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Table of Contents
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 10-Q
 
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2022
OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___________ to ____________
Commission File Number: 001-40644
Kaltura, Inc.
(Exact name of Registrant as specified in its Charter)
 
 
Delaware
20-8128326
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)

860 Broadway
3rd Floor
New York, New York
10003
(Address of principal executive offices)(Zip Code)
 
Registrant’s telephone number, including area code: (646) 290-5445

N/A

(Former name, former address and former fiscal year, if changed since last report)
 
Securities registered pursuant to Section 12(b) of the Act:
 
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common stock, $0.0001 par value per share
KLTR
The Nasdaq Stock Market LLC
Preferred Stock Purchase Rights
N/A
(1)
(1) Attached to Common Stock
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated filer
Non-accelerated filerSmaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No

The number of shares of the registrant’s common stock, par value $0.0001, outstanding as of August 2, 2022 was 131,225,371



Table of Contents


TABLE OF CONTENTS
 Page
PART I FINANCIAL INFORMATION 
Item 1.
Item 2.
Item 3.
Item 4.
PART II OTHER INFORMATION
Item 1.
Item 1A.
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.




Table of Contents
FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements other than statements of historical facts contained in this Quarterly Report on Form 10-Q may be forward-looking statements. In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “could,” “intends,” “targets,” “projects,” “contemplates,” “believes,” “estimates,” “forecasts,” “predicts,” “potential” or “continue” or the negative of these terms or other similar expressions. Forward-looking statements contained in this Quarterly Report on Form 10-Q include, but are not limited to statements regarding our future results of operations and financial position, industry and business trends, stock-based compensation, revenue recognition, business strategy, plans and market growth.
The forward-looking statements in this Quarterly Report on Form 10-Q are only predictions. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our business, financial condition, and results of operations. Forward-looking statements involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance, or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements, including, but not limited to, the following risks and the other important factors discussed in Part II, Item 1A, "Risk Factors" in this Quarterly Report on Form 10-Q and Part I, Item 1A, “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2021, filed with the Securities and Exchange Commission (the “SEC”) on February 25, 2022:

We may not successfully execute or achieve the expected benefits of our 2022 Restructuring Plan (as defined below) and other cost saving measures we may take in the future, and our efforts may result in further actions and may adversely affect our business, financial condition and results of operations;

Our business and operations have experienced rapid growth, and if we do not appropriately manage this growth and any future growth, or if we are unable to improve our systems, processes and controls, our business, financial condition, results of operations and prospects will be adversely affected;

Our recent growth may not be indicative of our future growth, and we may not be able to sustain our revenue growth rate in the future. Our growth also makes it difficult to evaluate our current business and future prospects and may increase the risk that we will not be successful;

We have a history of losses and may not be able to achieve or maintain profitability;

The ongoing COVID-19 outbreak, and its variants, could adversely affect our business, financial condition and results of operations;

The markets for our offerings are new and evolving and may develop more slowly or differently than we expect. Our future success depends on the growth and expansion of these markets and our ability to adapt and respond effectively to evolving market conditions;

The loss of one or more of our significant customers, or any other reduction in the amount of revenue we derive from any such customer, would adversely affect our business, financial condition, results of operations and growth prospects;

If we are not able to keep pace with technological and competitive developments and develop or otherwise introduce new products and solutions and enhancements to our existing offerings, our offerings may become less marketable, less competitive or obsolete, and our business, financial condition and results of operations may be adversely affected;

A version of our Media Services is licensed to the public under an open source license, which could negatively affect our ability to monetize our offerings and protect our intellectual property rights;

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The markets in which we compete are nascent and highly fragmented, and we may not be able to compete successfully against current and future competitors, some of whom have greater financial, technical, and other resources than we do. If we do not compete successfully, our business, financial condition and results of operations could be harmed;

If we are unable to increase sales of our subscriptions to new customers, expand the offerings to which our existing customers subscribe, or expand the value of our existing customers’ subscriptions, our future revenue and results of operations will be adversely affected;

If our existing customers do not renew their subscriptions, or if they renew on terms that are less economically beneficial to us, it could have an adverse effect on our business, financial condition and results of operations;

