SOUN 10-K & 10-Q changes, risk factors and insider trading

•Our acquisition of SYNQ3, AmeliaAmelia, Interactions and any potential future acquisitions or strategic transactions may not be accretive and may subject us to various risks that could adversely affect our business and for which we may not achieve the anticipated benefit of such a transaction;

•We have identified material weaknesses in our internal control over financial reporting and may identify additional material weaknesses in the future, which may result in material misstatements of our consolidated financial statements or cause us to fail to meet itsour periodic reporting obligations and the trading price of our stock could be negatively affected.

•Third parties have claimed presently and in the past and may claim in the future that we are infringing their intellectual property, and we could be exposed to significant litigation or licensing expenses or be prevented from selling our products or making our technologies available to our customers if such claims are successful;

•Our stock price and trading volume mayhas fluctuatefluctuated significantly;

For example, in Europe, the European Parliament formally enacted the European Union’s Artificial Intelligence Act (the “AI Act”)., which was entered into force on August 1, 2024 and will become fully applicable on August 2, 2026, with some provisions already applying from February 2025. The AI Act establishes, among other things, a risk-based governance framework for regulating AI systems operating in the European Union. This framework seeks to categorize AI systems, based on the risks associated with such AI systems’ intended purposes, as creating unacceptable or high risks, with all other AI systems being considered low risk. While the AI Act has only recently been enacted, there is a risk that our current or future AI-powered software or applications may obligate us to comply with the applicable requirements of the AI Act, which may impose additional costs on us, increase our risk of liability or adversely affect our business. For example, the AI Act would prohibit certain uses of AI systems and place numerous obligations on providers and deployers of permitted AI systems, with heightened requirements based on AI systems that are considered high risk. If enacted in this form or a similar form, this regulatory framework is expected to have a material impact on the way AI is regulated in the European Union and beyond, and, together with developing regulatory guidance and judicial decisions in this area, may affect our use of AI and our ability to provide and to improve our services, require additional compliance measures and changes to our operations and processes, result in increased compliance costs and potential increases in civil claims against us and could adversely affect our business, financial condition and results of operations.

SoundHound may experience pricing pressure from its customers in the future, including, relative to its automotive industry customers, pricing pressure resulting from the strong purchasing power of major original equipment manufacturers (“OEMs”). SoundHound may be expected to quote fixed prices or be forced to accept prices with annual price reduction commitments for long-term sales arrangements or discounted reimbursements for SoundHound’s work. Any price reductions could impact SoundHound’s sales and profit margins. SoundHound’s profitability is also influenced by its success in designing and marketing technological improvements in Voice AI systems. If SoundHound is unable to offset any price reductions in the future, its business, results of operations and financial condition would be adversely affected.

Additionally, China has recently implemented new regulation pertaining to cybersecurity and the protection of personal information, including the Data Security Law which took effect in September 2001 and the Personal Information Protection Law which took effect in November 2021. Interpretation, application and enforcement of these laws, rules and regulations evolve from time to time and their scope may continually change, through new legislation, amendments to existing legislation or changes in enforcement. Compliance with cybersecurity and data security legislation could significantly increase the cost to SoundHound of carrying out its business in China, require significant changes to its operations or even prevent SoundHound from providing certain service offerings in jurisdictions in which SoundHound currently operates or in which it may operate in the future.

InWe completed our acquisitions of Synq3, Inc. ("SYNQ3") in January 2024, weAmelia completedHoldings, ourInc. acquisition of SYNQ3 and("Amelia") in August 2024, weand completedInteractions ourCorporation acquisition("Interactions") ofin AmeliaSeptember 2025, and we continue to actively evaluate opportunities to grow and enhance our business and technologies. We have incurred certain significant costs relating to the SYNQ3, Amelia and Interactions acquisitions, such as legal, accounting, financial advisory and other professional services fees, as well as other customary payments. In the event we engage in an acquisition or other strategic transaction, including by making an investment in another company, we may need to acquire additional financing. Obtaining financing through the issuance or sale of additional equity and/or debt securities, if possible, may not be at favorable terms and may result in additional dilution to our current stockholders. Additionally, any such transaction may require us to incur non-recurring or other charges, may increase our near and long-term expenditures and may pose significant integration challenges or disrupt our management or business, which could adversely affect our operations and financial results. For example, an acquisition or strategic transaction, may entail numerous operational and financial risks, including the risks outlined above and additionally:

If intangible assets and goodwill that we recorded in connection with our acquisitions, including our SYNQ3SYNQ3, Amelia, and AmeliaInteractions acquisitions, become impaired, we may have to take significant charges against earnings, which would have a negative impact on our financial condition and results of operations.

We record goodwill and intangible assets at fair value upon the acquisition of a business. Goodwill represents the excess of amounts paid for acquiring businesses over the fair value of the net assets acquired. Under generally accepted accounting principles in the United States, we must assess, at least annually and potentially more frequently, whether the value of indefinite-lived intangible assets and goodwill have been impaired. Intangible assets and goodwill will be assessed for impairment in the event of an impairment indicator. Any reduction or impairment of the value of intangible assets and goodwill will result in a charge against earnings, which could materially adversely affect our results of operations and shareholders’stockholders’ equity in future periods.

The integration of our acquisitions, and in particular, our acquisition of SYNQ3SYNQ3, Amelia, and Amelia,Interactions, may result in significant accounting charges that adversely affect the financial results of our company.

•integrate SYNQ3’sSYNQ3, Amelia, and Amelia'sInteractions' customer bases and capitalize on our cross-selling opportunities;

To date, SoundHound has generated substantial net losses and negative cash flows from operating activities. SoundHound maywill likely continue to have net losses and negative operating cash flows as SoundHound continues to invest in its development activities, and in sales and marketing. SoundHound also expects to continue to incur the incremental costs of operating as a public company, contributing to SoundHound’s losses and operating uses of cash. SoundHound’s costs may also increase due to such factors as higher than anticipated financing and other costs; increases in the costs of labor or infrastructure, in particular following the implementation of the restructuring plan; and major incidents or catastrophic events. If any of these or similar factors occur, SoundHound’s net losses and accumulated deficit could increase significantly and the price of shares of its common stock could decline.

Even though the total unrestricted cash and cash equivalents on hand as of December 31, 20242025 was $198.2$248.5 million, we have had negative cash flows from operations of $98.2 million, $108.9 million and $68.3 million, respectively, during the years ended December 31, 2025, 2024 and 2023. Accordingly, SoundHound may require additional capital to continue its planned business operations. SoundHound anticipates that current cash, cash equivalents, cash provided by operating activities and funds available through SoundHound’s at-the-market offering program ("ATM program"), will not be sufficient to meet its long-term expected future capital needs. SoundHound will need additional financing to execute on its current or future business strategies, including to:

If SoundHound raises additional funds through the issuance of equity, including its ATM Program,program, or convertible debt securities, or grants competitive equity awards to attract and retain qualified employees, the percentage ownership of its stockholders could be significantly diluted, and these newly-issued securities may have rights, preferences or privileges senior to those of existing stockholders, including those acquiring shares in this offering. SoundHound cannot assure you that additional financing will be available on terms favorable to SoundHound, or at all, particularly in light of inflationary pressures and resulting increases in the cost of borrowing. If adequate funds are not available or are not available on acceptable terms, if and when needed, SoundHound’s ability to fund its operations, take advantage of unanticipated opportunities, develop or enhance its products, or otherwise respond to competitive pressures would be significantly limited.

