Kaltura(KLTR) - 2025 Q2 - Quarterly Results

Executive Summary Kaltura reported strong Q2 2025 results, exceeding guidance with record non-GAAP net profit and adjusted EBITDA, while initiating a reorganization to boost efficiency and target long-term growth Q2 2025 Performance Overview Kaltura announced strong financial results for Q2 2025, exceeding all guidance ranges with record non-GAAP net profit, matching last quarter's record adjusted EBITDA, and achieving the strongest second-quarter operating cash flow since 2020 - Exceeded all second quarter guidance ranges[3] - Delivered record non-GAAP net profit[3] - Adjusted EBITDA profit matched last quarter's record high[3] - Achieved strongest second-quarter operating cash flow since 2020[3] CEO Commentary & Strategic Outlook CEO Ron Yekutiel highlighted sequential growth in new bookings, including initial sales of AI products, and a robust pipeline for the second half of 2025. He also announced a reorganization plan with a 10% workforce reduction to boost efficiency, aiming to double adjusted EBITDA by 2026 and return to being a 'Rule of 30' company by or before 2028 - New bookings increased sequentially and included initial sales of AI products[3] - Robust pipeline for the second half of the year, projecting growth in new bookings[3] - Initiated a reorganization plan including a workforce reduction of approximately 10% to boost efficiency and productivity[3] - Long-term strategy to double adjusted EBITDA in 2026 and return to being a 'Rule of 30' company by or before 2028 through double-digit revenue growth and improved adjusted EBITDA margin[3] Q2 2025 Financial Highlights Kaltura reported a 1% increase in total revenue and a 3% increase in subscription revenue and ARR year-over-year for Q2 2025. GAAP gross margin improved to 70% from 65%, and non-GAAP gross margin to 70% from 66%. The company achieved non-GAAP operating profit of $3.0 million (vs. $0.5M in Q2 2024) and non-GAAP net profit of $2.5 million (vs. net loss of $2.1M in Q2 2024), alongside a significant increase in Adjusted EBITDA to $4.1 million. Net cash from operating activities turned positive Q2 2025 Financial Performance (YoY Comparison) | Metric | Q2 2025 | Q2 2024 | Change | | :-------------------------- | :---------- | :---------- | :----- | | Revenue | $44.5 million | $44.0 million | +1% | | Subscription Revenue | $42.4 million | $41.0 million | +3% | | Annualized Recurring Revenue (ARR) | $170.4 million | $165.2 million | +3% | | GAAP Gross profit | $31.2 million | $28.7 million | +8.7% | | GAAP Gross margin | 70% | 65% | +5 ppts | | Non-GAAP Gross profit | $31.3 million | $29.0 million | +7.9% | | Non-GAAP Gross margin | 70% | 66% | +4 ppts | | GAAP Operating loss | $2.8 million | $8.6 million | Improved | | Non-GAAP Operating profit | $3.0 million | $0.5 million | +500% | | GAAP Net loss | $7.8 million | $10.0 million | Improved | | GAAP Net loss per diluted share | $0.05 | $0.07 | Improved | | Non-GAAP Net profit | $2.5 million | ($2.1 million) | Turned profitable | | Non-GAAP Net profit per diluted share | $0.01 | ($0.01) | Turned profitable | | Adjusted EBITDA | $4.1 million | $1.6 million | +156% | | Net Cash Provided by Operating Activities | $2.7 million | ($1.6 million) | Turned positive | Q2 2025 Business Highlights & Strategic Initiatives Kaltura achieved strong business momentum with new AI deals and improved customer retention, alongside a strategic reorganization to enhance productivity and realize significant cost savings Business Momentum & AI Adoption Kaltura achieved significant business momentum in Q2 2025, closing 21 new six-figure deals and initiating its AI monetization journey with the first three AI-driven deals, building a pipeline of over 100 qualified AI opportunities - Closed 21 new six-figure deals across diverse industries[8] - Signed first three AI-driven deals featuring Content Lab and Genie[8] - AI sales pipeline now includes over 100 qualified opportunities[8] Customer Retention & Industry Recognition Kaltura demonstrated strong customer retention