Summary
Kaltura's third quarter of 2022 revenue declined 4.5% to $41.05 million from $42.98 million in the third quarter of 2021. The decline came from professional services, while subscription revenue grew slightly. Annualized Recurring Revenue was $152.9 million, up 1% from $151.7 million a year earlier. Management pointed to macroeconomic headwinds and currency. The MD&A cites an approximate $0.5 million revenue reduction from currency in the Enterprise, Education and Technology segment and roughly $0.7 million in Media and Telecom. Year to date, revenue was $124.74 million, up 2.0% from $122.30 million.
Gross profit for the quarter was $26.38 million, down 5.2% from $27.82 million, and gross margin slipped to 64.2% from 64.7%. Year to date gross profit was $79.33 million, up 4.5% from $75.93 million, with gross margin of 63.6% versus 62.1%. The operating loss widened to $14.85 million from $5.87 million, and operating margin fell to -36.2% from -13.7%. Operating expenses drove the swing. Research and development rose 12% to $13.9 million, sales and marketing climbed 34% to $15.0 million, and general and administrative increased 13% to $11.4 million. Restructuring charges of $0.9 million also hit the quarter. Net loss narrowed to $19.44 million from $25.15 million, helped by financial expenses, net, which fell 83% to $3.0 million after a $16.8 million warrant remeasurement in the prior-year quarter. Diluted EPS was $0.15, down from $0.26.
Cash flow improved. Net cash provided by operating activities was $1.1 million for the quarter, compared with $5.7 million used in the third quarter of 2021. Year to date, operating cash flow was negative $40.98 million versus negative $11.37 million. Capital expenditures were $0.24 million in the quarter, down from $0.62 million, and $1.00 million year to date, down from $1.58 million. Cash and cash equivalents were $52.6 million at September 30, 2022, down from $143.9 million at December 31, 2021. Deferred revenue, current portion, was $58.28 million, down 7.5% from $63.01 million a year earlier. Remaining performance obligations rose 4.2% to $169.18 million from $162.32 million, made up of $59.8 million billed and $109.4 million unbilled, with 65% expected to be recognized over the next 12 months.
Retention weakened. Net Dollar Retention Rate was 96%, down from 117% a year earlier, partly because one major customer reduced part of its business in the fourth quarter of 2021. Average annualized recurring revenue per customer decreased 1%. The company executed the restructuring plan it outlined last quarter, cutting about 10% of employees and recording $884 thousand of severance costs, with roughly $366 thousand more expected in the fourth quarter of 2022. Kaltura also plans to merge its two reporting segments into one starting in the fourth quarter of 2022.
For the fourth quarter of 2022, Kaltura guides subscription revenue to grow 0% to 3% year over year to between $38.5 million and $39.5 million, total revenue to rise 1% to 3% to between $43.0 million and $44.0 million, and Adjusted EBITDA to be negative in the range of $6.5 million to $5.5 million. For the full year 2022, the company expects subscription revenue to grow 4% to 5% to between $151.4 million and $152.4 million, total revenue to grow 2% to between $167.7 million and $168.7 million, and Adjusted EBITDA to be negative in the range of $30.5 million to $29.5 million.
Risks remain heavy. Macroeconomic and currency headwinds weighed on the quarter, and the company said the pandemic-driven demand acceleration it saw in 2021 is not continuing in 2022. Rising inflation and interest rates and the Russia-Ukraine conflict could disrupt financial markets and make additional capital harder to raise. The credit agreement requires a minimum Annualized Recurring Revenue and liquidity of at least $10 million, and Kaltura reported it was in compliance as of September 30, 2022. The $35.0 million revolving credit facility had no balance outstanding.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q3 FY2022 | Q2 FY2022 | QoQ | Q3 FY2021 | YoY |
|---|---|---|---|---|---|
| Revenue | $41.1M | $42.0M | -2.2% | $43.0M | -4.5% |
| Gross profit | $26.4M | $26.7M | -1.2% | $27.8M | -5.2% |
| Gross margin | 64.3% | 63.6% | +0.7 pp | 64.7% | -0.5 pp |
| Research & development | $13.9M | $14.4M | -3.8% | $12.4M | +12.4% |
| Sales & marketing | $15.0M | $16.4M | -8.4% | $11.3M | +33.6% |
| General & administrative | $11.4M | $11.3M | +0.7% | $10.1M | +13.3% |
| Total operating expenses | $41.2M | $42.2M | -2.3% | $33.7M | +22.4% |
| Operating income (loss) | -$14.9M | -$15.5M | +4.2% | -$5.9M | -152.9% |
| Operating margin | -36.2% | -36.9% | +0.8 pp | -13.7% | -22.5 pp |
| Net income (loss) | -$19.4M | -$17.3M | -12.1% | -$25.1M | +22.7% |
| Net margin | -47.4% | -41.3% | -6.0 pp | -58.5% | +11.1 pp |
| Diluted EPS | $0.15 | -$0.13 | +$0.28 | — | — |
| Net retention rate | 117.0% | 100.0% | +17.0 pp | 117.0% | ±0.0 pp |
Risks
Net Dollar Retention Rate declined to 96% for the three months ended September 30, 2022 from 117% for the prior-year period, partly due to one major customer reducing part of its business in the fourth quarter of 2021 and currency headwinds. Average annualized recurring revenue per customer decreased by 1% in the three months ended September 30, 2022 compared to the prior-year period.
The 2022 Restructuring Plan includes releasing approximately 10% of employees, and the company recorded $884 thousand of restructuring expenses in the three months and nine months ended September 30, 2022. The company expects approximately $366 thousand of additional severance charges in the fourth quarter of 2022, with risks that cost savings, cash burn rate, access to restricted cash, gross profit improvements, and reduced marketing spend effectiveness may not be fully realized.
Currency headwinds reduced EE&T revenue by approximately $0.5 million and M&T revenue by approximately $0.7 million in the three months ended September 30, 2022. Total revenue for the quarter was down 4.5% versus the prior-year quarter, and management stated it does not see the pandemic-driven demand acceleration continuing in 2022.
Net cash used in operating activities was $40.98 million for the nine months ended September 30, 2022, down 260.4% versus the prior-year period. The restructuring plan depends on assumptions regarding cash burn rate and access to restricted cash, and the company may need additional debt or equity financing that may not be available on favorable terms.
The company has customer and third-party relationships in Russia, Belarus, and Ukraine and is subject to export control, trade sanctions, and import laws. Enhanced U.S. and other sanctions in response to the Russia-Ukraine conflict could impair the company's ability to provide services to or receive payments from customers in Russia and could lead to penalties or reputational harm.
On August 7, 2022, the board adopted a stockholder rights plan with a 10% trigger for most investors and 20% for passive institutional investors, and a $13.00 exercise price for preferred stock purchase rights. The rights may discourage a merger, tender offer, or other business combination that stockholders may consider favorable.
SaaS KPIs
All quarters →Net Dollar Retention Rate
Remaining Performance Obligations
Non-GAAP Operating Margin
Annualized Recurring Revenue
Non-GAAP Gross Margin
Summary, forecast, risks and KPIs are extracted from KALTURA INC's SEC filings for Q3 FY2022 (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.