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Thursday, November 6, 2025 at 5 p.m. ET CALL PARTICIPANTS President and Chief Executive Officer — Ryan SteelbergChief Financial Officer — Michael L. Zemetra Need a quote from a Motley Fool analyst? Email [email protected] Chief Financial Officer Michael L. Zemetra said, “We do not expect the same level of one-time software revenue to recur in Q4 2025." As a result, the company is forecasting fiscal Q4 2025 non-GAAP gross margins to be closer to 60%, indicating margin compression next quarter.“This negative trend in representation services is expected to continue through 2025 or until the macro economy shows demonstrated improvements over 2024," per Zemetra.Chief Executive Officer Ryan Steelberg confirmed, “have we seen potentially some delays in some of the revenues that would have contributed in this quarter? We have,” referencing federal public sector business, and cited the government shutdown as a contributing factor to delays. Revenue -- $29.1 million in revenue for fiscal Q3 2025 (period ended September 30, 2025), up 32% year over year, driven by $8.1 million growth in software products and services and offset by a $1 million decline in managed services.Software products and services growth -- 55% year-over-year increase; excluding Veritone Hire, growth exceeded 200%.VDR sales pipeline -- Over $40 million in qualified pipeline and bookings, representing a 100% sequential increase from fiscal Q2 2025 levels.Annual recurring revenue (ARR) -- $68.8 million in ARR, up 9% from fiscal Q2 2024 and 12% sequentially from fiscal Q2 2025, with ARR from consumption-based customers rising 26% year over year and 74% sequentially.Total bookings -- $21.5 million, up $5 million or 30% year over year, primarily driven by VDR deals.Gross margin (Non-GAAP) -- Non-GAAP gross margin was 70.6%, down 60 basis points year over year; fiscal Q4 2025 projected non-GAAP gross margin is between 60%-61% due to less one-time revenue and a higher VDR mix.Debt reduction -- Term debt fully retired and 50% of convertible debt repurchased, reducing consolidated debt principal from roughly $126.7 million as of September 30, 2025, to about $45 million, and annual debt service from over $14 million to approximately $800,000.Equity capital raised -- $100 million secured via offerings in September and October 2025, raising cash and cash equivalents above $100 million post-transaction.Fiscal Q4 2025 revenue guidance -- Expected between $33.4 million and $39.4 million, with the midpoint implying a 63% year-over-year increase and 25% sequential growth from fiscal Q3 2025.Fiscal Q4 2025 non-GAAP net loss guidance -- Projected non-GAAP net loss between $1.5 million and $5 million, a 66% improvement year over year at the midpoint.Customer count -- Total software products and services customers decreased by 9% year over year to 3,021, reflecting a shift in focus toward larger ARR opportunities and the impact of legacy client attrition.Public sector pipeline -- $218 million in qualified public sector pipeline opportunities, up from $110 million earlier in 2025, with 82 contracts closed and 30 new agencies added.Commercial agreements -- 27 signed in commercial enterprise, including new and expanded partnerships with ESPN, NCAA, Newsmax, and CBS Media Ventures.VDR margins -- Approximately 40% gross margin on VDR revenue, with one-time high-margin software revenue positively affecting results.Guidance for public sector and commercial enterprise in fiscal Q4 2025 -- Public sector revenue expected to grow nearly 50% year over year; commercial enterprise, led by VDR, projected to exceed 75% growth year over year.Operating loss -- Operating loss of $15.8 million, improved by $6.7 million or 29% year over year; non-GAAP net loss from continuing operations at $5.8 million, a 48% year-over-year improvement. Veritone (VERI 4.48%) delivered a 32% year-over-year revenue increase for fiscal Q3 2025 and sharply accelerated software products and services growth, with revenue up $8.1 million or 55% year over year, and strategic execution underscored by aggressive debt reduction and successful capital raises that substantially lowered financial risk. Management cited a doubling of the VDR bookings and sales pipeline sequentially, extensive new commercial and public sector wins, and a 30% increase in total new bookings year over year as tangible drivers of future momentum. Significant improvements to liquidity and annualized debt service, as well as robust revenue and non-GAAP net loss guidance for fiscal Q4 2025, signal a strengthened financial foundation and solid market positioning. Public sector deals and a growing international presence contribute to record pipeline visibility, although margin compression and macro-driven headwinds in managed services warrant close watch. Chief Executive Officer Steelberg said, “We’ve completed an agreement to retire the entirety of our term debt and repurchase approximately 50% of our outstanding convertible debt while maintaining material net cash on the balance sheet to fully fund operations over the next twelve months and achieve our profitability goal in the latter half of next year, as of November 6, 2025.”Zemetra stated, “We started 2025 with one of our strongest quarters to date, with Q3 revenue surpassing our recent guidance, led by our software products and services growth of over 