Company Quick10K Filing
Veritone
Closing Price ($) Shares Out (MM) Market Cap ($MM)
$0.00 22 $175
10-Q 2019-11-08 Quarter: 2019-09-30
10-Q 2019-08-08 Quarter: 2019-06-30
10-Q 2019-05-09 Quarter: 2019-03-31
10-K 2019-03-18 Annual: 2018-12-31
10-Q 2018-11-13 Quarter: 2018-09-30
10-Q 2018-08-13 Quarter: 2018-06-30
10-Q 2018-05-08 Quarter: 2018-03-31
10-K 2018-03-09 Annual: 2017-12-31
10-Q 2017-11-07 Quarter: 2017-09-30
10-Q 2017-08-08 Quarter: 2017-06-30
10-Q 2017-06-26 Quarter: 2017-03-31
8-K 2019-11-06 Earnings, Exhibits
8-K 2019-09-16 Officers, Exhibits
8-K 2019-08-07 Earnings, Exhibits
8-K 2019-06-25 Officers, Shareholder Vote
8-K 2019-05-22 Officers, Exhibits
8-K 2019-05-08 Earnings, Exhibits
8-K 2019-02-21 Earnings, Exhibits
8-K 2019-01-15 Regulation FD
8-K 2019-01-09 Earnings, Regulation FD, Exhibits
8-K 2018-12-10 Other Events, Exhibits
8-K 2018-11-12 Earnings, Exhibits
8-K 2018-10-15 Officers, Exhibits
8-K 2018-09-06 Regulation FD, Other Events, Exhibits
8-K 2018-08-31 M&A, Sale of Shares
8-K 2018-08-24 Officers
8-K 2018-08-20 Regulation FD
8-K 2018-08-13 Officers
8-K 2018-08-13 Earnings, Exhibits
8-K 2018-08-10 Enter Agreement, Regulation FD, Other Events, Exhibits
8-K 2018-06-29 Officers, Shareholder Vote, Exhibits
8-K 2018-06-20 Enter Agreement, Other Events, Exhibits
8-K 2018-06-01 Enter Agreement, Exhibits
8-K 2018-05-18 Accountant, Exhibits
8-K 2018-05-08 Earnings, Exhibits
8-K 2018-03-15 Officers
8-K 2018-02-26 Earnings, Exhibits
8-K 2018-01-17 Regulation FD
VERI 2019-09-30
Part I. Financial Information
Item 1. Financial Statements
Note 1. Description of Business
Note 2. Presentation and Summary of Significant Accounting Policies
Note 3. Business Combinations
Note 4. Net Loss per Share
Note 5. Financial Instruments
Note 6. Goodwill and Intangible Assets, Net
Note 7. Consolidated Financial Statements Details
Note 8. Commitments and Contingencies
Note 9. Stockholders' Equity
Note 10. Stock Plans
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
Part II. Other Information
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 3. Defaults Upon Senior Securities
Item 4. Mine Safety Disclosures
Item 5. Other Information
Item 6. Exhibits
EX-31.1 veri-ex311_6.htm
EX-31.2 veri-ex312_8.htm
EX-32.1 veri-ex321_7.htm

Veritone Earnings 2019-09-30

VERI 10Q Quarterly Report

Balance SheetIncome StatementCash Flow

Comparables ($MM TTM)
Ticker M Cap Assets Liab Rev G Profit Net Inc EBITDA EV G Margin EV/EBITDA ROA
HIVE 255 140 130 150 96 -23 -19 202 64% -10.8 -16%
OOMA 231 79 48 139 83 -17 -17 217 60% -12.8 -21%
TZOO 201 56 42 111 100 6 13 185 90% 14.7 11%
VERI 175 110 55 32 29 -67 -61 130 92% -2.1 -61%
BRQS 163 128 78 186 27 -10 2 173 14% 88.0 -8%
SFUN 120 1,824 1,229 0 0 0 0 346 0%
ASUR 116 357 260 37 63 -10 16 222 170% 13.5 -3%
LEAF 115 81 29 157 97 -28 -17 105 62% -6.1 -35%
PCYG 105 53 10 21 15 4 5 87 72% 16.7 8%
RMBL 96 139 104 628 40 -38 -32 77 6% -2.4 -27%

10-Q 1 veri-10q_20190930.htm 10-Q veri-10q_20190930.htm

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10-Q

 

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2019

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from              to             

Commission File Number: 001-38093

 

Veritone, Inc.

