Good day, and thank you for waiting. Welcome to the Veritone Inc. Third Quarter 2024 Financial Results Conference Call. [Operator Instructions] Please note that today's event is being recorded. I would now like to turn the conference over to, Cate Goldsmith, Investor Relations. Please go ahead.

Thank you, and good morning. Prior to market open, Veritone issued a press release announcing results for the third quarter ended September 30, 2024. The press release and other supplemental information are available on the Investor Relations section of Veritone's website. Joining us for today's call are Veritone's Chief Executive Officer and President, Ryan Steelberg; and Chief Financial Officer, Mike Zemetra, who will provide prepared remarks and then open up the call for a live question-and-answer session. Please note that certain information discussed on the call today, including certain answers to your questions will include forward-looking statements. This includes without limitation, statements about our business strategy and future financial and operating performance. These forward-looking statements are subject to risks, uncertainties and assumptions that may cause the actual results to differ materially from those stated. Certain of these risks and assumptions are discussed in Veritone's SEC filings, including its annual report on Form 10-K. These forward-looking statements are based on assumptions as of today, November 12, 2024 and Veritone undertakes no obligation to revise or update them. During this call, the actual and forecasted financial measures we will be discussing include non-GAAP measures. Reconciliations of these measures to the corresponding GAAP measures are included in the press release we issued today. Also, when we reference pro forma measures, such measures are presented on a combined pro forma basis, treating Broadbean, as acquired by Veritone on January 1, 2022. Periods commencing after June 13, 2023 are not presented on a pro forma basis. Finally, I would like to remind everyone that the call today is being recorded and will be made available for replay via a link on the Investor Relations section of Veritone's website at www.veritone.com. Now, I would like to turn the call over to our Chief Executive Officer and President, Ryan Steelberg.

Thank you, Cate and thank you everyone for joining us. We are excited to speak with you today and provide an update on our third quarter 2024 operations, financial performance and strategic progress. Mike Zemetra will cover our quarterly performance and financials in more detail later, but I wanted to start by providing a broader company update and perspective on our current market environment and the opportunity that lies ahead. Before we dive into the results, I want to address the transformative announcement we made a few weeks ago that marked a pivotal moment in Veritone's journey. We have successfully executed an agreement and have closed on the divestiture of Veritone One, our legacy Media Agency business in a transaction valued at up to $104 million. Let me put this transaction into perspective and clearly articulate what it means for Veritone's future, as it represents the culmination of the strategic plan laid out in early 2023 to transform and focus this business. This divestiture represents far more than the sale of a noncore asset. It's a fundamental repositioning of our company in the rapidly evolving AI landscape and a significant catalyst to unlock shareholder value and reinforce our market leadership position. When we initiated the strategic review of Veritone, when I first took on the role of CEO, our goal was to identify the optimal path to unlock shareholder value and position Veritone for sustainable long-term growth in the AI sector. The sale of Veritone One accomplishes several critical objectives. First, it streamlines our operational focus, eliminating the complexity of managing two distinct business models, a technology software business and our legacy Media Agency. This refinement of purpose allows us to concentrate our resources, both financial and human capital on what we believe is the greatest opportunity, delivering the most…

Thank you, Ryan. I am pleased to report our third quarter results, which were in line with our previously announced guidance and demonstrates continued execution of our strategic initiatives set out earlier this year. Post our October 2024 divestiture of our media agency, we are now shifting our projected cash flow profitability to fiscal 2026. During my prepared remarks, I will discuss the key financial terms of the October 2024 divestiture of our media agency, our Q3 year-over-year performance in KPIs from continuing operations which exclude the results of our media agency, which are presented as discontinued operations as of September 30 2024 and in the corresponding historical financial periods balance sheet and liquidity positions pre- and post-divestiture and our updated guidance for fiscal year 2024 and 2025. Starting with the key financial terms of our October 2024 divestiture of our media agency Veritone One. Total consideration from the sale was up to $104 million in cash, which consisted of $86 million in cash at closing and $18 million in cash subject to earn-out based upon Veritone One's revenue for calendar year 2025. The divestiture represented approximately 25% of our consolidated revenue during the trailing nine months ended September 30, 2024. The total purchase price was 3.5 times multiple on revenue and an 8.9 times multiple on EBITDA for the trailing 12 months ended September 30, 2024. To be clear, Veritone One was predominantly a service business and a traditional media agency. These multiples represent a significant discount in the current market value of Veritone today, which is predominantly Software Products & Services. Of the total $86 million in cash at closing the net cash proceeds were $59.1 million in cash after $6.7 million in cash was held in escrow and $20.3 million in purchase price adjustments. Net cash proceeds…

Thank you. We will now begin the question-and-answer session. [Operator Instructions] And today's first question comes from Seth Gilbert with UBS. Please proceed.

Hey, guys. Thanks for the question. Can you talk about the updated 2024 revenue guide? Is the $4 million to $5 million change 100% allocated to public deal push out? Or were there maybe updates on the hiring side of the business as well?

Yeah. I can take that. Yeah, you're right. It's 100% allocated to timing on Public Sector. And as I mentioned in my prepared remarks, there's potential upside assuming some of these larger deals get pulled into the quarter.

Got it. And then maybe as a follow-up, can you give us a bit more of a bridge on acceleration to 2025. I think on our numbers 2024 revenue growth is going to finish around maybe negative 7% on a pro forma basis. And you're guiding 2025 to above 30% at the high end an addition of almost $30 million. So is that all allocated to public deal sector as well? Or maybe there's other spots of improvement that you would call out that we should be cognizant of in our model? Thank you.

Yeah. I think we mentioned the Public Sector growing between 100% to 150% year-over-year. So if you take the residual of that we are expecting growth across commercial sector. But that -- the large portion of growth on a dollar basis will come from the Public Sector.

Got it. Thanks guys.

[Operator Instructions] And at this time, it appears that we have no further questioners in the queue. And this does conclude our question-and-answer session as well as today's conference. Thank you for attending today's presentation, and you may now disconnect.