Mike Latimore, managing director at brokerage and research firm Northland Capital Markets, says artificial intelligence company Veritone Inc. is “hitting its stride now’’ with major growth opportunities in the energy sector and in government.
With a market cap that recently had been approaching $1 billion for the first time in several years, others on Wall Street appear to agree. Of course, the stock is still subject to wild swings, as shown by an 18% drop in after-hours trading following the company’s announcement of a public stock offering that is expected to close on Dec. 7.
Veritone (Nasdaq: VERI) recently checked in at No. 1 on the Business Journal’s Nov. 23 list of fastest-growing publicly traded local companies that have revenue under $100 million, with a two-year sales growth of almost 220%.
The Costa Mesa company is projecting its upward trend will continue next year, according to chief financial officer Mike Zemetra.
The company’s aiWARE operating system helps analyze unstructured public and private audio and video data for clients in a variety of markets, including media, entertainment, legal, compliance, energy and government to provide actionable intelligence in a searchable database.
That lets users analyze the information in real-time to drive business decisions and insights.
The company is “benefiting from the confluence of market need for more data and insights and Veritone maturing its aiWARE platform,’’ said Latimore, who heads up AI market research for Northland, which has a local office in Newport Beach. Latimore added: “The biggest growth opportunities going forward are in energy and government.”
Shares in Veritone popped last week after announcing its aiWARE system now supports Nvidia’s CUDA platform.
Shares rose to more than 30% on the news, putting the company market cap at over $900 million. After announcing a new share offering on Wednesday, it lost much of those gains. Shares are now trading around $24; that’s up from $2.53 at the start of the year.
Energy Sector
Veritone in October introduced a set of AI tools to help utilities increase profitability and improve electrical grid reliability as they make the transition to renewables. Veritone’s platform detects energy demand and supply in real time, allowing utilities to adjust to those variables and increase efficiencies.
Veritone has already begun to deploy its AI energy technologies with a leading U.S. utility and is in advanced talks with other potential private and public sector customers and partners, the company said.
“We just closed a recent deal,” finance chief Zemetra told the Business Journal on Nov. 18. He said energy is “a massive opportunity for us.”
Veritone said revenue for the third-quarter ended Sept. 30, rose to $15.7 million, for a 23% jump year over year, while its fourth quarter revenue outlook topped analysts’ consensus estimate.
Greenfield Opportunity
“The momentum is really being fueled by the AI platform and its growth, particularly in our SaaS business,” according to Zemetra. “This is just an open greenfield opportunity for us.”
“You can expect similar to better growth heading into the new year,” according to Zemetra, who joined Veritone in October.
In the government area, police agencies are using the platform to redact videos and find evidence with lower manual labor costs.
Zemetra points out that the company’s advertising business grew 39% year over year, and the segment will always be an integral part of the company.
Tom Diffely, a senior research analyst at D.A. Davidson & Co., told the Business Journal his firm remains bullish on Veritone, citing the company’s “exciting” offerings, applications and exposure to many different industries and cost that is “very affordable for companies of all sizes.”
Diffely also added a note of caution, “It is important to point out that many of these served markets are still in their infancy and Veritone has yet to see a meaningful revenue ramp and is still in its pre-profitability investment phase.”
The company, led by CEO Chad Steelberg and his brother and company president Ryan Steelberg, was advertising for 19 positions as of Nov. 29, including engineers and data analysts.