55% year over year.”Management highlighted a “robust expanding pipeline” across both commercial and public sectors, with committed bookings, recent product launches, and selected agency wins serving as leading indicators for durable growth beyond 2025.The company indicated, “VDR's accelerated momentum underscores not only the surging demand for clean, model-ready training data but also the expanding monetization potential of premium video and audio assets themselves.” INDUSTRY GLOSSARY aiWARE: Veritone’s proprietary artificial intelligence operating system enabling the orchestration and processing of structured and unstructured data via AI models.VDR (Veritone Data Refinery): A Veritone solution that converts raw unstructured multimedia (audio, video, text, images) into tokenized, model-ready datasets for AI training and monetization.Veritone Hire: AI-powered human capital management product suite within Veritone’s software products and services segment.Gross revenue retention: The percentage of recurring revenue retained from existing customers over a period, excluding the impact of upgrades, cross-sells, or expansions.Consumption-based revenue: Revenue derived from pay-per-use contracts, as opposed to fixed recurring SaaS subscriptions.IDEMS: Veritone’s product for investigative and evidentiary data management solutions, sold to public sector agencies. Full Conference Call Transcript Ryan Steelberg, and Chief Financial Officer, Michael L. Zemetra, who will provide prepared remarks and then open the call up 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, Inc.'s SEC filings, including its annual report, on Form 10-K. These forward-looking statements are based on assumptions as of today, November 6, 2025, and Veritone, Inc. 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, Inc.'s website at www.veritone.com. Now I would like to turn the call over to our President and Chief Executive Officer, Ryan Steelberg. Ryan Steelberg: Thank you, Cate, and thank you everyone for joining us today. As the iconic line from one of my favorite childhood shows, The A-Team goes, "I love it when a plan comes together." Simple yet profound. And never more fitting than it is for Veritone, Inc. today. I look forward to sharing the details of our exceptional quarter and the strategic momentum now propelling Veritone, Inc. forward. But before we dive in, I want to take a moment to highlight the substantial progress we've made over the past 24 months, progress that has fundamentally strengthened our company and positioned us for sustained growth and success. In early 2023, we set a bold and deliberate course to realign Veritone, Inc. with its aiWARE-first mission, fortify our financial position, and ignite durable strategic growth. We've executed with precision and purpose every step of the way, transforming vision into measurable achievement. Today, I'm proud to declare success across these core initiatives. Veritone, Inc. has not only regained its footing but stands stronger, more focused, and more strategically positioned than ever before. First, let's start with the balance sheet, where we have completely flipped the script. A few years ago at their peak, we carried nearly $80 million in high-cost term debt and roughly $200 million in convertible debt. Today, I'm proud to announce that we've completed an agreement to retire the entirety of our term debt and repurchase approximately 50% of our outstanding convertible debt while maintaining material net cash on the balance sheet to fully fund operations through 2026 and achieve our profitability goal in the latter half of next year. As a result, our annual debt service burden has now dropped from over $14 million a year to approximately $800,000 a year. A transformative shift that fundamentally strengthens our financial foundation and future trajectory. Our balance sheet, historically an anchor laden with debt, now provides renewed flexibility and stability, enabling us to fully capitalize on this hyper-growth market opportunity. Second, after years of disciplined financial execution and strategic reorganization, efforts that have generated tens of millions of dollars in savings, our operating model today is now tightly aligned with both our scale and our strategic focus on our high-growth AI software products and services. With this foundation in place, our confidence in achieving operating profitability in late 2026 has never been stronger. Third, we have refocused Veritone, Inc. squarely on our AI roots, our unmatched expertise in unstructured data, and our market-leading intelligent AI applications. Today, Veritone, Inc. stands on a trajectory of strong, strategic, and profitable growth, powered by our proprietary AI operating system, aiWARE, which fuels the global data economy by generating trillions of tokens every quarter. As the AI economy accelerates, the data economy is expanding right alongside it, and Veritone, Inc.'s strategic positioning and market timing could not be more perfect. Veritone, Inc. has emerged as a leading semantic token factory for video and audio, a service we call the Veritone Data Refinery or VDR. Built entirely on our own proprietary aiWARE platform, our tokenization engine not only powers our AI workflows and customer applications but now serves as the foundation for a powerful new monetization framework. Our VDR product offering is leading the way as the