Cumulative Bookings Backlog Up 3.4x and Reported Revenue Up 2.8x Year-Over-Year


SANTA CLARA, Calif.–(BUSINESS WIRE)–$SOUN–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.

“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

 

 

Contacts

Investors:
Scott Smith

408-724-1498

IR@SoundHound.com

Media:
Fiona McEvoy

415-610-6590

PR@SoundHound.com