Earnings Call Transcript - SOUN Q1 2023

Operator, Operator

Good day, and welcome to the SoundHound Q1 2023 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker, Scott Smith, Head of Investor Relations. Please go ahead.

Scott Smith, Head of Investor Relations

Great. Thank you. Good afternoon and thank you for joining our first quarter 2023 conference call. With me today is our CEO, Keyvan Mohajer; and our CFO, Nitesh Sharan. 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 those 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. 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. Finally, this call is being audio webcast in its entirety on our Investor Relations website. An audio replay will be available shortly following today's call. With that, I would like to turn the call over to our CEO, Keyvan Mohajer. Please go ahead, Keyvan.

Keyvan Mohajer, CEO

Thank you, Scott, and thank you to everyone for joining the call today. The start of 2023 was a pivotal time for SoundHound and our path to sustainable and profitable growth. During the quarter, we raised a significant amount of capital, streamlined our organization, and reduced our expenses. With the launch of SoundHound Chat AI, we unveiled our innovative approach of integrating Generative AI and large language models into our full stack of technology for conversational voice AI. While the first quarter was a transition quarter for us, we overachieved our targets and grew our revenue by 56% year-over-year. In our Pillar 1 of revenue, where we power devices such as cars, TVs, and IoTs, we have added several new brands, including a transformational Turkish automotive manufacturer of electric vehicles. We have also expanded our global reach by adding two brands associated with the Stellantis Group and now have 10 brands with them in total. Additionally, we signed a new revolutionary television manufacturer, which is expected to launch later this year. We also closed a new deal with a multinational electronics company and one of the world's largest manufacturers of printers. In Q1, the number of cars shipping with SoundHound's technology more than doubled year-over-year, and we expect the growth to accelerate as more brands sign up and existing customers experience our technology. In our Pillar 2 of revenues, where we power customer service applications, we have signed up hundreds of new brands. It's important to note that our AI customer service solutions are fully autonomous, which is different from the human-assisted AI solution that other vendors are offering in this particular field. This key differentiator, in addition to giving us much better margins, also enables us to attract brands of all sizes from a single location to thousands of locations. Our newly launched SoundHound Chat AI platform is already positively impacting both Pillar 1 and Pillar 2 revenues. In Pillar 1, we are seeing demand from existing customers and new brands. We expect faster adoption, better user experience, more frequent usage, and ultimately, more revenue per device from our Pillar 1 customers. In Pillar 2, we are expanding our AI customer service solutions from restaurants to other businesses. We have always envisioned that restaurants are to SoundHound what books were to Amazon. They started by selling books, then over time expanded to other categories, eventually everything from A to Z. Now, thanks to SoundHound Chat AI, we are able to accelerate our vision and expand from restaurants to nearly all business types within this year. We expect this to increase our near-term AutoStore market by more than 10x. We are doing this by expanding our Smart Ordering solution for restaurants with a new service called Smart Answering. While Smart Ordering currently allows a restaurant to automatically upload its menu and enable customers to place orders with a voice assistant over the phone, we have a simple integration with one of our POS partners. Smart Answering will allow any business to field nearly any inbound query or question for opening hours, parking, location, typical wait times, products and services, appointments, and reservations, and more using an automated assistant over the phone. By automatically incorporating data from the business website, we can significantly accelerate the onboarding process, allowing customers to test it within minutes and be live on the same day. We are augmenting Smart Answering with Generative AI capabilities so that any voice assistant built on our platform can respond to more open-ended questions with tailored answers. We address the risk of AI hallucinations using our proprietary SoundHound Chat AI platform. AI hallucination is one of the major weaknesses of Generative AI models when these models produce incorrect, misleading, and at times harmful responses that are deceptively convincing. On a large benchmark of real usage data, we have reduced the undesired AI hallucinations by over 90% to a negligible amount compared to a prominent off-the-shelf model. Smart Answering helps businesses manage inbound inquiries in a much more tailored and accurate manner, ranging from hair salons to auto shops. Onboarding for Smart Answering and Smart Ordering has been streamlined such that we expect adoption to accelerate. We are helping businesses create efficiencies when many are tackling rising costs, staffing shortages, supply chain issues, and other headwinds. No longer will the customer service professional need to break away from serving their clients to answer the phone, book appointments, or address basic questions. SoundHound Smart Answering is designed to help businesses optimize human labor while leaving employees unobstructed from the burden of answering calls so that they can focus on more business-critical tasks. This service also helps businesses cater to the evolving expectations of consumers who increasingly prefer customer service to be automated across channels. We believe SoundHound Smart Answering is the first-of-its-kind in the industry. Until now, only businesses with large capital resources could afford AI-enabled customer service. And even though the quality of such solutions has been historically worse than humans, they still required large upfront investments and long development cycles. Our SoundHound Smart Answering solution can be live within minutes with high quality and is available for any business, large or small, with affordable pricing. Now on to our strategic partnerships. One key to success in winning deals with a large number of businesses is the ability to integrate with a variety of