KALTURA INC - 1432133 - 2023
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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 September 30, 2023
 
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 class
Trading 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 filer
Accelerated filer
Non-accelerated filer
Smaller 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 November 1, 2023 was 141,405,627
 

TABLE OF CONTENTS
 
  
Page
PART I
FINANCIAL INFORMATION
 
5
 
5
 
7
 
8
 
9
 
11
 
13
33
55
55
   
PART II
OTHER INFORMATION
 
57
57
60
61
61
61
62
 
64
 

 
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, 2022, filed with the Securities and Exchange Commission (the “SEC”) on February 24, 2023:
 
 
The ongoing distressed economic climate, and the associated impact on capital markets, has resulted in, among other things, slowdown of business activities and decline in spending and procurement by customers, increased price-driven competition, including through initiation of bid processes and longer sale cycles, and other adverse effects. If we are unable to successfully assess or mitigate the direct and indirect impact of the worsening economic climate on our business and operations, or the duration and depth of the current instability of the global economy, or if we are unable to retain our existing customer base or to obtain new customers at reasonable prices, our business, financial condition, results of operations and prospects would be adversely affected;
 
 
Our primary research and development, human resources, and certain other finance and administrative activities are based in Israel, and the political, economic, and military conditions in Israel, such as the current conflicts with Hamas and Hezbollah, could materially and adversely affect our business.
 
 
Our dependency on existing customer demand and exposure to changes in demand by our customers, loss of one or more of our significant customers, or any other reduction in the amount of revenue we derive from any such customer, including as a result from reasons not under our control, makes it difficult to evaluate our current business and future prospects and may increase the risk that our business, financial condition, results of operations and growth prospects would be adversely affected;
 
 
Our business and operations have experienced high volatility, including rapid growth partially attributed to the effects of the COVID-19 pandemic and thereafter a decline as such effects have subsided and the global economic climate has worsened. If we do not appropriately adapt to these or any future changes, including through improvement of our systems, processes, controls and efficiency, or if we are unable to successfully implement our Reorganization Plans (as defined below), our business, financial condition, results of operations and prospects would be adversely affected;
 
 
We have a history of losses and may not be able to achieve or maintain profitability;
 
 
Our future success depends on the growth and expansion of the markets for our offerings, which are new and evolving and may develop more slowly or differently than we expect, and on our ability to adapt and respond effectively to evolving market conditions;
 
1

 
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;
 
 
We may face risks associated with our use of certain artificial intelligence and machine learning models (collectively, "AI").
 
 
If we do not maintain the interoperability of our offerings across devices, operating systems and third-party applications that we do not control, and if we are not able to maintain and expand our relationships with third-party technology partners to integrate our offerings with their products and solutions (or vice-versa), our business, financial condition and results of operations may be adversely affected;
 
 
Part of our Application Programming Interfaces (APIs) and other components in our offerings are 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;
 
 
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 or can provide a bundled offering and solutions that might be more attractive to our customers enabling them to better compete with us. 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 the value of their subscriptions, or have them renew their subscriptions in terms that are economically beneficial to us, our future revenue and results of operations would be adversely affected;
 
 
Political, economic, and military conditions in Ukraine, Russia and other countries following the Russian invasion to Ukraine, or political, economic, and in other regions in which we operate, or changes in the business environment in those regions, could materially and adversely affect our business;
 
 
Currency exchange rate fluctuations affect our results of operations, as reported in our financial statements;
 
 
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;
 
 
Increased breaches of network or information technology security along with an increase in cyber-attack activities, increases the risk that we shall be subject to cybersecurity threats that could have an adverse effect on our business;
 
 
Data privacy and data protection laws are rapidly evolving and present increasing compliance challenges. Additionally, 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;
 
 
We typically provide service-level commitments and offer customer support 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, be charged penalties, 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;
 
2

 
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;
 
 
Our corporate culture has contributed to our success, and if we cannot maintain it as we grow, we could lose the innovation, creativity, and entrepreneurial spirit we have worked to foster, which could adversely affect our business;
 
 
The failure to effectively develop and expand our marketing and sales capabilities or to maintain or expand our international business, 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;
 
 
In the event of failure of any of the financial institutions where we maintain our cash and cash equivalents, there can be no assurance that we would be able to access uninsured funds in a timely manner or at all.
 
