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    VERI
    Earnings call· Jun 2026(Q2 FY26)

    Veritone Q2 FY26 earnings call VERI

    Aug 13, 2026 Source

    Executive summary

    Veritone Q2 FY26 — Strategic Execution and Cost Cuts Drive Sequential Growth Amidst Public Sector Delays

    Veritone delivered sequential revenue growth in Q2 FY26, driven by VDR and Managed Services, while executing significant cost reductions targeting $15M-$20M in annualized savings by year-end. Despite a challenging macro and public sector budgetary shifts delaying DoD contracts, the company launched new AI products and secured key partnerships, positioning for breakeven profitability by H1 FY27. Management is actively discussing restructuring its remaining convertible debt.

    Highlights

    5

    • Q2 revenue was $24.3 million, up 20% sequentially from Q1 FY26 and up 5% year-over-year from Q2 FY25.

    • Implemented $11.3 million in annualized savings from cost restructuring, targeting $15 million to $20 million by year-end FY26.

    • Significantly deleveraged the balance sheet, reducing total debt by $85 million year-over-year to $45 million and cutting annualized debt carry costs by over $13 million.

    • Veritone Data Refinery (VDR) closed some of its largest individual deals in Q2, with a near-term sales pipeline and bookings of over $65 million.

    • Launched multiple new AI products in Q2, including Veritone Assess and Document Redaction, expanding the public sector TAM.

    Concerns

    5

    • Public Sector revenue declined year-over-year due to delayed DoD contract extension, driven by temporary budgetary shifts to the Iran conflict.

    • Uncertainty in the timing of large, consumption-based VDR deals led to a revision of full-year FY26 revenue guidance.

    • Veritone Hire revenue was down year-over-year due to a challenging macro hiring environment and churn from smaller customers.

    • Q2 GAAP gross margin declined by 900 basis points year-over-year to 58.5%, and non-GAAP gross margin declined by 890 basis points to 63.7%, primarily due to revenue mix.

    • Breakeven profitability target shifted from earlier expectations to as early as the first half of fiscal year 2027.

    Guidance & targets

    8
    CategoryTargetConfidence
    Full Year 2026 Revenue
    $100 million to $150 million
    high materiality
    Medium
    Full Year 2026 Non-GAAP Net Loss
    $22 million and $32 million
    high materiality
    Medium
    Full Year 2026 Non-GAAP Gross Margins
    60% to 65%
    medium materiality
    High
    Q3 2026 Revenue
    $24 million to an excess of $28 million
    high materiality
    Medium
    Breakeven Profitability
    as early as the first half of fiscal 2027
    high materiality
    Medium
    Annualized Operating Expense Reductions
    $15 million to $20 million
    high materiality
    High
    Public Sector Revenue Growth
    more modest rate
    medium materiality
    Medium
    Managed Services Revenue Growth
    10% to 15%
    medium materiality
    High

    Segment performance

    4
    SegmentRevenueYoYQoQMargin
    Commercial Enterprise
    Strong execution, demonstrating scalability and deepening demand for AI software and data monetization solutions. Content Licensing drove double-digit year-over-year growth in both revenue and completed agreements. Broadbean had 76 new business wins and expanded integrations with SAP, Oracle HCM, and Workday.
    232 agreements executedContent Licensing revenue growth: double-digit YoYContent Licensing agreements completed growth: double-digit YoY76 new business wins (Broadbean)7 new Workday deals (Broadbean)Workday joint wins YTD: 33Workday joint wins YTD value: $1.3M
    		————
    Public Sector
    Revenue declined year-over-year due to delayed DoD contract extension (budgetary shifts to Iran conflict). However, deal progress has been substantial with new product launches (Document Redaction, Assess) and significant wins with CHP and a Washington state agency. International activity is growing. Pipeline is strong, with potential for substantial growth in FY27.
    Pipeline: north of $200MMultiyear contract with California Highway Patrol5-year agreement with state agency in WashingtonNew channel partners: MCCi, JustFOIANew reseller partners addedAgreement with U.K. Department for Work and Pensions
    		—decline——
    Broadbean by Veritone (Hire Division)
    Delivered a focused and productive Q2 despite a challenging macro hiring environment, remaining a bedrock of high-margin recurring revenue. Revenue was down year-over-year due to lower consumption-based revenue from a large hiring platform and macro-driven churn from smaller customers. Launched Job Acceleration feature.
    Jobs managed annually: over 7.6MCandidate engagements annually: 132MNew business wins: 76Workday joint wins YTD: 33Workday joint wins YTD value: $1.3M
    		—slightly down—high-margin
    Managed Services
    Increased $1 million year-over-year, principally due to increases in both licensing and representation services. Expected to continue this trend throughout the remainder of fiscal 2026.
    		$1Mup $1M——

