Exhibit 99.1

 

Veritone Reports Third Quarter 2022 Results

 

- Q3 Revenue Up 64% Year Over Year Driven By 131% Increase in Software Products & Services and 20% Increase in Managed Services -

- Q3 Ending Software Customers Up 43% on a Pro Forma Basis Year over Year -

- Record Q3 New Bookings of $16.5 Million, Up 393% Year over Year -

- Ryan Steelberg to be Elevated to Chief Executive Officer, Effective January 1, 2023; Chad Steelberg to Continue Serving as Chairman of the Board -

- Ended Q3 2022 with $196.1 Million in Cash and Cash Equivalents(1) -

 

DENVER, CO – November 8, 2022 – Veritone, Inc. (NASDAQ: VERI), creator of aiWARE, a hyper-expansive enterprise AI platform, today reported results for the third quarter ended September 30, 2022.

 

“For the third quarter of 2022, Veritone reported revenue of $37.2 million, representing year-over-year growth of 64 percent on a GAAP basis and 5 percent on a Pro Forma basis. Over the same period, new bookings in the quarter grew nearly 400% and Software Products and Services customer count grew 43%, both on a Pro Forma basis,” said Chad Steelberg, Chairman and CEO of Veritone. “I am immensely proud of the team we have assembled, the technology we have developed, and the progress we have made in establishing a world-class AI operating system. Looking ahead, I have total confidence in Ryan and the stewardship he will employ in executing Veritone’s long-term strategy as Chief Executive Officer.”

 

Ryan Steelberg, President of Veritone added, “Overall, our customer growth, record bookings and increasingly diverse revenue base continue to demonstrate that Veritone’s business is not only resilient but poised for acceleration. We will continue to responsibly invest in growing the business while also leveraging our partners to expand market opportunities.”

 

Financial Highlights: Third Quarter 2022 Compared to Third Quarter 2021

 

Revenue increased 64% on a GAAP basis to $37.2 million and increased 5% on a Pro Forma basis.
Software Products & Services Revenue increased 131% on a GAAP basis to $20.8 million and decreased 5% on a Pro Forma basis.
Ending Software Customers of 618 increased 43% year over year and 4% sequentially.
Managed Services Revenue increased 20% to $16.4 million.
Loss from operations decreased 67% to $3.6 million and non-GAAP gross profit increased 79% to $30.1 million and was up 3% on a Pro Forma basis.
GAAP net loss was $4.9 million, as compared to $11.5 million.
Non-GAAP net loss was $5.7 million, as compared to $2.3 million.
Cash and cash equivalents(1) were $196.1 million as of September 30, 2022, as compared to $72.6 million as of September 30, 2021.
Average Annual Revenue (AAR) per customer declined by 18% on a Pro Forma basis driven by a higher mix of newer customers offset by a decline in Amazon.

 

(1) Including approximately $59.5 million of cash received from Managed Services clients for future payments to vendors.


Record Total New Bookings of $16.5 million increased 393% on a Pro Forma basis.

 

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

 

Nine Months Ended

 

September 30,

 

September 30,

Unaudited
(in $000s, except customers)

2022

 

2021

 

Percent Change

 

2022

 

2021

 

Percent Change

Revenue

$37,196

 

$22,655

 

64%

 

$105,838

 

$60,156

 

76%

Net Loss

$(4,886)

 

$(11,491)

 

NM

 

$(30,268)

 

$(54,773)

 

NM

Non-GAAP Gross Profit*

$30,099

 

$16,847

 

79%

 

$85,113

 

$44,294

 

92%

Non-GAAP Net Loss*

$(5,716)

 

$(2,294)

 

NM

 

$(18,070)

 

$(10,135)

 

NM

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Nine Months Ended

 

September 30,

 

September 30,

Software Products & Services
Supplemental Financial Information*

2022

 

2021

 

Percent Change

 

2022

 

2021

 

Percent Change

Software Revenue – Pro Forma (in 000s)

$20,812

 

$21,860

 

(5%)

 

$57,358

 

