Q2 2024 Kaltura Inc Earnings Call

August 8, 2024

Erica Mannion: Good morning, everyone, and welcome to the Kaltura second quarter 2024 earnings call. All material contained in the webcast is the sole property and copyright of Kaltura with all rights reserved. For opening remarks and introductions, I will now turn the call over to Erica Mannion at Sapphire Investor Relations.

Operator: All material contained in the webcast is the sole property and copyright of Kaltura, with all rights reserved. For opening remarks and introductions, I will now turn the call over to Erica Mannion at Sapphire Investor Relations. Please go ahead.

Erica Mannion: For opening remarks and introductions, I will now turn the call over to Erica Mannion at Sapphire Investor Relations. Please go ahead.

Erica Mannion: Thank you and good morning. I'm joined by Ron Yekutiel, who is co-founder, chairman, president, and chief executive officer, and John Doherty, chief financial officer. Ron will begin with a summary of results for the second quarter ended June 30, 2024, and provide a business update. John will then review the financial results for the second quarter of 2024 in greater detail, followed by the company's outlook for the third quarter and full year of 2024. We will then open the call for questions.

Erica Mannion: Thank you and good morning. I'm joined by Ron Yekutiel. Kaltura's co-founder, chairman, president, and chief executive officer, and John Doherty, chief financial officer. Ron will begin with a summary of results for the second quarter ended June 30, 2024, and provide a business update. John will then review the financial results for the second quarter of 2024 in greater detail, followed by the company's outlook for the third quarter and full year of 2024.

Speaker Change: Please go ahead.

Erica Mannion: Thank you and good morning. I'm joined by Ron Yekutiel, Kaltura's co-founder, chairman, president, and chief executive officer, and John Doherty, chief financial officer. Ron will begin with a summary of results for the second quarter ended June 30, 2024, and provide a business update.

Speaker Change: John will then review the financial results for the second quarter of 2024 in greater detail, followed by the company's outlook for the third quarter and full year of 2024. We will then open the call for questions.

Erica Mannion: Please note that this call will include forward-looking statements within the meaning of the federal securities laws, including but not limited to statements regarding Kaltura's expected future financial results and management's expectations and plans for the business. These statements are neither promises nor guarantees and involve risks and uncertainties that may cause actual results to differ materially from those discussed here. Important factors that could cause actual results to differ from forward-looking statements can be found in the risk factors section of Kaltura's annual report on Form 10-K for the fiscal year ending December 31, 2023, and other SEC filings, including the quarterly report on Form 10-Q for the quarter ending June 30, 2024, to be filed with the SEC.

Erica Mannion: We will then open the call for questions. Please note that this call will include forward-looking statements within the meaning of the federal securities laws, including but not limited to statements regarding Kaltura's expected future financial results and management's expectations and plans for the business. These statements are neither promises nor guarantees and involve risks and uncertainties that may cause actual results to differ materially from those discussed here. Important factors that could cause actual results to differ from forward-looking statements can be found in the risk factors section of Kaltura's annual report on Form 10-K for the fiscal year ending December 31, 2023, and other SEC filings, including the quarterly report on Form 10-Q for the quarter ending June 30, 2024, to be filed with the SEC

Speaker Change: Please note that this call will include forward-looking statements within the meaning of the federal securities laws including but not limited to statements regarding Kaltura's expected future financial results and management's expectations and plans for the business.

Speaker Change: These statements are neither promises nor guarantees and involve risks and uncertainties that may cause actual results to differ materially from those discussed here.

Speaker Change: Important factors that could cause actual results to differ from forward-looking statements can be found in the risk factors section of Kaltura's annual report on Form 10-K for the fiscal year ended December 31, 2023, and other SEC filings, including the quarterly report on Form 10-Q for the quarter ended June 30, 2024, to be filed with the SEC.

Erica Mannion: Any forward-looking statements made during this conference call, including responses to your questions, are based on current expectations as of today, and Kaltura assumes no obligation to update or revise them, whether as a result of new developments or otherwise, except as required by law. Please note that during this call, we will be discussing a non-GAAP financial measure, adjusted EBITDA. For reconciliation of this non-GAAP financial measure to the most directly comparable GAAP metric, please refer to our earnings release, which is available on our website at www.investors.kaltura.com. Now, I'm pleased to hand the call over to Ron.

Speaker Change: Any forward-looking statements made during this conference call, including responses to your questions, are based on current expectations as of today, and Kaltura assumes no obligation to update or revise them, whether as a result of new developments or otherwise, except as required by law.

Speaker Change: Please note, during this call, we will be discussing a non-GAAP financial measure.

Ron: For a reconciliation of this non-GAAP financial measure to the most directly comparable GAAP metric, please refer to our earnings release, which is available on our website at www.investors.kaltura.com. Now I'm pleased to hand the call over to Ron.

Ron Yekutiel: Thank you, Erica, and welcome, everyone, to our second border earnings call. Total revenue for the second quarter of 2024 was $44.0 million, up marginally year over year, while subscription revenue was $41.0 million, up 1% year over year, of Notes, and in the second quarter, we posted a company record ARR of $165.2 million. As for our bottom line, we posted in the second quarter adjusted EBITDA of $1.6 million, representing our fourth consecutive quarter of adjusted EBITDA profitability and the highest result since the third quarter of 2020. Cash used in operations decreased to $1.6 million, an improvement from $4.1 million in the second quarter of 2023.

Ron Yekutiel: Thank you, Erica, and welcome everyone to our second quarter earnings call. Total revenue for the second quarter of 2024 was $44.0 million, up marginally year-over-year, while subscription revenue was $41.0 million, up 1% year-over-year. In Notes, and in the second quarter, we posted a company record ARR of $165.2 million. As for our bottom line, we posted an adjusted EBITDA of $1.6 million in the second quarter, representing our fourth consecutive quarter of adjusted EBITDA profitability and the highest result since the third quarter of 2020. Cash used in operations decreased to $1.6 million, an improvement from $4.1 million in the second quarter of 2023.

Ron: Thank you, Erica, and welcome everyone to our second quarter earnings call. Total revenue for the second quarter of 2024 was $44.0 million, up marginally year-over-year, while subscription revenue was $41.0 million, up 1% year-over-year.

Speaker Change: In the second quarter, we posted a company record ARR of $165.2 million.

Ron: As for our bottom line, we posted in the second quarter adjusted EBITDA of $1.6 million, representing our fourth consecutive quarter of adjusted EBITDA profitability, and the highest result since the third quarter of 2020.

Ron: Cash used in operations decreased to $1.6 million, an improvement from $4.1 million in the second quarter of 2023.

Ron Yekutiel: Taken together, our results for the second quarter lead us to increase our revenue and adjusted EBITDA guidance for the full year and to, once again, reaffirm our plan to post positive cash flow from operations for the full year. Moving on to the business, As expected, we saw renewed growth in new subscription bookings in the second quarter, which were at the highest level since the fourth quarter of 2022. In addition, the portion of new bookings from you, Enterprise Education and Technology customers, was at its highest level since the second quarter of 2023.

Ron: Taken together, our results for the second quarter lead us to increase our revenue and adjusted EBITDA guidance for the full year, and to once again reaffirm our plan to post positive cash flow from operations for the full year.

Ron: Moving on to the business update.

Ron: As expected, we saw renewed growth in new subscription bookings in the second quarter, which were at the highest level since the fourth quarter of 2022.

Ron: In addition, the portion of new bookings from new enterprise education and technology customers was at its highest level since the second quarter of 2023.

Ron Yekutiel: Our bookings from new customers and upsells included 23 six-digit deals spanning a diverse array of industries, use cases, and geographies. Customers include a large European government institute and a global pharmaceuticals leader, both new to Kaltura. One of the largest banks in the world, a leading healthcare software company, two of the world's largest tech companies, a large U.S. R1 university, and two large telecom companies. Youth Cases ran the gamut from Customer Marketing and Engagement, Employee and Channel Communication and Reskilling, Student Learning and Engagement, and Entertainment.

Ron: Our bookings from you customers and upsells included 23 six-digit deals spanning a diverse array of industries, use cases, and geographies.

Ron: Customers include a large European government institute and a global pharmaceuticals leader, both new to Kaltura.

Ron: One of the largest banks in the world, a leading healthcare software company, two of the world's largest tech companies, a large U.S. R1 university, and two large telecom companies.

Speaker Change: Youth Cases ran the gamut from Customer Marketing and Engagement, Employee and Channel Communication and Reskilling, Student Learning and Engagement, and Entertainment.

Speaker Change: Gross retention in the second quarter of 2024 remained at a similar level compared with the first quarter, which again was better than all quarterly results of 2023. This continues to represent an annualized gross retention rate that is higher than the previous three calendar years.

Ron Yekutiel: The combination of both higher growth subscription bookings and increasing growth retention rates has yielded the highest level of net new subscription bookings in the last six quarters, helping to fuel future subscription revenue. On the product front, in the second quarter, we continued boosting our event platform functionality and user experience with an improved F&B flow between sessions and admin group targeting, enhanced chat options, and a more robust analytics dashboard. In addition, we enriched our video portal content management and guest landing pages, added new features for admin sessions in our real-time conferencing rooms, and continued advancing our video player and the scalability and security of our platform, related to AI.

Ron: The combination of both higher gross subscription bookings and increasing gross retention rates has yielded the highest level of net new subscription bookings in the last six quarters, helping to fuel future subscription revenue.

Ron Yekutiel: In the second quarter, we continued boosting our event platform functionality and user experience with an improved FMV flow between sessions and admin group targeting, enhanced chat options, and a more robust analytics dashboard. In addition, we enriched our video portal content management and guest landing pages, added new features for admin sessions in our real-time conferencing rooms, and continued advancing our video player and the scalability and security of our platform, related to AI.

Ron: On the product front, in the second quarter we continued boosting our event platform functionality and user experience with an improved app and deep flow between sessions and admin group targeting, enhanced chat options and a more robust analytics dashboard.

Ron: In addition, we enriched our video portal content management and guest landing pages, added new features for admin sessions in our real-time conferencing rooms, and continued advancing our video player and the scalability and security of our platform.

Ron Yekutiel: This quarter, we added a number of product enhancements. We launched our internally developed AI-based automatic speech recognition service, based on Whisper, as an improved alternative to the non-AI-based third-party ASR services we previously provided. With the help of AI, captions are automatically generated within videos, regardless of the language spoken, enhancing accessibility and user experience.

Ron: Related to AI, this quarter we added a number of product enhancements.

Ron: We launched our internally developed AI-based automatic speech recognition service, based on Whisper, as an improved alternative to the non-AI-based third-party ASR services we previously provided.

Ron: With the help of AI, captions are automatically generated within videos, regardless of the language spoken, enhancing accessibility and user experience.

Ron Yekutiel: For our events and webinars products, we developed an AI-based email notification engine that automatically generates notifications for users based on ongoing session information, ensuring SMVs stay informed without manual intervention. We also developed a real-time AI-based sentiment analysis of user chat communications for event organizers and presenters. For our video portal, we added an AI-based quiz generator based on the transcript.

Ron: For our events and webinars products, we developed an AI-based email notification engine that automatically generates notifications for users based on ongoing session information, ensuring SMVs stay informed without manual intervention.

Ron: We also developed a real-time AI-based sentiment analysis of user chat communications for event organizers and presenters.

Ron: For our video portal, we added an AI-based quiz generator based on the transcript, and for our video conferencing rooms, we launched an AI-based noise cancellation feature for improved audio.

Ron Yekutiel: And for our video conferencing rooms, we launched an AI-based noise cancellation feature for improved audio. Product Leadership continues to yield industry awards as well this quarter. Amongst them are the 2024 Innovation and Business Martek Awards for Best Virtual Events Platform, the 2024 Event Technology Award for Best Virtual and Hybrid Event Platform, and four 2024 EventX Awards for Best Event Technology, Best Audience Engagement Technology, Best Data Collection and Event Analytics Technology, and Best Virtual Events Platform. In the past quarter, we also conducted our annual VIP events in New York, San Francisco, and London.

Ron Yekutiel: And for our video conferencing rooms, we launched an AI-based noise cancellation feature for improved audio. Product Leadership continues to yield industry awards as well this quarter. Amongst them are the 2024 Innovation and Business MARTEC Awards for Best Virtual Events Platform, the 2024 Event Technology Award for Best Virtual and Hybrid Event Platform, and four 2024 EventX Awards for Best Event Technology, Best Audience Engagement Technology, Best Data Collection and Event Analytics Technology, and Best Virtual Events Platform. In the past quarter, we also conducted our annual VIP events in New York, San Francisco, and London.

