Veritone (VERI) risk factors, FY2024 10-K

Risks Related to Our Business and Our Financial Condition

1. 01Our ability to continue as a going concern depends on, among other factors, our financial condition and operating performance, which are subject to prevailing economic and competitive conditions and certain financial, business and other factors beyond our control
2. 02We recently sold Veritone One, our full-service advertising agency, which represented approximately 25% of our revenue for the twelve months ended December 31, 2024. As a result, our revenue following the sale of Veritone One has been and will continue to be reduced and our business will be less diversified
3. 03Our efforts to expand our aiWARE SaaS business may not be successful
4. 04If we fail to develop a successful business for our aiWARE platform, our business, results of operations and financial condition will suffer
5. 05Certain of our operating results and financial metrics are difficult to predict and subject to volatility, including as a result of seasonality
6. 06We have had a history of losses and we may be unable to achieve or sustain profitability
7. 07general administration, including legal, accounting and other expenses
8. 08We may pursue the opportunistic acquisition of other companies, businesses or technologies, which could be expensive, divert our management’s attention, fail to achieve the expected benefits and/or expose us to other risks or difficulties
9. 09achieving anticipated cross-selling opportunities and eliminating any redundant operations with respect to the acquired business
10. 10We have expanded our international operations, including in the second half of 2023 as a result of our Broadbean acquisition, which exposes us to significant risks, and we intend to continue expanding international operations going forward
11. 11Our failure to manage any of these risks successfully could harm our international operations, and adversely affect our business, results of operations and financial condition
12. 12We depend on our executive officers and other key employees, and the loss of one or more of these executive officers or key employees or an inability to attract and retain highly skilled employees could adversely affect our business

Risks Related to the Development and Operation of Our aiWARE Platform and other Products

1. 13If we are not able to enhance our existing products or introduce new products that achieve market acceptance and keep pace with technological developments, our business, results of operations and financial condition could be harmed
2. 14We rely on third parties to develop AI models for our platform and in some cases to integrate them with our platform
3. 15If we are not able to develop a strong brand for our aiWARE platform and other products and increase market awareness of our company, platform and other products, then our business, results of operations and financial condition may be adversely affected
4. 16Interruptions or performance problems associated with our technology and infrastructure, or that of the third parties with whom we work, including AWS and Azure, may adversely affect our business and operating results
5. 17The security or operation of our platform, networks, computer systems or data, or those of third parties with whom we work, have in the past, and may in the future, be breached or otherwise disrupted, and any such breach or other disruption could have a material adverse effect on our business and reputation
6. 18Our ability to use our loss carryforwards may be limited

Risks Related to our Indebtedness and Liquidity

1. 19Servicing our debt requires a significant amount of cash, and we may not have sufficient cash flow from our operations to pay our debt obligations
2. 20If we are not able to achieve certain cost synergies from our prior acquisitions, cost savings from our planned cost reduction measures, or raise sufficient capital through capital-raising transactions, we will need additional liquidity to continue our operations over the next twelve months
3. 21The Credit Agreement governing our Term Loan contains debt service obligations and restrictive covenants that may impair our ability to access sufficient capital and operate our business
4. 22Any adverse change in market interest rates could increase our interest costs on existing and future debt and could adversely affect our stock price

Risks Related to Target Markets, Competition and Customers

1. 23The success of our business depends on our ability to expand into new vertical markets and attract new customers in a cost-effective manner
2. 24Historically, we have generated significant revenue from a limited number of key customers, and have recently experienced declines in revenue from one of these customers, which has resulted in a significant reduction in our revenues and may cause our revenues for future periods to be less predictable
3. 25Technological advances may significantly disrupt the labor market and weaken demand for human capital at a rapid rate
4. 26Significant segments of the market for talent acquisition software and services may have hiring needs and service preferences that are subject to greater volatility than the overall economy
5. 27Our sales efforts related to our Software Products & Services involve considerable time and expense and our sales cycle is often long and unpredictable

Risks Related to Intellectual Property

1. 28We face risks arising from our digital content licensing services, including potential liability resulting from claims by third parties for infringement or violation of copyrights, publicity or other rights, as well as indemnification claims by rights holders and customers
2. 29We may be sued by third parties for alleged infringement of their proprietary rights, which could adversely affect our business, results of operations and financial condition
3. 30We could incur substantial costs in protecting or defending our intellectual property rights, and any failure to protect our intellectual property could adversely affect our business, results of operations and financial condition
4. 31Our use of open source software could negatively affect our ability to sell our products and subject us to possible litigation

Risks Related to Regulatory Compliance

1. 32In the ordinary course of business, we process sensitive information. Our customers also utilize our Software Products & Services and Managed Services to process sensitive information, which may contain personal data that is subject to data protection and privacy laws in various jurisdictions

Risks Related to the Ownership of Our Securities and Our Public Company Operations

1. 33Our common stock price has been extremely volatile and could continue to fluctuate widely in price, which could result in substantial losses for investors
2. 34general economic and market conditions and other factors, including factors unrelated to our operating performance or the operating performance of our competitors
3. 35If we fail to maintain an effective system of disclosure controls and internal control over financial reporting, our ability to produce timely and accurate financial statements or comply with applicable regulations could be impaired
4. 36We are a “smaller reporting company” under the U.S. federal securities laws, and the reduced reporting requirements applicable to smaller reporting companies could make our common stock less attractive to investors
5. 37Our anti-takeover provisions could prevent or delay a change in control of our company, even if such change in control would be beneficial to our stockholders
6. 38In addition, the Delaware General Corporation Law prohibits us, except under specified circumstances, from engaging in any mergers, significant sales of stock or assets or business combinations with any stockholder or group of stockholders who owns at least 15% of our common stock
7. 39which could make it more costly for a potential acquiror to engage in such takeover. Such additional costs may have the effect of delaying or preventing a takeover of us that would otherwise be beneficial to stockholders
8. 40any action asserting a claim against us governed by the internal affairs doctrine
9. 41Conversion or exercise of outstanding equity-linked securities may dilute the ownership interest of our stockholders or may otherwise depress the price of our common stock
10. 42If securities or industry analysts do not publish research or publish inaccurate or unfavorable research about our business, our stock price and trading volume could decline