Q1 2021 Veritone Inc Earnings Call
[music].
Good day and welcome to the Verra tone, Inc. First quarter 2021 financial results conference call.
All participants will be in listen only mode should you need assistance. Please signal a conference specialist by pressing Star then zero on your telephone keypad.
After todays presentation, there will be and opportunity to ask questions to ask a question you May Press Star then one on your telephone keypad to withdraw your question. Please press star.
Please note. This event is being recorded I would now like to turn the conference over to Brian Alger Senior Vice President corporate development and Investor Relations.
Go ahead.
Good afternoon, and welcome to <unk> first quarter, 2020, One conference call I, and Brian Alger Senior Vice President of corporate development and Investor Relations. After the market close day Marathon and issued a press release announcing results for the first quarter ended March 31, 2021. This press release is available and the investors section on our website joining me for today's call.
And our very Toms Chairman and CEO, Chad Gilbert President, Brian and store and CFO, Mike symmetric following their remarks, well open up the call for questions. Please.
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 revenue and non-GAAP net loss and second quarter and full year of 2021. These forward looking statements are subject to risks uncertainties and assumptions that may cause the actual results to differ materially.
And those stated or implied by those statements certain of these risks and assumptions are discussed and <unk> SEC filings, including its annual report on form 10-K.
These forward looking statements are based on assumptions as of today may 4th 2021, and baritone undertakes no obligation to revise or update them during.
During this call the actual and forecasted financial measures, we will be discussing other than revenue will be presented on a non-GAAP basis unless noted otherwise reconciliation of these measures to the corresponding GAAP measures are included in the press release, we issued today.
Non-GAAP measures include a breakout of our results between core operations and corporate core operations consists of our <unk> operating platform of software SaaS and related services or content licensing and advertising services, and then 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.
Corporate consist principally of general and administrative functions, such as executive finance legal people and it and.
And other areas that support the entire company, including any public company driven initiatives and supporting functions.
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 the company's website at www Dot <unk> Dot com.
Now I'd like to turn the call over to our chairman and CEO Chad Gilbert Kevin.
Thank you Brian.
And thanks, everyone for joining us on today's call. We are off to a tremendous start in 2021 baritone is and the strongest position and our history with over $125 million and cash no debt and a rapidly growing pipeline of business. Our momentum from last year is accelerating from a revenue market share and technology perspective.
Our total year over year revenue growth accelerated to 54% and Q1 compared with 35% and Q4.
Our Q1 performance exceeded both the top and bottom line guidance, we provided just two months ago and our outlook continues to improve.
Underpinning this growth and everything we do at bear tone is AI, where the world's leading operating system for artificial intelligence.
And whereas unique architecture enables unparalleled scalability and deployment flexibility delivering over 500 machine learning model.
Dozens of applications and a developer suite that accelerate enterprise AI adoption.
The market is rapidly shifting their focus to AI, where as more and more organizations come to realize the need for an operating system for their machine learning applications and solutions.
And March I highlighted the key factors that are driving <unk> leadership role and the AI powered future to recap and provide further insights.
First we are targeting a large and accelerating market expected to be and exits of $100 billion and just a few years.
And where is limitless capable of serving any industry.
We are now selling direct and through channel partners eyewear and do a number of new markets and the initial pilot customer feedback has been positive.
Second.
And we're already orchestrate hundreds of cognitive model and hosted dozens of applications across a growing set of industry demonstrating not only the breadth, but debt of our expertise and AI. This includes of course, our patented prediction and optimization models that we expect to accelerate the green energy Revolution.
Third.
<unk> provides run AI anywhere solutions with a vibrant ecosystem of technology and channel partners system integrators and developers whether your organization runs on Azure and AWS or your own servers, and where is there and ready to handle your cognitive computing.
And finally, and where is based on our standards driven architecture that is accelerating development and deployment of AI solutions across multiple industries and use cases.
This standards based approach creates and opened a framework for partners to deploy and extend AI, where with their own model and application.
<unk> continues to thrive because our customers continue to find value and our AI solutions. The strength. We demonstrated last year continues to build as we stay true to our core mission of building, a safer and more vibrant transparent and empowered society through artificial intelligence.
