Q1 2024 SoundHound AI Inc Earnings Call

Okay.

Operator: Good day, and thank you for standing by. Welcome to SoundHound's Q1 2024 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising that your hand is raised. To withdraw your question, please press star 1 1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Scott Smith, Head of Investor Relations. Please go ahead.

Good day and thank you for standing by welcome to Sound Hound Q1, 2024 earnings Conference call.

Operator: This time, all participants are in a listen only mode. After the speaker's presentation, there will be a question and answer session.

Operator: Ask a question during the session you will need to press star one one on your telephone you will then hear an automated message advising your hand is raised to withdraw your question. Please press star one one again please.

Operator: Please be advised that today's conference is being recorded I would now like to hand, the conference over to your Speaker today, Scott Smith head of Investor Relations. Please go ahead.

Scott Smith: Good afternoon, and thank you for joining our first quarter 2024 conference call. With me today is our CEO, Keyvan Mohajer, and our CFO, Nitesh Sharan.

Scott Smith: And thank you for joining our first quarter 2024 conference call with me today is our CEO <unk> <unk> and our CFO. The texture on will begin with some short remarks before moving to Q&A.

Scott Smith: We'll begin with some short remarks before moving to Q&A. We'd like to remind everyone that we'll 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

Scott Smith: We'd 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.

Scott Smith: Please refer to our filings with the SEC for a detailed discussion of the risks and uncertainties that could affect our business.

Scott Smith: And for a discussion statements that qualify as forward looking statements.

Scott Smith: 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.

Scott Smith: 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. Finally, this call is being webcast in its entirety on our Investor Relations website. An audio replay will be available following today's call. With that said, I would like to turn the call over to our CEO, Keyvan Mohajer. Please go ahead, Keyvan. Thank you.

Scott Smith: 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.

Keyvan Mohajer: Finally, this call is being audio webcast in its entirety on our Investor Relations website.

Scott Smith: An audio replay will be available following today's call.

Keyvan Mohajer: With that I would like to turn the call over to our CEO <unk>. Please go ahead Kevin.

Scott Smith: Scott.

Keyvan Mohajer: and thank you to everyone for joining the call today. Once again, we are reporting very strong growth. First quarter revenue was up 73%. Just a few days ago, we reached the milestone of being a public company for two years. While the tough external conditions of the last two to three years have weakened or eliminated many organizations, we have become stronger.

Keyvan Mohajer: Thank you to everyone for joining the call today.

Keyvan Mohajer: Once again, we are reporting very strong growth first quarter revenue was up 73% just a few days ago, you reached the milestone of being a public company for two years.

Keyvan Mohajer: While the top external conditions at the last two to three years have a weekend or eliminated many organizations we have become stronger.

Keyvan Mohajer: We've nearly tripled our first quarter revenue in just two years, while better leveraging our expenses. And we have more than doubled our cash position to a record high of approximately $225 million on the balance sheet. Our three-pillar strategy is working. This quarter was a special quarter for Pillar 2, where we offer AI customer service solutions for businesses. About 30% of our revenue was from Pillar 2, with over 10,000 locations live in production and over 100,000 in our pipeline. Just a year ago, these numbers were negligible.

Keyvan Mohajer: We've nearly tripled our first quarter revenue in just two years, while better leveraging our expenses.

Keyvan Mohajer: And we have more than doubled our cash position to its record high up approximately $225 million on the balance sheet.

Keyvan Mohajer: Our three pillar strategy is working.

Keyvan Mohajer: This quarter was a special quarter for ocular too who already offer AI customer service solutions for businesses.

Keyvan Mohajer: About 30% of our revenue was crown pillar two with over 10000 locations light in production and over 100000 in our pipeline.

Keyvan Mohajer: Just a year ago. These numbers were negligible.

Keyvan Mohajer: And for the first time, our next generation drive-thru AI service, Dynamic Interaction, is now live with one of the top global QSR brands, and the results are incredible beyond expectations. The main challenge our customers faced on the first day of being live with dynamic interaction was that our AI was so fast at taking orders that their kitchen could not keep up with the pace. Of course, they're addressing that on their side and are pleased with the results and have immediately decided to expand to more locations.

Keyvan Mohajer: And for the first time, our next generation drive through AI service dynamic interaction is now live with one of the top global Qs our brands and the results are incredible beyond expectation there.

Keyvan Mohajer: The main challenges our customers face on the first day of being live with dynamic interaction was that our AOS. So fast I'm, taking orders that theyre kitchen could not keep up with the pace.

Keyvan Mohajer: Of course, they are addressing that on their side and are pleased with the results and immediately decided to expand to more locations.

Keyvan Mohajer: As we've said before, our AI solution saves costs for our customers, improves the experience of their users, and also increases revenue by adding throughputs and proactively offering upsells. Dynamic interaction is a SoundHound technological breakthrough like no other. We believe its impact on voice and conversational interfaces will be as meaningful as the Apple multi-touch technology on touch interfaces. If you have not seen it in action, check out the videos on our website

Keyvan Mohajer: As we've said before our AI solutions save cost for our customers improves the experience after users and also increased its revenue by adding throughput and proactively offering upsells.

Keyvan Mohajer: Interaction is a townhome technological breakthrough like no other.

Keyvan Mohajer: We believe its impact on voice and conversational interfaces will be at.

Keyvan Mohajer: Meaningful as the Apple multi touch technology and touch interfaces.

Keyvan Mohajer: I have not seen it in action checkout the videos on our website, we have built a competitive moat with our proprietary technology that is creating a massive opportunity in customer service. We have agreements executed with several other large skus are brands that we will be deploying dynamic interaction in the next few months for example, church's chicken the earlier version of.

Keyvan Mohajer: We have built a competitive moat with our proprietary technology that is creating a massive opportunity for customer service. We have agreements executed with several other large QSR brands that will be deploying dynamic interaction in the next few months, for example, Church's Chicken. The earlier version of our drive-thru AI experience has been live for several years and continues to thrive. White Castle continues to expand its footprint with more locations opening, including one of their busiest locations next to Disney World.

Keyvan Mohajer: Our drive through AI experience has been live for several years and continues to thrive Wyatt.

Keyvan Mohajer: <unk> Castle continues to expand its footprint with more locations openings, including one of their busiest locations next to Disney World. Another major <unk> with over 2000 locations uses our AI for drive thru and continues to expand our offering to more locations as they add more drive through capabilities to their existing in store.

Keyvan Mohajer: Another major QSR with over 2,000 locations uses our AI for drive-thru and continues to expand our offering to more locations as they add more drive-thru capabilities to their existing in-store and take-out services. Next, our smart ordering offering continues to gain strong adoption. Smart Ordering uses our voice AI for answering all inbound phone calls, to take customer food orders, and to answer numerous questions, allowing restaurants to free up their staff to focus on making food and engaging with customers in-store. We handle millions of calls per month, and we power national brands such as Chipotle, Casey's, Firehouse, Noodles, and Five Guys. Last quarter, we announced a pilot with Jersey Mike.

Keyvan Mohajer: Takeout services.

Keyvan Mohajer: Next our smart ordering offering continues its strong adoption.

Keyvan Mohajer: Smart ordering uses our voice AI for answering all inbound phone calls to take customer food orders and to answer numerous questions, allowing restaurants to free up their staff to focus on making food and engaging with customers in store, we handle millions of calls per month and the power of national brands, such as Chipotle Casey's firehouse.

Keyvan Mohajer: Noodles and five days last quarter, we announced the pilot be Jersey Mikes. The pilot was successful and they are adding more locations. We also expanded with applebee's and now have our voice AI offering across multiple franchisees, resulting in an additional 500 locations this quarter alone.

Keyvan Mohajer: The pilot was successful, and they're adding more locations. We also expanded with Applebee's and now have our voice AI offering across multiple franchisees, resulting in an additional 500 locations this quarter alone. We introduced a product called SoundHound Employee Assist, which uses our conversational voice AI technology to support employees like a co-pilot across a variety of tasks via their headsets. We already have several customers benefiting from this new service, and we will have more to share.

Keyvan Mohajer: We introduced a product called sound, how an employee assessed which uses our conversational voice AI technology to support employees like a copilot after I say, a better ICF task via their headsets.

Keyvan Mohajer: Already have several customers benefiting from this new service and we will have more to share soon.

Keyvan Mohajer: Last year, we expanded our AI customer service offering beyond restaurants with smart answers, a product that handles multiple calls at once, 24-7, conveniently filtering out spam calls, providing verbal and SMS responses, taking configurable actions, capturing leads with intelligent messaging, and answering questions about policies, hours, products, services, pricing, and more. Smart answering is showing rapid growth within Pillar 2 and already has hundreds of locations signed up, from single-location small businesses to brands such as Planet Fitness. We estimate our Pillar 2 total addressable market to be over $100 billion, with over 1 million restaurants and approximately 30 million businesses in North America alone that we can offer our solutions to.

Keyvan Mohajer: Last year, we expanded our AI customer service offering beyond restaurants with smart answering at product that handles multiple calls at 124, seven conveniently filtering out spam calls, providing verbal and SMS responses, taking configured about actions capturing leads with intelligent messaging and answering questions about policies.

Keyvan Mohajer: Our products services pricing and more.

Keyvan Mohajer: Smart answering is showing rapid growth within pillar two and already has hundreds of locations signed up from single location small businesses to brands such as planet fitness we.

Keyvan Mohajer: We estimate our pillar two total addressable market to be over 100 billion with over 1 million restaurants, and approximately 30 million businesses in North America alone that we can offer our solutions too.

Keyvan Mohajer: And with dozens of languages we already provide to our Pillar 1 customers, we plan to also go international in Pillar 2. We believe that with large language models and generative AI, and most importantly, the data science and machine learning behind our proprietary software, the time is now. Very few companies can offer businesses of all sizes an affordable, fast, and easy-to-implement solution that addresses their growing needs.

Keyvan Mohajer: And we have dozens of languages, we already provide to our pillar one customers. We plan to also go international in pillar II.

Keyvan Mohajer: We believe with large language models and journey of AI and most importantly, the data science and machine learning behind our proprietary software. The time is now very few companies can offer of businesses of all sizes and affordable fast and easy to implement solution that addresses their growing needs.

