Q3 2021 Veritone Inc Earnings Call
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Hello, everyone and welcome to the <unk> third quarter 2021 financial results Cool My name is Daisy and I will be coordinating today's call you will have the opportunity to register a question at the end of the presentation. If you would like to register a question. Please press star followed by one on your telephone.
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I will now hand over to highest Brian Alger from Barrington to begin Brian. Please go ahead good afternoon.
And welcome to <unk> third quarter of 2021 conference call I'm, Brian Alger Senior Vice President Investor Relations and capital markets. After the market close today <unk> issued a press release announcing the results for the third quarter ended September 32021, the press release and other supplemental information is available at the investors section of our website joining me for today's call are very transitory.
And CEO, Chad, Joe Burton, President, Brian Shelburne, and CFO, Mike semester. 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 business strategy and future financial and operating performance, including its expected net revenues and non-GAAP net income and loss for the fourth quarter and full year of 2021, respectively. These forward looking statements are subject to risks uncertainties and assumptions that may cause the actual result.
To differ materially from those stated or implied by those statements certain of these risks and assumptions are discussed in <unk> SEC filings, including its annual report on Form 10-K.
These forward looking statements are based on assumptions as of today November nine 2021, and baritone undertakes no obligation to revise or update them.
During this call the actual and forecasted financial measures, we'll be discussing other than revenue will be presented on a non-GAAP basis unless noted otherwise reconciliations of these measures to the corresponding GAAP measures are included in the press release, we issued today. These non-GAAP measures include a breakout of our results between core operations and corporate.
Core operations consists of our consolidated software products and services, including our recently acquired panels and managed services that include our content licensing and advertising services and their supporting operations, including direct cost of sales as well as operating expenses for sales marketing and product development in certain general and administrative costs is dedicated to these.
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Corporate consists of general and administrative functions, such as executive finance legal people operations fixed overhead expenses, including facilities and information technology expenses, other income or expenses and taxes and other expenses that support the entire company, including public company German costs.
As we will discuss on this call we have realigned our organization to focus on two distinct customer groups commercial enterprise and government and regulated industries.
Commercial enterprise, which today consists of customers in the commercial sector, including our media and entertainment customers advertising customers content licensing customers and customers through panel logic that are not from government or regulated industries.
Government and regulated industries also known as <unk>, which today consists of customers in the government and regulated industry sectors, including our state local and federal government legal compliance and energy customers.
Across the commercial enterprise and government and regulated industries businesses, we separate revenue into two categories.
Software products and services and managed services.
Software products and services consists of the revenues generated from our AIA platform and <unk> software product solutions any related support and maintenance services and any related professional services associated with the deployment and implementation of such solutions.
Managed services consist of revenues generated from our advertising agency and related services and our content licensing services.
Finally, I would like to remind everyone that this call is being recorded and will be made available for replay via a link in the investors section of the company's website at www dot baritone dot com.
Now I'd like to turn the call over to our chairman and CEO Chad Gilbert.
Chad.
Thank you, Brian and thanks to everyone for joining us on today's call. It looks like we have many new investors that have joined us for the first time welcome them.
I'm delighted to report that baritones trend of raising the bar continues our topline revenue grew 44% year on year, making Q3, our sixth consecutive record quarter. Moreover, we are raising the midpoint of our full year 2021 revenue guidance to $104 3 million, which represents over 80% grow.
Versus 2020.
We remain steadfast in our mission to create a better world through the power of artificial intelligence.
One that is dynamic transparent innovative and safe.
Powered by our proven AI platform AI, where the first AI operating system.
With our ever expanding AI solutions, and rich partner ecosystem, our customers are solving their current and future challenges with confidence knowing that their tone is there to help streamline processes through intelligent automation.
Enhanced decision support and optimize outcomes.
We are very excited to have closed the recent acquisition and integration with Panda logic the impact to the overall business is transformative.
By entering this new market corporate intelligence, we increased our customer penetration into the fortune 100, and broaden our international footprint.
