Veritone® Reports Financial Results for the Third Quarter of 2019

Record Quarterly Revenues of $12.8 Million

Corporate Realignment Actions and Computing Cost Reductions Expected to Deliver $7 Million to $9 Million in Annualized Savings

COSTA MESA, Calif.--()--Veritone, Inc. (NASDAQ: VERI), a leading provider of artificial intelligence (AI) technology and solutions, today reported results for the third quarter and nine months ended September 30, 2019.

Chad Steelberg, CEO and Chairman of Veritone, said, “Our third quarter results were in line with our expectations, driven by strength in our Advertising and Content Licensing and Media Services businesses that offset the impact of longer-than-expected sales cycles with government customers, which delayed some expected revenues from that market. Based on our all-time record pipeline of customer opportunities, we continue to be extremely bullish regarding our revenue growth opportunities. In addition, we recently completed a significant upgrade to our aiWARE™ operating system that we believe will improve our computing efficiency and also enable larger and more dynamic use cases for our existing product portfolio.”

“Our Advertising business continued to deliver outstanding growth, with net revenues in the third quarter reaching a record $6.3 million. Within Advertising, our highest growth was in podcasting and YouTube, where our gross billings increased more than 47% on a year-over-year basis to account for 56% of our Advertising billings in the quarter,” said Ryan Steelberg, President of Veritone. “A few weeks ago, we attended the IAB Podcast Upfront 2019 event, where our initial upfront bookings for 2020 were very strong, leading us to expect additional growth in this business. Combined with the anticipated revenue from our VeriAds networks, we believe we will again post double digit year-over-year growth in our Advertising business in 2020.”

Chad Steelberg continued, “As we have continued to refine our aiWARE platform and pursue our land and expand strategy in our targeted vertical markets, we have identified opportunities to optimize our organization to maximize our speed, efficiency and customer focus. In connection with this effort, we have realigned our organization and eliminated certain positions that are no longer critical to meeting our strategic goals. We believe that these actions, together with our recent enhancements to aiWARE, will help to propel Veritone to the next level, accelerating our revenue growth and the reduction of our Adjusted EBITDAS loss.”

Third Quarter 2019 Financial Highlights:

  • Net revenues increased 70% to $12.8 million, compared with $7.5 million in Q3 2018.
  • aiWARE SaaS net revenues increased 67% to $2.4 million, compared with $1.4 million in Q3 2018.
  • Advertising net revenues were a record $6.3 million, compared with $5.8 million in Q2 2019 and $4.7 million in Q3 2018.
  • Cash and cash equivalents totaled $49.2 million at the end of the quarter.

Recent Business Highlights:

  • Microsoft and Veritone announced the launch of aiWARE and Veritone’s AI-powered applications for public safety customers on Microsoft Azure Government, and commenced joint sales activities with these customers.
  • Entered into 19 new SaaS license agreements for the Company’s Redact application since the beginning of Q3 2019.
  • Signed new aiWARE SaaS license agreements and extensions or expansions of existing licenses with several major broadcasters and media companies, representing aggregate revenue potential in excess of $10 million over the next three years.
  • Signed a new agreement with the San Francisco Giants to further fan engagement through AI-powered, rapid media discovery and workflows.
  • Implemented certain acquisition integration and business realignment actions and computing cost reductions that are expected to accelerate revenue growth, improve customer engagement, and deliver $7 million to $9 million of annualized savings beginning in the first quarter of 2020.

Third Quarter 2019 Financial Results:

Net revenues were $12.8 million, compared with $7.5 million in the third quarter of 2018. This was comprised of $2.4 million from aiWARE SaaS solutions, $4.2 million from aiWARE content licensing and media services, and $6.3 million from Advertising. Net revenues from the Company's aiWARE software and services businesses were 51% of total net revenues. Net revenues in the third quarter of 2019 included $6.9 million from the Company’s acquisitions completed in the third quarter of 2018, reflecting a full quarter of results of those businesses, compared with $2.2 million in the prior year period, which only included approximately one month of such results.

Operating expenses were $24.2 million, an increase of $2.0 million compared with $22.2 million in the third quarter of 2018. The increase was due primarily to the addition of approximately $2.3 million of operating expenses related to the businesses acquired in the third quarter of 2018, approximately $0.5 million of additional amortization of intangibles related to those acquisitions, and higher product development costs. These increases were offset in part by higher advisory and professional fees incurred in the third quarter of 2018.

Loss from operations was $16.2 million, essentially the same as the loss from operations of $16.3 million in the third quarter of 2018.

