Q4 2020 Veritone Inc Earnings Call
[music].
Good day, and welcome to the Verra tone and fourth quarter 'twenty 'twenty financial results Conference call.
All participants will be in a listen only mode should you need assistance. Please signal a conference specialist by pressing the Starkey followed by zero.
After todays presentation, there will be and opportunity to ask questions to ask a question. You May Press Star then one on a touchdown and found to withdraw. Your question. Please press Star then two please note. This event is being recorded I would now like to turn the conference over to Brian Alger Senior Vice President of corporate development and <unk>.
Mr Relations. Please go ahead.
Good afternoon, and welcome to Verifone, and <unk> fourth quarter and full year 2020 conference call I'm, Brian Alger Senior Vice President of corporate development, and Investor Relations and through the market close today baritone issued a press release announcing results for the fourth quarter and full year ended December 31, and 2020. This press release is available and the investors section of our web.
Right.
Joining me for today's call are very Jones, Chairman and CEO, Chad Gilbert President, Brian and silver and CFO, Mike and I'm not sure. Following their remarks, we will 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 <unk> business strategy and future financial and operating performance, including its expected net revenues non-GAAP net loss for the first quarter and full year of 2021. Please note that for the first time, we will be providing guidance for the full year. In addition to the current quarter. These forward looking statements.
They're subject to risks uncertainties and assumptions that may cause the actual results to differ materially from those stated or implied by those statements certain of these risks and assumptions are discussed and baritones SEC filings, including its annual report on form 10-K, which will be filed and in the next few days.
These forward looking statements are based on assumptions as of today March 4th 2021, and very tall and undertakes no obligation to revise or update them.
Yeah.
During this call and the actual and forecast and financial measures, we will be discussing other than revenue will be presented on a non-GAAP basis, unless otherwise noted reconciliations of these measures and a corresponding GAAP measures are included in the press release, we issued today. These non-GAAP measures, including a breakout of our results between core operations and corporate core.
Consistent work and we're operating platform of software and SaaS and related services or content licensing and advertising services and their supporting operations, including the direct cost of sales as well as the operating expenses for our sales marketing and product development and to a lesser extent certain general and administrative costs.
Corporate consists principally of general and administrative functions, such as executive finance legal people and.
<unk> and other areas that support the entire company, including any public company driven initiatives and supporting functions and finally I would 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 our company's website at www dot baritone dot com.
Now I'd like to turn the call over to our chairman and CEO Chad steel Bert.
Chad.
Yeah.
Thank you, Brian and thanks, everyone for joining us on today's call 2020 was a pivotal year for the planet with Covid and social unrest shaking the very foundations of society and yet in the midst of this turmoil baritone demonstrated great agility and speed of thought and execution to not only survive, but thrive delivering for our customers.
And while keeping true to our core mission and building, a safer and more vibrant transparent and empowered society through artificial intelligence.
I am proud to report that our efforts are paying off fourth quarter, 2020 revenues grew 35% year over year and today, we are guiding to 2021 full year revenue growth and excess of 40% at the high end of our range driven by our SaaS business growing 60 to 65 per cent.
And 2020, and where it came into its own and a full fledged distributed intelligent operating system with massive performance reliability and deployment improvements.
As a result demand for our cognitive solutions from our customers and partners across multiple markets. This past year is accelerating.
We are very grateful to have so many loyal and successful customers exploring the boundaries of artificial intelligence with us and applying it to their real world problems and their results have been profound and have led to repeat and expanding relationships.
Our media customers are using and I were to learn what makes their audiences pit and in turn helped them deliver more engaging programming and advertising solutions.
Our law enforcement partners are solving heretofore unsolvable crimes and processing and crime scene data and other legal evidence and super human scale and speed to help find the needle and the haystack and sometimes even the smoking gun.
And I were assist investigators and their pursuit of justice well also speeding the disclosure of audio and video footage to the public increasing transparency and trust.
Sunni eyewear will be helping the U S government and our allies to analyze huge volumes of aerial images faster and more accurately and humans to identify threats to our national security.
Most recently, we focus the power of AI, where when addressing the enormous reliability and safety challenges facing electric utilities and they struggled to manage extreme weather.
Natural disasters and unpredictable green energy sources with aging grid technology that largely still relies on human and the loop decision making.
The widespread power outages, and California, and Texas and the past year have underscored yet again, the need for a more robust electrical grid or AI, where energy solutions address the critical needs for a better forecasting synchronization and optimization to make power grid more resilient and efficient.
