SoundHound AI (SOUN) Q4 2025 Earnings Transcript

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DATE

Thursday, February 26, 2026 at 5 p.m. ET

CALL PARTICIPANTS

• Chief Executive Officer — Keyvan Mohajer
• Chief Financial Officer — Nitesh Sharan
• Head of Investor Relations — Scott Smith

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TAKEAWAYS

• Revenue -- $55,100,000 for the quarter, representing 59% growth year over year and $169,000,000 for the year, up 99%.
• Deal Activity -- Over 100 customer deals signed during the quarter, spanning automotive, telecommunications, apparel, financial services, health care, retail, hospitality, and government verticals.
• Automotive Penetration -- New contracts signed with Japanese, Korean, Italian, Chinese, and Vietnamese OEMs, along with the sector's expansion to include two-wheeler and commercial truck manufacturers, with one seven-digit unit commitment in Japan specifically highlighted.
• Gross Margin -- GAAP gross margin reached 48% and non-GAAP gross margin was 61%, both increasing year over year as a result of infrastructure optimization and portfolio pruning.
• Monthly Active Users—Automotive -- More than 50% year-over-year growth in Q4; cloud-based audio queries up approximately 75% year over year, reflecting deepening user engagement.
• Restaurant Order Volume -- Over 9,000,000 calls handled in Q4, with order activity growing at strong double-digit rates year over year across the sector.
• Customer Diversification -- No individual customer contributed more than 10% of revenue in either the quarter or full year, underscoring a balanced client portfolio.
• R&D Expenses -- Totaled $24,800,000 in Q4, up 22% year over year, driven mainly by acquisitions and related staffing.
• Sales and Marketing Expenses -- $17,400,000 in Q4, an 82% increase year over year, attributed primarily to acquisition-related activity.
• G&A Expenses -- $21,200,000 in Q4, marking a 29% rise year over year, with increases tied to legal and advisory costs from acquisitions.
• Adjusted EBITDA -- Loss of $7,400,000, a 56% year-over-year improvement, showing enhanced operating leverage.
• GAAP Net Income -- $40,100,000 and GAAP EPS of $0.10, driven by an $85,000,000 gain in contingent liability fair value adjustments, tied to stock price volatility and not reflecting operational performance.
• Non-GAAP Net Loss -- $7,300,000 with non-GAAP net loss per share of $0.02, excluding the above non-cash adjustments.
• Cash Balance -- $248,000,000 in cash and equivalents, with zero debt at quarter-end.
• Annual Revenue Guidance -- Management projects 2026 revenue in the range of $225,000,000 to $260,000,000, with seasonality expected but improving as the subscription mix grows.
• Operational Updates -- Management highlighted containment rates exceeding 90% on specific enterprise AI deployments and reported “All this comes together in our comprehensive query volume, which now is in billions per month, up 12x since we went public.
• Migration to Agentic AI Platform -- Over 75% of Amelia customers targeted to migrate to Version 7.3 by midyear, enabling incremental revenue through higher containment and upsell potential.
• Pricing & Upsell -- CEO Keyvan Mohajer said, “So it is basically renewal with a price increase and sometimes with a bigger volume commitment,” describing renewals as direct upsell events, especially with migration to the agentic platform.
• M&A Impact on Guidance -- CFO Nitesh Sharan said, “no. Our guidance does not contemplate M&A that we have not done,” clarifying the outlook excludes unannounced acquisitions.
• Long-Term Profitability Targets -- Management expressed expectation to achieve “70% plus gross margins and 30% plus EBIT margins” at scale, with near-term focus on progressive movement toward breakeven.

SUMMARY

Management cited sharp expansion in both revenue and deal activity across diversified industries, coupled with rapid advances in enterprise AI adoption, particularly within regulated verticals such as health care and financial services. Executives connected revenue growth with upselling and renewal cycles, especially as legacy customers migrate to the agentic platform for higher containment and operational automation. Deal wins in automotive, telecommunications, and consumer sectors reinforced the company’s strategy of diversified global reach and minimized customer concentration risk.

