Q2 2024 Veritone Inc Earnings Call

August 8, 2024

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Operator: Good day, and welcome to the Veritone Inc. second quarter 2024 financial results conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star and then one on your telephone keypad; to withdraw your questions, please press start. Please note that this event is being recorded. I would now like to turn the conference over to Stefan Norbom, Investor Relations. Please, go ahead. Thank you, and good afternoon.

Operator: Good day and welcome to the Veritone Inc. 2nd quarter of 2024 financial results conference calls. All participants will be in less than only mode. Should you need assistance, please signal a conference specialist by pressing the star key, all by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on your telephone keypad. To withdraw your questions, please press star, then choose. Please note this event is being recorded.

Speaker Change: To ask a question you May press Star then one on your telephone keypad.

Speaker Change: Which I have a question. Please press Star then two please.

Speaker Change: Please note this event is being recorded.

Stefan Norbom: I would now like to turn the conference over to Stefan Norbom in verse and relation.

Speaker Change: I would now like to turn the conference over to the normal investor relation.

Stefan Norbom: Please go ahead.

Speaker Change: Please go ahead.

Stefan Norbom: Thank you and good afternoon. After market close today, Veritone issued a press release announcing results for the second quarter ended June 30, 2024. The press release and other supplemental information are available in the investors section of Veritone's website. Joining us for today's call are Veritone Chairman, Chief Executive Officer, Ryan Steelberg, and Chief Financial Officer, Mike Zemetra, who will provide prepared remarks and then open the call up for a live question and answer session.

Stefan Norbom: Thank you and good afternoon. Aftermarket close today, Veritone issued a press release announcing results for the 2nd quarter and did June 30, 2024. The press release, another supplemental information, or available in the pastor section of Veritone's website.

Speaker Change: And good afternoon.

Speaker Change: After market closed today <unk> issued a press release announcing results for the second quarter ended June 32024.

Speaker Change: This release smaller supplemental information are available on the investors section.

Speaker Change: Right.

Stefan Norbom: Joining us for today's call are Veritone's Chairman, Chief Executive Officer, Ryan Steelberg, and Chief Financial Officer, Mike Zemetra, who provide prepared remarks and then open the call up for a live question-and-answer session. Please note that certain information discussed on the call today, including certain answers to your questions, will include forward-looking statements. This includes, without limitations, statements about our business strategy and future financial and operating performance. These forward-looking statements are subject to risks, uncertainties, and assumptions that may cause actual results to differ materially from those stated. Certain of these risks and assumptions are discussed in Veritone's SEC filings, including its annual report on Form 10-K.

<unk>: Joining us for today's call are <unk>, Chairman, Chief Executive Officer, Ryan Gilbert Chief Financial Officer.

Speaker Change: We will provide prepared remarks, and then open the call up for last question answer session.

Stefan Norbom: Please note that certain information discussed on the call today, including certain answers to your questions, will include forward-looking statements. This includes, without limitation, statements about our business strategy and future financial and operating performance. These four forward-looking statements are subject to risks, uncertainties, and assumptions that may cause actual results to differ materially from those stated. Certain of these risks and assumptions are discussed in Veritone's SEC filings, including its annual report on Form 10-K.

Speaker Change: Please note that certain information discussed on the call today certain answers to your questions will include forward looking statements.

Speaker Change: Including without limitation statements about our business strategy and future financial and operating performance.

Speaker Change: Forward looking statements are subject to risks uncertainties and assumptions that may cause actual results to differ materially from those stated.

Speaker Change: Certain of these risks and assumptions are discussed in <unk> SEC filings, including its annual report on Form 10-K.

Stefan Norbom: These forward-looking statements are based on assumptions as of today, August 8, 2024, and Veritone undertakes no obligation to revise or update them.

Stefan Norbom: These four forward-looking statements are based on assumptions as of today, August 8th, 2024, and Veritone undertakes no obligation to revise or update them. During this call, the actual and forecasted financial measures we will be discussing include non-GAAP measures. Reconciliations of these measures to the corresponding GAAP measures are included in the press release we issued today. Also, when we reference pro-forma measures, such measures are presented on a combined pro-forma basis treating broadband as owned by Veritone during fiscal year 2022.

Speaker Change: These forward looking statements are based on assumptions as of today August eight 2024 compared to one undertakes no obligation to revise or update them.

Stefan Norbom: During this call, the actual and forecasted financial measures we will be discussing include non-GAAP measures. Reconciliation of these measures to the corresponding GAAP measures is included in the press release we issued today. Also, when we reference pro-forma measures, such measures are present on a combined pro-forma basis, treating broad being as unbiberitone during fiscal year 2022.

Speaker Change: During this call the actual and forecasted financial measures, we will be discussing non-GAAP measures.

Speaker Change: Reconciliations of these measures to corresponding GAAP measures are included in the press release, we issued today.

Speaker Change: So when we referenced pro forma measures such measures are presented on a combined pro forma basis treating bobbi that's owned by Barrick during fiscal year 2022.

Stefan Norbom: Finally, I would like to remind everyone that the call today is being recorded and will be made available for replay via link on the investor section of Veritone's website at www.veritone.com. Now I would like to turn the call over to our Chairman and Chief Executive Officer, Ryan Steelberg. Thank you, Stefan.

Speaker Change: Finally, I would like to remind everyone that the call today is being recorded.

Speaker Change: Billable to replay via a link on the investors section of <unk> website.

Speaker Change: Www Dot <unk> dot com.

Ryan Steelberg: Now I would like to turn the call over to our Chairman and Chief Executive Officer Ryan Steeleberg. Thank you, Stefan, and thank you, everyone, for joining us. We are excited to speak with you today and provide an update on our second quarter 2024 operations, financial performance, and strategic progress.

Speaker Change: Now I would like to turn the call over to our chairman and Chief Executive Officer Bryan Stuart.

Ryan Steelberg: Thank you, Stefan, and thank you, everyone, for joining us. We are excited to speak with you today and provide an update on our second quarter 2024 operations, financial performance, and strategic progress. Mike Zemetra will cover our quarterly performance and financials in more detail, but I wanted to start by providing a broader company update and perspective on our current market environment and opportunities. The demand for AI-based applications, workflows, and solutions has never been higher.

Bryan Stuart: Thank you Stephane and thank you everyone for joining US we are excited to speak with you today and provide an update on our second quarter 2024 operations financial performance and strategic progress.

Ryan Steelberg: Mike Symmetra will cover our quarterly performance and financials in more detail, but I wanted to start by providing a broader company update and perspective on our current market environment and opportunity. The demand for AI-based applications, workflows, and solutions has never been higher, and Veritone is both a catalyst for this demand as well as a direct beneficiary. Veritone has been developing and delivering production grade AI applications and solutions at scale for several years now, now serving over 3,000 customers, and we are just getting started. As of this earnings call, Veritone boasts its largest AI software pipeline ever, with a material portion of such already contracted and launching in trials and initial phases.

Speaker Change: The Metro will cover our quarterly performance and financials in more detail, but I wanted to start by providing a broader company update and perspective on our current market environment and opportunity.

Ryan Steelberg: And Veritone is both a catalyst for this demand as well as a direct beneficiary. Veritone has been developing and delivering production-grade AI applications and solutions at scale for several years now, now serving over 3000 customers. And we are just getting started.

Speaker Change: The demand for AI based applications workflows and solutions has never been higher and baritone as both the catalyst for this demand as well as a direct beneficiary.

Speaker Change: Marathon has been developing and delivering production grade AI applications and solutions at scale for several years now now serving over 3000 customers and we are just getting started.

Ryan Steelberg: As of this earnings call, Veritone boasts its largest AI software pipeline ever, with a material portion of it already contracted and launching in trials and initial phases. This momentum is highlighted by strong demand and activations in the public sector, spanning both state and local law enforcement, as well as FED-CIV and FED-DOD, which I will detail for you more later. Not to be overlooked in media and entertainment, Veritone also boasts a record pipeline, and I'm excited to announce that Veritone recently secured its largest revenue contract to date, a multi-year technology and services contract with the NCAA. Again, I will speak later about our media and entertainment services in more detail.

Speaker Change: As of this earnings call Bedtime posted its largest AI software pipeline ever with a material portion of such already contracted and launching in trials and initial phases. This momentum is highlighted by strong demand and activations in the public sector spanning both state and local law enforcement as well as that Jim and Fed D O D, which I will.

Ryan Steelberg: This momentum is highlighted by strong demand and activations in the public sector, spanning both state and local law enforcement, as well as FedSiv and FedDOD, which I will detail for you more later.

Speaker Change: Detailed for you more later.

Ryan Steelberg: Not to be overlooked in meeting entertainment, Veritone also boasts a record pipeline, and I'm excited to announce that Veritone recently secured its largest revenue contract to date, a multi-year technology and services contract with the NCAA. Again, I will speak later to our media and entertainment services in more detail. Veritone's accelerating velocity is not limited or credited solely to our direct selling efforts, but also includes a robust and expanding partnership and reseller network. This is highlighted by our expanded partnership with AWS, which we announced pre-market today. Under our new strategic collaboration agreement with AWS, Veritone and AWS will drive AI and cloud innovation across media, entertainment, sports, talent acquisition, and the public sectors.

Speaker Change: Not to be overlooked in media and entertainment baritone also boast a record pipeline and I'm excited to announce the baritone recently secured its largest revenue contract to date, a multiyear technology and services contract with the NC doubling.

Speaker Change: Again, I will speak later to our media and entertainment services in more detail.

Speaker Change: Baritones accelerating velocity is not limited or credited solely to our direct selling efforts, but also includes a robust and expanding partnership and reseller network. This is highlighted by our expanded partnership with AWS, which we announced pre market today under our new strategic collaboration agreement with AWS Burtone in AWS.

Ryan Steelberg: Veritone's accelerating velocity is not limited or credited solely to our direct selling efforts but also includes a robust and expanding partnership and reseller network. This is highlighted by our expanded partnership with AWS, which we announced pre-market today. Under our new strategic collaboration agreement with AWS, Veritone and AWS will drive AI and cloud innovation across media, entertainment, sports, talent acquisition, and the public sectors. We also continue to make great strides in the restructuring and strategic initiatives we announced earlier this year. And we made further material progress, optimizing our operating structure, resulting in a non-gap net loss improvement of 47% in the quarter year over year.

Speaker Change: We will drive AI and cloud innovation across media Entertainment sports talent acquisition and the public sectors.

Ryan Steelberg: We also continue to make great strides in the restructuring and strategic initiatives we announced earlier this year, and we made further material progress optimizing our operating structure, resulting in a non-GAAP net loss improvement of 47% in the quarter year over year. While realizing these fiscal improvements, we continue sharpening and accelerating our product and go-to-market focus while concurrently achieving significant milestones in delivering the latest AI-powered solutions to our enterprise customers. While we continue to optimize our cost structure with incremental up-ex saving opportunities, we are strategically shifting our focus to organic growth and servicing our accelerating business pipeline.

Speaker Change: We also continue to make great strides in the restructuring and strategic initiatives, we announced earlier this year and we made further material progress optimizing our operating structure, resulting in a non-GAAP net loss improvement of 47% in the quarter year over year, while realizing these physical improvements we continued sharpening and acts.

Ryan Steelberg: While realizing these fiscal improvements, we continue sharpening and accelerating our product and go-to-market focus, while concurrently achieving significant milestones in delivering the latest AI-powered solutions to our enterprise customers. Meanwhile, while we continue to optimize our cost structure with incremental OPEX saving opportunities, we are strategically shifting our focus to organic growth and servicing our accelerating business pipeline. We completed our announced restructuring efforts in Q2, and we expect to realize the full benefits of these efforts in the second half of 2024. Additionally, as we have reported on previous calls, we remain on a near-term pathway to improve our balance sheet and liquidity position. In Q1, we launched a formal banking process to divest one of our non-software-based assets.

Speaker Change: Celebrating our product and go to market focus while concurrently achieving significant milestones in delivering the latest AI powered solutions to our enterprise customers.

Speaker Change: While we continue to optimize our cost structure with incremental opex saving opportunities. We are strategically shifting our focus to organic growth and servicing are accelerating business pipeline with.

Ryan Steelberg: We've completed our announced restructuring efforts in Q2, and we expect to realize the full benefits of these efforts in the second half of 2024. Additionally, as we have reported on previous calls, we remain on a near-term pathway to improve our balance sheet and liquidity position.

Speaker Change: We've completed our announced restructuring efforts in Q2, and we expect to realize the full benefits of these efforts in the second half of 'twenty 'twenty four.

Speaker Change: Additionally, as we have reported on previous calls we remain on a near term pathway to improve our balance sheet and liquidity position in Q1, we launched a formal banking process to divest one of our non software based assets.

Ryan Steelberg: In Q1, we launched a formal banking process to divest one of our non-software-based assets. We currently have multiple qualified bidders and hope to close this transaction in the second half of 2024. If consummated, this transaction will generate significant cash proceeds that will be used to repay a portion of our term debt and fund future operations. While there can be no assurance that a transaction from this process will ultimately be completed, this is an active strategic objective for our company. One of the core drivers of the increase in demand and robust pipeline that we are seeing is due to the strength of our software.

Ryan Steelberg: We currently have multiple qualified bidders and hope to close this transaction in the second half of 2024. If consummated, this transaction will generate significant cash proceeds that will be used to repay a portion of our term debt and fund future operations. While there can be no assurance that a transaction from this process will ultimately be completed, this is an active strategic objective for our company. One of the core drivers of the increase in demand and robust pipeline that we are seeing is due to the strength of our software.

Speaker Change: We currently have multiple qualified bidders and hope to close this transaction in the second half of 2024.

Speaker Change: If consummated this transaction will generate significant cash proceeds that will be used to repay a portion of our term debt and fund future operations.

Speaker Change: While there can be no assurance that a transaction from this process will ultimately be completed this is an active strategic objective for our company.

Speaker Change: One of the core drivers of the increase in demand and robust pipeline that we are seeing is due to the strength of our software.

Ryan Steelberg: Over the past several quarters, Veritone has made significant enhancements to our proprietary AI platform, AIWare. With AIWare, businesses can swiftly develop and deploy production-grade, AI-driven solutions using ready-to-use models, workflows, and data adapters. Leveraging our 10 years of experience building and deploying AI solutions at scale, Veritone is able to support enterprise customers to quickly operationalize AI solutions designed to solve large-scale real-world business challenges. AIWare supports a wide array of AI models, including offerings from major cloud providers, best-of-breed point solutions, proprietary Veritone models, and, of course, the latest large language models on the market. This extensive catalog of plug-and-play AI models enables seamless and interchangeable AI processing, an increasingly valuable feature as model development advances at unprecedented speed.

Ryan Steelberg: Over the past several quarters, Veriton has made significant enhancements to our proprietary AI platform, AIware. With AIware, businesses can swiftly develop and deploy production-grade AI-driven solutions using ready-to-use models, workflows, and data adapters. Leveraging our 10 years of experience building and deploying AI solutions at scale, Veriton is able to support enterprise customers to quickly operationalize AI solutions designed to solve large-scale real-world business challenges. AIware supports a wide array of AI models, including offerings from major cloud providers, best-of-breed point solutions, proprietary Veriton models, and, of course, the latest large-language models on the market. This extensive catalog of plug-and-play AI models enables seamless and interchangeable AI processing, an increasingly valuable feature as model development advances at unprecedented speeds.

Speaker Change: Over the past several quarters <unk> has made significant enhancements to our proprietary AI platform AI work with AI, where businesses can swiftly develop and deploy production grade AI driven solutions using ready to use models workflows and data adapters.

Speaker Change: Bridging our 10 years of experience building and deploying AI solutions at scale baritone is able to support enterprise customers to quickly operationalize AI solutions designed to solve large scale real world business challenges.

Speaker Change: Yeah, we're supports a wide array of AI models, including offerings from major cloud providers best of breed point solutions proprietary Burtone models and of course, the latest large language models on the market.

Speaker Change: This extensive catalog of plug and play AI models enabled seamless and interchangeable AI processing and increasingly valuable feature as model development advances at unprecedented speeds recent.

Ryan Steelberg: Recent enhancements to the AI-Aware platform include significant advancements in search, analytics, and data ingestion. Our sophisticated search capabilities now incorporate cutting-edge vector databases and embedded technologies, enabling natural language and semantic search. In analytics, we provide robust insights across cognition, monetization, and processing via self-service dashboards and offer custom analytics for clients needing specific reporting on their ontology and identifiers.

Ryan Steelberg: Recent enhancements to the AIware platform include significant advancements in search, analytics, and data ingestion. Our sophisticated search capabilities now incorporate cutting-edge vector databases and embedded technologies, enabling natural language and semantic search. In analytics, we provide robust insights across cognition, monetization, and processing via self-service dashboards and offer custom analytics for clients needing specific reporting on their ontology and identifier. Additionally, we have significantly upgraded our enterprise-grade data ingestion capabilities, ensuring that they are more reliable, observable, and scalable, essential features across our business units. These advancements enable Veritone to drive transformative results and foster innovation within our business units and AI solutions group.

Speaker Change: Recent enhancements to the eyewear platform includes significant advancements in search analytics and data ingestion or sophisticated search capabilities now incorporate cutting edge vector databases and embedded technology, enabling natural language and semantic search.

Speaker Change: In analytics, we provide robust insights across cognition monetization and processing via self service dashboards and offer custom analytics for clients, meaning specific reporting on their ontology and identifiers.

Ryan Steelberg: Additionally, we have significantly upgraded our enterprise-grade data ingestion capabilities, ensuring that they are more reliable, observable, and scalable, essential features across our business units. These advancements enable Veritone to drive transformative results and foster innovation within our business units and AI solutions. All of these enhancements in aggregate have led to positive customer feedback and a meaningful increase in demand, as evidenced by our largest AI software pipeline to date. When we launched AIWare several years ago, it was a groundbreaking way to improve the workflows of enterprise customers.