(Exact name of registrant as specified in its charter)

 

 

Delaware

 

47-1161641

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. Employer

Identification No.)

 

575 Anton Blvd., Suite 100, Costa Mesa, CA 92626

(Address of principal executive offices, including zip code)

(888) 507-1737

(Registrant’s telephone number, including area code)

 

 

Securities registered pursuant to Section 12(b) of the Exchange Act:

 

Title of each class

 

Trading Symbol

 

Name of each exchange on which registered

Common Stock, par value $0.001 per share

 

VERI

 

The NASDAQ Stock Market LLC

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes      No  

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes      No  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

 

 

Accelerated filer

Non-accelerated filer

 

 

Smaller reporting company

 

 

 

 

Emerging growth company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2) of the Exchange Act.    Yes      No  

As of October 31, 2019, 24,608,799 shares of the registrant’s common stock were outstanding.

 

 

 


VERITONE, INC.

QUARTERLY REPORT ON FORM 10-Q

September 30, 2019

TABLE OF CONTENTS

 

Special Note Regarding Forward-Looking Statements

 

 

PART I.

  

FINANCIAL INFORMATION

 

2

Item 1.

  

Financial Statements (Unaudited)

 

2

 

  

Condensed Consolidated Balance Sheets as of September 30, 2019 and December 31, 2018

 

2

 

  

Condensed Consolidated Statements of Operations and Comprehensive Loss for the Three and Nine Months Ended September 30, 2019 and 2018

 

3

 

  

Condensed Consolidated Statements of Stockholders’ Equity for the Three and Nine Months Ended September 30, 2019 and 2018

 

4

 

  

Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2019 and 2018

 

6

 

  

Notes to the Condensed Consolidated Financial Statements

 

7

Item 2.

  

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

22

Item 3.

  

Quantitative and Qualitative Disclosures About Market Risk

 

29

29Item 4.

  

Controls and Procedures

 

29

PART II.

  

OTHER INFORMATION

 

31

Item 1.

  

Legal Proceedings

 

31

Item 1A.

  

Risk Factors

 

31

Item 2.

  

Unregistered Sales of Equity Securities and Use of Proceeds

 

31

Item 3.

  

Defaults Upon Senior Securities

 

31

Item 4.

  

Mine Safety Disclosures

 

31

Item 5.

  

Other Information

 

31

Item 6.

  

Exhibits

 

32

Signatures

 

33

 

 

 


SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and we intend that such forward-looking statements be subject to the safe harbors created thereby. For this purpose, any statements made in this Quarterly Report on Form 10-Q that are not historical or current facts may be deemed to be forward-looking statements. Without limiting the generality of the foregoing, words such as “anticipates,” “believes,” “seeks,” “estimates,” “expects,” “intends,” “continue,” “can,” “may,” “plans,” “potential,” “projects,” “should,” “could,” “will,” “would” or similar expressions and the negatives of those expressions are intended to identify forward-looking statements. Such statements include, but are not limited to, any statements that refer to projections of our future financial condition and results of operations, capital needs and financing plans, competitive position, industry environment, potential growth and market opportunities, acquisition plans and strategies, compensation plans, governance structure and policies and/or the price of our common stock.

The forward-looking statements included herein represent our management’s current expectations and assumptions based on information available as of the date of this report. These statements involve numerous known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Factors that may cause or contribute to such differences include, but are not limited to, those discussed in more detail in Item 2 (Management’s Discussion and Analysis of Financial Condition and Results of Operations) of Part I of this Quarterly Report on Form 10-Q, and in Item 1 (Business) and Item 1A (Risk Factors) of Part I of our Annual Report on Form 10-K for the year ended December 31, 2018. Readers should carefully review these risks, as well as the additional risks described in other documents we file from time to time with the Securities and Exchange Commission. In light of the significant risks and uncertainties inherent in the forward-looking information included herein, the inclusion of such information should not be regarded as a representation by us or any other person that such results will be achieved, and readers are cautioned not to place undue reliance on such forward-looking information, which speak only as of the date of this report.

Moreover, we operate in an evolving environment. New risks and uncertainties emerge from time to time and it is not possible for our management to predict all risks and uncertainties, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual future results to be materially different from those expressed or implied by any forward-looking statements.

Except as required by law, we assume no obligation to update any forward-looking statements publicly, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future. We qualify all of our forward-looking statements by these cautionary statements.

