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In this call, we will focus our Veritone results. Next Monday, August 20th, at 4:30 PM Eastern Time, we'll have an investor call to review the Wazee and Performance Bridge businesses and describe how they fit into our strategic plan.

For those investors new to Veritone, I'll quickly run through core aspects of our business and offerings. Veritone is comprised of two business units. First, a high growth SaaS business providing artificial intelligence and solutions to analyze information in all its primary forms including audio, video, and text at scale and with accuracy and speed. We address three vertical markets today with our SaaS solutions; media and entertainment, legal and compliance, and government. Second, a media agency known as Veritone One. The agency is a high margin business, which provides us with valuable information about the needs of media businesses and demonstrates the use of artificial intelligence to improve the effectiveness of media buys. The media space is a natural and huge user of artificial intelligence, thanks to its content rich data trove. Veritone One has brought us into major radio broadcasters, which has in turn made Veritone One one of the largest suppliers of AI enabled SaaS solutions in this market.

Now turning to our AI SaaS business. I'd like to take a few minutes and provide a small primer on AI technology and our offering. First, artificial intelligence based solutions analyze video and audio content, which were previously indecipherable by computational tools that required structured content. AI has evolved to the point where large and complex bodies of video and audio content can be analyzed by machines much more quickly and effectively than human capabilities. The AI analysis of this content is performed by cognitive engines developed by companies throughout the world. Cognitive engines can be deployed within the Veritone operating system aiWARE. Cognitive engines are specialized machine learning algorithms trained to perform specific functions such as transcribe spoken language or recognize faces or objects within videos. The more specialized the engine, the higher the level of accuracy.

The challenge is that most tasks are multidimensional and oftentimes no single engine is capable of producing the required analysis at a sufficient level of accuracy. For example, a law enforcement officer may need to search surveillance footage for specific faces and tattoos to identify suspects. That requires two different cognitive classes, face recognition and object recognition, to operate in tandem. Within each of these two cognitive classes, multiple cognitive engines must be needed to enhance the accuracy of the search. To solve this very complex technical problem, we developed our AI operating system aiWARE, which is similar in concept to a computer's operating system. A PC operating system enables third-party components such as CPUs, RAM, peripherals, and applications to work together.

Our aiWARE allows a multitude of cognitive engines and applications to work together and delivers an orchestrated result for analysis of unstructured and structured content. At the heart of aiWARE is our unique orchestration technology, which we call Conductor. Today, Conductor uses our own proprietary AI to learn the capabilities of each engine within the NLP class and select the right engine or engines to achieve the best results based on the content being processed and the desired information the customer is trying to discover. In addition to Conductor and third- party cognitive engines, aiWARE has applications that allows users to organize the output and take actions, much like how applications work with a computer's operating system and processors.

We have developed a suite of six standard applications. Third parties are able to deploy applications on aiWARE and we are developing specialized applications for customers. Customers deploy aiWARE because it allows them to analyze information in all its primary forms, including audio, video, and text at scale and use the results to meet their objectives with accuracy, speed, and ease. Our customers can be up and running on aiWARE in under an hour for monthly fees as low as $500. They generally begin their AI journey on a single project and expand as the business value becomes evident. They can also develop custom applications to extend the usefulness of aiWARE for their organization's specific use cases. We have multiple partner communities in our collaborative ecosystem; developers of cognitive engines, applications, and data products as well as system integrators.

The cognitive engines on our platform come from a wide range of companies, from small tech shops to large public companies, including Google, Microsoft, IBM Watson, and Nuance. We pay the engine developers based on the amount of media we process through them. These companies integrate with aiWARE operating system providing greater reach for their engines and greater accuracy of results due to Veritone's Conductor AI layer.

Next, I'll move on to the current business climate and then turn it over to Pete for financial details. The AI Industry as we know is still in its early days. The largest and perhaps the earliest vertical to deploy AI for business value is the media and entertainment industry. Their business model, of course, is based on the creation and monetization of unstructured data. This space is where we have been the longest and as such, it has shown the greatest and most consistent net revenue growth. It is up over 250% on a trailing 12-month basis. If I were to plot this vertical on the product adoption curve, it has crossed the chasm with their first and second evolution in deployments, the 1X and 2X wins as I like to call them. Today ,this industry segment is getting more sophisticated with how they use AI.

