Cover
Cover - shares | 9 Months Ended | |
Sep. 30, 2022 | Nov. 10, 2022 | |
Document Information | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Sep. 30, 2022 | |
Document Transition Report | false | |
Entity File Number | 001-40193 | |
Entity Registrant Name | SOUNDHOUND AI, INC. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 86-1286799 | |
Entity Address, Address Line One | 5400 Betsy Ross Drive | |
Entity Address, City or Town | Santa Clara | |
Entity Address, State or Province | CA | |
Entity Address, Postal Zip Code | 95054 | |
City Area Code | (408) | |
Local Phone Number | 441-3200 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | false | |
Entity Shell Company | false | |
Entity Central Index Key | 0001840856 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2022 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Class B Common Stock | ||
Document Information | ||
Entity Common Stock, Shares Outstanding | 40,396,600 | |
Class A Common Stock | ||
Document Information | ||
Title of 12(b) Security | Class A Common stock, par value $0.0001 per share | |
Trading Symbol | SOUN | |
Security Exchange Name | NASDAQ | |
Entity Common Stock, Shares Outstanding | 157,517,926 | |
Warrant | ||
Document Information | ||
Title of 12(b) Security | Redeemable Warrants | |
Trading Symbol | SOUNW | |
Security Exchange Name | NASDAQ |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) | Sep. 30, 2022 | Dec. 31, 2021 |
Current assets: | ||
Cash and cash equivalents | $ 33,412,000 | $ 21,626,000 |
Restricted cash equivalents | 0 | 460,000 |
Accounts receivable, net of allowances of $109 as of September 30, 2022 and December 31, 2021 | 2,789,000 | 2,060,000 |
Prepaid expenses | 3,774,000 | 1,276,000 |
Debt issuance cost | 122,000 | 1,132,000 |
Contract assets | 1,407,000 | 54,000 |
Other current assets | 861,000 | 863,000 |
Total current assets | 42,365,000 | 27,471,000 |
Restricted cash equivalents, non-current | 230,000 | 736,000 |
Right-of-use assets | 8,833,000 | 10,291,000 |
Property and equipment, net | 4,146,000 | 6,155,000 |
Deferred tax asset | 2,169,000 | 2,169,000 |
Debt issuance cost | 204,000 | 0 |
Deferred offering costs | 0 | 1,264,000 |
Contract assets, non-current | 4,823,000 | 0 |
Other assets | 1,071,000 | 1,117,000 |
Total assets | 63,841,000 | 49,203,000 |
Current liabilities: | ||
Accounts payable | 2,894,000 | 3,760,000 |
Accrued liabilities | 7,242,000 | 7,298,000 |
Operating lease liabilities | 3,281,000 | 3,281,000 |
Finance lease liabilities | 179,000 | 1,301,000 |
Income tax liability | 2,858,000 | 2,737,000 |
Deferred revenue | 5,312,000 | 6,042,000 |
Convertible note | 0 | 29,868,000 |
Derivative liability | 0 | 3,488,000 |
Notes payable | 16,533,000 | 29,964,000 |
Total current liabilities | 38,299,000 | 87,739,000 |
Operating lease liabilities, net of current portion | 6,236,000 | 8,611,000 |
Financing lease liabilities, net of current portion | 168,000 | 292,000 |
Deferred revenue, net of current portion | 8,874,000 | 14,959,000 |
Notes payable, net of current portion | 22,508,000 | 0 |
Other liabilities | 2,133,000 | 1,336,000 |
Total liabilities | 78,218,000 | 112,937,000 |
Commitments and contingencies (Note 7) | ||
Legacy SoundHound redeemable convertible preferred stock; $0.0001 par value; 0 and 146,218,514 shares authorized; 0 and 106,949,326 shares issued and outstanding, liquidation preference of $0 and $284,826 as of September 30, 2022 and December 31, 2021, respectively | 0 | 279,503,000 |
Stockholders’ deficit: | ||
Common stock issued | 1,000 | |
Additional paid-in capital | 457,025,000 | 43,491,000 |
Accumulated deficit | (471,422,000) | (386,729,000) |
Total stockholders’ deficit | (14,377,000) | (343,237,000) |
Total liabilities, redeemable convertible preferred stock, and stockholders’ deficit | 63,841,000 | 49,203,000 |
Class A Common Stock | ||
Stockholders’ deficit: | ||
Common stock issued | 16,000 | |
Class B Common Stock | ||
Stockholders’ deficit: | ||
Common stock issued | $ 4,000 | $ 0 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parentheticals) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Acconts receivable | $ 109 | $ 109 |
Redeemable convertible preferred stock, par value (in Dollars per share) | $ 0.0001 | $ 0.0001 |
Redeemable convertible preferred stock, shares authorized (in shares) | 0 | 146,218,514 |
Redeemable convertible preferred stock, shares issued (in shares) | 0 | 106,949,326 |
Redeemable convertible preferred stock, shares outstanding (in shares) | 0 | 106,949,326 |
Liquidation preference (in Dollars) | $ 0 | $ 284,826 |
Common stock, par value (in Dollars per share) | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized (in shares) | 250,030,433 | 250,030,433 |
Common stock, shares issued (in shares) | 0 | 68,258,556 |
Common stock, shares outstanding (in shares) | 0 | 68,258,556 |
Class A Common Stock | ||
Common stock, par value (in Dollars per share) | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized (in shares) | 455,000,000 | 0 |
Common stock, shares issued (in shares) | 157,296,065 | 0 |
Common stock, shares outstanding (in shares) | 157,296,065 | 0 |
Class B Common Stock | ||
Common stock, par value (in Dollars per share) | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized (in shares) | 44,000,000 | 44,000,000 |
Common stock, shares issued (in shares) | 40,396,600 | 0 |
Common stock, shares outstanding (in shares) | 40,396,600 | 0 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations and Comprehensive Loss - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Income Statement [Abstract] | ||||
Revenues | $ 11,186 | $ 4,028 | $ 21,628 | $ 16,046 |
Operating expenses: | ||||
Cost of revenues | 2,583 | 1,657 | 6,844 | 4,878 |
Sales and marketing | 6,672 | 1,175 | 13,623 | 3,259 |
Research and development | 19,352 | 14,344 | 54,864 | 42,810 |
General and administrative | 9,587 | 4,022 | 22,952 | 11,387 |
Total operating expenses | 38,194 | 21,198 | 98,283 | 62,334 |
Loss from operations | (27,008) | (17,170) | (76,655) | (46,288) |
Other expense, net: | ||||
Interest expense | (1,166) | (2,683) | (5,715) | (5,725) |
Other income (expense), net | 116 | (2,738) | (718) | (4,280) |
Total other expense, net | (1,050) | (5,421) | (6,433) | (10,005) |
Loss before provision for income taxes | (28,058) | (22,591) | (83,088) | (56,293) |
Provision for income taxes | 864 | 1,190 | 1,605 | 1,400 |
Net loss | (28,922) | (23,781) | (84,693) | (57,693) |
Other comprehensive gain: | ||||
Unrealized holding gain on available-for-sale securities, net of tax | 0 | 0 | 0 | 1 |
Comprehensive loss | $ (28,922) | $ (23,781) | $ (84,693) | $ (57,692) |
Net loss per share: | ||||
Basic (in Dollars per share) | $ (0.15) | $ (0.35) | $ (0.59) | $ (0.86) |
Diluted (in Dollars per share) | $ (0.15) | $ (0.35) | $ (0.59) | $ (0.86) |
Weighted-average common shares outstanding: | ||||
Basic (in shares) | 197,006,980 | 67,718,940 | 143,338,517 | 67,021,176 |
Diluted (in shares) | 197,006,980 | 67,718,940 | 143,338,517 | 67,021,176 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Redeemable Convertible Preferred Stock And Stockholders’ Equity (Deficit) - USD ($) | Total | Previously Reported | Adjustment | Common Stock | Common Stock Previously Reported | Common Stock Adjustment | Additional Paid-in Capital | Additional Paid-in Capital Previously Reported | Additional Paid-in Capital Adjustment | Accumulated Other Comprehensive Loss | Accumulated Other Comprehensive Loss Previously Reported | Accumulated Deficit | Accumulated Deficit Previously Reported | Class A | Class A Common Stock | Class A Common Stock Previously Reported | Class A Additional Paid-in Capital | Class B | Class B Common Stock | Class B Common Stock Previously Reported |
Increase (Decrease) in Temporary Equity | ||||||||||||||||||||
Balance at the beginning | $ 273,687,000 | $ 273,687,000 | ||||||||||||||||||
Balance at the beginning at Dec. 31, 2020 | (276,353,000) | $ (276,353,000) | $ 1,000 | $ 1,000 | $ 30,836,000 | $ 30,836,000 | $ (1,000) | $ (1,000) | $ (307,189,000) | $ (307,189,000) | $ 0 | $ 0 | $ 0 | $ 0 | ||||||
Balance at the beginning (in shares) at Dec. 31, 2020 | 65,667,776 | 11,818,761 | 53,849,015 | 0 | 0 | 0 | 0 | |||||||||||||
Increase (Decrease) in Stockholders' Equity | ||||||||||||||||||||
Issuance of common stock upon exercise of stock options | $ 1,906,000 | 1,906,000 | ||||||||||||||||||
Issuance of common stock upon exercise of stock options (in Shares) | 2,178,412 | 2,178,412 | ||||||||||||||||||
Issuance of common stock warrants | $ 3,842,000 | 3,842,000 | ||||||||||||||||||
Other comprehensive gain, net of tax | 1,000 | 1,000 | ||||||||||||||||||
Stock-based compensation | 4,049,000 | 4,049,000 | ||||||||||||||||||
Net loss | (57,693,000) | (57,693,000) | ||||||||||||||||||
Balance at the end at Sep. 30, 2021 | $ (324,248,000) | $ 1,000 | 40,633,000 | 0 | (364,882,000) | $ 0 | $ 0 | |||||||||||||
Balance at the end (in shares) at Sep. 30, 2021 | 67,846,188 | 0 | 0 | |||||||||||||||||
Balance at the beginning (in Shares) at Dec. 31, 2020 | 106,303,970 | 19,132,387 | 87,171,583 | |||||||||||||||||
Balance at the end at Sep. 30, 2021 | $ 273,687,000 | |||||||||||||||||||
Balance at the ending (in Shares) at Sep. 30, 2021 | 106,303,970 | |||||||||||||||||||
Increase (Decrease) in Temporary Equity | ||||||||||||||||||||
Balance at the beginning | $ 273,687,000 | |||||||||||||||||||
Balance at the beginning at Jun. 30, 2021 | (302,016,000) | $ 1,000 | 39,084,000 | 0 | (341,101,000) | $ 0 | ||||||||||||||
Balance at the beginning (in shares) at Jun. 30, 2021 | 67,633,891 | 0 | 0 | |||||||||||||||||
Increase (Decrease) in Stockholders' Equity | ||||||||||||||||||||
Issuance of common stock upon exercise of stock options | 234,000 | 234,000 | ||||||||||||||||||
Issuance of common stock upon exercise of stock options (in Shares) | 212,297 | |||||||||||||||||||
Stock-based compensation | 1,315,000 | 1,315,000 | ||||||||||||||||||
Net loss | (23,781,000) | (23,781,000) | ||||||||||||||||||
Balance at the end at Sep. 30, 2021 | $ (324,248,000) | $ 1,000 | 40,633,000 | 0 | (364,882,000) | $ 0 | $ 0 | |||||||||||||
Balance at the end (in shares) at Sep. 30, 2021 | 67,846,188 | 0 | 0 | |||||||||||||||||
Balance at the beginning (in Shares) at Jun. 30, 2021 | 106,303,970 | |||||||||||||||||||
Balance at the end at Sep. 30, 2021 | $ 273,687,000 | |||||||||||||||||||
Balance at the ending (in Shares) at Sep. 30, 2021 | 106,303,970 | |||||||||||||||||||
Increase (Decrease) in Temporary Equity | ||||||||||||||||||||
Balance at the beginning | $ 273,687,000 | |||||||||||||||||||
Balance at the beginning | $ 279,503,000 | $ (279,503,000) | ||||||||||||||||||
Balance at the beginning at Dec. 31, 2021 | $ (63,734,000) | $ (343,237,000) | $ 279,503,000 | $ 0 | $ 1,000 | $ (1,000) | 322,995,000 | $ 43,491,000 | $ 279,504,000 | 0 | $ 0 | (386,729,000) | $ (386,729,000) | $ 0 | $ 0 | $ 0 | $ 0 | |||
Balance at the beginning (in shares) at Dec. 31, 2021 | 68,258,556 | 68,258,556 | 12,280,051 | 55,978,505 | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||
Increase (Decrease) in Stockholders' Equity | ||||||||||||||||||||
Issuance of common stock upon exercise of stock options | $ 2,840,000 | 2,840,000 | $ 780,000 | $ 780,000 | ||||||||||||||||
Issuance of common stock upon exercise of stock options (in Shares) | 3,139,565 | 2,582,535 | 557,030 | |||||||||||||||||
Net exercise of outstanding warrants (in Shares) | 673,416 | |||||||||||||||||||
Conversion of convertible note | $ 20,239,000 | 20,239,000 | ||||||||||||||||||
Conversion of convertible note (in Shares) | 2,046,827 | |||||||||||||||||||
Effect of reverse recapitalization, net of costs (in Shares) | (73,561,334) | 140,114,060 | 40,396,600 | |||||||||||||||||
Effect of reverse recapitalization, net of costs (Note 3) | 0 | (18,000) | $ 14,000 | $ 4,000 | ||||||||||||||||
PIPE financing | 86,585,000 | 86,584,000 | $ 1,000 | |||||||||||||||||
PIPE financing (in Shares) | 11,300,000 | |||||||||||||||||||
Issuance of Class A common shares pursuant to the Business Combination | 4,106,000 | 4,105,000 | $ 1,000 | |||||||||||||||||
Issuance of Class A common shares pursuant to the Business Combination (in Shares) | 4,693,050 | |||||||||||||||||||
Issuance of common stock upon release of restricted stock units (in Shares) | 631,925 | |||||||||||||||||||
Stock-based compensation | 19,500,000 | 19,500,000 | ||||||||||||||||||
Net loss | (84,693,000) | (84,693,000) | ||||||||||||||||||
Balance at the end at Sep. 30, 2022 | $ (14,377,000) | $ 0 | 457,025,000 | 0 | (471,422,000) | $ 16,000 | $ 4,000 | |||||||||||||
Balance at the end (in shares) at Sep. 30, 2022 | 0 | 0 | 157,296,065 | 157,296,065 | 40,396,600 | 40,396,600 | ||||||||||||||
Balance at the beginning (in Shares) at Dec. 31, 2021 | 106,949,326 | 19,248,537 | 87,700,789 | |||||||||||||||||
Increase (Decrease) in Temporary Equity | ||||||||||||||||||||
Effect of reverse recapitalization, net of costs (Note 3), ( in Shares) | (106,949,326) | |||||||||||||||||||
Balance at the end at Sep. 30, 2022 | $ 0 | |||||||||||||||||||
Balance at the ending (in Shares) at Sep. 30, 2022 | 0 | |||||||||||||||||||
Increase (Decrease) in Temporary Equity | ||||||||||||||||||||
Balance at the beginning | $ 0 | |||||||||||||||||||
Balance at the beginning at Jun. 30, 2022 | 4,656,000 | $ 0 | 447,136,000 | 0 | (442,500,000) | $ 16,000 | $ 4,000 | |||||||||||||
Balance at the beginning (in shares) at Jun. 30, 2022 | 0 | 156,266,549 | 40,396,600 | |||||||||||||||||
Increase (Decrease) in Stockholders' Equity | ||||||||||||||||||||
Issuance of common stock upon exercise of stock options | 716,000 | $ 716,000 | ||||||||||||||||||
Issuance of common stock upon exercise of stock options (in Shares) | 514,931 | |||||||||||||||||||
Issuance of common stock upon release of restricted stock units (in Shares) | 514,585 | |||||||||||||||||||
Stock-based compensation | 9,173,000 | 9,173,000 | ||||||||||||||||||
Net loss | (28,922,000) | (28,922,000) | ||||||||||||||||||
Balance at the end at Sep. 30, 2022 | $ (14,377,000) | $ 0 | $ 457,025,000 | $ 0 | $ (471,422,000) | $ 16,000 | $ 4,000 | |||||||||||||
Balance at the end (in shares) at Sep. 30, 2022 | 0 | 0 | 157,296,065 | 157,296,065 | 40,396,600 | 40,396,600 | ||||||||||||||
Balance at the beginning (in Shares) at Jun. 30, 2022 | 0 | |||||||||||||||||||
Balance at the end at Sep. 30, 2022 | $ 0 | |||||||||||||||||||
Balance at the ending (in Shares) at Sep. 30, 2022 | 0 | |||||||||||||||||||
Increase (Decrease) in Temporary Equity | ||||||||||||||||||||
Balance at the beginning | $ 0 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows - USD ($) | 9 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | |
Cash flows from operating activities: | ||
Net loss | $ (84,693,000) | $ (57,693,000) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization | 3,197,000 | 4,169,000 |
Stock-based compensation | 19,500,000 | 4,049,000 |
Change in fair value of derivative and warrant liability | 606,000 | 3,791,000 |
Amortization of debt issuance cost | 2,237,000 | 2,953,000 |
Non-cash lease amortization | 2,168,000 | 2,412,000 |
Deferred income taxes | 0 | 1,035,000 |
Changes in operating assets and liabilities: | ||
Accounts receivable, net | (729,000) | (2,061,000) |
Prepaid expenses | (2,498,000) | (75,000) |
Other current assets | 2,000 | (552,000) |
Contract assets | (6,176,000) | 0 |
Other assets | 46,000 | (222,000) |
Accounts payable | 398,000 | (32,000) |
Accrued liabilities | 1,440,000 | 1,724,000 |
Operating lease liabilities | (3,085,000) | (2,710,000) |
Deferred revenue | (6,815,000) | (7,138,000) |
Other liabilities | 797,000 | (747,000) |
Net cash used in operating activities | (73,605,000) | (51,097,000) |
Cash flows from investing activities: | ||
Purchases of property and equipment | (1,188,000) | (234,000) |
Net cash used in investing activities | (1,188,000) | (234,000) |
Cash flows from financing activities: | ||
Proceeds from issuance of convertible notes, net of issuance cost | 0 | 5,044,000 |
Proceeds from note payable, net of issuance cost | 0 | 29,833,000 |
Proceeds from the issuance of common stock upon exercise of options | 3,620,000 | 1,906,000 |
Proceeds from Business Combination and PIPE, net of transaction costs | 90,689,000 | 0 |
Payments on notes payable | (7,450,000) | 0 |
Payments on finance leases | (1,246,000) | (1,885,000) |
Net cash provided by financing activities | 85,613,000 | 34,898,000 |
Net change in cash, cash equivalents, and restricted cash equivalents | 10,820,000 | (16,433,000) |
Cash, cash equivalents, and restricted cash equivalents, beginning of period | 22,822,000 | 44,982,000 |
Cash, cash equivalents, and restricted cash equivalents, end of period | 33,642,000 | 28,549,000 |
Reconciliation to amounts on the condensed consolidated balance sheets: | ||
Cash and cash equivalents | 33,412,000 | 27,259,000 |
Current portion of restricted cash equivalents | 0 | 230,000 |
Non-current portion of restricted cash equivalents | 230,000 | 1,060,000 |
Supplemental disclosures of cash flow information: | ||
Cash paid for interest | 2,302,000 | 1,475,000 |
Cash paid for income taxes | 787,000 | 260,000 |
Noncash investing and financing activities | ||
Operating lease liabilities and right-of-use assets through adoption of ASC 842 | 0 | 11,428,000 |
Conversion of convertible note into common stock pursuant to Business Combination | 20,239,000 | 0 |
Conversion of redeemable convertible preferred stock to common stock pursuant to Business Combination | 279,503,000 | 0 |
Debt discount through issuance of common stock warrants | 0 | 3,842,000 |
Operating lease liabilities arising from obtaining right-of-use assets | 650,000 | 3,422,000 |
Property and equipment acquired under finance leases or debt | $ 0 | $ 650,000 |
Organization
Organization | 9 Months Ended |
Sep. 30, 2022 | |
Accounting Policies [Abstract] | |
ORGANIZATION | ORGANIZATION Nature of Operations SoundHound AI, Inc. (“SoundHound” or the “Company”) turns sound into understanding and actionable meaning. SoundHound’s technology applications enable humans to interact with the things around them in the same way they interact with each other: by speaking naturally to mobile phones, cars, televisions, music speakers, coffee machines, and every other part of the emerging “connected” world. The conversation voice AI platform is called “Houndify”, where product creators can develop their own voice interfaces with their customers. Hound is primarily used as a prototyping tool to demonstrate what Houndify can deliver. Products and services built on the Houndify platform are referred to as Houndified Products and Houndified Services. The SoundHound music app allows customers to identify and play songs by singing or humming into the smartphone’s microphone, or by identifying the sound playing in the background from external sources. On April 26, 2022 (the “Closing Date”), pursuant to a merger agreement dated as of November 15, 2021 by and among Archimedes Tech SPAC Partners Co. (“ATSP”), ATSPC Merger Sub, Inc. and SoundHound, Inc. (“Legacy SoundHound”), the parties consummated the merger of ATSPC Merger Sub, Inc. with and into Legacy SoundHound, with Legacy SoundHound continuing as the surviving corporation (the “Merger”), as well as the other transactions contemplated by the Merger Agreement (the Merger and such other transactions, the “Business Combination”). In connection with the closing (the “Closing”) of the Business Combination, Legacy SoundHound became a wholly owned subsidiary of ATSP and ATSP changed its name to SoundHound AI, Inc., and all of Legacy SoundHound common stock (“Legacy SoundHound Common Stock”) and Legacy SoundHound redeemable convertible preferred stock (“Legacy SoundHound Preferred Stock”) automatically converted into shares of the Company’s Class A common stock, par value of $0.0001 per share (the “Class A Common Stock”), and the Company’s Class B common stock, par value of $0.0001 per share (the “Class B Common Stock”, and collectively with the Class A Common Stock, the “common stock”). The Company’s Class A Common Stock and warrants commenced trading on the Nasdaq Global Market (“Nasdaq”) under the symbols “SOUN” and “SOUNW,” respectively, on April 28, 2022. Refer to Note 3 to these condensed consolidated financial statements for more information on the Business Combination. Legacy SoundHound determined that it was the accounting acquirer in the Business Combination based on an analysis of the criteria outlined in Accounting Standards Codification 805, Business Combinations . The determination was primarily based on the following facts: • Former Legacy SoundHound stockholders have a controlling voting interest in the Company; • The Company’s board of directors immediately after the closing of the Business Combination was comprised of five board members, primarily from the board of directors of Legacy SoundHound; and • Legacy SoundHound’s management continues to hold executive management roles for the Company following the Business Combination and are responsible for the day-to-day operations. Accordingly, for accounting purposes, the Business Combination was treated as the equivalent of Legacy SoundHound issuing stock for the net assets of ATSP, accompanied by a reverse recapitalization. The primary asset acquired from ATSP was related to the cash amounts that were assumed. Separately, the Company also assumed warrants that were deemed to be equity upon Closing of the Business Combination. No goodwill or other intangible assets were recorded as a result of the Business Combination. While ATSP was the legal acquirer in the Business Combination, because Legacy SoundHound was deemed the accounting acquirer, the historical financial statements of Legacy SoundHound became the historical financial statements of the combined company upon the consummation of the Business Combination. As a result, the financial statements included in this report reflect (i) the historical operating results of Legacy SoundHound prior to the Business Combination; (ii) the combined results of the Company and Legacy SoundHound following the Closing of the Business Combination; (iii) the assets and liabilities of Legacy SoundHound at their historical cost; and (iv) the Company’s equity structure for all periods presented. In accordance with guidance applicable to these circumstances, the equity structure has been retroactively restated in all comparative periods up to the Closing Date, to reflect the number of shares of the Company’s Class A Common Stock and Class B Common Stock issued to Legacy SoundHound Common Stockholders and Legacy SoundHound Preferred Stockholders in connection with the Business Combination. As such, the shares and corresponding capital amounts and earnings per share related to Legacy SoundHound Preferred Stock and Legacy SoundHound Common Stock prior to the Business Combination have been retroactively restated as shares reflecting the conversion ratio established in the Business Combination. Going Concern Since inception, the Company has generated recurring losses as well as negative operating cash flows and reported a net loss of $28.9 million and $84.7 million for the three and nine months ended September 30, 2022, respectively. As of September 30, 2022, the Company had an accumulated deficit of $471.4 million. Management expects to continue to incur additional substantial losses in the foreseeable future primarily as a result of research and development activities. The Company has historically funded its operations primarily through equity or debt financings. Total cash and cash equivalents on hand as of September 30, 2022 was $33.4 million. Although the Company has incurred recurring losses each year since its inception, the Company expects it will be able to fund its operations for at least the next twelve months. The Company may seek additional funding through debt or equity financing arrangements (e.g., Equity Line of Credit ("ELOC") (see Note 19)), implement incremental expense reduction measures or a combination thereof to continue financing its operations. Although management continues to pursue these plans, there is no assurance that the Company will be successful in obtaining sufficient funding on terms acceptable to the Company to fund continuing operations, if at all. The Company's condensed consolidated financial statements have been prepared assuming the Company 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. The condensed consolidated financial statements do not include adjustments to reflect the possible future effects on the recoverability and classification of recorded assets or the amounts of liabilities that might be necessary should the Company be unable to continue as a going concern. Other Risk and Uncertainties The COVID-19 outbreak in the United States has caused business disruption through mandated and voluntary closings of businesses and shelter in place orders. In response, the U.S. Government enacted the CARES Act, which includes significant provisions to provide relief and assistance to affected organizations. There is considerable uncertainty around potential future closings, shelter in place orders, containment of the recent COVID-19 variants and the ultimate impact of the CARES Act and other government initiatives. The COVID-19 pandemic and its resulting economic and other effects could result in significant adverse effects on our customers’ cash flow and their ability to manufacture, distribute, and sell products incorporating our voice-enabling technologies. This in turn may restrict the ability of our customers to pay invoices for royalties, licensing fees and usage fees, or may result in a reduction in the royalties, licensing fees and usage fees that the Company earns which are often based on the number of units sold or distributed by customers. This reduction could cause adverse effects on the business, results of operations, financial condition, cash flows and ability to raise operating capital. In addition, economic effects resulting from the COVID-19 pandemic may adversely change consumer behavior and demand, including products sold by customers, which may result in a significant reduction in our revenue and adversely impact results of operations and financial condition. The COVID-19 pandemic has adversely affected our business and results of operations to date, and the duration and extent to which this will impact our future results remains uncertain. Further, inflation has risen significantly worldwide and the United States has recently experienced historically high levels of inflation. This inflation and government efforts to combat inflation, such as recent and future significant increases to benchmark interest rates and other related monetary policies, have and could continue to increase market volatility and have an adverse effect on the domestic and international financial markets and general economic conditions. Additionally, U.S. and global markets are experiencing volatility and disruption following the escalation of geopolitical tensions and the start of the military conflict between Russia and Ukraine. On February 24, 2022, a full-scale military invasion of Ukraine by Russian troops was reported. Although the length and impact of the ongoing military conflict is highly unpredictable, the conflict in Ukraine could lead to market disruptions, including significant volatility in commodity prices, credit and capital markets, as well as supply chain interruptions. We are continuing to monitor the situation in Ukraine and globally and assessing its potential impact on our business. The recent military conflict in Ukraine has led to sanctions and other penalties being levied by the United States, European Union and other countries against Russia. Additional potential sanctions and penalties have also been proposed and/or threatened. Russian military actions and the resulting sanctions could adversely affect the global economy and financial markets and lead to instability and lack of liquidity in capital markets, potentially making it more difficult for us to obtain additional funds. Although our business has not been materially impacted by the ongoing military conflict between Russian and Ukraine to date, it is impossible to predict the extent to which our operations, or those of our customers’ suppliers and manufacturers, will be impacted in the short and long-term, or the ways in which the conflict may impact our business. The extent and duration of the military action, sanctions and resulting market disruptions are impossible to predict but could be substantial. