Earnings call transcript: Veritone Inc. Q2 2025 reports revenue growth

Veritone Inc. (VERI), a $130.6 million market cap AI technology company, reported its financial results for the second quarter of 2025, showcasing a robust performance in its software and public sector segments. The company posted a revenue of $24 million, surpassing forecasts of $21.91 million. Despite a significant EPS miss, with actual EPS at -$0.54 against a forecast of -$0.18, the market reacted positively, with premarket trading showing a 6.49% increase in stock price. According to InvestingPro, the stock has demonstrated significant volatility, with 12 key investment insights available to subscribers.

Key Takeaways

• Veritone’s Q2 2025 revenue reached $24 million, beating forecasts.
• The company experienced a substantial year-over-year growth in software (45%) and public sector revenues (over 90%).
• Premarket trading showed a 6.49% increase in stock price following the earnings release.

Company Performance

Veritone Inc. demonstrated strong performance in Q2 2025, with revenues remaining flat year-over-year but exceeding expectations. The company’s growth was driven by its software products and services, which saw a 45% increase, and its public sector division, which grew by over 90%. This performance underscores Veritone’s strategic focus on expanding its AI solutions and partnerships. InvestingPro analysis indicates the company is currently undervalued, though it operates with a significant debt burden of $119.5 million and faces rapid cash burn challenges.

Financial Highlights

• Revenue: $24 million (flat year-over-year)
• Earnings per share: -$0.54 (compared to forecast of -$0.18)
• Gross margins: 63.9% GAAP, 68.9% non-GAAP
• Annual Recurring Revenue (ARR): $62.6 million (up 7% from Q1)

Earnings vs. Forecast

Veritone reported an EPS of -$0.54, missing the forecast of -$0.18, resulting in a 200% surprise. However, the revenue of $24 million surpassed the forecast of $21.91 million, marking a 9.54% surprise. This mixed result reflects the company’s ongoing investment in growth areas and cost management strategies.

Market Reaction

Following the earnings release, Veritone’s stock price increased by 6.49% in premarket trading, reaching $2.46. This positive movement suggests investor confidence in the company’s growth prospects, despite the EPS miss. With a beta of 2.82 and average daily trading volume of 1.73 million shares, the stock exhibits significant volatility compared to the broader market. The stock’s performance aligns with broader positive trends in the AI sector, indicating strong market sentiment. For detailed analysis and valuation metrics, investors can access the comprehensive Pro Research Report available on InvestingPro.

Outlook & Guidance

Veritone provided optimistic guidance for Q3 2025, projecting revenues between $28 million and $30 million, a 32% year-over-year increase. For the full year 2025, the company expects revenues between $108 million and $115 million. The public sector is anticipated to grow by 100-150%, driven by new partnerships and contracts.

Executive Commentary

CEO Ryan Stielberg emphasized the company’s strategic focus, stating, "VDR could be lightning in a bottle," highlighting the potential of their new Veritone Data Refinery product. He also noted, "We are translating demand into tangible and sustainable growth," reflecting confidence in the company’s direction.

Risks and Challenges

• Continued net losses could impact long-term financial stability.
• Competition in the AI sector remains intense, requiring ongoing innovation.
• Economic uncertainties might affect public sector spending and partnerships.

Q&A

During the earnings call, analysts inquired about the VDR pipeline, which now exceeds $20 million, and the potential for broader Department of Defense opportunities. The management expressed confidence in meeting Q3 revenue guidance and emphasized the strategic importance of their Air Force contract as a gateway to further DoD engagements.

Veritone’s Q2 results and strategic initiatives indicate a promising trajectory, with strong growth in key sectors and positive market reception, despite the EPS miss.

Full transcript - Veritone Inc (VERI) Q2 2025:

Conference Operator: Good day, and welcome to the Veritone Inc. Second Quarter twenty twenty five Financial Results Conference Call. All participants will be in listen only mode. After today’s presentation, there will be an opportunity to ask questions. Please note this event is being recorded.

I would now like to turn the conference over to Kate Goldsmith. Please go ahead.

Kate Goldsmith, Investor Relations, Veritone Inc.: Thank you and good afternoon. After the market closed today, Veritone issued a press release announcing results for the second quarter twenty twenty five, which ended 06/30/2025. The press release and other supplemental information are available on the Investor Relations section of Veritone’s website. Joining us for today’s call are Veritone’s President and Chief Executive Officer, Brian Stielberg and Chief Financial Officer, Mike Symetra, who will provide prepared remarks and then open the call up for a live question and answer session. Please note that certain information discussed on the call today, including certain answers to your questions, will include forward looking statements.

This includes, without limitation, statements about our business strategy and future financial and operating performance. These forward looking statements are subject to risks, uncertainties and assumptions that may cause the actual results to differ materially from those stated. Certain of these risks and assumptions are discussed in Veritone’s SEC filings, including its annual report on Form 10 ks. These forward looking statements are based on assumptions as of today, 08/07/2025, and Veritone undertakes no obligation to revise or update them. During this call, the actual and forecasted financial measures we will be discussing include non GAAP measures.

Reconciliations of these measures to the corresponding GAAP measures are included in the press release we issued today. Finally, I would like to remind everyone that the call today is being recorded and will be made available for replay via a link on the Investor Relations section of Veritone’s website at www.veritone.com. Now I would like to turn the call over to our President and Chief Executive Officer, Ryan Stielberg.

