Veritone, Inc.

Good day and welcome to the Veritone, Inc. Second Quarter 2024 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 telephone keypad. To withdraw your questions, please press Start and Choose. Please note, this event is being recorded. I would now like to turn the conference over to Stefan Norbom, Investor Relations. Please go ahead.

Thank you and good afternoon. After market closed today, Maritone issued a press release announcing results for the second quarter ended June 30, 2024. The press release and other supplemental information are available in the Investor section of Maritone's website. Joining us for today's call are Veritone's Chairman, Chief Executive Officer, Ryan Steelberg, and Chief Financial Officer, Mike Zometra, who will provide prepared remarks and then open the call up 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 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, 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 Steeleberg.

Thank you, Stephan, and thank you, everyone, for joining us. We are excited to speak with you today and provide an update on our second quarter 2024 operations, financial performance, and strategic progress. Mike Zimetro will cover our quarterly performance and financials in more detail, but I wanted to start by providing a broader company update and perspective on our current market environment and opportunity. The demand for AI-based applications, workflows, and solutions has never been higher, and Veritone is both a catalyst for this demand as well as a direct beneficiary. Veritone has been developing and delivering production-grade AI applications and solutions at scale for several years now, now serving over 3,000 customers. And we are just getting started. As of this earnings call, Veritone boasts its largest AI software pipeline ever, with a material portion of such already contracted and launching in trials and initial phases. This momentum is highlighted by strong demand and activations in the public sector, spanning both state and local law enforcement, as well as FedSiv and FedDOD, which I will detail for you more later. Not to be overlooked, in media and entertainment, Veritone also boasts a record pipeline, and I'm excited to announce that Veritone recently secured its largest revenue contract to date, a multi-year technology and services contract with the NCAA. Again, I will speak later to our media and entertainment services in more detail. Veritone's accelerating velocity is not limited or credited solely to our direct selling efforts, but also includes a robust and expanding partnership and reseller network. This is highlighted by our expanded partnership with AWS, which we announced pre-market today. Under our new strategic collaboration agreement with AWS, Veritone and AWS will drive AI and cloud innovation across media, entertainment, sports, talent acquisition, and the public sectors. We also continue to make great strides in the restructuring and strategic initiatives we announced earlier this year. And we made further material progress optimizing our operating structure, resulting in a non-gap net loss improvement of 47% in the quarter year over year. While realizing these fiscal improvements, we continued sharpening and accelerating our product and go-to-market focus while concurrently achieving significant milestones in delivering the latest AI-powered solutions to our enterprise customers. While we continue to optimize our cost structure with incremental OPEX saving opportunities, we are strategically shifting our focus to organic growth and servicing our accelerating business pipeline. We've completed our announced restructuring efforts in Q2, and we expect to realize the full benefits of these efforts in the second half of 2024. Additionally, as we have reported on previous calls, we remain on a near-term pathway to improve our balance sheet and liquidity position. In Q1, we launched a formal banking process to divest one of our non-software-based assets. We currently have multiple qualified bidders and hope to close this transaction in the second half of 2024. If consummated, this transaction will generate significant cash proceeds that will be used to repay a portion of our term debt and fund future operations. While there can be no assurance that a transaction from this process will ultimately be completed, this is an active strategic objective for our company. One of the core drivers of the increase in demand and robust pipeline that we are seeing is due to the strength of our software. Over the past several quarters, Veritone has made significant enhancements to our proprietary AI platform, AIWare. With AIWare, businesses can swiftly develop and deploy production-grade, AI-driven solutions using ready-to-use models, workflows, and data adapters. Leveraging our 10 years of experience building and deploying AI solutions at scale, Veritone is able to support enterprise customers to quickly operationalize AI solutions designed to solve large-scale, real-world business challenges. AIWare supports a wide array of AI models, including offerings from major cloud providers, best-of-breed point solutions, proprietary Veritone models, and of course, the latest large language models on the market. This extensive catalog of plug-and-play AI models enables seamless and interchangeable AI processing, an increasingly valuable feature as model development advances at unprecedented speeds. Recent enhancements to the AIWare platform include significant advancements in search, analytics, and data ingestion. Our sophisticated search capabilities now incorporate cutting-edge vector databases and embedded technologies, enabling natural language and semantic search. In analytics, we provide robust insights across cognition, monetization, and processing via self-service dashboards and offer custom analytics for clients needing specific reporting on their ontology and identifiers. Additionally, we have significantly upgraded our enterprise-grade data ingestion capabilities, ensuring that they are more reliable, observable, and scalable, essential features across our business units. These advancements enable Veritone to drive transformative results and foster innovation within our business units and AI solutions group. All of these enhancements in aggregate have led to positive customer