Executive Summary

SoundHound delivered another record quarter: Q3 revenue was $42.0M (+68% YoY), non-GAAP gross margin expanded to 59.3%, and FY25 revenue outlook was raised to $165–$180M .
Profitability remained constrained by a $66M non-cash mark-to-market expense on contingent acquisition liabilities tied to stock price; GAAP EPS was $(0.27) and non-GAAP EPS was $(0.03) .
Demand was broad-based across enterprise AI, restaurants, and IoT; automotive remained soft due to tariffs/macro, but management pointed to momentum for Voice Commerce into 2026 and continued integration synergies from acquisitions .
Near-term stock catalysts: raised FY25 guide, large IoT deal (double-digit millions of devices in 2–3 years), and visible 2026 Voice Commerce launch path with multiple OEMs and tech platforms .

What Went Well and What Went Wrong

What Went Well
- Revenue growth and margin expansion: Q3 revenue +68% YoY to $42.0M; non-GAAP gross margin rose to 59.3% on cloud efficiency and mix benefits .
- Strategic momentum: Signed a major IoT deal to integrate Chat AI into double-digit millions of devices (commitment over 2–3 years); Voice Commerce POCs advancing with multiple OEMs and merchants .
- Differentiated tech and execution: Management emphasized Polaris’ measurable accuracy/latency advantages and faster path from demo to production; “we beat big tech by as much as 35%-40% in accuracy” (CEO) .
What Went Wrong
- Automotive headwinds: “Continued pressure… driven by global tariffs and broader industry softness,” muting a historically important vertical .
- Non-cash, non-operating volatility in GAAP results: $66M quarter-over-quarter mark-to-market expense on contingent acquisition liabilities drove GAAP net loss $(109.3)M .
- Estimates visibility: S&P Global consensus estimates were not available for Q3 and FY25/FY26 in our data pull; cannot quantify beats/misses vs Street this quarter (values unavailable from S&P Global).

Financial Results

Metric	Q1 2025	Q2 2025	Q3 2025
Revenue ($M)	$29.1	$42.7	$42.0
YoY Growth	+151%	+217%	+68%
GAAP Gross Margin %	36.5%	39.0%	42.6%
Non-GAAP Gross Margin %	50.8%	58.4%	59.3%
Adjusted EBITDA ($M)	$(22.2)	$(14.3)	$(14.5)
GAAP Net Income (Loss) ($M)	$129.9 (benefit from fair value gain)	$(74.7)	$(109.3)
GAAP EPS ($)	$0.31 (diluted)	$(0.19)	$(0.27)
Non-GAAP EPS ($)	$(0.06)	$(0.03)	$(0.03)
Cash & Equivalents ($M, end of period)	$246	$230	$269

Notes:

GAAP results were materially affected by changes in fair value of contingent acquisition liabilities: Q1 included a $176M gain ; Q2 included a $31M loss ; Q3 included a $66M loss .

Segment/Business Mix:

The company discusses “pillars” and verticals rather than reporting discrete revenue segments; no quantitative segment revenue breakdown was disclosed in the 8-K .

KPIs and Operating Metrics:

Active restaurants: 14,000+ locations using AI ordering (Q2); added ~1,000 locations in Q3 .
Queries: Now consistently eclipsing 1B queries per month; >3B per quarter, up ~10x since public listing .
Customer concentration: YTD no customer >10% of revenue .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue	FY 2025	$157–$177M (reaffirmed in Q1)	$165–$180M (Q3)	Raised
Revenue	FY 2025	$160–$178M (raised in Q2)	$165–$180M (Q3)	Raised
Adj. EBITDA	Q4 2025	Not provided	Profitable at high end of FY25 revenue outlook; single-digit millions loss at low end	New detail
Cost Synergies	2026 (run-rate)	Not provided	~$20M annual run-rate cost synergies expected in 2026	New detail
Profitability Profile	2026	Not provided	Near break-even targeted, while reinvesting for growth	New detail

Earnings Call Themes & Trends

Topic	Q1 2025	Q2 2025	Q3 2025	Trend
AI/Technology (Polaris, Agentic)	Launched Amelia 7; Polaris touted for accuracy/latency and lower cost; first in-vehicle Voice Commerce showcased at CES	Amelia 7 adoption; Vision AI announced (8/8); >35% accuracy and 4x latency lead reiterated	Polaris rollout broadening; Amelia 7.3 upgrades; Agentic+ framework emphasized	Strengthening differentiation
Enterprise AI momentum	Renewals/expansions across FS/healthcare/IT; strong cross-sell	Enterprise led growth; channels inflecting	Multiple Fortune 100 logos via Interactions; up to 10x containment, +25 NPS, +15 CSAT	Accelerating
Restaurants	Scaled with top brands; next-gen platform for dynamic drive-thru	+1,000 locations in Q2; >14,000 total; partnerships (PAR, Acrelec)	More rollouts and franchise wins; Employee Assist at Peet’s expanded	Continued expansion
Automotive	Generative AI into more brands; China OEM win	New Chinese OEM; higher ASPs with GenAI; mix tailwind	Tariff/macro pressure; Jeep rollout in Europe; new sports car brand engagement	Mixed: near-term headwinds, longer-term catalysts
Voice Commerce	Integrated dozens of restaurant brands; POCs with OEMs	Advancing POCs; partnerships with platform giants “later this year”	Transactions executed in cars; production targeted 2026; nearly live with two platform giants	2026 launch path firming
M&A/Integrations	Acquisition-driven momentum; cross-sell synergies	Integration metrics: NRR >120%; displaced 3rd-party ASR to Polaris; ERP consolidation	Interactions acquired; $20M cost synergies in 2026; break-even profile targeted	Synergies building
Macro/tariffs	—	—	Auto softness driven by tariffs/industry; diversified mix mitigates	Watch item

