Q2 2020 Veritone Inc Earnings Call
[music].
Welcome to.
The Veritone second quarter 2020 financial results conference call.
All participants will be in listen only mode.
Do you need assistance. Please take the conference specialist by pressing the star keep all it buys era.
After today's presentation, there will be an opportunity to ask questions.
Please note the fact is being recorded.
I would now like to turn the conference over to Brian Alger. Please go ahead.
Good afternoon, and welcome to parents on second quarter of 2020 conference call I'm, Brian Alger Senior Vice President corporate development and Investor Relations.
After market close today baritone issued a press release announcing results for the second quarter ended June Thirtyth 2020. This press release is available at the Investor section of our website.
Joining me for today's call or Baritones, Chairman and CEO, Jeff Silber, President French Gilbert and CFO he called.
And their remarks, well open up the call for questions.
Please note that certain information discussed on the call. Today will include forward looking statements about future events and girls business strategy and future financial and operating performance include and it's expected that revenues and non-GAAP net loss for the third quarter 2020.
Forward looking statements are subject to risks uncertainties and assumptions that may cause the actual results to differ materially from those stated or implied by the statements.
No those risks and assumptions are discussed in baritones as he see filings, including its annual report on form 10-K, and its quarterly report form 10-Q filed today.
These forward looking statements are based on assumptions as of today August 10, 2020 baritone undertakes no obligation to revise or update them.
During this call the actual and forecasted financial measures will be discussing including gross margin operating expenses and that loss will be presented on a non-GAAP basis.
Reconciliations to these measures to the corresponding GAAP measures are included in the press release issued today.
Finally, I'd like to remind everyone that this call is being recorded and will be made available for replay via a link available on the investor section of the company's website at Www Dot Dot dot com.
Now I'd like to turn the call over to our chairman and CEO John Gilbert.
Yes.
Thank you, Brian very tough posted our strongest financial result ever this quarter, despite the unprecedented turbulent times.
The success was driven by our talented team, which has worked together with ingenuity resilience and determination, helping our customers leverage our AI technology to improve efficiency and transform their operations.
As a result, we posted second quarter revenue, a 13.3 million up 8% year over year and 11.5% sequentially.
We are forecasting Q3 results that effectively accelerate street estimates by full quarter, where the midpoint goal of 14.4 million, which represent growth of 12.5% year over year and 8.5% sequentially.
Record Q2 results demonstrate the power of our AI operating system and World class AI application and the value of our differentiated and diverse portfolio of AI powered services.
The cost side, we continue our March to profitability, then shifting our operational focus in the fourth quarter of last year toward achieving cash flow breakeven you have seen our quarterly non-GAAP net loss improved by 40% since Q3 2019 to 5.7 million.
We're committed to continuing to reduce our non-GAAP net loss is moving forward, while simultaneously growing our revenue a double digit rate.
Now with the fog is lifted somewhat from the earlier days of the pandemic, it's clear that our customers are accelerating their implementation across critical parts of their operation to execute more effectively and efficiently and we're delivering the technology that is making not possible from helping businesses optimize the impacted their advertising spend.
Giving content owners, the ability to quickly and easily search and monetize their audio and video archives to enabling government agency to more effectively and transparently protect answered the community.
Even helping energy companies deliberate cleaner more reliable and affordable power.
Our customers see an opportunity to reimagine their operation and help reinvent an increasingly automated and virtual world and they recognize it baritone is the best AI partner to help them achieve their ambitious goal with a revolutionary and proprietary technology.
It sounds inception, six years ago, we haven't solely focused on building AI solutions that deliver immediate and measurable value to an initial set of targeted industries.
While simultaneously developing the <unk> operating system of the future.
Baritones <unk> only focus has resulted in a powerful and growing technology base with over 75 issued and pending patents worldwide. As a result of this investment and clarity of purpose Barracuda poised to transform every industry across every geography.
And we're not alone.
But rather a line executing together with some of the world's best technology and system integrator partners like Microsoft PDW G Carousel.
The flexibility of the Iwear entered developer tools allows us to deepen and build out our existing customer relationships, while innovating and exploring new global market in fields, such as energy, where we are making tremendous inroads and generating revenues. Despite only a short time in the market.
