Q1 2025 Veritone Inc Earnings Call

Unknown Executive: Welcome to the Veritone Inc. First Quarter 2025 Financial Results Conference Call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key, followed by zero.

Welcome to the baritone Inc. First quarter 'twenty 25 financial results Conference call. All participants will be in a listen only mode should you need assistance. Please signal a conference specialist by pressing the star key followed by zero after today's presentation.

Unknown Executive: After today's presentation, there will be an opportunity to ask your questions. To ask a question, you may press star, then one on your telephone keypad. To withdraw your question, please press star, then two. Please note this event is being recorded.

Speaker Change: There will be an opportunity to ask your questions to ask a question you May Press Star then one on your telephone keypad to withdraw your question. Please press Star then two please note. This event is being recorded I would now like to turn the conference over to Kate Goldsmith inverse.

Kate Goldsmith: I would now like to turn the conference over to Kate Goldsmith, Investor Relations. Please go ahead. Thank you and good afternoon.

Relations. Please go ahead.

Kate Goldsmith: Thank you and good afternoon.

Kate Goldsmith: After the market closed today, Veritone issued a press release announcing results for the first quarter 2025 ending March 31st, 2025. The press release and other supplemental information are available on the Investor Relations section of Veritone's website.

Speaker Change: After the market closed today Barrington <unk> issued a press release announcing results for the first quarter ending March 31st 2020.

Speaker Change: The press release and other supplemental information are available on the Investor Relations section American's website.

Kate Goldsmith: Joining us for today's call are Veritone's President and 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. 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 forward-looking statements are subject to risks, uncertainties, and assumptions that may cause the actual results to differ materially from those stated.

Speaker Change: Joining us for today's call are very challenged President and Chief Executive Officer, Ryan CEO, Frank and Chief Financial Officer, who will provide prepared remarks, and then open the call from my question and answer session.

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

Speaker Change: Thanks Whit.

Speaker Change: Limitation statements about our business strategy and future financial and operating performance.

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

Kate Goldsmith: Certain of these risks and assumptions are discussed in Veritone's SEC filings, including its annual report on Form 10-K. These forward-looking statements are based on assumptions as of today, May 8, 2025, and Veritone undertakes no obligation to revise or update them.

Speaker Change: Sure Mt's risks and assumptions are discussed very attuned SEC filings.

Speaker Change: Its annual report on Form 10-K.

Speaker Change: based on assumptions as of today, May 8th, 2025, and Veritone undertakes no obligation to revise or update them.

Kate Goldsmith: During this call, the actual and forecasted financial measures we will be discussing include non-GAAP measures. Reconciliations of these measures to the corresponding GAP measures are included in the press release we issued today.

Speaker Change: 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 are included in the press release we issued today.

Kate Goldsmith: 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 relations section of Veritone's website at www.veritone.com.

Ryan Steelberg: Now, I would like to turn the call over to our President and Chief Executive Officer, Ryan Steelberg. Thank you, Kate, and thank you, everyone, for joining us. We are excited to speak with you today and to provide an update on our first quarter 2025 results, financial performance and progress against our strategic growth plan.

Speaker Change: Now I would like to turn the call over to our president and Chief Executive Officer, Ryan Steelberg.

Ryan Steelberg: Thank you, Kate, and thank you everyone for joining us. We are excited to speak with you today and to provide an update on our first quarter 2025 results, financial performance, and progress against our strategic growth plan.

Ryan Steelberg: I will begin by providing a strategic update and sharing my perspective on our current market environment and the opportunity that lies ahead. Mike Zemetra will then cover our quarterly performance and financials in more detail. We are pleased to report our Q1 2025 financial results, which reflect solid revenue performance and demonstrate strong progress against our growth strategy. Veritone secured over 100 new business and renewal software agreements during the first quarter. Notable contracts with marquee commercial clients include Fremantle, Odyssey, World Athletics, Cox Media Group, and Hubbard. On the public sector front, notable deals include Fresno Police Department, Riverside County Sheriff's Department, as well as several agency components under the Department of Justice.

Ryan Steelberg: I will begin by providing a strategic update and sharing my perspective on our current market environment and the opportunity that lies ahead Mike Zemetra will then cover our quarterly performance and financials in more detail

Ryan Steelberg: We are pleaded to report our Q-1 2025 financial results which reflect solid revenue performance and demonstrate strong progress against our growth strategy.

Ryan Steelberg: Veritone secured over 100 new business and renewal software agreements during the first quarter.

Ryan Steelberg: Notable contracts with marquee commercial clients include Fremantle, Odyssey, World Athletics, Cox Media Group, and Hubbard.

Ryan Steelberg: On the public sector front, notable deals include Fresno Police Department, Riverside County Sheriff's Department, as well as several agency components under the Department of Justice.

Ryan Steelberg: And within Veritone Hire, notable new contracts include Rolls-Royce and a nine plus year deal with the Bank of France. These deals highlight the continued software as a service growth and the importance and reliability of Veritone's AI solutions for our clients.

Ryan Steelberg: and within Veritone Hire, notable new contracts include Rolls-Royce and a 9 plus year deal with the Bank of France.

Ryan Steelberg: These deals highlight the continued softwares of service growth and the importance and reliability of Veritone's AI solutions for our clients. The median entertainment industry is experiencing significant growth, fueled by evolving consumer behaviors and technological advancements.

Ryan Steelberg: The media and entertainment industry is experiencing significant growth fueled by evolving consumer behaviors and technological advances. The surge is driving demand for content across a fragmented ecosystem of platforms and devices. However, media organizations are struggling to meet this demand while also dealing with economic pressure and limited capital budget. Veritone's cost effective AI solutions provide necessary efficiencies and automated workflows while also fueling growth.

Ryan Steelberg: The surge is driving demand for content across a fragmented ecosystem of platforms and devices. However, media organizations are struggling to meet this demand while also dealing with economic pressure and limited capital budgets.

Ryan Steelberg: Veritone's cost effective AI solutions provide necessary efficiencies and automated workflows while also fueling growth.

Ryan Steelberg: Our recent execution at this year's Masters Golf Tournament with our longstanding customer, Augusta National, is an excellent example of how Veritone provides mission critical solutions at scale. Managing over 200 terabytes of footage, inclusive of over 90,000 video files, and over 18,000 images. Veritone enabled unprecedented content access and distribution across the Masters Tournament, Augusta Nationals Women's Amateur, and Drive Chip and Putt Championship, strengthening their brand presence and enhancing fan experiences across all digital platforms. Our comprehensive media infrastructure, powered by AIware, empowered both global broadcasters and content creators with seamless access to high-quality assets, facilitating efficient content production and wider audience reach.

Ryan Steelberg: Our recent execution at this year's Master's Golf Tournament with our long-standing customer, Augusta National, is an excellent example of how Veritone provides mission critical solutions at scale.

Ryan Steelberg: Managing over 200 terabytes of footage, inclusive of over 90,000 video files and over 18,000 images.

Speaker Change: Veritone enabled unprecedented content access and distribution across the master's tournament, Augusta Nationals Women's Amateur, and Drive Chip and Putt Championship, strengthening their brand presence and enhancing fan experiences across all digital platforms.

Speaker Change: Our comprehensive media infrastructure, powered by AI Wear, empowered both global broadcasters and content creators with seamless access to high quality assets, facilitating efficient content production and wider audience reach.

Ryan Steelberg: Artificial intelligence has emerged as the requisite solution for media companies to address these challenges by enabling them to extend the distribution and yield of their content assets with greater efficiency and automated work. Simultaneously, the expanding AI foundational models and infrastructure sector has led to an insatiable appetite and need for high quality training. However, there is a significant shortage of accessible, clean, unstructured data, including audio and video.

Speaker Change: Artificial intelligence has emerged as the requisite solution for media companies to address these challenges by enabling them to extend the distribution and yield of their content assets, with greater efficiency and automated workflows.

Speaker Change: Simultaneously, the expanding AI foundational models and infrastructure sector has led to an insatiable appetite and need for high quality training data.

Speaker Change: However, there is a significant shortage of accessible, clean, unstructured data, including audio and video. This is our time and our opportunity.

Ryan Steelberg: This is our time and our opportunity. Veritone's data refinery, or VDR, is solving this data gap by servicing the global training data market, which is expected to grow from $2.4 billion in 2023 to over $17 billion in 2032. As AI models' data needs advance from text to images to audio and video, Veritone is uniquely and strategically positioned to capitalize on this audio and video market demand. In 2024 alone, Veritone AIware processed almost 11 petabytes and nearly 60 million hours of media for our customers, providing further evidence of our ability to meet VDR fulfillment requirements. The big headline is VDR is gaining material traction and is now expected to generate significant revenue for the remainder of the year, with a qualified and near-term pipeline of over $10 million, up from $5 million just a few weeks ago.