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2022 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation and Significant Accounting Policies The (a) condensed consolidated balance sheet as of December 31, 2021, which has been derived from audited financial statements as filed in the Company’s Form 8-K, which was originally filed with the SEC on May 2, 2022 and amended by Amendment No. 1 to Current Report on Form 8-K, and (b) the unaudited interim condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (“SEC”) regarding annual financial reporting. Any reference in these notes to applicable accounting guidance is meant to refer to the authoritative U.S. GAAP included in the Accounting Standards Codification (“ASC”), and Accounting Standards Update (“ASU”) issued by the Financial Accounting Standards Board (“FASB”). The condensed consolidated financial statements have been prepared on a basis consistent with the audited consolidated financial statements and in the opinion of management, all adjustments, consisting of normal recurring adjustments, considered necessary for a fair presentation of the financial statements have been included. The results of operations for the three and nine months ended September 30, 2022 are not necessarily indicative of the results for the fiscal year ending December 31, 2022 or any future interim period. Certain information and note disclosures normally included in annual financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to those rules and regulations, although the company believes that the disclosures made are adequate to make the information not misleading. Principles of Consolidation The Company’s condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. We consolidate any variable interest entity (“VIE”) where we have determined we are the primary beneficiary. The primary beneficiary is the entity which has both: (i) the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance; and (ii) the obligation to absorb losses or receive benefits of the entity that could potentially be significant to the VIE. Reclassification Certain prior period balances have been reclassified to conform to the current year presentation. Such changes include reclassifications or combinations of certain accounts on the condensed consolidated balance sheets. These reclassifications had no impact on total assets, total liabilities, net loss or comprehensive loss or accumulated deficit in the previously reported consolidated financial statements for the year ended December 31, 2021. Foreign Currency The functional currency of the Company and its subsidiaries is the U.S. dollar. Foreign currency denominated transactions are converted into U.S. dollars at the average rates of exchange prevailing during the period. Assets and liabilities denominated in foreign currency are remeasured into U.S. dollars at current exchange rates at the balance sheet date for monetary assets and liabilities and at historical exchange rates for non-monetary assets and liabilities. During the three and nine months ended September 30, 2022, the Company recognized net losses related to foreign currency transactions and remeasurements of $0.1 million and $0.4 million, respectively, in the condensed consolidated statements of operations and comprehensive loss as other income (expense), net. During the three and nine months ended September 30, 2021, the Company recognized net losses related to foreign currency transactions and remeasurements of $0.3 million and $0.5 million, respectively, in the condensed consolidated statements of operations and comprehensive loss as other income (expense), net. Use of Estimates The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and judgments that affect the amounts reported and disclosures in the condensed consolidated financial statements and accompanying notes. Such estimates include revenue recognition, allowance for doubtful accounts, accrued liabilities, derivative and warrant liabilities, calculation of the incremental borrowing rate, financial instruments recorded at fair value on a recurring basis, valuation of deferred tax assets and uncertain tax positions and the fair value of common stock and other assumptions used to measure stock-based compensation expense. The Company bases its estimates on historical experience, the current economic environment and on assumptions it believes are reasonable under the circumstances. The Company adjusts such estimates and assumptions when facts and circumstances dictate. Changes in those estimates resulting from changes in the economic environment will be reflected in the financial statements in future periods. Actual results could differ materially from those estimates. Segment Information The Company has determined that the Chief Executive Officer is its chief operating decision maker. The Company’s Chief Executive Officer reviews financial information on a consolidated basis for purposes of allocating resources and evaluating financial performance. Accordingly, the Company has determined that it operates as a single reportable segment. Emerging Growth Company Status The Company is an emerging growth company (“EGC”) as defined in the Jumpstart Our Business Startups Act of 2012 (“JOBS Act”) and may take advantage of reduced reporting requirements that are otherwise applicable to public companies. Section 107 of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies are required to comply with those standards. This means that when a standard is issued or revised and it has different application dates for public and nonpublic companies, the Company has the option to adopt the new or revised standard at the time nonpublic companies adopt the new or revised standard and can do so until such time that the Company either (i) irrevocably elects to “opt out” of such extended transition period or (ii) no longer qualifies as an emerging growth company. The Company has elected to use the extended transition period for complying with new or revised accounting standards unless the Company otherwise early adopts select standards. Concentrations of Credit Risk and Other Risks and Uncertainties Financial instruments that potentially subject the Company to significant concentrations of credit risk consist principally of cash and cash equivalents. The Company regularly monitors its credit risk exposure and takes steps to mitigate the likelihood of these exposures resulting in actual loss. As of September 30, 2022, accounts receivable balances due from two customers collectively totaled 65% of the Company’s condensed consolidated accounts receivable balance. As of December 31, 2021, accounts receivable balances due from five customers collectively totaled 86% of the Company’s condensed consolidated accounts receivable balance. For the nine months ended September 30, 2022, the Company had four customers that accounted for 77% of revenue, and for the nine months ended September 30, 2021, the Company had two customers that accounted for 57% of revenue. For the three months ended September 30, 2022, the Company had one customer that accounted for 63% of revenue, and for the three months ended September 30, 2021, the Company had three customers that accounted for 50% of revenue. Equity Issuance Costs The Company capitalizes certain legal, professional, accounting and other third-party fees that are directly associated with in-process equity financings as deferred offering costs until such financings are consummated. After consummation of the financing, these costs are recorded as a reduction of the proceeds received from the equity financing. On April 26, 2022, upon closing of the Business Combination, the Company offset equity proceeds by $4.1 million of deferred offering costs. Revenue Recognition The Company recognizes revenue under Accounting Standards Codification Topic 606 (“ASC 606”), Revenue from Contracts with Customers, when a customer obtains control of promised goods or services in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services. To determine revenue recognition for arrangements that an entity determines are within the scope of ASC 606, the Company performs the following five steps: (i) Identification of the contract(s) with a customer; (ii) Identification of the performance obligations in the contract; (iii) Determination of the transaction price, including the constraint on variable consideration; (iv) Allocation of the transaction price to the performance obligations in the contract; and (v) Recognition of revenue when, or as, performance obligations are satisfied. Contracts are accounted for when both parties have approved and committed to the contract, the rights of the parties and payment terms are identifiable, the contract has commercial substance and collectability of consideration is probable. Any payments received from customers that do not meet criteria for having a contract are recorded as deposit liabilities on the condensed consolidated balance sheet. Under ASC 606, assuming all other revenue recognition criteria have been met, the Company recognizes revenue for arrangements upon the transfer of control of the Company’s performance obligations to its customers. A performance obligation is a promise in a contract to transfer a distinct good or service to a customer and is the unit of account in ASC 606. The Company currently generates its revenues through the following performance obligations: (1) hosted services, (2) professional services, (3) monetization and (4) licensing. Research and Development The Company’s research and development costs are expensed as incurred. These costs include salaries and other personnel related expenses, contractor fees, facility costs, supplies and depreciation of equipment associated with the design and development of new products prior to the establishment of their technological feasibility. Warrants The Company determines whether to classify contracts, such as warrants, that may be settled in its own stock as equity of the entity or as a liability. An equity-linked financial instrument must be considered indexed to the Company’s own stock to qualify for equity classification. The Company classifies warrants as liabilities for any contracts that may require a transfer of assets. Warrants classified as liabilities are accounted for at fair value and remeasured at each reporting date until exercise, expiration or modification that results in equity classification. Any change in the fair value of the warrants is recognized as other income (expense), net in the condensed consolidated statements of operations and comprehensive loss. Income Taxes The Company accounts for income taxes under the asset and liability method, whereby deferred tax assets and liabilities are determined based on the difference between the financial statement and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to affect taxable income. A valuation allowance is established when, in management’s estimate, it is more-likely-than-not that the deferred tax asset will not be realized. The Company adopted a more-likely-than-not threshold for financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. The Company records a liability for the difference between the benefit recognized and measured and the tax position taken or expected to be taken on the Company’s tax return. The Company classifies interest and penalties related to uncertain tax positions in income tax expense, if applicable. There has been no interest expense or penalties related to unrecognized tax benefits recorded through September 30, 2022. Stock-Based Compensation The Company measures and records the expense related to stock-based payment awards based on the fair value of those awards as determined on the date of grant. The Company recognizes stock-based compensation expense over the requisite service period of the individual grant, generally equal to the vesting period, and uses the straight-line method to recognize stock-based compensation. The Company accounts for forfeitures as they occur. The Company uses the Black-Scholes option-pricing model to determine the fair value of stock options. The Black-Scholes option-pricing model requires the use of highly subjective and complex assumptions to determine the fair value of stock options, including the option’s expected term and the price volatility of the underlying stock. The Company calculates the fair value of options granted by using the Black-Scholes option-pricing model with the following assumptions: Expected Volatility — The Company estimates volatility for option grants by evaluating the average historical volatility of a peer group of companies for the period immediately preceding the option grant for a term that is approximately equal to the option’s expected term. Expected Term — The expected term of the Company’s options represents the period that the stock-based awards are expected to be outstanding. The Company has elected to use the midpoint between the stock options’ vesting term and contractual expiration period to compute the expected term, as the Company does not have sufficient historical information to develop reasonable expectations about future exercise patterns and post-vesting employment termination behavior. Risk-Free Interest Rate — The risk-free interest rate is based on the implied yield currently available on U.S. Treasury zero-coupon issues with a term that is equal to the options’ expected term at the grant date. Expected Dividend Yield — The Company has not declared or paid dividends to date and does not anticipate declaring dividends. As such, expected dividend yield is zero. Restricted Stock Units The Company issues restricted stock unit awards (“RSUs”) to grantees as compensation for services. The fair value of the RSUs is determined at the grant date based on the fair value of the Company’s Class A Common Stock and for RSUs with service conditions only, is recognized straight-line over the service period. The Company issues RSUs with vesting conditions tied to certain performance criteria (“Performance-Based RSUs”). Stock-based compensation related to Performance-Based RSUs is recognized to the extent it is determined that performance is probable of being achieved. The Company issues RSUs with vesting conditions tied to certain market conditions (“Market-Based RSUs”). To derive the fair value of Market-Based RSUs, the Company applies a Monte Carlo simulation to determine the grant date fair value. Stock-based compensation related to Market-Based RSUs is recognized over the derived service period. Fair Value Measurements The Company defines fair value as the exchange price that would be received from an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the measurement date. The Company follows a three-level valuation hierarchy for disclosure of fair value measurements as follows: • Level 1 — Inputs are unadjusted quoted prices in active markets for identical assets or liabilities at the measurement date. • Level 2 — Inputs (other than quoted market prices included in Level 1) are either directly or indirectly observable for the asset or liability through correlation with market data at the measurement date and for the duration of the instrument’s anticipated life. • Level 3 — Inputs reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date. Consideration is given to the risk inherent in the valuation technique and the risk inherent in the inputs to the model. The Company’s derivative liabilities and warrants are measured at fair value on a recurring basis and are classified as Level 3 liabilities. The Company records subsequent adjustments to reflect the increase or decrease in estimated fair value at each reporting date on the condensed consolidated statements of operations and comprehensive loss. Redeemable Convertible Preferred Stock Legacy SoundHound Preferred Stock did not have a mandatory redemption date. The Company presents as temporary equity any stock which (i) the Company undertakes to redeem at a fixed or determinable price on the fixed or determinable date or dates; (ii) is redeemable at the option of the holders, or (iii) has conditions for redemption which are not solely within the control of the Company. Legacy SoundHound Preferred Stock was redeemable upon a deemed liquidation event which the Company determined was not solely within its control and thus has classified shares of Legacy SoundHound Preferred Stock as temporary equity until such time as the conditions are removed or lapse. Since the occurrence of a deemed liquidation event was not probable, the carrying values of the shares of Legacy SoundHound Preferred Stock were not being accreted to their redemption values. As a result of the Business Combination, the shares of Legacy SoundHound Preferred Stock outstanding immediately prior to the effective time of the Business Combination (the “Effective Time”) were converted into 106,949,326 shares of the Company’s Class A Common Stock. Refer to Note 11 for further information. Convertible Notes and Derivative Liabilities The Company evaluates its convertible notes, and other contracts, if any, to determine if those contracts or embedded components of those contracts qualify as derivatives requiring bifurcation. The Company accounts for conversion features that meet the criteria for bifurcation as liabilities at fair value and adjusts the derivative instruments to fair value at each reporting period. The conversion features qualify as derivatives, as they continuously reset as the underlying stock price increases or decreases to provide a fixed value of equity to the holders at any conversion date. The conversion features are subject to remeasurement at each balance sheet date until exercised, and any change in fair value is recognized as a component of other income (expense), net in the condensed consolidated statements of operations and comprehensive loss. The fair value of the conversion features has been estimated using a probability-weighted discount model with and without the conversion feature until extinguished on April 26, 2022 in connection with the Business Combination See Note 10 for additional information. The Company held its convertible notes at amortized cost and amortized the associated debt discount created from bifurcated derivatives and issuance costs under the effective interest or straight-line method until maturity or early conversion pursuant to the contractual terms of the arrangement. Net Loss Per Share Basic net loss per share attributable to common stockholders is calculated by dividing the net loss attributable to common stockholders by the weighted-average number of shares of common stock outstanding during the period, without consideration for potentially dilutive securities. Diluted net loss per share attributable to common stockholders is computed by dividing the net loss attributable to common stockholders by the weighted-average number of common stock and potentially dilutive securities outstanding for the period. For purposes of the diluted net loss per share calculation, Preferred Stock, stock options, RSUs, warrants and convertible notes are considered to be potentially dilutive securities. See Note 16 for further information. Accordingly, in periods in which the Company reports a net loss, diluted net loss per share is the same as basic net loss per share, since dilutive common stock is not assumed to have been issued if their effect is anti-dilutive. Recent Accounting Pronouncement — Adopted From time to time, new accounting pronouncements, or Accounting Standards Updates, are issued by the FASB or other standard setting bodies and adopted by the Company as of the specified effective date. Unless otherwise discussed, the impact of recently issued standards that are not yet effective will not have a material impact on the Company’s financial position or results of operations upon adoption. During the nine months ended September 30, 2022, no additional accounting pronouncements were adopted. Refer to Note 2 of our audited consolidated financial statements for the fiscal year ended December 31, 2021 contained within the Company’s Form S-1/A filed July 13, 2022 for a complete list of adopted accounting pronouncements. We have described the key accounted pronouncements below: In February 2016, FASB issued Accounting Standards Update (ASU) 2016-02, Leases (Topic 842) and subsequent amendments to the initial guidance: ASU 2017-13, ASU 2018-10, ASU 2018-11, ASU 2018-20 and ASU 2019-01 (collectively, Topic 842). Topic 842 aims to increase transparency and comparability among organizations by requiring lessees to recognize leases with a term greater than 12 months as a right-of-use (“ROU”) asset and corresponding lease liabilities on the balance sheet, regardless of lease classification, and requiring disclosure of key information about leasing arrangements. The lease liability should be initially measured at the present value of the remaining contractual lease payments. Subsequently, the ROU assets will be amortized generally on a straight-line basis over the lease term, and the lease liability will bear interest expense and be reduced for lease payments. The Company adopted Topic 842 on January 1, 2021 using the modified retrospective approach, and financial information for the comparative period was not updated. In addition, the Company elected the transition package of three practical expedients which allow companies not to reassess (i) whether agreements contain leases, (ii) the classification of leases, and (iii) the capitalization of initial direct costs. Further, the Company elected to separate lease and non-lease components for the building asset class and elected to not separate lease and non-lease components for the equipment asset class. The Company also made an accounting policy election to recognize lease expense for leases with a term of 12 months or less on a straight-line basis over the lease term and recognize no ROU or lease liability for those leases. The Company’s lease portfolio consists primarily of real estate assets and computer equipment. Some of these leases also require the Company to pay maintenance, utilities, taxes, insurance, and other operating expenses associated with the leased space. Based upon the nature of the items leased and the structure of the leases, the Company’s leases classified as operating leases continue to be classified as operating leases and capital leases will be accounted for as financing leases under the new accounting standard. As a result of the adoption of the new lease accounting guidance, the Company recognized on January 1, 2021: • Operating lease liabilities of approximately $11.4 million, which represent the present value of the remaining lease payments, as of the date of adoption, discounted using the Company’s incremental borrowing rate on a lease-by-lease basis, and • Operating lease ROU assets of approximately $9.8 million which represent the operating lease liabilities of $11.4 million, adjusted for (1) deferred rent of approximately $0.8 million, (2) lease incentives or tenant improvement allowance of $1.1 million and (3) prepaid rent of $0.3 million. The adoption of the new lease accounting standard did not have any other material impact on the Company’s consolidated balance sheet and did not impact the Company’s operating results and cash flows. When the Company’s leases do not provide an implicit rate, an incremental borrowing rate is used based on the information available at the adoption date and commencement date for leases entered into after the adoption date in determining the present value of lease payments. The Company applies a benchmark rate and adjusts it for Company specific risk, collateral, term of the lease and economic factors for the economy in which the lease was maintained. See Leases in Note 14 for further information. In December 2019, the FASB issued ASU No. 2019-12, Simplifying the Accounting for Income Taxes (“Topic 740”) (“ASU 2019-12”). ASU 2019-12 eliminates the need for an organization to analyze whether the following apply in a given period (1) exception to the incremental approach for intra-period tax allocation (2) exceptions to accounting for basis differences when there are ownership changes in foreign investments and (3) exceptions in interim period income tax accounting for year-to-date losses that exceed anticipated losses. ASU 2019-12 also is designed to improve financial statement preparers’ application of income tax-related guidance and simplify U.S. GAAP for (1) franchise taxes that are partially based on income, (2) transactions with a government that result in a step-up in the tax basis of goodwill, (3) separate financial statements of legal entities that are not subject to tax, and (4) enacted changes in tax laws in interim periods. The Company adopted the standard on January 1, 2022. ASU 2019-12 did not result in any material impact on the Company’s condensed consolidated financial statements. Recent Accounting Pronouncement — Not Yet Adopted In October 2021, the FASB issued ASU 2021-08 Business Combinations (“ASC 805”) Accounting for Contract Assets and Contract Liabilities from Contracts with Customers guidance requiring entities to apply ASC 606 to recognize and measure contract assets and contract liabilities in a business combination. Under current U.S. GAAP, an acquirer generally recognizes assets acquired and liabilities assumed in a business combination, including contract assets and contract liabilities arising from revenue contracts with customers and other similar contracts that are accounted for in accordance with ASC 606, at fair value on the acquisition date. Under the new guidance the acquirer will recognize contract assets and contract liabilities at the same amounts recorded by the acquiree. The modifications improve comparability for both the recognition and measurement of acquired revenue contracts with customers at the date of, and after a business combination. The amendment is effective for the Company in fiscal years beginning after December 15, 2023. Early adoption of the amendment is permitted. The Company anticipates that it will not have a material impact on its condensed consolidated financial statements and related disclosures. In June 2016, the FASB issued ASU 2016-13 to update the methodology used to measure current expected credit losses (“CECL”). This ASU applies to financial assets measured at amortized cost, including loans, held-to-maturity debt securities, net investments in leases, and trade accounts receivable as well as certain off-balance sheet credit exposures, such as loan commitments. This ASU replaces the current incurred loss impairment methodology with a methodology to reflect CECL and requires consideration of a broader range of reasonable and supportable information to explain credit loss estimates. The guidance must be adopted using a modified retrospective transition method through a cumulative-effect adjustment to retained earnings/(deficit) in the period of adoption. In November 2019, the FASB issued ASU 2019-10, Financial Instruments — Credit Losses (“Topic 326”), Targeted Transition Relief, which amends the transition guidance for ASU 2016-13. The ASU provides entities with the option to irrevocably elect the fair value option in Subtopic 825-10 on an instrument-by-instrument basis. ASU 2019-10 and ASU 2016-13 are effective for years beginning after December 15, 2022, with early adoption permitted. The Company anticipates that it will not have a material impact on its condensed consolidated financial statements and related disclosures. |
Business Combination
Business Combination | 9 Months Ended |
Sep. 30, 2022 | |
