Veritone Inc

NASDAQ:VERI

Earnings Call Transcript 2024-Q1

[Operator]

Good day, and welcome to the Veritone Inc. First Quarter 2024 Financial Results Call. [Operator Instructions] Please note, this event is being recorded.

I would now like to turn the conference over to Stefan Norbom, Investor Relations. Please go ahead. .

[Stefan Norbom]

Thank you, and good afternoon. After market close today, Veritone issued a press release announcing results for the first quarter ended March 31, 2024. The press release and other supplemental information are available on the Investors section of Veritone's website.

Joining us for today's call are Veritone's Chairman and Chief Executive Officer, Ryan Steelberg; and Chief Financial Officer, Mike Zemetra, who will provide prepared remarks and then open the call up 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, May 7, 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 owned by Veritone during fiscal year 2022.

Finally, I would like to remind everyone that the call today is being recorded and will be made available for replay via link on the Investors section of Veritone's website at www.veritone.com.

Now I would like to turn the call over to our Chairman and Chief Executive Officer, Ryan Steelberg.

[Ryan Steelberg, executive]

Thank you, Stefan, and thank you, everyone, for joining us. We are excited to speak with you today and provide an update on our first quarter 2024 operations and financial performance. I will start by reviewing our first quarter results before sharing a broader company update and turning it over to Mike Zemetra for more details on our financial performance.

Veritone had a strong start to 2024. We delivered a healthy quarter of new business wins and demonstrated strong momentum against our commitments announced last quarter. We continue to make progress bolstering our fundamentals, rightsizing our operating structure and aligning our investments and technical resources to accelerate our AI software and services revenue growth and technological leadership within the AI industry.

For the first quarter of 2024, Veritone delivered total revenue of $31.6 million and non-GAAP operating loss of $7.6 million, outperforming the high end of our guidance. Annual recurring revenue was $72.1 million, including $48.6 million from subscription versus consumption-based customers, representing an improvement of 7% from Q1 2023 or subscription-based ARR.

First quarter operating results underscore the strength of our strategy and execution over the last year, both of which have shifted our focus back to long-term sustainable and profitable growth. We are seeing clear signs that the steps taken to align Veritone's go-to-market strategy are gaining traction. Our restructuring efforts continued throughout the first quarter of 2024, and we expect to realize the full benefits of these efforts beginning in the second quarter of 2024. We also expect future costs and revenue-related synergies to materialize in the later part of this year.

As discussed on our last earnings call, we are now targeting to achieve profitability on a non-GAAP basis as early as Q4 2024 and for the entirety of 2025. Notably, Veritone achieved several technological milestones in the first quarter and saw increased momentum evidenced by a robust qualified pipeline of commercial and public sector enterprises.

Our aiWARE powered solutions, which provide a best-in-class ecosystem of AI models and intelligent data lake and workflow tools remain the cornerstone of our operations, allowing us to adapt alongside the development of AI technology and models to meet the unique needs of our customers.

Coupled with our progress in LLMs and Retrieval Augmented Generation, our comprehensive AI product suite positions us as a complementary solution to hardware providers and hyperscalers in the AI ecosystem. Generative AI stands as the preeminent focus of technological innovation with companies of all sectors in the early stages of incorporating next-generation AI capabilities into their existing solutions.

Concurrently, cloud providers are launching new services and ramping capacity and semiconductor firms are experiencing the escalating demand for AI and data center chip applications. According to IDC forecast, total worldwide expenditure on generative AI is projected to grow from $19.4 billion in 2023 to a staggering $151 billion by 2027. The accessibility and ease of use of new AI models has raised the prospect for rapid and widespread adoption. However, barriers still remain.

Census Bureau's business Survey indicates that less than 5% of firms are formerly using generative AI to produce goods and services, although the share is 2 to 3x as high among information, professional services and financial firms. The most commonly cited barriers to early AI adoption are short-term factors such as lack of knowledge, privacy concerns and technological maturity.

