SOUN Q1 Earnings Call: Product Integration and Industry Diversification Support Growth Amid Revenue Miss

Voice AI recognition company SoundHound (NASDAQ:SOUN) fell short of the market’s revenue expectations in Q1 CY2025, but sales rose 151% year on year to $29.13 million. Its non-GAAP loss of $0.06 per share was in line with analysts’ consensus estimates.

Is now the time to buy SOUN? Find out in our full research report (it’s free).

StockStory’s Take

SoundHound’s first quarter results were shaped by the company’s continued push into diversified end markets and integration of recent acquisitions. Management highlighted robust expansion in enterprise verticals, particularly through the adoption of its Polaris multilingual AI model and the integration of SYNQ3, Allset, and Amelia. CEO Keyvan Mohajer pointed to progress in restaurant and automotive deployments, noting that the company achieved a new milestone by activating more than 1,000 new restaurant locations in a single quarter. The company also emphasized traction in customer service, hospitality, healthcare, and financial services. CFO Nitesh Sharan explained that this broader customer base has helped reduce concentration risk, with no single customer contributing more than 10% of revenue this quarter. Both executives attributed the growth in customer activity and product adoption to differentiated AI performance, as well as the company’s ability to offer solutions across industries.

Looking ahead, management reaffirmed its outlook for the year and expects continued momentum from the expansion of voice commerce offerings and the launch of the Amelia 7.0 agentic AI platform. Sharan stated, “We remain committed to our path to profitability and have activated several cost actions to ensure we remain disciplined.” Mohajer described rising enterprise interest in voice commerce and agentic AI, citing active pilots with major automakers and new partnerships in energy and hospitality. The company believes that its technology’s ability to drive both automation and incremental revenue for customers positions it well regardless of macroeconomic conditions. Management also anticipates improvements in gross margin over the medium term as acquired contracts are optimized. The team is focused on expanding the reach of its solutions while maintaining discipline on costs and integration.

Key Insights from Management’s Remarks

Management attributed the quarter’s performance to expanded product adoption, successful integration of recent acquisitions, and increased enterprise demand for voice AI solutions.

• Acquisition-driven portfolio expansion: SoundHound’s integration of SYNQ3, Allset, and Amelia enabled it to deliver new capabilities and cross-sell opportunities, particularly in restaurants and enterprise verticals. Early results showed upgraded locations and new merchant connections, with the Polaris model deployed across much of the acquired footprint.
• Voice commerce ecosystem growth: The company advanced its voice commerce platform, connecting automotive OEMs, restaurants, and new service partners. Multiple pilots with automakers and over 15 large restaurant chains have joined the network, allowing drivers to place food orders or book services by voice, which management sees as a unique entry point for future transaction-based revenue.
• Broad-based sector traction: Beyond automotive and restaurants, SoundHound reported contract wins and renewals in financial services, healthcare, energy, retail, telecommunications, and hospitality. The company’s product set is being adopted by major brands across these industries, indicating a shift from heavy reliance on any single vertical.
• Technology differentiation in AI performance: Management emphasized that the Polaris foundation model offers lower latency, higher accuracy, and broader language support than peers, supporting adoption in noisy environments and international use cases. This technical advantage is seen as a competitive moat as more enterprises seek advanced conversational AI.
• Active customer engagement and scaling: The company cited a significant increase in active users and transactional volume, particularly in the restaurant segment, where locations using SoundHound’s ordering solutions have grown to nearly 13,000. Improved automation rates and reduced resolution times were highlighted as signs of operational scaling.

Drivers of Future Performance

SoundHound expects continued revenue growth to be driven by expanding voice commerce, new AI platform releases, and ongoing improvements in product mix and efficiency.

• Expansion of voice commerce platform: Management believes that increasing adoption by OEMs and restaurants will create new revenue streams as drivers and consumers transact through integrated voice AI systems. This flywheel effect is expected to support both subscription and royalty-based revenue growth.
• Agentic AI and enterprise deployments: The rollout of Amelia 7.0 and its agentic AI capabilities are anticipated to accelerate customer deployments, expand use cases, and improve customer retention. Management expects these solutions to shorten implementation cycles and increase net revenue retention over time.
• Margin improvement and contract optimization: The company is focused on raising gross margins by optimizing or exiting lower-margin contracts acquired through M&A. Management expects sequential improvement in adjusted EBITDA and gross margin, with a target of returning to pre-acquisition margin profiles over the next 18–24 months.

Catalysts in Upcoming Quarters

In the quarters ahead, the StockStory team will be monitoring (1) the pace of new customer wins and deployments in automotive and restaurant verticals, (2) progress in optimizing gross margins as acquired contract terms evolve, and (3) scaling of the voice commerce ecosystem, particularly as new OEM and enterprise partners are onboarded. The success of Amelia 7.0 and agentic AI adoption will also be closely tracked as a signpost for broader enterprise traction.

SoundHound AI currently trades at a forward price-to-sales ratio of 25.2×. At this valuation, is it a buy or sell post earnings? Find out in our full research report (it’s free).

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