We recognize a significant portion of revenue from subscriptions over the term of the relevant subscription period, and as a result, downturns or upturns in sales are not immediately reflected in full in our results of operations;

We typically provide service-level commitments under our customer agreements. If we fail to meet these contractual commitments, we could be obligated to provide credits for future service, face contract termination with refunds of prepaid amounts or could experience a decrease in customer renewals in future periods, any of which would lower our revenue and adversely affect our business, financial condition and results of operations;

We rely on third parties, including third parties outside the United States, for some of our software development, quality assurance, operations, and customer support;

We depend on our management team and other key employees, and the loss of one or more of these employees or an inability to attract and retain highly skilled employees could adversely affect our business;

If we are not able to maintain and enhance awareness of our brand, especially among developers and IT operators, our business, financial condition and results of operations may be adversely affected;

Our corporate culture has contributed to our success, and if we cannot maintain this culture as we grow, we could lose the innovation, creativity, and entrepreneurial spirit we have worked to foster, which could adversely affect our business;

Our failure to offer high quality customer support would have an adverse effect on our business, reputation and results of operations;

The failure to effectively develop and expand our marketing and sales capabilities could harm our ability to increase our customer base and achieve broader market acceptance of our offerings;

The sales prices of our offerings may change, which may reduce our revenue and gross profit and adversely affect our financial results;

We expect our revenue mix to vary over time, which could negatively impact our gross margin and results of operations;

The length of our sales cycle can be unpredictable, particularly with respect to sales to large customers, and our sales efforts may require considerable time and expense;

Our international operations and expansion expose us to risk;

If we are not successful in sustaining and expanding our international business, we may incur additional losses and our revenue growth could be adversely affected;

Currency exchange rate fluctuations affect our results of operations, as reported in our financial statements;
A portion of our revenue is generated by sales to government entities, which are subject to a number of challenges and risks;
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If we are unable to consummate acquisitions at our historical rate and at acceptable prices, and to enter into other strategic transactions and relationships that support our long-term strategy, our growth rate and the trading price of our common stock could be negatively affected. These transactions and relationships also subject us to certain risks;

A real or perceived bug, defect, security vulnerability, error, or other performance failure involving our platform, products or solutions could cause us to lose revenue, damage our reputation, and expose us to liability;

If we or our third-party service providers experience a security breach, data loss or other compromise, including if unauthorized parties obtain access to our customers’ data, our reputation may be harmed, demand for our platform, products and solutions may be reduced, and we may incur significant liabilities;

Failure to protect our proprietary technology, or to obtain, maintain, protect and enforce sufficiently broad intellectual property rights therein, could substantially harm our business, financial condition and results of operations;

Our failure to raise additional capital or generate the significant capital necessary to expand our operations and invest in new offerings could reduce our ability to compete and could adversely affect our business;

Changes in laws and regulations related to the internet, changes in the internet infrastructure itself, or increases in the cost of internet connectivity and network access may diminish the demand for our offerings and could harm our business; and

Political, economic, and military conditions in Israel could materially and adversely affect our business.

The forward-looking statements in this Quarterly Report on Form 10-Q are based upon information available to us as of the date of this Quarterly Report on Form 10-Q, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and investors are cautioned not to unduly rely upon these statements.
You should read this Quarterly Report on Form 10-Q and the documents that we reference in this Quarterly Report on Form 10-Q and have filed as exhibits to this Quarterly Report on Form 10-Q with the understanding that our actual future results, levels of activity, performance and achievements may be materially different from what we expect. We qualify all of our forward-looking statements by these cautionary statements. These forward-looking statements speak only as of the date of this Quarterly Report on Form 10-Q. Except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements contained in this Quarterly Report on Form 10-Q, whether as a result of any new information, future events or otherwise.
As used in this Quarterly Report on Form 10-Q, unless otherwise stated or the context requires otherwise, references to “Kaltura,” the “Company,” “we,” “us,” and “our,” refer to Kaltura, Inc. and its subsidiaries on a consolidated basis.

