SoundHound AI Inc is expected to release its third-quarter earnings report for 2025 after the market closes on November 6. The market's focus will be on the company's ongoing expansion in restaurant voice ordering and enterprise AI, the sustainability of high gross margins, and the progress towards achieving adjusted EBITDA breakeven within the year.
Forecast
According to Tiger Trade data, the market consensus forecasts that SoundHound AI's third-quarter revenue will be 40.48 million yuan, marking a 61% year-over-year increase; the loss per share is expected to be $0.096, with a narrowing net loss.
Last Quarter Review
In the second quarter, SoundHound AI reported revenue of $42.70 million, up 217% year-over-year; the GAAP gross margin was 39.0%, and the non-GAAP gross margin was 58.4%; the GAAP net loss was $74.70 million, and the non-GAAP net loss was $11.90 million; the adjusted EBITDA loss was $14.30 million; the GAAP loss per share was $0.19, and the non-GAAP loss per share was $0.03.
The GAAP performance included losses from changes in the fair value of contingent acquisition liabilities, which are marked to market every quarter based on the company's stock price. Non-GAAP figures exclude this non-operational, non-cash impact.
SoundHound AI's CFO Nitesh Sharan stated, "The second quarter was a strong one, with our intrinsic growth momentum reflected in the financial results, and early investments beginning to deliver excess returns. We are moving rapidly to seize the explosive opportunities in the voice and conversational AI sectors as clients across industries recognize the tremendous value in adopting our market-leading solutions."
This Quarter's Outlook
Resilience of Gross Margin and Cost Structure Optimization
In Q2, the non-GAAP gross margin remained at 58%. Management has emphasized in multiple analyses and earnings calls the advantages of the Polaris model in terms of accuracy and latency, having replaced third-party ASR to save millions in costs. Coupled with the migration of enterprise clients to the Amelia 7 platform, Q3's gross margin structure is expected to remain high: on one hand, reduced unit costs and improved inference efficiency from in-house ASR will reflect higher query volumes and broader store coverage through economies of scale; on the other hand, improved product uniformity and support costs from channel and major client migration will enhance gross margin sustainability. It needs to be observed that as restaurant rollouts expand and enterprise project deliveries accelerate, fulfillment and support costs may stage-risk increase in the short term, but the main trend of decreasing unit costs will continue with higher usage density. Overall, there is a high probability of maintaining a high gross margin in Q3, with potential for upward elasticity in gross margin if enhanced voice commerce capabilities generate higher billing added value.
Revenue Pattern and Q4>Q3 Implementation Verification
The company indicated an acceleration in growth in the second half of the year, with Q4 expected to surpass Q3, making Q3's sequential revenue growth a critical verification point. Based on store and usage trends on the restaurant side, a base of over 14,000 stores and query volume growth exceeding 100% year-over-year provides a solid foundation for subscription and usage revenue in Q3; on the automotive side, double-digit growth in per-car average sales price and pilot expansions of voice commerce among automakers and national merchants raise potential billing scenarios and incremental orders for Q3. In line with multiple analytical institutions, the non-GAAP loss per share is expected to narrow in Q3, maintaining sequential revenue growth, laying the foundation for further expansion in Q4. Attention should be paid to the transactional rate volatility mentioned in the Q2 earnings call; if channel-driven and existing customer expansion can compensate for rhythm uncertainties in Q3, the goal of Q4>Q3 becomes more assured.
Restaurant Voice Ordering: Scalability and ARPU Enhancement
Restaurant voice ordering is a key point in the Q3 outlook. Store coverage has exceeded 14,000 stores, with a net addition of about 2,000 stores in the first half, indicating the replicability of channel and delivery systems. With the cost savings from the self-developed Polaris model replacement and the low-code proxy capability of Amelia 7, store-side configuration efficiency and response speed have improved, making order conversion and repurchase scenarios smoother; with higher query volume density, the decline in unit and support costs provides a basis for ARPU enhancement. Analysts generally believe that this segment will contribute stable subscription and incremental usage revenue in Q3, and deeper multi-store integration with national chains will bring more significant scale effects. Seasonal factors and the rollout pace of major clients need to be tracked; if launches are concentrated in Q4, Q3 revenue recognition might be conservative, but it will also reserve stronger growth for Q4.
