Veritone, Inc. (VERI) Earnings Call Transcript & Summary

Good morning, everyone, and welcome. Before we get started, I want to pause and recognize all the men and women that have served or are currently serving in our Armed Forces, both home and abroad. Veterans Day is an important day for us to recognize the risks and sacrifices that these men and women and their families have made and doing so voluntarily. Our country would not be what it is without them. Thank you. Now let's get started. As you can see, we have the obligatory disclosure page. Today's presentation will include some forward-looking comments. And as such, you should refer to these disclosures as well as those made in our SEC documents, including our Form 10-K. Today's presentation is going to be about an hour in length in total. We're going to have a presentation of roughly 40 minutes or so, followed up by a 20-minute Q&A session that I'll post live with both Ryan Steelberg, our President; and Mike Zemetra, our CFO. Kicking things off for today is going to be a brief overview from Ryan, discussing the business as well as some of the new initiatives that we have underway, followed by 3 of our BU leads, each discussing new products and initiatives and showing us some demos on the products in each of their respective divisions. Again, we'll be doing a Q&A session at the end of the presentation. But throughout, you can enter your questions in the box at the bottom of your screen. We'll compile them, and we'll get to as many as we can before time runs out. Now it's my pleasure to hand things over to Ryan Steelberg, Veritone's Co-Founder and President, Ryan?

Thank you, Brian. Good morning, good afternoon and good evening. Welcome to Veritone's 2022 Analyst and Tech Demo Day. We're thrilled that everybody could join us today. We're really excited to talk a little bit some highlights on our numbers from our recent quarterly earnings in Q3 as well as we get to jump in and walk through and share with you some fascinating and amazing new product innovations that we've rolled out here over the past few weeks and a few months. First, I want to acknowledge our talented team and staffers at Veritone who helped put together another fantastic quarter in Q3 with total revenue growth over 64% year-over-year, customer growth over 43% to now over 618 SaaS and software-related customers, while maintaining over a 90% retention rate of customers. It's a fantastic job, and everybody should be very proud of that. Over the past several quarters, we have been making intentional, disciplined investments in both the aiWARE platform and associated market-specific applications and services that leverage it. I'm proud to state that while maintaining and extending our historical applications and services that continue to enjoy a very high customer retention rate, we have also continued to innovate. Today, I'm excited to introduce you to several of these AI-driven innovations and applications, all of which have recently been moved into general availability for our customers. For a while now, we have argued that artificial intelligence, in good times and bad, will continue to thrive, whether it is our advertising services, our HR solutions or our SaaS offerings for media and entertainment, our customers are realizing the improved ROI and efficiencies that is enabled by Veritone's aiWARE solutions. We have an exciting agenda for everybody today, starting off with a deep dive in our voice and voice technologies, and then transition over to our exciting new HR technology, specifically pandoSELECT application. And then finally, we're going to bring it home with an introduction of our exciting new people-tracking or person-of-interest tracking solution called Tracker. And now I would like to turn over to Sean King, our Senior Vice President and General Manager of Commercial Enterprise. Sean?

Thank you, Ryan. I'm pleased to be here to share some of our ongoing advancements with Veritone Voice. We continue to see broad adoption of our voice product across media, entertainment and advertising groups, with specific emphasis on audio groups, both broadcasting and digitally consumed audio like podcasts and streaming as well as sports. As we look ahead, we continue to see great opportunities to grow existing use cases as well as expand into new ones. Veritone Voice has a unique ability to help content creators across many different industries localize and personalize their content at scale. Veritone Voice is uniquely differentiated from our point solution competitors because our solution is built on aiWARE. Not only can Veritone Voice create best-in-class synthetic voice models in 2 modalities, text-to-speech and speech-to-speech, we have the ability to create end-to-end enterprise workflows and audio automation that allow an organization at any size or even an individual to rapidly scale their content. A recent example of this is our announced partnership with Stats Perform. We're very excited to showcase our capabilities here shortly. In this partnership, we're ingesting data feeds directly from Stats Perform, and using our natural language generation or NLG models to convert this data in near real time to speech to provide play-by-play for sports. This is a game changer for the sports industry as it allows the ability to provide full accessibility to thousands of global sporting events and can be made available in a variety of different languages. And now I'm going to turn it over to my colleague, Corey Hill, who will take you through a demonstration.

