Kaltura, Inc.

Good afternoon, everyone, and welcome to the Kaltura third quarter 2025 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 will now turn the call over to Erica Mannion at Sapphire Investor Relations. Please go ahead, Erica.

Thank you, operator. I am joined by Ron Yucatel. Kaltura's co-founder, chairman, president, and chief executive officer, and John Doherty, chief financial officer. Ron will begin with a summary of the results for the third quarter ended September 30, 2025, and provide a business update. John will review the financial results for the third quarter of 2025 in greater detail, followed by the company's outlook for the fourth quarter and full year of 2025. 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, but not limited to statements regarding Kaltura's expected future financial results and management's expectations and plans for the business, including our planned acquisition announced earlier today. 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 Caltura's annual report on Form 10-K for the fiscal year ended December 31st, 2024 and our other SEC filings including quarterly report on Form 10-Q for the quarter ended September 30, 2025 filed with the SEC. Any forward-looking statements made during 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 non-GAAP financial measures, adjusted EBITDA, non-GAAP net loss, and non-GAAP gross margin during this call. For reconciliation of these measures to the most directly comparable GAAP metric, please refer to our earnings release, which is available on our website at investors.caltora.com. Now, I will turn the call over to Ron.

Thank you, Erica, and thanks to everyone for joining us on the call this afternoon. Today, we reported total revenue of $43.9 million for the third quarter of 2025 and subscription revenue of $42 million. We posted a record adjusted EBITDA of $4.2 million representing our ninth consecutive quarter of adjusted EBITDA profitability, driven by a strong non-GAAP gross margin of 70%, up from 68% in the same quarter last year. Cash flow from operations was 9.3 million, in line with our forecast of strong cash flow in the second half of the year. Non-GAAP net profit in the third quarter was 2 million, representing the fifth consecutive quarter of non-GAAP profitability. Before continuing the review of our third quarter results, I would like to discuss some exciting news. After market closed today, we announced that we signed on November 5th a definitive agreement to acquire eself.ai, a deep-tech gen-AI lab developing conversational agentic AI technology and models for real-time photorealistic avatars, speech recognition and generation, and screen understanding. Eself's avatar technology is planned to power a new line of Kaltura immersive real-time conversational virtual agents, which will hear, speak, see, and understand, and harness video and other forms of rich media to provide highly engaging, personalized customer and employee experiences. It is also planned to serve as the foundation of a new Kaltura content creation tool, which would enable customers to create and publish videos with recorded avatars. This dual capability positions eself as an important driver of both our live conversational agentic experiences and next generation video on demand content creation offerings. In our previous earnings call, we reiterated our vision to transform our AI agent from reactive prompt-based agents into proactive automated conversational ambient agents that will anticipate needs and take action to not only drive productivity, but become intelligent enough to replicate human rules and automate tasks, acting as AI twins. We also said we plan to gradually evolve our offerings into AI specialists that are intended to be role aware, use case specific, and ultimately also industry specific. Likewise, our investor presentations throughout the past year outlined our intent to launch immersive AI agents that would be fully automated, conversational, hyper-personalizing, context-aware, elevating us from powering video experiences to providing end-to-end video-based, AI-infused customer and employee experiences. We believe we're entering the decade of agents, where avatar-based conversational agents will become a primary interface for work, learning, and entertainment. To meet this shift, organizations will require a real-time video experience generator that assembles scenes user interface, and narratives based on user intent. Instead of static pages or pre-cut videos, real-time immersive agents will understand user context, goals, and constraints, and accordingly construct personalized digital experiences that include a tailored dialogue, visuals, data overlays, and calls for action to drive the best outcome on every digital touchpoint across all employee and customer journeys. The plan acquisition of ESELF, which is expected to close in the fourth quarter of this year, is an important milestone in achieving this vision and in our evolution from powering video content management and experiences to harnessing these capabilities to provide immersive virtual agents for customer and employee experiences in our transformation from a video company to a rich media-powered, AI-infused CX and EX company. After this acquisition, customers will continue to receive from KOTURA cutting edge products to manage their