Reverse Recapitalization [Abstract] | |
BUSINESS COMBINATION | 3. BUSINESS COMBINATION As discussed in Note 1, on April 26, 2022, the Business Combination was consummated. Pursuant to the Company’s certificate of incorporation, the Company is authorized to issue 500,000,000 shares of capital stock consisting of 455,000,000 shares of Class A Common Stock, 44,000,000 shares of Class B Common Stock, and 1,000,000 shares of preferred stock. All stock has a par value of $0.0001 per share. The holders of Class A Common Stock are entitled to one vote for each share of Class A Common Stock held. The holders of Class B Common Stock are entitled to ten votes per share on all matters submitted to stockholders for their vote or approval. No shares of preferred stock were issued and outstanding as of September 30, 2022. The Business Combination was approved by ATSP’s stockholders at a special meeting thereof (the “Special Meeting”), held in lieu of the 2022 annual meeting of the Company’s stockholders. The Business Combination fulfilled the definition of an “initial business combination” as required by the ATSP’s Amended and Restated Certificate of Incorporation. This fulfillment resulted in ATSP ceasing to be a shell company upon the Closing. An aggregate of 12,767,950 shares of Class A Common Stock sold in ATSP’s initial public offering (the “public shares”) exercised their rights to redemption. The redemption right provided holders the right to have their shares redeemed for a pro rata portion of the trust account holding the proceeds from ATSP’s initial public offering. The value of the shares is calculated as of two (2) business days prior to the date of the Special Meeting, which was $10.00 per share, or $127.7 million in the aggregate. As a result of the Business Combination, among other things (1) all outstanding shares of Legacy SoundHound Common Stock as of immediately prior to the Closing (including Legacy SoundHound Common Stock resulting from the Legacy SoundHound Preferred Stock Conversion), were exchanged at an conversion ratio of 5.5562 (the “Conversion Ratio”) for an aggregate of 140,114,060 shares of Class A Common Stock and 40,396,600 Class B Common Stock; (2) each outstanding warrant to purchase shares of Legacy SoundHound Common Stock automatically converted into a warrant to purchase, subject to substantially the same terms and conditions as were applicable under these warrants prior to the Effective Time, shares of Class A Common Stock, proportionately adjusted for the Conversion Ratio, with the per share exercise price equal to the exercise price prior to the Effective Time divided by the Conversion Ratio and were net exercised upon the Closing; (3) each outstanding option to purchase shares of Legacy SoundHound Common Stock converted into an option to purchase, subject to substantially the same terms and conditions as were applicable under these options prior to the Effective Time, shares of Class A Common Stock equal to the number of shares subject to such option prior to the Effective Time multiplied by the Conversion Ratio, with the per share exercise price equal to the exercise price prior to the Effective Time divided by the Conversion Ratio; (4) each Legacy SoundHound RSU converted into a restricted stock unit of SoundHound, subject to substantially the same terms and conditions as were applicable under the SoundHound RSU prior to the Closing. SoundHound RSU holders received the same consideration holders would have received if the SoundHound RSU was converted into Legacy SoundHound Common Stock immediately prior to the Effective Time. In connection with the Merger Agreement, ATSP entered into subscription agreements (collectively, the “Subscription Agreements”) with certain accredited investors (the “Subscribers”). Pursuant to the Subscription Agreements, the Subscribers agreed to purchase, and ATSP agreed to sell to the Subscribers, an aggregate of 11,300,000 shares of Class A Common Stock (“PIPE Shares”), for a purchase price of $10.00 per share and an aggregate purchase price of $113.0 million (the “PIPE Investment”). The PIPE shares are identical to the shares of Class A Common Stock that were held by the ATSP’s public stockholders at the time of the Closing, except that the PIPE Shares were not entitled to any redemption rights. The sale of PIPE Shares was consummated concurrently with the Closing. The Business Combination is accounted for as a reverse recapitalization in accordance with U.S. GAAP. Under this method of accounting, ATSP was treated as the “acquired” company for financial reporting purposes (See Note 1). The net assets of Legacy SoundHound were stated at historical cost, with no goodwill or other intangible assets recorded. In accounting for the Business Combination and after redemptions, net proceeds received by the Company totaled $90.7 million. The table below shows the total net proceeds from the Business Combination and the PIPE Investment (in thousands): Cash - ATSP trust and cash (net of redemption) $ 5,357 Cash - PIPE Investment 113,000 Less: transaction costs (27,668) Net proceeds from Business Combination and PIPE Investment $ 90,689 Relating to the consummation of the Business Combination, the Company incurred $27.7 million in total transaction costs consisting of direct legal, accounting and other fees. $4.1 million of Legacy SoundHound transaction costs specific and directly attributable to the Business Combination were initially capitalized as deferred offering costs on the condensed consolidated balance sheets. Total transaction expenses were recorded as an offset against proceeds received on the closing of the Business Combination, accounted for as additional paid-in capital. The amount recorded to additional paid-in-capital was comprised of $86.6 million net proceeds from the PIPE investment and $4.1 million after net redemptions of ATSP shareholders. The number of shares of common stock issued immediately following the consummation of the Business Combination was as follows: Class A Common Stock - conversion of Legacy SoundHound Common Stock and Legacy SoundHound Preferred Stock outstanding prior to Business Combination 140,114,060 Class B Common Stock - conversion of Legacy SoundHound Common Stock and Legacy SoundHound Preferred Stock outstanding prior to Business Combination 40,396,600 Class A Common Stock - PIPE Investment 11,300,000 Class A Common Stock - issuance to ATSP shareholders 532,050 Class A Common Stock - issuance to Legacy SoundHound founders and representatives 4,161,000 Total shares of common stock immediately after Business Combination 196,503,710 |
Revenue Recognition
Revenue Recognition | 9 Months Ended |
Sep. 30, 2022 | |
Revenue from Contract with Customer [Abstract] | |
REVENUE RECOGNITION | REVENUE RECOGNITION Revenue Recognition The Company recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Revenues are generally recognized upon the transfer of control of promised products or services provided to customers, reflecting the amount of consideration the Company expects to receive for those products or services. The Company enters into contracts that can include various products or services, which are generally capable of being distinct and accounted for as separate performance obligations. The Company derives its revenue primarily from the following performance obligations: (1) hosted services, (2) professional services, (3) monetization, and (4) licensing. Revenue is reported net of applicable sales and use taxes that are passed through to customers. The Company’s arrangements with customers may contain multiple obligations. Individual services are accounted for separately if they are distinct — that is, if a service is separately identifiable from other items in the contract and a customer can benefit from it in its own or with other resources that are readily available to the customer. The Company has the following performance obligations in contracts with customers: Hosted Services Hosted services, along with non-distinct customization, integration, maintenance and support professional services, allow customers to access the Houndify platform over the contract period without taking possession of the software. The contract terms of hosted services range from one year to twenty years. The Company has determined that the hosted services arrangements are a single performance obligation comprised of a series of distinct services, since each day of providing access to hosted services is substantially the same and the customer simultaneously receives and consumes the benefits as access is provided. These services are provided either on a usage basis (i.e., variable consideration) or on a fixed fee subscription basis. The Company recognizes revenue as each distinct service period is performed (i.e., recognized as incurred). Hosted services generally include up-front services to develop and/or customize the Houndify application to each customer’s specification. Judgement is required to determine whether these professional services are distinct from the hosted services. In making this determination, factors such as the degree of integration, the customers’ ability to start using the software prior to customization, and the availability of these services from other independent vendors are considered. In instances where the Company concluded that the up-front services are not distinct performance obligations, revenue for these activities is recognized over the period which the hosted services are provided and is included within hosted services revenue. Professional Services Revenue from distinct professional services, such as non-integrated development services, is either recognized over time based upon the progress towards completion of the project, or at a point in time at project completion. The Company assesses distinct professional services to determine whether the transfer of control is over-time or at a point in time. The Company considers three criteria in making their assessment, including (1) the customer simultaneously receives and consumes the benefits; (2) the Company’s performance creates or enhances an asset that the customer controls as the asset is created or enhanced; or (3) the Company’s performance does not create an asset with an alternative use to the entity and the entity has an enforceable right to payment for performance completed to date. If none of the criteria are met, revenue is determined to be recognized at a point in time. For distinct professional services determined to be recognized over-time, measuring the stage of completion of a project requires significant judgement and estimates, including actual efforts spent in relation to estimated total costs and percentage of completion based on input and output measures. During the three months ended September 30, 2022, $0.4 million of professional service revenue was recognized over time, with the remaining $0.3 million recognized at a point in time when the performance obligation was fulfilled and control of the service was transferred to the customer. During the nine months ended September 30, 2022, $1.2 million of professional service revenue was recognized over time, with the remaining $1.4 million recognized at a point in time when the performance obligation was fulfilled and control of the service was transferred to the customer. Monetization Monetization revenues are primarily derived from advertising payments associated with ad impressions placed on the SoundHound music identification application. The Company derives an immaterial amount of revenue from sales commissions earned from song purchases facilitated by the SoundHound app and App store fees paid for ads-free downloads of the SoundHound music identification app. The amount of revenue is based on actual monetization generated or usage, which represent a variable consideration with constrained estimates. Therefore, the Company recognizes the related revenues at a point in time when advertisements are placed, when commissions are paid or when the SoundHound application is downloaded. The determination of whether revenue should be reported on a gross or net basis is based on an assessment of whether the Company is acting as a principal or an agent in the transaction. The Company has determined that it does not act as the principal in monetization arrangements because it does not control the transfer of the service and it does not set the price. Based on these factors, the Company reports revenue on a net basis. Licensing The Company licenses voice solutions that are embedded in customer products. Licensing revenue is a distinct performance obligation that is recognized when control is transferred to the customer, which is at a point in time for non-customized solutions. Revenues generated from licensing is based on royalty models with a combination of minimum guarantees and per unit pricing. Royalty periods are generally subsequent to when control of the license passes to the customer. The Company records licensing revenue as a usage-based royalty from customers’ usage of intellectual property in the same period in which the underlying sale occurs. The Company provides assurance-type warranty services and to date, post-contract support has been an immaterial performance obligation within the context of the contract. When a contract has multiple performance obligations, the transaction price is allocated to each performance obligation based on its relative estimated standalone selling price (“SSP”). Judgments are required to determine the SSP for each distinct performance obligation. SSP is determined by maximizing observable inputs from pricing of standalone sales, when possible. Since prices vary from customer to customer based on customer relationship, volume discount and contract type, in instances where the SSP is not directly observable, the Company estimates SSP by considering the following factors: • Costs of developing and supplying each performance obligation; • Industry standards; • Major product groupings; and • Gross margin objectives and pricing practices, such as contractually stated prices, discounts offered, and applicable price lists. These factors may vary over time, depending upon the unique facts and circumstances related to each deliverable. If the facts and circumstances underlying the factors considered change or should future facts and circumstances lead the Company to consider additional factors, the Company’s best estimate of SSP may also change. For the three and nine months ended September 30, 2022 and 2021, revenues under each performance obligation were as follows (in thousands): Three Months Ended Nine Months Ended 2022 2021 2022 2021 Hosted services $ 4,878 $ 3,170 $ 12,672 $ 9,680 Professional services 694 591 2,644 5,329 Monetization 225 267 652 1,037 Licensing 5,389 — 5,660 — Total $ 11,186 $ 4,028 $ 21,628 $ 16,046 For the three and nine months ended September 30, 2022 and 2021, the disaggregated revenue by geographic location was as follows (in thousands): Three Months Ended Nine Months Ended 2022 2021 2022 2021 United States $ 2,654 $ 1,283 $ 5,901 $ 3,586 Japan 925 921 2,775 2,875 Germany 1,070 817 2,897 7,034 France 650 506 2,947 899 Korea 5,751 320 6,403 1,180 Other 136 181 705 472 Total $ 11,186 $ 4,028 $ 21,628 $ 16,046 For the three and nine months ended September 30, 2022 and 2021, the disaggregated revenue by recognition pattern was as follows (in thousands): Three Months Ended Nine Months Ended 2022 2021 2022 2021 Over time revenue $ 5,251 $ 3,611 $ 13,852 $ 10,513 Point-in-time 5,935 417 7,776 5,533 Total $ 11,186 $ 4,028 $ 21,628 $ 16,046 The Company also disaggregates revenue by service type. This disaggregation consists of Product Royalties, Service Subscriptions and Monetization. Product Royalties revenue is derived from Houndified Products, which are voice-enabled tangible products across the automotive and consumer electronics industries. Revenue from Product Royalties is based on volume, usage, or life of the products, which are driven by number of devices, users, or unit of time. Service Subscription revenue is generated through Houndified Services, which include customer services, food ordering, content, appointments, and voice commerce. Subscription revenue is derived from monthly fees based on usage-based revenue, revenue per query or revenue per user. Both Houndified Products and Houndified Services may include professional services that develop and customize the Houndify platform to fit customers’ specific needs. Revenue from Monetization is generated from the SoundHound music identification app and is primarily attributable to user ad impression revenue. For the three and nine months ended September 30, 2022 and 2021, the disaggregated revenue by service type was as follows (in thousands): Three Months Ended Nine Months Ended 2022 2021 2022 2021 Product royalties $ 10,265 $ 3,380 $ 19,534 $ 13,833 Service subscriptions 696 381 1,442 1,176 Monetization 225 267 652 1,037 Total $ 11,186 $ 4,028 $ 21,628 $ 16,046 Contract Balances The Company performs its obligations under a contract with a customer by licensing access to software or providing services in exchange for consideration from the customer. The timing of the Company’s performance often differs from the timing of the customer’s payment, which results in the recognition of a receivable, a contract asset, or a contract liability. During the three and nine months ended September 30, 2022, we recognized $5.3 million of licensing revenue from our Houndify Edge solution, which we delivered to a customer during the three months ended September 30, 2022, related to minimum guarantee units to be utilized over the life of the contract and resulted in a corresponding increase in our Contract assets balance. The Company has not recorded any asset impairment charges related to contract assets during the periods presented in the condensed consolidated financial statements. Revenue recognized included in the balances of the deferred revenue at the beginning of the reporting period during three and nine months ended September 30, 2022, was $2.0 million and $5.4 million, respectively, as compared to $2.3 million and $7.4 million for the three and nine months ended September 30, 2021, respectively. As of September 30, 2022, the aggregate amount of the transaction price allocated to the remaining performance obligations related to customer contracts that were unsatisfied or partially unsatisfied was $23.4 million. Given the applicable contract terms, $10.4 million is expected to be recognized as revenue within one year, $9.6 million is expected to be recognized between two the Company recognizes revenue equal to the amount the Company has the right to invoice for services performed or future sales-based or usage-based royalty payments in exchange for access to the Company’s hosted services. This amount is subject to change due to future revaluations of variable consideration, terminations, other contract modifications or currency adjustments. The estimated timing of the recognition of remaining unsatisfied performance obligations is subject to change and is affected by changes to scope, changes in timing of delivery of products and services or contract modifications. The Company’s long-term contracts do not have significant financing components, as there is generally payment and performance in each year of the contract. If there is a period of one year or longer between the transfer of promised services and payment, it is generally for reasons other than financing and, thus, the Company does not adjust the transaction price for financing components. The Company elected the practical expedient to not adjust promised amounts of consideration for the effects of a significant financing component if the Company expects, at contract inception, that the period between when the Company transfers a promised good or service to a customer and when the customer pays for that good or service will be one year or less. |
Property and Equipment, Net
Property and Equipment, Net | 9 Months Ended |
Sep. 30, 2022 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY AND EQUIPMENT, NET | 5. PROPERTY AND EQUIPMENT, NET Property and equipment, net consisted of the following (in thousands): September 30, December 31, Computer equipment $ 20,947 $ 20,571 Software and voice recordings 9,271 8,687 Leasehold improvements 3,850 3,567 Furniture and fixtures 765 729 Total property and equipment, at cost 34,833 33,554 Less: accumulated depreciation and amortization (30,687) (27,399) Total property and equipment, net $ 4,146 $ 6,155 Property and equipment, net includes assets under finance lease obligations (see Note 14 for additional information) with an aggregate cost of approximately $0.9 million and $7.0 million as of September 30, 2022 and December 31, 2021, respectively, and accumulated depreciation of approximately $0.4 million and $4.3 million as of September 30, 2022 and December 31, 2021, respectively. Depreciation and amortization expense totaled approximately $0.9 million and $3.2 million for the three and nine months ended September 30, 2022, respectively, as compared to $1.3 million and $4.2 million for the three and nine months ended September 30, 2021, respectively. |
Accrued Liabilities
Accrued Liabilities | 9 Months Ended |
Sep. 30, 2022 | |
Other Liabilities Disclosure [Abstract] | |
ACCRUED LIABILITIES | 6. ACCRUED LIABILITIES Accrued liabilities on the condensed consolidated balance sheets was comprised of the following (in thousands): September 30, December 31, Accrued compensation expenses $ 5,536 $ 3,802 Accrued interest 230 1,369 Accrued vendor payables 1,256 1,109 Accrued professional services 155 934 Other accrued liabilities 65 84 $ 7,242 $ 7,298 |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | 7. COMMITMENTS AND CONTINGENCIES Contracts In August 2021, the Company entered into an exclusive agreement with a cloud service provider to host its voice artificial intelligence platform pursuant to which the Company committed to pay a minimum of $98.0 million in cloud costs over a seven-year period subject to variable increases based on usage. Aggregate non-cancelable future minimum payments were as follows as of September 30, 2022 (in thousands): Remainder of 2022 $ 1,000 2023 7,000 2024 11,000 2025 14,000 2026 16,000 Thereafter 48,000 Total $ 97,000 Legal Proceedings From time to time, the Company may have certain contingent liabilities that arise in the ordinary course of its business activities. The Company accrues contingent liabilities when it is probable that future expenditures will be made, and such expenditures can be reasonably estimated. In the opinion of management, there are no pending claims for which the outcome is expected to result in a material adverse effect on the financial position, results of operations or cash flows of the Company. Other Matters The Company has not historically collected U.S. state or local sales and use tax, or other similar taxes, in any jurisdiction. On June 21, 2018, the U.S. Supreme Court decided, in South Dakota v. Wayfair, Inc. , that state and local jurisdiction may, in certain circumstances, enforce sales and use tax collection obligations on remote vendors that have no physical presence in such jurisdiction. A number of states have already begun, or have positioned themselves to begin, requiring sales and use tax collection from remote vendors. The details and effective dates of these collection requirements vary from state to state. The Company continues to analyze potential sales tax exposure using a state-by-state assessment. In accordance with ASC 450, Contingencies, the Company estimated and recorded a liability of $1.1 million as of September 30, 2022 and December 31, 2021. |
Warrants
Warrants | 9 Months Ended |
Sep. 30, 2022 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
WARRANTS | 8. WARRANTS As a result of the Business Combination (see Note 3), the Company has retroactively adjusted the Legacy SoundHound warrants outstanding and corresponding strike price prior to April 26, 2022 to give effect to the Conversion Ratio used to determine the number of shares of common stock into which they were converted. Series C Warrants In connection with the issuance of the April 2013 Note and November 2013 Note, the Company issued detachable warrants to purchase 248,408 and 496,827 shares of Legacy SoundHound Series C Preferred Stock (“Series C Warrants”), respectively, at $1.21 per share to the lenders, which were immediately exercisable. In December 2021, all outstanding 745,235 shares of warrants related to April 2013 Note and November 2013 were net exercised, leading to a net issuance of 645,356 shares of Legacy SoundHound Series C Preferred Stock. As of September 30, 2022 and December 31, 2021, the fair value of the warrant liability was $0. Warrants Related to Convertible Notes and Note Payable In connection with the issuance of the Company’s 2021 note payable (“SVB March 2021 Note”) and 2021 convertible note (“SCI June 2021 Note”), the Company issued detachable warrants to purchase 708,808 and 354,404 shares of Legacy SoundHound common stock, respectively, with an exercise price of $3.67 per share to the lenders, which were immediately exercisable. The Company recorded the warrants initially at fair value (see Note 10 for additional information) as paid-in-capital on the condensed consolidated balance sheets based on the allocation of its relative fair value of the debt proceeds. See Note 10 for additional information on the fair value calculation. The fair value in relation to the SVB March 2021 Note was allocated to the notes as a discount. The fair value in relation to the SCI June 2021 Note was capitalized as an asset, as the underlying debt bears similarity to a revolving commitment. As the warrants were classified as equity, they are not subject to remeasurement at the end of each reporting period. The initial allocated fair value of the warrants as of March 31, 2021 and June 14, 2021 was $2.3 million and $1.5 million, respectively. The warrants had a ten-year expiration date from the applicable closing date of March 2031 and June 2031, respectively. On the Closing Date, all outstanding warrants issued in connection to the SVB March 2021 Note and the SCI June 2021 Note were fully net exercised by their respective lenders, leading to a net issuance of 673,416 shares of Class A Common Stock. Warrants Related to the Business Combination Public Warrants Prior to the Business Combination, ATSP issued Public Warrants. Each Public Warrant entitles the holder to the right to purchase one share of common stock at an exercise price of $11.50 per share. No fractional shares were issued upon exercise of the Public Warrants. The Company may redeem the outstanding warrants, for $0.01 per warrant, upon not less than 30 days’ prior written notice of redemption given after the warrants become exercisable, if the reported last sale price of the common stock equals or exceeds $18.00 per share (as adjusted for stock dividends, sub-divisions, reorganizations, recapitalizations and the like) for any 20 trading days within a 30-trading day period commencing after the warrants become exercisable and ending on the third trading day before the Company sends the notice of redemption to the warrant holders. Upon issuance of a redemption notice by the Company, the warrant holders may, at any time after the redemption notice, exercise the Public Warrants for cash, or on a cashless basis. Subsequent to the closing of the Business Combination, the Company’s Public Warrants continue to be classified as equity instruments, as they are indexed to the Company’s stock. As of September 30, 2022, there were 3,457,996 Public Warrants issued and outstanding. Private Warrants Prior to the Business Combination, ATSP issued Private Warrants. The Private Warrants were initially issued in the same form as the Public Warrants with the exception that the Private Warrants: (i) would not be redeemable by the Company and (ii) may be exercised for cash or on a cashless basis, so long as they are held by the initial purchasers or any of their permitted transferees. If the Private Warrants are held by holders other than the initial purchasers or any of their permitted transferees, the Private Warrants will be redeemable by the Company and exercisable by the holders on the same basis as the Public Warrants. Pursuant to ASC 815, the Private Warrants were initially considered a liability instrument as they met the definition of a derivative. Upon the Closing of the Business Combination, the Company modified its Private Warrants to be identical to its Public Warrants. Therefore, the Private Warrants met requirements for classification as equity instrument, as they are indexed to the Company’s stock. On the Closing Date, there were 208,000 Private Warrants issued and outstanding. Refer to Note 10 for fair value measurement of these warrants. |