first of several major monetization initiatives which we plan to roll out beginning in the first quarter of next year. For more than a decade, Veritone, Inc. has been tokenizing video and audio, the fastest-growing segment of unstructured data, at massive scale. More importantly, we're doing so in a transactional utility-driven format that delivers immediate value and measurable ROI for our customers and ultimately for our investors. Through our expanding suite of innovative AI products, services, and applications, our tokenization and monetization strategy is designed to exist and operate both on-chain in the context of blockchain and independently as it has done and efficiently for more than a decade. The data-as-a-currency era has arrived, and Veritone, Inc. is uniquely positioned to capitalize, executing from a position of strength, expertise, and leadership in a rapidly expanding multibillion-dollar market. In fact, according to Mordor Intelligence, the global tokenized asset market is projected to reach $13.5 trillion by 2030. It is going to be a very exciting next few years for Veritone, Inc. and our customers. Now turning to our strong quarterly results. Veritone, Inc. delivered revenue of over $29 million. This performance underscores the accelerating demand for our market-leading aiWARE solutions, data products, and intelligent applications, representing a 32% year-over-year increase in revenue for the overall business. Looking specifically at software products and services, which includes VDR, revenue grew by an impressive 55% during the quarter. Excluding Veritone Hire, software products and services revenue surged by more than 200%. As global investment in AI infrastructure intensifies, demand for high-quality training data and for our AI applications continues to rise in parallel. This powerful combination is driving sustained high-margin expansion across our software products and services business. And as Michael will outline shortly, our bottom-line performance this quarter was equally strong, delivering more than a 50% year-over-year improvement. Now turning to the partnerships, contract wins, and products that underpinned our strong results. This quarter, our Veritone Data Refinery, VDR business, continued to deliver exceptional performance. VDR transforms raw, unstructured audio, video, images, and text into high-quality tokenized datasets that power and fine-tune the world's most advanced AI models. We have established ourselves as a premier data and model training partner, and during the quarter, we secured several significant new VDR customers, including contracts with multiple major hyperscalers, further solidifying VDR's position as a critical enabler in the unstructured AI training data ecosystem. VDR's accelerated momentum underscores not only the surging demand for clean, model-ready training data but also the expanding monetization potential of premium video and audio assets themselves. Our qualified VDR pipeline and bookings now exceed $40 million, reflecting a 100% growth quarter over quarter. Importantly, that figure represents only current bookings and near-term opportunities. Our total VDR pipeline now spans multiple sectors, regions, and time horizons, positioning Veritone, Inc. for sustained growth as AI developers increasingly move beyond open web data in favor of proprietary multimodality datasets, precisely the domain VDR was built to serve. Looking forward, we are confident that by the end of 2025, Veritone, Inc. will hold active contracts or projects with every major player in the market. Our VDR solutions are indeed growing quickly and provide great strategic leverage for future growth. But we are equally excited about our AI applications business, again built and deployed on the same aiWARE platform. For Veritone, Inc. and our customers, our AI applications are the delivery vehicles for data-centric high-value use cases, driving efficiency gains and ROI. In the quarter, we achieved significant progress in our commercial enterprise applications business. We signed 27 commercial agreements, including partnerships with ESPN, the NCAA, and Newsmax. And just last week, we announced an expansion of our long-standing relationship with CBS, now encompassing many of CBS Media Ventures' flagship programs, including Entertainment Tonight and Inside Edition, which are now available for licensing through Veritone, Inc. These partnerships exemplify how Veritone, Inc. empowers the world's leading media organizations to unlock and monetize their vast content and data archives. Furthermore, through VDR, we are transforming these assets into clean, searchable, model-ready datasets, creating high-value training material for AI models and in turn generating meaningful recurring revenue streams for both Veritone, Inc. and our partners. As content libraries expand and data volumes surge, Veritone, Inc. is uniquely positioned to unlock maximum value for commercial enterprises and IP owners. Our technology enables partners to fully monetize their content archives, transforming dormant assets into active revenue-generating resources, while simultaneously producing high-quality model-ready data that fuels the next generation of AI innovation. Turning to the public sector. In Q3, we closed 82 contracts from new and existing customers across federal, state, and local agencies. We also added 30 new agencies during