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Veritone President: Strong SaaS Performance Boosted Q1 Results

A strong showing for Veritone’s Software-as-a-Service (SaaS) business provided the artificial intelligence (AI) tech company a revenue boost during its first quarter (ended March 31), according to company president Ryan Steelberg.

“Despite the challenging economic climate, our SaaS business units continued to deliver strong performance,” he said May 11 on an earnings call.

SaaS revenue grew to a record $3.1 million, up 13% from a year ago and up 8% from Q4, he told analysts, adding: “Our land and expand strategy is continuing to drive growth in our media and entertainment business, while our government, legal and compliance business has seen its momentum coming from landing new customers.”

In both of those businesses, the “vast majority of our deployments are in the cloud, enabling customers to use our solutions remotely and thus the adoption of and usage of our SaaS offerings continues to grow despite the changes in our customers’ operations,” he added.

In Veritone’s advertising business, although the company “saw the cancelation and delay of several advertising campaigns in March, our differentiated cognitive processing and analytics capabilities, the diversity of our … media markets and the fact that many of our clients are direct-to-consumer focused helped to mitigate the disruption from the pandemic to some extent,” he told analysts.

Advertising revenue grew to $6 million from $5.7 million a year ago, but declined from $6.5 million in Q4, “reflecting the impact of COVID-19,” the company said.

Although revenue in the ad business declined, the “net customer count has continued to be relatively stable,” Steelberg said.

Average gross billings per active clients increased 23.7% from a year ago, “reflecting the increasing traction we are having with accounts like Express VPN and a large pharmaceutical company that is adding new drugs to its campaigns serviced through Veritone,” he told analysts.

Gross billings in that segment, meanwhile, “continued to represent more than 60% of our total gross billions and our revenue growth here continued to outperform the competition,” he said.

Veritone is also seeing strength in its new ad networks business, VeriAds, he said, noting: “We have seen a strong pickup in our VeriAds offerings this quarter as stations and advertisers look to transact increasing loads of unsold inventory.”

Looking to the near future, “we expect our advertising revenues to rebound somewhat in Q2 due to new client campaigns and growth in VeriAds, and we are optimistic that they will increase further later this year, once global economies start to open back up,” he said.

In Veritone’s content licensing business, “we are seeing similar near-term revenue pressures from COVID, so we are taking decisive action to mitigate these temporary impacts,” he told analysts.

Content licensing and media services was the company’s only business division that declined from a year ago, falling to $2.8 million from $3.7 million. That was enough to cause total Veritone Q1 revenue to fall to $11.9 million from $12.1 million a year ago. Its loss narrowed to $12.7 million (47 cents a share) from $16.3 million (84 cents a share).

Veritone is also “seeing a material increase in demand for COVID-19-related content provided by licensing partners” including CBS News, Bloomberg and CNN, Steelberg said.

Meanwhile, “within our existing base of content, we are finding new distribution models emerge,” such as with the Golf Channel’s presence on Comcast’s new Peacock streaming service, he said.

It is clear that we will be facing a world very different than before,” Chad Steelberg, Veritone CEO and chairman, told analysts. “While we recognize the severe human and economic impact this pandemic has created, we also see new opportunities ahead,” he said.