point-of-sale systems that act as the brain center of businesses. Along with our original point-of-sale integration with Square, this quarter, we went live with our Toast restaurant point-of-sale integration, and we have been working closely with our sales organization on our joint go-to-market. In addition, our voice AI is now available on Oracle MICROS Simphony POS that can seamlessly help any restaurant accept voice orders over the phone via menu kiosks or at the drive-thrus on their platform. Oracle has been a great partner, and we sincerely value their collaboration. We are also now live with Olo, a leading open SaaS platform for restaurants, and are already working with several well-known brands in their customer base. These strategic channel partnerships expand our reach to hundreds of thousands of new locations. Other strategic partnerships include our collaborations with Qualcomm, HARMAN, and LG. On technology innovation, which is core to our DNA, we continue to push the boundaries with SoundHound Chat AI and Dynamic Interaction. While SoundHound Chat AI is our innovative integration of Generative AI and large language models with our software engineering modules that solve for AI hallucinations and deliver real-time content from our knowledge domains, Dynamic Interaction is a first-of-its-kind multi-modal full duplex interface with real-time, continuous audio, visual, and touch feedback loops with no wake words, awkward pauses, or turn-taking. It ignores off-topic speech, makes proactive suggestions to the user, and intelligently decides when to use audio or visual output. Dynamic Interaction is a category-defining breakthrough for human-computer interaction and is still unmatched by any other technology out there today. We initially launched Dynamic Interaction in a drive-thru ordering experience, then early this year, we combined Dynamic Interaction with our existing Generative AI technology that we've been working on since 2019. As we did last year with Dynamic Interaction for restaurants, we brought ourselves one step closer to our ultimate vision of making computers better than humans in language understanding and more human in the way they interact and respond. There is a lot of enthusiasm around AI, and it's important to distinguish the companies that have the technologies to back it up. SoundHound is one of those companies. My co-founders and I, nearly two decades ago at a Stanford University dorm room, predicted that within our lifetime, computers would become better than humans in language understanding, and we created SoundHound to pursue that vision and make the world a better place. Over the years of constant innovation, we have seen and benefited from real disruptions, such as the mobile ecosystem transformation. We have also been able to avoid distractions from short-lasting hype, such as messenger bots and smart speech skills that did not result in mass adoption. But now we absolutely believe the impact of Generative AI and large language models is indeed a disruption. We expect this impact to be larger than the mobile ecosystem transformation. We believe nearly every business can be transformed, new user experiences will be unveiled rapidly, and users are ready and eager to adopt these new experiences. We are clearly at the intersection of demand and technology readiness for conversational AI, and we view the market impact of the resulting momentum in our field to be transformative. The real opportunity is for nimble companies with the right experience and the tenacity to move fast. It's for companies that have the experience and foundation to understand and utilize the strengths of the new AI models while being aware of the weaknesses and solving them using their experience and their own core technologies. SoundHound is one of those companies. This new way of innovation has occurred, and there is a lot more to come. We are enabling more tasks to be automated, whether driving in a car and using a smart device or through customer service. We see AI not just becoming more efficient and effective than humans but also more consistent and reliable to the extent that consumers will ultimately prefer to interact with an agent powered by conversational AI when conducting transactions with the business. The predictability of the AI technology can ultimately eliminate many of the variables that lead to an unsatisfactory user and customer experience. We believe our products are creating more opportunities for interaction, and consequently, the increased usage translates to more relevance for product creators and service-oriented businesses looking to drive further adoption for their customers and ultimately more demand for SoundHound's products and services. SoundHound is in a unique position to take advantage of this rare moment, thanks to our advanced and comprehensive technologies, mature products, and existing customer base. In our view, conversational AI can't be done as a side project. It can't be achieved by simply integrating a few external APIs. Creating the necessary technologies to win in conversational AI takes time. By owning all the core pieces of the engine that we have built from the ground up over many years, we have a distinct competitive advantage. To all the investors and stakeholders that have stood by us from the beginning and the many new ones that continue to show interest in our vision, our technology, and what it can do to create tremendous value for businesses and consumers alike, we thank you for your continued support and look forward to further engagement. I also wanted to take the time to acknowledge all our employees. I am proud to collaborate with such an amazing team and wanted to thank them for their tireless efforts to get us to where we are today and paving the path to where we will be tomorrow. In closing, we have grown our revenues by over 56%, reduced our expenses by over 40%, significantly improved our balance sheet, and are seeing strong demand for our products and solutions. We are innovating faster than ever and are in a position of strength to not only maintain our leadership in core voice-enabled AI technology but also to gain further traction as enterprises increasingly realize that they have a time-sensitive need for SoundHound technology. We are confident we have the right strategy and see that our technology is recognized every day. We remain agile and focused and are right where we need to be to reach our goals for 2023. With that, I will now turn the call over to Nitesh to talk about our financial performance for the quarter.

