Summary
SoundHound AI posted a difficult fiscal 2022 second quarter, with revenue down and losses much wider. Revenue fell 25.7% to $6.15 million for the quarter ended June 30, 2022. First half revenue declined 13.1% to $10.44 million. The company pinned the drop on a nonrecurring contract modification in Germany in the prior-year period and on lower monetization revenue from its music app. Operating loss widened to $28.93 million in the quarter, and net loss widened to $30.67 million. Diluted EPS was negative $0.19, though the per-share loss narrowed from the prior-year quarter. For the first six months, operating loss widened to $49.65 million and net loss widened to $55.77 million. Diluted EPS for the first half was negative $0.48, a narrower loss than the prior-year period.
Profitability pressure showed up across the board. Operating margin was negative 470.3% in the quarter, down 319.3 percentage points from the prior-year quarter. For the first half, operating margin was negative 475.5%, down 233.2 percentage points. Operating cash flow was negative $46.55 million in the quarter, down 43.5% from the prior-year quarter, and negative $46.77 million for the first half, down 43.3%. Capital expenditures were $0.37 million in the quarter and $0.98 million for the first half, up 784.7% from the prior-year first half. Deferred revenue, current portion only, stood at $6.17 million at June 30, 2022.
The operating story remains tied to the Houndify Voice AI platform. SoundHound said Houndify surpassed 1 billion annual queries in 2021, and traffic grew more than 100% in the first half of 2022 compared with the same period in 2021. Its partners include Hyundai, Mercedes-Benz, Pandora, Deutsche Telekom, Snap, VIZIO, KIA and Stellantis. Those partners have a combined reach of over 2 billion end users. The company also cited over 250 granted or pending patents and a library of over 100 content domains. It has globalized its solution from 1 to 22 languages, with a roadmap of 38 languages and 114 acoustic variations. Customer retention was at least 90% as of June 30, 2022.
SoundHound completed its business combination with Archimedes Tech SPAC Partners on April 26, 2022. The deal brought $113 million in PIPE proceeds, plus $5.4 million in cash held in trust, for $118.4 million in gross proceeds. Transaction expenses were $27.7 million, leaving $90.7 million in net proceeds. On the debt side, the SVB March 2021 Note had a $30.0 million balance, and its maturity was extended to September 1, 2024. The SCI June 2021 Note had a $15.0 million commitment and matures May 31, 2025. The SNAP June 2020 Note converted on April 26, 2022, with $15.0 million of principal and $1.4 million of accrued interest converted into Class A common stock.
Risks remain significant. Management flagged COVID-19, automotive production cuts, semiconductor chip shortages and broader supply chain challenges as headwinds. The military conflict between Russia and Ukraine has hurt the global economy and financial markets. The company also points to seasonality, long enterprise sales cycles and the need to invest heavily in sales, marketing and research and development. Its forward-looking commentary expects billings to increase as car manufacturers recover from delayed production. Going forward, SoundHound expects monetization revenue to come from advertising on its music identification app and from leads and transactions on voice-enabled products and services. The company said its operating cash flows and cash on hand should cover working capital and capital expenditure needs for at least twelve months from the filing date.
Forecast
No forward guidance in this quarter's filings.
Reported figures
GAAP, from SEC filings| Metric | Q2 FY2022 | Q1 FY2022 | QoQ | Q2 FY2021 | YoY |
|---|---|---|---|---|---|
| Revenue | $6.2M | — | — | — | — |
| Gross profit | $3.7M | — | — | — | — |
| Gross margin | 59.6% | — | — | — | — |
| Research & development | $18.9M | — | — | — | — |
| Sales & marketing | $4.4M | — | — | — | — |
| General & administrative | $9.4M | — | — | — | — |
| Total operating expenses | $35.1M | — | — | — | — |
| Operating income (loss) | -$28.9M | -$490.1K | -5803.4% | -$150.9K | -19071.5% |
| Operating margin | -470.3% | — | — | — | — |
| Net income (loss) | -$30.7M | -$385.4K | -7856.4% | -$70.5K | -43376.0% |
| Net margin | -498.5% | — | — | — | — |
| Diluted EPS | -$0.19 | -$0.02 | -$0.17 | — | — |
Risks
Total revenues decreased 25.7% in FY2022 Q2 and 13.1% year to date, primarily due to a $4.3 million nonrecurring contract modification with a German customer in the prior-year periods. That customer was retained only through ongoing hosting services, highlighting dependence on a limited number of large contracts.
Net cash used in operating activities was $46.8 million for the six months ended June 30, 2022, and net loss was $55.8 million. Management believes $65.0 million of cash on hand is sufficient for at least twelve months but may raise additional debt or equity financing.
MD&A states COVID-19, semiconductor chip shortages and global supply chain challenges adversely impacted automotive production and Houndify per-unit royalties. Although the impact during the three and six months ended June 30, 2022 was not considered material, the duration and future impact remain uncertain.
MD&A notes enterprise sales cycles can be longer than consumer cycles and that revenue growth requires significant upfront investment in customer-specific engineering projects and sales and marketing.
MD&A highlights the military conflict between Russia and Ukraine beginning February 24, 2022, which has adversely affected the global economy and financial markets. The extent and duration of the conflict and resulting disruptions are impossible to predict.
MD&A describes big tech Voice AI offerings as extensions of core services that can take over the user experience and disintermediate customer brands, while legacy vendors use dated technologies. This competition may impede adoption of SoundHound's independent platform.
MD&A says future success depends on investing significantly in the Houndify platform and attracting and retaining a world-class technical workforce. Research and development expenses rose 35% in FY2022 Q2 and 25% year to date, partly from increased engineering headcount.
General and administrative costs increased 127% in FY2022 Q2 and 81% year to date, including higher public company expenses for directors and officers insurance, accounting, legal support and SEC filings following the Business Combination.
SaaS KPIs
All quarters →Remaining Performance Obligations
Summary, forecast, risks and KPIs are extracted from SOUNDHOUND AI, INC.'s SEC filings for Q2 FY2022 (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 2, 2026.