Executive Summary

Q1 2025 revenue rose 151% year over year to $29.1M; GAAP diluted EPS was $0.31, driven by a non‑operating, non‑cash $176M gain from contingent acquisition liabilities; non‑GAAP diluted EPS was a loss of $(0.06) .
Gross margin compressed materially (GAAP 36.5%; non‑GAAP 50.8%) due to acquired lower‑margin contract mix, with management expecting improvement over 18–24 months as automation and contract optimization take hold .
Guidance was reaffirmed: FY 2025 revenue of $157–$177M; management reiterated a target to reach adjusted EBITDA profitability by year‑end 2025, despite a ~$2M revenue shift later in 2025 due to a customer change of control .
Operational momentum: ~13,000 restaurant locations now active, >10M interactions per quarter, and >2B queries processed in <1 quarter; launch of Amelia 7.0 agentic platform and expansion of voice commerce pilots with major OEMs support medium‑term growth catalysts .

What Went Well and What Went Wrong

What Went Well

Record Q1 revenue with broadened customer base: “Reported revenue was $29.1 million… no customer accounted for more than 10% of our revenue… showing continued diversification” .
Product and platform momentum: Launch of Amelia 7.0 agentic AI platform with category‑leading voice technology, enabling autonomous, voice‑enabled AI agents for complex tasks .
Scale in restaurants and enterprise: “Activated more than 1,000 new live restaurant locations in a single quarter… nearing 13,000 locations… ~10 million interactions a quarter” .

What Went Wrong

Margin compression: GAAP gross margin fell to 36.5% (from 59.7% YoY), and non‑GAAP to 50.8% (from 65.5%), primarily due to acquired lower‑margin contracts; management is mining or exiting certain contracts over 18–24 months .
Continued non‑GAAP losses: Adjusted EBITDA of $(22.2)M; non‑GAAP net loss $(22.3)M, reflecting investment in R&D, S&M, and integration costs post‑acquisitions .
Auto unit pressure and revenue cadence: Auto units faced “complex geopolitical dynamics”; ~$2M of expected Q1 revenue shifts to later 2025 due to a customer change of control .

Financial Results

Quarterly Comparison (oldest → newest)

Metric	Q3 2024	Q4 2024	Q1 2025
Revenue ($USD Millions)	$25.094	$34.543	$29.129
GAAP Diluted EPS ($USD)	$(0.06)	$(0.69)	$0.31
Non‑GAAP Diluted EPS ($USD)	$(0.04)	$(0.05)	$(0.06)
GAAP Gross Margin %	48.6%	39.9%	36.5%
Non‑GAAP Gross Margin %	59.7%	52.1%	50.8%
GAAP Operating Income (Loss) ($USD Millions)	$(33.767)	$(257.072)	$128.097
Adjusted EBITDA ($USD Millions)	$(15.869)	$(16.793)	$(22.172)
Cash and Cash Equivalents ($USD Millions)	$135.606	$198.240	$245.809

Notes: Q1 GAAP operating income/EPS were favorably impacted by a non‑operating, non‑cash $176M gain from the fair value change in contingent acquisition liabilities marked to market .

Year‑over‑Year (Q1 2025 vs Q1 2024)

Metric	Q1 2024	Q1 2025
Revenue ($USD Millions)	$11.594	$29.129
GAAP Gross Margin %	59.7%	36.5%
Non‑GAAP Gross Margin %	65.5%	50.8%
GAAP Net Income (Loss) ($USD Millions)	$(33.009)	$129.932
Non‑GAAP Net Loss ($USD Millions)	$(20.227)	$(22.331)
GAAP Diluted EPS ($USD)	$(0.12)	$0.31
Non‑GAAP Diluted EPS ($USD)	$(0.07)	$(0.06)
Net Cash Used in Operating Activities ($USD Millions)	$(21.948)	$(19.185)

Segment/Vertical Breakdown

Not disclosed as formal segments. Management indicated balanced contributions across automotive, restaurants, financial services, healthcare, insurance, and hospitality (each low double‑digit % mix), versus prior heavy auto concentration .

KPIs

KPI	Q4 2024	Q1 2025
Active Restaurant Locations (approx.)	Not disclosed; “leading phone ordering technology surpassed 100M interactions”	~13,000 locations
Quarterly Restaurant Interactions	Not disclosed	~10M interactions/quarter
Active Cloud Users Growth	Not disclosed	>50% growth YoY
Queries Processed	Prior run‑rate was annual scale ~2B two years ago	>2B queries in <1 quarter

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue ($USD Millions)	FY 2025	$157–$177 (as of Q4 2024)	$157–$177 (reaffirmed)	Maintained
Adjusted EBITDA Profitability	FY 2025 exit	Not explicitly provided in Q4 8‑K	Expect adjusted EBITDA profitability by end of 2025	Introduced/maintained in call commentary

