Business Wire | Nov 9, 2020 04:06PM EST

Veritone Beats Top- and Bottom-Line Guidance with Record Q3 2020 Financial Results

Nov. 09, 2020

COSTA MESA, Calif.--(BUSINESS WIRE)--Nov. 09, 2020--Veritone, Inc.(NASDAQ: VERI), a leading provider of artificial intelligence (AI) technology and solutions, today reported results for the three months ended September 30, 2020.

Veritone reported record revenue of $15.7 million for the third quarter of 2020, reflecting record contributions from Advertising and aiWARE SaaS Solutions. GAAP net loss was $11.0 million and non-GAAP net loss was $4.3 million, improving $3.2 million and $5.4 million, respectively, compared with the third quarter of 2019.

"Across the board, the team performed with skill and agility, helping our customers improve their businesses and build resilience in these challenging times through the adoption of our cutting-edge artificial intelligence solutions, anchored by our powerful aiWARE platform," said Chad Steelberg, Chairman and CEO of Veritone. "Third quarter revenue increased by 23% year over year and 18% sequentially. Our momentum was boosted by our timely and well received move into aiWARE solutions for energy, which complement our growing presence in the media and entertainment and government, legal and compliance markets."

Ryan Steelberg, President of Veritone added, "Our team performed extremely well in the third quarter, with revenue from each vertical exceeding the expectations we had coming into the quarter. The 43% year-over-year growth in our aiWARE SaaS business reflects both our increasing traction in the government, legal and compliance markets and initial revenue from the energy market. Both of these markets hold enormous potential for Veritone, and we are driving hard to meet the increasing demand for our solutions."

Recent Business Highlights

* Launched Veritone Energy, a suite of AI solutions aimed at increasing grid reliability to support utilities' integration of renewable energy sources, and maximizing their profitability. * Added GovQA to the growing list of technology and channel partners targeting U.S. Government customers and state and local law enforcement agencies with aiWARE. * Completed and announced the integration of aiWARE with George Jon's Kits, accelerating the rapid discovery of actionable evidence critical to eDiscovery processes. * Renewed and expanded relationship with CBS News with a new multi-year license agreement.

Fourth Quarter 2020 Business Outlook

* Revenue is expected to be in the range of $16.0 million to $16.4 million, representing a 30% increase year over year at the midpoint. * Non-GAAP net loss is expected to be in the range of $4.5 million to $4.0 million, representing a 47% improvement year over year at the midpoint.

Financial Results for Third Quarter Ended September 30, 2020

Revenue was a record $15.7 million, compared with $12.8 million in the third quarter of 2019. The growth reflects a 43% increase in aiWARE SaaS Solutions, including revenue from the Company's new energy solutions, and a 39% increase in Advertising, reflecting contributions from both VeriAds and Veritone One, offset in part by a 13% decrease in aiWARE Content Licensing and Media Services due primarily to lower licensing activity resulting from the cancellation of sporting events because of the pandemic.

Loss from operations was $11.0 million, a substantial improvement compared with $16.2 million in the third quarter of 2019. The $5.2 million improvement was driven primarily by a $2.6 million increase in gross profit due to the higher revenue level and cost savings on efficiencies realized from enhancements to the Company's aiWARE operating system, coupled with a $2.7 million decrease in operating expenses, particularly in the areas of personnel and professional services, due largely to the cost reduction initiatives implemented in the fourth quarter of 2019.

GAAP net loss was $11.0 million, or $0.40 per share, an improvement of $3.2 million compared with $14.2 million, or $0.64 per share, in the third quarter of 2019. Non-GAAP net loss was $4.3 million, or $0.15 per share, compared with $9.6 million, or $0.43 per share, in the third quarter of 2019. The $5.4 million improvement in Non-GAAP net loss was driven by the Company's Core Operations, which improved $4.4 million to Non-GAAP net income of $0.4 million, compared with a Non-GAAP net loss of $3.9 million in the third quarter of 2019, and by Corporate, which improved $1.0 million to a Non-GAAP net loss of $4.7 million.

As of September 30, 2020, the Company had cash and cash equivalents of $54.3 million, including $34.2 million of cash received from Advertising clients for future payments to vendors, and no long-term debt.

Conference Call

Veritone will hold a conference call on Monday, November 9, 2020 at 4:30 p.m. Eastern Time (1:30 p.m. Pacific Time) to discuss its results for the third quarter of 2020, provide an update on the business, and conduct a question and answer session. To listen, please join the webcast or dial-in. To avoid a wait, if dialing in, please pre-register or call in 20 minutes in advance.

