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Edited Transcript of VERI.OQ earnings conference call or presentation 11-May-20 8:30pm GMT

Q1 2020 Veritone Inc Earnings Call

NEWPORT BEACH Jun 30, 2020 (Thomson StreetEvents) -- Edited Transcript of Veritone Inc earnings conference call or presentation Monday, May 11, 2020 at 8:30:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Brian Matthew Alger

Veritone, Inc. - SVP of Corporate Development & IR

* Chad Steelberg

Veritone, Inc. - Chairman & CEO

* Peter F. Collins

Veritone, Inc. - Executive VP & CFO

* Ryan Steelberg

Veritone, Inc. - Co-Founder, President & Director

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Conference Call Participants

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* Chad Michael Bennett

Craig-Hallum Capital Group LLC, Research Division - Senior Research Analyst

* Darren Aftahi

Roth Capital Partners, LLC, Research Division - MD & Senior Research Analyst

* Franco Rafael Granda Penaherrera

D.A. Davidson & Co., Research Division - Senior Research Associate

* Michael James Latimore

Northland Capital Markets, Research Division - MD & Senior Research Analyst

* Patrick D. Walravens

JMP Securities LLC, Research Division - MD, Director of Technology Research and Equity Research Analyst

* Yolanda Dee

- Private Investor

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Presentation

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Operator [1]

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Good afternoon. My name is Suzanne, and I will be your conference operator for today. At this time, I would like to welcome everyone to the Veritone First Quarter 2020 Financial Results Conference Call. (Operator Instructions) Brian Alger, Senior Vice President of Corporate Development and Investor Relations, you may begin your conference.

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Brian Matthew Alger, Veritone, Inc. - SVP of Corporate Development & IR [2]

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Good afternoon, and welcome to Veritone's First Quarter 2020 Conference Call. I am Brian Alger, Senior Vice President of Corporate Development and Investor Relations. After the market closed today, Veritone issued a press release announcing results for the first quarter ended March 31, 2020. This press release is available in the Investors section of our website.

Joining me for today's call are Veritone's Chairman and CEO, Chad Steelberg; President, Ryan Steelberg; and CFO, Pete Collins. Following their remarks, we'll open up the call for questions.

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 net revenues and non-GAAP net loss for the second quarter of 2020. These forward-looking statements are subject to risks, uncertainties and assumptions that may cause the actual results to differ materially from those stated or implied by those statements. Certain of these risks and assumptions are discussed in Veritone's SEC filings, including its annual report on Form 10-K and its quarterly report on Form 10-Q filed today. These forward-looking statements are based on assumptions as of today, May 11, 2020, and Veritone undertakes no obligation to revise or update them.

During this call, the actual and forecasted financial measures we will be discussing, including gross margin, operating expenses and net loss, will be presented on a non-GAAP basis. Reconciliations of these measures to corresponding GAAP measures are included in the press release we issued today.

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

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

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Chad Steelberg, Veritone, Inc. - Chairman & CEO [3]

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Thank you, Brian. Welcome, everyone, and thank you for joining us today. I hope you and your families are staying safe and healthy in light of these extraordinary circumstances. When I last spoke with you in early March, no one could have imagined how much and how quickly the world would change. Our prayers are with everyone who has been hit by this pandemic, especially those who have lost loved ones.

The pandemic had an immediate impact on our content licensing and advertising businesses in March with approximately $1.5 million in expected revenue lost or delayed in the last few weeks of the quarter. Despite the significant revenue pressure, I am pleased with our Q1 results which demonstrates the resiliency of our team and the value of our differentiated and diverse portfolio. Veritone's Q1 revenue was $11.9 million.

On the cost side, we were in a strong position given the focus we've had since Q4 on the bottom line. As the pandemic continued to spread, we were able to quickly accelerate and expand our program and further reduce our operating expenses without a reduction in headcount, enabling us to reduce our non-GAAP net loss to $6.7 million. I cannot stress enough how immensely proud I am of the Herculean effort of our talented employees working from home to maintain operations in this environment while driving customer engagement and product development levels to all-time highs.

We have seen a decade's worth of digital transformation in the last 2 months as businesses increasingly moved to the cloud and AI, recognizing the necessity for change in a changing world. As a result, we expect to see increased strong engagement on our powerful and unique platform.

We continue to innovate and explore new verticals such as energy and safety, and we are building out existing relationships and adding new customers. Upgrades to our aiWARE operating system continued to gain high praise from our customers.

