SOUN - NASDAQ

Good day, and thank you for standing by. Welcome to the SoundHound Q4 2023 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] 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 afternoon, and thank you for joining our fourth quarter and full year 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 would also 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. 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 measures. Please refer to today's press release for more detailed financial results and further details on the definition, 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 the 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 would 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. Once again, we broke a new quarterly record for revenue this quarter, which surpassed $17 million and was up 80% year-over-year. We are winning new customers and expanding with existing ones. We continue to create value for our customers, their customers and their employees, while delighting users with our technology. At the same time, we're also driving efficiencies with an 80% year-over-year improvement in adjusted EBITDA. At SoundHound, we've made two important predictions for the future of AI. The first is that AI customer service will be as necessary for every business as WiFi and electricity. Second is that speaking will become the primary way we interact with the devices around us. We believe voice and conversation is the most natural way to interact with technology, and fortunately for product creators, they can bring their products to life by simply adding a tiny inexpensive microphone. These predictions are the foundation of our three-pillar business strategy. Let me start with our first pillar, where we power products such as cars, TVs and IoT devices. We had a mature history in Pillar 1. We went from zero to over 20 automotive brands in just a few years. These brands represent over 25% of the automotive industry and we've added several brands just in the last few months. We powered TVs from legacy giants such as VI

