VERI 10-K & 10-Q changes, risk factors and insider trading

Based on our liquidity position at December 31, 20242025 and our current forecast of operating results and cash flows, absent any other action, management determined that there is substantial doubt about our ability to continue as a going concern over the twelve months following the filing of this Annual Report on Form 10-K.10-K, principally driven by the maturity of our Convertible Notes, along with historical negative cash flows and recurring losses. In past fiscal quarters, based on our liquidity position at the end of such fiscal quarter and our then-current forecast of operating results and cash flows, management has determined that there has been a substantial doubt about our ability to continue as a going concern over the twelve months following such determination, principally driven by our current debt service obligations, historical negative cash flows and recurring losses.determination. Our ability to continue as a going concern is dependent on our ability to servicegenerate oursignificant debtcash obligationsflows, underobtain sufficient proceeds from any future offerings of securities, and/or obtain alternative financing prior to the Termmaturity Loanof asthe theyConvertible become due, which, in turn, is dependent on, among other factors, our financial condition and operating performance, which are subject to prevailing economic and competitive conditions and certain financial, business and other factors beyond our control.Notes. Any future determination that we may be unable to continue as a going concern may materially harm our business and reputation and may make it more difficult for us to obtain financing for the continuation of our operations, including through equity financings, incurring additional debt or otherwise, which in turn, may adversely impact our financial condition, results of operations and cash flows.

The going concern assumption contemplates the realization of assets and satisfaction of liabilities in the normal course of business, including the ability to meet minimum liquidity thresholds under our Credit Agreement.business. We may not be able to access additional equity under acceptable terms, and may not be successful in future operational restructurings, earning any of our deferred purchase consideration, meeting our minimum liquidity threshold under out Credit Agreement, or at growing our revenue base, and our ability to execute on our operating plans may be materially adversely impacted. If we are unable to capture past cost reduction and potential future cost synergies from our past acquisitionsacquisitions, we would likely not have sufficient cash on hand or available liquidity to servicerepay our currentConvertible debtNotes obligations,upon their maturity in November 2026, and our ability to execute on our operating plans may be materially adversely impacted. If we become unable to continue as a going concern, we may have to dispose of other or additional assets and might realize significantly less value than the values at which they are carried on our consolidated financial statements. These actions may cause stockholders to be further diluted or to lose all or part of their investment in our common stock. IfIn addition, if we receivedispose anof auditorcertain opinionof qualifiedour byassets suchin auditor’s determination that there is a substantial doubt asorder to ourgenerate abilityadditional to continue as a going concern, it will result in an event of default underliquidity, our Termrevenue Loanmay (asbe defined below), absent any consent or waiver by the lenders under the Credit Agreement,reduced and our business may resultbecome inless incremental costs to us or restrictions imposed upon us by our lenders. In March 2025, we received a consent from the lenders under our Term Loan to deliver our audited consolidated financial statements for the fiscal year ended December 31, 2024 with a report from our independent certified public accountants related thereto that contained a going concern emphasis of matter. As consideration for the Limited Consent, we paid an aggregate of $1.0 million in cash to the lenders party to the Limited Consent.diversified. If we cannot continue as a going concern, adjustments to the carrying values and classification of our assets and liabilities and the reported amounts of income and expenses could be required and could be material.

In order for us to grow our aiWARE SaaS business and achieve profitability, we must expand our revenue base by expanding our customer base and increasing our business with existing customers. We may not be able to succeed with respect to these efforts. Many factors may adversely affect our ability to grow the business for our aiWARE platform, including but not limited to:

•Failure to add market-specific applications to our aiWARE platform with sufficient levels of capability to provide compelling benefits to users in our target vertical markets;

•Failure to add AI models with sufficient levels of capability or trainability into our platform, difficulties integrating AI models,models and loss of access to, or increases in the cost of, AI models;

•Inability to expand the number of AI models in different classes that can operate in a network-isolated manner, which would limit the capabilities of aiWARE available in our FedRAMP environment or under private cloud, on-premises and hybrid deployment models;

•Difficulties in adding technical capabilities to our platform and ensuring future compatibility of additional third party providers;

•Failure to articulate the perceived benefits of our solutions, or to generate broad customer acceptance of or interest in our solutions;

•Introduction of competitive offerings by larger, better financed and more well-known companies;

•Introduction of new products or technologies that have performance and/or cost advantages over our aiWARE platform;

•Inability to integrate our solutions with products of other companies to pursue particular vertical markets, or the failure of such relationships to achieve their anticipated benefits;

•Long and complex sales cycles, particularly for customers in the Public Sector markets; and Challenges in operating our platform on secure government cloud platforms and complying with government security requirements.

If we fail to developgrow a successfulthe business for our aiWARE platform, including our VDR product, our business, results of operations and financial condition will suffer.

We use machine learning and AI, including generative AI and automated decision-making technologies, in our products and services. The market for AI-based software applications is still relatively new and evaluating the size and scope of the market is subject to a number of risks and uncertainties. We believe that our future success will depend in large part on the growth of this market. The utilization of our platform and solutions by customers is also still relatively new, and customers may not recognize the need for, or benefits of, our platform and solutions, which may prompt them to cease use of our platform and solutions or decide to adopt alternative products and services to satisfy their cognitive computing, search and analytics requirements. Our ability to access and extend our position in the markets that our platform and solutions are designed to address depends upon a number of factors, including the cost, performance and perceived value of our platform and solutions, as well as regulatory scrutiny over our products and technologies. As AI technologies become increasingly incorporated into various mainstream products and offerings and these technologies advance and develop,develop legal and regulatory scrutiny of AI technologies, potentially including our products, has and will likely increase. Market opportunity estimates are subjectcontinue to significantincrease. uncertaintyFor additional information about the legal and areregulatory basedrisks related to our use of AI technologies in our Software Products & Services, see the below Risk Factor titled “Recent and proposed regulation of AI technologies, including facial recognition technology, the processing of biometric data, and automated decision-making and machine learning technologies, increase our compliance costs and otherwise make it harder for us to conduct our business, require us to change our business practices, and may lead to regulatory investigations or actions, litigation, reputational harm, and otherwise have a material adverse effect on assumptions and estimates, including our internal analysis and industry experience. Assessing the market for our solutions is particularly difficult for several reasons, including limited available information and rapid evolution of the market.business.”

In addition, the development and use of AI technologies presents risks and challenges that could hinder its further development, adoption and use in the markets that we serve. AI algorithms may be flawed, datasets may be insufficient or contain biased information, and the results and analyses that our AI solutions assist in producing may be deficient, inaccurate or biased. For example, biased datasets and results could produce results that are objectionable to customers using our talent acquisition, or Veritone Hire, technologies. Further, use of AI technologies in certain scenarios present ethical concerns. For example, due to potential inaccuracies or flaws in the inputs, outputs or logic of our AI technology,technologies, the model could result in decisions that bias certain individuals (or classes of individuals) and adversely impact their rights, employment and ability to obtain certain pricing, products, services or benefits. If we enable or offer AI solutions that produce deficientbiased or inaccurate resultsoutputs and analyses, or that are perceived as controversial due to human rights, privacy or other social issues, we may experience lower-than-expected demand for our products and services, or competitive, brand or reputational harm. Multiple states in the United States, as well as the European Union,Union and other jurisdictions, have enacted or proposed legislation regulating the use of AI. These regulations include requirements for increased transparency, mandatory disclosures and the implementation of mitigating measures to address potential risks associated with AI technologies. Compliance with these laws may impose additional costs, operational adjustments, or restrictions on our use of AI, and noncompliance could result in regulatory penalties, reputational harm, or other adverse impacts. As this regulatory landscape continues to develop, new or more stringent requirements could emerge, further affecting our business operations and ability to leverage AI technologies effectively.