Net loss totaled $14.2 million, or $(0.64) per share, compared with $15.9 million, or $(0.86) per share, in the third quarter of 2018. Non-GAAP net loss was $9.6 million, or $(0.43) per share, compared with $8.6 million, or $(0.46) per share, in the third quarter of 2018. See “About the Presentation of Supplemental Non-GAAP Financial Information” below for an explanation of the items excluded from the calculation of non-GAAP net loss and a reconciliation of non-GAAP net loss to GAAP net loss following the financial statements below.

Adjusted EBITDAS, a non-GAAP financial measure, totaled a loss of $9.6 million, or 75% of net revenues, compared with a loss of $8.6 million, or 114% of net revenues, in the third quarter of 2018. The higher Adjusted EBITDAS loss in absolute dollars in the third quarter of 2019 was due primarily to the incremental profit from the year-over-year increase in net revenues being more than offset by higher cash operating expenses related primarily to the recent acquisitions. See “About the Presentation of Supplemental Non-GAAP Financial Information” below for an explanation of the items excluded from the calculation of Adjusted EBITDAS and a reconciliation of Adjusted EBITDAS loss to GAAP net loss following the financial statements below.

Cash: As of September 30, 2019, the Company had cash and cash equivalents of $49.2 million, including $17.4 million of cash received from Advertising clients and content licensees for future payments to vendors, and no long-term debt. During the third quarter, the Company raised net proceeds of $5.3 million through the issuance of 1.1 million shares of its common stock under the ATM facility established in June 2018.

First Nine Months 2019 Financial Results:

Net revenues were $37.2 million (including $19.4 million from the Company’s acquisitions completed in the third quarter of 2018), compared with $16.1 million in the first nine months of 2018 (which included $2.2 million from the acquisitions). This was comprised of $7.8 million from aiWARE SaaS solutions, $11.5 million from aiWARE content licensing and media services, and $17.9 million from Advertising. Net revenues from the Company's aiWARE software and services businesses were 52% of total revenue.

Operating expenses were $73.4 million, an increase of $16.3 million compared with $57.1 million in the first nine months of 2018. The increase was due primarily to the addition of approximately $10.1 million of operating expenses related to the businesses acquired in the third quarter of 2018, reflecting a full nine months of expenses for those businesses, compared with $1.0 million in the prior year period, which only included approximately one month of such expenses. The increase was also due to approximately $1.3 million of additional amortization of intangibles related to those acquisitions, and approximately $5.9 million of additional stock-based compensation expense related primarily to performance-based awards and acquisition-related awards.

Loss from operations was $49.4 million, an increase of $5.5 million compared with a loss from operations of $43.9 million in the first nine months of 2018.

Net loss totaled $47.2 million, or $(2.26) per share, compared with $43.3 million, or $(2.55) per share, in the first nine months of 2018. Non-GAAP net loss was $28.1 million, or $(1.35) per share, compared with $29.8 million, or $(1.75) per share, in the first nine months of 2018. See “About the Presentation of Supplemental Non-GAAP Financial Information” below for an explanation of the items excluded from the calculation of non-GAAP net loss and a reconciliation of non-GAAP net loss to GAAP net loss following the financial statements below.

Adjusted EBITDAS, a non-GAAP financial measure, totaled a loss of $28.1 million, or 76% of net revenues, compared with a loss of $29.8 million, or 185% of net revenues, for the first nine months of 2018. The lower Adjusted EBITDAS loss was due primarily to the increase in net revenues, offset in part by an increase in cash operating expenses related primarily to the recent acquisitions. See “About the Presentation of Supplemental Non-GAAP Financial Information” below for an explanation of the items excluded from the calculation of Adjusted EBITDAS and a reconciliation of Adjusted EBITDAS loss to GAAP net loss following the financial statements below.

Integration and Business Realignment Actions:

The Company also announced today that it has realigned its business and functional teams to increase their operating efficiency and support the next phase of Veritone’s growth, as well as to complete the integration of the companies acquired in the third quarter of 2018. The realignment creates business teams focused on the needs of customers in the Company’s Media and Entertainment market and Government, Legal and Compliance market, to maximize each team’s effectiveness as they execute the next phase of the Company’s growth strategy. As part of this effort, the Company also eliminated certain positions that are no longer critical to meeting its strategic goals.

The costs associated with the actions are expected to be incurred largely in the fourth quarter of 2019, and the Company expects these actions, together with recently negotiated computing cost reductions, to result in total annualized savings of $7 million to $9 million beginning in the first quarter of 2020.