Our Sam is expanding rapidly not only with media and entertainment companies Federal state and local government agencies and energy industry leaders, but in a wide range of other global markets as well our pipeline and visibility into ongoing growth opportunities continues to build and as a result.
And we are increasing our full year guidance, which we now expect to grow by 40% year over year at the midpoint driven by the accelerating growth and our SaaS services, which we expect to achieve at least 65% year over year growth in 2021.
While the <unk> and government verticals are the primary drivers of our recent acceleration.
<unk> energy offerings are poised to deliver crucial and transformative enhancement to and increasingly complex energy infrastructure.
Unlike skater and distributed energy resource management systems baritone energy with its patented AI models and applications is the only solution capable of providing latency free prediction control and optimization across a geographically distributed power grid.
Industry experts and participants know that as more and more clean energy comes on to the grid at the utility level and at the independent and residential levels. The requirement for autonomous monitoring prediction and control is only going to grow.
Our technical progress and sales pipeline gives us tremendous confidence that the energy vertical will rapidly grow to match the strength, we are seeing and our other more mature verticals.
For those of you on the call who are new to the energy market, Let me break it down and.
In layman's terms, we make the grid plug and play compatible with new energy generation and storage solutions.
So rather than energy providers, having to manually reprogram their energy network and a sub optimal way to handle unpredictable energy flow as a result of Green energy technology.
AI, where now learned and manages the supply distribution and storage and delivery of energy autonomous Lee and and real time.
Bottom line. This means the world can accelerated to March towards the Green energy future and trust and an AI powered grid, while intelligently adjusts to ensure the delivery of clean quality reliable and cost effective energy to customers.
Next week at our Investor Day, and Technology Expo, we will be providing a much more detailed look into our business and some of the new technology innovations that we believe will drive additional growth and business opportunities for our partners and customers.
With that I would like to now hand, the call over to Ryan, our President and co founder and to discuss our operational achievements and greater detail.
Total redo Ryan.
Thank you Chad and good afternoon, everyone.
As Chad mentioned, we had a very strong first quarter and our momentum is accelerating AI driven advertising grew by 72% year over year, including $2 million from our emerging and network very ads by comparison, Barry ads contributed $4 million over all of 2020.
Our SaaS revenue grew by 51% year over year and Q1 and.
And many generated strong growth sequentially and was up over 30% year on year.
The government legal and compliance or GLC vertical delivered over 60% sequential growth and well over 100% growth versus Q1 of 2020.
As anticipated Q1 was a period of implementation and initial deployment for our energy vertical, which we expect to deliver meaningful revenues and transformational results. This year.
I will go into our progress on the energy front and just a bit.
Finally content licensing posted year over year growth for the first time since the pandemic halted sporting events and media production.
Q1 was an exceptional quarter for advertising overcoming our typical Q1 seasonality, which is particularly notable as our strong Q4 set the bar even higher.
As our Kpis illustrate we continue to drive increasing revenues on a per client basis.
In addition, we have also been successful and adding a number of significant new clients, giving us great confidence that 2021 will be another year of solid double digit growth and advertising.
As I mentioned in Q1 are very adds network generated roughly half the revenue that are recorded and all of 2020.
And we see enormous opportunity for Berry ads can be a meaningful contributor to our overall growth and profitability going forward.
At the current run rate, we expect to more than double our AD network revenue and 2021 versus 2020.
Before I detailed SaaS and licensing I think it is important for everybody on this call to understand why our advertising vertical has been so strong and continued to take market share.
It all starts with superior and timely data.
Since we started baritone in 2014, we have been using AI, where not only for AD verification, but also for search and discovery measurement and attribution.
Leverage AI, where to provider partners unparalleled results and we do it at huge scale executing over 75000 unique and integrations per month.
On a gross billings basis, we will place more than $300 million and adds this year with the majority going into digital influencers directly.
Our very adds network leverages, our relationships with leading brands together with our relationships with the broadcasters that license our technology can provide a unique solution that is further accelerating this growth.
