VERI - Earnings call transcript Q2 2019

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Operator

Good afternoon. My name is Rob and I will be your conference operator today. At this time, I would like to welcome to the Veritone's Second Quarter 2019 Financial Results Earnings Call. [Operator Instructions]. Thank you. begin may you Alger, your conference. Brian

Brian Alger

section market Welcome conference release available call. afternoon. on announcing Development After results Investor to press second on issued Senior XX, the earnings XXXX Corporate XXXX. the website. Relations. Investor ended quarter for second and today I release is our of President Veritone a Veritone's Vice Good close quarter am June the Alger, Brian press The the

CEO; today's Chad CFO; for Joining call Steelberg Chairman and President, are and Steelberg, me Pete Veritone's Ryan Collins.

call Following their up open remarks, we'll for the questions.

the Please future today note quarter that strategy operating certain information Veritone's net and its include discussed and about third on revenues statements including XXXX. financial the and call performance, of forward-looking business future will events expected for

risks, these assumptions implied subject are and may from These that actual differ Form XX-K. of are or discussed those Veritone's annual results filings, stated forward-looking Certain risks statements uncertainties statements. and including to its materially SEC report assumptions on in the to by cause

statements undertakes These Veritone today X, of August on update as assumptions, and based revise obligation XXXX them. to no are or forward-looking

same well before and our presenting certain GAAP addition we measures. expense, be In during Both as loss Company's and financing which and items. integration, those interest acquisition, of adjusted stock-based amortization, earnings as this non-GAAP discussing or Company's results, depreciation, compensation, EBITDA, will adjusted the are exclude call non-GAAP to financial the to excluding expenses financial related net

these included loss release today. are in measures the GAAP press of to issued net Reconciliations Company's Company's the

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

Steelberg. to like Chad Chad. I to Now, CEO turn the Chairman over and our call would

Chad Steelberg

Welcome our second pleased Brian. performance us everyone quarter. I and for joining financial you the and with today. you, thank operating Thank am in

the second compared quarter an of record acquisitions both revenue the contributions increase recent of $XX.X our a of reflecting million, growth. was XXXX, with XXX% Our organic and

revenues on up year-over-year. in basis, we points Redact Identify of call, organic loss comments sequentially XX% the an we with to-date. our EBITDAS doubled Consistent for than adjusted number quarter's and On rate our were and trials more delivered XXX improvement basis last

our In XX% with half outpace QX, the continued by business revenues first advertising to competition, organically year-over-year. growing

In addition, growth XX%. our Bridge brings Performance to that

growth, this online with we discuss in and will Ryan detail this broadcasters capabilities the podcasters, to unique brings business As faster that social radio momentarily, morning stations, higher and influencers. us for rate announced greater business are opportunities aiWARE new commission driving

organically Our by of last SaaS revenues grew year. XXX% versus QX

growth With their acquisitions last year XXX%. that was

sales communicated new extended the we had on for call the more the quarter, sequential challenging government as project government first legal product comparison well due our as we in the in completed May to the in As was our and large cycle markets.

see from growth to beginning revenue these products expect strong We quarter. this

licensing line delivered posted $X.X services expectations short, we May. in with content of solid revenues communicated business the with quarter Our our all media In another results and million. in group

in increase. interest and our continue our engagement solutions. customer market size Looking tremendous to The forward, we see number of

has we since on execute with strategy customers. continue As been land and our the started Veritone, case we expand to

and Co-founder introduce Ryan. I'd detail. our progress To that end, our brother, by like Ryan, operational greater to President discuss in to