Market opportunity estimates are subject to significant uncertainty and are based on assumptions and estimates, including our internal analysis and industry experience. Assessing the market for our solutions is particularly difficult for several reasons, including limited available information and rapid evolution of the market. If the market for AI-based solutionssoftware applications does not experience significant growth, or if demand for our platform or solutions does not increase in line with our projections, then our business, results of operations and financial condition will be adversely affected.

We experience quarterly variations in the timing of revenues from our Software Products & Services as a result of numerous factors, such as the timing of large projects, the length and complexity of our sales cycles and trends impacting our target vertical markets. In particular, our VeritoneTalent HireAcquisition solutions have historically experienced seasonality in terms of when we enter into customer agreements for our products and services. Consistent with the hiring patterns of many of our customers, a higher percentage of related revenue is earned in the second half of each year. Within a given quarter, a significant portion of our agreements are often signed toward the end of the quarter. This seasonality is reflected to a lesser extent in our revenue due to the fact that we generally recognize subscription revenue over the term of the customer agreement. We expect this seasonality to continue, which may cause fluctuations in certain of our operating results and financial metrics, and thus, difficulties in predictability of our operating results.

•investments to expand and enhance our platform and technology infrastructure, make improvements to the scalability, availability and security of our aiWARE platform, and develop new products;

•sales and marketing, including expanding our direct sales organization and marketing programs, and expanding our programs directed at increasing our brand awareness among current and new customers;

•hiring additional employees;

expansion•investment ofin our operations and infrastructure, both domestically and internationally; and general administration, including legal, accounting and other expenses.

These investmentsexpenditures may not result in increased revenue or growth of our business. We may not be able to generate netadditional revenues sufficient to offset our expected cost increases and planned investments in our business and platform. As a result, we may incur significant losses for the foreseeable future, and may not be able to achieve and sustain profitability. If we fail to achieve and sustain profitability, then we may not be able to achieve our business plan, fund our business or continue as a going concern.

As part of our growth strategy, we have acquired, and we may continue to acquire, businesses, services, technologies or intellectual property rights that we believe could complement, expand or enhance the features and functionality of our aiWARE platform and our technical capabilities, broaden our product and service offerings or offer growth opportunities for our business. For example, we closed on our acquisition of Broadbean in June 2023. This acquisition strategy may divert the attention of management and cause us to incur various expenses in identifying, investigating and pursuing suitable acquisitions, whether or not such acquisitions are consummated. Acquisitions could also result in dilutive issuances of equity securities, the incurrence of debt, contingent liabilities, amortization expenses, impairment of goodwill and/or purchased long-lived assets, and restructuring charges, any of which could adversely affect our operating results and financial condition. In addition, we may face risks or experience difficulties successfully integrating acquired businesses, such as Broadbean, with our operations. These risks include:

•effectively managing the combined business following the acquisition, including any international operations of the acquired business and integrating the acquired company’s accounting, human resources and other administrative systems, and coordination of product, engineering and sales and marketing functions;

•the potential loss of key employees and customers as a result of competing in the markets in which the acquired company operates;

•cultural challenges associated with integrating employees from the acquired company into our organization, and retention of employees from the businesses we acquire; and achieving anticipated cross-selling opportunities and eliminating any redundant operations with respect to the acquired business.

We also may not achieve the anticipated benefits from the acquired business and may incur unanticipated costs and liabilities in connection with any such acquisitions. Additionally, if we are unable to complete an acquisition, we could lose market share to competitors who are able to make such an acquisition. Once an acquisition is closed, we may discover hidden costs, resource demands and potential liabilities that were not evident during the due diligence process, particularly when such process is undertaken on an accelerated timeline. Although we often utilize representation and warranty insurance and standard indemnity provisions in these acquisition transactions, if we are unable to successfully assert a claim, if a claim is not covered by insurance or if these hidden costs prove greater than expected, our operations as a whole may be adversely affected. In addition, a significant portion of the purchase price of companies we acquire may be allocated to acquired goodwill and other intangible assets, which must be assessed for impairment at least annually. If any of these results occurs, our business and financial results could be adversely affected.

We have expanded ourOur international operations,operations including in the second half of 2023 as a result of our Broadbean acquisition, which exposesexpose us to significant risks, and we intend to continue expanding international operations going forward.

In June 2023, and in conjunction with our acquisition of Broadbean, we expanded our operations into Europe and Asia Pacific. As part of our growth strategy, we may expand our operations further internationally. As of December 31, 2024,2025, we had operations in the United Kingdom, other parts of Europe, Israel, Australia and India, and we may, in the future, open offices and hire employees in additional locations outside of the United States to service existing global customers, reach new customers and gain access to additional technical talent. Operating in and expanding to new international markets requires significant resources and management attention and will subject us to uncertain regulatory, international tax, international conflicts, and economic and politicalgeopolitical risks. Because of our limited historical experience with expanded international operations, as well as developing and managing sales in international markets, our international expansion efforts may not be successful. In addition, we will face risks of doing business internationally that could adversely affect our business, including, but not limited to:

•managing and staffing international operations and the increased operating, travel, infrastructure and legal compliance costs associated with numerous international locations;

•establishing and managing additional instances of our aiWARE platform in other countries;

•adapting, localizing and pricing our products and services for specific countries and to offeroffering customer support in various languages;

•additional foreign tax requirements and obligations, and adverse tax consequences and tax rulings;

economic,•economic conditions, international conflicts and political instability in some countries;

•compliance with local laws, regulations and customs in foreign jurisdictions, particularly in the areas of data privacy and personal privacy, employment and tax and export controls, economic sanctions and anti-corruption laws; and limited protection for intellectual property rights in some countries.

Our failure to manage any of these risks successfully could harm our existing international operations, interrupt our expansion plans and adversely affect our business, results of operations and financial condition.

Our business has been and may continue to be negatively affected by macroeconomic and geopolitical factors, including lingering economic disruption caused by theinternational Russia-Ukraineconflicts, conflict,financial the Israel-Hamas war and conflict in the surrounding regions,instability, inflation and the responses by central banking authorities to control inflation, monetary supply shifts, the imposition of tariffs and other global trade disputes, and the threat of recession in the United States and around the world.

Global economic and business activities continue to face widespread macroeconomic and geopolitical uncertainties, including lingering economic disruption caused by theinternational Russia-Ukraineconflicts, conflict,financial Israel-Hamas war and conflict in the surrounding regions,instability, inflation and the responses by central banking authorities to control inflation, monetary supply shifts, the imposition of tariffs and other global trade disputes, and the threat of recession in the United States and around the world. We continue to actively monitor the impact of these macroeconomic factors on our financial condition, liquidity, operations, suppliers, industry and workforce, and instituted certain cost saving measures during 2023 andthrough 20242025 as a result of these factors. The extent of the impact of these factors on our operational and financial performance, including our ability to execute our business strategies and initiatives in the expected time frame, will depend on future developments, and the impact on our customers, partners and employees, all of which are uncertain and cannot be predicted. These and other global economic conditions, including any new disruptions, have in the past and may in the future again negatively impact our business. For example, business operations at our Herzliya, Israel office location where we perform development work on our Talent Acquisition solutions, have operationsbeen, and anmay officecontinue into Israel,be, andimpacted as a result ofby the Israel-Hamas war,and Iran conflicts. In addition, a small portion of our Israel-based employees, and a number of our employees andtheir family members of our employeesmembers, have been conscripted into military service. In addition, our VeritoneTalent HireAcquisition solutions are sold to businesses that experience performance fluctuations based on factors including the demand for labor and the economic health of current and prospective employers. To the extent that economic uncertainty or attenuated economic conditions cause our current and potential customers to freeze or reduce their headcount, demand for our products and services has been, and may continue to be negatively affected. Adverse economic conditions have also caused and could continue to result in reductions in sales of our applications, longer sales cycles, reductions in contract duration and value, slower adoption of new technologies and increased price competition. In addition, economic recessions have historically resulted in overall reductions in spending on software and technology solutions as well as pressure from customers and potential customers for extended billing terms. If economic, political, or market conditions deteriorate, or if there is uncertainty around these conditions, our current and potential customers may elect to decrease their software and technology solutions budgets by deferring or reconsidering product purchases, which could limit our ability to grow our business and negatively affect our operating results. Any of these events would likely have an adverse effect on our business, operating results and financial position.