Thank you, Keyvan, and good afternoon, everyone. Q4 revenue increased by 80% year-over-year. We finished 2023 with accelerating momentum and we are seeing exceptionally strong interest from enterprise businesses, most notably within the restaurant and auto sectors. In fact, demand for SoundHound solutions is so high that we now have a healthy waitlist of restaurant merchants and we're calibrating our resources to ensure we deliver for the customers. While we continue to be mindful of our pathway to profitability, delivering against this demand is paramount. Exceptional growth we realized was coupled with cost containment. We focused on cost discipline this past year and will continue to do so. For the year, adjusted EBITDA improved by over 50%, and in Q4, our results were even better with 80% improvement. Excluding certain costs that were necessary to fuel our growth and transformation brings us close to the positive Q4 adjusted EBITDA target we laid out last quarter. For example, the near-term impact of switching to Big Four audit from PwC mid-year while becoming a large accelerated filer and upgrading some of our internal tools contributed to the majority of these costs. We expect these expense pressures to lessen as we go forward. The underlying drivers behind the remainder of the expenses are positive indicators of our future. First, we saw some tremendous growth opportunities in the second half of the year that we chose to invest in. We saw significant demand from enterprise restaurants in particular. Second, we saw a great opportunity to inorganically accelerate our go-to-market motion and capture a sizable and meaningful restaurant customer portfolio. The acquisition of SYNQ3 clearly positions us as the leader in the restaurant AI space. Lastly, we accelerated investments in our administrative functions, notably around internal processes and controls, to ensure we have an even stronger foundation for the sustained long-term growth we expect to deliver. We fundamentally re-architected this company in 2023. We are more efficient, more focused, even more nimble and aggressively driving disruption and growth across voice-enabled products and services. Accordingly, we are updating a metric we have previously shared in what we call cumulative subscription and bookings backlog, which includes our previously reported cumulative bookings backlog to also now include new subscription revenue streams that we are focused on. Cumulative bookings backlog takes into account the prior quarter-end balance plus new bookings in the current quarter minus associated revenue recognized. Cumulative booking backlog is still derived from committed customer contracts and this definition remains the same as the previous one. Subscription 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. We believe we can outperform these assumptions given the faster rollouts we are currently experiencing and expectation to work with these partners for much longer. Similar to the previous definition, we do not include expected auto renewals for our Pillar 1 customers. This allows us to combine our Pillar 1 and Pillar 2 businesses into a single unifying metric. As we have communicated before, our cumulative bookings backlog mainly represented our Pillar 1 businesses. In Pillar 2, we have previously noted that ARR standardizes the annual subscription like potential of these contracts, while also indicating the better stability and predictability building in our financial model. That said, two different metrics on two different timescales doesn't synthesize our full potential in an easy-to-understand manner, so we believe this updated figure is more representative of our medium-term revenue potential. Ultimately, we are addressing a greater than $100 billion rapidly growing market. So, this new metric gives you a view of the tangible customer activity we have won within that larger opportunity set. In Q3, I mentioned our cumulative bookings backlog was $341 million with automotive being the largest constituent. I also mentioned that separately, in the restaurant vertical, that at full scale out, we would have 4,500 locations signed up and roughly $25 million in ARR. When we look at the combined potential of our signed up customers at the end of 2023 across both Pillars 1 and 2, our cumulative subscriptions and bookings backlog was $661 million, up nearly 100% year-over-year on an apples-to-apples basis, thanks to growth in Pillar 1 and the incredible list of customers we have added in Pillar 2. Let me now get specific on our financial results for the fourth quarter and full year. In Q4, revenue was $17.1 million, up 80% and within our guidance for the quarter. Full year revenue of $45.9 million was also within the outlook set at the beginning of the year. Revenue growth in Q4 was predominantly driven by automotive royalties with strong increase in units offset by slight decreases in average selling prices due to a higher volume of edge licenses that generally have a lower royalty than our cloud licenses. Note that particularly with some of our new generative AI solutions and ultimately with monetization, we think there are meaningful opportunities for unit price expansion. We also benefited in the quarter by a strong multi-year commitment of minimum guarantee volumes of our edge solution with an automotive partner and a new IP licensing opportunity with one of the preeminent AI chip makers that Keyvan referenced earlier. Over the full year 2023, we increased auto units by 68% and active cloud users by 55% versus the prior year. And over the last four years, we have delivered an overall compounded annual growth rate of greater than 50%. In Q4, our gross margins were 77.2%, up over 600 basis points year-over-year, largely resulting from the greater scale in our business. This helped drive gross margins above 75% for the full year, also up over 600 basis points year-over-year, as we increased our revenue sequentially every quarter, and at the same time, improved our cloud and data center efficiency throughout the year. R&D expenses were $12.7 million in Q4, a decrease of 41% year-over-year, resulting largely from our corporate restructuring actions earlier in the year. Despite the expense reduction, we continue to invest in disruptive innovation and expand our existing suite of products with solutions like Dynamic Interaction, Smart Answering, Employee Assist, Vehicle Intelligence, and SoundHound Chat AI. Sales and marketing expenses were $4.5 million in Q4, a decrease of 34% year-over-year, also due to the aforementioned restructuring. We continue to invest in go-to-market and customer engagement. As mentioned earlier, we are seeing tremendous momentum and heightened customer demand, largely resulting from the investments we have been making in sales and marketing. We will continue to invest in high ROI demand generation and brand awareness to ensure we further build upon the current traction. G&A expenses were $7.6 million in Q4, an increase of 3% year-over-year. The increase in G&A reflects two elements, some of which was not contemplated when we guided last quarter. First, part of our spending was related to diligence, negotiation and closing of the acquisition of SYNQ3. Second, we accelerated investment in financial and non-financial processes and internal controls to support requirements under SOX 404(b) as we became a large accelerated filer. In total, these additional expenses, as compared to prior Q4, amounted to over $3 million and were the primary factors not fully encompassed in our previously provided adjusted EBITDA outlook. Across all operating expenses, non-cash employee stock compensation was $6.5 million in Q4. As a result, our operating loss for Q4 was $12.4 million, which reflects an improvement of 57% year-over-year. Likewise, for the full year, we saw improvements in our operating loss of 35%, as we successfully grew the business while maintaining cost discipline. OI&E was $4 million of net expense for the quarter and net loss was $18 million in Q4, an improvement of 42% year-over-year. This led to a net loss per share in Q4 of $0.07 compared to $0.15 in the previous year, an improvement of 53%. Adjusted EBITDA, which excludes non-cash charges of stock compensation, acquisition costs, restructuring and depreciation and amortization was a loss of $3.7 million in Q4 2023, which was an 80% year-over-year improvement and a sizable dollar reduction down from an $18.8 million loss in Q4 2022. Net cash used in operating activities for the entire year ended 2023 was about $68 million, improving roughly 27% year-over-year. Our cash position at year-end was approximately $109 million, of which $95 million was in cash and equivalents. Given additional actions we have taken in early 2024, our current total cash balance is an excess of $200 million. Our capital position is unequivocally a source of strength and gives us security and optionality we need to drive the business forward. With that, let me discuss our outlook for 2024. We are committed to continuing to fuel strong growth with cost discipline and returns focus. We expect to expand with our existing automotive partners and add Pillar 1 customers. We expect our Pillar 2 businesses to grow meaningfully and increase from less than 10% of our total revenue in 2023 to more than 20% in 2024. We see the overall top-line growing to within a range of $63 million to $77 million with $70 million as the midpoint target. As we look further ahead to 2025, we believe we will cross $100 million in revenue and deliver adjusted EBITDA profitability. Our gross margins have been in the range of 70% to 80%, providing a strong indicator of our software business profile. Since we just completed the acquisition of SYNQ3, while we work on migrating their cloud and AI infrastructure to our own, we expect to have a temporary decrease in gross margins due to some of these duplicative expenses. In addition, while the majority of SYNQ3's revenue is AI-driven, they also have a legacy call center operation which their team has been gradually upgrading with AI. We expect to further accelerate this migration, which will ultimately calibrate their gross margins to ours over time. As a result, we expect a combined company will show a one-time gross margin decrease in the early part of 2024, with steady improvement towards our historical levels as we get to the latter half of 2024 and beyond. Overall though, we see this acquisition is roughly EBITDA neutral over 2024 and accretive beyond. Lastly, let me comment on expected revenue seasonality for the year. Our mix of business will shift through the year, as I described, to a greater mix of Pillar 2. But we will start the year more automotive heavy, just as we ended 2023. As such, we remain affected by the seasonality in the automotive sector, which tends to be higher in Q4 and lower in Q1. Again, in 2024, we see our quarterly revenue building through the year and back-end weighted. We believe we can grow our business roughly 50% year-on-year each quarter. Let me close by re-articulating our excitement about what lies ahead. Generative AI and large language models have created a generational technological shift. The old way is out. Customers are increasingly realizing they need partners like SoundHound to help pave the way forward. We are balancing the massive long-term opportunity with the inherent near-term volatility to navigate towards our goals. And we are bringing conversational voice AI to consumers everywhere, so they can seamlessly access the information and services they covet through the products and devices they most interact with. Thank you. We will now move to Q&A.

