Veritone, Inc.

Hello everyone and welcome to the Veritone third quarter 2021 financial results call. My name is Daisy and I will be coordinating today's call. You will have the opportunity to register a question at the end of the presentation. If you would like to register a question, please press star followed by one on your telephone keypad. I'll now hand over to your host, Brian Alger from Veritone to begin. Brian, please go ahead.

Good afternoon and welcome to Veritone's third quarter of 2021 conference call. I'm Brian Alger, Senior Vice President, Investor Relations and Capital Markets. After the market closed today, Veritone issued a press release announcing the results for the third quarter ended September 30th, 2021. The press release and other supplemental information is available at the investor section of our website. Joining me for today's call are Veritone's Chairman and CEO, Chad Stilberg, President, Brian Stilberg, and CFO, Mike Zimetra. Following their remarks, we'll open up the call for questions. Please note that certain information discussed on the call today will include forward-looking statements about future events and Veritone's business strategy and future financial and operating performance, including its expected net revenues and non-GAAP net income and loss for the fourth quarter and full year of 2021, respectively. These forward-looking statements are subject to risks, uncertainties, and assumptions that may cause the actual results to differ materially from those stated or implied by those statements. 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, November 9, 2021, and Veritone undertakes no obligation to revise or update them. During this call, the actual and forecasted financial measures we will be discussing, other than revenue, will be presented on a non-GAAP basis, unless noted otherwise. Reconciliations of these measures to the corresponding GAAP measures are included in the press release we issued today. These non-GAAP measures include a breakout of our results between core operations and corporates. Core operations consist of our consolidated software products and services, including recently acquired PandaLogic, and managed services that include our content licensing and advertising services, and their supporting operations, including direct cost of sales, as well as operating expenses for sales, marketing, and product development, and certain general and administrative costs dedicated to these operations. Corporate consists of general and administrative functions such as executive, finance, legal, people operations, fixed overhead expenses, including facilities and information technology expenses, other income or expenses and taxes, and other expenses that support the entire company, including public company driven costs. As we will discuss on this call, we have realigned our organization to focus on two distinct customer groups, commercial enterprise and government and regulated industries. Commercial enterprise, which today consists of customers in the commercial sector, including our media and entertainment customers, advertising customers, content licensing customers, and customers through PentaLogic that are not from government or regulated industries. Government and regulated industries, also known as GRI, which today consists of customers in the government and regulated industry sectors, including our state, local, and federal government, legal, compliance, and energy customers. Across the commercial enterprise and government and regulated industries businesses, we separate revenue into two categories, software products and services, and managed services. Software products and services consist of the revenues generated from our AIWare platform and through Panelogic software product solutions, any related support and maintenance services, and any related professional services associated with the deployment and or implementation of such solutions. Managed services consist of revenues generated from our advertising agency and related services and our content licensing services. Finally, I would like to remind everyone that this call is being recorded. and will be made available for replay via a link in the investor section of the company's website at www.veritone.com. Now, I'd like to turn the call over to our chairman and CEO, Chad Stilberg.

