Earnings call transcript Q2 2023

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Operator

Good morning everyone and welcome to the Kaltura Second Quarter 2023 Earnings Call.

For opening remarks and introductions, I will now turn the call over to Erica Mannion at Sapphire Investor Relations. Please go ahead.

Erica Mannion

Thank you and good morning. Kaltura and Yekutiel, Officer. Yaron from Chief Chairman today Officer; Executive Garmazi, me are Co-Founder, Ron and With Chief Financial will XX, summary second a business begin results Ron the for update. of quarter and XXXX the June provide a ended with then third the results Yaron year XXXX. quarter second and review for company's the greater followed XXXX full of by in outlook the detail will financial quarter for the of

open then call for the questions. We will

of otherwise, adjusted new or XX, SEC. and made obligations this financial fiscal or revise forward-looking note Kaltura's we non-GAAP XX, December during update from developments results securities to and them, EBITDA note, on questions, here. the statements cause for be your Risk those this guarantees that quarter and as conference nor meaning will to including expectations plans could June and the in with current within differ XX-Q no Please These law. limited discussing a be and expected of regarding Kaltura's for XXXX the to neither a and factors on statements for results annual federal discussed report include this Form including ended actual other risks the statements as result statements involve as assumes that on materially call. not ended may including Important will SEC required that measure, Please actual of financial uncertainties but management's forward-looking XXXX Kaltura laws filed expectations today section whether by except of promises, the cause are responses to be found quarterly business. XX-K the statements call Any year forward-looking report from Factors the to, can differ results filings, the to Form future call, in are based

refer please most at to reconciliation our metric, comparable which is available release For on directly financial GAAP to non-GAAP of our measure this website the earnings a www.investors.kaltura.com.

over call Ron. Now, I'd to the to like turn

Ron Yekutiel

Erica call this morning. everyone and joining Thank us thanks for you, to on the

Today, of $XX.X year-over-year was up X% for million. of the we of revenue $XX.X and reported second Adjusted quarter year-over-year. X% up negative million, revenue quarter the total XXXX EBITDA for million, $X subscription

third compared a the record of in subscription since the and was XX% posted highest revenue For year-over-year to revenue growth QX quarter in total XXXX. we row, XX% XXXX. represented total Subscription the revenue quarter of first revenue our rate

our full of results the first increasing year. the for guidance of cautiously the Given the we revenue half are year,

and We returning focus adjusted profitable continue loss on to the growth to quarters. X EBITDA achieved of the last lowest

the of the results for year, the increasing full our we're EBITDA of the half adjusted year. first guidance cautiously also Given

in We adjusted are achieve our a positive plans once EBITDA to XXXX. reaffirming again

quarter reduced materially XXXX. consumption we QX million flow, cash our this in Regarding $X.X from our brings cash This HX 'XX. 'XX million $XX.X from million $XX.X operations operations to compared consumption with in to $XX.X to compared HX cash in million total

our following post with and cash the next in half sufficient reserves. of first seasonal cash the flow at typical half to in arrive expect operations flow of cash positive from second We breakeven operations cash greater from XXXX losses year,

in top again very XXXX As line there independent operations before, adjusted cash we getting and to our from and are were growth. stated flow in EBITDA profitable committed and soon XXXX of

for interactive XX landed within is new platform into the libraries quarter customer this the Moving organization. learning content Fortune their supporting bank consolidating video a a and we training and update; on business to single that video

portal. in For a their internal investment internal new all and powering events global are we bank video customer, external

their newly events Kaltura consolidate that European multiple video by starting an streaming to health the for learning quarter selected by powered company several platforms. global government provide communications. by care were to to We for institution power worldwide and have and is Valley first events by live to their a trailblazers and a online internal chosen use all video Silicon signed leading time this power Two organization webinars also events experiences previously to Kaltura

the industry reporting SDRs to was We of lower meetings observing submissions. that of products. a and also While RFP indicators sequential leading been we increased number in into of and headwinds and the pressure our on all we elongated and in these budgets, demand qualified persist growth increased newer by leads to our parameters Platform see translating fueled sales and our increase cycles, number quarter this Event posted for these the set demand new have number Classroom our grow. are we The the price by glad and size in continue Virtual are