Speaker Change: Additionally, we have significantly upgraded our enterprise grade data ingestion capabilities, ensuring that they are more reliable observable and scalable a central features across our business units.

Speaker Change: These advancements enable burtone to drive transformative results and foster innovation within our business units and AI solutions group.

Ryan Steelberg: All of these enhancements in aggregate have led to positive customer feedback and a meaningful increase in demand, as evidenced by our largest AI software pipeline to date.

Speaker Change: All of these enhancements in aggregate have led to positive customer feedback and a meaningful increase in demand as evidenced by our largest AI software pipeline to date.

Ryan Steelberg: When we launched AI Wear several years ago, it was a groundbreaking way to improve the workflows of enterprise customers. As I mentioned in previous discussions, we are still in the early stages of AI adoption and have only begun to explore its full potential for large scale deployment. Today, the global race for AI is about more than just applications, their features, and accuracy. It's also about how well these technologies can work in complex and distributed environments. As AI continues to change how organizations operate, businesses must move away from traditional software models. Leaders now need to rethink and redesign their large workflows and data systems to adapt to the fast-changing AI landscape.

Speaker Change: When we launched AI, where several years ago. It was a groundbreaking way to improve the workflows of enterprise customers.

Ryan Steelberg: As I mentioned in previous discussions, we are still in the early stages of AI adoption and have only begun to explore its full potential for large-scale deployment. Today, the global race for AI is about more than just applications, their features, and accuracy. It's also about how well these technologies can work in complex and distributed environments. As AI continues to change how organizations operate, businesses must move away from traditional software models.

Speaker Change: As I mentioned in previous discussions we are still in the early stages of AI adoption and have only begun to explore its full potential for large scale deployment.

Speaker Change: Today, the global rates for AI is about more than just applications. Their features and accuracy. It's also about how well. These technologies can work in complex and distributed environments and.

Speaker Change: And AI continues to change how organizations operate businesses must move away from traditional software models leaders now need to rethink and redesign their large workflows and data systems to adapt to the fast changing landscape.

Ryan Steelberg: Leaders now need to rethink and redesign their large workflows and data systems to adapt to the fast-changing AI landscape. Despite challenges like uncertain ROI, isolated data sets, data privacy issues, and accessibility concerns, our AIWare platform and comprehensive AIWare product suite stand out. Our platform is flexible and can work with various models and deployment methods. Additionally, our advancements in large language models and retrieval-augmented generation make us a strong partner for hardware providers and cloud service giants in the AI ecosystem across our three main market areas. Now, let me turn to providing some further details on quarterly progress across our core market verticals. First, Veritone Hire.

Ryan Steelberg: Despite challenges like uncertain ROI, isolated data sets, data privacy issues, and accessibility concerns, our AI Wear platform and comprehensive AI Wear product suite stand out. Our platform is flexible. It can work with various models and deployment methods. Additionally, our advancements in large language models and retrieval augmented generation make us a strong partner for hardware providers and cloud service giants in the AI ecosystem across our three main market areas.

Speaker Change: Despite challenges like uncertain ROI isolated datasets data privacy issues and accessibility concerns our AI wear platform and comprehensive AI, where product suite standout our platform, it's flexible and can work with various models and deployment methods. Additionally, our advancements in large language models and retrieve.

Speaker Change: Augmented generation make us a strong partner for hardware providers and cloud service Giants in the AI ecosystem across our three main market areas.

Ryan Steelberg: Now, let me turn to providing some further details on quarterly progress across our core market verticals. First, Veritone higher. Veritone Higher maintains its strong performance in the second quarter, underpinned by its strategic go-to-market strategy, efficiency gains resulting from the reorganization of its product and engineering teams, and focus on securing multi-year subscription deals. I'm excited to report that we have completed the integration of Broadbeam this quarter. All employee, back office, and system integration work has been completed, including the migration of the legacy Broadbeam platforms, CRM, and financial systems this quarter, moving us one step closer to providing one seamless recruiter experience that enhances operational efficiency, automation, and data-driven hiring decisions for employers.

Speaker Change: Now, let me turn to providing some further details on quarterly progress across our core market verticals.

Ryan Steelberg: Veritone Hire maintained its strong performance in the second quarter, underpinned by a strategic go-to-market strategy, efficiency gains resulting from the reorganization of its product and engineering team, and focus on securing multi-year subscription deals. I'm excited to report that we have completed the integration of Broadbeam this quarter. All employee back office and system integration work has been completed, including the migration of the legacy Broadbeam platforms, CRM, and financial systems this quarter, moving us one step closer to providing one seamless recruiter experience that enhances operational efficiency, automation, and data-driven hiring decisions for employers.

Speaker Change: First baritone higher verity.

Speaker Change: Baritone higher maintained its strong performance in the second quarter underpinned by a strategic go to market strategy efficiency gains, resulting from the reorganization of its product and engineering teams and focus on securing multiyear subscription deals.

Speaker Change: I'm excited to report that we have completed the integration of broadband this quarter all employee back office and system integration work has been completed including the migration of the legacy broadband platforms CRM and financial systems. This quarter moving us one step closer to providing one seamless recruiter experience and enhances operational efficiency automation.

Speaker Change: And data driven hiring decisions where employers.

Ryan Steelberg: We've successfully unified the branding under Veritone Higher, incorporating the best of the Broadbeam and Pandologic brands, and our team at Hard at Work on the next generation in Veritone Higher platform and application suite. Notably, from a synergy perspective, we signed significant new enterprise programmatic advertising and job distribution software deals in the quarter, including global brands such as Sabita, Whole Foods, Best Buy, and Herons. We also completed the beta launch of our programmatic advertising solution and programmatic publisher network in Australia, and we're thrilled to become the first programmatic solutions provider with a presence there. Our performance in programmatic campaigns continues to deliver leading KPIs in the market, executing an average 40% plus improvement versus client target cost for acquisition this quarter.

Ryan Steelberg: We've successfully unified the branding under Veritone Hire, incorporating the best of the Broadbean and Pandalogic brands, and our team is hard at work on the next generation Veritone Hire platform and application suite. Notably, from a synergy perspective, we signed significant new enterprise programmatic advertising and job distribution software deals in the quarter, including global brands such as Cevita, Whole Foods, Best Buy, and Harrods. We also completed the beta launch of our programmatic advertising solution and programmatic publisher network in Australia. And we're thrilled to become the first programmatic solutions provider with a presence in Singapore.

Speaker Change: We've successfully unified the branding under baritone higher incorporating the best of the broadband and panel object brands and our team is hard at work on the next generation baritone higher platform and application suite.

Speaker Change: Notably from a synergy perspective, we signed significant new enterprise programmatic advertising and job distribution software deals in the quarter, including global brands, such as the beta whole foods Bestbuy inherits.

Speaker Change: We also completed the beta launch of our programmatic advertising solution and programmatic publisher network in Australia, and we're thrilled to become the first programmatic solutions provider with a presence there.

Ryan Steelberg: Our performance and programmatic campaigns continue to deliver leading KPIs in the market, executing an average 40% plus improvement versus client target cost for acquisition this quarter. Despite industry headwinds, Veritone Hire remains well positioned to capitalize on the upward trend of programmatic spend in recruitment, driving market expansion as companies seek to maximize returns from the recruiting effort. We look forward to keeping up this momentum with additional wins and pilot conversions in the second half of 2024, while shifting focus to media and entertainment.

Speaker Change: Our performance in programmatic campaigns continues to deliver leading kpis in the market executing an average 40% plus improvement versus client target cost per acquisition this quarter.

Ryan Steelberg: Despite industry headwinds, Veritone higher remains well positioned to capitalize on the upward trend of programmatic spend in recruitment, driving market expansion as companies seek to maximize returns from the recruiting efforts. We look forward to keeping up this momentum with additional wins and pilot conversions in the second half of 2024.

Speaker Change: Despite industry headwinds baritone higher remains well positioned to capitalize on the upward trend of programmatic spend and recruitment driving market expansion as companies seek to maximize returns from their recruiting efforts.

Speaker Change: We look forward to keeping up this momentum with additional wins and pilot conversions in the second half of 'twenty 'twenty four.

Speaker Change: Shifting focus to media and entertainment.

Ryan Steelberg: Across AI software and intelligence services, within media and entertainment, we completed landmark partnerships and agreements with notable brands and generated significant customer renewals in the second quarter. Heading Veritone's media and entertainment vertical, I am pleased to announce that Veritone has been named the NCAA's Global Archive of Record and Exclusive Licensing Partner. This multi-year agreement represents Veritone's largest contract to date and extends our synergistic and dynamic partnership with the NCAA for years to come.

Speaker Change: Across AI software and intelligence services within media and Entertainment, we completed landmark partnerships and agreements with notable brands and generated significant customer renewals in the second quarter.

Ryan Steelberg: The agreement will leverage Veritone's advanced AI-powered digital media hub platform to enhance the storage, management, and distribution of NCWA's extensive championship media assets. Veritone will also provide name, image, and likeness clearance services for current and former student-athletes on behalf of the NCAA. In addition to the NCAA win, we executed over 23 new deals in the second quarter. Among the highlights, we secured multiple deals with prominent Australian media and sports organizations, including a Tennis Australia multi-year partnership. Tennis Australia, which owns and produces the Australian Open, now secures three of the four tennis Grand Slam tournaments as Veritone customers.

Speaker Change: Headlining baritones media and entertainment vertical I am pleased to announce the baritone has been named the N C double as global archive of record and exclusive licensing partner. This multi year agreement represents baritones largest contract to date and extends our synergistic and dynamic partnership with the NCWA for years to come.

Ryan Steelberg: I am pleased to announce that Veritone has been named the NCAA's Global Archive of Record and Exclusive Licensing Partner. This multi-year agreement represents Veritone's largest contract to date and extends our synergistic and dynamic partnership with the NCAA for years to come. The agreement will leverage Veritone's advanced AI-powered digital media hub platform to enhance the storage, management, and distribution of NCAA's extensive championship media assets. Veritone will also provide name, image, and likeness clearances services for current and former student athletes on behalf of the NCAA. In addition to the NCAA win, we executed over 23 new deals in the second quarter.

Speaker Change: The agreement will leverage baritones advanced AI powered digital media hub platform to enhance the storage management and distribution of NCWA has extensive championship media assets.

Speaker Change: <unk> will also provide name image and likeness clearances services for current and former student athletes on behalf of the Encina blank.

Speaker Change: In addition to the N C double a win we executed over 23, new deals in the second quarter. Among the highlights we secured multiple deals with prominent Australia media and sports organizations, including a tennis, Australia multi year partnership.

Ryan Steelberg: Among the highlights, we secured multiple deals with prominent Australian media and sports organizations, including a Tennis Australia multi-year partnership. Tennis Australia, which owns and produces the Australian Open, now secures three of the four tennis Grand Slam tournaments as Veritone customers. Veritone has also recently secured a major new Australian broadcaster customer, resulting in Veritone now servicing three of the top four major Australian media companies. Other notable renewals and deal expansions include agreements with NBC Universal, CNBC, Bloomberg, CNN, Big Ten Network, and A&E Networks, underscoring our commitment to client satisfaction and the stickiness of our solutions. Veritone's AI-assisted content licensing business continues to thrive and demonstrate significant partner growth, supported by a diverse space of content customers and buyers.

Speaker Change: Tennis, Australia, which owns and produces the Australian open now secures three of the four tenants Grand Slam tournaments as baritone customers fair.

Ryan Steelberg: Veritone has also recently secured a major new Australian broadcaster customer, resulting in Veritone now servicing three of the top four major Australian media companies. Other notable renewals and deal expansions include agreements with NBC Universal, CNBC, Bloomberg, CNN, Big Ten Network, and A&E Networks, underscoring our commitment to client satisfaction and the stickiness of our solutions. Veritone's AI-assisted content licensing business continues to thrive and demonstrate significant partner growth supported by a diverse base of content customers and buyers.

Speaker Change: Baritone has also recently secured a major new Australian broadcaster customer, resulting in baritone now servicing three of the top four major Australian media companies.

Speaker Change: Other notable renewals and deal expansions include agreements with NBC Universal C. N B C. Bloomberg C N N Big 10 network and Amy networks, underscoring our commitment to client satisfaction and the stickiness of our solutions.

Speaker Change: Baritones AI assisted content licensing business continues to thrive and demonstrates significant partner growth supported by a diverse base of content customers and buyers alongside securing these licensing arrangements baritone played a pivotal role in facilitating near real time packaged and distributed content for companies such as Pac 12 Court T V State farm does.

Ryan Steelberg: Alongside securing these licensing arrangements, Veritone played a pivotal role in facilitating near real-time packaged and distributed content for companies such as PAC-12, Core TV, State Farm, Disney, ESPN, Nike, Rolex, and HBO. Our advertising agency, Veritone 1, delivered strong performance in Q2 with revenues increasing substantially year-over-year at over 25%. We also saw significant growth from key customers such as Mint Mobile, LinkedIn, DraftKings, and Quince. By expanding our customers' media investments and adding prominent new customers, including market-leading Chui, we've capitalized on the revitalized advertising market. Streaming and YouTube media placements led the way, with revenues surging 55% and 29% respectively, driving improved margins.

Speaker Change: Any E S P N Nike Rolex and H B L.

Speaker Change: Our advertising agency baritone one delivered strong performance in Q2 with revenues increasing substantially year over year at over 25%.

Ryan Steelberg: We also saw significant growth from key customers such as Mint Mobile, LinkedIn, DraftKings, and Quint. By expanding our customers' media investments and adding prominent new customers, including market-leading Chewy, we've capitalized on the revitalized advertising market. Streaming and YouTube media placements led the way, with revenue surging 55% and 29%, respectively, driving improved margin.

Speaker Change: We also saw significant growth from key customers, such as Mint mobile Linkedin drafting sequence.

Speaker Change: By expanding our customer's media investments and adding prominent new customers, including market, leading chewy, we've capitalized on the revitalized advertising market.

Speaker Change: Streaming and Youtube media placements led the way with revenue surging, 55% and 29% respectively driving improved margins.

Ryan Steelberg: This momentum is expected to continue, fueled by a robust pipeline of new advertisers in various stages of contracting and discussions, positioning us for continued success in the quarters to come. Finally, I would like to comment on Veritone's public sector business, both in terms of strategy and progress. We are very bullish about our public sector growth process.

Speaker Change: This momentum is expected to continue fueled by our robust pipeline of new advertisers in various stages of contracting and discussions positioning us for continued success in the quarters to come.

Ryan Steelberg: Finally, I would like to comment on Veritone's public sector business both in terms of strategy and progress. We are very bullish about our public sector growth prospects. To provide some context around this, we came to market in state and local law enforcement with our initial AI solutions in 2019, and despite the impact of COVID, today we serve as several hundred state and local law enforcement agencies and are growing quickly. On the federal side, despite coming to market just recently in 2020, we already are contracting with Fed Siv and Fed DoD agencies. This is great progress relative to the timing of government contracting and procurement, especially for a new AI software player in this space.

Speaker Change: Finally, I would like to comment on baritones public sector business, both in terms of strategy and progress.

Speaker Change: We are very bullish about our public sector growth prospects to provide some context around this we came to market and state and local law enforcement with our initial AI solutions in 2019, and despite the impact of Covid today, We service several hundred state and local law enforcement agencies and are growing quickly on.

Ryan Steelberg: To provide some context around this, we came to market in state and local law enforcement with our initial AI solutions in 2019, and despite the impact of COVID, today, we service several hundred state and local law enforcement agencies and are growing quickly. On the federal side, despite coming to market just recently in 2020, we are already contracting with FedSiv and FedDoD agencies. This is great progress relative to the timing of government contracting and procurement, especially for a new AI software player in the space.

Speaker Change: On the federal side, despite coming to market. Just recently in 2020, we already are contracting with fed says and fed D O D agencies.

Speaker Change: This is great progress relative to the timing of government contracting and procurement, especially for a new AI software player in the space.

Ryan Steelberg: This progress is a direct result of our market leading AI products and solutions built on A Hour. Our go-to-market strategy is clear, applicable, and extensible across state and local law enforcement and judicial agencies, fedsive, fed DOD, and international governments. We can move and provision customers quickly. In Q1 of this year, we introduced Veritone Intelligent Digital Evidence Management System, our IDEMS, and the reception so far has greatly exceeded our expectations. Our IDEMS application suite, powered by AI hour, positions Veritone as a strong competitor in a fast growing digital evidence management market, allowing Veritone to become a leading system of record and set of intelligence tools for aggregating, analyzing, correlating, and sharing all investigation-related materials and disparate data sets.

Ryan Steelberg: This progress is a direct result of our market-leading AI products and solutions built on AIWare. Our go-to-market strategy is clear, applicable, and extensible across state and local law enforcement and judicial agencies, Fed-Civ, Fed-DoD, and international government. We can move and provision customers quickly.

Speaker Change: This progress is a direct result of our market, leading AI products and solutions built on our our go to market strategy is clear applicable and extensible across state and local law enforcement and judicial agencies Fed says fed D O D and international governments, we can move and provision customers quickly in.

Ryan Steelberg: In Q1 of this year, we introduced Veritone's Intelligent Digital Evidence Management System, or IDEMS, and the reception so far has greatly exceeded our expectations. Our IDEMS application suite, powered by AOUR, positions Veritone as a strong competitor in a fast-growing digital evidence management market, allowing Veritone to become a leading system of record and set of intelligence tools for aggregating, analyzing, correlating, and sharing all investigation- IDEMS uses AI to speed up and more accurately assess the evidence, including robust and comprehensive video and audio analytics.