Nitesh Sharan, CFO

Thank you, Keyvan, and good afternoon, everyone. We are pleased to report another strong quarter with 56% year-over-year top-line growth while demonstrating steady progress in driving efficiencies and improving cash flow. At the start of the year, we set out to significantly strengthen our liquidity position, and we have now done that. We initially raised enough capital to see us through to profitability, and just last month, we closed our new debt refinancing that will fund us well beyond that. Despite a choppy funding market, we were able to successfully execute these financings on the foundations of our technology and deep patent portfolio, along with significant customer adoption in attractive end markets. We also stay focused on the business and the opportunity in front of us. Artificial intelligence is rightly getting a lot of attention these days, and our opportunity has only expanded. At SoundHound, we make conversations with technology more natural and seamless, and the demand for that has only become stronger. Large language models, Generative AI, and the pervasiveness of chatbots are unearthing entirely new use cases every day. The opportunity set and adoption curves will accelerate rapidly, and we are at the forefront of this next major inflection in technology. We continue to expand our voice-enabled ecosystem and had strong growth, even with Q1 typically being our seasonally smallest quarter of the year from a revenue standpoint. This could have only been possible with our strong customer engagement and streamlined execution that we expect will only further improve from here. Our business model is grounded in the three Pillar revenue framework. Pillar 1 represents voice-enabled products where we receive royalties. Pillar 2 represents voice-enabled services, generally under monthly subscription contracts, and then we bring Pillars 1 and 2 together into Pillar 3, monetization, driving meaningful and relevant advertising and transactional interactions. As we have discussed previously, the bulk of our current business and backlog is in Pillar 1. In Q1, our cumulative bookings backlog was $336 million, up 46% year-over-year. That level expanded with more than $10 million of new gross bookings in the quarter with deals across auto, devices, and other IoT manufacturers. In this pillar, we continue to extend our offering across new units while adding more features to existing ones to expand revenue per unit. We can scale with existing customers, and we are constantly adding new ones. In automotive, for example, we saw over 2x growth in units and also realized unit price expansion in Q1. There are some really exciting new brands in our pipeline. Growing our Pillar 2 voice-enabled services is a key focus area, starting with AI-enabled customer services for restaurants. The demand is real, and one advantage here is the pace at which we can scale because of the much shorter sales cycle and activation timeline. I mentioned last quarter how our advanced pipeline of stores was well into the thousands, and we continue to expand that meaningfully in Q1. Through the end of last year, our pipeline largely consisted of small chains and regional brands, generally with fewer than 50 locations per brand. Since January, we rapidly extended that progress into mid-market and enterprise businesses, which typically have more than 100 locations each. Although these enterprise deals take slightly longer to close, once we onboard one location, it can be nearly immediate for us to scale across the full fleet. As Keyvan noted, we are also scaling and expanding into more enterprise-focused point-of-sale systems. Already live with Square and Toast, these systems like Olo and Oracle MICROS Simphony extend our offering into hundreds of thousands of new locations. We mentioned expansion into other areas of customer service with new solutions for Smart Answering and Smart Ordering that are vertical-agnostic and can be deployed by any business that is looking to gain an edge over their competition and significantly improve their customer experience. To quantify that further, we are basically expanding the immediate addressable opportunity from roughly 1 million restaurants to tens of millions of customer service opportunities in the U.S. alone. We expect monthly recurring revenue in the several hundred dollars per location, if not more, so you can see how the math can quickly compound and why this is expected to become a very meaningful revenue driver. Let us now get specific on our financial results for the first quarter. In Q1, we generated $6.7 million in revenue, up 56% year-over-year, driven by strong growth in our product royalties and strength in automotive. Our product royalty revenue increased primarily due to strong customer momentum and expansion with key global brands. Our long-term commitments demonstrate the continued strong partnerships we've developed and the share gains we are experiencing. In Q1, our gross margin improved to 71%, up from 59% in the prior-year quarter, largely driven by the expanding scale of our business, migration of cloud services, and increased data center efficiency. Cost of revenue for the quarter was $2 million, up 11% from prior year Q1. The majority of our cost of revenue includes data center costs supporting our customer production environments. We also continue to migrate some on-premise activities to the cloud, helping us drive further gross margin expansion