Including Pandal logic are combined head count is approaching 500 growing over 50% since the beginning of 2021 and more importantly, increasing our engineering and product capabilities.
We also augmented our topline with the addition of <unk> pro forma revenues of over $50 million in 2021, and operating margins greater than 50%.
In addition to strengthening our financial position Panda logic perfectly fits our culture and aligns with our strategic objectives.
We are aggressively integrating AI, where independent logic applications and are already seeing the fruits of our labor.
As a company very towns go to market strategy continues to mature with.
With the addition of Panda logic and the technological advances in AI, where we are now capturing more enterprise opportunities across an increasing number of businesses.
It's a mature technology platform and multiple proven applications, we are aligning our business to focus on the customer and more broadly delivered the full potential of AI.
As Ryan and Michael will detail later in the call in Q3, we realigned our organization to focus on two distinct markets each with a unique customer base and go to market strategy.
Commercial enterprise and government and regulated industry.
With that I would like to now hand, the call over to Ryan, our President and co founder to discuss our operational achievements in greater detail.
However, you Ryan.
Thank you Chad and good afternoon, everyone. We again achieved record results in Q3, our performance for the quarter and year to date reflects the maturing platform and business strategy.
Accordingly, we have recast our revenue breakdown to more accurately reflect the business we're managing today.
We sell a combination of products and managed services into multiple end markets in commercial enterprise and government and regulated industries are recasting of the revenue aligns our reporting with the customers we serve and the way we go to market.
Bear tone has and always will lead with our software and technology.
Ever as the air where platform and our suite of products matures the way that we engage with our customers has also matured.
In the early days, we talked about our land and expand customer strategy. Our goal was to get a foothold and then use our technology to compel customers to expand how much of one product they use across their company today, we have a much more comprehensive suite of products and managed services. So we are having much more comprehensive and strategic conversations.
With our customers.
Increasingly we are engaging in whole enterprise conversations. So now what started with a single application or use case has evolved to conversations and contracts that leverage the full potential of AI, where.
Whether it is with legacy broadcast customers, our newly engaged public safety agency customers baritone is now leveraging the power of our platform ecosystem of partners and broad suite of applications.
Commercial enterprise currently accounts for the vast majority of <unk> revenues, Yes, we believe that G. R. I will grow in scope and size, albeit with different deal sizes and sales cycles.
Over the course of the quarter, we achieved a number of notable milestones with our commercial enterprise customers.
We renewed all material Q3 contracts supporting strong customer retention, which remains well above 90%.
We expanded our international footprint by signing Bauer media in the UK and media works in New Zealand as well as by extending our licensing agreement with CBS news globally.
Regarding our new voice as a service offering marvell dot AI, we won mythical as a customer and integrated with <unk> wait and Wendy conversational AI framework.
I am excited to state at Marvell Dot AI has just been awarded the N b product of the year.
Referencing our recent relationship with Steve Cohen back recur to create non fungible tokens are mlps. We have also unveiled an expanded opportunity with our longtime customer the Pac 12 conference to make their content available as entities.
This agreement highlights the extensibility of our platform and the strength of our content and media ecosystem and we're replicating it with other digital influencers content owners brands and networks.
In addition strength with existing customers and a more focused enterprise sales approach led to expanded contracts with media companies, such as Odyssey, I heart, Viacom and others in the third quarter, bringing.
Bringing the panto IQ solution into the equation is expected to drive further revenue growth from our top tier list of customers.
Pan of IQ and AI enabled recruitment and talent acquisition platform is solving one of today's most notable challenges job recruitment and hiring.
We have all been reading and hearing about the labor challenges facing transportation hospitality and logistics companies as well as countless restaurants and small businesses across the U S and more broadly around the world.
<unk> uses AI can match job opportunities with the right job seekers.
Many of the largest trucking companies in the U S are our clients as are a number of large quick service restaurant chains not to mention the world's largest e-commerce and logistics company Amazon.