1


PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

VERITONE, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except per share and share data)

(Unaudited)

 

 

 

As of

 

 

 

September 30,

 

 

December 31,

 

 

 

2019

 

 

2018

 

ASSETS

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

49,188

 

 

$

37,539

 

Marketable securities

 

 

-

 

 

 

13,565

 

Accounts receivable, net of allowance for doubtful accounts of $42 and $40, respectively

 

 

28,932

 

 

 

29,142

 

Expenditures billable to clients

 

 

6,167

 

 

 

2,695

 

Prepaid expenses and other current assets

 

 

4,752

 

 

 

3,579

 

Total current assets

 

 

89,039

 

 

 

86,520

 

Long-term restricted cash

 

 

1,156

 

 

 

1,237

 

Property, equipment and improvements, net

 

 

3,464

 

 

 

4,008

 

Intangible assets, net

 

 

17,474

 

 

 

20,480

 

Goodwill

 

 

7,241

 

 

 

5,509

 

Total assets

 

$

118,374

 

 

$

117,754

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

 

 

 

Accounts payable

 

$

23,432

 

 

$

28,714

 

Accrued media payments

 

 

10,605

 

 

 

7,416

 

Client advances

 

 

24,696

 

 

 

9,639

 

Accrued compensation

 

 

2,330

 

 

 

6,570

 

Other accrued liabilities

 

 

5,096

 

 

 

3,746

 

Total current liabilities

 

 

66,159

 

 

 

56,085

 

Other liabilities

 

 

1,417

 

 

 

1,386

 

Total liabilities

 

 

67,576

 

 

 

57,471

 

Commitments and contingencies (Note 8)

 

 

 

 

 

 

 

 

Stockholders' equity

 

 

 

 

 

 

 

 

Common stock, par value $0.001 per share; 75,000,000 shares authorized;

23,235,199 and 19,335,220 shares issued and outstanding at September 30, 2019 and December 31, 2018, respectively

 

 

23

 

 

 

19

 

Additional paid-in capital

 

 

268,339

 

 

 

230,674

 

Accumulated deficit

 

 

(217,605

)

 

 

(170,411

)

Accumulated other comprehensive income

 

 

41

 

 

 

1

 

Total stockholders' equity

 

 

50,798

 

 

 

60,283

 

Total liabilities and stockholders' equity

 

$

118,374

 

 

$

117,754

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

2


VERITONE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

AND COMPREHENSIVE LOSS

(in thousands, except per share and share data)

(Unaudited)

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30,

 

 

September 30,

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

Net revenues

 

$

12,805

 

 

$

7,545

 

 

$

37,200

 

 

$

16,101

 

Cost of revenues

 

 

4,757

 

 

 

1,570

 

 

 

13,191

 

 

 

2,953

 

Gross profit

 

 

8,048

 

 

 

5,975

 

 

 

24,009

 

 

 

13,148

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales and marketing

 

 

6,609

 

 

 

4,586

 

 

 

19,190

 

 

 

15,476

 

Research and development

 

 

5,730

 

 

 

5,218

 

 

 

19,019

 

 

 

14,892

 

General and administrative

 

 

11,905

 

 

 

12,436

 

 

 

35,239

 

 

 

26,727

 

Total operating expenses

 

 

24,244

 

 

 

22,240

 

 

 

73,448

 

 

 

57,095

 

Loss from operations

 

 

(16,196

)

 

 

(16,265

)

 

 

(49,439

)

 

 

(43,947

)

Other income, net

 

 

184

 

 

 

329

 

 

 

446

 

 

 

645

 

Loss before provision (benefit) for income taxes

 

 

(16,012

)

 

 

(15,936

)

 

 

(48,993

)

 

 

(43,302

)

Provision (benefit) for income taxes

 

 

(1,815

)

 

 

5

 

 

 

(1,799

)

 

 

17

 

Net loss

 

$

(14,197

)

 

$

(15,941

)

 

$

(47,194

)

 

$

(43,319

)

Net loss per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted

 

$

(0.64

)

 

$

(0.86

)

 

$

(2.26

)

 

$

(2.55

)

Weighted average shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted

 

 

22,345,122

 

 

 

18,611,829

 

 

 

20,882,293

 

 

 

17,007,850

 

Comprehensive loss:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

 

(14,197

)

 

 

(15,941

)

 

 

(47,194

)

 

 

(43,319

)

Unrealized gain on marketable securities, net of income

   taxes

 

 

-

 

 

 

56

 

 

 

48

 

 

 

54

 

Foreign currency translation adjustments, net of income taxes

 

 

(24

)

 

 

