Veritone Inc.
04/15/2026 | Press release | Distributed by Public on 04/15/2026 12:23
Annual Report for Fiscal Year Ending December 31, 2025 (Form 10-K)
Management's Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion and analysis of our financial condition and results of operations should be read together with our consolidated financial statements and related notes thereto included elsewhere in this Annual Report on Form 10-K. The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. You should review the section titled "Cautionary Note Regarding Forward-Looking 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.
Overview
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 customers. Our Software Products & Services consist of revenues generated from Commercial Enterprise and Public Sector customers using our aiWARE platform and Talent Acquisition 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 Consolidated Financial Statements included in Part II, Item 8, Financial Statements and Supplementary Data, of this Annual Report on Form 10-K for additional information.
During the year ended December 31, 2025, we generated revenue of $92.2 million as compared to $92.6 million during the year ended December 31, 2024. Our Software Products & Services revenue was $65.8 million and $61.1 million during the years ended December 31, 2025 and 2024, respectively, and represented 71.4% and 65.9% of our consolidated revenue during the years ended December 31, 2025 and 2024, respectively. Our Managed Services revenue was $26.4 million and $31.6 million during the years ended December 31, 2025 and 2024, respectively, and represented 28.6% and 34.1% of our consolidated revenue in the years ended December 31, 2025 and 2024, respectively. No customers accounted for 10% or more of the Company's revenue for the years ended December 31, 2025 and 2024, respectively.
Recent Developments
October 2025 Registered Direct Offering
On October 17, 2025, we issued and sold an aggregate of 12,864,494 shares of common stock at a price of $5.83 per share to certain institutional and accredited investors in a registered direct offering. The aggregate net proceeds were approximately $70.2 million, after deducting estimated offering expenses.
November 2025 Convertible Note Repurchase
On November 6, 2025, we entered into separate, privately negotiated transactions with certain holders of our Convertible Notes to repurchase (the "Repurchases") approximately 50% of the outstanding Convertible Notes or approximately $45.7 million aggregate principal amount of the Convertibles Notes, comprising a combination of (i) approximately $39.0 million in cash and (ii) the issuance of 625,000 shares of our common stock, par value $0.001 per share. The Repurchases closed on November 12, 2025. Following the closing of the Repurchases, we cancelled the repurchased Convertible Notes and, after such cancellation of repurchased Convertible Notes, approximately $45.6 million aggregate principal amount of the Convertible Notes remained outstanding.
November 2025 Term Loan Repayment
On November 12, 2025, we repaid in full all outstanding amounts under the Term Loan for an aggregate amount of $36.7 million in cash. The repayment amount reflects the outstanding principal amount of loans under the Term Loan of $31.8 million, together with accrued and unpaid interest thereon of $0.5 million, and a prepayment premium equal to 14% of such principal amount. Following such repayment, our obligations under the Term Loan have been terminated.
Opportunities, Challenges and Risks
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 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 current and prospective employers. As a result, our Software Products & Services revenue decreased from $84.8 million during the year ended December 31, 2022 to $68.4 million during the year ended December 31, 2023, and decreased further to $61.1 million during the year ended December 31, 2024. While these economic and geopolitical factors have persisted throughout 2025, including instability caused by tariffs, our Software Products & Services revenue of $65.8 million for the year ended December 31, 2025 increased 7.8% as compared to the corresponding prior-year period.
Beginning in 2023, we enacted significant cost reductions during fiscal years 2023, 2024, and 2025. In January 2023, we announced our plans to reduce costs through the optimization of our operational structure. In February 2024, we announced additional cost reduction and restructuring initiatives, the result of which was a reduction in our global workforce of approximately 13% during fiscal 2024. From January 1, 2023 through December 31, 2024, we reduced our global workforce by approximately 19%. In June 2025, we announced further cost reduction initiatives of up to $10.0 million, approximately 80%, or $8.0 million of which have been achieved as of December 31, 2025. As of December 31, 2025, we have achieved an aggregate of over $50.0 million of net annualized strategic cost reductions since January 1, 2023 as a result of our organizational restructuring and realignment efforts. In fiscal year 2026, we plan to keep our operating expenses relatively flat as compared to fiscal year 2025, which will be driven in part by planned cost reductions across our operating structure, 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 December 31, 2025, our total Software Products & Services customers declined to 2,978, which was a decrease of 8.0% as compared to December 31, 2024. This change was largely driven by fewer consumption-based customers across Talent Acquisition and the continuing impact of sunsetting legacy Career Builder customers from our June 2023 acquisition of Broadbean. In addition, smaller hiring agency customers experienced a drop in hiring as a result of the challenging macroeconomic environment, which contributed to the decrease in Software Products & Services customers, but did not have a significant impact on our financial results for the year ended December 31, 2025 and 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 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 has come 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 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 announced in 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 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 was threefold: (i) to increase the scale of our business in markets we 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.
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. The 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 divestiture of 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 recognize improved margins and more effective allocation of capital. We believe that a sharper focus on our core assets will drive sustainable growth and value creation for our shareholders moving forward.
For the year ended December 31, 2025, our total revenues were $92.2 million, as compared to $92.6 million for the year ended December 31, 2024, a decrease of 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 representation services, in each case, compared to the prior year period. Our gross profit for the year ended December 31, 2025 was $57.5 million, as compared to $61.7 million for the year ended December 31, 2024, a decrease of 6.8%, driven by an increase in lower gross margin revenue, including VDR revenue compared to the prior year period. For the year ended December 31, 2025, our non-GAAP gross profit (calculated as described in "Non-GAAP Financial Measures" below) decreased to $62.6 million, as compared to $65.4 million for the year ended December 31, 2024, driven by an increase in lower gross margin revenue, including VDR revenue 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.