Veritone was created to break down these barriers with the ultimate mission to democratize AI, advance the capabilities of AI and empower our customers and partners to do even better than before. Earlier today, we announced a major expansion in our go-to-market and service offerings with the launch of our integrated AI consulting and services group. Through our expanded offering, we hope to address the growing demand for expertise in the deployment of enterprise AI technologies and bridge a gap in the market between AI providers and end customers allowing us to serve as a trusted partner for customer organizations in their journey to realize the full value of AI.

Veritone services launch at the Advanced Tier Services Partner level within the AWS Partner Network complements our historical differentiated status on the AWS Software Partner Path with numerous AWS validated offerings in key areas such as machine learning and public safety. Our elevation to the Advanced Tier Services Partner level recognizes the pivotal role Veritone's AI Consulting and Services Group will play in the advancement of AI, empowering customers to effectively use and derive the most benefit from the technology.

Specifically, our partnership with AWS will further empower Veritone to develop and deploy innovative AI software solutions similar to the media management platform and licensing services, Veritone architected for U.S. soccer.

By combining human expertise with aiWARE technology, our newly formed group will empower businesses on their digital transformation journey through custom AI strategy development, AI workflow solutions and innovation workshops. Through partnering with Veritone's AI Consulting and Services Group, customers will benefit from an expedited path to AI activation as well as enhanced scalability, reliability and performance for their AI-driven initiatives. We expect net new bookings and accretive revenue growth at attractive margins starting in 2024 from this new and expanded services offering.

Now let me turn to our vertical markets. First, Veritone's Hire platform. Veritone Hire continued to perform well, again, capitalizing on its strong commercial strategy and focus on multiyear subscription engagements, helping contribute to a near 10% increase in subscription-based ARR or Veritone in Q1.

Beginning in the second half of 2024, we expect to see material growth on a global basis from Broadbean, driven by our ability to expand into controlling not just the job distribution software budget, but the advertising budgets as well for EMEA clients. We expect to finalize the full integration in the first half of 2024 and begin to realize further synergies from the sales and marketing, organizational integration and technological integrations in the later half of the year.

One notable synergy update, we launched programmatic offering in the U.K. in Q1 and we're expanding further to big Continental European markets, Germany and France and Australia by the end of the year.

Veritone Hire recently landed a new RFP win in EMEA with a Fortune 10 clients, that will contribute over $2 million in gross media revenues, and will facilitate 7,500 hires on an annual basis starting in mid-May 2024. Additional key wins in the quarter include Alfa Laval, Sevita, Davidson Hospitality Group, Uniting Care Queensland, Brenntag, Rhenus, American Water and others.

On the product front, in Q1, Veritone Hire introduced market-leading predictive performance capabilities on an individual job basis, cookieless ad tracking technology that led to 20% improvement of tracking accuracy and campaigns previously tracked by third-party cookies and self-serve features to expand the customer base of core programmatic solutions.

Shifting to media and entertainment. Across software products and services within media and entertainment, we had a robust start to the year headlined by momentum in customer renewals and uptick in new business and the achievement of significant technological milestones. Notably, our Ask Veri solution, our new generative AI media intelligence and natural language tool was honored with the prestigious NAB Product of the Year Award, marking our fifth win at NAB, but this time in the AI and machine learning category.

At a time in which one of generative AI's most prominent use cases is content creation, Ask Veri enables the democratization of data exploration and activation to provide value from content investments. Ask Veri empowers Veritone Digital Media Hub, or DMH users to quickly extract actual insights and execute dynamic workflows from their media archive and is an integrated solution on Veritone's aiWARE platform. We are thrilled to announce that Ask Veri will soon be available across the majority of Veritone's commercial and public sector applications.

In Q1, we inked partnerships with both Dalet and Grabyo, showcasing our partner-driven channel approach and that other companies servicing the media and entertainment industry, both need and rely on Veritone. Within media and entertainment, we executed over 23 new deals in the first quarter with a total contract value of $1.97 million and bookings reaching $1.6 million. Among the highlights of new business wins in the quarter, we secured deals with prominent media organizations, such as Summit Media, the U.S. Soccer Federation and NBC Universal.