Keyvan Mohajer: While other point solution providers and legacy call center vendors are trying to evolve their offerings to include AI, we already have a fully automated and therefore easily scalable solution. We own our tech, we have big data from real interactions, and nearly 20 years of experience. This is why we are winning.

Keyvan Mohajer: One other point solution providers and legacy call center vendors are trying to evolve their offerings to include AI, we already have it fully automated and therefore easily scalable solution.

Keyvan Mohajer: We own our tech we have big data from real interactions and nearly 20 years of experience. This is why we are winning.

Keyvan Mohajer: Moving on to Pillar 1, where we power products such as cars, TVs, and IoT devices. Within this category, our customers choose us because they believe our technology is the best, and we help them protect their brand, users, and data, and because we partner with them to differentiate and innovate. We power millions of devices in dozens of languages, and this quarter, we reached an annual run rate of over 4 billion queries, and in Q1, that represents a growth of more than 60% year over year.

Keyvan Mohajer: Moving on to pillar, one whereby powered products such as cars Tvs and Iot devices.

Keyvan Mohajer: Within this category our customers choose us because they believe our technology is the best and we help them protect their brand users data and because we partner with them to differentiate and innovate repower millions of devices in dozens of languages and this quarter. We reached an annual run rate of over 4 billion queries and in Q1 EG presents.

Keyvan Mohajer: A growth of more than 60% year over year last year, we announced somehow chat AI, which combines the power of large language models with our AI assistant, making it more capable and powerful.

Keyvan Mohajer: Last year, we announced SoundHound Chat AI, which combines the power of large language models with our AI assistant, making it more capable and powerful. This is an upsell feature that will increase royalties from existing customers, and its unmatched quality is helping us win new customers.

Keyvan Mohajer: This is an upsell feature that will increase royalties from existing customers and it's unmatched quality is helping us win new customers.

Keyvan Mohajer: Last quarter, we talked about DS Automobiles being the first to quickly run a trial run to live production, which was unprecedented in car manufacturing. We have signed up new brands for SoundHoundChat AI, including OPPO, Peugeot, and Vauxhall, due to the success of their launch, and now, this quarter, we are pleased to add Alfa Romeo and Lancia. We also went live into production with Stellantis Vehicles in Japan. With our customer Stellantis, we are the first company anywhere in the world to launch an AI voice assistant integrated with ChatGPT into vehicles. We are also pleased to have been awarded a design win for our first automobile customers in Latin America with Stellantis. This is a brand new competitive win.

Keyvan Mohajer: Last quarter, we talked about the automobiles being the first to quickly run a trial run two life production, which was unprecedented with car manufacturers.

Keyvan Mohajer: We have signed up new brands for finance at AI, including Opel and Vauxhall due to the success of their launch and now this quarter. We are pleased to add Alfa Romeo and landfill.

Keyvan Mohajer: And live into production with Atlantis vehicles in Japan.

Keyvan Mohajer: With our customers. The Atlantis, we have been the first company anywhere in the world to lunch and AI voice assistant integrated Wechat GPT into vehicles.

Keyvan Mohajer: We are also pleased to have been awarded a design win for our first automobile customers in Latin America with Atlantis.

Keyvan Mohajer: This is a brand new competitive win.

Keyvan Mohajer: We also continue to gain interest and make progress with EV manufacturing. For example, a deal we won last quarter with a prominent US-based EV maker will voice-enable their full fleet of market-leading vehicles later this summer. This means we have gone from signing to in-production in a matter of months thanks to SoundHound's industry-leading capabilities and market-ready products. Additionally, we want to deal with a leading Asian electric car manufacturer to embed our software that aims to bring affordable and luxury electric cars with powerful engines. This is a brand new automaker we have not announced yet.

Keyvan Mohajer: We also continue to gain interest and make progress with EV manufacturers for.

Keyvan Mohajer: For example at deal we won last quarter with a prominent U S based EV maker with a voice enabled their full fleet of market leading vehicles later this summer.

Keyvan Mohajer: This means we have gone from signing to in production in a matter of months, thanks to <unk> industry, leading capabilities and market ready products.

Keyvan Mohajer: Additionally, we won a deal with a leading Asian electric car manufacturer to embed our software that aims to bring affordable and luxury electric cars with powerful engines.

Keyvan Mohajer: This is a brand new automaker, we have not announced before.

Keyvan Mohajer: This quarter, we announced a collaboration with NVIDIA during the GCC conference. The solution we are partnering on combines SoundHound Chat AI with large language models running in-vehicle on NVIDIA drives for seamless voice interaction. Together, we can now deliver in-vehicle generative AR responses with no connectivity required.

Keyvan Mohajer: This quarter, we announced the collaboration with Nvidia during the GTC conference.

Keyvan Mohajer: The solution that we are partnering on combines some handset AI with large language models running in vehicle on Nvidia drive for seamless voice interaction together with Nvidia, we cannot deliver in vehicle generative AI responses with no connectivity required.

Keyvan Mohajer: We are also now partnering with Arm and have been officially added to their partner program. More to come on that later this year. Just today, we announced a partnership with Perplexity, which will bring cutting-edge online language modules to SoundHound Chat AI. This allows us to offer a truly multi-faceted next-generation voice assistant to phones, cars, and IoT devices. SoundHound Chat AI will leverage perplexity to provide accurate, up-to-date responses to web-based queries that static offline LLMs cannot currently answer.

Keyvan Mohajer: We are also now partnering with arm and have been officially added to their partner program more to come on that later this year.

Keyvan Mohajer: Just today, we announced a partnership with perplexity, which will bring cutting edge on nine Llm's two samaranch had AI.

Keyvan Mohajer: This allows us to offer a truly multifaceted next generation voice assistant to phones cars and Iot devices.

Keyvan Mohajer: San <unk> AI, we leverage perplexity to provide accurate up to date responses to web based queries that static offline llm's cannot currently answer expanding the type and complexity of the questions that system is able to answer.

Keyvan Mohajer: By expanding the type and complexity of the questions the assistant is able to answer, the move makes SoundHound Chat AI the most advanced voice assistant available on the market today. We believe we are the only voice AI platform to be able to quickly provide this unified integration, combining our own technology seamlessly with third-party providers. We have also reached an important milestone with Polaris, our multimodal, multilingual generative AI foundation model. Polaris now beats our latest state-of-the-art speech recognition model in terms of accuracy, speed, model size, and run cost, which already beats the other vendors we've benchmarked against by a large margin, including models provided by big tech. Polaris is now live in production with a growing percentage of our customers, and we will continue to provide updates on this project.

Keyvan Mohajer: They move makes sometimes that AI. The most advanced voice assistant available out in the market. Today. We believe we are the only voice AI platform to be able to quickly provide this unified integration.

Keyvan Mohajer: Binding our own technology seamlessly with third party providers. We have also reached an important milestone with Polaris, our multimodal multilingual generative AIG Foundation model.

Keyvan Mohajer: Polaris now beats, our latest state of the art speech recognition model in terms of accuracy speed model site and run costs, which already beat other vendors, we've benchmarked against by a large margin including models provided by the Big Tech.

Keyvan Mohajer: Polaris is now live in production with a growing percentage of our customers and we will continue to provide updates on this progress we.

Keyvan Mohajer: We believe voice AI is a bigger opportunity than just conversational AI. Our data and know-how, along with our continued investment in this level of R&D, will strengthen our position as a leader in our space. As I mentioned earlier, we have three pillars.

Keyvan Mohajer: We believe voice AI is a bigger opportunity than just conversational AI or data and know how along with our continued investment in this level of R&D growth strengthened our position as the leader in our space.

Keyvan Mohajer: Royalties from voice-enabled products, subscriptions from voice-enabled services, and the third pillar is monetization from connecting those services to products. As we increase the notable names that we sign every quarter, and this quarter is no different, we get one step closer to mobilizing this third pillar, significantly increasing our accessible market while creating new, more convenient, and accessible consumer experiences. We believe Pillar 3 will create the voice commerce ecosystem of the future, and many customers are signing up for Pillar 1 and Pillar 2 in eager anticipation of us rolling out this monetization strategy.

Keyvan Mohajer: As I mentioned earlier, we have three pillars royalties from both an abrupt product subscription from voice enabled services and the third pillar is monetization from connecting those services to product.

Keyvan Mohajer: As we increase the notable names that we sign every quarter and this quarter is no different we get one step closer to mobilizing this third pillar significantly increasing our addressable market, while creating new more convenient and accessible consumer experiences. We believe pillar III will create the voice commerce ecosystem of the future and many customers are.

Keyvan Mohajer: Signing up in pillar, one and pillar two in eager anticipation of us rolling out these monetization strategy.

Keyvan Mohajer: We are excited to see our portfolio of customers using voice-enabled services continue to grow, which should allow us to begin to offer this new commercial ecosystem. In closing, we continue to build a strong business and fortify our financial position, all while gaining market share. We couldn't be more pleased with the demand we are seeing and the high praise we are receiving from the customers we are serving. With another quarter of strong growth and notable customer wins, our momentum continues to grow.

Keyvan Mohajer: We are excited to see our portfolio of customers using voice enabled services continued to grow which should allow us to begin to offer this new commercial ecosystem.

Keyvan Mohajer: In closing, we continue to build a strong business and fortify our financial position, all while gaining market share.

Keyvan Mohajer: We couldnt be more pleased with the demand youre seeing and the high praise youre receiving from the customers we are serving.

Keyvan Mohajer: With another quarter of strong growth and notable customer wins, our momentum continues to grow.

Keyvan Mohajer: We remain passionate about what we do, and that has not changed in the 20 years since we founded the company. We look forward to continued strong growth and creating value for our stakeholders. We are grateful to our amazing team that makes this all possible, as well as our customers, partners, investors, and shareholders. With that, I'll now turn the call over to Nitesh to talk about our financial performance, key growth drivers, and outlook for the remainder of the year.

Keyvan Mohajer: We remain passionate about what we do and that has not changed in the 20 years since we founded the company.

Nitesh: We look forward to continued strong growth and creating value for our stakeholders.

