SoundHound AI, Inc. (NASDAQ:SOUN) reported its second-quarter financial results after Thursday’s closing bell.
Below are the transcripts from the Q2 earnings call.
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OPERATOR
Good day and thank you for standing by. Welcome to the SoundHound second quarter 2025 earnings conference call. At this time all participants are in a listen only mode. After the speaker’s presentation, there will be a question and answer session. To ask a question during this session you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised to withdraw your question. Please press star 11 again. Please be advised that today’s conference is being recorded. I would now like to hand the conference over to your first speaker today, Scott Smith, Head of Investor Relations.
Scott Smith (Head of Investor Relations)
Good afternoon and thank you for joining our second quarter 2025 conference call. With me today is our CEO Keyvan Mohajer and our CFO Nitesh Sharan. We’ll begin with some short remarks before. Moving to Q and A. We’d also like to remind everyone that we’ll be making forward looking statements on this call. Actual results could differ materially from from those suggested by our forward looking statements. Please refer to our filings with the SEC for a detailed discussion of the risks and uncertainties that could affect our business and for discussion statements that qualify as forward looking statements. In addition, we may discuss certain non GAAP measures. Please refer to today’s press release for more detailed financial results and further details on the definitions, limitations and uses of those measures and reconciliations from GAAP to non gaap. Also note that the forward looking statements on this call are based on information available to us as of today’s date. We undertake no obligation to update any forward looking statements except as required by law. Finally, this call is being audio webcast in its entirety on our investor relations website. An audio replay will be available following today’s call. With that, I would like to turn the call over to our CEO Keyvan Mohajer. Please go ahead Keyvan.
Keyvan Mohajer
Thank you Scott. And thank you to everyone for joining the call today. I’m proud to say we had our all time strongest quarter in Q2 with $43 million in revenue representing an increase of 217% year over year. That’s up more than three times. We saw success across all key businesses. We achieved significant growth in our automotive business, significant growth in AI, customer service for enterprise and significant growth in AI and automation for restaurants. In Q2 we surpassed another record processing more than 1 billion queries per month on our platform. Our acquisition strategy and execution is succeeding. Within just 12 to 18 months of each acquisition, we have demonstrated a repeatable turnaround story. Not only have we converted their pre merger decline to post merger growth, we have turned them into leaders in their field as fully integrated business units within Soundhound. Let me tell you why we believe we are succeeding here. First, the companies we acquired had an important trait in common. They are all great businesses, have amazing teams and have incredible solutions. They had already built strong customer relationships and had accumulated years of history and experience. Their business was highly aligned with our highly focused pillars of business. They disrupted category of of conversational AI where SoundHound has emerged as a leader. Then SoundHound gave them what they needed to thrive. SoundHound gave them strong IP replacing their legacy tech dependencies with Soundhound in house models that are more accurate, faster and less costly. With 20 years of data and innovation behind them, Soundhound made their customer experiences better while reducing their costs. Soundhound gave them strong financial backing for innovation and expansion. SoundHound gave them proven scale, strong brand and credibility. Combined together we have achieved and continue to harvest cost synergies and revenue synergies with cross selling and upselling. To give specific examples, our first and second acquisitions are the key ingredients that enabled us to successfully launch our voice commerce ecosystem. Our innovative third pillar. Another notable example is in Q2 we cross sold the solution we brought to Soundhound with our most recent acquisition to a marquee customer of our first acquisition which also triggered a renewal and expansion of their customers existing subscription. Further, we are well underway to eliminate the legacy cloud cost of all past acquisitions by moving their stack into our own cloud and all of our solutions are migrating to Polaris, Soundhound’s own multimodal multilingual foundation model. We believe Polaris is the best of its kind. Last quarter I shared that Polaris easily beats its closer peers, including the big tech in accuracy by over 35% and in latency by four times. While running at a lower cost. We continue to increase our lead through constant innovation. Polaris has given us significant tailwinds as customers migrate to Polaris in production. They see the immediate benefits in accuracy and user experience which now consistently leads to renewals, expansions and growth. And when new customers test Polaris against their legacy solutions they clearly see the benefit and that is increasing our close rate. Polaris is a unique differentiator for Soundhound, trained with 20 years of innovation and massive amounts of data. And most distinctively, when we migrate from third parties to our own models, we can iterate and drive rapid improvements and