M+E Daily

Veritone achieved an “inflection point” in its artificial intelligence (AI) platform business during the first quarter (ended March 31), according to Chad Steelberg, its CEO and chairman.

Q1 was a “great quarter” for the company as its aiWARE AI operating system experienced growth across multiple metrics, including a 50% increase in active customers, a more than 75% increase in net new customers and over 500% increase in Software-as-a-Services (SaaS) revenue, he said on an earnings call May 8.

Veritone shares were up more than 12% the afternoon of May 9 at $22.70, after the company reported revenue jumped 41% from a year ago to a record $4.4 million, with Media Agency revenue increasing 8% to $3.1 million and SaaS licensing revenue from the aiWARE platform soaring 506% to a record $1.3 million. But its loss widened to $13 million from $6.9 million.

The SaaS revenue growth was “particularly noteworthy as it reflects the success we are beginning to achieve with our ‘land and expand’ strategy of making it easy and cost-effective for customers to deploy AI to enable 1x and 2x solutions to their immediate business needs, and then increasing our business with them as they realize the power of our platform and create additional use cases,” Steelberg said on the call.

Veritone also “saw significant growth in our second vertical market, legal, and made important strides in laying the groundwork for our third vertical, government,” he told analysts.
“Unlike monolithic” AI systems from larger technology companies that “can cost tens of millions of dollars and take months or more to implement, our customers can be up and running on aiWARE in under an hour for monthly fees as low as $500,” he boasted.

The AI industry, however, is still “in its early days,” he said, citing recent third-party research showing 78% of users surveyed were actively planning to implement AI, but only 16% of those companies were planning to invest in it in 2018.

Steelberg is “seeing three factors” that are still “limiting customer participation” in the AI industry now, he said, adding: “First, the technology represents change and requires new thinking from potential users. It is also still at a relatively early stage in the development of its capabilities. Second, there is a lot of scar tissue out there. This is when an organization is hesitant to make significant investments in AI after their first initiatives failed.”

He went on to say: “The third factor is trust. Humans are not ready to fully trust computers alone. Solutions like self-driving cars, where AI replaces human actions, requires a huge amount of trust. Augmented intelligence solutions that extend the users’ cognitive capabilities rather than replace them are much easier for humans to accept today.”

Veritone’s strategy “recognizes and addresses” each of those barriers, he said, noting the aiWARE platform “makes cognitive engines better and orchestrates multiple cognitive engines to deliver insights that exceed the sum of the parts.” Its AI technology is also “as future-proof as possible, which reassures customers that our solution will evolve with the technology and their needs,” he said.

The company is “really excited about the progress we are making in executing our strategy but, as I have said many times, we are in the very early innings of a long game,” he told analysts.

Veritone’s largest project in Q1 “involved transcribing over 1 million recorded phone conversations on behalf of a financial institution,” CFO Pete Collins said on the call. “We processed this volume quickly and achieved a level of accuracy that was better than their other providers,” he said.

The company had 60 active Media Agency clients in Q1, up from just 39 a year ago, he said. It also had a record 70 customers on the platform at the end of the quarter, up from 57 at the end of the fourth quarter and 25 at the end of Q1 last year, he said. In terms of total accounts on the platform, it had 591 at the end of Q1, up from 467 at the end of Q4 and only 57 at the end of Q1 last year, he said. Veritone, meanwhile, had 184 third-party active cognitive engines on the platform at the end of Q1, up from 151 at the end of Q4 and 48 at the end of Q1 last year, he said.

The company processed a whopping 2.8 million total hours of video and audio files, up from just 367,000 in Q1 last year, he also said, adding Veritone expects to end the current quarter with 15 new customers, about 30 new accounts, and about 20 new active third-party cognitive engines on its platform, after processing about 3.5 million hours of video and audio files during the quarter.