This article first appeared on GuruFocus .
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Revenue:Q2 2026 revenue was $24.3 million, up 20% sequentially from Q1 2026 and up 5% year-over-year.
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Gross Profit:GAAP gross profit was $14.2 million in Q2 2026, down from $15.7 million in Q2 2025.
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Gross Margin:GAAP gross margin was 58.5%, down 900 basis points year-over-year; non-GAAP gross margin was 63.7%, down 890 basis points.
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Operating Loss:Q2 operating loss was $22.1 million, up 16% year-over-year, including $4.5 million in one-time severance and transition costs.
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Net Loss:Net loss was $22.2 million, a 16% year-over-year improvement; excluding restructuring charges, net loss would have been approximately $17.7 million.
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Non-GAAP Net Loss:Non-GAAP net loss was $9.95 million, compared to $8.4 million in Q2 2025.
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Annualized Cost Reductions:Executed $11.3 million in annualized cost reductions to date, targeting $15 million to $20 million by end of fiscal 2026.
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Cash Position:Held $12.7 million in cash and restricted cash as of June 30, 2026, down from $27.7 million at December 31, 2025.
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Debt:Total debt outstanding was approximately $45 million at June 30, 2026, down from approximately $130 million at June 30, 2025.
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Annual Recurring Revenue (ARR):ARR was $62 million, up slightly from $61.9 million in Q2 2025.
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New Bookings:New bookings were $13.9 million, down slightly year-over-year.
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Fiscal 2026 Guidance:Revenue guidance revised to between $100 million and $115 million; non-GAAP net loss expected between $22 million and $32 million.
Release Date: August 13, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
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Revenue grew 20% sequentially and 5% year-over-year, driven by strong VDR and licensing services.
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Executed $11.3 million in annualized cost reductions, with plans to reach $15-$20 million by end of 2026.
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Closed several of the largest individual VDR deals in Q2, with a near-term pipeline of over $65 million.
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Launched new AI products (Veritone Assess, Document Redaction) and secured key public sector contracts, including California Highway Patrol.
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Reduced total debt by $85 million year-over-year, lowering annualized debt carry costs by over $13 million.
Negative Points
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Revenue slightly missed expectations due to delayed public sector budgets from the DoD, impacted by the Iran conflict.
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Lowered full-year 2026 revenue guidance to $100-$115 million, reflecting reduced VDR and public sector contributions.
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Non-GAAP gross margin declined 890 basis points year-over-year to 63.7%, due to revenue mix.
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Cash and restricted cash decreased to $12.7 million from $27.7 million at end of 2025, with net cash outflows from operations of $22.1 million.
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Customer count declined 8% year-over-year, with continued churn in smaller Broadbean customers due to a challenging hiring market.
Q & A Highlights
Q: Can you help us dimensionalize how much of the revenue guidance adjustment was due to VDR versus other factors, and is there still VDR revenue expected in the back half of the year? A: Ryan Steelberg (CEO): The adjustment is a combination of both, not removing VDR entirely. We brought down the expected contributions primarily from the Department of War/Federal sector and elements of VDR due to timing delays. We remain extremely bullish on VDR but felt it prudent to align the guide with our visibility. Mike Zemetra (CFO) clarified that there will still be VDR revenue in the back half of the year.
Q: What is your confidence level in achieving breakeven profitability in early 2027, given the dynamics of revenue growth and cost-cutting? A: Mike Zemetra (CFO): With modest revenue growth of $125 million to $130 million (approximately 11% year-over-year growth) and executing the remaining $3.5 million to $8.5 million of cost reductions in the back half of 2026, that should be sufficient to achieve breakeven for the full year. Some of this depends on execution and re-engagement with the Department of War, but the cost-cutting measures are largely within our control.
Q: Have the recent public sector wins, like the California Highway Patrol (CHP), driven an uptick in interest from other public sector organizations? A: Ryan Steelberg (CEO): Absolutely. It's a relatively small industry, and landing material agencies at state, local, or federal levels creates a ripple and referral effect across the ecosystem. Getting deals done, publicly announced, and having happy customers using mission-critical software is a catalyst. We expect these recent awards to contribute materially to bookings and revenue in 2027.
Q: Regarding the $45 million in convertible debt, can you provide more detail on the timing of a potential restructuring update? A: Mike Zemetra (CFO): We are in active discussions with the debt holders and hope to have news over the coming month or months. It's top of mind and we are focused on it.
Q: Given the revenue reduction, the net loss improvement seems strong. Is the cost action fully seasoned, or are there other factors to consider? A: Mike Zemetra (CFO): It's a combination of the cost reductions already implemented and more coming. Additionally, VDR has lower margins than some of our SaaS products, so the revenue reduction doesn't have a one-to-one correlation with net loss improvement.
Q: Can you break down the revenue guidance adjustment into specific buckets (VDR vs. other segments)? A: Mike Zemetra (CFO): We can't break that up specifically. Ryan Steelberg (CEO) added that the main drivers for the pullback are primarily the Department of War/Federal sector and bringing down slightly the contributions from VDR in 2026.
Q: How does the recent momentum in public sector wins help with discussions and pipeline growth? A: Ryan Steelberg (CEO): Every win is important, and material agencies are crucial. There is a crossover between state, local, and federal initiatives (e.g., with the Department of Justice and Border Patrol). We are incredibly bullish on the public sector business both domestically and internationally, and we expect to see material contributions to bookings and revenue in 2027 from recent awards.
Q: What are the key risks to your revenue projections for the rest of 2026 and into 2027? A: Mike Zemetra (CFO): The key risks are the consumption-based nature of VDR revenue and the timing of government-based contracts and decision-making. VDR deal timing is typically only visible two to three months in advance, and government decisions can be delayed, as seen with the DoD budgetary shifts due to the Iran conflict.
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