Speaker Change: Veritone's Data Refinery, or VDR, is solving this data gap by servicing the global training

Speaker Change: In 2024 alone, Veritone AI wear processed almost 11 petabytes and nearly 60 million hours of media for our customers, providing further evidence of our ability to meet VDR fulfillment

Speaker Change: The big headline is this, VDR is gaining material traction and is now expected to generate significant revenue for the remainder of the year with a qualified and near-term pipeline of over $10 million, up from 5 million just a few weeks ago.

Ryan Steelberg: As a reminder, our targeted kegger from 2024 to 2027 to address the large and growing training data market is over 300%. VDR transforms unstructured data in the AI-ready assets, enabling enterprises to prepare and leverage their data efficiently and effectively, both for internal use as well as for licensing such data for third-party AI model training and tuning. BDR is powered by Veritone's AIWare platform, supporting incredible scale, and now has contracts with major hyperscalers, AI model providers, and intellectual property owners. To put the scale into perspective, we have already ingested, prepared and delivered the equivalent of over 200 billion tokens derived from premium audio and video to multiple hyperscalers and model developers for advanced model training and tuning.

Speaker Change: As a reminder, our targeted kegger from 2024 to 2027 to address the large and growing training data market is over 300%.

Speaker Change: VDR transforms unstructured data in AI-ready assets, enabling enterprises to prepare and leverage their data efficiently and effectively, both for internal use as well as for licensing such data for third-party AI model training and tuning.

Speaker Change: BDR is powered by Veritone's AI Wear platform, supporting incredible scale and now has contracts with major hyperscalers, AI model providers, and intellectual property owners.

Speaker Change: To put the scale into perspective, we have already ingested, prepared, and delivered the equivalent over 200 billion tokens derived from premium audio and video to multiple hyperscalers and model developers for advanced model training and tuning.

Ryan Steelberg: We are now targeting to achieve the higher end of our previously disclosed VDR pipeline of at least $10 million in 2025 alone.

Speaker Change: We are now targeting to achieve the higher end of our previously disclosed VDR pipeline of at least $10 million in 2025 alone.

Ryan Steelberg: As the media and entertainment sector continues to evolve, Veritone is poised to lead the charge in providing AI-driven solutions that empower organizations to meet the increasing demands for content, audience engagement, and data monetization. With the momentum we have built so far this year, we are confident that Veritone is well positioned to maintain its leadership in the AI space and deliver strong, sustained growth in 2025 and beyond.

Speaker Change: As the media and entertainment sector continues to evolve, Veritone is poised to lead the charge in providing AI-driven solutions that empower organizations to meet the increasing demands for content, audience engagement, and data monetization.

Speaker Change: With the momentum we have built so far this year, we are confident that Veritone is well positioned to maintain its leadership in AI space and deliver strong, sustained growth in 2025 and beyond. I'll now shift to discussing Veritone higher, our products and solutions for the HR and job recruiting industries.

Ryan Steelberg: I'll now shift to discussing Veritone Hire, our products and solutions for the HR and job recruiting. Despite the global challenges to the labor market, Veritone Hire remains focused on mid- and long-term growth. is being pursued through a concerted three pronged approach, expanding the reseller network, enhancing ATF integrations, and growing our media services solution. Currently, our media services penetration within existing customers is less than 5% of their respective annual spend budgets, which we estimated to be close to $1 billion per year. Therefore, we see significant growth potential against both our installed client base as well as from that new count.

Speaker Change: Despite the global challenges to the labor market, Veritone Hire remains focused on mid and long-term growth. This is being pursued through a concerted three-pronged approach, expanding the reseller network, enhancing ATF integrations, and growing our media services solution.

Speaker Change: Currently, our Media Services penetration within existing customers is less than 5% of their respective annual spend budgets, which we estimated to be close to $1 billion per year. Therefore, we see significant growth potential against both our installed client base, as well as from that new counts.

Ryan Steelberg: In Q1 2025, Veritone Hire increased its number of media services clients, grew client budgets under management compared to the previous year, and extended media services to new international markets.

Speaker Change: In Q1 2025, Veritone Hire increased its number of media services clients, grew client budgets under management compared to the previous year, and extended media services to new international markets.

Ryan Steelberg: To close my update on Veritone Hire, I want to highlight our partnership with Workday, one of the largest global HCM ATS providers. As a Workday Certified Platinum Partner, Veritone is now co-selling with Workday and through this collaboration, we have already generated numerous opportunities and leads, which have resulted in the swift acquisition of new clients, especially considering that our Workday agreement only officially started just mid-quarter. As our partnership with Workday develops, we anticipate meaningful growth in both opportunities and signed clients. Veritone Hire is set for further expansion. The results of the first quarter demonstrate our effective strategic implementation and adaptability to market changes.

Speaker Change: To close my update on Veritone Hire, I want to highlight our partnership with Workday, one of the largest global HCAM ATS providers.

Speaker Change: As a workday certified platinum partner, Veritone is now co-selling with Workday and through this collaboration, we have already generated numerous opportunities and leads.

Speaker Change: Veritone Hire is set for further expansion. The results of the first quarter demonstrate our effective strategic implementation and adaptability to market changes. With a solid ground work established, we are optimistic about our direction for the remainder of the year ahead. Now turning to the public sector.

Ryan Steelberg: With a solid groundwork established, we are optimistic about our direction for the remainder of the year ahead.

Ryan Steelberg: Now turning to the public.

Ryan Steelberg: I'm proud to report that our Veritone Intelligent Digital Evidence Management System, or IDEMS, continues to gain traction, both domestically and internationally. In local law enforcement, we are now servicing hundreds of customers using our I-DEMS applications for investigation workflows, public record requests, freedom of information requests, and redaction workflows. Our users include detectives, investigators, crime analysts, public affairs, and FOIA personnel. And they're all seeing the transformative impact of our AI-powered solutions, helping them streamline their operations and achieve improved outcomes faster. As we continue to grow, we are expanding our technical partnerships and integrations with new sales opportunities arriving on a weekly basis.

Speaker Change: On Proud Report that our Veritone Intelligent Digital Evidence Management System, or High Dums continues to gain traction, both domestically and internationally.

Speaker Change: In local law enforcement, we are now servicing hundreds of customers using our items, applications for investigation workflows, public record requests, freedom of information requests, and reduction workflows.

Speaker Change: Our users include detectives, investigators, crime analysts, public affairs, and FOIA personnel, and they're all seeing the transformative impact of our AI-powered solutions, helping them streamline their operations and achieve improved outcomes faster.

Speaker Change: As we continue to grow, we are expanding our technical partnerships and integrations with new sales opportunities arriving on a weekly basis.

Ryan Steelberg: The addition of our IDEMS application suite has been a game changer for us, driving increases in deal size and opening up new opportunities. We are in the final stages of procurement with several large counties in California, as well as law enforcement agencies and district attorney offices in major cities across North America. We are also expanding our footprint in Canada with a strategic partnership focused on opportunities across both the U.S. and Canada. Additionally, our partnership with technology and public safety's safety leader, GTAC, is now moved into the operational stage, and we are beginning to work closely with joint customers.

Speaker Change: We are also expanding our footprint in Canada, with a strategic partnership focused on opportunities across both the US and Canada

Speaker Change: Additionally, our partnership with Technology and Public Safety Leader GTAC is now moved into the operational stage and we are beginning to work closely with joint customers.

Ryan Steelberg: As we continue to innovate, we are also working on new integrations with other major industry players, bringing our AI, scale, workflow, and expertise in video and audio analytics to create combined solutions that deliver enhanced value for our customers. On the U.S.

Speaker Change: As we continue to innovate, we are also working on new integrations with other major industry players bringing our AI, scale, workflow, and expertise in video and audio analytics to create combined solutions that deliver enhanced value for our customers.

Ryan Steelberg: federal side, we've made strong progress as well. Veritone Investigate has achieved awardable status within the TradeWinds marketplace, broadening our footprint in federal agencies. We're also assisting with a proof of concept for procurement fraud with the Department of Defense agents. Additionally, we are working closely with the Defense Logistics Agency, or DLA, on the JET 2.0 contract for FOIA and investigative services. Our IDEMS applications are now the system of record for several service providers, fulfilling key tasks for the DLA, and we are also deploying IDEMS and AIWare on the DLA's private tenant in their own secure environment.

Michael Zemetra, Unknown Executive, Ryan Steelberg

Speaker Change: On the U.S. federal side, we've made strong progress as well. Veritone investigate has achieved awardable status within the trade winds marketplace, broadening our footprint in federal agencies.