Nitesh: We are grateful to our amazing team that makes this all possible as well as our customers partners investors and shareholders.

Nitesh: With that I'll now turn the call over to <unk> to talk about our financial performance key growth drivers and outlook for the remainder of the year.

Nitesh Sharan: Thank you, Keyvan, and good afternoon, everyone. Q1 revenue increased by 73% year-over-year. The results indicate another positive mile marker on our growth journey, in which we exceeded $11 million in revenue in our seasonally smallest quarter of the year. We like where we are today, and we are excited about what we are quickly becoming. Our AI solutions attractively reside at a critical intersection. Macro factors, like persistent inflation and wage pressures, drive many of our customers towards automation for productivity. Concurrently, consumer demand for increased speed and convenience drives our customers towards automation to accelerate throughput and increase revenue. AI connects those intersections seamlessly, and generative AI massively extends the value proposition further.

Nitesh: Thank you, Kevin and good afternoon, everyone.

Nitesh Sharan: Q1 revenue increased by 73% year over year.

Nitesh Sharan: The results indicate another positive mile marker on a growth journey in which we exceeded $11 million in revenue in our seasonally smallest quarter of the year.

Nitesh Sharan: We like where we are today and we are excited about what we are quickly becoming.

Nitesh Sharan: Our AI solutions attractively reside at a critical intersection.

Nitesh Sharan: Macro factors like persistent inflation and wage pressures drive many of our customers towards automation for productivity.

Nitesh Sharan: Concurrently consumer demand for increased speed and convenience drive our customers towards automation to accelerate throughput and increase revenue.

Nitesh Sharan: AI connected intersections seamlessly and generative AI massively extend the value proposition further.

Nitesh Sharan: The penultimate result is high consumer interest in SoundHound. With our recent acquisition SYNC3 now fully in the mix, the benefits of integrating this pioneering restaurant tech organization with our years of voice AI innovations are clear, and the breadth of coverage we now have in the restaurant sector is so exciting and showing up in overflowing customer activity. One of the measures we use to gauge that traction is backlog. Last quarter, I introduced a combined Pillar 1 and Pillar 2 customer demand metric called Cumulative Subscriptions and Bookings Backlog.

Nitesh Sharan: Ultimate result is high consumer interest in sound Hound.

Nitesh Sharan: With our recent acquisition <unk> now fully in the mix the benefits of integrating this pioneering restaurant tech organization with our years of voice AI innovations are clear and the breadth of coverage. We now have in the restaurant sector is so exciting and showing up and overflowing customer activity.

Nitesh Sharan: One of the measures we use to gauge that traction as backlog.

Nitesh Sharan: Last quarter I introduced a combined pillar, one and pillar two customer demand metric called cumulative subscriptions and bookings backlog.

Nitesh Sharan: In Q1, we saw approximately 80% year-over-year growth to $682 million, with an average duration of about 7 years. As a reminder, this measure includes new subscription revenue streams and our traditional royalty contract. The methodology for our Pillar One contracts has not changed.

Nitesh Sharan: In Q1, we saw approximately 80% year over year growth to $682 million with an average duration of about seven years.

Nitesh Sharan: As a reminder, this measure includes new subscription revenue streams and our traditional royalty contracts.

Nitesh Sharan: The methodology for a pillow on contracts has not changed.

Nitesh Sharan: We include only committed customer contracts for exactly the duration of the contract period and capture various facets of the deal in total contract value, such as constructs. These facets include minimum commitments, target volumes, professional services, and other arrangements. We do not include renewals until a renewal takes place, even if contracts include auto-renewal provisions.

Nitesh Sharan: We include only committed customer contracts for exactly the duration of the contract period and capture various facets of the deal in total contract value like construct.

Nitesh Sharan: These factors include minimum commitment target volumes professional services and other arrangements. We do not include renewals until the renewal takes place even if contracts include auto renewal provisions for.

Nitesh Sharan: For subscriptions, the Cumulative Subscriptions and Bookings Backlog takes into account customers where we are the leading or exclusive provider and assumes a four-year ramp to fully scale, with a total five-year duration. We have incorporated reasonable assumptions about adoption percentages, with lower percentages applying to pilot and proof-of-concept customers. Furthermore, this metric does not include pipeline opportunities, for which we have well over a 100,000 location opportunity for Pillar 2 alone.

Nitesh Sharan: For subscriptions cumulative subscriptions and bookings backlog takes into account customers, where we are the leading or exclusive provider and assumes a four year ramp to fully scale with a total of five year duration.

Nitesh Sharan: We have incorporated reasonable assumptions about adoption percentages with lower percentages applying to pilot and proof of concept customers.

Nitesh Sharan: Furthermore, this metric does not include pipeline opportunities for which we have well over a 100000 location opportunity for pillar two alone.

Nitesh Sharan: This metric is intended to directionally convey our medium-term revenue growth prospects. Before I walk through the financial results for the first quarter, given the impact of the acquisition on various aspects of the GAP financial measures, we are introducing two new non-gap financial measures for growth margins and EPS to help investors better track how we manage the business operation. I'll share more context in the relevant sections below.

Nitesh Sharan: This metric is intended to directionally convey our medium term revenue growth prospects.

Nitesh Sharan: Before I walk through the financial results for the first quarter given the impact of the acquisition to various aspects of the GAAP financials. We are introducing two new non-GAAP financial measures for gross margins and EPS to help investors better track, how we manage the business operationally.

Nitesh Sharan: I'll share more context, and the relevant sections below.

Nitesh Sharan: Q1 revenue was $11.6 million, up 73% year-over-year. We saw growth in Q1 across all major industry categories. Pillar 2 represented approximately 30% of revenue in the quarter, combining organic growth with positive contributions of roughly $3 million from the acquisition of SINGAPORE. We also had a strong quarter in Pillar 1 as automotive royalties went up with volume increases year-over-year. Auto units and cloud users both expanded strongly by double digits in the quarter. Additionally, we continue to see growing demand for our generative AI solutions, and we are seeing meaningful opportunities starting to be realized for accelerated unit price expansion.

Nitesh Sharan: Q1 revenue was $11 $6 million up 73% year over year.

Nitesh Sharan: We saw growth in Q1 across all major industry categories.

Nitesh Sharan: Pillar two represented approximately 30% of revenue in the quarter, combining organic growth with positive contributions of roughly $3 million from the acquisition of <unk> III we.

Nitesh Sharan: We also had a strong quarter in pillar one is automotive royalties went up with volume increases year over year.

Nitesh Sharan: Auto units in cloud users both expanded strong double digits in the quarter. Additionally, we continue to see growing demand in our generative AI solutions, and we are seeing meaningful opportunities starting to be realized for accelerated unit price expansion.

Nitesh Sharan: We also signed a multi year commitment in the Tvs <unk> devices category and that led to strong double digit growth from devices in the quarter.

Nitesh Sharan: We also signed a multi-year commitment in the TVs and Devices category, and that led to strong double-digit growth from Devices in the Corner. In Q1, our gross margins were 60%, down year-over-year, largely due to the acquisition, including the mix of lower-margin call center agent business. However, on a stand-alone basis, gross margins were up year over year.

Nitesh Sharan: In Q1, our gross margins were 60% down year over year, largely resulting from the acquisition, including the mix of lower margin call Center agent business.

Nitesh Sharan: On a standalone basis gross margins were up year over year adjusted for acquisition impacts, notably the noncash amortization of purchased intangibles gross margins would have been 65, 5%.

Nitesh Sharan: Adjusted for acquisition impacts, notably the non-cash amortization of purchased intangibles, gross margins would have been 65.5%. This is the non-GAAP gross margin metric I introduced above. While the call center business does pressure margins in the near term, we are excited about what this new capacity can do for broader business opportunities and equally so for the valuable training data it provides for our AI model. That said, our goal over time is to automate and modernize, so we expect growth margin improvements through the year and ultimately back to pre-merger levels.

Nitesh Sharan: This is the non-GAAP gross margin metric I introduced above.

Nitesh Sharan: While the call center business does pressure margins in the near term. We are excited about what this new capacity can do for broader business opportunities and equally so for the valuable training data. It provides our AI models that said our goal overtime is to automate and modernize so we expect gross margin improvement through the year and ultimately back to <unk>.

Nitesh Sharan: The merger levels.

Nitesh Sharan: R&D expenses were $14.9 million in Q1, an increase of 5% year over year. We have streamlined our R&D costs, increased efficiencies, and are prioritizing investments in disruptive innovation to expand our suite of products to address a wider array of customer needs. We are accelerating the training and deployment of large language models to provide even more value to customers, enabling us to open many doors and a wide variety of new conversational AI applications.

Nitesh Sharan: R&D expenses were $14 9 million in Q1, an increase of 5% year over year.

Nitesh Sharan: We have streamlined our R&D cost increased efficiencies and are prioritizing investments in disruptive innovation to expand our suite of products to address a wider array of customer needs.

Nitesh Sharan: We are accelerating the training and deployment of large language models to provide even more value to customers, enabling us to open many doors and a wide variety of new conversational AI use cases.

Nitesh Sharan: That said, we will continue to be thoughtful and opportunistic, with a greater emphasis on bringing unique value through best-of-breed large language models, including multilingual ASR foundation models, generative AI solutions, and voice AI capabilities that intermediate and arbitrate between our own models and partner LLM. Sales and marketing expenses were $5.5 million in Q1, an increase of 14% year-over-year. We continue to invest in go-to-market and customer engagement to capture the strong momentum and heightened demand.

Nitesh Sharan: That said, we will continue to be thoughtful and opportunistic with greater emphasis on bringing unique value through best of breed large language models, including multilingual ASR Foundation model generative AI solutions and voice AI capabilities that intermediate and arbitrate between our own models and partner LLM.

Nitesh Sharan: Sales and marketing expenses were $5 5 million in Q1, an increase of 14% year over year.

Nitesh Sharan: We continue to invest in go to market and customer engagement to capture the strong momentum in heightened demand and.

Nitesh Sharan: And we are expanding our reach through brand and industry marketing, demand generation, and a high ROI lead gen strategy. Our sales reach continues to expand with both direct sales and through an amazing ecosystem of strategic channel partners. We know the best go-to-market ROI comes from customers loving us, and this quarter, with one of the largest QSRs, we were introduced to their executive management team as the best partners their team has ever worked with. GNA expenses were $10.3 million in Q1, an increase of 41% year-over-year. The increases in DNA reflect two main elements that we talked about last quarter.