Looking at SaaS.
From a financial standpoint, the numbers speak for themselves.
What is even more exciting and however is the acceleration and activity and the broadening of our sales funnel across all of our verticals.
And any SaaS grew revenue, 9% sequentially, we continue to retain and expand our relationships with key domestic customers like Odyssey and ESPN, while also continuing to add to our international roster of clients, including Nova Broadcasting and Australia World Athletics, and wireless group and the U K and Sony Interactive out of Japan.
Our confidence and predictability and this vertical remained high.
GLC is accelerating and as great as the first quarter was we believe we are just getting started.
At the state and local level, we have very strong product fit and are seeing accelerating awareness and adoption of our products.
On the federal level or traction within the Doj and the Dod continues to expand.
Without stealing thunder from our upcoming analyst day, and new business opportunities. We are now seeing with federal customers have grown from six and seven figure contracts to multiple eight figures.
Channel partners like Microsoft Deloitte CACI.
And <unk> lighthouse and others are all expanding our active pipeline of business.
While nothing with the government seems to have and quickly or on a predictable timeline I am proud to say that our strategy of technology first augmented by strong partners is beginning to pay off.
And our energy markets, we have made tremendous progress since March we completed.
And our implementation at our lead customers first site and the data we've been collecting and modeling against is moving that project well along as well as beginning to attract more and more entities.
Our energy team is now engaging three to five new potential customers per week.
Recall, our solutions for the energy space are multifaceted and each use case has a different combination of needs we.
We are finding that our stimulation forecaster controller and optimizer solutions are great fits where more and more applications in this market.
And our content licensing and services, where we leverage the power of AI to index search and reposition premium video and audio content for licensing by advertisers and content creators. We finally saw an uptick in Q1.
Sporting events like March Madness, and the Masters Golf tournament returned and broader content production and distribution have improved across the board.
Q1 content licensing revenue was up 17% over Q1 last year, and we expect that the market to continue to improve.
As the global economy continues to emerge from the various COVID-19 restrictions, we believe that our licensing revenue will continue to increase.
In summary, we continue to expect strong momentum and organic growth across all of our verticals in 2021.
As we will discuss during our Investor day, and technology Expo, we believe that our strong product development pipeline will continue to position <unk> as the leader and AI applications intelligent services and workflows.
And now I will hand, it over to Mike <unk>, our CFO to detail the financial results of the first quarter and outline our financial guidance for the second quarter and full year 2021, Mike.
Thank you Brian.
For the fourth consecutive quarter, we posted record results and kpis across the board.
During Q1, we delivered $18 3 million and revenue and a non-GAAP net loss of $3 9 million, both of which beat our financial guidance.
During my prepared remarks, I will discuss our year over year performance in Q1, compared with Q1, and 2020 and provide some comments and our sequential performance versus Q4 of 2020.
Turning to Q1 2021 performance.
Consolidated revenue of $18 $3 million increased 54% from Q1 and 2020.
Driving this improvement was AI, where SaaS solutions and advertising revenues.
AI, where SaaS solutions grew 51% year over year to $4.
And 7 million, principally from GLC, which generated $1 $3 million and revenue in Q1 2021.
Representing approximately 65% of the revenue generated by TLC and all of fiscal 2020, and an increase of over 150% compared with Q1 of 2020.
And Q1 2021, we sold the important deliverables across government driven initiatives within both the department of Justice and Department of Defense.
While still in the early stages of deliverables across the energy market. We continue to remain incredibly bullish on our 2021 pipeline and growth prospects and this multibillion dollar market opportunity.
And we expect to announce material developments and new bookings in 2021.
Overall, our partner driven channel strategy continues to drive results with our DLC revenue pipeline, increasing more than <unk> since Q4 2020.
AI, where enabled advertising services grew by 72% year over year to $10 3 million.
Driven by both the ramp of our very adds network and growth and our agency services.
And content licensing revenues grew to $3 3 million, a 17% improvement over Q1, 2020, due primarily to the resumption of sporting events and content production and distribution.
We reported solid <unk> results and Q1.
