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Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
			For the quarterly period ended June 30, 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 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

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 August 1, 2024 was 148,992,942

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TABLE OF CONTENTS

						Page
PART I			FINANCIAL INFORMATION
Item 1.			Consolidated Financial Statements (unaudited)
			Condensed Consolidated Balance Sheets as of June 30, 2024 (unaudited) and December 31, 2023 (audited)			4
			Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2024 and 2023 (unaudited)			6
			Condensed Consolidated Statements of Comprehensive Loss for the three and six months ended June 30, 2024 and 2023 (unaudited)			7
			Condensed Consolidated Statement of Stockholders’ Equity for the three and six months ended June 30, 2024 and 2023 (unaudited)			8
			Condensed Consolidated Statement of Cash Flows for the six months ended June 30, 2024 and 2023 (unaudited)			10
			Notes to Condensed Consolidated Interim Financial Statements (unaudited)			12
Item 2.			Management’s Discussion and Analysis of Financial Condition and Results of Operations			31
Item 3.			Quantitative and Qualitative Disclosures About Market Risk			50
Item 4.			Controls and Procedures			50
PART II			OTHER INFORMATION
Item 1.			Legal Proceedings			52
Item 1A.			Risk Factors			52
Item 2.			Unregistered Sales of Equity Securities and Use of Proceeds			52
Item 3.			Defaults Upon Senior Securities			52
Item 4.			Mine Safety Disclosures			52
Item 5.			Other Information			52
Item 6.			Exhibits			55
			Signatures			67

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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. 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 and 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 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;

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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;

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•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;

•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)

			June 30, 2024						December 31, 2023
ASSETS
CURRENT ASSETS:
Cash and cash equivalents			$	34,268					$	36,684
Marketable securities			34,035						32,692
Trade receivables			22,116						23,312
Prepaid expenses and other current assets			7,522						8,410
Deferred contract acquisition and fulfillment costs, current			10,384						10,636
Total current assets			108,325						111,734
LONG-TERM ASSETS:
Marketable securities			2,953						5,844
Property and equipment, net			18,068						20,113
Other assets, noncurrent			2,843						3,100
Deferred contract acquisition and fulfillment costs, noncurrent			14,526						17,314
Operating lease right-of-use assets			13,067						13,872
Intangible assets, net			452						689
Goodwill			11,070						11,070
Total noncurrent assets			62,979						72,002
TOTAL ASSETS			$	171,304					$	183,736
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long-term loans			$	2,280					$	1,612
Trade payables			7,052						3,629
Employees and payroll accruals			11,748						12,651
Accrued expenses and other current liabilities			19,552						17,279
Operating lease liabilities, current			2,402						2,374
Deferred revenue, current			55,458						62,364
Total current liabilities			98,492						99,909
LONG-TERM LIABILITIES:
Deferred revenue, noncurrent			80						369
Long-term loans, net of current portion			31,110						33,047
Operating lease liabilities, noncurrent			16,081						17,796
Other liabilities, noncurrent			2,064						2,295
Total long-term liabilities			49,335						53,507
TOTAL LIABILITIES			$	147,827					$	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)

						June 30, 2024						December 31, 2023
COMMITMENTS AND CONTINGENCIES (NOTE 8)
STOCKHOLDERS' EQUITY:
Preferred stock, $0.0001 par value per share, 20,000,000 shares authorized as of June 30, 2024 and December 31, 2023; 0 shares issued and outstanding as of June 30, 2024, and December 31, 2023						—						—
Common stock $0.0001 par value per share, 1,000,000,000 shares authorized as of June 30, 2024 and December 31, 2023; 156,956,711 and 150,274,107 shares issued as of June 30, 2024 and December 31, 2023, respectively; 149,204,916 and 142,588,917 outstanding as of June 30, 2024 and December 31, 2023, respectively						15						14
Treasury stock – 7,751,795 and 7,685,190 shares of common stock, $0.0001 par value per share, as of June 30, 2024 and December 31, 2023, respectively						(4,966)						(4,881)
Additional paid-in capital						487,406						471,635
Accumulated other comprehensive (loss) income						(383)						1,047
Accumulated deficit						(458,595)						(437,495)
Total stockholders' equity						23,477						30,320
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY						$	171,304					$	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 June 30,												Six Months Ended June 30,
						2024						2023						2024						2023
Revenue:
Subscription						$	41,014					$	40,724					$	82,184					$	81,116
Professional services						3,018						3,156						6,629						6,037
Total revenue						44,032						43,880						88,813						87,153
Cost of revenue:
Subscription						10,861						10,935						22,262						22,103
Professional services						4,495						4,343						9,267						9,162
Total cost of revenue						15,356						15,278						31,529						31,265
Gross profit						28,676						28,602						57,284						55,888
Operating expenses:
Research and development						12,029						12,975						24,034						27,105
Sales and marketing						11,780						12,734						23,592						24,805
General and administrative						13,417						12,431						25,498						24,531
Restructuring						—						23						—						968
Total operating expenses						37,226						38,163						73,124						77,409
Operating loss						8,550						9,561						15,840						21,521
Financial expense (income), net						(1,010)						(1,166)						488						(2,951)
Loss before provision for income taxes						7,540						8,395						16,328						18,570
Provision for income taxes						2,464						2,383						4,772						5,003
Net loss						10,004						10,778						21,100						23,573
Net loss per share attributable to common stockholders, basic and diluted						$	0.07					$	0.08					$	0.14					$	0.17
Weighted-average shares used in computing net loss per share attributable to common stockholders, basic and diluted						147,607,504						136,782,051						145,939,847						135,939,680

