SoundHound AI (SOUN -0.32%) develops voice and conversational AI technology for businesses. The company's shares have tanked nearly 71% from their $22.17 intraday high from October 2025 (closing price as of Sept. 9).
Image source: Getty Images.
Yet SoundHound AI's business has held up far better than its stock price, creating a gap that makes the shares worth a closer look.
Growth is strong, but acquisitions are also helping
SoundHound AI's revenue was up 45% year over year to $61.9 million in the second quarter. Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) loss also improved 33% year over year to $9.6 million. The company exited Q2 with $203 million in cash and no debt. Management expects fiscal 2026 revenue to fall in the range of $230 million to $260 million.
NASDAQ: SOUN
Key Data Points
The growth is encouraging, but investors should look past the financial numbers. SoundHound's revenue growth was not entirely organic. The company's service subscription revenue increased 47% year over year to $47 million in the second quarter, mainly due to revenue from acquisitions. The company also used nearly $60 million of cash in operating activities during the first half of fiscal 2026.
Hence, SoundHound AI is growing rapidly, but acquisitions and continued cash burn make the underlying growth story less impressive than the headline numbers suggest.
LivePerson acquisition catalyst
SoundHound AI completed its acquisition of LivePerson on Sept. 4, significantly expanding its enterprise reach. The combined company now serves 25 of the Fortune 100 companies. Management expects revenue of at least $350 million and up to $400 million in 2027. SoundHound also sees an opportunity to eventually reach $500 million in annual revenue by leveraging the combined company's existing customer base.
LivePerson's revenue fell 12% year over year in the second quarter, partly due to customer cancellations and downsells. SoundHound AI must therefore successfully cross-sell its AI products into the expanded customer base while improving cash flow.
At today's lower price, the stock looks attractive but still speculative. Stronger organic growth and lower cash burn could make the 71% decline look excessive.
