SoundHound AI Inc Q2 2024 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Gil Luria - D. A. Davidson & Co - Analyst : Hi, good afternoon. One for Keyvan, one for Nitesh, both on the acquisition. This is a transformative acquisition. So, one, Keyvan up until now, a lot of the strategy has been around autos and restaurants, pillars one, two and three. There's a very good alignment in the strategy between those end markets and that pillar framework. How do you see that changing now that you're bringing -- that you'll bring Amelia into the fold in terms of what verticals you're going to have and what your focus is going to be in terms of pillars?

Question: Gil Luria - D. A. Davidson & Co - Analyst : Got it. Thank you. And Nitesh, I know you asked in your prepared remarks for a little more time, but want to talk -- as you talk about managing a company that next year is going to have $150 million, you're saying that accretive second half 2025, that -- strictly speaking, that just means your earnings would be higher than they would have been otherwise. In terms of the overall margin structure and where that could put you when you're managing a company that big, does it bring closer your breakeven in terms of your ability to generate cash flow, adjusted operating margins, and then even GAAP operating margins, what does it do to the timeline of hitting those milestones?

Question: Gil Luria - D. A. Davidson & Co - Analyst : All right. Thank you.

Question: Dan Ives - Wedbush Securities Inc - Analyst : (technical difficulty) and great quarter. Can you just talk about how conversations with prospective customers have changed, let's say, over the last three, six months compared to even a year ago? Can you just maybe anecdotally talk about that, just given where everything is going from a technology perspective, new verticals? And I think the view of SoundHound, right, is obviously changing dramatically in the market. Thanks.

Question: Gil Luria - D. A. Davidson & Co - Analyst : Okay. And then just like a follow-up, I mean, kind of like Gil asked, but even to take that, does it really feel like just given the momentum you're seeing, now is the time to do a deal like this? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 08, 2024 / 9:00PM, SOUN.OQ - Q2 2024 SoundHound AI Inc Earnings Call

Question: Dan Ives - Wedbush Securities Inc - Analyst : Great. Thanks.

Question: Mike Latimore - Northland Securities Inc - Analyst : Great, thanks. Yeah, congrats on all the developments here. Looks great. The query volume growth was 90% and last quarter it was 60% year over year. What caused that acceleration?

Question: Mike Latimore - Northland Securities Inc - Analyst : Got it. Great. And then, on Amelia, can you talk a little bit about the core technology here? Is it that they have a kind of a platform that can handle orchestration, integration, data security, develop agents on that, and then they can bring in your tech, or maybe just talk a little bit about kind of what the core elements of their platform is?

Question: Mike Latimore - Northland Securities Inc - Analyst : Yeah. Excellent. Great. Best of luck.

Question: Scott Buck - H.C. Wainwright & Co - Analyst : Hi. Good afternoon, guys. Thanks for taking my questions. First. I'm just curious, with the closing of Amelia, do you now have all the tools in the toolbox necessary to complete the three-pillar strategy and do it successfully?

Question: Scott Buck - H.C. Wainwright & Co - Analyst : Okay. So, there are no holes in tech that you still need to fill, it's now just about accelerating the scaling?

Question: Scott Buck - H.C. Wainwright & Co - Analyst : Yeah. Okay, perfect. That's helpful. And then, you've had some nice wins and then obviously some big opportunities out in front of you. I'm curious, from an implementation capacity standpoint, whether or not you need to go through a process of significant hiring or between your own team and the team you're bringing on through Amelia, you have the -- I guess, the hands on deck to meet that demand.

Question: Scott Buck - H.C. Wainwright & Co - Analyst : Yeah, that's helpful, guys. I appreciate the added color. That's it for me.

Question: Brett Knoblauch - Cantor Fitzgerald LP - Analyst : Hey, guys. Thanks for taking my question. Congrats on the acquisition. I guess just kind of digging a bit deeper there. I think in your prepared remarks, you guys talked about there being some slower-growth, lower-margin businesses, and probably in the flip side, some higher-growth, higher-margin businesses. Could you just maybe provide a framework for what that business is growing at? And additionally, walk us through why they sold for, call it, $80 million with expectations to do $45 million in revenue? It seems like a phenomenal purchase price for you guys, but I guess, why the sellers agreed to that? I guess they just not have in them anymore? I guess, you just talk about how that process happen as well?

Question: Brett Knoblauch - Cantor Fitzgerald LP - Analyst : Perfect. Thank you. That was very helpful. I think you guys also talked about how you like having the optionality to kind of go back and forth between different models that you're integrated with, whether it be Perplexity or ChatGPT. I just want to know from the cost side on, from your point of view, I guess, how are they billing you? Is that a usage model? Is it a one-time setup fee? I guess, how should we think about that dynamic?

Question: Brett Knoblauch - Cantor Fitzgerald LP - Analyst : Perfect. Thank you. Really appreciate it. Congrats on transactions again, guys.

Question: Glenn Mattson - Ladenburg Thalmann & Co Inc - Analyst : Hi. Thanks for taking the question. Building on that last question a little bit with expected new release of ChatGPT, maybe can you just talk about how you plan ahead for something like that? And maybe there's obviously opportunities, but perhaps is there any risks associated with maybe they could come out with some functionality that could potentially be competitive on the very low end or something like that? So anyway, just generally speaking, managing the evolution of this process, as well as maybe you can hit on other factors of the competitive landscape when you talk about this, just in general, whether it be pillar one or pillar two?

Question: Glenn Mattson - Ladenburg Thalmann & Co Inc - Analyst : Yeah. No, it was. Just beyond that, possibly the competitive landscape, if there's been any changes, possibly even down to pillar one or just across the board in terms of the traditional competitors? Thanks.

Question: Glenn Mattson - Ladenburg Thalmann & Co Inc - Analyst : Great. Thanks for that color, Nitesh and Keyvan. Thanks.

Question: Leo Carpio - Joseph Gunnar & Co LLC - Analyst : Good afternoon, gentlemen. First, congratulations on the deal and on the quarter. Just want to dive a little bit further into Amelia. In terms of the deal, can you just talk us through in terms of who approached who for this transaction? How did you became aware of Amelia? And then, looking forward, post Amelia, what other verticals you may be interested in? Thinking here, being that as you explore voice AI and develop the capabilities, you may discover second, third, derivative technologies that may be of interest to you that could bolster your platforming capabilities?

Question: Leo Carpio - Joseph Gunnar & Co LLC - Analyst : Okay. And then, a quick follow-up question on the restaurant side. The tentative conversations, have they switched from one where your marketing team is proactively reaching out to potential customers, or are they now flipping in terms of coming their inbound calls to you?

Question: Gil Luria - D. A. Davidson & Co - Analyst : Okay, well, congratulations on the quarter.