Everyday Panda IQ illustrates how AI is being used for solving these acute and systemic labor challenges, having delivered millions of applicants globally.
We have also had strong success with our managed services average gross billings per client grew 18% year on year well ahead of industry peers increasingly we are leveraging the ecosystem of media partners through the unique technology and scale that bear tone and add where it brings to bear bringing.
Bringing brands broadcasters and content owners together baritone is unlocking new revenue streams for our clients with N F T's and Marvel about AI in prominent proof points.
Moreover, the strength that we have established in the U S is extending internationally with new content licensing and brand opportunities leveraging our technology.
Shifting focus to G. R I all year, but particularly this past quarter, we have made considerable progress with our customers in federal and state government public safety agencies legal and energy.
On the state and local level a significant surge in the number of agencies are licensing our products and increasingly it is our breadth of offerings made available through AI, where that is closing the deals for us with.
With redact illuminate identify and most recently contact our public safety customers are realizing the value of the platform its applications and the activation of a shared intelligent data lake.
Earlier today, we co hosted the transparency panel with Microsoft that included police Chiefs from Massachusetts, Georgia, Illinois, Colorado and California.
<unk> solutions are enabling the department of Justice and law enforcement agencies, all across the country to more accurately and quickly communicate to provide transparency into the interactions that they have with their communities that they serve.
I encourage everyone to view this important webinar now hosted on our website.
Our success with the Doj is driving accelerating adoption of our solutions by our legal customers.
As the legal system gathers and processes and ever increasing amount of unstructured information baritones add where platform and the illuminate and redact products are providing all constituents the necessary scale and cognition required a fifth through the mountains of evidence being created.
<unk> managed service providers partners, including epic pro serve and exact data discovery or pre buying licenses on behalf of their legal customers.
Speaking of the Doj, we cannot overstate the significance of our authorization to operate or Ato.
Extending beyond our initial award with the 94 E O USA U S. Attorney's offices, we are now fed ramp authorized across all 59 agencies in the Doj.
We are the first platform provider to have such authorization in multiple cloud environments, AWS and Azure in our case.
Already we have had active engagements with multiple divisions of the Doj under this newly awarded ATL, including the FBI Department of Homeland Security Bureau of prisons, the D E and others.
Already through our channel partners, we have seen bearish on scope of work dramatically expand while at the same time accelerating the adoption of AI across multiple branches of the federal government. In addition to our work with the Doj. We are actively engaged with other departments of both the U S and other foreign governments that are leveraging the unique scale and flexibility of AI, where.
On the energy front, we have made significant progress with our lead customer we have delivered and implemented our forecaster and controller software as well as have been implemented and delivered our battery optimization software for this initial solar array, which represents less than 5% of our customers solar production.
As such this large grid, operator is able to accurately predict the energy production of its solar array control the distribution of that production and finally guarantee resilience utilizing our battery optimization solution.
This effectively removes this customer's needs to run expensive diesel backup reserve systems.
Which with its current solar footprint cost over $20 million a year.
The success and performance of our solutions on the initial solar array has led our customer to seek an expanded engagement of a multiyear enterprise wide license.
Similar to our government customers, we have found regulated industries to have elongated and often unpredictable sales cycles. The tradeoff of course is that these businesses are incredibly sticky and broad in scope.
We remain very committed to our energy focus and technology development in this area.
Based on our current engagements and pipeline of projects, we are more confident than ever that G. R. I will become a significant revenue contributor driving our future growth.
As we look to finish 2021, we see baritone position stronger than ever as a recognized leader in the AI and machine learning ecosystem baritone is poised to further accelerate its growth and extend AI into all industries across the globe and now I will hand, it over to Mike Symmetra, Our CFO Mike.
Thank you Brian.
I am excited to report our financial progress, including our recent addition of handled logic late Q3 2021.
For the sixth consecutive quarter, we posted record results in our Kpis, along with top and bottom line beat our Q3 2021 guidance.
During my prepared remarks, I will discuss our Q3 2021, organizational realignment and resulting changes to our financial reporting and Kpis drivers.