Speaker Change: We're also assisting with a proof of concept for procurement fraud with a Department of Defense Agency. Additionally, we are working closely with the Defense Logistics Agency or DLA on the Jet2.0 contract for full yet and investigative services.

Speaker Change: Our IDEMS applications are now the system of record for several service providers, fulfilling key tasks for the DLA, and we are also deploying IDEMS and AI wear on the DLA's private tenant in their own secure environment.

Ryan Steelberg: This is a significant milestone for us as it proves our ability to meet the highest security standards required by the Department of Defense. We are also supporting multiple agencies across the DOD, DHS, and DOJ as they scope requirements and implement proof-of-concept deployments under Project Defender, a key initiative that aligns with the President's strategy for securing the border and modernizing law enforcement.

Speaker Change: This is a significant milestone for us as it proves our ability to meet the highest security standards required by the Department of Defense.

Speaker Change: We are also supporting multiple agencies across the DOD, DHS, and DOJ as they scope requirements and implement proof-of-concept deployments under Project offender, a key initiative that aligns with the president's strategy for securing the border and modernizing law enforcement.

Ryan Steelberg: We expect significant budget approvals and revenue generation for fiscal year 2026. And we are confident that Veritone will play a key role in this critical initiative.

Speaker Change: We expect significant budget approvals and revenues generation for fiscal year 2026 and we are confident that Veritone will play a key role in this critical initiative.

Ryan Steelberg: In the first quarter of 2025, we added eight new SLED customers and 40 expansion sales transactions in the public sector. Our public sector pipeline now exceeds $110 million, underscoring the increasing demand for AI-based applications and services across all four of our public sector segments—SLED, FedSiv, FedDOD Intel, and international markets. I am very excited about what lies ahead as we continue to leverage the momentum from the strategic milestone I've just detailed.

Speaker Change: In the first quarter of 2025, we added eight new sled customers and 40 expansion sales transactions in the public sector.

Speaker Change: Our public sector pipeline now exceeds 110 million, underscoring the increasing demand for AI-based applications and services across all four of our public sector segments. Sled, FedSiv, FedDOD, Intel, and international markets.

Speaker Change: I am very excited about what lies ahead as we continue to leverage the momentum from the strategic milestones I've just detailed. We are confident that Veritone is well positioned to capitalize on the increasing demand for AI-powered solutions in both the commercial and public sectors.

Mike Zemetra: We are confident that Veritone is well positioned to capitalize on the increasing demand for AI powered solutions in both the commercial and public I would now like to turn over to Mike Zemetra who will provide more details on our quarterly performance and future guidance. Mike. Thank you, Ryan. We started the year strong in Q1. Revenue was in line with our preliminary results, but did fall slightly below our guidance, primarily driven by delays in some of our larger public sector deals. Offset by outperformance from our VDR business. which resulted in slightly lower gross margins versus expectations.

Speaker Change: I would now like to turn over to Mike Zemetra who will provide more details on our quarterly performance and future guidance. Mike

Mike Zemetra: Thank you, Ryan. We started the year strong in Q1. Revenue was in line with our preliminary results, but did fall slightly below our guidance, primarily driven by delays in some of our larger public sector deals.

Mike Zemetra: Offset by our performance from our VDR business which resulted in slightly lower gross margins versus expectations. We ended Q1 with solid customer metrics and contributions made across our software products and services and managed services.

Mike Zemetra: We ended Q1 with solid customer metrics and contributions made across our software products and services and managed services. As we enter the second quarter of 2025, we remain very bullish on the future growth prospects across our public sector and VDR initiatives, which I will explain in more detail.

Mike Zemetra: As we enter the second quarter of 2025, we remain very bullish on the future growth prospects across our public sector and VDR initiatives, which I will explain in more detail.

Mike Zemetra: During my prepared remarks, I will discuss Q1 year-over-year performance and KPIs, which exclude the results of our media agency, which are presented as discontinued operations in the corresponding historical financial periods. balance sheet and liquidity position and Q2 and fiscal 2025 guidance. starting with our Q1 2025 performance. Q1 revenue was $22.5 million, down $1.7 million from Q1 2024, principally due to a decline in managed services and, to a lesser extent, from software products and services. Q1 managed services of $8 million declined to $0.9 million, principally driven by declines in campaigns across our representation services. Coupled with slightly lower licensing, we expect this negative trend in representation services to continue throughout 2025 or until the macroeconomy shows demonstrated improvements over 2024.

Mike Zemetra: During my prepare remarks, I will discuss Q1 Euroyear Performance in KPIs which exclude the results of our media agency which are presented in discontinued operations in the corresponding historical financial periods.

Mike Zemetra: Ballet sheet and liquidity position, and Q2 in fiscal 2025 guidance.

Starting with our Q1 2025 performance

Mike Zemetra: Q1 revenue was $22.5 million, down $1.7 million from Q1 2024, principally due to a decline in managed services and to a lesser extent from software products and services.

Mike Zemetra: Q1 Man Services of 8 million, Declined 0.9 million, principally driven by declines and campaigns across our representation services.

Mike Zemetra: Couple with slightly lower licensing We expect this negative trend in representation services to continue throughout 2025 or until the macroeconomy shows demonstrated improvements over 2024.

Mike Zemetra: For software products and services, Q1 commercial enterprise revenue declined 0.6 million year-over-year, largely due to a decrease in consumption-based revenue over the same period. coupled with the decline in foreign exchange rates in Europe in Q1 2025 as compared to the US dollar. Offsetting this was growth in Veritone Data Refinery, or VDR, in Q1 2025 over approximately $0.9 million in revenue. VDR, which launched in Q4 2024, is one area where we anticipate substantial year-over-year growth throughout fiscal 2025, with a near-term sales pipeline of approximately $10 million, or double that from early March of 2025. Overall, our public sector saw a small decline in revenue year over year and was slightly better when you exclude the loss of $0.3 million of certain non-recurring project-related revenue in Q1 2024 that is not recurring in Q1 2025.

Mike Zemetra: For software product and services, Q1 commercial enterprise revenue declined 0.6 million year over year, largely due to a decrease in consumption-based revenue over the same period.

Mike Zemetra: Couple with the decline in foreign exchange rates in Europe in Q1 2025 as compared to the US dollar

Mike Zemetra: Offsetting this was growth in Veritone data refinery or VDR in Q1 2025 over approximately 0.9 million in revenue.

Mike Zemetra: VDR, which launched in Q4 2024, is one area where we anticipate substantial year-over-year growth throughout fiscal 2025, with a near-term sales pipeline of approximately 10 million or double that from early March of 2025.

Mike Zemetra: Overall, our public sector saw a small decline in revenue year over year and was slightly better when you exclude the loss of 0.3 million of certain non-recurring project related revenue in Q1 2024 that is not recurring in Q1 2025.

Mike Zemetra: As I will explain later in my prepared remarks, we remain incredibly excited about our public sector and the growth it will achieve in fiscal 2025, which we are forecasting to start in Q2 2025. turning to key performance metrics across our software products and services in Q1 2025. ARR was $58.7 million. which was relatively flat sequentially and down year over year as we expected declines in consumption-based revenue from the customers across our commercial enterprise sector, including Amazon over the trailing 12 months. Overall, ARR from recurring subscription based SAS customers remain relatively flat year over year. As of Q1 2025, 81% of our ARR was from subscription versus consumption based customers, up from 68% at Q1 2024 and flat sequentially from Q4 2024.

Mike Zemetra: As I will explain later in my prepared remarks, we remain incredibly excited about our public sector and the growth it will achieve in fiscal 2025, which we are forecasting to start in Q2 2025.

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Mike Zemetra: Turning to key performance metrics across our software product and services in Q1 2025.

AR was 58.7 million

Mike Zemetra: which was relatively flat sequentially and down year over year, as we expected declines in the consumption-based revenue from the customers across our commercial enterprise sector, including Amazon over the trailing 12 months.

Mike Zemetra: Overall, ARR from recurring subscription-based SaaS customers remain relatively flat year

Mike Zemetra: As of Q1 2025, 81% of our ARR was from subscription versus consumption based customers, up from 68% at Q1 2024, and flat sequentially from Q4 2024.

Mike Zemetra: Total new bookings of $15.8 million, up $2.9 million or 22% year over year. primarily due to larger renewals across our software customer base. Gross revenue retention continued to be above the 90th percentile and total software products and services customers of 3,156 was down 7% year over year, predominantly from our commercial enterprise sector, which includes lower consumption based customers across Veritone Hire and the rolling impact of sunsetting legacy career builder customers post the June 2023 acquisition of Broadbeam and smaller customers as we focus on larger ARR opportunities. offset by an increase across public sector largely from growth in public safety.

