• Revenue: $22 million for Q3 2024, down $6 million from Q3 2023.
• ARR (Annual Recurring Revenue): $63.3 million, down year-over-year.
• Gross Margin: Non-GAAP gross margin of 71.2% in Q3 2024, compared to 74.9% in Q3 2023.
• Net Loss: Non-GAAP net loss of $7.1 million in Q3 2024, an improvement from $7.9 million in Q3 2023.
• Cash Position: Approximately $27.3 million in cash post-divestiture.
• Debt: Aggregate principal debt of approximately $134.4 million, down from $168.8 million at December 31, 2023.
• Divestiture Proceeds: $86 million in cash at closing from the sale of Veritone One, with potential future proceeds up to $24.7 million.
• Public Sector Growth: Expected to grow 100% to 150% year-over-year in fiscal 2025.
• Fiscal 2024 Revenue Guidance: Between $92.5 million and $93.5 million.
• Fiscal 2025 Revenue Guidance: Between $107 million to $122 million.

• Warning! GuruFocus has detected 5 Warning Signs with VERI.

Release Date: November 12, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Veritone Inc (NASDAQ:VERI) successfully divested its legacy media agency business, Veritone One, in a transaction valued at up to $104 million, streamlining its operational focus.
• The divestiture strengthens Veritone Inc (NASDAQ:VERI)'s financial foundation, reducing debt and enhancing its balance sheet.
• Veritone Inc (NASDAQ:VERI) has eliminated customer concentration risk, with no single customer accounting for more than 5% of revenues post-divestiture.
• The company has a strong pipeline in the Public Sector, with growth expected between 100% to 150% year-over-year, driven by its aiWARE platform.
• Veritone Inc (NASDAQ:VERI) has secured significant partnerships, including multiyear deals with iHeartMedia and ESPN, showcasing the value of its AI solutions.

Negative Points

• Veritone Inc (NASDAQ:VERI) reported a decline in Q3 2024 revenue to $22 million, down $6 million from Q3 2023, primarily due to a decrease in Software Products & Services.
• The company experienced a non-GAAP net loss of $11.1 million from continuing operations in Q3 2024, reflecting a decline in gross profit.
• Veritone Inc (NASDAQ:VERI) has shifted its projected cash flow profitability to fiscal 2026, indicating a longer timeline to achieve profitability.
• The company's non-GAAP gross margin decreased to 71.2% in Q3 2024 from 74.9% in Q3 2023, driven by a decline in high-margin revenue.
• Veritone Inc (NASDAQ:VERI) faces challenges in the commercial sector, with a decline in consumption-based customers and a focus on larger ARR opportunities.

Q & A Highlights

Q: Can you talk about the updated 2024 revenue guide? Is the $4 million to $5 million change 100% allocated to public deal push out? Or were there maybe updates on the hiring side of the business as well? A: Yes, it's 100% allocated to timing on Public Sector. There's potential upside if some of these larger deals get pulled into the quarter. - Michael Zemetra, CFO

Q: Can you give us a bit more of a bridge on acceleration to 2025? Is the growth mainly from the Public Sector, or are there other areas of improvement? A: The Public Sector is expected to grow between 100% to 150% year-over-year. While we expect growth across the commercial sector, the large portion of growth on a dollar basis will come from the Public Sector. - Michael Zemetra, CFO

Q: What are the key financial terms of the October 2024 divestiture of Veritone One? A: The total consideration from the sale was up to $104 million in cash, consisting of $86 million at closing and $18 million subject to earn-out. The divestiture represented approximately 25% of our consolidated revenue during the trailing 9 months ended September 30, 2024. - Michael Zemetra, CFO

Q: How has the divestiture of Veritone One impacted your financial strategy? A: The divestiture positions Veritone as a pure-play AI company, allowing us to focus on core AI products and services. It also improves our balance sheet by reducing our annualized debt carry costs significantly. - Michael Zemetra, CFO

Q: Can you elaborate on the strategic focus post-divestiture? A: Post-divestiture, we are focusing on higher growth verticals with strong margin profiles, namely Public Sector and Commercial Enterprise AI. This positions us as a pure-play AI enterprise software firm. - Ryan Steelberg, CEO

For the complete transcript of the earnings call, please refer to the full earnings call transcript.