Ron: Our product leadership continued to yield industry awards as well this quarter. Amongst them are the 2024 Innovation and Business MARTEC Awards for Best Virtual Events Platform, the 2024 Event Technology Award for Best Virtual and Hybrid Event Platform,

Ron: and four 2024 EventX Awards for Best Event Technology, Best Audience Engagement Technology, Best Data Collection and Event Analytics Technology, and Best Virtual Events Platform.

Ron: In the passing quarter, we also conducted our annual VIP events in New York, San Francisco, and London.

Ron Yekutiel: Hundreds of customers and prospects attended Kaltura Connect On The Road 2024 and discussed how AI-infused video experiences could boost their business results. We had an amazing speaker lineup of marketing and corporate communications leaders from customers such as Adobe, Salesforce, Novartis, IBM, Mayo Clinic, Bloomberg, Siemens Healthineers, AstraZeneca, and Red Hat. During the event, we gave out Kaltura Digital Engagement Awards to companies that have demonstrated creative and exceptional use of our platform and have expanded the possibilities of digital experiences in the enterprise. The recipients across nine different categories included ABN AMRO, Adobe, Audible, Bank of America, Bloomberg, Spiti, IBM, Intuit, Netflix, Salesforce, and Siemens Salfonier.

Ron Yekutiel: Hundreds of customers and prospects attended Kaltura Connect On The Road 2024 and discussed how AI-infused video experiences could boost their business results. We had an amazing speaker lineup of marketing and corporate communications leaders from customers such as Adobe, Salesforce, Novartis, IBM, Mayo Clinic, Bloomberg, Siemens Healthineers, AstraZeneca, and Red Hat. During the event, we gave out Kaltura Digital Engagement Awards to companies that have demonstrated creative and exceptional use of our platform and have expanded the possibilities of digital experiences in the enterprise. Recipients across nine different categories included ABN AMRO, Adobe, Audible, Bank of America, Bloomberg, Spiti, IBM, Intuit, Netflix, Salesforce, and Siemens Salfonier.

Ron: Hundreds of customers and prospects attended Kaltura Connect On The Road 2024 and discussed how AI-infused video experiences could boost their business results.

Ron: We had an amazing speaker lineup of marketing and corporate communications leaders from customers such as Adobe, Salesforce, Novartis, IBM, Mayo Clinic, Bloomberg, Siemens Healthineers, AstraZeneca, and Red Hat.

Ron: During the event, we gave out Kaltura Digital Engagement Awards to companies that have demonstrated creative and exceptional use of our platform and have expanded the possibilities of digital experiences in the enterprise.

Ron: Recipients across nine different categories included ABN AMRO, Adobe, Audible, an Amazon company, Bank of America, Bloomberg, Citi, IBM, Intuit, Netflix, Salesforce, and Siemens Alphaneurs.

Ron Yekutiel: Lastly, I want to mention a couple of recent executive changes at Kaltura. Renown Goodman, our Chief Product Officer, and Lisa Bennett, our Chief Marketing Officer, are moving on after 10 and 17 years at Kaltura, respectively. We are appreciative of Renan's and Lisa's great contribution to Kaltura and wish them well in their new endeavors.

Ron Yekutiel: Lastly, I want to mention a couple of recent executive changes at Kaltura. Renown Goodman, our chief product officer, and Lisa Bennett, our chief marketing officer, are moving on after 10 and 17 years at Kaltura, respectively. We are appreciative of Renan's and Lisa's great contribution to Kaltura and wish them well in their new endeavors.

Speaker Change: Lastly, I want to mention a couple of recent executive changes in Kaltura.

Speaker Change: Renown Goodman, our Chief Product Officer, and Lisa Bennett, our Chief Marketing Officer, are moving on after 10 and 17 years at Kaltura, respectively.

Speaker Change: We are appreciative of Renan's and Lisa's great contribution to Kaltura and wish them well in their new endeavors.

Ron Yekutiel: Navia Zaria, who joined Kaltura three and a half years ago as general manager of our enterprise education and technology business and later held the role of chief revenue officer, succeeds Renan as our chief product officer and will also oversee marketing. Before joining Kaltura, Navia was the CEO of a data analytics company servicing enterprises and communications providers. Navi's prior experience included other leadership roles overseeing product and engineering. He also holds a degree in computer engineering. Yadish Karr, who has been with Kaltura for over 10 years, has assumed the role of Chief Spreading Officer.

Speaker Change: Navia Zaria, who joined Kaltura three and a half years ago as general manager of our enterprise education and technology business, and later held the role of chief revenue officer, succeeds Renan as our chief product officer, and will also oversee marketing.

Speaker Change: Before joining Kaltura, Navi was the CEO of a data analytics company servicing enterprises and communications providers. Navi's prior experience included other leadership roles overseeing product and engineering. He also holds a degree in computer engineering.

Speaker Change: The Yadish Karr, who has been with Kaltura for over 10 years, has assumed the role of Chief Threatening Officer.

Ron Yekutiel: Leod's most recent role was that of Chief Business Development Officer. Prior to that, he led all our sales customers and partners in the technology sector, including the biggest and most complex enterprise education and technology sales cycles and customers, which also contributed the most to our growth. The odd holds an MBA from Columbia Business School, an MA in Business Law, and a degree in Engineering.

Ron Yekutiel: Leod's most recent role was that of Chief Business Development Officer. Prior to that, he led all our sales, customers, and partners in the technology sector, including the biggest and most complex enterprise education and technology sales cycles and customers, which also contributed the most to our growth. DeYard holds an MBA from Columbia Business School, an MA in Business Law, and a degree in Engineering.

Speaker Change: Leod's most recent role was that of Chief Business Development Officer. Prior to that, Leod led all our sales customers and partners in the technology sector, including the biggest and most complex enterprise education and technology sales cycles and customers, which also contributed the most to our growth.

Speaker Change: The odd holds an MBA from Columbia Business School, an MA in Business Law, and a degree in Engineering.

Ron Yekutiel: In summary, As expected, in the second quarter, we saw sequential improvement in our new bookings and continued to yield a gross retention materially above quarterly results from last year. In light of that, and following our revenue and adjusted EBITDA outperformance in both the first and second quarters of the year, we are incrementally raising our revenue and adjusted EBITDA guidance for the year. We continue to believe there are stronger tailwinds ahead as companies reaccelerate their investments in digital transformation and online experiences.

John Doherty: In summary, As expected, in the second quarter, we saw sequential improvement in our new bookings and continued to yield a gross retention materially above quarterly results from last year. In light of that, and following our revenue and adjusted EBITDA outperformance in both the first and second quarters of the year, we are incrementally raising our revenue and adjusted EBITDA guidance for the year. We continue to believe there are stronger tailwinds ahead as companies reaccelerate their investments in digital transformation and online experiences.

Speaker Change: In summary, as expected, in the second quarter, we saw sequential improvement in our new bookings and continued to yield a gross retention materially above quarterly results from last year.

Speaker Change: In light of that, and following our revenue and adjusted EBITDA outperformance in both the first and second quarters of the year, we are incrementally raising our revenue and adjusted EBITDA guidance for the year.

Speaker Change: We continue to believe there are stronger tailwinds ahead as companies re-accelerate their investments in digital transformation and online experiences.

John Doherty: Fueling these initiatives are factors such as the increasingly hybrid workplace, growth in Gen Z and millennial video-savvy employees, cost savings by consolidating multiple enterprise video use cases around a single video platform, and the advent of Gen AI, which will bring about more creation and consumption of videos and increased ROI. We believe these trends will continue to grow our new bookings. With that, I'll turn it over to John, our CFO, to discuss our financial results in more detail. John.

Ron Yekutiel: Fueling these initiatives are factors such as the increasingly hybrid workplace, growth in Gen Z and millennial video-savvy employees, cost savings by consolidating multiple enterprise video use cases around a single video platform, and the advent of Gen AI, which will bring about more creation and consumption of videos and increase ROI. We believe these trends will continue to grow our new bookings. Celerate, A Revenue Growth, and the Increaser Plot. [inaudible] With that, I'll turn it over to John, our CFO, to discuss our financial results in more detail. John.

Speaker Change: fueling these initiatives are factors such as increasingly hybrid workplace growth in Gen Z and millennial video savvy employees

Speaker Change: by consolidating multiple enterprise video use cases around a single video platform at the advent of Gen AI, which will bring about more creation and consumption of videos and increased ROI. We believe these trends will continue to grow when you're booking.

Speaker Change: Accelerate our revenue growth and increase our profits.

Speaker Change: With that, I'll turn it over to John , our CFO , to discuss our financial results in more detail.

John Doherty: Thanks, Ron. And hello to everyone on the call today. Kaltura continues to make important adjustments to its business, including improving its operating efficiency, focusing on further monetizing our existing customer base, adding new logos, and reallocating resources towards higher ROI opportunities and marketing. I want to touch on a few highlights in the quarter that demonstrate these changes. The highlights include our sequential and year-over-year increase in new bookings, which more than doubled from Q1, and represents the highest new bookings since Q4 2022.

John: Thanks Ron and hello to everyone on the call today. Kaltura continues to make important adjustments to its business including improving our operating efficiency, focusing on further monetizing our existing customer base,

John: Adding new logos and reallocating resources towards higher ROI opportunities and markets. I want to touch on a few highlights in the quarter that demonstrate this.

John: The highlights include...

John: Our sequential and year-over-year increase in new bookings, which more than doubled from Q1, and represents the highest new bookings since Q4 2022.

John Doherty: Our sustained low level of gross churn for the second quarter in a row, an improvement from all quarters last year, and if annualized, represents a high watermark for the last three fiscal years. Our seventh consecutive quarter of year-over-year revenue growth, driven primarily by strength in our subscription revenue. Our growth in remaining performance obligations and the highest ARR to date, all of which has culminated in what we see as strong positioning to achieve our profitability targets with higher gross margin than the three prior quarters, lower year-over-year operating expenses, and continued improvement in adjusted EBITDA representing the fourth consecutive positive quarter, as Ron mentioned earlier. With that, let me move on to our results.

John: our sustainedable level of gross churn for the second quarter in a row and improvement from all quarters last year and if annualized represents a high watermark for the last three fiscal years

John: Our seventh consecutive quarter of year-over-year revenue growth, driven primarily by strength in our subscription revenue.

Speaker Change: Our growth in remaining performance obligations and the highest ARR to date, all of which has culminated in what we see as strong positioning to achieve our profitability targets.

Speaker Change: With higher gross margin than the three prior quarters, lower year-over-year operating expenses, and continued improvement in adjusted EBITDA, representing the fourth consecutive positive quarter, as Ron mentioned earlier.

John Doherty: Our results exceeded expectations for both revenue and adjusted EBITDA for the quarter. Total revenue for the quarter ended June 30, 2024 was $44 million, up 35 basis points year over year and above the high end of our guidance range of $42.7 million to $43.5 million. Subscription revenue was $41 million, up about 1% year-over-year and above the high end of our guidance range of $39.6 million to $40.3 million. Professional Services revenue contributed $3 million for the quarter and is down 4% year-over-year. We expect professional services revenue to continue to fluctuate.

Speaker Change: With that, let me move on to our results. Our results exceeded expectations for both revenue and adjusted EBITDA for the quarter.

Ron: Total revenue for the quarter ended June 30th, 2024, was $44 million, up 35 basis points a year of a year, and above the high end of our guidance range of $42.7 million to $43.5 million.

Ron: Subscription revenue was $41 million, up about 1% year-over-year, and above the high end of our guidance range of $39.6 million to $40.3 million.

Ron: Professional services revenue contributed 3 million for the quarter and is down 4% year-over-year.

John Doherty: I will touch on this more when I provide an update on our guidance for the third quarter and full year. The remaining performance obligations were $177.8 million, up 8% sequentially and 2% year-over-year, of which we expect to recognize 60% as revenue over the next 12 months. Consistent with what I mentioned last quarter, this $12.5 million increase in RPO was anticipated and is a result of our strong booking of renewable energy and improvement in new bookings in both enterprise education technology and media and telecom in the quarter. Annualized recurring revenue of $165.2 million, up 2% sequentially and 1% year-over-year. This is the highest ARR we have achieved to date and is reflective of increased subscription revenue in our media and telecom business.

Ron: we expect professional services revenue to continue to vasate i will touch on this more when i provide an update on our guidance for the third quarter and full year

Speaker Change: The remaining performance obligations were $177.8 million, up 8% sequentially and 2% year-over-year, of which we expect to recognize 60% as revenue over the next 12 months.

Speaker Change: Consistent with what I mentioned last quarter, this $12.5 million increase in RPO was anticipated and is a result of our strong booking of renewables and improvement in new bookings in both enterprise education technology and media and telecom in the quarter.