Hi, everyone. This is Corey Hill, bringing you another sneak peek of our live sports offering through our recent partnership with Stats Perform. In this partnership, we will be ingesting that statistics in metadata from Stats Perform in order to generate engaging and customizable digital experiences for sports fans around the world. With the help of a little NLG and digital sound effects processing, we're able to not only generate the appropriate commentary, but also apply timely sound effects in the background as well as targeted content such as historical facts and advertising for a truly personalized enhanced experience at the speed of AI with multiple personalities and full match coverage. [Presentation]

Across various languages. [Presentation]

And with the opportunity to combine with engaging visual content. [Presentation]

This puts Veritone at the center of some compelling opportunities in the digital sports space. Thank you very much.

Hello. My name is Steve Xeller. I'm the Chief Revenue Officer here at Stats Perform. Stats Perform is a global leader in sports tech, providing the most trusted sports data and latest innovation in AI to lead next-generation solutions for teams, sports books, broadcasters and media. Our clients are companies like Google, Apple, Amazon, ESPN, NBC, BBC Sport, Canal+, Bet365, professional teams and many more. We're excited to recently announce our global partnership with Veritone to give sports data a voice. Opta Voice, powered by Veritone, combine Stats. Perform's industry-leading data with Veritone's award-winning synthetic voice AI technology. We will create new ways to engage sports fans with life-like AI content at scale and in multiple languages. Together, we will enable voice-enhanced commentary for automated match previews, player recaps and play-by-play information. We'll empower fans to choose audio content that fits their preferences and will reach a global audience in their native language, providing access to underserved markets, and sports reporting to the visually impaired. Veritone and Stats Perform share a passion for innovation. Working with them as a partner has been a seamless and rapid evolution of bringing this type of solution to market. We are engaging our respective client bases and prospects and are seeing huge demand for AI voice-powered sports data. We look forward to our continued partnership and commercial success. Thank you.

Thank you, Steve, for being here and being able to share. And now I'd like to take a moment to introduce you to our Head of PandoLogic, Terry Baker.

Hello, everyone. PandoLogic's operational theme this year has been all systems go. For us, that means the development of multiple business units to penetrate the varied and diverse talent acquisition market with multiple products designed for specific market fit across what is a $13 billion TAM opportunity just for job advertising. I'm happy to report that in Q3, we had ample examples and great results in our all-systems-go approach. So let's get started. Let's start with our growth. In the HTH business unit, our client expansion efforts have resulted in revenue growth of 374% in Q3 compared to the prior quarter. One of the biggest objectives this year for high-volume hiring has been to expand our client base within the supply chain and logistics market, including trucking and delivery services. We're already working with providers such as FedEx and J.B. Hunt, and one of the largest expansions in Q3 has been with Amazon DSP, or delivery service providers, which is a program created by Amazon Corporate to help the entrepreneurs launch and operate their own package delivery business, which we've moved into our new franchising business opportunity. For the Enterprise business unit, we saw an expansion of 25% quarter-to-quarter growth and 118% growth year-to-date versus our prior year. In the last quarter, we've seen some big client names being added to our expanding portfolio. Major new clients like Regis Corp, Lincoln Tech, Behavior Frontiers and even a roofing company, Bartlett Roofing. One of the strategic things we've done is differentiated our vertical market and industry penetration. There is ample opportunity for continued growth across new vertical markets, which for us becomes really strategic as we see changes happening in the labor market. Another area of massive growth has been our partner relations effort as we launched 10 new partnerships in Q3. These partnerships represent not only revenue opportunities for cross-selling to partner clients, but also faster implementation times for new PandoLogic clients as well as a seamless workflow for recruiters that use multiple talent acquisition platforms. And finally, growth with our new franchise business. We've seen steady growth with our intent to become the leading top-of-funnel recruitment marketing and talent engagement tool set for franchise operators by the year 2025. We're investing in new product offerings to help us get there. Franchises currently have a total of over 8.5 million open jobs, that's a lot of opportunity. And we're providing complete talent management tool sets for multi-unit franchise operators, and we're investing across the board to meet this demand head on. Part of that investment is to create a product offering that specifically caters to the unique needs of SMBs and franchise business owners. As a result of our acquisition of Wade & Wendy, we've launched pandoSELECT. And you're going to see a demo and a client testimonial of pandoSELECT in just a moment. And as you can see on the right side of the slide, the market, it has taken notice of the work we've done. There's a list of awards and recognition by some of the industry's most prestigious organizations that PandoLogic has received since our last Investor Day. And now we'd like to show you our newest product, pandoSELECT in action. Let me introduce you to Whit Walker, our VP of Product. Take it away, Whit.