We products quarter growing. indicators This echoed Eventex newer such our the the also believe signaled awards, as well Platform E-learning industry is was our Year categories. in pipeline Solution Event and sales the positioned well that winning awards this as are Global and well top-of-the-funnel growing demand are us category Breakthrough of in including at interest we that and Webinar Software Events as Best the EdTech that market Kaltura competitively, that Virtual XXXX these XXXX, Best the the embraced at with X Overall Awards Technology,

in exclusive We through marketing the better XXXX, XX and on focused leading London widespread first events particularly video-based event Kaltura of ROI their of the opportunity Francisco, Berlin. for and goals the XXXX. sessions. and workshops SAP, Kaltura cuts discussing use hosted of digital series participate physical industry The executives SMBs leaders the thrilled companies, have and with of customers to speaker Road the New marketing and video training of of since Atlanta, VMware and as AWS top Salesforce, network such were Connect hands-on across from were and helping These visionaries learning and York, line-up held events global industry experiences roundtables development. San we to quarter, engagement ESG in X organized in-person organizations interactive context and have Kaltura This a IBM. on budget and including industry Hundreds a achieve reduction meet

across video role experiences inclusion events, further a identified the were artificial them attendees their achieve attendees around experiences, single multiple goals. the exchange and and and by speakers use products video converge intelligence platform Kaltura Speakers aspects insights video to of need helping these equity areas also great and diversity, All value, and where as to online hybrid about cases. how and brings differentiated business

on Lastly, front. development product the

creators beefing up their video events enhanced session portal and with This management, track content engagement better enhancing event our theme templatization distribution. editing, content. content better quarter, dashboard a from added multi-language authentication, platform, continue We we and with content user registration and our support moderation to for

lower storyboard We enhanced conferencing room preparation and capabilities rooms to branding enable also improve whiteboarding segments studio for that capabilities. customization thirds, upgraded session of collaborative our and production as integration in and branding video and advance, content mirror [ph] such a features

We as SaaS support. for such markets our additional financial the also also to groundwork launched for privacy us and cloud specialized lays able regulated health service regions security be regional and to address to for localized services global federal, data requirements services. highly care This and for cloud launch

where to enterprise-grade and share leverage and cases. to AI increase drive we will We content and to across experiences extensive capabilities Kaltura's libraries add content learning, generative in-depth new for The and are generative investment. production and that our reduce knowledge use creation, intended costs marketing customers analytics marketing, efficiency entertainment video-based learning the return move of our communication, for would like into their on boost customers to entertainment AI, with to are our collaborate and also already starting world training

to distribution highlight Kaltura's insert in-depth AI comply interactivity making repurposing to assets enhance highly analytics content webinar analytics for from services as and our across a reporting. interactive enable content as content accessible with includes, for for optimization and many example, enriching broad AI customers intelligent into requirements. for of more create We existing social generative widely into immersive and capabilities and to regulatory content, This loops feedback content for and new search our range and and of or learning. the models plan new creation, products like help reels using to discovery capabilities with well continuous discovery, search cater platforms targeted event

to capabilities include generation experience event improved creation, creation reach auto generative end on grow also streamline engagement. our to plan discovery attendance, boost system user intended Building and a new and insights AI event that event hosts launch content and of for we increase capabilities, content

integrated As their video already an solutions across available partner company have and our from harness AI to and flexible open platform, continue customers. innovation we into Kaltura's the and ecosystem. that Kaltura providers generative are cloud experience includes to tech program

customers. our value knowledge of will connect products while launch part creation that accelerator Kaltura tend program brainstorming, a to we Kaltura start-ups and sharing with Kaltura AI with AI enterprise facilitating, program, As partner

that from fly. creation, tremendously. promise great experiences the about benefit create that increase will this AI to the customers significantly and video the experiences excited generative its are believe on from ROI and hyper-engaging it to holds would and stand We Kaltura that hyper-personalized, We consumption

solutions. continue demand, record we potential revenue innovation, continued has grow losses continue reduce AI total newer In operations. further again subscription about our value EBITDA growth our excited We by cash especially to and to increase continued and revenue, are goal from we to the of Despite and generative consumed headwinds, adoption profitable make towards and around growth. posted continued and about usage the return significantly progress to indicators our the summary, industry our our encouraged be of year-over-year our the to demand rate products leading that to adjusted

plans cautiously in flow positive XXXX both second for sufficient operations EBITDA XXXX the from our operations reaffirming the of adjusted reserves. positive in flow increasing half to We by to We half and XXXX plan cash breakeven numbers second with cash guidance are achieve and achieve a to and are post adjusted of from EBITDA cash XXXX. our revenue

turn With detail. our financial Yaron, more over Yaron? in to our it that, results I'll discuss CFO, to

Yaron Garmazi

and good Thank Ron you, morning, everyone.

our review note available which be our referring of reconciliation to earnings website metric please that I release in to is included second A will financials at non-GAAP a EBITDA. GAAP today's non-GAAP results I is today, www.investors.kaltura.com. on adjusted As quarter

$XX.X had million, of Total commitment X% months. X% a revenue of XX% million, were XX% X reduced year-over-year, expect quarter up while spread in year-over-year. X% recurring as the revenue second million, we down customer professional record approximately up their quarter, XX, of The years' recognize for $XXX.X remaining the $XX.X up which to X% the years. year-over-year, revenue annualized revenue XXXX by the contributed $X Subscription We the June second the million, equally $X.X quarter XX over was services up next a ended we $XXX.X million, posted over close was performance After revenue million, obligations year-over-year. year-over-year.

