SoundHound AI (NASDAQ:SOUN) Issues Earnings Results

SoundHound AI (NASDAQ:SOUN) released its earnings results on Thursday. The company reported ($0.05) EPS for the quarter, topping analysts’ consensus estimates of ($0.12) by $0.07, FiscalAI reports. The company had revenue of $62.43 million for the quarter, compared to analysts’ expectations of $61.71 million. SoundHound AI had a negative net margin of 67.45% and a negative return on equity of 30.22%. The firm’s revenue was up 48.5% compared to the same quarter last year. During the same quarter last year, the business earned ($0.03) EPS.

Here are the key takeaways from SoundHound AI’s conference call:

• SoundHound reported record Q3 revenue of $62.4 million, up 48% year over year, with nearly one month of LivePerson revenue included.
• The company is shifting large license deals to hosted, multi-year contracts: point-in-time revenue fell to about 10% of Q3 revenue from over 33% in Q2. This improves recurring-revenue visibility but reduces near-term licensing revenue; 2026 guidance was raised and narrowed to $250 million to $260 million.
• Management reaffirmed 2027 revenue guidance of $350 million to $400 million and expects sustainable positive adjusted EBITDA in the second half of 2027. It cited at least $120 million in annualized cost reductions, with more than $80 million already actioned.
• Non-GAAP gross margin fell 9 percentage points year over year to 50.3%, which management attributed to increased cloud usage and the ramp of agentic AI capabilities. It expects margin improvement from cloud savings, exiting negative-margin contracts, and using its own AI models.
• SoundHound ended the quarter with more than $200 million in cash and was effectively debt-free after retiring nearly all LivePerson debt. Management said its proprietary models have cut model costs by more than an order of magnitude in migrated deployments.

SoundHound AI Stock Down 3.5%

SOUN traded down $0.15 during trading on Friday, reaching $4.11. The company had a trading volume of 29,163,390 shares, compared to its average volume of 15,011,830. The business has a 50 day simple moving average of $5.50 and a 200-day simple moving average of $7.03. The stock has a market cap of $1.83 billion, a P/E ratio of -19.57 and a beta of 2.89. SoundHound AI has a 52 week low of $3.88 and a 52 week high of $14.98.

Key Headlines Impacting SoundHound AI

Here are the key news stories impacting SoundHound AI this week:

• Positive Sentiment: Management is targeting sustained adjusted EBITDA profitability in the second half of 2027, supported by a planned $120 million in cost savings and the integration of LivePerson. SOUN Q3 Earnings Call Highlights 2027 Profitability Target
• Positive Sentiment: Commercial momentum includes an expanded Ultraviolette partnership to bring voice AI to its electric motorcycle lineup, alongside an LG deal covering about 20 million U.S. smart TVs. SoundHound AI and Ultraviolette Announce Major Expansion
• Neutral Sentiment: Q3 revenue reached a record $62.4 million, up 48.5% year over year, while the reported loss per share was narrower than some estimates. However, revenue slightly missed other published estimates, making the quarter’s results mixed. SOUN Q3 Loss Narrower Than Expected, Revenues Miss on Licensing Shift
• Neutral Sentiment: Cantor Fitzgerald lowered its price target to $10 from $15 but maintained an Overweight rating, reflecting continued analyst optimism alongside a more cautious valuation. Cantor Fitzgerald’s $10 Target
• Negative Sentiment: Investors focused on deteriorating profitability: non-GAAP gross margin fell to 50.3% from 59.3%, and the adjusted EBITDA loss widened. The move away from upfront licensing toward hosted, recurring contracts may also weigh on near-term recognized revenue. SoundHound Stock Slips Despite Beat as Adjusted Losses Widen
• Negative Sentiment: Persistent net losses, cash burn, and execution risks around the LivePerson acquisition remain concerns. Those issues have contributed to a steep recent sell-off despite strong year-over-year sales growth. SOUN Plunges 22.8% in the Past Month

Wall Street Analyst Weigh In

A number of brokerages recently weighed in on SOUN. DA Davidson dropped their target price on shares of SoundHound AI from $10.00 to $5.00 and set a “buy” rating for the company in a research report on Friday. Piper Sandler decreased their target price on SoundHound AI from $7.00 to $6.00 and set a “neutral” rating on the stock in a research report on Tuesday, September 22nd. Weiss Ratings raised SoundHound AI from a “sell (e+)” rating to a “sell (d-)” rating in a research note on Thursday, October 15th. Yorkville Ives assumed coverage on SoundHound AI in a report on Monday, October 5th. They set an “in-line” rating and a $6.50 price target for the company. Finally, Wall Street Zen raised SoundHound AI from a “strong sell” rating to a “sell” rating in a research note on Saturday, October 24th. One research analyst has rated the stock with a Strong Buy rating, three have issued a Buy rating, four have given a Hold rating and one has given a Sell rating to the stock. Based on data from MarketBeat.com, SoundHound AI has a consensus rating of “Hold” and a consensus target price of $9.50.

Insider Activity

In related news, insider James Hom sold 38,730 shares of the stock in a transaction dated Tuesday, September 15th. The shares were sold at an average price of $6.33, for a total value of $245,160.90. Following the sale, the insider directly owned 1,105,555 shares of the company’s stock, valued at $6,998,163.15. This represents a 3.38% decrease in their position. The transaction was disclosed in a document filed with the SEC, which is available through this hyperlink. The sale was made to cover tax withholding obligations related to the vesting of equity awards. Also, CEO Keyvan Mohajer sold 137,290 shares of the firm’s stock in a transaction dated Tuesday, September 15th. The stock was sold at an average price of $6.33, for a total transaction of $869,045.70. Following the completion of the sale, the chief executive officer directly owned 3,684,947 shares of the company’s stock, valued at approximately $23,325,714.51. The trade was a 3.59% decrease in their position. Additional details regarding this sale are available in the official SEC disclosure. The sale was made to cover tax withholding obligations related to the vesting of equity awards. Insiders sold a total of 288,758 shares of company stock valued at $1,828,598 in the last quarter. 8.84% of the stock is currently owned by company insiders.

SoundHound AI Company Profile

SoundHound AI, Inc develops voice artificial intelligence and conversational intelligence technologies. Its platform is designed to enable people to interact with devices, applications and services using natural language, with capabilities including speech recognition, language understanding and conversational response generation.

The company’s offerings include the Houndify platform, which businesses can use to create branded voice assistants and conversational interfaces. SoundHound AI also provides voice-enabled solutions for industries such as automotive, restaurants and customer service, allowing users to access information, control functions, place orders and engage with businesses through voice interactions.