SOUNDHOUND AI INC
For the period ended Mar 31, 2025. Filed May 12, 2025.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 31, 2025 · Filed May 12, 2025
SOUN$4.11-3.5%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-09-30; filed 2024-11-12.
0001840856-24-000040
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-03-31; filed 2025-05-12.
0001628280-25-024654
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 188 previous paragraphs and 147 current paragraphs.
90 unchanged; 45 reworded; 11 added; 51 removed; 2 previous and 1 current paragraphs rearranged.
Tables are not compared: 15 previous and 8 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (11)
Current report
“Amelia Software Platform” meaning our AI-based digital resource solution that enables AI in our customers’ services, ranging across multiple industries. This generally includes revenue from hosted services if the customer elects our SaaS offering, or from licensing revenue if the customer requires an on-premise solution. Professional services are also offered and included within professional services revenue. The revenues from Amelia Software Platform are included within Service Subscriptions, and are recognized point in time or over time depending on the arrangement.
Current report
Other Income, Net
Current report
We expect our sales and marketing expenses to remain stable in the short term. However, in the long term, we expect sales and marketing expenses to grow at a rate below that of our revenue, aligning with our strategic emphasis on cost effectiveness and sustainable financial performance.
Current report
We expect our research and development expenses to remain stable in the short term. However, in the long term, we expect research and development expenses to grow at a rate below that of our revenue, aligning with our strategic emphasis on cost effectiveness and sustainable financial performance.
Current report
Other Income, Net
Current report
Change in fair value of derivative
Current report
Change in fair value of derivative increased by $1.3 million, or 100% in the three months ended March 31, 2025 compared to the same period in 2024. The increase was primarily attributable to the remeasurement gain from the change in fair value of a derivative assumed from Amelia acquisition. See Note 16 to our unaudited condensed consolidated financial statements included within this report for more information.
Current report
Provision for income taxes increased by $0.5 million, or 178% in the three months ended March 31, 2025 compared to the same period in 2024. This increase was primarily attributable to increased withholding tax from foreign customers, increased foreign taxes and decreased tax benefit from acquisitions.
Current report
Second Equity Distribution Agreement
Current report
The purchase price allocation has been finalized as of December 31, 2024.
Current report
The preliminary purchase price allocation has been finalized as of March 31, 2025.
Removed paragraphs (51)
Previous report
We have incurred certain significant costs relating to the SYNQ3 and Amelia Acquisitions, such as legal, accounting, financial advisory, printing and other professional services fees, as well as other customary payments. Refer to "Item 1A. Risk Factors" in our Form 10-K for a discussion regarding the risks associated with the acquisitions.
Previous report
Restructuring
Previous report
Restructuring expenses consisted of employee severance payments, employee benefits and share-based compensation related to reduced headcount from our restructuring plan ("Restructuring Plan") announced in January 2023. The Restructuring Plan was complete as of December 31, 2023.
Previous report
Loss on Extinguishment of Debt
Previous report
Loss on extinguishment of debt represents the loss associated with the repayment of the Senior Secured Term Loan Credit Agreement with ACP Post OAK Credit II LLC (the "Term Loan") in June 2024 and the repayment of the 2021 note payable ("SVB March 2021 Note") and 2021 convertible note ("SCI June 2021 Note") in April 2023. See Note 9 to our unaudited condensed consolidated financial statements included within this report for more information.
Previous report
Other Income (Expense), Net
Previous report
We recognized a change in valuation allowance due to taxable temporary differences from the intangible assets acquired from the Amelia Acquisition, resulting in the tax benefit of $11.1 million during the three and nine months ended September 30, 2024.
Previous report
Not meaningful
Previous report
Total revenues increased by $21.4 million, or 75%, in the nine months ended September 30, 2024 compared to the same period in 2023. The increase of $25.0 million in service subscription revenue, primarily based in the Americas, was driven by the contribution of Amelia and SYNQ3 revenue. This is offset by a decrease in product royalties revenue in the Asia region, due to the minimum guarantee licensing revenue relating to Houndify Edge recognized in the previous period. We also saw an increase of professional service and unit-based Product Royalties, including SoundHound Chat AI, in both the Asia and EMEA region.
Previous report
Research and development expenses increased by $6.7 million, or 53%, in the three months ended September 30, 2024 compared to the same period in 2023. The increase in research and development expenses was primarily due to increased personnel-related costs of $4.3 million, spending on cloud computing services of $2.7 million, office expense of $0.1 million and consulting fees of $0.1 million. This is partially offset by the reduced information technology and facility allocations of $0.5 million, and legal and professional fees of $0.1 million. Included in the research and development expense is an increase of $1.0 million arising from the Amelia acquisition and $1.1 million arising from the SYNQ3 acquisition, stemming from increased personnel-related costs.
Previous report
Research and development expenses increased by $11.4 million, or 30%, in the nine months ended September 30, 2024 compared to the same period in 2023. The increase in research and development expenses was primarily due to increased personnel-related costs of $8.2 million, spending on cloud computing services of $5.3 million, $0.2 million in property-related expenses and consulting fees of $0.2 million. This is partially offset by the reduced information technology and facility allocations of $1.8 million, legal and professional fees of $0.4 million, and office expenses of $0.2 million. Included in the research and development expense is an increase of $2.8 million arising from the SYNQ3 acquisition and $1.0 million arising from the Amelia acquisition, stemming from increased personnel-related costs.
Previous report
General and administrative expenses increased by $16.2 million, or 78%, in the nine months ended September 30, 2024 compared to the same period in 2023. The increase in general and administrative expenses was primarily due to an increase of $10.7 million in legal and professional fees, of which $4.8 million relate to the Amelia Acquisition and $0.8 million relate to the SYNQ3 Acquisition, $4.4 million in personnel-related costs, $2.5 million in information technology and facility allocations, $0.4 million in bad debt expense, $0.3 million in consulting fees, and $0.1 million in travel expense. The SYNQ3 and Amelia Acquisitions led to increases in personnel-related costs, amortization expense and office expenses. This increase was offset by reductions of $0.8 million in insurance expense, $0.7 million in equipment rental cost and $0.5 million in office expense, and $0.3 million in property-related expenses. Included in the general and administrative expense is an increase of $0.7 million arising from the Amelia acquisition, stemming from increased personnel-related costs.
Previous report
Restructuring
Previous report
There were no restructuring expenses resulting from the Restructuring Plan recorded in the three and nine months ended September 30, 2024 as the Restructuring Plan was complete as of December 31, 2023, compared to zero and $3.8 million of expenses incurred in the three and nine months ended September 30, 2023, respectively.
Previous report
Loss on Extinguishment of Debt
Previous report
The $15.6 million increase in loss on extinguishment of debt during the nine months ended September 30, 2024 was attributable to a loss on repayment of Term Loan in June 2024. See Note 9 to our unaudited condensed consolidated financial statements included within this report for more information.
Previous report
Interest expense decreased by $0.4 million, or 4% in the nine months ended September 30, 2024 compared to the same period in 2023. The decrease in interest expense was primarily attributable to the early repayment of Term Loan in June, 2024 and the interest expense from on our SVB March 2021 Note and SCI June 2021 Note in the nine months ended September 30, 2023, which were terminated at the time that the Term Loan was obtained in April 2023. The decrease in interest expense was partially offset by the increased interest expense of $1.0 million from Amelia Debt in the three months ended September 30, 2024. We expect interest expense will decrease as a result of the extinguishment of the Term Loan.
