Veritone, Inc.

Good day, and thank you for waiting. Welcome to the Veritone, Inc. Third Quarter 2024 Financial Results Conference Call. Today, all participants will be in a listen-only mode. Should you need any assistance during today's call, please signal for a conference specialist by pressing the star key followed by zero on your telephone keypad. After today's presentation, there will be an opportunity to ask your 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 that today's event is being recorded. I would now like to turn the conference over to Kate Goldsmith, Investor Relations. Please go ahead.

Thank you and good morning. Prior to Market Open, Veritone issued a press release announcing results for the third quarter and did September 30th, 2024. The press release and other supplemental information are available on the Investor Relations section of Veritone's website. Joining us for today's call are Veritone's Chief Executive Officer and President, Ryan Steelberg, and Chief Financial Officer, Mike Symmetra, 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, November 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 Broadbeam as acquired by Veritone on January 1, 2022. Periods commencing after June 13th, 2023 are not presented on a pro forma basis. Finally, I would like to remind everyone that the call today is being recorded and will be made available for replay via a link on the investor relations section of Veritone's website at www.veritone.com. Now, I would like to turn the call over to our Chief Executive Officer and President, Ryan Steeleberg.

Thank you, Kate, and thank you, everyone, for joining us. We are excited to speak with you today and provide an update on our third quarter 2024 operations, financial performance, and strategic progress. Mike Zimetra will cover our quarterly performance and financials in more detail later, but I wanted to start by providing a broader company update and perspective on our current market environment and the opportunity that lies ahead. Before we dive into the results, I want to address the transformative announcement we made a few weeks ago that marked a pivotal moment in Baritone's journey. We have successfully executed an agreement and have closed on the divestiture of Veritone One, our legacy media agency business, in a transaction valued at up to $104 million. Let me put this transaction into perspective and clearly articulate what it means for Veritone's future as it represents the culmination of the strategic plan laid out in early 2023 to transform and focus this business. This divestiture represents far more than the sale of a non-core asset. It's a fundamental repositioning of our company in the rapidly evolving AI landscape and a significant catalyst to unlock shareholder value and reinforce our market leadership position. When we initiated the strategic review of Veritone, when I first took on the role of CEO, our goal was to identify the optimal path to unlock shareholder value and position Veritone for sustainable long-term growth in the AI sector. The sale of Veritone One accomplishes several critical objectives. First, it streamlines our operational focus, eliminating the complexity of managing two distinct business models, a technology software business and our legacy media agency. This refinement of purpose allows us to concentrate our resources, both financial and human capital, on what we believe is the greatest opportunity, delivering the most advanced AI solutions to our customers and partners at scale through our enterprise AI software, applications, and AIware platform. Second, this transaction significantly strengthens our financial foundation, substantially bolsters our balance sheet, and enables us to reduce our debt servicing cash burden. Furthermore, this strategic sale focuses our operations on higher growth verticals with strong margin profiles, namely public sector and commercial enterprise AI. As a result, we are now well positioned as a pure play AI enterprise software firm, building on top of our existing scale, which boasts over 3,000 customers after the divestiture. Furthermore, post-divestiture, Veritone has eliminated our customer concentration risk, with no single customer accounting for more than 5% of our revenues, while still maintaining gross revenue retention well above the 90th percentile. I'm very proud of our staff and leadership team who have guided us through this lengthy and challenging transformation, all in the public market form. And our timing to complete this transformation could not be more perfect. We're at a pivotal moment in technology history. Just as the cloud revolution transformed software delivery into software as a service, or SaaS, we're now witnessing an even more profound shift with AI. This new paradigm is what we call service as software. the automation and amplification of knowledge work itself. This isn't just an incremental change. We're looking at a market opportunity worth trillions, according to Forbes and several other sources. Let me put this in perspective. The foundation layer of AI, the chips, infrastructure, and general large language models, is consolidating around major players like Microsoft OpenAI and Google DeepMind. This mirrors what we saw with cognitive AI. Large language models are readily available today and becoming increasingly commoditized, portable, and more affordable. The real opportunity where baritone is well positioned lies in the application layer. Just a few years ago, skeptics dismissed application layer companies as just rappers on GPT. Today, it's this technology, our technology, that has emerged as one of the most compelling ways to build lasting value in the AI economy. According to Sequoia Capital, the most important segment for future AI investment is the application layer. This has been and will continue to be our focus. For you, our investors, you need to know that Veritone goes far beyond simple API integration to call AI models. AIWare, our core platform, is truly an operating system for AI, supporting dynamic and scalable cognitive architectures and workflows. This proven platform, which is today serving hundreds of enterprise customers around the world, combines dynamic data integration, hundreds of cognitive and generative AI models, intelligent model routing, vector databases, compliance frameworks, and application workflow logic that can mirror human reasoning. We've expressed this powerful technology through dozens of award-winning applications that are solving real business and service problems with clear and definable ROI. For several years now, our leading AIWare platform and applications have been delivering critical value for public and commercial sectors, including media and entertainment, sports, state and local law enforcement, Fed Civ, and now Fed DoD. With our strength and balance sheet and renewed focus on our AIWare software and applications, we're uniquely positioned to capitalize on this opportunity. Our strategy is in full focus. Our track record of execution is strong, and our serviceable, addressable market is in the tens of billions. We are not just participating in the AI revolution, we're leading