Cumulative Bookings Backlog Up 3.4x and Reported Revenue Up 2.8x
Year-Over-Year
SoundHound AI, Inc. (Nasdaq: SOUN), a global leader in voice
artificial intelligence, today reported its financial results for
the three and nine months ended September 30, 2022.
This press release features multimedia. View
the full release here:
https://www.businesswire.com/news/home/20221110005989/en/
SoundHound AI Reports Record Quarter With
Significant Growth Across All Key Metrics (Graphic: Business
Wire)
“Adoption of our voice AI is accelerating fast, as evidenced by
our record quarterly revenue. In addition to strong growth in
royalty revenues across automotive and IoT customers, increasing
numbers of businesses are now looking to use our AI to automate
their customer service – particularly for restaurant phone and
drive-thru ordering,” said Keyvan Mohajer, Co-Founder and CEO of
SoundHound. “Across industries voice AI is proving to be the next
big interface and, as the only independent platform, SoundHound is
well-positioned to establish itself as a leader in this market. On
November 17, we will also unveil a new breakthrough technology that
we believe will redefine conversational AI and mark a new chapter
in human-computer interaction.”
Third Quarter Business Highlights
- Record cumulative bookings backlog of $302 million, up 239%
year-over-year, marking the fourth straight quarter of triple-digit
growth
- Record reported revenues of $11.2 million, up 178%
year-over-year, driven by strong product royalty revenue
- Record monthly queries of ~180 million, surpassing an annual
run rate of 2 billion queries, more than doubling year to date
compared to the prior year
- Record gross margin of 77%, compared to 59% for the third
quarter of 2021, benefiting from economies of scale and a favorable
product mix
- Significant international market expansion of existing
multi-year volume commitment with Hyundai, Kia and Genesis
- Building upon our existing 17 automotive brands we announced
new and expanded relationships with Stellantis in Europe, Dongfeng
Peugeot Citroën Automobiles in China, and initiated integrations
with LG and Harman automotive technology platforms
- Rapidly expanding channel relationships with SoundHound for
Restaurants, including new integrations with Oracle and Toast, and
continuing strong uptake with Mastercard and Square
- Fully automated SoundHound for Restaurants order completion
rate is on track to surpass human levels as a result of our
advanced AI technology, delivering substantial value to
customers
- Announced general availability of full suite of Edge and Cloud
connectivity solutions and launched SoundHound Intelligent
Transcription
“Our exceptional Q3 results demonstrate our business momentum.
Not only have we reaffirmed our full year outlook, we also saw our
cumulative bookings increase for the fourth straight quarter – to
over $300 million – and our revenue eclipse that of the full year
2021 in the first nine months of this year,” said Nitesh Sharan,
CFO of SoundHound. “We’re thoughtfully channeling investments to
the areas that matter most, while accelerating our path to
profitability.”
Third Quarter 2022 Financial Highlights
Three Months Ended
(thousands, except per share data)
September 30, 2022
September 30, 2021
Change in %
Cumulative bookings backlog1
$
302,187
$
89,118
239%
Revenues
$
11,186
$
4,028
178%
Operating expenses:
Cost of revenues
$
2,583
$
1,657
56%
Sales and marketing
6,672
1,175
468%
Research and development
19,352
14,344
35%
General and administrative
9,587
4,022
138%
Total operating expenses
$
38,194
$
21,198
80%
Operating loss
$
(27,008
)
$
(17,170
)
57%
Net loss
$
(28,922
)
$
(23,781
)
22%
Net loss per share
$
(0.15
)
$
(0.35
)
$
0.20
Adjusted EBITDA2
$
(16,907
)
$
(14,522
)
16%
1)
Cumulative bookings backlog is prior
quarter end balance plus new bookings in the current quarter minus
associated revenue recognized.
2)
Please see table below for a
reconciliation from GAAP to non-GAAP.
Summary of Cash Flows
(thousands)
Nine Months Ended
September 30, 2022
September 30, 2021
Cash flows:
Net cash used in operating activities
$
(73,605
)
$
(51,097
)
Net cash used in investing activities
(1,188
)
(234
)
Net cash provided by financing
activities
85,613
34,898
Net change in cash and cash
equivalents
$
10,820
$
(16,433
)
The Company’s cash and cash equivalents was $33.4 million at
September 30, 2022.
Business Outlook
SoundHound reaffirms its full year 2022 revenue guidance.
Moreover, the company refines its range to now expect between $28
and $32 million (previous range between $27 and $33 million).
To streamline the company and focus on strategic initiatives to
accelerate growth in key verticals, we have implemented cost
reduction initiatives. The announced measures will result in a
reduction in workforce of approximately 10% as well as adjustments
to our discretionary expenses.
Additional Information
SoundHound expects to file its Form 10-Q for the quarterly
period ended September 30, 2022, by November 14, 2022. For more
information please see the company’s SEC filings which can be
obtained on our website at investors.soundhound.com.