Well, at first, they took advantage of aiWARE's AI driven processing speed and ability to quickly find and validate ads that ran for their advertising customers. Today, they are using aiWARE for applications such as analyzing which on-air talent connected best which audience segments when discussing specific topics. They use this information to train on-air talent and select talent and content for enhanced ratings and ad revenues. We see clearly how aiWARE capabilities will help every industry. Each quarter we are adding more cognitive engines and our operating system is literally getting smarter enabling us to provide our customers with richer and more accurate analysis than any single point solution provider.

We have now taken these capabilities and built go-to-market models addressing the legal, compliance, and government markets. If the media and entertainment space has crossed the chasm in AI adoption, these other verticals are plotting their arrival and are in the education phase. To further our competitive advantage, we are building our arsenal of readiness for them. Specifically, we're extending our tech capabilities geared to their markets, sales channels, and ecosystems of tech partners. In the first quarter, we experienced a lift-off in the legal market with a meaningful revenue contribution. As we pointed out on the Q1 call, the bulk of our legal revenue came from a single project, which required transcription of over 1 million phone calls.

Our experience with this project demonstrates what we said last quarter; our net revenues in the legal vertical will be lumpy until the number of projects we have increases to the point where it smooth out those lumps. We are continuing to execute our strategy to generate more sales in this market. This quarter we brought to the legal market our capability of translation in addition to transcription, which is a meaningful expansion of the services we offer to this market. As with the media and entertainment space, growth will come but will not always be consistent.

The government vertical remains in the early days as well. We have multiple -- we have several proof of concepts under way, one of which has resulted in investigators matching multiple facial images recorded at crime scenes to a known individual in a library of over 40,000 individuals. While this is a great example of our early efforts in the government vertical, the key revenue contributing verticals for us this year will continue to be media and entertainment and legal and compliance and we'll expect government to ramp up its net revenues in 2019.

In the SaaS space at large, our land and expand strategy continues to work. Again, during the quarter, our number of new customers expanded and the number of new accounts expanded further. In Q2 we had 126% year-over-year growth in customers and a 270% year-over-year growth in total accounts. It is clear to us that conviction in Veritone continues to grow, conviction from customers as seen in a 62% year-over-year growth in monthly reoccurring revenue under agreements and conviction from AI engine developers as seen in the 210% year-over-year growth in Q2 in active third-party cognitive engines integrated within aiWARE.

We are encouraged about the overall progress we are making in executing our strategy and we see deep pools of opportunity in the market. To go after these pools with speed, scale, and impact; we will increasingly be partnering with tech companies who are already processing petabytes of data for these customers. As an example, one such tech partner reached out to Veritone and brought us into Bloomberg, CBS News, and The Masters. But as I have said many times, we are in the very early innings of a long game.

Now I will turn the call over to our CFO, Pete Collins, to walk us through our financial results and key performance indicators for the second quarter of 2018. Pete?

Pete Collins -- Chief Financial Officer

Thank you, Chad, and good afternoon, everybody. Our net revenues in the second quarter of 2018 increased 2% to $4.2 million from $4.1 million in the second quarter of 2017. The year-over-year increase in net revenues was mainly due to a 147% increase in SaaS net revenues from our AI platform, which increased from $0.3 million in Q2 last year to $0.9 million in Q2 this year. Our total net revenues increased even though our media agency's net revenues decreased 12% from $3.7 million in Q2 last year to $3.3 million in Q2 this year. Looking closer at our AI operating system business, we generated net revenues primarily from one vertical in Q2 2018, media and entertainment. The media and entertainment vertical delivered the majority of the AI platform's net revenue in the quarter as we continued to build on the business development work we started in 2016.

Our land and expand approach delivered the media vertical's revenue growth, particularly with iHeartMedia and ESPN. Our monthly recurring revenue or MRR under agreements in effect at the end of Q2 increased 62% to $214,000 from $132,000 in the second quarter last year. This year-over-year decrease of $0.4 million or 12% in net revenues for our media agency's business was due primarily to the large initial campaign for a significant client in the first half of 2017 that did not recur in 2018. Varying client situations and challenges independent of Veritone can impact the agency business and this is what took place in the second quarter. Our media agency's net revenues have already recovered in bookings during the current quarter and such dynamics reflect the nature of the agency business. We had 74 active media clients in the second quarter of 2018 compared with 45 in the second quarter of 2017, an increase of 64%.