Preregister*: http://dpregister.com/10148666

Live audio webcast: investors.veritone.com

Domestic call number: 1-844-750-4897

International call number: 1-412-317-5293

Call ID: 10148666

* Callers who pre-register will be emailed upon registering a conference pass code and unique PIN to gain immediate access to the call and bypass the live operator. Participants may pre-register at any time, including up to and after the call start time. If you have any difficulty connecting with the conference call, please contact LHA at 415-433-3777.

A replay of the audio webcast will be available on the Company's website approximately one hour after the call ends. Additionally, a telephonic replay of the call will be available through November 23, 2020:

Replay number: 1-877-344-7529

International replay number: 1-412-317-0088

Replay ID: 10148666

About the Presentation of Supplemental Non-GAAP Financial Information

In this news release, the Company has supplemented its financial measures prepared in accordance with U.S. generally accepted accounting principles (GAAP) with certain non-GAAP financial measures: "Non-GAAP net loss," and "Non-GAAP net loss per share." Non-GAAP net loss is the Company's net loss, adjusted to exclude interest expense, provision for income taxes, depreciation expense, amortization expense, stock-based compensation expense, and certain acquisition, integration and financing-related costs. Non-GAAP net loss should not be considered as an alternative to net income (loss), operating income (loss) or any other financial measures so calculated and presented, nor as an alternative to cash flow from operating activities as a measure of liquidity. The items excluded from Non-GAAP net loss, as well as a breakdown of GAAP net loss, non-GAAP net income (loss) and these excluded items between the Company's core operations and corporate, are detailed in the reconciliations included following the financial statements attached to this news release. Other companies (including the Company's competitors) may define Non-GAAP net loss differently.

Core Operations consists of the Company's aiWARE operating platform of software, SaaS and related services; content, licensing and advertising agency services; and their supporting operations, including direct costs of sales as well as operating expenses for sales, marketing and product development and certain general and administrative costs dedicated to these operations. Corporate principally consists of general and administrative functions such as executive, finance, legal, people operations, fixed overhead expenses (including facilities and information technology expenses), other income (expenses) and taxes, and other expenses that support the entire company, including public company driven costs.

In addition, following the financial statements attached to this news release, the Company has provided additional supplemental non-GAAP measures of gross profit, operating expenses, loss from operations, other income (expense), net, and loss before income taxes, excluding the items excluded from non-GAAP net loss as noted above, and reconciling such non-GAAP measures to the applicable GAAP measures.

The Company presents this supplemental non-GAAP financial information because management believes such information to be important supplemental measures of performance that are commonly used by securities analysts, investors and other interested parties in the evaluation of companies in its industry. Management also uses this information internally for forecasting and budgeting. These non-GAAP measures may not be indicative of the historical operating results of Veritone or predictive of potential future results. Investors should not consider this supplemental non-GAAP financial information in isolation or as a substitute for analysis of the Company's results as reported in accordance with GAAP.

About Veritone

Veritone (NASDAQ: VERI) is a leading provider of artificial intelligence (AI) technology and solutions. The company's proprietary operating system, aiWARE(tm), powers a diverse set of AI applications and intelligent process automation solutions that are transforming both commercial and government organizations. aiWARE orchestrates an expanding ecosystem of machine learning models to transform audio, video, and other data sources into actionable intelligence. The company's AI developer tools enable its customers and partners to easily develop and deploy custom applications that leverage the power of AI to dramatically improve operational efficiency and unlock untapped opportunities. Veritone is headquartered in Costa Mesa, California, and has offices in Denver, London, New York, and San Diego. To learn more, visit Veritone.com.

