SoundHound AI (SOUN -0.28%), a voice artificial intelligence technology provider, delivered a standout earnings report for the quarter ended June 30, 2025, released on August 7, 2025. The company announced revenue of $42.7 million, more than doubling results from the prior year, up 217% year-over-year thanks to rapid expansion and key acquisitions. This total exceeded Wall Street's consensus estimate of $32.9 million by nearly $9.8 million, or 29.9%. Non-GAAP earnings per share came in at a loss of $(0.03), comfortably ahead of the $(0.09) per share non-GAAP loss analysts expected. Despite the record topline growth and narrowed non-GAAP net loss, gross margins compressed to 39.0% from 63.0% last year, reflecting the impact of newly acquired, lower-margin businesses. Overall, the period marked significant revenue progress and important customer wins—balanced by the need for ongoing margin improvement and further operational efficiencies.
| Metric | Q2 2025 | Q2 2025 Estimate | Q2 2024 | Y/Y Change |
|---|---|---|---|---|
| EPS (Non-GAAP) | $(0.03) | $(0.09) | $(0.04) | 25.0 % |
| Revenue | $42.7 million | $32.9 million | N/A | N/A |
| GAAP Gross Margin | 39.0 % | 63.0 % | (24.0) pp | |
| Non-GAAP Gross Margin | 58.4 % | 66.5 % | (8.1) pp | |
| Non-GAAP Adjusted EBITDA | $(14.3 million) | $(13.8 million) | (3.6 %) |
Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q1 2025 earnings report.
What Does SoundHound AI Do—and What Drives Its Success?
SoundHound AI specializes in voice artificial intelligence solutions for businesses, enabling spoken interactions and intelligent responses in products and services. Its technology powers conversational agents for automotive, restaurants, enterprise, and various customer-facing applications. The company has developed proprietary models like Speech-to-Meaning and Deep Meaning Understanding. These technologies allow users to interact with machines in natural language, providing accurate and real-time communication.
Recently, SoundHound AI has focused on expanding its product family—spanning agentic AI platforms, voice commerce capabilities, and broad language support. The business is driven by three revenue pillars: royalties from integrations, subscriptions, and usage-based monetization. Maintaining a competitive edge requires continuous innovation, effective integration of acquisitions, and forging global partnerships that open new opportunities across sectors.
Quarter in Review: Financial, Customer, and Product Highlights
The quarter showcased exceptional revenue growth, with reported revenue surging 217% year-over-year. This leap was spurred by strong adoption in key verticals and incremental contributions from integration of acquisitions. However, gross margin fell sharply to 39.0%, down from 63.0% in Q2 2024. The main driver of this contraction was the addition of lower-margin professional services and call center businesses, acquired through companies like Amelia and SYNQ3. Management clarified that this mix impact was expected and that efforts to return to prior margin levels are underway.
Non-GAAP net loss improved to $(11.9) million, marking progress from a $(14.9) million non-GAAP net loss a year earlier. Diluted operating losses, both GAAP and Non-GAAP, remained a reality for the period, highlighting how scale and cost discipline are works in progress. The quarter included a significant one-time, non-cash mark-to-market expense of $31 million tied to acquisition liabilities, which unfavorably affected the company’s GAAP results.
During the quarter, SoundHound AI saw wins and expansions across several industry verticals. In restaurants, it renewed and expanded contracts with brands like MOD Pizza and Chipotle, while adding new customers such as Red Lobster and IHOP. The number of sites using its restaurant solutions topped 13,000. Automotive growth was enriched by new original equipment manufacturer (OEM) awards in China, rollout of chat AI in North America, and continued expansion with KIA India. Its healthcare push added large group clients like Primary Health Solutions and Allina Health. SoundHound works with seven of the top ten global financial institutions, and either renewed or had upsells with four of them.
The quarter also saw the debut and commercial uptake of new offerings. "Amelia 7" was launched as a next-generation agentic AI platform—meaning a software agent able to understand, reason, and act in more human-like ways—which now has 15 enterprise customers piloting or migrating to it. The company emphasized the value of its proprietary foundation model (Polaris) and continued its focus on multi-language capabilities and white-label solutions, which let customers retain full brand and data control. Strategic alliances were also expanded, including a new partnership with global restaurant technology specialist Acrelec and channel partners such as AVANT Communications, all aimed at broadening the company’s international presence.
From a financial perspective, diversification improved, with no single customer making up more than 10% of revenue. This trend reduces risk concentration and reflects broad-based momentum. Cash and equivalents stood at $230 million as of June 30, 2025, and the company reported having no debt. Cash used in operations for the first half of 2025 was $(43.7) million, showing a slight increase in net cash used in operating activities (cash burn) for the six months ended June 30, 2025, versus the prior year.
Looking Forward: Guidance and What to Watch Next
SoundHound AI raised its full-year 2025 revenue outlook, now expecting $160 million to $178 million, up from a prior full-year 2025 range of $157 million to $177 million. Management reiterated its target of achieving adjusted EBITDA profitability by year-end 2025. The company continues to pursue margin recovery and increased automation.
Looking ahead, key areas for investors to monitor include progress in recovering gross margins and the pace of integration and retention within acquired businesses. The ongoing expansion into new geographies and verticals, paired with continued innovation in language models and agentic AI, remain focal points.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
