Good morning, and welcome to the Veritone Inc. Third Quarter 2023 Financial Results Conference Call. All participants will be in listen-only. [Operator Instructions]. Please note that this event is being recorded. I would now like to turn the conference over to Stefan Norbom of Investor Relations. Please go ahead..

Thank you and good morning. Before the market opened today Veritone issued a press release announcing results for the third quarter ended September 30, 2023. The press release and other supplemental information are available on the Investors section of Veritone's website.

Joining us for today's call are Veritone's CEO and President, Ryan Steelberg; and CFO, Mike Zemetra who will provide prepared remarks and then open up the call for a live question-and-answer session. Please note that certain information discussed on the call today, including certain answers to your questions will include forward-looking statements.

This includes without limitation, statements about our business strategy and future financial and operating performance. These forward-looking statements are subject to risks, uncertainties and assumptions that may cause actual results to differ materially from those stated.

Certain of these risks and assumptions are discussed in Veritone's SEC filings, including its annual report on Form 10-K. These forward-looking statements are based on assumptions as of today November 8, 2023 and Veritone undertakes no obligation to revise or update them.

During this call, the actual and forecasted financial measures we will be discussing including non-GAAP measures.

Reconciliations of these measures to the corresponding GAAP measures are included in the press release we issued today, also when we reference pro forma measures such measures are presented on a combined pro forma basis treating Broadbean as owned by Veritone during fiscal year 2022.

Finally, I would like to remind everyone that that call today is bring recorded and will be available for replay via a link on the Investor Section of Veritone website at www.veritone.com. Now, I would like to turn the call over to our CEO and President, Ryan Steelberg..

Thank you, Stefan, and thank you everyone for joining us today. Before turning to third-quarter earnings, business highlights and results, I want to provide an update on our strategic initiatives and discuss Veritone's positioning in the current operational landscape.

Exactly a year ago, Veritone announced my appointment as CEO, and I introduced several strategic initiatives, including focused execution, operational excellence and fiscal responsibility to accelerate our path to profitable growth and drive long-term shareholder value. I continue to be impressed with our team's progress against this framework.

Despite lingering uncertainty across financial and consumer markets, Veritone has made significant strides in streamlining operations, and we look to the start of 2024 as an inflection point in our growth trajectory.

Veritone has intensified its focus on the verticals we serve, allocating our resources to establish markets where we have demonstrated differentiation and strong product market fit.

We took swift action to reshape our organization in pursuit of operational excellence, aligning Veritone's go-to-market strategy and purpose built applications to solve critical problems for our customers, enabling them to cut costs, streamline operations and boost revenue streams.

Even amidst the difficulties posed by the challenging macroeconomic environment, our customers are affirming the value of our services by choosing to extend their contracts.

Veritone's recent award by Deloitte as a member of its 2023 Technology Fast 500 class underscores our position as a top innovator and high growth company in North America across various sectors.

In addition to operational changes, Veritone's dedication to fiscal responsibility resulted in $24 million in annualized savings year-to-date, and we expect to realize more as we progress to the end of the year.

As signaled last quarter, Veritone is taking decisive action to improve our liquidity position, restructuring our debt and adding $40 million in net new cash to our balance sheet, while also extending a major portion of our debt to 2027 maturity. Mike Zemetra will provide further information and details on the debt restructuring later.

As we approach the conclusion of 2023, I remain confident in our path forward and the strategic value of our products and services, as well as the enduring growth potential of our business.

According to Goldman Sachs research, companies involved in the AI ecosystem can be classified into two distinct groups, enablers, who make cognitive and Generative AI possible or empowered entities that harness the power of cognitive and Generative AI to grow stronger.

As enterprises increasingly seek to deploy AI solutions faster than ever before, they face unique challenges in integrating and productively managing the growing sea of disparate data, as well as the AI models they utilize.

By leveraging Veritone's proprietary aiWARE platform, our integration capabilities and our established partnerships, we support AI empowered companies in implementing cognitive and Generative AI into their key business lines and work productivity tools.