XXX% was rate retention same dollar net the QX XXXX. Our as

services professional second down revenue for contributed revenue the up Subscription services year-over-year, $XX.X up representing EE&T segment, our quarter up total contributed $XX.X year-over-year, second segment, year-over-year $XX.X was for was our year-over-year. was million, revenue Within revenue was while million, total million, while M&T the year-over-year. $X.X growth. Within XX% X% up XX% revenue revenue $X.X $XX.X million, professional quarter Subscription million, X% a X% year-over-year. million, XX%

XX%, diluted for profit million, our since XX% the a quarter negative in a gross in gross in quarter per GAAP down second representing XX% from gross $X of quarter XXXX. was improving segment, was $X.X margin million margin $XX.X a QX Within was the XXXX. of margin negative M&T for margin QX was in quarter in or from EBITDA second EE&T was profit QX of share. representing a million, a gross XX%, XXXX. $X.X million, gross of $XX.X quarter loss XX% $XX.X margin $X.XX XXXX. our GAAP up the million representing the gross net QX Adjusted highest Within gross the gross for margin of profit gross segment, from the million,

with the and in and $X.X million Turning balance cash cash quarter to XXXX. was cash to quarter securities. in the Net operating we the $XX.X compared using marketable $XX.X in ended QX activities million sheet flow; million

between of revenue we In I subscription increase X% would $XX.X total by $XX.X quarter, first expect to X% between now million for XXXX year XXXX. the million like X% X% grow ending to for outlook XX, and the our to to revenue to million $XX.X and fiscal $XX.X to the turn to and and third December quarter to million. the by

EBITDA between $X adjusted We negative expect and million. million $X.X a

by to subscription the year, and $XXX.X we full to X% million revenue X% by total million to and increase and $XXX.X For to million between to million. X% expect grow $XXX to the between X% $XXX revenue

million $X.X between EBITDA adjusted negative a expect We $X.X million. and

the EBITDA year despite industry the cash in guidance environment our the quarter of for half given summary, headwinds, a from the adjusted macro XXXX. leading indicator, positive of cautiously increasing our and rest second results the we positive In the and and and demand generate of are our expecting revenue first to operations flow

are our growth. progress achieving commitment of a from in EBITDA are cash profitable with by reserves growth adjusted to towards and encouraged flow by second to positive half XXXX continued sufficient line breakeven We cash the our top dependence and XXXX in reaffirming of operations

will we open that, the With for Operator? call questions.

Operator

question first Our with DJ Instructions] comes [Operator Hynes Canaccord. from

DJ Hynes

the I X% have to Ron, in against expected more to seeing back I Look, of off coming quarter. in what retention there segment. bit ticked dynamics easier comp. core ask about growth an would sequential to down wanted see Year-over-year terms you're of a EE&T growth last

out mentioned retention years? over the contract. of is the dynamics term million that just how model couple we by about plays You next $X customer reducing as think of this X-year commitment gross unpack its over their Maybe the

Ron Yekutiel

do to Happy so. question. the for Thanks

an that the XXX% year last our general slightly last and with was from aligned NDR seen it decreased to expectation for you've quarter XXX% XXX%, first, So perspective, quarter, year.

around that be going pick things gross We up same expect to are to but [indiscernible] number again. that

a reduction We approximately had so From retention reductions. half and QX X/X from first both gross of the in gross somewhat the lower to compared QX levels this recent were in quarters parcel retention quarter. the perspective,

with that So are us. or churn only means of still customers full came nonrenewal. X/X from kind that And

the So longer with we're customers. working no

could It's virtual this complete kind events are reduction. of on The the of more in requiring is is that's -- no less separate to it of we've because an that side So turn next case on. on we've of the it's customer and departure not a announced projects or parcel majority that mentioned due certain of of quarter, price of one RPO uptick what reduction a the sometimes even of a the pressures a churn that physical. kind product doing be longer but people

is time. point say, And so I'd gap then the this or X% product feature issues. in reason they're second due kind Only would of And of certain reduction pressure. stopping be at the price level service to,

was last perspective From still question, there front, quarter an a usual. segment improvement than M&T lower retention, on the actually better from

that than two side, even than It's note that was with On EE&T years. the had bit QX. lower quarter each this the retentions a But is we in thing a we one to lower it one usual. EE&T last had lower quarter of

