Veritone Inc (VERI) Q2 2024 Earnings Call Highlights: Revenue Growth and Strategic Partnerships ...
Revenue: $31 million, up 10.7% from Q2 2023.
Software Products and Services Revenue: Increased by $1.5 million, largely driven by Veritone Hire.
Managed Services Revenue: Increased by $1.5 million, driven by improvements in advertising.
ARR (Annual Recurring Revenue): $67.9 million, with $49.2 million from subscription-based customers.
Gross Margin: 78.8%, improved by 660 basis points from Q2 2023.
Non-GAAP Gross Profit: $24.6 million, up 22% from Q2 2023.
Non-GAAP Net Loss: $6.9 million, an improvement of 47% from Q2 2023.
Cash and Restricted Cash: $47 million as of June 30, 2024.
Debt: $166.5 million in total, with $75.5 million as term debt and $91 million as convertible debt.
Advertising Revenue Growth: Over 25% year-over-year increase.
Q3 2024 Revenue Guidance: Between $34 million and $35 million.
Full Year 2024 Revenue Guidance: Between $136 million and $142 million.
Release Date: August 08, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
Veritone Inc (NASDAQ:VERI) reported a 10.7% increase in revenue for Q2 2024, driven by growth in software products and services and managed services.
The company achieved a 47% improvement in non-GAAP net loss year-over-year, reflecting effective cost management and restructuring efforts.
Veritone Inc (NASDAQ:VERI) secured its largest revenue contract to date with the NCAA, highlighting strong performance in the media and entertainment sector.
The company has a robust pipeline in the public sector, with significant traction and new customer acquisitions totaling over $100 million.
Veritone Inc (NASDAQ:VERI) expanded its partnership with AWS, enhancing AI and cloud innovation across multiple sectors, including media and public services.
Negative Points
Veritone Inc (NASDAQ:VERI) experienced a decline in consumption-based revenue, particularly from major customers like Amazon, impacting overall ARR.
The company faces challenges in closing larger deals in the public sector, which could affect revenue projections for the second half of 2024.
Despite improvements, Veritone Inc (NASDAQ:VERI) reported a non-GAAP net loss of $6.9 million for Q2 2024, indicating ongoing financial challenges.
The company is engaged in a formal process to divest non-software assets, but there is no assurance that the transaction will be completed.
Veritone Inc (NASDAQ:VERI) has a high level of consolidated debt, with $166.5 million in principal, which could impact future financial flexibility.
Q & A Highlights
Q: You have made significant strides in reducing your GAAP operating loss and non-GAAP net loss. Do you foresee any impact on future growth from these cost cuts and organizational changes? A: Ryan Steelberg, CEO, stated that the strategy and execution plan have been in practice for over 1.5 years, focusing on future growth drivers like the public sector. The company has found the right mix and organizational structure to continue hitting targets despite cost cuts. Productivity in product and engineering is at an all-time high, evidenced by successful contract bids and high customer retention.
Q: Your projections for 2024 imply a significant improvement in Q4. Should we see this as a return to seasonality in revenue, or is it a new base for future growth? A: Ryan Steelberg, CEO, mentioned that the improvement includes contributions from new public sector contracts and revitalized managed services, particularly advertising. Michael Zemetra, CFO, added that there is some seasonality, especially in consumption-based products and managed services, driven by customer mix. However, it should not be seen as a run rate for Q1 but can be used as a proxy for growth next year.
Q: Can you share more about the progress in divesting the legacy service business and its probability to close? Also, what are your thoughts on material revenue contribution from the public service space? A: Ryan Steelberg, CEO, stated that the company is optimistic about completing the divestiture due to strong asset performance and multiple qualified bidders. Regarding the public sector, Veritone has become an established partner in state and local enforcement and the federal space. The applications and workflows sold are repeatable, allowing for quick customer provisioning, which is promising for future growth.
Q: What is driving the expected growth in Q4, and how does it relate to your overall strategy? A: Ryan Steelberg, CEO, highlighted that growth is driven by new public sector contracts and a revitalization in managed services, particularly advertising. The company is seeing record bookings and new customer acquisitions, which align with their strategy to capitalize on AI adoption and expand their serviceable pipeline.
Q: How does Veritone plan to maintain its momentum in the public sector, and what are the key factors for success? A: Ryan Steelberg, CEO, emphasized that Veritone's success in the public sector is due to its established reputation and repeatable AI solutions built on aiWARE. The company is bullish about its ability to quickly sign and provision new customers, leveraging its expertise in handling complex data environments.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.