Mike Zemetra: Total new bookings of 15.8 million, up 2.9 million or 22% year-over-year

Primarily due to larger renewals across our software customer base.

Mike Zemetra: Gross Revenue Retention continued to be above the 90% tile, and Total Software Products and Services Customers of 3,156

Mike Zemetra: was down 7% year of a year predominantly from our commercial enterprise sector.

Mike Zemetra: which includes lower consumption-based customers across Veritone higher and the rolling impact of sun-setting legacy career builder customers.

Mike Zemetra: Post the June 2023 acquisition of Broadbeam and smaller customers as we focus on larger ARR opportunities.

Mike Zemetra: Offset by an increase across public sector, largely from growth and public safety customers.

Mike Zemetra: Q1 GAAP gross profit was $13.9 million compared to $16.6 million in Q1 2024. down $2.7 million, largely as a result of the decline in revenue, coupled with a higher mix of lower margin revenue in Q1 2025, with gap gross margin of 61.9% as compared to 68.8% in Q1 2024. Excluding non-cash depreciation and amortization expense, 2025 non-GAAP gross margin was 65.1% as compared to 71.2% in Q1 2024. A decline of 610 basis points largely due to the reduction in higher margin consumption-based revenue coupled with a higher mix of lower margin revenue. Note that in Q1 2025, VDR gross margins were approximately 40%.

Mike Zemetra: Q1 Gap Gross Profit was 13.9 million compared to 16.6 million in Q1 2020-24.

Mike Zemetra: Down 2.7 million, largely as a result of the decline in revenue.

Mike Zemetra: Couple with a higher mix of lower margin revenue in Q1 2025, with gap gross margin of 61.9% as compared to 68.8% in Q1 2024 in Q1 2024.

Mike Zemetra: Excluding non-cash depreciation and normalization expense, 2025 non-GAAP gross margin with 65.1% as compared to 71.2% in Q1 2024.

Mike Zemetra: A decline of 610 basis points largely due to the reduction in higher margin consumption on to base revenue, coupled with a higher mix of lower margin revenue.

Mike Zemetra: We expect that as VDR product matures, margins will initially be similar to Q1 but should expand throughout 2025 as we grow and diversify our content offering. In addition, certain larger content licensing renewables in Q1 2025 continue to drive lower margins in their early phases of tiered volume pricing, but are expected to improve throughout 2025 as the volume of revenue increases over time. Q1 operating loss of $21.6 million improved by $2.7 million or 11% year-over-year, primarily driven by lower operating expenses and severance costs year-over-year as a result of our Q1 2024 restructuring, offset by lower non-GAAP gross profit from the decline in revenue over the same period.

Mike Zemetra: In addition, certain larger content licensing renewables in Q1 2025 continue to drive lower margins in their early phases of tiered volume pricing, but are expected to improve throughout about 2025 is the volume of revenue increases over time.

Mike Zemetra: Q1 operating loss of $21.6 million, improved by $2.7 million or 11% year-over-year, primarily driven by lower operating expenses and seven costs year-over-year as a result of our Q1 2020-24 restructuring, offset by lower non-gab girls' profit from the decline in revenue over the same period.

Mike Zemetra: Net loss from continuing operations was $19.9 million, an improvement of 6.3 million or 24% compared to Q1 2024. The year-over-year improvement was principally driven by the previously discussed $2.7 million improvement in loss from operations and a $3.7 million benefit from the change in fair value of our earn out from the divestiture of Veritone I recorded in Q1 2025. Non-GAAP net loss from continuing operations was $11.1 million as compared to $10.3 million in Q4 2024. The decline was principally due to lower non-GAAP gross profit offset by improved operating losses. Turning to our balance sheet, as of March 31st, 2025, we held cash and restricted cash of 16.49 as compared to 17.3 million at December 31st, 2024.

Mike Zemetra: Net loss from continuing operations was $19.9 million, an improvement of $6.3 million or 24% compared to Q1, 2024.

Mike Zemetra: The year of your improvement was principally driven by the previously discussed 2.7 million improvement in loss from operations, and a 3.7 million dollar benefit from the change in fair values of our turnout from the divestiture of Veritone 1 recorded in Q1 2025.

Mike Zemetra: Non-GapNet loss from continuing operations was 11.1 million as compared to 10.3 million in Q42024. The decline was freshly due to lower non-GapNet gross profit offset by improved operating losses.

Mike Zemetra: Turning to our balance sheet, as of March 31, 2025, we held cash and restricted cash of $16.4 million, as compared to $17.3 million at December 31, 2024.

Mike Zemetra: The net change in cash reflects net cash outflow from operations of $17 million, principally driven by our non-GAAP net loss of $11.1 million, deferred purchase consideration of $1.2 million, and interest paid on debt of approximately $1.2 million, coupled with the timing of working capital of a quarter.

The net changing cash reflects

Mike Zemetra: Netcatch Outflow from Operations of 17 million, principally driven by our non-GAAP net loss of 11.1 million, deferred purchase consideration of 1.2 million, and interest paid on debt of approximately 1.2 million.

Mike Zemetra: Offset by net cash inflow from investing and financing activities of $16.5 million, driven by net cash inflows of $19.9 million from our January Registered Direct Offering, partially offset by $1.9 million in debt principal payments and $1.4 million in capital expenditures. Turning to liquidity, in Q1 2025 we completed a registered direct offering selling 4.4 million shares of common stock priced at $2.53 per share and $3.6 million of pre-funded warrants priced at $2.52 per share for gross proceeds of approximately $20.3 million. At March 31st, 2025, our consolidated debt is down from a peak of $201 million in December 2021 to approximately $130 million today, comprised of term debt of $39 million maturing in December 2027 and convertible debt of $91.3 million due November 2026.

Coupled with the timing of working capital of the quarter

Mike Zemetra: Offset by Net Cash Inflow from Investing and Financing Activities of 16.5 million driven by Net Cash Inflow's of 19.9 million from our January Registered Direct offering, partially offset by 1.9 million in debt principal payments and 1.4 million in capital expenditures.

Unknown Executive, Ryan Steelberg

Mike Zemetra: and $3.6 million a pre-funded warrants priced at $2.52 per share for gross proceeds of approximately $20.3 million.

Speaker Change: At March 31, 2025, our consolidated debt is down from a peak of 201 million in December 2021 to approximately 130 million today.

Speaker Change: comprised a term debt of $39 million, maturing in December 2027, and a convertible debt of $91.3 million, due November 2026.

Mike Zemetra: As of March 31st, 2025, we have over 30 million available across our $35 million ATM, which was established in November 2024.

Speaker Change: As of March 31, 2025, we have over $30 million available across our $35 million ATM which was established in November of 2024 in 2004.

Mike Zemetra: That said, we are currently in various discussions to further improve our cash position and balance sheet in the near term, which we will discuss in more detail as these initiatives progress. At March 31st, 2025, we had 44.9 million shares issued in outstanding and 2.5 million warrants outstanding to our debtors.

Speaker Change: That said, we are currently in very discussions to further improve our cast position and balance sheet in the near term, which we will discuss in more detail as these initiatives progress.

Speaker Change: At March 31st, 2025, we had 44.9 million shares issued not standing and 2.5 million warrants outstanding to our debt holders.

Mike Zemetra: Now turning to updated Q2 2025 and full year 2025 guidance. Our software products and services revenue pipeline and long-term outlook continue to be at all-time highs. More specifically, we continue to see strong demand across the approximate $10 billion global digital evidence management market.

Speaker Change: Now turning to updated Q2 2025 and full year 2025 guidance.

Speaker Change: Our software products and services revenue pipeline and long-term outlook continue to be at all-time highs.

Speaker Change: More specifically, we continue to see strong demand across the approximate $10 billion global digital evidence management market. In the public sector alone, we are beginning to march towards our 100-150% revenue growth target for fiscal year 2025.

Mike Zemetra: In the public sector alone, we are beginning to march towards our 100 to 150% revenue growth target for fiscal year 2025. We also remain in near-term contract phases on several large products with various facets of the U.S. federal government and international public safety customers with a near-term sales pipeline in excess of $100 million. These deals range in the high seven to mid eight figure levels and will last anywhere from one to five years in duration and our confidence on closing these remains high. While there has been a lot of scrutiny around government spending under the new presidential administration, these initiatives are not expected to be scrutinized by the current administration and will drastically improve the federal government's investigative and evidence-gathering capabilities in forecasted centralization.

Speaker Change: We also remain in near-term contract phases on several large products with various facets of the U.S. federal government and international public safety customers with a near-term sales pipeline in excess of 100 million.