Chad. Thank you, Brian. And thanks everyone for joining us on today's call. Looks like we have many new investors that have joined us for the first time. Welcome. I'm delighted to report that Veritone's trend of raising the bar continues. Our top line revenue grew 44% year on year, making Q3 our sixth consecutive record quarter. Moreover, we are raising the midpoint of our full year 2021 revenue guidance to $104.3 million, which represents over 80% growth versus 2020. We remain steadfast in our mission to create a better world through the power of artificial intelligence, one that is dynamic, transparent, innovative, and safe. powered by our proven AI platform, AIWare, the first AI operating system. With our ever-expanding AI solutions and rich partner ecosystem, our customers are solving their current and future challenges with confidence, knowing that Veritone is there to help streamline processes through intelligent automation, enhance decision support, and optimize outcomes. We are very excited to have closed the recent acquisition and integration with PandaLogic, The impact to the overall business is transformative. By entering this new market, corporate intelligence, we increased our customer penetration into the Fortune 100 and broadened our international footprint. Including PandoLogic, our combined headcount is approaching 500, growing over 50% since the beginning of 2021, and more importantly, increasing our engineering and product capabilities. We also augmented our top line with the addition of PandoLogic's pro forma revenues of over 50 million in 2021 and operating margins greater than 50%. In addition to strengthening our financial position, PandoLogic perfectly fits our culture and aligns with our strategic objectives. We are aggressively integrating AIWare into PandoLogic's applications and are already seeing the fruits of our labor. As a company, Veritone's go-to-market strategy continues to mature. With the addition of PandoLogic and the technological advances in AIWare, we are now capturing more enterprise opportunities across an increasing number of businesses. With a mature technology platform and multiple proven applications, we are aligning our business to focus on the customer and more broadly deliver the full potential of AI. As Ryan and Mike will detail later in the call, In Q3, we realigned our organization to focus on two distinct markets, each with a unique customer base and go-to-market strategy, commercial enterprise and government and regulated industries. With that, I would like to now hand the call over to Ryan, our president and co-founder, to discuss our operational achievements in greater detail. Over to you, Ryan.