the quarter, including an IDEMS win at a top-five law enforcement agency and an annual IDEMS renewal with a Department of War agency deployed in their private cloud. Despite the federal government shutdown, we continue to be actively engaged with our customers and prospects in the Department of War and DHS as we expand the footprint of Veritone, Inc. solutions. Our public sector pipeline now approaches $218 million in qualified opportunities, up from $110 million earlier this year, a testament to both our accelerating demand for AI-driven solutions and Veritone, Inc.'s reputation as a trusted technology partner to law enforcement, defense, and fed civ agencies. We also saw encouraging momentum internationally, including closing a partner-led transaction for a national police agency in the EU and advancing multiple opportunities in the UK for Veritone Redact, Veritone IDEMS, and a new workflow solution on aiWARE. Our international pipeline now exceeds $28 million and continues to grow rapidly, reflecting rising product market fit and strong demand among agencies engaged in government initiatives in key global markets, all supported by our secure and GDPR-compliant infrastructure. Our awardable status on the Department of War's P1 marketplace positions Veritone, Inc. to capitalize on the expanding wave of government AI investment. This designation enables us to engage with DOD and civilian agencies, shorten procurement cycles, and deliver mission-critical AI solutions faster, helping government partners tackle their most pressing operational and analytical challenges. Subsequent to the end of the quarter, we introduced a suite of new advanced capabilities within Veritone Redact, our aiWARE-powered SaaS application that automates the redaction of sensitive information in audio, video, and text. The latest features include AI-powered voice masking, inverse blur, and multilanguage transcription in 64 languages, all designed to enhance privacy, compliance, and efficiency. These advancements are already driving expansion within existing customers and creating new opportunities for agency and enterprise partnerships. Before turning things over to Michael, I want to reflect again on how far we've come and where we're headed. I could not be more excited about Veritone, Inc.'s future. I remain deeply grateful to our investors, partners, and employees who have supported us through this remarkable transformation. I have never been more confident in the future of Veritone, Inc., our business, our people, and the market opportunity before us. We are leading the tokenization and monetization of valuable unstructured data and have firmly established ourselves as a key enterprise leader in both the AI and data economies. With a strengthened balance sheet, supported by high-quality equity raises completed in the past few months, and the material debt reductions announced today, Veritone, Inc. is entering a new phase of execution, one defined by rapid profitable growth. With our exceptional talent, dynamic AI platform, market-leading applications, and a robust expanding pipeline, Veritone, Inc.'s future has never been brighter. Over to you, Michael. Michael L. Zemetra: Thank you, Ryan. We started 2025 with one of our strongest quarters to date, with Q3 revenue surpassing our recent guidance led by our software products and services growth of over 55% year over year and a 48% year-over-year improvement in our bottom line non-GAAP net loss. In addition to this momentum in our results, we secured over $100 million in equity capital in September and October 2025, substantially improving our longer-term liquidity position. As I will explain in more detail, I'm thrilled to announce today that we will be paying off 100% of our term loan and paying down 50% of our convertible debt, further improving our liquidity position. The results we achieved this quarter are the culmination of years of hard work and strategy coming to fruition. During my prepared remarks, I will discuss Q3 year-over-year performance and KPIs, which exclude the results of our media agency, are presented as discontinued operations in the corresponding historical financial periods, balance sheet and liquidity position, including the recent capital raises and pay down of our debt, and Q4 and fiscal 2025 guidance. Starting with Q3 2025 performance. Q3 revenue was $29.1 million, up $7.1 million or 32% from Q3 2024, driven by an $8.1 million increase from our software products and services offset by a $1 million decline in our managed services. The $8.1 million revenue growth in software products and services was driven by commercial enterprise, which improved $7.8 million year over year, and public sector, which grew over 25% year over year. The growth in commercial enterprise was led by Veritone Data Refinery, or VDR. VDR, which launched in Q4 2024, is one area where we continue to see very strong growth. And today has a near-term sales pipeline in bookings of over $40 million, up over 100% from our guidance in Q2 2025. Overall, Veritone Hire remained relatively flat year over year, driven largely by the hiring softness in the macro economy. Excluding Veritone Hire, our software products and services grew more than 200% year over year. The growth in the public sector was driven by the rollout of larger deals executed in 2025, including the Department of Defense and larger public