- Q3 Total Revenue and Software Revenue of
$35.1 and $20.4 million, respectively -
- ARR(1) of $99 million from 3,536 Total
Software Products & Services Customers(1), including $48
million from subscription-based customers(1) -
- Over $24 million of annualized cost savings
year to date -
- Entered into commitment letter to raise $77.5
million in senior secured debt, of which $37.5 million will be used
to repurchase existing convertible debt at 75% of par and $40.0
million in cash for operations -
Veritone, Inc. (Nasdaq: VERI), a leader in designing human-centered AI
solutions, today reported results for the second quarter ended
September 30, 2023.
“Veritone’s third quarter results highlight progress against our
strategic initiatives aimed at transforming the organization to
meet evolving demand from companies seeking to leverage artificial
intelligence to enhance productivity and boost revenue streams,”
said Ryan Steelberg, Chief Executive Officer and President of
Veritone. “Since last quarter, Veritone announced partnerships with
CHESA and the U.S. Department of Justice, while extending
long-standing AI partnerships with the U.S. Soccer Federation,
iHeartMedia and many others. Our value proposition is resonating
with partners, and Veritone’s AI solutions continue to gain
traction in the target market verticals we serve. Year-to-date,
Veritone has delivered over $24 million in annualized cost savings
while optimizing the balance sheet as the company prepares to
embark on its next phase of disruptive growth. Veritone is on a
clear path to profitability, and we remain focused delivering
long-term shareholder value in the years to come.”
Third Quarter 2023 Financial
Highlights
- GAAP revenue of $35.1 million, a decrease of 6% and 22%,
respectively, compared to GAAP and Pro forma revenues,
respectively, for Q3 2022 driven primarily by declines in Managed
Services and Software Products.
- Software revenues of $20.4 million, a decrease of $8.2 million
or 29% compared to Pro Forma Software Products & Services
revenue for Q3 2022 driven largely from reduced spend from Amazon
in Q3 2023.
- Managed Services revenue of $14.8 million, as compared to $16.4
million in Q3 2022.
- Total Software Products & Services Customers(1) of 3,536,
down 7% compared to pro forma Q3 2022 largely driven by planned
migration of legacy CareerBuilder customers off Broadbean software
platform.
- Total New Bookings(1) of $15.5 million, up 85% from Q2 2023,
and down 35% compared to Q3 2022 driven by reduced HR consumption
from a major customer.
- Annual Recurring Revenue (ARR)(1) of $98.6 million, down 24%
compared to ARR for Q3 2022, largely driven by drop in
consumption-based ARR from major customer over the trailing twelve
months from Q3 2023 as compared to Q3 2022.
- Loss from Operations of $23.1 million, as compared to a loss of
$3.6 million in Q3 2022 driven by a one-time non-cash benefit of
$14.3 million in Q3 2022 coupled with a decline in non-GAAP gross
profit.
- Non-GAAP gross profit of $27.9 million, a decrease of $2.2
million compared to Q3 2022 driven by the reduction in higher
margin consumption-based revenue offset by the addition of
Broadbean.
- Net Loss of $20.9 million, as compared to $4.9 million in Q3
2022.
- Non-GAAP Net Loss of $7.9 million, as compared to $5.7 million
in Q3 2022.
- Cash and cash equivalents(2) of $72.1 million on September 30,
2023, as compared to $62.7 million at June 30, 2023.
(1) Calculated on a Pro Forma basis; for
additional information on these calculations, see “Note Regarding
Pro Forma Information” and the definitions provided for each metric
cited.
(2) Including approximately $60 million of
cash received from Managed Services clients for future payments to
vendors.
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.
Three Months Ended
Nine Months Ended
September 30,
September 30,
Unaudited
(in $000s, except customers)
2023
2022
Percent Change
2023
2022
Percent Change
Revenue
$35,133
$37,196
(6%)
$93,363
$105,838
(12%)
Loss from Operations
$(23,062)
$(3,611)
539%
$(74,831)
$(28,044)
167%
Net Loss
$(20,910)
$(4,886)
328%
$(67,169)
$(30,268)
122%
Non-GAAP Gross Profit*
$27,946
$30,099
(7%)
$71,602
$85,113
(16%)
Non-GAAP Net Loss *
$(7,942)
$(5,716)
39%
$(30,523)
$(18,070)
69%
Three Months Ended
Nine Months Ended
September 30,
September 30,
Software Products & Services
(in $000s, except customers)
2023
2022
Percent
Change
2023
2022
Percent Change
Pro Forma Software Revenue (1)
$20,361
$28,603
(29%)
$63,644
$81,572
(22%)
Total Software Products & Services
Customers(2)
3,536
3,787
(7%)
Average Annual Revenue (AAR)(3)
$98,559
$129,016
(24%)
Total New Bookings(4)
$15,501
$23,793
(35%)
Gross Retention(5)
>90%
>90%
(1) “Pro Forma Software Revenue” is a
non-GAAP measure that represents Software Products & Services
revenue on a Pro Forma basis.
