Veritone, Inc.

Excuse me, this is a conference operator. Please continue to hold. The call will begin shortly. Thank you. Thank you. Thank you. Good day and welcome to the Veritone first quarter 2023 financial results conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing star then zero on your telephone keypad. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Stefan Norbaum. Please go ahead.

Thank you and good afternoon. After the market closed today, Veritone issued a press release announcing results for the first quarter ended March 31st, 2023. The press release and other supplemental information are available on 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 Ryan Stilberg and CFO Mike Simetra, who will provide prepared remarks and then open up the call for a live question and answer session. Please note that certain information discussed on the call today, including answers to your questions, may 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. 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 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. 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 would like to turn the call over to the digital twin of our CEO and President, Ryan Steelberg. Thank you, Stefan.

Good afternoon. As Stefan noted, I am Ryan's digital twin, powered by Veritone Generative AI. We are excited to speak with you today and to provide an update on our first quarter 2023 operations and financial performance. It is truly an exciting and dynamic time for AI development and enterprise adoption. Veritone, through its AIWare platform and applications, continues to lead at the forefront of these efforts, supporting hundreds of market-leading and disruptive companies as they transform and extend their businesses, products, and services through the scalable and impactful incorporation and deployment of AI technologies and solutions. The recent acknowledgement of these efforts earlier this month, winning the prestigious NAB Product of the Year award for Veritone's generative AI solutions, is a testament to our continued focus and passion around building and marketing the most advanced and dynamic artificial intelligence products and services in the markets we serve. Before turning to the financial results, I'd like to discuss the strategic pillars laid out earlier this year, which I believe will unlock the true growth potential of our industry-leading applications and enterprise AI platform, AIWare. First is focused execution. Veritone continues to pursue existing markets where we have established clear differentiation and product market fit, resulting in disruptive efficiency and productivity gains delivered to our customers. Integration of our various applications enabled through AIWare offers orchestrated cognitive and generative AI workflows and solutions transforming the verticals we know best. Talent acquisition, media and entertainment, sports, and government-regulated industries. These are all verticals where we are seeing increased AI adoption with large runways for tremendous growth. Second, operational excellence. During 2023, Veritone has already implemented a number of organizational initiatives to reshape the company and more efficiently support the needs of our customers. Together, with the executive leadership team, we are pursuing the highest level of excellence in everything we do, from hiring to employee engagement and, of course, product development and sales. The entire Veritone team is doing their part. Lastly, fiscal responsibility. As we drive Veritone towards profitable growth in the upcoming year, I'd like to reiterate the initiatives we announced earlier this year, which include a target of $12 to $15 million of annualized cost savings. I am pleased to report that Veritone remains on track to achieve the target range, reinforcing management's commitment to right-size our cost structure and optimize the balance sheet. Mike Zometra will cover these efforts in more detail during his remarks. To this end, we have made significant progress on the energy divestiture. I am pleased to share that as of today, Veritone is no longer incurring any expenses from the energy group and the divestiture transaction will close by the end of second quarter 2023. The net result of these actions is that Veritone is more capable, focused and efficient in its operations. Our go-to-market strategy and engagement with customers and partners is more tightly aligned as we drive value. Turning now to the financial results. For the first quarter of 2023, Veritone reported total revenue of $30 million while delivering new bookings of $15 million, up 57% year over year. Further, we ended the quarter with a record number of nearly 670 total software customers, marking a 19% increase. Gross revenue retention was strong, well above the 90th percentile. Importantly, the customer and booking strength was balanced across all of our offerings, further diversifying our business. Our commercial enterprise business, powered by Veritone AIWare, remains the foundation for our differentiated operating model, providing the majority of the revenues and profits for our company. Our investments in government and regulated industry solutions, or GRI, are also gaining traction as demonstrated by its material growth. The government and regulated sectors are quickly starting to understand how Veritone's applications extract actionable intelligence from disparate data silos to help drive increased operational efficiency and agency