During the year ended December 31, 2025, we reported a net loss of $111.7 million, as compared to $37.4 million during the year ended December 31, 2024. During the year ended December 31, 2025, we reported a non-GAAP net loss (calculated as described in "Non-GAAP Financial Measures" below) of $40.7 million, as compared to $30.7 million during the year ended December 31, 2024. To continue to grow our revenue, we will continue to make targeted investments in people, namely software engineers and sales personnel. However, considering the challenging macro-economic environment since 2022, we have made significant cost reductions to our operating structure to better streamline our business and prioritize investments that drive our growth. These cost reduction initiatives began in the latter half of 2022 and will continue into 2026, and included 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.
About Our Sales Pipelines
Our VDR and Public Sector sales pipelines represent revenue we expect to receive from contracts related to our VDR solutions and with our Public Sector customers, respectively, in each case based on the total fees payable during the full contract term for contracts that we believe have a high probability of closing in the next three to twelve months. We include in our VDR and Public Sector sales pipelines fees payable during any cancellable portion and an estimate of license fees that may fluctuate over the term and we do not include any variable fees under the contract (e.g., fees for cognitive processing, storage, professional services and other variable services) and any fees payable after contract renewals or extensions that are at the discretion of our customer. Many of our contracts require us to provide services over more than one year and may include professional fees required to enable our technology in certain environments we do not host or have direct control over. In some cases, our customers may have the ability to terminate our agreements on short notice and our VDR and Public Sector sales pipelines do not consider the potential impact of any early termination. No assurance can be given that we will ultimately realize our full VDR and Public Sector sales pipelines.
Non-GAAP Financial Measures and Key Performance Indicators
In evaluating our cash flows and financial performance, we use certain non-GAAP financial measures, including non-GAAP net income (loss), non-GAAP net income (loss) from continuing operations, non-GAAP net income (loss) 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) is calculated as our net income (loss) adjusted to exclude net income from discontinued operations, net of income taxes, 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, (gain) loss on asset disposition, 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 is calculated as our net loss from continuing operations adjusted to exclude net income from discontinued operations, net of income taxes, 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, (gain) loss on asset disposition, variable consultant performance bonus expense, severance and executive transition costs, loss on debt extinguishment and lender consent fees. Non-GAAP net income (loss) from discontinued operations is calculated as our net income from discontinued operations adjusted to exclude interest expense, net, income taxes, depreciation and amortization, stock-based compensation, gain on sale, and severance and executive transition costs.
Non-GAAP gross profit is calculated as gross profit with adjustments to add back depreciation and amortization related to cost of revenue. Non-GAAP gross margin is defined as non-GAAP gross profit divided by revenue.
We present non-GAAP net income (loss), non-GAAP net income (loss) from continuing operations, non-GAAP net income (loss) 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 our executive personnel, including our 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.
These non-GAAP financial measures are not calculated and presented in accordance with GAAP and should not be considered as an alternative to net income (loss), operating income (loss), net income (loss) from continuing operations, net income (loss) from discontinued operations, gross profit, gross margin or any other financial measures so calculated and presented, nor as an alternative to cash flow from operating activities as a measure of liquidity. Other companies (including our competitors) may define these non-GAAP financial measures differently. These non-GAAP measures may not be indicative of our historical operating results or predictive of potential future results. Investors should not consider this supplemental non-GAAP financial information in isolation or as a substitute for analysis of our results as reported in accordance with GAAP.
The following table provides a reconciliation of net loss to non-GAAP net loss:
| Year Ended | ||||||||||||||
|
December 31, 2025 |
December 31, 2024 |
|||||||||||||
| Net income (loss) | $ | (111,732) | $ | (37,384) | ||||||||||
| Net income (loss) from discontinued operations, net of income taxes | - | (58,948) | ||||||||||||
| Interest expense, net | 10,224 | 12,071 | ||||||||||||
| Income taxes | (228) | (3,861) | ||||||||||||
| Depreciation and amortization | 27,174 | 28,510 | ||||||||||||
| Stock-based compensation expense | 6,686 | 7,705 | ||||||||||||
| Change in fair value of earnout receivable | 7,667 | (1,357) | ||||||||||||
| Contingent purchase compensation expense | 500 | 1,619 | ||||||||||||
| Foreign currency impact and other | (126) | 1,103 | ||||||||||||
| Acquisition and due diligence costs | 3,086 | 4,090 | ||||||||||||
| (Gain) Loss on asset disposition | - | 170 | ||||||||||||
| Variable consultant performance bonus expense (1) | - | 64 | ||||||||||||
| Severance and executive transition costs | 2,028 | 5,374 | ||||||||||||
| Gain on troubled debt restructuring | (1,448) | - | ||||||||||||
| Loss on debt extinguishment | 14,443 | - | ||||||||||||
| Lender consent fees | 1,039 | - | ||||||||||||
| Non-GAAP net loss from continuing operations | (40,687) | (40,844) | ||||||||||||
| Non-GAAP net income from discontinued operations(2) | - | 10,170 | ||||||||||||
| Non-GAAP net loss | $ | (40,687) | $ | (30,674) | ||||||||||
(1)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.
