SoundHound AI(US:SOUN)2025-11-10 21:23Financial Performance - Total revenues for Q3 2025 reached $42,049,000, a 67.5% increase from $25,094,000 in Q3 2024[16] - The net loss for Q3 2025 was $109,271,000, compared to a net loss of $21,751,000 in Q3 2024, indicating a worsening financial position[16] - Net loss for the nine months ended September 30, 2025, was $54,063,000, a decrease from the net loss of $92,082,000 for the same period in 2024, representing a 41.2% improvement[24] - Revenue for the three months ended September 30, 2025, was $52,472 thousand, while for the nine months it was $156,642 thousand[103] - Net loss attributable to SoundHound AI, Inc. for the three months ended September 30, 2025, was $(104,443) thousand, and for the nine months it was $(47,772) thousand[103] Expenses and Costs - Operating expenses for Q3 2025 totaled $157,940,000, compared to $58,861,000 in Q3 2024, reflecting a significant increase in costs[16] - Research and development expenses for the nine months ended September 30, 2025, were $73,409,000, compared to $50,161,000 for the same period in 2024, reflecting increased investment in innovation[16] - Stock-based compensation increased to $60,956,000 for the nine months ended September 30, 2025, compared to $23,292,000 in 2024, representing a significant increase of 162.5%[24] - The company reported a depreciation and amortization expense of $24,086,000 for the nine months ended September 30, 2025, compared to $8,115,000 in 2024, indicating an increase of 196.5%[24] - Cash flows used in operating activities totaled $76,336,000 for the nine months ended September 30, 2025, compared to $75,755,000 for the same period in 2024, indicating a slight increase in cash outflow[24] Assets and Equity - Cash and cash equivalents increased to $268,936,000 as of September 30, 2025, up from $198,240,000 at the end of 2024[15] - Total assets grew to $702,217,000 as of September 30, 2025, compared to $553,953,000 at the end of 2024[15] - The company’s total stockholders' equity increased to $399,236,000 as of September 30, 2025, from $182,653,000 at the end of 2024[15] - The company reported a cumulative deficit of $997,123,000 as of September 30, 2025, up from $943,060,000 at the end of 2024[15] Acquisitions and Investments - The company completed the acquisition of Synq3, Inc. on January 3, 2024, and Amelia Holdings, Inc. on August 6, 2024, as part of its strategy to expand its technology capabilities[29] - The Company acquired SYNQ3 for a total purchase consideration of $15.8 million, which includes $3.9 million in cash and 5,755,910 shares of Class A Common Stock[56] - The Amelia Acquisition was completed for a total purchase consideration of $98.6 million, including 3,809,520 shares of Class A Common Stock and $8.4 million in cash for seller transaction expenses[71] - The Company expects to expand its market reach into new industries such as healthcare, insurance, financial services, energy, and retail through the Amelia Acquisition[70] - The acquisition of Interactions is expected to enhance SoundHound's leadership in Agentic AI and expand its customer portfolio across various industries[82] Revenue Sources - Hosted services revenue for the three months ended September 30, 2025, was $27,673 thousand, an increase from $17,546 thousand in the same period of 2024[124] - Licensing revenue for the three months ended September 30, 2025, was $10,403 thousand, compared to $4,619 thousand in the same period of 2024[124] - Professional services revenue recognized over time for the three months ended September 30, 2025, was $3,859 thousand, up from $2,851 thousand in the same period of 2024[117] - Service subscriptions generated $33.932 million in revenue for the three months ended September 30, 2025, up 78.5% from $19.029 million in 2024[128] Stock and Financing - The Company raised approximately $25.0 million by issuing 835,011 shares of Series A Convertible Preferred Stock at an issuance price of $30.00 per share between January 18 and January 20, 2023[165] - The Company sold 13,913,014 shares of common stock under the Second Equity Distribution Agreement at an average price of $14.48 per share, raising $201.5 million of gross proceeds during the nine months ended September 30, 2025[185] - The Company had a remaining capacity to sell up to an additional $48.5 million of its common stock under the Second Equity Distribution Agreement as of September 30, 2025[185] - The company entered into a Senior Secured Term Loan Credit Agreement for up to $100 million, with an additional $25 million available under certain conditions[159] Legal and Compliance - The company intends to vigorously defend against patent infringement allegations filed by VB Assets, LLC, with no reasonable estimate of loss available as of September 30, 2025[144] - The company recorded a liability of $4.1 million for potential sales tax exposure as of September 30, 2025, compared to $3.1 million as of December 31, 2024[149] - The company intends to file a motion to dismiss a class action complaint by December 12, 2025, and believes the claims lack merit[145] Tax and Regulatory Changes - The effective tax rate for the three months ended September 30, 2025, was -0.42%, contrasting with 32.54% for the same period in 2024[211] - The enactment of the One Big Beautiful Bill Act (OBBBA) on July 4, 2025, allows for immediate expensing of certain R&D expenses, although its impact on the financial statements was immaterial for the three and nine months ended September 30, 2025[212]