– Fiscal Year 2023 Revenue of $127.6 Million, in line with previously stated guidance –
– Q4 Total Revenue and Software Revenue of $34.2 and $19.8 million –
– ARR(1) of $82.1 million from 3,460 Total Software Products & Services Customers(1), including $48 million or 58% from subscription-based customers(1) demonstrating diversified & stable revenue streams –
– Announced restructuring in Q1 2024 resulting in forecasted annualized savings of over 15% in operating expense accelerating profitability into the second half of 2024 –
– Closed $77.5 million four-year Senior Secured Term Debt facility, using $37.5 million of proceeds to repurchase $50.0 million of November 2026 Convertible notes and ended December 2023 with cash and cash equivalents of $79.4 million –
DENVER–(BUSINESS WIRE)–Veritone, Inc. (Nasdaq: VERI) (“the Company”), a leader in designing human-centered AI solutions, today reported results for the fourth quarter and fiscal year ended December 31, 2023.
“I am pleased with our performance in the fourth quarter, and extremely excited about our prospects for 2024. For the balance of the past year, we executed and progressed against the strategic initiatives we set in motion at the beginning of 2023, continuing through the first quarter of 2024, which have resulted in a series of transformative actions, including the execution of significant cost reductions and the realignment of our organization. More importantly, we believe we now have the appropriate talent and investment to meet the current demands of our customers and partners, and to secure our growth in delivering advanced, efficient AI solutions to our customers in the years to come. These actions, coupled with our large and diverse customer base, high gross margins and industry leading AI software and solutions, set Veritone on the path to accelerating profitability into the second half of 2024,” said Ryan Steelberg, Chairman and Chief Executive Officer of Veritone. “Looking to the year ahead, I am confident that our aiWARE-powered solutions, expertise in the core market verticals we serve and renewed sense of focus will position us to be stronger, more competitive and better aligned to capitalize on the opportunities presented by the dynamic AI market for years to come.”
Full Year 2023 Financial Highlights
- Revenue of $127.6 million, a decrease of $22.2 million or 14.8% year over year.
- Loss from operations of $92.3 million, an increase of $54.3 million year over year.
- Non-GAAP gross profit of $99.3 million, a decrease of $23.0 million or 18.8% year over year.
- Net loss of $58.6 million, an increase of $33.0 million year over year on a GAAP basis.
- Non-GAAP Net Loss of $37.3 million, as compared to Non-GAAP Net Loss of $15.9 million in fiscal year 2022.
- Cash and cash equivalents(1) were $79.4 million as of December 31, 2023, as compared to $184.4 million as of December 31, 2022.
Fourth Quarter 2023 Financial Highlights
Calculated on a Pro Forma basis; for additional information on these calculations, see “Note Regarding Pro Forma Information” and the definitions provided for each metric cited.
- Revenue of $34.2 million, a decrease of 22.1%, compared to Q4 2022.
- Software Products and Services revenues of $19.8 million, a decrease of 27.2% compared to Q4 2022.
- Managed Services revenue of $14.4 million, a decrease of 13.8% compared to Q4 2022.
- Total Software Products & Services Customers(1) of 3,460, down slightly year over year.
- Total New Bookings(2) of $17.5 million, down from $26.3 million in Q4 2022.
- Annual Recurring Revenue (ARR)(2) of $82.1 million, down from $118.0 in Q4 2022 driven by declines in consumption-based revenue from our largest customer, offset by increases from recurring subscription-based revenue customers.
- Loss from Operations of $17.5 million, as compared to a loss of $10.0 million in Q4 2022.
- Non-GAAP gross profit of $27.7 million, a decrease of $9.5 million compared to Q4 2022.
- Net Income of $12.2 million, as compared to Net Income of $5.0 million in Q4 2022 driven by gains from repurchases of our November 2026 convertible notes at discounts in Q4 of 2023 and 2022.
- Non-GAAP Net Loss of $6.8 million, as compared to Non-GAAP Net Income of $2.2 million in Q4 2022.
(1) Including approximately $45.3 million of cash received from Managed Services clients for future payments to vendors.
(2) Calculated on a Pro Forma basis; for additional information on these calculations, see “Note Regarding Pro Forma Information” and the definitions provided for each metric cited.
