Thread by @CulperResearch

We are short SoundHound AI, Inc. $SOUN. Our full report is now available on our website, culperresearch.com

2) $SOUN is a flailing AI wannabe trading at 22x revenues that has misled investors regarding both its claims to possess revolutionary AI technology and a massive backlog of $336M in contracts averaging 6.5 years in length. We think both $SOUN's tech and its backlog are bogus.

3) $SOUN claims that it sees "immediate scaling" at restaurants, but the only large restaurant group $SOUN names is White Castle, signed in 2020. Former employees told us that White Castle was merely a trial, and remains contained to just 3 of 300+ locations, 3 years later.

4) Similarly, in early SPAC materials, $SOUN named Sonic Drive-In as a customer, yet has removed Sonic's logos from all of its materials and has not mentioned Sonic in any venues since that time. We think Sonic likely left SoundHound behind, as $SOUN's tech simply does not work.

5) Customers at the sole named White Castle location utilizing $SOUN's AI ordering say they "hate it", it's "always messed up", "did not get my order right", "is a pain", and gets orders "all wrong." Former $SOUN employees estimated the AI messed up 30% to 50% of orders.

6) $SOUN touts its offering as "fully-automated", but we discovered $SOUN uses undisclosed fully-staffed call centers. As recently as May, $SOUN posted jobs seeking a "Merchant Operations Manager" who would explicitly contract with and manage call centers.

7) $SOUN claims it's AI has reduced bad responses "to a negligible amount", but even $SOUN's chat app is useless. The app failed in even basic asks, telling us Joe Biden was the first POTUS, and naming CLOSED restaurants when we asked for food options open now.

8) $SOUN misleads on its supposed $336M backlog consisting of contracts averaging 6.5 years in length. $SOUN previously called its backlog "understated", but now forecasts just $43-50M in 2023 revenues vs. its original $110M guide, a 58% whiff.

9) $SOUN's claims literally don't add up: $SOUN says its longest deal is 9+ years, and that avg. length expanded from 4 to 6.5 years, implying $SOUN has been signing 12 to 20-year contracts. Both can't be true. A former employee corroborated 10-year contracts out of question.

10) $SOUN claims backlog "automatically rolls into the P&L" yet our convos with 3 former $SOUN employees contradicted these claims. Per formers, backlog included "potential revenue based on potential engagements" which "might be vague", and "may not actually happen."

11) $SOUN's auditor is the problematic Armanino LLP, now infamous for auditing FTX US, a bevy of microcap blow-ups, and providing aattestation services for cryptos like Nexo, later fined $45M by the SEC. Coincidentally, both Armanino's 2021 audit inspections found deficiencies.

12) Our read of $SOUN's 8-K accompanying its new $400M shelf implies $SOUN burned $16.3M in Q2, up from $14.5M in Q1, despite the Company's claims to ramp profitability thru 2023. Sell-side models we reviewed bought into management's bait-and-switch; steep revisions are coming.

13/13) $SOUN's CRO left in February, and $SOUN has yet to hire a replacement. Yet in March 2023, multiple insiders instead set up stock sale plans, and have collectively sold $11.5M in stock, most of it since June. We're short and think shares are headed lower.