Security and privacy remains a priority for every organization, and we have been working closely with customers to ensure that as they become digital-first businesses using AI, they have the necessary checks and balances in place. More specifically, Veritone launched a groundbreaking AI benchmarking tool to help our customers compare the performance and efficiency of various AI models on aiWARE and equally important, to measure and mitigate bias within the machine.

In addition to helping customers and the communities they serve, Veritone is hyper-focused on efforts to help reopen the global economy. We are hardly immune from the global economic downturn, but we believe this current environment also creates new opportunities for us as digital and AI are critical to finding a path to recovery. In that spirit, we are doubling down on our government business, working with top private and public sector organizations to develop AI-based solutions aimed at bringing back much needed trust and confidence to the places where we work, live, shop and play. There is still plenty to do but we hope to be in a position to share additional details in the coming weeks.

Looking past our first response phase, we see profound structural changes in the global economy, but particularly for the quick and agile, a relatively fast recovery and bright future. At our core, we are driven by the belief that AI is mankind's greatest innovation and is the key to building a more just, transparent and productive society. Veritone is committed to making AI technology available to transform the activities of organizations of all sizes and industries.

Now I'd like to hand the call over to Ryan, our President and Co-Founder, to discuss our operational progress in greater detail. Ryan?

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Ryan Steelberg, Veritone, Inc. - Co-Founder, President & Director [4]

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Thank you, Chad, and good afternoon, everyone. Let me start by saying that in the face of pressures resulting from the pandemic and economic restrictions, our entire team has been laser-focused on not just mitigating the impact on our business, but emerging even stronger than before. I'd like to spend a few minutes discussing our first quarter revenues and outlook in each of our businesses.

In our advertising business, while we saw the cancellation and delay of several advertising campaigns in March, our differentiated cognitive processing and analytics capabilities, the diversity of our served media market and the fact that many of our clients are direct-to-consumer focused, helped to mitigate the disruption from the pandemic to some extent.

In terms of performance highlights for the quarter in this business, while its revenues declined sequentially, our net customer count has continued to be relatively stable and its revenues grew 5% year-over-year while most of the peers are reporting declines. We are introducing a new KPI, average gross billings per active client, as it is a primary indicator of our current and future performance of our advertising business. Our average gross billings per active client for Q1 2020 increased 23.7% year-over-year to $579,000, reflecting the increasing traction we are having with accounts like ExpressVPN and a large pharmaceutical company that is adding new drugs to its campaigns serviced through Veritone One.

Our performance marketing in podcast, broadcast and digital influencers enabled by aiWARE Cognitive Analytics continued to perform very well. Gross billings in this segment continued to represent more than 60% of our total gross billings and our revenue growth here continues to outperform the competition. I also want to call out the strength we are seeing in our new ad networks business, VeriAds. We have seen a strong pickup in our VeriAds offering this quarter as stations and advertisers look to transact increasing loads of unsold inventory. Looking ahead, we expect our advertising revenues to rebound somewhat in Q2 due to new client campaigns and growth in VeriAds, and we are optimistic that they will increase further later this year once global economies start to open back up.

In our content licensing business, we are seeing similar near-term revenue pressures from COVID, but we are taking decisive action to mitigate these temporary impacts. We remain confident that our strategy of leveraging the power of aiWARE to monetize both live and historical video and audio content is a game changer for the media and entertainment industry.

Starting in mid-March, virtually every major sporting event worldwide has been canceled or postponed. In particular, 2 of our licensing group's most material revenue drivers, the NCAA Basketball Tournament and the Masters Golf Tournament, have been canceled and postponed, respectively. In addition, film and television production was largely shut down in March and April, which also impacted our Q1 and Q2 revenue. However, our team has done an excellent job of finding new opportunities to license the top-tier content we represent and leveraging aiWARE's capabilities to add value to that content.

In terms of performance highlights, we are seeing a material increase in demand for COVID-19 related content provided by licensing partners such as CBS News, Bloomberg and CNN. And with aiWARE's indexing and search capabilities, we are able to identify and provide this content quickly and efficiently.

Within our existing base of content, we are finding new distribution models emerge, such as with the Golf Channel's presence on NBCUniversal's new streaming service, Peacock. We have also added notable new licensing clients like CBS' GAME ON! And additionally, our licensing business has expanded into indexing and representing user-generated content, or UGC, and we are already starting to license this new content.

While we expect the impact on our content licensing revenue to continue in Q2, we are seeing them start to stabilize somewhat as some of our new business initiatives start to produce revenue. And we are optimistic that they will start to rebound later this year once sporting events start to take place and film and TV production returns to normal levels. We also expect that some of the events that have been rescheduled to the second half of the year, including the Masters Golf Tournament, will have a positive impact on our licensing revenue later this year.