$52,115

 

10%

Ending Software Customers

618

 

433

 

43%

 

 

 

 

 

 

AAR (in 000s)

$170

 

$208

 

(18%)

 

 

 

 

 

 

Total New Bookings (in 000s)

$16,548

 

$3,356

 

393%

 

 

 

 

 

 

 

* 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

 

Veritone aiWARE selected by Deloitte to advance AI practice focused on helping clients rapidly discover and manage media, text and data at scale.
Announced that more than 20% of California law enforcement agencies have adopted Veritone Contact, increasing approximately 80% in 2022.
Launched SPORTX™, a global intelligent marketplace for sports federations and content producers to license short-form sports video directly to media buyers, maximizing additional revenue streams and their visibility amongst media organizations.
Unveiled Veritone Tracker, a new AI-powered tracking solution that accelerates investigative efforts requiring rapid processing of video-based evidence in both public and private sectors.
Established a strategic partnership with Stats Perform, the sports tech leader in data and AI, designed to provide real-time game updates.
Announced a new strategic partnership with Exterro, the preferred provider of Legal GRC software specifically designed for in-house legal, privacy and IT teams at Global 2000 and AmLaw 200 organizations, to provide automated redaction for audio and video as part of the Exterro platform workflow.
Released the findings of its second annual nationwide Transparency and Trust Report, focused on the relationship between law enforcement agencies (LEAs) and

the communities they serve to provide insight into the broader public opinion on policing in the United States and how new technologies can improve transparency.
Announced the integration of Veritone Digital Media Hub with iconik’s cloud native media management platform to help media organizations easily manage, share and license their content while speeding the path from media creation to management to monetization.
Unveiled its next-generation Veritone Voice which gives content creators and publishers one of the most powerful and versatile voice solutions on the market.
Launched Veritone Voice Network, a multilingual custom AI voice solution and podcast monetization service that combines synthetic voice creation and AI translation services to localize podcasts and grow ad revenues and audiences.

 

Leadership Transition

Veritone announced new roles for co-founders Chad Steelberg and Ryan Steelberg, effective January 1, 2023. Chad Steelberg, who has served as Chief Executive Officer and Chairman of the Board since Veritone’s inception in June 2014, has indicated he will resign as Chief Executive Officer on January 1, 2023 but will remain Chairman of the Board. Ryan Steelberg, who has served as President and a member of the Board, will become Veritone’s Chief Executive Officer on January 1, 2023, where he will continue to drive innovation and elevate the company’s product offerings. Ryan Steelberg will also continue to serve as a member of the Board.

 

Financial Results for Three Months Ended September 30, 2022

Achieved third quarter revenue of $37.2 million, up 64% from $22.7 million in the third quarter of 2021. Software Products & Services revenue reached $20.8 million, 131% greater than the third quarter of 2021, driven by customer and revenue growth in Commercial Enterprise. Managed Services revenue grew to $16.4 million, up 20% compared to the third quarter of 2021, driven by growth in content licensing services. GAAP net loss was $4.9 million, compared to $11.5 million in the third quarter of 2021, driven in part by a one-time non-cash benefit in Q3 of $12.9 million associated with estimated earn-out on the PandoLogic acquisition. Net loss margin was 13%, compared to 51% in the third quarter of 2021. Loss from operations decreased 67% to $3.6 million and non-GAAP gross profit increased to $30.1 million, up 79% compared to the third quarter of 2021, driven by continued growth in Software Products and Services. Non-GAAP gross margin improved to 81%, compared to 74% in the third quarter of 2021. Non-GAAP net loss was $5.7 million, compared to $2.3 million in the third quarter of 2021, largely driven by higher investments in people and infrastructure costs to grow and scale our business.

Third quarter Pro Forma Revenue improved 5% from $35.5 million in third quarter 2021. Driving this was Managed Services, which increased 20% year over year, offset by Software Products and Services – Pro Forma, which declined 5% year over year. During Q3 2022, Ending Software Customers increased 43% year over year; however, offsetting this was an 18% decline in AAR driven in large part by Amazon significantly reducing its hiring consumption across our platform.