Thank you, Chad, and good afternoon, everyone. We again achieved record results in Q3, Our performance for the quarter and year to date reflects a maturing platform and business strategy. Accordingly, we have recast our revenue breakdown to more accurately reflect the business we are managing today. We sell a combination of products and managed services into multiple end markets in commercial enterprise and government and regulated industries. Our recasting of the revenue aligns our reporting with the customers we serve and the way we go to market. Veritone has and always will lead with our software and technology. However, as the AIWare platform and our suite of products matures, the way that we engage with our customers has also matured. In the early days, we talked about our land and expand customer strategy. Our goal was to get a foothold and then use our technology to compel customers to expand how much of one product they use across their company. Today, we have a much more comprehensive suite of products and managed services So we are having much more comprehensive and strategic conversations with our customers. Increasingly, we are engaging in whole enterprise conversations. So now what started with a single application or use case has evolved to conversations and contracts that leverage the full potential of AIWare. Whether it is with legacy broadcast customers or newly engaged public safety agency customers, Veritone is now leveraging the power of our platform, ecosystem of partners, and broad suite of applications. Commercial Enterprise currently accounts for the vast majority of Veritone's revenues, yet we believe that GRI will grow in scope and size, albeit with different deal sizes and sales cycles. Over the course of the quarter, we achieved a number of notable milestones with our Commercial Enterprise customers. We renewed all material Q3 contracts, supporting strong customer retention, which remains well above 90%. We expanded our international footprint by signing Bauer Media in the UK, and MediaWorks in New Zealand, as well as by extending our licensing agreement with CBS News globally. Regarding our new voice-as-a-service offering, Marvel.ai, we won Mythical as a customer and integrated with PandaLogic's Wade & Wendy's conversational AI framework. I'm excited to state that Marvel.ai has just been awarded the NAB Product of the Year. Referencing our recent relationship with Steve Cohen-backed Recur, to create non-fungible tokens, or NFTs, we have also unveiled an expanded opportunity with our longtime customer, the Pac-12 Conference, to make their content available as NFTs. This agreement highlights the extensibility of the AIWare platform and the strength of our content and media ecosystem, and we are replicating it with other digital influencers, content owners, brands, and networks. In addition, strength with existing customers and a more focused enterprise sales approach led to expanding contracts with media companies such as Odyssey, iHeart, Viacom, and others in the third quarter. Bringing the PandoIQ solution into the equation is expected to drive further revenue growth from our top-tier list of customers. PandoIQ, an AI-enabled recruitment and talent acquisition platform, is solving one of today's most notable challenges, job recruitment and hiring. We have all been reading and hearing about the labor challenges facing transportation, hospitality, and logistics companies, as well as countless restaurants and small businesses across the US and more broadly around the world. PandoIQ uses AI to match job opportunities with the right job seekers. Many of the largest trucking companies in the US are our clients, as are a number of large quick service restaurant chains, not to mention the world's largest e-commerce and logistics company, Amazon. Every day, PandoIQ illustrates how AI is being used for solving these acute and systemic labor challenges, having delivered millions of applicants globally. We have also had strong success with our managed services. Average growth billings per client grew 18% year on year, well ahead of industry peers. Increasingly, we are leveraging the ecosystem of media partners through the unique technology and scale that Beartone and AIWare brings to bear. Bringing brands, broadcasters, and content owners together, Veritone is unlocking new revenue streams for our clients, with NFTs and Marvel.ai being prominent proof points. Moreover, the strength that we have established in the US is extending internationally with new content licensing and brand opportunities leveraging the AIWare technology. Shifting focus to GRI. All year, but particularly this past quarter, we have made considerable progress with our customers in federal and state governments, public safety agencies, legal, and energy. On the state and local level, a significant surge in the number of agencies are licensing our products, and increasingly, it is our breadth of offerings made available through AIWare that is closing the deals for us. With Redact, Illuminate, Identify, and most recently, Contact, our public safety customers are realizing the value of the platform, its applications, and the activation of a shared intelligent data lake. Earlier today, we co-hosted a transparency panel with Microsoft that included police chiefs from Massachusetts, Georgia, Illinois, Colorado, and California. Baritone solutions are enabling the Department of Justice and law enforcement agencies all across the country to more accurately and quickly communicate and provide transparency into the interactions that they have with their communities that they serve. I encourage everyone to view this important webinar now hosted on our website. Our success with the DOJ is driving accelerating adoption of AIWare solutions by our legal customers. As the legal system gathers and processes an ever increasing amount of unstructured information, Veritone's AIWare platform and the Illuminate and Redact products are providing all constituents the necessary scale and cognition required to sift through the mountains of evidence being created. Increasingly, Veritone's managed service providers partners, including Epic, ProServe, and Exact Data Discovery, are pre-buying licenses on behalf of their legal customers. Speaking of the DOJ, we cannot overstate the significance of our Authorization to Operate, or ATO. Extending beyond our initial award with the 94 EOUSA U.S. Attorney's Offices, we are now FedRAMP authorized across all 59 agencies in the DOJ. We are the first platform provider to have such authorization in multiple cloud environments, AWS and Azure in our case. Already, we have had active engagements with multiple divisions of the DOJ under this newly awarded ATO, including the FBI, Department of Homeland Security, Bureau of Prisons, the DEA, and others. Already, through our channel partners, we have seen Veritone's scope of work dramatically expand, while at the same time accelerating the adoption of AI across multiple branches of the federal government. In addition to our work with the DOJ, we are actively engaged with other departments of both the US and other foreign governments that are leveraging the unique scale and flexibility of AIWare. On the energy front, we have made significant progress with our lead customer, We have delivered and implemented our forecaster and controller software, as well as have implemented and delivered our battery optimization software for this initial solar array, which represents less than 5% of our customer's solar production. As such, this large grid operator is able to accurately predict the energy production of its solar array, control the distribution of that production, and finally guarantee resilience utilizing our battery optimization solutions. This effectively removes this customer's needs to run expensive diesel backup reserve systems, which with its current solar footprint costs over $20 million a year. The success and performance of our solutions on the initial solar array has led our customer to seek an expanded engagement of a multi-year enterprise-wide license. Similar to our government customers, we have found regulated industries to have elongated and often unpredictable sales cycles. The trade off, of course, is that these businesses are incredibly sticky and broad in scope. We remain very committed to our energy focus and technology development in this area. Based on the current engagements and pipeline of projects, we are more confident than ever that GRI will become a significant revenue contributor, driving our future growth. As we look to finish 2021, we see Veritone positioned stronger than ever. As a recognized leader in the AI machine learning ecosystem, Veritone is poised to further accelerate its growth and extend AI into all industries across the globe. And now I will hand it over to Mike Symmetra, our CFO. Mike?

