SoundHound AI, Inc. Class A Common Stock 2026 Q2 Earnings Call

Good afternoon, and thank you for joining our second quarter 2026 conference call. With me today is our CEO and co-founder, Keyvan Mohajer, and our CFO and co-founder, James Hom. We will begin with some short remarks before moving to Q&A. We'd also 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 a discussion of the statements that qualify as forward-looking statements. 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.

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. Finally, this call is being audio webcast in its entirety on our investor relations website. An audio replay will be available following today's call. With that, I'd like to turn the call over to our CEO, Keyvan Mohajer.

Please go ahead, Keyvan. Thank you, Scott, and thank you to everyone for joining the call today.

I'm delighted to report an outstanding second quarter. Coming off an already strong Q1, the team executed flawlessly in Q2. This was not only a record Q2, but our largest all-time quarter with $62 million in revenue. Revenue was up 45% year-over-year, 40% sequentially, and 10 times higher than Q2 four years ago, which was our first quarter as a public company. We improved all key profitability metrics. Our gross margin improved, our adjusted EBITDA improved, and our EPS improved both year-over-year and sequentially. Our results were beyond our own expectations, and a significant part of that is attributed to OASYS, SoundHound's self-learning agentic AI platform that we launched in May this year.

With OASYS, we are winning in demos, we are winning in RFPs, we are winning in pilots, and we are winning as we scale with our customers in production. OASYS demos are absolutely delighting new and existing customers, and it shows in our renewal rates and our exceptional win rates. Because of our standout technology, we are now moving quickly with our prospects from demo to contract, signing in a matter of months. We are also converting pilots to large implementations at a record pace. We recently signed an 8-figure commitment in less than 90 days from the initial demo to contract signature. This is all while enterprise market for conversational and agentic AI grows exponentially with every quarter that passes.

In a recent report, Gartner projected that agentic AI software spending will hit nearly $1 trillion by 2030, with a compound annual growth rate of over 60% between 2025 and 2030 as enterprises scale adoption. We have everything we need to seize a sizable portion of this. We continue to invest in growth and convert on the massive pipeline we built to start the year. Even with those key investments, we have maintained a disciplined approach to spending, achieving a 33% improvement in adjusted EBITDA this quarter. We saw success across all key metrics and every part of our business. SoundHound's enterprise AI business is fundamentally changing the market, emerging as a clear leader in what was once a fragmented landscape.

SoundHound's excellence in conversational AI for enterprise also recently received heavyweight validation with SoundHound being named as a leader by analyst firm Gartner in their Magic Quadrant for conversational AI platforms. We expect this high-profile recognition to drive even greater momentum with enterprise buyers who rely on Gartner to validate market leaders with both a strong vision and proven ability to execute. Looking ahead, we are poised to increase our scale again with the acquisition of LivePerson, which is expected to close by the end of this year. When it does, we will accelerate our leadership position and extend our footprint in conversational AI with 25 of the Fortune 100 brands and a significant increase in the number of enterprise brands using our platform across a range of verticals. Our track record shows that our repeatable M&A formula is working.

We've been able to realize high potential turnaround opportunities with our technical innovation and financial discipline. We look forward to repeating our process with LivePerson. Our success in Q2 was driven in large part by our new OASYS platform, which we demoed extensively with existing customers and prospects before launching publicly in May. Early reactions confirmed what we already knew. This is a category-leading enterprise AI platform that addresses the critical pain points that large multinational businesses face when trying to deliver a quality AI-based customer experience consistently across billions of interactions. One large healthcare company leader told us they evaluated other options and found OASYS was the most intuitive and easiest to navigate. OASYS has a unique feature where AI builds AI, and they were able to create agents using this feature in just a few minutes, which took much longer in other platforms.

Agentic AI is an important step change for our industry. Previously, technology stacks were vertically integrated, meaning that, for example, phone-based customer service was attached to telephony channels or product-based conversations were limited to the product platform itself. OASYS is built for a new era in which the AI conversational layer is no longer attached to a specific modality or channel. It lives independently with cross-channel orchestrated agents that are built for any and every touch point, including physical environments. This means that AI agents built on OASYS can power enterprises and businesses of all sizes in vehicle voice assistance, restaurant and retail voice AI transactions, and complex customer tasks across our multiple verticals. SoundHound AI is a company that puts its customers first, supported by products that deliver tangible value. That's why we are proud that our biggest Q2 deals are with customers that chose OASYS.

As we continue to onboard and upgrade customers, introducing them to features that enable AI to build and continually optimize agentic workflows on their behalf, we are expanding our capabilities to support our rapid growth across key verticals. One area we are seeing very strong traction is in healthcare, with one top 20 provider quadrupling their spend with us in Q2. We also added Champion Payer Solutions, a managed healthcare services organization based in California, and either expanded or renewed with five additional healthcare organizations. We continue to strengthen our presence in banking and financial services, renewing or expanding contracts with two of the top seven global banking institutions, as well as one of the largest global insurers. At the same time, we are seeing strong demand from regional banks and credit unions who look to leverage our platform to scale customer service efficiently and extend operating hours.

We recently partnered with a top-tier regional credit union and helped them introduce automated AI agents without compromising their famously high standard of customer service or sacrificing containment rates. In Q2, we announced that Quálitas, one of our insurance customers in Latin America, now uses SoundHound AI agents to handle over 100,000 calls per month, an increase of 150% over four years with our automated agents interacting with customers over issues like car assistance requests and broken glass claims, handling the complexities from the initial call to the claim resolution. These are very human moments of need, and the message is clear. End customers are not resistant to automation. They're only resistant to bad service. This momentum in highly regulated industries like healthcare and financial services underscores our enterprise readiness.

With built-in guardrails and rigorous agent evaluation, SoundHound AI's platform provides the security and traceability needed for mission-critical AI workflows. Because of this trusted foundation and our growing credentials, we are seeing our vertical-specific strength build across a number of other critical industries, including telecommunications and energy and utilities. A notable component of SoundHound AI's ongoing success is the excellent traction our solutions are getting in Asia. In each of the last five consecutive quarters, we have signed major deals in the region, and we are seeing particular success with the automotive sector in China, a market that has been notoriously difficult for Silicon Valley companies to compete in. Time and time again, large Chinese OEMs are choosing SoundHound AI because of our mature, flexible, proprietary stack and due to the pure-play nature of our offering. The Chinese automotive industry is booming, and where the winners are, we will be there.

In Q2, we signed a seven-figure deal with a large infotainment software company to provide agentic AI solutions, and we also had an IoT win with an established automotive maintenance and diagnostic company that will use our AI agents to boost operational productivity on-site. Both customers will integrate with our OASYS platform, which expands their possibilities for taking any built-for-purpose agent and deploying it across multiple channels. Elsewhere in the region, we also signed a six-figure unit expansion with Indian two-wheeler company Ultraviolette, and we entered an agreement with another large OEM customer to roll out real-time generative AI features to vehicles in India, the first LLM-enabled voice technology the brand has rolled out in the country. Our ability to outpace our competitors in high-impact agent markets is not accidental.