Veritone(VERI) - 2025 Q2 - Quarterly Results

Veritone Second Quarter 2025 Earnings Release This report details Veritone's Q2 2025 financial and operational performance, highlighting revenue, software growth, pipeline expansion, cost savings, and future outlook Executive Summary and Highlights Veritone reported Q2 2025 revenue of $24.0 million, with core AI software growing over 45%, significant pipeline expansion, $10.0 million in annualized cost savings, and a $10.0 million equity raise - Total revenue for Q2 2025 was $24.0 million, achieving the top end of updated guidance[2] - Software Products & Services revenue grew 12% YoY; excluding the relatively flat Veritone Hire, this segment grew over 45%[2][6][7] - The Veritone Data Refinery's near-term pipeline grew to over $20.0 million, a 100% increase from Q1 2025[2] - Awarded a sole source contract with the United States Air Force for the deployment of aiWARE & iDEMS[2] - Cost reduction initiatives are anticipated to provide up to $10.0 million in annualized savings, with $8.0 million already achieved[2] - Announced a $10.0 million equity raise, with net proceeds intended for working capital and general corporate purposes[2][7] Financial Performance Analysis Veritone's Q2 2025 revenue was flat at $24.0 million, with Software Products & Services growth offset by Managed Services decline, leading to a GAAP net loss of $26.8 million Three Months Ended June 30, 2025 Q2 2025 results show flat total revenue at $24.0 million, a GAAP net loss of $26.8 million, and a decline in total software customers and ARR Q2 2025 vs. Q2 2024 Financial Results (in millions) | Metric | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Total Revenue | $24.0 | $24.1 | 0% | | Software Products & Services | $17.5 | $15.6 | +11.8% | | Managed Services | $6.5 | $8.4 | -22.3% | | GAAP Gross Profit | $15.3 | $16.4 | -6.5% | | GAAP Gross Margin | 63.9% | 68.2% | -430 bps | | Non-GAAP Gross Profit | $16.5 | $17.7 | -6.7% | | Non-GAAP Gross Margin | 68.9% | 73.6% | -470 bps | | Operating Loss | $(19.3) | $(20.3) | -4.9% | | Net Loss | $(26.8) | $(22.2) | +21% | | Non-GAAP Net Loss (Continuing Ops) | $(8.7) | $(9.7) | -10.2% | - The increase in net loss was primarily driven by a $2.9 million non-cash charge related to the change in fair value of an earnout from the Veritone One divestiture[7][15] - The number of Total Software Product & Services Customers decreased by 10.8% YoY to 3,067, mainly due to fewer consumption-based customers and the sunsetting of legacy Career Builder customers[16] - Annual Recurring Revenue (ARR) decreased by 7.8% YoY to $62.6 million, driven by an expected decline in Commercial Enterprise consumption spending[17] Six Months Ended June 30, 2025 For the first half of 2025, total revenue decreased by 4% to $46.5 million, while operating loss improved by 8% to $41.0 million Six Months 2025 vs. Six Months 2024 Financial Results (in millions) | Metric | H1 2025 | H1 2024 | Change | | :--- | :--- | :--- | :--- | | Total Revenue | $46.5 | $48.2 | -4% | | Software Products & Services | $32.0 | $30.9 | +4% | | Managed Services | $14.5 | $17.4 | -16% | | GAAP Gross Profit | $29.1 | $32.7 | -11% | | Operating Loss | $(41.0) | $(44.7) | -8% | | Net Loss from Continuing Ops | $(46.7) | $(49.6) | -6% | | Non-GAAP Net Loss from Continuing Ops | $(19.8) | $(20.0) | -1% | - The decline in Managed Services revenue for the six-month period was primarily due to a $2.7 million decrease in representation services, including VeriAds, impacted by a challenging macro environment[18] - The improvement in operating loss was driven by enhancements to the operating expense structure and a one-time $1.5 million expense in Q1 2024 associated with the former CEO[20] Business and Operational Highlights Veritone achieved strong Q2 2025 operational momentum, with the Data Refinery pipeline doubling to over $20.0 million and Public Sector pipeline growing to $189 million, securing a key U.S. Air Force contract Commercial Enterprise The Commercial Enterprise segment saw its Veritone Data Refinery pipeline double to over $20.0 million and closed 11 new enterprise software deals - The Veritone Data Refinery (VDR) solution's qualified and near-term pipeline grew to over $20.0 million, up 100% from Q1 2025[16] - Veritone aiWARE processed an estimated 5 trillion tokens from millions of hours of audio and video in Q2 2025[16] - Closed 11 new enterprise software deals with notable clients including Inter Milan, Laver Cup, United States Soccer Federation, ESPN, and Big Ten Network[16] Public Sector The Public Sector pipeline expanded to $189 million, securing 35 new customers and a multi-year contract with the United States Air Force - The qualified and near-term pipeline for Public Sector solutions grew to $189 million, up from $110 million in Q1 2025[16] - Signed 35 new Public Sector customers, including the Riverside County Sheriff's Department and a top 5 U.S. police agency, along with 95 renewal contracts[16] - Awarded a sole source contract (one year plus four option years) with the United States Air Force to provide advanced intelligence capabilities via the aiWARE platform