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What changed in KALTURA INC's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of KALTURA INC's 2023 and 2024 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 2024 report.

+592 added−485 removedSource: 10-K (2025-02-20) vs 10-K (2024-02-22)

Top changes in KALTURA INC's 2024 10-K

592 paragraphs added · 485 removed · 343 edited across 9 sections

Item 1. Business

Business — how the company describes what it does

41 edited+151 added−59 removed9 unchanged
Biggest changeOur 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.
Biggest changeOur key competitors vary based on market segment: • EVCM & OVP : Microsoft, AWS, and Vimeo • Virtual Events & Webinars : Microsoft, Zoom, and ON24 • Cloud TV Software : Comcast, Synamedia and MediaKind We believe the principal competitive factors in our markets include, but are not limited to: • Breadth, depth, and scale of products, APIs and developer tools; • Ability to support all types of video interactions, including live, real-time, and on-demand, as well as non-video digital assets; • Ability to cater to numerous use-cases with interoperable products and unified analytics; • Ability to provide engaging, interactive, and personalized experiences; • Ability to innovate quickly; • Ease of customization and integration with other products; • Support of various deployment options (including regional and dedicated environments); • Data capabilities, including advanced analytics and Gen AI; • High-availability and global presence; • Enterprise-grade reliability, security, and scalability; • Quality of service and customer satisfaction; • Total cost of ownership and time to value; • Brand recognition; and • Corporate culture.
As a result, open-source development and licensing practices can limit the value of our proprietary software assets. Despite our efforts to protect our proprietary rights, unauthorized parties may attempt to copy or obtain and use our technology to develop products and services with the same functionality as our platform. Policing unauthorized use of our technology is difficult.
As a result, open-source development and licensing practices can limit the value of our proprietary software assets. Despite our efforts to protect our proprietary rights, unauthorized parties may attempt to copy, obtain or circumvent and use our technology to develop products and services with the same functionality as our platform. Policing unauthorized use of our technology is difficult.
Moreover, our platform and many of our products and services incorporate software components licensed to the general public under open-source software licenses. We obtain some components from software developed and released by contributors to independent open-source components of our platform. Open-source licenses grant licensees broad permissions to use, copy, modify and redistribute certain components of our platform.
Moreover, our platform and many of our products and services incorporate software components licensed to the general public under open-source software licenses. We also obtain some components from software developed and released by contributors to independent open-source components of our platform. Open-source licenses grant licensees broad permissions to use, copy, modify and redistribute certain components of our platform.
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).
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 2024 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).
(1) We have been included in Gartner research reports on this since 2013, where we were listed as a Leader for 5 consecutive times in the Magic Quadrant for Enterprise Video Content Management report and ranked highest in all Use Cases in the last-published Critical Capabilities for Enterprise Video Content Management report.
(12) We have been included in Gartner research reports on this since 2013, where we were listed as a Leader for 5 consecutive times in the Magic Quadrant for Enterprise Video Content Management report (13) and ranked highest score in all 4 Use Cases in the last-published Critical Capabilities for Enterprise Video Content Management report.
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.
As of December 31, 2024, we owned five registered trademarks in the United States and nine 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. 14 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.
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.
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, 2024, we had 563 employees operating across 24 countries and 5 continents.
We also plan to expand in the future into new markets by introducing new industry solutions, for example for the financial services and healthcare markets. • Accelerate through Partnerships and M&A : We plan to increase the breadth of partnerships with our technology partners, further allowing us to provide the most comprehensive video solutions to our customers.
We also plan to expand in the future into new markets by introducing new industry solutions, for example for the financial services and healthcare markets. 13 Table of Contents • Accelerate through Partnerships and Mergers & Acquisitions : We plan to increase the breadth of partnerships with our technology partners, further allowing us to provide the most comprehensive video solutions to our customers.
(1) We were also recognized as a Representative Vendor in the 2020 Gartner Market Guide for Enterprise Video Content Management.
(11) 2020 and before We were also recognized as a Representative Vendor in the 2020 Gartner Market Guide for Enterprise Video Content Management.
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.
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. 22 Table of Contents As of December 31, 2024, we owned eight issued U.S. patents and ten non-U.S. patents.
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.
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 : We plan to continue leveraging our flexible and extendable platform to expand our product portfolio to include more advanced capabilities and power more use cases.
The issued U.S. patents are expected to expire between 2028 and 2035. We pursue the registration of our domain names, trademarks and service marks in the United States and in certain locations outside the United States. To protect our brand, we file trademark registrations in the United States and in some other jurisdictions.
The issued U.S. patents are expected to expire between 2025 and 2035. We have registered certain of our domain names, trademarks and service marks in the United States and in certain locations outside the United States. As part of our brand protection strategy, we filed trademark registrations in the United States and in some other jurisdictions.
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 .
As of January 29, 2025, we received a rating of 4.2/5 from 5 reviews for Event Technology Platforms (15) , and 4.5/5 from 62 reviews for Meeting Solutions (16) and 4.5/5 from 29 reviews for Enterprise Video Content Management (17) by customers on Gartner® Peer Insights™.
Seasonality Historically, we have experienced seasonality in bookings and collections from customers within the education market, with a pattern of higher sales and new academic customers in the second and third quarters of the year as a result of school procurement periods, resulting in lower sequential sales and customer growth in other quarters of the year.
We have not experienced any work stoppages and largely consider our relationship with our employees to be good and mutually beneficial. 23 Table of Contents Seasonality Historically, we have experienced seasonality in bookings and collections from customers within the education market, with a pattern of higher sales and new academic customers in the second and third quarters of the year as a result of school procurement periods, resulting in lower sequential sales and customer growth in other quarters of the year.
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.
(6) In 2023, we were recognized in Gartner 2023 Market Guide for Event Technology Platforms, (7) the 2023 Gartner Market Guide for Meeting Solutions, (8) and the Market Finder and Use Case Guide for Meetings and Virtual Events.
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.
Additionally, we utilize digital marketing campaigns and make free trials available for many of our products to encourage product engagement and expedite the sales cycle. Intellectual Property and Data Privacy Intellectual property is an important aspect of our business, and we seek protection for our intellectual property rights we deem as appropriate.
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.
Moreover, the recent rise of generative AI enables real-time, automatic production of highly personalized and contextually relevant content, including video and rich media, which we believe would materially boost the creation, consumption, and business impact of video experiences.
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.
As a result, we are subject to various data privacy and protection laws, which continue to evolve and may pose significant compliance challenges. 20 Table of Contents For more information on the legal framework and associated risks, see Part I, Item 1A.
"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.
“Management's Discussion and Analysis of Financial Condition and Results of Operations”) was 100% and 101%, respectively. • Secure New Customers Within our Current Markets : Kaltura is already trusted by top large enterprises, leading education institutions, and prominent Media & Telecom companies.
“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.
“Risk Factors—Risks Related to Information Technology, Intellectual Property and Data Privacy and Security.” Partner Ecosystem We have established an extensive ecosystem of technology provider and system integrator partners that integrate with our offerings to extend our platform and products’ capabilities.
In March 2021, we were also cited as a Strong Performer in The Forrester Wave™: B2B Marketing Events Management Solutions, Q1 2021. The Gartner content described herein (the "Gartner Content") represent(s) research opinion or viewpoints published, as part of a syndicated subscription service, by Gartner, Inc. ("Gartner"), and are not representations of fact.
The Gartner content described herein (the “Gartner Content”) represent(s) research opinion or viewpoints published, as part of a syndicated subscription service, by Gartner, Inc. (“Gartner”), and are not representations of fact.
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.
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.
(1) Gartner discontinued publication of this Magic Quadrant for Enterprise Video Content Management report in 2018 and of the correlating Critical Capabilities report in 2019. We have also received customer recognition.
(14) Gartner discontinued publication of this Magic Quadrant for Enterprise Video Content Management report in 2018 and of the correlating Critical Capabilities report in 2019. Past Recognition by Forrester In March 2023, we were recognized as a Contender in The 2023 Forrester Wave™: B2B Event Management Technology.
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.
In November 2022, we were recognized as a Notable Vendor in The 2022 Forrester B2B Event Management Technology Landscape. In March 2021, we were also cited as a Strong Performer in The 2021Forrester Wave™: B2B Marketing Events Management Solutions. Customer Recognition We have also received customer recognition.
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.
For the years ended December 31, 2024 and 2023, our Net Dollar Retention Rate (as defined below in Part II, Item 7.
We are highly committed to our founding values of Openness, Flexibility, and Collaboration. Except for certain of our employees in Brazil, our employees are not represented by a labor union in respect to their employment or covered by a collective bargaining agreement.
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. Except for certain of our employees in Brazil, our employees are not represented by a labor union in respect to their employment or covered by a collective bargaining agreement.
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.
Additionally, we intend to continue to explore potential M&A initiatives that could enhance our capabilities, increase our market share in markets we already operate in, or open up new markets. Product Kaltura’s Video Experience Cloud is designed to meet the variety of customers’ needs to effectively engage employees and customers through video-first and TV experiences, and boost business results.
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.
Real-time, automated production of highly personalized, contextually relevant video and other rich media has the potential to substantially boost both the creation and consumption of video experiences. As organizations are expected to produce more rich content, we anticipate growing demand for robust content management solutions and advanced digital experiences.
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.
We serve 27 of the U.S. Fortune 100, and more than 50% of the top U.S. research universities (R1 Research Institutions). Additionally, our solutions power major global TV initiatives. Most of our customers leverage several Kaltura products for a range of use cases across their organization.
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.
For example, since 2020, we have introduced our Events & Webinars and Virtual Classroom products, and a set of new TV applications for viewers using TVs, PCs, tablets, and mobile devices.
These organizations may suffer from limited functionality, a lack of cohesiveness and inconsistent user experience, disjointed workflows, content silos, and fragmented analytics that lack a holistic view of user behavior. All of this reduces usability and user engagement, adds unnecessary complexities and costs, and lowers return-on-investment. • Still offering mostly non-personalized lean-back viewing experiences.
This also often includes utilizing different providers for on-demand, live, and real-time video, instead of meshing these experiences together. These organizations may suffer from limited functionality, a lack of cohesiveness and inconsistent user experience, disjointed workflows, content silos, and fragmented analytics that lack a holistic view of user behavior.
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.
In our operations, we handle personal information and other sensitive data related to users of our services, our employees, contractors, and other third parties.
For businesses, video sits at the heart of digital transformation, with organizations increasingly embracing video solutions to better engage with customers and employees. The COVID-19 pandemic accelerated the use and adoption of video, while creating a long-lasting remote operation culture across all sectors.
It has become a driving force for online interactions and engagement, and has revolutionized how we communicate, work, learn, and entertain. For businesses, video sits at the heart of digital transformation, with organizations increasingly embracing video solutions to better engage with customers and employees.
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.
Key Market Trends The nature of video experiences has transformed in recent years. Several major trends have played a role in this evolution: • Shift to Remote Work and Education: Organizations worldwide continue to adopt remote and hybrid work and learning arrangements, relying heavily on video to create comprehensive digital experiences at scale.
