Veritone Reports Fourth Quarter and Fiscal Year 2022 Results

- Fiscal Year 2022 Revenue of $149.7 Million, Up 30% Year Over Year -

- Grew Ending Software Customers to 642, Up 21% Year over Year -

- Record New Bookings in Q4 2022 of $20.0 Million, Up 141% Year over Year -

- Retired $60 Million of Debt in Q4 2022 in exchange for $39 Million of Cash -

- Ended 2022 with $184 Million in Cash and Cash Equivalents(1) -

DENVER--(BUSINESS WIRE)-- Veritone, Inc. (NASDAQ: VERI), creator of aiWARE™, and a leader in enterprise AI software and services, today reported results for the fourth quarter and fiscal year ended December 31, 2022.

Ryan Steelberg, CEO & President of Veritone commented, “Veritone made significant strategic progress in 2022 and positioned the company for disciplined growth. Q4 new bookings reached another record of $20 million, up 141% year over year. Our year over year customer count grew 21% to 642 and our Gross Revenue Retention continued to be strong in the high 90th percentiles, providing a resilient foundation. As new management, we plan to capitalize on this customer-based momentum in 2023. We will continue to responsibly invest in growing the business while also leveraging our partners to expand market opportunities.”

Full Year 2022 Financial Highlights:

  • Revenue of $149.7 million, an increase of $34.4 million or 30% year over year on a GAAP basis and 1% on a Pro Forma basis.
  • Loss from operations of $38.0 million, an improvement $23.4 million or 38% year over year.
  • Non-GAAP gross profit of $122.3 million, an increase of $29.1 million or 31% year over year.
  • Net loss of $25.2 million, an improvement of $39.4 million or 61% year over year on a GAAP basis.
  • Non-GAAP Net Loss of $15.9 million, as compared to Non-GAAP Net Income of $6.8 million in fiscal year 2022.
  • Cash and cash equivalents(1) were $184.4 million as of December 31, 2022, as compared to $254.7 million as of December 31, 2021.

Fiscal Quarter Q4 Financial Highlights:

  • Revenues of $43.9 million, a decrease of $11.3 million or 20% year over year.
  • Loss from operations of $10.0 million, a decline of $2.9 million or 40% year over year.
  • Non-GAAP gross profit of $37.2 million, a decrease of $11.7 million or 24% year over year.
  • On a GAAP basis, Net Income was $5.0 million, an improvement of $14.9 million from a Net Loss of $9.9 million in Q4 2022, principally driven by a one-time net gain of approximately $21.0 million from the repurchase of our convertible notes in Q4 2022.
  • Non-GAAP Net Income was $2.2 million as compared to $17.0 million in Q4 2022.
  • Repurchased $60.0 million of convertible notes in exchange for cash totaling approximately $39.0 million, generating a net gain of $21.0 million in Q4 2022.

(1) Including approximately $93.1 million of cash received from Managed Services clients for future payments to vendors.

Pro Forma basis assumes Veritone owned PandoLogic since the beginning of 2021. See below for a description of our non-GAAP measures and reconciliations to the most directly comparable GAAP measures.

 

Three Months Ended

December 31,

 

Year Ended

December 31,

Unaudited

 

 

 

 

Percent

 

 

 

 

 

Percent

(in $000s, except customers)

 

2022

 

 

 

2021

 

 

Change

 

 

2022

 

 

 

2021

 

 

Change

Revenue

$

43,890

 

$

55,149

 

(20

)%

$

149,728

 

$

115,305

 

30

%

Loss from operations

$

(9,951

)

$

(7,109

)

40

%

$

(37,995

)

$

(61,373

)

(38

)%

Net income (loss)

$

5,032

 

$

(9,899

)

NM

 

$

(25,236

)

$

(64,672

)

(61

)%

Non-GAAP gross profit(1)

$

37,183

 

$

48,882

 

(24

)%

$

122,296

 

$

93,176

 

31

%

Non-GAAP net income (loss)(1)

$

2,190

 

$

16,967

 

(87

)%

$

(15,880

)

$

6,832

 

NM

 

 

 

 

 

 

 

 

 

Three Months Ended

December 31,

 

Year Ended

December 31,

Software Products & Services

 

 

 

 

Percent

 

 

 

 

 

Percent

Supplemental Financial Information(1)

 

2022

 

 

 

2021

 

 

Change

 

 

2022

 

 

 

2021

 

 

Change

Software Products & Services Revenue (in 000s)

$

27,220

 

$

40,223

 

(32

)%

$

84,578

 

$

92,338

 

(8

)%

Ending Software Customers

 

642

 

 

529

 

21

%

 

 

 

Average Annual Revenue (AAR) (in 000's)(1)

$

140

 

$

209

 

(33

)%

 

 

 

Total New Bookings (in 000s)

$

20,047

 

$

8,317

 

141

%

 

 

 

(1) See tables below for reconciliation of non-GAAP financial measures to directly comparable GAAP measures and for the definitions used for Software Products & Services Supplemental Financial Information.