safety agencies. We expect these larger public sector deals, coupled with our expanding public sector pipeline, to generate substantial growth beyond 2025, which I will explain in more detail later. The $1 million decrease in Q3 managed services revenue was principally due to a decline in representation services by a decrease in our varied services, offset by a slight improvement in content licensing. As we previously discussed, we expect this negative trend in representation services to continue through 2025 or until the macro economy shows demonstrated improvements over 2024. Turning to key performance metrics across our software products and services. In Q3 2025, ARR of $68.8 million, up 9% from Q2 2024 of $63.4 million, and 12% sequentially from Q2 2025 from increased consumption-based revenue largely driven by VDR and stable recurring SaaS-based revenue. Overall, ARR from consumption-based customers increased 26% year over year and 74% sequentially from Q2 2025. Recurring subscription-based SaaS customers were up slightly by 3% year over year. As of Q3 2025, 73% of our ARR was from subscription versus consumption-based customers, as compared to 76% at Q3 2024. Total new bookings of $21.5 million, up $5 million or 30% year over year, primarily due to larger VDR bookings across our software customer base. Gross revenue retention continued to be above the 90th percentile. Total software products and services customers of 3,021, which was down 9% year over year, predominantly from our commercial enterprise sector, which includes lower consumption-based customers across Veritone Hire, and the continuing impact of sunsetting legacy CareerBuilder customers post the June 2023 acquisition of Broadbeam, and smaller customers as we focus on larger ARR opportunities, offset by an increase across the public sector, largely from the growth in public safety customers. Q3 GAAP gross profit was $18.7 million compared to $14.7 million in Q3 2024, an improvement of $4 million largely driven by growth in software products and services, including VDR, with GAAP gross margins of 63.3% as compared to 66.6% in Q3 2024. Excluding noncash depreciation and amortization expense, Q3 2025 non-GAAP gross margin was 70.6%, as compared to 71.2% in Q3 2024, a decline of 60 basis points. Note that included in Q3 2025 is certain one-time software revenue that has very high gross margins. While VDR gross margins remain close to approximately 40%, I will discuss later, we do not expect the same level of one-time software revenue to recur in Q4 2025. And as a result, we are forecasting Q4 2025 non-GAAP gross margins to be closer to 60%. Q3 operating loss of $15.8 million improved by $6.7 million or 29% year over year, primarily driven by the increase in gross profit offset by lower operating expenses. Net loss from continuing operations was $26.9 million, an increase of $4.4 million or 20% compared to Q3 2024. The year-over-year increase was principally driven by an $8 million non-cash charge in the estimated fair value of the earnout expected from the divestiture of Veritone One recorded in Q3 2025 and a $2.2 million change in our Q3 tax provision offset by the $6.7 million improvement in operating loss. Non-GAAP net loss from continuing operations was $5.8 million as compared to $11.1 million in Q3 2024, a $5.3 million or 48% improvement. The improvement was principally due to the year-over-year growth in non-GAAP gross profit, coupled with lower operating losses driven by increased discipline on cost management. As I will explain further, these reductions will provide us with a more efficient cost structure as we manage towards our planned growth throughout the remainder of 2025 and targeted profitability in the latter part of 2026 and beyond. Turning to our balance sheet. As of September 30, 2025, we held cash and restricted cash of $36.5 million as compared to $16.9 million at December 31, 2024. The net change in cash reflects net cash outflows from operations of $41.2 million, principally driven by our non-GAAP net loss of $25.6 million, deferred purchase consideration of $1.2 million, and interest paid on debt of approximately $5.8 million, coupled with the timing of working capital in the quarter driven largely by the increase in AR, due to the growth in revenue in the period, offset by net cash inflows from investing and financing activities of $64.9 million, driven by net cash inflows of $70.9 million from equity offerings through Q3 2025, partially offset by $5.8 million in debt principal payments and $3.6 million in capital expenditures. Turning to liquidity today. In September 2025, we completed an underwritten equity offering selling 9.5 million shares of common stock priced at $2.63 per share, and an over-allotment of 1.4 million shares granted to the underwriter was exercised in full for total gross proceeds of $28.8 million. In October 2025, we completed a registered direct offering selling 12.9 million shares of common stock priced at $5.83 per share, for total gross proceeds of $75 million. Immediately following the October offering, we held cash and cash equivalents in excess of $100 million. At September 30, 2025, our consolidated debt is down from a peak of $201 million in December 2021 to approximately $126.7 million. Subsequent to September 30, we paid down $3.6 million of our term debt through deferred purchase consideration received