NOTE 8. CONSOLIDATED FINANCIAL STATEMENTS DETAILS

Consolidated Balance Sheets Details

Cash and cash equivalents

As of March 31, 2024 and December 31, 2023, the Company had cash and cash equivalents of $90,733 and $79,439, respectively, including $73,300 and $44,481, respectively, of cash received from advertising customers for future payments to vendors.

Accounts Receivable, Net and Allowance for Credit Losses

Prepaid Expenses and Other Current Assets

Other Assets

Property, Equipment and Improvements, Net

Depreciation expense was $1,511 and $478 for the three months ended March 31, 2024 and 2023, respectively. Of the $6,631 in property and equipment as of March 31, 2024, $1,839 consisted of work in progress not yet placed in service for internal use software development costs. Depreciation of internal use software development costs was $695 and $282 for the three months ended March 31, 2024 and 2023, respectively.

Accounts Payable

Other Accrued Liabilities

Contract Liabilities

Contract liabilities consist of deferred revenue. Deferred revenue represents billings under non-cancelable contracts before the related product or service is transferred to the customer. The portion of deferred revenue that is anticipated to be recognized as revenue during the succeeding twelve-month period is recorded as deferred revenue within the Company's condensed consolidated balance sheets. Deferred revenue was comprised of the following:

Consolidated Statements of Operations and Comprehensive Loss Details

Revenue

The Company serves two customer groups: (1) Commercial Enterprise, which consists of customers in the commercial sector, including media and entertainment customers, advertising customers, content licensing customers and Veritone Hire customers (inclusive of Broadbean customers); and (2) Public Sector, which consists of customers in the government and regulated industries sectors, including state, local and federal government, legal, and compliance customers, and which we previously referred to as Government & Regulated Industries.

Software Products & Services consists of revenues generated from the Company’s aiWARE platform and Veritone Hire solutions’ talent acquisition solutions (inclusive of Broadbean), any related support and maintenance services, and any related professional services associated with the deployment and / or implementation of such solutions.

Managed Services consists of revenues generated from content licensing customers and advertising agency customers and related services.

Other Income (Expense), Net

Other in the table above consists of foreign exchange loss of $413 for the three months ended March 31, 2024 and foreign exchange gain of $1,160 for the three months ended March 31, 2023.

Provision for Income Taxes

In accordance with ASC 740-270, Income Taxes, the provision or benefit from income taxes for interim periods is determined using an estimate of the Company’s annual effective tax rate, adjusted for discrete items, if any, that are taken into account in the relevant period. Each quarter, the Company updates the estimate of the annual effective tax rate, and if the estimated tax rate changes, the Company records a cumulative adjustment. A separate estimated annual effective tax rate is applied for jurisdictions where an entity anticipates an ordinary loss or has an ordinary loss for the year to date for which no tax benefit can be recognized.

The Company’s effective tax rate for the three months ended March 31, 2024 and 2023 was 4.0% and 1.2%, respectively. The difference between the effective tax rate and the U.S. federal statutory rate of 21% is primarily due to a valuation allowance established on the Company’s domestic federal and state net deferred tax assets, as well as the impact of foreign operations subject to tax in foreign jurisdictions.

As of March 31, 2024, the Company continues to provide a valuation allowance against federal and state deferred tax assets that are not expected to be realizable. The Company continues to evaluate the realizability of deferred tax assets and the related valuation allowance. If the Company’s assessment of the deferred tax assets or the corresponding valuation allowance were to change, the Company would record the related adjustment to income during the period in which the determination is made.

As a result of the Broadbean acquisition, the Company expects to be subject to taxation in France and Australia, in addition to already being subject to taxation in the United States, Israel, and the United Kingdom. The United States, Israel, and the United Kingdom comprise the majority of the Company’s operations. In general, the U.S. federal statute of limitations is three years. However, the Internal Revenue Service

may still adjust a tax loss or credit carryover in the year the tax loss or credit carryover is utilized. As such, the Company’s U.S. federal tax returns and state tax returns are open for examination since inception. The Israeli statute of limitations period is generally four years commencing at the end of the year in which the return was filed. The UK statute of limitations period is typically twelve months following the date on which the return is filed. The Company is not currently under examination from income tax authorities in the jurisdictions in which the Company does business.