Summary
SoundHound AI reported third-quarter revenue of $42.0 million, up 67.6% from the prior-year quarter. Year-to-date revenue was $113.9 million, up 127.0%. The top line is growing quickly, but the GAAP bottom line remains under pressure. The quarter's operating loss was $115.9 million, compared with an operating loss of $33.8 million a year earlier, and the loss widened. Net loss was $109.3 million, compared with a net loss of $21.8 million, and diluted EPS was a loss of $0.27 versus a loss of $0.06. The quarter included a large non-cash loss from the fair value of contingent acquisition liabilities tied to the company's stock price. Excluding that and other items, non-GAAP net loss was $13.0 million and non-GAAP EPS was a loss of $0.03. Adjusted EBITDA was a loss of $14.5 million. Non-GAAP gross margin was 59.3%.
On a year-to-date basis, the GAAP picture is different. Operating loss narrowed to $65.8 million. Net loss narrowed to $54.1 million, and diluted EPS improved to a loss of $0.14. Operating margin was negative 275.6% in the quarter, down 141.0 percentage points from negative 134.6% a year earlier. For the first nine months, operating margin was negative 57.8%, up 110.2 percentage points. The split reflects the swing in contingent acquisition liabilities, which moved from a large gain earlier in 2025 to a loss in the third quarter.
Cash flow and backlog metrics show a mixed picture. Operating cash flow was negative $32.7 million in the quarter, up 7.5% from the prior-year quarter. Year-to-date operating cash flow was negative $76.3 million, down 0.8%. Capital expenditures were $0.17 million in the quarter, down 23.6% from the prior-year quarter. Deferred revenue was $20.70 million, up 3.0% from the prior-year quarter. Remaining performance obligations were $70.60 million, up 5.5%. Those backlog figures can move with billing timing and contract terms, so they are not a clean read on near-term revenue growth.
Operationally, SoundHound kept expanding its Agentic AI footprint. It launched Amelia 7.3 with Speech-to-Meaning, added restaurant reservations and parking payments to in-vehicle voice commerce, and won a deal to put SoundHound Chat AI into a minimum commitment of double digit millions of AI-enabled smart devices from a large China-based company. Automotive wins included a major sports car brand, Jeep vehicles in Europe, Togg in Germany, an Italian commercial vehicle company, and two prominent two-wheeler brands in India. The company also signed new or expanded work in financial services, healthcare, insurance, restaurants, retail, IT services, energy, and telecommunications. It closed the Interactions acquisition on September 3, 2025, with preliminary purchase consideration of $76.1 million, including $19.4 million of cash paid and $41.5 million to pay off Interactions debt, plus up to $25.0 million in contingent earnout consideration. It launched Vision AI and was named a leader in IDC MarketScape and Everest Group assessments.
Guidance points to a raised full-year 2025 revenue outlook. That is for the full fiscal year, not a quarterly target. Management tied the raise to enterprise AI adoption and its Agentic+ framework, which combines generative AI, multi-agent orchestration, and deterministic models. The risks are familiar for a high-growth AI company. SoundHound has a history of recurring losses and a cumulative loss position for tax purposes. It depends on integrating SYNQ3, Amelia, and Interactions, and enterprise sales cycles can be long. Revenue has been seasonal, with roughly one third in the first half and two thirds in the second half in past periods. RPO and deferred revenue can swing with billing frequency. The fair value of contingent acquisition liabilities moves with the stock price and can create large non-cash GAAP losses. The company also has net operating loss carryforwards that could be limited under Sections 382 and 383. SoundHound reported no debt, and management expects cash to fund operations for at least the next twelve months.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q3 FY2025 | Q2 FY2025 | QoQ | Q3 FY2024 | YoY |
|---|---|---|---|---|---|
| Revenue | $42.0M | $42.7M | -1.5% | $25.1M | +67.6% |
| Gross profit | $17.9M | $16.7M | +7.6% | $12.2M | +47.0% |
| Gross margin | 42.6% | 39.0% | +3.6 pp | 48.6% | -6.0 pp |
| Research & development | $22.8M | $25.8M | -11.5% | $19.5M | +16.9% |
| Sales & marketing | $16.4M | $15.8M | +3.4% | $8.4M | +95.9% |
| General & administrative | $24.3M | $18.2M | +33.5% | $17.0M | +43.0% |
| Total operating expenses | $157.9M | $120.7M | +30.8% | $58.9M | +168.3% |
| Operating income (loss) | -$115.9M | -$78.1M | -48.5% | -$33.8M | -243.2% |
| Operating margin | -275.6% | -182.9% | -92.8 pp | -134.6% | -141.1 pp |
| Net income (loss) | -$109.3M | -$74.7M | -46.2% | -$21.8M | -402.4% |
| Net margin | -259.9% | -175.1% | -84.8 pp | -86.7% | -173.2 pp |
| Diluted EPS | -$0.27 | -$0.19 | -$0.08 | -$0.06 | -$0.21 |
Risks
The change in fair value of contingent acquisition liabilities resulted in a loss of $66.2 million for Q3 2025, primarily due to an increase in the Company's stock price as of September 30, 2025 compared to June 30, 2025. This non-cash remeasurement widened the quarterly net loss to $109.3 million and will continue to cause volatility until the earnout period ends in 2026.
Gross margin decreased to 43% for Q3 2025 and 40% for the nine months ended September 30, 2025, compared to 49% and 55% respectively, primarily due to amortization of acquired intangible assets from the Amelia and Interactions acquisitions. The company expects gradual improvement, but integration and revenue mix risks remain.
Revenue growth of 68% in Q3 2025 and 127% for the nine months ended September 30, 2025 was driven mainly by service subscription revenue from acquisitions, while product royalties decreased 3% for the nine months. This reliance on acquisitions for growth could mask organic weakness.
The Contingent Interactions Earnout Consideration includes a condition for renewal or extension of an existing contract with a specific customer on or before March 31, 2026. Failure to renew could impact earnout payments and future revenue from that customer.
The company has incurred recurring losses and expects to fund operations through cash flows, available cash balances, and proceeds from its at-the-market equity program, under which it has $48.5 million remaining capacity as of September 30, 2025. Continued losses may require additional equity dilution.
The company anticipates fluctuations in revenue due to seasonality, with approximately one third of revenue in the first half and two thirds in the second half of the year, and has experienced volatility in remaining performance obligations and deferred revenue. This may affect quarterly results.
SaaS KPIs
All quarters →Non-GAAP Gross Margin
Adjusted EBITDA
Remaining Performance Obligations (RPO)
Summary, forecast, risks and KPIs are extracted from SOUNDHOUND AI, INC.'s SEC filings for Q3 FY2025 (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.