(2)A reconciliation of non-GAAP net income from discontinued operations to GAAP net income from discontinued operations for the year ended December 31, 2024 is set forth in the table below.
| Year Ended | ||||||||
|
December 31, 2024 |
||||||||
| Net income (loss) from discontinued operations, net of income taxes | $ | 58,948 | ||||||
| Interest expense, net | 16,941 | |||||||
| Income taxes | 76 | |||||||
| Depreciation and amortization | 260 | |||||||
| Stock-based compensation expense | 422 | |||||||
| Gain on sale | (66,533) | |||||||
| Severance and executive transition costs | 56 | |||||||
| Non-GAAP net income (loss) from discontinued operations | $ | 10,170 | ||||||
The following table provides a reconciliation of GAAP gross profit to Non-GAAP gross profit and GAAP gross margin to Non-GAAP gross margin:
| Year Ended | ||||||||||||||
|
December 31, 2025 |
December 31, 2024 |
|||||||||||||
| Revenue | $ | 92,192 | $ | 92,637 | ||||||||||
| Operating expenses: | ||||||||||||||
| Cost of revenue (exclusive of depreciation and amortization) | 29,608 | 27,254 | ||||||||||||
| Depreciation and amortization related to cost of revenue | 5,085 | 3,669 | ||||||||||||
| GAAP gross profit | 57,499 | 61,714 | ||||||||||||
| Depreciation and amortization related to cost of revenue | 5,085 | 3,669 | ||||||||||||
| Non-GAAP gross profit | $ | 62,584 | $ | 65,383 | ||||||||||
| GAAP gross margin | 62.4 | % | 66.6 | % | ||||||||||
| Non-GAAP gross margin | 67.9 | % | 70.6 | % | ||||||||||
GAAP gross profit of $57.5 million for the year ended December 31, 2025 decreased $4.2 million, or 6.8%, as compared to the same period in 2024 largely due to an increase in lower gross margin revenue, including VDR revenue. GAAP gross margin of 62.4% for the year ended December 31, 2025 decreased 425 basis points as compared to the same period in 2024 as a result of year-over-year increases in lower gross margin revenue from consumption-based revenue including VDR revenue.
Non-GAAP gross profit of $62.6 million for the year ended December 31, 2025 decreased $2.8 million, or 4.3%, as compared to the same period in 2024 due to the increase in lower gross margin revenue, including VDR revenue. Non-GAAP gross margin of 67.9% for the year ended December 31, 2025 decreased 270 basis points as compared to the same period in 2024 as year over year increases in lower gross margin revenue from consumption-based revenue, including VDR 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.
Supplemental Financial Information
We are providing the following unaudited supplemental financial information regarding our Software Products & Services as a lookback of the prior year to explain our recent historical and year-over-year performance.
The supplemental financial information for our Software Products & Services includes: (i) Total Software Products & Services Customers, (ii) Annual Recurring Revenue, (iii) Total New Bookings, and (iv) Gross Revenue Retention, in each case as defined in the footnotes to the table below.
Software Products & Services Supplemental Financial Information
The following table sets forth the results for each of our Software Products & Services supplemental financial information.
| Quarter Ended | ||||||||||||||||||||||||||||||||
|
December 31, 2024 |
March 31, 2025 |
June 30, 2025 |
September 30, 2025 |
December 31, 2025 |
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| Total Software Products & Services Customers(1) | 3,237 | 3,156 | 3,066 | 3,021 | 2,978 | |||||||||||||||||||||||||||
| Annual Recurring Revenue (SaaS) (in 000's)(2) | $ | 47,549 | $ | 47,494 | $ | 50,910 | $ | 50,010 | $ | 46,499 | ||||||||||||||||||||||
| Annual Recurring Revenue (Consumption) (in 000's)(3) | $ | 11,245 | $ | 11,223 | $ | 10,957 | $ | 13,930 | $ | 16,207 | ||||||||||||||||||||||
| Annual Recurring Revenue (in 000's)(4) | $ | 58,794 | $ | 58,717 | $ | 61,867 | $ | 63,940 | $ | 62,706 | ||||||||||||||||||||||
| Total New Bookings (in 000's)(5) | $ | 13,228 | $ | 15,835 | $ | 14,965 | $ | 19,042 | $ | 16,654 | ||||||||||||||||||||||
| Gross Revenue Retention(6) | > 90% | > 90% | > 90% | > 90% | > 90% | |||||||||||||||||||||||||||
(1)"Total Software Products & Services Customers" includes Software Products & Services customers as of the end of each respective quarter set forth above with net revenues in excess of $10 during the last month of the quarter and also excludes any customers categorized by us as trial or pilot status. Management uses Total Software Products & Services Customers and we believe Total Software Products & Services Customers is useful to investors because it more accurately reflects our total customers for our Software Products & Services.
(2)"Annual Recurring Revenue (SaaS)" represents an annualized calculation of monthly recurring subscription-based SaaS revenue during the last month of the applicable quarter for all Total Software Products & Services customers. Management uses "Annual Recurring Revenue (SaaS)" and we believe Annual Recurring Revenue (SaaS) is useful to investors because it provides annualized recurring subscription-based SaaS revenue based on the last month of the applicable quarter, which provides revenue based on subscriptions in the most recent month of the applicable period, from Total Software Products & Services Customers, which as noted above, excludes customers with insignificant revenue and customers on trial or pilot status. We also believe the split between subscription-based SaaS revenue and consumption-based revenue allows us to delineate between predictable recurring SaaS revenues and more volatile consumption-based revenues, including VDR.
(3)"Annual Recurring Revenue (Consumption)" represents the trailing twelve months of all non-recurring and/or consumption-based revenue for all active Total Software Products & Services customers. Management uses "Annual Recurring Revenue (Consumption)" and we believe Annual Recurring Revenue (Consumption) is useful to investors because Broadbean significantly increases our mix of subscription-based SaaS revenues as compared to consumption-based revenues and the split between the two allows us to delineate between predictable recurring SaaS revenues and more volatile consumption-based revenues, including VDR.
(4)"Annual Recurring Revenue" represents the sum of "Annual Recurring Revenue (SaaS)" and "Annual Recurring Revenue (Consumption)." Management uses "Annual Recurring Revenue" and we believe Annual Recurring Revenue is useful to investors because Broadbean significantly increases our mix of subscription-based SaaS revenues as compared to consumption-based revenues and the split between the two allows us to delineate between predictable recurring SaaS revenues and more volatile consumption-based revenues, including VDR.
