- SOUN posted Q4 2025 revenue of $55.1M, beating consensus of $54.0M; EPS -$0.02 vs. -$0.10 expected.
- HC Wainwright cut its SOUN price target from $26 to $20; stock gapped down to $7.95 on Monday open.
- FY2026 guidance of $225M–$260M implies 43.5% growth at midpoint; profitability not expected until Q4 2026 at earliest.
SOUN -13.7% YTD vs. Russell 2000 +6.1%
SoundHound AI delivered a clean beat on the top line. Q4 2025 revenue came in at $55.1M, ahead of the $54.0M consensus and HC Wainwright’s own $52.1M estimate. EPS of -$0.02 was a wide beat against the -$0.10 forecast. Revenue grew 59.4% year-over-year. On a trailing twelve-month basis, growth ran at 99%. Those are not soft numbers.
Gross margins tell a similar story of directional improvement. Three consecutive quarters of expansion have pushed gross margin to 43%. Management targets 70% long-term. The company is not profitable today — net margin and return on equity are both negative — but the Q4 2026 operating profitability window is now on the table. Analysts do not price that in yet.
The beat did not hold the stock. HC Wainwright maintained its Buy rating but slashed its SOUN stock price target from $26 to $20, citing valuation pressure across software names. The market read the target cut, not the rating. Shares closed at $8.60 on Friday and opened Monday at $7.95, trading on volume of nearly 7.9 million shares in early session.
The broader analyst setup is messy. Current consensus is Moderate Buy — 1 Strong Buy, 5 Buy, 3 Hold, 1 Sell — with an average price target of $14.93. That average sits 76% above Monday’s trading price around $8.47. DA Davidson sits at $14. Cantor Fitzgerald, after upgrading to Overweight in December, holds a $15 target. Weiss Ratings maintains a Sell. The spread between bull and bear targets here is wider than the guidance range itself.
FY2026 guidance of $225M–$260M excludes any M&A contribution. Management attributed the outlook to new contract wins and renewals across multiple verticals. InvestingPro flags the stock as overvalued relative to fair value at current levels, a tension that the guidance range alone does not resolve.
SOUN beat on revenue and EPS, issued above-consensus growth guidance, and still got sold. That is the tape. The stock trades at a steep premium to its $14.93 consensus target, which itself prices in execution the company has not yet delivered. Gross margin expansion is real and the profitability timeline is tightening, but the gap between the bull case ($20) and where shares trade ($8.47) reflects genuine disagreement about whether this multiple is justifiable pre-profitability. Until operating income turns positive, this remains a show-me story.
Watch Item: Q3 2026 earnings report for first evidence of the Q4 2026 operating profitability trajectory — specifically gross margin progression toward the 70% long-term target and operating expense trajectory.
Disclaimer: This post is for informational purposes only and does not constitute investment advice. All investment decisions and their outcomes are solely the responsibility of the reader.