SOUNDHOUND AI, INC.

Current report

Risks Related to the LivePerson Acquisition

Current report

We may not realize the anticipated benefits of the LivePerson Acquisition, and integrating LivePerson’s business may be more difficult, costly or time-consuming than we expect.

Current report

On September 4, 2026, we completed our acquisition of LivePerson. The success of the transaction depends in substantial part on our ability to integrate LivePerson’s operations, technology, products, personnel and systems with our own and to realize the revenue opportunities, cost savings and other benefits we anticipate. Integration is a complex, costly and time-consuming process, and we are undertaking it while continuing to operate and grow our existing business.

Current report

The integration requires us to combine two companies that have operated independently, including consolidating sales and go-to-market organizations, migrating customers onto a combined product roadmap, centralizing treasury, cash management and pricing functions across LivePerson’s foreign operations, conforming accounting policies and financial reporting systems, and harmonizing compensation and benefit arrangements. We may encounter difficulties we have not anticipated, including the loss of customers, partners or key employees, disruption to our ongoing business, diversion of management attention from other priorities, unanticipated integration costs, difficulties combining information technology and financial systems, and the need to comply with the laws of jurisdictions in which LivePerson operates but in which we previously did not.

Current report

Even if we integrate the businesses successfully, we may not realize the benefits we expect, or may not realize them within the period we expect. Those benefits are based on assumptions about future revenue, cost savings and operating efficiencies that may prove incorrect, and the costs of integration may exceed our estimates. Any failure to realize the anticipated benefits of the LivePerson Acquisition, or to realize them on the expected timetable, could adversely affect our business, financial condition and results of operations and could cause the trading price of our common stock to decline.

Current report

LivePerson’s revenue declined in periods preceding the acquisition, and we may be unable to reverse that trend.

Current report

LivePerson’s revenue declined in recent periods prior to the LivePerson Acquisition, reflecting customer attrition, competitive pressure in the conversational artificial intelligence market and the migration of enterprise customers toward alternative platforms. We completed the acquisition on the expectation that we can stabilize and ultimately grow that revenue base by combining LivePerson’s enterprise customer relationships with our technology and go-to-market capabilities. That expectation may prove incorrect.

Current report

Our ability to retain LivePerson’s customers may be affected by uncertainty regarding the combined company’s product direction, by contractual provisions permitting customers to terminate or renegotiate upon a change of control, by competitors seeking to displace us during the integration period, and by any reduction in service levels during the transition. A significant portion of LivePerson’s revenue is concentrated among a limited number of large enterprise customers, and the loss of any of them, or renewal on materially less favorable terms, could have a disproportionate effect on our results. If LivePerson’s revenue continues to decline, we may not realize the benefits of the acquisition and may be required to recognize impairment charges with respect to the goodwill and intangible assets we recorded.

Current report

A substantial portion of our total assets consists of goodwill and intangible assets, which are subject to impairment.

Current report

In connection with the LivePerson Acquisition, we recorded goodwill of approximately $139.5 million and identifiable intangible assets of approximately $146.2 million, including in-process research and development that is not amortized until the related projects are completed or abandoned. Together with the goodwill and intangible assets recognized in our prior acquisitions, these balances represent a substantial portion of our total assets.

Current report

We test goodwill and indefinite-lived intangible assets for impairment at least annually, and we test goodwill, indefinite-lived intangible assets and long-lived assets whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Indicators that could require interim testing include a sustained decline in the trading price of our common stock or in our market capitalization, adverse changes in the business climate or in the markets we serve, the loss of significant customers, declines in actual or forecast revenue or profitability of an acquired business, and changes in the manner in which acquired assets are used. The trading price of our common stock has been volatile, and our forecasts, including forecasts for acquired businesses, are inherently uncertain and have been revised in the past. In-process research and development is particularly sensitive to changes in the expected timing, cost and commercial outcome of the underlying projects. Any impairment charge could be material to our results of operations in the period in which it is recognized.

Current report

Our accounting for the LivePerson Acquisition is preliminary and may change materially.

Current report

The amounts we have recorded for the assets acquired and the liabilities assumed in the LivePerson Acquisition are provisional and are based on preliminary valuations and on information available to us as of the date of this report. Under applicable accounting guidance, we have up to one year from the acquisition date to complete the measurement period, during which we may adjust those provisional amounts if we obtain new information about facts and circumstances that existed as of the acquisition date. Areas subject to adjustment include the valuation of acquired intangible assets, acquired income tax positions and related deferred taxes, assumed contingencies and acquired contract balances.