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.
Our customers are global, spanning 53 countries, and during the year ended December 31, 2024, our technology reached end users in over 200 countries. For the year ended December 31, 2024, approximately 53% of our revenue was generated from customers in the Americas, 38% from customers in EMEA and 9% from customers in APAC.
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.
We offer our partners solutions through our marketplace, where we feature a range of plugins and out-of-the-box integrations with our technology. The partner ecosystem enables our customers to discover and more easily integrate new technologies that enhance their existing Kaltura offerings, and ultimately increase their overall satisfaction and retention.
Gartner Content speaks as of its original publication date (and not as of the date of this Form 10-K) and the opinions expressed in the Gartner Content are subject to change without notice. (1) Gartner's Magic Quadrant and Critical Capabilities references are provided for historical purposes only and do not reflect current market recognition.
Gartner's Magic Quadrant and Critical Capabilities references are provided for historical purposes only and do not reflect current market recognition. Gartner does not endorse any vendor, product or service depicted in its research publications, and does not advise technology users to select only those vendors with the highest ratings or other designation.
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.
We believe that our partner ecosystem will continue to expand in 2025. Competition We believe our Platform and Products position us well to compete with other video solution providers.
Our marketing efforts are focused on creating preference for our brand, and driving leads to Kaltura through thought leadership, participation in industry events, analyst and press coverage, customer referrals, community work, customer user groups, and Kaltura produced customer and industry events like “Kaltura Connect” and “Kaltura Virtually Live”.
This effort began to yield preliminary heightened results, and we expect channel sales to continue expanding over time. Our marketing efforts are designed to enhance brand awareness and generate sales leads through thought leadership, participation in industry events, industry analyst and media coverage, customer referrals, community engagement, and company-hosted conferences and regional customer user-groups, such as “Kaltura Connect”.
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).
Customers and Industries As of December 31, 2024, we served approximately 850 customers 18 , including several of the world’s leading brands across multiple industries, such as technology, higher education and K-12, regulated industries (banking, government, healthcare, and life sciences), professional and commercial services (consulting, manufacturing, retail, real estate, and nonprofit organization), and media and telecommunications.
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Item 1. Business. Overview Our mission is to power any video experience, for any organization. Video is everywhere. It has become a driving force for online interactions and engagement, and has revolutionized how we communicate, work, learn, and entertain.
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Item 1. Business. Overview We, Kaltura, Inc. (“Kaltura,” “we,” “us,” or “our”), are a market-leading provider of live, real-time, and on-demand video offerings for enterprises, with a mission to create and power AI-infused hyper-personalized video experiences that boost customer and employee engagement and success. Video is everywhere.
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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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With the expected continued growth in rich content in organizations, the potential need for content management solutions and advanced digital experiences is expected to grow. Founded in 2006, Kaltura was amongst the first pioneers to recognize the great potential of adding video to enterprise workflows and to offer a system for enterprise video content management and online video publishing.
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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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We have since expanded to also power virtual events and webinars and Cloud TV with our Video Experience Cloud. Our Video Experience Cloud includes a platform for enterprise and TV content management and a wide array of Gen AI-infused video-first products, including Video Portals, LMS and CMS Video Extensions, Virtual Events and Webinars, Virtual Classrooms, and TV Streaming Applications.
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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.
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Our platform and products engage millions of end-users at home, at work, and at school, boosting both customer and employee experiences, including marketing, sales, and customer success; teaching, learning, training and certification; communication and collaboration; and entertainment, and monetization.
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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.
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We power a large and loyal blue-chip customer base of large, and small and medium enterprises (SMEs), across diverse industries, including 27% of Fortune 100 companies, over 50% of US R1 schools, and top-tier telecommunications companies and media companies.
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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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From the onset, our differentiated approach has been to treat video as a data type, not as an application, and accordingly to provide a unified and flexible enterprise-grade API-first platform that enables tightly integrated live, real-time, and on-demand video experiences across business workflows.
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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.
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We believe Kaltura’s platform offering is superior to siloed point solutions, which are not deeply integrated or interoperable, and as such are typically less effective, less efficient, and more costly.
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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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Our platform is designed to foster deeper engagement and deliver greater business outcomes, whether that means boosting employee knowledge, engagement, collaboration and productivity; driving marketing funnel conversion and successfully attracting and engaging customers and prospects; providing improved customer care; or offering more engaging entertainment experiences that yield greater monetization.
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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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During the COVID-19 pandemic, many enterprises and educational institutions rapidly expanded their use of video solutions, fueling accelerated adoption of video solutions. While the enterprise video market saw demand deceleration when pandemic-related restrictions subsequently eased and certain geopolitical and macroeconomic challenges ensued, the demand for high-quality, secure, and flexible video tools remains robust.
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In August 2022, our Board of Directors approved a strategic restructuring program (the “2022 Restructuring Plan”) to streamline our operations in order to support our investment in critical growth areas. The 2022 Restructuring Plan included, among other things, a workforce reduction of approximately 10% of our employees. The 2022 Restructuring Plan was substantially completed in 2022.
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We believe demand is gradually starting to regrow, along with an even greater need of organizations to converge their numerous disparate video experiences to run more effectively on single horizontal platforms like Kaltura’s.
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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.
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Furthermore, we believe that recently introduced Gen AI capabilities supercharge the value of video experiences by helping to facilitate real-time, unique, hyper-personalized and hyper-contextualized video-first experiences for every end user.
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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.
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We believe this is a groundbreaking revolution in our industry, and that Kaltura is well-positioned to benefit from it in light of the vast video content that we already manage for our customers, our deep integrations into workflows, and our cross-enterprise deployments across a wide range of products, and employee and customer use-cases.
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Key Industry Trends The nature of video consumption has transformed in recent years.
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As we look ahead, we see opportunities to strengthen our valuable existing relationships through additional upsells and cross-sells, to attract new customers to use our existing products and services, and to also continue and grow our product and services portfolio and expand into additional adjacent markets.
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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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We believe this combination of innovation, operational adaptability, and strong customer relationships will enable us to maintain our leadership in the dynamic video technology market and deliver growing, sustainable value for our shareholders. 5 Table of Contents Market Segments We have expanded throughout the years to operate today in three enterprise video market segments: • Enterprise Video Content Management and Online Video Platforms • Cloud TV Software • Virtual Events and Webinars We believe that we are well-positioned to continue expanding our business in these growing market segments as well as continue to effectively penetrate new ones and are continually exploring new ways to innovate our business. • Enterprise Video Content Management (EVCM) and Online Video Platforms (OVP) ◦ The EVCM and OVP market segment is comprised of video-first solutions designed to enable organizations to capture, create, manage, analyze, edit, optimize, distribute, publish, monetize, and engage with on-demand and live video streaming, at scale. ◦ Key Projected Growth Drivers: ▪ The advent of mobile devices and cloud-based services, increased bandwidth capacity, a shift towards remote work and learning, and a demographic shift to generations that favor video over other data types are expected to increase content creation and consumption. ▪ Gen AI-infused experiences are expected to boost content creation, consumption, and impact, and to increasingly replace labor-intensive production services. • Cloud TV Software ◦ The Cloud TV Software market segment is comprised of solutions that power large scale, cloud-based over-the-top (OTT) television streaming services across devices (set-top-boxes, smart TVs, and connected devices) and monetization schemas (subscription, transaction, and advertising-based).
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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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This includes both a backend platform for content and user management, and front-end applications for end-user engagement. ◦ Key Projected Growth Drivers: ▪ Customer migration from legacy IPTV systems to OTT, and from on-premises to cloud, is expected to continue. ▪ Gen AI-infused content curation and end-user TV experiences are expected to improve cost efficiencies and to boost engagement and monetization. • Virtual Events and Webinars ◦ The Virtual Events and Webinars market segment is comprised of both synchronous and asynchronous video-first solutions that are used to host virtual and hybrid events and webinars at varying scales, from small group meetings to large multi-day conferences. ◦ Key Projected Growth Drivers: ▪ Events have increasingly become full or partial virtual experiences, in order to expand reach, reduce costs and increase sustainability, and to increase engagement before, during, and after the events. ▪ Gen AI-infused experiences are expected to reduce event production costs and to drive adoption, engagement, impact, and return on investment. 6 Table of Contents Use Cases Our platform and products support millions of end users worldwide at home, work, and school, through our enterprise customers who rely on Kaltura to power a broad range of use cases, spanning across both customer and employee experiences.
Removed
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.
Added
Main use cases include: • Marketing, Sales and Customer Success: including, for example, live webinar programs for lead generation, large-scale virtual or hybrid events, video publishing in websites and social media, customer video portal, and personalized video messaging. • Teaching, Learning, Training and Certification: including, for example, lecture capture, virtual classrooms, online learning and training libraries and portals for onboarding, training, compliance programs, micro-learning, and certification pathways. • Communication and Collaboration: including, for example, intranet knowledge sharing portals and content hubs, social enterprise platforms, virtual events, and employee town halls. • Entertainment and Monetization: including, for example, live and on-demand Cloud TV services (SVOD, TVOD, and AVOD), live broadcasting, content syndication and publishing, and user-generated content portals.
Removed
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.
Added
We distinguish in our financial reporting between revenue and gross profit from Subscription and Professional Services that are attained from customers who use us to address the Entertainment & Monetization use case (“Media & Telecom” reporting segment, or “M&T”), to those that are attained from customers who are using us to address all other use cases (“Enterprise, Education, and Technology” reporting segment, or “EE&T”).
Removed
OTT video technology has enabled content providers to bypass the traditional distribution value chain and reach consumers directly.
Added
The need for high-quality remote and hybrid solutions has further increased as businesses reduce travel budgets and seek to lower their carbon footprint and further adapt to the remote experiences culture of their audiences.
Removed
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.
Added
As a result, we have observed a growing demand for integrated video workflows, analytics, and engagement tools that can accommodate diverse use cases from employee collaboration and corporate training, to academic instruction and online events. • Events are No Longer just In-Person : Marketers and event organizers are increasingly incorporating virtual and hybrid formats into their engagement strategies.
Removed
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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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