Veritone is an enabler, and we are committed to advancing human potential by blending human expertise with AI technology, helping organizations solve problems and achieve more than ever before. Next, I'll highlight our progress in each of our core go to market verticals, talent acquisition, media and entertainment, and public sector industries.

First, Veritone's hiring platform. Last quarter our strategic acquisition of Broadbean further solidified our positioning in a talent acquisition industry. These solutions offer substantial customer improvements to hiring performance, resulting in higher ROI and accountability, while also enabling faster and more efficient hiring process.

In Q3, we made substantial progress integrating Broadbean with Veritone and expect to complete this integration in early 2024 and subsequently start realizing anticipated synergies in the first half of 2024.

To that point, I'm excited to report that we have successfully integrated the sales and marketing organizations and have begun upselling Veritone programmatic solutions to the legacy Broadbean customer base.

We remain committed to diversifying our customer revenue base, and the notable increase in subscription based customers this year has contributed to greater stability in revenues and earnings, reducing vulnerability to the actions of a single customer or market segment.

Turning to media and entertainment, Veritone remains at the forefront of driving AI innovation in the media and entertainment sector. Our comprehensive range of services spans content and advertising analytics, asset management, licensing and bespoke cognitive and Generative AI solutions.

By equipping content organizations and their teams with these powerful tools, we facilitate the swift and efficient management, creation, monetization and innovation surrounding their proprietary datasets, enabling our customers to meet the ever growing demand for personalized content and boost their organization's revenue streams.

Despite the turbulent environment impacting consumer behavior, and the active SAG-AFTRA, and recently settled WGA strikes, our customer retention and engagement metrics in media and entertainment remain resilient.

During the third quarter, we signed and renewed contracts with leading talent agency CAA, United States Tennis Association, NBC Universal, A&E Networks, HBO and Augusta National. Recently, on the heels of the Women's World Cup, we renewed and extended our longstanding AI and monetization partnership with the U.S. Soccer Federation.

Together, we will continue our efforts to oversee licensing rights and optimize content management and monetization with U.S. women's and men's national teams, youth national teams, and extended national teams.

Lastly, I am proud to state that we renewed our flagship partnership with iHeartMedia, providing the largest audio media company with Veritone's market-leading AI-based applications and solutions, to enable them to continue to drive consumer engagement and ROI for their advertisers.

Our media and entertainment platform is well-positioned to capture market share as blue-chip customers turn to Veritone to unlock the unrealized value from unstructured data sets and supercharged human outputs. Finally, I would like to comment on Veritone's public sector business.

Our Q3 wins with the Veritone public sector suite of solutions across state and local agencies, education, U.S. Fed civilian, and U.S. Fed DoD Intel showcase our value, focus and passion for providing AI-powered solutions to address the unique challenges faced by government agencies and legal organizations.

As of the end of Q3, Veritone is actively supporting over 325 law enforcement agencies. We are engaged in a new project with a law enforcement organization of a major DoD agency, and we have started a new project with a Fed Civ agency with significant potential that utilizes the Veritone public sector product suite.

We are thrilled that former Anaheim Police Chief, Jorge Cisneros will act as a law enforcement advisor to Veritone public sector, working alongside our team to empower law enforcement agencies with the latest AI-driven tools to accelerate investigations, protect personally identifiable information, and improve public safety.

In addition, this past quarter, we were selected by the U.S. Department of Justice for a $15 million sole contractor blanket purchase agreement that can be used by all organizations within the DOJ, which will facilitate access to Veritone’s software and services.

Specifically, Veritone will enable DOJ personnel to greatly improve their productivity and proficiency as they investigate, review and redact unstructured data, including digital documents, audio and video files.

During the third quarter, we also launched a new product, Veritone Evidence, to manage, protect, and share digital evidence amongst and across government agencies.

As of last year, more than half of the 100-plus state and local law enforcement agencies were using cloud-based digital evidence management systems or plan to implement these solutions within the next three years.

We look forward to growing our public sector customer base as government agencies seek out solutions that rapidly extract actual intelligence from their diverse data sources.

Our pipeline continues to grow significantly, and we expect Veritone public sector to deliver nearly 75% to 100% year-over-year growth in 2023 and continue to contribute a greater share of revenue through 2024.