Speaker Change: In Q1 of this year, we introduced Burtone intelligent digital evidence management system or items and the reception. So far has greatly exceeded our expectations. Our items application suite powered by a our positions burtone as a strong competitor in a fast growing digital evidence management market, allowing baritone to become a leading system.

Speaker Change: Record and set of intelligence tools for aggregating analyzing correlating and sharing all investigation related materials and disparate datasets.

Ryan Steelberg: IDEMS uses AI to speed up and more accurately assess the evidence, including robust and comprehensive video and audio analytics. According to future data stats, the addressable market for Veritone's public sector business is large and growing quickly, pacing to surpass $50 billion by 2030. Reports estimate that the global digital evidence management market size alone is poised to exceed $12 billion by 2028. We are in a great position. Expanding on the successes achieved in previous quarters, we have made significant strides in developing and deploying AS solutions that meet the evolving needs of our public sector and government customers.

Speaker Change: Items uses AI to speed up and more accurately assess the evidence, including robust and comprehensive video and audio analytics.

Speaker Change: According to future data stats, the addressable market for baritones public sector business is large and growing quickly pacing to surpassed $50 billion by 2030 reports estimate that the global digital evidence management market size alone is poised to exceed $12 billion by 2028, we are in a great position.

Ryan Steelberg: According to future data stats, the addressable market for Veritone's public sector business is large and growing quickly, pacing to surpass $50 billion by 2030. Reports estimate that the global digital evidence management market size alone is poised to exceed $12 billion by 2028. We are in a great position. Expanding on the successes achieved in previous quarters, we have made significant strides in developing and deploying AI solutions that meet the evolving needs of our public sector and government customers.

Speaker Change: Expanding on the successes achieved in previous quarters, we have made significant strides in developing and deploying <unk> solutions that meet the evolving needs of our public sector and government customers.

Ryan Steelberg: Our suite of solutions continue to gain significant traction in the global public sector market, with new customer acquisitions and increased pipeline activity, now totaling more than $100 million. This traction includes the addition of 17 new public sector customers to the portfolio of this quarter. We've expanded our distribution channels and market reach to more rapidly seize opportunities through strategic technical partnerships, the addition of new resellers, and platform listings such as our AWS Advanced Tier Services Partner Status, and the public listing of our IDEMS applications on the AWS Marketplace. Together with AWS, we're uniquely positioned to support public sector customers, such as law enforcement agencies, to overcome adoption challenges by also harnessing the transformative potential of AI and cloud computing through accelerating streamlined cloud native enterprise AI and generative AI solutions at scale.

Ryan Steelberg: Our suite of solutions continues to gain significant traction in the global public sector market with new customer acquisitions and increased pipeline activity, now totaling more than $100 million. This traction includes the addition of 17 new public sector customers to the portfolio this quarter.

Speaker Change: Our suite of solutions continue to gain significant traction in the global public sector market with new customer acquisitions and increased pipeline activity now totaling more than $100 million.

Speaker Change: This traction includes the addition of 17, new public sector customers to the portfolio this quarter.

Ryan Steelberg: We've deepened our distribution channels and market reach to more rapidly seize opportunities through strategic technical partnerships, the addition of new resellers, and platform listings, such as our AWS Advanced Tier Services Partner Status and the public listing of our iDEMS applications on the AWS Marketplace. Together with AWS, we're uniquely positioned to support public sector customers such as law enforcement agencies to overcome adoption challenges by also harnessing the transformative potential of AI and cloud computing through accelerating streamlined cloud native enterprise AI and generative AI solutions at scale.

Speaker Change: We've deepened our distribution channels and market reach to more rapidly seize opportunities through strategic technical partnerships. The addition of new resellers and platform listings such as our AWS advanced here services partner status and the public listing of our items applications on the AWS marketplace.

Speaker Change: Together with AWS, we're uniquely positioned to support public sector customers, such as law enforcement agencies to overcome adoption challenges. While also harnessing the transformative potential of AI and cloud computing through accelerating streamlined cloud native enterprise AI and generative AI solutions at scale.

Ryan Steelberg: This is simply one example of our dedication to unlocking AI at scale and enabling our customers to achieve not only sustained success, but a competitive advantage in their respective industries as well.

Ryan Steelberg: This is simply one example of our dedication to unlocking AI at scale and enabling our customers to achieve not only sustained success but a competitive advantage in their respective industries as well. Regarding the second quarter, I want to share some operational highlights to give further context to our progress. In Q2, we completed a second phase of an AI-based video redaction service for one of the largest police agencies in the country with a total contract value of greater than $500,000. And just recently, we were able to enter the third phase of this agreement. In addition, two Department of Justice components used the $15 million blank purchase agreement, as previously announced, to procure Veritone services.

Speaker Change: This is simply one example of our dedication to unlocking AI at scale and enabling our customers to achieve not only sustained success on a competitive advantage in their respective industries as well.

Ryan Steelberg: Relating to the second quarter, I want to share some operational highlights to give further context to our progress. In Q2, we completed a second phase of AI-based video reduction service for one of the largest police agencies in the country, with a total contract value of greater than $500,000. And just recently, we're able to enter the third phase of this agreement. In addition, two Department of Justice components used the $15 million blank purchase agreement as previously announced to procure their tone services. Also, our ongoing pilot with a Bureau of Prisons is making significant headway, and we officially receive security approval to move this project forward.

Speaker Change: Relating to the second quarter I want to share some operational highlights to give further context to our progress.

Speaker Change: In Q2, we completed a second phase of AI based video reduction service for one of the largest police agencies in the country with a total contract value of greater than $500000.

Speaker Change: And just recently, we were able to enter the third phase of this agreement.

Speaker Change: In addition to department of Justice components used $15 million blank purchase agreement as previously announced to procure a baritone services.

Ryan Steelberg: Also, our ongoing pilot with the Bureau of Prisons is making significant headway, and we officially received security approval to move this project forward, confirming our vision to expand our offerings globally. We also signed a landmark paid trial with a European country's National Police Agency for both our tracker and illuminate offerings, which are part of the Items suite. On the U.S. front, just this week, we were awarded a contract with a major DOD agency, the Defense Logistics Agency, for our Veritone items applications for electronic storage of information, discovery, and disclosure for forensic video. This is a one-year contract with four annual renewals.

Speaker Change: Also our ongoing pilot with the Bureau of prisons is making significant headway and we officially received security approval to move this project forward.

Ryan Steelberg: confirmed our vision to expand our offerings globally. We also signed a landmark paid trial with a European country's national policing agency for both our tracker and Illuminate offerings, which are part of the items suite. On the US front, just this week, we were awarded a contract with a major DOD agency, the Defense Logistics Agency, for our Veritone's item applications, for electronic storage of information, discovery, and disclosure for forensic video. This is a one-year contract with four annual renewals. If realized and service to term, this will represent what our largest contract to date with a DOD agency.

Speaker Change: Confirming our vision to expand our offerings globally. We also signed a landmark paid trial with a European countries' National policing agency for both our tracker and illuminate offerings, which are part of the <unk> suite.

Speaker Change: On the U S front just this week, we were awarded a contract with a major D. O D Agency the defense Logistics agency for our <unk> item applications for electronic storage of information discovery and disclosure for forensic video.

Speaker Change: This is a one year contract with four annual renewals.

Ryan Steelberg: If realized and serviced to term, this will represent one of our largest contracts to date with a DoD agency. The quality of our pipeline has never been stronger, and we have a promising number of opportunities that are in the latest stages of the funnel, including an expanded U.S. Senate contract. In addition to realizing great traction and growth in our Fed business, state and local law enforcement agencies are increasingly turning to our AI-powered tools to streamline their audio and video processing.

Speaker Change: If realized in service to term this will represent one of our largest contracts to date with a D O D agency.

Ryan Steelberg: The quality of our pipeline has never been stronger, and we have a promising number of opportunities better in the latest stages of the funnel, including expanded US Senate contract. In addition to realizing great traction and growth in our Fed business, state local law enforcement agencies are increasingly turning to our AI powered tools to streamline their audio and video processing. By automating these time-consuming manual tasks, hundreds of agencies are now significantly reducing operational costs, optimizing resource allocation, and expediting the fulfillment of Freedom of Information Act requests for FOIA. This allows law enforcement to focus on their core missions of protecting and serving their communities.

Speaker Change: The quality of our pipeline has never been stronger and we have a promising number of opportunities that are in the latest stages of the funnel, including expanded U S Senate contract.

Speaker Change: In addition to realizing great traction and growth in our fed business state and local law enforcement agencies are increasingly turning to our AI powered tools to streamline their audio and video processing.

Ryan Steelberg: By automating these time-consuming manual tasks, hundreds of agencies are now significantly reducing operational costs, optimizing resource allocation, and expediting the fulfillment of Freedom of Information Act requests, or FOIA. This allows law enforcement to focus on their core missions of protecting and serving their communities.

Speaker Change: By automating these time consuming manual tasks hundreds of agencies are now significantly reducing operational cost optimizing resource allocation and expediting the fulfillment of freedom of information act requests or failure.

Speaker Change: This allows law enforcement to focus on their core mission of protecting and serving their communities.

Ryan Steelberg: Realized achievements in 2024 demonstrate our dedication to serving as a trusted partner in the public sector and the immense opportunity ahead to broaden our footprint across countries, cities, agencies, and municipalities globally.

Speaker Change: Our realized achievements in 2024 demonstrate our dedication to serving as a trusted partner in the public sector and the immense opportunity ahead to broaden our footprint across countries cities agencies and municipalities globally.

Ryan Steelberg: Our realized achievements in 2024 demonstrate our dedication to serving as a trusted partner in the public sector and the immense opportunity ahead to broaden our footprint across countries, cities, agencies, and municipalities globally. Finally, as it relates to our public sector and government business, I'm thrilled to have Gus Hunt, the former longstanding CTO of the Central Intelligence Agency, join Veritone as a strategic advisor. His security and AI insights, domain expertise, and passion for Veritone's AI for good mission will generate great yield for Veritone, our shareholders, and our customers.

Unknown Executive: Good day and welcome to the Veritone Inc. 2nd quarter of 2024 financial results conference calls. All participants will be in less than only mode. Should you need assistance please signal a conference specialist by pressing the star key all by zero. After today's presentation there will be an opportunity to ask questions. To ask a question you may press star then one on your telephone keypad. To withdraw your questions please press star then choose. Please note this event is being recorded. I would now like to turn the conference over to Stefan Norbom in verse and relation. Please go ahead.

Ryan Steelberg: Finally, as it relates to our public sector and government business, I am thrilled to have Gus Hunt, the former long-standing CTO of the Central Intelligence Agency, join Veritone as a strategic advisor. The security and AI insights domain expertise and passion for Veritone's AI for good mission will generate great yield for Veritone, our shareholders, and our customers. We have made significant strides in building a strong foundation throughout the first half of 2024. Our team's dedication has been instrumental in driving this progress. We remain committed to financial discipline and implementing operational improvements to optimize Veritone's operating model for long-term success.

Speaker Change: Finally, as it relates to our public sector and government business I'm thrilled to have got hunt the former long standing CTO of the Central Intelligence Agency joined Burtone as a strategic advisor to security and AI insights domain expertise and passion for baritones AI for good emission will generate great yield for Burtone.

Speaker Change: Our shareholders and our customers.

Ryan Steelberg: We have made significant strides in building a strong foundation throughout the first half of 2024. Our team's dedication has been instrumental in driving this progress. We remain committed to financial discipline and implementing operational improvements to optimize Veritone's operating model for long-term success. I am confident that our enhanced strategic focus will enable us to better serve our customers and strengthen our leadership position in delivering cutting-edge AI solutions to our customers and partners at scale. Now, I would like to hand the call off to Mike Zemetra, our CFO, who will go through our financial results and guidance in more detail.

Speaker Change: We have made significant strides in building a strong foundation throughout the first half of 2024, our team's dedication has been instrumental in driving this progress.

Speaker Change: We remain committed to financial discipline, and implementing operational improvements to optimize baritones operating model for long term success.

Stefan Norbom: Thank you and good afternoon. Aftermarket close today Veritone issued a press release announcing results for the 2nd quarter and did June 30, 2024. The press release another supplemental information or available in the pastor section of Veritone's website.

Ryan Steelberg: I am confident that our enhanced strategic focus will enable us to better serve our customers and strengthen our leadership position in delivering cutting-edge AI solutions to our customers and partners at scale.

Speaker Change: I'm confident that our enhanced strategic focus will enable us to better serve our customers and strengthen our leadership position and delivering cutting edge AI solutions to our customers and partners at scale.

Stefan Norbom: Joining us for today's call are Veritone's Chairman Chief Executive Officer, Ryan Steelberg and Chief Financial Officer, Mike Zemetra who provide a prepared remarks and then open the call up for a live question and answer session. Please note that certain information discussed on the call today including certain answers to your questions will include forward-looking statements. This includes without limitations statements about our business strategy and future financial and operating performance. These forward-looking statements are subject to risk, uncertainties and assumptions that may cause actual results to differ materially from those stated.

Michael Zemetra: Now, I would like to hand a call off to Mike Symetra, our CFO, who will go through our financial results and guidance in more detail. Mike? Thank you, Ryan. I'm happy to report we continue to execute on plan through Q2 2024. More importantly, we ended Q2 with our strongest pipeline of SaaS revenue since our inception and on track with cost, keeping us on target towards operating cash flow profitability, neutrality on a non-GAAP basis as early as Q4 2024.

Speaker Change: Now I would like to hand, the call off to Mike Symmetra, Our CFO, who will go through our financial results and guidance in more detail.

Speaker Change: <unk>.

Mike Symmetra: Thank you Ryan.

Mike Zemetra: Ryan, I'm happy to report we continue to execute on plan through Q2 2024. More importantly, we ended Q2 with our strongest pipeline of SAS revenue since our inception and on track with cost, keeping us on target towards operating cash flow profitability neutrality on a non-gap basis as early as Q4 2024. During my prepared remarks, I will discuss our Q2 year-over-year performance and KPIs, as well as Q3 and fiscal 2024 guidance.

Stefan Norbom: Certain of these risks and assumptions are discussed in Veritone's SEC filings including its annual report on foreign 10K. These forward-looking statements are based on assumptions as of today August 8, 2024 and Veritone undertakes no obligation to revise or update them. During this call the actual and forecasted financial measures we will be discussing include non-GAAT measures. Reconciliation of these measures to the corresponding GAAT measures are included in the press release we issued today. Also when we reference pro-former measures such measures are present on a combined pro-former basis treating broad being as unbiberitone during fiscal year 2022.

Mike Symmetra: We report we continue to execute on plan through Q2 2024.

Mike Symmetra: More importantly, we ended Q2 with our strongest pipeline of SaaS revenue since our inception and on track with cost.

Speaker Change: Keeping us on target towards operating cash flow profitability neutrality on a non-GAAP basis as early as Q4 of 2024.

Michael Zemetra: During my prepared remarks, I will discuss our Q2 year-over-year performance in KPIs and Q3 in fiscal 2024 guidance, highlighting the scalability of our revenue and business, including the risks heading into the second half of fiscal 2024, focus on near-term profitability, and projected four-year results. Starting with Q2 2024 performance. Revenue was $31 million, up to 10.7% or $3 million from Q2 2023, driven by an increase of $1.5 million from software products and services, and $1.5 million from managed services driven largely from year-to-year improvement in advertising. The increase in software products and service revenue was largely driven by Veritone Hire, which improved $1.7 million as compared to Q2 2023, largely driven by the June 2023 acquisition of robbing, which generated $8.7 million revenue in Q2 2024, offset by the expected decline in consumption-based revenue from legacy Veritone Hire customers over the same period, including Amazon.

Speaker Change: During my prepared remarks, I will discuss our Q2 year over year performance in Kpis.

Speaker Change: In Q3, and fiscal 2020 guidance, highlighting the scalability of our revenue and business, including the risks heading into the second half of fiscal 2024.

Mike Zemetra: Highlighting the scalability of our revenue and business, including the risks heading into the second half of fiscal 2024, focus on near-term profitability, and projected full-year results, starting with Q2 2024 performance. Revenue was $31 million, up 10.7% or $3 million from Q2 2023, driven by an increase of $1.5 million from software products and services and $1.5 million from managed services, driven largely from a year-over-year improvement in advertising. The increase in software products and service revenue is largely driven by Veritone Hire, which improved $1.7 million as compared to Q2 2023, largely driven by the June 2023 acquisition of Broadbean, which generated $8.7 million in revenue in Q2 2024, offset by the expected decline in consumption-based revenue for legacy Veritone Hire customers over the same period, including Amazon. By comparison, Amazon represented approximately 14% of consolidated revenue in Q2 2023, as compared to less than 5% in Q2 2024.

Speaker Change: On near term profitability and projected full year results.

Speaker Change: Starting with Q2 2020 for performance.

Speaker Change: Revenue was $31 million up 10, 7% or 3 million for Q2 2023, driven by an increase of $1 5 million from software products and services and $1 5 million for managed services driven largely from year over year improvement in advertising.

Stefan Norbom: Finally I would like to remind everyone that the call today is being recorded and will be made available for replay via link on the investor section of Veritone's website at www.veritone.com.

Speaker Change: The increase in software products and service revenue is largely driven by Byrd, who hire which improved $1 7 million as compared to Q2 2023, largely driven by the June 2023 acquisition of <unk>, which generated $8 7 million in revenue in Q2 2024.

Ryan Steelberg: Now I would like to turn the call over to our chairman and chief executive officer Ryan Steeleberg. Thank you Stefan and thank you everyone for joining us. We are excited to speak with you today and provide an update on our second quarter 2024 operations financial performance and strategic progress.