Great. Terry, thanks so much for the introduction. My name is Whit Walker, and I'm going to walk you through pandoSELECT. This is the pandoSELECT dashboard. It's a dashboard that houses all the jobs and applicant information that we acquire for our clients using pandoIQ. So all the information that you see on this dashboard here relates to the client jobs and applicants that are actually being distributed by pandoIQ. On the left side of the screen, you can see we have the various jobs here. And as I click around, you'll see that the right side of the screen updates, that's because the right side of the screen houses the different applicants that we have received via pandoIQ's algorithmic AI-powered job distribution. And each of the applicants on the right side of the screen has various information, such as when they applied, their phone number, e-mail address, resume. And in certain cases, they have answers to questions that we can get via our chat product. The information here is all organized to make it super easy for the recruiters to do their job evaluating talent so they can look at the resume, they can understand what sort of credentials and qualifications somebody has, and they can either advance them or they can reject them for a selected reason. I'll quickly now show you what the chat looks like, so you can get an understanding of the information and how it's collected that powers this. So to demonstrate the chat, I'll take this applicant here at Nita, and this is what a chat would look like for Nita. This chat is -- would be branded for the companies -- have the company's logo, appropriate avatar. We can make sure that it is in line with corporate brand standards. It's customized to Nita as well. And it follows a very familiar dynamic sort of interaction that we all know because we've all chatted before and done SMS and messaging. And what we do is the chat basically chops up a lot of the relevant information to sell the company and also get information back from the candidates so that we can qualify them for the job. And we present things such as videos, we saw GIFs earlier. We can have lots more kind of corporate information about perks, benefits, FAQs to really help the applicant understand what it's like to work at the company in question. And within the experience, we have a couple of different types of questions. We have directed questions such as this one. Are you authorized to work in the United States? We also have open-ended questions like we'll see here in just a minute, such as what are your pay expectations. Put in information, we're going to see it populate on the dashboard in just a moment. And throughout the whole interaction, candidates really love this. Candidates really love this -- 5 years because it allows them to answer at their own pace. They can do it at their own convenience and they're not pressured to like you might be in an interview. We also have directed types of questions where we're going to prequalify somebody based upon experience with different types of tools, a hard worker, and kind of knockout type of answers there. So now that we're done with the chat, let's split back over, and we'll see what this looks like in the dashboard. Previously, Nita didn't have any of the questions answered. But upon a quick refresh, we see that we can now have an evaluation of all of Nita's qualifications for this job, and we could take action on Nita. All right. Thank you.

One of the pandoSELECT clients is Blake Quinlan, franchisee for Express Employment Professionals. Now let's hear about his pandoSELECT experience.

Yes. Before we got connected with the PandoLogic team, we were basically using ZipRecruiter, indeed, having to go in and post onto those websites, manage you to those website postings, and then kind of just very manually go into all of that needs that. So obviously, by being able to work with PandoLogic and the pandoSELECT team, the AI-based and just the time savings has been a huge thing for us. We've seen about a 30% savings in our per candidate hire. While our cost for hiring has increased, the number of people that we're able to place has increased by far more than what we're paying. So this year, as an office, we'll grow by about 110%, and our cost for everything is only increasing by about 60%. And that doesn't include the time savings of not having a full-time employee that I would normally have to have in order to just manage the job postings, reach out to all of the candidates, organize it, get it into our system and all that. So I mean when you throw on the full-time employee on top of that, I mean you're talking about like 400% savings. Having a partner like pandoSELECT that can adapt with us, that can create features for us that we need for our business is invaluable. I think that just to streamline this and pandoSELECT's, as an organization, ability to cut through the weeds, recognize our problem and come up with a solution that works for us is awesome. So it keeps me coming back.

Thank you, Blake, and everyone, for joining us here today. And now it's my pleasure to introduce Jon Gacek, who will discuss how Tracker fits into our rapidly expanding product suite.

Thanks, Terry. Appreciate the introduction. My name is Jon Gacek, I'm the GM of aiWARE Enterprise, and I'm excited today to introduce to you our new application, Veritone Tracker. Veritone Tracker is based on the aiWARE, but it's an additional capability where you can create a unique scenario around looking for human objects in very, very crowded scenarios. So without further ado, I'd like to introduce Ben Ha. I think seeing is believing. Ben is going to walk you through the demonstration. Take it away, Ben.