 
Our international operations and expansion expose us to risk;
 
 
A portion of our revenue is generated by sales to government entities, which are subject to a number of challenges and risks;
 
 
If we are unable to consummate acquisitions at acceptable rate or 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;
 
 
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; and
 
 
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.
 
3

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.
 
4

 

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)
 
   
September 30, 2023
   
December 31, 2022
 
ASSETS
           
CURRENT ASSETS:
           
Cash and cash equivalents
 
$
34,073
   
$
44,625
 
Marketable securities
   
35,084
     
41,343
 
Trade receivables
   
21,865
     
28,786
 
Prepaid expenses and other current assets
   
7,430
     
7,521
 
Deferred contract acquisition and fulfillment costs, current
   
10,601
     
10,759
 
                 
Total current assets
   
109,053
     
133,034
 
                 
LONG-TERM ASSETS:
               
Marketable securities
   
1,902
     
-
 
Property and equipment, net
   
20,763
     
15,142
 
Other assets, noncurrent
   
2,910
     
3,176
 
Deferred contract acquisition and fulfillment costs, noncurrent
   
18,277
     
21,691
 
Operating lease right-of-use assets
   
14,735
     
20,814
 
Intangible assets, net
   
808
     
1,244
 
Goodwill
   
11,070
     
11,070
 
                 
Total noncurrent assets
   
70,465
     
73,137
 
                 
TOTAL ASSETS
 
$
179,518
   
$
206,171
 
                 
LIABILITIES AND STOCKHOLDERS' EQUITY
               
CURRENT LIABILITIES:
               
Current portion of long-term loans
 
$
31,455
   
$
5,793
 
Trade payables
   
4,435
     
9,437
 
Employees and payroll accruals
   
12,380
     
14,884
 
Accrued expenses and other current liabilities
   
17,184
     
16,527
 
Operating lease liabilities, current
   
2,337
     
2,355
 
Deferred revenue, current
   
59,244
     
59,841
 
                 
Total current liabilities
   
127,035
     
108,837
 
                 
LONG-TERM LIABILITIES:
               
Deferred revenue, noncurrent
   
578
     
1,266
 
Long-term loans, net of current portion
   
-
     
30,004
 
Operating lease liabilities, noncurrent
   
17,581
     
20,697
 
Other liabilities, noncurrent
   
2,147
     
2,021
 
                 
Total long-term liabilities
   
20,306
     
53,988
 
                 
TOTAL LIABILITIES
 
$
147,341
   
$
162,825
 
 
The accompanying notes are an integral part of the condensed consolidated financial statements.
 

 5


 

KALTURA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(U.S. dollars in thousands, except share and per share data)
(unaudited)
   
September 30, 2023
   
December 31, 2022
 
COMMITMENTS AND CONTINGENCIES (NOTE 8)
           
             
STOCKHOLDERS' EQUITY:
           
Preferred stock, $0.0001 par value per share, 20,000,000 shares authorized as of September 30, 2023 and December 31, 2022; 0 shares issued and outstanding as of September 30, 2023, and December 31, 2022
   
-
     
-
 
Common stock $0.0001 par value per share, 1,000,000,000 shares authorized as of September 30, 2023 and December 31, 2022; 147,960,279 and 142,249,619 shares issued as of September 30, 2023 and December 31, 2022, respectively; 140,275,089 and 134,564,429 shares outstanding as of September 30, 2023 and December 31, 2022, respectively
   
13
     
13
 
Treasury stock –
7,685,190 shares of common stock, $0.0001 par value per share, as of September 30, 2023 and December 31, 2022
   
(4,881
)
   
(4,881
)
Additional paid-in capital
   
463,155
     
439,644
 
Accumulated other comprehensive loss
   
(682
)
   
(301
)
Accumulated deficit
   
(425,428
)
   
(391,129
)
                 
Total stockholders' equity
   
32,177
     
43,346
 
                 
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
 
$
179,518
   
$
206,171
 
 
The accompanying notes are an integral part of the condensed consolidated financial statements.