NM = [Not meaningful]

Recent Business Highlights

  • Launched Veritone Generative AI on aiWARE, enhancing offerings to immediately deliver robust, orchestrated cognitive and generative AI workflows and solutions across a variety of target industries.
  • Announced strategic cost reduction initiatives that will result in net annualized savings of $12 to $15 million over the course of fiscal 2023. Key areas of focus include improving the balance sheet, enhancing Veritone’s cost structure and improving focus on near-term solutions, initiatives and customer growth.
  • Announced the launch of Veritone Redaction Managed Service, enabling organizations with limited dedicated resources to lean on Veritone to automate the process of obscuring sensitive media evidence, significantly improving the manual and time-intensive redaction workflows.
  • Unveiled new strategic partnerships with Cameo Kids and Moonbug, the creators of Cocomelon, leveraging Veritone’s AI voice capabilities to enable greater scale by removing the need to manually record each Cameo message, while diversifying revenue streams and upholding brand safety standards.
  • Repurchased approximately $60 million, or 30% of the outstanding principal amount, of our 1.75% Convertible Senior Notes due November 2026 for an aggregate cash repurchase price of approximately $39 million, a transaction aligned with our strategic initiatives to improve the balance sheet flexibility and drive profitable growth.
  • In addition to Ryan Steelberg assuming the role of CEO, Veritone made strategic hires of Seth Greenberg as Chief Marketing & Strategy Officer and Fleming Meng as Chief Information Officer, both seasoned executives who bring deep sector expertise in the technology industry with proven track records of elevating strong businesses as innovative decision-makers.
  • Audacy selects Veritone Attribute to provide advertisers with additional analytics capabilities for campaign planning, performance monitoring and optimization.

Financial Results for Three Months Ended December 31, 2022

Delivered fourth quarter revenue of $43.9 million, a decrease of $11.3 million or 20% from $55.1 million in the fourth quarter of 2021. Driving this decrease was Software Products & Services revenue of $27.2 million, which declined $13.0 million or 32% year over year principally due to reductions in overall consumption of our human resources and hiring solutions as a result of exiting the COVID-19 environment in the fourth quarter of 2021, where some of our larger customers experienced an overall pull-back in consumer demand for their services in the fourth quarter of 2022 and as a result were hiring less. Offsetting this decrease was Managed Services revenue of $16.7 million, an increase of $1.8 million or 12% from $14.9 million in the fourth quarter of 2021, principally driven by the growth in our licensing and advertising services.

Loss from operations increased 40% to $10.0 million. The year over year decline in Software Products & Services revenue during the fourth quarter of 2022 largely drove a corresponding decline of $11.7 million in our Non-GAAP Gross Profit of $37.2 million as compared to Non-GAAP Gross Profit of $48.9 million in the fourth quarter of 2021. Non-GAAP gross margin was 84.7% as compared to 88.6% in the fourth quarter of 2021.

GAAP net income of $5.0 million increased $14.9 million as compared to a net loss of $9.9 million in the fourth quarter of 2021, driven largely by a net $19.1 million one-time gain on the repurchase of our convertible notes in the fourth quarter of 2022. Non-GAAP net income was $2.2 million, a decline of $14.8 million as compared to $17.0 million in the fourth quarter of 2021 that was largely driven by the decrease in Non-GAAP Gross Margin coupled with increased investments in personnel, financial systems and professional services to facilitate future scale and growth.

Financial Results for Full Year Ended December 31, 2022

Delivered fiscal year 2022 revenue of $149.7 million, an increase of $34.4 million or 30% year over year on a GAAP basis. This increase was largely driven by Software Products & Services revenue of $84.6 million, an increase of $25.1 million or 42% year over year as a result of organic growth and our acquisition of Pandologic in the third quarter of 2021, and secondarily from Managed Services revenue of $65.2 million, an increase of $9.4 million or 17% year over year. Excluding hiring solutions revenue from the Pandologic acquisition, Software Products & Services increased 28% year over year led by growth in our commercial media and entertainment products and services. And on a Pro Forma basis, fiscal year 2022 Pro Forma Revenue increased 1% from fiscal year 2021 Pro Forma Revenue of $148.1 million driven by a decline in Software Products & Services of $7.8 million or 8% driven by reductions in services used by Amazon, offset by the $9.2 million increase in Managed Services. Excluding the revenues from the PandoLogic acquisition, revenue grew more than 60% year over year in fiscal year 2022 as compared to fiscal year 2021.