Shifting to our SaaS businesses. We continue to transform the activity of organizations of all sizes and industries through the power of aiWARE. Despite the challenging economic climate, our SaaS business units continue to deliver strong performance. Total SaaS revenues in Q1 were a record $3.1 million, up 8% sequentially and 13% year-over-year. As our updated KPI table illustrates, our bookings and TCV have each shown strong improvement over the last 4 quarters.

Our land and expand strategy is continuing to drive growth in our Media & Entertainment business, while our Government, Legal and Compliance business is seeing this momentum come from landing new customers. In both of these businesses, the vast majority of our deployments are in the cloud, enabling customers to use our solutions remotely and thus the adoption of and usage of our staff offerings continues to grow despite the changes in our customers' operations.

Within M&E, we continue to see virtually 0 customer churn, and a number of our existing customers have renewed into broader and longer-term contracts. I'm pleased to say that as of this month, iHeartRadio is now using aiWARE on all of its 903 U.S. stations, all of its premier radio network, and we have begun processing their national podcasts. Moreover, nearly all of Hubbard, Bonneville and Entercom U.S. stations are also using aiWARE.

In addition to our broadcast partners, we have signed aiWARE deals with Sony Pictures, Fremantle, and several other large media companies and professional sports teams. Looking forward, we intend to extend the cognitive capabilities of aiWARE across all of our customers.

GLC posted a good quarter, strengthened by a 6-figure subcontract under a program sponsored by AFWERX, the U.S. Air Force's innovation arm. We are very excited about this opportunity to provide aiWARE for the U.S. military. Importantly, GLC's business activity has shifted from demos and trials to signing new license agreements. Year-to-date, we have signed new contracts with 29 public safety and justice agencies in 7 different states. That's more than we signed in all of 2019.

Also, last Friday, the U.S. Department of Justice awarded Veritone a 2-year sole source IDIQ contract covering various cognitive solutions. We consider this award a significant milestone in our strategy to expand our business with the federal government. Furthermore, our engagement with partners such as Epic, Microsoft, PRI, Deloitte and others, continues to drive expansion and leverage through our organization. Looking at GLC's new business pipeline for Q2 and the remainder of the year, we are increasingly confident that GLC will rapidly grow to exceed our M&E SaaS business.

Pete Collins will now review our financial results for the first quarter of 2020 and provide details around our financial guidance. Pete?

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Peter F. Collins, Veritone, Inc. - Executive VP & CFO [5]

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Thank you, Ryan, and good afternoon, everyone. Each of you should have access to the results we released earlier this afternoon, and Ryan has already provided significant color on the first quarter revenues of our business units. The COVID-19 pandemic had an immediate impact on our monetization businesses starting in March, which resulted in our total revenues declining by 4.3% sequentially and 1.8% year-over-year.

As I reviewed our financial results, a couple of items warrant further discussion. First, we were able to achieve significant improvements in our gross margin in Q1. Our overall non-GAAP gross margin improved 110 basis points sequentially and more than 150 basis points year-over-year. This is due primarily to our revenue mix in Q1 as content licensing is our lowest gross margin business, but it is also reflective of the enhancements we have made to our underlying aiWARE software, which are not only reducing our computing costs but also improving performance and stability.

We've also made great progress in reducing our operating expenses. Starting back in Q4 of 2019, we began aggressively cutting costs and pursuing efficiencies in a number of areas. As we saw conditions begin to deteriorate in March, we implemented additional actions to reduce our costs. As a result, we were able to bring our non-GAAP operating expenses down by nearly $2.2 million versus the fourth quarter of last year.

On an annualized basis, we are now operating with a $13 million lower cost base than we had in the third quarter of 2019 before we shifted our focus on driving towards cash flow breakeven. As a result of these actions, despite the revenue disruption caused by the pandemic, our gross margin improvement, together with tight expense controls, helped us to reduce our Q1 non-GAAP net loss to $6.7 million, the lowest level since we have been a public company. Over the past 3 quarters, since shifting our focus towards reaching cash flow breakeven, our quarterly non-GAAP net losses have dropped from $9.6 million to $8.1 million and now to $6.7 million in Q1.