Thank you, Ryan. I am excited to report our financial progress, including our recent addition of PandoLogic in late Q3 2021. For the sixth consecutive quarter, we posted record results, and our KPIs, along with top and bottom line, beat our Q3 2021 guidance. During my prepared remarks, I will discuss our Q3 2021 organizational realignment and resulting changes to our financial reporting and KPI drivers, our year-over-year performance on a GAAP and pro forma basis, the PandaLogic impact, and annual 2021 guidance, which we raised again, highlighting revenue scaling and exceeding $100 million for the first time, and equally as important, Q4 2021 being our first projected quarter with positive non-GAAP net income. First, I'll discuss our organizational realignment and new reporting format and metrics. We are presenting revenue in two distinct customer groups, each with a unique focus and go-to-market strategy. One, commercial enterprise, and two, government and regulated industries, or GRI. Additionally, we show revenue in two categories, one, software product and services, and two managed services. We are also now reporting new customer-driven metrics around our consolidated software, product, and services, and on a pro forma basis, as if we owned Panelogic since January 1st, 2020. This includes a quarterly breakdown of total ending customers, average annual revenue per customer, or AAR, and gross retention, which is our breadth proxy for customer churn. Now to Q3 2021 performance. On a GAAP basis, revenue was a record $22.7 million, up $6.9 million, or 44%, from Q3 of 2020, driven largely by software products and services, which increased $5.7 million, or 169%, to a record $9 million in revenue, and secondarily from managed services, which increased $1.3 million, or 10%. The increase in software products and services was driven largely from the acquisition of PandaLogic and organic growth from legacy Veritone software products and services revenue. We closed the PandaLogic transaction on September 14th, 2021, which contributed approximately $4 million during Q3, while organic software products and services increased over 40% year over year. On a pro forma basis, Q3 revenue was $35.5 million, increasing $9 million or 34% from Q3 2020 revenue of $26.5 million, driving this pro forma increase with software products and services, which increased $7.7 million or 54% to $21.9 million. The year-on-year improvement was driven by software customer growth of 34% and an outstanding 90% growth in average annual revenue, or AAR, to 208,000 in Q3 2021. Driving this increase in pro forma AAR was Amazon, which began to significantly ramp services with PandaLogic in Q4 2020. Overall, our revenue pipeline has never been stronger. Our partner-driven channel strategy continues to deliver results, with new bookings of 3.3 million in Q3 2021, an increase of over 60% from pro forma Q3 2020. With Marvel, international expansion, the cross-selling of PandoLogic, the recent addition of the DOJ ATO announcement, and significant progress on our energy initiatives, our future pipeline across all customer groups has never been stronger, particularly in GRI, where we expect to start realizing more significant growth in the near and long term. In Q3, we reported solid pro forma KPI results. New bookings were 3.3 million, up 61% from pro forma Q3 2020. Pro forma gross retention exceeded 90%, pro forma customers up 34%, and pro forma software ARR eclipsing 200,000. In managed services, advertising gross billings per client increased to 615,000, up 18% over Q3 2020. Q3 2021 advertising revenue continued to outpace prior year, however, more approximating industry growth than the robust strength shown in the first half of 2021. Q3 2021 gross profit reached 16.8 million, improving 5.6 million, or 50%, from Q3 of 2020. Overall, Q3 gross margins increased to 74%, compared with 71% in Q3 of 2020, and up sequentially from 72.8% in Q2 2021. Software products and services gross margins benefited from the two-week contribution from PandaLogic, which has historical gross margins in excess of 90%. As we continue to scale over the next 12 to 24 months, including having PandaLogic in our results for the entire period, we expect consolidated gross margins to exceed 80% as early as Q4 2021. Assuming we had PandaLogic for the entire quarter, our Q3 pro forma gross profit increased to $29.2 million, an increase of 7.5 million or 35% versus Q3 2020 pro forma results. Overall, pro forma gross margins were flat year over year at 82%. Q3 non-GAAP net loss was a record 2.3 million, a 2 million or 46% improvement from Q3 of 2020, driven by increased core operations net income offset by relatively flat corporate year over year. In Q3, operations