Previous report
Other Income (Expense), Net
Previous report
Not meaningful
Previous report
Loss on Change in Fair Value of Equity Line of Credit Program
Previous report
We recorded loss on changes in the fair value of the derivative liability associated with the ELOC (as defined below) of $1.9 million for the nine months ended September 30, 2023 as other income (expense), net on our consolidated statements of operations and comprehensive loss. There was no change in fair value of the derivative liability associated with the ELOC for the nine months ended September 30, 2024 as we sold the entirety of the 25,000,000 shares under the ELOC during the year ended December 31, 2023.
Previous report
Gain on Bargain Purchase
Previous report
The gain on bargain purchase of $1.2 million was recorded within other income (expense), net in the condensed consolidated statements of operations and comprehensive loss in the nine months ended September 30, 2024 as a result of a favorable fair value of identifiable net assets acquired from an immaterial acquisition at the date of acquisition as compared with the purchase price. See Note 3 to our unaudited condensed consolidated financial statements included within this report for more information.
Previous report
Provision for income taxes decreased by$12.1 million, or 772%, and$11.9 million, or 514% in the three and nine months ended September 30, 2024, respectively, compared to the same periods in 2023. This decrease was primarily attributed to increased tax benefit from acquisitions.
Previous report
Equity Distribution Agreement
Previous report
During the three and nine months ended September 30, 2024, we sold a total of 10,465,581 and 31,694,198 shares of our common stock under the Equity Distribution Agreement, at a weighted-average price of$4.74 and $4.73 per share, respectively, and raised$49.6 million and $150.0 million of gross proceeds, respectively. After deducting approximately$1.2 million and $3.7 million, respectively, ofcommissions and offering costs incurred by us, thenet proceeds from sales of common stock was $48.4 million and $146.2 million, respectively during thethree and nine months ended September 30, 2024. As of September 30, 2024, we had no remaining capacity to sell the common stock under the Equity Distribution Agreement.
Previous report
The preliminary purchase price allocation has not been finalized as of September 30, 2024 primarily due to the final assessment of the fair values of the intangible assets, contingent sales tax liability assumed and fair value of the contingent acquisition liabilities. The fair value estimates of assets acquired and liabilities assumed is pending the completion of various items, including obtaining further information regarding the identification and valuation of all assets acquired and liabilities assumed, such as the contingent liabilities accrued for a pre-acquisition legal contingency. See Note 7 to our unaudited condensed consolidated financial statements included within this report for more information. Any adjustments to the estimates of purchase price allocation will be made in the periods in which the adjustments are determined, and the cumulative effect of such adjustments will be calculated as if the adjustments had been completed as of the acquisition date. We expect to finalize the purchase price allocation within 12 months from the SYNQ3 Acquisition Date.
Previous report
Escrow Consideration
Previous report
The preliminary purchase price allocation has not been finalized as of September 30, 2024 primarily due to the final assessment of the fair values of the intangible assets, contingent tax liability assumed and fair value of the contingent acquisition liabilities. The fair value estimates of assets acquired and liabilities assumed is pending the completion of various items, including obtaining further information regarding the identification and valuation of all assets acquired and liabilities assumed. Any adjustments to the estimates of purchase price allocation will be made in the periods in which the adjustments are determined, and the cumulative effect of such adjustments will be calculated as if the adjustments had been completed as of the acquisition date. We expect to finalize the purchase price allocation within 12 months from the Amelia Acquisition Date.
Previous report
Sales Agreement
Previous report
During the nine months ended September 30, 2024, we sold a total of 37,907,219 shares of our common stock under the Sales Agreement at a weighted-average price of$3.62 per share and raised$137.3 million of gross proceeds, which resulted in complete utilization of the Sales Agreement as of March 31, 2024. After deducting approximately$3.4 million ofcommissions and offering costs incurred by us, thenet proceeds from sales of common stock was $133.8 million.
Previous report
Debt Financing
Previous report
On April 14, 2023 (the “Term Loan Closing Date”), we entered into a Senior Secured Term Loan Credit Agreement (the “Credit Agreement”) with ACP Post Oak Credit II LLC, as Administrative Agent and Collateral Agent for the Lenders (the “Agent”), and the lenders from time to time party thereto (the “Lenders”). The Credit Agreement provides for a term loan facility in an aggregate principal amount of up to $100.0 million, the entirety of which was funded on the Term Loan Closing Date.
Previous report
As of June 30, 2024, the interest rate was approximately 14.0%. Subject to certain exceptions as set forth in the Credit Agreement, interest on the Term Loan is payable quarterly in arrears on the last business day of each fiscal quarter. The Term Loan is set to mature on April 14, 2027 (the “Maturity Date”). The Credit Agreement provides for no scheduled principal payments prior to the Maturity Date. Refer to Note 9 of the unaudited condensed consolidated financial statements for further information regarding the Credit Agreement, and amortization of the debt issuance cost and debt discount.
Previous report
On June 7, 2024, the Company entered into a letter agreement (the “Payoff Letter”) to prepay in full all indebtedness and other amounts outstanding and owing under the Credit Agreement. In connection with the Term Loan prepayment, the Company paid a total of$105.6 million on June 7, 2024, which consisted of (i) the remaining principal amount outstanding of$100.0 million, (ii) a prepayment premium of$5.0 million, (iii) transaction expenses of$0.6 million, resulting in a loss on debt extinguishment of$15.6 million. Accordingly, the accrued and unpaid interest of$2.6 million was waived under the Payoff Letter.
Previous report
Amelia Debt
Previous report
In connection with the Amelia Acquisition, we assumed the amended senior secured term loan facility from Amelia in an aggregate principal amount of $121.5 million (“Amelia Debt”) and on August 7, 2024, we paid $70.0 million in cash to pay down a portion of the outstanding principal balance and issued 2,943,917 shares of Class A common stock to settle certain fees associated with the Amelia Debt. The remaining outstanding balance of $39.7 million has a maturity date of June 30, 2026 (the “Maturity Date”) and provides, at our election, for payment of a portion of interest in cash or in kind ("PIK"), in which case interest will be capitalized and added to the outstanding principal amount, with principal and accrued interest due at the Maturity Date. Refer to Note 9 of the unaudited condensed consolidated financial statements for further information regarding the Amelia Debt.
Previous report
Equity Line of Credit (ELOC)
Previous report
On August 16, 2022, we entered into a common stock purchase agreement (the “Common Stock Purchase Agreement”) and related registration rights agreement (the “CFPI Registration Rights Agreement”) with CF Principal Investments LLC (the “Counterparty”). Pursuant to the Common Stock Purchase Agreement, we have the right to sell to the Counterparty up to the lesser of (i) 25,000,000 shares of Class A Common Stock and (ii) the Exchange Cap (as defined in the Common Stock Purchase Agreement), subject to certain limitations and conditions set forth in the Common Stock Purchase Agreement (the "ELOC Shares"). On February 14, 2023, our Registration Statement on Form S-1 registering the resale of the ELOC Shares (the "ELOC Registration Statement") was declared effective. On March 31, 2023, a post-effective amendment to the ELOC Registration Statement was declared effective. We have utilized and expect to continue to utilize proceeds from the ELOC for working capital and other general corporate purposes. During the year ended December 31, 2023, we sold the entirety of the 25,000,000 shares under the ELOC program for aggregate proceeds of approximately $71.7 million.
Previous report
Series A Preferred Stock
Showing the first 40 of 51 passages. Open the source sections for the rest.