Convertible Note and Notes Paya
Convertible Note and Notes Payable | 9 Months Ended |
Sep. 30, 2022 | |
Debt Disclosure [Abstract] | |
CONVERTIBLE NOTE AND NOTES PAYABLE | 9. CONVERTIBLE NOTE AND NOTES PAYABLE SNAP June 2020 Note In June 2020, the Company issued a promissory note, the SNAP June 2020 Note, to a Lender in exchange for $15.0 million in cash proceeds. This note has an annual interest rate of 5% and a maturity date of June 26, 2022, if not converted earlier pursuant to conversion terms and change in control events as described below. All unpaid interest and principal are due and payable upon request of the Lender on or after the SNAP June 2020 Note’s maturity date. The outstanding principal balance and unpaid accrued interest of the SNAP June 2020 Note are convertible pursuant to the following terms (“SNAP June 2020 Note Conversion Feature” or “Conversion Feature”): automatic conversion into equity shares in the next equity financing round (“SNAP June 2020 Note Qualified Financing,” or “Qualified Financing”) at a conversion price equal to either (a) the lowest cash price per share paid by investors in such qualified financing (which will reflect at least a 20% discount to the price per share paid by other investors purchasing securities in additional closings), or (b) if there are no additional closings, 0.80 times the price per share paid by investors purchasing equity securities in the Qualified Financing. The SNAP June 2020 Note Qualified Financing shall be at least $30.0 million, which excludes the conversion of the SNAP June 2020 Note and any other indebtedness. Furthermore, upon a change of control event, the Company shall settle the SNAP June 2020 Note in cash, pursuant to the following terms (“Redemption Feature”): • 200% of the then outstanding principal amount of the respective note plus any unpaid accrued interest on the original principal of such note; and • 100% of the then outstanding principal amount of the respective note plus any unpaid accrued interest on the original principal of such note, provided that if the change of control transaction closes between the Company and the Lender or an affiliate of the Lender. The Company evaluated whether the SNAP June 2020 Note contains embedded features that meet the definition of derivatives under ASC 815, Derivatives and Hedging. The Conversion Feature qualifies as a derivative as it continuously resets as the underlying stock price increases or decreases so as to provide a variable number of shares for a fixed value of equity to the holders at any conversion date. As such, the Conversion Feature is bifurcated and accounted for as a derivative liability to be remeasured at the end of each reporting period. The Company recorded the bifurcated Conversion Feature initially at fair value with the residual value being allocated to the SNAP June 2020 Note as a debt discount. The fair value of the Conversion Feature upon issuance in September 2020 was $2.5 million, which was recorded as a derivative liability on the Company’s condensed consolidated balance sheet. The Redemption Feature of the SNAP June 2020 Note does not meet the definition of a derivative. Therefore, the Redemption Feature is not bifurcated. The total amount of debt discount at issuance for the SNAP June 2020 Note was $2.5 million. The Company amortized the aggregate debt discount using the effective interest method. The Company recognized total interest expense of $0.7 million associated with the SNAP June 2020 Note for the nine months ended September 30, 2022, out of which $0.4 million relates to the amortization of the debt discount. The Company recognized total interest expense of $0.5 million and $1.5 million associated with the SNAP June 2020 Note for the three and nine months ended September 30, 2021, respectively, out of which $0.3 million and $0.9 million relates to the amortization of the debt discount. The debt discount related to the SNAP June 2020 Note is amortized over the life of the instrument, beginning at note issuance and ending on April 26, 2022, the date on which the note was converted. The SNAP June 2020 Note contains a conversion feature in which outstanding principal and any unpaid accrued interest automatically converts into equity securities. This conversion occurs when the Company issues and sells equity securities in a bona fide equity financing with total proceeds to the Company totaling more than $30.0 million, excluding the face value of the SNAP June 2020 Note (“SNAP June 2020 Note Qualified Financing”). As a result of the Business Combination, on the Closing Date, the SNAP June 2020 Note conversion feature was triggered, as total proceeds from the Business Combination exceeded the minimum amount to qualify as a SNAP June 2020 Note Qualified Financing. As a result, on the Closing Date, all outstanding principal of $15.0 million and accrued interest of $1.4 million were converted into 368,384 shares of Class A Common Stock. In addition, the remaining debt discount of $0.2 million and related derivative liability with fair value of $4.1 million as of the Closing Date were extinguished. The following table summarizes the unamortized debt discount, fair value of conversion feature, and accrued interest as of April 26, 2022 and December 31, 2021 (in thousands). April 26, December 31, Unamortized debt discount $ 230 $ 657 Fair value of conversion feature $ 4,094 $ 3,488 Accrued interest $ 1,375 $ 1,136 Accrued interest is included in accrued liabilities on the condensed consolidated balance sheets to reflect the classification of the SNAP June 2020 Note as short-term in nature on December 31, 2021. SVB March 2021 Note In March 2021, the Company entered into a loan and security agreement with a commercial bank to borrow $30.0 million along with the issuance of warrants to purchase 127,570 shares of Legacy SoundHound’s common stock. The warrant’s allocated fair value was $2.3 million at issuance. The SVB March 2021 Note also contains a final payment provision of $1.1 million. The warrants were recognized as a debt discount at issuance and recorded as a reduction of the debt balance under a relative fair value approach. The Company recorded the final payment as an increase to the principal balance and debt discount for the entire payment amount. The Company was amortizing the discounts on an effective interest basis over the period from issuance through the Early Maturity Date (as defined below). The loan bears interest at an annual rate equal to the greater of 9% or 5.75% above the Prime Rate. As of September 30, 2022, the interest rate was 12.0%. Payments were interest-only for the first twelve months and are now principal and interest through maturity. The Company recorded stated interest expense in the condensed consolidated statements of operations and comprehensive loss for the three and nine months ended September 30, 2022 of $0.7 million and $2.1 million, respectively, of which $0.2 million remained unpaid as accrued interest at September 30, 2022. During the three and nine months ended September 30, 2021, the Company recorded interest expense of $0.7 million and $1.4 million, respectively, of which $0.2 million remained unpaid as accrued interest at September 30, 2021. The total amount of debt discount at issuance was $3.5 million. As of September 30, 2022 and December 31, 2021, the unamortized debt discount totaled $0.1 million and $1.1 million, respectively. During the three and nine months ended September 30, 2022, the Company recorded a nominal amount and $1.0 million in interest expense related to the debt discounts, respectively. During the three and nine months ended September 30, 2021, the Company recorded $0.8 million and $1.6 million in interest expense related to the debt discounts, respectively. The original term loan amortization date was April 1, 2022, with an opportunity for a six-month extension if certain performance milestones are met. The original maturity date of the loan was April 26, 2022 (“Early Maturity Date”), with an opportunity for extension to September 2024 or March 2025 if certain performance milestones are met, including the conversion of the SNAP June 2020 Note. In April 2022, the Company entered into a loan modification agreement with Silicon Valley Bank, which extended the note’s Early Maturity Date to May 26, 2022 which also extended the period of amortization of the discount. As a result of the Business Combination, the SNAP June 2020 Note converted on the Closing Date and the performance milestone was met, satisfying the requirements to extend the maturity date to September 1, 2024 Accordingly, the Company has classified $13.1 million of the balance as long-term and $12.0 million of the balance as short-term as of September 30, 2022 compared to the entirety of the balance as short-term as of December 31, 2021. SCI June 2021 Note In June 2021, the Company entered into a loan and security agreement with a lender to obtain credit extensions to the Company. Extensions may be requested in $5.0 million increments up to a total commitment amount of $15.0 million. The Company drew an initial $5.0 million on June 14, 2021 and the remaining $10.0 million on December 1, 2021. The SCI June 2021 Note also contains a final payment provision of 3.5% on each draw or $0.5 million in total. Additionally, warrants were issued alongside the convertible note to purchase 63,785 shares of Legacy SoundHound’s common stock. The warrant’s allocated fair value was $1.5 million at issuance. The Company recorded the final payment as an increase to the principal balance and debt discount for the entire payment amount upon each draw. As the warrants and discounts of $2.2 million are directly attributable to the total commitment of $15.0 million, the Company has presented its unamortized debt issuance cost associated with this note as a current asset, recorded as debt issuance cost on the condensed consolidated balance sheets. The Company is amortizing the cost on a straight-line basis from the issuance date through the maturity date of May 31, 2025. The Company recorded a nominal amount and $0.8 million in interest expense related to the debt discounts during the three and nine months ended September 30, 2022, respectively, and $0.4 million and $0.6 million in interest expense related to the debt discounts during the three and nine months ended September 30, 2021, respectively. As of September 30, 2022 and December 31, 2021, the unamortized debt discount totaled $0.3 million and $1.1 million, respectively. The loan bears interest at an annual rate equal to the greater of 9% or 5.75% above the Prime Rate. As of September 30, 2022, the interest rate was 12.0%. Payments were interest-only for the first twelve months and are now principal and interest through maturity. The Company incurred and paid $0.4 million and $1.1 million in stated interest in the condensed consolidated statements of operations and comprehensive loss for the three and nine months ended September 30, 2022, respectively, and $0.1 million in stated interest during both the three and nine months ended September 30, 2021. The loan amortization date was June 1, 2022, with an opportunity for a six-month extension if certain performance milestones are met. The maturity date of the loan is the earlier of May 31, 2025 or when the SNAP June 2020 Note is either paid in full or matures on June 26, 2022. Upon mutual consent of the Company and its Agent, the outstanding principal amount of term loan advances may be converted into equity securities that are issued by SoundHound in an Initial Public Offering (“IPO”) or by a Special Purpose Acquisition Company (“SPAC”) during a private placement sale of SoundHound’s equity securities that closes substantially concurrently with the closing of a SPAC acquisition. If conversion occurs in connection with an IPO, the conversion of the principal amount shall be into the same class and series of equity securities for the initial price per security to the public sold in the IPO. If conversion occurs in connection with a SPAC, the conversion of principal amount shall be into the equity securities purchased by other investors in the SPAC at the same share price and upon the same terms. As a result of the Business Combination, the SNAP June 2020 Note converted into the Company’s securities on the Closing Date. As the SNAP June 2020 Note was not paid in full and did not mature on June 26, 2022 due to its conversion, the maturity date of the SCI June 2021 Note is May 31, 2025. Accordingly, the Company has classified $9.5 million of the balance as long-term and $4.6 million of the balance as short-term as of September 30, 2022 compared to the entirety of the balance as short-term as of December 31, 2021. Additionally, as the Company and its Agent did not mutually consent to the equity conversion that could have been triggered by the Business Combination, the conversion feature no longer existed subsequent to the Closing Date. As of September 30, 2022, the SCI June 2021 Note was classified as a note payable. The below tables summarize the Company’s debt balances as of September 30, 2022 and December 31, 2021 (in thousands): September 30, 2022 SVB SCI June 2021 Note Total Notes payable $ 12,000 $ 4,593 $ 16,593 Notes payable, net of current portion 13,050 9,479 22,529 Unamortized loan discount (81) — (81) Total $ 24,969 $ 14,072 $ 39,041 Unamortized debt issuance cost recorded as an asset $ — $ 326 $ 326 December 31, SVB March 2021 Note payable, current portion $ 31,050 Unamortized loan discount (1,086) Carrying value $ 29,964 December 31, 2021 SNAP June 2020 Note SCI June 2021 Note Total Convertible notes, current portion $ 15,000 $ 15,525 $ 30,525 Unamortized loan discount (657) — (657) Total $ 14,343 $ 15,525 $ 29,868 Unamortized debt issuance cost recorded as an asset $ — $ 1,132 $ 1,132 Additionally, interest expense on the condensed consolidated statements of operations and comprehensive loss is inclusive of stated interest incurred on the Company’s debt instruments during the relevant periods, as well as the amortization of debt discounts and issuance costs. The life of each instrument may be shortened if a lender demands payment if certain events occur that are outside the control of the Company. |
Fair Value Measurements
Fair Value Measurements | 9 Months Ended |
Sep. 30, 2022 | |
Fair Value Disclosures [Abstract] | |
FAIR VALUE MEASUREMENTS | 10. FAIR VALUE MEASUREMENTS The following tables present the fair value of the Company’s financial instruments that are measured or disclosed at fair value on a recurring basis (in thousands): Fair Value Measurements as of Level 1 Level 2 Level 3 Assets: Cash equivalents $ 166 $ — $ — Total $ 166 $ — $ — Fair Value Measurements as of Level 1 Level 2 Level 3 Assets: Cash equivalents $ 4,863 $ — $ — Liabilities: Derivative liability — — (3,488) Total $ 4,863 $ — $ (3,488) The fair values of the derivative liabilities were determined based on significant inputs not observable in the market, which represent Level 3 measurements within the fair value hierarchy. Series C Warrants (April 2013 and November 2013) The Company revalued the Series C warrants as of September 30, 2021, resulting in a change in fair value of $1.8 million and $2.7 million during the three and nine months ended September 30, 2021, respectively. This change in fair value was recorded as a component of other income (expense), net, in the accompanying condensed consolidated statements of operations and comprehensive loss. The Company determined the fair value of the April 2013 Series C redeemable convertible preferred stock warrants using the Black-Scholes option-pricing model using the following assumptions: September 30, Expected dividend rate 0 % Risk-free interest rate 0.26 % Expected volatility 44 % Expected term (in years) 1.89 Upon exercise in December 2021, the warrants were recorded as Series C Preferred Stock at their fair value of $5.8 million upon net share settlement. Common Stock Warrants (SVB March 2021 Note and SCI June 2021 Note) The Company issued common stock warrants in connection with the SVB March 2021 Note and SCI June 2021 Note (See Note 8 for additional information). The SVB March 2021 Note and SCI June 2021 Note warrants were recorded based on the allocation of its relative fair value of the debt proceeds of $2.3 million and $1.5 million, respectively. The warrants were classified as equity instruments at inception with a corresponding discount recorded at issuance against the outstanding notes in connection with the SVB March 2021 Note or as an asset in connection with the SCI June 2021 Note. The common stock warrants are not subject to remeasurement at each subsequent balance sheet date due to their classification as equity instruments as they are considered indexed to the Company’s stock. The SVB March 2021 Note warrants expire in March 2031 and the SCI June 2021 Note warrants expire in June 2031. The Company determined the fair value of the SVB March 2021 Note and SCI June 2021 Note common stock warrants at issuance using the Black-Scholes option-pricing model using the following assumptions, respectively: SVB March 2021 Note Common Stock Warrants Expected dividend rate 0 % Risk-free interest rate 1.74 % Expected volatility 47 % Expected term (in years) 10.00 SCI June 2021 Note Common Stock Warrants Expected dividend rate 0 % Risk-free interest rate 1.51 % Expected volatility 47 % Expected term (in years) 10.00 Upon the Closing of the Business Combination, all outstanding warrants associated with the SVB March 2021 Note and SCI June 2021 Note were exercised, leading to a net issuance of 673,416 shares of Class A Common Stock. Public and Private Common Stock Warrants The Public Warrants and Private Warrants were issued prior to the Business Combination by ATSP. The Public Warrants and Private Warrants initially differed in classification, as the Public Warrants were considered equity instruments indexed to ATSP’s stock, while the Private Warrants were considered liability instruments. However, upon the Closing of the Business Combination, the Company modified its Private Warrants to be identical to its Public Warrants. At the time of conversion from a liability instrument to an equity instrument, the fair value of the Private Warrants was $0.1 million. Following the Business Combination and as of September 30, 2022, both warrants are classified as equity instruments, as they are indexed to the Company’s stock. The common stock warrants are not subject to remeasurement at each subsequent balance sheet date due to their classification as equity instruments. Refer to Note 3 and Note 8 for further information on the Public Warrants and Private Warrants. The fair value of the Public Warrants and Private Warrants are measured using quoted market prices. Derivative Liability (SNAP June 2020 Note) To determine the fair value of the embedded derivative associated with the SNAP June 2020 Note, the Company utilized the income approach model using the With and Without method. Using the With and Without method, the Company modeled expected cash flows to the noteholder under Next Equity Financing, Change in Control, SPAC/Private Investment in Public Equity, and IPO scenarios. The value of the embedded derivative was determined as the differential value from the perspective of the With and Without Method. The Company utilized the following assumptions at the valuation date: December 31, Probability of Next Equity Financing 3 % Probability of SPAC/PIPE 95 % Probability of IPO 2 % 100 % Weighted average term (years) 0.27 Weighted average discount rate 25.00 % The significant unobservable inputs used in the fair value measurement of the derivative liability are the remaining expected term, the discount rate, and the probability of financing for each scenario. Significant increases (decreases) in the term would result in significantly lower (higher) fair value measurements. Significant increases (decreases) in the discount rate would result in significantly lower (higher) fair value measurements. On April 26, 2022, the Closing of the Business Combination, the embedded derivative was valued at fair value which was equivalent to its intrinsic value. The embedded derivative had a fair value of $4.1 million. As the Closing of the Business Combination triggered the Conversion Feature contained within the SNAP June 2020 Note, therefore converting the note’s principal to equity, the embedded derivative associated with the note was extinguished. The Company recorded the remeasurement of derivative liabilities in other income (expense), net on the condensed consolidated statements of operations and comprehensive loss. The fair value of the embedded derivative was recorded as additional paid-in capital upon extinguishment on the condensed consolidated balance sheet. The following table summarizes the fair value remeasurement of the embedded derivative for the three and nine months ended September 30, 2022 and 2021 (in thousands): Three Months Ended Nine Months Ended 2022 2021 2022 2021 Remeasurement of conversion feature – loss $ — $ (640) $ (606) $ (1,090) The following tables set forth a summary of changes in fair value of the Company’s derivative liability and warrant liability for which fair value was determined by Level 3 inputs (in thousands): Derivative Warrant Balance as of December 31, 2020 $ 2,380 $ 2,004 Change in fair value 1,090 2,701 Balance as of September 30, 2021 $ 3,470 $ 4,705 Derivative Warrant Balance as of December 31, 2021 $ 3,488 $ — Change in fair value 606 — Extinguishment of embedded derivative upon conversion of convertible note (4,094) — Balance as of September 30, 2022 $ — $ — There were no transfers of financial instruments between the three levels of the fair value hierarchy during the nine months ended September 30, 2022. The Company had no other financial assets or liabilities that were required to be measured at fair value on a recurring basis. |
Preferred Stock
Preferred Stock | 9 Months Ended |
Sep. 30, 2022 | |
Equity [Abstract] | |
PREFERRED STOCK | PREFERRED STOCK A summary of the Legacy SoundHound Preferred Stock authorized, issued and outstanding as of the date of the Business Combination is as follows: Shares Shares Liquidation Carrying Series A 19,106,048 19,106,048 $ 28,239 $ 4,967 Series B 33,702,134 33,702,134 66,360 11,038 Series C 5,687,525 5,687,525 38,163 11,837 Series C-1 4,436,090 4,436,090 89,298 16,061 Series D 20,258,299 20,258,299 527,992 85,648 Series D-1 8,418,535 8,418,535 277,812 49,957 Series D-2 8,418,530 8,418,530 277,811 49,949 Series D-3 6,922,165 6,922,165 276,887 50,046 Series D-3A 20,835,869 — — — 127,785,195 106,949,326 $ 1,582,562 $ 279,503 Upon the closing of the Business Combination, the outstanding shares of Series A, B, C, C-1, D, D-1, D-2, and D-3 preferred stock were converted into 106,949,326 shares of SoundHound AI Class A Common Stock at the exchange ratio of 5.5562. Shares Authorized and Shares Issued above have been retroactively adjusted to reflect the exchange. As a result of the conversion of the Legacy SoundHound redeemable convertible preferred stock, the Company reclassified the amount of redeemable convertible preferred stock to additional paid in capital. Upon the consummation of the Business Combination, the Company is authorized to issue 1,000,000 shares of preferred stock with a par value of $0.0001 per share. The number of authorized shares of preferred stock may also be increased or decreased by the affirmative vote of the holders of a majority of the voting power of all the then-outstanding shares of capital stock of the Company entitled to vote thereon, without a separate vote of the holders of preferred stock. Any new series of preferred stock may be designated, fixed and determined as provided by the Board without approval of the holders of common stock or preferred stock. The preferred stock holders have the rights to elect one or more directors as per the Company’s restated certificate of incorporation. The Company has no preferred stock outstanding as of September 30, 2022. |
Common Stock
Common Stock | 9 Months Ended |
Sep. 30, 2022 | |
Equity [Abstract] | |
COMMON STOCK | 12. COMMON STOCK The Company had 250,030,433 shares of Legacy SoundHound common stock authorized for issuance prior to the closing of the Business Combination. On April 26, 2022, the Company consummated a Business Combination which was accounted for as a reverse recapitalization (refer to Note 3 for additional information). Pursuant to the Company’s restated certificate of incorporation, the Company is authorized to issue 500,000,000 shares of capital stock, consisting of (a) 455,000,000 shares of Class A Common Stock with a par value of $0.0001 per share, (b) 44,000,000 shares of Class B Common Stock with a par value of $0.0001 per share, and (c) 1,000,000 shares of preferred stock with a par value of $0.0001 per share. The outstanding shares of the Company’s common stock are fully paid and non-assessable. As a result of the Business Combination, 73,561,334 shares of Legacy SoundHound common stock, along with 106,949,326 shares of Legacy SoundHound preferred stock, were converted into 180,510,660 shares of the Company’s common stock, consisting of 140,114,060 shares of Class A Common Stock and 40,396,600 shares of the Company’s Class B Common Stock. On all matters to be voted upon, subject to the rights of any holders of any series of preferred stock, holders of shares of Class A Common Stock and Class B Common Stock will vote together as a single class on all matters submitted to the stockholders for their vote or approval. Holders of Class A Common Stock are entitled to one vote per share on all matters submitted to the stockholders for their vote or approval. Holders of Class B Common Stock are entitled to ten votes per share on all matters submitted to stockholders for their vote or approval. Each share of Class B Common Stock shall automatically convert into one fully paid and nonassessable share of Class A Common Stock. Shares of Class B Common Stock will be convertible into shares of Class A Common Stock and will be 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 amended 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. |
Stock Incentive Plans
Stock Incentive Plans | 9 Months Ended |
Sep. 30, 2022 | |
Share-Based Payment Arrangement [Abstract] | |