Hello, everyone. My name is Ben Ha from the sales engineering team here in Veritone. Today, I'm going to be walking you through Veritone Tracker. This product was built for the person of interest tracking use case. It leverages technology that looks at the entire person as an object, and allows you to then track and follow that person's whereabouts across different camera angles and media sources. Let's get right into it. In this example here, we see a person of interest spotted in the subway station. All we need is a single appearance of that person across any footage, and we can use that to actually run a search based off of their appearance. So it's not looking at facial recognition or any biometric features. What it's actually doing is it's looking at the visual appearance of that person, what type of hair do they have? Do they have a cap on? Are they wearing backpack? What color is their upper versus lower clothing? All of those different visually distinguishing attributes are not taken into account. And then what it allows you to do is run a search to say how similar is that person compared to the other possible detections of that person. So now using this confidence slider, I have the ability to very quickly go through these different detections that are potential matches. I have the ability to review it. Now we can see it picked up that same person of interest in a completely different camera angle, different shot within the subway station, and then I can continue to build on this. As I'm going through this process, I have the ability to now select these different matches of a person, and I can add them into a selective matches area. So think of this as your user verified list of all the moments of where that person of interest has appeared. Now what's nice about this process is it doesn't have to be linear. For example, right now, I'm looking at the front-facing shots of this individual, but as they start to get lower on the confidence, I might run into shots like this or actually get the back shot of that same person of interest, as you can see over here. So now using this, I could potentially get additional matches that I wouldn't normally get used in the front-facing approach as my reference detection. And so now using this approach, this gives me the ability to now go through and run a search. And now I can get back-facing shots of that same individual spotted in different shots throughout the subway station, like we're seeing over here. And now we're going to get the complete picture of where that person's whereabouts are. And so now you can continue to build off of multiple searches into your selective matches area. You can send that off to Illuminate when you're ready. And now I can give this person to label, submit it. And now it's going to give me the ability to access Veritone Illuminate and all of its analytical capabilities. So for example, I can search on that individual, that person of interest I just submitted through. This will show me all the different results where that person of interest has appeared, along with where in the video they are located, as you can see over here. It picked up that same individual like we saw earlier Tracker. And then what I can do is run further types of analysis. So I've narrowed down my huge library of videos from that event to a smaller subset of videos that are relevant, where I know my person of interest appears. So now I can run additional types of processing on the data, whether it's transcribing the audio, if it's present, or maybe detecting other objects, maybe recognizing text off of the signs or licensed plates off of vehicles in the parking lot, logos off of people's clothing, whatever it might be, it opens up the world of possibilities of what the aiWARE platform offers. Starting off with Tracker is really a starting point to call that information depth. Let's look at some additional examples. So here, we have another person of interest. We'll call him Brian. You can see he's in the yellow shirt and the cap. And now what I can do is run a search. And it's not going to go through and reveal additional matches of that same individual. And I can see the same individual has been picked up in a different part of the subway. As they start to go lower on that confidence slider, you'll note it actually gets shots of that individual from the front facing as well. And so much like we saw in the previous example, by using a combination of both the front-facing and the back-facing shots, it's really going to allow me to build a complete list of the matches of where that individual has appeared. Let's look at one final example here. In this case, we have a more difficult situation. We had this person in the black suit as a person of interest. If I run a search off of this, you're going to see that's going to return a lot of possible matches because there's a lot of people in the subway station, as you can imagine, who are going to be wearing the same black suit. And so as I'm looking through my potential matches, I'm going to have a lot of false positives to go through. But one strategy that you can take is to now rely on people who are next to that person of interest. So you can see this person is actually walking with this other individual. And so now if you focus in on her, who's a lot more visually distinguishing than the black suit individual, this gives me the ability to now run a search off of her instead. And now if we find her, we find the person she's walking next to. So using that search, I can now look at my potential matches. And you can see it now spots the same individual in a lot of different other areas. So here is that same couple now from a different shop in the subway station, as you can see right over there. Here's another example where she's spotted actually front-facing. And now we get a front-facing shot of her as well as our person of interest. And so between these detections, we have more than enough information to find that person of interest, the 2 of them actually across all the other locations they might be. That concludes our demonstration of Veritone Tracker. I hope you found this informative. Thanks for your time, everyone.

Thanks, Ben. Great job on that demo. I want to give a little more context on tracker. As I mentioned, we just announced it. We are currently positioning it as a post-events review platform where humans will use it to call down data to find an individual. What's really interesting is those individuals could be a crime scene, it could be a missing person, human trafficking as a use case, we've been informed about. We're also demoing it to major sporting event locations around the country, football stadiums, baseball stadiums, racetracks. Again, lots of resources are spent trying to find people in those situations, and this tool will speed that up dramatically. Over time, you'll see us add more and more capability to it, but we're really excited about getting started and the feedback that we've gotten thus far. As a matter of fact, we have one of our partners on, Mitch Thompson from WSI, and he's going to share his perspective on Tracker. He and I have done a number of demos together. So Mitch, take it away.