Nitesh Sharan: And we are expanding reach through brand and industry marketing demand generation and high ROI lead Gen strategies.

Nitesh Sharan: Our sales reach continues to expand with both direct sales and through an amazing ecosystem of strategic channel partners.

Nitesh Sharan: We know the best go to market ROI comes from customers loving us and this quarter with one of the largest <unk> were introduced to their executive management team as the best partners. Their team has ever worked with.

Nitesh Sharan: G&A expenses were $10 3 million in Q1, an increase of 41% year over year.

Nitesh Sharan: The increases in G&A reflect two main elements that we talked about last quarter.

Nitesh Sharan: Our year-over-year comparison continues to be impacted by investments in financial and non-financial processes and internal controls to support requirements under SOX 404B as we become a large accelerated filer, and this quarter also factors in acquisition-related expenses. All operating expense line items were impacted by the SINC 3 acquisition, as well as higher employer-related tax costs and increased compensation. Non-Cash Employee Stock Compensation with $7,000,000 in QI.

Nitesh Sharan: Our year over year comparison continues to be impacted by investments in financial and nonfinancial processes and internal controls to support requirements under Sox 404, B as we became a large accelerated filer last year and this quarter also factors in acquisition related costs.

Nitesh Sharan: All operating expense line items were impacted by the <unk> acquisition as well as higher employer related tax costs and increased compensation.

Nitesh Sharan: Noncash employee stock compensation was $7 million in Q1.

Nitesh Sharan: As a result, our operating loss for Q1 was $28.5 million. This included non-cash acquisition impacts related to the fair value accounting that will likely introduce volatility into this line for the foreseeable future. OI&E was $4.2 million of net expense for the quarter, and the net loss was $33 million in Q1 compared to $27.4 million in the prior year. This led to a net loss per share in Q1 of $0.12 compared to $0.14 in the previous year.

Nitesh Sharan: As a result, our operating loss for Q1 was $28 5 million. This included noncash acquisition impacts related to the fair value accounting that will likely introduce volatility into this line for the foreseeable future.

Nitesh Sharan: <unk> was $4 2 million of net expense for the quarter and net loss was $33 million in Q1 compared to $27 $4 million in the prior year period.

Nitesh Sharan: This led to a net loss per share in Q1 of 12.

Nitesh Sharan: Compared to <unk> 14 in the previous year.

Nitesh Sharan: Adjusting for noncash acquisition related amortization of purchase intangibles fair value adjustments M&A transaction cost stock based comp and other noncash items.

Nitesh Sharan: Adjusting for non-cash acquisition-related amortization of purchase intangibles, fair value adjustments, M&A transaction costs, stock-based comp, and other non-cash items, our non-GAP EPS loss was seven cents in the quarter. This is a measure we will continue to report upon in future quarters, given it better normalizes the ongoing operating results of the business, and Justin Iveda had a loss of $15.4 million in Q1. The year-over-year decrease was a result of the previously mentioned higher operating costs as well as the Sink 3 acquisition.

Nitesh Sharan: Our non-GAAP EPS loss was <unk> <unk> in the quarter.

Nitesh Sharan: This is a measure we will continue to report upon in future quarters, given it better normalizes the ongoing operating results of the business.

Nitesh Sharan: Adjusted EBITDA was a loss of $15 4 million in Q1 the year over year decrease was a result of the previously mentioned higher operating costs as well as the sync three acquisition impact.

Nitesh Sharan: Net cash used in operating activities for the three months ended March 31st, 2024 was about $21 million. Our cash position at quarter end was $226 million, of which $212 million was in cash and cash equivalents. With this strong cash position, we have given ourselves some great optionality to drive the business forward and further improve our financial profile. We entered a new ATM program in the quarter to provide us with capital-raising flexibility, although our balance sheet and forward projections indicate we don't have any time-sensitive capital-raising needs. It would only be necessitated strategically, either for capital structure optimization purposes or if another attractive acquisition opportunity presented itself where the economic value was warranted.

Nitesh Sharan: Net cash used in operating activities for the three months ended March 31, 2024 was about $21 million.

Nitesh Sharan: Our cash position at quarter end was $226 million of which $212 million in cash and equivalents.

Nitesh Sharan: With this strong cash position, we have given ourselves some great optionality to drive the business forward and further improve our financial profile.

Nitesh Sharan: We entered a new ATM program in the quarter to provide us with capital raising flexibility, although our balance sheet and forward projections indicate we don't have any time sensitive capital raising needs.

Nitesh Sharan: It would only be necessitated strategically either for capital structure optimization purposes, or if another attractive acquisition opportunity presented itself, where the economic value Meredith at.

Nitesh Sharan: All that said, we don't take this strength for granted and are committed to being prudent stewards of capital, focusing on creating long-term, sustainable growth and profitability. With that, let me discuss our outlook for the remainder of 2024. We are excited about the opportunities ahead and pleased with our top line performance coupled with the demand we are seeing in pillars one and two, and we are driving new opportunities in Pillar 3. We are ahead of pace in having Pillar 2 exceed 20% of the total revenue mix this year, and we see that mix increasing as we go into 2025.

Nitesh Sharan: All that said, we don't take this strength for granted and are committed to being prudent stewards of capital focusing on creating long term sustainable growth and profitability.

Nitesh Sharan: With that let me discuss our outlook for the remainder of 2024.

Nitesh Sharan: We are excited about the opportunities ahead and pleased with our top line performance coupled with the demand we are seeing in pillars wanted to.

Nitesh Sharan: We are driving new opportunities and pillar three.

Nitesh Sharan: We are ahead of pace and having pillar to exceed 20% of total revenue mix. This year and we see that mix increasing as we go into 2025.

Nitesh Sharan: Given the Q1 performance, we are raising the lower end of our guidance and narrowing our initial rate, which steps up our midpoint to $71 million. Therefore, our revenue guidance for the full year is now $65 to $77 million.

Nitesh Sharan: Given the Q1 performance, we are raising the lower end of our guidance and narrowing our initial range, which steps up our midpoint to $71 million.

Nitesh Sharan: Therefore, our revenue guidance for the full year is now $65 million to $77 million.

Nitesh Sharan: We continue to believe the right expectation for subsequent quarters is roughly 50% year-on-year growth. We hope to outperform, but at this stage, we believe this is the appropriate expectation. Furthermore, we still expect to cross $100 million in revenue and deliver adjusted EBITDA profitability in 2025. As I noted last quarter, the increased cost impact on gross margins and adjusted EBITDA is temporary, and we expect both to improve as we move forward. With the SYNC3 acquisition, we are working on migrating their cloud and AI infrastructure to SoundHound. So, in the immediate term, we have some duplicative costs. In addition, while a portion of SYNC3's revenue is AI-driven, they also have a legacy call center operation, which their team has been gradually upgrading with AI.

Nitesh Sharan: We continue to believe the right expectation for subsequent quarters is roughly 50% year on year growth we.

Nitesh Sharan: We hope to outperform but at this stage. We believe this is the appropriate expectation.

Nitesh Sharan: Furthermore, we still expect to cross the $100 million in revenue and deliver adjusted EBITDA profitability in 2025.

Nitesh Sharan: As I noted last quarter, the increased cost impact on gross margins and adjusted EBITDA as temporary and we expect both to improve as we move forward.

Nitesh Sharan: With the sync three acquisition, we are working on migrating their cloud and AI infrastructure to sound Hound.

Nitesh Sharan: So in the immediate term we have some duplicative costs.

Nitesh Sharan: In addition, while a portion of <unk> revenue is AI driven they also have a legacy call center operation, which their team has been gradually upgrading with AI.

Nitesh Sharan: We expect to further accelerate this migration, which will ultimately calibrate their growth margins to ours over time. Overall, though, based on initial conversations with customers and partners, we are making great progress, and there is strong interest to even further increase the value we create for customers. I'll close with another note of conviction in the business we are building. As I've said before, the path forward isn't always linear. In particular, creating disruptive, transformational innovation is not for everyone, but it's a strong part of SoundHound's DNA.

Nitesh Sharan: We expect to further accelerate this migration, which will ultimately calibrate their gross margins two hours overtime.

Nitesh Sharan: Overall, though based on initial conversations with customers and partners, we are making great progress and there is strong interest to even further increase the value we create for customers.

Nitesh Sharan: I'll close with another node of conviction in the business. We are building as I've said before the path forward isn't always linear and <unk>.

Nitesh Sharan: Particular, creating disruptive transformational innovation is not for everyone, but it's a strong part of <unk> DNA.

Nitesh Sharan: When the pieces start falling together, though, there's a gravitational force at play. With our proven track record of progress, as each quarter passes, we get closer to our escape velocity. Despite our achievements so far, we don't take our success for granted, and we fight for it every day to aim higher and push the boundaries further, measurably and persistently. Thank you. We will now move to Q&A.

Nitesh Sharan: When the pieces start falling together, though there's a gravitational force at play.

Nitesh Sharan: With our proven track record of progress as each quarter passes we get closer to our escape velocity.

Nitesh Sharan: Despite our achievements so far we don't take our success for granted and we fight for it every day to aim higher and push the boundaries further measurably and persistently.

Speaker Change: Thank you we will now move to Q&A.

Operator: Thank you. As a reminder to ask a question, please press star 1 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1 1 again. Please stand by while we compile the Q&A roster. Our first question comes from the line of Gil Luria from D.A. Davidson.

Speaker Change: Thank you.

Operator: A reminder to ask a question. Please press star one to one on your telephone.

Operator: Wait for your name to be announced towards the draw. Your question. Please press star one one again.

Operator: Please standby, while we compile the Q&A roster.

Operator: Our first question comes from the line of Gil Luria from D. A Davidson.

Gil Barnum Luria: Yes, good afternoon. A lot of product announcements and advances. Let me focus on a couple of the ones that seem most intriguing. The first one is around NVIDIA in-vehicle. It would be a big step forward for the whole technology around AI to do the inferencing without connectivity. What's the timeline for you to deliver this to one of your automotive customers? So that's one.

