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What changed in KALTURA INC's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of KALTURA INC's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+451 added−465 removedSource: 10-K (2024-02-22) vs 10-K (2023-02-24)

Top changes in KALTURA INC's 2023 10-K

451 paragraphs added · 465 removed · 347 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

48 edited+27 added−7 removed34 unchanged
Biggest changeEducation Solutions Advanced video solutions that boost in-class and remote teaching and learning, and boost student engagement, interactivity, and performance. • Learning-Management-System (LMS) Video: Video galleries, video creation and virtual classrooms, seamlessly integrated into the LMS • Lecture Capture: Scheduling, recording, and monitoring of any size lecture hall including live broadcast Media & Telecom Solutions Platforms for TV service providers and media companies to manage and distribute premium television content across devices, and boost reach, engagement, and monetization. 9 Table of Contents ▪ Cloud TV: Modular and scalable solution for building multinational streaming services that aggregate VOD, live, and linear content on any device ▪ Streaming Platform: Turn-key solution enabling launching, operating, and managing direct-to-consumer streaming service with low entry and operational costs API & Developer Tools : Tools for developers to create their own video workflows, products, and industry solutions.
Biggest changeMedia & Telecom Solutions Platforms for TV service providers and media companies to manage and distribute premium television content across devices, and boost reach, engagement, and monetization. ▪ Cloud TV: Modular and scalable solution for building multinational streaming services that aggregate VOD, live, and linear content on any device. ▪ Streaming Platform: Turn-key solution enabling launching, operating, and managing direct-to-consumer streaming service with low entry and operational costs.
Many organizations are working with multiple video vendors who offer point solutions for seemingly separable use cases. This also often includes utilizing different providers for on-demand, live, and real-time video, instead of meshing these experiences together.
Many organizations are working with multiple vendors who offer point solutions for seemingly separable use cases. This also often includes utilizing different providers for on-demand, live, and real-time video, instead of meshing these experiences together.
We apply different sales approaches to the different segments we target: • Sales & Accounts: We use high-touch "Outside-Sales" methodologies to target Global 2000 companies with our Enterprise products, TV operators and media companies with our Media and Telecom industry solutions and universities, K-12 institutions and Ed-Tech companies with our Education industry solutions. • Commercial Sales : We use high velocity "Inside-Sales" methodologies to sell our low touch enterprise products to mid-market accounts. • Self-Serve / Digital Acquisition : We use digital acquisition sales methodologies to target small businesses with our no-touch offers. 11 Table of Contents • Business Development : We establish strategic partnerships with the world's top tech firms, integrators and value-add resellers, to cater to their advanced needs and to establish co-sell, re-sell and OEM relationships.
We apply different sales approaches to the different segments we target: • Sales & Accounts: We use high-touch "Outside-Sales" methodologies to target Global 2000 companies with our Enterprise products, TV operators and media companies with our Media and Telecom industry solutions and universities, K-12 institutions and Ed-Tech companies with our Education industry solutions. • Commercial Sales : We use high velocity "Inside-Sales" methodologies to sell our low touch enterprise products to mid-market accounts. • Self-Serve / Digital Acquisition : We use digital acquisition sales methodologies to target small businesses with our no-touch offers. 12 Table of Contents • Business Development : We establish strategic partnerships with the world's top tech firms, integrators and value-add resellers, to cater to their advanced needs and to establish co-sell, re-sell and OEM relationships.
Our key competitors vary based on market and industry. • Our main competitors for Video Portals are Microsoft and Vimeo • Our main competitors for Virtual & Hybrid Events and Webinars are Zoom, On24, Cvent and Notified • Our main competitors for Online Learning and Education are Zoom and Microsoft • Our main competitors for Media and Telecom Solutions are Mediakind and Synamedia 10 Table of Contents • Our main competitors for API & Developer Tools are the media services offered by AWS and Microsoft We believe the principal competitive factors in our markets include, but are not limited to: • breadth and scale of products, industry solutions, and APIs and developer tools; • ability to provide a cross-organization video platform with multiple interoperable video solutions; • ability to support converging experiences across live, real time, and on-demand video; • flexibility to build and support custom workflows using video technology; • ease of customization and integration with other products; • quality of service and customer satisfaction; • flexibility of deployment options; • ability to innovate quickly; • ability to provide engaging, interactive, and personalized experiences; • data capabilities, including advanced analytics and AI; • enterprise-grade reliability, security, and scalability; • cost of implementation and ongoing use; • brand recognition; and • corporate culture.
Our key competitors vary based on market and industry. • Our main competitors for Video Portals are Microsoft and Vimeo • Our main competitors for Virtual & Hybrid Events and Webinars are Zoom, On24, Cvent and Notified • Our main competitors for Online Learning and Education are Zoom and Microsoft • Our main competitors for Media and Telecom Solutions are Mediakind and Synamedia • Our main competitors for API & Developer Tools are the media services offered by AWS and Microsoft 11 Table of Contents We believe the principal competitive factors in our markets include, but are not limited to: • breadth and scale of products, industry solutions, and APIs and developer tools; • ability to provide a cross-organization video platform with multiple interoperable video solutions; • ability to support converging experiences across live, real time, and on-demand video; • flexibility to build and support custom workflows using video technology; • ease of customization and integration with other products; • quality of service and customer satisfaction; • flexibility of deployment options; • ability to innovate quickly; • ability to provide engaging, interactive, and personalized experiences; • data capabilities, including advanced analytics and AI; • enterprise-grade reliability, security, and scalability; • cost of implementation and ongoing use; • brand recognition; and • corporate culture.
For example, since 2020, we have introduced Webinars, Online Learning, and Hybrid and Virtual Events products, and a set of new Cloud TV applications for viewers using TVs, PCs, tablets, and mobile devices. • Expand into New Markets: We are expanding down market from large enterprises to also power SMEs through making our products more self-operated, and advancing our inside-sales and self-serve marketing, sales, and operations practices.
For example, since 2020, we have introduced Webinars, Online Learning, and Hybrid and Virtual Events products, and a set of new Cloud TV applications for viewers using TVs, PCs, tablets, and mobile devices. • Expand into New Markets: We are expanding down market from large enterprises to also power SMEs through making our products more self-operated, and advancing our inside-sales marketing, sales, and operations practices.
In 2021, we were recognized as a Visionary in the 2021 Gartner® Magic Quadrant™ for Meeting Solutions, and we ranked 4th in the ‘External Presentation’ (4.44/5) Use Case, and 5th in the ‘Learning and Training’ (4.32/5), and ‘Webinar’ (4.16/5) Use Cases in the Gartner 2021 Critical Capabilities for Meeting Solutions Report.
In 2022, we were recognized as a Visionary in the 2022 Gartner® Magic Quadrant™ for Meeting Solutions, and we ranked 4th in the ‘External Presentation’ (4.44/5) Use Case, and 5th in the ‘Learning and Training’ (4.32/5), and ‘Webinar’ (4.16/5) Use Cases in the Gartner 2021 Critical Capabilities for Meeting Solutions Report.
"Management's Discussion and Analysis of Financial Condition and Results of Operations") was 100% and 118%, respectively. • Secure New Customers Within our Current Markets: Kaltura is already trusted by top large enterprises, leading education institutions, and prominent Media & Telecom companies . We have a significant opportunity to expand our presence in these markets, especially with Global 2000 companies.
"Management's Discussion and Analysis of Financial Condition and Results of Operations") was 100%. • Secure New Customers Within our Current Markets: Kaltura is already trusted by top large enterprises, leading education institutions, and prominent Media & Telecom companies . We have a significant opportunity to expand our presence in these markets, especially with Global 2000 companies.
These tools also power Kaltura's products and industry solutions. • Media Services : Hundreds of media services APIs for live, on-demand and real time video, offering ingestion, transcoding, enrichment, management, distribution, engagement, monetization, and deep view analytics amongst many other capabilities. • Experience Components: Complete experiences ready to be embedded in any application.
These tools also power Kaltura's products and industry solutions. • Media Services : Hundreds of media services APIs for live, on-demand and real time video, offering ingestion, transcoding, enrichment, management, distribution, engagement, monetization, and deep viewer analytics amongst many other capabilities. • Experience Components: Complete experiences ready to be embedded in any application.
Currently, most common systems still offer unified passive viewing experiences that are not personalized for individual users' needs and do not encourage them to interact with the content or contribute their own. This greatly limits engagement and reduces return-on-investment. • Being vulnerable to mission-critical risks and liabilities .
Currently, most common systems still offer unified passive viewing experiences that are not optimized or personalized for users' needs, and do not encourage them to interact with the content or contribute their own. This greatly limits engagement and reduces return-on-investment. • Being vulnerable to mission-critical risks and liabilities .
To establish and protect our proprietary rights, we rely on a combination of patent, copyright, trade secret and trademark laws, know-how and continuing innovation, and contractual restrictions such as confidentiality agreements, licenses, and intellectual property assignment agreements. As of December 31, 2022, we owned nine issued U.S. patents and eleven non-U.S. patents and patent applications.
To establish and protect our proprietary rights, we rely on a combination of patent, copyright, trade secret and trademark laws, know-how and continuing innovation, and contractual restrictions such as confidentiality agreements, licenses, and intellectual property assignment agreements. As of December 31, 2023, we owned nine issued U.S. patents and eleven non-U.S. patents and patent applications.
In addition to competitive base salaries and cash compensation, we maintain equity incentive plans to attract, retain and reward personnel through share-based compensation awards. 12 Table of Contents We are committed to ensuring a culture of diversity and equality. Our culture embraces our employees’ differences in age, race, gender and gender identity, sexual orientation and nationality.
In addition to competitive base salaries and cash compensation, we maintain equity incentive plans to attract, retain and reward personnel through share-based compensation awards. 13 Table of Contents We are committed to ensuring a culture of diversity and equality. Our culture embraces our employees’ differences in age, race, gender and gender identity, sexual orientation and nationality.
Video is a demanding data type and solutions that were not designed from the ground up to support the specific needs of video capture, preparation and distribution nor to run in scalable public clouds have difficulties offering the availability and service level that many companies require.
Video is a demanding data type, and solutions that were not designed from the ground up to support the specific needs of video capture, creation, preparation, repurposing, and distribution, nor to run in scalable public clouds, have difficulties offering the availability and service level that many companies require.
Organizations from a wide range of industries, including financial services, technology, professional services, healthcare, pharma, education, public sector and media and telecommunications, trust Kaltura to power their video experiences for marketing, events, communication, collaboration, sales, customer care, training and learning, and entertainment experiences.
Organizations from a wide range of industries, including financial services, technology, professional services, healthcare, pharma, education, public sector and media and telecommunications, trust Kaltura to power their digital experiences for marketing, events, communication, collaboration, sales, customer care, training and learning, and entertainment experiences.
For developers, it includes an extensive array of Application Programming Interfaces (APIs) and developer tools that enable them to build other video workflows, products, and industry solutions. Kaltura has long been recognized by top industry analysts as a leader in the Enterprise Video Content Management market, which includes experiences that are based on video-on-demand and live broadcast/streaming.
For developers, it includes an extensive array of Application Programming Interfaces (APIs) and developer tools that enable them to build other media workflows, integrations, and industry solutions. Kaltura has long been recognized by top industry analysts as a leader in the Enterprise Video Content Management market, which includes experiences that are based on video-on-demand and live broadcast/streaming.
We also leverage digital campaigns and make free trials available for many of our products to drive engagement and conversion. Intellectual Property Intellectual property is an important aspect of our business and we seek protection for our intellectual property rights as appropriate.
We also leverage digital campaigns and make free trials available for many of our products to drive engagement and conversion. Intellectual Property and Data Privacy Intellectual property is an important aspect of our business and we seek protection for our intellectual property rights as appropriate.
As of December 31, 2022, we owned five registered trademarks in the United States and three registered trademarks in foreign jurisdictions, including the European Union and Brazil, that we consider material to the marketing of our products, including the “Kaltura” name and logo.
As of December 31, 2023, we owned five registered trademarks in the United States and three registered trademarks in foreign jurisdictions, including the European Union and Brazil, that we consider material to the marketing of our products, including the “Kaltura” name and logo.
The information found on our website is not part of this or any other report we file with, or furnish to, the SEC. 13 Table of Contents
The information found on our website is not part of this or any other report we file with, or furnish to, the SEC. 14 Table of Contents
See Note 18, Restructuring Activities, for further information. We foresee great potential and growth opportunities for video experiences, and we believe Kaltura is well positioned with our robust offering and strong customer base in this growing market. We intend to continue to innovate and invest in our products to maintain and improve our market position.
See Note 18, Restructuring Activities, for further information. We foresee great potential and growth opportunities for rich media digital experiences, and we believe Kaltura is well positioned with our robust offering and strong customer base in this growing market. We intend to continue to innovate and invest in our products and technology to maintain and improve our market position.
How Kaltura Addresses Organizations' Video Challenges Customers trust Kaltura to power their video experiences for the following main reasons: 6 Table of Contents • Advanced Video Content Management: We offer a powerful and feature rich content processing, management and distribution system.
How Kaltura Addresses Organizations' Video Challenges Customers trust Kaltura to power their video experiences for the following main reasons: • Advanced Video Content Management: We offer a powerful and feature rich content processing, management and distribution system.
Customers As of December 31, 2022, we served over 1,000 customers, including several of the world’s leading brands across multiple industries, including financial services, high technology, healthcare, education, public sector, media and telecommunications. We serve 30 of the U.S. Fortune 100, and more than 50% of the top U.S. research universities (R1 Research Institutions).
Customers As of December 31, 2023, we served approximately 1,000 customers, including several of the world’s leading brands across multiple industries, including financial services, high technology, healthcare, education, public sector, media and telecommunications. We serve 28 of the U.S. Fortune 100, and more than 50% of the top U.S. research universities (R1 Research Institutions).
For more information regarding the risks relating to intellectual property, see Part I, Item 1A. “Risk Factors—Risks Related to Information Technology, Intellectual Property and Data Privacy and Security.” Human Capital Resources As of December 31, 2022, we had 681 employees operating across 30 countries and 5 continents.
For more information regarding the risks relating to intellectual property, see Part I, Item 1A. “Risk Factors—Risks Related to Information Technology, Intellectual Property and Data Privacy and Security.” Human Capital Resources As of December 31, 2023, we had 580 employees operating across 27 countries and 5 continents.
We also expect to see an increase in their usage of our products, by way of more video creation and consumption and more end-users. For the years ended December 31, 2022 and 2021, our Net Dollar Retention Rate (as defined below in Part II, Item 7.
We expect to see continued increase in usage of our products, by way of more video creation and consumption and more end-users. For the years ended December 31, 2023 and 2022, our Net Dollar Retention Rate (as defined below in Part II, Item 7.
Additionally, our solutions power 27 major global TV initiatives. Most of our top customers leverage several Kaltura products for a range of use cases across their organization. 7 Table of Contents Our customers are global, spanning 51 countries, and during the year ended December 31, 2022, our technology reached end users in over 200 countries.
Additionally, our solutions power 27 major global TV initiatives. Most of our top customers leverage several Kaltura products for a range of use cases across their organization. Our customers are global, spanning 54 countries, and during the year ended December 31, 2023, our technology reached end users in over approximately 200 countries.
For the year ended December 31, 2022, approximately 38% of our revenue was generated from customers in the Americas, 34% from customers in EMEA and 7% from customers in APAC. We have sold our products to customers of all sizes, selling to large global enterprises as well as more recently to small and medium enterprises ("SMEs").
For the year ended December 31, 2023, approximately 56% of our revenue was generated from customers in the Americas, 38% from customers in EMEA and 6% from customers in APAC. We have sold our products to customers of all sizes, selling to large global enterprises as well as more recently to SMEs.
Key Trends In Our Favor The nature of video consumption has transformed in recent years.
Key Industry Trends The nature of video consumption has transformed in recent years.
We have a well-tuned sales and marketing operation, which we expect will drive both geographic and vertical expansion. • Expand our Product Offering for our Existing Markets : Our flexible and extendable platform facilitates a continuous expansion of our product portfolio to include more enterprise video products, and additional industry-solutions for the Education and Media & Telecom markets.
We have a well-tuned sales and marketing operation, which we expect will drive both geographic and vertical expansion. • Expand our Product Offering for our Existing Markets : Our flexible and extendable platform facilitates a continuous expansion of our product portfolio to include more advanced capabilities and use cases, and additional industry-solutions.
It also includes industry-specific video solutions, currently for the Education and Media and Telecom industries. For developers, it includes an extensive array of APIs and developer tools that enable them to build other video workflows, products, and industry solutions.
For developers, it includes an extensive array of APIs and developer tools that enable them to build other video workflows, products, and industry solutions.
Market Recognition of Kaltura In 2022, we were recognized as a Representative Vendor in the 2022 Gartner Market Guide for Event Technology Platforms, and the 2022 Gartner Market Guide for Meeting Solutions.
Market Recognition of Kaltura In 2023, we were recognized as a Representative Vendor in the 2023 Gartner Market Guide for Event Technology Platforms, the 2023 Gartner Market Guide for Meeting Solutions, and the Market Finder and Use Case Guide for Meetings and Virtual Events.
Our technology and platform are infrastructure agnostic, allowing us to also offer managed, hybrid, private and air-gapped deployment options. While the great majority of our customers are hosted on our public Software-as-a-Service ("SaaS") offering, some customers are hosted on separate and dedicated private cloud environments that are also managed by us.
While the great majority of our customers are hosted on our public Software-as-a-Service ("SaaS") offering, some customers are hosted on separate and dedicated private cloud environments that are also managed by us.
Kaltura's Video Experience Cloud includes products that power virtual and hybrid events, webinars, online learning, and video portals for companies across all industries. Our platform also includes industry-specific video solutions, currently for the Education and Media and Telecom industries.
Products 9 Table of Contents Kaltura's Video Experience Cloud includes products that power virtual and hybrid events, webinars, online learning, and video portals for companies across all industries, including technology, financial services, healthcare and pharma, IT and professional services, retail and manufacturing. It also includes industry-specific video solutions, currently for the Education and Media and Telecom industries.
Competition We believe our Products, Industry Solutions and API & Developer Tools position us well to compete with other video solution providers.
We also maintain relationships with cloud partners, most notably Amazon Web Services (“AWS”) and Oracle. Competition We believe our Products, Industry Solutions and API & Developer Tools position us well to compete with other video solution providers.
Several major trends have played a role in this evolution: 5 Table of Contents • Shift to Remote Work and Education: The world is settling into a "new normal" that includes remote and hybrid work and learning practices that rely heavily on video, and that require complex, integrated video workflows and analytics, to create comprehensive digital experiences at scale. • Events are No Longer just In-Person : Marketers and event organizers embrace virtual experiences as part of their engagement strategy.
We have observed the following trends playing a role in this evolution: • Shift to Remote Work and Education: The world is settling into a "new normal" that includes remote and hybrid work and learning practices that rely heavily on video, and that require complex, integrated video workflows and analytics, to create comprehensive digital experiences at scale.
Over one hundred ecosystem partners are already pre-integrated to Kaltura. • A Single Platform for All Video Experiences: Our Platform seamlessly combines real-time, live and on-demand video and manages all content from one place, across experiences and platforms. This avoids content silos and unnecessary complexities and costs, and enables vendor-consolidation, economies-of-scale, and an increased return-on-investment.
Over one hundred ecosystem partners are already integrated with Kaltura. • A Single Platform for All Video Experiences: Our Platform seamlessly combines real-time, live and on-demand video and manages all content from one place, across experiences, use-cases and platforms, from webinars and events to online learning and content management.
As of January 30, 2023, we ranked 4.5/5 out of 61 reviews for Meeting Solutions and 4.6/5 out of 27 reviews for Enterprise Video Content Management by customers on Gartner® Peer Insights TM . In November 2022, we were recognized as a Notable Vendor in The Forrester B2B Event Management Technology Landscape, Q4 2022.
