{
  "@context": "https://frontierpicks.com/schemas/dossier.v1.json",
  "ticker": "SOUN",
  "name": "SoundHound AI, Inc",
  "url": "https://frontierpicks.com/dossiers/SOUN/",
  "json_url": "https://frontierpicks.com/dossiers/SOUN.json",
  "status": "WATCHLIST",
  "current_conviction": "LOW",
  "archetype": {
    "code": "a4",
    "n": 4
  },
  "current_thesis": "SoundHound AI's shares are more likely to lag the S&P 500 over three months: margins fell and lower-quality revenue was cut, leaving the case on a 2027 outlook that the report expected around late February 2027 first tests.",
  "invalidation_trigger": "A daily close above $4.26, the 2026-11-05 close before the third-quarter report, which would show the shares had recovered the whole post-report decline; or a raised 2027 revenue outlook above $400 million.",
  "catalyst_date": null,
  "portfolio": null,
  "pick": null,
  "themes": [
    "ai-enterprise-software"
  ],
  "tags": [],
  "sources": [],
  "notes": [
    "SoundHound AI has two share classes: 455,858,001 Class A and 32,535,408 Class B shares were outstanding on 2026-11-05, according to the company's 10-Q.",
    "The company has an at-the-market equity program, under an agreement dated 2026-05-11, that lets it sell new Class A shares into the market.",
    "The LivePerson purchase price allocation is preliminary as of the 2026-09-30 10-Q, so goodwill of $261.8 million may be revised."
  ],
  "source_links": [
    {
      "title": "SOUNDHOUND AI, INC. - Form 8-K - FY2026",
      "url": "https://www.sec.gov/Archives/edgar/data/0001840856/000184085626000025/soun-20261105ex991earnings.htm",
      "date": "2026-11-05"
    },
    {
      "title": "SOUNDHOUND AI, INC. - Form 10-Q - FY2026",
      "url": "https://www.sec.gov/Archives/edgar/data/0001840856/000184085626000028/soun-20260930.htm",
      "date": null
    },
    {
      "title": "SoundHound AI (SOUN) Q3 2026 Earnings Call Transcript",
      "url": "https://www.fool.com/earnings/call-transcripts/2026/11/06/soundhound-ai-soun-q3-2026-earnings-call-transcript/",
      "date": "2026-11-06"
    },
    {
      "title": "SoundHound AI Inc (SOUN) (Q3 2026) Earnings Call Highlights: Record $62.4 Million Revenue, $120 Million Cost Cuts, and First Profitability Target for 2027",
      "url": "https://www.gurufocus.com/news/9178603/soundhound-ai-inc-soun-q3-2026-earnings-call-highlights-record-624-million-revenue-120-million-cost-cuts-and-first-profitability-target-for-2027",
      "date": null
    },
    {
      "title": "Cantor Fitzgerald’s $10 Target Says SoundHound AI’s Selloff Went Too Far",
      "url": "https://www.tikr.com/blog/cantor-fitzgeralds-10-target-says-soundhound-ais-selloff-went-too-far",
      "date": null
    },
    {
      "title": "SoundHound AI Completes Acquisition of LivePerson, Creating a World-Leading Omnichannel Conversational AI Powerhouse",
      "url": "https://soundhound.gcs-web.com/news-releases/news-release-details/soundhound-ai-completes-acquisition-liveperson-creating-world",
      "date": null
    }
  ],
  "evidence": [
    {
      "claim": "Third-quarter 2026 revenue was a record $62.4 million, up 48.5% from $42.0 million a year earlier; GAAP net loss was $46.4 million.",
      "source": "SoundHound AI 8-K earnings release, 2026-11-05",
      "as_of": "2026-11-05"
    },
    {
      "claim": "GAAP gross margin fell to 34.1% from 42.6% and non-GAAP gross margin to 50.3% from 59.3% a year earlier; adjusted EBITDA was a loss of $20.7 million.",
      "source": "SoundHound AI 8-K earnings release, 2026-11-05",
      "as_of": "2026-11-05"
    },
    {
      "claim": "2026 revenue guidance narrowed to $250–260 million from $230–260 million; 2027 revenue outlook of $350–400 million reaffirmed; adjusted EBITDA expected to be sustainably positive in the second half of 2027.",
      "source": "SoundHound AI 8-K earnings release, 2026-11-05",
      "as_of": "2026-11-05"
    },
    {
      "claim": "A restructuring begun on 2026-11-04 cuts about 27% of the global workforce, with $18–22 million of pre-tax charges, mostly in the fourth quarter of 2026.",
      "source": "SoundHound AI 8-K, 2026-11-05",
      "as_of": "2026-11-05"
    },
    {
      "claim": "Unrestricted cash was $207.6 million on 2026-09-30; operating cash outflow was $96.0 million for the first nine months of 2026.",
      "source": "SoundHound AI 10-Q for the quarter ended 2026-09-30",
      "as_of": "2026-09-30"
    },
    {
      "claim": "The LivePerson acquisition closed on 2026-09-04, with 41,891,373 Class A shares issued, valued at $283.5 million.",
      "source": "SoundHound AI 10-Q for the quarter ended 2026-09-30",