And the coming week, we'll be sharing more about how baritone is leveraging eyewear and its suite of energy applications based on our patented technology to drive unprecedented efficiency reliability and cost saving for macro and micro grid operators.
Baritone <unk> energy applications are addressing many of the key technical challenges that have impaired the progress of the renewable Green energy movement in a cost you energy company billion damaged infrastructure and energy law.
But helping to solve these issues. We believed that we can help accelerate the use of renewable energy, which will help reduce global warming and positively impact our planet now and for future generations.
Our solutions in public safety are helping to create more transparent inefficient police forces that we will be able to maintain public safety more effectively while helping to increase accountability and public trust.
These are important goals that are aligned with our founding belief that artificial intelligence is the key to building a safer more vibrant transparent and empowered society, we're determined to be an active contributor to shaping our future for the better.
Yeah, It's Howard solutions are increasingly seen as necessary to compete and in some cases just simply survive.
We see them as a gateway to a better future. The I Revolution has not far off idea that's happening now everywhere and very kind of leading the way.
With that I would like to hand, the call over to Ryan our President and co founder to discuss our operational progress in greater detail over you Ryan.
Thank you Chad and good afternoon, everyone as Chad indicated we had a strong second quarter much better than we expected when we spoke with all of you in May we are immensely proud of our team's performance. During this truly unprecedented business environment. They have responded very well staying focused and agile and are continuing to generate strong results.
I'm going to spend a few minutes discussing our second quarter revenues and outlook in each of our businesses before passing the baton back to Pete.
In our advertising business, we had a record quarter of just over $7 million up 20.5% year over year, including a strong contribution from our various network.
Our agency business was up 5.1% year over year, and 4.4% sequentially. It continues to significantly outperformed most peers in this space by a wide margin due to our strong focus on digital and social platforms, and our ability to leverage AI where to demonstrate ROI across multiple platforms to optimize our clients advertising program.
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Our agency team did a great job of winning new business and expanding our business with existing clients in the second quarter, which most more than offset reductions in AD spending by some clients due to the pandemic.
We've also started to see great traction in our various network. While we launched just this past November these networks open up new opportunities for media partners to easily generate incremental advertising revenue without impacting their existing AD sales and create new native AD influencer advertising opportunities for advertisers.
We now have over 250 radio stations for participating in our spot network and over 3000 unique digital Influencers active on our Influencer Bridge program. This year.
Looking forward, we expect our advertising revenues to show strong growth in Q3 from both our agency business and our various network as digital and social platforms continue to outperform other segments of the advertising market.
In our content licensing business, where we leverage the power of AI, where to index search and reposition premium video content for licensing by advertisers and content creators our team overcame tremendous macro headwinds to deliver a much better second quarter than we had originally expected.
While many of the headwinds, including canceled sporting events and slowness in film and television production continue to challenge. This business. The team has added new content libraries and brought in our customer base.
As a result, we believe we will be able to sustain the traction we created in the second quarter and so when content production or restarts in college and professional sports come back we will have a larger base to grow revenues from.
In terms of performance highlights within content licensing revenues were down 13.9% year over year, including 300000 in lost revenue from live events services due to canceled sporting events.
Excluding Lebanon services licensing revenues were only down 6.6% year over year.
We continue to expand and diversify our licensee base of content, including new and expanded relationships with a number of premium content partners and new agreements with digital influencer firms like Colab and studio 71 that expanded our served market in this business.
While we expect the pandemic to continue to impact our content licensing revenues in Q3, we believe the team has stabilized the business and of college professional sports are able to start gearing Q3, we could see slight growth sequentially.
Shifting to our SaaS businesses revenues were just over 3 million up 12.1% year over year, reflecting continued growth with media entertainment customers and revenues from our new energy solutions.
While they were down 3.4% sequentially due to timing issues, we had very strong bookings in the second quarter, including a seven figure subcontract under a department of Defense development program that we expect to start generating revenues beginning in Q3.
We then how many SaaS as our keep an eye cables reflect we saw continued account growth in QQ largely through expansion of our relationships with existing customers.
Q3, we expect to begin deploying attribute across a number of our customer station portfolios, including Iheartmedia.
