Veritone, Inc.: Form 10-Q for the period ended Jun 30, 2026

The following discussion and analysis of our financial condition and results of operations should be read together with and is qualified in its entirety by reference to the condensed consolidated financial statements and related notes that are included elsewhere in this Quarterly Report on Form 10-Q. This discussion contains forward-looking statements based upon current expectations that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those discussed under “Risk Factors,” set forth in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2025, and any updates thereto set forth in this Quarterly Report on Form 10-Q and our other filings with the SEC, including future SEC filings. See “Cautionary Note Regarding Forward-Looking Statements.”

Overview

Veritone, Inc., collectively with our subsidiaries, referred to as “Veritone,” “Company,” “we,” “our,” and “us,” is a provider of artificial intelligence (“AI”) computing solutions. We are driven by the belief that AI is key to building a safer, more efficient, transparent and empowered society. Our mission is to be an active contributor to making the world better through AI. As creators of one of the world’s first AI operating systems, we are augmenting the human workforce by transforming use-case concepts into tangible, industry-leading applications and solutions.

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. aiWARE serves as the foundation for our AI solutions and bespoke applications and offers access to hundreds of cognitive categories through one common software infrastructure. Highly modular and customizable, aiWARE enables expansive scale with the flexibility to deploy in the cloud, at the edge or in hybrid environments. Our aiWARE platform offers capabilities that are designed to mimic human cognitive functions such as perception, prediction and problem solving, enabling users to quickly, efficiently and cost effectively transform unstructured data into structured data, and analyze and optimize data to drive business processes and insights. aiWARE is based on an open architecture that enables new AI models, applications and workflows to be added quickly and efficiently, resulting in a scalable and evolving solution that can be leveraged by organizations across a range of industries.

We also offer cloud-native digital content management solutions and content licensing and representation services. These offerings leverage our aiWARE technologies, providing customers with unique capabilities to enrich and drive expanded revenue opportunities from their content.

We generate revenue primarily through the delivery of our Software Products & Services (as defined below) across our Commercial Enterprise (“Commercial Enterprise”) and Public Sector (“Public Sector”) divisions, and secondarily from Managed Services (as defined below) that today include the delivery of content licensing, influencer management and related services within Commercial Enterprise.

• “Software Products & Services” consists of revenues generated from Commercial Enterprise and Public Sector customers using our aiWARE platform and hiring 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 Commercial Enterprise customers using our content licensing services, representation and related services.

Our presence is primarily in the United States, the United Kingdom, France, Australia, Israel and India.

During the three and six months ended June 30, 2026, we generated revenue of $24.3 million and $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 $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 and six months ended June 30, 2025, respectively. During the three months ended June 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.

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 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 half of 2026, our Software Products & Services revenue of $16.7 million and $30.5 million for the three and six months ended June 30, 2026, respectively, remained relatively flat as compared to 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 June 30, 2026, we have achieved an aggregate of over $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, 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 began executing this cost reduction plan in June 2026 and 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 recent cost reduction plan, we incurred $4.5 million of employee severance and other costs as of June 30, 2026. Our planned cost reductions will be 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 June 30, 2026, our total Software Products & Services customers declined to 2,829, which was a decrease of 7.7% as compared to June 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 change in Software Products & Services customers, but did not have a significant impact on our financial results for the three and six months ended June 30, 2026 or year ended December 31, 2025. 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 June 2026, our VDR sales pipeline increased to over $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 $220 million as of June 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.

In March 2026, we announced a strategic relationship with Oracle, which we anticipate will initially provide substantial savings on our compute costs. The strategic relationship also includes cash-based incentives to be paid from Oracle to us over time to facilitate the future scale and growth in our AI platform, including VDR. In addition, we will be able to leverage Oracle’s high-performance AI superclusters, including the latest OCI Zettascale10 architecture, to power our aiWARE platform. This collaboration allows Veritone’s global customer base to use AI with the superior price-performance, security, and data sovereignty provided by Oracle’s distributed cloud, 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. We believe that a sharper focus on our core assets will drive sustainable growth and value creation for our shareholders moving forward.