Speaker Change: Set by the expected decline in consumption based revenue from legacy baritone higher customers over the same period, including Amazon.

Ryan Steelberg: Mike Symmetra will cover our quarterly performance and financials in more detail but I wanted to start by providing a broader company update and perspective on our current market environment and opportunity. The demand for AI-based applications workflows and solutions has never been higher and Veritone is both a catalyst for this demand as well as a direct beneficiary. Veritone has been developing and delivering production grade AI applications and solutions at scale for several years now, now serving over 3,000 customers and we are just getting started.

Michael Zemetra: By comparison, Amazon represented approximately 14% of consolidated revenue in Q2 2023, as compared to less than 5% in Q2 2024. Excluding the impact of Amazon, Q2 software products and services revenue would have increased over 50% in Q2 2024 versus Q2 2023. As we continue to diversify our customer base throughout fiscal 2024, our target-driven channel strategy continues to deliver results. In Q2, we delivered strong key performance metrics on a performance basis. ARR 67.9 million, including 49.2 million from subscription versus consumption-based customers, which represents an improvement of over 3% from Q2 2023 and over 72% of our total ARR.

Speaker Change: By comparison Amazon represented approximately 14% of consolidated revenue in Q2, 2023 as compared to less than 5% in Q2 2024.

Mike Zemetra: Excluding the impact of Amazon, Q2 software products and services revenue would have increased over 50% in Q2 2024 versus Q2 2023. As we continue to diversify our customer base throughout fiscal 2024, our partner-driven channel strategy continues to deliver results. In Q2, we delivered strong key performance metrics on a proforma basis.

Speaker Change: Excluding the impact of the Amazon Q2 software products and services revenue would have increased over 50% in Q2 2024 versus Q2 2023.

Speaker Change: As we continue to diversify our customer base throughout fiscal 2024.

Speaker Change: Partner driven channel strategy continues to deliver results.

Speaker Change: In Q2, we delivered strong key performance metrics on a pro forma basis.

Ryan Steelberg: As of this earnings call, Veritone boasts its largest AI software pipeline ever with a material portion of such already contracted and launching in trials and initial phases. This momentum is highlighted by strong demand and activations in the public sector, spanning both state and local law enforcement, as well as FedSiv and FedDOD, which I will detail for you more later.

Mike Zemetra: ARR 67.9 million, including 49.2 million from subscription versus consumption based customers, which represents an improvement of over 3% from Q2 2023 and over 72% of our total ARR. While our subscription based ARR grew year over year, our overall ARR declined given the trailing 12 month pullback in consumption based spending, principally from customers including Amazon. We expect consumption-based ARR to continue to decline year over year in the second half of 2024 as we exit Amazon dependencies over the trailing 12-month period. Total new bookings were $14 million, up 67% year-over-year, driven by increases in subscription-based customer bookings.

Speaker Change: <unk> of $67 9 million.

Speaker Change: Adding $49 2 million from subscription versus consumption based customers, which represents an improvement of over 3% from Q2 2023.

Speaker Change: Over 72% of our total air R.

Michael Zemetra: While our subscription-based ARR grew year-to-year, our overall ARR declined given the training 12-month pullback in consumption-based spending, principally from customers including Amazon. We expect consumption-based ARR to continue to decline year-to-year in the second half of 2024 as we exit Amazon dependencies over the trailing 12-month periods. Total new bookings for $14 million, up 67% year-to-year, driven by increases in subscription-based customer bookings. As I will discuss later, we are seeing a large uplift in our sales pipeline, in particular with the public sector, and we expect bookings over the next few quarters to improve substantially year-to-year as a result.

Speaker Change: While our subscription based <unk> grew year over year, our overall air declined given the trailing 12 months pullback in consumption based spending principally from customers, including Amazon.

Ryan Steelberg: Not to be overlooked in meeting entertainment, Veritone also boasts a record pipeline and I'm excited to announce that Veritone recently secured its largest revenue contract to date, a multi-year technology and services contract with the NCAA. Again, I will speak later to our media and entertainment services in more details. Veritone's accelerating velocity is not limited or credited solely to our direct selling efforts but also includes a robust and expanding partnership and reseller network.

Speaker Change: We expect consumption based air Art continued to decline year over year in the second half of 2024, as we exit Amazon dependencies over the trailing 12 month periods.

Speaker Change: Total new bookings or $14 million up 67% year over year, driven by increases in subscription based customer bookings.

Ryan Steelberg: This is highlighted by our expanded partnership with AWS, which we announced pre-market today. Under our new strategic collaboration agreement with AWS, Veritone and AWS will drive AI and cloud innovation across media, entertainment, sports, talent acquisition, and the public sectors. We also continue to make great strides in the restructuring and strategic initiatives we announced earlier this year, and we made further material progress optimizing our operating structure resulting in a non-gap net loss improvement of 47% in the quarter year over year.

Mike Zemetra: As I will discuss later, we are seeing a large uplift in our sales pipeline, in particular with the public sector, and we expect bookings over the next few quarters to improve substantially year over year as a result. Gross revenue retention continued to be above the 90th percentile, and software products and services customers of 3,437, which are up quarter over quarter, but slightly down year over year, principally due to reductions in legacy career builder accounts, transition off our hire platform post the acquisition of Broadbeam, and from smaller ACV accounts across Veritone Hire, as we prioritize renewals with larger ACV customers in Q2 2024. The overall decline had a minimal impact as overall AR from subscription-based customers improved year-over-year and was slightly up from Q1 2024.

Speaker Change: As I will discuss later, we are seeing a large uplift in our sales pipeline in particular with public sector and we expect bookings over the next few quarters to improve substantially year over year as a result.

Michael Zemetra: Gross revenue retention continued to be above the 90th percentile, and software products and services customers of 3437, which were up quarter to quarter, but slightly down year-to-year, principally due to reductions in legacy CareerBuilder accounts, transition off our higher platform or post-via acquisition of broadening, and from smaller ACV accounts across Baritone higher as we prioritize renewals with larger ACV customers in Q2-2024. The overall decline had a minimal impact, as overall ARR from subscription-based customers in the previous year was slightly up from Q1-2024. As we discussed in our prior call, we are seeing a rebound in advertising beginning in Q2-2024, specifically Q2-manage services advertising gross billions per active client for 727,000, improving 26% from Q2-2023.

Speaker Change: Gross revenue retention continued to be above the 98 percentile and.

Speaker Change: And software products and services customers of 3437, which were up quarter over quarter slightly down year over year, principally due to reductions in legacy Careerbuilder accounts transition off our higher platform post the acquisition of broadband and from smaller ACB accounts across baritone higher as we prioritize renewals.

Ryan Steelberg: While realizing these fiscal improvements, we continue sharpening and accelerating our product and go-to-market focus while concurrently achieving significant milestones in delivering the latest AI-powered solutions to our enterprise customers. While we continue to optimize our cost structure with incremental up-ex saving opportunities, we are strategically shifting our focus to organic growth and servicing our accelerating business pipeline. We've completed our announced restructuring efforts in Q2 and we expect to realize the full benefits of these efforts in the second half of 2024.

Speaker Change: With larger ACD customers in Q2 2024.

Speaker Change: The overall decline had a minimal impact is overall a are from subscription based customers improve year over year. It was slightly up from Q1 2024.

Speaker Change: As we discussed in our prior call we are seeing a rebound in advertising beginning in Q2 2024.

Mike Zemetra: As we discussed in our prior call, we are seeing a rebound in advertising beginning in Q2 2024. Specifically, Q2 managed services advertising gross billings per active client were $727,000, improving 26% in Q2 2023. Given our performance through today and expected macroeconomic improvements in the second half of 2024, we anticipate advertising to continue improving throughout the second half of 2024 as compared to 2023. Q2 loss from operations of $17.7 million improved $10.5 million or 36.8% from Q2 2023 loss from operations of $28.2 million.

Speaker Change: Typically Q2 managed services advertising gross billings per active client for 727000, improving 26% from Q2 2023.

Michael Zemetra: Given our performance, looking through today in expected macroeconomic improvements in the second half of 2024, we anticipate advertising to continue improving throughout the second half of 2024 as compared to Q2-2023. Q2 loss from operations of 17.7 million, improved 10.5 million, or 36.8% from Q2-2023 loss from operations, a 20.2 million. A year-over-year improvement was driven in part by an improvement in non-GAAP growth profit, a decline in acquisition-related expenses year-over-year, driven by the Q2-2023 broadly in acquisition, year-over-year reductions in operating expenses from legacy cost-restructuring efforts over the trend in 18 months, and the timing of the broadly in acquisition, which included a full quarter of broadly in results in Q2-2024 as opposed to a partial month in June 2023.

Speaker Change: Given our performance bookings through today and expected macroeconomic improvements in the second half of 2024, we anticipate advertising to continue improving throughout the second half of 2012 as compared to 2023.

Ryan Steelberg: Additionally, as we have reported on previous calls, we remain on a near-term pathway to improve our balance sheet and liquidity position. In Q1, we launched a formal banking process to divest one of our non-software-based assets. We currently have multiple qualified bidders and hope to close this transaction in the second half of 2024. If consummated, this transaction will generate significant cash proceeds that will be used to repay a portion of our term debt and fund future operations.

Speaker Change: Q2 loss from operations of $17 7 million improved and <unk> 5 million or 36, 8% from Q2 2023 loss from operations of $22 million.

Mike Zemetra: Year-over-year improvement was driven in part by an improvement in non-GAAP gross profit, a decline in acquisition-related expenses year-over-year, driven by the Q2 2023 Broadbeam acquisition, year-over-year reductions in operating expenses from legacy cost restructuring efforts over the trailing 18 months, and the timing of the Broadbeam acquisition, which included a full quarter of Broadbeam results in Q2 2024, as opposed to Q2 2024 non-GAAP gross profit reached $24.6 million, improving $4.4 million or 22% from Q2 2023, largely due to an increase in revenue.

Speaker Change: The year over year improvement was driven in part by an improvement in non-GAAP gross profit decline in acquisition related expenses year over year, driven by the Q2 2023 broadening acquisition.

Ryan Steelberg: While there can be no assurance that a transaction from this process will ultimately be completed, this is an active strategic objective for our company. One of the core drivers of the increase in demand and robust pipeline that we are seeing is due to the strength of our software. Over the past several quarters, Veriton has made significant enhancements to our proprietary AI platform, AIware. With AIware, businesses can swiftly develop and deploy production-grade AI-driven solutions using ready-to-use models, workflows, and data adapters.

Speaker Change: Year over year reductions in operating expenses from legacy cost restructuring efforts over the trailing 18 months and the timing of the Broadview acquisition, which included a full quarter of broad beam results in Q2, 2020 or as opposed to a partial month in June 2023.

Michael Zemetra: Q2-2024 non-GAAP growth profit reached 24.6 million, improving 4.4 million or 22% from Q2-2023, largely due to the increasing revenue. Overall, non-GAAP growth margin in Q2-2024 of 78.8% improved by 660 basis points versus Q2-2023 of 72.2%. Largely driven by the outperformance and mix of our revenue, we expect consolidated non-GAAP growth margins to approximate 78 to 80% through the remainder of fiscal 2024. Q2-non-gap net loss was 6.9 million, an improvement of 6.1 million or 47% as compared to non-gap net loss of 13.0 million in Q2-2023. This was driven largely by the improvements in non-GAAP growth profit, coupled with the reductions in our cost structure over the 12 months, which included significant cost reductions through fiscal 2023 through Q1-2024.

Speaker Change: Q2, 2024, non-GAAP gross profit reached $24 6 million, including $4 4 million or 22% in Q2 2023, largely due to the increase in revenue.

Ryan Steelberg: Leveraging our 10 years of experience building and deploying AI solutions at scale, Veriton is able to support enterprise customers to quickly operationalize AI solutions designed to solve large-scale real-world business challenges. AIware supports a wide array of AI models, including offerings from major cloud providers, best-of-breed point solutions, proprietary Veriton models, and, of course, the latest large-language models on the market. This extensive catalog of plug-and-play AI models enables seamless and interchangeable AI processing, an increasingly valuable feature as model development advances at unprecedented speeds.

Mike Zemetra: Overall, non-GAAP gross margin in Q2 2024 of 78.8% improved by 660 basis points versus Q2 2023 of 72.2%, largely driven by the outperformance and mix of our revenue. We expect consolidated non-GAAP price margins to approximate 78% to 80% through the remainder of fiscal 2024.

Speaker Change: Overall non-GAAP gross margin in Q2, 2024 of 78, 8% improved by 660 basis points versus Q2, 2023 of 72, 2% largely driven by the outperformance in mix of our revenue.

Speaker Change: We expect consolidated non-GAAP gross margins to approximate 78% to 80% through the remainder of fiscal 2024.

Mike Zemetra: Q2 non-GAAP net loss was $6.9 million, an improvement of $6.1 million, or 47%, as compared to a non-GAAP net loss of $13.0 million in Q2 2023. This was driven largely by the improvements in non-GAAP gross profit, coupled with the reductions in our cost structure over the trailing 12 months, which included significant cost reductions through fiscal 2023 through Q1 2024. On the strategic front, as we transition our focus out of cost reductions in Q1 2024, we are now well positioned to return to growth.

Speaker Change: Q2, non-GAAP net loss was $6 9 million, an improvement of $6 1 million or 47% as compared to non-GAAP net loss of 13.0 million. In Q2 2023. This was driven largely by the improvements in non-GAAP gross profit coupled with the reductions in our cost structure over the trailing 12 months, which <unk>.

Ryan Steelberg: Recent enhancements to the AIware platform include significant advancements in search, analytics, and data ingestion. Our sophisticated search capabilities now incorporate cutting-edge vector databases and embedded technologies, enabling natural language and semantic search. In analytics, we provide robust insights across cognition, monetization, and processing via self-service dashboards and offer custom analytics for clients needing specific reporting on their ontology and identifier. Additionally, we have significantly upgraded our enterprise-grade data ingestion capabilities ensuring that they are more reliable, observable, and scalable, essential features across our business units.

Speaker Change: <unk> significant cost reductions through fiscal 2023 through Q1 2024.

Michael Zemetra: On the strategic front, as we transition our focus out of cost reductions in Q1-2024, we are now well positioned to return back towards growth. As a reminder, we executed over 37 million of annualized costs since the beginning of 2023. During Q1-2024, we completed over 13 million of annualized cost reductions, which is included in our full year in Q3-2024 financial guidance. On top of this phase of reorganization, we expect future synergies with cost and revenue to materialize in the latter part of fiscal 2024, largely from integration of past acquisitions across our software products and services lines.

Speaker Change: On the strategic front as we transition our focus out of cost reductions in Q1 2024.

Speaker Change: Now well positioned returned back towards growth.

Mike Zemetra: As a reminder, we have executed over $37 million of annualized cost savings since the beginning of 2023. During Q1 2024, we completed over $13 million of annualized cost reductions, which is included in our full year in Q3 2024 financial guidance. On top of this phase of reorganization, we expect future synergies, both cost and revenue, to materialize in the latter part of fiscal 2024, largely from the integration of past acquisitions across our software products and services lines.

Speaker Change: As a reminder, we executed over $37 million of annualized cost savings since the beginning of 2023 during.

Speaker Change: During Q1 2024, we completed over $13 million of annualized cost reductions, which is included in our full year and Q3 2024 financial guidance.

Ryan Steelberg: These advancements enable Veritone to drive transformative results and foster innovation within our business units and AI solutions group. All of these enhancements in aggregate have led to positive customer feedback and a meaningful increase in demand as evidenced by our largest AI software pipeline to date.

Speaker Change: On top of this phase of reorganization, we expect future synergies both cost and revenue to materialize in the latter part of fiscal 2024, largely from integration of past acquisitions across our software products and services voice.

Michael Zemetra: The Q1's restructuring included organizational alignments within sales, engineering, and corporate; the result of which was a reduction of approximately 14% of our global workforce.

Mike Zemetra: The Q1s we're structuring included organizational realignments within sales, engineering, and corporate, the result of which was a reduction of approximately 14% of our global... On the growth front, our software products and services revenue pipeline and long-term outlook are at all-time highs. More specifically, we see strong demand across the global digital evidence management market, which represents an approximate $10 billion market opportunity.

Speaker Change: The key ones restructuring included organizational realignments within sales engineering incorporate the results of which was a reduction of approximately 14% of our global workforce.

Michael Zemetra: On the growth front, our software products and services revenue pipeline and long-term outlook are at all-time highs. More specifically, we see strong demand across the global digital evidence management market, which represents an approximate $10 billion dollar market opportunity. In the public sector alone, we are currently in contract phases on several large projects with various facets of the U.S. federal government and international customers, with the sales pipeline of over 100 million. Additionally, we recently renewed our licensing agreement with the NCAA, a multi-year deal with up to 40 million and expected revenue over the term and against heavy competition.

Speaker Change: On the growth front, our software products and services revenue pipeline and long term outlook are at all time highs.

Speaker Change: More specifically, we see strong demand across the global digital evidence management market, which represents an approximate $10 billion market opportunity.

Mike Zemetra: In the public sector alone, we are currently in contract phases on several large projects with various facets of the U.S. federal government and international customers, with a sales pipeline of over 100 million. Additionally, we recently renewed our licensing agreement with the NCAA, a multi-year deal with up to 40 million in expected revenue over the term and against heavy competition. Journey to our Balance Sheet. At June 30th, 2024, we held cash and restricted cash of $47 million, compared to $80.3 million at December 31st, 2023.

Speaker Change: And the public sector alone. We are currently in contract basis, and several large projects in various facets of the U S Federal government and international customers the sales pipeline of over 100 million.

