Veritone outlines Q4 revenue target of up to $39.4M driven by VDR expansion and major debt reduction

Earnings Call Insights: Veritone (VERI) Q3 2025

MANAGEMENT VIEW

* CEO Ryan Steelberg opened by emphasizing Veritone's transformation over the past 24 months, stating "Veritone has not only regained its footing, but stands stronger, more focused and more strategically positioned than ever before." He announced the retirement of all term debt and the repurchase of approximately 50% of outstanding convertible debt, reducing annual debt service from over $14 million to approximately $800,000, and noted, "our annual debt service burden has now dropped... a transformative shift that fundamentally strengthens our financial foundation and future trajectory."
* Steelberg highlighted a sharpened focus on AI Software Products & Services, reporting "revenue grew by an impressive 55% during the quarter. Excluding Veritone Hire, our Software Products & Services revenue surged by more than 200%."
* The CEO described the Veritone Data Refinery (VDR) as a key growth engine, mentioning contracts with several major hyperscalers and stating the VDR pipeline and bookings now exceed $40 million, reflecting 100% quarter-over-quarter growth. He added, "Our qualified VDR pipeline and bookings now exceed $40 million, reflecting 100% growth quarter-over-quarter."
* Strategic partnerships included 27 new commercial agreements such as deals with ESPN, NCAA, Newsmax, and an expanded partnership with CBS. In the public sector, 82 contracts were closed with federal, state, and local agencies, and 30 new agencies were added. The public sector pipeline now approaches $218 million, up from $110 million earlier in the year.
* CFO Michael Zemetra stated, "Q3 revenue was $29.1 million, up $7.1 million or 32% from Q3 2024, driven by an $8.1 million increase from our Software Products & Services, offset by a $1 million decline in our Managed Services." He also remarked on balance sheet improvements, "we secured over $100 million in equity capital in September and October 2025, substantially improving our longer-term liquidity position."

OUTLOOK

* Zemetra provided Q4 2025 revenue guidance of $33.4 million to $39.4 million, a 63% year-over-year increase at the midpoint and 25% sequentially from Q3 2025. He stated, "In Q4, we expect our Software Products & Services to increase more than 75% year-over-year, led by the growth in Public Sector and Commercial Enterprise."
* Non-GAAP gross margins for Q4 2025 are forecasted at approximately 61% to 60%.
* Q4 non-GAAP net loss is projected between $1.5 million to $5 million.
* For fiscal 2025, revenue guidance is updated to $109 million to $115 million, with non-GAAP net loss expected between $31.6 million to $26 million.
* Management expects the VDR pipeline and monetization opportunities to further increase in 2026.

FINANCIAL RESULTS

* Q3 2025 revenue was $29.1 million, an increase of $7.1 million or 32% from Q3 2024, driven by an $8.1 million rise in Software Products & Services.
* ARR reached $68.8 million, up 9% from Q2 2024 and 12% sequentially.
* Total new bookings stood at $21.5 million, up $5 million or 30% year-over-year.
* GAAP gross profit was $18.7 million, with GAAP gross margins of 63.3%, while non-GAAP gross margin was 70.6%.
* Q3 operating loss was $15.8 million, improving by $6.7 million year-over-year; non-GAAP net loss from continuing operations was $5.8 million, a $5.3 million or 48% improvement.
* Cash and restricted cash at September 30, 2025, was $36.5 million. Post-October equity offering, cash and cash equivalents exceeded $100 million.
* Debt was reduced to $123.1 million post-quarter, with further reductions announced, bringing remaining debt to approximately $45 million.

Q&A

* Joshua Reilly, Needham: Asked about the range in Q4 revenue guidance and drivers for high or low outcomes. Steelberg explained, "it's just timing and velocity on some of the larger VDR deals... as I sit here today, very, very optimistic, very excited and most importantly, we have... a very mature pipeline to substantiate that range."
* Reilly followed up on VDR pipeline growth and go-to-market strategy. Steelberg noted Veritone's unique position on both the buy and supply side and said, "we are unique in the sense that we sit and represent and sell to both sides of the equation... we will be investing strategically more into the go-to-market to increase velocity."
* Reilly inquired about public sector guidance amid the government shutdown. Steelberg responded, "we've taken that into the handicap for that guide... we still are generating growth... the other sides of the business have grown, just sort of outperformed."
* Glenn Mattson, Ladenburg, asked about the impact of the federal shutdown on public sector contracts and seasonality in 2026. Steelberg indicated delays were short-term and not expected to materially affect long-term modeling.
* Stephen Banta, Banta Asset Management, asked about Veritone Hire strategy. Steelberg described Hire as "a very stable business... it is a meaningful contributor to the business in terms of cash flow."

SENTIMENT ANALYSIS

* Analysts expressed positive sentiment, focusing on pipeline growth, guidance, and execution, with questions emphasizing growth drivers and confidence in meeting targets.
* Management maintained a confident and optimistic tone, frequently using phrases like "very, very optimistic" and "never been more confident," particularly in reference to future growth and the VDR opportunity.
* Compared to the previous quarter, both management and analysts showed increased confidence, with more emphasis on transformative financial measures and rapid pipeline expansion.

QUARTER-OVER-QUARTER COMPARISON

* Q3 revenue increased from Q2 2025, with Software Products & Services growth accelerating from 45% to 55% year-over-year.
* ARR rose from $62.6 million in Q2 to $68.8 million in Q3.
* The VDR pipeline doubled from over $20 million in Q2 to over $40 million in Q3.
* Debt reduction efforts intensified, with the company retiring all term debt and repurchasing half of its convertible debt in Q3, compared to ongoing discussions and smaller reductions in Q2.
* Management's tone shifted from cautious optimism in Q2 to pronounced confidence in Q3, underpinned by significant balance sheet improvements and strong growth metrics.
* Analysts in Q3 focused more on execution risk around large deals and guidance ranges, whereas in Q2, questions centered on pipeline conversion and contract specifics.

RISKS AND CONCERNS

* Management cited possible delays due to federal government shutdown but indicated this is not expected to materially affect guidance.
* The company acknowledged ongoing softness in managed services due to macroeconomic conditions.
* For Veritone Hire, stability is expected, but future options remain open.
* Management stated they will "keep all of our options on the table" regarding Veritone Hire and will continue to monitor macroeconomic trends.

FINAL TAKEAWAY

Veritone’s Q3 2025 call showcased a company in the midst of strong operational and financial transformation, highlighted by material debt reduction, robust revenue growth, and a rapidly expanding VDR pipeline. Management presented a confident outlook, with guidance projecting significant gains in Q4 and into 2026, driven by strategic focus on AI software and data monetization initiatives. With a strengthened balance sheet and expanding customer base across both commercial and public sectors, Veritone signals a new phase of accelerated, diversified growth.

Read the full Earnings Call Transcript [https://seekingalpha.com/symbol/veri/earnings/transcripts]

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