Speaker Change: Annualized recurring revenue of $165.2 million, up 2% sequentially and 1% year-over-year. This is the highest ARR we have achieved to date and is reflective of increased subscription revenue in our media and telecom business.

John Doherty: Our net dollar retention rate for the quarter was 98%. This reflects no change from the first quarter and is down from 100% in Q2 2023. As I mentioned last quarter, we expected NDR for the quarter to be lower due to lower net bookings last year, as NDR is a lagging indicator for gross retention and upsell bookings. This result was, therefore, better than expected, and we continue to expect it to improve in the second half of 2024, given the sequential improvement in gross retention that we have demonstrated over the last four quarters and the sequential increase in bookings.

John Doherty: Our net dollar retention rate for the quarter was 98%. This reflects no change from the first quarter and is down from 100% in Q2 2023. As I mentioned last quarter, we expected NDR for the quarter to be lower due to lower net bookings last year, as NDR is a lagging indicator for gross retention and upsell bookings. This result was therefore better than expected, and we continue to expect it to improve in the second half of 2024, given the sequential improvement in gross retention that we have demonstrated over the last four quarters and the sequential increase in book. Within our enterprise education and technology segment, total revenue for the second quarter was $31 million, down 1% year-over-year, as expected.

Speaker Change: Our net dollar retention rate for the quarter was 98%.

Speaker Change: This reflects no change from the first quarter and is down from 100% in Q2 2023. As I mentioned last quarter, we expected NDR for the quarter to be lower due to lower net bookings last year, as NDR is a lagging indicator for gross retention and upsell booking.

Speaker Change: This result was therefore better than expected, and we continue to expect it to improve in the second half of 2024, given the sequential improvement in gross retention that we have demonstrated over the last four quarters and the sequential increase in bookings.

John Doherty: Within our enterprise education and technology segment, total revenue for the second quarter was $31 million, down 1% year-over-year, as expected. Subscription revenue was $29.8 million, down 2% year over year, while professional services revenue contributed $1.2 million, up 33% year over year. Within our media and telecom segment, total revenue for the second quarter was $13.1 million, representing 3% year-over-year growth. The prescription revenue was $11.2 million, which is up 7% year-over-year, while professional services revenue contributed $1.8 million, down 19% year-over-year.

Speaker Change: Within our enterprise education and technology segment, total revenue for the second quarter was $31 million, down 1% year-over-year as expected.

John Doherty: Subscription revenue was $29.8 million, down 2% year over year, while professional services revenue contributed $1.2 million, up 33% year over year. Within our media and telecom segment, total revenue for the second quarter was $13.1 million, representing 3% year-over-year growth. The subscription revenue was $11.2 million, which is up 7% year-over-year, while professional services revenue contributed $1.8 million, down 19% year-over-year.

Speaker Change: Subscription revenue was $29.8 million, down 2% year-over-year, while professional services revenue contributed $1.2 million, up 33% year-over-year.

Speaker Change: Within our media and telecom segment, total revenue for the second quarter was $13.1 million, representing 3% year-over-year growth.

Speaker Change: Subscription revenue was $11.2 million, which is up 7% year-over-year, while professional services revenue contributed $1.8 million, down 19% year-over-year.

John Doherty: Gap gross profit in the second quarter 2024 was $28.7 million compared to $28.6 million in the second quarter 2023, resulting in a gross margin of 65% for the quarter consistent with Q2 2023. Within our enterprise education and technology segment, gross profit for the second quarter was $22.9 million, representing a gross margin of 74%, similar to Q2 2024. The subscription gross margin was 81%, which is up from 79% in Q2 2023. Within our media and telecom segment, gross profit for the second quarter was $5.7 million, representing a gross margin of 44%, up from 43% in Q2 2023. The subscription gross margin was 55%, down from 57% in Q2 2023.

John Doherty: Gap gross profit in the second quarter, 2024, was $28.7 million, compared to $28.6 million in the second quarter, 2023, resulting in a gross margin of 65% for the quarter, consistent with Q2, 2023. Within our enterprise education and technology segment, gross profit for the second quarter was $22.9 million, representing a gross margin of 74%, similar to Q2, 2024. The subscription gross margin was 81%, which is up from 79% in Q2 2023. Within our media and telecom segment, gross profit for the second quarter was $5.7 million, representing a gross margin of 44%, up from 43% in Q2 2023.

Speaker Change: gaap gross profit in the second quarter two thousand and twenty four was twenty eight point seven million dollars compared to twenty eight point six million in second quarter two thousand and twenty three resulting in a gross margin of sixty-five percent for the quarter consistent with q two two thousand and twentyth r

Speaker Change: Within our enterprise education and technology segment, gross profit for the second quarter was $22.9 million, representing a gross margin of 74%, similar to Q2 2024.

Speaker Change: Subscription gross margin was 81% which is up from 79% in Q2 2023.

Speaker Change: Within our media and telecom segment, gross profit for the second quarter was $5.7 million, representing a gross margin of 44%, up from 43% in Q2 2023.

John Doherty: Subscription gross margin was 55%, down from 57% in Q2 2023. Total operating expenses in the quarter were $37.2 million, compared to $38.2 million in the second quarter of 2023, a reduction of 2% year over year. Adjusted EBITDA for the quarter was $1.6 million.

Speaker Change: Subscription gross margin was 55% down from 57% in Q2 2023.

John Doherty: Total operating expenses in the quarter were $37.2 million compared to $38.2 million in the second quarter of 2023, a reduction of 2% year over year. Adjusted EBITDA for the quarter was $1.6 million, an increase of $2.6 million from negative $1 million in Q2 2023. This result, along with our improving expense profile, indicates our focus on improving our operating efficiency over time. Gap's net loss for the quarter was $10 million, or $0.07 per diluted share.

Speaker Change: Total operating expenses in the quarter were $37.2 million compared to $38.2 million in the second quarter of 2023, a reduction of 2% year-over-year.

John Doherty: An increase of $2.6 million from negative $1 million in Q2 2023. This result, along with our improving expense profile, indicates our focus on improving our operating efficiency over time. Gap's net loss for the quarter was $10 million, or $0.07 per diluted share.

Speaker Change: Adjusted EBITDA for the quarter was $1.6 million, an increase of $2.6 million from negative $1 million in Q2 2023. This result, along with our improving expense profile, indicates our focus on improving our operating efficiency over time.

Speaker Change: Gap net loss for the quarter was $10 million, or $0.07 per diluted share. This is an improvement of $0.8 million, or 7% year-over-year.

John Doherty: This is an improvement of $0.8 million, or 7% year over year. Turning to the balance sheet and cash flow, we ended the quarter with $71.3 million in cash and marketable securities.

John Doherty: This is an improvement of $0.8 million, or 7% year over year. Turning to the balance sheet and cash flow, we ended the quarter with $71.3 million in cash and marketable security.

Speaker Change: Turning to the balance sheet and cash flow.

Speaker Change: We ended the quarter with $71.3 million in cash and marketable securities.

John Doherty: We consumed $1.6 million in cash from operations during the second quarter, which reflects a significant improvement of $2.5 million compared with $4.1 million in Q2 2023. This includes the impact of a delayed $2.3 million payment from a large customer that moved from Q2 2024 to Q3 2024 due to their corporate entity restructuring. With this payment, which has already been received, we would have generated positive cash from operations in the second quarter. In the first half of 2024, we consumed $2.8 million in cash from operations, compared to $11.6 million in the same period last year, an $8.8 million year-over-year improvement.

Speaker Change: We consumed $1.6 million in cash from operations during the second quarter, which reflects a significant improvement of $2.5 million compared with $4.1 million in Q2 2023.

Speaker Change: this includes the impact of a delay two point three million dollar payment from a large customer that moveved from q two two thousand and twenty four to q three two thousand and twenty four due to their corporate entity restructuring

Speaker Change: With this payment, which has already been received, we would have generated positive cash from operations in the second quarter.

Speaker Change: In the first half of 2024, we consumed $2.8 million in cash from operations, compared to $11.6 million in the same period last year, an $8.8 million year-over-year improvement.

John Doherty: I would now like to turn to our outlook for the third quarter of 2024 and for the fiscal year ending December 31, 2024. Throughout 2023, we experienced pressure on our revenue growth due to year-over-year declines in gross retention and new subscription bookings, along with reduced demand for our lower-margin professional services that was driven by our expansion into products that are easier and faster to deploy. While gross retention has improved in recent quarters, new bookings were still low in the first quarter for reasons mentioned in the last earnings call.

Speaker Change: I would now like to turn to our outlook for the third quarter of 2024 and for the fiscal year ending December 31, 2024.

Speaker Change: throughout two thousand and twenty-three we experienced pressure on our revenue growthdue to year-over-year declines in groceryretention and new subscription bookings along with reduced demand for our lower margin professional services that was driven by our expansion into products that are easier and faster to deploy

Speaker Change: While gross retention improved in recent quarters, new bookings were still low in the first quarter for reasons mentioned in the last earnings call.

John Doherty: Last quarter, we got it towards an expected sequential decline in both subscription and professional services revenue for Q2 2024, expecting downward pressure on subscription revenue that had accumulated in prior quarters would catch up to us in the quarter. While we did feel some of that, we were able to manage through it with stronger gross retention and new bookings, and we have come out above guidance, as I mentioned. Revenues from professional services were indeed sequentially lower, as also expected.

Speaker Change: Last quarter we got it towards an expected sequential decline in both subscription and professional services revenue for Q2 2024 expecting downward pressure on subscription revenue that had accumulated in prior quarters would catch up to us in the quarter.

Speaker Change: While we did feel some of that, we were able to manage through it with stronger gross retention and new bookings, and have come out above guidance, as I mentioned.

Speaker Change: Revenues from professional services were indeed sequentially lower, as also expected.

John Doherty: For the third quarter, we are forecasting a sequential stabilization of subscription revenue, which we believe will be followed by a return to growth. We are also forecasting a continued sequential decline in our lower-margin professional services revenue, which has the positive benefits of enabling faster deployments and higher gross margins. Accordingly, we expect subscription revenue in the third quarter to be between $40.5 million and $41.2 million, and total revenue to be between $42.6 million and $43.3 million.

Speaker Change: For the third quarter, we are forecasting a sequential stabilization of subscription revenue, which we believe will be followed by a return to growth.

Speaker Change: We are also forecasting a continued sequential decline in our lower margin professional services revenue, which has the positive benefits of enabling faster deployments and higher gross margins.

Speaker Change: Accordingly, we expect subscription revenue in the third quarter to be between $40.5 million and $41.2 million, and total revenue to be between $42.6 million and $43.3 million.

John Doherty: We expect adjusted EBITDA in the third quarter to be between negative 0.3 million and positive 0.7 million. As we look towards the full year, we expect to see an increase in subscription revenue driven by our improved gross retention rate and new bookings, as well as the continued decline in revenues from professional services. As a result, for the full year, we are increasing the bottom of our guidance ranges for subscription and total revenues by $2 million and $1 million, respectively, and narrowing both guidance ranges from $3 million to $2 million.

Speaker Change: We expect adjusted EBITDA in the third quarter to be between negative 0.3 million and positive 0.7 million.

Speaker Change: As we look towards the full year, we expect to see an increase in subscription revenue driven by our improved gross retention rate and new bookings, as well as a continued decline in revenues from professional services.

Speaker Change: As a result, for the full year, we are increasing the bottom of our guidance ranges for subscription and total revenues up by $2 million and $1 million, respectively, and narrowing both guidance ranges from $3 million to $2 million.

John Doherty: Accordingly, we expect subscription revenue for the year to be between $163.2 million and $165.2 million, and total revenue to be between $174.7 million and $176.7 million. We expect adjusted EBITDA for the year to be between $2 million and $3 million, which compared to the negative $2.5 million adjusted EBITDA of 2023 would be an improvement of $5 million at the midpoint of the guidance.

Speaker Change: Accordingly, we expect subscription revenue for the year to be between $163.2 million and $165.2 million.

Speaker Change: in total revenue to be between one hundred and seventy four point seven million dollars and one onehundred and seventy six point seven million dollars

Speaker Change: We expect adjusted EBITDA for the year to be between $2 million and $3 million, which compared to the negative $2.5 million adjusted EBITDA of 2023 would be an improvement of $5 million at the midpoint of the guidance range.

Operator: As Ron mentioned, we also continue to forecast a positive cash flow from operations for the full year. We believe the company continues to be well positioned to benefit from the emerging tailwinds we are seeing of spend consolidation to a single vendor. Digital transformation and the hybrid workplace that is continuing to drive demand for video-based offerings. As we move into the second half of 2024 and beyond, we expect to continue to demonstrate that we can achieve both revenue growth and sustained and improving profitability.

