SoundHound AI Stock

Good day, and thank you for standing by. Welcome to SoundHound AI Q2 2026 Earnings Conference Call. [Operator Instructions] 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, Investor Relations.

Good afternoon, and thank you for joining our second quarter 2026 conference call. With me today is our CEO and co-funder Keyvan Mohajer; and our CFO and Co-Founder, James Hom. We will begin with some short remarks before moving to Q&A.

We'd also like to remind everyone that we will be making forward-looking statements on this call. Actual results could differ materially 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 a discussion of the 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'd like to turn the call over to our CEO, Keyvan Mohajer.

Thank you, Scott, and thank you to everyone for joining the call today. I'm delighted to report an outstanding second quarter. Coming off an already strong Q1, the team executed flawlessly in Q2. This was not only a record Q2, but our largest all-time quarter with $62 million in revenue.

Revenue was up 45% year-over-year, 40% sequentially and 10x higher than Q2 4 years ago, which was our first quarter as a public company. We also improved all key profitability metrics. Our gross margin improved, our adjusted EBITDA improved and our EPS improved both year-over-year and sequentially. Our results were beyond our own expectations, and a significant part of that is attributed to OASYS, SoundHound Self-learning Agentic AI platform that we launched in May this year. With OASYS, we are winning in demos, we are winning in RFPs, we are winning in pilots, and we are winning as we scale with our customers in production.

OASYS demos are absolutely delighting new and existing customers, and it shows in our renewal rates and our exceptional win rates. Because of our standout technology, we are now moving quickly with our prospects from demo to contract signing in a matter of months. And we're also converting pilots to large implementations at a record pace.

We recently signed an 8-figure commitment in less than 90 days from the initial demo to contract signature. This is all while enterprise market for conventional and agentic AI grows exponentially with every quarter that passes. In a recent report, Gartner projected that Agentic AI software spending will hit nearly $1 trillion by 2030 with a compound annual growth rate of over 60% and between 2025 and 2030 as it surprises scale adoption. We have everything we need to seize a sizable portion of this. We continue to invest in growth and convert on the massive pipeline we built to start the year. And even with those key investments, we have maintained a disciplined approach to spending, achieving a 33% improvement in adjusted EBITDA this quarter.

We saw success across all key metrics and every part of our business. San Homes enterprise AI business is fundamentally changing the market, emerging as a clear leader in what was once a fragmented landscape. SoundHound's excellence in conversational AI for enterprise also recently received heavyweight validation with SoundHound being named as a leader by analyst firm Gartner in their Magic Quadrant for conversational AI platforms. We expect these high-profile recognition to drive even greater momentum with enterprise buyers who rely on Gartner to validate market leaders with both a strong vision and proven ability to execute.

Looking ahead, we are poised to increase our scale again with the acquisition of LivePerson, which is expected to close by the end of this year. When it does, we will accelerate our leadership position and extend our footprint in conversational AI with 25 of the Fortune 100 brands and a significant increase in the number of enterprise brands using our platform across a range of verticals.

Our track record shows that our repeatable M&A formula working, we've been able to realize high potential turnaround opportunities with our technical innovation and financial discipline. We look forward to repeating our process with LivePerson.

Our success in Q2 was driven in large part by our new OASYS platform, which we demoed extensively with existing customers and prospects before launching publicly in May. Early reactions confirm what we already knew.

This is a category-leading enterprise AI platform that addresses the critical pain points that large multinational businesses space when trying to deliver a quality AI-based customer experience consistently across billions of interactions.

One large health care company leader told us they evaluated other options and [ span OASYS ] was the most intuitive and easiest to navigate. OASYS has a unique feature where AI builds AI, and they were able to create agents using this feature in just a few minutes, which took much longer in other platforms.

Agentic AI is an important step change for our industry. Previously, technology stacks were vertically integrated. Meaning that, for example, phone-based customer service was attached to telephony channels or product-based conversations were limited to the product platform itself. OASYS is built for a new era in which the AI conversational layer is no longer attached to a specific modality or channel. It lives independently with cross-channel orchestrated agents that are built for any and every touch point, including physical environments. This means that AI agents built on OASYS can power enterprises and businesses of all sizes in vehicle voice assistance, restaurant and retail voice AI transactions and complex customer tasks across our multiple verticals.

SoundHound is a company that puts its customers first, supported by products that deliver tangible value. That's why we are proud that our biggest Q2 deals are with customers that chose OASYS. And as we continue to onboard and upgrade customers, introducing them to features that enable AI to build and continually optimize agency workflows on their behalf. We are expanding our capabilities to support our rapid growth across key verticals.

One area we are seeing very strong traction is in health care with one top 20 provider quadrupling their spend with us in Q2. We also added champion payer solutions and managed health care services organization based in California and either expanded or renewed with five additional health care organizations.

And we continue to strengthen our presence in banking and financial services, renewing or expanding contracts with two of the top 7 global banking institutions as well as one of the largest global insurers. At the same time, we are seeing strong demand from regional banks and credit unions who look to leverage our platform to scale customer service evenly and extend operating hours. We recently partnered with a top-tier regional credit union and help them introduce automated AI agents without compromising their famously high standard of customer service or sacrificing containment rates.

And in Q2, we announced that [ Qualitas ], one of our insurance customers in Latin America now uses SoundHound AI agents to handle over 100,000 calls per month, an increase of 150% over 4 years, with our automated agents interacting with customers over each a car assistance request and broken glass claims, handling the complexities from the initial call to the claim resolution. These are very human elements of need and the message is clear and customers are not resistant to automation. They're only resistant to bad service.

This momentum in highly regulated industries like health care and financial services underscores our enterprise readiness. And we built in guardrails and rigorous agent evaluation, SoundHound platform provides the security and traceability needed for mission-critical AI workflows.

Because of this trusted foundation and our growing credentials, we are seeing our vertical specific strength build across a number of other critical industries, including telecommunications and energy and utilities.

A notable component of SoundHound's ongoing success is the excellent traction our solutions are getting in Asia. In each of the last 5 consecutive quarters, we have signed major deals in the region and we are seeing particular success with the automotive sector in China, a market that has been notoriously difficult for Silicon Valley companies to compete in.

Time and time again, large Chinese OEMs are choosing SoundHound because of our mature flexible proprietary stack and due to the pure-play nature of our offering. The Chinese automotive industry is booming and where the winners are, we will be there.

In Q2, we signed a 7-figure deal with a large infotainment software company to provide agent AI solutions, and we also had an IoT win with an established automotive maintenance and diagnostic company that will use our AI agents to boost operational productivity on site. Both customers will integrate with our OASYS platform which expands their possibilities for taking any bills for purpose agents and deploying it across multiple channels.

Elsewhere in the region, we also signed a 6-figure unit expansion with Indian 2-wheeler company [ Ultraviolet ]. And we entered an agreement with another large OEM customer to roll out real-time generative AI feature to vehicles in India. The first LLM enabled voice technology, the brand has rolled up in the country.

Our ability to outpace our competitors in high-impact Asian markets is not accidental. These companies consistently partner with us based on the performance of our Agentic technology, our broad vertical expertise and our growing experience within the region.

And the same story holds for automotive globally. In Q2, we expanded with a number of our major OEM customers, including Stellantis in Europe, which saw overall higher unit adoption and added live generative AI capabilities. And Hyundai, one of our prominent automotive customers in the U.S., Latin America and India, who is adding generative AI enhancements which allow end users to retreat LLM power search results and ask multilayered questions on the go.

We continue to innovate and see opportunity and growth across restaurants and retail. Our Agentic AI solution for SMBs, which we call smart answering more than doubled year-over-year in Q2, largely driven by excellent platform performance and increasingly sophisticated capabilities that allow for outbound calls to help businesses with retention, new registration and win-back campaigns.

We also signed three major U.S. restaurant chains in the quarter. In Q2, restaurant renewal rates reached 100% for key accounts while client location count grew with major brands, including Jersey Mike's, Five Guys, IHOP and a prominent pizza brand with thousands of locations that are now live with more than 75% of their total locations.

Last earnings, I talked about one well-known QSR customer that had conducted an analysis and reported that drive-through locations deploying SoundHound AI solutions are generating greater revenue than comparable locations that don't currently use it. I'm delighted to say that those metrics continue to improve across locations, which is fueling the path to broader expansion.

Our restaurant AI solutions get better and better, and customers and businesses alike have become even more confident of their capabilities and consistency. This is proving the first our territory for cross-selling, using our land and expand strategy with our OASYS platform, which allows us to also provide IT help desk and guest relation services to our existing restaurant base.

By positioning SoundHound as a one-stop shop for AI we aim to become central to the AI strategies of our top restaurant clients, thereby growing our total addressable market. Another part of our business that is experiencing rapid expansion is voice commerce.

In Q2, we saw strategic advancements engaging with some of the biggest global manufacturers across automotive and IoT, all of whom we're excited about the prospect of this new monetization channel and what it can do for their business and the end user experience.

I'm delighted to reveal that our first commercial projects will launch soon. In Q3, we will begin to pilot direct in-vehicle transactions, with a world-renowned automotive brand with the recently signed contracts. We are integrating these vehicle native voice commerce capabilities seamlessly into the car navigation system, via the OASYS Agentic AI platform with a broader public launch to follow.

And later this year, we will launch with a global economic manufacturer who will initially utilize SoundHound technology to enable agent transactions, including retail and restaurant purchases right from the television screen in homes across the U.S. without the need for a phone, tablet or even an app.

With voice commerce, we are observing and accelerating interest within the automotive industry to implement Agentic AI for a broader range of use cases as well as monetizable transactional opportunities with OEMs adjusting their business models to accommodate it.

It's amazing what we are doing. We are transforming the way OEMs can improve the user experience and monetize their products while delighting their customers. Our leadership position in this space is unprecedented, and we are leading the charge to a shift in the way OEMs are looking at the next-generation capabilities.

The breadth of our tech suite and the depth of our stack have made us hugely appealing to enterprise clients looking for consistency across all their channels and operations. OASYS delivers on this with a single pane of glass view, alongside capabilities like AI build AI, which flashes build times from months to minutes, and save vital resources.

And we always say innovation is in our DNA. So those businesses already adopting OASYS can effect features to be added and existing capabilities to grow even more powerful.

Last quarter, I gave an update on our investment in our R&D. OASYS will be powered by Polaris, SoundHound's own speech foundation model that consistently outperforms its competitors. We are also making a calculated investment to augment Polaris with our own specialized LLM and speech synthesis, built using our own rich interaction data. We expect the results of these investments will be better quality and lower cost for our customers and more control independents, higher profit margin and differentiation for SoundHound.

I'm proud to say that we have made incredible progress with thanks to the strength of our engineering teams, which also bring together some of the best mines from the pioneer companies we've acquired over the last few years. Our [ SMB ] customers are now entirely on our own stack using our models, independent of frontier models. And we are about to go live with one of our largest healthcare customers after seeing significant improvements by making the switch.

Once again, this is not just about cost savings, but also improvement in quality, such as accuracy and vacancy. As we lean deeper into our specific verticals, Being able to tune and deploy models using our own data has huge advantages for cost, efficiency, accuracy and AI safety.

Turning to M&A and building on what we've said last quarter. We are excited that our previously announced agreement to acquire LivePerson is advancing. We recently secured all key regulatory clearances and continue to expect the deal to close before the end of the year. Bringing the two companies together will compound the winning strategy we have proven. We've now done this with SYNQ3, [ AllSet ], Amelia and interactions, and it has become a repeatable formula for us. With each, we get faster and more efficient at integrating the strength of the business.

Our first acquisition took about 2 years to fully turn around and our most is demonstrating early signs of acceleration in just a few quarters. What makes us confident that we can do this again and even faster with LivePerson is OASYS. OASYS is built specifically to unify the technology from every company acquired onto one platform. Harvesting the years of innovation SoundHound has developed, coupled with the great innovation these companies created.

Put simply, this is an amazing opportunity to bring true end-to-end omnichannel conversational AI to some of the most recognizable enterprise brands in the world and combining decades of customer relationships and data with the speed and innovation OASYS unlocks.

We are proud of the strategy, energized by the team we are bringing on board and confident this positions SoundHound for its next chapter of scale and leadership in Agentic AI.

I already spoke of a number of customer highlights this quarter. But let me list out a few more of the key deals we have across a diverse number of verticals, including financial services, insurance, telecommunications, health care, pharmaceutical and restaurants.

They included Rakuten Securities, one of Japan's largest online brokerages, serving over 6 million accounts. The company offers purchase, sales and brokerage of securities throughout the world, a global asset management firm providing investment management and research services worldwide to investors.

A major international financial services organization headquartered in Canada, that offers lives and health insurance, wealth solutions and asset management, an insurance company that offers individuals, professionals and businesses, casualty insurance products, an American health care customer that provides technology, pharmacy care and direct health care services globally, a leading provider of practice management and electronic health record solutions customized for the eye care industry, a leader in home nursing services, pediatric therapy, enteral nutrition and ABA therapy Healthcare, a rehab facility offering nursing care for short-term rehab, respite care and long-term care facilities, a global biopharmaceutical leader in one of the world's largest generic drug manufacturer, the British multinational telecommunications company, operating networks in 15 countries, a large QSR specializing in seafood to adapt SoundHound drive-through solution, a major QSR known for American style Mexican food, as sushi restaurant known for its rock music and concert team menus. Also in restaurants, [ Ruby Tuesday, Habit Burger, Red Lobster, Torche Tacos ] and [indiscernible].

We also continue to make progress with channel partners. We entered into a partner agreement with a large global IT services and consulting provider specializing in comprehensive enterprise digital transformations. We also entered into a multiyear partnership with a Latin America-based company to deliver SoundHound technology to their vast network of customers spanning over 20 countries.

In closing, we had an exceptional Q2 and our results demonstrate the incredible momentum SoundHound is building achieving a strong revenue performance, disciplined cost management and industry-leading platform validation.

The demand for our solutions is at an all-time high. Enterprise, in particular, are looking for high ROI Voice and Agentic AI solutions and our OASYS platform delivers just that. Our expanding IoT ecosystem and in-home model innovation position us to lead in this new era of enterprise automation. We are excited about the progress we are seeing with the planned acquisition of LivePerson, which we expect to be in the second half of this year.

With that, I'll now turn the call over to my cofounder James, to talk about our financial performance, key growth drivers and business outlook.

Thank you, Keyvan, and good afternoon, everyone. In Q2, we had $61.9 million in revenue, up 45% year-over-year. With sustained high demand for our AI solutions, it's become more evident each quarter that SoundHound is leading the charge as a pure-play conversational AI vendor. The launch of OASYS, our self-building and self-optimizing Agentic AI platform has fueled excitement and accelerated deals. This high-performance platform, which draw upon the collective technical strengths of SoundHound and our acquired businesses, appeals to businesses looking to automate and scale reliable, consistent customer service resolutions while reducing costs.

We are seeing traction across all industry verticals and in all pillars of our businesses, building on this OASYS momentum. As Keyvan mentioned, one of the verticals we are seeing SoundHound pull ahead of the competition is health care, where we provide automated patient services powered by AI agents that facilitate appointment making, care updates, prescription refills and more. We had seven deals in health care alone with one hitting 7 figures, and we continue to execute with manufacturers, bringing AI agents to vehicles and physical devices, particularly in Asia, where we had our largest deal of the quarter.

The pieces are coming together, and we continue to execute on the strong pipeline we built earlier this year, resulting in an exceptional first half of the year.

With that, let me discuss the second quarter financial results in more detail. As I mentioned earlier, Q2 revenue was $61.9 million, up 45% year-over-year. The growth was driven across multiple verticals such as health care, financial services, technology and automotive. And our broad-based expansion once again enabled us to realize strong customer diversification.

Our enterprise AI business performed particularly well and continued to be the largest contributor to revenue. In automotive, we continue to accelerate our Asia business, growing substantially their 5 quarters in a row. In Q2, our GAAP gross margin was 45%, up 6 percentage points year-over-year. Our non-GAAP gross margin was 58%, which adjusts for noncash amortization of purchased intangibles and employee stock compensation was flat year-over-year, but up 8 percentage points sequentially.

We continued to drive efficiencies by modernizing infrastructure, optimizing cloud spend, consolidating legacy systems and improving the efficiency of our core platforms, including shifting from third-party solutions to our own in-house ones as well as realizing synergies from acquisitions. We are being prudent on costs. While acquisitions have temporarily impacted our gross margin, we continue to explore and harvest synergies and expect to see our gross margin exceeding 70% in the future, similar to when we went public.

R&D expenses were $27.1 million in Q2, up 5% year-over-year, largely due to acquisitions and related head count and development costs. Sales and marketing expenses were $16.6 million in Q2, reflecting a 5% year-over-year increase, primarily driven by acquisitions. Outside of that, the bulk of our investments here continue to be go-to-market efforts via direct and indirect sales as well as customer success to increase retention.

We continue to elevate our brand and market presence continues to generate demand and convert more opportunities into pipeline. G&A expenses were $26 million in Q2, reflecting a 43% year-over-year increase primarily driven by various legal, advisory and other costs related to our acquisitions, including increased head count. We also continued to add additional resources to support necessary functions as we continue to grow.

We had noncash employee stock compensation of $21 million in depreciation and amortization including the amortization of intangibles of $11 million in Q2, all of which are included in our GAAP results.

Our GAAP operating loss for the quarter of $43.3 million improved by 45% compared to the same quarter in the previous year. Adjusted EBITDA was a loss of $9.6 million an improvement of 33% year-over-year. GAAP net loss was $42.8 million and GAAP net loss per share of $0.10 -- non-GAAP net loss was $9 million and non-GAAP net loss per share was $0.02 in this quarter. This adjusts for items such as noncash depreciation and amortization, M&A transaction costs and stock-based compensation. Our balance sheet remains strong with cash and equivalents at quarter end of $203 million with no debt.

Now let me discuss our financial outlook. Q2 was clearly a strong quarter for us as the demand for our solutions accelerated. We are moving fast to capture the underlying market shifts, which continue to be in our favor. With the strong first half of the year, we are increasing our revenue expectations to be in the range of $230 million to $260 million. Overall, this outlook affirms our expectation of another year of very strong growth.

We are pleased with the cost synergies we have realized from acquisitions and the targeted investments we have made in go-to-market, such as in the channel and in technology with OASYS. We will continue to stay aggressive and capture market share by expanding within our existing customer base and attracting new customers with our rapid innovation.

In closing, it's clear that our momentum is real. We are excited by the strong interest we are seeing with OASYS which is a testament to the category defined technology we continue to deliver to the market. We will continue to be disciplined on costs as we drive our business towards achieving profitable growth. We have a lot of opportunity in front of us. and we are operating in a way that reflects our optimism.

With that, we'll now move to Q&A.

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And pardon me, everyone. We are experiencing technical difficulties. Please stand by.

Okay. Then we'll continue and take Thomas Blakeley with Cantor Fitzgerald.

Congratulations on the record results here in 2Q. I guess maybe to start off to talk about OASYS and especially building your own models was very interesting Keyvan. Could you just maybe talk about what you're seeing in terms of 2Q trends with Amelia interactions installed base, in these new technologies and try to parlay that into what you're seeing for potential successes with LivePerson's installed base as you see it and potential to grow that very large revenue base in the context of these new technologies and what you're seeing in terms of 2Q trends.

Yes. Thank you for the great question. So OASYS represents really decades of innovation from several companies that have come together by merging with SoundHound. One of the things that we we're really mindful of when we design OASYS was to be able to integrate the innovation of these acquisitions very seamlessly because every company that we have bought that has been pursuing AI for customer service for 20-plus years, has done innovations that are unique to them, and we absolutely wanted to bring these under the same platform. So we design OASYS to be able to capture the innovations very seamlessly.

OASYS has a lot of strength and promises. One is just absolute high-quality conversational AI and Agentic AI for businesses, low latent high accuracy, naturalness, flexibility, and kind of a better-than-human experience that our customers have been waiting for, for a long time, and it's finally here.

One more thing that is very prominent in the design of OASYS is time to value. So it has a feature called AI built AI and then self improvement after it goes live, we used to sign up a customer, for example, a health care provider with complex use cases, hundreds of APIs and you would allocate a team to them to work with them for a month before they could go live.

Now what used to take us months with a large team is now taking us minutes by just telling the AI what to build, we upload the documents, we give it all the APIs, and we described the use cases, sometimes we are even able to upload previous calls with humans, the transcription and it just goes and build itself. And it shows you on the screen what it's doing and you can follow it. And in a matter of minutes, you have something that again used to take us a month.

And then once it goes live, it learns how to improve itself. For example, if it's missing an API, if it's missing document, if callers are asking about certain things that are not in the original design of the use cases. And it even programs the enhancements and then it allows human moderators to review those enhancements and accrue them with 1 click. So it's -- the time value goes down. We don't need months and months of expensive professional services for our customers. So it makes it easier for them to choose us and faster to go live.

You asked a lot of questions, I'm going to answer them one by one. The next one is building our own models. So SoundHound is very unique in the sense that we have our own foundation models. We were a pioneer invoiced AI. We started working on voice in the dorm at Stanford University, a long time before even the big tech -- a lot of the big tech players are even thinking about voice. A lot of the innovations in the space were invented by SoundHound concepts like speech-to-meaning that combines speech recognition and language understanding together.

And that gives us the advantage of owning the core technology compared to some of the new players that putting the pieces of the Lego together by turning up for different APIs. We have our own models that gives us flexibility, able to enhance things respond to complex use cases.

