Veritone, Inc.

Hello and welcome to the Veritone, Inc. fourth quarter 2023 financial results conference call and webcast. 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 telephone keypad, and to withdraw from the question queue, please press star then two. As a reminder, this conference is being recorded. I would now like to hand the call over to Stefan Norbom, Investor Relations. 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 31, 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's Chairman and Chief Executive Officer, Ryan Steelberg, and Chief Financial Officer, Mike Symmetra, who will provide prepared remarks and then open the call out 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 actual results to differ materially from 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, March 12, 2024, 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 the call today is being recorded and will be made available for replay via link on the investor section of Veritone's website at www.veritone.com. Now I would like to turn the call over to our chairman and chief executive officer, Ryan Stilberg.

Thank you, Stephan. And thank you, everyone, for joining us today. I'm pleased with our financial performance in the fourth quarter while also achieving significant progress against the strategic initiatives set in motion last year. We took significant steps to bolster our fundamentals, and now we are targeting to achieve profitability as early as Q4 2024 and for the entirety of 2025. It is nice to get back to focusing on long-term, sustainable growth. Today, I would like to share more details about the material steps we've taken to right-size our operating structure while also prioritizing the alignment of our resources towards growth and differentiation. I'm encouraged by the strong foundation we have built and the swiftness of our team's execution over the past year. As I noted on our last earnings call, we see 2024 as a critical transition and inflection year for us as we drive the business towards profitability while aligning our investments and technical resources to accelerate our AI software and services revenue growth. We are in the midst of an unprecedented wave of demand for artificial intelligence, strengthening Veritone's value proposition. Key decision makers and leaders across governments and commercial industries are recognizing the necessity of scaled adoption of AI-powered solutions. Baritone's decade-long AI expertise and software and service capabilities in this field gives us a strong competitive advantage in delivering world-class AI applications and solutions. We're seeing an explosion of demand for Baritone's AI applications, AIware platform and solution capabilities with the largest qualified pipeline on record. And we are continuing to accelerate our innovation and development pipeline to adapt and extend our AI capabilities to serve our markets. Although we've achieved solid results and growth across our core business segments, which I will detail later in the call, we recognize that there's ample opportunity for further improvement. In line with our plans to position Veritone's operating model for long-term agility and serve true customer demand, we have been focused on the disciplined execution of the cost-saving initiatives we laid out over a year ago and signaled on our past two earnings calls. The restructuring will be ongoing during the first quarter of 2024, and we expect to realize the full benefits of these efforts beginning in the second quarter of 2024. We anticipate these combined actions to result in material improvements to our 2024 non-GAAP net loss as compared to 2023, netting over a 15% reduction in overall operating expense, which Mike will provide further detail on later. Again, I want to reiterate that we are projecting profitability as early as fourth quarter of 2024 and in the full year fiscal 2025. We will continue to focus on developing and delivering world-class AI applications and solutions powered by our AIWare platform. In conjunction with this focus, our realignment allocates more of our capital and talent to the sectors and customers where we see sustainable and long-term growth. In essence, these organizational adjustments are integral components of our overreaching strategy aimed at channeling investments more efficiently into areas of sustainable growth and technological leadership within the AI industry. Now, let me turn to our market verticals. First, Veritone's hiring platform. 