[Operator Instructions] Our first question comes from Dan Ives with Wedbush. Your line is now open.

Yes, thanks. Good quarter. Can you talk about -- do you expect more strategic partnerships from a distribution perspective to happen over the next six, nine months? Like, is that going to be a big focus from a go-to-market?

Hi, Dan. Yes, that's definitely in the second -- in our Pillar 2, we see that as a big contributor. We have partnerships with, for example, Olo and Toast and Oracle and Square as channel partners and they help us reach a larger number of merchants. And in Pillar 1, we also -- our customers are generally very large. For example, we just signed an extended deal until 2037. It's one of the largest automakers. That's a lot of commitment for a very long time, so it's just a lot of trust.

Okay. And then, can you just talk about how the conversation with customers is changing? I mean, it seems like the vision has been there, but now you're starting to actually see the traction. How -- does it feel like it's more strategic in terms of the conversations you're having, whether it's on restaurants, autos? Maybe you could just compare conversation today to even six months ago?

It's totally different, Dan. The demand is going through the roof. And we actually have -- we are dealing with more demand than ever before. We have, for example, very large customers like multinational chains with tens of thousands of locations. We actually have to put them on hold to deal with someone who's a little bit bigger. So, it's a temporary problem that we're dealing with, but it's in a really good position to be in. So, customers are now coming to us, whereas maybe 12 months ago, even nine months ago, we were actually going after them knocking on their door, they are now knocking on our door.

Great. Thanks.

Thank you, Dan.