with a third consecutive quarter of YoY improvement in Net Dollar Retention (NDR) and continued industry recognition, including being named an IDC MarketScape Leader for AI-Enabled Enterprise Video Platforms and multiple awards for its products - Achieved a third consecutive quarter of year-over-year improvement in Net Dollar Retention (NDR), and a fourth consecutive quarter above 100%[8] - Recognized as a Leader by IDC in their inaugural MarketScape for AI-Enabled Enterprise Video Platforms[8] - Class Genie awarded 'e-Learning Innovation of the Year' at the 7th Annual EdTech Breakthrough Awards[8] - Virtual Events & Webinars platform earned five Gold Awards at the 2025 Eventex Awards[8] Organizational Realignment & Financial Impact Kaltura initiated a company-wide reorganization, including a 10% workforce reduction, to enhance productivity and streamline operations. This realignment is expected to generate $2.6 million in cost savings for the remainder of 2025 and $8.5 million annually, with a one-time charge of $0.7 million in Q3 2025 - Initiated a company-wide reorganization to enhance productivity, streamline operations, and capture synergies, including unifying engineering resources and consolidating Customer Experience and Sales[8] - The reorganization includes a reduction of approximately 10% of the workforce, primarily impacting engineering, professional services, and administrative spend[8] - Expected cost savings from workforce reductions: $2.6 million for the balance of 2025, and $8.5 million on an annualized basis[8] - Total one-time charge related to the reorganization expected to be approximately $0.7 million in Q3 2025[8] Financial Outlook Kaltura provided financial guidance for Q3 and full year 2025, projecting continued revenue growth and increased Adjusted EBITDA, reflecting anticipated benefits from strategic initiatives Q3 2025 Guidance Kaltura provided financial guidance for the third quarter of 2025, projecting total revenue between $42.8 million and $43.6 million, with subscription revenue ranging from $40.8 million to $41.6 million, and Adjusted EBITDA between $1.5 million and $2.5 million Q3 2025 Financial Guidance | Metric | Range | | :---------------- | :-------------------------- | | Subscription Revenue | $40.8 million - $41.6 million | | Total Revenue | $42.8 million - $43.6 million | | Adjusted EBITDA | $1.5 million - $2.5 million | Full Year 2025 Guidance For the full year ending December 31, 2025, Kaltura expects total revenue to be between $180.4 million and $182.4 million, with subscription revenue between $170.9 million and $172.9 million, and Adjusted EBITDA in the range of $14.5 million to $16.0 million Full Year 2025 Financial Guidance | Metric | Range | | :---------------- | :-------------------------- | | Subscription Revenue | $170.9 million - $172.9 million | | Total Revenue | $180.4 million - $182.4 million | | Adjusted EBITDA | $14.5 million - $16.0 million | Company Information & Disclosures This section provides essential company information, including investor resources, a company overview, important forward-looking statements, and definitions of non-GAAP financial measures and key operating metrics Investor Resources & Conference Call Kaltura provides an Investor Deck on its website and will host a conference call to discuss Q2 2025 results and outlook, with replay available online - Second quarter and full year 2025 Investor Deck available on www.investors.kaltura.com[9](index=9&type=chunk) - Conference call scheduled for August 7, 2025, at 8:00 a.m. ET to review Q2 2025 financial results and discuss financial outlook[10] About Kaltura Kaltura is the Video Experience Cloud, dedicated to creating AI-infused, hyper-personalized video experiences to enhance customer and employee engagement. Its offerings include enterprise and TV content management and a range of Gen AI-infused video-first products for various applications - Mission: Create and power AI-infused hyper-personalized video experiences that boost customer and employee engagement and success[12] - Products: AI Video Experience Cloud, platform for enterprise and TV content management, and Gen AI-infused video-first products (e.g., Video Portals, Virtual Events, Virtual Classrooms)[12] - Engages millions of end-users for marketing, sales, education, communication, collaboration, entertainment, and monetization[12] Forward-Looking Statements This section highlights that the press release contains forward-looking statements regarding future performance, strategy, and economic conditions, which are subject to various known and unknown risks and uncertainties that could cause actual results to differ materially - Statements regarding future financial and operating performance, business strategy, cost-saving initiatives, AI-driven technologies, profitability, and general economic conditions are considered forward-looking[13] - Forward-looking statements are based on current plans, estimates, and expectations and are not a guarantee of future achievement[14] - Actual results may differ materially due to factors such as the volatile economic climate, geopolitical conditions (Israel), customer retention, competition, technological developments, AI risks, cybersecurity, and data privacy[15] Non-GAAP Financial Measures Explanation Kaltura provides non-GAAP financial measures, including non-GAAP gross profit, operating profit, net income, and Adjusted EBITDA, to offer supplemental information useful for management and investors in evaluating core operating performance. These measures adjust GAAP figures for specific non-cash and non-recurring items, but are not a substitute for GAAP results - Non-GAAP financial measures (e.g., gross profit, operating profit/loss, net income/loss, Adjusted EBITDA) are provided as supplemental information to GAAP[16] - Adjustments include stock-based compensation, amortization of acquired intangibles, strategic initiatives costs, war-related costs, and foreign currency translation adjustments[17] - Non-GAAP Net Income was adjusted for foreign currency translation adjustments starting Q2 2025 for better reflection of overall operating performance[16] - These measures are not defined by GAAP and should not be considered in isolation or as an alternative to GAAP measures[18] Key Financial and Operating Metrics Definitions This section defines key operating metrics used by Kaltura: Annualized Recurring Revenue (ARR), Net Dollar Retention Rate (NDR), and Remaining Performance Obligations (RPO), explaining their calculation and purpose - Annualized Recurring Revenue (ARR) is calculated by annualizing recurring revenue from SaaS, PaaS, and On-Prem subscriptions for the most recently completed fiscal quarter[19] - Net Dollar Retention Rate (NDR) measures success in retaining and growing recurring revenue from existing customers by comparing recognized recurring revenue across comparable periods[20] - Remaining Performance Obligations (RPO) represents contracted future revenue not yet delivered, with 61% expected to be recognized as revenue over the next 12 months[21] Consolidated Financial Statements Kaltura's consolidated financial statements for Q2 2025 show improved profitability, positive operating cash flow, and shifts in asset composition, alongside detailed segment performance and reduced stock-based compensation Consolidated Balance Sheets As of June 30, 2025, Kaltura's total assets decreased to $169.4 million from $181.3 million at December 31, 2024, primarily due to a reduction in marketable securities. Total liabilities also decreased, while stockholders' equity saw a decline, mainly influenced by increased treasury stock and accumulated deficit Consolidated Balance Sheet Highlights (June 30, 2025 vs. Dec 31, 2024) | Metric | June 30, 2025 | Dec 31, 2024 | Change | | :-------------------------------- | :------------ | :------------ | :----- | | Total Assets | $169,447 | $181,305 | -6.5% | | Cash and cash equivalents | $35,446 | $33,059 | +7.2% | | Marketable securities (current) | $35,756 | $48,275 | -25.9% | | Total Current Assets | $114,419 | $121,558 | -5.9% | | Total Liabilities | $152,493 | $156,918 | -2.8% | | Total Stockholders' Equity | $16,954 | $24,387 | -30.5% | | Treasury stock | ($17,396) | ($7,801) | +123% (increase in negative value) | | Accumulated deficit | ($477,679) | ($468,810) | -1.9% (increase in negative value) | Consolidated Statements of Operations For Q2 2025, total revenue increased 1% YoY to $44.5 million, driven by a 3% rise in subscription revenue. Gross profit increased to $31.2 million (70% margin) from $28.7 million (65% margin) in Q2 2024. Operating loss significantly narrowed to $2.8 million from $8.6 million, and net loss decreased to $7.8 million from $10.0 million YoY. For the six months ended June 30, 2025, total revenue grew 3% to $91.4 million, and net loss improved to $8.9 million from $21.1 million in the prior year period Q2 2025 Consolidated Statements of Operations (YoY Comparison) | Metric | Q2 2025 | Q2 2024 | Change | | :-------------------------- | :---------- | :---------- | :----- | | Total revenue | $44,462 | $44,032 | +1.0% | | Subscription revenue | $42,384 | $41,014 | +3.3% | | Professional services revenue | $2,078 | $3,018 | -31.1% | | Gross profit | $31,219 | $28,676 | +8.9% | | Gross margin | 70% | 65% | +5 ppts | | Operating loss | $2,757 | $8,550 | Improved | | Net loss | $7,750 | $10,004 | Improved | | Net loss per share (diluted) | $0.05 | $0.07 | Improved | Six Months Ended June 30, 2025 Consolidated Statements of Operations (YoY Comparison) | Metric | 6M 2025 | 6M 2024 | Change | | :-------------------------- | :---------- | :---------- | :----- | | Total revenue | $91,446 | $88,813 | +3.0% | | Net loss | $8,869 | $21,100 | Improved | | Net loss per share (diluted) | $0.06 | $0.14 | Improved | Stock-based Compensation Stock-based compensation expenses decreased significantly across all categories for both the three and six months ended June 30, 2025, compared to the prior year periods, with total stock-based compensation for Q2 2025 down 54% YoY Stock-based Compensation (Q2 2025 vs. Q2 2024) | Category | Q2 2025 | Q2 2024 | Change | | :-------------------------- | :---------- | :---------- | :----- | | Cost of revenue | $119 | $263 | -54.7% | | Research and development | $760 | $1,158 | -34.4% | | Sales and marketing | $383 | $729 | -47.4% | | General and administrative | $2,829 | $6,752 | -58.1% | | Total | $4,091 | $8,902 | -54.0% | Stock-based Compensation (6M 2025 vs. 6M 2024) | Category | 6M 2025 | 6M 2024 | Change | | :-------------------------- | :---------- | :---------- | :----- | | Total | $8,624 | $15,429 | -44.1% | Revenue by Segment In Q2 2025, the Enterprise, Education and Technology segment revenue increased by 7.4% YoY, while the Media and Telecom segment revenue decreased by 14.2% YoY. Similar trends were observed for the six-month period Revenue by Segment (Q2 2025 vs. Q2 2024) | Segment | Q2 2025 | Q2 2024 | Change | | :-------------------------------- | :---------- | :---------- | :----- | | Enterprise, Education and Technology | $33,242 | $30,965 | +7.4% | | Media and Telecom | $11,220 | $13,067 | -14.2% | | Total | $44,462 | $44,032 | +1.0% | Revenue by Segment (6M 2025 vs. 6M 2024) | Segment | 6M 2025 | 6M 2024 | Change | | :-------------------------------- | :---------- | :---------- | :----- | | Enterprise, Education and Technology | $67,658 | $63,405 | +6.7% | | Media and Telecom | $23,788 | $25,408 | -6.4% | | Total | $91,446 | $88,813 | +3.0% | Gross Profit by Segment Gross profit for the Enterprise, Education and Technology segment increased by 12.8% YoY in Q2 2025, while the Media and Telecom segment's gross profit decreased by 6.8% YoY Gross Profit by Segment (Q2 2025 vs. Q2 2024) | Segment | Q2 2025 | Q2 2024 | Change | | :-------------------------------- | :---------- | :---------- | :----- | | Enterprise, Education and Technology | $25,867 | $22,932 | +12.8% | | Media and Telecom | $5,352 | $5,744 | -6.8% | | Total | $31,219 | $28,676 | +8.9% | Gross Profit by Segment (6M 2025 vs. 6M 2024) | Segment | 6M 2025 | 6M 2024 | Change | | :-------------------------------- | :---------- | :---------- | :----- | | Enterprise, Education