SoundHound AI, Inc. Q2 FY2025 earnings call

• Q2 was the strongest quarter with 217% year-over-year revenue growth. - Success across key businesses including automotive, enterprise AI, and restaurants. - Acquisition strategy is working with repeatable turnaround stories post-acquisition. - Polaris model offers benefits like improved performance, enabling rapid innovation. - Customer highlights: In restaurants, expanded with brands like Fast Casual, IHOP, etc.; in automotive, won a new customer in China and rolled out Generative AI solution; in healthcare, signed with Primary Health Solutions and Allina Health; in retail and financial services, had renewals, upsells, and expanded partnerships.

In the second quarter of 2025, SoundHound achieved an all-time strong quarter with $43 million in revenue, representing a 217% year-over-year increase. Significant growth was seen across key businesses: automotive, enterprise AI customer service, and AI and automation for restaurants. The platform processed more than 1 billion queries per month. Acquisition strategy is succeeding with post-merger growth and conversion of pre-merger decline. The company's own Polaris multimodal, multilingual foundation model provides tailwinds with improved accuracy, latency, and cost efficiency. Revenue contribution % isn't explicitly stated for each segment individually but overall revenue breakdown shows strong growth in multiple areas.

SoundHound is increasing its outlook for 2025 revenue to $160 million to $178 million. The strong Q2 was better than initial expectations due to strong close rates on major deals. The company is moving towards profitability and expects adjusted EBITDA profitability by the end of 2025. There is recognition of lumpiness in major deals but sees strong momentum for future growth.

No specific detailed discussion of risks and operational failures provided in the transcript except the general mention that actual results could differ materially from forward-looking statements, with a reference to SEC filings for detailed risks.

Q: How would you rank the contribution of different verticals to sequential growth?

A: Keyvan Mohajer stated momentum is across the board, hard to rank specifically, with enterprise leading, restaurants scaling, auto having a big win, and Voice Commerce compounding.

Q: Who are you competing with to get Chinese OEM business and how differentiate?

A: Nitesh Sharan said they compete with similar names in China, win based on technology quality, language coverage.

Q: Are you seeing opportunities to improve selling process or optimize pricing?

A: Keyvan Mohajer said using AI internally to improve processes, with some exploration in outbound sales but considering regulations.

Q: How much potential wallet share in existing customer base?

A: Nitesh Sharan said very low penetration with a lot of runway.

Q: Guidance for 2025, seasonality or conservatism?

A: Nitesh Sharan said there's lumpiness due to major deals but it's prudent planning.

Q: 3Q vs 4Q revenue modeling?

A: Keyvan Mohajer expected Q4 to be bigger than Q3, driven by momentum and year-end budget deployments.

Q: Key drivers of growth in second half?

A: Keyvan Mohajer said all pillars are growing, including Amelia software sales, phone ordering, professional services, and expansion within existing partnerships and indirect channel.

Q: Auto vertical royalty opportunity and tariffs?

A: Keyvan Mohajer said there are multiple revenue components, and tariffs have secondary impact on auto shipments.

Q: Voice Commerce update?

A: Keyvan Mohajer said indirect revenue impact from flywheel effect, with soon-to-be live scale.

Q: QSR vertical larger opportunities like McDonald's?

A: Keyvan Mohajer said working with many QSRs, small penetration, unique differentiation, and innovating on drive-thru scaling