      "as_of": "2026-09-30"
    },
    {
      "claim": "Cantor Fitzgerald cut its price target to $10 from $15 and kept its Overweight rating.",
      "source": "TIKR, 2026-11-06",
      "as_of": "2026-11-06"
    },
    {
      "claim": "The chief executive, chief operating officer, chief product officer and chief strategy officer sold a combined 285,863 shares in the open market at $6.33 on 2026-09-15.",
      "source": "SEC Form 4 filings dated 2026-09-17",
      "as_of": "2026-09-17"
    }
  ],
  "view_changes": [],
  "frame": null,
  "filed_numbers": {
    "as_of": "2026-11-13",
    "sector": "Technology",
    "financials": {
      "status": "ok",
      "reason": null,
      "close_date": "2026-11-13",
      "latest_quarter": "2026-09-30",
      "figures": {
        "revenue": {
          "status": "ok",
          "quarters": [
            {
              "end": "2026-09-30",
              "filed": "2026-11-09",
              "value_musd": 62.4,
              "yoy_pct": 48.5
            },
            {
              "end": "2026-06-30",
              "filed": "2026-08-10",
              "value_musd": 61.9,
              "yoy_pct": 45
            },
            {
              "end": "2026-03-31",
              "filed": "2026-05-11",
              "value_musd": 44.2,
              "yoy_pct": 51.7
            },
            {
              "end": "2025-12-31",
              "filed": "2026-03-02",
              "value_musd": 55.1,
              "yoy_pct": 59.4
            },
            {
              "end": "2025-09-30",
              "filed": "2026-11-09",
              "value_musd": 42,
              "yoy_pct": 67.6
            },
            {
              "end": "2025-06-30",
              "filed": "2026-08-10",
              "value_musd": 42.7,
              "yoy_pct": 217.1
            }
          ]
        },
        "gross_margin": {
          "status": "ok",
          "quarters": [
            {
              "end": "2026-09-30",
              "filed": "2026-11-09",
              "pct": 34.1
            },
            {
              "end": "2026-06-30",
              "filed": "2026-08-10",
              "pct": 45.1
            },
            {
              "end": "2026-03-31",
              "filed": "2026-05-11",
              "pct": 31.1
            },
            {
              "end": "2025-12-31",
              "filed": "2026-03-02",
              "pct": 47.9
            },
            {
              "end": "2025-09-30",
              "filed": "2026-11-09",
              "pct": 42.6
            },
            {
              "end": "2025-06-30",
              "filed": "2026-08-10",
              "pct": 39
            }
          ]
        },
        "operating_margin": {
          "status": "ok",
          "quarters": [
            {
              "end": "2026-09-30",
              "filed": "2026-11-09",
              "pct": -73.6
            },
            {
              "end": "2026-06-30",
              "filed": "2026-08-10",
              "pct": -70
            },
            {
              "end": "2026-03-31",
              "filed": "2026-05-11",
              "pct": -51.3
            },
            {
              "end": "2025-12-31",
              "filed": "2026-03-02",
              "pct": 77.3
            },
            {
              "end": "2025-09-30",
              "filed": "2026-11-09",
              "pct": -275.6
            },
            {
              "end": "2025-06-30",
              "filed": "2026-08-10",
              "pct": -182.9
            }
          ]
        },
        "pretax_income": {
          "status": "ok",
          "end": "2026-09-30",
          "filed": "2026-11-09",
          "value_musd": -46.2
        },
        "net_income": {
          "status": "ok",
          "end": "2026-09-30",
          "filed": "2026-11-09",
          "four_quarters_end": "2026-09-30",
          "value_musd": -45.8,
          "four_quarters_musd": -73.6
        },
        "operating_cash_flow": {
          "status": "ok",
          "end": "2026-09-30",
          "filed": "2026-11-09",
          "first_end": "2025-12-31",
          "value_musd": -117.9
        },
        "capital_spending": {
          "status": "ok",
          "end": "2026-09-30",
          "filed": "2026-11-09",
          "first_end": "2025-12-31",
          "value_musd": 1.5
        },
        "free_cash_flow": {
          "status": "ok",
          "end": "2026-09-30",
          "filed": "2026-11-09",
          "first_end": "2025-12-31",
          "value_musd": -119.4
        },
        "diluted_share_change": {
          "status": "ok",
          "end": "2026-09-30",
          "filed": "2026-11-09",