As of January 30, 2024, we received a rating of 4.8/5 from 4 reviews for Event Technology Platforms, and 4.5/5 from 62 reviews for Meeting Solutions and 4.6/5 from 27 reviews for Enterprise Video Content Management by customers on Gartner® Peer Insights TM .
This includes our video player, video editor, video capture tool, chat and networking widgets and our software development kits (SDKs) for mobile applications and smart TVs. Technology Our business has been driven by constant innovation, anticipating trends ahead of other participants in the market.
This includes our video player, video editor, video capture tool, and chat and networking widgets. 10 Table of Contents Technology Our business has been driven by constant innovation, anticipating trends ahead of other participants in the market. We believe we are one of the first organizations to recognize the importance and mission-critical nature of video experiences.
We believe we are one of the first organizations to recognize the importance and mission-critical nature of video experiences. Our ability to be a leader in our target markets and rapidly introduce new applications depends on the constant expansion of our APIs, and the development of new products and industry solutions that rely on them.
Our ability to be a leader in our target markets and rapidly introduce new applications depends on the constant expansion of our APIs, and the development of new products and industry solutions that rely on them. Our unique technology enables very large scale interactive video applications at a high level of reliability, performance, accessibility, scale and security.
Challenges That Organizations Who Want to Use Video Currently Face Video has become a primary means for organizations of all industries to enrich sales and marketing activities, host events, communicate and collaborate, support customers and offer learning and training.
Generative AI is especially popular in the world of marketing technology, and we are seeing growing interest in built-in AI capabilities for marketers to leverage in a wide range of use cases across the creation and execution of video-based digital experiences. 6 Table of Contents Challenges That Organizations Who Want to Use Video Currently Face Video has become a primary means for organizations of all industries to enrich sales and marketing activities, host events, communicate and collaborate, support customers and offer learning and training.
Additionally, we intend to continue to explore potential M&A transactions that could enhance our capabilities, increase our market share in markets we already operate in, or open up new markets. 8 Table of Contents Products Kaltura's Video Experience Cloud includes products that power virtual and hybrid events, webinars, online learning, and video portals for companies across all industries.
Additionally, we intend to continue to explore potential M&A transactions that could enhance our capabilities, increase our market share in markets we already operate in, or open up new markets.
CMOs are typically the buyers for marketing and external events. We also sell specialized video industry solutions. Currently we have offerings for the Education and Media & Telecom markets. In Media and Telecom the buyers are typically the CTO or CEO. In Education the buyers are typically the CTOs or CIOs of educational institutions or of education-technology companies.
These products are typically bought by CTOs, CIOs, and heads of Learning and Development when used for internal events, communication and collaboration, training and learning. CMOs are typically the buyers for marketing programs, such as webinars and external events. We also sell specialized video industry solutions. Currently we have offerings for the Education and Media & Telecom markets.
This ecosystem further simplifies our customers’ workflows, enabling them to weave video capabilities into non-video workflows and discover new technologies to further enhance their own offerings, ultimately increasing their satisfaction and stickiness with our platform. We also maintain relationships with cloud partners, most notably Amazon Web Services (“AWS”) and Oracle.
We make our partners’ solutions available to our customers through our marketplace, complete with a variety of plugins and out-of-the-box integrations with our platform. This ecosystem further simplifies our customers’ workflows, enabling them to weave video capabilities into non-video workflows and discover new technologies to further enhance their own offerings, ultimately increasing their satisfaction and stickiness with our platform.
In 2020 we expanded our offerings to power experiences that harness two-way real-time-communication (RTC) with the launch of our new products for virtual and hybrid events, webinars and online learning. Our Video Experience Cloud is used by leading brands, reaching millions of users, at home, at school and at work.
In 2020 we expanded our offerings to power experiences that harness two-way real-time-communication (RTC) with the launch of our new products for virtual and hybrid events, webinars and online learning. Since then, the capabilities of our event and webinar platform that incorporates our virtual meeting rooms have also been recognized by those same analysts.
We sell our APIs and Developer Tools to all of these markets, either along with products and industry solutions, or separately from them. Buyers are typically the CTOs. Our sales organization is primarily comprised of direct sales and account teams that focus mainly on acquisition, retention, and growth of large customers, including Fortune Global 2000 organizations.
Our sales organization is primarily comprised of direct sales and account teams that focus mainly on acquisition, retention, and growth of large customers, including Fortune Global 2000 organizations.
Our cloud platform was specifically designed to address the entire lifecycle of media (including video on demand, live video and real-time video, as well as images and audio files), how users interact with media online and the business models that support content monetization.
Our cloud platform was specifically designed to address the entire lifecycle of media, how users interact with media online and the business models that support content monetization. With new AI technologies available we plan to further expand our offering to include capabilities such as content enrichment and content repurposing. Kaltura's platform natively supports live broadcast, real-time communications, and VOD playback.
Partner Ecosystem We have built an ecosystem consisting of over 120 partners that have integrated with our solutions, and extend our products and platform capabilities with creation, AI, transcripts, and delivery capabilities. We make our partners’ solutions available to our customers through our marketplace, complete with a variety of plugins and out-of-the-box integrations with our platform.
“Risk Factors—Risks Related to Information Technology, Intellectual Property and Data Privacy and Security.” Partner Ecosystem We have built an ecosystem consisting of over 120 partners that have integrated with our solutions, and extend our products and platform capabilities with creation, AI, transcripts, and delivery capabilities.
On January 3, 2023, our Board of Directors approved a re-organization plan (the “2023 Reorganization Plan” and together with the 2022 Restructuring Plan, the “Reorganization Plans”) that included, among other things, downsizing an additional 11% of our workforce and adapting our organizational structure, roles, and responsibilities accordingly.
On January 3, 2023, our Board of Directors approved a re-organization plan (the “2023 Reorganization Plan” and together with the 2022 Restructuring Plan, the “Reorganization Plans”) that included, among other things, downsizing an additional 11% of our workforce and adapting our organizational structure, roles, and responsibilities accordingly, to realign our operations, with a goal of increasing efficiency and productivity, in reaction to the macro-economic climate, position the Company for lower demand, spend, and available budgets across our market segments, align our business strategy in light of these market conditions and support our growth initiatives and our return path to profitability. 5 Table of Contents The 2023 Reorganization Plan was substantially completed in 2023.
Unified in-depth analytics across products and use-cases provides a holistic view of video usage and user journeys and helps boost engagement. • Heightened Engagement, Interactivity, and Personalization: We offer applications, sites and management consoles that are fully branded, engaging, interactive, personalized, and easy to use, and that include powerful features for both end-user and service managers. • Built for Enterprise: Our platform is built from the ground-up as a mission-critical platform for large enterprises, offering high availability, scalability, accessibility, security and data protection.
Unified in-depth analytics across products and use-cases provides a holistic view of video usage and user journeys and helps boost engagement. • Heightened Engagement, Interactivity, and Personalization: We offer applications, sites and management consoles that are fully branded, engaging, interactive, personalized, and easy to use. These create a holistic digital experience, leveraging content and video capabilities alongside audience interactions.
Growth Strategies We intend to drive growth by executing on the following key strategies: • Grow Our Existing Customers : Most of our customers use multiple Kaltura products, and many do so across multiple use-cases. We plan to sell more to our existing customers by providing them more products (existing and new) and addressing additional use cases.
As of December 31, 2023, our customer base included 301 customers with annualized recurring revenue ("ARR") greater than $100,000 and 26 customers with ARR greater than $1.0 million. 8 Table of Contents Growth Strategies We intend to drive growth by executing on the following key strategies: • Grow Our Existing Customers : Most of our customers use multiple Kaltura products, and many do so across multiple use-cases and buyers.
Before the COVID-19 pandemic, Kaltura demonstrated a track record of double digit revenue growth while having positive adjusted EBITDA. In the last three years, we experienced COVID-19 driven tailwinds followed by a correction after the effects of the COVID-19 pandemic subsided and recession headwinds, that led to an increase and then a decrease in year-on-year revenue growth.
Before the COVID-19 pandemic, Kaltura demonstrated a track record of double digit revenue growth while having positive adjusted EBITDA. In 2020 and most of 2021 there was increased demand for video services due to the COVID pandemic across enterprises and in the education sector, which led to further acceleration of our year-on-year revenue growth.
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The total cost reduction from the downsizing in connection with the 2023 Reorganization Plan on an annualized basis is expected to be approximately $16 million. The 2023 Reorganization Plan is focused on realigning our operations to further increase efficiency and productivity, in reaction to the current macro-economic climate.
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Moreover, generative AI enables real-time, automatic production of highly personalized and contextually-relevant content, including video and rich media, that we believe would materially boost the creation, consumption, and business impact of video experiences. With the expected growth in rich content in organizations, the potential need for content management solutions and advanced digital experiences is expected to grow.
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The 2023 Reorganization Plan's main objectives are to position the Company for lower demand, spend, and available budgets across our market segments, align our business strategy in light of these market conditions and support our growth initiatives and return path to profitability. The 2023 Reorganization Plan is expected to be substantially completed in the first half of 2023.
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Kaltura's Video Experience Cloud includes products that power digital experiences such as virtual and hybrid events, webinars, online learning, and content portals for large enterprises and small and medium enterprises (SMEs), across all industries, including technology, financial services, healthcare and pharma, IT & professional services, retail and manufacturing.
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The core of these experiences is video. • Consumerization of Enterprise Technology : Employees and other audiences and users in today’s businesses expect consumer-like experiences. This has accelerated the use of video for both internal and external use cases. • Rise of Over-The-Top (OTT) Video : Television is increasingly delivered as an internet-based service.
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In 2023, we broadened our suite of offerings for marketers, successfully attracting new clients and stakeholders across Marketing Technology (MarTech), Field Marketing, and Chief Marketing Officer (CMO) groups. Our platform also includes industry-specific solutions, currently for the Education and Media and Telecom industries.
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It also enables any organization, and even person, to easily produce and distribute video content. • Universal Access to Broadband and Smartphones : With the widespread availability of affordable high speed internet, and with billions of people around the world using smartphones, it has never been easier to access video content.
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These newer products now incorporate our full stack of on-demand, live and RTC technology, designed to provide our customers with the utmost level of flexibility and variety when crafting their digital experiences. Our Video Experience Cloud is used by leading brands, reaching millions of users, at home, at school and at work.
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As of December 31, 2022, our customer base included 303 customers with annualized recurring revenue ("ARR") greater than $100,000 and 21 customers with ARR greater than $1.0 million, compared to December 31, 2019, when we had 209 customers with over $100,000 ARR and 6 customers with over $1.0 million ARR.
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Beginning in the fourth quarter of 2021, revenue growth has decreased, which we attribute to the post-COVID return to offices and university campuses, and subsequently to the economic slowdown and financial markets instability that resulted from the increase in inflation and interest rates, and geopolitical unrest.
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Our unique technology enables very large scale interactive video applications at a high level of reliability, performance, scale and security.
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The need for high-quality remote and hybrid digital experiences has become increasingly important with the recent trend towards reduced business travel to address companies' budgetary constraints and commitments to climate change and reduction in carbon footprint. • Events are No Longer just In-Person : Marketers and event organizers embrace virtual and hybrid experiences as part of their engagement strategy.
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Sales & Marketing We sell our video portal, virtual and hybrid events, webinars, and online learning products to any organization, including companies in any industry, governments and non-profits. These products are typically bought by CTOs, CIOs, and heads of Learning and Development when used for internal events, communication and collaboration, training and learning.
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The core of these experiences is video, with growing interest in in-depth engagement analytics. • Growing Importance of Employer Branding : Companies are increasingly promoting their brand both externally, for customer and prospect marketing, and internally, for employee recruitment and retention.
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Communications by marketing to external audiences and internal company human resource and executive communications are getting closer in term of their needs, as companies are increasingly looking for the same level of experience for both audiences. • Focus on First Party Data : Marketers increasingly are relying on user consent and first party data to target their audiences, given, among other things, recent changes to privacy and data regulations that disincentive usage of third-party data.
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This shifts the focus to creators of digital experiences, which are key drivers of first party data, to raise the quantity and quality of the experience, as well as the breadth and depth of the data that is derived from interactions. • Rise of Over-The-Top (OTT) Video : Television is increasingly delivered as an internet-based service.
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It also enables any organization, and even person, to easily produce and distribute video content. • Move from growth to profitability: In the current unstable economic climate, we have seen a noticeable shift towards businesses streamlining operations and maximizing value by consolidating vendors.
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This trend is largely motivated by the need for organizations to reduce complexity, manage costs more effectively, and enhance operational efficiency. Companies are increasingly looking for versatile solutions that can cover multiple digital transformation needs - such as virtual events, corporate communications, and live streaming - within a single platform.
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This approach not only simplifies vendor management but also provides a more integrated and cohesive strategy for leveraging technology.
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By prioritizing partnerships with vendors capable of delivering comprehensive solutions, businesses can achieve greater agility, improved cost efficiencies, and a stronger competitive edge in the digital marketplace. • Generative Artificial Intelligence on the Rise: The technology revolution around generative AI has introduced a slew of ways to automate workflows, increase productivity and save costs across every department and industry.
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Moreover, generative AI enables real-time, automatic production of highly personalized and contextually-relevant content, including video and rich media, that we believe would materially boost the creation, consumption, and business impact of video experiences. With the expected growth in rich content in organizations, the potential need for content management solutions and advanced digital experiences is expected to grow.
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This avoids content silos and unnecessary complexities and costs, and enables vendor consolidation across CIO, CMO and training departments, economies-of-scale, and an increased return-on-investment.
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Kaltura provides powerful capabilities for both end-user and experience managers, including recent additions, such as the AI assistant for Events and Webinars, that leverage session data to suggest real-time actions that event managers and moderators can take. 7 Table of Contents • Built for Enterprise: Our platform is built from the ground-up as a mission-critical platform for large enterprises, offering high availability, scalability, accessibility, security and data protection.
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In March 2023, we were recognized as a Contender in The Forrester Wave™: B2B Event Management Technology, Q1 2023 . In November 2022, we were recognized as a Notable Vendor in The Forrester B2B Event Management Technology Landscape, Q4 2022.
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We plan to sell more to our existing customers by providing them more products and capabilities (existing and new) and addressing additional use cases. For example, in 2023 we continued expanding our customers' use-cases from internal in-house use for their employees (e.g. employee training and communication), to also external (e.g. customer and prospect marketing, and partner training).
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Education Solutions Advanced video solutions that boost in-class and remote teaching and learning, and boost student engagement, interactivity, and performance. • Learning-Management-System (LMS) Video: Video galleries, video creation and virtual classrooms, seamlessly integrated into the LMS. • Lecture Capture: Scheduling, recording, and monitoring of any size lecture hall including live broadcast.
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API & Developer Tools : Tools for developers to create their own video workflows, products, and industry solutions.
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The platform also addresses other media types such as audio files (e.g., podcasts) and images including PDFs. The platform provides a complete digital experience within the site, built on the content management capabilities, that connects these different experiences and creates workflows and cohesive, engaging experiences for end users.
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The platform's flexibility and robustness enables creation of highly customized experiences at scale. With AI assistant, we are able support users with automated advanced workflows that leverage real-time platform analytics. Our technology and platform are infrastructure agnostic, allowing us to also offer managed, hybrid, private and air-gapped deployment options.
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In our operations, we receive, collect, store, process, transfer, share and otherwise use or host personal information and other sensitive information about individuals and other data relating to users of our offerings, our employees and contractors, and other persons.
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As a result, we are subject to various data privacy and data protection laws, which are rapidly evolving and present increasing compliance challenges. For more information regarding the applicable legal framework and risks related to data privacy, see Part I, Item 1A.
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Recent trends towards consolidation within the industry may result in our competitors achieving greater capabilities in some or all of these areas.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeOur indebtedness could have important consequences, including: • our ability to obtain additional debt or equity financing for working capital, capital expenditures, debt service requirements, acquisitions and general corporate or other purposes may be limited; • a portion of our cash flows from operations will be dedicated to the payment of principal and interest on the indebtedness and will not be available for other purposes, including operations, capital expenditures and future business opportunities; • certain of our borrowings are at variable rates of interest, exposing us to the risk of increased interest rates; • our ability to adjust to changing market conditions may be limited and may place us at a competitive disadvantage compared to less-leveraged competitors; • we may be vulnerable during a downturn in general economic conditions or in our business, or may be unable to carry on capital spending that is important to our growth; and • if, due to the worsening economic climate and increased inflation and interest rates, the net cash derived from our operations decreases and the cost of financing increases, and we fail to pursue adequate measures to adapt to those changes, we may fail to satisfy our financial covenants under the Term Loan Facility and Revolving Credit Facility, or otherwise lack the financial resources or financing required to pursue our annual operation plan. 42 Table of Contents In addition, the agreement governing our Credit Facilities contains, and any agreements evidencing or governing other future indebtedness may also contain, certain restrictive covenants that limit or otherwise restrict our ability, among other things, to: • create, issue, incur, assume, become liable in respect of or suffer to exist any debt or liens; • consummate any merger, consolidation or amalgamation, or liquidate, wind up or dissolve, or dispose of all or substantially all of our or their respective property or business; • dispose of property or, in the case of our subsidiaries, issue or sell any shares of such subsidiary’s capital stock; • repay, prepay, redeem, purchase, retire, or defease subordinated debt; • declare or pay dividends or make certain other restricted payments; • make certain investments; • enter into transactions with affiliates; • enter into new lines of business; and • make certain amendments to our or their respective organizational documents or certain material contracts.
Biggest changeOur indebtedness could have important consequences, including: • our ability to obtain additional debt or equity financing for working capital, capital expenditures, debt service requirements, acquisitions and general corporate or other purposes may be limited; • a portion of our cash flows from operations will be dedicated to the payment of principal and interest on the indebtedness and will not be available for other purposes, including operations, capital expenditures and future business opportunities; • certain of our borrowings are at variable rates of interest, exposing us to the risk of increased interest rates; • our ability to adjust to changing market conditions may be limited and may place us at a competitive disadvantage compared to less-leveraged competitors; • we may be vulnerable during a downturn in general economic conditions or in our business, or may be unable to carry on capital spending that is important to our growth; and • if, due to the volatile economic climate and increased inflation and interest rates, the net cash derived from our operations decreases and the cost of financing increases, and we fail to pursue adequate measures to adapt to those 43 Table of Contents changes, we may fail to satisfy our financial covenants under the Term Loan Facility and Revolving Credit Facility, or otherwise lack the financial resources or financing required to pursue our annual operation plan.
In addition, even if we are able to consummate acquisitions and enter into other strategic transactions and relationships, these transactions and relationships involve a number of financial, accounting, managerial, operational, legal, compliance and 30 Table of Contents other risks and challenges, including the following, any of which could negatively affect our growth rate and the trading price of our common stock, and may have a material adverse effect on our business, financial condition and results of operations: • Any business, technology, product, or solution that we acquire or invest in could under-perform relative to our expectations and the price that we paid or not perform in accordance with our anticipated timetable, or we could fail to operate or integrate any such business or deploy any such technology, product, or solution profitably. • We may incur or assume significant debt in connection with our acquisitions and other strategic transactions and relationships, which could also cause a deterioration of our credit ratings, result in increased borrowing costs and interest expense and diminish our future access to the capital markets. • Acquisitions and other strategic transactions and relationships could cause our financial results to differ from our own or the investment community’s expectations in any given period, or over the long-term. • Pre-closing and post-closing earnings charges could adversely impact operating results in any given period, and the impact may be substantially different from period to period. • Acquisitions and other strategic transactions and relationships could create demands on our management, operational resources, and financial and internal control systems that we are unable to effectively address. • We could experience difficulty in integrating personnel, operations and financial and other controls and systems and retaining key employees and customers. • We may be unable to achieve cost savings or other synergies anticipated in connection with an acquisition or other strategic transaction or relationship. • We may assume unknown liabilities, known contingent liabilities that become realized, known liabilities that prove greater than anticipated, internal control deficiencies or exposure to regulatory sanctions resulting from the acquired company’s or investee’s activities and the realization of any of these liabilities or deficiencies may increase our expenses, adversely affect our financial position and/or cause us to fail to meet our public financial reporting obligations. • In connection with acquisitions and other strategic transactions and relationships, we often enter into post-closing financial arrangements such as purchase price adjustments, earn-out obligations, and indemnification obligations, which may have unpredictable financial results. • As a result of our acquisitions, we have recorded significant goodwill and other assets on our balance sheet and if we are not able to realize the value of these assets, or if the fair value of our investments declines, we may be required to incur impairment charges. • We may have interests that diverge from those of our strategic partners and we may not be able to direct the management and operations of the strategic relationship in the manner we believe is most appropriate, exposing us to additional risk. • Investing in or making loans to early-stage companies often entails a high degree of risk, and we may not achieve the strategic, technological, financial or commercial benefits we anticipate; we may lose our investment or fail to recoup our loan; or our investment may be illiquid for a greater-than-expected period of time.