Safe Harbor Statement

This news release contains forward-looking statements, including without limitation statements regarding the Company's expected growth potential in the government, legal and compliance and energy markets; and the Company's expected total revenue and Non-GAAP net loss in the fourth quarter of 2020. In addition, words such as "may," "will," "expect," "believe," "anticipate," "intend," "plan," "should," "could," "estimate" or "continue" or the plural, negative or other variations thereof or comparable terminology are intended to identify forward-looking statements, and any statements that refer to expectations, projections or other characterizations of future events or circumstances are forward-looking statements. These forward-looking statements speak only as of the date hereof, and are based on management's current assumptions, beliefs and information. As such, the Company's actual results could differ materially and adversely from those expressed in any forward-looking statement as a result of various factors. Important factors that could cause such differences include, among other things, the impact of the economic disruption caused by COVID-19 pandemic on the business of the Company and that of its existing and potential customers; the Company's ability to achieve broad recognition and customer acceptance of its products and services; the Company's ability to continue to develop and add additional capabilities and features to its aiWARE operating system; the development of the market for cognitive analytics solutions; the ability of third parties to develop and provide additional high quality, relevant cognitive engines and applications; the Company's ability to successfully identify and integrate such additional third-party cognitive engines and applications onto its aiWARE operating system, and to continue to be able to access and utilize such engines and applications, and the cost thereof; as well as the impact of future economic, competitive and market conditions, particularly those related to its strategic end markets; and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond the control of the Company. Certain of these judgments and risks are discussed in more detail in the Company's Annual Report on Form 10-K and other periodic reports filed with the Securities and Exchange Commission. In light of the significant uncertainties inherent in the forward-looking information included herein, the inclusion of such information should not be regarded as a representation by the Company or any other person that the Company's objectives or plans will be achieved. The forward-looking statements contained herein reflect the Company's beliefs, estimates and predictions as of the date hereof, and the Company undertakes no obligation to revise or update the forward-looking statements contained herein to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events for any reason, except as required by law.

VERITONE, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(in thousands)



As of

September 30, December 31,

2020 2019

ASSETS

Cash and cash equivalents $ 54,315 $ 44,065

Accounts receivable, net 17,470 21,352

Expenditures billable to clients 20,108 10,286

Prepaid expenses and other current assets 5,116 5,409

Total current assets 97,009 81,112



Property, equipment and improvements, net 2,499 3,214

Intangible assets, net 12,086 16,126

Goodwill 6,904 6,904

Long-term restricted cash 855 855

Other assets 229 315

Total assets $ 119,582 $ 108,526

LIABILITIES AND STOCKHOLDERS' EQUITY

Accounts payable $ 21,268 $ 17,014

Accrued media payments 41,226 26,664

Client advances 13,767 9,080

Other accrued liabilities 7,643 6,978

Total current liabilities 83,904 59,736

Other non-current liabilities 1,251 1,379

Total liabilities 85,155 61,115



Stockholders' equity

Common Stock 28 26

Additional paid-in capital 302,321 279,828

Accumulated deficit (267,979 ) (232,489 )

Accumulated other comprehensive income 57 46

Total stockholders' equity 34,427 47,411

Total liabilities and stockholders' equity $ 119,582 $ 108,526

VERITONE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

AND COMPREHENSIVE LOSS

(in thousands, except per share and share data)

Three Months Ended

Nine Months Ended

September 30,

September 30,

2020

2019

2020

2019

Revenue

$

15,718

$

12,805

$

40,890

$

37,200

Cost of revenue (exclusive of amortization shown separately below)

4,553

4,196

11,566

11,725

Gross profit

11,165

8,609

29,324

25,475

71

%

67

%

72

%

68

%

Operating expenses:

Sales and marketing

5,255

6,081

15,116

17,921

Research and development

3,587

5,473

10,673

18,250

General and administrative

11,950

11,899

34,836

35,228

Amortization

1,346

1,352

4,040

3,515

Total operating expenses

22,138

24,805

64,665

74,914

Loss from operations

(10,973

)

(16,196

)

(35,341

)

(49,439

)

Other (expense) income, net

(4

)

184

(108

)

446

Loss before provision for income taxes

(10,977

)

(16,012

)

(35,449

)

(48,993

)

Provision for (benefit from) income taxes

36

(1,815

)

41

(1,799

)

Net loss

$

(11,013

)

$

(14,197

)

$

(35,490

)

$

(47,194

)

Net loss per share:

Basic and diluted

$

(0.40

)

$

(0.64

)

$

(1.31

)

$

(2.26

)

Weighted average shares outstanding:

Basic and diluted

27,593,315

22,345,122

27,162,880

20,882,293

Comprehensive loss:

Net loss

$

(11,013

)

$

(14,197

)

$

(35,490

)

$

(47,194

)

Unrealized gain on marketable securities, net of income taxes

-

-

-

48

Foreign currency translation gain (loss), net of income taxes

6

(31

)

11

(8

)

Total comprehensive loss

$

(11,007

)

$

(14,228

)

$

(35,479

)

$

(47,154

)

VERITONE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

AND COMPREHENSIVE LOSS

(in thousands, except per share and share data)



Three Months Ended Nine Months Ended

September 30, September 30,

2020 2019 2020 2019

Revenue $ 15,718 $ 12,805 $ 40,890 $ 37,200

Cost ofrevenue(exclusive ofamortization 4,553 4,196 11,566 11,725 shownseparatelybelow)

