Veritone, Inc.

Good day, and welcome to the Veritone Incorporated Second Quarter 2023 Financial Results 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. Please note, this event is being recorded. I would now like to turn the conference over to Stephan Norbaum of Investor Relations. Please go ahead.

Thank you and good afternoon. After the market closed today, Veritone issued a press release announcing results for the second quarter ended June 30th, 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 Veritone CEO and President Ryan Steelberg and CFO Mike Zimetra, 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 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. 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, August 8, 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 broad bean as owned by Veritone during fiscal year 2022. 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 our CEO and President, Ryan Stielberg. Thank you, Stefan. Good afternoon.

Buenas tardes. Guten Abend. Sausage. As Stefan noted, this call is being powered by our AI-driven and multi-award-winning offering, Veritone Voice. I'm pleased to share our second quarter earnings results, which demonstrate Veritone's progress against the strategic pillars we presented earlier this year, despite a challenging macroeconomic backdrop. Before turning to results, I want to discuss the attractive opportunity that Veritone is uniquely positioned to capitalize on through disrupting target vertical markets. Over the last year, artificial intelligence has transitioned from a niche area of R&D to a catalyst for transformation expected to boost global productivity and GDP by over 14% in 2030, representing a contribution of approximately $16 trillion, according to PwC. The global technology landscape has experienced immense innovation over the past decades, and consequently, we have seen a rapid increase in data creation foundational to consumers and businesses. With unstructured data comprising the overwhelming majority of data created globally, there is a clear demand for solutions that extract value and actionable insights from this sea of unmanaged data, as well as act upon it. While structured data can show you what's happening, the programmatic use of unstructured data allows you to realize the full potential of this asset. Data is the lifeblood of predictive, end-to-end automation and commercialized artificial intelligence. Through Veritone's enterprise AI software and solutions, we are enabling companies to integrate and orchestrate their disparate data sources and workflows to drive operational efficiencies and productivity gains. A consequence of enterprises centralizing vast amounts of structured and unstructured data is the opportunity to infuse existing applications or build new applications with AI-based generative models. Veritone's purpose-built applications powered by AIWare have been enabling disruptive efficiency and productivity in the market verticals we believe are most attractive. Talent acquisition, media and entertainment, sports, and government and regulated industries. These purpose-built applications provide a best-in-class ecosystem of AI models as well as an intelligent data lake and workflow tools that helps companies acquire, analyze, and act on unstructured data sources for greater business efficiency and insight. With Veritone's AIWare operating system, developers are able to rapidly build, scale, and operationalize AI-enabled applications. The AI paradigm has shifted, and it's important to remember we are still in the early innings. While companies continue to ramp adoption, the underlying AI models themselves will not be differentiated. Rather, differentiation will come from the application of the AI in large language models with unique data on a job-specific basis. For almost a decade, Veritone has demonstrated its ability to weave together data in a vast array of cognitive and generative AI models for industry-leading customers. These capabilities allow Veritone to double down on attractive market verticals and expand our proprietary data moats. I can confidently state that Veritone, through AIWare and our unique data and workflow capabilities, is strategically positioned to capitalize on the opportunities that lie ahead. To understand my initial strategy as CEO, I want to reiterate Veritone's pillars of focused execution, operational excellence, and fiscal responsibility. The entire team remains committed to strengthening our foundation while streamlining operations to accelerate our mission of achieving sustainable and profitable growth. I'm excited to share with you the progress on Veritone's transformation initiatives and unpack operational updates which enforce management's focus on driving long-term shareholder value. In line with our strategy to pursue existing market verticals where Veritone has clear differentiation, resulting in efficiency gains for customers, Veritone's acquisition of Broadbean this quarter marks an inflection in growth trajectory for years to come, accelerating our leadership in the global talent acquisition and HR technology market. which is projected to exceed a valuation of $196 billion by 2028. Within this expanding opportunity, Veritone is amplifying recruitment and positioned to benefit from generative AI in HR, which alone will grow from $413 million in 2022 to over $1.6 billion in 2032. The combination of PandaLogic with Broadbean or Veritone HR solutions will leverage AIWare to orchestrate cognitive, predictive, and generative AI workflows across the talent acquisition ecosystem. Notably, Broadbean provides us access to nearly 3,000 customers, direct integration with over 100 ATS providers, millions of applicants and resumes and billions of valuable data points globally. This transaction is immediately accretive to Veritone and, on a standalone basis, is projected to generate SaaS and GAAP revenues of over $35 million on an annualized basis, of which about $30 million is subscription-based with attractive margins. Veritone HR Solutions will be the leading provider capable of offering universal talent acquisition and AI-driven data solutions to its global set of customers, leading to significant growth opportunities beginning in 2024. In the near term, the platform synergies accelerate growth of programmatic adoption with diversified customers across the globe, drive efficiencies of scale, and enhance recruitment insights. As we look ahead, this solution will allow customers to evaluate the return on