Early customer data from our forecasting engines combined with our optimization technology leads us to believe that our technology will enable our current and future utility partners to realize significant reductions in their spinning reserves protect critical grid infrastructure and reduce costs, while at the same time, improving the quality and reliability.
Service to their customers.
We believe <unk> is uniquely positioned to solve these distributed challenges and the AI energy management market, which is projected to exceed 7.8 billion by 2020 four.
I'd like to pause for a moment and let the magnitude of these opportunities and settle in.
I realize that per some it's hard to believe then and Nathan company like baritone could be leading the world and this AI Revolution.
But then again, we arent alone.
And we stand with giant partners like Microsoft and Nvidia that are symbiotically collaborating with us as we leverage the performance and flexibility of our third generation operating system and proprietary Hamiltonian models to Usher in a new era of artificial intelligence powered by AI, where.
Our passionate pursuit of this AI powered future and strong belief and the meaningful role varied and will play in shaping this trajectory are being driven by many factors.
Few of which I will highlight to help align our perspective and expectations with yours.
First.
Organizations globally are expected to spend more than $100 billion on AI solutions annually by 2025.
And we think that's a conservative estimate we believe the Tam will be even larger as AI adoption diversified and accelerates.
Especially for those companies serving both the commercial and government sectors. We are seeing D C and a behavioral change and the marketplace organizations are no longer simply experimenting with AI, but rather are depending on it to deliver improved operational performance.
Second Virtu and offers hundreds of fully orchestrated world class cognitive models and cutting edge machine learning technologies, including our patented co-operative distributed inferencing and prediction and optimization models more companies and government agencies are learning about it across more verticals and geographies.
Our customers depend on us to deliver the growth cost savings and efficiencies that come with the adoption of our AI platform and cognitive engines.
Third.
And is it run anywhere and everywhere solution today, and where operate and both AWS and azure, including our AI, where government fed ramp certified version and we are also deployed and processing data on the edge and our customers' on premise data centers, we expect our support of Nvidia Cuda and E. G X.
Further expand our deployment and use cases into the Iot realm.
And B Arctic relationship between baritone and I were operating system and and videos advanced processors follows a proven path for success and is reminiscent of the wind tell relationship that dominated the computational computer revolution.
Finally, and where it isn't open standard driven O S. A model, whose success has been proven time and time again, just think of windows over Mac Linux over Solaris or even Android over I O F. The largest and most vibrant ecosystems have always been built on open standards.
We see and we're unlocking and several successive levels of value for customers measured and orders of magnitude on a logarithmic scale I look forward to discussing this more and our inaugural technology Expo and Matt.
Baritone is quickly maturing as a company and force and the AI Revolution with our management team and go to market efforts finding their rhythm. This stability gives me comfort and more importantly, a strong platform to continue to innovate and make calculated that an exciting new opportunities with them.
That I would like to now hand, the call over to Ryan, our President and co founder to discuss our operational achievements and greater detail.
And you're right.
Thank you Chad and good afternoon, everyone.
As Chad mentioned, we had a very strong fourth quarter and finish to our exceptional year and.
Every area, we delivered results above the expectations, we had set when we spoke with you in November.
SaaS revenue grew by 53% year over year, and Q4 and by more than 30 per cent for the full year.
Our G O C and energy markets were the strongest contributors just as they were in Q3.
I also want to call out our exceptional performance of our advertising team fueled by the insights and differentiation enabled by AI, where this team massively outperformed its peers throughout 2020.
Advertising revenue, including the contribution of our very adds network grew by over 50 per cent and Q4 compared with Q4 of 2019.
Dear and ear and which many AD budgets were slashed their tone showed marked increases in spend from many of our clients, including draft Kings Purple, Hello, fresh and others.
Out the year as customers continue to recognize the differentiated results, we provide true AI, where we increased gross billings per active customer.
Entering 2021 baritone is currently delivering AI solutions to thousands of customers. We are addressing large and complex problems for our federal government and we are leveraging the same architecture to enhance and augment workflows for hundreds of organizations some.
Some of these engagements are multiyear and several million dollar contracts and others can be as little as a few hundred dollars a month truly democratizing AI and machine learning and delivering it to a much more expansive market.
Flexibility scalability and performance of the AI, where operating system enables burtone, our partners and third party developers to rapidly create and deploy cognitively driven solutions into virtually any industry and so we believe that baritones market opportunity is substantially larger than other providers.
