Full Year 2022 Revenue of $31.1 Million at High End of Guidance;
Company Expects to Grow Revenue by Approximately 50% in 2023
SoundHound AI, Inc. (Nasdaq: SOUN), a global leader in voice
artificial intelligence, today reported its financial results for
the fourth quarter and full year 2022.
This press release features multimedia. View
the full release here:
https://www.businesswire.com/news/home/20230307005995/en/
SoundHound AI Reports Strong Q4 Revenue,
Up 84% Year-Over-Year (Graphic: Business Wire)
“Conversational AI is at a watershed moment and our proprietary
Dynamic Interaction and Generative AI solutions are perfectly
positioned. From electricity to telecommunications to internet
search, each generation has established a new foundational
capability to better serve society, and AI will catalyze this next
horizon,” said Keyvan Mohajer, Co-Founder and CEO of SoundHound.
“Such a convergence of technological maturity and market demand is
rare, and SoundHound, as a leading innovator of voice and
conversational AI, is in a unique position to create tremendous
value.”
Fourth Quarter and Full Year Financial Highlights
- Fourth quarter revenue was $9.5 million, an increase of 84%
year-over-year
- Fourth quarter gross margin was 71%, an increase of 4
percentage points year-over-year
- Fourth quarter earnings per share was a net loss of ($0.15),
compared to ($0.32) in the prior year. Net loss was ($30.7)
million, compared to ($21.8) million in the prior year
- At the end of 2022, cumulative bookings backlog was $332
million, an increase of 59% year-over-year
- In 2022, queries grew over 85% year-over-year leading to an
annual run rate of approximately 2.2 billion queries
- Full year revenue was $31.1 million, an increase of 47%
year-over-year
- Full year earnings per share was a net loss of ($0.73),
compared to ($1.18) in the prior year. Net loss was ($115.3)
million, compared to ($79.5) million in the prior year
“We closed 2022 on a strong note, and we are entering 2023 in a
position of strength. Customer engagement is robust, we are rolling
out waves of industry-defining innovations, and the market demand
for our solutions is high,” said Nitesh Sharan, CFO of SoundHound.
“We have taken the necessary steps to significantly improve our
operating efficiency, strengthen our financial foundation, and we
have a clear line of sight to near-term profitability and sustained
long-term growth.”
Business Highlights
Product launches
SoundHound launched a broad range of category-leading
products:
- SoundHound’s next generation, multimodal voice interface
Dynamic Interaction for restaurants and customer service.
- Dynamic Interaction with Generative AI for devices and
automotive.
- Intelligent Transcription, which captures, identifies, and
attributes meaning to live conversations.
- Edge and Cloud connectivity options to open up voice AI to even
more smart device, IoT, and vehicle manufacturers.
Upcoming Launch
- The Company is announcing the upcoming launch of its chat AI
service for end users and businesses, which combines the power of
software engineering and machine learning with Generative AI to
deliver the digital assistant experience that users have been
desiring for decades.
Partner announcements
SoundHound forged a number of key partnerships with world-class
brands:
- In automotive, SoundHound now provides voice AI solutions for
20 global brands.
- Expanded its existing relationship with Hyundai, which includes
a multi-year arrangement.
- Expanded its relationship with Stellantis in Europe, adding
multiple brands.
- Announced collaborations in the automotive space with LG and
HARMAN International, a Samsung Company, as well as DPCA and
DMI.
- Agreement with Qualcomm to bring SoundHound voice AI to
Snapdragon platforms.
- Signed a new deal expanding its long standing relationship with
VIZIO.
- Extended its partnership with Snap.
- PoS agreements with Square, Toast, and Oracle.
- Airmeez chose SoundHound to deliver its intelligent virtual
assistant and notification services with natural language
interactions across multiple channels.
Industry recognition
SoundHound’s voice AI has received broad praise and
recognition:
- Qualcomm, Yobe, and LG showcasing its voice technology at
CES.
- AI Magazine named SoundHound among ten other disruptive global
AI companies.