posted a record non-GAAP net income of $1.9 million, compared with $0.4 million in Q3 2020. The $1.5 million in year-over-year improvement was principally driven by the acquisition of PandaLogic, which drove improvements in gross profit and operating margin, offset by greater investments in Q3 2021 across engineering, product, sales, and marketing to drive current and future year plan results. On a pro forma basis, we have generated non-GAAP net income of $2.6 million in Q3 2021 versus $3.2 million in Q3 2020. Driving the year-over-year change was improved revenue and gross profit offset by increased investments in OPEX, namely sales and engineering, organically and at PandaLogic to fund growth. Turning to our balance sheet. At September 30th, 2021, we held cash and restricted cash of $73.5 million compared to $115.7 million at December 31, 2020. The decrease reflects $47.6 million in investing activities, including the PandoLogic acquisition, coupled with net cash used by operations of $3.5 million, offset by net cash provided by financing activities of $9 million. Net cash outflows from operating activities of $3.5 million consists of net positive changes in our working capital of $10.2 million principally associated with the growth and timing of payments in our managed services and software products and services, which was offset by our $9.9 million non-GAAP net loss and other cash uses. As a reminder, approximately $57 million of our reported cash is essentially held for payment to third parties from our managed services, and our working capital will continue to fluctuate depending on the timing and due dates of payments in any given period. Our unencumbered cash at the end of Q3 2021 was over $15 million, which is sufficient to operate the existing business for the foreseeable future as the PandaLogic acquisition will generate substantial cash flows from operations beginning in Q4 2021. We ended September 30th, 2021 with 34.9 million shares outstanding. Turning to PandaLogic. As a reminder, we closed the acquisition on September 14th, 2021. Terms of the deal were $150 million acquisition price, payable with $50 million in cash and $35 million in stock, or 1.7 million shares upon closing, and the remaining $65 million payable in cash and stock based upon PandaLogic meeting financial targets in 2021 and 2022. Immediately accretive to Veritone, PandaLogic has a pro forma run rate in 2021 to exceed $50 million of revenue, with greater than 90% gross margin and over 50% operating margin. Please note, PandaLogic does have seasonality in its business, with Q3 and Q4 having greater concentrations of revenue versus Q1 and Q2, and consistent with hiring patterns of its customers, most notably its largest customer, Amazon. Turning to financial guidance. Given our continued high visibility and confidence in our revenue pipeline, including a full quarter of PandaLogic, we expect Q4 revenue to be between 43.8 and 45.3 million, representing a 165% increase year-over-year at the midpoint and sequentially up 96% from our strongest quarter ever in Q3 2021. And we are excited to guide for quarterly non-GAAP in-income for the first time and expect Q4 to be between 8.5 million and 10 million, representing over 13 million improvement year over year from Q4 2020. We plan to continue to invest responsibly in resources in key areas to help accelerate our growth throughout and heading into 2022. With this, we are forecasting our core operations to be significantly more profitable in Q4 2021 and our corporate overhead non-GAAP net loss to be relatively consistent with Q3 2021. For full year 2021, including the impact of PandoLogic, We expect consolidated revenue to be between 103 and 105.5 million, representing a year-over-year increase of over 80% at the midpoint, and expect our combined software products and services revenue growth to be over 250% year-over-year. We expect the full-year non-GAAP net loss to be between 1.5 million and break-even, representing over 96% improvement year-over-year at the midpoint. Before I close, I'd like to invite you to our Virtual Analyst Day and Tech Demo on Friday, November 19th. Similar to our May event, but abbreviated to 1.5 hours, we will showcase new technology, the depth of our team, and customer use cases and testimonials. Also, we will be speaking at the following investor conferences. The Stiefel Midwest One-on-One Conference this Thursday, November 11th. The Needham Conference on November 17th. the Roth Conference on November 18th, the UBS Conference December 6th through the 8th, and finally the Roth Deer Valley Conference December 8th through the 10th. That concludes my prepared remarks. Operator, we would now like to open up the call for questions.