          "base_end": "2025-09-30",
          "pct": 10.4
        },
        "cash": {
          "status": "ok",
          "end": "2026-09-30",
          "filed": "2026-11-09",
          "value_musd": 207.6
        },
        "debt": {
          "status": "ok",
          "end": "2026-09-30",
          "filed": "2026-11-09",
          "value_musd": 3.8,
          "composition": "convertible debt"
        },
        "net_cash": {
          "status": "ok",
          "end": "2026-09-30",
          "filed": "2026-11-09",
          "value_musd": 203.8
        },
        "deferred_revenue": {
          "status": "ok",
          "end": "2026-09-30",
          "filed": "2026-11-09",
          "value_musd": 69.5,
          "yoy_pct": 144.3
        },
        "backlog": {
          "status": "ok",
          "end": "2026-09-30",
          "filed": "2026-11-09",
          "value_musd": 191.4,
          "yoy_pct": 171.1
        },
        "receivables": {
          "status": "not reported"
        },
        "inventory": {
          "status": "not reported"
        },
        "equity": {
          "status": "ok",
          "end": "2026-09-30",
          "filed": "2026-11-09",
          "value_musd": 806.3
        },
        "market_value": {
          "status": "ok",
          "close_date": "2026-11-13",
          "basis_end": "2026-09-30",
          "basis_filed": "2026-11-09",
          "value_musd": 1586.2
        },
        "enterprise_value": {
          "status": "ok",
          "close_date": "2026-11-13",
          "basis_end": "2026-09-30",
          "basis_filed": "2026-11-09",
          "value_musd": 1382.5
        },
        "ev_sales": {
          "status": "ok",
          "close_date": "2026-11-13",
          "basis_end": "2026-09-30",
          "basis_filed": "2026-11-09",
          "multiple": 6.2
        },
        "ev_ebit": {
          "status": "not meaningful"
        },
        "pe": {
          "status": "not meaningful"
        },
        "pb": {
          "status": "ok",
          "close_date": "2026-11-13",
          "basis_end": "2026-09-30",
          "basis_filed": "2026-11-09",
          "multiple": 2
        },
        "fcf_yield": {
          "status": "ok",
          "close_date": "2026-11-13",
          "basis_end": "2026-09-30",
          "basis_filed": "2026-11-09",
          "pct": -7.5
        }
      }
    },
    "short_interest": {
      "status": "ok",
      "settlement": "2026-10-15",
      "published": "2026-11-13",
      "short_pct_of_outstanding": 37.58,
      "days_to_cover": 10.1,
      "change_pct": 7.5
    },
    "insiders": {
      "status": "ok",
      "as_of": "2026-11-14",
      "windows": [
        {
          "days": 90,
          "status": "ok",
          "from": "2026-08-17",
          "bought_usd": 0,
          "sold_usd": 1828597.96,
          "bought_unpriced": 0,
          "sold_unpriced": 0
        },
        {
          "days": 365,
          "status": "ok",
          "from": "2025-11-15",
          "bought_usd": 0,
          "sold_usd": 11118224.64,
          "bought_unpriced": 0,
          "sold_unpriced": 0
        }
      ]
    }
  },
  "body_markdown": "## Current Thesis\nSoundHound AI's shares are more likely to lag the S&P 500 over the next three months. Revenue is growing fast, but the company removed lower-quality revenue, cut 27% of staff and posted lower gross margins. That leaves the case resting on a 2027 outlook that no reported quarter has yet tested. The fourth-quarter report, expected around late February 2027, is the first test of that outlook.\n\nThe third-quarter report on 2026-11-05 delivered growth. Revenue was a record $62.4 million, up 48.5% from $42.0 million a year earlier, according to the company's 8-K. The company narrowed its 2026 revenue guidance to $250–260 million from $230–260 million and reaffirmed $350–400 million for 2027. On the earnings call, management said about $35 million had come out of 2026 expectations. About $8 million came from exiting negative-margin contracts and about $27 million from lower second-half licensing as upfront licenses move to hosted contracts.\n\nThe rating is Low because profitability has worsened. In the third quarter of 2026, GAAP gross margin fell to 34.1% from 42.6% a year earlier, and adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) was a loss of $20.7 million against a loss of $14.5 million. Breakeven is a target for the second half of 2027, after the three-month window ends. At the 2026-11-12 close of $3.60, the shares were 74.0% below the 52-week intraday high of $13.87 set on 2025-11-12. The price reflects deep doubt that the 2027 outlook and the profitability target will hold.