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

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KALTURA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(U.S. dollars in thousands, except for share data)
(unaudited)

						Three Months Ended June 30,												Six Months Ended June 30,
						2024						2023						2024						2023
Net loss						$	10,004					$	10,778					$	21,100					$	23,573
Other comprehensive income (loss):
Net unrealized gains (losses) on cash flow hedges						(662)						270						(1,335)						(91)
Net unrealized gains (losses) on available-for-sale marketable securities						(23)						22						(95)						131
Other comprehensive income (losses)						(685)						292						(1,430)						40
Comprehensive loss						$	10,689					$	10,486					$	22,530					$	23,533

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 stock												Treasury stock												Additional paid-in capital						Accumulated other comprehensive loss						Accumulated deficit						Total stockholders' equity
						Number						Amount						Number						Amount
Balance as of April 1, 2024						146,346,306						$	14					7,685,190						$	(4,881)					$	478,292					$	302					$	(448,591)					$	25,136
Stock-based compensation						—						—						—						—						9,038						—						—						9,038
Repurchase of common stock						(66,605)						—						66,605						(85)						—						—						—						(85)
Issuance of common stock upon exercise of stock options, and vesting of restricted stock units						2,925,215						1						—						—						76						—						—						77
Other comprehensive losses						—						—						—						—						—						(685)						—						(685)
Net loss						—						—						—						—						—						—						(10,004)						(10,004)
Balance as of June 30, 2024						149,204,916						$	15					7,751,795						$	(4,966)					$	487,406					$	(383)					$	(458,595)					$	23,477

						Common stock												Treasury stock												Additional paid-in capital						Accumulated other comprehensive loss						Accumulated deficit						Total stockholders' equity
						Number						Amount						Number						Amount
Balance as of April 1, 2023						135,695,254						$	13					7,685,190						$	(4,881)					$	447,316					$	(553)					$	(403,924)					$	37,971
Stock-based compensation						—						—						—						—						7,668						—						—						7,668
Issuance of common stock upon exercise of stock options, and vesting of restricted stock units						2,098,224						—						—						—						370						—						—						370
Other comprehensive income						—						—						—						—						—						292						—						292
Net loss						—						—						—						—						—						—						(10,778)						(10,778)
Balance as of June 30, 2023						137,793,478						$	13					7,685,190						$	(4,881)					$	455,354					$	(261)					$	(414,702)					$	35,523

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 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, 2024						142,588,917						$	14					7,685,190						$	(4,881)					$	471,635					$	1,047					$	(437,495)					$	30,320
Stock-based compensation						—						—						—						—						15,621						—						—						15,621
Repurchase of common stock						(66,605)						—						66,605						(85)						—						—						—						(85)
Issuance of common stock upon exercise of stock options, and vesting of restricted stock units						6,682,604						1						—						—						150						—						—						151
Other comprehensive losses						—						—						—						—						—						(1,430)						—						(1,430)
Net loss						—						—						—						—						—						—						(21,100)						(21,100)
Balance as of June 30, 2024						149,204,916						$	15					7,751,795						$	(4,966)					$	487,406					$	(383)					$	(458,595)					$	23,477