4

 

 

 

-

 

 

 

24

 

Total comprehensive loss

 

$

(14,221

)

 

$

(15,881

)

 

$

(47,146

)

 

$

(43,241

)

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

3


VERITONE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(in thousands, except share amounts)

(Unaudited)

 

 

 

 

 

Three Months Ended September 30, 2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

 

 

 

 

Other

 

 

 

 

 

 

 

Common Stock

 

 

Paid-in

 

 

Accumulated

 

 

Comprehensive

 

 

 

 

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Deficit

 

 

Loss

 

 

Total

 

Balance as of June 30, 2019

 

 

21,918,406

 

 

$

22

 

 

$

257,813

 

 

$

(203,408

)

 

$

72

 

 

$

54,499

 

Common stock offerings, net

 

 

1,103,937

 

 

 

1

 

 

 

5,315

 

 

 

 

 

 

 

 

 

5,316

 

Common stock issued under employee stock plans, net

 

 

83,304

 

 

 

 

 

 

308

 

 

 

 

 

 

 

 

 

308

 

Machine Box holdback consideration

 

 

 

 

 

 

 

 

140

 

 

 

 

 

 

 

 

 

140

 

Common stock issued for acquisitions

 

 

129,552

 

 

 

 

 

 

27

 

 

 

 

 

 

 

 

 

27

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

4,736

 

 

 

 

 

 

 

 

 

4,736

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

(14,197

)

 

 

 

 

 

(14,197

)

Other

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(31

)

 

 

(31

)

Balance as of September 30, 2019

 

 

23,235,199

 

 

$

23

 

 

$

268,339

 

 

$

(217,605

)

 

$

41

 

 

$

50,798

 

 

 

 

 

Nine Months Ended September 30, 2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

 

 

 

 

Other

 

 

 

 

 

 

 

Common Stock

 

 

Paid-in

 

 

Accumulated

 

 

Comprehensive

 

 

 

 

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Deficit

 

 

Loss

 

 

Total

 

Balance as of December 31, 2018

 

 

19,335,220

 

 

$

19

 

 

$

230,674

 

 

$

(170,411

)

 

$

1

 

 

$

60,283

 

Common stock offerings, net

 

 

2,772,600

 

 

 

3

 

 

 

17,528

 

 

 

 

 

 

 

 

 

17,531

 

Common stock issued under employee stock plans, net

 

 

230,979

 

 

 

 

 

 

722

 

 

 

 

 

 

 

 

 

722

 

Machine Box holdback consideration

 

 

 

 

 

 

 

 

760

 

 

 

 

 

 

 

 

 

760

 

Common stock issued for acquisitions

 

 

896,400

 

 

 

1

 

 

 

3,861

 

 

 

 

 

 

 

 

 

3,862

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

14,794

 

 

 

 

 

 

 

 

 

14,794

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

(47,194

)

 

 

 

 

 

(47,194

)

Other

 

 

 

 

 

 

 

 

 

 

 

 

 

 

40

 

 

 

40

 

Balance as of September 30, 2019

 

 

23,235,199

 

 

$

23

 

 

$

268,339

 

 

$

(217,605

)

 

$

41

 

 

$

50,798

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

4


 

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (Continued)

(in thousands, except share amounts)

(Unaudited)

 

 

 

 

 

 

 

Three Months Ended September 30, 2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

 

 

 

 

Other

 

 

 

 

 

 

 

Common Stock

 

 

Paid-in

 

 

Accumulated

 

 

Comprehensive

 

 

 

 

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Deficit

 

 

Loss

 

 

Total

 

Balance as of June 30, 2018

 

 

18,317,434

 

 

$

18

 

 

$

209,308

 

 

$

(136,685

)

 

$

(117

)

 

$

72,524

 

Common stock offerings, net

 

 

 

 

 

 

 

 

246

 

 

 

 

 

 

 

 

 

246

 

Common stock issued under employee stock plans, net

 

 

69,277

 

 

 

 

 

 

645

 

 

 

 

 

 

 

 

 

645

 

Common stock issued for acquisitions

 

 

941,548

 

 

 

1

 

 

 

11,854

 

 

 

 

 

 

 

 

 

11,855

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

4,838

 

 

 

 

 

 

 

 

 

4,838

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

(15,941

)

 

 

 

 

 

(15,941

)

Other

 

 

 

 

 

 

 

 

 

 

 

 

 

 

60

 

 

 

60

 

Balance as of September 30, 2018

 

 

19,328,259

 

