SoundHound AI Q3 Earnings Call Highlights

Key Points

• Record Q3 revenue rose 48% to $62.4 million, including nearly $14 million from LivePerson. SoundHound narrowed its 2026 revenue outlook to $250 million–$260 million and reaffirmed its 2027 forecast of $350 million–$400 million.
• The company is targeting sustainable positive adjusted EBITDA in the second half of 2027, backed by more than $80 million in annualized cost reductions already underway and another $40 million planned during 2027.
• Moving customers from upfront licenses to multi-year hosted contracts is weighing on near-term revenue but is expected to improve visibility and stability. SoundHound says LivePerson integration is on track and proprietary AI models have cut model costs by more than an order of magnitude.

SoundHound AI NASDAQ: SOUN reported record third-quarter 2026 revenue and said it expects to achieve sustainable positive adjusted EBITDA in the second half of 2027, as it integrates LivePerson and shifts more customers to recurring revenue contracts.

Revenue rose 48% year over year to $62.4 million, including nearly one month of contribution from LivePerson following the acquisition’s September 4 close. Chief Financial Officer John Collins estimated that LivePerson contributed nearly $14 million during the quarter.

The company reaffirmed its 2027 revenue outlook of $350 million to $400 million and said it expects to reach its adjusted EBITDA goal even at the low end of that range. For 2026, SoundHound narrowed its revenue guidance to $250 million to $260 million from $230 million to $260 million.

Cost reductions underpin profitability target

Collins said SoundHound has taken actions to reduce the combined company’s annualized cost structure by more than $80 million, with those actions expected to be fully effective before January 1, 2027. The company is working on another $40 million in reductions that it expects to take effect during 2027.

The planned savings include approximately $48 million from merger-related team and vendor consolidation, $42 million from cloud and infrastructure optimization, $15 million from AI and systems-driven operations, and $15 million from reallocating resources and exiting or pausing some business lines.

SoundHound expects those actions to improve gross margin, although Collins did not provide a numerical margin forecast. Third-quarter non-GAAP gross margin fell nine percentage points year over year to 50.3%, which Collins attributed to the rollout of new agentic AI capabilities and higher cloud usage.

The company ended the quarter with more than $200 million in cash and cash equivalents. Collins said it had approximately $500,000 of outstanding 2026 notes, which are due to be retired in the fourth quarter, after retiring virtually all of LivePerson’s debt.

Revenue shift reduces near-term outlook

SoundHound is moving some customers from upfront licenses to hosted, multi-year agreements that recognize revenue over time. CEO and Co-Founder Keyvan Mohajer said point-in-time deals accounted for about 10% of third-quarter revenue, down from more than 33% in the second quarter.

Collins said the change should reduce near-term revenue but improve visibility, cash collections and earnings stability. He also said SoundHound is exiting certain negative-gross-margin contracts inherited through earlier acquisitions and deprioritizing some low-growth businesses.

To explain the effect on 2026, Collins said revenue would have been approximately $290 million if LivePerson’s contribution were purely additive to pre-acquisition consensus of $238 million. The $35 million difference between that estimate and the company’s new $255 million guidance midpoint comprises approximately $8 million from contract exits and business-line decisions and $27 million from lower second-half licensing revenue, he said.

Collins said the changes do not affect SoundHound’s prior 2027 outlook. He also said the company would consider providing additional leading indicators on its fourth-quarter call. Adjusted EBITDA will become a regular component of guidance starting in 2027, he said.

LivePerson integration and customer activity

Mohajer said SoundHound remains on track to complete platform and organizational integration of LivePerson by the beginning of 2027. The company has engaged with LivePerson’s top 90 enterprise accounts, representing more than $100 million in annual recurring revenue, he said.

Collins said nearly 20 enterprise implementations of SoundHound’s OASYS platform were underway. Mohajer highlighted new or expanded customer relationships across industries, including health testing provider Randox and Resorts World Las Vegas, which expanded from an on-property digital concierge to an external-facing booking agent.

He also pointed to Línea 195, Bogotá’s city-services line, where a Spanish-language AI agent was deployed through a partner. According to Mohajer, call abandonment fell by two-thirds and the number of inquiries handled rose 30% in the first phase.

In automotive, SoundHound signed a seven-figure minimum-guarantee agreement with a top-tier supplier in China, Mohajer said. The company also announced a partnership to bring a commerce channel to approximately 20 million LG smart TVs in the U.S., with a debut expected in the coming months.

Proprietary models and margins

Mohajer said SoundHound has migrated hundreds of customers to an architecture that can run complete interactions on its own AI models without requiring third-party frontier models. He said those deployments have reduced the company’s model costs by more than an order of magnitude while improving accuracy and latency.

SoundHound expects proprietary models to power most of its traffic over time, although OASYS will continue to support third-party models or combinations of the two, Mohajer said. Collins identified wider use of SoundHound’s models, along with cloud consolidation and the exit from negative-margin contracts, as drivers of expected gross margin expansion.

About SoundHound AI (NASDAQ:SOUN)

SoundHound AI, Inc develops voice artificial intelligence and conversational intelligence technologies. Its platform is designed to enable people to interact with devices, applications and services using natural language, with capabilities including speech recognition, language understanding and conversational response generation.

The company's offerings include the Houndify platform, which businesses can use to create branded voice assistants and conversational interfaces. SoundHound AI also provides voice-enabled solutions for industries such as automotive, restaurants and customer service, allowing users to access information, control functions, place orders and engage with businesses through voice interactions.

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