John Doherty: As Ron mentioned, we also continue to forecast a positive cash flow from operations for the full year. We believe the company continues to be well positioned to benefit from the emerging tailwinds we are seeing of spend consolidation to a single vendor. Digital transformation and the hybrid workplace that is continuing to drive demand for video-based offerings. As we move into the second half of 2024 and beyond, we expect to continue to demonstrate that we can achieve both revenue growth and sustained and improving profitability.

Speaker Change: As Ron mentioned, we also continue to forecast a positive cash flow from operations for the full year.

Ron: We believe the company continues to be well-positioned to benefit from emerging tailwinds we are seeing of spend consolidation to a single vendor, digital transformation, and the hybrid workplace that is continuing to drive demand for video-based offerings.

Speaker Change: As we move into the second half of 2024 and beyond, we expect to continue to demonstrate that we can achieve both revenue growth and sustained and improving profitability.

Operator: We believe that we are on the right path to achieve these objectives and to deliver consistent returns to our shareholders. We are encouraged by the increased adoption of our products, demonstrated by our increase in bookings, our sustained high gross retention rate, and deals in our pipeline that we believe could yield continued growth in bookings and by what we believe will be growing industry tailwinds in the second half of the year and in 2025. With that, we'll open up the call for questions. Operator.

John Doherty: We believe that we are on the right path to achieve these objectives and to deliver consistent returns to our shareholders. We are encouraged by the increased adoption of our products, demonstrated by our increase in bookings, our sustained high growth retention rate, and deals in our pipeline that we believe could yield continued growth in bookings, and by what we believe will be growing industry tailwinds in the second half of the year, end in 2025. With that, we'll open up the call for questions. Operator.

Speaker Change: We believe that we are on the right path to achieve these objectives and to drive consistent returns to our shareholders.

Speaker Change: We are encouraged by the increased adoption of our products, demonstrated by our increase in bookings, our sustained high growth retention rate, and deals in our pipeline that we believe could yield continued growth in bookings and by what we believe will be growing industry tailwinds in the second half of the year and in 2025.

Operator: Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.

Speaker Change: With that, we'll open up the call for questions. Operator.

Speaker Change: Thank you.

Speaker Change: We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.

Operator: One moment, please, while we poll for questions. The first question is from Gabriela Borges from Goldman Sachs. Please go ahead.

Gabriela Borges: One moment, please, while we poll for questions. The first question is from Gabriela Borges from Goldman Sachs. Please go ahead.

Gabriela Borges: Hi, good morning. Thank you.

Speaker Change: One moment, please, while we poll for questions.

Speaker Change: The first question is from Gabriela Borges from Goldman Sachs. Please go ahead.

Gabriela Borges: Hi, good morning. Thank you.

Ron Yekutiel: Ron, you mentioned impressive work with some of the larger customers that you have in your prepared remarks. We're hearing from a number of software companies that as some of these large enterprises evaluate their AI plans, it can sometimes change how they're thinking about spending with one specific software vendor or on core systems and software. Maybe share with us a little bit how some of those customers in the enterprise are thinking about their AI roadmaps and to what extent does that either pull forward their enablement with Kaltura or, perhaps, in some cases, push it out. Thank you.

Gabriela Borges: Hi, good morning. Thank you.

Speaker Change: Ron, you mentioned the impressive list of some of the larger customers that you have in the prepared remarks.

Speaker Change: We're hearing from a number of software companies that as some of these large enterprises evaluate their AI plans.

Speaker Change: It can sometimes change how they're thinking about spending with one specific software vendor or on core systems and software. Maybe share with us a little bit how some of those customers in the enterprise

Speaker Change: are thinking about their AI roadmaps, and to what extent does that either pull forward their enablement with Kaltura or perhaps in some cases push it out. Thank you.

Ron Yekutiel: Thank you, Gabriela, for the great question, and good morning, everybody on the call. Yeah, AI is very exciting. It is very exciting for large enterprises and for our Connect event around the world. We had very detailed discussions with a great many of them, and they've all come extremely excited and have come out even more so about the possibilities and opportunities behind AI. The huge discussion there is how you could bring about further content creation and faster moderation of content in order to make sure that the right people are getting the right content at the right time and in the right context in order to improve their results, whether it be internally for reskilling and learning and training, or it be externally for better marketing and sales and better conversions of the funnel. And what people get excited about Kaltura is several things.

Ron Yekutiel: Thank you, Gabriela, for the great question. And good morning, everybody on the call.

Speaker Change: Thank you, Gabriela, for the great question, and good morning, everybody, on the call.

Ron Yekutiel: Yeah, AI is very exciting. It is very exciting for large enterprises and for our Connect events around the world. We had very detailed discussions with a great many of them, and they've all come extremely excited and are even more so about the possibilities and opportunities behind AI. The huge discussion there is how you could bring about further content creation, faster moderation of content in order to make sure that the right people are getting the right content at the right time and in the right context in order to improve their results, whether it be internally for reskilling, learning, and training, or And what people get excited about Kaltura is several things.

Speaker Change: Yeah, AI is very exciting. It is very exciting for large enterprises and our connect event around the world.

Speaker Change: We had very detailed discussion with a great many of them and they've all come extremely excited and have come out even more so about the possibilities and opportunities behind AI.

Speaker Change: The huge discussion there is how you could bring about further content creation.

Speaker Change: I'm going to be talking about how to make faster moderation of content in order to make sure that the right people are getting the right content in the right time and in the right context.

Speaker Change: in order to improve their results, whether it be internally.

Speaker Change: for reskilling and learning and training, or be it externally, for better marketing and sales and better conversions of funnel.

Ron Yekutiel: Number one, the depth of the integration into the workflows, the fact that we don't just say, here we have video plus AI, but the video is going deep into learning with our integrations into LMS or going deep into marketing through our integration into the marketing workflows. The second thing they really like is that we have a federated approach to data with very advanced data collection information. And right now, increasingly, we're becoming the single vendor where people have all the data in a pool on our system. And the reason this is really important, consider when you're trying to track the behavior of a prospect or a customer through multiple events.

Speaker Change: And what people get excited about Kaltura is several things. Number one, the depth of the integration into the workflows, the fact that we don't just say, here we have video plus AI, but the video is going deep into learning with our integrations into LMS.

Speaker Change: or going deep into marketing through our integration into the workflows for marketing. The second thing they really like is that we have a federated approach towards data with very advanced...

Speaker Change: data collecting information. And right now, increasingly, we're becoming the single vendor where people have all the data pool on our system. And the reason this is really important, consider when you're trying to track the behavior of a prospect or a customer through multiple events.

Ron Yekutiel: You want to have a system that knows how to track them across all their different interactions so that you'd know what their taste is, what their interest is, what products they like, what services they appreciate, and Kaltura is able to bring that to better guide the system in order to yield better results. And of course, when you add on top of that integration into the workflow and the metadata and data information that we have, the engagement layer that we offer, then we have a full sandwich that's really exciting.

Speaker Change: You want to have a system that would know how to track them across all their different interactions so that you'd know what is their taste, what is their interest, what products do they like, what service do they appreciate, and Kaltura is able to bring that to better prompt the system in order to yield better results.

Speaker Change: and of course when you put on top of that integration into the workflow and the metad ata and data information that we have the engagement ler that we offer then we have a full sandwich it's really exciting

Ron Yekutiel: So, customers are looking forward to it. You know, we have mentioned this quarter all the exciting releases that we've done around AI across multiple areas. As stated, we have a lot of releases that have been put in place, both the new transcription and translation engine that we have fueled by Kaltura as well as the way to analyze reactions in real time as well as, on the M&T side, better ways to curate content as well as further engage in better recommendation at the user level. So, there's a lot there.

Ron Yekutiel: So, customers are looking forward to, you know, we have mentioned this quarter all the exciting releases that we've done around AI across multiple areas. As stated, we have a lot of releases that have been put in place, both the new transcription and translation engine that we have fueled by Kaltura as well as the way to analyze reactions in real time as well as, on the M&T side, better ways to curate content as well as further engage in better recommendation at the user level. So, there's a lot there.

Speaker Change: So, customers are looking forward, you know, we have mentioned this quarter of all the exciting releases that we've done around AI across multiple areas.

Speaker Change: As stated, we have

Speaker Change: Both on the E&T and the M&T, a lot of releases that have been put in place.

Speaker Change: The new transcription and translation engine that we have fueled by Kaltura, as well as the way to analyze reactions in real time, as well as in the M&T side, better ways to curate content, as well as to further engage in better recommendation at the user level.

Gabriela Borges: Absolutely, thank you for the detail. The follow-up question for either Ron or John is the normalized birth question.

Gabriela Borges: Absolutely, thank you for the detail. The follow-up question for either Ron or John is the normalized birth questions. So we've talked about how the bookings last year have impacted the revenue this year. Your comments on bookings today are actually more positive. Given everything you know about what customers have been doing with Kaltura, new logos, cross-tile, etc., what do you think about the normalized birth profile of Kaltura in the medium term?

Speaker Change: So there's a lot there.

Speaker Change: Absolutely, thank you for the detail. The follow-up for either Ron or John is the normalized birth question. So we've talked about how the bookings last year have impacted the revenue this year. Your comments on bookings today are actually more positive.

Gabriela Borges: So we've talked about how the bookings last year have impacted revenue this year. Your comments on bookings today are actually more positive. Given everything you know about what customers are doing with Kaltura, new logos, cross-tile, etc., what do you think about the normalized birth profile of Kaltura in the medium term?

Speaker Change: Given everything you know about what customers are doing with Kaltura, new logos, cross-tile, etc., how do you think about the normalized worth profile of Kaltura over the medium term?

Ron Yekutiel: Yeah, let me say a few words about booking trends in this quarter and then let John speak a bit about maybe forward looking and thoughts about where things could go. And so yeah, Q2, as you said, we're more positive. It's correct.

Speaker Change: Yeah, let me say a few words about booking trends in this quarter and then let John speak a bit about maybe forward looking and thoughts about where things could go.

John: And so, yeah, Q2, as you said, we're more positive. It's correct. It's the highest new booking since the fourth quarter of 2022. So it's better than earlier quarters.

Ron Yekutiel: It's the highest new booking since the fourth quarter of 2022, so it's better than earlier quarters throughout all of last year. It was also, as expected, a sequential increase compared to Q1. We also had larger deals compared to Q1. So we had more six-digit deals than in general. We also saw a sequential increase in the number of and in the dollar amount of bookings from U.S. customers. So not just total between upsells and U, but also in the new. And that was also achieved with larger first deals. So our ARPU had grown.

Ron Yekutiel: It's the highest new booking since the fourth quarter of 2022, so it's better than earlier quarters throughout all of last year. It was also, as expected, a sequential increase compared to Q1. We also had larger deals compared to Q1, so we had more six-digit deals than in general. We also saw a sequential increase in the number and in the dollar bookings from U customers, so not just totaled between upsells and U, but also in the new, and that was also achieved with larger first deals, so our ARPU had grown.

John: Throughout all of last year, it was also, as expected, a sequential increase compared to Q1. We also had larger deals compared to Q1, so we had more six-digit deals than in general. We also saw a sequential increase in the number and in the dollar bookings from you, customers.

Speaker Change: So not just totaled between upsells and you, but also in the new.

Ron Yekutiel: In fact, it's the highest ARPU since the first quarter of 2023. By the way, just about trends, most of the new bookings came from North America Enterprise. But most of the new logos came from Europe, from the EMEA enterprise, both in the dollar and in a percentage, in the number of units and in the dollar value.

Speaker Change: And that was also achieved with larger first deals. So our ARPU had grown. In fact, it's the highest ARPU since the first quarter of 2023.

John: By the way, just about trends, most of the new bookings came from North America Enterprise,

Speaker Change: But most of the new logos came from Europe , from EMEA Enterprise, both in the dollar and in a percentage, in the number of units and in the dollar value. So we're seeing a good turnaround of the European market.

Ron Yekutiel: So we're seeing a good turnaround in the European market. We still see customers that continue to consolidate around Kaltura, for both internal and external, and that touches on my earlier comment about having data across the enterprise. And we're seeing success across many sectors. Again, I've noted a few from tech and financial services and government and professional services and pharma and healthcare and education, of course.

Speaker Change: We still see customers that continue to consolidate around Kaltura for both internal and external and that touches on my earlier comment about having data across the enterprise.

Erica Mannion: For opening remarks and introductions, I will now turn the call over to Erica Mannion at Sapphire Investor Relations. Please go ahead. Thank you, and good morning. I'm joined by Ron Yekutiel.