as we scale the business. Operating expenses saw a step function reduction in Q1 compared to the previous quarter as we executed our announced corporate restructuring program. Restructuring expenses in Q1 were $3.6 million. The full benefit of our cost reductions is expected to be realized as we move into Q2 and beyond, while expected restructuring expenses should be minimal in future quarters. R&D expenses were $14.2 million in Q1, a decrease of 15% year-over-year and 34% sequentially, largely due to the restructuring actions. We delivered this by successfully completing our ambitious language development plans while bringing to market key innovation in both Dynamic Interaction and SoundHound Chat AI in Q1. Notably, our investment in key areas has not slowed as we continue to build out our voice AI platform and leverage our deep patent portfolio. We intend to remain at the forefront of innovation in the rapidly evolving ecosystems of artificial intelligence and machine learning while also helping to develop and scale our cloud offerings and other products and services. In sales and marketing, we also saw a sequential expense reduction. Although year-over-year, we saw an increase from prior year Q1 when we hadn't fully yet begun building out this organization. We continue to streamline our focus on digital marketing, lead generation, and customer acquisition, both direct and through channel partners. In Q1, sales and marketing expenses were $4.9 million, up 89% year-over-year and down 28% sequentially. With our organizational shifts in 2023, we expect this expense item to benefit from greater focus. G&A expenses were $7.1 million in Q1, down sequentially, though up 78% year-over-year. In the prior year Q1, we were not yet a public company and this year-over-year increase largely reflects investments across the global support functions necessary for a public company. Across all operating expenses, non-cash employee stock compensation was $6 million in Q1, excluding the expenses associated with restructuring. Our operating loss was $25 million, an improvement of approximately $3.7 million from the prior quarter. The net loss was $26.4 million in Q1, an improvement of approximately $4.3 million from the prior quarter. This led to a net loss per share in Q1 of $0.13, an improvement of $0.02 from the prior quarter. Without the one-time impact of restructuring in Q1, all these metrics would have been improved even more. Adjusted EBITDA, which excludes non-cash charges of stock compensation and depreciation and amortization, as well as other non-operating activities including restructuring, was a loss of $14.8 million, which was 21% better than the loss of $18.6 million last quarter and an improvement of 13% year-over-year. Operating cash flow in Q1 was a $14.5 million use of cash, improving roughly 30% sequentially and also improved versus the prior year Q1. Now on to the capital structure, where we've made great progress in strengthening our balance sheet. Our cash position at quarter end was $46.3 million. In January, we successfully raised $25 million in preferred equity. Our previously announced committed equity line of credit also became effective, giving us additional access to capital, through which we raised approximately $29 million in Q1. In addition, after the quarter end, we raised $100 million of debt financing, which we partially used to pay off our existing debt of approximately $30 million and eliminate the associated principal amortization payments. All-in, our balance sheet has strengthened meaningfully, and we have a fully funded business plan to drive growth and differentiation and provide cushion regardless of how the macroeconomic landscape evolves from here. Our capital position is now a source of strength that we will leverage to drive our business aggressively forward while staying streamlined and delivering on our profitability targets. With that, I'll move to guidance. This year we took actions to set the stage for sustained long-term profitable growth. We are pleased with the momentum we have seen to start the year and are encouraged with the momentum we continue to see from customers. Accordingly, we reaffirm our 2023 guidance and continue to expect that revenue will be in the range of $43 million to $50 million. As we noted last quarter, we expect this revenue will build through the year due to the seasonality of Pillar 1 and the scaling of Pillar 2 with restaurants and customer services more broadly. We also continue to expect to become adjusted EBITDA positive in Q4 of this year. Before moving to Q&A, I would also like to comment on expectations for other income and expenses in Q2 and impacts from the recent debt refinancing. Given the various transaction-related fees and other charges, we expect roughly $6 million to $6.5 million of expense in the quarter associated with one-time transaction fees, expected ongoing amortization impacts, and quarterly interest costs. This is different from the historical level, so I wanted to highlight this expectation. To summarize, we have taken the important steps to set us up for long-term success. We are driving significant market differentiation, delivering on customer demand, and catalyzing disruptive innovation with high velocity. Each quarter on our journey brings its own unique dynamics, yet we are steadily stitching together the foundations for sustainable long-term growth and profitability. Thank you. And we will now move to Q&A.