I'm Mitch Thompson. I am with WSI Technologies based in Indianapolis, Indiana. We're an audio, video and digital evidence management specialist that has been around since 1977, and we're proud of our partners that we work with, and Veritone is a very valuable partner of WSI. At WSI, as being an audio video specialist, we like the bolt-on tools that we provide with our product line, and that Veritone provides a capability with aiWARE, as everyone knows, probably around Illuminate and redaction, and it helps our clients be more successful. When Jon showed us the power of Tracker, it really just took it to another level. And we were super excited about showing that to our clients because we know the value that's there and the ability to be able to identify and see what folks are doing. But we also know that there's challenges associated with that with facial recognition, whether it's the inability to get a clear face recognition or the fact that agencies are just shy from using facial recognition, Tracker gives them that option to begin and have that ability to process people across many video streams. What's great about Tracker is it provides technology that helps law enforcement be able to solve crimes. And it also has that wow factor, if you will, in terms of technology. When speaking to our clients and letting them know that there are options out there, when I describe Tracker to them, they immediately say, yes, we want to see it. And we're very excited to bring in Veritone to have the ability to show them the capabilities of Tracker which then opens the door to many other discussions as well.

Thanks, Mitch. Really appreciate your support. I'm going to pass it along now to Brian Alger who's going to manage the Q&A. Brian?

Hopefully, that was informational at a minimum. I certainly get fired up by the potential of these new products. They're early. They're very early, and certainly in the case of Tracker and sports perform, which is just new on the scene. Looking forward to the Q&A session here. You also have access to it down below at the bottom of your screen to enter into the questions. We got a little bit more time than originally thought. So we'll try and get through all the questions and get you guys up to speed with what we just presented.

First question, Ryan, I'm going to kind of throw to you as a question with regards to PandoLogic. It's a question from Richard asking, how does PandoLogic fit in with aiWARE?

Yes. So PandoLogic, first and foremost, is it has a lot of the same fundamental attributes that actually what we tackled in building aiWARE originally, meaning it's very good at ingesting disparate data sets. In this case, open recs and integrations with application tracking systems from third-party customers. So ultimately, the output of their product is very intelligent programmatic job advertising that is actually optimized on the fly. So our ability to leverage aiWARE, as we look at building a more intelligent data lake, and in addition, when they add on or bolt on additional applications like pandoSELECT, that affords us the ability, at the end of the day, to make better informed decisions on what's the right ad to put it right in front of the right applicant at the right time. And so this is a very core. There's a lot of overlap in synergy what we're doing on our advertising solutions across the company in Veritone One. And it's one of the key areas of growth as we look from facilitating and activating, not just the active job seeker, but the passive job seeker, right? And we look at us being able to continue to integrate and assist the Pando team in sort of expanding their scale, their AI optimization and, frankly, their prediction, particularly in a market where we're seeing a significant increase in trend need towards the use of programmatic AI-driven job advertising as compared to what we heard from our customer at Express, a very historical laborious manual process. So aiWARE is critical to the growth of PandoLogic. It's a brilliant team, and we're really excited about the prospects for 2023 and beyond.

Great. Next question coming in from Darren. With regards to Stats Perform. Can you maybe talk about some of the lowest-hanging fruit, the opportunities that you see there? And what should we look for as kind of the next steps with that partnership?

So Stats Perform, in its own right, is a really exciting platform and opportunity. We do expect it to be a material revenue driver for 2023 and beyond. And I'll go in a little bit more detail specifically about what we're doing for sports. But through the process of us developing that technology set, which by the way, is patent pending, it's IP that Veritone owns directly, not just the voice technology, but actually the real-time voice assembly using natural language generation, which we're thrilled about. But we're also leveraging that and pointing in direction of really any type of real-time voice synthesis as it relates to weather, traffic and other things. So specifically back to Stats Perform, we are going to hopefully be launching although it was a relatively new product with them, but we should be live for people to consume and listen to this experience for the upcoming World Cup just here in a couple of weeks. But more importantly, this is going to be a pivotal component to Stats Perform's array of data solutions that they, in turn, are taking Veritone Voice technology, which they call Opta Voice to all of their customers. As Steve mentioned on the call, Stats Perform currently services dozens of major broadcasters, sports betting companies, groups like DraftKings and Apple, all who are subscribers and leverage the Stats Perform data. Now we -- potentially all of those customers are bringing a real-time voice enablement to that data set. So we're thrilled and more importantly, this is laying the foundation for us to again tackle additional areas outside of sports, leveraging real-time voice.