Our year over year performance on a GAAP and pro forma basis.
The Panda logic impact and annual 2021 guidance, which we raised again highlighting revenue scaling and exceeding 100 million for the first time and equally as important Q4 2021 being our first projected quarter with positive non-GAAP net income.
First I'll discuss our organizational realignment and new reporting format and metrics.
We are presenting revenue in two distinct customer groups.
Each with a unique focus and go to market strategy.
One commercial enterprise into government and regulated industries or <unk>.
Additionally, we show revenue in two categories, one software product and services and to managed services.
We also now reporting new customer driven metrics around our consolidated software products and services and on a pro forma basis as if we own panel objects is January one 2020.
This includes a quarterly breakdown of total ending customers average annual revenue per customer or a a R and gross retention, which is our best proxy for customer churn.
Now to Q3 2021 performance.
On a GAAP basis revenue was a record $22 7 million up $6 9 million or 44% from Q3 of 2020, driven largely by software products and services, which increased $5 7 million or 169% to a record $9 million in revenue.
And secondarily for managed services, which increased $1 3 million or 10%.
The increase in software products and services was driven largely from the acquisition of handle logic that organic growth for legacy baritone software products and services revenue.
We closed the Panda logic transaction on September 14th 2021, which contributed approximately $4 million during Q3.
Organic software products and services increased over 40% year over year.
On a pro forma basis Q3 revenue was $35 5 million, increasing 9 million or 34% from Q3 2020 revenue of $26 5 million.
Driving this pro forma increase with software products and services, which increased $7 7 million or 54% to $21 9 million.
The year on year improvement was driven by software customer growth of 34%.
And an outstanding 90% growth in average annual revenue or a a R to 208000 in Q3 2021.
Driving this increase in pro forma AOR with Amazon, which began to significantly ramp services with hematologic and Q4 of 2020.
Overall, our revenue pipeline has never been stronger.
Our partner driven channel strategy continues to deliver results with new bookings of $3 3 million in Q3 2021 and.
An increase of over 60% from pro forma Q3 2020.
With Marvel International expansion, the cross selling of tangible logic.
The recent edition of the Doj Ato announcement and significant progress on our energy initiatives.
Our future pipeline across all customer groups has never been stronger.
Particularly in <unk>, where we expect to start realizing more significant growth in the near and long term.
In Q3, we reported solid pro forma Casey our results.
New bookings were $3 3 million up 61% from pro forma Q3 2020.
Pro forma gross retention exceeded 90% pro.
Pro forma customers up 34% and pro forma software a R eclipsing 200000.
In managed services advertising gross billings per client increased to 615000.
Up 18% over Q3 2020 Q.
Q3, 2021 advertising revenue continued to outpace prior year, however, more approximating industry growth and the robust strength shown in the first half of 2021.
Q3, 2021, gross profit reached $16 8 million, improving $5 6 million or 50% from Q3 of 2020.
Overall Q3 gross margins increased to 74% compared with 71% in Q3 of 2020 and up sequentially from 72, 8% in Q2 2021.
Software products and services gross margins benefited from the chewy contribution from Canada logic, which has historical gross margins in excess of 90%.
As we continue to scale over the next 12 months to 24 months, including having to handle logic in our results for the entire period, we expect consolidated gross margins to exceed 80% as early as Q4 of 2021.
Assuming we had tangible logic for the entire quarter, our Q3 pro forma gross profit increased to $29 2 million, an increase of $7 5 million or 35% versus Q3 2020 pro forma results overall pro forma gross margins were flat year over year at 82%.
Q3, non-GAAP net loss was a record $2 3 million.
<unk> 2 million or 46% improvement from Q3 of 2020, driven by increased core operations net income offset by relatively flat corporate year over year.
Q3 operations posted a record non-GAAP net income of $1 9 million compared with <unk> 4 million in Q3 2020.
The $1.5 million year over year improvement was principally driven by the acquisition at the end of logic.