The Company has identified material weaknesses in its internal control over financial reporting and may identify additional material weaknesses in the future, which may result in material misstatements of the Company’s consolidated financial statements or cause the Company to fail to meet its periodic reporting obligations and the trading price of ourthe Company's stock could be negatively affected.

We identified material weaknesses in internal control over financial reporting as of December 31, 2024.2025. These material weaknesses were previously disclosed and continue to exist. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. The Company did not maintain an effective control environment as it lacked sufficient oversight of activities related to its internal control over financial reporting due to a lack of an appropriate level of experience and training commensurate with its financial reporting requirements. Further, due to rapid business growth, changes to existing controls or the implementation of new controls have not been sufficient to respond to changes to the risks of material misstatement to financial reporting, which resulted in the Company, including the SYNQ3 and Amelia entities which were acquired during 2024,Company not designing and maintaining effective controls related to substantially all accounts and disclosures. These material weaknesses contributed to the following additional material weaknesses that continue to exist as of December 31, 20242025:

•The Company did not design and maintain effective controls related to the identification of and accounting for certain non-routine, unusual or complex transactions, including the accounting for complex financing transactions and acquisitions.transactions.

The material weaknesses related to the control environment, risk assessment and the accounting for certain non-routine, unusual or complex transactions resulted in the revision of the consolidated financial statements as of and for the periods ended September 30, 2022, December 31, 2022, March 31, 2023, June 30, 2023, immaterial errors related to SYNQ3 and Amelia acquisitions during the year ended December 31, 2024 and immaterial errors in various accounts during the interim and annual periods during 20232023, 2024 and 2024.2025. The material weaknessesweakness related to segregation of duties and IT general controls did not result in a misstatement to our annual or interim consolidated financial statements. Additionally, the material weaknesses could result in misstatements to substantially all of our accounts and disclosures that would result in a material misstatement of the annual or interim consolidated financial statements that would not be prevented or detected.

While we are in the process of addressing ourthe material weaknesses as disclosed herein, elements of our remediation plan can only be accomplished over time and we can offer no assurance that these initiatives will ultimately have the intended effects. Any failure to maintain effective internal control over financial reporting could adversely impact our ability to report our financial results on a timely and accurate basis. If our financial statements are not accurate, investors may not have a complete understanding of our operations or may lose confidence in our reported financial information. Likewise, if our financial statements are not filed on a timely basis as required by the SEC and The NASDAQ Stock Market, we could face severe consequences from those authorities. In either case, it could result in a material adverse effect on our business or have a negative effect on the trading price of our common stock. Further, if we fail to remedy these deficiencies (or any other future deficiencies) or maintain effective internal control over financial reporting, we could be subject to regulatory scrutiny, civil or criminal penalties or shareholderstockholder litigation. We can give no assurance that the measures we have taken and plan to take in the future will remediate the material weaknesses identified or that any additional material weaknesses or restatements of our financial statements will not arise in the future due to a failure to implement and maintain adequate internal control over financial reporting or circumvention of those controls.

SoundHound has beenbeen, is currently and in the future may be subject to claims and legal actions alleging that we or its customers may be infringing or contributing to the infringement of the intellectual property rights of othersothers. (thoughFor noexample, materialon legalNovember actions21, 2024, VB Assets, LLC, a non-practicing entity, filed a complaint against SoundHoundthe areCompany currentlyin pending).the United States District Court for the District of Delaware alleging patent infringement under 35 U.S.C. § 271. See “Legal Proceedings” for more information. We may be unaware of intellectual property rights of others that may cover some of its technologies and products. If it appears necessary or desirable, we may seek licenses for these intellectual property rights. However, we may not be able to obtain licenses from some or all claimants, the terms of any offered licenses may not be acceptable to us, and we may not be able to resolve disputes without litigation. Any litigation regarding intellectual property could be costly and time-consuming and could divert the attention of SoundHound’s management and key personnel from its business operations. Intellectual property disputes could subject us to significant liabilities, require us to enter into royalty and licensing arrangements on unfavorable terms, prevent us from licensing certain of its products, cause severe disruptions to its operations or the markets in which we compete, or require us to satisfy indemnification commitments with its customers including contractual provisions under various arrangements. Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation, there is a risk that some of SoundHound’s confidential information could be compromised by disclosure during this type of litigation. For example, during the course of this kind of litigation, confidential information may be inadvertently disclosed in the form of documents or testimony in connection with discovery requests, depositions or trial testimony. This disclosure could have a material adverse effect on SoundHound’s business and its financial results. Any of these could seriously harm SoundHound’s business.

The market price and trading volume of SoundHound’s Class A common stock, $0.0001 par value per share (“Class A Common Stock”) has fluctuated widely and may continue to fluctuate widely, depending on many factors, some of which may be beyond our control, including:

•significant purchases or sales of our Class A Common Stock by large or influential investors or stockholders;

In addition, over the last few years, the stock market more broadly has experienced price and volume fluctuations, including due to factors relating to the outbreak of COVID-19, inflationary pressures, the wars in Ukraine and in Gazathe Middle East and the imposition and/or threat of tariffs, and this volatility has sometimes been unrelated to the operating performance of particular companies. As a result, there is a potential for rapid and substantial decreases in the price of our Class A Common Stock, including decreases unrelated to our operating performance or prospects. This market and share price volatility relating to these outside effects, as well as general economic, market or political conditions, has and could further reduce the market price of our Class A Common Stock in spite of our operating performance and could also increase our cost of capital, which could prevent us from accessing debt and equity capital on terms acceptable to us or at all.

As a public company and a large accelerated filer, we will continue to incur significant legal, accounting and other expenses that SoundHound did not incur as a private company. SoundHound is subject to the reporting requirements of the Exchange Act, and is required to comply with the applicable requirements of the Sarbanes-Oxley Act, and the Dodd-Frank Wall Street Reform and Consumer Protection Act, as well as the rules and regulations subsequently implemented by the SEC and the listing standards of the Nasdaq, including changes in corporate governance practices and the establishment and maintenance of effective disclosure and financial controls. Compliance with these rules and regulations can be burdensome. SoundHound’s management and other personnel will need to devote a substantial amount of time to these compliance initiatives. Moreover, these rules and regulations have increased, and will continue to increase, SoundHound’s historical legal and financial compliance costs and will make some activities more time-consuming and costly. For example, SoundHound has incurred and expects to continue to incur significant expenses and devote substantial management effort toward ensuring compliance with the requirements of Section 404 of the Sarbanes-Oxley Act. SoundHound has hired and will continue to need to hire additional accounting and financial staff, including as a result of our acquisitions in 2024, and engage outside consultants, all with appropriate public company experience and technical accounting knowledge and maintain an internal audit function, which has and will increase its operating expenses. Moreover, SoundHound could incur additional compensation costs in the event that it decides to pay cash compensation closer to that of other publicly listed companies, which would increase its general and administrative expenses and could materially and adversely affect its profitability. SoundHound will evaluate these rules and regulations, and cannot predict or estimate the amount of additional costs SoundHound may incur or the timing of such costs.