hiring investments in real time, from job acquisitions and recruitment to down-the-funnel attribution, improving the quality of applicants. Moreover, the recurring subscription-based revenue streams generated by this acquisition aligns with our long-term strategy for growth, earning stability, and strong customer retention. There are a number of additional strategic initiatives currently in flight, and we look forward to providing an update in the back half of the year. As Veritone pursues operational excellence across all aspects of our business, achieving profitable growth through reshaping the organization to more efficiently support the needs of our customers remains a priority. Our integration of Broadbean is just the beginning. Veritone has been strategically evaluating opportunities to deepen our exposure to the industries we believe are the most attractive. As mentioned previously, we are committed to diversifying our customer and revenue base, and we expect that for each quarter moving forward, earnings will become more stable and less susceptible to the actions of a single customer or end market. Notably, we are seeing meaningful traction with near 100% year-over-year growth for 2023 from new and existing government and regulated industry solutions, or GRI, customers that want to benefit from Veritone's industry-leading applications as evidenced by cloud-based Veritone Redact which accelerates evidence redaction workflows. During the second quarter, Veritone deployed a series of product enhancements for its award-winning AIWare-powered Veritone Redact and Contact applications for its customers in the legal and law enforcement sectors, delivering greater customization capabilities to enable users to operate with a higher overall degree of efficiency, effectiveness, and seamlessness. Hundreds of law enforcement agencies are actively using Veritone's AI-powered technologies and applications to improve the way they respond to crime, collect and analyze data, while maintaining safety within their respective communities. One customer that I would like to highlight is the Beverly Hills Police Department, led by its Data Focus Chief, Mark Stainbrook. Mark is developing a state-of-the-art real-time watch center that is ingesting and orchestrating thousands of data sets, including real-time drone video, officer body and dash cam video, as well as CCTV footage from across the city. His goal is to protect his citizens and real property, and this real-time visibility is providing the data and information to not only react quickly to crime, but potentially to prevent it. This infrastructure is already producing results, but Mark and his team understand that to keep up and process all this data, AI must be at the center of his stack. We are excited to be working with Chief Stainbrook, who is setting a standard for modern law enforcement agencies. Not only are our customers fans of our products and solutions, but the industry is also taking note. Veritone's generative AI platform won two prestigious awards at the NAB Show 2023, including the NAB Product of the Year in the AI and Machine Learning category and the IABM Broadcast and Media Award in the Monetization category. Winning these two awards is a testament to the power of Veritone's generative AI platform and validates our efforts to create solutions that deliver meaningful results for our customers. 2023 is the fourth year Veritone has won the NAB Product of the Year. A recent example of how we have incorporated generative AI into an established product line is Digital Media Hub, or DMH. Used by hundreds of media and entertainment customers today, DMH provides the ability to use AI to ingest, index, and automate your metadata creation process. allowing users to easily find content via metadata tags, such as object, facial, or logo recognition. Synthetic Data Enhancement uses generative AI natively within DMH to fill in those gaps by using existing asset metadata to create and apply new metadata in order to improve the cataloging and accessibility of that asset. This is a productivity enhancer and provides users the ability to save countless working hours in data management. Warner Brothers and other prominent media companies are already using these generative AI features within DMH. We believe these examples underpin Veritone's ability to deliver powerful, orchestrated cognitive and generative solutions across a variety of industries that include sports, advertising and entertainment, law enforcement, and talent acquisition. And most recently, in the media, entertainment, and sports vertical, I wanted to spotlight our recent partnership with Major League Baseball to distribute short-form video content through SportX, which is powered by AIWare and supported through DMH. Veritone's sports and media licensing offering, SportX, is a premier intelligent marketplace for sports federations and content producers, which enables media buyers direct access to sports video from around the globe, maximizing additional revenue streams and increasing visibility for rights holders. turning to fiscal responsibility today veritone's cost saving initiatives have translated into 17 million dollars in annualized savings year to date we have already exceeded our annualized savings target for 2023 which highlights management's commitment to right-sizing our cost structure With the recent integration of Broadbean, we will continue to evaluate opportunities to unlock further operational efficiencies. On June 30th, we officially divested our energy group in line with our strategy to divert resources to Veritone's target market verticals. Furthermore, we have secured an AR credit line of up to $30 million, providing additional liquidity on our balance sheet. The net result of these actions is that Veritone is more capable, focused, and efficient in its operations, and our go-to-market strategy is more tightly aligned as we drive value and progress towards profitability. Before we turn to second quarter operating results, I'd like to reemphasize the product demand and broad-based growth opportunities for Veritone as artificial intelligence continues to gain traction. Since 2014, Veritone's AI mission has been to augment the human workforce by transforming concepts into industry-leading applications and solutions. We remain confident in Veritone's long-term strategy, which will propel us into our next phase of growth. Now, I would like to hand the call off to Mike Zimetra, our CFO, to go through the financial results and guidance.