AI Technology and Platform - Veritone's proprietary AI operating system, aiWARE, enables the transformation of unstructured data into structured data, enhancing business processes and insights [31]. - The aiWARE platform offers over 20 cognitive categories, allowing users to quickly analyze and optimize large volumes of data [39]. - aiWARE's capabilities include advanced analytics, intelligent data lakes, and generative AI, which are being integrated into industry-specific applications [45][46]. - The company has integrated its Veritone Hire solutions with over 120 applicant tracking systems, optimizing hiring processes through predictive AI algorithms [46]. - aiWARE is deployed in various environments, including cloud-based, on-premises, and hybrid models, ensuring flexibility for customers [41]. - The company is focused on expanding its aiWARE SaaS business, which requires increasing its customer base and revenue from existing customers [88]. - The company plans to continue significant investments in developing AI technologies and expanding the functionality of the aiWARE platform [66]. Revenue and Financial Performance - The company generated revenue primarily through Software Products & Services and Managed Services, with a focus on Commercial Enterprise and Public Sector divisions [33]. - The company reported that no single customer accounted for 10% or more of total revenues from Software Products & Services in 2024, compared to one customer accounting for 22% in 2023 [59]. - One customer accounted for 20% of total Managed Services revenues in both 2024 and 2023 [60]. - The company experienced a year-over-year decline in consumption-based revenue from a single customer across Veritone Hire in fiscal 2024 [69]. - The company experienced net losses of $37.4 million and $58.6 million in fiscal years 2024 and 2023, respectively, with an accumulated deficit of $467.3 million as of December 31, 2024 [94]. - The company expects to continue incurring significant losses for the foreseeable future, which may hinder its ability to achieve and sustain profitability [95]. - The company has a history of operating losses and negative cash flows, raising concerns about its ability to achieve profitability in the future [134]. - The ten largest customers accounted for approximately 22% of net revenues in fiscal year 2024, down from 36% in fiscal year 2023, with Amazon's contribution dropping from 25% to less than 1% [147]. Divestiture and Acquisitions - The divestiture of Veritone One, a full-service advertising agency, is expected to have a material effect on operations and financial results, with historical results classified as discontinued operations [34]. - The company sold Veritone One, which represented approximately 25% of its revenue for the twelve months ended December 31, 2024, leading to reduced revenue and less diversification [87]. - The company received net proceeds of $55.9 million from the divestiture of Veritone One, using $30.5 million to repay principal on its outstanding term loan [83]. - The company closed its acquisition of Broadbean in June 2023, as part of its growth strategy to enhance its aiWARE platform and expand its product offerings [96]. - The company expanded its international operations into Europe and Asia Pacific following the Broadbean acquisition, with plans for further international expansion [98]. Market and Competitive Landscape - The company faces competition from major technology firms such as Google, Microsoft, and Amazon in the AI-enabled solutions market [61]. - The market for AI-based software applications is relatively new and unproven, with significant uncertainty regarding its growth potential [90]. - Regulatory scrutiny over AI technologies may hinder the adoption of the company's products, impacting future growth potential [90]. - The company plans to expand into new vertical markets, including the Public Sector, but faces challenges in compliance with regulations such as FedRAMP and CJIS [145]. Risks and Challenges - The company faces substantial doubt about its ability to continue as a going concern due to historical negative cash flows and recurring losses [82]. - The company faces risks related to macroeconomic and geopolitical factors, including inflation and the threat of recession, which could negatively impact its business and financial performance [103]. - The company relies on third parties to develop AI models for its platform, which may pose risks if those third parties cease to provide their technologies [108]. - The company is vulnerable to cybersecurity risks, including supply-chain attacks, which have increased in frequency and severity [114]. - The company may experience increased state taxes due to limitations on the use of net operating loss carryforwards under new California legislation [131]. - The company may require additional capital to service its debt obligations and refinance maturing debt, which may not be available on acceptable terms [135]. - The company has experienced volatility in revenue due to reliance on a limited number of key customers, which may affect future revenue predictability [148]. Compliance and Regulatory Issues - The company is subject to stringent data privacy and security obligations, including compliance with GDPR and CCPA, which may impose additional costs and operational changes [169][171]. - Non-compliance with privacy regulations could result in financial penalties up to €20 million or 4% of annual global revenue under the EU GDPR [171]. - The evolving regulatory framework regarding data protection may require the company to fundamentally change its business model [170]. - The company faces significant challenges in transferring personal data from the EEA and UK to the United States due to stringent privacy laws, which could lead to operational disruptions and increased regulatory scrutiny [172]. - Increased regulatory scrutiny on facial recognition technology could limit market demand for the company's IDentify solution, particularly in jurisdictions with enacted bans [182]. Internal Controls and Governance - Management identified multiple material weaknesses in internal control over financial reporting, including insufficient qualified resources and ineffective risk assessment [198]. - The company has not remediated certain material weaknesses as of December 31, 2024, which could lead to misstatements in financial reporting [198]. - The company faces potential adverse regulatory consequences, including investigations or penalties by the SEC or NASDAQ, due to identified material weaknesses [202]. - The board of directors oversees the company's cybersecurity risk management processes, ensuring effective mitigation of cybersecurity threats [222]. Employee and Organizational Aspects - The company has implemented employee engagement surveys to improve company culture and employee satisfaction [76]. - As of December 31, 2024, the company had a total of 487 employees, with 469 being full-time employees [75]. - The company must attract and retain highly skilled personnel to manage its business effectively, facing intense competition for talent in its industry [106]. Cybersecurity Measures - The company has implemented various information security processes to manage material risks from cybersecurity threats to its critical data and systems [216]. - The Chief Information Officer (CIO) and Chief Information Security Officer (CISO) lead the cybersecurity risk management efforts, utilizing both manual and automated tools for threat assessment [217]. - The company maintains a vendor management program to assess and manage cybersecurity risks associated with third-party service providers [220]. - The incident response plan includes escalation procedures for significant cybersecurity incidents to key management personnel and the board of directors [225].

