August 5, 2021 - 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 June 30, 2021

☐	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.)

1515 Arapahoe St., Tower 3, Suite 400, 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 July 30, 2021, 32,874,492 shares of the registrant’s common stock were outstanding.

VERITONE, INC.

QUARTERLY REPORT ON FORM 10-Q

June 30, 2021

TABLE OF CONTENTS

Special Note Regarding Forward-Looking Statements
PART I.	FINANCIAL INFORMATION	2
Item 1.	Financial Statements (Unaudited)	2
	Condensed Consolidated Balance Sheets as of June 30, 2021 and December 31, 2020	2
	Condensed Consolidated Statements of Operations and Comprehensive Loss for the Three and Six Months Ended June 30, 2021 and 2020	3
	Condensed Consolidated Statements of Stockholders’ Equity for the Three and Six Months Ended June 30, 2021 and 2020	4
	Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2021 and 2020	6
	Notes to the Condensed Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	17
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	26
Item 4.	Controls and Procedures	26
PART II.	OTHER INFORMATION	28
Item 1.	Legal Proceedings	28
Item 1A.	Risk Factors	28
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	28
Item 3.	Defaults Upon Senior Securities	28
Item 4.	Mine Safety Disclosures	28
Item 5.	Other Information	28
Item 6.	Exhibits	29
Signatures		30

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. Such 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, those discussed in more detail in Item 2 (Management’s Discussion and Analysis of Financial Condition and Results of Operations) of Part I, and Item 1A (Risk Factors) of Part II, of this Quarterly Report on Form 10-Q, and in Item 1 (Business) and Item 1A (Risk Factors) of Part I of our Annual Report on Form 10-K for the year ended December 31, 2020, filed with the SEC on March 5, 2021. Readers should carefully review these risks, as well as the additional risks described in other documents we file from time to time with the Securities and Exchange Commission. 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
	June 30,			December 31,
	2021			2020
ASSETS
Cash and cash equivalents	$	120,627		$	114,817
Accounts receivable, net		19,518			16,666
Expenditures billable to clients		20,783			18,365
Prepaid expenses and other current assets		8,944			6,719
Total current assets		169,872			156,567
Property, equipment and improvements, net		479			2,354
Intangible assets, net		8,587			10,744
Goodwill		6,904			6,904
Long-term restricted cash		855			855
Other assets		230			230
Total assets	$	186,927		$	177,654
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable	$	16,174		$	15,632
Accrued media payments		68,266			55,874
Client advances		7,638			6,496
Other accrued liabilities		12,633			10,246
Total current liabilities		104,711			88,248
Other non-current liabilities		1,989			1,196
Total liabilities		106,700			89,444
Commitments and contingencies (Note 7)
Stockholders' equity
Common stock, par value $0.001 per share; 75,000,000 shares authorized; 32,870,767 and 31,799,354 shares issued and outstanding at June 30, 2021 and December 31, 2020, respectively		33			32
Additional paid-in capital		403,768			368,477
Accumulated deficit		(323,647	)		(280,365	)
Accumulated other comprehensive income		73			66
Total stockholders' equity		80,227			88,210
Total liabilities and stockholders' equity	$	186,927		$	177,654

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						Six Months Ended
	June 30,						June 30,
	2021			2020			2021			2020
Revenue	$	19,206		$	13,268		$	37,501		$	25,172
Operating expenses:
Cost of revenue		5,231			3,763			10,054			7,013
Sales and marketing		5,253			4,932			11,680			9,861
Research and development		4,646			3,440			9,606			7,086
General and administrative		15,644			11,343			47,187			22,886
Amortization		1,079			1,346			2,157			2,694
Total operating expenses		31,853			24,824			80,684			49,540
Loss from operations		(12,647	)		(11,556	)		(43,183	)		(24,368	)
Other expense, net		(13	)		(235	)		(22	)		(104	)
Loss before provision for income taxes		(12,660	)		(11,791	)		(43,205	)		(24,472	)
Provision for income taxes		55			2			77			5
Net loss	$	(12,715	)	$	(11,793	)	$	(43,282	)	$	(24,477	)
Net loss per share:
Basic and diluted	$	(0.39	)	$	(0.43	)	$	(1.33	)	$	(0.91	)
Weighted average shares outstanding:
Basic and diluted		32,741,356			27,117,432			32,458,269			26,945,297
Comprehensive loss:
Net loss	$	(12,715	)	$	(11,793	)	$	(43,282	)	$	(24,477	)
Foreign currency translation gain, net of income taxes		-			1			7			5
Total comprehensive loss	$	(12,715	)	$	(11,792	)	$	(43,275	)	$	(24,472	)