Reworded paragraphs (45)
Previous wording
The following discussion and analysis of the financial condition and results of operations of SoundHound should be read together with our unaudited interim condensed consolidated financial statements and the related notes thereto included elsewhere in this Quarterly Report on Form 10-Q ("Form 10-Q") and the audited consolidated financial statements and notes thereto and Management’s Discussion and Analysis of Financial Condition and Results of Operation as of and for the year ended December 31, 2023 included in our Annual Report on Form 10‑K for 2023 filed with the SEC on March 1, 2024 ("Form 10-K" or the "Annual Report). Some of the information contained in this discussion and analysis or set forth elsewhere in this report, including information with respect to SoundHound’s plans and strategy for its business and related financing, includes forward-looking statements that involve risks and uncertainties. As a result of many factors, including those factors set forth in the “Risk Factors” and “Cautionary Statement Regarding Forward Looking Statements” section of this report, our actual results could differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis. Unless otherwise indicated or the context otherwise requires, references in this section to “SoundHound,” “we,” “us,” “our” and other similar terms refer to SoundHound AI, Inc.
Current wording
The following discussion and analysis of the financial condition and results of operations of SoundHound should be read together with our unaudited interim condensed consolidated financial statements and the related notes thereto included elsewhere in this Quarterly Report on Form 10-Q ("Form 10-Q") and the audited consolidated financial statements and notes thereto and Management’s Discussion and Analysis of Financial Condition and Results of Operation as of and for the year ended December 31, 2024 included in our Annual Report on Form 10‑K for 2024 filed with the SEC on March 11, 2025 ("Form 10-K" or the "Annual Report). Some of the information contained in this discussion and analysis or set forth elsewhere in this report and in our Form 10-K, including information with respect to SoundHound’s plans and strategy for its business and related financing, includes forward-looking statements that involve risks and uncertainties. As a result of many factors, including those factors set forth in the “Risk Factors” and “Cautionary Statement Regarding Forward Looking Statements” section of this report, our actual results could differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis. Unless otherwise indicated or the context otherwise requires, references in this section to “SoundHound,” “we,” “us,” “our” and other similar terms refer to SoundHound AI, Inc.
Previous wording
Our market position is strengthened by the technical barriers to entry in the Voice AI space, which tend to discourage new market participants. Furthermore, our technology is backed by significant investments in intellectual property, with over 155 patents granted and over 115 patents pending, spanning multiple fields including speech recognition, natural language understanding, machine learning, monetization and more. We have achieved this critical momentum in part thanks to a long-tenured leadership team with deep expertise and proven ability to attract and retain talent. We believe that SoundHound has extensive technical expertise and a proven track record of innovation and value creation for us to continue to attract customers in the growing market for Voice AI transactions.
Current wording
Our market position is strengthened by the technical barriers to entry in the Voice AI space, which tend to discourage new market participants. Furthermore, our technology is backed by significant investments in intellectual property, with over 196 patents granted and over 112 patents pending, spanning multiple fields including speech recognition, natural language understanding, machine learning, monetization and more. We have achieved this critical momentum in part thanks to a long-tenured leadership team with deep expertise and proven ability to attract and retain talent. We believe that SoundHound has extensive technical expertise and a proven track record of innovation and value creation for us to continue to attract customers in the growing market for Voice AI transactions.
Previous wording
When it comes to criteria for adoption, our goal is to win on every dimension. We believe that the first two criteria customers typically consider are technology and brand control. We strive to provide our customers with the best technology, and we provide a white label solution giving our customers control of their brands. In some industries you may have to choose between technology and brand control. In our case, we offer our customers the best of both, enabling them to offer disruptive technologies to their users while maintaining control of their brand and user experience.
Current wording
When it comes to criteria for adoption, our goal is to win on every dimension. We believe to be the first two criteria customers typically consider are technology and brand control. We strive to provide our customers with the best technology, and we provide a white label solution giving our customers control of their brands. In some industries you may have to choose between technology and brand control. In our case, we offer our customers the best of both, enabling them to offer disruptive technologies to their users while maintaining control of their brand and user experience.
Previous wording
When a product is voice enabled, we see three stages of integration and value propositions. The first stage is to enable the core use case of the product. For example, the product could be a TV, a coffee machine, a car, a wearable device, a robot, a smart speaker, an appliance or other devices, and with your voice you can control the functionality of the device and the product. With a TV, you can ask it to change the channel, increase the volume, rewind by 30 seconds, search for movies and even add personalization by adding a TV show to your favorites. Note that this is different from adding a third-party voice assistant to the product. Our view is that every product needs to have an interface, and voice-AI is a natural and compelling interface that unlocks new use cases and potential. Consider just the simple example of rewinding or fast forwarding by a specific duration. That is a command that can be done with voice in only few seconds, but it can take many steps to use alternative interfaces such as a remote control or a companion app.
Current wording
When a product is voice enabled, we see three stages of integration and value propositions. The first stage is to enable the core use case of the product. For example, the product could be a TV, a coffee machine, a car, a wearable device, a robot, a smart speaker, or an appliance, and with your voice you can control the functionality of the device and the product. With a TV, you can ask it to change the channel, increase the volume, rewind by 30 seconds, search for movies and even add personalization by adding a TV show to your favorites. Note that this is different from adding a third-party voice assistant to the product. Our view is that every product needs to have an interface, and voice-AI is a natural and compelling interface that unlocks new use cases and potential. Consider just the simple example of rewinding or fast forwarding by a specific duration. That is a command that can be done with voice in only a few seconds, but it can take many steps to use alternative interfaces such as a remote control or a companion app.
Previous wording
We expect this disruptive, three-pillar business model will create a monetization flywheel; as more products integrate into our platform, more users will use it and more services will choose to integrate as well. This creates even more usage, and results in a flow of revenue share to product creators, which further encourages even greater adoption and integration with our platform and the cycle will perpetually continue and expand. This ecosystem increases adoption and increases our addressable market. While all three pillars contribute to our revenues today, the majority of the contribution is currently from our first pillar with only a small contribution from pillar three from our music identification app. Over time, the subscription and monetization portions are expected to grow and make a bigger contribution to our overall revenue.
Current wording
We expect this disruptive, three-pillar business model will create a monetization flywheel; as more products integrate into our platform, more users will use it and more services will choose to integrate as well. This creates even more usage, and results in a flow of revenue share to product creators, which further encourages even greater adoption and integration with our platform and the cycle will perpetually continue and expand. This ecosystem increases adoption and increases our addressable market. While all three pillars contribute to our revenues today, the majority of the contribution is currently from our first and second pillar with only a small contribution from pillar three from our music identification app. Over time, we expect our revenues from the monetization pillar to increase meaningfully in the future.
Previous wording
On August 6, 2024, we completed its acquisition of Amelia, a privately-held conversational AI software company involved in the development and delivery of AI and automation solutions and related services to improve customer experience and optimize business outcomes. We expect Amelia will bring together decades of experience in conversational AI, and highly complementary product portfolios, to offer best-in-class, scalable customer service support to a vast spectrum of businesses. These include some of the very largest multinational enterprise brands, top 15 global banks, and Fortune 500 organizations, with the combined company spanning nearly 200 marquee customers. We believe the acquisition of Amelia is expected to strengthen SoundHound’s position in voice and conversational AI and allow the Company to enter new industries such as healthcare, insurance, financial services, and retail, expanding its market reach.
