Q3 2020 Veritone Inc Earnings Call
Good day and welcome to the Bertram third quarter 2020 financial results Conference call.
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I'd now like to turn the conference over to Brian Alger. Please go ahead.
Good afternoon, and welcome to <unk> third quarter up 2020 conference call I'm, Brian Alger Senior Vice President of corporate development and Investor Relations.
For the market close today baritone issued a press release announcing results for the third quarter ended September Thirtyth 2020, that's personal leases available at the Investor section of our website.
Joining me for today's call are Burton's Chairman and CEO, John Gilbert President, Brian Stillbirth, Seattle Metro all.
Following their remarks, we will open up the call for questions.
I felt that certain information discussed on the call. Today will include forward looking statements about future events, and bottoms business strategy and future financial and operating performance, including its expected net revenues and non-GAAP net loss for the fourth quarter of 2020.
Forward looking statements are subject to risks uncertainties and assumptions that may cause the actual results to differ materially no stated or implied by those payments certain of these risks and assumptions are discussed in <unk> SEC filings, including its annual report on form 10-K, and its quarterly report on form 10-Q filed today.
Forward looking statements are based on assumptions as of today November nice twice twice you baritone undertakes no obligation to revise or update them.
During this call the actual and forecasted financial matters, we'll be discussing including gross margin operating expenses and net loss as well as the discussion of operating results like core operations and corporate will be presented on a non-GAAP basis reconciliations of these measures to the corresponding GAAP measures are included in the press release, we 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 on the investors section of the company's website at www <unk> baritone dot com.
Now I'd like to turn the call over to our chairman and CEO Cats Stewart.
Yep.
Thank you Brian I'm proud to report that by all measures Q3 was a record quarter for baritone more importantly, we're delivering on our mission to help public and private organizations conquered data complexity to build a smarter and safer world to the power of artificial intelligence, we continued to make big investments in areas that matter.
Whether it is helping improve transparency and law enforcement or accelerating the adoption of renewable energy.
Across the board the Barrington team performed with skilled and agility, helping our customers improve their operations and build resilience in challenging times through the adoption of our cutting edge artificial intelligence solutions anchored by our powerful yeah were operating system.
Q3 revenue increased by 23% year over year to a record 15.7 million.
18% from last quarter.
Our momentum was boosted by our timely and well received launch a baritone energy, which augments our growing presence in the media and entertainment and government legal and compliance markets.
Our third quarter non-GAAP net loss decreased by 56% year over year, and 26% from Q2 to a record 4.3 million.
Our top and bottom line results both significantly exceeded the increased guidance we provided in August.
But the story this quarter is not about cost savings or reduced cash usage, it's about growth.
Revenue growth continues to accelerate faster than expectations and we believe this trend will continue for the foreseeable future.
This is highlighted by the fact that our Q3 revenues from AI, where software solution increased by 43% year over year, and 12% sequentially and we saw increased momentum, particularly in our GLC and energy businesses, which we fully expect to continue to build moving forward.
Our GLC business is beginning to hit its stride as revenue growth and bookings accelerate public safety ranks as one of the biggest issues facing community today with agencies challenges to do more with fewer resources and some cases to rebuild trust with the communities. They serve baritones AI driven solutions address these critical need.
Helping police combat crime more quickly and effectively also expediting, they're really a video footage of crime and fleet interaction, helping to increase transparency and build trust with citizens.
The World is a wash an ever increasing volume of Pat video and audio content.
Now, it's far too large for humans to review in a timely or efficient manner. If at all at the same time bolt agencies and companies are facing reduced operating budgets. These dynamics are increasingly leading agencies and companies do incorporate baritone AI solution into their business processes.
Enabling them to ingest analyze vast amounts of information to make more critical decision to address this opportunity. We have added trusted channel partners like Microsoft and CDW, Gi and integrated AI, where with leading platform like Gov Seaway and George John.