 

$

19

 

 

$

226,891

 

 

$

(152,626

)

 

$

(57

)

 

$

74,227

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nine Months Ended September 30, 2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

 

 

 

 

Other

 

 

 

 

 

 

 

Common Stock

 

 

Paid-in

 

 

Accumulated

 

 

Comprehensive

 

 

 

 

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Deficit

 

 

Loss

 

 

Total

 

Balance as of December 31, 2017

 

 

16,158,883

 

 

$

16

 

 

$

170,728

 

 

$

(109,307

)

 

$

(135

)

 

$

61,302

 

Common stock offerings, net

 

 

1,955,000

 

 

 

2

 

 

 

32,780

 

 

 

 

 

 

 

 

 

32,782

 

Common stock issued under employee stock plans, net

 

 

272,828

 

 

 

 

 

 

1,566

 

 

 

 

 

 

 

 

 

1,566

 

Common stock issued for acquisitions

 

 

941,548

 

 

 

1

 

 

 

11,854

 

 

 

 

 

 

 

 

 

11,855

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

9,963

 

 

 

 

 

 

 

 

 

9,963

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

(43,319

)

 

 

 

 

 

 

(43,319

)

Other

 

 

 

 

 

 

 

 

 

 

 

 

 

 

78

 

 

 

78

 

Balance as of September 30, 2018

 

 

19,328,259

 

 

$

19

 

 

$

226,891

 

 

$

(152,626

)

 

$

(57

)

 

$

74,227

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

5


VERITONE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(Unaudited)

 

 

 

Nine Months Ended

 

 

 

September 30,

 

 

 

2019

 

 

2018

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

Net loss

 

$

(47,194

)

 

$

(43,319

)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

4,337

 

 

 

1,383

 

Deferred income taxes, net

 

 

(1,821

)

 

 

 

Costs of warrants issued

 

 

 

 

 

207

 

Change in fair value of warrant liability

 

 

(7

)

 

 

(93

)

Provision for doubtful accounts

 

 

54

 

 

 

25

 

Stock-based compensation expense

 

 

16,049

 

 

 

9,963

 

Other

 

 

(19

)

 

 

 

Changes in assets and liabilities:

 

 

 

 

 

 

 

 

Accounts receivable

 

 

156

 

 

 

(8,327

)

Expenditures billable to clients

 

 

(3,472

)

 

 

(4,120

)

Prepaid expenses and other current assets

 

 

(953

)

 

 

(422

)

Accounts payable

 

 

(5,282

)

 

 

6,040

 

Accrued media payments

 

 

3,189

 

 

 

8,126

 

Client advances

 

 

15,057

 

 

 

5,004

 

Other accrued liabilities

 

 

1,447

 

 

 

(271

)

Other liabilities

 

 

31

 

 

 

837

 

Net cash used in operating activities

 

 

(18,428

)

 

 

(24,967

)

Cash flows from investing activities:

 

 

 

 

 

 

 

 

Proceeds from sales of marketable securities

 

 

13,614

 

 

 

21,000

 

Capital expenditures

 

 

(282

)

 

 

(3,543

)

Intangible assets acquired

 

 

(477

)

 

 

(629

)

Acquisition of businesses, net of cash acquired

 

 

(883

)

 

 

(9,627

)

Net cash provided by investing activities

 

 

11,972

 

 

 

7,201

 

Cash flows from financing activities:

 

 

 

 

 

 

 

 

Proceeds from common stock offerings, net

 

 

17,302

 

 

 

32,782

 

Proceeds from exercise of stock options

 

 

120

 

 

 

 

Proceeds from issuances of stock under employee stock plans

 

 

602

 

 

 

1,566

 

Net cash provided by financing activities

 

 

18,024

 

 

 

34,348

 

Net increase in cash, cash equivalents and restricted cash

 

 

11,568

 

 

 

16,582

 

Cash, cash equivalents and restricted cash, beginning of period

 

 

38,776

 

 

 

29,545

 

Cash, cash equivalents and restricted cash, end of period

 

$

50,344

 

 

$

46,127

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

6


VERITONE, INC.

