SoundHound AI Reports First Quarter Revenue Increase of 56%
Significantly Improves Cash Position and Operating Expenses; Reaffirms Full Year Guidance
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SoundHound AI Reports First Quarter Revenue Increase of 56% (Graphic: Business Wire)
“The incredible surge in demand for conversational AI is giving
Financial Highlights
-
First quarter reported revenue was
$6.7 million , an increase of 56% year-over-year - First quarter gross margin was 71%, an improvement of approximately 1,200 basis points compared to 59% in the prior year
-
First quarter earnings per share was a net loss of (
$0.13 ), improving both year over year and sequentially -
First quarter adjusted EBITDA (non-GAAP) was a loss of
($14.8) million , an improvement of 21% from the prior quarter and a year-over-year improvement of 13% -
Significantly strengthened balance sheet through multiple financings, cumulatively raising over
$150 million year-to-date through April - Drove meaningful operating efficiencies through corporate restructuring, resulting in 40% reduction to ongoing operating expense run-rate
“In the first quarter we significantly strengthened our liquidity position while streamlining our costs. At the same time, our new innovations have driven positive customer reception that has meaningfully increased demand for our products and solutions,” said
Business Highlights
-
Announced that SoundHound’s voice AI technology will be available on, and can be integrated with, Oracle
MICROS Simphony Point -of-Sale for Restaurants. -
Launched SoundHound Chat AI, a powerful new voice assistant that delivers best-in-class voice AI by combining
SoundHound and third-party Generative AI models, like ChatGPT. - Introduced SoundHound Chat AI for Automotive, which gives drivers and passengers seamless access to a vast array of information domains enabled by complex conversational capabilities, and can be integrated with the company’s publicly announced 20 automotive brands.
- Debuted Dynamic Interaction with Generative AI, an extension of the company’s groundbreaking multimodal Dynamic Interaction interface, able to be integrated with any vehicle or smart device.
- Joined the Toast ecosystem to provide best-in-class voice-ordering technology to restaurants using Toast’s Point-of-Sale system.
- Qualcomm demonstrated SoundHound’s voice technology at NRF 2023.
- Strong representation at CES with Qualcomm, Yobe, and LG.
- Nominated for a 2023 Webby Award in the Best Use of Voice Technology category for Dynamic Interaction.
Financial Results in Detail
First Quarter 2023 Financial Measures
|
|
|
|
|
|||||||
Three Months Ended (thousands, except per share data) |
|
|
|
|
Change in % |
||||||
Cumulative bookings backlog1 |
$ |
335,967 |
|
|
$ |
229,827 |
|
|
|
46 |
% |
Revenues |
$ |
6,707 |
|
|
$ |
4,290 |
|
|
|
56 |
% |
Operating expenses: |
|
|
|
|
|
|
|
|
|||
Cost of revenues |
$ |
1,976 |
|
|
$ |
1,773 |
|
|
|
11 |
% |
Sales and marketing |
|
4,875 |
|
|
|
2,581 |
|
|
|
89 |
% |
Research and development |
|
14,184 |
|
|
|
16,650 |
|
|
|
-15 |
% |
General and administrative |
|
7,125 |
|
|
|
4,003 |
|
|
|
78 |
% |
Restructuring |
|
3,585 |
|
|
|
- |
|
|
|
N/A |
|
Total operating expenses |
$ |
31,745 |
|
|
$ |
25,007 |
|
|
|
27 |
% |
Operating loss |
$ |
(25,038 |
) |
|
$ |
(20,717 |
) |
|
|
21 |
% |
Net loss |
$ |
(26,369 |
) |
|
$ |
(25,103 |
) |
|
|
5 |
% |
Net loss per share |
$ |
(0.13 |
) |
|
$ |
(0.36 |
) |
|
|
0.23 |
|
Adjusted EBITDA2 |
$ |
(14,775 |
) |
|
$ |
(16,961 |
) |
|
|
-13 |
% |
1. |
Cumulative bookings backlog is prior quarter end balance plus new bookings in the current quarter minus associated revenue recognized. |
|
2. |
Please see table below for a reconciliation from GAAP to non-GAAP. |
Summary of Liquidity and Cash Flows
The company’s cash and cash equivalents was
Through these financings, cumulatively the company raised over
Condensed Cash Flow Statement
Three Months Ended
(thousands) |
|
|
|
||||
Cash flows: |
|
|
|
|
|
||
Net cash used in operating activities |
$ |
(14,467 |
) |
|
$ |
(14,989 |
) |
Net cash used in investing activities |
|
(15 |
) |
|
|
(611 |
) |
Net cash provided by financing activities |
|
51,568 |
|
|
|
1,955 |
|
Net change in cash and cash equivalents |
$ |
37,086 |
|
|
$ |
(13,645 |
) |
Business Outlook 2023
Additional Information
If you wish to receive company email notifications, please register at investor.soundhound.com.