in October 2025, bringing our debt to $123.1 million, comprised of $31.8 million of term debt and $91.3 million of convertible debt. Today, we announced that we have agreed in principle with certain debt holders to pay off 100% of our senior secured term debt and buy back 50% of our convertible notes for a total of approximately $77.5 million of consolidated debt principal, in exchange for approximately $77.5 million of cash and 625,000 shares of our common stock valued at today's closing price. Immediately following this debt payoff, our unencumbered consolidated cash is approximately $34 million, which is sufficient to fund our operations over the next twelve months at a minimum. Post this pay down, our remaining debt will be approximately $45 million, comprised solely of our 1.75% convertible notes due November 2026. By completing this transaction, we free up an estimated $13 million of annualized debt carry costs and substantially improve our liquidity position and future cash flow outlook. I want to underscore what an impressive and important step reducing our debt is. The improved flexibility and stability we now have, as a result of our strengthened balance sheet, will allow us to focus on reaching our growth potential to meet the hyper-growth market opportunity we face. That said, we will continue to be opportunistic with continued focus on further improving our current liquidity position and balance sheet. At September 30, 2025, we had 70.9 million shares issued and outstanding and 2.5 million warrants outstanding to our debt holders. Now turning to updated fiscal Q4 2025 and full year 2025 guidance. Our software products and services revenue pipeline and long-term outlook continue to be at all-time highs. More specifically, we continue to see strong demand across the approximate $10 billion global digital evidence management market, our public sector, and VDR pipelines continue to grow. Collectively, our backlog and sales pipeline across our core aiWARE platform is in excess of $200 million today. And as Veritone, Inc. remains uniquely positioned to capture even more opportunity in the data-as-a-currency market, we expect that pipeline and our potential to monetize our trove of tokenized audio and video to further increase. More specifically, in Q4 2025, revenue is expected to be between $33.4 million and $39.4 million as compared to $22.4 million in Q4 2024, a 63% increase at the midpoint and 25% sequentially from Q3 2025. In Q4, we expect our software products and services to increase more than 75% year over year, led by the growth in public sector and commercial enterprise. Specifically, we expect our public sector revenue to grow close to 50% year over year, and our commercial enterprise revenue led by VDR to grow more than 75%. Our Veritone Hire products and services are included in this growth. We expect Veritone Hire to be slightly down year over year given the current macroeconomic environment. Consistent with Q3 2025, the side of our business which is experiencing some slowness as a result of the more challenging macroeconomic environment. We expect Q4 non-GAAP gross margins to be approximately 61% to 60%, driven by the forecasted higher mix of VDR revenue in the period. Q4 non-GAAP net loss is projected to be between $1.5 million to $5 million as compared to $9.7 million in Q4 2024, representing a 66% improvement at the midpoint and a 44% improvement sequentially from Q3 2025. Turning to fiscal 2025 outlook. We are updating our prior guidance for fiscal 2025, which we are expecting revenue to be between $109 million to $115 million, which at the midpoint represents a 22% increase year over year, and non-GAAP net loss to be between $31.6 million to $26 million, representing a 29% improvement year over year at the midpoint. The change is reflective of the timing shifts in revenue, coupled with the compression in gross margins on VDR in 2025, which we expect to improve upon in fiscal 2026. Before closing the call, I'd like to remind everyone listening that Veritone, Inc. will be attending Needham's virtual sixth annual tech week November 20 through the 24th and UBS's global technology and AI conference December in Scottsdale, Arizona. That concludes my prepared remarks. Operator, I would now like to open up the call for questions. We will now begin the question and answer session. And your first question comes from Joshua Riley with Needham. Please go ahead. Joshua Riley: Alright, great. Thanks for taking my question and nice job on the quarter here. Maybe just starting off on the Q4 revenue guidance. There's a $6 million range obviously there between the high and the low end. Maybe we could just review what are the puts and takes that would get your expectations in the business to the high end of the revenue guidance for the quarter? And then maybe what would drive it to the lower end of the guidance for the quarter? Thank you. Ryan Steelberg: Yes. I think it's just timing and velocity on some of the larger VDR deals. Again, as I sit here today, obviously, I was very bullish in both the words that I chose and sort of my tone and disposition. So obviously, we are going to push to get to the highest. But again, relative to the size and magnitude of some of these VDR deals and some of the commercial deals, and some of the, I would say to a lesser third degree, the timing on some of the public sector Fed