Which drove improvements in gross profit and operating margin offset by greater investments in Q3, 2021 across engineering product sales and marketing to drive current and future year plan results.
On a pro forma basis, we have generated non-GAAP net income of $2 6 million in Q3, 2021 versus $3 2 million in Q3 2020, driving the year over year change was improved revenue and gross profit offset by increased investments in opex, namely sales and engineering organically in it handled logic.
To fund growth.
Turning to our balance sheet.
At September 30th 2020, we held cash and restricted cash of $73 5 million compared to $115 7 million at December 31, 2020.
The decrease reflects $47 6 million in investing activities, including the Panda logic acquisition, coupled with net cash used by operations of $3 5 million.
Offsetting by net cash provided by financing activities of <unk> 9 million net.
Net cash outflows from operating activities of $3 5 million.
It's a net positive changes in our working capital of $10 2 million.
It's really associated with the growth and timing of payments in our managed services and software products and services, which was offset by a $9 9 million non-GAAP net loss and other cash uses.
As a reminder, approximately $57 million of our reported cash is essentially held for payment to third parties from our managed services.
And our working capital will continue to fluctuate depending on the timing and due dates of payments in any given period.
Our unencumbered cash at the end of Q3, 2021 that was over $15 million, which is sufficient to operate the existing business for the foreseeable future as the Panda logic acquisition will generate substantial cash flows from operations beginning in Q4 of 2021.
We ended September 32021, with $34 9 million shares outstanding.
Turning to Tangela logic.
As a reminder, we closed the acquisition on September 14th 2021 in terms of the deal were $150 million acquisition price payable with $50 million in cash and 35 million in stock or one 7 million shares upon closing.
The remaining 65 million payable in cash and stock based upon tangible logic meeting financial targets in 2021 and 2022.
Immediately accretive to Verifone Pandal logic has a pro forma run rate in 2021 to exceed $50 million of revenue with greater than 90% gross margin and over 50% operating margin.
Please note Tangela logic does have seasonality in its business with Q3, and Q4, having greater concentrations of revenue versus Q1, and Q2 and consistent with hiring patterns of its customers, most notably its largest customer Amazon.
Turning to financial guidance.
Given our continued high visibility and confidence in our revenue pipeline, including a full quarter of Panther logic, we expect Q4 revenue to be between $43 eight and $45 3 million.
Presenting a 165% increase year over year at the midpoint.
<unk> up 96% from our strongest quarter ever in Q3 2021.
And we are excited to guide for quarterly non-GAAP net income for the first time and expect Q4 to be between $8 5 million and $10 million, representing over 13 million improvement year over year from Q4 of 2020.
We plan to continue to invest responsibly in resources in key areas to help accelerate our growth throughout and heading into 2022.
With this we are forecasting our cooperations to be significantly more profitable in Q4 of 2021, and our corporate overhead non-GAAP net loss to be relatively consistent with Q3 2021.
For full year 2021, including the impact of tangible logic, we expect consolidated revenue to be between 103, and $105 5 million, representing a year over year increase of over 80% at the midpoint.
I'd expect our combined software products and services revenue growth to be over 250% year over year.
We expect the full year non-GAAP net loss to be between $1 5 million and breakeven.
Representing over 96% improvement year over year at the midpoint.
Before I close I'd like to invite you to our virtual analyst day and Tech demo on Friday November 19th.
Similar to our May event, but abbreviated to 1.5 hours, we will showcase new technology, the depth of our team and customer use cases and testimonials.
I'm closed <unk>, how things have changed and and what kind of U C. As the prospects for kind of cross selling panto into your legacy Veritone base and then second question is kind of Big picture as you look into twenty-two you've got a lot of.
Things that are.
Fairly material catalysts I'm, just kind of curious if you're gonna speak to which ones. You think will gain the most kind of traction or fruit amongst energy federal government tend to logic and a marble AI X.
Hi, Darren well this is Ryan <unk>, Yeah, right why don't you take the first one and then yeah and part of the second and I'll follow up.