As we highlighted in our recent white orbit press release attribute is also generating increasing attention among TV station operators. In addition to the radio networks.
Finally within our M&A SAS group, we're increasingly finding synergies with our agency in various partners, which we believe give us greater insights to develop new products and features and increase our differentiation.
We also see the potential to expand our addressable market by linking on premise man this with a hours cloud based cognitive capabilities.
Our GLC SaaS business had a foundational quarter of bookings their new bookings in the second quarter exceeded all GLC revenue generated in 2019.
Additionally, we have formed multiple technology partnerships that vastly expand our reach in revenue potential companies like relativity and open text have integrated their E discovery tools with a eyewear further enabling legal MSP is like epic Oasis Pro search and exact data discovery to cognitively process large quantities of both unstructured and so.
Crusher data.
Also recently signed agreements with a leading provider of security and surveillance systems as well as with the software provider specializing in processing freedom of information acts requests, adding to our list of channel partners.
Importantly, our GLC business activity has begun to shift from being primarily project based to more strategic and sustainable long term contracts.
While projects will continue to be an important component of our GLC revenues, we expect to see further expansion of GLC bookings pipeline through our technology and channel partners.
This quarter, we are introducing a new revenue subset of our a outwear SaaS revenues called other markets. Since we founded baritone we have said the at where would find application and use across multiple industries the verticals.
Other markets represent those other industries and opportunities within our SaaS revenue line.
As shown in our supplemental tables other AI were generated $251000 of net revenues in the second quarter. These revenues were associated with an initial project with a regional U.S. energy utility.
We believe that our technology can be used in many other renewable energy projects around the world.
I encourage everyone to visit the energy solutions page on our website at baritone dotcom to learn more.
In addition to our organic growth initiatives, we continue to look for potential acquisition targets, where we see opportunities to accelerate our entry into new markets and transforming grow their businesses by integrating AI where into their products and solutions.
Collins will now review our financial results for the second quarter and provide details around our financial guidance Pete.
Thank you ride and good afternoon, everyone.
Each of you should have access to the results. We released earlier this afternoon and Ryan has already provided significant color on the second quarter revenues of our business units or growth strategies are beginning to offset the impact of the cobot 19 pandemic, which resulted in our total net revenues, increasing 11.5% sequentially and 8.1 per.
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As I review the financial results a couple of items warrant further discussion.
As Ryan mentioned previously very adds contributed to this strong growth in our advertising revenues in the second quarter. We account for the very adds revenues on a gross basis, while our agency revenues are reported on a net basis.
In the second quarter, our non-GAAP gross margins were 71.6%, which is an improvement of more than 400 basis points year over year.
The year over year upward trend is due primarily to the enhancements we have made to our area, where software which are not only reducing our computing costs, but also improving performance instability and we expect these benefits to continue.
Regarding our operating costs, we initiated aggressive cost reductions in the fourth quarter of 2019 and additional actions in March 2020.
Since then we have maintained strict cost discipline.
These initiatives have been very effective and continue to deliver significant cost reductions.
Our second quarter 2020, cash operating expenses decreased by 1.2% compared with the first quarter of 2020 and decreased by 13.2% compared with the second quarter of 2019.
With our cost reductions and focus on cash flow breakeven, we have lowered our non-GAAP operating expenses by $12.6 million on an annualized basis since the third quarter of 2019.
Our gross margin improvement coupled with tight expense controls helped us to reduce our second quarter non-GAAP net loss to $5.7 million. Despite the revenue disruption caused by the pandemic.
Shifting our focus toward reaching cash flow breakeven, our quarterly non-GAAP net losses have dropped to 40% since the third quarter of 2019, and we have reduced them sequentially. Each of the past three quarters achieved the lowest level since we have been a public company.
We are committed to continuing our drive to cash flow breakeven going forward.
Well, we continue to see efficiency gains in our cloud compute and cognitive engine costs. We don't expect to see further reduction in our overall operating expenses as we are now selectively adding incremental talent to support our growth outlook.
As of June 32020.
We had no long term debt and cash and cash equivalents of $50.1 million, including $24.2 million of cash received from advertising clients for future payments the vendors compared with $44.1 billion at December 31, 2019.