We grew advertising services gross billings per active client to 713000 and up 34% year over year and up 13% sequentially.
And seasonal Q1 outperformance reflects the timing of onetime campaigns and certain clients that are not expected to recur at the same rate and Q2.
As such in Q2, we expect advertising revenue to be slightly lower sequentially and expect revenue and gross bookings to continue to outpace prior year.
Our AI, where SaaS solutions grew total accounts on the platform by 12% and Q1 versus Q1 of 2020.
New bookings were also up year over year, even with significant pending deals with GLC and energy customers shifting to the mid to latter part of 2021.
Q1 gross profit for the company reached $13 5 million, improving $4 8 million or 56% from Q1 and 2020.
This increase was largely driven by the expansion of our AI, where SaaS solutions gross margins to 72%.
And improvement of over 55% versus Q1 and 2020 sequentially.
Sequentially, AI, where SaaS margins continued to improve each quarter driven largely by the higher revenue level with a blended incremental margin over 80% on new accounts.
This reflects both customer growth across the platform and dramatically lower unit costs from efficiencies realized and our AI, we're operating system.
Overall Q1 gross margins increased to 73, 6% compared with 72, 7% in Q1 and 2020.
As we continue to scale over the next 12 months to 24 months, we expect to continue to improve gross margins.
Our Q1, GAAP net loss was $30 6 million.
$17 9 million greater than Q1, 2020 due to two large onetime charges in Q1 and 2021.
First was a noncash stock based compensation expense of $16 3 million and divesting of performance stock grants, which triggered as a result of the improvement and our stock price second was a one time $3 $4 million charge associated with the subleasing of our corporate space and customer sets.
Q1, non-GAAP net loss was $3 9 million a 41% improvement from Q1 of 2020, driven by an improvement and core operations offset by relatively flat corporate year over year.
And Q1 core operations posted record non-GAAP net profit of $1 2 million, improving $3 $1 million year over year, principally driven by the $4 8 million gross profit improvement.
This was offset in part by higher investments in engineering and product sales and marketing to drive our growth plans in 2021.
And Q1, corporate and non-GAAP net loss of $5 1 million was incrementally higher than the $4 8 million and Q1 and 2020 as we responsibly invested and the infrastructure necessary to support our growth outlook and added new corporate initiatives and Q1 and 2021, such as Sarbanes Oxley compliance.
Turning to our balance sheet. We ended Q1 2021 with cash cash equivalents and restricted cash of $128 $3 million.
Up $12 6 million from December 31, 2020.
During Q1, we issued approximately 860000 shares in connection with the exercise of certain warrants and employee stock options and received net proceeds of $6 5 million.
Net cash inflows from operating activities were $6 $2 million and Q1.
Due principally to positive changes and our working capital of $10 $8 million associated primarily with the growth and timing of payments and our advertising services.
All set by our non-GAAP net loss of $3 9 million.
As a reminder, a significant portion of our reported cash is essentially held for payments to broadcasters and connection with our advertising agency services and.
And our working capital will continue to fluctuate depending on the timing and due dates of payments and any given period.
Our unencumbered cash at the end of Q1 was over $75 million versus approximately $70 million at the end of Q4.
We ended Q1 with $32 7 million shares outstanding.
Turning to the Q2 and full year 2021 financial guidance.
Given our visibility to and confidence in our revenue pipeline and more importantly, and our ability to drive renewals and net retention and our existing customer base. We expect Q2 revenue to be between $18, eight and $19 2 million, representing a 43% increase year over year at the midpoint.
And a sequential increase over our strongest quarter ever.
We expect Q2, non-GAAP net loss to be between 5% and $4 5 million reps.
Representing a 17% improvement year over year at the midpoint.
We plan to continue to invest responsibly and resources in key areas to help accelerate our growth throughout 2021.
With this we are forecasting core operations to once again be profitable and Q2, 2021, and corporate overhead and non-GAAP net loss to be relatively consistent with Q1 2021.
For full year 2021, we are increasing our revenue guidance and narrowing our net loss guidance range.
