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SOUN Q3 Loss Narrower Than Expected, Revenues Miss on Licensing Shift
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Key Takeaways
SOUN posted a narrower-than-expected Q3 loss, but revenues missed estimates despite surging 48.5%.
SOUN's margins contracted amid rising AI and cloud costs, while LivePerson contributed to revenue growth.
SOUN raised its 2026 revenue guidance to $250M and reaffirmed its $350M-$400M outlook for 2027.
SoundHound AI, Inc. (SOUN - Free Report) reported mixed third-quarter 2026 results, with the bottom line beating the Zacks Consensus Estimate but revenues falling short. Adjusted loss widened year over year, while revenues surged 48.5%, supported by enterprise demand for agentic AI and contributions from the LivePerson acquisition.
Following the results, the company’s shares dipped more than 7% in the after-hours trading session yesterday.
SOUN's Revenues Rise, but Earnings Weaken
SoundHound reported record third-quarter revenues of $62.4 million, up from $42.1 million in the year-ago quarter. However, the figure missed the Zacks Consensus Estimate of $63 million by 0.9%. Growth reflected strong demand for enterprise AI solutions and nearly one month of contributions from LivePerson following the Sept. 4 acquisition closing. The quarter reflected a strategic shift toward recurring revenues, with point-in-time contributions declining to approximately 10% of total revenues.
The company posted an adjusted loss of 5 cents per share compared with 3 cents in the prior-year quarter. The reported figure was narrower than the Zacks Consensus Estimate of a 6-cent loss, representing a 16.7% surprise. Non-GAAP net loss widened to $21.2 million from $13 million, indicating increased pressure on underlying profitability despite revenue growth.
SoundHound AI, Inc. Price, Consensus and EPS Surprise
SoundHound's Margins Contract Amid Higher AI Costs
GAAP gross profit increased 19% year over year to $21.3 million from $17.9 million. However, GAAP gross margin contracted 850 basis points to 34.1% from 42.6%, reflecting higher costs relative to revenue growth.
Non-GAAP gross profit rose 26% to $31.4 million, while non-GAAP gross margin declined 900 basis points to 50.3%. Management attributed the margin pressure to the ramp-up of new agentic AI capabilities and increased cloud usage. Adjusted EBITDA loss widened to $20.7 million from $14.5 million.
GAAP operating loss narrowed to $46.5 million from $115.9 million. The quarter included a $23.4 million noncash gain from changes in the fair value of contingent acquisition liabilities, which was excluded from non-GAAP measures.
SOUN's Enterprise Expansion Supports Growth
SoundHound continued securing enterprise agreements across health care, telecommunications, utilities and hospitality. A leading academic health system selected its technology for hospital services and health-plan operations. Randox adopted SoundHound for customer care, while a major U.S. electric utility signed an agreement covering back-office functions.
In hospitality, Resorts World Las Vegas expanded its deployment from an on-property digital concierge to an autonomous booking agent. Restaurant adoption also progressed, with a major pizza chain adding SoundHound's AI ordering technology to nearly 100 additional locations.
SoundHound Expands OASYS and Voice Commerce Reach
The OASYS platform remained central to SoundHound's product strategy. The company introduced OASYS Edge, enabling AI-powered voice agents to operate directly on vehicles and smart devices, including without continuous network connectivity.
Automotive wins included a seven-figure minimum-guarantee agreement with a Chinese supplier and an embedded voice-assistant deal with India's Greaves Electric. SoundHound also partnered with LG to introduce voice commerce capabilities across approximately 20 million smart televisions in the United States.
Management highlighted a transition toward hosted solutions that recognize revenues over time rather than through upfront licensing. The shift is intended to improve recurring revenue visibility and reduce quarterly fluctuations.
SOUN's Liquidity Position Supports Integration
SoundHound ended September 2026 with $207.6 million in cash and cash equivalents. Short-term debt totaled $3.8 million, largely associated with the LivePerson acquisition. Management expects the remaining convertible notes to be retired during the fourth quarter.