Management Commentary

CEO on technology moat: “We beat the big tech and some of the industry giants by as much as 35%-40% in accuracy, several times in latency, and we can run it at a lower cost.”
CFO on margin drivers: “We continued to drive efficiencies in cloud spend… and realize cost savings from shifting from third-party solutions to our own home-built ones.”
CFO on profitability path: “As we exit 2025 and enter 2026… we expect continued hypergrowth to be coupled with a break-even profitability profile.”
CEO on Voice Commerce: “We’ve… successfully placed live voice orders from cars and completed the transaction… full production in 2026.”
Press release highlight: “SoundHound Reports Record Q3 Revenue of $42 Million, Up 68%, Raises Full Year Outlook” .

Q&A Highlights

Large IoT/robotics win specifics: Double-digit millions of devices over 2–3 years; commitment, not internal estimate .
Interactions acquisition: Adds workflow orchestration and deep retail/enterprise adjacencies; part of raised outlook into next year .
Revenue model mix: “Vast majority… recurring,” with shift to outcome-based pricing in Amelia; some edge-license one-time recognition remains .
Automotive outlook and tariffs: Auto revenue pressured by global tariffs and industry softness; diversification reduces single-vertical impact .
Voice Commerce rollout: Multiple OEM/merchant POCs; first production in 2026; integrations with platform giants “imminent” .

Estimates Context

S&P Global consensus estimates for Q1–Q3 2025 quarterly EPS/Revenue and FY25/FY26 were unavailable in our retrieval; therefore, we cannot quantify beats/misses versus Street this quarter. Values would typically be sourced from S&P Global; they were not returned in this pull (S&P Global).
Implication: Narrative momentum and raised FY25 guide suggest upside vs prior internal expectations, but lack of published consensus prevents a formal “beat/miss” scorecard this quarter .

Additional Q3-Period Press Releases

Banking agentic AI research: 70% of banking leaders see agentic AI as significant/game changer; 64% of larger banks testing/deploying; SoundHound works with 7 of top 10 global FIs .
Vision AI launch (Aug): Integrated visual understanding engine with Polaris and agent orchestration for real-time multimodal use cases .

Key Takeaways for Investors

Execution remains strong: three consecutive quarters of record revenue with non-GAAP gross margin approaching 60% as synergies and in-house model migration lower cloud costs .
Growth breadth reduces cyclicality: Diversified mix across enterprise, restaurants, IoT offsets near-term auto pressure from tariffs/macro .
Voice Commerce is a 2026 catalyst: Live transactions completed; OEM and platform integrations advancing—a credible path to new revenue streams and attach rates .
Acquisition flywheel: Interactions adds Fortune 100 access and workflow orchestration; $20M run-rate cost synergies expected in 2026 support break-even profile .
Non-GAAP vs GAAP matters: Fair value remeasurement of earnouts introduces GAAP volatility; focus on non-GAAP gross margin and adjusted EBITDA trajectory .
Near-term watch items: Auto demand/tariffs, pace of Amelia 7 migrations (~75% targeted by mid-2026), and conversion of POCs to production in Voice Commerce .
FY25 outlook raised again to $165–$180M; Q4 adj. EBITDA profitability possible at high end—execution against this will be a key stock driver .

Cross-Quarter Financial Appendix (for trend reference)

Q1 2025: Revenue $29.1M; GAAP EPS $0.31; non-GAAP EPS $(0.06); non-GAAP GM 50.8%; Cash $246M .
Q2 2025: Revenue $42.7M; GAAP EPS $(0.19); non-GAAP EPS $(0.03); non-GAAP GM 58.4%; Cash $230M .
Q3 2025: Revenue $42.0M; GAAP EPS $(0.27); non-GAAP EPS $(0.03); non-GAAP GM 59.3%; Cash $269M .

Non-GAAP and Adjustments:

Q3 non-GAAP gross profit excludes amortization of intangibles and stock-based compensation/payroll taxes .
Non-GAAP net loss and EPS exclude D&A, SBC/payroll taxes, changes in fair value of contingent liabilities/derivative, acquisition costs, and related tax effects .

S&P Global estimates were unavailable in this retrieval; consensus comparisons could not be shown (Values retrieved from S&P Global).

SOUNDHOUND AI, INC. (SOUN)·Q3 2025 Earnings Summary