(5)"Total New Bookings" represents the total fees payable during the full contract term for new contracts received in the quarter (including fees payable during any cancellable portion and an estimate of license fees that may fluctuate over the term), excluding any variable fees under the contract (e.g., fees for cognitive processing, storage, professional services and other variable services).
(6)"Gross Revenue Retention" represents a calculation of our dollar-based gross revenue retention rate as of the period end by starting with the revenue from Software Products & Services Customers as of the three months in the prior year quarter to such period, or Prior Year Quarter Revenue. We then deduct from the Prior Year Quarter Revenue any revenue from Software Products & Services Customers who are no longer customers as of the current period end, or Current Period Ending Software Customer Revenue. We then divide the total Current Period Ending Software Customer Revenue by the total Prior Year Quarter Revenue to arrive at our dollar-based gross retention rate, which is the percentage of revenue from all Software Products & Services Customers from our Software Products & Services as of the year prior that is not lost to customer churn.
Net Loss Carryforwards
As of December 31, 2025, we had U.S. federal, state and foreign NOLs totaling approximately $195.1 million, $173.3 million and $40.0 million, respectively. The U.S. federal and state NOLs are projected to expire beginning in 2037 and 2030, respectively, unless previously utilized. The U.S. federal NOLs generated in tax years beginning on or after January 1, 2018 may be carried forward indefinitely, subject to an 80% taxable income limitation on the utilization of the NOLs. The foreign NOLs can be carried forward indefinitely.
In addition, our U.S. federal NOLs may be subject to limitations under Section 382 of the Code, if we have undergone or undergo an "ownership change," generally defined as a greater than 50 percentage point change (by value) in our equity ownership by certain stockholders over a rolling three-year period. Our existing NOLs may be subject to limitations arising from previous ownership changes, and our ability to utilize NOLs could be further limited by Section 382 of the Code. In addition, future changes in our stock ownership, some of which may be outside of our control, could result in an ownership change under Section 382 of the Code. The amount of such limitations, if any, has not been determined. Our NOLs may also be impaired or restricted under state law. For example, California enacted legislation that, with certain exceptions, suspends the ability to use California NOLs to offset California income and limits the ability to use California business tax credits to offset California taxes, for taxable years beginning on or after January 1, 2024, and before January 1, 2027. Such state tax law provisions could accelerate or permanently increase state taxes owed.
There is also a risk that due to other future regulatory changes, such as suspensions on the use of NOLs in other jurisdictions, or other unforeseen reasons, our existing NOLs could expire or otherwise be unavailable to offset future income tax liabilities. For these reasons, we may not be able to realize a tax benefit from the use of our NOLs, even if we attain profitability.
Results of Operations
The following tables set forth our results of operations for the year ended December 31, 2025 and 2024, 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.
| Year Ended | ||||||||||||||
|
December 31, 2025 |
December 31, 2024 |
|||||||||||||
| Revenue | $ | 92,192 | $ | 92,637 | ||||||||||
| Operating expenses: | ||||||||||||||
| Cost of revenue (exclusive of depreciation and amortization shown separately below) | 29,608 | 27,254 | ||||||||||||
| Sales and marketing | 42,689 | 39,837 | ||||||||||||
| Research and development | 20,711 | 26,817 | ||||||||||||
| General and administrative | 53,264 | 58,425 | ||||||||||||
| Depreciation and amortization | 27,174 | 28,510 | ||||||||||||
| Total operating expenses | 173,446 | 180,843 | ||||||||||||
| Operating loss | (81,254) | (88,206) | ||||||||||||
| Interest expense, net | 10,224 | 12,071 | ||||||||||||
| Gain on troubled debt restructuring | (1,448) | - | ||||||||||||
| Loss on debt extinguishment | 14,443 | - | ||||||||||||
| Other expense (income), net | 7,487 | (84) | ||||||||||||
| Loss from continuing operations before income taxes | (111,960) | (100,193) | ||||||||||||
| Benefit from income taxes | (228) | (3,861) | ||||||||||||
| Net loss from continuing operations | (111,732) | (96,332) | ||||||||||||
| Net income from discontinued operations, net of income taxes (inclusive of gain on sale of $66,553 for the year ended December 31, 2024) | - | 58,948 | ||||||||||||
| Net loss | $ | (111,732) | $ | (37,384) | ||||||||||
| Year Ended | ||||||||||||||
|
December 31, 2025 |
December 31, 2024 |
|||||||||||||
| Revenue | 100.0 | % | 100.0 | % | ||||||||||
| Operating expenses: | ||||||||||||||
| Cost of revenue (exclusive of depreciation and amortization shown separately below) | 32.1 | % | 29.4 | % | ||||||||||
| Sales and marketing | 46.3 | % | 43.0 | % | ||||||||||
| Research and development | 22.5 | % | 28.9 | % | ||||||||||
| General and administrative | 57.8 | % | 63.1 | % | ||||||||||
| Depreciation and amortization | 29.5 | % | 30.8 | % | ||||||||||
| Total operating expenses | 188.1 | % | 195.2 | % | ||||||||||
| Operating loss | (88.1) | % | (95.2) | % | ||||||||||
| Interest expense, net | 11.1 | % | 13.0 | % | ||||||||||
| Gain on troubled debt restructuring | (1.6) | % | - | % | ||||||||||
| Loss on debt extinguishment | 15.7 | % | - | % | ||||||||||
| Other expense (income), net | 8.1 | % | (0.1) | % | ||||||||||
| Loss from continuing operations before income taxes | (121.4) | % | (108.2) | % | ||||||||||
| Benefit from income taxes | (0.2) | % | (4.2) | % | ||||||||||
| Net loss from continuing operations | (121.2) | % | (104.0) | % | ||||||||||
| Net income from discontinued operations, net of income taxes (inclusive of gain on sale of $66,553 for the year ended December 31, 2024) | - | % | 63.6 | % | ||||||||||
| Net loss | (121.2) | % | (40.4) | % | ||||||||||
Comparison of the Year Ended December 31, 2025 and 2024
Revenue
Software Products & Services consists of revenues generated from our aiWARE platform, including our VDR product, and Talent Acquisition solutions, any related support and maintenance services, and any related professional services associated with the deployment and/or implementation of such solutions.
