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The voice recognition company benefits from a major change in the fair value of its conditional obligations.
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The profit was based on what is called low quality revenue as it is unlikely to be repeated.
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Soundhound AI (Nasdaq: Soun) is an artificial intelligence company (AI) that specializes in a voice recognition platform. It has a lot of potential, especially with restaurant driving, and its technology helps to improve the efficiency of many businesses.
She recently reported her most profit numbers. And although investors were expecting growth, they may not have expected a profit that Soundhound reported. It was also an unregulated profit.
This happened as a result of a change in value, but the reason for this change is what can surprise you the most. In a slightly ironic turn, the evaluation of the technology company actually helped its lower line.
The big reason investors are hesitant to buy Soundhound AI shares is due to the company’s bad lower order. Business is growing, but lack of profitability is a problem.
However, in his latest profit report, for the first quarter of 2025 (which ended on March 31), he reported a surprising profit of $ 129.9 million. This is a huge improvement in the loss of $ 33 million, caused last year.
So what was behind the sharp twist? The change in the fair value of the conditional acquisition obligations led to the addition of $ 176.1 million back to its expenses, which was more than all its operating costs.
And what was surprising in that was reason For the change in value. The correction was related to its acquisitions of AI companies SYNQ3 and Amelia and how much Soundhound it will still have to pay the sellers based on the fulfillment of certain goals.
The bigger part of these payments are in stock and thus, as the cost of the company’s shares collapses this year, which has led to a decline in the fair value of its conditional obligations. If the price of the shares is collected, it can harm the profits of the company in the future.
The acquisitions helped Soundhound increase its operations. But against all this, there can be a lot of noise in the financial resources, as can be seen in conditional obligations. The company’s revenue not only jumped by 151% in the first three months of 2025, for a total of $ 29.1 million, but there were also drastic changes in the bottom line, with the business suddenly swelled with profit.