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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 March 31, 2024
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


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 May 1, 2024 was 146,911,185.




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.




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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 or terminology. 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, projections of demand, growth prospects, product development, competitive pressure, cost savings, stock-based compensation, revenue recognition, business strategy, plans and market growth, the economic climate and its impact on us, and other financial and market matters.
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 assumptions, 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:
We may not be able to successfully assess or mitigate the current volatile economic climate and its direct and indirect impact on our business and operations, including our customers and vendors, or to correctly predict the duration and depth of the current instability of the global economy and take the right or sufficient measures to address it;

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, which could 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 constantly evolving and may develop more slowly or differently than we expect, and on our ability to adapt and respond effectively to evolving market conditions;

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 ("AI") and machine learning models, including generative artificial intelligence ("generative AI" or "GenAI") and compliance with the evolving regulatory framework around AI development and use;

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 (and vice-versa), our business, financial condition and results of operations may be adversely affected;
1


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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, and as a result 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, geopolitical instability and hostilities in the Middle East and Gulf region and their possible impact on global trade and financial markets, or such and other conditions in other regions in which we operate, or changes in the business environment in those regions, could materially and adversely affect our business;

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;

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;

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;

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

Our international operations and expansion expose us to risk;
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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 or achieve our expected goals, 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;

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
The other important factors discussed in Part I, Item 1A, “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2023, filed with the Securities and Exchange Commission (the “SEC”) on February 22, 2024.

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)
March 31, 2024December 31, 2023
ASSETS
CURRENT ASSETS:
Cash and cash equivalents$31,565 $36,684 
Marketable securities37,294 32,692 
Trade receivables17,837 23,312 
Prepaid expenses and other current assets8,298 8,410 
Deferred contract acquisition and fulfillment costs, current10,426 10,636 
Total current assets105,420 111,734 
LONG-TERM ASSETS:
Marketable securities4,904 5,844 
Property and equipment, net19,008 20,113 
Other assets, noncurrent2,879 3,100 
Deferred contract acquisition and fulfillment costs, noncurrent15,757 17,314 
Operating lease right-of-use assets13,468 13,872 
Intangible assets, net572 689 
Goodwill11,070 11,070 
Total noncurrent assets67,658 72,002 
TOTAL ASSETS$173,078 $183,736 
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long-term loans2,066 1,612 
Trade payables8,069 3,629 
Employees and payroll accruals11,552 12,651 
Accrued expenses and other current liabilities18,922 17,279 
Operating lease liabilities2,413 2,374 
Deferred revenue, current53,913 62,364 
Total current liabilities96,935 99,909 
LONG-TERM LIABILITIES:
Deferred revenue, noncurrent203 369 
Long-term loans, net of current portion31,741 33,047 
Operating lease liabilities, noncurrent16,996 17,796 
Other liabilities, noncurrent2,067 2,295 
Total long-term liabilities51,007 53,507 
TOTAL LIABILITIES$147,942 $153,416 

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)
March 31, 2024December 31, 2023
COMMITMENTS AND CONTINGENCIES (Note 8)
STOCKHOLDERS' EQUITY:
Preferred stock, $0.0001 par value per share, 20,000,000 shares authorized as of March 31, 2024 and December 31, 2023; 0 shares issued and outstanding as of March 31, 2024, and December 31, 2023
  
Common stock $0.0001 par value per share, 1,000,000,000 shares authorized as of March 31, 2024 and December 31, 2023; 154,031,496 and 150,274,107 shares issued as of March 31, 2024 and December 31, 2023, respectively; 146,346,306 and 142,588,917 outstanding as of March 31, 2024 and December 31, 2023, respectively
14 14 
Treasury stock –
7,685,190 shares of common stock, $0.0001 par value per share, as of March 31, 2024 and December 31, 2023
(4,881)(4,881)
Additional paid-in capital478,292 471,635 
Accumulated other comprehensive income
302 1,047 
Accumulated deficit(448,591)(437,495)
Total stockholders' equity25,136 30,320 
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY$173,078 $183,736 

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 March 31,
20242023
Revenue:
Subscription$41,170 $40,392 
Professional services3,611 2,881 
Total revenue44,781 43,273 
Cost of revenue:
Subscription11,401 11,168 
Professional services4,772 4,819 
Total cost of revenue16,173 15,987 
Gross profit28,608 27,286 
Operating expenses:
Research and development12,005 14,130 
Sales and marketing11,812 12,071 
General and administrative12,082 12,100 
Restructuring 945 
Total operating expenses35,899 39,246 
Operating loss7,291 11,960 
Financial expenses (income), net1,497 (1,785)
Loss before provision for income taxes8,788 10,175 
Provision for income taxes2,308 2,620 
Net loss11,096 12,795 
Net loss per share attributable to common stockholders, basic and diluted$0.08 $0.09 
Weighted-average shares used in computing net loss per share attributable to common stockholders, basic and diluted144,253,660 135,087,949 

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 March 31,
20242023
Net loss$11,096 $12,795 
Other comprehensive income (loss), net of tax:
Net unrealized losses on cash flow hedges(673)(361)
Net unrealized gains (losses) on available-for-sale marketable securities(72)109 
Other comprehensive losses(745)(252)
Comprehensive loss$11,841 $13,047 

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 STOCKHOLDERS' EQUITY
U.S. dollars in thousands (except share data)
(unaudited)


Common stockTreasury stockAdditional paid-in capitalAccumulated other comprehensive incomeAccumulated deficitTotal stockholders' equity
NumberAmountNumberAmount
Balance as of January 1, 2024142,588,917 $14 7,685,190 $(4,881)$471,635 $1,047 $(437,495)$30,320 
Stock-based compensation— — — — 6,583 — — 6,583 
Issuance of common stock upon exercise of stock options, and vesting of restricted stock units3,757,389  — — 74 — — 74 
Other comprehensive loss, net of tax— — — — — (745)— (745)
Net loss— — — — — — (11,096)(11,096)
Balance as of March 31, 2024146,346,306 $14 7,685,190 $(4,881)$478,292 $302 $(448,591)$25,136 

Common stockTreasury stockAdditional paid-in capitalAccumulated other comprehensive lossAccumulated deficitTotal stockholders' equity
NumberAmountNumberAmount
Balance as of January 1, 2023134,564,429 $13 7,685,190 $(4,881)$439,644 (301)$(391,129)$43,346 
Stock-based compensation— — — — 7,291 — — 7,291 
Issuance of common stock upon exercise of stock options, and vesting of restricted stock units1,130,825  — — 381 — — 381 
Other comprehensive loss, net of tax— — — — — (252)— (252)
Net loss— — — — — — (12,795)(12,795)
Balance as of March 31, 2023135,695,254 $13 7,685,190 $(4,881)$447,316 $(553)$(403,924)$37,971 