Ryan Stielberg, President and Chief Executive Officer, Veritone Inc.: Thank you, Kate, and thank you everyone for joining us this afternoon. I’m excited to speak with you about our recent quarter and our overall progress we’ve made against our strategic business priorities. I will start with an update on our exciting results and progress against our growth plans, and then Mike will cover our financials in more detail. We are thrilled to report that our revenue of over $24,000,000 for the quarter came in at the high end of our updated guidance in June and is a testament to the demand for our aiWARE platform and our market leading AI applications and solutions. Our results demonstrate strong organic non Veritone higher software revenue growth of over 45% in the quarter and we expect this growth rate to continue through the balance of the year.

Veritone is definitively growing again, and this growth is being led by our core AI software solutions spanning both commercial and public sector business lines. Since co founding Veritone in 2014, I can confidently say that there has never been a more exciting moment for our company than right now. We are translating demand into tangible and sustainable growth, and what makes this even more compelling is that our fastest growth areas, including Veritone Data Refinery, or VDR, and public sector not only delivered strong results but also represent our largest pipelines and most expansive addressable markets in our history. We are building momentum in all the right areas, and the opportunity ahead of us has never been greater. In the quarter, we secured 104 new software customers and grew our VDR pipeline by over 100% from Q1 and over 33% just since our late June business update.

The near term VDR pipeline now surpasses $20,000,000 as the demand for high quality training data across both our commercial and public sector verticals remains very strong. We have also broken through with yet another major DoD agency with the signing of our sole source contract with the U. S. Air Force in June. This deal is already contributing revenue in 2025, and we expect it to ramp significantly in 2026 and beyond.

Our public sector pipeline is now up to $189,000,000 up from $110,000,000 at the end of the first quarter. Overall, it has been a fantastic momentum building quarter as we transition into the second half of the year. Our recently announced cost saving initiatives, which are expected to generate $10,000,000 in annualized savings, together with our $10,000,000 equity offering we completed in June, have strengthened our financial position and enhanced our ability to execute our strategy and focus on driving growth. Mike will provide more detail on these efforts and their impact across our core commercial and public sector verticals shortly. Now I want to provide an updated perspective on the AI landscape and our market opportunity.

The AI landscape is indeed evolving rapidly. While enterprise wide generative tools like Copilots and chatbots have scaled quickly, function specific applications remain mostly in pilot mode. This GenAI paradox, as McKinsey describes it, underscores a gap between broad adoption and truly transformative use cases. Agentic AI aims to close this gap, shifting from reactive LLM centric tools to proactive goal driven agents capable of autonomous workflow execution. These agents combine planning, memory, and reasoning capabilities, but also pose new challenges around governance, data fragmentation, and effective monitoring and control.

Scaling them effectively requires an infrastructure designed for trust, interoperability, and flexibility across different vendors. This has been and remains Veritone’s clear opportunity. Our aiWARE platform provides a scalable, secure, and model agnostic foundation for ingesting and operationalizing both structured and unstructured data across disparate enterprise systems securely and at scale. This architecture aligns directly with the emerging AgenTik AI mesh, where multiple AI agents interact, collaborate, and continuously learn while maintaining visibility and control. As organizations move towards more adaptive workflow driven AI, Veritone offers the infrastructure and purpose built aiWARE platform to power that evolution, unlocking operational agility, smarter operations, and new revenue opportunities.

AiWARE also uniquely positions Veritone to capture one of the most compelling opportunities in the evolving AI value chain, training data. As reported just last week by The Wall Street Journal, Big Tech will spend over $400,000,000,000 this year on AI CapEx and OpEx in what has become a new tech arms race. As next generation LLMs and multimodality models become more sophisticated, demand for high quality domain specific training datasets has surged. Industry estimates suggest that approximately $3,000,000,000 will be spent this year alone by fewer than 50 companies, including the major hyperscalers, on acquiring and preparing training data and is expected to grow to over $17,000,000,000 by 02/1932. Veritone is uniquely equipped to serve this market through our VDR solution, which transforms massive volumes of unstructured video, audio, and text into centralized license ready datasets for internal use or external model training.

In the 2025, VDR greatly exceeded our expectations in both adoption and revenue contribution. Data customers across both our commercial and public sector verticals, ranging from major media networks to public institutions, are using VDR to extract new value from both current and legacy data archives, which often are underutilized, some dating back over a decade. On the buy side, VDR is now directly supplying clean, structured training data to some of the world’s largest hyperscalers and AI model developers. In many ways, VDR represents the next generation solution for unstructured training data, building on what data labeling companies like Scale AI, recently acquired by Meta for over $30,000,000,000 and Shutterstock have done for the training data economy. Veritone’s differentiation lies in our ability to process complex and diverse media types and modalities like audio and video at tremendous scale.

In the second quarter alone, Veritone aiWARE processed millions of hours of video and audio, or in data science speak, over 5,000,000,000,000 tokens. Through multimodal tokenization, Veritone efficiently transforms these millions of hours of unstructured video and audio assets into the foundation training blocks of intelligent systems. Our aiWARE powered pipeline enables transformer based sequence modeling and other training methods using discrete audio and video tokens, bringing enterprise grade media into the era of AI. Whether it’s leveraged for third party model training, fine tuning enterprise customers’ models, or even for training Veritone’s proprietary internal models, we are providing a modern day AgenTex stack for customers around their audio, video, and text data. As I mentioned earlier, our qualified VDR pipeline now exceeds $20,000,000 up from $15,000,000 at the June and more than doubling since early May.