Ryan Steelberg

Chad. you, Thank

one excellent as and service of customers, critical customers new providing innovation our to to since as land said, product solution and our our revenue expand, and this founded strategy retain we those customer Chad well to As from Veritone, customers. been has grow existing attract

strategy. This pursuing past quarter having are demonstrated we in success fundamental the that

trials. and initiated In was of XXX new we and during our XX Redact conducted very in strong demos both customers market with over contracted momentum half government Our Identify the QX. and existing more first than

discussed six-figure two go-to-market contract market quarter calls, a strategy XXX% in we signed in the legal and in sequentially. have grew revenues and shift legal prior customers SaaS that our in Spain after Italy in with the the we We our

vertical, we agreement continue with and announced to sequential we aiWARE media for growth SaaS new and produce a our Cox stations. XX entertainment In Media

have our across and We over radio TV XXX employed U.S. now stations. licensed and software

continue a half our year-over-year above also We to QX the first growth average. achieved very Veritone strong total well XX% in the retention the industry XX%. organic One, agency in have rate with above advertising

are driven average not higher aiWARE also rapid business than only We gains, in capabilities believe but rates. share driving that our commission this

account it this per During the business in quarter, continue as we reported added new our improve today's in and reflected customers revenue to net XX KPIs.

Veritone, rest in quarter. had customer of business As with the negligible the loss the we during

been leverage core create to across business has and of to element markets. opportunities our our of disruptive scale new business technology synergies strategy our and Another

Our mass now to advertisers media Veritone for opportunity and enabled introduce unwired critical a unique of broadcasters networks. and aiWARE has created autonomous intelligent

the across media. clearance targeting advertising verification programmatic native aiWARE and broadcasting media listens, enabling scale and terrestrial understands delivery, of and watches digital at

These existing [Indiscernible] to into and exciting side business. new solutions expand our agency and adding and Veritone's advertising business sale network advertising monetization the

the a ability Earlier advertising on basis. networks. podcasters cost give these Bridge unwired other access unprecedented gives announced a advertisers Influencer advertisement and simple of launch today influencers the the on effective to is we channels Pay-Per-Performance opportunities and and Advertising place that to us of first Influencer Bridge, popular Platform these conversely

largest $X and XXXX and detail, in think this opportunity PWC XXXX. Bride podcasting grow ever And will currently To the pursue positioned Influencer than the that by opportunity. As podcasters, frame estimates uniquely grow $XXX can advertisements podcast it revenue we faster to this exceed billion more that. million of placing year we agency over advertising are be with

CPM revenues to than tiny basis of In active ads short, podcast podcast more point. XXX,XXX had than the XX of million a tail a been completely up ignored with the more were episodes. Last on and played XX% of fraction year, podcast to the and mid more than XX% going long

long the market advertisers of Bride target mid solve expanding Influencer to problem and available total segments the this significantly. enabling aims the market tail to effectively

We in we advertisers what Influencer interest happened using XXX in already similar expect least podcasters podcasters quarter. from least to the seen and believe that is tremendous at XX have of early this platform days Bridge internet at We've to the and advertisers advertising. and

is and to the connects of networks are is live broadcasters second we unwired spot organic and platform transact MicroMentions, initially traditionally enabled new ads. The The efficiently aiWARE which launching as target libraries advertisers at to broadcast. scheduled opposed autonomously

the automatically advertising advertiser. and aiWARE campaigns. then premium and complement MicroMention will verify these without of libraries sell rates the We believe inventory ads build cannibalizing broadcaster existing the at the

media U.S. radio enabled initiative. stations pursue over scale XXX of this already capabilities new uniquely disruptive market with positioned us The our aiWARE our technology the to aiWARE and grow in and

XX% week per These aiWARE reached enabled over XXX of million unique listeners. radio U.S. stations collectively users representing

the are clients. We of MicroMention watching broadcasters over this with quarter several beta prominent prominent advertising XX and

and and initially of this advertising our traditional to margins agency than expect higher customers we MicroMentions will to Both introduced them generate revenues business. our existing be Bridge Influencer both quarter with profit

that our of drive In our Influencer believe MicroMentions expanded both will seeing Redact success we demand and the we Bridge SLED for applications. adoption accelerating are Identify and Furthermore, market of aiWARE.