192 edited+62 added−52 removed455 unchanged
Biggest changeWe 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.
Biggest changeWe believe our ability to compete successfully depends on a variety of factors, some of which are beyond our control, including: • Breadth, depth, and scale of products, APIs and developer tools; • Ability to support all types of video interactions, including live, real-time, and on-demand, as well as non-video digital assets; • Ability to cater to numerous use-cases with interoperable products and unified analytics; • Ability to provide engaging, interactive, and personalized experiences; • Ability to innovate quickly; • Ease of customization and integration with other products; • Support of various deployment options (including regional and dedicated environments); • Data capabilities, including advanced analytics and Gen AI; • High-availability and global presence; • Enterprise-grade reliability, security, and scalability; • Quality of service and customer satisfaction; • Total cost of ownership and time to value; • Brand recognition; and • Corporate culture. 33 Table of Contents If we fail to address these competitive pressures or if we cannot keep pace with rapid technological changes, customer demands, or evolving regulatory requirements, our business, financial condition, and results of operations could be materially and adversely affected.
Changes in tax laws in these jurisdictions could cause us to experience fluctuations in our tax obligations and effective tax rates in the future and otherwise adversely affect our tax positions and/or our tax liabilities.
Changes in tax laws or tax rates in these jurisdictions could cause us to experience fluctuations in our tax obligations and effective tax rates in the future and otherwise adversely affect our tax positions and/or our tax liabilities.
These authorities could also claim that various withholding requirements apply to us or our subsidiaries, assert that benefits of tax treaties are not available to us or our subsidiaries, or challenge our methodologies for valuing developed technology or intercompany arrangements, including our transfer pricing.
These authorities could also claim that various withholding requirements apply to us or our subsidiaries, assert that benefits of tax treaties are not available to us or our subsidiaries, or challenge our methodologies for valuing developed technology or intercompany arrangements, including our transfer pricing methodologies.
Limitations imposed by the applicable jurisdictions on our ability to utilize net operating loss carryforwards, including with respect to the net operating loss carryforwards of companies that we have acquired or may acquire in the future, could cause us to become an income tax payer earlier than we would become otherwise if such limitations were not in effect and could cause such net operating loss carryforwards to expire unused, in each case reducing or eliminating the benefit of such net operating loss carryforwards.
Limitations imposed by the applicable jurisdictions on our ability to utilize net operating loss carryforwards, including with respect to the net operating loss carryforwards of companies that we have acquired or may acquire in the future, could cause us to become an income tax payer earlier than we would otherwise become if such limitations were not in effect and could cause such net operating loss carryforwards to expire unused, in each case reducing or eliminating the benefit of such net operating loss carryforwards.
In the United States, the FTC and many state attorneys general are interpreting federal and state consumer protection laws to impose standards for the online collection, use, dissemination, and security of data. Such standards require us to publish statements that describe how we handle personal data and choices individuals may have about the way we handle their personal data.
In the United States, the FTC and many state attorneys general are interpreting federal and state consumer protection laws to impose standards for the online collection, use, dissemination, and security of data. Such standards require us to publish statements that describe how we handle Personal Information and choices individuals may have about the way we handle their Personal Information.
In addition, operating on public cloud infrastructure and the redundancy in cloud infrastructure to satisfy different local data privacy regimes have increased our variable costs, which may lead to higher overall costs. The impact of one or more of the foregoing or other factors may cause our results of operations to vary significantly.
Operating on public cloud infrastructure and the redundancy in cloud infrastructure to satisfy different local data privacy regimes have increased our variable costs, which may lead to higher overall costs. The impact of one or more of the foregoing or other factors may cause our results of operations to vary significantly.
Our 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.
Our 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 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.
For so long as we remain an “emerging growth company” as defined in the JOBS Act, we may take advantage of certain exemptions from various requirements that are applicable to public companies that are not “emerging growth companies.” These provisions include, among other exemptions, that: • we are required to have only two years of Management’s Discussion and Analysis of Financial Condition and Results of Operations disclosure; • we are not required to engage an auditor to report on our internal controls over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act; • we are not required to comply with any requirement that may be adopted by the PCAOB regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements (i.e., an auditor discussion and analysis); • we are not required to submit certain executive compensation matters to stockholder advisory votes, such as “say-on-pay,” “say-on-frequency” and “say-on-golden parachutes;” and • we are not required to disclose certain executive compensation related items such as the correlation between executive compensation and performance and comparisons of the chief executive officer’s compensation to median employee compensation.
For so long as we remain an “emerging growth company” as defined in the JOBS Act, we may take advantage of certain exemptions from various requirements that are applicable to public companies that are not “emerging growth companies.” These provisions include, among other exemptions, that: • we are required to have only two years of Management’s Discussion and Analysis of Financial Condition and Results of Operations disclosure; • we are not required to engage an auditor to report on our internal controls over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act; • we are not required to comply with any requirement that may be adopted by the PCAOB regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements (i.e., an auditor discussion and analysis); 67 Table of Contents • we are not required to submit certain executive compensation matters to stockholder advisory votes, such as “say-on-pay,” “say-on-frequency” and “say-on-golden parachutes;” and • we are not required to disclose certain executive compensation related items such as the correlation between executive compensation and performance and comparisons of the chief executive officer’s compensation to median employee compensation.
If we or other companies in our industry experience security incidents, loss of customer data, or disruptions in delivery or service, the market for these applications as a whole, including the demand for our offerings, may be negatively affected.
Further if we or other companies in our industry experience security incidents, loss of customer data, or disruptions in delivery or service, the market for these applications as a whole, including the demand for our offerings, may be negatively affected.
Further, any significant change to applicable laws, regulations or industry practices regarding the collection, use, retention, hosting, security, processing, transfer or disclosure of data, or their interpretation, or any changes regarding the manner in which the consent of users or other data subjects for the collection, use, retention, security, processing, transfer or disclosure of such data must be obtained, could increase our costs and require us to modify our services and features, possibly in a material manner, which we may be unable to complete, and may limit our ability to receive, collect, store, host, process, transfer, and otherwise use user data or develop new services and features.
Further, any significant change to applicable laws, regulations or industry practices regarding the collection, use, retention, hosting, security, processing, transfer or disclosure of Personal Information, or their interpretation, or any changes regarding the manner in which the consent of users or other data subjects for the collection, use, retention, security, processing, transfer or disclosure of such Personal Information must be obtained, could increase our costs and require us to modify our services and features, possibly in a material manner, which we may be unable to complete, and may limit our ability to receive, collect, store, host, process, transfer, and otherwise use user data or develop new services and features.
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.
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 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.
If we are unsuccessful in defending against any such claims, we may be liable for damages or prevented from using certain intellectual property, which in turn could materially adversely affect our business, financial condition, or results of operations; even if we are successful in defending against such claims, litigation could result in substantial costs and distract management and other employees. 37 Table of Contents In order to protect our intellectual property and proprietary rights and to monitor for and take action against any infringement, misappropriation or other violations thereof, we may be required to spend significant resources.
If we are unsuccessful in defending against any such claims, we may be liable for damages or prevented from using certain intellectual property, which in turn could materially adversely affect our business, financial condition, or results of operations; even if we are successful in defending against such claims, litigation could result in substantial costs and distract management and other employees. 48 Table of Contents In order to protect our intellectual property and proprietary rights and to monitor for and take action against any infringement, misappropriation or other violations thereof, we may be required to spend significant resources.
Among other requirements, the GDPR regulates the transfer of personal information outside of the European Economic Area (“EEA”) and UK to third countries that have not been found to provide adequate protection to such personal information, including the United States.
Among other requirements, the GDPR regulates the transfer of personal information outside of the European Economic Area (“EEA”) and the UK to third countries that have not been found to provide adequate protection for such personal information, including the United States.
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.
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; • changes in the amounts or frequency of stock repurchases; 62 Table of Contents • 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; • 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 actual or perceived failure to comply with evolving regulatory frameworks around the development and use of AI could adversely affect our business, operations and financial condition. 21 Table of Contents If we do not maintain the interoperability of our offerings across devices, operating systems, and third-party applications that we do not control, and if we are not able to maintain and expand our relationships with third-party technology partners to integrate our offerings with their products and solutions, our business, financial condition, and results of operations may be adversely affected.
Any actual or perceived failure to comply with evolving regulatory frameworks around the development and use of AI could adversely affect our business, operations and financial condition. 31 Table of Contents If we do not maintain the interoperability of our offerings across devices, operating systems, and third-party applications that we do not control, and if we are not able to maintain and expand our relationships with third-party technology partners to integrate our offerings with their products and solutions, our business, financial condition, and results of operations may be adversely affected.
In addition, in Europe and the UK, we are subject to the European Union General Data Protection Regulation (the “EU GDPR”) and to the United Kingdom General Data Protection Regulation and Data Protection Act 2018 (collectively, the “UK GDPR”) (the EU GDPR and UK GDPR together referred to as the “GDPR”).
In addition, in the EU and the UK, we are subject to the European Union General Data Protection Regulation (the “EU GDPR”) and to the United Kingdom General Data Protection Regulation and UK Data Protection Act 2018 (collectively, the “UK GDPR”) (the EU GDPR and UK GDPR together referred to as the “GDPR”).
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.
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, including if customers do not adopt related offerings at the rate we project, 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. 42 Table of Contents • 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, poor relations between the United States and Russia, economic sanctions and export control restrictions imposed by the United States, the European Union (“EU”), the United Kingdom ("UK") and other countries targeting Russia, Belarus, and the embargoed areas of Ukraine, including as a result of the Russian invasion of Ukraine, and any further escalation of political tensions or economic instability in the area could have an adverse impact on our third-party software development in Ukraine and Belarus.
In addition, poor relations between the United States and Russia, economic sanctions and export control restrictions imposed by the United States, the European Union (“EU”), the United Kingdom (“UK”) and other countries targeting Russia, Belarus, and the embargoed areas of Ukraine, including as a result of the Russian invasion of Ukraine, and any further escalation of political tensions or economic instability in the area could have an adverse impact on our third-party software development in Ukraine and Belarus.
However, the AGPL would not prevent a commercial licensee from taking this open source version of our platform under AGPL and using it for internal purposes for free.
However, the AGPL would not prevent a commercial licensee from taking this open source version of our platform under AGPL and using it solely for internal purposes for free.
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.
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 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. 65 Table of Contents These provisions, alone or together, could delay or prevent hostile takeovers and changes in control or changes in our management.
Moreover, according to the FTC, violating consumers’ privacy rights or failing to take appropriate steps to keep consumers’ personal data secure may constitute unfair acts or practices in or affecting commerce in violation of Section 5(a) of the Federal Trade Commission Act. State consumer protection laws provide similar causes of action for unfair or deceptive practices.
Moreover, according to the FTC, violating consumers’ privacy rights or failing to take appropriate steps to keep consumers’ Personal Information secure may constitute unfair acts or practices in or affecting commerce in violation of Section 5(a) of the Federal Trade Commission Act. State consumer protection laws provide similar causes of action for unfair or deceptive practices.
Various other U.S. federal privacy laws are relevant to our business, including the Family Educational Rights and Privacy Act ("FERPA") and the Children’s Online Privacy Protection Act ("COPPA"), While we are not directly subject to FERPA or COPPA, our contracts with certain educational institution customers impose obligations on us related to FERPA and COPPA.
Various other U.S. federal privacy laws are relevant to our business, including the Family Educational Rights and Privacy Act (“FERPA”) and the Children’s Online Privacy Protection Act (“COPPA”), While we are not directly subject to FERPA or COPPA, our contracts with certain educational institution customers impose obligations on us related to FERPA and COPPA.
We have recorded a full valuation allowance related to our carryforwards due to the uncertainty of the ultimate realization of the future benefits of those assets. 50 Table of Contents Risks Related to Our Operations in Israel Political, economic, and military conditions in Israel could materially and adversely affect our business.