If there’s one thing that stands out about a potential recession, it’s that the pressure grip will tighten on companies that were already doing poorly heading into it. The tech sector, in particular, has seen a group of smaller-cap tech companies rideWith combined experience of covering technology companies on Wall Street and working in Silicon Valley, and serving as an outside adviser to several seed-round startups, Gary Alexander has exposure to many of the themes shaping the industry today. He has been a ...

Veritone, Inc. (NASDAQ:VERI) Q4 2024 Earnings Conference Call March 13, 2025 5:00 PM ET Company Participants Cate Goldsmith - Investor Relations Ryan Steelberg - Chairman and Chief Executive Officer Mike Zemetra - Chief Financial Officer Conference Call Participants Scott Buck - H.C. Wainwright & Co. Jesse Sobelson - D. Boral Capital Glenn Mattson - Ladenburg Thalmann Operator Good day, and welcome to the Veritone, Inc. Fourth Quarter 2024 Financial Results Conference Call. All participants will be in liste ...

March 2025 Copyright © 2025 Veritone, Inc. All rights reserved. Trademarks are the property of their respective owners. Copyright © 2025 Veritone, Inc. All rights reserved. Forward-Looking Statements & Disclaimers This presentation of Veritone, Inc. (the "Company") contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that involve substantial risks and uncertainties. Without limiting the generality of the foregoing, words such as "anticipates," "belie ...

Revenue Performance - Fiscal Year 2024 revenue was $92.6 million, a decrease of $7.3 million or 7% year over year[5]. - Total revenue for fiscal year 2024 was $92.6 million, down 7% from $100.0 million in fiscal year 2023[21]. - Total revenue for the year ended December 31, 2024, was $92,637,000, a decrease of 7.5% compared to $99,986,000 in 2023[44]. - Revenue for Q4 2024 was $22.433 million, a decrease of 17.8% compared to $27.103 million in Q4 2023[61]. - Revenue guidance for Q1 2025 is expected to be between $23.0 million and $24.0 million, compared to $24.2 million in Q1 2024[25]. - Full year 2025 revenue is projected to be in the range of $107 million to $122 million, representing a 23.7% implied annual increase at the midpoint compared to fiscal 2024[24]. Customer Metrics - Annual Recurring Revenue (ARR) was $58.8 million, down from $80.1 million in Q4 2023, representing a decline of 27%[5][7]. - Total Software Products & Services Customers decreased by 6% year over year to 3,237[5][7]. - Total Software Product & Services Customers decreased by 6% year over year to 3,237 as of December 31, 2024, mainly due to the planned migration of legacy customers[20]. - Total software products and services customers decreased to 3,237 in Q4 2024 from 3,459 in Q4 2023, reflecting a decline of 6.4%[56]. - Gross revenue retention rate remained above 90% for all quarters reported, indicating strong customer retention[56]. Profitability and Loss - Loss from operations for fiscal year 2024 was $19.7 million, flat year over year, primarily due to improved operating expense structure offset by revenue decline[19]. - Net loss from continuing operations was $24.3 million for Q4 2024, compared to net income of $10.0 million in Q4 2023, largely due to a one-time gain in Q4 2023 that did not recur[19]. - Non-GAAP net loss for fiscal year 2024 was $40.8 million, an improvement of $5.3 million from $46.1 million in 2023[23]. - The net loss for the year ended December 31, 2024, was $37,384,000, compared to a net loss of $58,625,000 in 2023, indicating an improvement of 36.1%[46]. - The company reported a non-GAAP net loss from continuing operations of $(9,703) thousand for Q4 2024, compared to $(9,258) thousand in Q4 2023[49]. Operating Expenses - Operating expenses for the year ended December 31, 2024, totaled $179,486,000, down from $199,556,000 in 2023, reflecting a reduction of 10.1%[44]. - Research and development expenses for the year ended December 31, 2024, were $26,817,000, down from $40,591,000 in 2023, a decrease of 33.9%[44]. - Acquisition and due diligence costs for the year ended December 31, 2024, amounted to $4,090 thousand, down from $9,125 thousand in 2023[50]. Gross Profit and Margins - GAAP gross profit for Q4 was $15.3 million, a decrease of $4.6 million or 23% year over year, with a GAAP gross margin of 68.1%[9][18]. - GAAP gross profit decreased to $62.7 million in 2024 from $70.3 million in 2023, with a GAAP gross margin of 67.6%, down 280 basis points year over year[22]. - Year-end GAAP gross profit for 2024 was $62.666 million, down from $70.343 million in 2023, a decrease of 10.9%[61]. - Non-GAAP gross profit for Q4 2024 was $15.746 million, compared to $20.739 million in Q4 2023, representing a decrease of 24.0%[61]. - Year-end non-GAAP gross profit for 2024 was $66.335 million, compared to $72.273 million in 2023, reflecting a decline of 8.2%[61]. Strategic Developments - The divestiture of the media agency was completed for total consideration of up to $104 million, including $59.1 million in cash at closing[1]. - The launch of the Veritone Data Refinery solution has attracted 13 enterprise customers since its introduction[16]. - The company achieved Platinum-level status within Workday's partnership program, enhancing collaboration opportunities[16]. - The company processed over 10.5 petabytes of data in 2024, leveraging over 862 unique AI models[2].