Stock Incentive Plans | STOCK INCENTIVE PLANS In April 2016, we adopted the 2016 Equity Incentive Plan (the “2016 Plan”) as a successor and continuation of the 2006 Plan. Under the 2016 Plan, the Company was permitted to grant awards of stock options and RSUs, as well as stock appreciation rights and other stock awards. During the year ended December 31, 2021, the Company amended the 2016 Plan to increase the number of shares of common stock reserved for issuance by 6,667,478 to an aggregate of 48,347,329. As of the Closing Date of the Business Combination, the Company no longer has shares available for issuance under the 2016 Plan. The 2016 Plan provides for incentive stock options to be granted to employees at an exercise price not less than 100% of the fair value at the grant date as determined by the Board of Directors, unless the optionee is a 10% stockholder, in which case the option price will not be less than 110% of such fair market value. Options granted generally have a maximum term of 10 years from grant date, are exercisable upon vesting unless otherwise designated for early exercise by the Board of Directors at the time of grant, and generally vest over a four-year period, with a 25% cliff vesting after one year and then ratably on a monthly basis for the remaining three years. RSUs granted generally vest over a four-year period, with 25% cliff vesting after one year and then ratably on a quarterly basis for the remaining three years. On April 26, 2022, the stockholders of the Company approved the SoundHound AI, Inc. 2022 Incentive Award Plan (the “2022 Incentive Plan”)(collectively, with the 2006 Plan and the 2016 Plan, the “Plans”), which became effective upon the Closing. The Company initially reserved 19,650,371 shares of Class A Common Stock for the issuance of awards under the 2022 Incentive Plan (“Initial Limit”). The Initial Limit represents 10% of the aggregate number of shares of the Company’s common stock outstanding immediately after the Closing and is subject to increase each year over a ten-year period. The Incentive Award Plan provides for the grant of stock options, which may be ISOs or non-statutory stock options (“NSOs”), stock appreciation rights (“SARs”), restricted shares, restricted stock units and other stock or cash-based awards that the Incentive Award Plan Administrator determines are consistent with the purpose of the Incentive Award Plan and the interests of the Combined Company, or collectively, awards. As of September 30, 2022, the Company has 5,601,945 awards remaining for issuance. On April 26, 2022, the stockholders of the Company approved the SoundHound AI, Inc. 2022 Employee Stock Purchase Plan (the “ESPP”), which became effective upon the Closing. An aggregate of 3,930,074 shares of the Company’s Class A Common Stock has been reserved for issuance or transfer pursuant to rights granted under the ESPP (“Aggregate Number”). The Aggregate Number represents 2% of the aggregate number of shares of the Company’s common stock outstanding immediately after the Closing and is subject to increase each year over a ten-year period. The ESPP provides eligible employees with an opportunity to purchase common stock from the Company at a discount through accumulated payroll deductions. The ESPP will be implemented through a series of offerings of purchase rights to eligible employees. Under the ESPP, the Company’s Board of Directors may specify offerings but generally provides for a duration of 27 months. The first purchase period had not begun as of September 30, 2022. The purchase price will be specified pursuant to the offering, but cannot, under the terms of the ESPP, be less than 85% of the lower of the fair market value per share of the Company’s common stock on either the offering date or on the purchase date. The ESPP also includes a six-month look-back provision for the purchase price if the stock price on the purchase date is less than the stock price on the offering date. Option Activity Stock option activity under the Plans was as follows for the nine months ended September 30, 2022: Number of Weighted Weighted Average Outstanding, December 31, 2021 30,361,405 $ 3.45 6.78 $ 168,923 Granted 391,619 6.17 Exercised (3,139,565) 1.16 21,751 Forfeited or cancelled (663,656) 4.51 Outstanding, September 30, 2022 26,949,803 $ 3.73 6.53 14,790 Exercisable, September 30, 2022 18,698,462 $ 2.83 5.66 14,511 Stock option activity under the Plans was as follows for the nine months ended September 30, 2021: Number of Weighted Weighted Average Outstanding, December 31, 2020 28,772,180 $ 2.38 6.75 $ 36,987 Granted 5,203,804 6.84 Exercised (2,178,412) 0.87 5,947 Forfeited or cancelled (1,801,023) 3.11 Outstanding, September 30, 2021 29,996,549 $ 3.22 6.85 172,816 Exercisable, September 30, 2021 17,350,839 $ 2.06 5.22 119,390 Options exercised early are subject to the vesting provisions mentioned above, and any unvested shares are subject to repurchase at the original price upon termination of employment, death, or disability. There were no option exercises during the nine months ended September 30, 2022 or year ended December 31, 2021 that were subject to repurchase. The total fair value of options vested was approximately $3.8 million and $7.2 million during the three and nine months ended September 30, 2022, respectively, as compared to $0.9 million and $2.9 million for the three and nine months ended September 30, 2021, respectively. For the purpose of determining the estimated fair value of share-based payment awards issued in the form of stock options, the Company uses the Black-Scholes option-pricing model as permitted under the provisions for share-based payment awards. The assumptions under the Black-Scholes option-pricing model and the weighted average calculated fair value of the options granted to employees during the nine-month periods ended September 30, 2022 and September 30, 2021 are as follows: September 30, September 30, Expected dividend yield 0 % 0 % Expected volatility 51 % 42 % Expected term (years) 5.88 6.01 Risk free interest rate 2.58 % 1.11 % As of September 30, 2022, the unamortized expense related to outstanding options was $18.8 million. The weighted average remaining amortization period over which the balance as of September 30, 2022 is to be amortized is 2.54 years. No income tax benefit was recognized for this compensation expense in the condensed consolidated statements of operations and comprehensive loss, as the Company does not anticipate realizing any such benefit in the future. Restricted Stock Unit Activity Restricted stock unit activity under the Plans was as follows for the nine months ended September 30, 2022: Number of Shares Weighted Average Grant Date Fair Value Outstanding, December 31, 2021 — $ — Granted 15,802,990 5.02 Vested (631,925) 3.79 Forfeited (68,772) 9.77 Outstanding, September 30, 2022 15,102,293 $ 5.02 The Company assessed an accounting grant date on June 2, 2022 for the issuance of 2,310,000 RSUs, 870,000 Performance-Based RSUs and 770,000 Market-Based RSUs to certain named executives and other executive offers based on the approval of employment agreements by the Board of Directors or Compensation Committee as respectively authorized which contained the key terms of the equity award agreements. The Company recorded stock-based compensation expense of $0.2 million related to Performance-Based RSUs during the three and nine months ended September 30, 2022. Unamortized expense related to Performance-Based RSUs was $7.3 million as of September 30, 2022. To derive the fair value of Market-Based RSUs, the Company applies a Monte Carlo simulation to determine the grant date fair value. Stock-based compensation related to Market RSUs is recognized over the derived service period. The assumptions under the Monte Carlo simulation model and the calculated fair value of the Market-Based RSUs granted to employees during the nine months ended September 30, 2022 were as follows: September 30, Expected volatility 52 % Expected term (years) 4 Drift rate 2.9 % The weighted average grant date fair value of the Market-Based RSUs was $3.91. The Company recorded $0.6 million in stock-based compensation expense related to Market-Based RSUs during the three and nine months ended September 30, 2022. Unamortized expense related to Market-Based RSUs was $3.0 million as of September 30, 2022. During the three and nine months ended September 30, 2022, the fair value of RSUs that vested was $2.7 million and $3.6 million, respectively. During the three and nine months ended September 30, 2022 the Company recorded $7.1 million and $11.6 million, respectively, of stock-based compensation related to RSUs. As of September 30, 2022, the unamortized expense related to RSUs was $56.8 million. The weighted average remaining amortization period over which the balance as of September 30, 2022 is to be amortized is 3.07 years. No income tax benefit was recognized for this compensation expense in the condensed consolidated statements of operations and comprehensive loss, as the Company does not anticipate realizing any such benefit in the future. Employee Stock-Based Compensation The Company’s founders held 7,270,503 of Legacy SoundHound common stock pre-conversion prior to the Business Combination. The founders exchanged their shares for Legacy SoundHound Class B common stock immediately prior to the closing of the business combination. Upon the Business Combination, the founders exchanged their Legacy SoundHound Class B shares in exchange for 40,396,600 shares of Class B Common Stock according to the Conversion Ratio. As the Class B Common Stock shares have ten votes per share, the exchange resulted in incremental stock-based compensation expense of $1.0 million which is included in general and administrative expenses on the condensed consolidated statements of operations and comprehensive loss for the nine month period ended September 30, 2022. During the three and nine months ended September 30, 2022, the Company’s stock compensation expense was $9.2 million and $19.5 million, respectively, as compared to $1.3 million and $4.0 million for the three and nine months ended September 30, 2021, respectively. Stock-based compensation is classified in the following operating expense accounts on the condensed consolidated statements of operations and comprehensive loss for the three and nine months ended September 30, 2022 and 2021 (in thousands): Three Months Ended Nine Months Ended 2022 2021 2022 2021 Cost of revenues $ 57 $ — $ 68 $ — Sales and marketing 1,077 92 1,873 294 Research and development 4,668 943 9,011 2,939 General and administrative 3,371 280 8,548 816 Total $ 9,173 $ 1,315 $ 19,500 $ 4,049 |
Leases
Leases | 9 Months Ended |
Sep. 30, 2022 | |
Leases [Abstract] | |
Leases | 14. LEASES The Company leases certain facilities under non-cancelable operating leases that expire at various dates through 2026. Some leases include renewal options, which would permit extensions of the expiration dates at rates approximating fair market rental values. The Company also enters into certain finance leases for computer equipment. The finance leases are collateralized by the financed assets. Aggregate non-cancelable future minimum lease payments under operating and finance leases were as follows as of September 30, 2022: Operating Financing Remainder of 2022 $ 939 $ 63 2023 3,688 189 2024 3,194 122 2025 875 12 2026 418 — Thereafter 1,533 — Total 10,647 386 Less: imputed interest (1,130) (39) Present value of lease liabilities 9,517 347 Less: current portion (3,281) (179) Lease liabilities, net of current portion $ 6,236 $ 168 The components of lease cost were as follows (in thousands): Three Months Ended Nine Months Ended 2022 2021 2022 2021 Operating lease cost $ 851 $ 790 $ 2,570 $ 2,466 Short-term lease cost 184 151 321 434 Financing lease cost: Amortization of finance leased assets 170 623 946 1,912 Interest of lease liabilities 12 209 71 676 The table below presents additional information related to our leases as of September 30, 2022: Operating Lease Financing Lease Weighted average remaining lease term (years) 3.68 1.96 Weighted average discount rate 5.92 % 10.61 % The Company’s total rent expense for the three and nine months ended September 30, 2022 was $1.0 million and $2.9 million, respectively. The Company’s total rent expense for the three and nine months ended September 30, 2021 was $0.9 million and $2.9 million, respectively. |
Leases | 14. LEASES The Company leases certain facilities under non-cancelable operating leases that expire at various dates through 2026. Some leases include renewal options, which would permit extensions of the expiration dates at rates approximating fair market rental values. The Company also enters into certain finance leases for computer equipment. The finance leases are collateralized by the financed assets. Aggregate non-cancelable future minimum lease payments under operating and finance leases were as follows as of September 30, 2022: Operating Financing Remainder of 2022 $ 939 $ 63 2023 3,688 189 2024 3,194 122 2025 875 12 2026 418 — Thereafter 1,533 — Total 10,647 386 Less: imputed interest (1,130) (39) Present value of lease liabilities 9,517 347 Less: current portion (3,281) (179) Lease liabilities, net of current portion $ 6,236 $ 168 The components of lease cost were as follows (in thousands): Three Months Ended Nine Months Ended 2022 2021 2022 2021 Operating lease cost $ 851 $ 790 $ 2,570 $ 2,466 Short-term lease cost 184 151 321 434 Financing lease cost: Amortization of finance leased assets 170 623 946 1,912 Interest of lease liabilities 12 209 71 676 The table below presents additional information related to our leases as of September 30, 2022: Operating Lease Financing Lease Weighted average remaining lease term (years) 3.68 1.96 Weighted average discount rate 5.92 % 10.61 % The Company’s total rent expense for the three and nine months ended September 30, 2022 was $1.0 million and $2.9 million, respectively. The Company’s total rent expense for the three and nine months ended September 30, 2021 was $0.9 million and $2.9 million, respectively. |
Other Income (Expense), net
Other Income (Expense), net | 9 Months Ended |
Sep. 30, 2022 | |
Other Income and Expenses [Abstract] | |
Other Income (Expense), net | 15. OTHER INCOME (EXPENSE), NET Other income (expense), net on the condensed consolidated statements of operations and comprehensive loss is comprised of the following for the three and nine months ended September 30, 2022 and 2021 (in thousands): Three Months Ended Nine Months Ended 2022 2021 2022 2021 Other income (expense), net Interest income $ 186 $ — $ 225 $ 6 Change in fair value of derivative and warrant liability — (2,478) (606) (3,792) Other expense, net (70) (260) (337) (494) Total other income (expense), net $ 116 $ (2,738) $ (718) $ (4,280) |
Net Loss Per Share
Net Loss Per Share | 9 Months Ended |
Sep. 30, 2022 | |
Earnings Per Share [Abstract] | |
Net Loss Per Share | NET LOSS PER SHARE The following table presents the calculation of basic and diluted net loss per share attributable to common stockholders for the three and nine months ended September 30, 2022 and 2021: Three Months Ended Nine Months Ended 2022 2021 2022 2021 Numerator: Net loss (in thousands) $ (28,922) $ (23,781) $ (84,693) $ (57,693) Denominator: Weighted average shares outstanding – basic and dilutive 197,006,980 67,718,940 143,338,517 67,021,176 Basic and diluted net loss per share $ (0.15) $ (0.35) $ (0.59) $ (0.86) For the three and nine months ended September 30, 2022 and 2021, the diluted earnings per share is equal to the basic earnings per share as the effect of potentially dilutive securities would have been antidilutive. The following table summarizes the outstanding shares of potentially dilutive securities that were excluded from the calculation of diluted earnings per share because their inclusion would have been anti-dilutive for the three and nine months ended September 30, 2022 and 2021: As of September 30, 2022 2021 Stock options 26,949,803 29,996,549 Restricted stock units (RSUs) 15,102,293 — Series C warrants — 745,235 Common stock warrants 3,665,996 1,063,214 Redeemable convertible preferred stock — 106,303,970 Total 45,718,092 138,108,968 |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2022 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | INCOME TAXES The tax expense and the effective tax rate were as follows (in thousands): Three Months Ended Nine Months Ended 2022 2021 2022 2021 Loss before income taxes $ (28,058) $ (22,591) $ (83,088) $ (56,293) Income tax expense 864 1,190 1,605 1,400 Effective tax rate (3.08) % (5.27) % (1.93) % (2.49) % The Company’s recorded effective tax rate differs from the U.S. statutory rate primarily due to an increase in the domestic valuation allowance caused by tax losses, foreign withholding taxes and foreign tax rate differentials from the U.S. domestic statutory tax rate. |
Related Party Transactions
Related Party Transactions | 9 Months Ended |
Sep. 30, 2022 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | RELATED PARTY TRANSACTIONSThe Company entered into revenue contracts to perform professional services for certain companies who are also investors in the Company. These companies are holders of the Company’s Class A Common Stock. As a result of the Business Combination during the second quarter of 2022, each company's ownership interest in us was reduced to less than 5%. Consequently, considering all aspects of our relationships with the companies, as of June 30, 2022, we no longer consider the companies related parties. Below we provide our disclosures for transactions with the companies through June 30, 2022.During the six months ended June 30, 2022, we recognized revenue from the companies of $5.2 million. During the three and nine months ended September 30, 2021, we recognized revenue from the companies of $1.6 million and $5.2 million, respectively. As of December 31, 2021, we had accounts receivable and deferred revenue balances related to the companies of $0.6 million and $15.2 million, respectively. |
Subsequent Event
Subsequent Event | 9 Months Ended |
Sep. 30, 2022 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENT | SUBSEQUENT EVENT Equity Line of Credit On August 16, 2022, the Company entered into a common stock purchase agreement (the “Common Stock Purchase Agreement”) and related registration rights agreement (the “CFPI Registration Rights Agreement”) with CF Principal Investments LLC (“CFPI”). Pursuant to the Common Stock Purchase Agreement, the Company, has the right to sell to CFPI up to the lesser of (i) 25,000,000 shares of Class A common stock and (ii) the Exchange Cap (as defined in the Common Stock Purchase Agreement), subject to certain limitations and conditions set forth in the Common Stock Purchase Agreement. As of November 14, 2022, the Company’s Registration Statement on Form S-1 registering the resale of the ELOC Shares had not yet been declared effective. If declared effective and certain other conditions are met permitting the Commencement (as defined in the Common Stock Purchase Agreement) of the offering, the Company expects to utilize proceeds from the ELOC for working capital and other general corporate purposes. After the Commencement, the Company will have the right from time to time at its sole discretion until the first day of the month next following the 36-month period from and after the Commencement, to direct CFPI to purchase up to a specified maximum amount of shares of Class A common stock as set forth in the Common Stock Purchase Agreement by delivering written notice to CFPI prior to the commencement of trading on any trading day. The Company will control the timing and amount of any sales of the Class A common stock to CFPI. Actual sales of shares to CFPI under the Common Stock Purchase Agreement will depend on a variety of factors to be determined by the Company from time to time, including, among other things, market conditions, and the trading price of the Common Stock. The purchase price of the shares that the Company elects to sell to CFPI pursuant to the Common Stock Purchase Agreement will be the volume weighted average price of the Common Stock during the applicable purchase date on which the Company has timely delivered written notice to CFPI directing it to purchase the shares under the Common Stock Purchase Agreement. The Company will receive 97% of the volume weighted average price of the Common Stock so sold. In connection with the execution of the Common Stock Purchase Agreement, the Company issued CFPI 250,000 shares (the “Commitment Shares”) as consideration for its irrevocable commitment to purchase the shares upon the terms and subject to the satisfaction of the conditions set forth in the Common Stock Purchase Agreement. Pursuant to a separate side letter agreement between the Company and CFPI, the Company and CFPI have agreed that if the net proceeds with respect to Commitment Shares either sold by CFPI by the 121st day after Commencement, subject to an extension under certain circumstances (the “True-Up Date”), or held by CFPI on the True-Up Date (based on the closing price of the Class A common stock on the Nasdaq Global Market on the trading day immediately prior to the True-Up Date), in the aggregate, are less than $1.0 million, the Company will pay to CFPI the difference between $1.0 million and the applicable net proceeds. Alternatively, in the event that such net proceeds exceed $1.0 million, CFPI will pay to the Company the difference between the applicable net proceeds and $1.0 million . |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2022 | |
Accounting Policies [Abstract] | |
Basis of Presentation and Significant Accounting Policies | Basis of Presentation and Significant Accounting Policies The (a) condensed consolidated balance sheet as of December 31, 2021, which has been derived from audited financial statements as filed in the Company’s Form 8-K, which was originally filed with the SEC on May 2, 2022 and amended by Amendment No. 1 to Current Report on Form 8-K, and (b) the unaudited interim condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (“SEC”) regarding annual financial reporting. Any reference in these notes to applicable accounting guidance is meant to refer to the authoritative U.S. GAAP included in the Accounting Standards Codification (“ASC”), and Accounting Standards Update (“ASU”) issued by the Financial Accounting Standards Board (“FASB”). The condensed consolidated financial statements have been prepared on a basis consistent with the audited consolidated financial statements and in the opinion of management, all adjustments, consisting of normal recurring adjustments, considered necessary for a fair presentation of the financial statements have been included. The results of operations for the three and nine months ended September 30, 2022 are not necessarily indicative of the results for the fiscal year ending December 31, 2022 or any future interim period. Certain information and note disclosures normally included in annual financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to those rules and regulations, although the company believes that the disclosures made are adequate to make the information not misleading. |
Principles of Consolidation | Principles of Consolidation The Company’s condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. We consolidate any variable interest entity (“VIE”) where we have determined we are the primary beneficiary. The primary beneficiary is the entity which has both: (i) the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance; and (ii) the obligation to absorb losses or receive benefits of the entity that could potentially be significant to the VIE. |
Reclassification | Reclassification Certain prior period balances have been reclassified to conform to the current year presentation. Such changes include reclassifications or combinations of certain accounts on the condensed consolidated balance sheets. These reclassifications had no impact on total assets, total liabilities, net loss or comprehensive loss or accumulated deficit in the previously reported consolidated financial statements for the year ended December 31, 2021. |
Foreign Currency | Foreign Currency The functional currency of the Company and its subsidiaries is the U.S. dollar. Foreign currency denominated transactions are converted into U.S. dollars at the average rates of exchange prevailing during the period. Assets and liabilities denominated in foreign currency are remeasured into U.S. dollars at current exchange rates at the balance sheet date for monetary assets and liabilities and at historical exchange rates for non-monetary assets and liabilities. During the three and nine months ended September 30, 2022, the Company recognized net losses related to foreign currency transactions and remeasurements of $0.1 million and $0.4 million, respectively, in the condensed consolidated statements of operations and comprehensive loss as other income (expense), net. During the three and nine months ended September 30, 2021, the Company recognized net losses related to foreign currency transactions and remeasurements of $0.3 million and $0.5 million, respectively, in the condensed consolidated statements of operations and comprehensive loss as other income (expense), net. |
Use of Estimates | Use of Estimates The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and judgments that affect the amounts reported and disclosures in the condensed consolidated financial statements and accompanying notes. Such estimates include revenue recognition, allowance for doubtful accounts, accrued liabilities, derivative and warrant liabilities, calculation of the incremental borrowing rate, financial instruments recorded at fair value on a recurring basis, valuation of deferred tax assets and uncertain tax positions and the fair value of common stock and other assumptions used to measure stock-based compensation expense. The Company bases its estimates on historical experience, the current economic environment and on assumptions it believes are reasonable under the circumstances. The Company adjusts such estimates and assumptions when facts and circumstances dictate. Changes in those estimates resulting from changes in the economic environment will be reflected in the financial statements in future periods. Actual results could differ materially from those estimates. |
Segment Information | Segment Information The Company has determined that the Chief Executive Officer is its chief operating decision maker. The Company’s Chief Executive Officer reviews financial information on a consolidated basis for purposes of allocating resources and evaluating financial performance. Accordingly, the Company has determined that it operates as a single reportable segment. |
Emerging Growth Company Status | Emerging Growth Company Status The Company is an emerging growth company (“EGC”) as defined in the Jumpstart Our Business Startups Act of 2012 (“JOBS Act”) and may take advantage of reduced reporting requirements that are otherwise applicable to public companies. Section 107 of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies are required to comply with those standards. This means that when a standard is issued or revised and it has different application dates for public and nonpublic companies, the Company has the option to adopt the new or revised standard at the time nonpublic companies adopt the new or revised standard and can do so until such time that the Company either (i) irrevocably elects to “opt out” of such extended transition period or (ii) no longer qualifies as an emerging growth company. The Company has elected to use the extended transition period for complying with new or revised accounting standards unless the Company otherwise early adopts select standards. |
Concentrations of Credit Risk and Other Risks and Uncertainties | Concentrations of Credit Risk and Other Risks and Uncertainties Financial instruments that potentially subject the Company to significant concentrations of credit risk consist principally of cash and cash equivalents. The Company regularly monitors its credit risk exposure and takes steps to mitigate the likelihood of these exposures resulting in actual loss. |
Equity Issuance Costs | Equity Issuance Costs The Company capitalizes certain legal, professional, accounting and other third-party fees that are directly associated with in-process equity financings as deferred offering costs until such financings are consummated. After consummation of the financing, these costs are recorded as a reduction of the proceeds received from the equity financing. On April 26, 2022, upon closing of the Business Combination, the Company offset equity proceeds by $4.1 million of deferred offering costs. |
