Executive Summary

Q4 revenue declined 17% year over year to $22.4M as Software Products & Services fell 22% on lower consumption from Commercial Enterprise customers (including Amazon); GAAP gross margin compressed 540 bps to 68.1% while non‑GAAP gross margin fell 630 bps to 70.2% .
Net income was $31.8M, driven by a gain on the Veritone One divestiture (discontinued ops); continuing operations posted a net loss of $24.3M; non‑GAAP net loss from continuing ops was $9.7M (roughly flat YoY) .
2025 guidance: revenue maintained at $107–$122M (midpoint +23.7% YoY); non‑GAAP net loss widened to $27–$17M (from $25–$15M prior) reflecting early VDR margin compression; Q1’25 revenue guided to $23–$24M and non‑GAAP net loss to $9.5–$8.5M .
Strategic catalysts: launch of Veritone Data Refinery (13 customers signed since launch), expanding DoD/FedRAMP deployments for iDEMS, and divestiture of media agency with proceeds used to reduce debt and bolster liquidity .

What Went Well and What Went Wrong

What Went Well
- Veritone Data Refinery (VDR) launched and is already producing revenue (~$0.7M in Q4) with a growing pipeline (> $5M), positioning as an “AI‑ready data” provider for hyperscalers/model developers; “AI at scale” processing over 10.5 PB and 58M hours with 862+ models in 2024 .
- Public Sector momentum: 19 new customers in Q4, iDEMS deployments (FedRAMP DoJ/DHS; DoD “awardable” status) and a public sector pipeline exceeding $110M; management expects 2025 Public Sector growth of 100–150% .
- Customer diversification and major renewals: no single customer ≥5% of 2024 revenue; multiyear renewals/expansions (CBS News, ESPN) and 42 M&E deals in Q4 .
What Went Wrong
- Consumption‑driven headwinds: Software Products & Services revenue −22% YoY (Commercial Enterprise down on Amazon and other consumption cuts); ARR −27% YoY to $58.8M with consumption ARR declining through 2024 .
- Margin compression: GAAP gross margin 68.1% (−540 bps) and non‑GAAP 70.2% (−630 bps) given lower high‑margin consumption revenue and early‑stage VDR/content licensing mix .
- Cash/interest burden: cash and restricted cash at 12/31/24 was $17.3M (would be >$37M including Jan’25 raise), with interest expense elevating; debt remains at ~$132.6M across term and converts (post‑divestiture reductions) .

Financial Results

P&L snapshot (USD Millions unless noted)

Metric	Q4 2023	Q2 2024	Q3 2024	Q4 2024
Revenue	$27.1	$31.0	$22.0	$22.4
GAAP Gross Margin %	73.5%	–	–	68.1%
Non-GAAP Gross Margin %	76.5%	78.8%	71.2%	70.2%
Loss from Operations	$(19.8)	$(17.7)	$(22.5)	$(19.7)
Net Income (Loss) – Continuing Ops	$10.0	$(22.3)	$(22.5)	$(24.3)
Net Income (Loss) – Total	$12.2	$(22.2)	$(21.7)	$31.8
Diluted EPS – Continuing Ops ($/sh)	$(0.38)	$(0.59)	$(0.59)	$(0.55)

Notes: Q4’24 net income reflects gains in discontinued operations from the Veritone One divestiture; continuing operations remain loss‑making .

Segment revenue (USD Thousands)

Segment	Q4 2023	Q4 2024
Software Products & Services – Commercial Enterprise	$18,301	$14,123
Software Products & Services – Public Sector	$1,519	$1,399
Managed Services – Representation	$2,782	$2,788
Managed Services – Licensing	$4,501	$4,124
Total Revenue	$27,103	$22,434

KPIs

KPI	Q2 2024	Q3 2024	Q4 2024
Total Software Products & Services Customers	3,437	3,291	3,237
ARR – SaaS ($000s)	49,223	48,269	47,549
ARR – Consumption ($000s)	18,701	15,011	11,245
ARR – Total ($000s)	67,924	63,280	58,794
Total New Bookings ($000s)	14,047	16,471	13,228
Gross Revenue Retention	>90%	>90%	>90%

Estimates comparison

S&P Global (Capital IQ) Wall Street consensus for Q4 2024 could not be retrieved at time of query due to provider rate limits; vs‑consensus comparisons are unavailable.