Financial Performance - Total revenue for the three months ended September 30, 2024, was $21,993,000, a decrease of 21.4% compared to $27,968,000 for the same period in 2023[7]. - Net loss for the three months ended September 30, 2024, was $21,746,000, compared to a net loss of $24,541,000 for the same period in 2023, representing a 11.4% improvement[7]. - The company reported a loss from operations of $(22,492,000) for the three months ended September 30, 2024, compared to $(25,183,000) for the same period in 2023, reflecting a 10.7% improvement[7]. - Basic and diluted net loss per share from continuing operations for the three months ended September 30, 2024, was $(0.59), an improvement from $(0.72) in the same period of 2023[7]. - The net loss for the nine months ended September 30, 2023, was $69,175,000, compared to a net loss of $70,800,000 for the same period in 2022, indicating a slight improvement[14]. - The company reported a net loss from continuing operations of $22,511 million for the three months ended September 30, 2024, compared to a net loss of $26,732 million for the same period in 2023[74]. - Non-GAAP net loss from continuing operations for the three months ended September 30, 2024, was $(11,097) million, compared to $(10,411) million for the same period in 2023[161]. Cash and Liquidity - Cash and cash equivalents decreased to $11,422,000 as of September 30, 2024, from $46,609,000 as of December 31, 2023, a decline of 75.5%[5]. - The company reported a net decrease in cash, cash equivalents, and restricted cash of $33.5 million for the nine months ended September 30, 2024[194]. - Cash used in operating activities for the nine months ended September 30, 2024, was $24,223,000, a decrease from $48,111,000 in the same period of 2022[14]. - The company has substantial doubt about its ability to continue as a going concern over the next twelve months due to current debt service obligations and historical negative cash flows[192]. Expenses - Operating expenses for the three months ended September 30, 2024, were $44,485,000, down 16.3% from $53,151,000 in the prior year[7]. - Research and development expenses for the three months ended September 30, 2024, were $7,528,000, a decrease of 27.5% from $10,410,000 in the same period last year[7]. - Stock-based compensation expense for the three months ended September 30, 2024, was $2,586 thousand, compared to $5,267 thousand in the same period last year, a decrease of 50.9%[156]. - The company incurred $3.9 million in one-time severance and transition expenses related to restructuring initiatives[134]. Assets and Liabilities - Total current liabilities increased to $249,287,000 as of September 30, 2024, from $191,869,000 as of December 31, 2023, an increase of 30%[5]. - Total assets decreased to $336,425,000 as of September 30, 2024, from $378,858,000 as of December 31, 2023, a decline of 11.2%[5]. - The accumulated deficit as of September 30, 2024, was $(499,071,000), worsening from $(429,896,000) as of December 31, 2023[8]. - The company reported a total accumulated deficit of $442,071,000 as of September 30, 2023, compared to $371,271,000 as of December 31, 2022[12]. Acquisitions and Divestitures - The company completed the acquisition of Broadbean, a leader in talent acquisition software, on June 13, 2023, enhancing its service offerings[19]. - The company completed the sale of Veritone One for total consideration up to $104,000, with net cash proceeds of $59,053 after adjustments[24]. - The acquisition of Broadbean was completed on June 13, 2023, for a total purchase consideration of $53,301 million, aimed at enhancing the AI-driven human resources product suite[40][41]. Revenue Streams - Revenue from Commercial Enterprise for the nine months ended September 30, 2024, was $65,968 million, down from $68,411 million in 2023, representing a decline of 3.5%[99]. - Software Products & Services revenue for the three months ended September 30, 2024, was $14.7 million, down 28.0% from $20.4 million in the same period of 2023[146]. - Managed Services revenue for the three months ended September 30, 2024, was $7.3 million, a slight decrease from $7.6 million in the same period of 2023[146]. - The company expanded its customer base in Europe and Asia Pacific following the acquisition of Broadbean in June 2023, with 28.9% of consolidated revenue coming from international customers for the three months ended September 30, 2024[102]. Debt and Financing - A senior secured term loan of $77,500 million was fully drawn on December 13, 2023, with a scheduled maturity date of December 13, 2027[49][52]. - Interest expense related to the term loan for the nine months ended September 30, 2024, was $7,402 million, with an effective annual interest rate of approximately 31.3%[55]. - The Company has $91,250 million in aggregate principal amount of Convertible Notes outstanding as of September 30, 2024, after repurchasing $60,000 million in December 2022 and $50,000 million in December 2023[58]. Future Outlook - The company is evaluating additional strategies to obtain funding for future operations, including equity financing and operational restructuring[24]. - The company expects to achieve over $40.0 million in net annualized strategic cost reductions due to operational realignment and restructuring initiatives[134]. - Current global economic conditions, including inflation and geopolitical factors, may negatively impact the company's operational and financial performance[150].