Loss from operations decreased 38% to $38.0 million. Non-GAAP gross profit was $122.3 million, an increase of $29.1 million or 31% year over year. Non-GAAP Gross Margin improved to 81.7% in fiscal year 2022 as compared to 80.8% in fiscal year 2021, primarily driven by the growth and higher mix of Software Products & Services revenue in fiscal year 2022 as compared to fiscal year 2021.

GAAP net loss was $25.2 million, an improvement of $39.5 million as compared to $64.7 million in fiscal year 2021, primarily driven by the net $19.1 million gain on the repurchase of approximately $60 million of our convertible notes and a benefit of $22.7 million in fiscal year 2022 versus an expense of $12.1 million in fiscal year 2021 as a result of the PandoLogic earnout, coupled with full year interest expense in fiscal year 2022 from our 1.75% convertible notes and various changes in other operating expenses year over year. Non-GAAP net loss was $15.9 million as compared to Non-GAAP net income of $6.8 million in fiscal year 2021. The primary drivers of the year over year change in Non-GAAP net loss/income were investments made in Core Operations, most notably additions of sales and engineering staff made in the first half of fiscal year 2022 and investments in Corporate largely around new system launches and to support our growth and regulatory compliance in fiscal year 2022.

As of December 31, 2022, the Company had cash and cash equivalents of $184.4 million as of December 31, 2022, as compared to $254.7 million as of December 31, 2021, including approximately $92.9 million of cash received from Managed Services clients for future payments to vendors.

Business Outlook

First Quarter 2023

  • Revenue is expected to be in the range of $29.5 million to $30.5 million, as compared to $34.4 million in the first quarter of 2022.
  • Non-GAAP net loss is expected to be in the range of $8.5 million to $9.5 million, compared to $5.2 million in the first quarter of 2022.

Full Year 2023

  • Revenue is expected to be in the range of $158 million to $168 million, as compared to $149.7 million in 2022.
  • Non-GAAP net loss is expected to be in the range of $7.0 million to $1.0 million, as compared to non-GAAP net loss of $15.9 million in 2022.

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

Conference Call

Veritone will hold a conference call using its synthetic voice technology, Veritone Voice, to deliver management’s prepared remarks on Thursday March 2, 2023, at 4:30 p.m. Eastern Time (1:30 p.m. Pacific Time) to discuss its fourth quarter and full year 2022 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 Dial-In: 844-750-4897
  • International Dial-In: 412-317-5293

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

About the Presentation of Supplemental Non-GAAP and Pro Forma Financial Information

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 Revenue, Average Annual Revenue (AAR), Non-GAAP gross profit, Non-GAAP gross margin, Non-GAAP net income (loss), Non-GAAP net income (loss) per share and Non-GAAP net loss (pro forma). The Company has posted additional supplemental financial information on its website at investors.veritone.com concurrently with this press release.

Pro Forma Revenue includes historical Software Products & Services revenue from the past eight fiscal quarters of each of Veritone, Inc. and PandoLogic Ltd. (unaudited) and presents such revenue on a combined pro forma basis treating PandoLogic Ltd. as owned by Veritone, Inc. since January 1, 2021. Average Annual Revenue (AAR) is calculated as the aggregate of trailing twelve-month Software Products & Services Pro Forma Revenue divided by the average number of customers over the same period for both Veritone, Inc. and PandoLogic Ltd. 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. Non-GAAP net loss (pro forma) is the Company’s Non-GAAP net income (loss) presented on a combined pro forma basis treating PandoLogic Ltd. as owned by Veritone, Inc. since January 1, 2021. 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 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.

These 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.

These 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 PandoLogic’s talent acquisition software product 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) is a leader in enterprise artificial intelligence (AI) software and solutions. Serving organizations in both commercial and regulated sectors, Veritone’s software, services, and industry applications accelerate and maximize digital migration, empowering the largest and most recognizable brands in the world to run more efficiently, accelerate decision making and increase profitability. Veritone’s hyper-expansive Enterprise AI platform, aiWARE™, orchestrates an ever-growing ecosystem of machine learning models to transform audio, video and other data sources into actionable intelligence. Through professional and managed services, as well as its robust partner ecosystem, Veritone develops and builds AI solutions that solve the problems of today and tomorrow.

To learn more, visit Veritone.com.

