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SoundHound AI, Inc Class A (SOUN)
NASDAQ:SOUN
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SoundHound AI, Inc Class A
(NASDAQ:SOUN)
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Rating:53Neutral
Price Target:
$9.00
▲(4.41% Upside)
Action:ReiteratedDate:02/27/26
The score is primarily constrained by weak financial quality—especially substantial negative operating and free cash flow—despite strong revenue growth and balance sheet improvement. The earnings call adds meaningful support due to robust 2026 revenue guidance and improving margins/EBITDA trends, while technicals are mixed and valuation is pressured by a negative P/E and no dividend yield data.
Positive Factors
Exceptional revenue growth and deal momentum
Near-doubling of revenue and record-quarter growth demonstrate durable commercial traction and product-market fit. Broad multi-year OEM, telco and channel commitments provide recurring, usage-linked revenue that supports scaling unit economics and visibility into multi-quarter revenue streams.
Stronger balance sheet with ample liquidity
A $248M cash balance and no debt materially reduce refinancing and liquidity risk, giving management runway to invest in product migrations, sales expansion and margin initiatives. This capital flexibility supports execution while operating losses convert toward break‑even.
Product leadership with improving margins
Proprietary models (Agentic/Polaris) and multi-mode deployment (on-device, cloud, on‑premise) create differentiation that drives higher containment and upsell potential. Current margin expansion and ambitious long-term margin targets indicate sustainable gross-margin levers from product mix and scale.
Negative Factors
Persistent negative operating cash flow
Deep negative operating and free cash flow in 2025 indicate structural cash burn despite revenue growth. Continued reliance on cash reserves or external funding constrains financial flexibility and raises execution risk until unit economics and working-capital absorption turn sustainably positive.
Continued non‑GAAP losses and EBITDA deficit
Ongoing adjusted EBITDA losses show the company has not yet reached operating profitability. Durable improvement depends on consistent margin expansion, conversion of large contracts to cash‑generative scale, and disciplined opex control; failure would prolong cash dependence.
Rising operating expenses and stock‑based compensation
Steep YoY increases in S&M and elevated R&D, plus large noncash stock compensation, pressure margins and can dilute shareholders. High fixed and compensation-related costs make achieving durable profitability harder and increase sensitivity to slower-than-expected deal conversions.
SoundHound AI, Inc Class A (SOUN) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$3.62B
Dividend YieldN/A
Average Volume (3M)25.08M
Price to Earnings (P/E)―
Beta (1Y)3.31
Revenue Growth120.52%
EPS Growth-124.81%
CountryUS
Employees842
SectorTechnology
Sector Strength88
IndustrySoftware - Application
Share Statistics
EPS (TTM)0.10
Shares Outstanding387,560,460
10 Day Avg. Volume25,776,823
30 Day Avg. Volume25,083,720
Financial Highlights & Ratios
PEG Ratio2.99
Price to Book (P/B)8.72
Price to Sales (P/S)23.93
P/FCF Ratio0.00
Enterprise Value/Market Cap0.93
Enterprise Value/Revenue19.96
Enterprise Value/Gross Profit47.13
Enterprise Value/Ebitda50.41
Forecast
1Y Price Target
$14.83Price Target Upside72.04% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering7
EPS Forecast (FY)-0.32
Revenue Forecast (FY)$230.17M
SoundHound AI, Inc Class A Business Overview & Revenue Model
Company DescriptionSoundHound AI, Inc. develops independent voice artificial intelligence (AI) platform that enables businesses across industries to deliver high-quality conversational experiences to their customers. Its products include Houndify platform that offers a suite of Houndify tools to help brands build conversational voice assistants, such as automatic speech recognition, natural language understanding, wake words, custom domains, text-to-speech, and embedded voice solutions The company is headquartered in Santa Clara, California.
How the Company Makes MoneySoundHound AI generates revenue through a combination of licensing agreements, subscription services, and partnerships with businesses looking to implement its voice AI technology. The company charges fees for the use of its Houndify platform, which provides custom voice recognition capabilities for clients across various sectors. Additionally, revenue is derived from its music identification app through advertising and premium features. Strategic partnerships with automotive manufacturers and tech companies also contribute to its earnings by integrating SoundHound’s technology into their products.
SoundHound AI, Inc Class A Key Performance Indicators (KPIs)
Any
Revenue by Service Type
Breaks down revenue by different service offerings, indicating which services drive growth and where the company might expand or face competition.
Breaks down revenue by different service offerings, indicating which services drive growth and where the company might expand or face competition.