As Veritone executes its long-term strategy and embarks on its next phase of growth, I am thrilled to announce the addition of Michael Zilis as an independent Director to our Board.

Michael, who is currently serving as EVP and CFO of Ingram Micro, is an accomplished company executive and dynamic leader who shares Veritone's mission of delivering highly targeted solutions to help companies through technology to unlock operational efficiencies and productivity gains.

His financial and international operations expertise will bring a valuable perspective to Veritone's pursuit of operational excellence to prioritize the artificial needs of our customers while driving value for our shareholders. We welcome Michael to the Veritone team.

Overall, customer growth, booking strength, and an increasingly diverse revenue base demonstrate that Veritone is resilient and poised to accelerate its growth. We anticipate the company-wide financial advantages will become increasingly evident in 2024 with one-time integration and transaction costs behind us.

Veritone is on a clear path to profitability and we look forward to updating you on the progress we are making to unlock long-term value for our shareholders in the quarters to come. Now, I would like to hand the call off to Michael Zemetra, our CFO, to go through the financial results in more detail. Over to you, Mike. .

Thank you, Ryan.

I am pleased to report Veritone made material progress in the third quarter, headlined by the announced new debt structure, improving our balance sheet heading into 2024, increased annualized cost savings through Q3 of over $24 million, and the integration of Broadbean, all while closing the quarter with solid customer and operating metrics.

I would like to highlight a few items before I begin. With the June 2023 acquisition of Broadbean, our key software customer metrics are presented on a pro forma basis, which assumes that we own Broadbean since the beginning of fiscal year 2022.

During my prepared remarks, I will discuss our third quarter financial and operating performance on a GAAP and pro forma basis, progress on 2023 cost initiatives, Q3 cash flow and liquidity sources, including our new $77.5 million debt facility, and our Q4 and fiscal 2023 outlook and projected improvements in our cost structure heading into fiscal 2024.

Starting with Q3, 2023 performance. GAAP revenue was $35.1 million, down 6% or $2.1 million year-over-year, driven primarily by a $1.6 million decline in managed services and a $0.5 million decline in software products.

The Q3, 2023 decline in managed services was driven in large part by advertising, which declined $1 million or 9% year-over-year, primarily driven by the lower ad net revenue contribution, due in part to the challenging macro environment, coupled with customer deferral of budgeted ad spending to future periods.

In Q3, 2023, average billings per customer dropped 15.7% to $630,000 as compared to Q3 2022 of $747,000. As previously discussed, advertising softness began to reverse itself into the second half of 2023, due largely to our customer mix, new customer activation, seasonality on spend, and slightly improved economic outlook.

We expect Q4 to continue to be down versus Q4, 2022, but improve versus the first half of 2023. In addition, licensing declined by $0.6 million or 11% to $4.8 million, principally due to the deferral of certain planned deals from Q3 to Q4 2023 as a result of the pending writers and actor strikes.

The software products and services decline was largely attributed to a lower consumption across our Veritone HR [ph] Solutions customer base, including Amazon, offset by the addition of Broadbean in Q3 2023, which contributed $8.7 million of revenue in Q3, 2023, an increase in both GRI and legacy media and entertainment revenue.

During Q3, 2023, Amazon represented less than 10% of our consolidated revenue, down sequentially from 14% in Q2, 2023 and from 31% during Q3, 2022. Each quarter Veritone's revenue base is becoming increasingly diverse.

On a pro forma basis, Q3 revenue of $35.1 million declined $9.9 million or 22%, largely due to lower consumption of our legacy hire solutions, which was largely driven by the decline in Amazon spending year-over-year, coupled with the decline in managed services as previously discussed.

In addition to the year-over-year increase in GRI and legacy media and entertainment, Broadbean increased 12.2% as compared to Q3, 2022. As a reminder, during 2022 and the first half of 2023, Broadbean focused a lot of its efforts on moving existing customers off its legacy career builder platform in preparation to be sold.

This effort shifted sales focus on maintaining existing customers versus acquiring new customers, particularly in North America. Despite this challenge, Broadbean revenue did grow slightly year-over-year, which highlights the stability of its subscription based business.

