Veritone, Inc. Q3 FY2024 earnings call

• Veritone successfully completed the divestiture of Veritone One, a legacy Media Agency business, valued at up to $104 million, which streamlines operations and strengthens the balance sheet.
• In the commercial sector, notable deals include partnerships with NCAA, iHeartMedia, ESPN, Amblin Partners, etc. Veritone Hire weathered market pressures and signed significant contracts in the UK and Australia.
• In the public sector, Veritone's iDEMS solution exceeded expectations, added 13 new public sector customers, expanded distribution channels with partnerships like Nuix and Getac, and made progress with DoD agencies and presidential election impact on prospects.
• The company has achieved over $40 million of annualized cost savings since the beginning of 2023, including over $17 million in fiscal 2024, with a 15% reduction in global workforce.

In the third quarter of 2024, Veritone's revenue was $22 million, down from $28 million in the third quarter of 2023. For Software Products & Services, ARR was $63.3 million, which was down year-over-year. New bookings were $16.5 million, up 17% sequentially from Q2 2024 and 6% year-over-year. Gross revenue retention remained above the 90th percentile. The number of Software Products & Services customers was 3,291, with a slight decrease quarter-over-quarter and year-over-year, predominantly from the commercial sector due to sunsetting legacy customers, offset by growth in the public sector, especially from public safety customers. Revenue contribution from subscription-based customers increased to 76% in Q3 2024 from 53% in Q3 2023.

• Fiscal 2024 full-year revenue is expected to be between $92.5 million and $93.5 million, with non-GAAP loss projected between $37.5 million and $36.5 million. This is due to the divestiture of Veritone One and timing of large public sector deals.
• Fiscal 2025 revenue is expected to be between $107 million and $122 million, representing a 22% increase year-over-year at the midpoint, with non-GAAP net loss between $25 million and $15 million, a 46% improvement at the midpoint. Public Sector is expected to grow 100%-150% year-over-year, and Commercial Enterprise has renewed partnerships and new opportunities.

Forward-looking statements are subject to risks, uncertainties, and assumptions that may cause actual results to differ materially from stated. Risks include uncertainties in achieving the earn-out from the Veritone One divestiture, timing of large public sector deals closing, and market pressures affecting revenue streams.

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: Yeah. It's 100% allocated to timing on Public Sector. And as I mentioned in my prepared remarks, there's potential upside assuming some of these larger deals get pulled into the quarter.

Q: And then maybe as a follow-up, can you give us a bit more of a bridge on acceleration to 2025. I think on our numbers 2024 revenue growth is going to finish around maybe negative 7% on a pro forma basis. And you're guiding 2025 to above 30% at the high end an addition of almost $30 million. So is that all allocated to public deal sector as well? Or maybe there's other spots of improvement that you would call out that we should be cognizant of in our model?

A: Yeah. I think we mentioned the Public Sector growing between 100% to 150% year-over-year. So if you take the residual of that we are expecting growth across commercial sector. But that -- the large portion of growth on a dollar basis will come from the Public Sector.