This past quarter, we announced partnerships with Nvidia and all tricks AI.
Hey, eyewear is a complementary technology that extends and accelerates AI adoption and efficacy by providing a cognitive O S that unifies big data platforms advanced processing power and end user applications into a single holistic solution.
Our relationship with Nvidia truly extend a eye wear everywhere, we've already realized accelerating processing speeds and the cloud through our integration with and videos Cuda Gpus and with our integration with their Iot platform E. G assets, we will deliver cognition and real time dynamic model creation to the edge.
We are applying this to our AI, where energy solutions and believe that it has potential to transform multiple industries.
And the case of all threats, we've completed our technical integration and are working directly with the company's leadership and customers to deliver unprecedented eyewear capabilities and develop new use cases.
AI is now available to altra, and 7000, plus and customers and the self service cloud service for a few hundred dollars per user per month.
This integration with ultra <unk> represents a significant milestone for baritone and we plan to replicate this integration with other leading data analytics platforms.
Looking at AI, where SaaS solutions and greater detail revenues in Q4 were $4 4 million up 53% year over year and 31% sequentially.
We delivered double digit sequential growth and each of our primary SaaS verticals accelerating off the strong performance we posted in Q3.
Our opportunities supporting the Air Force continue to grow augmenting our rapidly increasing activity with the department of Justice.
We are partnering with multiple prime contractors, who have recently been awarded contracts under the D. O J. Its 1.5 billion dollar Nuggets five automated litigation support contract to support our eight our software and cognitive processing and services under those contracts.
Additionally, we have submitted proposals to provide AI, where anywhere within various groups and the department of defense and the broader intelligence community.
We recently completed a successful proof of concept project, where a Canadian government entity, expanding our federal government efforts beyond our domestic market.
At the state and local level, both our direct and channel partner sales initiatives are gaining traction and our initial direct sales go to market is being augmented and expanded by our partners into a number of regional statewide initiatives.
And that it is too early to detail.
High renewal rate and expansion of engagements gives us increasing confidence and a sustainable growth potential of our sweat offerings, where we continue to benefit from strong product fit.
And our other markets, which are dominated by our energy offerings today, we achieved over 50% sequential growth and are engaged on a number of projects and its rapidly emerging market.
Initial implementation and began at the end of the fourth quarter and the first dataset started to come back this week.
We and our customers look forward to reporting on the very promising results in the near future.
And any incremental revenue from a tribute across our existing customers as well as new account growth and both television and radio drove our Q4 revenue was up more than 12% year on year.
As Mike will discuss later, we expect further revenue acceleration and our our SaaS solutions in 2021.
And our AI, we're enabled advertising services a record performance for the fourth quarter and full year 2020 is a testament to both the AI work technology that we leverage and to the outstanding efforts of our advertising team, which once again executed well above their peer group.
In aggregate Q4 net revenue in our advertising business grew 11% sequentially and 50% year over year. These.
These are tremendous results in any economy, let alone in the midst of the pandemic affected ad market.
We continue to gain momentum with our very adds network.
Which generated over $4 million of revenue and 2000 and 'twenty based.
Based on our strong bookings momentum we have already achieved we are confident that 2021 will be another strong year for our advertising team.
And our content licensing and services, where we leverage the power of AI, where to index search and reposition premium video and audio content for licensing by advertisers and content creators, we continue to face headwinds associated with the pandemic. In addition to the normal seasonal slowness. This drove both sequential and year on year to <unk>.
<unk> and content licensing revenue.
Fortunately, we are experiencing a seasonal uptick in Q1 and key sporting events like March Madness, and the masters are back on calendar, even if they will occur with diminished life crowds.
Both with production activity rebounding, we look forward to content licensing revenue returning to its pre pandemic levels over the course of 2021.
In summary, we expect strong momentum and organic growth across all of our markets and 2021.
And now I will hand, it over to Mike Some metro and our CFO to detail the financial results of the fourth quarter and to outline our financial guidance for the first quarter and full year 2021, Mike.
And Mike.
Thank you Brian.
We posted record results and Kpis for the fourth quarter and full year of 2020 across the board.
Seeding our financial guidance.
For the fourth quarter, we reported $16 8 million and revenue.
And the non-GAAP net loss of $3 9 million.
Since this is our year and I will first highlight our full year 2000, and 'twenty results and then spend more time discussing our year over year performance in Q4 of 2020, compared with Q4 of 2019 as well as providing some comments on our sequential performance versus Q3.
