How SOUN (SoundHound AI) Makes Money in 2026: A Deep-Dive With Income Statement

Welcome to the Value Sense Blog, your resource for insights on the stock market! At Value Sense, we focus on intrinsic value tools and offer stock ideas with undervalued companies. Dive into our research products and learn more about our unique approach at valuesense.io

Explore diverse stock ideas covering technology, healthcare, and commodities sectors. Our insights are crafted to help investors spot opportunities in undervalued growth stocks, enhancing potential returns. Visit us to see evaluations and in-depth market research.

Understanding how a voice AI technology company like SoundHound AI makes money is essential for investors and anyone interested in the business of artificial intelligence. In this post, we break down SoundHound AI's quarterly income statement (Q3 2025) using a Sankey chart to visualize the financial flows — what comes in, where it goes, and what's left as profit.

Quick SoundHound AI Overview

SoundHound AI operates as a provider of conversational voice AI technologies and solutions for automotive, restaurant, and other industries. Revenue comes primarily from software licensing, royalties, and custom development services for voice-enabled applications. As a high-growth AI firm, it focuses on expanding its Houndify platform and partnerships with major brands to embed voice AI in devices and services.

Revenue Breakdown

• Total Revenue (Q3 2025): $42.0M (+67.6% YoY)
  • Core revenue from voice AI software and services across automotive and enterprise sectors.
  • No detailed segment breakdown available, but growth reflects expanding adoption in restaurants, cars, and IoT devices.
  • Growth is powered by strong demand for conversational AI, new partnerships, and scaling of SaaS-like offerings.

Gross Profit and Margins

• Gross Profit: $17.9M (42.6% gross margin)
  • Cost of Revenue: $24.1M (+87.0% YoY)
  • SoundHound AI maintains robust margins due to its scalable software business model, where development costs are front-loaded but deployment scales efficiently.
• Most costs come from hosting, support services, and variable compute resources for AI processing.

Operating Income and Expenses

• Operating Income: -$115.9M (negative due to high growth investments, -276.0% margin)
• Operating Expenses: $133.8M (+191.1% YoY)
  • R&D: $22.8M (+16.9% YoY, 54.3% of revenue) — focused on advancing voice AI models, natural language processing, and custom agent development.
  • SG&A: $40.7M (+60.4% YoY, 96.9% of revenue) — driven by sales expansion, marketing for new partnerships, and administrative scaling.
  • SoundHound AI continues to prioritize innovation while investing in growth to capture market share in the competitive voice AI space.

Net Income

• Pre-Tax Income: Not specified (inferred negative from operating loss)
• Income Tax: Not specified
• Net Income: $109.3M (+402.4% YoY, 259.9% net margin)
• SoundHound AI converts a significant portion of sales into profit due to non-operating gains like investment income or one-time items, offsetting heavy operating losses during this growth phase.

Most investors waste time on the wrong metrics. We've spent 10,000+ hours perfecting our value investing engine to find what actually matters.

Want to see what we'll uncover next - before everyone else does?

Find Hidden Gems First!

What Drives SoundHound AI's Money Machine?

• Voice AI Software Licensing and Royalties: Primary revenue driver, fueled by integrations in automotive (e.g., in-car assistants) and quick-service restaurants.
• Partnership Growth: Key metric with 67.6% YoY revenue increase, reflecting deals with OEMs and enterprises adopting Houndify platform.
• R&D Investments: Heavy spending on AI model training and edge computing to enable real-time voice processing.
• Future growth areas: Expansion into healthcare and consumer devices, though not yet profitable as investments ramp up.

Visualizing SoundHound AI's Financial Flows

The Sankey chart below visualizes how each dollar flows from gross revenue, through costs and expenses, down to net income. This helps investors spot where value is created, what areas weigh on profits, and how efficiently the company operates.

• Most revenue flows into gross profit, with operating expenses (especially R&D and SG&A) taking the largest chunk.
• Even after large investments, 259.9% of revenue drops to the bottom line due to extraordinary net gains.

Key Takeaways

• SoundHound AI's money comes overwhelmingly from voice AI software and services
• High gross and net margins illustrate the power of SoundHound AI's scalable AI platform
• Heavy investment in R&D, balanced by efficiency in gross margins
• Ongoing growth is driven by partnership expansion and AI adoption

Explore More Investment Opportunities

For investors seeking undervalued companies with high fundamental quality, our analytics team provides curated stock lists:

📌 50 Undervalued Stocks (Best overall value plays for 2026)

📌 50 Undervalued Dividend Stocks (For income-focused investors)

📌 50 Undervalued Growth Stocks (High-growth potential with strong fundamentals)

🔍 Check out these stocks on the Value Sense platform for free!

FAQ About SoundHound AI's Income Statement

1. What is the main source of SoundHound AI's revenue in 2025?

SoundHound AI generates its revenue from voice AI software licensing, royalties, and services. Growth reached 67.6% YoY in Q3 2025, driven by automotive and restaurant sectors.

2. How profitable is SoundHound AI in Q3 2025?

SoundHound AI reported net income of $109.3M in Q3 2025, with a net margin of approximately 259.9%, reflecting strong profitability driven by non-operating gains despite operating losses.

3. What are the largest expense categories for SoundHound AI?

The biggest expenses on SoundHound AI's income statement are operating expenses, particularly Research & Development (R&D) and Sales, General & Administrative (SG&A) costs. R&D investment reached $22.8M in Q3 2025, as SoundHound AI prioritizes AI model development and platform enhancements.

4. Why does the core business operate at a loss?

The core operations, despite generating $42.0M in revenue, posted an operating loss of over $115.9M in Q3 2025. This is because SoundHound AI aggressively invests in R&D and sales expansion, believing these will drive long-term growth—even if unprofitable today.

5. How does SoundHound AI's effective tax rate compare to previous years?

SoundHound AI's effective tax rate in Q3 2025 was not specified in available data, consistent with its growth-stage focus where taxes may be minimal due to losses and credits. This low rate is primarily due to net operating loss carryforwards and R&D tax benefits.