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PART I—FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS
KALTURA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(U.S. dollars in thousands, except share and per share data)
(unaudited)
June 30, 2022December 31, 2021
ASSETS
CURRENT ASSETS:
Cash and cash equivalents$55,660 $143,949 
Marketable securities34,890  
Trade receivables32,209 17,509 
Prepaid expenses and other current assets7,488 5,110 
Deferred contract acquisition and fulfillment costs, current10,496 9,079 
Total current assets140,743 175,647 
LONG-TERM ASSETS:
Marketable securities3,424  
Property and equipment, net12,221 9,503 
Other assets, noncurrent3,563 2,543 
Deferred contract acquisition and fulfillment costs, noncurrent22,696 22,621 
Operating lease right-of-use assets23,897  
Intangible assets, net1,526 1,909 
Goodwill11,070 11,070 
Total noncurrent assets78,397 47,646 
TOTAL ASSETS$219,140 $223,293 
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long-term loans$4,297 $2,794 
Trade payables8,024 6,480 
Employees and payroll accruals17,413 18,627 
Accrued expenses and other current liabilities14,546 18,496 
Operating lease liabilities, current1,346  
Deferred revenue, current51,904 51,689 
Total current liabilities97,530 98,086 
LONG-TERM LIABILITIES:
Deferred revenue, noncurrent1,475 1,953 
Long-term loans, net of current portion32,900 35,795 
Operating lease liabilities, noncurrent22,066  
Other liabilities, noncurrent2,101 2,185 
Total long-term liabilities58,542 39,933 
TOTAL LIABILITIES$156,072 $138,019 
The accompanying notes are an integral part of the condensed consolidated financial statements
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KALTURA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(U.S. dollars in thousands, except share and per share data)
(unaudited)
June 30, 2022December 31, 2021
COMMITMENTS AND CONTINGENCIES (NOTE 8)
STOCKHOLDERS' EQUITY:
Preferred stock, $0.0001 par value per share, 20,000,000 shares authorized as of June 30, 2022 and December 31, 2021; 0 shares issued and outstanding as of June 30, 2022, and December 31, 2021
  
Common stock $0.0001 par value per share, 1,000,000,000 shares authorized as of June 30, 2022 and December 31, 2021; 138,271,944 and 134,610,294 shares issued as of June 30, 2022 and December 31, 2021, respectively; 130,586,754 and 126,925,104 outstanding as of June 30, 2022 and December 31, 2021, respectively
13 13 
Treasury stock –
7,685,190 shares of common stock, $0.0001 par value per share, as of June 30, 2022 and December 31, 2021
(4,881)(4,881)
Additional paid-in capital426,037 412,776 
Accumulated other comprehensive loss(1,194) 
Accumulated deficit(356,907)(322,634)
Total stockholders' equity63,068 85,274 
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY$219,140 $223,293 

The accompanying notes are an integral part of the condensed consolidated financial statements.


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KALTURA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(U.S. dollars in thousands, except share and per share data)
(unaudited)

Three Months Ended June 30, Six Months Ended June 30,
2022202120222021
Revenue:
Subscription$37,972 $36,467 $74,989 $68,808 
Professional services4,006 5,136 8,705 10,508 
Total revenue41,978 41,603 83,694 79,316 
Cost of revenue:
Subscription9,770 10,018 19,419 19,894 
Professional services5,519 5,604 11,315 11,309 
Total cost of revenue15,289 15,622 30,734 31,203 
Gross profit26,689 25,981 52,960 48,113 
Operating expenses:
Research and development14,441 11,787 29,314 22,687 
Sales and marketing16,416 10,524 31,032 20,685 
General and administrative11,338 9,440 22,775 17,387 
Other operating expenses   1,724 
Total operating expenses42,195 31,751 83,121 62,483 
Operating loss15,506 5,770 30,161 14,370 
Financial expenses (income), net(241)(4,497)(56)653 
Loss before provision for income taxes15,265 1,273 30,105 15,023 
Provision for income taxes2,082 1,446 4,168 3,252 
Net loss17,347 2,719 34,273 18,275 
Preferred stock accretion and cumulative undeclared dividends  3,412  6,672 
Net loss attributable to common stockholders$17,347 $6,131 $34,273 $24,947 
Net loss per share attributable to common stockholders, basic $0.13 $0.24 $0.27 $0.98 
Net loss per share attributable to common stockholders, diluted $0.13 $0.37 $0.27 $0.98 
Weighted-average shares used in computing net loss per share attributable to common stockholders, basic 129,745,162 25,768,411 128,794,256 25,538,010 
Weighted-average shares used in computing net loss per share attributable to common stockholders, diluted 129,745,162 32,836,110 128,794,256 25,538,010 