While the team has been very diligent in improving efficiencies and reducing costs where possible, I'd like to point out that our largest expense continues to be our employees' compensation. Before any bonus, commission or payroll benefit consideration at our current headcount, we have an annual cash cost of $30 million. The $6.5 million in loans that we have received under the Paycheck Protection Program have been deposited into separate accounts and all withdrawals are directly linked to payroll and occupancy-related costs, as is required under the program rules. As we noted in our April 16 press release, these loans, together with our cost savings initiatives, are helping us to avoid actions that would impact our employees such as salary reductions, layoffs or furloughs. Based on our current outlook, we do not anticipate needing additional capital in the near term.

We will continue to take actions that will reduce our cloud compute and cognitive engine costs and control our operating expenses as we pursue revenue growth. The combination of revenue growth, compute cost reductions and operating expense control will reduce our cash burn and minimize the amount of cash we will need to raise until we reach cash flow breakeven from operations.

Turning to our guidance regarding the second quarter of 2020. We continue to see cancellations and delays of sporting events and slowness in film and television production impacting our content licensing business unit. We also see some delays in expected new revenues from our SaaS businesses resulting from the economic shutdown. We expect these impacts to be offset by a rebound in our advertising businesses due primarily to additional spending by existing clients and growth in VeriAds. As a result, we now expect our total net revenues for the second quarter of 2020 to be in the range of $11.8 million to $12.2 million. As we have discussed, we have made significant progress on the cost front. And as a result of efficiency gains and tight operational controls, we believe we should once again be in a position to reduce our cash burn sequentially. We expect our second quarter non-GAAP net loss to be in the range of $6.5 million to $6.1 million.

Now I'll hand the call back over to Chad to summarize. Chad?

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Chad Steelberg, Veritone, Inc. - Chairman & CEO [6]

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Thank you, Pete. As we persevere through this crisis, it is clear that we will be facing a world very different than before. And while we recognize the severe human and economic impact this pandemic has created, we also see new opportunities ahead. We are committed to ensuring that Veritone will play a critical role in the rebuilding of our global economy. aiWARE, our proprietary operating system for artificial intelligence, is the backbone of our strategy and key to enterprise AI transformation. Our customers' trust in artificial intelligence is deepening and a newfound fellowship between man and machine is being forged as a result of our efforts.

I'll conclude by reiterating our confidence that Veritone will emerge stronger through this crisis. Our business today is differentiated in the marketplace. We have a unique and diverse portfolio of products and solutions. And we have very strong relationships and engagement with our customers. We are truly a partner to our customers and are helping them through this period.

Which brings me to our team and our culture, which is our source of strength and differentiation. During this pandemic, as fear and uncertainty spread like wildfire, I watched the Veritone team become a family as they cared and encouraged one another with sincerity and empathy. I am honored and blessed to be counted among them, and I'm thankful for our shareholders, customers and partners for your continued support and business.

We look forward to connecting directly with our investors and analysts at the Oppenheimer Virtual Conference tomorrow, May 12. To arrange meetings at this event, we encourage institutional investors to reach out to their respective brokers or to contact Brian Alger.

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

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Questions and Answers

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Operator [1]

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(Operator Instructions) Our first question comes from the line of Pat Walravens with JMP Securities.

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Patrick D. Walravens, JMP Securities LLC, Research Division - MD, Director of Technology Research and Equity Research Analyst [2]

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Great. And congratulations, you guys, on controlling your expenses in an extremely volatile period. Chad, can I start with sort of one of the big questions I know people have, which is you announced in April that you got the $6.5 million from the Paycheck Protection Program, and there's just been so many different headlines about that. Can you update us on what the status is?

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Chad Steelberg, Veritone, Inc. - Chairman & CEO [3]

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Yes. Can you hear me okay, Pat? I'm on mobile while I'm working from home.

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Patrick D. Walravens, JMP Securities LLC, Research Division - MD, Director of Technology Research and Equity Research Analyst [4]

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Yes. Yes. Yes, I can.

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Chad Steelberg, Veritone, Inc. - Chairman & CEO [5]

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Great. First, let me start with Veritone's first priority has always been and continues to be the safety and wellbeing of our employees, their families and our community. And meeting our obligations to our customers and partners is paramount to our future success. As we noted in our prepared remarks, the COVID-19 pandemic had an immediate negative impact on our business starting in March and there was a tremendous amount of uncertainty as to both the duration and intensity that both the pandemic and the economic downturn would have on our ability to access capital and obviously continue to finance the business going forward to profitability.