Our commitment to client satisfaction is reflected in the 14 renewal deals closed in Q1, with total contract value of over $1 million and bookings totaling almost $850,000. Notable renewals include partnerships with Beasley Media Group, Crawford Broadcasting, and Augusta National. Furthermore, we've executed several substantial upsells in Q1, including partnerships with Golf Magazine and Sony Pictures Entertainment, underscoring our strong customer retention metrics and the tangible value we bring to our customers.

We achieved several technology milestones in Q1 with notable achievements, including the enhancement of Veritone's search capabilities, which now significantly outperforms and recall empowering clients to effortlessly query their media and data lake archives using natural language. Within our advertising and intelligence product suite, we introduced updates adding support for Google Bigquery, Adobe, customer website pixels and other industry benchmarks, augmenting the depth of insights provided to our media and amortizing partners.

The launch of media analytics on our DMH platform empowers customers with comprehensive reporting around media monetization, ingestion analytics, cognitive analytics and engine optimization, to name a few. In Q1, we announced feature enhancements to our advertising and content intelligence suite designed to embrace data privacy.

Our solutions support the safeguarding of ad revenues for our customers by providing data granularity, privacy and security. Our AI-assisted content licensing business continues to thrive and demonstrate significant partner growth, supported by a diverse base of content customers and buyers.

Notably, during Q1, we witnessed the meteoric rise in women's sports and record-breaking professional sports ratings driven largely by the global phenomenon of Caitlin Clark during the Women's March Madness Basketball Championship. This created a unique opportunity for both content owners and creators to leverage near real-time events to drive special and unique content moments rather than advertisements, news briefings or documentaries.

In Q1, Veritone had various new client wins, such as the Professional Fighters League and played a pivotal role in facilitating near real-time moments for companies such as State Farm, Nike, Invesco, Apple Studios and many more.

As the advertising market rebounds from a challenging 2023, our agency group seized opportunities to expand customer advertising campaigns for our clients. Annual bookings remain strong for the year and are on track to surpass our previous records. While the overall digital streaming and podcasting sector saw significant Internet growth rates of around 7% in 2023, our agency groups endeavor surpassed these numbers by a considerable margin.

In Q1 2024, we signed 4 new advertising customers, Boll &

Branch, Gabb, National Debt, and Nordace, with 3 additional exciting launches subsequent to the quarter's end. Our advertising customers pipeline remains strong with numerous new advertisers in various stages of contracting and discussions, positioning us for continued success throughout the year. One of the most notable new advertising customers recently signed is Chewy, the largest direct-to-consumer pet supplies company.

Across media and entertainment, we continue to see a strong validated pipeline of $11 million with significant opportunities across both new and existing customers. Our newly launched AI Consulting and Services Group stands well positioned to help these media and entertainment titans accelerate their business goals and drive immediate value for their organizations by leveraging AI.

Finally, I would like to comment on Veritone's public sector business. Building on the progress made in the previous quarters, we've achieved significant milestones and made substantial strides in delivering AI-powered solutions that address the unique needs of the public sector in Q1 2024.

In the first quarter, we welcomed 19 new public sector customers to the portfolio. Notably, we updated and released our contact application to meet the new requirements set forth by the California Department of Justice for RIPA data collection. With over 14,000 police officers and supervisors now utilizing Veritone Contact, we continue to expand our reach in providing cutting-edge solutions to support law enforcement agencies.

Our collaboration with Opexus, a technical integration partner has already produced encouraging results. During Q1, we closed 3 deals with federal clients, and our pipeline is steadily expanding with a promising funnel in North America, particularly in Canada as well as with the U.S. federal government and U.S. SLED. Furthermore, we onboarded 3 new public sector resellers in Q1, and each has already established customer meetings and created new opportunities for growth.

At a time in which law enforcement agencies are facing mounting pressure to modernize their operations coupled with the pressures of fluctuating budgetary constraints, Veritone Redact gained traction with 7 new revenue-generating customers, highlighting the value and efficiency of our managed services offering to the public sector organizations.