As of September 30, 2022, the Company had cash and cash equivalents of $196.1 million, including approximately $59.5 million of cash received from Managed Services clients for future payments to vendors.


Business Outlook

Fourth Quarter 2022

Revenue is expected to be in the range of $44 million to $46 million, as compared to $55.1 million in the fourth quarter of 2021.
Non-GAAP net income is expected to be in the range of $3.0 million to $4.0 million, compared to $17.0 million in the fourth quarter of 2021.

Full Year 2022

Revenue is expected to be in the range of $150 million to $152 million, as compared to $115.3 million in 2021.
Non-GAAP net loss is expected to be in the range of $14 million to $15 million, as compared to non-GAAP net income of $6.8 million in 2021.

 

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 Tuesday, November 8, 2022, at 4:30 p.m. Eastern Time (1:30 p.m. Pacific Time) to discuss its third quarter 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 seven 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 significant opportunity to grow market share and the Company’s expected total revenue and Non-GAAP net income(loss) for Q4 2022 and for full year 2022. 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, the impact of the economic disruption caused by the COVID-19 pandemic and the Russian invasion of Ukraine on the business of the Company and that of its existing and potential customers; increasing interest rates and inflationary pressure; the Company’s ability to achieve broad recognition and customer acceptance of its products and services; the Company’s ability to continue to develop and add additional capabilities and features to its aiWARE operating system; the development of the market for cognitive analytics solutions; the ability of third parties to develop and provide additional high quality, relevant machine learning models and applications; the Company’s ability to successfully identify and integrate such additional third-party models and applications onto its aiWARE operating system, and to continue to be able to access and utilize such models and applications, and the cost thereof; 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.

 

 

Company Contact:
Brian Alger, CFA
SVP, Investor Relations and Capital Markets
Veritone, Inc.
415-203-8265

investors@veritone.com

 

IR Agency Contact:

Stefan Norbom

Prosek Partners

203-644-5475

snorbom@prosek.com


Source: Veritone, Inc.


 

 

 


VERITONE, INC.

 

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

 

(in thousands)

 

 

 

 

 

 

 

 

As of

 

 

September 30,
2022

 

 

December 31,
2021

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

$

196,071

 

 

$

254,722

 

Accounts receivable, net

 

85,951

 

 

 

85,063

 

Expenditures billable to clients

 

23,785

 

 

 

27,180

 

Prepaid expenses and other current assets

 

16,963

 

 

 

12,117

 

Total current assets

 

322,770

 

 

 

379,082

 

Property, equipment and improvements, net

 

4,636

 

 

 

1,556

 

Intangible assets, net

 

85,195

 

 

 

93,872

 

Goodwill

 

46,465

 

 

 

42,028

 

Long-term restricted cash

 

857

 

 

 

855

 

Other assets

 

9,868

 

 

 

954

 

Total assets

$

469,791

 

 

$

518,347

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

 

 

 

 

 

 

Accounts payable

$

31,437

 

 

$

46,711

 

Accrued media payments

 

107,693

 

 

 

86,923

 

Client advances

 

13,696

 

 

 

10,561

 

Contingent consideration, current

 

7,147

 

 

 

20,053

 

Other accrued liabilities

 

25,835

 

 

 

27,093

 

Total current liabilities

 

185,808

 

 

 

191,341

 

Convertible senior notes, non-current

 

195,984

 

 

 

195,082

 

Contingent consideration, non-current

 

546

 

 

 

31,533

 

Other non-current liabilities

 

16,680

 

 

 

13,891

 

Total liabilities

 

399,018

 

 

 

431,847

 

Total stockholders' equity

 

70,773

 

 

 

86,500

 

Total liabilities and stockholders' equity

$

469,791

 

 

$

518,347

 

 

 


VERITONE, INC.

