VERI - Earnings call transcript Q3 2017

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Operator

Good afternoon. Welcome to Veritone’s Third Quarter 2017 Earnings Conference Call.

Joining us for today’s call are Veritone’s Chairman and CEO, Chad Steelberg; and the company’s Chief Financial Officer, Pete Collins. [Operator Instructions]. Please note that certain information discussed on the call today will include forward-looking statements about future events and Veritone’s business strategy and future financial and operating performance, including its expected operating performance for the full year of 2017. differ only that are and statements. are the results are uncertainties to may statements stated actual assumptions those and difficult to forward-looking predictions by subject and risks, cause or These implied from those materially to predict of reports are in on filings, and Form Veritone’s Form S-X assumptions statement its XX-Q. registration on risks and these SEC Certain discussed including its quarterly XXXX, live reflect and forward-looking predictions statements undertakes as estimates of broadcast, reflect November date of date statements circumstances forward-looking to X, These obligation call. the and this Veritone any no this revise events management’s the update conference of after beliefs, or or to

would company’s recorded the available I call in to available website this Relations a that will and of section at link Finally, Investor be www.veritone.com. the remind for like everyone made replay via

like Chairman Veritone’s would over I please and CEO, to turn call proceed. Steelberg. Sir, the to Now Chad

Chad Steelberg

for closed, for press today. of and us After of in thank everyone, which third is quarter market the announcing you release XXXX, ended Relations September available the a Welcome our section Investor XX, a copy joining our issued the we website. results

continuation quarter and momentum several strong releasing of much-anticipated to continued part our achieved our platform, Veritone same The represented expand AI operational all last year-to-year Developer aiWARE of and including a the quarters. our key over growth the growth Application. aiWARE experienced is indicators; performance third we’ve We Edge, across a our the operating of system strengthen which and

our today’s bit of walk and our Collins, Pete? I to will more financial highlights performance months for including nine wins our platform, Brasil. and quarter and several call. detail later iHeartMedia to FOX CFO, like in secured major indicators XXXX. invite Sports these us We I’d on third first, for new the results in a But also first key discuss Pete AI through

Pete Collins

good everyone. and Chad you afternoon Thank

September XX, months XXXX. third results to quarter for financial and the our ended nine Turning

net in for $X.X The million from our platform. $X.X Agency an Our million in net million to revenues quarter of revenues of revenues the due Media $X.X XX%, increase year. to last from licensing revenues XXX% in SaaS AI or or in million QX was XX% and an increased $X.X increase increase

of the revenues our first increase XXX% or or Agency million revenues in For SaaS million an due licensing nine period our $XX.X year. in XX% year, The and platform. XX% in $X.X increase from to revenues to increase the million net net months $X.X million AI in the last increased revenues $X.X from an same was of of Media

Looking at million our an increase AI from $X.X the the total increased of quarter new contract platform received during QX of of last in to business, $XXX,XXX year, XXX%. value bookings

increased end QX In XX%, monthly at agreements to under in recurring from year. addition, our third the the in of $XX,XXX effect quarter last year-over-year, $XXX,XXX revenue,

Our of of $X.X XX% of from in gross profit in XX% revenues $X.X year. XXXX net last or to revenues QX increased of XX% million million the net third quarter or

revenue from $X.X period were both our the margin level. by the leverage the the increased of provided due The higher or of gross million in revenues increases profit million gross $XX.X XX% gross For for to profit quarter same or nine period, operating net to our XX% XXXX. months nine in revenues net period and and XX% month of primarily net

the million to XXX% XXXX operating $X.X quarter third Now from last $XX.X year. increased our of expenses. expenses turning QX million of in to in Total

These compared last quarter average with XX.X for average weighted consecutive to per $X.XX X.XX third common for been last million $X.X the capitalization Loss compensation due relating in of shares loss or from and The was including compared to for and upon developing outstanding expenses, the $XX.X $XX.X of Ryan of both to with loss XXXX. of third which expenses to first year. of operations the sales under issued in stock-based the primarily outstanding quarter share of XXXX, during to We which second from periods Net million. in third in the expense the compared that those compensation options of million, of was quarter $XX.X included stock-based on X.X enhance operating first $X.X attributable $XX.X total million functionality. million of year, QX with satisfied million million investments third million plan. EPS operating the this period operations with Loss shares of total performance-based compares to our XXX% increased in nine the stock-based and XXXX. million increase same third the we a shares of operations $XXX market in as products of to higher period, Chad days, was XXXX. marketing, $XX,XXX to in over share, from increased It’s options, such are five and the the level months in business months science from weighted to in in note third platform, and was quarter our quarter of The from This XXXX Stock-based of million higher $X.X due increase million $XX.X million XXXX our a in software development, nine total with the $XX.X compared the primarily the $XXX,XXX that in vesting nine per months operations million first stockholders compensation conditions had million the $X.X totaled important $X.X in XXXX quarter or period figures compensation was last of recorded million in year. $XX.X under month based stock nine in was previously was AI a $XX.X of same QX compared For exceeded September, our expense, loss operating continue quarter million of the of Steelberg, year. $X.XX and recorded XXXX XXXX which recorded data million. expenses new vesting.