Conference Call and Webcast
About
Forward Looking Statements
This press release contains forward-looking statements, which are not historical facts, within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. In some cases, you can identify forward-looking statements by the use of words such as “may,” “could,” “expect,” “intend,” “plan,” “seek,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” “continue,” “likely,” “will,” “would” and variations of these terms and similar expressions, or the negative of these terms or similar expressions. These forward-looking statements include, but are not limited to, statements concerning the expected financial performance of the company, the company's ability to implement its business strategy and anticipated business and operations, including the launch of its chat AI service, the potential utility of and market for the company's products and services, guidance for financial results for 2023 and our ability to timely file our annual report on Form 10-
Non-GAAP Measures of Financial Performance
To supplement our financial statements, which are presented on the basis of
Reconciliation of GAAP Net Loss to Non-GAAP Adjusted EBITDA
Three Months Ended (thousands) |
|
|
|
||||||||
|
|
|
|
|
|
||||||
GAAP net loss |
$ |
(26,369 |
) |
|
$ |
(25,103 |
) |
|
|
||
|
|
|
|
|
|
|
|
||||
Adjustments: |
|
|
|
|
|
|
|
||||
Interest and other expense, net1 |
$ |
1,002 |
|
|
$ |
4,034 |
|
|
|
||
Income taxes |
|
329 |
|
|
|
352 |
|
|
|
||
Depreciation and amortization |
|
708 |
|
|
|
1,292 |
|
|
|
||
Stock-based compensation |
|
5,970 |
|
|
|
2,464 |
|
|
|
||
Restructuring |
|
3,585 |
|
|
|
- |
|
|
|
||
Adjusted EBITDA |
$ |
(14,775 |
) |
|
$ |
(16,961 |
) |
|
|
||
1. |
Includes other (income)/expense of ( |
|
||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS |
||||||||
(In thousands, except share and per share data) |
||||||||
|
|
|
||||||
|
(Unaudited) |
|
||||||
ASSETS |
|
|
||||||
|
|
|
||||||
Current assets: |
|
|
||||||
Cash and cash equivalents |
$ |
46,331 |
|
$ |
9,245 |
|
||
Accounts receivable, net |
|
2,660 |
|
|
3,414 |
|
||
Prepaid expenses |
|
1,651 |
|
|
2,514 |
|
||
Contract assets |
|
1,546 |
|
|
1,671 |
|
||
Other current assets |
|
1,069 |
|
|
859 |
|
||
Total current assets |
|
53,257 |
|
|
17,703 |
|
||
Restricted cash equivalents, non-current |
|
230 |
|
|
230 |
|
||
Right-of-use assets |
|
7,393 |
|
|
8,119 |
|
||
Property and equipment, net |
|
2,754 |
|
|
3,447 |
|
||
Deferred tax asset |
|
55 |
|
|
55 |
|
||
Contract assets, non-current |
|
7,040 |
|
|
7,041 |
|
||
Other non-current assets |
|
2,074 |
|
|
1,656 |
|
||
Total assets |
$ |
72,803 |
|
$ |
38,251 |
|
||
|
|
|
||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) |
|
|
||||||
Current liabilities: |
|
|
||||||
Accounts payable |
$ |
2,542 |
|
$ |
2,798 |
|
||
Accrued liabilities |
|
12,306 |
|
|
7,462 |
|
||
Operating lease liabilities |
|
3,157 |
|
|
3,282 |
|
||
Finance lease liabilities |