Our gross profit in this year's second quarter decreased 11% to $3.3 million or 80.3% of net revenues from $3.8 million or 91.8% of net revenues in Q2 last year. This shift was a result of the decline to the media agency's revenues, which carry a higher gross margin. The gross margin of our AI platform business is lower than in our media agency due to the difference in their business models. Our AI platform grows -- as our AI platform grows to become a larger portion of our total net revenues, we expect our gross margin will decrease. Our SaaS business incurs costs for the cloud platform and third-party cognitive engines, which results in a 65% to 70% gross margin rate for the aiWARE net revenues.

Turning to our operating expenses. Our total operating expenses in the second quarter of 2018 were $17.8 million, an increase of 53% from Q2 last year. The year-over-year increase in total operating revenues was due primarily to our 44% increase in headcount, particularly in software development, data science, and sales and marketing; which we expect will further enhance our aiWARE platform and drive higher AI revenue in the future. Included in our total operating expense this quarter was $2.7 million of stock-based compensation compared with $1.8 million in Q2 last year.

Loss from operations in Q2 this year totaled $14.5 million. This compares with a loss from operations in Q2 last year of $7.8 million. Net loss attributable to common stockholders in Q2 totaled $14.3 million or $0.88 per share. This compares with a net loss of $24.5 million or $2.94 per share in Q2 last year. These EPS figures are based on 16.3 million weighted average shares outstanding for Q2 of 2018 compared with 8.5 million weighted average shares outstanding in Q2 of 2017. It's important to point out that our net loss for Q2 included the $2.7 million of stock-based compensation as well as $0.5 million of depreciation and the amortization expense related primarily to the amortization of the software technology we purchased in December of 2017.

Now turning to our non-GAAP metrics. Earnings before interest expense, depreciation, amortization, and stock-based compensation or EBITDAS for Q2 was a loss of $11 million compared with the loss of $6 million in the second quarter of 2017 and a loss of $10.2 million in Q1 of 2018. The higher EBITDAS loss compared to the year-ago period was due primarily to the addition of software development, data science, and sales and marketing resources as I mentioned before. While our EBITDAS loss was higher on a year-over-year basis, it was similar to the prior quarter loss demonstrating the leverage in the model where we were able to increase our AI net revenues by 147% and hold cost relatively flat.

Now turning to our balance sheet, which remained strong. At the end of the quarter, we had cash, cash equivalents, and marketable securities of $78.2 million and no long-term debt. In June, we completed our second follow-on offering of common stock. We issued 1.955 million shares of common stock and received net proceeds of $32.9 million. We will use this additional cash to further develop aiWARE and to sustain our sales and marketing efforts. We expect that our operating system development and sales and marketing initiatives will increase our future net revenues. Also, the additional cash provides flexibility for potential future M&A, including the two acquisitions we announced this morning.

Next I'd like to shift gears to our key performance indicators or KPIs for both our AI platform business and our media agency business. Our AI platform business exceeded our KPI guidance for the second quarter of 2018 across most metrics. We had a record 86 customers on the platform at the end of the quarter compared with 70 at the end of last quarter and 38 at the end of Q2 last year. In terms of total accounts on the platform, we had 625 at the end of the quarter compared with 591 at the end of last quarter and 169 at the end of Q2 last year. We had 214 third-party active cognitive engines on the platform at the end of the quarter compared with 184 at the end of last quarter and 69 at the end of Q2 2017. And finally, during the quarter, we processed 2.7 million total hours of video and audio files compared with 0.4 million hours in Q2 last year. The total hours processed this quarter nearly matched the amount we processed over all of 2017.

As we grow and expand our AI platform, we will continue to provide goalposts to make it easier to track our success. Along that line, we expect to end the third quarter of 2018 with nine new customers, approximately 30 new accounts, and approximately 20 new active third-party cognitive engines on our platform and having processed approximately 2.7 million hours of video and audio files during the quarter. For our media agency business, we evaluate three key performance indicators. First, the number of new clients added under master service agreements; second, the total number of active clients; and third, the average media spend per client.

