Veritone, Inc. Common Stock 2026 Q2 Earnings Call

Please note this event is being recorded. I would now like to turn the conference over to Cate Goldsmith, Investor Relations.

Please go ahead. Thank you and good afternoon.

After the market closed today, Veritone issued a press release announcing results for the second quarter ended June 30th, 2026. The press release and other supplemental information are available on the investor relations section of Veritone's website. Joining us for today's call are Veritone's President and Chief Executive Officer, Ryan Steelberg, and Chief Financial Officer, Mike Sametra, who will provide prepared remarks and then open the call for a live question and answer session. Please note that certain information discussed on the call today, including certain answers to your questions, will include forward-looking statements. This includes, without limitation, statements about our business strategy and future financial and operating performance. These forward-looking statements are subject to risks, uncertainties, and assumptions that may cause the actual results to differ materially from those stated.

Certain of these risks and assumptions are discussed in Veritone's SEC filings, including its annual report on Form 10-K. These forward-looking statements are based on assumptions as of today, August 13th, 2026, and Veritone undertakes no obligation to revise or update them. During this call, the actual and forecasted financial measures we will be discussing include non-GAAP measures. Reconciliations of these measures to the corresponding GAAP measures are included in the press release we issued today. Finally, I would like to remind everyone that the call today is being recorded and will be made available for replay via a link on the investor relations section of Veritone's website at www.veritone.com. Now, I would like to turn the call over to our President and Chief Executive Officer, Ryan Steelberg.

Thank you, Cate. Good afternoon, everyone, and thank you for joining us today. During the second quarter, Veritone executed decisively on the strategy and commitments we outlined in May. Our goal was to create measurable and material outcomes, generating material revenue and repeat orders through Veritone Data Refinery, or VDR, expanding customer adoption, and restructuring our organization to be more efficient while materially lowering our cost structure. I am proud to report that we delivered on these fronts, improving our second half visibility and firmly positioning the business for profitable growth. I would summarize our performance like this. As we sit here in Q3 of 2026, while executing these very material organizational changes and cost-cutting initiatives, we were still able to grow revenues year-over-year and materially from last quarter.

Furthermore, compared to this time last year, we have greatly de-leveraged the business, substantially increased our pipeline and total addressable market, and lowered our operating cost structure. Regarding our remaining convertible debt, we have been and remain in active discussions with our debt holders about potential restructuring, and we plan to provide more detail in the upcoming weeks and months. In addition to these corporate and fiscal improvements, our talented product and engineering teams also delivered on the production build and launch of multiple new AI products in the second quarter, including Veritone Assess and Document Redaction, with more exciting new product releases slated for the third quarter. Back to our recent actions. Subsequent to the quarter end, we made substantial progress on the restructuring and cost actions announced earlier this year. These changes, albeit difficult, were necessary.

As of today, we have implemented actions that represent approximately $11.3 million in annualized savings, including headcount reductions and lower non-payroll expenses towards a projected total of $15 million to $20 million by the end of fiscal year 2026. We expect to continue to identify additional opportunities to improve operating efficiency into next year with a continued effort to realize up to 30% in relative total savings through the first part of 2027. Importantly, we have been deliberate in where we have reduced spending while preserving targeted investments behind our highest growth opportunities, including VDR and public sector. Our actions have focused on eliminating duplicative corporate cost, streamlining the organization, and leveraging our own AI technologies to drive greater productivity and operating efficiency across the business.

We believe these actions better align our cost structure with our current revenue base while maintaining the resources and capabilities needed to execute against our key growth priorities. As we mentioned last quarter, we are not waiting for revenue growth to catch up to our cost structure. We are actively improving the operating efficiency of the business with the goal of achieving break-even profitability in fiscal year 2027. Today, we are moving rapidly from vision to commercial execution, connecting data owners with AI developers and placing Veritone at the center of the rapidly expanding AI data economy. We are successfully converting VDR opportunities into large commercial deployments, having closed some of our largest individual deals in the second quarter. This traction came from repeat customers, and we are currently sourcing and prepping data for several strategic clients, most of which operate under active master services agreements.