    Operational metrics

    15
    Annualized Operating Expense Savings
    $11.3 million
    Q2 FY26

    Part of a larger restructuring effort targeting $15 million to $20 million by year-end FY26.

    Revenue
    $24.3 millionup 20% sequentially from Q1 FY26; up 5% from Q2 FY25
    Q2 FY26

    Software Products and Services was relatively flat year-over-year, driven by higher VDR revenue, offset by declines in Veritone Hire and Public Sector.

    GAAP Gross Profit
    $14.2 milliondown from $15.7 million in Q2 FY25
    Q2 FY26
    GAAP Gross Margin
    58.5%down from 67.5% in Q2 FY25 (900 bps decline)
    Q2 FY26
    Non-GAAP Gross Margin
    63.7%down from 72.6% in Q2 FY25 (890 bps decline)
    Q2 FY26

    Forecasted to be closer to 60%-65% throughout the year, varying with VDR revenue mix.

    Operating Loss
    $22 millionincreased by $3.1 million or 16% YoY
    Q2 FY26

    Lower personnel costs in G&A and S&M, offset by higher R&D.

    Net Loss
    $22.2 millionimproved by $4.3 million or 16% YoY from $26.5 million in Q2 FY25
    Q2 FY26

    Excluding $4.5 million restructuring charge, Q2 net loss would have been $17.7 million, an $8.8 million or 33% improvement YoY.

    Non-GAAP Net Loss
    $9.95 millioncompared to $8.4 million in Q2 FY25
    Q2 FY26
    Cash and restricted cash balance
    $12.7 millioncompared to $27.7 million at December 31, 2025; compared to $13.8 million at June 30, 2025
    as of June 30, 2026

    All cash is unencumbered, unlike prior year when there was a $15 million minimum cash requirement.

    Total Debt Outstanding
    $45 milliondown $85 million from $130 million at June 30, 2025
    as of June 30, 2026

    Resulted from the paydown and retirement of 100% of the company's senior secured debt in November 2025.

    Shares Issued and Outstanding
    99.1 million
    as of June 30, 2026
    Warrants Outstanding
    2.5 million
    as of June 30, 2026
    ATM Net Proceeds
    $9.4 million
    Q2 FY26

    $40 million of availability remaining under current ATM.

    Net Cash Outflows Improvement
    $8.8 millionover 27% YoY
    H1 FY26

    Excluding capital raises in H1 FY26 and FY25.

    Compute Savings
    approximately 20% or more
    expected

    Expected once relevant payloads are migrated to Oracle Cloud Infrastructure.

    Industry KPIs

    9
    MetricValueDetails
    Capacity CAPEX$2 millionUSD
    Revenue growth$24.3 millionUSD
    Arr net new arr$62 millionUSD
    Bookings billings$13.9 millionUSD
    Customer account count2,829customers
    Large deal new logo metrics76wins
    Gross retention renewal rateabove the 90 percentile%
    Multi product platform attach33wins
    Operating FCF margin rule of 4063.7%%

    Orderbook & backlog

    2
    Near-term VDR Sales Pipeline and Bookingsover $65 millionQ2 FY26

    continues to grow

    Active sales pipeline of more than $15 million could close in Q3 and/or Q4 FY26, includes several deals in the single to high multimillion dollar range. Average deal size is $1M to millions per VDR order.

