SoundHound AI, Inc. Q3 FY2025 earnings call

Keyvan Mohajer noted enterprise AI adoption is booming globally, with SoundHound strengthening its leading position. Q3 was a quarter of precise execution against the plan, with revenue up 127% in the first 3 quarters to $114 million. SoundHound's Polaris model shows superiority in accuracy, speed, and cost, reducing error rate by up to 3x when moving clients. The company celebrated 20 years, starting from a Stanford dorm room with the mission to voice enable the world with conversational intelligence. Completed acquisition of Interactions, a pioneer in customer service and workflow orchestration. Highlighted customer wins across various verticals including IoT and Robotics, Automotive, Financial Services, etc. Updated Amelia 7 platform to version 7.3 with capability upgrades. Voice Commerce solution is in advanced stages with POCs completed, expecting full production in 2026.

Q3 revenue was $42 million, up 68% year-over-year. All 3 pillars grew double digits. GAAP gross margin was 43% and non-GAAP gross margin was 59%. R&D expenses were $22.8 million, up 17% year-over-year. Sales and marketing expenses were $16.4 million, up 96% year-over-year. G&A expenses were $24.3 million, up 43% year-over-year. Adjusted EBITDA was a loss of $14.5 million. GAAP net loss was $109.3 million, while non-GAAP net loss was $13 million. Cash and equivalents at quarter end were $269 million with no debt.

For full year 2025, revenue is expected to be in the range of $165 million to $180 million. Q4 is 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. Expect additional acquisition cost synergies of roughly $20 million on an annual run rate basis to be realized more fully in 2026, with 2026 expected to continue high growth with near breakeven profitability levels.

Potential competition from other companies in the AI space, market dynamics affecting individual sectors' growth, and challenges in maintaining pricing and margins in a rapidly evolving market.

Q: About the 8-figure Chinese robotics deal, is it related to humanoid robotics and what's the time frame for the double-digit million?

A: It's a robotic company, not a human robot, and the commitment is in the next 2 to 3 years.

Q: On the Interactions acquisition, which verticals will it impact and financial impact?

A: It has adjacencies in automotive, tech services, retail, financial services and health care, and is contemplated in the outlook with a nudge up in expectations.

Q: Percentage of term license vs SaaS in Amelia and onetime revenue this quarter?

A: Amelia continues to be more heavily penetrated towards recurring, with smaller onetime type license deals this quarter.

Q: Number of customers committed to upgrading to Amelia 7 and current recurring revenue percentage?

A: The number has grown from the initial cohort, with vast majority of revenue being recurring, including SaaS-like and outcome-based contracts.

Q: Capacity across industry verticals and Voice Commerce rollout?

A: As a horizontal platform, there's room with thoughtful partnering, and Voice Commerce is in advanced stages with OEMs and merchants, expecting more at CES and production timing around that time.

Q: Competitive environment and pricing pressure?

A: SoundHound is the leader due to 20 years of innovation, outperforming competitors in accuracy, latency and cost; in pricing, there's a transition with innovation enabling price value alignment and some pricing expansion.