For the three and six months ended June 30, 2026, our total revenues were $24.3 million and $44.5 million, respectively, as compared to $23.2 million and $45.7 million for the three and six months ended June 30, 2025, respectively, an increase of 4.6% and decrease of 2.5%, respectively, over the prior-year period, driven by an increase in margins for aiWARE for the three months ended June 30, 2026 and a decrease in our Veritone hire revenue offset by an increase in our aiWARE SAAS revenue compared to the prior year period for the six months ended June 30, 2026. Our gross profit for the three and six months ended June 30, 2026 was $14.2 million and $26.6 million, respectively, as compared to $15.7 million and $29.4 million for the three and six months ended June 30, 2025, respectively, a decrease of 9.4% and 9.4%, respectively, primarily driven by a decrease in margins within Veritone hire and VeriAds products compared to the prior year period. For the three and six months ended June 30, 2026, our non-GAAP gross profit (calculated as described in “Non-GAAP Financial Measures” below) decreased to $15.5 million and $29.2 million, respectively, as compared to $16.8 million and $31.5 million for the three and six months ended June 30, 2025, respectively, driven by a decrease margins within our VeriAds and Veritone hire products compared to the prior year period.

During the three and six months ended June 30, 2026, we reported a net loss of $22.2 million and $41.7 million, respectively, as compared to $26.5 million and $46.4 million during the three and six months ended June 30, 2025, respectively. During the three and six months ended June 30, 2026, we reported a non-GAAP net loss (calculated as described in “Non-GAAP Financial Measures” below) of $10.0 million and $21.8 million, respectively, as compared to $8.4 million and $19.5 million during the three and six months ended June 30, 2025, respectively, primarily due to the decrease in non-GAAP gross profit (calculated as described in “Non-GAAP Financial Measures” below), including as a result of decreases in sales of higher margin products.

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 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), 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.

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 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), 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:

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(1) Other items represent other expenses that are not indicative of our ongoing operations, which, for the three and six months ended June 30, 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.

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

GAAP gross profit of $14.2 million and $26.6 million for the three and six months ended June 30, 2026, respectively, decreased $1.5 million and $2.8 million, respectively, or 9.4% and 9.4%, respectively, as compared to the three and six months ended June 30, 2025 primarily due to an increase in cost of revenue. GAAP gross margin of 58.5% and 59.8% for the three and six months ended June 30, 2026, respectively, decreased 901 basis points and 454 basis points, respectively, as compared to the three and six months ended June 30, 2025 as a result of year-over-year declines in higher gross margin revenue from consumption-based revenue.

Non-GAAP gross profit of $15.5 million and $29.2 million for the three and six months ended June 30, 2026, respectively, decreased $1.4 million and $2.3 million, respectively, or 8.2% and 7.3%, respectively, as compared to the three and six months ended June 30, 2025 primarily due to an increase in cost of revenue. Non-GAAP gross margin of 63.7% and 65.5% for the three and six months ended June 30, 2026, respectively, decreased 891 basis points and 342 basis points, respectively, as compared to the three and six months ended June 30, 2025 as a result of year-over-year declines in higher gross margin revenue from consumption-based 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.

(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 annual recurring 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.

(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 Annual Recurring Revenue provides a calculation of our trailing twelve months of consumption-based revenue from Total Software Products & Services Customers, which as noted above, excludes customers with insignificant revenue and customers on trial or pilot status. We 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.

(4) “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).

(5) “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.

Results of Operations

The following tables set forth our results of operations for the three and six months ended June 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 June 30, 2026 and 2025

Revenue

We serve two customer groups: (1) Commercial Enterprise, which consists of customers in the commercial sector, including media and entertainment customers, representation customers and Veritone Hire solutions customers (inclusive of Broadbean customers); and (2) Public Sector, which consists of customers in the public sector industries, including state, local and federal government, legal, and compliance customers.

Software Products & Services consists of revenue generated from our aiWARE platform, including our VDR product, and our 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, advertising customers and related services.

Software Products & Services revenue increased $0.1 million, or 0.5%, in the three months ended June 30, 2026 compared to the corresponding prior-year period primarily due to an increase in revenue generated from our aiWARE solutions, offset by a decrease in Veritone hire solutions.

Managed Services revenue increased $1.0 million, or 15.2%, in the three months ended June 30, 2026 compared to the corresponding prior-year period driven by an increase of $0.6 million in representation services led by VeriAds in addition to a $0.4 million improvement in content licensing.

