Veritone Inc (VERI) Q3 2024 Earnings Call Highlights: Strategic Divestiture and Public Sector ...

GuruFocus.com11-13 15:09

Revenue: $22 million for Q3 2024, down $6 million from Q3 2023. ARR (Annual Recurring Revenue): $63.3 million, down year-over-year. Gross Margin: Non-GAAP gross margin of 71.2% in Q3 2024, compared to...

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GuruFocus has detected 5 Warning Signs with VERI.\n\nRelease Date: November 12, 2024\nFor the complete transcript of the earnings call, please refer to the full earnings call transcript.\n Positive Points \n\nVeritone Inc (NASDAQ:VERI) successfully divested its legacy media agency business, Veritone One, in a transaction valued at up to $104 million, streamlining its operational focus.\nThe divestiture strengthens Veritone Inc (NASDAQ:VERI)'s financial foundation, reducing debt and enhancing its balance sheet.\nVeritone Inc (NASDAQ:VERI) has eliminated customer concentration risk, with no single customer accounting for more than 5% of revenues post-divestiture.\nThe company has a strong pipeline in the Public Sector, with growth expected between 100% to 150% year-over-year, driven by its aiWARE platform.\nVeritone Inc (NASDAQ:VERI) has secured significant partnerships, including multiyear deals with iHeartMedia and ESPN, showcasing the value of its AI solutions.\n\n Negative Points \n\nVeritone Inc (NASDAQ:VERI) reported a decline in Q3 2024 revenue to $22 million, down $6 million from Q3 2023, primarily due to a decrease in Software Products & Services.\nThe company experienced a non-GAAP net loss of $11.1 million from continuing operations in Q3 2024, reflecting a decline in gross profit.\nVeritone Inc (NASDAQ:VERI) has shifted its projected cash flow profitability to fiscal 2026, indicating a longer timeline to achieve profitability.\nThe company's non-GAAP gross margin decreased to 71.2% in Q3 2024 from 74.9% in Q3 2023, driven by a decline in high-margin revenue.\nVeritone Inc (NASDAQ:VERI) faces challenges in the commercial sector, with a decline in consumption-based customers and a focus on larger ARR opportunities.\n\n Q & A Highlights \nQ: Can you talk about the updated 2024 revenue guide? Is the $4 million to $5 million change 100% allocated to public deal push out? Or were there maybe updates on the hiring side of the business as well? A: Yes, it's 100% allocated to timing on Public Sector. There's potential upside if some of these larger deals get pulled into the quarter. - Michael Zemetra, CFO\nQ: Can you give us a bit more of a bridge on acceleration to 2025? Is the growth mainly from the Public Sector, or are there other areas of improvement? A: The Public Sector is expected to grow between 100% to 150% year-over-year. While we expect growth across the commercial sector, the large portion of growth on a dollar basis will come from the Public Sector. - Michael Zemetra, CFO\nQ: What are the key financial terms of the October 2024 divestiture of Veritone One? A: The total consideration from the sale was up to $104 million in cash, consisting of $86 million at closing and $18 million subject to earn-out. The divestiture represented approximately 25% of our consolidated revenue during the trailing 9 months ended September 30, 2024. - Michael Zemetra, CFO\nQ: How has the divestiture of Veritone One impacted your financial strategy? A: The divestiture positions Veritone as a pure-play AI company, allowing us to focus on core AI products and services. It also improves our balance sheet by reducing our annualized debt carry costs significantly. - Michael Zemetra, CFO\nQ: Can you elaborate on the strategic focus post-divestiture? A: Post-divestiture, we are focusing on higher growth verticals with strong margin profiles, namely Public Sector and Commercial Enterprise AI. This positions us as a pure-play AI enterprise software firm. - Ryan Steelberg, CEO\nFor the complete transcript of the earnings call, please refer to the full earnings call transcript.This article first appeared on \nGuruFocus.","kind":null,"is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"1","news_tag":"","news_rank":0,"symbols":[],"gpt_button":1},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.29.1","shortVersion":"4.29.1","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2483289040"}