massive acceleration in time to value and we continue to innovate. Most recently we have added vision AI to our stack which is engineered to bring real time visual understanding into conversational AI system and marks a transformational shift in how people interact with product and devices. This intersection between voice AI and vision AI is compounding exponentially improving the use cases we can address and the ease with which end users experience when engaging with AI solutions. Our recently launched agentic AI platform Amelia7 is especially benefiting from Polaris. We were one of the first companies to bring an agentic solution to the market and you’re seeing fast results. This is also creating upsell opportunities to convert all enterprise brands to agentiq in the near future. Our restaurant business is scaling rapidly where every quarter new activations exceed the previous quarter. This quarter in particular was driven by new wins and activations as well as continued penetration into existing brands. In automotive, we continue to expand within existing customers and add new ones. For example, we just announced that our generative AI solution called Chat AI has been rolled out in North America with three more global brands. We’ve also signed several new deals including a large one in China representing millions of units powering a prominent auto brand that’s winning and expanding globally. Where the Winners are We plan to be there with Voice Commerce, our solution to seamlessly bring convenience to drivers like food ordering, parking, payment and reservations. We are seeding a solution in the market that’s never been experienced before. What started out as interest and a buzz from our announcement at CES has now developed to the point of advanced stage pilots and POCs with a number of OEMs. We are also seeing buy in from well known merchants and restaurant operators. We believe these first movers will ultimately motivate many other OEMs and restaurants in the near term. Last year was about investing in great opportunities and this year is about realizing the benefits of the strategic decisions we’ve made to further commercialize our AI solutions. The three pillar strategy we laid out a number of years ago is now rapidly coming together with Voice Commerce. Going live is imminent. This is driving strong demand in our pillar one for products and Pillar two for services as both existing customers and new additions are anticipating the powerful ecosystem we are creating and are racing to be a part of it. This is expected to drive Future Monetization in Pillar 3. With that, let me now talk about some specific Customer Highlights in Q2.
Keyvan Mohajer
Restaurants, we expanded the company’s relationship with a household named Fast Casual brand Cross selling the SoundHound Amelia platform to provide customer service support. In addition to food ordering. We also added new wins with ihop Red Lobsters and pewdiepieter Pizza and renewed with Mod Pizza, one of our existing phone ordering customers. Red Robin added Smart Answering and now has both AI phone solutions for ordering and customer service fully integrated and we continue to grow with our existing customer base including an expansion with Chipotle and adding more locations to Firehouse subs, Habit Burger, McAllister’s Deli Beef operates and cases In Automotive we want a new customer with a major supplier in China to ship to one of China’s top five and fastest growing OEMs worldwide. SoundHound Chat AI our generative AI solution continues to make it into new brands as well as being added into vehicles by our largest automotive customers, increasing the revenue per vehicle we receive. In healthcare, we signed with Primary Health Solutions to improve their patient facing solutions, starting with appointment management and progressing into more complex use cases over time. We also deployed our solutions with healthcare system Alima Health to streamline and automate patient access and overall customer experience. In Q2, we were also delighted to sign one of the world’s largest healthcare companies. In retail, we made deals to deploy Smart Answering with two multi hundred unit personal care companies and a home services company with over 500 locations. The solution also continues to attract additional fitness chains and expand further into existing brands. In financial services, we already have seven of the top 10 global financial institutions as customers and the company either renewed or had upsell deals with four of them. This included expanding into new lines of business, penetrating across dozens of business units and doubling automated conversation volume from the previous year. We are also expanding our presence in in the regional bank and credit union market. For example, we recently signed with a leading credit union with operations across multiple states. Together with Channel Partners, we expanded our relationship with EXL to deliver agentic and voice AI integrations across various industry verticals and use cases. With PAR Technologies, we entered into a partnership to extend Soundhound’s Reach across PAR’s extensive portfolio of restaurant chains and their franchisees globally. We launched a strategic partnership with global QSR technology leader Acralect to accelerate AI adoption in restaurants globally. To expedite the adoption of Soundhound AI agents across enterprise markets, we went into a sales partnership with technology services distributor Avant Communications. We also doubled the volume of interactions with a long standing partner that specializes in customer experience and workforce engagement solutions focused on contact centers. This inflection