It also -- our Polaris foundation model for speech performs the other providers by a large margin in both spend accuracy and cost. But we also, in OASYS, we integrate with the Frontier models because we want to promise our customers that they get the best experience no matter where it comes from.

In most cases, it will come from SoundHound, but if one Frontier model does an innovation that's either unique and delivers that are expanding for their colors, we don't hesitate to bring that in.

And that actually makes it more interesting for them to choose SoundHound versus going directly with the frontier model. Because if a customer goes directly with the frontier model, they are making a very risky bet that, that frontier model provider is going to be always the best and that doesn't necessarily hold. We've seen some beats others every quarter. They publish results that beat each other. So by choosing SoundHound, they are actually reducing or removing that risk by being able to tap into multiple frontier models.

So we are investing in our own specialized LLM and text-to-speech. We'll have a lot more to say about that in the near future. but our smaller customers are now running entirely on SoundHound stack. So there's no use of frontier models for our smaller customers, and we are starting to now convert the bigger customers, one is about to go live very soon because they're getting much better results with our own models.

And over time, we expect that the majority of all of our customer service interactions will be powered by OASYS and will be powered by our own models, which also reduced our costs as a higher quality to our users.

And then your last question, if my memory serves, is what happens to the customers of the various companies you're acquiring, for example, LivePerson hopefully coming soon in the second half of this year and the companies that we have purchased in the past, look interaction Amelia.

So all the new customers we expect will utilize OASYS. There's no reason for them not to. The legacy customers, you are converting them at a pace that we are comfortable with, right? Because some of these customers have been on a legacy platform for many years, and they are very loyal to it. They are very happy with the results. The last thing we want to do is to disturb that. So we are going -- some of them are very eager to switch and some of them will take a little bit more time. So it's really going to get space that they are comfortable with it, but OASYS is ready to take them on now, especially with the AI built AI and the self-improvement we have a lot of reasons for them to be convinced to make a switch.

Very insightful, Keyvan, and it certainly sounds like your installed base and even potential LivePerson customers will have a lot to look at and upgrade to.

Just as a quick follow-up on the -- it's very impressive to see you continuing to execute and signing large deals intra-quarter. I'd love to get an update there in terms of the pipeline. And if you wanted to double click here on any kind of the recurring component of these large deals, I think, would help investors kind of from an outlook perspective.

Yes. Our pipeline has never been this big and our win rate has never been this good. We are very bullish and excited about our prospects. And we're not the only one that thinks this way. Gartner just published a report on the total addressable market for Agentic AI is going to approach $1 trillion by 2030. So that's just a few years away. Every quarter is going up exponentially. It's 60% compounding.

So -- and SoundHound emerged as a leader in their Magic Quadrant. So you can expect a lot of the big logos are in on that to make a decision. So we are very excited about our prospects. We -- our win rate has never been this good. We win in demos, we win in RFP, we win in pilots, because of OASYS. And really, our results speak for themselves. It was beyond our own expectation, the quarter, and we think we can repeat that.

You asked about large [indiscernible] and repeatability. We've had large deals every quarter for the past few years. So there are components of it that may not be recurring, but they have been absolutely repeatable. So just maybe the size of it is not as recurring as one might build a model around it, but the fact that it hasn't every quarter should show that our pipeline is strong and it's just getting better.

[Operator Instructions] our next question will come from Gil from D.A. Davidson.

Let me follow on that conversation and ask about the 8-figure deal. That's a pretty significant jump forward in terms of the types of deals that you're doing.

So if you wouldn't mind, without talking about the specific -- the specific customer is talk about what would the components are for those -- for that deal what's the scope? What are the types of products you're selling into that customer to make it such a big deal?

Yes. And I'm hoping we can repeat those a lot more frequently going forward. We have also 7-figure deals in the quarter in different sectors. We had, for example, automotive deals that were very large in China and other parts of Asia.

That particular one you asked for, I would think of them more as a channel customer. And they're all important to us. Channels are important, direct sales importance, M&A is important. I think last time we were talking the analogy of in a land grab moment, you can go by foot, you can go by sea and you can go by air and going by foot is direct sales, going by sea is channel partners going by air is M&A. And not everyone can do all three, but we can. So -- and we will absolutely do all three. And channel partners are very important.

So this particular customer, it is a commitment. So it's an 8-figure commitment to use our platform. for their customers and their customers they have customers in 20 countries. So they will be utilizing the OASYS platform to provide AI automation for the customers they already have. And we are -- we hope that we can expand beyond the figures that they've committed to.

Got it. So then if you wouldn't mind taking this change while we're on the public call and the protection of [ RegFD ], and reviewing the guidance that we have as of today for the two scenarios. One is before we close the LivePerson deal and then with the possibility of closing it in the second half of the year? What would guidance look like under both of those scenarios?

Yes. So the guidance you provided does not include the acquisition. And because of the uncertainty in the timing of the closing, we are not able to provide clear guidance on what it would look like. But we did say in our press release that once it closes, we are going to have another update to include the results into ours.

But we felt confident enough in the closing this year that when we talked about what next year might look like, and we talked about that last time was at minimum, the range would be $350 million to $400 million next year. And again, we hope to do better than that as we gain more visibility and confidence in the integration of the two companies.

[Operator Instructions] And our next question will come from Mike Latimore from Northland Capital Markets.

This is Vijay Devar for Mike Latimore. About LivePerson, is there any change to what you expect Life to add to the business this year or next? I think it says $350 million to $400 million, but any changes or in terms of your confidence levels in opening that level of revenue?

We haven't talked about the contribution this year mostly because of the urgent in the closing date. But with next year, what we said last time remains the same. So again, the $350 million to $400 million next year, assuming the merger is successful in the second half of this year hasn't changed.

And in terms of confidence in closing that has gone up because there was a whole bunch of regulatory approvals that we needed to get, and we had a filing that disclosed that we got all of those regulatory approvals are already in place.

Understood. And secondly, what's the main tech platform benefit from the LivePerson acquisition and main cross-sell opportunity that you see?

Yes, there is -- well, there are a few things I want to say about that. One is there is a very high potential turnaround opportunity via this acquisition because LivePerson is an amazing company. They invented in my opinion, as far as I know, they invented the web chat, when you go to our business website at the bottom right there, the chat they were at least a pioneer in that. And there -- the chances are that you have used it at some point in your life if you visited a company website and use that feature. And they have a lot of customers. They have a product called digital [ CCaaS ] that is very complementary to what we have.

And the reason they have lost some customers over the years were reasons that the merger fixes overnight. One was financial stability, one was platform stability and one of innovation. And SoundHound is a leading innovator in this space. So by merging together, the customers now can tap into SoundHound innovation. And the financial stability gets sticks overnight. So all the debt goes away. The combined company will have a strong balance sheet and no debt. All of this was announced in the deal terms.

And so it's a huge turnaround opportunity for SoundHound, and it's something that we've done successfully in the past and we're getting better at it every time. The first acquisition took us about 2 years to turn around. The last one interaction is showing signs of turnaround even a lot faster than we expected.

And beyond the turnon opportunity, there is, as you mentioned, cross-sell and upsell. The upsell is upgrading to OASYS. So these customers are already using the digital chat from LivePerson, the digital [ CCaaS ] will stay, but the AI that powers it can upgrade the OASYS. And because of the very short time to value of OASYS where AI can build AI and AI can build it's feature by looking at a lot of the prior AI, we think we can -- we have a very good value proposition for the customers. So that's the absolute opportunity on the cross-sell.

The #1 most requested feature of LivePerson customers is to LivePerson has in voice. Historically, LivePerson did not provide voice. It was mostly chat and digital and their customers have to go to different vendors to build -- to power the voice channel versus the chat channel. But now with SoundHound, they can build a single agency solutions for their customer service and they can power -- it can be multimodal and omnichannel. They can power their phone, the call centers. They can power their websites, their mobile apps, their messaging. We can even bring those use cases into the devices that we power like cars and TVs and other IoT devices. So both cross-sell and upsell opportunities are tremendous in our opinion.

And our last question will come from Leo Carpio from Joseph Gunnar.

I had a quick question regarding the competitive environment. Given your success winning the bigger deal, can you give us some sort of granularity and color on who are you facing off now at this stage in terms of the bake-offs, who are your competitors? Are they existing competitors that we've known about? Or are they a new level all large LLM companies even forced to betting for these deals?

Yes. It's -- as I mentioned, it's on track to be almost $1 trillion TAM. So you can expect more competitors to enter the market. But SoundHound used to having competitors. We have had very big and powerful competitors, and we've managed to do well. We beat them in technology quality, we beat them in business model and partnership mentality. And now we have some newcomers and smaller players of different sizes. Most of them, they don't have their own technology. They basically tap into other APIs, and they could actually become a customer of SoundHound and again, the OASYS platform will be open eventually to those type of customers. Like some of the channel partners that I mentioned, they have a decision do they compete with us or they become our customer and they can move faster by choosing our platform.

And I personally think competition is good. It's either they don't matter or they provide inspiration for us to defrag them and be done well in that situation.

You had a very important question about what the Frontier models become competitors. We don't think so. Frontier models are after API. And that's the rate that they're after, and they need to stay focused on that, to really serve our customers. Our customers don't want an API, they want a partner. So we go stick with them, we listen to them. We learned about their pain points. We help them overcome their challenges, then we inspire them to think big and dream big and achieve those dreams. And that kind of a partnership mentality is something that they need and appreciate.

And it's unlikely for a big tech player or a frontier model player to want to go into that business. Now their API is available. And sometimes you see customer or a potential customer try to play with those APIs. But as I mentioned earlier, that's a very risky bet because then you're choosing -- you're really betting that in particular frontier model is going to be the best for years to come, whereas if you use SoundHound, you get the best model no matter where it comes from, and you get it at a higher quality and you get it at a lower cost because of SoundHound's own models.

So we have everything we need to win, and we are winning. And competition is there. It's not a question, it's a certainty, but we know how to navigate around it, and it's a $1 trillion market TAM that we hope to capture a very big product.

Thank you. And this does conclude today's presentation. Thank you for your participation, and you may now disconnect. Everyone, have a great day.

Good morning, ladies and gentlemen. Thank you for standing by. Welcome to LivePerson's Town Hall. My name is Dean, and I will be your conference operator today.

[Operator Instructions].

I would now like to turn the conference call over to Mr. Jon Perachio, Vice President, Investor Relations.

Hello, and thank you all for joining us. I'm Jon Perachio, LivePerson's Vice President of Investor Relations.

Joining me today is John Sabino, LivePerson's Chief Executive Officer. We'll be discussing our previously announced transaction with Downtown AI and addressing questions submitted by stockholders.

I'd like to remind everyone that certain statements made during today's presentation may constitute forward-looking information.

These statements reflect the current expectations of management and are subject to risks and uncertainties that could cause actual results to differ materially.

I encourage all participants to refer to the full disclaimer and forward-looking statements disclosure contained within the press releases issued on July 10, July 23 and June 28, all of which are available at voteliveperson.com and on the SEC's website at sec. gov.

Nothing on this call constitutes an offer to sell, buy or exchange or solicitation of an offer to sell, buy or exchange any securities.

A transcript of this webcast will be filed with the SEC and made available on the Investor Relations section of LivePerson's website as well as on our transaction website, voteliperson.com.

With that, I'll turn it over to John.

Thanks so much, Jon, and thank you, everybody, for joining today. Look, we wanted to hold this town hall because we know there's a lot of information out there about this transaction.

There are press releases, SEC filings, letters, voting materials, and we know that all this can be difficult to sort through. So today, I want to speak plainly about what's at stake and why the Board is recommending this transaction and why your vote matters.

We'll spend a few minutes today to walk through some key points, and then we'll answer some questions submitted by stockholders, as Jon just said. So let's kick this off. And let me start with the vote itself.

The special meeting for the vote is going to be on the 20th of August, and approval requires the support of a majority of the outstanding LivePerson shares. So this is not simply about letting your votes sit there.

We need a majority of the shares to be voted. And that means that a share not voted is the same as effectively voting against the transaction.

So however many shares you own, your participation is really important. And this vote will help determine both the future of LivePerson and the value that stockholders have the opportunity to receive from their investment.

Now before we get into the details, let me summarize why the Board is recommending that stockholders vote for this transaction.

This transaction will bring together the complementary capabilities across voice, digital engagement, Agentic AI and AI assurance. Most LivePerson stockholders would become stockholders of the combined company with SoundHound, with a strong balance sheet, no debt, greater scale, broader strategic capabilities and an accelerated path to profitability.

And after a comprehensive review of LivePerson's alternatives, the Board determined that the transaction with SoundHound really does represent the best alternative for maximizing stockholder value.

So with that as the background and the context, let me spend a few minutes on how the Board reached its decision and why this transaction is expected, and what this transaction is expected to mean for stockholders.

Some of the points I'm about to share cover specific transaction terms and financial details. So I'm going to stay close to my notes and make sure I describe them accurately for all of you who are listening today.

First and foremost, the LivePerson Board of Directors undertook a comprehensive review of alternatives in which 66 potential counterparties were contacted.

Following that process, the Board determined that the transaction with SoundHound represents the best alternative for maximizing stockholder value, including when compared with continuing as a stand-alone company given the business, financial, competitive industry and market risks that are facing LivePerson.

This transaction would also unite complementary capabilities across voice, digital engagement, Agentic AI and AI assurance.

The combined base of our 2 companies together includes over 25 of the Fortune 100 companies, creating one of the conversational AI sector's most comprehensive enterprise customer footprints and a significant opportunity to introduce additional capabilities across the company's existing customer base.

So that's why the Board is leaning in and wants all of us to vote for the transaction with our shares. All right. So let's talk a little bit about LivePerson's debt and the agreement we reached with noteholders.

It was an important part of the Board's assessment, and it really did revolve around LivePerson's financial position. LivePerson's outstanding debt currently exceeds the total value of the transaction.

And as part of this transaction, our secured noteholders have agreed to exchange their notes at a value reflecting a substantial discount to the notes' approximate $350 million par value.

Given LivePerson's valuation and significant debt without these substantial concessions from our noteholders, stockholders may not have had the opportunity to receive any value for their shares in any strategic transaction.

So this transaction is not occurring in isolation from our financial circumstances. The agreement with our noteholders really is a critical part of the overall transaction and the opportunity for our common stockholders to receive value.

Now let me address the consideration LivePerson stockholders are expected to receive if the transaction is approved and completed.

Based on the assumptions described in our proxy statement and prospectus, most LivePerson stockholders will receive SoundHound stock.

As of the announcement of the transaction on April 21, 2026, the SoundHound stock consideration to be received by LivePerson stockholders represented approximately $3.33 in value per LivePerson share.

That represents a premium of approximately 22% over LivePerson's 30-day volume-weighted average trading price before the announcement.

The exact number of SoundHound shares a stockholder receives will not be finalized until closing. It will be determined using the formula described in our proxy statement and prospectus and will depend in part on SoundHound's stock price near the closing.

The calculation uses a 10-day volume-weighted average price of SoundHound stock ending 3 trading days before the closing and is subject to a caller.

If the average price is above $12 per share, $12 will be used in the calculation. If a SoundHound share is below $7 per share, $7 will be used in the calculation.

The aggregate consideration is also subject to a possible downward adjustment based on LivePerson's cash balance shortly before closing as described in our public filings.

Because the final exchange ratio depends on a formula with variable factors, we encourage stockholders to visit voteliveperson.com and use the Interactive illustrated calculator to see what consideration could mean for their individual holdings on an estimated basis.

Stockholders holding LivePerson shares listed on the Tel Aviv Stock Exchange are expected to receive an equivalent value in cash instead of SoundHound shares, subject to the terms described in our proxy statement and prospectus.

So, to pull this together, stockholders receiving SoundHound shares, the second component of the transaction is an opportunity to participate in the potential future upside of the combined companies. And I think this is a good thing.

LivePerson stockholders receiving SoundHound stock will become stockholders of the combined company with a strong balance sheet with no debt and an accelerated path to profitability.

SoundHound has stated that assuming the transaction closes in the second half of 2026, it expects to achieve a combined revenue range of a minimum of $350 million to $400 million in 2027.

And SoundHound has also stated that the combined business is expected to reach $500 million in revenue based on the existing customer base alone.

So in summary, I know there was a lot of detail and the full terms are available in the proxy statement and prospectus. But I encourage everyone to review those materials. But let me bring you back to the central point.

The Board conducted a comprehensive process, considered LivePerson's financial position and evaluated the alternatives available to the company. And based on that review, the Board unanimously determined that the SoundHound transaction is the best alternative for maximizing value for LivePerson's stockholders.

It provides stockholders the opportunity to receive value from their LivePerson shares and for most stockholders to participate in the potential upside of the combined company with broader capabilities, greater scale and a strong balance sheet with no debt.

And that is why the Board is recommending that you vote for this transaction.

It brings me back to what you're hearing from us so frequently. A share that is not voted is the same as voting against the transaction. We do not want anyone to miss the opportunity to participate simply because an e-mail was overlooked or a proxy card was not sent.

Voting takes only a few minutes, and you must vote, or your vote must be received by 11:59 p.m. Eastern Time on August 19, 2026, or you must attend a special meeting online and vote during that meeting if your shares are held directly in your name as a stockholder of record.

Even if you plan on attending the LivePerson special meeting, we recommend that you vote your shares today so that your vote will be counted if you later decide not to attend a special meeting.

However many shares you own, your vote matters, and we stress please vote for the transaction.

So hopefully, that gives a good overview to everybody, Jon, and we could probably start moving on to some of the questions we've received from some investors on things that we think are on the minds of stockholders today.

Yes, sure. Great. Thanks for that, John. So the first question for you is, why does the Board believe the merger consideration fairly compensates LivePerson stockholders?

Okay. So at signing, the consideration was set to deliver roughly $3.33 per share, as I've already said. And this is a premium of about 22% of the 30-day average price the day the deal was announced.

The Board considered a few things. First, the Board ran a comprehensive review contacting over 66 parties, and you can read about every detail of that in the review process in our proxy statement.

Second, LivePerson's financial adviser, Houlihan Lokey, delivered an opinion that the consideration is fair from a financial point of view to LivePerson's common stockholders, and that was based on assumptions and qualifications that are from their opinion.

Then lastly and arguably most importantly, LivePerson's debt exceeds the total value of this transaction. As we've said many times before, without the noteholders agreeing to accept substantially less than what they're owed, there would be no value available to distribute to all stockholders.

So considering these facts, the Board determined that SoundHound's offer provides the best path forward to stockholders. Offering a premium above the trading price at signing, an opportunity to participate in the future of the combined entity with a more comprehensive platform, and, as I've stated many times before, 0 debt.

And look, if you really want to take a look at this for yourself, you can refer to the calculator at voteliveperson.com, and we encourage everybody to do that.

Thanks, John. Second question for you is, why did the Board conclude that selling now was superior to continuing LivePerson's stand-alone turnaround?

That's a good question. So it's true that our turnaround was progressing. We extended our debt maturities, and we gained some flexibility to continue investing in our platform.

However, we continue to face an extremely competitive landscape, and there are a lot of headwinds, which contributed to a slower turnaround than originally planned.

So it was critical that we sought out alternatives. And after review, the Board concluded that this transaction really does offer stockholders a much better path to value and for most future upside as part of a company that has flexibility to invest in the right technologies and opportunities. 

The fact is we're just constrained as LivePerson alone right now. And the Board determined in its review that any other alternatives, including being a stand-alone company, may result in leaving no value for stockholders. And that is something we really wanted to avoid.

Thanks, John. It's a very important context. Next question is, what happens if the transaction is not approved by stockholders?

Right. So look, if this deal does not go through, we remain an independent company, but we will face substantial risks and an increasing entry of well-funded competitors in our space.

You don't need me to tell you that. You can just look at the news every day. We'll immediately face 2 problems: managing our debt obligations while also dealing with the fact that our revenue is contracted.

And this makes it tougher to invest in the future and run the company as it stands today.

That's why this vote is so important. And it's not a matter of comparing the merits of a sale versus a stand-alone path because a stand-alone path is going to be very difficult for this company, and they end up with stockholders not getting anything, and we want to avoid that.

Great. Thanks, John. Another question from a shareholder referenced that LivePerson contacted 66 counterparties in the process. Were there any other or better offers?

Yes. So we did run a highly rigorous and comprehensive strategy review process led by very capable advisers.

Out of the 66 potential counterparties contacted, only SoundHound submitted a formal bid. SoundHound's offer was the highest, most definitive, and only actionable proposal that really did preserve value for our common stockholders.

And what are the chances of a competing bid emerging before the meeting later in August?

Look, I can't predict every scenario, but this was a very expensive process, as you've seen in our filings. And so we're not currently expecting anything like that.

Another question from an investor: why are the Tel Aviv Stock Exchange holders getting cash while other stockholders get SoundHound AI stock? Which is the better deal and why the difference?

Okay. So this is really being driven by local regulatory and compliance reasons in Israel. The value that Tel Aviv Stock Exchange holders will receive in cash is designed to be substantially equivalent to the value a NASDAQ holder would receive in stock consideration.

So NASDAQ holders will receive freely tradable shares; TACE or Tel Aviv Stock Exchange members will receive the equivalent value in cash. And again, this is because of compliance and regulatory reasons, and there's not really one that's better than the other.

Thanks, John. Very clear. Next question is what percentage recovery or economic outcome is expected for creditors compared to common shareholders? And how does the Board evaluate whether that allocation was fair?

Okay. The Board considers the allocation highly favorable to stockholders because we negotiated significant financial concessions from our lenders to ensure that there's money on the table for equity holders.