Thank you. One moment for our next question. Our next question comes from Gil Luria with D.A. Davidson. Your line is now open.

Thank you. Good afternoon. I have one product question, one financial question. The product question, the chip company, what's the nature of that revenue? Are they incorporating your technology in a chip and then when they sell it into devices, you're getting a license revenue? Or is it a different type of arrangement? And how does that scale once it's in the -- once the chip makers incorporated the technology?

Yeah. This actually was not a channel partnership with the direct revenues. So, the company paid us for our IP. And we've known this company for a number of years. They're a close friend, close partner. And this was the first time we generated revenue from the relationship. So, we're incredibly excited about it. And we expect more positive things to come out of it in the future, but that's as much as we can share today.

Got it. So, then maybe another product question. You mentioned a large or a high-profile EV maker in the U.S. Does that mean that you can now send the technology over-the-air updates? Because part of your gating factor so far has been incorporating into new cars only as they ship. But some -- I think the EV makers based in the U.S., at least the three that I'm thinking about, allow for over-the-air updates. They already have a microphone built in. So, does this type of deal make it possible for you to deploy your software a little more quickly and to a fab -- to a bigger set of automobiles as opposed to only the ones that get shipped?

Yeah, absolutely. Especially for our cloud, we could replace an existing solution or sometimes they don't have a solution. So, we could actually go to legacy cars and power them too. In this particular case, it would be for new cars and older cars that have already been sold.

And then maybe one thing to add Gil, I think a part of your question is about like pace of scale. The other thing we're super excited about, as Keyvan mentioned in the prepared remarks, is around generative AI opportunities that we're already adding with existing customers. So, it's sort of a build on top and it really unlocks so many different use cases for us and there's tremendous demand. So, I think the opportunity of scaling faster and doing more per unit, revenue per unit is a big opportunity for us.

Got it. So then on the new backlog metric, I want to make sure I understand the duration. So, it sounds like on the subscription side, you define the duration as the five year duration. What's the duration on the booking side on the other side that on Pillar 1? That used to be, I believe, six years. Is it still the six years or are you now harmonizing it as also a five-year duration?

No, great question. The current one is basically because they're committed contracts over the duration, so it's not like we're harmonizing, we're actually based on whatever is in the contract. So, in Q4, we actually had some deals that extended it. So, I'd say the average of that -- I think when you take the weighted average of the full portfolio, it's still about that 6.5 years. But the actual device side, the product side did extend because we got some deals that extended the duration of the device, so -- the Pillar 1 product. So, the way -- like you said, we, on the subscription side, made it five years to standardize, but on the -- just like we used to do with cumulative bookings backlog, we just tie to whatever the contract length is. Hope that makes sense.

It does. Thank you.

Thanks, Gil.

Thank you. One moment for our next question. Our next question comes from Scott Buck with H.C. Wainwright & Co. Your line is now open.

Hi, good afternoon guys. Thanks for taking my questions. First, I was hoping I could get a little more color on your visibility into '25 and maybe why you're comfortable putting out a target today.

Yes, I think it's a couple of different things. One is we're building and we're making choices to sort of build a multi-year roadmap and that we're not playing short-term quarter-to-quarter or even two quarters. So, I think with the pipeline we're building, with the customers we're working with, with the investment we're making to try to scale, we're getting increasing confidence beyond just this year and we thought it made sense frankly. We through last year into this year, we're sort of giving mile markers only up into the one-year mark. And so, I think with the bookings backlog-type metric that we were talking about, there's a lot of good visibility. And frankly, it's sort of like where we're sitting today in February, early in the year and we know there's just a lot more pipeline and traction that we're gaining. So, we felt confident enough to sort of give an early read to 2025, which we'll obviously calibrate as we go forward. But I think it's really a sentiment of confidence and commitment we're seeing from our customers.

That's helpful. Now does that include any additional M&A or any potential deal you would do in the future would be on top of those figures?