Business Outlook:

For the fourth quarter ending December 31, 2019, the Company expects its total net revenues to be in the range of $12.0 million to $12.4 million, and expects its non-GAAP Adjusted EBITDAS Loss, excluding expenses associated with the realignment, to be in the range of $8.7 million to $8.3 million. The midpoint of this net revenues range reflects double digit growth year over year, but a slight sequential reduction due to the typical seasonal pattern in the Company’s content licensing business, offset in part by higher aiWARE SaaS revenues.

For the first quarter ending March 31, 2020, the Company expects its total net revenues to be in the range of $12.6 million to $13.4 million, driven by increases in its aiWARE SaaS and content licensing businesses, and expects its non-GAAP Adjusted EBITDAS Loss to be in the range of $7.8 million to $7.2 million.

See “About the Presentation of Supplemental Non-GAAP Financial Information” below for an explanation of the items excluded from the calculation of the Company’s expected Adjusted EBITDAS and a reconciliation of its expected Adjusted EBITDAS losses to its expected GAAP net losses following the financial statements below.

Investor Conference Call:

Veritone will hold a conference call today, November 6, 2019, at 4:30 p.m. Eastern Time (1:30 p.m. Pacific Time) to discuss these results and provide an update on the business. Veritone management will host the presentation, followed by a question and answer session. The call will be open to all interested parties through a live audio webcast at investors.veritone.com. The call will also be available by dialing 877-791-0151 or 647-689-5650 for International.

Please call the conference telephone number 5-10 minutes prior to the start time and reference the conference ID 4288437. An operator will register your name and organization. If you have any difficulty connecting with the conference call, please contact LHA at 415-433-3777.

A replay of the audio webcast will be available on the Company’s website shortly after the call ends. Additionally, a telephonic replay of the call will be available through November 20, 2019 by dialing the following numbers:

Replay number: 800-585-8367
International replay number: 416-621-4642
Replay ID: 4288437

About Veritone

Veritone (Nasdaq: VERI) is a leading provider of artificial intelligence (AI) technology and solutions. The company’s proprietary operating system, aiWARE™, orchestrates an expanding ecosystem of machine learning models to transform audio, video and other data sources into actionable intelligence. aiWARE can be deployed in a number of environments and configurations to meet customers’ needs. Its open architecture enables customers in the media and entertainment and government, legal and compliance sectors to easily deploy applications that leverage the power of AI to dramatically improve operational efficiency and effectiveness. Veritone is headquartered in Costa Mesa, California, with offices in Denver, London, New York, San Diego and Seattle. To learn more, visit Veritone.com.

About the Presentation of Supplemental Non-GAAP Financial Information

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: “Non-GAAP net loss,” “Non-GAAP net loss per share,” and “Adjusted EBITDAS.” Non-GAAP net loss is the company’s net loss, adjusted to exclude interest expense, depreciation expense, amortization expense, stock-based compensation expense, and certain acquisition, integration and financing-related costs. Adjusted EBITDAS is defined as earnings before interest expense, depreciation, amortization and stock-based compensation expenses, adjusted to exclude certain acquisition, integration and financing-related costs. Adjusted EBITDAS should not be considered as an alternative to 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. The items excluded from Non-GAAP net loss and actual and forecasted Adjusted EBITDAS are detailed in the reconciliations included following the financial statements attached to this news release. Other companies (including the Company’s competitors) may define Non-GAAP net loss and/or Adjusted EBITDAS differently.

In addition, following the financial statements attached to this news release, the Company has provided additional supplemental non-GAAP measures of gross profit, operating expenses, loss from operations, other income, 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 applicable GAAP measures.

The Company presents this supplemental non-GAAP financial information 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. These non-GAAP measures may not be indicative of the historical operating results of Veritone or predictive of potential future results. Investors should not consider this supplemental non-GAAP financial information in isolation or as a substitute for analysis of the Company’s results as reported in accordance with GAAP.