We remain very bullish on VDR and our market positioning in the training data market. Hyperscalers remain central to this expansion as both foundational clients and high-velocity partners, positioning VDR as a core growth engine for Veritone. We have built the VDR infrastructure and signed the major players. Now is the time to execute and fulfill. To put the scale opportunity in context, based on the firms already under contract, a single incremental order from one of our signed hyperscalers or foundational model developers can represent millions of dollars of margin in a single quarter. As we discussed last quarter, and to continue to support this scale, our migration to Oracle is progressing right on schedule. Initial storage payloads are expected to begin moving in the month, with complete workloads to follow. This transaction is seamlessly enabled by aiWARE's containerized platform-agnostic architecture, which preserves customer flexibility and avoids vendor lock-in.

Once relevant payloads are migrated, we expect compute savings of approximately 20% or more. In addition to our infrastructure build-out with Oracle, we are also escalating our co-selling and marketplace opportunities with Oracle. I recently had the opportunity to speak at their national OCI sales team at their annual kickoff, and have been invited to speak at the Oracle AI World 2026 conference in October. Partners like Oracle, Workday, Carahsoft Technology Corp., GTAC, and others remain a critical part of our future growth strategies, both domestically and internationally. In addition to these major global partners, we maintain strategic partnerships with numerous public sector agencies and leaders in the sports, media, and entertainment industries. Through these strategic partnerships, co-selling activity is well underway, currently representing over 450 sourced or jointly pursued opportunities and over $9 million in active pipeline. Partners are critical. Our Commercial Enterprise division delivered another quarter of strong execution, demonstrating scalability and deepening demand for our AI software and data monetization solutions, with 232 agreements executed over the period.

One of the clearest examples is within our content licensing division, which showed double-digit year-over-year growth in both revenue performance and completed agreements. Simultaneously, our sales team continued to close strategic software deals, expanding the operational footprint of our AI enterprise platform. By securing and renewing key rights clearance partnerships like premier brands like CNN and Sony Pictures Entertainment, Veritone continues to prove its value as an essential software and revenue engine for commercial organizations. Live sports remains the crown jewel of the media ecosystem, and Veritone sits directly at the center of it. Building on our Q1 momentum, Q2 marked another milestone in our long-standing relationship with Augusta National Golf Club, which began in 2008.

During the Masters, our technology delivered live ingestion, automated AI tagging, and agentic metadata workflows to transform tournament coverage into instantly searchable, high-value digital assets in near real-time. Extending this momentum across the broader sports ecosystem, we have recently announced a multi-year renewal with the Pac-12 Conference as their exclusive global content licensing partner, leveraging our Veritone Digital Media Hub to manage and monetize both historical archives and current athletic seasons. By unlocking immediate asset accessibility while preserving strict IP control, Veritone empowers premier rights holders to open new revenue streams and elevate fan engagement as action unfolds. As global demand for high-quality AI training data reaches an inflection point, we are actively monetizing the AI data economy. Through our Veritone Data Refinery, as we turn massive unstructured video and audio archives into high-margin AI-ready assets.

We remain consistently and actively engaged with both hyperscalers and frontier labs as a trusted partner of the necessary data to power the AI economy. This underscores the strength of our data pipeline as AI technology and innovation leaders turn to Veritone to fuel their next-generation models. Looking ahead, we continue to aggressively execute on our strategy to dramatically expand our total addressable market. Leveraging our cloud-native Veritone Digital Media Hub, we are taking the enterprise-grade AI architecture we have built for media giants and democratizing it through modular packaging and tier pricing to capture high-margin growth across previously underserved market segments, including mid-market SMBs, marketing agencies, and independent creators. We are transforming Veritone from purely an enterprise specialist into a universal software standard for audio and video workflows. Turning to the public sector, Veritone's AI applications and iDEMS suites are revolutionizing productivity and efficiency for mission-critical workflows.

This quarter, we launched Veritone Document Redaction and Veritone Assess to our product portfolio. Both applications are built on aiWARE and fit seamlessly into the iDEMS suite of solutions that we currently offer. Document redaction materially increases our TAM, as all states have requirements for document redaction. We have already closed several deals and will be making document redaction available to our existing customers and generally available to all customers this quarter. Veritone Assess is an agentic AI-powered data analysis solution designed to help public safety agencies rapidly identify inconsistencies, missing information, and critical intelligence gaps hidden within complex, unstructured data sets. Assess significantly expands our AI capabilities across investigations, compliance, and case analysis, while increasing the speed and accuracy of decision-making. It uses cases including solving crimes, identifying procurement and financial fraud, developing mission plans, and applying policies and procedures to processes involving unstructured data.