Current wording
On August 6, 2024, we completed the acquisition of Amelia, a privately-held conversational AI software company involved in the development and delivery of AI and automation solutions and related services to improve customer experience and optimize business outcomes. We expect Amelia will bring together decades of experience in conversational AI, and highly complementary product portfolios, to offer best-in-class, scalable customer service support to a vast spectrum of businesses. These include some of the very largest multinational enterprise brands, top 15 global banks, and Fortune 500 organizations, with the combined company spanning nearly 200 marquee customers. We believe the acquisition of Amelia is expected to strengthen SoundHound’s position in voice and conversational AI and allow us to enter new industries such as healthcare, insurance, financial services, energy and retail, expanding our market reach. Refer to the "Liquidity and Capital Resources" section for discussion on the purchase price and the Acquisition's impact on SoundHound's liquidity.
Previous wording
SoundHound generates revenues through: (1) “Product Royalties,” meaning royalties from voice-enabled products which are driven by volume, usage or life of applicable products and are affected by number of devices, users and units of usage, (2) “Service Subscriptions,” meaning subscription revenues, derived from monthly fees based on usage-based revenue, revenue per query or revenue per user, and (3) “Monetization,” meaning revenues generated from focused ad targeting to users of products and services that employ our technologies. Currently, our monetization revenue is derived only from our music identification application primarily in the form of ad impression revenue — revenue generated when an ad is shown in our music identification app — and, to a lesser extent, affiliate revenue for referrals to music stores for content sales and downloads of our premium music application.
Current wording
SoundHound generates revenues through: (1) “Product Royalties,” meaning royalties from voice-enabled products which are driven by volume, usage or life of applicable products and are affected by number of devices, users and units of usage, (2) “Service Subscriptions,” meaning subscription revenues, derived from fixed monthly fees or fees based on usage-based revenue, revenue per query or revenue per user, and (3) “Monetization,” meaning revenues generated from focused ad targeting to users of products and services that employ our technologies. Currently, our monetization revenue is derived only from our music identification application primarily in the form of ad impression revenue — revenue generated when an ad is shown in our music identification app — and, to a lesser extent, affiliate revenue for referrals to music stores for content sales and downloads of our premium music application.
Previous wording
We have and may continue to experience volatility for our remaining performance obligations and deferred revenue as a result of the timing for completing our performance obligations. We had remaining performance obligations in the amount of $66.9 million as of September 30, 2024. Given the applicable contract terms, $40.9 million is expected to be recognized as revenue within one year, $24.1 million is expected to be recognized between 2 to 5 years and the remainder of $2.0 million is expected to be recognized after 5 years. Deferred revenue consists of billings or payments received in advance of revenue being recognized and can fluctuate with changes in billing frequency and other factors. As a result of these factors, as well as our mix of revenue streams and billing frequencies, we do not believe that changes in our remaining performance obligations and deferred revenue in a given period are directly correlated with our revenue growth in that period.
Current wording
We have and may continue to experience volatility for our remaining performance obligations and deferred revenue as a result of the timing for completing our performance obligations. We had remaining performance obligations in the amount of $71.1 million as of March 31, 2025. Given the applicable contract terms, $41.9 million is expected to be recognized as revenue within one year, $27.1 million is expected to be recognized between 2 to 5 years and the remainder of $2.1 million is expected to be recognized after 5 years. Deferred revenue consists of billings or payments received in advance of revenue being recognized and can fluctuate with changes in billing frequency and other factors. As a result of these factors, as well as our mix of revenue streams and billing frequencies, we do not believe that changes in our remaining performance obligations and deferred revenue in a given period are directly correlated with our revenue growth in that period.
Previous wording
We anticipate that we will experience fluctuations in our revenues from quarter-to-quarter due to a variety of factors, including acquisitions, the supply and demand of end user products such as automobiles, the size and success of our sales force and the number of users who are aware of and use our application. See Note 4 to our unaudited condensed consolidated financial statements included within this report for more information.
Current wording
We anticipate that we will experience fluctuations in our revenues from quarter-to-quarter due to a variety of factors, including the supply and demand of end user products such as automobiles, the size and success of our sales force and the number of users who are aware of and use our applications. See Note 4 to our unaudited condensed consolidated financial statements included within this report for more information.
Previous wording
The issuance of debt instruments with direct transaction costs, embedded derivatives and warrant instruments has resulted in debt discounts. Direct transaction costs consist of various transaction fees and third-party costs, such as bank and legal fees, that are incurred upon issuance. We expect the impact of the discounts from debt issuance costs to the interest expense will decrease due to the repayment of Term Loan in June 2024.
Current wording
The issuance of debt instruments with direct transaction costs, embedded derivatives and warrant instruments has resulted in debt discounts. Direct transaction costs consist of various transaction fees and third-party costs, such as bank and legal fees, that are incurred upon issuance. No interest expense was incurred during the three months ended March 31, 2025 due to the repayment of Amelia Debt in December 2024 and the repayment of Term Loan in June 2024.
Previous wording
Other income (expense), net consists of the change in fair value related to our derivative liability, interest income, gain on bargain purchase and other income (expense).
Current wording
Other income, net consists of the change in fair value related to our derivative liability, interest income and other income (expense).
Previous wording
Income tax expense includes federal, state and foreign taxes and is based on reported income before income taxes. We are in a cumulative loss position for tax purposes based on historical earnings. As of December 31, 2023, we had $395.5 million of U.S. federal and $109.4 million of state net operating loss carryforwards available to reduce future taxable income. The federal and state net operating loss carryforwards will start to expire in 2025 and 2028, respectively, with the exception of $306.8 million federal net operating loss carryforwards and $5.6 million state net operating loss carryforwards, which can be carried forward indefinitely.
Current wording
Income tax expense includes federal, state and foreign taxes and is based on reported income before income taxes. We are in a cumulative loss position for tax purposes based on historical earnings. As of December 31, 2024, we had $548.4 million of U.S. federal and $208.1 million of state net operating loss carryforwards available to reduce future taxable income. The federal and state net operating loss carryforwards will start to expire in 2025 and 2028, respectively, with the exception of $403.3 million federal net operating loss carryforwards and $11.0 million state net operating loss carryforwards, which can be carried forward indefinitely.
Previous wording
We had federal and state research and development credit carryforwards of $14.4 million and $10.9 million, respectively, as of December 31, 2023. The federal credits will expire starting in 2029 if not utilized. The state credits can be carried forward indefinitely. We also had Canadian SR&ED tax credits of $1.7 million, which expire starting in 2038 if not utilized.
Current wording
We had federal and state research and development credit carryforwards of $21.4 million and $13.3 million, respectively, as of December 31, 2024. The federal credits will expire starting in 2029 if not utilized. The state credits can be carried forward indefinitely. We also had Canadian SR&ED tax credits of $1.6 million, which expire starting in 2038 if not utilized.
Previous wording
The following tables set forth the significant components of our results of operations for the three and nine months ended September 30, 2024 and 2023 ($ in thousands):
Current wording
The following tables set forth the significant components of our results of operations for the three months ended March 31, 2025 and 2024 ($ in thousands):
Previous wording
The following tables summarize our revenues by type and geographic regions for the three and nine months ended September 30, 2024 and 2023 ($ in thousands):
Current wording
The following tables summarize our revenues by type and geographic regions for the three months ended March 31, 2025 and 2024 ($ in thousands):
Previous wording
Total revenues increased by $11.8 million, or 89%, in the three months ended September 30, 2024 compared to the same period in 2023. The increase of $18.5 million in service subscription revenue, primarily based in the Americas, was driven by the contribution of Amelia and SYNQ3 revenue. This is offset by a decrease in product royalties revenue in the Asia region, due to the minimum guarantee licensing revenue relating to the edge solution ("Houndify Edge") recognized in the previous period.