Safe Harbor Statement

This news release contains forward-looking statements, including without limitation statements regarding the Company’s belief that it has strong revenue growth opportunities; its expectation that the Company’s recent software enhancements will improve computing efficiency and enable larger and more dynamic use cases for its products; its expectation that it will achieve growth in podcasting and double digit year-over-year growth in its Advertising business in 2020; its expected total revenue from recently signed SaaS license agreements over the next three years; its expected annualized savings commencing in the first quarter of 2020 and other benefits resulting from its acquisition integration and business realignment actions and computing cost reductions; and the Company’s expected total net revenues and Adjusted EBITDAS loss in the fourth quarter of 2019 and the first quarter of 2020. In addition, words such as “may,” “will,” “expect,” “believe,” “anticipate,” “intend,” “plan,” “should,” “could,” “estimate” or “continue” or the plural, negative or other variations thereof or comparable terminology are intended to identify forward-looking statements, and any statements that refer to expectations, projections or other characterizations of future events or circumstances are forward-looking statements. These forward-looking statements speak only as of the date hereof, and are based on management’s current assumptions, beliefs and information. As such, the Company’s actual results could differ materially and adversely from those expressed in any forward-looking statement as a result of various factors. Important factors that could cause such differences include, among other things, the Company’s ability to successfully integrate its recent acquisitions; the Company’s ability to achieve broad recognition and customer acceptance of its products and services; the Company’s ability to continue to develop and add additional capabilities and features to its aiWARE operating system; the development of the market for cognitive analytics solutions; the ability of third parties to develop and provide additional high quality, relevant cognitive engines and applications; the Company’s ability to successfully identify and integrate such additional third-party cognitive engines and applications onto its aiWARE operating system, and to continue to be able to access and utilize such engines and applications, and the cost thereof; as well as the impact of future economic, competitive and market conditions, particularly those related to its strategic end markets; and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond the control of the Company. Certain of these judgments and risks are discussed in more detail in the Company’s Annual Report on Form 10-K and other periodic reports filed with the Securities and Exchange Commission. In light of the significant uncertainties inherent in the forward-looking information included herein, the inclusion of such information should not be regarded as a representation by the Company or any other person that the Company’s objectives or plans will be achieved. The forward-looking statements contained herein reflect the Company’s beliefs, estimates and predictions as of the date hereof, and the Company undertakes no obligation to revise or update the forward-looking statements contained herein to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events for any reason, except as required by law.

 

VERITONE, INC.

 

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

 

(in thousands)

 

 

 

 

 

 

 

 

 

 

As of

 

 

September 30,

 

 

December 31,

 

 

2019

 

 

2018

 

ASSETS

 

 

 

 

 

 

 

Cash and cash equivalents

$

49,188

 

 

$

37,539

 

Marketable securities

 

-

 

 

 

13,565

 

Accounts receivable, net

 

28,932

 

 

 

29,142

 

Expenditures billable to clients

 

6,167

 

 

 

2,695

 

Prepaid expenses and other current assets

 

4,752

 

 

 

3,579

 

Total current assets

 

89,039

 

 

 

86,520

 

 

 

 

 

 

 

 

 

Long-term restricted cash

 

1,156

 

 

 

1,237

 

Property, equipment and improvements, net

 

3,464

 

 

 

4,008

 

Intangible assets, net

 

17,474

 

 

 

20,480

 

Goodwill

 

7,241

 

 

 

5,509

 

Total assets

$

118,374

 

 

$

117,754

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

 

 

Accounts payable

$

23,432

 

 

$

28,714

 

Accrued media payments

 

10,605

 

 

 

7,416

 

Client advances

 

24,696

 

 

 

9,639

 

Accrued compensation

 

2,330

 

 

 

6,570

 

Other accrued liabilities

 

5,096

 

 

 

3,746

 

Total current liabilities

 

66,159

 

 

 

56,085

 

Other liabilities

 

1,417

 

 

 

1,386

 

Total liabilities

 

67,576

 

 

 

57,471

 

 

 

 

 

 

 

 

 

Stockholders' equity

 

 

 

 

 

 

 

Common Stock

 

23

 

 

 

19

 

Additional paid-in capital

 

268,339

 

 

 

230,674

 

Accumulated deficit

 

(217,605

)

 

 

(170,411

)

Accumulated other comprehensive income

 

41

 

 

 

1

 

Total stockholders' equity

 

50,798

 

 

 

60,283

 

Total liabilities and stockholders' equity

$

118,374

 

 

$

117,754

 

 

VERITONE, INC.