Very sound has completed several strategic technology integrations with Nvidia and I'll tricks. Yeah. We're now support can video queued up and their GPU platform and we've integrated AD words automate studio with ultra analytics platform, enabling organization across both public and private sectors to run intensive AI tap augmenting their traditional business.
This process workload with accelerated machine learning capability, whether on premise or in the cloud.
We're also very excited about the growing momentum we're seeing in our recently launched baritone energy business renewable energy sources are projected to be the fastest growing segment of electricity generation over the next decade.
But the increasing use of these environmentally friendly resources it.
It is creating a significant reliability and optimization challenges for utilities.
Each year billions of dollars of infrastructure damage and energy waste are being caused by utility operators that are ill equipped to handle the dynamic load created by renewable energy sources.
Challenges create enormous opportunity for baritone to excel with a suite patented AI solution that help utilities automatically predict optimized dispatch and trade energy to optimally meet grid demand in real time, we're helping improve grid reliability and efficiency to drive the next wave.
In the Green energy, though.
With the growth of our AD where business beginning to accelerate we are adding some key talent to help lead that growth I'm pleased to introduce you to our new CFO, Mike Demetra, an industry veteran who brings extensive experience in growing and driving performance in staff and digital media company before.
Before Mike dig into the key metrics behind our financial performance this quarter I would like to hand, the call over to Ryan our President and co founder to discuss our operational progress in greater detail.
Nobody Ryan.
Thank you Chad and good afternoon, everyone.
As Chad mentioned, we had a very strong third quarter each vertical delivered results above the expectations, we had coming into the quarter, the 43% year over year growth in our staff business reflects the rapid expansion with our GLC customers and initial revenues from the energy sector.
Both verticals hold enormous potential and veritone is driving hard to deliver on meeting the increasing demand.
Im going to spend a few minutes discussing our third quarter revenues and outlook in each of our businesses before Mike discusses the financial details.
Starting with our air where staffing solutions revenues were 3.4 million up 42% year over year and 12% sequentially.
In addition to strong revenue growth bookings continue to improve as customers in the GLC, an energy markets accelerated their demand.
New bookings in the quarter up 31.6% year on year, including multiple six figure bookings for our new energy solutions.
During the quarter, we made significant progress on our seven figure subcontract under a U.S. Air Force development program.
We are applying AD words, intelligent process automation capabilities to analyze overhead imagery with <unk> object detection engines to significantly increase the speed accuracy and throughput of the analysis process.
Our ultimate goal is to secure a much larger long term agreement to supply solutions that enable us intelligence and surveillance after brainless analysts with much needed assistance in rapidly identifying threats and other activity around the globe.
We also announced a number of technology and channel partnerships, including Gulf, Kuwait, George John and March networks that have already begun to bear fruit by expanding our reach both internationally as well as domestically.
In our media and entertainment vertical we have now completed the deployment of our AD were unable to attribute application across all of Iheartmedia and our TV customers are steadily adding attribute as well.
Importantly, as we bring on attribute and other offerings with these existing customers. The incremental margin is considerably higher as the content has already been processed by our.
Now, we would like to discuss our newest vertical energy as.
As Chad mentioned, we have already recognized revenues and reached over $1 million of bookings from this new market.
Since we made our formal launch announcement in October customer engagement and demand for our energy solutions has grown both domestically and internationally.
We are on pace to complete our initial implementation with a large regional utility provider later, this quarter, which will be a major milestone for our energy team.
While it's too early to break out specific forecast enormous market size in a substantial value that we're delivering with our patented technologies lead us to believe the energy to rapidly become one of our largest end markets from a revenue perspective.
Based upon these factors, we expect again to deliver double digit sequential growth from our our SAS solutions group in the fourth quarter.
In our AD where enabled advertising business the third quarter was another record.
We again materially outperformed our peers as well as our own internal forecast.
Truly an outstanding effort by everyone involved.
As the KBR tables reflect we continue to increase average gross billings from active customers, even as we bring on new accounts and target new media channels.