We have recorded a full valuation allowance related to our carryforwards due to the uncertainty of the ultimate realization of the future benefits of those assets. 60 Table of Contents Risks Related to Our Operations in Israel Political, economic, and military conditions in Israel could materially and adversely affect our business.
If the trend of increasing enforcement by regulators of the strict approach to opt-in consent for all but essential use cases, as seen in recent guidance and decisions continues, this could lead to substantial costs, require significant systems changes, limit the effectiveness of our marketing activities, divert the attention of our technology personnel, adversely affect our margins, increase costs and subject us to additional liabilities.
If the trend of increasing enforcement by regulators of the strict approach to opt-in consent for all but essential use cases, as seen in recent guidance and decisions continues, this could lead to additional costs, require systems changes, limit the effectiveness of our marketing and personalization activities, divert the attention of our technology personnel, adversely affect our margins, increase costs and subject us to additional liabilities.
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.
If our revenue does not increase or if the 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.
In addition, customer terminations or any reduction in renewals resulting from service-level failures could significantly affect both our current and future revenue. 26 Table of Contents In addition, the agreements we enter into with our TV Solution customers typically provide for committed delivery schedules and milestones with which we are required to comply in connection with the deployment of our offerings.
In addition, customer terminations or any reduction in renewals resulting from service-level failures could significantly affect both our current and future revenue. In addition, the agreements we enter into with our TV Solution customers typically provide for committed delivery schedules and milestones with which we are required to comply in connection with the deployment of our offerings.
We are subject to numerous federal, state, local, and international laws, directives, and regulations regarding privacy, data protection, and data security and the collection, storing, sharing, use, processing, transfer, disclosure, disposal, and protection of information about individuals and other data, the scope of which are changing, subject to differing interpretations, and may be inconsistent among jurisdictions or conflict with other legal and regulatory requirements.
We are subject to numerous federal, state, local, and international laws, directives, and regulations regarding privacy, data protection, and data security and the collection, storing, sharing, use, processing, transfer, disclosure, disposal, and protection of Personal Information and other data, the scope of which are changing, subject to differing interpretations, and may be inconsistent among jurisdictions or conflict with other legal and regulatory requirements.
These restrictive laws and policies may have an adverse impact on our operating results, financial condition, or the expansion of our business. A campaign of boycotts, divestment and sanctions has been undertaken against Israel, which could also adversely impact our business. 51 Table of Contents Israel’s most recent general elections were held on November 1, 2022.
These restrictive laws and policies may have an adverse impact on our operating results, financial condition, or the expansion of our business. A campaign of boycotts, divestment and sanctions has been undertaken against Israel, which could also adversely impact our business. Israel’s most recent general elections were held on November 1, 2022.
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.
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). We are also subject to evolving EU and UK privacy laws on cookies, tracking technologies and e-marketing.
If we cannot generate sufficient cash flow from operations to service our debt, we may need to further refinance our debt, dispose of assets, or issue equity to obtain necessary funds. We do not know whether we will be able to do any of this on a timely basis, on terms satisfactory to us, or at all.
If we cannot generate sufficient cash flow from operations to service our debt, we may need to further refinance our debt, dispose of assets, or issue equity to obtain necessary funds. 53 Table of Contents We do not know whether we will be able to do any of this on a timely basis, on terms satisfactory to us, or at all.
Accordingly, the remedies and damages available to us for unauthorized use of our software may be limited. 36 Table of Contents Further, the steps we take to protect our intellectual property and proprietary rights may be inadequate.
Accordingly, the remedies and damages available to us for unauthorized use of our software may be limited. 47 Table of Contents Further, the steps we take to protect our intellectual property and proprietary rights may be inadequate.
An escalation of tensions or violence might result in a significant downturn in the economic or financial condition of Israel, which could have a material adverse effect on our operations in Israel and our business. Our commercial insurance does not cover losses that may occur as a result of events associated with war and terrorism.
An escalation of tensions or violence might result in a significant downturn in the economic or financial condition of Israel, which could have a material adverse effect on our operations in Israel and our business. 61 Table of Contents Our commercial insurance does not cover losses that may occur as a result of events associated with war and terrorism.
Since we are subject to the supervision of relevant data protection authorities under both the EU GDPR and the UK GDPR, we could be fined under each of those regimes independently in respect of the same breach.
Since we are subject to the supervision of relevant data protection authorities under both the EU GDPR and the UK GDPR, we could be fined under each of these regimes independently in respect of the same breach.
We could incur greater operating expenses and our customer acquisition and retention could be negatively impacted if network operators: • implement usage-based pricing; • discount pricing for competitive products; • otherwise materially change their pricing rates or schemes; • charge us to deliver our traffic at certain levels or at all; • throttle traffic based on its source or type; • implement bandwidth caps or other usage restrictions; or • otherwise try to monetize or control access to their networks.
We could incur greater operating expenses and our customer acquisition and retention could be negatively impacted if network operators: • implement usage-based pricing; • discount pricing for competitive products; • otherwise materially change their pricing rates or schemes; • charge us to deliver our traffic at certain levels or at all; • throttle traffic based on its source or type; • implement bandwidth caps or other usage restrictions; or 56 Table of Contents • otherwise try to monetize or control access to their networks.
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.
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.
The relevant taxing authorities may determine that the manner in which we operate our business does not achieve the intended tax consequences. If such a disagreement were to occur, and our position was not sustained, we could be required to pay additional taxes, interest, and penalties.
We may take certain tax positions, and the relevant taxing authorities may determine that the manner in which we operate our business does not achieve the intended tax consequences. If such a disagreement were to occur, and our position was not sustained, we could be required to pay additional taxes, interest, and penalties.
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.
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, 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.
Any of the foregoing could materially and adversely affect our business, financial condition, and results of operations. 42 Table of Contents Risks Related to our Debt, Liquidity and Capitalization Our failure to raise additional capital or generate the significant capital necessary to expand our operations and invest in new offerings could reduce our ability to compete and could adversely affect our business.
Any of the foregoing could materially and adversely affect our business, financial condition, and results of operations. Risks Related to our Debt, Liquidity and Capitalization Our failure to raise additional capital or generate the significant capital necessary to expand our operations and invest in new offerings could reduce our ability to compete and could adversely affect our business.
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.
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.
We also currently rely on the EU standard contractual clauses and the UK Addendum to the EU standard contractual clauses as relevant to transfer personal information outside the EEA and the UK with respect to both intragroup and third party transfers. We expect the existing legal complexity and uncertainty regarding international personal information transfers to continue.
We also rely on the EU standard contractual clauses (“SCCs”) and the UK Addendum to the SCCs, as relevant, to transfer personal information outside the EEA and the UK with respect to both intragroup and third party transfers. We expect the existing legal complexity and uncertainty regarding international personal information transfers to continue.
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.
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, and keep pace with the technological developments predominantly around AI-based technologies and use cases; • 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 AI, 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.
A successful assertion that we should have been or should currently be collecting additional sales, use, value added, digital services or other similar taxes in a particular jurisdiction could, among other things, result in substantial tax payments, create significant administrative burdens for us, discourage potential customers from subscribing to our platform due to the incremental cost of any such sales or other related taxes, or otherwise adversely affect our business.
A successful assertion that we should have been or should currently be collecting additional sales, use, value added, digital services or other similar taxes in a particular jurisdiction could, among other things, result in substantial tax payments (potentially including interest and penalties), create significant administrative burdens for us, discourage potential customers from subscribing to our platform due to the incremental cost of any such sales or other related taxes, or otherwise adversely affect our business.
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.
Any such bugs, defects, security vulnerabilities, misconfigurations, errors, or other performance failures in IT Systems, 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.
This material weakness has since been remediated, but we may discover additional significant deficiencies or material weaknesses in our internal control over financial reporting in the future, which we may not successfully remediate on a timely basis or at all.
This material weakness has since been remediated, but we may discover additional significant deficiencies or material weaknesses in our internal control over financial reporting in the future, which we may not successfully remediate in a timely manner or at all.
It is possible that tax authorities may disagree with certain positions we have taken, and any adverse outcome of such a review or audit could have a negative effect on our business, financial condition, and results of operations.
It is possible that these taxing authorities may disagree with certain positions we have taken, and any adverse outcome of such a review or audit could have a negative effect on our business, financial condition, and results of operations.
A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of a company’s annual and interim financial statements will not be detected or prevented on a timely basis.
A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of a company’s annual and interim financial statements will not be detected or prevented in a timely manner.
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.
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, 2024, 2023 and 2022, we generated approximately 47%, 48% and 46% of our revenue, respectively, from customers outside the United States.
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 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; • potential changes in the foreign affairs and trade policies of the countries in which we operate or do business, including the imposition of significant increases in tariffs on goods imported into the United States and corresponding retaliatory actions by the countries with which the Unites States trades; • 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; • exposure to liabilities under anti-corruption and anti-money laundering laws, including the U.S.
We are subject to taxation in several countries, including the United States and Israel; changes in tax laws or challenges to our tax positions could adversely affect our business, results of operations, and financial condition.
We are subject to taxation in several countries, including the United States and Israel; changes in tax laws or tax rulings, changes in interpretations of existing tax laws, challenges to our tax positions could adversely affect our business, results of operations, and financial condition.
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 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, 2024.
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 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 $31.3 million, $46.4 million, and $68.5 million in the years ended December 31, 2024, 2023 and 2022, respectively.
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.
The GDPR imposes comprehensive data privacy compliance obligations in relation to our collection, use, sharing, disclosure and other processing of personal data relating to an identified or identifiable individual or “personal information” (or “personal data”), including a principle of accountability and the obligation to demonstrate compliance through policies, procedures, training and audit.
For example, the recent Inflation Reduction Act enacted in the United States introduced, among other changes, a 15% corporate minimum tax on certain United States corporations and a 1% excise tax on certain stock redemptions by United States corporations.
For example, the Inflation Reduction Act of 2022 enacted in the United States introduced, among other changes, a 15% corporate minimum tax on certain United States corporations and a 1% excise tax on certain stock redemptions by United States corporations.
Affected customers may also elect to terminate their agreements with us. Furthermore, any service-level failures or failure to meet committed delivery schedules and milestones could also create negative publicity and damage our reputation, which may discourage prospective customers from adopting our offerings.
Affected customers may also elect to terminate their agreements with us. 37 Table of Contents Furthermore, any service-level failures or failure to meet committed delivery schedules and milestones could also create negative publicity and damage our reputation, which may discourage prospective customers from adopting our offerings.
We have offices near Tel Aviv, Israel where our primary research and development, human resources, and certain other finance and administrative activities are based. In addition, a number of our officers and directors are residents of Israel. As of December 31, 2023, we had 344 full-time employees in Israel.
We have offices near Tel Aviv, Israel where our primary research and development, human resources, and certain other finance and administrative activities are based. In addition, a number of our officers and directors are residents of Israel. As of December 31, 2024, we had 341 full-time employees in Israel.
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.
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.
We may not be able to register our intellectual property rights in all jurisdictions where we conduct or anticipate conducting business, and may experience conflicts with third parties who contest our applications to register our intellectual property.
We may not be able to register our intellectual property rights in all jurisdictions where we conduct or anticipate conducting business, may experience conflicts with third parties who contest our applications to register our intellectual property, and may choose to register intellectual property rights providing insufficient coverage.
If we fail to achieve the necessary level of efficiency in our organization, or if we are not able to accurately forecast future growth and other changes that might impact our business, our business would be adversely affected.