The accompanying notes are an integral part of the condensed consolidated financial statements.
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KALTURA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(U.S. dollars in thousands, except for share data)
(unaudited)

Three Months Ended June 30, Six Months Ended June 30,
2022202120222021
Net loss$17,347 $2,719 $34,273 $18,275 
Other comprehensive income:
Net unrealized losses on cash flow hedges1,572  1,049  
Net unrealized losses on available-for-sale marketable securities145  145  
Other comprehensive loss1,717  1,194  
Comprehensive loss$19,064 $2,719 $35,467 $18,275 

The accompanying notes are an integral part of the condensed consolidated financial statements.


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KALTURA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CONVERTIBLE AND REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS' EQUITY (DEFICIT)
U.S. dollars in thousands (except share data)
(unaudited)
Common stockTreasury stockAdditional paid-in capitalAccumulated other comprehensive lossAccumulated deficitTotal stockholders' equity
NumberAmountNumberAmount
 Balance as of April 1, 2022127,648,228 $13 7,685,190 $(4,881)$418,826 $523 $(339,560)$74,921 
Stock-based compensation— — — — 6,145 — — 6,145 
Issuance of common stock upon exercise of stock options, and vesting of restricted stock units2,938,526 *) — — 1,066 — — 1,066 
Other comprehensive loss
— — — — — (1,717)— (1,717)
Net loss— — — — — — (17,347)(17,347)
 Balance as of June 30, 2022130,586,754 $13 7,685,190 $(4,881)$426,037 $(1,194)$(356,907)$63,068 

Convertible preferred stockRedeemable convertible preferred stockCommon stockTreasury stockAdditional paid-in capitalAccumulated deficitTotal stockholders' deficit
NumberAmountNumberAmountNumberAmountNumberAmount
 Balance as of April 1, 20211,043,778 $1,921 15,806,333 $159,340 25,755,951 $2 7,685,190 $(4,881)$13,560 $(278,839)$(270,158)
Stock-based compensation expenses— — — — — — — — 4,213 — 4,213 
Issuance of common stock upon exercise of stock options— — — — 38,311 *) — — 65 — 65 
Net loss— — — — — — — — (2,719)(2,719)
 Balance as of June 30, 20211,043,778 $1,921 15,806,333 $159,340 25,794,262 $2 7,685,190 $(4,881)$17,838 $(281,558)$(268,599)



*) Represents an amount that is lower than $1
The accompanying notes are an integral part of the condensed consolidated financial statements.
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KALTURA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CONVERTIBLE AND REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS' EQUITY (DEFICIT)
U.S. dollars in thousands (except share data)
(unaudited)

Common stockTreasury stockAdditional paid-in capitalAccumulated other comprehensive lossAccumulated deficitTotal stockholders' equity
NumberAmountNumberAmount
Balance as of January 1, 2022126,925,104 $13 7,685,190 $(4,881)$412,776 $ $(322,634)$85,274 
Stock-based compensation— — — — 11,897 — — 11,897 
Issuance of common stock upon exercise of stock options, and vesting of restricted stock units3,661,650 *) — — 1,364 — — 1,364 
Other comprehensive loss
— — — — — (1,194)— (1,194)
Net loss— — — — — — (34,273)(34,273)
 Balance as of June 30, 2022130,586,754 $13 7,685,190 $(4,881)$426,037 $(1,194)$(356,907)$63,068 