Ryan Steelberg: As AI continues to change how organizations operate, businesses must move away from traditional software models. Leaders now need to rethink and redesign their large workflows and data systems to adapt to the fast-changing AI landscape. Despite challenges like uncertain ROI, isolated data sets, data privacy issues, and accessibility concerns, our AI Wear platform and comprehensive AI Wear product suite stand out. Our platform is flexible. It can work with various models and deployment methods. Additionally, our advancements in large language models and retrieval augmented generation make us a strong partner for hardware providers and cloud service giants in the AI ecosystem across our three main market areas.

Speaker Change: Additionally, we recently renewed our license agreement with the NCWA, a multiyear deal with up to $40 million in expected revenue over the term and against heavy competition.

Michael Zemetra: Turning to our balance sheet. At June 30, 2024, we held cash and restricted cash of $47 million compared to $80.3 million at December 31, 2023. The net's $33.3 million decrease reflects net cash outflows from operations of $26.9 million, driven principally by the timing of payments in managed services in Q2 of 2024, our non-GAAP net loss, net interest payments of approximately $4.1 million principally from our debt, and approximately $1.5 million of one-time transition and severance expenses associated with our Q1-2024 structure. Note that in Q2, we accelerated the timing of payments to our customers across our advertising platform, partly driven by a shift from traditional media to increase influencer-based campaigns, or expectations on media settlements are much shorter versus traditional media.

Speaker Change: Turning to our balance sheet.

Speaker Change: At June 30th 2024, we held cash and restricted cash of $47 million compared to $80 3 million at December 31, 2023.

Mike Zemetra: The net $33.3 million decrease reflects net cash outflows from operations of $26.8 million, driven principally by the timing of payments for managed services in Q2 of 2024, our non-GAAP net loss, net interest payments of approximately $4.1 million, principally from our debt, and approximately $1.5 million of one-time transition and severance expenses associated with our Q1 2024 restructuring. Note that in Q2, we accelerated the timing of payments to our customers across our advertising platform, partly driven by a shift from traditional media to increase influencer-based campaigns, where expectations on media settlements are much shorter versus traditional media. In addition, there were net cash outflows from investing activities of $3.4 million driven by capital expenditures.

Speaker Change: The net $33 3 million dollar decrease reflects net cash outflows from operations of $26 8 billion driven principally by the timing of payments and managed services in Q2 2024.

Speaker Change: Our non-GAAP net loss net interest payments of approximately $4 1 million principally from our debt and approximately $1 5 million of one time transition and severance expenses associated with our Q1 2020 for restructuring.

Ryan Steelberg: Now, let me turn to providing some further details on quarterly progress across our core market verticals.

Ryan Steelberg: First, Veritone Higher. Veritone Higher maintains its strong performance in the second quarter underpin by its strategic go-to-market strategy, efficiency gains resulting from the reorganization of its product and engineering teams, and focus on securing multi-year subscription deals.

Speaker Change: Note that in Q2, we accelerated the timing of payments to our customers across our advertising platform, partly driven by a shift from traditional media to increase influencer based campaigns or expectations on media settlements are much shorter versus traditional media.

Ryan Steelberg: I'm excited to report that we have completed the integration of Broadbeam this quarter. All employee, back office, and system integration work has been completed, including the migration of the legacy Broadbeam platforms, CRM, and financial systems this quarter, moving us one step closer to providing one seamless recruiter experience that enhances operational efficiency, automation, and data-driven hiring decisions for employers. We've successfully unified the branding under Veritone Higher, incorporating the best of the Broadbeam and Pandologic brands, and our team at Hard at Work on the next generation in Veritone Higher platform and application suite.

Michael Zemetra: In addition, there was net cash outflows from investing activities of $3.4 million driven by capital expenditures, 2.9 million of deferred searches considerations from fiscal 2023 acquisitions, and principal debt payments of $1.9 million on our December 2023 term loan, offset by $1.8 million in cash from the sale of our energy investment. Total interest paid on our debt was $4.7 million in the first half of Q2, 2024, which was offset by interest income earned from cash on hand of approximately $0.6 million. At June 30th, 2024, we have consolidated that of 166.5 million principal, of which $75.5 million is termed debt, and the remaining $9.1 million is convertible debt due November 20th, 206.

Speaker Change: In addition, there was net cash outflows from investing activities of $3 4 million driven by capital expenditures.

Mike Zemetra: $2.8 million of deferred purchase consideration from fiscal 2023 acquisitions and principal debt payments of $1.9 million on our December 2023 turnaround, offset by $1.8 million in cash from the sale of our energy investment. Total interest paid on their debt was $4.7 million in the first half of Q2 2024, which was offset by interest income earned from cash on hand of approximately $0.6 million. At June 30, 2024, we had consolidated debt of $166.5 million principal, of which $75.5 million is term debt, and the remaining $91 million is convertible debt due in November 2026.

Speaker Change: $2 8 million of deferred purchase consideration in fiscal 2023 acquisitions.

Speaker Change: Principal debt payments of $1 9 million on our December 2023 term loan also.

Speaker Change: Set by $1 $8 million in cash from the sale of our energy investments.

Speaker Change: Total interest paid on our debt was $4 7 million in the first half of Q2, 2024, which was offset by interest income earned from castle in an approximately <unk> 6 million.

Ryan Steelberg: Notably, from a synergy perspective, we signed significant new enterprise programmatic advertising and job distribution software deals in the quarter, including global brands such as Sabita, Whole Foods, Best Buy, and Herons. We also completed the beta launch of our programmatic advertising solution and programmatic publisher network in Australia, and we're thrilled to become the first programmatic solutions provider with a presence there. Our performance in programmatic campaigns continues to deliver leading KPIs in the market, executing an average 40% plus improvement versus client target cost for acquisition this quarter. Despite industry headwinds, Veritone higher remains well positioned to capitalize on the upward trend of programmatic spend in recruitment, driving market expansion as companies seek to maximize returns from the recruiting efforts.

Speaker Change: At June 32024, we had.

Speaker Change: Consolidated debt of $166 5 million principle of which $75 $5 million is term debt and the remaining $91 million is convertible debt due November 2026.

Ryan Steelberg: We look forward to keeping up this momentum with additional wins and pilot conversions in the second half of 2024.

Mike Zemetra: Beginning in June 2024, we began amortizing our term debt principal balance at the rate of 2.5% per quarter. As we have mentioned on previous calls, we remain on a near-term pathway to improve our balance sheet and liquidity position. We are currently engaged with outside bankers and have launched a formal process to sell one of our non-software assets.

Michael Zemetra: Beginning in June 2024, we began amortizing our term debt principal balance at the rate of 2.5 percent per quarter. As we have mentioned on previous calls, we remain on a near-term pathway to improve our balance sheet and liquidity position.

Speaker Change: Beginning in June 2024, we began amortizing our term debt principal balance at the rate of two 5% per quarter.

Speaker Change: As we have mentioned on previous calls we remain on a near term pathway to improve our balance sheet and liquidity position.

Michael Zemetra: We are currently engaged with outside bankers and have launched a formal process to sell one of our non-software assets. We currently have multiple qualified bidders and hope to close this transaction in the second half of 2024. If consummated, this transaction is expected to generate significant cash proceeds, which will be used to repay a portion of our term debt and to fund future operations. There can be no assurance that any transaction resulting from this process will ultimately be completed, but this is an active strategic objective for our company. At the total $47 million in cash, approximately $39.3 million of our reported cash is essentially held for payment to third parties for our managed services, down from $45.3 million at December 31st, 2023.

Speaker Change: We are currently engaged with outside bankers have launched a formal process to sell one of our non software assets.

Mike Zemetra: We currently have multiple qualified bidders and hope to close this transaction in the second half of 2024. If consummated, this transaction is expected to generate significant cash proceeds, which will be used to repay a portion of our term debt and to fund future operations. There can be no assurance that any transaction resulting from this process will ultimately be completed, but this is an active strategic objective for our company.

Speaker Change: We currently have multiple qualified bidders and hope to close this transaction in the second half of 2024.

Speaker Change: If consummated this transaction is expected to generate significant cash proceeds which will be used to repay a portion of our term debt and to fund future operations.

Speaker Change: There can be no assurance that any transaction, resulting from this process will ultimately be completed but this is an active strategic objectives for our company.

Mike Zemetra: Of the total $47 million in cash, approximately $39.3 million of our reported cash is essentially held for payment to third parties for our managed services, down from $45.3 million at December 31, 2023. In June 2024, we refreshed our $3.3 million shelf filing, which expired in the same month. We ended June 30, 2024 with 38 million shares outstanding, and approximately 2.5 million five-year warrants outstanding under our debt facility at a $2.57 strike price. During the first half of 2024, we net settled 499,857 warrant shares in exchange for 298,410 shares of Common. Looking ahead to Q3 2024, I want to point out certain one-time cash items, such as cash payments of $2 million associated with the amortization of our term debt.

Speaker Change: Of the total $47 million in cash approximately $39 3 million of our reported cash is essentially held for payment to third parties for our managed services down from 45 3 million at December 31 2023.

Ryan Steelberg: I am pleased to announce that Veritone has been named the NCAA's Global Archive of Record and Exclusive Licensing Partner. This multi-year agreement represents Veritone's largest contract to date and extends our synergistic and dynamic partnership with the NCAA for years to come. The agreement will leverage Veritone's advanced AI-powered digital media hub platform to enhance the storage, management, and distribution of NCAA's extensive championship media assets. Veritone will also provide name, image, and likeness, clearances services for current and former student athletes on behalf of the NCAA.

Michael Zemetra: In June 2024, we refreshed our $3.3 million shelf filing, which expired in the same month. We ended June 30th, 2024, with 38 million shares outstanding, and approximately 2.5 million five year warrants outstanding under our debt facility at $2.57 and strike price. During the first half of 2024, we net settled 499,857 warrant shares in exchange for 298,410 shares of common stock.

Speaker Change: In June 2024, we refreshed our $300 million shelf, which expired in the same month ends.

Speaker Change: We ended June 32024, with 38 million shares outstanding and approximately $2 5 million five year warrants outstanding under our debt facility at $2 57 and strike price.

Speaker Change: During the first half of 2024 net settled 499857 warrants shares in exchange for 298110 shares of common stock.

Ryan Steelberg: In addition to the NCAA win, we executed over 23 new deals in the second quarter. Among the highlights, we secured multiple deals with prominent Australian media and sports organizations, including a tennis Australia multi-year partnership. Tennis Australia, which owns and produces the Australian Open, now secures three of the four tennis Grand Slam tournaments as Veritone customers. Veritone has also recently secured a major new Australian broadcaster customer, resulting in Veritone now servicing three of the top four major Australian media companies.

Michael Zemetra: Looking ahead to Q3 2024, I want to point out certain one-time cash items. Cash payments of $2 million associated with amortization of our term debt, cash interest payments of up to $5.2 million associated with our term and convertible debt, and cash payments of $1.2 million associated with our January 2021 amended consulting agreement with our former CEO.

Speaker Change: Looking ahead to Q3 2024, I want to point out certain one time cash items.

Mike Zemetra: Cash interest payments of up to $5.2 million associated with our term and convertible debt and cash payments of $1.2 million associated with our January 2024 amended consulting agreement with our former CEO. Turning to financial guidance for Q3 in fiscal 2024. As a backdrop to Fisco 2024, we continue to approach our planning with a very conservative approach to revenue, particularly on any consumption-based revenue, and with heightened discipline around costs as we march towards profitability.

Speaker Change: Cash payments of 2 million associated with amortization of our term debt.

Speaker Change: Cash interest payments of up to $5 2 million associated with our term and convertible debt.

Speaker Change: And cash payments of $1 2 million associated with our January 2024 amended consulting agreement with our former CEO.

Michael Zemetra: Turning to financial guidance for Q3 in fiscal 2024. As a backdrop to fiscal 2024, we continue to approach our planning with a very conservative approach on revenue, particularly on any consumption-based revenue, and with heightened discipline around cost as in March towards profitability. As previously mentioned, in Q1 2024, we executed over 13 million of annualized cost savings, which is included in our guidance, but have intentionally omitted from our 2024 guidance in future cost and revenue synergies expected in the second half of 2024 until they are realized. Given uncertainty in timing of closing some larger deals in the public sector, we are maintaining the top end of our revenue range to reflect a more conservative outlook in the second half of 2024.

Speaker Change: Turning to financial guidance for Q3 and fiscal 2024.

Speaker Change: As a backdrop to fiscal 2024, we continue to approach our planning with a very conservative approach on revenue, particularly on any consumption based revenue and with heightened discipline around costs as we march towards profitability.

Ryan Steelberg: Other notable renewals and deal expansions include agreements with NBC Universal, CNBC, Bloomberg, CNN, Big Ten Network, and A&E Networks, underscoring our commitment to client satisfaction and the stickiness of our solutions. Veritone's AI-assisted content licensing business continues to thrive and demonstrate significant partner growth supported by a diverse space of content customers and buyers. Alongside securing these licensing arrangements, Veritone played a pivotal role in facilitating near real-time packaged and distributed content for companies such as PAC-12, Core TV, State Farm, Disney, ESPN, Nike, Rolex, and HBO.

Mike Zemetra: As previously mentioned, in Q1 2024, we executed over $13 million of annualized cost savings, which is included in our guidance, but we have intentionally omitted from our 2024 guidance any future cost and revenue synergies expected in the second half of 2024 until they are realized. Given uncertainty in the timing of closing some larger deals in the public sector, we are maintaining the top end of our revenue range to reflect a more conservative outlook in the second half of 2024.

Speaker Change: As previously mentioned Q1, 2024, we executed over $13 million of annualized cost savings, which is included in our guidance, but have intentionally omitted from our 2020 for guidance and future cost and revenue synergies expected in the second half of 2024 until they are realized.

Speaker Change: Given uncertainty in timing of closing larger deals in the public sector. We are maintaining the top end of our revenue range to reflect a more conservative outlook in the second half of 2024.

Ryan Steelberg: Our advertising agency, Veritone 1, delivered strong performance in Q2 with revenues increasing substantially year-of-year at over 25%. We also saw significant growth from key customers such as Mint Mobile, LinkedIn, DraftKings, and Quince. By expanding our customers' media investments and adding prominent new customers, including market leading Chui, we've capitalized on the revitalized advertising market. Streaming and YouTube media placements led the way with revenues surging 55% and 29% respectively, driving improved margins. This momentum is expected to continue fuel by a robust pipeline of new advertisers in various stages of contracting and discussions, positioning us for continued success in the quarters to come.

Mike Zemetra: And our guidance assumes we continue to grow advertising in the second half of 2024 at a similar pace to year-over-year growth in Q2 2024. With that backdrop, we are guiding Q3 revenue to be between $34 and $35 million, which is relatively flat year-over-year at the midpoint. Driving this will be growth from the public sector and from our managed services, including advertising, offset by a decline in consumption and one-time revenues. Our managed services business is expected to continue accelerating with more significant growth coming in the second half of 2024 as we begin to exit a more challenging 2023 macro environment and continue to grow our bookings with new and existing customers. We continue to see strong bookings across our advertising services, with Q3 pacing in excess of 15% year over year. Offsetting these growth drivers will be legacy Veritone higher applications.

Michael Zemetra: And our guidance assumes we continue to grow advertising in the second half of 2024 at a similar pace to year-by-year growth in Q2 2024. With that backdrop, we are guiding Q3 revenue to be between 34 and 35 million, which is relatively flat year-by-year at the midpoint. Driving this will be growth from public sector and for our managed services, including advertising, offset by a decline in consumption and one-time revenues. Our managed services is expected to continue accelerating, with more significant growth coming in the second half of 2024, as we begin to exit a more challenging 2023 natural environment and continue to grow our bookings with new and existing customers.

Speaker Change: And our guidance assumes we continue to grow advertising in the second half of 2024 at a similar pace to year over year growth in Q2 2024.

Speaker Change: With that backdrop, we are guiding Q.

Speaker Change: <unk> revenue to be between 34% and $35 million, which is relatively flat year over year at the midpoint.

Speaker Change: Driving this will be growth from public sector and for our managed services, including advertising offset by a decline in consumption and onetime revenues.

Speaker Change: Our managed services is expected to continue accelerating with more significant growth coming in the second half of 2024 as we begin to exit a more challenging 2023 macro environment and continue to grow our bookings with new and existing customers.

Michael Zemetra: We continue to see strong bookings across our advertising services, with Q3 pacing in excess of 15% year-over-year. All setting these growth drivers will be legacy baritone higher applications. More specifically, Q3 2024 assumes Amazon will be less than 5% of a consolidated revenue as compared to 8% of our consolidated revenue in Q3 2023. Risks and upside to our Q3 revenue guidance include execution, our new enterprise deliverables, mainly across our public sector, which can be unpredictable, and to a lesser extent from consumption-based revenue across our higher and managed services. And Q3 quarterly non-GAAP net loss to be between 2.5 and 4 million, in improvement of 59% of the midpoint versus Q3 2023.

Speaker Change: Continue to see strong bookings across our advertising services with Q3 pacing in excess of 15% year over year.

Speaker Change: Offsetting these growth drivers will be legacy burdensome firing applications.

Mike Zemetra: More specifically, Q3 2024 assumes Amazon will be less than 5% of our consolidated revenue as compared to 8% of our consolidated revenue in Q3 2023. Risks and upside to our Q3 revenue guidance include execution on new enterprise deliverables, mainly across our public sector, which can be unpredictable, and to a lesser extent from consumption-based revenue across our hire and manage services. We expect our Q3 quarterly non-GAAP net loss to be between $2.5 and $4 million, an improvement of 59% at the midpoint versus Q3 2023.

Speaker Change: More specifically Q3, 2024 assumes Amazon will be less than 5% of consolidated revenue as compared to 8% of our consolidated revenue in Q3 2023.