If we fail to achieve the necessary level of efficiency in our organization, or if we are not able to accurately forecast future growth and other changes that might impact our business, such as changes in our existing customers' budgets, our business would be adversely affected.
No assurance can be given that these practices or agreements will be effective in controlling access to and distribution of our proprietary information, or in providing adequate remedies in the event of unauthorized access or distribution, especially in certain states and countries, including Russia, Belarus and countries that may favor local entities, that are less willing to enforce such agreements or otherwise provide protection for trade secrets.
No assurance can be given that these practices or agreements will be effective in controlling access to and distribution of our proprietary information, or in providing adequate remedies in the event of unauthorized access or distribution, especially in certain states and countries that are less willing to enforce such agreements or otherwise provide protection for trade secrets.
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.
Internal Revenue Service and other tax authorities, and we may be audited in Israel. 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.
The EU AI Act will apply to companies that develop, use and/or provide artificial intelligence in the EU and includes requirements around transparency, conformity assessments and monitoring, risk assessments, human oversight, security, accuracy, general purpose artificial intelligence and foundation models, and proposes fines for breach of up to 7% of worldwide annual turnover.
The EU AI Act will apply to companies that develop, use and/or provide artificial intelligence in the EU and, depending on the artificial intelligence use case, includes requirements around transparency, conformity assessments and monitoring, risk assessments, human oversight, security, accuracy, general purpose artificial intelligence and foundation models, with fines for breaches of up to 7% of worldwide annual turnover.
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.
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; 27 Table of Contents • 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; • changes in AI-related regulations, privacy and digital resilience or unexpected complexities in launching new AI-driven products; • 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; • 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; • the impact of any changes in the trade policies of the countries in which we operate or do business; and • the impact of any 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. 28 Table of Contents Historically, we have also experienced seasonality in bookings and collections from customers within the education market, with a pattern of higher sales and new academic customers in the second and third quarters of the year as a result of school procurement periods, resulting in lower sequential sales and customer growth in other quarters of the year.
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 ability to use our net operating loss carryforwards to offset future taxable income may be subject to certain limitations. As of December 31, 2024 we had U.S. federal net operating loss carryforwards of approximately $225 million and U.S. state net operating loss carryforwards of approximately $183 million, which may be utilized against future income taxes.
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 intend to continue to expend substantial financial and other resources on, among other things: • extending our product leadership by investing in the development of Gen AI 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; • 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; • repurchases of our common stock, to the extent permitted under Delaware law; • exploring additional organic and inorganic growth paths; and • general administration, including legal, accounting, and other expenses related to our operation as a public company.
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.
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.
Our total revenue for the years ended December 31, 2023 and 2022 was $175.2 million and $168.8 million, respectively, representing an annual growth rate of 4%. You should not rely on the revenue growth of any prior period as an indication of our future performance.
Our total revenue for the years ended December 31, 2024 and 2023 was $178.7 million and $175.2 million, respectively, representing an annual growth rate of 2%. You should not rely on the revenue growth of any prior period as an indication of our future performance.
Artificial intelligence and machine learning are rapidly evolving fields of study, and bear risks associated with the introduction of new technologies and the lack of learning curve and technology maturity. Thus, the Company cannot assure nor guarantee the accuracy of any output generated therefrom.
Artificial intelligence and machine learning are rapidly evolving fields of study, and bear risks associated with the introduction of new technologies and the lack of learning curve and technology maturity. Thus, the Company cannot assure nor guarantee the accuracy of any output generated therefrom or other results obtained from use thereof.
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.
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.
In the past, including in connection with the COVID-19 pandemic, we have sometimes adjusted our prices for individual customers in certain situations, and expect to continue to do so in the future. Moreover, demand for our offerings is price-sensitive.
In the past, we have sometimes adjusted our prices for individual customers in certain situations, and expect to continue to do so in the future. Moreover, demand for our offerings is price-sensitive.
We are also subject to certain contractual obligations to customers 39 Table of Contents and other third parties related to privacy, data protection and data security.
We are also subject to certain contractual obligations to customers and other third parties related to privacy, data protection and data security.
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.
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, armed conflicts in various regions including the Middle East and Eastern Europe, political changes and their impact on the economic markets, 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.
As the regulatory guidance and enforcement landscape in relation to data transfers continue to develop, we could suffer additional costs, complaints and/or regulatory investigations or fines; we may have to stop using certain tools and vendors and make other operational changes; and/or it could otherwise affect the manner in which we provide our services, and could adversely affect our business, operations and financial condition.
As the regulatory guidance and enforcement landscape in relation to data transfers continue to develop, we could suffer additional costs, complaints and/or regulatory investigations or fines; we may have to stop using certain tools and vendors, implement alternative data transfer mechanisms and/or take additional compliance and operational measures; and/or it could otherwise affect the manner in which we provide our services, and could adversely affect our business, operations and financial condition.
Our business platform, products and solutions, and those of third-party providers we rely on, involve the collection, storage, processing, transmission, and other use of data, including certain proprietary, confidential, sensitive, and personal information of ours and our customers (collectively, “Confidential Information").
Our IT Systems, and those of third-party providers we rely on, involve the collection, storage, processing, transmission, and other use of data, including certain proprietary, confidential, sensitive, and personal information of ours and our customers (collectively, “Confidential Information”).
Consequently, we have reassessed those relationships and took measures to comply with these Trade Controls. These Trade Controls are evolving and undergoing constant changes as the war continues, which may require changes in or cessation of our dealings with Russia and other regimes in the region or elsewhere. It is not possible to assess the full impact of those developments.
Consequently, we have reassessed those relationships and took measures to comply with these Trade Controls. These Trade Controls are evolving and undergoing constant changes as the war continues, which may require reassessment, changes in or cessation of our dealings with Russia and other regimes in the region or elsewhere.
As of December 31, 2023, we had approximately $34.7 million of borrowings outstanding under the Term Loan Facility (as defined below) and $25.0 million available for additional borrowings under the Revolving Credit Facility (as defined below).
As of December 31, 2024, we had approximately $32.3 million of borrowings outstanding under the Term Loan Facility (as defined below) and $25.0 million available for additional borrowings under the Revolving Credit Facility (as defined below).
We currently derive a significant portion of our revenue from a limited number of customers. Our top ten customers in the aggregate accounted for approximately 28.9%, 27.8% and 31.0% of our revenue for the years ended December 31, 2023, 2022 and 2021, respectively. For the year ended December 31, 2023, Vodafone accounted for approximately 10.2% of our revenue.
We currently derive a significant portion of our revenue from a limited number of customers. Our top ten customers in the aggregate accounted for approximately 30.8%, 28.9% and 27.8% of our revenue for the years ended December 31, 2024, 2023 and 2022, respectively.
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.
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 has adversely affected our ability to retain our existing customers and our ability to generate renewals and up-sales. We expect these trends to continue in the near-term.
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.
Many factors may contribute to declines in our growth rate, including slower 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 or regional economic downturns, including as a result of the continuing geopolitical tensions and active armed conflicts, and failure to adapt to such downturns, among others.
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.
Our IT Systems, and those of third parties providers 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.
Anyone can download a free copy of this version of our platform from the internet, and we neither know who all of our AGPL licensees are, nor have visibility into how Kaltura CE is being used by licensees, so our ability to detect violations of the open source license is extremely limited.
The AGPL grants licensees broad freedom to view, use, copy, modify and redistribute the source code of Kaltura CE. 32 Table of Contents Anyone can download a free copy of this version of our platform from the internet, and we neither know who all of our AGPL licensees are, nor have visibility into how Kaltura CE is being used by licensees, so our ability to detect violations of the open source license is extremely limited.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeSee “Risk Factors – Risks Related to Information Technology, Intellectual Property and Data Privacy and Security” - "A real or perceived bug, defect, security vulnerability, error, or other performance failure involving our platform, products or solutions could cause us to lose revenue, damage our reputation, and expose us to liability." and "If we or our third-party service providers experience a security breach, data loss or other compromise, including if unauthorized parties obtain access to our customers’ data, our reputation may be harmed, demand for our platform, products and solutions may be reduced, and we may incur significant liabilities." Cybersecurity Governance Cybersecurity risk is a critical aspect of our Board of Directors' risk oversight function.
Biggest changeSee “Risk Factors – Risks Related to Information Technology, Intellectual Property and Data Privacy and Security” - “A real or perceived bug, defect, security vulnerability, error, or other performance failure involving our platform, products or solutions could cause us to lose revenue, damage our reputation, and expose us to liability.” and “If we or our third-party service providers experience a security breach, data loss or other compromise, including if unauthorized parties obtain access to our customers’ data, our reputation may be harmed, demand for our platform, products and solutions may be reduced, and we may incur significant liabilities.” 71 Table of Contents Cybersecurity Governance Cybersecurity risk is a critical aspect of our Board of Directors' risk oversight function.
Department of State, Senior Lead Information Security Architect at one of the Israeli leading banks, and Head of Cyber Architecture, Engineering & Research Group at one of the leading Israeli Aerospace & Defense companies. The team reporting to our CISO further includes experienced specialists in the area of Cyber Forensics and Counterterrorism and Network Security Engineers holding B.S.
Department of State, Senior Lead Information Security Architect at one of the Israeli leading banks, and Head of Cyber Architecture, Engineering and Research Group at one of the leading Israeli Aerospace and Defense companies. The team reporting to our CISO further includes experienced specialists in the area of Cyber Forensics and Counterterrorism and Network Security Engineers holding B.S.
Our cybersecurity risk management program is further informed by the industry-recognized certifications we have obtained through comprehensive third-party evaluations, including ISO/IEC 27001, ISO 27701, ISO 27799, ISO 22301, SOC 2 Type 2, and SOC 3.
Our cybersecurity risk management program is further informed by the industry-recognized certifications we have obtained through comprehensive third-party evaluations, including ISO/IEC 27001:2022, ISO 27701, ISO 27799, ISO 22301, SOC 2 Type 2, and SOC 3.
Risk Assessments: A risk assessment process to identify and evaluate material cybersecurity threats to our systems, data, products, services, and overall IT environment. a. Security Team Expertise: Our security team, led by our Chief Information Security Officer (CISO), who oversees our cybersecurity risk assessments, the implementation of security controls, and the coordination of our incident response efforts. a.
Risk Assessments: A risk assessment process to identify and evaluate material cybersecurity threats to our systems, data, products, services, and overall IT environment. b. Security Team Expertise: Our security team, led by our Chief Information Security Officer (CISO), who oversees our cybersecurity risk assessments, the implementation of security controls, and the coordination of our incident response efforts. c.
Incident Response Preparedness: Our incident response plan outlines our approach to addressing and responding to cybersecurity incidents and to findings, vulnerabilities and incidents that could lead to or allegedly be suspected as cybersecurity incidents. a.
Incident Response Preparedness: Our incident response plan outlines our approach to addressing and responding to cybersecurity incidents and to findings, vulnerabilities and incidents that could lead to or allegedly be suspected as cybersecurity incidents. f.
The Board has entrusted the Audit Committee with the oversight of cybersecurity and other IT-related risks. This committee monitors the execution of our cybersecurity risk management program. 61 Table of Contents Regular briefings are provided to the Audit Committee by management, regarding the cybersecurity risk landscape and any significant cybersecurity incidents.
The Board has entrusted the Audit Committee with the oversight of cybersecurity and other IT-related risks. This committee monitors the execution of our cybersecurity risk management program. Regular briefings are provided to the Audit Committee by management, regarding the cybersecurity risk landscape and any significant cybersecurity incidents.
External Collaboration: We engage with external service providers, where appropriate, for assessing and testing our security processes and controls. a. Cybersecurity Awareness Training: Security awareness and training programs for our employees. a.
External Collaboration: We engage with external service providers, where appropriate, for assessing and testing our security processes and controls. d. Cybersecurity Awareness Training: Security awareness and training programs for our employees. e.
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Our management team takes steps to stay informed about and monitor efforts to prevent, detect, mitigate, and remediate cybersecurity risks and incidents through various means, which may include: briefings from internal security personnel; threat intelligence and other information obtained from governmental, public or private sources, including external consultants engaged by us; and alerts and reports produced by security tools deployed in our IT environment.