Our success depends largely upon the continued services of our President, Chief Executive Officer and Chairman of our Board, Ryan Steelberg, and our other executive officers and senior management. We rely on our leadership team in the areas of strategy and implementation, research and development, operations, security, marketing, sales, support and general and administrative functions. We do not currently have any employment agreements with our executive officers or senior management team that require them to continue to work for us for any specified period, and, therefore, they could terminate their employment with us at any time. The loss of Ryan Steelberg, or one or more of theour executive officers or members of our management team, could adversely impact our business and operations and disrupt our relationships with our key customers.

Our competitors, partners or others may acquire third party technologiestechnologies, including AI models, used in our aiWARE platform, which could result in them blocking us from using the technology in our aiWARE platform, offering it for free to the public or making it cost prohibitive for us to continue to incorporate their technologies in our aiWARE platform, or these third party technology providers may otherwise terminate their relationships with us, which could adversely affect the functionality of our aiWARE platform.

Our success depends in part on our ability to attract, incorporate and maintain high performing AI models on our aiWARE platform. If any third party acquires an AI model that is on our platform, they may preclude us from using it as a component of our platform or make it more expensive for us to utilize. In addition, a third-party AI model provider may terminate its relationship with us or may otherwise cease to make its AI models available to us. In either case, if that AI model has unique capabilities or a significant performance advantage over other models and we are unable to identify a suitable replacement model, the interruption could cause us to lose customers. It is also possible that a third partythird-party acquirer of such technology could offer the AI models and technologies to the public as a free add-on capability, in which case certain of our customers would have less incentive to pay us for the use of our platform. If a key third party technology becomes unavailable to us or is impractical for us to continue to use, the functionality of our platform could be interrupted, and our expenses could increase as we search for an alternative technology. As a result, our business, results of operations and financial condition could be adversely affected through the loss of customers and/or from increased operating costs.

A key element of our aiWARE platform is the ability to incorporate and integrate AI models developed by multiple third-party vendors, and we plan to continue to increase the number of third-party AI models incorporated into our aiWARE platform to enhance the performance and power of our platform. As we work to add new AI models to our platform, we may encounter difficulties in identifying additional high-quality AI models (particularly high performing, specialized models), entering into agreements for their inclusion in our ecosystem on acceptable terms or at all and/or in coordinating and integrating their technologies into our system. We may incur additional costs to modify and adjust existing functionalities of our platform to accommodate multiple classes of AI models, without the assurance that such costs can be recouped by the additional revenues generated by the new capabilities. As aiWARE becomes more complex and as we release enhancements to our platform that require changes to AI models, we may not be able to integrate third-party AI models in a seamless or timely manner due to a number of factors, including incompatible software, lack of cooperation from developers, insufficient internal technical resources, platform security constraints, and the inability to secure the necessary licenses or legal authorizations required. In addition, we have established a self-service development environment in which such third partythird-party developers integrate their AI models onto our platform, and we will be dependent in part upon their ability to do so effectively and quickly. We may not have full control over the quality and performance of third-party providers, and therefore, any unexpected deficiencies or problems arising from these third-party providers may cause significant interruptions in the operation of our platform. The failure of third party developers to integrate their AI models seamlessly into our platform and/or provide reliable, scalable services may impact the reliability of our platform and harm our reputation and business, results of operations and financial condition.

The following discussion and analysis of our financial condition and results of operations should be read together with,with and is qualified in its entirety by reference to theour consolidated financial statements and related notes that arethereto included elsewhere in this Annual Report on Form 10-K. ThisThe following discussion contains forward-looking statements based upon current expectations that involvereflect risksour plans, estimates and uncertainties.beliefs. Our actual results maycould differ materially from those anticipateddiscussed in thesethe forward-looking statementsstatements. asYou ashould result of various factors, including those discussed under “Item 1A. Risk Factors” set forth in Part I of this Annual Report on Form 10-K and our other filings withreview the SEC,section including future SEC filings. Seetitled “Cautionary Note Regarding Forward-Looking Statements.Statements” for a discussion of forward-looking statements and the section titled “Risk Factors” for a discussion of factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis. Our historical results are not necessarily indicative of the results that may be expected for any period in the future, and our interim results are not necessarily indicative of the results we expect for the full calendar year or any other period.

Veritone, Inc., collectively with our subsidiaries, referred to as “Veritone,” “Company,” “we,” “our,” and “us,” is a provider of Artificial Intelligence (“AI”) solutions, powered by our proprietary AI operating system, aiWARE™, to deliver differentiated products and solutions to our Commercial Enterprise and Public Sector (which we previously referred to as "Government & Regulated Industries") customers. Our Software Products & Services consist of revenues generated from Commercial Enterprise and Public Sector customers using our aiWARE platform and VeritoneTalent HireAcquisition solutions, any related support and maintenance services, and any related professional services associated with the deployment and/or implementation of our AI solutions. Our Managed Services consist of revenues generated from Commercial Enterprise customers using our content licensing and representation services, including influencer management and related operations.

The historical financial results of our former wholly-owned subsidiary Veritone One are reflected in our consolidated financial statements herein as discontinued operations and, as such, have been excluded from continuing operations for all periods presented on a retrospective basis, unless otherwise stated. Refer to Note 4, Discontinued Operations, Business Combinations, and Divestiture, to the sectionConsolidated titledFinancial "DivestitureStatements included in Part II, Item 8, Financial Statements and Supplementary Data, of Veritonethis One."Annual belowReport on Form 10-K for additional information.

During the year ended December 31, 2024,2025, we generated revenue of $92.6$92.2 million as compared to $100.0$92.6 million during the year ended December 31, 2023.2024. Our Software Products & Services revenue was $61.1$65.8 million and $68.4$61.1 million during the years ended December 31, 20242025 and 2023,2024, respectively, and represented 66%71.4% and 68%65.9% of our consolidated revenue during the years ended December 31, 20242025 and 2023,2024, respectively. Our Managed Services revenue was $31.6$26.4 million and $31.6 million during the years ended December 31, 20242025 and 2023,2024, respectively, and represented 34%28.6% and 32%34.1% of our consolidated revenue in the years ended December 31, 20242025 and 2023,2024, respectively. DuringNo customers accounted for 10% or more of the yearCompany’s revenue for the years ended December 31, 20242025 noand one2024, customer accounted for more than 10% of consolidated revenue. During the year ended December 31, 2023, our largest customer represented 15% of our consolidated revenue.respectively.

October 2025 Registered Direct Offering.Offering

On JanuaryOctober 2,17, 2025, we issued and sold 4,414,878an aggregate of 12,864,494 shares of our common stock, priced at $2.53 per share, and pre-funded warrants to purchase up to 3,608,838 shares of our common stock (the “Pre-Funded Warrants”), priced at $2.52 per pre-funded warrant, with an exercisea price of $0.01$5.83 per share,share to Esousacertain Groupinstitutional Holdings,and LLC,accredited a New York-based family office,investors in a registered direct offering (the “Registered Direct Offering”).offering. The grossaggregate net proceeds from the offering were approximately $20.3$70.2 million, beforeafter deducting estimated offering expenses.

