SoundHound AI, Inc. (Nasdaq: SOUN), a global leader in voice
artificial intelligence, today reported its financial results for
the second quarter of 2023.
This press release features multimedia. View
the full release here:
https://www.businesswire.com/news/home/20230808072152/en/
SoundHound AI Reports Second Quarter
Revenue Increase of 42%, Adjusted EBITDA Improves 50%, Strong
Increase in Cash Position, Investment in Generative AI Foundation
Model (Graphic: Business Wire)
“We mark another quarter of strong growth, with our AI powering
millions of devices and services and billions of successful
interactions per year. We expect our unique Generative AI
integration will result in faster adoption and even greater
capabilities,” said Keyvan Mohajer, CEO and Co-Founder of
SoundHound. “And now, we are combining our vast amounts of
experience and data to create the first of its kind, multimodal
foundation model, supporting speech-to-meaning and enabling
incredible new experiences.”
Financial Highlights - Second Quarter
- Reported revenue was $8.8 million, an increase of 42%
year-over-year
- Gross margin was 79%, an improvement of approximately 1,900
basis points compared to 60% in the prior year
- Operating loss was $16.4 million, an improvement of 43% year
over year
- Net loss was $21.9 million, an improvement of 28% year over
year
- Earnings per share was a net loss of ($0.10), compared to
($0.19) in the previous year
- Adjusted EBITDA (non-GAAP) was a loss of ($9.9) million, a
year-over-year improvement of 50%
- Significantly strengthened balance sheet, the company has
approximately $130 million in total cash as of June 30, 2023
“In the second quarter we significantly improved our liquidity
position and continued our strong growth trajectory, all while
making the business more efficient,” said Nitesh Sharan, CFO of
SoundHound. “We are judiciously balancing between our profit
objectives and the massive growth opportunities in front of
us.”
Business Highlights - Second Quarter and Recent
Highlights
- Generative AI Foundation Model: training an innovative
multi-modal foundation model supporting both audio and text,
combining the power of Large Language Models with SoundHound’s
Speech-to-Meaning® technology using over a million hours of field
data and billions of conversations in tens of languages
- Announced a significant expansion of White Castle partnership,
including plans to rollout voice AI drive-thru service to over 100
lanes by the end of 2024
- Strong customer adoption of Smart Ordering. Examples include:
Beef O’Bradys, Kneaders bakeries, Hot Table, Naz’s Halal, Slim
& Husky’s, Crust Pizza, Kumori Sushi, Noi Thai, Bozelli’s
Italian Deli and Dialog Cafe, among many others, adding to the
hundreds of others already signed up
- Dynamic Interaction: Rolling out Dynamic Interaction with a
fast growing large privately held hospitality and foodservice
franchiser that operates in 30 states and has over 200
restaurants
- Introduced SoundHound Chat AI for Automotive, giving drivers
and passengers seamless access to a vast array of information
domains enabled by complex conversational capabilities, generative
AI, and live content domains
- Multiple automotive brands began live pilots of SoundHound Chat
AI for Automotive, with the goal of upgrading by the end of the
year
- Announced that SoundHound’s voice AI technology will be
available on, and can be integrated with, Oracle MICROS Simphony
Point-of-Sale for Restaurants
- Joined with Meta on its Llama 2 announcement, partnering to
support an open and responsible approach to AI innovation
- Joined the Russell 2000 and 3000 Indexes
- Attended National Restaurant Association conference and named
by Nation’s Restaurant News as one of the most exciting companies
on the show floor
- Ranked among Technology Magazine’s top 10 companies advancing
Natural Language Processing
- Named as a finalists at Webby Awards: “Best Use of Voice
Technology”
Financial Results in Detail
Second Quarter 2023 Financial
Measures
Three Months Ended
(thousands, except per share data)
June 30, 2023
June 30, 2022
Change in %
Cumulative bookings backlog1
$
339,207
$
283,431
20
%
Revenues
$
8,751
$
6,152
42
%
Operating expenses:
Cost of revenues
$
1,830
$
2,488
-26
%
Sales and marketing
5,078
4,370
16
%
Research and development
11,736
18,862
-38
%
General and administrative
6,377
9,362
-32
%
Restructuring
166
-
N/A
Total operating expenses
$
25,187
$
35,082
-28
%
Operating loss
$
(16,436
)
$
(28,930
)
-43
%
Net loss
$
(21,932
)
$
(30,668
)
-28
%
Net loss per share
$
(0.10
)
$
(0.19
)
0.09
Adjusted EBITDA2
$
(9,926
)
$
(20,015
)
-50
%
1.
