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 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.

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 205 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

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.

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 $69.2 million as of June 30, 2025. Given the applicable contract terms, $40.8 million is expected to be recognized as revenue within one year, $26.5 million is expected to be recognized between 2 to 5 years and the remainder of $1.9 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

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.

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 and six months ended June 30, 2025 due to the repayment of Amelia Debt in December 2024 and the repayment of Term Loan in June 2024.

Previous 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):

Current wording

The following tables set forth the significant components of our results of operations for the three and six months ended June 30, 2025 and 2024 ($ in thousands):

Previous wording

The following tables summarize our revenues by type and geographic regions for the three months ended March 31, 2025 and 2024 ($ in thousands):

Current wording

The following tables summarize our revenues by type and geographic regions for the three and six months ended June 30, 2025 and 2024 ($ in thousands):

Previous 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.

Current wording

Total revenues increased by $46.8 million, or 187%, in the six months ended June 30, 2025 compared to the same period in 2024. Service subscription increased by $49.4 million, primarily from the Americas region, and was driven by the contribution of revenue from acquisitions. This was offset by a decrease in product royalty licensing revenue in the EMEA region.

Previous 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.

Current wording

Cost of revenues increased by $21.0 million and $34.9 million, or 423% and 362% in the three and six months ended June 30, 2025, respectively, compared to the same period in 2024. Gross margin decreased to 39% and 38% during the three and six months ended June 30, 2025, respectively, compared to 63% and 61%, respectively, 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 and $7.0 million for the three and six months ended June 30, 2025, respectively. 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 $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.

Current wording

Sales and marketing expenses increased by $10.2 million, or 180%, in the three months ended June 30, 2025 compared to the same period in 2024, primarily due to increases in 2025 of $8.4 million in personnel-related costs caused by Amelia acquisition, $0.8 million in office expense, $0.4 million in advertising expenses, $0.3 million in consulting fees, $0.3 million in travel expenses, $0.2 million in legal and professional fees, and $0.1 million in meals and entertainment, which were partially offset by a decrease of $0.4 million incurred for information technology and facility allocations.

Previous 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.

Current wording

Research and development expenses increased by $10.1 million, or 64%, in the three months ended June 30, 2025 compared to the same period in 2024. The increase in research and development expenses was primarily due to increases in 2025 of $10.1 million in personnel-related costs caused by Amelia acquisition, $0.4 million in legal and professional fees, $0.3 million in consulting fees, $0.2 million in cloud computing services, and $0.1 million in office expense, which were partially offset by a decrease of $1.1 million incurred for information technology and facility allocations.

Previous 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.

Current wording

General and administrative expenses increased by $8.7 million, or 91%, in the three months ended June 30, 2025 compared to the same period in 2024. The increase in general and administrative expenses was primarily due to increases in 2025 of $4.5 million in personnel-related costs caused by Amelia acquisition, $1.5 million in information technology and facility allocations, $1.0 million in legal and professional fees, $0.7 million in bad debt expense, $0.6 million in office expense, $0.2 million in insurance expense and $0.1 million in utilities.

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 $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.

Current wording

The change in fair value of acquisition related liabilities, which is marked-to-market based on the movements in our stock price and changes in the assessed probability of achieving certain future revenue targets, was a loss of $31.4 million and a gain of $144.7 million for the three and six months ended June 30, 2025. The increase of the Company's stock price as of June 30, 2025 compared to the stock price as of March 31, 2025, which was partially offset by the decreased probability of achieving the 2025 revenue target under the Contingent SYNQ3 Earnout Consideration, resulted in an increase in its fair value of contingent acquisition liabilities during the three months ended June 30, 2025. 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 $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.

Current wording

Interest expense decreased by $3.9 million and $9.3 million, or 96% and 96% in the three and six months ended June 30, 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

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.

Current wording

Interest income decreased by $0.4 million or 14% and remained consistent in the three and six months ended June 30, 2025, respectively, compared to the same period in 2024. The decrease was primarily attributable to interest earned on greater money market and treasury bond balances during the three months ended June 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 June 30, 2025.

Previous wording

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 wording

Change in fair value of derivative increased by $0.9 million and $2.2 million, or 100% in the three and six months ended June 30, 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.

Previous wording

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 wording

Provision for income taxes increased by $0.6 million and $1.1 million, or 97% and 122% in the three and six months ended June 30, 2025, respectively, 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.

Previous 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.

Current wording

Total unrestricted cash and cash equivalents on hand as of June 30, 2025 was $230.3 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

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.

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 and six months ended June 30, 2025, we sold 646,000 shares and 4,894,900 shares, respectively, of our common stock under the Second Equity Distribution Agreement, at an average price of $12.16 and $15.44 per share, respectively, and raised $7.9 million and $75.6 million of gross proceeds, respectively. The commissions and offering costs borne by us were approximately $0.2 million and $1.5 million, respectively. As of June 30, 2025, the Company had a remaining capacity to sell up to an additional $174.4 million of our common stock under the Second Equity Distribution Agreement.

Previous 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).

Current wording

We incurred $2.2 million in acquisition related expenses, of which $44.3 thousand and $0.1 million were incurred during the three and six months ended June 30, 2025, respectively. We incurred $0.5 million and $0.8 million acquisition related expenses during the three and six months ended June 30, 2024, respectively. These acquisition related expenses were recorded as general and administration expenses in our condensed consolidated statements of operations and comprehensive income (loss).