Turning to full year 2020 performance.
Your revenue was a record $57 7 million up 16% year over year from $49 6.002 million 19.
This growth was driven by improvements and advertising and AI where SaaS.
Offset by slight declines and content licensing and due to cancellation of some live sporting events caused by COVID-19.
In 2020 advertising grew 29% year over year due largely to our very adds networks, which we launched in late 2019, coupled with growth and our agency services.
Gee, I, where SaaS grew 30% year over year, as we expanded our footprint and the media and entertainment GLC and energy markets.
The real story is our sequential improvement and revenue throughout 2020 and.
And the acceleration in our year over year revenue growth rate over the course of the year.
From down minus 2% and Q1.
Up, 8% and Q2 to up 23% and Q3 and up.
35% and Q4.
Our AI, where SaaS growth in particular accelerated and the second half from 2020.
Growing, 43% and 53% and Q3 and Q4, respectively compared with the prior periods.
I will get deeper into revenue drivers later.
Full year gross profit reached 42 million and proving seven 7 million or 22% from 2019.
This too was largely driven by AI, where SaaS solutions, which.
I will get into into more detail later.
Overall gross margins increased to 72, 9% and 2020.
Compared with 68, 7% and 2019.
Full year non-GAAP net loss was $20 6 million and $15 6 million or 43% improvement over 2019.
Driven by improvements in core operations and to a lesser extent and corporate.
2020, non-GAAP net loss per cooperations with 0.8 million, a $13 7 million or 94% improvement from 2019, driven largely by margin improvement coupled with a full year benefit of cost improvements enacted and the latter part of 2019.
I will elaborate more and these improvements later.
Now I would like to discuss our results for Q4 of 2020.
Our Q4 <unk>.
Revenue of $16 8 million was up 35% from Q4 2019.
Year over year and were SaaS solutions grew 53 per cent to four 4 million compared with $2 9 million and Q4 of 2019.
Driving this improvement was revenue from our new AI, where energy market, where we continue to deliver important technology milestones in Q4, along with growth and our GLC and media and entertainment markets.
While in the early stages of deliverables across the energy market, we remain incredibly bullish on our 2021 pipeline and growth prospects and this multibillion dollar market and we.
We expect to announce material developments and new bookings as early as Q2 of 2021.
In addition, our AI, we're enabled advertising services grew by $3 2 million or 50% year over year, driven by both the ramp of our various networks and growth and our agency services.
Our year over year growth was partially offset by slightly lower content licensing revenues due to fewer live sporting events as a result of COVID-19.
We reported solid Kpis results and Q4, our advertising services and proved average growth billings by 24% year over year, 632000, and Q4, driven primarily by increased revenues and AI where related initiatives across digital and podcast and markets.
Our AI, where SaaS solutions grew total accounts on the platform by 77% year over year and Q4.
New bookings were down year over year due in large part to the timing of our large I heart media agreement and Q4 of 2019.
Coupled with significant pending deals with GLC and energy customers shifting to the first half of 2021.
Q4, gross profit reached $12 7 million, improving $3 8 million or 43% from Q4 of 2019.
This increase was driven largely by the expansion of our AI, where SaaS solutions gross margins to 67, 2% and improvement at 63% versus Q4 of 2019.
Sequentially and were SaaS margins improved each quarter, driven largely by the higher revenue level with a blended incremental margin of over 80% on new accounts and dramatically lower unit processing costs from efficiencies realized and our AI, we're operating system.
Overall Q4 gross margins increased to 75, 6% compared with 71, 8% and Q4 and 2019.
As we continue to scale over the next 12 months to 24 months, we expect to continue to improve AI, where gross margins.
Q4, non-GAAP net loss was a record $3 9 million.
$4 1 million or 52% improvement from Q4 2019, driven by improvements in both core operations and corporate and.
And Q4 core operations posted a record non-GAAP net profit of $1 1 million compared with a non-GAAP net loss of two 5 million and Q4 2019.
And a $3 $6 million year over year improvement was principally driven by the improvement in gross profit.
And Q4, corporate and non-GAAP net loss was $5 million compared with $5 6 million and Q4 2019 and.
The year over year improvement of <unk> 6 million or 11% was driven by net decreases and operating expenses largely around personnel and professional services yielded by cost reductions enacted in Q4 2019.
Coupled with lower overall travel as a result of COVID-19.
Turning to our balance sheet.