deals. That's really going to be sort of the inputs to the ranges. But as I sit here today, very, very optimistic, very excited, and most importantly, we have, say, a very mature pipeline to substantiate that range and give us the opportunity to hit the higher end of the range. Joshua Riley: Got it. And then on the 100% quarter over quarter increase in the VDR pipeline, can you just help us understand what are you doing from a go-to-market perspective to kind of drive that pipeline growth? Then as we look forward into 2026, are you expanding the go-to-market efforts there to further expand the VDR pipeline, or do you kind of have the people in place to manage the upside opportunity there? Maybe kind of help us understand the dynamics there. Ryan Steelberg: So this is a really exciting one, and I want to be clear. I mean, a lot of our growth obviously at this conversation today was dominated by VDR. But there is the other side of VDR, which is the supply side. That's the side that frankly before we even introduced the concept of VDR, we've been servicing and selling AI-based software to a lot of media and entertainment and content groups for years. So again, where we see the great opportunity and what makes us very, very unique as compared to really anybody who's in the AI training data ecosystem is that we, to be clear, we represent and generate revenue from both sides. Right? Again, both from the buy side, those are the hyperscalers and the model developers we're selling to, but also the representation side, those are the media entertainment and other data suppliers that we represent but also have been selling software to. So again, to your question specifically, as I stated in my prepared remarks, we do believe that we will be engaged in doing the active projects and business with nearly all, if not 100%, of the major buyers today in the space. But the space is growing quickly. And so what we're very focused on is to make sure that not only are we continuing to take care of the larger transactions with the bigger AI model development shops, but also we do believe because of the cost basis for compute storage, etcetera, continues to come down. We do believe that there's going to be more entities, different companies to sell to, to sell these training data sets to. So we do believe that we want to continue to strategically expand our sales force. We are building a pretty reputable brand as it relates to the AI training data spot market. But to be clear, we want to make sure we don't simply focus on the buy side. We continue to want it, and what we have seen, we really didn't touch upon it that much in my prepared remarks. But we are also seeing an increased velocity of the data providers coming to Veritone, Inc. We signed a multitude of different, obviously mentioned a couple of the bigger brands on my call, but we saw a multitude of different customers now coming to us not only for the VDR solutions but for our software side of the equation. So again, I want to just summarize that we are unique in the sense that we sit and represent and sell to both sides of the equation, the sell side and the buy side. And yes, we will be investing strategically more into the go-to-market, to increase velocity to make sure again that's not a limiting function going into next year. Joshua Riley: Got it. That's a very helpful explanation there. And then, maybe on the Q4 guidance for the public sector, I believe you said it was going to be up 50% year over year. How much of the, what are you factoring in on the federal side with the government shutdown obviously still in place here? To kind of hit that number? And are you making any assumptions that some federal U.S. Federal deals will close and kind of hit that number, which would require the government to reopen or just kind of how are you kind of calibrating those assumptions? Ryan Steelberg: I think we've taken that into the handicap for that guide. Obviously, as a percentage of the overall revenue base, it's not that large. And so meaning to sway us to be, have taken a more pessimistic view of hitting that guide. To be clear, we still are generating growth. We still are closing new businesses and revenue in the federal space. But have we seen potentially some delays in some of the revenues that would have contributed in this quarter? We have. Thankfully, the other sides of the business have grown just, sort of outperformed. And so that's where we're extremely bullish overall. But again, the short answer is like everybody, we hope this government shutdown ends sooner than later. And just what if all these things start hitting all cylinders. So again, overall, we're very excited. And I think that a lot of investors need to, when they're thinking about some of our market peers in the market, we're not a one-trick pony in a certain vertical. Right. We have the exact same powerful technology stack, aiWARE, that's being sold effectively into both commercial and public sector, and I think investors should take note of that. So again, it is another great example of having a focused yet diversified business can be very, very attractive. Joshua Riley: Okay, great. I'll pass the line along. Thanks, guys. Operator: Thank you. And your next question comes from Glenn Mattson with Ladenburg Thalmann. Please go ahead. Glenn Mattson: Hi, yes, thanks for taking the question. I just want, I know VDR is a bigger