 

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

 

AND COMPREHENSIVE LOSS

 

(in thousands, except per share and share data)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

September 30,

 

 

September 30,

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

Net revenues

$

12,805

 

 

$

7,545

 

 

$

37,200

 

 

$

16,101

 

Cost of revenues

 

4,757

 

 

 

1,570

 

 

 

13,191

 

 

 

2,953

 

Gross profit

 

8,048

 

 

 

5,975

 

 

 

24,009

 

 

 

13,148

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales and marketing

 

6,609

 

 

 

4,586

 

 

 

19,190

 

 

 

15,476

 

Research and development

 

5,730

 

 

 

5,218

 

 

 

19,019

 

 

 

14,892

 

General and administrative

 

11,905

 

 

 

12,436

 

 

 

35,239

 

 

 

26,727

 

Total operating expenses

 

24,244

 

 

 

22,240

 

 

 

73,448

 

 

 

57,095

 

Loss from operations

 

(16,196

)

 

 

(16,265

)

 

 

(49,439

)

 

 

(43,947

)

Interest expense

 

184

 

 

 

329

 

 

 

446

 

 

 

645

 

Loss before provision (benefit) for income taxes

 

(16,012

)

 

 

(15,936

)

 

 

(48,993

)

 

 

(43,302

)

Provision (benefit) for income taxes

 

(1,815

)

 

 

5

 

 

 

(1,799

)

 

 

17

 

Net loss

$

(14,197

)

 

$

(15,941

)

 

$

(47,194

)

 

$

(43,319

)

Net loss per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted

$

(0.64

)

 

$

(0.86

)

 

$

(2.26

)

 

$

(2.55

)

Weighted average shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted

 

22,345,122

 

 

 

18,611,829

 

 

 

20,882,293

 

 

 

17,007,850

 

Comprehensive loss:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

$

(14,197

)

 

$

(15,941

)

 

$

(47,194

)

 

$

(43,319

)

Unrealized gain on marketable securities, net of income taxes

 

-

 

 

 

56

 

 

 

48

 

 

 

54

 

Foreign currency translation adjustments, net of income taxes

 

(24

)

 

 

4

 

 

 

-

 

 

 

24

 

Total comprehensive loss

$

(14,221

)

 

$

(15,881

)

 

$

(47,146

)

 

$

(43,241

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

VERITONE, INC.

 

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

 

(in thousands)

 

 

 

 

 

 

 

 

 

 

Nine Months Ended

 

 

September 30,

 

 

2019

 

 

2018

 

Cash flows from operating activities:

 

 

 

 

 

 

 

Net loss

$

(47,194

)

 

$

(43,319

)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

 

 

Depreciation and amortization

 

4,337

 

 

 

1,383

 

Deferred income taxes, net

 

(1,821

)

 

 

-

 

Costs of warrants issued

 

 

 

 

207

 

Change in fair value of warrant liability

 

(7

)

 

 

(93

)

Provision for doubtful accounts

 

54

 

 

 

25

 

Stock-based compensation expense

 

16,049

 

 

 

9,963

 

Other

 

(19

)

 

 

 

Changes in assets and liabilities:

 

 

 

 

 

 

 

Accounts receivable

 

156

 

 

 

(8,327

)

Expenditures billable to clients

 

(3,472

)

 

 

(4,120

)

Prepaid expenses and other current assets

 

(953

)

 

 

(422

)

Accounts payable

 

(5,282

)

 

 

6,040

 

Accrued media payments

 

3,189

 

 

 

8,126

 

Client advances

 

15,057

 

 

 

5,004

 

Other accrued liabilities

 

1,447

 

 

 

(271

)

Other liabilities

 

31

 

 

 

837

 

Net cash used in operating activities

 

(18,428

)

 

 

(24,967

)

Cash flows from investing activities:

 

 

 

 

 

 

 

Proceeds from sales of marketable securities

 

13,614

 

 

 

21,000

 

Capital expenditures

 

(282

)

 

 

(3,543

)

Intangible assets acquired

 

(477

)

 

 

(629

)

Acquisition of businesses, net of cash acquired

 

(883

)

 

 

(9,627

)

Net cash provided by investing activities

 

11,972

 

 

 

16,828

 

Cash flows from financing activities:

 

 

 

 

 

 

 

Proceeds from common stock offerings, net

 

17,302

 

 

 

32,782

 

Proceeds from exercise of stock options

 

120

 

 

 

 

Proceeds from issuances of stock under employee stock purchase plan

 

602

 

 

 

1,566

 

Net cash provided by financing activities

 

18,024

 

 

 

34,348

 

Net increase in cash, cash equivalents and restricted cash

 

11,568

 

 

 

26,209

 

Cash, cash equivalents and restricted cash, beginning of period

 

38,776

 

 

 

29,545

 

Cash, cash equivalents and restricted cash, end of period

$

50,344

 

 

$

55,754

 

 

VERITONE, INC.