Cumulative bookings backlog is prior quarter end balance plus
new bookings in the current quarter minus associated revenue
recognized. Bookings are derived from committed customer contracts
and reflect revenue expected to be realized over the life of such
contracts.
2.
Please see table below for a reconciliation from GAAP to
non-GAAP.
Summary of Liquidity and Cash Flows
The company’s total cash was approximately $130 million at June
30, 2023. In April, SoundHound secured $100 million of minimally
dilutive debt financing. The company also raised $43 million
through its committed equity facility in the second quarter.
Condensed Cash Flow Statement
Six Months Ended
(thousands)
June 30, 2023
June 30, 2022
Cash flows:
Net cash used in operating activities
$
(33,651
)
$
(46,767
)
Net cash used in investing activities
(293
)
(982
)
Net cash provided by financing
activities
154,008
90,167
Net change in cash and cash
equivalents
$
120,064
$
42,418
Business Outlook 2023
SoundHound continues to expect 2023 revenue to be in a range of
$43 to $50 million. The company also continues to expect to be
adjusted EBITDA positive in the fourth quarter of 2023.
Additional Information
SoundHound expects to file its Form 10-Q for second quarter
2023, by August 14, 2023. For more information please see the
company’s SEC filings which can be obtained on the company’s
website at investors.soundhound.com.
Conference Call and Webcast
Keyvan Mohajer, Co-Founder and CEO, and Nitesh Sharan, CFO will
host a live audio conference call and webcast today at 2:30 p.m.
Pacific Time/5:30 p.m. Eastern Time. A live webcast will also be
accessible at investors.soundhound.com and a replay of the webcast
will be available for 90 days following the session.
About SoundHound AI
SoundHound (Nasdaq: SOUN), a global leader in conversational
intelligence, offers voice AI solutions that let businesses offer
incredible conversational experiences to their customers. Built on
proprietary technology, SoundHound’s voice AI delivers
best-in-class speed and accuracy in numerous languages to product
creators across automotive, TV, and IoT, and to customer service
industries via groundbreaking AI-driven products like Smart
Answering, Smart Ordering, and Dynamic Interaction™, a real-time,
multimodal customer service interface. Along with SoundHound Chat
AI, a powerful voice assistant with integrated Generative AI,
SoundHound powers millions of products and services, and processes
billions of interactions each year for world class businesses.
Forward Looking Statements
This press release contains forward-looking statements, which
are not historical facts, within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. In some cases, you can
identify forward-looking statements by the use of words such as
“may,” “could,” “expect,” “intend,” “plan,” “seek,” “anticipate,”
“believe,” “estimate,” “predict,” “potential,” “continue,”
“likely,” “will,” “would” and variations of these terms and similar
expressions, or the negative of these terms or similar expressions.
These forward-looking statements include, but are not limited to,
statements concerning our expected financial performance, our
ability to implement our business strategy and anticipated business
and operations, including our ability to improve our Generative AI
Foundation Model, expand our White Castle partnership and roll out
our AI drive thru service, roll out our Dynamic Interaction, Chat
AI for Automotive, and expand the number of platforms on which our
voice AI technology will be available, the potential utility of and
market for our products and services, our ability to achieve
revenue from our bookings backlog, guidance for financial results
for 2023 and our ability to timely file our quarterly report on
Form 10-Q. Such forward-looking statements are necessarily based
upon estimates and assumptions that, while considered reasonable by
us and our management, are inherently uncertain. As a result,
readers are cautioned not to place undue reliance on these
forward-looking statements. Our actual results may differ
materially from those expressed or implied by these forward-looking
statements as a result of risks and uncertainties impacting
SoundHound’s business including, our ability to successfully launch
and commercialize new products and services and derive significant
revenue, our ability to develop the bespoke products and services
required under the contracts included in our bookings backlog,
including, but not limited to, our ability to convert customer
adoption of Smart Ordering into realized revenue, our ability to
predict or measure supply chain disruptions at our customers, our
market opportunity and our ability to acquire new customers and
retain existing customers, the timing and impact of our growth
initiatives, level of product service failures that could lead our
customers to use competitors’ services, the impact of our announced
restructuring, our ability to predict direct and indirect customer
demand for our existing and future products, our ability to hire,
retain and motivate employees, the effects of competition,
including price competition within our industry segment.
technological, regulatory and legal developments that uniquely or
disproportionately impact our industry segment, developments in the
economy and financial markets and those other factors described in
our risk factors set forth in our filings with the Securities and
Exchange Commission from time to time, including our Annual Report
on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on
Form 8-K. We do not intend to update or alter our forward-looking
statements, whether as a result of new information, future events
or otherwise, except as required by applicable law.