During Q2 this year, we added 14 net new clients compared with 16 net new clients in Q2 last year. In terms of active clients, we had a total of 74 as of the end of Q2 of 2018 compared with 45 at the end of Q2 2017, a 64% increase. During Q2, our average media spend per client was $425,000 compared with $695,000 in the same period last year, which is a 39% decrease. It's important to keep in mind that while this business is mature and provides a solid foundation for Veritone, it can also experience volatility in net revenues from quarter to quarter.

That completes my financial summary. Now I'll turn the call back over to Chad. Chad?

Chad Steelberg -- Chairman and Chief Executive Officer

Thank you. Pete. As a first mover company with many shoots of opportunity, we see some are growing faster than others, some have been planted longer and yet the soil is fertile for all. The industry is new. We know we are early and variability is inevitable quarter to quarter. The quarter-to-quarter trajectory of our business will be both unpredictable and lumpy as a result of the industry dynamics. We do however expect to deliver triple-digit growth for our SaaS business year-over-year. We will continue to experience sequential variations in revenue growth rates in individual markets due to our current size. Some of our business comes from projects such as legal cases that're varying revenue size and duration. When the case ends, the associated revenue stream from the project also ends.

As I have said, we are in very early innings of a long game and over time as we continue to execute our strategy and build our business across all of our verticals, we expect to deliver significant sustained revenue growth. Veritone entered its fifth year of business last month. My brother, Ryan and I founded Veritone in July of 2014 when I became convinced that the updated AI models would lead to a massive paradigm shift and competitive advantage or disadvantage for organizations from the ability to best analyze and gain insight from the tsunami of information the world is producing. Mainframes, open system computers, and associated software together with chief analytics officers; we're able to tackle the first waves of terabytes, petabytes, and zettabytes crashing upon us. But those same computer systems and software could not unlock value from the unstructured data.

80% of the information created today is in an unstructured form and the information being created is doubling every 24 months. I saw clearly that a new solution would be needed to unlock the insights and competitive advantage from both information formats, structured and unstructured together, and the massive volume of information that is now within our daily lives. Artificial intelligence paired with human ability to ask the right questions is how the world is answering this giant change. Veritone has created the operating system for this new IT work order. Some of the most valuable technology companies in the world are working with Veritone and within our operating system. Why? Because Veritone makes their offerings better. With every byte of information that Veritone OS ingests, it becomes smarter and offers more value to our ecosystem of users, system integrators, and tech developers. I am excited about the future and even more eager to bring this vision to its fullest potential. It is my goal to help the market continue to see how Veritone is good for AI and good for the world. Thank you for joining us on this journey.

Again, thank you for your time today. We look forward to updating you on our progress on future calls. We are now ready to open the line for questions. Operator?

Questions and Answers:

Operator

Thank you. We will now take questions from Veritone's sell-side analysts. (Operator Instruction) And our first question comes from the line of Rob Stone with Cowen & Company. Your line is now open.

Rob Stone -- Cowen & Company -- Analyst

Hi guys. I wanted to ask first for a little more color on the trend in hours of video processed. It was roughly flat sequentially, maybe down 3% from Q1 and you're guiding to essentially the same number for Q3. When the Q1 results came out, you were actually guiding for about 3.5 million hours. So I'm curious if there was a large project or something that didn't happen and after many quarters of rising hours, it's flattening out. So, help us understand what's going on there. Thanks.

Chad Steelberg -- Chairman and Chief Executive Officer

Sure, Rob. Hey, this is Chad. Good afternoon. We have been looking at our business and it really comes down to two revenue streams. One is the very predictable classic SaaS business model with our licensing operating system and applications. And then a variable component, which is tied to in many cases, an unpredictable stream. Different than, let's say, a radio station or a television station group, which puts out a fairly consistent amount of content on a month-to-month basis that's easier forecast. What we've seen in the legal sector as well as in some of the new government work because of the project nature of the analysis, it's become very difficult for us given that law of small numbers for us to accurately forecast what that's going to look like even in a very few short months ahead of us. So rather than continuing to forecast to what we expect sort of a best case or a target case, we're falling back on a number which we know we can deliver on based upon what our more consistent media and other forms of consistent processing data is telling us on that trend and we'll let the variability drift to the upside versus to the mean.

Rob Stone -- Cowen & Company -- Analyst

Okay. That's a great segue into my next question, which is AI revenue was down about 29% sequentially, although it was up triple digits year-over-year and we know that you had a significant chunk from the legal and compliance segment project driven in Q1. Was the decline quarter-on-quarter? How much of that was from legal? Were there other things that declined? Just a little bit more on the sequential trend in reported revenue? Thanks.