• Management attributed customer engagement efficiency gains to AI-driven delivery, noting “demand is going up, and what we need to do to deliver to these customers, the resources requirement is actually going down.”
• The CFO referenced recent completion of most annualized acquisition cost synergies of $20,000,000, the effects of which are expected to show in future quarters.
• Executives described their outcome-focused pricing model—aligned to customer value—as a sustainable competitive moat, diverging from traditional seat-based software pricing models.
• The company emphasized its neutral approach to model selection, claiming “customers will have access to the latest and greatest technologies as fast as they become available,” regardless of provider.
• Leadership stated the 2026 guidance is underpinned solely by the “Our outlook reflects the base of business, the pipeline of deals we have in motion, the existing customer activity that is recurring, and we are upselling and expanding. That is what is reflected in the outlook range,” and excludes future, as-yet-unclosed M&A opportunities.
• Executives asserted a disciplined M&A methodology and continued focus on technology integration, customer relationships, and operating leverage, consistent with previously stated strategic pillars.

INDUSTRY GLOSSARY

• Agentic AI: AI systems capable of autonomous, goal-directed actions integrating multiple tasks and decision processes in complex environments.
• Containment Rate: The percentage of inbound interactions resolved by AI platforms without transferring to a human agent, used as a key operational success metric in enterprise AI deployments.
• Polaris: SoundHound AI, Inc.’s proprietary speech recognition foundation model referenced as a differentiator in the product suite.
• Voice Commerce: The use of voice-enabled AI interfaces to facilitate transactions, bookings, or purchases directly through interactive devices or platforms.

Full Conference Call Transcript

Scott Smith: 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 would 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. I will now turn the call over to our CEO, Keyvan Mohajer. Please go ahead, Keyvan.

Keyvan Mohajer: Thank you, Scott, and thank you to everyone for joining the call today. 2025 was a record year for SoundHound AI, Inc., 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 signed over 100 customer deals. We broke another record in Q4, 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 seven-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, ecommerce merchants, retail, military, and many more. Our execution with channel partners was also exceptional, with multiple seven-figure deals in 2025. I will 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 AI, Inc. In this inevitable AI transformation, companies need a partner like SoundHound AI, Inc. 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 advantage 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 AI, Inc. very well positioned with decades of deep tech innovation and data accumulation.

SoundHound AI, Inc. 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 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 AI, Inc., 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 AI, Inc.’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 AI, Inc. 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 have long since overcome. With those considerations in mind, we believe SoundHound AI, Inc. 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 called our tech 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 two-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 AI, Inc. 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 the 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-through 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 non-food 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., 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 two 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 company with over 80 health care facilities.

In insurance, a Fortune 100 multinational insurance 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 16,000,000 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 mentioned previously, we signed a European telecommunications company that provides cable television, broadband Internet, and telephony, and a large British broadcast and telecommunications company.

I mentioned some of the success we have had with large seven-figure deals in 2025 with our channel partners. And in Q4, we continued to build out our ecosystem with the following partners. One of the largest telecommunications companies in the world: we are adding SoundHound AI, Inc. agentic AI call center automation to SMBs in their large business marketplace. In addition, we partnered with Bridgepoint, 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 agents built on SoundHound AI, Inc.’s platform now handle more than a third of all patient appointment scheduling, helping to unclog the system so patients get 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 a 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 will now turn the call over to Nitesh to talk about our financial performance, key growth drivers, and business outlook.

Nitesh Sharan: Thank you, Keyvan, and good afternoon, everyone. Q4 was our strongest quarter, with $55,100,000 in revenue, up 59%, and improvements across all profit measures. For the full year, we delivered $169,000,000 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, hyper-responsiveness to customers, and by scaling across our broadening enterprise portfolio. And we operationalized 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 is a sustainable model. It is a differentiated moat with our entrenchment deepening.

Let me share some examples across our business. We have been growing the automotive install 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 do not 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 is even more directly impacting our revenue and our customers' business is order activity, which in Q4 saw across 9,000,000 calls for the first time, up strong double digits from the prior year. That is 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, 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 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 $55,100,000, 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 purchased 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 home-built 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 do not 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 $24,800,000 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 continued building our agentic AI solutions, leveraging our vast data to further improve our Polaris foundation model, are expanding our in-house real-time audio-to-audio and embedded vertical API integration 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 architecture for differentiated speed, accuracy, prosody, and with code-switching multilingual capability for an increasingly diverse and integrated world. Sales and marketing expenses were $17,400,000 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 $21,200,000 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 our global control environment. We had noncash employee stock compensation of $20,800,000 and depreciation and amortization, all of which are included in our GAAP results, including the amortization of intangibles of $10,000,000 in Q4. Adjusted EBITDA was a loss of $7,400,000, an improvement of 56% year over year. GAAP net income of $40,100,000 and GAAP net earnings per share of $0.10 were positively impacted by the change in fair value of contingent liabilities of approximately $85,000,000. 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 $7,300,000, and non-GAAP net loss per share was $0.02 in the quarter. Our balance sheet remains strong with cash and equivalents at quarter end of $248,000,000, 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 $225,000,000 to $260,000,000.