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)
Three Months Ended March 31,
20242023
Cash flows from operating activities:
Net loss$(11,096)$(12,795)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization1,305 1,009 
Stock-based compensation expenses6,529 7,159 
Amortization of deferred contract acquisition and fulfillment costs2,888 2,970 
Non-cash interest expenses (income), net(286)(224)
Gain on foreign exchange(325)(195)
Changes in operating assets and liabilities:
Decrease in trade receivables5,475 10,553 
Increase in prepaid expenses and other current assets and other assets, noncurrent(560)(764)
Increase in deferred contract acquisition and fulfillment costs(1,067)(1,642)
Increase (decrease) in trade payables4,447 (1,450)
Increase (decrease) in accrued expenses and other current liabilities1,654 (37)
Decrease in employees and payroll accruals(1,099)(2,405)
Increase (decrease) in other liabilities, noncurrent(36)406 
Decrease in deferred revenue(8,617)(9,595)
Operating lease right-of-use assets and lease liabilities, net(358)(422)
Net cash used in operating activities(1,146)(7,432)
Cash flows from investing activities:
Investment in available-for-sale marketable securities(15,424)(2,924)
Proceeds from maturities of available-for-sale marketable securities12,000 9,236 
Purchases of property and equipment(93)(852)
Capitalized internal-use software (380)
Net cash provided by (used in) investing activities(3,517)5,080 
Cash flows from financing activities:
Repayment of long-term loans(875)(1,500)
Proceeds from exercise of stock options104 578 
Payment of debt issuance costs(10) 
Net cash used in financing activities(781)(922)
Effect of exchange rate changes on cash, cash equivalents and restricted cash325 195 
Net decrease in cash, cash equivalents and restricted cash(5,119)(3,079)
Cash, cash equivalents and restricted cash at the beginning of the period36,784 45,833 
Cash, cash equivalents and restricted cash at the end of the period$31,665 $42,754 

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)
Three Months Ended March 31,
20242023
Supplemental disclosure of non-cash activity:
Purchase of property, equipment, and internal-use software in credit$36 $262 
Capitalized stock-based compensation cost $104 $132 
Pending proceeds from option exercises$47 $30 
Lease incentive recognized as leasehold improvements$ $2,922 
Supplemental disclosure of cash flow information
Cash paid for income taxes, net$408 $1,151 
Cash paid for interest$694 $749 
 
Reconciliation of cash, cash equivalents, and restricted cash to the consolidated balance sheet
Cash and cash equivalents$31,565 $41,576 
Restricted cash included in other assets, noncurrent100 1,178 
Total cash, cash equivalents, and restricted cash$31,665 $42,754 
    
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 consolidated balance sheet as of December 31, 2023 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, 2023, included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on February 22, 2024.
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 March 31, 2024, and the Company’s consolidated results of operations, stockholders’ equity, and cash flows for the three months ended March 31, 2024 and 2023. The results for the three months ended March 31, 2024, are not necessarily indicative of the results to be expected for the full year ending December 31, 2024, 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 Credit Risks
Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents, marketable securities, restricted cash and trade receivables.
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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)
The majority of the Company's and its subsidiaries' cash and cash equivalents and restricted cash are invested with major banks in Israel, the United Kingdom and the United States. Such investments in the United States may be in excess of insured limits and are not insured in other jurisdictions. However, 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 March 31,
20242023
Customer A (Media & Telecom)10.62 %10.70 %
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, 2023, which was filed with the SEC on February 22, 2024. There have been no significant changes to these policies during the three months ended March 31, 2024 except as noted below.
Recently Adopted 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.
Recent Accounting Guidance Not Yet Adopted
In November 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standard Update (ASU) No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which requires to disclose significant segment expenses and other segment items on an annual and interim basis and provide in interim periods all disclosures about a reportable segment’s profit or loss and assets that are currently required annually. The new standard is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. The Company is currently evaluating the impact of the adoption of this standard.
In December 2023, the Financial Accounting Standards Board issued Accounting Standards Update (“ASU”) 2023-09, “Income Taxes - Improvements to Income Tax Disclosures” requiring enhancements and further transparency to certain income tax disclosures, most notably the tax rate reconciliation and income taxes paid. This ASU is effective for fiscal years beginning after December 15, 2024 on a prospective basis and retrospective application is permitted. The Company is currently evaluating the impact of the adoption of this standard.





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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 3: REVENUES FROM CONTRACTS WITH CUSTOMERS
Disaggregation of Revenue
The following tables present disaggregated revenue by category:
Three Months Ended March 31, 2024
Enterprise, Education and TechnologyMedia and Telecom
AmountPercentage of revenueAmountPercentage of revenue
Subscription $30,655 94.5 %$10,515 85.2 %
Professional services1,785 5.5 %1,826 14.8 %
$32,440 100 %$12,341 100 %


Three Months Ended March 31, 2023
Enterprise, Education and TechnologyMedia and Telecom
AmountPercentage of revenueAmountPercentage of revenue
Subscription $29,874 95.4 %$10,518 88.1 %
Professional services1,456 4.6 %1,425 11.9 %
$31,330 100 %$11,943 100 %

The following table summarizes revenue by region based on the billing address of customers:
Three Months Ended March 31,
20242023
AmountPercentage of revenueAmountPercentage of revenue
United States (“US”)$23,306 52.0 %$23,058 53.3 %
Europe, the Middle East and Africa ("EMEA")17,520 39.1 %15,923 36.8 %
Other3,955 8.9 %4,292 9.9 %
$44,781 100 %$43,273 100 %

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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)
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 March 31, 2024, the aggregate amount of the transaction price allocated to remaining performance obligations was $165,224, which consists of both billed consideration in the amount of $54,116 and unbilled consideration in the amount of $111,108 that the Company expects to recognize as revenue but that was not yet recognized on the balance sheet. The Company expects to recognize 57% 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 March 31,
20242023
Beginning balance $24,210 $26,928 
Additions to deferred contract acquisition costs during the period1,170 1,741 
Amortization of deferred contract acquisition costs(2,520)(2,523)
Ending balance22,860 26,146 
Deferred contract acquisition costs, current9,021 8,934 
Deferred contract acquisition costs, noncurrent13,839 17,212 
Total deferred costs to obtain a contract$22,860 $26,146 

Costs to Fulfill a Contract
The following table represents a roll forward of costs to fulfill a contract:
Three Months Ended March 31,
20242023
Beginning balance$3,740 $5,522 
Additions to deferred costs to fulfill a contract during the period  
Amortization of deferred costs to fulfill a contract(417)(447)
Ending balance3,323 5,075 
Deferred fulfillment costs, current1,405 1,751 
Deferred fulfillment costs, noncurrent1,918 3,324 
Total deferred costs to fulfill a contract$3,323 $5,075 