That's great. Next question. I'm going to actually combine a couple of questions that I've seen in the queue from a number of individual investors. It kind of goes to the Deloitte announcement that we put out recently, asking how does that agreement impact aiWARE and the development of our partners, making applications for their customers on their own platform utilizing aiWARE?

Yes. So when we first launched aiWARE years ago, it was initially only deployed on AWS commercial. And so I would say it was exclusively a single cloud-based deployment. Over the last several years, as we've been communicating to our analysts and investors, we've gone through significant effort and engineering development to make it portable and platform agnostic. So today, actually, aiWARE is fully deployed and up and running on multiple platforms, Azure commercial as well. Also Azure Gov, we are also in FedRAMP, which we've communicated before. So these are critical components. When we transition from us managing aiWARE as a hosted solution internally on behalf or for our customers, moving into commercial grade where it's more containerized, so meaning partners like Deloitte can actually deploy in their own tenant and be able to leverage it and build upon it, that was a major advancement. And what you're seeing finally with the press release, I'm acknowledging this with Deloitte is then, in turn, helping them build a practice able to process, ingest, analyze and activate against unstructured data like audio and video in coordination with their CortexAI suite. So again, this is the culmination of a significant amount of engineering development, the transformation of aiWARE from seeing a singular public cloud deployment to a platform-agnostic even on-prem deployment and now at a commercial grade level at groups like Deloitte, the largest consulting group on the planet, can now highly leverage it. For us, the results are significant market opportunity where they have lots of customers, obviously. And instead of our direct marketing and sales team going out and bringing those enterprises to us, we now are empowering our partners like Deloitte to go service those deals, leveraging and building on aiWARE.

So Ryan, there's a couple of follow-up questions to that, that I'm just going to kind of summarize, if you may, and maybe a little bit less of a softball, but it's worthy of being addressed. The relationship we've had with Deloitte has been largely in the federal government. We've had other announcements with federal government contracts that haven't materialized in meaningful revenue growth. How should we think about this announcement and that relating to maybe past contracts or future contracts that may come through the federal government?

Yes. As we stated on our earnings, our business today is still dominated by our commercial business. And specifically, over 97% of our business is still commercial. Thankfully, we're thrilled about that. We're the market leader, particularly when a lot of the government contracting has been relatively precarious lately, and you've seen significant delays, but not immune to the potential changes in terms of the control of the House or Senate. Our position and leadership position in commercial is something that has afforded us the ability to be very resilient. Now that being said, we are still very active in both the state and local law enforcement and the federal basis. Deloitte, one of our key partners, specifically working with us and going after Fed, is critical to that opportunity. Again, as we sit here today, we still expect in the immediate short term that commercial is still going to lead the way in terms of growth and overall revenue generation for the business. But again, we still see great traction in terms of building out a pipeline and are very optimistic in mid and long term of what the federal and state and local law enforcement opportunities will afford to the company.

Thanks, Ryan. Follow-up question from Darren with regards to the voice technology and the synergies that we have with our content licensing business, and I'm going to throw in on top of that the announcement that we have with SPORT X. Maybe you can kind of wrap it up in about what we see going on with the voice product and how it branches across multiple avenues?

We think -- we believe all things synthetic content is going to be a major growth driver for the media and entertainment industry and obviously, thus for Veritone. So voice technologies and synthetic content creation is going to be a cornerstone for every media organization out there, including digital influencers, right, the creator economy. Veritone expects and we pride ourselves on being the de facto leader in synthetic voice technology. And it's a very extensible technology that they can be applied for very utility-based solutions such as, I need to programmatically create 50,000 pieces of local copy, advertising copy. And instead of having a host or a celebrity get in the studio and have to cut all those things, I can create a hyperscale, hyper-quality clone voice of them and be able to do that programmatically. As we talked about, Stats Perform, which again just shows you some of the power and tie it back to the supporting opportunity, I'm excited to announce that we recently signed Alan Smith, the famous FIFA color commentary for Sky Broadcasting who covers FIFA software, who were actually in the process of building synthetic voice, and you will all be able to listen to that iconic voice calling synthetic sports properties and sports games here shortly. So that's voice. Voice is very extensible. We expect it to be a material revenue driver, and we expect to maintain a leadership position in that area. And that ties back to sports. As we've touched on SPORT X, and we have about over 70 different sports-related customers and properties today, whether that's ranging from the Masters Golf Tournament to the World Tennis Association and many, many others, the NCAA Pac-12, we have built a very nice AI-driven portfolio of products and services that cater specifically to the sporting industry. It's an area that we want to frankly do a better job at narrowing our -- I'd say, honing in our narrative and our market and go-to-market strategy for all things sports because we're excited, and we think that sports is, like many companies, it's dominated by usually live, but it's -- but they produce a ton of unstructured data which is perfect for aiWARE, which we've shown historically to help them come in, ingest, organize, activate and monetize the tremendous amount of quality content that sports properties produce. So between voice and sports, we expect these 2 pillars to continue to be material growth drivers for our commercial business.