In addition, even if we are able to consummate acquisitions and enter into other strategic transactions and relationships, these transactions and relationships involve a number of financial, accounting, managerial, operational, legal, compliance and other risks and challenges, including the following, any of which could negatively affect our growth rate and the trading price of our common stock, and may have a material adverse effect on our business, financial condition and results of operations: • Any business, technology, product, or solution that we acquire or invest in could under-perform relative to our expectations and the price that we paid or not perform in accordance with our anticipated timetable, or we could fail to operate or integrate any such business or deploy any such technology, product, or solution profitably. • We may incur or assume significant debt in connection with our acquisitions and other strategic transactions and relationships, which could also cause a deterioration of our credit ratings, result in increased borrowing costs and interest expense and diminish our future access to the capital markets. • Acquisitions and other strategic transactions and relationships could cause our financial results to differ from our own or the investment community’s expectations in any given period, or over the long-term. • Pre-closing and post-closing earnings charges could adversely impact operating results in any given period, and the impact may be substantially different from period to period. • Acquisitions and other strategic transactions and relationships could create demands on our management, operational resources, and financial and internal control systems that we are unable to effectively address. • We could experience difficulty in integrating personnel, operations and financial and other controls and systems and retaining key employees and customers. • We may be unable to achieve cost savings or other synergies anticipated in connection with an acquisition or other strategic transaction or relationship. • We may assume unknown liabilities, known contingent liabilities that become realized, known liabilities that prove greater than anticipated, internal control deficiencies or exposure to regulatory sanctions resulting from the acquired company’s or investee’s activities and the realization of any of these liabilities or deficiencies may increase our expenses, adversely affect our financial position and/or cause us to fail to meet our public financial reporting obligations. • In connection with acquisitions and other strategic transactions and relationships, we often enter into post-closing financial arrangements such as purchase price adjustments, earn-out obligations, and indemnification obligations, which may have unpredictable financial results. • As a result of our acquisitions, we have recorded significant goodwill and other assets on our balance sheet and if we are not able to realize the value of these assets, or if the fair value of our investments declines, we may be required to incur impairment charges. 32 Table of Contents • We may have interests that diverge from those of our strategic partners and we may not be able to direct the management and operations of the strategic relationship in the manner we believe is most appropriate, exposing us to additional risk. • Investing in or making loans to early-stage companies often entails a high degree of risk, and we may not achieve the strategic, technological, financial or commercial benefits we anticipate; we may lose our investment or fail to recoup our loan; or our investment may be illiquid for a greater-than-expected period of time.
Among others, our Certificate of Incorporation and Bylaws include the following provisions: • the delegation to our board of directors of the exclusive right to expand the size of our board of directors and to elect directors to fill a vacancy created by any such expansion or the resignation, death or removal of a director, which will prevent stockholders from being able to fill vacancies on our board of directors; • the division of our board of directors into three classes, with each class serving staggered three-year terms, which may delay the ability of stockholders to change the membership of a majority of our board of directors; • limitations on convening special stockholder meetings, which could make it difficult for our stockholders to adopt desired governance changes; • advance notice procedures, which apply for stockholders to nominate candidates for election as directors or to bring matters before an annual meeting of stockholders, which may discourage or deter a potential acquirer from 52 Table of Contents conducting a solicitation of proxies to elect the acquirer’s own slate of directors or otherwise attempting to obtain control of our company; • a prohibition on stockholder action by written consent, which means that our stockholders will only be able to take action at a meeting of stockholders; • a forum selection clause, which means certain litigation against us can only be brought in Delaware; • no authorization of cumulative voting, which limits the ability of minority stockholders to elect director candidates; • directors will only be able to be removed for cause and only by the affirmative vote of two-thirds of the then outstanding voting power of our capital stock; • certain amendments to our Certificate of Incorporation and Bylaws will require the approval of two-thirds of the then outstanding voting power of our capital stock; • the affirmative vote of two-thirds of the then-outstanding voting power of our capital stock, voting as a single class, will be required for stockholders to amend or adopt any provision of our Bylaws; and • the authorization of undesignated or “blank check” preferred stock, the terms of which may be established and shares of which may be issued without further action by our stockholders, which could be used to significantly dilute the ownership and voting rights of a hostile acquirer.
Among others, our Certificate of Incorporation and Bylaws include the following provisions: 54 Table of Contents • the delegation to our board of directors of the exclusive right to expand the size of our board of directors and to elect directors to fill a vacancy created by any such expansion or the resignation, death or removal of a director, which will prevent stockholders from being able to fill vacancies on our board of directors; • the division of our board of directors into three classes, with each class serving staggered three-year terms, which may delay the ability of stockholders to change the membership of a majority of our board of directors; • limitations on convening special stockholder meetings, which could make it difficult for our stockholders to adopt desired governance changes; • advance notice procedures, which apply for stockholders to nominate candidates for election as directors or to bring matters before an annual meeting of stockholders, which may discourage or deter a potential acquirer from conducting a solicitation of proxies to elect the acquirer’s own slate of directors or otherwise attempting to obtain control of our company; • a prohibition on stockholder action by written consent, which means that our stockholders will only be able to take action at a meeting of stockholders; • a forum selection clause, which means certain litigation against us can only be brought in Delaware; • no authorization of cumulative voting, which limits the ability of minority stockholders to elect director candidates; • directors will only be able to be removed for cause and only by the affirmative vote of two-thirds of the then outstanding voting power of our capital stock; • certain amendments to our Certificate of Incorporation and Bylaws will require the approval of two-thirds of the then outstanding voting power of our capital stock; • the affirmative vote of two-thirds of the then-outstanding voting power of our capital stock, voting as a single class, will be required for stockholders to amend or adopt any provision of our Bylaws; and • the authorization of undesignated or “blank check” preferred stock, the terms of which may be established and shares of which may be issued without further action by our stockholders, which could be used to significantly dilute the ownership and voting rights of a hostile acquirer.
The market price of our common stock may be highly volatile and may fluctuate or decline substantially as a result of a variety of factors, many of which are beyond our control, including: • actual or anticipated changes or fluctuations in our results of operations; • the guidance we may provide to analysts and investors from time to time, and any changes in, or our failure to perform in line with, such guidance; • announcements by us or our competitors of new offerings or new or terminated contracts, commercial relationships, or capital commitments; • industry or financial analyst or investor reaction to our press releases, other public announcements, and filings with the SEC; • rumors and market speculation involving us or other companies in our industry; • future sales or expected future sales of our common stock; • investor perceptions of us and the industries in which we operate; • price and volume fluctuations in the overall stock market from time to time; • changes in operating performance and stock market valuations of other technology companies generally, or those in our industry in particular; • failure of industry or financial analysts to maintain coverage of us, the issuance of new or updated reports or recommendations by any analysts who follow our company, or our failure to meet the expectations of investors; • actual or anticipated developments in our business or our competitors’ businesses or the competitive landscape generally; • litigation involving us, other companies in our industry or both, or investigations by regulators into our operations or those of our competitors; • developments or disputes concerning our intellectual property or proprietary rights or our solutions, or third-party intellectual or proprietary rights; • announced or completed acquisitions of businesses or technologies, or other strategic transactions by us or our competitors; • actual or perceived breaches of, or failures relating to, data privacy, data protection or data security; 50 Table of Contents • new laws or regulations or new interpretations of existing laws or regulations applicable to our business; • actual or anticipated changes in our management or our board of directors; • general economic conditions and slow or negative growth of our target markets; and • other events or factors, including those resulting from war, incidents of terrorism or responses to these events.
The market price of our common stock may be highly volatile and may fluctuate or decline substantially as a result of a variety of factors, many of which are beyond our control, including: • actual or anticipated changes or fluctuations in our results of operations; • the guidance we may provide to analysts and investors from time to time, and any changes in, or our failure to perform in line with, such guidance; • announcements by us or our competitors of new offerings or new or terminated contracts, commercial relationships, or capital commitments; • industry or financial analyst or investor reaction to our press releases, other public announcements, and filings with the SEC; • rumors and market speculation involving us or other companies in our industry; • future sales or expected future sales of our common stock; • investor perceptions of us and the industries in which we operate; • price and volume fluctuations in the overall stock market from time to time; • changes in operating performance and stock market valuations of other technology companies generally, or those in our industry in particular; • failure of industry or financial analysts to maintain coverage of us, the issuance of new or updated reports or recommendations by any analysts who follow our company, or our failure to meet the expectations of investors; • actual or anticipated developments in our business or our competitors’ businesses or the competitive landscape generally; 52 Table of Contents • litigation involving us, other companies in our industry or both, or investigations by regulators into our operations or those of our competitors; • developments or disputes concerning our intellectual property or proprietary rights or our solutions, or third-party intellectual or proprietary rights; • announced or completed acquisitions of businesses or technologies, or other strategic transactions by us or our competitors; • actual or perceived breaches of, or failures relating to, data privacy, data protection or data security; • new laws or regulations or new interpretations of existing laws or regulations applicable to our business; • actual or anticipated changes in our management or our board of directors; • general economic conditions and slow or negative growth of our target markets; and • other events or factors, including those resulting from war, incidents of terrorism or responses to these events.
Any failure or perceived failure by us to comply with our posted privacy policies, our privacy-related obligations to users or other third parties, or any other legal obligations or regulatory requirements relating to data privacy, data protection, or data security, may result in governmental investigations or enforcement actions, litigation, claims, or public statements against us by consumer advocacy groups, orders to cease or change our data processing activities, or others and could result in significant liability, cause our users to lose trust in us, and otherwise materially and adversely affect our reputation and business.
Any failure or perceived failure by us to comply with our posted privacy policies, our privacy-related obligations to users or other third parties, or any other legal obligations or regulatory requirements relating to data privacy, data protection, or data security, may result in governmental or regulatory investigations or enforcement actions, fines, litigation, claims, or public statements against us by consumer advocacy groups, orders to cease or change our data processing activities, or others and could result in significant liability, cause our users to lose trust in us, and otherwise materially and adversely affect our reputation and business.
Any such bugs, defects, security vulnerabilities, errors, or other performance failures in our platform, products or solutions, including as a result of denial of claims by our insurer or the successful assertion of claims by others against us that exceed available insurance coverage, or the occurrence of changes in our insurance policies, including increases or the imposition of large deductible or co-insurance requirements, could have a material adverse effect on our business, including our financial condition, results of operations and reputation.
Any such bugs, defects, security vulnerabilities, misconfigurations, errors, or other performance failures in our platform, products or solutions, including as a result of denial of claims by our insurer or the successful assertion of claims by others against us that exceed available insurance coverage, or the occurrence of changes in our insurance policies, including increases or the imposition of large deductible or co-insurance requirements, could have a material adverse effect on our business, including our financial condition, results of operations and reputation.
If we are unable to meet the stated service-level commitments, including failure to meet the uptime and response time requirements under our customer agreements, we may be contractually obligated to provide these customers with service credits, or customers could elect to terminate and receive refunds for prepaid amounts related to unused subscriptions, either of which could significantly affect our revenue in the periods in which the failure occurs and the credits are applied or refunds paid out.
If we are unable to meet the stated service-level commitments, including failure to meet the uptime and response time requirements under our customer agreements, we may be contractually obligated to provide these customers with service credits or damages, or customers could elect to terminate and receive refunds for prepaid amounts related to unused subscriptions, either of which could significantly affect our revenue in the periods in which the failure occurs and the credits are applied or refunds paid out.
However, the regulatory framework for privacy, data protection and data security worldwide is, and is likely to remain for the foreseeable future, uncertain, complex and lacking worldwide unified standards, and it is possible that these or other actual or alleged obligations may be interpreted and applied in a manner that we do not anticipate or that is inconsistent from one jurisdiction to another and may conflict with other legal obligations or our practices.
The regulatory framework for privacy, data protection and data security worldwide is, and is likely to remain for the foreseeable future, uncertain, complex and lacking worldwide unified standards, and it is possible that these or other actual or alleged obligations may be interpreted and applied in a manner that we do not anticipate or that is inconsistent from one jurisdiction to another and may conflict with other legal obligations or our practices.
Factors that may cause fluctuations in our quarterly financial results include: • our ability to attract new customers and increase revenue from our existing customers; • the loss of existing customers; • subscription renewals, and the timing and terms of such renewals; • fluctuations in customer usage from period to period, including as a result of seasonality in our customers’ underlying businesses, which create variability in our cost of revenue; • customer satisfaction with our products, solutions, platform capabilities and customer support; • mergers and acquisitions or other factors resulting in the consolidation of our customer base; • mix of our revenue; • our ability to gain new partners and retain existing partners; • fluctuations in stock-based compensation expense; • decisions by potential customers to purchase competing offerings or develop in-house technologies and solutions as alternatives to our offerings; • changes in the spending patterns of our customers; • the amount and timing of operating expenses related to the maintenance and expansion of our business and operations, including investments in research and development, sales and marketing, and general and administrative resources; 17 Table of Contents • our increasing reliance on public cloud infrastructure, which will result in higher variable costs compared to our own data centers; • network outages; • developments or disputes concerning our intellectual property or proprietary rights, our platform, products or solutions, or third-party intellectual property or proprietary rights; • negative publicity about our company, our offerings or our partners, including as a result of actual or perceived breaches of, or failures relating to, privacy, data protection or data security; • the timing of expenses related to the development or acquisition of technologies or businesses and potential future charges for impairment of goodwill from acquired companies; • general economic, industry, and market conditions, such as the current decline of the economic climate; • the impact of political uncertainty or unrest or outbreak of hostilities or armed conflicts; • changes in our pricing policies or those of our competitors; • fluctuations in the growth rate of the markets that our offerings address; • seasonality in the underlying businesses of our customers, including budgeting cycles, purchasing practices and usage patterns; • the business strengths or weakness of our customers; • our ability to collect timely or at all on invoices or receivables; • the cost and potential outcomes of future litigation or other disputes; • future accounting pronouncements or changes in our accounting policies; • our overall effective tax rate, including impacts caused by any reorganization in our corporate tax structure and any new legislation or regulatory developments; • our ability to successfully expand our business in the United States and internationally; • fluctuations in the mix of on-premise and SaaS/PaaS deployments; • fluctuations in foreign currency exchange rates; • fluctuations in the geographical mix of our revenue that may impact out gross margin; • the timing and success of new products and solutions introduced by us or our competitors, or any other change in the competitive dynamics of our industry, including consolidation among competitors, customers or partners or technology disruption; and • the impact of the pandemic related to COVID-19 and its variants, or any other pandemic, epidemic, outbreak of infectious disease or other global health crises on our business, the businesses of our customers and partners and general economic conditions.
Factors that may cause fluctuations in our quarterly financial results include: • our ability to attract new customers and increase revenue from our existing customers; • the loss of existing customers; • subscription renewals, and the timing and terms of such renewals; 17 Table of Contents • fluctuations in customer usage from period to period, including as a result of seasonality in our customers’ underlying businesses, which create variability in our cost of revenue; • customer satisfaction with our products, solutions, platform capabilities and customer support; • mergers and acquisitions or other factors resulting in the consolidation of our customer base; • mix of our revenue; • our ability to gain new partners and retain existing partners; • fluctuations in stock-based compensation expense; • decisions by potential customers to purchase competing offerings or develop in-house technologies and solutions as alternatives to our offerings; • changes in the spending patterns of our customers; • the amount and timing of operating expenses related to the maintenance and expansion of our business and operations, including investments in research and development, sales and marketing, and general and administrative resources; • our increasing reliance on public cloud infrastructure, which will result in higher variable costs compared to our own data centers; • network outages; • developments or disputes concerning our intellectual property or proprietary rights, our platform, products or solutions, or third-party intellectual property or proprietary rights; • negative publicity about our company, our offerings or our partners, including as a result of actual or perceived breaches of, or failures relating to, privacy, data protection or data security; • the timing of expenses related to the development or acquisition of technologies or businesses and potential future charges for impairment of goodwill from acquired companies; • general economic, industry, and market conditions, such as the current volatile economic climate; • the impact of political uncertainty or unrest or outbreak or worsening of hostilities or armed conflicts; • changes in our pricing policies or those of our competitors; • fluctuations in the growth rate of the markets that our offerings address; • seasonality in the underlying businesses of our customers, including budgeting cycles, purchasing practices and priorities and usage patterns; • the business strengths or weakness of our customers; • our ability to collect timely or at all on invoices or receivables; • the cost and potential outcomes of future litigation or other disputes; • future accounting pronouncements or changes in our accounting policies; • our overall effective tax rate, including impacts caused by any reorganization in our corporate tax structure and any new legislation or regulatory developments; • our ability to successfully expand our business in the United States and internationally; • fluctuations in the mix of on-premise and SaaS/PaaS deployments; • fluctuations in foreign currency exchange rates; 18 Table of Contents • fluctuations in the geographical mix of our revenue that may impact out gross margin; • the timing and success of new products and solutions introduced by us or our competitors, or any other change in the competitive dynamics of our industry, including consolidation among competitors, customers or partners or technology disruption; and • the impact of the pandemic related to COVID-19 and its variants, or any other pandemic, epidemic, outbreak of infectious disease or other global health crises on our business, the businesses of our customers and partners and general economic conditions.
Failure to comply with the GDPR could result in penalties for noncompliance (including possible fines of up to the greater of €20 million and 4% of our global annual turnover for the preceding financial year for the most serious violations, as well as the right to compensation for financial or non-financial damages claimed by individuals under Article 82 of the GDPR).
Failure to comply with the GDPR could result in penalties for noncompliance (including possible fines under the EU GDPR of up to the greater of €20 million and 4% of our global annual turnover for the preceding financial year for the most serious violations, as well as the right to compensation for financial or non-financial damages claimed by individuals under Article 82 of the GDPR).
We believe that our ability to compete successfully depends upon many factors both within and beyond our control, including the following: • breadth and scale of products, solutions and Media Services; • ability to provide a cross-organization video platform with multiple interoperable video solutions; • ability to support converging experiences across live, real-time and on-demand video; • flexibility to build and support custom workflows using video technology; • ease of customization and integration with other products; • quality of service and customer satisfaction; • flexibility of deployment options; • ability to innovate quickly; • ability to provide engaging, interactive, and personalized experiences; • data capabilities, including advanced analytics and AI; 22 Table of Contents • enterprise-grade reliability, security and scalability; • cost of implementation and ongoing use; • brand recognition; and • corporate culture.
We believe that our ability to compete successfully depends upon many factors both within and beyond our control, including the following: • breadth and scale of products, solutions and Media Services; • ability to provide a cross-organization video platform with multiple interoperable video solutions; • ability to support converging experiences across live, real-time and on-demand video; • flexibility to build and support custom workflows using video technology; • ease of customization and integration with other products; • quality of service and customer satisfaction; • flexibility of deployment options; • ability to innovate quickly; • ability to provide engaging, interactive, and personalized experiences; • data capabilities, including advanced analytics and AI; • enterprise-grade reliability, security and scalability; • cost of implementation and ongoing use; • brand recognition; and 23 Table of Contents • corporate culture.
