Home Markets Veritone, Inc. (VERI)

Veritone, Inc. (VERI)


Is there anyone, anywhere who doubts that Artificial Intelligence (AI) holds the most transformative potential the world has yet to record? That may be a bit of hyperbole but time will likely prove this to be a pretty accurate statement. For investors today, AI is the lightning in a bottle that gets instant attention.

Take the case of Veritone Inc. the Newport Beach California software company.

The company claims to have developed a proprietary AI platform that can take raw audio and video data, analyze it and in almost real time generate “actionable intelligence”. In other words, it makes fast business decisions that provide the user with a competitive advantage.

Veritone March S-1 filings make the point that their AI platform incorporates proprietary software that mimics human cognitive functions such as perception, reasoning, prediction and problem solving in order to quickly, efficiently and cost effectively transform raw data into an actionable outcome.

The Forecast: Clouds Everywhere

 Veritone is a cloud based open ecosystem. This is technobable for software that can work with any company anywhere, no matter what operating system is in place. Veritone also offers a group of applications that enable corporate customers the opportunity to customize the platform to match specific needs.

Before singing the laurels of AI or Veritone any further, one important thing needs mentioning. Now only is AI evolving rapidly but the history of companies in the software business claiming to have proprietary software is hardly unique. The technology graveyard is filled with them. Remember Sun Microsystems and Java?

Targeting The World

Veritone has some big ambitions. Their mission is to deploy a Software-as-a-Service (SaaS) business model for enterprises of virtually any size using the benefits of a cloud-based platform that integrates “multiple cognitive engine capabilities into a single platform”. Even if you are not a techno-geek, you must admit, they make it sound like they have all the bases covered.

From the viewpoint of an objective observer, one of the nice little features of the SaaS business model is the recurring nature of the revenue stream. When combined with the normally high profitability of software, there are a few things to like about Veritone even though the company has only been in business since 2014 and has all the business operating challenges of any fledgling company.

Not only is Veritone aiming for customers in virtually any size category, they believe their software can be tailored to a broad range of industries that capture or use audio and video data, including, without limitation, media, politics, legal, law enforcement, retail, and other vertical markets. That includes a lot of the economy. Competition Is Pretty Formidable When you think AI, names like IBM, Google, Amazon and Microsoft jump out right away. The AI prize is just that attractive. AI is also rapidly evolving so today’s SaaS based solutions are very likely to morph into something totally new and different in the coming decade. So does Veritone have enough to get through the next few years and then get gobbled up by a larger entity? Let’s take a look at some facts and some recent events. In 2016, Veritone achieved just under $9 million in revenues of which 82% of that was gross profit. This at least shows that Veritone has a good amount of traction and that the company is cash flow positive until costs like marketing and development come into play. That is where the red ink starts to flow rather freely. Veritone needs additional capital and that is why they filed for a public offering back on March 15, 2017. However, as we mentioned at the start AI is a very hot area right now and Veritone may have arrived in just the right time. On May 9th the company announced it was doubling the size of it proposed offering to $38 million. As always, we don’t make investment recommendations, it is neither our style nor our expertise. What we love to do is to find things that entrepreneurs are doing to make the world more interesting and bring them to your attention.