Software Products & Services revenue decreased $0.6 million, or 1.9%, in the six months ended June 30, 2026 compared to the corresponding prior-year period primarily due to a decline in revenue generated from our Talent Acquisition solutions.

Managed Services revenue decreased $0.5 million, or 3.7%, in the six months ended June 30, 2026 compared to the corresponding prior-year period driven by a $0.2 million decrease in representation services driven by lower influencer based advertising revenue as a result of the more challenging macro environment, along with a $0.3 million decrease in content licensing.

Cost of Revenue (Exclusive of Depreciation and Amortization)

Cost of revenue, exclusive of depreciation and amortization, increased $2.5 million, or approximately 38.7%, from $6.4 million for the three months ended June 30, 2025 to $8.8 million for the three months ended June 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 $2.5 million increase was primarily due to a higher mix of lower margin revenue, including VDR. During the three months ended June 30, 2026, Software Products & Services products accounted for 68.9% of revenues compared to 71.8% in the prior year period.

Cost of revenue, exclusive of depreciation and amortization, increased $1.2 million, or approximately 8.3%, from $14.2 million for the six months ended June 30, 2025 to $15.4 million for the six months ended June 30, 2026. Cost of revenue, exclusive of depreciation and amortization, as percentage of revenue increased from 31.1% for the six months ended June 30, 2025 to 34.5% for the six months ended June 30, 2026.

The $1.2 million increase was primarily due to a higher mix of lower margin revenue, including VeriAds. During the six months ended June 30, 2026, Software Products & Services products accounted for 68.6% of revenues compared to 68.2% in the prior year period.

Sales and Marketing

Sales and marketing expenses decreased $0.8 million, or approximately 7.2%, from $11.1 million for the three months ended June 30, 2025 to $10.3 million for the three months ended June 30, 2026. Sales and marketing expenses as a percentage of revenue decreased from 47.8% for the three months ended June 30, 2025 to 42.4% for the three months ended June 30, 2026.

The $0.8 million decrease was primarily due to decreases in personnel-related costs and a decrease in advertising expense.

Sales and marketing expenses decreased $0.3 million, or approximately 1.2%, from $21.2 million for the six months ended June 30, 2025 to $21.0 million for the six months ended June 30, 2026. Sales and marketing expenses as a percentage of revenue increased from 46.4% for the six months ended June 30, 2025 to 47.1% for the six months ended June 30, 2026.

The $0.3 million decrease was primarily due to a decrease in advertising expense.

Research and Development

Research and development expenses increased $0.9 million, or approximately 19.0%, from $4.9 million for the three months ended June 30, 2025 to $5.9 million for the three months ended June 30, 2026. Research and development expenses as a percentage of revenue increased from 21.3% for the three months ended June 30, 2025 to 24.2% for the three months ended June 30, 2026.

The $0.9 million increase was primarily due to increases in platform costs, additional personnel-related costs and an increase in outside consulting services.

Research and development expenses increased $1.5 million, or approximately 14.7%, from $10.1 million for the six months ended June 30, 2025 to $11.6 million for the six months ended June 30, 2026. Research and development expenses as a percentage of revenue increased from 22.2% for the six months ended June 30, 2025 to 26.1% for the six months ended June 30, 2026.

The $1.5 million increase was primarily due to increases in platform costs, additional personnel-related costs, and an increase in outside consulting services.

General and Administrative

General and administrative expenses decreased $1.5 million, or approximately 12.0%, from $12.7 million for the three months ended June 30, 2025 to $11.1 million for the three months ended June 30, 2026. General and administrative expenses as a percentage of revenue decreased from 54.6% for the three months ended June 30, 2025 to 45.9% for the three months ended June 30, 2026.

The $1.5 million decrease was primarily due to decreases in personnel-related costs resulting from various cost reduction initiatives enacted, including decreased stock compensation cost.

General and administrative expenses decreased $4.6 million, or approximately 17.2%, from $26.7 million for the six months ended June 30, 2025 to $22.1 million for the six months ended June 30, 2026. General and administrative expenses as a percentage of revenue decreased from 58.4% for the six months ended June 30, 2025 to 49.6% for the six months ended June 30, 2026.