Safe Harbor Statement
This news release contains forward-looking statements, including without limitation statements regarding the Company’s expectations regarding its plan to capitalize on customer-based momentum and the Company’s expected total revenue and Non-GAAP net loss for Q1 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, 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 the COVID-19 pandemic and the Russian invasion of Ukraine on the business of the Company and that of our existing and potential customers and increasing interest rates, inflationary pressures and the threat of a recession in the United States and around the world; as well as 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 Annual Report on Form 10-K, as supplemented by Amendment No. 1 to our Quarterly Report on Form 10-Q/A for the three months ended March 31, 2022, 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

 

December 31,

2022

December 31,

2021

ASSETS

 

 

 

 

 

Cash and cash equivalents

$

184,423

$

254,722

Accounts receivable, net

 

56,001

 

85,063

Expenditures billable to clients

 

22,339

 

27,180

Prepaid expenses and other current assets

 

15,242

 

12,117

Total current assets

 

278,005

 

379,082

Property, equipment and improvements, net

 

5,291

 

1,556

Intangible assets, net

 

79,664

 

93,872

Goodwill

 

46,498

 

42,028

Long-term restricted cash

 

859

 

855

Other assets

 

14,435

 

954

Total assets

$

424,752

$

518,347

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

Accounts payable

$

36,738

$

46,711

Accrued media payments

 

102,064

 

86,923

Client advances

 

19,042

 

10,561

Contingent consideration, current

 

8,067

 

20,053

Other accrued liabilities

 

27,020

 

27,093

Total current liabilities

 

192,931

 

191,341

Convertible senior notes, non-current

 

137,767

 

195,082

Contingent consideration, non-current

 

 

31,533

Other non-current liabilities

 

13,882

 

13,891

Total liabilities

 

344,580

 

431,847

Total stockholders' equity

 

80,172

 

86,500

Total liabilities and stockholders' equity

$

424,752

$

518,347

VERITONE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

AND COMPREHENSIVE INCOME (LOSS)

(in thousands, except per share and share data)

 

 

 

 

 

 

 

 

 

Three Months Ended

December 31,

 

Year Ended

December 31,

 

2022

 

2021

 

2022

 

2021

Revenue

$

43,890

 

$

55,149

 

$

149,728

 

$

115,305

 

Operating expenses:

 

 

 

 

Cost of revenue

 

6,707

 

 

6,267

 

 

27,432

 

 

22,129

 

Sales and marketing

 

13,780

 

 

11,349

 

 

51,345

 

 

28,935

 

Research and development

 

10,854

 

 

10,215

 

 

43,589

 

 

25,075

 

General and administrative

 

17,050

 

 

29,395

 

 

44,177

 

 

91,667

 

Amortization

 

5,450

 

 

5,032

 

 

21,180

 

 

8,872

 

Total operating expenses

 

53,841

 

 

62,258

 

 

187,723

 

 

176,678

 

Loss from operations

 

(9,951

)

 

(7,109

)

 

(37,995

)

 

(61,373

)

Other expense, net

 

18,413

 

 

(563

)

 

14,747

 

 

(600

)

Income (loss) before provision for income taxes

 

8,462

 

 

(7,672

)

 

(23,248

)

 

(61,973

)

Provision for (benefit from) income taxes

 

3,430

 

 

2,227

 

 

1,988

 

 

2,699

 

Net income (loss)

$

5,032

 

$

(9,899

)

$

(25,236

)

$

(64,672

)

Net income (loss) used for calculating net income (loss) per share:

 

 

 

 

Basic

$

5,032

 

$

(9,899

)

$

(25,236

)

$

(64,672

)

Diluted

$

(9,096

)

$

(9,899

)

$

(25,236

)

$

(64,672

)

Net income (loss) per share:

 

 

 

 

Basic

$

0.14

 

$

(0.28

)

$

(0.70

)

$

(1.94

)

Diluted

$

(0.21

)

$

(0.28

)

$

(0.70

)

$

(1.94

)

Weighted average shares outstanding:

 

 

 

 

Basic

 

36,359,618

 

 

34,916,927

 

 

36,033,560

 

 

33,298,382

 

Diluted

 

42,487,004

 

 

34,916,927

 

 

36,033,560

 

 

33,298,382

 

Comprehensive income (loss):

 

 

 

 

Net income (loss)

$

5,032

 

$

(9,899

)

$

(25,236

)

$

(64,672

)

Foreign currency translation gain, net of income taxes

 

(614

)

 

(177

)

 

28

 

 

(170

)

Total comprehensive income (loss)

$

4,418

 

$

(10,076

)

$

(25,208

)

$

(64,842

)

VERITONE, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(in thousands)

 

 

 

 

Year Ended

December 31,

 

2022

 

2021

Cash flows from operating activities:

 

 

Net loss

$

(25,236

)

$

(64,672

)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

Depreciation and amortization

 

22,493

 

 

9,410

 

Loss on disposal of fixed assets

 

 

 

1,894

 

Provision for doubtful accounts

 

549

 

 

172

 

Loss on sublease

 

 

 

1,211

 

Stock-based compensation expense

 

19,115

 

 

40,065

 