Yes. It doesn't require it. I mean, we -- I would say we're super excited about the SYNQ3 acquisition and what it can bring. So, from that vantage point, it is the one plus one equals a lot more than two opportunity we have with them. And then in terms of future opportunities, we'll continue to look. We think it's a very dynamic market with a lot of potential opportunities organically and then even possibly inorganically. So, we certainly have nothing on the horizon to talk about there. But the numbers we laid out do not require it. If something structurally changed there, obviously, as you know very well depends on the flavor and the size and the type of M&A that possibly could be out there. So, if something we do changes that architecture, that ramp, we'll let you know.

Sure. That's great. And then on SYNQ3, I'm curious if you could give us something in terms of dollar terms, maybe what the upselling, cross-selling revenue synergy opportunity is there, or even as maybe a percentage of their legacy revenue?

Yes. I think let me try to think of the best way to unpack it. I mean, we -- first of all, they bring this great portfolio of customers we articulated for the likes of Chipotle, Papa John's, Applebees, Firehouse, Subs, Five Guys, just as amazing are some customers that were early days of having some of those conversations. We certainly had a thesis when we acquired them as to what the possibilities could be. And I'll just tell you early days that are even more exciting of what we can do together. To your point, cross selling our solutions, bringing together the different voice solutions, upselling some of the Employee Assist capabilities, Smart Answering. There's so many conversations going on, so I'm going to little bit punt to later to give you a better tangible visibility. But the roadmap we've laid out, we believe SYNQ3 will be a big contributor on that. The impact I mentioned, the margins and particularly as they've been evolving the sort of call center business to AI, that is an evolution we'll work through together. There is definitely -- as you know, anytime when the two companies come together, there's a lot of work to integrate and we're in the middle of that. But long term, I mean, I just want to clarify again, we're talking a restaurant space that for us is billions and billions of dollars of annual revenue opportunity and we're just scratching at the surface of it. And together, I think we can go faster in capturing a greater and greater share. We also think when we look out at the competitive landscape, it's mostly greenfield. We don't think people out there have comparable tech, not in certainly what we're seeing in terms of fully automated solutions. And most importantly, the restaurant demand is just -- I mean it's exactly what they need. They have labor shortage, they have cost pressures, and they need consistency of service and this is a solution that fits very well. So, in terms of the organic opportunity is a tremendous. With SYNQ3, we're very excited about the synergies and the upside. And then the revenue outlook and even maybe to your first question, us coming together gives us confidence to give you a call it -- put a flag in the ground on what we think early signs of 2025 are. But I would just tell you, we wouldn't put that out there if we didn't think we could do that and even more.

Yes. Well, I appreciate the added color guys. Congrats again on the quarter.

Thank you.

Thank you.

Thank you. One moment for our next question. Our next question comes from Glenn Mattson with Ladenburg Thalmann. Your line is now open.

Hi, guys. Thanks for taking the question. So I just wanted to talk a little more about the comment that was made that perhaps some customers on the restaurant side have put on hold for a little bit in terms of -- because demand is kind of just overflowing your ability to kind of fill it right now. So, curious if that means that there's going to be more hiring involved or maybe it's more of a learning process as you kind of scaled up from more smaller mom-and-pops to national chains and whatnot and perhaps there's a learning curve for both sides of the equation whereby, the process of implementing the software will get faster over time or that kind of thing. Maybe you could just give some color on your thoughts there?

I'll start, sorry, and then Keyvan can add on top. First of all, say, yeah, we're constantly learning. This is a new market, we're disrupting, we're growing, we're improving every day. I think we're learning a lot, frankly, also with the acquisition. One of the things SYNQ3 has been really good at is scaling very quickly and I think we can come together and drive improvement. Coupled with sort of building the -- one of the beauties of our solutions in software, it can really scale very quickly once you kind of get the integration with point of sale systems, get menu ingestion, some of those things done right. And the quicker -- every time we add a new customer, it really expands the market of other customers we can go to that we could really rapidly accelerate. So, there's a lot of positive sort of build effect here that we can build and we can continue forward with. On the investment side, yeah, I mean we're -- we definitely want to go after the growth. When the demand is there, we don't want to say no to any customer. We want to be thoughtful of the roadmap. So, we will absolutely look at our hiring and make sure that we're calibrating it. And I wanted to jump in before Keyvan just to put my point of view, like, it's always going to be cost discipline focused and so forth and we'll be very judicious. But I think that -- we know the opportunity there. We're not going to shortchange it by any stretch of the imagination. So, we're certainly going to invest to make sure we're capitalizing on the demand.