and in situation other seeing based are Assembly California the York action to we New solutions. AI in legislative Similar for the Bill need states XXX essentially accelerate with

to of expiration XX New prosecutors other York to days of have within evidence things less really coming arraignment post Law For no craft arraignment deal Redact uptake requires for your seen plea prior example, which all provide defendant from and than an recently to among we seven days interest offers. a of

in discussions solutions with our in to active law into the until January, effect law. does several and not go agencies are and we this implementation While can acquire the looking use of to we municipalities prior

the It better mentioning process volumes from application led naturally of and discussions looking gathered the defendant. before it to disclosing and that in also many our discovery understand have the bears Illuminate prosecutors data during our of phases investigation particularly interest massive to

engines unique the cognition, across capability multiple cognitive today. to structured differentiate market classes to to of solutions us Veritone's point single unstructured data on multiple content tie from continue and utilize

customers still government legal of significantly cycle, the than more for markets. of and we we in are sale both forecasting the deal cautious opportunities we length variability ever revenues to targeting products the unique While are in and lumpiness have and SLED new that due confident

believe this diversify the our industry of business significantly are due our to summarize, and technical to extending our coming we enable [ph] on outpace revenues grow over quarters. advertising from us unique these and and its scale. markets To We capabilities continues the that to differentiation cast the significantly

increase government agencies have and applications our both markets safety public market and customer we interest and domestically seen and have our from and addressable for Our abroad. differentiation new government legal expanded tremendous

of forward deliver our we control land while to strategy and diversified to growth continuing segments. across revenue all maintaining look continue our to expand Operationally, execute and discipline budget market in are we

With that, back pass it Chad. I'll to

Chad Steelberg

seeing customer engagement said our just On call, our the are Ryan. quarter's last and Influencer business. Ryan described, MicroMentions in you, an point operational statement. I Thank Bridge we validate the that We further inflation and that believe that, this opportunities products with new for

that customers In customer of To-date, target new of engaging revenues previously entertainment, government and targeting; legal workflows from and the specifically loss. are without specific doing customers one with aiWARE. considered so, very markets improving each products have large we we media three we've markets identified compliance. and these delivered that our capabilities couldn't have negligible rapidly in we existing ways are that increasing In

that the the have address rapidly developers application develop specific aiWARE customize Veritone's needs. have the to own Moreover, their deploy operating building ability to tools customer's partners offerings. scope By of enable current and applications we we to and third-party channel system, beyond

to applications foundation cost access the of will a AI is framework. incur and continues common and The aiWARE approached development, locked development longer of to Companies one operating to growth. the Veritone. higher our be in to versus lifecycle silos on that And system current unique interoperating without future

low-code, on front for focus development aiWARE analysts. enhancing data tools remain and even center no-code Our scientists, the engineers targeting

are Flow. our us on our developer tool of briefly known we enabling This example internally aiWARE ecosystem. a accelerate touch studio help originally product me is the Let great formally to designed how automate Automate to as no-code leverage studio, was others development. low-code

largely In fact Illuminate it. developed was with

and partners government with our partners. that particularly product I'm the in parties automate opportunity third customers studio does became for talking in very to as vertical, for an it and rapidly represented to great than committed However, roll personally apparent it things this greater expect our we us even out channel internally. it

review I'll our to for guidance update With Pete? QX CFO our Pete that, XXXX. ask financial results our QX and Collins,

Pete Collins

afternoon Chad, everyone. Thanks, and good

that May. are in As Chad we mentioned, expectations executed had we the pleased on communicated we

$XX,XXX. Our that now and we organic associated excluding intangible, can non-GAAP five acquired have compensation generate and net earn-out our amortization increased we shows decreased XX%, the past by operating approximately revenues with the years. the for while invested stock-based businesses by This operating acquisitions we those leverage expenses aiWARE

second the with of of First, highlights quarter of XXXX as second quarter XXXX. compared review I'd like to our financial the

As three the we quarter third Digital, and Machine XXXX a in Performance reminder, Box. of Bridge acquired companies; Wazee

primarily Our to net year-over-year addition with $XX.X million increased acquisitions the revenues mentioned, existing as and QX from due in the well $X.X customers contribution with customers. to a I as new million growth just of XXX%

increased SaaS or the our in $X.X first increased year organic aiWARE second basis, net an On the in periods. revenues and or XX% quarter half by prior compared by $XXX,XXX million XXX% the with

customers. Organic the primarily half both business increased continued the second prior driven and our by first XX% or in quarter was as existing XX% compared in and our land or periods to new year expand growth by and vertical, with by customers $XXX,XXX $X.X we media million the entertainment in periods with which

