SOUNDHOUND AI, INC. Q1 FY2024 earnings call

• Strong revenue growth: First-quarter revenue up 73%. Cash position at record high of ~$225 million.
• Pillar two progress: AI customer service solutions for businesses, ~30% of revenue, over 10,000 locations in production and over 100,000 in pipeline. Dynamic interaction live with top QSR brand, Smart Ordering with strong adoption, new product SoundHound Employee Assist, Smart Answering showing rapid growth.
• Pillar one progress: Powering products like cars, TVs, IoT devices, reached annual run rate of over 4 billion queries in Q1, growth over 60% y-o-y. Partnerships with NVIDIA, Arm, Perplexity, Polaris model live in production.
• Monetization strategy: Building towards voice commerce ecosystem of the future with growing portfolio of customers.

Pillar two accounted for approximately 30% of Q1 revenue, with organic growth and a ~$3 million contribution from the SYNQ3 acquisition. Pillar one saw growth in automotive royalties due to volume increases, and the devices category also experienced strong double-digit growth. Q1 revenue was $11.6 million, up 73% year over year.

• Revenue guidance for full year 2024 is $65 million to $77 million, with mid-point raised to $71 million.
• Expect subsequent quarters to have roughly 50% year-on-year growth.
• Aim to cross $100 million in revenue and deliver adjusted EBITDA profitability in 2025.
• Increased cost impact on gross margins and adjusted EBITDA is temporary, expected to improve over time.

Q: About the NVIDIA in vehicle and Perplexity partnership, what's the timeline for delivering NVIDIA in vehicle to automotive customers and details on Perplexity partnership?

A: For NVIDIA in vehicle, hardware change takes longer but software can be accelerated. Perplexity partnership is beyond the Chat AI app, an upsell feature for customers, and it's a beginning of a complementary partnership.

Q: On synergies with SYNQ3, what cross-sells, opportunities, data usage, and deployment help are seen?

A: Synergies include using SYNQ3's data to improve models, leveraging their experience in restaurant industry to accelerate scale, cross-sell/upsell opportunities, and progress in cloud migration and software stack integration.

Q: On restaurant vertical, balance between phone ordering and drive-thrus in pipeline?

A: Balanced, with a suite of opportunities including Employee Assist and Smart Answering, and partnerships with hardware providers for drive-thru.

Q: Update on demand handling and future acquisitions?

A: Making progress in handling demand, hiring and investing to serve customers, and future acquisitions will be strategic, focused on complementing strategy, return on capital, and speed of disruption.