Veritone Reports First Quarter 2024 Results

Veritone, Inc. (NASDAQ:VERI), a leader in designing human-centered AI solutions, today reported results for the first quarter ended March 31, 2024.

“Veritone executed at a high level in the first quarter with total revenue of $31.6 million, outperforming the high end of our guidance range. Our customer retention and engagement metrics remained strong, highlighted by a 7% year-over-year increase in ARR from subscription-based customers as we work to decrease historical revenue dependencies from consumption-based customers,” said Ryan Steelberg, CEO & President of Veritone. “We demonstrated strong progress against our commitments to right-size our operating structure and strategically align our investments to position Veritone for long-term agility and to serve true customer demand. As the adoption of enterprise-wide generative AI accelerates, Veritone stands ready to capitalize on the immense opportunities ahead, partnering with our customers to advance the capabilities of AI and foster a more empowered society. We look forward to continuing to execute the opportunities in front of us and strive to drive long-term shareholder value.”

First Quarter 2024 Financial Highlights

Calculated on a Pro Forma basis where noted; for additional information on these calculations, see “Note Regarding Pro Forma Information” and the definitions provided for each metric cited.

• Revenue of $31.6 million, an increase of 4.5% compared to Q1 2023.

• Software Products and Services revenues of $15.2 million, an increase of 7.8% compared to GAAP revenue of $14.1 million in Q1 2023, and a decrease of 32.1% when compared to Pro Forma Software Revenue for Q1 2023 driven by the decline in consumption-based revenue from customers, including Amazon, offset by a slight increase in Broadbean revenue year over year.

• Managed Services revenue of $16.4 million, an increase of 1.9% compared to Q1 2023.

• Total Software Products & Services Customers of 3,384, down 10% year over year, as compared to March 31, 2023.

• Total New Bookings of $13.0 million, down from $22.8 million in Q1 2023 driven by a decline in consumption-based customers.

• Annual Recurring Revenue (“ARR”)of $72.1 million, down from $112.7 in Q1 2023 driven by declines in consumption-based revenue from our largest customer, offset by a 7% increase from recurring subscription-based revenue customers.

• Loss from Operations of $21.8 million, as compared to a loss of $23.6 million in Q1 2023.

• Non-GAAP gross profit of $24.6 million, an increase of $1.1 million as compared to Q1 2023.

• Net Loss of $25.2 million, as compared to $23.0 million in Q1 2023.

• Non-GAAP Net Loss of $7.6 million, improving 20.3% as compared to Q1 2023.

Note Regarding Pro Forma Information

“Pro Forma” information provided in this press release represents the historical information of Veritone combined with the historical information of Broadbean (as defined below) for the applicable period on a Pro Forma basis as if Veritone had acquired Broadbean on January 1, 2022. Veritone completed its acquisition of (i) all of the issued and outstanding share capital of (a) Broadbean Technology Pty Ltd ACN 116 011 959 / ABN 79 116 011 959, a limited company incorporated under the laws of Australia, (b) Broadbean Technology Limited, a limited company incorporated under the laws of England and Wales, (c) Broadbean, Inc., a Delaware corporation and (d) CareerBuilder France S.A.R.L., a limited liability company organized (société à responsabilité limitée) under the laws of France, and (ii) certain assets and liabilities related thereto (the foregoing clauses (i) and (ii) together, “Broadbean”) on June 13, 2023.

Recent Business Highlights

• Signed 19 Public Safety & Government customers in the first quarter, which includes three new Federal customers, including a primary state law enforcement agency, intending to use Veritone Redact to automate audio and video redaction workflows, aimed at reducing lengthy manual processes, and addressing their Freedom of Information Act (“FOIA”) request backlog.

• Announced the launch of Veritone’s AI consulting and services group to address customer and market-driven needs for increased AI enterprise-level services.

• Veritone continued its strong advertising momentum, with annual agency bookings growth year over year and signed several new customers, including the largest direct-to-consumer, pet supplies company, Chewy.

• Signed over 20 new Media & Entertainment deals in the first quarter, including new deals with Summit Media, the U.S. Soccer Federation, and NBC Universal, and renewals with key customers including Beasley Media Group, Crawford Broadcasting, and Augusta National and upsells with Golf Magazine and Sony Pictures Entertainment.