Speaker Change: These deals range in the high seven to mid eight figure levels, and will last anywhere from one to five years in duration, and are confident on closing these rimming tie.

Speaker Change: While there has been a lot of scrutiny around government spending under the new presidential administration, these initiatives are not expected to be scrutinized by the current administration and will drastically improve the federal government's investigative and evidence-gathering capabilities in forecasted centralization.

Mike Zemetra: As previously noted, we are seeing strong demand for a VDR product offering. Our near term sales pipeline on VDR is now over 10 million, which is an increase of 100% or 5 million since March of 2025. We are in active discussions with most of the largest hyperscalers on various VDR initiatives and will provide more detailed updates as we continue to progress on these initiatives.

Speaker Change: As previously noted, we are seeing strong demand for a VDR product offering. Our near-term sales pipeline on VDR is now over 10 million, which is an increase of 100% or 5 million since March of 2025.

Speaker Change: We are in active discussions with most of the largest hyperscalers on various VDR initiatives.

Speaker Change: and will provide more detailed updates as we continue to progress on these initiatives.

Mike Zemetra: More specifically, in Q2 2025, revenue is expected to be between $23 and $25 million, as compared to $24.1 million in Q2 2024. In Q2, we expect public sector revenue to be up year over year, led by the launch of larger initiatives across the Department of Defense. Commercial enterprise revenue is expected to be relatively flat, driven by $1 million decline in consumption-based revenue across our managed services and Veritone higher services offset by $1 million growth in commercial SAS driven in large part from expanded VDR revenue. Managed services is expected to be down year over year, principally due to the representation side of our business, which is experiencing some deceleration as a result of the more challenging macro environment.

Speaker Change: More specifically, in Q2 2025, revenue is expected to be between 23 and 25 million as compared to 24.1 million in Q2 2024.

Speaker Change: In Q2, we expect public sector revenue to be up year over year led by the launch of larger initiatives across the Department of Defense

Speaker Change: Commercial Enterprise Revenue is expected to be relatively flat driven by $1 million decline in consumption-based revenue across our managed services and Veritone higher services offset by $1 million growth in commercial SaaS driven in large part from expanded VDR revenue.

Speaker Change: Manage Services is expected to be down year over year, principally due to the representation side of our business, which is experiencing some decelerization as a result of the more challenging macro environment. We expect Q2 non-GAAP gross margins to be around 68-70%.

Mike Zemetra: We expect Q2 non-GAAP gross margins to be around 68 to 70%.

Mike Zemetra: Q2 non-GAAP net loss is projected to be between 8 to 9 million, as compared to 9.7 million in Q1 2024.

Speaker Change: Q2 non-GAAP net loss is projected to be between 8 to 9 million, as compared to 9.7 million in Q1, 2024.

Mike Zemetra: Turning to fiscal 2025 outlook. We are updating our prior guidance for fiscal 2025, which we are expecting revenue to be between 104 to 115 million, which at the midpoint represents an 18% increase year over year. A change in our outlook is principally driven by the shift in some of our larger growth initiatives across our public sector and VDR to the second half of 2025. Coupled with a forecasted deceleration in managed services, reflecting the more challenging macro market today and non-GAAP net loss to be between 30 to 20 million, representing a 39% improvement year over year at the midpoint.

Turning to Fiscal 2025 Outlook.

Speaker Change: We are updating our prior guidance for fiscal 2025, which we are expecting, revenue to be between 104 to 115 million, which at the midpoint represents an 18% increase year

Speaker Change: A change in our outlook is principally driven by the shift in some of our larger growth initiatives across our public sector and VDR to the second half of 2025, couple with a forecasted decelerization and man services reflecting the more challenging macro market today.

Speaker Change: and non-GAAP net loss to be between 30 to 20 million, representing a 39% improvement year over year at the midpoint.

Mike Zemetra: The change is reflective of the timing shifts in revenue, coupled with the compression in gross margins on VDR in the first half of 2025, which we expect to improve in the latter half of fiscal 2025.

Speaker Change: The change is reflective of the timing system revenue, coupled with the compression and gross margins on VDR in the first half of 2025, which we expect to improve in the latter half of fiscal 2025.

Mike Zemetra: Key drivers to our fiscal 2025 guidance remain intact and include in the public sector. As previously discussed, we are expecting the public sector to grow 100 to 150% year over year, led by near-term deals across the Department of Defense. Public Safety, including international expansion into Europe, and through more recently announced and expanded partnerships with AWS, GTAC, and others. We are currently in early phases of deployments on projects across the U.S. government and later trials on other opportunities. All of these projects, when aggregated, are projected to generate substantial revenue over today's baseline, more prominently in the back half of 2020.

Speaker Change: Key drivers to our fiscal 2025 guidance remain intact and include in the public sector, as previously discussed, we are expecting the public sector to grow 100 to 150% year-over-year.

led by near-term deals across the Department of Defense.

Speaker Change: Public Safety, including International Expansion in Europe , and through more recently announced an expanded partnership with AWS, G-TAC, and others.

Speaker Change: We are currently in early phases of deployment some projects across the US government and later trials on other opportunities. All these projects when aggregated are projected to generate substantial revenue over today's baseline, more prominently in the back half of 2025.

Mike Zemetra: Commercial Enterprise. Since August 2024, we renewed partnerships with some of our largest customers, including multi-year and expanded services with the NCAA, CBS, and iHeart. Moreover, we recently renewed ESPN for a multi-year deal that included expanded software products and services. We are also in the early phases of our VDR product offering with meaningful growth opportunities in fiscal 2025 and beyond. Today, we are expecting anywhere between 5 to 10 million of deals to execute in 2025 and exciting new partnerships with some of the largest AI, LLMs, and cloud providers, expanding our offerings into generative AI. These existing and newer market opportunities will drive year over year growth across our commercial enterprise sector.

Commercial Enterprise [inaudible]

Speaker Change: Since August , 2024, we renewed partnerships with some of our largest customers, including multi-year and expanded services with the NCAA, CBS , and I Heart. Moreover, we recently renewed ESPN for a multi-year deal that included expanded software products and services.

Speaker Change: We are also in the early phases of our VDR product offering with meaningful growth opportunities in fiscal 2025 and beyond. Today, we are speccing anywhere...

Speaker Change: between 5 to 10 million of deals to execute in 2025. An exciting new partnerships with some of the largest AI LOMs and cloud providers expanding our offerings into generative AI.

Speaker Change: These existing and newer market opportunities will drive you over your growth across our commercial enterprise sector.

Mike Zemetra: and more importantly, drive longer term sustainable growth.

Mike Zemetra: We believe the opportunity for VDR could generate $60 million in revenue annually by 2027.

Speaker Change: And more importantly, drive longer term sustainable growth. We believe the opportunity for VDR could generate 60 million revenue annually by 2027.

Mike Zemetra: Veritone Hire. Given the current macro environment, we continue to expect modest to flat growth across our Veritone Hire applications and services in fiscal 2025. With the exit of consumption-based customer dependencies in fiscal 2025, we do expect a more stable year in fiscal 2025, and a return back to growth in late fiscal 2025 to fiscal 2026 with expected macroeconomic improvements, non-gap gross margins. We are expecting our non-GAAP gross margins to be between 65 to 70% throughout fiscal 2025. To the extent that we approach the higher end of our fiscal 2025 revenue guide, we can see non-GAAP gross margins expanding closer to 73% on a blended basis.

Speaker Change: Veritone Hire. Given the current macro environment, we continue to expect modest to flat growth across our Veritone Hire applications and services in fiscal 2025.

Speaker Change: With the exit of consumption-based customer dependencies in fiscal 2025, we do expect a more stable year in fiscal 2025.

Speaker Change: and a return back to growth in late fiscal 2025 to fiscal 2026 with expected macroeconomic improvements, non-GAAP growth margins.

Speaker Change: We are expecting our non-GAAP gross margins to be between 65 to 70% throughout fiscal 2025. To the extent that we approach the higher end of our fiscal 2025 revenue guide, we can see non-GAAP gross margins expanding closer to 73% on a blended basis.

Mike Zemetra: As we begin to scale and look towards 2026 and profitability, our non-GAAP gross margins should return to 70% or better.

Mike Zemetra: And finally, our cost structure. With the backdrop of significant cost savings enacted over the last two years, we exited 2024 with a much improved cost structure relative to the past three years. We will continue to manage our cost structure throughout 2025 to ensure we time necessary investments with corresponding growth. Today, our largest cost driver remains headcount and to a lesser degree, professional services that have recently been higher and driven by transactional volume and integration.

Speaker Change: and finally our cost structure. With the backdrop of significant cost savings enacted over the last two years, we exited 2024 with a much improved cost structure relative to the past three years.