Non-GAAP Measures of Financial Performance
To supplement the company’s financial statements, which are
presented on the basis of U.S. generally accepted accounting
principles (GAAP), the following non-GAAP measure of financial
performance is included in this release: adjusted EBITDA. We define
Adjusted EBITDA as the company’s GAAP net loss excluding (i)
interest and other expense, net, (ii) depreciation and amortization
expense, (iii) income taxes, (iv) stock-based compensation, and (v)
restructuring expense. A reconciliation of GAAP to this adjusted
non-GAAP financial measure is included below. When analyzing the
company's operating results, investors should not consider non-GAAP
measures as substitutes for the comparable financial measures
prepared in accordance with GAAP.
Reconciliation of GAAP Net Loss to Non-GAAP Adjusted
EBITDA
Three Months Ended
(thousands)
June 30, 2023
June 30, 2022
GAAP net loss
$
(21,932
)
$
(30,668
)
Adjustments:
Interest and other expense,
net1
$
5,079
$
1,349
Income taxes
417
389
Depreciation and amortization
703
1,052
Stock-based compensation
5,641
7,863
Restructuring
166
-
Adjusted EBITDA
$
(9,926
)
$
(20,015
)
1)
Includes other income/(expense) of $0.5
and $0.2 million for the three months ended June 30, 2023 and 2022,
respectively.
SOUNDHOUND AI, INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(In thousands, except share
and per share data)
June 30, 2023
December 31,
2022
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents
$
115,764
$
9,245
Accounts receivable, net
3,532
3,414
Prepaid expenses
2,573
2,514
Contract assets
3,701
1,671
Other current assets
1,371
859
Total current assets
126,941
17,703
Restricted cash equivalents,
non-current
13,775
230
Right-of-use assets
6,502
8,119
Property and equipment, net
2,329
3,447
Deferred tax asset
55
55
Contract assets, non-current
7,091
7,041
Other non-current assets
885
1,656
Total assets
$
157,578
$
38,251
LIABILITIES AND STOCKHOLDERS’
EQUITY (DEFICIT)
Current liabilities:
Accounts payable
$
1,895
$
2,798
Accrued liabilities
16,381
7,462
Operating lease liabilities
2,881
3,282
Finance lease liabilities
154
160
Income tax liability
1,080
1,314
Deferred revenue
4,612
5,812
Current portion of long-term debt
—
16,668
Total current liabilities
27,003
37,496
Operating lease liabilities, net of
current portion
4,356
5,715
Finance lease liabilities, net of current
portion
60
128
Deferred revenue, net of current
portion
4,118
7,543
Long-term debt
66,428
18,299
Other non-current liabilities
16,824
4,295
Total liabilities
118,789
73,476
Commitments and contingencies (Note 6)
Stockholders’ equity (deficit):
Series A Preferred Stock, $0.0001 par
value; 1,000,000 shares authorized; 835,011 and 0 shares issued and
outstanding, aggregate liquidation preference of $25,050 and $0 as
of June 30, 2023 and December 31, 2022, respectively
24,942
—
Class A Common Stock, $0.0001 par value;
455,000,000 shares authorized; 194,336,749 and 160,297,664 shares
issued and outstanding as of June 30, 2023 and December 31, 2022,
respectively
20
16
Class B Common Stock, $0.0001 par value;
44,000,000 shares authorized; 38,035,408 and 39,735,408 shares
issued and outstanding as of June 30, 2023 and December 31, 2022,
respectively
4
4
Additional paid-in capital
564,197
466,857
Accumulated deficit
(550,403
)
(502,102
)
Accumulated other comprehensive income
29
—
Total stockholders’ equity (deficit)
38,789
(35,225
)
Total liabilities and stockholders’ equity
(deficit)
$
157,578
$
38,251
The accompanying notes are an integral part of
these condensed consolidated financial statements.
