November 14, 2022 - 10-Q: Quarterly report pursuant to Section 13 or 15(d)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2022

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-38093

Veritone, Inc.

(Exact name of registrant as specified in its charter)

Delaware

47-1161641

(State or other jurisdiction of
incorporation or organization)

(I.R.S. Employer
Identification No.)

2420 17th St., Office 3002, Denver, CO 80202

(Address of principal executive offices, including zip code)

(888) 507-1737

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Exchange Act:


Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock, par value $0.001 per share	VERI	The NASDAQ Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2) of the Exchange Act. Yes ☐ No ☒

As of November 8, 2022, 36,289,632 shares of the registrant’s common stock were outstanding.

VERITONE, INC.

QUARTERLY REPORT ON FORM 10-Q

September 30, 2022

TABLE OF CONTENTS


Special Note Regarding Forward-Looking Statements		1
PART I.	FINANCIAL INFORMATION	2
Item 1.	Financial Statements (Unaudited)	2
	Condensed Consolidated Balance Sheets as of September 30, 2022 and December 31, 2021	2
	Condensed Consolidated Statements of Operations and Comprehensive Loss for the Three and Nine Months Ended September 30, 2022 and 2021	3
	Condensed Consolidated Statements of Stockholders’ Equity for the Three and Nine Months Ended September 30, 2022 and 2021	4
	Condensed Consolidated Statements of Cash Flows for the Three and Nine Months Ended September 30, 2022 and 2021	6
	Notes to the Condensed Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	27
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	38
Item 4.	Controls and Procedures	38
PART II.	OTHER INFORMATION	40
Item 1.	Legal Proceedings	40
Item 1A.	Risk Factors	40
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	40
Item 3.	Defaults Upon Senior Securities	40
Item 4.	Mine Safety Disclosures	40
Item 5.	Other Information	40
Item 6.	Exhibits	41
Signatures		42

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and we intend that such forward-looking statements be subject to the safe harbors created thereby. For this purpose, any statements made in this Quarterly Report on Form 10-Q that are not historical or current facts may be deemed to be forward-looking statements. Without limiting the generality of the foregoing, words such as “anticipates,” “believes,” “seeks,” “estimates,” “expects,” “intends,” “continue,” “can,” “may,” “plans,” “potential,” “projects,” “should,” “could,” “will,” “would” or similar expressions and the negatives of those expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. Such forward-looking statements include, but are not limited to, any statements that refer to projections of our future financial condition and results of operations, capital needs and financing plans, competitive position, industry environment, potential growth and market opportunities, acquisition plans and strategies, compensation plans, governance structure and policies and/or the price of our common stock.

The forward-looking statements included herein represent our management’s current expectations and assumptions based on information available as of the date of this report. These statements involve numerous known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Factors that may cause or contribute to such differences include, but are not limited to:

▪

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 operations;

▪

our ability to enhance our 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 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 pressures in the United States and around the world; and

▪

any additional factors discussed in Item 1A (Risk Factors) of Part I of our Annual Report on Form 10-K for the year ended December 31, 2021, as supplemented by Amendment No. 1 to our Quarterly Report on Form 10-Q/A for the three months ended March 31, 2022 and our other filings with the Securities and Exchange Commission (the “SEC”), including future SEC filings.

Readers should carefully review these risks, as well as the additional risks described in other documents we file from time to time with the SEC. All forward-looking statements are necessarily only estimates of future results, and there can be no assurance that actual results will not differ materially from expectations. In light of the significant risks and uncertainties inherent in the forward-looking information included herein, the inclusion of such information should not be regarded as a representation by us or any other person that such results will be achieved, and readers are cautioned not to place undue reliance on such forward-looking information, which speak only as of the date of this report.

Moreover, we operate in an evolving environment. New risks and uncertainties emerge from time to time and it is not possible for our management to predict all risks and uncertainties, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual future results to be materially different from those expressed or implied by any forward-looking statements.