Pete Collins -- Chief Financial Officer

So Rob, the underlying media business was up very nicely like 25% sequentially. What we saw when you refer to the sequential decline, it was all related to the legal vertical, which is what we had spoken about last quarter and Chad kind of covered in his section of the prepared remarks that there was a large project. That project that had 1 million phone calls that we transcribed and we did not see a similar level of project type work in the legal vertical this quarter. So, that explains the overall sequential decline, two factors. Media and entertainment being up 25% on a sequential basis, but legal being down due to that large project that we had called out in Q1.

Rob Stone -- Cowen & Company -- Analyst

And finally this question for you, Pete, which is -- and I know this may be superseded by the impact of acquisitions, which I guess you're not ready to talk about tonight. But any color you can provide on what you might look for in the sequential trend in operating expenses?

Pete Collins -- Chief Financial Officer

I think overall operating expenses are in pretty good shape. I think that we do have an increase in our stock-based compensation this quarter that's in the neighborhood of $1.9 million to $2.2 million. But beyond that, I think that the -- there aren't any other significant items apart from the M&A work where we will have additional headcount for the quarter and then we'll also have obviously transaction costs associated with those acquisitions.

Rob Stone -- Cowen & Company -- Analyst

Thanks. I'll jump back in the queue.

Chad Steelberg -- Chairman and Chief Executive Officer

Alright, Rob.

Operator

Thank you. And our next question comes from the line of Mike Latimore with Northland Capital Markets. Your line is now open.

Mike Latimore -- Northland Capital Markets -- Analyst

Great. Thanks a lot. I guess on the media AI business, how are you thinking about going forward? Are there some further upsell opportunities? Are there new contracts? It's been the sort of strongest business segment to date, I mean can you give a little color on kind of what to expect next in that vertical?

Chad Steelberg -- Chairman and Chief Executive Officer

We continue to see strong growth both in terms of new customer adoption, both domestically and abroad, as well as based upon our metrics, more and more accounts. So we're seeing that land and expand model of not only new use cases, but new channels in the media space, whether it's additional television, competitive analytics, et cetera driving usage up. So probably from my perspective, the thing that I'm most bullish about is some of the applications that are now starting to roll out that are actually not just using the same physical application on aiWARE, but new applications that they're adopting, whether that's again in the redaction phase or other forms of business use cases that companies like ESPN and Bloomberg are deploying.

So as AI itself performs better and the accuracy rate for specific engines, for example, logo detection or even transcription reach and approximate human levels; we're going to see more and more use cases open up in the media and entertainment space. Things like closed captioning that still today are done by humans. We see in the not too distant future opportunities to replace and augment those capabilities. So again as aiWARE improves, as the number of engines continues to increase and the accuracy in those also increases; we continue to expect extremely strong positive growth on the land and expand strategy in media and entertainment.

Mike Latimore -- Northland Capital Markets -- Analyst

Got it. And then on the bookings in the quarter, they doubled, I guess, a little -- more than doubled sequentially and year-over-year. Was that all from sort of the media category or was there other things in there?

Pete Collins -- Chief Financial Officer

Yes, it's -- the vast majority of it, Mike, was in the media vertical.

Mike Latimore -- Northland Capital Markets -- Analyst

Okay. And just last on legal. I guess the large case you had in the first quarter, is there sort of more opportunity in that specific case and then maybe just a little more color on kind of the pipeline of cases that might be applicable throughout the rest of this year?

Chad Steelberg -- Chairman and Chief Executive Officer

Right. So, just to give a little more color on that, when we're dealing with our media and entertainment, we're usually almost exclusively dealing directly with the end customer. In the legal and compliance space, specifically in the legal eDiscovery sector of legal and compliance, we're [ph] effectively four layers removed from the paying customer; you have the client, you have the law firm, you have the MSP that's processing the eDiscovery files, and then you have Veritone. And what that does, it really just creates a lot of variability for us. We had a number of very large cases in the pipeline this quarter in Q2. We expected at least one or two of those to hit in addition to the smaller ones that were running through, but due to circumstances outside of our control, whether it was a lawyer quitting and going to another firm or something else, those cases did not originate and land on Veritone from an analytic standpoint.

