Ryan Steelberg, the chief executive of Veritone Inc., a once promising company that’s struggled in recent years, says the firm is on the road to becoming profitable for the first time since its founding more than a decade ago.
The firm has shifted from placing advertisements to using an operating system called aiWARE that employs artificial intelligence to analyze audio, video and text data.
“We can confidently state that we’re back on the growing train right now,” Steelberg told the Business Journal. “The business is no longer shrinking, and the most important thing is that the areas that are growing are the exciting core AI segments that have the largest pipeline.”
Veritone says it’s turning a corner by winning new contracts with the U.S. military; it’s convinced prominent local entrepreneur Francisco Morales to join its board of directors.
On Aug. 7, the company reported second-quarter revenue of $24 million; while flat year over year, the result was above analysts’ estimates and included a 45% growth in its core AI software revenue.
In the following three trading sessions, the shares jumped as much as 33% to $3.05; at press time, they were $2.84 with a $157 million market cap (Nasdaq: VERI).
As of Dec. 31, the company had 487 employees, including 116 in California. It ranked No. 26 on the Business Journal’s annual list of software companies with operations in Orange County, saying it has 51 employees at its Irvine office (see page 21).
The Brothers
Steelberg and his brother Chad Steelberg have previously successfully started and sold two companies, including dMarc Broadcasting to Google for $102 million in cash in 2006.
They began Veritone in 2014 in Newport Beach to place advertising for clients like Uber and 1-800-flowers.com. The company went public in 2017, reaching almost $75 a share and a market cap that topped $1 billion. The headquarters were in Costa Mesa for several years, before they were relocated to Denver in 2021. The company now has its OC office in Irvine, where several of its top executives work, including Steelberg.
Sales reached almost $150 million in 2022 before falling 15% to $127.6 million in 2023. A big reason was that its biggest customer, Amazon, went from providing 25% of Veritone’s revenue in 2022 to less than 1% in 2024.
Chad Steelberg in 2023 resigned as CEO and has since moved on to a new venture (see story this page).
The company has long struggled to prove itself. Veritone has never turned an annual profit since going public in 2017; it has an accumulated deficit of $514 million as of June 30. Its second quarter operating adjusted loss narrowed to $19.3 million from $20.3 million a year earlier.
Cash on hand was $13.6 million, down from $16.9 million on Dec. 31. The company in July grossed about $9 million by issuing shares.
Auditor Grant Thornton LLP said in Veritone’s 2024 annual report that because of its historical negative cash flows and recurring losses, there is doubt about the “company’s ability to continue as a going concern.”
The Pivot
Last October, Veritone divested its full-service advertising agency called “Veritone One,” which was the company’s only profitable business and where sales in prior years often dwarfed that of its AI unit.
The company said it gained 104 new software customers in the second quarter alone and now has 3,067 software as a service (SaaS) customers, including “major media and entertainment names.” Its website lists customers like Sony Pictures, Deloitte and Microsoft.
“We had to do a lot of cleanup work,” Ryan Steelberg said in July as he looked forward to stronger growth. He says the company got “distracted” in the past.
Veritone in March was able to attract to its board Morales, founder and executive chairman of 5.11 Tactical, a Costa Mesa-based apparel company that has more than $500 million in annual sales, particularly for local first responder entities.
“Veritone’s public sector AI business continues gaining momentum, covering state and local law enforcement and federal government customers,” Morales said in a statement. “I am eager to leverage my knowledge and expertise to support the expansion of this high-growth segment for the business while fulfilling my passion for serving those who protect our communities and country.”
104 New Software Customers
Zacks Investment Research contributor Shrabana Mukherjee acknowledged after the latest earnings that Veritone had improved its financial position.
“There are, however, challenges,” Mukherjee added. “Veritone is still losing money and must execute well to hit its growth targets.”
The company is projecting its revenue to climb about 20% at the midpoint to $108 million to $115 million; analysts predict revenue will climb 17% this year to $108.2 million and then accelerate another 23% to $133 million in 2026.
The company predicts a non-GAAP net loss of $25 million to $30 million, down from $40.8 million loss in 2024. The four analysts following the company predict the company’s loss will narrow from 53 cents a share this year to 12 cents in 2026.
The company in June said it’s implemented cost reduction initiatives to generate annualized savings of up to $10 million, which could provide “a clearer pathway to profitability as early as the second half of 2026.”
Ryan Steelberg is optimistic that the company can reach profitability in 2026.
“I feel a lot better today with a lot of these contracts behind us,” he said.
“Veritone’s finally back on a high growth rate on its core AI software business.”
The core AI software is “really hitting its stride. It obviously makes it easier when we’re landing some larger Air Force contracts and stuff like that.”
Veritone is counting on increased work for the Pentagon, including a recently completed contract with the U.S. Air Force, to help boost the bottom line.
He also cited opportunities for Veritone Data Refinery (VDR), which handles large datasets for AI model training. VDR had a near-term pipeline of more than $20 million in the second quarter.
“I am already sitting on one of the largest corpuses of audio-video training data,” he says.
U.S. Air Force Contract Win
In a recent major win, the U.S. Air Force Office of Special Investigations (AFOSI) awarded Veritone a sole-source contract to deploy and launch its AI technology across portions of the Department of Defense (DoD).
Veritone’s products will provide AFOSI with advanced investigative, intelligence and counterintelligence capabilities in support of the DoD and inter-agency mission requirements.
A Veritone investigative product named iDEMS for audio and visual evidence will provide AFOSI with powerful forensic tools to handle vast amounts of data quickly and accurately.
AFOSI, which has capabilities to investigate cases domestically and internationally, including counterterrorism, is one of 16 law enforcement agencies within the DoD.
“This Air Force contract is really the big catalyst, the big one that we’ve been working on as the foundational path for the next several years for Veritone’s DoD growth,” Steelberg said in July.
Financial terms were not released.
Pentagon Certification
Separately, Veritone said July 17 its AI-powered tools have been granted the status of being “awardable” within the Defense Department, opening a whole new area of business opportunities to work with the U.S. military.
The “awardable” designation means that Veritone products are now readily accessible to DoD customers through what is called the “P1 Solutions Marketplace.” That marketplace is the DoD’s digital enabling environment for innovation and in effect puts Veritone on an elite procurement list.
“At least from my purview over the next few years I think Veritone’s going to be an exciting, growing company but who knows? Things can always happen in this vast, dynamic ecosystem,” Steelberg said.
Chad Steelberg Turns to Defense Work After Leaving Veritone Management
For years, the Steelberg brothers – Ryan and Chad – worked as a team in building up software company Veritone Inc.
Now Chad has branched out in a different direction, founding defense company Tiberius Aerospace, with offices in Newport Beach and London. Tiberius is developing products that include Sceptre, “a guided ramjet liquid-fueled munition that is launched from a 155mm howitzer class artillery.” He founded the company in 2022.
Chad is no longer on the Veritone board or on the executive team at Veritone, according to Ryan. Chad previously served as Veritone’s chairman and CEO.
However “Chad is still a major shareholder” and advisor, and “he lives in my same community here in Newport Beach.”
According to the annual proxy, Ryan Steelberg owns 12.7% of the company, or 5.7 million shares, while Chad Steelberg has 9.5%, or 4.2 million shares. Together, these shares are worth around $23 million at press time.