Change in fair value of contingent consideration

 

(22,721

)

 

12,074

 

Change in deferred taxes

 

1,482

 

 

(45

)

Amortization of debt issuance costs

 

1,191

 

 

 

Amortization of right-of-use assets

 

1,053

 

 

 

Gain on debt extinguishment

 

(19,097

)

 

 

Changes in assets and liabilities:

 

 

Accounts receivable

 

29,658

 

 

(47,225

)

Expenditures billable to clients

 

4,841

 

 

(8,815

)

Prepaid expenses and other assets

 

(2,938

)

 

3,368

 

Other assets

 

(9,558

)

 

(241

)

Accounts payable

 

(9,997

)

 

17,896

 

Accrued media payments

 

14,507

 

 

31,049

 

Client advances

 

8,481

 

 

4,065

 

Other accrued liabilities

 

(1,992

)

 

8,184

 

Other liabilities

 

(8,094

)

 

(1,156

)

Net cash provided by operating activities

 

3,737

 

 

7,234

 

 

 

 

Cash flows from investing activities:

 

 

Minority investment

 

(2,750

)

 

 

Capital expenditures

 

(4,765

)

 

(1,016

)

Acquisitions, net of cash acquired

 

(4,589

)

 

(52,827

)

Net cash used in investing activities

 

(12,104

)

 

(53,843

)

 

 

 

Cash flows from financing activities:

 

 

Proceeds from issuance of convertible senior notes

 

 

 

201,250

 

Payment of debt issuance costs

 

 

 

(6,304

)

Purchases of capped calls related to convertible senior notes

 

 

 

(18,616

)

Repurchase of convertible senior notes

 

(39,029

)

 

 

Payment of debt repurchase costs

 

(380

)

 

 

Unwinding of capped calls related to debt repurchase

 

276

 

 

 

Payment of contingent considerations

 

(14,376

)

 

 

Taxes paid related to net share settlement of equity awards

 

(9,765

)

 

 

Proceeds from the exercise of warrants

 

 

 

2,279

 

Proceeds from issuances of stock under employee stock plans, net

 

1,346

 

 

7,905

 

Net cash (used in) provided by financing activities

 

(61,928

)

 

186,514

 

 

 

 

Net (decrease) increase in cash and cash equivalents and restricted cash

 

(70,295

)

 

139,905

 

Cash and cash equivalents and restricted cash, beginning of period

 

255,577

 

 

115,672

 

Cash and cash equivalents and restricted cash, end of period

$

185,282

 

$

255,577

 

VERITONE, INC.

REVENUE DETAIL (UNAUDITED)

(in thousands)

 

 

 

 

 

 

 

 

Three Months Ended

December 31, 2022

Year Ended

December 31, 2022

 

 

Government &

 

 

Government &

 

 

Commercial

Regulated

 

Commercial

Regulated

 

 

Enterprise

Industries

Total

Enterprise

Industries

Total

Total Software Products & Services

$

26,055

$

1,165

$

27,220

$

80,749

$

3,829

$

84,578

 

 

 

 

 

 

 

Managed Services

 

 

 

 

 

 

Advertising

 

12,045

 

 

12,045

 

44,665

 

 

44,665

Licensing

 

4,625

 

 

4,625

 

20,485

 

 

20,485

Total Managed Services

 

16,670

 

 

16,670

 

65,150

 

 

65,150

 

 

 

 

 

 

 

Total Revenue

$

42,725

$

1,165

$

43,890

$

145,899

$

3,829

$

149,728

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

December 31, 2021

Year Ended

December 31, 2021

 

 

Government &

 

 

Government &

 

 

Commercial

Regulated

 

Commercial

Regulated

 

 

Enterprise

Industries

Total

Enterprise

Industries

Total

Total Software Products & Services

$

38,888

$

1,335

$

40,223

$

55,484

$

4,031

$

59,515

 

 

 

 

 

 

 

Managed Services

 

 

 

 

 

 

Advertising

 

10,857

 

 

10,857

 

40,800

 

 

40,800

Licensing

 

4,069

 

 

4,069

 

14,990

 

 

14,990

Total Managed Services

 

14,926

 

 

14,926

 

55,790

 

 

55,790

 

 

 

 

 

 

 

Total Revenue

$

53,814

$

1,335

$

55,149

$

111,274

$

4,031

$

115,305

VERITONE, INC.