Our aiWARE the the quarter first SaaS agreements increased recurring $XX,XXX by quarter end MRR over approximately at in revenue the XX%. monthly of second or under or effect

level. second increase our majority X% quarter an bookings million, SaaS the The $X.X the in media the quarter entertainment aiWARE quarter over first vertical. of bookings in were of Our second were and

XX% licensing Our services media total, $X.X have QX, in and continuing and revenues the our our In had in prior business revenues contributed total aiWARE net net discussed we of aiWARE content quarters. million. trend software of services businesses

Our advertising Bridge. the or XX% Performance million net revenues increased $X.X contribution including from to million $X.X $X.X million

existing new clients acquisition advertising net QX Thanks a growth year-over-year. with combination to clients. by and this of increased Excluding revenues XX% our

$X.X expenses million $XX.X $XX.X approximately to XXXX acquired of quarter In XXXX. total operating due third of the in million million in XXXX, businesses second period GAAP of of increased expenses operating of to quarter primarily the our the the the from same addition

[ph] intangibles amortization compensation earn-out of approximately to expense expense plan compensation those and primarily And awards. under performance $X.X million stock related Approximately $X.X awards stock-based of related XXXX additional our based acquisitions. for million and acquisition

in overhead compensation manage software The and to additional our from impact acquisitions and expenses closely, part higher efforts to operating by in the of the our were continuing stock-based product while invest the offset development.

the million the primarily A This expenses is period the expenses increased of increase $XX.X XXXX. of acquired. in of operating from operating to addition to due non-GAAP $XX.X million same businesses

we cash. which revenue QX forward, driving million operations our in $XX.X spending will reduce on Loss second $XX.X our focus Going will the XXXX. the from in with while million keep compared growth a controlling was loss use of quarter of of

totaled $X.XX loss $XX.X per of per year. share prior or a net the million or $XX.X compared net Our with $X.XX share million loss for

Now, results. turning non-GAAP to

non-GAAP expenses total operating QX revenue higher created of and $XX.X management our in million level our leverage of Our or efforts. $XX.X revenue in million the benefits cost net QX, or with by were net of compared XXXX XXX% XXX% reflecting revenues the

prior year per $XX.X share net compared or Our per with the share $X.XX non-GAAP loss or to quarter. $X.X million million totaled $X.XX

or XX% of of last revenues, of revenues net year. down million in EBITDA quarter the or $XX.X second net Our loss from second million $X.X quarter XXX% was adjusted

XXXX, we reduce expense leverage loss on adjusted our to EBITDA prudent XXXX. year-over-year quarter management to revenue a rate in and expect each of are continuing growth In we our and basis

remains balance strong. Our sheet

June million marketable and cash cash balance long-term future $XX.X of received no marketable clients The XX, $X.X securities of cash, securities for we cash from includes million. XXXX, had payments equivalents totaling As and and debt.

During we the raised quarter, XXXX. $X.X X.X proceeds set facility under of million second common of up that shares through quarter million net the the of issuance our second the stock we of ATM in

as have under We of million $XX.X the available today. ATM

guidance. our Turning to

of to $XX.X expect for $XX.X to be range the the We third quarter million million. net in revenue

As quarters based and licensing expected net planned aiWARE historical revenues clients. trends have agreements in in upon recent place services signed on and we today. guidance by our based net prior revenue our is range the the The this from advertising spending content media

as and revenues that net are media forecast not difficult projects of entertainment those does have eDiscovery potential archive not accurately. include processing or range started This to including yet

similar We second expect adjusted our EBITDA to level. the to loss be quarter rate

we connecting Annual with XXth D.A. respective be encourage conference York Ryan. early quarter, meetings directly City. To or New we Technology and investors this in analysts. to at In or presenting reach Later institutional look their our the the brokers in will forward person September, please out arrange contact we investors Davidson to at Conference to

this At to would the session. begin we Q&A time, like Operator?

