SoundHound AI (SOUN 6.77%) shares soured despite the artificial intelligence (AI) voice-focused company seeing surging revenue growth and offering upbeat guidance. The stock continues to be volatile, up 88% over the past year but down nearly 32% year to date as of this writing.
Let's take a closer look to see if now is a good time to buy the stock on this dip, with its revenue continuing to soar.
Revenue soars higher
While SoundHound's revenue growth slowed from the triple-digit pace it delivered in the first half of the year (151% year-over-year growth in Q1 and 217% growth in Q2), revenue growth was still robust, jumping 68% to $42 million. That surpassed the $32.9 million analyst consensus, as compiled by FactSet Research Systems.
Image source: Getty Images
The company's adjusted net loss improved from $0.04 per share to $0.03 per share, while its adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) were a loss of $14.5 million, compared to a loss of $15.9 million a year ago.
It had an operating cash outflow of $32.8 million in the quarter and $71 million through the first nine months of the year.
Its gross margins, while still under pressure, continue to see improvement. Per generally accepted accounting principles (GAAP), gross margins fell 600 basis points from 48.6% to 42.6% year over year but were up from 39% in Q2. Adjusted gross margin dropped 40 basis points year over year to 59.2% but improved from 58.4% in Q2.
Much of the GAAP gross margin pressure stems from the noncash amortization of purchase intangibles that came from its acquisition of Amelia. This is largely an accounting issue, and its adjusted gross margins are more reflective of its ongoing operations. SoundHound said it was starting to see some benefits from moving to more of its own solutions.
NASDAQ: SOUN
Key Data Points
The company is also looking to adjust its pricing more toward an outcome-based model in some verticals, like healthcare and hospitality, to drive growth. This should also help improve gross margins.
SoundHound continues to upgrade customers to its new Amelia 7 platform and expects three-quarters of its customer base to be moved over by mid-2026. It is also seeing strong interest in its new voice commerce solution and is currently in discussion with smart TV makers to integrate its technology to allow for voice ordering. In addition, it has recently entered it partnerships with technology distributors, including Telarus and VOXai, to push further into the enterprise space.
Looking ahead, management once again increased its full-year revenue forecast, despite seeing some pressure in the auto sector. It now expects revenue of between $165 million and $180 million, up from previous guidance of $160 million to $178 million. It said it can reach EBITDA profitably in Q4 if it hits the high end of its guidance.
| Forecast (When Made) | 2025 Full-Year Revenue |
|---|---|
| Original (August 2024) | At least $150 million |
| Revision (November 2024) | $155 million to $175 million |
| Revision (February 2025) | $157 million to $177 million |
| Unchanged (May 2025) | $157 million to $177 million |
| Revision (August 2025) | $160 million to $178 million |
| Current (November 2025) | $165 million to $180 million |
Source: Company press releases.
Looking toward 2026, SoundHound expects to continue strong revenue growth, similar to that of past years, while coming close to EBITDA profitability.
Should investors buy the dip?
SoundHound continues to produce strong revenue growth, and it is still in the very early innings with agentic AI. However, the company is already seeing agentic AI wins in different verticals, including healthcare and insurance, and this is a big future opportunity for the company. Its new voice commerce solution also looks like it could be a nice growth driver. Overall, this is a much different company than it was just a few years ago, when its focus was mostly on the auto and restaurant industries.
From a valuation standpoint, SoundHound trades at a price-to-sales (P/S) multiple of about 27.5 times the 2026 revenue consensus analyst estimate. That's not cheap, but the company is growing revenue quickly, and many new growth opportunities are just emerging with agentic AI and voice commerce. SoundHound is still very small, and if the company can establish itself as a leader in these spaces, it could have material upside ahead.
That said, this is a high-risk, high-potential-reward stock, and investors should probably consider only small, speculative positions.