We now expect consolidated revenue to be between 78, 5% and $83 5 million, representing a year over year increase of over 40% at the midpoint, and reflecting AI, where SaaS revenue growth of over 65% year over year.
We expect non-GAAP net loss to be between 17% and $14 million, representing a 25% improvement year over year at the midpoint.
Before I turn the call back to Chad I'd like to invite you to our virtual Investor and Tech Expo day on Friday may 14th at noon Eastern time.
And you had not signed up already please do so as we will be showcasing some new and game changing applications. We plan to release over the next 12 to 18 months.
In addition, we will be speaking at three upcoming investor events on May 18th at Needham's Annual Tech and media conference and in June at Stifel Cross sector insight and Ross virtual London conferences.
That concludes my prepared remarks, I will now hand, it over to Chad Chad.
Thanks, Mike.
To summarize 2021 is a year of acceleration for baritone revenue market share and technology perspective, our.
Our GLC and media related services are rapidly gaining momentum and our energy solutions are poised for breakout financial performance.
And <unk> team remains laser focused on our core mission to harness the power of AI to help build a safer more vibrant and transparent and empowered society.
Our performance over the past several quarters as well as our increased 2021 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 debt the bear to and we will continue to make.
We had baritone see amazing opportunities for our technology to transform the world and we believe firmly that our <unk> operating system is fundamental to this endeavor.
With that we would like to begin the Q&A session operator.
We will now begin the question and answer session.
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We will pause momentarily to assemble our roster.
The first question.
Comes from Darrin.
<unk> <unk> with Roth capital partners.
Please go ahead.
Hey, guys. Thanks for taking my questions. Congrats on the quarter a few if I may 1st just on your raised guidance I'm just kind of curious on the AI.
And I were like.
Or is the marginal.
Confidence coming from things about two months to the day that we last spoke on earnings. So I'm just kind of curious Thats question one.
Two on the <unk>.
SaaS bookings number the $4 1 million and the quarter just kind of curious.
That was a pretty strong number and how that's kind of broken out between the three verticals.
And then.
And I think last time, you guys spent some time on our terex and.
Kind of curious.
Both data and intelligence software partnerships and then more broader enterprise software partnerships like where are we with the pipeline on hearing about any more of those coming down the pipe this year. Thanks.
Hey, Darren Thanks, so much for the question Chad.
Non.
Low level I'll address some of it and then I'll tee it up to Mike and Ryan, but probably Ryan next to give you a little bit more color on that.
But we're just continues to shine I mean, I think I mentioned in my prepared remarks that the market is coming to US now I think kind of first generation and AI has been out there people have been burned by the consulting practices. They've tried to one off point solutions, they've even tried to probably integrate some of it themselves into their solutions with their own engineering talent and.
And the complexities involved it'd be like running software without and operating system on your on your PC right now.
Nobody does that and so.
So the world is moving very quickly to realize the benefits of an operating system. Both in terms of reliability scalability ease and building application across a diverse set of data is really something that we have alone pioneered and the market today and we're reaping the benefits of that and I think it's across the board in terms of market.
<unk>, we're seeing that impact the M&A side obviously.
The GLC thought a great quarter this quarter and energy is just getting out of the gate, but the success that we're seeing there with.
Customers again, inbound calls and meetings and demonstrations were doing plus the deployment on our existing customers is going very very well.
And I don't expect this to slow down at all and I think that we're just starting to hit the stride and where ever becomes.
And the fact, though standard and the industry in terms of building enterprise grade artificial intelligence applications.
Brian do you want to touch on some of the more details of what were share and then some of the Gpus.
Yes.
So I'll start with we expect to have another very strong bookings quarter and the.
Current quarter Q1 was particularly strong where we did have a lot of pent up demand.
From a lot of legacy media and entertainment and customers and for obvious reasons with COVID-19 and some of the budget constraints.
A lot of those I'd say interested parties and there were just delays and so some of that was.
And just I would say a catch up.
From from any pent up demand.
And customers, who are really starting to authorize spending.
In addition, we are seeing significant increased demand for digital media hub, which is our AI infused.