video lifecycle, publish and stream content online and on TV, run virtual events, et cetera. But the plan is that soon customers will also get from us two additional new offerings. First, a KOTURA powered content creation tool that generates AI based videos on demand with both photorealistic and animated avatars. And second, Immersive conversational virtual agents with live avatar interfaces that utilize real-time video creation and repurposing, voice chat across over 30 languages, image creation, interactive whiteboarding, and screen sharing. This will include a wide array of pre-built off-the-shelf agents that are optimized to fulfill CX, EX, and industry-specific tasks and roles, as well as development tools and professional services to create bespoke agents for customized needs. These immersive virtual agents will address tasks and fulfill roles in areas such as marketing, sales, customer care, recruiting, onboarding, teaching and training, communications, entertainment, and more. Essentially, they represent the next generation of Kaltura's recently launched AI-based genies, turning them into fully conversational agents and adding to them a mouth, ears, eyes, and a face so they could better fulfill human roles, increase customer and employee engagement and retention, streamline and accelerate processes, reduce costs, and increase revenue. We plan to integrate and offer eSelf technology alongside our current video experience products, as well as offer eSelf-powered immersive virtual agents separately as new self-serve offerings, which are expected to boost our product-led growth, go-to-market motion, and expand our target market from large enterprise to also small and medium businesses across industries. Examples of potential integrated offerings include enabling the creation and insertion of avatars to VOD assets within our VCMS platform and video portal product, as well as adding live conversational avatars to all our products, including video portal, LMS and CMS extensions, virtual events and webinars, virtual classroom and TV streaming apps. Examples of potential new self-serve offerings would be CX, EX, and industry-specific immersive virtual agents based on the combination of Genie and the avatar interface that would be easily embeddable in any website and online applications. These self-serve agents will include native integrations with a full suite of KOTURA products, so if warranted, they would enable our customers to harness the full powers of KOTURA across video creation, management, distribution, publishing, and monetization. ESOP was founded by Dr. Alan Becker and Elon Shoshan. It is home for an exceptionally talented team of more than 15 AI experts in the fields of computer vision and vision language models, NLP, and speech. The company commenced development in 2023 and has recently started piloting its offering and receiving strong early user endorsement and industry recognition. including being recently honored by staff company as one of the next big things in tech in 2025. We engaged with the ESL team as they were switching gears from piloting to further hardening and scaling their offerings towards full commercialization. And they appreciated the opportunity to join hands with Cultura to accelerate this process and their go-to-market motion because of our proven track record of successfully commercializing enterprise products, our highly synergistic technology and product portfolio, and our strong market positioning and prominent customer base. In recent months, we presented together the planned joint offering and its future potential and promise to various Kultura customers and prospects across industries and were met with great interest and excitement. People love the rich multi-model conversational interface, appreciate the ability to integrate it deeply into their enterprise workflows and systems, and are excited by how it connects with Kultura's products, and the vast video database that we manage and draw insights from. We believe that closing this acquisition will enrich our technology and AI development talent base, boost the breadth, depth, appeal, and mission criticality of our offerings, increase our addressable market, shorten our sales cycles with a new PLG motion, and altogether support revenue growth. This transaction will also support the repositioning of Kaltura from a video company to a media-rich, AI-infused CX and EX company, from providing video products as an end to harnessing them as means for improved employee and customer engagement and success. As for the deal structure of the ESOP acquisition, the purchase price consists of $7.5 million in cash, payable upon closing, $12.5 million in cash, payable over three years, contingent upon the attainment of specific earn-out milestones of incremental recognized revenue, and 4.7 million common shares of KOTORA vesting over three years, subject to retention holdback provisions for ESL founders and key employees, representing 3% of the company's outstanding stock before the deal. The total deal value as of the day of signing, assuming all earn-out milestones and retention targets are achieved, is approximately $27 million. We believe that this deal structure provides significant value accretion to Cultura shareholders, while at the same time recognizes the eSelf team and shareholders for their great achievements