DENVER - Veritone, Inc. (NASDAQ: NASDAQ:VERI), known for its enterprise AI solutions, has divested its media agency, Veritone One, LLC, to Insignia Capital Group. The transaction, valued at up to $104 million, is a strategic move to strengthen Veritone's focus on its core enterprise AI software and services.
The sale includes potential earn-out payments based on Veritone One's future revenue performance and is part of Veritone's broader strategy to streamline operations and reduce debt. The proceeds from the divestiture are earmarked for retiring a significant portion of the company's term debt and funding future operations, enhancing Veritone's balance sheet and liquidity.
Ryan Steelberg, CEO & President of Veritone, emphasized the significance of the sale as a pivotal moment for the company, stating that it marks a material step in Veritone's mission to accelerate growth and concentrate on AI software and services. He expressed enthusiasm for the company's future, highlighting the opportunity to capitalize on the increasing demand for AI and the strength of Veritone's proprietary aiWARE platform.
Veritone's decision to sell Veritone One comes as the company seeks to further establish itself in the enterprise AI market, servicing thousands of customers across commercial and public sectors. The divestiture is seen as an inflection point that unlocks value for shareholders and solidifies Veritone's position in the AI industry.
Insignia Capital Group also acquired Oxford Road, another audio advertising agency, alongside Veritone One. Both agencies will continue to operate independently but will eventually leverage their combined resources to enhance client performance.
The financial advisor for the transaction was Canaccord Genuity, with legal counsel provided by Cooley LLP. The deal is expected to enable Veritone to focus on its AI-driven software and services, positioning the company for sustained growth in a booming sector.
This news article is based on a press release statement from Veritone, Inc.
In other recent news, Veritone Inc . reported a notable revenue increase of over 10% for the second quarter of 2024, largely credited to the strong demand for its AI-based applications. The company also announced a substantial multiyear contract with the NCAA and an expansion of its partnership with AWS. These strides come on the heels of restructuring efforts that resulted in a 47% improvement in non-GAAP net loss, with the full benefits expected to materialize in the latter half of 2024.
Veritone has also enhanced its AI-powered digital video forensics tool, Veritone Track, as part of its intelligent digital evidence management system (iDEMS). The tool now allows for the identification and tracking of vehicles by make and model across various video sources, aiding law enforcement and public safety agencies.
Additionally, Veritone has entered a partnership with Eightfold AI to integrate its job distribution software with Eightfold's talent intelligence platform. This collaboration aims to streamline the recruitment process by using AI for efficient job distribution and candidate sourcing. These developments reflect Veritone's commitment to leveraging AI technology across various sectors.
For the third quarter, Veritone anticipates revenue between $34 million to $35 million and a non-GAAP net loss of $2.5 million to $4 million. For the full year, the company projects revenue between $136 million to $142 million, with a non-GAAP net loss estimated between $13 million and $16 million, indicating progress towards profitability by Q4 2024.
InvestingPro Insights
The divestiture of Veritone One aligns with Veritone's strategy to focus on its core AI business and improve its financial position. This move is particularly timely given some of the financial challenges highlighted by InvestingPro data.
According to InvestingPro, Veritone's market capitalization stands at $157.42 million, reflecting its position as a smaller player in the AI industry. The company's revenue for the last twelve months as of Q2 2024 was $131.96 million, with a revenue growth of 10.82% in the most recent quarter. This growth is encouraging, especially considering the company's strategic shift towards AI software and services.
An InvestingPro Tip notes that Veritone has "impressive gross profit margins," which is evident in the data showing a gross profit margin of 79.31% for the last twelve months. This high margin could be a significant advantage as the company refocuses on its AI offerings.
However, another InvestingPro Tip cautions that Veritone is "quickly burning through cash." This insight underscores the importance of the divestiture, as the proceeds are intended to retire debt and fund operations, potentially addressing this cash burn issue.
The sale of Veritone One for up to $104 million is substantial when compared to the company's current market cap, suggesting that this move could indeed be transformative for Veritone's balance sheet and future prospects.
For investors seeking a deeper understanding of Veritone's financial health and potential, InvestingPro offers 11 additional tips, providing a more comprehensive analysis of the company's position in the rapidly evolving AI market.
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