KALTURA INC Q4 FY2024 earnings call

• Record total revenue of $45.6 million in Q4, up 3% YOY, and record subscription revenue of $43.4 million, up 6% YOY. Also achieved record ARR and RPO for consecutive quarters.
• Adjusted EBITDA was $2.7 million in Q4, sixth consecutive quarter of adjusted EBITDA profitability. Cash flow from operations was $4.3 million in Q4.
• New subscription bookings in Q4 were at highest level since Q4 2022, including four seven-digit deals and 29 six-digit deals. Portion from new customers grew. Upsells from existing customers contributed.
• AI investments: Launched beta releases of Class Genie and Work Genie, enhanced Content Lab with new features, improved AI in TV CMS and streaming apps with recommendation engine, dubbing/subtitling, etc.
• Product updates: Enhanced virtual events/webinars with green room, bulk invite tool, polls/quizzes; improved video portal with moderation tools, chat/collaboration; reinforced enterprise video platform with Microsoft Team integrations.
• Identified five growth engines: unified cross enterprise platform, maturity of newer products, Gen AI capabilities, loyal high-value customer base, growing sales force.

In the fourth quarter, total revenue was $45.6 million, up 3% year-over-year, with subscription revenue at $43.4 million, up 6% year-over-year. For the full year, total revenue was $178.7 million, up 2% year-over-year, and subscription revenue was $167.7 million, up 3% year-over-year. Adjusted EBITDA for the fourth quarter was $2.7 million, and for the full year 2024, it was $7.3 million. Subscription revenue contributes a significant portion, with the fourth quarter subscription revenue making up a large share of the total revenue, and the full year subscription revenue also being the major component of total revenue.

• Q1 2025: Subscription revenue expected to range $43.4M-$44.2M (+5%-7%), total revenue $45.7M-$46.5M (+2%-4%), adjusted EBITDA $2.5M-$3.5M.
• Full year 2025: Subscription revenue expected $170.4M-$173.4M (+2%-3%), total revenue $179.9M-$182.9M (+1%-2%), adjusted EBITDA $12.7M-$14.7M. Expect gross margin to continue improving, aim to double adjusted EBITDA margin in 2025, and cash flow from operations to similar level as adjusted EBITDA with majority in second half.
• Long-term goal: Double adjusted EBITDA in 2026 and return to Rule of 30 company by 2028 or before.

• Forward-looking statements involve risks and uncertainties that may cause actual results to differ materially, including factors in SEC filings like risk factors in 10-Q and 10-K.
• Market volatility, macroeconomic environment, and potential FX fluctuations can impact results.

Q: Please elaborate on the on premise commentary in Q1?

A: On premise represents less than 5% of revenue. Q1 has more on prem than others due to accounting rules, and typically Q1 is weaker with lower bookings and potential M&T churn. There's a sequential decline between Q1 and Q2 typical for the company.

Q: How to think about monetizing AI opportunity with the 3x upsell opportunity in the base?

A: Kaltura has an unfair advantage with content and data from being a leading content management platform. AI features like Content Lab, Genies (Class, Work, TV) are live and being used. There's a 10%-100% growth opportunity for video consumption in organizations, and Kaltura is well-positioned to monetize this.

Q: What's incrementally more important for Kaltura this year versus last year?

A: Focus on consolidation around Kaltura, maturity of new products (event platform), Agentic AI features, tapping into 3x growth space in existing customer base, and re-growing sales force. Also, shifting focus from EX to CX and customer experience.

Q: How much of AI conversation is pull vs push from customers?

A: Some customers are still exploratory, but Kaltura is a good vehicle as it's connected to workflows, has metadata/content, and runs the experience. Customers are intrigued and interested, but not all are coming with exact needs; Kaltura helps educate them.

Q: With better market conditions, any verticals or geographies standing out?

A: Business is growing across board, with tech being quicker to embrace AI. Strong region for E&T is North America, for M&T is EMEA. Closed 30 customers north of $1 million, and net booking is doing well. Win rates are strong, though time to close deals is longer than normal.

Q: Changes in time to close deal and closure rate in 2025?

A: Win rates have been holding nice. Time to close deals is still longer than normal, but no dramatic shift noted in Q4.