SoundHound to Post Q4 Earnings: Buy, Sell or Hold the Stock?

Core Insights - SoundHound AI, Inc. (SOUN) is set to report its fourth-quarter 2025 results on February 26, 2026, after market close [1] Financial Performance - In the last reported quarter, SoundHound achieved a revenue increase of 68% year over year, reaching $42 million, surpassing the Zacks Consensus Estimate by 4.9% [2] - The company raised its 2025 revenue outlook to a range of $165 million to $180 million, indicating confidence in sustained growth [2] - Non-GAAP gross margin was reported at 59.3%, supported by operational efficiencies and proprietary model usage [3] - The company reported a non-GAAP net loss of 3 cents per share, which was narrower than the Zacks Consensus Estimate of a loss of 4 cents [3] Future Estimates - The Zacks Consensus Estimate for the fourth-quarter bottom line remains unchanged at a loss of 2 cents per share, compared to a loss of 69 cents per share a year ago [6] - For 2026, revenues are expected to increase by 38.3% year over year to $232.2 million, with an anticipated improvement in the bottom line to a loss of 6 cents per share from an estimated loss of 13 cents for 2025 [7] Market Position and Competition - SoundHound operates in a competitive voice and conversational AI market, facing challenges from established players like Nuance Communications, Cerence Inc., and NICE Ltd. [25] - The competitive landscape is characterized by pricing and platform competition, particularly from Nuance's enterprise and healthcare AI solutions [25] Valuation and Investment Outlook - SOUN shares are currently considered slightly overvalued, trading at a forward 12-month price-to-sales (P/S) ratio of 13.73, higher than the Zacks Computers - IT Services industry average [26] - Despite strong revenue momentum and a solid liquidity position of $269 million in cash with no debt, ongoing automotive market softness and elevated investments may pressure near-term profitability [27][28]