NOTE 4: MARKETABLE SECURITIES
The following is a summary of available-for-sale marketable securities as of March 31, 2024 and December 31, 2023, respectively:
March 31, 2024
Amortized CostGross Unrealized GainsGross Unrealized LossesFair Value
Available-for-sale – matures within one year:
Corporate bonds$8,384 $3 $(2)$8,385 
U.S. Treasury14,690 4 (13)14,681 
Commercial paper6,924  (3)6,921 
Agency bonds7,312 3 (8)7,307 
37,310 10 (26)37,294 
Available-for-sale – matures after one year:
Corporate bonds1,962 1 (2)1,961 
U.S. Treasury2,948 1 (6)2,943 
4,910 2 (8)4,904 
Total$42,220 $12 $(34)$42,198 
December 31, 2023
Amortized costGross Unrealized GainsGross Unrealized LossesFair Value
Available-for-sale – matures within one year:
Corporate bonds$6,985 $4 $ $6,989 
U.S. Treasury8,795 17  8,812 
Commercial paper8,855  (5)8,850 
Agency bonds8,037 9 (5)8,041 
32,672 30 (10)32,692 
Available-for-sale – matures after one year:
Corporate bonds2,944 14  2,958 
U.S. Treasury2,869 17  2,886 
5,813 31  5,844 
Total$38,485 $61 $(10)$38,536 
As of March 31, 2024 and December 31, 2023, the Company did not record an allowance for credit losses for its available-for-sale marketable debt securities and all of the gross unrealized losses of the Company's marketable securities have been in a continuous loss position for less than 12 months. There were no gains or losses from available-for-sale marketable securities that were reclassified out of accumulated other comprehensive loss during the periods presented.
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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 5: FAIR VALUE MEASUREMENTS
In accordance with ASC 820, the Company measures its cash equivalents and marketable securities at fair value using the market approach valuation technique. Cash equivalents and marketable securities are classified within Level 1 or Level 2 because these assets are valued using quoted market prices or alternative pricing sources and models utilizing market observable inputs. Foreign currency derivative contracts are classified within the Level 2 value hierarchy, as the valuation inputs are based on quoted prices and market observable data of similar instruments.. The following table sets forth the Company’s assets and liabilities that were measured at fair value as of March 31, 2024 and December 31, 2023 by level within the fair value hierarchy:
Fair Value Measurements As Of
DescriptionFair Value HierarchyMarch 31, 2024December 31, 2023
Measured at fair value on a recurring basis:
Assets:
Cash equivalents:
Money market fundsLevel 1$15,462 $18,745 
Short-term marketable securities:
Corporate bondsLevel 2$8,385 $6,989 
U.S. TreasuryLevel 2$14,681 $8,812 
Commercial paperLevel 2$6,921 $8,850 
Agency bondsLevel 2$7,307 $8,041 
Long-term marketable securities:
Corporate bondsLevel 2$1,961 $2,958 
U.S. TreasuryLevel 2$2,943 $2,886 
Prepaid expenses and other current assets:
Restricted bank depositsLevel 2$3,397 $3,397 
Options and forward contracts designated as hedging instruments  Level 2$344 $998 
Other assets, noncurrent:
Restricted bank deposit$1,010 $1,025 
Liabilities:
Derivative instruments liability included in accrued expenses and other current liabilities:
Options and forward contracts designated as hedging instruments  Level 2$19 $ 



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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 6: DERIVATIVES AND HEDGING
The Company enters into forward, put and call option contracts to hedge certain forecasted payroll costs denominated in NIS against exchange rate fluctuations of the U.S. dollar for a period of up to twelve months. The Company recorded the cash flows associated with these derivatives under operating activities. The Company does not use derivative instruments for trading or speculative purposes.
Notional Amount of Foreign Currency Contracts
The Company had outstanding contracts designated as hedging instruments in the aggregate notional amount of $18,215 and $15,093 as of March 31, 2024, and December 31, 2023, respectively. The fair value of the Company’s outstanding contracts amounted to an asset of $344 and $998, and a liability of $19 and $0 as of March 31, 2024 and December 31, 2023, respectively. These assets and liabilities were recorded under prepaid expenses and other current assets and accrued expenses and other current liabilities, respectively. Gain of $666 and loss of $504 were reclassified from accumulated other comprehensive income during the three months ended March 31, 2024 and 2023, respectively. Such gain and loss were reclassified from accumulated other comprehensive income when the related expenses were incurred.
Effect of Foreign Currency Contracts on the Condensed Consolidated Statements of Operations
The effect of foreign currency contracts on the condensed consolidated statements of operations during the three months ended March 31, 2024 and 2023 were as follows:
Condensed Statement of Operations Location:Three Months Ended March 31, 2024Three Months Ended March 31, 2023
Cost of revenue$(101)$70 
Research and development$(343)$252 
Sales and marketing$(87)$58 
General and administrative$(135)$96 
Restructuring$ $28 
Total$(666)$504 
NOTE 7: LEASES
The Company leases its office facilities under agreements that expire at various dates through July 2032.
Components of operating lease expense were as follows:
Three Months Ended March 31, 2024Three Months Ended March 31, 2023
Operating lease cost$684 $761 
Short-term lease cost 154 
Variable lease cost34 9 
Total$718 $924 


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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)

Supplementary cash flow information related to operating leases was as follows:
Three Months Ended March 31, 2024Three Months Ended March 31, 2023
Cash paid for operating leases$387 $579 
As of March 31, 2024, the weighted-average discount rate is 4.7% and the weighted-average remaining term is 7.9 years. Maturities of the Company’s operating lease liabilities as of March 31, 2024 were as follows:
Year Ending December 31,
2024 (Remainder)2,327 
20253,086 
20263,148 
20272,715 
20282,336 
20292,336 
2030 and thereafter6,618 
Total operating lease payments22,566 
Less: imputed interest3,157 
Total operating lease liabilities$19,409 
NOTE 8: COMMITMENTS AND CONTINGENCIES
Purchase Commitments
The Company has entered into various non-cancelable agreements with third-party providers for use of mainly cloud and other services, under which it committed to minimum and fixed purchases through the year ending December 31, 2026.
The following table presents details of the aggregate future non-cancelable purchase commitments under such agreements as of March 31, 2024:
Year Ending March 31,
2024 (Remainder)24,132 
202527,334 
202628,557 
Total purchase commitment$80,023 
During the three months ended March 31, 2024, the Company has accelerated expenses in the amount of $1,312 related to its minimum commitment with one of its cloud hosting service due to the Company's decision not to utilize the provider's cloud service. Such expenses were recorded under general and administrative expenses in the consolidated statement of operations.