 

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

 

AND COMPREHENSIVE LOSS

 

(in thousands, except per share and share data)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended
September 30,

 

 

Nine Months Ended
September 30,

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Revenue

$

37,196

 

 

$

22,655

 

 

$

105,838

 

 

$

60,156

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

Cost of revenue

 

7,097

 

 

 

5,808

 

 

 

20,725

 

 

 

15,862

 

Sales and marketing

 

13,920

 

 

 

5,906

 

 

 

37,565

 

 

 

17,586

 

Research and development

 

11,784

 

 

 

5,254

 

 

 

32,735

 

 

 

14,860

 

General and administrative

 

2,502

 

 

 

15,084

 

 

 

27,127

 

 

 

62,272

 

Amortization

 

5,504

 

 

 

1,683

 

 

 

15,730

 

 

 

3,840

 

Total operating expenses

 

40,807

 

 

 

33,735

 

 

 

133,882

 

 

 

114,420

 

Loss from operations

 

(3,611

)

 

 

(11,080

)

 

 

(28,044

)

 

 

(54,264

)

Other expense, net

 

(1,249

)

 

 

(15

)

 

 

(3,666

)

 

 

(37

)

Loss before provision for income taxes

 

(4,860

)

 

 

(11,095

)

 

 

(31,710

)

 

 

(54,301

)

Provision for (benefit from) income taxes

 

26

 

 

 

396

 

 

 

(1,442

)

 

 

472

 

Net loss

$

(4,886

)

 

$

(11,491

)

 

$

(30,268

)

 

$

(54,773

)

Net loss per share:

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted

$

(0.13

)

 

$

(0.34

)

 

$

(0.84

)

 

$

(1.67

)

Weighted average shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted

 

36,202,496

 

 

 

33,332,668

 

 

 

35,924,413

 

 

 

32,752,939

 

Comprehensive loss:

 

 

 

 

 

 

 

 

 

 

 

Net loss

$

(4,886

)

 

$

(11,491

)

 

$

(30,268

)

 

$

(54,773

)

Foreign currency translation gain, net of income taxes

 

66

 

 

 

 

 

 

642

 

 

 

7

 

Total comprehensive loss

$

(4,820

)

 

$

(11,491

)

 

$

(29,626

)

 

$

(54,766

)

 

 

 


VERITONE, INC.

 

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

 

(in thousands)

 

 

 

 

 

 

 

 

Nine Months Ended
September 30,

 

 

2022

 

 

2021

 

Cash flows from operating activities:

 

 

 

 

 

Net loss

$

(30,268

)

 

$

(54,773

)

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

 

 

 

 

 

Depreciation and amortization

 

16,494

 

 

 

4,189

 

Loss on disposal of fixed assets

 

 

 

 

1,894

 

Provision for doubtful accounts

 

(113

)

 

 

14

 

Loss on sublease

 

 

 

 

1,211

 

Stock-based compensation expense

 

14,734

 

 

 

33,491

 

Change in fair value of contingent consideration

 

(23,076

)

 

 

303

 

Change in deferred taxes

 

(2,078

)

 

 

 

Amortization of debt issuance costs

 

902

 

 

 

 

Amortization of right-of-use assets

 

632

 

 

 

 

Changes in assets and liabilities:

 

 

 

 

 

Accounts receivable

 

370

 

 

 

(19,907

)

Expenditures billable to clients

 

3,395

 

 

 

(6,871

)

Prepaid expenses and other assets

 

(4,114

)

 

 

5,014

 

Other assets

 

(4,568

)

 

 

 

Accounts payable

 

(15,298

)

 

 

4,288

 

Accrued media payments

 

20,136

 

 

 

19,297

 

Client advances

 

3,135

 

 

 

1,906

 

Other accrued liabilities

 

(3,177

)

 

 

7,016

 

Other liabilities

 

(1,736

)

 

 

(600

)

Net cash used in operating activities

 

(24,630

)

 

 

(3,528

)

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

Minority investment

 

(2,750

)

 

 

 

Capital expenditures

 

(3,777

)

 

 

(448

)

Acquisitions, net of cash acquired

 

(4,589

)

 

 

(47,602

)