• Announced a partnership with Grabyo, a leading cloud video platform for live broadcasting, live clipping, and distribution, to streamline live digital content production and leverage AI-driven content management and monetization tools to meet the evolving needs of sports organizations in today’s fast-paced digital landscape.

• Achieved AWS Advanced Tier Services status, advancing our AWS Partner capabilities, further accelerating partner driven revenue opportunities, and empowering Veritone to expand and deploy innovative AI solutions.

• Named NAB Product of the Year for the 5^th straight year for its recently launched Ask Veri solution, a new Generative AI media intelligence and natural language tool.

• Released feature enhancements to its Advertising and Content Intelligence Suite designed to embrace data privacy while helping to safeguard ad revenues.

• Q1 restructuring of organization resulted in over $13.0 million in forecasted annualized cost savings, accelerating non-GAAP net income to as early as Q4 2024.

Financial Results for Three Months Ended March 31, 2024

Delivered first quarter revenue of $31.6 million, an increase of $1.3 million or 4.3% from $30.3 million in the first quarter of 2023. Software Products & Services revenue of $15.2 million increased $1.1 million or 7.8% year over year driven by the Q2 2023 acquisition of Broadbean, which generated $8.5 million in revenue in Q1 2024, offset by the decline in legacy Veritone Hire revenue over the same period, including Amazon. Managed Services revenue was relatively flat year over year, increasing by $0.3 million, or 1.7%, to $16.4 million.

Loss from operations was $21.8 million as compared to a loss of $23.6 million in Q1 2023 driven in part by a net $2.5 million decrease in operating expense including the impact of the Q2 2023 Broadbean Acquisition, a $1.1 million increase in non-GAAP gross profit driven by higher revenue, and a $0.7 million decline in non-cash depreciation, amortization, and stock based compensation, offset by a $2.5 million increase in severance and transition costs. Non-GAAP gross margin of 77.7% was relatively flat compared to the first quarter of 2023. GAAP net loss was $25.2 million, compared to GAAP net loss of $23.0 million in the first quarter of 2023, driven by an increase of $3.2 million in net interest expense associated with the Company’s December 2023 term loan, which included $1.3 million of non-cash amortization associated with the initial discount and issuance costs of the debt, offset by the $1.8 million decrease in loss from operations. Non-GAAP net loss of $7.6 million decreased by over 20% when compared to non-GAAP net loss of $9.6 million in the first quarter of 2023, largely driven by the increase in non-GAAP gross profit, coupled with reductions in our cost structure since the first quarter of 2023.

During Q1 2024, Total Software Product & Services Customers of 3,384 was down 11% year over year on a Pro Forma basis principally due to reductions in legacy Career Builder customers transitioned off our Hire platform following our acquisition of Broadbean. Total New Bookings on a Pro Forma basis decreased by 43.1% to $13.0 million versus the comparable period a year ago largely driven by a reduction in revenue from consumption-based customers, including Amazon. Annual Recurring Revenue on a Pro Forma basis of $72.1 million decreased 36% year over year driven in large part by the decline in consumption spending from customers, offset by 7% year over year increase in subscription-based customers. Excluding the decline in consumption-based spending from Amazon, Software Products & Services revenue growth would have increased over 75% year over year.

As of March 31, 2024, the Company had cash and cash equivalents of $90.7 million, including approximately $73.3 million of cash received from Managed Services clients for future payments to vendors.

Business Outlook

Second Quarter 2024

• Revenue is expected to be in the range of $31.0 million to $32.0 million, as compared to $30.0 million in the second quarter of 2023.

• Non-GAAP net loss is expected to be in the range of $5.5 million to $6.5 million, compared to non-GAAP net loss of $13.0 million in the second quarter of 2023.

Full Year 2024

• Revenue is expected to be in the range of $136.0 million to $142.0 million, as compared to $127.6 million for fiscal 2023.

• Non-GAAP net loss is expected to be in the range of $11.0 million to $15.0 million, compared to non-GAAP net loss of $37.5 million for fiscal 2023.

These updated financial guidance ranges supersede any previously disclosed financial guidance and investors should not rely on any previously disclosed financial guidance.

Conference Call

Veritone will hold a conference call to deliver management’s prepared remarks on Tuesday, May 7, 2024, at 5:00 p.m. Eastern Time (2:00 p.m. Pacific Time) to discuss its first quarter 2024 results, provide an update on the business and conduct a question-and-answer session. To participate, please join the audio webcast or dial-in and ask to be connected to the Veritone earnings conference call. To avoid a delay, if dialing in, please pre-register or join the live audio webcast.

