SoundHound stock fell 7.28% to $3.95 during Friday’s US trading session after the voice AI company reported record third-quarter revenue but continued to post substantial losses. SoundHound AI (NASDAQ: SOUN) raised the lower end of its 2026 revenue outlook to $250 million, yet declining gross margins and a larger adjusted EBITDA loss left investors questioning how quickly the recently expanded business can become profitable.
At 1:17 p.m. ET on November 6, SOUN traded at $3.95, down $0.31 from Thursday’s $4.26 close, according to Stock Analysis. The shares opened at approximately $4.14 and traded between $3.88 and $4.18. The regular-session decline followed Thursday’s after-hours selloff, when Benzinga reported a 7.02% drop to $3.96 and Seeking Alpha recorded a decline of approximately 9% to $3.89 at a different time.
The reaction contrasts with SoundHound’s higher annual revenue forecast and its first financial update since acquiring LivePerson in September. The central question is whether investors are discounting continued growth because of the cost of integrating the acquisition, weaker margins and a profitability target that remains several quarters away.
SoundHound Q3 Revenue Rises 48.5%, but Losses Persist
SoundHound reported third-quarter revenue of $62.4 million, up 48.5% from $42 million a year earlier. The result was broadly consistent with market expectations. Earnings Whispers put consensus revenue at $63.02 million, implying a modest miss of approximately $600,000, while other estimates published before the announcement ranged from $61.71 million to $62.8 million.
The company recorded a GAAP net loss of $46.4 million, compared with $109.3 million a year earlier. However, the latest figure included a $23.4 million non-cash gain associated with the revaluation of contingent acquisition liabilities, limiting how much the headline improvement says about underlying operations.
Non-GAAP net losses widened to $21.2 million from $13 million, while adjusted EBITDA deteriorated to a loss of $20.7 million from $14.5 million. Non-GAAP earnings came in at a loss of $0.05 per share, compared with the $0.07 loss expected by the Earnings Whispers consensus.
Gross margins also weakened. GAAP gross margin fell to 34.1% from 42.6% a year earlier, while non-GAAP gross margin declined to 50.3% from 59.3%. Management attributed part of the pressure to the expansion of agentic AI capabilities and increased cloud usage.
The figures show why revenue growth alone did not settle the earnings debate. SoundHound is generating substantially more sales, but the costs of supporting those services and its expanded operations have continued to weigh on adjusted profitability.
SoundHound Raises 2026 Guidance, but Keeps the Revenue Ceiling
SoundHound narrowed its full-year 2026 revenue forecast to $250 million-$260 million, compared with its previous range of $230 million-$260 million. The revision raises the lower end by $20 million while leaving the upper end unchanged.
The new $255 million midpoint is above the approximately $241.1 million full-year consensus reported by Earnings Whispers. SoundHound also reaffirmed its 2027 revenue forecast of $350 million-$400 million, although that range’s $375 million midpoint is below the $391.2 million consensus cited by the same provider.
Management’s updated outlook incorporates the LivePerson acquisition as well as decisions to exit certain low-margin business lines and change how software licensing revenue is recognized.
On the earnings call, CFO John Collins provided a useful reconciliation. Starting with approximately $238 million in pre-acquisition consensus revenue, he said adding LivePerson without other adjustments would imply around $290 million for 2026. The company’s new $255 million midpoint is $35 million lower, reflecting approximately $8 million from discontinued or deprioritized business and $27 million from reduced upfront licensing revenue.
The difference matters because SoundHound is deliberately accepting lower near-term revenue recognition in exchange for what management expects will be more predictable recurring sales. Investors must assess whether that transition ultimately improves profitability enough to justify the revenue trade-off.
Why SoundHound Stock Fell Despite the Higher Outlook
Friday’s decline suggests investors are placing greater weight on the economics of growth than on the higher guidance floor. The company has expanded through acquisitions, but the third-quarter figures show that increased revenue has not yet produced improving adjusted operating profitability.
The deterioration in non-GAAP gross margin and adjusted EBITDA is particularly relevant. A business moving toward sustained profitability generally needs to demonstrate that revenue growth can outpace the costs required to deliver its services. SoundHound’s latest quarter has not yet established that trend.
Cash generation remains another consideration. The company ended September with $207.6 million in cash and equivalents