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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)
Litigation
The Company is occasionally a party to claims or litigation in the normal course of the business. The Company does not believe that it is a party to any pending legal proceeding that is likely to have a material adverse effect on its business, financial condition, or results of operations.
NOTE 9: CONDENSED CONSOLIDATED BALANCE SHEET COMPONENTS
Prepaid expenses and other current assets
Prepaid expenses and other current assets consisted of the following:
March 31, 2024December 31, 2023
Prepaid expenses$3,682 $2,656 
Government institutions57  
Derivative instrument344 998 
Restricted bank deposits3,397 3,397 
Other current assets818 1,359 
$8,298 $8,410 
Property and Equipment, net
Composition of property and equipment is as follows:

March 31, 2024December 31, 2023
Cost:
Computers and peripheral equipment$3,862 $3,802 
Office furniture and equipment2,183 2,183 
Leasehold improvements7,286 7,267 
Finance leases of computers and peripheral equipment254 253 
Internal use software13,755 13,755 
27,340 27,260 
Accumulated depreciation(8,332)(7,147)
Depreciated cost$19,008 $20,113 

Depreciation expenses for the three months ended March 31, 2024 and 2023 were $1,188 and $842, respectively.





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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)
Other assets, noncurrent

March 31, 2024December 31, 2023
Restricted cash$100 $100 
Severance pay fund1,494 1,685 
Restricted deposit1,010 1,025 
Other275 290 
$2,879 $3,100 

Accrued expenses and other current liabilities

March 31, 2024December 31, 2023
Accrued expenses$4,860 $4,353 
Accrued taxes13,046 11,755 
Derivative instruments19  
Other current liabilities997 1,171 
$18,922 $17,279 
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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 10: GOODWILL AND INTANGIBLE ASSETS
There was no goodwill activity during the periods presented.
The carrying amounts and accumulated amortization expenses of the intangible assets, as of March 31, 2024 and December 31, 2023, were as follows:
March 31, 2024December 31, 2023
Weighted average remaining useful life (in years)BalanceBalance
Gross carrying amount:
Technology1.00$4,700 $4,700 
Customer relationship3.002,419 2,419 
7,119 7,119 
Accumulated amortization and impairments:
Technology(4,282)(4,177)
Customer relationship(2,265)(2,253)
(6,547)(6,430)
Intangible assets, net$572 $689 

During the three months ended March 31, 2024, and 2023, the Company recorded amortization expenses in the amount of $117 and $167, respectively, included in cost of revenue and sales and marketing expenses in the statements of operations.
The estimated future amortization expense of intangible assets as of March 31, 2024, is as follows:
March 31,
2024 (Remainder)359 
2025149 
202652 
202712 
$572 
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
(unaudited)
NOTE 11: INCOME TAXES
The Company recognized an income tax expense of $2,308 and $2,620 for the three months ended March 31, 2024, and 2023, respectively. The tax expense for these periods was primarily attributable to pre-tax foreign earnings in our foreign jurisdictions.
The Company’s effective tax rates of (26)% and (26)% for the three months ended March 31, 2024 and 2023, respectively, differ from the U.S. statutory tax rate primarily due to U.S. losses for which there is no benefit and the tax rate differences between the U.S. and the foreign countries in which we operate.
The Company has a full valuation allowance on its net deferred tax assets. The residual deferred tax liability is from indefinite life goodwill intangibles and include under other liabilities, noncurrent in the balance sheet. Management currently believes that it is more likely than not that the deferred tax regarding the tax loss carry forwards and other temporary differences will not be realized in the foreseeable future in the U.S.
NOTE 12: NET LOSS PER SHARE ATTRIBUTABLE TO COMMON STOCKHOLDERS:
The following table sets forth the computation of basic and diluted net loss per share attributable to common stockholders for the periods presented:
Three Months Ended March 31,
20242023
Numerator:
Net loss$11,096 $12,795 
Denominator:
Weighted-average shares used in computing net loss per share attributable to common stockholders, basic and diluted144,253,660135,087,949
Net loss per share attributable to common stockholders, basic and diluted$0.08 $0.09 

Instruments potentially exercisable for common stock that were excluded from the computation of diluted net loss per share attributable to common stockholders for the periods presented because including them would have been anti-dilutive are as follows:
Three Months Ended March 31,
20242023
Outstanding stock options and RSUs39,704,37439,387,789
Total39,704,37439,387,789
NOTE 13: REPORTABLE SEGMENTS AND GEOGRAPHICAL INFORMATION
Reportable segments
ASC 280, Segment Reporting, establishes standards for reporting information about operating segments. Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance. The Company's chief operating decision maker is its Chief Executive Officer ("CODM"). The Company's CODM does not regularly review asset information by segments and, therefore, the Company does not report asset information by segment.
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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)
The Company organizes its operations in two segments: Enterprise, Education and Technology and Media and Telecom. The Enterprise, Education and Technology segment represents products related to industry solutions predominantly for education customers, and media services (except for Media and Telecom customers). The Media and Telecom segment primarily represents TV solutions that are sold to media and telecom operators and mass broadcasting and entertainment.
The measurement of the reportable operating segments is based on the same accounting principles applied in these financial statements, which includes certain corporate overhead allocations.
Three Months Ended March 31, 2024
Enterprise, Education and TechnologyMedia and TelecomTotal
Revenue$32,440 $12,341 $44,781 
Gross profit$23,556 $5,052 $28,608 
Operating expenses35,899 
Financial expenses, net1,497 
Provision for income taxes2,308 
Net loss$11,096 

Three Months Ended March 31, 2023
Enterprise, Education and TechnologyMedia and TelecomTotal
Revenue$31,330 $11,943 $43,273 
Gross profit$22,789 $4,497 $27,286 
Operating expenses39,246 
Financial income, net(1,785)
Provision for income taxes2,620 
Net loss$12,795 