For XXXX. stockholders per XXXX, with nine million share of figures the last are compared $X.XX weighted million period on first of share, outstanding These for $XX.X of net outstanding in $XX.XX to loss the based average in EPS X.X the $XX.X the compared first months common million X.X nine totaled months per attributable months or shares million same first year. nine or average with shares XXXX, weighted

our and had balance sheet; to marketable term cash we equivalents of quarter, and the long turning cash Now debt. securities and the at $XX.X million no end of

to in KPIs, or our our businesses. progress AI both these shift KPIs Agency both like of gears our We this Key quarter I’d platform business. Media Next, Indicators again for our great Performance to made for and business

the As three I business, metrics: on key media Agency and performance number Media customers master we active our customer. of spend mentioned total added call, of progress per of in last evaluate the average service under the our new to order track number customers, the agreement,

well of customers, two first regarding of as to KPIs, ability number by winning customers, customer The as us market active these new the business of grow our which Media keeping tabs provide Agency churn. our share the new insight with track and

increase. with customers, a net nine net new the we period last in customers six same compared new QX, added XX% During year,

with of a end the we at of active year of a customers, compared the as of quarter increase. total XX terms XX quarter had XX% the In prior end,

media per Our with ability trends, Agency existing our average KPI allows analyze spend but is not spend Media third spending us grow to the for media customer, to customers. which only

same During last foundation QX, mature while the was Veritone, a period average the experience $XXX,XXX solid XX% year, customer in in in which can is our for also increase. it important spend keep It’s mind with that and time. to volatility from media net $XXX,XXX time to revenues business is provides per this compared

had had quarter, the platform XX end. We of to year which the XXX the active third the the at moving of with platform And quarter, platform finally, of with on at XXX%. year prior we accounts end, was quarter, compared customers on compared of at of quarter prior XXX%. at engines at with our platform the the quarter-end, an total Artificial on end end end increase Now at had the the Intelligence XX the we party the compared year increase XX an the quarter XX XXX prior cognitive KPIs;

total video audio of we with hours the files, prior and the of During in processed an period, XXX%. XXX,XXX increase XXX,XXX compared quarter, year

continue summary. to and the I’ll million audio over track our As cognitive we and year platform, provide and XXX year. end to having With completes with grow posts XXX turn my that That we make expect our and Chad? platform, our easier to financial goal it party of active call third success. approximately hours the on during in Chad. files video we back AI to mind, the processed accounts approximately now X.XX expand will approximately engines to

Chad Steelberg

Pete. like Thanks, and some I’ll QX. product operational our as to provide what updates business update call, we highlights on on last our I’d on happened well discussed our in as to developments now new AI as outlook. also well related as that new provide an customer development wins,

starting our with operational system August. with Edge that in highlights our we launched the third for begin quarter; aiWARE Let’s operating

move required the immediate scale cognitive is and that media analyze be platform’s where large to application The approach policies. of the having provides integration onprem, regardless engine provide content by is At cognitive or which Conductor is these Other cognition processing. the As their cognitive containerized working engine parallel cost-effective movement which across and deployment secured cloud engines some by to output subset engines, stored. engines cloud new for customers content. to cognitive aiWARE, applications. with orchestrated our unstructured companies unstructured of its within the run of cloud-based large operating onpremise of with can for some content enterprise quantities customers Using proprietary partners. processing data leverage Bringing using perform high allows a aiWARE, customer’s network, all onpremise can method and data containerized of on in to AiWARE heterogeneous and and XXX prefer to able enables models. account users security a of a volumes. and to repositories, cognitive version to to our and onpremise creates contents onpremise This our engines is data capabilities ensemble companies’ for of aiWARE It manages onpremise of version and X.X, network, aiWARE LANs, engines route cloud WANs, located onpremise XX content versus which know, is our Veritone’s learning their version both core, onpremise we’re supports the AI spanning behind data, to Currently classes. powered to structured always technology. system, you firewall, currently freely ingest certain digital content analyzing our their their is minimizes throughout universe. additional our for AI output board kept onpremise This their the spanning transmitted