Managed Services consists of revenues generated from content licensing customers, representation services, and, to a lesser extent, from advertising customers and related services.
| Year Ended | ||||||||||||||||||||
| December 31, 2025 | December 31, 2024 | |||||||||||||||||||
| Software Products & Services | $ | 65,819 | $ | 61,068 | ||||||||||||||||
| Managed Services: | ||||||||||||||||||||
| Representation Services | 6,800 | 12,550 | ||||||||||||||||||
| Licensing | 19,573 | 19,019 | ||||||||||||||||||
| Total Managed Services | 26,373 | 31,569 | ||||||||||||||||||
| Total revenue | $ | 92,192 | $ | 92,637 | ||||||||||||||||
Software Products & Services revenue increased $4.8 million, or 7.8%, from $61.1 million for the year ended December 31, 2024 to $65.8 million for the year ended December 31, 2025. The $4.8 million increase was primarily due to an increase in VDR revenue, partially offset by a decline in consumption-based revenue across Talent Acquisition.
Managed Services revenue decreased $5.2 million, or 16.5%, from $31.6 million for the year ended December 31, 2024 to $26.4 million for the year ended December 31, 2025. The $5.2 million decrease was driven by a $5.8 million decrease in representation services including our VeriAds services and live event services as a result of the more challenging macro environment offset by growth of $0.6 million from our licensing revenue customers.
Cost of Revenue (Exclusive of Depreciation and Amortization)
Cost of revenue, exclusive of depreciation and amortization, increased $2.4 million, or approximately 8.6%, from $27.3 million for the year ended December 31, 2024 to $29.6 million for the year ended December 31, 2025. Cost of revenue, exclusive of depreciation and amortization, as a percentage of revenue increased from 29.4% for the year ended December 31, 2024 to 32.1% for the year ended December 31, 2025.
The $2.4 million increase was primarily due to an increase in lower margin revenue, including VDR revenue. Software Products & Services products accounted for 71.4% of revenues for the year ended December 31, 2025 as compared to 65.9% for the same period in 2024.
Sales and Marketing
Sales and marketing expenses increased $2.9 million, or approximately 7.2%, from $39.8 million for the year ended December 31, 2024 to $42.7 million for the year ended December 31, 2025. Sales and marketing expenses as a percentage of revenue increased from 43.0% for the year ended December 31, 2024 to 46.3% for the year ended December 31, 2025.
The $2.9 million increase was primarily due to increases in personnel-related costs and outside services.
Research and Development
Research and development expenses decreased $6.1 million, or approximately 22.8%, from $26.8 million for the year ended December 31, 2024 to $20.7 million for the year ended December 31, 2025. Research and development expenses as a percentage of revenue decreased from 28.9% for the year ended December 31, 2024 to 22.5% for the year ended December 31, 2025.
The $6.1 million decrease was primarily due to decreases in personnel-related costs resulting from various cost reduction initiatives enacted throughout fiscal year 2024 and 2025, capitalized internal-use software costs, and outside consulting services.
General and Administrative
General and administrative expenses decreased $5.2 million, or approximately 8.8%, from $58.4 million for the year ended December 31, 2024 to $53.3 million for the year ended December 31, 2025. General and administrative expenses as a percentage of revenue decreased from 63.1% for the year ended December 31, 2024 to 57.8% for the year ended December 31, 2025.
The $5.2 million decrease was primarily due to decreases in personnel-related costs resulting from various cost reduction initiatives enacted throughout fiscal year 2024 and 2025 and contingent purchase compensation expense.
Depreciation and Amortization
Depreciation and amortization expenses decreased $1.3 million, or approximately 4.7%, from $28.5 million for the year ended December 31, 2024 to $27.2 million for the year ended December 31, 2025. Depreciation and amortization expenses as a percentage of revenue decreased from 30.8% for the year ended December 31, 2024 to 29.5% for the year ended December 31, 2025.
The $1.3 million decrease was primarily due to an increase in fully depreciated assets.
Interest Expense, Net
Interest expense, net decreased $1.8 million, or approximately 15.3%, from $12.1 million for the year ended December 31, 2024 to $10.2 million for the year ended December 31, 2025. Interest expense, net as a percentage of revenue decreased from 13.0% for the year ended December 31, 2024 to 11.1% for the year ended December 31, 2025.
The $1.8 million decrease was primarily due to a decrease in interest expense as a result of the repayment of the Term Loan along with the partial repurchase of our Convertible Notes and an increase in interest income.
Gain on Troubled Debt Restructuring
The gain on troubled debt restructuring of $1.4 million for the year ended December 31, 2025 represented a gain attributed to the pay down of our convertible debt due November 2026. There was no gain on troubled debt restructuring for the year ended December 31, 2024.
Loss on Extinguishment of Debt
The loss on extinguishment of debt of $14.4 million for the year ended December 31, 2025 represented a loss of $14.4 million as a result of the pay off of our Term Loan. There was no loss on extinguishment of debt for the year ended December 31, 2024.
Other Expense (Income), Net
Other expense (income), net changed $7.6 million, from $(0.1) million of other income for the year ended December 31, 2024 to $7.5 million of other expense, net for the year ended December 31, 2025, primarily driven by a $7.7 million loss on revaluation of earnout attributed to the Veritone One sale offset by $0.2 million of foreign currency impact. The $(0.1) million of other (income), net for the year ended December 31, 2024 primarily consisted of foreign currency impact.