This growth reflects both expansion with existing customers as well as new agreements with leading hyperscalers and foundational model developers. We expect to formalize partnerships with nearly all of the major hyperscalers by the 2025. The growth in our commercial business continues to accelerate, driven by a growing demand for our differentiated AI powered software and managed services. We enable IP owners to unlock the full value of all of their media libraries by making them searchable, discoverable, and monetizable across a range of channels, including advertising, broadcasting, documentary production, TV and film projects, and internal initiatives. In the second quarter, Veritone Commercial successfully closed 11 software enterprise deals with clients such as Inter Milan, Lavra Cup, United States Soccer Federation, Alpha Media, St.

Louis Zoo, ESPN, and the Big Ten Network. These agreements underscore the continued expansion of Veritone’s software as a service offerings and highlight the critical role of our AI solutions and AI differentiated managed services in supporting our customers. Turning to the public sector. The major highlight this quarter is our multi year agreement with the U. S.

Air Force to deploy our aiWARE platform and Intelligent Digital Evidence Management System or IDEMS. We will provide the Air Force with advanced investigative and information capabilities to enhance and accelerate data analysis for investigative activity across diverse mission areas. This contract represents a material portion of our sales pipeline and represents a strong alignment between our capabilities and the mission critical needs of our federal partners. We have already begun recognizing revenue from this contract in 2025, with revenue contributions expected to accelerate meaningfully in 2026. This latest sole source award with the Air Force represents our third contract with this agency and greatly expands the scope of our partnership.

Our work with the DoD’s Defense Logistics Agency also continues to expand. Our task orders with the DLA, funded under the Jet two point zero IDIQ, specifically require contractors to be competent in the use of Veritone applications, which has resulted in a number of contracted service providers entering into reseller agreements with Veritone IDEMS for new opportunities. In conjunction with our recently achieved awardable status through the Department of Defense’s P1 solutions marketplace, we are realizing accelerated opportunities to expand our work with the DoD and other areas of federal, state, and local government and agencies. In the second quarter, we signed 35 new public sector customers, including the Riverside County Sheriff’s Department and a top five police agency in The United States. Additionally, we signed 95 renewal contracts in the quarter, further validating the mission critical nature of our aiWARE software and strong customer retention.

We are confident that Veritone is well positioned to take advantage of the surge in AI spend by our government as use cases and demand for our solutions and AI continue to grow. Our direct public sector pipeline has grown to nearly $200,000,000 With defense technology spending projected to approach $1,000,000,000,000 and the administration’s prioritization of AI innovation highlighted by the White House’s recent AI action plan, we see significant additional business opportunities in the public sector both this year and beyond. Turning to our Hire division. The second quarter delivered solid performance across multiple key areas. The strategies implemented to navigate the challenging hiring market yielded positive outcomes, resulting in year over year growth for our SaaS and media services, formerly known as Broadbeam, and exceeding our Q2 revenue targets.

We also surpassed annual sales targets and achieved record growth in media service revenue in our inaugural year as a LinkedIn Gold Partner. With our programmatic business slated to conclude its LinkedIn pay for performance and apply connect integrations in early Q3, we expect to benefit from these efforts across our entire portfolio. These investments with LinkedIn will enable us to continue delivering substantial value to clients and strengthen our collaboration with LinkedIn, the new global market leader. We signed 58 new software deals in the quarter, including some of our most significant deals to date, while also building a more robust pipeline that could lead to even more positive results in the second half of the year, particularly in Q4, which traditionally is our strongest quarter for media deals in the higher division. Another major higher initiative focused on expanding our SaaS revenue through enhanced ATS partnerships and integrations is also gaining momentum and shows considerable promise for the SaaS revenue growth.

At the close of Q1, we executed our most critical partnership agreement to date with Workday. This elevated us to the highest platinum level of partners and created substantial opportunities for co selling and lead generation with the global leader in the market. In our first active quarter, our lead pipeline with Workday clients exceeds $1,000,000 in contract value, despite the nascent stage of lead and deal flow. We finalized 11 new Workday client deals this quarter. Furthermore, new integrations with major global ATSs, as well as our partnership with the integrations marketplace combo will provide Veritone Hire access to over 100 new ATS integrations in Q3 and beyond.

We successfully concluded several notable deals this quarter with global corporations such as KPMG, Dauer, Faden, CBRE and Suncorp, among others. Before turning things over to Mike, I want to congratulate our team for their strong performance and perseverance. Veritone is growing again, and we remain very bullish on our future. Our pipeline is the largest it has ever been, led by public sector and BDR, and our AI software revenue growth is accelerating. Now, Mike, over to you.

Mike Symetra, Chief Financial Officer, Veritone Inc.: Thank you, Ryan. We continued our strong momentum in the 2025 with solid financial results in Q2. Revenue came in at the top end of our recent guidance with our software products and services, excluding Veritone Hire, growing over 45% year over year, driven by strong performances across our public sector and commercial enterprise. We ended Q2 with solid customer metrics and contributions made across our software products and services and managed services. As we enter the 2025, we remain very confident on the future growth prospects across our core software products and services, which I will explain in more detail.