So, they still exist. We see that pipeline continuing to build, but predicting which quarter they're going to land in when we're dealing with such small numbers is obviously challenging. So maybe one final comment on that, Mike. Legal and compliance but focusing purely on eDiscovery, we are very confident that we are the dominant solution in the space. We have fantastic technology and if you talk to our customers and the MSPs that have used us, it's second to none. So this is just an early stage problem for us. We're doubling down the space and we will see this through and transform the legal and compliance industries.

Mike Latimore -- Northland Capital Markets -- Analyst

Got it. Thank you.

Operator

Thank you. And our next question comes from the line of Darren Aftahi with ROTH Capital Partners. Your line is now open.

Darren Aftahi -- ROTH Capital Partners -- Analyst

Hey, good afternoon and thanks for taking my questions. Can you just talk on the media and entertainment vertical like what was the mix in AI between existing and new clients and how did that change from Q1?

Pete Collins -- Chief Financial Officer

So it's -- a lot of the work, Darren, is on existing clients and it's that land and expand type of an approach. We are -- when you look at the customer count growth that we present, the bulk of that is in media and entertainment. But as Chad has talked about before, we typically start out with relatively modest levels of revenue on many of the new clients and then as they get more familiar with the platform; they develop new business cases, start ingesting more content, and our revenues build. So it's really a function of more of the kind of internal growth rate versus bringing on large new customers.

Darren Aftahi -- ROTH Capital Partners -- Analyst

Got it. And obviously you're going to have [ph] another call for the acquisitions. I'm just curious if you might talk high level just about the leveragability of the Wazee Digital asset management platform to verticals beyond media and entertainment, I think you called out government in the PR. But I'm just kind of curious how leverageable that is across other sectors perhaps?

Chad Steelberg -- Chairman and Chief Executive Officer

Yes. We believe a lot of these core products, if we split the business into two from core to then their more media monetization platform, but their core product we believe has extensibility into other verticals in addition to government alone. So we're not going to talk more about that, but it is not a single point solution that's hardwired to the media and entertainment industry and we see it as a broader opportunity for the company.

Darren Aftahi -- ROTH Capital Partners -- Analyst

That's helpful. And there's two more if I may. If you were to back out sort of the one-time kind of campaign within the media agency business as well as the one-time government. Did those businesses -- can you suggest one on the media agency business, talk about how fast that grew ex that campaign that you have? And then two, how fast sequentially legal grew if you back out that one-time revenue? And then just my last one was, just any update on FedRAMP would be helpful. Thanks.

Pete Collins -- Chief Financial Officer

So this kind of high level here, Darren. You take out that one kind of initial campaign a year ago in the media agency and the overall revenue I think off the top of my head would have been kind of in the low double-digits, probably 10% to 15% on a year-over-year basis. So, very solid growth there. On the AI business, you're talking about growth of probably closer on a sequential basis, I already said that the M&E business was up 25% sequentially. That's probably about 25% to 30% would have been about what we would have delivered without that -- excluding the impact of that one large legal project from a year ago. Then you asked a question about FedRAMP.

Chad Steelberg -- Chairman and Chief Executive Officer

So, I can address FedRAMP. So, we are now through FedRAMP certification. We have authorization to operate, authorization to test I think it is ATT, and we continue to work with a number of federal agencies with that program. So great progress, got our certification, and now we're simply working through the actual specific clients that are going to be deploying the platform.

Pete Collins -- Chief Financial Officer

Yes. And the ATO has two more phases to it and we think that we'll be able to get both of those phases done within the next six months.

Chad Steelberg -- Chairman and Chief Executive Officer

Correct.

Darren Aftahi -- ROTH Capital Partners -- Analyst

Great. Thank you

Operator

Thank you. And our next question comes from the line of Chad Bennett with Craig-Hallum. Your line is now open.

Chad Bennett -- Craig-Hallum -- Analyst

Great. Thanks for taking my questions. So Pete, can you maybe kind of speak to since we kind of have these one-time deals on the legal side that are tough to predict and I think it's obviously the way to think about it is kind of hair cutting those in terms of your guy's expectations. But if we just look at the second half revenue both for the agency business and for the aiWARE SaaS business, kind of how do we think about it sequentially in the September quarter and the December quarter excluding obviously the two acquisitions that you guys just announced?

