SoundHound AI Reports 85% Revenue Growth to $84.7 Million in 2024

SoundHound AI, Inc. reported total revenues of $84.7 million for the year ended December 31, 2024, an 85% increase compared to $45.9 million in 2023. This increase was driven primarily by a significant rise in service subscription revenue to $56.3 million, largely attributed to contributions from acquisitions. Conversely, product royalty revenue decreased by 35% to $27.9 million, primarily due to the recognition of minimum guarantee licensing revenue in the prior year. Monetization revenue remained relatively flat at $0.4 million.

Operating expenses surged to $426.0 million in 2024, a 272% increase from $114.5 million in 2023. This significant rise was largely due to a $222.7 million loss from the change in fair value of contingent acquisition liabilities, primarily driven by stock price fluctuations and changes in the probability of achieving future revenue targets. Other contributing factors included increases in cost of revenues (283% increase), sales and marketing (54% increase), research and development (37% increase), and general and administrative expenses (88% increase). These increases were partially offset by a 100% decrease in restructuring expenses, as the restructuring plan completed in 2023.

The company completed two significant acquisitions during 2024: the acquisition of SYNQ3 in January and Amelia in August. The SYNQ3 acquisition involved a total purchase consideration of $15.8 million, including cash and stock. The Amelia acquisition had a preliminary purchase consideration of $98.6 million, also comprised of cash and stock, and included the assumption of a term loan facility. Both acquisitions resulted in significant accounting charges impacting the company's financial results. An immaterial acquisition was also completed in June 2024. The company also engaged in significant equity financing activities throughout the year, raising substantial proceeds through at-the-market offerings.

SoundHound employed approximately 842 full-time employees as of December 31, 2024, with 54% located in the United States and 46% internationally. The company noted that it had identified material weaknesses in its internal control over financial reporting as of December 31, 2024, and outlined a plan to remediate these weaknesses. These weaknesses related to the control environment, risk assessment, accounting for complex transactions, segregation of duties, and information technology general controls. The company also disclosed that it does not anticipate paying cash dividends in the foreseeable future.

The company's 10-K filing included numerous risk factors, including the potential for continued net losses and negative operating cash flows, the need for additional capital, intense competition in the Voice AI market, dependence on skilled employees, cybersecurity risks, and regulatory uncertainties related to the use of AI. The company also highlighted the risks associated with its acquisitions, including integration challenges and the potential for impairment charges. The filing further detailed the company's strategy to expand its cloud-connected and embedded products, expand into new foreign languages, and manage pricing pressures from its customers. The company's outlook is contingent upon successfully executing its business strategy, including the integration of its recent acquisitions and the continued development of its AI platform.