Kaltura, Inc.

Everyone and welcome to the Kaltura second quarter 2023 earnings call. All material contained in the webcast is the sole property and copyright of Kaltura with all rights reserved. For opening remarks and introductions, I'll now turn the call over to Erica Mannion at Sapphire Investors Relations. Please go ahead.

Thank you and good morning. With me today from Kaltura are Ron Yucatel, co-founder, chairman, and chief executive officer, and Yaron Gamarzi, chief financial officer. Ron will begin with a summary of the results for the second quarter ended June 30, 2023, and provide a business update. Yaron will then review in greater detail the financial results for the second quarter, 2023, followed by the company's outlook for the third quarter and full year of 2023. We will then open the call for questions. Please note that this call will include forward-looking statements within the meaning of the federal securities laws, including but not limited to statements regarding Kaltura's expected future financial results and management's expectations and plans for the business. These statements are neither promises nor guarantees and involve risks and uncertainties that may cause actual results to differ materially from those discussed here. Important factors that could cause actual results to differ from forward-looking statements can be found in the risk factors section of Kaltura's annual report on Form 10-K for the fiscal year ended December 31, 2022 and other SEC filings including the quarterly report on Form 10-Q for the quarter ended June 30, 2023 to be filed with the SEC. Any forward-looking statements made in this conference call including responses to your questions, are based on current expectations as of today, and Kaltura assumes no obligations to update or revise them whether as a result of new developments or otherwise, except as required by law. Please note, we will be discussing a non-GAAP financial measure, adjusted EBITDA, during this call. For reconciliation of this non-GAAP financial measure to the most directly comparable GAAP metric, please refer to our earnings release, which is available on our website at www.investors.caltura.com. Now I'd like to turn the call over to Ron.