Our partnership with WSI Technologies to automate public record request for our primary statewide law enforcement agency marks a significant milestone for the public sector. The state law enforcement agency will use our AI-powered Redact tool to automate its audio and video redaction workflows, reducing lengthy manual processes, conserve internal resources and address the ever-increasing Freedom of Information Act, FOIA request backlog.

With a solution like Veritone Redact, these agencies can significantly alleviate the manual and laborious process of audio and video redaction and get back to what matters most, protecting and serving their communities.

The newly launched Veritone iDEMS applications gained traction in international markets, including Canada, the U.K. and Ireland. In Q1, we enhanced our iDEMS suite by adding a secure large language model deployed on a customer-by-customer basis. This addition ensures that the usage of our Veritone LLM technology remains secure and is not shared outside of their organization. With multiple wins and new funnel growth during the quarter, our iDEMS applications continue to resonate with global public sector entities.

Our achievements already realized in 2024 demonstrate our dedication to serving as a trusted partner in the public sector and the immense opportunity ahead to broaden our footprint across countries, cities, agencies and municipalities globally.

Reflecting on the first quarter of 2024, I am proud of the substantial progress made possible by our talented and dedicated Veritone team. We will continue to take disciplined measures to enact cost savings and operational enhancements throughout the year, aligning with our plan to position Veritone's operating model for long-term agility, serve true customer demand and secure our lead in delivering advanced efficient AI solutions to our customers and partners.

While generative AI has experienced an explosion in the market and is maturing rapidly, it is important to recognize that we are still in the early innings. Many enterprises remain largely in the experimental and pilot phases and the adoption of AI has only seen modest growth thus far with fewer than 5% of companies reporting using generative AI in regular production according to Goldman Sachs.

As evidenced by our strong financial performance, new business wins and technological milestones in Q1, Veritone has emerged from this transition stronger and better positioned to harness the immense opportunities of more mainstream enterprise-wide AI adoption that lie in the quarters and years to come. I am confident in our ability to maintain continued momentum throughout 2024 and look forward to providing an update on our progress in August.

Now I'd like to hand the call off to Mike Zemetra, our CFO, to go through our financial results and guidance in more detail. Mike?

[Michael Zemetra, executive]

Thank you, Ryan. I'm happy to report that we continue to execute at a high level in Q1 2024 with solid customer metrics and contributions made across our software products and services and managed services. More importantly, we ended Q1 with better-than-expected revenue results in line on costs and executed on significant changes to our cost structure keeping us on target towards operating cash flow, profitability, neutrality on a non-GAAP basis as early as Q4 2024.

During my prepared remarks, I will discuss our Q1 year-over-year performance and KPIs, Q1 2024 cost reduction initiatives and Q2 and fiscal 2024 guidance highlighting the scalability of our revenue and business, including the risks heading into fiscal 2024, focused on near-term profitability and projected full year results.

Starting with Q1 2024 performance. Revenue was $31.6 million, up 4.5% or $1.4 million from Q1 2023, driven by an increase of $1.1 million from software products and services and $0.3 million from managed services. The increase in software products and services was largely driven by Veritone Hire, which improved $1.1 million as compared to Q1 2023 largely driven by the Q2 2023 acquisition of Broadbean, which generated $8.5 million in revenue in Q1 2024, offset by the expected decline in legacy Veritone Hire revenue over the same period, including Amazon.

By comparison, Amazon represented approximately 18% of consolidated revenue in Q1 2023 as compared to less than 5% in Q1 2024. Excluding the impact of Amazon, Q1 software products and services revenue would have increased to over 75% in Q1 2024 versus Q1 2023. Our revenue pipeline and long-term outlook remains strong. As we continue to diversify our customer base throughout fiscal 2024, our partner-driven channel strategy continues to deliver results.

In Q1, we delivered strong key performance metrics on a pro forma basis. ARR of $72.1 million including $48.6 million from subscription versus consumption-based customers, which represents an improvement of 7% from Q1 2023 and over 67% of our total ARR. While our subscription-based ARR grew year-over-year, our overall ARR decline given the trailing 12-month pullback in consumption spending, principally from customers, including Amazon. We expect consumption-based ARR to continue to decline in the first half of 2024 as we exit Amazon dependencies over the trailing 12-month period.