To give you the specifics, creditors agreed to write off over $140 million of what they were owed, basically enabling $43 million in deal value or $3.33 per share as of signing to go directly to common stockholders instead of going entirely towards the debt repayment.

So we think that this works for our shareholders.

Great. Thanks, John. Another one here. How does the Board value LivePerson's existing customer relationships, enterprise integrations, conversational cloud platform and cross-sell potential in determining that the merger consideration was fair to common shareholders?

Okay. So our financial advisers, [ Koulihan and Lokey ], ran a standard valuation model and a number of them, including discounted cash flows.

While our technology and customer bases are valuable, our financial losses and negative equity severely damaged our stand-alone value.

So partnering with SoundHound immediately provides this financial stability we'll need to retain our customers and, most importantly, continue to invest in the platform and be able to innovate. So that's what really led us in this direction.

Okay. Great. And one last question. How does the Board evaluate newer LivePerson product initiatives such as SentriX, which you've talked about on some prior earnings calls in the valuation process?

So look, SentriX is an innovative product. There's interest in it, but it's still in its early stages, as with all new products.

And because its long-term success really does require a lot of future investment for customer adoption and improving the product.

The Board views this as an asset whose value will actually be unlocked much better when combined with SoundHound's omnichannel platform and their financial stability.

So we see SentriX as still being valuable, but it's going to need more investment to move it forward as any product would, and we think we can do this best with SoundHound.

All right. Great. Thanks, John. Thanks for clarifying that. Well, that is all the time today that we have for questions.

John, again, thank you for providing this additional context of the transaction. So it will be very helpful to the shareholders and clarifies why it's important for all LivePerson stockholders to vote. And thank you to everyone who joined in today. 

Additional transaction materials and voting information are available on voteliveperson.com. For assistance voting your shares, please contact Mackenzie Partners toll-free at 1 (800) 322-2885.

As a reminder, votes submitted in advance of the special meeting must be received by 11:59 p.m. Eastern Time on August 19, 2026. Please vote for the transaction today. Thank you.

Thank you, John, and thank you, everyone, for attending.

That concludes our call today. Thank you for joining. You may now disconnect.

Good morning, and welcome to SoundHound's 2026 Annual Meeting of Stockholders, which will be conducted via live webcast. I'm Keyvan Mohajer, the Chief Executive Officer and a Director of the company. At this time, I would like to turn the meeting over to Warren Heit, our General Counsel, who will serve as Chairman of the meeting.

Thank you, Keyvan. Good morning, everyone. At this time, I would like to call the meeting to order. I will begin by introducing the current members of the company's Board of Directors and a representative of our independent registered public accounting firm.

Joining us today on the call are Dr. Keyvan Mohajer, Co-Founder, Chief Executive Officer and Director; James Hom, Co-Founder, Chief Product Officer and Interim Chief Financial Officer and Director; Larry Marcus, Director; Diana Sroka, Director; and Dr. Eric Ball, Director. Griselda Panozo from the PricewaterhouseCoopers LLP.

An agenda outlining the order of business for the meeting has been made available on the live webcast. You can also ask questions regarding the meeting by typing your question into the text box. We will respond to appropriate questions after the meeting. The stockholders will vote on the following matters at the meeting.

One, the election of 5 directors to the company's Board of Directors each to serve until the 2027 Annual Meeting of Stockholders or until their successor is elected and qualified. And the ratification of the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for the year ending December 31, 2026.

If there are any stockholders who wish to vote at the meeting, you can do so by using the voting link that says, click here to vote your proxy online. You will only be able to vote if you have logged into the meeting with your control number. If you have logged into the meeting as a guest, you will not be able to vote. You may vote your shares at any time once you've logged into the meeting until the closing of the polls, which will happen after all of the polls have been brought to the meeting. Please remember that if you've not voted your shares when voting is closed, your vote will not be counted.

In advance of this meeting, a formal notice of Annual Meeting of Stockholders and proxy statement was sent to each stockholder of record as of March 30, 2026, which is the record date for this meeting. Vincent Amodeo of Continental Stock Transfer and Trust Company has been appointed to act as Inspector of Election at this meeting. His oath as Inspector of Election has been submitted and it will be appended to the minutes of this meeting.

The Inspector of Election has polled the stockholders present and voting at the meeting. He has examined the proxies. His report of stockholders represented at the meeting has been submitted. The report indicates that holders of shares in excess of the number necessary to constitute a quorum are present or represented by proxy. The Inspector of Election's report will be appended to the minutes.

The first item of business before the meeting is the election of 5 directors to the Board of Directors. They will serve until the 2027 Annual Meeting of Stockholders or until his or her successor is duly elected and qualified. The proxy statement listed the company's director nominees. The candidates for director who have been nominated by the Board of Directors are Dr. Keyvan Mohajer, James Hom, Larry Marcus, Diana Sroka and Dr. Eric Ball. The company has not received notice of any other nominations for director as required under the company's bylaws. Therefore, I declare nominations closed. The 5 nominees that receive the largest number of votes will be elected as directors.

My name is Michael Zagorsek, and I am a stockholder. I hereby move that Dr. Keyvan Mohajer, James Hom, Larry Marcus, Diana Sroka and Dr. Eric Ball, each be elected as a director to serve until the 2027 Annual Meeting of Stockholders or until his or her successor is elected and qualified.

My name is Scott Smith, and I second the nominations.

The second item of business before the meeting is to vote to ratify the appointment of PricewaterhouseCoopers LLP as the company's independent registered public accounting firm for the fiscal year ending December 31, 2026.

My name is Michael Zagorsek and I am a stockholder. I hereby move to approve the appointment of PricewaterhouseCoopers LLP as the company's independent registered accounting firm.

My name is Scott Smith, and I second the motion.

All items of business have now been discussed. If you have not already voted on this item or any previous item, please cast the ballot now.

[Voting]

I now declare the polls closed on all motions. The Inspector of Elections will proceed to count the ballots and report on the results. I hereby present the report of the Inspector of Elections giving the preliminary results of the meeting. First, Keyvan Mohajer, James Hom, Larry Marcus, Diana Sroka, and Dr. Eric Ball received the largest number of votes cast at the meeting. Each has therefore been duly elected as a director to serve until the 2027 Annual Meeting of Stockholders or until each of their successors are elected and qualified.

Second, a majority of the votes present or represented by proxy at the meeting and entitled to vote have voted for the appointment of PricewaterhouseCoopers LLP as the company's independent registered public accounting firm for the year ending December 31, 2026. Therefore, this proposal has been approved.

I will file the report of the Inspector of Election in the minute book of the company immediately following the minutes of this meeting. Further, the company, in accordance with the SEC rules, will file a Form 8-K containing the results of the meeting and the number of votes for, against and abstained for each proposal.

There being no further business and having finished the formal portion of the meeting, the meeting is hereby adjourned. I turn the meeting back over to Keyvan Mohajer, our Chief Executive Officer and Director.

Thank you for your attendance this morning, and we appreciate your continued support and interest in SoundHound.

Good day, and thank you for standing by. Welcome to SoundHound Quarter 1 2026 Earnings Conference Call. [Operator Instructions] 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. Please go ahead.

Good afternoon, and thank you for joining our first quarter 2026 conference call. With me today is our CEO and Co-Founder, Keyvan Mohajer; our CFO and Co-Founder, James Hom; and our COO, Mike Zagorsek. We will begin with some short remarks before moving to Q&A.

We'd also like to remind everyone that we will be making forward-looking statements on this call. Actual results could differ materially 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 a discussion of the 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'd like to turn the call over to our CEO, Keyvan Mohajer. Please go ahead, Keyvan.

Thank you, Scott, and thank you, everyone, for joining the call today. SoundHound started the year strong with top line growth exceeding 50%. And excluding the impact of all acquisitions, our automotive and IoT AI business was up 88% year-over-year. Overall, we are seeing increased demand for our AI and our enterprise solutions, and this is reflected in the massive pipeline we continue to build.

Two weeks ago, we announced we entered into a definitive agreement for the acquisition of LivePerson, a digital messaging pioneer and a leader in the conversational AI space serving hundreds of enterprise and mid-market customers. The combined company will work with enterprise customers across more than 30 countries, including 12 of the top 15 global banks, 4 of the top 5 global airlines, 4 of the top 5 global automakers and 10 leading global telecommunications providers. This accumulated customer base includes 25 of the Fortune 100 companies.

We expect the deal to close in the second half of the year, marking our fifth strategic acquisition while continuing a disciplined and deliberate approach to developing a full-service enterprise AI business. With the addition of LivePerson, SoundHound will have over 120 years of combined customer relationships and enterprise integrations as well as data from tens of billions of real-world interactions.

We now have a proven track record when it comes to M&A, a repeatable formula of turning premerger decline to post-merger growth by taking complementary business models and technology stacks and integrating them with SoundHound's own to emerge together as a formidable force in conversational and agentic AI. Our first acquisition has undergone a complete turnaround in under 2 years and is on the path of continuous growth. And while we are less than 12 months into our latest acquisition, we are already seeing an acceleration in that pace with this portion of our business beating its Q1 revenue forecast. Our process is getting faster and more efficient, and we are ready to deliver another success story with LivePerson.

With all of these companies, we've identified a common thread to bring success and a substantial return on investment for our stakeholders. They are great businesses. Each one has amazing teams, incredible solutions and have built strong customer relationships. In each case, synergies with our highly focused pillars of our business were clear and SoundHound was able to give them the resources and the collaboration they needed to thrive. We believe that LivePerson can be a transformational turnaround opportunity. Upon closing the acquisition, SoundHound will immediately seek to address the 3 critical areas required by their customers: first is strengthening their financial status; second is accelerating the modernization of their platform; and third is delivering faster innovation.

In addition, one of the most frequently requested capabilities from LivePerson customer base is Voice AI, which SoundHound can offer immediately. By offering SoundHound Voice AI to LivePerson customers and the unified digital and voice omnichannel solution to SoundHound customers, we believe the combined business is expected to reach $500 million based on the existing customer base alone. And with all of our combined businesses, we continue to harvest cost synergies and revenue synergies with cross-selling and upselling.

While acquisition is not a requirement for our success, it provides a strategic opportunity for SoundHound to accelerate the expansion of our customer base, bring advanced and additive capabilities to our platform and to further scale and accelerate the trajectory of our leadership position. Moves like this are a key piece of a much larger vision for SoundHound. And turning specifically to the technical synergies arising from our acquisitions, I want to comment on our big news earlier in the week.

For those who may have missed the headlines, on Tuesday, we officially announced OASYS, our Orchestrated Agent System. This category-leading platform breaks away from old static built and deploy models that requires businesses to dedicate considerable resources to constant time-consuming maintenance.

With OASYS, AI itself can build entire fleet of AI agents in minutes based on existing documentation and integrations, and those agents will autonomously and continuously refine themselves. What once took businesses months can now take just minutes, significantly lower their operational costs. Like the human brain, OASYS continues to get better, the more it is used and is intelligent enough to take the initiatives, evaluating the performance gaps and then proactively suggesting and building fixes for its human operators to approve.

But OASYS isn't just about efficiency gains. It's also about opportunity. A business can use the platform to build an AI agent once and deploy its anywhere across phone, text, web chats, in-store kiosks, social media, TVs and in vehicle. The channel diversity SoundHound offers is unmatched by competitors in the space, and will truly allow brands to redefine where and how they interact with their customers. This is truly a platform built for a new era.

AI agents will traverse digital and physical spaces, handling complex customer contact center inquiries, reducing the need for human escalation enhanced by continuously improving AI agents trained on historical data and built by AI, managing workflows like prescription refills or IT service requests, offering real-time assistance to employees on the retail sales floor, executing transactions in the vehicle like ordering coffee on the road, providing outbound customer outreach with personalized offers and incentives based on the customer data, handling orders in high-volume sales environments like the drive-thru and solving disputes for customer service contact centers, turning complaints into opportunities.

OASYS is a platform that unites SoundHound's core technology with the collective strength of our various acquisitions to deliver one unified engine. This marks an important evolution for who we are as a business, moving to a single powerful agentic AI ecosystem. OASYS serves as orchestration and intelligence layer that allows our customers to move beyond deploying individual SoundHound products toward a more integrated and user-friendly experience.

To understand how powerful this new platform will be for businesses, it's helpful to understand the kind of ROI our current platform is delivering for global enterprise clients. One Fortune 100 insurance company was able to achieve over $10 million in quarterly labor savings. For that same customer, our AI successfully served over 21 million customers, fully automating a significant portion of those interactions, while maintaining over 96% routing accuracy. Additionally, our agents processed over 1 million financial transactions and generated more than $5 million in savings through enhanced customer self-service. Unsurprisingly, this customer has already been testing our new OASYS platform in beta alongside a number of our large enterprise customers.

As another example of undeniable value creation, one of our QSR customers conducted a careful analysis and reported that drive-thru locations deploying our voice AI solutions are generating greater revenue than comparable locations that don't use SoundHound's technology. Our AI is functioning as a powerful efficiency tool for operators and their employees, allowing them to deliver fast, accurate service, a vital advantage in today's challenging macroeconomic environment where every transaction matters. You can see we are driving measurable value for our clients and their end users alike.

While our acquisitions have provided the opportunity for significant cost synergies, I also want to talk about where we are making the right and responsible investments. OASYS will be powered by Polaris, SoundHound's own speech foundation model that consistently beats big tech competitors in accuracy and performance by a large margin. We now see further opportunity to take our foundation model to the next level and include specialized LLMs and speech synthesis with a level of quality beyond state-of-the-art.

As a result, OASYS at runtime does not need to depend on any third-party frontier models. Every interaction can be powered by SoundHound's own models, giving us higher quality, more control and significant cost savings. Of course, when necessary or required by a customer, OASYS can orchestrate across any model, and our customers can continue to have the benefit of flexibility, but we expect for the majority of cases, OASYS will utilize SoundHound's own models.

This is the right time for us to be making this investment for the following reasons:

First, due to our years of R&D and data accumulation, this is a contained and responsible investment. Unlike some companies that are throwing billions to avoid missing out, we know what we are doing. We know our training recipe, we have the data and our models will be specialized for what they will be used for. Importantly, we believe that models that handle the customer service inquiry don't need to also solve quantum physics problems or answer history questions in Haiku. We will create models that have the right parameters to outperform the frontier models at a lower cost for their target applications, like resolving customer queries, processing orders, refilling prescriptions or executing card transactions.

Second, we have reached a scale that makes this investment a clear winner. Once the traffic from our various acquisitions migrate to OASYS and upgrades to Agentic, the cost saving of avoiding frontier models at run time will be far more than the investment to create this independence within a short span of time. This is a contained and calculated investment expected to be less than 1% of our market cap this year and time bounded. We expect it will pay off by an order of magnitude in cost savings for SoundHound and even more so in value creation as it will elevate SoundHound's standing as a pure-play AI company with a full stack of models for the growing number of industries we serve.

That brings me to Q1, which saw a number of strong deals across a number of those industries. Across automotive and IoT, we signed a new 7-figure commitment with a prominent Japanese auto manufacturer to deploy our voice assistant across vehicles globally. We also expanded into South America with a prominent multinational OEM and signed an agreement to integrate SoundHound's Voice AI into Walmart's TV brand ONN. And we continue to make progress with voice commerce as multiple TV and well-known automotive brands integrate our first-of-its-kind solution.

Q1 also saw strong traction across large restaurants, retail and consumer brands. A major QSR reported growing ROI from SoundHound's drive-thru technology with AI-enabled locations consistently generating more revenue than those without our AI technology. Also in restaurants, we are seeing an increase in cross-sell wins and a strong uptick in the adoption of SoundHound Voice Insight product, which provides operators with deep and valuable analysis of customer interactions and staff responses.

In consumer enterprise, we've now deployed AI solutions with 3 major global fitness apparel brands, representing the majority of market share in that category. And in retail, we signed deals with a national residential and commercial service company, a large swim school and multiple boutique fitness chains with a total opportunity to deploy our AI solutions in approximately 1,600 locations.

We also signed deals across a diverse number of verticals such as banking, financial services, insurance, utilities, energy, telecommunications, health care, pharmaceutical, life sciences, technology, software and IT services.

They included one of the largest insurance companies in the U.S. and a Fortune 100 company representing an 8-figure deal; one of the world's largest banks that serve millions of customers in over 100 global markets; one of the largest technology companies in the world expanding services into Europe; a New York-based global financial services platform company, an American multinational financial services corporation headquartered in Denver, Colorado; a multinational conglomerate that offers a number of products and services across its multiple business groups; a top 10 U.S. credit union; a major insurance corporation headquartered in Texas and operating in all 50 states; 2 electricity providers headquartered in Texas and Kansas, respectively, both serving residential and business customers.

A large telecommunications provider supporting customers in 25 states, a specialized U.S. health care organization operating in multiple states; Allina Health, a health care provider with over 90 clinics; 12 hospital campuses; and 13 retail pharmacies; a large U.S.-based health care network specializing in medical, surgical and cosmetic dermatology operating across 14 states in over 150 locations; a Japanese multinational company operating across sectors, including energy, digital systems, mobility and industrial infrastructure.

And with our channel partners, we continue to expand our ecosystem. We announced a breakthrough partnership with Manpower Group, working with them on their strategy to bring AI agentic capabilities to market. We agreed to a partnership with an American multinational corporation that designs, builds and manages infrastructure services. And we added new business with the following: a leading global IT services and consulting company providing digital transformation, AI and cloud computing solutions; one of the largest information technology services and consulting companies in the world headquartered in France; and a Japanese headquartered company that offers IT services, system integration, cloud computing and information security.

In short, we are seeing great traction because our technology is delivering real value across a wide range of verticals. And with the planned acquisition of LivePerson, we expect our customer base to expand further. LivePerson brings hundreds of long-tenured enterprise relationships, many spanning over a decade, adding to our expanding customer roster, which includes thousands of restaurants, leading global automakers and enterprise customers across financial services, health care, insurance, energy and retail. Combined with LivePerson, we will have one of the most comprehensive customer footprints in the conversational AI sector.

In closing, we had a strong start to 2026. This is happening because our disruptive technology, breakthrough innovation and hyperresponsiveness to customers is resonating, and we continue to scale across our broadening enterprise portfolio. We are growing our top line. We are making the right investments with clear ROI while exploring cost synergies. We are innovating faster than ever. And most importantly, we are giving our customers what they want, thanks to our years of experience, relationships, integrations and data.

We are excited about the planned acquisition of LivePerson and the synergies that the 2 companies can bring to market. The momentum in our space continues to accelerate, and we are being proactive and leading the charge to go after further market share gains.

With that, I'll now turn the call over to my co-founder, James, to talk about our financial performance, key growth drivers and business outlook.

Thank you, Keyvan, and good afternoon, everyone. In Q1, we had $44.2 million in revenue, up 52% year-over-year. Each quarter that passes is another mile marker on our journey and our pace is increasing at every turn. Innovation and disruption in our industry is not showing any signs of slowing down and SoundHound continues to pioneer new breakthroughs.

We orchestrate and arbitrate a comprehensive array of models, and this enables us to build new Agentic and voice AI solutions that deliver the best possible outcomes for our customers. And now with our unified platform OASYS, we have just taken an important step forward in advancing our leadership position. The technological differentiation, breadth of coverage and capabilities and scalable infrastructure position us well for continued market and mind share capture.

Our Q1 was heavy on enterprise momentum across financial services and automotive as well as health care, restaurants and technology, which also made strong contributions. The driving force behind this growth continues to be the high usage of our product and solutions. With that, let me discuss the first quarter financial results in more detail.

As I mentioned earlier, Q1 revenue was $44.2 million, up 52% year-over-year. The growth was driven across multiple verticals, led by financial services and automotive. And our broad-based expansion once again enabled us to realize strong customer diversification with no customers contributing greater than 10% of our revenues for the quarter. Our enterprise AI business performed particularly well and continued to be the largest contributor to revenue.

In automotive, we doubled the number of units committed with a prominent Japanese manufacturer. And while we continue to accelerate our Asia business, we also saw new expansion in the Latin American market. Our restaurant business also contributed, highlighting upsell and cross-sell among solutions as well as an uptick in Voice Insights adoption.

In Q1, our GAAP gross margin was 31% and adjusted for noncash amortization of purchased intangibles and employee stock compensation, our non-GAAP gross margin was 50%. The decrease this quarter was in part due to some true-up costs of third-party expenses from a vendor we use for our digital-first business. These costs will not recur in future periods and without them, margins would have improved year-over-year. We also continue to drive efficiencies by modernizing infrastructure, optimizing cloud spend, consolidating legacy systems and improving the efficiency of our core platforms, including shifting from third-party solutions to our own in-house ones.

R&D expenses were $26.2 million in Q1, up 6% year-over-year, largely due to acquisitions and related headcount and development costs. Sales and marketing expenses were $19.2 million in Q1, reflecting a 60% year-over-year increase, primarily driven by acquisitions. Outside of that, the bulk of our investments here continue to be go-to-market efforts via direct and indirect sales as well as customer success to increase retention. We continue to elevate our brand and market presence to generate demand and convert more opportunities into pipeline.

G&A expenses were $25.7 million in Q1, reflecting a 39% year-over-year increase, primarily driven by various legal, advisory and other costs related to our acquisitions. We also saw headcount increases from acquisitions, but also added additional resources to support necessary functions as we continue to grow.

Q1 expenses included several nonrecurring charges. As we shared in prior quarters, we have identified cost synergies as a result of our acquisitions, and we took several steps to achieve them in Q1, the impact of which will be realized in the next 2 quarters with more synergies still being explored. Therefore, we expect recurring costs to generally improve this year.