EE&T. was same the quarter year fact, XXXX, QX exact In the of before, lower in

to be we to up had that lower do time. goes it current than just be for overall the So mentioned. But and that's year expect in a all rate. usual forecast to given of back kind percent and next retention down fueled usual levels. we lower things still And an to QX, in quarter from part come to this than time forecast frame to We things in size, in by expect we customer then that usual all, few

retention the squeezing seeing then much a it We're we typical percent nothing time, not anything certain than projects that. few and gross it's lower more than the at than back. drastic else like crazy sign a We be rate. said, to stopping and coming will but So, more reduction think

Does that question? address your

DJ Hynes

in the terms to what Yes, to things maybe the sound mean, it finish of the pretty up RFPs, stuff. you lines deals that of excited are get seeing the follow want sure around meetings pipeline qualified through you and Like are metrics. over How generation does. sort all pipeline? leads, progressing I line? time on I

Ron Yekutiel

question. good a That's

last in in increase from side year-over-year year-over-year also newer the in Platform, year that and by and was a pull looked it was the continue for also also of an that extent we tick are half a lot the that's So submission declining there's RFP the that continued are RFP. RFP, sequential we kind year. mid on we specific and indicate that second last are up products because average and opportunity And to and seeing meetings products, the decline are seeing Classroom did we seeing set to and sequential that Virtual at Event growth to up requests more of SDR

responses than to compared the So more example, last QX an to Platform and double QX give Event were year. just you

sum QX was like and QX QX bit a So and the of more.

up. pulling it's So

meetings that's the pulling QBM funnel on that So up. the of RFPs side top are

At well. to we rate, win the bottom continue do from side a

In even a it it's fact, and than quarters it x really last was number. was better record the strong

So price the longer is that's pressure not pertains the budgets, lower But and issue. increased are getting of cycles the tail the the they that to general of that of bigger issue industry kind and prolonged. headwinds

It's the it's opening they're go So opportunities taking losing through the not process. to new up that they we're are and through to that taking are longer go deals funnel. the not longer but not

so now, middle. a continue. closes not in the QX, we if let's rich it on And that's the have -- around the delays the But pretty biggest not for And QX goes story if and QX but bottom it pipeline. in booking, top

Operator

Our with question comes George next Oppenheimer. from Iwanyc

George Iwanyc

Maybe provided. bit following a that seeing pricing dynamics? on you be you customers efficient? more IT little competitive on just more to to give share? the the Can looking pressure spend us Or more your you more this answer cost be color is you vendors and that aggressive just up environmental the driven are Are take mentioned

Ron Yekutiel

and does -- has customers The customers, received less existing well the story Kaltura for latter of been competitors' prices, to new external, the over also lot also stronger internal that existing. to money money of could again multiple us reduce address the a product we affect lot less cases the consolidation. switch need more as have have of but we've as And with because biggest live. that that's lot across we see to starts a that, It And also a willingness of on-demand even bids to use spend both better to it in want switches. people so and uniformly we years, still and because quite again is and the both

this, by say, do In say, great. if the they to we on we'll a says, And look, do question vendor. this. existing like us, that just when they jump efficient. typical more And reduce you year, vendors that? It continue is by cost with what, know existing I'll stick money. the so then It's and what us It's push you XX%, saves the can might just with we already year, they want our know year

we So to switch. us that a delay until want a to to had they make on statements a this such get bit more interest to that replace bids it's year

And so of pertaining right I'd majority aspects. I behavior a but moving like to said, say of the change perspective, are reduction retention more it's of people of -- event reducing and price. like a these both physical know affordable retention a virtual not say, people that are a combination now. portion that is you the a from And just let's It's to option just physical what, need, go in a a

George Iwanyc

the the opportunities Then Can engage you the engagement update gradually with give been directly know you've following platform. more up on you're low-touch year, platform. the on what last there? customers to for over customer adding with I seeing us an

Ron Yekutiel

to happy do that. Yes,

things, complete Kaltura, have was I that automated rich could you X low-touch Event less an was were And the services card VE, but do be you parts. our it solution of required reincarnation enterprise example Virtual by so through Event and that are original our not There's a as EP that with product the to which self-serve said, our yourself of Platform, templatization. that So offerings that would that have could services. divided credit is

and that card second is lends to so self-serve then SME. credit and sales itself departmental piece more even which And is more the SMB complete and also

to first of are touch. let product happening me are EP Yes, what of can lower in our and and using I earlier down do this expect indeed, is also, professional is the to up. that decrease on for touch. services that a revenues over growing sales one cetera. that's a increased be which lower lot continue the what's products picking nominal we said go year-over-year that's et year, our the that professional that more demand you That's start So with ratio there's And to continued services see basis

that's revenue. as self-serve, of earlier making until big We've I'm the And From more we're had a these that such to one But change to complete progress over said users. products. this it pickup not things of this a going could to not good we company trying look, tell time is promote I until start make is it and on year's of you, deploying about needle moving bookings the again, next growth. the an be now wouldn't this next and we it? impact. Are talking impact a this really I and Yes. -- revenue for should I our quarters But year, as progress wouldn't making over the few optimizing us