RECONCILIATION OF NON-GAAP NET INCOME (LOSS) TO GAAP NET LOSS (UNAUDITED)

(in thousands)

 

 

 

 

 

 

 

 

Three Months Ended December 31,

 

2022

 

2021

 

Core

Operations(1)

 

Corporate(2)

 

Total

 

Core

Operations(1)

 

Corporate(2)

 

Total

Net income (loss)

$

3,466

 

$

1,566

 

$

5,032

 

$

12,231

$

(22,130

)

$

(9,899

)

Provision for income taxes

 

2,310

 

 

1,120

 

 

3,430

 

 

2,268

 

4

 

 

2,272

 

Depreciation and amortization

 

5,882

 

 

117

 

 

5,999

 

 

5,119

 

102

 

 

5,221

 

Stock-based compensation expense

 

2,526

 

 

2,010

 

 

4,536

 

 

1,986

 

4,586

 

 

6,572

 

Change in fair value of contingent consideration

 

 

 

355

 

 

355

 

 

 

11,771

 

 

11,771

 

State sales tax reserve

 

 

 

 

 

 

 

 

 

 

 

Interest expense, net

 

 

 

680

 

 

680

 

 

 

493

 

 

493

 

Gain on debt extinguishment

 

 

 

(19,097

)

 

(19,097

)

 

 

 

 

 

Acquisition and due diligence costs

 

 

 

1,080

 

 

1,080

 

 

 

537

 

 

537

 

Charges related to sublease

 

 

 

 

 

 

 

 

 

 

 

Severance and executive search

 

175

 

 

 

 

175

 

 

 

 

 

 

Non-GAAP Net Income (Loss)

$

14,359

 

$

(12,169

)

$

2,190

 

$

21,604

$

(4,637

)

$

16,967

 

 

 

 

 

 

 

 

 

Year Ended December 31,

 

2022

 

2021

 

Core

Operations(1)

 

Corporate(2)

 

Total

 

Core

Operations(1)

 

Corporate(2)

 

Total

Net income (loss)

$

(18,706

)

$

(6,530

)

$

(25,236

)

$

8,298

$

(72,970

)

$

(64,672

)

(Benefit from) provision for income taxes

 

1,484

 

 

504

 

 

1,988

 

 

2,658

 

86

 

 

2,744

 

Depreciation and amortization

 

21,936

 

 

557

 

 

22,493

 

 

8,984

 

426

 

 

9,410

 

Stock-based compensation expense

 

10,138

 

 

8,977

 

 

19,115

 

 

6,575

 

33,488

 

 

40,063

 

Change in fair value of contingent consideration

 

 

 

(22,721

)

 

(22,721

)

 

 

12,074

 

 

12,074

 

State sales tax reserve

 

 

 

 

 

 

 

 

306

 

 

306

 

Interest expense, net

 

 

 

4,350

 

 

4,350

 

 

 

493

 

 

493

 

Gain on debt extinguishment

 

 

 

(19,097

)

 

(19,097

)

 

 

 

 

 

Acquisition and due diligence costs

 

 

 

2,688

 

 

2,688

 

 

 

2,698

 

 

2,698

 

Charges related to sublease

 

 

 

 

 

 

 

 

3,367

 

 

3,367

 

Severance and executive search

 

512

 

 

28

 

 

540

 

 

 

349

 

 

349

 

Non-GAAP Net Income (Loss)

$

15,364

 

$

(31,244

)

$

(15,880

)

$

26,515

$

(19,683

)

$

6,832

 

(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.

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

 

March 31,

2023

December 31,

2023

Net loss

($22.0) to ($21.0)

 

($57.0) to ($51.0)

Provision for income taxes

$0.5

 

$2.0

Interest expense

$1.0

 

$4.0

Depreciation and amortization

$6.0

 

$24.0

Stock-based compensation expense

$5.0

 

$20.0

Non-GAAP net income (loss)

($9.5) to ($8.5)

 

($7.0) to ($1.0)

VERITONE, INC.

RECONCILIATION OF NON-GAAP TO GAAP FINANCIAL INFORMATION (UNAUDITED)

(in thousands, except per share data)

 

 

 

 

 

 

Three Months Ended

December 31,

 

Year Ended

December 31,

 

 

2022

 

 

 

2021

 

 

 

2022

 

 

 

2021

 

Revenue

$

43,890

 

$

55,149

 

$

149,728

 

$

115,305

 

Cost of revenue

 

6,707

 

 

6,267

 

 

27,432

 

 

22,129

 

Non-GAAP gross profit

 

37,183

 

 

48,882

 

 

122,296

 

 

93,176

 

 

 

 

 

 

GAAP cost of revenue

 

6,707

 

 

6,267

 

 

27,432

 

 

22,129

 

Stock-based compensation expense

 

(26

)

 

(116

)

 

(116

)

 

(116

)

Non-GAAP cost of revenue

 

6,681

 

 

6,151

 

 

27,316

 

 

22,013

 

 

 

 

 

 

GAAP sales and marketing expenses

 

13,780

 

 

11,349

 

 

51,345

 

 

28,935

 

