Veritone(VERI)2024-08-14 20:01Cash 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