Gross profit 11,165 8,609 29,324 25,475

71 % 67 % 72 % 68 %

Operating expenses:

Sales and 5,255 6,081 15,116 17,921 marketing

Research and 3,587 5,473 10,673 18,250 development

General and 11,950 11,899 34,836 35,228 administrative

Amortization 1,346 1,352 4,040 3,515

Totaloperating 22,138 24,805 64,665 74,914 expenses

Loss from (10,973 ) (16,196 ) (35,341 ) (49,439 )operations

Other(expense) (4 ) 184 (108 ) 446 income, net

Loss beforeprovision for (10,977 ) (16,012 ) (35,449 ) (48,993 )income taxes

Provision for(benefit from) 36 (1,815 ) 41 (1,799 )income taxes

Net loss $ (11,013 ) $ (14,197 ) $ (35,490 ) $ (47,194 )

Net loss per share:

Basic and $ (0.40 ) $ (0.64 ) $ (1.31 ) $ (2.26 )diluted

Weightedaverage shares outstanding:

Basic and 27,593,315 22,345,122 27,162,880 20,882,293 diluted

Comprehensive loss:

Net loss $ (11,013 ) $ (14,197 ) $ (35,490 ) $ (47,194 )

Unrealizedgain onmarketable - - - 48 securities,net of incometaxes

Foreigncurrencytranslation 6 (31 ) 11 (8 )gain (loss),net of incometaxes

Totalcomprehensive $ (11,007 ) $ (14,228 ) $ (35,479 ) $ (47,154 )loss



VERITONE, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(in thousands)

Nine Months Ended

September 30,

2020

2019

Cash flows from operating activities:

Net loss

$

(35,490

)

$

(47,194

)

Adjustments to reconcile net loss to net cash provided by (used in) operating activities:

Depreciation and amortization

4,816

4,337

Deferred income taxes, net

-

(1,821

)

Warrant expense

102

-

Change in fair value of warrant liability

200

(7

)

Provision for doubtful accounts

291

54

Stock-based compensation expense

13,698

16,049

Other

-

(19

)

Changes in assets and liabilities:

Accounts receivable

3,535

156

Expenditures billable to clients

(9,822

)

(3,472

)

Prepaid expenses and other current assets

(131

)

(953

)

Accounts payable

4,254

(5,282

)

Accrued media payments

14,562

3,189

Client advances

4,687

15,057

Other accrued liabilities

708

1,447

Other liabilities

(128

)

31

Net cash provided by (used in) operating activities

1,282

(18,428

)

Cash flows from investing activities:

Proceeds from sales of marketable securities

-

13,614

Proceeds from the sale of equipment

56

-

Capital expenditures

(61

)

(282

)

Intangible assets acquired

-

(477

)

Acquisition of businesses, net of cash acquired

-

(883

)

Net cash (used in) provided by investing activities

(5

)

11,972

Cash flows from financing activities:

Proceeds from common stock offerings, net

6,517

17,302

Proceeds from loan

6,491

-

Repayment of loan

(6,491

)

-

Proceeds from the exercise of warrants

2,100

-

Proceeds from issuances of stock under employee stock plans, net

356

722

Net cash provided by financing activities

8,973

18,024

Net increase in cash, cash equivalents and restricted cash

10,250

11,568

Cash, cash equivalents and restricted cash, beginning of period

44,920

38,776

Cash, cash equivalents and restricted cash, end of period

$

55,170

$

50,344

VERITONE, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(in thousands)



Nine Months Ended

September 30,

2020 2019

Cash flows from operating activities:

Net loss $ (35,490 ) $ (47,194 )

Adjustments to reconcile net loss to net cash provided by (used in) operating activities:

Depreciation and amortization 4,816 4,337

Deferred income taxes, net - (1,821 )

Warrant expense 102 -

Change in fair value of warrant liability 200 (7 )

Provision for doubtful accounts 291 54

Stock-based compensation expense 13,698 16,049

Other - (19 )

Changes in assets and liabilities:

Accounts receivable 3,535 156

Expenditures billable to clients (9,822 ) (3,472 )

Prepaid expenses and other current assets (131 ) (953 )

Accounts payable 4,254 (5,282 )

Accrued media payments 14,562 3,189

Client advances 4,687 15,057

Other accrued liabilities 708 1,447

Other liabilities (128 ) 31

Net cash provided by (used in) operating activities 1,282 (18,428 )

Cash flows from investing activities:

Proceeds from sales of marketable securities - 13,614

Proceeds from the sale of equipment 56 -

Capital expenditures (61 ) (282 )

