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 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.

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 223 patents granted and over 108 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

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.

Current wording

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

•Revenue Growth. Our commercial success, including acceptance and use of our applications, will depend on a number of factors, some of which are beyond our control, such as size of the market opportunity, successful integration with original equipment manufacturers (“OEM”), competition and demand from the public and members of the conversational AI community. Our product offerings, including those offerings that we have acquired, have disruptive effects in the ways human interact with computers and we are developing new, innovative economic models and acquiring companies such as SYNQ3 and Amelia which have synergistic businesses to ours that we believe will enhance value to customers, partners and shareholders. For our revenue growth to continue, we will need to invest in sales and marketing to ensure our messaging, capabilities and offerings are well understood and valued by customers. With our primary focus on enterprise customers, we also need to align with enterprise sales cycles, which can be longer than consumer cycles. As we build new customer relationships, we continually focus on maintaining and growing our existing relationships through long-term partnerships through significant upfront investment in customer specific engineering projects. Additionally, in addition to our acquisitions of SYNQ3 and Amelia, we may look to acquire other companies in the industry to develop synergies with our existing business.

Current wording

•Revenue Growth. Our commercial success, including acceptance and use of our applications, will depend on a number of factors, some of which are beyond our control, such as size of the market opportunity, successful integration with original equipment manufacturers (“OEM”), competition and demand from the public and members of the conversational AI community. Our product offerings, including those offerings that we have acquired, have disruptive effects in the ways human interact with computers and we are developing new, innovative economic models and acquiring companies such as SYNQ3, Amelia and Interactions which have synergistic businesses to ours that we believe will enhance value to customers, partners and shareholders. For our revenue growth to continue, we will need to invest in sales and marketing to ensure our messaging, capabilities and offerings are well understood and valued by customers. With our primary focus on enterprise customers, we also need to align with enterprise sales cycles, which can be longer than consumer cycles. As we build new customer relationships, we continually focus on maintaining and growing our existing relationships through long-term partnerships through significant upfront investment in customer specific engineering projects. Additionally, in addition to our acquisitions of SYNQ3, Amelia and Interactions, we may look to acquire other companies in the industry to develop synergies with our existing business.

Previous wording

“Houndified Products,” meaning products of our customers that employ SoundHound technology, and “Houndified Services,” meaning services provided to customers related to SoundHound technology, provide our customers with access to our Houndify platform over a contractual period without taking possession of the software. This generally includes revenues derived from up-front services (“professional services”) that develop and customize the Houndify platform to fit customers’ specific needs. These professional services are included in both our Product Royalties and Service Subscriptions revenues. Non-distinct professional services are recognized over the contractual life of the contract, whereas revenues from distinct professional services are recognized as the services are performed or when the services are complete depending on the arrangement.

Current wording

“Houndified Products,” meaning products of our customers that employ SoundHound technology, and “Houndified Services,” meaning services provided to customers related to SoundHound technology, provide our customers with access to our Houndify platform over a contractual period without taking possession of the software. This generally includes revenues derived from implementation services (“professional services”) that develop and customize the Houndify platform to fit customers’ specific needs. These professional services are included in both our Product Royalties and Service Subscriptions revenues. Non-distinct professional services are recognized over the contractual life of the contract, whereas revenues from distinct professional services are recognized as the services are performed or when the services are complete depending on the arrangement.

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 $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.

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 $70.6 million as of September 30, 2025. Given the applicable contract terms, $41.3 million is expected to be recognized as revenue within one year, $27.6 million is expected to be recognized between 2 to 5 years and the remainder of $1.7 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 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.

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 for more information.

Previous wording

The change in fair value of contingent acquisition liabilities is related to contingent consideration from the SYNQ3 and Amelia acquisitions. The contingent consideration was determined to be liability classified and is remeasured as of each reporting period with a corresponding change in fair value recorded.

Current wording

The change in fair value of contingent acquisition liabilities is related to contingent consideration from the SYNQ3, Amelia and Interactions acquisitions. The contingent consideration was determined to be liability classified and is remeasured as of each reporting period with a corresponding change in fair value recorded.

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 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.