During the second quarter, we received $2.1 million from the exercise of warrants and we raised a $3.1 million through the sale of shares at an average price $16.07 per share.
Our lowered non-GAAP net losses have allowed us to significantly reduce the amount of cash we have needed to raise.
We expect the combination of revenue growth compute cost reductions in operating expense control to continue to reduce our cash burn and to minimize the amount of cash will need to raise until we reach cash flow breakeven from operations.
Turning to our guidance for the third quarter of 2020, we expect to see sequential growth in our advertising and you'll see SaaS businesses.
As a result, we now expect our total net revenues for the third quarter 2020 to be in the range of $14.2 million to $14.6 million, assuming that major sporting events, such as the NFL in college football season, and the U.S. tenants open will occur in line with current schedules and then our advertising clients do not experienced further supply.
Options.
Revenue at the midpoint of this range would represent growth of 8.5% sequentially and 12.5% year over year.
Based on this revenue projection and continuing cost controls. We believe we should have once again dina position to reduce our cash burn sequentially.
We expect our third quarter non-GAAP net loss to be the range of $5.7 million to $5.3 million non-GAAP net loss at the midpoint of that range would represent a 42.9% improvement over the third quarter of 2019.
We look forward to connecting directly with our investors and analysts at the Oppenheimer Virtual Conference Tomorrow August 11th to arrange meetings at this event, we encourage institutional investors to reach out to their respective brokers or to contact Brian Alger.
Now I'll hand, the call back to Chad to summarize Jed.
Thank you Pete.
Despite the unprecedented environment, we find ourselves that we had baritone are driven with a renewed sense of urgency to pursue our core mission of helping to build a safer more transparent empowered world through artificial intelligence and more specifically AI where.
There are done is leading the next wave of AI innovation with a number of new products and the pipeline, if you, which I'd like to highlight briefly before we open the floor to question.
First this month, we will be publicly launching automate studio are low code workload designer that helps organizations quickly and easily gold production ready AI enriched application and business process either at scale without the need great expertise.
We have used automate studio internally to accelerate our development of new application and we see it bringing AI to Republic out process automation and enabling the development of hyper automation applications across a wide range of industry.
We believe this tool will set a new standard for low code AI process automation and we thank our beta customers that have helped us over the past six month to repair automate studio for widespread relief.
Now the Veritone has reached critical mass in both the number of cognitive engine and customers running on AI, where we felt an imperative that we begin to shed much needed clarity on the performing accuracy and potential hitting bias of AI models.
Our baritone clarity application, which is scheduled for release. This fall is an important new addition to the Iwear suite a practical AI solution that are customers can trust and rely on.
Whether you're a chief risk officer, Werent end user Veritone clarity, we'll give you the visibility you need to harness the full potential of artificial intelligence with confidence and peace of mind.
Lastly, we are acutely aware of the current koby crisis and have been working with external partners to Reimagine, what health and safety standards on a global scale should look like in an AI first society.
The work from baritone our partners have been developing a new framework on top of the Iwear for health and safety monitoring and information sharing.
I look forward to sharing more details on this exciting new program, which we have codenamed birthday as it rolls out the beta customers this quarter.
As we continue to augment human intelligence with artificial intelligence.
And reap the financial benefit of our continued success, we acknowledge the inherent responsibility that comes with the technology that is redefining the global balance of power economically socially and geopolitically.
We had veritone are committed and determined to be on the right side of history by pioneering ethical artificial intelligence at this time, we would like to begin to accumulate session operator.
[noise]. Thanks, Yes, we will now begin the question and answer session.
You asked the question you May Press Star then one on your Touchtone phone.
If you're using speakerphone, please pick up your handset before Preston Mickey.
And what's driving your question. Please press Star then too.
At this time, we'll pause momentarily to assemble aro there.
[noise] My first question comes from Darrin.
He Roth. Please go ahead.
Hey, guys, Oh pure well, thanks, taking my questions feels like they first on a on the energy.
Revenue that you produced in the quarter, a Chad we mentioned the utility company could you talk kind of one what is it that you're doing well utility company and kind of two out of products differentiator them.
It sounds like by your comments or some legs that this is sort of how big of an opportunity.