						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						—						—						—						—						14,959						—						—						14,959
Issuance of common stock upon exercise of stock options, and vesting of restricted stock units						3,229,049						—						—						—						751						—						—						751
Other comprehensive income						—						—						—						—						—						40						—						40
Net loss						—						—						—						—						—						—						(23,573)						(23,573)
Balance as of June 30, 2023						137,793,478						$	13					7,685,190						$	(4,881)					$	455,354					$	(261)					$	(414,702)					$	35,523

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

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KALTURA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
U.S. dollars in thousands
(unaudited)

						Six Months Ended June 30,
						2024						2023
Cash flows from operating activities:
Net loss						$	(21,100)					$	(23,573)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization						2,585						2,155
Stock-based compensation expenses						15,429						14,583
Amortization of deferred contract acquisition and fulfillment costs						5,731						5,872
Non-cash interest income, net						(593)						(405)
Losses (Gain) on foreign exchange						132						(485)
Changes in operating assets and liabilities:
Decrease (Increase) in trade receivables						1,196						(978)
Increase in prepaid expenses and other current assets and other assets, noncurrent						(34)						(6)
Increase in deferred contract acquisition and fulfillment costs						(2,497)						(3,279)
Increase in trade payables						3,447						1,084
Increase (decrease) in accrued expenses and other current liabilities						1,967						(349)
Decrease in employees and payroll accruals						(903)						(2,409)
Increase (Decrease) in other liabilities, noncurrent						(33)						415
Decrease in deferred revenue						(7,195)						(3,235)
Operating lease right-of-use assets and lease liabilities, net						(883)						(954)
Net cash used in operating activities						(2,751)						(11,564)
Cash flows from investing activities:
Investment in available-for-sale marketable securities						(19,392)						(14,645)
Proceeds from maturities of available-for-sale marketable securities						21,482						26,191
Purchases of property and equipment						(327)						(1,591)
Capitalized internal-use software						—						(1,242)
Investment in restricted bank deposit						—						(1,001)
Net cash provided by investing activities						1,763						7,712
Cash flows from financing activities:
Repayment of long-term loans						(1,313)						(3,000)
Proceeds from exercise of stock options						177						815
Payment of debt issuance costs						(10)						—
Repurchase of common stock						(85)						—
Payments on account of repurchase of common stock						(65)						—
Net cash used in financing activities						(1,296)						(2,185)
Effect of exchange rate changes on cash, cash equivalents and restricted cash						(132)						485
Net decrease in cash, cash equivalents and restricted cash						(2,416)						(5,552)
Cash, cash equivalents and restricted cash at the beginning of the period						36,784						45,833
Cash, cash equivalents and restricted cash at the end of the period						$	34,368					$	40,281

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

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KALTURA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
U.S. dollars in thousands
(unaudited)

						Six Months Ended June 30,
						2024						2023
Supplemental disclosure of non-cash activity:
Purchase of property, equipment and internal-use software in credit						$	19					$	179
Capitalized stock-based compensation cost						$	309					$	389
Pending proceeds from option exercises						$	51					$	163
Lease incentive recognized as leasehold improvements						$	—					$	3,790
Supplemental disclosure of cash flow information
Cash paid for income taxes, net						$	2,242					$	2,443
Cash paid for interest						$	1,382					$	1,504
Reconciliation of cash, cash equivalents, and restricted cash to the consolidated balance sheet
Cash and cash equivalents						$	34,268					$	40,181
Restricted cash included in other assets, noncurrent						100						100
Total cash, cash equivalents, and restricted cash						$	34,368					$	40,281

    

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 June 30, 2024, and the Company’s consolidated results of operations, stockholders’ equity, and cash flows for the three and six months ended June 30, 2024 and 2023. The results for the three and six months ended June 30, 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 June 30,												Six Months Ended June 30,
						2024						2023						2024						2023
Customer A (M&T)						11.00		%				10.30		%				10.80		%				10.50		%

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 six months ended June 30, 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 June 30, 2024
						Enterprise, Education and Technology												Media and Telecom
						Amount						Percentage of revenue						Amount						Percentage of revenue
Subscription						$	29,771					96.1		%				$	11,243					86.0		%
Professional services						1,194						3.9		%				1,824						14.0		%
						$	30,965					100		%				$	13,067					100		%

						Three Months Ended June 30, 2023
						Enterprise, Education and Technology												Media and Telecom
						Amount						Percentage of revenue						Amount						Percentage of revenue
Subscription						$	30,258					97.1		%				$	10,466					82.3		%
Professional services						900						2.9		%				2,256						17.7		%
						$	31,158					100		%				$	12,722					100		%