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 nine months ended September 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 and six months ended June 30, 2025 and 2024 ($ in thousands):

Current wording

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

Previous 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):

Current wording

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

Previous wording

Total revenues increased by $29.2 million, or 217%, in the three months ended June 30, 2025 compared to the same period in 2024. Service subscription increased by $28.4 million, with all regions contributing, and was driven by the contribution of revenue from acquisitions. Product royalties increased by $0.8 million, primarily due to the increase of revenue in Asia.

Current wording

Total revenues increased by $17.0 million, or 68%, in the three months ended September 30, 2025 compared to the same period in 2024. The increase of $14.9 million in service subscription revenue, primarily based in the Americas, was mainly driven from the contribution of acquisitions. Product royalties increased by $2.0 million, primarily due to licensing revenue in Asia .

Previous 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.

Current wording

Total revenues increased by $63.7 million, or 127%, in the nine months ended September 30, 2025 compared to the same period in 2024. The increase of $64.3 million in service subscription revenue, primarily based in the Americas, was driven by the contribution of acquisitions, This was offset by a decrease in product royalty professional service revenue in the EMEA region.

Previous 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.

Current wording

Cost of revenues increased by $11.2 million and $46.1 million, or 87% and 204% in the three and nine months ended September 30, 2025, respectively, compared to the same period in 2024. Gross margin decreased to 43% and 40% during the three and nine months ended September 30, 2025, respectively, compared to 49% and 55%, 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 $3.6 million and $10.6 million for the three and nine months ended September 30, 2025, respectively, and the acquisition of Interactions in 2025, which included a amortization of acquired intangible assets in the amount of $0.2 million for the three and nine months ended September 30, 2025. 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, Interactions and SYNQ3.

Previous 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.

Current wording

Sales and marketing expenses increased by $8.0 million, or 96%, in the three months ended September 30, 2025 compared to the same period in 2024, primarily due to increases in 2025 of $6.9 million in personnel-related costs caused by Amelia and Interactions acquisitions, $0.7 million in office expense, $0.3 million in advertising expenses, $0.3 million in consulting fees, $0.2 million in travel expenses, and $0.1 million in legal and professional fees, 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 $16.6 million, or 149%, in the six months ended June 30, 2025 compared to the same period in 2024, primarily due to increases in 2025 of $14.0 million in personnel-related costs caused by Amelia acquisition, $1.3 million in office expense, $0.7 million in advertising expenses, $0.6 million in consulting fees, $0.4 million in travel expenses and $0.3 million in legal and professional fees, which were partially offset by a decrease of $0.8 million incurred for information technology and facility allocations.

Current wording

Sales and marketing expenses increased by $24.7 million, or 126%, in the nine months ended September 30, 2025 compared to the same period in 2024, primarily due to increases in 2025 of $20.9 million in personnel-related costs caused by Amelia and Interactions acquisitions, $2.1 million in office expense, $1.1 million in advertising expenses, $0.9 million in consulting fees, and $0.6 million in travel expenses, and $0.4 million in legal and professional fees, which were partially offset by a decrease of $1.2 million incurred for information technology and facility allocations.

Previous wording

Research and development expenses increased by $19.9 million, or 65%, in the six 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 $19.1 million in personnel-related costs caused by Amelia acquisition, $1.8 million in cloud computing services, $0.7 million in consulting fees, $0.5 million in legal and professional fees, $0.3 million in office expense, and $0.1 million in travel expense, which were partially offset by a decrease of $2.4 million incurred for information technology and facility allocations and $0.2 million in rent expense.

Current wording

Research and development expenses increased by $3.3 million, or 17%, in the three months ended September 30, 2025 compared to the same period in 2024. The increase in research and development expenses was primarily due to increases in 2025 of $3.6 million in personnel-related costs caused by Amelia and Interactions acquisitions, $1.0 million in legal and professional fees, $0.8 million in office expense, $0.5 million in consulting fees, $0.1 million in utilities, and $0.1 million in travel expense, which were partially offset by a decrease of $1.5 million in cloud computing services, $1.1 million incurred for information technology and facility allocations, and $0.2 million in rent expense.

Previous 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.