Okay, Great you know I think the labor market, obviously you know.
Despite it being a very challenging time for many corporations that obviously puts veritone with panto and in a very strategic position to really grow that business and while we're doing that and obviously to our benefit we are gonna be significantly in benefiting those respective clients of ours. So uhm, obviously, we're seeing increased demand.
And uhm in increased revenue, hence from that increased demand through panel I Q and we do expect that to continue for the foreseeable future. Just don't we again, we think the the labor market is gonna be tight uhm and does not just for I'd say you know short term quick service type of restaurants in the <unk> logistics type of employee employers employees.
But we do see the systemic uhm problem going to persist you know well through 2022 and beyond so bodes very well for what we're doing in terms of cross selling I'm really excited to state that that you know. This this has been a very well thought out and kind of strategically onboarded opportunity, yes pen a logic is still subject to a contracted.
Earn out uhm asthma, as we disclose before but we've already done some great work in terms of co marketing cross selling them in doing that mapping.
Uhm. So we <unk>, we are very optimistic that we will start to see penetration of P. I N, who I Q technology Uhm enabled with a eyewear sold and deployed across the breadth of our customer base. The good news is everybody is in need of hiring quality talent and I think we're we're not only I'm looking forward to that in 2022, but we're act upon it.
Upon that now in terms of other catalysts and I'll I'll, let Chad have his own remarks, but I'll speak to just the demand that were seen uhm really anemone, which has been exciting you know we're gonna talk a lot about me as I did on the <unk> prepared remarks earlier today about government legal and compliance, but you know meeting entertainment and art sort of commitment.
To that industry as we sort of sprint here to know this new Merdivorous ecosystem. You know we're ahead of the curve you know we have lots of major customers, where we've already sort of prepared their content through you know, obviously indexing and hosting on a eyewear and we obviously have some early proof points such as you know the the fairly good sized deals for N F.
Cheese that we've already has facilitated through a I wear as well as Marvel Dot AI, which were extremely bullish about and so yeah. So I think marbly I will be a material contributor to revenue in 2022, and I think we will have a very wide distribution of of service deployment of Marvel that spans from audio books too commercial production.
<unk> two theatrical productions, uhm and localization, both domestically and internationally chatty want any add anything on the energy or GLC front.
Yeah, I mean, I mean going back to the first question Darren I think the Covid effect that we all kind of have witnessed in terms of accelerating the adoption of technology in the enterprise in terms of global communication and collaboration over the Internet, which obviously had manifested itself and and things like zoom in other technologies.
I think you're saying in the hiring markets as well right. You have this COVID-19 effect, that's driving that uhm challenges and in the global supply chain and hiring France and in our a I solutions and services are are directly tailoring and solving that problem in a very unique way and I believe that will become a systemic part of our society and the enterprise businesses.
<unk>, even well past you know, they're just current crunch that we're seeing which leaves us in a really nice position to transform the corporate intelligence market, starting with Palin acquisition, but expanding with our obviously, our a I wear platform I've been looking forward into into 2022 beyond just the obvious that Ryan kind of mentioned in.
And the two category Yeah G. R. I, we've been investing and continue to invest heavily in that sector and are seeing just spectacular progress uhm and laying that foundation, both in the energy side as well as in in the government sector. So stay tuned one of these days, you're gonna see that market really explode for it and become a massive part of our business 2022 work.
Crossing our fingers that that'll be the ear.
Thank you.
Next question comes from Pottsville Raven from J M. P Security is Patti line in Saint <unk>. Please go ahead.
Oh, great. Thank you and congratulations you guys in place to see the business cracking on so many different fronts <unk> I think what I would love to hear is just started the steps you've taken [noise].
In terms of integrating <unk> and and the steps you still have to take so that would be sort of part one in the park too.
You you definitely piqued my curiosity with the comment and a press release about.
No matter verse and the opportunity that presents so if my if you want to expand a little bit on that love to hear that.