During Q3, 2023, a little over 100 customers associated with this effort were removed from the Broadbean platform, the revenue impact of which was immaterial to both ARR and the financial results looking forward. In Q3 we delivered strong key performance metrics on a pro forma basis.

ARR of $98.6 million, including over $47 million from subscription versus consumption based customers. Our subscription based ARR grew 8.7% year-over-year. Our overall ARR declined given the trailing 12 months pullback in consumption spending principally from Amazon.

We expect this trend of consumption based ARR declining in Q4, 2023 versus 2022, given Amazon pullback on spending over the trailing 12 months. Total new bookings were 15.5 million, up 85% sequentially from Q2, 2023, but down year-over-year, largely due to Amazon's reduced spend.

The sequential improvement in bookings was largely driven by our hire solutions in GRI. Gross revenue retention continued to be in the high 90th percentile.

And total software products and services customers of 3,536, which were down slightly year-over-year, principally due to the previously discussed runoff of legacy career builder customers, transitioning off of Broadbean's platform, which had a minimal impact as overall ARR at Broadbean on a standalone basis improved 7% year-over-year.

We remain encouraged by the growing number of opportunities that come from companies seeking to boost operational efficiencies given the challenging market.

We continue to see meaningful traction from new and existing commercial enterprise and GRI customers that want to benefit from Veritone's industry leading applications, hiring solutions, and newer offerings, such as cloud-based Veritone DMH, which accelerates unstructured data and workflows.

During the quarter, we've closed several large deals, including a deal with the U.S. Senate and a blanket purchase agreement with the Department of Justice. Our future pipeline continues to grow and ample cross-selling opportunities, particularly in GRI where we expect significant growth in the near and long term.

As previously discussed, Q3 managed services gross billings per active client of $630,000 declined 15.7% from Q3, 2022. While the macro environment remains challenging, gross billings per active client did improve 9.4% sequentially from Q2, 2023.

Given our performance and bookings through today, we expect advertising revenue to be relatively consistent in Q4 versus Q3, but down year-over-year as customers continue to delay spend to future periods.

However, and as of today, our advertising operations have the highest gross planned spend in 2024 since our inception, coming from existing and newer customers, including Mint Mobile.

Q3 2023 GAAP loss from operations was $23.1 million as compared to $3.6 million in Q3 2022, largely driven by the decline in non-GAAP gross profit, coupled with non-recurring cash benefit of $14.3 million in Q3, 2022 associated with a change in estimated value of contingent purchase price consideration.

Q3, 2023 non-GAAP gross profit reached $27.9 million, down $2.2 million or 7%. The decline was largely driven by the reduction in higher margin consumption-based revenue in Q3, 2023 versus Q3, 2022, offset by the addition of Broadbean in Q3, 2023. Q3 non-GAAP gross profit margin of 80% was relatively flat when compared to Q3 2022.

During Q3, 2023, Broadbean contributed approximately $8.2 million of non-GAAP gross profit as compared to $7.5 million in Q3, 2022. We expect consolidated non-GAAP gross margins to remain near 80% in Q4, 2023.

Q3 non-GAAP net loss was $7.9 million as compared to $5.7 million in Q3, 2022, driven largely by the decline in revenue and corresponding non-GAAP gross margins, which negatively impacted our core operations, coupled with the addition of Broadbean operational expenses in Q3, 2023, offset by the various cost reductions enacted through Q3, 2023.

On a pro forma basis Q3, 2022 non-GAAP net loss was approximately $2.8 million. Turning to our balance sheet, at September 30, 2023, we held cash and restricted cash of $72.9 million, compared to $185.3 million at December 31, 2022.

The $112.4 million decrease reflects net cash outflows from operations of approximately $48.1 million, driven principally by the timing of payments and managed services and by our non-GAAP net loss.

In addition, we had net cash outflows from financing and investing activities of $64.2 million, driven by the net $50.2 million acquisition of Broadbean in June 2023 and deferred purchase price consideration of $10.5 million, attributable to PandoLogic's 2022 earn out and certain 2022 acquisitions.

Of the total $72.9 million in cash, approximately $60 million of our reported cash is essentially held for payment to third parties from our managed services, down from $93.1 million at December 31, 2022.

