Veritone, Inc. Q2 FY2025 earnings call

• Revenue of over $24 million for the quarter was at the high end of updated guidance, with strong organic non-Veritone Hire software revenue growth over 45%.
• Secured 104 new software customers, grew VDR pipeline by over 100% from Q1 and over 33% since late June, with near-term VDR pipeline surpassing $20 million.
• Signed sole source contract with U.S. Air Force in June, contributing revenue in 2025 and expected to ramp in 2026 and beyond. Public sector pipeline up to $189 million from $110 million at end of Q1.
• Veritone Data Refinery (VDR) processed millions of hours of video and audio, with qualified pipeline over $20 million, supplying clean training data to hyperscalers and model developers.
• Commercial business continued to accelerate with 11 software enterprise deals in Q2. Hire division had solid performance, with SaaS and media services growing YOY, surpassed annual sales targets as LinkedIn gold partner, and signed 58 new software deals.

Veritone reported revenue of over $24 million for the second quarter, which was at the high end of their updated guidance. Software products and services excluding Veritone Hire grew over 45% year-over-year. Public sector revenue grew over 90% year-over-year. Veritone Data Refinery (VDR) pipeline exceeded $20 million. Managed services declined by $1.9 million primarily due to representation services slowness. Veritone Hire remained relatively flat year-over-year. ARR was $62.6 million, up 7% from Q1 2025. Total new bookings were $15.8 million, up 13% year-over-year.

• Q3 2025 revenue expected between $28 million and $30 million, a 32% increase at midpoint from Q3 2024. Software products and services expected to grow over 45% YOY, public sector over 50%, commercial led by VDR over 45%.
• Q3 non-GAAP gross margins expected around 61% to 63% due to higher VDR revenue mix. Non-GAAP net loss projected between $6 million to $6.5 million, a 43% improvement at midpoint from Q3 2024.
• Fiscal 2025 revenue guidance $108 million to $115 million, a 20% increase YOY at midpoint. Non-GAAP net loss guidance $30 million to $25 million, reflecting timing shifts in revenue and VDR margin compression.

• Managed services expected to continue declining due to representation services slowness linked to macroeconomic challenges.
• Dependence on key contracts and projects, with delays in certain public sector deals impacting financials.
• Competition from other AI platforms and rapid advancements in generative AI posing potential challenges to market position.

Q: How does Veritone differentiate in regulated industries like defense and law enforcement versus broader AI platforms?

A: Veritone's aiWARE platform is agnostic to models, can manage the full end-to-end stack, and has scale in tokenizing unstructured data. It's platform-agnostic, can run in network isolated environments, and maintains long-term relationships with customers as models advance.

Q: Can you quantify the VDR pipeline and its translation to revenue?

A: The near-term VDR pipeline is over $20 million with high visibility in 3 to 12 months. VDR is working with major hyperscalers and model developers, and while the space is dominated by top players, Veritone is engaged with nearly all and expects to formalize partnerships with major hyperscalers by end of 2025.

Q: What's the outlook for 4Q growth given public sector growth in 3Q?

A: While not giving specific guidance, the growth in 3Q public sector suggests significant uptick in 4Q, with the Air Force contract being a vehicle for a good portion of that growth, but not dependent on a single contract.

Q: What's the delta of go get to meet 3Q guide?

A: Right now, the delta of go get to hit the 3Q guide midpoint is the smallest it's ever been, with a lot of deal flow already in the works, including VDR and deployed Air Force contract phases ramping up.