Current wording
Total revenues increased by $17.5 million, or 151%, in the three months ended March 31, 2025 compared to the same period in 2024. Service subscription increased by $21.0 million, primarily based in the Americas, and was driven by the contribution of revenue from Amelia acquisition. This was offset by a decrease in royalty revenue, primarily in the Asia region.
Previous wording
Cost of revenues increased by $9.3 million, or 259%, and $15.2 million, or 205% in the three and nine months ended September 30, 2024, respectively, compared to the same periods in 2023. Gross margin decreased to 49% and 55% during the three and nine months ended September 30, 2024, respectively, compared to 73% and 74% during the same periods in 2023 primarily due to the acquisitions of Amelia and SYNQ3, which included a mix of lower margin call center agent business from SYNQ3 and amortization of acquired intangible assets. In the past, our gross margin has fluctuated and may continue to fluctuate from quarter to quarter due to revenue contributions from varying product mixes. However, we expect to gradually improve gross margins in the mid-term, especially as it relates the integration of Amelia and SYNQ3.
Current wording
Cost of revenues increased by $13.8 million, or 296% in the three months ended March 31, 2025 compared to the same period in 2024. Gross margin decreased to 36% during the three months ended March 31, 2025 compared to 60% during the same period in 2024 primarily due to the acquisition of Amelia in 2024, which included a amortization of acquired intangible assets in the amount of $3.5 million. In the past, our gross margin has fluctuated and may continue to fluctuate from quarter to quarter due to revenue contributions from varying product mixes. However, we expect to gradually improve gross margins in the mid-term, especially as it relates the integration of Amelia and SYNQ3.
Previous wording
Sales and marketing expenses increased by $3.9 million, or 87%, in the three months ended September 30, 2024 compared to the same period in 2023, primarily due to increases in 2024 of $3.2 million in personnel-related costs, $0.5 million in legal and professional fees, $0.2 million in consulting fees, $0.1 million in office expense, and $0.1 million in travel expenses, which were partially offset by a decrease of $0.3 million incurred for information technology and facility allocations. Included in the sales and marketing expense is an increase of $1.7 million arising from the Amelia acquisition, stemming from increased personnel-related costs.
Current wording
Sales and marketing expenses increased by $6.5 million, or 117%, in the three months ended March 31, 2025 compared to the same period in 2024, primarily due to increases in 2025 of $5.6 million in personnel-related costs caused by Amelia acquisition, $0.5 million in office expense, $0.3 million in consulting fees, $0.3 million in advertising expenses, and $0.1 million in travel expenses, which were partially offset by a decrease of $0.4 million incurred for information technology and facility allocations.
Previous wording
Sales and marketing expenses increased by $5.1 million, or 36%, in the nine months ended September 30, 2024 compared to the same period in 2023, primarily due to increases in 2024 of $4.5 million in personnel-related costs, $0.5 million in consulting fees, $0.5 million in legal and professional fees, $0.2 million in office expense, and $0.2 million in travel expense, which were partially offset by a decrease of $0.7 million incurred for information technology and facility allocations.
Current wording
Research and development expenses increased by $9.9 million, or 66%, in the three months ended March 31, 2025 compared to the same period in 2024. The increase in research and development expenses was primarily due to increases in 2025 of $9.0 million in personnel-related costs caused by Amelia acquisition, $1.6 million in cloud computing services, $0.3 million in consulting fees, and $0.2 million in office expense, which were partially offset by a decrease of $1.3 million incurred for information technology and facility allocations.
Previous wording
General and administrative expenses increased by $10.1 million, or 146%, in the three months ended September 30, 2024 compared to the same period in 2023. The increase in general and administrative expenses was primarily due to an increase of $6.0 million in legal and professional fees, of which $4.8 million relate to the Amelia Acquisition, $2.8 million in personnel-related costs, $0.8 million in information technology and facility allocations, $0.6 million in consulting fees, $0.4 million in office expenses, and $0.2 million in bad debt expense. The SYNQ3 and Amelia Acquisitions led to increases in personnel-related costs, amortization expense and office expenses. This increase was offset by reductions of $0.6 million in equipment rental expense, and $0.2 million in property-related expenses. Included in the general and administrative expense is an increase of $0.7 million arising from the Amelia acquisition, stemming from increased personnel-related costs.
Current wording
General and administrative expenses increased by $8.1 million, or 79%, in the three months ended March 31, 2025 compared to the same period in 2024. The increase in general and administrative expenses was primarily due to increases in 2025 of $4.6 million in personnel-related costs caused by Amelia acquisition, $1.7 million in information technology and facility allocations, $0.8 million in bad debt expense, $0.6 million in office expense, $0.2 million in legal and professional fees, $0.2 million in cloud computing services, and $0.1 million in insurance expense.
Previous wording
The change in fair value of acquisition related liabilities, which is driven by the movements in our stock price and changes in the assessed probability of achieving certain future revenue targets, was a gain of $1.4 million and a loss of $1.7 million for the three and nine months ended September 30, 2024, respectively. We will continue to review our estimates on the quarterly basis over the remaining earnout period until 2026. See Note 17 to our unaudited condensed consolidated financial statements included within this report for more information.
Current wording
The change in fair value of acquisition related liabilities, which is driven by the movements in our stock price and changes in the assessed probability of achieving certain future revenue targets, was a gain of $176.1 million for the three months ended March 31, 2025. The Company's quarter-end stock price decrease resulted in an decrease in its fair value of contingent acquisition liabilities where future Contingent Earnout Consideration and Contingent Holdback Consideration are marked-to-market on a quarterly basis, significantly impacting net income (loss) and EPS during the reporting period. The fluctuation is non-operating and non-cash in nature. We will continue to review our estimates on the quarterly basis over the remaining earnout period until 2026. See Note 16 to our unaudited condensed consolidated financial statements included within this report for more information.
Previous wording
Interest expense decreased by $4.3 million, or 80% in the three months ended September 30, 2024 compared to the same period in 2023. The decrease in interest expense was primarily attributable to the early repayment of Term Loan in June, 2024, resulting in the decrease in interest expense, which was partially offset by the increased interest expense of $1.0 million from Amelia Debt in the period.
Current wording
Interest expense decreased by $5.4 million, or 96% in the three months ended March 31, 2025 compared to the same period in 2024. The decrease in interest expense was primarily attributable to the early repayment of Term Loan in June, 2024, resulting in the decrease in interest expense.
Previous wording
The following tables summarize our other income (expense), net, by type ($ in thousands):
Current wording
The following tables summarize our other income, net, by type ($ in thousands):
Previous wording
Interest income increased by $1.1 million, or 88%, and $4.8 million, or 232% in the three and nine months ended September 30, 2024 compared to the same periods in 2023. The increase was primarily attributable to interest earned on greater money market and treasury bond balances during the three and nine months ended September 30, 2024, as we engaged in significant transactions that increased our liquidity. Refer to "Liquidity and Capital Resources" for a discussion of the changes in our business that led to an increase in cash for the period ended September 30, 2024.