(2) “Total Software Products &
Services Customers” includes Pro Forma Software Products &
Services customers as of the end of each respective quarter set
forth above with net revenues in excess of $10 and also excludes
any customers categorized by us as trial or pilot status. In prior
periods, we provided “Ending Software Customers,” which represented
Software Products & Services customers as of the end of each
fiscal quarter with trailing twelve-month revenues in excess of
$2,400 for both Veritone, Inc. and PandoLogic Ltd. and/or deemed by
the Company to be under an active contract for the applicable
periods. Total Software Products & Services Customers is not
comparable to Ending Software Customers. Total Software Products
& Services Customers includes customers based on revenues in
the last month of the quarter rather than on a trailing twelve
month basis and excludes any customers that are on trial or pilot
status with us rather than including customers with active
contracts. Management uses Total Software Products & Services
Customers and we believe Total Software Products & Services
Customers are useful to investors because it more accurately
reflects our total customers for our Software Products &
Services inclusive of Broadbean.
(3) “Annual Recurring Revenue” is
calculated as Annual Recurring Revenue (SaaS), which is an
annualized calculation of the monthly recurring revenue in the last
month of the calculated quarter for all active Software Products
& Services customers, combined with Annual Recurring Revenue
(Consumption), which is the trailing twelve month calculation of
all non-recurring and/or consumption-based revenue for all active
Software Products & Services customers. In prior periods, we
provided “Average Annual Revenue,” which was calculated as the
aggregate of trailing twelve-month Software Products & Services
revenue divided by the average number of customers over the same
period for both Veritone, Inc. and PandoLogic Ltd. Pro Forma Annual
Recurring Revenue is not comparable to Average Annual Revenue.
Annual Recurring Revenue is on a Pro Forma basis, is not averaged
among active customers and uses a calculation of recurring revenue
as described above instead of annual revenue. Management uses
“Annual Recurring Revenue” and we believe Annual Recurring Revenue
is useful to investors because Broadbean significantly increases
our mix of subscription-based SaaS revenues as compared to
non-recurring and/or consumption-based revenues.
(4) “Total New Bookings” represents the
total fees payable during the full contract term for new contracts
received in the quarter (including fees payable during any
cancellable portion and an estimate of license fees that may
fluctuate over the term), excluding any variable fees under the
contract (e.g., fees for cognitive processing, storage,
professional services and other variable services), in each case on
a Pro Forma basis.
(5) “Gross Revenue Retention” represents
our dollar-based gross retention rate as of the period end by
starting with the revenue from Software Products & Services
Customers as of the 3 months in the prior year quarter to such
period, or Prior Year Quarter Revenue. We then deduct from the
Prior Year Quarter Revenue any revenue from Software Products &
Services Customers who are no longer customers as of the current
period end, or Current Period Ending Software Customer Revenue. We
then divide the total Current Period Ending Software Customer
Revenue by the total Prior Year Quarter Revenue to arrive at our
dollar-based gross retention rate, which is the percentage of
revenue from all Software Products & Services Customers from
our Software Products & Services as of the year prior that is
not lost to customer churn. All numbers used to determine Gross
Revenue Retention are calculated on a Pro Forma basis.
Recent Business
Highlights
Veritone entered into a commitment letter with certain funds
managed by Highbridge Capital Management, LLC and with certain
other lenders on November 7, 2023 to provide a senior secured term
loan facility in an aggregate principal amount of $77.5 million
(the “Term Loan”). Veritone expects to use the proceeds of the Term
Loan to repurchase an aggregate $50.0 million principal amount of
its existing 1.75% convertible senior notes due 2026 held by the
lenders at a purchase price of $37.5 million plus accrued and
unpaid interest and for general corporate purposes.
The Term Loan will have a term of four years, accrue interest at
a rate of Term SOFR plus 8.50%, with a 3.00% floor for Term SOFR,
payable quarterly, and will require quarterly amortization payments
of 2.5% of the principal amount, commencing in June 2024. Veritone
may, subject to certain conditions and limitations, elect to make
any amortization payment in shares of its common stock. Veritone
may prepay the term loan, subject to payment of a premium, at any
time and is required to prepay the term loan on certain customary
events. Veritone may also, subject to certain conditions and
limitations, elect to prepay portions of the Term Loan in shares of
its common stock.