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 in 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 $20,000,000 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 will not 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: Thank you. At this time, we will have the question-and-answer session. Please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Your first question comes from the line of Scott Buck with Sidoti and Company. Your line is now open.

Scott Buck: Yes. Good afternoon, guys. Thanks for taking my questions. Yeah. As we went through the Q4 highlights, clearly, a lot of balls in the air. I am curious how you are handling from a deployment and customer service capacity standpoint? Are you starting to feel a little constrained?

Keyvan Mohajer: Thanks for the question. We are definitely doing a lot, and I have 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 are the same. So the decades of work we have 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 providing customer service for a health care company or insurance company. And because of the advances in AI, we are actually able to deploy faster, go live faster, and develop faster.

And we are able to keep up with the demands 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. We expect that to be a further tailwind for us.

Scott Buck: Great. That is 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 are seeing as you go through the renewal process with customers?

Keyvan Mohajer: Yeah. So we have customers that we have had for a while. For example, some of the automotive logos that we have had for a number of years. These renewals are actually an upsell moment because we bring them the agentic solution. The GenAI solution that we developed three years ago, that was an upsell moment. Now we have the agentic solution. That is another upsell moment. So it is basically 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 have had for a number of years. The agentic platform is an upgrade. Partly, it could come at a higher price.

And for deals that are based on containment rates, we expect to generate more revenue because we contain more of the incoming calls. For example, I am going to use some numbers, but in the industry, there is no one number for containment rate because it depends on the use case. We have seen, for example, in a 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, even without increasing the price, it is going to generate more revenue for us.

Scott Buck: Great. That is very helpful. That is all I had, guys. I appreciate it, and congrats on the quarter.

Keyvan Mohajer: Thank you. Thanks, Scott.

Operator: Thank you. Your next question comes from the line of Brian Schwartz with Oppenheimer. Your line is now open.

Brian Schwartz: Yeah. Hi. Thanks for taking my questions this afternoon. Congratulations on a very good year. Keyvan, I wanted to start with you. Your enterprise AI business clearly has strong momentum, especially in the higher regulated industries that you pointed out. You are building deeper entrenchment. But in the market, certainly over the last, like, three, four, five months, there has 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 is going to be much more challenging for companies to grow.

So I am 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.

Keyvan Mohajer: Sure. That is a great question. So I think there are two flavors of that question. One is what is happening to software and services companies—so not necessarily SoundHound AI, Inc. And that has been a tailwind for us for the past three-plus years because of GenAI. So the concept of that is there is automation 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 is not a new thing. We have been benefiting from that for three years, and these companies that want to automate basically come to SoundHound AI, Inc. to help them automate.

There is maybe a second flavor of that question which is what happens to companies like SoundHound AI, Inc.? 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 services to their visitors. And then from dial-up modem we got broadband Internet. So bandwidth went up orders of magnitude. That was a great thing for Internet companies.

Now some did not maybe reinvent themselves quickly, but the services that these Internet companies could provide became a lot more rich and powerful. And we feel the same way—that we can move faster, like the earlier question that was asked: 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. We are utilizing these advances in AI.

Brian Schwartz: Thank you. I just wanted to ask you that question, Keyvan, because you are 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 are 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 are gaining efficiency in your development, as Keyvan talked about, with your own agentic 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 margin stable where they are today? Are you looking to show improvement in terms of EBITDA margin?

Nitesh Sharan: Thank you. I will take that from a couple of different angles. First, with respect to continuing that AI efficiency play, I think there are a multitude of ways that plays out here. Number one, our efficiency in development is better. Certainly, we are seeing that. I think our efficiency in delivery is better. We are seeing that. And then even just operationally, we are all, across the company, utilizing tools that may not be core to what SoundHound AI, Inc. develops.