George Iwanyc

Great. And for last question me.

stickiness you're functionality AI us efforts timing? putting changes new or expansion? on at products some that see something On into driving you Or the the that platform. potential that [ph]? some of you Is this Can primarily price give perspective and also as could generative you out fall customer look do

Ron Yekutiel

Yes.

collaborate already enrichment. Broadly, the to into, customers to AI. X and video are So boost experiences divided say, plans buckets. I'd AI analysis metadata the There's our with we started with

So is it's around video AI. the [ph] rich And media that's where video. enhanced asset not is with it but our creating

inside video, which transcription, OCR in or if is open-source or better ASR understanding doing who's or what's of we creation. identification in or you're example, project Whisper using, speaker understand the can diarization, or when doing post example, the are for called identification, -- text for you summarization adding better talking So we chaptering that titling keyword or actually or what's video the the

to clips there all a here It's come like is X is And you step and after already in next that's divided going is actual sooner. happen or and There's reels creation over that. it's pilots The when too, content months. is few customers So, is creation video part existing and doing it video into highlight the out running there all these excited I editing. the There more expected with parts. and we're where next about to repurposing.

and That's in is so insert images get expect the generation you I'd immediate audio that introduces the more by say, do videos, plans way. video and get robust automatic there AI then opportunity large, insert text, you and a and the used of compressing big there. future ability the separate we in full but not an to is you And is X really, to the at that so have the content, and to is person on right the fly video distribution highly that things the time have the context maximize actual right engagement the which to been and that production gets and each right personalized really short interesting.

on three, of the There's image And there on is analysis creation video, creating of thumbnails there's category, then [indiscernible]. there's that like the the posts, then creation. And content big I generation for said top social are fly. third

third is touching features not AI-powered are just but the video to experience. The that are general related

for events So generation it so the you and you the assistance events wizard want automatic and for webinar. example, basically you for webinars, of or creates do to what insert

in advancing is to parallel the one. piece third first also That

video-centric is less So experience-centric. it's it but

few So months pieces it's it next to multiyear a are all going of longer. to over It's but take strategy. happen the going

And we are for and banking we partners we're to lot a the the cases. -- I have own AI in interesting place have earlier As a different an really the we in of historically we data for use known we the in of content, that and experience have users data enterprise script, lot expect we because horizontally yes, it's but do on about my well do we said and excited and also to are we're that.

that's So add quite if going AI of you powerful. the top to that, be on

Operator

comes Ryan Our with next from Needham & Company. question Koontz

Ryan Koontz

strategy, you in to what of around share color you're relatively pleased can Ron, I productivity. your improve you changes headcount the on And have despite, of reflect wonder turned made the here. mean, you've it here. sounds with guys execution some like terms could sales cuts organizational you on and if obviously, I predictability process

So changes -- -- the reflect can made having results? is to think in that what you've organization you that you some

Ron Yekutiel

market. doing I we're in parenthesis. very put appreciate what that. happy Again, the the with I'm I'll

typical better the are execution doing are think we're I other impacting not folks. is that and year. the There than and headwinds a this bookings slower

We that's made expect together and better am very internal both use have case reaching to and well with products. do there all much enabling the to our down on double expansion cases we're be marketing in video out CMO pleased but that. And consolidate to enterprise. internal the offering anything use external than out also I that the different to into our fronting horizontal our from else that us grow beyond ARPU unique platform

So that's very powerful.

also I'm win holding our that rates and even And are better. happy doing actually

so that's So -- good.

insofar what order Now are for done accommodate that that. changes to we've in as the

big quarter. that's no done first, this revolution So over

product touch internal team work better product-led product through For example, trends we've gone enable on sales a, more staff so from planning our that and environments basis. the product with through growth and is marketing enterprise to: and further also earlier support even if organization and to getting people to general to playing than execution to tell in an done, from and aligned to that marketing the well. lower where you sale, start how and and could are grow not and that enable a sale multi-quarter I to our the self-serve do external could complete then train CMO from do product sale sales whole but it's b, together;

come. in getting quarters think lot to switches. these to see are a against And other competitors doing folks by I'd interested and less of work we're recent we I I in better that more that situated. in And Kaltura And We're better in have we've a and how years. lot why going you're story being doing the so, to making also done the tell say think we're of that able gotten that

some made. are these So of we've improvements the that

Ryan Koontz

announcement, That's there don't on Yahoo you at what the We level such. high acquired this a in channel strategic see collaboration? and of thoughts don't for Hopin come your a bit them. I bear comment and discussed do on Brightcove, for morning saw of about Are in Kaltura are you events saw wonder RingCentral. kind could the strategically great. think was happening I if any they if the industry. industry little but know kind can you thought what I'd think of a you by to know stretch appreciate. past, But the We've much I relationships? consolidation, It's industry,

