It has been about a month since the last earnings report for SoundHound AI, Inc. (SOUN). Shares have lost about 4.8% in that time frame, underperforming the S&P 500.
But investors have to be wondering, will the recent negative trend continue leading up to its next earnings release, or is SoundHound AI due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
SoundHound Q2 Earnings Beat on OASYS Demand, Revenues Top
SoundHound AI, Inc. delivered a strong second-quarter 2026 performance, with earnings and revenues surpassing expectations. The quarter reflected accelerating enterprise demand for voice and agentic AI, major OASYS-driven deals and improving cost discipline. Profitability strengthened year over year, with higher GAAP gross margin and narrower adjusted EBITDA and net losses.
SOUN's Revenues and Earnings
In the second quarter, SoundHound reported record revenues of $61.9 million, up 45% year over year. The figure surpassed the Zacks Consensus Estimate of $52.49 million by 17.9%. Management attributed the top-line growth to major enterprise AI deals linked to OASYS, reflecting rising adoption of the company's voice and agentic AI offerings across industries.
The company posted an adjusted loss of 2 cents per share compared with the Zacks Consensus Estimate of a loss of 3 cents, representing a favorable surprise of 33.3%. The adjusted loss also narrowed from 3 cents per share in the prior-year quarter.
SOUN's Margins Improve on Cost Discipline
On a year-over-year basis, SOUN's profitability improved. GAAP gross profit rose 68% to $27.9 million from $16.7 million, while GAAP gross margin expanded to 45.1% from 39%, reflecting stronger growth in gross profit than revenues.
Non-GAAP gross profit increased 45% to $36.2 million. Non-GAAP gross margin remained unchanged at 58.4%, indicating stable underlying profitability after excluding amortization, stock-based compensation and acquisition-related expenses. Adjusted EBITDA also improved year over year, with the loss narrowing to $9.6 million from $14.3 million. Non-GAAP net loss decreased 24% to $9 million, while GAAP operating loss narrowed to $43.3 million from $78.1 million.
SOUN's Enterprise Pipeline Keeps Broadening
Management highlighted rising demand across health care, financial services, telecommunications, automotive, restaurants and consumer-facing applications. In health care, SoundHound signed a seven-figure agreement with a nationally ranked system employing 30,000 people across hospitals, health parks and medical offices.
The company also secured new and expanded business with health care technology, pharmacy care and electronic health record customers. Financial services renewals included a Japanese online brokerage serving more than 6 million accounts, a global asset manager, a major U.S. bank and a Canadian financial services organization. Automotive activity included a seven-figure deal with an infotainment software company in China. Stellantis increased overall unit adoption and added live generative AI capabilities, while Hyundai expanded its adoption of the technology. Restaurant wins and expansions included Ruby Tuesday, Five Guys, IHOP and Jersey Mike's.
SoundHound's OASYS Drives Enterprise Adoption
OASYS remained central to SoundHound's enterprise growth strategy. Management said major agreements attributed to the platform supported the quarter's record revenues and demonstrated strong customer interest in deploying voice and agentic AI across business workflows. The company describes OASYS as a self-learning, orchestrated platform that allows organizations to build and deploy conversational agents across phones, chat, kiosks, smart devices, drive-thrus, televisions and vehicles. Its broader deployment model is intended to support transactions, tasks and customer-service workflows across digital and physical channels.
SoundHound also expanded its distribution reach through a multi-year partnership in Latin America representing an initial eight-figure agreement. The arrangement covers a network spanning more than 20 countries. A partnership with a global IT services provider is expected to extend access to enterprise digital-transformation customers.
SoundHound's Balance Sheet Remains Debt-Free
As of June 30, 2026, SOUN ended the quarter with $203 million in cash and cash equivalents and no debt. The debt-free position preserves financial flexibility as the company continues investing in platform development and prepares for the pending LivePerson transaction. Operating cash flow weakened year over year during the first half. Net cash used in operating activities was $60 million compared with $43.7 million in the prior-year period. Net cash used in investing activities totaled $32.7 million, while financing activities provided $46.7 million.
The quarter's GAAP results included an approximately $4 million gain tied to the revaluation of contingent acquisition liabilities. This noncash item was excluded from the company's non-GAAP performance measures.
SOUN Raises Its 2026 Revenue Outlook
For 2026, SOUN raised its revenue outlook to $230 million to $260 million from the previous range of $225 million to $260 million. The revision followed the company's strong second-quarter performance and reflected continued demand for OASYS and its broader voice and agentic AI portfolio. The outlook does not yet contemplate the pending acquisition of LivePerson. SoundHound expects the transaction to close before the end of 2026 and plans to update its guidance after the deal is completed.
How Have Estimates Been Moving Since Then?
Analysts were quiet during the last two month period as none of them issued any earnings estimate revisions.
The consensus estimate has shifted 7.89% due to these changes.
VGM Scores
At this time, SoundHound AI has a subpar Growth Score of D, however its Momentum Score is doing a lot better with a B. However, the stock was allocated a score of F on the value side, putting it in the bottom 20% quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
SoundHound AI has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
Performance of an Industry Player
SoundHound AI belongs to the Zacks Computers - IT Services industry. Another stock from the same industry, DXC Technology Company. (DXC), has gained 5.2% over the past month. More than a month has passed since the company reported results for the quarter ended June 2026.
DXC Technology reported revenues of $3 billion in the last reported quarter, representing a year-over-year change of -5.1%. EPS of $0.40 for the same period compares with $0.68 a year ago.
DXC Technology is expected to post earnings of $0.57 per share for the current quarter, representing a year-over-year change of -32.1%. Over the last 30 days, the Zacks Consensus Estimate remained unchanged.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for DXC Technology. Also, the stock has a VGM Score of A.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
SoundHound AI, Inc. (SOUN) : Free Stock Analysis Report
DXC Technology Company. (DXC) : Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).