Stock-based compensation expense

 

(535

)

 

(358

)

 

(2,263

)

 

(1,716

)

Severance and executive search

 

 

 

 

 

(86

)

 

(236

)

Non-GAAP sales and marketing expenses

 

13,245

 

 

10,991

 

 

48,996

 

 

26,983

 

 

 

 

 

 

GAAP research and development expenses

 

10,854

 

 

10,215

 

 

43,589

 

 

25,075

 

Stock-based compensation expense

 

(1,273

)

 

(1,201

)

 

(5,056

)

 

(3,217

)

Severance and executive search

 

 

 

 

 

(198

)

 

(14

)

Non-GAAP research and development expenses

 

9,581

 

 

9,014

 

 

38,335

 

 

21,844

 

 

 

 

 

 

GAAP general and administrative expenses

 

17,050

 

 

29,395

 

 

44,177

 

 

91,667

 

Depreciation

 

(549

)

 

(189

)

 

(1,313

)

 

(538

)

Stock-based compensation expense

 

(2,702

)

 

(4,897

)

 

(11,680

)

 

(35,014

)

Change in fair value of contingent consideration

 

(355

)

 

(11,771

)

 

22,721

 

 

(12,074

)

Charges related to sublease

 

 

 

 

 

 

 

(3,367

)

State sales tax reserve

 

 

 

 

 

 

 

(306

)

Acquisition and due diligence costs

 

(1,080

)

 

(537

)

 

(2,688

)

 

(2,698

)

Severance and executive search

 

(175

)

 

 

 

(256

)

 

(99

)

Non-GAAP general and administrative expenses

 

12,189

 

 

12,001

 

 

50,961

 

 

37,571

 

 

 

 

 

 

GAAP amortization

 

(5,450

)

 

(5,032

)

 

(21,180

)

 

(8,872

)

 

 

 

 

 

GAAP loss from operations

 

(9,951

)

 

(7,109

)

 

(37,995

)

 

(61,373

)

Total non-GAAP adjustments (1)

 

12,145

 

 

24,101

 

 

22,115

 

 

68,267

 

Non-GAAP income (loss) from operations

 

2,194

 

 

16,992

 

 

(15,880

)

 

6,894

 

 

 

 

 

 

GAAP other income (expense), net

 

18,413

 

 

(563

)

 

14,747

 

 

(600

)

Gain on debt extinguishment

 

(19,097

)

 

 

 

(19,097

)

 

 

Interest expense, net

 

680

 

 

538

 

 

4,350

 

 

538

 

Non-GAAP other expense, net

 

(4

)

 

(25

)

 

 

 

(62

)

 

 

 

 

 

GAAP income (loss) before income taxes

 

8,462

 

 

(7,672

)

 

(23,248

)

 

(61,973

)

Total non-GAAP adjustments (1)

 

(6,272

)

 

24,639

 

 

7,368

 

 

68,805

 

Non-GAAP income (loss) before income taxes

 

2,190

 

 

16,967

 

 

(15,880

)

 

6,832

 

 

 

 

 

 

Income tax provision

 

3,430

 

 

2,227

 

 

1,988

 

 

2,699

 

 

 

 

 

 

GAAP net income (loss)

 

5,032

 

 

(9,899

)

 

(25,236

)

 

(64,672

)

Total non-GAAP adjustments (1)

 

(2,842

)

 

26,866

 

 

9,356

 

 

71,504

 

Non-GAAP net income (loss)

$

2,190

 

$

16,967

 

$

(15,880

)

$

6,832

 

 

 

 

 

 

Shares used in computing non-GAAP basic net income (loss) per share

 

36,360

 

 

34,917

 

 

36,034

 

 

33,298

 

Shares used in computing non-GAAP diluted net income (loss) per share (2)

 

42,487

 

 

45,626

 

 

36,034

 

 

43,928

 

Non-GAAP basic net income (loss) per share

$

0.06

 

$

0.49

 

$

(0.44

)

$

0.21

 

Non-GAAP diluted net income (loss) per share

$

0.05

 

$

0.37

 

$

(0.44

)

$

0.16

 

 

 

 

 

 

(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.

(2) Shares used in computing non-GAAP diluted net income (loss) per share include the dilutive effects of common stock options, RSUs, and warrants as well as the common stock issuable in connection with the convertible notes, which for the purposes of diluted net earnings per share will be presented as if the convertible senior notes were converted to common shares as of January 1, 2021.