We believe our revenue growth will depend on a number of factors, including, among other things, our ability to: • attract new customers and maintain our relationships with, and increase revenue from, our existing customers; • provide excellent customer and end user experiences; • maintain the security and reliability of our platform, products and solutions; • introduce and grow adoption of our offerings in new markets outside the United States; • hire, integrate, train and retain skilled personnel; • adequately expand our sales force and distribution channels; • continually enhance and improve our platform, products and solutions, including the features, integrations and capabilities we offer, and develop or otherwise introduce new products and solutions; • obtain, maintain, protect and enforce intellectual property protection for our platform and technologies; • expand into new technologies, industries and use cases; • expand and maintain our partner ecosystem; • comply with existing and new applicable laws and regulations, including those related to data privacy and security; • price our offerings effectively and determine appropriate contract terms; • determine the most appropriate investments for our limited resources; • successfully compete against established companies and new market entrants; • increase awareness of our brand on a global basis; and • timely and efficiently adapt to changes in customer demand, trends, global and local macro and micro economic conditions, new technologies or offerings by our competitors or other market disruptions.
We believe our revenue growth will depend on a number of factors, including, among other things, our ability to: • attract new customers and maintain our relationships with, and increase revenue from, our existing customers; • provide excellent customer and end user experiences; • maintain the security and reliability of our platform, products and solutions; • introduce and grow adoption of our offerings in new markets outside the United States; • hire, integrate, train and retain skilled personnel; • adequately expand our sales force and distribution channels; • continually enhance and improve our platform, products and solutions, including the features, integrations and capabilities we offer, and develop or otherwise introduce new products and solutions; • obtain, maintain, protect and enforce intellectual property protection for our platform and technologies; • expand into new technologies, industries and use cases; • expand and maintain our partner ecosystem; • comply with existing and new applicable laws and regulations, including those related to data privacy and security; 15 Table of Contents • price our offerings effectively and determine appropriate contract terms; • determine the most appropriate investments for our limited resources; • successfully compete against established companies and new market entrants; • increase awareness of our brand on a global basis; and • timely and efficiently adapt to changes in customer demand, trends, global and local macro and micro economic conditions, new technologies or offerings by our competitors or other market disruptions.
Our ability to monitor our vendors and service providers’ data security is limited, and, in any event, third parties may be able to circumvent those security measures, resulting in the unauthorized access to, misuse, acquisition, disclosure, loss, alteration, or destruction of our and our customers’ data, including confidential, sensitive, and other information about individuals.
Our ability to monitor our vendors and service providers’ data security is limited, and, in any event, third parties may be able to circumvent those security measures, resulting in the unauthorized access to, misuse, acquisition, disclosure, loss, alteration, or destruction of our and our customers’ data, including Confidential Information and other information about individuals.
Such changes could functionally limit or eliminate our ability to use these third-party applications and software in conjunction with our offerings, or may require us to obtain royalty-bearing licenses, which could negatively impact customer demand, our competitive position and adversely affect our business.
Such changes could functionally limit or eliminate our or our customers' ability to use these third-party applications and software in conjunction with our offerings, or may require us to obtain royalty-bearing licenses, which could negatively impact customer demand, our competitive position and adversely affect our business.
With the rise in travel restrictions and shelter-in-place policies resulting from the COVID-19 pandemic, as well as the passage of time, the introduction of new technologies and the entrance of new market participants, competition has intensified, and we expect it to continue to intensify in the future.
With the rise in travel restrictions and shelter-in-place policies resulting from the COVID-19 pandemic, as well as the passage of time, the introduction of new technologies and the entrance of new market participants, competition has intensified, and we expect it to continue in the future.
Our future performance also depends on the continued services and continuing contributions of our senior management team, which includes Ron Yekutiel, our co-founder and Chief Executive Officer, to execute on our business plan and to identify and pursue new opportunities and product innovations.
Our future performance also depends on the continued services and continuing contributions of our senior management team, which includes Ron Yekutiel, our co-founder, Chief Executive Officer and President, to execute on our business plan and to identify and pursue new opportunities and product innovations.
Any intellectual property litigation to which we might become a party, or for which we are required to provide indemnification, may require us to do one or more of the following: • cease selling or using offerings that incorporate or are otherwise covered by the intellectual property rights that we allegedly infringe, misappropriate, or otherwise violate; • make substantial payments for legal fees, settlement payments or other costs or damages, including potentially punitive or treble damages if we are found liable for willful infringement; • obtain a license to sell or use the relevant technology, which may not be available on reasonable terms or at all, may be non-exclusive and thereby allow our competitors and other parties access to the same technology, and may require the payment of substantial licensing, royalty, or other fees; or 36 Table of Contents • redesign the allegedly infringing offerings to avoid infringement, misappropriation, or other violation, which could be costly, time-consuming, or impossible.
Any intellectual property litigation to which we might become a party, or for which we are required to provide indemnification, may require us to do one or more of the following: • cease selling or using offerings that incorporate or are otherwise covered by the intellectual property rights that we allegedly infringe, misappropriate, or otherwise violate; • make substantial payments for legal fees, settlement payments or other costs or damages, including potentially punitive or treble damages if we are found liable for willful infringement; • obtain a license to sell or use the relevant technology, which may not be available on reasonable terms or at all, may be non-exclusive and thereby allow our competitors and other parties access to the same technology, and may require the payment of substantial licensing, royalty, or other fees; or • redesign the allegedly infringing offerings to avoid infringement, misappropriation, or other violation, which could be costly, time-consuming, or impossible.
See “Forward-Looking Statements.” Risks Related to Our Business and Industry We may not be able to successfully assess or mitigate the worsening economic climate and its direct and indirect impact on our business and operations, including our customers and vendors, or to correctly predict the duration and depth of the current instability of the global economy and take the right or sufficient measures to address it, and as a result our business, financial condition, results of operations and prospects would be adversely affected.
See “Forward-Looking Statements.” Risks Related to Our Business and Industry We may not be able to successfully assess or mitigate the current volatile economic climate and its direct and indirect impact on our business and operations, including our customers and vendors, or to correctly predict the duration and depth of the current instability of the global economy and take the right or sufficient measures to address it, and as a result our business, financial condition, results of operations and prospects would be adversely affected.
We anticipate that, absent any adverse developments, we will continue to engage with our personnel and third party service providers and maintain those relationships in order to grow our business for the foreseeable future.
We anticipate that, absent any adverse developments, we will continue to engage with third party service providers and maintain those relationships in order to grow our business for the foreseeable future.
These efforts may prove more expensive than we currently anticipate, and we may not succeed in increasing our revenue sufficiently, or at all, or managing our business and operations more efficiently to offset these higher expenses.
These efforts may prove more expensive than we currently anticipate, and we may not succeed in increasing our revenue sufficiently, or at all, or managing our business and operations more efficiently to offset these expenses.
In particular, the GDPR includes obligations and restrictions concerning the rights of individuals to whom the personal data relates, maintaining a record of data processing, security breach notifications and measures for the security and confidentiality of personal data.
In particular, the GDPR includes obligations and restrictions concerning the rights of individuals to whom the personal information relates, maintaining a record of data processing, security breach notifications and measures for the security and confidentiality of personal information.
In response to the Russian invasion of Ukraine, the U.S. government, the European Union, the United Kingdom and other countries and jurisdictions in which we operate, have imposed enhanced export and import controls and economic sanctions targeting Russia and Belarus, including for example, 43 Table of Contents certain industry sectors, products and professional services related to Russia, and have also designated certain individuals and entities as subject to blocking or asset freeze measures, which may restrict dealings with those designated persons or entities owned or controlled by such persons, and may impose additional Trade Controls in the future.
In response to the Russian invasion of Ukraine, the U.S. government, the European Union, the United Kingdom and other countries and jurisdictions in which we operate, have imposed enhanced export and import controls and economic sanctions targeting Russia and Belarus, including for example, certain industry sectors, products and professional services related to Russia, and have also designated certain individuals and entities as subject to blocking or asset freeze measures, which may restrict dealings with those designated persons or entities owned or controlled by such persons, and may impose additional Trade Controls in the future.
The UK GDPR mirrors the fines under the GDPR, e.g., fines up to the greater of €20 million / £17.5 million or 4% of global turnover.
The UK GDPR mirrors the fines under the EU GDPR, e.g., fines up to the greater of €20 million / £17.5 million or 4% of global turnover.
A portion of our revenue is generated by sales to government entities, which are subject to a number of challenges and risks. Sales to government entities are subject to a number of risks.
A portion of our revenue is generated by sales to government entities, which are subject to a number of challenges and risks. Sales to government and semi-government entities are subject to a number of risks.
The GDPR imposes comprehensive data privacy compliance obligations in relation to our collection, processing, sharing, disclosure and other use of data relating to an identifiable living individual or “personal information”, including a principal of accountability and the obligation to demonstrate compliance through policies, procedures, training and audit.
The GDPR imposes comprehensive data privacy compliance obligations in relation to our collection, processing, sharing, disclosure and other use of data relating to an identifiable living individual or “personal information”, including a principle of accountability and the obligation to demonstrate compliance through policies, procedures, training and audit.
In addition, the worsening economic climate has resulted in, among other things, longer sale cycles and increased price driven competition, including through initiation of bid processes, which adversely affects our ability to retain our existing customers and our ability to generate renewals and up-sales.
In addition, the current economic climate has resulted in, among other things, longer sale cycles and increased price driven competition, including through initiation of bid processes, which adversely affects our ability to retain our existing customers and our ability to generate renewals and up-sales.
If an author or other third party that distributes such open source software were to allege that we had not complied with the conditions of one or more of these licenses, we could be required to incur significant legal expenses defending against such allegations and could be subject to significant damages, enjoined 37 Table of Contents from the sale of our offerings that contain the open source software and required to comply with onerous conditions or restrictions on these offerings, which could disrupt the distribution and sale of these offerings.
If an author or other third party that distributes such open-source software were to allege that we had not complied with the conditions of one or more of these licenses, we could be required to incur significant legal expenses defending against such allegations and could be subject to significant damages, enjoined from the sale of our offerings that contain the open-source software and required to comply with onerous conditions or restrictions on these offerings, which could disrupt the distribution and sale of these offerings.
While market demand for our offerings was growing at a robust rate prior to the pandemic, we have since experienced a slowdown as the effects of the COVID-19 pandemic have weakened and as a result of the current worsening economic climate.
While market demand for our offerings was growing at a robust rate prior to the COVID-19 pandemic, we have since experienced a slowdown as the effects of the COVID-19 pandemic have weakened and as a result of the current volatile economic climate.
The success of any new products or solutions, or enhancements to our existing offerings, will depend on a number of factors including, but not limited to, the timeliness and effectiveness of our research and product development activities and go-to-market strategy, our ability to anticipate customer needs and achieve market acceptance, our ability to manage the risks associated with new product releases, the effective management of development and other spending in connection with the product development process, and the availability of other newly developed products and technologies by our competitors and by any other third parties that may introduce disruptive technologies.
The success of any new products or solutions, or enhancements to our existing offerings, will depend on a number of factors including, but not limited to, the timeliness and effectiveness of our research and product development activities and go-to-market strategy, our ability to identify the appropriate technological development paths, our ability to anticipate customer needs and achieve market acceptance, our ability to manage the risks associated with new product releases, the effective management of development and other spending in connection with the product development process, and the availability of other newly developed products and technologies by our competitors and by any other third parties that may introduce disruptive technologies.
As this operation was launched only recently, we cannot guarantee that this model will succeed in generating revenue in excess 27 Table of Contents of the corresponding sales and marketing expenses, or that it will be effective in helping us achieve our other objectives, any of which would adversely affect our business, financial condition, and results of operations.
As this operation was launched only recently, we cannot guarantee that this model will succeed in generating revenue in excess of the corresponding sales and marketing expenses, or that it will be effective in helping us achieve our other objectives, any of which would adversely affect our business, financial condition, and results of operations.
The GDPR, together with national legislation, regulations and guidelines of the EU member states impose strict obligations and restrictions on the ability to collect, use, retain, host, protect, disclose, transfer, and otherwise process personal data.
The GDPR, together with national legislation, regulations and guidelines of the EU member states impose strict obligations and restrictions on the ability to collect, use, retain, host, protect, disclose, transfer, and otherwise process personal information.
In addition to the foregoing, a breach of the GDPR could result in regulatory investigations, reputational damage, orders to cease/ change our processing of our data, enforcement notices and/ or assessment notices (for a compulsory audit). 40 Table of Contents In addition to the GDPR, we are subject to evolving EU and UK privacy laws on cookies, tracking technologies and e-marketing.
In addition to the foregoing, a breach of the GDPR could result in regulatory investigations, reputational damage, orders to cease or change our processing of our data, enforcement notices and/or assessment notices (for a compulsory audit). 41 Table of Contents We are also subject to evolving EU and UK privacy laws on cookies, tracking technologies and e-marketing.
Should any of our competitors modify their products or standards in a manner that degrades the functionality of our offerings or gives preferential treatment to competitive products or services, whether to enhance their competitive position or for any other reason, or if they deploy encryption, cybersecurity ringfencing protections or other interface limitations, we may not be able to offer the functionality that our customers need, which would negatively impact our ability to generate revenue and adversely affect our business.
Should any of our competitors modify their products or standards in a manner that degrades the functionality of our offerings or gives preferential treatment to competitive products or services, whether to enhance their competitive position or for any other reason, or if they deploy encryption, cybersecurity ringfencing protections or other interface limitations, we may not be able to offer the functionality that our customers need or may be offered by such competitor, which would negatively impact our ability to generate revenue and adversely affect our business.
Moreover, due to the worsening economic climate and increased inflation and interest rates, the net cash derived from our operations may be reduced while the availability of new financing may be limited, costly or unavailable.
Moreover, due to the volatile economic climate and increased inflation and interest rates, the net cash derived from our operations may be reduced while the availability of new financing may be limited, costly or unavailable.
Any failure to 16 Table of Contents increase our revenue as we grow our business or to manage our expenditures more effectively could prevent us from achieving profitability at all or on a consistent basis, which would cause our business, financial condition, and results of operations to suffer and the market price of our common stock to decline.
Any failure to increase our revenue as we grow our business or to manage our expenditures more effectively could prevent us from achieving profitability at all or on a consistent basis, which would cause our business, financial condition, and results of operations to suffer and the market price of our common stock to decline.
If we are unsuccessful in maintaining existing and, where needed, establishing new relationships with third parties, our ability to efficiently operate existing services or develop 24 Table of Contents new services and provide adequate customer support could be impaired or become more expensive, and, as a result, our competitive position or our results of operations could suffer.
If we are unsuccessful in maintaining existing and, where needed, establishing new relationships with third parties, our ability to efficiently operate existing services or develop new services and provide adequate customer support could be impaired or become more expensive, and, as a result, our competitive position or our results of operations could suffer.
Case law clarifies that the right to receive consideration for “service inventions” can be waived by the employee and that such waiver does not necessarily have to be explicit. The Committee will examine, on a case-by-case basis, the general contractual framework between the parties, using interpretation rules of the general Israeli contract laws.
Case law clarifies that the right to receive consideration for “service inventions” can be waived by the employee and that such waiver does not necessarily have to be explicit. The Committee will examine, on a case-by-case basis, the general contractual framework 38 Table of Contents between the parties, using interpretation rules of the general Israeli contract laws.
Any expansion into new geographies may also require us to integrate our offerings with new third-party technologies, products, services and regulatory requirements, and invest in developing new relationships with these providers.
Any expansion into new geographies or verticals may also require us to integrate our offerings with new third-party technologies, products, services and regulatory requirements, and invest in developing new relationships with these providers.
If we fail to meet or exceed such expectations for these or any other reasons, the market price of our common stock could decline. The length of our sales cycle can be unpredictable, particularly with respect to sales to large customers, and our sales efforts may require considerable time and expense.
If we fail to meet or exceed such expectations for these or any other reasons, the market price of our common stock could decline. 29 Table of Contents The length of our sales cycle can be unpredictable, particularly with respect to sales to large customers, and our sales efforts may require considerable time and expense.
As a result, our consolidated financial statements and the reported results of operations contained therein may not be directly comparable to those of other public companies. We cannot predict if investors will find our common stock less attractive because we may rely on these exemptions.
As a result, our consolidated financial statements and the reported results of operations contained therein may not be directly comparable to those of other public companies. 57 Table of Contents We cannot predict if investors will find our common stock less attractive because we may rely on these exemptions.
Competition continues to increase in the market segments in which we operate, and we expect competition to further increase in the future, in particular as a result of the worsening economic climate, thereby leading to increased pricing pressures.
Competition continues to increase in the market segments in which we operate, and we expect competition to further increase in the future, in particular as a result of the volatile economic climate, thereby leading to increased pricing pressures.
Although we currently anticipate that our net cash provided by operating activities, cash on hand and availability under our Revolving Credit Facility will be adequate to meet our operating, investing, and financing needs for at least the next twelve months, we may require additional financing.
Although we currently anticipate that our net cash provided by operating activities, cash on hand and availability under our Revolving Credit Facility (as defined below) will be adequate to meet our operating, investing, and financing needs for at least the next twelve months, we may require additional financing.
Moreover, if the assumptions that we use to plan our business are incorrect or change in reaction to 15 Table of Contents changes in our market, or if we are unable to maintain consistent revenue or revenue growth, the market price of our common stock could be volatile, and it may be difficult to achieve and maintain profitability.
Moreover, if the assumptions that we use to plan our business are incorrect or change in reaction to changes in our market, or if we are unable to maintain consistent revenue or revenue growth, the market price of our common stock could be volatile, and it may be difficult to achieve and maintain profitability.
A decline in the trading price of our common stock might impede our ability to raise capital through the issuance of additional shares of our common 51 Table of Contents stock or other equity securities and may impair your ability to sell shares of our common stock at a price higher than the price you paid for them or at all.
A decline in the trading price of our common stock might impede our ability to raise capital through the issuance of additional shares of our common stock or other equity securities and may impair your ability to sell shares of our common stock at a price higher than the price you paid for them or at all.
The taxing authorities of the jurisdictions in which we operate may challenge our methodologies for valuing 47 Table of Contents developed technology or intercompany arrangements or our revenue recognition policies, which could increase our worldwide effective tax rate and adversely affect our financial position and results of operations.
The taxing authorities of the jurisdictions in which we operate may challenge our methodologies for valuing developed technology or intercompany arrangements or our revenue recognition policies, which could increase our worldwide effective tax rate and adversely affect our financial position and results of operations.
Any estimates of market opportunity and forecasts of market growth that we provide may prove to be inaccurate. Market opportunity estimates and growth forecasts are subject to significant uncertainty and are based on assumptions and estimates that may not prove to be accurate, including as a result of any of the risks described in this Annual Report on Form 10-K.
Market opportunity estimates and growth forecasts are subject to significant uncertainty and are based on assumptions and estimates that may not prove to be accurate, including as a result of any of the risks described in this Annual Report on Form 10-K.
Many factors may contribute to declines in our growth rate, including greater market penetration, increased competition, slowing demand for our offerings, a failure by us to capitalize on growth opportunities, the maturation of our business, failure to deliver under our commitments or to satisfy customer expectations, global economic downturns and failure to adapt to such downturns or successfully implement our Reorganization Plans, among others.
Many factors may contribute to declines in our growth rate, including greater market penetration, increased competition, slowing demand for our offerings, a failure by us to capitalize on growth opportunities, the maturation of our business, failure to deliver under our commitments or to satisfy customer expectations, global economic downturns and failure to adapt to such downturns, among others.