Net cash used in investing activities

 

(11,116

)

 

 

(48,050

)

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

Payment of contingent considerations

 

(14,376

)

 

 

 

Taxes paid related to net share settlement of equity awards

 

(9,726

)

 

 

 

Proceeds from the exercise of warrants

 

 

 

 

2,279

 

Proceeds from issuances of stock under employee stock plans, net

 

1,199

 

 

 

7,127

 

Net cash (used in) provided by financing activities

 

(22,903

)

 

 

9,406

 

 

 

 

 

 

 

Net decrease in cash and cash equivalents and restricted cash

 

(58,649

)

 

 

(42,172

)

Cash and cash equivalents and restricted cash, beginning of period

 

255,577

 

 

 

115,672

 

Cash and cash equivalents and restricted cash, end of period

$

196,928

 

 

$

73,500

 

 

 

 


VERITONE, INC.

 

REVENUE DETAIL (UNAUDITED)

 

(in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended
September 30, 2021

 

 

Nine Months Ended
September 30, 2021

 

 

 

 

 

Government &

 

 

 

 

 

 

 

 

Government &

 

 

 

 

 

Commercial

 

 

Regulated

 

 

 

 

 

Commercial

 

 

Regulated

 

 

 

 

 

Enterprise

 

 

Industries

 

 

Total

 

 

Enterprise

 

 

Industries

 

 

Total

 

Total Software Products & Services

$

8,069

 

 

$

958

 

 

$

9,027

 

 

$

16,596

 

 

$

2,696

 

 

$

19,292

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Managed Services

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Advertising

 

9,648

 

 

 

 

 

 

9,648

 

 

 

29,943

 

 

 

 

 

 

29,943

 

Licensing

 

3,980

 

 

 

 

 

 

3,980

 

 

 

10,921

 

 

 

 

 

 

10,921

 

Total Managed Services

 

13,628

 

 

 

 

 

 

13,628

 

 

 

40,864

 

 

 

 

 

 

40,864

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Revenue

$

21,697

 

 

$

958

 

 

$

22,655

 

 

$

57,460

 

 

$

2,696

 

 

$

60,156

 

 

 


VERITONE, INC.

 

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

 

(in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended September 30,

 

 

2022

 

 

2021

 

 

Core Operations(1)

 

 

Corporate(2)

 

 

Total

 

 

Core Operations(1)

 

 

Corporate(2)

 

 

Total

 

Net loss

$

(7,921

)

 

$

3,035

 

 

$

(4,886

)

 

$

(427

)

 

$

(11,064

)

 

$

(11,491

)

(Benefit from) provision for income taxes

 

20

 

 

 

6

 

 

 

26

 

 

 

390

 

 

 

6

 

 

 

396

 

Depreciation and amortization

 

5,650

 

 

 

174

 

 

 

5,824

 

 

 

1,698

 

 

 

81

 

 

 

1,779

 

Stock-based compensation expense

 

2,944

 

 

 

2,158

 

 

 

5,102

 

 

 

878

 

 

 

4,393

 

 

 

5,271

 

Change in fair value of contingent consideration

 

 

 

 

(14,291

)

 

 

(14,291

)

 

 

 

 

 

303

 

 

 

303

 

Interest expense, net

 

 

 

 

1,305

 

 

 

1,305

 

 

 

 

 

 

 

 

 

 

Acquisition and due diligence costs

 

 

 

 

839

 

 

 

839

 

 

 

 

 

 

1,426

 

 

 

1,426

 

State sales tax reserve

 

 

 

 

 

 

 

 

 

 

 

 

 

22

 

 

 

22

 

Severance and executive search

 

337

 

 

 

28

 

 

 

365

 

 

 

 

 

 

 

 

 

 

Non-GAAP Net Income (Loss)

$

1,030

 

 

$

(6,746

)

 

$

(5,716

)

 

$

2,539

 

 

$

(4,833

)

 

$

(2,294

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nine Months Ended September 30,

 

 

2022

 

 

2021

 

 