Gil Barnum Luria: Yes, good afternoon.

Gil Barnum Luria: A lot of product announcements and advances let me focus on a couple of the ones that.

Gil Barnum Luria: Let's see most intriguing the first one.

Gil Barnum Luria: The Nvidia in vehicle it would be a big step forward for the whole technology around AI to do.

Gil Barnum Luria: The infant seeing without connectivity, what's the timeline do you think that you can deliver this to one of your automotive customers. So that's one bundle the second one on product, which is on the perplexity. It sounds like youre going to be leveraging perplexity AI in the sound home chat AI.

Gil Barnum Luria: I'll bundle the second one on product, which is on perplexity. It sounds like you're going to be leveraging perplexity AI in the SoundHound chat AI app. Is there a potential down the road for the SoundHound technology to be the front end for the Perplexity app?

Gil Barnum Luria: Yeah.

Gil Barnum Luria: Is there a potential down the road for for the <unk> technology to be the front end.

Gil Barnum Luria: The perplexity App.

Keyvan Mohajer: Thanks for that. Great questions.

Speaker Change: Thanks for the great questions.

Keyvan Mohajer: So the NVIDIA announcement. As you noted, a very big milestone, because these generative AI large language models are very large. Typically, they don't fit on the edge, but with this partnership, you are able to run them on the edge.

Keyvan Mohajer: So on the so the Nvidia announcements.

Keyvan Mohajer: As you noted.

Keyvan Mohajer: Okay.

Keyvan Mohajer: Very big milestone because.

Keyvan Mohajer: Jeremy large language models are very large.

Keyvan Mohajer: Typically they don't fit on the edge, but with this partnership we are able to run them on the edge.

Keyvan Mohajer: And a lot of the functionality will not need the cloud. But you still need the cloud, like if you want real-time weather information or sports scores, you need some cloud connectivity. But for a lot of the functionalities, whether it's from general knowledge to getting things done inside a car or a device, you actually don't need cloud connectivity. We think that the use cases are beyond automotive. In the automotive industry, things take longer, especially when you're talking about hardware changes. For software, as I mentioned in my comments earlier, we had one case when we went from signing the deal to going to production in a matter of just a few months.

Keyvan Mohajer: And a lot of the functionality, though not need cloud you still need cloud like if you want real time weather information of our sports scores do you need to become cloud connectivity, but for a lot of the functionality is whether it's from general nowadays to getting things done inside the car or a device you actually don't need the cloud connectivity.

Keyvan Mohajer: But when you talk about hardware change, that takes longer. But we think it's not just about automotive. Even for QSR, dynamic interaction, drive-through automation, you could actually bring some of that to the edge, for perplexity.

Keyvan Mohajer: We think that the use cases are beyond automotive and automotive things take longer, especially when youre talking about hardware change for us.

Keyvan Mohajer: Software as I mentioned in my.

Keyvan Mohajer: In my comments earlier actually we had one case than the rent from signing the deal to go into production in a matter of just a few months.

Keyvan Mohajer: But when you talk about the hardware change.

Keyvan Mohajer: Longer, but we think it's not just about automotive event for them.

Keyvan Mohajer: You guys are.

Keyvan Mohajer: Interaction drive through automation, you could actually bring some of that to the edge. So we are excited about things that can happen faster with that partnership.

Keyvan Mohajer: For perplexity.

Keyvan Mohajer: It's not just about our chat.ai app; our chat.ai platform is also a platform we offer to our customers, like automotive customers and beyond. We will offer it to them as well, and it will be for an additional cost. It's an upgrade feature, right? So they've already upgraded. A lot of them have already upgraded from our pre-LLM version to add the chat.ai feature, and as I mentioned earlier on the call, that's an upsell.

Keyvan Mohajer: Uh huh.

Keyvan Mohajer: It's not just about our chat apps.

Keyvan Mohajer: It's also a platform be offered to our customers.

Keyvan Mohajer: Automotive customers and beyond.

Keyvan Mohajer: We will offer it to them as well and it will be for additional.

Keyvan Mohajer: It's an upgraded feature right. So they are already upgraded a lot of them have already upgraded from our.

Keyvan Mohajer: Pre LLM versions to add the chat AI feature and as I mentioned again earlier on the call. That's an upsell. So a royalty we expect it will go up.

Keyvan Mohajer: So our royalty, we expect, will go up. Now to access the online LLM, it will be another upgrade moment for us. So it's very much beyond the chat.ai application that's on the phone. You also asked if we would power perplexity properties.

Keyvan Mohajer: Now to access to the online it will be another upgrade moment for us.

Keyvan Mohajer: It's very much beyond the chat AI.

Keyvan Mohajer: Obligation that's on the phone.

Keyvan Mohajer: Now you also asked if we would power perplexity properties, we haven't announced anything yet, but it's the beginning of the partnership we are excited about.

Keyvan Mohajer: We haven't announced anything yet, but it's the beginning of a partnership we are excited about. We are both NVIDIA portfolio companies. NVIDIA invested in us and them. We are very complementary, so we think there's a lot more we can do.

Keyvan Mohajer: Both Nvidia portfolio companies like Nvidia Investor and then we are very complementary.

Keyvan Mohajer: We think theres a lot more we can do with them.

Gil Barnum Luria: Thank you, Nitesh. One for you, a little big picture. Last year, you were very effective at changing your overall cost structure to fit, frankly, what the capital markets needed you to do, which is to show a clear path to profitability. You did that very effectively; you reached that point. But as you sit here today, with significant cash on your balance sheet, much lower burn rates, and a long list of opportunities, a couple of which we just discussed, is there potential or an opportunity for you to move the lever a little bit the other way and say, hey, we have so many opportunities on the technology front that maybe we need to fund more of those and relax a little bit of that shift to profitability?

Speaker Change: Thank you.

Keyvan Mohajer: One for you a little big picture.

Gil Barnum Luria: Last year, you you were very effective that changing your overall cost structure to fit frankly, what the couple of markets needed you to do which is to show a clear path to profitability you did that very effectively you reached that point, but as you sit here today.

Gil Barnum Luria: With significant cash on your balance sheet, much lower burn rates and the long series of opportunities a couple of which we just discussed is there a potential opportunity for you to to move the.

Gil Barnum Luria: The lever a little bit the other way and say hey, we have so many opportunities on the technology front that maybe we need to fund more of those.

Gil Barnum Luria: And relax a little bit of that shift to profitability.

Nitesh Sharan: Yeah, thanks, Gil. I'll start by saying principally, you know, we're trying to drive and create long-term value for customers. And we're seeding and hearing the demand, and we're seeing how the technology opportunities are intersecting with that consumer demand in real time and expanding, frankly, every conversation we have with customers. So I think the opportunity in front of us is tremendous, and so I don't think that gives us a carte blanche to just go spend, spend, spend.

Nitesh Sharan: Yes, Thanks Gail.

Speaker Change: I'll start by saying, principally we're trying to drive and create long term value for customers and we're seeing and hearing the demand and we're seeing how the technology opportunities intersecting with that consumer demand real time, and expanding frankly every conversation we have with customers. So I think the opera.

Nitesh Sharan: Attunity in front of US is tremendous and so I don't think that gives us a.

Nitesh Sharan: Carte Blanche to just go spend spend spend.

Nitesh Sharan: You know, we do need to be thoughtful about the pathway, and I've conveyed our directionality towards getting to a break-even profile next year. But to your point, I think there is more opportunity that we're seeing every day in terms of active conversations with customers to really go faster, to invest in the solutions. I think certainly your first question on the opportunities and the car is certainly there, and we're seeing that, especially with the speed that we're able to move with some of the EV players. But more broadly, on the restaurant side, in particular customer service, there is just so much demand.

Nitesh Sharan: We do need to be thoughtful about the pathway and I've conveyed our our directionality towards getting to a breakeven profile next year.

Nitesh Sharan: But to your point I think there is more opportunity that we're seeing every day in terms of active conversations with customers really go faster.

Nitesh Sharan: To invest in our solutions I think certainly your first question on the opportunities in the auto is certainly there and we're seeing that especially with the speed that we're able to move with some of the EV players, but more broadly on the restaurant side in particular in customer service. There is just so much demand we highlighted in our prepared remarks, a bit around the traction that we're getting.

Nitesh Sharan: We highlighted in our prepared remarks a bit around the traction that we're getting with larger and larger QSRs. Those larger and larger QSRs, for us, could be, you know, at scale, hundreds of millions of annual revenue, recurring revenue. So we see the size of the prize in the short term, and we also know given the ecosystem is so very dynamic, a lot of new players, a lot of new technologies that are advancing very quickly, and the tremendous pace of innovation going on, we need to stay agile.

Nitesh Sharan: With larger and larger <unk> larger and larger <unk> for us could be at scale with them hundreds of millions of annual revenue recurring revenue. So.

Nitesh Sharan: So we see the size of the prize in the short term and we also know given the ecosystem as it is.

Nitesh Sharan: So very dynamic lot of new players a lot of new technologies that are advancing very quickly tremendous pace of innovation going on we need to stay agile and so that's why the balance sheet is super important for us to have this rail Arsenal.

Nitesh Sharan: And so that's why the balance sheet is super important for us to have this real arsenal in our back pocket to be thoughtful. We will do it very judiciously and prudently with capital, and mindfulness around driving strong returns. But there's a balance in all of that, so I can't give a sort of uni-directional statement. I know ultimately the principle that we govern our choices on investments around: is it really creating value for customers?

Nitesh Sharan: Our back pocket to be thoughtful we will do it very judiciously and prudently with capital.

Nitesh Sharan: Mindfulness around driving strong returns, but theres, a balance and all of that so I can't give a sort of you need directional statement I know ultimately the the principal that we govern our choices on investments around is it really creating value for customers and are we hearing that and as the echoes get louder.

Nitesh Sharan: And are we hearing that? And as the echoes get louder and louder for that, we're going to go and serve those consumer interests. So I hope that's not too opaque of an answer for you, but that's how we think about it. Makes sense. Thank you.

