SoundHound AI, Inc. Q3 FY2025 earnings call

• Q3 marks another quarter of precise execution; revenue in first 3 quarters of 2025 reached $114 million, up 127%, with outlook raised. • Celebrated 20th anniversary, starting from a Stanford dorm room with mission to voice enable the world. • Enterprise AI adoption booming globally, SoundHound strengthening leading position. • Polaris, the multimodal, multilingual foundation model, shows superiority in accuracy, speed, and cost, reducing error rate by up to 3x when moving clients from third-party legacy vendors. • Acquired Interactions, a pioneer in customer service and workflow orchestration, integrating to create comprehensive contact center and customer service offering. • Customer highlights across verticals: IoT/Robotics signed deal with large Chinese company, automotive working with major sports car brand, financial services with 7 out of top 10 global financial institutions, energy with new contracts, retail/consumer goods with net new upsell, restaurants with multiple wins and Voice Insights solution gaining interest. • Amelia 7 platform updated to version 7.3 with capability upgrades, expanding globally. • Voice Commerce in advanced stages with POCs, 4 OEMs showing interest, set to go into full production in 2026.

Q3 revenue was $42 million, up 68% year-over-year. All 3 pillars grew double digits. Pillar 1 had a big IoT win, Pillar 2 had enterprise and restaurants driving outperformance, and Pillar 3 (Voice Commerce) showing momentum. GAAP gross margin was 43% and non-GAAP gross margin was 59%. R&D expenses were $22.8 million, sales and marketing expenses $16.4 million, G&A expenses $24.3 million. Adjusted EBITDA was a loss of $14.5 million.

• Full year 2025 revenue expected in the range of $165 million to $180 million. • Q4 expected to be adjusted EBITDA profitable at the higher end of the revenue outlook and in the single-digit millions of loss at the lower end. • 2026 expected to continue high growth with near breakeven profitability levels, with additional acquisition cost synergies of roughly $20 million on an annual run rate basis to be realized more fully in 2026.

Q: Could you provide a percentage on what's seen come from term license versus SaaS within Amelia at this point and anything to call out for onetime revenue this quarter?

A: Nitesh Sharan mentioned continuing to grow recurring footprint with Amelia, with more heavy penetration towards recurring, and much smaller onetime type license deals this quarter, with the model being more outcome-based contracts and pricing.

Q: How many customers have committed to upgrading to Amelia 7 right now?

A: Nitesh Sharan said the 15 was an initial cohort and the number has grown, with target of about 75% of customers moving on to Amelia 7 by mid next year, and all new customers to be migrated on.

Q: What percent of your revenue is recurring presently?

A: Nitesh Sharan said the vast majority of revenue is recurring, with different aspects like automotive having license recognition as cars are shipped, Amelia being largely recurring SaaS-like, and more towards outcome-based.

Q: Do you feel like you have enough capacity across each of those to continue to grow them? Or if not, how are you kind of prioritizing where your attention goes near term?

A: Nitesh Sharan said SoundHound is a horizontal platform focusing on conversational and voice AI, being best of breed in speech recognition and real-time speech to speech, and being judicious with resources, calibrating through partnerships in different verticals like restaurants with hardware and software partners.

Q: Can you give an update on the competitive environment and how deep is your competitive moat? And on the contracts that you've won, have you been seeing any pricing pressure at all?

A: Keyvan Mohajer said SoundHound is the leader in enterprise AI due to 20 years of innovation, outperforming competitors in accuracy, latency, and cost, with models like Polaris beating big tech. Nitesh Sharan said in shifting from old tech to new tech, there can be price battles, but SoundHound is demonstrating innovation where price value and alignment protect pricing, with pricing architectures transitioning and ASP expansion available for those providing real innovation.