Benefit From Income Taxes
Benefit from income taxes of $(0.2) million for the year ended December 31, 2025 represented a change of $3.7 million compared to a benefit from income taxes of $(3.9) million for the year ended December 31, 2024. The change was largely driven by credits earned on foreign taxes and tax credits achieved during the year ended December 31, 2025.
Net Income From Discontinued Operations
On October 17, 2024, we completed the Divestiture. The Divestiture was strategic, primarily allowing us to focus on our AI solutions, and secondarily improving our financial liquidity with the net proceeds from the Divestiture. During the third quarter of 2024, we determined that Veritone One met the criteria to be classified as discontinued operations. As a result, the historical financial results of 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. See Note 4, Discontinued Operations, Business Combinations, and Divestiture, included in Part II, Item 8, Financial Statements and Supplementary Data, of this Annual Report on Form 10-K.
Net income from discontinued operations for the year ended December 31, 2024 primarily consisted of revenue of $24.4 million, offset by cost of revenue of $0.7 million, other operating expenses of $14.2 million, net of interest expense primarily due to the repayment of our Term Loan as a result of the Divestiture of $16.9 million, and a gain on sale of $66.5 million.
Liquidity, 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.
Pursuant to the requirements of the Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") Topic 205-40, Presentation of Financial Statements-Going Concern, management must evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about our ability to continue as a going concern for one year from the date these financial statements are issued. This evaluation does not take into consideration the potential mitigating effect of management's plans that have not been fully implemented or are not within our control as of the date the financial statements are issued. When substantial doubt exists under this methodology, management evaluates whether the mitigating effect of its plans sufficiently alleviates substantial doubt about our ability to continue as a going concern. The mitigating effect of management's plans, however, is only considered if both (1) it is probable that the plans will be effectively implemented within one year after the date that the financial statements are issued, and (2) it is probable that the plans, when implemented, will mitigate the relevant conditions or events that raise substantial doubt about the entity's ability to continue as a going concern within one year after the date that the financial statements are issued.
As of December 31, 2025, we had cash and cash equivalents of approximately $27.4 million, working capital deficit of $29.9 million and accounts receivable, net of $36.8 million, and the amount outstanding under our debt obligations was $45.3 million, net of unamortized discount cost, all of which related to the Convertible Notes. Additionally, for the year ended December 31, 2025, net loss was $111.7 million and net cash used in operating activities was $53.2 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.
Due to our projected cash needs (which includes amounts that will become due under the Convertible Notes upon their maturity in November 2026) combined with our current liquidity level and history of net losses and cash used to fund operating activities, there is substantial doubt regarding our ability to continue as a going concern for a period of at least one year from the date of issuance of these consolidated financial statements.
We may not be able to access additional equity under acceptable terms, and may not be successful in future financial and operational restructurings, earning any of our deferred purchase consideration, or growing our revenue base, 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 our stockholders to lose all or part of their investment in our common stock. The consolidated financial statements do not include any adjustments that might result from us being unable to continue as a going concern. 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.
See Note 5, Debt, and Note 11, Stockholders Equity, to the Consolidated Financial Statements included in Part I, Item 8, Financial Statements and Supplementary Data, of this Annual Report on Form 10-K for more information regarding our Convertible Notes, equity offerings, the repayment of our Term Loan and the repurchase of our Convertible Notes.
Cash Flows
The following table summarizes our cash flows for the periods indicated:
| Year Ended | ||||||||||||||
|
December 31, 2025 |
December 31, 2024 |
|||||||||||||
| Net cash used in operating activities from continuing operations | $ | (53,205) | $ | (59,307) | ||||||||||
| Net cash used in investing activities from continuing operations | (4,978) | (1,448) | ||||||||||||
| Net cash provided by (used in) financing activities from continuing operations | 69,424 | (34,011) | ||||||||||||
| Effect of exchange rates on cash, cash equivalents, and restricted cash | (844) | 405 | ||||||||||||
| Net change in cash, cash equivalents, and restricted cash from continuing operations | $ | 10,397 | $ | (94,361) | ||||||||||
Changes in Cash Flows from Continuing Operating Activities
Net cash used in continuing operating activities was $53.2 million for the year ended December 31, 2025, a decrease of $6.1 million from $59.3 million for the year ended December 31, 2024. The decrease was primarily due to a $19.7 million favorable change in non-cash items, a $1.8 million favorable change in operating assets and liabilities, partially offset by a $74.3 million increase in net loss from continued operations disclosed within our consolidated statement of cash flows offset by a decrease in net loss from discontinued operations of $58.9 million. Changes in non-cash and reconciling items increased $19.7 million, primarily driven by an increase of $14.4 million attributed to our loss on debt extinguishment, offset by a gain of $3.5 million on troubled debt restructuring and an increase of $9.0 million in our change in fair value of earnout receivable. The remaining change of $1.3 million can be attributed to increases attributed to deferred income taxes, non-cash interest and carrying amount of our leases offset by changes in depreciation and amortization, stock-based compensation and provision for credit losses. The $1.8 million of unfavorable changes in operating assets and liabilities was primarily driven by unfavorable changes in accounts receivable, accrued expenses and other current and non-current liabilities, partially offset by favorable changes in prepaids and other assets, other assets, accounts payable and deferred revenue.
Changes in Cash Flows from Continuing Investing Activities
Net cash used in continuing investing activities was $5.0 million for the year ended December 31, 2025, an increase of $3.6 million from $1.4 million for the year ended December 31, 2024. The increase was primarily due to a $4.7 million decrease in proceeds from the sale of investments of $1.8 million and $2.9 million, net of cash divested attributed to the sale of Veritone One in the prior year offset by a decrease of $1.1 million in the purchase of fixed assets.