|
147 |
|
|
160 |
|
||
Income tax liability |
|
1,213 |
|
|
1,314 |
|
||
Deferred revenue |
|
5,319 |
|
|
5,812 |
|
||
Notes payable |
|
16,828 |
|
|
16,668 |
|
||
Total current liabilities |
|
41,512 |
|
|
37,496 |
|
||
|
|
|
||||||
Operating lease liabilities, net of current portion |
|
5,045 |
|
|
5,715 |
|
||
Finance lease liabilities, net of current portion |
|
102 |
|
|
128 |
|
||
Deferred revenue, net of current portion |
|
5,433 |
|
|
7,543 |
|
||
Notes payable, net of current portion |
|
14,035 |
|
|
18,299 |
|
||
Other non-current liabilities |
|
4,294 |
|
|
4,295 |
|
||
Total liabilities |
|
70,421 |
|
|
73,476 |
|
||
Commitments and contingencies (Note 6) |
|
|
||||||
|
|
|
||||||
Stockholders’ equity (deficit): |
|
|
||||||
Series A Preferred Stock, |
|
24,942 |
|
|
— |
|
||
Class A Common Stock, |
|
18 |
|
|
16 |
|
||
Class B Common Stock, |
|
4 |
|
|
4 |
|
||
Additional paid-in capital |
|
505,889 |
|
|
466,857 |
|
||
Accumulated deficit |
|
(528,471 |
) |
|
(502,102 |
) |
||
Total stockholders’ equity (deficit) |
|
2,382 |
|
|
(35,225 |
) |
||
Total liabilities and stockholders’ equity (deficit) |
$ |
72,803 |
|
$ |
38,251 |
|
|
|||||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS |
|||||||
(In thousands, except share and per share data) |
|||||||
(Unaudited) |
|||||||
|
Three Months Ended
|
||||||
|
2023 |
|
2022 |
||||
Revenues |
$ |
6,707 |
|
|
$ |
4,290 |
|
Operating expenses: |
|
|
|
||||
Cost of revenues |
|
1,976 |
|
|
|
1,773 |
|
Sales and marketing |
|
4,875 |
|
|
|
2,581 |
|
Research and development |
|
14,184 |
|
|
|
16,650 |
|
General and administrative |
|
7,125 |
|
|
|
4,003 |
|
Restructuring |
|
3,585 |
|
|
|
— |
|
Total operating expenses |
|
31,745 |
|
|
|
25,007 |
|
Loss from operations |
|
(25,038 |
) |
|
|
(20,717 |
) |
|
|
|
|
||||
Other expense, net: |
|
|
|
||||
Interest expense |
|
(1,096 |
) |
|
|
(2,977 |
) |
Other income (expense), net |
|
94 |
|
|
|
(1,057 |
) |
Total other expense, net |
|
(1,002 |
) |
|
|
(4,034 |
) |
Loss before provision for income taxes |
|
(26,040 |
) |
|
|
(24,751 |
) |
Provision for income taxes |
|
329 |
|
|
|
352 |
|
Net loss |
|
(26,369 |
) |
|
|
(25,103 |
) |
|
|
|
|
||||
Net loss per share: |
|
|
|
||||
Basic and diluted |
$ |
(0.13 |
) |
|
$ |
(0.36 |
) |
|
|
|
|
||||
Weighted-average common shares outstanding: |
|
|
|
||||
Basic and diluted |
|
205,082,328 |
|
|
|
69,604,188 |
|
|
|||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS |
|||||||
(In thousands) |
|||||||
(Unaudited) |
|||||||
|
Three Months Ended
|
||||||
|
2023 |
|
2022 |
||||
Cash flows from operating activities: |
|
|
|
||||
Net loss |
$ |
(26,369 |
) |
|
$ |
(25,103 |
) |
Adjustments to reconcile net loss to net cash used in operating activities: |
|
|
|
||||
Depreciation and amortization |
|
708 |
|
|
|
1,292 |
|
Stock-based compensation |
|
8,249 |
|
|
|
2,464 |
|
Change in fair value of derivative and warrant liability |
|
— |
|
|
|
592 |
|