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. 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.
Biggest changeWe also subscribe for co-working office spaces in Singapore and London. 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.
Starting from June 2022, we also lease approximately 5,926 square meters (approximately 63,784 square feet) of office space in Bnei-Brak, Israel, for our Israeli center, where among others, our primary research and development, human resources, and certain other finance and administrative activities are based.
We also lease approximately 5,926 square meters (approximately 63,784 square feet) of office space in Bnei-Brak, Israel, where our primary research and development, human resources, and certain other finance and administrative activities, among others, are based. The lease for our Israeli center expires in November 2027 with two extension options of five years each.
Removed
We believe that our current facilities are adequate to meet our current needs for the immediate future.

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. 62 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. 72 Table of Contents PART II

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changeItem 4. Mine Safety Disclosures 62 PART II Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 63 Item 6. [Reserved] 64 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 64 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 82 Item 8.
Biggest changeItem 4. Mine Safety Disclosures 72 PART II Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 73 Item 6. [Reserved] 74 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 75 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 93 Item 8.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThe 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.
Biggest changeUse 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.
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.
Holders As of February 13, 2025, there were 1,385 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.
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.
Performance Graph The following graph and table illustrate the total return from July 21, 2021 through December 31, 2024 for (i) our common stock, (ii) the Nasdaq Composite Index, and (iii) the Nasdaq Computer & Data Processing Index.
Added
Recent Sales of Unregistered Securities; Purchases of Equity Securities by the Issuer or Affiliated Purchaser The following table presents information with respect to the Company’s purchases of its common stock during the three months ended December 31, 2024: Period Total Number of Shares Purchased (1) Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (in Thousands) October 1, 2024 to October 31, 2024 388,596 $ 1.34 388,596 $ 2,299 November 1, 2024 to November 30, 2024 86,544 $ 1.74 86,544 $ 2,157 December 1, 2024 to December 31, 2024 4,500 $ 2.00 4,500 $ 2,148 Total 479,640 479,640 (1) On June 11, 2024, the Company’s board of directors authorized a stock repurchase program of the Company’s outstanding common stock for up to $5 million of the Company’s common stock (the “Repurchase Program”).
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Under the Repurchase Program, the Company may make repurchases, from time to time, through open market purchases, block trades, in privately negotiated transactions, accelerated stock repurchase transactions, or by other means. The Company may also, from time to time, enter into Rule 10b5-1 plans to facilitate repurchases under this authorization.
Added
The volume, timing, and manner of any repurchases will be determined at the Company’s discretion, subject to general market conditions, as well as the Company’s management of capital, general business conditions, other investment opportunities, regulatory requirements and other factors. 73 Table of Contents The Repurchase Program does not obligate the Company to repurchase any specific amount of common stock, has no time limit, and may be modified, suspended, or discontinued at any time without notice at the discretion of the Board of Directors.
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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.