Convertible preferred stockRedeemable convertible preferred stockCommon stockTreasury stockReceivables on account of stockAdditional paid-in capitalAccumulated deficitTotal stockholders' deficit
NumberAmountNumberAmountNumberAmountNumberAmount
 Balance as of January 1, 20211,043,778 $1,921 15,779,322 $158,191 25,467,922 $2 7,685,190 $(4,881)$(882)$8,388 $(263,283)$(260,656)
Loan forgiveness— — — — — — — — 882 — — 882 
Stock-based compensation expenses— — — — — — — — — 9,173 — 9,173 
Issuance of common stock upon exercise of stock options— — — — 326,340 *) — — — 277 — 277 
Issuance of preferred stock upon exercise of warrants— — 27,011 1,149 — — — — — — — — 
Net loss— — — — — — — — — — (18,275)(18,275)
 Balance as of June 30, 20211,043,778 $1,921 15,806,333 $159,340 25,794,262 $2 7,685,190 $(4,881)$ $17,838 $(281,558)$(268,599)

*) Represents an amount that is lower than $1
The accompanying notes are an integral part of the condensed consolidated financial statements.
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KALTURA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
U.S. dollars in thousands
(unaudited)
Six Months Ended June 30,
20222021
Cash flows from operating activities:
Net loss$(34,273)$(18,275)
Adjustments to reconcile net loss to net cash used in operating activities:
Loss on sale of property and equipment 179  
Depreciation and amortization1,353 1,200 
Stock-based compensation expenses11,727 9,173 
Amortization of deferred contract acquisition and fulfillment costs5,066 3,165 
Change in valuation of warrants to purchase preferred and common stock (1,776)
Non-cash interest expenses20 222 
Non-cash expenses with respect to stockholders’ loans 882 
Changes in operating assets and liabilities:
Increase in trade receivables(14,700)(6,612)
Decrease (increase) in prepaid expenses and other current assets and other assets, noncurrent115 (1,945)
Increase in deferred contract acquisition and fulfillment costs(6,517)(9,719)
Increase (decrease) in trade payables1,643 (177)
Increase (decrease) in accrued expenses and other current liabilities(4,721)3,112 
Increase (decrease) in employees and payroll accruals(1,214)4,085 
Decrease in other liabilities, noncurrent(56)(309)
Increase (decrease) in deferred revenue(263)11,279 
Operating lease right-of-use assets and lease liabilities, net(486) 
Net cash used in operating activities(42,127)(5,695)
Cash flows from investing activities:
Investment in available-for-sale marketable securities(38,393) 
Purchases of property and equipment(761)(956)
Capitalized internal-use software(3,076)(1,255)
Investment in restricted bank deposit(1,850) 
Purchase of intangible assets (79)
Net cash used in investing activities(44,080)(2,290)
Cash flows from financing activities:
Proceeds from long-term loans, net of debt issuance cost 41,915 
Repayment of long-term loans(1,500)(28,833)
Principal payments on finance leases(133)(956)
Proceeds from exercise of stock options754 277 
Payment of debt issuance costs(125) 
Payment of deferred offering costs (2,594)
Net cash provided by (used in) financing activities(1,004)9,809 
Net increase (decrease) in cash, cash equivalents and restricted cash(87,211)1,824 
Cash, cash equivalents and restricted cash at the beginning of the period144,371 28,355 
Cash, cash equivalents and restricted cash at the end of the period$57,160 $30,179 
The accompanying notes are an integral part of the condensed consolidated financial statements.
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KALTURA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
U.S. dollars in thousands
(unaudited)

Six Months Ended June 30,
20222021
Supplemental disclosure of non-cash activity:
Purchase of property, equipment, internal-use software, and intangible asset in credit$415 $1,534 
Lease liabilities arising from right-of-use assets$23,712 $ 
Capitalized stock-based compensation cost $170 $ 
Supplemental disclosure of cash flow information
Cash paid for income taxes, net$6,463 $543 
Cash paid for interest$880 $1,939 
Reconciliation of cash, cash equivalents, and restricted cash to the consolidated balance sheet
Cash and cash equivalents$55,660 $29,772 
Restricted cash included in other assets, noncurrent1,500 407 
Total cash, cash equivalents, and restricted cash$57,160 $30,179 
    