Current report

Adjustments to provisional amounts will change the amount of goodwill we have recognized and may change the amortization and other expense we recognize in subsequent periods. The final amounts may differ materially from the provisional amounts presented in this report, and any such difference could adversely affect our reported results of operations and financial condition.

Current report

The shares we issued as consideration in the LivePerson Acquisition diluted our existing stockholders

Current report

We issued approximately 41.9 million shares of our common stock as consideration in the LivePerson Acquisition, which diluted the ownership interests of our existing stockholders. In addition, we assumed LivePerson’s outstanding convertible senior notes. Those notes are convertible into shares of our common stock in accordance with their terms, and any conversion would further dilute our existing stockholders and could depress the trading price of our common stock. A portion of the assumed notes was repurchased following the acquisition, and we may repurchase, redeem, exchange or refinance the remaining notes, any of which would use cash or result in the issuance of additional shares.

Current report

LivePerson’s internal control over financial reporting is excluded from management’s assessment for 2026, and integrating LivePerson’s control environment presents risk.

Current report

As permitted by guidance of the staff of the Securities and Exchange Commission, management’s assessment of the effectiveness of our internal control over financial reporting as of December 31, 2026 will exclude the internal control over financial reporting of LivePerson. Accordingly, neither management nor our independent registered public accounting firm will evaluate or report on the effectiveness of LivePerson’s internal control over financial reporting for 2026.

Current report

LivePerson maintains accounting systems, processes and controls that differ from ours and conducts operations through numerous foreign subsidiaries. Integrating LivePerson into our financial reporting process and extending our internal control framework over its operations will require significant time, cost and management attention, and during the transition we expect to rely in part on LivePerson’s legacy processes and on manual procedures. If we are unable to maintain effective internal control over financial reporting as we integrate LivePerson, or if we identify a material weakness, we may be unable to report our financial results accurately or on a timely basis. Any of these outcomes could cause investors to lose confidence in our reported financial information, expose us to regulatory scrutiny or sanctions or to litigation, and cause the trading price of our common stock to decline.

Current report

The LivePerson Acquisition was a taxable transaction that did not result in a step-up in the tax basis of the acquired assets, and our ability to use acquired tax attributes may be limited.

Current report

The LivePerson Acquisition is treated as a taxable business combination for U.S. federal income tax purposes; however, it did not result in a step-up in the tax basis of the acquired assets. As a result, the goodwill we recognized is not deductible for tax purposes, and we will not receive tax deductions corresponding to the amortization of the acquired intangible assets that we recognize for financial reporting purposes. This increases our effective tax rate relative to a transaction that produced a step-up in tax basis and reduces the cash tax benefit we derive from the acquisition.

Current report

In addition, our ability to use LivePerson’s historical net operating loss carryforwards and other tax attributes may be limited under Section 382 of the Internal Revenue Code and comparable provisions of state and foreign law as a result of the ownership change arising from the acquisition. We have not completed our analysis of these limitations. Any limitation could reduce the value of the tax attributes we acquired and increase our future cash taxes.

Current report

Risks Related to Our Revenue and Significant Estimates

Current report

A portion of our revenue is derived from a customer in which we hold an equity investment, which may subject our reported results to additional scrutiny.

Current report

We hold a minority equity investment in a business process outsourcing provider that is also a customer and commercial partner of ours. During 2026 we entered into a license arrangement with this customer that includes minimum committed amounts, and we have recognized revenue under that arrangement. We may enter into additional arrangements with this customer, and we may make additional investments in or extend additional commitments to it.

Current report

Because the same counterparty is both an investee and a customer, these arrangements may not be representative of the terms we would obtain from an unrelated customer, and investors, regulators and other stakeholders may question the pricing and economic substance of the arrangements, the timing and amount of revenue we recognize from them, and whether that revenue is indicative of demand from unrelated customers. Our accounting for these arrangements involves significant judgment, including with respect to the standalone selling price of the licensed technology, the enforceability of the minimum commitments and the collectibility of the related consideration. If our judgments are challenged or ultimately prove incorrect, we may be required to revise the amount or timing of revenue we have recognized.

Current report

Collectibility of amounts due under these arrangements depends on the financial condition of a counterparty whose operations may be funded in part by our own investment. If the counterparty does not perform as we expect, we may be unable to collect amounts due to us, may be required to reverse or defer revenue we have previously recognized, and may be required to recognize an impairment of our equity investment. Any of these outcomes, or heightened scrutiny of these arrangements, could adversely affect our reported results of operations and the trading price of our common stock.