SoundHound will announce a new breakthrough technology on
November 17th. Please refer to soundhound.com on November 17th for
the press release.
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. Please click here to
pre-register for the conference call and obtain your dial in number
and passcode. A live webcast will also be accessible at
investors.soundhound.com and a replay of the webcast will be
available following the session.
About SoundHound
SoundHound (Nasdaq: SOUN), a leading innovator of conversational
intelligence, offers an independent voice AI platform that enables
businesses across industries to deliver best-in-class
conversational experiences to their customers. Built on proprietary
Speech-to-Meaning® and Deep Meaning Understanding® technologies,
SoundHound’s advanced voice AI platform provides exceptional speed
and accuracy and enables humans to interact with products and
services like they interact with each other—by speaking naturally.
SoundHound is trusted by companies around the globe, including
Hyundai, Mercedes-Benz, Pandora, Qualcomm, Netflix, Snap, Square,
LG, VIZIO, KIA, and Stellantis. www.soundhound.com
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. Our actual results,
performance or achievements may differ materially from those
expressed or implied by these forward-looking statements. 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. 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. Actual results may differ materially
from those indicated by these forward-looking statements as a
result of risks and uncertainties impacting SoundHound’s business
including, current uncertainties associated with the COVID-19
pandemic, our inability to predict or measure supply chain
disruptions at our customers resulting from the COVID-19 pandemic
and other causes, the potential future revenue associated with our
AI platform products and services; our rate of growth; our ability
to predict direct and indirect customer demand for our existing and
future products and to secure adequate manufacturing capacity; 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 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 our 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 our
GAAP net loss excluding (i) interest and other expense, net, (ii)
depreciation and amortization expense, (iii) income taxes, and (iv)
stock-based compensation. 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
(thousands)
Three Months Ended
September 30, 2022
September 30, 2021
GAAP net loss
$
(28,922
)
$
(23,781
)
Adjustments:
Interest and other expense,
net1
$
1,050
$
5,421
Income taxes
864
1,190
Depreciation and amortization
928
1,333
Stock-based compensation
$
9,173
$
1,315
Adjusted EBITDA
$
(16,907
)
$
(14,522
)
1)
Includes other (income)/expense of ($0.1)
and $2.7 million, respectively
SOUNDHOUND AI, INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(In thousands, except share
and per share data)
September 30,
2022
December 31,
2021
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents
$
33,412
$
21,626
Restricted cash equivalents
—
460
Accounts receivable, net of allowances of
$109 as of September 30, 2022 and December 31, 2021
2,789
2,060
Prepaid expenses
3,774
1,276
Debt issuance cost
122
1,132
Contract assets
1,407
54
Other current assets
861
863
Total current assets
42,365
27,471
Restricted cash equivalents,
non-current
230
736
Right-of-use assets
8,833
10,291
Property and equipment, net
4,146
6,155
Deferred tax asset
2,169
2,169
Debt issuance cost
204
—
Deferred offering costs
—
1,264
Contract assets, non-current
4,823
—
Other assets
1,071
1,117
Total assets
$
63,841
$
49,203
LIABILITIES, REDEEMABLE
CONVERTIBLE PREFERRED STOCK, AND STOCKHOLDERS’ DEFICIT
Current liabilities:
Accounts payable
$
2,894
$
3,760
Accrued liabilities
7,242
7,298
Operating lease liabilities
3,281
3,281
Finance lease liabilities
179
1,301
Income tax liability
2,858
2,737
Deferred revenue
5,312
6,042
Convertible note
—
29,868
Derivative liability
—
3,488
Notes payable
16,533
29,964
Total current liabilities
38,299
87,739
Operating lease liabilities, net of
current portion
6,236
8,611
Financing lease liabilities, net of
current portion
168
292
Deferred revenue, net of current
portion
8,874
14,959
Notes payable, net of current portion
22,508
—
Other liabilities
2,133
1,336
Total liabilities
78,218
112,937
Commitments and contingencies (Note 7)
Legacy SoundHound redeemable convertible
preferred stock; $0.0001 par value; 0 and 146,218,514 shares
authorized; 0 and 106,949,326 shares issued and outstanding,
liquidation preference of $0 and $284,826 as of September 30, 2022
and December 31, 2021, respectively
—
279,503
Stockholders’ deficit:
Legacy SoundHound Common Stock, $0.0001
par value; 250,030,433 shares authorized; 0 and 68,258,556 shares
issued and outstanding as of September 30, 2022 and December 31,
2021, respectively
—
1
Class A Common Stock, $0.0001 par value;