and Technology | $52,435 | $46,488 | +12.8% | | Media and Telecom | $11,520 | $10,796 | +6.7% | | Total | $63,955 | $57,284 | +11.6% | Consolidated Statement of Cash Flows For the six months ended June 30, 2025, net cash provided by operating activities turned positive at $1.6 million, a significant improvement from the prior year's cash usage. Net cash from investing activities increased substantially, while net cash used in financing activities also increased due to common stock repurchases Cash Flow Highlights (Six Months Ended June 30, 2025 vs. 2024) | Metric | 6M 2025 | 6M 2024 | Change | | :-------------------------------- | :---------- | :---------- | :----- | | Net cash provided by (used in) operating activities | $1,610 | ($2,751) | Turned positive | | Net cash provided by investing activities | $11,625 | $1,763 | +559.4% | | Net cash used in financing activities | ($11,335) | ($1,296) | -774.6% (increased outflow) | | Net increase (decrease) in cash, cash equivalents and restricted cash | $2,387 | ($2,416) | Turned positive | | Cash, cash equivalents and restricted cash at end of period | $35,546 | $34,368 | +3.4% | - Repurchase of common stock increased to $9.6 million in 6M 2025 from $0.085 million in 6M 2024[27] Non-GAAP Reconciliations & Adjusted EBITDA This section details the reconciliation of GAAP to non-GAAP financial measures, highlighting significant improvements in non-GAAP gross profit, operating profit, net profit, and Adjusted EBITDA for Q2 2025 Reconciliation from GAAP to Non-GAAP Results This section provides detailed reconciliations of GAAP to non-GAAP financial measures for gross profit, operating expenses, operating income (loss), and net loss, showing significant improvements in non-GAAP profitability metrics for Q2 2025 compared to the prior year Q2 2025 GAAP to Non-GAAP Reconciliation Highlights | Metric | GAAP (Q2 2025) | Non-GAAP (Q2 2025) | GAAP (Q2 2024) | Non-GAAP (Q2 2024) | | :-------------------------- | :--------------- | :----------------- | :--------------- | :----------------- | | Gross profit | $31,219 | $31,338 | $28,676 | $29,045 | | Gross margin | 70% | 70% | 65% | 66% | | Operating loss (profit) | ($2,757) | $2,978 | ($8,550) | $472 | | Operating margin | (6)% | 7% | (19)% | 1% | | Net loss (profit) | ($7,750) | $2,449 | ($10,004) | ($2,050) | | Net earnings (loss) per share - diluted | $0.05 (loss) | $0.01 (profit) | $0.07 (loss) | $0.01 (loss) | - Key adjustments for non-GAAP measures include stock-based compensation, amortization of acquired intangibles, strategic initiatives, war-related costs, and foreign currency translation adjustments[29] Adjusted EBITDA Kaltura's Adjusted EBITDA for Q2 2025 significantly increased to $4.1 million from $1.6 million in Q2 2024, and for the six months ended June 30, 2025, it was $8.2 million, reflecting substantial year-over-year growth Adjusted EBITDA (Q2 2025 vs. Q2 2024) | Metric | Q2 2025 | Q2 2024 | Change | | :---------------- | :---------- | :---------- | :----- | | Adjusted EBITDA | $4,060 | $1,632 | +148.8% | Adjusted EBITDA (6M 2025 vs. 6M 2024) | Metric | 6M 2025 | 6M 2024 | Change | | :---------------- | :---------- | :---------- | :----- | | Adjusted EBITDA | $8,201 | $2,196 | +274.4% | - Adjustments include non-cash stock-based compensation expense, strategic initiatives, and war-related costs[30] Reported Key Performance Indicators (KPIs) As of June 30, 2025, Annualized Recurring Revenue (ARR) increased by 3.1% YoY to $170.4 million, and Remaining Performance Obligations (RPO) grew by 5.8% YoY to $188.1 million. The Net Dollar Retention Rate (NDR) improved to 101% in Q2 2025 from 98% in Q2 2024 Key Performance Indicators (as of/for Q2 2025 vs. Q2 2024) | Metric | June 30, 2025 | June 30, 2024 | Change | | :-------------------------- | :------------ | :------------ | :----- | | Annualized Recurring Revenue | $170,364 | $165,167 | +3.1% | | Remaining Performance Obligations | $188,124 | $177,751 | +5.8% | | Net Dollar Retention Rate (Q2) | 101% | 98% | +3 ppts |