Amortization of debt issuance cost |
|
16 |
|
|
|
1,742 |
|
Non-cash lease amortization |
|
894 |
|
|
|
846 |
|
Changes in operating assets and liabilities: |
|
|
|
||||
Accounts receivable, net |
|
754 |
|
|
|
728 |
|
Prepaid expenses |
|
863 |
|
|
|
(543 |
) |
Other current assets |
|
(210 |
) |
|
|
60 |
|
Contract assets |
|
126 |
|
|
|
— |
|
Other non-current assets |
|
19 |
|
|
|
(1,942 |
) |
Accounts payable |
|
(256 |
) |
|
|
3,178 |
|
Accrued liabilities |
|
4,306 |
|
|
|
4,398 |
|
Operating lease liabilities |
|
(963 |
) |
|
|
(1,080 |
) |
Deferred revenue |
|
(2,603 |
) |
|
|
(1,623 |
) |
Other non-current liabilities |
|
(1 |
) |
|
|
2 |
|
Net cash used in operating activities |
|
(14,467 |
) |
|
|
(14,989 |
) |
|
|
|
|
||||
Cash flows from investing activities: |
|
|
|
||||
Purchases of property and equipment |
|
(15 |
) |
|
|
(611 |
) |
Net cash used in investing activities |
|
(15 |
) |
|
|
(611 |
) |
|
|
|
|
||||
Cash flows from financing activities: |
|
|
|
||||
Proceeds from the issuance of Series A Preferred Stock, net of issuance costs |
|
24,942 |
|
|
|
— |
|
Proceeds from sales of common stock under the ELOC program, net of issuance costs |
|
28,360 |
|
|
|
— |
|
Proceeds from the issuance of common stock upon exercise of options |
|
2,425 |
|
|
|
2,474 |
|
Payments on notes payable |
|
(4,120 |
) |
|
|
— |
|
Payments on finance leases |
|
(39 |
) |
|
|
(519 |
) |
Net cash provided by financing activities |
|
51,568 |
|
|
|
1,955 |
|
Net change in cash, cash equivalents, and restricted cash equivalents |
|
37,086 |
|
|
|
(13,645 |
) |
Cash, cash equivalents, and restricted cash equivalents, beginning of period |
|
9,475 |
|
|
|
22,822 |
|
Cash, cash equivalents, and restricted cash equivalents, end of period |
$ |
46,561 |
|
|
$ |
9,177 |
|
|
|
|
|
||||
Reconciliation to amounts on the condensed consolidated balance sheets: |
|
|
|
||||
Cash and cash equivalents |
$ |
46,331 |
|
|
$ |
8,211 |
|
Current portion of restricted cash equivalents |
|
— |
|
|
|
230 |
|
Non-current portion of restricted cash equivalents |
|
230 |
|
|
|
736 |
|
Total cash, cash equivalents, and restricted cash equivalents shown in the condensed consolidated statements of cash flows |
$ |
46,561 |
|
|
$ |
9,177 |
|
|
|
|
|
||||
Supplemental disclosures of cash flow information: |
|
|
|
||||
Cash paid for interest |
$ |
1,074 |
|
|
$ |
1,013 |
|
Cash paid for income taxes |
$ |
550 |
|
|
$ |
32 |
|
|
|
|
|
||||
Noncash investing and financing activities: |
|
|
|
||||
Unpaid issuance costs in connection with the ELOC program |
$ |
437 |
|
|
$ |
— |
|
Deferred offering costs reclassified to additional paid-in capital |
$ |
323 |
|
|
$ |
— |
|
Operating lease liabilities arising from obtaining right-of-use assets |
$ |
— |
|
|
$ |
650 |
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20230511005364/en/
Investors:
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[email protected]
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