- SoundHound was also named as a 2022 Speech Industry Award
Winner.
- SoundHound for Restaurants was named among the winners of the
National Restaurant Association’s Smartbrief Innovation Awards for
Foodservice 2022.
Financial Results in Detail
Fourth Quarter 2022 Financial Measures
Three Months Ended
(thousands, except per share data)
December 31, 2022
December 31, 2021
Change in %
Cumulative bookings backlog1
$
331,515
$
207,927
59
%
Revenues
$
9,501
$
5,151
84
%
Operating expenses:
Cost of revenues
$
2,755
$
1,707
61
%
Sales and marketing
6,744
981
587
%
Research and development
21,528
16,368
32
%
General and administrative
7,226
5,134
41
%
Total operating expenses
$
38,253
$
24,190
58
%
Operating loss
$
(28,752
)
$
(19,039
)
51
%
Net loss
$
(30,680
)
$
(21,847
)
40
%
Net loss per share
$
(0.15
)
$
(0.32
)
0.17
Adjusted EBITDA2
$
(18,620
)
$
(15,433
)
27
%
Full Year 2022 Financial
Measures
Twelve Months Ended
(thousands, except per share data)
December 31, 2022
December 31, 2021
Change in %
Revenues
$
31,129
$
21,197
47
%
Operating expenses:
Cost of revenues
$
9,599
$
6,585
46
%
Sales and marketing
20,367
4,240
380
%
Research and development
76,392
59,178
29
%
General and administrative
30,178
16,521
83
%
Total operating expenses
$
136,536
$
86,524
58
%
Operating loss
$
(105,407
)
$
(65,327
)
61
%
Net loss
$
(115,373
)
$
(79,540
)
45
%
Net loss per share
$
(0.73
)
$
(1.18
)
0.45
Adjusted EBITDA2
$
(72,578
)
$
(53,503
)
36
%
- Cumulative bookings backlog is prior quarter end balance plus
new bookings in the current quarter minus associated revenue
recognized. Balance is as of December 31, 2022.
- Please see table below for a reconciliation from GAAP to
non-GAAP.
Summary of Liquidity and Cash Flows
The Company’s cash and cash equivalents was $9.2 million at
December 31, 2022. In January 2023, the Company successfully raised
$25 million in net proceeds of equity financing from both current
shareholders and new capital providers.
Condensed Cash Flow Statement
Year Ended
(thousands)
December 31, 2022
December 31, 2021
Cash flows:
Net cash used in operating activities
$
(94,019
)
$
(66,177
)
Net cash used in investing activities
(1,329
)
(636
)
Net cash provided by financing
activities
82,001
44,653
Net change in cash and cash
equivalents
$
(13,347
)
$
(22,160
)
Business Outlook
Based on the Company's strong business momentum and customer
demand for its voice AI products and services, the Company expects
to grow its revenue by approximately 50% in 2023. SoundHound’s
guidance for revenue in 2023 is expected to be in a range of $43 to
$50 million. With this growth, and previously announced
restructuring, which we expect will result in approximately $60
million of operating cost savings, the Company expects to become
adjusted EBITDA positive in the fourth quarter of 2023.
Additional Information
SoundHound expects to file its Form 10-K for 2022, by March 31,
2023. For more information please see the company’s SEC filings
which can be obtained on our website at
investors.soundhound.com.
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 AI
SoundHound AI (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, Toast, 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. 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.
These forward-looking statements include, but are not limited to,
statements concerning the expected financial performance of the
company, the company's ability to implement its business strategy
and anticipated business and operations, including the anticipated
launch of its chat AI service, the potential utility of and market
for the company's products and services, guidance for financial
results for 2023 and our ability to timely file our annual report
on Form 10-K. 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. Our actual results, performance or
achievements may differ materially from those expressed or implied
by 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 projected rate of revenue
growth; the impact of our announced restructuring; 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.
