SoundHound AI Inc. (SOUN) had a Thursday morning that short sellers probably didn't enjoy. The conversational AI company's stock jumped more than 26% in premarket trading after it delivered second-quarter results that beat expectations and raised its full-year 2026 revenue guidance.
But the earnings beat was only part of the story. The rally likely got an extra boost from a short squeeze. About 42.35% of SoundHound's public float, roughly 169.2 million shares, was sold short. That's a lot of investors betting against the stock, and when shares started climbing, many of them were forced to cover their positions, fueling the surge even higher.
Q2 Results: Beating the Street
Revenue came in at $61.9 million, up 45% year over year and well above the analyst consensus of $52.39 million. The company credited strong demand across enterprise AI, healthcare, automotive, financial services, technology, and other end markets.
On the bottom line, SoundHound reported an adjusted loss of 2 cents per share, beating expectations for a 6-cent loss. Adjusted gross margin held steady at 58.4% year over year but improved 8 percentage points sequentially. The adjusted EBITDA loss narrowed 33% to $9.6 million, and the company ended the quarter with $203 million in cash and cash equivalents.
Management pointed to its OASYS agentic AI platform as a key growth driver during the quarter. The platform helped improve customer conversion rates, increase win rates, and shorten sales cycles. In fact, the company secured an eight-figure customer commitment within 90 days of an initial OASYS demonstration.
Partnerships and New Frontiers
Asia continued to be a bright spot, with SoundHound securing major deals for the fifth consecutive quarter. The company signed new partnerships with Chinese and Indian automotive and technology companies for agentic AI, IoT, and large language model-powered voice solutions. It also expanded collaborations with global automakers like Stellantis and Hyundai.
SoundHound is also venturing into voice commerce. Upcoming pilot programs will enable AI-powered in-car transactions through OASYS and direct purchases through smart TVs with a global electronics partner.
The restaurant and small-business AI segment kept growing too. Smart Answering revenue more than doubled from a year earlier, the company added three new U.S. restaurant customers, and it maintained a 100% renewal rate among key accounts.
On the acquisition front, SoundHound expects its deal for LivePerson to close by the end of 2026, which should expand its enterprise reach and strengthen its conversational AI platform.
FY26 Outlook: Raised and Ready
SoundHound raised its fiscal 2026 revenue guidance to a range of $230 million to $260 million, up from its previous forecast of $225 million to $260 million. The midpoint of the updated range sits above the analyst consensus of $232.2 million.
Management also highlighted the long-term potential of agentic AI, citing Gartner's forecast that software spending in the category could approach $1 trillion by 2030. The company expects gross margins to eventually exceed 70% as acquisition synergies materialize and more customers adopt its proprietary AI platform.
As of premarket trading Thursday, SoundHound AI shares were up 26.44% at $8.13.