Total new bookings were $13 million, down year-over-year largely due to Amazon's reduced spend. Gross revenue retention continued to be in the high 90th percentile and total software products and services customers of 3,384 which were down slightly year-over-year, principally due to reductions in legacy Career Builder Accounts, transition off our Hire platform post the acquisition of Broadbean and, to a lesser extent, from smaller ACV accounts across Veritone Hire as we prioritize renewals and larger ACV customers in Q1 2024.

The overall decline had a minimal impact as overall ARR from subscription-based customers improved year-over-year and was relatively flat sequentially from Q4 2024. Q1 managed service advertising gross per active client were $793,000, improving slightly from Q1 2023 and over 20% sequentially from Q4 2023.

Keeping our performance looking through today and expected macroeconomic improvements in the second half of 2024, we anticipate advertising to improve as early as Q2 2024 versus Q2 2023 and throughout the remainder of 2024 as compared to 2023. Q1 2024 non-GAAP gross profit reached $24.6 million improving $1.1 million or 4.8% from Q1 2023, largely due to the increase in revenue. Overall, non-GAAP gross margins in Q1 2024 of 77.7% were relatively flat year-over-year. We expect consolidated non-GAAP gross margins to approximate 78% to 80% throughout the remainder of fiscal 2024.

Q1 non-GAAP net loss was $7.6 million, an improvement of $2 million or over 20% as compared to non-GAAP net loss of $9.6 million in Q1 2023. This was driven largely by the improvements in non-GAAP gross profit, coupled with the reductions in our cost structure over the trailing 12 months, which included significant cost reductions in the mid- to latter part of Q1 2024, which I will explain in detail later.

Turning to our balance sheet. At March 31, 2024, we held cash and restricted cash of $91.7 million compared to $80.3 million at December 31, 2023, the $11.4 million increase reflects net cash inflows from operations of $15.9 million, driven principally by the timing of payments and managed services in Q1 of 2024. Our non-GAAP net loss and approximately $1.3 million of onetime transition and severance expenses associated with our Q1 2024 restructuring.

Offsetting this was net cash outflows from investing activities of $1.9 million, driven by capital expenditures and $2.8 million of deferred purchase consideration from fiscal 2022 acquisitions. Total interest paid on our debt was $1.1 million in Q1 2024, which was offset by interest income earned from cash on hand of $0.6 million.

At March 31, 2024, we had a consolidated debt of $168.5 million principal, of which $77.5 million is term debt and the remaining $91 million of convertible debt due to November 2026. Beginning in June 2024, we will begin amortizing our term debt principal balance at the rate of 2.5% per quarter.

As we discussed on our last call, we remain on a near-term pathway and are progressing to vastly improve our liquidity position on a nondilutive basis. We will continue to update you on further progress on this initiative when we announce Q2 earnings in August 2024.

Of the total $91.7 million in cash, approximately $73.3 million of our reported cash is essentially held for payment to third parties from our managed services, up from $45.3 million at December 31, 2023.

Turning to our cost savings initiatives. Including March 31, 2024, we have executed over $37 million of annualized savings since the beginning of 2023. During Q1 2024, we completed over $13 million of annualized cost reductions which is included in our full year Q2 2024 financial guidance.

On top of this phase of reorganization, we expect future synergies, both cost and revenue to materialize in the latter part of fiscal 2024, largely from integration of past acquisitions across our software products and services lines.

The Q1 restructuring included organizational realignments within sales, engineering and corporate, the result of which was a reduction of approximately 13% of our global workforce. Total onetime severance and transition costs were $2 million, of which approximately $1.3 million was paid in Q1 2024, with a $0.7 million to be paid throughout the remainder of fiscal 2024.

Additionally, we executed on a little over $1 million of annualized cost savings in late April 2024, bringing our total reduction to 14% of our global workforce. We ended March 31, 2024, with 37.6 million shares outstanding and approximately 2.7 million 5-year warrants outstanding under our December 2023 debt facility at a strike price of $2.57. During Q1 2024, we net settled 349,000 warrant shares in exchange for 207,000 shares of common stock.