SoundHound may not have adequate personnel with the appropriate level of knowledge, experience and training in the accounting policies, practices or internal control over financial reporting required of public companies. SoundHound’s management will need to continually assess its staffing and training procedures to improve its internal control over financial reporting. For example, SoundHound did not timely file its Form 10-Q for the quarter ended March 31, 2021 and had to file extensions for its Form 10-Q for the quarter ended September 30, 2023 and 2023its Form 10-K.10-K for the years ended December 31, 2023 and 2024. Unless the matters discussed in this risk factor and elsewhere in this Annual Report are mitigated, the risk exists that SoundHound may not be able to file timely in the future. Further, the development, implementation, documentation and assessment of appropriate processes, in addition to the need to remediate any potential deficiencies, will require substantial time and attention from management. The development and implementation of the standards and controls necessary for us to achieve the level of accounting standards required of a public company may require costs greater than expected. It is possible that SoundHound will be required to expand its employee base and hire additional employees to support its operations as a public company which will increase our operating costs in future periods.

Changing laws, regulations and standards relating to corporate governance and public disclosure, including regulations implemented by the SEC and the Nasdaq, are subject to varying interpretations, and as a result, their application in practice may evolve over time as new guidance is provided by regulatory and governing bodies. SoundHound intends to invest resources to comply with evolving laws, regulations and standards, and this investment may result in increased general and administrative expenses and a diversion of management’s time and attention from revenue-generating activities to compliance activities. If, notwithstanding our efforts, we fail to comply with new laws, regulations and standards, regulatory authorities may initiate legal proceedings against us, and our business may be harmed.

SoundHound has a dual class common stock structure that has the effect of concentrating voting control with the holders of our Class B common stock, $0.0001 par value per share (“Class B Common Stock.Stock”). Our Class B Common Stock has multiple votes per share and this ownership will limit or preclude your ability to influence corporate matters, including the election of directors, amendments of our organizational documents, and any merger, consolidation, sale of all or substantially all of our assets, or other major corporate transactions requiring stockholder approval, and that may adversely affect the trading price of our Class A Common stock.

SoundHound has a dual class common stock structure and the holders of SoundHound Class B Common Stock have ten votes per share. SoundHoundSoundHound's Foundersfounders (Keyvan Mohajer, Majid Emami and James Hom) own shares of Class B Common Stock representing approximately 48%47% of the voting power of the outstanding capital stock of SoundHound as of December 31, 2024.2025. In addition, because of the ten-to-one voting ratio between our Class B and Class A Common Stock, holders of our Class B Common Stock could continue to control a majority of the combined voting power of our Commoncommon Stockstock and therefore control all matters submitted to our stockholders for approval until such time, if any, as a sufficient number of shares of our Class B Common Stock are converted into shares of our Class A Common Stock in accordance with the terms of the Second Amended & Restated Certificate of Incorporation of the Company (the "AmendedRestated Charter"). This concentrated control may limit or preclude your ability to influence corporate matters for the foreseeable future, including the election of directors, amendments of our organizational documents and any merger, consolidation, sale of all or substantially all of our assets or other major corporate transactions requiring stockholder approval. In addition, this concentrated control may prevent or discourage unsolicited acquisition proposals or offers for our capital stock that you may feel are in your best interest as one of our stockholders. As a result, such concentrated control may adversely affect the market price of our Class A Common Stock.

Shares of Class B Common Stock are convertible into shares of Class A Common Stock and will automatically convert into shares of Class A Common Stock upon the occurrence of certain future events, generally including transfers, subject to limited excepts set forth in the AmendedRestated Charter. The conversion of Class B Common Stock to Class A Common Stock will have the effect, over time, of increasing the relative voting power of those holders of Class B Common Stock who retain their shares in the long term. As a result, it is possible that one or more of the persons or entities holding our Class B Common Stock could gain significant voting control as other holders of Class B Common Stock sell or otherwise convert their shares into Class A Common Stock.

The AmendedRestated Charter provides for a dual-class multiple voting Common Stock structure, and we cannot predict the effect this structure of our Commoncommon Stockstock may have on the market price of our Class A Common Stock.

We cannot predict whether having an AmendedRestated Charter that permits the issuance of multiple voting shares in a dual-class structure will result in a lower or more volatile market price of our Class A Common Stock, adverse publicity or other adverse consequences. For example, certain index providers have announced and implemented restrictions on including companies with multiple-class share structures in certain of their indices. In July 2017, FTSE Russell announced that it would require new constituents of its indices to have greater than 5% of the company’s voting rights in the hands of public stockholders, and S&P Dow Jones announced that it would no longer admit companies with multiple-class share structures to certain of its indices. Affected indices include the Russell 2000 and the S&P 500, S&P MidCap 400 and S&P SmallCap 600, which together make up the S&P Composite 1500. Also in 2017, MSCI, a leading stock index provider, opened public consultations on its treatment of no-vote and multi-class structures and temporarily barred new multi-class listings from certain of its indices; however, in October 2018, MSCI announced its decision to include equity securities “with unequal voting structures” in its indices and to launch a new index that specifically includes voting rights in its eligibility criteria. Under such announced and implemented policies, the dual-class structure of our common stock would make us ineligible for inclusion in certain indices and, as a result, mutual funds, exchange-traded funds and other investment vehicles that attempt to passively track those indices would not invest in our Class A Common Stock. These policies are relatively new and it is unclear what effect, if any, they will have on the valuations of publicly-traded companies excluded from such indices, but it is possible that they may adversely affect valuations, as compared to similar companies that are included. Due to the dual-class structure of our common stock, we will likely be excluded from certain indices and we cannot assure you that other stock indices will not take similar actions. Given the sustained flow of investment funds into passive strategies that seek to track certain indices, exclusion from certain stock indices would likely preclude investment by many of these funds and could make our Class A Common stockStock less attractive to other investors. As a result, the market price of our Class A Common stockStock could be adversely affected.

The AmendedRestated Charter, Amended & Restated Bylaws of the Company (the "Amended Bylaws"), and Delaware law contain provisions that could depress the trading price of our common stock by acting to discourage, delay, or prevent a change of control of SoundHound or changes in SoundHound that our management or stockholders may deem advantageous. Among other things, the AmendedRestated Charter and Amended Bylaws include the following provisions:

These provisions, alone or together, could delay or prevent hostile takeovers and changes in control or changes in our management. As a Delaware corporation, we are also subject to provisions of Delaware law. Any provision of our AmendedRestated Charter, our Amended Bylaws, or Delaware law that has the effect of delaying, preventing, or deterring a change in control could limit the opportunity for our stockholders to receive a premium for their shares of our common stock and could also affect the price that some investors are willing to pay for our common stock.

As of December 31, 2024,2025, SoundHound had $548.4$892.9 million of U.S. federal and $208.1$379.7 million of state net operating loss carryforwards available to reduce future taxable income. The federal and state net operating loss carryforwards will start to expire in 2025 and 2028, respectively,2026 with the exception of $403.3$691.0 million federal net operating loss carryforwards and $11.0$18.5 million state net operating loss carryforwards, which can be carried forward indefinitely. It is possible that SoundHound will not generate taxable income in time to use these net operating loss carryforwards before their expiration or at all. Under legislative changes made in December 2017, U.S. federal net operating losses incurred in 2018 and in future years may be carried forward indefinitely, but the deductibility of such net operating losses is limited. In addition, the federal and state net operating loss carryforwards and certain tax credits may be subject to significant limitations under Section 382 and Section 383 of the Code, respectively, and similar provisions of state law. Under those sections of the Code, if a corporation undergoes an “ownership change,” the corporation’s ability to use its pre-change net operating loss carryforwards and other pre-change attributes, such as research tax credits, to offset its post-change income or tax may be limited. In general, an “ownership change” will occur if there is a cumulative change in SoundHound’s ownership by “5-percent shareholdersstockholders” that exceeds 50 percentage points over a rolling three-year period. Similar rules may apply under state tax laws. In addition, certain U.S. states have imposed additional limitations on the use of net operating loss carryforwards not otherwise imposed on the use of U.S. federal net operating loss carryforwards and may impose additional limitations in the future.

