Prediction: SoundHound Passes $500 Million in Revenue Before It Turns a Profit
2026-09-06 06:14
•Daniel Sparks •The Motley Fool
•••••• ••• Axe Cap view
SoundHound’s Revenue Surge Masks Lingering Profit Problems
Strong revenue growth at SoundHound AI contrasts sharply with persistent losses and a distant path to profitability.
SoundHound AI’s revenue growth, boosted by acquiring LivePerson, looks impressive on paper—45% year-on-year growth and a push toward $500 million in annual sales by 2028. But that gloss hides a slow crawl toward profit. Their adjusted EBITDA losses remain stubbornly high, and net losses are still a hefty 69% of revenue. This is a classic high-growth tech story, where top-line gains don’t yet translate to the bottom line. For South African investors, SoundHound’s story is a reminder why the rand’s strength or weakness matters here: USD/ZAR fluctuations will heavily impact the true cost and valuation of these foreign tech bets. The risk of extended losses should push us to watch carefully but not rush in. We’d rather focus on JSE counters with clearer paths to profit and dividends in our local currency. This view may prove wrong if SoundHound’s product innovations drive faster margin improvement than anticipated. this is just our opinion and not financial advice
Avoid SoundHound shares for now. Keep a loose eye on USD/ZAR, as rand weakness could increase the cost of any foreign tech exposure. Instead, prioritize profitable, well-established JSE stocks.
- SOUN
- USD/ZAR
- Long delay to profitability at SoundHound
- Volatility in USD/ZAR impacting foreign investment returns
5/10
SoundHound AI is experiencing rapid revenue growth (45% YoY in Q2 2026) and acquired LivePerson to accelerate its path to $500 million in annual revenue, projected for 2028. However, the company's losses are narrowing much slower than revenue is growing, with adjusted EBITDA losses still at $9.6 million in Q2 and net losses at $42.8 million. Sustained profitability is unlikely before 2029 at the earliest, making this a high-growth but unprofitable investment.
Our take is based on reporting first published by The Motley Fool.