Tue. 16 Nov 2021, 5:25pm ETBenzinga
In: M&A, News, IPOs

A leading artificial intelligence company announced a SPAC merger to go public.

The SPAC Deal: SoundHound announced a SPAC merger with Archimedes Tech SPAC Partners Co (NASDAQ:ATSPT) valuing the company at a pro-forma enterprise value of $2.1 billion.

A PIPE of $111 million includes investments by Oracle Corp (NYSE:ORCL), Vizio Holding Corp (NYSE:VZIO), Koch Industries, HTC and FIH Mobile, a FoxConn company.

Existing investors in SoundHound include Hyundai, Daimler AG, Mercedes-Benz, Samsung, Tencent Holdings (OTC:TCEHY), NVIDIA Corp (NASDAQ:NVDA), Korea Telecom, Kleiner Perkins and others.

The merger is expected to close in the first quarter of 2022 with the company trading as SoundHound AI Inc and trade with the ticker SOUN on the Nasdaq. Public ATSPT shareholders will own 5.8% of the company.

Leading SPAC expert Julian Klymochko notes that ATSPT is a subunit, which consists of common stock and one-quarter of a warrant. ATSPT is one of only three SPACs with a subunit structure and the only one that has announced a definitive agreement.

About SoundHound: With a voice artificial intelligence platform, SoundHound helps businesses to deliver best-in-class conversational experiences to customers in 22 languages.

The company’s products include speech-to-meaning and deep meaning understanding technologies. These platforms offer customers to interact with products and services just with their voice. A developer platform called Houndify offers development tools and dashboards for its partners to analyze customer usage.

Over the last 16 years, SoundHound has help launched several products and has obtained 227 patents for voice artificial intelligence.

Partners for SoundHound include Pandora, Mastercard (NYSE:MA), Deutsche Telekom, Snap Inc (NYSE:SNAP), KIA, Hyundai, Mercedes-Benz, White Castle, Sportradar Group (NASDAQ:SRAD), Yelp (NYSE:YELP), Expedia Group Inc (NASDAQ:EXPE) and Stellantis NV (NYSE:STLA).

The company helps process over 100 million queries each month through its partnerships.

Related Link: November SPAC Merger Calendar: Upcoming Votes, Earnings, Stocks To Watch

Growth Ahead: The voice artificial intelligence segment is estimated to be a $160-billion opportunity in 2026 by SoundHound. There are expected to be 75 connected devices in the world by 2025, according to SoundHound’s presentation.

Over 90% of new vehicles are expected to have voice assistants by the year 2028. SoundHound has investments and partnerships with several of the leading automotive companies.

SoundHound helps its partners grow customer loyalty and enhance customer experiences, a segment of the market that continues to grow.

“Much like Apple disrupted and revolutionized human-machine interaction via the perfection of touch, SoundHound is poised to disrupt and revolutionize human-machine interaction via voice,” Archimedes Chairman Eric Ball said.

Examples from SoundHound on helping customers includes voice commands to turn off the air conditioning, lower the car windows, placing food deliveries and finding specific genre films on a streaming platform.

Query volume for SoundHound has doubled in the first half of 2021 and could hit 1 billion by the end of 2021.

“We believe voice AI is poised to create the next major disruption in computing,” SoundHound CEO and co-founder Keyvan Mohajer said. “The growing demand for these companies to own their customer relationships and data have positioned SoundHound as a leading solution for voice assistants globally.”

Financials: SoundHound had revenue of $13 million in fiscal 2020, up 70% year-over-year. The company is estimating revenue of $20 million in fiscal 2021 and $533 million in fiscal 2025.

SoundHound gets the majority of its revenue from royalties, making up 88% of the estimated 2021 total. Subscription revenue and monetization revenue make up 7% and 5%, respectively.

By 2025, SoundHound expects its revenue mix to be 19% royalty, 44% subscription and 37% monetization.

Voice technology companies have been actively bought up by investors and large technology companies over the years with the sector growth. Samsung bought Harman for $8 billion in 2016. Microsoft Corp (NASDAQ:MSFT) bought Nuance for $16 billion in 2021.

ATSPT Price Action: ATSPT shares gained 0.81% Tuesday, closing at $9.90.