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SoundHound Expands Enterprise Services with Strategic Acquisition of Amelia AI
SoundHound Buys Amelia AI: SoundHound, an AI company specializing in voice interface technology used by industries such as automotive, hospitality, and technology, is strengthening its focus on enterprise services through strategic acquisitions. On Thursday, SoundHound announced its acquisition of Amelia AI, a company known for creating customizable AI agents for internal and customer-facing use in businesses.
SoundHound Buys Amelia AI: Acquisition Details and Financial Impact
SoundHound is set to acquire Amelia AI for $80 million in a combination of cash and equity. While Amelia’s exact valuation before the deal remains unclear, it had previously raised at least $189 million, including a significant $175 million investment in March 2023 from BuildGroup, according to PitchBook.
Amelia AI’s client roster includes prominent names such as BNP Paribas, Teva Pharmaceuticals, and Fujitsu. Post-acquisition, SoundHound and Amelia will collectively serve approximately 200 customers, including major banks and Fortune 500 companies, with an anticipated revenue of $150 million by 2025. Of this projected revenue, $45 million is expected to come from Amelia’s existing business.
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SoundHound Buys Amelia AI: Market Position and Future Outlook
SoundHound, a publicly traded company, has experienced a turbulent journey since going public via a SPAC merger in 2021, when it was valued at $2.1 billion. However, by 2023, the company had to lay off nearly half of its workforce and secure additional funding to stabilize its position. As of 2024, SoundHound’s market capitalization stands at around $1.4 billion, a significant recovery from less than $300 million in January 2023. Despite this improvement, analysts anticipate that SoundHound will report a loss in its upcoming quarterly results.
The acquisition of Amelia AI will also see SoundHound assuming Amelia’s debt. Upon completion of the deal, the combined entity will possess $160 million in cash and $39 million in debt.
Strategic Rationale Behind the Acquisition
SoundHound and Amelia AI have long histories in the AI industry, with SoundHound founded in 2005 and Amelia, originally known as IPsoft, established in 1998. The acquisition of Amelia allows SoundHound to penetrate new verticals, including financial services, insurance, healthcare, retail, and hospitality, where it currently has limited presence.
SoundHound’s co-founder and CEO, Keyvan Mohajer, emphasized the strategic benefits of the acquisition, noting that Amelia’s existing customer relationships and product capabilities would have taken years to develop internally. Amelia’s voice assistant tools also align with SoundHound’s focus on voice interfaces, offering a smoother entry into new markets and customers.
The Broader AI Industry and Investment Trends
This acquisition comes at a time of intense activity in the AI sector, with substantial investments flowing into AI startups. According to CrunchBase, more than $35 billion was invested in AI startups in the first half of 2024, with 28 startups raising over $100 million each. Additionally, Goldman Sachs estimates that big tech and other industries will spend $1 trillion on AI-related capital expenditures in the coming years.
Despite concerns about potential over-investment in AI, Mohajer remains optimistic, arguing that the value creation in AI is far from over and that SoundHound is positioning itself to capitalize on this growth.
SoundHound’s Acquisition Strategy
SoundHound’s acquisition of Amelia AI is part of a broader strategy to accelerate its business through targeted acquisitions. In June 2024, SoundHound acquired Allset, an ordering platform for restaurants, and in December 2023, it purchased SYNQ3, another AI provider for the restaurant industry, for $25 million.
As the AI industry continues to evolve, the focus remains on how service-based businesses will develop and the value they will bring to the market. SoundHound aims to expand its portfolio and scale its conversational and generative AI solutions, balancing innovation with effective risk management.
“We see a massive opportunity to extend our reach,” Mohajer stated. “It’s not just about building infrastructure; it’s about delivering productivity by integrating different ecosystems and focusing on end-customer use cases.”