Speaker Change: And we're seeing success across many sectors. Again, I've noted a few from tech and financial services and government and professional services and pharma and health care and education, of course.

Erica Mannion: Kaltura is co-founder, chairman, president, and chief executive officer, and John Doherty, chief financial officer. Ron will begin with a summary of results for the second quarter into June 30, 2024, and provide a business update. John will then review the financial results for the second quarter of 2024 in greater detail, followed by the company's outlook for the third quarter in full year of 2024.

Ron Yekutiel: And we also see continued awakening in the media and telecom market, so both organically growing as well as new potential customers that are picking up. You remember that market tends to be a bit clunkier, but we're seeing some good buying signs there, and we're excited as we look into the future. And maybe a couple of other points that I would note. We mentioned earlier price increases in the first quarter, and we said that those had gone up.

Speaker Change: and we also see continue to awakening in the median telecom market so book organically growing as well as new potential customers

Speaker Change: that are picking up. You remember that market tends to be a bit clunkier.

Speaker Change: But we're seeing some good buying signs there and we're excited as we look into the future.

Erica Mannion: We will then open the call for questions. Please note that this call will include forward-looking statements within the meeting of the federal securities laws, including but not limited to statements regarding Kaltura's expected future financial results and management expectations and plans for the business. These statements are neither promises, nor guarantees, and involve risks and uncertainties that may cause actual results to differ materially from those discussed here. Important factors that could cause actual results to differ from forward looking statements can be found in the risk factors section of Kaltura's annual report on form 10K for the fiscal year ended December 31, 2023, and other SEC filings, including the quarterly report on form 10K for the quarter ended June 30, 2024, to be filed with the SEC.

Speaker Change: and maybe a couple of other points that I would note that we mentioned earlier price increases in the first quarter and we said that that had gone up we continue to see that it was actually 3x the booking we had a year prior in the second quarter of 2023 so competitively

Ron Yekutiel: We continue to see that. It was actually 3x the bookings we had a year prior in the second quarter of 2023, so competitively, we're able to command better prices for better value provided by Kaltura, even compared to our own services offered the year before. And then from a lead gen perspective, we still saw a sequential increase in the meetings set by SDRs and RFPs, so all in all, the trend is going in a good direction.

Speaker Change: We're able to command better prices for better value provided by Kaltura even compared to our own services offered the year before.

Speaker Change: And then from a lead gen perspective, we still saw a sequential increase in the meetings set by SDRs and RFPs. So, all in all, the trend is going in a good direction. Again, this isn't as high as we expected to continue to be and grow. There's a lot more to grow, a lot more to look forward to. We still...

Ron Yekutiel: Again, this isn't as high as we expect it to continue to be and grow. There's a lot more to grow, and a lot more to look forward to. We still broadly see the headwinds that we believe will turn into further tailwinds, but I'll let John comment. Thanks, Ronit.

Speaker Change: Broadly see the headwinds that we believe will turn into further tailwinds, but I'll let John comment on that

John Doherty: And thanks, Ron, and thanks for the question, Gabriela. So, we talked about how we were working through some of the headwinds that were, you know, coming out of 2023. And that was, some of that was in our guide for Q2. It's also a bit in our guide for Q3, you know, overall. But we did come out, and as we've mentioned, we beat, you know, we beat where we got it to in Q2.

John Doherty: And thanks, Ron, and thanks for the question, Gabriela. So we talked about how we were working through some of the headwinds that were coming out of 2023. And that was some of that in our guide for Q2. It's also a bit in our guide for Q3 overall. But we did come out, and as we've mentioned, we beat where we got it to in Q2. So we're certainly managing through it. The stronger bookings, and the increase in RPO, we think bodes well for where we're headed as we finish this year and as we head into 2025. And our guide certainly supports that as well.

John: And thanks Ron, and thanks for the question, Gabriela.

John: So we talked about how we were working through some of the headwinds that were coming out of 2023.

John: Some of that was in our guide for Q2. It's also a bit in our guide for Q3.

Erica Mannion: Please note, during this call, we will be discussing a non-gap financial measure, adjusted EBITDA. For reconciliation of this non-gap financial measure to the most directly comparable gap metric, please refer to our earnings release, which is available on our website at www.investors.kaltura.com.

John: Overall, but we did come out, and as we've mentioned, we beat where we got it to on Q2, so we're certainly managing through it. The stronger bookings, the increase in RPO, we think bodes well for where we're headed as we finish this year and as we head into 2025.

John Doherty: So, we're certainly managing through it. The stronger bookings, the increase in RPO, we think, you know, bodes well for where we're headed as we finish this, you know, this year and as we head into 2025. And, you know, our guide certainly supports that as well.

Ron Yekutiel: Now I'm pleased to hand the call over to Ron. Thank you, Erica, and welcome everyone to our second quarter earnings call. Total revenue for the second quarter of 2024 was 44.0 million, up marginally year-over-year, while subscription revenue was 41.0 million, up 1% year-of-year. Of notes, in the second quarter, we posted a company record ARR of 165.2 million. As for our bottom line, we posted in the second quarter adjusted EBITDA of 1.6 million, representing our fourth consecutive quarter of adjusted EBITDA profitability, and the highest result since the third quarter of 2020. Cash use and operations decreased to 1.6 million, and improvements from 4.1 million in the second quarter of 2023.

Speaker Change: And our guide certainly supports that as well.

Gabriela Borges: Thank you very much.

Speaker Change: Thank you very much.

George Iwanyc: The next question is from George Iwanyc from Oppenheimer and Co.; please go ahead. I thank you.

John: The next question is from George Iwanyc from Oppenheimer & Co. Please go ahead.

George Iwanyc: Thank you for taking my question. So, John, maybe building on the guidance, can you give us a sense of what linearity was like as the quarter progressed into July?

George Iwanyc: Hi, thank you for taking my question. So, John, maybe building on the guidance, can you give us a sense of what linearity was like as the quarter progressed into July?

George Iwanyc: Hi, thank you for taking my question. So John , maybe building on the guidance, can you give us a sense of what linearity was like as the quarter progressed into July ?

John Doherty: For the quarter specifically, and yeah, I'll talk about through June. I won't necessarily talk about into July. And it's not unlike any typical quarter, you see, you know, strength towards the back end of it. And that's what we saw in the second quarter.

Speaker Change: for the quarter specifically and yeah I'll talk about through June I won't necessarily talk about it into July but

Speaker Change: And it's not like any typical quarter, you see, you know...

Speaker Change: Strength towards the back end of it.

Speaker Change: And that's what we saw in the second quarter.

John Doherty: Your guide reflects both for the third quarter and full year where we expect it to go. But certainly, as I said, there are certain things that we're managing through as a business. One of the keys that I'd focus folks on as we move forward is also what we're doing around, you know, growth profit and margin in particular. Our guide does support the fact that we're going to see a little bit of, you know, lighter PS.

John Doherty: Our guide reflects both for the third quarter and full year, you know, where we expect them to be, but certainly, as I said, there are certain things that we're managing through as a business. One of the keys that I'd focus folks on as we move forward is also what we're doing around, you know, growth profit and margin, in particular. You know, our guide does support the fact that we're going to see a little bit of, you know, lighter PS, but PS comes with, you know, lower margins than subscription.

Speaker Change: You know, our guide reflects both for the third quarter and full year.

Ron Yekutiel: Taken together, our results for the second quarter lead us to increase our revenue and adjusted EBITDA guidance for the full year, and to once again, we affirm our plan to post positive cash flow from operations for the full year. Moving on to the business update. As expected, we saw renewed growth in new subscription bookings in the second quarter, which were at the highest level since the fourth quarter of 2022. In addition, the portion of new bookings from you enterprise education and technology customers was at its highest level since the second quarter of 2023.

Speaker Change: You know, where we expect, but certainly, as I said, there are certain things that we're managing through as a business. One of the keys that I'd focus folks on as we move forward is also what we're doing around, you know, growth profit and margin in particular. You know, our guide does support the fact that we're going to see a little bit.

John Doherty: But PS comes with, you know, lower margins than subscription. We're, you know, we're confident we're headed on the subscription side of things. And, you know, as we've also talked about, we have a strong focus on each kind of line item of profitability. And I think that's showing up in terms of what we're doing with gross margin, where we expect gross margin to be, plus, you know, our performance around adjusted EBITDA and cash flow, which is obviously, you know, of critical importance for us and for shareholders.

John Doherty: We're, you know, confident where we're headed on the subscription side of things. And, you know, as we've also talked about, we have a strong focus on each kind of line item of profitability. And I think that's showing up in terms of what we're doing, you know, with gross margin, where we expect gross margin to be plus, you know, our performance around adjusted EBITDA and cash flow, which is obviously, you know, of critical importance for us and for our shareholders.

Speaker Change: lighter p but pss comes with lower margins than subscriptions re we're confident we were headed on the subscription side of things and as we've also talked about

Speaker Change: We have a strong focus on each kind of line item of profitability.

Speaker Change: and i think that's showing up in terms of what we're doing with gross margin where we expect roush was in to be plus you our performance around adjusted ebitda and cash flow which is obviously of critical importance for us and for shareholders

Ron Yekutiel: Our bookings from you customers and upsells included 23 six digit deals spanning a diverse array of industries, use cases and geographies. Customers include a large European government institute and a global pharmaceuticals leader, both youth and Kaltura. One of the largest banks in the world, a leading healthcare software company, two of the world's largest tech companies, a large US R1 university, and two large telecom companies. Youth cases ran the gamut from customer marketing and engagement, employee and channel communication and reskilling, student learning and engagement and entertainment.

George Iwanyc: All right, and Ron, with the leadership changes that you highlighted, are you making any changes to, you know, the organizational structure, especially on the sales side? And, you know, kind of following up on that, John, would you maybe give us some highlights from an investment priority standpoint over the next six months?

George Iwanyc: All right, and Ron, with the leadership changes that you highlighted, are you making any changes to the organizational structure, especially on the sales side? And kind of following up on that, John, would you maybe give us some highlights from an investment priority standpoint over the next six months?

Ron: Ron, with the leadership changes that you highlighted,

Ron: Are you making any changes to the organizational structure, especially on the sales side? And kind of following up on that, John, would you maybe give us some highlights from an investment priority standpoint over the next six months?

Ron Yekutiel: Yeah, thank you for the good question. Obviously, we continue to optimize the organization. We do that at least once a year as we look into the situation, both in the market as well as where we're at and where we could take it to the next level. As part of the changes that were made, yes, there were various optimizations made, and everybody's excited about that. The energy levels are high.

Ron Yekutiel: Yeah, thank you for the good question. Obviously, we continue to optimize the organization. We do that at least once a year, as we look into the situation, both in the market as well as where we're at and where we could take it to the next level. As part of the changes that were made, yes, there were various optimizations made. And everybody's excited about that. The energy levels are high.

Ron: yes thank you for the good question obviously we cancontinue to optimize organization we do that at least once a year as we look into this situation both in the market as well as where we're at where wecould take ittothe next level

Ron Yekutiel: Gross retention in the second quarter of 2024 remained at a similar level compared with the first quarter, which again was better than all quarterly results of 2023. This continues to represent an annualized gross retention rate that is higher than the previous three calendar years. The combination of both higher gross subscription bookings and increasing gross retention rates has yielded the highest level of net new subscription bookings in the last six quarters, helping to fuel future subscription revenue.

Ron: As part of the changes that were made, yes, there were various optimizations made and everybody's excited about that. The energy levels are high.

Ron Yekutiel: I'll give you an example. I mean, marketing has been put now under Navi's organization, but they are trying to put together closer product marketing, and marketing together with sales enablement in a way that would streamline better. FDRs have been moved. They were for a certain period on the marketing organization. They're back in the sales organization. Within the sales teams, we've further doubled down on large enterprise opportunities within the core team and moved the smaller ones into what's defined as kind of our operations team or a customer care group in a separate place where they're doubling down and kind of fishing with the net versus the others who are fishing with a fishing rod in a more effective way.

Ron Yekutiel: I'll give you an example. I mean, marketing has been put now under an obvious organization, but they are trying to put together closer product marketing, marketing together with sales enablement in a way that would streamline better. FDRs have been moved. They work for a certain period in the marketing organization. They're back in the sales organization. Within the sales teams, we had further double down on large enterprise opportunities within the core team and have moved the smaller ones into what's defined as kind of our operations team or a customer care group in a separate place, where they're doubling down and kind of fishing with a net versus the others who are fishing with a fishing rod in a more effective way.

Ron: I'll give you an example. I mean, marketing has been put now under Navi's organization, but trying to put together closer product marketing, marketing together with sales enablement.