Financial Data and Key Metrics Changes - Q3 2024 revenue was $22 million, down $6 million from Q3 2023, primarily due to a decline in Software Products & Services [49] - Non-GAAP gross profit for Q3 2024 reached $15.7 million, declining 24.9% from $20.9 million in Q3 2023 [55] - Q3 non-GAAP net loss was $7.1 million, an improvement of 10.1% from $7.9 million in Q3 2023 [56] Business Line Data and Key Metrics Changes - Commercial enterprise revenue declined by $5.8 million year-over-year, largely due to a decrease in consumption-based customers [49] - Public sector revenue showed a slight increase, with expectations for significant growth in fiscal 2025 [50] - Total new bookings for Q3 2024 were $16.5 million, up 17% sequentially from Q2 2024 and 6% year-over-year [53] Market Data and Key Metrics Changes - The public sector is expected to grow year-over-year by 100% to 150%, driven by iDEMS applications [71] - The sales pipeline for public sector opportunities now exceeds $110 million [34] - The company has added 13 new public sector customers in Q3 2024 [34] Company Strategy and Development Direction - The divestiture of Veritone One marks a strategic shift to focus on AI solutions, streamlining operations and enhancing financial stability [10][11] - The company aims to capitalize on the growing AI market, particularly in the application layer, which is projected to be a significant growth area [18][20] - The strategy includes a focus on higher growth verticals, specifically in the public sector and commercial enterprise AI [13][30] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving a breakout year in fiscal 2025, particularly in the public sector [50] - The company anticipates a return to growth with a more efficient operating structure and a focus on AI solutions [58] - Management noted that the results of the recent presidential election are expected to positively impact prospects in the federal sector [40] Other Important Information - The divestiture of Veritone One was valued at up to $104 million, significantly strengthening the company's balance sheet [10][43] - The company has successfully reduced its debt from $201 million in December 2021 to approximately $134 million today [64] - The company is exploring additional strategic pathways to further improve its balance sheet and reduce debt [65] Q&A Session Summary Question: Can you talk about the updated 2024 revenue guide? - The change is 100% allocated to timing on Public Sector deals, with potential upside if larger deals close sooner [83] Question: Can you give us a bit more of a bridge on acceleration to 2025? - The large portion of growth on a dollar basis will come from the Public Sector, with expectations for growth across the commercial sector as well [85]

veritone Investor Presentation November 2024 H U M A N H U M A A A N H U M H U M H U M a N Copyright @ 2024 Veritone, Inc. All rights reserved. Trademarks are the property of their respective owners. Forward-Looking Statements & Disclaimers This presentation of Veritone, Inc. (the "Company") contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that involve substantial risks and uncertainties. Without limiting the generality of the foregoing, words su ...

Transaction Details - The equity purchase agreement was made on October 17, 2024, between Oxford Buyer, LLC and Veritone, Inc., involving the purchase of company interests[6]. - The aggregate consideration for the company interests includes the purchase price plus any earnout payment, with specific terms outlined in the agreement[9]. - The closing of the transaction is set to occur remotely at 7:00 a.m. Pacific time on the closing date, with the transaction deemed effective as of 12:01 a.m. on that date[9]. - Seller is required to deliver various documents at closing, including a properly completed IRS Form W-9 and executed agreements related to transition services and escrow[10]. - The agreement stipulates that the purchaser will pay the closing purchase price and transaction expenses via immediately available funds[10]. - The seller must provide evidence of the release of all encumbrances related to the assets and properties of the acquired companies[10]. - The seller owns all issued and outstanding equity interests of the company, which has been converted into a Delaware limited liability company prior to the closing[7]. - The agreement includes provisions for the termination of prior agreements regarding voting and transfer arrangements related to the company interests[10]. - The purchaser will receive certified copies of resolutions authorizing the execution of the agreement and the resignations of requested officers and directors at closing[10]. Earnout Payment Structure - The Earnout Payment is capped at $18,000,000, based on Net Revenue during the period from January 1, 2025, to December 31, 2025[20]. - If the Revenue Retention Amount is between $31,000,000 and $32,000,000, the payment will be $3,000,000; if between $32,000,000 and $33,500,000, it will be $8,000,000; if between $33,500,000 and $35,000,000, it will be $13,000,000; and if $35,000,000 or more, it will be $18,000,000[21][22]. - The Company must deliver the Estimated Earnout Statement to Seller within 45 calendar days after the end of the Earnout Period[24]. - Purchaser will pay 50% of the Estimated Earnout Payment within 60 calendar days following the end of the Earnout Period[25]. - The Proposed Final Earnout Statement must be delivered to Seller within 15 days after the earlier of the Purchaser's receipt of audited financial statements for the fiscal year ending December 31, 2025, or April 30, 2026[26]. - The Estimated Earnout Payment is $13,000,000, with the Initial Earnout Payment set at $6,500,000, representing 50% of the Estimated Earnout Payment[28]. - The Final Earnout Payment was determined to be $18,000,000, resulting in a True-up Earnout Payment of $11,500,000, calculated as Final Earnout Payment minus Initial Earnout Payment[29]. - If the Initial Earnout Payment exceeds the Final Earnout Payment, a Claw-back Payment will be required, as illustrated by an example where the Initial Earnout Payment is $6,500,000 and the Final Earnout Payment is $3,000,000, leading to a Claw-back Payment of $3,500,000[29]. - Any payments made under the Earnout Payment provisions will be treated as an adjustment to the Final Purchase Price for tax purposes[30]. - The Earnout Payment is subordinated to the prior Payment in Full of all Senior Obligations, meaning no distributions can be made until those obligations are satisfied[31]. - Seller's right to receive the Earnout Payment is a