Core Operations(1)

 

 

Corporate(2)

 

 

Total

 

 

Core Operations(1)

 

 

Corporate(2)

 

 

Total

 

Net loss

$

(22,172

)

 

$

(8,096

)

 

$

(30,268

)

 

$

(3,933

)

 

$

(50,840

)

 

$

(54,773

)

(Benefit from) provision for income taxes

 

(826

)

 

 

(616

)

 

 

(1,442

)

 

 

390

 

 

 

82

 

 

 

472

 

Depreciation and amortization

 

16,054

 

 

 

440

 

 

 

16,494

 

 

 

3,865

 

 

 

324

 

 

 

4,189

 

Stock-based compensation expense

 

7,612

 

 

 

6,967

 

 

 

14,579

 

 

 

4,589

 

 

 

28,902

 

 

 

33,491

 

Change in fair value of contingent consideration

 

 

 

 

(23,076

)

 

 

(23,076

)

 

 

 

 

 

303

 

 

 

303

 

State sales tax reserve

 

 

 

 

 

 

 

 

 

 

 

 

 

306

 

 

 

306

 

Interest expense, net

 

 

 

 

3,670

 

 

 

3,670

 

 

 

 

 

 

 

 

 

 

Acquisition and due diligence costs

 

 

 

 

1,608

 

 

 

1,608

 

 

 

 

 

 

2,161

 

 

 

2,161

 

Charges related to sublease

 

 

 

 

 

 

 

 

 

 

 

 

 

3,367

 

 

 

3,367

 

Severance and executive search

 

337

 

 

 

28

 

 

 

365

 

 

 

 

 

 

349

 

 

 

349

 

Non-GAAP Net Income (Loss)

$

1,005

 

 

$

(19,075

)

 

$

(18,070

)

 

$

4,911

 

 

$

(15,046

)

 

$

(10,135

)

(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 LOSS RANGE

 

TO EXPECTED GAAP NET LOSS RANGE (UNAUDITED)

 

(in millions)

 

 

Three Months Ending

 

Year Ending

 

 

December 31,
2022

 

December 31,
2022

 

Net loss

($11.6) to ($10.6)

 

($41.9) to ($40.9)

 

Provision for income taxes

$0.1

 

($1.3)

 

Interest expense

$1.4

 

$5.1

 

Depreciation and amortization

$5.9

 

$22.4

 

Contingent consideration

$2.1

 

($21.0)

 

Stock-based compensation expense

$5.1

 

$19.7

 

Acquisition and due diligence costs

$0.0

 

$1.6

 

Severance and executive search

$0.0

 

$0.4

 

Non-GAAP net income (loss)

$3.0 to $4.0

 

($15.0) to ($14.0)

 

 


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,

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Revenue

$

37,196

 

 

$

22,655

 

 

$

105,838

 

 

$

60,156

 

Cost of revenue

 

7,097

 

 

 

5,808

 

 

 

20,725

 

 

 

15,862

 

Non-GAAP gross profit

 

30,099

 

 

 

16,847

 

 

 

85,113

 

 

 

44,294

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP cost of revenue

 

7,097

 

 

 

5,808

 

 

 

20,725

 

 

 

15,862

 

Stock-based compensation expense

 

(46

)

 

 

 

 

 

(90

)

 

 

 

Non-GAAP cost of revenue

 

7,051

 

 

 

5,808

 

 

 

20,635

 

 

 

15,862

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP sales and marketing expenses

 

13,920

 

 

 

5,906

 

 

 

37,565

 

 

 

17,586

 

Stock-based compensation expense

 

(538

)

 

 

(226

)

 

 

(1,728

)

 

 

(1,358

)

   Severance and executive search

 

(86

)

 

 

 

 

 

(86

)

 

 

(236

)

Non-GAAP sales and marketing expenses

 

13,296

 

 

 

5,680

 

 

 

35,751

 

 

 

15,992

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP research and development expenses

 

11,784

 

 

 

5,254

 

 

 

32,735

 

 

 

14,860

 