We ended Q4, 2020 with cash and restricted cash of $115 7 million.
77 million from $44 9 million at December 31, 2019.
The year over year increase was driven largely by net cash provided by financing activities of $69 5 million and net cash provided by operations of $1 4 million.
During the year ended December 31, 2020, we raised net proceeds of $66 3 million and common stock offerings.
Which includes our Q4 2020 sale of $3 5 million shares raising net proceeds of approximately $60 million.
And raised an additional $3 2 million through the exercises of warrants and employee stock options.
The Q4 2020 capital raise gives us sufficient growth capital to execute on our near term operating plans.
Net cash inflows from operating activities were $1 4 million during 2020.
Due principally to positive changes and our working capital of $22 8 million principally associated with the timing of payments and our advertising services.
Set by net cash usage, driven primarily by our $20 6 million non-GAAP net loss during the period.
As a reminder, approximately 35% of our reported cash is essentially held for payments to third parties for advertising agency services.
And our working capital will continue to fluctuate depending on the timing and do day to payments and any given period.
Our unencumbered cash at the end of the year 2020 with over 70 million a substantial improvement from approximately $20 million at the end of Q3 2020.
We ended 2020 with 31 8 million shares outstanding.
Turning to Q1 and full year 2021 financial guidance.
Today, we will be the first time baritone is providing annual guidance on both revenue and non-GAAP net loss.
This is the direct result, and the high visibility and confidence and our revenue pipeline and more importantly, and our ability to drive renewals and net retention and our existing customer base.
Now turning to Q1 2021.
We are excited to guide Q1 revenue to be approximately 17 and $17 5 million.
Presenting a 45 per cent increase year over year at the midpoint and sequentially up from our strongest quarter ever and Q4 of 2020.
We expect non-GAAP net loss to be between 4.4, and $3 9 million Rep.
Representing a 38% improvement year over year at the midpoint.
We plan to invest responsibility and resources and key areas to help accelerate our growth throughout 2021.
With this we are forecasting our core operations division once again be profitable in Q1, and 2021 and our corporate overhead non-GAAP net loss to be relatively consistent with Q4 2020.
I'll mention two additional items for Q1.
As a result of the recent improvement and our share price, we will recognize a onetime noncash expense of approximately $16 2 million and Q1 2021 associated with divesting and certain performance stock awards during the quarter.
And a onetime noncash charge of approximately $4 5 million related to write offs of leasehold improvements furniture and certain other expenses associated with the sublease of our former corporate headquarters.
For full year 2021.
We expect revenue to be between 76 and $81 million representing.
Representing a year over year increase at 36% at the midpoint and over 40% at the high end and expect our AI, where SaaS revenue to grow 60% to 65% year over year.
And we expect non-GAAP net loss to be between 18, and $14 million, representing 22% improvement year over year at the midpoint.
We are forecasting to invest and growth this year, mainly and sales engineering and marketing as well as into our infrastructure as we rollout our first year Sarbanes Oxley requirements corporate development initiatives and some planned early international expansion efforts.
I look forward to meeting and speaking with investors we plan to host a technology Expo in May 2021. Following our Q1 2021 conference call. In addition, we will participate and upcoming events, including the Roth Conference in March and the Stifel Conference in June.
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 Q&A.
Yeah.
Thanks, Mike.
Reflecting on 2020 I'm extremely proud of the <unk> family and a continued strong performance.
While the path to recovery from COVID-19, and all its economic and social fallout continues to evolve we remain focused on our core mission.
And as the power of AI to help build a safer and more vibrant and transparent and empowered society.
Last quarter's results as well as our strong 'twenty 'twenty, one guidance and long term outlook demonstrates that <unk> is delivering on this mission.
Our expansion into the clean energy sector is a prime example of the universal applicability of AI, where and the types of large and mission aligned bets that Burton will continue to make.
We had burton and see amazing opportunities for our technology to transform the world and we firmly believe that our AI. We're operating system is fundamental to this endeavor.
With that we'd like to begin the Q&A session operator.
We will now begin the question and answer session to ask a question Press Star then one on your Touchtone phone.
If you are using a speakerphone please pick up your handset before pressing the keys.
And anytime Youre question has been addressed and you would like to withdraw your question. Please press Star then two.
At this time, we will pause momentarily to assemble our roster.
And the first question comes from Darren <unk> with Roth Capital Partners. Please go ahead.
Hi, guys. Thanks for taking my questions I hope, you're well nice job on me and the quarter and and nice to see the.