contractual right and does not confer any equity security rights[33]. - Until the Senior Obligations are fully paid, Seller cannot take enforcement action regarding the Earnout Payment[34]. - The Senior Agent and Lenders are entitled to rely on the agreements regarding the Earnout Payment and are considered third-party beneficiaries[35]. - Withholding Agents are entitled to deduct and withhold amounts required under tax laws from payments made under the agreement[37]. Financial and Operational Representations - The Company is duly incorporated and in good standing under Delaware law, with all necessary corporate power to conduct its business[39]. - The unaudited pro forma balance statement of the Acquired Companies as of December 31, 2023, shows a consistent financial condition with GAAP standards[48]. - The accounts receivable of the Acquired Companies are current and collectible, with a reserve for bad debts not exceeding the rate reflected on the Company Balance Sheet[49]. - As of the date of the Agreement, the Acquired Companies have no material liabilities other than those disclosed in the Company Financial Statements[50]. - Since January 1, 2024, the Acquired Companies have conducted business in the ordinary course without any material adverse effects[51]. - The Acquired Companies own all tangible personal property free of any encumbrances, which is adequate for their current business operations[54]. - The Company is the sole owner of all Registered Intellectual Property, which is valid and enforceable[56]. - The Company has not used Open Source Software in a manner that would require it to disclose or license any Company Owned Intellectual Property[60]. - The Company Products have been free of material defects and have operated in accordance with contractual obligations[60]. - The consummation of the Transaction will not obligate the Company to pay any royalties or amounts exceeding those payable prior to the Closing Date[61]. - The Company has taken commercially reasonable measures to protect the confidentiality of trade secrets and material confidential information[63]. - The Company and its Subsidiary have not experienced any security breaches or unauthorized access in the past three years[67]. - The Company has complied with all Privacy Obligations for the past three years and has adopted written privacy and security policies[68]. - There have been no investigations or lawsuits concerning privacy and data security related to Personal Information in the last three years[70]. - The Company does not engage in web scraping or use bots to collect Personal Information from other entities[71]. - The Company has complied with Privacy Obligations related to the use of AI Tools and has maintained necessary contracts governing their use[72]. - The Company owns or possesses sufficient rights to use all Training Data material to its products and AI Tools[74]. Customer and Supplier Relations - The top fifteen customers for the year ended December 31, 2023, and the seven-month period ended July 31, 2024, have not indicated any plans to decrease business with the Company[78]. - The Company has not received any material increase requests from Top Suppliers inconsistent with existing contracts[78]. - The Company has made available all Material Contracts and has ensured they are in full force and effect[77]. Legal and Compliance Matters - Each Acquired Company has materially complied with all applicable Legal Requirements for the last three years, with no violations reported[80]. - All required Tax Returns have been filed on time and are true and correct in all material respects[82]. - The Company and its Subsidiaries have fully paid all Taxes due and payable in a timely manner[82]. - No pending audits or examinations involving Taxes have been received from any Governmental Body[84]. - There are no liens for Taxes on any asset of the Company or its Subsidiaries, except for those not yet due[88]. - The Company has not been a member of an Affiliated Group filing a consolidated federal income Tax Return, other than with the Seller[88]. - All material transactions between the Company and its Subsidiaries have been conducted on arm's length terms[99]. - Each Acquired Company has collected and remitted all required sales and use Taxes[99]. Employment and Labor Matters - All employees are employed on an "at-will" basis, allowing termination without additional payments beyond legal requirements[103]. - No Company Employee has indicated plans to terminate their employment with the Acquired Company[103]. - Each Acquired Company has been in material compliance with all legal requirements pertaining to labor and employment practices for the past three years[105]. - No Acquired Company has any pending workers' compensation claims or any facts that would give rise to such claims not covered by insurance[107]. - All individuals classified as employees or independent contractors have been properly classified according to applicable legal requirements[108]. - No allegations of sexual harassment or misconduct have been made against any current or former director, officer, or supervisor-level employee in the last three years[109]. - Each Acquired Company is in compliance with the Worker Adjustment and Retraining Notification Act and has not implemented any plant closing or layoffs that could implicate the WARN Act in the past three years[110]. Insurance and Environmental Matters - The Insurance Policies maintained by the Acquired Companies are in full force, with all premiums paid on time, and cover all material risks[121]. - There are no pending or threatened legal proceedings against any Acquired Company in the last three years[124]. - No Acquired Company has incurred any liability under the Patient Protection and Affordable Care Act, including any penalties[119]. - The Acquired Companies have made available true and complete copies of all material environmental assessment reports and health and safety audits[126]. Miscellaneous Provisions - No Acquired Company has entered into any contracts that may result in the obligation to pay finder's fees or commissions in connection with the negotiations leading to this Agreement[125]. - No Acquired Company has any general or special powers of attorney outstanding[127]. - In the last five years, no Acquired Company has made any contributions or payments that could subject it to penalties or adverse consequences[128]. - No Acquired Company has engaged in dealings with persons or countries subject to sanctions in the last five years[130]. - No Acquired Company has entered into any contracts that may result in