The $4.6 million decrease was primarily due to decreases in personnel-related costs resulting from various cost reduction initiatives enacted, reduction in debt related expenses and lower third party professional services.

Restructuring Expenses

Restructuring expenses were $4.52 million for the three and six months ended June 30, 2026 as a result of the restructuring plan initiated in June 2026 which is principally comprised of severance and transition expenses associated with planned reductions in employees.

Depreciation and Amortization

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

The $1.4 million decrease was primarily due to an increase in assets becoming fully depreciated compared to the prior year.

Depreciation and amortization expenses decreased $2.6 million or approximately 18.2% to $11.5 million from $14.1 million for the six months ended June 30, 2026 and 2025. Depreciation and amortization expenses as a percentage of revenue decreased from 30.9% for the six months ended June 30, 2025 to 25.9% for the six months ended June 30, 2026. The decrease was primarily due to an increase in assets becoming fully depreciated compared to the prior year.

Interest Expense, Net

Interest expense, net decreased $3.2 million, or approximately 92.1%, from $3.4 million for the three months ended June 30, 2025 to $0.3 million for the three months ended June 30, 2026.

The $3.2 million decrease was primarily due to a decrease in interest expense resulting from the repayment in full of our senior secured term loan in November 2025 and the partial repayment of our Convertible Notes in November 2025.

Interest expense, net decreased $5.6 million, or approximately 92.6%, from $6.1 million for the six months ended June 30, 2025 to $0.5 million for the six months ended June 30, 2026.

The $5.6 million decrease was primarily due to a decrease in interest expense was primarily due to the repayment in full of our senior secured term loan in November 2025 along with the partial repayment of our Convertible Notes in November 2025.

Other Expense (Income), Net

The $0.1 million of other expense, net for the three months ended June 30, 2026 primarily consisted of foreign currency 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.

The $0.6 million of other expense, net for the six months ended June 30, 2026 primarily consisted of foreign currency impact. The $0.9 million of other income, net for the six months ended June 30, 2025 primarily consisted of a $0.8 million gain on revaluation of the Veritone One earnout receivable.

Liquidity and Capital Resources

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.

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 June 30, 2026, we had cash and cash equivalents of $12.4 million, working capital deficit of $53.1 million and accounts receivable, net of $28.0 million, and the amount outstanding under our debt obligations was $45.5 million, net of unamortized discount cost, all of which related to the Convertible Notes. Additionally, for the six months ended June 30, 2026, net loss was $41.7 million and net cash used in operating activities was $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.

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.

Cash Flows

A summary of cash flows from our operating, investing, and financing activities is shown in the table below (in thousands):

Operating Activities

Cash used in operating activities for the six months ended June 30, 2026 was $22.1 million, a decrease of $3.2 million from the six months ended June 30, 2025 of $25.3 million. The decrease was primarily due to a $4.7 million decrease in the change in net loss, a decrease of $7.1 million in changes in non-cash items and a $5.6 million favorable change in operating assets and liabilities. The changes in non-cash and reconciling items including change in fair value of earnout receivable and deferred income taxes, partially offset by unfavorable changes in non-cash and reconciling items including stock-based compensation, provision for credit losses, reduction in carrying amount of operating lease right-of-use assets, barter income and non-cash interest expense. The $5.6 million of favorable changes in operating assets and liabilities was primarily driven by favorable changes in prepaid expenses and other current assets, accrued expenses and other current liabilities, partially offset by unfavorable changes in accounts receivable accounts payable and deferred revenue, other assets, and other non-current liabilities.

Investing Activities

Net cash used in investing activities was $2.0 million for the six months ended June 30, 2026, a decrease of $0.3 million from $2.3 million for the six months ended June 30, 2025. The decrease was due to a $0.3 million decrease in capital expenditures.

Financing Activities

Net cash provided by financing activities was $8.9 million for the six months ended June 30, 2026, an unfavorable change of $16.4 million as compared to net cash provided by financing activities of $25.3 million for the six months ended June 30, 2025. The decrease was primarily due to a $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 partially offset by a $3.9 million decrease in repayment of our senior secured term loan.

Contractual Obligations and Known Future Cash Requirements

As of June 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 5, Debt, to our financial statements included in this Quarterly Report on Form 10-Q.

As of June 30, 2026, 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 June 30, 2026, we have recorded $2.6 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 condensed 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.