Operator, Operator

Thank you. Our first question will come from Mike Latimore with Northland Capital Markets. Your line is open.

Mike Latimore, Analyst

Great. Thanks guys. Congrats on all the progress this quarter. I guess just two basic technology questions. Can you elaborate a little bit more on why SoundHound can prevent these Generative AI hallucinations, just a little bit more detail on why you're differentiated in that regard?

Keyvan Mohajer, CEO

Yes. We can address several issues with our Chat AI platform. One major issue is hallucination, where Generative AI language models produce incorrect but convincing results, making them potentially harmful. Another challenge is their scalability, as they lack access to real-time information; some answers that were once accurate may now be outdated. We have developed a solution that includes two models: CaiLAN, which focuses on conversational AI language, and CaiNET, which is centered on conversational AI network. The first model represents a software engineering approach, while the second utilizes machine learning. By integrating these models, we harness the advantages of both—machine learning models that scale effectively along with a software engineering strategy that avoids unpredictable issues. This innovative combination reduces hallucinations, allowing us to detect when machine learning provides incorrect answers and to determine when we need to use external APIs for real-time information. We have also identified specific domains, like navigation and business searches, that face challenges with Generative AI models due to their reliance on large data structures. By merging these two approaches, we create significant value with our Chat AI, offering a platform for our Pillar 1 customers, including car manufacturers and IoT makers, while also applying these techniques in customer service applications.

Mike Latimore, Analyst

Got it. Great. That's helpful. With regard to the cost controls, where should we model kind of OpEx broadening? Once it's all into the model, like what would be the absolute amount of OpEx you would have in the quarter?

Nitesh Sharan, CFO

Well, I guess I'll go back a little bit to what I said, Mike, last time. I had indicated that on an annualized basis, we expected through the corporate restructuring actions that we would see about a $60 million reduction in OpEx. If you take last year, it was close to $136 million and chop off $60 million from that. This quarter saw a little bit of impact since we executed the action, so there was a partial quarter impact. So, I think in Q2, you'll see the full extent of it. There are still some international and other pieces, but by and large, we're through it. You'll probably see it reflected in Q2 and onwards. I don't know if part of your question was regarding how it is spread across the line items. We had impacts across R&D, sales and marketing, G&A, and it was relatively balanced across all of them. So, does that answer your question?

Mike Latimore, Analyst

Yes, yes, definitely great. And I guess just last one on the Smart Ordering and Smart Answering. You talked about, obviously, the restaurant vertical. A couple of the incremental verticals you mentioned were kind of more retail like auto shops, I think. How broadly is that applicable on customer service? Can you get into, I don't know, insurance and health care as well, which may be a little bit more complicated or is it more kind of that retail focus?

Keyvan Mohajer, CEO

Yes, good question. It's meant to be very broad. The initial rollout will be for targeting smaller businesses. We're slightly less focused on insurance companies, but we can serve those too, with the necessary engagement and collaboration. Smart Answering is intended to be completely self-service. It could cater to a 1-person business or a business with 75 employees and multiple locations; you can discover the service and sign up on your own, becoming operational on the same day. We do utilize your website if you have one. If you don't have one, that's okay, but if you have a website, you're able to pre-populate a lot of the information from it. All you have to do is examine the extracted and validated information. It really could be live on the same day as you discover the feature.