The decline in cash held for third parties is partially reflected with the seasonality of our advertising services, coupled with certain catch-up payments made in Q1, 2023 from delayed payments as we migrated onto new Oracle ERP system in the second half of 2022. Turning to liquidity.

During the first half of 2023, we were approached by a highly regarded PE firm to sell one of our non-software based assets for total consideration in excess of $100 million in cash. In late Q3, 2023 we terminated discussions with the PE firm, due in large part from the uncertainty around the timing to close coupled with macroeconomic challenges.

That said, we may elect to run a formal banking process for this asset in mid-2024. I am happy to report that in Q4 we committed to a four-year $77.5 million senior secured debt facility, which will replace our previously announced AR credit facility.

Key terms of the debt facility include a rate of SOFR plus 850 basis points, amortization of payments of 2.5% per quarter beginning on the six-month anniversary of the loan, 10% warrant coverage, a minimum liquidity covenant, and the ability to pay down the debt with equity at certain price points prospectively.

$37.5 million of the proceeds from the debt facility will be used to repurchase existing convertible debt at 75% of par, and the remaining $40 million to be used for general and corporate purposes. We expect the deal to close in the fourth quarter of this year.

On a pro forma basis, we project to have approximately $37 million of unencumbered cash post-deal, which includes direct fees associated with the deal. Post deal, our consolidated pro forma debt will be $168.5 million, including our legacy November 2026 convertible notes of $91 million, down from $141 million at September 30, 2023.

Additional information regarding the terminal facility was included in our earnings release today, and more information will be included in our 10-Q filing. We ended September 30, 2023 with 37.0 million shares outstanding and convertible debt of $141 million principal, 1.75% interest due November 2026. Turning to cost savings.

In February of this year we announced $12 million to $15 million of annualized cost saving initiatives, which including optimizing our cost structure, along with the Q2, 2023 divestiture in our energy group. In August, we announced that we were targeting an additional $10 million in annual cost savings.

To-date, we have executed over $24 million of annualized savings, well above our initial range. As these cost reductions flow through the P&L, we expect they will have a much larger impact in 2024, which will be when Veritone pivots back towards vertical growth from existing software and services with a clearer path towards profitability.

To put this in perspective, assuming no revenue growth in 2024 on a pro forma basis, and we were able to hold our exiting 2023 operating structure relatively flat, our non-GAAP net loss or our projected cash burn would improve greater than 50% over projected 2023.

And if we grew pro forma 2023 revenue by approximately 20% year-over-year, we'd be close to breakeven. This is a substantial improvement over our baseline 2023 operating structure. Turning to our financial guidance for Q4 and fiscal 2023.

Fiscal 2023 continues to be a difficult year, with increased uncertainty amplified by Fed rate increases, inflation, writer and actor strikes, wartime events in Israel and customer impacting decisions, including Amazon's recent Q2, 2023 decision to reduce spending.

While we remain more efficient operationally and continue to progress on longer term initiatives, the consumption side of our business, including our advertising and Legacy HR Solutions Products, continues to be challenged. With that backdrop, we are guiding Q4 revenue to be between $33 million and $34.5 million down year-over-year at the midpoint.

Included in this is Broadbean, which is expected to contribute $8 million to $8.5 million in revenue in Q4.

Excluding Broadbean, organic revenue is expected to decline overall, largely driven by our conservative outlook on Amazon spend in Q4, 2023, coupled with a projected decline in advertising, offset by continued improvement in GRI and other services.

The rest of Q4 revenue guidance include the execution of new enterprise deliverables, namely across GRI which can be unpredictable, advertising concurrent with the current economic environment and the variability of usage across our hiring platform.

And we expect Q4 quarterly non-GAAP net loss to be between $5.5 million and $6.5 million as compared to a $2.2 million non-GAAP gross profit in Q4, 2022. In summary, our efforts in 2023 have been focused on streamlining operations to build a strong foundation for Veritone's next phase of disruptive growth.

Despite external challenges in the current environment, we are excited by the improvements we've made here to-date. That concludes my prepared remarks. Operator, we would like to now open the call for questions. Operator. .