Ron Yekutiel

platform. Starting a OVP, Yes, Brightcove for statement. nor it's and a classic media on customer, channel, focused kind that's question. online shift. a not of Yahoo, of but companies customer with It's which is great video the strategic it's them kind not a bigger and a They've great strategic

more you rate know, more ultimately. a less media focus and gross commoditization, could delivery and better mission-critical As TV in the on the greater which margins we've bit and put are yield telecom, stickiness

a bit direction. there's of a different So

We larger of the the media is are in in. been But Yahoo coming Brightcove to always focus down eye market had that companies. also bull's

And SMB, smaller space. Hopin, way far self-serve congrats. consolidation there the product all the enterprises. and be acquisition fitted not to in that load SME It end classic kind touch the that's geared companies, not tells to -- so and continued an Hopin large will just as large the of enterprise. of or the low are off It's the

that more the bigger is the market It be where event with self-serve. did more complete towards don't yet the example We much go will doing we're But to of and to the a add that in are work towards with the what and less enables scale different the The The Do places and horizontal. consolidation And another sure size it in event webinar good are consolidation will for components. believe place them lot open with in in we take was multiple size, interesting of form. yes. folks. to And I'm that going We're we it we're Kaltura we very whatever multiple is see in are happen. thing today. compete and And grow architecture even so about We're an in And continue is, it. to answer make we consolidation? we markets. to products. of

consolidator be in So very we the could market. a strong

sales our few move expansion expect be Historically, Hopefully, into go power your We're more said and bookings now as quarters that important. announce conferencing well. provide about part to and be will this few I and products And real-time is with are we've be channel on as that that's a channels as quarter had still XX% Insofar that to ago channels, of remained market comment consistent able really case. from to I into that interesting. and it's they us yes, SME, the will able working and right channel our together we'll products. we'll deals quite channels a to X%

will channels more be and future the yes, more consolidation. So

Ryan Koontz

great, that. That's for appreciate response, thorough Thanks really Ron.

Operator

Our Wells Fargo. question Turrin with Michael from next comes

Michael Berg

million downgraded by million on around key quarter. large in $X in you it's You the customers? Anything your that is to downwards? of How referenced Turrin. rest for across I to to relation to point customer the customer color got just in the question on have Berg, Michael point whether [ph]? $X who Michael expansion positioning, Congrats the to Anything quarter. follow-up the script the in

Yaron Garmazi

Yes.

as First of the around all, numbers. reduction you RPO we customer saw, this mentioned

the main even such fact approximately for You $X reason because or And mentioned fact numbers jumped basis. of future customer impact good that this RPO million because $X for And was a a renewal quarterly annual very RPO. is the a saw that the the on the it's that revenue the season the I this company is material the reason that us. for it this customer a million, in on just of not for it's sequential of nicely quarter

example, report, will for quarter. we So next

major important as Actually, chunk a they an a paying customer; on deals next some it's On discussing months. are This big it's basically basis, we impact the customers. us to and it still roughly money. with X/X of other we customer still us of them annual are mentioned, XX going is

short-term saw So anticipate go line coming will that We levels the the the below significantly But in quarter. that RPO. will do on grow believe don't bottom it continue impact that RPO the be we earlier to we a same is the not time, there to year. the this at

Ron Yekutiel

not level. a that related bit of different. Yes. made related different. the I as caused related bit them said in bit this for customer, And It's something that do not reasons a it's a And not earlier, to different something reshift to to a in strategic direction to competitors, to case about churn specific our do related their a product, it's -- decision to service we've

Yaron Garmazi

next in XX impact business. is the the the And to immaterial months,

Operator

with Borges from comes Sachs. Gabriela Our next Goldman question

Jake Titleman

content This is increases detail of cross-sell about It get deal Kaltura. that the video and on upsell would to and looks for typically Ron, Jake consolidating all more a Gabriela. your bit on within base? like customers try installed maybe be Titleman, how their you've And opportunity little talked on great what sizes? quantify the