						Six Months Ended June 30, 2024
						Enterprise, Education and Technology												Media and Telecom
						Amount						Percentage of revenue						Amount						Percentage of revenue
Subscription						$	60,426					95.3		%				$	21,758					85.6		%
Professional services						2,979						4.7		%				3,650						14.4		%
						$	63,405					100		%				$	25,408					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)

						Six Months Ended June 30, 2023
						Enterprise, Education and Technology												Media and Telecom
						Amount						Percentage of revenue						Amount						Percentage of revenue
Subscription						$	60,132					96.2		%				$	20,984					85.1		%
Professional services						2,356						3.8		%				3,681						14.9		%
						$	62,488					100		%				$	24,665					100		%

The following tables summarize revenue by region based on the billing address of customers:

						Three Months Ended June 30,
						2024												2023
						Amount						Percentage of revenue						Amount						Percentage of revenue
United States (“US”)						$	23,547					53.5		%				$	22,902					52.2		%
Europe, the Middle East and Africa ("EMEA")						16,884						38.3		%				16,599						37.8		%
Other						3,601						8.2		%				4,379						10.0		%
						$	44,032					100		%				$	43,880					100		%

						Six Months Ended June 30,
						2024												2023
						Amount						Percentage of revenue						Amount						Percentage of revenue
US						$	46,737					52.6		%				$	45,973					52.7		%
EMEA						34,404						38.7		%				32,523						37.3		%
Other						7,672						8.7		%				8,657						10.0		%
						$	88,813					100		%				$	87,153					100		%

Remaining Performance Obligations

Remaining performance obligations represent the amount of contracted future revenue that has not yet been recognized, including both deferred revenue and contracted amounts that will be invoiced and recognized as revenue in future periods. As of June 30, 2024, the aggregate amount of the transaction price allocated to remaining performance obligations was $177,751, which consists of both billed consideration in the amount of $55,538 and unbilled consideration in the amount of $122,213 that the Company expects to recognize as revenue but that was not yet recognized on the balance sheet. The Company expects to recognize 60% of its remaining performance obligations as revenue over the next 12 months and the remainder thereafter.

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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)

Costs to Obtain a Contract

The following table represents a roll forward of costs to obtain a contract:

						Three Months Ended June 30,												Six Months Ended June 30,
						2024						2023						2024						2023
Beginning balance						$	22,860					$	26,146					$	24,210					$	26,928
Additions to deferred contract acquisition costs during the period						1,634						1,807						2,804						3,547
Amortization of deferred contract acquisition costs						(2,492)						(2,468)						(5,012)						(4,990)
Ending balance						$	22,002					$	25,485					$	22,002					$	25,485
Deferred contract acquisition costs, current						$	9,146					$	9,042					$	9,146					$	9,042
Deferred contract acquisition costs, noncurrent						12,856						16,443						12,856						16,443
Total deferred costs to obtain a contract						$	22,002					$	25,485					$	22,002					$	25,485

Costs to Fulfill a Contract

The following table represents a roll forward of costs to fulfill a contract:

						Three Months Ended June 30,												Six Months Ended June 30,
						2024						2023						2024						2023
Beginning balance						$	3,323					$	5,075					$	3,740					$	5,522
Additions to deferred costs to fulfill a contract during the period						—						—						—						—
Amortization of deferred costs to fulfill a contract						(415)						(448)						(832)						(895)
Ending balance						$	2,908					$	4,627					$	2,908					$	4,627
Deferred fulfillment costs, current						1,238						1,719						1,238						1,719
Deferred fulfillment costs, noncurrent						1,670						2,908						1,670						2,908
Total deferred costs to fulfill a contract						$	2,908					$	4,627					$	2,908					$	4,627

NOTE 4: MARKETABLE SECURITIES

The following is a summary of available-for-sale marketable securities as of June 30, 2024 and December 31, 2023:

						June 30, 2024
						Amortized Cost						Gross Unrealized Gains						Gross Unrealized Losses						Fair Value
Available-for-sale – matures within one year:
Corporate bonds						$	8,961					$	1					$	(5)					$	8,957
U.S. Treasury						17,815						—						(26)						17,789
Commercial paper						2,986						—						(2)						2,984
Agency bonds						4,312						—						(7)						4,305
						34,074						1						(40)						34,035
Available-for-sale – matures after one year:
Corporate bonds						1,964						1						(4)						1,961
U.S. Treasury						995						—						(3)						992
						2,959						1						(7)						2,953
Total						$	37,033					$	2					$	(47)					$	36,988