Current wording

Research and development expenses increased by $23.2 million, or 46%, in the nine months ended September 30, 2025 compared to the same period in 2024. The increase in research and development expenses was primarily due to increases in 2025 of $22.7 million in personnel-related costs caused by Amelia and Interactions acquisitions, $1.5 million in legal and professional fees, $1.2 million in consulting fees, $1.1 million in office expense, $0.2 million in cloud computing services, $0.2 million in utilities, $0.2 million in travel expense, and $0.1 million in hardware cost, which were partially offset by a decrease of $3.4 million incurred for information technology and facility allocations and $0.4 million in rent expense.

Previous 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.

Current wording

General and administrative expenses increased by $7.3 million, or 43%, in the three months ended September 30, 2025 compared to the same period in 2024. The increase in general and administrative expenses was primarily due to increases in 2025 of $4.6 million in personnel-related costs caused by Amelia and Interactions acquisitions, $1.4 million in information technology and facility allocations, $1.0 million in bad debt expense, $0.3 million in legal and professional fees, $0.2 million in taxes and license fees, $0.2 million in payroll fees, and $0.1 million in insurance expense, which were partially offset by a decrease of $0.2 million in consulting fees, $0.2 million in cloud computing fees, and $0.1 million in office expense.

Previous wording

General and administrative expenses increased by $16.8 million, or 85%, in the six 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 $9.1 million in personnel-related costs caused by Amelia acquisition, $3.2 million in information technology and facility allocations, $1.5 million in bad debt expense, $1.2 million in office expense, $1.2 million in legal and professional fees, $0.3 million in insurance expense, $0.3 million in cloud computing services, $0.2 million in consulting fees, $0.1 million in taxes and licenses, $0.1 million in tax filing fees, $0.1 million in utilities, and $0.1 million in hardware cost, which were partially offset by a decrease of $0.5 million in rent expense.

Current wording

General and administrative expenses increased by $24.2 million, or 66%, in the nine months ended September 30, 2025 compared to the same period in 2024. The increase in general and administrative expenses was primarily due to increases in 2025 of $13.7 million in personnel-related costs caused by Amelia and Interactions acquisitions, $4.6 million in information technology and facility allocations, $2.5 million in bad debt expense, $1.1 million in office expense, $1.5 million in legal and professional fees, $0.4 million in insurance expense, $0.3 million in taxes and licenses, $0.1 million in tax and payroll processing fees, $0.1 million in cloud computing services, $0.1 million in software cost, $0.1 million in hardware cost. and $0.1 million in utilities, which were partially offset by a decrease of $0.5 million in rent expense.

Previous 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.

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 $66.2 million and a gain of $78.5 million for the three and nine months ended September 30, 2025. The increase of the Company's stock price as of September 30, 2025 compared to the stock price as of June 30, 2025, resulted in an increase in its fair value of contingent acquisition liabilities during the three months ended September 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

Amortization of intangibles increased by $6.6 million and $13.0 million, or 670% and 615% in the three and six months ended June 30, 2025 compared to the same period in 2024. The increase in amortization of intangibles was primarily attributable to the Amelia Acquisition that was closed during the third quarter of 2024.

Current wording

Amortization of intangibles increased by $3.2 million and $16.2 million, or 64% and 226% in the three and nine months ended September 30, 2025 compared to the same period in 2024. The increase in amortization of intangibles was primarily attributable to the Amelia Acquisition that was closed during the third quarter of 2024 and Interaction Acquisition that was closed during the third quarter of 2025.

Previous 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.

Current wording

Interest expense decreased by $1.0 million and $10.3 million, or 86% and 95% in the three and nine months ended September 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 and Amelia Debt in December, 2024, resulting in the decrease in interest expense.

Previous 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.

Current wording

Interest income increased by $0.5 million or 23% and $0.5 million or 7% for the three and nine months ended September 30, 2025, respectively, 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 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, 2025.

Previous wording

The loss on extinguishment of debt of $15.6 million recorded in the three and six months ended 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.

Current wording

The loss on extinguishment of debt of $15.6 million recorded in 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 wording

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 three and six months ended June 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.

Current wording

The gain on bargain purchase of $1.2 million was recorded within other income, 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 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.