SOUNDHOUND AI, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(In thousands, except share
and per share data)
(Unaudited)
Three Months Ended June
30,
Six Months Ended June
30,
2023
2022
2023
2022
Revenues
$
8,751
$
6,152
$
15,458
$
10,442
Operating expenses:
Cost of revenues
1,830
2,488
3,806
4,261
Sales and marketing
5,078
4,370
9,953
6,951
Research and development
11,736
18,862
25,920
35,512
General and administrative
6,377
9,362
13,502
13,365
Restructuring
166
—
3,751
—
Total operating expenses
25,187
35,082
56,932
60,089
Loss from operations
(16,436
)
(28,930
)
(41,474
)
(49,647
)
Other expense, net:
Interest expense
(5,572
)
(1,572
)
(6,668
)
(4,549
)
Other income (expense), net
493
223
587
(834
)
Total other expense, net
(5,079
)
(1,349
)
(6,081
)
(5,383
)
Loss before provision for income taxes
(21,515
)
(30,279
)
(47,555
)
(55,030
)
Provision for income taxes
417
389
746
741
Net loss
(21,932
)
(30,668
)
(48,301
)
(55,771
)
Other comprehensive income:
Unrealized gains on investments
29
—
29
—
Comprehensive loss
$
(21,903
)
$
(30,668
)
$
(48,272
)
$
(55,771
)
Net loss per share:
Basic and diluted
$
(0.10
)
$
(0.19
)
$
(0.23
)
$
(0.48
)
Weighted-average common shares
outstanding:
Basic and diluted
220,772,111
162,004,172
212,970,561
116,059,520
The accompanying notes are an integral part of
these condensed consolidated financial statements.
SOUNDHOUND AI, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Six Months Ended June
30,
2023
2022
Cash flows from operating activities:
Net loss
$
(48,301
)
$
(55,771
)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization
1,411
2,269
Stock-based compensation
13,947
10,327
Change in fair value of derivative and
warrant liability
—
606
Non-cash interest expense
1,607
2,185
Non-cash lease expense
1,714
1,545
Loss on debt extinguishment
837
—
Other non-cash losses, net
82
—
Changes in operating assets and
liabilities:
Accounts receivable, net
(118
)
1,045
Prepaid expenses
(59
)
(3,409
)
Other current assets
(634
)
(10
)
Contract assets
(2,080
)
—
Other non-current assets
628
110
Accounts payable
(903
)
1,846
Accrued liabilities
5,045
108
Operating lease liabilities
(1,910
)
(2,258
)
Deferred revenue
(4,625
)
(5,362
)
Other non-current liabilities
(292
)
2
Net cash used in operating activities
(33,651
)
(46,767
)
Cash flows from investing activities:
Purchases of property and equipment
(293
)
(982
)
Net cash used in investing activities
(293
)
(982
)
Cash flows from financing activities:
Proceeds from the issuance of Series A
Preferred Stock, net of issuance costs
24,942
—
Proceeds from sales of common stock under
the ELOC program, net of issuance costs
70,905
—
Proceeds from the issuance of common
stock
8,177
2,904
Proceeds from Business Combination and
PIPE, net of transaction costs
—
91,695
Proceeds from the issuance of long-term
debt, net of issuance costs
85,087
—
Payments on notes payable
(35,029
)
(3,416
)
Payments on finance leases
(74
)
(1,016
)
Net cash provided by financing
activities
154,008
90,167
Net change in cash, cash equivalents, and
restricted cash equivalents
120,064
42,418
Cash, cash equivalents, and restricted
cash equivalents, beginning of period
9,475
22,822
Cash, cash equivalents, and restricted
cash equivalents, end of period
$
129,539
$
65,240
Supplemental disclosures of cash flow
information:
Cash paid for interest
$
4,344
$
1,140
Cash paid for income taxes
$
1,098
$
33
Noncash investing and financing
activities:
Accrued and unpaid debt issuance costs
$
16,461
$
—
Non-cash debt discount
$
4,315
$
—
Deferred offering costs reclassified to
additional paid-in capital
$
802
$
—
Conversion of convertible note into common
stock pursuant to Business Combination
$
—
$
20,239
Unpaid deferred offering costs associated
with the Business Combination
$
—
$
1,006
Conversion of redeemable convertible
preferred stock to common stock pursuant to Business
Combination
$
—
$
279,503
Operating lease liabilities arising from
obtaining right-of-use assets
$
—
$
650
The accompanying notes are an integral part of
these condensed consolidated financial statements.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230808072152/en/
Investors: Scott Smith 408-724-1498 IR@SoundHound.com
Media: Fiona McEvoy 415-610-6590 PR@SoundHound.com
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