We will now begin the question-and-answer session. [Operator Instructions]. The first question comes from Darren Aftahi with ROTH. Please go ahead..

Hey guys, good morning. Thanks for taking my questions. Just two if I may.

On the DOJ contract, can you kind of talk about the scope of work there and kind of the impacts on P&L, and just any clarity? Is the $15 million in aggregate, is that a number that spans over the five years or is that an annual kind of ceiling in terms of the contract value?.

I think – thank you, Darren. It's good to talk to you. The Blanket Purchase Agreement, it finally has a financial vehicle and instrument in place. A couple of key tenets here. Number one is sole contractor.

So these are appropriated and approved funds is up for the DOJ and the breadth of their agencies, spanning from the Bureau of Prisons now to the FBI, to be able to buy Veritone’s product and services, where we've already had a very large pent-up demand for these services.

You're correct that the $15 million Blanket Purchase Agreement does provide the allocation of those funds over a multi-year period of time.

However, we're optimistic that working just based upon the demand that we have and the active trials and other projects we're working with, with these respective agencies, to hopefully be able to service, I'd say more – a lot of or a material amount of that $15 million prior to the end of extending it through year four.

So again, we look at this as the beginning of a very active and dynamic opportunity with the Department of Justice.

The services include both our, I'll call it industry-specific applications, as it relates to programmatic redaction, Illuminate, which is I'd say dynamic AI-based data analytics and discovery, but also it's kind of a blanket coverage for net new initiatives built natively on aiWARE.

So again, we think that this is a bellwether turning point for our relationship with Fed Civ, highlighted by the DOJ, that hopefully we'll be able to service and work through this $15 million on a much faster clip. .

That's helpful. Thanks, Ryan. Just maybe one. So Amazon, it looks like they are going to hire, I think, a quarter million people in the quarter. That I think theoretically should be good for your Pando business. The guidance sort of doesn't really assume that benefit.

I'm just trying to understand the relationship of your company or Pando with Amazon and kind of how we can connect.

Has that relationship changed meaningfully or is there an opportunity for that business to maybe have a resurgence kind of in the future?.

We're taking a pretty conservative view on it and we're still actively working with Amazon as we mentioned. They still are a material customer. Thankfully, we brought down that concentration risk down significantly. But we're going to keep it, a pretty conservative view working with that entity.

It's taken us, as you're well aware, a full year to kind of flush through that reduction through our business. Actually, if you kind of do your own math and you look at the loft contribution of net revenues and contributed EBITDA, Veritone, the picture would look radically different for us overall just with that one customer.

But to be very clear, I mean Amazon is a great partner. We work with them on many different areas of the Veritone business line. We're co-selling with them. They are one of our most active co-selling partners in media and entertainment, and now growing quickly in the public sector.

So we need to continue to do – continue to do work to right-size our cost structure and get it truly at a base level and a baseline for growth next year. But to be clear there, we are going to take a conservative view on the hiring side of the relationship with Amazon going into, obviously in Q4, but even into 2024. .

Great. Thank you. .

Thank you..

Our next question comes from Chad Bennett with Craig-Hallum. Please go ahead. .

Great. Thanks for taking my question. So can we just dig into a line item on the balance sheet, the accrued media payment line item? I think it was $84 million. And how that kind of reconciles with your $60 million held for payment customer commentary on the call.

Is that – I assume that $60 million is in that $84 million? And if so, what's the remainder?.

Yeah, I'll take that one. So you do have receivables associated with that business, which would plug the difference. .

Okay.

You have receivables in that $84 million as a liability?.

No, you have receivables plus the cash will get you back to the liability. .

Okay. And so the delta between your cash and that line item has grown. It actually went net negative last quarter, but grown this quarter.

Is that – I mean, just from a future payment term standpoint, that $84 million is cash going out over the next 12 months?.

Yeah, that's right. .

Okay.

And then, what are the terms on the new debt facility from what's the current interest cost today, and then are there any covenants associated with that?.

Yeah, so the current interest cost today is 1.75%. This one is going to go up just on the new debt facility. It'll be a SOFR, so call it prime, plus 850 basis points. It'll be a four-year loan, so 2027. And the covenants, while the minimum liquidity covenant, that'll be pegged at $15 million of consolidated cash. .

