Financial Data and Key Metrics Changes - For fiscal year 2024, revenue was $92.6 million, down 7% year-over-year from $100 million in 2023, primarily due to a decline in software products and services [48][50] - GAAP gross profit for 2024 reached $62.7 million, compared to $70.3 million in 2023, reflecting a decline of $7.6 million [50] - Non-GAAP net loss from continuing operations was $48.8 million, an improvement of $5.4 million compared to 2023 [51] Business Line Data and Key Metrics Changes - Software products and services revenue decreased by 10.8% to $61.5 million, driven by a decline in commercial enterprise [48][50] - Managed service revenue remained flat year-over-year at $31.6 million [48] - In Q4 2024, revenue from continuing operations was $22.4 million, down 17.3% from Q4 2023, largely due to a decline in software products and services [52] Market Data and Key Metrics Changes - The public sector is expected to grow year-over-year by 100% to 150%, driven by IDEMS applications [60][72] - The global unstructured data solution market size is estimated to exceed $30 billion in 2024 and is projected to grow to over $90 billion by 2033 [18] - The sales pipeline for public sector opportunities now exceeds $110 million [42] Company Strategy and Development Direction - The company aims to become a leading provider of enterprise AI software applications and services across commercial and public sectors [9][10] - The divestiture of VeritoneOne focused operations on advanced AI solutions, strengthening the financial foundation and reducing debt servicing [15][16] - The launch of Veritone Data Refinery is expected to significantly contribute to revenue growth in 2025 and beyond [27][60] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to accelerate growth due to trends in enterprise-wide AI adoption and the increasing volume of unstructured data [8][21] - The company is optimistic about the public sector's growth prospects, particularly with ongoing contracts and deployments in the Department of Defense [35][60] - Management highlighted the importance of cost structure improvements and strategic focus on AI solutions as key to achieving profitability by fiscal 2026 [60][78] Other Important Information - The company appointed Francisco J. Morales to the board of directors, replacing Chad Steelberg [44] - The divestiture of VeritoneOne resulted in a gain of $69.6 million, included in discontinued operations for Q4 and fiscal 2024 results [62] - As of December 31, 2024, the company held cash and restricted cash of $17.3 million, down from $47.5 million at the end of 2023 [63] Q&A Session Summary Question: When will the consumption customer headwinds fully anniversary? - Management indicated that Q1 2024 will mark the end of the consumption comparison [82] Question: Are there any disruptions due to the new administration in the federal government? - Management stated that they are not experiencing disruptions for contracts awarded previously, as current deployments are primarily funded by approved 2025 dollars [84][85] Question: What is the potential upsell opportunity from new commercial customers? - Management noted that initial contracts may have lower margins but expect upsell opportunities to normalize over the year, particularly with the VDR segment [88][90]

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 ...

Financial Data and Key Metrics Changes - For fiscal year 2024, revenue was $92.6 million, down 7% year-over-year from $100 million in 2023, primarily due to a decline in software products and services revenue [31][32] - GAAP gross profit for 2024 reached $62.7 million, a decline of $7.6 million from 2023, with a GAAP gross margin of 67.6%, down from 70.4% in 2023 [32] - Non-GAAP net loss from continuing operations was $48.8 million, an improvement of $5.4 million compared to 2023 [33] Business Line Data and Key Metrics Changes - Software products and services revenue decreased by $7.4 million or 10.8%, while managed service revenue remained flat at $31.6 million year-over-year [31] - In Q4 2024, revenue from continuing operations was $22.4 million, down $4.7 million from Q4 2023, primarily due to a decline in software products and services [34] - Annual Recurring Revenue (ARR) was $58.8 million, down year-over-year, with 81% of ARR coming from subscription-based customers, up from 61.3% in Q4 2023 [35] Market Data and Key Metrics Changes - The global unstructured data solution market is estimated to be over $30 billion in 2024 and expected to expand to over $90 billion by 2033 [13] - The public sector is projected to grow year-over-year by 100% to 150%, driven by IDEMS applications [47] Company Strategy and Development Direction - The company aims to become a leading enterprise AI software provider across commercial and public sectors, focusing on advanced AI solutions [7][11] - The divestiture of Veritone One was a significant strategic move to concentrate resources on AI solutions, strengthening the financial foundation and reducing debt [11][39] - The launch of Veritone Data Refinery (VDR) is expected to be a major contributor to revenue growth in 2025 and beyond [18][19] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to accelerate growth due to trends in enterprise-wide AI adoption and the increasing volume of unstructured data [6][7] - The company anticipates a breakout year in 2025 for its public sector business, with significant opportunities in government contracts [24][47] - Management highlighted the importance of maintaining a diversified revenue base, with no single customer accounting for more than 5% of total revenue [12][33] Other Important Information - The company appointed Francisco J. Morales to the board of directors, replacing Chad Steelberg [28] - The company has executed over $40 million in annualized cost savings, including a 15% reduction in global workforce [38][50] Q&A Session Summary Question: When will the consumption customer headwinds fully anniversary? - Management indicated that Q1 2024 will mark the end of the consumption comparison [54] Question: Are there any disruptions due to administration turnover in the federal government? - Management stated that they are not experiencing disruptions for awarded contracts and are closely monitoring the budget cycle [55] Question: What is the potential for upsell opportunities with new commercial customers? - Management noted that initial contracts may have lower margins but expect normalization over the year, with significant upsell opportunities anticipated [56][57]

