“This was a breakthrough year in which SoundHound rapidly integrated powerful new generative AI capabilities. Our real-world voice AI applications are already live and driving consumer engagement across vehicles, devices, and customer service businesses,” said Keyvan Mohajer, CEO and Co-Founder of SoundHound AI. “We also acquired SYNQ3, establishing SoundHound as the largest voice AI provider for restaurants. Our pace and agility amid this AI revolution has put us ahead of the field when it comes to delivering real commercial value.”
Fourth Quarter and Full Year Financial Highlights
- Fourth quarter revenue was $17.1 million, an increase of 80% year-over-year
- Fourth quarter gross margin was 77%, an increase of 6 percentage points year-over-year
- Fourth quarter earnings per share was a net loss of ($0.07), compared to ($0.15) in the prior year, improved by 53%
- Adjusted EBITDA (non-GAAP) was ($3.7) million, compared to ($18.8) million in the prior year, improved by 80%
- Full year revenue was $45.9 million, an increase of 47% year-over-year
- Full year gross margin was 75%, an increase of 6 percentage points year-over-year
- Full year earnings per share was a net loss of ($0.40), compared to ($0.74) in the prior year, and improved by 46%
- Adjusted EBITDA (non-GAAP) was ($35.9) million, compared to ($72.8) million in the prior year, and improved by 51%
- Combined Cumulative Subscriptions and Bookings Backlog1 customer metric grew to $661 million, up 2x compared to the prior year comparable measure
- Achieved an annual run rate of ~3.5 billion queries, up roughly 50% year-over-year
“We finished the year strong by accelerating revenue and meaningfully increasing our penetration in the marketplace,” said Nitesh Sharan, CFO of SoundHound AI. ”We have fortified our balance sheet and taken prudent measures to strengthen our bottom line to ensure we can continue to capitalize on the tremendous customer demand for our AI solutions.”
Business Highlights
Customer and partners announcements
- Notable, first-of-its-kind revenue contribution in Q4 from a preeminent AI chip company
- Signed contract with a large auto OEM to significantly extend and increase unit volumes through 2037
- Won a deal with a prominent US-based EV maker to voice-enable their full fleet of market-leading vehicles
- SoundHound Chat AI was announced as the world’s first voice assistant with integrated generative AI to go into full production with an automaker. Stellantis’ DS Automobiles will be deploying the technology across all models in 13 languages across 18 countries
- Three additional automotive brands, Peugeot, Opel, and Vauxhall, announced SoundHound Chat AI pilots in Europe
- Custom branded AI voice assistant went live with a new line of vehicles from Togg, a growing Turkish EV car maker
- Telly’s revolutionary dual screen smart TV integrated SoundHound AI voice assistant
- Expanded our portfolio of renowned restaurant brands with enterprise restaurants brands: Jersey Mike’s, Krispy Kreme, White Castle, and Church’s Chicken
- Expanded agreement with White Castle to go live in 100 drive-thru lanes by the end of this year and announced partnership with Samsung to revolutionize next-gen display technology for voice AI drive-thrus
- In 2023, more than 100 customers adopted our AI restaurant solutions, including mid market brands such as Beef O’Brady’s, Blake’s Lotaburger, Bozzelli’s Italian Deli, Bubbakoos Burritos, Chicken Shack, CoreLife Eatery, Dog Haus, Naz’s Halal, and Noi Thai
- Expanded our ecosystem for customer service by adding Oracle MICROS Simphony Point-of-Sale for Restaurants, Toast Point-of-Sale system, and integration with Olo, a leading restaurant SaaS platform
- SoundHound AI is now working with audio experts HME to make its solutions compatible with its world class NEXEO® headsets. HME serves QSRs drive-thrus in over 140 countries, enabling them to fulfill more than 30 million orders every day
Acquisition of SYNQ3
- The combination with SYNQ3 expands SoundHound AI’s customer service offering, creating the largest voice AI provider for restaurants and extending the company’s market reach by an order of magnitude
- The newly joined entity brings nearly two decades of SoundHound’s innovation with decades of SYNQ3’s industry expertise and established customer relationships – accelerating the deployment of leading-edge generative AI capabilities to the industry
- SYNQ3 comes with more than 20 national and multinational chains, such as Chipotle, Casey’s, Applebees, Panda Express, Papa John’s, and Five Guys
Product launches