With that.
Second one on your sequential growth in revenue of things slightly vermillion quarter to quarter can you talk about and I see I understand it's it's mostly made up of advertising and SaaS can you talk about what the the growth kind of components are for each of those on a.
Called out.
GLC you also called out a your advertising business, it's a little bit more granularity and the last one for me did you guys receive any revenue from the DJ and a quarter. Thanks.
Perfect. Thanks, so much of the question.
So our energy initiative, you know we mentioned to briefly on the on the last quarterly call and we finally rolled that out into Q2, and our main focus is about delivering and enabling greater fit resiliency and efficiency through our proprietary i. I mean other others in this industry over the years as you know have focused on disruptive innovation.
When dealing with new renewable energy sources, such as wind and solar which are often times incompatible with existing energy infrastructure and sometimes even at odds with the economic reality the public utilities.
As a result, they have found significant resistance from a number of vectors Maritimes energy forecaster, and our optimization solution as well as our controller technology helps mitigate these systemic hurdles and accelerate our path to cleaner and more reliable energy.
What's important to note is veritone in our artificial intelligence not clean energy technology per se, but our proprietary model is running on at work and help create an intelligent and coordinated backbone that support the entire energy ecosystem from a macro and micro grid operators to equipment infrastructure suppliers, such as batteries solar inverters.
Strollers, although actually down to end user devices, such as smart meters. So our potential customer base and energy is extremely diverse and eggs and at poised for some significant growth in the future.
That makes sense.
Yes. Thanks.
Perfect.
Pete you want to take the next one on the revenue breakdown.
Sure Hey, there and I was gone.
So as you.
I'm good so the revenue growth that we talked about is is I'm focused on a couple other parts of the business. So in advertising you know we've continued to see revenue growth with a number of our existing customers and the nice thing about that is we basically once it gets locked in at the beginning.
The quarter, we've got a very solid a picture of what that the quarter revenue is going to look like in that part of the business. So we feel really good about that dig that revenue growth with existing customers in the advertising.
Agency business over the course of Q3 growing over Q2.
In NGL see one of things that Ryan talked about was you know the real strong bookings quarter that we had in the second quarter and that lays the foundation for revenue growth that we're I'm counting on in the third quarter in that part of the business. So that's the other part you know the other aspect of the business that we called out in.
Our remarks.
Were you know I think if we get some favorable breaks or honestly, if we if we see some things that.
That stay as we expect them today, especially in content licensing and don't see you know some of the sporting events falloff that we would expect to be able to see revenue growth across all parts of the business I'm in the third quarter, but that's that's a little but some of those does the sporting events.
Our obviously out of our control at or kind of a bit dynamic at this point, so not necessarily you know certain about that but definitely certain about the revenue growth sequentially in advertising and GLC.
Great. That's helpful. And then just lastly, any revenue.
Yes, but Jay.
Yes, so so no no revenue recorded in Q2 under that if you remember you know that just got signed in May and so the second quarter was spent doing a lot of trading and getting everything basically ramped up but we are expecting to see revenue from the DJ in Q3.
Great. Thank you.
Yep.
Our next question comes from Patrick Walravens with.
Okay and P. Securities. Please go ahead.
Oh, great. Thank you and.
Congratulations in particular on on the guidance for two three had I want ask you a really big picture question, which is sort of around.
What spending is like for AI projects in general and I realize the years tend to be more focused and that's helpful. But but for context, we were talking to the CEO of another big public AI company and for whom things slowed this quarter and and his comment was the number one spending.
Priority of companies is enabling their employees to work from home.
Number two is now around making sure that when they enable everyone to work from home, they're doing that in a safe way and so it's around cyber security and then a lot of our projects, which used to be number one our are now number three and so that you know cause sale cycles, the lengthen and deal sizes to go down.
And I'd just love to hear your reaction and then it sounds like things are are different for you and how you have your sales team working around those kinds of issues.
Hey, Pat.
Great Great question at a macro level I think very tones in in a very different part of the AI ecosystem is as you know we've been spending and exorbitant amount of time building an AI operating system that both can operate very easily and any cloud environment, but also can be deployed on on a local basis.
Yet access remotely so you still protect customers security of their data and information.