 

 6


 

KALTURA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(U.S. dollars in thousands, except share and per share data)
(unaudited)
 
   
Three Months Ended
September 30,
   
Nine Months Ended
September 30,
 
   
2023
   
2022
   
2023
   
2022
 
                         
Revenue:
                       
Subscription
 
$
40,847
   
$
37,915
   
$
121,962
   
$
112,904
 
Professional services
   
2,695
     
3,136
     
8,732
     
11,841
 
                                 
Total revenue
   
43,542
     
41,051
     
130,694
     
124,745
 
                                 
Cost of revenue:
                               
Subscription
   
11,004
     
9,772
     
33,106
     
29,192
 
Professional services
   
4,839
     
4,904
     
14,001
     
16,219
 
                                 
Total cost of revenue
   
15,843
     
14,676
     
47,107
     
45,411
 
                                 
Gross profit
   
27,699
     
26,375
     
83,587
     
79,334
 
                                 
Operating expenses:
                               
                                 
Research and development
   
12,558
     
13,891
     
39,663
     
43,205
 
Sales and marketing
   
11,683
     
15,040
     
36,489
     
46,072
 
General and administrative
   
11,767
     
11,412
     
36,298
     
34,188
 
Restructuring
   
5
     
884
     
973
     
884
 
                                 
Total operating expenses
   
36,013
     
41,227
     
113,423
     
124,349
 
                                 
Operating loss
   
8,314
     
14,852
     
29,836
     
45,015
 
                                 
Financial expenses (income), net
   
(95
)
   
3,002
     
(3,047
)
   
2,945
 
                                 
Loss before provision for income taxes
   
8,219
     
17,854
     
26,789
     
47,960
 
                                 
Provision for income taxes
   
2,507
     
1,589
     
7,510
     
5,756
 
                                 
Net loss
   
10,726
     
19,443
     
34,299
     
53,716
 
                                 
Net loss per share attributable to common stockholders, basic and diluted
 
$
0.08
   
$
0.15
   
$
0.25
   
$
0.41
 
                                 
Weighted-average shares used in computing net loss per share attributable to common stockholders, basic and diluted
   
139,186,364
     
132,185,026
     
137,033,800
     
129,919,489
 
 
The accompanying notes are an integral part of the condensed consolidated financial statements.

 

 7


 

KALTURA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(U.S. dollars in thousands, except for share data)
(unaudited)
 
   
Three Months Ended
September 30,
   
Nine Months Ended
September 30,
 
   
2023
   
2022
   
2023
   
2022
 
                         
Net loss
 
$
10,726
   
$
19,443
   
$
34,299
   
$
53,716
 
Other comprehensive income:
                               
Net unrealized gains (losses) on cash flow hedges
   
(445
)
   
553
     
(536
)
   
(496
)
Net unrealized gains (losses) on available-for-sale marketable securities
   
24
     
(100
)
   
155
     
(245
)
Other comprehensive income (loss)
   
(421
)
   
453
     
(381
)
   
(741
)
Comprehensive loss
 
$
11,147
   
$
18,990
   
$
34,680
   
$
54,457
 
 
The accompanying notes are an integral part of the condensed consolidated financial statements.

