SoundHound AI Inc. [NASDAQ: SOUN] posted record first-quarter 2026 revenue of $44.2 million, up 52% year-over-year and ahead of the Wall Street consensus estimate of $42.84 million, yet the stock fell more than 12% following the report as analysts trimmed price targets and investors focused on sustained profitability concerns.

CEO and co-founder Keyvan Mohajer described the start of the year as strong, noting that excluding the impact of recent acquisitions, revenue from SoundHound’s core automotive and IoT AI vertical grew 88% year-over-year, reflecting broad-based demand across the company’s product lines.

On the bottom line, the company reported a GAAP net loss of $25.0 million and an adjusted EBITDA loss of $26.7 million, with operating cash outflow of $26.3 million, confirming that while the top line is accelerating, profitability remains a distant target.

GAAP gross margin declined to 31.1% from 36.5% a year earlier, partly due to non-recurring vendor true-up charges that hit both GAAP and non-GAAP margins in the quarter, while non-GAAP gross margin came in at 49.7%, a more flattering but still directionally concerning figure for investors tracking margin trends.

D.A. Davidson’s four-star analyst Gil Luria lowered his price target on SOUN from $14 to $12, acknowledging the above-expectations revenue start to 2026 but flagging earnings pressure and execution risks around the company’s acquisition integration efforts as factors that limit near-term upside despite the strong growth trajectory.

Northland Securities’ top-rated analyst Michael Latimore also trimmed his target from $14 to $12, noting that SoundHound slightly exceeded revenue expectations but missed adjusted EBITDA estimates due to continued heavy investment in technology development and expansion activity.

Both analysts maintained their Buy or Outperform ratings on the stock, which market observers noted suggests the sell-side remains constructive on the long-term story even as near-term expectations cool following a massive rally over the past year.

The company held $216 million in cash and no debt at the end of Q1, giving it a balance sheet to fund continued expansion, and reaffirmed its 2026 full-year revenue guidance of $225 million to $260 million.

SoundHound also announced a definitive agreement to acquire LivePerson [NASDAQ: LPSN], a digital messaging AI company with an enterprise footprint spanning more than 30 countries and relationships with 25 of the Fortune 100, with the deal expected to close in the second half of 2026.

Management said the combined entity would have access to a $500 million revenue opportunity from existing customer relationships alone, and projected 2027 revenue of at least $350 million to $400 million, including at least $100 million in contribution from LivePerson’s existing customer base.

The company also launched its OASIS platform during the quarter, described by management as a self-learning agentic AI system designed to unify the technologies acquired through SoundHound’s recent deals, including Interactions and Amelia, into a single integrated enterprise AI offering.