Speaker Change: Risks and upside to our Q3 revenue guidance include execution, our new enterprise deliverables, namely across our public sector, which can be unpredictable and to a lesser extent from consumption based revenue across our higher and managed services.

Ryan Steelberg: This is great progress relative to the timing of government contracting and procurement, especially for a new AI software player in this space. This progress is a direct result of our market leading AI products and solutions built on A hour. Our go-to market strategy is clear, applicable, and extensible across state and local law enforcement and judicial agencies, fedsive, fed DOD and international governments. We can move and provision customers quickly. In Q1 of this year we introduced Veritone Intelligent Digital Evidence Management System, our IDEMS, and the reception so far has greatly exceeded our expectations.

Speaker Change: In Q3 quarterly non-GAAP net loss to be between two and a half from $4 million an improvement of 59% at the midpoint versus Q3 2023.

Michael Zemetra: Driving this improvement in the bottom line are legacy cost reductions, which we will begin fully realizing in Q1 2024. For full year 2024, we are maintaining our revenue range to be between 136 and 142 million, representing a year-over-year increase of 9% of the midpoint and relatively flat versus pro-former 2024. As a reminder, and given the current economic outlook, we continue to forecast our revenue conservatively in 2024. Driving the second half of 2024, our public sector remains unpaced to grow as much as 40 to 50% year-over-year. However, and as previously discussed, this growth is dependent on closing some of the larger near-term deals over the next three to five months.

Speaker Change: This improvement in the bottom line, our legacy cost reductions, which we will begin fully realizing in Q1 2024.

Mike Zemetra: Driving this improvement in the bottom line are legacy cost reductions, which we will begin fully realizing in Q1. For full year 2024, we are maintaining our revenue range to be between $136 and $142 million, representing a year-over-year increase of 9% at the midpoint and relatively flat versus pro forma 2024. As a reminder, and given the current economic outlook, we continue to forecast our revenue conservatively in 2024. For the second half of 2024, our public sector remains on pace to grow as much as 40 to 50% year-over-year.

Speaker Change: For full year 2024, we are maintaining our revenue range to be between 136 and $142 million, representing a year over year increase of 9% at the midpoint.

Speaker Change: Relatively flat versus pro forma 2000 people.

Ryan Steelberg: Our IDEMS application suite, powered by AI hour, positions Veritone as a strong competitor in a fast growing digital evidence management market, allowing Veritone to become a leading system of record and set of intelligence tools for aggregating, analyzing, correlating, and sharing all investigation related materials and disparate data sets. IDEMS uses AI to speed up and more accurately assess the evidence, including robust and comprehensive video and audio analytics. According to future data stats, the addressable market for Veritone's public sector business is large and growing quickly, pacing to surpass $50 billion by 2030.

Speaker Change: As a reminder, and given the current economic outlook, we continue to forecast our revenue conservatively in 2024.

Speaker Change: I think the second half of 2020 for our public sector remains on pace to grow as much as 40% to 50% year over year.

Mike Zemetra: However, and as previously discussed, this growth is dependent on closing some of the larger near-term deals over the next three to five months. Moreover, we remain in late agreement stages with various federal agencies on large multimillion-dollar enterprise-level arrangements, which, if executed in 2024, could accelerate this growth projection even further. We expect our managed services, including our advertising, to continue to improve in the second half by over 15% year-over-year, led by advertising and licensing.

Speaker Change: However, and as previously discussed this growth is dependent on closing some of the larger near term deals over the next three to five months.

Michael Zemetra: Moreover, we remain in late-agreement stages with various federal agencies on large multi-million-dollar enterprise-level arrangements, which, if executed in 2024, could accelerate this growth projection even further. We expect our managed services, including our advertising, to continue to improve in the second half by over 15% year of a year, led by advertising and licensing. Offsetting this is a year of a year decline in consumption-based revenue, in certain one-time software sales in 2023, not recurring in 2024. Amazon is projected to conservative represent less than 5% of a consolidated revenue at the midpoint, as compared to 11% in 2024.

Speaker Change: Moreover, we remain in late agreement stages with various federal agencies are large multimillion dollar enterprise level arrangements, which is executed in 2024 could accelerate this growth projection even further.

Ryan Steelberg: Reports estimate that the global digital evidence management market size alone is poised to exceed $12 billion by 2028. We are in a great position. Expanding on the successes achieved in previous quarters, we have made significant strides in developing and deploying AS solutions that meet the evolving needs of our public sector and government customers. Our suite of solutions continue to gain significant traction in the global public sector market, with new customer acquisitions and increased pipeline activity, now totally more than $100 million.

Speaker Change: We expect our managed services, including our advertising to continue to improve in the second half by over 15% year over year led by advertising and licensing.

Mike Zemetra: Offsetting this is a year-over-year decline in consumption-based revenue in certain one-time software sales in 2023, not recurring in 2024. Amazon is projected to represent less than 5% of our consolidated revenue at the midpoint as compared to 11% in 2024. Risks to our annual revenue guidance include the macroeconomy and the results of continuing inflation, tighter labor markets, and higher interest rates on our customers, which we expect to continue at least through the latter part of Q3 2024, execution on new enterprise deliverables, mainly across our public sector, and continued customer growth and retention metrics from our software products and services.

Speaker Change: Offsetting this is a year over year decline in consumption based revenue and certain onetime software sales in 2023 not recurring in 2024.

Speaker Change: Amazon is projected to conserve represent less than 5% of our consolidated revenue at the midpoint as compared to 11% in 2020 for rich.

Michael Zemetra: Risk to our annual revenue guidance include the macroeconomy and the results of continued inflation, tender labor markets and higher interest rate on our customers, which we expect to continue at least through the latter part of Q3 2021. Execution on new enterprise deliverables mainly across our public sector, and continue customer growth and retention metrics from our software products and services. As a result, we now expect full-year non-GAAP net loss to be between 13 and 16 million, with substantial progress towards profitability beginning in the second half of 2024. At the midpoint, this represents over 20 million, and a 61% improvement when compared to fiscal 2023 non-GAAP net loss.

Speaker Change: The risk to our annual revenue guidance include the macro economy and the results of continued inflation and the labor markets and higher interest rate on our customers, which we expect to continue at least through the latter part of Q3 2020 for execution.

Ryan Steelberg: This traction includes the addition of 17 new public sector customers to the portfolio of this quarter. We've even our distribution channels and market reach to more rapidly seize opportunities through strategic technical partnerships, the addition of new resellers, and platform listings such as our AWS Advanced Tier Services Partner Status, and the public listing of our IDEMS applications on the AWS marketplace. Together with AWS, we're uniquely positioned to support public sector customers, such as law enforcement agencies, to overcome adoption challenges by also harnessing the transformative potential of AI and cloud computing through accelerating streamlined cloud native enterprise AI and generative AI solutions at scale. This is simply one example of our dedication to unlocking AI at scale and enabling our customers to achieve not only sustained success, but a competitive advantage in their respective industries as well.

Speaker Change: Execution on new enterprise deliverables, namely concert public sector, and continued customer growth and retention metrics from our software products and services.

Mike Zemetra: As a result, we now expect full-year non-GAAP net losses to be between $13 and $16 million, with substantial progress towards profitability beginning in the second half of 2024. At the midpoint, this represents over $20 million and a 61% improvement when compared to fiscal 2023 non-GAAP notes. Assuming we reach the higher end of our guidance, we expect we will be cash flow positive on a non-gap basis as early as Q4 2024. Further, assuming modest revenue growth in fiscal 2025, we should be cash flow positive on a non-gap basis in fiscal 2025.

Speaker Change: As a result, we now expect full year non-GAAP net loss to be between 13 and $16 million with substantial progress towards profitability beginning in the second half of 2024.

Speaker Change: At the midpoint this represents over $20 million and a 61% improvement when compared to fiscal 2023 non-GAAP net loss.

Michael Zemetra: Assuming we reach the higher end of our guidance, we expect we will be cashflow-positive on a non-GAAP basis as early as Q4 2024. Further, in assuming modest revenue growth in fiscal 2025, we should be cash flow-positive on a non-GAAP basis in fiscal 2025.

Speaker Change: Sumit reached the higher end of our guidance, we expect we will be cash flow positive on a non-GAAP basis as early as Q4 of 2020.

Speaker Change: Further and assuming modest revenue growth in fiscal 2025, we should be cash flow positive on a non-GAAP basis in fiscal 2025.

Michael Zemetra: Lastly, we will be presenting of the 26th Annual H.C. wing right investment conference September 9th to the 11th in New York City. That concludes my prepared remarks.

Speaker Change: Lastly, we will be presenting at the 26th annual H C. Wainwright investment Conference September nine to the 11th in New York City.

Mike Zemetra: Lastly, we will be presenting at the 26th Annual H.C. Wainwright Investment Conference September 9th to the 11th in New York City. That concludes my prepared remarks. Operator, we would like to now open the call to questions.

Speaker Change: It concludes my prepared remarks, operator, we would like to now open the call for questions.

Operator: Operator, we would like to now open the call for questions. Thank you. We will now begin the question and answer session. To ask a question, you may press start the one on your telephone keypad. If you are using a speakerphone, please pick up your hand and start to focus on the key. If any time your question has been addressed and you would like to withdraw your question, please press start, then choose.

Speaker Change: Thank you.

Ryan Steelberg: In addition, two Department of Justice components used the $15 million blank purchase agreement as previously announced to procure their tone services. Also, our ongoing pilot with a Bureau of Prisons is making significant headway, and we officially receive security approval to move this project forward, confirmed our vision to expand our offerings globally.

Speaker Change: Well now begin the question and answer session.

Operator: We will now begin the question and answer session. To ask a question, you may press star then 1 on your telephone keypad. If you're using a speakerphone, please pick up your handset before pressing the key. If at any time your question has been answered and you would like to withdraw your question, please press star then choose. At this time, we'll pause momentarily to assemble the rosters. The first question comes from Brent Overfeld from Pacific Equity.

Speaker Change: To ask a question.

Speaker Change: You May press Star then one on your telephone keypad.

Speaker Change: You're using a speakerphone please pick up your whole thoughtful forecast one excellent.

Speaker Change: If at any time, you have question Hossein and Josh and you would like to withdraw your question. Please.

Ryan Steelberg: We also signed a landmark paid trial with a European country's national policing agency for both our tracker and illuminate offerings, which are part of the items suite. On the US front, just this week, we were awarded a contract with a major DOD agency, the Defense Logistics Agency for our Veritone's item applications, for electronic storage of information, discovery, and disclosure for forensic video. This is a one year contract with four annual renewals. If realized and service to term, this will represent what our largest contract to date with a DOD agency.

Speaker Change: Thanks.

Operator: At this time, we'll pause momentarily to assemble the roster.

Speaker Change: At this time all pause.

Speaker Change: So assemble roster.

Brent Overfeld: The first question comes from Brent Overfeld from Pacific Equity.

Brent <unk>: The first question comes from Brent <unk> from Pacific Equity. Please go ahead.

Brent Overfeld: Please go ahead. Hey Ryan, Mike. Thanks for taking my question here. Hey, so you guys have made some material strides in reducing your gap operating loss and non-gap net loss. I believe you said 47% improvement.

Speaker Change: Hey, Ron and Mike.

Brent Overfeld: Please go ahead. Hey, Ryan, Mike. Hey.

Brent: Thanks for taking my.

Speaker Change: My question here.

Speaker Change: You guys have made.

Speaker Change: The material strides in.

Speaker Change: Reducing your GAAP operating loss and non-GAAP net loss.

Speaker Change: I believe you said, 47% improvement.

Ryan Steelberg: The quality of our pipeline has never been stronger, and we have a promising number of opportunities better in the latest stages of the funnel, including expanded US Senate contract. In addition to realizing great traction and growth in our Fed business, state local law enforcement agencies are increasingly turning to our AI powered tools to streamline their audio and video processing. By automating these time-consuming manual tasks, hundreds of agencies are now significantly reducing operational cost, optimizing resource allocation, and expediting the fulfillment of Freedom of Information Act requests for FOIA. This allows law enforcement to focus on their core missions of protecting and serving their communities.

Ryan Steelberg: But do you foresee any impact on future growth from these cascets and organizational changes? Thanks, Brent. I think we started to put this strategy and execution plan into practice now well over a year and a half ago. I think part of it is being very methodical about looking at where the future growth drivers of this business are. Obviously, we talked a lot about one key area of the public sector and what that would require in terms of product and engineering focus, as well as go to market. Focus. So the short answer is I think we've done a fantastic job of finding the right mix and reorganizational structure.

Speaker Change: But do you foresee any impact on future growth from these cost cuts organs.

Speaker Change: Organizational changes.

Brett: Thanks, Brett.

Speaker Change: You know I think.

Ryan Steelberg: You know, we started to put this strategy and execution plan into practice now, you know, well over a year and a half ago. And, you know, I think part of it is being very methodical about, you know, looking at where the future growth drivers of this business are. Obviously, we talked a lot about one key area, the public sector, and what that would require in terms of, you know, product and engineering focus as well as go-to-market focus.

Speaker Change: We are we starting to put the strategy and execution plan and the practice now well over a year and a half ago and I think part of it has been very methodical about looking at where the future growth drivers of this business are obviously, we talked a lot about one key area of the public sector and what that would require an <unk>.

Speaker Change: Terms of product and engineering focus and sell as well as go to market focus.

Ryan Steelberg: So the short answer is, I think we've done a fantastic job of finding the right mix and reorganizational structure, so we can continue to hit the numbers, right, despite the very material cost cuts that we've done. But I can honestly state, and I'm very excited to state, that I think our productivity from a product perspective, an engineering perspective, is at an all-time high. And the testament is really our ability to not just, you know, be bidding on contracts in state and local law enforcement and other areas, but we're landing those contracts and looking to provision new solutions at scale this year. So, you know, ultimately, I think the proof of that statement is that software's being deployed, we're servicing it effectively, and we're still retaining our customers at a very, very high retention rate.

Brett: So the short answer is I think we've done a fantastic job of finding the right mix on our re organizational structure.

Ryan Steelberg: Are realized achievements in 2024 demonstrate our dedication to serving as a trusted partner in the public sector and the immense opportunity ahead to broaden our footprint across countries, cities, agencies, and municipalities globally.

Ryan Steelberg: So we can continue to hit the numbers, right, despite, you know, the very material cost that we've done. But I can honestly state and very excited to state that I think our productivity on a product perspective and engineering perspective is at its all time high. And the testament is real. Really, our ability to not just, you know, be bidding on contracts in state and local enforcement in other areas, but we're landing those contracts and looking to provision solutions at scale this year. So I, you know, ultimately, I think that the proof of, you know, that statement is softwares being deployed, we're servicing it effectively, and we're still retaining our customers at a very, very high retention rate.

Brett: So we can continue to hit the numbers right despite that.

Brett: The very material cost cuts that we've done, but I can honestly state and very excited to state that I think our productivity on a product perspective and engineering perspective.

Speaker Change: <unk> is at an all time high.

Speaker Change: And the Testament is really our ability to not just be bidding on contracts.

Speaker Change: And local law enforcement other areas or landing those contracts and looking to provision inclusion that scalable share. So.

Speaker Change: Ultimately I think the proof of that statement.

Ryan Steelberg: Our team's dedication has been instrumental in driving this progress. We remain committed to financial discipline and implementing operational improvements to optimize Veritone's operating model for long-term success. I am confident that our enhanced strategic focus will enable us to better serve our customers and strengthen our leadership position in delivering cutting-edge AI solutions to our customers and partners at scale.

Speaker Change: Software is being deployed we're servicing effectively and we're still we're still retaining our customers at a very very high retention rate.

Brent Overfeld: Great. Thank you.

Speaker Change: Great.

Speaker Change: Thank you.

Andrew Michael Mashaka: The next question comes from Andrew Michael Mashaka with Simple Wealth Management. Please go ahead. Hi, thanks for taking my question. Your projections for two for 2024 imply that two for non-GAAP profit. That would be the mid single digits, three to seven millions, or somewhere around there, and then we're going to 40 1.9 million for. For the Q4. So this would be a pretty big improvement over the fourth quarter of last year and seven point seven million.

Andrew <unk>: The next question comes from Andrew <unk> with some of our wealth management group.

Andrew Michael Machata: The next question comes from Andrew Michael Machata with Semper Wealth Management. Please go ahead.

Michael Zemetra: Now, I would like to hand a call off to Mike Symetra, our CFO, who will go through our financial results and guidance in more detail. Mike? Thank you, Ryan. I'm happy to report we continue to execute on-plan through Q2 2024. More importantly, we ended Q2 with our strongest pipeline of SaaS revenue since our inception and on track with cost, keeping us on target towards operating cash flow profitability, neutrality on a non-gap basis as early as Q4 2024.

Speaker Change: Go ahead.

Andrew <unk>: Hi, Thanks for taking my question are your projections for Q.

Ryan Steelberg: Hi, thanks for taking my question. Your projections for 2024 imply that Q4 non-gap profit would be in the mid-single digits, $3 to $7 million or somewhere around there, and then revenue of $41.9 million for the Q4. So this would be a pretty good, big improvement over the fourth quarter of last year and 7.7 million. So should we think about this as an increase as a return to the seasonality that you have in revenue? Or is the fourth quarter more of a baseline for revenue going forward? And that's the kind of improvement we can expect on a regular basis from quarterly revenue for, you know, Q1, Q2, Q3.

Speaker Change: For 2024 imply that Q4, non-GAAP profit would be mid single digits during the seven millions or somewhere around there and then revenue $41 9 million for.

Speaker Change: For Q4.

Speaker Change: So this would be a pretty good big improvement over the fourth quarter of last year at $7 7 million.