feedback and a meaningful increase in demand as evidenced by our largest AI software pipeline to date. When we launched AIWare several years ago, it was a groundbreaking way to improve the workflows of enterprise customers. As I mentioned in previous discussions, we are still in the early stages of AI adoption and have only begun to explore its full potential for large-scale deployment. Today, the global race for AI is about more than just applications, their features, and accuracy. It's also about how well these technologies can work in complex and distributed environments. As AI continues to change how organizations operate, businesses must move away from traditional software models. Leaders now need to rethink and redesign their large workflows and data systems to adapt to the fast-changing AI landscape. Despite challenges like uncertain ROI, isolated datasets, data privacy issues, and accessibility concerns, our AIWare platform and comprehensive AIWare product suite stand out. Our platform is flexible and can work with various models and deployment methods. Additionally, our advancements in large language models and retrieval augmented generation make us a strong partner for hardware providers and cloud service giants in the AI ecosystem across our three main market areas. Now, let me turn to providing some further details on quarterly progress across our core market verticals. First, Veritone Hire. Veritone Hire maintains its strong performance in the second quarter, underpinned by its strategic go-to-market strategy, efficiency gains resulting from the reorganization of its product and engineering teams, and focus on securing multi-year subscription deals. I'm excited to report that we have completed the integration of Broadbean this quarter. All employee back office and system integration work has been completed, including the migration of the legacy Broadbean platforms, CRM and financial systems this quarter, moving us one step closer to providing one seamless recruiter experience that enhances operational efficiency, automation and data-driven hiring decisions for employers. We've successfully unified the branding under Veritone Hire, incorporating the best of the Broadbean and PandaLogic brands, and our team is hard at work on the next generation Veritone Hire platform and application suite. Notably, from a Synergy perspective, we signed significant new enterprise programmatic advertising and job distribution software deals in the quarter, including global brands such as Savita, Whole Foods, Best Buy, and Harrods. We also completed the beta launch of our programmatic advertising solution and programmatic publisher network in Australia, and we're thrilled to become the first programmatic solutions provider with a presence there. Our performance in programmatic campaigns continues to deliver leading KPIs in the market, executing an average 40% plus improvement versus client target cost per acquisition this quarter. Despite industry headwinds, Baritone Hire remains well-positioned to capitalize on the upward trend of programmatic spend in recruitment, driving market expansion as companies seek to maximize returns from their recruiting efforts. We look forward to keeping up this momentum with additional wins and pilot conversions in the second half of 2024. Shifting focus to media and entertainment. Across AI software and intelligence services, within media and entertainment, we completed landmark partnerships and agreements with notable brands and generated significant customer renewals in the second quarter. Headlining Veritone's media and entertainment vertical, I am pleased to announce that Veritone has been named the NCAA's Global Archive of Record and Exclusive Licensing Partner. This multi-year agreement represents Veritone's largest contract to date and extends our synergistic and dynamic partnership with the NCAA for years to come. The agreement will leverage Veritone's advanced AI-powered digital media hub platform to enhance the storage, management, and distribution of NCAA's extensive championship media assets. Veritone will also provide name, image, and likeness clearances services for current and former student athletes on behalf of the NCAA. In addition to the NCAA win, we executed over 23 new deals in the second quarter. Among the highlights, we secured multiple deals with prominent Australian media and sports organizations, including a Tennis Australia multi-year partnership. Tennis Australia, which owns and produces the Australian Open, now secures three of the four Tennis Grand Slam tournaments as Veritone customers. Veritone has also recently secured a major new Australian broadcaster customer, resulting in Veritone now servicing three of the top four major Australian media companies. Other notable renewals and deal expansions include agreements with NBCUniversal, CNBC, Bloomberg, CNN, Big Ten Network, and A&E Networks, underscoring our commitment to client satisfaction and the stickiness of our solutions. Veritone's AI-assisted content licensing business continues to thrive and demonstrate significant partner growth supported by a diverse base of content customers and buyers. Alongside securing these licensing arrangements, Veritone played a pivotal role in facilitating near real-time packaged and distributed content for companies such as Pac-12, Core TV, State Farm, Disney, ESPN, Nike, Rolex, and HBO. Our advertising agency, Veritone, revenues increasing substantially year-over-year at over 25%. We also saw significant growth from key customers such as Mint Mobile, LinkedIn, DraftKings, and Quince. By expanding our customers' media investments and adding prominent new customers, including market-leading Chewy, we've capitalized on the revitalized advertising market. Streaming and YouTube media placements led the way, with revenues surging 55% and 29%, respectively, driving improved margins. This momentum is expected to continue fueled by a robust pipeline of new advertisers in various stages of contracting and discussions, positioning us for continued success in the quarters to come. Finally, I would like to comment on Veritone's public sector business, both in terms of strategy and progress. we are very bullish about our public sector growth prospects. To provide some context around this, we came to market in state and local law enforcement