The accompanying notes are an integral part of the condensed consolidated financial statements.
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KALTURA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
(unaudited)
NOTE 1: GENERAL
Description of Business
Kaltura, Inc. (together with its subsidiaries, the “Company”) was incorporated in October 2006 and commenced operations in January 2007. The Company’s business operations are allocated between two main segments, Enterprise, Education, and Technology (“EE&T”) and Media and Telecom (“M&T”). The Company has developed a platform for video creation, management, and collaboration. The Company's platform enables companies, educational institutions, and other organizations to cost-effectively launch advanced online video experiences, including for Over-the-top (“OTT”) Television, Cloud TV, web video publishing, video-based teaching, learning and training, video-based marketing, and video-based collaboration. The Company’s core offerings consist of various Software-as-a-Service (“SaaS”) products and solutions and a Platform-as-a-Service (“PaaS”).

NOTE 2: BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation and Consolidation
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”), and applicable rules and regulations of the Securities and Exchange Commission (the “SEC”) regarding interim financial reporting.
The condensed consolidated balance sheet as of December 31, 2021 was derived from the audited consolidated financial statements as of that date, but does not include all of the disclosures, including certain notes required by U.S. GAAP on an annual reporting basis. Certain information and note disclosures normally included in the financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations. Therefore, these unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the related notes thereto as of and for the year ended December 31, 2021, included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, filed with the SEC on February 25, 2022.
In management’s opinion, other than the changes to accounting for leases as described in Note 6, the unaudited condensed consolidated financial statements have been prepared on the same basis as the annual consolidated financial statements with normal recurring adjustments necessary for the fair presentation of the Company’s financial position as of June 30, 2022, and the Company’s consolidated results of operations, convertible and redeemable convertible preferred stock and stockholders’ equity (deficit), and cash flows for the three and six months ended June 30, 2022 and 2021. The results for the three and six months ended June 30, 2022, are not necessarily indicative of the results to be expected for the full year ending December 31, 2022, or any other future interim or annual period.
Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates, judgments and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. The Company evaluates on an ongoing basis its assumptions, including those related to contingencies, income tax uncertainties, incremental borrowing rate for operating leases, fair value of financial assets and liabilities, including fair value of derivatives, fair value and useful life of intangible assets, as well as in estimates used in applying the revenue recognition policy. The Company bases these estimates on historical and anticipated results, trends and various other assumptions that it believes are reasonable under the circumstances, including assumptions as to future events. Actual results could differ from those estimates.
Concentration of Risks
Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents, restricted cash and trade receivables.
The majority of the Company’s cash, and cash equivalents and restricted cash are invested with major banks in the United States, Israel, and the United Kingdom. Such investments in the United States may be in excess of insured limits and they are not insured in other jurisdictions. In general, these investments may be redeemed upon demand and therefore bear minimal risk.
The Company’s trade receivables are geographically dispersed and derived from sales to customers mainly in the United States, Europe, and Asia. Concentration of credit risk with respect to trade receivables is limited by credit limits, ongoing credit evaluation, and account monitoring procedures.
Major customer data as a percentage of total revenues:
The following table sets forth customers that represented 10% or more of the Company’s total revenue in each of the periods set forth below:
Three Months Ended June 30,Six Months Ended June 30,
2022202120222021
Customer A (EE&T)          *)   —           *)   —           *)   — 10.01 %
*) Represents an amount that is lower than 10% of the Company's total revenue.
Significant Accounting Policies and Estimates
The Company’s significant accounting policies are discussed in Note 2 of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021, which was filed with the SEC on February 25, 2022. There have been no significant changes to these policies during the six months ended June 30, 2022 except as noted below.
Derivatives and Hedging
Derivatives are recognized at fair value as either assets or liabilities in the consolidated balance sheets in accordance with ASC Topic 815, “Derivatives and Hedging.” The gain or loss of derivatives which are designated and qualify as hedging instruments in a cash flow hedge, is recorded under accumulated other comprehensive income (loss) and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings. Derivatives are classified within Level 2 of the fair value hierarchy as the valuation inputs are based on quoted prices and market observable data of similar instruments.
Marketable Securities