Nitesh Sharan: Allowed or for that we're going to we're going to go and serve those consumer interest. So I hope thats not too opaque have an answer for you, but that's how we think about it.

Gil Barnum Luria: make sense. Thank you very much.

Speaker Change: Makes sense. Thank you very much.

Speaker Change: Thanks, Jeff.

Speaker Change: Thank you.

Operator: One moment for our next question. Our next question comes from the line of Mike Latimore from Northland Capital Market.

Speaker Change: One moment for our next question.

Operator: Our next question comes from the line of Mike Latimore from Northland Capital markets.

Michael James Latimore: Great, thanks. Yeah, congrats on all the developments here. Maybe, can you just talk a little bit about the synergies you're seeing with SYNC3 so far? You know, what kind of cross-sell opportunities are you seeing and have had? You know, are you able to leverage some of their data to train your model? And then are you able to use some of their resources to help with deployments?

Michael James Latimore: Great. Thanks, Congrats on all the developments here.

Michael James Latimore: Maybe can you just talk a little bit about.

Michael James Latimore: Synergies youre seeing with sync three so far.

Michael James Latimore: What kind of cross sell opportunities are you seeing an ad.

Michael James Latimore: Are you able to leverage some of their data to train your models.

Michael James Latimore: And then are you able to use some of their resources to help us deployments.

Keyvan Mohajer: and maybe Nitesh can add more. Absolutely, we see the synergy, it was a fantastic acquisition, and we couldn't be more proud of it. Every day we feel it; they have a ton of data, and we are already using that to make our models better. They have a lot of integration, and it's not just about offering a magical AI model that does everything. You have to integrate with POS systems, and a lot of these enterprise customers have their own in-house systems that you have to integrate with.

Speaker Change: Yeah, I'll start and.

Michael James Latimore: Maybe this has kind of add more but.

Keyvan Mohajer:

Keyvan Mohajer: Absolutely if you see the synergies it was a fantastic acquisition, we couldnt be more proud of it everyday you feel it.

Keyvan Mohajer: They have a ton of data.

Keyvan Mohajer: And we are already using that to make our models better.

Keyvan Mohajer: They have a lot of integration.

Keyvan Mohajer: And it's not just about offering a magical AI model that does everything you have to go on integrates with.

Keyvan Mohajer: POS systems and a lot of these enterprise customers have their own in house systems that you have to integrate with.

Keyvan Mohajer: They have to do analytics and menu management and so on, and they have a lot of that that we are using to accelerate our scale with our organic customers as well, so on the technology and data side, but the synergy between the two companies in terms of experience. We started as an AI company. We identified restaurants as a very ripe business to go into. They started as restaurant operators, and they identified automation as a good business to get into.

Keyvan Mohajer: They have to.

Keyvan Mohajer: Analytics and menu management and.

Keyvan Mohajer: And so on they have a lot of that that we are using.

Keyvan Mohajer: To.

Keyvan Mohajer: Accelerates our scale with our organic customers as well.

Keyvan Mohajer: And.

Keyvan Mohajer: So on the other technology and data side, but.

Keyvan Mohajer: Energy between the two companies in terms of experience, we started as an AI company identified restaurants.

Keyvan Mohajer: Very ripe business to go into they started as a restaurant operators and they identified automation as.

Keyvan Mohajer: As a good business to get into and we started nearly 20 years ago. Each and then they became more AI to be became into restaurants, but they understand that the industry really well and that.

Keyvan Mohajer: We started nearly 20 years ago, and then as they became more AI-driven, we became restaurants, but they understand that industry really well, and that experience is what we needed to improve our scale as we go forward.

Keyvan Mohajer: That experience is what we need it to.

Keyvan Mohajer: Improve our scale as we go forward.

Nitesh Sharan: Yeah, and you know, I'll just add a couple of points to that. I think I'll kind of break it up into three categories.

Keyvan Mohajer: Yeah.

Speaker Change: I'll just add a couple of points on that I think I kind of break it up into three categories revenue Theres a lot of opportunities in terms of the cross sell upsell, Kevin I'll, let it too.

Nitesh Sharan: Revenue, there's a lot of opportunities in terms of cross-sell and up-sell, Kevin alluded to. I'd say, on top of that, just the relationships they bring and some of the extended conversations were happening much faster than what we would have been able to do alone, and that's happening at an accelerating pace. And then just the ability to bring our core engines along with what they've already built, I think is an accelerant with their own customers but also with new customer relationships.

Nitesh Sharan: On top of that just the relationships they bring in some of the extended conversations we're having much faster than what we would've been able to do alone that's happening at accelerated pace.

Nitesh Sharan: And then just.

Nitesh Sharan: The ability to bring our core engines, along with what they've already built I think as an accelerant with their own customers, but also with new customer relationships. So from a revenue standpoint. This is the multi sort of medium longer term opportunity just get even more excited.

Nitesh Sharan: So from a revenue standpoint, this is a medium-term, longer-term opportunity. We just get even more excited several months into the acquisition from that thesis we had going into it. On the cost side, we've talked about a couple of these, Mike, and I'd say these are we're in the midst of this journey, but there are some back-end costs in terms of cloud migration that we're in the middle of driving.

Nitesh Sharan: Months into the acquisition from the thesis we had going into it on the cost side, we've talked about a couple of these Mike and I would say it either we're in the midst of this journey, but there are some back end cost in terms of cloud migration that we're in the middle of driving there are architectural things and the software stack that we can bring our.

Nitesh Sharan: There are architectural things in the software stack so that we can bring our own capabilities back in, go faster than what we were doing, and learn from learnings on both sides. So there are cost elements that you certainly didn't see in the Q1 numbers because the Q1 numbers sort of reflect a lot of both acquisition transactional stuff but also just the call it an unsynergized cost structure.

Nitesh Sharan: And again capabilities in and go faster than what we were doing learned from learnings on both sides. So theres cost elements that you certainly didn't see in the Q1 numbers because the Q1 numbers sort of reflect a lot of those acquisition transactional stuff, but also just the.

Nitesh Sharan: Call it on synergize cost structure, that's not even a word but.

Nitesh Sharan: That's not even a word, but that's what we're doing on the cost side. And so I think over the next quarters, you'll see more of that efficiency driving through. One specific thing is the growth margin. And I commented on this in the prepared remarks, but growth margins were depressed in the quarter, but this is okay. This is on plan.

Nitesh Sharan: That's what we're doing on the cost side and so I think over the next quarters Youll see more of that efficiency drive through one specific thing is the gross margin and I commented about this in the prepared remarks, but gross margins were depressed in.

Nitesh Sharan: In the quarter, but this is okay. This is it.

Nitesh Sharan: Unplanned.

Nitesh Sharan: We know that they have a call center business, and we will, over time, be migrating that to automation. Being able to leverage the real-time production data is gold to be able to improve our models. And so we're in the process of driving that on our own.

Nitesh Sharan: Know that they have a call center business and we over time will be migrating that to automation and be able to leverage the real time production data is gold to be able to improve our models and so we're in process of driving that.

Nitesh Sharan: I'm just putting some data points out there. You didn't ask it, but SoundHound's gross margin year over year on a standalone basis was up over 300 basis points. So we're still driving the great margin profile, but we're going to have this transition with SANG3. And then lastly, I'll just say the innovation opportunity in terms of synergies and, notably again, data. Data is so important here, real-time improving our models. And just again, being able to come together and say, boy, this really matters to customers.

Nitesh Sharan: On our own and just to put some data points out there you didn't ask it but sound hounds gross margin year over year on a standalone basis was up over 300 basis points. So we're still driving the right margin profile, but we're going to have this transition with <unk> III and then lastly, I'll, just say that innovation opportunity in terms of synergies.

Nitesh Sharan: And notably again data and data is so important here real time, improving our models.

Nitesh Sharan: And just again.

Nitesh Sharan: Being able to come together and go quite this really matters to customers to be able to talk to there.

Nitesh Sharan: To be able to talk to their operators in 10,000 locations and say, this is what matters to the restaurant ecosystem and to make our products more attuned to what they need. Those are the types of things we're very excited about. So we could go much longer on this, but I know it's a short call, so I'll stop there. But there's a lot we're excited about.

Nitesh Sharan: Operators in 10000 locations to say this is what matters to the restaurant ecosystem and to make our products more attuned to what they need those are the types of things. We're very excited about so we can go much longer on this but I know, it's a short call. So I'll stop there but.

Nitesh Sharan: And what we're excited about that.

Michael James Latimore: All right, sounds like great progress out of the gate. And then, just real quick on the restaurant vertical, is there a clear leader here between phone ordering versus drive-thrus in terms of just like what's in the pipeline? Is it skewed to one to the other very much here, or is it kind of balanced between phone ordering and drive-thrus?

Speaker Change: Alright, it sounds like yes, it sounds like great progress out of the gate and then just real quick on the restaurant vertical.

Michael James Latimore: Is there a clear.

Michael James Latimore: <unk> here between phone ordering versus drive throughs in terms of just like what's in the pipeline does it skew to one for the other very much here or does it kind of balance between phone ordering drivers.

Michael James Latimore: It's pretty it's balance well it is a bit of short term long term answer to that question is balanced and I would extend it to other opportunities not simply the phone versus drive through but we're excited about some conversations we're having with a program we called employee assessed which is helping in store employees.

Nitesh Sharan: It's a bit of a short-term, long-term answer to that question. It's balanced, and I would extend it to other opportunities, not simply the phone versus drive-through, but we're excited about some conversations we're having about the program we call Employee Assist, which is helping in-store employees. There are in-app conversations going on that a lot of restaurants are excited about. Our smart answering capability is sort of a front-end vehicle for a lot of this, but something else.

Nitesh Sharan: In App conversations going on and a lot of restaurants are excited about our smart answering capability is sort of front end vehicle on a lot of this is something else. So there's a suite of opportunities and part of my last answer on innovation I mean, those are the things that are sort of getting incubated here and there.

Nitesh Sharan: So there's a suite of opportunities, and part of my last answer on innovation, I mean, those are things that are sort of getting incubated here. And then, you know, as we've said before, there's sort of a timeline for deployment. So we know with drive-through, there is hardware requirements, there are hardware requirements, there are cycles we need to go through. We're building great partnerships with many hardware providers to standardize and move faster there. But that is, we know that is a breakthrough. Nobody else is doing it. I mean, certainly we don't disparage competition.