The following discussion and analysis of the financial condition and results of operations of SoundHound should be read together with our consolidated financial statements and the related notes thereto. The fiscal years presented are the periods ended December 31, 20242025 (“20242025”) and December 31, 20232024 (“20232024”). Information concerning the fiscal year ended December 31, 20222023 (“20222023”) and a comparison of 20232024 and 20222023 may be found under “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Company’s Annual Report on Form 10‑K for 2023,the fiscal year ended December 31, 2024, filed with the SEC on March 1,11, 2024.2025.

Some of the information contained in this discussion and analysis or set forth elsewhere in this report, including information with respect to SoundHound’s plans and strategy for its business and related financing, includes forward-looking statements that involve risks and uncertainties. As a result of many factors, including those factors set forth in the “Risk Factors” and “Cautionary Statement Regarding Forward Looking Statements” section of this report, our actual results could differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis. Unless otherwise indicated or the context otherwise requires, references in this section to “SoundHound,” “we,” “us,” “our” and other similar terms refer to SoundHound AI, Inc. and our subsidiaries.

We believe that SoundHound is well-positioned to fill the growing void and demand for an independent Voice AI platform. The Voice AI offerings from big tech companies are primarily an extension of their more core services and offerings. Rather than strengthening a customer’s product, it can take over the entire experience, thus disintermediating the company’sour brand, users and data. As a result, brands relying on big tech may lose their ability to innovate, differentiate and customize. In some cases, these providers even compete with the products they support, making them increasingly less attractive as a choice for a voice interface.

There are three pillars to our revenue model. The first pillar is Product Royalties, where we voice enable a product and the product creator pays us a royalty based on volume, usage or duration. SoundHound collects royalty revenue when yourour technology is placed in a car, smart speaker or an appliance, for example.

AmeliaInteractions Acquisition

We have incurred certain significant costs relating to the SYNQ3SYNQ3, Amelia and AmeliaInteractions Acquisitions,acquisitions, such as legal, accounting, financial advisory and other professional services fees, as well as other customary payments. Refer to "Item 1A. Risk Factors" in our Form 10-K for a discussion regarding the risks associated with the acquisitions.

•Revenue Growth. Our commercial success, including acceptance and use of our applications, will depend on a number of factors, some of which are beyond our control, such as size of the market opportunity, successful integration with original equipment manufacturers (“OEM”),OEM, competition and demand from the public and members of the conversational AI community. Our product offerings, including those offerings that we have acquired, have disruptive effects in the ways human interact with computers and we are developing new, innovative economic models and acquiring companies such as SYNQ3SYNQ3, Amelia, and AmeliaInteractions which have synergistic businesses to ours that we believe will enhance value to customers, partners and shareholders.stockholders. For our revenue growth to continue, we will need to invest in sales and marketing to ensure our messaging, capabilities and offerings are well understood and valued by customers. With our primary focus on enterprise customers, we also need to align with enterprise sales cycles, which can be longer than consumer cycles. As we build new customer relationships, we continually focus on maintaining and growing our existing relationships through long-term partnerships through significant upfront investment in customer specific engineering projects. Additionally, in addition to our acquisitions of SYNQ3SYNQ3, Amelia, and Amelia,Interactions, we may look to acquire other companies in the industry to develop synergies with our existing business.

•Seasonality. Our ability to accurately forecast demand for our technology could be negatively affected by many factors, including seasonal demand. We anticipate that we will experience fluctuations in customer and user demand based on seasonality. For example, in the past, we have seen approximately one third40% of our revenue in the first half of the year with the remaining two thirds60% in the second half. Additionally, given that we address markets across several different industry verticals, the associated overall seasonality impact to us may not be consistent year-to-year.

“Houndified Products,” meaning products of our customers that employ SoundHound technology, and “Houndified Services,” meaning services provided to customers related to SoundHound technology, provide our customers with access to our Houndify platform over a contractual period without taking possession of the software. This generally includes revenues derived from up-frontimplementation services (“professional services”) that develop and customize the Houndify platform to fit customers’ specific needs. These professional services are included in both our Product Royalties and Service Subscriptions revenues. Non-distinct professional services are recognized over the contractual life of the contract, whereas revenues from distinct professional services are recognized as the services are performed or when the services are complete depending on the arrangement.

“Amelia Software Platform” and “Virtual Assistance” meaning our AI-based digital resource solution that enables AI in our customers’ services, ranging across multiple industries. This generally includes revenue from hosted services if the customer elects our SaaS offering, or from licensing revenue if the customer requires an on-premise solutions.solution. Professional services are also offered and included within professional services revenue. The revenues from Amelia Software Platform and Virtual Assistance are included within Service Subscriptions, and are recognized point in time or over time depending on the arrangement.

SoundHound’s cost of revenues are comprised of direct costs associated directly with SoundHound’s revenue streams as described above. This primarily includes costs and depreciation related to hosting for cloud-based services, such as data centers, electricity charges, content fees and certain personnel-related expenses including personnel costs under call centers that are directly related to these revenue streams. Additionally, our cost of revenues also includes the amortization of developed technology acquired from SYNQ3, AmeliaAmelia, Interactions and other acquisition as intangible assets.

The change in fair value of contingent acquisition liabilities is related to contingent consideration from the SYNQ3SYNQ3, Amelia, and AmeliaInteractions acquisitions. The contingent consideration was determined to be liability classified and is remeasured as of each reporting period with a corresponding change in fair value recorded.

The issuance of debt instruments with direct transaction costs, embedded derivatives and warrant instruments has resulted in debt discounts. Direct transaction costs consist of various transaction fees and third-party costs, such as bank and legal fees, that are incurred upon issuance. We expect the impact of the discounts from debt issuance costs to theNo interest expense willwas decreaseincurred during the year ended December 31, 2025 due to the repayment of Amelia Debt in December 2024 and the repayment of Term Loan in June 2024.

Other Income (Expense),Income, Net

Other income (expense),income, net consists of the change in fair value related to our derivative liability, interest income and other income (expense).

Provision (benefit) for Income Taxes

Income tax expense includes federal, state and foreign taxes and is based on reported income before income taxes. We are in a cumulative loss position for tax purposes based on historical earnings. As of December 31, 2024,2025, we had $548.4$892.9 million of U.S. federal and $208.1$379.7 million of state net operating loss carryforwards available to reduce future taxable income. The federal and state net operating loss carryforwards will start to expire in 2025 and 2028, respectively,2026 with the exception of $403.3$691.0 million federal net operating loss carryforwards and $11.0$18.5 million state net operating loss carryforwards, which can be carried forward indefinitely.