Geographical information
See Note 3 for disaggregated revenue by geographic region.
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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 14: LONG-TERM LOAN
In January 2021, the Company refinanced all amounts outstanding under the then-existing loan agreements, terminated all outstanding commitments, and entered into a new credit agreement (the “Credit Agreement”) with an existing lender, which provides for a new senior secured term loan facility in the aggregate principal amount of $40,000 (the “Term Loan Facility”) and a new senior secured revolving credit facility in the aggregate principal amount of $10,000 (the “Revolving Credit Facility” and, together with the Term Loan Facility, the “Credit Facilities”), which subsequently and has been amended according to the Company's needs and other developments.
In May 2023, the Company entered into an amendment (the "Fourth Amendment") to the then-existing Credit Agreement to replace the London Interbank Offered Rate (“LIBOR”) with the Secured Overnight Financing Rate (“SOFR”) as the benchmark rate under the Credit Agreement. Prior to the Fourth Amendment, borrowings under the Credit Agreement would bear interest, at the Company's election, at (a) the Eurodollar Rate (as defined in the Credit Agreement as in effect prior to the Fourth Amendment) plus a margin of 3.50% or (b) Alternative Base Rate (“ABR”) (as defined in the Credit Agreement) plus a margin of 2.50%.
In December 2023, the Company entered into a new amendment to the then-existing Credit Agreement (the “Fifth Amendment”), which provides for a new term loan facility in the aggregate principal amount of $35,000, while the commitments under the Revolving Credit Facility decreased to $25,000.
Following the effectiveness of the Fifth Amendment, borrowings under the Credit Facilities are subject to interest, determined as follows: (a) SOFR loans accrue interest at a rate per annum equal to Term SOFR (as defined in the Credit Agreement) plus 0.10% per annum plus a margin of 2.50% (the Adjusted Term SOFR (as defined in the Credit Agreement) is subject to a 1.00% floor), and (b) ABR loans accrue interest at a rate per annum equal to the ABR plus a margin of 1.50% (ABR is equal to the highest of (i) the prime rate and (ii) the Federal Funds Effective Rate plus 0.50%, subject to a 2.00% floor). As of March 31, 2024, the current rate of interest under the Credit Facilities was equal to a rate per annum of 7.95%, consisting of 5.35% (the 3-month SOFR rate as of March 28, 2024), 0.10% credit spread adjustment and the margin of 2.50%.
The Term Loan Facility is payable in consecutive quarterly installments on the last day of each fiscal quarter in an amount equal to (i) $438 for installments payable on December 31, 2023 (deferred to January 9, 2024) through September 30, 2024, (ii) $656 for installments payable on December 31, 2024 through September 30, 2025, and (iii) $1,313 for installments payable on and after December 31, 2025. The remaining unpaid balance on the Term Loan Facility is due and payable on December 21, 2026, together with accrued and unpaid interest on the principal amount to be paid to, but excluding, the payment date. Amounts outstanding under the Credit Facilities may be voluntarily prepaid at any time and from time to time, in whole or in part, without premium or penalty.
Under the terms of the Credit Facilities, the Company is obligated to maintain compliance with certain financial covenants as defined therein. As of March 31, 2024, the Company met these covenants.
The aggregate principal annual maturities according to the Credit Facilities agreements are as follows:

Year Ending December 31,
2024 (Remainder)1,531 
20253,281 
202629,313 
$34,125 
The carrying amounts of the loans approximate their fair value.

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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 15: STOCKHOLDERS' EQUITY AND EQUITY INCENTIVE PLANS
Equity Incentive Plans
On January 1, 2024, the number of shares of common stock authorized for issuance under the 2021 Incentive Award Plan (the “2021 Plan”) automatically increased by 7,129,446 shares pursuant to the terms of the 2021 Plan.
Stock Options
A summary of the Company's stock option activity with respect to options granted under the 2021 Plan is as follows:

Number of Options
Weighted
Average exercise price
Weighted remaining contractual term (years)Aggregate
Intrinsic
Value








Outstanding as of January 1, 2024

22,933,058$4.99 6.29$5,378 


Granted

 $ 
Exercised

(314,671)$0.23 $364 
Forfeited

(1,259,486)$12.40 
Outstanding as of March 31, 2024

21,358,901$4.63 5.87$1,899 


Exercisable options at end of the period

17,091,719$3.01 5.63$1,899 

RSUs
The following table summarizes the RSU activity with respect to the 2021 Plan for the three months ended March 31, 2024:


RSUs
Outstanding

Weighted Average
Grant Date Fair
Value per Share
Outstanding as of December 31, 2023

11,199,265$2.24
RSUs granted

11,067,000$1.51
RSUs vested

(3,442,718)$2.13
RSUs forfeited

(478,074)$2.22
Unvested and Outstanding as of March 31, 2024

18,345,473$1.82








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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)
Stock-Based Compensation Expense
The stock-based compensation expense by line item in the accompanying consolidated statement of operations is summarized as follows:
Three Months Ended March 31,
20242023
Cost of revenue$285 $264 
Research and development1,172 1,145 
Sales and marketing770 772 
General and administrative4,302 4,978 
Total expenses$6,529 $7,159 

As of March 31, 2024, there was $35,927 of total unrecognized compensation cost related to non-vested stock-based compensation arrangements granted under the Company's equity incentive plans. These costs are expected to be recognized over a weighted-average period of approximately two years.
Shares Reserved for Future Issuance
The Company has the following common stock reserved for future issuance under the 2021 Plan:
March 31, 2024
Outstanding options21,358,901 
Outstanding RSUs18,345,473 
Shares reserved under 2021 Plan1,321,143 
Total41,025,517 













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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 16: SELECTED STATEMENTS OF OPERATIONS DATA
Three Months Ended March 31,
20242023
Financial income:
Interest income$818 $538 
Foreign currency translation adjustments, net 2,237 
818 2,775 
Financial expenses:
Foreign currency translation adjustments, net1,565  
Bank fees33 34 
Interest expense704 803 
Other13 153 
2,315 990 
Financial expenses (income), net$1,497 $(1,785)
NOTE 17: ACCUMULATED OTHER COMPREHENSIVE INCOME
The following tables summarize the changes in accumulated other comprehensive income (loss) by component, net of tax (AOCI), during the three months ended March 31, 2024 and 2023:
Net Unrealized Losses on Available-for-Sale Securities InstrumentsNet Unrealized Gains (Losses) on Derivatives Designated as Hedging InstrumentsTotal
Balance as of December 31, 2023$49 $998 $1,047 
Other comprehensive loss before reclassifications$(72)$(7)$(79)
Net realized gains reclassified from accumulated other comprehensive income$ $(666)$(666)
Other comprehensive loss$(72)$(673)$(745)
Balance as of March 31, 2024$(23)$325 $302 





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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)
Net Unrealized Gains on Available-for-Sale Securities InstrumentsNet Unrealized Losses on Derivatives Designated as Hedging InstrumentsTotal
Balance as of December 31, 2022$(181)$(120)$(301)
Other comprehensive income (loss) before reclassifications109 $(866)$(757)
Net realized losses reclassified from accumulated other comprehensive income $505 $505 
Other comprehensive income (loss)109 $(361)$(252)
Balance as of March 31, 2023$(72)$(481)$(553)