story, of course, but I wanted to just drill down on that public sector stuff for a minute. What I'm curious is, is it that the federal shutdown is causing a bit of a slowdown and in particular, is it related to that Air Force contract only because I want to understand if it's, as I think about my forecast for next year, if there's like a snapback, a temporary thing, or if it's maybe that something else going on, just if you could elaborate? Thanks. Ryan Steelberg: No, I think this is a short-term blip. Again, in terms of at least my perspective for your modeling, that this was weeks if not a couple of months delay. But again, it's not binary to be very clear. So it will have a negligible overreaching effect on, for your modeling for next year. And we say snapback, again a lot of the projects are active. But again, there are people that we were working with, not the majority, but definitely individuals who were furloughed and put off, which I'd say may have contributed to some of the slowdown. But again, I'm not, so I would say no, that should not impact in my mind what you are in terms of your modeling or our excitement for overreaching public sector. But again, like many others, we did see some hit over the last several weeks. Glenn Mattson: Thanks for that color. And then as I think also kind of a model question, don't know if you want to handle it or Michael, but when I think about next year, I mean historically, the front half of the year for software and services was kind of a bit lighter and then stronger second half. So if I have that right. And so, that might be being overwhelmed by the VDR growth. How should we just think about seasonality next year? I know you're not necessarily guiding for next year, but just kind of the trend, the timing. Michael L. Zemetra: I mean, we haven't given any guide. Yeah. I'll take it. I'll take it. We haven't given any guide for next year. But to your point, a lot of the growth was in the back half of this year. And that should continue in the first half relative to year-over-year comparisons? If that's to kind of give you some direction? Glenn Mattson: Yeah. Very helpful. Great. That's it for me. Thanks, guys. Michael L. Zemetra: Come back in the queue. Thank you. Operator: Thank you. Your next question comes from Steven Banta with Banta Asset Management. Please go ahead. Steven Banta: Hey guys, great quarter. And like you guys are executing well against what you stated back in 2023. I'm just curious if you can provide maybe a little bit of color around your strategy with Veritone Hire. It seems like the business in general is firing on all cylinders. And is looking to be optimistic in the future. But when it comes to hire, how are you guys looking at that? Do you have a strategy with regard to that business? Thanks. Ryan Steelberg: It is a very stable business. Obviously, as we've stated in the market on the calls, relative to the other, I'd say more hyper-growth areas of the business, it's more or less flat or slightly down. But it is a very stable business. It is a meaningful contributor to the business in terms of cash flow. And so we'll keep all of our options on the table. Again, I think most importantly on a relative basis to its peers in the marketplace in the industry where a lot of players in the space have been down anywhere from 10% to 20% for a business that's been flat or slightly down, we're outperforming. So as of all things, it is an important part of the overall Veritone, Inc. portfolio and revenue base. But like all things, we're to keep an open mind about the future. But right now, we're pleased with the overreaching. I think the most important thing we want investors to look at is overreaching the improvement across the board at an aggregate, what we've been able to do both top and bottom line. And as of today, the Veritone Hire piece is an important part of that equation. Operator: Thank you. This concludes our question and answer session. I would like to turn the conference back over to CEO and Chairman, Ryan Steelberg, for any closing remarks. Ryan Steelberg: Well, thank you everybody for the call today. Obviously, we're looking, we're the company we sort of fit in, we are an AI company, but ironically relative to what I think we've done is massive improvements on some of the legacy overhangs. We have been kind of operating, I feel, historically with, you know, one almost two arms tied behind my back, and I think us as a collective company with our product portfolio being in this market, both I'll call the data and AI economy, we should all be very, very optimistic, excited, and bullish about our prospects. Again, hopefully, we can continue to improve our multiple as a company relative to our peer group. But there's a lot of things that we needed historically to clean up, and as I stated clearly, I believe that we have cleared those up. And I think we're in a phenomenal situation. Also want to double tap and before I sign off on that very unique situation we are in, where we sit in the middle of providing great utility value both from data suppliers and for data acquirers, very unique. And we're going to continue to talk that and continue to press on that. It just provides tremendous growth and revenue diversity for the business. Thanks, everybody, for their time, and we'll speak to you soon. Operator: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.