For the first nine months of 2026, net cash used in operating activities increased to $96 million from $76.3 million a year earlier. Investing activities provided $9.8 million compared with cash usage of $57 million, while financing activities generated $45.3 million.
SoundHound Raises 2026 Revenue Guidance Floor
SoundHound narrowed its 2026 revenue outlook to $250 million-$260 million from $230 million-$260 million. The revision incorporates LivePerson contributions and strategic changes involving licensing arrangements and lower-margin contracts.
For 2027, management reaffirmed revenue guidance of $350 million-$400 million and expects sustained positive adjusted EBITDA within the second half of the year, even at the lower end of its revenue outlook.
The company identified at least $120 million in annualized cost reductions, including more than $80 million in actions scheduled to become effective before January 2027. Savings will come from acquisition synergies, operational automation, cloud infrastructure optimization and resource reallocation. These measures, alongside greater deployment of proprietary AI models, are expected to support margin expansion and improved profitability.
SOUN Stock’s Zacks Rank & Key Picks
SoundHound currently carries a Zacks Rank #3 (Hold).
Telos carries a Zacks Rank #1 (Strong Buy) at present. It has a trailing four-quarter earnings surprise of 212.5% on average. Shares of Telos have lost 6.5% year to date (YTD). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Telos’ 2026 EPS indicates 66.7% growth on 15.8% revenue rise from the year-ago levels.
ExlService currently holds a Zacks Rank of 2 (Buy). It has a trailing four-quarter earnings surprise of 9%, on average. Shares of EXLS have gained 2.7% YTD.
The Zacks Consensus Estimate for EXLS’ 2026 EPS implies a 21% rise on 16.7% revenue growth, from the year-ago levels.
SAIC currently carries a Zacks Rank of 2. It has a trailing four-quarter earnings surprise of 28.7%, on average. Shares of SAIC have gained 45.9% YTD.
The Zacks Consensus Estimate for SAIC’s 2026 EPS indicates 0.2% rise on 1% revenue decline, from the year-ago levels.
View the Zacks #1 Rank List
Image: Bigstock
SOUN Q3 Loss Narrower Than Expected, Revenues Miss on Licensing Shift
Key Takeaways
SoundHound AI, Inc. (SOUN - Free Report) reported mixed third-quarter 2026 results, with the bottom line beating the Zacks Consensus Estimate but revenues falling short. Adjusted loss widened year over year, while revenues surged 48.5%, supported by enterprise demand for agentic AI and contributions from the LivePerson acquisition.
Following the results, the company’s shares dipped more than 7% in the after-hours trading session yesterday.
SOUN's Revenues Rise, but Earnings Weaken
SoundHound reported record third-quarter revenues of $62.4 million, up from $42.1 million in the year-ago quarter. However, the figure missed the Zacks Consensus Estimate of $63 million by 0.9%. Growth reflected strong demand for enterprise AI solutions and nearly one month of contributions from LivePerson following the Sept. 4 acquisition closing. The quarter reflected a strategic shift toward recurring revenues, with point-in-time contributions declining to approximately 10% of total revenues.
The company posted an adjusted loss of 5 cents per share compared with 3 cents in the prior-year quarter. The reported figure was narrower than the Zacks Consensus Estimate of a 6-cent loss, representing a 16.7% surprise. Non-GAAP net loss widened to $21.2 million from $13 million, indicating increased pressure on underlying profitability despite revenue growth.
SoundHound AI, Inc. Price, Consensus and EPS Surprise
SoundHound AI, Inc. price-consensus-eps-surprise-chart | SoundHound AI, Inc. Quote
SoundHound's Margins Contract Amid Higher AI Costs
GAAP gross profit increased 19% year over year to $21.3 million from $17.9 million. However, GAAP gross margin contracted 850 basis points to 34.1% from 42.6%, reflecting higher costs relative to revenue growth.
Non-GAAP gross profit rose 26% to $31.4 million, while non-GAAP gross margin declined 900 basis points to 50.3%. Management attributed the margin pressure to the ramp-up of new agentic AI capabilities and increased cloud usage. Adjusted EBITDA loss widened to $20.7 million from $14.5 million.