Cloud data Lake application for media and entertainment specifically.
And we put out a few brief recent press releases on that I think we have a couple more coming.
And so we see that as it is.
Continuing to prove it had great and product market fit both domestically and internationally.
And we're also seeing demand for digital media hub, which obviously is built on AI, where that is being extensible with and into other fee use, particularly government legal and compliance and so.
And we're very excited about that.
And so I would expect those pillars of demand to continue to increase and Youll see bookings accordingly, the other thing I would note and this ties back to what Chad was talking about is we continue to see customers expand.
The use of AI, where with and into different use cases, and subscribing to different applications. So we're really and been able to show the efficiency gain that if I already have a customer, let's say, where I'm indexing all of their audio and video content and M&A.
Seamlessness by which to provision and acquire a new application against that same data set that's already been indexed and at <unk>.
Time correlated fashion provides great yield it provides us with additional revenue at very high margin and it provides just a lot I'd say more expanded and in depth value with the end customer so pretty exhaustive on the on the M&A front and we're seeing similar.
Similar opportunities and demand and the other business units as well and particularly in GLC, where youre seeing again entities and agencies police agencies, and others, who are and again invested their assets and data with and into AI, where and then it makes it that much easier and more viable for them and more valuable for them to turn.
And and provisioning and purchased from US additional applications. So I think it's really new logos, which is helping drive the bookings, but also expansion.
<unk> bookings with existing customers.
Thanks, Brian Let me just finish the final question you ask because there are three parts to that which was technology integration.
We continue to lean very heavily into both.
Both large and small technology partners not just system integrators and these are the altera snowflakes and others of the world.
So I expect and expect to see us continue that effort.
Throughout the balance of this year and probably perennially the.
And the alternate relationship continues to grow we continue to see nice strong demand primarily through the leading system integrators of Altera solutions are now taking the integrated platform to their customers, which <unk> been focusing on through the balance of Q1, and we're very bullish about what that looks like in terms of some of the expansions and new offerings, we are going.
Be announcing on AI, where.
As early as tomorrow, so stay tuned for our Texas Tech Expo will be having a lot of our customers and partners and new technology partners.
On stage with us.
And I'm talking about the integrated value proposition that we're bringing to the market.
Great. Thanks.
The next question comes from Brad right back.
Stifel. Please go ahead Mr Reback.
Great. Thanks, very much and maybe digging in a little deeper on the energy vertical can you give us a sense of how you guys actually helped customers such as money with their legacy infrastructure.
Just optimizing green, but how the tools help them actually optimize.
<unk> installed assets. Thanks.
Yes, absolutely.
And what's happening as you know, Brad the energy markets and and power grids are quickly changing from kind of the legacy base routes, where they had maybe one or two.
Power supplies.
And a fairly stable customer base of demand that was there was easily forecastable.
And one of the first things that we bring to the market or even customers that are not even engaged with the green energy movement, but there are very few that orange, but even and traditional centers the ability for us to deploy a forecasting technology on the edge that's.
And thats capable of understanding supply and demand in.
In real time, we're talking about sub second forecasting with multiple minds of accuracy, both on the supply and demand side of that curve allows us to re program through the dynamic control of both her and burgers and other key infrastructure to ensure that you're maintaining the appropriate power distribution in terms of.
Cleanliness of the power in terms of frequency modulation and voltage regulation, two and customers and the benefits of doing that really prolong lifespan.
Your of your grid infrastructure, but also allows you to optimize the supply of power to meet the demand and a more tightening narrow band range, so youre going to be reducing cost across the board. This problem becomes exacerbated as you start having and plug and play and independent power providers plugging into those existing legacy.
Grid as well as the great operators themselves and deploying Green energy solutions, such as wind turbines and PV array.
Couple that with storage arrays.
And the problem becomes exponentially more challenging to orchestrate and so what baritone day. There is simply the problem gets more difficult AI, where he's able to forecast.
All of the both energy supply dynamic as well as understand when to be charging and discharging batteries cycles and thats. What our current solution is really bringing to the table. The challenge that debt power companies. As you know are faced with is two fold one as soon as you have unpredictable power you ought to have excess power and the form spinning reserve.