Operator

from from Thank first the of you. GMP Patrick Securities. [Operator comes line Your Walravens Instructions] question

open. Your line is

Patrick Walravens

doing sales were do, congratulations aiWARE great. Great. quarter Thank you. ask that you is so, you let a – for what me would value was happy that productive And a you we new Hey for – guys is organization? I that at said if the which you with that? mean, the a Chad, you Is look – the total contract [Indiscernible].

Chad Steelberg

Yes. It was a productive us. quarter for

on of was the part it quarter what think did X.X. we I in prior

out could probably we a of that little think it. more I expect

and I that this out larger a negotiated contracts think $XXX,XXX long-term QX little that ink us just that for on really we're in trying bit. in the had large deal year contracts QX is about we and to revenue extends

and in accelerate, and to see expect we hit that to QX QX So, start that

Patrick Walravens

then, a sort that And I what we and you seems lot, for mean and Are cool. we bit can talked demos, how a and when – you pipeline that like -- the Okay, how converting? see Redact right? about of for looks little Identify see XX

Chad Steelberg

entered contracted over XXX believe it's I and have trials. over XX into demos we Actually,

of type type demos, municipalities these for agencies. of and high very are numbers those yes, So, with those

being cycles that. very can about we're them. as it So, relates sales long very be That excited said, to the

translate we a term again sure while. set that great of make trials, into as So expectations those may contracted we actually that that but deals usage long great to we're demand. take in right now I'm want getting our sort

Patrick Walravens

Great. should you're we Pete, right. but I should should there some And modeled there one up clearly of guiding that is out I be you, us for mean, can sequentially revenue just not aware this you know that we help mind? QX, wrinkle terms All in of a the bit all then, the seasonality areas. there little we as in they three is or keep go

Chad Steelberg

source the strong of in a Advertising seasonality, customers mark. since the we for upset two only in which year, second the year of we finish content sporting just events are seasonal of the probably the time fourth some that, said, portion that don't on some parts Pat nature first, business, have that of revenue of kind past quarter. are the because of in there that just the occur is serve licensing other The things that of business. decline that In That is third the us soft being Yes. real for and in the that quarters, a has been in them, year good years in business. other of

out also that back it in And our that the on called got then fourth has that to quarter that side fourth the XXXX call of we contract did of a a timing fourth up achieved when that the quarter February, extra related was bonus in large there's to in SaaS XXX we we component an we had [Indiscernible] bonus quarter XXXX. picked of the that in grants

it bonus is As today something still we're this that pursuing stands for year.

So think is really real only content in business. structural I that licensing the seasonality

Patrick Walravens

Hi, great. very Thank much. you

Chad Steelberg

Pat. Thanks,

Operator

Mike comes Latimore question line the Capital. next from Northland Your from of

open. Your line is

Mike Latimore

the Great. Congratulations quarter. Thanks lot. a Yes. on

a clarification. Just

Redact Ryan, quarter. had in or said six else? and Was two Identify deals figure you I specific you think, the something to that

Ryan Steelberg

much Identify. No. that. really on generic can't go they and They not detail But were were I into more aiWARE. too Redact But

Mike Latimore

-- that and a wanted bit if in quarter that it. government revenue I clarify is And seeing that? little third And what the about strong drives think Got in just case. maybe also so to think then you the talked I Okay. legal. I growth

Ryan Steelberg

stronger I No. don't much it’s revenue. think Yes.

under the different with doing number of with seeing is of we're the demos we're that adoption a driven trials that strong Redact the platform being of what Identify factors. couple we're think really by and products. That's and I a a

audio based enforcement. happening which you lot in of DAs. within York, And cetera, law and First, just that's second of evidence agencies that's Florida well et of by Information legislation this Act, respond have as explosion got California, as that's timeline coming a Freedom to Request have the New video changing you've to to forward