Looking ahead to Q2 2024. I want to point out certain onetime cash items. Cash payments of $2.5 million associated with amortization of our term debt, cash interest payments of up to $3.7 million associated with our term and convertible debt and cash proceeds of $1.8 million associated with the sale of our energy investment in April 2024.

Turning to financial guidance for Q2 and fiscal 2024. As a backdrop to fiscal 2024, we approached our planning with a very conservative approach on revenue, particularly on any consumption-based revenue and with heightened discipline around costs as we march towards profitability.

As previously mentioned, in Q1 2024, we executed over $13 million of annualized cost savings initiatives, which is included in our guide, but have intentionally omitted from our 2024 guidance to any future cost and revenue synergies expected in the second half of 2024 until they are realized.

With that backdrop, we are guiding Q2 revenue to be between $31 million and $32 million, representing a 13% improvement year-over-year at the midpoint. Driving this is growth in Veritone Hire, including the addition of Broadbean and growth from our managed services, including advertising. Our managed services is expected to begin accelerating with more significant growth coming in Q2 2024 as we began to exit a more challenging 2024 macro and continue to grow our bookings with new and existing customers.

We continue to see strong bookings across our advertising services with Q2 pacing in excess of 10% year-over-year. Offsetting these growth drivers will be legacy Veritone Hire applications. More specifically, Q2 2024 assumes Amazon will be less than 5% of our consolidated revenue as compared to 14% of our consolidated revenue in Q2 2023.

Risks and upside to our Q2 revenue guidance include execution on new enterprise deliverables, namely across our public sector, which can be unpredictable and to a lesser extent, consumption-based revenue across our hire and managed services.

In Q2, quarterly non-GAAP net loss to be between $5.5 million and $6.5 million, an improvement of 54% at the midpoint versus Q2 2023. Driving this improvement in the bottom line are legacy cost reductions, which we will fully begin realizing in Q2 2024. As a reminder, Q2 is one of our seasonally lowest performing quarters and the majority of our costs are fixed and payroll-driven.

For full year 2024, we are increasing the bottom end of our revenue range to be between $136 million and $142 million representing a year-over-year increase of 9% at the midpoint and relatively flat versus pro forma 2024.

As a reminder, and given the current economic outlook, we are forecasting our revenue conservatively. Driving 2024, we expect software products and services to benefit from the Q2 2023 Broadbean acquisition, our public sector, which is projected to grow between 40% to 50% year-over-year of which over 75% of that growth is coming from our exit 2024 run rate.

Moreover, we remain in late agreement stages with various federal agencies on larger enterprise-level arrangements which has executed in the first half of 2024 could accelerate this growth projection even further. We expect our managed services, including our advertising to improve over 15% year-over-year, led by advertising and licensing starting in Q2 2024. Offsetting this is a year-over-year decline in consumption-based revenue, including Amazon and certain onetime software sales of $3 million in 2023, not recurring to 2024.

Amazon is projected to conservatively represent less than 5% of our consolidated revenue at the midpoint as compared to 11% in 2024. If we exclude the impact of these, our revenue guidance would be over 20% improvement in 2024 versus 2023. Risks to our annual revenue guidance include the macro economy and the result of continued inflation and higher interest rates on our customers, which we expect to continue at least through the first half of 2024, execution on new enterprise deliverables, namely across our public sector and continued customer growth and retention metrics from our software products and services.

We expect full year non-GAAP net loss to be between $11 million and $15 million, with substantial progress towards profitability beginning in the second half of 2024. At the midpoint, this represents a $24.3 million or over 65% improvement when compared to fiscal 2023 non-GAAP net loss.

Assuming we reach the higher end of our guidance, we expect we will be cash flow positive on a non-GAAP basis as early as Q4 2024. Further, in assuming modest revenue growth in fiscal 2025, which should be cash flow positive on a non-GAAP basis for the entirety of fiscal 2025.