- Dynamic Interaction with Generative AI, an extension of the company’s groundbreaking multimodal Dynamic Interaction interface
- Smart Answering became generally available, our service that lets any business handle customer service calls with voice AI
- Employee Assist, our voice AI product for restaurant employees using advanced voice technology to coach in-store employees through actions and provide fast answers to critical questions
- SoundHound Chat AI for Automotive, giving drivers and passengers seamless access to a vast array of information domains enabled by complex conversational capabilities
- Vehicle Intelligence, SoundHound’s voice AI-enabled solution for instant hands-free access to car manual
- SoundHound Chat AI, a powerful new voice assistant that delivers best-in-class voice AI by combining SoundHound and third-party Generative AI models
|
1) |
See section ‘Certain Defined Terms’ at the end of this press release for additional information. |
Fourth Quarter 2023 Financial Measures
|
Three Months Ended (thousands, except per share data) |
December 31, |
|
December 31,
|
|
Change |
||||||
|
Revenues |
$ |
17,147 |
|
|
$ |
9,501 |
|
|
|
80 |
% |
|
Operating expenses: |
|
|
|
|
|
|
|
|
|||
|
Cost of revenues |
$ |
3,911 |
|
|
$ |
2,755 |
|
|
|
42 |
% |
|
Sales and marketing |
|
4,469 |
|
|
|
6,744 |
|
|
|
-34 |
% |
|
Research and development |
|
12,713 |
|
|
|
21,528 |
|
|
|
-41 |
% |
|
General and administrative |
|
7,641 |
|
|
|
7,427 |
|
|
|
3 |
% |
|
Restructuring |
|
806 |
|
|
|
– |
|
|
|
N/A |
|
|
Total operating expenses |
$ |
29,540 |
|
|
$ |
38,454 |
|
|
|
-23 |
% |
|
Operating loss |
$ |
(12,393 |
) |
|
$ |
(28,953 |
) |
|
|
57 |
% |
|
Net loss |
$ |
(18,003 |
) |
|
$ |
(30,881 |
) |
|
|
42 |
% |
|
Net loss per share |
$ |
(0.07 |
) |
|
$ |
(0.15 |
) |
|
|
0.08 |
|
|
Adjusted EBITDA1 |
$ |
(3,676 |
) |
|
$ |
(18,821 |
) |
|
|
80 |
% |
Full Year 2023 Financial Measures
|
Twelve Months Ended (thousands, except per share data) |
December 31, |
|
December 31, |
|
Change |
||||||
|
Revenues |
$ |
45,873 |
|
|
$ |
31,129 |
|
|
|
47 |
% |
|
Operating expenses: |
|
|
|
|
|
|
|
|
|||
|
Cost of revenues |
$ |
11,307 |
|
|
$ |
9,599 |
|
|
|
18 |
% |
|
Sales and marketing |
|
18,893 |
|
|
|
20,367 |
|
|
|
-7 |
% |
|
Research and development |
|
51,439 |
|
|
|
76,392 |
|
|
|
-33 |
% |
|
General and administrative |
|
28,285 |
|
|
|
30,443 |
|
|
|
-7 |
% |
|
Restructuring |
|
4,557 |
|
|
|
– |
|
|
|
N/A |
|
|
Total operating expenses |
$ |
114,481 |
|
|
$ |
136,801 |
|
|
|
-16 |
% |
|
Operating loss |
$ |
(68,608 |
) |
|
$ |
(105,672 |
) |
|
|
35 |
% |
|
Net loss |
$ |
(88,937 |
) |
|
$ |
(116,713 |
) |
|
|
24 |
% |
|
Net loss per share |
$ |
(0.40 |
) |
|
$ |
(0.74 |
) |
|
|
0.34 |
|
|
Adjusted EBITDA1 |
$ |
(35,896 |
) |
|
$ |
(72,843 |
) |
|
|
51 |
% |
|
1) |
Please see table below for a reconciliation from GAAP to non-GAAP. | |
|
2) |
Note: the Company identified corrections related to historical financial transactions for certain prior periods, which have been revised. These amounts had no impact on revenue, EPS or adjusted EBITDA for the period noted. Specifically, for the three months ended December 31, 2022, general and administrative expense and total net loss both increased by $201. For the 12 months ended December 31, 2022, general and administrative expense increased by $265 and other income and expense increased by $1,075, resulting in total net loss increasing by $1,340. Further details were included in the company’s Form 10-Q filed on November 15, 2023 for the quarterly period ended September 30, 2023. |
Summary of Liquidity and Cash Flows
The company’s total cash was approximately $109 million at December 31, 2023. Current total cash balance is in excess of $200 million.
Condensed Cash Flow Statement
|
Year Ended |
|||||||
|
(thousands) |
December 31, |
|
December 31, |
||||
|
Cash flows: |
|
|
|
|
|
||
|
Net cash used in operating activities |
$ |
(68,265 |
) |
|
$ |
(94,019 |
) |
|
Net cash used in investing activities |
|
(392 |
) |
|
|
(1,329 |
) |
|
Net cash provided by financing activities |
|
168,237 |
|
|
|
82,001 |
|
|
Net change in cash and cash equivalents1 |
$ |
99,560 |
|
|
$ |
(13,347 |
) |
|
1) |
Foreign exchange impact on cash of ($20) for the period ending December 31, 2023 not shown on chart. |
Business Outlook 2024 and 2025
SoundHound expects full year 2024 revenue to be in a range of $63 to $77 million, with a midpoint target of $70 million. The company is also introducing a 2025 outlook, in which it expects its growth to accelerate with revenue exceeding $100 million, achieving positive adjusted EBITDA.