The Company invests its excess cash primarily in short-term fixed income securities, including government and investment-grade debt securities and money market funds. Marketable securities with original maturities greater than three months from the date of purchase and remaining maturities less than one year are classified as short-term marketable securities. Marketable securities with remaining maturities greater than one year, as of the balance sheet date and that the Company intends to hold for greater than one year, are classified as long-term marketable securities. Marketable securities are carried at fair market value, with unrealized gains and losses considered to be temporary in nature reported in accumulated other comprehensive loss. Cost of securities sold is based on specific identification. The Company determines the appropriate classification of its investments in marketable securities at the time of purchase and reevaluates such designation at each balance sheet date. The Company has classified and accounted for its marketable securities as available-for-sale. After considering its capital preservation objectives, as well as its liquidity requirements, the Company may sell securities prior to their stated maturities. The Company determines any realized gains or losses on the sale of marketable securities on a specific identification method and record such gains and losses as a component of financial expense (income), net.
The Company evaluates the investments periodically for possible other-than-temporary impairment. A decline in fair value below the amortized costs of debt securities is considered an other-than-temporary impairment if it has the intent to sell the security or it is more likely than not that it will be required to sell the security before recovery of the entire amortized cost basis. In those instances, an impairment charge equal to the difference between the fair value and the amortized cost basis is recognized in financial expenses (income), net. Regardless of its intent or requirement to sell a debt security, impairment is considered other-than-temporary if the Company does not expect to recover the entire amortized cost basis.
Recently Adopted Accounting Pronouncements
As an “emerging growth company”, the Jumpstart Our Business Startups Act (“JOBS Act”) allows the Company to delay adoption of new or revised accounting pronouncements applicable to public companies until such pronouncements are made applicable to private companies. The Company has elected to use this extended transition period under the JOBS Act. The adoption dates discussed below reflect this election.
In February 2016, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2016-02, Leases (Topic 842), which would require lessees to put all leases on their balance sheets, whether operating or financing, while continuing to recognize the expenses on their income statements in a manner similar to the existing practice. The guidance states that a lessee would recognize a lease liability for the obligation to make lease payments and a right-of-use (“ROU”) asset for the right to use the underlying asset for the lease term.
The Company adopted the guidance on January 1, 2022 using a modified retrospective transition approach. It applied Topic 842 to all leases as of January 1, 2022 without adjusting the comparative periods presented. The Company elected certain practical expedients permitted under the transition guidance within the new guidance and carried forward the historical accounting relating to lease identification and classification, remaining lease terms, and initial direct costs. Upon adoption, the Company recognized operating lease right-of-use assets and corresponding lease liabilities of $823. The adoption of Topic 842 did not have a material impact to the Company’s results of operations or cash flows. See Note 7, Leases, for further information.
In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, which simplifies the accounting for income taxes by removing a variety of exceptions within the framework of ASC 740. These exceptions include the exception to the incremental approach for intra-period tax allocation in the event of a loss from continuing operations and income or a gain from other items (such as other comprehensive income), and the exception to using general methodology for the interim period tax accounting for year-to-date losses that exceed anticipated losses. The guidance will be effective for the Company beginning January 1, 2022, and interim periods in fiscal years beginning January 1, 2023. Early adoption is permitted. The Company adopted this guidance on January 1, 2022, and the adoption did not have a material impact on its consolidated financial statements.
Recently Issued Accounting Pronouncements
In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which replaces the existing incurred loss impairment model with an expected credit loss model and requires a financial asset measured at amortized cost to be presented at the net amount expected to be collected. The guidance will be effective for the Company beginning January 1, 2023, and interim periods therein. Early adoption is permitted. The Company is currently evaluating the effect that ASU 2016-13 will have on its consolidated financial statements and related disclosures.
In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers, which requires an acquirer in a business combination to recognize and measure contract assets and contract liabilities in accordance with Accounting Standards Codification Topic 606. ASU 2021-08 is effective for fiscal years beginning after December 15, 2023 and early adoption is permitted. While the Company is continuing to assess the timing of adoption and the potential impacts of ASU 2021-08, it does not expect ASU 2021-08 to have a material effect, if any, on its consolidated financial statements.