						December 31, 2023
						Amortized Cost						Gross Unrealized Gains						Gross Unrealized Losses						Fair Value
Available-for-sale – matures within one year:
Corporate bonds						$	6,985					$	4					$	—					$	6,989
U.S. Treasury						8,795						17						—						8,812
Commercial paper						8,855						—						(5)						8,850
Agency bonds						8,037						9						(5)						8,041
						32,672						30						(10)						32,692
Available-for-sale – matures after one year:
Corporate bonds						2,944						14						—						2,958
U.S. Treasury						2,869						17						—						2,886
						5,813						31						—						5,844
Total						$	38,485					$	61					$	(10)					$	38,536

As of June 30, 2024 and December 31, 2023, the Company did not record an allowance for credit losses for its available-for-sale marketable debt securities and the vast majority 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 June 30, 2024 and December 31, 2023 by level within the fair value hierarchy:

												Fair Value Measurements As Of
Description						Fair Value Hierarchy						June 30, 2024						December 31, 2023
Measured at fair value on a recurring basis:
Assets:
Cash equivalents:
Money market funds						Level 1						$	18,295					$	18,745
Short-term marketable securities:
Corporate bonds						Level 2						$	8,957					$	6,989
U.S. Treasury						Level 2						$	17,789					$	8,812
Commercial paper						Level 2						$	2,984					$	8,850
Agency bonds						Level 2						$	4,305					$	8,041
Long-term marketable securities:
Corporate bonds						Level 2						$	1,961					$	2,958
U.S. Treasury						Level 2						$	992					$	2,886
Prepaid expenses and other current assets:
Restricted bank deposits						Level 2						$	3,397					$	3,397
Options and forward contracts designated as hedging instruments						Level 2						$	—					$	998
Other assets, noncurrent:
Restricted bank deposit						Level 2						$	989					$	1,025
Liabilities:
Derivative instruments liability included in accrued expenses and other current liabilities:
Options and forward contracts designated as hedging instruments						Level 2						$	337					$	—

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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 entered 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 $23,001 and $15,093 as of June 30, 2024 and December 31, 2023, respectively. The fair value of the Company’s outstanding contracts amounted to a liability of $337 as of June 30, 2024 and asset of $998 as of December 31, 2023. These liabilities and assets were recorded under accrued expenses and other current liabilities and prepaid expenses and other current assets, respectively. Gain of $145, $811 and losses of $693, $1,198 were reclassified from accumulated other comprehensive losses during the three and six months ended June 30, 2024 and 2023, respectively. Such gains and losses were reclassified from accumulated other comprehensive losses 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 and six months ended June 30, 2024 and 2023 were as follows:

Condensed Statement of Operations Location:						Three Months Ended June 30, 2024						Three Months Ended June 30, 2023						Six Months Ended June 30, 2024						Six Months Ended June 30, 2023
Cost of revenue						$	(21)					$	93					$	(122)					$	162
Research and development						(75)						358						(418)						610
Sales and marketing						(21)						94						(108)						152
General and administrative						(28)						124						(163)						220
Restructuring						—						—						—						28
Total						$	(145)					$	669					$	(811)					$	1,172

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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 7: LEASES

The Company leases its office facilities under non-cancelable agreements that expire at various dates through November 2027. The Company has a lease agreement for offices in Israel which includes two extension options for five years each. The Company estimates that it is reasonably certain that it will exercise the option for the first extension period. Therefore, for the purposes of determining the amount of the expense and the value of the right of use asset and lease liability according to ASC 842, the Company determined that the lease term would end in November 2032.

Components of operating lease expense were as follows:

						Three Months Ended June 30, 2024						Three Months Ended June 30, 2023						Six Months Ended June 30, 2024						Six Months Ended June 30, 2023
Operating lease cost						$	685					$	726					$	1,369					$	1,488
Short-term lease cost						—						—						—						154
Variable lease cost						36						20						70						29
Total						$	721					$	746					$	1,439					$	1,671

Supplementary cash flow information related to operating leases was as follows:

						Three Months Ended June 30, 2024						Three Months Ended June 30, 2023						Six Months Ended June 30, 2024						Six Months Ended June 30, 2023
Cash paid for operating leases						$	877					$	875					$	1,264					$	1,477