We are a leader in AI-based Software Products & Services. Our proprietary AI operating system, aiWARE, uses machine learning algorithms, or AI models, together with a suite of powerful applications, to reveal valuable insights from vast amounts of structured and unstructured data. Historically, we have derived a large portion of our Software Product & Services revenue from applications we internally developed from our aiWARE platform and actively sold across various customers. Beginning in mid-fiscal year 2022, macroeconomic and asgeopolitical afactors, resultincluding oflingering theeconomic recent pullback in the macroeconomic environmentdisruption caused by international conflicts, financial instability, inflation and the responses by central banking authorities to control inflation, monetary supply shifts, high interest rates, the imposition of tariffs, trade tensions, and geopoliticalglobal factorstrade including the Russia-Ukraine wardisputes, and the Israel-Hamasthreat war,of economicrecession conditionsin the United States and around the world on our business and our existing and potential customers, negatively impacted parts of our consumption-based operations and financial results,results. whichFor representedexample, abusiness significantoperations amountat our Herzliya, Israel office location where we perform development work on our Talent Acquisition solutions, have been, and may continue to be, impacted by the Israel-Hamas and Iran conflicts. In addition, our Talent Acquisition solutions are sold to businesses whose financial conditions fluctuate based on general economic and business conditions, particularly the overall demand for labor and the economic health of ourcurrent revenueand priorprospective to fiscal 2024.employers. As a resultresult, our Software Products & Services revenue decreased byfrom 10.8%$84.8 million during the year ended December 31, 2024 as compared2022 to the$68.4 priormillion year period due to lower consumption across our Commercial Enterprise customer base, including Amazon and certain one-time software revenue recognized in 2023 that did not recur at the same rate in 2024. This impact was partially offset by the addition of Broadbean in the second quarter of 2023. During the year ended December 31, 2024, no customer represented more than 10% of our consolidated revenue as compared toduring the year ended December 31, 2023, and decreased further to $61.1 million during whichthe oneyear customerended representedDecember 15%31, 2024. While these economic and geopolitical factors have persisted throughout 2025, including instability caused by tariffs, our Software Products & Services revenue of our$65.8 consolidatedmillion revenue.for the year ended December 31, 2025 increased 7.8% as compared to the corresponding prior-year period.

ToBeginning alignin our operating structure with this corresponding revenue decline,2023, we enacted significant cost reductions during fiscal years 20242023, 2024, and 2023.2025. In January 2023, we announced our plans to reduce costs through the optimization of our operational structure. In February 2024, we announced certainadditional cost reduction and restructuring initiatives, the result of which was a reduction in our global workforce of approximately 13% during fiscal 2024. DuringFrom January 1, 2023 and through December 31, 20242024, we reduced our totalglobal workforce by approximately 19%. In June 2025, we announced further cost reduction in workforce was 19%. Since the first quarterinitiatives of 2023,up weto $10.0 million, approximately 80%, or $8.0 million of which have been actively realigning and restructuring our organization, which,achieved as of December 31, 2024,2025. hasAs resultedof inDecember 31, 2025, we have achieved an aggregate of over $40.0$50.0 million of net annualized strategic cost reductions since theJanuary beginning1, of2023 fiscal 2023. Asas a result of our effortsorganizational restructuring and realignment efforts. In fiscal year 2026, we plan to diversifykeep our customeroperating baseexpenses andrelatively increase sales within our existing customer base, as well as the June 2023 acquisition of Broadbean, we also increased our sales and marketing spending in the near termflat as compared to thefiscal trailingyear twelve2025, months;which however,will thesebe increaseddriven investmentsin werepart partiallyby planned cost reductions across our operating structure, offset by planned increases in our 2024research and 2023development cost-reductionoperating initiatives.expenses, largely to support efforts around near-and long-term revenue growth in VDR and the Public Sector.

As of December 31, 2024,2025, our total Software Products & Services customers declined to 3,237,2,978, which was a decrease of 6.4%8.0% as compared to 2023,December 31, 2024. This change was largely driven by plannedfewer migrationconsumption-based customers across Talent Acquisition and the continuing impact of sunsetting legacy CareerBuilderCareer Builder customers offfrom our June 2023 acquisition of Broadbean. In addition, smaller hiring agency customers experienced a drop in hiring as a result of the Broadbeanchallenging softwaremacroeconomic platform,environment, which contributed to the decrease in Software Products & Services customers, but did not have a significant impact on our financial results infor 2023the year ended December 31, 2025 and 2024.2024, respectively. In the first half of 2026 and until we see an improved macroeconomic environment, we expect to experience a similar decline in smaller hiring agency customers across Talent Acquisition. To continue our effort to grow our customer base and overall revenue, we havecontinue beento investinginvest aggressively in existing customers and acquiring new customers.

We believe our Software Products & Services will extend the capabilities of many third-party software platforms and products that are widely used today. For example, we believe that, when integrated with aiWARE, our VeritoneTalent Hire solutionsAcquisition customers will be givenhave greater visibility and transparency in their hiring processes. Further andFurther, with the recently announced iDEMsiDEMS and VDR launches,products, we now offer a suite of aiWARE applications to address the growing issueproblem of unstructured digital data management faced by commercial andcommercial, public safetysafety, and federal government sectors today. In 2025, we expect aA substantial portion of our growth toin 2025 has come from our iDEMsiDEMS and VDR solutions. In June 2025, we announced a partnership with the US Air Force Office of Special Investigations (“OSI”), an investigative division within the US Department of Defense (“DOD”). The partnership with OSI is in the early stages of deploying our iDEMS solutions across the investigative divisions within the DOD. Through February 2026, our VDR sales pipeline increased to over $50.0 million, as compared to approximately $20.0 million in August 2025 and $40.0 million in October 2025. As of the first quarter of 2026, we are now under contract with several leading hyperscalers for the deployment of our VDR solution. Our Public Sector pipeline has also increased to $220 million as of December 31, 2025, which we believe reflects accelerating demand for our AI-driven solutions and our reputation as a trusted technology partner to government agencies. See “About Our Sales Pipelines” below for more information. As a result, during the year ended December 31, 2025, our Software Products Services revenue, excluding our Talent Acquisition platform, grew over 45% when compared to the same period in 2024 led principally by our iDEMS and VDR initiatives. In addition, we recentlyannounced announcedin the second quarter of 2024 that we achieved Amazon Web Services (“AWS”) Advanced Tier Services status, advancing the deployment of our AI solutions and capabilities across the AWS platform, and we have historically integrated aiWARE across many platforms, including Alteryx, Snowflake and the NVIDIA® CUDA® GPU-based platform, enabling dramatic increases in aiWARE’s processing speed and providing a wide range of new use cases for our technology. We are in the process of developing and marketing more specific use cases for these and future integrations, which we believe will open up new markets for our products and accelerate our long-term revenue growth opportunities.

We believe our operating results and performance are, and will continue to be, driven by various factors that affect our industry. Our ability to attract, grow and retain customers for our aiWARE platform is highly sensitive to rapidly changing technology and is dependent on our ability to maintain the attractiveness of our platform, content and services to our customers. Our near-term growth opportunities across our Software Products & Services include VDR and the expansion of our iDEMS platform across our Public Sector. Our future revenue and operating growth will rely heavily on our ability to grow and retain our Software Products & Services customer base, continue to develop and deploy quality and innovative AI-driven applications and enterprise-level offerings, provide unique and attractive content and related services to our customers, continue to grow in newer markets such as Public Sector and our VDR opportunity, expand aiWARE into larger and more expansive enterprise engagements and manage our corporate overhead costs. While we believe we will be successful in these endeavors, we cannot guarantee that we will succeed in generating substantial long term operating growth and profitability.