When the CARES Act was passed, we applied for a PPP loan in good faith based on the rules and interpretations in effect at that time. And these loans truly allowed us to avoid the salary reductions and layoffs and helped us through this period of economic uncertainty. We do not have any update today, though, on that -- to the question, Pat. Our Board continues to evaluate the situation. As you know, the government continues to make modifications to the rules governing the CARES Act and the PPP loans themselves. But we will update you in the future. But again, our primary goal is to protect our business and our employees going forward.

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Patrick D. Walravens, JMP Securities LLC, Research Division - MD, Director of Technology Research and Equity Research Analyst [6]

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Okay. Good. And then 2 more, I'll just put them out there. So you had a big aiWARE SaaS bookings quarter in Q4. And I'm wondering, did that turn into revenue the way you thought it would? Or were there some things about the environment that might have impacted that? And then, Pete, maybe this is a little unfair because I know you didn't guide for the year, but any ideas on how we should think about the quarters after Q2? I mean, should they go down sequentially, should it be flat? Anything you can share with us would be really helpful.

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Chad Steelberg, Veritone, Inc. - Chairman & CEO [7]

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So why don't I have Ryan address the bookings and how that translates into revenue in 2020. Ryan?

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Ryan Steelberg, Veritone, Inc. - Co-Founder, President & Director [8]

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Yes. I'll go with the bookings. So in the fourth quarter, we renewed and expanded some very material large contracts, including a material expansion with iHeartMedia. That expansion is on track. It's actually setting us up to deploy our next-generation Attribute application software across their station groups. So I wouldn't say that there's been a material delay. So the bookings we're very confident with in terms of total contract value. And we will start to see more accelerating expansion, specifically as it relates to Attribute through the end of Q2 and into Q3.

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Peter F. Collins, Veritone, Inc. - Executive VP & CFO [9]

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Pat, this is Pete. Let me pick up on that. So your question about the full year outlook. I think the thing that, as you mentioned when you first started, was the job we did with operating expenses, and that's the thing that we can really control the most. So let me just kind of share feedback with you on what we see from that perspective.

I think for the rest of the year, we're looking to -- we're expecting that our operating expenses will be very similar to where they are in Q1 and what we're guiding to for Q2. So we're not expecting to see significant changes from that operating expense perspective looking out for the remainder of the year.

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Operator [10]

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And our next question comes from the line of Darren Aftahi of Roth Capital Partners.

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Darren Aftahi, Roth Capital Partners, LLC, Research Division - MD & Senior Research Analyst [11]

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Hope you're well. A few -- can I follow-up, Pete, on your commentary around OpEx reductions? Just so I understand it clearly, I think you referenced $13 million annualized savings, correct me if I'm wrong. So does that compare to the $8 million in annualized savings you guys took, I think, at the end of maybe it was the third quarter in 2019? And so should we think about run rate of OpEx as benefiting from that by $13 million on an annualized basis starting in 2Q?

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Peter F. Collins, Veritone, Inc. - Executive VP & CFO [12]

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No, I think that the comment was really back anchored on the third quarter of last year, Darren, and saying that we've pulled out roughly over $3 million a quarter since that point in time. So that $13 million is really an annual improvement over that Q3 2019 run rate.

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Darren Aftahi, Roth Capital Partners, LLC, Research Division - MD & Senior Research Analyst [13]

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Okay. And that's starting in the second quarter though, correct?

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Peter F. Collins, Veritone, Inc. - Executive VP & CFO [14]

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Yes. I mean -- yes, it's ongoing from the first and second quarter, yes.

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Darren Aftahi, Roth Capital Partners, LLC, Research Division - MD & Senior Research Analyst [15]

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Got it. Got it. And then 2 more, if I may. On your ads business, can you kind of deduplicate between the core business and maybe VeriAds? I know in the commentary and the release, you said weakness around content licensing and then AI, SaaS. I was a little bit surprised, though, you said a rebound in the ads business. So maybe, Ryan, if you could just talk about your core business versus VeriAds and then kind of compare and contrast?

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Ryan Steelberg, Veritone, Inc. - Co-Founder, President & Director [16]

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Sure. The core agency business was rather resilient, although it was softer than we had hoped for Q1. It was rather resilient. And primarily because of just the type and the portfolio of different types of customers that we represent. Specifically, we had a heavy distribution of dollars for direct-to-consumer type of accounts, the ExpressVPNs of the world, the GoTo, the LogMeIns, which actually maintained, in some instances, actually increased spend. We were never really historically heavy with consumer packaged goods or retail. So I think that boded very well for us throughout the quarter. And we did bring on some very recent larger pharmaceutical buys that started to kick in at the end of Q1 and are continuing through Q2. So again, I would chalk it up mostly to great discipline and execution of the team. But going into the year, we had a pretty diversified portfolio and a sort of dominant position as it relates to client distribution for direct-to-consumers.