Veritone has agreed to issue warrants to the lenders to purchase
up to 3,008,540 shares of Common Stock, with 20% of the warrants to
be issued for entry into the commitment letter and the remaining
80% conditioned on the closing of the Term Loan. We expect the Term
Loan to close in the fourth quarter and replace our Senior Secured
ABL Facility.
In other recent developments:
- The company was selected by the U.S. Department of Justice
(DOJ) for a $15 million five-year Blanket Purchase Agreement,
allowing all DOJ agencies to easily purchase Veritone software and
services.
- The Legislative Branch of the U.S. Government will use the
company’s cutting-edge solutions to streamline its digital media
management efforts through a channel partnership with CHESA, a
prominent provider of media workflow solutions.
- Signed and renewed software contracts with CAA, United States
Tennis Association, A&E Networks, HBO, Augusta National, and
NBC Universal.
- Announced a comprehensive multi-year partnership extension with
U.S. Soccer, the governing body of soccer in the United States
including the U.S. Women’s and Men’s National Teams, Youth National
Teams and Extended National Teams, to continue to serve as the
archive of record and a licensing partner for all U.S. Soccer owned
content, including all National Teams.
- Announced that Table Rock Management LLC, its subsidiary,
entered into an exclusive advertising direct sales monetization
agreement with SpokenLayer, a full-service creative studio
specializing in custom, short-form digital audio content for the
media and entertainment industries.
Financial Results for Three Months
Ended September 30, 2023
Delivered third quarter revenue of $35.1 million, a decrease of
$2.1 million or 6% from $37.2 million in the third quarter of 2022.
Software Products & Services revenue of $20.4 million, declined
$0.5 million or 2% year over year driven by reduction in
consumption-based revenue from a major customer offset by the
addition of Broadbean, which was acquired in June 2023. Managed
Services revenue decreased by $1.6 million, or 10%, to $14.8
million, driven by lower advertising revenue and spend. Loss from
operations was $23.1 million as compared to a loss of $3.6 million
in Q3 2022 driven in part by a non-cash benefit of $14.3 million in
Q3 2022 associated with a revaluation of certain contingent
consideration, coupled with the decline in non-GAAP gross profit.
Non-GAAP gross profit of $27.9 million in Q3 2023 declined by $2.2
million year over year due to a reduction in higher margin
consumption-based revenue. Non-GAAP gross margin of 79.5% was
relatively flat compared to the third quarter of 2022.
GAAP net loss was $20.9 million, compared to $4.9 million in the
third quarter of 2022, driven in part by increased general and
administrative expenses. Non-GAAP net loss was $7.9 million
compared to $5.7 million in the third quarter of 2022, largely
driven by the decline in revenue and corresponding non-GAAP gross
margins.
During Q3 2023, Total Software Product & Services Customers
of 3,536, on a Pro Forma basis, was down slightly year over year,
given the run-off of legacy CareerBuilder customers transitioning
off Broadbean’s platform over the last 18 months. Total New
Bookings on a Pro Forma basis decreased by 35% to $15.5 million
versus the comparable period a year ago largely driven by a
reduction in spend from Amazon. Annual Recurring Revenue on a Pro
Forma basis decreased 24% year over year to $98.6 million driven in
large part by the decline in consumption revenue from Amazon over
the trailing twelve months ended Q3 2023 as compared to Q3 2022.
Excluding Amazon, Pro Forma Software revenue growth was 4% year
over year.
As of September 30, 2023, the Company had cash and cash
equivalents of $72.1 million, including approximately $58.0 million
of cash received from Managed Services clients for future payments
to vendors.
Business Outlook
Fourth Quarter 2023
- Revenue is expected to be in the range of $33.0 million to
$34.5 million, as compared to $43.9 million in the fourth quarter
of 2022.
- 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 $2.2
million in the fourth quarter of 2022.
Full Year 2023
- Revenue is expected to be in the range of $126.4 million to
$128.0 million, as compared to $149.7 million for fiscal 2022.
- Non-GAAP net loss is expected to be in the range of $36.0
million to $37.0 million, compared to non-GAAP net loss of $15.9
million for fiscal 2022.