it. When appointed as CEO, I stated my strategic imperatives. Streamline operations, bolster our financials, and zero in on what we do best, AI software and services. Now, as we near the close of fiscal 2024, we've advanced each initiative meaningfully, on the booming demand for AI and leverage the strength of Veritone's AIware platform, applications, and solutions. Now let me walk you through our performance in our core market verticals, commercial and public sector. In the commercial sector, our AI applications and custom-built AI solutions continue to unlock tremendous value for commercial enterprises across functions and industries in this quarter. Within media and entertainment, in August, we officially announced our landmark partnership with the NCAA. Since then, we've continued to build upon that success with additional partnerships and agreements with many notable brands. Today, we're in the final stages with a material media customer to secure an expanded multi-year deal worth over $20 million in potential total contract value, which we expect to close this contract in the fourth quarter. Additionally, I'm pleased to announce that Baritone has extended its agreement with iHeartMedia, the nation's leading audio company. This multi-year SaaS agreement enables iHeartMedia to seamlessly and automatically process, transform, and review audio data in near real time with enhanced ad and content tracking, comprehensive analytics, faster content extension, and smarter media management. When we initially launched iHeartMedia as a customer in 2017, we deployed our AI solutions across 200 stations in 50 markets. This current multi-year agreement extends our solutions to over 850 stations across 150 markets, showcasing the increasing value our software provides to both iHeart and their customers. In addition to the iHeart extension, in media and entertainment, we execute over 28 deals in the quarter. One other recently executed deal was the re-signing of ESPN, which will leverage our software to effectively track the impact on native advertising placements and promotions, both spoken and visual across multiple ESPN-owned channels. Other notable deals in the quarter include agreements with Amblin Partners, Carson Entertainment Group, Univision, Westwood One, and the United States Tennis Association, showcasing our commitment to client satisfaction and the stickiness of our AI solutions. Staying in commercial, let me provide an update on our AI hiring solutions. Veritone Hire successfully weathered market pressures on global label markets for another quarter, remaining focused and consistent in its strategy to add SaaS clients at the higher end of the middle and enterprise market, to offer significant budget efficiencies to programmatic and media services clients, and to continue to expand the reach and cross-selling of programmatic advertising and media services globally. Also, I'd like to call out that our Hiring Solutions General Manager, Alex Forlis, was selected for TA Tech's Fall 2024 Honor Class of Business and Thought Leaders. For awareness, TA Tech is the leading association for talent acquisition leaders. Additionally, we signed significant AI programmatic contracts in the UK with a global staffing client and broke into Australia for the first time utilizing AI-based programmatic job placement. A few notable global deals include Magnet International, Shell Energy Australia, Marriott International, Teleperformance, and Mitsubishi Chemical. Switching to our public sector vertical, which will be a key focus for us post-investiture, We remain very bullish on our public sector opportunities and growth prospects. Our market-leading AI products built on AIWare are driving our success. Our clear go-to-market strategy extends across law enforcement, judicial agencies, and government sectors globally, enabling fast customer onboarding. Launched this year, Baritone Intelligent Digital Evidence Management System, or IDEMS, powered by AIWare, has exceeded our expectations. IDEM strengthens Veritone's position in the digital evidence management market as a leading system for aggregating, analyzing, and sharing investigation materials with advanced AI-powered video and audio analytics. In local law enforcement, we now service hundreds of customers and are adding opportunities and partnerships weekly. On the federal side, we already are contracting with both FedCiv and FedDOD agencies and are very active with several material trials and software implementations. Internationally, we have also added customers who are active with trials and are in procurement on several important and large opportunities. Our solutions are getting traction globally with new customer acquisitions and a growing pipeline that is now exceeding $110 million. This quarter, we added 13 new public sector customers to our portfolio. New state and local agency customers include Englewood, Colorado, Sandoval County in New Mexico, two of the largest counties in Southern California, and a statewide law enforcement agency. New federal business includes the Department of Justice, the Office of Public Affairs. During Q3, we expanded our distribution channels and market reach with new strategic technical partnerships, including Nuix and G-Tech. We completed and announced our integrations with AxonEvidence.com and Milestones VMS Connector, where we have created automated workflows and efficiencies for our customers by automating the ingestion process from those applications into our ITEM Suite, which allows our customers to take advantage of our public sector applications and our suite of AI capabilities that are part of AIWare. This is all part of our strategy to be an open technology solution that can aggregate data from all the disparate evidence solutions, particularly audio, video, and unstructured data, and allow investigators to take advantage of our AI applications and AIWare technology. As I close, I want to share some additional third quarter operational highlights in the public sector to provide a comprehensive view of our progress to date in this vertical. In Q3, we initiated a second phase of a project with a major DoD agency for our IDEM solutions. We also delivered an IDEM solution and began assisting in its implementation with yet another DoD organization. During the quarter, we announced and released our latest version of Track with enhanced UI and search capabilities and the ability to track and re-ID vehicles as individual objects. We also enhanced our model for tracking and re-IDing humans based on no biometric information. Track 2.0 is now fully deployed on AIWare, and it is included as a fully operational application in our item suite. Finally, the result of this month's presidential election, we believe, will be a net positive for our prospects in the U.S. Fed and have little to no impact on our existing contracts. The size and quality of our pipeline continues to grow and improve as a result of the IDEM's product suite, expansion of our technical partnerships, and the addition of new channel partners. I would now like to turn it over to Mike Zimetra, who will provide more details on our quarterly performance and future guidance. Mike?