455,000,000 shares authorized; 157,296,065 and 0 shares issued and
outstanding as of September 30, 2022 and December 31, 2021,
respectively
16
—
Class B Common Stock, $0.0001 par value;
44,000,000 shares authorized; 40,396,600 and 0 shares issued and
outstanding as of September 30, 2022 and December 31, 2021,
respectively
4
—
Additional paid-in capital
457,025
43,491
Accumulated deficit
(471,422
)
(386,729
)
Total stockholders’ deficit
(14,377
)
(343,237
)
Total liabilities, redeemable convertible
preferred stock, and stockholders’ deficit
$
63,841
$
49,203
SOUNDHOUND AI, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(In thousands, except share
and per share data)
(Unaudited)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2022
2021
2022
2021
Revenues
$
11,186
$
4,028
$
21,628
$
16,046
Operating expenses:
Cost of revenues
2,583
1,657
6,844
4,878
Sales and marketing
6,672
1,175
13,623
3,259
Research and development
19,352
14,344
54,864
42,810
General and administrative
9,587
4,022
22,952
11,387
Total operating expenses
38,194
21,198
98,283
62,334
Loss from operations
(27,008
)
(17,170
)
(76,655
)
(46,288
)
Other expense, net:
Interest expense
(1,166
)
(2,683
)
(5,715
)
(5,725
)
Other income (expense), net
116
(2,738
)
(718
)
(4,280
)
Total other expense, net
(1,050
)
(5,421
)
(6,433
)
(10,005
)
Loss before provision for income taxes
(28,058
)
(22,591
)
(83,088
)
(56,293
)
Provision for income taxes
864
1,190
1,605
1,400
Net loss
(28,922
)
(23,781
)
(84,693
)
(57,693
)
Other comprehensive gain:
Unrealized holding gain on
available-for-sale securities, net of tax
—
—
—
1
Comprehensive loss
$
(28,922
)
$
(23,781
)
$
(84,693
)
$
(57,692
)
Net loss per share:
Basic and diluted
$
(0.15
)
$
(0.35
)
$
(0.59
)
$
(0.86
)
Weighted-average common shares
outstanding:
Basic and diluted
197,006,980
67,718,940
143,338,517
67,021,176
SOUNDHOUND AI, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Nine Months Ended
September 30,
2022
2021
Cash flows from operating activities:
Net loss
$
(84,693
)
$
(57,693
)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization
3,197
4,169
Stock-based compensation
19,500
4,049
Change in fair value of derivative and
warrant liability
606
3,791
Amortization of debt issuance cost
2,237
2,953
Non-cash lease amortization
2,168
2,412
Deferred income taxes
—
1,035
Changes in operating assets and
liabilities:
Accounts receivable, net
(729
)
(2,061
)
Prepaid expenses
(2,498
)
(75
)
Other current assets
2
(552
)
Contract assets
(6,176
)
—
Other assets
46
(222
)
Accounts payable
398
(32
)
Accrued liabilities
1,440
1,724
Operating lease liabilities
(3,085
)
(2,710
)
Deferred revenue
(6,815
)
(7,138
)
Other liabilities
797
(747
)
Net cash used in operating activities
(73,605
)
(51,097
)
Cash flows from investing activities:
Purchases of property and equipment
(1,188
)
(234
)
Net cash used in investing activities
(1,188
)
(234
)
Cash flows from financing activities:
Proceeds from issuance of convertible
notes, net of issuance cost
—
5,044
Proceeds from note payable, net of
issuance cost
—
29,833
Proceeds from the issuance of common stock
upon exercise of options
3,620
1,906
Proceeds from Business Combination and
PIPE, net of transaction costs
90,689
—
Payments on notes payable
(7,450
)
—
Payments on finance leases
(1,246
)
(1,885
)
Net cash provided by financing
activities
85,613
34,898
Net change in cash, cash equivalents, and
restricted cash equivalents
10,820
(16,433
)
Cash, cash equivalents, and restricted
cash equivalents, beginning of period
22,822
44,982
Cash, cash equivalents, and restricted
cash equivalents, end of period
$
33,642
$
28,549
Reconciliation to amounts on the condensed
consolidated balance sheets:
Cash and cash equivalents
$
33,412
$
27,259
Current portion of restricted cash
equivalents
—
230
Non-current portion of restricted cash
equivalents
230
1,060
Total cash, cash equivalents, and
restricted cash equivalents shown in the condensed consolidated
statements of cash flows
$
33,642
$
28,549
Supplemental disclosures of cash flow
information:
Cash paid for interest
$
2,302
$
1,475
Cash paid for income taxes
$
787
$
260
Noncash investing and financing
activities
Operating lease liabilities and
right-of-use assets through adoption of ASC 842
$
—
$
11,428
Conversion of convertible note into common
stock pursuant to Business Combination
$
20,239
$
—
Conversion of redeemable convertible
preferred stock to common stock pursuant to Business
Combination
$
279,503
$
—
Debt discount through issuance of common
stock warrants
$
—
$
3,842
Operating lease liabilities arising from
obtaining right-of-use assets
$
650
$
3,422
Property and equipment acquired under
finance leases or debt
$
—
$
650
View source
version on businesswire.com: https://www.businesswire.com/news/home/20221110005989/en/
Investors: Scott Smith 408-724-1498 IR@SoundHound.com
Media: Fiona McEvoy 415-610-6590 PR@SoundHound.com
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