of capital.
SoundHound AI, Inc. (NASDAQ:SOUN) is a company that specializes in voice-enabled AI and conversational intelligence technologies. It provides solutions that allow users to interact with devices and services through natural language. SoundHound competes with other AI and tech companies, including BigBear.ai Holdings, Inc. (BBAI), Guardforce AI Co., Limited (GFAI), BuzzFeed, Inc. (BZFD), Genius Group Limited (GNS), and CXApp Inc. (CXAI).
In evaluating SoundHound’s financial performance, the Return on Invested Capital (ROIC) is a critical metric. SoundHound’s ROIC is -68.13%, which is significantly lower than its Weighted Average Cost of Capital (WACC) of 17.82%. This negative ROIC indicates that the company is not generating returns above its cost of capital, suggesting inefficiency in capital utilization.
Comparatively, BigBear.ai Holdings has a ROIC of -32.02% and a WACC of 15.17%, resulting in a ROIC to WACC ratio of -2.11. This ratio, while negative, is less severe than SoundHound’s -3.82, indicating that BigBear.ai is slightly more efficient in using its capital, though still not covering its cost of capital.
BuzzFeed, Inc. stands out among the peers with a ROIC of -8.65% and a WACC of 15.30%, leading to a ROIC to WACC ratio of -0.57. Although still negative, BuzzFeed’s ratio is the least negative among the group, suggesting it is closer to breaking even in terms of generating returns relative to its cost of capital, as highlighted by the analysis.
Overall, the peer group, including SoundHound, is experiencing negative ROICs, indicating a common challenge in generating sufficient returns to cover their respective costs of capital. However, BuzzFeed’s relatively better performance in this metric suggests it is more efficient in capital utilization compared to its peers.