During my prepared remarks, I will discuss Q2 year over year performance and KPIs, which exclude the results of our media agency, which are presented as discontinued operations in the corresponding historical financial periods, balance sheet and liquidity position, and Q3 and fiscal twenty twenty five guidance. Starting with Q2 twenty twenty five performance. Q2 revenue was slightly over $24,000,000 which was flat from Q2 twenty twenty four, principally due to a $1,100,000 increase from our software products and services, offset by a $1,900,000 decline in our managed services. The $1,800,000 revenue growth in our software products and services was driven by our public sector, which grew over 90% year over year, coupled with the commercial enterprise software products and services revenue that improved $800,000 year over year. The growth in the public sector was driven by execution of larger deals in Q2 twenty twenty five including the Department of Defense and larger public safety agencies, including a top five law enforcement agency in The U.

S. And Riverside County. We expect these larger public sector deals coupled with our expanding public sector pipeline to generate substantial growth in 2025, which I will explain in more detail. The growth in commercial enterprise was led by Veritone Data Refinery or VDR. VDR, launched in Q4 twenty twenty four, is one area where we anticipate substantial year over year growth throughout the remainder of fiscal twenty twenty five and today has a near term sales pipeline over $20,000,000 up over 100% from our guidance in Q1 twenty twenty five.

The $1,900,000 decline in Q2 managed services was principally driven by a $2,000,000 decline in representation services driven by declines in our very ad services and a one time live event campaign of $1,000,000 in Q2 twenty twenty four, which did not recur in Q2 twenty twenty five, offset by a $100,000 improvement in licensing. As we previously discussed, we expect this negative trend in representation services to continue throughout 2025 or until the macro economy shows demonstrated improvements over 2024. Overall, Veritone Hire remained relatively flat year over year, driven largely by the hiring softness in the macro economy. Excluding Veritone Hire, our software products and services grew over 45% year over year. Turning to key performance metrics across our software products and services in Q2 twenty twenty five.

ARR of $62,600,000 up 7% from Q1 twenty twenty five of 58,700,000.0 and down year over year from the expected declines in consumption based revenue from customers across our hiring software products and services over the trailing twelve months. Overall, ARR from recurring subscription based SaaS customers was up slightly by 2% year over year. As of Q2 twenty twenty five, eighty one percent of our ARR was from subscription versus consumption based customers, up from 74% at Q2 twenty twenty four and flat sequentially from Q1 twenty twenty five. Total new bookings of 15,800,000.0 up 1,800,000.0 or 13% year over year primarily due to larger renewals across our software customer base. Gross revenue retention continued to be above the ninetieth percentile and total software product and service customers of 3,067, which was down 9% year over year, predominantly from our commercial enterprise sector, which includes lower consumption based customers from Veritone higher and the continuing impact of sunsetting legacy CareerBuilder customers post the June 2023 acquisition of Broadbeam and a smaller customer as we focus on larger ARR opportunities offset by an increase across public sector largely from growth in public safety customers.

Q2 GAAP gross profit was $15,300,000 compared to $16,400,000 in Q2 twenty twenty four, a decline of $1,100,000 largely driven by the higher mix of lower margin revenue in Q2 twenty twenty five with GAAP gross margins of 63.9% as compared to 68.2% in Q2 twenty twenty four. Excluding non cash depreciation and amortization expense 2025 non GAAP gross margins 68.9% as compared to 73.6% in Q2 twenty twenty four, a decline of four seventy basis points largely due to the decline in higher margin consumption based revenue coupled with a higher mix of lower margin revenue. Note that in Q2 twenty twenty five, BDR gross margins were approximately 40%. We expect that as the BDR product matures, margins will initially be similar to Q2, but should expand into late twenty twenty five and 2026 as we grow and diversify the mix of our content offerings. Q2 operating loss of $19,300,000 improved by $1,000,000 or 5% year over year primarily driven by lower operating expenses offset by a lower non GAAP gross profit from the decline in revenue over the same period.

Net loss from continuing operations $26,800,000 an increase of $3,400,000 or 14.5% as compared to Q2 twenty twenty four. The year over year increase was principally driven by a $3,400,000 change in the estimated fair value of earn out from the divestiture of Veritone One recorded in Q2 twenty twenty five. Non GAAP net loss from continuing operations was 8,700,000.0 as compared to 9,700,000.0 in Q2 twenty twenty four and 11,100,000.0 in Q1 twenty twenty five. The improvement was principally due to lower operating losses driven by increased discipline on cost management offset by lower non GAAP gross profit. Further in June 2025, we initiated up to $8,000,000 of a targeted $10,000,000 annualized cost reduction through reductions in personnel and improvements in our operating structure including our platform costs.

These cost reductions were initiated in part due to the softness in our managed services, coupled with delays in certain public sector deals that were expected to close earlier in 2025. As I will explain further, these reductions should provide us a more efficient cost structure as we manage towards our planned growth in the 2025 and profitability into 2026 and beyond. Turning to our balance sheet. As of 06/30/2025, we held cash and restricted cash of $13,900,000 as compared to $17,300,000 at 12/31/2024. The net change in cash reflects net cash outflows from operations of $25,200,000 principally driven by our non GAAP net loss of $19,800,000 deferred purchase consideration of $1,200,000 and interest paid on debt of approximately 3,000,000 coupled with the timing of working capital in the quarter, offset by net cash inflows from investing and financing activities of $23,000,000 driven by net cash inflows of 29,900,000.0 from our January and June 2025 registered direct offerings, partially offset by 3,900,000.0 in debt principal payments and 2,300,000.0 in capital expenditures.