our For blending operating this and system recommends, onpremise capabilities. engine which and content, chaining to cognitive provides select,

facial interest; of human and of Some and onpremise near of aiWARE against asset tracking ad integration; repurposing; anomaly assets. cases closed the customers checks detection; compliance content persons sponsorship recognition tracking used and corporate video for real-time unstructured behavior audio known air automated include: captioning; and

seven POCs; We customers. response pleased content proposals nine we XX signed into new identified launched providers, especially are AWS, partners, partner teams. and agencies customers; XX we The that was whole submitted have the we and a with the partners. Quantum, or broadcasters, agreements August, with the to are we under in Direct very Quantum versus In review a for feedback channel nine sales storage licensing is we’re via channel have utilize those way including: aiWARE integrators; and and entered significant already aiWARE, system two selling. boarded in trials by XX Since with government other Quantum have channel late for are opportunities; on qualitative actively is to over and hearing video aiWARE have and resellers partner that stored category, differentiator customer of

has solution have we in partners by integrated pipeline. addition, new received In extremely our the well been market. channel XX The

were a Award Show secure gate. Global of In win out able Perhaps, September, the earned to in of show solution customer the even fact, more we right IBCXXXX is first Best Amsterdam. encouraging the our that the in at fact

is the be with to of deploy will aiWARE archive, and at transcription. Sports expected The Xcelsius Brasil, index FOX to media which solution the beginning onpremise first Portuguese appointment

in used FOX to customers help transform optical relationship Latin experts. world, with Sports will premium new streams. and outstanding and international party stronger with in character to generated part presence by market. has built transcription third America a value enabled indexing Latin into are that Brasil untapped our expansion to Brasil cases and Our potential accepting by services this recognition; FOX purpose partner support Future America, technology positioned AI their having and By include: strategy stay to us live Sports recognition; afford relationships deliver deliver also our across providers with Portuguese and post we close clients, of services, business foster the enabled of aiWARE. to DAM workflows MAM production AI logo AiWARE previously metadata face for and are then

and access we recent the technology Network, Partner now AWS’ suite. the aiWARE to AWS AWS is is with us Veritone of significant on very the Another an development our and for Marketplace. partner and advanced customers application aiWARE full availability provide in

exciting this it regarding We development as will more progresses. provide detail

accelerate out. as our strategy we dramatically expect go-to-market partnership this to rolls However, it AWS

in remarks, call party development Veritone or VDA, party self-service another mentioned major and cognitive Application software beta platform using QX engines with tools. launch opening third internally. the VDA to our As as development we integrate during and our I kit of third our Developer my allows was it applications

VDA launch global generally make by available partner to community it and our year-end. expect to We

VDA For data have their to onto them more multiple performance, and number ability platform niches. to training applications use of VDA will engines. third-party and engine target our gives access customers to customers. that engines expands to Veritone links market speed addition the facilitating We engines cognitive the their also and they benefits and which improve specific (inaudible) to believe platform, our developers, cognitive of a to and accuracy that our party create the to models third of cognitive potential

also set capabilities to enhanced of classes even to First, of having additional is more which more but only customers. it The technology has not enhanced bring when cognitive will engines, learning cognitive ensemble will cognition cognitive engines engines our on larger additional from come our platform cognition impactful and from conductor, our a inference.

new approximately and and cost. engines AI provide us and process VDA, their business help and engines coupled tuned spectrum a that partners a platform needs. XX have will our with speed, enables with to flexible robust We the to creates custom VDA customers range on-boarding engine across the time. believe with models that cognitive build deploy aiWARE, that highly this We customers deployment in of tools our are broad of cognitive at a options accuracy VDA

extending users their is The benefit applications of using to top VARs is workflows needs in for quickly solution integrators; technical them of on to application second to expected build system to in platform helping processing and customized developers and our underlying Veritone, our our cognitive and architecture a This industries. and capability it the the Veritone because create customized effectively specific meet resellers, and users of for many aiWARE industry reach customers, important further the allows the platform. of

such those application multiple locations, as and tracks and to create can example, assets, an specific languages even will platform assets. For integrators that structured partners. customer of to and be data provide solutions firms both understands system customized third on vehicle the formats predicts content party and custom Large their with build related to video data to a behavior our able applications in consulting