Intangible assets acquired - (477 )

Acquisition of businesses, net of cash acquired - (883 )

Net cash (used in) provided by investing activities (5 ) 11,972

Cash flows from financing activities:

Proceeds from common stock offerings, net 6,517 17,302

Proceeds from loan 6,491 -

Repayment of loan (6,491 ) -

Proceeds from the exercise of warrants 2,100 -

Proceeds from issuances of stock under employee stock 356 722 plans, net

Net cash provided by financing activities 8,973 18,024

Net increase in cash, cash equivalents and restricted 10,250 11,568 cash

Cash, cash equivalents and restricted cash, beginning 44,920 38,776 of period

Cash, cash equivalents and restricted cash, end of $ 55,170 $ 50,344 period

VERITONE, INC.

REVENUE DETAIL (UNAUDITED)

(in thousands)

Three Months Ended

Nine Months Ended

September 30,

September 30,

2020

2019

2020

2019

Advertising

$

8,764

$

6,291

$

21,803

$

17,847

aiWARE SaaS Solutions

3,351

2,350

9,461

7,781

aiWARE Content Licensing and Media Services

3,603

4,164

9,626

11,572

Revenue

$

15,718

$

12,805

$

40,890

$

37,200

VERITONE, INC.

REVENUE DETAIL (UNAUDITED)

(in thousands)



Three Months Ended Nine Months Ended

September 30, September 30,

2020 2019 2020 2019

Advertising $ 8,764 $ 6,291 $ 21,803 $ 17,847

aiWARE SaaS Solutions 3,351 2,350 9,461 7,781

aiWARE Content Licensing and 3,603 4,164 9,626 11,572 Media Services

Revenue $ 15,718 $ 12,805 $ 40,890 $ 37,200

VERITONE, INC.

RECONCILIATION OF NON-GAAP NET LOSS TO GAAP NET INCOME (LOSS) (UNAUDITED)

(in thousands)

Three Months Ended September 30,

2020

2019

Core Operations(1)

Corporate(2)

Total

Core Operations(1)

Corporate(2)

Total

Net loss

$

(1,670

)

$

(9,343

)

$

(11,013

)

$

(6,024

)

$

(8,173

)

$

(14,197

)

Provision for (benefit from) income taxes

-

36

36

-

(1,815

)

(1,815

)

Depreciation and amortization

1,480

130

1,610

1,346

276

1,622

Stock-based compensation expense

627

4,484

5,111

678

4,058

4,736

Change in fair value of warrant liability

-

-

-

-

(57

)

(57

)

Machine Box contingent payments

-

-

-

160

-

160

Machine Box earn-out fair value adjustment

-

-

-

(79

)

-

(79

)

Non-GAAP Net Income (Loss)

$

437

$

(4,693

)

$

(4,256

)

$

(3,919

)

$

(5,711

)

$

(9,630

)

Nine Months Ended September 30,

2020

2019

Core Operations(1)

Corporate(2)

Total

Core Operations(1)

Corporate(2)

Total

Net loss

$

(7,819

)

$

(27,671

)

$

(35,490

)

$

(19,246

)

$

(27,948

)

$

(47,194

)

Provision for (benefit from) income taxes

-

41

41

-

(1,799

)

(1,799

)

Depreciation and amortization

4,190

626

4,816

3,499

843

4,342

Stock-based compensation expense

1,716

11,982

13,698

2,132

12,662

14,794

Change in fair value of warrant liability

-

200

200

-

(7

)

(7

)

Warrant expense

-

102

102

-

-

-

Gain on sale of asset

-

(56

)

(56

)

-

-

-

Interest expense

-

9

9

-

-

-

Machine Box contingent payments

-

-

-

1,609

-

1,609

Machine Box earn-out fair value adjustment

-

-

-

(9

)

-

(9

)

Performance Bridge earn-out fair value adjustment

-

-

-

139

-

139

Non-GAAP Net Loss

$

(1,913

)

$

(14,767

)

$

(16,680

)

$

(11,876

)

$

(16,249

)

$

(28,125

)

(1)Core operations consists of the Company's aiWARE operating platform of software, SaaS and related services; content, licensing and advertising agency services; and their supporting operations, including direct costs of sales as well as operating expenses for sales, marketing and product development and certain general and administrative costs dedicated to these operations.

(2)Corporate consists of general and administrative functions such as executive, finance, legal, people operations, fixed overhead expenses (including facilities and information technology expenses), other income (expenses) and taxes, and other expenses that support the entire company, including public company driven costs.

