August 15, 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 June 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 17^th 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 July 31, 2022, 36,135,161 shares of the registrant’s common stock were outstanding.

VERITONE, INC.

QUARTERLY REPORT ON FORM 10-Q

June 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 June 30, 2022 and December 31, 2021	2
	Condensed Consolidated Statements of Operations and Comprehensive Loss for the Three and Six Months Ended June 30, 2022 and 2021	3
	Condensed Consolidated Statements of Stockholders’ Equity for the Three and Six Months Ended June 30, 2022 and 2021	4
	Condensed Consolidated Statements of Cash Flows for the Three and Six Months Ended June 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; and

▪

any additional factors discussed 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, 2021, filed with the Securities and Exchange Commission (the “SEC”) on March 17, 2022, 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
	June 30,			December 31,
	2022			2021
ASSETS
Cash and cash equivalents	$	220,463		$	254,722
Accounts receivable, net		50,134			85,063
Expenditures billable to clients		17,975			27,180
Prepaid expenses and other current assets		14,365			12,117
Total current assets		302,937			379,082
Property, equipment and improvements, net		3,400			1,556
Intangible assets, net		89,370			93,872
Goodwill		45,787			42,028
Long-term restricted cash		856			855
Other assets		9,603			954
Total assets	$	451,953		$	518,347
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable	$	30,213		$	46,711
Accrued media payments		81,569			86,923
Client advances		11,977			10,561
Contingent consideration, current		21,680			20,053
Other accrued liabilities		24,963			27,093
Total current liabilities		170,402			191,341
Convertible senior notes, non-current		195,681			195,082
Contingent consideration, non-current		305			31,533
Other non-current liabilities		15,344			13,891
Total liabilities		381,732			431,847
Commitments and contingencies (Note 9)
Stockholders' equity
Common stock, par value $0.001 per share; 75,000,000 shares authorized; 36,128,363 and 34,972,256 shares issued and outstanding at June 30, 2022 and December 31, 2021, respectively		36			35
Additional paid-in capital		440,809			431,606
Accumulated deficit		(371,096	)		(345,037	)
Accumulated other comprehensive income (loss)		472			(104	)
Total stockholders' equity		70,221			86,500
Total liabilities and stockholders' equity	$	451,953		$	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						Six Months Ended
	June 30,						June 30,
	2022			2021			2022			2021
Revenue	$	34,235		$	19,206		$	68,642		$	37,501
Operating expenses:
Cost of revenue		6,705			5,231			13,628			10,054
Sales and marketing		12,576			5,253			23,645			11,680
Research and development		11,068			4,646			20,951			9,606
General and administrative		2,304			15,644			24,625			47,187
Amortization		5,211			1,079			10,226			2,157
Total operating expenses		37,864			31,853			93,075			80,684
Loss from operations		(3,629	)		(12,647	)		(24,433	)		(43,183	)
Other expense, net		(1,231	)		(13	)		(2,417	)		(22	)
Loss before provision for income taxes		(4,860	)		(12,660	)		(26,850	)		(43,205	)
(Benefit from) provision for income taxes		(1,607	)		55			(1,468	)		77
Net loss	$	(3,253	)	$	(12,715	)	$	(25,382	)	$	(43,282	)
Net loss per share:
Basic and diluted	$	(0.09	)	$	(0.39	)	$	(0.71	)	$	(1.33	)
Weighted average shares outstanding:
Basic and diluted		36,083,515			32,741,356			35,782,766			32,458,269
Comprehensive loss:
Net loss	$	(3,253	)	$	(12,715	)	$	(25,382	)	$	(43,282	)
Foreign currency translation gain, net of income taxes		386			—			576			7
Total comprehensive loss	$	(2,867	)	$	(12,715	)	$	(24,806	)	$	(43,275	)

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, 2022
												Accumulated
						Additional						Other
	Common Stock					Paid-in			Accumulated			Comprehensive
	Shares			Amount		Capital			Deficit			Income			Total
Balance as of March 31, 2022		36,056,839		$	36	$	435,954		$	(367,843	)	$	86		$	68,233
Common stock issued under employee stock plans		78,802			—		212			—			—			212
Common stock withheld for employee taxes		(7,278	)		—		(72	)		—			—			(72	)
Stock-based compensation expense		—			—		4,715			—			—			4,715
Net loss		—			—		—			(3,253	)		—			(3,253	)
Other comprehensive gain		—			—		—			—			386			386
Balance as of June 30, 2022		36,128,363		$	36	$	440,809		$	(371,096	)	$	472		$	70,221

	Six Months Ended June 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		1,152,345			1		781			—			—			782
Common stock withheld for employee taxes		(465,118	)		—		(9,509	)		—			—			(9,509	)
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		—			—		9,562			—			—			9,562
Net loss		—			—		—			(25,382	)		—			(25,382	)
Other comprehensive gain		—			—		—			—			576			576
Balance as of June 30, 2022		36,128,363		$	36	$	440,809		$	(371,096	)	$	472		$	70,221

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	)
Other comprehensive gain		—		—		—		—			—		—
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

Form: 10-Q

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