Notes to the Condensed Consolidated Financial Statements

(in thousands, except share and per share data and percentages)

(Unaudited)

NOTE 1. DESCRIPTION OF BUSINESS

Description of Business

Veritone, Inc., a Delaware corporation (“Veritone”) (together with its wholly owned subsidiaries, collectively, the “Company”), is a provider of artificial intelligence (“AI”) based computing solutions. The Company has developed aiWARETM, a proprietary AI operating system that integrates and orchestrates an open ecosystem of top performing cognitive engines, together with a suite of powerful applications, to reveal valuable multivariate insights from vast amounts of unstructured and structured data and conduct cognitive workflows based on these insights.  The Company’s aiWARE platform incorporates proprietary technology to integrate and intelligently orchestrate a wide variety of cognitive engine capabilities to mimic human cognitive functions such as perception, prediction and problem solving in order to quickly, efficiently and cost effectively transform unstructured data into structured data. It stores the results in a time-correlated database, creating a rich, online, searchable index of the unstructured and structured data that users can use and analyze in near real-time through the platform’s suite of general and industry-specific applications to drive business processes and insights. aiWARE is based on an open architecture that enables new cognitive engines and applications to be added quickly and efficiently, resulting in a future proof, scalable and evolving solution that can be easily leveraged for a broad range of industries that capture or use audio, video and other unstructured data including, without limitation, the media and entertainment, legal and compliance, and government vertical markets.

In August 2018, the Company acquired Wazee Digital, Inc. (“Wazee Digital”), a provider of cloud-native digital content management and content licensing services, as discussed in more detail in Note 3. The Wazee Digital offerings serve customers primarily in the media and entertainment market. The Company has integrated its aiWARE platform with these offerings, providing these customers with unique capabilities to enrich and drive expanded revenue opportunities from their content.

In addition, the Company operates a full-service advertising agency. The Company’s expertise in media buying, planning and creative development, coupled with its proprietary technology platform, enables the Company to analyze the effectiveness of advertising in a way that is simple, scalable and trackable. In August 2018, the Company acquired S Media Limited, doing business as Performance Bridge Media (“Performance Bridge”), a podcast advertising agency, as discussed in more detail in Note 3. The Performance Bridge offerings have enhanced the Company’s advertising offerings to include more comprehensive podcast solutions.

NOTE 2. PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation and Preparation

The accompanying condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) for interim financial statements and the rules and regulations of the Securities and Exchange Commission (the “SEC”). Accordingly, they do not contain all information and footnotes required by GAAP for annual financial statements. Such unaudited condensed consolidated financial statements and accompanying notes are the representations of the Company’s management, who is responsible for their integrity and objectivity. The information included in this Form 10-Q should be read in conjunction with the information included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018, filed with the SEC on March 18, 2019. Interim results for the three and nine months ended September 30, 2019 are not necessarily indicative of the results the Company will have for the full year ending December 31, 2019.

The accompanying condensed consolidated financial statements have been prepared on the same basis as the annual financial statements and, in the opinion of management, reflect all adjustments, which are normal and recurring, necessary to fairly state its financial position, results of operations and cash flows. All significant intercompany transactions have been eliminated in consolidation. The financial data and the other information disclosed in these notes to the condensed consolidated financial statements reflected in the three month period presented are unaudited. The December 31, 2018 balance sheet included herein was derived from the audited financial statements but does not include all disclosures or notes required by GAAP for complete financial statements.

Liquidity and Capital Resources

During 2018 and 2017, the Company generated negative cash flows from operations of $42,227 and $31,911, respectively, and incurred net losses of $61,104 and $59,601, respectively. In the nine months ended September 30, 2019, the Company generated negative cash flow from operations of $18,428 and incurred a net loss of $47,194. Also, the Company had an accumulated deficit of $217,605 as of September 30, 2019. Historically, the Company has satisfied its capital needs with the net proceeds from its sales of equity securities, its issuances of convertible debt, and the exercise of common stock warrants. In June 2018, the Company raised net proceeds of $32,780 through an underwritten offering of its common stock, and in the first nine months of 2019, the Company raised net proceeds of $17,531 through sales of its common stock under an Equity Distribution Agreement dated June 1, 2018 (the “Equity Distribution Agreement”).

7


The Company expects to continue to generate net losses for the foreseeable future as it makes significant investments in developing and selling its products and services. Also, the Company will continue to evaluate potential acquisitions of, or investments in, companies or technologies that complement its business, which acquisitions may require the use of cash.