And what that's really created Pat that infrastructure, and then building applications on top of that better specific for certain used cases as we like to think about on human in the loop Crossett D. As this entire movement has moved literally hundreds of millions if not billion by global basis.
To working from home.
It's completely disrupted and change the way in which their job need to be a process and and not only from the communication standpoint, which is one of the first thing you've touched on which is how do you have you communicate effectively with you know employees and staffing customers, which patent <unk> companies like zero mothers of obviously capitalized on and then the second wave.
Switching cyber security have you when you're working everyone from home how do you you know and shore This safety and security of not only your corporate information, but also your customer data mission critical Veritone really tackles, the third and I think the biggest opportunity there, which is how do you beverage remote system in a very effective way.
And automate and drive efficiency and automation and collaboration where you know before humans were forced to be in the loop to really sort of tackling communicate and solving crime and identifying suspect in processing evidence for department adjusted even in media and entertainment. So as those as those employees have moved to home.
They become more and more reliant upon technology to do the heavy lifting and I'm not just talking about computational lifting I'm talking about actual cognitive capabilities of solving very challenging problems that here, we're only able for human and honestly allow that data with only available in the corporation themselves. So when they wanted to view.
The footage or do the analysis on the crime scene. They were required to be at the precinct or out the corporation with AI, where in our new application. They can now do all that remotely. So I think what you're seeing as a real resurgence of people and corporations and institutions looking at a high as as a disruptive technology to enable them to continue.
To move forward, but and what they're finding at least a worsening is it the adoption rate of our technology is accelerating and they're finding great success with it as it rolls out.
Yeah, that's super helpful. Thank you.
Well.
Our next question comes from Tom definitely with D.A. Davidson. Please go ahead.
Yes. Good afternoon. Thanks for let me ask a few questions here. So Chris one chat is wondering if you could follow up on what you talked about as far as responsible AI going forward and just kind of curious what the impact as Bennett from some of these companies decide the pool will facial recognition program even after their networks Office Center.
Systems.
Let me kind of big picture view of where they add it looks like from a facial recognition going for would be great.
Yes, no great. Good question I think thats been obviously at the forefront of of the news lately with all of the BLM matters that had been flying around.
As you know when we stated that you like front and center on our website. We founded this company on the belief that AI is the key to solving some of the fight is most challenging problem and if you ethically will help creating more transparent efficient unjustified period.
Yeah, it's not like any other technology or technical innovation, we've ever seen like Microsoft word or a hammer for that matter.
Hi is uniquely responsible for the outcome not just the action.
Heretofore outcome was something that was really humans were held accountable responsible for that solely not the machine and AI is starting to shift that responsibility to now more shared basis. So veritone thieves itself as a partner with industries, we serve and if we can provide better outcomes. There obviously.
Technology to share in the financial benefits, but also we live in the same society. So.
As we look what's happening in public safety and the use of facial recognition in the use of identity management et cetera, I think all of that from a cyber security standpoint like passed last question to you know I've been able to identify suspects I crime scene and being able to process that remotely the world is changing and AI.
And facial recognition and it is a part of that mix. So we lean into it but we do so in a very ethical way in a very transparent way that conforms with all of the necessary laws than and first amendment second then right that we protecting so hope that asked the question Yeah. That's great and then obviously your relationship with the radio stations is a great assets.
For you I'm curious.
How much is there to expand in your lender the extent strategy in across your domestic radio stations and what does the international opportunity for you.
Hi, This is Ryan the buying take take that yes.
I think there's still substantial growth opportunities in both domestically and internationally and E terrestrial broadcasters and also online.
Streaming based groups in OTI T related networks.
For a few reasons and kind of somewhat analogous to what Chad was talking about.
Out of our resources and tools are helping accelerate the productivity and bringing more efficiencies to operations. While these large corporations and their cost and their employee bases are working from home. So very similar to how we're bringing remote and an enhanced an augmented efficiencies in government legal and compliance.
Given the exact same thing immediate entertainment salespeople can analyze.
Very complex.
Feeds and verify ad placement.
Whether that's a pretty spot or native integration.
Literally on the fly from home and get the results delivered to their mobile device for example.