Additional cadence update: ~$2M of expected Q1 revenue to shift later in 2025 due to a customer change of control, with first‑half mix still expected to be ~40% of FY revenue .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q3 2024)	Previous Mentions (Q4 2024)	Current Period (Q1 2025)	Trend
Agentic AI / Platform	Acquired Amelia; expanding AI agents across verticals	Unveiled in‑vehicle voice commerce; awards; CES presence	Launched Amelia 7.0 agentic platform with voice AI; enterprise deployments	Accelerating productization
Restaurants	Signed with 7 of top 20 QSRs; expanding with major brands	30% of top 20 QSR brands; surpassing 100M phone‑ordering interactions	>1,000 new live locations added; ~13,000 total; ~10M interactions/quarter	Rapid scale
Automotive	Live across Stellantis brands; EV wins; India expansion	OEM adoption; CES demos; partnerships (NVIDIA, Rekor)	Auto units pressured by geopolitics; strong pipeline; voice commerce pilots with OEMs	Mixed near term, positive pipeline
Voice Commerce	Introduced ecosystem; CES unveiling	In‑vehicle voice commerce platform highlighted	Pilots/POCs with largest OEM innovation teams; 15+ restaurant chains integrated	Early commercialization
Partnerships & Security	Channel partnerships broadened	Awards and tech showcases; government contracts	Pindrop authentication partnership; Tencent Intelligent Mobility collaboration	Strengthening
R&D / Foundation Model	Expansion and integrations	Edge demos with NVIDIA	Polaris foundation model upgrades; inference cost reductions	Efficiency improving

Management Commentary

CEO on strategy and synergies: “Within less than 3 quarters, we are seeing outsized growth across the portfolio… delivering on the promise of the upsell and cross‑sell opportunities we identified as part of the acquisition.”
CFO on scale and traction: “Activated more than 1,000 new live restaurant locations in a single quarter… nearing 13,000 locations… ~10 million interactions a quarter… Queries into our voice AI engine… now over 2 billion in less than a quarter” .
CFO on margins and path to improvement: “We are starting to realize improvements from acquisition synergies… mining certain low‑margin acquired contracts… 18–24‑month process” .
CFO on FY 2025 outlook: “Reaffirming… $157–$177M… expect sequential improvement in adjusted EBITDA… expect to achieve adjusted EBITDA profitability by the end of 2025” .

Q&A Highlights

Mix by vertical: Management emphasized balanced contributions across auto, restaurants, financial services, healthcare, insurance, and hospitality, with auto no longer dominating mix; strong voice commerce engagement with OEMs shifting SoundHound from a cost component to a revenue enabler .
Macro sensitivity: AI adoption seen as resilient across cycles—innovation in up cycles; automation/cost savings in down cycles; IT budgets continue to prioritize AI outcomes .
Competitive landscape: More entrants post‑GenAI, but SoundHound cites mature tech, data, integration depth; partnering (e.g., Pindrop) to complete solutions .
Gross margin modeling: No explicit margin guide; management expects steady improvement through 2025 as mix shifts and automation lifts margins; OpEx discipline to support EBITDA trajectory .
M&A stance: No M&A needed to achieve 2025 outlook, but will evaluate strategic fits at the right price; shared‑economics approach with targets; no immediate deals .

Estimates Context

S&P Global consensus for Q1 2025 revenue and EPS was unavailable at the time of query; consequently, we cannot assess a beat/miss versus Street. Values retrieved from S&P Global.
Near‑term estimate adjustments may focus on gross margin trajectory (compression from acquired contract mix, improving through automation) and revenue phasing (shift of ~$2M later in 2025), while medium‑term adoption catalysts (Amelia 7.0, voice commerce pilots with OEMs, enterprise expansions) support FY revenue reaffirmation .

Key Takeaways for Investors

Underlying growth is strong across diversified verticals, with restaurants and enterprise delivering scale; the pipeline is at an all‑time high, supporting the reaffirmed FY revenue outlook .
GAAP profitability in Q1 is a function of non‑operating, non‑cash fair value gains; focus should remain on non‑GAAP metrics and margin trajectory as the acquired mix is optimized over the next 18–24 months .
Voice commerce and agentic AI (Amelia 7.0) are emerging catalysts, deepening relationships with OEMs and enterprises, potentially opening new revenue streams beyond traditional BOM royalties .
Auto exposure is improving in quality (pipeline and ASPs) but near‑term units are pressured by geopolitics—watch for unit recovery and POC conversions into production .
Operational efficiencies are visible (lower cash burn YoY, inference cost reductions), and management targets adjusted EBITDA profitability by end‑2025—monitor sequential EBITDA improvement through 2025 .
Cash of ~$246M and no debt provide flexibility to invest and integrate acquisitions while pursuing disciplined M&A if strategic and accretive .
Near‑term trading: stock may react to the GAAP EPS print, but investors should discount non‑cash gains; medium‑term thesis rests on execution in agentic AI, restaurant scale, OEM voice commerce monetization, and margin normalization .

SOUNDHOUND AI, INC. (SOUN)·Q1 2025 Earnings Summary