The acceleration on the top line and in 2020. One just three questions. If I may I think if my math is correct your AI where.
SaaS revenue somewhere in the 22 and a half million.
For 2021 first question is around the visibility with that.
Second question on energy, where are you guys seeing the most traction with grid operators equipment providers battery companies renewables and maybe just talking about the <unk>.
General sales cycle and with each of those and then last one any.
Any color you can give on automate studio what verticals, you're seeing adoption, there and kind of is that gonna be a needle mover in 2020 one.
Yes. Thanks I appreciate the questions first one why don't I teed up to Mike to address that one and then I'll pick up the second one and the third Mike Yes, Yes sure.
And I think Gary Yeah, and in terms of visibility now I mentioned it earlier on the call.
Tank car.
And the reason why we're providing and annual outlook is we are highly confident and.
And that visibility and pipeline and particular with SaaS and.
So so the visibility is there and the confidence is good and we're also.
The net retention that we're seeing even in our advertising business is pretty phenomenal so in and very strong in terms of pipeline. So.
Okay and answers your question.
Yeah, Let me I'll add on to that Mike as you know and as we sit here today, the book of business and pacing of existing customers and our M&A SaaS and advertising businesses already exceed and it'll be clear on this already exceeds our revenues from those groups and all of 2020.
And to that you know.
Add to that the visibility we have on substantial contract from the G O T and energy sectors, we are extremely confident and our guidance because of the book of business. We know we already have which goes well beyond the classic definition of bookings and even T. C. B.
So moving to the second question and I think it was related to energy and sort of the go to market cycle. There remember, we just launched our energy business.
And Q3 of last year and as it ramps and that of course is gonna be a little bit lumpy Q4 energy revenues. However were up roughly 50 per cent from Q3.
And as I said in my prepared remarks, right, we began getting collecting data back from our bead and utility customers. This past month and the early results are extremely impressive so state and stay tuned on on what that means for the rollout here, but our go to market cycle is really penetrating primarily utility and IPP independent power providers.
In the market today and that already have existing operations and customers and this is where our technology makes the biggest difference and impacts and customers and you've seen as I mentioned and again in prepared remarks, what's happening in California and Texas.
And and I think that's not unique I mean, what we're seeing and Florida and other markets, they're having just a really difficult time.
With their green energy deployment, causing just massive catastrophes at the hardware level as well as and their ability to deliver quality power and a consistent basis to their own customers, especially as green power starts increasing as a total percentage of overall power supplied to those grids and it just becomes a greater and greater impact.
Factor that can't be mitigated by other sources, so being able to predict optimizing and control that grid and those green energy sources is gonna be paramount to achieving our green energy objectives, not only domestically, but abroad and our go to market cycles is really classic business development. We've got a few channel partners that have already been engaged with us but also we are working with direct sales and.
And and have a number of the biggest utility companies, both domestically and internationally and engage with us.
The last question was automate studio automate studio.
Launched obviously last year, we did a significant integration with all tricks that we announced just recently.
We're already starting to see upticks and the customer adoption and use cases, there and we're working right as Brian mentioned with all tricks and management team and their go to market motion bolt and the federal government sectors as well as and the commercial side, what's been really interesting novel use cases that begins to augment their analytics platform with now true artificial intelligence that can.
Can be applied to to nearly any any use case and those and those sectors. So stay tuned there as we continue to roll that service out what I'm. Most excited about about that go to market motion is the first time baritone has offered a completely self service SaaS platform that allows and customers to self sign up and provision and pay for.
For our <unk> solutions, specifically automate studio. So I every great SaaS company that you can name has always had a direct self service.
And service that they had been and made available and I think per ton is following and those footsteps.
Thanks for the color.
Sure.
The next question comes from Brad Reback with Stifel. Please go ahead.
Great. Thanks, very much a couple of quick ones from me.
The sequential growth and assess business nothing short of astounding.
Very strong.
How should we think about the shape of that curve over the course of 'twenty. One were there any one time items that that's true for Q, a little higher and and maybe there's a lull and <unk> or is this the new base level.
Yeah.
Michael I can take that yeah, yeah, I can take that one.
I mean in terms of you know next quarter I think you know youre going to see similar themes.
With the sequential growth really coming from GLC.
And energy and then and then as we started as I mentioned in Q2, you know, we're looking to announce very promising.
Activities around the end of June energy sector.
