Earnings

SoundHound Gives Up $35 Million Of 2026 Revenue On Purpose, Swapping Upfront Licenses For Hosted Deals

CFO John Collins says the cut comes from exiting weak contracts and licensing, and the company now guides to positive adjusted EBITDA in late 2027.

Matteo Parrino Jonathan Ponciano

Matteo Parrino, Jonathan Ponciano

— 2 min read
Share
SoundHound Gives Up $35 Million Of 2026 Revenue On Purpose, Swapping Upfront Licenses For Hosted Deals

SoundHound AI, which builds voice AI software for businesses and device makers, is deliberately giving up about $35 million of 2026 revenue, CFO John Collins told analysts on the company's Thursday earnings call. The company is moving away from one-time license sales toward hosted contracts and says that shift sets up positive adjusted EBITDA in the second half of 2027.

The $35 million bridge

Collins, on his first call as chief financial officer, walked through the math. SoundHound's pre-acquisition consensus of $238 million excluded LivePerson. Treating LivePerson as purely additive would put 2026 revenue near $290 million, he said, against a guidance midpoint of $255 million, a gap he attributed to measures that improve earnings quality.

About $8 million of that comes from not renewing negative-margin contracts and deprioritizing weak lines, Collins said. The other roughly $27 million is lower licensing revenue in the second half. The 2026 range was tightened to $250 million to $260 million, from $230 million to $260 million.

Collins said the changes do not affect the 2027 outlook.

Why licenses are being hosted

CEO Keyvan Mohajer said the upfront license deals have been repeatable, closing every quarter since the company went public. Collins put the streak at 18 consecutive quarters and said just over $20 million of point-in-time licensing revenue landed in the second quarter.

Mohajer said the company's Oasis platform now lets it sign large commitments as hosted solutions that book revenue over time. Certain point-in-time deals made up over 33% of revenue in the second quarter and about 10% in the third, he said. Third-quarter revenue was a record $62.4 million, up 48% from a year earlier.

Asked by an Oppenheimer analyst which indicators to follow now that reported revenue will say less about demand, Collins said new metrics beyond adjusted EBITDA are not ready. He said more leading indicators should come on the fourth-quarter call.

Profit target and the layoffs

Collins reaffirmed 2027 revenue guidance of $350 million to $400 million. For the first time he guided to positive adjusted EBITDA in the second half of 2027, which he said holds even at the low end of that range. It rests on at least $120 million of annualized cost cuts, with at least $80 million already actioned and set to take effect before January 1.

SoundHound closed the LivePerson deal on September 4. A MarketWatch report said the company also disclosed a restructuring plan including a workforce cut of roughly 27%, and that shares fell 11% in late trading Thursday after the regular session.

The quarter ended with $207.6 million in cash and equivalents, according to Benzinga's report of the results. Management described the balance sheet as debt-free apart from about $500,000 of 2026 stub notes.

Collins said the stub notes will be retired at maturity in the fourth quarter, the same call where he expects to add leading indicators.

Sources

Read more