Nitesh Sharan: As we've said before there is sort of a timeline of deployment. So we know with drive through there is hardware requirement. There are hardware requirements. There are cycles, we need to go through we are building great partnerships with many hardware providers to standardize and move faster there.

Nitesh Sharan: But that is we know that as the break that nobody else is doing I mean, certainly we don't disparage competition. We know that there are other players that can come but right now it's greenfield that we have a unique value proposition that we're driving until we want to go really fast.

Michael James Latimore: We know that there are other players that could come, but right now, it's Greenfield. We have a unique value proposition that we're driving, and so we want to go really fast. And then even on phone ordering, you know, they have a lot of great partners, and we're growing in that space. And some of what we find is in certain cuisine types, you see a heavier weighting of phone volume, and so we're going to service those particular cuisine types more so in that front. So I am a little balanced but excited on multiple fronts.

Michael James Latimore: And then even on phone ordering they have a lot of great partners and we're growing in that space in some what we find it in certain cuisine types, you see a heavier weighting of phone volume and so that we're going to service those particular, because we couldnt even types that more so on that front, so little balanced but excited on multiple fronts.

Michael James Latimore: All right, thanks very much.

Speaker Change: Alright, thanks very much.

Speaker Change: Thanks, Mike. Thank you one moment for our next question.

Operator: Thank you. One moment for our next question. Our next question comes from the line of Glenn Mattson from Ladenburg.

Operator: Our next question comes from the line of Glenn Mattson from Ladenburg.

Glenn Mattson: I apologize if any of this is repetitive because I missed part of Keyvan's prepared remarks. Nitesh, you just kind of talked about some of the gating factors in rolling out the offering in retail, like some of the equipment that has to be placed in. You know, I think on the last call, you guys also kind of talked about [inaudible] Michael Latimore, Brett Knoblauch, Bryan Vaniman, Keyvan Mohajer, Vivekanandhan Palani, Gil Luria, Nitesh Sharan, SoundHound

Glenn Mattson: Hi, yes.

Glenn Mattson: I apologize if any of this is repetitive because I missed part of our prepared remarks, but.

Glenn Mattson: The test can you just kind of talked about the.

Glenn Mattson: Some of the gating factors in.

Glenn Mattson: In rolling out.

Glenn Mattson: The offering and the retail like some of the equipment that has to be placed.

Glenn Mattson: I think last call you guys kind of talked about.

Glenn Mattson: The advantage of being a little bit high.

Glenn Mattson: Then you could handle.

Glenn Mattson: Handle at the given time and that some customers are kind of put on hold while you kind of like.

Glenn Mattson: Beside.

Glenn Mattson: Who best to serve and how quickly and everything so I guess I'm just trying to figure out.

Glenn Mattson: Understand that.

Glenn Mattson: Some change there.

Glenn Mattson: <unk> caught up to some of that demand somewhat or if there's more investment needed to make to get to that Bob just kind of an update on where you are from that point of view.

Nitesh Sharan: Yeah, thanks Glenn. We're working hard. We are making progress for sure. We don't like that, you know, and last time, I want to clarify also that we, You know, it's not that we're talking about months and months out.

Nitesh Sharan: Yes, thanks Glenn.

Glenn Mattson: We're working hard.

Nitesh Sharan: We're making progress for sure we don't like that customer last time I just wanted to clarify so we.

Nitesh Sharan: It's not that we're talking about months and months out we are really trying to address some of these things where we've got a bit of pipeline that we need to work through with those customers. So theres been a lot of progress Youll see unpacking our cost at this time I know it will be a little complicated with the acquisition, but if I break it apart into kind of three pieces. One is just acquisition transitional.

Nitesh Sharan: We are really trying to address some of these things where we've got a bit of a pipeline that we need to work through with those customers. So there's been a lot of progress. You'll see, you know, unpacking our costs this time, I know it'll be a little complicated with the acquisition, but if I break it apart into kind of three pieces, you know, one is just acquisition transitional things. One is the inclusion of sort of acquisition plus other one-time dynamics and seasonal things.

Nitesh Sharan: Two things one is the inclusion of sort of acquisition plus other onetime dynamics and seasonal things and then there is.

Nitesh Sharan: And then there are sort of investments that we will continue to make. Again, going back to Gil's question, like this target of getting to profitability next year. We are accelerating investment in the right pockets to serve that consumer demand, that customer demand. So to Glenda, your question, we are making sure that we are hiring the right people, and investing in the right capabilities so that we can quickly get and serve customers the right way.

Nitesh Sharan: Sort of investments that we will continue to make again if you go back to <unk> question like this target of getting to profitability next year.

Nitesh Sharan: We are accelerating investment in the right pockets to serve that consumer demand or customer demand. So to Glenn to your question. We are making sure that we are hiring the right people investing in the right capabilities. So that we can quickly get and serve customers the right way and so I would say we are making really good progress on that.

Nitesh Sharan: And so I'd say we are making really good progress on that. The challenge, and maybe a silver lining, is that we're getting a lot more demand too. Every time we have meaningful innovation and progress, the word gets around pretty quickly, particularly on the restaurant side. We're excited. Actually, I think it's coming up very soon, the largest restaurant conference show in Chicago.

Nitesh Sharan: The challenge.

Nitesh Sharan: Maybe a silver lining challenges that we're hitting a lot more demand to every time, we have meaningful.

Nitesh Sharan: Innovation and progress the word gets around pretty quickly, particularly in the restaurant side. We're excited actually I think it is coming up very soon the largest restaurant conference show in Chicago, and we've got a big showcase ready to go there to just get our word out so while we are making progress with those existing relationships.

Nitesh Sharan: And we've got a big showcase ready to go there to just get our word out. So while we are making progress with those existing relationships, the dynamic we're faced with is that we're getting more and more demand. And that's a good problem to have, but we don't, we can't sit on our restaurant laurels. We've got to invest to make sure that we're serving customer demand. And so I mentioned the prepared marks was one of the largest QSRs. You know, hearing feedback about the technology moving really well. In fact, the challenge in that situation was that the dynamic interaction technology was taking the orders too quickly for the back ordering preparation to handle.

Nitesh Sharan: The dynamic we're faced with is we're getting more and more demand.

Nitesh Sharan: And Thats a good problem to have but we don't we can't sit back rests on our laurels, we got to invest to make sure that we're serving customer demand and so I mentioned in the prepared remarks with one of the largest <unk> hearing feedback about that.

Nitesh Sharan: Technology, moving really well in fact, the challenge in that situation was the dynamic interaction technology was taking the orders too quickly for the back ordering preparation to handle that that obviously, we want to work with them together to get that situation.

Nitesh Sharan: Obviously, we want to work with them together to get that situation remediated or ameliorated. But that's a good sign of the progress we can make. And then hearing comments from our customers about the positivity of working with us, that's what we want to keep fueling. We know that's a virtuous cycle that could keep building. So I think we're trying really hard to keep up with it. We're investing to make sure we're meeting customer demand. And, but I will acknowledge we're still faced with a lot of demand that we're trying to meet. Great, that's very helpful.

Nitesh Sharan: Ameliorated, but that's a good good sign of the progress we can make and then hearing comments from our customers about the positivity of working with US that's what we want to keep fueling we know thats virtuous cycle that could keep building.

Nitesh Sharan: I think we're trying really hard to keep pace with it we're investing to make sure we're serving consumer to meet customer demand.

Nitesh Sharan: And.

Nitesh Sharan: But I will acknowledge we're still.

Nitesh Sharan: We're still faced with a lot of demand that we're trying to work through.

Glenn Mattson: Great, that's very helpful and a good problem to have, of course. The second question, just for me, would be... I feel like you've hinted at this in the past, and maybe on this call as well, but just the outlook for what you're thinking about for future or further acquisitions beyond SYNC 3. Now, I realize you have some digestion to do here for that SYNC 3 acquisition still, but I'm curious what your thought process is in terms of, you know, what kind of attributes you're looking for in future acquisitions and what your app is.

Nitesh Sharan: Great that's very helpful and a good problem to have of course.

Glenn Mattson: And the second question just for me.

Glenn Mattson: I feel like you've hinted at this in the past maybe on this call as well, but just the.

Glenn Mattson: The outlook for what Youre thinking about for future or further acquisitions beyond three now.

Glenn Mattson: Yes.

Glenn Mattson: Some digestion to do here for that.

Glenn Mattson: Acquisitions still but.

Glenn Mattson: I'm curious what your thought processes in terms of.

Glenn Mattson: What kind of attributes you're looking for.

Glenn Mattson: Future acquisitions, and what how big your appetite as I guess thanks.

Glenn Mattson: Sure.

Nitesh Sharan: So I'll start with our opportunity organically is tremendous, meaning we're excited about what SYNC3 is bringing. We're excited about what we're able to address, but just with the capabilities we have right now. We know we could do a lot of great things, so we're 100% the organization is focused on driving that, and it could fuel great long-term growth and build an amazing business. The ecosystem around us, the macro landscape, and what we're seeing from other players, there are multiple things happening. First, I think the recent shift to Gen AI is disrupting a lot.

Glenn Mattson: So I'll start with our opportunity organically is tremendous.

Nitesh Sharan: We're excited about what <unk> is bringing.

Nitesh Sharan: We're excited about what we're able to address but just with the capabilities we have right now.

Nitesh Sharan: We can do a lot of great things so.

Nitesh Sharan: We're 100% the organization is focused on driving that and they can feel great long term growth.

Nitesh Sharan: Build a building amazing business the ecosystem around us.

Nitesh Sharan: <unk> landscape and what we're seeing from other players there is multiple things happening first I think that.

Nitesh Sharan: The recent ship Gen AI is disrupting a lot of people.

Nitesh Sharan: Number two is bringing a lot of new players into the ecosystem. So we're certainly not going to sit with our heads in the sand and kind of just drive our own agenda. We're going to be very mindful because, number one, it's not just an acquisition story. It's about partnerships. It's about learning from others.