That said, as Keyvan mentioned, we are making calculated and time-bound investments this year in our foundation models with a clear and near-term ROI expected. We predict that this investment will temporarily offset our cost actions. The 2 together will keep our expenses at an appropriate level. Basically, we are reducing expenses in many areas and channeling the savings to the appropriate investment opportunities with a clear ROI.

We had noncash employee stock compensation of $20 million and depreciation and amortization, including the amortization of intangibles of $10 million in Q1, all of which are included in our GAAP results. Adjusted EBITDA was a loss of $26.7 million. GAAP net loss of $25 million and GAAP net loss per share of $0.06 were impacted by the change in fair value of contingent liabilities of approximately $39 million. This relates to the acquisitions we have completed and is a nonoperating and noncash expense and primarily reflects the quarter-on-quarter fluctuations in our stock price.

As such, this item has been excluded from our non-GAAP results. Non-GAAP net loss was $26.6 million and non-GAAP net loss per share was $0.06 in the quarter. This adjusts for items such as noncash depreciation and amortization, M&A transaction costs and stock-based compensation. Our balance sheet remains strong with cash and equivalents at quarter end of $216 million with no debt.

With that, let me discuss our financial outlook. We started 2026 with strong momentum. Our pipeline continues to build across several verticals. We have a strong foundational customer base to expand upon through full portfolio upsell and cross-sell, and we continue to aggressively release new agentic and voice AI capabilities to dramatically improve customer outcomes. We also expect OASYS to bring game-changing synergies by unifying our products and solutions into one platform.

For 2026, we still expect our revenue to be in the range of $225 million to $260 million. As in prior years, there will be a ramp in revenue through the year given the nature of our customer base, underlying seasonality and expected large deal timing, both for renewals and new deals. That said, we expect the seasonality to even out as our recurring mix of businesses continue to grow. Overall, this outlook affirms our expectation of another year of very strong growth.

We are excited to have announced the LivePerson acquisition and eventually combine the teams together to bring great solutions to the market and increase value for our customers. The opportunity is large. And in 2027, assuming the acquisition closes in the second half of this year, we expect that the achievable revenue range will be at minimum $350 million to $400 million with at least $100 million of global contribution from LivePerson's long-tenured customers. And by offering our voice AI to LivePerson's customers and the unified digital and voice omnichannel solution to SoundHound customers, the combined business is expected to reach $500 million based on the existing customer base alone.

We remain committed to delivering accelerated growth while being mindful of our journey to profitability. Our strong cash position and debt-free balance sheet gives us the capacity to remain prudent in appropriately balancing growth with profit maximization. We will continue to drive scale through targeted investments and go after growth aggressively where we see opportunity and real ROI. Our mindset has always been AI first, and we weave that into everything we do. This allows us to automate our customers' complex processes and make them more human-like to better serve their customers. New opportunities are opening up before us every day, and we look forward to continuing to share those with you.

With that, we will now move to Q&A.

[Operator Instructions] Our first question comes from the line of Gil Luria from D.A. Davidson.

I wanted to ask for you to expand on the M&A strategy here. You touched on it a little bit at the outset, but I think it will help investors get into your mindset, especially as you're making larger and larger acquisitions with this particular approach.

Most investors are used to technology companies -- public technology companies buying smaller growing technology companies at high multiples, but that's not your approach. You're buying companies that you can then take -- buying companies at a very attractive valuation that you can take their customers and grow from there and be selective about that, which is a very different approach.

So especially now as we're talking about LivePerson, would you mind expanding on that, why that's the strategy that you're embarked on and the implications of that for you and your growth?

Gil, thanks for the great question, this is Keyvan. So first of all, we are very proud of our acquisition strategy to date. And we think we've done really well. And you're right, it's a unique strategy, and it's worked really well for us, and we are getting better at it. So we think we can do it even better and faster with LivePerson. So SoundHound has spent 20-plus years in technology innovation, and that's an area of strength for us. So it's -- you haven't had the need to go pay expensive dollars for technology acquisition or teams. That is our DNA.

In enterprise AI, things take time. Adoption takes time. You have to develop a relationship with brands. You have to be part of their infrastructure, you have to go through procurement. You start small even after you win the deal and then you scale with them, that takes time. And what we've learned is that those relationships and the time of integration and scale is just very important and very valuable. And that opened our eyes to the M&A strategy.

And then as we were exploring that, we found amazing opportunities that I think, are amazing for us as SoundHound, not necessarily for a lot of other buyers. We find companies that have a great team, a great business, really strong customer relationships, and they are deeply integrated with their customers for -- with their long history. And -- but for some reasons, they are going through some stressful situations and the combination really unlocks the value that was kind of trapped. And it really is the collaboration between the 2 teams that we come together and we give them what they need to really thrive. And it's really a collaboration between them. It's not -- I wouldn't say that we are the only savior for their business. These are amazing teams that we collaborate together. And it's really amazing turnaround opportunities.

And our first acquisition was just about 2 years ago. Same story, great team, great technology, great solution, great customer base, but they were declining. Within 2 years, they are on a continuous growth path. So we have completely turned them around with really strong growth. And we think we can do it LivePerson. We can do it better and faster. Our last acquisition is just a few months ago, and we are already seeing signs of turnaround with them.

I mean with LivePerson, there are 3 really important areas that we can address immediately, financial stability, faster innovation, and faster modernization of their platform. And that's kind of -- the story just kind of gets fixed overnight. Of course, we have to execute after that. And I know you didn't ask, but if you exclude all of our acquisitions, our core auto and IoT business was up 88% year-over-year, this year.

So we are doing really well organically with our core business, and we are really doing a good job turning around the businesses and with the 52% growth year-over-year, that included some business components that have recent and have [ decline ] in them, and we did a great job and we're very optimistic about our outlook.

Got it. So just to kind of take that forward, asking the question, oh, this acquisition had x revenue a year ago, and now it has less than x revenue this year isn't really the right question because you're taking businesses that are either declining or in distress and you're being selective about what you're [ retaining. ]

So with that in mind -- LivePerson is a public company and the expectations are for them to generate $200 million of revenue this year. And I believe your statement is that you're going to retain at least $100 million of that, which is to say you do plan on some attrition of that business, planned attrition of that business moving forward before you start turning it around and growing again. Is that a correct understanding of your approach to the LivePerson?

Gil, I'll take this one. It's Mike Zagorsek, Chief Operating Officer. I thought I'd jump in on the follow-up on that question. Just building on a lot of what Keyvan said. as Keyvan mentioned, this is our -- now will be our fifth acquisition. So we've built a bit of a foundation for integration. And ultimately, when we step back and look at each scenario, we try to account for all the variables. So it's a combination, as you can imagine, ARR, churn rates, pipeline. So in cases where there is a marked, call it, decline, we certainly factor that in. So we try to approach our path forward with the appropriate amount of conservatism.

Ultimately, it's a matter of execution, right, integrating the business, achieving new baseline of stability. And of course, we did announce our Agentic platform, OASYS 2 days ago. And of course, that is that is a way to really unify a lot of SoundHound's legacy business as well as the businesses of the companies we brought on board. So no longer does the technology stack become entrenched in the organization or even in the channel. It's a conversational AI platform where you build an agent once and it's omnichannel. And so we -- that becomes part of our integration path.

And again, as Keyvan mentioned, we approach M&A with this best of mindset, right? We combine with each company excels at, it's not one sided. So we approach it humbly and conservatively, but with a goal for transformational turnaround. So we've certainly started to see that. So -- and our goal with LivePerson, it's very much the same. And so ultimately, even though we are approaching it with the appropriate sort of long-term revenue targets in mind, our goal is to always exceed those expectations while making sure that we can hit what we're putting out there.

[Operator Instructions] Our next question comes from the line of Mike Latimore from Northland Capital Markets.

This is Vijay Devar for Mike Latimore. A couple of questions. What are the best near-term prospects for OASYS? Is it Amelia based or the auto companies or the channel -- is it the new customers or established customers? I mean any comments around that, please?

Yes, this is Keyvan. I'll take this one. So we had, for example, a Fortune 100 insurance company that we had a renewal with them in Q1. It was an 8-digit size deal. They are getting great results from our agentic platform. Companies like that would be the first wave of data users because it would make a very big impact to the quality and to the business, to their business, to our business. And -- but -- so there is a wave of upgrades and migration of the existing customers, starting with the larger ones, doing it very carefully because some of these integrations have been in place for years with thousands of incremental optimizations. But all the new customers we expect will use OASYS going forward.

And with OASYS, what used to take months now can be done in minutes, because the concept behind OASYS is AI builds AI. So we used to have to go and take their documents, take their APIs, take their specs and allocate resources and spend months to work with them to build. Now we provide the vision to our AI and our AI builds the AI that can be deployed in multiple channels, in voice, in chat, in cars and so on.

Now it's not just AI builds AI. It's also self-learning. So once it goes live, the data that comes in, all the interactions that the AI sees, it can improve itself. But it doesn't automatically improve itself because there's the concern of AI going in the wrong direction. It presents the improvements that it has designed for itself to a human operator for approval. And that is something that used to take constant maintenance with a large set of resources now it can be done automatically, again, with the human oversight to make sure we keep the AI in check. So going forward, we expect all of our customers to start using OASYS, which, again, will improve the quality, improve the speed of delivery and the profitability.

Got it. And how many Amelia customers might migrate to Agentic AI this year?

So maybe I'll step back a little bit because our new platform is OASYS. OASYS combines all the great innovations of all the companies that have come together, SoundHound, Interactions, Amelia and others. And if you look at the history of conversational AI for customer service, it was deterministic, then it was generative AI, then it was Agentic. And now for us, it's OASYS.

And we have designed OASYS with all the great qualities that I mentioned, AI builds AI, self-learning and so on. But we've also designed it to help us with integration of the various acquisitions because -- we don't want to kill the innovation that has taken place for 20 years of one acquisition to in favor another platform, you want to actually inherit all the great qualities. And we designed the infrastructure of OASYS to be able to bring all of those innovations. So I'll give you an example.

Our last acquisition was Interactions. They have a patented way for human oversight of AI. When AI knows it's not able to handle the question instead of transferring to a human, it asks a human to help us overcome that particular challenge. So you don't lose the containment completely because usually what other companies do is they just transfer to a human. So the AI loses its value. But the way they do it is they just almost like let me check with my supervisor. They go ask a human, what should I do in this case and then they go back, the AI continues to handle the call. That's a very important innovation for a lot of their customers, our other customers really valuing it. That innovation is coming into OASYS.

So think of OASYS as a combination of the best of Amelia, the best of SoundHound, the best of Interactions, the best of SYNQ3 all combined and hopefully, the best of LivePerson in the future. And we expect, ultimately, all customers will migrate to OASYS. We are not sharing the exact number or the exact time frame, but that is the biggest priority for the company to migrate everyone to OASYS, migrate the teams to integrate to work on OASYS and OASYS is going to be the foundation of our technology and solution going forward.

Our next question comes from the line of Leo Carpio from Joseph Gunnar.

I just want to focus in terms on -- terms of the competitive positioning. How are you thinking right now in terms of the competitive environment? Now you got these large language model providers are still focusing on native voice, AI and agentic capabilities. Are they still being a pressure? Or are you seeing them? Or are you thinking you've got a competitive mode at this point? And I've got a follow-up question.

Yes. So I will categorize 2 types of competitors. There's the big tech players and some of the frontier model providers. And then there is this newcomers -- so I'll address both and how SoundHound is positioned against both of those. What we are seeing -- first of all, what we're seeing is our customers, they don't want a vendor, they need a partner because the AI transformation, there's a mandate for AI transformation and they don't want an API, right? They want someone that can sit with them, listen to their pain points, address the pain points, help them dream big and help them achieve those dreams.

And SoundHound absolutely does that. We position -- we pitch ourselves as a partner for the transformation, not a vendor with some documentation. So that really eliminates some of the big tech players that -- or the frontier model providers because that's really not their business to be a partner for all these hundreds and hundreds of enterprise customers.

Sometimes they run science projects or some proof of concept, but they don't really -- we don't really see them as a head-to-head competitor. And then there are a number of companies that we call them LEGO makers. They don't have their own technology. They are using an API for this, an API for that, a bunch of APIs and create a solution together.

We win against them also in terms of quality because SoundHound has its own foundation models. And SoundHound brings the model from all the frontier models. So we promise to bring the best solution and best model to our customers, no matter where it comes from, but for majority of the cases, it's our own model. We have our own Polaris speech foundation model. It beats the accuracy of all the other models we've tried.

When we benchmark, it's 35% more accurate or more. When our customers tested it, it's actually even better, like sometimes they report 80% more accurate. So because SoundHound has a DNA of the core technology itself and is a partner to our customers, we win on technology and we win on the partnership.

I want to just add, this is Mike again. Just -- sorry, just one more thing to add because I wanted to tie it into a previous question on our M&A strategy and how that actually makes us more competitive. And that's why the timing of this question is really good. Between M&A growth and customer acquisition and OASYS, what we're offering is scale, a proven level of scale. So we operate at a level of scale that is significant, it's global, it's enterprise. So customers have the confidence that we can deliver for them because we're doing it across industries and verticals.

We're production tested, meaning that we actually don't just work across the phone. We work in noisy environments. We work in vehicles. We are truly omnichannel. And that presents itself distribution opportunities. So if you envision an Agentic future built on OASYS where it's a build one agent deploy it anywhere, working with a company that can do it at scale in environments and across channels, omnichannel, that creates a very compelling package that isn't narrowed down to any one particular execution or industry type. For a pure-play AI company to be able to do all those things is resonating with customers.

Okay. And then turning to the auto units. Have you been seeing any pricing pressure? I know auto company and automakers are trying to consolidate the AI vendor that they use. And just thinking if you're seeing that impact as you start gaining more share in that area?

Actually we are seeing the opposite because -- so there is this pre-Gen AI solution in the automotive business for a number of years, and they love our solution, both cloud and on the edge and lots of content, all the vehicle, the domains for car control and so on. And then we have the Gen AI upgrade, and that was an upgrade moment. So we basically gave our customers a choice of staying with the pre-GenAI version with the royalties that they were paying us or upgrade and they pay us more for it. And it's like one of those rare moments where in the automotive industry, we are able to increase the revenue per unit. And then we kept the force behind that. So we offered the live Gen AI after that. So we have the Gen AI version.

And then live Gen AI is -- the Gen AI is static information, but if people are asking for current news or something that happened today. We have a live GenAI, just a another upgrade that a lot of our customers are signing up for. And we are benefiting from increased revenue per unit. And a lot of that actually becomes renewable. So instead of a onetime fee for the cloud, they pay for a certain duration and then there's a renewal after that. So that's another opportunity for growing revenue.

Then the next milestone is Agentic and OASYS, and that's going to bring even more capabilities, including voice commerce, which is something we've talked about for a while. And as I mentioned in my prepared remarks and in our press release today, we have a number of automakers and TV makers integrating our voice commerce, which is our agentic solution for devices, but it brings commerce opportunities.

So while you're driving, you can order food, you can order coffee in the morning, you can order food for pickup on your way home. Ultimately, you can book parking or table reservation or other sets of reservations. And that's the monetizable opportunity that brings revenue for us, more revenue for us, more revenue for the carmakers, more leads for the merchants, and that's the agentic upgrade that is also going to bring more revenue.

Okay. And I apologize, I just got one more question. Regarding LivePerson, this is going to be your fifth acquisition? And what's the biggest lesson that you learned from integrating Amelia and Interactions that you're going to be applying for LivePerson?

We've learned 1,000 lessons. It's not just one thing. I think we keep getting better at it every time. The first acquisition, I would say, 2 years -- after 2 years, we see a complete turnaround. It's on a path of growth. The revenue is growing and a lot of complementary. There are a lot of upsell, cross-sell opportunities between, let's say, our first acquisition and our third acquisition. And the last one, which was not long ago, we are seeing that the same signs within a year that we saw maybe in the first one in 2 years.

And it's not just about one thing. Again, it's 1,000 things, integrating better, integrating faster, getting to know what they have, getting to know the team, meeting them, respecting all the innovation they have done, respecting every individual in the company and their vision and getting in front of customers together. And in many cases, they become our leaders. We find amazing gems in these organizations that -- with a lot of potential, and we put them in charge of different business units and different teams, and that have been working really well.

Our next question comes from the line of Scott Buck from [ Titan Partners. ]

I just have one today. In terms of -- or as I think about path to sustainable profitability, beyond scaling revenue, what are going to be the biggest drivers? Is it mix shift? Is it improved efficiencies, pricing power? How does that kind of break down over time?

Yes. So we -- our acquisitions, we get revenue opportunities. We also get cost synergy opportunities. And some of it is very obvious, like redundant cloud providers, for example, or redundant vendors. And we are constantly exploring those. We -- in fact, we talked about it a couple of quarters ago. We took certain actions in Q1 for those cost reductions, and we expect to see the impact of that in the next 1 or 2 quarters. So it's a combination of exploring those cost synergies and revenue growth, but also making the right investments.

So another thing I mentioned in my prepared remarks was we have a strategy of a very calculated, responsible investment in our foundation models. Historically, we've been very strong in speech foundation models, which we call Polaris. Polaris will be powering OASYS. But now we see an opportunity to enhance our foundation models to cover specialized language models and speech synthesis.

Now this is the right time for us to do this because of the scale that we have, as we migrate all these customers to OASYS, the cost of hitting frontier models, for example, can be substantial. So making this investment now will be a fraction of the cost that we would experience if we migrate all of our traffic to OASYS. And in a very short span of time, it will have a return on the investment.

So our COGS will go down and our costs will go down because of this investment that we are making today. And SoundHound will basically have the full stack of all the models to power the full agentic experience of every interaction from our customer. And that type of innovation is going to reduce cost and improve profitability.

Thank you. This concludes the question-and-answer session. Thank you for your participation in today's conference. This does conclude the program, and you may now disconnect.

Good day, everyone, and thank you for standing by. Welcome to the SoundHound Q4 2025 Earnings Conference Call. [Operator Instructions] 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. Please go ahead.

Good afternoon, and thank you for joining our fourth quarter and full year 2025 conference call. With me today is our CEO, Keyvan Mohajer; and our CFO, Nitesh Sharan. We will begin with some short remarks before moving to Q&A.

We'd also like to remind everyone that we will be making forward-looking statements on this call. Actual results could differ materially 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.

Thank you, Scott, and thank you to everyone for joining the call today. 2025 was a record year for SoundHound, nearly doubling our revenue year-over-year. We also had a record fourth quarter. Revenue was up 59%, while all key profit metrics improved. We broke another record in Q4. We signed over 100 customer deals, making it our biggest quarter yet. We won across different industries in a variety of regions. Just to name a few, we signed a new prominent automotive logo in Japan to use our AI assistant with a 7-digit unit commitment.

In the U.S., we signed a multiyear deal with one of the largest telecommunications companies in the world to use our technology. We signed a multiyear global deal with one of the largest athletic shoes and apparel companies to power their AI customer service. We closed deals with health care providers, universities, insurance companies, financial institutions, e-commerce merchants, retail, military, and many more. Our execution with channel partners was also exceptional with multiple 7-figure deals in 2025.

I'll dive into other business highlights specific to Q4 shortly. But first, I wanted to touch on a few recent market dynamics. The power of AI is disrupting traditional software and services companies, and this is creating further tailwinds for SoundHound. In this inevitable AI transformation, companies need a partner like SoundHound to help them rapidly reinvent themselves. We partner with our customers to overcome their challenges and achieve their ambitions, creating incredible end user experiences for their employees and customers.

With the exponential advances in AI, we believe we are entering a new era where companies with deep tech and data moats will create the most value. This makes SoundHound very well positioned with decades of deep tech innovation and data accumulation. SoundHound AI was founded with a mission to deliver voice and conversational AI experiences that are deeply integrated into user environments and deliver value where it matters most. This early vision now positions us perfectly for the Agentic AI revolution we are seeing today.

We believe our Agentic platform is the only solution that is ready to be deployed across a multitude of vertical use cases and a huge and growing range of touch points and modalities from call centers to cars, robots, phones, apps, TVs, and websites, all with a unified AI agent framework. This means that our customers can build an agent once and deploy it anywhere. At SoundHound, we offer the best models and innovation regardless of where they come from. We can give customers access to big tech models, emerging models, other third-party models as well as SoundHound's own models that consistently outperform big tech players.

With us, our customers will have access to the latest and greatest technologies as fast as they become available. And because of our deep expertise in conversational AI, we are able to optimize our own technologies to meet customer needs. This ranges from offering Polaris, our custom speech recognition foundation model to our unique method of arbitrating the conversation across on device, cloud, on-premise, and even human augmented services. This combination of capabilities is the foundation of our unique and differentiated Agentic Plus framework, which blends agentic, deterministic, and human-assisted understanding, representing the full mix of what our customers want.

In addition, SoundHound has a massive amount of data and has processed billions of interactions over the years across all major global languages supported by having a physical presence in multiple markets and geographies. This allows us to compete and win against big tech while new players are faced with the traditional limitations of scale and reach we've long since overcome. With those considerations in mind, we believe SoundHound is the strongest bet in an ever-changing world of AI evolution. We recently previewed our Agentic platform to public audiences, and they were blown away.

