Veritone(US:VERI)2021-08-05 01:20PART I. FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) This section presents Veritone, Inc.'s unaudited condensed consolidated financial statements, including balance sheets, statements of operations, stockholders' equity, and cash flows for the periods ended June 30, 2021 Condensed Consolidated Balance Sheets Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2021 | December 31, 2020 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $120,627 | $114,817 | | Total current assets | $169,872 | $156,567 | | Total assets | $186,927 | $177,654 | | Liabilities & Stockholders' Equity | | | | Total current liabilities | $104,711 | $88,248 | | Total liabilities | $106,700 | $89,444 | | Total stockholders' equity | $80,227 | $88,210 | | Total liabilities and stockholders' equity | $186,927 | $177,654 | Condensed Consolidated Statements of Operations and Comprehensive Loss Statement of Operations Highlights (in thousands, except per share data) | Metric | Three Months Ended June 30, 2021 | Three Months Ended June 30, 2020 | Six Months Ended June 30, 2021 | Six Months Ended June 30, 2020 | | :--- | :--- | :--- | :--- | :--- | | Revenue | $19,206 | $13,268 | $37,501 | $25,172 | | Loss from operations | $(12,647) | $(11,556) | $(43,183) | $(24,368) | | Net loss | $(12,715) | $(11,793) | $(43,282) | $(24,477) | | Net loss per share (basic and diluted) | $(0.39) | $(0.43) | $(1.33) | $(0.91) | Condensed Consolidated Statements of Stockholders' Equity - Total stockholders' equity decreased from $88.2 million to $80.2 million as of June 30, 2021, primarily due to a net loss of $43.3 million, partially offset by $28.0 million in stock-based compensation and $7.1 million from stock plan issuances20 Condensed Consolidated Statements of Cash Flows Cash Flow Summary (in thousands) | Cash Flow Activity | Six Months Ended June 30, 2021 | Six Months Ended June 30, 2020 | | :--- | :--- | :--- | | Net cash used in operating activities | $(991) | $(2,777) | | Net cash (used in) provided by investing activities | $(272) | $26 | | Net cash provided by financing activities | $7,073 | $8,767 | | Net increase in cash | $5,810 | $6,016 | Notes to the Condensed Consolidated Financial Statements - Veritone provides AI solutions, including its aiWARE operating system, digital content management, and advertising services, and has reclassified amortization expense while no longer presenting gross profit directly2834 Revenue Breakdown (in thousands) | Revenue Source | Q2 2021 | Q2 2020 | H1 2021 | H1 2020 | | :--- | :--- | :--- | :--- | :--- | | Advertising | $9,969 | $7,038 | $20,296 | $13,039 | | aiWARE SaaS Solutions | $5,580 | $3,002 | $10,265 | $6,110 | | aiWARE Content Licensing and Media Services | $3,657 | $3,228 | $6,940 | $6,023 | | Total revenue | $19,206 | $13,268 | $37,501 | $25,172 | - In July 2021, the company agreed to acquire PandoLogic Ltd. for $150 million, comprising $50 million cash, $35 million common stock, and $65 million performance-based earnouts79 Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's financial performance, noting a 44.8% revenue increase in Q2 2021, improved Non-GAAP net loss, and the strategic acquisition of PandoLogic Revenue Growth Analysis (Q2 2021 vs Q2 2020, in thousands) | Revenue Stream | Q2 2021 | Q2 2020 | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Advertising | $9,969 | $7,038 | $2,931 | 41.6% | | aiWARE SaaS Solutions | $5,580 | $3,002 | $2,578 | 85.9% | | aiWARE Content Licensing and Media Services | $3,657 | $3,228 | $429 | 13.3% | | Total Revenue | $19,206 | $13,268 | $5,938 | 44.8% | Non-GAAP Net Loss (in thousands) | Metric | Q2 2021 | Q2 2020 | H1 2021 | H1 2020 | | :--- | :--- | :--- | :--- | :--- | | GAAP Net Loss | $(12,715) | $(11,793) | $(43,282) | $(24,477) | | Non-GAAP Net Loss | $(3,921) | $(5,745) | $(7,841) | $(12,424) | | Non-GAAP Net Loss per Share | $(0.12) | $(0.21) | $(0.24) | $(0.46) | - The pending acquisition of PandoLogic, expected to close in late Q3 2021, is a key strategic move anticipated to generate over $25 million in operating cash flow for PandoLogic in fiscal 2021, improving Veritone's operating results by Q4 202185146 - As of June 30, 2021, the company held $120.6 million in cash and cash equivalents, deemed sufficient to fund operations for at least the next twelve months136146 Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, Veritone is not required to provide the information requested by this item - The company is exempt from this disclosure requirement as it qualifies as a smaller reporting company148 Controls and Procedures Management, with the participation of the CEO and CFO, evaluated the company's disclosure controls and procedures and concluded they were effective at a reasonable assurance level as of June 30, 2021 - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of June 30, 2021149 - No material changes to internal control over financial reporting occurred during the quarter150 PART II. OTHER INFORMATION Legal Proceedings The company reports that it is not currently a party to any legal proceedings that would have a material adverse effect on its financial condition, results of operations, or cash flows - Veritone is not currently involved in any material legal proceedings154 Risk Factors This section updates the company's risk factors, focusing exclusively on the risks associated with the pending acquisition of PandoLogic Ltd - A new material risk has been identified concerning the pending acquisition of PandoLogic Ltd156 - Specific risks include failure to satisfy closing conditions, challenges in managing international operations, retaining key employees, and potential management distraction and business disruption during integration157158 Unregistered Sales of Equity Securities and Use of Proceeds The company reported no unregistered sales of equity securities during the period - None159 Defaults Upon Senior Securities The company reported no defaults upon senior securities - None159 Mine Safety Disclosures This item is not applicable to the company - Not applicable159 Other Information The company reported no other information for this item - None159 Exhibits This section lists the exhibits filed with the Form 10-Q, including the PandoLogic acquisition agreement and required certifications - Key exhibits include the PandoLogic merger agreement (Exhibit 2.1) and CEO and CFO certifications (Exhibits 31.1, 31.2, 32.1)160