SoundHound AI reported third‑quarter revenue of $42 million, a 68% year‑over‑year increase from $25.09 million in Q3 2024. The growth was driven by a 30% rise in enterprise‑AI contracts, a 25% increase in automotive licensing revenue, and a 15% lift in customer‑service deployments, offset by a modest decline in legacy voice‑assistant sales. Global tariffs and supply‑chain constraints in the automotive sector contributed to a slight headwind, but the company’s diversified product portfolio helped maintain momentum.
The company’s non‑GAAP earnings per share fell to a loss of $0.03, beating the consensus estimate of a $0.09 loss by $0.06. The GAAP net loss widened to $109.3 million, largely due to a $66 million mark‑to‑market loss on contingent acquisition liabilities. The EPS beat was driven by disciplined cost management, a shift toward higher‑margin enterprise contracts, and improved operating leverage from the recent acquisition of Interactions.
GAAP gross margin contracted to 42.6% from 48.6% in the prior year, reflecting the impact of acquisition‑related mix. Non‑GAAP gross margin remained essentially flat at 59.3% versus 59.7% a year earlier, supported by a favorable product mix and scale‑related cost efficiencies. The margin profile indicates that while accounting adjustments compress GAAP figures, core operating profitability is stable.
Management raised the full‑year revenue outlook to $165 million–$180 million, up from the previous $155 million–$170 million range. The guidance lift reflects sustained demand for the company’s Agentic+ platform and Vision AI, as well as continued expansion into new verticals. The company reiterated its target of achieving adjusted EBITDA profitability by year‑end 2025, underscoring confidence in its growth trajectory.
Investors reacted cautiously, citing concerns about the sizable GAAP net loss, valuation levels, and broader market sentiment around high‑growth AI stocks. Despite the earnings beat, the market’s focus on profitability and valuation highlights the gap between operational performance and investor expectations.
Keyvan Mohajer, CEO, said the quarter “marks another period of precise execution against our plan” and highlighted booming global enterprise‑AI adoption. CFO Nitesh Sharan noted that “we continue to deliver high growth with a diverse customer base, expanding product suite, and a balance sheet that enables us to stay on the offense,” while acknowledging “continued pressure in the automotive business, driven by global tariffs and the broader industry softness.”
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