Our critical accounting estimates reflecting management’s estimates and judgments are described in our Annual Report on Form 10-K for the year ended December 31, 2025. We have reviewed recently issued accounting pronouncements and are evaluating the potential impact, if any, on our condensed consolidated financial statements. Accordingly, there have been no material changes to critical accounting policies and estimates as disclosed in our Annual Report on Form 10-K for the year ended December 31, 2025.

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act as of June 30, 2026. Our disclosure controls and procedures are designed to provide reasonable assurance of achieving their objectives of ensuring that information we are required to disclose in the reports we file or submit under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to enable timely decisions regarding required disclosures, and is recorded, processed, summarized, and reported within the time periods specified in the rules and forms promulgated by the SEC. Our management recognizes that any disclosure controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives, and there is no assurance that our disclosure controls and procedures will operate effectively under all circumstances. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of June 30, 2026, our disclosure controls and procedures were not effective at the reasonable assurance level due to the following material weaknesses in internal control over financial reporting.

Material Weaknesses in Internal Control over Financial Reporting

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.

During the preparation of our Form 10-K for the year ended December 31, 2025, management identified a material weakness in internal control over financial reporting relating to revenue recognition, specifically as it relates to the determination of the appropriate accounting for non-routine revenue transactions. This material weakness was not remediated as of June 30, 2026 and could have resulted in a material misstatement to our interim condensed consolidated financial statements that would not be prevented or detected on a timely basis.

During the preparation of our Quarterly Report on Form 10-Q for the quarter ended June 30, 2024, management identified a material weakness in internal control over financial reporting relating to a lack of an effective information and communication process that identified and assessed the source of and controls necessary to ensure the reliability of information used in financial reporting and for providing information required for effective activity level controls. This material weakness was not remediated as of June 30, 2026 and could have resulted in a material misstatement to our interim condensed consolidated financial statements that would not be prevented or detected on a timely basis.

During the preparation of our Annual Report on Form 10-K for the fiscal years ended December 31, 2023 and 2022, management identified the following material weaknesses in internal control over financial reporting, which still exist as of June 30, 2026:

• Management identified a material weakness in internal control over financial reporting relating to the consolidation process and review of financial statements specifically pertaining to our design of controls to determine proper accounting for certain foreign exchange transactions and translation between Veritone, Inc. and certain foreign subsidiaries. This material weakness did not result in any identified material misstatements to the financial statements. However, this material weakness could have resulted in a material misstatement to our annual or interim condensed consolidated financial statements that would not be prevented or detected and corrected on a timely basis.
• Management identified a material weakness in internal control over financial reporting relating to information technology general controls (“ITGCs”) in the areas of user access and change-management over certain information technology (“IT”) systems that support our financial reporting processes. Our business process automated and manual controls that are dependent on the affected ITGCs were also deemed ineffective because they could have been adversely impacted. These control deficiencies were a result of user access and change management processes over certain IT systems.

Related to the findings above, management concluded that during the year ended December 31, 2023, we did not maintain appropriately designed entity-level controls impacting the control environment or monitoring controls to prevent or detect material misstatements to the consolidated financial statements. Specifically, these deficiencies were attributed to (i) a lack of a sufficient number of qualified resources to perform control activities and (ii) insufficient risk assessment and monitoring activities as a result of untimely or ineffective identification of internal control risks to properly design, test, implement and assess effective internal controls over financial reporting. This material weakness has not been remediated as of June 30, 2026.

Remediation of Material Weaknesses in Internal Control Over Financial Reporting

In order to remediate the material weaknesses, management took and is continuing to take remediation actions including:

(i) continued engagement since March 2024 with an outside firm to assist us with our remediation actions;

(ii) development of a more robust plan and risk assessment process around the proper design, testing and assessment of operating effectiveness of internal controls over financial reporting which has been an ongoing process since April 2024;

(iii) development and delivery of a training program addressing ITGCs and policies, including educating control owners concerning the principles and requirements of each control, with a focus on those related to user access and change management over IT systems impacting financial reporting;

(iv) development and maintenance of documentation of underlying ITGCs to promote knowledge transfer upon personnel and function changes;

(v) implementation of quarterly IT management review and testing plan to monitor ITGCs, including user access reviews and change management controls with a specific focus on systems supporting our financial reporting processes;

(vi) hiring and training staff on proper accounting for foreign exchange translation, transactions when consolidating foreign subsidiaries and the proper, accurate and timely evaluation of the realizability of long lived assets, including goodwill and intangible assets. Management has also hired additional staff to oversee the implementation and testing of these remediation actions; and

(vii) implementation of enhanced procedures for the evaluation and review of non-routine revenue transactions. including review of the estimated fair value of noncash consideration, or assessment of standalone selling price of the services promised to the customer, as applicable.