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 using its synthetic voice
technology, Veritone Voice, to deliver management’s prepared
remarks on Wednesday, November 8, 2023, at 8:30 a.m. Eastern Time
(5:30 a.m. Pacific Time) to discuss its third quarter 2023 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 November 15, 2023. The full
webcast replay will be available through November 8, 2024. 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: 7979787
* 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 is the
Company’s net income (loss) and net income (loss) per share,
respectively, adjusted to exclude interest expense, 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, a
reserve for state sales taxes, charges related to a facility
sublease, gain on sale of asset, warrant expense, acquisition and
diligence costs, and severance and executive search 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 HR 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 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 the Company’s strategic
position to capitalize in the most attractive market verticals and
drive long-term shareholder value, statements regarding the
Commitment Letter with Highbridge and the expected closing of the
Term Loan, and the Company’s expected total revenue and Non-GAAP
net loss for Q3 2023 and for full year 2023. In addition, words
such as “may,” “will,” “expect,” “believe,” “anticipate,” “intend,”
“plan,” “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, beliefs and
information. As such, the Company’s 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;
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 technology in our
aiWARE platform, offering it for free to the public or making it
cost prohibitive to continue to incorporate their 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 COVID-19 pandemic, the Russia-Ukraine conflict and
related sanctions, 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; the
impact of future economic, competitive and market conditions,
particularly those related to its strategic end markets; and future
business decisions, all of which are difficult or impossible to
predict accurately and many of which are beyond the control of the
Company. Certain of these judgments and risks are discussed in more
detail in the Company’s most recently-filed Annual Report on Form
10-K, and other periodic reports filed 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 the Company or any other person that the
Company’s objectives or plans will be achieved. The forward-looking
statements contained herein reflect the Company’s beliefs,
estimates and predictions as of the date hereof, and the Company
undertakes 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.
CONDENSED CONSOLIDATED BALANCE
SHEETS (UNAUDITED)
(in thousands)
As of
September 30, 2023
December 31, 2022
ASSETS
Cash and cash equivalents
$
72,070
$
184,423
Accounts receivable, net
49,691
56,001
Expenditures billable to clients
24,447
22,339
Prepaid expenses and other current
assets
15,179
15,242
Total current assets
161,387
278,005
Property, equipment and improvements,
net
11,595
5,291
Intangible assets, net
91,081
79,664
Goodwill
78,388
46,498
Long-term restricted cash
869
859
Other assets
17,787
14,435
Total assets
$
361,107
$
424,752
LIABILITIES AND STOCKHOLDERS'
EQUITY
Accounts payable
$
40,512
$
36,738
Accrued media payments
84,346
102,064
Client advances
14,867
16,442
Deferred revenue
11,821
2,600
Contingent consideration, current
500
8,067
Other accrued liabilities
34,692
27,412
Total current liabilities
186,738
193,323
Convertible senior notes, non-current
138,416
137,767
Contingent consideration, non-current
317
—
Other non-current liabilities
15,744
13,811
Total liabilities
341,215
344,901
Total stockholders' equity
19,892
79,851
Total liabilities and stockholders'
equity
$
361,107
$
424,752
VERITONE, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS (UNAUDITED)
AND COMPREHENSIVE INCOME
(LOSS)
(in thousands, except per
share and share data)
Three Months Ended September
30,
Nine Months Ended September
30,
2023
2022
2023
2022
Revenue
$
35,133
$
37,196
$
93,363
$
105,838
Operating expenses:
Cost of revenue
7,187
7,097
21,761
20,725
Sales and marketing
12,892
13,920
38,706
37,565
Research and development
10,410
11,784
32,456
32,735
General and administrative
21,082
2,502
57,504
27,127
Amortization
6,624
5,504
17,767
15,730
Total operating expenses
58,195
40,807
168,194
133,882
Loss from operations
(23,062
)
(3,611
)
(74,831
)
(28,044
)
Other income (expense), net
1,670
(1,249
)
5,535
(3,666
)
Loss before provision for income taxes
(21,392
)
(4,860
)
(69,296
)
(31,710
)
(Benefit from) provision for income
taxes
(482
)
26
(2,127
)
(1,442
)
Net loss
$
(20,910
)
$
(4,886
)
$
(67,169
)
$
(30,268
)
Net loss per share:
Basic and diluted
$
(0.57
)
$
(0.13
)
$
(1.82
)
$
(0.84
)
Weighted average shares outstanding:
Basic and diluted
36,991,650
36,202,496
36,810,878
35,924,413
Comprehensive loss:
Net loss
$
(20,910
)
$
(4,886
)
$
(67,169
)
$
(30,268
)
Foreign currency translation (loss) gain,
net of income taxes
(693
)
66
(2,456
)
642
Total comprehensive loss
$
(21,603
)
$
(4,820
)
$
(69,625
)
$
(29,626
)
VERITONE, INC.