Currently, directly, VDA handful apps similar to the revenues from SDKs. engine SaaS participate generate VDA in our expect to in utilization of using have marketplace. increased business linked the the application we app revenues and in applications and applications to business a development their We cognitive Salesforce’s

believe they forward. to adopters, sales we additional teams, a world technology of the developments we’ll that and and us give highlight broader These we time. engineering our these extend over capabilities significant early will and opportunities, gather As product class moving from audience invitations innovations feedback

from and in new engineering One that key has strengthen talent I’m primary that class science of organization expand of and data uses the QX. hires executives. by our business proven made introduce two the proceeds our to IPO development line, been world we to Along excited and hiring

who’s also technologist include: He Partner ecosystem. services he than professional a scientists. and having data channel and science, our as steeped business Michael’s Microsoft, innovation Sandoval], Center. responsibilities the team more was built data spent officer. founded that our our [Michael years programs, Michael at ran an and First, XX is proven where with Microsoft joined AI-related entrepreneur, Solutions partner

Dr. data hire the both proven a electrical key other The scientist engineering during quarter Ph. Kahn], [Wolf D’s from in was science MIT. and with computer

at five for addition supervising the for University more quantum meta business, to Scientist AI related research In Washington optimization control. Wolf serving taught than as years, D Ph. in control, students and doing Chief of an

the existing aiWARE platform in a administration. with radio employees signed reach end markets. stations headcount a total agreement its the radio at the to the This recently of the to headcount our included XXX or orchestration his two year of gives at America. quarter. our AI our field put over the in As the we engines in four and five sales capability Michael using to our in additions our of and projects Including data manages expertise expand order classes, adding and VP, second other of license iHeartMedia, people any sales television by is increased across relationship the in general people in leading as customer XXX iHeartMedia These outlet cognitive Scientist, standpoint, Data we as with people largest machine to platform This multiple company well for Wolf XX learning. audio new additions science Wolf that a largest and engineering our special of Principal is top team, technology date that of of in XX our QX. From and expansion marketing, conductor, our eight

audio comprehensive ad content time analytics, process, media and and extension will in content smarter technology with enable faster seamlessly and near to transform tracking, automatically content real review iHeartMedia and Our management. enhanced

ad will advertising. in to iHeart’s projected to is packaging, XXXX, to platform have advertising and data and based content and enhance Our marketing data. indexing, extending on verifying focus advanced billion be enables ad will now radio is provide creation on for concrete increase ad industry, verification the to creative in and iHeartMedia reviewing placements time analysis showing its as of strategies, Previously, reporting, content. monotonous real to than performance whole revenue. iHeart metrics imperative, performance ROI. Using analytics, value support AI XX.X spend a Veritone advertising metadata rather near addition initiatives of In and verification distributing hours spent more US iHeartMedia the radio and to able Though organizing and advertisers,

Our digital media and leagues entertainment abroad. to pipeline domestically teams and continues including sports asset television both and and grow, radio providers, management media and broadcasters, and

pipeline extended as sales and has service wireless cable also operators. Our and in infrastructure to telephone, this market providers, such

and to make business continues its revenue sales expanding legal and pipeline. compliance Our inroads, unit base

Legal, We to represents a which figure expect on date to contract largest production begin vertical. in Veritone our for this six contract

and this feature invest cost we bullish most are legal currently compliance customers rich We and its the content continue unstructured on to that accurate, in market on effective the hearing solution initial is and aiWARE available as from are platform the for prospects, analysis. currently

and We the within deployment efforts now cloud aiWARE. with continue partners vertical, initial pilot our using FedRAMP secured government

significant in of to expect We a XXXX. our base contributor this be revenue second the half to

present to of our continue success they expansion explore as organic opportunities, growth, our and and customer themselves. we’re continuing to revenue fuel base While technology inorganic market

where solution believe the businesses to process our video enable customer the about audio, via other customers. offer to more bases we and significant will of SaaS customers. on their provide we businesses acquire model and are enhance calls, their have unstructured to that Companies they aiWARE prior their As I’ve those products interesting that data to existing that particularly a us, are talked value to looking

of have that at least synergistic with, of we area. by and a year’s We active had apprised very hope developments significant targets end. are keep talking we in you pipeline sign any this one to We’ll

cost key the rate look our strengthen, Microsoft to firm Again, to offer intelligence system expanding calls. by Amazon The team we Google, attract the the thank of share we more as while your you We at belief IBM, continues Veritone companies personnel on and year-over-year, are continues our channels. existing through triple on digit building adding to forward AI future. summary, from new revenue time today. depth efficient sales operating clients, value to in effective for grow future and our our customers like of So, that caliber SaaS updating and you all that progress we of

now open the We’re to ready line questions. Operator? for

Operator

will Capital. question first Latimore come our proceed. Now Please with Instructions] Mike from [Operator Northland

Mike Latimore

Difficulty] on talk think year customers composition the seasonality you can Media and seasonality once think had do bit you the last the (inaudible) I about Just the that business? the a how holiday in you more the quarter, on given of there, third positive business, little there? seasonal about [Technical

Operator

[Operator Instructions].