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue	FY 2025	$107M–$122M	$107M–$122M	Maintained
Non-GAAP Net Loss	FY 2025	$(25)M–$(15)M	$(27)M–$(17)M	Widened loss range
Revenue	Q1 2025	N/A	$23M–$24M	New
Non-GAAP Net Loss	Q1 2025	N/A	$(9.5)M–$(8.5)M	New

Assumptions/drivers cited:

Public Sector expected to grow 100–150% YoY in 2025; early VDR margins below corporate average, improving as the year progresses .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q2’24, Q3’24)	Current Period (Q4’24)	Trend
Veritone Data Refinery (VDR)	VDR unveiled Nov’24; AI‑ready data positioning; ARR mix shift away from consumption	13 customers signed; ~$0.7M Q4 revenue; >$5M pipeline; margins ~50% initially, improving in 2025	Accelerating adoption; improving unit economics
Public Sector/iDEMS	Pipeline >$100M; new Fed/DoD entities; advisor hire (Gus Hunt)	19 new PS customers; DoD Tradewinds “awardable”; active DoD deployments; pipeline >$110M; 2025 growth +100–150% targeted	Strengthening pipeline to deployments
Consumption revenue (Amazon)	Noted declines affecting software growth and ARR	Continued YoY pressure; anniversaries after Q1’24; mix shifts to SaaS (81% of ARR)	Headwind moderating post‑Q1 base
Key renewals/partners	NCAA, iHeart, AWS SCA; CBS renewal pipeline	CBS News expanded; ESPN renewal; Workday Platinum; Bullhorn integration	Relationship depth expanding
Capital/Balance Sheet	Formal divestiture process; debt service burden	Veritone One sold (up to $104M); Jan’25 $20.3M raise; debt down to ~$132.6M; ATM facility	Improved flexibility; still monitoring liquidity/interest

Management Commentary

Strategic focus: “We are now firmly positioned as a pure‑play AI enterprise software firm” post Veritone One sale, “building on…over 3,000 customers” and “no single customer accounting for more than 5%” of revenue .
VDR thesis: “Offering a clear solution…turning raw, unstructured data into high‑value AI‑ready assets…secure and scalable” with 13 enterprise signings since launch .
Scale proof points: “Over 10.5 petabytes…58 million hours…862 unique AI models…This is AI at scale” .
Public Sector outlook: iDEMS “deployed in AWS and Azure Gov clouds…FedRAMP…and…DoD…awardable status,” with a pipeline “now exceeding $110 million” .
Profitability path: cost reductions ($40M annualized since 2023; 15% workforce reduction in 2024) provide “pathway to profitability as early as fiscal 2026” .

Q&A Highlights

Timing of consumption headwind anniversary: “Q1 2024…we are going to be out of the consumption comparison” for YoY comps .
Federal transition risk: Current deployments tied to “approved 2025 dollars,” not expected to impact 2025 guide, though budgets/CR monitored .
VDR contracts/margins: Early deals “vastly exceeding expectations,” with initially lower margins expected to normalize over 2025 .
Profitability timing: Earliest cash operating breakeven in “back half of 2026” .
iDEMS differentiation: Broader suite (Redact, Illuminate, Track, Investigate) and open ingestion across disparate datasets enables end‑to‑end investigative workflows vs. more siloed incumbents .

Estimates Context

Wall Street consensus (S&P Global/Capital IQ) for Q4 2024 was not retrievable at query time due to provider rate limits; as a result, vs‑consensus comparisons are unavailable.
Implications: FY25 revenue guidance unchanged at $107–$122M suggests sell‑side revenue largely intact; early VDR margin compression and content licensing mix may prompt modest widening of FY25 loss forecasts before anticipated improvement later in 2025 .

Key Takeaways for Investors

Mix reset underway: High‑margin consumption revenue declines (incl. Amazon) are cycling; ARR now 81% subscription, supporting more predictable SaaS growth from a lower base .
VDR is the key commercial catalyst: Rapid early adoption and pipeline should offset consumption headwinds; near‑term margin drag should abate as scale/process efficiency improves .
Public Sector inflecting: DoD/FedRAMP/iDEMS deployments and >$110M pipeline underpin FY25 growth and multi‑year visibility; watch contract timing and rollout pacing .
Balance sheet improved but still constrained: Veritone One proceeds reduced term debt; cash enhanced by Jan’25 raise; interest burden remains a focus until further de‑leveraging .
Guidance signals confidence with caution: Revenue guide maintained; loss range widened for early VDR margin effects; management reiterates profitability path into 2026 .
Execution watch‑items: VDR margin ramp, conversion of federal pipeline to funded deployments, stability in Veritone Hire, and sustained retention/upsell in Media & Entertainment .
Trading/PM angle: Stock likely to react to evidence of large PS awards closing and incremental VDR logos; near‑term P&L optics (gross margin mix, interest expense) could cap multiple until conversion/scale becomes evident .

Citations: Press release and 8‑K Q4’24 ; Q4’24 earnings call –, –; Q3’24 press release –; Q2’24 press release –; DoD Tradewinds awardable status PR ; Corporate updates PR .

Veritone, Inc. (VERI)·Q4 2024 Earnings Summary