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Darren Aftahi, Roth Capital Partners, LLC, Research Division - MD & Senior Research Analyst [17]

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Great. And then just last one for me. I noticed -- 2 parts to this. On the aiWARE accounts, that was up, I think, pretty materially both year-on-year and sequentially. So maybe if you could talk to that. And then, Chad, I think you mentioned energy as a vertical, may have been the first time you've talked about that for aiWARE. So I'm just kind of curious if you could dive a little bit more into that.

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Chad Steelberg, Veritone, Inc. - Chairman & CEO [18]

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Sure. Ryan, why don't you take the first and I'll take the second part?

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Ryan Steelberg, Veritone, Inc. - Co-Founder, President & Director [19]

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Sure. GLC, we obviously have been laying the groundwork and laying the infrastructure for a long time. And I think we're just starting to really see the benefits of that. Obviously, we specifically referenced a couple of marquee opportunities with an extension to our ATO with the DOJ and really starting to roll out and train their 94 state U.S. attorneys' offices. So we're pretty excited about that. Obviously, with AFWERX, which was a relatively material sized deal for us to deploy aiWARE for the Air Force's use within the U.S. military has, again, been a long time coming, but we're starting to see a lot of those deals start to come in and actually close. So we are very optimistic about the pipeline for GLC, both from, I'll say, more legal-centric initiatives with the DOJ, but also with DoD and other related opportunities within the government. Chad?

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Chad Steelberg, Veritone, Inc. - Chairman & CEO [20]

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Yes. Thanks, Ryan. Yes, [Brian], the -- aiWARE was always developed as an operating system that was independent of any vertical and industry specific. And so over the past year, we have been working heavily with our aiWARE team and our labs organization to explore new markets and new applications, both in the safety, security and even the energy market. And as these markets continue to evolve and really the needs of those markets continue to progress to the standpoint where they actually could take advantage of artificial intelligence in terms of their transformation to be in the technology-first sectors, I've been really pleased with some of the opportunities that we see in front of us, both in terms of, again, the energy markets as well as just general safety. And so stay tuned. I think we've got some big, big things underway that we've been working on for over a year with regards to our core data science and aiWARE team that could have a dramatic impact in some new markets for us.

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Operator [21]

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Our next question comes from the line of Chad Bennett of Craig-Hallum.

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Chad Michael Bennett, Craig-Hallum Capital Group LLC, Research Division - Senior Research Analyst [22]

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Pete, I don't know if I missed it in the prepared or in the press release. Did you talk about MRR for aiWARE in the quarter?

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Peter F. Collins, Veritone, Inc. - Executive VP & CFO [23]

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We did not. We've refined our KPIs. And with the mix of business that we've got, we just found that that wasn't a significant factor for us. So it's not presented in the KPI table any longer.

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Chad Michael Bennett, Craig-Hallum Capital Group LLC, Research Division - Senior Research Analyst [24]

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Okay. I guess, was there -- in that $3.1 million in the quarter, was there any revenue in there that would be more onetime in nature?

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Peter F. Collins, Veritone, Inc. - Executive VP & CFO [25]

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Yes. The one project -- the one piece of revenue that Ryan was referring to from AFWERX would be the one item that would be kind of a onetimer in the revenue for the quarter, Chad.

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Chad Michael Bennett, Craig-Hallum Capital Group LLC, Research Division - Senior Research Analyst [26]

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Okay. Okay. And can you quantify that?

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Peter F. Collins, Veritone, Inc. - Executive VP & CFO [27]

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Yes. It was $300,000.

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Chad Michael Bennett, Craig-Hallum Capital Group LLC, Research Division - Senior Research Analyst [28]

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Okay. Got it. And then just directionally, it sounds like -- I think it was Ryan talking about the segments and you, Pete. You think aiWARE sequentially will grow again in the June quarter here as far as you can tell today?

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Peter F. Collins, Veritone, Inc. - Executive VP & CFO [29]

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We haven't given -- broken out the color on the segments. I think that the comments that Ryan shared emphasized the improvement that we're seeing in advertising and the challenges we're facing, especially in content licensing. So I think those are the 2 that I'd say, overall, are kind of -- on a sequential basis, are more directionally 1 heading up, 1 heading down for the factors that Ryan talked about, but overall producing relatively flat revenues Q1 looking out to Q2.