The Consumer Technology Association, the body that organizes CES, consistently calls our tech as an example of one of the most exciting trends at the whole show. Our customers agree, and we are proud to navigate this exciting and dynamic period by their side. Here are some proof points, as I highlight, some of the many wins in this quarter alone. In automotive, besides the Japanese OEM previously mentioned, other notable customer wins include a new Korean OEM with a global footprint, an iconic Italian manufacturer of high-performance luxury sports cars as well as a Chinese and Vietnamese manufacturer. We also signed our first 2-wheeler and have seen strong interest from at least a half dozen other OEMs.

Stellantis also expanded further with the adoption of live generative AI capabilities for real-time responses, and we added an Italian commercial truck company, which will offer SoundHound voice assistant to its wide range of vehicles. We also signed a multiyear renewal with one of the largest American automobile manufacturers to deploy our enterprise AI solutions. In voice commerce, coming off a successful CES, we are seeing lots of momentum. Thanks to our deep penetration in restaurants, this highly anticipated solution is quickly advancing to go live in the U.S. with a prominent German automotive OEM. The list of engaged OEMs is growing rapidly, and we are now starting to see early signs of the flywheel effect taking shape.

In January, we also unveiled our fully agentic voice platform for in-vehicle and on-TV commerce and showcased a leading smart TV manufacturer and a national pizza restaurant working together seamlessly. The solution is expected to go live later this year. And we are quickly building out an ecosystem well beyond food ordering from the car or TV with Parkopedia and OpenTable partnerships announced in Q4 and further plans to extend to events and travel booking very soon.

In restaurants, our Voice Inside solution is seeing high demand with a number of top 25 restaurant chains signing up to collect data for drive-thru efficiency. Panda Express also expanded into dozens more locations, while Casey's General Store agreed to a multiyear renewal and added Smart Answering to handle nonfood ordering calls. We had franchise wins with both IHOP and Jersey Mike's.

In retail and consumer goods, we signed one of the fastest-growing global health clubs in the U.S. and a multi-hundred unit personal care company to adopt our outbound innovative automated solution for customer retention campaigns. And for managing inbound calls, we signed 2 nonprofit organizations, one that has a large network of thrift stores and another one with a large number of fitness and health locations.

In enterprise AI, we signed a record number of deals across various solutions and verticals, including in financial services, a New York-based global financial services platforms company, a large American multinational payment card services corporation, and BNP Paribas. In health care, an eyewear and optical retailer, which operates or manages over 700 stores in 40 U.S. states, an independent health care practice that supports more than 1,300 locations in 45 states, and a Virginia-based health care and wellness services with over 80 health care facilities.

In insurance, a Fortune 100 multinational insurance and asset management company headquartered in Germany, a global Japanese insurance company that has offices spread throughout the U.S. and one of the first motor clubs in the U.S. with more than 16 million members across 21 states. In government and education, a U.S. government-sponsored enterprise helping to make housing more accessible and affordable. A large Florida-based university to support their health system. And likewise, we signed on with a local government to a city in Florida.

In hospitality, one of the world's leading providers of food and support services operating in over 25 countries and an American ticket sales and distribution company with operations in over 35 countries around the world. In telecommunications, in addition to the large telco I mentioned previously, we signed a European telecommunications company that provides cable television, broadband internet, and fixed telephony and a large British broadcast and telecommunications company.

I mentioned some of the success we've had with large 7-figure deals in 2025 with our channel partners. And in Q4, we continue to build out our ecosystem with the following partners. With one of the largest telecommunications companies in the world, we are adding SoundHound Agentic AI call center automation to SMBs in their large business marketplace. In addition, we partnered with Bridgepointe, which expands our enterprise AI adoption across their vast network and a large customer experience management company providing services to approximately 150,000 businesses. We renewed our partnership with a global technology and professional services company that delivers technology solutions and mission services to every major agency across the U.S. government and a large multinational professional services firm to provide our solutions to financial services firms across Spain.

Importantly, our enterprise AI technology is making a difference and helping businesses tackle some of their biggest challenges. One large health care network reported that their AI agent built on SoundHound platform now handles more than 1/3 of all patient appointment scheduling, helping to unclog the system that gets patients what they need more quickly. This customer is already looking to expand our platform to tackle additional use cases like prescription refills and pharmacy inquiries.

In a completely different industry, telecommunications, another customer reported a 20% reduction in the labor costs associated with billing disputes, thanks to AI agents that analyze invoices and execute adjustments. And in auto insurance, our platform was able to help the customer increase containment by 10 percentage points with respect to very complex use cases in under 60 days. In short, we are seeing great traction because our technology is delivering real-world results.

In closing, we had a record 2025. This is happening because we are an AI-first company and customers from a broad range of verticals are coming to us to automate their complex processes and make them more human-like to better serve their customers. We are leading the charge in a market disruption that is in the very early stages. We have a massive TAM, and we are poised to win.

With that, I'll now turn the call over to Nitesh to talk about our financial performance, key growth drivers, and business outlook.

Thank you, Keyvan, and good afternoon, everyone. Q4 was our strongest quarter with $55.1 million in revenue, up 59% and improvements across all profit measures. For the full year, we delivered $169 million in revenue, up 99% versus the prior year, and up more than fivefold in the few years that we have been a public company. We achieved this record performance through our disruptive technology, breakthrough innovation, hyperresponsiveness to customers and by scaling across our broadening enterprise portfolio. And we operationalize this with cost discipline, driving a clear pathway to breakeven profitability.

The market momentum in our space continues to accelerate. Generative AI, Agentic AI, and Voice AI are now base level customer requirements. Customer service is undergoing a once-in-a-generation disruption and enterprises are clamoring for innovators like us to provide high customer engagement solutions to improve their top and bottom lines. From the beginning, we have built our business to deliver successful AI-driven outcomes and our pricing architecture is purpose-built for that. In a world where seat-based pricing models are quickly becoming antiquated because of their deteriorating price/value equations, our Agentic solutions seamlessly drive outcome-focused consumption and success rates that create economic incentives fully aligned with our customers. That's a sustainable model. It's a differentiated moat with our entrenchment deepening.

Let me share some examples across our business. We have been growing the automotive installed base for years, and our monthly active users continue to expand rapidly with Q4 growth in excess of 50% year-on-year. More notably, their query activity or usage continues to accelerate with Q4 audio queries up roughly 75% from the prior year. And note that this is only cloud-based queries. We also offer edge-based solutions that don't require internet connectivity, so these volume metrics meaningfully understate the full auto customer engagement.

The volume of queries we deliver in IoT and smart devices is even larger than the automotive base and also growing strongly. Our new voice commerce engines fit so well here and the idea of ordering a pizza or a salad naturally via voice ordering on your TV while watching the Super Bowl or Olympics personally resonates with me. On that point, in restaurants, we continue to grow locations, but what's even more directly impacting our revenue and our customers' business is order activity, which in Q4, we saw cross 9 million calls for the first time, up strong double digits from the prior year. That's a lot of meals from Chipotle, Casey's and many others.

In our enterprise business, our AI platform is delivering measurably better customer outcomes quarter after quarter. Containment rates hit record highs, now resolving the majority of inbound interactions without any human escalation and with certain containment levels even crossing 90%. Our automation intensity crossed a meaningful architectural threshold in Q4, chaining multiple targeted actions per customer engagement into fully autonomous resolutions. Our omnichannel multimodal systems are driving better resolution rates, resulting in compounding returns per interaction. All this comes together in our comprehensive query volume, which now is in the billions per month, up 12x since we went public.

With that, let me discuss the fourth quarter financial results in more detail. Q4 revenue was $55.1 million, up 59% year-over-year. The growth was driven across multiple verticals. Our enterprise AI business performed particularly well in health care and financial services. We also saw strong year-over-year growth in our restaurant business as our automation rates continue to improve, integrations deepen, and customer adoption continues to expand at a healthy rate.

In automotive, we continue to accelerate our Asia business and see traction in the world's fastest-growing markets. As Keyvan mentioned, we signed a new Japanese automotive OEM in Q4, and we had several deals in Asia in 2025 with commitments of millions of units. This broad-based expansion once again enabled us to realize strong customer diversification with no customers contributing greater than 10% of our revenue for the quarter or full year.

In Q4, our GAAP and non-GAAP gross margins were both up year-over-year. Our GAAP gross margin was 48% and adjusted for noncash amortization of purchase intangibles and employee stock compensation, our non-GAAP gross margin was 61%. We continue to drive efficiencies by modernizing infrastructure, optimizing cloud spend, consolidating legacy systems and improving the efficiency of our core platforms, such as shifting from third-party solutions to our own homebuilt ones. And our continued efforts to prune our portfolio of low-margin acquired contracts has been resulting in the sequential improvements in non-GAAP gross margin this year.

We expect to continue focusing on profitable contracts and either adjusting or moving away from those that don't meet our minimum thresholds. That said, there are deals that have a clear near-term path to automation using our AI, and we will not hesitate to make the critical investments in them to build long-term sustainable profitable returns. R&D expenses were $24.8 million in Q4, up 22% year-over-year, largely due to acquisitions and related headcount and development costs.

We continue to invest in innovation to maintain our technological leadership. For example, we continue building our Agentic AI solutions, leveraging our vast data to further improve our Polaris foundation model and are expanding our in-house real-time audio-to-audio and embedded vertical API integrations into production environments. We also continue to differentiate across the entire voice AI stack, including via best-in-class text-to-speech built on modern architectures for differentiated speed, accuracy, prosody, and with code switching multilingual capability for an increasingly diverse and integrated world.

Sales and marketing expenses were $17.4 million in Q4, reflecting an 82% year-over-year increase, primarily driven by acquisitions. We continue to invest in go-to-market efforts via direct and indirect sales as well as customer success to increase retention. In addition, we continue to elevate our brand and market presence to drive demand and lead generation. G&A expenses were $21.2 million in Q4, reflecting a 29% year-over-year increase, primarily driven by various legal, advisory, and other costs related to our acquisitions.

We also continue to drive operational efficiencies throughout the organization and improve our global control environment. We had noncash employee stock compensation of $20.8 million and depreciation and amortization, including the amortization of intangibles of $10 million in Q4, all of which are included in our GAAP results.

Adjusted EBITDA was a loss of $7.4 million, an improvement of 56% year-over-year. GAAP net income of $40.1 million and GAAP net earnings per share of $0.10 were positively impacted by the change in fair value of contingent liabilities of approximately $85 million. This relates to the acquisitions we have completed and is a nonoperating and noncash expense and primarily reflects the quarter-on-quarter fluctuation in our stock price. As such, this item has been excluded in our non-GAAP results.

Non-GAAP net loss was $7.3 million and non-GAAP net loss per share was $0.02 in the quarter. This adjusts for items such as noncash depreciation and amortization, M&A transaction costs, and stock-based compensation. Our balance sheet remains strong with cash and equivalents at quarter end of $248 million with no debt.

With that, let me discuss our financial outlook. We are starting 2026 with strong momentum. As Keyvan mentioned, we broke a record in Q4 with over 100 customer deals across every industry we operate in. Our pipeline continues to build across several verticals. We have a strong foundational customer base to expand upon through full portfolio upsell and cross-sell, and we continue to aggressively release new Agentic and voice AI capabilities to dramatically improve customer outcomes. With the greater scale achieved in 2025, we have increased visibility in the near-term and expect to continue to grow rapidly over the long-term.

For 2026, we expect our revenue to be in a range of $225 million to $260 million. As in prior years, there will be a ramp in revenue through the year given the nature of our customer base, underlying seasonality, and expected large deal timing, both for renewals and new deals. That said, we expect the seasonality to improve as our recurring mix of business continues to grow. Overall, this outlook affirms our expectation of another year of very strong growth. We remain committed to delivering accelerated growth while being mindful of the journey to profitability.

Our strong cash position and debt-free balance sheet gives us the capacity to remain prudent and appropriately balancing growth with profit maximization. We will continue to drive scale through targeted investments. Last quarter, I mentioned that we see additional acquisition cost synergies of $20 million on an annualized basis. And in Q1, we have already executed most of that, the effect of which we expect to appear in future quarters.

I also noted last quarter that we are entering our breakeven phase after many years in heavy investment mode. This transition won't be linear or uniform. We expect it should be progressive and ultimately compounding. Our long-term expectation is that we can operate this business at scale with 70% plus gross margins and 30% plus EBIT margins. For the near-term, though, we expect to calibrate the investments based on the opportunities in front of us and their expected returns, and we will continue to balance the importance of delivering profitability in the near term with fueling sustainable, profitable growth over the long term.

With that, we will now move to Q&A.

[Operator Instructions] Your first question comes from the line of Scott Buck from H.C. Wainwright & Company.

As we went through the 4Q highlights, clearly, a lot of balls in the air. I'm curious, how are you handling from a deployment and customer service capacity standpoint? Are you starting to feel a little constrained?

Thanks for the question. We are definitely doing a lot. And I've been saying for the past few quarters that this is the time for us to do more, partly because, yes, we are in many industries, but the ingredients we are using to power these experiences is the same. So the decades of work we've done to build the best-in-class speech recognition, conversational AI, Agentic orchestration, all of that is the same regardless of whether we are in automotive or we are providing customer service for a health care company or insurance company. And we are -- because of the advances in AI, we are actually able to deploy faster, go live faster, develop faster. And we are able to keep up with the demand with fewer people and less resources. So demand is going up and what we need to do to deliver to these customers, the resources requirement is actually going down. So we expect that to be a further tailwind for us.

Great. That's helpful. And then I wanted to ask, you called out a number of renewals. Can you talk a little bit about any changes in pricing or upselling you're seeing as you go through the renewal process with customers?

Yes. So in -- we have customers that we've had for a while, for example, some of the automotive logos that we've had for a number of years. These renewals are actually an upsell moment because we bring them the Agentic solution. The Gen AI solution that we developed 3 years ago, that was an upsell moment. Now we have the Agentic solution. That's another upsell moment. So it's basically the renewal with a price increase and sometimes with a bigger volume commitment. And we are seeing the same in customer service, again, especially with the customers we've had for a number of years, the Agentic platform that is an upgrade, partly, it could come at a higher price.

And for deals that are based on containment rate, we expect to generate more revenue because we contain more of the incoming calls. For example, if I'm going to use some numbers, but in the industry, there's no like one number for containment rate because it depends on the use case. We've seen, for example, in the use case, a 30% containment go to 70%, 80%, sometimes over 90%. That means we handle more than 90% of the incoming calls without kicking to a human, and we get paid more as we contain more calls. So some of the increase in revenue is just going to come from upgrading our existing customers to the Agentic solution even without a renewal and even without increasing the price, it's going to generate more revenue for us.

Your next question comes from the line of Brian Schwartz with Oppenheimer.

Congratulations on a very good year. Keyvan, I want to start with you. And your enterprise AI business clearly has strong momentum, especially in the higher regulated industries that you pointed out. You're building deeper entrenchment. But in the market, certainly over the last like 3, 4, 5 months, there's been a lot of fear about software companies' long-term growth that these larger LLM providers are going to be able to just build workflows above software companies' platforms and bypass them and it's going to be much more challenging for companies to grow. So I was hoping you could address that, how you see the durability of the enterprise AI business as we enter this agentic era? And then I have a follow-up for Nitesh.

Sure. That's a great question. So I think there are 2 flavors of that question. One is what's happening to software and services companies, so not necessarily SoundHound. And that has been a tailwind for us for the past 3-plus years because of Gen AI. So the concept of that is the automation is coming, and that is going to disrupt services companies and SaaS companies. Everything is going to get automated and more and more automated. And that's not a new thing. It's been -- we've been benefiting from that for 3 years, and these companies that want to automate basically come to SoundHound to help them automate.

There is maybe a second flavor of that question, which is what happens to companies like SoundHound with the latest advances in AI where software development is becoming easier. We think of that as another tailwind. And a really good analogy that has resonated with me is imagine the internet companies when we had connections with dial-up modems. So good internet companies were there, and they were delivering their websites to their visitors. And then dial-up modem became broadband internet, so bandwidths went up in orders of magnitude. That was a great thing for internet companies.

Now some didn't maybe reinvent themselves quickly, but the services that these internet companies could provide became a lot more richer and powerful. And we feel the same way that we can move faster, like the earlier question that was asked like can we -- we have so many customers, how quickly can we deliver? We use AI to build AI to deliver to the customers that want AI. And we think that pace is going to be better for us. The quality is going to be higher because we are utilizing these advances in AI.

I just wanted to ask you that question, Keyvan, because you're such a pioneer in terms of technology in this industry. I appreciate you sharing your perspective.

The question I have for Nitesh is just thinking about how you're thinking about planning the progression of the efficiency of the business. So maybe asking it in terms of the operating profile here in 2026. Clearly, the business is accelerating. I think you're gaining efficiency in your development from your -- as Keyvan talked about with your own Agentic and AI. But how do you think about the rest of the investment profile? Are you looking to accelerate your investments? Are you looking to keep your margins stable where they are today? Are you looking to show improvement in terms of the efficiency and the EBITDA margin 2026?

Thanks, Brian. I'll take that from a couple of different angles. First, with respect to continuing that AI efficiency play, I think there's a multitude of ways as that plays out here. #1, our efficiency in product development is better. Certainly, we're seeing that. I think our efficiency in deployment and delivery is better. We're seeing that. And then even just operationally, we're all across the company, utilizing tools that may not be core to what SoundHound develops. But certainly, in my G&A function, there's definitely a number of areas that we're driving efficiencies. And I think that's a responsibility that all of us take to leverage the latest and greatest to be responsible with our costs.

#2, to your question on just the profile, I'll go back to my prepared remarks a little bit. We are now shifting from an era, I'd say, from the origins of SoundHound where we were heavily investing primarily in our innovation, but maybe more recently in building up the go-to-market capabilities to now this area -- to this era of breakeven. And we're not trying to be super precise one quarter delivering one specific number.

But more importantly, we start with the premise that we are in the very early innings of massive transformational shift, whether that's the LLM-driven capabilities that we're seeing with these amazing engines to the voice AI era of how we're able to engage with consumers and customers in really unique, more efficient, seamless ways to get all sorts of transactions done or obviously now to Agentic and how we can deliver great platforms and capabilities to enhance customer capabilities and solutions, predominantly, I think, for us in the customer service space and rewrite how those traditional sort of ways that people get their billing inquiries resolved or they book travel or they order food or whatnot or get health care appointments, all that's getting rewritten. And we're just in the early innings of it.

So we need to be focused because we know that the outsized returns are there for us to go after. So we're going to keep fueling in getting the hyper growth that we've been delivering over the last couple of years. And it's our view that, that level of growth, strong -- very strong growth should continue for the foreseeable future. So with that, to every incremental dollar point, that should go into fueling growth, but we need to be mindful that we're going to do it efficiently.

So to your point, as we continue to scale, we absolutely expect efficiencies on our operating leverage. And I think from an EBITDA basis, we'll continue to see year-over-year improvements in EBITDA. We'll continue to see leverage on the P&L. And I think our R&D, in particular, I think we'll be able to drive efficiencies. And then I think it's a matter of go-to-market kind of we're going to -- we are investing both in direct and indirect channel. And I think the indirect channel has been great for us. We highlighted it briefly in the prepared remarks of just the additional scale we can get through indirect channel partners. So across R&D, across sales and marketing and across G&A, we think there's efficiency and ultimately, that will land towards what I characterized in the prepared remarks is us moving into this era of breakeven zone.

Your next question comes from the line of Gil Luria with D.A. Davidson.

Great. This is [ Lucky ] on for Gil Luria. You guys had pretty strong traction, it sounds like with auto OEMs, especially on net new in the quarter despite previous headwinds from tariffs impacting the industry. I guess is there anything to call out as to why you had particularly prominent success in that vertical this quarter?

Yes. It actually was a great year in automotive for us. Earlier in the year, we closed with a big Chinese OEM, also with multiple millions of units committed. Then we had a robot maker in China, then we had more deals in India. And then we're very proud that we have won a prominent logo in Japan. And I think it's because of the great solutions we've created. We've been in automotive for a number of years. We are well known for having the best solution, and we partner with our customers to achieve their vision and ambition.

Our Pillar 3 vision is paying off. It's -- we predicted a flywheel effect from Pillar 3. And to summarize it quickly, we power cars and TVs and devices in Pillar 1 and then we power customer service for merchants in Pillar 2, and then we connect them in Pillar 3 together. So while you're driving, you can order a copy, you can book appointments, you can reserve tables. And that's a monetizable moment. We call it the voice commerce. And just the concept of being able to deliver value to the drivers while generating revenue for us and share that revenue with the OEM is creating a flywheel for us and a lot of OEMs are choosing to work with us. So it's a combination of being a great partner, having the best technology and the concept of monetization with our Agentic AI in the cars.

And hopefully, Lucky, you're also noticing that we're seeing this growth in the fastest-growing markets, too. So oftentimes in the fastest-growing markets, it's sort of where they want the best-of-breed technology, and I think that's what's playing out here as well.

I think that makes a lot of sense. Maybe the last question from me. As you enter your next phase of growth here, you touched on it already, but can you kind of stack rank the top investment priorities to capture the opportunity in front of you? And any update on your M&A strategy in light of the broad decline in valuations across software here recently?

Maybe I'll take some of it and Nitesh can add. Our Agentic platform is an area we are heavily investing in. It delivers a much better user experience. It has a higher containment rate. And then the latest version of our platform, it uses AI to create AI. So a lot of the experiences that it used to take us maybe a team of -- a large team of developers, weeks and months to deliver. You just tell it what you need to do and it just does it for you. So that is going to allow us to move faster, deliver better quality, have a higher containment rates, win more customers. So that's one area of focus for us. And that is going to be everywhere. It's going to be in automotive. It's going to be in customer service, Pillar 1, Pillar 2, Pillar 3.