 

UNAUDITED NET REVENUES DETAIL

 

(in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

September 30,

 

 

September 30,

 

 

2019

 

 

2018

 

 

2019

 

 

 

 

2018

 

Advertising

$

6,291

 

 

$

4,730

 

 

$

17,847

 

 

 

 

$

11,159

 

aiWARE SaaS Solutions

 

2,350

 

 

 

1,406

 

 

 

7,781

 

 

 

 

 

3,533

 

aiWARE Content Licensing and Media Services

 

4,164

 

 

 

1,409

 

 

 

11,572

 

 

 

 

 

1,409

 

Net revenues

$

12,805

 

 

$

7,545

 

 

$

37,200

 

 

 

 

$

16,101

 

 

VERITONE, INC.

 

RECONCILIATION OF NON-GAAP ADJUSTED EBITDAS LOSS TO GAAP NET LOSS (UNAUDITED)

 

(in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

September 30,

 

 

September 30,

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

$

(14,197

)

 

$

(15,941

)

 

$

(47,194

)

 

$

(43,319

)

Provision (benefit) for income taxes

 

(1,815

)

 

 

5

 

 

 

(1,799

)

 

 

17

 

Depreciation and amortization

 

1,622

 

 

 

555

 

 

 

4,342

 

 

 

1,383

 

Stock-based compensation expense

 

4,736

 

 

 

4,838

 

 

 

14,794

 

 

 

9,963

 

Issuance of warrants

 

 

 

 

 

 

 

 

 

 

207

 

Change in fair value of warrant liability

 

(57

)

 

 

(108

)

 

 

(7

)

 

 

(93

)

Acquisition and integration-related costs

 

 

 

 

2,020

 

 

 

 

 

 

2,020

 

Machine Box contingent payments

 

160

 

 

 

 

 

1,609

 

 

 

Machine Box earn-out fair value adjustment

 

(79

)

 

 

 

 

(9

)

 

 

Performance Bridge earn-out fair value adjustment

 

 

 

 

 

 

139

 

 

 

Adjusted EBITDAS

$

(9,630

)

 

$

(8,631

)

 

$

(28,125

)

 

$

(29,822

)

 

VERITONE, INC.

 

RECONCILIATION OF EXPECTED NON-GAAP ADJUSTED EBITDAS LOSS RANGE

 

TO EXPECTED GAAP NET LOSS RANGE (UNAUDITED)

 

(in millions)

 

 

 

Three Months Ending
December 31, 2019

 

 

Three Months Ending
March 31, 2020

 

Net loss

($15.3) to ($14.9)

 

 

($14.0) to ($13.4)

 

Provision for income taxes

 

 

 

Depreciation and amortization

1.6

 

 

1.6

 

Stock-based compensation expense

4.7

 

 

4.6

 

Costs related to realignment actions

0.3

 

 

 

Adjusted EBITDAS Loss

($8.7) to ($8.3)

 

 

($7.8) to ($7.2)

 

 

VERITONE, INC.

 

RECONCILIATION OF NON-GAAP TO GAAP FINANCIAL INFORMATION (UNAUDITED)

 

(in thousands, except per share data)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

September 30,

 

 

September 30,

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

GAAP gross profit

$

8,048

 

 

$

5,975

 

 

$

24,009

 

 

$

13,148

 

Depreciation and amortization

 

561

 

 

 

31

 

 

 

1,466

 

 

 

128

 

Non-GAAP gross profit

 

8,609

 

 

 

6,006

 

 

 

25,475

 

 

 

13,276

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP sales and marketing expenses

 

6,609

 

 

 

4,586

 

 

 

19,190

 

 

 

15,476

 

Depreciation and amortization

 

(529

)

 

 

(18

)

 

 

(1,270

)

 

 

(18

)

Stock-based compensation expense

 

(281

)

 

 

(246

)

 

 

(795

)

 

 

(814

)

Non-GAAP sales and marketing expenses

 

5,799

 

 

 

4,322

 

 

 

17,125

 

 

 

14,644

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP research and development expenses

 

5,730

 

 

 

5,218

 

 

 

19,019

 

 

 

14,892

 

Depreciation and amortization

 

(257

)

 

 

(267

)

 

 

(759

)

 

 

(778

)

Stock-based compensation expense

 

(307

)

 

 

(665

)

 

 

(1,064

)

 

 

(1,172

)

Machine Box contingent payments

 

(81

)

 

 

 

 

 

(1,600

)

 

 

 

Non-GAAP research and development expenses

 

5,085

 

 

 

4,286

 

 

 

15,596

 

 

 

12,942

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP general and administrative expenses

 

11,905

 

 

 

12,436

 

 

 

35,239

 

 