Revenue Recognition | Revenue Recognition The Company recognizes revenue under Accounting Standards Codification Topic 606 (“ASC 606”), Revenue from Contracts with Customers, when a customer obtains control of promised goods or services in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services. To determine revenue recognition for arrangements that an entity determines are within the scope of ASC 606, the Company performs the following five steps: (i) Identification of the contract(s) with a customer; (ii) Identification of the performance obligations in the contract; (iii) Determination of the transaction price, including the constraint on variable consideration; (iv) Allocation of the transaction price to the performance obligations in the contract; and (v) Recognition of revenue when, or as, performance obligations are satisfied. Contracts are accounted for when both parties have approved and committed to the contract, the rights of the parties and payment terms are identifiable, the contract has commercial substance and collectability of consideration is probable. Any payments received from customers that do not meet criteria for having a contract are recorded as deposit liabilities on the condensed consolidated balance sheet. Under ASC 606, assuming all other revenue recognition criteria have been met, the Company recognizes revenue for arrangements upon the transfer of control of the Company’s performance obligations to its customers. A performance obligation is a promise in a contract to transfer a distinct good or service to a customer and is the unit |
Research and Development | Research and Development The Company’s research and development costs are expensed as incurred. These costs include salaries and other personnel related expenses, contractor fees, facility costs, supplies and depreciation of equipment associated with the design and development of new products prior to the establishment of their technological feasibility. |
Warrants, Restricted Stock, Redeemable Convertible Preferred Stock | Warrants The Company determines whether to classify contracts, such as warrants, that may be settled in its own stock as equity of the entity or as a liability. An equity-linked financial instrument must be considered indexed to the Company’s own stock to qualify for equity classification. The Company classifies warrants as liabilities for any contracts that may require a transfer of assets. Warrants classified as liabilities are accounted for at fair value and remeasured at each reporting date until exercise, expiration or modification that results in equity classification. Any change in the fair value of the warrants is recognized as other income (expense), net in the condensed consolidated statements of operations and comprehensive loss. Restricted Stock Units The Company issues restricted stock unit awards (“RSUs”) to grantees as compensation for services. The fair value of the RSUs is determined at the grant date based on the fair value of the Company’s Class A Common Stock and for RSUs with service conditions only, is recognized straight-line over the service period. The Company issues RSUs with vesting conditions tied to certain performance criteria (“Performance-Based RSUs”). Stock-based compensation related to Performance-Based RSUs is recognized to the extent it is determined that performance is probable of being achieved. The Company issues RSUs with vesting conditions tied to certain market conditions (“Market-Based RSUs”). To derive the fair value of Market-Based RSUs, the Company applies a Monte Carlo simulation to determine the grant date fair value. Stock-based compensation related to Market-Based RSUs is recognized over the derived service period. Redeemable Convertible Preferred Stock Legacy SoundHound Preferred Stock did not have a mandatory redemption date. The Company presents as temporary equity any stock which (i) the Company undertakes to redeem at a fixed or determinable price on the fixed or determinable date or dates; (ii) is redeemable at the option of the holders, or (iii) has conditions for redemption which are not solely within the control of the Company. Legacy SoundHound Preferred Stock was redeemable upon a deemed liquidation event which the Company determined was not solely within its control and thus has classified shares of Legacy SoundHound Preferred Stock as temporary equity until such time as the conditions are removed or lapse. Since the occurrence of a deemed liquidation event was not probable, the carrying values of the shares of Legacy SoundHound Preferred Stock were not being accreted to their redemption values. As a result of the Business Combination, the shares of Legacy SoundHound Preferred Stock outstanding immediately prior to the effective time of the Business Combination (the “Effective Time”) were converted into 106,949,326 shares of the Company’s Class A Common Stock. Refer to Note 11 for further information. |
Income Taxes | Income Taxes The Company accounts for income taxes under the asset and liability method, whereby deferred tax assets and liabilities are determined based on the difference between the financial statement and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to affect taxable income. A valuation allowance is established when, in management’s estimate, it is more-likely-than-not that the deferred tax asset will not be realized. The Company adopted a more-likely-than-not threshold for financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. The Company records a liability for the difference between the benefit recognized and measured and the tax position taken or expected to be taken on the Company’s tax return. The Company classifies interest and penalties related to uncertain tax positions in income tax expense, if applicable. There has been no interest expense or penalties related to unrecognized tax benefits recorded through September 30, 2022. |
Stock-Based Compensation | Stock-Based Compensation The Company measures and records the expense related to stock-based payment awards based on the fair value of those awards as determined on the date of grant. The Company recognizes stock-based compensation expense over the requisite service period of the individual grant, generally equal to the vesting period, and uses the straight-line method to recognize stock-based compensation. The Company accounts for forfeitures as they occur. The Company uses the Black-Scholes option-pricing model to determine the fair value of stock options. The Black-Scholes option-pricing model requires the use of highly subjective and complex assumptions to determine the fair value of stock options, including the option’s expected term and the price volatility of the underlying stock. The Company calculates the fair value of options granted by using the Black-Scholes option-pricing model with the following assumptions: Expected Volatility — The Company estimates volatility for option grants by evaluating the average historical volatility of a peer group of companies for the period immediately preceding the option grant for a term that is approximately equal to the option’s expected term. Expected Term — The expected term of the Company’s options represents the period that the stock-based awards are expected to be outstanding. The Company has elected to use the midpoint between the stock options’ vesting term and contractual expiration period to compute the expected term, as the Company does not have sufficient historical information to develop reasonable expectations about future exercise patterns and post-vesting employment termination behavior. Risk-Free Interest Rate — The risk-free interest rate is based on the implied yield currently available on U.S. Treasury zero-coupon issues with a term that is equal to the options’ expected term at the grant date. Expected Dividend Yield — The Company has not declared or paid dividends to date and does not anticipate declaring dividends. As such, expected dividend yield is zero. |
Fair Value Measurements | Fair Value Measurements The Company defines fair value as the exchange price that would be received from an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the measurement date. The Company follows a three-level valuation hierarchy for disclosure of fair value measurements as follows: • Level 1 — Inputs are unadjusted quoted prices in active markets for identical assets or liabilities at the measurement date. • Level 2 — Inputs (other than quoted market prices included in Level 1) are either directly or indirectly observable for the asset or liability through correlation with market data at the measurement date and for the duration of the instrument’s anticipated life. • Level 3 — Inputs reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date. Consideration is given to the risk inherent in the valuation technique and the risk inherent in the inputs to the model. The Company’s derivative liabilities and warrants are measured at fair value on a recurring basis and are classified as Level 3 liabilities. The Company records subsequent adjustments to reflect the increase or decrease in estimated fair value at each reporting date on the condensed consolidated statements of operations and comprehensive loss. |
Convertible Notes and Derivative Liabilities | Convertible Notes and Derivative Liabilities The Company evaluates its convertible notes, and other contracts, if any, to determine if those contracts or embedded components of those contracts qualify as derivatives requiring bifurcation. The Company accounts for conversion features that meet the criteria for bifurcation as liabilities at fair value and adjusts the derivative instruments to fair value at each reporting period. The conversion features qualify as derivatives, as they continuously reset as the underlying stock price increases or decreases to provide a fixed value of equity to the holders at any conversion date. The conversion features are subject to remeasurement at each balance sheet date until exercised, and any change in fair value is recognized as a component of other income (expense), net in the condensed consolidated statements of operations and comprehensive loss. The fair value of the conversion features has been estimated using a probability-weighted discount model with and without the conversion feature until extinguished on April 26, 2022 in connection with the Business Combination See Note 10 for additional information. The Company held its convertible notes at amortized cost and amortized the associated debt discount created from bifurcated derivatives and issuance costs under the effective interest or straight-line method until maturity or early conversion pursuant to the contractual terms of the arrangement. |
Net Loss Per Share | Net Loss Per Share Basic net loss per share attributable to common stockholders is calculated by dividing the net loss attributable to common stockholders by the weighted-average number of shares of common stock outstanding during the period, without consideration for potentially dilutive securities. Diluted net loss per share attributable to common stockholders is computed by dividing the net loss attributable to common stockholders by the weighted-average number of common stock and potentially dilutive securities outstanding for the period. For purposes of the diluted net loss per share calculation, Preferred Stock, stock options, RSUs, warrants and convertible notes are considered to be potentially dilutive securities. See Note 16 for further information. Accordingly, in periods in which the Company reports a net loss, diluted net loss per share is the same as basic net loss per share, since dilutive common stock is not assumed to have been issued if their effect is anti-dilutive. |
Recent Accounting Pronouncement | Recent Accounting Pronouncement — Adopted From time to time, new accounting pronouncements, or Accounting Standards Updates, are issued by the FASB or other standard setting bodies and adopted by the Company as of the specified effective date. Unless otherwise discussed, the impact of recently issued standards that are not yet effective will not have a material impact on the Company’s financial position or results of operations upon adoption. During the nine months ended September 30, 2022, no additional accounting pronouncements were adopted. Refer to Note 2 of our audited consolidated financial statements for the fiscal year ended December 31, 2021 contained within the Company’s Form S-1/A filed July 13, 2022 for a complete list of adopted accounting pronouncements. We have described the key accounted pronouncements below: In February 2016, FASB issued Accounting Standards Update (ASU) 2016-02, Leases (Topic 842) and subsequent amendments to the initial guidance: ASU 2017-13, ASU 2018-10, ASU 2018-11, ASU 2018-20 and ASU 2019-01 (collectively, Topic 842). Topic 842 aims to increase transparency and comparability among organizations by requiring lessees to recognize leases with a term greater than 12 months as a right-of-use (“ROU”) asset and corresponding lease liabilities on the balance sheet, regardless of lease classification, and requiring disclosure of key information about leasing arrangements. The lease liability should be initially measured at the present value of the remaining contractual lease payments. Subsequently, the ROU assets will be amortized generally on a straight-line basis over the lease term, and the lease liability will bear interest expense and be reduced for lease payments. The Company adopted Topic 842 on January 1, 2021 using the modified retrospective approach, and financial information for the comparative period was not updated. In addition, the Company elected the transition package of three practical expedients which allow companies not to reassess (i) whether agreements contain leases, (ii) the classification of leases, and (iii) the capitalization of initial direct costs. Further, the Company elected to separate lease and non-lease components for the building asset class and elected to not separate lease and non-lease components for the equipment asset class. The Company also made an accounting policy election to recognize lease expense for leases with a term of 12 months or less on a straight-line basis over the lease term and recognize no ROU or lease liability for those leases. The Company’s lease portfolio consists primarily of real estate assets and computer equipment. Some of these leases also require the Company to pay maintenance, utilities, taxes, insurance, and other operating expenses associated with the leased space. Based upon the nature of the items leased and the structure of the leases, the Company’s leases classified as operating leases continue to be classified as operating leases and capital leases will be accounted for as financing leases under the new accounting standard. As a result of the adoption of the new lease accounting guidance, the Company recognized on January 1, 2021: • Operating lease liabilities of approximately $11.4 million, which represent the present value of the remaining lease payments, as of the date of adoption, discounted using the Company’s incremental borrowing rate on a lease-by-lease basis, and • Operating lease ROU assets of approximately $9.8 million which represent the operating lease liabilities of $11.4 million, adjusted for (1) deferred rent of approximately $0.8 million, (2) lease incentives or tenant improvement allowance of $1.1 million and (3) prepaid rent of $0.3 million. The adoption of the new lease accounting standard did not have any other material impact on the Company’s consolidated balance sheet and did not impact the Company’s operating results and cash flows. When the Company’s leases do not provide an implicit rate, an incremental borrowing rate is used based on the information available at the adoption date and commencement date for leases entered into after the adoption date in determining the present value of lease payments. The Company applies a benchmark rate and adjusts it for Company specific risk, collateral, term of the lease and economic factors for the economy in which the lease was maintained. See Leases in Note 14 for further information. In December 2019, the FASB issued ASU No. 2019-12, Simplifying the Accounting for Income Taxes (“Topic 740”) (“ASU 2019-12”). ASU 2019-12 eliminates the need for an organization to analyze whether the following apply in a given period (1) exception to the incremental approach for intra-period tax allocation (2) exceptions to accounting for basis differences when there are ownership changes in foreign investments and (3) exceptions in interim period income tax accounting for year-to-date losses that exceed anticipated losses. ASU 2019-12 also is designed to improve financial statement preparers’ application of income tax-related guidance and simplify U.S. GAAP for (1) franchise taxes that are partially based on income, (2) transactions with a government that result in a step-up in the tax basis of goodwill, (3) separate financial statements of legal entities that are not subject to tax, and (4) enacted changes in tax laws in interim periods. The Company adopted the standard on January 1, 2022. ASU 2019-12 did not result in any material impact on the Company’s condensed consolidated financial statements. Recent Accounting Pronouncement — Not Yet Adopted In October 2021, the FASB issued ASU 2021-08 Business Combinations (“ASC 805”) Accounting for Contract Assets and Contract Liabilities from Contracts with Customers guidance requiring entities to apply ASC 606 to recognize and measure contract assets and contract liabilities in a business combination. Under current U.S. GAAP, an acquirer generally recognizes assets acquired and liabilities assumed in a business combination, including contract assets and contract liabilities arising from revenue contracts with customers and other similar contracts that are accounted for in accordance with ASC 606, at fair value on the acquisition date. Under the new guidance the acquirer will recognize contract assets and contract liabilities at the same amounts recorded by the acquiree. The modifications improve comparability for both the recognition and measurement of acquired revenue contracts with customers at the date of, and after a business combination. The amendment is effective for the Company in fiscal years beginning after December 15, 2023. Early adoption of the amendment is permitted. The Company anticipates that it will not have a material impact on its condensed consolidated financial statements and related disclosures. In June 2016, the FASB issued ASU 2016-13 to update the methodology used to measure current expected credit losses (“CECL”). This ASU applies to financial assets measured at amortized cost, including loans, held-to-maturity debt securities, net investments in leases, and trade accounts receivable as well as certain off-balance sheet credit exposures, such as loan commitments. This ASU replaces the current incurred loss impairment methodology with a methodology to reflect CECL and requires consideration of a broader range of reasonable and supportable information to explain credit loss estimates. The guidance must be adopted using a modified retrospective transition method through a cumulative-effect adjustment to retained earnings/(deficit) in the period of adoption. In November 2019, the FASB issued ASU 2019-10, Financial Instruments — Credit Losses (“Topic 326”), Targeted Transition Relief, which amends the transition guidance for ASU 2016-13. The ASU provides entities with the option to irrevocably elect the fair value option in Subtopic 825-10 on an instrument-by-instrument basis. ASU 2019-10 and ASU 2016-13 are effective for years beginning after December 15, 2022, with early adoption permitted. The Company anticipates that it will not have a material impact on its condensed consolidated financial statements and related disclosures. |
Business Combination (Tables)
Business Combination (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Reverse Recapitalization [Abstract] | |
Schedule Of Reverse Recapitalization | The table below shows the total net proceeds from the Business Combination and the PIPE Investment (in thousands): Cash - ATSP trust and cash (net of redemption) $ 5,357 Cash - PIPE Investment 113,000 Less: transaction costs (27,668) Net proceeds from Business Combination and PIPE Investment $ 90,689 The number of shares of common stock issued immediately following the consummation of the Business Combination was as follows: Class A Common Stock - conversion of Legacy SoundHound Common Stock and Legacy SoundHound Preferred Stock outstanding prior to Business Combination 140,114,060 Class B Common Stock - conversion of Legacy SoundHound Common Stock and Legacy SoundHound Preferred Stock outstanding prior to Business Combination 40,396,600 Class A Common Stock - PIPE Investment 11,300,000 Class A Common Stock - issuance to ATSP shareholders 532,050 Class A Common Stock - issuance to Legacy SoundHound founders and representatives 4,161,000 Total shares of common stock immediately after Business Combination 196,503,710 |
Revenue Recognition (Tables)
Revenue Recognition (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Revenue from Contract with Customer [Abstract] | |
Schedule of Disaggregate Revenue | For the three and nine months ended September 30, 2022 and 2021, revenues under each performance obligation were as follows (in thousands): Three Months Ended Nine Months Ended 2022 2021 2022 2021 Hosted services $ 4,878 $ 3,170 $ 12,672 $ 9,680 Professional services 694 591 2,644 5,329 Monetization 225 267 652 1,037 Licensing 5,389 — 5,660 — Total $ 11,186 $ 4,028 $ 21,628 $ 16,046 For the three and nine months ended September 30, 2022 and 2021, the disaggregated revenue by geographic location was as follows (in thousands): Three Months Ended Nine Months Ended 2022 2021 2022 2021 United States $ 2,654 $ 1,283 $ 5,901 $ 3,586 Japan 925 921 2,775 2,875 Germany 1,070 817 2,897 7,034 France 650 506 2,947 899 Korea 5,751 320 6,403 1,180 Other 136 181 705 472 Total $ 11,186 $ 4,028 $ 21,628 $ 16,046 For the three and nine months ended September 30, 2022 and 2021, the disaggregated revenue by recognition pattern was as follows (in thousands): Three Months Ended Nine Months Ended 2022 2021 2022 2021 Over time revenue $ 5,251 $ 3,611 $ 13,852 $ 10,513 Point-in-time 5,935 417 7,776 5,533 Total $ 11,186 $ 4,028 $ 21,628 $ 16,046 Three Months Ended Nine Months Ended 2022 2021 2022 2021 Product royalties $ 10,265 $ 3,380 $ 19,534 $ 13,833 Service subscriptions 696 381 1,442 1,176 Monetization 225 267 652 1,037 Total $ 11,186 $ 4,028 $ 21,628 $ 16,046 |
Property and Equipment, Net (Ta
Property and Equipment, Net (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Property, Plant and Equipment [Abstract] | |
Schedule of property and equipment, net | Property and equipment, net consisted of the following (in thousands): September 30, December 31, Computer equipment $ 20,947 $ 20,571 Software and voice recordings 9,271 8,687 Leasehold improvements 3,850 3,567 Furniture and fixtures 765 729 Total property and equipment, at cost 34,833 33,554 Less: accumulated depreciation and amortization (30,687) (27,399) Total property and equipment, net $ 4,146 $ 6,155 |
Accrued Liabilities (Tables)
Accrued Liabilities (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Other Liabilities Disclosure [Abstract] | |
Schedule of accrued liabilities | Accrued liabilities on the condensed consolidated balance sheets was comprised of the following (in thousands): September 30, December 31, Accrued compensation expenses $ 5,536 $ 3,802 Accrued interest 230 1,369 Accrued vendor payables 1,256 1,109 Accrued professional services 155 934 Other accrued liabilities 65 84 $ 7,242 $ 7,298 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of aggregate noncancelable future minimum payments | Aggregate non-cancelable future minimum payments were as follows as of September 30, 2022 (in thousands): Remainder of 2022 $ 1,000 2023 7,000 2024 11,000 2025 14,000 2026 16,000 Thereafter 48,000 Total $ 97,000 Aggregate non-cancelable future minimum lease payments under operating and finance leases were as follows as of September 30, 2022: Operating Financing Remainder of 2022 $ 939 $ 63 2023 3,688 189 2024 3,194 122 2025 875 12 2026 418 — Thereafter 1,533 — Total 10,647 386 Less: imputed interest (1,130) (39) Present value of lease liabilities 9,517 347 Less: current portion (3,281) (179) Lease liabilities, net of current portion $ 6,236 $ 168 |
Convertible Note and Notes Pa_2
Convertible Note and Notes Payable (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Debt Disclosure [Abstract] | |
Schedule of unamortized debt discount, fair value of conversion feature, and accrued interest | The following table summarizes the unamortized debt discount, fair value of conversion feature, and accrued interest as of April 26, 2022 and December 31, 2021 (in thousands). April 26, December 31, Unamortized debt discount $ 230 $ 657 Fair value of conversion feature $ 4,094 $ 3,488 Accrued interest $ 1,375 $ 1,136 |
Schedule of convertible notes, debt balances | The below tables summarize the Company’s debt balances as of September 30, 2022 and December 31, 2021 (in thousands): September 30, 2022 SVB SCI June 2021 Note Total Notes payable $ 12,000 $ 4,593 $ 16,593 Notes payable, net of current portion 13,050 9,479 22,529 Unamortized loan discount (81) — (81) Total $ 24,969 $ 14,072 $ 39,041 Unamortized debt issuance cost recorded as an asset $ — $ 326 $ 326 December 31, SVB March 2021 Note payable, current portion $ 31,050 Unamortized loan discount (1,086) Carrying value $ 29,964 December 31, 2021 SNAP June 2020 Note SCI June 2021 Note Total Convertible notes, current portion $ 15,000 $ 15,525 $ 30,525 Unamortized loan discount (657) — (657) Total $ 14,343 $ 15,525 $ 29,868 Unamortized debt issuance cost recorded as an asset $ — $ 1,132 $ 1,132 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Fair Value Disclosures [Abstract] | |
Schedule of financial instruments that are measured or disclosed at fair value | The following tables present the fair value of the Company’s financial instruments that are measured or disclosed at fair value on a recurring basis (in thousands): Fair Value Measurements as of Level 1 Level 2 Level 3 Assets: Cash equivalents $ 166 $ — $ — Total $ 166 $ — $ — Fair Value Measurements as of Level 1 Level 2 Level 3 Assets: Cash equivalents $ 4,863 $ — $ — Liabilities: Derivative liability — — (3,488) Total $ 4,863 $ — $ (3,488) |
Fair Value Measurement Technique | The Company determined the fair value of the April 2013 Series C redeemable convertible preferred stock warrants using the Black-Scholes option-pricing model using the following assumptions: September 30, Expected dividend rate 0 % Risk-free interest rate 0.26 % Expected volatility 44 % Expected term (in years) 1.89 The Company determined the fair value of the SVB March 2021 Note and SCI June 2021 Note common stock warrants at issuance using the Black-Scholes option-pricing model using the following assumptions, respectively: SVB March 2021 Note Common Stock Warrants Expected dividend rate 0 % Risk-free interest rate 1.74 % Expected volatility 47 % Expected term (in years) 10.00 SCI June 2021 Note Common Stock Warrants Expected dividend rate 0 % Risk-free interest rate 1.51 % Expected volatility 47 % Expected term (in years) 10.00 December 31, Probability of Next Equity Financing 3 % Probability of SPAC/PIPE 95 % Probability of IPO 2 % 100 % Weighted average term (years) 0.27 Weighted average discount rate 25.00 % |
Schedule of fair value remeasurement of embedded derivative | The following table summarizes the fair value remeasurement of the embedded derivative for the three and nine months ended September 30, 2022 and 2021 (in thousands): Three Months Ended Nine Months Ended 2022 2021 2022 2021 Remeasurement of conversion feature – loss $ — $ (640) $ (606) $ (1,090) |
Schedule of changes in fair value of the company’s derivative liability and warrant liability | The following tables set forth a summary of changes in fair value of the Company’s derivative liability and warrant liability for which fair value was determined by Level 3 inputs (in thousands): Derivative Warrant Balance as of December 31, 2020 $ 2,380 $ 2,004 Change in fair value 1,090 2,701 Balance as of September 30, 2021 $ 3,470 $ 4,705 Derivative Warrant Balance as of December 31, 2021 $ 3,488 $ — Change in fair value 606 — Extinguishment of embedded derivative upon conversion of convertible note (4,094) — Balance as of September 30, 2022 $ — $ — |