with our initial AI solutions in 2019. And despite the impact of COVID, today we service several hundred state and local law enforcement agencies and are growing quickly. On the federal side, despite coming to market just recently in 2020, we already are contracting with Fed Civ and Fed DoD agencies. This is great progress relative to the timing of government contracting and procurement, especially for a new AI software player in the space. This progress is a direct result of our market-leading AI products and solutions built on AIWare. Our go-to-market strategy is clear, applicable, and extensible across state and local law enforcement and judicial agencies, Fed CIV, Fed DoD, and international governments. We can move and provision customers quickly. In Q1 of this year, we introduced Veritone Intelligent Digital Evidence Management System, or IDEMS, and the reception so far has greatly exceeded our expectations. Our IDEMS application suite, powered by Aauer, positions Veritone as a strong competitor in a fast-growing digital evidence management market, allowing Veritone to become a leading system of record and set of intelligent tools for aggregating, analyzing, correlating, and sharing all investigation-related materials and disparate datasets. IDEMS uses AI to speed up and more accurately assess the evidence, including robust and comprehensive video and audio analytics. According to future data stats, the addressable market for Baritone's public sector business is large and growing quickly, pacing to surpass $50 billion by 2030. Reports estimate that the global digital evidence management market size alone is poised to exceed $12 billion by 2028. We are in a great position. Expanding on the successes achieved in previous quarters, we have made significant strides in developing and deploying AI solutions that meet the evolving needs of our public sector and government customers. Our suite of solutions continue to gain significant traction in the global public sector market, with new customer acquisitions and increased pipeline activity now totaling more than $100 million. This traction includes the addition of 17 new public sector customers to the portfolio this quarter. We've deepened our distribution channels and market reach to more rapidly seize opportunities through strategic technical partnerships, the addition of new resellers, and platform listings such as our AWS Advanced Tier Services Partner Status and the public listing of our IDEMS applications on the AWS Marketplace. Together with AWS, we're uniquely positioned to support public sector customers, such as law enforcement agencies, to overcome adoption challenges while also harnessing the transformative potential of AI and cloud computing through accelerating streamlined cloud-native enterprise AI and generative AI solutions at scale. This is simply one example of our dedication to unlocking AI at scale and enabling our customers to achieve not only sustained success, but a competitive advantage in their respective industries as well. Relating to the second quarter, I want to share some operational highlights to give further context to our progress. In Q2, we completed the second phase of AI-based video redaction service for one of the largest police agencies in the country with a total contract value of greater than $500,000. And just recently, we were able to enter the third phase of this agreement. In addition, two Department of Justice components used the $15 million blank purchase agreement, as previously announced, to procure baritone services. Also, our ongoing pilot with the Bureau of Prisons is making significant headway, and we officially received security approval to move this project forward. Confirming our vision to expand our offerings globally, we also signed a landmark paid trial with a European country's national policing agency for both our tracker and illuminate offerings, which are part of the IDEMS suite. On the U.S. front, just this week, we were awarded a contract with a major DOD agency, the Defense Logistics Agency, for our Veritone's IDEMS applications for electronic storage of information, discovery, and disclosure for forensic video. This is a one-year contract with four annual renewals. If realized and serviced to term, this will represent one of our largest contracts to date with a DOD agency. The quality of our pipeline has never been stronger, and we have a promising number of opportunities that are in the latest stages of the funnel, including an expanded U.S. Senate contract. In addition to realizing great traction and growth in our Fed business, state and local law enforcement agencies are increasingly turning to our AI-powered tools to streamline their audio and video processing. By automating these time-consuming manual tasks, hundreds of agencies are now significantly reducing operational cost, optimizing resource allocation, and expediting the fulfillment of Freedom of Information Act requests, or FOIA. This allows law enforcement to focus on their core missions of protecting and serving their communities. Our realized achievements in 2024 demonstrate our dedication to serving as a trusted partner in the public sector and the immense opportunity ahead to broaden our footprint across countries, cities, agencies, and municipalities globally. Finally, as it relates to our public sector and government business, I am thrilled to have Gus Hunt, the former longstanding CTO of the Central Intelligence Agency, join Veritone as a strategic advisor. His security and AI insights, domain expertise, and passion for Veritone's AI for Good mission will generate great yield for Veritone, our shareholders, and our customers. We have made significant strides in building a strong foundation throughout the first half of 2024. Our team's dedication has been instrumental in driving this progress. We remain committed to financial discipline and implementing operational improvements to optimize Veritone's operating model for long-term success. I am confident that our enhanced strategic focus will enable us to better serve our customers and strengthen our leadership position in delivering cutting-edge AI solutions to our customers and partners at scale. Now, I would like to hand a call off to Mike Symmetra, our CFO, who will go through our financial results and guidance in more detail. Mike?