Note Regarding Pro Forma Information
«Pro Forma” information provided in this press release represents the historical information of Veritone combined with the historical information of Broadbean (as defined below) for the applicable period on a pro forma basis as if Veritone had acquired Broadbean on January 1, 2022. Veritone completed its acquisition of (i) all of the issued and outstanding share capital of (a) Broadbean Technology Pty Ltd ACN 116 011 959 / ABN 79 116 011 959, a limited company incorporated under the laws of Australia, (b) Broadbean Technology Limited, a limited company incorporated under the laws of England and Wales, (c) Broadbean, Inc., a Delaware corporation and (d) CareerBuilder France S.A.R.L., a limited liability company organized (société à responsabilité limitée) under the laws of France, and (ii) certain assets and liabilities related thereto (the foregoing clauses (i) and (ii) together, “Broadbean”) on June 13, 2023.
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|
Three Months Ended |
|
Year Ended |
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|
|
|
||||||||||
|
Unaudited |
|
|
|
|
|
|
|
|
|
|
|
|
2023 |
|
2022 |
|
Percent |
|
2023 |
|
2022 |
|
Percent |
|
|
Revenue |
$34, 197 |
|
$43,890 |
|
(22%) |
|
$127,560 |
|
$149,728 |
|
(15%) |
|
Loss from Operations |
$(17,505) |
|
$(9,951) |
|
76% |
|
$(92,336) |
|
$(37,995) |
|
NM |
|
Net Income (Loss) |
$12,175 |
|
$5,032 |
|
NM |
|
$(58,625) |
|
$(25,557) |
|
NM |
|
Non-GAAP Gross Profit* |
$27,702 |
|
$37,183 |
|
(25%) |
|
$99,304 |
|
$122,296 |
|
(19%) |
|
Non-GAAP Net Income (Loss) * |
$(6,808) |
|
$2,190 |
|
NM |
|
$(37,331) |
|
$(15,880) |
|
NM |
|
Software Products & Services |
Three Months Ended |
|
Year Ended |
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|
|||||||||||
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|
|
|
|
|
|
|
|
|
|
|
|
|
2023 |
|
2022 |
|
Percent |
|
2023 |
|
2022 |
|
Percent |
|
|
Pro Forma Software Revenue (1) |
$19,824 |
|
$35,612 |
|
(44%) |
|
$83,468 |
|
$117,814 |
|
(29%) |
|
Total Software Products & Services Customers(2) |
3,460 |
|
3,824 |
|
(10%) |
|
|
|
|
|
|
|
Average Annual Revenue (AAR)(3) |
$82,128 |
|
$118,002 |
|
(30%) |
|
|
|
|
|
|
|
Total New Bookings(4) |
$17,457 |
|
$26,342 |
|
(33%) |
|
|
|
|
|
|
|
Gross Retention(5) |
>90% |
|
>90% |
|
|
|
|
|
|
||
NM = Not Meaningful
(1)“Pro Forma Software Revenue” is a non-GAAP measure that represents Software Products & Services revenue on a Pro Forma basis.
(2)“Total Software Products & Services Customers” includes Pro Forma Software Products & Services customers as of the end of each respective quarter set forth above with net revenues in excess of $10 and also excludes any customers categorized by us as trial or pilot status. In prior periods, we provided “Ending Software Customers,” which represented Software Products & Services customers as of the end of each fiscal quarter with trailing twelve-month revenues in excess of $2,400 for both Veritone, Inc. and PandoLogic Ltd. and/or deemed by Veritone to be under an active contract for the applicable periods. Total Software Products & Services Customers is not comparable to Ending Software Customers. Total Software Products & Services Customers includes customers based on revenues in the last month of the quarter rather than on a trailing twelve month basis and excludes any customers that are on trial or pilot status with us rather than including customers with active contracts. Management uses Total Software Products & Services Customers and we believe Total Software Products & Services Customers are useful to investors because it more accurately reflects our total customers for our Software Products & Services inclusive of Broadbean.
(3) “Annual Recurring Revenue” is calculated as Annual Recurring Revenue (SaaS), which is an annualized calculation of the monthly recurring revenue in the last month of the calculated quarter for all active Software Products & Services customers, combined with Annual Recurring Revenue (Consumption), which is the trailing twelve month calculation of all non-recurring and/or consumption-based revenue for all active Software Products & Services customers. In prior periods, we provided “Average Annual Revenue,” which was calculated as the aggregate of trailing twelve-month Software Products & Services revenue divided by the average number of customers over the same period for both Veritone, Inc. and PandoLogic Ltd. Pro Forma Annual Recurring Revenue is not comparable to Average Annual Revenue. Annual Recurring Revenue is on a Pro Forma basis, is not averaged among active customers and uses a calculation of recurring revenue as described above instead of annual revenue. Management uses “Annual Recurring Revenue” and we believe Annual Recurring Revenue is useful to investors because Broadbean significantly increases our mix of subscription-based SaaS revenues as compared to non-recurring and/or consumption-based revenues.