Operator

next with Our Instructions] will [Operator Riley come from FBR. B. question Sinha Sameet

Lee Krowl

the actually Lee a in Real QX this With have kind milestone that on slate pilot ramp few whole guys had you the that you necessary you filling for program FedRAMP This is to just Sameet. for I quick, opportunity? progress, Krowl approval. mean were you of on certifications mentioned, know that does certifications

Pete Collins

we to that work certification. some getting prior There’s do can

type then assessment the the So and the in to self-assessment we going at that’s of point. and be certification third QX will doing We of of our summer that ’XX, and party ‘XX. end the we’re of development with think coming by this be complete work are

remarks said we ‘XX revenue the second opportunity in being us. that made, for So we a see we half it

Lee Krowl

can you integration? just talk that third about Can is you relationship, opportunity party ramp pre-revenue, just talk that then and the the with about AWS as

Pete Collins

of go and one We a their actually too into what Sure. afford speculation us. as to to much AWS our is partner want integration that don’t new will development. with

at provider, XXXX. cloud us, it and for However; abroad extremely means, Amazon’s we’re double-digit as excited growing dominant what leading domestically position both about rates, given the in

Lee Krowl

opportunities market. the have Will last can to you one investment are require of the with today? opportunities those you FOX incremental incremental announced, you Latin just sales American force that opportunity suggested then there any on that you tackle or kind existing And had guys the be question, in

Pete Collins

partners right distribution our were now channel through QX, that Part all to plan expansion that a enabling on solving investment, that relationship. which we’re for major us through contributor sales the being XXXX. anticipate global in new we’re growth incremental of now channel and a of our to activating brought Quantum those really basis No in is

Operator

Mike Capital next with Our Market. Northland from is Instructions] question Latimore [Operator

Mike Latimore

of Just the talk the said, think the accounts in (inaudible) so you account, I get about or terms expect to end you you XXX year little there? in third a bit drivers quarter versus by can

Pete Collins

driver main iHeart that Mike on boarding the the for So is going to be of the station.

So here are that QX. platform will XXX we onto coming stations mentioned there over that be in the

bring So that pipeline board to it. that’s mostly then in XXX. that will have that from broadcasters sales of And majority to do up the go allow to us the which we XXX we’re expecting other, are radio on

Mike Latimore

how about how then you guys acquired for And then And here? or I you Is now? opportunity chance Radio, an deployed is is CBS that do a is think think or fully that? there that they get (inaudible)

Pete Collins

they upcoming fully Radio together. CBS their us as in there merger Entercom, the some their business to that’s opportunity up is two far with yes is pick additional deployed, our one as businesses pipeline. for That’s items as merge of and an

Mike Latimore

about that, legal mentioned, figure more or you case think, on bit just in in like (inaudible) a vertical, believe. deal, little specific then you’re I production I you what’s Can a driving that is that a the talk opportunity? And six

Pete Collins

been on, bringing will that team be based there’s matter our one particular with, has that we’ll that and be through project on. it’s a working litigation Yes, that, reseller

think will on into We’re quarter that continue it It’s a one in is sales performing expecting not next than six be kind we of in that fourth the here, be span to quarter more figure our But project a we’ll will opportunity project. year. this large quarter. and it the

Mike Latimore

should comp stock model fourth in the for What we quarter?

Pete Collins

options in So call, about in $X.X comp you million really the about we we’ve stock of vested a talked think quarter. but had the we what were third performance based the on as to million with give stock related the $XX.X guidance, that quarter, don’t that if based

run think to leaves be So million, options will about board the at this rate awarded run of in is There expecting the coming which that about the you to quarter. some meeting, right I’m quarter. a with probably for $X.X rate up later get

So of. I’m But X.X it is in so. vicinity or thinking that might be what

Operator

Instructions] [Operator this time, At session. our this concludes question-and-answer

team Steelberg, was remarks. If the you your Mr. Veritone’s VERI@liolios.com. not for may back now turn Relations over to taken his to closing call I’d at contact question Investor like

Chad Steelberg

today’s Thank on We joining our us, mission for investors to updating we We next building as thank pursue AI employees, on on progress us the you look call. Operator? you for system our future. and our supporting the to forward want of partners operating for our call.

Operator

Thank you for Third Veritone’s joining us Quarter XXXX Call. Earnings today for

now may You disconnect.

Veritone (VERI) 12 Nov 172017 Q3 Earnings call transcript