Saul and Co.
Thanks so much for taking the time to respond and take a look. Admittedly the GAAP and Non-GAAP and organic vs inorganic growth can be confusing for me still. I thought they actually did a really great job to be purposeful and break down the organic growth— I’m not sure where the disparity is, but I thought the organic growth was actually 41% based on a couple of the breakdowns:
“Starting with full-year 2021 performance, 2021 revenue reached a record $115.3 million, up 100% year-over-year. Software products and services revenue increased 329% to a record $59.5 million, driven by the $38.0 million PandoLogic contribution and a 53% year-over-year increase in organic software products and services. Managed services grew $11.9 million, or 27%, well above industry averages. On a pro forma basis, 2021 revenue increased 41% to $148.1 million, driven primarily by software products and services.”
While admittedly the past 4-8 quarters don’t paint hyper-growth the way we look for it, I believe Veritone is heading into hyper growth acceleration driven by momentum in both government/regulated industry (GRI) and commercial sectors:
“New bookings were $8.2 million in Q4 2021, an increase of over 450%. Organic bookings growth was 238% in the quarter. Our future pipeline is at an all-time high, particularly in GRI, where we expect to immediately begin realizing significant growth in the near and long-term.”
“our commercial business, excluding PandoLogic, grew 61% year-over-year in the December quarter.”
Growth through acquisitions is always a red flag for me initially, so help me understand with this one—
From what I can tell both the organic and the acquired company revenue accelerated this quarter.
“customer growth for PandoLogic was over 100% in the quarter.”
It looks to me the Q4 organic(old Veritone) revenue was muted a bit by the large growth in Pando’s revenue QoQ— when in fact “A 53% year-over-year increase in organic software products and services.”
Gross Margins improved after the acquisition to an all-time high of 89%.
The PandoLogic acquisition expands Veritones product suite, offers obvious and realized synergies, and was a total purchase price of up to $150 million, which based on last quarter’s growth in Pando alone is probably less than 2x Pando’s Sales—
On the surface to me this looks like a profitable, founder-led, high margin, software / AI company growing organically at 41% YoY and trading at less than 3x sales (not our favorite metric I know)
Just below the surface— this looks like a company with strong tailwinds who is under-followed and under-appreciated by fickle Mr. Market— and a company who just breached the government / regulated industry space which will prove transformative to revenue and continued growth.
I do want to see how the organic growth continues going forward— and the revenue is more lumpy as ARR is still a minority of the revenue on a subscription basis— that lumpiness is evident in guidance weaker next quarter yet 60% higher for the year.
I also haven’t dared breach the topic of potential revenue sources— the founders— who have a lot of skin in the game— also have 25 years in advertising tech— an industry I believe they could exploit through their industry leading synthetic voice products— as well as — wait for it, whisper voice the Metaverse. I know I just lost some interest there, but fortunately it’s just bonus material at this point.
I know these aren’t all apples to apples but:
SentinelOne (S) : last quarter revenue $56M
VERI: $55M
Market cap
S: $8 Billion
VERI: $500 million
Gross margin
S: 60%
VERI: 89%
Non-GAAP net income margin
S: -120%
VERI 30%
Price / Sales
S: over 40X sales
VERI: under 3X sales
Even 3x sales for 30% growth and 89% GM seems like a very good value to me. But I think the organic growth is over 40% and the revenue / opportunity is much better.
The low subscription / ARR revenue is a concern as well as the market cap because most of our companies are much larger by cap— but it also means $500M doubles whereas $8B gets Sentinel to a double?
I have a large position in Sentinel also BTW— so I’m not attacking it per say, just comparing two companies I own.
Thanks again for your time, honestly just talking about one stock instead of why all the stocks are down is invigorating for me… (and this feels like progress compared to kaleyra!)
I know times are tough, but we live in a fortunate age. Opportunity abounds.
Health today, Prosperity tomorrow, Peace always.
MillennialFalcon
“Stake now, Steak later!”