GAAP operating loss narrowed to $46.5 million from $115.9 million. The quarter included a $23.4 million noncash gain from changes in the fair value of contingent acquisition liabilities, which was excluded from non-GAAP measures.
SOUN's Enterprise Expansion Supports Growth
SoundHound continued securing enterprise agreements across health care, telecommunications, utilities and hospitality. A leading academic health system selected its technology for hospital services and health-plan operations. Randox adopted SoundHound for customer care, while a major U.S. electric utility signed an agreement covering back-office functions.
In hospitality, Resorts World Las Vegas expanded its deployment from an on-property digital concierge to an autonomous booking agent. Restaurant adoption also progressed, with a major pizza chain adding SoundHound's AI ordering technology to nearly 100 additional locations.
SoundHound Expands OASYS and Voice Commerce Reach
The OASYS platform remained central to SoundHound's product strategy. The company introduced OASYS Edge, enabling AI-powered voice agents to operate directly on vehicles and smart devices, including without continuous network connectivity.
Automotive wins included a seven-figure minimum-guarantee agreement with a Chinese supplier and an embedded voice-assistant deal with India's Greaves Electric. SoundHound also partnered with LG to introduce voice commerce capabilities across approximately 20 million smart televisions in the United States.
Management highlighted a transition toward hosted solutions that recognize revenues over time rather than through upfront licensing. The shift is intended to improve recurring revenue visibility and reduce quarterly fluctuations.
SOUN's Liquidity Position Supports Integration
SoundHound ended September 2026 with $207.6 million in cash and cash equivalents. Short-term debt totaled $3.8 million, largely associated with the LivePerson acquisition. Management expects the remaining convertible notes to be retired during the fourth quarter.
For the first nine months of 2026, net cash used in operating activities increased to $96 million from $76.3 million a year earlier. Investing activities provided $9.8 million compared with cash usage of $57 million, while financing activities generated $45.3 million.
SoundHound Raises 2026 Revenue Guidance Floor
SoundHound narrowed its 2026 revenue outlook to $250 million-$260 million from $230 million-$260 million. The revision incorporates LivePerson contributions and strategic changes involving licensing arrangements and lower-margin contracts.
For 2027, management reaffirmed revenue guidance of $350 million-$400 million and expects sustained positive adjusted EBITDA within the second half of the year, even at the lower end of its revenue outlook.
The company identified at least $120 million in annualized cost reductions, including more than $80 million in actions scheduled to become effective before January 2027. Savings will come from acquisition synergies, operational automation, cloud infrastructure optimization and resource reallocation. These measures, alongside greater deployment of proprietary AI models, are expected to support margin expansion and improved profitability.
SOUN Stock’s Zacks Rank & Key Picks
SoundHound currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader Zacks Computer and Technology sector are Telos Corporation (TLS - Free Report) , ExlService Holdings, Inc. (EXLS - Free Report) and Science Applications International Corporation (SAIC - Free Report) .
Telos carries a Zacks Rank #1 (Strong Buy) at present. It has a trailing four-quarter earnings surprise of 212.5% on average. Shares of Telos have lost 6.5% year to date (YTD). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Telos’ 2026 EPS indicates 66.7% growth on 15.8% revenue rise from the year-ago levels.
ExlService currently holds a Zacks Rank of 2 (Buy). It has a trailing four-quarter earnings surprise of 9%, on average. Shares of EXLS have gained 2.7% YTD.
The Zacks Consensus Estimate for EXLS’ 2026 EPS implies a 21% rise on 16.7% revenue growth, from the year-ago levels.
SAIC currently carries a Zacks Rank of 2. It has a trailing four-quarter earnings surprise of 28.7%, on average. Shares of SAIC have gained 45.9% YTD.
The Zacks Consensus Estimate for SAIC’s 2026 EPS indicates 0.2% rise on 1% revenue decline, from the year-ago levels.