That's great. Thanks, Ryan. I think it's really helpful for people to understand the context. I'm kind of surprised this question didn't come earlier, but it's from an individual investor. Congrats on the new role, Ryan. And just a general question of how your leadership position as you take the reins is going to be impacting the business?

Chad and I have built every single company together, going back to the mid '90s. So again, you can never completely break apart the Steelberg. So he will always be there as Chairman of the Board. But I think the biggest thing I want to try to influence subtly over is, I'd say, increase in clarity and narrative of what our mission is. We have some fantastic market presence and killer products in HR Tech programmatic job acquisition market with PandoLogic, and we have a very strong dynamic in fast-growing commercial business. We need to do a better job of speaking to that specifically. That does not mean that we're not going to continue to invest in the enterprise class grade and opportunities that aiWARE affords us. But I do expect us to rely in the future more on partners, right, as we mentioned with Deloitte to really help us go tackle some of these newer, I'd say, service-dependent opportunities, particularly in the Fed space. So again, you're going to see a subtle shift where we do believe we have best-of-breed and market-leading positions in programmatic job acquisition and in many areas in the commercial AI space, and we want to double down on those areas. And make it very clear to investors and customers and the analysts that this is who Veritone is in these categories. We're going to be proud of it. And we're going to continue to be a market leader in those capacities. So I would say it's going to be a subtle shift, right, but not a 90-degree shift in terms of management.

Good. And I think this actually works as a pretty good follow-up to that one, Ryan. First, congrats on beating the top and bottom line with the most recent report. Listening to the earnings release and commentary, you spoke quite a bit about the opportunity with programmatic within hiring and how it's early days, and you've seen this movie before. How do you see this playing out as it pertains to programmatic within the hiring and recruitment markets?

Yes. Well, as we heard from our customer, it's always great not to hear from us, but to hear from our any customer is the fact is that job acquisition is a huge TAM, billions and billions of dollars worldwide. Even if the job -- the net new job market cools, just the management of attrition, right, and doing backfills of talent is a major multibillion-dollar industry. That space in terms of job acquisition and recruiting is -- has a trend and a continuing trend to become more programmatic. What I mean by programmatic, as our gentleman from Express articulated, is humans are expensive, right? When they're trying to manually place job advertising posts, it's very inefficient, it's expensive and inherently biased. Very similar to what happened in the display advertising digital market, really from like 2008 to 2010, you saw an incredible growth of programmatic advertising simply because it's more efficient and it generates higher return for the end customer. We have seen, we are seeing and we expect a continued acceleration of programmatic job advertising and acquisition to increase. And hence, why we're very bullish about what we're doing in terms of investment and continuing to support and grow the PandoLogic business.

Another individual investor question coming with regards to the voice. Apparently, they've seen the press around some of the movie industry. I'm guessing this relates to the Top Gun with Val Kilmer and whatnot. Wanting to know where we are in the industry and in the market and what we think of those technologies are the competition?

Yes. There's lots of point competitions out there. Specifically, I think you're referring to, I think, some of the Val Kilmer and I forgot the other gentleman. They're actually integrated into aiWARE. So some of these companies are actually not competitors. They're actually partners, right, on our enterprise class. Think of us as we are not going after the one-off individual who wants to create a single cone voice. We're enterprise class. So as we previously announced, doing deals with iHeart, our goal is to be the de facto standard, right, to build and manage the synthetic digital twins, in this instance, the digital voice, for every company out there. And so to tap on that a little bit further, case in point, as I mentioned with Alan Smith previously, the management of digital twins is a big business. It's going to be a significantly large business as the world goes more, I would say, localized. And as talent is trying to better manage their IP going forward in Web3 and the Metaverse. It's critical that a single company, an independent company helps manage the digital identity of people of notoriety and fame in particular. We expect every future production agreement, meaning when talent, whether it's Tom Hanks or Alan Smith and they're doing a production, we expect in the future there to be a digital twin writer in every agreement. Meaning when somebody is doing a movie, I'll make a reference to -- similar to a body double, right? Now when somebody shows up and Tom Hanks is doing production, in his contract, he will have a portion that manages his digital twin, whether that's an avatar or his voice, which then in turn the production company can use under strict rules and regulations, that's a digital twin. It's nothing more than when they're going through the editing process, and they have to do retakes, right, very expensive to try to go find Tom Hanks and get him back into the studio. So the digital twin will be part of the IP ownership of these people, and Veritone is actually leading that. Well, just to triple tap that one, that's one of the reasons why we're one of the founding charter members of the open voice network, which is a derivative of the Linux Foundation. We appreciate, we support and we respect the IP integrity of everybody's digital identity. California, actually, it's actually statutory law that you actually own your digital persona, right? And we expect that case law to transfer from specifically case law to statutory law across the United States here shortly.

