SoundHound AI(SOUN)2024-11-13 02:11Financial Data and Key Metrics - Q3 revenue increased by 89% year-over-year, reaching 25 million in a quarter [7][39] - Annualized run rate of over 6 billion queries, up over 100% year-over-year, excluding the impact of recent acquisitions [7] - Gross margin for Q3 was 49%, down year-over-year due to the impact of recent acquisitions, but non-GAAP gross margin was 60% [45][46] - Operating loss for Q3 was 21.8 million and GAAP net loss per share of 15.9 million in Q3, driven by strategic acquisitions and growth investments [51] - Cash and equivalents as of September 30th were 39 million of debt outstanding [52] Business Line Data and Key Metrics - The company's AI agent customer service offerings now span multiple industries, including financial services, healthcare, and automotive, with significant growth in enterprise customer brands [10][12] - Automotive portfolio continues to grow, with strong traction in the EV space, including a new deal with an EV OEM in the Middle East and partnerships with Stellantis [14] - Restaurant business has expanded, with seven of the top 20 quick service restaurants (QSRs) as customers, and the company has surpassed 100 million AI-powered inbound customer calls [29][44] - The company's AI agent offerings now represent more than half of its business and are growing rapidly, with significant wins in telecom, healthcare, insurance, banking, retail, and government sectors [21][22][37] Market Data and Key Metrics - The company has expanded its presence in the Chinese market through partnerships with DayinTec and a major Chinese multinational technology company, focusing on the automotive industry [16] - Growth in the Indian market includes a new deal with VE Commercial trucks and expanded partnerships with Kia, adding Hindi language capabilities and planning to roll out more languages like Bangla and Punjabi [17] - The company has a strong presence in North America, with an estimated total addressable market (TAM) of over 30 million businesses for its SMB-focused smart answering solution [23] Company Strategy and Industry Competition - The company is focused on voice AI as the next major interface for human-technology interaction, leveraging generative AI and large language models (LLMs) to drive growth [39][40] - SoundHound is building a competitive moat through its proprietary technology, including the Polaris foundation model, which is now powering approximately one-third of all AI interactions for restaurant customers [34][35] - The company is expanding its ecosystem through partnerships with major technology and hardware providers, such as NVIDIA, Deloitte, and Oracle, to enhance its offerings and scale faster [19][31][32] Management Commentary on Operating Environment and Future Outlook - Management highlighted the acceleration of AI adoption across industries, with AI becoming a mandate rather than an exploration within innovation budgets [11] - The company expects 2024 revenue to be in the range of 85 million, with 2025 revenue projected to be between 175 million, driven by growth in automotive, AI agent, and restaurant businesses [53] - The company aims to achieve adjusted EBITDA profitability by the end of 2025, focusing on cost synergies and rationalizing its portfolio to capitalize on meaningful investment opportunities [54] Other Important Information - The company will have a prominent presence at CES 2025, showcasing automotive technologies and AI solutions, including voice generative AI for in-car experiences and a voice commerce ecosystem [31][32][33] - The Polaris foundation model, which leverages billions of real conversations and over a million hours of audio, is now in production and is expected to power all customer experiences in the future [34][35] Q&A Session Summary Question: Amelia Acquisition Integration and Business Retention - The company is still in the process of integrating the Amelia acquisition, with plans to retain high-margin, deep-integration components like AIOps and voice enablement, while potentially discontinuing lower-margin services like escalation support [58][59][60][61][62][63][64][65][66] Question: Technology Benchmarks and Model Training - The company's Polaris foundation model is benchmarked using real-life interactions and standardized tests, with a focus on reducing hallucination in AI responses. The model has been trained on billions of real conversations and over a million hours of audio [67][68][69][70] Question: Capacity and Resource Allocation Across Verticals - The company sees significant growth opportunities in automotive, restaurants, and enterprise AI agents, with a focus on scaling existing partnerships and expanding into new industries like healthcare and financial services [72][73][74][75][76][77][78][79] Question: Revenue Outlook and Acquisition Impact - The increased revenue outlook for 2024 and 2025 is driven by both organic growth and the impact of acquisitions, with significant cross-sell and upsell opportunities across the portfolio [80][81][82] Question: Backlog and Seasonality - The company's cumulative subscriptions and bookings backlog has doubled year-over-year, with a combined metric now exceeding $1 billion. Seasonality is expected to stabilize as the business shifts more towards SaaS [84][85][86][95][96] Question: M&A Appetite and Industry Focus - The company is open to strategic M&A opportunities, particularly in industries like energy and retail, but is currently focused on integrating recent acquisitions and driving growth in existing verticals [99][100][101][102][103][104][105] Question: Partnerships with Large AI LLM Companies - The company uses OpenAI as one of its vendors and has built an LLM-agnostic architecture, allowing it to arbitrate across multiple LLMs, including its own Polaris foundation model [106] Question: Restaurant Business Growth and Future Plans - The company is the leader in AI for restaurants, with seven of the top 20 QSRs as customers. Future plans include integrating voice AI across automotive and restaurant ecosystems, enabling voice commerce and advanced ordering capabilities [107][108]