As of June 30, 2024, the weighted-average discount rate is 4.58% and the weighted-average remaining term is 7.70 years. Maturities of the Company’s operating lease liabilities as of June 30, 2024 were as follows:

Year Ending December 31,
2024 (Remainder)						1,528
2025						3,040
2026						3,102
2027						2,669
2028						2,287
2029						2,287
2030 and thereafter						5,938
Total operating lease payments						$	20,851
Less: imputed interest						2,368
Total operating lease liabilities						$	18,483

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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 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 June 30, 2024:

Year Ending December 31,
2024 (Remainder)						17,759
2025						27,799
2026						28,557
Total purchase commitment						$	74,115

During the six months ended June 30, 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.

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:

						June 30, 2024						December 31, 2023
Prepaid expenses						$	3,178					$	2,656
Government institutions						60						—
Derivative instrument						—						998
Restricted bank deposits						3,397						3,397
Other current assets						887						1,359
						$	7,522					$	8,410

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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)

Property and Equipment, net

Composition of property and equipment is as follows:

						June 30, 2024						December 31, 2023
Cost:
Computers and peripheral equipment						$	4,026					$	3,802
Office furniture and equipment						2,237						2,183
Leasehold improvements						7,286						7,267
Finance leases of computers and peripheral equipment						254						253
Internal use software						13,755						13,755
						27,558						27,260
Accumulated depreciation						(9,490)						(7,147)
Depreciated cost						$	18,068					$	20,113

Depreciation expenses for the three months ended June 30, 2024 and 2023, and for the six months ended June 30, 2024 and 2023 were $1,161, $998, $2,343 and $1,840, respectively.

Other assets, noncurrent

						June 30, 2024						December 31, 2023
Restricted cash						$	100					$	100
Severance pay fund						1,485						1,685
Restricted deposit						989						1,025
Other						269						290
						$	2,843					$	3,100

Accrued expenses and other current liabilities

						June 30, 2024						December 31, 2023
Accrued expenses						$	4,404					$	4,353
Accrued taxes						13,745						11,755
Derivative instruments						337						—
Other current liabilities						1,066						1,171
						$	19,552					$	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 June 30, 2024 and December 31, 2023, were as follows:

						June 30, 2024												December 31, 2023
						Weighted average remaining useful life (in years)						Balance						Balance
Gross carrying amount:
Technology						0.75						$	4,700					$	4,700
Customer relationship						2.75						2,419						2,419
												7,119						7,119
Accumulated amortization and impairments:
Technology												(4,389)						(4,177)
Customer relationship												(2,278)						(2,253)
												(6,667)						(6,430)
Intangible assets, net												$	452					$	689

During the three months ended June 30, 2024 and 2023, and the six months ended June 30, 2024 and 2023, the Company recorded amortization expenses in the amount of $118, $148, $237 and $315, respectively, included in cost of revenue and sales and marketing expenses in the consolidated statements of operations.

The estimated future amortization expense of intangible assets as of June 30, 2024, is as follows:

						Year Ending December 31,
2024 (Remainder)						240
2025						$	148
2026						50
2027						14
						$	452

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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 11: INCOME TAXES

The Company recognized an income tax expense of $2,464, $2,383, $4,772 and $5,003 for the three and six months ended June 30, 2024, and 2023, respectively. The tax expense for these periods was primarily attributable to pre-tax foreign earnings. The Company’s effective tax rates of (33)%, (28)%, (29)% and (27)% for the three and six months ended June 30, 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 foreign countries.

The Company has a full valuation allowance on its deferred tax assets. Deferred tax liability is from indefinite life goodwill intangibles. 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 June 30,												Six Months Ended June 30,
						2024						2023						2024						2023
Numerator:
Net loss						$	10,004					$	10,778					$	21,100					$	23,573
Denominator:
Weighted-average shares used in computing net loss per share attributable to common stockholders, basic and diluted						147,607,504						136,782,051						145,939,847						135,939,680
Net loss per share attributable to common stockholders, basic and diluted						$	0.07					$	0.08					$	0.14					$	0.17

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:

						As of June 30,
						2024						2023
Outstanding stock options and RSUs						35,790,142						39,020,539
Total						35,790,142						39,020,539

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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 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 ("CODM") is its Chief Executive Officer. The Company's CODM does not regularly review asset information by segments and, therefore, the Company does not report asset information by segment.

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 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.

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 June 30, 2024

Enterprise, Education and Technology