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 ...

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

Financial Data and Key Metrics Changes - Revenue for Q2 2024 was $31 million, an increase of 10.7% or $3 million from Q2 2023, driven by software products and services and managed services improvements [51][52] - Non-GAAP net loss improved by 47% to $6.9 million compared to $13.0 million in Q2 2023, attributed to increased gross profit and reduced costs [60][61] - Non-GAAP gross profit reached $24.6 million, a 22% increase from Q2 2023, with gross margin improving to 78.8% [59] Business Line Data and Key Metrics Changes - Veritone Hire showed strong performance with a revenue increase of $1.7 million compared to Q2 2023, largely due to the acquisition of Broadbean [51][52] - Managed services advertising gross billings per active client improved by 26% year-over-year [56] - The AI software pipeline is at its largest ever, with significant contracts secured, including a multiyear deal with the NCAA [10][28] Market Data and Key Metrics Changes - The public sector business is growing rapidly, with over $100 million in pipeline activity and 17 new public sector customers added in Q2 [40] - The addressable market for Veritone's public sector business is projected to exceed $50 billion by 2030, with the digital evidence management market alone expected to surpass $12 billion by 2028 [38][40] - The advertising market is revitalizing, with revenues from streaming and YouTube placements increasing by 55% and 29% respectively [33] Company Strategy and Development Direction - The company is focusing on organic growth and optimizing its operating structure while continuing to enhance its AI platform, aiWARE [12][15] - A strategic collaboration with AWS aims to drive AI and cloud innovation across various sectors [11] - The company is actively pursuing a divestiture of non-software-based assets to improve its balance sheet and liquidity [14][68] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the demand for AI solutions and the company's ability to capitalize on this momentum [8][48] - The company anticipates significant growth in the public sector, with expectations of 40% to 50% year-over-year growth [76] - Management highlighted the importance of closing larger deals in the public sector to achieve projected growth [78] Other Important Information - The company completed a restructuring that resulted in a 14% reduction in its global workforce, aimed at improving operational efficiency [61] - The NCAA contract is expected to generate up to $40 million in revenue over its term [63] - The company is maintaining a conservative revenue outlook for 2024, particularly regarding consumption-based revenue [71] Q&A Session Summary Question: Impact of cost cuts on future growth - Management believes that the organizational changes will not hinder future growth and that productivity is at an all-time high [81][83] Question: Q4 revenue expectations - Management indicated that Q4 revenue projections include contributions from new public sector contracts and a revitalization of managed services [85][86] Question: Progress on divesting legacy service business - Management is optimistic about the divestiture process, noting strong inbound interest and a favorable market environment [91][93] Question: Material revenue contribution from public sector - Management is confident in the public sector's growth potential, emphasizing the repeatable nature of their solutions built on aiWARE [94][95]

veritone Investor Presentation August 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 such ...