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 June 30, 2021
										Accumulated
					Additional					Other
	Common Stock				Paid-in		Accumulated			Comprehensive
	Shares		Amount		Capital		Deficit			Income		Total
Balance as of March 31, 2021		32,676,286	$	33	$	396,619	$	(310,932	)	$	73	$	85,793
Common stock issued under employee stock plans, net		194,481		—		540		—			—		540
Common stock issued for services		—		—		131		—			—		131
Stock-based compensation expense		—		—		6,478		—			—		6,478
Net loss		—		—		—		(12,715	)		—		(12,715	)
Balance as of June 30, 2021		32,870,767	$	33	$	403,768	$	(323,647	)	$	73	$	80,227

	Six Months Ended June 30, 2021
										Accumulated
					Additional					Other
	Common Stock				Paid-in		Accumulated			Comprehensive
	Shares		Amount		Capital		Deficit			Income		Total
Balance as of December 31, 2020		31,799,354	$	32	$	368,477	$	(280,365	)	$	66	$	88,210
Common stock issued under employee stock plans, net		803,367		1		4,793		—			—		4,794
Common stock issued for services		15,828		—		250		—			—		250
Stock-based compensation expense		—		—		27,969		—			—		27,969
Exercise of warrants		252,218		—		2,279		—			—		2,279
Net loss		—		—		—		(43,282	)		—		(43,282	)
Other comprehensive gain		—		—		—		—			7		7
Balance as of June 30, 2021		32,870,767	$	33	$	403,768	$	(323,647	)	$	73	$	80,227

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 June 30, 2020
										Accumulated
					Additional					Other
	Common Stock				Paid-in		Accumulated			Comprehensive
	Shares		Amount		Capital		Deficit			Income		Total
Balance as of March 31, 2020		27,074,372	$	27	$	287,368	$	(245,173	)	$	50	$	42,272
Common stock offerings, net		199,109		1		3,021		—			—		3,022
Common stock issued under employee stock plans, net		88,515		—		39		—			—		39
Stock-based compensation expense		—		—		4,131		—			—		4,131
Exercise of warrants		154,311		—		2,100		—			—		2,100
Warrant issuance		—		—		308		—			—		308
Net loss		—		—		—		(11,793	)		—		(11,793	)
Other comprehensive gain		—		—		—		—			1		1
Balance as of June 30, 2020		27,516,307	$	28	$	296,967	$	(256,966	)	$	51	$	40,080


	Six Months Ended June 30, 2020
										Accumulated
					Additional					Other
	Common Stock				Paid-in		Accumulated			Comprehensive
	Shares		Amount		Capital		Deficit			Income		Total
Balance as of December 31, 2019		25,670,737	$	26	$	279,828	$	(232,489	)	$	46	$	47,411
Common stock offerings, net		1,491,317		2		6,004		—			—		6,006
Common stock issued under employee stock plans, net		199,942		—		140		—			—		140
Stock-based compensation expense		—		—		8,587		—			—		8,587
Exercise of warrants		154,311		—		2,100		—			—		2,100
Warrant issuance		—		—		308		—			—		308
Net loss		—		—		—		(24,477	)		—		(24,477	)
Other comprehensive gain		—		—		—		—			5		5
Balance as of June 30, 2020		27,516,307	$	28	$	296,967	$	(256,966	)	$	51	$	40,080

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

VERITONE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(Unaudited)

	Six Months Ended
	June 30,
	2021			2020
Cash flows from operating activities:
Net loss	$	(43,282	)	$	(24,477	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		2,410			3,206
Issuance of warrants		—			102
Loss on disposal of fixed assets		1,894			—
Loss on sublease		1,211			—
Change in fair value of warrant liability		—			200
Provision for doubtful accounts		5			213
Stock-based compensation expense		28,219			8,587
Changes in assets and liabilities:
Accounts receivable		(2,857	)		(3,453	)
Expenditures billable to clients		(2,418	)		7,109
Prepaid expenses and other assets		(2,218	)

Form: 10-Q

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