Yep part of Mike Mcguire golfing the paddle.
Sorry.
Right why don't you take the panto integration first what we've done so far and then kind of what's left on the roadmap going forward and then we can both tag team on the <unk>.
Yeah, I know and I'll address it with Mike as well, there's a I'll say a technical side of integration. So I think like everything we wanted to first make sure that we had good institutional controls of data and systems and so I think check the box there, Mike and and our team have done a good job and our integration team about making sure. We just have you know full <unk>.
Some visibility too financials metrics numbers, you know and I'll say all system processes. So that's sort of been completed I'm you know that'd be an ongoing effort as we look to consolidate on a common HR based platform and then other systems over time.
I'd say, we're definitely well ahead of schedule more importantly, there part of our weekly management meetings already so we do already just in some of this is important as anecdotal but for example, they are part of our weekly all staff kind of worldwide calls now uhm, we're actively coming and engaged both on the marketing side is set and and sales front cause I mean.
<unk> earlier.
And that specifically means account mapping right really looking out how we can accelerate not just their existing pipeline, but you know how do we obviously you accelerate taking piano I Q and they're valuable services to to our customer base. Some ongoing things obviously R. As we've talked a little bit no, it's not and hindering any of our projected growth.
But there again, we do have to take into account the earn out and obviously, the b M actions and and and sort of processes that we put in place need to obviously make sure they align with providing pandas ability to have the inability to achieve those are announced the good news is we're almost perfectly aligned uhm. So again it whether it's.
Ah the fruits of our labors or their labors to hit collective uhm, new logo counts and numbers. We we both benefit so I would give it you know a very high marks internal score on how we've been doing so far in terms of integration and I expect that to follow suit here in in the future on the matter. Mike is there anything else you wanted to add regarding integration on.
Technical basis.
Nope that was perfect.
Okay right on the ninth of July we're touching on I think it would be worth touching on the weight and Wendy integration into Marvel AI and how that plays into the med overdrafts as well.
Yep, and I'd say, well one of our kind of new novel integrations representations that we've done even above just starting to do some I'd say low level cognitive work through a I wear is the integration of marble that AI with uhm penned up panel objects and wait and when he conversational AI framework and so we're really excited about that and and.
Wait and Wendy which is a service offering of P. I N who I Q provides a very powerful very intelligent conversation AI chatbot type of environment and service four panto, when they're engaging them through their customers talent acquisition needs. We've added a very powerful uhm almost seamlessly hyper realistic.
Voice element to that and we can and will that voice can be in different dialects different languages, and so we can really add a human element uhm anneke and a continuity aspect to talent acquisitions and onboarding through an integration of marble that AI voices with weight and Wendy and I think that's a good T a or just one of them.
Any things that I think again, we are in a very good position to to be a great technical provider and a technical partner to all of our meeting entertainment customers and other organizations as they are evaluating not just the digital transformation world that we say, we're dealing with yesterday, but looking forward and almost seamless.
Means of looking into the <unk> and just one simple example is imagine now just one of our big media partners like an E. S. P N or C. B S news, having all of their content in effect ready for seamless integration with the <unk> right, where that contents being awesome uhm offline through I'll say more traditional means of distribution like.
O T T or linear television, but in in a concrete example is I think I might've mentioned it to you actually put a couple of quarters ago, I'm, sorry, a quarter ago.
Was for example, the C. B S news footage of the March March on Washington, with Martin Luther King and the civil rights movement and that whole experience being accessible with inside the game a fortnight Uhm is one example, so I think we're in a great position Uhm AI, where it makes us all possible because we've already indexed and sort of packaged all the <unk>.
Content ready for activation again, whether that's distribution and F T production or whatnot. So yeah, we're very excited about it yeah.
Yeah, and I I think you know the Merdivorous by definition is a lot bigger than the new meta company a K a Facebook you know by definition is a multiverse of that's gonna be moving in content and information bolt into the digital realm, and then obviously the digital realm interfacing back with us and our physical so.