In aggregate net revenues from our advertising business grew 25% quarter over quarter and 39% year over year. These are tremendous results in any economy, let alone in the midst of a pandemic.
We continue to add more stations to our various network year to date, our various network has generated nearly 650000 additional operating income in this vertical owing to the fact that our network is leveraging the cognitive processing and we're already monetizing for both our brand and media customers.
Entering the fourth quarter, we have tremendous momentum while the fourth quarter is typically seasonally slower in this vertical we expect to post similar results to the September quarter, which should drive full year 2020 advertising net revenues to better than 25% growth over 2019, and again simply outstanding results.
In our content licensing business, where we leverage the power of the Iwear to index search and reposition premium video content for licensing by advertisers and content creators were able to post sequential growth of 12%. Despite continuation of the headwinds facing this group this group since March.
Recently, we announced a new partnership with South China morning Post Hong Kong oldest running English language newspaper. This vast trove of content augments, our already strong news based portfolio with unique and timely source material.
We also announced a major contract renewal and expansion with CBS news.
Even our historical run rate, we believe we can generate more than $10 million in revenue under this contract over the three year term.
Our content licensing business is typically seasonally slower in Q4 as content production papers around the holidays and there are very few of major sporting events on the calendar.
In summary, we are seeing strong organic growth across all of our segments.
In addition, we continue to look for potential acquisition targets, where we see opportunities to accelerate our entry into new markets and transform and grow their businesses by integrating AI were into their products and solutions.
And now I'll hand over to Mike Thats right, our new CFO the detail the financial results of the third quarter EPS outline our financial guidance for the fourth quarter Mike.
Great. Thank you Brian.
Before I begin I would like to thank Chad and Ryan and the entire Baird said team for making my first month, a very smooth transition.
I've been so impressed with this team and more importantly, the validations and the Iwear platform directly from third parties, including some of the largest companies in the S&P 100 today.
The proliferation of digital data in our dependency on it in our day to day lives today has created many efficiencies some great things in our society.
But it has also created a massive amount of problems and efficiencies around the mountains of unstructured content and data.
Today, most of which require human intervention to overcome in salt.
Whether these are content related enterprise levels are within the safety and security of our own governments AI, where is the only AI platform designed to directly and responsibly solved and create solutions out of this resulting big data problem.
The Tam for AI software is significant projected to be over 100 billion by 2025 with a CAGR of over 40% year over year, and we will play a big part in its a story.
With record Q3 results discussed today I believe fiscal 2020, the turning point in very tense evolution.
Showing massive execution and financial progress diversification in our revenue mix and a radical improvement in our bottom line cost structure.
The company is laser focused on a strong pathway towards growth and profitability.
Turning you three 2020, we.
We posted record results and Kate it's across the board meeting our financial guidance with revenue of 15.7 million and non-GAAP net loss of $4.3 million.
Q3, 2020 revenue was a record $15.7 million up.
23% year over year from Q3 2019 include.
Including 43% year over year growth in our AI, where SaaS solutions.
I will get deeper into revenue drivers later.
Q3, 2020, gross profit reached 11.2 million, improving 2.6 million or 30% from Q3 2019.
Since the third quarter of 2019, we have realized considerable cost savings.
Reducing our daily cloud computing expenses by nearly a third.
Overall gross margins increased to 71% in Q3 2020, compared with 67.2% in Q3 2019.
Q3, non-GAAP net loss was a record $4.3 million.
$5.4 million or 56% improvement from Q3, 2019, driven by improvements in core operations and corporate.
Which I will elaborate on later.
Now I would like to discuss the Q3 financial performance for our core operations and corporate we are adding this new enhanced disclosure to provide greater visibility into the profitability of our core operations and our corporate overhead.
Turning to our core operations.
Which consist of RK eyewear, SAS solutions, including our AI operating system.