But are basically online power that is today just gets dumped into the ground. If it is not being utilized what we're able to do with dramatically reduced spending and reserves for all customers both for green energy as well as traditional infrastructure. The second thing that we're able to do and optimize how we're routing that power to either discharge and charge.
The battery array and even now start to push it to third party grid operators through exchanges, so as youre seeing powers spiked and and let's say the sunbelt. We can now route that energy through arbitrage based and exit point on a programmatic basis. So we think about this and is literally turning the legacy base circuit base.
Network into almost equivalent of a packet based network similar to what the Internet did the legacy telecommunications is what we're bringing to the table for the energy market.
Now Youll hear its data systems and others have been trying to do this for years, but without a holistic infrastructure both for the forecasting and supply.
Distribution control and optimization under one AI control.
Parameterization system it was impossible.
We're seeing just demand on and international basis country country leaders are now engaged with us and everyone is really focused on the initial results that we plan on publishing very soon.
First major utility customer.
That's excellent thank you very much.
Sure.
The next question comes from Nick <unk> with Craig Hallum. Please go ahead.
Hi, this is in the commodity <unk> on for Chad Bennett and thanks for taking our questions.
I wanted to ask about the core advertising agency business, which looks like it accelerated from about 20% growth, we saw and the second half of last year, how should we think about growth going forward for the core advertising agency business, excluding the contribution from <unk>.
Why don't we Brian.
Sure and if you can hear me I would expect growth to be on par or surpassed one and what it has over the last 12 months, where we have a <unk>.
Solid and diverse.
Roster.
We expect based upon the profile and nature of those businesses that their future investment.
Into advertising and particularly as the investment into Influencer based advertising will remain very high.
So I would expect growth rates to be very strong going forward for the agency growth.
Okay, and then would you be able to talk about kind of like.
Expansion rate for the advertising business or any color you can give around customer expansion for that business. Thank you.
Yeah, Mike why don't you take this one Mike.
Yes.
We're not going to talk about.
Net retention and our net expansion and hopefully you'll attend our analyst day and some more color then.
But I think we do we did publish our kpis, which shows our increasing revenue per customer continues to increase.
And so we expect that trend to continue as well.
Okay got it thank you.
Okay.
And then if you'd like to ask a question. Please press Star then one on a touchtone phone.
The next question comes from.
Pat Wall Ravens of JMP.
Please go ahead.
Hi, This is there and kitson on for Pat Walraven, and I was wondering on the GLC side are you guys seeing any increased momentum provides administration passes and the first 100 days and priorities become clear.
Yes. This is Chad I'll take that question.
We're seeing kind of a couple of things that I think everyone's aware of infrastructure spending and energy spending are obviously.
At the top of the stack with defense getting deep prioritize.
And that aligns perfectly with kind of where we have been aligning AI, where with some of the initial customers that we have and the fed space. Both on the energy infrastructure spending side through through that division as well as our focus has been heavily tailored.
Tailored towards the department of Justice and more infrastructure and cost saving solutions versus defense base spending of AI.
From our perspective again, I think that's going to play well for us and and expanding budget.
And at a macro level, though artificial intelligence, we don't expect to buy and administration to be cutting that budget at all in fact, we're hearing that they're going to continue to expand that budget, while other defense programs will most likely be significantly curtailed.
Thank you very much.
Sure.
The next question comes from Mike Latimore with Northland Capital markets. Please go ahead.
Hi, guys.
And also on volume like.
Congrats on a great quarter.
Could you give me an update on the share does have the lots and.
And as you deem that you're expecting and first half after and everyone.
Was that question just to clarify the energy was that what the question.
Yes.
So we have been working with.
Major utility operator, and the south eastern portion of the United States for the last six months.
Doing a detailed deployment of the full end to end system, which includes the forecaster controller and optimize your for our energy.
And our expectation is that that relationship will continue to expand and Q1 and Q2 and two multiple.
Deployment opportunities as they continue to deploy more green energy solutions and battery infrastructure.