Identify is Veritone on human hold obviously, And and advanced market the the putting for Redact. both that that And so of that that can tremendous based forward. with timeline forefront at solutions is pressure

going The think seen terms needs approval to So, actually we've there's by date. terms the City even a Councils given both we tremendous and what go but et to side in as much delay of contracts, quarter impacting trials can types in pilots for to deals really uptick as those of be customer revenue to year. a of that cetera to which just

So think uptick. see going huge a we're I to don't

On multiple to we XXX,XXX expect QX and year. QX on the about out been we international in did the a agreements side, with the for integrator projects. the large and however to throughout government revenue those this kick side that from them in with negotiations in back of U.K. We've in talked QX system QX start

Mike Latimore

automate And that don't maybe broader little Got can Chad, on, of then just studio, or last How kind it. monetize you that? on I you effect just on bit elaborate go-to-market. the know, a

Chad Steelberg

Yes, absolutely.

this be XXX over of artificial into to on the to internal on to that to operations. a inside a do integrate power able been processes engines things they product the and time the Veritone to could real of the business cognitive intelligence aiWARE this be one able that infrastructure analysts seamlessly so we and harness for product So, built product we their and called -- enterprise is has built of

in on that have On capabilities time no front. the real the really cognitive to-date market you product enables

to using of applications open kind And technology tens there customers two, today. itself source software enterprise base on go-to-market already the the our aiWARE existing Veritone's where our the to a installed base lot customer now that integrated use the predicated we've of into base can number this we've integrated. that expand of So are of touch comes actually from and literally that thousands of market injecting cases significant is really customer

brand gives new us cognitive base this infrastructure base phenomenal to So a level into. customer we push believe this

Mike Latimore

Thank Great. you.

Chad Steelberg

Thanks.

Operator

question line from from Chad Your of Hallum. comes Greg next Bennett

open. is line Your

Chad Bennett

Great. questions. Thanks for taking on job a my quarter. again Nice good

you're So, and just XXX the so can from revenue does sequentially. or about I sense -- any other grants the segment give SaaS the growth at puts of aiWARE on in Pete, the the you a majority midpoint come that QX segments? us within takes up guide, sequential guess,

Chad Steelberg

the business that majority say the aiWARE The will advertising SaaS. is of I'd up. Yes. it in be

is flat. business licensing slightly content looking the that down think be to I to

an being overall flat. perspective lion So, expecting other SaaS or those in slightly down share to slightly it up is with from of the that two mix we're

Chad Bennett

longer Thank growth. of And Okay. on more of question kind a you. then term little maybe a

the acquisitions in you're December annualize growth think on we So, SaaS if share year. made to the And aiWARE then, overall fully should the of willing the business organic quarter business? How the growth you last guys about organically? we

Chad Steelberg

that organic in call QX. Well, growth we the

Chad, are think, of right? I to rate is what the business, run once we've anniversary you're a from getting type what acquisitions, get we the combined at going

Chad Bennett

Yep, correct.

Pete Collins

the the and that we've about so not very Bridge. But a between of today Performance rate doing historical think the I today, in Ryan advertising, making consideration as So, that business some changes got into look run is the the One taking well. Veritone like at if talked we're enhancements Bridge on stands Influencer you with rate -- run business

a quarter combined organic run the very basis, So, that a year business on on XX% teed in growth and healthy basis is a growth to a XX% rate. growth continue in a to-date second up

I just we're the bank would well is on right positioned podcast But market in That's very the going you number. we're never market. that XX%. very huge tell and to a

Ryan got selling the over cycles the in positive. the was very on are vertical. there we Redact and and predict good very now of the we're media the also for in had very there remarks. That's it's sales just government SaaS been On there. or that efforts our to market Identify that penetrated those highlighted But We've we've long. in feedback why is sharing to you side, have But really land products entertainment sales that. and We're three proud difficult years and continue like the and with expand results

overall think of that's quarter a ourselves. it's SaaS just want we're rate we out to point to that I to harder predict growth of limiting this ourselves of don't because really So ahead and kind kind why get at

Chad Bennett

the job again. once Nice Thanks. Okay. quarter on

Chad Steelberg

you. Thank

Operator

Your line next comes ROTH Aftahi from Darren Partners. of question from Capital

Your line open. is

Darren Aftahi

Hey, guys. Good afternoon. and nice Thanks for the quarter. questions taking the

this just new on trials. paying two Are engaged clarification renewing those the they're into of contracts? their Just XX customer about kind language? So The converted outright they contracts. trial more but unclear

Chad Steelberg

paid Yes. Those are contracts, Darren.