Andrew Michael Mashaka: So should we think about this as an increase as a return to the seasonality that you have in revenue, or is a fourth quarter more of a base for. Revenue going forward, and that's the kind of improvement we can expect on a regular basis from quarterly revenue for, you know, Q1, Q2, Q3 next year.

Speaker Change: So should we think about this is an increase as a return to the seasonality that you have in revenue or as a fourth quarter more of a base for <unk>.

Speaker Change: Revenue going forward and that's the kind of improvement we can expect on a regular basis from quarterly revenue for Q1, and Q2 Q3 of next year.

Speaker Change: Yes.

Mike Zemetra: Yeah, I'll cover some of the business. Yeah, you'll speak to seasonality. But obviously, that includes, again, the expected contribution of some of the newer revenues that we've talked about on the call today, such as contracts with public sector customers. Number two, as we might talk about on the call, is we've definitely seen a revitalization of the managed services, particularly on the advertising side, where we stated a 25% quarter-per-quarter improvement in the second quarter. So we expect, I'd say, kind of record bookings at this time of the year, coupled with net new customers coming on board. We're very bullish about that as well.

Ryan Steelberg: Yeah, I'll cover some of that business. Yeah, you'll speak to seasonality, but obviously that includes, again, the expected contribution of some of, I would say, newer revenues that we've talked about on the call today of contracts with public sector, you know, customers. Number two is we might talk about on the call is we've definitely seen a revitalization of the managed services, particularly on the advertising side where we, we stated a 25% quarter of record or improvement. I mean, the second quarter. So we expect with, I'd say kind of record bookings at this time of the year coupled with net new customers coming on board.

Speaker Change: I'll cover some of the business right, Yeah, I guess because of seasonality, but obviously that include <unk>.

Speaker Change: The expected contribution of some of upstate newer revenues that we've talked about on the call today of contract with public sector.

Speaker Change: Customers no.

Michael Zemetra: The increase in software products and service revenue was largely driven by Veritone Hire, which improved $1.7 million as compared to Q2 2023, largely driven by the June 2023 acquisition of robbing, which generated $8.7 million revenue in Q2 2024, offset by the expected decline in consumption-based revenue from legacy Veritone Hire customers over the same period, including Amazon. By comparison, Amazon represented approximately 14% of consolidated revenue in Q2 2023 as compared to less than 5% in Q2 2024, excluding the impact of Amazon, Q2 software products and services revenue would have increased over 50% in Q2 2024 versus Q2 2023.

Speaker Change: Number two is when Mike talked about on the call is we've definitely seen a revitalization.

Mike Symmetra: Of the managed services, particularly on the advertising side, where.

Mike Symmetra: Where we stayed at a 25% quarter over quarter improvement in the second quarter. So we expect with <unk>.

Mike Symmetra: Kind of record bookings at this time of the year, coupled with net new customers coming on board, we're very bullish about that as well.

Michael Zemetra: We're very bullish about that as well.

Michael Zemetra: And then I'll let Mike speak to the seasonality a little bit. Yeah, there's definitely some seasonality, particularly across the consumption side of our business on the software side. You know, we typically see seasonal increases through our hiring products, which are consumption-based. And then on the managed services side, certainly more driven by our customer midst. So, for example, a draft king is going to be advertising more during football and higher sports market types versus not. So I wouldn't kind of cue that in as a run rate heading into Key One. But it's certainly something you can start proxying in terms of growth for next year.

Ryan Steelberg: And I'll let Mike speak to seasonality a little bit. Yeah, there's definitely some seasonality, particularly across the consumption side of our business. On the software side, you know, we typically see seasonal increases through our hiring products, which are consumption-based. And then on the managed services side, certainly more driven by our customer mix. So for example, DraftKings is going to be advertising more during football in higher sports market times versus not. So I wouldn't kind of cue that in as a run rate heading into Q1. But it's certainly something you can start measuring in terms of growth for next year.

Speaker Change: Then I'll, let Mike speak to the seasonality a little bit.

Mike Symmetra: Yeah, there's definitely some seasonality, particularly across the consumption side of our business.

Speaker Change: On the software side.

Mike Symmetra: Typically see Inc.

Mike Symmetra: <unk> increases.

Mike Symmetra: Once you are hiring products, which are consumption based.

Mike Symmetra: And then on the managed services side, certainly more driven by our customer mix. So for example, a draft kings is going to be advertising more during football and higher sports market types.

Michael Zemetra: As we continue to diversify our customer base throughout fiscal 2024, our target-driven channel strategy continues to deliver results. In Q2, we delivered strong, key performance metrics on a performance basis, ARR 67.9 million, including 49.2 million from subscription versus consumption-based customers, which represents an improvement of over 3% from Q2 2023 and over 72% of our total ARR. While our subscription-based ARR grew year-to-year, our overall ARR declined given the training 12-month pullback in consumption-based spending, principally from customers including Amazon.

Mike Symmetra: Versus not so I wouldn't kind of Q that in as a run rate heading into Q1.

Speaker Change: But it's certainly something that you can start proxy in terms of growth for next year.

Speaker Change: So the growth.

Andrew Michael Mashaka: So the growth combined about, I mean, that would imply 20-some odd percent, right? So is that what you mean, or we're not giving guidance on 2025, but you've used that as sort of a, you know, in your model. That's right. Thank you very much. Thank you. Once again, if you have a question, please press third and one.

Mike Zemetra: So the growth component without, I mean, that would imply 20 some odd percent, right? So, is that what you mean?

Mike Symmetra: About.

Speaker Change: I mean that would imply 20, some odd percent right.

Mike Symmetra: Without.

Speaker Change: Is that what you mean or.

Mike Symmetra: Yes.

Andrew Michael Machata: No, we're not giving guidance on 2025. But you can use that as sort of a, you know, in your models, some sort of exit rate. Thank you very much.

Speaker Change: We're not giving guidance on 2025.

Michael Zemetra: We expect consumption-based ARR to continue to decline year-to-year in the second half of 2024 as we exit Amazon dependencies over the trailing 12-month periods. Total new bookings for $14 million, up 67% year-to-year, driven by increases in subscription-based customer bookings. As I will discuss later, we are seeing a large uplift in our sales pipeline, in particular with public sector, and we expect bookings over the next few quarters to improve substantially year-to-year as a result.

Speaker Change: That is sort of that.

Speaker Change: Model baseline some sort of exit rate, yes, that's right.

Mike Symmetra: Okay.

Mike Symmetra: Thank you very much.

Speaker Change: Thank you.

Speaker Change: Once again, if you have a question. Please press Star then one.

Operator: Once again, if you have a question, please press star then 1. Our next question comes from Stephen Banta with Banta Asset Management. Please go ahead.

Mike Symmetra: Our next question comes from Jason Zhang.

Speaker Change: Zander asset management. Please go ahead.

Stephen Banta: Hey guys, thanks for taking the call. It's good to hear that you're making progress in divesting the legacy service business. Is there anything more you can share about the transaction?

Jason Zhang: Hey, guys. Thanks for taking the call.

Speaker Change: It's good to hear that you are making progress.

Michael Zemetra: Gross revenue retention continued to be above the 90th percentile, and software products and services customers of 3437, which were up quarter to quarter, but slightly down year-to-year, principally due to reductions in legacy career-builder accounts, transition off our higher platform or post-via acquisition of broadening, and from smaller ACV accounts across baritone higher as we prioritize renewals with larger ACV customers in Q2-2024. The overall decline had a minimal impact as overall ARR from subscription-based customers in previous year and was slightly up from Q1-2024.

Speaker Change: And divesting our legacy service business.

Speaker Change: Is there anything more you can share about the transaction.

Mike Symmetra: And.

Ryan Steelberg: It's probability to close. And then the second question would be, you know, looks like you're getting some traction in the public service space. And I'm just curious to know what you're thinking about material revenue contribution from the area over the next several quarters. Well, I think we...

Speaker Change: That's probability to close.

Stephen Banta: And then a second question would be, you know, looks like you're getting some traction in the public service space. And I'm just curious to know what, what you're thinking about material revenue contribution from the area over the next several quarters. Well, I think we're pretty clear of what we're comfortable stating relative to, you know, sort of the timing and progress of the potential divestiture of the non-software based asset. You know, what I can say is, you know, this is something that we've talked a little bit about, you know, that we had inbound interest into this asset last year.

Speaker Change: And then second question would be it.

Speaker Change: It looks like Youre getting some traction in the public.

Speaker Change: Service space and I'm, just curious to know what.

Speaker Change: What youre thinking about material revenue contribution from the area over the next several quarters.

Speaker Change: Well I think we were pretty clear of what were comfortable stating relative to sort of the timing and progress of the potential divestiture of the non software based asset.

Ryan Steelberg: Well, I think we're pretty clear about what we're comfortable stating relative to, you know, sort of the timing and progress of the potential divestiture of the non-software-based asset. You know, what I can say is, you know, this is something that we've talked a little bit about, you know, that we had inbound interest in this asset last year. We went pretty far down the transactional path, and the market was a little softer last year. I mean, as we've reported, the advertising unit of Veritone was soft last year for the first time in many years.

Michael Zemetra: As we discussed in our prior call, we are seeing a rebound in advertising beginning in Q2-2024, specifically Q2-manage services advertising gross billions per active client for 727,000, improving 26% from Q2-2023. Given our performance, looking through today in expected macroeconomic improvements in the second half of 2024, we anticipate advertising to continue improving throughout the second half of 2024 as compared to Q2-2023. Q2 loss from operations of 17.7 million, improved 10.5 million, or 36.8% from Q2-2023 loss from operations, a 20.2 million.

Speaker Change: You know what what I can say is you know this is something that we've talked a little bit about.

Speaker Change: That we had inbound interest into that asset last year.

Ryan Steelberg: We went pretty far down the transactional path. And the market was a little softer last year. I mean, as we've reported, the advertising unit of Veritone was soft last year for the first time in many years. But, as we've stated on this call and sort of the guide and sort of discussion about future managed services growth. The, which I say, the asset is strong. It's growing. We're adding new customers. So I think that this time around with the formal banking process that we started back in Q1. And I'd say the number of qualified interested parties around the table.

Speaker Change: We went pretty far down.

Speaker Change: The transactional path.

Speaker Change: And the market was a little softer last year as we've reported the advertising unit of Vera town.

Speaker Change: Soft last year for the first time in many years.

Ryan Steelberg: But as we've stated on this call, and in the guide and sort of discussion about future managed services growth, let's just say the asset is strong, it's growing, and we're adding new customers. So I think that this time around, with a formal banking process that we started back in Q1, and I'd say the number of qualified interested parties around the table, we are optimistic that we'll get this transaction done. But again, we want to be very disciplined.

Speaker Change: But as we've stated on this call and in sort of the.

Speaker Change: The guide and sort of discussion about future managed services growth.

Speaker Change: What you think the asset is strong.

Speaker Change: Growing we're adding new customers.

Michael Zemetra: A year-over-year improvement was driven in part by an improvement in non-gap growth profit, a decline in acquisition related expenses year-over-year, driven by the Q2-2023 broadly in acquisition, year-over-year reductions in operating expenses from legacy cost-restructuring efforts over the trend in 18 months, and the timing of the broadly in acquisition, which included a full quarter of broadly in results in Q2-2024 as opposed to a partial month in June 2023. Q2-2024 non-gap growth profit reached 24.6 million, improving 4.4 million or 22% from Q2-2023 largely due to the increasing revenue.

Speaker Change: So I think that this time around with the formal banking process that we started back in Q1.

Speaker Change: And I'd say the number of qualified interested parties around the table. We are optimistic that we'll get this transaction done.

Ryan Steelberg: We are optimistic that we'll get this transaction done. But again, we want to be very disciplined. We know it's an important part of this business on a historical legacy basis. And, you know, we expect to see a good result and outcome in 2024.

Speaker Change: But again, we want to be very disciplined we know of that's an important part of this of this business on a historical legacy basis and we.

Ryan Steelberg: We know it's an important part of this business on a historical legacy basis. And, you know, we expect to see a good result and outcome in 2024. As it relates to the public sector, you can sort of tell by the comprehensiveness of my prepared remarks and how much detail I went into it that I think we've arrived as it relates to the public sector as a group.

Speaker Change: To see a good result, and outcome in 2024.

Speaker Change: And as it relates to the public sector and you can sort of tell by I think that the comprehensiveness of my prepared remarks, and how much detail I went into it.

Ryan Steelberg: And as relates to the public sector, you know, you can sort of tell by, I can think that the comprehensiveness of my prepared remarks and how much detail I went into it, is I think we've arrived as relates to public sector as a group. Now the Fed space and the state local law enforcement space and timing is lumpy. But, you know, Veritone is becoming an established and trusted partner in state, local law enforcement and on the Fed side. And one thing I want to point out is a lot of what we're selling to them is not custom-based.

Michael Zemetra: Overall, non-gap growth margin in Q2-2024 of 78.8% improved by 660 basis points versus Q2-2023 of 72.2%. Largely driven by the outperformance and mix of our revenue, we expect consolidated non-gap growth margins to approximate 78 to 80% through the remainder of fiscal 2024. Q2-non-gap net loss was 6.9 million, an improvement of 6.1 million or 47% as compared to non-gap net loss of 13.0 million in Q2-2023. This was driven largely by the improvements in non-gap growth profit, coupled with the reductions in our cost structure over the 12 months, which included significant cost reductions through fiscal 2023 through Q1-2024.

Speaker Change: I think we've arrived as it relates to the public sector as a group now the fed space and the same law enforcement space.

Ryan Steelberg: Now the Fed space and the state and local law enforcement space and timing are lumpy, but Veritone is becoming an established and trusted partner in state and local law enforcement and on the Fed side, and one thing I want to point out is that a lot of what we're selling to them is not custom-based solutions. These applications and workflows that we are selling to both state and local law enforcement and the Fed are all built on AIWare, our core platform and infrastructure.

Speaker Change: Timing is lumpy.

Speaker Change: But.

Speaker Change: They're telling us, becoming an established and trusted partner in state and local law enforcement and on the fed side and one thing I want to point out is a lot of what we're selling to them is not custom based solutions.

Ryan Steelberg: solutions. These applications and workflows that we are selling to both state-of-the-law enforcement and the Fed are all built on AI, where our core platform and infrastructure, but the applications and workflows are very repeatable. So, our velocity to be able to sign new customers and provision new customers quickly, we're very bullish about. And that's a true testament of, frankly, how we built AI, where and how we sort of honed our skills and expertise because of the complexities and volume of data in the media, actually in the media and entertainment business. So, we're excited; we're glad we were able to discuss certain key accounts like the Defense Logistics Agencies and others.

Speaker Change: These applications and workflows that we are selling to both state local law enforcement and the fed are all built on a eyewear, our core platform and infrastructure.

Ryan Steelberg: But the applications and the workflows are very repeatable. So, where our velocity to be able to sign up new customers and provision new customers quickly is, we're very bullish about it. And that's a true testament to, frankly, how we built AIWare and how we sort of honed our skills and expertise because of the complexities and volume of data in the media and actually in the media and entertainment business. So we're excited, and we're glad we'll be able to discuss certain key accounts like the Defense Logistics Agencies and others. And, you know, we're also very proud that we're able to apply our AI expertise and technologies for AI for good, specifically in the public sector.

Speaker Change: But the applications and the workflows are very repeatable.

Speaker Change: Where our velocity to be able to sign new customers and provisioning customers quickly.

Speaker Change: Bullish about and that is a true testament of frankly, how we built.

Speaker Change: AI, where and how we sort of honed our skills and expertise because of the complexity and volume of data in the metering and actually in the media and entertainment business. So.

Speaker Change: We're at we're excited we're glad we were able to to discuss certain key accounts like the defense logistics agency than others and.

Stephen Banta: And we're also very proud that we're able to apply our AI expertise and technologies for AI for good and specifically servicing the public sector. All right, thank you guys. Thank you.

Speaker Change: We're also very proud that we're able to apply our AI expertise and technologies for Africa, and specifically servicing in the public sector.

Speaker Change: Alright, Thank you guys.

Speaker Change: Thank you.

Operator: This concludes our question and answer session.

Speaker Change: This concludes our question and answer session I would like to turn the conference back over to Ryan Taylor for any closing remarks.

Ryan Steelberg: This concludes our question and answer session. I would like to turn the conference back over to Ryan Steelberg for any closing remarks.

Ryan Steelberg: I would like to turn the conference back over to Ryan Steelberg for any closing remarks. I would like to thank everyone today for joining us as we head into the remainder of 2024. I have a lot of excitement and optimism for what is to come for Veritone. As the adoption of AI continues to accelerate, Veritone remains well-positioned to capitalize on this effort, I mean on this momentum, and breakdown barriers so our customers may fully realize the true value and opportunity of AI. Our team has obviously worked incredibly hard to secure an advance, a record serviceable pipeline, you know, led by our public sector, but also with strong contributions from our meeting entertainment and hired division.

Ryan Taylor: I would like to thank everyone today for joining us as we head into the remainder of 2024 I have a lot of.

Ryan Steelberg: I would like to thank everyone today for joining us. As we head into the remainder of 2024, I have a lot of excitement and optimism about what is to come for Veritone. As the adoption of AI continues to accelerate, Veritone remains well positioned to capitalize on this effort, I mean, this momentum and break down barriers so our customers may fully realize the true value and opportunity of AI. Our team has obviously worked incredibly hard to secure and advance a record serviceable pipeline, you know, led by our public sector but also with strong contributions from Armenian Entertainment and others.

Michael Zemetra: On the growth front, our software products and services revenue pipeline and long-term outlook are at all-time highs. More specifically, we see strong demand across the global digital evidence management market, which represents an approximate $10 billion dollar market opportunity. In the public sector alone, we are currently in contract phases on several large projects with various facets of the U.S, federal government and international customers, with the sales pipeline of over 100 million. Additionally, we recently renewed our licensing agreement with the NCAA, a multi-year deal with up to 40 million and expected revenue over the term and against heavy competition.