And simultaneously the number of both independent power providers as well as other utility companies, both domestically and internationally.
And are engaged with us and that partner awaiting the results of that deployment.
And the and the.
Models, so that we can and validate from a global standard and in terms of how we can roll out that solution to a broader set of customers. So.
I think it all is is kind of rolling as expected and.
We're very excited to see the pipeline building and the solution performing.
As was designed so whether whether it happened this quarter next quarter will be yet to be determined, but we're very bullish about what we're seeing and the pipeline and really the product market fit for our energy solutions and this massive infrastructure spend for green energy.
Okay.
Meaningful and Eagle project, and one view and and.
And is slated for <unk>.
I'll take this Brian.
It's just constantly a bouncing ball for us, we see projects coming and going.
Incidentally I think as Brian mentioned, what's interesting is just with our continued expansion into the department adjusted as well as independent agencies and the technology providers.
Right.
Legal support services.
And our technology, becoming more and more readily adopted and becoming much more broadly accepted as a solutions throughout that legal industry and so we're just getting more shots on goal from a revenue perspective and the size of the cases coming through continued to also build so my anticipation and expectation is that that business will continue to grow and accelerate.
As we become more and more of a standard as a part of legal process and prosecution.
Alright, and the last one the COVID-19 is having a weighted impact.
And by countries is that COVID-19, helping our daily win and at this point for that are you doing.
Okay.
I think COVID-19 from our perspective, it's sort of a neutral for us today I think that we have and.
And the United States, where most of our customers like today, we are not seeing a significant amount of impact. However, as we've expanded internationally primarily into the European market, obviously they have.
I think a little bit more challenging situation on hand, there and so yes, I think from a global standpoint, we're definitely seeing a slowdown and international expansion just due to focused but with the majority of our business domestic today, we're not seeing really and impact of COVID-19 on our operations and growth cycle.
Okay.
Thank you.
Thank you.
Okay.
Okay.
And I understand that we do have pet wall Ravens of JMP. Please go ahead with your question.
Oh, great. Thank you.
And Pat Hey, Mike.
Can I ask you I mean, so it's been six or seven months since you've been in this role and part of the reason that he came on board with to help scale.
The financial and operational systems is very tongue gross.
How is that going so.
And what have you done so or what what are you what are your priorities for the rest of the year in terms of.
Building that kind of stuff out.
Yeah. Thanks, Patrick.
I mean, we're.
We are in deployment phase in terms of infrastructure and scale and it's across the board between.
And the balance of people process and systems.
During the first quarter, we've invested in Sarbanes Oxley, which are more controls, but theres also a process element associated with that and when.
Particularly as we start to go International Inc.
Hired resources on financial systems.
To help us spread and so.
On.
The back end.
Whether it's M&A or international growth.
Or whatever gets thrown at us and Sarbanes Oxley, which is what we're investing and at the moment.
And we're definitely planning to seems to have that hopefully.
Somewhat operational and functional and by the latter half of this year.
Great and.
Are there things.
And what prompted this question was the net dollar expansion rate question earlier are there things as.
And that as investors we.
Might look forward to get and I know you had your analyst day, So I don't want to totally.
And I don't know how you can answer this but are there are there metrics like that that are or piece of information like that that you would love to be able to give but you need to make sure that all the systems are in place for it.
100%. So we're in the process right now of going through our data.
And really driving two customer metrics to really understand.
And not just customer performance, but relative performance and.
And then that allows the company to go back and focus on things like net retention where.
And where we are seeing early early data is showing we are seeing a lot of success across the business on net retention. So we're hopeful to showcase some preliminary metrics during our analyst day.
We'll give better visibility and then as we build out more robust systems and processes and.
And to have that just as a part of our DNA when we report.
Okay, Great that's super Thank you.
Yes.
This concludes our question and answer session I would 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 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 of continuing to pursue our vision of building the world's leading AI solutions company.
We have huge opportunities in all areas of our business and our teams are better positioned to capture them than they ever have been before.
We look forward to seeing you next week at a virtual Investor day and Tech Expo Goodbye.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.
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Okay.
Peter.
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