Pete Collins -- Chief Financial Officer

So on the media agency, Chad, if you look back at the quarterly revenue a year ago, it was higher in the first half of the year than it was in the second half of the year and that's because of this initial campaign that a large customer did last year. That extended just through the second quarter and then it dropped off and didn't -- it wasn't at that same level over the back half of the year. So, the revenue growth that would be more sustainable in the second half is very similar to the figure I just shared with Darren in kind of that 10% to 15% level on the media agency on a year-over-year basis.

Chad Bennett -- Craig-Hallum -- Analyst

Okay. How about the AI business?

Pete Collins -- Chief Financial Officer

Well, I think where we are in the second quarter is the vast majority of that $900,000, $860,000 revenue is from the media and entertainment vertical, which we've talked about has a trailing-12 growth rate of 200% plus. So I think that I wouldn't necessarily sign up for 200% growth rate continuing each quarter going out the back half of the year, but I think we're well into the 100% to 150% type growth rate for that vertical. And then to the extent we've got -- and there wasn't significant meaningful legal revenues a year ago in the second half of the year. So I think if we -- as we build up that legal vertical, but again that's kind of the variable aspect which Chad talked about how it's not baked into the number of hours we're forecasting for Q3, that would be really an upside for us.

Chad Bennett -- Craig-Hallum -- Analyst

Okay. And then again I know you have the call next Monday for the acquisitions, but can you just comment at least from a financial profile standpoint if the combined revenue stream would be a positive operating income, EBITDA business for you guys?

Pete Collins -- Chief Financial Officer

Yes. They're both -- one is -- on a combined basis, their profit -- they have EBITDA profit.

Chad Bennett -- Craig-Hallum -- Analyst

Okay, got it. Thanks, guys.

Pete Collins -- Chief Financial Officer

Yes.

Operator

Thank you. And our next question comes from the line of Tom Diffely with D.A. Davidson. Your line is now open.

Tom Diffely -- D.A. Davidson -- Analyst

Yes, good afternoon. First question for Pete on the margins. You talked about how the AI margins are kind of in the 65% to 70% range. Wondering though if that changes when you go through the legal space where there's several layers of distribution you have to work through?

Chad Steelberg -- Chairman and Chief Executive Officer

So actually, this is Chad, I'll address that. Despite the layers in the legal, the value proposition, which is how we charge not based upon the commodity nature of the service is -- has higher margins in the legal and compliance space than we do in the media and entertainment, primarily due to the value of the platform and what they're paying for in terms of the increased accuracy that really only Veritone can deliver around tough cases.

Tom Diffely -- D.A. Davidson -- Analyst

Okay, great. And then, Chad, maybe I have a product question for you too then. About a quarter ago, you released the real-time framework for the aiWARE program. Has that opened any new opportunities for you or has it driven any recent wins, maybe a quick update there?

Chad Steelberg -- Chairman and Chief Executive Officer

Yes. The real-time framework is becoming mission critical to us in almost all of our newer opportunities with customers. Part of that land and expand that we're seeing that growth rate with our existing media customers is due to that real-time nature. It's again, as accuracy improves in the real-time platform now that's been deployed, it really opens up the closed captioning marketplace and other forms of use cases for the media and entertainment. In the government sector, the specific use case that I talked about in the prepared remarks around identifying suspects, et cetera also is going through that real-time platform. As you can imagine when you're looking for a potential suspect, time is of the essence and so real-time is definitely critical not only to the local agencies, but also to the federal ones that we're in discussions with.

Tom Diffely -- D.A. Davidson -- Analyst

Okay, great. And then finally, when you look at the KPI, the third quarter projections, I assume all of that is just on the base business and has nothing to do with the acquisitions at this point?

Chad Steelberg -- Chairman and Chief Executive Officer

Correct.

Tom Diffely -- D.A. Davidson -- Analyst

Great. Alright. Thank you.

Chad Steelberg -- Chairman and Chief Executive Officer

Thanks, Tom.

Operator

Thank you. And our final question comes from the line of Sameet Sinha with B Riley FBR. Your line is now open.

Lee Krowl -- B. Riley FBR -- Analyst

Hey, guys. This is Lee Krowl on for Sameet. Couple of questions.

Pete Collins -- Chief Financial Officer

Hi Lee.

