AI could also be getting hyped as the following billion greenback (or, a lot greater) alternative today 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 companies for automotive, linked dwelling and hospitality functions — earlier this month laid off 40% of its employees and as a comply with up, at the moment introduced that it had raised $25 million in fairness to shore up its place available in the market.
SoundHound didn’t say who’s behind the funding besides to notice that it’s coming from “a various set of monetary and strategic traders, each from the present shareholder base and new capital suppliers.”
SoundHound notes that it’s coming within the type of most popular 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 circumstances are met.” We’ve got reached out to the corporate to see if we will get extra element on that investor listing.
We’ve got additionally requested if it may present element on how the proceeds shall be used. One report from final week famous that the laid off staff will solely be getting severance if the corporate raises more cash. Now that this spherical has closed, we’ve requested if that shall 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 unbiased different to companies constructed by Large Tech equivalent 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 means 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 the moment 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 specifically. Tech shares have taken a nosedive within the final 12 months, and that’s impacting corporations significantly arduous when they’re nonetheless successfully proving out their product-market match.
SoundHound has inked numerous massive partnerships over time, together with offers with Mercedes Benz, Kia and Hyundai in its intensive 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 are producing income proper now — shouldn’t be so clear.
The corporate, in its funding announcement, additionally offered a preliminary take a look at its full-year 2022 outcomes, and they’re okay however not huge. Revenues shall 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 numerous hope on future prospects.
We’ll replace this put up as we study extra.