Fourth Quarter Reconciliation of GAAP Net Loss to Non-GAAP
Adjusted EBITDA
Three Months Ended
(thousands)
December 31, 2022
December 31, 2021
GAAP net loss
$
(30,680
)
$
(21,847
)
Adjustments:
Interest and other expense,
net1
$
644
$
3,752
Income taxes
1,284
(944
)
Depreciation and amortization
840
1,333
Stock-based compensation
$
9,292
$
2,273
Adjusted EBITDA
$
(18,620
)
$
(15,433
)
1. Includes other (income)/expense of ($0.5) and $1.1 million,
respectively
Full Year Reconciliation of GAAP Net Loss to Non-GAAP
Adjusted EBITDA
Twelve Months Ended
(thousands)
December 31, 2022
December 31, 2021
GAAP net loss
$
(115,373
)
$
(79,540
)
Adjustments:
Interest and other expense,
net2
$
7,077
$
13,757
Income taxes
2,889
456
Depreciation and amortization
4,037
5,502
Stock-based compensation
$
28,792
$
6,322
Adjusted EBITDA
$
(72,578
)
$
(53,503
)
2. Includes other expense of $0.2 and $5.4 million,
respectively
CONSOLIDATED BALANCE
SHEETS
(In thousands, except share and
per share data)
December 31,
2022
December 31,
2021
ASSETS
Current assets:
Cash and cash equivalents
$
9,245
$
21,626
Restricted cash equivalents
—
460
Accounts receivable, net of allowances of
$109 as of December 31, 2022 and December 31, 2021
3,414
2,060
Prepaid expenses
2,514
1,276
Contract assets
1,671
54
Other current assets
859
1,995
Total current assets
17,703
27,471
Restricted cash equivalents,
non-current
230
736
Right-of-use assets
8,119
10,291
Property and equipment, net
3,447
6,155
Deferred tax asset
55
2,169
Contract assets, non-current
7,041
—
Other non-current assets
1,656
2,381
Total assets
$
38,251
$
49,203
LIABILITIES, REDEEMABLE
CONVERTIBLE PREFERRED STOCK,
AND STOCKHOLDERS’
DEFICIT
Current liabilities:
Accounts payable
$
2,798
$
3,760
Accrued liabilities
7,462
7,298
Operating lease liabilities
3,282
3,281
Finance lease liabilities
160
1,301
Income tax liability
1,314
2,737
Deferred revenue
5,812
6,042
Convertible note
—
29,868
Derivative liability
—
3,488
Notes payable
16,668
29,964
Total current liabilities
37,496
87,739
Operating lease liabilities, net of
current portion
5,715
8,611
Finance lease liabilities, net of current
portion
128
292
Deferred revenue, net of current
portion
7,543
14,959
Notes payable, net of current portion
18,299
—
Other non-current liabilities
4,295
1,336
Total liabilities
73,476
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 December 31, 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 December 31, 2022 and December 31,
2021, respectively
—
1
Class A Common Stock, $0.0001 par value;
455,000,000 shares authorized; 160,297,664 and 0 shares issued and
outstanding as of December 31, 2022 and December 31, 2021,
respectively
16
—
Class B Common Stock, $0.0001 par value;
44,000,000 shares authorized; 39,735,408 and 0 shares issued and
outstanding as of December 31, 2022 and December 31, 2021,
respectively
4
—
Additional paid-in capital
466,857
43,491
Accumulated deficit
(502,102
)
(386,729
)
Total stockholders’ deficit
(35,225
)
(343,237
)
Total liabilities, redeemable convertible
preferred stock, and stockholders’ deficit
$
38,251
$
49,203
SOUNDHOUND AI, INC.