Thank you very much. If anyone would like to register a question, please press star followed by 1 on your telephone keypad. If you would like to withdraw your question, please press star followed by 2. When preparing to ask your question, please ensure you are unmuted locally. Our first question comes from Darren Aftahi from Roth Capital Partners. Darren, your line is open. Please go ahead.

Hi, guys. Thanks for taking my questions, and congrats on the nice quarter and the good outlook. Two, if I may, just with the labor market, what's going on? I'm just kind of curious, since you've bought and closed Pando, How have things kind of changed and what kind of do you see as the prospects for kind of cross-selling Pando into your legacy Veritone base? And then second question is kind of big picture. As you look into 22, you've got a lot of things that are fairly material catalyst. I'm just kind of curious if you can kind of speak to which ones you think will gain the most kind of traction or fruit. amongst energy, federal government, PandaLogic, and then Marvel AI. Thanks.

Hi, Darren. Thank you for your questions. Yeah, Ryan, why don't you take the first one and then part of the second, and then I'll follow up. Okay, great.

You know, I think the labor market, obviously, you know, despite it being a very challenging time for many corporations, it obviously puts Veritone ahead. with Pando in a very strategic position to really grow that business. And while we're doing that, and obviously to our benefit, we are going to be significantly in benefiting those respective clients of ours. So obviously we're seeing increased demand in increased revenue, hence from that increased demand through Pando IQ. And we do expect that to continue for the foreseeable future. Just, again, we think the labor market is going to be tight And it's not just for, I'll say, short-term, quick-service type of restaurants and logistics type of employees. But we do see this systemic problem going to persist well through 2022 and beyond. So it bodes very well for what we're doing. In terms of cross-selling, I'm really excited to state that this has been a very well-thought-out and kind of strategically onboarded opportunity. Yes, Pandalogic is still subject to a contracted earn-out, as we've disclosed before, but we've already done some great work in terms of co-marketing, cross-selling, and doing that mapping. So we are very optimistic that we will start to see penetration of PandoIQ technology enabled with AIWare, sold and deployed across the breadth of our customer base. The good news is everybody is in need of hiring quality talent, and I think we're not only looking forward to that in 2022, but we're active upon that now. In terms of other catalysts, I'll let Chad have his own remarks, but I'll speak to just the demand that we're seeing really in M&E, which has been exciting. We're going to talk a lot about, as I did on the prepared remarks earlier today, about government legal and compliance. But media and entertainment and our sort of commitment to that industry as we sort of sprint here to now this new metaverse ecosystem is You know, we're ahead of the curve. You know, we have lots of major customers. We've already sort of prepared their content through, you know, obviously indexing and hosting on AIWare. And we obviously have some early proof points, such as, you know, the fairly good-sized deals for NFTs that we've already facilitated through AIWare, as well as Marvel.ai, which we're extremely bullish about. And so, yeah, I think Marvel.ai will be a material contributor to revenue in 2022. And I think we'll have a very wide distribution of service deployment of Marvel that spans from audiobooks to commercial productions to theatrical productions and localization, both domestically and internationally. Chad, do you want to add anything on the energy or GLC front?

Yeah, I mean, going back to the first question, Darren, I think the COVID effect that we all kind of have witnessed in terms of accelerating the adoption of technology in the enterprise in terms of global communication and collaboration over the Internet which obviously has manifested itself in things like Zoom and other technologies. I think you're seeing in the hiring markets as well, right? You have this COVID effect that's driving mass challenges in the global supply chain and hiring fronts. And our AI solutions and services are directly tailoring and solving that problem in a very unique way. And I believe that will become a systemic part of our society and the enterprise businesses, even well past this current crunch that we're seeing. which leaves us in a really nice position to transform the corporate intelligence market, starting with talent acquisition, but expanding with obviously our AIWare platform. And then looking forward into 2022, beyond just the obvious that Ryan kind of mentioned in the two categories, you know, GRI, we've been investing and continue to invest heavily in that sector and are seeing just spectacular progress and laying that foundation both in the energy side as well as in in the government sector. So stay tuned. One of these days, you're going to see that market really explode for us and become a massive part of our business. 2022, we're crossing our fingers that that'll be the year.

