Veritone Class Action Lawsuit – VERI

Introduction

A securities class action lawsuit has been filed against Veritone, Inc. (NASDAQ: VERI), its CEO Ryan Steelberg, and its CFO Michael L. Zemetra on behalf of investors who purchased or acquired Veritone securities between October 14, 2025 and April 14, 2026. The complaint alleges that throughout the Class Period, defendants made materially false and misleading statements about the Company's financial results, failing to disclose that Veritone had inaccurately recorded and misclassified certain revenue and costs, overstating revenue, assets, accounts receivable, and other comprehensive income. A series of disclosures beginning in March 2026 revealed that the Company was unable to finalize its accounting for certain revenue transactions under ASC 606, ultimately culminating in an announcement that Veritone's previously issued financial statements for the third quarter of 2025 should no longer be relied upon and would need to be restated. Following these alleged revelations, VERI shares declined significantly, including a single-day drop of 29.5% on March 27, 2026.

Company Profile

Veritone, Inc. is an artificial intelligence computing solutions and services company headquartered in Irvine, California. The Company's platform, aiWARE, powers its software products and services as well as managed services offerings, which the complaint describes as serving both commercial and public sector customers with solutions including data refinery, digital media hub, and redaction technology.

Class Period

October 14, 2025 – April 14, 2026

Investors who purchased or acquired Veritone, Inc. (VERI) securities during the Class Period may be entitled to seek recovery under the federal securities laws.

Allegations

The complaint alleges that Veritone and its senior executives presented a picture of strong financial performance and accelerating growth throughout the Class Period while concealing fundamental accounting deficiencies. Beginning on October 14, 2025, the Company issued preliminary third-quarter 2025 results touting revenue between $28.5 million and $28.7 million, a 30.5% year-over-year increase, along with nearly $40 million in qualified bookings and pipeline for its Veritone Data Refinery product. CEO Ryan Steelberg publicly stated the Company was "executing at a high level" and "on track to reach profitability by the latter part of 2026." These representations were incorporated into SEC filings, including a Form 8-K, a Prospectus filed on Form 424B5, and the Company's quarterly report on Form 10-Q for the period ended September 30, 2025.

According to the complaint, the third-quarter 2025 financial results reported by Veritone were materially overstated. The Company's 10-Q affirmed revenue of $29.1 million and reported detailed financial metrics including gross profit, contract liabilities, and asset figures. The filing also addressed previously disclosed material weaknesses in internal controls over financial reporting, including deficiencies in the consolidation process and the information and communication process used for financial reporting. The complaint alleges that despite acknowledging these existing material weaknesses, Veritone assured investors the weaknesses "did not result in any identified material misstatements to the financial statements" and that the Company was "committed to maintaining a strong control environment." On November 10, 2025, the Company issued an additional press release clarifying third-quarter expenses, further reaffirming the reported financial figures.

Plaintiffs allege these statements were materially false and misleading because, throughout this period, Veritone had inaccurately recorded and misclassified certain revenue and costs, including errors in the valuation of consideration received from non-monetary software transactions and the misclassification of revenue from transactions where the Company acted as an agent under ASC 606. The complaint alleges defendants knew or recklessly disregarded that the Company's internal controls were so deficient that the reported financial statements could not be relied upon, yet continued to present them to investors as accurate, including by incorporating the preliminary financial results by reference into a Prospectus filed on Form 424B5 with the SEC.

The Truth Emerges

The first indication of problems surfaced on March 26, 2026, when Veritone issued a press release disclosing only a wide range of expected fourth-quarter 2025 revenue, between $18.1 million and $30.0 million, because it was "currently finalizing its accounting determination of certain revenue transactions under ASC 606." The Company revealed it was reviewing a non-monetary transaction involving an on-premise software license exchanged for intangible rights with a negotiated price of $13.0 million in the fourth quarter of 2025, but an estimated standalone selling price of just $0.4 million to $11.3 million, as well as a second on-premise software sale with an estimated fair value of $1.8 million to $2.8 million.

The situation deteriorated on April 1, 2026, when Veritone filed a Form NT 10-K disclosing it was unable to file its annual report on time, citing delays in finalizing accounting for "certain barter revenue transactions under ASC 606." The filing warned that ongoing analysis could result in a revenue reduction of $1.5 million to $2.5 million, or 5.2% to 8.6%, of the $29.1 million previously reported for the third quarter of 2025, and that previously issued financial statements for the second and third quarters of 2025 might need to be revised or restated. Additional details emerged on April 14, 2026, when a Form 8-K disclosed that Veritone’s previously issued financial statements for the three and nine months ended September 30, 2025 “should no longer be relied upon.”

The filing detailed multiple errors: an approximately $2.2 million revenue overstatement from an error in valuing consideration received in a non-monetary software transaction; approximately $0.9 million in additional revenue overstatements from recognizing revenue before meeting required criteria under ASC 606 and clerical billing errors; misclassification of revenue and costs in transactions where Veritone acted as agent rather than principal; and a $1.5 million overstatement of accumulated other comprehensive income related to foreign currency translation errors.

Market Reaction

Veritone’s stock price suffered a series of steep declines following the accounting-related disclosures alleged in the complaint. On March 27, 2026, following the disclosure of the wide revenue range and ASC 606 accounting review, VERI fell $0.77, or 29.5%, to close at $1.84 per share on unusually heavy trading volume. The stock dropped further on April 1, 2026, declining $0.18, or 9.14%, to close at $1.79 per share after the Company disclosed it could not file its annual report on time and flagged potential restatements of prior quarters. On April 15, 2026, following the formal announcement that the third-quarter 2025 financial statements should no longer be relied upon, VERI fell an additional $0.19, or 8.3%, to close at $2.09 per share. The cumulative impact was severe: VERI had reached a Class Period high of $8.39 on October 15, 2025, and closed as low as $1.79 during the disclosure period, representing a decline of approximately 79% from its peak.

Next Steps

●      Lead Plaintiff Deadline: July 20, 2026

●      The Court will issue its order for lead plaintiff and counsel in the weeks after submissions are due.

●      The Court will then consider motion for class certification.

●      The Court will later consider a motion to dismiss.

Disclaimer: This shareholder alert is for informational purposes only and does not constitute legal advice. Consult a qualified attorney for personalized guidance. No specific outcomes are guaranteed.

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