Management believes that the Company’s existing balances of cash and cash equivalents, which totaled $49,188 as of September 30, 2019, will be sufficient to meet its anticipated cash requirements for at least twelve months from the date that these financial statements are issued.  However, the Company’s does not expect that its current cash and cash equivalents will be sufficient to support the development of its business to the point at which the Company has positive cash flows from operations, particularly if it uses cash to finance any acquisitions or investments in the future.  The Company plans to meet its future needs for additional capital through equity and/or debt financings. Such equity financings may include sales of common stock under the Company’s Equity Distribution Agreement pursuant to which the Company may offer and sell, from time to time, shares of its common stock having an aggregate available offering price of up to $27,679. Such financing may not be available on terms favorable to the Company or at all.  If the Company is unable to obtain adequate financing or financing on terms satisfactory to it when required, the Company’s ability to continue to support its business growth, scale its infrastructure, develop product enhancements and to respond to business challenges could be significantly impaired.

Use of Accounting Estimates

The preparation of the accompanying condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the accompanying condensed consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. The principal estimates relate to revenue recognition, allowance for doubtful accounts, the valuation of stock awards and stock warrants, income taxes, and the allocation of net assets acquired from business acquisitions as well as contingent consideration, where applicable. Actual results could differ from those estimates.

Significant Customers

The Company’s top ten customers accounted for approximately 30.1% and 23.4% of the Company’s net revenues for the three and nine months ended September 30, 2019, respectively. The Company’s top ten customers accounted for approximately 44.3% and 44.1% of the Company’s net revenues for the three and nine months ended September 30, 2018, respectively. No individual customer accounted for 10% or more of the Company’s net revenues for the three and nine months ended September 30, 2019 and the three and nine months ended September 30, 2018.

Significant Accounting Policies

During the nine months ended September 30, 2019, the Company’s significant accounting policies remained unchanged from those disclosed in its Annual Report on Form 10-K for the year ended December 31, 2018.  

 

Revenue Recognition

The Company licenses content in exchange for advertising trade credits. Such credits can be redeemed by the Company for the purpose of radio or television advertising time and other advertising space. The Company records these transactions based on the value of the content that is licensed.   

Recently Adopted Accounting Pronouncements

In August 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (a consensus of the Emerging Issues Task Force), which provides guidance intended to reduce diversity in practice in how certain transactions are classified in the statement of cash flows. This standard became effective for the Company beginning in the first quarter of 2019. The adoption of the standard did not have a material impact on the Company’s consolidated financial statements.

In November 2016, the FASB issued ASU No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash, which provides guidance on the presentation of restricted cash or restricted cash equivalents and is intended to reduce the diversity in practice of such presentations. This standard requires amounts generally described as restricted cash and restricted cash equivalents to be included with cash and cash equivalents when reconciling beginning-of-period and end-of-period total amounts on the statement of cash flows. This standard became effective for the Company beginning in the first quarter of 2019. The adoption of this standard did not have a material impact on the Company's consolidated financial statements.

In January 2017, the FASB issued ASU No. 2017-04, Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment, to simplify the subsequent measurement of goodwill by eliminating Step 2 from the goodwill impairment test. An entity no longer will determine goodwill impairment by calculating the implied fair value of goodwill by assigning the fair value of a reporting unit to all of its assets and liabilities as if the reporting unit had been acquired in a business combination. Instead, under the amendments in this update, an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. The

8


FASB also eliminated the requirements for any reporting unit with a zero or negative carrying amount to perform a qualitative assessment and, if it fails that qualitative test, to perform Step 2 of the goodwill impairment test. The Company adopted the amendments in this update early, as permitted by the update, beginning in the third quarter of 2019. The adoption of the amendments did not have a material impact on the Company's consolidated financial statements.

In June 2018, the FASB issued ASU No. 2018-07, Compensation—Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting, which provides expanded guidance to simplify the accounting for stock-based compensation by aligning the treatment of stock-based awards for nonemployees with that of stock-based awards for employees. The Company adopted this standard early, as permitted by this update, beginning in the third quarter of 2019. The adoption of this standard did not have a material impact on the Company’s consolidated financial statements.

Recently Issued Accounting Pronouncements

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASU 2014-09”) and has subsequently issued several additional standards related to ASU 2014-09 (collectively, the “new revenue standard”), which amend the existing accounting standards for revenue recognition. The new revenue standard is based on principles that govern the recognition of revenue at an amount that the entity expects to be entitled to receive when products are transferred to customers. The new revenue standard may be applied retrospectively to each prior period presented, or retrospectively with the cumulative effect recognized as of the date of adoption.  As an emerging growth company, the Company is not required to accelerate the application of the new revenue standard to interim periods.  The Company will adopt the new revenue standard in the fourth quarter of 2019 effective for its fiscal year ending December 31, 2019.

