SoundHound AI (NASDAQ:SOUN) experienced a significant premarket surge on Thursday, with shares climbing 28.8% to $8.28 ahead of the Nasdaq open. This rally followed the release of the company's second-quarter results, which not only surpassed analyst expectations but also prompted an upward revision to its full-year revenue guidance, alleviating some concerns about near-term growth.
The company reported record quarterly revenue of $61.9 million for the period ending June 30, marking a robust 45% increase year-over-year. This figure notably exceeded the consensus estimate of $52.39 million by 18.1%, underscoring strong demand for its voice AI solutions. The performance was driven by accelerating sales of its OASYS platform, with CEO Keyvan Mohajer highlighting a major eight-figure deal that was closed in under 90 days from initial demonstration to contract signing.
Financially, the quarter showed improved loss absorption. GAAP gross margin expanded by 6.1 percentage points to 45.1%, while adjusted EBITDA loss narrowed by 33% to $9.6 million from $14.3 million in the same period last year. Non-GAAP EPS also improved, coming in at -$0.02 versus -$0.03 in the prior year. The adjusted EBITDA margin rose to -15.5% from -33.5%, reflecting better operating leverage.
For the first half of 2026, revenue totaled $106.1 million, building on the $44.2 million generated in Q1. The company's updated guidance for the full year implies that achieving the lower end of the range would require only modest sequential revenue growth in the second half. Specifically, the lower end of the guidance now points to approximately $62 million in average quarterly revenue for H2, essentially flat compared to Q2's performance.
The guidance revision saw the lower end of the revenue target increased by $5 million to $230 million, while the upper end remained steady at $260 million. The midpoint of the guidance rose by just 1% to $245 million. Executives noted that while large deals are becoming more frequent, accurately forecasting their timing and magnitude remains challenging, which is reflected in the wide range.
The premarket rally significantly boosted SoundHound's valuation, implying an equity value of approximately $3.56 billion based on the $8.28 share price. This translates to a market value-to-2026 revenue multiple of 14.5 times at the midpoint, up from 11.3 times at Wednesday's close. The stock had already gained 4.9% between July 31 and Wednesday, and the premarket move extended that gain to roughly 35% over the period.
This surge contrasts with a broader tech market that saw Nasdaq futures slip 0.76% early Thursday. Analyst reactions have been mixed but generally constructive. Cantor Fitzgerald maintained its Buy rating, while Piper Sandler continued to hold a Hold stance. According to data from MarketScreener, the consensus target price stands at $12.86, implying a 55% upside from the premarket quote, though targets range from $8 to $17.
Investors will now focus on the upcoming Form 10-Q filing and potential analyst rating adjustments. The company has no investor events scheduled for the coming week. Additionally, the pending acquisition of LivePerson (NASDAQ:LPSN) remains a key overhang; the shareholder vote is scheduled for August 20, and SoundHound's current outlook does not incorporate this transaction.
Despite the positive momentum, risks remain. SoundHound's operating cash outflow reached $60 million in the first half, and basic weighted-average shares increased by 7.6%. The company continues to report losses, and the LivePerson deal carries integration and completion risks. While the lower end of the revenue target now appears more attainable, the market's valuation at 14.5 times midpoint sales suggests expectations remain high.