to date and their expected significant future contribution to our joint success. For further details regarding eSelf and the transaction, please refer to the press release sent out this afternoon. You can learn more about our planned joint offering post-closing and the potential exciting opportunity ahead by visiting www.cultura.com slash avatars-agents. Next, I would like to turn to discuss another announcement from today, the repurchase of Cultura Common shares held by Goldman Sachs. Goldman Sachs invested in Cultura in 2016. They have been a strong supporter of the company and have held all their shares since that time. Considering the extended duration that they have owned our stock and in line with their publicly traded strategy and efforts, to harvest long-tenured non-core investments, we have come to an agreement to repurchase all the agricultural shares at a 25% discount to the 30-day VWAP. The deal concluded on Friday, November 7th, whereupon we repurchased 14.4 million shares, representing 9.2% of our outstanding shares that day, for a total price of 16.6 million. Our board believes that this represents a smart, timely and value-accretive move for all company shareholders and is committed to pursuing similar rewarding opportunities in the future in conjunction with our planned increased generation of cash and operational profits. It is worth noting that following the Goldman Sachs share repurchase in Q4 and the expected closing of ESOP acquisition, the company is forecasting to close the year with approximately $60 million in gross cash representing approximately $30 million in net cash after deducting our outstanding bank debt. Furthermore, once the acquisition closes, the net combined impact of these two deals, assuming all the ESOP transaction shares will ultimately vest, represents a reduction in our outstanding share base of 9.8 million shares, translating to a 6.2% anti-dilutive accretive effect. So, we expect to come out of these two transactions with stronger technology, offerings, positioning, and business opportunities, far fewer shares outstanding, and more than enough cash to execute our exciting future plans. Returning to the business updates. New subscription bookings in the third quarter were comprised of 12 six-digit deals, including new customers such as a large Japanese conglomerate, a leading European professional services firm, in a prominent Asian telecommunications company. As for AI deals, in the third quarter, we closed five AI deals for Content Lab and Genie following last quarter's initial sales with a multinational fast food restaurant chain, a leading US-based healthcare provider, and three universities. We expect many more AI deals in the quarter ahead, in fact, more than previously forecasted given the earlier stated accelerated efforts in this area. On the last earnings call, we forecasted new bookings to pick up in the second half of the year. While this has not happened yet in the third quarter, our current pipeline supports this pickup in the fourth quarter. On the gross retention front, the gross retention rate in ENT continued to be strong in the third quarter, and we still forecast an annual ENT gross retention rate in 2025 that is better than that of the previous four years. M&T growth retention rate was better than that of the first and second quarters, though still lower than usual as forecasted. We continue to expect a strong M&T growth retention rate in the fourth quarter. Moving on to the product front and beginning with our continued and growing investments in our AI offerings. In the third quarter, we expanded our family of Genie agents with additional features and functionalities. As mentioned before, these developments help prepare our genies to become proactive, automated, conversational, and ambient agents. As discussed, soon they're expected to become fully immersive with the addition of a mouth, ears, eyes, and the face. As for Content Lab, in the third quarter, we enabled custom instructions designed to empower content creators and administrators to guide the AI with specific prompts to ensure that the generated clips emphasize the right messages, that the summaries and chapters match their communication style, that the generated metadata aligns with their internal taxonomy, and that the generated quizzes fit their specific learning objectives. Lastly, for AI developments, in the third quarter, we launched the first version of our new publishing agent, which automates the entire process of publishing content, taking over complex and repetitive tasks that previously required manual efforts. Once a content creator or administrator defines the publishing workflow and rules, the agent is empowered to take actions and make decisions autonomously to ensure content is prepared, enriched, and published according to policy, including automated captioning, clipping, quiz insertion, metadata generation, and content approval. I want to tie all these AI developments together and also connect them to my earlier statements about eSELF and our exciting AI plans to evolve towards providing immersive virtual agents, our AI offerings, and consequently, our entire product portfolio is becoming smarter, richer, more accurate, consistent, interactive, engaging, reliable, and compliant. Our offerings are becoming more contextualized and personalized, are