Except as required by law, we assume no obligation to update any forward-looking statements publicly, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future. We qualify all of our forward-looking statements by these cautionary statements.

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

VERITONE, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except per share and share data)

(Unaudited)


	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
Commitments and contingencies (Note 9)
Stockholders' equity
Common stock, par value $0.001 per share; 75,000,000 shares authorized; 36,322,465 and 34,972,256 shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively		36			35
Additional paid-in capital		446,181			431,606
Accumulated deficit		(375,982	)		(345,037	)
Accumulated other comprehensive income (loss)		538			(104	)
Total stockholders' equity		70,773			86,500
Total liabilities and stockholders' equity	$	469,791		$	518,347

The accompanying notes are an integral part of these condensed consolidated financial statements.

VERITONE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

AND COMPREHENSIVE LOSS

(in thousands, except per share and share data)

(Unaudited)


	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	)
(Benefit from) provision for 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	)

The accompanying notes are an integral part of these condensed consolidated financial statements.

VERITONE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(in thousands, except share amounts)

(Unaudited)


	Three Months Ended September 30, 2022
												Accumulated
						Additional						Other
	Common Stock					Paid-in			Accumulated			Comprehensive
	Shares			Amount		Capital			Deficit			Income			Total
Balance as of June 30, 2022		36,128,363		$	36	$	440,809		$	(371,096	)	$	472		$	70,221
Common stock issued under employee stock plans		226,577			—		417			—			—			417
Common stock withheld for employee taxes		(32,475	)		—		(217	)		—			—			(217	)
Stock-based compensation expense		—			—		5,172			—			—			5,172
Net loss		—			—		—			(4,886	)		—			(4,886	)
Other comprehensive gain		—			—		—			—			66			66
Balance as of September 30, 2022		36,322,465		$	36	$	446,181		$	(375,982	)	$	538		$	70,773

	Nine Months Ended September 30, 2022
												Accumulated
						Additional						Other
	Common Stock					Paid-in			Accumulated			Comprehensive
	Shares			Amount		Capital			Deficit			Income			Total
Balance as of December 31, 2021		34,972,256		$	35	$	431,606		$	(345,037	)	$	(104	)	$	86,500
Cumulative-effect of accounting change adopted as of January 1, 2022		—			—		—			(677	)		—			(677	)
Common stock issued under employee stock plans, net		1,378,922			1		1,198			—			—			1,199
Common stock withheld for employee taxes		(497,593	)		—		(9,726	)		—			—			(9,726	)
Common stock issued for acquisition		116,550			—		1,929			—			—			1,929
Common stock issued as part of contingent consideration		352,330			—		6,440			—			—			6,440
Stock-based compensation expense		—			—		14,734			—			—			14,734
Net loss		—			—		—			(30,268	)		—			(30,268	)
Other comprehensive gain		—			—		—			—			642			642
Balance as of September 30, 2022		36,322,465		$	36	$	446,181		$	(375,982	)	$	538		$	70,773

The accompanying notes are an integral part of these condensed consolidated financial statements.

VERITONE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(in thousands, except share amounts)

(Unaudited)


	Three Months Ended September 30, 2021
										Accumulated
					Additional					Other
	Common Stock				Paid-in		Accumulated			Comprehensive
	Shares		Amount		Capital		Deficit			Income			Total
Balance as of June 30, 2021		32,870,767	$	33	$	403,768	$	(323,647	)	$	73		$	80,227
Common stock issued under employee stock plans, net		281,574		—		2,332		—			—			2,332
Common stock issued for acquisition		1,704,822		2		31,498		—			—			31,500
Stock-based compensation expense		—		—		5,272		—			—			5,272
Net loss		—		—		—		(11,491	)		—			(11,491	)
Other comprehensive gain		—		—		—		—			(221	)		(221	)
Balance as of September 30, 2021		34,857,163	$	35	$	442,870	$	(335,138	)	$	(148	)	$	107,619


	Nine Months Ended September 30, 2021
										Accumulated
					Additional					Other

Form: 10-Q

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