Business Context and Reporting Period
Company: SoundHound AI, Inc.
Filing Type: Form 10-Q (Quarterly Report)
Period Ended: June 30, 2026
Business Overview: SoundHound is a global leader in conversational intelligence and Voice AI, offering independent solutions for automotive, IoT, and customer service sectors. The company recently launched OASYS, an orchestrated agentic AI platform, and continues to integrate acquisitions including SYNQ3, Amelia, and Interactions Corporation.
Key Financial Metrics
| Metric (in thousands) | Three Months Ended June 30, 2026 |
Six Months Ended June 30, 2026 |
|---|---|---|
| Revenues | $61,897 | $106,092 |
| Cost of Revenues | $33,967 | $64,420 |
| Gross Profit | $27,930 | $41,672 |
| Gross Margin | 45% | 39% |
| Operating Expenses (Total) | $105,195 | $172,061 |
| Net Income (Loss) | $(42,817) | $(67,845) |
| Net Loss Per Share (Diluted) | $(0.10) | $(0.21) |
| Cash and Cash Equivalents | $202,776 (as of June 30, 2026) | N/A |
| Net Cash Used in Operating Activities | N/A | $(59,969) |
Material Changes vs. Prior Period
- Revenue Growth: Revenue increased 45% year-over-year (YoY) for the quarter and 48% YoY for the six-month period, driven primarily by service subscription revenue from acquisitions in the Americas and product royalties in Asia.
- Profitability: The company reported a net loss of $42.8 million for the quarter, a significant improvement from the $74.7 million loss in the same period in 2025. This improvement was largely due to a $3.7 million gain from the change in fair value of contingent acquisition liabilities, compared to a $31.4 million loss in the prior year.
- Operating Expenses: General and administrative expenses increased 43% YoY for the quarter, primarily due to legal and professional fees related to acquisitions and bad debt expenses. Research and development expenses remained relatively flat (up 5%) due to lower stock-based compensation offsetting increases in office and consulting costs.
- Contingent Liabilities: The company recognized a $43.1 million gain from the change in fair value of contingent acquisition liabilities for the six months ended June 30, 2026, compared to a $144.7 million gain in the prior year period. This fluctuation is non-cash and driven by stock price movements and probability assessments of revenue targets.
Guidance, Outlook, and Risks
- Strategic Initiatives: The company launched OASYS in May 2026 to unify its voice and agentic AI capabilities. It is actively pursuing the acquisition of LivePerson (expected to close Q3 2026) to expand digital engagement capabilities.
- Liquidity: As of June 30, 2026, the company held $202.8 million in unrestricted cash. Management expects to fund operations for at least the next 12 months through existing cash and its At-The-Market (ATM) equity programs. The Second Equity Distribution Agreement capacity was fully utilized, but a Third Equity Distribution Agreement with $300 million capacity was established in May 2026.
- Internal Controls: The company disclosed that its disclosure controls and procedures were not effective as of June 30, 2026, due to material weaknesses in the control environment, risk assessment, and accounting for complex transactions. Remediation efforts are underway.
- Legal Proceedings: The company is involved in patent infringement litigation (VB Assets, LLC) and a securities class action lawsuit (Liles v. SoundHound AI, Inc.). No loss has been accrued as the outcome is uncertain.
- Going Concern: While the company has incurred recurring losses, it asserts it can continue as a going concern for the next 12 months.
Investor Verification Checklist
- Internal Control Remediation: Verify the progress of remediation plans for material weaknesses in internal controls over financial reporting.
- LivePerson Acquisition: Monitor the closing status of the LivePerson merger and the associated $261.2 million notes restructuring agreement.
- Contingent Liability Volatility: Assess the impact of stock price fluctuations on the fair value of contingent acquisition liabilities, which significantly impacts reported net income/loss.
- Revenue Concentration: Review customer concentration risks, noting that specific customers accounted for significant portions of unbilled receivables (e.g., Customer A, B, C, D).
- Cash Burn Rate: Evaluate the sustainability of the current cash burn rate ($60 million used in operating activities over six months) against the $202.8 million cash balance and ATM program capacity.