Preferred Stock (Tables)
Preferred Stock (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Equity [Abstract] | |
Schedule of Preferred Stock Authorized, Issued and Outstanding | A summary of the Legacy SoundHound Preferred Stock authorized, issued and outstanding as of the date of the Business Combination is as follows: Shares Shares Liquidation Carrying Series A 19,106,048 19,106,048 $ 28,239 $ 4,967 Series B 33,702,134 33,702,134 66,360 11,038 Series C 5,687,525 5,687,525 38,163 11,837 Series C-1 4,436,090 4,436,090 89,298 16,061 Series D 20,258,299 20,258,299 527,992 85,648 Series D-1 8,418,535 8,418,535 277,812 49,957 Series D-2 8,418,530 8,418,530 277,811 49,949 Series D-3 6,922,165 6,922,165 276,887 50,046 Series D-3A 20,835,869 — — — 127,785,195 106,949,326 $ 1,582,562 $ 279,503 |
Stock Incentive Plans (Tables)
Stock Incentive Plans (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Share-Based Payment Arrangement [Abstract] | |
Schedule of Stock Options Outstanding and Exercisable | Stock option activity under the Plans was as follows for the nine months ended September 30, 2022: Number of Weighted Weighted Average Outstanding, December 31, 2021 30,361,405 $ 3.45 6.78 $ 168,923 Granted 391,619 6.17 Exercised (3,139,565) 1.16 21,751 Forfeited or cancelled (663,656) 4.51 Outstanding, September 30, 2022 26,949,803 $ 3.73 6.53 14,790 Exercisable, September 30, 2022 18,698,462 $ 2.83 5.66 14,511 Stock option activity under the Plans was as follows for the nine months ended September 30, 2021: Number of Weighted Weighted Average Outstanding, December 31, 2020 28,772,180 $ 2.38 6.75 $ 36,987 Granted 5,203,804 6.84 Exercised (2,178,412) 0.87 5,947 Forfeited or cancelled (1,801,023) 3.11 Outstanding, September 30, 2021 29,996,549 $ 3.22 6.85 172,816 Exercisable, September 30, 2021 17,350,839 $ 2.06 5.22 119,390 |
Schedule of Assumptions | The assumptions under the Black-Scholes option-pricing model and the weighted average calculated fair value of the options granted to employees during the nine-month periods ended September 30, 2022 and September 30, 2021 are as follows: September 30, September 30, Expected dividend yield 0 % 0 % Expected volatility 51 % 42 % Expected term (years) 5.88 6.01 Risk free interest rate 2.58 % 1.11 % The assumptions under the Monte Carlo simulation model and the calculated fair value of the Market-Based RSUs granted to employees during the nine months ended September 30, 2022 were as follows: September 30, Expected volatility 52 % Expected term (years) 4 Drift rate 2.9 % |
Schedule of Restricted Stock Unit Activity | Restricted stock unit activity under the Plans was as follows for the nine months ended September 30, 2022: Number of Shares Weighted Average Grant Date Fair Value Outstanding, December 31, 2021 — $ — Granted 15,802,990 5.02 Vested (631,925) 3.79 Forfeited (68,772) 9.77 Outstanding, September 30, 2022 15,102,293 $ 5.02 |
Schedule of Operations and Comprehensive Loss | Stock-based compensation is classified in the following operating expense accounts on the condensed consolidated statements of operations and comprehensive loss for the three and nine months ended September 30, 2022 and 2021 (in thousands): Three Months Ended Nine Months Ended 2022 2021 2022 2021 Cost of revenues $ 57 $ — $ 68 $ — Sales and marketing 1,077 92 1,873 294 Research and development 4,668 943 9,011 2,939 General and administrative 3,371 280 8,548 816 Total $ 9,173 $ 1,315 $ 19,500 $ 4,049 |
Leases (Tables)
Leases (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Leases [Abstract] | |
Operating Lease, Liability, Fiscal Year Maturity | Aggregate non-cancelable future minimum payments were as follows as of September 30, 2022 (in thousands): Remainder of 2022 $ 1,000 2023 7,000 2024 11,000 2025 14,000 2026 16,000 Thereafter 48,000 Total $ 97,000 Aggregate non-cancelable future minimum lease payments under operating and finance leases were as follows as of September 30, 2022: Operating Financing Remainder of 2022 $ 939 $ 63 2023 3,688 189 2024 3,194 122 2025 875 12 2026 418 — Thereafter 1,533 — Total 10,647 386 Less: imputed interest (1,130) (39) Present value of lease liabilities 9,517 347 Less: current portion (3,281) (179) Lease liabilities, net of current portion $ 6,236 $ 168 |
Finance Lease, Liability, Fiscal Year Maturity | Aggregate non-cancelable future minimum lease payments under operating and finance leases were as follows as of September 30, 2022: Operating Financing Remainder of 2022 $ 939 $ 63 2023 3,688 189 2024 3,194 122 2025 875 12 2026 418 — Thereafter 1,533 — Total 10,647 386 Less: imputed interest (1,130) (39) Present value of lease liabilities 9,517 347 Less: current portion (3,281) (179) Lease liabilities, net of current portion $ 6,236 $ 168 |
Schedule of Lease Cost | The components of lease cost were as follows (in thousands): Three Months Ended Nine Months Ended 2022 2021 2022 2021 Operating lease cost $ 851 $ 790 $ 2,570 $ 2,466 Short-term lease cost 184 151 321 434 Financing lease cost: Amortization of finance leased assets 170 623 946 1,912 Interest of lease liabilities 12 209 71 676 The table below presents additional information related to our leases as of September 30, 2022: Operating Lease Financing Lease Weighted average remaining lease term (years) 3.68 1.96 Weighted average discount rate 5.92 % 10.61 % |
Other Income (Expense), net (Ta
Other Income (Expense), net (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Other Income and Expenses [Abstract] | |
Schedule of Other Income (Expense), Net | Other income (expense), net on the condensed consolidated statements of operations and comprehensive loss is comprised of the following for the three and nine months ended September 30, 2022 and 2021 (in thousands): Three Months Ended Nine Months Ended 2022 2021 2022 2021 Other income (expense), net Interest income $ 186 $ — $ 225 $ 6 Change in fair value of derivative and warrant liability — (2,478) (606) (3,792) Other expense, net (70) (260) (337) (494) Total other income (expense), net $ 116 $ (2,738) $ (718) $ (4,280) |
Net Loss Per Share (Tables)
Net Loss Per Share (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Earnings Per Share [Abstract] | |
Schedule of Calculation of Basic and Diluted Net Loss Per Share Attributable to Common Stockholders | The following table presents the calculation of basic and diluted net loss per share attributable to common stockholders for the three and nine months ended September 30, 2022 and 2021: Three Months Ended Nine Months Ended 2022 2021 2022 2021 Numerator: Net loss (in thousands) $ (28,922) $ (23,781) $ (84,693) $ (57,693) Denominator: Weighted average shares outstanding – basic and dilutive 197,006,980 67,718,940 143,338,517 67,021,176 Basic and diluted net loss per share $ (0.15) $ (0.35) $ (0.59) $ (0.86) |
Schedule of Outstanding Shares of Potentially Dilutive Securities | The following table summarizes the outstanding shares of potentially dilutive securities that were excluded from the calculation of diluted earnings per share because their inclusion would have been anti-dilutive for the three and nine months ended September 30, 2022 and 2021: As of September 30, 2022 2021 Stock options 26,949,803 29,996,549 Restricted stock units (RSUs) 15,102,293 — Series C warrants — 745,235 Common stock warrants 3,665,996 1,063,214 Redeemable convertible preferred stock — 106,303,970 Total 45,718,092 138,108,968 |
Income Taxes (Tables)
Income Taxes (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Income Tax Disclosure [Abstract] | |
Schedule of Tax Expense and the Effective Tax Rate | The tax expense and the effective tax rate were as follows (in thousands): Three Months Ended Nine Months Ended 2022 2021 2022 2021 Loss before income taxes $ (28,058) $ (22,591) $ (83,088) $ (56,293) Income tax expense 864 1,190 1,605 1,400 Effective tax rate (3.08) % (5.27) % (1.93) % (2.49) % |
Organization -Narratives (Detai
Organization -Narratives (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Apr. 26, 2022 | Dec. 31, 2021 | |
Organization (Details) [Line Items] | ||||||
Common stock, par value (in Dollars per share) | $ 0.0001 | $ 0.0001 | $ 0.0001 | |||
Net loss | $ 28,922 | $ 23,781 | $ 84,693 | $ 57,693 | ||
Accumulated deficit | 471,422 | 471,422 | $ 386,729 | |||
Total cash and cash equivalents on hand | $ 33,412 | $ 27,259 | $ 33,412 | $ 27,259 | $ 21,626 | |
Class A Common Stock | ||||||
Organization (Details) [Line Items] | ||||||
Common stock, par value (in Dollars per share) | $ 0.0001 | $ 0.0001 | $ 0.0001 | $ 0.0001 | ||
Class B Common Stock | ||||||
Organization (Details) [Line Items] | ||||||
Common stock, par value (in Dollars per share) | $ 0.0001 | $ 0.0001 | $ 0.0001 | $ 0.0001 |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies - Narratives (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||||
Apr. 26, 2022 USD ($) shares | Sep. 30, 2022 USD ($) customer | Sep. 30, 2021 USD ($) customer | Sep. 30, 2022 USD ($) customer | Sep. 30, 2021 USD ($) customer | Dec. 31, 2021 USD ($) customer | Jan. 01, 2021 USD ($) | |
Summary of Significant Accounting Policies (Details) | |||||||
Loss related to foreign currency | $ 100 | $ 300 | $ 400 | $ 500 | |||
Present value of lease liabilities | 9,517 | 9,517 | $ 11,400 | ||||
Operating lease right-of-use asset | $ 8,833 | $ 8,833 | $ 10,291 | 9,800 | |||
Deferred rent | 800 | ||||||
Lease incentives or tenant improvement allowance | 1,100 | ||||||
Prepaid rent | $ 300 | ||||||
Legacy SoundHound | |||||||
Summary of Significant Accounting Policies (Details) | |||||||
Converted shares (in shares) | shares | 106,949,326 | ||||||
ATSP | |||||||
Summary of Significant Accounting Policies (Details) | |||||||
Deferred offering costs | $ 4,100 | ||||||
Accounts Receivable | Customer Concentration Risk | Two Customers | |||||||
Summary of Significant Accounting Policies (Details) | |||||||
Number of customers | customer | 2 | ||||||
Concentration risk, percentage | 65% | ||||||
Accounts Receivable | Customer Concentration Risk | Five Customers | |||||||
Summary of Significant Accounting Policies (Details) | |||||||
Number of customers | customer | 5 | ||||||
Concentration risk, percentage | 86% | ||||||
Revenue | Customer Concentration Risk | Two Customers | |||||||
Summary of Significant Accounting Policies (Details) | |||||||
Number of customers | customer | 2 | ||||||
Concentration risk, percentage | 57% | ||||||
Revenue | Customer Concentration Risk | Four Customers | |||||||
Summary of Significant Accounting Policies (Details) | |||||||
Number of customers | customer | 4 | ||||||
Concentration risk, percentage | 77% | ||||||
Revenue | Customer Concentration Risk | One Customer | |||||||
Summary of Significant Accounting Policies (Details) | |||||||
Number of customers | customer | 1 | ||||||
Concentration risk, percentage | 63% | ||||||
Revenue | Customer Concentration Risk | Three Customers | |||||||
Summary of Significant Accounting Policies (Details) | |||||||
Number of customers | customer | 3 | ||||||
Concentration risk, percentage | 50% |
Business Combination - Narrativ
Business Combination - Narratives (Details) - USD ($) $ / shares in Units, $ in Thousands | 9 Months Ended | |||
Apr. 26, 2022 | Sep. 30, 2022 | Apr. 25, 2022 | Dec. 31, 2021 | |
Reverse Recapitalization | ||||
Common stock and preferred stock, shares authorized (shares) | 500,000,000 | |||
Common stock, shares authorized (in shares) | 250,030,433 | 250,030,433 | 250,030,433 | |
Preferred stock, shares authorized (in shares) | 1,000,000 | 127,785,195 | ||
Common stock, par value (in Dollars per share) | $ 0.0001 | $ 0.0001 | ||
Preferred stock shares outstanding (in shares) | 0 | |||
Preferred stock shares issued (in shares) | 0 | 106,949,326 | ||
Preferred Stock, par value (in Dollars per share) | $ 0.0001 | |||
Share conversion rate (shares) | 5.5562 | |||
Shares issued as compensation | $ 4,100 | $ 4,106 | ||
Net proceeds from Business Combination and PIPE Investment | 90,689 | |||
Transaction cost | 27,668 | |||
PIPE financing | 86,600 | 86,585 | ||
Legacy SoundHound | ||||
Reverse Recapitalization | ||||
Transaction cost | $ 4,100 | |||
Additional Paid-in Capital | ||||
Reverse Recapitalization | ||||
Shares issued as compensation | 4,105 | |||
PIPE financing | $ 86,584 | |||
Class A Common Stock | ||||
Reverse Recapitalization | ||||
Common stock, shares authorized (in shares) | 455,000,000 | 455,000,000 | 0 | |
Common stock, par value (in Dollars per share) | $ 0.0001 | $ 0.0001 | $ 0.0001 | |
Vote per share | one | |||
Aggregate shares (in shares) | 11,300,000 | |||
Proceeds from the sales of share | $ 113,000 | |||
Converted into shares of common stock (in Shares) | 140,114,060 | |||
Class A Common Stock | Common Stock | ||||
Reverse Recapitalization | ||||
Shares issued as compensation | $ 1 | |||
PIPE financing | $ 1 | |||
Class A Common Stock | Initial Public Offering | ATSP | ||||
Reverse Recapitalization | ||||
Aggregate shares (in shares) | 12,767,950 | |||
Stock price per share (in Dollars per share) | $ 10 | |||
Proceeds from the sales of share | $ 127,700 | |||
Class A Common Stock | PIPE | ||||
Reverse Recapitalization | ||||
Stock price per share (in Dollars per share) | $ 10 | |||
Class B Common Stock | ||||
Reverse Recapitalization | ||||
Common stock, shares authorized (in shares) | 44,000,000 | 44,000,000 | 44,000,000 | |
Common stock, par value (in Dollars per share) | $ 0.0001 | $ 0.0001 | $ 0.0001 | |
Vote per share | ten | |||
Converted into shares of common stock (in Shares) | 40,396,600 |
Business Combination (Details)
Business Combination (Details) - Schedule of total net proceeds from the Business Combination and the PIPE Investment $ in Thousands | Apr. 26, 2022 USD ($) |
Reverse Recapitalization [Abstract] | |
Cash - ATSP trust and cash (net of redemption) | $ 5,357 |
Cash - PIPE Investment | 113,000 |
Less: transaction costs | (27,668) |
Net proceeds from Business Combination and PIPE Investment | $ 90,689 |
Business Combination (Details_2
Business Combination (Details) - Schedule of common stock issued for the consummation of the business combination - shares | Apr. 26, 2022 | Sep. 30, 2022 | Dec. 31, 2021 |
Reverse Recapitalization | |||
Common stock, shares outstanding (in shares) | 196,503,710 | 0 | 68,258,556 |
Class A Common Stock | |||
Reverse Recapitalization | |||
Shares issued in sales of stock (in shares) | 11,300,000 | ||
Common stock, shares outstanding (in shares) | 157,296,065 | 0 | |
Class A Common Stock | Legacy SoundHound | |||
Reverse Recapitalization | |||
Shares, Outstanding | 140,114,060 | ||
Class A Common Stock | ATSP | |||
Reverse Recapitalization | |||
Issuance of Class A common shares pursuant to the Business Combination (in Shares) | 532,050 | ||
Class A Common Stock | Legacy Soundhound Founders | |||
Reverse Recapitalization | |||
Issuance of Class A common shares pursuant to the Business Combination (in Shares) | 4,161,000 | ||
Class B Common Stock | |||
Reverse Recapitalization | |||
Common stock, shares outstanding (in shares) | 40,396,600 | 0 | |
Class B Common Stock | Legacy SoundHound | |||
Reverse Recapitalization | |||
Shares, Outstanding | 40,396,600 |
Revenue Recognition - Narrative
Revenue Recognition - Narratives (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Disaggregation of Revenue | ||||
Contract terms of hosted services range | Hosted services, along with non-distinct customization, integration, maintenance and support professional services, allow customers to access the Houndify platform over the contract period without taking possession of the software. The contract terms of hosted services range from one year to twenty years. | |||
Revenues | $ 11,186 | $ 4,028 | $ 21,628 | $ 16,046 |
Deferred revenue recognized | $ 2,000 | 2,300 | 5,400 | 7,400 |
Related to customer contracts unsatisfied amount | $ 23,400 | |||
Long term contract, term | 1 year | 1 year | ||
License | ||||
Disaggregation of Revenue | ||||
Revenues | $ 5,300 | $ 5,300 | ||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-10-01 | ||||
Disaggregation of Revenue | ||||
Revenue, remaining performance obligation, amount | $ 10,400 | $ 10,400 | ||
Revenue, remaining performance obligation, expected timing of satisfaction, period | 1 year | 1 year | ||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-01-01 | ||||
Disaggregation of Revenue | ||||
Revenue, remaining performance obligation, amount | $ 9,600 | $ 9,600 | ||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2024-01-01 | ||||
Disaggregation of Revenue | ||||
Revenue, remaining performance obligation, amount | $ 3,400 | $ 3,400 | ||
Revenue, remaining performance obligation, expected timing of satisfaction, period | ||||
Over Time Revenue | ||||
Disaggregation of Revenue | ||||
Revenues | $ 5,251 | 3,611 | $ 13,852 | 10,513 |
Deferred revenue recognized | 400 | 1,200 | ||
Point-In-Time | ||||
Disaggregation of Revenue | ||||
Revenues | 5,935 | $ 417 | 7,776 | $ 5,533 |
Deferred revenue recognized | $ 300 | $ 1,400 | ||
Minimum | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-01-01 | ||||
Disaggregation of Revenue | ||||
Revenue, remaining performance obligation, expected timing of satisfaction, period | 2 years | 2 years | ||
Maximum | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-01-01 | ||||
Disaggregation of Revenue | ||||
Revenue, remaining performance obligation, expected timing of satisfaction, period | 5 years | 5 years |
Revenue Recognition - Schedule
Revenue Recognition - Schedule of revenues under each performance (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Disaggregation of Revenue | ||||
Revenues | $ 11,186 | $ 4,028 | $ 21,628 | $ 16,046 |
Hosted services | ||||
Disaggregation of Revenue | ||||
Revenues | 4,878 | 3,170 | 12,672 | 9,680 |
Professional services | ||||
Disaggregation of Revenue | ||||
Revenues | 694 | 591 | 2,644 | 5,329 |
Monetization | ||||
Disaggregation of Revenue | ||||
Revenues | 225 | 267 | 652 | 1,037 |
Licensing | ||||
Disaggregation of Revenue | ||||
Revenues | $ 5,389 | $ 0 | $ 5,660 | $ 0 |
Revenue Recognition - Schedul_2
Revenue Recognition - Schedule of disaggregates revenue by geographic location (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Disaggregation of Revenue | ||||
Total | $ 11,186 | $ 4,028 | $ 21,628 | $ 16,046 |
United States | ||||
Disaggregation of Revenue | ||||
Total | 2,654 | 1,283 | 5,901 | 3,586 |
Japan | ||||
Disaggregation of Revenue | ||||
Total | 925 | 921 | 2,775 | 2,875 |
Germany | ||||
Disaggregation of Revenue | ||||
Total | 1,070 | 817 | 2,897 | 7,034 |
France | ||||
Disaggregation of Revenue | ||||
Total | 650 | 506 | 2,947 | 899 |
Korea | ||||
Disaggregation of Revenue | ||||
Total | 5,751 | 320 | 6,403 | 1,180 |
Other | ||||
Disaggregation of Revenue | ||||
Total | $ 136 | $ 181 | $ 705 | $ 472 |
Revenue Recognition - Schedul_3
Revenue Recognition - Schedule of revenue recognition pattern (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Disaggregation of Revenue | ||||
Total | $ 11,186 | $ 4,028 | $ 21,628 | $ 16,046 |
Over Time Revenue | ||||
Disaggregation of Revenue | ||||
Total | 5,251 | 3,611 | 13,852 | 10,513 |
Point-In-Time | ||||
Disaggregation of Revenue | ||||
Total | $ 5,935 | $ 417 | $ 7,776 | $ 5,533 |
Revenue Recognition - Schedul_4
Revenue Recognition - Schedule of Service (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Disaggregation of Revenue | ||||
Total | $ 11,186 | $ 4,028 | $ 21,628 | $ 16,046 |
Product royalties | ||||
Disaggregation of Revenue | ||||
Total | 10,265 | 3,380 | 19,534 | 13,833 |
Service subscriptions | ||||
Disaggregation of Revenue | ||||
Total | 696 | 381 | 1,442 | 1,176 |
Monetization | ||||
Disaggregation of Revenue | ||||
Total | $ 225 | $ 267 | $ 652 | $ 1,037 |
Property and Equipment, Net - S
Property and Equipment, Net - Schedule of property and equipment, net (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Property, Plant and Equipment | ||
Total property and equipment, at cost | $ 34,833 | $ 33,554 |
Less: accumulated depreciation and amortization | (30,687) | (27,399) |
Total property and equipment, net | 4,146 | 6,155 |
Computer equipment | ||
Property, Plant and Equipment | ||
Total property and equipment, at cost | 20,947 | 20,571 |
Software and voice recordings | ||
Property, Plant and Equipment | ||
Total property and equipment, at cost | 9,271 | 8,687 |
Leasehold improvements | ||
Property, Plant and Equipment | ||
Total property and equipment, at cost | 3,850 | 3,567 |
Furniture and fixtures | ||
Property, Plant and Equipment | ||
Total property and equipment, at cost | $ 765 | $ 729 |
Property and Equipment, Net - N
Property and Equipment, Net - Narratives (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | |
Property, Plant and Equipment [Abstract] | |||||
Finance lease right of use asset | $ 0.9 | $ 0.9 | $ 7 | ||
Accumulated depreciation | 0.4 | 0.4 | $ 4.3 | ||
Depreciation and amortization expense | $ 0.9 | $ 1.3 | $ 3.2 | $ 4.2 |
Accrued Liabilities - Schedule
Accrued Liabilities - Schedule of accrued liabilities (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Other Liabilities Disclosure [Abstract] | ||
Accrued compensation expenses | $ 5,536 | $ 3,802 |
Accrued interest | 230 | 1,369 |
Accounts payable | 1,256 | 1,109 |
Accrued professional services | 155 | 934 |
Other accrued liabilities | 65 | 84 |
Accrued liabilities | $ 7,242 | $ 7,298 |
Commitments and Contingencies -
Commitments and Contingencies - Narratives (Details) - USD ($) $ in Millions | Sep. 30, 2022 | Dec. 31, 2021 | Aug. 30, 2021 |
Commitments and Contingencies Disclosure [Abstract] | |||
Committed to pay a minimum cost | $ 98 | ||
Estimated and recorded liability | $ 1.1 | $ 1.1 |
Commitments and Contingencies_2
Commitments and Contingencies - Schedule of aggregate noncancelable future minimum payments (Details) $ in Thousands | Sep. 30, 2022 USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
Remainder of 2022 | $ 1,000 |
2023 | 7,000 |
2024 | 11,000 |
2025 | 14,000 |
2026 | 16,000 |
Thereafter | 48,000 |
Total | $ 97,000 |
Warrants- Narratives (Details)
Warrants- Narratives (Details) - USD ($) | 1 Months Ended | ||||||
Apr. 25, 2022 | Dec. 31, 2021 | Sep. 30, 2022 | Apr. 26, 2022 | Jun. 14, 2021 | Mar. 31, 2021 | Nov. 30, 2020 | |
Warrants [Abstract] | |||||||
Preferred stock shares issued (in shares) | 106,949,326 | 0 | |||||
Series C | |||||||
Warrants [Abstract] | |||||||
Preferred stock shares issued (in shares) | 5,687,525 | ||||||
Series C | Legacy SoundHound | |||||||
Warrants [Abstract] | |||||||
Preferred stock shares issued (in shares) | 645,356 | ||||||
Class A Common Stock | |||||||
Warrants [Abstract] | |||||||
Net issuance of shares (in shares) | 673,416 | ||||||
SVB March 2021 Note | |||||||
Warrants [Abstract] | |||||||
Number of common stock purchase by warrants (in shares) | 708,808 | ||||||
Exercise price per share (in Dollars per share) | $ 3.67 | ||||||
Fair value of warrants | $ 2,300,000 | ||||||
Warrants term, years | 10 years | ||||||
SCI September 2021 | |||||||
Warrants [Abstract] | |||||||
Number of common stock purchase by warrants (in shares) | 354,404 | ||||||
Fair value of warrants | $ 1,500,000 | ||||||
Warrants term, years | 10 years | ||||||
SCI June 2021 Note | |||||||
Warrants [Abstract] | |||||||
Exercise price per share (in Dollars per share) | $ 3.67 | ||||||
Series C warrants | |||||||
Warrants [Abstract] | |||||||
Exercise price per share (in Dollars per share) | $ 1.21 | ||||||
Warrants exercised (shares) | 745,235 | ||||||
Series C warrants | Warrant | |||||||
Warrants [Abstract] | |||||||
Fair value of warrants | $ 0 | $ 0 | |||||
Series C warrants | April 2013 Notes | |||||||
Warrants [Abstract] | |||||||
Number of common stock purchase by warrants (in shares) | 248,408 | ||||||
Series C warrants | November 2013 Notes | |||||||
Warrants [Abstract] | |||||||
Number of common stock purchase by warrants (in shares) | 496,827 | ||||||
Public Warrants | |||||||
Warrants [Abstract] | |||||||
Warrants outstanding (in shares) | 3,457,996 | ||||||
Warrants issued (in shares) | 3,457,996 | ||||||
Public Warrants | ATSP | |||||||
Warrants [Abstract] | |||||||
Exercise price per share (in Dollars per share) | $ 11.50 | ||||||
Public Warrants | Share Price Equal Or Exceeds Eighteen Rupees Per Dollar | ATSP | |||||||
Warrants [Abstract] | |||||||
Redemption price (in Dollars per share) | $ 0.01 | ||||||
Redemption notice period | 30 days | ||||||
Warrant trigger price (per share) | 18 | ||||||
Public Warrants | Minimum | Share Price Equal Or Exceeds Eighteen Rupees Per Dollar | ATSP | |||||||
Warrants [Abstract] | |||||||
Number of consecutive trading days for determining share price | 20 days | ||||||
Public Warrants | Maximum | Share Price Equal Or Exceeds Eighteen Rupees Per Dollar | ATSP | |||||||
Warrants [Abstract] | |||||||
Number of consecutive trading days for determining share price | 30 days | ||||||
Private Warrants | |||||||
Warrants [Abstract] | |||||||
Warrants outstanding (in shares) | 208,000 | ||||||
Warrants issued (in shares) | 208,000 |
Convertible Note and Notes Pa_3
Convertible Note and Notes Payable - Narratives (Details) - USD ($) $ / shares in Units, $ in Thousands | 1 Months Ended | 3 Months Ended | 9 Months Ended | |||||||||
Apr. 26, 2022 | Jun. 30, 2021 | Mar. 31, 2021 | Jun. 30, 2020 | Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | Dec. 01, 2021 | Jun. 14, 2021 | Sep. 30, 2020 | |
Debt Instrument [Line Items] | ||||||||||||
Proceeds from note payable, net of issuance cost | $ 0 | $ 29,833 | ||||||||||
Outstanding principal percentage | 100% | |||||||||||
Interest expense | $ 1,166 | $ 2,683 | 5,715 | 5,725 | ||||||||
SNAP June 2020 Note | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Proceeds from note payable, net of issuance cost | $ 15,000 | |||||||||||
Stated interest rate (percent) | 5% | |||||||||||
Discount percentage | 20% | |||||||||||
Price per share (in Dollars per share) | $ 0.80 | |||||||||||
Qualified financing trigger | $ 30,000 | |||||||||||
Outstanding principal percentage | 200% | |||||||||||
Derivative liability | $ 4,100 | $ 2,500 | ||||||||||
Total amount of debt discount at issuance | $ 2,500 | |||||||||||
Total interest expense | 500 | 700 | 1,500 | |||||||||
Amortization of the debt discount | 300 | 400 | 900 | |||||||||
Debt instrument face amount | 15,000 | |||||||||||
Accrued interest | 1,400 | |||||||||||
Discount written off | $ 200 | |||||||||||
SVB March 2021 Note | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Total amount of debt discount at issuance | $ 3,500 | 100 | 100 | $ 1,100 | ||||||||
Accrued interest | $ 200 | 200 | $ 200 | 200 | ||||||||
Borrowings | $ 30,000 | |||||||||||
Issuance of warrants to purchase (in Shares) | 127,570 | |||||||||||
Fair value issuance | $ 2,300 | |||||||||||
Final payment provision | $ 1,100 | |||||||||||
Loan bears interest rate | 9% | 9% | ||||||||||
Comprehensive loss | $ 700 | $ 2,100 | ||||||||||
Interest expense | 700 | 1,400 | ||||||||||
Interest expense, related party | 800 | 1,000 | 1,600 | |||||||||
Long-term balance | 13,100 | 13,100 | ||||||||||
Short-term balance | $ 12,000 | $ 12,000 | ||||||||||
Effective interest rate (percent) | 12% | 12% | ||||||||||
SVB March 2021 Note | Prime Rate | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Prime interest rate | 5.75% | |||||||||||
SCI June 2021 Note | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Loan bears interest rate | 9% | 9% | ||||||||||
Comprehensive loss | $ 400 | 100 | $ 1,100 | 100 | ||||||||
Unamortized debt discount | 300 | 300 | $ 1,100 | |||||||||
Interest expense, related party | 800 | $ 400 | 800 | $ 600 | ||||||||
Long-term balance | 9,500 | 9,500 | ||||||||||
Short-term balance | 4,600 | 4,600 | ||||||||||
Increments amount | $ 5,000 | |||||||||||
Total commitment amount | $ 15,000 | 15,000 | 15,000 | |||||||||