2023 was marked by our strategic acquisition of BroadBeam in Q2, which further solidified our position in the talent acquisition industry. Our Veritone hire platform continued to demonstrate our ability to deliver intelligent talent acquisition and down funnel analytics solutions for clients in the marketplace to enable better cost savings, time to hire KPIs, and superior advertising performance in Q4. Collectively, our hire vertical achieved quarter-over-quarter revenue growth in Q4, and broadband revenues grew year-over-year against the backdrop of a challenging job advertising market, with key global leaders reporting double-digit year-over-year reductions in revenue. Fairtone Hire demonstrated resilience, capitalizing on its strong commercial strategy, and focus on multi-year subscription engagements, leading ATS integrations, and dynamic pricing management. Broadbean's ability to expand into controlling not just the job distribution software budget, but the advertising budget as well for EMEA clients led its recognition from both Indeed, strategic agency partner, and LinkedIn, golden partner status, as a key media partner in EMEA in 2024. Beginning in the second half of 2024, we expect to see material growth on a global basis. We remain committed to diversifying our customer and revenue base, and the notable increase in ARR associated with our subscription-based customers this year has contributed to greater stability in our revenues and earnings, reducing vulnerability to the actions of a single customer or market segment. Key wins and renewals in Q4 included global brands such as KPMG, Walmart, Staples, S3, FedEx, Moderna, Renault, and others. Further, with the expanded customer base and growth, we've eliminated the risk of our customer concentration. As Mike will discuss later, we are forecasting Amazon's contribution will be less than 5% of our consolidated revenue. We made substantial progress onboarding Broadbean this year, building onto Broadbean's year-over-year growth with a successful integration of sales and marketing organizations in Q3 and accelerated IT systems integration in Q4. We anticipate finalizing the full integration in the first half of 2024 with the expectation of beginning to realize further synergies in the later half of the year. Shifting focus to media and entertainment. Fairtone continues to lead the industry in advancing AI innovation in the media entertainment sector. Our comprehensive range of services spans content and advertising analytics, asset management, licensing, and bespoke cognitive and generative AI solutions. In Q4, we saw an increased demand for our tools among content organizations who looked to Veritone to equip them and their teams with the facilitation of swift and efficient management, creation, monetization, and innovation surrounding their proprietary data and content assets. Our content licensing business delivered exceptional results and demonstrated significant partner growth across core customers. In Q4, our team successfully implemented expanded CBS Evening News content ingestions which includes the delivery of all news segments in near real time across the baritone marketplace, providing an unmatched user experience for content buyers. Specific to our partnership, CBS News licensing revenues grew 43% year-over-year internationally. 2023 new customer signings included World Poker Tour, Major League Baseball, Orchard Eclipse, and the Women's Tennis Association. Furthermore, Veritone's AI-assisted licensing contributed into 12 projects that received 32 nominations for Emmys, Golden Globes, and Oscars, and efficiently provided content into key blockbusters, such as the Amazon Series Prime and the Apple TV Series 11. Despite a difficult advertising backdrop in 2023, our agency group diversified our media portfolio and seized new opportunities to expand customer advertising campaigns. This strategy helped to mitigate the concentration in some legacy media channels, such as radio, and fueled material growth in streaming media and dynamic ad inserted podcasting. Our digital efforts grew 43% year over year and have become a new pivotal element of our media portfolio. 58% of Veritone One new clients signed under MSA for fiscal year 2023, with over 55% of new clients' billings for Veritone One occurring in Q4, setting the stage for strong performance in the quarters to come. As of March 1st, our booked media placements for 2024 represents our largest bookings to date at this point in any other year. We therefore seen not only a rebound for the media business, but material growth prospects for the year. Across software products and services within meeting entertainment, our customer retention and engagement metrics remained resilient, highlighting our critical role with existing customers. We closed 40 deals totaling $6.34 million in annual contract value or $6.87 million in total contract value in the fourth quarter and secured 139 deals with $9.91 million in annual contract value or $10.74 million in total contract value for fiscal year 2023. Additionally, we signed several key new business agreements with prominent media organizations such as Fox Corporation, CAA, and ABC Television. alongside notable Q4 deals with Sesame Street, Guinness World Records, and the Football Association. The quarter also saw substantial upsells with Sinclair, All3 Media, Dentsu, and Urban One, in addition to contract renewals with major partners, including the Tennis Channel, Hearst Media, U.S. Swimming, Augusta National, and Sony Pitchers. As media-rich organizations seek innovative avenues for growth in an area which content consumption has soared to unprecedented levels, I'm excited to spotlight our recently announced technology partnership with Dilette, a leading technology provider for media-rich organizations. Our partnership enables media and entertainment customers to maximize the return on investment of their content assets to generate new revenue streams and automatically deliver content to partners while remaining in control of their content catalog. Amidst a challenging 2023 backdrop and lingering uncertainty driven by the recent SAG-AFTRA and WGA strikes, Veritone Media & Entertainment continued to sign significant customers that will provide meaningful long-term growth. Heading further into 2024, we're well-positioned to capitalize on the rebounding ad market and improving outlook in the media and entertainment space overall. Finally, I would like to comment on Veritone's public sector business. 