Turning to liquidity today. On 06/30/2025, we completed a registered direct offering, selling 6,500,000.0 shares of common stock priced at $1.09 per share and $1,800,000 of prefunded warrants priced at $1.08 per share for gross proceeds of approximately $10,000,000 Of the total funding, $3,000,000 of the gross proceeds was received in July 2025. Included in the funding was $1,000,000 from our CEO, Ryan Stielberg, which will price at the greater of $1.41 per share, which was the closing price of Veritone stock on 06/27/2025, or the closing price of Veritone stock two trading days following the filing of our Q2 Form 10 Q. At 06/30/2025, our consolidated debt is down from a peak of $2.00 1,000,000 in December 2021 to approximately $128,000,000 today, comprised of term debt of approximately $37,000,000 maturing in December 2027 and convertible debt of $91,300,000 due November 2026. As of today, we have over $25,000,000 available across our $35,000,000 ATM, which was established in November 2024.

That said, we are currently exploring potential financing structures, including discussions with our current debt holders, which we believe could improve our current liquidity position and balance sheet. At 06/30/2025, we had 47,600,000.0 shares issued and outstanding and 2,500,000.0 warrants outstanding to our debt holders. Now turning to updated fiscal Q2 twenty twenty five and full year 2025 guidance. Our software products and services revenue pipeline and long term outlook continue to be at all time highs. More specifically, we continue to see strong demand across the approximate $10,000,000,000 global digital evidence management market.

In the public sector alone, we are beginning to march towards our 100% to 150% revenue growth target for fiscal year twenty twenty five. In Q2, we announced we were awarded a sole source contract with the Air Force Office of Special Investigations, or OSI. Under the contract, the company’s AI powered solutions including IDEMS will provide OSI with advanced investigative intelligence and counterintelligence capabilities in support of the DoD and interagency mission requirements. During Q2 twenty twenty five, we began to recognize revenue on the award. This is the initial deployment with plans to roll out our IDM solution across the broader DoD investigative and branches over the next several years.

While we cannot discuss the magnitude or exact specifics of this deal, it will serve as a substantial growth driver of our public sector revenue in 2025 and 2026. We also remain in near term contract basis on several large projects with various facets of the U. S. Federal government and international public safety customers with a near term sales pipeline in excess of 180,000,000 As previously noted, on the commercial side, we are seeing strong and increasing demand for our VDR product. More specifically, we are in active discussions with the largest hyperscalers on various VDR initiatives, some of which are near term agreements that approach or exceed $10,000,000 individually and others are longer term partnerships where we are being positioned to serve as their provider of choice across their BDR initiatives.

Our near term sales pipeline on VDR, which launched in the 2024, is now over $20,000,000 which is an increase of 100% or $10,000,000 since March since the June 2025. More specifically, in Q3 twenty twenty five, revenue is expected to be between $28,000,000 and $30,000,000 as compared to $22,000,000 from Q3 twenty twenty four, a 32% increase at the midpoint and 21% sequentially from Q2 twenty twenty five. In Q3, we expect our software products and services to increase over 45% year over year, led by growth in the public sector and commercial enterprise. Specifically, we expect our public sector revenue to grow over 50 year over year and our commercial revenue led by VDR to grow over 45%. Included in this growth is our hiring products and services, which we expect to be relatively flat year over year given the current macroeconomic environment.

Consistent with Q2 twenty twenty five, our managed services is expected to be down year over year, principally due to the representation side of our business, which has experienced some slowness as a result of the more challenging macro environment. We expect Q3 non GAAP gross margins to be around 61% to 63%, driven by the forecasted higher mix of VDR revenue in the period. Q3 non GAAP net loss is projected to be between $6,000,000 to $6,500,000 as compared to $11,100,000 in Q3 twenty twenty four, representing a 43% improvement at the midpoint and a 28% improvement sequentially from Q2 twenty twenty five. Turning to fiscal twenty twenty five outlook. We are updating our prior guidance for fiscal twenty twenty five, which we are expecting revenue to be between 108,000,000 to $115,000,000 which at the midpoint represents a 20% increase year over year.

The change in our outlook is principally driven by the confidence in some of our more larger growth initiatives across the public sector and commercial BDR, coupled with a forecasted decline in managed services reflecting the more challenging macro market today. And non GAAP net loss to be between 30,000,000 to $25,000,000 representing a 33% improvement year over year at the midpoint. The change is reflected of the timing, shifts in revenue, coupled with the compression in gross margins on VDR in 2025, which we expect to improve upon fiscal twenty twenty six. Before closing the call, I’d like to remind everyone listening that Veritone will be attending H. C.

Wainwright’s twenty seventh Annual Global Conference, September in New York City. That concludes my prepared remarks. Operator, we would now like to open up the call for questions.

Conference Operator: We will now begin the question and answer session. And your first question comes from Scott Buck with H. C. Wainwright. Please go ahead.

And your next question comes from Jesse Silvinson with D. Borrow Capital. Please go ahead.

