Veritone Inc. is exiting its only profitable business, media services, to become a “pure play AI company.”
It sold its media agency, Veritone One LLC, to Insignia Capital Group for up to $104 million, saying the divestiture strengthens its balance sheet and liquidity, allowing it to concentrate on accelerating the growth of its enterprise AI software and solutions.
“Today marks a pivotal moment for Veritone, reshaping our trajectory and positioning us for the next stage of growth,” Chairman and Chief Executive Ryan Steelberg said in an Oct. 22 statement.
“We are pleased that this divestiture allows Veritone One to focus on its core advertising strengths within audio and video and to continue its growth and industry leadership under Insignia’s new ownership.”
The company also announced preliminary third quarter revenue of $22 million from continuing operations and an adjusted non-GAAP loss of $10.8 million to $11.3 million.
In the trading session after the sale announcement and preliminary results, the stock fell 20%. At press time, it traded at $3.85 each with a $147 million market cap (Nasdaq: VERI).
Brothers with Big Exits
Steelberg and his brother Chad Steelberg have two big exits on their resumes. AdForce Inc., a web advertising company sold to CMGI Inc. in the late 1990s for $500 million; and an advertising radio business, dMarc Broadcasting Inc. in Newport Beach, was sold to Google Inc. in 2006 for $502 million after meeting certain benchmarks.
In 2014, the brothers began Veritone in Costa Mesa to place advertisements on a variety of platforms. It sought to crack the booming AI industry by developing a platform called aiWARE that allows companies to track advertisements and media mentions in real time. It went public in 2017 and at one point soared to a market cap above $1 billion. While the company moved its headquarters in Denver in 2021, it still has 55 employees working in its Irvine office, out of a companywide total of about 500. Ryan Steelberg and other top executives are still based in Orange County.
It has run into trouble in recent years. Revenue fell 15% to $127.6 million in 2023 as sales to its biggest customer, Amazon, fell by about 59% to $15.3 million.
Veritone says its Media Agency Services provides full-service media planning and strategy, media buying and placement, campaign messaging, clearance verification and attribution, and custom analytics.
The divestiture represented about 24% of Veritone’s trailing revenue for the nine months ended Sept. 30. It said the discontinued operations reported an adjusted profit of $9.2 million to $9.5 million during this period while the continuing operations had a loss of $31.8 million to $32.4 million.