The length of our sales cycle, from initial contact with a prospective customer to subscribing to one or more of our offerings, can vary substantially from customer to customer for a number of reasons, including deal complexity (particularly for customers that purchase our TV Solutions), setup time and our customers’ needs to satisfy their own internal requirements and processes.
The length of our sales cycle, from initial contact with a prospective customer to subscribing to one or more of our offerings, can vary substantially from customer to customer for a number of reasons, including deal complexity (particularly for customers that purchase our TV Solutions), certification by new customers or due to new customers' requirements, setup time and our customers’ needs to satisfy their own internal requirements and processes.
As a public company listed in the United States, we will incur significant additional legal, accounting, and other expenses. In addition, changing laws, regulations, and standards relating to corporate governance and public disclosure, including regulations implemented by the SEC and Nasdaq, may increase legal and financial compliance costs, and make 54 Table of Contents some activities more time consuming.
As a public company listed in the United States, we will incur significant additional legal, accounting, and other expenses. In addition, changing laws, regulations, and standards relating to corporate governance and public disclosure, including regulations implemented by the SEC and Nasdaq, may increase legal and financial compliance costs, and make some activities more time consuming.
The nature of our activities and our global presence and operations expose us to global and local macro and micro effects, including the effects of global economic trends such as the worsening economic climate, rising inflation, rising interest rates, price increases, economic slowdown, decrease in our customers' spend or available budget that causes decline in demand, up-sales or subscription renewals, and other adverse effects that might have direct or indirect effects on our business and results of operations that are hard to predict, monitor or assess.
The nature of our activities and our global presence and operations expose us to global and local macro and micro effects, including the effects of global economic trends such as the current global economic volatility, rising inflation, rising interest rates, price increases, decrease in our customers' spend or available budget that causes decline in demand, up-sales or subscription renewals, and other adverse effects that might have direct or indirect effects on our business and results of operations that are hard to predict, monitor or assess.
Negative conditions in the general economy both in the United States and abroad, including conditions resulting from changes in gross domestic product growth, financial, and credit market fluctuations, political turmoil, natural catastrophes, the pandemic related to COVID-19 and its variants, any other pandemic, epidemic or outbreak of infectious disease, warfare, protests and riots, and terrorist attacks on the United States, Europe, the Asia Pacific region, or elsewhere, could cause a decrease in business investments by our customers and potential customers, including spending on information technology, and negatively affect the growth of our business.
Negative conditions in the general economy both in the United States and abroad, including conditions resulting from changes in gross domestic product growth, financial, and credit market fluctuations, political turmoil, natural catastrophes, any pandemic, epidemic or outbreak of infectious disease, including a resurgence of COVID-19 and its variants, warfare, protests and riots, and terrorist attacks on the United States, Europe, Middle East, the Asia Pacific region, or elsewhere, could cause a decrease in business investments by our customers and potential customers, including spending on information technology, and negatively affect the growth of our business.
Our platform, products and solutions address the needs of customers and end users around the world, and we see continued international expansion as a significant opportunity. For the years ended December 31, 2022, 2021 and 2020, we generated approximately 46%, 42% and 43% of our revenue, respectively, from customers outside the United States.
Our platform, products and solutions address the needs of customers and end users around the world, and we see continued international expansion as a significant opportunity. For the years ended December 31, 2023, 2022 and 2021, we generated approximately 48%, 46% and 42% of our revenue, respectively, from customers outside the United States.
Any such bug, defect, security vulnerability, error, or other performance failure could cause damage to our reputation, loss of customers or revenue, order cancellations, service terminations, and lack of market acceptance of our offerings.
Any such bug, defect, security vulnerability, misconfiguration, error, or other performance failure could cause damage to our reputation, loss of customers or revenue, remediation costs, order cancellations, service terminations, and lack of market acceptance of our offerings.
Our principal stockholders each holding more than 5% of our outstanding common stock collectively beneficially owned a majority of our outstanding common stock as of December 31, 2022.
Our principal stockholders each holding more than 5% of our outstanding common stock collectively beneficially owned a majority of our outstanding common stock as of December 31, 2023.
Our ability to sell new subscriptions and expand the number and value of existing subscriptions depends on a number of factors, including the prices of our offerings and their 23 Table of Contents functionality, the prices of products offered by our competitors, and the budgets of our customers.
Our ability to sell new subscriptions and expand the number and value of existing subscriptions depends on a number of factors, including the prices of our offerings and their functionality, the prices of products offered by our competitors, and the budgets of our customers.
Future changes in our stock ownership could result in an ownership change that subjects us to 48 Table of Contents limitations on our ability to utilize net operating loss forwards to offset future income. Furthermore, we may not be able to generate sufficient taxable income to utilize our net operating loss carryforwards before they expire.
Future changes in our stock ownership could result in an ownership change that subjects us to limitations on our ability to utilize net operating loss forwards to offset future income. Furthermore, we may not be able to generate sufficient taxable income to utilize our net operating loss carryforwards before they expire.
We have elected to take advantage of certain of the reduced reporting and other obligations described above and intend to take advantage of reduced 55 Table of Contents reporting requirements in the future for so long as we are able to do so.
We have elected to take advantage of certain of the reduced reporting and other obligations described above and intend to take advantage of reduced reporting requirements in the future for so long as we are able to do so.
Our current international operations involve, and future initiatives will also involve, a variety of risks, including: • unexpected changes in practices, tariffs, export quotas, custom duties, trade disputes, tax laws and treaties, particularly due to economic tensions and trade negotiations or other trade restrictions; • different labor regulations, especially in the European Union, where labor laws are generally more advantageous to employees as compared to the United States, including deemed hourly wage and overtime regulations in these locations; • exposure to many evolving stringent and potentially inconsistent laws and regulations relating to privacy, data protection, and information security, particularly in the European Union; • changes in a specific country’s or region’s political or economic conditions, including in connection with the Russian invasion of Ukraine, and political or armed tension in other regions; • risks resulting from changes in currency exchange rates; • challenges inherent to efficiently managing an increased number of employees over large geographic distances, including the need to implement appropriate systems, policies, benefits and compliance programs; • difficulties in maintaining our corporate culture with a dispersed workforce; • risks relating to the implementation of exchange controls, including restrictions promulgated by the United States Department of the Treasury’s Office of Foreign Assets Control (“OFAC”), the Bureau of Industry and Security (BIS) at the United States Department of Commerce, and other similar trade protection regulations and measures in the United States, EU, UK, or in other jurisdictions; • reduced ability to timely collect amounts owed to us by our customers in countries where our recourse may be more limited; • slower than anticipated availability and adoption of cloud infrastructures by international businesses, which would increase our on-premise deployments; • limitations on our ability to reinvest or transfer earnings from operations derived from one country to fund the capital needs of our operations in other countries; • potential changes in laws, regulations, and costs affecting our U.K. operations and personnel due to Brexit; • limited or unfavorable—including greater difficulty in enforcing—intellectual property protection; • exposure to liabilities under anti-corruption and anti-money laundering laws, including the U.S.
Our current international operations involve, and future initiatives will also involve, a variety of risks, including: • unexpected changes in practices, tariffs, export quotas, custom duties, trade disputes, tax laws and treaties, particularly due to economic tensions and trade negotiations or other trade restrictions; • different labor regulations, especially in the European Union, where labor laws are generally more advantageous to employees as compared to the United States, including deemed hourly wage and overtime regulations in these locations; • exposure to many evolving stringent and potentially inconsistent laws and regulations relating to privacy, data protection, and information security, particularly in the European Union; • changes in a specific country’s or region’s political or economic conditions, including in connection with the Russian invasion of Ukraine, the armed conflict in the Middle East and Red Sea area involving Israel, Hamas, Hezbollah and the Houthi movement, and political or armed tension in other regions; • risks resulting from changes in currency exchange rates; • challenges inherent to efficiently managing an increased number of employees over large geographic distances, including the need to implement appropriate systems, policies, benefits and compliance programs; • difficulties in maintaining our corporate culture with a dispersed workforce; • risks relating to the implementation of exchange controls, including restrictions promulgated by the United States Department of the Treasury’s Office of Foreign Assets Control (“OFAC”), the Bureau of Industry and Security (BIS) at the United States Department of Commerce, and other similar trade protection regulations and measures in the United States, EU, UK, or in other jurisdictions; • reduced ability to timely collect amounts owed to us by our customers in countries where our recourse may be more limited; • slower than anticipated availability and adoption of cloud infrastructures by international businesses, which would increase our on-premise deployments; • limitations on our ability to reinvest or transfer earnings from operations derived from one country to fund the capital needs of our operations in other countries; • limited or unfavorable—including greater difficulty in enforcing—intellectual property protection; 30 Table of Contents • exposure to liabilities under anti-corruption and anti-money laundering laws, including the U.S.
Our communications with our clients are subject to certain laws and regulations, including the Controlling the Assault of Non-Solicited Pornography and Marketing (“CAN-SPAM”) Act of 2003, the Telephone Consumer Protection Act of 1991 (the “TCPA”), and the Telemarketing Sales Rule and analogous state laws, that could expose us to significant damages awards, fines and other penalties that could materially impact our business.
Our communications with our clients are subject to certain laws and regulations, including the Controlling the Assault of Non-Solicited Pornography and Marketing Act (the “CAN-SPAM Act”), the Telephone Consumer Protection Act (the “TCPA”), and the Telemarketing Sales Rule and analogous state laws, that could expose us to significant damages awards, fines and other penalties that could materially impact our business.
From time to time we may provide estimates of market opportunity and forecasts of market growth. These estimates may prove to be inaccurate, and even if the markets in which we compete achieve the forecasted growth, our business could fail to grow at similar rates, or at all.
These estimates may prove to be inaccurate, and even if the markets in which we compete achieve the forecasted growth, our business could fail to grow at similar rates, or at all. Any estimates of market opportunity and forecasts of market growth that we provide may prove to be inaccurate.
Our 28 Table of Contents customers, end users, employees and partners are located in a number of different jurisdictions worldwide, and we expect our operations to become more globally diversified.
Our customers, end users, employees and partners are located in a number of different jurisdictions worldwide, and we expect our operations to become more globally diversified.
While we will need to invest significant resources in such expansion, it is possible that returns on such investments 29 Table of Contents will not be achieved in the near future or at all in these less familiar competitive environments.
While we will need to invest significant resources in such expansion, it is possible that returns on such investments will not be achieved in the near future or at all in these less familiar competitive environments.
These laws or charges could limit the growth of internet-related commerce or communications 44 Table of Contents generally or result in reductions in the demand for internet-based products such as ours.
These laws or charges could limit the growth of internet-related commerce or communications generally or result in reductions in the demand for internet-based products such as ours.
We have a history of losses and may not be able to achieve or maintain profitability. We have incurred losses in each year since our incorporation in 2006, including net losses of $68.5 million, $59.4 million, and $58.8 million in the years ended December 31, 2022, 2021 and 2020, respectively.
We have a history of losses and may not be able to achieve or maintain profitability. We have incurred losses in each year since our incorporation in 2006, including net losses of $46.4 million, $68.5 million, and $59.4 million in the years ended December 31, 2023, 2022 and 2021, respectively.
We intend to continue to expend substantial financial and other resources on, among other things: • enhancing inside sales and self-serve offerings and distribution channels, and expanding our customer base; • extending our product leadership by investing in our API and Developer Tools offerings, in our Products for any Enterprise, and in our specialized solutions for the industry verticals we currently address (Education and Media and Telecom), and continuing to develop new products and expand into additional vertical industries; • increasing sales within our existing customer base through increased usage of our platform and the cross-selling of additional products and solutions; • augmenting our current offerings by increasing the breadth of our technology partnerships and exploring potential transactions that may enhance our capabilities or increase the scope of our technology footprint; • continuing to grow our international operations; and • general administration, including legal, accounting, and other expenses related to our operation as a public company.
We intend to continue to expend substantial financial and other resources on, among other things: • extending our product leadership by investing in the development of GenAI based new capabilities, in our API and Developer Tools offerings, in our Products for any Enterprise, and in our specialized solutions for the industry verticals we currently address (Education and Media and Telecom), and continuing to develop new products and expand into additional vertical industries; 16 Table of Contents • increasing sales within our existing customer base through increased usage of our platform and the cross-selling of additional products and solutions; • augmenting our current offerings by increasing the breadth of our technology partnerships and exploring potential transactions that may enhance our capabilities or increase the scope of our technology footprint; • continuing to grow our international operations; and • general administration, including legal, accounting, and other expenses related to our operation as a public company.
We engage third-party vendors and service providers to store and otherwise process some of our and our customers’ data, including personal, confidential, sensitive, and other information about individuals. Our vendors and service providers, including providers of open source platforms, may also be the targets of cyberattacks, malicious software, phishing schemes, and fraud.
We engage third-party vendors and service providers to store and otherwise process some of our and our customers’ data, including Confidential Information. Our vendors and service providers, including providers of open source platforms, may also be the targets of cyberattacks, malicious software, phishing schemes, and fraud.
As a result of this usage and increased demand from our customers, we incurred significant costs associated with upgrading our infrastructure and expanding our capacity and hiring additional personnel, although we have recently implemented workforce reductions pursuant to our Reorganization Plans.
As a result of this usage and increased demand from our customers, we incurred significant costs associated with upgrading our infrastructure and expanding our capacity and hiring additional personnel, although during 2022 and 2023 we implemented workforce reductions pursuant to our Reorganization Plans.
In addition, we cannot be sure that our existing insurance coverage will continue to be available on acceptable terms or that our insurers will not deny coverage as to any future claim. In addition, we do not directly control content that our customers store or use in our products.
In addition, we cannot be sure that our existing insurance coverage will continue to be available on economically reasonable terms or at all or that our insurers will not deny coverage as to any future claim. In addition, we do not directly control content that our customers store or use in our products.
In addition, in connection with our product development efforts, we may introduce significant changes to our existing products or solutions, or develop or otherwise introduce new and unproven products or solutions, including technologies with which we have little or no prior development or operating experience.
In addition, in connection with our product development efforts, we may introduce significant changes to our existing products or solutions, or develop or otherwise introduce new and unproven products or solutions, integrate new technologies such as AI models, including technologies with which we have little or no prior development or operating experience.
Extortion payments may alleviate the negative impact of a ransomware attack, but we may be unwilling or unable to make such payments due to, for example, applicable laws or regulations prohibiting payments. 32 Table of Contents If our security measures are breached as a result of third-party action, employee error or negligence, a defect or bug in our offerings or those of our third-party service providers, malfeasance or otherwise and, as a result, someone obtains unauthorized access to any data, including our confidential, sensitive, or personal information or the confidential, sensitive, or personal information of our customers, or other persons, or any of these types of information is lost, destroyed, or used, altered, disclosed, or acquired without authorization, our reputation may be damaged, our business may suffer, we may be subject to regulatory investigations, and we could incur significant liability, including under applicable data privacy and security laws and regulations.
Extortion payments may alleviate the negative impact of a ransomware attack, but we may be unwilling or unable to make such payments due to, for example, applicable laws or regulations prohibiting payments. 33 Table of Contents If our security measures are breached as a result of third-party action, employee error or negligence, a defect or bug in our offerings or those of our third-party service providers, malfeasance or otherwise and, as a result, someone obtains unauthorized access to any data, including our Confidential Information or that of our customers, or other persons, or any of these types of information is lost, destroyed, or used, altered, disclosed, or acquired without authorization, our reputation may be damaged, our business may suffer, we may be subject to regulatory investigations, and we could incur significant liability, including significant incident response, system restoration or remediation and future compliance costs and penalties or fines under applicable data privacy and security laws and regulations.
Foreign Corrupt Practices Act of 1977, as amended, and similar applicable laws and regulations in other jurisdictions; and • risks resulting from the ongoing pandemic related to COVID-19 and its variants, or any other pandemic, epidemic, or outbreak of infectious disease, including uncertainty regarding what measures the U.S. or foreign governments will take in response.
Foreign Corrupt Practices Act of 1977, as amended, and similar applicable laws and regulations in other jurisdictions; and • risks resulting from a pandemic, epidemic, or outbreak of infectious disease, such as resurgence of COVID-19 or its variants, including uncertainty regarding what measures the U.S. or foreign governments will take in response.
Our ability to use our net operating loss carryforwards to offset future taxable income may be subject to certain limitations. As of December 31, 2022 we had U.S. federal net operating loss carryforwards of approximately $277 million and U.S. state net operating loss carryforwards of approximately $172 million, which may be utilized against future income taxes.
Our ability to use our net operating loss carryforwards to offset future taxable income may be subject to certain limitations. As of December 31, 2023 we had U.S. federal net operating loss carryforwards of approximately $258 million and U.S. state net operating loss carryforwards of approximately $184 million, which may be utilized against future income taxes.
Our platform, products and solutions are inherently complex and, despite extensive testing and quality control, have in the past and may in the future contain bugs, defects, security vulnerabilities, errors, or other performance failures, especially when first introduced and when upgraded with additional new features and capabilities, or otherwise not perform as intended.
Our platform, products, solutions and third-party products and services we rely on are inherently complex and, despite testing and quality control, have in the past and may in the future contain bugs, defects, security vulnerabilities, misconfigurations, errors, or other performance failures, especially when first introduced and when upgraded with additional new features and capabilities, or otherwise not perform as intended.
We experience cyber-attacks and other security incidents of varying degrees from time to time, though none which individually or in the aggregate has led to costs or consequences which have materially impacted our operations or business.
We experience cyber-attacks and other security incidents of varying degrees from time to time, though none which individually or in the aggregate has led to third parties gaining access to our or our customers data, or to costs or consequences which have materially impacted our operations or business.
If our revenue does not increase or if the Reorganization Plans do not sufficiently offset the expected increases in our operating expenses and the effects of the worsening economic climate, we will not achieve profitability in future periods and our net losses may increase.
If our revenue does not increase or if the Reorganization Plans and our management of our resources do not sufficiently offset the expected increases in our operating expenses and the effects of the current economic volatility, we will not achieve profitability in future periods and our net losses may increase.
Our resellers may prioritize selling their own offerings that compete with ours, or one of our competitors may be effective in causing a reseller or potential reseller to favor that competitor’s offerings or otherwise prevent or reduce sales of our offerings.
These relationships subject us to certain risks. Our resellers may prioritize selling their own offerings that compete with ours, or one of our competitors may be effective in causing a reseller or potential reseller to favor that competitor’s offerings or otherwise prevent or reduce sales of our offerings.
If our customers use our products for the transmission or storage of personal, confidential, sensitive, or other information about individuals and our security measures are or are believed to have been breached as a result of third-party action, employee error, malfeasance or otherwise, our reputation could be damaged, our business may suffer, and we could incur significant liability.
If our customers use our products for the transmission or storage of Confidential Information about individuals and our security measures are or are believed to have been breached as a result of third-party action, employee error, malfeasance or otherwise, our reputation could be damaged, our business may suffer, and we could incur significant liability, including related to breach notification and incident response.
Any actual or alleged violation of the FCPA or other applicable anti-bribery, anti-corruption or anti-money laundering laws could result in whistleblower complaints, sanctions, settlements, prosecution, enforcement actions, fines, damages, adverse media coverage, investigations, loss of export privileges, severe criminal or civil sanctions, or suspension or debarment from U.S. government contracts, any of which would adversely affect our reputation, as well as our business, financial condition, results of operations and growth prospects.
As we increase our international sales and business operations, our risks under these laws are likely to increase. 47 Table of Contents Any actual or alleged violation of the FCPA or other applicable anti-bribery, anti-corruption or anti-money laundering laws could result in whistleblower complaints, sanctions, settlements, prosecution, enforcement actions, fines, damages, adverse media coverage, investigations, loss of export privileges, severe criminal or civil sanctions, or suspension or debarment from U.S. government contracts, any of which would adversely affect our reputation, as well as our business, financial condition, results of operations and growth prospects.