CONSOLIDATED STATEMENTS OF
CASH FLOWS (UNAUDITED)
(in thousands)
Nine Months Ended September
30,
2023
2022
Cash flows from operating
activities:
Net loss
$
(67,169
)
$
(30,268
)
Adjustments to reconcile net loss to net
cash (used in) provided by operating activities:
Depreciation and amortization
20,154
16,494
Provision for credit losses
168
(113
)
Stock-based compensation expense
8,646
14,734
Gain on sale of energy group
(2,572
)
—
Change in fair value of contingent
consideration
1,468
(23,076
)
Change in deferred taxes
(2,858
)
(2,078
)
Amortization of debt issuance costs
649
902
Amortization of right-of-use assets
1,127
632
Imputed non-cash interest income
(108
)
176
Changes in assets and liabilities:
Accounts receivable
14,052
370
Expenditures billable to clients
(2,108
)
3,395
Prepaid expenses and other assets
1,224
(4,290
)
Other assets
(5,426
)
(4,568
)
Accounts payable
2,405
(15,298
)
Deferred revenue
(913
)
895
Accrued media payments
(17,718
)
20,136
Client advances
(1,567
)
2,240
Other accrued liabilities
5,209
(3,177
)
Other liabilities
(2,774
)
(1,736
)
Net cash used in operating activities
(48,111
)
(24,630
)
Cash flows from investing
activities:
Minority investment
—
(2,750
)
Proceeds from divestiture
504
—
Capital expenditures
(4,054
)
(3,777
)
Acquisitions, net of cash acquired
(50,195
)
(4,589
)
Net cash used in investing activities
(53,745
)
(11,116
)
Cash flows from financing
activities:
Payment of contingent considerations
(7,772
)
(14,376
)
Taxes paid related to net share settlement
of equity awards
(1,088
)
(9,726
)
Proceeds from issuances of stock under
employee stock plans, net
1,063
1,199
Settlement of deferred consideration for
acquisitions
(2,690
)
—
Net cash used in financing activities
(10,487
)
(22,903
)
Net decrease in cash and cash equivalents
and restricted cash
(112,343
)
(58,649
)
Cash and cash equivalents and restricted
cash, beginning of period
185,282
255,577
Cash and cash equivalents and restricted
cash, end of period
$
72,939
$
196,928
VERITONE, INC.
REVENUE DETAIL
(UNAUDITED)
(in thousands)
Three Months Ended September
30, 2023
Nine Months Ended September
30, 2023
Government &
Government &
Commercial
Regulated
Commercial
Regulated
Enterprise
Industries
Total
Enterprise
Industries
Total
Total Software Products &
Services
$
18,885
$
1,476
$
20,361
$
44,109
$
4,472
$
48,581
Managed Services
Advertising
9,993
—
9,993
28,945
—
28,945
Licensing
4,779
—
4,779
15,837
—
15,837
Total Managed Services
14,772
—
14,772
44,782
—
44,782
Total Revenue
$
33,657
$
1,476
$
35,133
$
88,891
$
4,472
$
93,363
Three Months Ended September
30, 2022
Nine Months Ended September
30, 2022
Government &
Government &
Commercial
Regulated
Commercial
Regulated
Enterprise
Industries
Total
Enterprise
Industries
Total
Total Software Products &
Services
$
19,800
$
1,012
$
20,812
$
54,694
$
2,664
$
57,358
Managed Services
Advertising
11,017
—
11,017
32,620
—
32,620
Licensing
5,367
—
5,367
15,860
—
15,860
Total Managed Services
16,384
—
16,384
48,480
—
48,480
Total Revenue
$
36,184
$
1,012
$
37,196
$
103,174
$
2,664
$
105,838
VERITONE, INC.
RECONCILIATION OF NON-GAAP NET
INCOME (LOSS) TO GAAP NET LOSS (UNAUDITED)
(in thousands)
Three Months Ended September
30,
2023
2022
Core Operations(1)
Corporate(2)
Total
Core Operations(1)
Core Operations(1)
Core Operations(1)
Net income (loss)
$
(7,058
)
$
(13,852
)
$
(20,910
)
$
(7,921
)
$
3,035
$
(4,886
)
Benefit from income taxes
(2,668
)
2,186
(482
)
20
6
26
Depreciation and amortization
8,105
(248
)
7,857
5,650
174
5,824
Stock-based compensation expense
1,446
586
2,032
2,944
2,158
5,102
Change in fair value of contingent
consideration
—
816
816
—
(14,291
)
(14,291
)
Interest expense, net
—
218
218
—
1,305
1,305
Foreign currency impact
(1,808
)
(24
)
(1,832
)
—
—
—
Acquisition and due diligence costs
—
3,177
3,177
—
839
839
Variable consultant performance bonus
expense
397
—
397
—
—
—
Severance and executive transition
costs
770
15
785
337
28
365
Non-GAAP Net Loss
$
(816
)
$
(7,126
)
$
(7,942
)
$
1,030
$
(6,746
)
$
(5,716
)
Nine Months Ended September
30,
2023
2022
Core Operations(1)
Corporate(2)
Total
Core Operations(1)
Corporate(2)
Total
Net loss
$
(34,833
)
$
(32,336
)
$
(67,169
)
$
(22,172
)
$
(8,096
)
$
(30,268
)
Benefit from income taxes
(3,914
)
1,787
(2,127
)
(826
)
(616
)
(1,442
)
Depreciation and amortization
19,677
476
20,153
16,054
440
16,494
Stock-based compensation expense
5,710
2,936
8,646
7,612
6,967
14,579
Change in fair value of contingent
consideration
—
1,467
1,467
—
(23,076
)
(23,076
)
Interest expense, net
9
1,734
1,743
—
3,670
3,670
Foreign currency impact
(4,585
)
(67
)
(4,652
)
—
—
—
Acquisition and due diligence costs
—
8,253
8,253
—
1,608
1,608
Gain on sale of energy group
—
(2,572
)
(2,572
)
—
—
—
Contribution of business held for sale
(3)
1,789
—
1,789
—
—
—
Variable consultant performance bonus
expense
1,028
—
1,028
—
—
—
Severance and executive transition
costs
2,271
647
2,918
337
28
365
Non-GAAP Net Loss
$
(12,848
)
$
(17,675
)
$
(30,523
)
$
1,005
$
(19,075
)
$
(18,070
)
(1) Core Operations consists of our 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.