Thank you.

Our next question comes from Pat Woolravens from JMP Securities.

Pat, your line is open. Please go ahead.

Oh, great. Thank you. And congratulations, you guys. Nice to see the business cranking on so many different fronts. I think what I would love to hear is just sort of the steps you've taken in terms of integrating Pando and the steps you still have to take. So that would be sort of part one. And then part two, you definitely piqued my curiosity with the comment and the press release about Pando.

metaverse and the opportunity that presents so if one of you wants to expand a little bit on that um love to hear that yep perfect mike sorry chad ryan why don't you take the pando integration first what we've done so far and then kind of what's left on the roadmap going forward and then um we can both tag team on the metaverse yeah oh no and i'll address it with mike as well there's a i'll say a technical side of integration so

I think like everything, we wanted to first make sure that we had good institutional controls of data and systems. And so I think check the box there. Mike and our team have done a good job in our integration team about making sure we just have full access and visibility to financials, metrics, numbers, and I'll say all system processes. So that's sort of been completed. That would be an ongoing effort as we look to consolidate on a common HR-based platform and other systems over time. but i would say we're definitely well ahead of schedule more importantly they're part of our weekly management meetings already um so we do already just in some of this is important it's anecdotal but for example they are part of our weekly all staff kind of worldwide calls now we're actively co-engaged both on the marketing side and sales front as i mentioned earlier um and that specifically means account mapping right really looking at how we can accelerate not just their existing pipeline, but how do we obviously accelerate taking PandoIQ and their valuable services to our customer base. Some ongoing things obviously are, as we've talked a little bit, it's not in hindering any of our projected growth, but again, we do have to take into account the earn out. And obviously the actions and sort of processes that we put in place need to obviously make sure they align with providing Pando's ability to have an ability to achieve those are announced the good news is we're almost perfectly aligned um so again whether it's you know the fruits of our labors or their labors to hit collective new logo accounts and numbers we both benefit so i would give it you know a very high marks internal score on how we've been doing so far in terms of integration and i expect that um to follow suit here in in the future on the meta mike is there anything else you want to add regarding integration on a technical basis

No, that was perfect. Okay. Ryan, I think it would be worth touching on the Wade and Wendy integration into Marvel AI and how that plays into the metaverse as well. Yep.

And I'd say one of our kind of new novel integrations, representations that we've done, even above just starting to do some, I'd say, low-level cognitive work through AIWare, is the integration of Marvel.AI with PandaLogic's Wade and Wendy conversational AI framework. And so we're really excited about that. And Wade and Wendy, which is a service offering of Panda IQ, provides a very powerful, very intelligent conversation AI chatbot type of environment and service for Panda when they're engaging through their customers' talent acquisition needs. We've added a very powerful, almost seamlessly hyper-realistic voice element to that. And that voice can be in different dialects, different languages, and so we can really add a human element and a continuity aspect to talent acquisitions and onboarding through an integration of Marvel.ai voices with Wade and Wendy. And I think that's a good tee-up of just one of the many things that I think, again, we are in a very good position to be a great technical provider and a technical partner to all of our media and entertainment customers and other organizations as they're evaluating not just the digital transformation world that I'd say we're dealing with yesterday, but looking forward in almost seamless means of looking into the metaverse. And just one simple example is imagine now just one of our big media partners like ESPN or CBS News having all of their content in effect ready for seamless integration with the metaverse, right? Or that content's being offline through, I'll say, more traditional means of distribution like OTT or linear television. But in a concrete example, I think I might have mentioned it to you actually a couple quarters ago. I'm sorry, a quarter ago was, for example, the CBS News footage of the March on Washington with Martin Luther King and the Civil Rights Movement and that whole experience being accessible with inside the game of Fortnite is one example. So I think we're in a great position, AIWare makes this all possible because we've already indexed and sort of packaged all the content ready for activation. Again, whether that's distribution, NFT production or not. So yeah, we're very excited about it.