Prior to 2024, we pursued an opportunistic strategy of acquiring companies to help accelerate our organic growth. Our acquisition strategy has beenwas threefold: (i) to increase the scale of our business in markets we are in today,serve, (ii) to accelerate growth in new markets and product categories, including expanding our existing engineering and sales resources, and (iii) to accelerate the adoption of aiWARE as the universal AI operating system through venture or market-driven opportunities. To accelerate and expand our growth opportunities in VDR and the Public Sector, we may pursue this strategy of acquiring companies in fiscal 2026 and beyond. While we believe there are strategic acquisition targets that can accelerate our entry into and expand our existing market share in key strategic markets, as well as our ability to grow our business, there is no certainty our historical or future acquisitions will achieve these objectives. Conversely, we have pursued and may continue to pursue opportunistic sales of certain business operations that are not strategic to us long-term, such as the divestitures of our Energy Group in the second quarter of 2023 and Veritone One in October 2024.

In the last few years, we have pursued and may continue to pursue opportunistic sales of certain business operations that are not part of our long-term strategy. For example, we divested our Veritone energy solutions group in the second quarter of 2023 and in October 2024, we divested our wholly-owned subsidiary, Veritone One, for a total purchase price of up to $104.0 million. This strategicThe decision to divest Veritone One was made to enhance our focus on our core business and growth initiatives, particularly in Software Products & Services. By divesting non-core assets, we aim to streamline operations, reduce complexity, and allocate resources more effectively toward areas that align with our long-term strategic goals. The Divestituredivestiture allowsof Veritone One has allowed us to concentrate on organic growth, enabling greater innovation, operational efficiency, and the ability to respond more swiftly to market opportunities within our primary business segments. As a result of this transaction, we expect to see potential positive impacts, e.g.,recognize improved margins,margins increased operational efficiency,and more effective allocation of capitalcapital. andWe believesbelieve that thisa sharper focus on our core assets will drive sustainable growth and value creation for our shareholders moving forward.

For the year ended December 31, 2024,2025, our total revenues were $92.6$92.2 millionmillion, as compared to $100.0$92.6 million for the year ended December 31, 2023,2024, a decrease of 7.4%,0.5% over the prior-year period, driven by an increase in Software Products & Services revenue from iDEMs and VDR revenues, offset by a decrease in Managed Services revenue primarily due to lower revenue from one-timerepresentation softwareservices, salesin andeach fromcase, consumption-basedcompared customers, including Amazon, partially offset byto the additionprior ofyear Broadbean in the second quarter of 2023.period. Our gross profit for the year ended December 31, 20242025 was $61.7$57.5 millionmillion, as compared to $70.3$61.7 million for the year ended December 31, 2023,2024, a decrease of 12.3%,6.8%, driven by the decrease in revenue and thean increase in depreciationlower ofgross internallymargin developedrevenue, softwareincluding costsVDR revenue compared to the prior year period. For the year ended December 31, 2024,2025, our non-GAAP gross profit (calculated as described in “Non-GAAP Financial Measures” below) decreased to $65.4$62.6 millionmillion, as compared to $72.3$65.4 million for the year ended December 31, 2023,2024, driven by the decrease in revenue and thean increase in costlower ofgross revenuemargin asrevenue, aincluding percentage ofVDR revenue compared to the prior year period. Gross profit and non-GAAP gross profit (calculated as described in “Non-GAAP Financial Measures” below) are also dependent upon our ability to grow our revenue by expanding our customer base and increasing business with existing customers, and to manage our costs by negotiating favorable economic terms with cloud computing providers such as AWS and Microsoft Azure. While we are focused on continuing to improve our gross profit and non-GAAP gross profit, our ability to attract and retain customers to grow our revenue will be highly dependent on our ability to implement and continually improve upon our technology and services and improve our technology infrastructure and operations as we experience increased network capacity constraints due to our growth.

During the year ended December 31, 2024,2025, we reported a net loss of $37.4$111.7 millionmillion, as compared to a net loss of $58.6$37.4 million during the year ended December 31, 2023.2024. During the year ended December 31, 2024,2025, we reported a non-GAAP net loss (calculated as described in “Non-GAAP Financial Measures” below) of $30.7$40.7 millionmillion, as compared to a non-GAAP net loss of $37.3$30.7 million during the year ended December 31, 2023.2024. To continue to grow our revenue, we will continue to make targeted investments in people, namely software engineers and sales personnel. During the year ended December 31, 2024, we continued to make substantial investments in our existing employee base, including higher annual raises and increased benefits, to compete in a challenging and constrained labor environment. Lastly, we made investments in our corporate infrastructure, including enterprise-wide applications and workforce systems to help us better manage the scale and growth of our business. However, considering the current challenging macro-economic environment throughoutsince 2024 and 2023,2022, we have made and are continuing to make significant cost reductions to our operating structure to better streamline our business and prioritizationprioritize aroundinvestments that drive our growth and corresponding investments.growth. These cost reduction initiatives began in the latter half of 2022 and continuedwill throughcontinue theinto end of 2024,2026, and includeincluded reductions in workforce and certain legacy operating costs, as well as the sale of our energy solutions group. As a result of these initiatives, we believe we will be able to accelerate our pathway toward long term profitability.

In evaluating our cash flows and financial performance, we use certain non-GAAP financial measures, including non-GAAP net income (loss) and, non-GAAP net income (loss) per share, non-GAAP net income (loss) and non-GAAP net income (loss) per share from continuing operations, non-GAAP net income (loss) and non-GAAP net income (loss) per share from discontinued operations, non-GAAP gross profit, and non-GAAP gross margin. We also provide certain key performance indicators (“KPIs”), including Total Software Products & Services Customers, Annual Recurring Revenue (SaaS), Annual Recurring Revenue (Consumption), Annual Recurring Revenue (Total)Total New Bookings and Gross Revenue Retention.

Non-GAAP net income (loss) andis Non-GAAPcalculated as our net income (loss) per share are calculated as the Company’s net income (loss) and net income (loss) per share, respectively, adjusted to exclude net income from discontinued operations, net of income taxes, benefitinterest fromexpense, net, income taxes, depreciation and amortization expense,amortization, stock-based compensationcompensation, expense, changeschange in fair value of earnout receivable, change in fair value of contingent consideration payable, contingent purchase compensation expense, interest expense, net, foreign currency impact and other, gain on extinguishment of debt, acquisition and due diligence costs, (gain) loss on asset disposition, contribution of business held for sale, variable consultant performance bonus expense, severance and executive transition costs, loss on debt extinguishment, lender consent fees, and non-GAAP net income from discontinued operations. Non-GAAP net income (loss) from continuing operations andis Non-GAAPcalculated as our net income (loss) per share from continuing operations are calculated as the Company’s net loss and net loss per share from continuing operations, respectively, adjusted to exclude net income from discontinued operations, net of income taxes, benefitinterest fromexpense, net, income taxes, depreciation and amortization, stockstock-based based compensation expense,compensation, change in fair value of earnout receivable, change in fair value of contingent consideration payable, contingent purchase compensation expense, interest expense, net, foreign currency impact and other, gain on extinguishment of debt, acquisition and due diligence costs, (gain) loss on asset disposition, contribution of business held for sale, variable consultant performance bonus expense, and severance and executive transition costs.costs, loss on debt extinguishment and lender consent fees. Non-GAAP net income (loss) from discontinued operations and Non-GAAP net income (loss) per share from discontinued operations areis calculated as the Company’sour net income from discontinued operations and net income per share from discontinued operations, respectively, adjusted to exclude provisioninterest forexpense, net, income taxes, depreciation and amortization, stock-based compensation expense,compensation, gain on sale, interest expense (income), net, acquisition due diligence costs, and severance and executive transition costs.

