Veritone, Inc.

Good afternoon and welcome to the Veritone, Inc. fourth quarter and full year 2022 financial results conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your touch-tone phone. To withdraw from the question queue, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Brian Alger, SVP, Investor Relations and Capital Markets. Please go ahead.

Thank you and good afternoon. After the market closed today, Veritone issued a press release announcing results for the fourth quarter and fiscal year ended December 31st, 2022. The press release and other supplemental information is available in the investor section of Veritone's website. Joining us for today's call are both the live and digital twin versions of Veritone's CEO and President, Brian Stilberg, and CFO, Mike Smetra, who will provide prepared remarks and then open up the call for 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 the assumptions that may cause the actual results to differ materially from those stated. Certain of these risks and assumptions are discussed in Veritone's SEC filings, including its annual report on Form 10-K. These forward-looking statements are based on the assumptions as of today, March 2, 2023, and Veritone undertakes no obligation to revise or update them. During this call, the actual and forecasted financial measures we will be discussing include non-GAAP measures. Reconciliations of these measures to the corresponding GAAP measures are included in the press release we issued today. also when we reference pro forma measures such measures are presented on a combined pro forma basis treating panel logic as owned by veritone since january 1st 2021. finally i would like to remind everyone that not only has this call been produced with veritone generative ai but it is also being recorded and will be made available for replay via a link in the investor section of veritone's website at www.veritone.com now i'd like to turn the call over to the digital twin of our ceo and president ryan steelberg ryan