Jesse Silvinson, Analyst, D. Borrow Capital: Thanks for taking my questions here. I think the big thing, this is a great quarter doing exactly what you guys said you’re going to do. You’ve got this guidance for the rest of the year that points to some pretty significant acceleration in the growth rate. I mean, I’m talking midpoint near 30% year over year here. While you’ve provided a lot of detail on growing the business, designing the contracts within the public sector, the growth in the pipeline, Can you guys elaborate on what specifically needs to convert, whether it’s revenue recognition from this Air Force contracts or any VDR pipeline signings that need to happen to support this step up in the acceleration that we’re seeing guided for the top line?

I’m just kind of curious what gives you the level of confidence into the visibility you have, for that acceleration? Thank you.

Ryan Stielberg, President and Chief Executive Officer, Veritone Inc.: Thank you, Jesse. I think as we sit here right now, we probably have our smallest gap of Go Get revenue to realize, that guide for Q3, and I say a bunch of that already in terms of bookings and visibility, for the balance of the year. So again, as we sit here today, in the end of the first week in August, our delta of GoGet to hit that guide midpoint and hopefully the high end, is the smallest it’s ever been. The other way of saying that is sort of the contracted opportunities and the businesses, and opportunities that we’re currently servicing will support the balance of that opportunity for revenue. So again, we have the customers, we are transacting as Mike and I both mentioned, we’re already generating revenue from these new DoD contracts, we’re already generating revenue from these new customers with VDR.

So we’re very, very excited. We’ve been sort of waiting for this to happen and they’re all kind of hitting on all cylinders right now.

Jesse Silvinson, Analyst, D. Borrow Capital: Awesome. That’s really great detail. It’s really exciting to see. We’re excited here too. I guess I’ll just back up and ask a broader level question here as well and then take a step back.

But just within AI, everything’s moving very fast. There’s very rapid advancements and even generative AI. How do you view Veritone’s differentiation particularly in these regulated industries like defense and law enforcement versus the broader AI platforms out there such as like Palantir, Microsoft or other open source options?

Ryan Stielberg, President and Chief Executive Officer, Veritone Inc.: I think first and foremost, and this goes back all the way to our founding, we kind of and thankfully had a vision that AI based models were going to become commoditized over time. There’ll be thousands of vision models, there’ll be thousands of speech models, and even today there’s hundreds of next generation LLMs and multimodal models. The key is having a platform, aiWARE that in effect can manage the full end to end stack, but be agnostic to these models or independent of these different models. Meaning customers like iHeartMedia and others, they’ve been customers for many years. We own, I’ll say, the software platform application layer with these entities and so as models advance they don’t have to go anywhere, so they can rely on the full technology stack of Veritone and aiWARE as the models mature.

The one thing though that was kind of a byproduct, and candidly, and VDR is kind of a culmination of the scale that we’ve been accumulating over the last decade. But, as you’ve just read, through and a good parallel is what Altman just described when OpenAI opened a couple of their weighted models as many of us have read about, what they didn’t open source was their training data, right, which is really interesting. And so what that points to is when you think about Veritone and why we are such strategic partner and able to not only maintain these long lasting relationships with customers, but able to bring on net new big customers. It is not just about the understanding the orchestration of the AI and the models, but it’s also understanding the unstructured data at huge scale. I gave a little tease in my speech which we’re going to follow-up on and talk a lot more over the next few weeks, but our scale of tokenizing audio and video and other forms of unstructured data is at huge scale.

I actually mentioned that we in effect tokenized or in effect realized over 5,000,000,000,000 of, in terms of scale for audio and video processing just in Q2. You based upon the research, if you kind of look at what it took to build these other foundational models that’s massive scale and frankly that was just in one quarter. So again, our differentiation is not just understanding and making a very early bet that there were going to be hundreds, thousands, millions of AI models, but we made a bet that it’s going to be you need to have the orchestration of not just the models, but the true understanding of the end to end platform that can manage the unstructured and structured data at the same time. The last thing I’ll put a little bow on that is we’re platform agnostic. We’re not limited to a single cloud provider.

Our platform has now been successfully deployed in air gapped network isolated environments. So not only can we run this readily available in public clouds, in government clouds, but we can also run it in network isolated, environments and even on prem, which is a big differentiator.

Conference Operator: Great.

Jesse Silvinson, Analyst, D. Borrow Capital: Thank you very much.

Glenn Mattson, Analyst, Ladenburg: Thank you.

Conference Operator: And your next question comes from Glenn Mattson with Ladenburg. Please go ahead.

Glenn Mattson, Analyst, Ladenburg: Hi, yes. Thanks for taking the question and congrats on the quarter. First on IDEMs, in the past you’ve spoken about multiple kind of I think you’ve said seven or eight figure kind of multi year size deals. The win in the Air Force is a significant one clearly. I guess partly I’m curious, do you need to close more of those style deals to meet your guidance for the year you reiterated?

So I’m guessing you feel pretty comfortable there. But also just can you speak to like what winning that contract and what it means for these next contracts? Does it get easier to close them as you get more reference customers of that size? Any color that would be great.

Ryan Stielberg, President and Chief Executive Officer, Veritone Inc.: Yes. Well, I’ll pick those off. First, of course, our ability, to point to a very large multifaceted contract with the Air Force spreads quickly, and we can attest and what we kind of spoke to is that we are seeing a multitude of different opportunities and inbound demand, spread quickly across the DoD and even outside the DoD because of the Air Force contract announcement. And that’s I’d say commensurate with any other type of business. So referral and having that public disclosure is very, very important.