And I think a I wear is is perfectly position with our automate studio and our ability to set up those pipelines for that digital transformation integration with the matter of or so or a P. I as in heavy lifting that we've been doing over the years is really gonna pay spades for us and our partners to capitalize on the <unk> an on and off.
Right.
Alright, great. Thank you both for that perspective.
Uh-huh.
Thank you very much Pat next question comes from brought read back from stifle Botulinus I've been please go ahead.
Great. Thanks, very much guys just high level I know you haven't spoken to 22, yet, but trying to get us all on the same page any thoughts on how we should think about revenue growth in a starting point there.
Yeah, I'll I'll take this one so so.
What I can tell you Brad is I think you have to look at us on a pro forma basis.
And you know pro forma your year over year. If you take the mid point of our guidance will be growing just north of 30 per cent.
But what we've always said is we're going to be a plus 40%.
Grower sort of a baseline target. So I think after you use that as a proxy for 2022, you're gonna be in the ballpark at least to start off the gate.
That's great that's great and then just one real sort of tactical question, what should we be using for the sure account for four to you given that she flipped over to profitability.
Yeah. That's a great question. So we've got 34.9 million shares outstanding and there's roughly about 10 million shares.
Common stock equivalents throw outstanding.
So that's what I would just on a fully diluted basis.
That's great. Thanks, very much guys.
Yep.
Right.
Our next question is from <unk> from Cray color makes you Linotype and please go ahead.
Hi, This is Nick on for Chad Bennett, Thanks for taking our questions. So I'm curious if you could speak about where whereas traction commercial enterprises outside of the media and entertainment vertical and then also if you'd just give any color on how much the media entertainment vertical is of that.
I wear a commercial business today, and where do you see opportunity outside of media and entertainment.
[noise] Ryan wanting to take this one.
Yeah. So.
So I mean, we it's kind of red announcing our new alignment and sort of defiant as commercial and government legal and come in complaints regulated industries today meeting entertainment still dominates it makes it the lion's share of commercial and so but we do expect that to expand into really all different types of of.
Trees here quickly uhm, you can kind of say that panel logic is kind of a an an interesting foyer, where we've already given the integration of AI with with and through Pandal IQ. So in by default, we're kind of already in you know kind of a wide array of hospitality quick service restaurants, and and others and that's gonna be a major Ford focus of ours, just because of obviously the scale.
And and market leverage we have already with Pan Y Q through panto IQ their service offering.
But I expect us to be and really all industry. It's been tech you know spam from health care auto in other areas. So I don't think we're limited today candidly post you know clothes of panto, and we kind of see ourselves didn't really almost every vertical uhm, but on a legacy basis. You know as you guys are aware medium can't many your medium and.
Payment historically had dominated commercial but I think that will kind of be brought in itself out and be more diversified through 2022.
Got it and I believe I saw that the founder of the company goes acquired Ah I think eventually became the energy products and left the company I was just curious if this has an impact on the product roadmap for you guys energy products. Thank you.
I don't think I mean, all the <unk> are you talking about our own internal energy solution.
Correct.
Yeah, No Chad was the chat with the founder and chief architect of of that product I think you're referring to Doctor Wolfe cone, who was the data scientist as as part of that so now we don't expect them and by the way he still actively engage with the company I'm on a consulting consulting basis. So we don't expect any disruption.
Particularly care I think tino chat and in our own engineering team sort of have or have led in our will continue to lead that effort.
Thank you.
Thanks <unk>.
As a final reminder, everyone. If you would like to register a question. Please press star flipped by one on your telephone keypad now.
Yeah.
At this time, we have Nathan the question so humbucker, if it to chat for any closing remarks.
Thank you operator, and thanks, everyone for joining us on today's call I'm very pleased with baritones performance. This past quarter. We appreciate your time today and the opportunity to share the exciting progress we were making towards our mission of making the world better through artificial intelligence until next time Goodbye.
Thank you everyone for joining today's cool you may now disconnect your line and have a lovely day.
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