Thank you, Erica, and thanks to everyone for joining us on the call this morning. Today we reported total revenue for the second quarter of 2023 of $43.9 million, up 5% year-over-year, and subscription revenue of $40.7 million, up 7% year-over-year. Adjusted EBIT up for the quarter was negative $1 million. For the third quarter in a row, we posted record subscription revenue, and our year-over-year total revenue growth rate was the highest since the first quarter of 2022. Subscription revenue represented 93% of total revenue compared to 90% in quarter two 2022. Given the results of the first half of the year, we are cautiously increasing our revenue guidance for the full year. We continue to focus on returning to profitable growth and achieve the lowest adjusted EBITDA loss of the last eight quarters. Given the results of the first half of the year, we're also cautiously increasing our adjusted EBITDA guidance for the full year. We are once again reaffirming our plans to achieve a positive adjusted EBITDA in 2024. Regarding cash flow, we materially reduced our cash consumption from operations in this quarter to $4.1 million compared with $22.5 million in quarter two 2022. This brings our total H-123 cash consumption from operations to $11.6 million compared to $42.1 million in H-122. We expect to post positive cash flow from operations in the second half of 2023 and following our typical seasonal greater cash losses in the first half of next year, arrive at cash flow from operations break even with sufficient cash reserves. As stated before, we were adjusted EBITDA and cash flow from operations profitable in 2019 and in 2020 and are committed to getting there again very soon. independent of our top line growth. Moving on to the business update. We landed this quarter a new Fortune 50 bank customer that is consolidating their video content libraries into a single platform and supporting interactive video for learning and training within the organization. For a new global investment bank customer, we are powering all internal and external events and their internal video portal. Two Silicon Valley trailblazers, have chosen Kaltura for the first time this quarter to power events and internal communications. We were also selected by a leading global healthcare organization to provide live streaming and webinars for all their events, by a newly signed European government institution to power their worldwide events, and by an online learning company that is starting to use Kaltura to consolidate several video experiences previously powered by multiple video platforms. While the industry headwinds that we have been reporting on persist, and we are observing these translating into lower budgets, increased price pressure, and elongated sell cycles, we are glad to see our leading demand indicators continue to grow. We posted this quarter a sequential increase in the number of new qualified leads, in the number of meetings set by our SDRs, and in the number and size of our RFP submissions. The growth in all these parameters was also fueled by increased demand for our newer event platform and virtual classroom products. We believe that these top-of-the-funnel demand indicators, as well as our growing sales pipeline, signal that we are positioned well competitively, that our newer products are well embraced, and that the market interest in KOTORA is growing. This was also echoed this quarter with us winning industry awards, such as the Overall eLearning Solution of the Year category at the 2023 EdTech Breakthrough Awards, and five awards at Global EventX 2023, including in the Best Event Technology, Best Virtual Event Platform, and Webinar Software categories. This quarter, we hosted Cultura Connect on the Road 2023, series of five exclusive events across New York, San Francisco, Atlanta, London, and Berlin. These were the first KOTORA organized physical industry events held since 2020. We were thrilled to have a speaker lineup of 24 top industry executives from global leading companies, including KOTORA customers such as AWS, SAP, Salesforce, VMware, and IBM. Hundreds of SMDs had the opportunity to network with industry leaders and visionaries and participate in hands-on workshops and interactive roundtables discussing the use of video experiences for marketing and learning and development. The event focused on helping organizations achieve better ROI and meet their ESG goals through video-based digital engagement, particularly in the context of widespread marketing budget cuts and reduction of in-person training sessions. Speakers and attendees exchange insights about hybrid events, the role of artificial intelligence and video experiences, how online video experiences further diversity, equity, and inclusion, and the need to converge around a single video platform across multiple products and use cases. All these aspects were also identified by speakers and attendees as areas where KOTURA brings great differentiated value, helping them to achieve their business goals. Lastly, on the product development front, This quarter, we continued beefing up our events platform, enhancing event templatization and theme editing, registration management, user authentication, session moderation, and content distribution. We enhanced our video portal with a dashboard for content creators to track better engagement with their content and added better support for multi-language content. We also upgraded our video conferencing rooms to include production studio features such as room branding and lower thirds, storyboard capabilities that enable preparation of session segments and content in advance, a mirror integration for collaborative whiteboarding, and enhanced customization and branding capabilities. We also launched cloud regions for our global SaaS service to address regional requirements for data privacy and security and localized support. This also lays the groundwork for us to be able to launch additional specialized cloud services for highly regulated markets such as federal, healthcare, and financial services. We would also like to share our move into the world of generative AI, where we are already starting to collaborate with customers to boost our video-based experiences for marketing, communication, learning, and training, and entertainment, and increase their return on investment. The new capabilities are intended to leverage Cultura's extensive content libraries and in-depth analytics to add enterprise-grade generative AI that will drive efficiency and reduce content production costs for our customers across learning, knowledge creation, marketing, and entertainment use cases. Kaltura's in-depth analytics enable optimization of the models as well as feedback loops for continuous learning. We plan to insert generative AI capabilities into a broad range of our products and cater to enhance content creation, search and discovery, interactivity, and analytics reporting. This includes, for example, using AI to create new assets from existing content, like repurposing event or webinar content into many highlight reels for highly targeted distribution across social platforms, and for enriching our immersive and intelligent content search and discovery services with new interactive capabilities, and for making content more widely accessible to help customers comply with regulatory requirements. Building on our new generative AI capabilities We also plan to launch a system event creation capabilities for event hosts that include auto generation of content and improved insights intended to streamline event creation, grow attendance, boost content discovery, and reach end user experience and increase engagement. As an open and flexible company and platform, we continue to harness innovation from across the tech ecosystem. Kaltura's partner program already includes generative AI providers, that have integrated their solutions into our video experience cloud and are available to Kaltura customers. As part of our partner programs, we intend to launch a Kaltura AI accelerator program that will connect AI startups with Kaltura products while facilitating brainstorming, knowledge sharing, and value creation with Kaltura enterprise customers. We are excited about the great promise that generative AI holds to create hyper-personalized, hyper-engaging experiences on the fly. We believe that this will significantly increase the creation, consumption, and ROI from video experiences, and that KOTORA and its customers would stand to benefit from it tremendously. In summary, we continue to make progress towards our goal to return to profitable growth. We posted, again, record subscription revenue, continue to increase our year-over-year total revenue growth rate, and further reduce or adjust even the losses and cash consumed from operations. Despite the continued industry headwinds, we continue to be encouraged by leading demand indicators and are excited about the adoption of our newer products and about our continued innovation, especially around generative AI that has the potential to significantly grow the demand, usage, and value of our solutions. We are cautiously increasing both our revenue and adjusted EBITDA guidance numbers for 2023 and they're reaffirming our plans to achieve a positive adjusted EBITDA in 2024. We plan to post positive cash flow from operations in the second half of 2023 and to achieve cash flow from operations break even by the second half of 2024 with sufficient cash reserves. With that, I'll turn it over to Yaron, our CFO, to discuss our financial results in more detail. Yaron.