Thank you, Brian. Good afternoon. As Brian noted, I am Ryan's digital twin powered by Veritone Generative AI. We are happy to speak with you today and to provide an update regarding our fourth quarter and full year 2022 results. Given this is my first earnings call as CEO and president, I want to take a moment to discuss the initiatives we will be prioritizing. Although Vertone will always be driven by our software and technology innovation, we are doubling down on our focus in the markets where we have established clear differentiation and product market fit, resulting in disruptive efficiency and productivity gains for our customers. According to various third-party estimates, these markets already represent tens of billions of dollars in opportunity for our applications, solutions, and services. And through focus, we expect to capture greater share and revenue growth. Entering the third month in my new capacity, we have already implemented a number of operational and organizational changes designed to more tightly align our go-to-market and technology development with our customers' needs. Together with the executive leadership, I am pushing for operational excellence in everything we do. From hiring, to employee engagement, and of course, product development and sales, the entire leadership team is aligned behind a heightened attention to productivity and operational excellence. We are committed to driving Veritone to sustainable profitability through growth and innovation. While these changes are largely internal and not yet evident to those outside the company, we expect the end result will be improved customer engagement and consequently more profitable growth. For the fourth quarter and full year 2022, Veritone reported revenue of $44 million and $150 million, respectively. Q4 new bookings reached another record of $20 million, up 141% year-over-year. Our year-over-year customer count grew 21% to 642, and our gross revenue retention continued to be strong in the high 90th percentiles. As we will detail, our commercial businesses, powered by Veritone AIWare, continue to be our foundation and clear differentiation in the market, providing the bulk of the revenues and profits for the business. That said, our investments in government and regulated industry solutions outside of energy, which I will speak to in a moment, are showing signs of more material traction with Q4 2022 GRI bookings growing both sequentially and year over year. Against a challenging global market in 2022, we have taken a number of actions to set our course and refocus the company for sustainable and profitable growth. During the fourth quarter, Veritone took the decisive action of buying back $60 million of our convertible debt for a total cost of just over $39 million, substantially improving our balance sheet and signaling high confidence in our business and outlook towards profitability. Post this debt repurchase, we remain well capitalized with $184.4 million in total cash and cash equivalents as of December 31, 2022. We ended the year with unencumbered cash of $91 million, and our November 2026 total debt outstanding is now just $141 million. In January, we announced a number of strategic initiatives that are already in motion, including the addition of key management talent, organizational realignment, various cost reductions, and the divesting of the energy business. The net result of these actions is that Veritone is more capable, focused, and efficient in its operations. Our go-to-market and engagement with customers and partners is more tightly aligned as we drive value. With the recent increase in AI awareness from the emergence of Generative AI and ChatGPT, Veritone is driven to continue to innovate and deploy market-leading and trusted AI applications and solutions. In mid-February, we announced Veritone AIWare's native support of Generative AI models, detailing several use cases where Generative AI is being utilized today in production with our customers. While the advancements and significance of the new public large language models, or LLMs, cannot be overstated, for Veritone, conversational AI in these LLMs and domain-specific LLMs as a class are another set of powerful models for AIWare to utilize in delivering game-changing products and solutions to our customers. We believe generative AI improves the customer experience and, as a result, should accelerate adoption of AI solutions and services for both new and existing customers. We have consistently maintained that artificial intelligence, in good times and bad, will continue to thrive. Our 21% growth in customers and 141% Booking's growth are concrete evidence that that belief continues to be valid. Importantly, the customer and Booking's strength was balanced across all of our offerings, further diversifying our business. Now, let's get into more of the operational details of our fourth quarter results. Kicking off the business review with Commercial Enterprise, Fourth quarter 2022 commercial enterprise revenues of $42.8 million increased 18% sequentially, but were down 21% year over year. Excluding Amazon, Q4 2022 commercial enterprise software and services revenues were up more than 70% year over year, while managed services revenues were up 12%. On the full year, commercial software and services revenues grew over 54% without Amazon, and managed services revenues grew 17%. Stated more plainly are 21% year over year growth in customers and otherwise growth in commercial revenues was strong as we continue to minimize the concentration risk of one customer. Our recent deals with the masters candle media fox stats perform and odyssey are all examples of our ability to expand and diversify in this dynamic operating environment. By growing our customer base and continuing to deliver superior products and services, Veritone will grow stronger and less susceptible to the actions of a single customer or even a single end market. Moving on to government and regulated industries, or GRI. GRI revenues were relatively flat at $1.2 million in Q4 and $3.8 million on the full year. That said, booking strength, broad customer engagement, and new product and market initiatives indicate that our investments in GRIN markets are gaining traction at an accelerating pace. At the state and local level, we continue to sign law enforcement agencies near daily. Moreover, our suite of offerings is driving increased product penetration with virtually no churn. Last quarter, we closed a three-year, seven-figure SAS contract to provide services to a statewide agency, the California Highway Patrol, and since signing, the contract has already been upsized. in the fourth quarter we introduced redaction as a service which is not only improving our revenue opportunities but it is also accelerating the sales cycle with numerous agencies that are understaffed and already overwhelmed with content In the fourth quarter, we also announced the general availability of Veritone Tracker, a unique person of interest detection and tracking solution that does not require biometric face identification. It is already attracting interest across our entire government customer base, including federal, state, and local agencies, as well as some of our commercial customers. Coming into 2023, a primary focus is on growing the business with existing customers and diversifying with new customers in the markets that we have established clear product market fit and productivity gains for our customers. Before handing the call over to Mike to go through the financials in more detail, I want to address the difficult decision to divest our energy group. While the potential of the energy market continues to be attractive and growing, our energy business has underperformed. Our decision demonstrates that we are focused on markets with stronger product market fit and traction. Those of you who have followed Veritone for a while know that the company's name is derived from Latin, meaning truth in a signal. As we have all witnessed over the past several months, there is a lot of noise around AI. Veritone provides applications, solutions and services to our customers that eliminate the noise and simply improve their processes and outcomes at significant margins to Veritone. Today we are clearly an established leader in delivering AI-enabled results to more than 600 commercial customers. With strong customer growth and retention, we expect to extend that lead not only in our commercial markets, but also with our targeted government and regulated clients as well. The people we have attracted and the technology we continue to develop are the foundational elements for Veritone to capture and dominate our targeted markets. Now, I would like to hand the call off to Mike Zimetra, our CFO, to go through the financial results and guidance. Take it away, Mike.