Summary
SoundHound AI opened fiscal 2024 with revenue of $11.6 million in the first quarter, up 73% from the prior-year quarter. The top line benefited from demand for voice AI subscriptions and customer service deployments. The company also closed the SYNQ3 acquisition during the quarter, a deal that management says creates the largest voice AI provider for restaurants with over 10,000 active locations. The quarter ended with $226 million in cash.
Profitability remained under pressure. GAAP operating loss was $28.5 million, and GAAP net loss was $33.0 million. Both losses widened from the prior-year quarter. Diluted EPS was -$0.12, a narrower loss than the prior-year quarter. Operating margin was -246.1%, an improvement from the prior-year quarter. On a non-GAAP basis, adjusted EBITDA loss was $15.4 million and non-GAAP net loss was $19.9 million. Non-GAAP gross margin was 66%. The company reported non-GAAP net loss per share of -$0.07. The company said non-GAAP metrics exclude one-time transaction expenses, amortization of intangibles, and changes in the fair value of contingent liabilities.
Cash generation remains a concern. Operating cash flow used $21.9 million in the first quarter, down from the prior-year quarter. Capital expenditures were $0.1 million, up 560% from the prior-year quarter. Deferred revenue was $3.6 million, down 31.7% from the prior-year quarter. Remaining performance obligations were $11.8 million, down 35.9% from the prior-year quarter. Management attributed the deferred revenue and RPO declines to timing of performance obligations and billing, not to revenue trends.
Operationally, the customer service segment expanded through SYNQ3 and new restaurant wins. Dynamic Interaction, the company's drive-thru AI interface, went live with a top global QSR brand. Agreements were executed with Church's Chicken, and Applebee's expanded voice AI ordering by 500 live locations. Another major QSR with over 2,000 locations is expanding drive-thru capabilities. Smart Answering added multi-location customers including a major Planet Fitness franchisee. In automotive, SoundHound partnered with NVIDIA for in-vehicle generative AI without connectivity. SoundHound Chat AI continued to ramp with Stellantis brands, including Opel, Peugeot, Vauxhall, DS Automobiles, Alfa Romeo, and Lancia. DS Automobiles became the first vehicle in Japan with voice-enabled generative AI. The company also signed a multi-year software license with a large broadcaster and telecommunications company in Austria, Germany, Ireland, Italy, and the UK. Other partnerships include Perplexity and ARM's partner program. Another prominent US-based EV maker will go live later this summer with voice assistants across its full fleet. A new deal with a leading Asian electric car manufacturer will embed SoundHound software into its lineup of affordable luxury cars.
For the full year 2024, management updated its revenue outlook to a range of $65 million to $77 million. The company reported a cumulative subscriptions bookings backlog of $682 million, up approximately 80% year over year. It also cited an annual run rate of over 4 billion queries, with first quarter queries up more than 60% year over year. Risks include the integration of SYNQ3, contingent acquisition liabilities that are remeasured each quarter, and a history of recurring losses. The Term Loan carried an interest rate of approximately 14.0% as of March 31, 2024 and matures on April 14, 2027. Management expects the company can fund operations for at least the next twelve months. Seasonality also matters: in the past, about one third of revenue came in the first half and two thirds in the second half.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q1 FY2024 | Q4 FY2023 | QoQ | Q1 FY2023 | YoY |
|---|---|---|---|---|---|
| Revenue | $11.6M | $17.1M | -32.4% | $6.7M | +72.9% |
| Gross profit | $6.9M | $13.2M | -47.7% | $4.7M | +46.4% |
| Gross margin | 59.7% | 77.2% | -17.5 pp | 70.5% | -10.8 pp |
| Research & development | $14.9M | $12.7M | +17.0% | $14.2M | +4.9% |
| Sales & marketing | $5.5M | $4.5M | +24.0% | $4.9M | +13.7% |
| General & administrative | $10.3M | $7.6M | +34.4% | $7.1M | +44.1% |
| Total operating expenses | $40.1M | $29.5M | +35.8% | $31.7M | +26.4% |
| Operating income (loss) | -$28.5M | -$12.4M | -130.2% | -$25.0M | -13.9% |
| Operating margin | -246.1% | -72.3% | -173.8 pp | -373.3% | +127.2 pp |
| Net income (loss) | -$33.0M | -$18.0M | -83.4% | -$26.4M | -25.2% |
| Net margin | -284.7% | -105.0% | -179.7 pp | -393.2% | +108.5 pp |
| Diluted EPS | -$0.12 | -$0.08 | -$0.04 | -$0.13 | +$0.01 |
| Customers | 100 | — | — | — | — |
Risks
SoundHound's core use and provision of generative AI exposes it to hallucinatory or inaccurate output, unintended bias, and inadvertent disclosure of confidential information into third-party training sets. These issues could harm reputation, competitive position, intellectual property rights, and create legal liability.
The risk factors state that competitors or other third parties may incorporate AI into their products more quickly or more successfully than SoundHound, which could impair its ability to compete effectively.
The European Parliament adopted a draft EU Artificial Intelligence Act on March 13, 2024, expected to be enacted in mid-2024. If enacted, its risk-based framework could impose additional compliance costs, liability, and operational changes on SoundHound's AI-powered products.
SoundHound has incurred recurring losses from inception, and net cash used in operating activities was $21.9 million during the three months ended March 31, 2024 compared to $14.5 million in the same period in 2023. It expects to fund operations for at least the next twelve months but may rely on equity sales under its $150.0 million at-the-market program.
SoundHound has significant goodwill and acquired developed technology, and while no goodwill impairment was recorded as of March 31, 2024, adverse changes such as underperformance or a sustained stock price decline could result in impairment charges.
The SYNQ3 acquisition closed on January 3, 2024 with preliminary purchase consideration of $17.0 million. Contingent acquisition liabilities from the deal were remeasured and produced a $4.2 million loss in the three months ended March 31, 2024, creating earnings volatility and integration risk.
Gross margin decreased to 60% during the three months ended March 31, 2024 from 71% during the same period in 2023, primarily due to the SYNQ3 acquisition's mix of lower-margin call center agent business and amortization of acquired intangible assets.
Interest expense increased by $4.6 million, or 417%, in the three months ended March 31, 2024 compared to the same period in 2023, and the Term Loan had an interest rate of approximately 14.0% as of March 31, 2024. Higher debt service could pressure liquidity.
The MD&A notes that with primary focus on enterprise customers, SoundHound must align with enterprise sales cycles, which can be longer than consumer cycles, requiring ongoing investment in sales and marketing and customer-specific engineering.
SaaS KPIs
All quarters →Remaining Performance Obligations
Non-GAAP Gross Margin
Adjusted EBITDA
Summary, forecast, risks and KPIs are extracted from SOUNDHOUND AI, INC.'s SEC filings for Q1 FY2024 (10-Q / 10-K and the 8-K earnings release); GAAP figures in the summary are checked against the reported XBRL data. They can contain errors; the filings are authoritative. Processed Oct 6, 2026.