So there there may be some one time things and they're like deliverables that would be enterprise level for example.
And then and then it will sort of normal its way down.
Got it.
You know our projections here on a quarter over quarter basis, we will follow our plan to follow a similar pattern with what you saw in 2020 as far as sequential growth.
Great and then my mother.
And <unk>.
Got it and then sort of one housekeeping note whats the right share count that we should be using for the quarter and for the full year.
As far as the quarter, it's about 31 8 million shares.
And the year, and and and and I would use $31 8 million for right now for the year as well.
Okay, great. Thanks, very much guys.
Thanks, Brian.
Yeah.
The next question comes from Patrick Wall Ravens with JMP Securities. Please go ahead.
Oh, great. Thank you and and let me add my congratulations on all the acceleration.
I can ask a big picture one for Chad and then my follow up for you Chad can you help investors.
Investors understand the distinction between.
Verifone strategy and AI and some of the other public companies.
Like C three and talented and snowflake.
Yes, Hi, Pat how are you today.
Great Yeah happy to answer the question first I think we can all agree that AI represents one of the greatest technological breakthroughs and the history of mankind and as such there is an enormous market opportunity to enterprise.
Enterprise artificial intelligence to augment and disrupt industries and its forecast as I mentioned in my prepared remarks to exceed over $100 billion annually with just a few years and we think that's a conservative estimate.
But to answer your question more specifically using that data as a backdrop and companies are going to deliver on this opportunity through a number of different approaches you know summer are delivering point solutions software.
Others as you just mentioned like <unk>, three and Pelletier, our more consulting and services, driven and well yet again and others are building out the hardware and compute infrastructure required to support. This this and this growth and our approach is unique to this leveraging our proprietary AI, we're operating system to deliver a universal platform for enterprise and I saw.
And where that runs everywhere.
The diversity of our customers and the applications running on the eyewear and the growth that we're experiencing reinforce our confidence and our strategic approach. Furthermore, and I discussed on the call, we're pattern and our business and Technologic technology strategy on and historically successful playbook, that's and pioneered by some of the largest technology.
And existence and and.
Some of whom not by happenstance and as you know also happened to be some of our strategic partners. So we think we are very uniquely positioned and the AI marketplace, but at the same time extremely complementary to assist and other companies and its things like all three and other to start to fill some of the gaps and their product roadmap and really build and symbiotic relationship with.
And he's like Nvidia could drive further adoption and accelerate its importance and the market.
Alright, that's super Thank you and then Mike and your script you had.
And something that you don't hear very often and it kind of caught my attention. So I was just wondering if you can elaborate on it there was something about material developments and new booking as early as Q2.
Yep.
Yeah, So I sort of alluded to it earlier and this will be in the energy market and.
So a lot of the stuff that we've been working on.
We're gonna be.
Looking forward to announcing some great stuff and the second quarter.
Okay.
And then maybe one more just quick one I mean, Chad when you look at what happened in Texas, and that's something that AI could help with.
You know it's interesting when you when you really Peel back the covers of what happened there, yes, we could have forecasted it yes, our our our modeling and control software would've given operators I think a much better picture and tried to control it but at the end of the day, what happened and Texas.
Was so severe that they ended up having some of their their infrastructure their wind turbine.
We froze they had you know.
Major infrastructure on their on their coal fired plants, you know basically failing and even I think for 48 hours. They even had a and nuclear energy power plant go offline and so the confluence of B B.
These factors regardless of controlling energy was so catastrophic that I don't think we would've been able to mitigate much of it.
But at the end of the day as the infrastructure and independent power providers.
Begin to flourish in the market and you start seeing more interconnects like the Aircard exchange, but even on broader distribution long haul lines.
Our technology would have absolutely needed to get it because we would've been able to pull in additional power from areas not being hit by that storm.
On a dynamic real time basis to mitigate a lot of the impact that they had so with the current infrastructure probably difficult, but with what's planned in the future and what we're seeing and the roadmap for a lot of utilities and our technology would have been absolutely critical to mitigating that.
Okay, great. Thank you.
Thanks.
The next question comes from Mike Latimore with Northland Capital markets. Please go ahead.
Yeah.
Hi, guys.
And can follow on from Mike.
Congrats on a great quarter.
And we and update on what type of revenue are you seeing and and geopolitical or like is it license reoccurring.
And is and that's your problem is more heavily weighted to new logos or upsell.
I'll take that Mike So I'll take the second half. So it's it's both upsells and upgrades to existing customers as we expand the deployment across.