(4)“Total New Bookings” represents the total fees payable during the full contract term for new contracts received in the quarter (including fees payable during any cancellable portion and an estimate of license fees that may fluctuate over the term), excluding any variable fees under the contract (e.g., fees for cognitive processing, storage, professional services and other variable services), in each case on a Pro Forma basis.
(5) “Gross Revenue Retention” represents our dollar-based gross retention rate as of the period end by starting with the revenue from Software Products & Services Customers as of the 3 months in the prior year quarter to such period, or Prior Year Quarter Revenue. We then deduct from the Prior Year Quarter Revenue any revenue from Software Products & Services Customers who are no longer customers as of the current period end, or Current Period Ending Software Customer Revenue. We then divide the total Current Period Ending Software Customer Revenue by the total Prior Year Quarter Revenue to arrive at our dollar-based gross retention rate, which is the percentage of revenue from all Software Products & Services Customers from our Software Products & Services as of the year prior that is not lost to customer churn. All numbers used to determine Gross Revenue Retention are calculated on a Pro Forma basis.
Recent Business Highlights
- Veritone became a contributing company to the newly launched Generative AI Center of Excellence (CoE) for Amazon Web Services (AWS) Partners in the AWS Partner Network (APN). As an AWS Partner, Veritone will contribute its generative AI expertise and AI for Good principles to the program’s mission.
- iHeart, the number one audio company in America, extended its licensing agreement for both Discovery and Attribute. iHeart has utilized Veritone’s technology to provide a differentiated service to its customers and advertisers since 2017.
- Veritone launched its new Intelligent Digital Evidence Management Systems (“iDEMS”), one of the industry’s first cloud-based digital evidence management solutions that integrates AI to help public safety and judicial agencies accelerate investigations. iDEMS combines Veritone’s market-leading solutions for state and local law enforcement agencies – including Investigate, which is now available in the AWS marketplace – to form a centralized repository with AI-enabled applications that automate workflows and extract valuable data and insights, significantly improving upon legacy evidentiary software.
- Commenced the initial phase of two separate custom implementations of Veritone’s iDEMS solutions with US Federal Government Agencies (DoJ and DoD) to materially reduce the time and cost associated with the organization, review and analysis of video content and evidence.
- Expanded and extended our license agreement with the California Highway Patrol (CHP) for Veritone Redact unlimited licenses, to significantly reduce the cost and time associated with providing audio and video content to third parties while protecting identities and personal identifiable information.
- Announced a technology partnership with Dalet, a leading technology and service provider for media-rich organizations, enabling a seamless workflow from content creation through production, creation, packaging and distribution, empowering media, sports and entertainment customers to monetize their digital media archives.
- Announced restructuring of organization in Q1 2024, resulting in forecasted annualized savings of 15% of operating expenses, accelerating projected near-term cash flow profitability to as early as Q4 2024.
- Entered into a four-year $77.5 million senior secured Term Loan in December 2023, using $37.5 million of the proceeds to repurchase $50.0 million principal amount of Veritone’s convertible senior notes due 2026 at a purchase price of $37.5 million plus accrued and unpaid interest through the closing date to pay fees and out-of-pocket expenses in connection with the Term Loan. Veritone expects to use the remaining net proceeds of the Term Loan for general corporate purposes.
Financial Results for Three Months Ended December 31, 2023
Delivered fourth quarter revenue of $34.2 million, a decrease of $9.7 million or 22.1% from $43.9 million in the fourth quarter of 2022. Software Products & Services revenue of $19.8 million declined $7.4 million or 27.2% year over year driven by a decline of $5.5 million in certain one-time, non-recurring revenue in Q4 2022 as compared to Q4 2023, coupled with a net decline of $1.9 million from our Veritone Hire solutions offset by a 30% year over year improvement in GRI. Managed Services revenue decreased by $2.3 million, or 13.8%, to $14.4 million, driven by lower advertising revenue and spend. Loss from operations was $17.5 million as compared to a loss of $10.0 million in Q4 2022 driven in part by the corresponding decline in revenue partially offset by various cost reductions enacted in 2023. Non-GAAP gross profit of $27.7 million in Q4 2023 declined by $9.5 million year over year largely due to the decrease in revenue. Non-GAAP gross margin of 81.3% as compared to 84.7% in 2022 driven by the mix of revenue year over year.