Chad? Yeah, and I think, you know, the metaverse by definition is a lot bigger than the new meta company, aka Facebook. By definition, it's a multiverse that's going to be moving content and information both into the digital realm and then obviously the digital realm interfacing back with us in our physical selves. And I think AIWare is perfectly positioned with our Automate Studio and our ability to set up those pipelines for that digital transformation integration with the metaverse. So our APIs and heavy lifting that we've been doing over the years is really going to pay spades for us and our partners to capitalize on the metaverse in all ways. All right, great.

Thank you both for that perspective.

Thank you very much, Pat. Our next question comes from Brad Reback from Stifle. Brad, your line is open. Please go ahead.

Great. Thanks very much. Guys, just high level, I know you haven't spoken to 22 yet, but trying to get us all on the same page. Any thoughts on how we should think about revenue growth and the starting point there?

Yeah, I'll take this one. So what I can tell you, Brad, is I think you have to look at us on a pro forma basis. And pro forma year over year, if you take the midpoint of our guidance, we'll be growing just north of 30%. But what we've always said is we're going to be a plus 40%. grower as sort of our baseline target. So I think if you use that as a proxy for 2022, you're going to be in the ballpark, at least to start off the gate.

That's great. That's great. And then just one real sort of tactical question. What should we be using for the share account for 4Q given that you flipped over to profitability?

Yeah, that's a great question. So we've got 34.9 million shares outstanding. And there's roughly about 10 million shares of common stock equivalents that are outstanding. So that's what I would use on a fully diluted basis. That's great. Thanks very much, guys.

Yep.

Thanks, Brad.

Our next question is from Nick Mattiaci from Craig Hullum. Nick, your line is open. Please go ahead.

Hi, this is Nick on for Chad Bennett. Thanks for taking our questions. So I'm curious if you could speak about where AI where is traction commercial enterprises outside of the media and entertainment vertical. And then also, if you just give any color on how much the media entertainment vertical is of that AI where commercial business today, and where do you see opportunity outside of media and entertainment?

Ryan, why don't you take this one?

So, I mean, we've been kind of re-announcing our new alignment and sort of define it as commercial and government legal and compliance regulated industries. Today, media and entertainment still dominates and makes up the lion's share of commercial. But we do expect that to expand into really all different types of industries here quickly. You can kind of say that Pandalogic is kind of an interesting foyer where we're already doing the integration of AI with and through PandoIQ. So by default, we're kind of already in, you know, kind of a wide array of hospitality, quick service restaurants and others. And that's going to be a major focus of ours just because of obviously the scale and market leverage we have already with PandoIQ through PandoIQ, their service offering. But I expect us to be, you know, in really all industries, fintech, you know, from healthcare auto, and other areas. So I don't think we're limited today, candidly, post close of Pando, and we kind of see ourselves in really almost every vertical. But on a legacy basis, as you guys are aware, media and entertainment historically have dominated commercial, but I think that will kind of broaden itself out and be more diversified through 2022.

Got it. And I believe I saw that the founder of the company you guys acquired that I think eventually became the energy product left the company. I was just curious if this has any impact on the product roadmap for you guys' energy products. Thank you.

I don't think, yeah. I mean, are you talking about our own internal energy solution?

Correct.

Yeah. Now, Chad was the founder and chief architect of that product. I think you're referring to Dr. Wolf Cohn, who was a data scientist as part of that. So, no, we don't expect – and by the way, he's still actively engaged with the company on a consulting basis. So, we don't expect any disruption. But to be clear, I think Chad and our own engineering team sort of have led and will continue to lead that effort.

Got it. Thank you.

Thanks. Thank you. As a final reminder, everyone, if you would like to register a question, please press star followed by one on your telephone keypad now.

At this time, we have no further questions, so I'll hand back over to Chad for any closing remarks.

Thank you, operator, and thanks, everyone, for joining us on today's call. I'm very pleased with Veritone's performance this past quarter. We appreciate your time today and the opportunity to share the exciting progress we are making towards our mission of making the world better through artificial intelligence. Until next time, goodbye.

Thank you, everyone, for joining today's call. You may now disconnect your line and have a lovely day.