special bonuses or severance payments related to the transactions contemplated by this Agreement[131]. Seller and Purchaser Representations - Seller is a corporation duly organized and in good standing under the laws of Delaware[132]. - Seller has the requisite power and authority to enter into the Agreement and consummate the Transaction[133]. - There are no legal proceedings against Seller that would adversely affect its performance under this Agreement[137]. - Purchaser is a limited liability company duly organized and in good standing under Delaware law[138]. - Purchaser has not incurred any liability for brokerage or finders' fees in connection with this Agreement[142]. Tax Matters - Any tax-sharing agreement involving the Company Subsidiary shall be terminated as of the Closing Date[146]. - The Purchaser will prepare and file all Tax Returns for the Acquired Companies for Pre-Closing Tax Periods, ensuring consistency with prior practices[149]. - Seller shall include the income of the Company and the Company Subsidiary on its consolidated federal income Tax Returns for all periods through the end of the Closing Date[148]. - The parties agree to treat the Closing Date as the last day of the taxable period of the Company and the Company Subsidiary for all Tax purposes[152]. - Purchaser and Seller will negotiate in good faith to resolve any disputes regarding Purchaser Prepared Returns, with final determinations made by an Accounting Firm[151]. - The Purchase Price will be allocated to the assets of the Company for U.S. federal income tax purposes in accordance with Code Section 1060[158]. Employee Benefits - Purchaser will provide Company Continuing Employees with annual base salary or hourly wages comparable to those provided prior to the Closing[162]. - Purchaser shall recognize all service of Company Continuing Employees for vesting and eligibility purposes in any Purchaser Benefit Plans[163]. - Seller shall not be required to share any consolidated federal income Tax Return with Purchaser or its Affiliates[154]. - The Final Allocation of the Purchase Price will be binding for all income Tax purposes, with adjustments allowed for any changes in the purchase price[160]. - Purchaser will deliver a statement of the Proposed Allocation to Seller, who must respond with objections within twenty days[158]. Record Keeping and Insurance - Purchaser shall retain the books and records of the Company for a period of six years after the Closing Date[166]. - Purchaser is responsible for procuring and maintaining insurance coverage for the Acquired Companies effective from and after the Closing[177]. - Seller shall cause the Company to remove all references to Veritone marks by March 31, 2026[176]. - Purchaser must maintain separate accounting books for the Acquired Companies for calculating Net Revenue during the Earnout Period[181]. - Purchaser and its Affiliates are required to deliver quarterly reports on Net Revenue collected by the Acquired Companies starting from the first calendar quarter of 2025[182]. - The consummation of a Purchaser Change of Control will result in the immediate acceleration of the Earnout Payment[183]. Indemnification Provisions - All rights to indemnification for current or former directors and officers will survive for six years post-Closing[171]. - Purchaser shall obtain directors' and officers' liability insurance for a period of six years from the Closing Date[172]. - Seller and its Affiliates will retain all books and records of the Acquired Companies relating to periods ending on or prior to the Closing Date[168]. - Purchaser shall not take actions to avoid or reduce an Earnout Payment during the Earnout Period[181]. - Seller will establish a bonus plan within thirty (30) calendar days after the Closing Date[185]. - Seller agrees to release and terminate all Encumbrances related to State Tax Lien E-050677795-W001-8 within sixty (60) days of the Agreement date[186]. - Seller's indemnification obligations will not apply unless the aggregate Losses exceed $860,000, known as the "Deductible"[190]. - Specific Indemnity Items related to breaches of Fundamental Representations will not be subject to the Deductible or Cap[191]. - The total cap for Specific Indemnity Items is set at $8,500,000[191]. - Purchaser and Seller will jointly instruct the Escrow Agent to release $1,500,000 from the Specific Indemnity Escrow Fund within twelve (12) months after the Closing Date[195]. - Purchaser agrees not to take actions to create or accelerate claims under Specific Indemnity Items during the twenty-four (24) month period following the Closing[198]. - Any Losses subject to indemnification will be calculated net of any insurance proceeds received by the Indemnitee[197]. - Seller will indemnify Purchaser Indemnified Parties for any Losses incurred due to breaches of representations or warranties concerning the Acquired Companies[188]. - Purchaser will indemnify Seller Indemnified Parties for any Losses incurred due to breaches of representations or warranties concerning Purchaser[189].

Cash and Cash Equivalents - Cash and cash equivalents decreased from $79.4 million to $46.0 million, a 42.1% decline[8] - Cash and cash equivalents and restricted cash decreased by $33.3 million to $47.0 million as of June 30, 2024[15] - Cash and cash equivalents decreased from $79.4 million as of December 31, 2023, to $46.0 million as of June 30, 2024[62][63] - Cash and cash equivalents decreased to $46.0 million as of June 30, 2024, from $79.4 million as of December 31, 2023, primarily due to $27.8 million used in operating activities[156] - Net decrease in cash, cash equivalents, and restricted cash was $33.3 million for the six months ended June 30, 2024, compared to $121.7 million for the same period in 2023[159] Accounts Receivable - Accounts receivable decreased from $69.3 million to $53.9 million, a 22.2% reduction[8] - Accounts receivable decreased from $70.4 million as of December 31, 2023, to $54.9 million as of June 30, 2024, with a net decrease from $69.3 million to $53.9 million after accounting for the allowance for expected credit losses[75] Revenue Growth - Revenue for Q2 2024 increased to $30.99 million from $27.97 million in Q2 2023, a 10.8% growth[9] - Total revenue for the six months ended June 30, 2024, was $62.6 million, compared to $58.2 million for the same period in 2023, with Commercial Enterprise revenue increasing from $55.2 million to $60.0 million and Public Sector revenue decreasing from $3.0 million to $2.6 million[84] - Software Products & Services revenue for the six months ended June 30, 2024, was $30.9 