And more additional green energy infrastructure, which includes both solar as well as battery infrastructure.
But at the same time, we've got a very robust pipeline of other independent power providers and utility companies that would consist of obviously, new logos that we'll be adding to our to our roster and 2021.
And the first the first question you asked again was.
Yeah, that's what I could take another day.
Yeah.
Yeah, no problem, yeah. So so it'll be a variety and I think early on and Youre going to see.
Agreements that will be enterprise type, but have some flavor of SaaS and in terms of maintenance and support.
And then you'll see also you know.
Pure pure SaaS deliverables so.
It'll be it'll be a mixture book.
Okay, All right and then how is the visibility into the legal project pipeline and like any catalyst and the CFO and accelerating growth.
And Mike why don't you take that one as well I know everybody else do it yeah.
Yeah, Yeah, so I mean listen we're having.
Good experience on the legal side.
That's an area that can tend to be a little bit bumpy.
Because it is highly dependent upon usage.
However in terms of the fed and utilizing some of our products and the legal side, we have great visibility on that so.
So the pipeline looks robust and we feel pretty confident it's going to continue to grow.
And then and the last one how important will a microsoft or B as a channel this year.
Yes, I can answer that one Mike Microsoft I think is going to continue to be a strong go to market partner for us both in terms of the sales motion, but also a technology partner as we've expanded AI where to run natively on Azure and that's just gout and garnering.
Further and further steam is as more and more customers are piling and that that cloud environment. So as that symbiotic relationship continues to foster I think Microsoft will be leaning into the relationship even more so stay tuned.
Thank you.
Okay.
Okay.
As a reminder, if you have a question. Please press star then one to be joined into the queue.
The next question comes from Nick commodity Archie with Craig Hallum. Please go ahead.
Hi, This is Nick commodity LG on for Chad Bennett you.
You guys mentioned.
You were partnering with a couple of multiple primary contractors for air Force contracts.
Could you just expand on what Youre seeing there and if that's an extension of the Air Force contract you guys one last year.
Yeah, Brian and Brian money, you take that one.
Yep.
So I think right now as we discussed and earnings call. We have teaming agreements with multiple I'm actually almost up to a dozen of major.
Tier one prime contractors and ranging from VA systems and two others.
Our strategy is to both continue to reinforce and and work through direct and executed team and agreements with these large prime contractors, but what you'll see over the next few quarters is baritones more aggressive approach and pushing to be more and bidding on more as a prime contractor.
Some of these use cases and opportunities we feel that we can effect also it could be ultimately sole source a good analogy of that would be our idea IQ with the department of Justice, where we are the sole source prime contractor and that initiatives. So again.
And we're gonna be following a very traditional and.
And successful playbook by being both eight and a prime and a sub.
Got it.
And then and I guess on the Doj deal I think less we heard and Q2 is that it was just beginning to ramp with revenues expected in Q3.
Could you use idea of how much revenue was recognized and the second half of the year for that Doj deal.
Yeah.
Well, we won't we won't break that out.
And individually what we can tell you is.
As we are first a T O authorization operate with the Department of Justice was limited to them, there and state attorney's offices, and what you'll see over the next few quarters is a material expansion.
Of that relationship.
And compliance to support the breadth of the Doj and.
We are confident that we'll be able to talk more about that in Q2, but we do continue to believe that the Doj will be if not one of our largest if not our largest customer for 2021 and beyond.
Yeah.
Okay and then just one last one from me you asked about the energy vertical but could you just characterize and anyway.
And as expected AI, where revenue for 2020 one.
Just the mix between upfront perpetual revenue and recurring revenue.
Yeah, I think I think I might address that on a prior question, but Mike when you reiterate.
Yeah, I mean, it's.
It's a mix I mean, we do have and parts of our business.
We are dependent upon usage and all.
And other parts of our business is recurring and there'll be some enterprise type stuff, particularly in the second quarter.
That will be a little bit more one time, so it'll be a mixture.
But congrats from the court.
Thanks, Thank you.
This concludes our question and answer session.
I'd now like to turn the conference back over to Chad Steel Berg for any closing remarks.
Thank you operator, and thank you all for joining us on today's call. Although I said I am so proud of the way our entire team had proposed 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.
And if huge opportunities in all areas of our business and our teams are better positioned to capture them than they have been ever before.
And we look forward to reporting to you on our progress and the future.
Goodbye and have a good day.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.
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