 

 8


 

KALTURA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
U.S. dollars in thousands (except share data)
(unaudited)
 
   
Common stock
   
Treasury stock
   
Additional
paid-in
capital
   
Accumulated other comprehensive loss
   
Accumulated
deficit
   
Total
stockholders'
equity
 
   
Number
   
Amount
   
Number
   
Amount
                 
                                                 
Balance as of July 1, 2023
   
137,793,478
   
$
13
     
7,685,190
   
$
(4,881
)
 
$
455,354
   
$
(261
)
 
$
(414,702
)
 
$
35,523
 
                                                                 
Stock-based compensation
   
-
     
-
     
-
     
-
     
7,512
     
-
     
-
     
7,512
 
Issuance of common stock upon exercise of stock options, and vesting of restricted stock units
   
2,481,611
     
*
)
   
-
     
-
     
289
     
-
     
-
     
289
 
Other comprehensive loss
 
   
-
     
-
     
-
     
-
     
-
     
(421
)
   
-
     
(421
)
Net loss
   
-
     
-
     
-
     
-
     
-
     
-
     
(10,726
)
   
(10,726
)
                                                                 
Balance as of September 30, 2023
   
140,275,089
   
$
13
     
7,685,190
   
$
(4,881
)
 
$
463,155
   
$
(682
)
 
$
(425,428
)
 
$
32,177
 
 
   
Common stock
   
Treasury stock
   
Additional
paid-in
capital
   
Accumulated other comprehensive loss
   
Accumulated
deficit
   
Total
stockholders'
equity
 
   
Number
   
Amount
   
Number
   
Amount
                 
                                                 
Balance as of July 1, 2022
   
130,586,754
   
$
13
     
7,685,190
   
$
(4,881
)
 
$
426,037
   
$
(1,194
)
 
$
(356,907
)
 
$
63,068
 
                                                                 
Stock-based compensation
   
-
     
-
     
-
     
-
     
6,176
     
-
     
-
     
6,176
 
Issuance of common stock upon exercise of stock options, and vesting of restricted stock units
   
1,905,370
     
*
)
   
-
     
-
     
1,249
     
-
     
-
     
1,249
 
Other comprehensive income
 
   
-
     
-
     
-
     
-
     
-
     
453
     
-
     
453
 
Net loss
   
-
     
-
     
-
     
-
     
-
     
-
     
(19,443
)
   
(19,443
)
                                                                 
Balance as of September 30, 2022
   
132,492,124
   
$
13
     
7,685,190
   
$
(4,881
)
 
$
433,462
   
$
(741
)
 
$
(376,350
)
 
$
51,503
 
 
The accompanying notes are an integral part of the condensed consolidated financial statements.
 
*) Represents an amount less than $1k.

 

 9


 

KALTURA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
U.S. dollars in thousands (except share data)
(unaudited)
 
   
Common stock
   
Treasury stock
   
Additional
paid-in
capital
   
Accumulated other comprehensive loss
   
Accumulated
deficit
   
Total
stockholders'
equity
 
   
Number
   
Amount
   
Number
   
Amount
                 
                                                 
Balance as of January 1, 2023
   
134,564,429
   
$
13
     
7,685,190
   
$
(4,881
)
 
$
439,644
   
$
(301
)
 
$
(391,129
)
 
$
43,346
 
                                                                 
Stock-based compensation
   
-
     
-
     
-
     
-
     
22,471
     
-
     
-
     
22,471
 
Issuance of common stock upon exercise of stock options, and vesting of restricted stock units
   
5,710,660
     
*
)
   
-
     
-
     
1,040
     
-
     
-
     
1,040
 
Other comprehensive loss
 
   
-
     
-
     
-
     
-
     
-
     
(381
)
   
-
     
(381
)
Net loss
   
-
     
-
     
-
     
-
     
-
     
-
     
(34,299
)
   
(34,299
)
                                                                 
Balance as of September 30, 2023
   
140,275,089
   
$
13
     
7,685,190
   
$
(4,881
)
 
$
463,155
   
$
(682
)
 
$
(425,428
)
 
$
32,177
 
 
   