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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our condensed consolidated financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q and our Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on February 22, 2024 (the "2023 10-K"). This discussion contains forward-looking statements based upon current plans, expectations and beliefs involving risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth in Part I, Item 1A, “Risk Factors” of our 2023 10-K and elsewhere in this Quarterly Report on Form 10-Q.
Overview
Our mission is to power any video experience, for any organization. Our Video Experience Cloud powers live, real-time, and on-demand video for webinars, events, virtual classrooms, and video sites. We also offer robust Application Programming Interfaces ("APIs") and industry solutions predominantly for education and media and telecom. Our Video Experience Cloud is used by leading brands across all industries, reaching millions of users, at home, at school and at work, for communication, collaboration, marketing, sales, customer care, learning, and entertainment experiences. With our flexible offerings, customers can experience the benefits of video across a wide range of use cases, while customizing their deployments to meet their individual, dynamic needs.
Our business was founded in 2006.
We generate revenue primarily through the sale of Software-as-a-Service (“SaaS”) and Platform-as-a-Service (“PaaS”) subscriptions, and additional revenue from term license subscriptions. We also generate revenue through the sale of professional services associated with the implementation of deployments for new and existing customers.
We organize our business into two reporting segments: (i) Enterprise, Education, and Technology (“EE&T”); and (ii) Media and Telecom (“M&T”). These segments share a common underlying platform consisting of our API-based architecture, as well as unified product development, operations, and administrative resources.
Enterprise, Education & Technology: Includes revenue from all of our products, industry solutions for education customers, and Media Services (except for Media and Telecom customers), as well as associated professional services for those offerings. Subscription revenues are primarily generated on a per full-time equivalent basis for on-demand and live products and solutions, per host basis for real-time-conferencing products and solutions, and per participant basis for Events product (which intersects on-demand, live, and real-time-conferencing video). Contracts are generally 12 to 24 months in length. Billing is primarily done on an annual basis.
Media & Telecom: Includes revenue from our TV Solution and Media Services for media and telecom customers, as well as associated professional services for those offerings. Revenues are generated on a per end-subscriber basis for telecom customers, and on a per video play basis for media customers. Contracts are generally two to five years in length. Billing is generally done on a quarterly or annual basis. It generally takes from six to twelve months to implement M&T offerings. The upfront resources required for implementation of our Media & Telecom solutions generally exceed those of our other offerings, resulting in a longer period from initial booking to go-live and a higher proportion of professional services revenue as a percentage of overall revenue. Additionally, a higher proportion of revenue comes from customers who choose to license our offerings through private cloud and on-premise deployments, which also impacts our gross margin.
Reflected below is a summary of reportable segment revenue and reportable segment gross profit for the three months ended March 31, 2024 and 2023.
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Three Months Ended March 31,
20242023
(in thousands)
Revenue
Enterprise, Education & Technology$32,440 $31,330 
Media & Telecom12,341 11,943 
Total Revenue$44,781 $43,273 
Gross Profit
Enterprise, Education & Technology23,556 22,789 
Media & Telecom5,052 4,497 
Total Gross Profit$28,608 $27,286 

We employ a "land and expand strategy" with the aim of having our customers increase their usage of our offerings and/or purchase additional offerings over time. Our Net Dollar Retention Rate (as defined below) measures our success in retaining and growing recurring revenue from our existing customers over a given period. For the three months ended March 31, 2024 and 2023, our Net Dollar Retention Rate was 98% and 103%, respectively. We grew our Annualized Recurring Revenue (as defined below), by 2% in the three months ended March 31, 2024, compared to the three months ended March 31, 2023, demonstrating our ability to land new customers with higher spending levels and increase revenue from our existing customers.
For any given year, a large majority of our revenue comes from existing customers, with whom we are in active dialogue and tend to have visibility into their expected usage of our offerings.
We focus our selling efforts on large organizations and sell our solutions primarily through direct sales teams and account teams. In addition, we are investing in low-touch and self-serve offerings for smaller customers.
Key Factors Affecting Our Performance
Expansion of our Platform
We believe our platform is ideally suited for expansion across solutions, industries, and use cases. For example, in 2020, we entered the real-time conferencing market with the introduction of our Virtual and Hybrid Events, Webinars, and Online Learning products, focusing on learning, training, events, and marketing. Since then, we expanded the capabilities of our Virtual & Hybrid Events product to support a broader range of event types and use cases, fitted them to also address low-touch and self-serve sales and introduced a set of GenAI powered capabilities that increase the productivity in creating content and setting up events and also foster user engagement. We believe these products present a significant long-term opportunity, and we intend to harness our growing presence with them. Additionally, we will continue to invest in new video products for training, communication and collaboration, sales, marketing, and customer care, as we extend our platform into more industries.
Acquiring New Customers
We are focused on continuing to grow the number of customers that use our solutions. Our focus remains on bringing in new customers from enterprise accounts, as well as expanding our small and medium enterprise ("SME") offerings that can be sold by inside-sales teams. We also continue to provide our self-serve offering that can be purchased completely online, which also serves as a demand generation engine for our low-touch and enterprise offerings. We believe this will enable us to efficiently acquire smaller customers across all industries over time – expanding beyond enterprises into SMEs, beyond universities into K-12 schools, beyond tier 1 media and telecom companies to tier 2 and 3 media and telecom companies, and beyond providing Media Services to large technology companies to also addressing smaller technology firms and startups.
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Increasing Revenue from Existing Customers
We are focused on increasing sales within our existing customer base through increased usage of our platform and the cross-selling of additional products and solutions. For the three months ended March 31, 2024, our Net Dollar Retention Rate was 98%. In order for us to increase revenue within our customer base, we will need to maintain engineering-level customer support and continue to introduce new products and features as well as innovative new use cases that are tailored to our customers' needs.
Continued Investment in Growth
Although we have invested significantly in our business to date, we believe that we still have a significant market opportunity ahead of us. We intend to continue to make investments to support the growth and expansion of our business and to increase revenue. We believe there is a significant opportunity to continue our growth. We expect that our cost of revenue and operating expenses will fluctuate over time.
Key Financial and Operating Metrics
We measure our business using both financial and operating metrics. We use these metrics to assess the progress of our business, make decisions on where to allocate capital, time, and technology investments, and assess the near-term and long-term performance of our business. The key financial and operating metrics we use are:
Three Months Ended March 31,
20242023
(in thousands)
Annualized Recurring Revenue$162,713 $159,582 
Net Dollar Retention Rate98 %
103 % (a)
Remaining Performance Obligations$165,224 $167,425 
(a)The Net Dollar Retention Rate for the three months ended March 31, 2023 reflects a clarifying change to the calculation, to treat VARs (as defined below) and the customers they manage as a single customer, which has resulted in an adjustment of 1 percentage point to the reported Net Dollar Retention Rate for such period.
Annualized Recurring Revenue
We use Annualized Recurring Revenue ("ARR") as a measure of our revenue trend and an indicator of our future revenue opportunity from existing recurring customer contracts. We calculate ARR by annualizing our recurring revenue for the most recently completed fiscal quarter. Recurring revenues are generated from SaaS and PaaS subscriptions, as well as term licenses for software installed on the customer’s premises (“On-Prem”). For the SaaS and PaaS components, we calculate ARR by annualizing the actual recurring revenue recognized for the latest fiscal quarter. For the On-Prem components for which revenue recognition is not ratable across the license term, we calculate ARR for each contract by dividing the total contract value (excluding professional services) as of the last day of the specified period by the number of days in the contract term and then multiplying by 365. Recurring revenue excludes revenue from one-time professional services and setup fees. ARR is not adjusted for the impact of any known or projected future customer cancellations, upgrades or downgrades, or price increases or decreases.
The amount of actual revenue that we recognize over any 12-month period is likely to differ from ARR at the beginning of that period, sometimes significantly. This may occur due to new bookings, cancellations, upgrades or downgrades, pending renewals, professional services revenue, foreign exchange rate fluctuations and acquisitions or divestitures. ARR should be viewed independently of revenue as it is an operating metric and is not intended to be a replacement or forecast of revenue. Our calculation of ARR may differ from similarly titled metrics presented by other companies.



