SoundHound AI (NASDAQ:SOUN) Releases Earnings Results, Beats Estimates By $0.07 EPS

SoundHound AI (NASDAQ:SOUN) issued its earnings results on Thursday. The company reported ($0.05) earnings per share for the quarter, topping analysts’ consensus estimates of ($0.12) by $0.07, FiscalAI reports. The firm had revenue of $62.43 million during the quarter, compared to analyst estimates of $61.71 million. SoundHound AI had a negative net margin of 67.45% and a negative return on equity of 30.22%. SoundHound AI’s revenue for the quarter was up 48.5% on a year-over-year basis. During the same quarter in the prior year, the business earned ($0.03) earnings per share.

Here are the key takeaways from SoundHound AI’s conference call:

• SoundHound reported record Q3 revenue of $62.4 million, up 48% year over year, with nearly one month of LivePerson revenue included.
• The company is shifting large license deals to hosted, multi-year contracts: point-in-time revenue fell to about 10% of Q3 revenue from over 33% in Q2. This improves recurring-revenue visibility but reduces near-term licensing revenue; 2026 guidance was raised and narrowed to $250 million to $260 million.
• Management reaffirmed 2027 revenue guidance of $350 million to $400 million and expects sustainable positive adjusted EBITDA in the second half of 2027. It cited at least $120 million in annualized cost reductions, with more than $80 million already actioned.
• Non-GAAP gross margin fell 9 percentage points year over year to 50.3%, which management attributed to increased cloud usage and the ramp of agentic AI capabilities. It expects margin improvement from cloud savings, exiting negative-margin contracts, and using its own AI models.
• SoundHound ended the quarter with more than $200 million in cash and was effectively debt-free after retiring nearly all LivePerson debt. Management said its proprietary models have cut model costs by more than an order of magnitude in migrated deployments.

SoundHound AI Stock Performance

Shares of NASDAQ:SOUN traded down $0.15 on Friday, reaching $4.11. The company’s stock had a trading volume of 29,163,390 shares, compared to its average volume of 15,011,830. SoundHound AI has a 52-week low of $3.88 and a 52-week high of $14.98. The company has a 50-day simple moving average of $5.56 and a 200 day simple moving average of $7.06.

Analysts Set New Price Targets

Several analysts have commented on SOUN shares. Oppenheimer reiterated a “market perform” rating on shares of SoundHound AI in a research note on Friday. Yorkville Ives started coverage on SoundHound AI in a research report on Monday, October 5th. They set an “in-line” rating and a $6.50 price objective for the company. Piper Sandler cut their price objective on SoundHound AI from $7.00 to $6.00 and set a “neutral” rating for the company in a research report on Tuesday, September 22nd. Weiss Ratings raised SoundHound AI from a “sell (e+)” rating to a “sell (d-)” rating in a report on Thursday, October 15th. Finally, Cantor Fitzgerald decreased their target price on SoundHound AI from $15.00 to $10.00 and set an “overweight” rating on the stock in a research report on Friday. One analyst has rated the stock with a Strong Buy rating, three have assigned a Buy rating, four have assigned a Hold rating and one has given a Sell rating to the company’s stock. Based on data from MarketBeat.com, SoundHound AI currently has an average rating of “Hold” and a consensus target price of $9.50.

Insider Buying and Selling at SoundHound AI

In other SoundHound AI news, COO Michael Zagorsek sold 71,113 shares of the company’s stock in a transaction that occurred on Tuesday, September 15th. The stock was sold at an average price of $6.33, for a total transaction of $450,145.29. Following the sale, the chief operating officer directly owned 2,600,231 shares in the company, valued at $16,459,462.23. This represents a 2.66% decrease in their ownership of the stock. The sale was disclosed in a document filed with the SEC, which is available at this link. The sale was made to cover tax withholding obligations related to the vesting of equity awards. Also, insider James Hom sold 38,730 shares of the stock in a transaction on Tuesday, September 15th. The shares were sold at an average price of $6.33, for a total value of $245,160.90. Following the sale, the insider owned 1,105,555 shares in the company, valued at $6,998,163.15. The trade was a 3.38% decrease in their position. The disclosure for this sale is available in the SEC filing. The sale was made to cover tax withholding obligations related to the vesting of equity awards. In the last 90 days, insiders have sold 288,758 shares of company stock valued at $1,828,598. Corporate insiders own 8.84% of the company’s stock.

Key Headlines Impacting SoundHound AI

Here are the key news stories impacting SoundHound AI this week:

• Positive Sentiment: Management is targeting sustained adjusted EBITDA profitability in the second half of 2027, supported by a planned $120 million in cost savings and the integration of LivePerson. SOUN Q3 Earnings Call Highlights 2027 Profitability Target
• Positive Sentiment: Commercial momentum includes an expanded Ultraviolette partnership to bring voice AI to its electric motorcycle lineup, alongside an LG deal covering about 20 million U.S. smart TVs. SoundHound AI and Ultraviolette Announce Major Expansion
• Neutral Sentiment: Q3 revenue reached a record $62.4 million, up 48.5% year over year, while the reported loss per share was narrower than some estimates. However, revenue slightly missed other published estimates, making the quarter’s results mixed. SOUN Q3 Loss Narrower Than Expected, Revenues Miss on Licensing Shift
• Neutral Sentiment: Cantor Fitzgerald lowered its price target to $10 from $15 but maintained an Overweight rating, reflecting continued analyst optimism alongside a more cautious valuation. Cantor Fitzgerald’s $10 Target
• Negative Sentiment: Investors focused on deteriorating profitability: non-GAAP gross margin fell to 50.3% from 59.3%, and the adjusted EBITDA loss widened. The move away from upfront licensing toward hosted, recurring contracts may also weigh on near-term recognized revenue. SoundHound Stock Slips Despite Beat as Adjusted Losses Widen
• Negative Sentiment: Persistent net losses, cash burn, and execution risks around the LivePerson acquisition remain concerns. Those issues have contributed to a steep recent sell-off despite strong year-over-year sales growth. SOUN Plunges 22.8% in the Past Month

SoundHound AI Company Profile

SoundHound AI, Inc develops voice artificial intelligence and conversational intelligence technologies. Its platform is designed to enable people to interact with devices, applications and services using natural language, with capabilities including speech recognition, language understanding and conversational response generation.

The company’s offerings include the Houndify platform, which businesses can use to create branded voice assistants and conversational interfaces. SoundHound AI also provides voice-enabled solutions for industries such as automotive, restaurants and customer service, allowing users to access information, control functions, place orders and engage with businesses through voice interactions.