Summary
Kaltura's first quarter of fiscal 2023 showed modest top-line growth and a narrower loss. Revenue rose 4% to $43.3 million from $41.7 million in the prior-year quarter. Gross profit increased to $27.3 million, and gross margin was 63.1%, essentially flat versus 63.0% a year earlier. Operating margin improved to negative 27.6% from negative 35.1%. The operating loss narrowed to $12.0 million from $14.7 million. Net loss narrowed to $12.8 million from $16.9 million. Net cash used in operating activities fell to $7.4 million from $19.6 million. Capital expenditures were $0.9 million, up from $0.4 million. Those figures reflect a business that is still unprofitable but is cutting its cash burn.
Operational metrics were mixed. Annualized Recurring Revenue was $159.6 million, up 8% from $147.7 million. Net Dollar Retention Rate slipped to 102% from 107%. Remaining Performance Obligations were $167.4 million, down 2.2% from $171.2 million. Current deferred revenue was $50.5 million, up 3.5% from $48.8 million. Management highlighted a year-over-year increase in new ARR bookings for the second quarter in a row, following five prior quarters of declines. The company also closed five seven-digit deals across insurance, banking, technology, and media. Average deal size increased as customers consolidated around Kaltura as a single vendor. Those are encouraging signs, but the RPO decline and lower net dollar retention show that expansion within the existing base remains under pressure.
Cost actions are a central part of the story. The 2023 Reorganization Plan cut 11% of the workforce and is expected to produce roughly $16 million in annualized cost reductions. Kaltura incurred about $1 million in pre-tax charges tied to the plan as of March 31, 2023. The plan is expected to be substantially completed in the first half of 2023. Management said the restructuring is meant to position the company for lower demand, spend, and available budgets across its market segments. The company also reaffirmed its expectation of reaching cash-flow-from-operations break-even during 2024 and posting positive Adjusted EBITDA for the full year 2024. Adjusted EBITDA was negative $2.7 million in the first quarter, an improvement from negative $8.4 million a year earlier. The company also continued to enhance its Events Platform, Webinars product, APIs and developer tools, and Cloud TV front-end experience applications. The earlier 2022 Restructuring Plan cut about 10% of employees and was substantially completed in 2022.
Guidance points to continued slow growth. For the second quarter of 2023, Kaltura expects subscription revenue to grow 5% to 7% year over year and Adjusted EBITDA of negative $1.5 million to negative $2.5 million. For the full year ending December 31, 2023, the company expects subscription revenue to grow 4% to 6% year over year, total revenue to grow 0% to 2% year over year, and Adjusted EBITDA of negative $5.0 million to negative $8.0 million. Risks include industry headwinds, a worsening economic climate, lower demand and budgets, recession concerns, the COVID-19 pandemic, the Russia-Ukraine conflict, rising inflation and interest rates, and the failure of financial institutions such as Silicon Valley Bank. The company also faces risks from Israel's judicial legislation proceedings and from covenants under its credit agreement, including a minimum Annualized Recurring Revenue requirement and a liquidity covenant of at least $10 million. Kaltura said it was in compliance with those covenants as of March 31, 2023. The company had no balance outstanding under its Revolving Credit Facility and $35.0 million available for future borrowings. The Term Loan Facility requires quarterly installments of $1.5 million and matures on January 14, 2024. Kaltura also noted that its cash and cash equivalents are maintained at financial institutions in amounts that exceed federally insured limits.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q1 FY2023 | Q4 FY2022 | QoQ | Q1 FY2022 | YoY |
|---|---|---|---|---|---|
| Revenue | $43.3M | $44.1M | -1.8% | $41.7M | +3.7% |
| Gross profit | $27.3M | $27.6M | -1.2% | $26.3M | +3.9% |
| Gross margin | 63.1% | 62.6% | +0.4 pp | 63.0% | +0.1 pp |
| Research & development | $14.1M | $14.2M | -0.4% | $14.9M | -5.0% |
| Sales & marketing | $12.1M | $13.2M | -8.6% | $14.6M | -17.4% |
| General & administrative | $12.1M | $11.2M | +7.8% | $11.4M | +5.8% |
| Total operating expenses | $39.2M | $39.0M | +0.7% | $40.9M | -4.1% |
| Operating income (loss) | -$12.0M | -$11.4M | -5.2% | -$14.7M | +18.4% |
| Operating margin | -27.6% | -25.8% | -1.9 pp | -35.1% | +7.5 pp |
| Net income (loss) | -$12.8M | -$14.8M | +13.4% | -$16.9M | +24.4% |
| Net margin | -29.6% | -33.5% | +4.0 pp | -40.6% | +11.0 pp |
| Net retention rate | 102.0% | 100.0% | +2.0 pp | 107.0% | -5.0 pp |
Risks
MD&A states the worsening economic climate and recession headwinds led to lower demand and the company does not expect the rapid growth trend to continue in 2023, with lower demand, spend, and available budgets across market segments. Q1 FY2023 revenue rose 3.7% to $43.27M, while Net Dollar Retention Rate was 102% compared with 107% for the prior-year quarter.
The risk factors newly emphasize the need to raise additional capital or generate significant capital, noting that worsening economic climate, inflation, and interest rates may reduce net cash from operations and limit financing availability. Q1 FY2023 operating cash flow was negative $7.43M, though up 62.1% from negative $19.59M in the prior-year quarter, and net loss was $12.80M.
The risk factors detail offices near Tel Aviv, Israel, with 339 full-time employees in Israel as of March 31, 2023, and risks from armed conflicts, military reserve duty, and proposed judicial system changes that may harm the business environment and capital raising. The company's primary research and development, human resources, and certain finance and administrative activities are based in Israel.
The risk factors expand on competition for skilled personnel, high attrition in the Israeli high-tech industry, and the impact of equity value on employee retention. MD&A notes the 2022 Restructuring Plan reduced the workforce by approximately 10% and the 2023 Reorganization Plan downsizes an additional 11%, which may affect retention and execution.
The risk factors newly state that the majority of cash and cash equivalents are held at major U.S. and multi-national financial institutions and exceed insured limits, so market conditions or institution failure could delay access to uninsured funds. Cash, cash equivalents, and restricted cash was $42.754M at March 31, 2023.
MD&A highlights that Media & Telecom gross margin decreased 8 percentage points to 38% for the three months ended March 31, 2023 from 46% for the prior-year period. Media & Telecom professional services gross loss increased $1.0M, or 295%, to $1.4M, mainly due to lower revenue.
MD&A describes the 2023 Reorganization Plan to downsize an additional 11% of the workforce, with an expected annualized cost reduction of approximately $16M and pre-tax charges of approximately $1M as of March 31, 2023. The plan is expected to be substantially completed in the first half of 2023, with execution risk if benefits are not realized.
Remaining Performance Obligations decreased 2.2% to $167.42M at March 31, 2023 from $171.22M in the prior-year quarter, while deferred revenue rose 3.5% to $50.49M. MD&A states 58% of Remaining Performance Obligations is expected to be recognized as revenue over the next 12 months.
SaaS KPIs
All quarters →Net Dollar Retention Rate
Remaining Performance Obligations
Annualized Recurring Revenue (ARR)
Summary, forecast, risks and KPIs are extracted from KALTURA INC's SEC filings for Q1 FY2023 (10-Q / 10-K and the 8-K earnings release); GAAP figures in the summary are checked against the reported XBRL data. They can contain errors; the filings are authoritative. Processed Oct 1, 2026.