But certainly in my G&A function, there are definitely a number of areas where we are driving efficiencies, and I think that is a responsibility that all of us take, to leverage the latest and greatest to be responsible with our cost. Number two, your question on just the profile. I will go back to my prepared remarks a little bit. We are now shifting from an era, I would say, from the origins of SoundHound AI, Inc., where we were heavily investing primarily in our innovation, but maybe more recently in building up the go-to-market capabilities, to now this era of breakeven. And we are not trying to be super precise on one quarter delivering one specific number.

But more importantly, we start with the premise that we are in the very early innings of a massive transformational shift, whether that is the LLM-driven capabilities that we are seeing with these amazing engines, to the Voice AI era of how we are 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 ways that people get their billing inquiries resolved or they book travel, or they order food, or get health care appointments.

All that is getting rewritten, and we are 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 are going to keep fueling and getting the hypergrowth that we have been delivering over the last couple of years. And it is our view that level of very strong growth should continue for the foreseeable future. So with that, every incremental dollar should go into fueling growth, but we need to be mindful that we are going to do it efficiently. To your point, as we continue to scale, we absolutely expect efficiencies on our operating leverage.

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

Brian Schwartz: Thank you for taking my questions.

Nitesh Sharan: Thank you, Brian.

Operator: Thank you. Your next question comes from the line of Gil Luria with D.A. Davidson. Your line is now open.

Unknown Analyst: Great. This is Lucky on for Gil Luria. Thanks for taking the questions. You know, 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 particular prominence and success in that vertical this quarter?

Keyvan Mohajer: Yeah. 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, and then we had more deals in India. Then we are very proud that we have won a prominent logo in Japan. And I think it is because of the great solutions we have created. We have 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 three vision is paying off.

We predicted a flywheel effect from pillar three, and to summarize it quickly: we power cars and TVs and devices in pillar one, and then we power customer service for merchants in pillar two, and then we connect them in pillar three together. So while you are driving, you can order coffee. You can book appointments. You can reserve tables. And that is the monetizable moment. We call it 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 the 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 are also noticing that we are seeing this growth in the fastest-growing markets too. So oftentimes in the fastest-growing markets, it is where they want the best-of-breed technology, and I think that is what is playing out here as well.

Nitesh Sharan: I think that makes a lot of sense.

Unknown Analyst: 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 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?

Keyvan Mohajer: Yeah. Maybe I will 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 the latest version of our platform uses AI to create AI. So a lot of the experiences that used to take us maybe a 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 fast, deliver better quality, have a higher containment rate, win more customers.

So that is one area of focus for us, and that is going to be everywhere. It is going to be in automotive. It is going to be in customer service, pillar one, pillar two, pillar three. The next area that I would highlight is voice commerce. It is a vision that we pioneered. We are ahead of others in the space. It is a great idea, but it will take time for people to catch up because we have the largest number of merchants that are using our Voice AI. We have 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.

Nitesh Sharan: And I can add on the M&A part of your question. I think a couple of years in, I will just say, I think the M&A approach we are taking seems right to us. I think we will keep being mindful about what is in the marketplace and potential partnerships, being aware of opportunities to combine. And so far, they have been companies that have had really amazing customer relationships. We have 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 will continue to seek some of those opportunities.

Because we have done a few, there is 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 will just keep that discipline. There is plenty that we look at that do not make sense for us. I think we put a lot of scrutiny into when it might. Again, since things are moving really fast, we have said before, and I will just repeat, that we know we could do a lot of good things with what we have built here, but we do not 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.

Unknown Analyst: Makes a lot of sense. Appreciate the color there. Thanks for taking my questions.

Keyvan Mohajer: Thanks, Lucky. Thank you.

Operator: Your next question comes from the line of Mike Latimore with Northland Capital Markets. Your line is now open.

Vijay Devar: Yeah. Hi. 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?

Nitesh Sharan: Yeah. Hey, Vijay. We said last time, and I think we are just continuing to make progress, we had early last year an 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 have been on this pathway of migration where we assume we are on pathway to get the vast majority—I think over 75%—migrated over by the middle of this year. So we are 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 are 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 and that we talked about in the prepared remarks is that is something that we are getting a lot of early traction from customers on. I would say that channel—our head of sales there—has been saying that the customer feedback has been superb. And so one of the great things we have been trying to deploy is automated migration paths to allow people to migrate from prior versions to Amelia 7.3 onto the new version that we are rolling out.