• Pre-Registration*

• Live Audio Webcast

• Domestic Call Number: (844) 750-4897

• International Call Number: (412) 317-5293

A replay of the conference call can be accessed one hour after the end of the conference call through May 14, 2024. The full webcast replay will be available through May 7, 2025. To access the earnings webcast replay please visit the Veritone Investor Relations website.

• Domestic Replay Number: (877) 344-7529

• International Replay Number: (412) 317-0088

• Replay Access Code: 7195217

* Please note that pre-registered participants will receive their dial-in number and unique PIN upon registration.

About the Presentation of Supplemental Non-GAAP Financial Information and Key Performance Indicators

In this news release, the Company has supplemented its financial measures prepared in accordance with U.S. generally accepted accounting principles (GAAP) with certain non-GAAP financial measures, including Pro Forma Software Revenue, Non-GAAP gross profit, Non-GAAP gross margin, Non-GAAP net income (loss) and Non-GAAP net income (loss) per share. The Company also provides certain key performance indicators (KPIs), including Total Software Products & Services Customers, Annual Recurring Revenue, Annual Recurring Revenue (SaaS), Annual Recurring Revenue (Consumption), Total New Bookings and Gross Revenue Retention. The Company has posted additional supplemental financial information on its website at investors.veritone.com concurrently with this press release.

Pro Forma Software Revenue represents Software Products & Services revenue on a Pro Forma basis. Non-GAAP gross profit is defined as revenue less cost of revenue. Non-GAAP gross margin is defined as Non-GAAP gross profit divided by revenue. Non-GAAP net income (loss) and non-GAAP net income (loss) per share, respectively, is the Company’s net income (loss) and net income (loss) per share, adjusted to exclude provision for income taxes, depreciation expense, amortization expense, stock-based compensation expense, changes in fair value of warrant liability, changes in fair value of contingent consideration, interest income, interest expense, foreign currency gains and losses, acquisition and due diligence costs, gain on sale of energy group, contribution of business held for sale, variable consultant performance bonus expense, and severance and executive transition costs. The items excluded from these non-GAAP financial measures, as well as a breakdown of GAAP net income (loss), non-GAAP net income (loss) and these excluded items between the Company’s Core Operations and Corporate, are detailed in the reconciliations included following the financial statements attached to this news release. In addition, following the financial statements attached to this news release, the Company has provided additional supplemental non-GAAP measures of operating expenses, loss from operations, other income (expense), net, and loss before income taxes, excluding the items excluded from non-GAAP net loss as noted above, and reconciling such non-GAAP measures to the most directly comparable GAAP measures.

The Company has provided these non-GAAP financial measures and KPIs because management believes such information to be important supplemental measures of performance that are commonly used by securities analysts, investors and other interested parties in the evaluation of companies in its industry. Management also uses this information internally for forecasting and budgeting. The non-GAAP financial measures should not be considered as an alternative to revenue, net income (loss), operating income (loss) or any other financial measures so calculated and presented, nor as an alternative to cash flow from operating activities as a measure of liquidity. Other companies (including the Company’s competitors) may define these non-GAAP financial measures differently. The non-GAAP financial measures may not be indicative of the historical operating results of Veritone or predictive of potential future results. Investors should not consider these non-GAAP financial measures in isolation or as a substitute for analysis of the Company’s results as reported in accordance with GAAP.

In addition, the Company defines the following capitalized terms in this news release as follows:

Core Operations consists of the Company’s aiWARE operating platform of software, SaaS and related services; content licensing and advertising agency services; and their supporting operations, including direct costs of sales as well as operating expenses for sales, marketing and product development and certain general and administrative costs dedicated to these operations.

Corporate principally consists of general and administrative functions such as executive, finance, legal, people operations, fixed overhead expenses (including facilities and information technology expenses), other income (expenses) and taxes, and other expenses that support the entire Company, including public company driven costs.

Software Products & Services consists of revenues generated from commercial enterprise and government and regulated industries customers using our aiWARE platform and Hiring Solutions, any related support and maintenance services, and any related professional services associated with the deployment and/or implementation of such solutions.

Managed Services consist of revenues generated from commercial enterprise customers using our content licensing services and advertising agency and related services.