Common stock
   
Treasury stock
   
Additional
paid-in
capital
   
Accumulated other comprehensive loss
   
Accumulated
deficit
   
Total
stockholders'
equity
 
   
Number
   
Amount
   
Number
   
Amount
                 
                                                 
Balance as of January 1, 2022
   
126,925,104
   
$
13
     
7,685,190
   
$
(4,881
)
 
$
412,776
   
$
-
   
$
(322,634
)
 
$
85,274
 
                                                                 
Stock-based compensation
   
-
     
-
     
-
     
-
     
18,074
     
-
     
-
     
18,074
 
Issuance of common stock upon exercise of stock options, and vesting of restricted stock units
   
5,567,020
     
*
)
   
-
     
-
     
2,612
     
-
     
-
     
2,612
 
Other comprehensive loss
 
   
-
     
-
     
-
     
-
     
-
     
(741
)
   
-
     
(741
)
Net loss
   
-
     
-
     
-
     
-
     
-
     
-
     
(53,716
)
   
(53,716
)
                                                                 
Balance as of September 30, 2022
   
132,492,124
   
$
13
     
7,685,190
   
$
(4,881
)
 
$
433,462
   
$
(741
)
 
$
(376,350
)
 
$
51,503
 
 
The accompanying notes are an integral part of the condensed consolidated financial statements.

 

 10


 

KALTURA, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
U.S. dollars in thousands
(unaudited)

 

   
Nine Months Ended
September 30,
 
   
2023
   
2022
 
Cash flows from operating activities:
           
Net loss
 
$
(34,299
)
 
$
(53,716
)
Adjustments to reconcile net loss to net cash used in operating activities:
               
Loss on sale of property and equipment
   
-
     
179
 
Depreciation and amortization
   
3,409
     
1,874
 
Stock-based compensation expenses
   
21,956
     
17,827
 
Amortization of deferred contract acquisition and fulfillment costs
   
8,774
     
7,883
 
Non-cash interest income, net
   
(705
)
   
(51
)
Gain on foreign exchange
   
(439
)
   
-
 
Changes in operating assets and liabilities:
               
Decrease (increase) in trade receivables
   
6,921
     
(5,761
)
Increase in prepaid expenses and other current assets and other assets, noncurrent
   
(193
)
   
(697
)
Increase in deferred contract acquisition and fulfillment costs
   
(4,853
)
   
(8,715
)
Increase (decrease) in trade payables
   
(5,575
)
   
98
 
Increase (decrease) in accrued expenses and other current liabilities
   
91
     
(3,600
)
Increase in employees and payroll accruals
   
(2,504
)
   
(2,195
)
Increase (decrease) in other liabilities, noncurrent
   
411
     
(33
)
Increase (decrease) in deferred revenue
   
(1,285
)
   
6,145
 
Operating lease right-of-use assets and lease liabilities, net
   
(1,613
)
   
(220
)
                 
Net cash used in operating activities
   
(9,904
)
   
(40,982
)
                 
Cash flows from investing activities:
               
                 
Investment in available-for-sale marketable securities
   
(33,609
)
   
(47,447
)
Proceeds from sales and maturities of available-for-sale marketable securities
   
38,976
     
5,670
 
Purchases of property and equipment
   
(1,792
)
   
(1,004
)
Capitalized internal-use software
   
(1,493
)
   
(4,573
)
Investment in restricted bank deposit
   
(1,001
)
   
(1,850
)
                 
Net cash provided by (used in) investing activities
   
1,081
     
(49,204
)
                 
Cash flows from financing activities:
               
                 
Repayment of long-term loans
   
(4,500
)
   
(2,250
)
Principal payments on finance leases
   
-
     
(135
)
Proceeds from exercise of stock options
   
1,224
     
2,445
 
Payment of debt issuance costs
   
-
     
(125
)
                 
Net cash used in financing activities
   
(3,276
)
   
(65
)
                 
Effect of exchange rate changes on cash, cash equivalents and restricted cash
   
439
     
-
 
Net decrease in cash, cash equivalents and restricted cash
   
(11,660
)
   
(90,251
)
Cash, cash equivalents and restricted cash at the beginning of the period
   
45,833
     
144,371
 
Cash, cash equivalents and restricted cash at the end of the period
 
$
34,173
   
$
54,120
 
 
The accompanying notes are an integral part of the condensed consolidated financial statements.