So we are excited that our migration path—especially going back to one of the earlier questions about the efficiency now with delivery and AI and what it is allowing us—it is allowing for more rapid migration patterns.

Vijay Devar: Got it. So when the customer moves to 7.3, is there incremental revenue to SoundHound AI, Inc.?

Keyvan Mohajer: Yeah. So as I mentioned, just the higher containment rate is expected to increase our revenue in many of our deals. We get paid when we successfully avoid a caller going to a human. And by going to agentic, we have seen, just as example, numbers going from a 30% containment to over 90% containment. In some cases, you also get paid more for upgrading to agentic. So it is a mix of both, but either way, it is directionally positive for revenue.

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

Vijay Devar: Perfect. Thank you.

Keyvan Mohajer: Thank you.

Nitesh Sharan: Thank you.

Operator: As a reminder, to ask a question, please press star 11 on your telephone and wait for your name to be announced. Your next question comes from the line of James Fish with Piper Sandler. Your line is now open.

James Fish: Hey, guys. Appreciate the time here. 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 is making them different that is resonating with customers? And then I have got a follow-up.

Keyvan Mohajer: Yeah. So first, at SoundHound AI, Inc., with the acquisitions we have made, we are a combination of teams and companies with several decades of collective experience in customer service. So we have been at this for a long time. And we have deep technology, and we have data. 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 did not quite answer from Scott—but if a customer chooses to work with a big tech, that is 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 AI, Inc.—but if they just go deep with one big tech, they are going to miss out on innovations that might come out of other big tech.

So if you are, for example, betting on Google models, and then if OpenAI builds an ecosystem that benefits the world, you might miss out on it, or vice versa. But SoundHound AI, Inc. provides—the 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. We have our own models that we have 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 AI, Inc., you are more guaranteed to get the best as soon as it becomes available no matter where it comes from. Versus when they bet on a big tech, then it is a very expensive risk. And beyond the big tech, there are some new players. Most of those are maybe two years old. Some are doing better than others. But the way we think about them: they are Lego players.

Because of the nature of how old they are—one or two years—they do not have their own tech. So they are scrambling and building—getting one API for speech recognition from one source, then for text-to-speech from another source, for LLMs from another source—and are basically putting it together like Legos, and they are only at it for a couple of years. And that puts SoundHound AI, Inc. at a much bigger advantage because we have been at this for decades. We have our own models. And we have proven success in enterprise. We are in seven of the top 10 banks. We process billions of queries.

And in terms of quality of service and reputation, we are in a very good position.

Nitesh Sharan: And maybe I can add one thing, Jim. And I said this in the prepared remarks, but it is salient to your question. I think, fundamentally, legacy models that were built seat-based—where the value was “let’s get more users using our tool,” and it was not as directly tied to customer outcomes—that is at risk. Because the tools are getting so good, and we are 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 an appointment get booked? Did food get ordered? So I think just architecturally, we are better, to Keyvan’s point.

And I would say also the economic incentive alignment is also an advantage for us.

James Fish: Got it. Very, very detailed answer, guys. Appreciate that. Maybe Nitesh, for you—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. Trying to understand if there is further revenue, and then confident in guide in—given the environment, there is 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 have seen historically? Thanks, guys.

Nitesh Sharan: Sure. Thanks, Jim. So for the first part of that, to be very direct: no. Our guidance does not contemplate M&A that we have not done. So 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 is recurring, and we are upselling and expanding. That is what is 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, if they are meaningful and material and we need to update outlook, we will certainly do that like we have in the past. Your second question on stock-based comp. Yeah. So I will start with this general point at SoundHound AI, Inc., 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 has built—this is a company where we want all employees to participate in the full contribution and outcome.

And so we do distribute equity to our entire company. And I do not think that is the same as every other company. So we feel pride because everybody here is an owner. And we have also seen historically a lot of volatility that makes some of the math on our P&L—especially with the acquisitions—you get mark-to-market activity. When you have a stock that is so volatile, you will distribute a grant; by the time it gets valued for P&L purposes, it is at $20, and then that amortizes over four years. So that is something that is a little different because we are 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, 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 I am 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, that 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 will close with what I started with, which is I think we generally do feel a sense of pride that we do distribute equity to everybody at this company, and that makes us all combined owners in the outcome of what we build.

James Fish: Thanks, guys.

Operator: Thank you. I am 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.

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