Release Date: August 08, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- SoundHound AI Inc (SOUN, Financial) reported a 54% increase in Q2 revenue year-over-year, marking strong growth.
- The acquisition of conversational AI leader Amelia is expected to significantly expand SoundHound AI Inc (SOUN)'s penetration in conversational AI across new verticals.
- SoundHound AI Inc (SOUN) has seen a steep increase in engagement with its technology, with an annual run rate of queries now over 5 billion.
- The company's Polaris model beats numerous benchmarks against state-of-the-art models, resulting in higher accuracy and better user experience.
- SoundHound AI Inc (SOUN) has successfully integrated its technology into multiple automotive brands, including Stellantis, and expanded into new markets like Latin America.
Negative Points
- Gross margins decreased to 63% in Q2, impacted by the acquisition of lower-margin call center agent business.
- Operating loss for Q2 was $22 million, including non-cash acquisition impacts related to fair value accounting.
- The integration of Amelia is expected to require significant effort and time to fully align across the enterprise.
- SoundHound AI Inc (SOUN) faces challenges in managing the increased demand and ensuring timely implementation for new customers.
- The company reported a net loss of $37.3 million in the quarter, leading to a GAAP net loss per share of $0.11.
Q & A Highlights
Q: How does the acquisition of Amelia change SoundHound's strategy and focus on verticals and pillars?
A: Keyvan Mohajer, CEO, explained that the acquisition strengthens their strategy, particularly in pillar two, by expanding beyond restaurants into other industries like retail, insurance, and hospitality. Amelia's existing customer base and integrations will accelerate SoundHound's vision and scale in AI customer service.
Q: What impact will the Amelia acquisition have on SoundHound's financials and timeline for profitability?
A: Nitesh Sharan, CFO, noted that the acquisition is expected to be accretive to earnings in the second half of 2025. SoundHound aims to maintain strong growth and software margins, with a focus on investing in growth opportunities. The acquisition will help accelerate their path to profitability.
Q: How have customer conversations and demand changed over the past year?
A: Keyvan Mohajer highlighted that in pillar one, customers are now willing to pay more for generative AI features. In pillar two, there is a significant increase in inbound demand from brands seeking AI customer service solutions, indicating a shift from SoundHound reaching out to customers to customers approaching them.
Q: What caused the acceleration in query volume growth from 60% to 90% year over year?
A: Keyvan Mohajer attributed the growth to automotive partners upgrading to SoundHound Chat AI, which increased consumer interaction with the assistant. Additionally, scaling in pillar two with more customer service clients contributed to the growth.
Q: Does SoundHound have all the necessary tools to complete its three-pillar strategy successfully?
A: Keyvan Mohajer confirmed that SoundHound has the tools needed and is now focused on scaling. The acquisition of Amelia significantly increases their scale in pillar two, expanding into new verticals and enhancing their ability to integrate pillar two customers into pillar one products.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