800 engines in applications and related services, our content licensing and advertising agency services, and they're supporting operations, including direct cost of sales as well as operating expenses for our sales marketing and product development and to a lesser extent certain general and administrative costs dedicated to.
Those business activities.
As previously discussed our Q3 revenue of 15.7 million was up 23% from Q3 2019.
Our AI, where staff solutions grew 43% year over year to $3.6 million compared with $2.4 million in Q3 2019.
Driving this improvement were initial revenues from a new market energy, where we delivered important technology milestones to a major utility on the east coast.
And increased revenue Underrate US Air Force program, along with growth in our GLC and media markets.
While we just launched our energy offers offerings recently, our conversations with multiple utilities have given us great confidence in our 2021 pipeline and growth prospects. In this massive market were over 750 billion is invested in globally.
Electricity generation and distribution projects annually.
In addition, our AI, where enabled advertising services grew by 2.5 million or 39%.
Largely driven by the initial ramp of our various offerings.
The growth was offset in part by slightly lower content licensing revenues due to the cancellation of some major sporting events as a result of COVID-19.
We reported solid case in Q3.
Our advertising services improved average gross billing by 28% year over year to 625000 compared with 409000 in Q3 2018, driven primarily by increased revenues in AI, where enabled initiatives across digital and podcasting markets.
Our AI, where SaaS solutions grew total accounts on the platform by 77% versus Q3, 2019 and increased new bookings over 32% over the same period.
Our Q3 gross profit of $11.2 million increased 30% year over year, largely driven by eight where SaaS solutions gross margin expansion.
Reflects both the revenue growth across the platform and dramatically lower unit processing cost from efficiencies realized from enhancements to our AI where operating system.
As we continued against gain scale over the next 12 to 24 months, we expect to continue driving margin improvements in our air where SaaS solutions.
In Q3 for the first time since our inception core operations posted a record non-GAAP net profit.
Zero point $4 million as kipp as it compared with a non-GAAP net loss of 3.9 million in Q3 2018.
The year over year improvement of 4.4 million or 111% was driven by the 2.6 million improvement in gross profit coupled with decreased operating expenses, particularly in the areas of personnel and professional services as a result of cost reduction initiatives implemented in Q4 of 2019.
Turning to corporate.
Which principally consists of general and administrative functions such as executive finance legal people operations occupancy costs IP and other areas to support the entire company, including any public company driven initiatives and supporting functions.
Q3, corporate non-GAAP net loss was 4.7 million.
Compared with $5.7 million in Q3 of 2019.
The year over year improvement of $1 million or 18% was principally driven by decreased operating expenses, particularly in the area of personnel and professional services due to the cost reductions I discussed earlier as well as by lower overall travel as a result of that 19.
Turning to our balance sheet.
We ended Q3 2020 with cash and restricted cash of 35.2 million.
After 10.3 million from the end of 2019, but.
The nine month increase was largely driven by net cash proceeds from financing of 9 billion and 1.3 million of cash generated from operations.
During the nine months ended September Thirtyth 2020, we raised net proceeds of $6.5 million in common stock offerings, and 2.5 million through the exercise of warrants and employee stock options.
Additionally, we undertook a PTP loan at the onset of the COVID-19 pandemic totaling $6.5 million, which we paid back in full due to the overall improvements in our business and our ability to access the capital markets. During this pandemic.
Net cash inflows from operating activities were a positive $1.3 million during the first nine months of 2020.
Due principally to positive changes in our working capital of $17.7 million.
Stated, mainly with the timing of payments within our advertising agency services.
Offset by net cash usage, driven primarily by our 16.9 million dollar non-GAAP net loss during the period.
As a reminder, a significant portion of our reported cash is essentially help for payments to third parties for advertising agency clients and our working capital will continue to fluctuate depending on the timing due dates to payments any given period.
Our unencumbered cash at the end of the quarter was $20.1 million.
Turning to our financial guidance for Q4 2020.
We expect revenue to be between 16, and $16.4 million, representing a 30% increase year over year at the midpoint.