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,

 

Dec 31,

 

2021

 

2021

 

2021

 

2021

 

2022

 

2022

 

2022

 

2022

Software Revenue - Pro Forma (in 000's) (1)

$

10,183

$

20,072

$

21,860

$

40,223

$

18,167

$

18,379

$

20,812

$

27,220

Ending Software Customers (2)

 

385

 

419

 

433

 

529

 

559

 

594

 

618

 

642

Average Annual Revenue (AAR) (in 000's) (3)

$

199

$

203

$

208

$

209

$

207

$

187

$

170

$

140

Total New Bookings (in 000's) (4)

$

2,442

$

4,896

$

3,356

$

8,317

$

9,574

$

14,658

$

16,548

$

20,047

Gross Revenue Retention (5)

>90%

>90%

>90%

>90%

>90%

>90%

>90%

>90%

(1) “Software Revenue - Pro Forma” includes historical Software Products & Services revenue from the past eight (8) fiscal quarters of each of Veritone, Inc. and PandoLogic Ltd. (unaudited) and presents such revenue on a combined Pro Forma basis treating PandoLogic Ltd. as owned by Veritone, Inc. since January 1, 2021.

(2) “Ending Software Customers” includes Software Products & Services customers as of the end of each respective quarter set forth above 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.

(3) “Average Annual Revenue (AAR)” is 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.

(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).

(5) “Gross Revenue Retention”: We calculate our dollar-based gross retention rate as of the period end by starting with the revenue from Ending Software Customers for Software Products & Services 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 Ending Software 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 Ending Software Customers from our Software Products & Services as of the year prior that is not lost to customer churn

Managed Services Supplemental Financial Information

 

Quarter Ended

 

Mar 31,

 

Jun 30,

 

Sept 30,

 

Dec 31,

 

Mar 31,

 

Jun 30,

 

Sept 30,

 

Dec 31,

 

2021

 

2021

 

2021

 

2021

 

2022

 

2022

 

 

2022

 

2022

Avg billings per active Managed Services client (in 000's) (6)

$

582

 

$

622

 

$

615

 

$

625

 

$

684

 

$

736

 

$

747

 

$

823

Revenue during quarter (in 000's) (7)

$

10,327

 

$

9,968

 

$

9,647

 

$

10,857

 

$

10,735

 

$

9,625

 

$

10,035

 

$

11,074

(6) 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.

(7) Managed Services revenue and metrics exclude content licensing and media services.

VERITONE, INC.
RECONCILIATION OF PRO FORMA REVENUE TO REVENUE AND CALCULATION OF AAR
(in thousands)

 

Quarter Ended

 

Mar 31,

 

Jun 30,

 

Sept 30,

 

Dec 31,

 

Mar 31,

 

Jun 30,

 

Sept 30,

 

Dec 31,

 

2021

 

2021

 

2021

 

2021

 

2022

 

2022

 

2022

 

2022

Software Products & Services Revenue

$

4,685

$

5,580

$

9,027

$

40,223

$

18,167

$

18,379

$

20,812

$

27,220

PandoLogic Revenue (1)

 

5,498

 

14,492

 

12,833

 

 

 

 

 

Software Revenue - Pro Forma

$

10,183

$

20,072

$

21,860

$

40,223

$

18,167

$

18,379

$

20,812

$

27,220

Managed Services Revenue

 

13,610

 

13,626

 

13,628

 

14,926

 

16,240

 

15,856

 

16,384

 

16,670

Total Pro Forma Revenue

$

23,793

$

33,698

$

35,488

$

55,149

$

34,407

$

34,235

$

37,196

$

43,890

(1) Represents PandoLogic Ltd. revenue prior to our acquisition of PandoLogic on September 14, 2021.

 

Trailing Twelve Months Ended

 

Mar 31,

 

Jun 30,

 

Sept 30,

 

Dec 31,

 

Mar 31,

 

Jun 30,

 

Sept 30,

 

Dec 31,

 

2021

 

2021

 

2021

 

2021

 

2022

 

2022

 

2022

 

2022

Software Products & Services Revenue

$

15,439

$

18,017

$

23,693

$

59,515

$

72,997

$

85,796

$

97,581

$

84,578

PandoLogic Revenue (1)

 

50,283

 

57,262

 

59,292

 

32,824

 

27,325

 

12,833

 

 

Software Revenue - Pro Forma

$

65,722

$

75,279

$

82,985

$

92,339

$

100,322

$

98,629

$

97,581

$

84,578

Managed Services Revenue

 

43,845

 

52,019

 

53,279

 

55,789

 

58,419

 

60,546

 

63,406

 

65,150

Total Pro Forma Revenue

$

109,567

$

127,298

$

136,264

$

148,128

$

158,741

$

159,175

$

160,987

$

149,728

 

 

 

 

 

 

 

 

 

Average Number of Customers - Pro Forma

 

330

 

372

 

399

 

442

 

485

 

529

 

575

 

603

Average Annual Revenue (AAR)

$

199

$

203

$

208

$

209

$

207

$

187

$

170