Current wording
Interest income increased by $0.4 million, or 22% in the three months ended March 31, 2025 compared to the same period in 2024. The increase was primarily attributable to interest earned on greater money market and treasury bond balances during the three months ended March 31, 2025, as we engaged in significant transactions that increased our liquidity. Refer to "Liquidity and Capital Resources" for a discussion of the changes in our business that led to an increase in cash for the period ended March 31, 2025.
Previous wording
Total unrestricted cash and cash equivalents on hand as of September 30, 2024 was $135.6 million. Alth ough we have incurred recurring losses each year since our inception, we expect we will be able to fund our operations for at least the next twelve months. We believe we will meet longer-term expected future cash requirements and obligations through a combination of cash flows from operating activities and available cash balances. Our condensed consolidated financial statements have been prepared assuming that we will continue as a going concern, which contemplates, among other things, the realization of assets and satisfaction of liabilities in the normal course of business.
Current wording
Total unrestricted cash and cash equivalents on hand as of March 31, 2025 was $245.8 million. Although we have incurred recurring losses each year since our inception, we expect we will be able to fund our operations for at least the next twelve months. We believe we will meet longer-term expected future cash requirements and obligations through a combination of cash flows from operating activities and, available cash balances and expected cash proceeds from the on-going at-the-market equity program. Our condensed consolidated financial statements have been prepared assuming that we will continue as a going concern, which contemplates, among other things, the realization of assets and satisfaction of liabilities in the normal course of business.
Previous wording
Our principal sources of liquidity are our cash and cash equivalents, which are sourced primarily from the sale of marketable securities. The primary uses of cash include the funding of operating expenses, as well as acquisition related costs. There were no material changes to our material cash requirements as disclosed in our audited consolidated financial statements for the fiscal year ended December 31, 2023 in our Annual Report on Form 10-K (our “Annual Report”).
Current wording
Our principal sources of liquidity are our cash and cash equivalents, which are sourced primarily from the sale of marketable securities. The primary uses of cash include the funding of operating expenses. There were no material changes to our material cash requirements as disclosed in our audited consolidated financial statements for the fiscal year ended December 31, 2024 in our Form 10-K.
Previous wording
On July 28, 2023, we entered into the Sales Agreement with Cantor Fitzgerald & Co., H.C. Wainwright & Co., LLC, and D.A. Davidson & Co. (each a “Sales Agent” and collectively, the “Sales Agents”), pursuant to which we may offer and sell up to$150.0 million of shares of our Class A Common Stock from time to time through or to the Sales Agents acting as agent or principal. Sales of our Class A Common Stock, if any, under the Sales Agreement were made at market prices by any method that is deemed to be an “at the market offering” as defined in Rule 415 under the Securities Act. The Sales Agents are entitled to aggregate compensation at a fixed commission rate of 2.5% of the gross sales price per share sold under the Sales Agreement. We have agreed to reimburse the Sales Agents for certain specified expenses, including the reasonable and documented fees and disbursements of its legal counsel in an amount of $75 thousand in the aggregate in connection with the execution of the Sales Agreement.
Current wording
On January 24, 2025, we entered into an Equity Distribution Agreement (the "Second Equity Distribution Agreement") with Cantor Fitzgerald & Co., Guggenheim Securities, LLC, Oppenheimer & Co. Inc., Wedbush Securities Inc., Ladenburg Thalmann & Co. Inc. and Northland Securities, Inc. with respect to an at-the-market equity program. Under this program, we may offer and sell up to $250.0 million of shares of its Class A Common Stock from time to time through the sales managers. Sales of our Class A Common Stock, if any, under the Second Equity Distribution Agreement will be made at market prices by any method that is deemed to be an “at the market offering” as defined in Rule 415 under the Securities Act. The sales managers will be entitled to commission at a fixed rate of 2.0% of the gross sales price per share for their services in acting as agent in the sale of our Class A Common Stock. During the three months ended March 31, 2025, we sold 4,248,900 shares of our common stock under the Second Equity Distribution Agreement, at an average price of $15.94 per share and raised $67.7 million of gross proceeds. The commissions and offering costs borne by us were approximately $1.4 million. As of March 31, 2025, the Company had a remaining capacity to sell up to an additional $182.3 million of our common stock under the Second Equity Distribution Agreement.
Previous wording
On January 3, 2024 (the "SYNQ3 Acquisition Date"), we acquired all of the issued and outstanding equity of SYNQ3, a leading provider of voice AI and other technology solutions to the restaurant industry, for total preliminary purchase consideration of $15.7 million (the “SYNQ3 Acquisition”).
Current wording
On January 3, 2024 (the "SYNQ3 Acquisition Date"), we acquired all of the issued and outstanding equity of SYNQ3, a leading provider of voice AI and other technology solutions to the restaurant industry, for total purchase consideration of $15.8 million (the “SYNQ3 Acquisition”).
Previous wording
The total preliminary purchase consideration includes $3.9 million in cash paid and 5,755,910 in shares of our Class A Common Stock issued as of the SYNQ3 Acquisition Date. We also withheld purchase consideration of $0.5 million in cash and 1,179,514 shares of our Class A Common Stock, subject to customary net working capital adjustments, to partially secure the indemnification obligations of SYNQ3's former stockholders under the merger agreement and agreed to pay up to $0.8 million in cash and 1,434,936 in shares of our Class A Common Stock to certain former stockholders of SYNQ3 based upon the achievement of specified future milestones. We also issued 2,033,156 restricted shares of our Class A Common Stock subject to time and performance-based vesting conditions.
Current wording
The total purchase consideration includes $3.9 million in cash paid and 5,755,910 in shares of our Class A Common Stock issued as of the SYNQ3 Acquisition Date. We also withheld purchase consideration of $0.5 million in cash and 1,179,514 shares of our Class A Common Stock, subject to customary net working capital adjustments, to partially secure the indemnification obligations of SYNQ3's former stockholders under the merger agreement and agreed to pay up to $0.8 million in cash and 1,434,936 in shares of our Class A Common Stock to certain former stockholders of SYNQ3 based upon the achievement of specified future milestones. On the SYNQ3 Acquisition Date, we also issued 2,033,156 restricted shares of our Class A Common Stock subject to time and performance-based vesting conditions. The fair value of the purchase consideration was $15.8 million.
Previous wording
We incurred $0.1 million in acquisition related expenses, of which zero and $0.1 million were incurred during the three and nine months ended September 30, 2024, respectively, and recorded as general and administration expenses in its condensed consolidated statements of operations and comprehensive loss.
Current wording
We incurred $2.2 million in acquisition related expenses, of which $0.1 million and $0.2 million were incurred during the three months ended March 31, 2025 and 2024, respectively, and recorded as general and administration expenses in its condensed consolidated statements of operations and comprehensive income (loss).
Previous wording
The contingent cash and share holdback consideration to be issued is variable (“Contingent Holdback Consideration”). Final amounts to be issued will be reduced based upon future actions and settlements with third parties to resolve assumed contingent sales tax liabilities and certain other assumed contingent liabilities of SYNQ3 in connection with the SYNQ3 Acquisition. We accounted for the Contingent Holdback Consideration as a liability on the condensed consolidated balance sheet. As of the SYNQ3 Acquisition Date, the Contingent Holdback Consideration was estimated to be $0.4 million in aggregate and to be settled in $0.1 million cash and the remainder in shares of our Class A Common Stock. During the three months ended September 30, 2024, we issued 38,277 shares of the Company’s Class A Common Stock and paid an immaterial amount in cash from the Contingent Holdback Consideration to SYNQ3's former stockholders as a result of the net working capital adjustments settled during the quarter. The Contingent Holdback Consideration will be subsequently remeasured at each reporting date with changes in fair value recognized as a component of operating expense on our condensed consolidated statement of operations and comprehensive loss. For the three and nine months ended September 30, 2024, we recognized a loss of $0.2 million and $0.5 million, respectively, related to the Contingent Holdback Consideration.