They can also do like air checks programmers, Ken can get real time assessment of trending topics and whatnot and they can do this all remotely. So I think we are right in the middle of being not just a digital transformation.
Solution as they are incorporating more AI, where we're fundamentally helping bring I'm not only efficiencies, but revenue revenue growth opportunities. So I think because of those those aspects neenah. Despite the headwinds that that other legacy enterprise groups in broadcast may be dealing with we see significant.
The increase in opportunity as we not just even if it with our current product lines, absolutely, but also what we continue to develop and innovate I think we'll see great success.
Okay, Great that's helpful and finally piece when you look at.
The operating expense other cost structure, how has and cool that impacted during the quarter I assume there was decreased travel and maybe some delayed hiring but just wondering what kind of the one term onetime impact of expenses were.
[noise] yet.
So Tom the reduction in our travel and entertainment expenses was in the neighborhood of probably $300000 for the quarter on a year over year basis.
On your comment about headcount and honestly, we actually did a great job, the attracting and adding new talent in the quarter. So we actually increased our headcount by about 16 people over the course the quarter. So I think we were things were a little slow back in.
Late first quarter when dependent it kind of really erupted, but our team found some great people to join us.
And over the course of the second quarter, we actually increased our head count and we're really pleased with some of that very talented people we brought onto the company.
Okay, Great Thats, good to hear and I appreciate your time today. Thanks.
So.
Our next question comes from Chad Bennett with Craig Hallum. Please go ahead.
Great. Thanks for taking my questions. So maybe one for Pete.
So it looks like IPO was down about 22% sequentially.
Total RPL and then current was down a couple percent how how does that why im just from a definition standpoint, how does that Ryan with kind of your commentary around.
Record bookings, especially in the GLC vertical.
Well the GRC vertical chat in particular, you know with the rollout of the enhanced capabilities has been able to it's basically it had a low base to build off of and I was very successful and getting new contracts. This quarter as we said that it was the first quarter where.
It got into the seven figure range in a in bookings. So we're really pleased with what we're seeing in that market you know across the board and there are you know as were building the business. We do see you know that the growth from a revenue perspective is not always consistent.
Quarter to quarter, and so there are times, where one part of the business picks up well the other one might not be as as growing at the same pace and this was the quarter for GLC to really step up and deliver some great bookings in the quarter.
Okay, and then maybe a follow up on that one just with respect to the the September quarter Guide that you gave I think you described.
Obviously, the advertising business, it's going to grow at a pretty nice rate again, and it sounds like there's potentially some upside to content.
If we get some sports back, but just on AI, where SaaS business I think you indicated or at least qualitatively said GLC rads should be up sequentially, if I have that right.
In the September quarter.
What are your thoughts on overall AI, where SAS routes are they going to be up overall sequentially in the September quarter.
Yes, we're expecting the overall yeah were to be up in the third quarter sequentially. Okay got it got it and then maybe one last one real quick just in terms of the the upside potential with with the DLJ.
I know, you're just getting them going in in ramping them up I mean, do we have any way of thinking about.
A relative magnitude standpoint, where we could be.
Six months from now, let's just say in that contract.
No I mean, I think that you know the our approach on that is to do a lot of.
You know training and development and starting with you know people, it's sort of the the case by case level of doing projects with various offices within the D.O.J. and as we build that that pipeline. It kind of get that flywheel going if you will you know, we look forward to being able to update.
Or analysts and investors about the development. There I mean, you know, we're very pleased and excited about the opportunity there.
But it's it's a bit of you know in the early days that were in its difficult to quantify exactly what the upside is there and that's why I'm you know we're in a position where we're just giving you.
An update as we get results and not trying to get ahead of ourselves and be too aggressive and making forecasts.
Yep understood. Thanks for taking my questions.
Jeff.
Our next question comes from Mike Latimore with Northland Capital. Please go ahead.
Hey high this until follow on for Mike Latimore.
Can you tell me more <unk> and what isn't the hey height Yep.
Could you give me a little lifetime, what doesn't do you see that Goldman Sachs segment anything the same level as media and entertainment.
I'm sorry, let me just rephrase the question, you're asking over what timeframe, we're going to see the GRC revenues match up with the media and entertainment revenues.