We expect our revenue from anywhere SaaS solutions to again posted double digit increase sequentially and our other businesses to be consistent with their normal seasonal patterns.
We expect non-GAAP net loss to be between 4.5 and 4.0 million.
Represented a 47% improvement year over year at the midpoint.
We expect our core operations to once again be profitable on a non-GAAP basis in Q4 of 2020, and our corporate non-GAAP net loss to be relatively consistent with Q3 of 2020.
I look forward to meeting and speaking with investors.
We will be presenting interim participating in several conferences and events throughout the end of 2020, including JMP Securities small cap technology Forum on November 10.
People's Midwest, One unwinding growth conference on November 11 through the 12.
Ross Technology Virtual conference on November 11 through the 12 were Chad will be participating in a panel discussion.
Craig Hallum Alpha Select conference on November 17th.
Northland Securities I O T AI in safety conference on December 7th and Ross Deer Valley Consumer conference on December 10th to the 12.
That concludes my prepared remarks, I would like to turn the call over to Chad for final thoughts and then we can open up the line for acuity.
Thanks, Mike.
It was great to welcome Mike to the team I would also like to thank the calling for his dedication and effort over the past four years Veritone Pete has done an outstanding job of getting the company to where it is today, we wish him the best of luck in his future endeavors.
Reflecting on our last quarter I'm extremely proud of the variants and family and their continued strong performance, while the path to recovery from COVID-19, and all its economic and social fallout remains unclear. We the Veritone family remains focused on our core mission to harness the power of AI helped build a safer more vibrant.
Transparent and powered society.
This quarter's results and our bullish outlook for Q4 and beyond demonstrate the Iwear is delivering on this mission by making law enforcement more transparent by protecting America's global interest through advanced image analysis by improving our judicial rigor through intelligent evidenced processing and by accelerating.
Our path to cleaner more reliable energy, we had baritones the amazing opportunities for our technology to transform our world and we know our greatest days lie ahead with that we'd like to begin the Q and a session operator.
Thank you we will now begin the question and answer session.
You ask a question you May press Star then one on your Touchtone phone.
If you are using a speakerphone please pick up your handset before pressing the keys.
To withdraw your question. Please press Star then two.
At this time, we will pause momentarily to assemble our roster.
Our first question comes from Darrin.
He with rock.
Ross Capital Partners. Please go ahead.
Hey, guys. Thanks for taking my questions.
Congrats on the quarter I Hope you guys are well.
Wanted to ask I know energy is new but it seems like you guys are fairly bullish on that so could you maybe just step back two part question first.
Talk a little bit about your three verticals and AI hsas and kind of as you look at the pipeline.
The opportunity kind of what represents the most material opportunity over the kind of the next 12 months.
And then second.
Just the energy energy opportunity, where is kind of the low hanging fruit versus some of these longer term contracts might be able to.
Advanced the platform and then my last question on the energy I'm just kind of curious.
Go to market strategy, how much this has gotta inside sales channel partners et cetera. Thanks.
Hey, there. Thanks for thanks for the question. This is Chad ill take the first one and what kind of batch around on the on the back half of those.
From a macro perspective right. Our three primary verticals today from a go to market standpoint, being media entertainment and our monetization group GLC and now energy. We just saw strong growth across all three categories and really underpinned by the continuity that I wear is bringing.
To those solutions and the and the efficiencies of scale that we are getting across all the verticals and are operating on one common platform.
The business from a from a go to market standpoint, we saw on the energy side, just some immediate traction out of the gates, which was frankly, a little bit unexpected we knew our technology was more advanced and anything else that was out there, but having the best technology doesn't always lead itself to necessarily being adopted.
That quickly, but in the energy space I think that the the problem with acute enough with regard to some of the damages that have been done over the last decade to the infrastructure as renewables have been being deployed the legacy grid itself doesn't lend itself well to being a handle bidirectional energy flows and the unpredictability b.