\n\n## Bull Case\n- **Revenue growth near 50% continues.** Third-quarter 2026 revenue of $62.4 million rose 48.5% from a year earlier, and adjusted earnings per share of a $0.05 loss beat the $0.06 loss analysts expected (company 8-K, 2026-11-05).\n- **2027 outlook reaffirmed after the cut.** The company kept its $350–400 million 2027 revenue outlook on 2026-11-05 and said the 2026 changes do not affect it.\n- **A dated path to breakeven.** The company expects to be sustainably positive on adjusted EBITDA in the second half of 2027, even at the low end of its revenue range. It is targeting $120 million of annual cost savings, with over $80 million of actions scheduled before 2027-01-01 (8-K, 2026-11-05).\n- **LivePerson adds enterprise accounts.** The all-stock LivePerson deal closed on 2026-09-04. The company says LivePerson's top 90 enterprise accounts carry over $100 million in annual recurring revenue (8-K, 2026-11-05).\n- **No borrowings and cash on hand.** Unrestricted cash was $207.6 million on 2026-09-30, and the 10-Q contains no substantial-doubt language. Only $3.8 million of LivePerson short-term debt remained, due for repayment in the fourth quarter.\n\n## Bear Case\n- **Gross margins are falling.** Non-GAAP gross margin fell to 50.3% in the third quarter of 2026 from 59.3% a year earlier (8-K, 2026-11-05). Lower-margin acquired revenue is diluting the core business.\n- **Cash burn remains heavy.** Operating cash outflow was $96.0 million in the nine months to 2026-09-30, and the restructuring adds $18–22 million of pre-tax charges, mostly in the fourth quarter (10-Q; 8-K, 2026-11-05).\n- **Share count keeps rising.** The company issued 41,891,373 Class A shares for LivePerson and sold 6,232,900 shares through at-the-market offerings in the first nine months of 2026 for $48.5 million gross. Class A shares outstanding were 455,858,001 on 2026-11-05 (10-Q).\n- **Analysts cut targets after the report.** Cantor Fitzgerald cut its target to $10 from $15 on 2026-11-06 and kept its Overweight rating. DA Davidson kept its Buy rating and cut its target to $5 on 2026-11-06, according to Benzinga.\n- **Insiders sold in September.** SEC Form 4 filings show open-market sales at $6.33 on 2026-09-15 by the chief executive (137,290 shares), the chief operating officer (71,113 shares), the chief product officer (38,730 shares) and the chief strategy officer (38,730 shares).\n\n## Setup & Price Structure\nThe shares closed at $3.60 on 2026-11-12. That is the lowest close of the past 52 weeks and a 51.5% fall from the 3-month reference close of $7.43 on 2026-08-14. The last close sits below the 50-day moving average of $5.25 and the 200-day moving average of $6.90, both as of 2026-11-12.\n\nThe report came after the close on 2026-11-05, when the shares closed at $4.26. They closed at $4.11 on 2026-11-06 and fell further over the next four sessions, to $4.05 on 2026-11-09 and $3.60 on 2026-11-12. Since the report, the price has kept falling. The $4.26 close of 2026-11-05 is the level that marks a full recovery of the post-report decline. The 50-day average is the next level above it.\n\n## Catalyst Calendar\n\n- **~2026-12-31 (est.):** Completion of over $80 million of scheduled annual cost-saving actions. The company scheduled these actions for before 2027-01-01. Completing them is the first step toward its target of positive adjusted EBITDA in the second half of 2027.\n- **~2027-02-26 (est.):** Fourth-quarter and full-year 2026 report. This report shows whether 2026 revenue lands within $250–260 million and whether the $350–400 million 2027 outlook holds after the restructuring. A raised outlook would break the lag call.\n\n## What Would Change Our Mind\n\nA daily close above $4.26, the 2026-11-05 close before the third-quarter report, which would show the shares had recovered the whole post-report decline; or a raised 2027 revenue outlook above $400 million.\n\n## Correlation Notes\nCompany events have set this price more than the broad market has. The shares fell 57% in 2026 through 2026-11-05, according to TIKR, while the company absorbed LivePerson, issued new shares and reset its revenue mix. The shares trade in the speculative AI-software group, where sentiment moves the whole group together. A broad AI-software rally could lift them regardless of company results, which is the main way a lag call fails without a change in the business.",
  "first_seen": "2026-11-12",
  "last_analyzed": "2026-11-13T03:41:38+00:00",
  "last_synthesized": "2026-11-13",
  "date_modified": "2026-11-13",
  "license": "Content © FrontierPicks. Cite the canonical URL."
}