yield. Our strong customer growth and bookings metrics are a direct result from our continued investments in our market-leading AIWare platform and applications. This includes our focus and efforts on generative AI, which are in production and being leveraged by our customers today. The recent emergence of generative artificial intelligence and large language models are topics of daily conversation and prognostication across the entire country. Experts believe we are on the brink of rapid acceleration in task automation. A new study from Stanford and MIT has found that AI tools can make entry-level employees up to 14% more productive. In turn, other sources, like Bloomberg, posit that AI may help narrow the gap between highly and lower skilled workers. These studies validate the Veritone strategy. AI will be a productivity accelerator and, ultimately, create opportunities for the broader workforce. Veritone's mission is to augment the human workforce by transforming concepts into industry-leading applications and services. We have been here for almost a decade working with many of the most well-known enterprises in the world. We are thrilled that AI is becoming part of the fabric of daily conversation, which enforces the importance of Veritone's mission to democratize artificial intelligence across all industries. Embedding and implementing generative AI tools across the application stack represents an attractive opportunity that Veritone is uniquely positioned to capitalize on. We have led the industry in bringing scalable AI-powered solutions and applications to market and that remains true today. Across talent acquisition, sports, and law enforcement, generative AI has been integrated into Veritone's applications and our customers are realizing the untapped potential of their assets. We are excited to announce that Veritone will be hosting a virtual series called AI in Action to showcase AIWare and our generative AI capabilities to demonstrate how Veritone customers are using these powerful solutions today. We will be sharing additional details later this week. I hope you all can join us. In regards to Veritone's hiring solutions, amid the current dynamic environment. As a leader in programmatic job advertising, Veritone cost-effectively manages thousands of job listings daily across hundreds of publishers to track results quickly while supporting DEI hiring goals. A study by Gartner demonstrated that highly diverse workforces can improve team performance by up to 30%. Likewise, McKinsey and Company found that the most diverse companies outperform less diverse peers by 36% in profitability. Veritone positions its partners with deeper insights to recruit top quality candidates efficiently and at scale. Now, let's get into more of the operational details of our first quarter results. Kicking off the business review with Commercial Enterprise, First quarter 2023 commercial enterprise revenues of $28.9 million declined 14% year over year. Excluding Amazon, Q1 2023 commercial enterprise software and services revenues were up 16% year over year, while managed services revenues were slightly down less than 1%. During Q1 2023, Amazon represented 18% of total revenue, down significantly from 31% in the comparable period a year ago. Each quarter, Veritone's revenue base becomes increasingly diversified and less susceptible to the actions of a single customer or end market. During the quarter, Veritone announced a comprehensive multi-year partnership extension with Augusta National Golf Club, the home of the iconic Masters Tournament. We have served as their official licensing partner and digital asset management platform since 2009, which speaks volumes to Veritone's industry-leading retention rates. We've shown very confidently that when we land customers, we rarely lose them. Our AI-powered content licensing platform continued to grow during the quarter. Today, we store over five petabytes of actionable content on our platform, partnering with CBS, Fox News, Bloomberg, the masters and institutions in professional and college sports, among others. This digital content is discoverable and licensable through the Veritone platform, providing a competitive edge as we begin to broaden the reach of our generative AI solutions and capabilities. Whether it is ESPN SportsCenter, Augusta Footage, or Archive Footage with the new Michael Jordan and Nike film Air, our content licensing platform continues to flourish with topical content trends. Moving on to Government and Regulated Industries, or GRI. Total GRI revenues were $1.4 million, representing a 79% increase year over year. We continue to see numerous opportunities on the state and local government side that reinforce our product fit. While revenues in GRI still account for less than 5% of our total revenues, booking strength and the growing diversity of customers continue to give us confidence in Veritone's strategy with state and local law enforcement, or LEAN markets. Focused execution, operational excellence, and fiscal responsibility are the three components of Veritone's report card that we have executed against during the year so far. Veritone is on a path to profitability and plans to achieve this growth through organic performance and opportunistic strategy. We look forward to updating you on the progress we are making to unlock long-term value for shareholders in the quarters to come. Now, I would like to hand the call off to Mike Zimetra, our CFO, to go through the financial results and guidance.