Total revenues increased by 85%99% in 20242025 compared to 2023.2024. ServiceThe increase of $77.2 million in service subscription revenue increased to $56.3 million,revenue, primarily based in the Americas, and was driven by the contribution of revenue from acquisitions. ThisThe wasincrease offsetof by$6.9 a decreasemillion in product royalties revenue,revenue primarilywas due to the increase in license revenue in the Asia region, due to the minimum guarantee licensing or point in time revenue relating to Houndify Edge recognized in the previous period.region.

Cost of revenues increased by $32.0$54.1 million, or 283%,125%, in 20242025 compared to 2023.2024. Gross margin decreased to 42% in 2025 compared to 49% in 2024 compared to 75% in 2023 primarily due to the acquisitionsacquisition of Amelia andin SYNQ3,2024, which included a mix of lower margin call center agent business from SYNQ3 and amortization of acquired intangible assets.assets in the amount of $14.1 million for the year ended December 31, 2025, and the acquisition of Interactions in 2025, which included a amortization of acquired intangible assets in the amount of $0.8 million for the year ended December 31, 2025. In the past, our gross margin has fluctuated and may continue to fluctuate from quarter to quarter due to revenue contributions from varying product mixes. However, we expect to gradually improve gross margins in the mid-term, especially as it relates the integration of AmeliaAmelia, Interactions and SYNQ3.

Sales and marketing expenses increased by $10.2$32.5 million, or 54%,112%, from $61.6 million in 2025 compared to $29.1 million in 2024 compared to $18.9 million in 2023,2024, primarily due to an increaseincreases in 20242025 of $7.8$27.6 million in personnel-related cost,costs $0.9caused by Amelia and Interactions acquisitions, $3.3 million in advertisingoffice expense, $0.8$1.1 million in consulting fees, $0.8 million in advertising expenses, $0.8 million in travel expenses, $0.2 million in legal and professional fees, $0.4and $0.2 million in travel expense,meal and $0.3entertainment, millionwhich in office expense. The increase waswere partially offset by reductiona decrease of $0.9$1.5 million inincurred for information technology and facility expenses. Included in the sales and marketing expense is an increase of $4.3 million arising from the Amelia acquisition and $0.7 million arising from the SYNQ3 acquisition, stemming from increased personnel-related costs.allocations.

Research and development expenses increased by $19.1$27.7 million, or 37%,39%, in 20242025 compared to 2023,2024, primarily due to an increaseincreases in 20242025 of $14.0$25.6 million in personnel-related cost,costs $6.4caused by Amelia and Interactions acquisitions, $2.7 million in cloudlegal computing,and $0.6professional fees, $2.7 million in office expense, $1.8 million in consulting fees, and$0.2 million in utilities, $0.2 million in travel expense.expense, Theand increase$0.1 wasmillion in hardware cost, which were partially offset by reductiona decrease of $1.8$4.5 million inincurred for information technology and facility expenses,allocations, and $0.3$0.6 million in legalrent expense.expense Includedand $0.5 million in thecloud researchcomputing and development expense is an increase of $2.3 million arising from the Amelia acquisition and $3.6 million arising from the SYNQ3 acquisition, stemming from increased personnel-related costs.services.

The change in fair value of acquisition related liabilities, which is drivenmarked-to-market bybased on the movements in our stock price and changes in the assessed probability of achieving certain future revenue targets, was a gain of $163.1 million for the year ended December 31, 2025, compared to a loss of $222.7 million for the year ended December 31, 2024. The decrease of the Company's year-end stock price increaseas of December 31, 2025 compared to the stock price as of December 31, 2024, resulted in ana increasedecrease in its fair value of contingent acquisition liabilities where future Contingent Earnout Consideration and Contingent Holdback Consideration are marked-to-market on a quarterly basis, significantly impacting net loss and EPS during the year ended December 31, 2024.2025. The fluctuation is non-operating and non-cash in nature. We will continue to review our estimates on a quarterly basis over the remaining earnout period until 2026. See Note 12 to our consolidated financial statements included within this report for more information.

Amortization of acquired developed technology is included within cost of revenues, while the amortization of other intangible assets, including acquired customer relationships, tradename and conversation data, are included within costoperating of revenues and amortization of intangible assets in the Company’s consolidated statement of operations and comprehensive loss.expenses. All intangible assets are amortized on a straight-line basis over their estimated useful lives.

The $15.6 million increasedecrease in loss on extinguishment of debt during the year ended December 31, 20242025 was attributable to a loss on the repayment of Amelia Debt in December 2024 and the repayment of Term Loan in June 2024. See Note 10 to our consolidated financial statements included within this report for more information.

Interest expense decreased by $4.6$11.5 million, or 27%,94%, in 20242025 compared to 2023.2024. The decrease in interest expense was primarily attributable to the early repayment of Term Loan in June, 2024 and theAmelia interestDebt expensein fromDecember, on2024, our SVB March 2021 Note and SCI June 2021 Noteresulting in the year ended December 31, 2023, which were terminated at the time that the Term Loan was obtained in April 2023. The decrease in interest expense was partially offset by the increased interest expense of $2.0 million from Amelia Debt in the year ended December 31, 2024. We expect interest expense will decrease as a result of the extinguishment of Term Loan and Amelia Debt.expense.

Other Income (Expense),Income, Net

The following table summarizes our other income (expense),income, net by type ($ in thousands):

Interest income increased by $5.5$1.4 million, or 192%,17%, in 20242025 compared to 2023.2024. The increase was primarily attributable to interest earned on greater money market and treasury bond balances during 2024the year ended December 31, 2025, as we engaged in significant transactions that increased our liquidity. Refer to "Liquidity and Capital Resources" for a discussion of the changes in our business that led to an increase in cash for the year ended December 31, 2024.2025.

The gain on bargain purchase of $1.2 million was recorded within other income (expense),income, net in the consolidated statements of operations and comprehensive loss in the year ended December 31, 2024 as a result of a favorable fair value of identifiable net assets acquired from an immaterial acquisition at the date of acquisition as compared with the purchase price. See Note 3 to our consolidated financial statements included within this report for more information.

Provision (benefit) for income taxes decreasedincreased by $13.2$14.0 million, or 336%,151%, in 20242025 compared to 2023.2024. This decreaseincrease was primarily attributedattributable to increaseddecreased tax benefit from acquisitions.

Total unrestricted cash and cash equivalents on hand as of December 31, 20242025 was $198.2$248.5 million. Although we have incurred recurring losses each year since itsour inception, except for a net income of $129.9 million reported for the three months ended March 31 2025, $55.2 million reported for the six months ended June 30, 2025 and $40.1 million reported for the three months ended December 31, 2025, primarily due to the change in fair value of acquisition related liabilities, we expect we will be able to fund our operations for at least the next twelve months. We believe we will meet longer-term expected future cash requirements and obligations through a combination of cash flows from operating activities, available cash balances and expected cash proceeds from the future at-the-market equityATM program. See Note 23 to our consolidated financial statements included within this report for more information on the cash proceeds from the at-the-market equity program launched subsequent to December 31, 2024. Our consolidated financial statements have been prepared assuming that we will continue as a going concern, which contemplates, among other things, the realization of assets and satisfaction of liabilities in the normal course of business.