Data provided by:
The Fly
The FlySoundHound AI, Inc Class A Earnings Call Summary
Earnings Call Date:Feb 26, 2026
(Q4-2025)
| % Change Since: |
Next Earnings Date:May 07, 2026
Earnings Call Sentiment Positive
The call highlighted very strong top-line momentum, record customer wins, meaningful usage growth, improving gross margins, a healthy cash position and aggressive 2026 revenue guidance — all signaling robust commercial traction and product differentiation. Key near-term weaknesses include continued non‑GAAP losses and adjusted EBITDA deficits, sizable YoY increases in operating expenses (particularly S&M), notable stock‑based compensation and P&L volatility tied to acquisition accounting, and a non‑linear path to breakeven. Overall, the positives (revenue scaling, deal momentum, product leadership, improving margins and balance sheet strength) materially outweigh the near-term financial and operational challenges.Q4-2025 Updates
Positive Updates
Record Revenue Growth (FY and Q4)
Q4 revenue of $55.1M, up 59% year-over-year; full-year 2025 revenue $169M, up 99% year-over-year (nearly doubled).
Strong Deal Momentum and Customer Wins
Signed over 100 customer deals in Q4 (biggest quarter ever) across automotive, telecom, retail, restaurants, healthcare, insurance, government and more, including multiyear global deals with a major telco and a leading athletic apparel company and a Japanese OEM with a 7-digit unit commitment.
Broad Automotive and Channel Traction
Multiple OEM wins (Japanese, Korean, Italian, Chinese, Vietnamese), first 2-wheeler win, Stellantis expansion, several multi‑million unit commitments in Asia, and multiple 7‑figure channel partner deals in 2025.
Operational Engagement and Usage Growth
Automotive monthly active users grew >50% YoY in Q4 and automotive cloud audio queries rose ~75% YoY; order activity in restaurants crossed 9 million calls in Q4 (strong double-digit growth YoY); overall query volume now in the billions per month, up 12x since going public.
Improving Margins and Path to Profitability
GAAP gross margin improved to 48%; non‑GAAP gross margin 61% in Q4. Adjusted EBITDA loss narrowed to $7.4M (improved 56% YoY). Management targets long-term >70% gross margins and >30% EBIT margins.
Healthy Balance Sheet and Guidance
Cash & equivalents $248M with no debt. 2026 revenue guidance of $225M–$260M (implies ~33%–54% growth over 2025), signaling continued strong expected growth and increased near-term visibility.
Demonstrable Customer Outcomes
Customer-reported results: a healthcare network's agent handles >1/3 of appointment scheduling; telco customer saw a 20% reduction in labor costs for billing disputes; auto insurance customer increased containment by 10 percentage points in <60 days.
Product Leadership and Differentiation
Marketed Agentic platform and Polaris speech model; claims of superior in-house models and multi‑model arbitration (on-device, cloud, on‑premise, human-augmented) enabling faster deployments, higher containment, and upsell opportunities on migrations (e.g., Amelia/Agentic upgrades).
Negative Updates
Continued Non‑GAAP Loss and Adjusted EBITDA Deficit
Non‑GAAP net loss of $7.3M and non‑GAAP net loss per share $0.02 in Q4; adjusted EBITDA loss of $7.4M (despite a 56% YoY improvement), indicating the company is not yet profitable on an operating basis.
Significant Increases in Operating Expenses
R&D expense rose to $24.8M (up 22% YoY); Sales & Marketing increased to $17.4M (up 82% YoY); G&A increased to $21.2M (up 29% YoY), largely driven by acquisitions and related costs, pressuring near-term margins.
GAAP Net Income Driven by Nonoperating, Noncash Item
Reported GAAP net income of $40.1M and GAAP EPS $0.10 was materially impacted by an ~$85M change in fair value of contingent liabilities tied to acquisitions—nonoperating and noncash—creating potential noise in GAAP profitability comparatives.
Stock‑Based Compensation and P&L Volatility
Noncash employee stock compensation of $20.8M in Q4 and mark-to-market impacts due to high share price volatility create P&L distortion and dilution concerns; management acknowledges higher relative stock comp and ongoing dilution sensitivity.
Portfolio Pruning and Low‑Margin Contracts
Management is pruning low-margin acquired contracts and avoiding or adjusting deals that don't meet minimum thresholds—indicative of legacy margin drag and the need to reprice or exit certain business.
Near‑Term Breakeven Is Non‑Linear
Company expects a progressive rather than uniform transition to breakeven; additional investments will be calibrated, meaning profitability improvements may be uneven and dependent on execution and timing of large deals.