Yeah, that's all that. And I would just add that the hold that I mentioned, we are talking about days and weeks, not really months or anything beyond that.

Great. Thanks for that color. And then last for me, just on the model side, I think in the press you said that historically been 70%, 80% gross margin. And I guess theoretically, if you get to that kind of north of $100 million 2025 revenue target that you put out today, a lot of the growth will be on the restaurant side or the staff side, which theoretically would be, I think, higher margin than the auto. So, would you have us model towards the higher end of that range for 2025?

I won't guide gross margin for 2025. I'll leave the guidance as I laid it out, but I will give you some color commentary to dimensionalize it. So, absolutely long term, we are a software business and so the margin profile should certainly be well north of 70%. And we think the EBIT margins should be 30%-plus. And that's at scale, fully penetrated, I'd say, multiple years down the road. We want to make sure we're investing in the near term. And then, I would also say to your specific question on gross margin, I don't think it's as clean as Pillar 2 versus Pillar 1, because it kind of depends. Even within Pillar 1, some of our edge solutions are very high margins. So, it kind of depends on the mix across both. But I do think, yeah, we'll be marching back to the 70% range. And then, part of it will also be -- this is going to be new where we bring on the call center business which will continue to -- I think we look at Pillar 2 and the restaurants is sort of the first gate on major disruption across customer service. I think we said in the prepared remarks, generative AI in particular, one of the major disruptive areas is customer service with very natural conversations to enable consumers to just seamlessly access information and services that they want. So with that, and the reason I mentioned that is, we believe that we can scale that really quickly and we can leverage the call center capability to get the data and the actual production live customer interactions that will help improve our model. So, there's going to be a bit of a journey to extend beyond restaurants into different verticals. And finding that right mix between maybe there is an advantage, because the customer really demands a little call center support. As you know, if you go from like, we can do the base 80% of the answering and maybe some part isn't. Like those are things as we grow into Pillar 2, we'll calibrate on. So that's why I can't give you a precise answer right now. I will tell you though, yes, long term, we absolutely should be growing back in the 70% range. But we need to keep going through the work and kind of get closer to that finish line to give you an exact on what 2025 will be.

Right. Thanks. I know a lot of the moving parts, I understand. Thanks, and congrats on the quarter.

Thank you.

Thank you.

[Operator Instructions] One moment for our next question. Our next question comes from Mike Latimore with Northland Capital Markets. Your line is now open.

Great, yes, thanks. Congrats on an excellent year here.

Hey, Mike, thanks.

Yeah, hello. The last quarter you highlighted a lot of restaurant wins like White Castle, Jersey Mike's, Krispy Kreme. What percent of those opportunities do you think you might get deployed by year-end? And sort of what are the keys to getting there, whether it's internal work or leveraging third parties?

Yeah, it depends on the customer. So, drive-thru is a little different than phone ordering. We've publicly, last year, made joint announcement with White Castle about our opportunity to scale into 100 locations this year, and we're on the pace. And that has some requirements of the drive-thru setup on the hardware side. And so that's a bit of the gating pacing. They're a company that has full corporate ownership, so that's a little bit easier to fully deploy. Get into another type of customer that has franchisees, again, that one of the gating points. Jersey Mike's is an opportunity for phone ordering. They have, I think, over 2,000 locations at scale and kind of went out of the gate with 50 locations that we're pushing through. And so, this can move really rapidly. So, I guess not to dance your question too much, but it kind of depends on the shape and flavor of the customer. And we are getting faster. Every week that goes by, we're learning and we're pacing it faster and faster. So, we're hopeful that -- and this is kind of why maybe one dimensionality of the answer would be the assumptions we use in the subscriptions estimate that we gave, sort of five year, which we believe that conservatively will ramp over four years and we use the five year duration. So, I mean, if you want to use the four year that I conveyed as the measure, I think that's conservative again. We're going faster than that, but that's maybe not too high expectations too early, that's probably a safe place to think.