    Public Sector Pipelinenorth of $200 millionQ2 FY26

    could easily double when combined with new opportunities

    Includes potential deals from multiyear 10-figure international award and major U.S. government investigative department deployment.

    Product announcements

    3
    ProductTypeDetails
    Veritone Assesslaunch
    Veritone Document Redactionlaunch
    Job Accelerationlaunch

    Deals & partnerships

    12
    OracleMigration of VDR infrastructure to Oracle Cloud Infrastructure (OCI) and escalating co-selling/marketplace opportunities.

    Migration progressing on schedule, initial storage payloads moving this month. Ryan Steelberg spoke at OCI sales team kickoff and will speak at Oracle AI World 2026 Conference.

    Oracle HCMDeepening functional integrations to seamlessly expose Broadbean's global distribution power to Oracle HCM's enterprise customer base.

    Continued push into this expanding relationship with Oracle.

    WorkdayPlatinum partner, closing joint deals for Broadbean solutions.$1.3 million

    Building on momentum as a Workday Platinum partner, firmly on track towards full year ecosystem expansion goals.

    SAPSigned as a partner in the SAP PartnerEdge Build program.

    Official signing on May 5.

    California Highway PatrolMultiyear contract for Veritone Redact to automate redaction of sensitive information within digital evidence data sets.multiyear

    CHP is the largest state police agency in the U.S. and is already evaluating other iDEMS applications.

    State agency in Washington5-year agreement for Veritone's solutions.5-year

    Part of broader public safety sales momentum.

    MCCi and JustFOIANew channel partners for redaction solutions.

    Part of increased partner activity in public safety.

    Police1 and LexipolStrategic partnership to help agencies identify, pursue, and secure grant funding for advanced investigative technologies.

    Aims to accelerate adoption across the local agency market.

    Genesis Mission ConsortiumParticipation in consortium supporting efforts to accelerate federal government's AI resources, data sets, and high-performance computing capabilities.

    Demonstrating leadership in AI infrastructure and government AI initiatives through partnership and participation.

    U.K. Department for Work and PensionsAgreement highlighting growing global momentum in the public sector.

    Also part of multi-agency U.K. public sector rollouts announced last quarter.

    U.K. GovernmentDown selected as part of an exclusive group of technology firms and vendors for a large countrywide procurement framework to deploy iDEMS solution.

    Optimistic to finalize contract to secure the award and appointment shortly.

    U.S. Department of JusticeExpanding enterprise ATO and application footprint for the Department of Justice by adding Veritone Investigate with Assess to the FedRAMP marketplace.

    In addition to supporting current Department of War agencies, the U.S. Defense Logistics Agency and the U.S. Air Force.

    Risks & headwinds

    6
    Delayed Department of Defense (DoD) contract extensionQ2 FY26, expected to continue through FY26

    resulted in year-over-year decline in Public Sector revenue

    Mitigation: Management remains highly engaged with DoD, anticipates funding approval in H2 FY26 or H1 FY27; strong public sector pipeline and international expansion.

    Uncertainty in timing of large VDR dealsnear-term (Q3/Q4 FY26)

    impacted Q2 revenue, led to revised FY26 guidance

    Mitigation: Strong VDR sales pipeline ($65M+), all largest hyperscalers under contract; focus on efficient data supply and Veritone Marketplace to deepen competitive moat.

    Challenging macro hiring environmentexpected to continue through H2 FY26

    Veritone Hire revenue down year-over-year

    Mitigation: Focus on larger ARR opportunities, product innovation (Job Acceleration), and strategic integrations with HCM ecosystems (SAP, Oracle, Workday).

    Gross margin compression due to revenue mixFY26

    Q2 GAAP gross margin 58.5% (down 900 bps YoY), non-GAAP 63.7% (down 890 bps YoY)

    Mitigation: Forecasted full-year non-GAAP gross margins to be 60%-65%; focus on high-margin VDR and continued cost reductions.

    Shift in breakeven profitability timelineH1 FY27

    now expected in H1 FY27, previously earlier

    Mitigation: Aggressive cost reduction efforts ($11.3M annualized savings implemented, targeting $15M-$20M by year-end FY26); dependence on VDR and Public Sector growth in FY27.