Okay. .

And those are the big ones. .

Is there any net leverage or anything else on the covenant side?.

No. .

Okay. And then just from a cost savings standpoint, the $24 million you talked about, and I think you alluded to additional cost savings, and I just want to get a sense from the current OpEx run rate, kind of how to think about that run rate, maybe two quarters out into the first half of next year. .

Yeah, so what we said in our prepared remarks, if you take the pro forma business exiting this year and assuming no growth, our bottom line would be improved by over 50% from a non-GAAP net loss perspective. Assuming 20% growth on that pro forma revenue, we'd be near breakeven. .

Got it. Okay. Thanks much. .

[Operator Instructions]. Our next question comes from Kunal Madhukar with UBS. Please go ahead. .

Hi. Thanks a lot. This is Jason for Kunal from UBS. I have a couple questions as well. The first question is on your unencumbered cash. So you finished 3Q with $14 million or so amount of unencumbered cash, and I think in the prepared remark you said after the debt deal close, you're going to be at $37 million unencumbered cash.

And so I'm just trying to get a sense of how you guys manage the unencumbered cash. What is the minimum amount that you guys expect to have on balance sheet? And do you guys think about it in connection to other key metrics such as cost or revenue? Any helpful – any color will be helpful. Thank you. .

Yeah, the $37 million was the net benefit of the CAB [ph], the debt facility, after you take in all the fees. We continue to manage cash pretty tightly through this window. So I don't know if that gives you any more perspective. .

Got it. Thanks a lot. And in the prepared remark, you also said 2024 will be an inflection point for growth trajectory. So can we break that down a little bit by different verticals? Can you talk about some of the trends that you see as we go into ‘24 for software, advertising, hiring trends, anything you can share will be helpful. Thank you. .

Yeah, we'll give more guidance on 2024 in our annual call in March. .

But I think Mike, you did – to reiterate what you just disclosed based upon what our projected exit pro forma is going to look like from a revenue and a cost structure perspective. Just to restate again, if we proceed next year with near zero growth, we would realize around a 50% improvement year-over-year in our non-GAAP net loss.

Correct me if I'm wrong, Mike. And then if we are able to grow and to be clear, we've kept nearly 100% of our customer base, less than what I'll call reconciliation from a few customers as named entities for the divestiture of say, the acquisition of Broadbean from CareerBuilder. But we've retained our customer base.

And so in the event, which we're working very hard to see a growth of 20% or more next year, that would get us close to breakeven over the course of 2024.

So that will kind of give you some perspective of the magnitude of the right-sizing of our cost structure against where we're expecting and from an exit velocity perspective on both our top and bottom line. .

Got it, thank you. .

Thank you. .

This concludes our question-and-answer session. I would like to turn the conference back over to Ryan Steelberg for any closing remarks. .

I want to thank you everybody for joining today. We've done a tremendous amount of work, despite some unforeseen major pullbacks from spend from a few customers. We've done, I think a brilliant job of maintaining those customers in the relationships, while having to right-side our cost structure.

Not easy for any organization, but I think we've done it in a sort of almost a masterful job, to be very, very clear that we are fully committed to making sure that we're ready for sustained profitable growth in 2024. I really want to thank our Veritone team for this hard work and also their commitment to our customers.

Many of which, which we highlighted today on the call, most of our flagship customers have renewed.

So when almost every company out there is looking to cut costs and find more efficiencies and gain, that we really want to telegraph how impactful and critical our solutions and applications are to our customers and considering these tightening of budgets. So very thankful for the renewals there.

Lastly, I would really want us to recognize our employees and team members and partners who are in Israel and other conflict zones, who continue just to amaze me that they continue to produce and execute at a high level despite these extremely challenging and tragic times.

So a heartfelt thank you to, again, not just our employees, but also to partners and customers who are being impacted as well. So again, this is – we're very, very thankful. So we're excited about push out, push through the end of the year, complete kind of the initial work we laid out and really prepare ourselves for an exciting 2024.

Thank you very much. .

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect..