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SOUN Q1 Earnings Miss on Higher Costs, Revenue Beat, Stock Down
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Key Takeaways
SOUN posted record Q1 revenues of $44.2M ( 52% YoY) but a 6-cent loss missed estimates.
SOUN said core automotive and IoT AI grew 88% YoY excluding acquisitions, fueled by demand.
SOUN reaffirmed 2026 revenues of $225M-$260M and expects to close the LivePerson deal in 2H 2026.
SoundHound AI, Inc. (SOUN - Free Report) delivered a mixed first-quarter 2026 performance, with earnings missing expectations even as revenue came in ahead of estimates. The quarter reflected strong demand across enterprise and automotive use cases, continued customer diversification and steady deal momentum, while profitability was weighed down by higher operating costs tied to acquisitions and certain nonrecurring items, including vendor-related true-ups and other acquisition-linked expenses.
Following the results, the company’s shares lost around 12% in the after-hour trading session yesterday.
SOUN’s Revenues and Earnings
In the first quarter, SoundHound reported record revenues of $44.2 million, up 52% year over year. The figure surpassed the Zacks Consensus Estimate of $43 million by 3.5%. The company posted a loss of 6 cents per share compared with the Zacks Consensus Estimate of a loss of 5 cents, a negative surprise of 20%.
SoundHound AI, Inc. Price, Consensus and EPS Surprise
Momentum was supported by increased demand across the enterprise and automotive sectors. Excluding the impact of acquisitions, SoundHound said its core automotive and IoT AI business grew 88% year over year, highlighting the strength of underlying adoption.
SOUN’s Margins Absorb Vendor True-Up and Spend
On a year-over-year basis, SOUN’s profitability softened. GAAP gross margin fell to 31.1% from 36.5% a year ago, reflecting higher costs in the quarter, including true-up costs tied to third-party vendor expenses in the company’s digital-first business, which management said are nonrecurring. Non-GAAP gross margin was 49.7%, down modestly from 50.8% in the prior-year quarter, as the same cost pressures partially offset benefits from ongoing efficiency efforts such as infrastructure modernization and cloud optimization.
Adjusted EBITDA also weakened year over year, with the loss widening to $26.7 million from $22.2 million. Management tied the expense backdrop largely to acquisition-driven cost increases (notably higher sales and marketing, R&D, and G&A from added headcount and integration-related legal/advisory costs), alongside time-bound investments aimed at advancing its foundation models and broader platform roadmap, which it expects to carry clear ROI but to temporarily offset some cost actions.
SOUN’s Enterprise Pipeline Keeps Broadening
Management characterized demand as rising across AI and enterprise solutions, pointing to a “massive pipeline” and a widening set of large-customer wins. Financial services and automotive were cited as key growth contributors in the quarter, alongside meaningful activity in health care, restaurants and technology.
Customer concentration remained contained, with no single customer contributing more than 10% of quarterly revenue. For a company scaling across multiple verticals, that diversification matters because it reduces reliance on any single renewal cycle while the business continues to absorb and integrate acquired operations.
SoundHound’s OASYS Pushes Agentic AI to Scale
SoundHound’s launch of OASYS is central to its pitch that AI deployments can move from custom, resource-heavy builds to a faster, repeatable process. The company described OASYS as a self-learning orchestrated agent system where “AI builds AI,” enabling agents to be created from existing documentation and integrations in minutes instead of months.
Beyond speed, management framed OASYS as an integration layer across products and acquisitions, supporting “build once, deploy anywhere” use cases across phone, chat, kiosks, TVs and in-vehicle channels. The approach is intended to improve delivery timelines and, over time, raise profitability by reducing ongoing manual maintenance through human-approved, automated optimization.
SoundHound’s Balance Sheet Supports M&A Strategy
As of March 31, 2026, SOUN ended the quarter with $215.6 million in cash and cash equivalents, down from $248.5 million as of Dec. 31, 2025.
Importantly, the company continued to carry no debt at quarter end, consistent with its debt-free position at the end of 2025, preserving financial flexibility as it pursues integration work and its planned acquisition strategy.
Operating cash flow also weakened year over year in the quarter. Net cash used in operating activities was $26.3 million in the first quarter of 2026 compared with $19.2 million in the prior-year quarter, reflecting a larger cash outflow from core operations during the period.