Darren Aftahi

Okay. trial? Fair you were cycle XX, then on curve that enough. pipeline long on is question Then two of how they of kind those look my in other as the a And of trials? life clients where at those

Chad Steelberg

were several months. definitely There

for expect successful do going are for recent kick it Committees, get an forward. to basis bulk they So, contract months do trials. they and Appropriation annualized XX on of contracted these take several If through we the to them in

Ryan Steelberg

us. and with days. they believe trial convert in I contracts that did contracts about one were two The was XX

which longer. a for was It actually with of one we that that from was months, other one was and piloted The yes. technology scratch bit six pioneered closed the about so the groups

Darren Aftahi

And earlier. that were international spoke of those two you ones the

and Spain think Italy? I

Chad Steelberg

domestic enforcement. Those law are No. domestic, both

Darren Aftahi

go-to-market That's this Influencer helpful. there? for you second, maybe strategy morning. Bridge kind guess it. What's of now Got I Ryan, said

Ryan Steelberg

managed based affiliate Bridge This We've over. here. through last start quarters Influencer running campaigns a sort of kind of actually it's already the several our formal over announcement. in deployed Influencer, is across and For

XXXX different I podcast. think at

is for while. has the market been The Veritone with in strategy, podcast that's works as number advertising. in are been taking a we So, leader something go-to-market the advantage of position one One's this

the the top So was brand from But on long of our podcasters huge the tail. the agency XXXX investment is is missing that community. we opportunity our focused have that in and strong very we're a obviously area mid only whereas growth through

and Influencer grow to we brand marketing are traditional PR the up sign and the space, both and efforts us to taking in of a sales Bridge, we efforts but go attract for absolutely equity podcasters and out of our new using and So opportunity are advantage to Influencer multitude direct launch acquire Bridge. well-known

Darren Aftahi

maybe one about of this I year Pete. as think the I And of margin was blended up your It going anything margins non-GAAP is you. If kind of little think a we was how think about looks guess, Thank gross basis revenue math But mix should like And right points. your quarter-on-quarter. my similar. rate? is down gross pretty Helpful. bit nuance kind forward one, then there? a XXX two, kind we for

Pete Collins

Yes.

So, that's good Darren. call,

we order of to the processing. of time increasing platform was enhance there And well. quarter Europe our in able over One impact as had things our the we that revenue to we in expanded capabilities provide And cloud of support be the did real to footprint in our cost. then growth the also

two gross the that factors basis. those a non-GAAP So, were main drove that reduction in the margin rate on

got implemented of hopefully refine evaluated on. a to to And undertook be of being think of second executed the process opportunities we we've got more in kind we some want, we've in those in some quarter effective do of to the it and maintain we've more but way. already cost capabilities we are that some able and activities to that said, is being That there that the

those towards point. should do more the the down as revenue at that the So some into costs help content business shifts see this in impact margins But year-over-year we shifts, year. drive an gross second are perspective the QX to SaaS, we the licensing we move overall and from half and the of of as

Darren Aftahi

you. Thank Great.

Pete Collins

Yep.

Operator

from Tom from D.A. question next Diffely Davidson. Your line Instructions] of [Operator comes

is open. line Your

Unidentified Analyst

in Hi, is This ask. Franco A letting you Tom. guys. us Thank for for few questions.

quarter. per did And want spend guys dollars then significant to I ask. First of hour all, on uptick you incremental AI was per I and customer? There driving is to What want solidification. congratulate in very the

Chad Steelberg

that a you aiWARE Can increased restate? per basis? utilization in customer on Is

Unidentified Analyst

hour per process a video basis. On and hour

Chad Steelberg

Yes.

flat of content X the at almost million QX. from basically at So process if hours you cognitive look to QX it's

