Recent enhancements that Veritone made to its aiWARE artificial intelligence (AI) platforms stand to help the company take another leap forward after a strong third quarter (ended Sept. 30), according to Veritone executives.
“We have never been more excited about the prospects of our business,” Chad Steelberg, the company’s CEO and chairman, said Nov. 6 on Veritone’s earnings call. “Bookings are at record levels, our pipeline of new” Software-as-a-Service (SaaS) business entering 2020 is at our strongest point in our history and we have optimized our operations and team structure to capitalize on these new opportunities,” he told analysts.
The company had been focused on investing in technology development and on growing revenue “while holding our expenses flat to reduce our adjusted” earnings before interest, taxes, depreciation and amortization loss rate, he noted. But, “with the heavy lifting towards these technical investments now complete, we are well positioned to take advantage of … growth opportunities,” he said, adding Veritone’s “ability to continue our strong revenue growth while reducing our losses rather than our loss rate is a critical company milestone.”
Although the sales cycle in the government sector has “been longer than expected, our sales pipeline and number of active trials is larger than it has ever been and we see multiple indications that our government business is on the cusp of dramatic growth,” he told analysts. Meanwhile, the company’s relationships with companies including Microsoft have “dramatically extended our reach and broadened our sales funnel,” he said.
“Many investors have asked us about the importance” of that announcement, Steelberg said on the call, adding: “Unquestionably, it is a very big deal for Veritone as Microsoft is the market leader in cloud and enterprise software for government agencies, with nearly 100% market penetration,” he said. Microsoft’s field and technical sales people are selling aiWARE products and solutions “side-by-side with our team” to Microsoft’s Public Safety and Justice customers, he noted.
“As we have continued to refine our aiWARE platform and pursue our growth strategy in our targeted vertical market, we have identified opportunities to optimize our organization to maximize our speed, efficiency and customer focus,” he said. As a result of that effort, Veritone recently “realigned our business and functional teams, completed the integration of the companies we acquired last year, and eliminated certain positions that are no longer critical to meeting our strategic goals,” he told analysts.
At the same time, the company “recently completed a significant upgrade” to the aiWARE software, he noted. “Without getting into the technical weeds, we expect these enhancements to deliver orders of magnitude improvements and scalability and compute utilization driving improved margins and more importantly, enabling larger and more dynamic use cases of our existing product portfolio,” he said
Those enhancements “will be fully deployed this quarter and we expect them to start producing savings next year,” he said, adding: “We believe these actions will propel Veritone to the next level, accelerating our revenue growth.”
Veritone today “has a deeper pipeline and greater visibility of bookings and revenue growth than any time in our history,” and its software improvements and “organizational realignment will expand our” total addressable market (TAM), “increase the speed and customer focus of our business teams and drive more profitable revenue growth,” he said, adding: “By every metric, we will be entering 2020 on our strongest footing ever.”
So far in Q4, Veritone has already “signed agreements with total revenue potential of more than $10 million and have more than half of Q4 remaining,” Ryan Steelberg, Veritone president, went on to point out.
The company has been discussing its SaaS business in terms of three vertical markets: media and entertainment, government, and legal and compliance, he noted. But he said: “As our product and customer engagements have evolved, the lines between our government vertical and our legal and compliance vertical have blurred considerably.” Therefore, Veritone has decided to combine its government and legal and compliance verticals into one market, he said.
In its media and entertainment SaaS vertical, “we are in the midst of our biggest bookings quarter ever,” he said, explaining: “Between new customers and renewals and expansion with existing customers, we have signed over 25 agreements since last quarter’s call.”
Veritone is seeing “increasing traction” in the government, legal and compliance market, he said. Although the sales cycle in that market has “been longer than we had expected,” Veritone executed 19 new SaaS license agreements for its Redact applications since the start of Q3 and the “pipeline of new customer opportunities in this market is literally exploding,” he said.
The company “conducted almost 100 customer demos and initiated 10 trials in this market since last quarter’s call, he disclosed.
Veritone Q3 revenue soared 70% from a year ago to $12.8 million, the company reported. AiWARE SaaS revenue jumped 67% to $2.4 million, while ad revenue reached a record $6.3 million.