Current wording
The contingent cash and share holdback consideration to be issued is variable (“Contingent Holdback Consideration”). Final amounts to be issued will be reduced based upon future actions and settlements with third parties to resolve assumed contingent sales tax liabilities and certain other assumed contingent liabilities of SYNQ3 in connection with the SYNQ3 Acquisition. We accounted for the Contingent Holdback Consideration as a liability on the condensed consolidated balance sheet. As of the SYNQ3 Acquisition Date, the Contingent Holdback Consideration was estimated to be $0.6 million in aggregate and to be settled in $0.1 million cash and the remainder in shares of our Class A Common Stock. During the year ended December 31, 2024, we issued 38,277 shares of our Class A Common Stock and paid an immaterial amount in cash from the Contingent Holdback Consideration to SYNQ3's former stockholders as a result of the net working capital adjustments settled during the year. The Contingent Holdback Consideration will be subsequently remeasured at each reporting date with changes in fair value recognized as a component of operating expense on our condensed consolidated statement of operations and comprehensive income (loss). See Note 16 to our unaudited condensed consolidated financial statements included within this report for more information on the fair value measurement of Contingent Holdback Consideration.
Previous wording
We also agreed to pay in aggregate up to $0.8 million in cash and 1,434,936 in shares of Class A Common Stock, to certain stockholders of SYNQ3 based on tiered annual revenue targets for each fiscal year 2024, 2025 and 2026 (the “Contingent SYNQ3 Earnout Consideration”). We accounted for the Contingent SYNQ3 Earnout Consideration as a liability within contingent acquisition liabilities on our condensed consolidated balance sheets and will subsequently remeasure the liability at each reporting date with changes in fair value recognized as a component of operating expense in our condensed consolidated statement of operations and comprehensive loss. As of the SYNQ3 Acquisition Date, the Contingent SYNQ3 Earnout Consideration was estimated to be $1.7 million in aggregate and to be settled in $0.2 million cash and the remainder in shares of our Class A Common Stock. For the three and nine months ended September 30, 2024, we recognized a gain of $1.5 million and a loss of $1.2 million, respectively, related to the Contingent SYNQ3 Earnout Consideration, reflected in the change in fair value of contingent acquisition liabilities in the condensed consolidated statement of operations and comprehensive loss.
Current wording
We also agreed to pay in aggregate up to $0.8 million in cash and 1,434,936 in shares of Class A Common Stock, to certain stockholders of SYNQ3 based on tiered annual revenue targets for each fiscal year 2024, 2025 and 2026 (the “Contingent SYNQ3 Earnout Consideration”). We accounted for the Contingent SYNQ3 Earnout Consideration as a liability within contingent acquisition liabilities on our condensed consolidated balance sheets and will subsequently remeasure the liability at each reporting date with changes in fair value recognized as a component of operating expense in our condensed consolidated statement of operations and comprehensive income (loss). As of the SYNQ3 Acquisition Date, the Contingent SYNQ3 Earnout Consideration was estimated to be $1.7 million in aggregate and to be settled in $0.2 million cash and the remainder in shares of our Class A Common Stock. See Note 16 to our unaudited condensed consolidated financial statements included within this report for more information on the fair value measurement of Contingent SYNQ3 Earnout Consideration. As of March 31, 2025, the 2024 revenue target was not met but the Company assessed the 2025 and 2026 revenue targets were probable of being met, and no earnout consideration was issued as of March 31, 2025.
Previous wording
On the Amelia Acquisition Date, we issued a total of 3,809,520 shares of the SoundHound Class A common stock to the sellers. Pursuant to the terms of the Purchase Agreement, we also issued and deposited 2,149,530 shares of the SoundHound Class A common stock into an escrow account in order to partially secure the indemnification obligations of the selling shareholders under the Purchase Agreement. We also paid $8.4 million of cash for seller transaction expenses in connection with the closing of the Amelia Acquisition. We agreed to issue up to 16,822,429 shares to the selling shareholders based on achievement of certain revenue targets in fiscal years 2025 and 2026. The fair value of the preliminary purchase consideration was $103.9 million.
Current wording
On the Amelia Acquisition Date, we issued a total of 3,809,520 shares of the SoundHound Class A common stock to the sellers. Pursuant to the terms of the purchase agreement, we also issued and deposited 2,149,530 shares of the SoundHound Class A common stock into an escrow account in order to partially secure the indemnification obligations of the selling shareholders under the purchase agreement. We also paid $8.4 million of cash for seller transaction expenses in connection with the closing of the Amelia Acquisition. We agreed to issue up to 16,822,429 shares to the selling shareholders based on achievement of certain revenue targets in fiscal years 2025 and 2026. The fair value of the preliminary purchase consideration was $98.6 million.
Previous wording
In connection with the Amelia Acquisition, we assumed the amended senior secured term loan facility from Amelia in an aggregate principal amount of $121.5 million (“Amelia Debt”). See Note 9 to our unaudited condensed consolidated financial statements included within this report for more information on the Amelia Debt.
Current wording
In connection with the Amelia Acquisition, we assumed the amended senior secured term loan facility from Amelia in an aggregate principal amount of $121.5 million (“Amelia Debt”). On December 3, 2024, we entered into a letter agreement (the “Amelia Debt Payoff Letter”) to prepay in full all indebtedness and other amounts outstanding and owing under the Amelia Debt Credit Agreement and the Amelia Debt was subsequently paid in full.
Previous wording
On the Amelia acquisition Date, we issued and deposited 2,149,530 shares of the Company’s Class A Common Stock into and escrow account in order to partially secure the indemnification obligations of the selling shareholders under the purchase agreement. The Company accounted for the Escrow Consideration as equity issued as part of consideration transferred. Upon the settlement of any valid indemnification claims against the sellers, the escrow agent will return a number of shares to us equal to the dollar value of the indemnified loss divided by the reference price of $5.35 as stipulated in the purchase agreement. We concluded that this variability in settlement value is a derivative that is requirement to be remeasured to fair value due to changes in stock price. This derivative did not have a material impact to the financial statements for the three and nine months ended September 30, 2024. Upon the expiration of the escrow period, any remaining shares in the escrow account will be released to the selling shareholders.
Current wording
On the Amelia Acquisition Date, we issued and deposited 2,149,530 shares of our Class A Common Stock into and escrow account in order to partially secure the indemnification obligations of the selling shareholders under the purchase agreement. We accounted for the escrow consideration as equity issued as part of consideration transferred. Upon the settlement of any valid indemnification claims against the sellers, the escrow agent will return a number of shares to us equal to the dollar value of the indemnified loss divided by the reference price of $5.35 as stipulated in the purchase agreement. We concluded that this variability in settlement value is a derivative that is requirement to be remeasured to fair value due to changes in stock price. This derivative did not have a material impact to the financial statements for the three months ended March 31, 2025. Upon the expiration of the escrow period, any remaining shares in the escrow account will be released to the selling shareholders. See Note 16 to our unaudited condensed consolidated financial statements included within this report for more information on the fair value measurement of the derivative related to indemnification rights. Upon the expiration of the escrow period, any remaining shares within the escrow account will be released to the selling shareholders.