Management also highlighted efforts to modernize infrastructure, optimize cloud spend and consolidate legacy systems, positioning these initiatives as a source of cost synergies following recent deals. At the same time, leadership reiterated plans for a “calculated” and time-bound investment in foundation models, aimed at lowering runtime costs by reducing dependence on third-party frontier models as more traffic migrates to OASYS.
SOUN Reaffirms 2026 Outlook, Lays Out LivePerson Plan
For 2026, SOUN reaffirmed its revenue outlook of $225 million to $260 million, implying expected year-over-year growth of roughly 33.2% to 53.9%, with management again expecting a ramp-up through the year based on seasonality and deal timing. The company said it continues to see pipeline build across verticals and expects OASYS to drive further product unification and commercial leverage.
The quarter also included a definitive agreement to acquire LivePerson, which management expects to close in the second half of 2026. Assuming the deal closes on that timeline, the company cited an achievable 2027 revenue range of at minimum $350 million to $400 million, including at least $100 million of contribution from LivePerson’s long-tenured customers. Management also said the combined business is expected to reach $500 million based on the existing customer base alone, supported by cross-selling SoundHound’s Voice AI into LivePerson’s customers and expanding omnichannel offerings to SoundHound clients.
SOUN Stock’s Zacks Rank & Key Picks
SoundHound currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks have been discussed below:
The Zacks Consensus Estimate for DXC’s fiscal 2027 EPS indicates 3.4% growth on 2.1% revenue decline from the year-ago levels.
TaskUs (TASK - Free Report) currently carries a Zacks Rank of 2. It has a trailing four-quarter earnings surprise of 12.9%, on average. The stock has plunged 46% YTD.
The Zacks Consensus Estimate for TASK’s 2026 EPS implies an 11.7% decline on 4.2% revenue growth, from the year-ago levels.
Vertiv Holdings Co (VRT - Free Report) currently carries a Zacks Rank of 2. It has a trailing four-quarter earnings surprise of 14.7%, on average.
The Zacks Consensus Estimate for VRT’s 2026 sales and EPS indicates 52.9% and 35% growth, respectively, from the year-ago levels.
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SOUN Q1 Earnings Miss on Higher Costs, Revenue Beat, Stock Down
Key Takeaways
SoundHound AI, Inc. (SOUN - Free Report) delivered a mixed first-quarter 2026 performance, with earnings missing expectations even as revenue came in ahead of estimates. The quarter reflected strong demand across enterprise and automotive use cases, continued customer diversification and steady deal momentum, while profitability was weighed down by higher operating costs tied to acquisitions and certain nonrecurring items, including vendor-related true-ups and other acquisition-linked expenses.
Following the results, the company’s shares lost around 12% in the after-hour trading session yesterday.
SOUN’s Revenues and Earnings
In the first quarter, SoundHound reported record revenues of $44.2 million, up 52% year over year. The figure surpassed the Zacks Consensus Estimate of $43 million by 3.5%. The company posted a loss of 6 cents per share compared with the Zacks Consensus Estimate of a loss of 5 cents, a negative surprise of 20%.
SoundHound AI, Inc. Price, Consensus and EPS Surprise
SoundHound AI, Inc. price-consensus-eps-surprise-chart | SoundHound AI, Inc. Quote
Momentum was supported by increased demand across the enterprise and automotive sectors. Excluding the impact of acquisitions, SoundHound said its core automotive and IoT AI business grew 88% year over year, highlighting the strength of underlying adoption.
SOUN’s Margins Absorb Vendor True-Up and Spend
On a year-over-year basis, SOUN’s profitability softened. GAAP gross margin fell to 31.1% from 36.5% a year ago, reflecting higher costs in the quarter, including true-up costs tied to third-party vendor expenses in the company’s digital-first business, which management said are nonrecurring. Non-GAAP gross margin was 49.7%, down modestly from 50.8% in the prior-year quarter, as the same cost pressures partially offset benefits from ongoing efficiency efforts such as infrastructure modernization and cloud optimization.
Adjusted EBITDA also weakened year over year, with the loss widening to $26.7 million from $22.2 million. Management tied the expense backdrop largely to acquisition-driven cost increases (notably higher sales and marketing, R&D, and G&A from added headcount and integration-related legal/advisory costs), alongside time-bound investments aimed at advancing its foundation models and broader platform roadmap, which it expects to carry clear ROI but to temporarily offset some cost actions.