Yes. Obviously, we're very much heavily involved in the industry, which is great. Question -- I'm going to combine a couple here as it relates to our SLED or LEA business, we talked about on the conference call. One, just kind of -- is there an expansion outside of California? How is that proceeding? And then with that as kind of another question in here, who are you competing against in that market? And what's really the barrier to faster growth?

Yes. As we recently announced, our penetration in California has been fantastic. Surpassing 20% market coverage, meaning over 20% of every single local law enforcement agency, police agency or Sheriff's department is licensing and actively using one of our AI-based solutions. And then a couple of the applications which we've talked about and touched on, Contact, Redact, are sort of leading the way. We have great product market fit in the local law enforcement marketplace. Now part of our acceleration is being in marketing and being ready to sell and license our solution in California at the right time because we had legislation that was mandating, right, at the ability, which they call the RIPA laws, the ability to afford police agencies and sworn officers that when they have a stop, whether it's a traffic stop or a domestic disturbance that they have to show up at a home, they are obligated by law to fill out a racial profile report. We've helped automate that completely leveraging our AI-based solutions. So we are -- so California has a mandate. Our solution has proven to be significantly better than the default solution from the Department of Justice. And we have started to be able to license and start to monetize those solutions outside of California. Again, we are waiting. There's a few states that we're expecting that they're going to be following suit of California here over the next few quarters that are going to be, I'd say, definitively mandating some of these solutions. But again, it's mostly been driven initially in California by legislation. In terms of -- again, in terms of growth expansion, our applications typically are pulling data from other, I'd say, data silos, whether those are -- so meaning the body cameras and dash cams and other pieces of unstructured data, they're currently stored in a multitude of different platforms and frameworks, whether it's a proprietary legacy on-prem solution or it's from, I'd say, some other groups that provide digital evidence management systems like Axon. And so in effect, we -- our job is to continue to make sure our solutions are interoperable wherever that data is coming from. So we don't care if the body camera or dash cam data is coming from Motorola or an Axon or anybody else, we want to be platform agnostic, which we've shown our ability to integrate with any of these data silos. So in effect, if a police agency or a Sheriff's department has unstructured audio and video in any format, in any storage capacity, whether it's cloud or on-prem, then we can integrate and we've shown the ability to integrate, ingest and process and analyze that data.

Thanks. One last one here, getting down to the end of it. Dylan's asking a question with regards to sales cycle. And it pertains mostly to, I believe the federal government in terms of increasing that market penetration and what's going on there. Is it elongating? Is it -- what's -- provide some color, I guess, what he's asking for.

Yes. I mean for us, it's a pretty small business on a relative basis. Again, as we mentioned earlier, 97% of our business is commercial. So I guess from the risk -- so we are seeing it. Palantir just released their numbers recently, and Citi followed up, and they're seeing significant delays in terms of their contracting and process. So again, I want to double tap this that we're very thankful that we have a leadership position in commercial. So we -- so the demand for our products are high and they're increasing. Partnerships like Deloitte will help us cost effectively continue to go up and prosecute and try to onboard those opportunities for us. We are going to be very disciplined in terms of our investment and focus to make sure that we are not, let's say, exposed disproportionately of the potential protracted sales cycle there. So again, our main focus here is continuing to drive and accelerate our commercial business lines. As you -- as we reported on our Q3 earnings, we had a record bookings quarter. And so we've shown capacity to despite market headwinds, close the deals and get things over the finish line. And those are primarily dominated by our commercial sales and marketing efforts. So again, in short is we're going to be cost-effective as it relates to our continued focus on the Fed space and relying, I'd say, even more heavily on our partners as it relates to activation and onboarding.

All right. I think this is almost a wrap. Ryan, thank you so much for giving us your time this morning for the Q&A. I want to thank everyone that attended. We had several hundred on this morning. And I want to give a shout out again once again to all the men and women currently or previously serving in our military and our first responders. Today's Veterans Day. For those of you that haven't seen your calendars, if you get a chance, thank those that serve around you. We're all blessed as a result. With that, I'm going to sign off and say thank you.

Thank you, everybody.