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Net Dollar Retention Rate
Our Net Dollar Retention Rate, which we use to measure our success in retaining and growing recurring revenue from our existing customers, compares our recognized recurring revenue from a set of customers across comparable periods. We calculate our Net Dollar Retention Rate for a given period as the recognized recurring revenue from the latest reported fiscal quarter from the set of customers whose revenue existed in the reported fiscal quarter from the prior year (the numerator), divided by recognized recurring revenue from such customers for the same fiscal quarter in the prior year (denominator). For annual periods, we report Net Dollar Retention Rate as the arithmetic average of the Net Dollar Retention Rate for all fiscal quarters included in the period.
We consider subdivisions of the same legal entity (for example, divisions of a parent company or separate campuses that are part of the same state university system) as well as Value-add Resellers (“VARs”) (meaning resellers that directly manage the relationship with the customer) and the customers they manage, to be a single customer for purposes of calculating our Net Dollar Retention Rate. Our calculation of Net Dollar Retention Rate for any fiscal period includes the positive recognized recurring revenue impacts of selling new services to existing customers and the negative recognized recurring revenue impacts of contraction and attrition among this set of customers. Our Net Dollar Retention Rate may fluctuate as a result of a number of factors, including the growing level of our revenue base, the level of penetration within our customer base, expansion of products and features, and our ability to retain our customers. Our calculation of Net Dollar Retention Rate may differ from similarly titled metrics presented by other companies.
Remaining Performance Obligations
Remaining Performance Obligations represents the amount of contracted future revenue that has not yet been delivered, including both subscription and professional services revenues. Remaining Performance Obligations consists of both deferred revenue and contracted non-cancelable amounts that will be invoiced and recognized in future periods. As of March 31, 2024, our Remaining Performance Obligations was $165.2 million, which consists of both billed consideration in the amount of $54.1 million and unbilled consideration in the amount of $111.1 million that we expect to invoice and recognize in future periods. We expect to recognize 57% of our Remaining Performance Obligations as revenue over the next 12 months and the remainder thereafter, in each case, in accordance with our revenue recognition policy.
Non-GAAP Financial Measures
In addition to our results determined in accordance with GAAP, we believe that EBITDA and Adjusted EBITDA, non-GAAP financial measures, are useful in evaluating the performance of our business.
We define EBITDA as net profit (loss) before interest expense, net, provision for income taxes and depreciation and amortization expenses. Adjusted EBITDA is defined as EBITDA (as defined above), adjusted for the impact of certain non-cash and other items that we believe are not indicative of our core operating performance, such as non-cash stock-based compensation expenses, facility exit and transition costs, restructuring charges and war-related expenses.
EBITDA and Adjusted EBITDA are supplemental measure of our performance, are not defined by or presented in accordance with GAAP, and should not be considered in isolation or as an alternative to net profit (loss) or any other performance measure prepared in accordance with GAAP. EBITDA and Adjusted EBITDA are presented because we believe that they provides useful supplemental information to investors and analysts regarding our operating performance and are frequently used by these parties in evaluating companies in our industry. By presenting EBITDA and Adjusted EBITDA, we provide a basis for comparison of our business operations between periods by excluding items that we do not believe are indicative of our core operating performance. We believe that investors’ understanding of our performance is enhanced by including these non-GAAP financial measures as a reasonable basis for comparing our ongoing results of operations. Additionally, our management uses Adjusted EBITDA as a supplemental measure of our performance because it assists us in comparing the operating performance of our business on a consistent basis between periods, as described above.
Although we use EBITDA and Adjusted EBITDA, as described above, EBITDA and Adjusted EBITDA, have significant limitations as analytical tools. Some of these limitations include:
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such measures do not reflect our cash expenditures, or future requirements for capital expenditures or contractual commitments;
such measures do     not reflect changes in, or cash requirements for, our working capital needs;
such measures do not reflect the interest expense, or the cash requirements necessary to service interest or principal payments on our debt;
such measures do not reflect our tax expense or the cash requirements to pay our taxes;
although depreciation and amortization expense and non-cash stock-based compensation expense are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future and such measures do not reflect any cash requirements for such replacements; and
other companies in our industry may calculate such measures differently than we do, thereby further limiting their usefulness as comparative measures.
Due to these limitations, EBITDA and Adjusted EBITDA should not be considered as measures of discretionary cash available to us to invest in the growth of our business. We compensate for these limitations by relying primarily on our GAAP results and using these non-GAAP measures only supplementally. Adjusted EBITDA includes an adjustment for non-cash stock-based compensation expenses. It is reasonable to expect that this item will occur in future periods. However, we believe this adjustment is appropriate because the amount recognized can vary significantly from period to period, does not directly relate to the ongoing operations of our business, and complicates comparisons of our internal operating results between periods and with the operating results of other companies over time. Each of the normal recurring adjustments and other adjustments described above help to provide management with a measure of our core operating performance over time by removing items that are not related to day-to-day operations. Nevertheless, because of the limitations described above, management does not view EBITDA, or Adjusted EBITDA in isolation and also uses other measures, such as revenue, operating loss, and net loss, to measure operating performance.
The following table reconciles EBITDA and Adjusted EBITDA to the most directly comparable GAAP financial performance measure, which is net loss:
Three Months Ended March 31,
20242023
(in thousands)
Net loss $(11,096)$(12,795)
Financial income, net (a)
1,497 (1,785)
Provision for income taxes 2,308 2,620 
Depreciation and amortization 1,305 1,009 
EBITDA (5,986)(10,951)
Non-cash stock-based compensation expense 6,529 7,159 
Facility exit and transition costs (b)
— 154 
Restructuring (c)
— 945 
War related costs (d)
21 — 
Adjusted EBITDA $564 $(2,693)

(a)The three months ended March 31, 2024 and 2023, include $704 and $803 respectively, of interest expenses.
(b)Facility exit and transition costs for the three months ended March 31, 2023 include losses from sale of fixed assets and other costs associated with moving to our temporary office in Israel.

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(c)The three months ended March 31, 2023 includes employee termination benefits incurred in connection with the 2023 Reorganization Plan.