Speaker Change: We will continue to manage our cost structure throughout 2025 to ensure we time necessary investments with corresponding growth Today our largest cost driver remains head count into a lesser degree professional services that have recently been higher and driven by transactional volume and integration

Mike Zemetra: That concludes my prepared remarks.

Unknown Executive: Operator, we would now like to open up the call for questions. We will now begin the question and answer session. To ask a question, you may press star, then the one on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press the pound sign, then one.

Speaker Change: That concludes my prepare remarks. Operator, we would now like to open up the call for questions

Speaker Change: We will now begin the question and answer session. To ask a question you may press star then the one on your telephone keypad. If you are using a speaker phone, please pick up your handset before pressing the keys.

Unknown Executive: At this time, we will pause momentarily to assemble our roster.

Speaker Change: To withdraw your question, please press the pound sign then one. At this time, we will pause momentarily to assemble our raster.

Scott Buck: Our first question comes from Scott Buck with H.C. Wainwright. Scott, you may ask your question. Hi, good afternoon, guys. Thanks for taking my questions. I guess first, I'm curious on the public pipeline. What of that is new customers versus more customer expansions? The majority of it is, I'll say, customer expansion. So why, you know, definitively why we're bullish is we've already executed two revenue based contracts for some of the larger pipeline customers, meaning we're expecting here over, frankly, in the next few days or the next few months, our ability to communicate and announce much larger and expanded contracts against, I'll say, existing agencies under the DOD.

Our first question comes from Scott Guck Scott Guck

with HC Wainwright. Scott, you may ask your question.

Speaker Change: Alright, good afternoon guys. Thanks for taking my questions. I guess first I'm curious on the public pipeline

What of that is new customers versus more customer expansions?

Speaker Change: The majority of it is, I'll say, customer expansion, so why, you know, definitely why we're bullish.

is we've already executed two revenue-based contracts.

Speaker Change: for some of the larger pipeline customers. Meaning, we're expecting here over, frankly, the next few days or the next few months.

Speaker Change: Our ability to communicate and announce much larger and expanded contracts against Big Thumb, I'll say existing agencies under the DOD.

Scott Buck: So it's really a combination of expansion or additional expanded task orders and contracts within existing agencies that we've already been working with and recognizing revenue, as well as net new agencies under the DOD and the DOJ.

Speaker Change: So it's really a combination of expansion or additional expanded task orders and contracts within existing agencies that we've already been working with and recognizing revenue as well as net new agencies under the DOD and the DOJ [inaudible]

Scott Buck: All right, that's helpful. Right. And I guess kind of piggybacking off of that. The second quarter guide and the annual revenue guide suggest, you know, kind of second half revenue being up, you know, mid-30s versus the first half. Can you just speak a little bit more to your visibility and confidence? And it sounds like it's going to be a combination of, you know, several factors, public sector, VDR, but any kind of additional granularity you could provide there would be helpful. Yeah, I think it will be dominated by that Delta will be again be dominated by VDR and public sector.

Speaker Change: That's helpful, right? And I guess I'm going to piggybacking off of that.

https://www.youtube.com or www.facebook.com

Speaker Change: Yeah, I think it will be dominated by that Delta will be again be dominated by VDR and public sector

Ryan Steelberg: So it's a public sector, we probably have, I'd say, great visibility on magnitude of the size of the deals and the revenue contribution. Obviously, the timing of when those contracts get opened, and we're able to execute against those contracts, most of which is software, not services. That is going to be one of the variables and hence why we took a slightly more conservative position on the guide. On VDR, we do have great visibility, and we're hopeful that that could be a breakout win even to the upside. So really, the combination of active deal flow proposals and sort of where we are specifically with VDR, in conjunction with, frankly, all ready to go and just ready for these next phase of these contracts to open up in the public safety side, does give us confidence that we will be able to meet or surpass those kind of growth targets and prospects for Q3 and Q4.

Speaker Change: So it's a public sector. We have, I'd say great visibility on magnitude of the size of the deals and the revenue to contribution, obviously the timing of when those contracts get opened and we're able to execute against those contracts, most of which is software, not services.

Speaker Change: That is going to be one of the variables and hence why we took a slightly more conservative position on the guide.

Speaker Change: on VDR we do have great visibility and we're hopeful that that could be a breakout win even to the upside. So really the combination of active deal flow proposals and sort of where we are specifically with VDR in conjunction with, frankly, already to go and just ready for these next phase of these contracts to open up in the public safety side does give us confidence that we will be able to...

Speaker Change: Meet or surpass those kind of growth targets and prospects for Q2 and I'm sorry for Q3 and Q4 [inaudible]

Ryan Steelberg: That's great. And it sounds like the difference between the low end and the high end of the range is just, again, simply timing, right? So I would say, well, I would say timing on one and I would say, yeah, timing on one and velocity on growth of VDR as well. I'd say VDR is less of a timing function. Public safety is more a timing Yep, and the increase in VDR today versus the end of the quarter, is that One contract, two contracts, several contracts, just trying to gauge, you know, how widespread the demand is. Multiple contracts, multiple contracts with new partners, new clients, prospective clients.

Speaker Change: That's great and it sounds like the difference between the low end and the high end of the range is just again simply timing, right so

Speaker Change: I would say while I was saying time in a one and yeah, time in a one in velocity on growth of VDR as well. I'd say VDR is less of a timing function, public state sees more timing function.

Speaker Change: One contract, two contracts, several contracts just trying to gauge, you know, how wide is this man? Multiple contracts, multiple contracts with new partners, new clients for second clients. With new partners. Perfect. I appreciate it. That's it from me guys. Thanks a lot.

Scott Buck: With new partners. Perfect.

Scott Buck: I appreciate it. That's it for me, guys. Thanks a lot. Thank you.

Seth Gilbert: Our next question comes from Seth Gilbert with UBS. Seth, you may ask your question. Yeah, thanks for the questions. I had to maybe start off a follow up from the previous question, you know, the four year guidestone buys a pretty healthy uplift in the second half.

Thank you.

Speaker Change: Our next question comes from Seth Gilbert with UBS. Seth, you may ask your question.

Seth Gilbert: Yeah, thanks for the questions I had to. Maybe you start off as I follow up from the previous question, you know, the full year guidestone applies a pretty healthy uplift in the second half.

Seth Gilbert: I was wondering, maybe more generically speaking, you know, when could some of these public safety deals start generating revenue? Is it, you know, once you get the deal signed in the go ahead, they'll immediately, you know, begin generating revenue. And that's why you're, you know, so bullish about the, the 104 to $115 million guide, or will it sort of trickle in, you know, bit by bit, because there's some integration work or, you know, other work you need to do with, with some of these deals. Thank you. For some of the high visibility contracts that we're discussing, we're ready to deploy.

Seth Gilbert: I was wondering maybe more generically speaking, you know, when could some of these public safety deals start generating revenue? Is it, you know, once you get the deal signed and to go ahead or leave?

Michael Zemetra, Unknown Executive, Ryan Steelberg

for some of the...

Ryan Steelberg: So to be clear, we've kind of, and obviously, we've been talking a lot about our historical deployments with the DLA Defense Logistics Agency, which, mind you, which just to provide a little bit more insight, was the actual deployment on Azure. So, you know, AI ware based and application deployments on a secure environment on the Azure stack. For some of the ones that we've been talking about that are immediately going to be a creative and potentially contribute as early as in Q2, is on AWS, which we've successfully done several many times. And we're kind of ready to go, which means the software modules, the applications that are being procured and contracted for are ready to be delivered and stood up.

Seth Gilbert: High Visibility Contracts that we're discussing, we're ready to deploy. So to be clear, we've kind of, and obviously, we've been talking a lot about our historic deployments with the DLA Defense Logistics Agency, which just to provide a little bit more insight, with the actual deployment on your AI Wear Based and Application deployments on a secure environment on the Sony Azure Stack.

Seth Gilbert: for some of the ones that we've been talking about that are immediately going to be a creative and potentially contribute, as early as in Q2, is on AWS which we've successfully done several many times, and we're kind of ready to go, which means the software modules, the applications that are being procured and contracted for are ready to be delivered and stood up.

Ryan Steelberg: So, again, I would say you will start to see, and it's not mostly service based revenues, but you will start to see full satisfaction of obligations starting almost immediately once that contract gets released. Got it. Very helpful.