Ryan Steelberg

Yes. Okay.

people I enhanced acquiring think of utilize as our services broader and a applications. they're licensing array seat licenses

which So of they're number through do we in processed have hours diversified platform particularly and through a way cognition the same that we seats. additional even more licenses against additional for, utilizing more charge the

processed. generating peg fixed media, again, goes and more kind So increasing continue with platform, of is the expense. or hour. hours favorable to hours they where don't we revenue our strategy sign add of against We per revenue more trend against really effect then again the since of that a so cost use licenses, we're it's our land cognition and less it and seat as our But in ESPN, it's expand this to more revenue cognitive

Unidentified Analyst

Okay.

So we to would expect that over go time? up

Chad Steelberg

mix. on depends the product It

the example you law very different revenue for very different in of minute look and a enforcement Redact content and cost. sector at have If of per ingested sort Identify

So as we innovate one to think dig happy explain and of new into develop And detail and running again our three services these because each own it’s how more you products characteristic. has we're with inside to I revenue think guys its that business. verticals and I some continue stuff

Now and our managers product pricing. go-to-market about their think

Ryan Steelberg

But today Redact cognition generate to higher as our of meeting processed broadcast of entertainment customers. and do than historical per Identify revenue hour

Chad Steelberg

Correct.

Unidentified Analyst

ago. business San you are really then being this at helpful. That's you. one facial passed regarding How And recognition are topic? the laws when a the affect few your you different Francisco and that how quarters look Thank addressing does in Okay. that like

Chad Steelberg

a level all macro we're California. in At

being of exact other states. aware have well. [Indiscernible] California across very in in banning where which you In forces state we're the in as of driven opposite, AI well facial So California and were state kind is what technology Bay the other happened they

agencies have putting in Bill New from have a well law to force XXX you ACLU driven groups a like transparent mentioned, the pressure handful Bill are as enforcement to others Assembly as service that and public. York Florida I California far XXXX, to more Senate the like So basically primarily of

software doing those public forcing being sitting as And the as in are frame on frame information redacting today agencies forcing doing time more process. content. using It's for they're the blur of can't they that unfortunately upon well video investigators far how human from fine supplying what comply it's and literally of going it and be content laws something agencies redacted a with And to to the in takes the to editing They're prosecutors, a the D.A. front screen technical of a amount requests, the by they're that that content to go not as out intentionally. in information they're defense. problem efficient a

doing and becomes the the now lifting. extremely it we reduce XX% company. heavy AI something Redact can like both time an is for where the way applications And of profitable in With cost

that moving the adopt demand [ph] we technology pressures in is and legislation the far think increasing happening the California what to in think in favor the terms on the circus Veritone we more saw in Sacramento. I of agencies of than So,

Unidentified Analyst

And driving That's you're revenues. Okay. loss the then What is for quarter. sequentially quarter second Thank the be up then bit you. will expenses? EBITDAS And for the on lastly you adjusted higher similar to getting it rate, great. a next the mentioned little

Chad Steelberg

we've engineering Well continue of increases that we're development, teams. software other got some looking to in kind expand primarily in headcount to capabilities related

back flat into frankly expecting we've So that we're why some to we're of and to invest profit that's that the business that expecting rate. guided towards generate gross additional

Unidentified Analyst

Thank Okay. guys. you,

Chad Steelberg

you. Thank

Operator

There for remarks. are turn further closing will questions. Gilbert call now to back the Chad no I

Chad Steelberg

that This geography, all our expect are forward products, operator to operational momentum revenue we standpoint huge pursue growth start to for The happening. us revenue move joining and we with channel. you today's aggressively encouraging from further early on on the for XXXX. us verticals call. And since opportunities these our reporting see inflection Bye. is forward to product, In progress. to across have and very and an you Good technology. our point coming months, diversification our see of look we to channel diversification thank we takeaway you our pleased is discussed and Thank We're to IPO

Operator

your now thank for conference gentlemen, today's you concludes participation. This may call. you And disconnect. and Ladies

Veritone (VERI) 7 Aug 192019 Q2 Earnings call transcript