2023 was a pivotal year in the growth of our public sector business, and our investments are showing signs of material traction with yearly and quarterly revenue growth of 55% and 29%, respectively. Our focus and passion for providing AI-powered solutions to government agencies and legal organizations resulted in the addition of 87 new public sector customers in fiscal year 2023, as well as the significant expansion of our pipeline, including opportunities globally in the United States, Canada, UK, and EU. Veritone was awarded a $15 million sole contractor blanket purchase agreement with the Department of Justice, of which we are already fulfilling task orders against. We also launched a new managed services offering, Veritone Redact, to help agencies cost-effectively reduce their redaction backlog for release of body camera video to the public, and executed a significant digital media hub and professional services project for a legislative branch agency. Along with our other market verticals, public sector customers continue to be drawn to our proven track record of AI partner model success, expertise in handling vast datasets, and experience leading ethical AI practices. New partner activations and growing our partner ecosystem with technical integration partners, resellers, and distributors represented over 30% of our public sector revenue in both Q4 and fiscal year 2023. Looking back on Q4 and the fiscal year 2023, we have definitive proof points of the progress we have made in building and scaling our public sector vertical. the significant momentum made possible by the accomplishments I've outlined earlier, and our renewed focus has accumulated in our formal announcement and launch of Veritone's AI-powered Intelligence Digital Evidence Management System, or IDEMS, for public safety and judicial organizations. Veritone's IDEMS includes our award-winning applications Investigate, Redact, Illuminate, Tracker, and Identify. Built on our AIWare platform, we are able to leverage over 450 AI models, including a multitude of generative AI and large language models, bringing the power of AI and cloud computing to state, local, and federal agencies. Veritone IDEMS helps these agencies expand what is humanly possible and extract more valuable information and insights to solve investigations faster and more cost-effectively, and make the digital evidence shareable across law enforcement, prosecution, defense, and the public at large. Veritone IDEMS, initially with our investigate application, is now officially listed in part of the AWS marketplace. We have a strong pipeline for IDEMS while already booking business and expect meaningful revenue contribution in 2024. More specifically, we have commenced the initial phase of two separate custom implementations of the IDEM solution with U.S. federal government agencies, the DOJ and the DOD, to materially reduce the time and cost associated with the organization, review, and analysis of video and audio content and evidence. Public sector agencies face the daunting task of effectively managing the influx of evidence and other digital data from disparate sources such as social media feeds, citizen-owned phones and cameras, body cameras, vehicle and drone cameras, and CCTV footage. Looking ahead to 2024 and beyond, I am confident in our ability to serve as a critical partner to the public sector by harnessing AI to improve efficiency, cut cost, and increase the effectiveness of investigations and the judicial process. As we close out financial year 2023, I am proud of the disciplined actions we took to align our resources, talent, and investments to not only meet the current demands of our customers and partners, but to secure our growth and lead in delivering advanced, efficient AI solutions in the years to come. Our AIWare-powered solutions designed to seamlessly adapt and evolve alongside the development of AI technology remain the cornerstone of our operations. I firmly believe that our renewed sense of focus, together with our expertise in software, professional services, and digital media, will allow us to come out of this transition stronger, more competitive, and better positioned to capitalize on the opportunities presented by this dynamic AI market. Now, I would like to hand the call off to Mike Cermetra, our CFO, to go through the financial results and guidance. Mike?