Non-GAAP gross profit is calculated as gross profit with adjustments to add back depreciation and amortization andrelated stock-basedto compensationcost expense.of revenue. Non-GAAP gross margin is defined as non-GAAP gross profit divided by revenue.

We present non-GAAP net income (loss) and, non-GAAP net income (loss) per share, non-GAAP net income (loss) and non-GAAP net income (loss) per share from continuing operations, non-GAAP net income (loss) and non-GAAP net income (loss) per share from discontinued operations, non-GAAP gross profit, and non-GAAP gross margin because management believes such information to be important supplemental measures of performance that are commonly used by securities analysts, investors and other interested parties in the evaluation of companies in our industry. Management also uses this information internally for forecasting, budgeting and measuring annual bonus compensation targets for itsour executive personnel, including itsour named executive officers. Our non-GAAP net income (loss) provides our management and investors consistency and comparability with our past financial performance and facilitates period-to-period comparisons of operations, as it eliminates the effect of items that are often unrelated to overall operating performance. Our non-GAAP gross profit and non-GAAP gross margin allow investors and our management team to analyze our operating performance by excluding expenses that are not directly related to the cost of providing goods and services.

ReconciliationThe following table provides a reconciliation of GAAP net loss to Non-GAAPnon-GAAP net loss:

(21) Variable consultant performance bonus expense represents the bonus payments paid to Mr. Chad Steelberg as a result of his achievement of the performance goals pursuant to his consulting agreement with us.

(32) A reconciliation of non-GAAP net income from discontinued operations to GAAP net income from discontinued operations for the yearsyear ended December 31, 2024 and 2023 is set forth in the table below.

ReconciliationThe following table provides a reconciliation of GAAP gross profit to Non-GAAP gross profit and GAAP gross margin to Non-GAAP gross margin:

Non-GAAP gross profit declined $6.9 million or 9.5% due to the decline in revenue. During the year ended December 31, 2024, Non-GAAP gross margin of 70.6% declined 170 basis points as compared to the same period in 2023 as year over year declines in higher gross margin revenue from consumption-based and one time software revenue. Historically, our gross margin and non-GAAP gross margin have been impacted significantly by the mix of our Software Products & Services revenue and our Managed Services revenue in any given period because our Managed Services revenue typically has a lower overall non-GAAP gross margin than our Software Products & Services revenue.

Risks affecting our business are discussed in Part I, Item 1A, Risk Factors, of our Annual Report on Form 10-K for the year ended December 31, 2025 (the “2025 10-K”). ThereExcept as set forth below, there have been no material changes to our risk factors as previously disclosed in our 2025 10-K. The risk factors set forth below update, and should be read together with, the risk factors disclosed in the 2025 10-K.

During the three and six months ended MarchJune 31,30, 2026 and 2025,2026, we generated revenue of $20.3$24.3 million and $22.5$44.5 million, respectively, as compared to $23.2 million and $45.7 million during the three and six months ended June 30, 2025, respectively. Software Products & Services revenue was $13.8$16.7 million and $30.5 million during the three and six months ended June 30, 2026, respectively, as compared to $16.6 million and $31.1 million during the three and six months ended June 30, 2025, respectively. Managed Services revenue was $7.5 million and $14.0 million during the three and six months ended June 30, 2026, respectively, as compared to $6.5 million and $14.5 million during the three months ended March 31, 2026 and 2025, respectively. Managed Services revenue was $6.4 million and $8.0 million during the threesix months ended MarchJune 31, 2026 and30, 2025, respectively. During the three months ended MarchJune 31,30, 2026 and 2025, one customer and no customer represented more than 10% of our consolidated revenue, respectively. During the six months ended June 30, 2026 and June 30, 2025 no customer represented more than 10% of our consolidated revenue.

We are a leader in AI-based Software Products & Services. Our proprietary AI operating system, aiWARE, uses machine learning algorithms, or AI models, together with a suite of powerful applications, to reveal valuable insights from vast amounts of structured and unstructured data. Historically, we have derived a large portion of our Software Product & Services revenue from applications we internally developed from our aiWARE platform and actively sold across various customers. Beginning in mid-fiscal year 2022, macroeconomic and geopolitical factors, including lingering economic disruption caused by international conflicts, financial instability, inflation and the responses by central banking authorities to control inflation, monetary supply shifts, high interest rates, the imposition of tariffs, trade tensions, and global trade disputes, and the threat of recession in the United States and around the world on our business and our existing and potential customers, negatively impacted parts of our consumption-based operations and financial results. For example, business operations at our Israel office location where we perform development work on our Talent Acquisition solutions, have been, and may continue to be, impacted by the conflicts in the Middle East. In addition, our Talent Acquisition solutions are sold to businesses whose financial conditions fluctuate based on general economic and business conditions, particularly the overall demand for labor and the economic health of current and prospective employers. While these economic and geopolitical factors persisted throughout 2025 and into the first quarterhalf of 2026, including instability caused by tariffs and higher energy costs, our Software Products & Services revenue of $65.8$16.7 million and $30.5 million for the yearthree and six months ended DecemberJune 31,30, 20252026, increasedrespectively, 7.8%remained relatively flat as compared to 2024.the corresponding prior-year periods.

Beginning in 2023, we enacted significant cost reductions. From January 2023 to June 2025, we announced plans to reduce costs through the optimization of our operational structure, the cumulative result of which was a reduction in our global workforce of approximately 30% over this period. As of MarchJune 31,30, 2026, we have achieved an aggregate of over $50.0$60.0 million of net annualized strategic cost reductions since January 1, 2023 as a result of our organizational restructuring and realignment efforts. In May 2026, we announced plans to further reduce our operating cost structure by up to 30%,structure, in part to reinvest in areas required for growth and to realize synergies from operations, including from the adoption of AI-based agents and tools across the organization. We expect to beginbegan executing this cost reduction plan byin noJune later2026 thanand as of August 2026 we enacted approximately $11.3 million of annualized cost savings, which included a reduction of approximately 14% of our workforce. In conjunction with the end of the third quarter of 2026. Until suchrecent cost reduction actions are initiated,plan, we planincurred to$4.5 keepmillion ourof operatingemployee expensesseverance relativelyand flatother costs as comparedof toJune fiscal30, year2026. 2025, which will be driven in part byOur planned cost reductions acrosswill ourbe operating structure,partially offset by planned increases in our research and development operating expenses, largely to support efforts around near-and long-term revenue growth in VDR and the Public Sector.

As of MarchJune 31,30, 2026, our total Software Products & Services customers declined to 2,897,2,829, which was a decrease of 8.2%7.7% as compared to MarchJune 31,30, 2025. This change was largely driven by declining consumption-based customers across our Talent Acquisition solutions, the vast majority of which are smaller revenue-based customers. In addition, smaller hiring agency customers experienced a drop in hiring as a result of the challenging macroeconomic environment. Collectively, these contributed to the decreasechange in Software Products & Services customers, but did not have a significant impact on our financial results for the quartersthree and six months ended MarchJune 30, 2026 or year ended December 31, 2026 and 2025. In the first half of 2026 and until we see an improved macroeconomic environment, we expect to experience a similar decline in smaller hiring agency customers across our Talent Acquisition solutions. To continue our effort to grow our customer base and overall revenue, we continue to invest aggressively in existing customers and acquiring new customers.

