SoundHound AI, Inc. (NASDAQ: SOUN)

SoundHound AI’s Q2 2025 results marked a pivotal quarter in the company’s growth trajectory, with revenue reaching a record $42.7 million, representing an exceptional 217% year-over-year increase. This dramatic growth was primarily driven by the successful integration and scaling of the company’s 2024 acquisitions, particularly SYNQ3 and Amelia, which have proven to be highly accretive to the business.

The company’s gross margin performance showed the impact of its growth investments and acquisition integration. GAAP gross margin decreased to 39.0% from 63.0% in the prior year, primarily due to amortization of acquired intangibles and increased stock-based compensation. However, on a non-GAAP basis, gross margin was a more respectable 58.4%, though down from 66.5% in Q2 2024, reflecting the integration costs and scaling investments required for the rapid business expansion.

Operating metrics showed the company’s commitment to growth over near-term profitability. GAAP net loss increased to $74.7 million from $37.3 million in the prior year, significantly impacted by a $31 million non-cash charge related to the fair value adjustment of contingent acquisition liabilities tied to the company’s rising stock price. When excluding these non-operating items, non-GAAP net loss improved to $11.9 million, a 20% improvement from the $14.9 million loss in Q2 2024.

Adjusted EBITDA showed relative stability at a loss of $14.3 million compared to a loss of $13.8 million in the prior year. This performance is particularly noteworthy given the massive revenue scale increase, suggesting improving operational leverage as the company scales. The company’s focus on driving long-term profitable growth is evident in its strategic investments in product development and market expansion.

The financial performance reflects SoundHound’s successful execution of its growth strategy, with the company demonstrating its ability to scale revenue dramatically while managing the integration complexities of its strategic acquisitions. The raised full-year guidance indicates management’s confidence in the sustainability of this growth trajectory.

SoundHound AI delivered breakthrough performance across all major business verticals, demonstrating the broad applicability and market demand for its voice AI solutions:

Agentic AI & Enterprise

The unveiling of Amelia 7 marked a significant milestone, with 15 large enterprise customers already migrating to this complete AI agent platform. The integration of Polaris, SoundHound’s category-leading speech foundation model, has created a powerful platform that combines conversational AI with enterprise-grade functionality. This segment benefited significantly from cross-selling opportunities, with existing restaurant customers expanding into enterprise customer service applications.

Automotive

The automotive segment achieved several strategic wins, including a significant new contract in China for voice assistant integration across a major OEM with global vehicle distribution. The company continued its expansion with KIA in the Indian market while seeing increased momentum from India-based OEMs. The rollout of SoundHound’s LLM-enhanced Chat AI product across three major brands in North America demonstrates the company’s ability to scale innovative solutions across established partnerships.

Restaurants

The restaurant vertical delivered a breakthrough quarter with numerous wins, renewals, and expansions. Notable achievements included new customer wins with Red Lobster, Peter Piper Pizza, and Applebee’s|IHOP, successful renewal with MOD Pizza, and significant expansions with established clients including Chipotle, Firehouse Subs, Habit Burger, McAllister’s Deli, Beef O’Brady’s, and Casey’s. The successful cross-selling of Smart Answering to Red Robin highlighted the company’s ability to expand wallet share with existing customers.

Healthcare

Healthcare expansion continued with new customer additions including Primary Health Solutions and partnerships with some of the world’s largest healthcare companies. The deployment with healthcare system Allina Health demonstrates the scalability of SoundHound’s solutions in complex healthcare environments.

Financial Services

With 7 of the top 10 global financial institutions as customers, SoundHound demonstrated strong customer retention and expansion, with 4 institutions either renewing or expanding their engagements. The company expanded into new business lines, penetrated dozens of business units, and doubled automated conversation volume year-over-year. Expansion into regional banks and credit unions, including a recent partnership with a leading multi-state credit union, shows the broadening market appeal.

Retail

The retail segment showed strong momentum with signings of two multi-hundred unit personal care companies and a home services company with over 500 locations for Smart Answering deployment. Continued attraction of fitness chains and expansion into existing brands demonstrated the sticky nature of SoundHound’s solutions.

SoundHound AI significantly strengthened its go-to-market capabilities through strategic partnerships that expand the company’s reach and accelerate adoption:

• EXL Partnership Expansion: Enhanced relationship to deliver Agentic and voice AI integrations across various verticals, leveraging EXL’s extensive client base and implementation expertise
• Par Technologies Alliance: Strategic partnership to extend SoundHound’s reach across Par’s extensive portfolio of restaurant chains and franchisees globally, providing access to a vast network of potential customers
• Acrelec Collaboration: Partnership with the global QSR technology leader to accelerate AI adoption in restaurants globally, combining Acrelec’s hardware expertise with SoundHound’s AI capabilities
• AVANT Communications: New sales partnership to accelerate adoption of SoundHound AI agents across enterprise markets, expanding the company’s sales reach
• CRM Partner Success: Doubled interaction volume with a long-standing partner specializing in CRM, AI, and workforce engagement management, demonstrating the value of deep partnerships

These partnerships represent a critical component of SoundHound’s scaling strategy, allowing the company to reach customers more efficiently while leveraging partners’ domain expertise and existing relationships. The doubling of interactions with existing partners demonstrates the success of this approach and the growing demand for voice AI solutions across various industries.

SoundHound AI’s technological leadership continued to advance during Q2 2025, with several key innovations and platform enhancements:

Amelia 7 Platform

The launch of Amelia 7 represents a significant technological milestone, integrating SoundHound’s Polaris speech foundation model to create a comprehensive AI agent platform. This platform combines advanced natural language processing, speech recognition, and conversational AI capabilities to deliver enterprise-grade solutions that can handle complex customer interactions autonomously.

Polaris Speech Foundation Model

Polaris has been recognized as a category-leading speech foundation model, providing the core technology that powers SoundHound’s voice AI solutions. The integration of Polaris across the company’s product portfolio ensures consistent, high-quality performance while enabling rapid deployment of new capabilities and languages.

Voice Commerce Innovation

The company advanced multiple voice commerce pilots with large automotive brands in both Europe and the USA, demonstrating the practical application of voice AI in commerce scenarios. These pilots include partnerships with prominent national and global merchants for ordering food, coffee, parking, and other services directly through voice interfaces.

Multi-Language Capabilities

The significant new win in China includes the development of multiple new languages, showcasing SoundHound’s ability to adapt its technology for diverse global markets and language requirements. This capability is crucial for the company’s international expansion strategy.

SoundHound’s continued investment in R&D and technological advancement positions the company to maintain its competitive edge in the rapidly evolving voice AI market. The company’s proprietary technology stack provides a defensible moat while enabling rapid customization for diverse industry applications.

SoundHound AI maintains a robust financial position that provides significant flexibility for continued growth investments and strategic initiatives:

• Strong Cash Position: $230 million in cash and cash equivalents as of June 30, 2025, with no debt, providing substantial runway for growth investments and operational flexibility
• Operating Cash Flow: Net cash used in operating activities of $43.7 million for the six months ended June 30, 2025, compared to $40.4 million in the prior year, reflecting controlled cash burn despite significant revenue growth
• Financing Activities: Net cash provided by financing activities of $76.6 million during the first half of 2025, demonstrating continued investor confidence and access to capital markets
• Capital Efficiency: Minimal capital expenditure requirements due to the software-based nature of the business, allowing cash generation to flow primarily to growth investments and operations

The company’s cash management strategy reflects a balanced approach between growth investments and financial prudence. The substantial cash position, combined with the absence of debt, provides SoundHound with the financial flexibility to pursue strategic opportunities, weather market volatility, and continue investing in technology development and market expansion.

Management’s disciplined approach to cash deployment is evident in the controlled increase in operating cash usage despite the dramatic revenue growth, suggesting improving operational leverage as the business scales. This financial foundation supports the company’s ambitious growth targets while maintaining financial stability.

SoundHound AI demonstrated strong confidence in its growth trajectory by raising its full-year 2025 revenue guidance:

• Full-year 2025 revenue expected to be in the range of $160-178 million, representing a significant increase from previous guidance
• The raised guidance reflects strong momentum across all business segments and successful integration of acquired companies
• Revenue guidance implies continued triple-digit growth rates for the remainder of 2025
• Management expressed confidence in the company’s “repeatable success formula” and ability to execute on strategic initiatives

The guidance increase reflects several positive factors: accelerating customer adoption across all verticals, successful cross-selling initiatives, strong pipeline development, and the positive impact of strategic partnerships. The company’s diverse revenue streams across automotive, enterprise, restaurants, healthcare, financial services, and retail provide multiple growth vectors and reduce dependence on any single market segment.

Management’s outlook is supported by concrete business developments, including the 15 large enterprise customers migrating to Amelia 7, expanded partnerships, significant contract wins across verticals, and a robust pipeline of voice commerce pilots. The company’s technology leadership and expanding partner ecosystem position it well to capitalize on the growing demand for voice AI solutions across industries.