Summary
Kaltura reported third quarter 2021 revenue of $43.0 million, up 40.4% from $30.6 million in the third quarter of 2020. Revenue for the first nine months of the year was $122.3 million, up 43.4% from the prior-year period. Annualized Recurring Revenue reached $151.7 million, up 41% from $107.3 million a year earlier, and the Net Dollar Retention Rate rose to 117% from 111%. Management described another quarter of robust bookings and said forecasted average annual salesforce productivity was tracking to plan. The company also highlighted its placement as a Visionary in the 2021 Gartner Magic Quadrant for Meeting Solutions.
Gross profit was $27.8 million for the quarter, up from $18.1 million a year earlier, and gross margin climbed to 64.7% from 59.1%. Year-to-date gross margin was 62.1%, up from 60.5%. The gain came largely from lower spending on the company's own data centers as workloads moved to public cloud infrastructure. That work is not finished. Kaltura said it is still scaling its network infrastructure and that costs incurred in 2021 will continue to affect gross margins.
Profitability below the gross line moved the other way. Operating loss was $5.9 million, wider than the $4.4 million loss a year earlier, although operating margin improved to -13.7% from -14.4%. Net loss widened to $25.2 million from $6.4 million, mostly because of a $16.8 million expense from remeasurement of warrants to fair value. Diluted earnings per share were $0.26 for the quarter and $1.00 for the first nine months. Adjusted EBITDA, a non-GAAP measure, was negative $2.3 million, compared with positive $1.7 million in the prior-year quarter.
Cash generation reversed. Net cash used in operating activities was $5.7 million in the quarter, against $4.9 million provided in the third quarter of 2020. For the nine months, operating activities used $11.4 million, compared with $1.7 million provided a year earlier. Capital expenditures were $0.6 million in the quarter, up from $0.1 million. Deferred revenue, current portion, was $63.0 million at September 30, 2021, and Remaining Performance Obligations were $162.3 million. The July IPO raised net proceeds of about $155.6 million. At quarter end the company had $22.4 million of borrowings outstanding under its revolving credit facility and $12.5 million of additional availability, and it reported compliance with credit covenants that include a minimum liquidity requirement of $10 million.
By segment, Enterprise, Education and Technology revenue grew 45% and Media and Telecom revenue grew 31%. Margins diverged. EE&T gross margin was 73%, while M&T gross margin was 45%, helped by lower compensation costs as a percentage of revenue.
The fourth quarter outlook calls for Adjusted EBITDA of negative $9.5 million to negative $7.5 million, with weighted average basic and diluted shares of about 126.7 million. For the full year 2021, Kaltura guides to Adjusted EBITDA of negative $14.1 million to negative $12.1 million, on roughly 70.7 million weighted average shares. The company did not provide a quantitative reconciliation of forecasted Adjusted EBITDA to forecasted GAAP net income (loss), saying it cannot calculate certain reconciling items without unreasonable effort. The outlook assumes current expectations about COVID-19 and its variants.
Risks are numerous. The company cites the ongoing pandemic, its ability to manage and sustain rapid growth, its ability to achieve and maintain profitability, quarterly fluctuations in results, customer retention, competition and technological change, reliance on third parties, retention of key personnel, and international operations. It also carries a restatement of its previously issued consolidated financial statements for the year ended December 31, 2020, tied to the December 2020 estimate of the fair value of its common stock. Separately, Kaltura committed to purchase at least $40.0 million of public cloud infrastructure services over five years beginning in the fourth quarter of 2021, and it expects research and development, sales and marketing, and general and administrative expenses to rise as a percentage of revenue in the near and medium term.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q3 FY2021 | Q2 FY2021 | QoQ | Q3 FY2020 | YoY |
|---|---|---|---|---|---|
| Revenue | $43.0M | $41.6M | +3.3% | — | — |
| Gross profit | $27.8M | $26.0M | +7.1% | — | — |
| Gross margin | 64.7% | 62.5% | +2.3 pp | — | — |
| Research & development | $12.4M | $11.8M | +4.9% | — | — |
| Sales & marketing | $11.3M | $10.5M | +7.0% | — | — |
| General & administrative | $10.1M | $9.4M | +6.7% | — | — |
| Total operating expenses | $33.7M | $31.8M | +6.1% | — | — |
| Operating income (loss) | -$5.9M | -$5.8M | -1.8% | — | — |
| Operating margin | -13.7% | -13.9% | +0.2 pp | — | — |
| Net income (loss) | -$25.1M | -$2.7M | -825.0% | — | — |
| Net margin | -58.5% | -6.5% | -52.0 pp | — | — |
| Net retention rate | 117.0% | 121.0% | -4.0 pp | — | — |
Risks
The company identified a material weakness in internal control over financial reporting related to fair value estimates for stock-based compensation and warrant remeasurement, leading to a restatement of 2020 financial statements. Remediation is not complete and could cause future reporting failures or restatements.
The company has a history of losses, and net loss widened to $43.4 million for the nine months ended September 30, 2021 from $22.4 million in the prior-year period, while operating loss widened to $20.2 million from $7.2 million. It expects continued investments that may not be offset by revenue growth.
Operating cash flow turned negative, with net cash used in operating activities of $11.4 million for the nine months ended September 30, 2021 versus $1.7 million provided in the prior-year period, a decrease of $13.1 million or 761.0%.
Revenue is concentrated in a limited number of customers. For the nine months ended September 30, 2021, Vodafone accounted for 9.7% and Amazon 9.4% of revenue, and the top ten customers accounted for 32.4%. Loss of a significant customer could materially harm results.
The market is highly fragmented and competitive, with competitors including Microsoft, Amazon, Zoom, Cisco, and Adobe that have greater resources. Competition has intensified and may lead to price reductions, fewer customers, and loss of market share.
The pandemic increased usage but also lengthened sales cycles, delayed projects, and prompted payment extension requests. The accelerated move to public cloud infrastructure caused service-level misses that could negatively impact customer renewals and Net Dollar Retention Rate.
The migration to public cloud infrastructure and increased usage of offerings with unlimited usage terms, primarily in education, have pressured gross margins. The company expects additional costs in 2021 to continue to impact gross margins.
Rapid growth places significant strain on management, operational, financial, and other resources. Failure to improve systems, processes, and controls could impair the ability to forecast revenue and expenses accurately.
COVID-19 has increased the average length of sales cycles to onboard new customers and caused delays in new projects and requests by customers for extension of payment obligations.
A version of Media Services, Kaltura Community Edition, is licensed under AGPL, allowing free internal use and potential competing offerings. This could reduce demand and put pricing pressure on the company's offerings.
The company has borrowings outstanding under its Revolving Credit Facility and is subject to credit agreement covenants, including minimum ARR and liquidity requirements. Noncompliance could accelerate debt and restrict access to capital.
Rapid growth requires hiring, integrating, training, and retaining skilled personnel. The management team has limited public company experience, and failure to manage these needs could impair business objectives.
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 Q3 FY2021 (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.