While we have procedures in place designed to ensure our compliance with Trade Controls, we cannot guarantee that these procedures will be successfully followed or keep pace with the ongoing regulatory changes, and failure to comply could subject us to both civil and criminal penalties, including substantial fines, disgorgement of profits, possible incarceration of responsible individuals for willful violations, possible loss of our export or import privileges, and reputational harm.
While we have procedures in place designed to comply with Trade Controls, we cannot guarantee that these procedures will be successfully followed or keep pace with the ongoing regulatory changes or that the relevant regulators shall apply the same interpretation, judgement and standards as we do, and failure to comply could subject us to both civil and criminal penalties, including substantial fines, disgorgement of profits, possible incarceration of responsible individuals for willful violations, possible loss of our export or import privileges, and reputational harm.
If we are unable to consummate acquisitions at our desired rate and at acceptable prices, and to enter into other strategic transactions and relationships that support our long-term strategy, our growth rate and the trading price of our common stock could be negatively affected. These transactions and relationships also subject us to certain risks.
“Risk Factors — If we are unable to consummate acquisitions at our desired rate and at acceptable prices, and to enter into other strategic transactions and relationships that support our long-term strategy, our growth rate and the trading price of our common stock could be negatively affected.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeThe lease for our research and development center expires in November 2027 with two extension options of five years each.
Biggest changeThe lease for our research and development center expires in November 2027 with two extension options of five years each. We also subscribe for co-working office spaces in St. Louis, Memphis, Sydney, Singapore and London . We lease all of our current facilities and do not own real estate property.
Louis, Memphis, Sydney, Singapore, London, Lisbon, and Jerusalem. We lease all of our current facilities and do not own real estate property. We believe that our current facilities are adequate to meet our current needs for the immediate future.
We believe that our current facilities are adequate to meet our current needs for the immediate future.
Removed
As the leased area in Bnei-Brak is expected to be available for our use commencing March 2023, we have secured a short term lease of approximately 3,860 square meters (approximately 41,549 square feet) of office space in Ramat Gan, Israel, that expires on March 2023. We also subscribe for co-working office spaces in St.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeWe may receive unfavorable preliminary or interim rulings in the course of litigation, and there can be no assurances that favorable final outcomes will be obtained. Item 4. Mine Safety Disclosures. Not applicable. 59 Table of Contents PART II
Biggest changeWe may receive unfavorable preliminary or interim rulings in the course of litigation, and there can be no assurances that favorable final outcomes will be obtained. Item 4. Mine Safety Disclosures. Not applicable. 62 Table of Contents PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeOther than the foregoing, there has been no material change in the expected use of the net proceeds from our IPO as described in the Prospectus. 61 Table of Contents Item 6. [Reserved]
Biggest changeOther than the foregoing, there has been no material change in the expected use of the net proceeds from our IPO as described in the Prospectus.
The comparisons reflected in the graph and table are not intended to forecast the future performance of our stock and may not be indicative of our future performance. 60 Table of Contents Use of Proceeds On July 23, 2021, we completed our IPO, in which we issued and sold 15,000,000 shares of our common stock at a price to the public of $10.00 per share.
The comparisons reflected in the graph and table are not intended to forecast the future performance of our stock and may not be indicative of our future performance. 63 Table of Contents Use of Proceeds On July 23, 2021, we completed our IPO, in which we issued and sold 15,000,000 shares of our common stock at a price to the public of $10.00 per share.
Recent Sales of Unregistered Securities; Purchases of Equity Securities by the Issuer or Affiliated Purchaser None. Performance Graph The following graph and table illustrate the total return from July 21, 2021 through December 31, 2022, for (i) our common stock, (ii) the Nasdaq Composite Index, and (iii) the Nasdaq Computer & Data Processing Index.
Recent Sales of Unregistered Securities; Purchases of Equity Securities by the Issuer or Affiliated Purchaser None. Performance Graph The following graph and table illustrate the total return from July 21, 2021 through December 31, 2023 for (i) our common stock, (ii) the Nasdaq Composite Index, and (iii) the Nasdaq Computer & Data Processing Index.
Holders As of February 22, 2023, there were 799 holders of record of our common stock. The number of record holders does not include persons who hold shares of our common stock in nominee or “street name” accounts through brokers.
Holders As of February 14, 2024, there were 1,248 holders of record of our common stock. The number of record holders does not include persons who hold shares of our common stock in nominee or “street name” accounts through brokers.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeThe period-to-period comparisons of our historical results are not necessarily indicative of the results that may be expected in the future. 69 Table of Contents Year Ended December 31, Period-over-Period Change 2022 2021 Dollar Percentage (in thousands, except percentages) Revenue: Enterprise, Education & Technology $ 120,190 $ 118,932 $ 1,258 1 % Media & Telecom 48,621 46,084 2,537 6 % Total revenue 168,811 165,016 3,795 2 % Cost of revenue 61,871 62,314 (443) (1) % Total gross profit 106,940 102,702 4,238 4 % Operating expenses: Research and development expenses 57,387 48,376 9,011 19 % Sales and marketing expenses 59,280 45,788 13,492 29 % General and administrative expenses 45,414 39,489 5,925 15 % Restructuring 1,238 — 1,238 Other operating expenses — 1,724 (1,724) Total operating expenses 163,319 135,377 27,942 21 % Loss from operations 56,379 32,675 23,704 73 % Financial expenses, net 4,248 20,106 (15,858) (79) % Loss before provision for income taxes 60,627 52,781 7,846 15 % Provision for income taxes 7,868 6,570 1,298 20 % Net loss $ 68,495 $ 59,351 $ 9,144 15 % Comparison of the Years Ended December 31, 2022 and 2021 Segments We currently manage and report operating results through two reportable segments. • Enterprise, Education & Technology (71% and 72% of revenue for the year ended December 31, 2022 and 2021, respectively): Our EE&T segment represents revenues from all of our products, industry solutions for education customers, and Media Services (except for M&T customers), as well as associated professional services for those offerings. • Media & Telecom (29% and 28% of revenue for the year ended December 31, 2022 and 2021, respectively): Our M&T segment primarily represents revenues from our TV Solution and Media Services sold to media and telecom customers.
Biggest changeYear Ended December 31, Period-over-Period Change 2023 2022 Dollar Percentage Revenue: (in thousands, except percentages) Enterprise, Education & Technology $ 125,154 $ 120,190 $ 4,964 4 % Media & Telecom $ 50,018 $ 48,621 $ 1,397 3 % Total revenue 175,172 168,811 6,361 4 % Cost of revenue 62,938 61,871 1,067 2 % Total gross profit 112,234 106,940 5,294 5 % Operating expenses: Research and development expenses 52,400 57,387 (4,987) (9) % Sales and marketing expenses 48,798 59,280 (10,482) (18) % General and administrative expenses 48,718 45,414 3,304 7 % Restructuring 973 1,238 (265) (21) % Total operating expenses 150,889 163,319 (12,430) (8) % Loss from operations 38,655 56,379 (17,724) (31) % Financial expenses (income), net (1,200) 4,248 (5,448) (128) % Loss before provision for income taxes 37,455 60,627 (23,172) (38) % Provision for income taxes 8,911 7,868 1,043 13 % Net loss $ 46,366 $ 68,495 $ (22,129) (32) % Comparison of the Years Ended December 31, 2023 and 2022 Segments We currently manage and report operating results through two reportable segments. • Enterprise, Education & Technology (71% of revenue for the year ended December 31, 2023 and 2022): Our EE&T segment represents revenues from all of our products, industry solutions for education customers, and Media Services (except for M&T customers), as well as associated professional services for those offerings. • Media & Telecom (29% of revenue for the year ended December 31, 2023 and 2022): Our M&T segment primarily represents revenues from our TV Solution and Media Services sold to media and telecom customers. 73 Table of Contents Enterprise, Education & Technology The following table presents our EE&T segment revenue and gross profit (loss) for the years indicated: Year Ended December 31, Period-over-Period Change 2023 2022 Dollar Percentage (in thousands, except percentages) Enterprise, Education & Technology revenue: Subscription $ 120,600 $ 113,551 $ 7,049 6 % Professional services 4,554 6,639 (2,085) (31) % Total Enterprise, Education & Technology revenue $ 125,154 $ 120,190 $ 4,964 4 % Total Enterprise, Education & Technology gross profit (loss): Subscription $ 95,168 $ 88,006 $ 7,162 8 % Professional services (3,544) (4,194) 650 15 % Total Enterprise, Education & Technology gross profit $ 91,624 $ 83,812 $ 7,812 9 % Enterprise, Education & Technology Revenue Total EE&T revenue increased by $5.0 million , or 4%, to $125.2 million for the year ended December 31, 2023, from $120.2 million for the year ended December 31, 2022.
Accordingly, we believe these are the most critical to aid in fully understanding and evaluating our financial condition and results of operations. See Note 2 to the audited consolidated financial statements included elsewhere in this Annual Report on Form 10-K for additional information regarding these and our other significant accounting policies.
Accordingly, we believe these are the most critical to aid in fully understanding and evaluating our financial condition and results of operations. See Note 2, Significant Accounting Policies, to the audited consolidated financial statements included elsewhere in this Annual Report on Form 10-K for additional information regarding these and our other significant accounting policies.
See Note 7 to the audited consolidated financial statements included elsewhere in this Annual Report on Form 10-K for additional information. (3) Consists of minimum purchase commitments mainly for our use of certain cloud and other services with third-party providers with a term of 12 months or longer.
See Note 7, Leases, to the audited consolidated financial statements included elsewhere in this Annual Report on Form 10-K for additional information. (3) Consists of minimum purchase commitments mainly for our use of certain cloud and other services with third-party providers with a term of 12 months or longer.
The Credit Agreement contains a number of covenants that, among other things and subject to certain exceptions, restrict our ability, and the ability of our subsidiaries, to: • create, issue, incur, assume, become liable in respect of or suffer to exist any debt or liens; • consummate any merger, consolidation or amalgamation, or liquidate, wind up or dissolve, or dispose of all or substantially all of our or their respective property or business; • dispose of property or, in the case of our subsidiaries, issue or sell any shares of such subsidiary’s capital stock; • repay, prepay, redeem, purchase, retire or defease subordinated debt; • declare or pay dividends or make certain other restricted payments; 75 Table of Contents • make certain investments; • enter into transactions with affiliates; • enter into new lines of business; and • make certain amendments to our or their respective organizational documents or certain material contracts.
The Credit Agreement contains a number of covenants that, among other things and subject to certain exceptions, restrict our ability, and the ability of our subsidiaries, to: • create, issue, incur, assume, become liable in respect of or suffer to exist any debt or liens; • consummate any merger, consolidation or amalgamation, or liquidate, wind up or dissolve, or dispose of all or substantially all of our or their respective property or business; • dispose of property or, in the case of our subsidiaries, issue or sell any shares of such subsidiary’s capital stock; • repay, prepay, redeem, purchase, retire or defease subordinated debt; • declare or pay dividends or make certain other restricted payments; • make certain investments; • enter into transactions with affiliates; • enter into new lines of business; and • make certain amendments to our or their respective organizational documents or certain material contracts.
The amount available for borrowing under the Revolving Credit Facility is limited to a borrowing base, which is equal to the product of (a) 800% (which will automatically reduce to 350% on the date the Term Loan Facility is repaid in full), multiplied by (b) monthly Recurring Revenue for the most recently ended monthly period, multiplied by (c) the Retention Rate (in each case, as defined in the Credit Agreement).
The amount available for borrowing under the Revolving Credit Facility is limited to a borrowing base, which is equal to the product of (a) 500% (which will automatically reduce to 350% on the date the Term Loan Facility is repaid in full), multiplied by (b) monthly Recurring Revenue for the most recently ended monthly period, multiplied by (c) the Retention Rate (in each case, as defined in the Credit Agreement).
Additionally, a higher proportion of revenue comes from customers who choose to license our offerings through private cloud and on-premise deployments, which also impacts our gross margin. Reflected below is a summary of reportable segment revenue and reportable segment gross profit for the years ended December 31, 2022, 2021 and 2020.
Additionally, a higher proportion of revenue comes from customers who choose to license our offerings through private cloud and on-premise deployments, which also impacts our gross margin. Reflected below is a summary of reportable segment revenue and reportable segment gross profit for the years ended December 31, 2023, 2022 and 2021.
Increasing Revenue from Existing Customers We are focused on increasing sales within our existing customer base through increased usage of our platform and the cross-selling of additional products and solutions. For the year ended December 31, 2022, our Net Dollar Retention Rate was 100%.
Increasing Revenue from Existing Customers We are focused on increasing sales within our existing customer base through increased usage of our platform and the cross-selling of additional products and solutions. For the year ended December 31, 2023, our Net Dollar Retention Rate was 100%.
All voluntary prepayments (other than ABR loans borrowed under the Revolving Credit Facility) must be accompanied by accrued and unpaid interest on the principal amount being prepaid and customary “breakage” costs, if any, with respect to prepayments of Eurodollar loans.
All voluntary prepayments (other than ABR loans borrowed under the Revolving Credit Facility) must be accompanied by accrued and unpaid interest on the principal amount being prepaid and customary “breakage” costs, if any, with respect to prepayments of SOFR loans.
The 2023 Reorganization Plan's main objectives are to position the Company for lower demand, spend, and available budgets across our market segments, align our business strategy in light of these market conditions and support our growth initiatives and return path to profitability.
The 2023 Reorganization Plan's main objectives were to position the Company for lower demand, spend, and available budgets across our market segments, align our business strategy in light of these market conditions and support our growth initiatives and return path to profitability.
In addition, the lenders under the Credit Facilities will be permitted to accelerate all outstanding borrowings and other obligations, terminate outstanding commitments and exercise other specified remedies upon the occurrence of certain events of default (subject to certain grace periods and exceptions), which include, among other things, payment defaults, breaches of representations and warranties, covenant defaults, certain cross-defaults and cross-accelerations to other indebtedness, certain events of bankruptcy and insolvency, certain judgments and Change of Control events.
In addition, the lenders under the Credit Facilities will be permitted to accelerate all outstanding borrowings and other obligations, terminate outstanding commitments and exercise other specified remedies upon the occurrence of certain events of default (subject to certain grace periods and exceptions), which include, among other things, payment defaults, breaches of representations and warranties, covenant defaults, certain cross-defaults and cross-accelerations to other indebtedness, certain events of bankruptcy and insolvency, certain judgments and Change of Control events (as defined in the Credit Agreement).
(d) Other operating expenses in the year ended December 31, 2021 consisted of expenses related to the forgiveness of loans to certain of our directors and executive officers in connection with the public filing of the registration statement in connection with our initial public offering.
(c) Other operating expenses in the year ended December 31, 2021 consisted of expenses related to the forgiveness of loans to certain of our directors and executive officers in connection with the public filing of the registration statement in connection with our initial public offering.
This section of our Annual Report on Form 10-K discusses our financial condition and results of operations for the fiscal years ended December 31, 2022 and 2021, and year-to-year comparisons between fiscal 2022 and fiscal 2021.
This section of our Annual Report on Form 10-K discusses our financial condition and results of operations for the fiscal years ended December 31, 2023 and 2022, and year-to-year comparisons between fiscal 2023 and fiscal 2022.
These segments share a common underlying platform consisting of our API-based architecture, as well as unified product development, operations, and administrative resources. • Enterprise, Education & Technology : Includes revenue from all of our products, industry solutions for education customers, and Media Services (except for Media and Telecom customers), as well as associated professional services for those offerings.
These segments share a common underlying platform consisting of our API-based architecture, as well as unified product development, operations, and administrative resources. 65 Table of Contents • Enterprise, Education & Technology : Includes revenue from all of our products, industry solutions for education customers, and Media Services (except for Media and Telecom customers), as well as associated professional services for those offerings.
If the SSP is not observable through past transactions, we estimate the SSP taking into account available information, including, but not limited to, pricing practices, market conditions, and the economic life of the software. 78 Table of Contents Income Taxes We are subject to income taxes in Israel, the U.S., and other foreign jurisdictions.
If the SSP is not observable through past transactions, we estimate the SSP taking into account available information, including, but not limited to, pricing practices, market conditions, and the economic life of the software. Income Taxes We are subject to income taxes in Israel, the U.S., and other foreign jurisdictions.
Our effective tax rate is affected by tax rates in foreign jurisdictions and the relative amounts of income we earn in those jurisdictions, as well as non-deductible expenses, such as share-based compensation, and changes in our valuation allowance. Results of Operations The following table summarizes key components of our results of operations.
Our effective tax rate is affected by tax rates in foreign jurisdictions and the relative amounts of income we earn in those jurisdictions, as well as non-deductible expenses, such as share-based compensation, and changes in our valuation allowance. Results of Operations The following table summarizes key components of our results of operations for the periods presented.
The 2022 Restructuring Plan included, among other things, a workforce reduction of approximately 10% of our employees. In connection with the 2022 Restructuring Plan, during the year ended December 31, 2022, we recorded expenses of $1,238, all for one-time employee termination benefits. The 2022 Restructuring Plan was substantially completed in 2022.
The 2022 Restructuring Plan included, among other things, a workforce reduction of approximately 10% of our employees. In connection with the 2022 Restructuring Plan, during the year ended December 31, 2022, we recorded expenses of $1.2 million, all for one-time employee termination benefits. The 2022 Restructuring Plan was substantially completed in 2022.
We believe this will enable us to efficiently acquire smaller customers across all industries – beyond enterprises into SMEs, beyond universities into K-12 schools, beyond tier 1 media and telecom companies to tier 2 and 3 media and telecom companies, and beyond providing Media Services to large technology companies to also addressing smaller technology firms and startups.
We believe this will enable us to efficiently acquire smaller customers across all industries over time – expanding beyond enterprises into SMEs, beyond universities into K-12 schools, beyond tier 1 media and telecom companies to tier 2 and 3 media and telecom companies, and beyond providing Media Services to large technology companies to also addressing smaller technology firms and startups.
We were in compliance with these covenants as of December 31, 2022. The Credit Agreement also contains certain customary representations and warranties and affirmative covenants, and certain reporting obligations.
We were in compliance with these covenants as of December 31, 2023. The Credit Agreement also contains certain customary representations and warranties and affirmative covenants, and certain reporting obligations.
Revenue from post-contract services ("PCS") included in On-Prem deals is recognized ratably over the period of the PCS. 67 Table of Contents Professional Services Our revenue also includes professional services, which consist of consulting, integration and customization services, technical solution services and training related to our video experience.
Revenue from post-contract services ("PCS") included in On-Prem deals is recognized ratably over the period of the PCS. Professional Services Our revenue also includes professional services, which consist of consulting, integration and customization services, technical solution services and training related to our video experience.
Due to cumulative losses, we maintain a valuation allowance against our deferred tax assets. We consider all available evidence, both positive and negative, in assessing the extent to which a valuation allowance should be applied against our deferred tax assets. Realization of our U.S. deferred tax assets depends upon future earnings, the timing and amount of which are uncertain.
We consider all available evidence, both positive and negative, in assessing the extent to which a valuation allowance should be applied against our deferred tax assets. Realization of our U.S. deferred tax assets depends upon future earnings, the timing and amount of which are uncertain.
As such, the implementation and professional services costs relating to an arrangement with a new customer are more significant than the costs to renew an existing customer’s license and support arrangement. Cost of revenue decreased in absolute dollars from the year ended December 31, 2021 to the year ended December 31, 2022.
As such, the implementation and professional services costs relating to an arrangement with a new customer are more significant than the costs to renew an existing customer’s license and support arrangement. Cost of revenue increased in absolute dollars from the year ended December 31, 2022 to the year ended December 31, 2023.
Billing is primarily done on an annual basis. • Media & Telecom : Includes revenue from our Cloud TV, Streaming Platform, and Media Services for media and telecom customers, as well as associated professional services for those offerings. Revenues are generated on a per end-subscriber basis for telecom customers, and on a per video play basis for media customers.
