Kaltura Inc. Conference Call Summary Company Overview - **Company Name**: Kaltura Inc. (Ticker: KLTR) - **Industry**: Video Management and AI-Driven Virtual Agents - **Founded**: 2006 - **Revenue**: $180 million, profitable business model [3][32] Core Products and Innovations - **Initial Offerings**: Video management platform evolved into advanced video experiences for enterprises, including content management systems for video [3][4] - **Key Products**: - Video portal for corporate use (white label YouTube) [3] - Integration with learning environments, particularly in higher education [4] - Real-time conversation tools and virtual events [4] - AI capabilities, including a product called Genie for hyper-targeted video responses [5][6] - **New Innovations**: Introduction of immersive virtual agents, which are photorealistic, multilingual, and hyper-personalized avatars that enhance user interaction [12][14] Market Position and Competition - **Market Standing**: Kaltura is positioned in the top right quadrant of the video management market, competing with companies like Brightcove and Vimeo [8] - **Customer Base**: 30% of the top 50 technology companies, including Amazon, Adobe, NVIDIA, Salesforce, and Oracle [10] - **Market Challenges**: The video industry has flattened post-COVID, with some companies experiencing declines. Kaltura has seen only single-digit growth [9][32] Financial Performance and Projections - **Current Financial Status**: The company has returned to profitability and is generating cash flow from operations [33][40] - **Future Growth Expectations**: Aiming for double-digit growth and a return to a "Rule of 30" company status by 2028 [33][34] - **Adjusted EBITDA**: Positive margins reported, with expectations for GAAP profitability to improve [40] Investment Thesis - **Leading Technology**: Kaltura is the only public company in the immersive virtual agent space, providing a unique investment opportunity [34] - **Large and Growing Total Addressable Market (TAM)**: Transitioning from a video market to a broader customer experience (CX) and employee experience (EX) market [34][52] - **Customer Retention**: High gross retention rates, particularly in the enterprise market, indicating strong customer loyalty [49] Additional Insights - **AI Integration**: The company is leveraging AI to enhance user engagement and create personalized experiences [6][14] - **Sales Cycle**: Generally ranges from three months to a year, with larger projects potentially taking longer [44] - **Balance Sheet**: Approximately $60 million in gross cash with $30 million in debt, indicating a stable financial position [47] Conclusion - Kaltura is positioned for significant growth with its innovative offerings in immersive virtual agents, backed by a strong customer base and a commitment to profitability. The transition into a broader market presents substantial opportunities for investors [51][52]

Financial Data and Key Metrics Changes - Total revenue for Q3 2025 was $43.9 million, down 1% year-over-year, but above the guidance range of $42.8 million to $43.6 million [34] - Subscription revenue was $42 million, flat year-over-year, exceeding the guidance range of $40.8 million to $41.6 million [34] - Adjusted EBITDA reached a record $4.2 million, marking the ninth consecutive quarter of profitability, up 72% from $2.4 million in Q3 2024 [40] - Non-GAAP net profit was $2 million, an improvement of $2 million year-over-year [40] - Cash flow from operations was $9.3 million, consistent with forecasts for strong cash flow in the second half of the year [5] Business Line Data and Key Metrics Changes - The EE&T segment generated total revenue of $32.4 million, a slight increase year-over-year, with subscription revenue up 1% to $31.8 million [38] - The M&T segment saw total revenue of $11.5 million, down 4% year-over-year but up 3% sequentially, with subscription revenue also down 4% year-over-year [39] - Professional services revenue contributed $1.9 million, down 14% year-over-year, consistent with previous trends [34] Market Data and Key Metrics Changes - New subscription bookings included 12 six-digit deals with notable new customers from various sectors, indicating a diverse market presence [20] - The gross retention rate in EE&T remained strong, while M&T's gross retention rate improved sequentially, with expectations for further improvement in Q4 [22][46] Company Strategy and Development Direction - The company announced the acquisition of ESOF.ai, aimed at enhancing its capabilities in AI-driven immersive virtual agents and video content creation [6][10] - The strategic shift is from being a video company to a rich media-powered, AI-infused customer and employee experience company, focusing on hyper-personalized and context-aware solutions [9][16] - The company plans to integrate ESOF's technology into its existing product offerings, expanding its addressable market to include small and medium businesses [11][12] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the future, forecasting a sequential increase in total revenue for Q4 2025 and raising adjusted EBITDA guidance for the year [29][45] - The company anticipates continued growth in adjusted EBITDA and cash flow, with a target of achieving double-digit revenue growth by 2028 or sooner [30][48] - Management acknowledged challenges in customer adoption of AI technologies but noted increasing interest and engagement from clients [66][68] Other Important Information - The company repurchased 14.4 million shares from Goldman Sachs at a 25% discount, representing 9.2% of outstanding shares, which is seen as a value-accretive move [18][19] - Following the share repurchase and the expected ESOF acquisition, the company forecasts closing the year with approximately $60 million in gross cash [19][41] Q&A Session Summary Question: Thoughts on the investments for the new product and integration - Management indicated that the focus is on long-term strategic value rather than immediate returns, with a gradual rollout expected over the next year [51][52] Question: Signs of AI technology adoption affecting video content creation - Management noted increased interest in AI offerings like Genie and ContentLab, with several deals closed in Q3, indicating a growing trend in video generation [66][67] Question: Clarification on revenue recognition delays with customers - Management explained that delays were due to customer-related issues, not Kaltura's delivery, and adjustments were made accordingly [72][74]