CFOs across industries have kept a close eye on inflation in recent months as key economic indicators continue to point to the growing possibility of recession. The latest lukewarm CPI data released by the Department of Labor is unlikely to persuade the Federal Reserve to halt further rate hikes, for example, forcing financial leaders to balance their companies’ financial needs with encroaching inflationary pressures.
However, CFOs must be aware of how their particular business will hold up during different economic environments, Nitesh Sharan, CFO for conversational AI provider SoundHound, said in a recent interview.
The response to inflationary pressures is not one-size-fits-all, he said. Determining whether to slow down operations or keep pushing for growth will hinge on your companies’ current position and goals.
“With respect to us, we should keep the [focus on] growth and scale,” Sharan said, referring to SoundHound. “We are not yet breaking even and we need to get a viable path [to profitability], which we expect in 2024.”
SoundHound, a provider of conversational and voice-enabled AI technology which began as a song identification app similar to services such as Shazam, went public via merger with special purpose acquisition company (SPAC) Archimedes Tech on April 27.
The deal, which both companies announced in November 2021, valued the voice assistant creator at $2.1 billion, according to a report by Reuters following the initial announcement. Shares slid 7% following the merger, before rallying 56% on May 2 the week after the closing of the SPAC, per a May 2022 report by Seeking Alpha.
Determining a path to future growth makes it essential for CFOs to keep a close eye on where to place one’s resources, especially during shakier economic periods, Sharan said.
Balancing company needs with inflationary pressures requires financial executives to pay close attention to their spending, according to Sharan. In order to weather economic distress, CFOs should always be detail-oriented, differentiating the “must-haves” from the “nice-to-haves” and anything below that tier when it comes to spending.
“You should be setting up your liquidity profile so you rarely have to compromise on the must-haves,” he said.
Creating a path to growth
Sharan first joined the SoundHound C-Suite as CFO in September 2021. Having begun his career as a senior consultant with Accenture, he has held previous executive and senior financial roles for cloud company Hewlett Packard Enterprise as well as retail firm Nike — he served as CFO, global operations and technology for the retailer prior to joining SoundHound, per his LinkedIn profile.
Sharan is the voice-enabled AI firm’s first CFO. He has since been joined in the SoundHound C-suite by executives such as Zubin Irani — a former CEO of ALTEN subsidiary Cprime Inc — whom the firm appointed its Chief Revenue Officer in January 2022.
The company reported its first financial results as a public company on Aug. 11, with Sharan as well as SoundHound co-founder and CEO Keyvan Mohajer hosting the firm’s inaugural conference call. SoundHound reported $283 million in cumulative bookings, a 207% increase year-over-year, making it the AI provider’s third consecutive quarter of triple-digit growth per their earnings results.
While both executives spoke to the effects of economic rumblings on the earnings call, Sharan stated that though “progress might not always be linear,” the company’s current momentum was “unquestionable.”
He also reaffirmed company guidance for full-year 2022, expecting revenue in the range of $27 million to $33 million. SoundHound generated $6.2 million in revenue, a 43% jump from Q1 2022, according to its earnings results.
Sharan is continuing to push forward on growth as the year progresses, he said.
“As CFO, my focus is getting us to scale and grow,” Sharan said. “All good things come from growth. We have a lot of market opportunities, so [achieving growth requires] partnering across the leadership team, [listening to] what customers are saying.”
For his part, Sharan is enthused about the future, industry-agnostic impact of conversational AI, having previously spoken with CFO Dive regarding the world-changing potential of such technologies.
CFOs across industries must also take steps to understand the ways in which technology is bleeding into their own sectors, Sharan said — tech is an “enabler for everything,” he said, pointing to developments in spaces such as the auto industry as well as food servicing where emerging technologies such as SoundHound's own AI-driven products and solutions are playing a key role in the industries’ future shape.
SoundHound has taken several steps to foster further growth following its public debut, including consolidating partnerships with notable players in the automotive and food services space.
The AI provider teamed up with the electronics develop an advanced AI voice system for conversational voice control in automobiles this past July. It also partnered with payments processing firm Square in May 2022 for the creation of an AI voice ordering service.