Second Equity Distribution Agreement

WeOn January 24, 2025, we entered into thean Equity Distribution Agreement (the "Second Equity Distribution Agreement") with CitigroupCantor GlobalFitzgerald Markets& Inc.,Co., BarclaysGuggenheim CapitalSecurities, LLC, Oppenheimer & Co. Inc., Wedbush Securities Inc., Northland Securities, Inc. and Ladenburg Thalmann & Co. Inc. onand AprilNorthland 9,Securities, 2024Inc. with regardsrespect to an at-the-market equityATM program. Under this program, we were able tomay offer and sell up to $150.0$250.0 million of shares of our Class A Common Stock from time to time through the sales managers. Sales of our Class A Common StockStock, if any, under the Second Equity Distribution Agreement werewill be made at market prices by any method that is deemed to be an “at the market offering” as defined in Rule 415 under the Securities Act. The sales managers wereare entitled to commission at a fixed rate of 2.5%2.0% of the gross sales price per share for their services in acting as agentsagent in the sale of our Class A Common Stock. During the year ended December 31, 2025, we sold an aggregate of 13,913,014 shares of our common stock under the Second Equity Distribution Agreement, at an average price of $14.48 per share and raised $201.5 million of gross proceeds. The commissions and offering costs borne by us were approximately $4.0 million. As of December 31, 2025, the Company had a remaining capacity to sell up to an additional $48.5 million of our common stock under the Second Equity Distribution Agreement.

The total purchase consideration includes $3.9 million in cash paid and 5,755,910 in shares of our Class A Common Stock issued as of the SYNQ3 Acquisition Date. We also withheld purchase consideration of $0.5 million in cash and 1,179,514 shares of our Class A Common Stock, subject to customary net working capital adjustments, to partially secure the indemnification obligations of SYNQ3's former stockholders under the merger agreement and agreed to pay up to $0.8 million in cash and 1,434,936 in shares of our Class A Common Stock to certain former stockholders of SYNQ3 based upon the achievement of specified future milestones. WeOn the SYNQ3 Acquisition Date, we also issued 2,033,156 restricted shares of our Class A Common Stock subject to time and performance-based vesting conditions. The fair value of the purchase consideration was $15.8 million.

We incurred $2.1$2.2 million in acquisition related expenses, of which $0.1 million, $1.0 million, and $1.1 million were incurred during the yearyears ended December 31, 2025, 2024 and 2023, respectively, and recorded as general and administration expenses in its consolidated statements of operations and comprehensive loss.

SYNQ3 Holdback

The $0.5 million in cash and 1,179,514 shares of our Class A Common Stock is beingwere withheld for a period of 15 months (the “SYNQ3 Holdback Amount”). We determined that there are two components to the SYNQ3 Holdback Amount related to deferred consideration and contingent consideration, each comprised of cash and shares.

Our operations and financial results are subject to various risks and uncertainties, including those described in Part I, Item 1A, "Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2025, and those described in "Risk Factors" related to the pending acquisition of LivePerson in our Form S-3ASR filed on May 11, 2026, which could adversely affect our business, financial condition, results of operations, cash flows, and the trading price of our stock. There have been no material changes from these risk factors during the quarter ended MarchJune 31,30, 2026.

This creates a great opportunity for SoundHound: we believe that we provide disruptive technologies that are superior to the alternatives, with better terms, allowing customers to maintain their brand, control the user experience, get access to the data and define their own privacy policies, while being able to customize, differentiate, innovate and monetize. With the launch of OASYS, we believe we are further widening this competitive gap by offering enterprises a self-learning agentic ecosystem that actively evolves based on real-world usage — reducing operational costs, accelerating deployment timelines, and driving incremental revenue opportunities across both digital and physical channels.

•Revenue Growth. Our commercial success, including acceptance and use of our applications, will depend on a number of factors, some of which are beyond our control, such as size of the market opportunity, successful integration with original equipment manufacturers (“OEM”), competition and demand from the public and members of the conversational AI community. Our product offerings, including those offerings that we have acquired, have disruptive effects in the ways human interact with computers and we are developing new, innovative economic models and acquiring companies such as SYNQ3, Amelia and Interactions which have synergistic businesses to ours that we believe will enhance value to customers, partners and stockholders. For our revenue growth to continue, we will need to invest in sales and marketing to ensure our messaging, capabilities and offerings are well understood and valued by customers. With our primary focus on enterprise customers, we also need to align with enterprise sales cycles, which can be longer than consumer cycles. As we build new customer relationships, we continually focus on maintaining and growing our existing relationships through long-term partnerships through significant upfront investment in customer specific engineering projects. Additionally, inIn addition to our acquisitions of SYNQ3, Amelia and Interactions, we may look to acquire other companies in the industry to develop synergies with our existing business.business, including LivePerson.

We have and may continue to experience volatility for our remaining performance obligations and deferred revenue as a result of the timing for completing our performance obligations. We had remaining performance obligations in the amount of $64.7$60.0 million as of MarchJune 31,30, 2026. Given the applicable contract terms, $40.1$37.3 million is expected to be recognized as revenue within one year, $22.9$20.1 million is expected to be recognized between 2 to 5 years and the remainder of $1.7$2.6 million is expected to be recognized after 5 years. Deferred revenue consists of billings or payments received in advance of revenue being recognized and can fluctuate with changes in billing frequency and other factors. As a result of these factors, as well as our mix of revenue streams and billing frequencies, we do not believe that changes in our remaining performance obligations and deferred revenue in a given period are directly correlated with our revenue growth in that period.

The issuance of debt instruments with direct transaction costs, embedded derivatives and warrant instruments has resulted in debt discounts. Direct transaction costs consist of various transaction fees and third-party costs, such as bank and legal fees, that are incurred upon issuance. No interest expense was incurred during the three and six months ended MarchJune 31,30, 2026 due to the repayment of Amelia Debt in December 2024 and the repayment of Term Loan in June 2024.

The following tables set forth the significant components of our results of operations for the three and six months ended MarchJune 31,30, 2026 and 2025 ($ in thousands):

The following tables summarize our revenues by type and geographic regions for the three and six months ended MarchJune 31,30, 2026 and 2025 ($ in thousands):

Total revenues increased by $15.1$19.2 million, or 52%,45%, in the three months ended MarchJune 31,30, 2026 compared to the same period in 2025. Service subscription revenue increased by $11.2$14.9 million, primarily in the Americas,mainly driven by revenue from acquisitions.acquisitions in the Americas. Product Royaltiesroyalty increasedrevenue in Asia also increased, partially offset by $3.9 million, primarily driven byreduced license revenue in the Asia and EMEA region.

Cost of revenues increased by $11.9$7.9 million and $19.9 million, or 65%31% and 45% in the three and six months ended MarchJune 31,30, 20262026, respectively, compared to the same period in 2025. Gross margin decreasedincreased to 31%45% and 39% during the three and six months ended MarchJune 31,30, 2026 compared to 36%39% and 38%, respectively, during the same period in 2025 primarily due to certain new, higher margin license deals closed in the second quarter of 2026, which was partially offset by the acquisition of Interactions in the third quarter of 2025, which includedresulted anin amortization of acquired intangible assets in the amount of $0.6 million and resulted in an increase of stock-based compensation of $2.8$1.2 million for the three and six months ended MarchJune 31,30, 2026.2026, respectively. In the past, our gross margin has fluctuated and may continue to fluctuate from quarter to quarter due to revenue contributions from varying product mixes. However, we expect to gradually improve gross margins in the mid-term, especially as it relates the integration of Amelia, Interactions and SYNQ3.

