SoundHound AI (NASDAQ: SOUN) saw its shares jump 14.8% to $7.38 in after-hours trading on Wednesday, following the release of preliminary second-quarter results that significantly exceeded analyst expectations. The stock had closed the regular session down 1.2% at $6.43.
The voice AI company reported preliminary Q2 revenue of $61.9 million, a 45% increase from the prior year's $42.7 million. This substantially outpaced the consensus estimate of $52.4 million, which had implied growth of roughly 23%. The company's results nearly doubled the anticipated growth rate, marking a strong start to the second half of 2026.
Management also updated its full-year guidance, raising the lower end by $5 million to $230 million, while keeping the upper boundary unchanged at $260 million. The midpoint now sits at $245 million, up 1% from the previous $242.5 million. This adjustment implies that SoundHound expects a challenging but achievable second half, with implied H2 revenue of $138.9 million at the midpoint, representing a 30.9% increase from the first half's $106.1 million.
Financial Highlights and Margins
The preliminary results show notable improvements in profitability metrics. Adjusted EPS came in at -$0.02, beating consensus by $0.10. GAAP gross margin expanded to 45.1% from 39.0% in the prior year, while non-GAAP gross margin held steady at 58.4%. The adjusted EBITDA loss narrowed to $9.6 million from $14.3 million, reflecting improved operating leverage.
Cash usage, however, increased. Operating cash outflows for the first half totaled $60.0 million, up 37.3% from $43.7 million in the comparable period. The company also spent an additional $32.7 million on investing activities. As of June 30, SoundHound held $203 million in cash and had no debt.
OASYS Drives Enterprise Adoption
Interim CFO James Hom attributed the strong topline growth to the company's OASYS platform. "Our strong topline growth this quarter was driven by signing major enterprise AI deals attributed to OASYS," he said in a statement. The company also highlighted the expansion of its MUSC Health deployment, noting that its "Emily" agent has handled over 2.2 million patient calls, with the platform now deployed in retail and specialty pharmacy sectors.
Guidance and Analyst Sentiment
The company plans to issue further guidance upon completion of its pending acquisition of LivePerson (NASDAQ: LPSN), which is expected before the end of 2026. The current outlook does not incorporate the combined entity's results.
Analyst price targets ahead of the report ranged from $9 to $20, with a Yahoo Finance fair value estimate of $13.14 and a Google Finance average target of $12.75. These figures are likely to be revised following the strong quarter.
Risks and Outlook
Despite the positive news, risks remain. Cash usage rose in the first half despite improved adjusted margins, and stock-based compensation reached $21.5 million, roughly 35% of Q2 revenue. The preliminary nature of the results and integration risks from the LivePerson acquisition also warrant caution.
Investors will watch Thursday's regular trading session to see if analysts raise their forecasts and whether SoundHound can sustain its elevated second-half run rate without further increasing cash burn.