VERITONE, INC.

RECONCILIATION OF NON-GAAP NET LOSS TO GAAP NET INCOME (LOSS) (UNAUDITED)

(in thousands)

Three Months Ended September 30,

2020 2019

Core Corporate Core Corporate Operations ^(2) Total Operations ^(2) Total ^(1) ^(1)

Net loss $ (1,670 ) $ (9,343 ) $ (11,013 ) $ (6,024 ) $ (8,173 ) $ (14,197 )

Provision for(benefit from) - 36 36 - (1,815 ) (1,815 )income taxes

Depreciationand 1,480 130 1,610 1,346 276 1,622 amortization

Stock-basedcompensation 627 4,484 5,111 678 4,058 4,736 expense

Change in fairvalue of - - - - (57 ) (57 )warrantliability

Machine Boxcontingent - - - 160 - 160 payments

Machine Boxearn-out fair - - - (79 ) - (79 )valueadjustment

Non-GAAP Net $ 437 $ (4,693 ) $ (4,256 ) $ (3,919 ) $ (5,711 ) $ (9,630 )Income (Loss)



Nine Months Ended September 30,

2020 2019

Core Corporate Core Corporate Operations ^(2) Total Operations ^(2) Total ^(1) ^(1)

Net loss $ (7,819 ) $ (27,671 ) $ (35,490 ) $ (19,246 ) $ (27,948 ) $ (47,194 )

Provision for(benefit from) - 41 41 - (1,799 ) (1,799 )income taxes

Depreciationand 4,190 626 4,816 3,499 843 4,342 amortization

Stock-basedcompensation 1,716 11,982 13,698 2,132 12,662 14,794 expense

Change in fairvalue of - 200 200 - (7 ) (7 )warrantliability

Warrant - 102 102 - - - expense

Gain on sale - (56 ) (56 ) - - - of asset

Interest - 9 9 - - - expense

Machine Boxcontingent - - - 1,609 - 1,609 payments

Machine Boxearn-out fair - - - (9 ) - (9 )valueadjustment

PerformanceBridgeearn-out fair - - - 139 - 139 valueadjustment

Non-GAAP Net $ (1,913 ) $ (14,767 ) $ (16,680 ) $ (11,876 ) $ (16,249 ) $ (28,125 )Loss

^(1)Core operations consists of the Company's aiWARE operating platform ofsoftware, SaaS and related services; content, licensing and advertising agencyservices; and their supporting operations, including direct costs of sales as well as operating expenses for sales, marketing and product development andcertain general and administrative costs dedicated to these operations.

^(2)Corporate consists of general and administrative functions such asexecutive, finance, legal, people operations, fixed overhead expenses(including facilities and information technology expenses), other income (expenses) and taxes, and other expenses that support the entire company,including public company driven costs.

VERITONE, INC.

RECONCILIATION OF EXPECTED NON-GAAP NET LOSS RANGE

TO EXPECTED GAAP NET LOSS RANGE (UNAUDITED)

(in millions)

Three Months Ending December 31, 2020

Net loss

($11.8) to ($11.3)

Provision for income taxes

-

Depreciation and amortization

$1.6

Stock-based compensation expense

$5.7

Non-GAAP net loss

($4.5) to ($4.0)

VERITONE, INC.

RECONCILIATION OF EXPECTED NON-GAAP NET LOSS RANGE

TO EXPECTED GAAP NET LOSS RANGE (UNAUDITED)

(in millions)

Three Months Ending December 31, 2020

Net loss ($11.8) to ($11.3)

Provision for income taxes -

Depreciation and amortization $1.6

Stock-based compensation expense $5.7

Non-GAAP net loss ($4.5) to ($4.0)

VERITONE, INC.

RECONCILIATION OF NON-GAAP TO GAAP FINANCIAL INFORMATION (UNAUDITED)

(in thousands, except per share data)

Three Months Ended

Nine Months Ended

September 30,

September 30,

2020

2019

2020

2019

GAAP gross profit

$

11,165

$

8,609

$

29,324

$

25,475

GAAP sales and marketing expenses

5,255

6,081

15,116

17,921

Stock-based compensation expense

(278

)

(281

)

(654

)

(795

)

Non-GAAP sales and marketing expenses

4,977

5,800

14,462

17,126

GAAP research and development expenses

3,587

5,473

10,673

18,250

Stock-based compensation expense

(172

)

(307

)

(593

)

(1,063

)

Machine Box contingent payments

-

(81

)

-

(1,600

)