Yeah. No, that makes sense. And on SYNQ3, I think they had something like 10,000 locations, I believe. Do you feel like you could apply your tech to all those locations, or is there a percent that's already kind of happy with what they have?

I mean the solution is already great, but there's an upgrade opportunity by combining what they have with what we have, and then there's upsell opportunities by offering things like Smart Answering and Employee Assist to existing customers, and we're pursuing both of those.

And I'll also add, Mike, there's also an efficiency opportunity for us as we sort of migrate their back-end systems, the cloud systems, migrate to our technology. So it's also sort of back-end, not only just our front-end, and that's a cost opportunity for us.

And I guess just a basic financial question. What do you think SYNQ3 contributes in '24 and what is current share count?

So, in '24, we -- it kind of depends on the synergies and so forth, but they have a good book of business that we're growing. The reason we're hedging a bit is some of it is the AI and call center that we're going to migrate the call center to AI, we're going to upgrade. So, there's a few choices through the integration. Again, we're still pretty early in the integration process. But we're excited about the fleet of partners that they have and really mostly about the synergies that we think we could build. But it's all contemplated in our guidance and we think together we can accelerate even faster than we could have alone. Share count, I think it's probably think 270-ish million, I don't have the number right in front of me on the Class A side is probably where we are. We have, I think I mentioned in the prepared remarks, some capital raising that we've done this year to get the balance sheet over $200 million of cash. So that is about where we are.

Okay. Great. Thanks a lot.

Thanks, Mike.

Thank you. One moment for our next question. Our next question comes from Brett Knoblauch with Cantor Fitzgerald. Your line is now open.

Hi, guys, thanks for taking my question. Maybe -- it was nice that you kind of gave us some info on, I guess, the year-over-year growth in auto units. I was wondering if you could maybe give us some type of indication for how many units or devices your technology is currently embedded in, and if that's something you could foresee giving us on a more frequent basis going forward?

We are in the millions. We considered disclosing the exact number. One challenge is that some of our customers don't give us unique device IDs. So then it makes it more difficult to accurately measure. So, it might all look like one device, but it might be a million devices. There are ways to interpolate that, but definitely you are in the millions of cars and TVs and IoT devices.

The other measure we do give, and we put it in the press release, but it's the queries, which is another sort of an indicator of usage and activity, and that has been growing. It's been growing. We've been giving that number for a couple of years now and crossing 3.5 billion sort of run rate is an indication of the breadth and also just the usage curve increases that we're excited about.

Got it. And then on maybe the restaurant business. I guess any update to how many units you guys are currently deployed in and what you're targeting for end of this year? I think [indiscernible] White Castle, you're expecting to be in over 100 by the end of the year. But maybe more broadly speaking, given you kind of expect Pillar 2 to be north of 20% of the business this year?

Yeah, I'll break apart. We do, with SYNQ3, now have thousands and thousands, right? They brought a big arsenal of restaurants, the likes of customer names I gave a little earlier. Then we're always growing and have these massive deals that are currently we're working on that -- it's tens of thousands of potential opportunities. So I think the best way to -- and I will say the pricing can range, if you're kind of in the phone ordering, it could be in the hundreds of dollars per location. If you're in drive-thru market, it could be north of thousands. So kind of really in our more advanced state, could be well beyond that of tech. So, units and location are going to kind of be driven by the integration pace. We believe we are unpacking and addressing a market that has hundreds of thousands of locations. So, what we have today is a small fraction. And I'd say in the U.S. alone, it's a million food establishments and globally multiples of that. So, we are going to grow from the 10,000 range by the end of the year quite meaningfully and then hopefully we'll be soon talking about hundreds of thousands that we're in and the revenue numbers will follow.

Thank you. Most appreciate it.

Thanks, Brett.