Stock-based compensation expense

 

(1,532

)

 

 

(431

)

 

 

(3,783

)

 

 

(2,016

)

   Severance and executive search

 

(198

)

 

 

 

 

 

(198

)

 

 

(14

)

Non-GAAP research and development expenses

 

10,054

 

 

 

4,823

 

 

 

28,754

 

 

 

12,830

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP general and administrative expenses

 

2,502

 

 

 

15,084

 

 

 

27,127

 

 

 

62,272

 

Depreciation

 

(320

)

 

 

(95

)

 

 

(764

)

 

 

(349

)

Stock-based compensation expense

 

(2,986

)

 

 

(4,615

)

 

 

(8,978

)

 

 

(30,117

)

Change in fair value of contingent consideration

 

14,291

 

 

 

(303

)

 

 

23,076

 

 

 

(303

)

   Charges related to sublease

 

 

 

 

 

 

 

 

 

 

(3,367

)

   State sales tax reserve

 

 

 

 

(22

)

 

 

 

 

 

(306

)

  Acquisition and due diligence costs

 

(839

)

 

 

(1,426

)

 

 

(1,608

)

 

 

(2,161

)

   Severance and executive search

 

(81

)

 

 

 

 

 

(81

)

 

 

(99

)

Non-GAAP general and administrative expenses

 

12,567

 

 

 

8,623

 

 

 

38,772

 

 

 

25,570

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP amortization

 

(5,504

)

 

 

(1,683

)

 

 

(15,730

)

 

 

(3,840

)

 

 

 

 

 

 

 

 

 

 

 

 

GAAP loss from operations

 

(3,611

)

 

 

(11,080

)

 

 

(28,044

)

 

 

(54,264

)

Total non-GAAP adjustments (1)

 

(2,161

)

 

 

8,801

 

 

 

9,970

 

 

 

44,166

 

Non-GAAP loss from operations

 

(5,772

)

 

 

(2,279

)

 

 

(18,074

)

 

 

(10,098

)

 

 

 

 

 

 

 

 

 

 

 

 

GAAP other expense, net

 

(1,249

)

 

 

(15

)

 

 

(3,666

)

 

 

(37

)

Interest expense, net

 

1,305

 

 

 

 

 

 

3,670

 

 

 

 

Non-GAAP other expense, net

 

56

 

 

 

(15

)

 

 

4

 

 

 

(37

)

 

 

 

 

 

 

 

 

 

 

 

 

GAAP loss before income taxes

 

(4,860

)

 

 

(11,095

)

 

 

(31,710

)

 

 

(54,301

)

Total non-GAAP adjustments (1)

 

(856

)

 

 

8,801

 

 

 

13,640

 

 

 

44,166

 

Non-GAAP loss before income taxes

 

(5,716

)

 

 

(2,294

)

 

 

(18,070

)

 

 

(10,135

)

 

 

 

 

 

 

 

 

 

 

 

 

Income tax (benefit) provision

 

26

 

 

 

396

 

 

 

(1,442

)

 

 

472

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP net loss

 

(4,886

)

 

 

(11,491

)

 

 

(30,268

)

 

 

(54,773

)

Total non-GAAP adjustments (1)

 

(830

)

 

 

9,197

 

 

 

12,198

 

 

 

44,638

 

Non-GAAP net loss

$

(5,716

)

 

$

(2,294

)

 

$

(18,070

)

 

$

(10,135

)

 

 

 

 

 

 

 

 

 

 

 

 

Shares used in computing non-GAAP basic and diluted net loss per share

 

36,202

 

 

 

33,333

 

 

 

35,924

 

 

 

32,753

 

Non-GAAP basic and diluted net loss per share

$

(0.16

)

 

$

(0.07

)

 

$

(0.50

)

 

$

(0.31

)

 

 

 

 

 

 

 

 

 

 

 

 

(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,

 

 

 

2021

 

 

2021

 

 

2021

 

 

2021

 

 

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

 

Ending Software Customers (2)

 

 

385

 

 

 

419

 

 