(d)The three months ended March 31, 2024 includes costs related to conflicts in Israel, attributable to temporary relocation of key employees from Israel for business continuity purposes, purchase of emergency equipment for key employees for business continuity purposes, and charitable donation to communities directly impacted by the war.

Components of Results of Operations
Revenue
Subscription
Our revenues are mainly comprised of revenue from SaaS and PaaS subscriptions. SaaS and PaaS subscriptions provide access to our Video Experience Cloud which powers all types of video experiences: live, real-time, and on-demand video. We provide access to our platform either as a cloud-based service, which represent most of our SaaS and PaaS subscriptions, or, less commonly, as a term license to software installed on the customer's premises. Revenue from SaaS and PaaS subscriptions is recognized ratably over the time of the subscription, beginning from the date on which the customer is granted access to our Video Experience Cloud. Revenue from the sale of a term license is recognized at a point in time in which the license is delivered to the customer. Revenue from post-contract services ("PCS") included in On-Prem deals is recognized ratably over the period of the PCS.
Professional Services
Our revenue also includes professional services, which consist of consulting, integration and customization services, technical solution services and training related to our video experience. In some of our arrangements, professional services are accounted for as a separate performance obligation, and revenue is recognized upon rendering of the service.
In some of our SaaS and PaaS subscriptions, we determined that the professional services are solely set up activities that do not transfer goods or services to the customer and therefore are not accounted for as a separate performance obligation and are recognized ratably over the time of the subscription.
Cost of Revenue
Cost of subscription revenue consists primarily of employee-related costs including payroll, benefits and stock-based compensation expense for operations and customer support teams, costs of cloud hosting providers and other third-party service providers, amortization of capitalized software development costs and acquired technology and allocated overhead costs.
Cost of professional services consists primarily of personnel costs of our professional services organization, including payroll, benefits, and stock-based compensation expense, allocated overhead costs and other third-party service providers.
The costs associated with providing professional services are significantly higher as a percentage of related revenue than the costs associated with delivering our subscriptions due to the labor costs of providing professional services. As such, the implementation and professional services costs relating to an arrangement with a new customer are more significant than the costs to renew an existing customer’s license and support arrangement.
Cost of revenue increased in absolute dollars from the three months ended March 31, 2023 to the three months ended March 31, 2024. For the three months ended March 31, 2023 and 2024, our cost of revenue was $15,987 and $16,173, respectively.




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Gross Margins
Gross margins have been, and will continue to be, affected by a variety of factors, including the average sales price of our products and services, volume growth, the mix of revenue between SaaS and PaaS subscriptions, software licenses, maintenance and support and professional services, onboarding of new media and telecom customers, hosting of major virtual events and changes in cloud infrastructure and personnel costs.
In particular, the gross margins in our M&T segment have been negatively impacted due to the resources required for implementation of our TV Solution and Media Services for TV experiences, which generally exceed those of our other offerings, resulting in a longer period from initial booking to go-live and a higher proportion of professional services revenue as a percentage of overall revenue.
Additionally, a higher proportion of revenue comes from customers who choose to license our offerings through private cloud and on-premise deployments, which also impacts our gross margin. In the long-term, we expect the margins for this segment to improve due to the following: expected increase in the ratio of subscription revenue to professional services with scale, improved efficiencies of both production and professional services costs, and an increase in the proportion of revenues from media customers, which generally entail simpler deployments compared to telecom customers. However, in the near and medium term, our gross margins in our M&T segment are expected to vary from period to period based on the onboarding of new customers, as well as the timing and aggregate usage of our solutions by such customers.
For the three months ended March 31, 2024 and 2023, our gross margins were 64% (72% for subscriptions and (32)% for professional services) and 63% (72% for subscriptions and (67)% for professional services), respectively.
For our EE&T segment, gross margins for the three months ended March 31, 2024 and 2023 were 73% (79% for subscriptions and (35)% for professional services) and 73% (78% for subscriptions and (40)% for professional services), respectively.
For our M&T segment, gross margins for the three months ended March 31, 2024 and 2023 were 41% (53% for subscriptions and (29)% for professional services) and 38% (56% for subscriptions and (95)% for professional services), respectively.
Research and Development
Our research and development expenses consist primarily of costs incurred for personnel-related expenses for our technical staff, including salaries and other direct personnel-related costs. Additional expenses include consulting and professional fees for third-party development resources and software subscriptions. We expect our research and development expenses generally to remain constant as a percentage of revenue for the near and medium-term, as we continue to dedicate substantial resources to develop, improve, and expand the functionality of our solutions. Subsequent costs incurred for the development of future upgrades and enhancements, which are expected to result in additional functionality, may qualify for capitalization under internal-use software and therefore may cause research and development expenses to fluctuate.
Sales and Marketing Expenses
Our sales and marketing expenses consist primarily of personnel related costs for our sales and marketing functions, including salaries and other direct personnel-related costs, such as sales commissions. Additional expenses include marketing program costs and amortization of acquired customer relationships intangible assets. We expect our sales and marketing expenses to be relatively stable on an absolute dollar basis.
General and Administrative Expenses
Our general and administrative expenses consist primarily of personnel-related costs for our executive, finance, human resources, information technology, and legal functions, including salaries and other direct personnel-related costs. We expect our general and administrative expenses to be relatively stable both on an absolute dollar basis and as a percentage of revenue for the near and medium-term.
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We allocate overhead costs such as rent, utilities, and supplies to all departments based on relative headcount to each operating expense category.
Financial Expenses (Income), Net
Financial expenses (income), net consists of interest expense accrued or paid on our indebtedness, net of interest income earned on our cash balances and marketable securities. Financial expenses (income), net also includes foreign exchange gains and losses and bank fees.
We expect interest expenses to vary each reporting period depending on the amount of outstanding indebtedness and prevailing interest rates.
We expect interest income will vary in each reporting period depending on our average cash and marketable securities balances during the period and applicable interest rates.
Provision for Income Taxes
We are subject to taxes in the United States as well as other tax jurisdictions or countries in which we conduct business. Earnings from our non-U.S. activities are subject to local country income tax and may be subject to current U.S. income tax. Due to cumulative losses, we maintain a valuation allowance against our deferred tax assets. We consider all available evidence, both positive and negative, in assessing the extent to which a valuation allowance should be applied against our deferred tax assets. Realization of our U.S. deferred tax assets depends upon future earnings, the timing and amount of which are uncertain. Our effective tax rate is affected by tax rates in foreign jurisdictions and the relative amounts of income we earn in those jurisdictions, as well as non-deductible expenses, such as share-based compensation, and changes in our valuation allowance.
Results of Operations
The following table summarizes key components of our results of operations for the periods presented. The period-to-period comparisons of our historical results are not necessarily indicative of the results that may be expected in the future.
Three Months Ended March 31,