with Channel Partners gives us a new catalyst to our accelerating growth story. One of the biggest opportunities for soundhound is with our new Agentic AI solution launched in May. While there is hype around this category, we’ve yet again achieved an advantage by moving fast to bring an advanced AI agent platform with true agent capabilities to market. We are migrating 15 of our large enterprise customers onto the Amelia 7 platform and we are working with them to build real world efficiency creating agentic use cases for their customers, employees and patients. As a reminder, Amelia 7 is powered by a proprietary multiprocess agentic framework branded Agentic plus, which is a blended autonomous architecture that dynamically toggles between fully autonomous workflows and and deterministic functions. This enables AI agents to act independently when appropriate while maintaining guardrails and precision for sensitive high impact tasks. Amelia 7 allows for low code no code development, providing flexible options for enterprise teams including natural language genai tools that allow non technical users to build and refine agents quickly alongside traditional low code controls for technical teams. Importantly, it also integrates SoundHound’s world class proprietary Polaris speech recognition engine which delivers speed, accuracy and domain specific understanding. It is implemented with end to end optimizations that also significantly reduce lag between user input and system response, creating a more natural conversational voice experience. We are delighted to be bringing this technically advanced system to market backed by our decades of combined R and D and conversational AI, including over 200 patents with a focus on VoIP capability which is poised to become a dominant user interface. That brings me on to one of the other SoundHound technologies that is catching real momentum, Voice commerce. I’m excited to report that our voice commerce solution is advancing at a rapid pace for those who might be new to soundhound. The voice commerce ecosystem was once part of our future vision, but it is now gaining momentum with existing and new customers from different parts of our business. We anticipated many years ago that consumers would want the convenience of executing transactions on a platform that seamlessly brings the services they enjoy directly to the connected products and that this would all come together in one environment. For example, a driver being able to use their natural speech through their in vehicle voice assistant to place an on the go order for coffee or food from their favorite restaurant and have it be available to them upon arrival without having to wait in line. We wanted to make it easy, intuitive and available via the most natural modality we have available to us, the human voice. For us that means the users of products powered by our voice assistant are pillar one can transact with businesses that are powered by our AI customer service offering RPiller 2. The way this works is through our pillar three, which connects both on a single platform to delight the end user. We talked about signing multiple pilots and POCs earlier this year. These engagements are going well and moving fast. We expect this to create the flywheel we had envisioned. We have large automotive brands in Europe and the usa, both existing customers and new car brands with participation from prominent national and global merchants for food ordering, coffee, parking and more. We’re also on track to launch partnerships with platform giants later this year to offer our voice ordering to their many millions of users. This not only emphasizes the power of the technology we have built, but also gives us confidence in the demand for users to have a safe, convenient, hands free option when performing transactions from their vehicles or devices. This speaks to the rapid innovation at SoundHound. The developments we are making are impressing the larger platforms, in particular the way we can now support a much broader scope of LLM conversations in the context of voice commerce, thus bringing their interest as well as large merchants, QSRs and OEMs alike. In closing, we are pleased to have reported such a strong quarter where all businesses were up. We built a strong pipeline to start the year and that’s not only now showing up in our results, but is growing as we create more value for the end user. Our acquisitions are turning into repeatable success stories. We are pioneering our platform with agentic AI and thus resonating with customers. We are also leveraging our advanced technology to bring opportunities to enterprises, automakers and restaurants that they have been waiting for. The voice commerce ecosystem we are building is bringing real time AI agents that larger platforms want to partner with and OEMs and merchants are racing to be a part of. Our three pillar strategy is no longer three separate offerings but is forming an ecosystem creating AI value to businesses and quickly becoming a necessity for them to differentiate themselves and strive. With that, I’ll now turn the call over to NITESH to talk about our financial performance, key growth drivers and business outlook.
Nitesh Sharan
Thank you Kevan and Good afternoon everyone. Q2 was a big quarter for us with $42.7 million in revenue up 217% year over year. With sustained high demand for our AI solutions. It’s becoming more evident each quarter that passes that voice AI is increasingly sharpening as the spearhead of the Gen AI era. We are seeing traction across all industry verticals and in all pillars of our business enterprise. AI grew with strong execution and clear …