Predictability on the supply side of energy so.
These Ceos of these companies have really latched onto our solutions and we've got a very clean path for them to to adoption.
With regards to our ability to simulate the problem and our solution for them looking at historical data and then a very well thought out and progressive plan for deployment, which we're now in in basin.
On the on the GLC side again, probably our best quarter ever in that category and strong support from our existing customers and our channel partners like Microsoft and some of our new one like George John and others, but.
The legal side as well continues to progress with the department of Justice.
And some of the Air force contracts that we have been awarded in our partnership program on the cyber side has also been been very fruitful and we have high expectations that we will be awarded a longer term contract around some bar satellite and reconnaissance image processing capability.
And then media and entertainment just remain the bedrock of the company and we have great traction with our partners. We continue to have near zero attrition.
And revenue expansion across multiple new applications that we continue to to foster and develop with our partners. So I can't really speak to any negatives coated itself as kind of a backdrop has been I think an accelerant to our business as companies have changed the way in which they operate in are looking for more efficient and more remote case.
Abilities, we've just hit the nail on the head and I think our 40 plus percent growth in the Iwear SaaS side of our business is evidence of that back and I don't think it's going be slowing time anytime soon.
When I talk about energy on a more specific on go to market I think your second question energy is really interesting again, we were getting pulled into partners that are just reading some of the scientific papers on our Hamiltonian.
Solution, which is our proprietary machine learning algorithms.
For optimizing the grid.
Not specific to grid energy optimization to be applied to really any optimization or machine learning process, but very well suited for the challenges in a distributed grid environment and so those gtlds are being newspapers and attending conferences that our chief data scientists Dr. Wolf cone attends and speak that frequently so I think we.
Just got a really good traction and pull through through the technology side of these these companies from a from a client health standpoint, it it's really primarily grid operators, whether it was our first foray into the market, but then right behind that as as we start to deploy the solution. The deployment has the integrating with everything from solar panel.
The company to Transformers, and Inverters, just some of the SCADA systems that are in those energy grid themselves. So we're starting to see ourselves having strategic conversations with the existing legacy hardware suppliers in a multi trillion dollar global market.
On the on the other side, though we've also seen expansion outside of the grid operators and the energy traditional energy company to some of the renewables providers as well as.
Some of the new trading desks that are starting to pop up as you know kind of my version of what I thought energy trading looked like was more on the financial side back in the Enron days.
Nothing could be further from the truth Theres now multiple energy exchanges, where people are at energy companies are buying and selling energy in real time, and transacting and trading the energy across grid. So I think we're looking at a very bright future for a democratize decentralized.
And de Carbonize.
Energy platform for the United States and beyond that Veritone is going to play a very strategic role in making a reality.
That's really good color, mostly little more in.
Perfect Thats great answer. Thank you for that just one on the financials, maybe for Mike and Mike Welcome. It looks like you guys grew sales within two and a half million sequentially, but cost of goods only went up by a couple of hundred thousand and then you talked about.
Cloud efficiencies and then you've also talked about with Iheart. Once here one application on since kind of pass through margin down I'm. Just curious as you grow revenue how sustainable is that margin improvement that we saw in the third quarter. Thanks.
Kevin we're not going to get.
Any detailed color going forward other than we do expect more efficiencies.
And as I mentioned.
During the call those efficiencies are really coming from two parts. One is the growth in more accretive revenue into the cost cutting efficiencies weve done specifically around cost of sales and we're going to continue to drive that margin.
Obviously, the the hurdle is going to get harder and harder as you go forward in terms of sequential and year over year improvement on but we're laser focused on it.
Thanks.
Our next question comes from Pat Walravens with JMP Securities. Please go ahead.
Oh, great. Thank you and congratulations.
Great quarter, Thanks, Pat just step back for a second and.
I mean it.
In Q1 revenue of negative 2%.