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Chad Michael Bennett, Craig-Hallum Capital Group LLC, Research Division - Senior Research Analyst [30]

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Right. Okay. And maybe last one for me. The aiWARE bookings in the quarter, $1.4 million. Is there any kind of split you can provide with respect to GLC and M&E in that bookings dollar amount?

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Peter F. Collins, Veritone, Inc. - Executive VP & CFO [31]

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Yes. I mean, the bookings are still skewed more towards M&E as they have been in the past. But what we talked about was the significant ramp-up in the number of GLC accounts that we've signed. And from our perspective, this is following the playbook that we've seen in the past. Where we get in, we've got typically kind of 5-figure type contracts with customers. Once they get more familiar with the aiWARE and the applications that we've built specifically for GLC, we expect to be able to expand that revenue on an account-by-account basis as well as adding new accounts. So really excited about the growth we've got in accounts and the adoption and really the reaction to the applications as well as just the overall improvements we've made in operating system and looking to continue to build that momentum in Q2 and throughout the rest of the year.

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Chad Michael Bennett, Craig-Hallum Capital Group LLC, Research Division - Senior Research Analyst [32]

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Okay. And sorry, one last one from me, Pete. I think you indicated on the call you're comfortable with the capital position right now. Does that imply that you guys won't utilize the ATM going forward, at least near term?

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Peter F. Collins, Veritone, Inc. - Executive VP & CFO [33]

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Yes. What we've said is that we do not need -- with the proceeds from the PPP loan, we do not expect to need additional capital in the near term.

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Operator [34]

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(Operator Instructions) Your next question comes from the line of [Tim] Diffely of D.A. Davidson.

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Franco Rafael Granda Penaherrera, D.A. Davidson & Co., Research Division - Senior Research Associate [35]

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This is Franco in for Tom this afternoon. I wanted to dig in a little bit on the revenue impact you had in the quarter. You talked about cancellations and pushouts late in the quarter. Do you have any sort of visibility into what percentage of the impact was cancellations versus pushouts?

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Chad Steelberg, Veritone, Inc. - Chairman & CEO [36]

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Franco, I'll have Ryan address that question for you. Ryan?

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Ryan Steelberg, Veritone, Inc. - Co-Founder, President & Director [37]

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I'm sorry. You guys cut out for a second. Can you repeat the question?

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Franco Rafael Granda Penaherrera, D.A. Davidson & Co., Research Division - Senior Research Associate [38]

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Yes. So I'm just trying to understand what the revenue impact in the quarter was between cancellations and pushouts. So if you have any color on that.

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Ryan Steelberg, Veritone, Inc. - Co-Founder, President & Director [39]

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Yes, I think we -- yes, I mean -- I think we represented that, based upon our estimates, it was around $1.5 million of an impact in the quarter. And it started pretty immediately. Although we do believe some of these are singular events and not systemic. So specifically, if you look at March Madness and the Masters, those who historically have generated several hundred thousand dollars of revenue for us. The Masters is, at least as everybody knows, rescheduled for this year so we do expect to recoup, if not a material amount, a majority of those lost revenues for the Masters. The NCAA Baseball Tournament obviously is not being rescheduled. And so we look at that as just lost opportunity there.

But again, what I think is important is for the other businesses, they all look relatively resilient, and our pipelines look strong and healthy as we sit here today, with the exception of the licensing business which is still going to be somewhat predicated upon production opening back up. And potentially these professional sport leagues going back to work. And a lot of -- although there's lots of discussions about opening up NBA and other sports, as we sit here today, nothing has been definitively rescheduled with the exception of the PGA TOUR.

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Franco Rafael Granda Penaherrera, D.A. Davidson & Co., Research Division - Senior Research Associate [40]

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Okay. And then have you seen any impacts on saving engagements or perhaps the timing of the deals on the GLC vertical as a result of the pandemic?

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Ryan Steelberg, Veritone, Inc. - Co-Founder, President & Director [41]

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There's definitely been some softness and a delay. And I wouldn't say it's not necessarily directly correlated to the appetite and demand for the products and services, specifically Redact and IDentify. Part of it is just the police agencies themselves who were also impacted by COVID-19 and the stay at home orders has just put, I'd say, that deal flow and timing into a little bit of a funk. That being said, as you saw probably in a recent press release, we did -- we were pretty excited that the City Council for Anaheim Police Department did approve the renewal of our license for IDentify. And that was a unanimous vote with a pretty good-sized city operation. So that bodes very well for us for other agencies to point to. So we do -- we have seen softness, but we don't believe it's going to be overly impactful over the course of the year.