Speaker Change: Excitement and optimism for what is to come for baritone.

Speaker Change: The adoption of AI continues to accelerate burtone remains well positioned to capitalize.

Speaker Change: On this effort on this momentum and break down barriers. So our customers may fully realize the true value and opportunity of AI.

Speaker Change: Our team has obviously worked incredibly hard to secure and advance a record service of all pipeline led by our public sector, but also with strong contributions from our media and entertainment and higher Division.

Ryan Steelberg: We look to communicate these advancements and successes in the near future. We will continue to drive the business towards profitable growth. That's been a clear focus and pillar of strategy for ours for a while. And also we're aiming to improve both our liquidity and balance sheet during the second half of 2024, which we've articulated previously. If you kind of look at this is, you know, and sort of, you know, again, a testament to an evaluation of our strategy and execution is our 47% improvement in non-GAAP net loss and growth in our top line. We did a strong validation, and I really want to applaud, you know, our employees and partners for helping us realize us through this transition.

Ryan Steelberg: We look to communicate these advancements and successes in the near future. We will continue to drive the business towards profitable growth. That's been a clear focus and pillar of strategy for ours for a while. And we're also aiming to improve both our liquidity and balance sheet during the second half of 2024, as we've articulated previously. If you kind of look at this, and sort of, you know, again, a testament to and a validation of our strategy and execution, our 47% improvement in non-GAAP net loss and growth in our top line is strong validation.

Speaker Change: We look to communicate these advancements and successes in the near future.

Speaker Change: We will continue to drive the business towards profitable growth that's been a clear focus.

Michael Zemetra: Turning to our balance sheet. At June 30, of 2024, we held cash and restricted cash of $47 million compared to $80.3 million at December 31, 2023. The net's $33.3 million decrease reflects net cash outflows from operations of $26.9 million, driven principally by the timing of payments in managed services in Q2 of 2024, our non-gap net loss, net interest payments of approximately $4.1 million principally from our debt, and approximately $1.5 million of one-time transition and severance expenses associated with our Q1-2024 structure.

Speaker Change: And pillar of strategy for ours for a while.

Speaker Change: And also we're aiming to improve both our liquidity and balance sheet. During the second half of 2024, which we've articulated previously.

Speaker Change: If you kind of look at this is you know of any sort.

Speaker Change: Again, a testament to.

Speaker Change: Validation of our strategy and execution is our 47% an improvement in non-GAAP net loss.

Speaker Change: And growth in our top line.

Speaker Change: As strong validation and I really want to applaud.

Ryan Steelberg: And I really want to applaud, you know, our employees and partners for helping us realize this transition. AI is quickly becoming the foundational new element for data-driven businesses, and Veritone is definitively at the forefront advancing these solutions and AI-based solutions to empower people to do even better. We look forward to providing an update on our progress during our third quarter 2024 earnings call in November. Thank you for your time today.

Speaker Change: Our employees and.

Speaker Change: And partners for helping us realize us through this transition.

Michael Zemetra: Note that in Q2, we accelerated the timing of payments to our customers across our advertising platform, partly driven by a shift from traditional media to increase influencer-based campaigns or expectations on media settlements are much shorter versus traditional media. In addition, there was net cash outflows from investing activities of $3.4 million driven by capital expenditures, 2.9 million of deferred searches considerations from fiscal 2023 acquisitions, and principal debt payments of $1.9 million on our December 2023 term loan, offset by $1.8 million in cash from the sale of our energy investment.

Ryan Steelberg: AI is quickly becoming the foundational new element for data-driven businesses, and Veritone is definitively at the forefront advancing these solutions and AI-based solutions to empower people to do even better.

Speaker Change: AI is quickly becoming the foundational new element for data driven businesses in.

Speaker Change: And burtone definitively at the forefront of advancing these solutions and AI based solutions to empower people to do even better.

Ryan Steelberg: And we look forward to providing an update on our progress during our third quarter 2024 earnings call in November.

Speaker Change: And we look forward to providing an update on our progress during our third quarter 2024 earnings call in November. Thank you for your time today.

Ryan Steelberg: I thank you for your time today.

Operator: The conference has now concluded. Thank you for attending today's presentation.

Speaker Change: The conference has now concluded. Thank you for attending today's presentation you may now disconnect.

Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect. This is the first time I've ever seen you in the world.

Operator: You may now disconnect.

unknown: Director of Photography, Michael Zemetra Music by Stephen Banta Art Direction by Michael Zemetra Music by Stephen Banta Music by Stephen Banta Art Director, Michael Zemetra Art Directors, Michael Zemetra Art Directors, Michael Zemetra Music by Darren Aftahi Music by Darren Aftahi Music by Darren Aftahi Music by Darren Aftahi Art Directors, Michael Zemetra Art Directors, Michael Zemetra Music by Darren Aftahi Art Directors, Michael Zemetra Music by Darren Aftahi Art Directors, Michael Zemetra Music by Darren Aftahi Art Directors, Michael Zemetra Art Directors, Michael Zemetra Art Directors, Michael Zemetra

Michael Zemetra: Total interest paid on our debt was $4.7 million in the first half of Q2, 2024, which was offset by interest income earned from cash on hand of approximately $0.6 million. At June 30th, 2024, we have consolidated that of 166.5 million principal, of which $75.5 million is termed debt, and remaining $9.1 million is convertible debt due November 20th, 206. Beginning in June 2024, we began amortizing our term debt principal balance at the rate of 2.5 percent per quarter.

Speaker Change: [music].

Michael Zemetra: As we have mentioned on previous calls, we remain on a near-term pathway to improve our balance sheet and liquidity position. We are currently engaged with outside bankers and have launched a formal process to sell one of our non-software assets. We currently have multiple qualified bidders and hope to close this transaction in the second half of 2024. If consummated, this transaction is expected to generate significant cash proceeds, which will be used to repay a portion of our term debt into fund future operations.

Unknown Executive: Michael Zemetra, Stephen Banta, Michael Zemetra, Ryan Steelberg. Michael Zemetra, Stephen Banta, Michael Zemetra, Ryan Steelberg. Michael Zemetra, Stephen Banta, Michael Zemetra, Ryan Steelberg.

Michael Zemetra: There can be no assurance that any transaction resulting from this process will ultimately be completed, but this is an active strategic objective for our company. At the total $47 million in cash, approximately $39.3 million of our reported cash is essentially held for payment to third parties for our managed services down from $45.3 million at December 31st, 2023. In June 2024, we refreshed our $3.3 million shelf filing, which expired in the same month.

Michael Zemetra: We ended June 30th, 2024, with 38 million shares outstanding, and approximately 2.5 million five year warrant house standing under our debt facility at $2.57 and strike price. During the first half of 2024, we net settled 499,857 warrant shares in exchange for 298,410 shares of common stock.

Speaker Change: Yeah.

Speaker Change: Yes.

Michael Zemetra: Given uncertainty in timing of closing some larger deals in the public sector, we are maintaining the top end of our revenue range to reflect a more conservative outlook in the second half of 2024. And our guidance assumes we continue to grow advertising in the second half of 2024 at a similar pace to year-by-year growth in Q2 2024. With that backdrop, we are guiding Q3 revenue to be between 34 and 35 million, which is relatively flat year-by-year at the midpoint.

Michael Zemetra: Driving this will be growth from public sector and for our managed services, including advertising, offset by a decline in consumption and one-time revenues. Our managed services is expected to continue accelerating with more significant growth coming in the second half of 2024, as we begin to exit a more challenging 2023 natural environment and continue to grow our bookings with new and existing customers. We continue to see strong bookings across our advertising services with Q3 pacing in excess of 15% year-over-year.

Michael Zemetra: All setting these growth drivers will be legacy baritone higher applications. More specifically, Q3 2024 assumes Amazon will be less than 5% of a consolidated revenue as compared to 8% of our consolidated revenue in Q3 2023. Risks and upside to our Q3 revenue guidance include execution, our new enterprise deliverables, mainly across our public sector, which can be unpredictable and to a lesser extent from consumption-based revenue across our higher and managed services. And Q3 quarterly non-gap net loss to be between 2.5 and 4 million in improvement of 59% of the midpoint versus Q3 2023.

Michael Zemetra: Driving this improvement in the bottom line are legacy cost reductions, which we will begin fully realizing in Q1 2024. For full year 2024, we are maintaining our revenue range to be between 136 and 142 million, representing a year-over-year increase of 9% of the midpoint and relatively flat versus pro-former 2024. As a reminder, and given the current economic outlet, we continue to forecast our revenue conservatively in 2024. Driving the second half of 2024, our public sector remains unpaced to grow as much as 40 to 50% year-over-year.

Michael Zemetra: However, and as previously discussed, this growth is dependent on closing some of the larger near-term deals over the next three to five months. Moreover, we remain in late-agreement stages with various federal agencies on large multi-million-dollar enterprise-level arrangements, which, if executed in 2024, could accelerate this growth projection even further. We expect our managed services, including our advertising to continue to improve in the second half by over 15% year of a year, led by advertising and licensing.

Michael Zemetra: Offsetting this is a year of a year decline in consumption-based revenue, in certain one-time software sales in 2023, not recurring in 2024. Amazon is projected to conservative represent less than 5% of a consolidated revenue at the midpoint, as compared to 11% in 2024. Risk to our annual revenue guidance include the macroeconomy and the results of continued inflation, tender labor markets and higher interest rate on our customers, which we expect to continue at least through the latter part of Q3 2021.

Michael Zemetra: Execution on new enterprise deliverables mainly across our public sector, and continue customer growth and retention metrics from our software products and services. As a result, we now expect full-year non-gap net loss to be between 13 and 16 million, with substantial progress towards profitability beginning in the second half of 2024. At the midpoint, this represents over 20 million, and a 61% improvement when compared to fiscal 2023 non-gap net loss. Assuming we reach the higher end of our guidance, we expect we will be cashflow-positive on a non-gap basis as early as Q4 2024. Further, in assuming modest revenue growth in fiscal 2025, we should be cashflow-positive on a non-gap basis in fiscal 2025.

Michael Zemetra: Lastly, we will be presenting of the 26th annual H.C, wing right investment conference September 9th to the 11th and New York City. That concludes my prepared remarks.

Unknown Executive: Operator, we would like to now open the call for questions. Thank you. We will now begin the question and answer session. To ask a question, you may press start the one on your telephone keypad. If you are using a speakerphone, please pick up your hand and start to focus on the key. If any time your question has been addressed and you would like to withdraw your question, please press start then choose. At this time, we'll pause momentarily to assemble the roster.

Brent Overfeld: The first question comes from Brent Overfeld from Pacific Equity. Please go ahead. Hey Ryan, Mike. Thanks for taking my question here. Hey, so you guys have made some material strides in reducing your gap operating loss and non-gap net loss. I believe you said 47% improvement.

Ryan Steelberg: Focus. So the short answer is I think we've done a fantastic job of finding the right mix and reorganizational structure. So we can continue to hit the numbers, right, despite, you know, the very material cost that we've done. But I can honestly state and very excited to state that I think our productivity on a product perspective and engineering perspective is at it all time high. And the testament is real. Really our ability to not just, you know, be bidding on contracts in state and local enforcement in other areas, but we're landing those contracts and looking to provision solutions at scale this year. So I, you know, ultimately, I think that the proof of, you know, that statement is softwares being deployed, we're servicing it effectively and we're still retaining our customers at a very, very high retention rate.

Unknown Executive: Great. Thank you.

Andrew Michael Mashaka: The next question comes from Andrew Michael Mashaka with simple wealth management. Please go ahead. Hi, thanks for taking my question. Your projections for two for 2024 imply that two for non-gap profit. That would be the mid single digits three to seven millions or somewhere around there and then we're going to 40 1.9 million for. For the Q4. So this would be a pretty big improvement over the fourth quarter of last year and seven point seven million.

Andrew Michael Mashaka: So should we think about this as an increase as a return to the seasonality that you have in revenue or is a fourth quarter more of a base for. Revenue going forward and that's the kind of improvement we can expect on a regular basis from quarterly revenue for, you know, Q1, Q2, Q3 next year. Yeah, I'll cover some of that business. Yeah, you'll speak to seasonality, but obviously that includes again, the expected contribution of some of, I would say newer revenues that we've talked about on the call today of contracts with public sector, you know, customers.

Andrew Michael Mashaka: Number two is we might talk about on the call is we've definitely seen a revitalization of the managed services, particularly on the advertising side where we, we stated a 25% quarter of record or improvement. I mean, the second quarter. So we expect with with, I'd say kind of record bookings at this time of the year coupled with net new customers coming on board. We're very bullish about that as well. And then I'll let Mike speak to the seasonality a little bit.

Andrew Michael Mashaka: Yeah, there's definitely some seasonality, particularly across the consumption side of our business on the software side. You know, we typically see seasonal increases through our hiring products, which are consumption based. And then on the managed services side, certainly more driven by our customer midst. So for example, a draft king is going to be advertising more during football and higher sports market types versus not. So I wouldn't kind of cue that in as a run rate heading into key one.

Andrew Michael Mashaka: But it's certainly something you can start proxying in terms of growth for next year. So the growth combined about, I mean, that would imply 20-some odd percent, right? So is that what you mean, or we're not giving guidance on 2025, but you've used that as sort of a, you know, in your model. That's right. Thank you very much. Thank you. Once again, if you have a question, please press third and one.

Stephen Banta: Our next question comes from Stephen Banta with Banta Assets Management. Please go ahead. Hey guys, thanks for taking the call. It's good to hear that you're making progress in divesting the legacy service business. Is there anything more you can share about the transaction? And it's probability to close. And then a second question would be, you know, looks like you're getting some traction in the public service space. And I'm just curious to know what, what you're thinking about material revenue contribution from the area over the next several quarters.

Ryan Steelberg: Well, I think we're pretty clear of what we're comfortable stating relative to, you know, sort of the timing and progress of the potential divesture of the non software based asset. You know, what I can say is, you know, this is something that we've talked a little bit about, you know, that we had inbound interest into this asset last year. We went pretty far down the transactional path. And the market was a little softer last year.

Ryan Steelberg: I mean, as we've reported, the advertising unit of Veritone was soft last year for the first time in many years. But as we've stated on this call and sort of the guide and sort of discussion about future managed services growth. The, which I say, the asset is strong. It's growing. We're adding new customers. So I think that this time around with the formal banking process that we started back in Q1. And I'd say the number of qualified interested parties around the table. We are optimistic that we'll get this transaction done. But again, we want to be very disciplined. We know it's an important part of this business on a historical legacy basis.

Ryan Steelberg: And, you know, we expect to see a good result and outcome in 2024. And as relates to the public sector, you know, you can sort of tell by, I can think that the comprehensiveness of my prepared remarks and how much detail I went into it, is I think we've arrived as relates to public sector as a group. Now the Fed space and the state local law enforcement space and timing is lumpy.

Ryan Steelberg: But, you know, Veritone is becoming an established and trusted partner in state local law enforcement and on the Fed side. And one thing I want to point out is a lot of what we're selling to them is not custom-based, solutions. These applications and workflows that we are selling to both state-of-the-law enforcement and the Fed are all built on AI where our core platform and infrastructure, but the applications and workflows are very repeatable.

Ryan Steelberg: So, our velocity to be able to sign new customers and provision new customers quickly, we're very bullish about. And that's a true testament of, frankly, how we built AI where and how we sort of honed our skills and expertise because of the complexities and volume of data in the media, actually in the media and entertainment business. So, we're excited, we're glad we were able to discuss certain key accounts like the defense logistics agencies and others. And we're also very proud that we're able to apply our AI expertise and technologies for AI for good and specifically servicing the public sector.

Unknown Executive: All right, thank you guys. Thank you.

Ryan Steelberg: This concludes our question and answer session. I would like to turn the conference back over to Ryan Steelberg for any closing remarks. I would like to thank everyone today for joining us as we head into the remainder of 2024. I have a lot of excitement and optimism for what is to come for Veritone. As the adoption of AI continues to accelerate, Veritone remains well-positioned to capitalize on this effort, I mean on this momentum and breakdown barriers so our customers may fully realize the true value and opportunity of AI.

Ryan Steelberg: Our team has obviously worked incredibly hard to secure an advance a record serviceable pipeline, you know led by our public sector, but also with strong contributions from our meeting entertainment and hired division. We look to communicate these advancements and successes in the near future. We will continue to drive the business towards profitable growth. That's been a clear focus and pillar of strategy for ours for a while. And also we're aiming to improve both our liquidity and balance sheet during the second half of 2024, which we've articulated previously.

Ryan Steelberg: If you kind of look at this is, you know, and sort of, you know, again, a testament to an evaluation of our strategy and execution is our 47% improvement in non-gap net loss and growth in our top line. We did a strong validation and I really want to applaud, you know, our employees and partners for helping us realize us through this transition. AI is quickly becoming the foundational new element for data driven businesses and Veritone is definitively at the forefront advancing these solutions and AI-based solutions to empower people to do even better.

Unknown Executive: And we look forward to providing an update on our progress during our third quarter 2024 earnings call in November. I thank you for your time today.

Unknown Executive: The conference has now concluded. Thank you for attending today's presentation.

Unknown Executive: You may now disconnect.

Unknown Executive: Michael Zemetra, Stephen Banta, Michael Zemetra, Ryan Steelberg Michael Zemetra, Stephen Banta, Michael Zemetra, Ryan Steelberg Michael Zemetra, Stephen Banta, Michael Zemetra, Ryan Steelberg

Q2 2024 Veritone Inc Earnings Call

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