Sales and marketing expenses increased by $7.2$0.8 million, or 60%,5%, in the three months ended MarchJune 31,30, 2026 compared to the same period in 2025, primarily due to increases in 2026 of $4.7$1.2 million in personnel-related costscosts, and $0.3 million in advertising cost, which were partially offset by decreases of Interactions which was acquired in the third quarter of 2025, $1.6$0.4 million in office expense, $0.4 million in advertising expenses, $0.3 million in travel expensesexpense and $0.1$0.2 million in legal and professional fees.

Research and development expenses increased by $1.4$1.3 million, or 6%,5%, in the three months ended MarchJune 31,30, 2026 compared to the same period in 2025. The increase in research and development expenses was2025, primarily due to increases in 2026 of $2.0$2.3 million in office expense, $1.0$0.8 million in legal and professional fees, $0.3$0.6 million in consulting fees, $0.1and $0.4 million in utilities,cloud computing services, which wereare partially offset by a decreasedecreases of $1.0$2.6 million in personnel-related costs caused by lower stock-based compensation of $3.0$2.6 million offset by the increased salary related expenses of $2.0 million due to Interactions acquisition, $0.9 million in cloud computing servicesmillion, and $0.1$0.2 million in rent expense.

General and administrative expenses increased by $7.3$7.8 million, or 39%,43%, in the three months ended MarchJune 31,30, 2026 compared to the same period in 2025. The increase in general and administrative expenses was primarily due to increases in 2026 of $4.5 million in personnel-related costs of Interactions which was acquired in the third quarter of 2025, $2.2$3.5 million in legal and professional fees mainly caused by the potential acquisitions, $0.3$1.9 million in rentbad debt expense, $0.3$1.5 million in consulting fees, $1.1 million in personnel-related costs, $0.2 million in software expense, $0.2 million in consulting fees, $0.2$0.1 million in taxes and licenses, and $0.1 million in rent expense, which were partially offset by a decreasedecreases of $0.2$0.6 million in office expense and $0.2$0.1 million in cloud computing services.

We expect our general and administrative expenses to increase in the short term as we invest in our control environment to remediate the existing material weaknesses.weaknesses and the costs incurred for the potential acquisitions. However, in the long term, we expect general and administrative expenses to grow at a rate below our expected growth in revenue, aligning with our strategic emphasis on cost effectiveness and sustainable financial performance.

The change in fair value of acquisition related liabilities, which is marked-to-market based on the movements in our stock price and changes in the assessed probability of achieving certain future revenue targets, was a gain of $39.4$3.7 million and $43.1 million for the three and six months ended MarchJune 31,30, 2026. The decrease of the Company's stock price as of MarchJune 31,30, 2026 compared to the stock price as of December 31, 2025, resulted in a decrease in its fair value of contingent acquisition liabilities during the three and six months ended MarchJune 31,30, 2026. The fluctuation is non-operating and non-cash in nature. We will continue to review our estimates on thea quarterly basis over the remaining earnout period. See Note 1514 to our unaudited condensed consolidated financial statements included within this report for more information.

Amortization of intangibles increased by $1.9$2.3 million and $4.2 million, or 25%30% and 28% in the three and six months ended MarchJune 31,30, 20262026, respectively, compared to the same periodperiods in 2025. The increase was primarily attributable to the intangibles of $39.5 million acquired from Interactions Acquisition that was closed during the third quarter of 2025, which is expected to be amortized over five years after the Interactions Acquisition Date, and the intangible of $28.0 million acquired under the MIPA Agreement during the three months ended June 30, 2026, which is expected to be amortized over nine years after the MIPA Closing Date.

Other Income (Expense),Income, Net

The following tables summarize our other income (expense),income, net, by type ($ in thousands):

Interest income decreased by $0.6 million and $1.1 million or 25%23% and 24% for the three and six months ended MarchJune 31,30, 20262026, respectively, compared to the same period in 2025. The decrease was primarily attributable to reduced balance of interest bearing money market fund during the three and six months ended MarchJune 31,30, 2026 compared to the same period in 2025.

Change in fair value of derivative decreased by $3.8$1.0 million and $4.8 million, or 293%116% and 221% in the three and six months ended MarchJune 31,30, 20262026, respectively, compared to the same period in 2025. The decrease was primarily attributable to the remeasurement loss from the change in fair value of a derivative assumed from Amelia acquisition caused by the decrease in the Company's stock price in the three and six months ended MarchJune 31,30, 2026. See Note 1514 to our unaudited condensed consolidated financial statements included within this report for more information.

Total unrestricted cash and cash equivalents on hand as of MarchJune 31,30, 2026 was $215.6$202.8 million. Although we have incurred recurring losses each year since our inception, we expect we will be able to fund our operations for at least the next twelve months. We believe we will meet longer-term expected future cash requirements and obligations through a combination of cash flows from operating activities, available cash balances and expected cash proceeds from future use of our ATM programs.program. Our condensed consolidated financial statements have been prepared assuming that we will continue as a going concern, which contemplates, among other things, the realization of assets and satisfaction of liabilities in the normal course of business.

On January 24, 2025, we entered into an Equity Distribution Agreement (the "Second Equity Distribution Agreement") with Cantor Fitzgerald & Co., Guggenheim Securities, LLC, Oppenheimer & Co. Inc., Wedbush Securities Inc., Ladenburg Thalmann & Co. Inc. and Northland Securities, Inc. with respect to an ATM program. Under this program, we may offer and sell up to $250.0 million of shares of our Class A Common Stock from time to time through the Sales Managers. Sales of our Class A Common Stock, if any, under the Second Equity Distribution Agreement will be made at market prices by any method that is deemed to be an “at the market offering” as defined in Rule 415 under the Securities Act. The Sales Managers are entitled to commission at a fixed rate of 2.0% of the gross sales price per share for their services in acting as agent in the sale of our Class A Common Stock. During the three months ended March 31, 2025, we sold 4,248,900 shares of our common stock under the Second Equity Distribution Agreement, at an average price of $15.94 per share and raised $67.7 million of gross proceeds. The commissions and offering costs borne by us were approximately $1.4 million. During the three months ended March 31, 2026, there were no issuances of our common stock under the Second Equity Distribution Agreement. As of March 31, 2026, the Company had a remaining capacity to sell up to an additional $48.5 million of our common stock under the Second Equity Distribution Agreement.

In April 2025, the Contingent SYNQ3 Holdback Consideration was settled by issuing 472,501 shares of the Company’s Class A Common Stock and paying $0.2 million in cash. After the holdback settlement, any remaining indemnifications by the sellers to cover unsettled claims was offset against the Contingent SYNQ3 Earnout Consideration to the extent of its fair value as of MarchJune 31,30, 2026. See Note 16 to our unaudited condensed consolidated financial statements included within this report for more information on the fair value measurement of Contingent SYNQ3 Holdback Consideration.

For the three months ended MarchJune 31,30, 2026 and 2025,2026, we recognized a loss of less than $0.1 millionzero and $0.4 million, respectively, related to the Contingent SYNQ3 Earnout Consideration, reflected in the change in fair value of contingent acquisition liabilities in the condensed consolidated statement of operations and comprehensive income (loss). For the three and six months ended June 30, 2025, we recognized a gain of $5.1$3.6 million and $8.7 million, respectively, related to the Contingent SYNQ3 Earnout Consideration, reflected in the change in fair value of contingent acquisition liabilities in the condensed consolidated statement of operations and comprehensive income (loss). See Note 1514 to our unaudited condensed consolidated financial statements included within this report for more information on the fair value measurement of Contingent SYNQ3 Earnout Consideration.