million, compared to $28.2 million for the same period in 2023, with Commercial Enterprise revenue increasing from $25.2 million to $28.2 million and Public Sector revenue decreasing from $3.0 million to $2.6 million[88] - Managed Services revenue for the six months ended June 30, 2024, was $31.8 million, compared to $30.0 million for the same period in 2023, with Advertising revenue increasing from $19.0 million to $21.5 million and Licensing revenue decreasing from $11.1 million to $10.3 million[88] - Revenue for the three months ended June 30, 2024 was $31.0 million, compared to $28.0 million for the same period in 2023[115] - Revenue for the six months ended June 30, 2024 was $62.6 million, compared to $58.2 million for the same period in 2023[115] - Software Products & Services revenue for the three months ended June 30, 2024 was $15.6 million, compared to $14.1 million for the same period in 2023[115] - Managed Services revenue for the three months ended June 30, 2024 was $15.4 million, compared to $13.9 million for the same period in 2023[115] - Software Products & Services revenue for the six months ended June 30, 2024 was $30.8 million, compared to $28.2 million for the same period in 2023[115] - Managed Services revenue for the six months ended June 30, 2024 was $31.8 million, compared to $30.0 million for the same period in 2023[115] - Total revenues for the three and six months ended June 30, 2024 were $31.0 million and $62.6 million, respectively, representing increases of 10.8% and 7.6% compared to the same periods in 2023[124] - Revenue for Q2 2024 increased to $30.992 billion, up 10.8% from $27.967 billion in Q2 2023[135] - Revenue increased by $3.0 million (10.8%) and $4.4 million (7.6%) in the three and six months ended June 30, 2024, respectively[155] Net Loss - Net loss for Q2 2024 improved to $22.23 million from $23.30 million in Q2 2023, a 4.6% reduction[9] - Net loss for the six months ended June 30, 2024, was $47.4 million, compared to $46.3 million for the same period in 2023[15] - Net loss for the three months ended Jun 2024 was $22,231,000, an improvement from $23,296,000 in the same period in 2023[143] - GAAP net loss for Q2 2024 was $22.231 billion, slightly better than $23.296 billion in Q2 2023[135] Research and Development Expenses - Research and development expenses decreased from $10.52 million to $6.65 million, a 36.8% reduction[9] - Research and development expenses decreased by 36.8% to $6,645,000 in the three months ended Jun 2024 compared to $10,519,000 in the same period in 2023[143] - Research and development expenses decreased by $3.9 million (36.8%) and $6.2 million (28.1%) in the three and six months ended June 30, 2024, respectively, primarily due to reduced personnel-related costs, partially offset by increased costs from the Broadbean acquisition[150] Total Assets and Liabilities - Total assets decreased from $375.8 million to $321.8 million, a 14.4% decline[8] - Total liabilities decreased from $337.7 million to $327.5 million, a 3.0% reduction[8] Stock-Based Compensation - Stock-based compensation expense for Q2 2024 was $2.23 million[10] - Stock-based compensation expense for the six months ended June 30, 2024, was $3.7 million, compared to $6.6 million for the same period in 2023[15] - Stock-based compensation expense for Q2 2024 was $2.139 million, down from $2.697 million in Q2 2023[130] - Stock-based compensation expense totaled $2,139 and $3,747 for the three and six months ended June 30, 2024, respectively, down from $2,697 and $6,614 for the same periods in 2023[102] Accumulated Deficit - Accumulated deficit increased from $429.9 million to $477.3 million, an 11.0% increase[8] - Accumulated deficit as of June 30, 2024, was $477.3 million, with negative working capital of $39.7 million[21] Weighted Average Shares Outstanding - Weighted average shares outstanding increased from 36.85 million to 37.81 million, a 2.6% increase[9] - Shares used in computing non-GAAP basic and diluted net loss per share increased to 37,814,000 in Q2 2024 from 36,849,000 in Q2 2023[135] Cash Used in Operating Activities - Cash used in operating activities for the six months ended June 30, 2024, was $27.8 million, compared to $58.5 million for the same period in 2023[15] - Operating activities used cash of $27.8 million in the six months ended June 30, 2024, primarily due to a net loss of $47.4 million, adjusted by $19.4 million in non-cash expenses[160] Depreciation and Amortization - Depreciation and amortization for the six months ended June 30, 2024, was $14.5 million, compared to $12.3 million for the same period in 2023[15] - Depreciation and amortization expenses for Q2 2024 were $6.958 million, up from $6.389 million in Q2 2023[130] - Amortization expense increased by $0.3 million (4.8%) and $0.8 million (7.5%) in the three and six months ended June 30, 2024, respectively, primarily due to the Broadbean acquisition[152] Acquisitions and Divestitures - The company acquired Broadbean, a global leader in talent acquisition software-as-a-service technology, on June 13, 2023[18] - The company acquired Broadbean for a total purchase consideration of $53,301, with $32,923 allocated to goodwill and $27,500 to identifiable intangible assets[33][34][37] - The company completed the sale of its energy group to GridBeyond Limited, resulting in a pre-tax gain of $2,572 in the second quarter of 2023[40] - The company sold its investment in GridBeyond for $1.8 million in April 2024, resulting in a loss on sale of $172,000 and a foreign exchange loss of $49,000[67] Term Loan and Convertible Notes - The company entered into a $77,500 senior secured term loan on December 13, 2023, with $37,500 used to repurchase $50,000 principal amount of its Convertible Notes[41] - Term Loan accrues interest at Term SOFR plus 8.50% per annum with a 3.00% floor, and a default interest rate of an additional 3.00% per annum applies during default[43] - Term Loan requires quarterly amortization payments of 2.50% of the principal amount starting June 2024, with a total principal payment of $75,563 due by December 2027[43][45] - Interest expense related to the Term Loan for the six months ended June 30, 2024, was $8,193 with an effective annual interest rate of approximately 31.3%[45] - Convertible Notes outstanding as of June 30, 2024, amount to $91,250, with interest expense of $1,084 for the six months ended June 30, 2024, and an effective annual interest rate of 2.42%[46][53] - The Company repurchased $60,000 of Convertible Notes at 65% of par in December 2022 and $50,000 at 75% of par in December 2023[46] - The Convertible