SoundHound AI: 3 Key Takeaways for Long-Term Investors

On its third-quarter 2026 earnings call, held on Nov. 5, 2026, SoundHound AI (NASDAQ:SOUN) announced that it expects to reach sustainable profitability within the second half of 2027. It's swapping lumpy upfront software license fees for steady hosted subscriptions. Management is also cutting operational expenses across the business. Three things management said on the call stand out.

1. Shifting From Upfront Licensing to Predictable Hosted Subscriptions

Upfront licensing deals historically created unpredictable swings in quarterly revenue. Management is now using its enterprise platform, OASYS -- which runs software agents across voice and text -- to convert those single-point customer commitments into steady annualized recurring revenue by positioning OASYS as a hosted service.

Now, with the self-learning feature of OASYS, we are able to structure these deals as hosted solutions with recurring revenue, while still signing long-term commitments from our customers.
-- Keyvan Mohajer, Chief Executive Officer and Co-Founder

2. Trimming At Least $120 Million in Costs to Secure H2 2027 Profitability

Integrating recent acquisitions allows the company to eliminate duplicate corporate functions, optimize cloud spending, and drop unprofitable customer contracts. Consequently, management expects to achieve positive adjusted EBITDA -- earnings before interest, taxes, depreciation, and amortization, which is a key measure of core operating profitability -- even at the low end of its revenue guidance.

With the integration actions we've already taken, which I'll discuss shortly, I'm confident that we'll both accelerate revenue growth and generate positive adjusted EBITDA within the second half of 2027.
-- John Collins, Chief Financial Officer

3. Replacing External AI Models With In-House Tech Drops Computing Costs

Relying on external providers for complex software tasks drives up computing expenses for enterprise customers. SoundHound is migrating customer traffic to its proprietary models, cutting operating costs while improving processing speed and accuracy.

And with our recent investments in machine learning, we can now run complete customer interactions on our own AI stack without requiring third-party frontier models. We have already migrated hundreds of customers to this architecture. These deployments are delivering better accuracy and latency for our customers and our end users, while importantly, reducing SoundHound model costs by more than an order of magnitude.
-- Keyvan Mohajer, Chief Executive Officer and Co-Founder

Looking Ahead

Quarterly revenue grew 48% year over year to a record $62.4 million, and enterprise demand for voice technology is accelerating. Management is institutionalizing financial discipline across the business.

Starting in 2027, adjusted EBITDA will be a regular component of our guidance, a numeric metric you can rely on going forward.
-- John Collins, Chief Financial Officer

SoundHound relies on structural advantages including over 800 patents and proprietary models that insulate it from third-party vendor fees. Management is watching pricing discipline and hosted customer transitions to drive long-term value.

Our pace of innovation has accelerated beyond our own imagination, and our data and experience benefit us in unique ways. We have also been strategically non-renewing and exiting certain negative gross margin contracts inherited from prior acquisitions and expect to continue doing so with a positive impact on both gross margin and EBITDA.
-- Keyvan Mohajer, Chief Executive Officer and Co-Founder

The Motley Fool has positions in and recommends SoundHound AI. The Motley Fool has a disclosure policy.