Veritone says more advertisers shifted campaign budgets from the first to the second half of 2023 “due to the challenging macro environment.” The result is Q2 ad-related revenue declined 21% to $8.4 million. And it says Q2 advertising gross billings per active client decreased to $576,000, down 22% from a year earlier.
“We believe advertising softness will reverse itself into the second half of 2023, due largely to our customer mix, new customer activation, seasonality on spend and improved economic outlook,” CFO Mike Zemetra said on a conference call for investors.
Veritone is the parent of the audio advertising platform Veritone One. It relies on artificial intelligence-based cognitive computing to process, organize and place digital audio and video advertising for clients.
In January, Veritone announced a series of cost-cuts and layoffs which CEO Ryan Steelberg says have translated into $17 million in annualized savings year-to-date. It also secured a new $30 million credit line to give the company additional financial flexibility.
“Veritone has been strategically evaluating opportunities to deepen our exposure to the industries we believe are the most attractive,” he said. “The net result of these actions is that Veritone is more capable, focused and efficient in its operations and our go-to-market strategy is more tightly aligned as we drive value and progress towards profitability.”
The streamlining of operations has come as Veritone has said it hopes to reach profitability in 2024. In the meantime, Veritone reported total Q2 revenue declined 18% to $28 million. Revenue was primarily dragged down by software products and services and managed services business units as Amazon continued to pull back on its spending. Overall, Amazon represented approximately 14% of Veritone’s Q2 revenue, down from 18% in Q1. While a short-term hit, Zemetra said there is an upside. “Each quarter Veritone's revenue base is becoming increasingly diverse,” he said.
Zemetra also told investors that more dealmaking is on the way. “We are currently in the process of completing a strategic transaction, which will further improve our liquidity position,” he said.
Veritone has not yet said when it will release its third quarter earnings, but the company says it expects overall revenue to be flat year-to-year, or down when the impact of its recent acquisition of the talent acquisition software firm Broadbean is excluded.
AI Wave Heads In Its Direction
Even with short-term cost-cutting and challenge with some of its biggest customers, Steelberg said he sees a “bright outlook” for Veritone to capitalize on the AI revolution as during the last year artificial intelligence has transitioned from a niche area of R&D to a catalyst for transformation.
“With Veritone's aiWARE operating system developers are able to rapidly build scale and operationalize AI-enabled applications,” Steelberg said. “The AI paradigm has shifted and it's important to remember we are still in the early innings. While companies continue to ramp adoption, the underlying AI models themselves will not be differentiated. Rather differentiation will come from the application of the AI in large language models with unique data on a job-specific basis.”
He said a recent example of how Veritone has incorporated generative AI into an established product line is with its Digital Media Hub, which is used by hundreds of media and entertainment companies. DMH provides the ability to use AI to ingest, index and automate the metadata creation process, which allows users to easily find content via metadata tags such as object, facial or logo recognition to improve the cataloging and accessibility of that asset.
“This is a productivity enhancer and provides users the ability to save countless working hours in data management,” he said.