Darren Aftahi, an analyst from Roth MKM, maintained the Sell rating on Veritone (VERI – Research Report). The associated price target is $2.00.
Darren Aftahi based his Sell rating on several factors which have negatively impacted Veritone’s financial performance. The third quarter results fell short of expectations and, furthermore, the guidance for the fourth quarter was lowered, indicating a possible decline in revenue by approximately 40% year on year. This decline is primarily attributed to the complications arising from Amazon’s impact on hiring solutions. Despite Veritone’s mention of increasing opportunities in GLC and new product development, Aftahi is skeptical as these are likely to take a few quarters to materialize while the company’s cash burn remains high.
Continuing on, Veritone’s core growth has also slowed down due to Amazon’s pullback, despite attempts at cost reduction and debt refinancing to improve the liquidity position. The company has managed to reduce costs by $24 million annually, but the introduction of new products and revenue growth remains uncertain. Moreover, the company’s balance sheet, although improved from debt refinancing, still faces pressure from a likely burn of around $10 million plus in the fourth quarter. Aftahi also expressed concerns about Amazon’s future contributions to HR in FY24. Based on these factors, Aftahi maintains a $2 PT for Veritone’s stock.
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Veritone (VERI) Company Description:
Veritone, Inc. engages in the provision of artificial intelligence (AI) computing solutions to media and entertainment, government, and legal and compliance industries. It operates through the following segments: Advertising; aiWARE SaaS Solutions; and aiWARE Content Licensing and Media Services. The Advertising segment places advertisements for clients, primarily with radio broadcasters, podcasters and digital media producers. The aiWARE SaaS Solutions segment offers solutions through a combination of its direct sales force and indirect channel partners such as value-added resellers (VARs), distributors, system integrators, managed services providers, and referral partners. The aiWARE Content Licensing and Media Services segment sells and markets activities relating to its digital content licensing services business through its direct sales force. The company was founded by Chad Steelberg and Ryan Steelberg in 2014 and is headquartered in Costa Mesa, CA.
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