Yes, I said segment.
Okay.
You know I think that the Q2 bookings and strengthen the GRC is indicative of the strong growth that we've got there, but you know in as it stands right now the bulk of the anywhere SaaS revenue is still coming from a median entertainment. So you know what Ryan Todd.
Liked about some of the growth that we see there and the opportunity to expand and with Oh, you know radio station groups. We also see other parts of the media Entertainment business that we can continue to grow in and Ah GLC. We think is going to grow at a faster pace, but frankly, there's there's no internal concerned about.
Having to have GLC exceed emoney frankly, what we're trying to serve customers in both of those markets and see them you know kind of developing somewhat independently theres theres not a a a scarcity of resources that needs to be balanced between those two so we see a lot of the faster pace growth is gonna be NGL.
But we still see opportunities over the long term to support businesses in the media Entertainment space.
I don't know Ryan is there anything else you you'd want to add on that.
Yeah, I would just to say well, where obviously energy that's very early on in but we're pretty optimistic about what that potential opportunity looks like as well. So if you include kind of other veritone other AI where based revenues.
Which is part of our SaaS line items.
We are confident that are non meeting entertainment initiatives are going to continue to accelerate and they definitely have the potential to surpass M&A, but to Pete's point, we're not disproportionately focusing on those new lines were kind of.
Yeah, <unk> accepting the growth as the demand has been processed.
Yeah, Ryan Levine headwinds, Chad, but let me let me give let me give one more color to that if I can you know it's also really important to note that with automate studio Veritone is no longer regulated or restricted to just the industry as noted by Pete and Ryan, but rather we are now a a leading company.
He and the hyper automation category that Jeff now emerging and so I think it's really important to note that hey, eyewear and our stock based solutions are gonna be on diversifying quickly into you know solutions in industries that are well outside of what we historically have served with a far more on the U.S type tool set.
So again pay attention to that as well. So don't think so much of the company about being vertically focused and one or another but rather an AI generalist tackling multiple market simultaneously.
Yeah, the Tesla and know what he is the what's the size of feel pipeline with the Microsoft and how has it been anything the main launch.
[noise] right do I take that line you want to take that.
Yeah, I think our pipeline for Microsoft historically has been representing us from a.
A kind of co sell focus almost exclusively on state and local law enforcement.
So we did this in the pipeline does look very strong obviously, there's thousands and thousands of local police.
Departments and share departments across United States. That's the kind of main collaboration in terms of sales efforts between Microsoft baritone today I'm. So the pipeline is quite large and then again, that's primarily focused on you know our stars three application suite in public safety redact identify and ILLUMENATE.
We still see very very high demand for all three of those products. So we see it has a very high ceiling and Microsoft does provide.
One of the great mechanisms by which to tap into those different potential agency count So pipeline very high but again, we're not sort of handicapping a specific size of the opportunity.
Yeah, I think and lots went out how much of the goal mind anything he couldn't buy if anything there Nick.
Integration.
But with the bride and again when I look how much of the pipeline how much of the pipeline is redact in their legal department versus others and debts cushion in our legal department actually not redact R.L. and the GLP part of our business is primarily I'm around E discovery.
Three of audio and video base evidence analysis.
That's through a set of tools and integrations that we've done primarily with relativity.
That makes its way down to msps like epic and others that we talk about them as project work.
A little bit of a misnomer our team doesn't actually do any of the quote project. Its define more project in terms of they're using our stock based software to you know analyzers specific case for audio and video and evidenced discovery.
Okay.
Thank you.
Thank you.
Thank you.
This concludes my question and answer session I would like to turn the conference back over to chat still pick for any closing remarks.
[noise]. Thank you operator, and thank you all for joining us on today's call as I said I'm. So proud of the way our entire team has responded to this very challenging situation I want to personally thank each and every one of them for their tireless effort. These past five month and further their unwavering focus on continuing to pursue our vision of building the role.
Leading AI solutions company, we have huge opportunities in our business.
Our teams are better positioned to capture them than they ever have been before well we know that our future is bright I'd be remiss, if I did not address the hardships being faced by many of these difficult times. Our prayers are with everyone who has been impacted by this pandemic, especially those who have lost loved ones.
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