Changes in Cash Flows from Continuing Financing Activities
Net cash provided by continuing financing activities was $69.4 million for the year ended December 31, 2025, a decrease of $103.4 million as compared to net cash used in continuing financing activities of $34.0 million for the year ended December 31, 2024. The increase was primarily due to a $150.2 million increase in proceeds from issuance of common stock and an increase of $1.8 million of deferred consideration payments that were made in the prior year, offset by an increase of $43.5 million due to the repayment of our Term Loan and repurchase of our Convertible Notes and an increase of $5.4 million for debt issuance cost and prepayment penalties made on our Term Loan and convertible Notes during the year ended December 31, 2025.
Contractual Obligations and Known Future Cash Requirements
For a further discussion on our long-term debt and operating lease commitments as of December 31, 2025, see the sections above as well as Note 5, Debt, and Note 10, Leases, Commitments, and Contingencies, to the consolidated financial statements included in Part I, Item 8, Financial Statements and Supplementary Data, of this Annual Report on Form 10-K.
As of December 31, 2025, we have no other present agreements or commitments with respect to any material acquisitions of businesses or technologies or any other material capital expenditures.
As of December 31, 2025, we have recorded $2.5 million of gross liability for uncertain tax positions, including interest and penalties. Based upon the information available and possible outcomes, we cannot reasonably estimate the amount and period in which the liability might be paid.
Critical Accounting Policies and Estimates
The preparation of financial statements in accordance with accounting principles generally accepted in the United States requires management to make estimates and assumptions about future events that affect amounts reported in our consolidated financial statements and related notes, as well as the related disclosure of contingent assets and liabilities at the date of the financial statements. Management evaluates its accounting policies, estimates and judgments on an on-going basis. Management bases its estimates and judgments on historical experience and various other factors that are believed to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions and conditions. The principal estimates relate to the accounting recognition and presentation of revenue, allowance for credit losses, purchase accounting, impairment of long-lived assets, the valuation of contingent consideration, including future escrow and earnout consideration on the divestiture of Veritone One, and the valuation of stock awards and stock warrants and income taxes, where applicable.
Management evaluated the development and selection of its critical accounting policies and estimates and believes that the following involve a higher degree of judgment or complexity and are most significant to reporting our results of operations and financial position and are therefore discussed as critical. The following critical accounting policies reflect the significant estimates and judgments used in the preparation of our consolidated financial statements. With respect to critical accounting policies, even a relatively minor variance between expected and actual experience can potentially have a materially favorable or unfavorable impact on subsequent results of operations. More information on these critical accounting policies and our significant accounting policies can be found in Note 3, Significant Accounting Policies, to the Consolidated Financial Statements included in Part II, Item 8, Financial Statements and Supplementary Data, of this Annual Report on Form 10-K.
Accounting for Business Combinations
As part of the purchase accounting for acquisitions, we estimate the fair values of the assets acquired and liabilities assumed. A fair value measurement is determined as the price we would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants at the measurement date. In the absence of active markets for the identical assets or liabilities, such measurements involve developing assumptions based on market observable data and, in the absence of such data, internal information that is consistent with what market participants would use in a hypothetical transaction that occurs at the measurement date. In the context of purchase accounting, the determination of fair value often involves significant judgments and estimates by management, including the selection of valuation methodologies, estimates of future revenues, costs and cash flows, discount rates, and selection of comparable companies. The fair values reflected in the purchase accounting rely on management's judgment and the expertise of a third-party valuation firm engaged to assist in concluding on the fair value measurements.
Impairment of Goodwill and Long-Lived Assets
Goodwill is not amortized but instead is tested at least annually for impairment, or more frequently when events or changes in circumstances indicate that goodwill might be impaired. Our annual impairment test is performed during the second quarter. In assessing goodwill impairment, we have the option to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that the fair value of a reporting unit is less than its carrying amount. Our qualitative assessment of the recoverability of goodwill considers various macro-economic, industry-specific and company-specific factors. These factors include: (i) severe adverse industry or economic trends; (ii) significant company-specific actions, including exiting an activity in conjunction with restructuring of operations; (iii) current, historical or projected deterioration of our financial performance; or (iv) a sustained decrease in our market capitalization below its net book value. If, after assessing the totality of events or circumstances, we determine it is unlikely that the fair value of a reporting unit is less than its carrying amount, then a quantitative analysis is unnecessary. However, if we conclude otherwise, or if we elect to bypass the qualitative analysis, then we are required to perform a quantitative analysis that compares the fair value of the reporting unit with its carrying amount, including goodwill. If the fair value of the reporting unit exceeds its carrying amount, goodwill is not considered impaired; otherwise, a goodwill impairment loss is recognized for the lesser of: (a) the amount that the carrying amount of a reporting unit exceeds its fair value; or (b) the amount of the goodwill allocated to that reporting unit.
We review long-lived assets to be held and used, other than goodwill, for impairment at least annually, or whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. If an evaluation of recoverability is required, the estimated undiscounted future cash flows directly associated with the asset are compared with the asset's carrying amount. If the estimated future cash flows from the use of the asset are less than the carrying value, an impairment charge would be recorded to write down the asset to its estimated fair value.
On May 31, 2025, we performed our annual goodwill impairment assessment. We determined that an indicator of impairment was present driven by a sustained decrease in our stock price, and as a result, we performed a quantitative goodwill impairment assessment as of May 31, 2025 using the enterprise approach, which estimates fair value based on the overall value of the business, including debt, and determined that goodwill was not impaired, as the estimated fair value of our single reporting unit exceeded its carrying value.