Current wording

Change in fair value of derivative increased by $5.1 million and $7.3 million, or 100% in the three and nine months ended September 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

The following table summarizes the provision for income taxes ($ in thousands):

Current wording

The following table summarizes the provision (benefit) for income taxes ($ in thousands):

Previous 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.

Current wording

Provision (benefit) for income taxes increased by $10.9 million and $12.1 million, or 104% and 126% in the three and nine months ended September 30, 2025, respectively, compared to the same period in 2024. This increase was primarily attributable to decreased tax benefit from acquisitions.

Previous 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.

Current wording

Total unrestricted cash and cash equivalents on hand as of September 30, 2025 was $268.9 million. Although we have incurred recurring losses each year since our inception, except for a net income of $129.9 million reported for the three months ended March 31 2025 and $55.2 million reported for the six months ended June 30, 2025, primarily due to the change in fair value of acquisition related liabilities, 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 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.

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 nine months ended September 30, 2025, we sold 9,018,114 shares and 13,913,014 shares, respectively, of our common stock under the Second Equity Distribution Agreement, at an average price of $13.97 and $14.48 per share, respectively, and raised $126.0 million and $201.5 million of gross proceeds, respectively. The commissions and offering costs borne by us were approximately $2.5 million and $4.0 million, respectively. As of September 30, 2025, the Company had a remaining capacity to sell up to an additional $48.5 million of our common stock under the Second Equity Distribution Agreement.

Previous 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).

Current wording

We incurred $2.2 million in acquisition related expenses, of which less than an immaterial amount and $0.1 million were incurred during the three and nine months ended September 30, 2025, respectively. We incurred zero and $0.8 million acquisition related expenses during the three and nine months ended September 30, 2024, respectively. These acquisition related expenses were recorded as general and administration expenses in our condensed consolidated statements of operations and comprehensive loss.

Previous 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.

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 “SYNQ3 Holdback Amount”). We determined that there are two components to the SYNQ3 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).

Current wording

The contingent cash and share holdback consideration to be issued is variable (“Contingent SYNQ3 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 SYNQ3 Holdback Consideration as a liability on the condensed consolidated balance sheet. As of the SYNQ3 Acquisition Date, the Contingent SYNQ3 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 SYNQ3 Holdback Consideration to SYNQ3's former stockholders as a result of the net working capital adjustments settled during the year. The Contingent SYNQ3 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.

Previous wording

In April 2025, the Contingent Holdback Consideration was settled by issuing 472,501 shares of the Company’s Class A Common Stock and paying $0.2 million in cash. After the holdback settlement, any remaining indemnifications by the sellers to cover unsettled claims was offset against the Contingent SYNQ3 Earnout Consideration to the extent of its fair value as of June 30, 2025. 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

In April 2025, the Contingent SYNQ3 Holdback Consideration was settled by issuing 472,501 shares of the Company’s Class A Common Stock and paying $0.2 million in cash. After the holdback settlement, any remaining indemnifications by the sellers to cover unsettled claims was offset against the Contingent SYNQ3 Earnout Consideration to the extent of its fair value as of June 30, 2025. 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 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 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.

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 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 September 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 September 30, 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 $98.6 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 purchase consideration was $98.6 million.

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 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.

Current wording

On the Amelia Acquisition Date, we issued and deposited 2,149,530 shares of our 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 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. For the three and nine months ended September 30, 2025, we recognized a gain of $5.1 million and $7.3 million, respectively, related to remeasurement of the derivative, reflected in the other income, net in the condensed consolidated statement of operations and comprehensive loss. 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 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.

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 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 nine months ended September 30, 2025, we recognized a loss of $65,945,000 and a gain of $70.1 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 loss. As of September 30, 2025, the Company assessed the 2025 and 2026 revenue targets were probable of being met.

Previous 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.

Current wording

During the nine months ended September 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 nine months ended September 30, 2025 and were made to reflect facts and circumstances that existed as of the Amelia Acquisition Date.

Previous 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).

Current wording

We incurred $6.7 million in acquisition related expenses, of which $0.1 million and $0.9 million was incurred during the three and nine months ended September 30, 2025 and recorded as general and administration expenses in its condensed consolidated statements of operat ions and comprehensive loss.