SoundHound AI(SOUN) - 2022 Q4 - Annual Report

Financial Performance - Total revenues for the year ended December 31, 2022, were $31,129,000, representing a 47$21,197,000 in 2021[340] - The net loss for 2022 was $115,373,000, compared to a net loss of$79,540,000 in 2021, indicating a worsening financial performance[340] - The company reported a basic and diluted net loss per share of $0.73 for 2022, compared to$1.18 for 2021[340] - The net loss for the year ended December 31, 2022, was $115,373,000, compared to a net loss of$79,540,000 in 2021, representing an increase of approximately 45%[347] - For the year ended December 31, 2022, the company reported a net loss of $115.4 million and an accumulated deficit of$502.1 million[355] - The company has incurred recurring losses since inception and expects to continue incurring substantial losses primarily due to research and development activities[355] - The company recorded a net loss of $115.4 million for the year ended December 31, 2022, compared to a net loss of$79.5 million in 2021, reflecting an increase of 45% year-over-year[512] Cash Flow and Liquidity - Cash and cash equivalents decreased to $9,245,000 as of December 31, 2022, down from$21,626,000 in 2021[339] - Cash used in operating activities for 2022 was $94,019,000, up from$66,177,000 in 2021, indicating a significant increase in cash outflow[347] - Total cash, cash equivalents, and restricted cash equivalents at the end of 2022 were $9,475,000, down from$22,822,000 at the end of 2021, reflecting a decrease of about 58%[347] - As of December 31, 2022, total cash and cash equivalents on hand were $9.2 million, which the company expects to fund operations for at least the next twelve months[356] Operating Expenses - Operating expenses increased to$136,536,000 in 2022, up from $86,524,000 in 2021, with significant increases in sales and marketing expenses by 381$20,367,000[340] - Research and development expenses rose to $76,392,000 in 2022, an increase of 29$59,178,000 in 2021, reflecting ongoing investment in new technologies[340] - Stock-based compensation expenses rose to $28,792,000 in 2022, compared to$6,322,000 in 2021, marking an increase of over 357%[347] - Total stock-based compensation expense for the year ended December 31, 2022, was $28.8 million, significantly up from$6.3 million in 2021, representing a 358% increase[507] Assets and Liabilities - The total assets of the company decreased to $38,251,000 in 2022 from$49,203,000 in 2021, indicating a decline in overall financial health[339] - Total current liabilities decreased significantly to $37,496,000 in 2022 from$87,739,000 in 2021, primarily due to the reduction in notes payable[339] - The company recorded a liability of $1.1 million for potential sales tax exposure as of December 31, 2022[446] - The total debt balance as of December 31, 2022, was$34.967 million, including current and non-current portions of the SVB March 2021 Note and SCI June 2021 Note[475] Revenue Recognition - The Company recognizes revenue under ASC 606 when a customer obtains control of promised goods or services[384] - Monetization revenues are primarily derived from advertising payments associated with ad impressions on the SoundHound application, recognized at a point in time[428] - Licensing revenue is recognized when control is transferred to the customer, based on royalty models with minimum guarantees and per unit pricing[429] - Revenue from hosted services increased to $17.743 million in 2022, up 39$12.764 million in 2021[432] - Product royalties revenue rose to $28.447 million in 2022, a 55$18.356 million in 2021[433] Business Strategy and Future Outlook - The company has emphasized the importance of launching new product offerings and expanding technology capabilities as part of its business strategy[12] - Future growth initiatives are expected to impact financial performance, although specific projections were not provided[12] - The company may seek additional funding through debt or equity financing arrangements to continue financing its operations[356] Tax and Deferred Tax Assets - The company reported an effective income tax expense rate of (2.6)% for the year ended December 31, 2022, compared to (0.6)% in 2021[517] - The total provision for income taxes for the year ended December 31, 2022, was $2.9 million, up from$0.5 million in 2021[517] - The company has provided a valuation allowance on deferred tax assets, increasing by $25.5 million for the year ended December 31, 2022[517] - As of December 31, 2022, the company had net operating loss carryforwards of approximately$344.6 million for federal purposes and $106.9 million for state purposes[520] Business Combination and Capital Structure - The Business Combination was completed on April 26, 2022, resulting in the issuance of 500,000,000 shares of capital stock, including 455,000,000 shares of Class A Common Stock and 44,000,000 shares of Class B Common Stock[409] - The net proceeds from the Business Combination and PIPE Investment totaled$90.7 million after accounting for transaction costs of $27.7 million[416] - The total number of shares of common stock issued immediately after the Business Combination was 196,503,710[417] - The Company is authorized to issue 500,000,000 shares of capital stock post-Business Combination, including 455,000,000 shares of Class A Common Stock[490]