The second thing is relative to our pipeline, the OSI Air Force contract alone presents a great huge opportunity for years to come. And remember the Air Force and the group that we’re working with, yes, it’s today kicking off with OSI, but this is an entity, that is really taking the charge in some areas the lead on expanding this overhaul of the government’s law enforcement and counter terrorism opportunities into other agencies as well. So yes, and this opportunity, for us really is the tip of the iceberg for expansion, just in areas of use cases for investigations and counter terrorism. We expect this to expand into other agencies as well. So, we do have a healthy pipeline that crosses over into many other areas of DoD.

Again to sort of be specific to your question is, we have enough meat if we can just execute on frankly the kind of customers that we already have. I think we’re pretty confident to hit many of our goals. That being said, as we attested to a material increase in the size of our pipeline, we are bringing on more and more new customers as we mentioned 35 new customers in public sector in the previous quarter and we expect that to continue to accelerate here over the next few quarters.

Glenn Mattson, Analyst, Ladenburg: You also mentioned a top five public safety customer. Can’t recall if you’ve mentioned that the past or not, but can you give any more color around

Seth Gilbert, Analyst, UBS: kind

Glenn Mattson, Analyst, Ladenburg: of agency and what the use cases are that kind thing?

Ryan Stielberg, President and Chief Executive Officer, Veritone Inc.: It’s a IDEM customer. It’s one of the biggest law enforcement agencies in the world. We’re not at liberty to give specific names, but let’s just say hopefully we’re closing, some homicide and murder investigations, leveraging our next generation AI based software here, but we’re thrilled and we’re all excited about our DoD efforts, but our state and local law enforcement business continues to grow and thrive as well and the Sheriff Department which we talked about and also this police agency, is kind of a good representation of the demand for our solutions in SLED as well.

Glenn Mattson, Analyst, Ladenburg: One more if I could squeeze in on VDR. You talked I think the pipeline you think it’s $20,000,000 now. Can you quantify just give some more color on that how you come up with that number and what that means to translate to revenue? I know in that pie chart on your slide deck, you upped the range, the higher end of the range kind of. Can you just kind of help us understand like the bridge between that and revenue and the Yes.

Ryan Stielberg, President and Chief Executive Officer, Veritone Inc.: So I think as Mike articulated in his remarks, that near term pipeline is kind of qualified as $20,000,000 with high visibility between the next three to twelve months. You know, the VDR could just continue to grow and grow and grow. I think we’ve really hit a perfect use case sweet spot. As I articulated in my remarks, you know, I really do believe Veritone has created a more technology version for unstructured data that Scale AI did in others, in primarily legacy data labeling efforts to help train data. We are working with many of the largest hyperscalers and model developer companies today.

So we are representing them in providing and helping them train their next generation AI models and the budgets are massive. So again, we are being successful. I’ve, it’s probably I’m very excited about public sector. I’m very excited about DoD, but VDR could be lightning in a bottle. Still a lot more work to do, but I think we’ve got great product market fit right now and it’s pedals down on sort of our bullishness for VDR.

Glenn Mattson, Analyst, Ladenburg: Thanks for all that color and congrats.

Ryan Stielberg, President and Chief Executive Officer, Veritone Inc.: Thank you.

Conference Operator: And your next question comes from Seth Gilbert with UBS. Please go ahead.

Seth Gilbert, Analyst, UBS: The full year guide by $4,000,000 and reduce the high end of the non GAAP net loss by $5,000,000 So just curious if you could talk about where you’re making investments or is there anything you didn’t anticipate in 2H on that cost side?

: Can take this one. Yes, the first

Ryan Stielberg, President and Chief Executive Officer, Veritone Inc.: did you hear the first part of that, Mike? I didn’t hear the first part of the question.

Conference Operator: But if you got it. I didn’t hear the first part,

: but yes, I think I can articulate it.

Seth Gilbert, Analyst, UBS: Can repeat it if you need.

: Yes. Just in terms of the non GAAP net loss, what I explained is just kind of the velocity of BDR and the compression on margins. And so while we raised the top end of the revenue guide, we tightened on the lower end or I guess the higher end on the non GAAP net loss, as a result of that margin compression.

Seth Gilbert, Analyst, UBS: Got it. Sorry, I was switching between a few calls. Maybe one more. If the public sector grows 50% in 3Q, which I believe I heard you say on the call, then in order to get to the 100% to 150% year over year guide for the year, you need to grow the public sector by about $3,000,000 quarter over quarter or maybe almost 300%. So I’m just wondering if that’s fair to assume a big uptick in 4Q?

Is it all from the DoD revenue kind of maybe hitting in 4Q? Thank you.

: Yes. On 4Q, I mean, we’re not giving specific guidance, but I think your math is probably directionally accurate. And it’s not dependent on a single contract, but that contract obviously is a vehicle for a good portion of that growth.

Seth Gilbert, Analyst, UBS: Got it. Thank you.

Conference Operator: And your next question comes from Scott Buck with H. C. Wainwright. Please go ahead.

Glenn Mattson, Analyst, Ladenburg: Hi, good afternoon guys. I appreciate the time. The 3Q guide suggest a nice sequential step up in revenue. I’m curious what do you think you kind of have in hand versus what you have to go out and earn here over the next couple of months to meet the midpoint of that guide?