(2) Corporate 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.
(3) Contribution of business held for sale
relates to the net loss for the periods presented for our energy
group that we divested during Q2 2023. We have not recast Non-GAAP
Net Loss for periods ended prior to March 31, 2023 because the
change in business strategy to divest the business occurred in Q1
2023 and the prior period contributions were costs to operate the
continuing business when incurred in the prior periods. The
historical amounts would not have a major effect on prior period
results.
VERITONE, INC.
RECONCILIATION OF EXPECTED
NON-GAAP NET INCOME (LOSS) RANGE
TO EXPECTED GAAP NET LOSS
RANGE (UNAUDITED)
(in millions)
Three Months Ending
Year Ending
December 31, 2023
December 31, 2023
Net loss
($16.0) to ($15.0)
($83.1) to ($82.1)
Provision for income taxes
($0.8)
($2.9)
Interest expense, net
$0.2
$1.9
Depreciation and amortization
$7.9
$28.1
Stock-based compensation expense
$2.0
$10.6
Variable consultant performance bonus
expense
$0.2
$1.2
Acquisition and due diligence costs
$0.0
$8.3
Change in fair value of contingent
consideration
$0.0
$1.5
Foreign currency impact
$0.0
($4.7)
Gain on sale of energy group
$0.0
($2.6)
Severance and executive search
$0.0
$2.9
Contribution of business held for sale
$0.0
$1.8
Non-GAAP net income (loss)
($6.5) to ($5.5)
($37.0) to ($36.0)
VERITONE, INC.
RECONCILIATION OF NON-GAAP TO
GAAP FINANCIAL INFORMATION (UNAUDITED)
(in thousands, except per
share data)
Three Months Ended September
30,
Nine Months Ended September
30,
2023
2022
2023
2022
Revenue
$
35,133
$
37,196
$
93,363
$
105,838
Cost of revenue
7,187
7,097
21,761
20,725
Non-GAAP gross profit
27,946
30,099
71,602
85,113
GAAP cost of revenue
7,187
7,097
21,761
20,725
Stock-based compensation expense
5
(46
)
(32
)
(90
)
Non-GAAP cost of revenue
7,192
7,051
21,729
20,635
GAAP sales and marketing expenses
12,892
13,920
38,706
37,565
Stock-based compensation expense
(208
)
(538
)
(913
)
(1,728
)
Contribution of business held for sale
—
—
(484
)
—
Severance and executive transition
costs
(207
)
(86
)
(710
)
(86
)
Non-GAAP sales and marketing expenses
12,477
13,296
36,599
35,751
GAAP research and development expenses
10,410
11,784
32,456
32,735
Stock-based compensation expense
(953
)
(1,532
)
(3,622
)
(3,783
)
Contribution of business held for sale
—
—
(1,117
)
—
Severance and executive transition
costs
(188
)
(198
)
(868
)
(198
)
Non-GAAP research and development
expenses
9,269
10,054
26,849
28,754
GAAP general and administrative
expenses
21,082
2,502
57,504
27,127
Depreciation
(1,233
)
(320
)
(2,386
)
(764
)
Stock-based compensation expense
(876
)
(2,986
)
(4,079
)
(8,978
)
Change in fair value of contingent
consideration
(816
)
14,291
(1,467
)
23,076
Variable consultant performance bonus
expense
(397
)
—
(1,028
)
—
Contribution of business held for sale
-
—
(188
)
—
Acquisition and due diligence costs
(3,177
)
(839
)
(8,253
)
(1,608
)
Severance and executive transition
costs
(390
)
(81
)
(1,340
)
(81
)
Non-GAAP general and administrative
expenses
14,193
12,567
38,763
38,772
GAAP amortization
(6,624
)
(5,504
)
(17,767
)
(15,730
)
GAAP loss from operations
(23,062
)
(3,611
)
(74,831
)
(28,044
)
Total non-GAAP adjustments (1)
15,064
(2,161
)
44,254
9,970
Non-GAAP loss from operations
(7,998
)
(5,772
)
(30,577
)
(18,074
)
GAAP other income (expense), net
1,670
(1,249
)
5,535
(3,666
)
Gain on sale of energy group
—
—
