SoundHound AI, Inc. Q4 FY2024 earnings call

• Had the strongest quarter on record with $35 million in revenue, a 100% YOY increase, reaching the top-end of revenue guidance. Over the last five years, top-line grew at a CAGR of over 50%.
• Three-pillar business strategy: voice assistant (pillar one), AI customer service (pillar two), and voice commerce ecosystem (pillar three) unveiled at CES, with strong traction from OEMs and restaurants.
• Showcased groundbreaking technologies at CES, including collaborations with NVIDIA, Perplexity, Lucid Motors, LG, and restaurant partners.
• Leader in enterprise conversational AI, with Agentic AI as a key focus, enabling autonomous agents to achieve complex goals and drive innovation.
• Business wins across verticals: automotive (four EV brands, including Lucid and Togg), healthcare (four notable wins), restaurants (Burger King live in UK, expansions with various chains), government/military (contract with City of Coral Springs), retail (expansion across multi-location brands), and energy (signed with a large US electric utility).

Q4 revenue was $34.5 million, representing a 101% year-over-year increase. For the full year, revenue grew by 85% to $85 million, reaching the high-end of the guidance range. In automotive, there was double-digit unit price expansion in Q4, though hampered by macro pressures in the industry. Customer service scaled with new logos like Burger King in the UK and a large energy company in the US. The backlog was nearly $1.2 billion, with a duration of ~6 years, and balanced across verticals including automotive, restaurants, healthcare, financial services, and energy.

• Raised 2025 revenue outlook to $157 million to $177 million, expecting 40% of annual revenue in the first half due to increased recurring subscription business.
• Committed to achieving adjusted EBITDA profitability by the end of 2025 through scale, surgical high ROI investments, and acquisition cost synergies.

• GAAP gross margin was 40% in Q4, down YOY due to business and product mix of recent acquisitions.
• Significant charge related to the change in fair value of contingent liabilities impacted GAAP loss from operations in Q4 by ~$220 million.
• Need to continue executing on synergies from acquisitions to improve gross margins and drive back to historical levels.

Q: Gil Luria asked about leveraging AI model advances for restaurant drive-thru efficiency.

A: Keyvan Mohajer said the architecture is designed to benefit from model advances, allowing more accuracy and lower costs, with demos at CES showing edge deployment.

Q: Gil Luria asked about backlog details.

A: Nitesh Sharan said backlog duration is ~6 years, balanced across verticals, with growth in restaurant and new industries like energy.

Q: Thomas Blakey asked about POC time to revenue.

A: Keyvan Mohajer said POCs in automotive can be quick, with revenue impact from pillar three not immediate but boosting pillar one adoption. Nitesh Sharan expanded on ramping in different verticals.

Q: Mike Latimore asked about Amelia's use cases and pricing.

A: Keyvan Mohajer said customer service is more pronounced but IT automation is strategic. Nitesh Sharan said mix of interaction-based, containment-based, and success-based pricing.

Q: Scott Buck asked about prioritizing verticals and cross-selling.

A: Nitesh Sharan said priorities are based on highest ROI, with focus on voice AI ecosystem and cross-selling through integration.

Q: Glenn Mattson asked about verticals, guidance, and lumpiness.

A: Keyvan Mohajer and Nitesh Sharan discussed verticals like military and energy, guidance confidence, and mix of SaaS and licensing deals.

Q: Leo Carpio asked about platform needs and auto POC timeline.

A: Keyvan Mohajer said platform uses in-house and partnerships, and auto POCs can be quick if already in production, longer for new OEMs.