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…

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…

[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…

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.