Notes have a conversion rate of 27.2068 shares per $1,000 principal amount, equivalent to an initial conversion price of approximately $36.76 per share[48] - The Company may redeem the Convertible Notes on or after November 20, 2024, if the stock price exceeds 130% of the conversion price for 20 trading days within a 30-day period[49] - The total estimated fair value of the Convertible Notes as of June 30, 2024, was $33,073, determined using a market approach[53] - The Company entered into capped call transactions with an initial cap price of $48.55 per share to reduce potential dilution from Convertible Notes conversion[55] - As of June 30, 2024, the company has $75.6 million principal amount outstanding under its Term Loan and $91.2 million aggregate principal amount outstanding of Convertible Notes[163] Goodwill and Intangible Assets - The company's goodwill decreased slightly from $80.2 million as of December 31, 2023, to $79.8 million as of June 30, 2024, primarily due to foreign currency translation[68][69] - The company's finite-lived intangible assets had a net carrying amount of $71.4 million as of June 30, 2024, compared to $83.4 million as of December 31, 2023[70] - The company's intangible assets, including developed technology and customer relationships, had a weighted average remaining useful life of 2.8 years as of June 30, 2024[70] - The company performed a quantitative goodwill impairment assessment as of June 30, 2024, and determined that goodwill was not impaired[72] Contingent Consideration and Stock Warrants - The company's contingent consideration liabilities were fully paid by December 31, 2023, with no outstanding liabilities as of June 30, 2024[64][65] - The company's stock warrants decreased from 3,008,540 shares issued on the Closing Date of the Term Loan to 2,508,683 shares as of June 30, 2024, due to net settlements[66] Strategic Investments - The company's strategic investment in a technology company remained at a cost of $2.75 million as of June 30, 2024, with no impairments recorded[67] Revenue Recognition - The company recognized $12,398 of revenue during the six months ended June 30, 2024, from deferred revenue as of December 31, 2023[26] - The aggregate amount of transaction prices under the company's contracts allocated to remaining performance obligations was $31,897 as of June 30, 2024, with 53% expected to be recognized as revenue over the next twelve months[27] Non-GAAP Metrics - Non-GAAP gross margin increased to 78.8% and 78.2% for the three and six months ended June 30, 2024, respectively, compared to 72.2% and 75.0% in the same periods of 2023[124] - Non-GAAP gross profit for Q2 2024 was $24.412 million, up from $20.202 million in Q2 2023[133] - Non-GAAP gross profit increased by $4.2 million (20.8%) and $5.3 million (12.2%) in the three and six months ended June 30, 2024, respectively, driven by increased revenue and improved margins[155] - Non-GAAP net loss for Q2 2024 was $6.85 million, an improvement from $13.026 million in Q2 2023[130] - Non-GAAP loss from operations decreased to $6.850 billion in Q2 2024, down from $13.025 billion in Q2 2023[135] - Non-GAAP basic and diluted net loss per share improved to $0.18 in Q2 2024 from $0.35 in Q2 2023[135] Operating Expenses - Total operating expenses for the three months ended Jun 2024 were $48,654,000, a decrease of 13.3% compared to $56,147,000 in the same period in 2023[143] - Sales and marketing expenses decreased by $0.5 million (3.4%) and $1.3 million (5.2%) in the three and six months ended June 30, 2024, respectively, due to cost reduction initiatives and reduced advertising spend, partially offset by expenses from the Broadbean acquisition[149] - General and administrative expenses decreased by $2.3 million (11.9%) in the three months ended June 30, 2024, due to reductions in non-recurring professional fees and personnel-related costs, partially offset by costs from the Broadbean acquisition[151] International Revenue - 33.4% and 33.1% of the company's consolidated revenue for the three and six months ended June 30, 2024, respectively, was from customers outside of the U.S., compared to less than 10% during the same periods in 2023[88] - The company plans to expand internationally in Europe, Asia Pacific, and Latin America, with 33.4% and 33.1% of consolidated revenue coming from outside the U.S. in Q2 and H1 2024, respectively[126] Customer Concentration - No customer represented more than 10% of consolidated revenue during the three and six months ended June 30, 2024[115] - In 2023, one customer represented 15% and 17% of consolidated revenue during the three and six months ended June 30, 2023, respectively[115] Restructuring and Cost Reduction - The company expects to reduce annualized operating expenses by over $13.0 million as a result of the Q1 2024 Restructuring, which included a 13% reduction in global workforce[116] - The company incurred $2.5 million in one-time severance and transition expenses related to the Q1 2024 Restructuring, with $2.3 million paid as of June 30, 2024[116] - The company expects over $37.0 million of net annualized strategic cost reductions as a result of restructuring initiatives since Q1 2023[120] Tax and Deferred Tax Liabilities - The company's effective tax rate for the three and six months ended June 30, 2024 was 0.2% and 2.3%, respectively, significantly lower than the U.S. federal statutory rate of 21% due to valuation allowances on deferred tax assets and foreign operations[91] - As of June 30, 2024, the company had net deferred tax liabilities of $7,040, down from $9,504 as of December 31, 2023[92] Operating Leases - The company made cash payments for operating leases of $771 and $1,453 for the three and six months ended June 30, 2024, respectively, up from $644 and $1,281 for the same periods in 2023[94] - Total rent expense for operating leases was $647 and $1,285 for the three and six months ended June 30, 2024, respectively, compared to $546 and $1,092 for the same periods in 2023[94] - The company's operating leases have a weighted average remaining lease term of 1.2 years and a weighted average discount rate of 8.2% as of June 30, 2024[94] - The company recorded sublease income of $277 and $554 for the three and six months ended June 30, 2024, respectively, unchanged from the same periods in 2023[94] Stock Issuance and Warrants - The company issued 479,903 shares of common stock during the six months ended June 30, 2024, down from 593,763 shares issued in the same period in 2023[99] - In Q2 2024, 91,153 shares of common stock were issued upon the exercise of 150,200 warrants at