(2,572
)
—
Foreign currency impact
(1,832
)
—
(4,652
)
—
Interest expense, net
218
1,305
1,743
3,670
Non-GAAP other expense, net
56
56
54
4
GAAP loss before income taxes
(21,392
)
(4,860
)
(69,296
)
(31,710
)
Total non-GAAP adjustments (1)
13,450
(856
)
38,773
13,640
Non-GAAP loss before income taxes
(7,942
)
(5,716
)
(30,523
)
(18,070
)
Benefit from income taxes
(482
)
26
(2,127
)
(1,442
)
GAAP net loss
(20,910
)
(4,886
)
(67,169
)
(30,268
)
Total non-GAAP adjustments (1)
12,968
(830
)
36,646
12,198
Non-GAAP net loss
$
(7,942
)
$
(5,716
)
$
(30,523
)
$
(18,070
)
Shares used in computing non-GAAP basic
and diluted net loss per share
36,992
36,202
36,811
35,924
Non-GAAP basic and diluted net loss per
share
$
(0.21
)
$
(0.16
)
$
(0.83
)
$
(0.50
)
(1) Adjustments are comprised of the
adjustments to GAAP cost of revenue, sales and marketing expenses,
research and development expenses and general and administrative
expenses and other (expense) income, net (where applicable) listed
above.
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
Quarter Ended
Mar 31,
Jun 30,
Sept 30,
Dec 31,
Mar 31,
Jun 30,
Sept 30,
2022 (1)
2022 (1)
2022 (1)
2022 (1)
2023 (1)
2023 (1)
2023
Pro Forma Software Revenue (in 000's)
(2)
$
26,319
$
26,650
$
28,603
$
35,612
$
22,423
$
20,860
$
20,361
Total Software Products & Services
Customers (3)
3,673
3,718
3,787
3,824
3,773
3,705
3,536
Annual Recurring Revenue (SaaS) (in 000's)
(4)
$
48,392
$
44,465
$
43,925
$
46,248
$
45,453
$
47,720
$
47,756
Annual Recurring Revenue (Consumption) (in
000's) (5)
$
87,445
$
85,901
$
85,091
$
71,754
$
67,242
$
60,229
$
50,803
Total New Bookings (in 000's) (6)
$
16,643
$
22,009
$
23,793
$
26,342
$
22,794
$
8,388
$
15,501
Gross Revenue Retention (7)
>90%
>90%
>90%
>90%
>90%
>90%
>90%
(1) All of the supplemental financial
information for this period is presented on a Pro Forma basis
inclusive of Broadbean.
(2) “Software Revenue - Pro Forma” is a
non-GAAP measure that represents Software Products & Services
revenue on a Pro Forma basis.
(3) “Total Software Products &
Services Customers” includes Software Products & Services
customers as of the end of each respective quarter set forth above
with net revenues in excess of $10 and also excludes any customers
categorized by us as trial or pilot status. In prior periods, we
provided “Ending Software Customers,” which represented Software
Products & Services customers as of the end of each fiscal
quarter with trailing twelve-month revenues in excess of $2,400 for
both Veritone, Inc. and PandoLogic Ltd. and/or deemed by the
Company to be under an active contract for the applicable periods.
Total Software Products & Services Customers is not comparable
to Ending Software Customers. Total Software Products &
Services Customers includes customers based on revenues in the last
month of the quarter rather than on a trailing twelve-month basis.
Total Software Products & Services Customers includes customers
based on revenues in the last month of the quarter rather than on a
trailing twelve-month basis and excludes any customers that are on
trial or pilot status with us rather than including customers with
active contracts. Management uses Total Software Products &
Services Customers and we believe Total Software Products &
Services Customers are useful to investors because it more
accurately reflects our total customers for our Software Products
& Services customers inclusive of Broadbean.