Speaker Change: in a way that would streamline better sds hadhave been moved there were for sistent period on the marketing organization they're back in the sals organization

Ron Yekutiel: On the product front, in the second quarter we continued boosting our event platform functionality and user experience with an improved avenue flow between sessions and admin group targeting enhanced chat options and a more robust analytics dashboard. In addition, we enriched our video portal content management and guest landing pages added new features for admin sessions in our real time conferencing rooms and continued advancing our video player and the skill ability and security of our platform related to AI.

Ron: within the sales teams we had further double down on large enterprise opportunities within the court team that haveve moved the smaller ones into what's the fined of kind of our operations team or customer care group in a separate place where they're doubling down a kind of fishing with in net versus the others are fing with fishing rod and a more effective way and within that we have further focused on verticalizations there's a list of things

Ron Yekutiel: Within that, we have further focus on verticalization. There's a list of things as we get to any one of these changes. We think broadly, and we kind of collect all the wisdom points that we've gathered for recent quarters, and we've come back with a good outcome. We have great leaders leading the teams going forward. Like I said, energy is really high. And I guess the other one was, to me...

Ron Yekutiel: And within that, we have further focused on verticalization. So, there's a list of things. As we get to any one of these changes, we think broadly, and we kind of collect all the wisdom points that we've gathered for recent quarters, and we come back with a good outcome. And we have great leaders leading the teams going forward. And like I said, the energy is really high. And I guess the other one was, to me...

Speaker Change: As we get to any one of these changes, we think broadly, and we kind of collect all the wisdom points that we've gathered for recent quarters, and we've come back with a good outcome, and we have great leaders leading the teams going forward, and like I said, energy is really high.

Ron Yekutiel: This quarter we added a number of product enhancements. We launched our internally developed AI based automatic speech recognition service based on whisper as an improved alternative to the non AI based third party ASR services we previously provided. With the help of AI, captions are automatically generated within videos regardless of the language spoken enhancing accessibility and user experience. For our events and webinars products, we developed an AI based email notification engine that automatically generates notifications for users based on ongoing session information ensuring that indeed stay informed without manual intervention.

John Doherty: And I guess the other one was for me in terms of investment priorities. Yeah, I covered some of that when I spoke a moment ago, but just to kind of highlight it. So, continued improvement around operating efficiency. You certainly, some of the leadership changes allowed us to do that at the top level as well as, you know, spread some of that through the organization. In addition, we talked about lighter PS, which also provides us with an opportunity to make some related cost adjustments there as well.

Speaker Change: And I guess the other one was to me in terms of investment priorities.

Speaker Change: yes i covered some of that when i spoke a moment ago about you just to kind of highlight

Speaker Change: So, continued improvement around operating efficiency.

Ron: You know, some of the leadership changes allowed us to...

Speaker Change: do that at the top level as well as you flow some of that through the organization in addition can you talked about lighter p could that also provide pres us with an opportunity to make some related cost of adjustments there as well in addition you ron coververy kind of

John Doherty: In addition, you know, and Ron covered kind of a broad focus on AI across the business and how, you know, external customers are using it as well. Certainly, it will present us with an opportunity both to enhance our product portfolio as we deploy it across, you know, different parts of our product portfolio, but also, you know, how we run our business and how we can gain some efficiencies from the deployment of that, you know, from an overall operating perspective.

John Doherty: In addition, you know, and Ron covered kind of a broad focus on AI across the business and how, you know, external customers are using it as well. Certainly, it will present us with an opportunity both to enhance our product portfolio as we deploy it across, you know, different parts of our product portfolio, but also, you know, in how we run our business and how we can gain some efficiencies from the deployment of that, you know, from an overall operating perspective.

Ron Yekutiel: We also developed a real time AI based sentiment analysis of user chat communications for event organizers and presenters. For our video portal, we added an AI based quiz generator based on the transcript. And for our video conferencing rooms, we launched an AI based noise cancellation feature for improved audio. Our product leadership continued to yield industry awards as well this quarter amongst them are the 2024 innovation and business martyck awards for best virtual event platform.

Speaker Change: you broad focus on ai across the business and how external customers are using it as well

Speaker Change: Certainly will present us with an opportunity both to enhance our products portfolio as we deploy it across different parts of our product portfolio But also in how we run our business and how we can gain some efficiencies from the deployment of that from an overall operating perspective additionally

John Doherty: Additionally... We have seen some growth in M&T. I don't want to say revitalization, but we think that business has also set up pretty well to provide some growth going forward, and that wasn't always the case. So certainly, we're working closely with that team, and that's one of our priorities. And then Yaron touched on this, but it's key and also can be part of our profit and margin story to focus on growing within our existing customer base.

John Doherty: Additionally, um... We have seen some growth in M&T. I don't want to say revitalization, but we think that business is also set up pretty well to provide some growth going forward, and that wasn't always the case. So, certainly, we're working closely with that team, and that's one of our priorities. And then Yaron touched on this, but it's key and also can be part of our profit and margin story to focus on growing within our existing customer base.

Speaker Change: we have seen some growth in mity i don't to say revitalization but we think that business is also set up you're pretty well to provide some growth going overward and that wasn't always the case so certainly we're working closely with that team and that's one of our priorities

Ron Yekutiel: The 2024 event technology award for best virtual and hybrid event platform and for 2024 event x awards for best event technology, this audience engagement technology, the data collection and event analytics technology and best virtual events, and the Basin Quarter.

Speaker Change: And then Yaron touched on this, but it's key and also can be part of our profit and margin story.

John Doherty: So, where they have a certain engagement, there's other opportunities for us to work across existing clients, and you're starting – you're certainly starting to see that based on what we reported this past quarter and what we see going forward from a – what we talked to from a bookings perspective.

John Doherty: So where they have a certain engagement, there are other opportunities for us to work across existing clients, and you're certainly starting to see that based on what we reported this past quarter and what we see going forward from what we talked about from a bookings perspective.

Yaron: is focusing on growing within our existing customer base. So where they have a certain engagement, there's other opportunities for us to...

Ron Yekutiel: We also conducted our annual VIP events in New York, San Francisco, and London. Hundreds of customers and prospects attended Kaltura Connect on the road 2024, and discussed how AI-infused video experiences could boost their business results. We had an amazing speaker lineup of marketing and corporate communications leaders from customers, such as Adobe, Salesforce, Novartis, IBM, Mayo Clinic, Bloomberg, Siemens Health and Years, AstraZeneca and Red Hat. During the event, we gave out Kaltura Digital Engagement Awards to companies that have demonstrated creative and exceptional use of our platform, and have expanded the possibilities of digital experiences in the enterprise. Recipients across nine different categories included, ABA and Admiral Adobe, Audible and Amazon Company, Bank of America, Bloomberg, City, IBM, Intuit, Netflix, Salesforce and Siemens Health and Years.

Yaron: work across existing clients and youre starting you certainly starting to see that you've based on what reported this past quarter what we should going forward from whatwe talked to from a booking perspective

D.J. Hines: The next question is from D.J. Hines from Canaccord Genuity. Please go ahead.

D.J. Hynes: The next question is from D.J. Hynes from Canaccord Genuity. Please go ahead.

Speaker Change: Thank you.

Speaker Change: The next question is from D.J. Hines from Canaccord Genuity. Please go ahead.

Ron Yekutiel: Hey guys, congrats on the nice booking score here. Ron, how would you characterize the environment as we think about the go-forward opportunity between new customer growth versus cross-sell, kind of as you look at the pipeline? Is one faring better than the other, or how would you kind of frame that?

D.J. Hines: Hey guys, congrats on the nice booking score here. Ron, how would you characterize the environment as we think about the go-forward opportunity between new customer growth versus cross-sell, kind of as you look at the pipeline? Is one faring better than the other, or how would you kind of frame that?

D.J. Hines: heyguys converress on the nice booking scoter here run how would you characterize the environment as we think about the go forward opportunity between new customer growth versus cross sell kind of you look at the pipeline is is one fairing better than the other how would you kind of frame that

Ron Yekutiel: Yeah, hi, DJ. So I'm going to take you back to my general comments that I've made on this topic in previous calls. And I said that way back, we were more or less on a 50-50, and then it picked up during COVID to 75-25 favoring U logos. I guess it was kind of a rush by those that didn't have it to go ahead and get it in a very short period, followed by a turn to the other direction, which had become more 25-75 in favor of upsells after COVID, where people stuck to their guns, and each one kind of stayed with a vendor.

D.J. Hynes: Yeah, hi, DJ. So I'm going to take you back to my general comments that I've made on this topic in previous calls. And I said that way back, we were more or less on a 50-50, and then it picked up during COVID to 75-25 favoring U logos. I guess it was a kind of a rush by those that didn't have it to go ahead and get it in a very short period, followed by a turn to the other direction, which had become more 25-75 in favor of upsells after COVID, where people stuck to their guns, and each one kind of stayed with a vendor.

Vijay: Yeah, hi, Vijay.

Speaker Change: so i'm going to take you back to my general comments that have made on this topic in previous calls and i said that way back we were more or less on a fifty and fifty

Speaker Change: And then it had...

Ron Yekutiel: Lastly, I want to mention a couple of recent executive changes in Kaltura. Renon Whitman, our chief product officer and Lisa Bennett, our chief marketing officer, are moving on after 10 and 17 years at Kaltura respectively. We are appreciative of Renon's and Lisa's great contributions to Kaltura and wish them well in their new endeavors.

Speaker Change: picked up during covid through seventy five twenty five favoring youulogos guess it was kind of a rush by those that didn't have it to go head and get it in the very short period

Vijay: Followed by a turn to the other direction, which had become more 25-75 in favor of upsells after COVID, where people stuck to their guns and each one kind of stayed with a vendor, because even though many had understood that there's a longer-term opportunity in consolidating or improving or going to a better solution, many were quite myopic in their budget process or risk-averse to the point that they had stuck to the main vendor that they had.

D.J. Hynes: Because even though many understood that there was a longer-term opportunity to consolidate or improve or go to a better solution, many were quite myopic in their budget process or risk-averse to the point that they've stuck to the main vendor that they had. We expected to continue to kind of shift back towards the 50-50, I'd say. There's a lot of opportunity for upsell as we offer new products. You know, the number of customers over the years that have had three or more products by Kaltura has grown consistently year over year.

Ron Yekutiel: Because even though many understood that there was a longer-term opportunity to consolidate or improve or go to a better solution, many were quite myopic in their budget process or risk averse to the point that they've stuck to the main vendor that they had. We expected to continue to kind of shift back towards the 50-50, I'd say. There's a lot of opportunity for upsell as we offer new products. You know, the number of customers over the years that have had three or more products by Kaltura has grown consistently year over year.

Ron Yekutiel: Navya Zarya, we joined Kaltura three and a half years ago as general manager of our enterprise education and technology business, and later held the role of chief revenue officer.

Ron Yekutiel: To exceed Renon as our chief product officer, we will also oversee marketing. Before joining Kaltura, Navya was the CEO of a data analytics company, servicing enterprises and communications providers. Navya's prior experience included other leadership roles overseeing product and engineering. He also holds a degree in computer engineering.

Vijay: We expect it to continue to kind of shift back towards the 50-50, I'd say. There's a lot of opportunity around upsell as we offer new products.

Speaker Change: You know, the number of customers over the years that have 3 plus products by Kaltura has grown consistently year over year.

Ron Yekutiel: And so people are buying more and moving from inside and outside and to multiple events and multiple activities. So we expect that to continue. But we do expect, gradually, to see a rebound in U.S. logos, especially, as I said earlier, when companies stop being myopic and have the opportunity to think forward about what's better for them for the next few years, not just for that year. Should they switch to a vendor that would not just provide them with more value but actually offer them a more cost-efficient solution because there is an economy of scale, and you can save money in the mid to long term by switching to a unified, leading vendor?

D.J. Hynes: And so people are buying more and moving from inside and outside and multiple events and multiple activities. We expect that to continue, but we do expect, gradually, a rebound in U.S. logos, especially, as I said earlier, when companies stop being myopic and have the opportunity to think forward, what's better for them for the next few years, not just for that year. Should they switch to a vendor that would not just provide them with more value but would actually offer them a more cost-efficient solution because there is an economy of scale, and you can save money in the mid to long term by switching to a unified, leading vendor?

Vijay: and so people are buying more and moving from inside and outside and multiple events and multiple activities who expect that to continue but we do expect gradually to see a reount and new logos

Ron Yekutiel: The adage car, who has been with Kaltura for over 10 years, has assumed the role of chief breading officer. The ad's most recent role was that of chief business development officer. Prior to that, he had led all our sales, customers and partners in the technology sector, including the biggest and most complex enterprise education and technology sales cycles and customers, which also contributed the most to our growth. The ad holds an MBA from Columbia Business School, an MA in Business Law, and a degree in engineering.