The next area that I would highlight is voice commerce. We've been -- it's a vision that we pioneered. We are ahead of others in the space. It's a great idea, but it will take time for people to catch up because we are -- we have the largest number of merchants that are using our voice AI, like we are the largest number of restaurants, and we have a huge footprint in cars and TVs and devices. So we are in a very good position to bring this to market.

Yes. And I can add on the M&A part of your question. I think a couple of years in, I'll just say, I think the M&A approach we're taking seems right to us. I think we'll keep being mindful about what's in the marketplace and potential partnerships being aware of opportunities to combine. And so far, they've been companies that have had really amazing customer relationships we've been able to harness together and bring our innovation jointly to expand those relationships, use some of those landing points to expand broader in the relevant industries. And I think we'll continue to seek some of those opportunities.

The -- because we've done a few, I'd say there's a lot more inbound also interest. And so we have a pretty strict and disciplined formula or methodology we go through in assessing if one may make sense, and we'll just keep that discipline. There's plenty that we look at that don't make sense for us. And I think we put a lot of scrutiny into when it might. Again, since things are moving really fast, we've said before, and I'll just repeat that we know we can do a lot of good things with what we've built here, but we don't want to be insular. And so we want to be aware of all the great things and partnerships that we can build. So I think M&A, certainly, thinking out the next few years, will continue to be a really important part of our muscle.

Your next question comes from the line of Mike Latimore with Northland Capital Markets.

This is Vijay Devar for Mike Latimore. A couple of questions. So one, how many Amelia customers are live on your Agentic AI version 7.3 and are likely to go live this year?

Yes. Hello, Vijay. We said last time, and I think we're just continuing to make progress that we had early last year sort of early adopter program where we piloted with, I think, at the time, we said 15 or so customers and that ramped through the summer. And we've been on this pathway of migration where we assume that we kind of are on a pathway to get the majority -- vast majority, I think, over 75% migrated over by the middle of this year.

So we're continuing to be on that pathway, making incremental progress every quarter that we go by, and we continue to see that in Q4, and we're already continuing to see acceleration in Q1. One of the good things with our new Agentic platform that we highlighted at the Consumer Electronics Show that we talked about in the prepared remarks is that's something that we're getting a lot of early traction from customers on the channel our Head of Sales there and saying that the customer feedback has been superb.

And so one of the great things we've been trying to deploy is sort of automated migration paths to allow people to migrate from prior version to Amelia 7.3 onto the new version that we're rolling out. So we are excited that our migration path in, especially going back to one of the earlier questions about the efficiency now with delivery and AI and what it's allowing us, it is allowing for more rapid migration patterns.

Got it. So when the customer moves to 7.3, is there incremental revenue to SoundHound?

Yes. So as I mentioned, just a pure higher containment rate is expected to increase our revenue. Many of our deals, we get paid when we successfully avoid a caller to go to a human. And by going to Agentic, we've seen just as an example, numbers going from like a 30% containment to over 90% containment. In some cases, we also get paid more for the upgrading to Agentic. So it's a mix of both, but either way directionally positive for revenue.

The other thing we've seen with the recent versions is sort of interactions that previously fell outside or would have to get escalated or things we can capture now at a much greater rate. So all of that is incremental revenue for us.

[Operator Instructions] Your next question comes from the line of James Fish with Piper Sandler.

Just on the CX side of things, how is Amelia effectively winning new customers versus the contact center pure play, the CRM offerings, and even some of the other stand-alone AI solutions out there? Really, what's making them different that's resonating with customers? And then I've got a follow-up.

Yes. So we -- so first of all, SoundHound, with the acquisitions we've made, we are a combination of teams and companies with several decades of collective experience in customer service. So we've been at this for a long time. And we have deep technology and we have data. And we are also very deep in a lot of these industries like health care, insurance, banking and so on and the reputation, the experience, the relationships all help us.

But if you zoom out, and this might answer an earlier question that maybe I didn't quite answer from Scott was, if a customer chooses to work with a big tech, that's a very high-risk decision because when you choose a company like Google or OpenAI as your vendor and by the way, these companies are not really deep into customer service. They provide tools for others like SoundHound. But if they just go deep with one big tech, they're going to miss out on innovation that might come out of other big tech.

So if you -- for example, you're betting on Google models and then if OpenAI creates an ecosystem that benefits the world, you might miss out on it or vice versa. So -- but SoundHound provides -- our philosophy is we provide the best technology, the best model to our customers, no matter where it comes from. Most of the time it comes from us because we have our own models that we've created over a long period of time with a lot of data and we compare it with the big tech models and we beat them in accuracy, speed and cost.

But if for some edge cases or use cases or scenarios, a big tech model is better, we bring it to our platform and we use it for our customers. So by choosing SoundHound, they are more guaranteed to get the best as soon as it becomes available, no matter where it comes from versus when they bid on a big tech, then it's a very expensive risk. And beyond the big tech, there are some new players. Most of those are maybe 2 years old. Some are doing better than others. But the way we think about them, they are LEGO players. They -- because of the nature of how old they are, 1 or 2 years, they don't have their own tech.

So they are scrambling and building -- getting one API from -- for speech recognition from one source and then for text-to-speech from another source from -- LLMs from another source. And they are basically putting it together like LEGOs, and they're only at it for a couple of years. And that puts SoundHound at a much bigger advantage because we've been at this for, again, decades. We have our own models, and we have proven success in enterprise. We are in 7 of the top 10 banks. We process billions of queries. And in terms of quality of service and the reputation, we are in a very good position.

And maybe I can add one thing, Jim. And I said this in the prepared remarks, but it's salient to your question. I think fundamentally, legacy -- this goes back to the earlier question on, I think, for Brian on disruption in software. Models that were built seat-based pricing that value was on let's get more users using our tool, and it wasn't as directly tied to customer outcomes, that is at risk because the tools are getting so good and we're building those.

And our solutions are directly -- our economic model, our pricing model is directly tied to customers achieving or seeing real value. Did a prescription get refilled? Did appointment get booked? Did food get ordered? So I think just architecturally, we're better to Keyvan's point. And I'd say also the economic incentive alignment is also an advantage for us.

Got it. Very detailed answer, guys. Appreciate that. Maybe, Nitesh, for you. Just a -- I'm getting it asked here after hours, just to hammer home a fine point. Is there much further M&A included in the annual guide? Obviously, you guys have a ton of opportunity. You guys have a strategic sense of doing acquisitions and folding them in. Just trying to understand if there's further M&A contemplated in the guide. And given the environment, there's a lot of sensitivity to stock-based comp. You guys are a bit of an outlier here. I guess, how are you handling your stock comp going forward and the dilution we've seen historically?

Sure. Thanks, Jim. For the first part of that, to be very direct, no, our guidance does not contemplate M&A that we haven't done or that is not baked into the outlook. Our outlook reflects the base of business, the pipeline of deals we have in motion, the existing customer activity that's recurring and we're upselling and expanding, and that's what's reflected in the outlook range. Now as I mentioned in an earlier call, certainly, there are M&A ideas out there and conversations we have from time to time and inbounds we receive that if they happen, we will -- if they're meaningful and material and we need to update an outlook, we will certainly do that like we have in the past.

Your second question on stock-based comp, yes. So I'll start with this general point at SoundHound, which I think a lot of us internally have a lot of pride around, and I give all credit to Keyvan and the culture he's built. Like this is a company where we want all employees to participate in the full contribution. And so we do distribute equity to our entire company. And I don't think that's the same as every other company. So we feel pride because everybody here is an owner. And we've also seen historically a lot of volatility that makes in some of the math on our P&L, especially with the acquisitions, you get mark-to-market activity that when you have a stock that's so volatile, you'll distribute a grant. By the time it gets valued for P&L purposes, it's at $20 and then that amortizes over 4 years. So that is something that's a little different because we're such a high-vol stock.

But I take the general element of your question. We do think of the economic impact certainly of dilution and certainly of where stock comp fits in our overall compensation profile. And we want to be competitive. We want to attract all the right talent and make sure we have the right people. To an earlier question, though, we are always vigilantly looking at our cost structure and can we do things more efficiently. And we have historically taken cost actions, including to our people when we needed to. But -- so I'm mindful of the element of your question. I think we do try to be equitable in our distribution of stock comp.

We are mindful of the dilution impact. We are mindful to your point on it is probably a higher percent of revenue than you might see elsewhere. I think as we scale, you will see that normalize certainly as you will with some of the other operating lines. But again, I'll close with what I started with, which is I think we generally do feel a sense of pride that we do distribute equity to all -- everybody at this company, and that makes us all combined owners in the outcome and success of what we build.

Thank you. I'm showing no further questions at this time. Thank you for your participation in today's conference. This does conclude the program, and you may now disconnect.

All right. Thanks, everyone. I'm here with the CFO of SoundHound, Nitesh Sharan, and delighted to have you with us today to have a little conversation. I'm trying to get a little spicy here to see what you guys are up to.

But let's talk a little bit first about SoundHound and what growth has been looking at and looking like, especially this year and if you think about the last quarter, what are the kind of the highlights and what's kind of driving that as people think about what SoundHound doing as a platform?

Yes. We continue to show strong growth. Last quarter was 68% up for the year. We continue to be -- actually for the last several years, we've been growing north of 40%, 50% CAGR. And with some of the acquisitions we've added, we've been crossing into the triple-digit range. So the growth is pretty broad based. So we are seeing a lot of traction within the customer service pillar, voice-enabling services, in particular, around restaurants and some of the enterprise verticals. We're seeing just a ton of customer interest of how do you do more, expand more, contain more of the conversation set.

We're also continuing to see growth and traction with automotive, albeit there's been, especially with the tariff backdrop and some dynamics playing out there. But we're innovating by bringing voice commerce into a new way of engaging and getting a coffee on the way to work or ordering pizza. That's rejuvenating a lot of conversations with the OEMs.

And I think more broad based, clearly, AI is an enabler for enterprises. It has just been the conversation for the last couple of years. And we have a sort of unique position led by voice AI but just the natural language conversations of how we can help enterprises serve their end consumers. And so I think that traction has been pretty positive.

And voice agents aren't new. So we've had Alexa and Siri. Why is it that you've been able to get into all of these markets where there has been penetration from a lot of those larger incumbent agents. What do you think the -- what's the differentiator that allows you to do that?

Yes. It's not new for us either. We're a pioneering company that our cofounders started the company in 2005 out of Stanford, their PhDs, pre-iPhone days, and machine learning and speech recognition. We were ahead of the curve even when we launched our platform after being in stealth for a number of years at the state, at the time, the ability to handle complex compound conversations to basically operate speech recognition concurrently with understanding and intent identification and then having a conversation that was much more complex. We were well ahead of, and this is 10 years ago now, even where you'd probably interact with Siri today or Alexa. So from a technological standpoint, we've been differentiated.

When we got our first sort of entry and traction commercially with the automotive space, it was because all the OEMs were looking for an innovator and a better differentiation on the technology versus the legacy provider, which at the time was nuanced. And we're seeing that across the board. We're penetrating into restaurants. We win on the footprint of great technology. And we have benchmarks when we do either public benchmarks or our own references against the biggest LLM guys out there. We outperformed 20% to 35% in terms of accuracy at 4x better latency at a much smaller cost footprint. So we could build these on a model that's 1/10 the size of what some of the LLMs are building there's on.

So technologically, we're differentiated and our architecture is also differentiated. So we are the first company to bring integration with OpenAI into the automotive with a partnership with Stellantis in Europe. They've now scaled into many brands where they're deploying integration of OpenAI in the vehicle. We do that where we can use our own models, our proprietary models that we're building, and we're training on our large data sets. We're doing it by integrating with LLM such as OpenAI and others. And we can kind of partner with best-of-breed and we can compound with their own state-of-the-art architecture. And I think it's all of that, that's really allowing us to continue to differentiate ourselves in the marketplace.

And when we think about the restaurant use case where you're rolling up to a drive-thru and you're right there at the point of the consumer when you get inside of the restaurant, where else do you show up? Where else do we see either from your own development or from acquisitions that you've made, where else do you show up in that kind of environment?

Yes. That's one of the exciting things for us. So restaurants is a huge opportunity. We've now -- we've communicated publicly how we're growing up to now 15,000 locations, which in the grand scheme of opportunity is a very small penetration. And by the way, we're in dozens and dozens of languages. So this is absolutely a global opportunity. We're already live in 3 continents around the world.

But to your question, it's not only about the front-end customer-facing voice order taking, which is something we've really got a lot of penetration in. We have a couple of other products that we're expanding the sort of price per unit, if you think of it that way.

Number one, we have a solution we call, Voice Insights, which basically enables the restaurant operator to kind of see how the throughput is going and voice ordering. They can understand what's working, what times of day or better for upsells? Or when do you really just need to get the speed of service faster. So that's a solution that is providing interesting operating analytics that will help restaurants operate more efficiently.

And number two, we have a solution called, Employee Assist. We're now -- imagine you're a new employee that has to learn how to make that specific coffee or how to clean that machine or how to operate certain procedures. It's sort of like your own AI operating procedure training manual. And that employee assist capabilities deployed across many, many locations.

And then we also have just non-order taking front-end smart assistant sort of smart answering service. So now for a lot of restaurants that have phones over 50% are just like spam calls and just even have -- a lot of times, they don't even pick up the call but handling some of that, what hours do you open? Is there parking around? We can handle and help and support a lot of those things.

And you can also -- and I remember when you first told me about this, I thought about my favorite Sushi restaurant that I call constantly they never answer the phone, I turn to order and they don't have a web presence. But for them, you could just be the -- I can provide my order, and it just immediately goes into the POS system and there you go, right?

Yes. And you can do it from, what hours do you open? Is there parking around there? Do you have vegetarian food? It could be all types of things that can -- by the way, we have a seamless interface where those things could be coated. We have a template that goes out the gate. And then if there's something specific to a restaurant in a particular location or particular menu structure, like those that can all be custom-developed.

Got it. And then when we think into the enterprise, and we think about customer service and that will -- where do you play there? And how has that been -- if we talk about Amelia is a great example, how does that kind of supercharge that effort?

Yes. In Enterprise, we're getting -- I mean, we -- so first, I'll maybe break that down by industry and then I can talk about the product suite a little bit. So historically, we were heavy in automotive up until the 2023 where 80% of our business within the automotive space. We then -- we talked about just now grown aggressively and rapidly in restaurants.

And in enterprise, now we're seeing great traction across financial services, health care, insurance, hospitality. And so our revenue base is now much more diverse, whereas 1 industry was 70%, 80% a few years ago, we now have 5 industries that are double-digit percentage contribution of our total revenue.

So the traction, again, with 7 of the top 10 money center banks, the ability to have a conversational agent that can handle, I need to find out what my bank balance is or I need to do money transfers or I'd really like to figure out a more accelerated way of paying on my loan. Those are the things that can be handled through a natural conversation interface. The traditional IVR infrastructures where you have to wait for the phone tree to say press 1 for this, press 2 for this. By the time you got through it, you're at an agent, it says, well, an agent is not available, can I call you in 45 minutes? That's what's being disrupted.

And Amelia played at the conversational AI layer, we added now advanced voice capability and integration with that architecture where a lot of the large money center banks have their own large language monitors they're developing, right? Security and privacy are super important to that ecosystem.

So we have, again, this capability where we can integrate with their -- their LLM. We can bring our own models. We can -- for certain use cases where it makes sense, we can bring in the other large language model providers. And that's sort of the advanced feature set that we're -- and everybody now has moved to agentic, and we're leading the charge there. So the types of use cases we're seeing that are working with either health care, financial services, insurance, it's just widening the aperture. So what used to almost automatically go to a human, the AI can handle much more of that.

Got it. And we've heard you talk about Polaris a little bit on what that means and what that is. Can you just explain what that's all about and why it's differentiated?

Yes. So our -- one of our major differentiators, I think, is a general thesis is technology, as I mentioned, and we've been pioneers in at the front end. So Polaris is our sort of latest gen multimodal, multilingual speech foundation model. And so this is our own home-built engine where on the speech recognition capability of voice. So if you think of voice AI as multiple parts, speech recognition, natural language understanding, generating a response and then speaking it back to text-to-speech. This is sort of that first part, speech recognition.

OpenAI Whisper is one of the competitors. Google has its own engine. Microsoft onwards and we benchmark against all of them. So we see outperformance on generic models where we're 20% to 35% better accuracy. We do a much lower latency and a much smaller cost footprint. We've then further done benchmarking at domain level sort of at the financial services level or retail or just in general customer service. And we see benchmarks now that are 70%, 50%, 60%, 70% better in accuracy and capability.

Now a lot of this is because we're training it off of production use cases, real data, how actual customers call in, in different acoustic background. So sometimes you have noisy environment. Sometimes you have a noisy call center, if you're driving in the car, there's a lot of background noise. We are able to train it in all these different environments, which enable better accuracy. If you can't understand it upfront, you can't really do transactional work on it. So the fact that we have this advanced capability. And we're constantly innovating there. So I mentioned it's multilingual, too, which means we can handle dozens of dozen languages. Some people flip in between different languages, mid-conversation, we can handle that. It's multimodal. So it's not just voice. It's sometimes voice visual. We have a Vision AI capability we're now bringing. So we believe the world is going to be omnichannel, multimodal, multilingual and Polaris is leading the charge on that.

And when we think about -- you talk about language models, we think about LLMs, you mentioned OpenAI a little bit. Like how do you -- are you competing in some fronts? Or like where do you -- how do you operate within that construct? And where do we see you?

Yes. Most of it is it's competition in general in tech, but I'd say we're partnering with a lot of them. And so I mentioned we're integrating OpenAI into the vehicle with Stellantis, for example. We have integrations with other large language models and again, it's an architecture that can work across any model, even if you build your own model, and we bring our own. So there's a lot that you don't need a trillion parameter, large language model to do if you're really looking for a use case on food ordering. You may not at the same time order your cheeseburger and then ask about the theory of relativity, like you pretty specified use cases. So we can work and partner with the large language models. Also, our specialty and sort of voice gives us differentiation. So for us, we're a complement to even some of the capabilities that they're building.

Cool. And I think we've all had a situation where we're driving the car. We're trying to do something commerce-related. And if we can stay on the road, that's great. If not, we just underperform. What does voice commerce look like for SoundHound. How are you enabling it? What new partnerships have come out recently that are interesting for us to think about? Like how is that working?

Yes. Our foundation, Keyvan Mohajer, our CEO, Co-Founder. His vision was always inspired by Star Trek and how do we voice-enable the world and talk to robots and the coffee machine and just get through life through natural conversations rather than touch type swipe and all that. So that was a vision and pioneering vision. And last year at CES, we sort of launched our commercialization of voice commerce. And we've now we're in partnerships with half a dozen OEMs, a lot of interest, many restaurants to try to bring basically this vision of you're driving it in a car and you could just seamlessly order coffee on your way to work or you're watching football on a Sunday, and you could just -- you see that pizza advertising come on and you can order pizza.

We announced just yesterday a partnership in that voice commerce ecosystem with OpenTable. So now you can get reservations for dinner on the weekend. We also announced recently a partnership with Parkopedia. So if you're driving and you're in a city where parking is limited, you can actually start to plan where you can park more efficiently. So all of this is what's more seamless to the end consumer. How do you make it more attractable to your point, if you're driving and you're -- unfortunately, too many people are still funneling around with their phone and trying to order something. This is deep integration.

And the model is also innovative in the sense that we're actually trying to build this flywheel where the manufacturer in this case, the car, if you take the example of somebody driving and ordering pizza to pick up on their way home for dinner, there's a sort of commercial economics on the transaction side.

So first, the pizza, you would search, you say, I want pizza. On the way home and say, oh, there's these 4 places on your way home. Would you like me to select this place and you say, yes, I'd like a large pepperoni and Pepsi and please place that order. The restaurant is happy because they got a lead generation. We would have a convenience fee associated with that transaction. We share part of the economics with the car manufacturer. So now the car manufacturers are actually incented because they're getting economics on this. They're generating revenue. It's a whole new revenue stream for them and imagine them or a TV manufacturer. Now device makers can make money on this new ecosystem. And the consumers pleasantly -- they're happy because they actually very seamlessly got their dinner.

So the auto manufacturer wants to have you in the car or VIZIO as an example to have you in the remote, the restaurant doesn't really carry their way. They're getting lead gen. They're just going to pay it. How does that compare versus some of the other -- I mean, how big is that convenience fee and how much friction does that cause or doesn't it?

We think there's a lot of economics that we can do in a very attractive manner that's a win for everybody. So I mean, there are delivery services charge pretty hefty fees for lead gen and we could be a small fraction of that and still make it economically really attractive for us and the device maker.

And to the point restaurants just want traffic, right? They want somebody who, on their way home wants pizza and they got that unique customer. So we believe there's -- certainly, we're seeding this. So there's an approach to seeding it to make sure that there's traction and over time, we'll see how that model grows. And by the way, you can add -- it's not just commerce, transactional, there's advertising opportunity in there as well.

So the big strategy here, and I think this is your 3 pillars you always talk about where you get the agent into the device and then you get the agent into the commerce and to the restaurant. And then all you do is connect those and that becomes the third pillar of the business, right? Is that how we should think about it?

Exactly. Ultimately, the vision is voice enabling the world with conversational intelligence, and we believe natural language conversation. So we've learned how to type or text with our thumbs really fast. You don't have to learn how to talk and get things done. And so the idea that we've kind of shifted from the Qwerty keyboard to mobile devices and texting and the next horizon is natural language conversations. And LLM and everything we're talking about generative AI, like that is one of the major unlocks that this technology is providing. And that's why we believe like customer service as a vertical is such an attractive opportunity in the near-term horizon.