CONSOLIDATED STATEMENTS OF
OPERATIONS
AND COMPREHENSIVE LOSS
(In thousands, except share and
per share data)
Year Ended December
31,
2022
2021
Revenues
$
31,129
$
21,197
Operating expenses:
Cost of revenues
9,599
6,585
Sales and marketing
20,367
4,240
Research and development
76,392
59,178
General and administrative
30,178
16,521
Total operating expenses
136,536
86,524
Loss from operations
(105,407
)
(65,327
)
Other expense, net:
Interest expense
(6,893
)
(8,342
)
Other expense, net
(184
)
(5,415
)
Total other expense, net
(7,077
)
(13,757
)
Loss before provision for income taxes
(112,484
)
(79,084
)
Provision for income taxes
2,889
456
Net loss
(115,373
)
(79,540
)
Other comprehensive gain:
Unrealized holding gain on
available-for-sale securities, net of tax
—
1
Comprehensive loss
$
(115,373
)
$
(79,539
)
Net loss per share:
Basic and diluted
$
(0.73
)
$
(1.18
)
Weighted-average common shares
outstanding:
Basic and diluted
157,317,695
67,255,538
SOUNDHOUND AI, INC.
CONSOLIDATED STATEMENTS OF
CASH FLOWS
(In thousands)
Year Ended December
31,
2022
2021
Cash flows from operating activities:
Net loss
$
(115,373
)
$
(79,540
)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization
4,037
5,502
Stock-based compensation
28,792
6,322
Change in fair value of derivative and
warrant liability
606
4,920
Amortization of debt issuance costs
2,287
4,746
Non-cash lease amortization
3,970
3,586
Deferred income taxes
2,114
113
Changes in operating assets and
liabilities:
Accounts receivable, net
(1,354
)
1,515
Prepaid expenses
(1,238
)
(168
)
Other current assets
299
(917
)
Contract assets
(8,658
)
—
Other assets
(539
)
(1,470
)
Accounts payable
302
424
Accrued liabilities
116
3,671
Operating lease liabilities
(4,693
)
(3,565
)
Deferred revenue
(7,646
)
(10,281
)
Other liabilities
2,959
(1,035
)
Net cash used in operating activities
(94,019
)
(66,177
)
Cash flows from investing activities:
Purchases of property and equipment
(1,329
)
(636
)
Net cash used in investing activities
(1,329
)
(636
)
Cash flows from financing activities:
Proceeds from issuance of convertible
notes, net of issuance costs
—
14,905
Proceeds from note payable, net of
issuance costs
—
29,833
Proceeds from the issuance of common stock
upon exercise of options
4,160
2,490
Proceeds from Business Combination and
PIPE, net of transaction costs
90,689
—
Payments on notes payable
(11,545
)
—
Payments on finance leases
(1,303
)
(2,575
)
Net cash provided by financing
activities
82,001
44,653
Net change in cash, cash equivalents, and
restricted cash equivalents
(13,347
)
(22,160
)
Cash, cash equivalents, and restricted
cash equivalents, beginning of year
22,822
44,982
Cash, cash equivalents, and restricted
cash equivalents, end of year
$
9,475
$
22,822
Reconciliation to amounts on the
consolidated balance sheets:
Cash and cash equivalents
$
9,245
$
21,626
Current portion of restricted cash
equivalents
—
460
Non-current portion of restricted cash
equivalents
230
736
Total cash, cash equivalents, and
restricted cash equivalents shown in the consolidated statements of
cash flows
$
9,475
$
22,822
SOUNDHOUND, INC.
CONSOLIDATED STATEMENTS OF
CASH FLOWS — Continued
For the Year Ended December 31,
2022 and 2021
(In thousands)
Supplemental disclosures of cash flow
information:
Cash paid for interest
$
3,425
$
2,631
Cash paid for income taxes
$
1,044
$
263
Noncash investing and financing
activities:
Operating lease liabilities and
right-of-use assets through adoption of ASC 842
$
—
$
11,428
Operating lease liabilities arising from
obtaining right-of-use assets
$
650
$
3,422
Property and equipment acquired under
finance leases or debt
$
—
$
584
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
Non-cash debt discount
$
—
$
525
Issues of series C redeemable convertible
preferred stock for exercise of warrants
$
—
$
5,816
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230307005995/en/
Investors: Scott Smith 408-724-1498 IR@SoundHound.com
Media: Fiona McEvoy 415-610-6590 PR@SoundHound.com
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