Ron Yekutiel

do to happy that. Yes,

our that that that can and ROI different theme it's company and nice better And unified workflows lot view -- know. including so their been they large costly. been if a XX replacing enterprise broken X into a one sharing of the that's conferences this all and for started repeated more different many Valley is at it's consolidated analytics otherwise move of us. that's and they've and across Silicon story names instances speaking their you there's you vendors, Kaltura, you much to they've also And platform a get them the So

usually be there also and events with the And the VOD, cases I entered moving is include products. and It learning expansion video groups similar or marketing more through different CIO out or be department, would instances the and mean it the And video layer, to then across more cross-sell. or development. groups historically, and L&D varies. more so with the HR external upsell use with use internal or or content the working management call an what portal case motion through from we've would

internally, think they serve you portal, about So also the could service video externally. when could it

workflows CMO with And so what the on owning and CIO of others. video all is the we was see behalf that tasked increasingly

there's involved get trying in where Of point purchasing all platform one but get course, the to they're to to that. decision us they're that a

is Now forever, vendor. stack even and separate all have the consolidating horizontal usual approach if This of our but most interoperable. and taken a we everything need you'd the not other vendors could that by conferencing and it provided be so goes origin consolidation. productivity goes This collaboration stated, And isn't workflows for of something other, the that system be to a we the power except started there's across talking that there tightly we've kit also that kind be about will not would one this single a note is suspects. year. But for that integrated, Lego enterprise stand-alone or to these back believe last

direction affecting it's Insofar look annualized ARPU, up just it the basis. new ARPU. the consistently but at state basis, ultimately deals MR per just the customers, but customers bigger think pulling We we'll as and on and that a don't talk how big. about customers works smaller we're you that's an into company, But about with average if I will deals. grown in getting my to the the we've parallel, it's on grown we're bigger other report large up choice. growing and SMEs deals going and We that that's our getting and that Obviously, and also is quarterly more self-serve size this on very more that of grown mean, they're

hundred a They managers into moved training their you take have we now then the are And may offer also events in as it it multimillion. are using they've empowerment for were in management. if banks worth thousand U.S. with accounts accounts the So X wealth webcasting for leading video and are into the and started moved few that from of vendor. grown of and wealth to a bank, into a mission-critical then in that

Xx. our in could anywhere accounts that's be and We ultimately MDR. it's it between a up these to XXx believe going growth So pull a

beginning to seeing is We moment, the of historical off. we pull is situation lot couple say then financial us at going to it a it's gradually. only of But So this back but causing this. going year tough a We're the of going this because last up, and it COVID more MDR year do companies years the into we're we're hits, coming these rates getting higher to do into it to in of even not to wait want the believe, rates. it out

believe that because could therefore, a thing keeps that I'd not to could on more into gift usage last MDR be let's say model quarter the hits. just how usage-based it FTE the And content one content continue base of higher these themselves things, and even we that The they're creation, moving we more have even progress. a But this giving. at more and into change time lend to management, be as world could is could take and of lot the see base for

Jake Titleman

control just What environment a Kaltura spending to that. growth? to the Yes, And depending that XX% to on on in needing that versus improve? to makes back sense. of much overall follow-up guess And happen your needs get how is then I

Ron Yekutiel

good a That's question.

So by profitable. for needs to us let's way. it, be of start Nothing from the other the happen side to

the better very tough can that Not celebrating cry We a are couple a flow it's We've are but as because done. are very, is guiding do this we're the that. Insofar than revenue, that there we industry. that's far are We're not. of happen should to that for always from cash down, what reducing the say on promised years you on out way to doing growing, that. profitability, that companies see, executing we're as other

seeing, nothing leaders, signing fact with optimistic are the the companies, I logos of choosing chip what are that big more top blue tech that think companies is a, keeps are that including great, up customers landing popped we're many but we've us us, type that the that because now the new into the we as that markets entered the best. historically expansion landed, and around are have the well. And markets so done we've we've we've done time, stuck entering first for

being to for to for the continue coming think the up other around than we're and markets more available what finesse what And budgets so that optimize down. is squeeze I for start start start to to to needs to happen turning

accelerate. companies the the No, the not Now is markets until it of that of half do north going that, than that to to We're our take it's after do XX%? that year, second to will the case. we're don't quickly come always been flourish, given very, we're in in albeit going that that that and top do the that to same come will a milestone. we hard we've we to our more to taking that's expect ultimately, place. We very going have expect believe industry, period, get all better not We pipeline, of deals time, will much grow that how the to confident And reach of our fruition. the on But to because continue industry into and that. certain say, come we're heap we honestly, will back that

Operator

Our comes America. Bank Mike of with next from question Funk

Michael Funk

if could. couple A I

remain I the for the think elevated you earlier remainder you to churn expect of mentioned year.

for to was next it 'XX about period that Just if that. calendar of extension forecast And so, expect imply year? is comment Or year? Does you more guess, improve that the why? curious, I your

Ron Yekutiel

just we will Yaron let to I'll be Go is amazing expected before, I But that next correction. he ahead, to answer jumping this, to improve, already Yaron. mentioned quarter QX, in it not one that one comment. answer. not Yes, still year. next but

Yaron Garmazi

Yes.

