SoundHound Narrows Q2 Non-GAAP Loss: Is Profitable Growth in Sight?

SoundHound AI, Inc. SOUN showed progress toward profitable growth in second-quarter 2026 as strong revenue gains were accompanied by improving margins and narrower losses. Revenues jumped 45% year over year to a record $61.9 million, while non-GAAP net loss narrowed 24% to $9 million from $11.9 million. Non-GAAP loss per share improved to 2 cents from 3 cents.

The improvement reflects both operating momentum and cost discipline. Adjusted EBITDA loss narrowed 33% year over year to $9.6 million. GAAP gross margin expanded 610 basis points to 45.1%, although non-GAAP gross margin remained unchanged at 58.4%.

OASYS is central to SoundHound’s path toward scale. The agentic AI platform is helping convert pilots into large implementations faster, including an eight-figure commitment signed less than 90 days after the initial demo. Management continued investing in growth while maintaining spending discipline.

SoundHound is also moving more workloads onto its proprietary technology. Its SMB customers are now entirely on the company’s own model stack. Management expects its Polaris speech model, specialized LLMs and speech synthesis technology to improve quality while lowering costs and supporting higher margins over time.

Still, profitability has not arrived. SoundHound used nearly $60 million in operating cash during the first half of 2026, up from $43.7 million a year earlier. Yet, with $203 million in cash, no debt and 2026 revenue guidance raised to $230-$260 million, stronger scale and cost efficiencies provide a clearer path toward profitable growth.

SoundHound Faces Profitable AI Rivals

SoundHound competes with Five9 FIVN and NICE NICE in conversational AI, customer engagement and AI-powered contact-center automation. Both provide important profitability benchmarks as SoundHound works to turn rapid revenue growth into sustainable earnings.

Five9’s second-quarter 2026 revenues increased 10% year over year to $312.4 million, while adjusted EBITDA reached $70.1 million, representing a 22.4% margin. Five9 generated $42.1 million in operating cash flow and posted non-GAAP net income of $53.5 million. Subscription revenues grew 14%, while management noted that AI revenues accelerated even faster.

NICE generated second-quarter 2026 revenues of $782.3 million, up 7.6%, while cloud revenues advanced 12.6% to $609 million. NICE delivered non-GAAP operating income of $198 million, a 25.3% margin, and $122.7 million in operating cash flow. Its AI and self-service ARR surged 52% to $362 million.

Against these profitable rivals, SoundHound’s narrowing $9.6 million adjusted EBITDA loss shows progress, but Five9 and NICE demonstrate the profitability and cash generation SoundHound still needs to achieve as OASYS scales.

SOUN’s Price Performance, Valuation & Estimates

SoundHound’s shares have lost 25.4% year to date (YTD), underperforming the industry, as shown below.

SOUN’s YTD Price Performance

Image Source: Zacks Investment Research

From a valuation standpoint, SOUN trades at a forward price-to-sales (P/S) multiple of 12.7, slightly above the industry’s average.

SOUN’s P/S Ratio (Forward 12-Month) vs. Industry

Image Source: Zacks Investment Research

Over the past 30 days, the Zacks Consensus Estimate for SoundHound’s 2026 and 2027 loss per share has narrowed to 16 cents and 13 cents, respectively, as shown below. The expected loss for 2026 remains wider than the previous year’s loss of 13 cents per share.
 

Image Source: Zacks Investment Research

SOUN currently has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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