We believe our Software Products & Services will extend the capabilities of many third-party software platforms and products that are widely used today. For example, we believe that, when integrated with aiWARE, our Talent Acquisition customers will have greater visibility and transparency in their hiring processes. Further, with iDEMS and VDR products, we now offer a suite of aiWARE applications to address the growing problem of unstructured digital data management faced by commercial, public safety, and federal government sectors today. A substantial portion of our growth in 2025 came from our iDEMS and VDR solutions. In June 2025, we announced a partnership with the US Air Force Office of Special Investigations (“OSI”), an investigative division within the US Department of Defense (“DOD”). The partnership with OSI is in the early stages of deploying our iDEMS solutions across the investigative divisions within the DOD. Through MarchJune 2026, our VDR sales pipeline increased to over $50.0$65.0 million, as compared to approximately $20.0 million in August 2025 and $40.0 million in October 2025. As of the first quarter of 2026, we are now under contract with the majority of leading hyperscalers for the deployment of our VDR solution. Our Public Sector pipeline is over $200$220 million as of MarchJune 31,30, 2026, which we believe reflects accelerating demand for our AI-driven solutions and our reputation as a trusted technology partner to government agencies. While we recently experienced a shift in the deployment plan of our iDEMS solution across a portion of the DOD, we viewed this shift as temporary as the DOD was reallocating budgetary spending to the crisis in Iran, and as a result did not impair our Public Sector pipeline. See “About Our Sales Pipelines” below for more information. As a result, during the year ended December 31, 2025, our Software Products Services revenue, excluding our Talent Acquisition solutions, grew over 45% when compared to the same period in 2024 led principally by our iDEMS and VDR initiatives.

For the three and six months ended MarchJune 31,30, 2026, our total revenues were $20.3$24.3 million and $44.5 million, respectively, as compared to $22.5$23.2 million and $45.7 million for the three and six months ended MarchJune 31,30, 2025, arespectively, an increase of 4.6% and decrease of 9.8%2.5%, respectively, over the prior-year period, driven by aan decreaseincrease in Softwaremargins Productsfor &aiWARE Servicesfor alongthe withthree months ended June 30, 2026 and a decrease in Managedour ServicesVeritone hire revenue dueoffset toby loweran revenue from representation services and licensing,increase in eachour case,aiWARE SAAS revenue compared to the prior year period.period for the six months ended June 30, 2026. Our gross profit for the three and six months ended MarchJune 31,30, 2026 was $12.4$14.2 million and $26.6 million, respectively, as compared to $13.7$15.7 million and $29.4 million for the three and six months ended MarchJune 31,30, 2025, respectively, a decrease of 9.4% and 9.4%, respectively, primarily driven by a decrease in revenuemargins within Veritone hire and VeriAds products compared to the prior year period. For the three and six months ended MarchJune 31,30, 2026, our non-GAAP gross profit (calculated as described in “Non-GAAP Financial Measures” below) decreased to $13.7$15.5 million and $29.2 million, respectively, as compared to $14.6$16.8 million and $31.5 million for the three and six months ended MarchJune 31,30, 2025, respectively, driven by a decrease inmargins revenuewithin our VeriAds and Veritone hire products compared to the prior year period. Gross profit and non-GAAP gross profit are dependent upon our ability to grow our revenue by expanding our customer base and increasing business with existing customers, and to manage our costs by negotiating favorable economic terms with cloud computing providers such as AWS and Microsoft Azure. While we are focused on continuing to improve our gross profit and non-GAAP gross profit, our ability to attract and retain customers to grow our revenue will be highly dependent on our ability to implement and continually improve upon our technology and services and improve our technology infrastructure and operations as we experience increased network capacity constraints due to our growth.

In evaluating our cash flows and financial performance, we use certain non-GAAP financial measures, including non-GAAP net income (loss), non-GAAP gross profit, and non-GAAP gross margin. We also provide certain key performance indicators (“KPIs”), including Total Software Products & Services Customers, Annual Recurring Revenue (SaaS), Annual Recurring Revenue (Consumption), Annual Recurring Revenue (Total), Total New Bookings and Gross Revenue Retention.

Non-GAAP net income (loss) is calculated as our net income (loss), adjusted to exclude interest expense, net, income taxes, depreciation and amortization, stock-based compensation, change in fair value of earnout receivable, contingent purchase compensation expense, foreign currency impact and other, acquisition and due diligence costs, severance and executive transition costs, professional fees and lender consent fees.

(1) Other items represent other expenses that are not indicative of our ongoing operations, which, for the three and six months ended MarchJune 31,30, 2025,2026 primarily comprised of professional fees and for the six months ended June 30, 2025 comprised of fees paid to the lenders in connection with the limited consent to the Company’s Credit Agreement.

GAAP gross profit of $12.4$14.2 million and $26.6 million for the three and six months ended MarchJune 31,30, 20262026, respectively, decreased $1.3$1.5 million and $2.8 million, respectively, or 9.4% and 9.4%, respectively, as compared to the three and six months ended MarchJune 31,30, 2025 primarily due to aan decreaseincrease in cost of revenue. GAAP gross margin of 61.4%58.5% and 59.8% for the three and six months ended MarchJune 31,30, 2026, increasedrespectively, 30decreased 901 basis points and 454 basis points, respectively, as compared to the three and six months ended MarchJune 31,30, 2025 as a result of year-over-year increasesdeclines in higher gross margin revenue from consumption-based and one-time software revenue.

Non-GAAP gross profit of $13.7$15.5 million and $29.2 million for the three and six months ended MarchJune 31,30, 20262026, respectively, decreased $0.9$1.4 million and $2.3 million, respectively, or 6.3%8.2% and 7.3%, respectively, as compared to the three and six months ended MarchJune 31,30, 2025 primarily due to aan decreaseincrease in cost of revenue. Non-GAAP gross margin of 67.7%63.7% and 65.5% for the three and six months ended MarchJune 31,30, 2026, increasedrespectively, 254decreased 891 basis points and 342 basis points, respectively, as compared to the three and six months ended MarchJune 31,30, 2025 as a result of year-over-year increasesdeclines in higher gross margin revenue from consumption-based and one-time software revenue.

The following tables set forth our results of operations for the three and six months ended MarchJune 31,30, 2026 and 2025, in dollars and as a percentage of our revenue for those periods. The period-to-period comparisons of our historical results are not necessarily indicative of the results that may be expected in the future.

Comparison of the Three and Six Months Ended MarchJune 31,30, 2026 and 2025

Managed Services consists of revenues generated from content licensing customers, representation services, and, to a lesser extent, from advertising customers and related services.

Software Products & Services revenue decreasedincreased $0.7$0.1 million, or 4.6%,0.5%, in the three months ended MarchJune 31,30, 2026 compared to the corresponding prior-year period primarily due to aan declineincrease in revenue generated from our TalentaiWARE Acquisitionsolutions, solutions. Commercial Enterprise Managed Services revenue decreased $1.5 million, or 19.2%, in the three months ended March 31, 2026 compared to the corresponding prior-year period drivenoffset by declines in representation services led by lower influencer based advertising revenue as a result of the more challenging macro environment, along with a $0.7 million decrease in contentVeritone licensing.hire solutions.

Cost of revenue, exclusive of depreciation and amortization, decreasedincreased $1.3$2.5 million, or approximately 16.4%,38.7%, from $7.8$6.4 million for the three months ended MarchJune 31,30, 2025 to $6.6$8.8 million for the three months ended MarchJune 31,30, 2026. Cost of revenue, exclusive of depreciation and amortization, as a percentage of revenue increased from 27.4% for the three months ended June 30, 2025 to 36.3% for the three months ended June 30, 2026.