To your point, our business model is set up that way. So we voice-enabled products, cars, TVs, IoT, we get royalty economics. We voice-enabled services like restaurants, financial services, health care, your appointments through reservation. Those are sort of more subscription SaaS economic.

And then yes, the third pillar is tying it together. Now while you're driving, and by the way, we're getting royalty economics, you can connect with the restaurant where we're getting subscription economics, and you can add on transactional commerce or again, advertising. So it is bringing this ecosystem together, led by natural conversation, of which within that voice is the killer app, like it's the most natural way to get things done. But we do believe the world is going to be omnichannel. So it is best for you to interact with WhatsApp or text, those are capabilities we also support.

And if we fast forward a couple of years, do you think more of your revenue is going to come from the connection revenue or more of it's going to come from the other 2 sides of pillars?

We think there's a huge growth opportunity in all of this. So historically, we're heavily in the Pillar 1 royalty. We've seen a lot of traction last year, this year. I'd expect even in next year from our services pillar. And then yes, over time, we think the third pillar, voice commerce is going to contribute a strong amount as well. The pacing of all those, I mean, they do interact. And so I think over time, if you ask me 5 years out, I think we'll have a really nice balance contribution from all 3 pillars. I think in the immediate, medium term, is really Pillar 2 where we're seeing a ton of traction.

Got it. And in your earnings calls, you talked about the path to profitability I think next year, you're projecting EBITDA positive. How can we kind of think about it? What's the driver behind that?

Yes. I mean I indicated even Q4, there's a range of revenue outcomes and there's a range of profitability outcomes that will tie to that. But yes, as we move to next year, we're moving towards a breakeven zone. And so I mean, ultimately, we're driving hyper growth, and we want to continue to service that growth because we're underpenetrated on the market opportunity in front of us. The serviceable market is hundreds of billions of dollars, and we can go after that, and we have a differentiated competitive moat that we can leverage.

On that journey, I do think moving to the breakeven zone makes -- that's where we need to get to, and that's what we're marching towards. And at scale as a software company, I do think the profile long term is a 30-plus percent EBIT margin business. But for the next few years, I think that breakeven zone is probably the right place because we'll continue to -- every incremental dollar, the return on that dollar, we believe, is well in excess of the risk-adjusted cost of capital. So it just makes sense for us to continue to fuel this growth.

Now that largely will come through continuing to build into ecosystems we've established, where M&A makes sense, we'll look at those individually, and we'll continue to sort of consider M&A if it makes sense for us, we'll go after those. But yes, we just got to keep executing and driving this growth, and I think that will get us to the right profitability profile.

Yes. And I guess that was just double-clicking a little bit on M&A. You talked about this massive TAM, but your served addressable market is relatively small vis-a-vis the TAM, and it doesn't even seem like there's a way you could possibly build into that fast enough organically. Are there a lot of companies out there that are trying to make solutions that are technology add-ons? You found a lot of them. Do you feel like there's a big universe there? Or is this -- what does the market look like in your mind?

Well, I think that -- like I said, I think, technologically, in voice, in particular, but also the sort of the omnichannel and architecture, the algorithmic and data, I guess, I'll say, we feel great with what we have. We think there's a lot of scalability with the technology and the product set. In fact, one of the things we're really trying to focus on is providing more a unification of our product suite. So that no matter which customer you are, you're looking at one common platform. So that's an internal effort.

A lot of what the acquisitions have provided us, it's almost like customer acquisition cost efficiency. So existing legacy companies who have established deep roots with customers, but needed an injection of innovation effectively, sort of taking to this next horizon of AI. We found great opportunities when we're diligencing some of these deals, and we're talking to a large money center too big to fill bank. And they're like voice is really what we want to move into, like, great, that's exactly what we have. That's sort of an affirmation of an investment thesis that we're playing out.

So I think companies that provide deep customer relationships, maybe a thirst thing for more innovation that makes sense. I think as we move more omnichannel, could there be adjacent technology that makes sense. Certainly, we're open. I mean, I guess the biggest thing is this market is moving rapidly. We have -- we appreciate the partnership of banks, and we also have our own dedicated team that's always making a pulse of who's out there, whether that be for partnership opportunities just to know who new competitive threats are or if there's potentially an acquisition target down there, we're constantly pulsed on it. It's rapidly moving. But we feel really good about what we have. And just even in the spaces we're playing, we know there's a lot of runway to go after. So we just got to aggressively keep going after it.

So at this conference, there's been a tremendous amount of discussion about infrastructure, power, chips, everything that's building the underpinnings of AI. Does that matter to you guys? I mean how much more computing power, speeds? Are you competing for the same resources as the LLM companies are? Like where do you fit in that ecosystem? And how does it impact your business?

Yes. I think that AI -- we believe that it is as transformative as whatever analogy people want to use, electric or so forth, that's probably bigger than the Internet, probably bigger than mobile. And so it's very early days and there's going to be a lot of opportunities. So yes, there are infrastructure players out there who need to be thoughtful about ensuring we're scaling these massive models on this pathway to AGI and so forth.

There's a lot you can do with even what's out there right now, the capabilities of the current models. When we move from generative model to agentic reasoning models or large language models to large reasoning models, like I said, in certain spaces where we're playing, we're sort of at that application layer of all of this investment where people are saying, okay, well, how are customers going to use this? And that's what enterprise are working with. So I'll give you 1 use case. We work with a large telecommunications company who get inquiries and they use our engines to sort of handle a lot of these calls. It could be, my WiFi is down or what's this billing issue or so forth. And there were traditional sort of containments of those calls before it would go down into a human to handle the sort of tail complicated stuff.

Well, now these reasoning models in our agentic solutions are just expanding what's possible. Our embedding of these latest capabilities are what used to be handled at 50% containment is moving to 80% containment. And the reasoning models, like, as an example, is telecommunication provider where somebody calls in and says, my bill went up this month, what's going on? Traditional models used to say, oh, shoot, we got to move that to a human. But now the AI itself can handle it. And we'll say, well, let me look back into your historical bills, oh, you had a discount going on, that discount has lapsed. That's why you went up $10 this month.

Those things, that application layer sort of where we fit. We sit on top of all these infrastructure investments. Obviously, it supports us when we can integrate. We use a cloud provider for a lot of our cloud services, but we're also unique in that we provide edge solutions where we know more and more people are trying to say, what can you do with smaller footprints.

So when I mentioned earlier about our benchmark of Polaris where we not only do it faster, more accurately, but we've done it on a model that's 1/10 the size, that's a huge differentiation. And when everybody is saying bigger and bigger and bigger, we can do a lot more with less even. And the way an application people are talking about inference costs are going down really rapidly. That's a benefit to our gross margins. So when we're deploying this in the application layer, how customers are using it, customer service is an easy one for people to understand or ordering your food at a restaurant like that's an easy one. That's sort of the application layer where we play.

Got it. And going back to Star Trek for a second. So I saw a Star Trek, a newer one recently, and there weren't any iPhones on that at all. So when you think about the vision of where this all goes, right, are we talking a deviceless world where everything is essentially in a cloud and the primary HMI is verbal? Like how do you think about like what are the way down the line vision? How do you think about that?

Yes. The vision of this company was about the sort of more ambient computing, where there'll be robots doing amazing things, and you'll be just talking to your coffee machine and you don't tell your elevator what needs to do. And I do think there's going to be a compounding. So it's never a move from generally like, again, we're still working with those clunky keyboards and IBM still makes plenty of money on mainframes. And like these things compound over time. We believe that natural conversation will be that next major inflection. And when you're driving, it's natural, it's safe to actually not have to fumble around with something. When you're watching TV, the biggest screen in the most -- where you have the most entertainment in your house to be able to interact naturally make sense.

And then customer service is an easy application where most people today are still frustrated with the traditional architectures in legacy infrastructure, having a natural conversation interface for that, whether it's through a phone or through your web device or whatever, the median doesn't matter, we'll be multimodal, will be omnichannel. But yes, absolutely, that's the vision is that we'll be very ambient pervasive.

And how far to the edge does this eventually go? So is it always going to be a central interface, like not exactly, but kind of like an Alexa that then speaks to devices? Or is this actually -- could this actually go all the way to the edge? So a light switch could be enabled because you don't need a screen, right? Where do you think that eventually -- how far to the edge does it get?

Yes, we had a deal this last quarter with the robotics company in China. And the idea of like just even a light bulb, the light bulb goes out and you can just replace your light bulb through voice, natural language conversation. We are working with smart appliance operators today. We do believe the sort of device side is a very underpenetrated opportunity. One of the real distinguishing features of voice AI, you don't need the economics or the GUI interface. You just need a very cheap, sort of inexpensive microphone to unlock the power of voice AI. So it absolutely, ultimately can be pervasive through any modality. The ones where we're going at it and approaching it is drive-thru makes a lot of sense. It's a captive driver on the way in ordering their cheeseburger and french fries and to convert that sort of busy human recipient of that order to AI makes a lot of sense or a call center capability like -- that's where we think the immediate horizon is. But long term, certainly, the sort of pervasiveness of it is what the vision is about.

Awesome. And I have 1 more question, but are there any questions from the group here?

Okay. Let me hit you with this one. It seems like the voice ordering at drive-thru makes a ton of sense. It's a use case we can all get on board with having all sort of experiences have been less than fruitful. It's taking a little while. What do you think is taking the long -- is it the CapEx? Is it the technology? What's the hold up that kind of keeps us from seeing this everywhere all at once? What is it?

Yes. In restaurants, in general, there is clear need for AI, both for cost containment and offsetting of other commodity costs or inflationary pressures. But there's also a consistency of service element that AI provides. And there's also possibilities of revenue uplift that we provide.

On the drive-thru specifically, there's also a hardware element sometimes to restaurants. So when we work with certain restaurant customers who have to retrofit their drive-thru, they might need to put in digital order confirmation board or upgrade their microphone or headset speaker systems. So sometimes that's the gate.

So we've done some things in partnering one of our earliest drive-through partners with White Castle. We've now scaled into dozens of their locations around the country. And we were able to work more quickly with the sort of quick seamless post with a small screen that was able to unlock and go faster through their permitting process and that enabled us to scale.

So there are sometimes implementation requirements like that, that govern it. More broadly with the restaurant, sometimes it's sort of the architecture of a restaurant, you can get an MSA at the corporate level, but you have to sell into franchisees, sometimes like a partner like Jersey Mike's actually, they work in partnership with us to try to do that and incent that sort of franchise adoption.

So there are a couple of gating items, just the complexity of working with a fragmented restaurant space that have different point-of-sale systems and infrastructure. But clearly, the demand is there. We're growing. I mentioned this year, every quarter, we've been adding 1,000 locations. I do believe it can inflect even greater than that, and we're pushing hard, and we have a dedicated team that's doing a great job on the ground trying to fight for every incremental expansion of that market every day.

Awesome. Well, Nitesh, thank you for your time. You continue to amaze us with how much progress the business makes both financially and as the reach just gets further and further. I think we're all looking forward to where it's going to be for our own convenience sake. And thanks for being here. We really appreciate your time.

Thanks for having me around. All right.

Good day, and thank you for standing by. Welcome to SoundHound's Third Quarter 2025 Earnings Conference Call. [Operator Instructions] 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. Please go ahead.

Good afternoon, and thank you for joining our third quarter 2025 conference call.

With me today is our CEO, Keyvan Mohajer; and our CFO, Nitesh Sharan. We will begin with some short remarks before moving to Q&A.

We'd also like to remind everyone that we will be making forward-looking statements on this call. Actual results could differ materially 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.

Thank you, Scott, and thank you to everyone for joining the call today.

Q3 marks another quarter of precise execution against our plan. Enterprise AI adoption is booming globally, and SoundHound is strengthening its leading position by anchoring its deployments in millions of endpoints across highly diversified industries and customers with much more potential remaining in the near- and long-term horizon. In just the first 3 quarters of the year, we have already achieved a record year in revenue of $114 million, up 127%, and we are raising our outlook once again. This quarter, we also celebrated our 20th year as a company. We started in a Stanford dorm room with the mission to voice enable the world with conversational intelligence. Our long-term focus, dedication and strategic execution has paid off as the opportunities before us are now advancing at an exponential rate.

Two decades of technical innovation has given us the speed and agility to truly capitalize on these opportunities. Our deep understanding of AI has allowed us to achieve market readiness rapidly while many others are still experimenting. Indeed, we are already in the market, achieving real success and creating measurable value for our customers with our technology as a driving force. And we have a track record of groundbreaking work and being highly responsive to new technological advancements.

We pioneered speech to meaning over 10 years ago, which combines speech recognition and language understanding in real time to deliver superior speed and accuracy. Likewise, we pioneered deep meaning understanding over 10 years ago, and we are the first voice technology company to enable the processing of complex and compound conversations while others were still delivering simple limited commands. Our work a decade ago paved the way to leading the world in the agentic experiences we are seeing today.

We were the first to go into production with a voice-enabled generative AI assistant in automotive within weeks of LLMs becoming a proven architecture in language understanding and years ahead of big tech. And this year, we were one of the first in the world to introduce a fully agentic platform for enterprise businesses, Amelia 7. Importantly, thanks to our years of IP accumulation and our mature platform, we are able to combine deterministic flows with machine learning models where the latter still lacks the reliability to go from proof of concept into production. This advantage has enabled us to deploy faster and scale faster and also avoid the explosion in model costs that other companies are battling today.

Now let me give you an update on Polaris, our most recent groundbreaking work. SoundHound's multimodal, multilingual foundation model, Polaris, continues to prove its superiority in accuracy, speed and cost. As we move more Amelia platform clients from third-party legacy vendors to use Polaris, we are able to reduce the error rate by as much as 3x. Our customers are thrilled and transitioning them to Polaris will help us drive down engineering and hardware costs and achieve faster iteration cycles to improve our speech foundation models. We also continue to add support for new languages and have innovated new methods to provide speech model customization with a rapid turnaround time and minimal deployment overhead.

We've innovated new training methodologies that reduce the cost of training and the amount of data required while significantly improving model accuracy. Notably, we are one of the very few companies that can support our customers in the environment of their choice, whether it is in our cloud, in their cloud, on the edge or on-prem as well as the hybrid combination. Polaris, in our view, is another significant disruption that widens the gap between us and the competition in our journey to realize SoundHound's vision.

And while innovation is clearly a major source of strength and the foundation of our growth story, we've also demonstrated repeatable success with our acquisition strategy. Within 12 to 18 months of our key acquisitions to date, we were able to convert their premerger decline to post-merger growth and turn them into leaders in their field as a fully integrated business unit within SoundHound. While acquisition is not a requirement for our success, it provides a unique opportunity for SoundHound to change the equation and accelerate our trajectory.

We've been able to find great businesses with amazing teams, strong customer relationships and solutions highly aligned with our 3 pillars of business and arm them with what they needed to thrive, including SoundHound's 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, improving their customer experiences while reducing their costs, strong financial backing for innovation and expansion and proven scale, strong brand and credibility.

This quarter, we acquired Interactions, a pioneer in customer service and workflow orchestration, and we are already moving fast to combine functions to create a comprehensive and dynamic contact center and customer service offering that incorporates a full spectrum of automation and human-assisted capabilities. We have now demonstrated our M&A playbook multiple times, learning from each acquisition and getting faster and stronger every time. Just as we did with our past acquisitions, we are now integrating our strong IP and replacing their dependencies on third-party models with more accurate, faster and less costly SoundHound built models. And with our robust financial position, we can give them the resources they need for innovation and expansion.

With this latest combination, we expect to achieve the results we achieved through previous acquisitions, harvesting cost synergies by moving their stack into our own cloud and realizing revenue synergies with cross-selling and upselling.

With that, let me now talk about some specific customer highlights in Q3. In IoT and Robotics, we had a significant win, signing a deal with a large Chinese company that offers intelligence-based interaction in hardware and software products. We agreed to integrate SoundHound Chat AI into double-digit millions of AI-enabled smart devices, which will initially be distributed in the Indian market, leveraging our strong language capabilities in Indian languages.

In automotive, we continue to see strong adoption and have begun to deepen our market penetration beyond global light vehicles. We are excited to now be working with a major globally renowned sports car brand to develop a unique personality for its in-vehicle assistant. Additionally, Jeep vehicles rolled out our category-leading Chat AI voice assistant in Europe and our work with existing EV customers, including Lucid, Togg and others are seeing promising results. Togg has just recently expanded throughout the German market. We've also signed multiple deals with prominent 2-wheeler companies based in the expansive Indian market as well as multinational commercial fleet vehicle companies based out of Italy that manufactures light, medium and heavy vehicles, including trucks, vans and buses.

In financial services, we continue to work with 7 out of the top 10 global financial institutions with 3 buying additional services and 2 signing renewals. We also signed a new enterprise technology deal with a prominent organization supporting credit unions throughout the United States.

In energy, we signed new contracts with a large utilities company that generate, transmit, distribute and sell electricity in the United States and a Texas-based electricity provider serving millions of customers. In retail and consumer goods, we had a net new upsell with a major multinational brand with an extensive product portfolio of food, beverage and consumer goods. And through our Smart Answering solution, we won deals with one of the fastest-growing global health clubs in the United States and a U.S.-based global franchise that offers state-of-the-art training facilities for elite athletes.

In restaurants, one of our most established verticals, we are a market leader and continue to see strong adoption with our cutting-edge solutions. Notably, we signed a deal to deploy our AI ordering solutions with a nationally recognized full-service restaurant chain and had franchise wins with Firehouse Subs, Five Guys and McAlister's Deli. And we are now fully rolled out in all My Pizza, Habit Burger, Red Lobster and Torchy's Tacos locations in addition to existing brands, Chipotle and Casey's. Peet's Coffee expanded further with Employee Assist, which will now be deployed in all company-owned locations.

Earlier this year, we introduced a new product called Voice Insights, targeting brands that require a precursor to full automation, for example, due to missing APIs and infrastructure. Voice Insights is our AI-powered solution that analyzes customer and employee interactions in real time in order to measure efficiency, satisfaction and other metrics that can help restaurants improve their operations. We are seeing strong interest from our customer brands and prospects with several brands already in process of rolling it out within just months of being introduced.

In health care, we launched with a large precision medicine provider to pioneer an inbound and outbound Agentic AI solution, which is the first of its kind in the health care space. We also signed with a U.S.-based regional hospital system to deploy the Amelia platform, and we renewed our relationship with one of the leading health care companies for wholesale medical supplies.

In insurance, French insurer, Apivia Courtage announced that it will deploy Amelia 7 to bring Agentic AI to its contact centers. We also renewed with a global insurance company that provides services to multinational corporations and a highly regarded Mexico-based insurance company specializing in auto insurance. In telecommunications, we signed a large well-known communications provider that offers fiber Internet, digital television and other services to residential and business customers in over 20 U.S. states.

In IT services, we renewed a multiyear contract and upsold to one of the largest Internet domain registry and web hosting companies in the world. We also won a deal with a leading provider of managed cybersecurity services, cloud and IT infrastructure solutions based out of the United States. With channel partners, we entered into a strategic partnership with leading technology services distributor, Telarus, to bring Amelia 7 and Autonomics to their enterprise CX and EX landscape.

Additionally, we signed a multiyear deal with a long-standing partner that specializes in CRM, AI and workforce engagement management. We entered into a reseller agreement with VOXai, a company that offers purpose-driven customer experience solutions and entered into strategic partnerships with 2 of the leading software and service providers of full suite studio gym, health and wellness cloud management. Many of these important deals and partnerships are a result of our success and growing leadership in enterprise AI. I'm excited to talk more about this increasingly important focus area for SoundHound as we lean in on Agentic AI with our differentiating Agentic+ framework.

With our acquisition of Interactions, we've added a number of preeminent Fortune 100 companies across various industries to our already strong portfolio of global brands. For example, we now offer our solutions to one of the largest footwear and apparel brands in the world, to a Silicon Valley-based platform giants and to some of the major names in automotive, energy, financial services, insurance, health care, technology and telecommunications. Not to mention that we've added hundreds of new patents that we can leverage to increase our innovation moat.

We see enterprise AI as one of the biggest near-term opportunities. So we are aggressively expanding our product suites and our customer engagement in that space. On that note, we've just updated the Amelia 7 platform to version 7.3, introducing some capability upgrades that have already been wowing customers and prospects, including major improvements to conversational latency and barging handling to deliver an even more natural and intuitive voice experience for customers. The Amelia 7 platform, which offers enterprise-grade Agentic AI is already making a real impact where it has been deployed, and we are now expanding its availability globally and already seeing brand-new logos in our pipeline.

Much of this interest is driven by our unique approach to Agentic AI, what we call our Agentic+ framework. It's an agentic system designed for enterprises that balances the power of multi-agent orchestration and generative AI with essential business requirements and controls. While many internal AI projects stall in pilot phase, our approach consistently brings use cases to market within days or weeks rather than months. Within any given AI agent workflow, there may be certain functions that are more appropriate to complete with predictable deterministic automation, especially when personal security is in question. And there are times when human escalation is necessary or required by our customers.

The complexity and sensitivity of enterprise use cases demand a highly intelligent, hybrid agentic system that delivers safe, efficient end-to-end orchestration. Agentic+ provides exactly that, a practical scalable framework that brings forward-looking AI use cases into real-world operation today. This is where we see the true value unlock in enterprise AI transformation. As with all of our solutions, this advanced technology has been built upon decades of R&D, troves of data and an understanding of what motivates our customers. Our platform is LLM agnostic with relevant enterprise integrations and SoundHound's trademark agility means we will adapt and upgrade Amelia 7 at the pace of AI innovation. We aim to always remain at the cutting edge for our customers.

That brings me on to Voice Commerce. Voice Commerce is our highly anticipated solution that seamlessly brings conveniences like food ordering and recent additions such as parking payments and restaurant reservations into the vehicle for the convenience of drivers as well as other IoT devices like TVs. We've now taken POCs to advanced stages with a number of OEMs and merchants and have already successfully placed live voice orders from cars and completed the transaction. We are looking forward to seeing these go into full production in 2026.

We have 4 OEMs showing strong interest in this groundbreaking technology with others following very closely. One of them in particular is poised to be the first to market together with a large QSR. We've also completed the integration with a larger paid parking service provider and a restaurant reservations company. We are on track to have some exciting announcements early next year.

In addition, Voice Commerce is driving new conversations with smart TV manufacturers. And in particular, we are in talks with 2 prominent global manufacturers to enable consumers to order food or other services while watching TV simply by speaking to the device. More to come on that in the near future. We are nearly fully integrated with 2 tech platform giants in order to offer our voice ordering to their many millions of users. Going live to consumers is now imminent with more to come on this opportunity. We believe this is a proof point that our decades of relentless innovation is delivering technology that is ready for mass adoption even by big tech. We will have a prominent presence at CES once again in January, showcasing our solutions with participation from several partners. We look forward to seeing some of you there.

In closing, we continue to deliver strong results. Some of the largest companies in the world are coming to us for solutions to address their AI goals. We are at the very beginning of addressing the massive market opportunity in front of us. We are a pioneer in voice and conversational AI and the expertise we've gained over the past decades are becoming recognized more and more every day. We are delivering value-driven agentic AI solutions to our customers, and we are ready to offer a voice commerce solution no other company has been able to bring to market.

With that, I'll now turn the call over to Nitesh to talk about our financial performance, key growth drivers and business outlook.

Thank you, Keyvan, and good afternoon, everyone.

Q3 revenue was $42 million, up 68% year-over-year. We continue to deliver strong growth led by product and technological differentiation in a rapidly expanding market. Reflecting on our performance so far this year, we have now successfully delivered the Pillar 2 scaling that we had anticipated and communicated last year. From financial services to health care, to technology and retail, on top of our existing footprints in automotive and restaurants, we have embedded our leading-edge voice and conversational AI suite deeply into a wide cross-section of market-leading services. The disruptive innovation curve that extends from deep learning and transformer architectures to large language and reasoning models into Agentic AI solutions portends societal and economic transformation for decades to come.

That said, the existing state of AI points vividly to call center and customer service disruption as a current epicenter of this transformation, and our solutions are strategically positioned to capitalize. Our organic and strategic investments have positioned us well to succeed here. From full automation that outperforms humans to human assist capabilities that drive contact center agent efficiencies, we now run the gamut to support enterprises as they deliver best-in-class customer support or outbound lead generation. We have an agentic-first architecture, leveraging our own state-of-the-art models alongside best-of-breed partners.

With the acquisition of Interactions, we have now added workflow optimization capabilities to our enterprise agentic solutions, stitching the fabric needed to enable companies to effectively adopt AI and deliver productivity and returns. And our deepening broad-based partnerships are a testament that our offerings are resonating. We have said before, this is the era where natural language conversations will enable humans to more seamlessly interact with technology and voice AI is the killer app. Our heritage of innovation is our right to win. We continue to see that play out in Q3.

In Pillar 1, we extended our penetration into China with a large IoT win as we capitalize on that country's lead in the global robotics race. In restaurants, another quarter of adding 1,000 locations, including most notably with a leading pizza provider and expansion beyond ordering with our Employee Assist and Voice Insight solutions provided both rapid unit and price expansion. In enterprise, our steady retention and expansion rates were supported by significant improvements in customer outcomes. In fact, relative to incumbent solutions, our early Agentic AI customers are seeing up to tenfold improvement in containment rates, 25% higher end user Net Promoter Score and 15% higher customer satisfaction. And we're achieving these results even faster with up to 35% less effort to design and deploy our Agentic AI service. And we are now consistently eclipsing 1 billion queries a month, up nearly 10x since we went public.

Before I move to the quarterly numbers, I want to talk about our pace of investment. The speed of innovation has been rapid the past several years. Now it's about accelerating the adoption curve and customers' realization of AI's massive benefits. The winners will entrench themselves where value can be derived for many years to come, and that's why we are aggressively investing to fortify and expand our moats while deepening our customer relationships. This has been taking the form of go-to-market investments as well as product capability expansion, and we expect to continue to keep the foot on the accelerator.

That said, from a financial profile perspective, we are also moving from our past where our investments were building the future and foreshadowing scale to our present where our growth and scale fully covers our costs. More specifically, as we exit 2025 and enter 2026, in part a result of executing on substantial acquisition synergies, we expect continued hyper growth to be coupled with a breakeven profitability profile. I'll share more when we discuss the outlook.

For now, let me discuss the third quarter financial results in more detail. Q3 revenue was $42 million, up 68% year-over-year. All 3 pillars grew double digits, and we saw strength in both direct sales and through channel partners. We had a big IoT win for Pillar 1 and enterprise and restaurants helped drive outperformance in Pillar 2. While there was continued pressure in the automotive business, driven by global tariffs and the broader industry softness, there are signs of improvement, especially when considering the momentum we are seeing around Pillar 3 Voice Commerce. And as we have substantially diversified our industry mix the past 2 years, any individual sector's impact on our growth is much more muted now. Across our business lines, we also expanded geographic reach and product coverage, and we continue to see strong customer diversification, where year-to-date, we don't have any customers contributing greater than 10% of our revenue.

In Q3, our GAAP and non-GAAP gross margins were both up from the prior quarter. Our GAAP gross margin was 43% and adjusted for noncash amortization of purchased intangibles and employee stock compensation, our non-GAAP gross margin was 59%. We continue to drive efficiencies in cloud spend as we deepened our acquisition integrations, and we continue to realize cost savings from shifting from third-party solutions to our own homebuilt ones.

R&D expenses were $22.8 million in Q3, up 17% year-over-year, largely due to acquisitions and related headcount and data center costs. We continue to invest in innovation to maintain our technological leadership. Our speech foundation model, Polaris, is delivering outstanding results, and we're now deploying it broadly across our customer base. We're also advancing our Agentic AI capabilities and real-time speech-to-speech models, leveraging our deep expertise in conversational architectures and machine learning to deliver industry-leading speed and accuracy.

Sales and marketing expenses were $16.4 million in Q3, reflecting a 96% year-over-year increase, primarily driven by acquisitions. As seen in our results the last few quarters, we have invested heavily in the channel, which is paying dividends. We have also continued to build up direct sales and are also driving demand and lead generation activities while speeding the journey from pipeline to close.

G&A expenses were $24.3 million in Q3, reflecting a 43% year-over-year increase, primarily driven by our acquisitions. We had roughly $5 million in onetime M&A-related costs. Aside from that, we continue to drive operational efficiencies throughout the organization and improve our control environment. We had noncash employee stock compensation of $19.7 million and depreciation and amortization, including the amortization of intangibles of $8.6 million in Q3, all of which are included in our GAAP results.

Adjusted EBITDA was a loss of $14.5 million. OI&E was $7.1 million of income for the quarter. GAAP net loss of $109.3 million and GAAP net loss per share of $0.27 were negatively impacted by the change in fair value of contingent liabilities of approximately $66 million. This relates to the acquisitions we have completed and is a nonoperating and noncash expense and primarily reflects the quarter-on-quarter increase in our stock price. As such, this item has been excluded in our non-GAAP results.

Non-GAAP net loss was $13 million and non-GAAP net loss per share was $0.03 in the quarter. This adjusts for items such as noncash depreciation and amortization, M&A transaction costs and stock-based compensation.

Our balance sheet remains strong with cash and equivalents at quarter end of $269 million and no debt.

With that, let me discuss our financial outlook. I'll complete a thought I started earlier about where we are in the longer-term trajectory of this business. Keyvan started these prepared remarks by noting our recently celebrated 20th anniversary as a company. He and our founding team started on a path of breakthrough science, tackling the challenge of hard AI, innovation that provides more seamless and natural access so humans can harness the power of technology for our collective benefit, notably through pioneering advancements in voice AI.

Breakthrough science is challenging. It takes time and requires tenacity and resilience to persist through the cycles of revolution, setbacks and further evolution. That was our company's existence for the first 15 years, and it manifested in financials that were heavy in R&D spend. The last 5 years as a company have been about commercialization, product deployment, customer traction and scale. That set the stage for the acceleration into the high-growth part of the S-curve where we are now. Within this high-growth stage, we are crossing the chasm to where we expect our inflows to exceed outflows. That transition, like all others, aren't linear or uniform, but they are progressive and ultimately compounding. That's the setup of our business as we look towards 2026.

With that broad context, for the full year 2025, we now expect revenue to be in the range of $165 million to $180 million. For Q4, we expect 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. We see additional acquisition cost synergies of roughly $20 million on an annual run rate basis to be realized more fully in 2026, which will set us up well as we align our organization with the massive tailwinds behind us.

Accordingly, our early expectations for 2026 are to continue delivering high growth commensurate with levels we have been compounding the past several years. And we expect to do so with near breakeven profitability levels because we want to reinvest when we foresee outsized returns. AI is fundamentally transformative. We have the assets and capabilities to deliver this transformation for our customers, but we will stay aggressive in our approach because we believe the potential value capture merits it, where expected returns are well in excess of the risk-adjusted cost of capital.

With that, we will now move to Q&A.

[Operator Instructions] Our first question comes from the line of Gil Luria from D.A. Davidson.

First, I wanted to ask about the 8-figure Chinese robotics deal. Is it too much for us to think of this as maybe a humanoid robotics? It seems like that may be a good application for low latency voice to meaning and therefore, a very interesting new development. And then the other part of that question is the double-digit millions over what time frame?

Yes. It is a robotic company. This particular product is not a human robot, but the deal does pave the way to experiences that you are imagining. This one is more of a device that can carry and like a wearable, but not actually a wearable, but in that category and in the double-digit million in the next 2 to 3 years.

Got it. Hope to be invited to the demo of the humanoid.

Yes, sorry to add that, it's actually a commitment number from them. It's not our -- just our estimates.

Got it. And then the second one on the Interactions acquisition. Where do you specifically -- which verticals do you think they will specifically have an impact? And then what do you expect the financial impact to be for the balance of the year and into next year?

Yes. Gil, so the first part, there is nice adjacencies and sort of going deeper with our enterprise vertical. So they have strength across some of their customers overlap in our automotive and our tech services. They have a really deep retail footprint and several of the verticals that we're in. And the application of the technology, particularly around the workflow orchestration or they have sort of intent analyst that really complement some of the more complicated enterprise use cases. So you could think also financial services and health care. So there's really nice complement to the existing portfolio.

In terms of contribution, I mean, this is, I think, sort of a pattern of our M&A that similar to what we've seen where we had brought companies that have amazing customer -- long-term contracts, customer relationships trust and -- but frankly, in some cases, legacy technology that we're able to partner and bring our own innovation on top of and recalibrate the growth curve. So this is one that we're pretty excited about how we can regrow them together. And so they're all contemplated in our outlook. I think you'll notice a little nudge up in our expectations, particularly with respect to next year. So it's an important acquisition. I think it's one that we're excited about what we're going to do. And most importantly, to your first part, just really excited the complement that it brings both on a tech product platform as well as sort of industry overlaps.

Our next question comes from the line of James Fish from Piper Sandler.

This is Caden on for Fish. I was just wondering, could you provide a percentage what you're seeing come from term license versus SaaS within Amelia at this point? And then anything to call out for onetime revenue this quarter?

Sure, I can give you more of the general trending, and we know it continued to grow our recurring footprint with Amelia. And we have noted in prior quarters that there were sort of a greater onetime type license deals. We talked about that last time, much smaller footprint this quarter. So I think with respect to Amelia, it continues to be more heavily penetrated towards the recurring. But I think most importantly, as we look at the shift to agentic and just really what the technology is able to do now integrating LLMs with our deterministic flows is the footprint is you embed, you get a recurring basis, but it's more outcome-based contracts and pricing.

So as we can continue to deliver outcomes, for example, at hospitality, we can book more reservations or in maybe a health care setting, book more appointments, like the economic model is one that is advantageous that we can scale. So it will be recurring plus outcome-based generative or incremental revenue. That's sort of the model also with respect to why we comment on restaurants and high order completion rates. Some of our pricing is just fixed per location amounts. And then more and more customers are seeing that there's real sharing of economic upside if we can say it's more based on real returns to the customer and the pricing will follow.

Our next question comes from the line of Mike Latimore from Northland Capital Markets.

This is Vijay Devar for Mike Latimore. Could you tell me how many customers have committed to upgrading to Amelia 7 right now? I think the number was around 15 last quarter.

Yes. We're continuing to grow it. The 15 was sort of a selected first set of customers, and that has progressed really, really well. That was an initial cohort and they were sort of our early adopter group. That group -- that number just continues to grow. We're migrating with others. We've expanded that set quite significantly. We're in active conversations with a number of them. Ultimately, our target here is that about 75% of our customers, we expect to be moving on to Amelia 7 probably by mid next year. So we're sort of thinking of the trajectory of moving towards that.

And ultimately, all of our new customers are going to get into that -- are going to be migrated on to Amelia 7. So we're trying to make sure there's a fair migration path for all our customers. Obviously, every customer is different, and we need to be thoughtful about their journeys and be very sensitive to their own end customers. Ultimately, we're trying to orchestrate across all other platforms, so we make sure that there's interoperability with other agentic platforms, and we're really thoughtful about just onboarding and pace. So continuing to see great momentum, lots of exciting conversations. And most importantly, I mentioned in my prepared remarks, just the outcomes or the feedback we're getting, whether it's in Net Promoter Score, customer satisfaction or even just the containment rate improvements, like they're real positive outcomes early days, so we're trying to be aggressive in how we migrate.

That's pretty interesting. Second one, what percent of your revenue is recurring presently?

The vast majority of our revenue is recurring, and there's just different -- well, I guess I'll group it. We talk about recurring and reoccurring. Like I've mentioned, I think, a couple of times around our automotive business where we have license recognition as cars are shipped, we get recognition for the voice capabilities, and we get a royalty on that. So maybe I'll count that reoccurring as long as these mega OEMs keep shipping cars under the contract duration, we get revenue.

Then we have and to the prior question from Caden around Amelia, it's recurring largely. They're SaaS. Oftentimes, they're fixed price up to certain levels of interactions. And then if the customer activity grows above an interaction level, then we'll -- it gets priced to the next level up. And then we do, from time to time, have certain recognition. When we deploy an edge solution where our obligation to the customer is to pass over that license, then there is immediate revenue recognition. So the vast majority is recurring SaaS-like and -- but there's a diversification in the product suite. And as I mentioned in the other question you asked, more and more, we're finding the trends towards outcome-based. And again, the reason is the AI solutions work. They can deliver more value. They can align to the economic interest of the customer. And so it makes sense for us to price accordingly.

Our next question comes from the line of Scott Buck from H.C. Wainwright & Company.

So you listed off kind of 8 or 9 industry verticals in the release and talked through them. I'm curious, do you feel like you're -- you have enough capacity across each of those to continue to grow them? Or if not, how are you kind of prioritizing where your attention goes near term?

Sure. I can start and Keyvan can add. I mean, I guess to think about it, I get this question to be open, and we get this question a lot like are you doing too much or -- and I kind of not trying to be flippant, but like if you start hearing us talk about investing in nuclear energy, maybe that's the fair place to say we're extending a little too far. We're a horizontal platform. We start with the premise of like the pioneering vision was in voice AI. We believe that's the major shift that we are going to enable humans to interact with technology predominantly through natural conversations and voice, the way we're talking right now. And we'll be able to get many, many things done.

And so we think, first and foremost, in terms of the ultimate vision, we are -- that can pervade across many, many industries. And again, we got traction in automotive restaurants moving into health care, financial services and setting appointments, booking reservations, doing money transfers, all of that just on the horizontal platform. So when we're deploying our technology, and we've mentioned it previously, whether it's Polaris or some of the other capabilities, we're best of breed. We're market-leading even against unlimited resource competitors, where we outperform on our speech recognition technology on how we bring real-time speech to speech for understanding and conversation.

So that -- I think when you think of us as a platform provider, that's sort of like the premise. Again, I'd say that's where our focus is. If we -- that's where we determine as long as we're playing in the game of conversational and voice AI, that's the right focus. Now it is fair, yes, there are different applications, especially when you go into workflow integrations that different ecosystems have different appointment reservation systems or order taking or point-of-sale systems in the restaurant. And there are in many of these industries, fragmentation. So we do have to be thoughtful about how deep we can go and who we partner with.

So we've talked in the past about our partnering strategy in restaurants, for example, where some of the drive-thru opportunity requires hardware partnerships, and we're excited that we work with the likes of Samsung and HME and PAR and others. So we think that's a great complement. We can go to market together. With respect to the integration with the menu structures, we're excited that we partner with the likes of Square, Toast, Olo, Oracle MICROS Simphony and on and on. And so that's an example of where we kind of go, here's where our software extends and here's where we want to use partners to go deeper. And that same application and some of the announcements we made today with some of the channel partners going deeper into health care, that's how we calibrate.

So I think there's a lot of room. I take the premise got to your point of like, hey, we're hustling relative to the -- certainly the big tech, smaller scale company, we have to be very judicious with our limited resources. I actually think that's a strength of ours because it does force prioritization and it forces us to focus on where our main strengths are, but that's definitely something we're constantly calibrating around.

Great. I appreciate the added color there. Second, I'm just curious on the Voice Commerce launch in '26 laid out in the release. Is that something that you're sharing marketing responsibilities for? Does that fall on the OEMs? I guess what does that rollout look like?

Well, we talked about Voice Commerce for a number of years. We showcased it at CES of January of this year in 2025, end-to-end, and it was very well received. Immediately after that, we had multiple OEMs that started running pilots and POCs and several brands, merchant brands like national and global brands that were participating. And those are all going really well. It's moving forward. We're getting more traction, but there are some that are actually eager to go live. Some want to be the first to go live. So we feel very confident that it's going to happen. Not everything is in our control because the OEM has to do something, but a lot of the work is being done by us actually, the whole integration of the voice AI and the merchant experience is done by us. We have done an end-to-end. We are able to drive a car, talk to the car, place an order, go pick it up from the store. All of that is done. We'll have more to show at CES and hopefully, more to share about the timing of an actual go-live in production around that time.

Our final question comes from the line of Leo Carpio from Joseph Gunnar.

A couple of quick questions. First, on the competitive environment. Can you give us an update on the competitive environment? Are you still facing off against the vendors that we've talked about in the past? And how have the large LLMs compete in the space, I mean, that they started to encroach? But ultimately, how deep is your competitive moat? And then turning secondly on to the contracts that you've won, have you been seeing any pricing pressure at all? Or it's pretty much you're getting the pricing that you asked for at this stage of the adoption curve?

Yes. So I'll talk about the competition. First of all, the space is extremely attractive, and you hear more names, and that's more of a validation. And we've had competitors in our whole life of 20 years and we had bigger competitors in the past. The particular space you're going after, enterprise AI, customer service, we feel we are the leader because of the 20 years of innovation. We have our own technology. Most of the new players don't have their own technology. So they're using APIs and models from third party, and they have to kind of stick it together and make it work. And a lot of these models make really good POCs and good demos.

But when you go to production, they have issues, but we are able to actually go from demo to deployment in production faster with a higher quality. And that's thanks to our 20 years of experience, having our own models, lower cost, higher accuracy, better latency, more integrations that we've accumulated over the years and some through the acquisition. So we feel very confident about the space.

And some of the names that you may hear in the market could end up being our customers because they need models from companies like SoundHound. And as they go through their choices, they will learn that models like Polaris outperform the competition, right? 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 at a lower cost.

And I think your second question was around pricing. I'm going to make the general point, and Keyvan can certainly add color. I think in a lot of these sort of eras where we're shifting from old tech to new tech, people are really sort of -- there's pressure on if you provide legacy technology to drop prices, and it becomes a little bit of a price battle. And so the key is we're demonstrating our innovation is where you can showcase price value and alignment, and that's where you can protect on pricing. And we've shown that and said that, I think, in prepared remarks today and previously, around where we are seeing pricing expansion. A lot of that is because we're bringing innovation.

We're layering on top generative AI intersection, the first company to bring generative AI into the vehicle, Stellantis early last year. We're seeing that with the generative capabilities. Like you need to be competitive in an ecosystem, as Keyvan noted, that's increasingly competitive. But the use case opportunities and expansions are so tremendous. So if you're a hospitality and you believe through a nice conversational engine that delights the customer, you can actually upsell a reservation or provide more services, then you're willing to pay more.

And that's a little bit the transition we're in. So I don't want to disparage in certain parts, certainly because we're across industry, there's different stories for different sectors and different solutions. And there's macroeconomic dynamics that play into it. But I'd just say largely, there's a transition of pricing architectures. I think ultimately, for those who can provide real innovation and product quality, there's ultimate ASP expansion available. And so that -- there's a little bit of both sides of that equation from a pricing dynamic that we're navigating through right now.

Thank you. This concludes the question-and-answer session. Thank you for your participation in today's conference. This does conclude the program, and you may now disconnect.