(4) “Annual Recurring Revenue (SaaS)”
represents an annualized calculation of monthly recurring revenue
during the last month of the applicable quarter for all Total
Software Products & Services customers, in each case on a Pro
Forma basis. In prior periods, we provided “Average Annual
Revenue,” which was calculated as the aggregate of trailing
twelve-month Software Products & Services revenue divided by
the average number of customers over the same period for both
Veritone, Inc. and PandoLogic Ltd. Annual Recurring Revenue is not
comparable to Average Annual Revenue (SaaS). Annual Recurring
Revenue (SaaS) includes only subscription-based SaaS revenue, is
not averaged among active customers and uses a calculation of
recurring revenue as described above instead of annual revenue.
Management uses “Annual Recurring Revenue (SaaS)” and we believe
Annual Recurring Revenue (SaaS) is useful to investors because
Broadbean significantly increases our mix of subscription-based
SaaS revenues as compared to Consumption revenues and the split
between the two allows the reader to delineate between predictable
recurring SaaS revenues and more volatile Consumption revenues.
(5) “Annual Recurring Revenue
(Consumption)” represents the trailing twelve months of all
non-recurring and/or consumption-based revenue for all active Total
Software Products & Services customers, in each case, on a Pro
Forma basis. In prior periods, we provided “Average Annual
Revenue,” which was calculated as the aggregate of trailing
twelve-month Software Products & Services revenue divided by
the average number of customers over the same period for both
Veritone, Inc. and PandoLogic Ltd. Annual Recurring Revenue
(Consumption) is not comparable to Average Annual Revenue. Annual
Recurring Revenue (Consumption) includes only non-recurring and/or
consumption-based revenue, is not averaged among active customers
and uses a calculation of recurring revenue as described above
instead of annual revenue. Management uses “Annual Recurring
Revenue (Consumption)” and we believe Annual Recurring Revenue
(Consumption) is useful to investors because Broadbean
significantly increases our mix of subscription-based SaaS revenues
as compared to Consumption revenues and the split between the two
allows the reader to delineate between predictable recurring SaaS
revenues and more volatile Consumption revenues.
(6) “Total New Bookings” represents the
total fees payable during the full contract term for new contracts
received in the quarter (including fees payable during any
cancellable portion and an estimate of license fees that may
fluctuate over the term), excluding any variable fees under the
contract (e.g., fees for cognitive processing, storage,
professional services and other variable services), in each case on
a Pro Forma basis.
(7) “Gross Revenue Retention” represents
calculate our dollar-based gross revenue retention rate as of the
period end by starting with the revenue from Software Products
& Services Customers as of the 3 months in the prior year
quarter to such period, or Prior Year Quarter Revenue. We then
deduct from the Prior Year Quarter Revenue any revenue from
Software Products & Services Customers who are no longer
customers as of the current period end, or Current Period Ending
Software Customer Revenue. We then divide the total Current Period
Ending Software Customer Revenue by the total Prior Year Quarter
Revenue to arrive at our dollar-based gross retention rate, which
is the percentage of revenue from all Software Products &
Services Customers from our Software Products & Services as of
the year prior that is not lost to customer churn. All numbers used
to determine Gross Revenue Retention are calculated on a Pro Forma
basis.
Managed Services Supplemental Financial
Information
Quarter Ended
Mar 31,
Jun 30,
Sept 30,
Dec 31,
Mar 31,
Jun 30,
Sept 30,
2022
2022
2022
2022
2023
2023
2023
Avg billings per active Managed Services
client (in 000's) (1)
$
684
$
736
$
747
$
823
$
771
$
576
$
630
Revenue during quarter (in 000's) (2)
$
10,735
$
9,625
$
10,035
$
11,074
$
9,337
$
6,876
$
9,117
(1) Avg billings per active Managed
Services customer for each quarter reflects the average quarterly
billings per active Managed Services customer over the twelve-month
period through the end of such quarter for Managed Services clients
that are active during such quarter.
(2) Managed Services revenue and metrics exclude content licensing
and media services.
VERITONE, INC.
RECONCILIATION OF NON-GAAP
GROSS PROFIT TO LOSS FROM OPERATIONS
(in thousands)
Three Months Ended September
30,
Nine Months Ended September
30,
2023
2022
2022
2021
Loss from operations
$
(23,062
)
$
(3,611
)
$
(74,831
)
$
(28,044
)
Sales and marketing
12,892
13,920
38,706
37,565
Research and development
10,410
11,784
32,456
32,735
General and administrative
21,082
2,502
57,504
27,127
Amortization
6,624
5,504
17,767
15,730
Non-GAAP gross profit
$
27,946
$
30,099
$
71,602
$
85,113
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231107853990/en/
Company Contact: Mike Zemetra Chief Financial Officer
Veritone, Inc. investors@veritone.com
IR Agency Contact: Stefan Norbom Prosek Partners
203-644-5475 snorbom@prosek.com
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