AI could also be getting hyped as the subsequent billion greenback (or, a lot greater) alternative lately after that mega spherical for OpenAI from Microsoft, however that rising tide shouldn’t be lifting all boats. SoundHound — the voice AI firm that gives conversational AI providers for automotive, linked house and hospitality functions — earlier this month laid off 40% of its staff and as a comply with up, at this time announced that it had raised $25 million in fairness to shore up its place out there.
SoundHound didn’t say who’s behind the funding besides to notice that it’s coming from “a various set of monetary and strategic buyers, each from the present shareholder base and new capital suppliers.”
SoundHound notes that it’s coming within the type of most well-liked fairness and convertible into shares of Class A standard inventory, doubtlessly “on or after the one 12 months anniversary of the issuance date if sure worth situations are met.” We’ve got reached out to the corporate to see if we are able to get extra element on that investor record.
We’ve got additionally requested if it might present element on how the proceeds will probably be used. One report from last week famous that the laid off workers will solely be getting severance if the corporate raises extra money. Now that this spherical has closed, we’ve requested if that will probably be one of many makes use of of the funds.
SoundHound was as soon as valued at $1 billion+ when nonetheless a privately-held startup and seen as an impartial different to providers constructed by Large Tech akin to Amazon’s Alexa. (And sooner than that, it developed music AI, and plenty of considered it as a extra highly effective and efficient different to Shazam, the corporate acquired by Apple that helps with figuring out music.)
SoundHound went public in November 2021 by the use of a SPAC merger at a $2.1 billion valuation. However… shock, shock, the SPAC valuation went the best way of so many different SPACs and didn’t maintain. SoundHound at this time has a market cap of $295 million.
That hasn’t been helped by the broader financial local weather and the winter that has hit the tech sector particularly. Tech shares have taken a nosedive within the final 12 months, and that’s impacting corporations notably laborious when they’re nonetheless successfully proving out their product-market match.
SoundHound has inked loads of massive partnerships over time, together with offers with Mercedes Benz, Kia and Hyundai in its in depth automotive efforts and extra just lately Toast within the hospitality sector, in addition to a cope with Qualcomm to combine SoundHound voice AI into Snapdragon, work with Snap, and extra. However how a lot all of that has performed out in merchandise — and particularly merchandise which might be producing income proper now — shouldn’t be so clear.
The corporate, in its funding announcement, additionally supplied a preliminary have a look at its full-year 2022 outcomes, and they’re okay however not huge. Revenues will probably be $31 million for the 12 months, “on the high-end of its prior steering,” with gross margins of over 70%. “The Firm expects income progress in 2023 to speed up to roughly 50% year-over-year resulting from its robust buyer base, properly over $300 million bookings basis, and growing demand for its voice AI-enabled customer support merchandise,” it famous. In different phrases, it’s persevering with to place loads of hope on future prospects.
We’ll replace this put up as we study extra.