July pointing the most quarter, going point and actually around QX. is for the that next happened reduction we not mentioned, that next it QX in actual that And the QX be we down to that of important customer of fact Ron to reasons still are as fact the specific waiting see in the this turning maybe -- it's even still So we do mentioned and one because that year. not mainly in

impact different. will it it in QX. number the Without So retention it, will be

still are level same retention quarter. the other be projecting rate point to the we that The that is regarding for in mentioned I going next that net-dollar

now despite see mentioned, in is lower around on see around retention, see year. a QX based rate. very we situation that turn in going the situation do balanced as So retention to the we fact we right the retention what the dollar net this And

Michael Funk

on Okay. clarification for that. the Thank you

Ron Yekutiel

not our are cases want to all SMBs and not just flooding or something and large SMEs have we see I it's specific that's which enterprises. decent different of because Yes. we these customers visibility kind that in It's say know. we

ahead. that's So we're at. Go where Yes.

question. another had You

Michael Funk

quick more One one. Sure.

been I that give just would be deals. maybe kind pressure or the some to of the recently? be Has Can helpful. seems willing for And might pricing comments win earlier. you the competitors of it discount there Are time. obviously, pressure? also discount competitive around mean there from increased us intensity pricing industry signs mentioned improvement the dynamics on You and has a Any there more some relatively some pricing to it detail pricing? the in bundle

Ron Yekutiel

Yes.

pressure type price renewals, when it's by think not of and to XX% tune large, at looking you're it's XX%. of I XX%, XX%, XX%, the

I come to more in think the the -- situation. companies it's contracts have just renewal passed more as more it time

to are want a you I there it's quarter, -- big, quarters the affected exit more seeing said, tactically, to do that part are And that make than tell tell some why that it's in so can't ease. can [ph] difference. And others. quarter we're you expect that But I big bigger we that still people Like gradually switch. do interesting issue is there. or the the I

beyond to And so budget the more long term, right you doing that is a to then this of that their know the this going company happens, the to care for Kaltura. that immediate raising for our eyes and efficient much when now what's for mid- question in what, they is our about it's going not just term midterm. they're they're when a say, And We're are solution. better chose

then they at myopically XXXX, choose all And otherwise. honest about is When look they're at that. they

again, better And the and limitations the have them. on And could both got out other as folks retention that there. cycles have it cannot tell more I time in And do quarter, the I tell will you they to in that this does, it occurred. like going Every in that. you still impact rates doing position. the or that perspective to be -- we're we so change. executing I the I It well And see you just you better past, We're even than are point can growth when change back this their has that again changed. and take to as booking a the

Michael Funk

So it's all very helpful.

Operator

[Operator Instructions] Austin from with next Cole JMP Securities. question Our comes

Austin Cole

looks plan, like on in debt $XX that's balance still million So the the I'm current the just wondering sheet. there's about

comment If on you could that?

Yaron Garmazi

final refinance the next year will the negotiation debt whole of This in early mature but of thing. we stage are Yes. on

basically it. be going able zero to be level we impact this is net to that we'll our cash refinance quarter, the on So be and going believe -- to it's

table proposal the a better the have proposals right on the we than have few way, by now. what We and are

So going level. cash on on it's to renewed some our no be even cash impact and our maybe positive we'll impact have and

Austin Cole

in Great. Ron. And could then a for I just quick follow-up throw if

Just Gen to follow the up AI topic. on

You new features, about there? are then there pretty the think guys guys bringing Any Can guys can we is sounds how the And mentioned you in of aboard intriguing. any talent some revenue new you years? comment, testing you any are incremental out doing?

Ron Yekutiel

Yes.

-- absolutely of by we space more we've are bringing update the a are in talent in we looking and looking future. of and near we a could partnerships at at stuff and and in hopefully, lot partner different this been great you So there's always build options

early too revenue, that. sure, it's to it's and well. mean, going to to incremental as far, so say impact And do for going I

demand of changing. the and have increased it's point, think year. platform for the But back usage this guidance showing at is to I I going not we go up. mean coming to that

QX into consideration. them. bearing doing -- beat we've that ahead that also we've okay QX, coming them are And cautiously We the headwinds year, for we're taking and mind still we're and for in there's of done And we're for expectations. We the numbers versus all increased Street.

upside yes, will So that believe assumptions. into not all is we're upside AI inserting the come. these This and we

Operator

any Ron I remarks. call for closing like Executive Officer, the That to Chief back concludes our would to turn over question-and-answer session. Yekutiel,

Ron Yekutiel

your Yes. great and I'd like support. to thank continued for all questions you

that of good As funnel we're and including we're as signs unfold. but the the good of I future trends to into all it top quarter this in excited well think market the developments, a see and AI of year continues are and the we're in mentioned, parentheses excited about with I to additional seeing how that a the stuff was as lot other

day. Stay safe, Have a be wonderful well.

Operator

concluded. for you has conference attending today's now presentation. Thank The

now You may disconnect.

Kaltura (KLTR) 2 Aug 232023 Q2 Earnings call transcript