 

 11


 

KALTURA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
U.S. dollars in thousands
(unaudited)
 
   
Nine Months Ended
September 30,
 
   
2023
   
2022
 
Supplemental disclosure of non-cash activity:
           
             
Purchase of property, equipment, internal-use software, and intangible asset in credit
 
$
699
   
$
141
 
                 
Lease liabilities arising from right-of-use assets
 
$
-
   
$
23,712
 
                 
Capitalized stock-based compensation cost
 
$
552
   
$
247
 
                 
Supplemental disclosure of cash flow information
               
                 
Cash paid for income taxes, net
 
$
3,182
   
$
7,687
 
                 
Cash paid for interest
 
$
2,242
   
$
1,429
 
                 
Reconciliation of cash, cash equivalents, and restricted cash to the consolidated balance sheet
               
                 
Cash and cash equivalents
 
$
34,073
   
$
52,638
 
Restricted cash included in other assets, noncurrent
   
100
     
1,482
 
                 
Total cash, cash equivalents, and restricted cash
 
$
34,173
   
$
54,120
 
 
The accompanying notes are an integral part of the condensed 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 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 consolidated balance sheet as of December 31, 2022 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, 2022, included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, filed with the SEC on February 24, 2023.
 
In management’s opinion, 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 September 30, 2023, and the Company’s consolidated results of operations, stockholders’ equity, and cash flows for the three and nine months ended September 30, 2023 and 2022. The results for the three and nine months ended September 30, 2023, are not necessarily indicative of the results to be expected for the full year ending December 31, 2023, 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 acquired intangible assets and goodwill, 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, marketable securities, bank deposits, restricted cash and trade receivables.
 
13

 

KALTURA, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands (except share and per share data)

(unaudited)
 
The majority of the Company’s cash, and cash equivalents, marketable securities, bank deposits 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. Market conditions can impact the viability of these financial institutions. In the event of failure of any of the financial institutions where the Company maintains its cash and cash equivalents, there can be no assurance that the Company would be able to access uninsured funds in a timely manner or at all. Any inability to access or delay in accessing these funds could adversely affect the Company's business and financial position. 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 September 30,
   
Nine Months Ended September 30,
 
   
2023
   
2022
   
2023
   
2022
 
                         
Customer A (M&T)
   
10.43
%
   
*) -
 
   
10.50
%
   
*) -
 
 
*) 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, 2022, which was filed with the SEC on February 24, 2023. There have been no significant changes to these policies during the nine months ended September 30, 2023 except as noted below.
 
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 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 Company adopted this guidance using modified retrospective approach, effective on January 1, 2023. The adoption did not have a material effect on its consolidated financial statements.

 

14

 

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 September 30, 2023
 
   
Enterprise, Education and Technology
   
Media and Telecom
 
   
Amount
   
Percentage of revenue
   
Amount
   
Percentage of revenue
 
                         
Subscription
 
$
30,043
     
96.6
%
 
$
10,804
     
86.8
%
Professional services
   
1,052
     
3.4
%
   
1,643
     
13.2
%
                                 
   
$
31,095
     
100
%
 
$
12,447
     
100
%
 
   
Three Months Ended September 30, 2022
 
   
Enterprise, Education and Technology
   
Media and Telecom
 
   
Amount
   
Percentage of revenue
   
Amount
   
Percentage of revenue
 
                         
Subscription
 
$
28,676
     
95.4
%
 
$
9,239
     
84.0
%
Professional services
   
1,380
     
4.6
%
   
1,756