As of June 30, 2025, we performed an updated analysis using a market approach, which estimates fair value based on our market capitalization and an estimate of a reasonable range of values of a control premium. We determined that goodwill was not impaired, as the estimated fair value of our reporting unit exceeded its carrying value. Additionally, as of May 31, 2025 and June 30, 2025, we performed a quantitative analysis of the recoverability of each of our asset groups. The result of the analyses was that the assets were not impaired, as the expected undiscounted cash flows exceeded the carrying value for each asset group.
No impairment of goodwill or long-lived assets was recorded for the years ended December 31, 2025 and 2024.
Stock-Based Compensation Expense
We record stock-based compensation expense associated with restricted stock, restricted stock units and stock options granted under our stock incentive plans, and purchase rights granted under our Employee Stock Purchase Plan ("ESPP"). We have granted stock options with time-based vesting conditions, as well as performance-based stock options, the vesting of which is conditioned upon the achievement of specified target stock prices for our common stock ("Performance Options"). All Performance Options become exercisable in three equal tranches based on the achievement of specific market price targets for our common stock. For each tranche to become exercisable, the closing price per share of our common stock must meet or exceed the applicable stock price target for a period of 30 consecutive trading days. All stock options have terms of ten years following the grant date, subject to earlier termination in the case of cessation of the awardee's continued service with us.
The fair values of restricted stock and restricted stock unit awards are based on the closing market price of our common stock on the date of grant.
We estimate the fair values of stock options having time-based vesting conditions, as well as purchase rights under our ESPP, using the Black-Scholes-Merton option pricing model. We estimate the fair values of Performance Options utilizing a Monte Carlo simulation model to estimate when the stock price targets will be achieved and the Black-Scholes-Merton option pricing model. A fair value is estimated for each tranche of such Performance Options that is tied to a particular stock price target.
Determining the appropriate fair values of stock options and ESPP purchase rights at the grant date requires significant judgment, including estimating the volatility of our common stock, the expected term of awards, and the derived service periods for each tranche of Performance Options.
The expected term for stock options other than Performance Options represents the period of time that stock options are expected to be outstanding and is determined using the simplified method. Under the simplified method, the expected term is calculated as the midpoint between the weighted average vesting date and the contractual term of the options. The expected term for Performance Options considers the remaining term of the option after the attainment date and the ratio of the stock price at the attainment date to the option exercise price.
The risk-free rate is based on the implied yield of U.S. Treasury notes as of the grant date with a remaining term approximately equal to the expected term of the award.
The fair value of stock-based awards (other than Performance Options) is amortized using the straight-line attribution method over the requisite service period of the award, which is generally the vesting period. For Performance Options, expense is recognized over a graded-vesting attribution basis over the period from the grant date to the estimated attainment date, which is the derived service period of each tranche of the award.
We recognize actual forfeitures as they occur and do not estimate forfeitures in determining our stock-based compensation expense.
If Performance Options are modified, the fair values and the new derived service periods of the modified awards as of the date of modification and the fair values of the original awards immediately before the modification are determined. The amount of incremental compensation expense resulting from the modification of each award is equal to the excess of the fair value of the modified award on the date of modification over the fair value of the original award immediately before the modification. The incremental compensation expense is recognized over the new derived service period of the modified award.
Accounting for Income Taxes
We account for income taxes using the asset and liability method. Under this method, deferred tax assets and liabilities are established for temporary differences between the financial statement carrying amounts and the tax bases of our assets and liabilities using statutory tax rates expected to apply to taxable income in the years in which those temporary differences are expected to reverse.
We assess the likelihood that the deferred tax assets will be recovered from future taxable income and, if recovery is not more likely than not, we establish a valuation allowance to reduce the deferred tax assets to the amounts that are more-likely-than-not to be realized. Realization of the deferred tax assets is dependent on various factors such as our ability to generate sufficient taxable income in future years. Based on management's assessment, we have recorded a valuation allowance in the amount of $117.7 million as of December 31, 2025.
On September 14, 2021, we acquired 100% of PandoLogic, Ltd. ("PandoLogic"), a company incorporated under the laws of the state of Israel. In connection with the acquisition of PandoLogic, a deferred tax liability was established for the future consequences attributable to differences between the financial statement carrying amounts of the acquired non-goodwill intangible assets and their respective tax basis. Of the goodwill recorded on the acquisition date, $1.9 is deductible for tax purposes.
On June 13, 2023, we acquired Broadbean (as defined below), a global leader of talent acquisition software-as-a-service technology, pursuant to a securities and asset purchase agreement whereby we acquired (i) 100% of the issued and outstanding share capital of (a) Broadbean Technology Pty Ltd I, (b) Broadbean Technology Limited, (c) Broadbean, Inc., and (d) CareerBuilder France S.A.R.L., and (ii) certain assets and liabilities related thereto (the foregoing clauses (i) and (ii) together, "Broadbean"). In connection with the acquisition of Broadbean, a deferred tax liability is established for the future consequences attributable to differences between the financial statement carrying amounts of the acquired non-goodwill intangible assets and their respective tax basis. Of the goodwill recorded on the acquisition date, $3.7 is deductible for tax purposes.
Significant management judgment is required in determining our provision for income taxes, our deferred tax assets and liabilities and our valuation allowance. In assessing the need for a valuation allowance, management has considered both the positive and negative evidence available, including but not limited to, our prior history of net losses, projected future outcomes, industry and market trends and the nature of existing deferred tax assets. In management's judgment, any positive indicators are outweighed by the uncertainties surrounding our estimates and judgments of potential future taxable income, due primarily to uncertainties surrounding the timing of realization of future taxable income. In the event that actual results differ from these estimates or we adjust these estimates should we believe we would be able to realize these deferred tax assets in the future, an adjustment to the valuation allowance would increase income in the period such determination was made.
Veritone Inc. published this content on April 15, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on April 15, 2026 at 18:23 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]