SoundHound targets positive adjusted EBITDA in late 2027 after record revenue

SoundHound AI’s record sales quarter came with a larger adjusted operating loss—and a deadline for reversing it. In its November 5 earnings release, the company reported $62.4 million in third-quarter revenue, up 48.5% year over year. It expects sustainable positive adjusted EBITDA in the second half of 2027, even at the bottom of its revenue forecast.

The voice and conversational AI company narrowed its 2026 revenue outlook to $250 million–$260 million, from $230 million–$260 million, raising the midpoint to $255 million. It reaffirmed its 2027 forecast of $350 million–$400 million. The profitability commitment rests on planned cost reductions and a shift in how customers buy its software—not just higher sales.

Record sales, but a wider adjusted loss

The quarter’s growth included an acquisition boost. Chief Financial Officer John Collins estimated that LivePerson contributed nearly $14 million after the deal closed September 4. That contribution matters when reading the headline growth rate: the $62.4 million total includes the newly acquired business, rather than measuring only growth in SoundHound’s existing operations.

Profit measures moved in different directions. SoundHound’s net loss under standard accounting rules narrowed to $46.4 million from $109.3 million a year earlier. But adjusted EBITDA deteriorated. The standard-accounting result also included a $23.4 million gain from revaluing acquisition-related liabilities, an item excluded from the adjusted measures.

Adjusted EBITDA is not net profit. SoundHound’s calculation excludes interest-related results, taxes, depreciation and amortization, stock-based compensation, acquisition costs and other specified items. Its 2027 target therefore does not promise profitability under standard accounting rules. The company also calls the released financial figures preliminary until it files its quarterly report.

Less revenue upfront, more recognized over time

SoundHound is moving some customers from upfront licenses to hosted, multi-year agreements, recognizing revenue over time instead of at a single point. Management expects the change to reduce near-term revenue while improving visibility, cash collections and earnings stability. Point-in-time deals represented about 10% of third-quarter revenue, down from more than 33% in the second quarter.

That transition explains why a higher guidance floor can coexist with revenue being forgone. Collins said adding LivePerson to the pre-acquisition analyst consensus of $238 million, without other changes, would have produced roughly $290 million in 2026 revenue. The new $255 million midpoint sits $35 million below that hypothetical figure—not below SoundHound’s previous guidance midpoint.

He attributed about $27 million of the difference to lower second-half licensing revenue. Another roughly $8 million reflects exits from negative-margin contracts and decisions to deprioritize low-performing business lines. Collins said those changes do not alter the prior 2027 outlook. The distinction is between collecting more revenue immediately and building what management expects to be a steadier business.

The savings must catch up with AI costs

SoundHound has identified $120 million in annualized savings, with more than $80 million in actions scheduled to take effect before January 1, 2027. It expects the full annualized savings rate during 2027. On the earnings call, Collins broke the planned reductions into four categories:

• About $48 million from merger-related team and vendor consolidation.
• About $42 million from cloud and infrastructure optimization.
• About $15 million from AI and systems-driven operations.
• About $15 million from reallocating resources and exiting or pausing business lines.

The current margin pressure shows the work ahead. Collins attributed the gross-margin decline to new AI capabilities that carry out tasks and higher cloud usage. He expects cloud consolidation, dropping negative-margin contracts and wider use of SoundHound’s own models to help margins expand, but did not provide a numerical margin forecast.

CEO Keyvan Mohajer said hundreds of customers have moved to an architecture that can complete interactions using SoundHound’s own models. He claimed those deployments cut model costs by more than an order of magnitude while improving accuracy and response speed. Its OASYS platform will still support third-party models or combinations of both.

Investors may get more ways to judge the transition on the fourth-quarter call. Collins said SoundHound is reconsidering which leading indicators it publishes, but was not ready to introduce new ones. Adjusted EBITDA is set to become a regular part of guidance in 2027.