Veritone Q2 2026 earnings: Revenue rises as gross margin contracts

Veritone (NASDAQ: VERI) reported fiscal Q2 2026 revenue of $24.3 million, up 4.6% from $23.2 million a year earlier, while its net loss narrowed to $22.2 million from $26.5 million. Gross margin contracted as lower-margin revenue made up more of the mix, and $4.5 million in restructuring costs caused the operating loss to widen even though lower interest expense improved the bottom line. Released on August 13, 2026, the results cover the quarter ended June 30.

Core Financial Results

Revenue returned to year-over-year growth, but gross profit declined on both a GAAP and non-GAAP basis. The difference reflects a mix shift toward lower-margin revenue rather than a lack of top-line growth.

Operating results were also affected by restructuring expenses. In contrast, GAAP net loss improved because interest expense fell after Veritone retired its senior secured term loan in November 2025.

The gap between the GAAP and non-GAAP outcomes is important: the GAAP net loss benefited from lower financing costs, while non-GAAP net loss worsened because of lower gross profit.

Business and Segment Performance

Software Products and Services revenue increased 0.5% to $16.7 million. Higher revenue from aiWARE solutions was largely offset by lower hire revenue, leaving the segment nearly flat.

Managed Services generated most of the company’s overall revenue increase. Segment revenue rose 15.2% to $7.5 million, driven by higher representation and content licensing services.

Veritone’s operating metrics show a significant change in the composition of ARR. Total ARR was nearly unchanged because rapid growth in consumption ARR offset a decline in subscription-based SaaS ARR.

The customer decline was principally attributed to fewer consumption-based customers in Talent Acquisition. Veritone also reported multi-million-dollar VDR orders with existing hyperscalers and more than 100 public-sector contracts, but these activities coexisted with lower total new bookings.

Veritone defines consumption ARR as trailing-12-month non-recurring or consumption-based revenue. Consequently, stable total ARR does not indicate that the company maintained the same level of predictable subscription revenue: SaaS ARR declined while the more variable consumption component increased.

Lower-Margin Mix and Restructuring Kept Operating Loss Elevated

The quarter’s central issue was the disconnect between revenue growth and operating economics. GAAP gross margin fell by 901 basis points because lower-margin revenue represented a larger share of sales, reducing gross profit despite the higher top line.

Veritone also recorded $4.5 million of restructuring expenses, principally for severance and employee transition costs. These expenses contributed to the wider operating loss, but they are connected to a program intended to lower future costs.

The completed first restructuring phase produced $11.3 million in annualized cost reductions, equal to approximately 11% of operating expenses for the trailing 12 months ended June 30, 2026. Veritone is targeting another $3.5 million to $8.5 million of reductions by year-end, which would bring total annualized operating expense reductions to approximately 15% to 20%, with further actions planned for 2027.

Below the operating line, interest expense decreased by $3.2 million following the retirement of the senior secured term loan. That reduction explains why GAAP net loss narrowed even as operating loss and non-GAAP net loss worsened. Management said it believes operating profitability could be achieved as early as the first half of 2027, making the timing and realization of the planned savings a key measure of progress.

Guidance

Veritone provided full-year 2026 revenue guidance of $100 million to $115 million and a non-GAAP net loss outlook of $22 million to $32 million. At the midpoints, the ranges imply higher annual revenue and a smaller non-GAAP loss than in fiscal 2025.

With first-half revenue of $44.5 million, reaching the outlook requires approximately $55.5 million to $70.5 million of revenue in the second half. The supplied release did not include a previous 2026 guidance range, so it is not possible to determine whether this outlook represented a revision.

Investor Risks to Watch

• Second-half execution: The full-year revenue range requires a meaningful acceleration from the $44.5 million generated during the first half of 2026.
• Revenue-mix pressure: Continued growth in lower-margin Managed Services or consumption-based revenue could keep gross margin below prior-year levels even if total revenue increases.
• Lower subscription ARR: SaaS ARR fell 15.1%, while total ARR remained stable only because consumption ARR rose 71.2%. This shift increases reliance on a more variable revenue component.
• Cost-reduction execution: The planned savings must outweigh restructuring charges and the existing operating-loss base for Veritone to approach management’s profitability objective.
• Talent Acquisition weakness: Lower hire revenue and fewer consumption-based Talent Acquisition customers continued to offset growth elsewhere in Software Products and Services.

Summary

Veritone’s Q2 2026 revenue growth was led by Managed Services, but the shift toward lower-margin business reduced gross profit and contributed to weaker non-GAAP profitability. Lower interest expense narrowed the GAAP net loss, while restructuring raised current costs in exchange for targeted future savings. Investors will need to monitor the required second-half revenue acceleration, the balance between SaaS and consumption ARR, and whether planned expense reductions produce sustained operating improvement.