GAAP net income was $12.2 million, compared to $5.0 million in the fourth quarter of 2022, driven in part by non-recurring gains of $30.0 million and $19.1 million associated with the repurchases of $50.0 million and $60.0 million of our convertible senior notes due 2026 in Q4 2023 and Q4 2022, respectively, offset by the increase in loss from operations and changes in the income tax provision over the same periods. Non-GAAP net loss was $6.8 million compared to non-GAAP net income of $2.2 million in the fourth quarter of 2022, largely driven by the decline in non-GAAP gross margin, offset by net improvements in our cost structure throughout fiscal 2023.
During Q4 2023, Total Software Product & Services Customers of 3,460 was down slightly year over year on a Pro Forma basis principally due to ongoing run-off of legacy Career Builder customers transitioning off as a result of Veritone’s Q2 2023 acquisition of Broadbean. Total New Bookings on a Pro Forma basis decreased by 33.7% to $17.5 million versus the comparable period a year ago largely driven by a reduction in spend from Amazon. Annual Recurring Revenue on a Pro Forma basis decreased 30.4% year over year to $82.1 million driven in large part by the decline in consumption revenue from larger customers, including Amazon, over the trailing twelve months ended Q4 2023 as compared to Q4 2022. Excluding the declines in one-time revenue and from Amazon, Software Products & Services revenue growth would have been 64% year over year.
As of December 31, 2023, the Company had cash and cash equivalents of $79.4 million, including approximately $45.3 million of cash received from Managed Services clients for future payments to vendors.
Financial Results Full Year Ended December 31, 2023
Delivered fiscal year 2023 revenue of $127.6 million, a decrease of $22.2 million or 14.8% year over year. Software Products & Services revenue was $68.4 million, a decrease of $16.2 million or 19.1% year over year as a result of lower consumption across our Veritone Hire customer base, offset by the addition of Broadbean in Q2 2023, and the decline of certain non-recurring, one-time software revenue in 2023 versus 2022. Managed Services revenue decreased by $6.0 million, or 9.2%, to $59.2 million, driven by lower advertising revenue and spend. Excluding the declines in certain one-time revenue and from Amazon, Software Products & Services revenue growth would have 44% year over year.
Loss from operations was $92.3 million as compared to a loss of $38.0 million in 2022 driven in part by a benefit of $22.7 million in 2022 associated with a revaluation of certain contingent consideration, coupled with the decline in non-GAAP gross profit and increases in certain non-recurring diligence costs and severance expenses. Non-GAAP gross profit of $99.3 million declined by $23.0 million year over year consistent with the revenue decline over the same period. Non-GAAP gross margin of 77.8% as compared to 81.7% in 2022 driven in large part by the mix of revenue in 2023 as compared to 2022.
Net loss was $58.6 million, compared to $25.2 million for fiscal year 2022, driven in part by the increase in loss from operations offset by the previously discussed gains on debt extinguishments of $30.0 million and $19.1 million in Q4 2023 and 2023, respectively, improvements in interest income year over year and the changes in the income tax provision over the same periods. Non-GAAP net loss was $37.3 million compared to $15.9 million in 2022, largely driven by the decline non-GAAP gross margin and the net impact of various cost reductions made in fiscal 2023 offset by the acquisition of Broadbean operating expenses in Q2 2023.
Business Outlook
First Quarter 2024
- Revenue is expected to be in the range of $30.5 million to $31.5 million, as compared to $30.3 million in the first quarter of 2023.
- Non-GAAP net loss is expected to be in the range of $7.0 million to $8.0 million, compared to non-GAAP net loss of $9.6 million in the first quarter of 2023.
Full Year 2024
- Revenue is expected to be in the range of $134.0 million to $142.0 million, as compared to $127.6 million for fiscal 2023.
- Non-GAAP net loss is expected to be in the range of $11.0 million to $15.0 million, compared to non-GAAP net loss of $37.5 million for fiscal 2023.
These updated financial guidance ranges supersede any previously disclosed financial guidance and investors should not rely on any previously disclosed financial guidance.