Initial amount | $ 5,000 | |||||||||||
Remaining amount | $ 10,000 | |||||||||||
Provision percentage | 3.50% | |||||||||||
Withdrawal amount | $ 500 | |||||||||||
Convertible note to purchase (in Shares) | 63,785 | |||||||||||
Fair value of issuance | $ 1,500 | |||||||||||
Warrants and discounts | $ 2,200 | $ 2,200 | ||||||||||
Effective interest rate (percent) | 12% | 12% | ||||||||||
SCI June 2021 Note | Prime Rate | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Prime interest rate | 5.75% | |||||||||||
Class A Common Stock | SNAP June 2020 Note | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Converted into shares of common stock (in Shares) | 368,384 |
Convertible Note and Notes Pa_4
Convertible Note and Notes Payable - Schedule of unamortized debt discount, fair value of conversion feature, and accrued interest (Details) - USD ($) $ in Thousands | Apr. 26, 2022 | Dec. 31, 2021 |
Debt Disclosure [Abstract] | ||
Unamortized debt discount | $ 230 | $ 657 |
Fair value of conversion feature | 4,094 | 3,488 |
Accrued interest | $ 1,375 | $ 1,136 |
Convertible Note and Notes Pa_5
Convertible Note and Notes Payable - Schedule of convertible notes, debt balances (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 | Mar. 31, 2021 | Jun. 30, 2020 |
Debt Instrument [Line Items] | ||||
Notes payable | $ 16,533 | $ 29,964 | ||
Convertible Debt | ||||
Debt Instrument [Line Items] | ||||
Unamortized loan discount | (657) | |||
Debt Issuance Costs, Net | 1,132 | |||
Convertible Notes Payable | 29,868 | |||
Convertible notes, current portion | 30,525 | |||
Notes Payable | ||||
Debt Instrument [Line Items] | ||||
Notes payable | 16,593 | |||
Notes payable, net of current portion | 22,529 | |||
Unamortized loan discount | (81) | |||
Total | 39,041 | |||
Debt Issuance Costs, Net | 326 | |||
SVB March 2021 Note | ||||
Debt Instrument [Line Items] | ||||
Unamortized loan discount | (100) | (1,100) | $ (3,500) | |
SVB March 2021 Note | Notes Payable | ||||
Debt Instrument [Line Items] | ||||
Notes payable | 12,000 | |||
Notes payable, net of current portion | 13,050 | |||
Unamortized loan discount | (81) | (1,086) | ||
Total | 24,969 | |||
Debt Issuance Costs, Net | 0 | |||
Note payable, current portion | 31,050 | |||
Notes payable | 29,964 | |||
SCI June 2021 Note | Convertible Debt | ||||
Debt Instrument [Line Items] | ||||
Unamortized loan discount | 0 | |||
Debt Issuance Costs, Net | 1,132 | |||
Convertible Notes Payable | 15,525 | |||
Convertible notes, current portion | 15,525 | |||
SCI June 2021 Note | Notes Payable | ||||
Debt Instrument [Line Items] | ||||
Notes payable | 4,593 | |||
Notes payable, net of current portion | 9,479 | |||
Unamortized loan discount | 0 | |||
Total | 14,072 | |||
Debt Issuance Costs, Net | $ 326 | |||
SNAP June 2020 Note | ||||
Debt Instrument [Line Items] | ||||
Unamortized loan discount | $ (2,500) | |||
SNAP June 2020 Note | Convertible Debt | ||||
Debt Instrument [Line Items] | ||||
Unamortized loan discount | (657) | |||
Debt Issuance Costs, Net | 0 | |||
Convertible Notes Payable | 14,343 | |||
Convertible notes, current portion | $ 15,000 |
Fair Value Measurements - Sched
Fair Value Measurements - Schedule of financial instruments that are measured or disclosed at fair value (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Level 1 | ||
Assets: | ||
Assets, fair value | $ 166 | |
Liabilities: | ||
Liabilities, fair value | $ 4,863 | |
Level 1 | Derivative | ||
Liabilities: | ||
Liabilities, fair value | 0 | |
Level 1 | Cash equivalents | ||
Assets: | ||
Assets, fair value | 166 | 4,863 |
Level 2 | ||
Assets: | ||
Assets, fair value | 0 | |
Liabilities: | ||
Liabilities, fair value | 0 | |
Level 2 | Derivative | ||
Liabilities: | ||
Liabilities, fair value | 0 | |
Level 2 | Cash equivalents | ||
Assets: | ||
Assets, fair value | 0 | 0 |
Level 3 | ||
Assets: | ||
Assets, fair value | 0 | |
Liabilities: | ||
Liabilities, fair value | (3,488) | |
Level 3 | Derivative | ||
Liabilities: | ||
Liabilities, fair value | (3,488) | |
Level 3 | Cash equivalents | ||
Assets: | ||
Assets, fair value | $ 0 | $ 0 |
Fair Value Measurements - Narra
Fair Value Measurements - Narrative (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||||
Apr. 26, 2022 | Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||
Fair value adjustment of warrants | $ 100 | $ 0 | $ 2,478 | $ 606 | $ 3,792 | |
Embedded derivative had a fair value | $ 4,100 | |||||
Series C warrants | ||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||
Change in fair value | $ 1,800 | $ 2,700 | ||||
SCI June 2021 Note Common Stock Warrants | ||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||
Fair value of warrants | 1,500 | 1,500 | ||||
SVB March 2021 Note Common Stock Warrants | ||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||
Fair value of warrants | $ 2,300 | $ 2,300 | ||||
Series C | ||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||
Preferred Stock fair value | $ 5,800 | |||||
Class A Common Stock | ||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||
Net issuance (in shares) | 673,416 |
Fair Value Measurements - Sch_2
Fair Value Measurements - Schedule of company determined the fair value of warrants (Details) | Sep. 30, 2022 yr | Sep. 30, 2021 yr |
Series C Redeemable Convertible Preferred Stock Warrants | Expected dividend rate | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Warrants, measurement input | 0 | |
Series C Redeemable Convertible Preferred Stock Warrants | Risk-free interest rate | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Warrants, measurement input | 0.0026 | |
Series C Redeemable Convertible Preferred Stock Warrants | Expected volatility | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Warrants, measurement input | 0.44 | |
Series C Redeemable Convertible Preferred Stock Warrants | Expected term (in years) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Warrants, measurement input | 1.89 | |
SVB March 2021 Note Common Stock Warrants | Expected dividend rate | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Warrants, measurement input | 0 | |
SVB March 2021 Note Common Stock Warrants | Risk-free interest rate | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Warrants, measurement input | 0.0174 | |
SVB March 2021 Note Common Stock Warrants | Expected volatility | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Warrants, measurement input | 0.47 | |
SVB March 2021 Note Common Stock Warrants | Expected term (in years) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Warrants, measurement input | 10 | |
SCI June 2021 Note Common Stock Warrants | Expected dividend rate | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Warrants, measurement input | 0 | |
SCI June 2021 Note Common Stock Warrants | Risk-free interest rate | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Warrants, measurement input | 0.0151 | |
SCI June 2021 Note Common Stock Warrants | Expected volatility | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Warrants, measurement input | 0.47 | |
SCI June 2021 Note Common Stock Warrants | Expected term (in years) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Warrants, measurement input | 10 |
Fair Value Measurements - Sch_3
Fair Value Measurements - Schedule of value of the embedded derivative was determined as the differential value from the perspective of the with and without method (Details) | Dec. 31, 2021 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Derivative liability measurement input (percent) | 1 |
Probability of Next Equity Financing | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Derivative liability measurement input (percent) | 0.03 |
Probability of SPAC/PIPE | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Derivative liability measurement input (percent) | 0.95 |
Probability of IPO | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Derivative liability measurement input (percent) | 0.02 |
Weighted average term (years) | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Derivative liability measurement input (percent) | 0.27 |
Weighted average discount rate | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Derivative liability measurement input (percent) | 0.2500 |
Fair Value Measurements - Sch_4
Fair Value Measurements - Schedule of fair value remeasurement of embedded derivative (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Fair Value Disclosures [Abstract] | ||||
Remeasurement of conversion feature – loss | $ 0 | $ (640) | $ (606) | $ (1,090) |
Fair Value Measurements - Sch_5
Fair Value Measurements - Schedule of changes in fair value of the company’s derivative liability and warrant liability (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | |
Derivative | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Balance beginning | $ 3,488 | $ 2,380 |
Change in fair value | 606 | 1,090 |
Extinguishment of embedded derivative upon conversion of convertible note | (4,094) | |
Balance ending | 0 | 3,470 |
Warrant | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Balance beginning | 0 | 2,004 |
Change in fair value | 0 | 2,701 |
Extinguishment of embedded derivative upon conversion of convertible note | 0 | |
Balance ending | $ 0 | $ 4,705 |
Preferred Stock - Schedule of p
Preferred Stock - Schedule of preferred stock authorized, issued and outstanding (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Apr. 26, 2022 | Apr. 25, 2022 |
Preferred Stock (Details) - Schedule of preferred stock authorized, issued and outstanding | |||
Preferred stock, shares authorized (in shares) | 1,000,000 | 127,785,195 | |
Preferred stock shares issued (in shares) | 0 | 106,949,326 | |
Liquidation Preference | $ 1,582,562 | ||
Carrying Value | $ 279,503 | ||
Series A | |||
Preferred Stock (Details) - Schedule of preferred stock authorized, issued and outstanding | |||
Preferred stock, shares authorized (in shares) | 19,106,048 | ||
Preferred stock shares issued (in shares) | 19,106,048 | ||
Liquidation Preference | $ 28,239 | ||
Carrying Value | $ 4,967 | ||
Series B | |||
Preferred Stock (Details) - Schedule of preferred stock authorized, issued and outstanding | |||
Preferred stock, shares authorized (in shares) | 33,702,134 | ||
Preferred stock shares issued (in shares) | 33,702,134 | ||
Liquidation Preference | $ 66,360 | ||
Carrying Value | $ 11,038 | ||
Series C | |||
Preferred Stock (Details) - Schedule of preferred stock authorized, issued and outstanding | |||
Preferred stock, shares authorized (in shares) | 5,687,525 | ||
Preferred stock shares issued (in shares) | 5,687,525 | ||
Liquidation Preference | $ 38,163 | ||
Carrying Value | $ 11,837 | ||
Series C-1 | |||
Preferred Stock (Details) - Schedule of preferred stock authorized, issued and outstanding | |||
Preferred stock, shares authorized (in shares) | 4,436,090 | ||
Preferred stock shares issued (in shares) | 4,436,090 | ||
Liquidation Preference | $ 89,298 | ||
Carrying Value | $ 16,061 | ||
Series D | |||
Preferred Stock (Details) - Schedule of preferred stock authorized, issued and outstanding | |||
Preferred stock, shares authorized (in shares) | 20,258,299 | ||
Preferred stock shares issued (in shares) | 20,258,299 | ||
Liquidation Preference | $ 527,992 | ||
Carrying Value | $ 85,648 | ||
Series D-1 | |||
Preferred Stock (Details) - Schedule of preferred stock authorized, issued and outstanding | |||
Preferred stock, shares authorized (in shares) | 8,418,535 | ||
Preferred stock shares issued (in shares) | 8,418,535 | ||
Liquidation Preference | $ 277,812 | ||
Carrying Value | $ 49,957 | ||
Series D-2 | |||
Preferred Stock (Details) - Schedule of preferred stock authorized, issued and outstanding | |||
Preferred stock, shares authorized (in shares) | 8,418,530 | ||
Preferred stock shares issued (in shares) | 8,418,530 | ||
Liquidation Preference | $ 277,811 | ||
Carrying Value | $ 49,949 | ||
Series D-3 | |||
Preferred Stock (Details) - Schedule of preferred stock authorized, issued and outstanding | |||
Preferred stock, shares authorized (in shares) | 6,922,165 | ||
Preferred stock shares issued (in shares) | 6,922,165 | ||
Liquidation Preference | $ 276,887 | ||
Carrying Value | $ 50,046 | ||
Series D-3A | |||
Preferred Stock (Details) - Schedule of preferred stock authorized, issued and outstanding | |||
Preferred stock, shares authorized (in shares) | 20,835,869 | ||
Preferred stock shares issued (in shares) | 0 | ||
Liquidation Preference | $ 0 | ||
Carrying Value | $ 0 |
Preferred Stock - Narratives (D
Preferred Stock - Narratives (Details) | Apr. 26, 2022 $ / shares shares | Apr. 25, 2022 shares |
Preferred Stock (Details) - Schedule of preferred stock authorized, issued and outstanding | ||
Preferred stock, shares authorized (in shares) | 1,000,000 | 127,785,195 |
Preferred Stock, par value (in Dollars per share) | $ / shares | $ 0.0001 | |
Class A Common Stock | ||
Preferred Stock (Details) - Schedule of preferred stock authorized, issued and outstanding | ||
Converted Preferred stock (in shares) | 106,949,326 | |
Preferred stock conversion ratio (per share) | 5.5562 |
Common Stock - Narratives (Deta
Common Stock - Narratives (Details) - $ / shares | Apr. 26, 2022 | Sep. 30, 2022 | Apr. 25, 2022 | Dec. 31, 2021 |
Class of Stock | ||||
Common stock, shares authorized (in shares) | 250,030,433 | 250,030,433 | 250,030,433 | |
Common stock and preferred stock, shares authorized (shares) | 500,000,000 | |||
Common stock par value (in Dollars per share) | $ 0.0001 | $ 0.0001 | ||
Preferred stock, shares authorized (in shares) | 1,000,000 | 127,785,195 | ||
Preferred stock par value (in Dollars per share) | $ 0.0001 | |||
Legacy SoundHound | ||||
Class of Stock | ||||
Converted shares (in shares) | 106,949,326 | |||
Class A Common Stock | ||||
Class of Stock | ||||
Common stock, shares authorized (in shares) | 455,000,000 | 455,000,000 | 0 | |
Common stock par value (in Dollars per share) | $ 0.0001 | $ 0.0001 | $ 0.0001 | |
Converted into shares of common stock (in Shares) | 140,114,060 | |||
Vote per share | one | |||
Class B Common Stock | ||||
Class of Stock | ||||
Common stock, shares authorized (in shares) | 44,000,000 | 44,000,000 | 44,000,000 | |
Common stock par value (in Dollars per share) | $ 0.0001 | $ 0.0001 | $ 0.0001 | |
Converted into shares of common stock (in Shares) | 40,396,600 | |||
Vote per share | ten | |||
Common Stock | ||||
Class of Stock | ||||
Converted shares (in shares) | 180,510,660 | |||
Common Stock | Legacy SoundHound | ||||
Class of Stock | ||||
Converted shares (in shares) | 73,561,334 | |||
Preferred Stock | Legacy SoundHound | ||||
Class of Stock | ||||
Converted shares (in shares) | 106,949,326 |
Stock Incentive Plans - Narrati
Stock Incentive Plans - Narratives (Details) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||||
Jun. 02, 2022 | Apr. 26, 2022 | Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | Apr. 25, 2022 | |
Stock Incentive Plans | ||||||||
Awards remaining for issuance shares (in Shares) | 5,601,945 | 5,601,945 | ||||||
Fair value of options vested | $ 3,800,000 | $ 900,000 | $ 7,200,000 | $ 2,900,000 | ||||
Unamortized expense | 18,800,000 | $ 18,800,000 | ||||||
Amortization period (years) | 2 years 6 months 14 days | |||||||
Stock based compensation expense | 9,173,000 | $ 1,315,000 | $ 19,500,000 | $ 4,049,000 | ||||
Legacy SoundHound | ||||||||
Stock Incentive Plans | ||||||||
Founders held of legacy (in Shares) | 7,270,503 | |||||||
2016 Equity Incentive Plan | ||||||||
Stock Incentive Plans | ||||||||
Additional share authorized for issuance (in Shares) | 6,667,478 | |||||||
Stock reserved for issuance (in Shares) | 48,347,329 | |||||||
2022 Employee Stock Purchase Plan | ||||||||
Stock Incentive Plans | ||||||||
Stock reserved for issuance (in Shares) | 3,930,074 | |||||||
Aggregate share percentage | 2% | |||||||
Percentage of fair market value | 85% | |||||||
Class A Common Stock | ||||||||
Stock Incentive Plans | ||||||||
Converted into shares of common stock (in Shares) | 140,114,060 | |||||||
Vote per share | one | |||||||
Class A Common Stock | 2022 Incentive Plan | ||||||||
Stock Incentive Plans | ||||||||
Stock reserved for issuance (in Shares) | 19,650,371 | |||||||
Percentage of initial Limit | 10% | |||||||
Class B Common Stock | ||||||||
Stock Incentive Plans | ||||||||
Converted into shares of common stock (in Shares) | 40,396,600 | |||||||
Vote per share | ten | |||||||
Stock based compensation expense | $ 1,000,000 | |||||||
Stock options | 2016 Equity Incentive Plan | ||||||||
Stock Incentive Plans | ||||||||
Shareholder percentage trigger (percent) | 10% | 10% | ||||||
Contractual expirations (years) | 10 years | |||||||
Vesting period (years) | 4 years | |||||||
Vesting percentage ( percent) | 25% | |||||||
Stock options | 2016 Equity Incentive Plan | Optionee Below Threshold | ||||||||
Stock Incentive Plans | ||||||||
Employee exercise price as a percentage of fair value of stock price (percent) | 100% | 100% | ||||||
Stock options | 2016 Equity Incentive Plan | Optionee Above Threshold | ||||||||
Stock Incentive Plans | ||||||||
Employee exercise price as a percentage of fair value of stock price (percent) | 110% | 110% | ||||||
RSUs | ||||||||
Stock Incentive Plans | ||||||||
Fair value of options vested | $ 2,700,000 | $ 3,600,000 | ||||||
Unamortized expense | 56,800,000 | $ 56,800,000 | ||||||
Amortization period (years) | 3 years 25 days | |||||||
Shares issued (shares) | 2,310,000 | |||||||
Stock based compensation expense | $ 7,100,000 | $ 11,600,000 | ||||||
Weighted average grant date fair value at the beginning (in Dollars per share) | $ 5.02 | $ 5.02 | $ 0 | |||||
RSUs | 2016 Equity Incentive Plan | ||||||||
Stock Incentive Plans | ||||||||
Vesting period (years) | 4 years | |||||||
Vesting percentage ( percent) | 25% | |||||||
Performance-Based RSUs | ||||||||
Stock Incentive Plans | ||||||||
Unamortized expense | $ 7,300,000 | $ 7,300,000 | ||||||
Shares issued (shares) | 870,000 | |||||||
Stock based compensation expense | 200,000 | 200,000 | ||||||
Market-Based RSUs | ||||||||
Stock Incentive Plans | ||||||||
Unamortized expense | 3,000,000 | 3,000,000 | ||||||
Shares issued (shares) | 770,000 | |||||||
Stock based compensation expense | $ 600,000 | $ 600,000 | ||||||
Weighted average grant date fair value at the beginning (in Dollars per share) | $ 3.91 | $ 3.91 |
Stock Incentive Plans - Schedul
Stock Incentive Plans - Schedule of stock options outstanding and exercisable (Details) - USD ($) $ / shares in Units, $ in Thousands | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | Dec. 31, 2020 | |
Number of Shares | ||||
Balance at the beginning (in shares) | 30,361,405 | 28,772,180 | 28,772,180 | |
Granted (in shares) | 391,619 | 5,203,804 | ||
Exercised (in shares) | (3,139,565) | (2,178,412) | ||
Forfeited or cancelled (in shares) | (663,656) | (1,801,023) | ||
Balance at the end (in shares) | 26,949,803 | 29,996,549 | 30,361,405 | 28,772,180 |
Options exercisable (in shares) | 18,698,462 | 17,350,839 | ||
Weighted Average Exercise Price | ||||
Balance at the beginning (in Dollars per share) | $ 3.73 | $ 3.22 | $ 3.45 | $ 2.38 |
Granted (in Dollars per share) | 6.17 | 6.84 | ||
Exercised (in Dollars per share) | 1.16 | 0.87 | ||
Forfeited or cancelled (in Dollars per share) | 4.51 | 3.11 | ||
Balance at the ending (in Dollars per share) | $ 3.73 | $ 3.22 | $ 3.45 | $ 2.38 |
Options exercisable (in Dollars per share) | 2.83 | 2.06 | ||
Weighted Average Remaining Contractual Term (Years) | ||||
Weighted Average Remaining Contractual Term (Years), Outstanding | 6 years 6 months 10 days | 6 years 10 months 6 days | 6 years 9 months 10 days | 6 years 9 months |
Weighted Average Remaining Contractual Term (Years), Exercisable | 5 years 7 months 28 days | 5 years 2 months 19 days | ||
Outstanding balance at the beginning, average intrinsic value | $ 14,790 | $ 172,816 | $ 168,923 | $ 36,987 |
Exercised, average intrinsic value | 21,751 | 5,947 | ||
Outstanding balance at the end, average intrinsic value | 14,790 | 172,816 | $ 168,923 | $ 36,987 |
Options exercisable at the end, average intrinsic value | $ 14,511 | $ 119,390 |
Stock Incentive Plans - Sched_2
Stock Incentive Plans - Schedule of assumptions under the Black-Scholes option-pricing model and the weighted average calculated fair value of the options granted to employees (Details) - Share-Based Payment Arrangement, Option | 9 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | |
Stock Incentive Plans | ||
Expected dividend yield | 0% | 0% |
Expected volatility | 51% | 42% |
Expected term (years) | 5 years 10 months 17 days | 6 years 3 days |
Risk free interest rate | 2.58% | 1.11% |
Stock Incentive Plans - Sched_3
Stock Incentive Plans - Schedule of restricted stock unit activity (Details) - Restricted stock units (RSUs) - $ / shares | 9 Months Ended | |
Sep. 30, 2022 | Dec. 31, 2021 | |
Number of Shares | ||
Balance at the beginning (in shares) | 0 | |
Granted (in shares) | 15,802,990 | |
Vested (in shares) | (631,925) | |
Forfeited (in shares) | (68,772) | |
Balance at the end (in shares) | 15,102,293 | |
Weighted Average Grant Date Fair Value | ||
Weighted average grant date fair value at the beginning (in Dollars per share) | $ 5.02 | $ 0 |
Weighted average grant date fair value, granted (in Dollars per share) | 5.02 | |
Weighted average grant date fair value,vested (in Dollars per share) | 3.79 | |
Weighted average grant date fair value, forfeited (in Dollars per share) | 9.77 | |
Weighted average grant date fair value at the end (in Dollars per share) | $ 5.02 |
Stock Incentive Plans - Sched_4
Stock Incentive Plans - Schedule of assumptions under the Monte Carlo simulation model and the calculated fair value of the Market-Based RSUs granted to employees (Details) - Restricted stock units (RSUs) | 9 Months Ended |
Sep. 30, 2022 | |
Stock Incentive Plans | |
Expected volatility | 52% |
Expected term (years) | 4 years |
Drift rate | 2.90% |
Stock Incentive Plans - Sched_5
Stock Incentive Plans - Schedule of operations and comprehensive loss (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Stock Incentive Plans | ||||
Total | $ 9,173 | $ 1,315 | $ 19,500 | $ 4,049 |
Cost of revenues | ||||
Stock Incentive Plans | ||||
Total | 57 | 0 | 68 | 0 |
Sales and marketing | ||||
Stock Incentive Plans | ||||
Total | 1,077 | 92 | 1,873 | 294 |
Research and development | ||||
Stock Incentive Plans | ||||
Total | 4,668 | 943 | 9,011 | 2,939 |
General and administrative | ||||
Stock Incentive Plans | ||||
Total | $ 3,371 | $ 280 | $ 8,548 | $ 816 |
Leases - Schedule of aggregate
Leases - Schedule of aggregate noncancelable future minimum lease payments under operating and finance leases (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 | Jan. 01, 2021 |
Operating Lease | |||
Remainder of 2022 | $ 939 | ||
2023 | 3,688 | ||
2024 | 3,194 | ||
2025 | 875 | ||
2026 | 418 | ||
Thereafter | 1,533 | ||
Total | 10,647 | ||
Less: imputed interest | (1,130) | ||
Present value of lease liabilities | 9,517 | $ 11,400 | |
Less: current portion | (3,281) | $ (3,281) | |
Lease liabilities, net of current portion | 6,236 | 8,611 | |
Financing Lease | |||
Remainder of 2022 | 63 | ||
2023 | 189 | ||
2024 | 122 | ||
2025 | 12 | ||
2026 | 0 | ||
Thereafter | 0 | ||
Total | 386 | ||
Less: imputed interest | (39) | ||
Present value of lease liabilities | 347 | ||
Less: current portion | (179) | (1,301) | |
Financing lease liabilities, net of current portion | $ 168 | $ 292 |
Leases - Schedule of lease cost
Leases - Schedule of lease cost (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Leases [Abstract] | ||||
Operating lease cost | $ 851 | $ 790 | $ 2,570 | $ 2,466 |
Short-term lease cost | 184 | 151 | 321 | 434 |
Amortization of finance leased assets | 170 | 623 | 946 | 1,912 |
Interest of lease liabilities | $ 12 | $ 209 | $ 71 | $ 676 |
Leases - Schedule of additional
Leases - Schedule of additional information related to our leases (Details) | Sep. 30, 2022 |
Leases [Abstract] | |
Operating lease, weighted average remaining lease term (years) | 3 years 8 months 4 days |
Operating lease, weighted average discount rate (in percent) | 5.92% |
Finance leasing, weighted average remaining lease term (years) | 1 year 11 months 15 days |
Financing lease, weighted average discount rate (in percent) | 10.61% |
Leases - Narratives (Details)
Leases - Narratives (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Leases [Abstract] | ||||
Total rent expense | $ 1 | $ 0.9 | $ 2.9 | $ 2.9 |
Other Income (Expense), net - S
Other Income (Expense), net - Schedule of other income (expense), net (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Apr. 26, 2022 | Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Other Income and Expenses [Abstract] | |||||
Interest income | $ 186 | $ 0 | $ 225 | $ 6 | |
Change in fair value of derivative and warrant liability | $ (100) | 0 | (2,478) | (606) | (3,792) |
Other expense, net | (70) | (260) | (337) | (494) | |
Total other income (expense), net | $ 116 | $ (2,738) | $ (718) | $ (4,280) |
Net Loss Per Share - Schedule o
Net Loss Per Share - Schedule of calculation of basic and diluted net loss per share attributable to common stockholders (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Numerator: | ||||
Net loss | $ (28,922) | $ (23,781) | $ (84,693) | $ (57,693) |
Weighted Average Number of Shares | ||||
Basic (in shares) | 197,006,980 | 67,718,940 | 143,338,517 | 67,021,176 |
Diluted (in shares) | 197,006,980 | 67,718,940 | 143,338,517 | 67,021,176 |
Net loss per share: | ||||
Basic net loss per share (in Dollars per share) | $ (0.15) | $ (0.35) | $ (0.59) | $ (0.86) |
Diluted net loss per share (in Dollars per share) | $ (0.15) | $ (0.35) | $ (0.59) | $ (0.86) |
Net Loss Per Share - Schedule_2
Net Loss Per Share - Schedule of outstanding shares of potentially dilutive securities (Details) - shares | 9 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Total | 45,718,092 | 138,108,968 |
Redeemable convertible preferred stock | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Total | 0 | 106,303,970 |
Stock options | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Total | 26,949,803 | 29,996,549 |
Restricted stock units (RSUs) | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Total | 15,102,293 | 0 |
Warrant | Common Stock | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Total | 3,665,996 | 1,063,214 |
Warrant | Series C warrants | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Total | 0 | 745,235 |
Income Taxes - Schedule of tax
Income Taxes - Schedule of tax expense and the effective tax rate (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Income Tax Disclosure [Abstract] | ||||
Loss before income taxes | $ (28,058) | $ (22,591) | $ (83,088) | $ (56,293) |
Income tax expense | $ 864 | $ 1,190 | $ 1,605 | $ 1,400 |
Effective tax rate (in percent) | (3.08%) | (5.27%) | (1.93%) | (2.49%) |
Related Party Transactions - Na
Related Party Transactions - Narratives (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | 9 Months Ended | |
Sep. 30, 2021 | Jun. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | |
Related Party Transactions [Abstract] | ||||
Revenue from related parties | $ 1,600 | $ 5,200 | $ 5,200 | |
Accounts receivable, related parties | $ 600 | |||
Deferred revenue, related parties | $ 15,200 |
Subsequent Event - Narratives (
Subsequent Event - Narratives (Details) - USD ($) | Aug. 16, 2022 | Apr. 26, 2022 | Sep. 30, 2022 | Apr. 25, 2022 | Dec. 31, 2021 |
Subsequent Events | |||||
Common stock, shares authorized (in shares) | 250,030,433 | 250,030,433 | 250,030,433 | ||
CFPI | |||||
Subsequent Events | |||||
Net proceeds trigger amount | $ 1,000,000 | ||||
Class A Common Stock | |||||
Subsequent Events | |||||
Common stock, shares authorized (in shares) | 455,000,000 | 455,000,000 | 0 | ||
Aggregate shares (in shares) | 11,300,000 | ||||
Class A Common Stock | CFPI | |||||
Subsequent Events | |||||
Common stock, shares authorized (in shares) | 25,000,000 | ||||
Weighted average redemption rate as a based on weighted average share price (percent) | 97% | ||||
Aggregate shares (in shares) | 250,000 |