I got this wrong. So I mean Q2, 8% in Q3, 23, and you're guiding at the midpoint to 30 in Q4. So that's that's quite an acceleration can you just sort of simplify it for us and just if there is sort of.
One or two or three things that you would point to is the driver behind the acceleration that this company what would you say they are.
Yes, I'm surprised you're asking me the softball question I thought I was in the guys had the normal from you, which is you know how does biden versus Trump affect your business, but I'll gladly answer the trend question.
We've been laser focused in last year and this year on on hardening, the Iwear operating system and by hardening and I am referring to its reliability stability and flexibility to be adopted through.
Really any use case that is out there in the market and we really achieved that goal as we mentioned in Q3 Q4 of last year and it set the stage for our sales engineers and our inside sales and our outside sales in our business partner and our channel partners to now finally start to be able to reliably deploy eyewear and its power.
To to really any industry today, we're operating in three.
But the fact that we're getting so much leverage on that technology, and what's driving down our operating costs at the same time is improving.
The efficiency of our cost of sales in the efficacy of our products I think the other one is once a customer hesitate to the iwear with one application I think Darren mentioned that his call and they're on the operating system. It's now literally a couple of quick than a phone call and you got a new application and running and the margin improvement for us on those things.
In dairy and tertiary applications at the same customers now using the again just creates great efficiency fourth of the business that delivers more.
More value to our customers more quickly.
All right that's great and so you brought it up so let's hear it what is the election mean for you guys.
[laughter].
Yes for you to come and the.
No I think we're agnostic to it honestly be the industries that were operating in are so important strategically in United States that the drivers whether that be in energy or in government legal and compliance.
Our beyond sort of basic for quarter four for a four year.
Political movements that might be happening and so we've been playing across the aisle with really no challenges for us as an operating group in those sectors and believe that we'll work very well with.
The biting team as they come to power.
On the media and entertainment side, I think we've had a tough.
Tough sledding in the in this covance situation I think covert gets under control I think media entertainment.
Despite performing very well given our peers I think we'll even continue to see acceleration.
Subside.
Okay, Great, we'll dig into all that more tomorrow. Thank you Jeff.
Thanks, Jeff.
Our next question comes from Tom Diffely with D.A. Davidson. Please go ahead.
Yes. Good afternoon, so maybe first a follow up to the previous.
Question on the the model itself on leverage.
Mike It looks like you're guiding for revenue growth quarter over quarter, but roughly flat EPS I'm. Just curious if there is any particular costs or expenses that we should think about going into fourth quarter.
Yeah, that's a great question I mean were.
The growth that we're targeting particularly in the energy sector and the GLC markets.
Yeah, we're going to be investing in those so we will have modest increases from an operating perspective.
But overall.
Not significant.
Okay, and then I know, obviously media did quite well in this tough year anyway to quantify how much revenue you did lose from the delayed or canceled events that will most likely come back next year.
Brian do you have any insights on that too you can put some quantity around but I don't think we yeah, yeah yeah.
Yes, I don't think were we would be able to reconcile that since some of these events are happening again.
And is being broadcast at a later date such as the as the Masters.
But it was not an inconsequential.
Inconsequential, some but I don't think it was overly material. So again as we look at sort of 2021 each.
Even if we see delays for major sporting events or I'll say, a very light audience.
Based life events I still don't think its going to have a material impact on a negative basis to our business going forward.
Okay, Great and then Chad I'm going.
Going back to the energy markets.
You did a nice large regional utility work right now is this a situation where it's kind of your proof of concept and it depends on how that goes it could really open the door or are things already moving pretty quickly with other players.
No great question. No. This is this is not a proof of concept. We're in full full deployment mode right now with a major us utility with high expectations given the modeling that we've already done in our simulators.
The expectations on both sides are very high and we expect those to be to me reached here very quickly.
And on the business development side, we are great traction again in a multiple different vectors, obviously energy offer.
Operators, both legacy grid operators and the renewable micro grid that are now popping up all have have great.