Billing is primarily done on an annual basis. • Media & Telecom : Includes revenue from our TV Solution and Media Services for media and telecom customers, as well as associated professional services for those offerings. Revenues are generated on a per end-subscriber basis for telecom customers, and on a per video play basis for media customers.
We also grew our Annualized Recurring Revenue (as defined below), by 6% in the three months ended December 31, 2022, compared to the three months ended December 31, 2021, demonstrating our ability to land new customers with higher spending levels and increase revenue from our existing customers.
We also grew our Annualized Recurring Revenue (as defined below), by 3% in the three months ended December 31, 2023, compared to the three months ended December 31, 2022, demonstrating our ability to land new customers with higher spending levels and increase revenue from our existing customers.
We expect that our cost of revenue and operating expenses will fluctuate over time. 64 Table of Contents Key Financial and Operating Metrics We measure our business using both financial and operating metrics.
We expect that our cost of revenue and operating expenses will fluctuate over time. Key Financial and Operating Metrics We measure our business using both financial and operating metrics.
Subscription revenues are primarily generated on a per full-time equivalent basis for on-demand and live products and solutions, per host basis for real-time-conferencing products and solutions, and per participant basis for the Hybrid and Virtual Events product (which intersects on-demand, live, and real-time-conferencing video). Contracts are generally 12 to 36 months in length.
Subscription revenues are primarily generated on a per full-time equivalent basis for on-demand and live products and solutions, per host basis for real-time-conferencing products and solutions, and per participant basis for Events product (which intersects on-demand, live, and real-time-conferencing video). Contracts are generally 12 to 24 months in length.
Our future capital requirements will depend on many factors, including our revenue growth, the timing and extent of investments to support such growth, the expansion of sales and marketing activities, increases in general and administrative costs and many other factors as described under Part I, Item 1A.
Our future capital requirements will depend on many factors, including our revenue growth, the timing and extent of investments to support such growth, the expansion of sales and marketing activities, increases in general and administrative costs and many other factors as described under Part I, Item 1A. “Risk Factors” and “—Key Factors Affecting Our Performance.
(e) Facility exit and transition costs for the year ended December 31, 2022 include losses from sale of fixed assets and other costs associated with moving to our temporary office in Israel (f) The year ended December 31, 2022, include one-time employee termination benefits incurred in connection with the 2022 Restructuring Plan.
(d) Facility exit and transition costs for the year ended December 31, 2023 include losses from sale of fixed assets and other costs associated with moving to our temporary office in Israel (e) The year ended December 31, 2023, includes employee termination benefits incurred in connection with the 2023 Reorganization Plan and the year ended December 31, 2022 includes employee termination benefits incurred in connection with the 2022 Restructuring Plan .
For our EE&T segment, gross margins for the years ended December 31, 2022, 2021 and 2020 were 70% (78% for subscription and (63)% for professional services), 71% (78% for subscription and (5)% for professional services) and 73% (81% for subscription and (33)% for professional services), respectively.
For our EE&T segment, gross margins for the years ended December 31, 2023, 2022 and 2021 were 73% (79% for subscription and (78)% for professional services), 70% (78% for subscription and (63)% for professional services) and 71% (78% for subscription and (5)% for professional services), respectively.
The total cost reduction from the downsizing in connection with the 2023 Reorganization Plan on an annualized basis is expected to be approximately $16 million. The 2023 Reorganization Plan is focused on realigning our operations to further increase efficiency and productivity, in reaction to the current macro-economic climate.
The total accumulated cost reduction from the downsizing in connection with the 2023 Reorganization Plan for 2023 and thereafter on a go-forward annualized basis is expected to be approximately $16 million. The 2023 Reorganization Plan focused on realigning our operations to further increase efficiency and productivity, in reaction to the current macro-economic climate.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations. You should read the following discussion and analysis of our financial condition and results of operations together with our consolidated financial statements and related notes included elsewhere in this Annual Report on Form 10-K.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations. The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and related notes appearing elsewhere in this Annual Report on Form 10-K.
Net cash used in investing activities of $49.8 million for the year ended December 31, 2022 was related to investment in available-for-sale marketable securities of $60.2 million, $4.8 million of capitalized internal use software, investment in restricted bank deposits of $2.6 million, and $1.2 million in capital expenditures, offset by sales and maturities of available-for-sale marketable securities of $19.0 million.
Net cash used in investing activities of $49.8 million for the year ended December 31, 2022 was related to investment in available-for-sale marketable securities of $60.2 million, $4.8 million of capitalized internal use software, investment in restricted bank deposits of $2.6 million, and $1.2 million in capital expenditures, offset by sales and maturities of available-for-sale marketable securities of $19.0 million. 80 Table of Contents Financing Activities Net cash flows provided by financing activities increased by $0.6 million for the year ended December 31, 2023 as compared to the year ended December 31, 2022.
The main drivers of net cash outflows that were derived from the changes in operating assets and liabilities were related to an increase in deferred revenue of $6.3 million and an aggregate increase in employees accruals, trade payables and accrued expenses and other liabilities of $10.0 million, partially offset by an addition to deferred contract acquisition costs of $18.1 million, an increase in trade receivables of $1.1 million and an increase in prepaid expenses and other assets of $2.3 million.
The main drivers of net cash outflows that were derived from the changes in operating assets and liabilities were related to an addition to deferred contract acquisition costs of $6.6 million, decrease in trade payables of $5.9 million and an aggregate decrease of $1.8 million in employees accruals, accrued expenses and other current liabilities, partially offset by a decrease in trade receivables of $5.5 million, increase in deferred revenue of $1.6 million, and an increase in prepaid expenses and other assets of $0.6 million.
Provision for Income Taxes Provision for income taxes increased by $1.3 million, or 20%, to $7.9 million for the year ended December 31, 2022, from $6.6 million for the year ended December 31, 2021, primarily due to increased tax liability related to income generated by our subsidiaries organized under the laws of Israel and the United Kingdom.
Provision for Income Taxes Provision for income taxes increased by $1.0 million, or 13%, to $8.9 million for the year ended December 31, 2023, from $7.9 million for the year ended December 31, 2022, primarily due to increased tax liability related to income generated by our subsidiaries organized under the laws of Israel and the United Kingdom.
For the years ended December 31, 2022 and 2021, our cost of revenue was $61,871 and $62,314, respectively.
For the years ended December 31, 2023 and 2022, our cost of revenue was $62,938 and $61,871, respectively.
These estimates, judgments and assumptions can affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the consolidated financial statements, and the reported amounts of revenue and expenses during the reporting periods. Actual results could differ from those estimates.
These estimates, judgments and assumptions can affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the consolidated financial statements, and the reported amounts of revenue and expenses during the reporting periods.
As of December 31, 2022, we had no balance outstanding under the Revolving Credit Facility and the total revolving commitment of $35.0 million is available for future borrowings.
As of December 31, 2023, we had no balance outstanding under the Revolving Credit Facility and the total revolving commitment of $25.0 million remains available for future borrowings.
A discussion of our financial condition and results of operations for the fiscal year ended December 31, 2020 and year-to-year comparisons between fiscal 2021 and fiscal 2020 can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2021, filed on February 25, 2022.
A discussion of our financial condition and results of operations for the fiscal year ended December 31, 2021 and year-to-year comparisons between fiscal 2022 and fiscal 2021 can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2022, filed on February 24, 2023 Overview Our mission is to power any video experience, for any organization.
We believe that the accounting policies described below require management’s most difficult, subjective or complex judgments. Judgments or uncertainties affecting the application of these policies may result in materially different amounts being reported under different conditions or using different assumptions.
Actual results could differ from those estimates. 81 Table of Contents We believe that the accounting policies described below require management’s most difficult, subjective or complex judgments. Judgments or uncertainties affecting the application of these policies may result in materially different amounts being reported under different conditions or using different assumptions.
The key financial and operating metrics we use are: Year Ended December 31, 2022 2021 2020 (in thousands) Annualized Recurring Revenue $ 159,238 $ 150,800 $ 116,643 Net Dollar Retention Rate 100 % 118 % 107 % Remaining Performance Obligations $ 171,660 $ 185,484 $ 140,955 Annualized Recurring Revenue We use Annualized Recurring Revenue ("ARR") as a measure of our revenue trend and an indicator of our future revenue opportunity from existing recurring customer contracts.
The key financial and operating metrics we use are: For the Year Ended December 31, 2023 2022 2021 (in thousands, except percentages) Annualized Recurring Revenue $ 164,723 $ 159,238 $ 150,800 Net Dollar Retention Rate 100 % 100 % 118 % Remaining Performance Obligations $ 185,305 $ 171,660 $ 185,484 67 Table of Contents Annualized Recurring Revenue We use Annualized Recurring Revenue ("ARR") as a measure of our revenue trend and an indicator of our future revenue opportunity from existing recurring customer contracts.
For our M&T segment, gross margins for the years ended December 31, 2022, 2021 and 2020 were 48% (63% for subscription and (13)% for professional services), 40% (56% for subscription and (19)% for professional services) and 36% (51% for subscription and (8)% for professional services), respectively.
For our M&T segment, gross margins for the years ended December 31, 2023, 2022 and 2021 were 41% (55% for subscription and (35)% for professional services), 48% (63% for subscription and (13)% for professional services) and 40% (56% for subscription and (19)% for professional services), respectively.
Restructuring Restructuring expenses were $1.2 million for the year ended December 31, 2022, due to the 2022 Restructuring Plan being implemented in the third quarter of 2022 and primarily consisting of employee severance and related costs.
Restructuring Restructuring expenses were $1.0 million for the year ended December 31, 2023 due to the 2023 Reorganization Plan being implemented in the first quarter of 2023 and consisting of employee severance and related costs.
We provide access to our platform either as a cloud-based service, which represent most of our SaaS and PaaS subscriptions, or, less commonly, as a term license to software installed on the customer's premises.
SaaS and PaaS subscriptions provide access to our Video Experience Cloud which powers all types of video experiences: live, real-time, and on-demand video. We provide access to our platform either as a cloud-based service, which represent most of our SaaS and PaaS subscriptions, or, less commonly, as a term license to software installed on the customer's premises.
Our products are used by leading brands across all industries, reaching millions of users, at home, at school and at work, for communication, collaboration, virtual and hybrid events, marketing, sales, customer care, learning, and entertainment experiences.
Our Video Experience Cloud is used by leading brands across all industries, reaching millions of users, at home, at school and at work, for communication, collaboration, marketing, sales, customer care, learning, and entertainment experiences.
As of December 31, 2022, our Remaining Performance Obligations was $171.7 million, which consists of both billed consideration in the amount of $61.1 million and unbilled consideration in the amount of $110.6 million that we expect to invoice and recognize in future periods.
As of December 31, 2023, our Remaining Performance Obligations was $185.3 million, which consists of both billed consideration in the amount of $62.7 million and unbilled consideration in the amount of $122.6 million that we expect to invoice and recognize in future periods.
Financial expenses, net also includes foreign exchange gains and losses and bank fees. We expect interest expenses to vary each reporting period depending on the amount of outstanding indebtedness and prevailing interest rates. We expect interest income will vary in each reporting period depending on our average cash and marketable securities balances during the period and applicable interest rates.
Financial expenses (income), net also includes foreign exchange gains and losses and bank fees. We expect interest expenses to vary each reporting period depending on the amount of outstanding indebtedness and prevailing interest rates.
The Credit Agreement also contains certain financial covenants that require us to maintain (i) a minimum amount of Annualized Recurring Revenue (as defined in the Credit Agreement) as of the last day of each fiscal quarter (which minimum amount increases through the fiscal quarter ending December 31, 2023) (the “ARR Covenant”), and (ii) Liquidity (as defined in the Credit Agreement) of at least $10 million as of the last day of any calendar month.
The Credit Agreement also contains certain financial covenants that require us to maintain (i) a minimum amount of Consolidated Adjusted EBITDA (as defined in the Credit Agreement) as of the last day of each fiscal quarter (which minimum amount increased through the fiscal quarter ended December 31, 2023) (the “Adjusted EBITDA Covenant”), and (ii) Liquidity (as defined in the Credit Agreement) of at least $20 million as of the last day of any calendar month.
Net cash used in operating activities of $22.1 million for the year ended December 31, 2021, was primarily due to $59.4 million in incremental net loss, adjusted for non-cash charges of $43.1 million, and net cash of $5.8 million due to changes in our operating assets and liabilities.
Net cash used in operating activities of $8.3 million for the year ended December 31, 2023, was primarily due to $46.4 million in incremental net loss, adjusted for non-cash charges of $45.3 million, and net cash of $6.6 million due to changes in our operating assets and liabilities.
For the Year Ended December 31, 2022 2021 2020 (in thousands) Revenue Enterprise, Education & Technology $ 120,190 $ 118,932 $ 80,449 Media & Telecom 48,621 46,084 39,991 Total Revenue $ 168,811 $ 165,016 $ 120,440 Gross Profit Enterprise, Education & Technology 83,812 84,196 58,539 Media & Telecom 23,128 18,506 14,236 Total Gross Profit $ 106,940 $ 102,702 $ 72,775 We employ a land and expand strategy with the aim of having our customers increase their usage of our offerings and/or purchase additional offerings over time.
For the Year Ended December 31, 2023 2022 2021 (in thousands) Revenue Enterprise, Education & Technology $ 125,154 $ 120,190 $ 118,932 Media & Telecom 50,018 48,621 46,084 Total Revenue $ 175,172 $ 168,811 $ 165,016 Gross Profit Enterprise, Education & Technology 91,624 83,812 84,196 Media & Telecom 20,610 23,128 18,506 Total Gross Profit $ 112,234 $ 106,940 $ 102,702 We employ a "land and expand" strategy with the aim of having our customers increase their usage of our offerings and/or purchase additional offerings over time.
(b) The year ended December 31, 2020 includes a $4.0 million one-time expense related to the abandonment of data center equipment in connection with our transition to public cloud infrastructure. (c) The year ended December 31, 2021 includes a gain on sale of data center equipment in connection with our transition to public cloud infrastructure.
(b) The year ended December 31, 2021 includes a gain on sale of data center equipment in connection with our transition to public cloud infrastructure.
Media & Telecom Gross Profit M&T gross profit increased by $4.6 million, or 25%, to $23.1 million for the year ended December 31, 2022, from $18.5 million for the year ended December 31, 2021.
Media & Telecom Gross Profit M&T gross profit decreased by $2.5 million, or 11%, to $20.6 million for the year ended December 31, 2023, from $23.1 million for the year ended December 31, 2022.
M&T subscription revenue increased by $2.8 million, or 8%, to $38.9 million for the year ended December 31, 2022, from $36.1 million for the year ended December 31, 2021. The increase is mainly attributable to a $0.5 million increase related to new customers, and a $2.3 million increase from existing customers.
The increase is mainly attributable to an increase in revenue from existing customers. M&T subscription revenue increased by $3.2 million, or 8%, to $42.2 million for the year ended December 31, 2023, from $38.9 million for the year ended December 31, 2022.
Subsequent costs incurred for the development of future upgrades and enhancements, which are expected to result in additional functionality, may qualify for capitalization under internal-use software and therefore may cause research and development expenses to fluctuate. 68 Table of Contents Sales and Marketing Expenses Our sales and marketing expenses consist primarily of personnel related costs for our sales and marketing functions, including salaries and other direct personnel-related costs.
Subsequent costs incurred for the development of future upgrades and enhancements, which are expected to result in additional functionality, may qualify for capitalization under internal-use software and therefore may cause research and development expenses to fluctuate.
The following table reconciles EBITDA and Adjusted EBITDA to the most directly comparable GAAP financial performance measure, which is net loss: 66 Table of Contents Year Ended December 31, 2022 2021 2020 Net loss $ (68,495) $ (59,351) $ (58,763) Financial expenses, net (a) 4,248 20,106 46,721 Provision for income taxes 7,868 6,570 3,553 Depreciation and amortization 2,707 2,412 3,708 EBITDA (53,672) (30,263) (4,781) Non-cash stock-based compensation expense 23,645 17,065 5,114 Abandonment costs (b) — — 3,969 Gain on sale of property and equipment (c) — (757) — Other operating expenses (d) — 1,724 — Facility exit and transition costs (e) 524 — — Restructuring (f) 1,238 — — Adjusted EBITDA $ (28,265) $ (12,231) $ 4,302 (a) The years ended December 31, 2022, 2021 and 2020 include $0, $15.0 million and $41.5 million , respectively, of remeasurement of warrants to fair value and $2.3 million, $3.0 million and $4.1 million, respectively, of interest expenses.
Nevertheless, because of the limitations described above, management does not view EBITDA, or Adjusted EBITDA in isolation and also uses other measures, such as revenue, operating loss, and net loss, to measure operating performance. 69 Table of Contents The following table reconciles EBITDA and Adjusted EBITDA to the most directly comparable GAAP financial performance measure, which is net loss: Year Ended December 31, 2023 2022 2021 (in thousands) Net loss $ (46,366) $ (68,495) $ (59,351) Financial expenses (income), net (a) (1,200) 4,248 20,106 Provision for income taxes 8,911 7,868 6,570 Depreciation and amortization 4,717 2,707 2,412 EBITDA (33,938) (53,672) (30,263) Non-cash stock-based compensation expense 29,980 23,645 17,065 Gain on sale of property and equipment (b) — — (757) Other operating expenses (c) — — 1,724 Facility exit and transition costs (d) 154 524 — Restructuring (e) 973 1,238 — War related costs (f) 331 — — Adjusted EBITDA $ (2,500) $ (28,265) $ (12,231) (a) The year ended December 31, 2021 includes $15.0 million of remeasurement of warrants to fair value and $3.2 million, $2.3 million and $3.0 million, respectively, of interest expenses.
Investing Activities Net cash flows used in investing activities increased by $44.5 million for the year ended December 31, 2022 as compared to the year ended December 31, 2021.
Investing Activities Net cash flows used in investing activities decreased by $48.2 million to $1.6 million for the year ended December 31, 2023 as compared to the year ended December 31, 2022.
General and Administrative Expenses Our general and administrative expenses consist primarily of personnel-related costs for our executive, finance, human resources, information technology, and legal functions, including salaries and other direct personnel-related costs.
We expect our sales and marketing expenses to be relatively stable on an absolute dollar basis. General and Administrative Expenses Our general and administrative expenses consist primarily of personnel-related costs for our executive, finance, human resources, information technology, and legal functions, including salaries and other direct personnel-related costs.
Obligations under contracts that we can cancel without a significant penalty are not included in the table above. We reported other liabilities of $5.3 million in our consolidated balance sheet at December 31, 2022, which principally consists of unrecognized tax benefits (see Note 11 to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K).
Obligations under contracts that we can cancel without a significant penalty are not included in the table above. We reported other liabilities of $7.1 million in our consolidated balance sheet at December 31, 2023, which principally consists of unrecognized tax benefits.
If we are unable to raise additional funds when desired, our business, financial condition and results of operations could be adversely affected. 74 Table of Contents Credit Facilities In January 2021, we entered into a new credit agreement (as amended, the “Credit Agreement”) with one of our existing lenders, which provides for a new senior secured term loan facility in the aggregate principal amount of $40.0 million (the “Term Loan Facility”) and a new senior secured revolving credit facility in the aggregate principal amount of $10.0 million (the “Revolving Credit Facility” and, together with the Term Loan Facility, the “Credit Facilities”).
Credit Facilities In January 2021, we entered into a new credit agreement (as amended, the “Credit Agreement”) with one of our existing lenders, which provides for a new senior secured term loan facility in the aggregate principal amount of $40.0 million (the “Term Loan Facility”) and a new senior secured revolving credit facility in the aggregate principal amount of $10.0 million (the “Revolving Credit Facility” and, together with the Term Loan Facility, the “Credit Facilities”), which thereafter were extended and amended to align our business needs and other developments.
M&T professional services gross loss decreased by $0.6 million, or 34%, to a gross loss of $1.2 million for the year ended December 31, 2022, from a gross loss of $1.9 million for the year ended December 31, 2021.