12

KALTURA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
(unaudited)
NOTE 3: REVENUES FROM CONTRACTS WITH CUSTOMERS
Disaggregation of Revenue
The following tables present disaggregated revenue by category:
Three Months Ended June 30, 2022
Enterprise, Education and TechnologyMedia and Telecom
AmountPercentage of revenueAmountPercentage of revenue
Subscription $28,280 93.0 %$9,692 83.7 %
Professional services2,123 7.0 %1,883 16.3 %
$30,403 100 %$11,575 100 %

Three Months Ended June 30, 2021
Enterprise, Education and TechnologyMedia and Telecom
AmountPercentage of revenueAmountPercentage of revenue
Subscription $27,197 89.9 %$9,270 81.6 %
Professional services3,040 10.1 %2,096 18.4 %
$30,237 100 %$11,366 100 %


Six Months Ended June 30, 2022
Enterprise, Education and TechnologyMedia and Telecom
AmountPercentage of revenueAmountPercentage of revenue
Subscription $55,882 92.9 %$19,107 81.1 %
Professional services4,248 7.1 %4,457 18.9 %
$60,130 100 %$23,564 100 %
Six Months Ended June 30, 2021
Enterprise, Education & TechnologyMedia and Telecom
AmountPercentage of revenueAmountPercentage of revenue
Subscription $51,167 88.9 %$17,641 81.1 %
Professional services6,388 11.1 %4,120 18.9 %
$57,555 100 %$21,761 100 %
The following tables summarizes revenue by region based on the billing address of customers:
Three Months Ended June 30,
20222021
AmountPercentage of revenueAmountPercentage of revenue
United States (“US”)$23,572 56.2 %$24,728 59.4 %
Europe, the Middle East and Africa ("EMEA")13,816 32.9 %12,436 29.9 %
Other4,590 10.9 %4,439 10.7 %
$41,978 100 %$41,603 100 %

Six Months Ended June 30,
20222021
AmountPercentage of revenueAmountPercentage of revenue
US$46,886 56.0 %$47,026 59.3 %
EMEA27,640 33.0 %24,824 31.3 %
Other9,166 11.0 %7,466 9.4 %
$83,692 100 %$79,316 100 %

Remaining Performance Obligations
Remaining performance obligations represent the amount of contracted future revenue that has not yet been recognized, including both deferred revenue and contracted amounts that will be invoiced and recognized as revenue in future periods. As of June 30, 2022, the aggregate amount of the transaction price allocated to remaining performance obligations was $172,732, which consists of both billed consideration in the amount of $53,379 and unbilled consideration in the amount of $119,353 that the Company expects to recognize as revenue but that was not yet recognized on the balance sheet. The Company expects to recognize 62% of its remaining performance obligations as revenue over the next 12 months and the remainder thereafter.
Costs to Obtain a Contract
The following table represents a roll forward of costs to obtain a contract:

Three Months Ended June 30,Six Months Ended June 30,
2022202120222021
Beginning balance $25,292 $20,177 $26,274 $17,683 
Additions to deferred contract acquisition costs during the period4,369 4,764 5,473 8,502 
Amortization of deferred contract acquisition costs(2,275)(1,434)(4,361)(2,678)
Ending balance$27,386 $23,507 $27,386 $23,507 
Deferred contract acquisition costs, current$8,902 $6,359 $8,902 $6,359 
Deferred contract acquisition costs, noncurrent18,484 17,148 18,484 17,148 
Total deferred costs to obtain a contract$27,386 $23,507 $27,386 $23,507 
Costs to Fulfill a Contract
The following table represents a roll forward of costs to fulfill a contract:
Three Months Ended June 30,Six Months Ended June 30,
2022202120222021
Beginning balance$5,641 $4,169 $5,427 $4,041 
Additions to deferred costs to fulfill a contract during the period512 849 1,084 1,217 
Amortization of deferred costs to fulfill a contract(347)(247)(705)(487)
Ending balance$5,806 $4,771 $5,806 $4,771 
Deferred fulfillment costs, current1,594 1,190 1,594 1,190 
Deferred fulfillment costs, noncurrent4,212 3,581 4,212 3,581 
Total deferred costs to fulfill a contract$5,806 $4,771 $5,806 $4,771 







NOTE 4: MARKETABLE SECURITIES