Non-GAAP research and development expenses

3,415

5,085

10,080

15,587

GAAP general and administrative expenses

11,950

11,899

34,836

35,228

Depreciation

(264

)

(270

)

(776

)

(827

)

Stock-based compensation expense

(4,661

)

(4,148

)

(12,451

)

(12,936

)

Issuance of warrants

-

-

(102

)

-

Performance Bridge earn-out fair value adjustment

-

-

-

(139

)

Non-GAAP general and administrative expenses

7,025

7,481

21,507

21,326

GAAP amortization

(1,346

)

(1,352

)

(4,040

)

(3,515

)

GAAP loss from operations

(10,973

)

(16,196

)

(35,341

)

(49,439

)

Total non-GAAP adjustments (1)

6,721

6,439

18,616

20,875

Non-GAAP loss from operations

(4,252

)

(9,757

)

(16,725

)

(28,564

)

GAAP other (expense) income, net

(4

)

184

(108

)

446

Change in fair value of warrant liability

-

(57

)

200

(7

)

Interest expense

-

-

9

-

Gain on sale of asset

-

-

(56

)

-

Non-GAAP other (expense) income, net

(4

)

127

45

439

GAAP loss before income taxes

(10,977

)

(16,012

)

(35,449

)

(48,993

)

Total non-GAAP adjustments (1)

6,721

6,382

18,769

20,868

Non-GAAP loss before income taxes

(4,256

)

(9,630

)

(16,680

)

(28,125

)

GAAP income tax provision (benefit)

36

(1,815

)

41

(1,799

)

GAAP net loss

(11,013

)

(14,197

)

(35,490

)

(47,194

)

Total non-GAAP adjustments (1)

6,757

4,567

18,810

19,069

Non-GAAP net loss

$

(4,256

)

$

(9,630

)

$

(16,680

)

$

(28,125

)

Shares used in computing non-GAAP basic and diluted net loss per share

27,593

22,345

27,163

20,882

Non-GAAP basic and diluted net loss per share

$

(0.15

)

$

(0.43

)

$

(0.61

)

$

(1.35

)

(1) Adjustments are comprised of the adjustments to GAAP gross profit, sales and marketing expenses, research and development expenses and general and administrative expenses and other income (expense), net (where applicable) listed above.

VERITONE, INC.

RECONCILIATION OF NON-GAAP TO GAAP FINANCIAL INFORMATION (UNAUDITED)

(in thousands, except per share data)



Three Months Ended Nine Months Ended

September 30, September 30,

2020 2019 2020 2019

GAAP gross profit $ 11,165 $ 8,609 $ 29,324 $ 25,475



GAAP sales and marketing 5,255 6,081 15,116 17,921 expenses

Stock-based compensation (278 ) (281 ) (654 ) (795 )expense

Non-GAAP sales and 4,977 5,800 14,462 17,126 marketing expenses



GAAP research and 3,587 5,473 10,673 18,250 development expenses

Stock-based compensation (172 ) (307 ) (593 ) (1,063 )expense

Machine Box contingent - (81 ) - (1,600 )payments

Non-GAAP research and 3,415 5,085 10,080 15,587 development expenses



GAAP general and 11,950 11,899 34,836 35,228 administrative expenses

Depreciation (264 ) (270 ) (776 ) (827 )

Stock-based compensation (4,661 ) (4,148 ) (12,451 ) (12,936 )expense

Issuance of warrants - - (102 ) -

Performance Bridgeearn-out fair value - - - (139 )adjustment

Non-GAAP general and 7,025 7,481 21,507 21,326 administrative expenses



GAAP amortization (1,346 ) (1,352 ) (4,040 ) (3,515 )



GAAP loss from operations (10,973 ) (16,196 ) (35,341 ) (49,439 )

Total non-GAAP 6,721 6,439 18,616 20,875 adjustments (1)

Non-GAAP loss from (4,252 ) (9,757 ) (16,725 ) (28,564 )operations



GAAP other (expense) (4 ) 184 (108 ) 446 income, net

Change in fair value of - (57 ) 200 (7 )warrant liability

Interest expense - - 9 -

Gain on sale of asset - - (56 ) -

Non-GAAP other (expense) (4 ) 127 45 439 income, net



GAAP loss before income (10,977 ) (16,012 ) (35,449 ) (48,993 )taxes

Total non-GAAP 6,721 6,382 18,769 20,868 adjustments (1)

Non-GAAP loss before (4,256 ) (9,630 ) (16,680 ) (28,125 )income taxes



GAAP income tax provision 36 (1,815 ) 41 (1,799 )(benefit)