 

26,727

 

Depreciation and amortization

 

(275

)

 

 

(239

)

 

 

(847

)

 

 

(459

)

Stock-based compensation expense

 

(4,148

)

 

 

(3,928

)

 

 

(12,935

)

 

 

(7,977

)

Issuance of warrants

 

 

 

 

 

 

 

 

 

 

(207

)

Performance Bridge earn-out fair value adjustment

 

 

 

 

 

 

 

(139

)

 

 

 

Acquisition and integration-related costs

 

 

 

 

(2,020

)

 

 

 

 

 

(2,020

)

Non-GAAP general and administrative expenses

 

7,482

 

 

 

6,249

 

 

 

21,318

 

 

 

16,064

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP loss from operations

 

(16,196

)

 

 

(16,265

)

 

 

(49,439

)

 

 

(43,947

)

Total non-GAAP adjustments (1)

 

6,439

 

 

 

7,413

 

 

 

20,875

 

 

 

13,573

 

Non-GAAP loss from operations

 

(9,757

)

 

 

(8,852

)

 

 

(28,564

)

 

 

(30,374

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP other income, net

 

184

 

 

 

329

 

 

 

446

 

 

 

645

 

Change in fair value of warrant liability

 

(57

)

 

 

(108

)

 

 

(7

)

 

 

(93

)

Non-GAAP other income, net

 

127

 

 

 

221

 

 

 

439

 

 

 

552

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP loss before income taxes

 

(16,012

)

 

 

(15,936

)

 

 

(48,993

)

 

 

(43,302

)

Total non-GAAP adjustments (1)

 

6,382

 

 

 

7,305

 

 

 

20,868

 

 

 

13,480

 

Non-GAAP loss before income taxes

 

(9,630

)

 

 

(8,631

)

 

 

(28,125

)

 

 

(29,822

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income tax (benefit) provision

 

(1,815

)

 

 

5

 

 

 

(1,799

)

 

 

17

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP net loss

 

(14,197

)

 

 

(15,941

)

 

 

(47,194

)

 

 

(43,319

)

Total non-GAAP adjustments (1)

 

4,567

 

 

 

7,310

 

 

 

19,069

 

 

 

13,497

 

Non-GAAP net loss

$

(9,630

)

 

$

(8,631

)

 

$

(28,125

)

 

$

(29,822

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares used in computing non-GAAP basic and diluted net loss per share

 

22,345

 

 

 

18,612

 

 

 

20,882

 

 

 

17,008

 

Non-GAAP basic and diluted net loss per share

$

(0.43

)

 

$

(0.46

)

 

$

(1.35

)

 

$

(1.75

)

1

Adjustments are comprised of the adjustments to GAAP gross profit, sales and marketing expenses, research and development expenses and general and administrative expenses listed above.

VERITONE, INC.

 

KEY PERFORMANCE INDICATORS

 

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Advertising

Q1 2018

 

 

Q2 2018

 

 

Q3 2018

 

 

Q4 2018

 

 

Q1 2019

 

 

Q2 2019

 

 

Q3 2019

 

Including acquisition1:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net new advertising clients added during quarter

 

14

 

 

 

14

 

 

 

10

 

 

 

14

 

 

 

14

 

 

 

21

 

 

 

11

 

 

Clients with active advertising campaigns during quarter

 

60

 

 

 

74

 

 

 

78

 

 

 

115

 

 

 

107

 

 

 

108

 

 

 

111

 

 

Average advertising spend per active client during quarter (in 000's)

$

490

 

 

$

425

 

 

$

540

 

 

$

478

 

 

$

486

 

 

$

497

 

 

$

505

 

 

Net revenue during quarter (in 000's)

$

3,121

 

 

$

3,308

 

 

$

4,730

 

 

$

5,986

 

 

$

5,714

 

 

$

5,842

 

 

$

6,291

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Excluding acquisition:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net new advertising clients added during quarter

 

14

 

 

 

14

 

 

 

10

 

 

 

14

 

 

 

14

 

 

 

21

 

 

 

11

 

 

Clients with active advertising campaigns during quarter

 

60

 

 

 

74

 

 

 

78

 

 

 

76

 

 

 

71

 

 

 

71

 

 

 

73

 

 

Average advertising spend per active client during quarter (in 000's)

$

490

 

 

$

425

 

 

 

540

 

 

 

616

 

 

 

604

 

 

 

542

 

 

 

537

 

 

Net revenue during quarter (in 000's)

 

3,121

 

 

 

3,308

 

 

 

4,296

 