Seth Gilbert: So again, I would say you will start to see, and it's not mostly service based revenues, but you will start to be full satisfaction of obligations starting almost immediately once that contract gets released

Ryan Steelberg: Maybe in the second one, Veritone Hire, I know the market's tough right now, and Mike just walked through some comments at the end of his prepared remarks. Maybe you could talk about some of the steps you're kind of undertaking on that side of the business. Or has there been a change in the competitive landscape like anything else that you'd mentioned just on Veritone Hire? Thank you. Yeah, I think number one, we've reached a point of stability. So again, on a relative basis to how it's been over the past previous years, primarily as an impact from Amazon as a major customer, we've absolutely achieved an element of stability.

Speaker Change: Got it, very helpful. Maybe in the second one, Veritone Hire, I know the market's tough right now, and Mike just walked through some comments at the end of his prepared remarks. Maybe you could talk about some of the steps you're kind of undertaking on that side of the business, or has it been a change in the competitive landscape, like anything else that you'd mentioned just on Veritone Hire. Thank you.

Yep.

Ryan Steelberg: In terms of growth, as I touched on briefly in the prepared remarks, it's really a three-pronged approach. Number one is the expansion of the reseller and partner network. A pretty big chunk of our new leads and new deal flow is now actually coming more consistently through partners, such as Bullhorn, such as Workday. Again, so we're leaning into those. And another benefit of those deals with those larger HCR, HR companies is some of the average contract value is actually higher. So again, partner engagement and partner activation is a one of the three-pronged approach for acceleration of the growth on the hiring side.

Speaker Change: As I touched on briefly in the prepared remarks it's really a three-prong approach number one

is the expansion of the reseller and partner network.

Ryan Steelberg: Number two is the media services. So in effect, where we're helping using our software to manage, let's just say, X percent of a customer's job acquisition budget. There's been a concerted effort starting, frankly, a couple years ago, but really picking up velocity at the second half of last year is to procure and secure a larger portion of the overall spend budget. And we're seeing good success there. And we actually have some pretty good, a pretty strong pipeline. It's one of the key areas where we probably have the most visibility of growth for the higher business is the expansion of that share of wallet or taking more of that spend allocation.

Number two is the media services. So in effect,

Speaker Change: Where we're helping using our software to manage, let's just say, X percent of a customer's job acquisition budget.

Speaker Change: And we're seeing good success there and we actually have some pretty good a pretty strong pipeline It's one of the key areas where we probably have the most visibility of growth for the higher business is the expansion of that share of wallet or taking more of that spend allocation.

Ryan Steelberg: And then the third-pronged approach, again, is just continue to optimization of our algorithms and in leaning in more to our competitive advantage in terms of ROI yield. So in effect, when we do get a dollar from a customer, what is the yield that we can get from in terms of proving whether that's cost of applicant or cost per hire is continuing to maintain our competitive lead in the performance there. So it's a pretty defined, I think, well-organized three-prong approach, but I guess it's going to be dominated with confidence mostly by the expansion of the partner one, again, with the big players like Workday and others, as well as the expansion of our media services opportunities.

Speaker Change: And then the third prong approach, again, is just continue to optimization of our algorithms and leaning in more to our competitive advantage in terms of ROI yield. So in effect, when we do get a dollar from a customer, what is the yield that we can get from in terms of proving whether that's cost of applicant or cost per hire is continuing to maintain our competitive lead in the performance there. So it's a pretty defined, I think well organized.

Speaker Change: 3-prong approach, but I guess it's going to be dominated with confidence mostly by the expansion, the partner one, again with the big players like Workday and others, as well as the expansion of our media services opportunity.

Unknown Executive: Thank you for allowing me to be a part of this.

Michael Zemetra, Unknown Executive, Ryan Steelberg

God, thank you for your librarian.

Glenn Mattens: And our next question comes from Glenn Mattens with Ledenberg and Thelman.

Speaker Change: And our next question comes from Glenn Mattens with Reddenberg and Thelman.

Glenn Mattens: Gwen, you may ask your question. Sorry, sorry, I was on mute there. Thanks for taking the question. Sorry, if you covered this, I'm bouncing amongst a couple calls here. So there's one quick one for me, you can, Mike, can you help us understand the margin kind of flow throughout the year as VDR kind of maybe drags earlier and then gets better over time, but then also the public sector sounds like it's going to be a big second half for public sector. So, the impact that has in the recovery, just kind of as we want to think about a quarter to quarter.

Glenn, you may ask your question again.

Gwen: Sorry, sorry, let me just thanks for taking the question. Sorry, I discovered this on Banta amongst a couple calls here, so there's one quick one for me. Michael, can you help us understand the margin kind of flows throughout the year as?

Speaker Change: VDR kind of maybe drags earlier and then gets better over time, but then also the public sector sounds like it's the way big second half for public sector So the impact that has in the recovery just kind of as we want to think about a quarter to quarter. Yeah, it'll be helpful. Thanks.

Mike Zemetra: Yeah, that's right. Yeah, I think I mentioned it in my prepared remarks that We had some slippage and some, you know, some planned delay on some of the public sector stuff that's going to come in at a higher margin. And then we had some VDR stuff that kind of drove that down a little bit further. As we get into Q2, Q3, Q4, those margins are expected to improve. Okay, so just kind of think about it, uh, you know. stepping up each quarter a little bit, I guess. And you may have covered this as well, but just kind of the stair step of growth from 5 million a little less than a month ago in pipeline to 10 million.

Speaker Change: Yeah, I think, like I mentioned it in my prepare remarks then.

Speaker Change: We had some slippage and some, you know, some planned delay on some of the public sector stuff that's going to come in at a higher margin. And then we had some VDR stuff that kind of

Speaker Change: We've grown that down a little bit further. As we get into Q2, Q3, Q4, those margins are expected to improve.

Speaker Change: Okay, so just kind of think about it, you know, stepping up each quarter a little bit, I guess.

Speaker Change: And you may have heard this as well, but just this kind of the stair step of growth from 5 million less than a month ago in pipeline to 10 million. Can you just talk about the nature of that difference was it was it was it.

Ryan Steelberg: Can you just talk about the nature of that difference? Was it, you know, broad based or is it, you know, a couple of large, you know, I guess the deal size here is so large that one or two deals can move that or is that? It's a few. It's not, I'd say it's not dozens, but let's just say a few players who we've been speaking with for now several months have progressed to, you know, I'd say a level of visibility in terms of data sampling, even at that stage already, that we're pretty bullish. And it's against a lot of the same data assets that we've been servicing and mobilizing already.

Speaker Change: you know, broad based or is it, you know, a couple large, you know, I guess the deal size here so large that one or two deals can move that or is that

Speaker Change: Data Sampling, even at that stage already, that we're pretty bullish and it's against a lot of the same data assets.

Ryan Steelberg: So specifically is it's not a net new of having to find new data assets per se. It's actually just expansion of in effect selling those data assets to net new customers who are some of the biggest names out there. Again, we're not going to go into the details of those. So specifically it's expansion for net new customers is why we're bullish. That's great. Just quick, is it, are you starting to see any of the feedback loop yet to bring in new content, customers in terms of their, we are, yeah. I think the halo effect of us, so once again, just to clarify what you're asking is, you know, if we're talking about a customer like the NCAA, where they're a technology customer, they're a footage licensing customer, and now a VDR customer, right, where, you know, that three-pronged opportunity has created a halo effect.

Speaker Change: that we've been servicing and mobilizing already. So specifically is it's not a net new of having to find new data assets per say it's actually just expansion of

Speaker Change: In effect, selling those data assets to net new customers who are some of the biggest names out there. Again, we're not going to go into the details of those. So specifically, it's expansion for net new customers is why we're bullish.

Speaker Change: That's great. Just quick, is it? Are you starting to stand at a feedback loop yet to bring in new content customers in terms of their. We are.

Like to hate the halo effect.

of us.

Speaker Change: So, once again, just to clarify what you're asking is, you know, if we're talking about, you know, customer like the NCAA, where there are technology customer, there are footage licensing customer, and now a VDR customer, right where, you know, that, that three-prong opportunity has created a halo effect. And so now we're in discussions with dozens of net new IP owners. And so now we're in discussions with some net new IP owners.

Jesse Sobelson: And so now we're in discussions with dozens of net new IP owners to become net new customers. So not only will we do expect this to continue to accelerate and drive the VDR line item, but we do expect acceleration in, I'll say, core AI, where DMH software SaaS licensing as well. Thank you for asking the question. Great, thanks guys.

Speaker Change: to become net new customers. So not only will we do expect this to be continue to accelerate and drive the VDR line item but we do expect acceleration and I'll say core AI word DMH software staff licensing as well. Thank you for asking the question.

Jesse Sobelson: Thank you.

So great. Thanks, guys.

Jesse Sobelson: Our next question comes from Jesse Sobelson with D. Borough Capital. Jesse, you may begin. Hey guys, I can take my question here.