Ryan Stielberg, President and Chief Executive Officer, Veritone Inc.: Scott, as I kind of mentioned earlier, may have been off the call, but, I said right now, we probably have the smallest delta of go get, that we’ve really had in any quarter. We have a lot of the deal flow kind of in the works already either under contract and just delivering executing against such as VDR, or areas that again we had to get over the hump to get the Air Force contract done with initial phases deployed. But now that that contract and award is live, and our initial software has been deployed, again now it’s just ramping and scaling. So again to be very clear I would say our contracted opportunity provides us probably the best resolution for us to, I’d say perform against the guide with the smallest delta of go get that we’ve had in a very long time.

Glenn Mattson, Analyst, Ladenburg: That’s great and very helpful. Did you disclose what, revenue from the Air Force was during the quarter?

Ryan Stielberg, President and Chief Executive Officer, Veritone Inc.: No, we did not.

Glenn Mattson, Analyst, Ladenburg: Can you?

Ryan Stielberg, President and Chief Executive Officer, Veritone Inc.: No, we’re not going to. We’re not going to break down specific contracts or specific line items.

Glenn Mattson, Analyst, Ladenburg: Fair enough. On the VDR pipeline, are there significant customer concentrations in there or is it fairly evenly dispersed?

Ryan Stielberg, President and Chief Executive Officer, Veritone Inc.: I think the space in general, as I’ve said in our in my prepared remarks, the space is dominated by really the top 50 major players. So it a massive category, but it is dominated by 50 players, around that area. So again, this is unlike other areas of our business where we have thousands of customers you can sort of interpret that, you know, again to be clear, we don’t have a single customer who’s dominating it, but in terms of the current ecosystem out there, this is both good and bad. It is the super majority of the spend is concentrated to about 50 major big tech companies today and AI model development companies. On on the flip side, the positive side is I probably, as we stated, we’re engaged with almost all of them already.

Right. We haven’t we’re not actively doing business with all of them yet. I think we did say as our goal is to be actively engaged in working with all of the major hyperscalers by the end of the year. So on one side there there you know, I would say there is the potential of concentration, within that 50, group, but on the opposite side is it’s afforded us the ability because of the killer offering that we have and the great assets that we have, we’re already engaged with near majority of the 50 already.

Glenn Mattson, Analyst, Ladenburg: Okay. And as you guys have gone out and sold VDR to your spoken to customers on VDR, are you getting better in that sales process? I mean, I imagine, each incremental opportunity your sales team was able to learn a little something new and might be more efficient moving forward?

Ryan Stielberg, President and Chief Executive Officer, Veritone Inc.: Yes. I’ll say empirically the answer is yes based upon the data we provided where we continue to increase our pipeline, right. So and a lot of that pipeline increase is not just net new customers but it’s repeat business or expanded business with existing customers in VDR. So I would say that is a good testament to not just us getting better on the sales process, but people, getting through trials, building confidence and trust in our VDR products and solutions to accelerate. So I’d say that’s exciting.

On the flip side, audio and video and unstructured data as a training data class is relatively newer. So again, part of it is just familiarity with a lot of different groups who are let’s say you know first time really trying to think about what their next generation multi modality, video based models may look like, or groups who are trying to fine legacy multi modality models. So not only I would say it’s two sides, not only are we learning more, about what these different groups, are trying to achieve with their next generation models. But on the flip side, they are learning more about us. And I can say confidently is, we’re building great trust.

People know that Veritone can deliver at scale. And I did touch on kind of the scale and size of tokens that we are dealing with. And we’re talking about hundreds of millions, billions and obviously potentially trillions of tokens in the context of just the scale of the audio and video that we’re dealing with. So we’re bullish, and I’d say it’s really two sides. One, we’re getting more confident and two, our customers who we’re working with and selling to are getting more confident in higher with a higher level of trust in us.

Glenn Mattson, Analyst, Ladenburg: All right, perfect. I appreciate the added color, Ryan.

Seth Gilbert, Analyst, UBS: Thank you.

Conference Operator: This concludes our question and answer session. I would like to turn the conference back over to President and Chief Executive Officer, Ryan Stielberg for any closing remarks.

Ryan Stielberg, President and Chief Executive Officer, Veritone Inc.: Well, first I’d like to thank everybody. I’m obviously very excited about this quarter. It’s taken us a long time, to clean up a lot of things, but, as sort of we’ve been sort of indicating now for a few quarters, there’s a really a lot of excitement on some killer core assets in our AI software business and VDR, that we knew were coming, and this quarter kind of culminated in a couple of things. One, got over the hump with the big, OSI Air Force contract and really started to sort of jog into a run with the growth of VDR, which is going to be a great accelerant for the balance of the year and into the future. 45% year over year growth in the second quarter in our core AI software is phenomenal and I think there’s a lot there’s a high ceiling there.

So again, we’re exiting this quarter and moving into the second half of the year with a purview into next year feeling great. We still got to execute, but our pipeline is large. We’re dealing with some of largest tech companies out there who we’re selling with and sort of finally the sky’s the limit for Veritone. Mike already covered it, but please check our IR sites or please register. We are going to be attending a multitude of different conferences here over the balance of the year and into the first quarter of next year.

Hope to meet and talk to both our existing and new investors. But appreciate everybody’s time today. Thank you.

Conference Operator: The conference is now concluded. Thank you for attending today’s presentation. You may now disconnect.

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