SOUN’s Enterprise Pipeline Keeps Broadening
Management characterized demand as rising across AI and enterprise solutions, pointing to a “massive pipeline” and a widening set of large-customer wins. Financial services and automotive were cited as key growth contributors in the quarter, alongside meaningful activity in health care, restaurants and technology.
Customer concentration remained contained, with no single customer contributing more than 10% of quarterly revenue. For a company scaling across multiple verticals, that diversification matters because it reduces reliance on any single renewal cycle while the business continues to absorb and integrate acquired operations.
SoundHound’s OASYS Pushes Agentic AI to Scale
SoundHound’s launch of OASYS is central to its pitch that AI deployments can move from custom, resource-heavy builds to a faster, repeatable process. The company described OASYS as a self-learning orchestrated agent system where “AI builds AI,” enabling agents to be created from existing documentation and integrations in minutes instead of months.
Beyond speed, management framed OASYS as an integration layer across products and acquisitions, supporting “build once, deploy anywhere” use cases across phone, chat, kiosks, TVs and in-vehicle channels. The approach is intended to improve delivery timelines and, over time, raise profitability by reducing ongoing manual maintenance through human-approved, automated optimization.
SoundHound’s Balance Sheet Supports M&A Strategy
As of March 31, 2026, SOUN ended the quarter with $215.6 million in cash and cash equivalents, down from $248.5 million as of Dec. 31, 2025.
Importantly, the company continued to carry no debt at quarter end, consistent with its debt-free position at the end of 2025, preserving financial flexibility as it pursues integration work and its planned acquisition strategy.
Operating cash flow also weakened year over year in the quarter. Net cash used in operating activities was $26.3 million in the first quarter of 2026 compared with $19.2 million in the prior-year quarter, reflecting a larger cash outflow from core operations during the period.
Management also highlighted efforts to modernize infrastructure, optimize cloud spend and consolidate legacy systems, positioning these initiatives as a source of cost synergies following recent deals. At the same time, leadership reiterated plans for a “calculated” and time-bound investment in foundation models, aimed at lowering runtime costs by reducing dependence on third-party frontier models as more traffic migrates to OASYS.
SOUN Reaffirms 2026 Outlook, Lays Out LivePerson Plan
For 2026, SOUN reaffirmed its revenue outlook of $225 million to $260 million, implying expected year-over-year growth of roughly 33.2% to 53.9%, with management again expecting a ramp-up through the year based on seasonality and deal timing. The company said it continues to see pipeline build across verticals and expects OASYS to drive further product unification and commercial leverage.
The quarter also included a definitive agreement to acquire LivePerson, which management expects to close in the second half of 2026. Assuming the deal closes on that timeline, the company cited an achievable 2027 revenue range of at minimum $350 million to $400 million, including at least $100 million of contribution from LivePerson’s long-tenured customers. Management also said the combined business is expected to reach $500 million based on the existing customer base alone, supported by cross-selling SoundHound’s Voice AI into LivePerson’s customers and expanding omnichannel offerings to SoundHound clients.
SOUN Stock’s Zacks Rank & Key Picks
SoundHound currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks have been discussed below:
DXC Technology (DXC - Free Report) carries a Zacks Rank #2 (Buy) at present. It has a trailing four-quarter earnings surprise of 12% on average. Shares of GDXC have plunged 18% year to date (YTD). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for DXC’s fiscal 2027 EPS indicates 3.4% growth on 2.1% revenue decline from the year-ago levels.
TaskUs (TASK - Free Report) currently carries a Zacks Rank of 2. It has a trailing four-quarter earnings surprise of 12.9%, on average. The stock has plunged 46% YTD.
The Zacks Consensus Estimate for TASK’s 2026 EPS implies an 11.7% decline on 4.2% revenue growth, from the year-ago levels.
Vertiv Holdings Co (VRT - Free Report) currently carries a Zacks Rank of 2. It has a trailing four-quarter earnings surprise of 14.7%, on average.
The Zacks Consensus Estimate for VRT’s 2026 sales and EPS indicates 52.9% and 35% growth, respectively, from the year-ago levels.