To further remediate the existing material weakness identified herein, the management team, including the Chief Executive Officer and Chief Financial Officer, have reaffirmed and re-emphasized the importance of internal controls, control consciousness and a strong control environment. We are committed to maintaining a strong control environment and believe that these remediation efforts represent continued improvement in our control environment.

We also expect to continue to review, optimize and enhance our financial reporting controls and procedures. While remediating actions have been implemented to mitigate the material weaknesses identified with regard to foreign transaction consolidation and ITGCs, these material weaknesses will not be considered remediated until the applicable remediated and enhanced control processes have operated for a sufficient period of time and management has concluded, through testing, that this enhanced control is operating effectively.

Changes in Internal Control over Financial Reporting

While management continues to make progress on its remediation efforts, other than the remediation efforts described above, there were no changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) during the quarter ended June 30, 2026 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Inherent Limitations on Effectiveness of Controls

Management recognizes that a control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints and that management is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud or error, if any, have been detected. These inherent limitations include the realities that judgments in decision making can be faulty, and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

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”). Except 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.

Our June 2026 restructuring plan may not achieve its intended cost savings and may adversely affect our business.

In June 2026, we made the decision to implement a restructuring plan (the “Expense Reduction Plan”) that includes a reduction of our workforce by at least 25% of our employee count as of March 31, 2026, together with reductions in certain third-party operating costs. The first phase of the Expense Reduction Plan has been completed. We are targeting additional cost reductions by year-end 2026, representing total annualized operating expense reductions of approximately 15% to 20%, with further reductions planned for 2027. We may not realize, in full or in part, the anticipated cost savings, operating efficiencies or other benefits of the Expense Reduction Plan within the expected timeframe or at all, and have incurred charges, including severance and other termination-related costs, in connection with the Expense Reduction Plan. The Expense Reduction Plan may be disruptive to our operations, including through the loss of institutional knowledge, the attrition of employees beyond our intended reductions, the diversion of management’s attention, and adverse effects on our ability to attract and retain qualified personnel and on employee morale and productivity. In addition, the reductions could impair our ability to execute on our growth initiatives, including in VDR and the Public Sector, or to respond to new business opportunities. Any of the foregoing could have a material adverse effect on our business, financial condition and results of operations.

Future issuances and sales of our common stock, including under our at-the-market program, our equity incentive plans and upon conversion of our Convertible Notes, will dilute our stockholders and may depress the market price of our common stock.

We have historically financed our operations in part through the sale of equity securities, and we expect to continue to require additional capital. In May 2026, we entered into the May 2026 Sales Agreement, under which we may offer and sell shares of our common stock having an aggregate offering price of up to $50.0 million from time to time in “at-the-market” offerings. Sales under this program are made at prevailing market prices, which have declined significantly, and as a result we may be required to issue a substantial number of shares to raise our desired amount of capital. In addition, on July 7, 2026, our stockholders approved an amendment to our certificate of incorporation increasing our authorized shares of common stock from 150,000,000 to 225,000,000 shares, approved the Second Amended and Restated 2023 Equity Incentive Plan, which increased the number of shares authorized for issuance thereunder by 3,000,000 shares, and approved time-based and performance-based restricted stock unit awards to our Chief Executive Officer. The issuance of shares under our at-the-market program, upon settlement or exercise of outstanding equity awards and warrants, upon conversion of our Convertible Notes, and in connection with any future financings or acquisitions, will dilute the ownership interests of our existing stockholders. These issuances or sales, or the perception that they may occur, could cause the market price of our common stock to decline. Because of our need for additional capital and the current market price of our common stock, any such financings may be significantly dilutive and may be on terms unfavorable to us and to our existing stockholders.