Nitesh Sharan: Number two it's bringing a lot of new players into the ecosystem. So we're certainly not going to sit with our head in the sand and kind of just drive our own agenda, we're going to be very mindful because number one it's not just an acquisition story, it's about partnerships, it's about learning from others and so we're going to take a very holistic view of being very thoughtful of who are the new players and we we have a team dedicated to being.

Nitesh Sharan: And so we're going to take a very holistic view of being very thoughtful about who are the new players. And we have a team dedicated to being on top of this all the time. And so the architecture we think about any organic investment or inorganic opportunity is through our three-pillar framework. We are aggressively going out and driving voice-enabled products, cars, IoT, and other devices. We're aggressively starting the journey through customer service, leading with restaurants, but our smart answering is scaling across others. Keyvan mentioned in prepared remarks the surrounding fitness centers, beauty salons, real estate agencies, and so forth.

Nitesh Sharan: On top of this all the time and so the architecture, we think about any organic investment or inorganic opportunity is two or three pillar framework, we are aggressively going out and driving voice enabled products autos Iot and other devices.

Nitesh Sharan: We're aggressively starting the journey through customer service, leading with restaurants, but our smart answering is scaling across others Kayvon mentioned in prepared remarks around.

Nitesh Sharan: Fitness centers, and a beauty Salon real estate agency and so forth. Many many different types of businesses that we are now servicing.

Nitesh Sharan: Many, many different types of businesses that we are now servicing. And we are now, because of the scale we have, seeing great opportunities for generating momentum with monetization, which is when we're integrating the voice-enabled services with voice-enabled products. And frankly, we see opportunity to drive that organically. And then when we find companies who are doing a great job, you know, they're doing some great things in a particular pocket, we're going to talk to them.

Nitesh Sharan: And we are now because of the scale, we have seen great opportunities and generating momentum with monetization, which is when we are integrating the voice enabled services with voice enabled products and frankly, we see opportunity to drive that organically and then when we find companies who are doing a great.

Nitesh Sharan: They're doing some great things in particular pocket, we're going to talk to them.

Nitesh Sharan: And if there is, you know, 12 things need to line up for M&A to ever make sense, but certainly partnerships make sense a lot, and we're expanding that. We mentioned a few of those on the call today.

Nitesh Sharan: And if there is 12 things need to lineup for M&A to ever make sense.

Nitesh Sharan: But certainly partnerships makes sense a lot and we're expanding that we mentioned a few of those on the call today.

Nitesh Sharan: So we're going to be open-minded. Having a strong balance sheet gives us and affords us the opportunity to be thoughtful. And yet again, we're going to be prudent stewards. So everything needs to be on strategy, needs to be focused on where the world is moving, what the tech is allowing, and what customers want. And in terms of, I guess you also asked about appetite. It's all about, to me, return on capital above your cost of capital, risk adjusted.

Nitesh Sharan: So so we're going to be open minded, having a strong balance sheet gives us and affords us the opportunity to be.

Nitesh Sharan: Thoughtful and yet again, we're going to be prudent stewards, so everything needs to be on strategy needs to be on where the world is moving where the tech is allowing what customers want.

Nitesh Sharan: And in terms of I guess, you also asked like appetite.

Nitesh Sharan: It's all about to me, it's return on capital above your cost of capital risk adjusted and as long as that math works out then we'll be open to it but we are a small disruptive company. So it's not always a dollar sign. It's also a speed sign we want to go fast and continue to disruptive aggressively disrupt aggressively so.

Glenn Mattson: And as long as that math works out, we'll be open to it. But we are a small disruptive company. So it's not always a dollar sign; it's also a speed sign. We want to go fast and continue to disrupt aggressively. So, you know, if there's sort of an... opportunity that seems like that would slow us down, that's not the right thing. If things that will make us go faster, that's the right thing. So that's the frame we use. Great, that's very helpful.

Glenn Mattson: Sort of.

Glenn Mattson: An opportunity that seems like that would slow us down and that's not the right thing and things that will make us go faster that's the right thing so that's the framework.

Glenn Mattson: Great. That was very helpful, Nitesh. Thanks, and congrats again.

Speaker Change: Great. That's very helpful. Thanks, and congrats again.

Speaker Change: Thank you.

Operator: Thank you. As a reminder, to ask a question, please press star one on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Our next question comes from the line of Brett Knoblauch from Cantor Fitzgerald.

Glenn Mattson: Thank you as a reminder to ask a question. Please press star one one on your telephone.

Brett Anthony Knoblauch: And wait for your name to be announced to withdraw your question. Please press star one one again.

Operator: Our next question comes from the line of Brett Knoblauch from Cantor Fitzgerald.

Brett Anthony Knoblauch: Hi guys, thanks for taking my question. On the restaurant side of the business, it's nice to see kind of demand continue to increase there. Can you talk maybe about where that demand is coming from, from a lead generation perspective? Is it your outbound sales motion? Are they coming to you? For example, like with Applebee's, it seems like that got deployed very quickly. Or is it the POS partnerships that you have with Square and Olo? I would be curious more on that front about the go-to-market strategy on the restaurant side.

Brett Anthony Knoblauch: Hi, guys. Thanks for taking my questions on the restaurant side of the business.

Brett Anthony Knoblauch: It's nice to see kind of demand continue to increase there.

Brett Anthony Knoblauch: Can you talk maybe about where that demand is coming from.

Brett Anthony Knoblauch: Lead Gen perspective is it your outbound sales motion are they coming to you for example, like with Applebee's it.

Brett Anthony Knoblauch: It seems like that got deployed very quickly.

Brett Anthony Knoblauch: Or is it the Pos partnerships that you have with them.

Brett Anthony Knoblauch: We're in.

Brett Anthony Knoblauch: No.

Brett Anthony Knoblauch: Just to be curious more on that front about the go to market strategy on the restaurant side.

Keyvan Mohajer: Yeah, thanks for the question. So it's a combination of both.

Speaker Change: Yeah. Thanks for the question so it's a combination.

Keyvan Mohajer: We have events that we participate in that increases awareness like the one that's coming up National Restaurant Association.

Speaker Change: We have.

Keyvan Mohajer: We have now a good sized sales team that <unk> III acquisition augments that.

Keyvan Mohajer: You know, we have events that we participate in that increase awareness, like the one that's coming up, the National Restaurant Association. We have, you know, we have now a good-sized sales team that thinks reacquisition augments that. But we have seen a big shift where, you know, maybe 18 months ago, we had to knock on these doors and educate them about the value of voice AI and automation, but now we see them knock on our door.

Speaker Change: But we have seen a big shifts that maybe.

Keyvan Mohajer: 18 months ago, we have to knock on the doors and educate them about the value of voice AI automation, but now we see them knock on our door likely a lot of these brands.

Keyvan Mohajer: Like a lot of these brands that we used to dream about talking to, now they're coming to us, knocking on our door, and they want to move fast. So there has been a very big change in the dynamics of the market.

Keyvan Mohajer: We used to dream about talking to now they are coming to us knocking on our door and they want to move fast.

Keyvan Mohajer: So there has been a very big changing the dynamic of the aftermarket.

Keyvan Mohajer: Okay.

Keyvan Mohajer: Yeah.

Speaker Change: Okay perfect. Thank you and then on the partnership side.

Brett Anthony Knoblauch: Perfect. Thank you.

Brett Anthony Knoblauch: And then on the partnership side. I guess, which partnership are you most excited about? You know, a monetization opportunity over the near term. Would it be NVIDIA? Would it be ARM? Perplexity? I guess any insights into how we should be thinking about those translating into financials?

Speaker Change: I guess whats partnership are you most excited about from a.

Brett Anthony Knoblauch: Monetization opportunity.

Brett Anthony Knoblauch: Over the near term would it be Nvidia would it be arm.

Brett Anthony Knoblauch: Perfect.

Brett Anthony Knoblauch: Any insights into how we should be thinking about those translating into financials.

Keyvan Mohajer: Yeah, I think channel

Keyvan Mohajer: Yeah, I think channel partnerships are very impactful when you know there is a complementary business that has the same customers, offering them something else, and then our service on top of it can be very complementary, and they can bring us those opportunities or take our stuff and take it to their customers, like Olo, for example, is a partnership we are really excited about. Those channel partnerships are very key, but, you know, maybe we can improve our product. Uh, we know that... is going to translate to more adoption and more revenue, so the Paraplexity partnership that we announced today was along those lines.

Brett Anthony Knoblauch: Yeah, I think channel partnerships are.

Keyvan Mohajer: Very impactful when there is a complementary business that has.

Keyvan Mohajer: The same customers offering them something else that then our service on top of it can be very complementary.

Keyvan Mohajer: They can.

Keyvan Mohajer: Bringing us those opportunities or take our stuff and take it.

Keyvan Mohajer: To their customers like <unk> for example is a partnership we are really excited about that.

Keyvan Mohajer: Channel partnerships are.

Keyvan Mohajer: Our very key but.

Keyvan Mohajer: We can improve our product.

Keyvan Mohajer: We know that.

Keyvan Mohajer: He is going to translate to more adoption or more revenue for the perplexity.

Keyvan Mohajer: Partnership that we announced today was.

Keyvan Mohajer: On those lines.

Speaker Change: Perfect. Thank you.

Speaker Change: Thank you.

Operator: As a reminder, to ask a question, please press star 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. At this time, I am showing no further questions. This concludes today's conference call. Thank you for participating. You may now disconnect.

Keyvan Mohajer: As a reminder to ask a question. Please press star one one on your telephone and wait for your name to be announced to withdraw. Your question. Please press star one one again.

Operator: At this time I am showing no further questions. This concludes today's conference call. Thank you for participating you may now disconnect.

Operator: Yes.

Operator: [music].

Operator: Okay.

Operator: Yeah.

Operator: Okay.

Operator:

Operator: Okay.

Operator: Okay.

Operator: Okay.

Operator: Okay.

Operator: [music].

Operator: No.

Operator: Yes.

Operator: Yeah.

Operator: Yes.

Operator: [music].

Operator: Okay.

Operator: Yes.

Operator: Yes.

Operator: Yes.

Operator: Yes.

Operator: Okay.

Operator: Okay.

Operator: Yes.

Operator: [music].

Operator: [music].