SoundHound Acquires Amelia AI for $80M to Boost AI Capabilities

SoundHound, known for its voice interface technology used by car companies, restaurants, and tech firms, is enhancing its enterprise services by acquiring Amelia AI for $80 million in cash and equity. This move positions SoundHound as a significant player in the AI market, aiming to expand its reach in various verticals.

Amelia AI’s Background

Amelia AI, previously known as IPsoft, specializes in customizable AI agents for businesses. It had raised at least $189 million, including a $175 million investment in March 2023. Amelia’s clients include major companies like BNP Paribas, Teva Pharmaceuticals, and Fujitsu.

Combined Customer Base and Revenue Forecast

The acquisition will bring together about 200 customers, including big banks and Fortune 500 companies. SoundHound expects to generate $150 million in revenue by 2025, with $45 million coming from Amelia’s current business.

SoundHound’s Market Position

Since going public via a SPAC merger in 2021, SoundHound has experienced a volatile market journey. After significant layoffs and additional funding in 2023, its market cap has grown to around $1.4 billion in 2024. However, analysts still anticipate the company to report a loss in its upcoming quarterly results.

Financial Details of the Deal

The deal includes SoundHound assuming Amelia’s debt, resulting in a combined entity with $160 million in cash and $39 million in debt upon closing.

Expansion into New Verticals

SoundHound plans to leverage Amelia’s presence in financial services, insurance, healthcare, retail, and hospitality to expand its business. This acquisition provides SoundHound with a quicker entry into these highly regulated sectors, which have complex integration requirements.

Leadership’s Vision

SoundHound’s co-founder and CEO, Keyvan Mohajer, emphasized that acquiring Amelia accelerates their growth into new verticals and enhances their voice assistant capabilities. He highlighted the significant opportunity to integrate different ecosystems and deliver productivity.

Context of AI Market

The AI market is witnessing massive investments, with over $35 billion invested in AI startups in the first half of 2024. Despite concerns about a potential bubble, companies like SoundHound continue to scale their businesses through strategic acquisitions. Earlier in 2024, SoundHound acquired Allset, an ordering platform for restaurants, and SYNQ3, an AI provider for restaurants.

Future Outlook

SoundHound aims to extend its portfolio and scale the production of its conversational and generative AI solutions. The focus remains on building customer-centric use cases and integrating various ecosystems to enhance productivity.