Operator, Operator

Thank you. One moment for our next question. And that will come from the line of Brett Knoblauch with Cantor Fitzgerald. Your line is open.

Brett Knoblauch, Analyst

Hi, guys. Thanks for taking my question. I guess the first is on the bookings backlog. It kind of increased by the slowest amount or at a much slower pace than it has over the most recent quarters. Is this kind of like what you expected going into the quarter? How should we think about it?

Nitesh Sharan, CFO

Yes, I'll start, Brett. So I think I'll start by noting, yes, we know that Q1 tends to be a little softer seasonally for the business. Part of that is still in the heavy kind of rhythm of the influence of the auto business in our overall business. The deals tend to be lumpy, and we had some acceleration in the prior year. We know things will happen, and some deals are still in motion that haven't necessarily closed by the end of Q1. So overall, this is in the zone of what we expected. Additionally, as our business shifts and we emphasize the Pillar 2 opportunity, particularly in restaurants, we aren't necessarily reflecting those in bookings. As we talked about, as we scale that and move into Pillar 2 and Pillar 3, you'll hear more about recurring type metrics like AR and so forth. So there's a bit of composition in the deals we're focused on. Overall, I would characterize this as an in-line quarter across most metrics, particularly regarding top-line perspective and the movement towards our profitability goals.

Brett Knoblauch, Analyst

Perfect. And I guess just on the full-year outlook, right, it implies quite significant acceleration over the last three quarters. Can you maybe help us out from a modeling perspective and give us some weights that we should expect in terms of when we should expect revenue to fall throughout the remainder of the year?

Nitesh Sharan, CFO

Yes, I'll go back to something we said last quarter. We expect about one-third of the revenue in the first half and two-thirds in the second half, similar to 2022. So we're kind of marching on that path. Regarding profitability, similar to what I answered to Mike's question, we were going through adjustments to our cost structure in Q1, and those have largely been completed. Now entering Q2, we are at the right level from an operating standpoint. We expect to scale meaningfully with this cost footprint. As we ramp up revenue, we also expect to post adjusted EBITDA in Q4.

Brett Knoblauch, Analyst

Got it. And then maybe just some comments on the competitive landscape, right? I think the news this week was that Wendy's is using Google AI to power their drive-thru ordering system. This is a space that you guys have been trying to break into and have been quite positive about over the last several quarters. So how are you competing with Google on this front? Do you see them when competing for new deals? Should we view this as a winner-take-all type of market? Any comments there.

Keyvan Mohajer, CEO

Yes, mostly, it's validation of the space because in the last couple of weeks we have seen several announcements, and from our visibility, these were POCs that the restaurant customers saw a benefit from announcing to show they are innovating in this very important space. So this is a net positive and very validating. Our view is that some of the big tech players have cloud deals, and to win those, they bundle voice AI, which is not really the core part of their offering. However, they do lead to some POCs. In terms of our technology competitiveness, the Dynamic Interaction that we really highlight in our drive-thru is very much unmatched; when presented to our customers, nothing comes close. It's just a matter of education and putting it in front of the brands. It is rapidly evolving from something novel, where we needed to convince customers to pay attention, to something they’re realizing they need and that's time-sensitive. Overall, it's very positive validation for the market.

Nitesh Sharan, CFO

Maybe I'll just build on that with a couple of points. One is we always respect competition and strive to fight against it aggressively. We've been in this for a while. We have the core technology and a deep patent portfolio. Generative AI brings a lot to the table here, and we can uniquely integrate the best of both worlds to enhance the technology. A real key differentiator, when you look at the players entering the space, particularly in quick-service restaurants, is the way our fully automated solution works. Competition may rely on human support in the background, which can lower their margins. While they may report high order completion rates, the reality is drastically different. In our case, we can exceed human performance with fully automated interactions. This is advantageous for restaurants, customers, and our margin profiles. So, there are real differences in offerings. The recent developments validate the massive opportunity, and we are aggressively pursuing it. It's important to note that this is not a winner-take-all dynamic; there will be multiple players in this space. The customer service opportunity spans millions of establishments seeking these types of services, and we believe we have a great start and will keep scaling.

Operator, Operator

Thank you. I am showing no further questions in the queue at this time. This concludes today's program. Thank you all for participating. You may now disconnect.