Item 7. Management's Discussion & Analysis

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

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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.
Biggest changeYear Ended December 31, Period-over-Period Change 2024 2023 Dollar Percentage Revenue: (in thousands, except percentages) Enterprise, Education & Technology $ 128,704 $ 125,154 $ 3,550 3 % Media & Telecom $ 50,013 $ 50,018 $ (5) 0 % Total revenue 178,717 175,172 3,545 2 % Cost of revenue 59,611 62,938 (3,327) (5) % Total gross profit 119,106 112,234 6,872 6 % Operating expenses: Research and development expenses 49,430 52,400 (2,970) (6) % Sales and marketing expenses 47,766 48,798 (1,032) (2) % General and administrative expenses 46,009 48,718 (2,709) (6) % Restructuring — 973 (973) (100) % Total operating expenses 143,205 150,889 (7,684) (5) % Loss from operations 24,099 38,655 (14,556) (38) % Financial Income, net (434) (1,200) 766 (64) % Loss before provision for income taxes 23,665 37,455 (13,790) (37) % Provision for income taxes 7,650 8,911 (1,261) (14) % Net loss $ 31,315 $ 46,366 $ (15,051) (32) % Comparison of the Years Ended December 31, 2024 and 2023 Segments We currently manage and report operating results through two reportable segments. • Enterprise, Education & Technology (72% and 71% of revenue for the year ended December 31, 2024 and 2023, 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 (28% and 29% of revenue for the year ended December 31, 2024 and 2023, respectively): Our M&T segment primarily represents revenues from our TV Solution and Media Services sold to media and telecom customers. 83 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 2024 2023 Dollar Percentage (in thousands, except percentages) Enterprise, Education & Technology revenue: Subscription $ 124,215 $ 120,600 $ 3,615 3 % Professional services 4,489 4,554 (65) (1) % Total Enterprise, Education & Technology revenue $ 128,704 $ 125,154 $ 3,550 3 % Total Enterprise, Education & Technology gross profit (loss): Subscription $ 101,284 $ 95,168 $ 6,116 6 % Professional services (4,356) (3,544) (812) 23 % Total Enterprise, Education & Technology gross profit $ 96,928 $ 91,624 $ 5,304 6 % Enterprise, Education & Technology Revenue Total EE&T revenue increased by $3.6 million , or 3%, to $128.7 million for the year ended December 31, 2024, from $125.2 million for the year ended December 31, 2023.
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.
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.
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 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; 89 Table of Contents • enter into new lines of business; and • make certain amendments to our or their respective organizational documents or certain material contracts.
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.
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, 2024) (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.
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.
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. 82 Table of Contents Results of Operations The following table summarizes key components of our results of operations for the periods presented.
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.
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, 2024, we had no balance outstanding under the Revolving Credit Facility and the total revolving commitment of $25.0 million is available for future borrowings.
Gross Margins Gross margins have been, and will continue to be, affected by a variety of factors, including the average sales price of our products and services, volume growth, the mix of revenue between SaaS and PaaS subscriptions, software licenses, maintenance and support and professional services, onboarding of new media and telecom customers, hosting of major virtual events and changes in cloud infrastructure and personnel costs.
Gross margins have been, and will continue to be, affected by a variety of factors, including the average sales price of our products and services, volume growth, the mix of revenue between software licenses, maintenance and support, professional services, onboarding of new media and telecom customers, hosting of major virtual events, and changes in cloud infrastructure and personnel costs.
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.
See Note 7, Leases, to the audited consolidated financial statements included elsewhere in this Annual Report on Form 10-K for additional information. 91 Table of Contents (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.
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.
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, 2024 and 2023, and year-to-year comparisons between fiscal 2024 and fiscal 2023.
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, such as sales commissions. Additional expenses include marketing program costs and amortization of acquired customer relationships intangible assets.
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, such as sales commissions. 81 Table of Contents Additional expenses include marketing program costs and amortization of acquired customer relationships intangible 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.
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.
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.
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, 2023 to the year ended December 31, 2024.
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.
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 Gen AI-powered capabilities designed to increase productivity in creating content and setting up events and to foster user engagement.
By presenting Adjusted EBITDA, we provide a basis for comparison of our business operations between periods by excluding items that we do not believe are indicative of our core operating performance. We believe that investors’ understanding of our performance is enhanced by including this non-GAAP financial measure as a reasonable basis for comparing our ongoing results of operations.
By presenting EBITDA and Adjusted EBITDA, we provide a basis for comparison of our business operations between periods by excluding items that we do not believe are indicative of our core operating performance. We believe that investors’ understanding of our performance is enhanced by including these non-GAAP financial measures as a reasonable basis for comparing our ongoing results of operations.
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.
Obligations under contracts that we can cancel without a significant penalty are not included in the table above. We reported other liabilities of $12.8 million in our consolidated balance sheet at December 31, 2024, which principally consists of unrecognized tax benefits.
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 define EBITDA as net profit (loss) before interest expense, net, provision for income taxes and depreciation and amortization expenses.
Non-GAAP Financial Measures In addition to our results determined in accordance with GAAP, we believe that EBITDA and Adjusted EBITDA, non-GAAP financial measures, are useful in evaluating the performance of our business. 78 Table of Contents We define EBITDA as net profit (loss) before interest expense, net, provision for income taxes and depreciation and amortization expenses.
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 also grew our Annualized Recurring Revenue (as defined below), by 6% in the year ended December 31, 2024, compared to the year ended December 31, 2023, demonstrating our ability to land new customers with higher spending levels and increase revenue from our existing customers.
Adjusted EBITDA is presented because we believe that it provides useful supplemental information to investors and analysts regarding our operating performance and is frequently used by these parties in evaluating companies in our industry.
EBITDA and Adjusted EBITDA are presented because we believe that they provide useful supplemental information to investors and analysts regarding our operating performance and are frequently used by these parties in evaluating companies in our industry.
In some of our SaaS and PaaS subscriptions, we determined that the professional services are solely set up activities that do not transfer goods or services to the customer and therefore are not accounted for as a separate performance obligation and are recognized ratably over the time of the subscription.
In some of our arrangements, professional services are accounted for as a separate performance obligation, and revenue is recognized upon rendering of the service. 80 Table of Contents In some of our SaaS and PaaS subscriptions, we determined that the professional services are solely set up activities that do not transfer goods or services to the customer and therefore are not accounted for as a separate performance obligation and are recognized ratably over the time of the subscription.
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.
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.
The increase is mainly attributable to a $3.8 million increase in revenue from new customers, and a $1.2 million increase from existing customers. EE&T subscription revenue increased by $7.0 million, or 6%, to $120.6 million for the year ended December 31, 2023, from $113.6 million for the year ended December 31, 2022.
The increase is mainly attributable to a $2.1 million increase in revenue from new customers, and a $1.5 million increase from existing customers. EE&T subscription revenue increased by $3.6 million, or 3%, to $124.2 million for the year ended December 31, 2024, from $120.6 million for the year ended December 31, 2023.
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.
Provision for Income Taxes Provision for income taxes decreased by $1.3 million, or 14%, to $7.7 million for the year ended December 31, 2024, from $8.9 million for the year ended December 31, 2023, primarily due to a decreased 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, 2023 and 2022, our Net Dollar Retention Rate was 100%.
For the years ended December 31, 2024 and 2023, our Net Dollar Retention Rate was 100% and 101%, 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.
For our M&T segment, gross margins for the years ended December 31, 2024, 2023 and 2022 were 44% (55% for subscription and (25)% for professional services), 41% (55% for subscription and (35)% for professional services) and 48% (63% for subscription and (13)% 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.
For our EE&T segment, gross margins for the years ended December 31, 2024, 2023 and 2022 were 75% (82% for subscription and (97)% for professional services), 73% (79% for subscription and (78)% for professional services) and 70% (78% for subscription and (63)% for professional services), respectively.
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.
As of December 31, 2024, we had no balance outstanding under the Revolving Credit Facility and the total revolving commitment of $25.0 million remains available for future borrowings. As of December 31, 2024, we had approximately $32.3 million of borrowings outstanding under the Term Loan Facility.
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.
We expect our sales and marketing expenses to be relatively stable as a percentage of revenue. 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.
The decrease was primarily due to a $6.4 million decrease in compensation which mainly related to lower headcount as a result of our Reorganization Plans, partially offset by a $1.1 million increase in subcontractors and consultants as a result of outsourcing part of the efforts related to specific projects.
The decrease was primarily due to a $2.3 million decrease in compensation expenses which mainly related to lower headcount, and a $1.0 million decrease in IT related expenses, partially offset by a $0.4 million increase in subcontractors and consultants expenses mainly as a result of outsourcing part of the efforts related to specific projects.
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.
The Term Loan Facility is payable in consecutive quarterly installments on the last day of each fiscal quarter in an amount equal to (i) $0.4 million for installments payable on December 31, 2023 (deferred to January 9, 2024), through September 30, 2024 (ii) $0.7 million for installments payable on December 31, 2024 ($0.2 million of the amount deferred to January 2025), through September 30, 2025, (iii) $1.3 million for installments payable on and after December 31, 2025.
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.
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.
Research and Development Our research and development expenses consist primarily of costs incurred for personnel-related expenses for our technical staff, including salaries and other direct personnel-related costs. Additional expenses include consulting and professional fees for third-party development resources and software subscriptions.
Research and Development Our research and development expenses consist primarily of costs incurred for personnel-related expenses for our technical staff, including salaries and other direct personnel-related costs. Additional expenses include consulting and professional fees for third-party development resources and software subscriptions. We expect our research and development expenses to gradually decrease as a percentage of revenue.
Our Net Dollar Retention Rate may fluctuate as a result of a number of factors, including the growing level of our revenue base, the level of penetration within our customer base, expansion of products and features, and our ability to retain our customers. Our calculation of Net Dollar Retention Rate may differ from similarly titled metrics presented by other companies.
Our Net Dollar Retention Rate may fluctuate as a result of a number of factors, including the growing level of our revenue base, the level of penetration within our customer base, expansion of products and features, and our ability to retain our 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.
M&T subscription revenue increased by $1.3 million, or 3%, to $43.5 million for the year ended December 31, 2024, from $42.2 million for the year ended December 31, 2023 the increase is mainly attributable to $1.3 million increase in revenue from existing customers.
As of December 31, 2023, the current rate of interest under the Credit Facilities was equal to a rate per annum of 7.98%, consisting of 5.32% (the 3-month SOFR rate as of December 31, 2023), 0.10% credit spread adjustment and the margin of 2.50%.
As of December 31, 2024, the current rate of interest under the Credit Facilities was equal to a rate per annum of 6.93%, consisting of 4.33% (the 3-month SOFR rate as of December 31, 2024), 0.10% credit spread adjustment and the margin of 2.50%.
In order for us to increase revenue within our customer base, we will need to maintain engineering-level customer support and continue to introduce new products and features as well as innovative new use cases that are tailored to our customers' needs.
For the year ended December 31, 2024, our Net Dollar Retention Rate was 100%. In order for us to increase revenue within our customer base, we will need to maintain engineering-level customer support and continue to introduce new products and features as well as innovative new use cases that are tailored to our customers' needs.
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.
A discussion of our financial condition and results of operations for the fiscal year ended December 31, 2022 and year-to-year comparisons between fiscal 2023 and fiscal 2022 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, 2023, filed on February 22, 2024 Overview We are Kaltura, Inc.
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.
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. 79 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, 2024 2023 2022 (in thousands) Net loss $ (31,315) $ (46,366) $ (68,495) Financial expenses (income), net (a) (434) (1,200) 4,248 Provision for income taxes 7,650 8,911 7,868 Depreciation and amortization 5,064 4,717 2,707 EBITDA (19,035) (33,938) (53,672) Non-cash stock-based compensation expense 26,264 29,980 23,645 Facility exit and transition costs (b) — 154 524 Restructuring (c) — 973 1,238 War related costs (d) 44 331 — Adjusted EBITDA $ 7,273 $ (2,500) $ (28,265) (a) The year ended December 31, 2024, 2023 and 2022 includes $2.7 million, $3.2 million and $2.3 million, respectively, of interest expenses ,and $3.4 million , $2.7 million and $1.0 million , respectively, of interest income.
We meet the definition of an “emerging growth company” and have elected to use this extended transition period for complying with new or revised accounting standards until the earlier of the date we (x) are no longer an emerging growth company, or (y) affirmatively and irrevocably opt out of the extended transition period provided in the JOBS Act.
This provision allows an “emerging growth company” to delay the adoption of new or revised accounting standards that have different transition dates for public and private companies until those standards would otherwise apply to private companies. 92 Table of Contents We meet the definition of an “emerging growth company” and have elected to use this extended transition period for complying with new or revised accounting standards until the earlier of the date we (x) are no longer an emerging growth company, or (y) affirmatively and irrevocably opt out of the extended transition period provided in the JOBS Act.
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.
Media & Telecom Gross Profit M&T gross profit increased by $1.6 million, or 8%, to $22.2 million for the year ended December 31, 2024, from $20.6 million for the year ended December 31, 2023.
In addition, our cash and cash equivalents are maintained at financial institutions in amounts that exceed federally insured limits.
“Risk Factors” and “—Key Factors Affecting Our Performance.” In addition, our cash and cash equivalents are maintained at financial institutions in amounts that exceed federally insured limits.
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.
For the Year Ended December 31, 2024 2023 2022 (in thousands) Revenue Enterprise, Education & Technology $ 128,704 $ 125,154 $ 120,190 Media & Telecom 50,013 50,018 48,621 Total Revenue $ 178,717 $ 175,172 $ 168,811 Gross Profit Enterprise, Education & Technology 96,928 91,624 83,812 Media & Telecom 22,178 20,610 23,128 Total Gross Profit $ 119,106 $ 112,234 $ 106,940 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 any given year, a large majority of our revenue comes from existing customers, with whom we are in active dialogue and tend to have visibility into their expected usage of our offerings. We focus our selling efforts on large organizations and sell our solutions primarily through direct sales teams and account teams.
For any given year, a large majority of our revenue comes from existing customers, with whom we are in active dialogue and tend to have visibility into their expected usage of our offerings.
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.
Net cash provided by operating activities of $12.2 million for the year ended December 31, 2024, was primarily due to $31.3 million in incremental net loss, adjusted for non-cash charges of $41.6 million, and net cash of $2.1 million due to changes in our operating assets and liabilities.
M&T subscription gross profit decreased by $1.0 million, or 4%, to $23.4 million for the year ended December 31, 2023, from $24.4 million for the year ended December 31, 2022.
M&T subscription gross profit increased by $0.5 million, or 2%, to $23.8 million for the year ended December 31, 2024, from $23.4 million for the year ended December 31, 2023.
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.
As of December 31, 2024, our Remaining Performance Obligations was $203.4 million, which consists of both billed consideration in the amount of $63.2 million and unbilled consideration in the amount of $140.2 million that we expect to invoice and recognize in future periods.
(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 .
(b) Facility exit and transition costs for the years ended December 31, 2023 and 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, 2023 includes costs related to conflicts in Israel, attributable to temporary relocation of key employees from Israel for business continuity purposes, purchase of emergency equipment for key employees for business continuity purposes, and charitable donation to communities directly impacted by the war. 70 Table of Contents Components of Results of Operations Revenue Subscription Our revenues are mainly comprised of revenue from SaaS and PaaS subscriptions.
