Photo Credit: Max Zhdanov
SoundHound AI, Inc. has announced it has secured $25 million in preferred equity financing to strengthen its balance sheet. The company recently laid off 40% of its workforce.
The financing includes investments from a “diverse set of financial and strategic investors, both from the current shareholder base and new capital providers.” The preferred equity is convertible into shares of Class A common stock under certain circumstances, including automatic conversion on or after the one year anniversary of the issuance date if certain price conditions are met.
“When combined with recent cost reductions that are expected to result in operating cost savings in excess of $60 million, the announced financing plan provides robust liquidity for the company to achieve its business plan,” the press release reads. Part of those ‘recent cost reductions’ include laying off 40% of its staff with minimal severance packages to compensate.
SoundHound has partnerships with companies like Qualcomm to use its voice AI on its Snapdragon platforms. It has also expanded its partnership with Snap and has landed new deals with VIZIO, Square, and Toast for voice AI technology. SoundHound has also signed a multi-year agreement with Hyundai and a series of collaborations in the automotive space, including LG, HARMAN International, DPCA, and DMI.
SoundHound is pre-announcing strong preliminary 2022 results with a revenue of approximately $31 million, at the high end of prior guidance. The company expects revenue growth in 2023 to accelerate to 50% year-over-year due to its strong customer base, well over $300 million bookings foundation, and increasing demand for its voice AI-enabled customer service products.
SoundHound announced its first round of layoffs for employees in November 2022—shedding 10% of its workforce then. Now three months later, the staff of 500 has dwindled to 200 or so. SoundHound CEO Keyvan Mohajer attributed the need to cut staff to rapid growth and a need to “re-evaluate the direction” of the company.