Affinity towards our solution, but I think that one of the more interesting opportunity. That's out there I guess I just briefly touched on was on this energy trading desks that are stopping happen in Texas. For example, there's the Aircard exchange there's another one out here on the west as well.
Where I think it's 50 megawatts is the required energy that youll be providing to the grid to the exchange, but this is truly real time energy arbitrage, that's going to start to flatten and smoothed out and reduce costs.
To the end user front with regards to our U.S. energy Bill, so very exciting capabilities and baritones arbitrage solutions and predicting.
He is a great role in that and that new solution.
Okay. Thanks for the color.
Thanks.
Our next question comes from Mike Latimore with Northland Capital. Please go ahead.
Hi, I'm jealous how on all my.
Cognizant on paid Garca.
I wanted to know.
How are bookings at Microsoft as a five month in the quarter.
So openly discussed venues skus and the bookings kind of size.
Great. Thanks, Rob why don't you pick that up.
Yeah, I guess you could I think you are talking about any activity specifically with Microsoft.
Terrific use cases, so I won't comment on I guess or the size on board I can say is Microsoft has been a very active partner with us I'd say highlighted by.
Most recently, our sort of collaboration with Gov key way.
That really focuses on public information request and freedom of Information Act request, where we're an integrated technology partner with Cups, you weigh in and running on issuer and that's something that we're aggressively marketing and selling.
To both let's say regional and state wide organizations.
Brian It really runs the gamut redact baritone redact, our programmatic and automated production application suite.
As really gains traction I think we're servicing.
Well over 100 active policing sheriff departments across the United States.
And again I think just think of Microsoft is mostly focused on.
On larger I'll call NFL cities size opportunity than statewide, but we still have a very active channel opportunity and direct sales efforts to regional and smaller agencies as well.
Okay and Uh huh.
However, I think the main thing in the quarter as compared to net expectation and.
Is this an important goal getting for you next year.
Yeah, Ryan let me handle that does to the department of Justice and legal versus more traditional public safety, we don't segment out our revenues that way.
Again, but GLC in its entirety had a very very strong quarter and we expect those those growth to continue in the foreseeable future.
Obviously, our relationship with the Department of Justice continues to to build as our deployment in our fed ramp continue to hard and with the progress that we've made with the Iwear. So I think that we will continue to see positive growth both out of the again public safety and the legal side of the business.
Okay. Thank you.
Our next question comes from Nik Modi teaching with Craig Hallum. Please go ahead.
Hi, This is Nick.
For Chad Bennett, Thanks for taking my questions. So.
So just on the eyewear business I'm curious how much of that is recurring in this quarter and if you could speak about that through the lens of the media and entertainment vertical and then.
Also the new energy bookings.
Yes, Mike why don't why don't you take that one.
Sorry, so it's about 50 50 between the growth from.
The SaaS perspective.
Is 43%.
Year over year.
And then equal side on the media side.
The growth predominantly from from the various business.
So it's about 50 50.
And then on the new energy bookings can you talk about we don't we don't give exact yeah. We don't give exact details on but just know that between GLC energy I mean, these are growing 100% quarter over quarter.
So.
These are these are great very high growth areas for us at the present moment.
But other than just one last one from me so it looks like ARPU goes down 15% quarter over quarter could you just help me reconcile that with some of your earlier commentary.
Thank you.
Yeah, I mean, it's down slightly but it's not material.
We'll leave it at that.
Great. Thanks.
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Showing no further questions. This concludes our question and answer session.
I would like to turn the conference back over to Chad Steelbrick for any closing remarks.
Thank you operator, and thank you all for joining us on todays call as I said I am so proud of the way our entire team has performed to achieve these record results I want to personally thank each of them for their tireless efforts and for their unwavering focus on continuing to pursue our vision of building the world's leading AI solutions company, we have huge opportunities on our big.
And our teams are better positioned to capture them than they ever have before we look forward to reporting to you on our progress Goodbye.
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