These costs are attributable to the temporary relocation of key employees from Israel for business continuity purposes, the purchase of emergency equipment for key employees, charitable donations to communities directly impacted by the war, and office fixes and modifications. Components of Results of Operations Revenue Subscription Our revenues are mainly comprised of revenue from SaaS and PaaS subscriptions.
In particular, the gross margins in our M&T segment have been negatively impacted due to the resources required for implementation of our TV Solution and Media Services for TV experiences, which generally exceed those of our other offerings, resulting in a longer period from initial booking to go-live and a higher proportion of professional services revenue as a percentage of overall revenue.
In particular, the gross margins in the M&T segment are lower than in the EE&T segment because of resources required for implementing solutions for TV experiences, which generally exceed those of other offerings. This results in a longer period for M&T from initial booking to go-live and a higher proportion of professional services revenue as a percentage of overall revenue.
We use these metrics to assess the progress of our business, make decisions on where to allocate capital, time, and technology investments, and assess the near-term and long-term performance of our business.
We expect that our cost of revenue and operating expenses will fluctuate. Key Financial and Operating Metrics We measure our business using both financial and operating metrics. We use these metrics to assess the progress of our business, make decisions on where to allocate capital, time, and technology investments, and assess the near-term and long-term performance of our business.
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.
Financing Activities Net cash flows used in financing activities increased by $3.6 million for the year ended December 31, 2024 as compared to the year ended December 31, 2023.
In the event of failure of any of the financial institutions where we maintain our cash and cash equivalents, there can be no assurance that we will be able to access uninsured funds in a timely manner or at all. 77 Table of Contents If necessary, we may borrow funds under our Revolving Credit Facility to finance our liquidity requirements, subject to customary borrowing conditions.
In the event of failure of any of the financial institutions where we maintain our cash and cash equivalents, there can be no assurance that we will be able to access uninsured funds in a timely manner or at all.
Enterprise, Education & Technology Gross Profit EE&T gross profit increased by $7.8 million, or 9%, to $91.6 million for the year ended December 31, 2023, from $83.8 million for the year ended December 31, 2022. This increase was mainly due to a $5.0 million increase in revenue, and lower compensation costs mainly as a result of our Reorganization Plans.
Enterprise, Education & Technology Gross Profit EE&T gross profit increased by $5.3 million, or 6%, to $96.9 million for the year ended December 31, 2024, from $91.6 million for the year ended December 31, 2023. This increase was mainly due to a $3.6 million increase in revenue, and reduction in production costs, which is a result of improved efficiency.
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.
Contractual Obligations and Commitments The following table summarizes our contractual obligations and commitments as of December 31, 2024: Payments Due by Period (in thousands) Less than 1 year 1-3 years More than 3 years Debt obligations 1 $ 5,501 $ 31,233 Operating lease obligations 2 3,119 8,301 8,525 Purchase obligations 3 28,727 28,576 Total $ 37,347 $ 68,110 $ 8,525 (1) Represents borrowings outstanding under our Term Loan Facility as of December 31, 2024, together with estimated interest payments thereon based on the interest rates in effect for such indebtedness as of December 31, 2024.
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.
On July 22, 2024, we revised the Credit Agreement to modify the definition of “Liquidity” to include certain additional cash and cash equivalents. We were in compliance with these covenants as of December 31, 2024. The Credit Agreement also contains certain customary representations and warranties and affirmative covenants, and certain reporting obligations.
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.
M&T professional services gross loss decreased by $1.1 million, or 39%, to a gross loss of $1.7 million for the year ended December 31, 2024, from a gross loss of $2.7 million for the year ended December 31, 2023. 85 Table of Contents Operating Expenses Research and Development Expenses Year Ended December 31, Period-over-Period Change 2024 2023 Dollar Percentage (in thousands, except percentages) Employee compensation $ 34,413 $ 36,748 $ (2,335) (6) % Subcontractors and consultants 7,043 6,633 410 6 % IT related 4,847 5,806 (959) (17) % Other 3,127 3,213 (86) (3) % Total research and development expenses $ 49,430 $ 52,400 $ (2,970) (6) % Research and development expenses decreased by $3.0 million, or 6%, to $49.4 million for the year ended December 31, 2024, from $52.4 million for the year ended December 31, 2023.
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.
Additionally, a greater share of revenue in this segment is derived from customers licensing our offerings through private cloud and on‑premise deployments, which has an impact on our gross margin. Reflected below is a summary of reportable segment revenue and reportable segment gross profit for the years ended December 31, 2024, 2023 and 2022.
Remaining Performance Obligations Remaining Performance Obligations represents the amount of contracted future revenue that has not yet been delivered, including both subscription and professional services revenues. Remaining Performance Obligations consists of both deferred revenue and contracted non-cancelable amounts that will be invoiced and recognized in future periods.
Remaining Performance Obligations consists of both deferred revenue and contracted non-cancelable amounts that will be invoiced and recognized in future periods.
Non-cash charges primarily consisted of depreciation and amortization of $2.7 million, stock-based compensation expenses of $23.6 million and amortization of deferred contract acquisitions and fulfillment costs of $10.9 million.
Non-cash charges primarily consisted of depreciation and amortization of $5.1 million, stock-based compensation expenses of $26.3 million and amortization of deferred contract acquisitions and fulfillment costs of $11.4 million.
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 .
EE&T professional services revenue decreased by $0.1 million, or 1%, to $4.5 million for the year ended December 31, 2024, from $4.6 million for the year ended December 31, 2023.
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.
We expect to recognize 58% of our Remaining Performance Obligations as revenue over the next 12 months and the remainder over the next four years.
Net cash used in financing activities of $0.5 million for the year ended December 31, 2022 was primarily due to $3.0 million of loan repayments and an aggregate outflow of $0.2 million due to principal payment on finance lease and payment of debt issuance costs, offset by proceeds from exercise of stock options of $2.7 million.
Net cash used in financing activities of $3.5 million for the year ended December 31, 2024 was primarily due to repurchase of common stock of $2.9 million and $2.2 million of loan repayments partially offset by proceeds from the exercise of stock options of $1.6 million.
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.
Cash Flows The following table summarizes our cash flows for the periods presented: Year Ended December 31, 2024 2023 (in thousands) Net cash provided by (used in) operating activities $ 12,233 $ (8,303) Net cash used in investing activities (12,414) (1,583) Net cash provided by (used in) financing activities (3,534) 109 Effect of exchange rate changes on cash, cash equivalents and restricted cash 90 728 Net increase in cash, cash equivalents, and restricted cash (3,625) (9,049) Cash, cash equivalents, and restricted cash at beginning of period 36,784 45,833 Cash, cash equivalents and restricted cash at end of period $ 33,159 $ 36,784 Operating Activities Net cash flows provided by operating activities increased by $20.5 million for the year ended December 31, 2024, as compared to the year ended December 31, 2023.
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).
In July 2024, we entered into an amendment to the Credit Agreement with an existing lender, in connection with our Repurchase Program, which updated the aggregate amount of permitted Restricted Payments (as defined in the Credit Agreement, which term includes, among others, the repurchase of the Company’s outstanding common stock) and conditions for making such payments. 88 Table of Contents 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).
The main drivers of net cash outflows that were derived from the changes in operating assets and liabilities were related to an increase in trade receivables of $11.3 million, addition to deferred contract acquisition costs of $11.6 million, an aggregate decrease in employees accruals, accrued expenses and other liabilities of $3.8 million and an increase in prepaid expenses and other assets of $0.4 million, offset by an increase in deferred revenue of $7.5 million and an increase in trade payables of $3.1 million.
The main drivers of net cash inflows that were derived from the changes in operating assets and liabilities were related to an increase of $5.4 million in accrued expenses and other current liabilities, a decrease in trade receivables of $3.3 million, an increase of $2.7 million in employees and payroll accruals and an increase of $0.5 million in deferred revenue, partially offset by an increase in deferred contract acquisition costs of $7.5 million, an increase of $1 million in prepaid expenses and other current assets and a decrease in trade payables of $0.5 million. 90 Table of Contents 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.
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.
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, facility exit and transition costs, restructuring charges, other non-recurring operating expenses and costs related to conflicts in Israel.
Sales and Marketing Expenses Year Ended December 31, Period-over-Period Change 2023 2022 Dollar Percentage (in thousands, except percentages) Employee compensation & commission $ 39,154 $ 48,021 $ (8,867) (18) % Marketing expenses 3,951 5,771 (1,820) (32) % Travel and entertainment 1,480 1,520 (40) (3) % Other 4,213 3,968 245 6 % Total sales and marketing expenses $ 48,798 $ 59,280 $ (10,482) (18) % S ales and marketing expenses decreased by $10.5 million, or 18%, to $48.8 million for the year ended December 31, 2023, from $59.3 million for the year ended December 31, 2022.
Sales and Marketing Expenses Year Ended December 31, Period-over-Period Change 2024 2023 Dollar Percentage (in thousands, except percentages) Employee compensation & commission $ 39,182 $ 39,154 $ 28 0 % Marketing expenses 3,366 3,951 (585) (15) % Travel and entertainment 1,123 1,480 (357) (24) % Other 4,095 4,213 (118) (3) % Total sales and marketing expenses $ 47,766 $ 48,798 $ (1,032) (2) % Sales and marketing expenses decreased by $1.0 million, or 2%, to $47.8 million for the year ended December 31, 2024, from $48.8 million for the year ended December 31, 2023.
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.
Additionally, a higher proportion of M&T revenue comes from customers who choose to license our offerings through private cloud and on-premise deployments, which also impacts our M&T gross margin. Going forward, we expect to see a gradual improvement in gross margins for both EE&T and M&T, driven by enhanced efficiencies in both production and professional services costs.
Financial Expenses (Income), net Financial expenses (income), net decreased by $5.4 million, or 128%, to $1.2 million income, net for the year ended December 31, 2023, from $4.2 million of expense, net for the year ended December 31, 2022. The decrease was mainly related to foreign currency translation adjustments, net.
Financial Expenses (Income), net Financial income, net decreased by $0.8 million, or 64%, to $0.4 million, for the year ended December 31, 2024, from $1.2 million for the year ended December 31, 2023.
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.
We believe 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 12 months. 87 Table of Contents 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.
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.
We expect our general and administrative expenses to gradually decrease as a percentage of revenue. We allocate overhead costs such as rent, utilities, and supplies to all departments based on relative headcount to each operating expense category.
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.
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.
We consider subdivisions of the same legal entity (for example, divisions of a parent company or separate campuses that are part of the same state university system) to be a single customer for purposes of calculating our Net Dollar Retention Rate.
As previously disclosed, in 2024 we updated our customer count methodology, which is used to calculate our Net Dollar Retention Rate, to treat subdivisions of the same legal entity (for example, divisions of a parent company or separate campuses that are part of the same state university system), as well as Value-add Resellers (“VARs”) (meaning resellers that directly manage the relationship with the customer) and the customers they manage, to be a single customer.
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.
EE&T professional services gross loss increased by $0.8 million, or 23%, to $4.4 million for the year ended December 31, 2024, from a gross loss of $3.5 million for the year ended December 31, 2023 . 84 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 2024 2023 Dollar Percentage (in thousands, except percentages) Media & Telecom revenue: Subscription $ 43,466 $ 42,150 $ 1,316 3 % Professional services 6,547 7,868 (1,321) (17) % Total Media & Telecom revenue $ 50,013 $ 50,018 $ (5) 0 % Media & Telecom gross profit (loss): Subscription $ 23,845 $ 23,358 $ 487 2 % Professional services (1,667) (2,748) 1,081 (39) % Total Media & Telecom gross profit $ 22,178 $ 20,610 $ 1,568 8 % Media & Telecom Revenue M&T revenue remained unchanged, totaling $50.0 million for both the year ended December 31, 2024 and the year ended December 31, 2023.
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.
The key financial and operating metrics we use are: For the Year Ended December 31, 2024 2023 2022 (in thousands, except percentages) Annualized Recurring Revenue $ 173,900 $ 164,723 $ 159,238 Net Dollar Retention Rate 100 % 101% (a) 100 % Remaining Performance Obligations $ 203,379 $ 185,305 $ 171,660 (a) The Net Dollar Retention Rate for the year ended December 31, 2023 has been recast to reflect the update to our customer count methodology, as discussed further below, which has resulted in an adjustment of 1 percentage point to the reported Net Dollar Retention Rate for such period.
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.
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.
If we are unable to raise additional funds when desired, our business, financial condition and results of operations could be adversely affected.
If we are unable to raise additional funds when desired, our business, financial condition and results of operations could be adversely affected. Repurchase Program On June 11, 2024, the Company’s board of directors authorized a stock repurchase program of the Company’s outstanding common stock for up to $5.0 million of the Company’s common stock (the “Repurchase Program”).
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.
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 and Technology (“EE&T”): In the EE&T segment, subscription revenue is primarily generated on a per full‑time equivalent or platform usage‑license basis for all of our products, in addition to revenue derived from associated professional services.
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.
Net cash used in investing activities of $12.4 million for the year ended December 31, 2024 was related to investment in available-for-sale marketable securities of $50.9 million and $0.5 million in capital expenditures, offset by maturities of available-for-sale marketable securities of $39.0 million.
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.
M&T professional services revenue decreased by $1.3 million, or 17%, to $6.5 million for the year ended December 31, 2024, from $7.9 million for the year ended December 31, 2023. The decrease is mainly attributable to the completion of setup for certain customers in the year ended December 31, 2023, for which professional services revenue was recognized at that time.
The decrease was primarily due to a $9.5 million decrease in compensation related to lower headcount as result of our Reorganization Plans and a $1.8 million decrease in other marketing expenses , partially offset by a $0.7 million increase in amortization of deferred commission expenses driven by accumulated higher bookings from previous years being amortized in 2023. . 76 Table of Contents General and Administrative Expenses Year Ended December 31, Period-over-Period Change 2023 2022 Dollar Percentage (in thousands, except percentages) Employee compensation $ 35,871 $ 30,779 $ 5,092 17 % Professional fees and insurance 4,510 6,208 (1,698) (27) % IT related 2,278 2,701 (423) (16) % Human resources related 1,913 1,861 52 3 % Subcontractors and consultants 1,074 1,343 (269) (20) % Travel and entertainment 741 427 314 74 % Other 2,331 2,095 236 11 % Total general and administrative expenses $ 48,718 $ 45,414 $ 3,304 7 % General and administrative expenses increased by $3.3 million or 7% , to $48.7 million for the year ended December 31, 2023, from $45.4 million for the year ended December 31, 2022.
The decrease was primarily due to a $0.6 million decrease in other marketing expenses mainly due to improved efficiency in managing the marketing budget and a $0.4 million decrease in travel expenses. 86 Table of Contents General and Administrative Expenses Year Ended December 31, Period-over-Period Change 2024 2023 Dollar Percentage (in thousands, except percentages) Employee compensation $ 32,284 $ 35,871 $ (3,587) (10) % Professional fees and insurance 4,329 4,510 (181) (4) % IT related 2,381 2,278 103 5 % Human resources related 1,328 1,913 (585) (31) % Subcontractors and consultants 1,413 1,074 339 32 % Travel and entertainment 751 741 10 1 % Unused cloud hosting commitment expense 1,312 — 1,312 NM Other 2,211 2,331 (120) (5) % Total general and administrative expenses $ 46,009 $ 48,718 $ (2,709) (6) % General and administrative expenses decreased by $2.7 million or 6% , to $46.0 million for the year ended December 31, 2024, from $48.7 million for the year ended December 31, 2023.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

8 edited+0 added−0 removed4 unchanged
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.
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 in March 2022. Currently, our hedging activity relates to U.S. dollar/NIS exchange rate exposure.
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
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. 93 Table of Contents
A hypothetical 10% change in interest rates during the periods presented would have resulted in a change to interest expense of $0.3 million for the year ended December 31, 2023.
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, 2024.
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.
Interest Rate Risk As of December 31, 2024, we had outstanding floating rate debt obligations of $32.3 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.
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.
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, 2024, of $1.4 million due to NIS (after considering cash-flow hedges) and $5.1 million due to Euros.
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.
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.
These foreign currency exposures give rise to market risk associated with exchange rate movements of the U.S. dollar against the NIS and 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 that a significant portion of our revenue will continue to be denominated in Euros.
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.
Our hedging activities are expected to reduce but not eliminate the impact of currency exchange rate movements.

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