Company Guidance
SoundHound guided 2026 revenue of $225 million to $260 million, with a seasonal ramp through the year, supported by strong 2025 momentum (Q4 revenue $55.1M, +59% YoY; FY2025 revenue $169M, +99% YoY), a cash balance of $248M and no debt, and the expectation of progressive movement into breakeven with continued year‑over‑year EBITDA improvement (Q4 adjusted EBITDA loss $7.4M, improved 56% YoY; Q4 non‑GAAP net loss $7.3M, non‑GAAP EPS −$0.02); management said most of $20M of annualized acquisition cost synergies were executed in Q1, Q4 GAAP/non‑GAAP gross margins were 48%/61%, they expect the majority (>75%) of customers migrated to Agentic 7.3 by mid‑year, and long‑term targets are 70%+ gross margins and 30%+ EBIT margins.SoundHound AI, Inc Class A Financial Statement Overview
Summary
Strong multi-year revenue growth and a much stronger balance sheet with minimal leverage support the score, but it is held back by persistent losses and very weak cash generation (deeply negative operating cash flow and free cash flow in 2025).Income Statement
Revenue growth is strong over time, with revenue rising from $13.0M (2020) to $168.9M (2025), including a sharp acceleration in 2025 (+13.8). Gross margin remains healthy at ~42% in 2025, but profitability is still a key weakness: the company continues to post net losses (2025 net margin ~-8.3%), and EBITDA remains negative. The notable improvement from very large losses in 2024 to a much smaller loss in 2025 is a positive inflection, but earnings quality and consistency are not yet proven.46
Neutral
Balance Sheet
Leverage has improved dramatically versus earlier years, with very low debt relative to equity in 2025 (debt-to-equity ~0.01) and sizable equity ($463.8M) supporting a larger asset base ($688.2M). This is a meaningful stabilization compared with 2023’s highly levered profile (debt-to-equity ~3.20) and negative equity in 2020–2022. The main weakness is that returns remain negative (2025 return on equity ~-3.0%), reflecting ongoing losses despite a stronger capital structure.72
Positive
Cash Flow
Cash generation remains the biggest pressure point: operating cash flow and free cash flow are deeply negative in 2025 (operating cash flow -$98.2M; free cash flow -$99.1M), following similarly negative results in prior years. While the operating cash burn improved modestly versus 2024, free cash flow still declined year over year (free cash flow growth -9.94). The company’s cash flow profile indicates continued reliance on external funding until operating losses and working-capital demands improve materially.33
Negative
| Breakdown | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 168.92M | 84.69M | 45.87M | 31.13M | 21.20M |
| Gross Profit | 71.55M | 41.38M | 34.57M | 21.53M | 14.61M |
| EBITDA | 25.53M | -329.09M | -62.63M | -99.70M | -61.65M |
| Net Income | -14.01M | -350.68M | -88.94M | -116.71M | -79.54M |
Balance Sheet | |||||
| Total Assets | 688.17M | 553.95M | 151.12M | 37.99M | 49.20M |
| Cash, Cash Equivalents and Short-Term Investments | 248.49M | 198.24M | 95.26M | 9.24M | 21.63M |
| Total Debt | 4.21M | 4.35M | 90.16M | 44.12M | 73.32M |
| Total Liabilities | 224.39M | 371.30M | 122.95M | 74.55M | 392.44M |
| Stockholders Equity | 463.79M | 182.65M | 28.17M | -36.56M | -343.24M |
Cash Flow | |||||
| Free Cash Flow | 0.00 | -109.52M | -68.66M | -95.35M | -66.81M |
| Operating Cash Flow | -98.22M | -108.88M | -68.27M | -94.02M | -66.18M |
| Investing Cash Flow | -59.50M | -12.37M | -392.00K | -1.33M | -636.00K |
| Financing Cash Flow | 208.07M | 210.91M | 168.24M | 82.00M | 44.65M |
SoundHound AI, Inc Class A Technical Analysis
Neutral
8.62
Price Trends
9.62
Negative
12.25
Negative
12.32
Negative
Market Momentum
-0.33
Negative
48.74
Neutral
76.91
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For SOUN, the sentiment is Neutral. The current price of 8.62 is above the 20-day moving average (MA) of 8.10, below the 50-day MA of 9.62, and below the 200-day MA of 12.32, indicating a neutral trend. The MACD of -0.33 indicates Negative momentum. The RSI at 48.74 is Neutral, neither overbought nor oversold. The STOCH value of 76.91 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for SOUN.
SoundHound AI, Inc Class A Risk Analysis
SoundHound AI, Inc Class A disclosed 53 risk factors in its most recent earnings report. SoundHound AI, Inc Class A reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
SoundHound AI, Inc Class A Peers Comparison
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
61 Neutral | $37.18B | 12.37 | -10.20% | 1.83% | 8.50% | -7.62% | |
53 Neutral | $3.62B | -174.85 | ― | ― | 120.52% | -124.81% | |
52 Neutral | $348.89M | -288.10 | 0.25% | ― | -24.05% | 96.90% | |
49 Neutral | $1.79B | -2.89 | -111.83% | ― | -6.95% | -53.69% | |
48 Neutral | $267.16M | -1.28 | ― | ― | -17.50% | -51.25% | |
47 Neutral | $35.33M | -0.11 | -605.44% | ― | -23.03% | -107.34% | |
47 Neutral | $1.22B | -2.74 | -55.01% | ― | 1.84% | -27.74% |
* Technology Sector Average
SOUN
SoundHound AI, Inc Class A
8.62
-1.10
-11.32%
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2.98
-12.77
-81.08%
VERI
Veritone
2.91
0.47
19.26%
CRNC
Cerence
7.75
-2.59
-25.05%
AI
C3ai
8.65
-13.45
-60.86%
BBAI
BigBearai Holdings
4.10
-0.61
-12.95%
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.