Conference Call
Veritone will hold a conference call to deliver management’s prepared remarks on Tuesday, March 12, 2024, at 4:30 p.m. Eastern Time (1:30 p.m. Pacific Time) to discuss its fourth quarter and full year 2023 results, provide an update on the business and conduct a question-and-answer session. To participate, please join the audio webcast or dial-in and ask to be connected to the Veritone earnings conference call. To avoid a delay, if dialing in, please pre-register or join the live audio webcast.
- Pre-Registration*
- Live Audio Webcast
- Domestic Call Number: (844) 750-4897
- International Call Number: (412) 317-5293
A replay of the conference call can be accessed one hour after the end of the conference call through March 19, 2024. The full webcast replay will be available through March 12, 2025. To access the earnings webcast replay please visit the Veritone Investor Relations website.
- Domestic Replay Number: (877) 344-7529
- International Replay Number: (412) 317-0088
- Replay Access Code: 2805175
* Please note that pre-registered participants will receive their dial-in number and unique PIN upon registration.
About the Presentation of Supplemental Non-GAAP Financial Information and Key Performance Indicators
In this news release, the Company has supplemented its financial measures prepared in accordance with U.S. generally accepted accounting principles (GAAP) with certain non-GAAP financial measures, including Pro Forma Software Revenue, Non-GAAP gross profit, Non-GAAP gross margin, Non-GAAP net income (loss) and Non-GAAP net income (loss) per share. The Company also provides certain key performance indicators (KPIs), including Total Software Products & Services Customers, Annual Recurring Revenue, Annual Recurring Revenue (SaaS), Annual Recurring Revenue (Consumption), Total New Bookings and Gross Revenue Retention. The Company has posted additional supplemental financial information on its website at investors.veritone.com concurrently with this press release.
Pro Forma Software Revenue represents Software Products & Services revenue on a Pro Forma basis. Non-GAAP gross profit is defined as revenue less cost of revenue. Non-GAAP gross margin is defined as Non-GAAP gross profit divided by revenue. Non-GAAP net income (loss) and non-GAAP net income (loss) per share is the Company’s net income (loss) and net income (loss) per share, adjusted to exclude provision for income taxes, depreciation expense, amortization expense, stock-based compensation expense, changes in fair value of warrant liability, changes in fair value of contingent consideration, interest income, interest expense, foreign currency gains and losses, acquisition and due diligence costs, gain on sale of energy group, contribution of business held for sale, variable consultant performance bonus expense, and severance and executive transition costs. The items excluded from these non-GAAP financial measures, as well as a breakdown of GAAP net income (loss), non-GAAP net income (loss) and these excluded items between the Company’s Core Operations and Corporate, are detailed in the reconciliations included following the financial statements attached to this news release. In addition, following the financial statements attached to this news release, the Company has provided additional supplemental non-GAAP measures of operating expenses, loss from operations, other income (expense), net, and loss before income taxes, excluding the items excluded from non-GAAP net loss as noted above, and reconciling such non-GAAP measures to the most directly comparable GAAP measures.
The Company has provided these non-GAAP financial measures and KPIs because management believes such information to be important supplemental measures of performance that are commonly used by securities analysts, investors and other interested parties in the evaluation of companies in its industry. Management also uses this information internally for forecasting and budgeting. The non-GAAP financial measures should not be considered as an alternative to revenue, net income (loss), operating income (loss) or any other financial measures so calculated and presented, nor as an alternative to cash flow from operating activities as a measure of liquidity. Other companies (including the Company’s competitors) may define these non-GAAP financial measures differently. The non-GAAP financial measures may not be indicative of the historical operating results of Veritone or predictive of potential future results. Investors should not consider these non-GAAP financial measures in isolation or as a substitute for analysis of the Company’s results as reported in accordance with GAAP.
In addition, the Company defines the following capitalized terms in this news release as follows:
Core Operations consists of the Company’s aiWARE operating platform of software, SaaS and related services; content licensing and advertising agency services; and their supporting operations, including direct costs of sales as well as operating expenses for sales, marketing and product development and certain general and administrative costs dedicated to these operations.
Contacts
Company Contact:
Mike Zemetra
Chief Financial Officer
Veritone, Inc.
investors@veritone.com
IR Agency Contact:
Stefan Norbom
Prosek Partners
203-644-5475
snorbom@prosek.com