Lee Krowl -- B. Riley FBR -- Analyst

Hi guys. Just wanted to kind of understand channel mix. With legal kind of being difficult to see when cases actually flow through, but it seems like channel partners are very important part of the growth strategy. So, could you maybe talk about the sales process and maybe the mix of revenue that's coming in through reseller channels and maybe the revenue that's coming in via your own sales force?

Pete Collins -- Chief Financial Officer

So on media -- Lee, are you referring to media and entertainment?

Lee Krowl -- B. Riley FBR -- Analyst

I mean -- just generally speaking.

Pete Collins -- Chief Financial Officer

Well, in legal and compliance on the eDiscovery side, that's all going to be through kind of channel partners or MSPs, right, because they're the ones that provide the foundation for the law firms who provide the service to the clients -- the ultimate clients that are paying. On compliance, which is a category that we're pushing into, it's a combination of us working directly with large financial institutions as well as system integrators or tech platform providers that are providing an outsourced solution to a lot of the financial services industry that we're addressing. On media and entertainment, a lot of the work we've done to this point has primarily been through our direct sales force although the pipeline now is shifting more toward a lot of channel partner opportunities coming through.

So as we've ramped up our resources there and expanded our capabilities there and done some technical integrations, that part of the sales channel, that pipeline is moving more toward the channel category versus the direct sales although our direct sales team is still out there and working hard on pursuing leads and opportunities that they've been going after. Government is probably more toward the channel side although our dedicated people there are really focused on enabling and working with those channel partners. But as you can imagine, getting into a lot of especially federal agencies, the path there is working with channel partners and system integrators who already have an established business with those agencies.

Lee Krowl -- B. Riley FBR -- Analyst

Got it. That makes sense. And then just a quick question on SaaS. To the extent you can maybe quantify it, but just how much of the revenue in SaaS is purely licensing and then how much is contingent upon like a volume element of it i.e., hours of processing?

Pete Collins -- Chief Financial Officer

So, the majority of the revenue that we're generating today is in the licensing category. The one part of the business that historically has had a large amount of processing is on that legal vertical, which is why we called that out in the first quarter. But on the media and entertainment side, most of that is licensing revenue. There are opportunities for us going forward to do processing kind of projects, say analysis of large archives in media and entertainment, but that's really more kind of a future opportunity. We have not generated a lot of revenue in that phase yet.

Lee Krowl -- B. Riley FBR -- Analyst

Got it. And then just the last one. On the legal space, you guys mentioned you have a pretty solid case pipeline. Would that imply that you expect to see kind of a bounce back in the legal vertical revenue in Q3?

Pete Collins -- Chief Financial Officer

We would -- we can't commit to that. A quarter ago we thought we would have had a good part of that work coming through revenue from that vertical in Q2. So, the factors Chad talked about, about cases that frankly were in seven-figure contracts that were enclosed in one state here internally in the middle of the quarter that didn't happen gives us the reason to step back and say we're not going to forecast or count those until they're completed and everything is done on them.

Lee Krowl -- B. Riley FBR -- Analyst

Got it. Fair enough. Thank you for answering my questions.

Pete Collins -- Chief Financial Officer

Alright, Lee.

Operator

At this time, this concludes our question-and-answer session. If your question was not taken, you may contact Veritone's Investor Relations team at veri@liolios.com. I'd now like to turn the call back over to Mr. Steelberg, for his closing remarks.

Chad Steelberg -- Chairman and Chief Executive Officer

Great. Thank you for joining us on today's call. We want to thank our employees, partners, and investors for supporting us as we pursue our mission of building the AI operating system of the future. We look forward to updating you on our progress on our next call. Operator?

Operator

Thank you for joining us today for Veritone's second quarter 2018 earnings call. You may now disconnect. Everyone, have a great day.

Duration: 51 minutes

Call participants:

Chad Steelberg -- Chairman and Chief Executive Officer

Pete Collins -- Chief Financial Officer

Rob Stone -- Cowen & Company -- Analyst

Mike Latimore -- Northland Capital Markets -- Analyst

Darren Aftahi -- ROTH Capital Partners -- Analyst

Chad Bennett -- Craig-Hallum -- Analyst

Tom Diffely -- D.A. Davidson -- Analyst

Lee Krowl -- B. Riley FBR -- Analyst

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