EE&T professional services gross loss decreased by $0.7 million, or 15%, to $3.5 million for the year ended December 31, 2023, from a gross loss of $4.2 million for the year ended December 31, 2022 .
The decrease is mainly due to fewer large-scale virtual events of the type that typically require substantial professional services. Enterprise, Education & Technology Gross Profit EE&T subscription gross profit increased by $3.3 million, or 4%, to $88.0 million for the year ended December 31, 2022, from $84.7 million for the year ended December 31, 2021.
EE&T professional services revenue decreased by $2.1 million, or 31%, to $4.6 million for the year ended December 31, 2023, from $6.6 million for the year ended December 31, 2022. The decrease is mainly due to fewer large-scale virtual events of the type that typically require substantial professional services.
In particular, the widespread pandemic related to COVID-19 and its variants, the ongoing conflict between Russia and Ukraine and rising inflation and interest rates have resulted in, and may continue to result in, significant disruption of global financial markets, reducing our ability to access capital.
In particular, the current global economic volatility, rising inflation and interest rates, price increases, decrease in our customers' spend or available budget, and the ongoing conflict between Russia and Ukraine, have resulted in, and may continue to result in, significant disruption of global financial markets, reducing our ability to access capital.
Adjusted EBITDA is defined as EBITDA (as defined above), adjusted for the impact of certain non-cash and other items that we believe are not indicative of our core operating performance, such as non-cash stock-based compensation expenses, abandonment costs, gain from sale of property and equipment, facility exit and transition costs, restructuring charges and other non-recurring operating expenses.
Adjusted EBITDA is defined as EBITDA (as defined above), adjusted for the impact of certain non-cash and other items that we believe are not indicative of our core operating performance, such as non-cash stock-based compensation expenses, gain from sale of property and equipment, facility exit and transition costs, restructuring charges and other non-recurring operating expenses. 68 Table of Contents Adjusted EBITDA is a supplemental measure of our performance, is not defined by or presented in accordance with GAAP, and should not be considered in isolation or as an alternative to net profit (loss) or any other performance measure prepared in accordance with GAAP.
Borrowings under the Credit Facilities are subject to interest, determined as follows: (a) Eurodollar loans accrue interest at a rate per annum equal to the Eurodollar rate determined for such day plus a margin of 3.50% (the Eurodollar rate is calculated as described in the Credit Agreement, subject to a 1.00% floor, divided by 1.00 minus the maximum effective reserve percentage for Eurocurrency funding), and (b) Alternate Base Rate (“ABR”) loans accrue interest at a rate per annum equal to the ABR plus a margin of 2.50% (ABR is equal to the highest of (i) the prime rate and (ii) the Federal Funds Effective Rate plus 0.50%, subject to a 2.00% floor).
Borrowings under the Credit Facilities bear interest, determined as follows: (a) SOFR loans accrue interest at a rate per annum equal to Term SOFR (as defined in the Credit Agreement) plus 0.10% per annum plus a margin of 2.50% (the Adjusted Term SOFR (as defined in the Credit Agreement) is subject to a 1.00% floor), and (b) ABR loans accrue interest at a rate per annum equal to the ABR plus a margin of 1.50% (ABR is equal to the highest of (i) the prime rate and (ii) the Federal Funds Effective Rate plus 0.50%, subject to a 2.00% floor).
Cash Flows The following table summarizes our cash flows for the periods presented: Year Ended December 31, 2022 2021 (in thousands) Net cash used in operating activities $ (46,828) $ (22,110) Net cash used in investing activities (49,757) (5,242) Net cash provided by (used in) financing activities (529) 143,368 Effect of exchange rate changes on cash, cash equivalents and restricted cash (1,424) — Net increase in cash, cash equivalents, and restricted cash (98,538) 116,016 Cash, cash equivalents, and restricted cash at beginning of period 144,371 28,355 Cash, cash equivalents and restricted cash at end of period $ 45,833 $ 144,371 76 Table of Contents Operating Activities Net cash flows used in operating activities increased by $24.7 million for the year ended December 31, 2022, as compared to the year ended December 31, 2021.
As of December 31, 2023, we had approximately $34.7 million of borrowings outstanding under the Term Loan Facility. 79 Table of Contents Cash Flows The following table summarizes our cash flows for the periods presented: Year Ended December 31, 2023 2022 (in thousands) Net cash used in operating activities $ (8,303) $ (46,828) Net cash used in investing activities (1,583) (49,757) Net cash provided by (used in) financing activities 109 (529) Effect of exchange rate changes on cash, cash equivalents and restricted cash 728 (1,424) Net increase in cash, cash equivalents, and restricted cash (9,049) (98,538) Cash, cash equivalents, and restricted cash at beginning of period 45,833 144,371 Cash, cash equivalents and restricted cash at end of period $ 36,784 $ 45,833 Operating Activities Net cash flows used in operating activities decreased by $38.5 million for the year ended December 31, 2023, as compared to the year ended December 31, 2022.
Non-cash charges primarily consisted of remeasurement of warrants to fair value of $15.0 million, depreciation and amortization of $2.4 million, stock-based compensation expenses of $17.1 million and amortization of deferred contract acquisitions and fulfillment costs of $8.1 million.
Non-cash charges primarily consisted of depreciation and amortization of $4.7 million, stock-based compensation expenses of $30.0 million and amortization of deferred contract acquisitions and fulfillment costs of $11.7 million.
Contractual Obligations and Commitments The following table summarizes our contractual obligations and commitments as of December 31, 2022: 77 Table of Contents Payments Due by Period Less than 1 year 1-3 years More than 3 years (in thousands) Debt obligations 1 $ 8,808 $ 30,226 $ — Operating lease obligations 2 3,206 9,569 14,191 Purchase obligations 3 13,427 41,895 — Total $ 25,441 $ 81,690 $ 14,191 (1) Represents borrowings outstanding under our Term Loan Facility as of December 31, 2022, together with estimated interest payments thereon based on the interest rates in effect for such indebtedness as of December 31, 2022.
Contractual Obligations and Commitments The following table summarizes our contractual obligations and commitments as of December 31, 2023: Payments Due by Period (in thousands) Less than 1 year 1-3 years More than 3 years Debt obligations 1 $ 4,719 $ 37,306 $ — Operating lease obligations 2 3,062 9,049 11,459 Purchase obligations 3 31,313 55,216 — Total $ 39,094 $ 101,571 $ 11,459 (1) Represents borrowings outstanding under our Term Loan Facility as of December 31, 2023, together with estimated interest payments thereon based on the interest rates in effect for such indebtedness as of December 31, 2023.
Net cash used in investing activities of $5.2 million for the year ended December 31, 2021 was related to $4.0 million of capitalized internal use software, $1.9 million in capital expenditures, and $0.1 million in purchases of intangible assets, partially offset by proceeds of $0.8 million from the sale of property and equipment.
Net cash used in investing activities of $1.6 million for the year ended December 31, 2023 was related to investment in available-for-sale marketable securities of $47.7 million, $2.6 million in capital expenditures, $1.5 million of capitalized internal use software and investment in restricted bank deposits of $1.8 million, partially offset by maturities of available-for-sale marketable securities of $52.0 million.
GAAP requires management to make estimates, judgments and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Our management believes that the estimates, judgment and assumptions used are reasonable based upon information available at the time they are made.
Our management believes that the estimates, judgment and assumptions used are reasonable based upon information available at the time they are made.
We expect our research and development expenses to decrease in both absolute dollars and as a percentage of revenue for the near and medium-term, as we implement our Reorganization Plans, improving efficiency and productivity while further dedicating substantial resources to develop, improve, and expand the functionality of our solutions.
We expect our research and development expenses to remain constant as a percentage of revenue for the near and medium-term, as we continue to dedicate substantial resources to develop, improve, and expand the functionality of our solutions.
Our principal sources of liquidity are expected to be our cash on hand and borrowings available under our Revolving Credit Facility. During December 2021, we repaid in full the outstanding principal balance under our Revolving Credit Facility.
Our principal sources of liquidity are expected to be our cash on hand and borrowings available under our Revolving Credit Facility. As of December 31, 2023, we had no balance outstanding under the Revolving Credit Facility and the total revolving commitment of $25.0 million is available for future borrowings.
Recent Accounting Pronouncements Please see Note 2 to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for information regarding recent accounting pronouncements. Jumpstart Our Business Startups Act of 2012 Under the JOBS Act, an “emerging growth company” can take advantage of an extended transition period for complying with new or revised accounting standards.
Jumpstart Our Business Startups Act of 2012 Under the JOBS Act, an “emerging growth company” can take advantage of an extended transition period for complying with new or revised accounting standards.
This increase was mainly due to a $2.5 million increase in revenue, and a 8 percentage point increase in gross margin to 48% for the year ended December 31, 2022 from 40% for the year ended December 31, 2021.
This decrease was mainly due to a decrease in gross margin to 41% for the year ended December 31, 2023 from 48% for the year ended December 31, 2022. The decrease in gross margin was attributable primarily to an increase in production cost as a percentage of subscription revenue partially offset by a $2.5 million increase in revenue.
EE&T subscription revenue increased by $4.7 million or 4%, to $113.6 million for the year ended December 31, 2022, from $108.8 million for the year ended December 31, 2021. EE&T professional services revenue decreased by $3.5 million, or 34%, to $6.6 million for the year ended December 31, 2022, from $10.1 million for the year ended December 31, 2021.
M&T professional services revenue decreased by $1.8 million, or 19%, to $7.9 million for the year ended December 31, 2023, from $9.7 million for the year ended December 31, 2022.
The Term Loan Facility is payable in consecutive quarterly installments on the last day of each fiscal quarter in an amount equal to (x) $250,000 for installments payable on March 31, 2021 through December 31, 2021, (y) $750,000 for installments payable on March 31, 2022 through December 31, 2022, and (z) $1.5 million for installments payable on and after March 31, 2023.
The Term Loan Facility is payable in consecutive quarterly installments on the last day of each fiscal quarter in an amount equal to (i) $437,500 for installments payable on December 31, 2023 (deferred to January 9, 2024), through September 30, 2024, (ii) $$656,250 for installments payable on December 31, 2024 through September 30, 2025, and (iii) $1,312,500 for installments payable on and after December 31, 2025.
We allocate overhead costs such as rent, utilities, and supplies to all departments based on relative headcount to each operating expense category.
We allocate overhead costs such as rent, utilities, and supplies to all departments based on relative headcount to each operating expense category. Financial Expenses (Income), Net Financial expenses (income), net consists of interest expense accrued or paid on our indebtedness, net of interest income earned on our cash balances and marketable securities.
Media & Telecom The following table presents our M&T segment revenue and gross profit for the periods indicated: Year Ended December 31, Period-over-Period Change 2022 2021 Dollar Percentage (in thousands, except percentages) Media & Telecom revenue: Subscription $ 38,929 $ 36,124 $ 2,805 8 % Professional services 9,692 9,960 (268) (3) % Total Media & Telecom revenue $ 48,621 $ 46,084 $ 2,537 6 % Media & Telecom gross profit (loss): Subscription $ 24,375 $ 20,398 $ 3,977 19 % Professional services (1,247) (1,892) 645 (34) % Total Media & Telecom gross profit $ 23,128 $ 18,506 $ 4,622 25 % 71 Table of Contents Media & Telecom Revenue M&T revenue increased by $2.5 million, or 6%, to $48.6 million for the year ended December 31, 2022, from $46.1 million for the year ended December 31, 2021.
This decrease was mainly due to a $2.1 million decrease in professional services revenue offset by lower compensation costs mainly as a result of our Reorganization Plans. 74 Table of Contents Media & Telecom The following table presents our M&T segment revenue and gross profit for the periods indicated: Year Ended December 31, Period-over-Period Change 2023 2022 Dollar Percentage (in thousands, except percentages) Media & Telecom revenue: Subscription $ 42,150 $ 38,929 $ 3,221 8 % Professional services 7,868 9,692 (1,824) (19) % Total Media & Telecom revenue $ 50,018 $ 48,621 $ 1,397 3 % Media & Telecom gross profit (loss): Subscription $ 23,358 $ 24,375 $ (1,017) (4) % Professional services (2,748) (1,247) (1,501) 120 % Total Media & Telecom gross profit $ 20,610 $ 23,128 $ (2,518) (11) % Media & Telecom Revenue M&T revenue increased by $1.4 million, or 3%, for the year ended December 31, 2023, from $48.6 million for the year ended December 31, 2022.
We expect to recognize 60% of our Remaining Performance Obligations as revenue over the next 12 months and the remainder thereafter, in each case, in accordance with our revenue recognition policy. 65 Table of Contents Non-GAAP Financial Measures In addition to our results determined in accordance with GAAP, we believe that Adjusted EBITDA, a non-GAAP financial measure, is useful in evaluating the performance of our business.
We expect to recognize 59% of our Remaining Performance Obligations as revenue over the next 12 months and the remainder thereafter, in each case, in accordance with our revenue recognition policy.
Operating Expenses Research and Development expenses Year Ended December 31, Period-over-Period Change 2022 2021 Dollar Percentage (in thousands, except percentages) Employee compensation $ 43,101 $ 38,981 $ 4,120 11 % Subcontractors and consultants 5,537 3,972 1,565 39 % IT related 5,766 3,273 2,493 76 % Other 2,983 2,150 833 39 % Total research and development expenses $ 57,387 $ 48,376 $ 9,011 19 % Research and development expenses increased by $9.0 million, or 19%, to $57.4 million for the year ended December 31, 2022, from $48.4 million for the year ended December 31, 2021.
M&T professional services gross loss increased by $1.5 million, or 120%, to a gross loss of $2.7 million for the year ended December 31, 2023, from a gross loss of $1.2 million for the year ended December 31, 2022. 75 Table of Contents Operating Expenses Research and Development Expenses Year Ended December 31, Period-over-Period Change 2023 2022 Dollar Percentage (in thousands, except percentages) Employee compensation $ 36,748 $ 43,101 $ (6,353) (15) % Subcontractors and consultants 6,633 5,537 1,096 20 % IT related 5,806 5,766 40 1 % Other 3,213 2,983 230 8 % Total research and development expenses $ 52,400 $ 57,387 $ (4,987) (9) % Research and development expenses decreased by $5.0 million, or 9%, to $52.4 million for the year ended December 31, 2023, from $57.4 million for the year ended December 31, 2022.
Our obligations under the Credit Facilities are currently guaranteed by Kaltura Europe Limited, and are required to be guaranteed by all of our future direct and indirect subsidiaries other than certain excluded subsidiaries and immaterial foreign subsidiaries.
The remaining unpaid balance on the Term Loan Facility is due and payable on December 21, 2026, together with accrued and unpaid interest on the principal amount to be paid to, but excluding, the payment date. 78 Table of Contents Our obligations under the Credit Facilities are currently guaranteed by Kaltura Europe Limited, and are required to be guaranteed by all of our future direct and indirect subsidiaries other than certain excluded subsidiaries and immaterial foreign subsidiaries.
This increase was mainly due to a $4.7 million increase in revenue, partially offset by a $1.4 million increase in production costs. EE&T professional services gross loss increased by $3.7 million, or 730%, to $4.2 million for the year ended December 31, 2022, from a gross loss of $0.5 million for the year ended December 31, 2021 .
EE&T subscription gross profit increased by $7.2 million, or 8%, to $95.2 million for the year ended December 31, 2023, from $88.0 million for the year ended December 31, 2022. This increase was mainly due to a $7.0 million increase in revenue while costs associated with subscription remained at the same level as in the year ended December 31, 2022.
In 2021 and 2022 we expanded the capabilities of our Virtual & Hybrid Events product to support a broader range of event types and use cases and fitted them to also address low-touch and self-serve sales. We believe these products present a significant long-term opportunity, and we intend to harness our growing presence with them.
Since then, we expanded the capabilities of our Virtual & Hybrid Events product to support a broader range of event types and use cases, fitted them to also address low-touch and self-serve sales and introduced a set of GenAI powered capabilities that increase the productivity in creating content and setting up events and also foster user engagement.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

8 edited+1 added−0 removed3 unchanged
Biggest changeTo reduce the impact of foreign currency exchange risks associated with forecasted future cash flows and certain existing assets and liabilities and the volatility in our consolidated statements of operations, we established a hedging program, starting March 2022. Currently, our hedging activity relates to U.S. dollar/NIS exchange rate exposure.
Biggest changeFurthermore, we anticipate that a significant portion of our expenses will continue to be denominated in NIS as well as that a significant portion of our revenue will continue to be denominated in Euros. 82 Table of Contents To reduce the impact of foreign currency exchange risks associated with forecasted future cash flows and certain existing assets and liabilities and the volatility in our consolidated statements of operations, we established a hedging program in March 2022.
However, if our costs were to become subject to significant inflationary pressures, we may not be able to fully offset higher costs through price increases or other corrective measures, and our inability or failure to do so could adversely affect our business, financial condition, and results of operations.
However, if our costs were to become subject to significant inflationary pressures, we may not be able to fully offset higher costs through price increases or other corrective measures, and our inability or failure to do so could adversely affect our business, financial condition, and results of operations. 83 Table of Contents
A hypothetical 10% change in interest rates during the periods presented would have resulted in a change to interest expense of $0.2 million for the year ended December 31, 2022.
A hypothetical 10% change in interest rates during the periods presented would have resulted in a change to interest expense of $0.3 million for the year ended December 31, 2023.
We do not intend to enter into derivative instruments for trading or speculative purposes. We account for our derivative instruments as either assets or liabilities and carry them at fair value in the consolidated balance sheets. The accounting for changes in the fair value of the derivative depends on the intended use of the derivative and the resulting designation.
Currently, our hedging activity relates to U.S. dollar/NIS exchange rate exposure. We do not intend to enter into derivative instruments for trading or speculative purposes. We account for our derivative instruments as either assets or liabilities and carry them at fair value in the consolidated balance sheets.
Accordingly, fluctuations in market interest rates may increase or decrease our interest expense which will, in turn, increase or decrease our net income and cash flow. We seek to manage exposure to adverse interest rate changes through our normal operating and financing activities. At this time, we do not use derivative instruments to mitigate our interest rate risk.
We seek to manage exposure to adverse interest rate changes through our normal operating and financing activities. At this time, we do not use derivative instruments to mitigate our interest rate risk.
A hypothetical 10% change in foreign currency exchange rates applicable to our business would have had an impact on our results for the year ended December 31, 2022, of $2.6 million due to NIS (after considering cash-flow hedges) and $3.5 million due to Euros. 79 Table of Contents Interest Rate Risk As of December 31, 2022, we had outstanding floating rate debt obligations of $35.8 million (consisting of the outstanding principal balance under our credit facilities).
A hypothetical 10% change in foreign currency exchange rates applicable to our business would have had an impact on our results for the year ended December 31, 2023, of $2.7 million due to NIS (after considering cash-flow hedges) and $4.9 million due to Euros.
These foreign currency exposures give rise to market risk associated with exchange rate movements of the U.S. dollar against the NIS and Euros. Furthermore, we anticipate that a significant portion of our expenses will continue to be denominated in NIS as well as significant portion of our revenue will continue to be denominated in Euro.
These foreign currency exposures give rise to market risk associated with exchange rate movements of the U.S. dollar against the NIS and Euros.
Our hedging activities are expected to reduce but not eliminate the impact of currency exchange rate movements.
The accounting for changes in the fair value of the derivative depends on the intended use of the derivative and the resulting designation. Our hedging activities are expected to reduce but not eliminate the impact of currency exchange rate movements.
Added
Interest Rate Risk As of December 31, 2023, we had outstanding floating rate debt obligations of $34.7 million (consisting of the outstanding principal balance under our credit facilities). Accordingly, fluctuations in market interest rates may increase or decrease our interest expense which will, in turn, increase or decrease our net income and cash flow.

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