About Veritone

Veritone (NASDAQ: VERI) designs human-centered AI solutions. Serving customers in the talent acquisition, media, entertainment and public sector industries, Veritone’s software and services empower individuals at many of the world’s largest and most recognizable brands to run more efficiently, accelerate decision making and increase profitability. Veritone’s leading enterprise AI platform, aiWARE™, orchestrates an ever-growing ecosystem of machine learning models, transforming data sources into actionable intelligence. By blending human expertise with AI technology, Veritone advances human potential to help organizations solve problems and achieve more than ever before, enhancing lives everywhere.

To learn more, visit Veritone.com.

Safe Harbor Statement

This news release contains forward-looking statements, including without limitation, statements regarding our prospects for the remainder of 2024, our ability to deliver AI solutions to our customers and serve customer demand, our ability to capitalize on actual or potential acceleration of enterprise-wide generative AI, our ability to accelerate non-GAAP net income as soon as Q4 2024, our ability to realize annualized cost-savings including from our recent restructuring, our ability to drive long-term shareholder value, ability to achieve our annual cost savings forecast, and our expected total revenue and non-GAAP net loss for Q2 2024 and for full year 2024. In addition, words such as “may,” “will,” “expect,” “believe,” “anticipate,” “intend,” “plan,” “outlook,” “should,” “could,” “estimate” or “continue” or the plural, negative or other variations thereof or comparable terminology are intended to identify forward-looking statements, and any statements that refer to expectations, projections or other characterizations of future events or circumstances are forward-looking statements. These forward-looking statements speak only as of the date hereof, and are based on management’s current assumptions, expectations, beliefs and information. As such, our actual results could differ materially and adversely from those expressed in any forward-looking statement as a result of various factors. Important factors that could cause such differences include, among other things, our ability to expand our aiWARE SaaS business; declines or limited growth in the market for AI-based software applications and concerns over the use of AI that may hinder the adoption of AI technologies; our requirements for additional capital to support our business growth and the availability of such capital on acceptable terms, if at all; our reliance upon a limited number of key customers for a significant portion of our revenue, including declines in key customers’ usage of our products and other offerings, our ability to realize the intended benefits of our acquisitions and divestitures, including our ability to successfully integrate our recent acquisition of Broadbean; our identification of existing material weaknesses in our internal control over financial reporting; fluctuations in our results over time; the impact of seasonality on our business; our ability to manage our growth, including through acquisitions and our further expansion into international markets; our ability to enhance our existing products and introduce new products that achieve market acceptance and keep pace with technological developments; actions by our competitors, partners and others that may block us from using the third party technologies in our aiWARE platform, offering it for free to the public or making it cost prohibitive to continue to incorporate such technologies into our platform; interruptions, performance problems or security issues with our technology and infrastructure, or that of our third party service providers; the impact of the continuing economic disruption caused by macroeconomic and geopolitical factors, including the Russia-Ukraine conflict, the war in Israel, financial instability, inflation rates and the responses by central banking authorities to control inflation, monetary supply shifts and the threat of recession in the United States and around the world on our business operations and those of our existing and potential customers; and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond our control. Certain of these judgments and risks are discussed in more detail in our most recently-filed Annual Report on Form 10-K, and our most recently-filed Quarterly report on Form 10-Q, and other periodic reports filed from time to time with the Securities and Exchange Commission. In light of the significant uncertainties inherent in the forward-looking information included herein, the inclusion of such information should not be regarded as a representation by us or any other person that our objectives or plans will be achieved. The forward-looking statements contained herein reflect our beliefs, estimates and predictions as of the date hereof, and we undertake no obligation to revise or update the forward-looking statements contained herein to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events for any reason, except as required by law.

VERITONE, INC.

SUPPLEMENTAL FINANCIAL INFORMATION

We are providing the following unaudited supplemental financial information as a lookback of the trailing twelve months and the comparative quarter for the prior year to help investors better understand our recent historical and year-over-year performance. The Software Products & Services supplemental financial information is presented on a Pro Forma basis, as further described below.

Software Products & Services Supplemental Financial Information

The following table sets forth the reconciliation of revenue to pro forma revenue and the calculation of pro forma annual recurring revenue.

Managed Services Supplemental Financial Information

The following table sets forth the results for each of the key performance indicators for Managed Services.

VERITONE, INC.

RECONCILIATION OF NON-GAAP GROSS PROFIT TO LOSS FROM OPERATIONS

(in thousands)

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