GAAP net loss (11,013 ) (14,197 ) (35,490 ) (47,194 )

Total non-GAAP 6,757 4,567 18,810 19,069 adjustments (1)

Non-GAAP net loss $ (4,256 ) $ (9,630 ) $ (16,680 ) $ (28,125 )



Shares used in computingnon-GAAP basic and 27,593 22,345 27,163 20,882 diluted net loss pershare

Non-GAAP basic anddiluted net loss per $ (0.15 ) $ (0.43 ) $ (0.61 ) $ (1.35 )share

^(1) Adjustments are comprised of the adjustments to GAAP gross profit, salesand marketing expenses, research and development expenses and general andadministrative expenses and other income (expense), net (where applicable)listed above.

VERITONE, INC.

KEY PERFORMANCE INDICATORS (KPI's) (UNAUDITED)

Quarter Ended

Mar 31,

Jun 30,

Sept 30,

Dec 31,

Mar 31,

Jun 30,

Sept 30,

2019

2019

2019

2019

2020

2020

2020

Advertising

Average gross billings per active client (in 000's)(1)

$

469

$

488

$

490

$

511

$

533

$

614

$

625

Revenue during quarter (in 000's)

$

5,714

$

5,842

$

6,197

$

6,517

$

5,881

$

6,140

$

7,372

Quarter Ended

Mar 31,

Jun 30,

Sept 30,

Dec 31,

Mar 31,

Jun 30,

Sept 30,

2019

2019

2019

2019

2020

2020

2020

aiWARE SaaS Solutions

Total accounts on platform at quarter end

911

941

980

1,069

1,587

1,753

1,791

New bookings received during quarter (in 000's)(2)

$

1,316

$

1,351

$

1,384

$

2,522

$

1,397

$

2,319

$

2,083

Total contract value of new bookings received during quarter (in 000's)(3)

$

2,092

$

1,351

$

1,724

$

12,872

$

2,312

$

2,502

$

2,469

Revenue during quarter (in 000's)

$

2,754

$

2,677

$

2,350

$

2,872

$

3,108

$

3,002

$

3,351

VERITONE, INC.

KEY PERFORMANCE INDICATORS (KPI's) (UNAUDITED)

Quarter Ended

Mar 31, Jun 30, Sept Dec 31, Mar 31, Jun 30, Sept 30, 30,

2019 2019 2019 2019 2020 2020 2020

Advertising

Average grossbillings per $ 469 $ 488 $ 490 $ 511 $ 533 $ 614 $ 625 active client(in 000's)^(1)

Revenue duringquarter (in $ 5,714 $ 5,842 $ 6,197 $ 6,517 $ 5,881 $ 6,140 $ 7,372 000's)



Quarter Ended

Mar 31, Jun 30, Sept Dec 31, Mar 31, Jun 30, Sept 30, 30,

2019 2019 2019 2019 2020 2020 2020

aiWARE SaaS Solutions

Total accountson platform at 911 941 980 1,069 1,587 1,753 1,791 quarter end

New bookingsreceived during $ 1,316 $ 1,351 $ 1,384 $ 2,522 $ 1,397 $ 2,319 $ 2,083 quarter (in000's)^(2)

Total contractvalue of newbookings $ 2,092 $ 1,351 $ 1,724 $ 12,872 $ 2,312 $ 2,502 $ 2,469 received duringquarter (in000's)^(3)

Revenue duringquarter (in $ 2,754 $ 2,677 $ 2,350 $ 2,872 $ 3,108 $ 3,002 $ 3,351 000's)

(1)

For each quarter, reflects the average gross quarterly billings per client over the twelve month period through the end of such quarter for clients that are active during such quarter.(2)

Represents the contractually committed fees payable during the first 12 months of the contract term, or the non-cancellable portion of the contract term (if shorter), for new contracts received in the quarter, excluding any variable fees under the contract (i.e., fees for cognitive processing, storage, professional services and other variable services).(3)

Represents the total fees payable during the full contract term for new contracts received in the quarter (including fees payable during any cancellable portion and an estimate of license fees that may fluctuate over the term), excluding any variable fees under the contract (i.e., fees for cognitive processing, storage, professional services and other variable services). View source version on businesswire.com: https://www.businesswire.com/news/home/20201109006095/en/

CONTACT: Company Contact: Brian Alger, CFA SVP, Corporate Development & Investor Relations Veritone, Inc. (949) 386-4318 investors@veritone.com

CONTACT: Investor Relations Contact: Kirsten Chapman LHA Investor Relations (415) 433-3777 veritone@lhai.com