Previous wording
We agreed to pay up to 16,822,429 in shares of Class A Common Stock to the selling shareholders based on achievement of certain revenue targets in fiscal years 2025 and 2026 (the “Contingent Amelia Earnout Consideration”). We accounted for the Contingent Amelia Earnout Consideration as a liability within contingent acquisition liabilities on the our condensed consolidated balance sheet and will subsequently remeasure the liability at each reporting date with changes in fair value recognized as a component of operating expense in our condensed consolidated statement of operations and comprehensive loss. As of the Amelia Acquisition Date, the Contingent Amelia Earnout Consideration had an estimated fair value of $71.6 million and will be settled in shares of our Class A Common Stock. For the three and nine months ended September 30, 2024, we recognizeda $0.5 million loss related to the Contingent Amelia Earnout Consideration, reflected in the change in fair value of contingent acquisition liabilities in the condensed consolidated statement of operations and comprehensive loss. See Note 17 to our unaudited condensed consolidated financial statements included within this report for more information on the fair value measurement of Contingent Amalia Earnout Consideration.
Current wording
We agreed to pay up to 16,822,429 in shares of Class A Common Stock to the selling shareholders based on achievement of certain revenue targets in fiscal years 2025 and 2026 (the “Contingent Amelia Earnout Consideration”). We accounted for the Contingent Amelia Earnout Consideration as a liability within contingent acquisition liabilities on the our condensed consolidated balance sheet and will subsequently remeasure the liability at each reporting date with changes in fair value recognized as a component of operating expense in our condensed consolidated statement of operations and comprehensive income (loss). As of the Amelia Acquisition Date, the Contingent Amelia Earnout Consideration had an estimated fair value of $66.3 million and will be settled in shares of our Class A Common Stock. For the three months ended March 31, 2025, we recognizeda$168.7 million gain related to the Contingent Amelia Earnout Consideration, reflected in the change in fair value of contingent acquisition liabilities in the condensed consolidated statement of operations and comprehensive income (loss). As of March 31, 2025, the Company assessed the 2025 and 2026 revenue targets were probable of being met.
Previous wording
During the nine months ended September 30, 2024, we recorded measurement period adjustments to decrease the deferred revenue by $0.1 million as the revenue recognition criteria had been met at the acquisition date, to increase the accrued litigation liabilities by $1.9 million resulting from a pre-acquisition legal contingency, and to decrease the deferred tax liabilities assumed by $0.2 million. Refer to Note 7 to these condensed consolidated financial statements for more information on the loss contingencies. These measurement period adjustments resulted in a decrease of $0.1 million in deferred cash consideration, $0.6 million in deferred equity consideration, and $0.6 million in contingent holdback consideration in accordance with the merger agreement. As a result of the adjusted acquisition-date fair value of assets acquired and liabilities assumed, we booked an increase of $0.3 million to the goodwill recognized. The measurement period adjustments were recorded in the consolidated financial statements as of and for the nine months ended September 30, 2024 and was made to reflect facts and circumstances that existed as of the SYNQ3 Acquisition Date.
Current wording
During the three months ended March 31, 2025, we recorded measurement period adjustments to decrease the accrued liabilities by $83.0 thousand and other current liabilities by $0.4 million due to true-up of the accrued payroll taxes and sales taxes subsequent to the acquisition. As a result of the adjusted acquisition-date fair value of liabilities assumed, we recorded a decrease of $0.5 million to the goodwill recognized. The measurement period adjustments were recorded in the condensed consolidated financial statements as of and for the three months ended March 31, 2025 and were made to reflect facts and circumstances that existed as of the Amelia Acquisition Date.
Previous wording
The preliminary purchase price allocation has not been finalized as of September 30, 2024 primarily due to the final assessment of the fair values of the intangible assets. The fair value estimates of assets acquired and liabilities assumed is pending the completion of various items, including obtaining further information regarding the identification and valuation of all assets acquired and liabilities assumed. Any adjustments to the estimates of purchase price allocation will be made in the periods in which the adjustments are determined, and the cumulative effect of such adjustments will be calculated as if the adjustments had been completed as of the acquisition date. We expect to finalize the purchase price allocation within 12 months from the acquisition date.
Current wording
The preliminary purchase price allocation has not been finalized as of March 31, 2025 primarily due to the final assessment of the contingent tax liability assumed. The fair value estimates of assets acquired and liabilities assumed is pending the completion of various items, including obtaining further information regarding the identification and valuation of all assets acquired and liabilities assumed. Any adjustments to the estimates of purchase price allocation will be made in the periods in which the adjustments are determined, and the cumulative effect of such adjustments will be calculated as if the adjustments had been completed as of the acquisition date. We expect to finalize the purchase price allocation within 12 months from the Amelia Acquisition Date.
Previous wording
We incurred $1.9 million in acquisition related expenses, of which $0.5 million and $0.8 million were incurred during the three and nine months ended September 30, 2024, respectively, and recorded as general and administration expenses in its condensed consolidated statements of operations and comprehensive loss.
Current wording
We incurred $6.3 million in acquisition related expenses, of which $0.6 million was incurred during the three months ended March 31, 2025 and recorded as general and administration expenses in its condensed consolidated statements of operat ions and comprehensive income (loss).
Previous wording
On June 14, 2024, we completed an immaterial acquisition for total preliminary purchase consideration of $1.0 million. As part of the acquisition, we acquired net assets of $2.2 million, including intangible assets of $2.6 million, and recognized a preliminary gain on bargain purchase of $1.2 million within other income (expense), net in the condensed consolidated statements of operations and comprehensive loss during the nine months ended September 30, 2024, resulting from a favorable fair value of identifiable net assets acquired at the date of acquisition as compared with the purchase price. We were able to negotiate a bargain purchase price as a result of the recurring losses and pre-filing bankruptcy status of the selling entity.
Current wording
On June 14, 2024, we completed an immaterial acquisition for total preliminary purchase consideration of $1.0 million. As part of the acquisition, we acquired net assets of $2.2 million, including intangible assets of $2.6 million, and recognized a preliminary gain on bargain purchase of $1.2 million within other income, net in the condensed consolidated statements of operations and comprehensive income (loss) during the quarter of the acquisition, resulting from a favorable fair value of identifiable net assets acquired at the date of acquisition as compared with the purchase price. We were able to negotiate a bargain purchase price as a result of the recurring losses and pre-filing bankruptcy status of the selling entity.
Showing the first 40 of 45 pairs. Open the source sections for the rest.
Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
*The change in fair value of acquisition related liabilities is mainly driven by the movements in our stock price during the reporting period and changes in the assessed probability of achieving certain future revenue targets defined as part of the acquisition agreements. See Note 16 to our unaudited condensed consolidated financial statements included within this report for more information.
Rearranged previous paragraphs (2)
Previous report — wording carried elsewhere
We entered into the Equity Distribution Agreement with the Managers on April 9, 2024 with regards to an at-the-market equity program. Under this program, we may offer and sell aggregate gross sale proceeds up to $150.0 million of shares of our Class A Common Stock from time to time through the Managers. Sales of Class A Common Stock under the Equity Distribution Agreement were made at market prices by any method that is deemed to be an “at the market offering”
Previous report — wording carried elsewhere
as defined in Rule 415 under the Securities Act. The Managers were entitled to commission at a fixed rate of 2.5% of the gross sales price per share for their services in acting as agents in the sale of our Class A Common Stock.