 

 

4,681

 

 

 

4,186

 

 

 

4,299

 

 

 

4,473

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

aiWARE SaaS Solutions

Q1 2018

 

 

Q2 2018

 

 

Q3 2018

 

 

Q4 2018

 

 

Q1 2019

 

 

Q2 2019

 

 

Q3 2019

 

Including acquisitions2:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total customers at quarter end

 

70

 

 

 

86

 

 

 

93

 

 

 

123

 

 

 

129

 

 

 

136

 

 

 

153

 

 

Total accounts on platform at quarter end

 

591

 

 

 

625

 

 

 

634

 

 

 

840

 

 

 

911

 

 

 

941

 

 

 

980

 

 

Active cognitive engines at quarter end

 

184

 

 

 

214

 

 

 

252

 

 

 

287

 

 

 

343

 

 

 

357

 

 

 

401

 

 

Hours of data processed during quarter

 

2,805,000

 

 

 

2,729,000

 

 

 

2,830,000

 

 

 

3,566,000

 

 

 

4,061,000

 

 

 

4,015,050

 

 

 

3,606,151

 

 

Total contract value of new bookings received during quarter (in 000's)

$

237

 

 

$

583

 

 

$

226

 

 

$

1,196

 

 

$

1,316

 

 

$

1,362

 

 

$

1,384

 

 

Monthly recurring revenue under agreements in effect at quarter end (in 000's)

$

169

 

 

$

214

 

 

$

191

 

 

$

544

 

 

$

494

 

 

$

545

 

 

$

547

 

 

Net revenue during quarter (in 000's)

$

1,267

 

 

$

860

 

 

$

1,406

 

 

$

2,426

 

 

$

2,754

 

 

$

2,677

 

 

$

2,350

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Excluding acquisitions:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total customers at quarter end

 

70

 

 

 

86

 

 

 

93

 

 

 

97

 

 

 

103

 

 

 

107

 

 

 

129

 

 

Total accounts on platform at quarter end

 

591

 

 

 

625

 

 

 

634

 

 

 

814

 

 

 

885

 

 

 

913

 

 

 

952

 

 

Active cognitive engines at quarter end

 

184

 

 

 

214

 

 

 

252

 

 

 

287

 

 

 

343

 

 

 

357

 

 

 

401

 

 

Hours of data processed during quarter

 

2,805,000

 

 

 

2,729,000

 

 

 

2,830,000

 

 

 

3,566,000

 

 

 

4,061,000

 

 

 

4,015,050

 

 

 

3,606,151

 

 

Total contract value of new bookings received during quarter (in 000's)

$

237

 

 

$

583

 

 

$

226

 

 

$

898

 

 

$

736

 

 

$

765

 

 

$

650

 

 

Monthly recurring revenue under agreements in effect at quarter end (in 000's)

$

169

 

 

$

214

 

 

$

191

 

 

$

229

 

 

$

235

 

 

$

283

 

 

$

273

 

 

Net revenue during quarter (in 000's)

$

1,267

 

 

$

860

 

 

$

1,077

 

 

$

1,474

 

 

$

1,639

 

 

$

1,735

 

 

$

1,427

 

1

The results of Performance Bridge are included in the results for each KPI for the Company’s Advertising business for the four most recent full quarters. In addition, Performance Bridge’s net revenues are included for the portion of the third quarter of 2018 following the closing date of that acquisition.
 

2

The results related to Wazee Digital and Machine Box offerings are included in the results for the following KPIs for the Company’s aiWARE SaaS Solutions business for the four most recent full quarters: (i) total number of customers, (ii) total accounts on the platform, (iii) total contract value of new bookings, (iv) monthly recurring revenue under active agreements, and (v) net revenues. In addition, net revenues from the Wazee Digital and Machine Box offerings are included for the portion of the third quarter of 2018 following the closing date of that acquisition.

 

Contacts

Company Contact:
Brian Alger, CFA
SVP, Corporate Development & Investor Relations
Veritone, Inc.
(949) 386-4318
investors@veritone.com

Investor Relations Contact:
Mary Magnani or Kirsten Chapman
LHA
(415) 433-3777
veri@lhai.com

Release Summary

Veritone® Reports Financial Results for the Third Quarter of 2019

Contacts

Company Contact:
Brian Alger, CFA
SVP, Corporate Development & Investor Relations
Veritone, Inc.
(949) 386-4318
investors@veritone.com

Investor Relations Contact:
Mary Magnani or Kirsten Chapman
LHA
(415) 433-3777
veri@lhai.com