saving people and organizations more time and money, and are assisting in achieving more mission-critical business goals. As stated before, We're excited about this transformative transaction and the continued repositioning of Kaltura from a video company that powers video content management and experiences to a rich media-based AI-infused customer and employee experience company that specializes in harnessing the power of rich media to deliver better business results. Moving beyond our AI innovations, in the third quarter, we delivered a broad set of enhancements across our portfolios. Our virtual events and webinars product supports events with much larger scale, fewer manual steps, and lesser human resources, thanks to a more streamlined setup, including event duplication and our new events MCP model, a powerful new way to connect our platform with AI assistance or third-party AI systems. In the video portal front, we fully integrated the modern Kultura Studio, enabling our customers to run events directly from the portal with full chat and collaboration support, offering an integrated and streamlined live experience. We also upgraded our LMS and CMS extensions and virtual classroom with native embedding so instructors can deliver live and on-demand classes without leaving the LMS and students can learn in the same place. Finally, our underlying platforms for video and TV content management gain improvements in hyper-personalized content discovery, the experience API, analytics, and security. We are proud to continue to lead the market with the most robust, flexible, and engaging video and TV platforms. Continuing beyond our products, in the passing quarter, we hosted four Kultura Connected Education events across the U.S. where we discussed how AI is transforming the way institutions capture, preserve, and personalize knowledge, empowering educators and learners with smarter, more connected experiences that drive engagement, success, and student retention. Additional education events are being conducted globally throughout the fourth quarter. During the third quarter, we also showcased at the IBC Broadcaster Conference in Amsterdam our newly launched media publishing agent and the latest enhancements in our TV Genie offerings and ad monetization options. Beyond education and media and telecom markets, for the broader enterprise market, we conducted several executive-level dinners across the U.S. and Europe, and showcased our offerings in large industry conferences like DigitalX by Deutsche Telekom, CEMA, ISMA, and DevelHub. The focus of the conversation was our new and upcoming agentic offerings for customer and employee experiences, and we were met with great interest and excitement. In summary, we wrapped up another quarter where we surpassed the high end of our subscription revenue, total revenue, and adjusted EBITDA guidance. as well as our expected cash flow from operations. Our pipeline still indicates a pickup in the level of new bookings in the fourth quarter for both ENT and M&T, coupled with an expected improvement in our M&T gross retention rate. We continue to be fueled by customer consolidation around our platform, the maturity of our newer products, and our exciting new Gen AI offerings that are expected to yield more bookings in the quarters ahead. As for our outlook for the remainder of this year, we are guiding for the fourth quarter a sequential increase in total revenue for the first time this year. This embodies a fourth quarter subscription revenue guide that is at the same level as our third quarter result after taking it into consideration revenue recognition delays with two existing customers. We are increasing for the third time our adjusted EBITDA guidance for the year and are forecasting to post another record high in the fourth quarter which is reflective of the strength of our operations and our continued focus on discipline execution. We're also forecasting another quarter of positive cash flow from operations. We are very excited about joining hands with ESELF to accelerate the introduction of additional video-on-demand content creation tools and our transition from providing video solutions to rich media-based, AI-infused, customer and employee experience solutions. We believe this will increase our value, appeal, and stickiness shorten our sales cycle, increase our addressable market, and support revenue growth. And we see a path to achieving all of this while continuing to grow our adjusted EBITDA profits and cash flow. To that end, we remain committed to achieving double-digit revenue growth in a rule of 30 combination between revenue growth and adjusted EBITDA margin by 2028 or sooner. Lastly, we will continue to look for opportunities to allocate our capital efficiently to increase shareholder value. Now, before turning it over to John, our CFO, to discuss our financial results in more detail, I would like to follow up on our announcements in early October about John's upcoming departure on December 5th, to thank him again for his great contribution to Cotura over the last couple of years, and to wish him well in his next endeavor. As noted, we have initiated a search for a new CFO, and John will continue to support and consult the company in its Seasons Finance team throughout the search process and UCFO onboarding. I will now pass it over to John. John.