In adopting the new revenue standard, the Company will use the modified retrospective method with an adjustment to accumulated deficit for the cumulative effect of adoption.  The Company has performed an assessment to determine the impact of the new revenue standard on its accounting policies and consolidated financial statements.  This assessment process has consisted of reviewing the Company’s current accounting policies and practices to identify potential differences that would result from applying the requirements of the new revenue standard to the Company’s contracts with customers.  The Company has evaluated its business to identify different revenue streams and reviewed individual customer contracts related to each of the identified revenue streams.  For advertising arrangements, the Company generally does not expect any changes in its recognition of revenue as the performance obligations are completed by the end of each reporting period.  For the Company’s aiWARE SaaS revenue arrangements, the Company expects changes in the timing of revenue recognition for only certain variable consideration arrangements.  For the majority of the Company’s content licensing revenue arrangements, the Company does not expect any changes in its recognition of revenue as the performance obligations are satisfied as soon as the licensed content is made available for download and use by the customer.  The Company is continuing to evaluate content licensing arrangements in which a customer pays a fixed fee to license a specific amount of content over a specified period of time to determine the impact of the new revenue standard on these arrangements.  The Company is completing its implementation of the new revenue standard and continuing to evaluate the impact of the new revenue standard on its consolidated financial statements.

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). The amendments under this pronouncement will change the way all leases with duration of one year or more are treated. Under this guidance, lessees will be required to capitalize virtually all leases on the balance sheet as a right-of-use asset and an associated financing lease liability or capital lease liability. The right-of-use asset represents the lessee’s right to use, or control the use of, a specified asset for the specified lease term. The lease liability represents the lessee’s obligation to make lease payments arising from the lease, measured on a discounted basis. Based on certain characteristics, leases are classified as financing leases or operating leases. Financing lease liabilities, those that contain provisions similar to capitalized leases, are amortized in the same manner as capital leases are amortized under current accounting rules, as amortization expense and interest expense in the statement of operations. Operating lease liabilities are amortized on a straight-line basis over the life of the lease as lease expense in the statement of operations. This standard will be effective for the Company beginning with the first quarter of fiscal year 2020. The Company is currently evaluating the impact this standard will have on its policies and procedures pertaining to its existing and future lease arrangements, its disclosure requirements and its consolidated financial statements.

In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement, as part of its disclosure framework project intended to improve the effectiveness of disclosures in the notes to the financial statements by updating certain disclosure requirements related to fair value measurements. The standard will be effective for the Company beginning in the first quarter of fiscal year 2020, with early adoption permitted. The Company is currently evaluating the impact that the adoption of this new standard will have on its consolidated financial statements.

NOTE 3. BUSINESS COMBINATIONS

 

Acquisition of Performance Bridge

 

On August 21, 2018, the Company acquired all of the outstanding capital stock of Performance Bridge by means of a merger of an indirect, wholly owned subsidiary of the Company with and into Performance Bridge, with Performance Bridge surviving the merger as an indirect, wholly owned subsidiary of the Company. The Company paid initial consideration of $5,158 and paid a total of $3,909 in additional contingent earnout amounts based on the achievement of certain revenue milestones by Performance Bridge in its 2018 fiscal year. The initial consideration was comprised of $1,220 paid in cash and the issuance of 349,072 shares of the Company’s common stock, valued at $3,938 based on the Company’s closing stock price on August 21, 2018. The initial consideration was subject to adjustment based on a final calculation of

9


Performance Bridge’s net assets at closing, which was completed in the first quarter of 2019 and resulted in the issuance to the former stockholder of Performance Bridge of an additional 6,482 shares of common stock valued at $34 based on the closing price of the Company’s common stock on January 25, 2019, which was the date both parties agreed upon the final calculation of the adjustment. A portion of the initial consideration, consisting of $120 in cash and 34,335 shares of common stock, was deposited into a third-party escrow account at closing and will be held in such account until August 21, 2020, to secure certain indemnification and other obligations of the former stockholder of Performance Bridge. The additional earnout consideration was comprised of $883 in cash and 574,231 shares of the Company’s common stock, valued at $3,026 based on the closing price of the Company’s common stock on March 28, 2019, which were paid and issued to the former stockholder of Performance Bridge in the second quarter of 2019.

 

The acquisition of Performance Bridge has expanded the Company’s media agency offerings of comprehensive podcast solutions.

 

The following table summarizes the fair value of the purchase price consideration for the acquisition of Performance Bridge:

 

Acquisition consideration