Turning to a few updates. We will be presenting at the following investor conferences in May 2024. The 19th Annual Needham Technology, Media and Consumer Conference in New York City, May 14 through May 16 and the EF Hutton Annual Global Conference in New York City, May 15.

That concludes my prepared remarks. Operator, we would now like to open up the call for questions.

[Operator]

[Operator Instructions] The first question comes from Steve Banta with Banta Asset Management.

[Stephen Banta, analyst]

And congrats on a solid quarter. Just want to see if you can comment a little bit more again on your target for cash flow profitability in Q4. And then maybe a little bit on today's announcement on whether you expect anything material in '24 or looking to '25?

[Ryan Steelberg, executive]

All right. Thank you. Thanks for joining the call. I think we touched on a few of the different points on why we're bullish on kind of our year-end guide towards profitability. As we mentioned, we continue to execute very effectively on the cost savings initiatives. Just to give you some perspective. And if you include the $13 million of realized annualized savings that we achieved in Q1. That is part of almost $37 million in total savings that we've been able to really identify and pull out of the business going back to the beginning of 2023, right?

So those efforts have been very, very beneficial. It's radically changed the profile of the business. So if you take the combination of those additional cost savings and which we touched on a little bit, the opportunity for potentially even further synergies in the future, both revenue and cost savings. And you combine that with our improvement in our bookings and our revenues despite Amazon contributing less than 5% in the quarter, it paints a solid picture and based upon sort of our confidence of improving our guide for the year, with, I'd say, very conservative positioning, you can sort of understand why we're bullish for not just for 2024, but as we move into 2025.

The second question, when you touched on was, I think, about our press release this morning about Veritone expanding from being just an ISV, a software-based vendor in the eyes of hyperscalers and partners like AWS, but to a full-fledged AI-based consulting and services group.

We view this as a critical component for many of our customers who not only will continue to buy at very high margins, our market-leading software applications and services but they need -- I mean, the sort of -- it's across the board, their need for AI guidance, workflow development workshop and definitive like platform development.

And some of this goes back to cloud migration, so we can help them prepare their data for AI opportunities. There's a lot of demand, and I think we've left a lot of revenue on the table looking in rears. So we're very excited about sort of introducing this entirely new service offering. And I think it's sort of a testament that we're kind of kind of starting this at the advanced tier level with AWS, who's been a great partner, and we're excited about what this new endeavor will provide.

The only thing I would comment on this is we've been very, very conservative with contributions of this new services and consulting arm for 2024. But we do expect bookings in calendar year 2024, and we do expect this to be a major part of our business going forward in 2025 and beyond.

[Operator]

The next question comes from [ Alec Sharps ] with Stifel.

[Robert Sharps, analyst]

I was curious if you guys had any updates surrounding the $15 million blanket purchase agreement with the DOJ that you guys mentioned on the last call?

[Ryan Steelberg, executive]

So we're actively servicing against that. We won't go and be able to share specific deals, but we are prosecuting and executing against paid task orders under that BPA. We're hopeful that -- we hope and aim to exhaust that over the next several quarters.

And to be clear, that's not, I'd say, at the end of the opportunity. We're doing a lot of work across the board with various agencies, both in Fed Civ and Fed DoD. But again, the BPA is an important vehicle for us, and we are already executing and servicing business and accounts against that $15 million preapproved budget.

[Operator]

[Operator Instructions] Seeing no further questions, this concludes our question-and-answer session. I would like to turn the conference back over to Ryan Steelberg for any closing remarks.

[Ryan Steelberg, executive]

Thank you. I'm very pleased with our performance in the first quarter of 2024 and very, very excited about our prospects for the year. Veritone has clearly established itself as a leader in the enterprise AI market, with a strong and diverse customer base, award-winning and market-leading applications and technologies and a very talented team of professionals driving us forward.

AI is well on its way to being deployed and integrated as a foundational technology and driving critical workflows and efficiencies for nearly every business. And we at Veritone look to continue to lead this charge and really accelerate what is humanly possible.

Thank you for your time today, and we look forward to speaking with you in a few months.

[Operator]

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.