As of MarchJune 31,30, 2026, the 2024 revenue target was not met, but the 2025 revenue target was met. On March 3, 2026, we paid $0.1 million in cash and issued 246,761 shares of Class A Common Stock to settle the 2025 portion of the Contingent SYNQ3 Earnout Consideration. We assessed the 2026 revenue target as not probable of being met.

For the three and six months ended MarchJune 31,30, 2026 and 2025,2026, we recognized a loss of $2.5$0.1 million and $2.6 million. respectively, related to remeasurement of the derivative, reflected in the other income (expense), net in the condensed consolidated statement of operations and comprehensive income (loss). For the three and six months ended June 30, 2025, we recognized a gain of $1.3$0.9 million,million and $2.2 million. respectively, related to remeasurement of the derivative, reflected in the other income (expense), net in the condensed consolidated statement of operations and comprehensive income (loss). Upon the expiration of the escrow period, any remaining shares in the escrow account will be released to the selling shareholders. See Note 1514 to our unaudited condensed consolidated financial statements included within this report for more information on the fair value measurement of the derivative related to indemnification rights. Upon the expiration of the escrow period, any remaining shares within the escrow account will be released to the selling shareholders.

We agreed to pay up to 16,822,429 in shares of Class A Common Stock to the selling shareholders based on achievement of certain revenue targets in fiscal years 2025 and 2026 (the “Contingent Amelia Earnout Consideration”). We accounted for the Contingent Amelia Earnout Consideration as a liability within contingent acquisition liabilities on our condensed consolidated balance sheet and will subsequently remeasure the liability at each reporting date with changes in fair value recognized as a component of operating expense in our condensed consolidated statement of operations and comprehensive income (loss). For the three months ended MarchJune 31,30, 2026 and 2025,2026, we recognized a gain of $37.4$4.0 million and $168.7$41.4 million, respectively, related to the Contingent Amelia Earnout Consideration, reflected in the change in fair value of contingent acquisition liabilities in the condensed consolidated statement of operations and comprehensive income (loss). For the three and six months ended June 30, 2025, we recognized a loss of $32.6 million and a gain of $136.1 million, respectively, related to the Contingent Amelia Earnout Consideration, reflected in the change in fair value of contingent acquisition liabilities in the condensed consolidated statement of operations and comprehensive income (loss). As of MarchJune 31,30, 2026, the 2025 revenue target was met. We assessed the 2026 revenue targets was probable of being met.

The fair value of the preliminary purchase consideration was $76.1 million. The preliminary purchase consideration includes $19.4 million of cash paid to the selling shareholders. We also paid $4.1 million of cash for seller transaction expenses in connection with the closing of the Interactions Acquisition.

The adjustment holdback consideration of $1.0 million was recorded within other current liabilities at fair value as of the Interactions Acquisition Date (the "Interactions Adjustment Holdback Consideration"), and iswas estimatedpaid to beInteractions' paidformer stockholders in the second quarter of 2026 to Interactions' former stockholders for the settlement of net working capital adjustments.2026.

The indemnity holdback consideration of $0.2 million was recorded within other current liabilities, which was withheld for a period of 12 months subsequent to the Interactions Acquisition Date (the "Interactions Indemnity Holdback Consideration"). Payment will occur after the sellers complete their review of the closing statement which must be submitted by the acquirer within 120 days of the Interactions Acquisition Date.

We also agreed to pay up to $25.0 million in cash to the selling shareholders based on achievement of certain annual revenue targets in fiscal years 2026 and 2027 and renewal or extension of an existing contract with a specific customer on or before March 31, 2026. We accounted for the Contingent Interactions Earnout Consideration as a liability within contingent acquisition liabilities on the condensed consolidated balance sheets and will subsequently remeasure the liability at each reporting date with changes in fair value recognized as a component of operating expense in the condensed consolidated statement of operations and comprehensive income (loss). As of the Interactions Acquisition Date, the Contingent Interactions Earnout Consideration had an estimated fair value of $9.9 million. For the three and six months ended MarchJune 31,30, 2026, we recognized a loss of $0.3 million and a gain of $2.4$2.1 millionmillion, respectively, related to the Contingent Interactions Earnout Consideration, reflected in the change in fair value of contingent acquisition liabilities in the condensed consolidated statement of operations and comprehensive income (loss). On January 23, 2026, we paid $4.7 million to the selling shareholders of the Interaction Acquisition to settle a portion of the Contingent Interactions Earnout Consideration due to the achieved renewal of an existing contract with a specific customer. As of MarchJune 31,30, 2026, we assessed the 2026 revenue target as not probable of being met, but the 2027 revenue targets as probable of being met.

As of MarchJune 31,30, 2026, we incurred $5.5 million in acquisition related expenses, of which zero and $0.5 million was incurred during the three and six months ended MarchJune 31,30, 20262026, respectively, and recorded as general and administration expenses in its condensed consolidated statements of operations and comprehensive loss.income (loss).

Net cash used in operating activities was $26.3$60.0 million during the threesix months ended MarchJune 31,30, 2026 compared to $19.2$43.7 million during the threesix months ended MarchJune 31,30, 2025. The $7.1$16.3 million increase in cash used in operating activities was primarily due to decreases of $155.0$123.1 million in net income, $7.5 million increase in operating assets and $0.2liabilities, $2.1 million increase in stock-based compensation, and $1.8 million in net other operating cash spend, which is partially offset by the movement of $136.7$101.7 million from change in the fair value of contingent acquisition liabilities, $5.5 million increase in depreciation and amortization, the movement of $3.8$4.8 million from change in fair value of derivative, $2.6$3.5 million increase in operatingbad assetsdebt andexpenses, liabilities, $2.2 million increase in depreciation and amortization, $1.1 million increase in stock-based compensation, $1.0$1.4 million in foreign currency gain from remeasurement, $0.5$1.0 million increase in amortization of capitalized commissions, and $0.2$0.3 million increase in non-cash lease amortization.

Net cash used in investing activities was $3.1$32.7 million during the threesix months ended MarchJune 31,30, 2026 compared to $0.2$0.4 million during the threesix months ended MarchJune 31,30, 2025. The $2.9$32.4 million increase in cash used in investing activities was primarily driven by the $2.6$26.5 million increase in payment related to asset acquisition, $5.4 million increases in software development costs and $0.3$0.5 million increase in purchases of property and equipment.

Net cash used in used in financing activities was $3.2$46.7 million during the threesix months ended MarchJune 31,30, 2026 compared to $67.0$76.6 million provided by financing activities during the threesix months ended MarchJune 31,30, 2025. The $70.3$29.9 million decrease in cash provided by financing activities was primarily due to $67.7$27.1 million decrease in net proceeds from Second Equity Distribution Agreement, $3.5$3.3 million increase in the payment to settle contingent earnout liabilities, $0.3$1.0 million decreaseincrease in the payment to settle deferred holdback liabilities, and $0.2 million increase in the payment on finance leases, which is partially offset by $1.2 million increase in proceeds from exercise of stock options and employee stock purchase plan, and $0.1 million increase in the payment on finance leases, which is partially offset by $1.4$0.5 million decrease in the payment of financing costs associated with the Second Equity Distribution Agreement.