    Remaining convertible debt ($45M) requires restructuringupcoming weeks and months

    $45 million total debt outstanding

    Mitigation: Active discussions with debt holders; plan to provide more detail soon.

    What to watch in Q3 FY26

    5

    VDR Deal Closures

    Q3 FY26
    Currentover $65M pipeline, $15M active pipeline for Q3/Q4
    Targetsignificant portion of $15M active pipeline closed

    Why it matters

    VDR deal timing is a key risk to revenue guidance and profitability path.

    I would like to remind everyone that we have all the largest hyperscalers under contract, and we currently have a near-term VDR sales pipeline and bookings of over $65 million. In addition, we have an active sales pipeline of more than $15 million, which could all close in Q3 and/or Q4 2026 and includes several deals in the single to high multimillion dollar range.

    Q&A highlights

    5

    How much of the revised revenue guidance was due to VDR timing versus other factors, and will VDR still contribute revenue in H2?

    The adjustment was a combination of reduced expected contributions from Department of War (DoD Fed) and VDR, not an elimination of VDR revenue. Management felt it prudent to align guidance with current visibility, but VDR will still contribute revenue in H2. They could not break out specific percentages.

    “I would say it comprises the combination of bulk, not removing VDR entirely by no stretch, but bringing down I'd say the contributions or expected contributions from primarily DOW Fed and the elements of VDR.”

    asked by Kevin McVeigh · answered by Ryan Steelberg

    2 min read5 chapters

    Detailed Narrative

    01

    Strategic Execution and Cost Restructuring

    Veritone executed decisively on its strategy, achieving measurable outcomes in Q2 FY26. The company implemented significant cost-cutting measures, realizing $11.3 million in annualized savings through headcount reductions and lower non-payroll expenses, targeting $15 million to $20 million by year-end. These actions are designed to align the cost structure with current revenue and achieve breakeven profitability by H1 FY27, while preserving investments in high-growth areas like VDR and Public Sector.

    02

    Veritone Data Refinery (VDR) Momentum

    VDR is successfully converting opportunities into large commercial deployments, closing some of the largest individual deals in Q2, primarily from repeat customers. The company remains bullish on VDR's market positioning in the training data market, with hyperscalers being foundational clients and partners. A single incremental order from a signed hyperscaler can represent millions of dollars of margin in a single quarter. The migration to Oracle is on schedule, expected to yield compute savings of 20% or more.

    03

    Public Sector Expansion and Wins

    Veritone launched new AI applications, Document Redaction and Assess, expanding its TAM in the public sector. Document Redaction has already closed several deals and will be generally available this quarter. Veritone Assess is being used in high-profile cases like the JonBenet Ramsey case. The company secured a multiyear contract with the California Highway Patrol and a 5-year agreement with a state agency in Washington, validating scalable deployment models. International momentum is also growing with an agreement with the U.K. Department for Work and Pensions and active engagements in the U.K., Canada, and Ireland.

    04

    Broadbean by Veritone (Hire Division) Innovation

    The Hire division, rebranded as Broadbean, delivered a focused Q2 despite a challenging macro hiring environment, maintaining high-margin recurring revenue. It manages over 7.6 million jobs annually and generates 132 million candidate engagements. A key innovation, Job Acceleration, was launched on May 11th, allowing recruiters to prioritize urgent roles. The division also deepened integrations with SAP, Oracle HCM, and Workday, closing 7 new Workday deals in Q2, totaling $1.3 million across 33 joint wins year-to-date.

    05

    Financial Performance and Liquidity

    Q2 revenue was $24.3 million, up 20% sequentially and 5% YoY. The company significantly deleveraged its balance sheet, reducing total debt by $85 million YoY to $45 million, and cutting annualized debt carry costs by over $13 million. Cash and restricted cash stood at $12.7 million as of June 30, 2026. The company settled 5.8 million shares under its ATM, raising $9.4 million in net proceeds. Discussions are ongoing with debt holders regarding potential restructuring.

    AI-generated summary of the company’s earnings call. Not investment advice.