Kaltura, Inc.

Good morning, everyone, and welcome to the Kaltura Third Quarter 2023 Earnings Call. All material contained in the webcast is sole property and copyright of Kaltura, with all rights reserved. For opening remarks and introductions, I now turn the call over to Erica Mannion at Sapphire Investor Relations. Please go ahead.

Thank you, and good morning. With me today from Kaltura are Ron Yukatil, co-founder, chairman, and chief executive officer, and Jeroen Gamazzi, Chief Financial Officer. Ron will begin with a summary of the results for the third quarter ended September 30, 2023, and provide a business update. Yaron will review in greater detail the financial results for the third quarter, 2023, followed by the company's outlook for the fourth 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 September 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 obligation 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 press release, which is available on our website at www.investors.kaltura.com. Now, I would 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 third quarter of 2023 of 43.5 million, up 6% year-over-year, and subscription revenue of 40.8 million, up 8% year-over-year. Adjusted EBITDA for the quarter was 0.3 million. For the fourth 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 94% of total revenue compared to 92% in Q3 2022. We are pleased to share that our keen focus on returning to profitability has proven fruitful and that we achieved adjusted EBITDA profits for the first time since 2020. In the third quarter, we also posted $1.7 million in cash flow from operations, the highest since the fourth quarter of 2020. Stabilizing our bottom line and cash burn has been our main goal for the year. We repeatedly stated that we have reported both positive adjusted EBITDA and cash flow from operations in 2019 and 2020, and that we had a plan to achieve it again. We are pleased to have achieved it again in the third quarter ahead of plan. Moving on to the business update, in the third quarter, we secured a seven-digit deal with a new leading financial services customer, who has chosen Kotura as their go-to platform for all their virtual and hybrid events. We also expanded our collaboration with two of the largest banks in the United States, including signing a seven-digit upsell deal with one of those banks. Over the quarter, we continue to see growing demand for consolidation around Kotura across a wide array of on-demand, live, and real-time video use cases for both employees, customers, and prospects. This continues to drive larger deals with new customers and expansions with existing ones. For example, a leading Fortune 500 tech customer that started working with Kaltura less than a year ago to power external events and marketing use cases expanded this quarter with another seven-digit deal to also utilize Kaltura as their internal video portal for improved employee collaboration, knowledge sharing, and training. And a European University customer expanded this quarter beyond our video content management suite connected to their LMS, to also utilize a real-time conferencing virtual classroom solution to enrich their hybrid and remote learning experiences. From a marketing perspective, last week we hosted our third annual virtually live event, our own virtual event for marketing and event professionals focused on discussing how to best reach and excite audiences through virtual and hybrid events, including leveraging innovative AI tools. It was a huge success with thousands of registrants. We had insightful fireside chats and panel discussions featuring leading minds from the marketing world, including senior leaders from KOTORA customers such as AWS, VMware, Adobe, SAP, and Salesforce, which is a new 2023 customer that uses KOTORA to power live and on-demand videos in Salesforce Plus in order to, among other things, provide the online experience for large events like Dreamforce, which took place this passing quarter and was a huge success. This year's Virtually Live included a showcase of our latest AI-focused product releases, including crowd reactions, AI-based content discovery, and our new event AI Assistant, which I will talk about later. Discussions revolved around enhancing ROI, strengthening brands, and building robust pipelines. We also dedicated significant attention to sustainability, diversity, equity, and inclusion, acknowledging their growing importance in the marketing landscape. Underlying all discussions was the transformative potential of AI in marketing. We explored how AI is revolutionizing the game for marketers and how its ongoing evolution will continue to impact all of us in the industry. While on the topic of AI and moving to product updates, we've started bringing AI offerings to market. Salesforce Plus incorporated Kultura-powered AI enrichment services for content repurposing in alignment with our AI-forward Einstein focus, particularly for events. Salesforce leveraged Cultura's AI to create automatic summaries and key takeaways for over 300 Dreamforce sessions, providing great value to attendees and saving their marketers and event organizers countless hours. In addition, another leading Silicon Valley technology company went live this quarter with a pilot program that utilizes Cultura-powered generative AI tools to rapidly produce on-the-fly, highly targeted, short-form video content and automatically publish it across many distribution channels. This quarter, Kaltura also released an AI Assistant that streamlines the process of setting up webinars, providing users with intelligent suggestions and automated actions to increase the efficacy of event management. Soon, we plan to expand the AI Assistant to provide insights and suggested actions to organizers and presenters during webinars and other events, from recommending audience engagement strategies to providing real-time performance metrics. We believe this assistant will be a valuable tool for optimizing the event experience and maximizing the impact of each session. We also added an AI-powered chatbot to our media and telecom cloud TV offering. Our new KOTURA TV Genie now engages TV viewers with tailored content suggestions. Lastly, on AI, we kicked off in the passing quarter a KOTURA AI Accelerator program with the goal of integrating the best Gen AI third-party technologies with our open and flexible platforms. We are already engaged with 15 pioneering Gen-AI startups that specialize in diverse fields, such as video creation, editing, repurposing, and analysis. Over 10 large culture customers across various industries have shown interest in these solutions for their specific use case and needs. We are excited about the great opportunity that the AI accelerator program can bring to our customers and to the wider tech ecosystem. Beyond AI, during the quarter on the E&T product front, We introduced more event platforms features aimed at enhancing engagement and ROI. These include a new dashboard for session analytics, interactive quick polls, improved recording management, and deeper integration with our video portal. We also added a connector to Salesforce CRM, a new HubSpot integration, and a theme editor for customization. On the M&T product front, we integrated new ad-supported fast channels and server-side ad insertion capabilities designed to allow us to broaden the target segment of our Kultura streaming platform to media companies who want to syndicate their content to third-party platforms like LG, Samsung, Amazon Prime, and Roku. Before I summarize and hand the call over to Yaron, I would like to briefly comment on the recent escalation in the Middle East. Kultura is a U.S. domiciled company that operates in many countries, including Israel, where we have a sizable presence. We are heartbroken and our thoughts and prayers go out to our Israeli Coturians and their families and to everyone else that has been impacted. Approximately 10% of our Israel-based workforce, which is approximately 5% of our global workforce, has been called up for reserve duty. And we are prioritizing and allocating resources between projects to mitigate any impact to our business. To date, we've not seen any disruption to our ability to deliver products and services to our customers. In summary, in the third quarter, we achieved an important milestone in our journey back to profitability, posting both positive adjusted EBITDA and positive cash flow from operations. Given the quarterly results, we are slightly increasing our subscription and total revenue guidance for the full year. While top of the sales funnel KPIs, like the number of new qualified leads, grew sequentially, underscoring the interest in Kaltura's comprehensive offerings, The industry headwinds we have been discussing in recent quarters have continued to weigh down on both new deals and renewals. Lower budgets, increased price pressure, and the elongated sales cycles have kept new bookings relatively flat throughout this year and have ticked down gross retention levels. As a result, we continue to forecast the combined impact will create a headwind to revenue in the fourth quarter, which is reflected in our guidance. We are raising our adjusted EBITDA guidance for the full year, setting the middle of the range at negative 4.3 million compared with negative 28.3 million in 2022. We're also restating again our expectation of boasting a positive adjusted EBITDA in 2024. And lastly, we are reaffirming once again our expectation to achieve positive cash flow from operations for the second half of 2023. This translates into a maximum forecasted annual cash consumption from operations of 11.5 million compared with 46.8 million in 2022. We're also reaffirming that following the typical seasonal greater cash losses in the first half of next year, we expect to arrive at 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.