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Franco Rafael Granda Penaherrera, D.A. Davidson & Co., Research Division - Senior Research Associate [42]

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Okay. Sounds good. And then one last one, if I may. Do you have any updates on the performance of the recently introduced podcast tools you put in the market a few quarters ago?

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Ryan Steelberg, Veritone, Inc. - Co-Founder, President & Director [43]

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The podcast tools. I think you're referring to the text analytics solutions that started on -- is that really correct? So I think the primary beneficiary -- yes, the primary beneficiary of those new technologies is actually our own monetization group. So I think we've started to roll out and have started to leverage the targeting capabilities provided by text analytics against our own advertising clients, which we're really excited about. And again, just to be clear, that's in lieu of just trying to target the entire show. We now can look into these shows and target very specific topics in different context categories. And so that's going to be the really big push initially. We -- in addition to ART19 and a few other groups, we're starting to license that technology externally. But I would say the primary beneficiary of that technology is actually Veritone One and our own monetization group.

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Operator [44]

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(Operator Instructions) And our [first] question comes from the line of [Yolanda Dee,] a private investor.

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Yolanda Dee, - Private Investor [45]

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I'm very sorry you had to cancel the shareholder conference meeting. Are you planning on trying to reschedule it this year or next year? What's your thoughts on that?

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Peter F. Collins, Veritone, Inc. - Executive VP & CFO [46]

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Yes. We put a lot of effort in -- this is Pete. We put a lot of effort into preparing for the shareholder meeting, so we'd definitely like to -- let me correct myself, it's not the shareholder meeting, but the investor meeting. And it was timed to coincide with the Roth conference when many of the folks would be in town, and it would be -- just made sense from a logistics perspective to host them at our offices because of the proximity between that conference and our office. So once things kind of get back to normal and we are kind of back in a more normal operating pattern, we'll reevaluate kind of getting that back on the schedule. But we were excited to host it and update investors and look forward to doing something most likely later in the year.

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Operator [47]

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Your next question comes from the line of [Chad] Latimore of Northland Capital.

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Michael James Latimore, Northland Capital Markets, Research Division - MD & Senior Research Analyst [48]

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Mike here. On the -- you talked about GLC exceeding Media & Entertainment. What was the time line again for that or what are you thinking here?

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Chad Steelberg, Veritone, Inc. - Chairman & CEO [49]

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I think the time line is just longer term, Mike. We see more opportunities long-term in GLC. But today, the mix is something like 80-20 M&E versus GLC. And so -- GLC will grow faster than M&E just because of the TAM that's out there.

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Michael James Latimore, Northland Capital Markets, Research Division - MD & Senior Research Analyst [50]

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Sure. Content licensing, what's the kind of rough gross margin on that?

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Chad Steelberg, Veritone, Inc. - Chairman & CEO [51]

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The gross margin's in the low 40s. Now the good thing is the overhead is relatively low as well. So it's a good operating margin business for us. But it is our lowest -- kind of on a rough, high level basis, our lowest gross margin business.

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Michael James Latimore, Northland Capital Markets, Research Division - MD & Senior Research Analyst [52]

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And then just last on podcasting, sounds like that is going well overall. I mean, is that kind of meeting expectations, is it ahead of expectations, is it a little bit slower just because of the COVID stuff? Just kind of more color there would be great.

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Chad Steelberg, Veritone, Inc. - Chairman & CEO [53]

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Yes, I think the podcast business remains very strong. The demand has kind of always been there and the performance as it relates to our clients' benefit. But also just during this event, time spent consuming podcast continues to increase at a disproportionate rate for obviously people not being in the office and sort of taking advantage of the work from home. So across the board, engagement is higher, the performance of the advertising is still maintaining and the demand for investment with and into podcasts remains high.

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Operator [54]

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There are no further questions in the queue. I turn the call back to Mr. Chad Steelberg for his closing remarks.

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Chad Steelberg, Veritone, Inc. - Chairman & CEO [55]

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Thank you, operator, and thank you all for joining us on today's call. As I said, I am very proud of the way our entire team has responded to this very challenging situation. I want to personally thank each of them for their tireless efforts in these past 2 months and for their unwavering focus on continuing to pursue our vision of building the world's leading AI solutions company. We have huge opportunities in our businesses, and our teams are better positioned to capture them than they ever have been before. We look forward to reporting to you on our progress. Goodbye.

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Operator [56]

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And this concludes today's conference call. You may now disconnect.