Speaker Change: Especially, as I said earlier, when companies stop being myopic and have the opportunity to think forward, what's better for them for the next few years, not just for that year? Should they switch to a vendor that would not just provide them more value, but would actually offer them a more cost-efficient solution?

Vijay: Solution, because there's economy of scale and you can save money on the mid to long

Ron Yekutiel: And as I said, this is where we win with a knockout. I mean, we in various places are better, but if you're looking at a unified platform that brings it all together, And I also mentioned earlier the virtues of that from an application level insofar as data harmonization that people move to us. So the short answer is to expect a relatively faster growth in new bookings over time. Doesn't mean it's going to be next quarter or the one after. It's gradual, but ultimately, we're coming back to 50-50.

D.J. Hynes: And as I said, this is where we win with a knockout. I mean, we in various places are better, but if you're looking at a unified platform that brings it all together, and I also mentioned earlier the virtues of that from an application level insofar as data harmonization, people move to us. So the short answer is expect a relatively faster growth in new bookings over time. Doesn't mean it's going to be next quarter or the one after. It's gradual, but ultimately, we're coming back to 50-50.

Ron Yekutiel: In summary, as expected, in the second quarter, we saw sequential improvement in our new bookings and continued to yield a gross retention material above quarterly results from last year. In light of that, and following our revenue and adjusted EBITDA up performance in both the first and second quarters of the year, we are incrementally raising our revenue and adjusted EBITDA guidance for the year. We continue to believe there are stronger tailwinds ahead as companies re-accelerate their investments in digital transformation and online experiences.

Speaker Change: this is where we win with a nockout i mean we in varioussles are better but if you're looking at a unified platform that brings that altogether and alsoso mentioned earlier the virtues of that from application level in so far data harmonization that people move to us so the short answer is expect

Vijay: a relatively faster growth and new bookings over time i mean 's going to be next quarter the one after s gradual that ultimately we're coming coming back to the fifty fifty

D.J. Hines: Yeah, sure. That makes perfect sense.

Ron Yekutiel: Sure, that makes perfect sense. John, a follow-up for you. Look, we posted record bookings or, you know, I guess record recent bookings, churn has stabilized, but you're guiding subscription revenue down sequentially at the midpoint in Q3. Is there anything from a revenue recognition standpoint that we should be aware of? Or are you just trying to keep numbers in a spot where you know you can hit them?

Jhonna: yeah sure that that makes perfect sense jhonna follow up for you so

John Doherty: John, a follow-up for you. Look, we posted record bookings, or, you know, I guess, record recent bookings. You know, churn has stabilized, but you're guiding subscription revenue down sequentially at the midpoint in Q3. Is there anything from a revenue recognition standpoint that we should be aware of? Or are you just trying to keep numbers in a spot?

Speaker Change: Look, we posted record bookings or, you know, I guess record recent bookings, you know, churn has stabilized, but you're guiding subscription revenue down sequentially at the midpoint in Q3. Is there anything from a revenue recognition standpoint that we should be aware of?

Ron Yekutiel: Viewing these initiatives are factors such as increasingly hybrid workplace, growth in Gen Z and millennial video savvy employees, cost savings by consolidating multiple enterprise video use cases around the single video platform, and the advent of Gen AI, which will bring about more creation and consumption of videos and increase ROI. We believe these trends will continue to grow when your booking accelerates our revenue growth and increase our profits.

Speaker Change: Or are you just trying to keep numbers in a spot where you know you can hit them?

John Doherty: There's certainly nothing from a revenue recognition perspective that you should be concerned about. As I mentioned, we're still working through some of what happened in 2023 relative to our lower bookings. But we feel we're in very strong shape.

Speaker Change: Certainly nothing from a revenue recognition perspective that you should be concerned about. As I mentioned, we're still working through some of...

John Doherty: We feel we're in very strong shape. And as we've said, I wouldn't characterize it as you did in terms of relative to how we approach guidance. But certainly, we're...

John Doherty: With that, I'll turn it over to John or CFO to discuss our financial results in more detail. Thanks, Ron, and hello to everyone on the call today. Hattura continues to make important adjustments to its business, including improving our operating efficiency, focusing on further monetizing our existing customer base, adding new logos and reallocating resources towards higher ROI opportunities and markets. I want to touch on a few highlights in the quarter that demonstrate this.

Speaker Change: You know what happened in 2023 relative to our lower bookings. We feel we're in we're in very, you know, strong shape and as we've said

D.J. Hines: And as you said, I wouldn't characterize it as you did in terms of relative to how we approach guidance. But certainly, I would say our posture is still conservative. I'll add one more thing, just to remind us, because we're working with large enterprises... And in most cases, deployment takes a few months. You know, I'm not even talking about M&T, where it could take a year or sometimes more. But on the E&T front, it's not an immediate kind of launch in most cases.

Speaker Change: I wouldn't characterize it as you did in terms of, you know, relative to, you know, how we approach guidance, but certainly, I would say our posture is still conservative, yeah.

Ron Yekutiel: I'll add one more thing, and just to remind us, because we're working with large enterprises... And in most cases, deployment takes a few months. You know, I'm not even talking about M&T, where it could take a year or sometimes more. But on the E&T front, it's not an immediate kind of launch in most cases. Then, from a revenue recognition point of view, if you're seeing a revival or a growth in bookings, there usually is at least a quarter lag in the behavior of revenue.

Vijay: I'll add one more thing, just to remind us, because we're working with large enterprises...

John Doherty: The highlights include our sequential and year-of-year increase in new bookings which more than double from Q1 and represents the highest new booking since Q4 2022. Our sustained low level of growth churn for the second quarter in a row in improvement from all quarters last year and if annualized represents a high watermark for the last three fiscal years. Our seventh consecutive quarter of year-of-year revenue growth during primarily by strength in our subscription revenue, our growth in remaining performance obligations and the highest ARR to date.

Speaker Change: And in most cases, deployment takes a few months. You know, I'm not even talking about M&T, where it could take a year or sometimes more. But on the E&T front, it's not an immediate kind of launch in most cases.

D.J. Hines: Then, from a revenue recognition point of view, if you're seeing a revival or a growth in bookings, there usually is at least a quarter lag in the behavior of revenue. And so if Q1 was the lower booking and Q2 was where it was, Q3 is more a reflection of Q1 than it would be of Q2. So that's not completely odd. Put that aside, obviously we're thoughtful in trying to leave space in order to achieve more than we got. Every company does that, and so do we. Yep, very good.

Speaker Change: then from a revenue recognition for your point if you're seeing a revival or a growth in booking usually is at least a quarter lag into the behavior of revenue

Ron Yekutiel: And so if Q1 was the lower booking and Q2 was where it was, Q3 is more a reflection of Q1 than it would be of Q2. So that's not completely odd. Put that aside, obviously, we're thoughtful in trying to leave space in order to achieve more than we guide for. Every company does that, and so do we. Yep, very good.

Speaker Change: And so if Q1 was the lower booking and Q2 was where it was, Q3 is more a reflection of Q1 than it would be of Q2, so that's not completely an odd. Put that aside, obviously we're thoughtful in trying to leave space in order to achieve more than we guide for. Every company does that, and so do we.

Ryan Koontz: Yep, very good. Thank you guys. The next question is from Ryan Koontz on behalf of Anita Menko. Please go ahead.

Ryan Koontz: Yep, very good. Thank you guys. The next question is from Ryan Koontz on behalf of Anita Minko. Please go ahead.

John Doherty: All of which is culminating in what we see as strong positioning to achieve our profitability targets with higher growth margin than the three prior quarters. Lower year-of-year operating expenses and continued improvement in adjusted EBITDA representing the fourth consecutive positive quarter as Ron mentioned.

Speaker Change: Yep, very good. Thank you guys

Speaker Change: The next question is from Ryan Koontz from Anita Menko. Please go ahead.

Ryan Koontz: Hi, thanks. You know, I see the improvement in bookings. What are the top factors there that you attribute that to?

Ron Yekutiel: Hi, thanks. You know, I see the improvement in bookings. What are the top factors there that you attribute that to?

Ryan Koontz: All right. Thanks. You know, I see the improvement in bookings.

John Doherty: With that, let me move on to our results. Our results exceeded expectations for both revenue and adjusted EBITDA for the quarter. Total revenue for the quarter ended June 30th, 2024, with $44 million, up 35 basis points year-of-year and above the high end of our guidance range of $42.7 million to $43.5 million. Subscription revenue with $41 million, up about 1% year-of-year and above the high end of our guidance range of $39.6 million to $40.3 million.

Ryan Koontz: Whatever the top factors are, you attribute that to across, say, changing the product or changing your own go-to-market processes. Thanks.

Ron Yekutiel: Yeah, thanks for asking. First of all, let's just remind ourselves that the first quarter is typically lower. We also said there were a couple of deals that were pushed on the 1st and the 2nd, which caused them to be lower by the way we closed them on the 2nd. And so we were expecting to see a rebound on the 2nd. The 2nd point is from the general macro move; 2023 was a historic low, you know, could come back to retention later, it was lower in retention, it was definitely low in booking, and we expect that to turn around. It was a low behavior across the industry. It's not just Kaltura.

Speaker Change: Yeah, thanks for asking. First of all, let's just remind us that the first quarter is typically lower. We also said there were a couple of deals that have been pushed from the first to the second.

Ron Yekutiel: The second point is, from the general macro move, 2023 was a historic low, you know, could come back to retention later, it was low on retention, and was definitely low on booking, and we expect that to turn around. It was a low behavior across the industry, it's not just Kaltura. And we expected and are seeing better signs, better buying signs this year. But yeah, we are continuing to improve our products; we are continuing to strengthen and solidify our position across multiple markets.

Ryan Koontz: which has caused it to be lower by the way we've closed them in a second.

Speaker Change: and so we were expecting to see a rebound on the second the second point is

Speaker Change: From the general macro move, 2023 was a historic low, you know, we could come back to retention later, it was low on retention, it was definitely low on booking, and we expect that to turn around, it was a low behavior across the industry, it's not just Kaltura, and we expected and are seeing better signs, better buying signs this year, but yeah, we are continuing to beef our products, we are continuing to strengthen and solidify our position across multiple markets,

Ron Yekutiel: And we expected and are seeing better signs, better buying signs this year. But yeah, we are continuing to improve our products. We are continuing to strengthen and solidify our position across multiple markets. In the case, for example, of our expansion from VOD and live into real time, associated also with the move from internal solutions into external for CMOs, this has been getting stronger and stronger, and we're able to take away customers from other vendors and expand customers that have just internal into external in increasing ways.

John Doherty: Professional services revenue contributed $3 million for the quarter and is down 4% year-of-year. We expect professional services revenue to continue to vacillate. I will touch on this more when I provide an update on our guidance for the third quarter and full year. The remaining performance obligations were $177.8 million, up 8% sequentially, and 2% year-of-year, of which we expect to recognize 60% as revenue over the next 12 months. Consistent with what I mentioned last quarter, this $12.5 million increase in RPO was anticipated and is a result of our strong booking over renewals and improvements in new bookings in both enterprise education and technology and median telecom in the quarter.

Ron Yekutiel: In the case, for example, of our expansion from VOD and live into real time associated also with the move from internal solutions into external for CMOs, this has been getting stronger and stronger, and we're able to take away customers from other vendors and expand customers that have just internal into external in increasing ways. The ones that started with us with one event or a few things are now consolidating further and growing. So we believe the momentum is being built, and we believe it will continue to be built in the coming quarters.

Speaker Change: In the case, for example, of our expansion from VOD and live into real-time associated also with the move from internal solutions into external for CMOs.

Speaker Change: This has been getting stronger and stronger, and we're able to take away customers from other vendors and expand customers that are just internal into external in increasing ways.

Ron Yekutiel: The ones that started with us with one event or a few things are now consolidating further and growing. So we believe the momentum is being built, and we believe it will continue to be built in the quarters of next year.

Speaker Change: theones that have started with us with one event or a few things are now consolidating further and growing so we believe the momentum is being built and we believe it will continue be built in the quarters ahead

John Doherty: Annualized recurring revenue of $165.2 million, up 2% sequentially, and 1% year-of-year, this is the highest ARR we have achieved to date and is reflective of increased subscription revenue in our media and telecom business. Our net dollar retention rate for the quarter was 98%. This reflects no change from the first quarter and is down from 100% in Q2 2023. As I mentioned last quarter, we expected NDR for the quarter to be lower due to lower net bookings last year, as NDR is a lagging indicator for gross retention and upsell booking.