Speaker Change: Thank you. Our next question comes from Jesse Sobelson with D-Boral Capital. Jesse, you may begin.

Ryan Steelberg: Just a bigger picture one since we're later in the call, you know, with AI adoption accelerating, you know, how are you guys balancing these R&D investments in VDR against the profitability targets? And then when you look at this product for the rest of the year, you know, what milestones are you really looking to define success? Is it converting this this doubled backlog by the end of the year? Or are there other other milestones we could point to? Thanks.

Jesse Sobelson: You guys, I can take my question here, just a bigger picture once it's related in the call. You know, with AI adoption accelerating, how are you guys balanced in these R&D investments and video are against the profitability targets? And then you look at this product to the rest of the year, what milestones are you really looking to define success as a converting this doubled backlog by the end of the year or other milestones we could point to. Thanks.

Ryan Steelberg: Sure, I'll hit the first one on the cat back. So the good news is, I think we have a pretty good runway where at least as it relates to VDR, you're not, we're not going to expect or foresee a lot of capital investment to continue to advance, I'll say that that revenue line, at least for the next maybe couple quarters, specifically is because it's relying on everything we've already built, and it's using the exact same AI work based platform and software systems, specifically DMH, to manage that product offering. So in effect, we're already have made the investments, and we're actually generating revenue and profits from those software services with media companies already.

Check.

Jesse Sobelson: Well, hit the first one on the cat-back. So the good news is I think we have a pretty good runway where at least as it relates to VDR we're not going to expect or a bit more of him.

We foresee a lot of capital investment [inaudible]

Jesse Sobelson: to continue to advance, I'll say that revenue line at least for the next maybe couple quarters.

Jesse Sobelson: Specifically, it's because it's relying on everything we've already built, and it's using the exact same AI-ware-based platform and software systems.

specifically DMH [inaudible]

Jesse Sobelson: to manage that product offering. So in effect, we're already, have made the investments and we're actually generating revenue and profits from those software services with media companies already. So this is almost like a net new, very organic new extension built on the same infrastructure and AI infrastructure that we've already been, that has already been subsidized because of other lines of business.

Ryan Steelberg: So this is almost like a net new, very organic new extension built on the same infrastructure and AI infrastructure that we've already been, that has already been subsidized, right, because of other lines of business. Now, over time, as we get more sophisticated, and the scale and velocity of VDR grows, you know, by all means, we're going to want to make sure that we double down, I'll say, and cement our moat and moats around the opportunity. So we can continue to be more efficient. And that's one of the areas I think, over time, where you're going to start to see an improving of margin, right, as we can continue to streamline the operations of VDR, we do expect again, over time, the margins to increase.

Jesse Sobelson: Now, over time, as we get more sophisticated in the scalability of VDR Grows,

Jesse Sobelson: You know, by all means, we're going to want to make sure that we double down. I'll say and and and and

and cement our moat.

Jesse Sobelson: and most around the opportunity so we can continue to be more efficient and it's one of the areas I think over time where you're going to start to see an improving of margin as we can continue to streamline the operations of VDR we do expect again over time the margins got to increase.

Ryan Steelberg: So that that hopefully answers the question on VDR. And if you do mind, can you answer ask the second part of your question again, please? Great question. So I think, I think we've achieved some of them already, which means we're not just limited to facilitating VDR revenues against data assets that are already under contract, right, meaning with our historical DMH and AI ware based, you know, media companies, we've already now facilitated deals against new data sets. So Veritone has established a level of credibility and trust on both sides of the equation, both the sell side, meaning our representation of the content IP owners, such as the news outlets and the broadcasters, etc.

Jesse Sobelson: So that hopefully answers the question on VDR. Can you answer the second part of your question again, please?

Speaker Change: Yeah, sure. I appreciate the detail there on the extension of an existing platform. I am very excited about the business model here, which is one of the things I wanted to highlight. The second case of this is just with VDR, what other milestones for success can we point to with this? Is it converting that backlog? Or is there an additional piece that we could look to?

Speaker Change: Great question. So I think I think we've achieved some of them already, which means we're not just limited to facilitating BDR revenues against data assets that are already under contract, right? Meaning with our historical DMH and AI were based media companies.

Speaker Change: We've already now facilitated deals against new data sets. So Veritone has established a level of credibility and trust on both sides of the equation, both the cell side, meaning our representation of the content IP owners, such as the news outlets and the broadcasters etc. But now we're also facilitating deals, I'll call them the buy side, so representing as both the service and technology partner for the hyperscalers and the model developers

Ryan Steelberg: But now we're also facilitating deals, I'll call them the buy side. So representing as both the service and technology partner for the hyperscalers and the model developers. And that second part was something that we did not foresee to happen as quickly as it has, but it puts us in a very strategic leverage position that we're really excited about. And if we don't, do we have the intimacy of the relationship with the buyers that if there are data sets that we need to go get, right, and fold or expand our current corpuses of data or get net new types of data sets out there, do we have the trust and do we have the ability to go procure those?

Michael Zemetra, Unknown Executive, Ryan Steelberg

and by side.

Speaker Change: In terms of trying to sell every piece of asset that we have under management, I don't think that's necessarily a goal. I think most importantly is, do we feel that we have either direct control and oversight of over the right audio and video assets today, which proves the supply to go realize those revenues?

Speaker Change: And if we don't, do we have the intimacy of the relationship with the buyers that if there are data sets that we need to go get, right and fold or expand our current corpses of data or get net new types of data sets out there? Do we have the trust and do we have the ability to go procure those?

Speaker Change: and I will state that we have done that already. So for example, we are already procuring

Speaker Change: I'll say some elements of security and public service data that is becoming an interesting asset class where we're seeing high demand for. So this is no longer just limited to meeting entertainment news and sports related content but we're also seeing, again, managed through Veritone VDR surveillance in other forms of unstructured datasets, that's in high demand as well, which is a great crossover to our public safety business as well.

Unknown Executive: So, this is no longer just limited to, you know, media and entertainment news and sports related content, but we're also seeing, again, managed through Veritone VDR surveillance and other forms of unstructured data sets. That's in high demand as well, which is a great crossover to our public safety business as well. Thank you very much. Thank you. It seems there are no further questions at this time. This concludes our question and answer session.

Thank you very much.

Speaker Change: It seems there are no further questions at this time. This concludes our question and answer session. I would like to now turn the call back over to your host, Ryan Steelberg for any closing remarks.

Ryan Steelberg: I would like to now turn the call back over to your host, Ryan Steelberg, for any closing remarks. Well, thank you, everybody, for joining today. I would say I'm somewhat disappointed that we had some slippage in timing of some of these deals. But I think what you're hearing through our voices in the Q&A, we're very, very bullish on VDR, and we're very bullish on public sector. These are going to deliver in a big way for us, and we're very, very excited about that. We are going to be participating in a few upcoming and very near-term financial conferences.

Ryan Steelberg: Well, thank you everybody for joining today. I would say I'm somewhat disappointed that we had some slippage and timing of some of these deals, but I think what you're hearing

Ryan Steelberg: These are going to deliver in a big way for us and we're very, very excited [inaudible]

Ryan Steelberg: about that. We are going to be participating in a few upcoming and very near term financial conferences. Hopefully many of you can listen in at their virtual or participate in person.

Ryan Steelberg: Hopefully, many of you can listen in if they're virtual or participate in person. Those conferences are going to be the Needham Conference, the Technology, Media, and Consumer Conference, which is actually a virtual conference starting tomorrow, and so you can get more information on our investor site or on Needham's website about that conference. Next week, we're going to be participating in person at the J.P. Morgan, their annual Global Technology, Media, and Communications Conference in Boston on May 14th and the 15th. Again, encourage everybody to participate if they're in the respective area. And then finally, the Lattenberg Thalmann Innovation Expo 25, which is on May 21st in New York City, and I'll be there in person presenting.

Ryan Steelberg: Those conferences are going to be the Needham conference, the Technology Media and Consumer Comments, which is actually virtual conference starting tomorrow, and so you can get more information on our investor site or on Needham's website about that conference.

Ryan Steelberg: Next week, we're going to be participating in person at the JP Morgan, their annual global technology, media, and communications conference in Boston on May 14th and the 15th. Again, encourage everybody to participate if they're in the respective area.

Unknown Executive: So look forward to speaking to everybody in person and going deeper into different areas. Thank you for your time, everybody, today. This conference has now concluded. Thank you for attending today's presentation. You may now disconnect. Have a pleasant day. The host has ended this call. Goodbye.

Thank you very much, everybody today.

Speaker Change: This conference has now concluded. Thank you for intending today's presentation. You may now disconnect. Have a pleasant day.

Ryan Steelberg: The host has ended this call.