and iDEMS[16] Business Outlook Veritone projects Q3 2025 revenue between $28.0 million and $30.0 million, and full-year 2025 revenue between $108 million and $115 million, representing 20% annual growth at the midpoint Q3 2025 Guidance | Metric | Q3 2025 Guidance | Q3 2024 Actual | | :--- | :--- | :--- | | Revenue | $28.0M - $30.0M | $22.0M | | Non-GAAP Net Loss | $(6.5)M - $(6.0)M | $(11.1)M | Full Year 2025 Guidance | Metric | FY 2025 Guidance | FY 2024 Actual | Implied Change (Midpoint) | | :--- | :--- | :--- | :--- | | Revenue | $108M - $115M | $92.6M | +20% | | Non-GAAP Net Loss | $(30.0)M - $(25.0)M | $(40.8)M | -33% | Consolidated Financial Statements (Unaudited) Unaudited financial statements detail a decrease in total assets to $186.8 million, a Q2 2025 net loss of $26.8 million, and $25.3 million net cash used in operating activities for the first six months Condensed Consolidated Balance Sheets The balance sheet shows total assets decreased to $186.8 million, with cash at $13.6 million, and total liabilities at $185.6 million as of June 30, 2025 Balance Sheet Summary (in thousands) | Account | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $13,568 | $16,911 | | Total current assets | $57,940 | $59,406 | | Goodwill & Intangibles, net | $100,842 | $112,610 | | Total assets | $186,806 | $198,060 | | Liabilities & Equity | | | | Total current liabilities | $64,842 | $60,957 | | Convertible Notes & Term Loan | $116,847 | $119,201 | | Total liabilities | $185,588 | $184,608 | | Total stockholders' equity | $1,218 | $13,452 | Condensed Consolidated Statements of Operations The statement of operations for Q2 2025 reports revenue of $24.0 million and a net loss of $26.8 million, with a six-month net loss of $46.7 million Statement of Operations Summary (in thousands) | Account | Three Months Ended June 30, 2025 | Six Months Ended June 30, 2025 | | :--- | :--- | :--- | | Revenue | $24,013 | $46,476 | | Total operating expenses | $43,331 | $87,428 | | Operating loss | $(19,318) | $(40,952) | | Net loss from continuing operations | $(26,798) | $(46,673) | | Net loss | $(26,798) | $(46,673) | | Loss per share, basic and diluted | $(0.54) | $(0.95) | Condensed Consolidated Statements of Cash Flows Cash flow for the first six months shows $25.3 million used in operating activities, offset by $25.3 million provided by financing activities, resulting in a net cash decrease of $3.5 million Cash Flow Summary for Six Months Ended June 30 (in thousands) | Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(25,277) | $(27,791) | | Net cash used in investing activities | $(2,311) | $(1,599) | | Net cash provided by (used in) financing activities | $25,259 | $(3,959) | | Net change in cash | $(3,462) | $(33,349) | | Cash, end of period (continuing ops) | $13,856 | $7,600 | Supplemental Financial Information and Reconciliations This section provides detailed revenue breakdowns, key performance indicators, and reconciliations from GAAP to non-GAAP measures for net loss and gross profit Revenue Detail Q2 2025 revenue breakdown shows Software Products & Services at $17.5 million and Managed Services at $6.5 million, with Public Sector contributing $2.1 million Q2 2025 Revenue Breakdown (in thousands) | Segment | Commercial Enterprise | Public Sector | Total | YoY Change | | :--- | :--- | :--- | :--- | :--- | | Software Products & Services | $15,334 | $2,135 | $17,469 | +12% | | Managed Services | $6,544 | $— | $6,544 | -22% | | Total Revenue | $21,878 | $2,135 | $24,013 | 0% | Reconciliation of GAAP to Non-GAAP Measures Reconciliations detail adjustments from GAAP to non-GAAP net loss and gross profit, primarily for depreciation, amortization, and stock-based compensation - For Q2 2025, the reconciliation from a GAAP Net Loss of $26.8 million to a Non-GAAP Net Loss from continuing operations of $8.7 million includes adjustments for depreciation & amortization ($7.2M), change in fair value of earnout receivable ($2.9M), and stock-based compensation ($1.7M)[45] - The reconciliation of Q3 2025 guidance shows an expected GAAP Net Loss of $(19.0)M to $(16.5)M adjusted to a Non-GAAP Net Loss of $(6.5)M to $(6.0)M, primarily by excluding estimated depreciation & amortization ($7.5M to $7.0M) and interest expense ($3.0M to $2.5M)[48] - Non-GAAP gross profit for Q2 2025 was $16.5 million (68.9% margin), compared to GAAP gross profit of $15.3 million (63.9% margin), with the difference being the add-back of $1.2 million in depreciation and amortization related to the cost of revenue[52] Key Performance Indicators (KPIs) Key performance indicators show a decrease in total software customers to 3,067, while SaaS Annual Recurring Revenue increased to $50.4 million in Q2 2025 Quarterly KPI Trends | Metric (in thousands, except customers) | Q2 2024 | Q1 2025 | Q2 2025 | | :--- | :--- | :--- | :--- | | Total Software Products & Services Customers | 3,437 | 3,156 | 3,067 | | Annual Recurring Revenue (SaaS) | $49,223 | $47,494 | $50,350 | | Annual Recurring Revenue (Consumption) | $18,701 | $11,223 | $12,249 | | Total New Bookings | $14,047 | $15,835 | $15,766 | | Gross Revenue Retention | >90% | >90% | >90% |