Previous wording

The $0.5 million in cash and 1,179,514 shares of our Class A Common Stock is being withheld for a period of 15 months (the “Holdback Amount”). We determined that there are two components to the Holdback Amount related to deferred consideration and contingent consideration, each comprised of cash and shares.

Current wording

The $0.5 million in cash and 1,179,514 shares of our Class A Common Stock were withheld for a period of 15 months (the “Holdback Amount”). We determined that there are two components to the Holdback Amount related to deferred consideration and contingent consideration, each comprised of cash and shares.

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 $0.6 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.

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).

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 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.

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 June 30, 2025, the 2024 revenue target was not met. The Company assessed the 2025 revenue target was not probable of being met but the 2026 revenue target was probable of being met. No earnout consideration was issued as of June 30, 2025.

Previous 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.

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 and six months ended June 30, 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 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.

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 and six months ended June 30, 2025, we recognized a loss of $32.6 million and a gain of $136.1 million, respectively, 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 June 30, 2025, the Company assessed the 2025 and 2026 revenue targets were probable of being met.

Previous 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.

Current wording

During the six months ended June 30, 2025, we recorded measurement period adjustments to decrease the accrued liabilities by $0.1 million 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 six months ended June 30, 2025 and were made to reflect facts and circumstances that existed as of the Amelia Acquisition Date.

Previous 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).

Current wording

We incurred $6.7 million in acquisition related expenses, of which $0.3 million and $0.9 million was incurred during the three and six months ended June 30, 2025 and recorded as general and administration expenses in its condensed consolidated statements of operat ions and comprehensive income (loss).

Previous wording

Net cash used in operating activities was $19.2 million during the three months ended March 31, 2025 compared to $21.9 million during the three months ended March 31, 2024. The $2.8 million decrease in cash used in operating activities was primarily due to increases of $162.9 million in net income, $10.5 million in stock-based compensation, $6.3 million in depreciation and amortization, $4.9 million in changes in operating assets and liabilities, $1.3 million in change in fair value of derivative, $0.9 million in other non-cash loss, and $0.1 million in foreign currency gain from remeasurement, which were partially offset by decreases of $180.3 million in change in the fair value of contingent acquisition liabilities, $1.2 million in amortization of debt issuance cost, $0.3 million in deferred income taxes, and non-cash lease amortization of $0.1 million.

Current wording

Net cash used in operating activities was $43.7 million during the six months ended June 30, 2025 compared to $40.4 million during the six months ended June 30, 2024. The $3.2 million increase in cash used in operating activities was primarily due to increases of $125.5 million in net income, $27.0 million in stock-based compensation, $12.8 million in depreciation and amortization, $2.9 million in other non-cash loss, and $0.4 million in deferred income taxes, which were partially offset by the movement of $147.8 million from change in the fair value of contingent acquisition liabilities, decrease of $15.6 million in loss on early extinguishment of debt, $3.9 million in changes in operating assets and liabilities, $2.2 million in change in fair value of derivative, $1.5 million in amortization of debt issuance cost, non-cash lease amortization of $0.1 million and increase of $0.8 million in foreign currency gain from remeasurement. Within the increase of $27.0 million in stock-based compensation, $3.8 million was related to accelerated vesting of RSAs during the three months ended June 30, 2025 as part of our integration plan of SYNQ3.

Previous wording

Net cash used in investing activities was $0.2 million during the three months ended March 31, 2025 compared to $3.8 million during the three months ended March 31, 2024. The $3.6 million decrease in cash used in investing activities was primarily driven by the decrease of payments related to acquisitions of $3.7 million, which was partially offset by the increase in purchases of property and equipment of $0.1 million.

Current wording

Net cash used in investing activities was $0.4 million during the six months ended June 30, 2025 compared to $4.8 million during the six months ended June 30, 2024. The $4.4 million decrease in cash used in investing activities was primarily driven by the decrease of payments related to acquisitions of $4.5 million.

Previous wording

Net cash provided by financing activities was $67.0 million during the three months ended March 31, 2025 compared to $142.7 million during the three months ended March 31, 2024. The $75.7 million decrease in cash provided by financing activities was primarily due to decreases of $69.6 million in net proceeds from sales of Class A Common Stock under the Sales Agreement and Second Equity Distribution Agreement, $8.2 million in proceeds from exercise of stock options and employee stock purchase plan, and $2.1 million in the payment of financing costs associated with the Sales Agreement and Second Equity Distribution Agreement.

Current wording

Net cash provided by financing activities was $76.6 million during the six months ended June 30, 2025 compared to $137.0 million during the six months ended June 30, 2024. The $60.4 million decrease in cash provided by financing activities was primarily due to decreases of $162.1 million in net proceeds from sales of Class A Common Stock under the Sales Agreement and Second Equity Distribution Agreement and $7.9 million in proceeds from exercise of stock options and employee stock purchase plan, and an increase of $0.2 million in the payment to settle contingent holdback liabilities from SYNQ3 acquisition, which were partially offset by a decreases of $105.5 million in the payment of notes payable, and $4.1 million in the payment of financing costs associated with the Sales Agreement and Second Equity Distribution Agreement.