 

433

 

 

 

529

 

 

 

559

 

 

 

594

 

 

 

618

 

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

 

$

199

 

 

$

203

 

 

$

208

 

 

$

209

 

 

$

207

 

 

$

187

 

 

$

170

 

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

 

$

2,442

 

 

$

4,896

 

 

$

3,356

 

 

$

8,317

 

 

$

9,574

 

 

$

14,658

 

 

$

16,548

 

Gross Revenue Retention (5)

 

>90%

 

 

>90%

 

 

>90%

 

 

>90%

 

 

>90%

 

 

>90%

 

 

>90%

 

 

(1) “Software Revenue - Pro Forma” includes historical Software Products & Services revenue from the past seven (7) 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,

 

 

 

2021

 

 

2021

 

 

2021

 

 

2021

 

 

2022

 

 

2022

 

 

2022

 

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

 

$

582

 

 

$

622

 

 

$

615

 

 

$

625

 

 

$

684

 

 

$

736

 

 

$

747

 

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

 

$

10,327

 

 

$

9,968

 

 

$

9,647

 

 

$

10,857

 

 

$

10,735

 

 

$

9,625

 

 

$

10,035

 

(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,

 

 

 

2021

 

 

2021

 

 

2021

 

 

2021

 

 

2022

 

 

2022

 

 

2022

 

Software Products & Services Revenue

 

$

4,685

 

 

$

5,580

 

 

$

9,027

 

 

$

40,223

 

 

$

18,167

 

 

$

18,379

 

 

$

20,812

 

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

 

Managed Services Revenue

 

 

13,610

 

 

 

13,626

 

 

 

13,628

 

 

 

14,926

 

 

 

16,240

 

 

 

15,856

 

 

 

16,384

 

Total Pro Forma Revenue

 

$

23,793

 

 

$

33,698

 

 

$

35,488

 

 

$

55,149

 

 

$

34,407

 

 

$

34,235

 

 

$

37,196

 

(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,

 

 

 

2021

 

 

2021

 

 

2021

 

 

2021

 

 

2022

 

 

2022

 

 

2022

 

Software Products & Services Revenue

 

$

15,439

 

 

$

18,017

 

 

$

23,693

 

 

$

59,515

 

 

$

72,997

 

 

$

85,796

 

 

$

97,581

 

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

 

Managed Services Revenue

 

 

43,845

 

 

 

52,019

 

 

 

53,279

 

 

 

55,789

 

 

 

58,419

 

 

 

60,546

 

 

 

63,406

 

Total Pro Forma Revenue

 

$

109,567

 

 

$

127,298

 

 

$

136,264

 

 

$

148,128

 

 

$

158,741

 

 

$

159,175

 

 

$

160,987

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average Number of Customers - Pro Forma

 

 

330

 

 

 

372

 

 

 

399

 

 

 

442

 

 

 

485

 

 

 

529

 

 

 

575

 

Average Annual Revenue (AAR)

 

$

199

 

 

$

203

 

 

$

208

 

 

$

209

 

 

$

207

 

 

$

187

 

 

$

170

 

 

 

 


VERITONE, INC.

RECONCILIATION OF NON-GAAP GROSS PROFIT TO LOSS FROM OPERATIONS

(in thousands)

 

 

Three Months Ended
September 30,

 

 

Nine Months Ended
September 30,

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Loss from operations

$

(3,611

)

 

$

(11,080

)

 

$

(28,044

)

 

$

(54,264

)

Sales and marketing

 

13,920

 

 

 

5,906

 

 

 

37,565

 

 

 

17,586

 

Research and development

 

11,784

 

 

 

5,254

 

 

 

32,735

 

 

 

14,860

 

General and administrative

 

2,502

 

 

 

15,084

 

 

 

27,127

 

 

 

62,272

 

Amortization

 

5,504

 

 

 

1,683

 

 

 

15,730

 

 

 

3,840

 

Non-GAAP gross profit

$

30,099

 

 

$

16,847

 

 

$

85,113

 

 

$

44,294