Enterprise AI and Amelia 7 Migration Progress
The progress of enterprise AI clients migrating to the Amelia 7 platform is a dual support for Q3 revenue and gross margin. Management announced during the Q2 earnings call plans to migrate approximately 15 large enterprise clients to Amelia 7, and with channel partners like EXL, ParTech, Acrelec, and AVANT, Q3 should see subscription renewals, module upgrade, and cross-selling enhancements from the migration. Amelia 7 integrated with Polaris helps unify the technology stack, shorten customization cycles, and reduce integration costs; with higher performance and lower latency, complex scenarios on the enterprise side (such as customer service, outbound calls, routing, and multilingual support) are more easily standardized into product packages. High non-GAAP gross margins are partly due to support cost optimizations after platform unification. Large client migration windows and budget arrangements need tracking; if decision cycles lengthen or batch deployments are delayed, Q3's performance may rely more on existing client expansion and channel pull, though the overall trend points to further acceleration in Q4.
Automotive Segment and Expansion of Voice Commerce Pilots
The automotive segment achieved double-digit growth in per-car average sales price in Q2, indicating increased value in modules such as in-car voice interaction, navigation, and media control. Q3 will focus on expanding and commercializing voice commerce pilots on the automaker side, identified as key observation items in analysis articles and institutional previews: when car-based voice systems connect with merchant-side order systems, new scenarios and transactional revenue will further boost ARPU. Management has repeatedly mentioned the pilot and proof-of-concept expansion of voice commerce to multiple automakers and national restaurant merchants, signaling the launch of cross-ecosystem technical and process collaboration. If Q3 can achieve milestone achievements on pilot scope, conversion rates, or scalability paths, it will more directly drive Q4 revenue. It should be noted that early transactional revenue may show some uncertainty, and the integration period of pricing models and settlement mechanisms will affect short-term recognition pace, though the long-term monetization potential of this segment is expected to gradually materialize.
Expenses and Path to Breakeven
In Q2, R&D, sales, and administrative expenses increased by 64%, 180%, and 91% year-over-year, respectively, related to M&A integration and scalability implementation. The core of the profitability path in Q3 lies in whether revenue growth and gross margin stability can offset costs from expansion pressures. The company maintains its goal of achieving positive adjusted EBITDA within the year, with general analyst opinion suggesting that Q3's non-GAAP loss will continue to narrow, with clearer breakeven trajectory. If Q3 sequential revenue growth and high gross margins are validated, Q4 will better reflect operational leverage under conditions of transactional rate recovery and accelerated major client launch pace. Attention should be paid to whether platform unification and automation level post-integration can effectively reduce support costs; if channel efficiency improves as expected, the expense ratio may inflect in Q4.
Analyst Opinions
Several institutions updated opinions following Q2. HC Wainwright raised the target price from $18 to $26, emphasizing improved execution and expectations of "considerable operating leverage"; Wedbush maintained "Outperform," raising its target price to $16, highlighting strong demand for restaurant and enterprise AI and continued expansion of channel partnerships; Ladenburg Thalmann upgraded its rating to "Buy," increasing its target to $16, citing synergistic revenue overperformance across automotive, restaurant, and enterprise sectors; Piper Sandler maintained "Neutral," with a target price of $12, anticipating potential but balanced gross margin and profitability path improvements; Cantor maintained "Neutral," with a target price of $8.50, warning of some transactional rate uncertainty in the second half.
Overall, sell-side opinions focus on the core areas for Q3: certainty of sequential revenue growth, maintenance of high non-GAAP gross margins, advancement of voice commerce testing, and the path for adjusted EBITDA to achieve breakeven within the year.