The $1.3$2.5 million decreaseincrease was primarily due to a decreasehigher inmix revenue.of lower margin revenue, including VDR. During the three months ended MarchJune 31,30, 2026, Software Products & Services products accounted for 68.2%68.9% of revenues compared to 64.5%71.8% in the prior year period.

Sales and marketing expenses increaseddecreased $0.5$0.8 million, or approximately 5.4%,7.2%, from $10.1$11.1 million for the three months ended MarchJune 31,30, 2025 to $10.7$10.3 million for the three months ended MarchJune 31,30, 2026. Sales and marketing expenses as a percentage of revenue increaseddecreased from 45.0%47.8% for the three months ended MarchJune 31,30, 2025 to 52.6%42.4% for the three months ended MarchJune 31,30, 2026.

The $0.5$0.8 million increasedecrease was primarily due to increasesdecreases in personnel-related costs and outside services, partially offset by a decrease in advertising expense.

Research and development expenses increased $0.5$0.9 million, or approximately 10.5%,19.0%, from $5.2$4.9 million for the three months ended MarchJune 31,30, 2025 to $5.8$5.9 million for the three months ended MarchJune 31,30, 2026. Research and development expenses as a percentage of revenue increased from 23.2%21.3% for the three months ended MarchJune 31,30, 2025 to 28.4%24.2% for the three months ended MarchJune 31,30, 2026.

The $0.5$0.9 million increase was primarily due to decreasesincreases in capitalized internal-use softwareplatform costs, additional personnel-related costs and an increase in outside consulting services.

General and administrative expenses decreased $3.1$1.5 million, or approximately 21.8%,12.0%, from $14.0$12.7 million for the three months ended MarchJune 31,30, 2025 to $10.9$11.1 million for the three months ended MarchJune 31,30, 2026. General and administrative expenses as a percentage of revenue decreased from 62.3%54.6% for the three months ended MarchJune 31,30, 2025 to 54.0%45.9% for the three months ended MarchJune 31,30, 2026.

The $3.1$1.5 million decrease was primarily due to decreases in personnel-related costs resulting from various cost reduction initiatives enacted, reductionincluding indecreased debtstock relatedcompensation expenses and lower third party professional services.cost.

Depreciation and amortization expenses decreased $1.2$1.4 million, or approximately 16.8%,19.6%, from $6.9$7.2 million for the three months ended MarchJune 31,30, 2025 to $5.8 million for the three months ended MarchJune 31,30, 2026. Depreciation and amortization expenses as a percentage of revenue decreased from 30.9% for the three months ended MarchJune 31,30, 2025 to 28.5%23.8% for the three months ended MarchJune 31,30, 2026.

Interest expense, net decreased $2.5$3.2 million, or approximately 93.2%,92.1%, from $2.6$3.4 million for the three months ended MarchJune 31,30, 2025 to $0.2$0.3 million for the three months ended MarchJune 31,30, 2026, primarily due to the repayment in full of our senior secured term loan in November 2025.2026.

The $0.5$0.1 million of other expense, net for the three months ended MarchJune 31,30, 2026 primarily consisted of the effect of foreign currency exchange.impact. The $3.2 million of other expense, net for the three months ended June 30, 2025 primarily consisted of a $2.9 million loss on revaluation of the Veritone One earnout receivable.

Liquidity,Liquidity and Capital Resources and Going Concern

We have historically generated negative cash flows from operations and have primarily financed our operations through the sale of equity securities and debt. As of June 30, 2026, we had cash and cash equivalents of $12.4 million.

As of MarchJune 31,30, 2026, we had cash and cash equivalents of $15.1$12.4 million, working capital deficit of $45.8$53.1 million and accounts receivable, net of $26.7$28.0 million, and the amount outstanding under our debt obligations was $45.4$45.5 million, net of unamortized discount cost, all of which related to the Convertible Notes. Additionally, for the threesix months ended MarchJune 31,30, 2026, net loss was $19.5$41.7 million and net cash used in operating activities was $11.5$22.1 million. Our ability to continue as a going concern is dependent on our ability to generate significant cash flows, obtain sufficient proceeds from any future offerings of securities, and/or obtain alternative financing prior to the maturity of the Convertible Notes in November 2026. We expect operating losses to continue in the foreseeable future as we continue to invest in growing our business. To alleviate these conditions, management is actively engaged in discussions to obtain alternative financing prior to the maturity of the Convertible Notes in November 2026. However, there can be no assurance that we will be able to obtain alternative financing as it is ultimately outside of our control. In addition, we have the ability to offer and sell shares of our common stock having an aggregate offering price of up to $50.0 million in an “at-the-market” equity offering program (the “2026 ATM Program”) pursuant to the sales agreement dated May 21, 2026, by and between us, UBS Securities LLC, Needham & Company, LLC and Craig-Hallum Capital Group LLC (the “May 2026 Sales Agreement”), under the 2026 ATM Program, which may provide additional liquidity. Our ability to sell shares under the 2026 ATM Program is subject to market conditions and there can be no assurance as to the amount of proceeds, if any, we may raise thereunder.

Net cashCash used in operating activities was $11.5 million for the threesix months ended MarchJune 31,30, 2026,2026 was $22.1 million, a decrease of $5.6$3.2 million from $17.0 million for the threesix months ended MarchJune 31,30, 2025.2025 of $25.3 million. The decrease was primarily due to a $0.9$4.7 million decrease in the change in net lossloss, excludinga decrease of $7.1 million in changes in operatingnon-cash assets and liabilities disclosed within our condensed consolidated statement of cash flowsitems and a $4.6$5.6 million favorable change in operating assets and liabilities. The $0.9 million decrease in net loss excluding changes in operating assets and liabilities was primarily driven by a decrease in our net loss and favorable changes in non-cash and reconciling items including change in fair value of earnout receivable and deferred income taxestaxes, partially offset by unfavorable changes in non-cash and reconciling items including stock-based compensation, provision for credit losses, barter income, non-cash interest expense and reduction in carrying amount of operating lease right-of-use assets.assets, barter income and non-cash interest expense. The $4.6$5.6 million of favorable changes in operating assets and liabilities was primarily driven by favorable changes in accounts receivable and prepaid expenses and other current assetsassets, accrued expenses and other current liabilities, partially offset by unfavorable changes in accounts receivable accounts payable and deferred revenue, other assets, accounts payable, deferred revenue and accrued expenses and other currentnon-current liabilities.

Net cash used in investing activities was $0.5$2.0 million for the threesix months ended MarchJune 31,30, 2026, a decrease of $0.8$0.3 million from $1.4$2.3 million for the threesix months ended MarchJune 31,30, 2025. The decrease was due to a $0.8$0.3 million decrease in capital expenditures.

Net cash usedprovided inby financing activities was $0.5$8.9 million for the threesix months ended MarchJune 31,30, 2026, an unfavorable change of $18.3$16.4 million as compared to net cash provided by financing activities of $17.9$25.3 million for the threesix months ended MarchJune 31,30, 2025. The decrease was primarily due to a $19.9$20.1 million decrease in proceeds from issuance of common stock and pre-funded warrants under our registered direct offerings in January 2025 and June 2025 and sales under our at-the-market offering, net of offering costs along with a decrease of $0.4 million paid for taxes attributed to settlement of equity awards, partially offset by a $1.9$3.9 million increasedecrease in repayment of our senior secured term loan.

As of MarchJune 31,30, 2026, our debt obligations are solely comprised of $45.6 million aggregate principal amount outstanding of our Convertible Notes that mature in November 2026. For a further discussion on our Convertible Notes, see Note 3,5, Debt, to our financial statements included in this Quarterly Report on Form 10-Q.