Speaker Change: Great. Thanks, Ron. And on the core gross margin for your subscription product, you know, what are the kind of keys to getting that margin up? Is it mainly scale because of fixed costs or are there any other levers you have there to get the gross margin up?

John Doherty: Yeah, it's really scale and also making sure that we're focused on the right spaces from an overall customer profile perspective. All right, great.

Speaker Change: Yeah, it's really scale and also making sure that we're, you know, focused on the right spaces from an overall customer profile perspective.

Ryan Koontz: I just remind us on that good question that, ultimately, our gross margin is also a blend between subscription and PS, and regardless of our ability to build scale and increase subscription, the fact that we're going to have less PS and the fact that we're going to have a better blend is going to increase our blended gross margin to a higher level as well, in addition to your question. The next question is from Michael Turin from Wells Fargo.

Speaker Change: all great thank

John Doherty: King. This result was, therefore, better than expected, and we continue to expect it to improve in the second half of 2024, given the sequential improvement and grocery tension that we have demonstrated over the last four quarters and the sequential increase in bookings. Within our enterprise education and technology segment, total revenue for the second quarter was $31 million, down 1% year-rear as expected. Subscription revenue was $29.8 million, down 2% year-rear, while professional services revenue contributed $1.2 million, up 33% year-over-year.

Speaker Change: i just remind us on that good question that ultimately our gross margin is also blend between subscription and pss and regardless of our ability to build scale and increase subscription the fact we're going to have lessft pss and the fact that we're going to have a better blend is going to increase our blended gross margin to ourer level as well in addition to your question

Michael Turin: The next question is from Michael Turin from Wells Fargo. Please go ahead. Hey, good morning. This is Ronit Shah on for Michael. I would love to double-click on the AI investment and how that's translating into

R: thanks r

Speaker Change: thank you

R: The next question is from Michael Turin from Wells Fargo. Please go ahead.

bronit sha: hey good morning this is bronit sha on cur michael would love to double click on the ai investment and how that's translating into the o pipeline conversion like any metrics that you guys would shinelight on would be superhelpful

John Doherty: Within our median telecom segment, total revenue for the second quarter was $13.1 million, representing 3% year-rear growth. Subscription revenue was $11.2 million, which is up 7% year-rear, while professional services revenue contributed $1.8 million, down 19% year-rear. Gap rose profit in the second quarter, 2024 was $28.7 million, compared to $28.6 million in second quarter 2023, resulting in a gross margin of 65% for the quarter, consistent with Q2 2023. Within our enterprise education and technology segment, gross profit for the second quarter was $22.9 million, representing a gross margin of 74%, similar to Q2 2024.

Ron Yekutiel: Yeah, sure. Thank you for the question. Again, let me just re-clarify what we've been doing by way of AI because it comes on the heels of more work that we've done earlier. I mentioned the fact that we added the new ASR solution, which is based on Whisper, and that's automatic captioning. We still use third parties to date to do the whole transcription work.

Speaker Change: Yeah, sure. Thank you for the question. Again, let me just re-clarify what we've been doing by way of AI, because it comes on the heels of more work that we've done earlier. I mentioned the fact...

Ron Yekutiel: And from now on, going forward, it's predominantly Kaltura, which not only improves the quality and the ability to do this real-time, multiple languages, etc., but also, to answer the earlier question about margin improvements, could support margin improvements. I mentioned improvements around AI for events with capabilities to automatically generate email notifications, as well as sentiment analysis for chats. So we're learning better about our end users and how we could better cater to them. We have a new AI quiz generator in our video portal, which enables to increase ROI so that within the portal itself, it could generate the right quiz in the right context.

Ron Yekutiel: And from now on, going forward, it's predominantly Kaltura, which not only improves the quality and the ability to do this real-time, multiple languages, etc., but also, to answer the earlier question about margin improvements, could support margin improvements. I mentioned improvements around AI for events with capabilities to automatically generate email notifications, as well as sentiment analysis for chats, so we're learning better about our end users and how we could better cater to them. We have a new AI quiz generator in our video portal, which enables to increase ROI so that within the portal itself, it can generate the right quiz in the right context.

Speaker Change: We added the new ASR solution, which is based on Whisper, and that's automatic captioning. We used third parties to date to do the whole transcription work, and from now on, going forward, it's predominantly Kaltura, which not only improves the quality and the ability to do this real-time, multiple languages, etc., but also, to earlier question about margin improvements, could support margin improvements.

Speaker Change: i mentioned improvements around a high-for events with capabilities to automatically generate e no notifications

John Doherty: Subscription gross margin was 81%, which is up from 79% in Q2 2023. Within our median telecom segment, gross profit for the second quarter was $5.7 million, representing a gross margin of 44%, up from 43% in Q2 2023. Subscription gross margin was 55% down from 57% in Q2 2023. Total operating expenses in the quarter were $37.2 million, compared to $38.2 million in the second quarter of 2023, a reduction of 2% year-over-year. Adjusted even down for the quarter was $1.6 million, an increase of 2.6 million from negative 1 million in Q2 2023.

Speaker Change: As well as the sentiment analysis for chat, so we're learning better our end users and how we could better cater to them. We had a new AI quiz generator in our video portal, which enables to increase ROI so that within the portal itself it could generate the right quiz in the right context.

Ron Yekutiel: This is taking us closer to a world where you could have kind of this Khan Academy on steroids, where people continuously learn based on their individual knowledge and get pushed and created content for what they need to get.

Speaker Change: This is taking us closer to a world where you can have kind of this Khan Academy in steroids, where people continuously learn based on their individual knowledge and get pushed and created content for what they need to get.

Ron Yekutiel: We also talked about noise cancellation, so improved quality of audio in rooms. And, as I said earlier, this is just the beginning. And the big focus for us in the second half is around content repurposing. A big package is going to be released that is going to talk about how we can repurpose content in an automated way, and provide AI summaries of key insights for specific users. And of course, everything else I mentioned earlier about media and telecom. We have our TV Genie chat bot, which is for search and recommendation, looking for similar people like you, your personal homepage, and channels with daily recommendation feeds for each.

Ron Yekutiel: We also talked about noise cancellation, so improved quality of audio in rooms. And as I said earlier, this is just the beginning, and the big focus for us in the second half is around content repurposing. A big package is going to be released that is going to talk about how we can repurpose content in an automated way, provide AI summaries for key insights for specific users, and, of course, everything else I mentioned earlier about media and telecom.

Speaker Change: We also talked about noise cancellation, so improved quality of audio in rooms, and as I said earlier,

Speaker Change: This is just the beginning and the big focus for us on the second half is around content repurposing. We are a big package that's going to be released that is going to talk about how we can repurpose content in an automated way, provide AI summaries for key insights for specific users.

John Doherty: This result, along with our improving expense profile, indicates our focus on improving our operating efficiency over time. Gatnet loss for the quarter was $10 million, or $0.7 per diluted share. This is an improvement of $0.8 million or 7% year-over-year. Turning to the balance sheet and cash flow, we ended the quarter with $71.3 million in cash and marketable securities. We consumed $1.6 million in cash from operations during the second quarter, which reflects the significant improvement of $2.5 million compared with $4.1 million in Q2 2023.

Ron Yekutiel: We have our TV genie chat bot, which is for search and recommendation, looking for similar people like you, your personal homepage, and channels with daily recommendation feeds for each, and then for content curation, we have our AI curator assistance for dynamic content editing and suggestions, clips, and subtitling, so there is a lot.

Speaker Change: and of course everything else I mentioned earlier about media and telecom. We have our TV Genie chatbot, which is for search and recommendation, looking for similar people like you.

Ron Yekutiel: And then for curation of content, we have our AI curator assistance for dynamic content, editing, suggestions, clips, and subtitling. So a lot to your questions about how this is monetized. We keep on saying the same thing.

Speaker Change: Personal homepage and channels with daily recommendation feeds for each.

Speaker Change: and then for curation of content we have our ai curator assistance or dynamic content editing and suggestions and clips and subtidling so a lot to your questions

Ron Yekutiel: To your question about how this is monetized, we keep on saying the same thing. It's early days, and you'd find that across the entire industry. And those that are talking about things getting picked up and maybe kind of a year-over-year growth in these things, it's year-over-year over a zero number. And so we're going slowly on declaring exactly what the impact is going to be.

Ron Yekutiel: It's early days, and you'd find that across the entire industry. And those that are talking about things getting picked up and maybe kind of a year-over-year growth in these things, it's year-over-year over a zero number. And so, you know, we're going slowly on declaring exactly what the impact is going to be.

Speaker Change: about how this is monetized. We keep on saying the same thing. It's a bit early days and you'd find that across the entire industry. And those that are talking about things getting picked up and maybe kind of a year-over-year growth in these things, it's year-over-year over a zero number. And so, you know, we're

John Doherty: This includes the impact of a delayed $2.3 million payment from a large customer that moved from Q2 2024 to Q3 2024 due to their corporate entity restructuring. With this payment, which has already been received, we would have generated positive cash from operations in the second quarter. In the first half of 2024, we consumed $2.8 million in cash from operations compared to $11.6 million in the same period last year. In $8.8 million year-over-year improvements.

Ron Yekutiel: Is this helping us win more business? Is this helping us increase our ARPU? You know, like I said, the ARPU for the new logo in the last quarter was the highest it's been for a long while. And so, yeah, it could be that it's supporting our ability to sell and sell at higher numbers. I also mentioned our ability to renew and increase the size of our existing customers. Could that be supporting it because people are happy? It doesn't mean that we necessarily charge for it separately. At this point, we're not charging for it separately. We will continue to consider our ways in the future. Got it. That's super cool.

Ron Yekutiel: Is this helping us win more business? Is this helping us increase our ARPU? As it were, like I said, the ARPU for the new logo in the last quarter was the highest it's been for a long while. And so, yeah, it could be that it's supporting our ability to sell and sell at higher numbers. I also mentioned our ability to renew and increase the size of our existing customers. Could that be supporting it because people are happy? It doesn't mean that we necessarily charge for it separately. At this point, we're not charging for it separately. We will continue to consider our ways in the future. Got it. That's super cool.

Speaker Change: Going slowly on, declaring exactly what the impact is going to be. Is this helping us win more business? Is this helping us increase the ARPU? As it were, like I said, the ARPU for new logo in the last quarter was the highest.

Speaker Change: It's been for a long while. And so, yeah, it could be that it's supporting our ability to sell and sell at higher numbers. I also mentioned our ability to renew and increase the size of our existing customers. Could that be also supporting it because people are happy?

Speaker Change: It doesn't mean that we necessarily charge for it separately. At this point, we're not charging for it separately. We will continue to consider our ways in the future.

John Doherty: I would now like to turn to our outlook for the third quarter of 2024 and for the fiscal year ending December 31, 2024. Throughout 2023, we experienced pressure on our revenue growth due to year-of-year declines in grocery tension and new subscription bookings along with reduced demand for our lower margin professional services that was driven by our expansion into products that are easier and faster to deploy. While grocery tension improved in recent quarters, new bookings were still low in the first quarter for reasons mentioned in the last earnings call.

John: Got it, that's super helpful, Culler. And then just to follow up for John , can you remind us how you think about capital deployment given your current cash position on the balance sheet and the buyback that you announced earlier this quarter?

John Doherty: Sure, I mean let's focus on the buyback first. I mean certainly where we announced it on the 11th of June, we effectively had a bit of a cooling-off period. We started, we launched it on June 25th, so there were really only a few days in the quarter itself where we were actually in the market. We purchased just over 100,000 shares during that window of time, which effectively resulted in using about $130,000 of the $5 million that was authorized by the board.

John Doherty: Sure, I mean, let's focus on the buyback first. I mean, certainly where we announced it on the 11th of June, we... Effectively, we had a bit of a cooling off period. We started, we launched it on June 25th, so there were really only a few days in the quarter itself where we were actually in the market. We purchased just over 100,000 shares during that window of time, which effectively resulted in using about $130,000 of the $5 million that was authorized by the board.

Speaker Change: Sure. Let's focus on the buyback first. I mean, certainly where we announced it on the 11th of June .

John Doherty: Last quarter, we got it towards an expected sequential decline in both subscription and professional services revenue for Q2 2024, expecting downward pressure on subscription revenue that had accumulated in prior quarters would catch up to us in the quarter. While we did feel some of that, we were able to manage through it with stronger grocery tension and new bookings and have come out above guidance as I mentioned. Revenues from professional services were indeed sequentially lower, as also expected.

Speaker Change: Effectively, we had a bit of a cooling off period, we started, we launched it on June 25th, so there's really only a few days actually.

Speaker Change: in the quarter itself where we were actually in the market we purchased just over one hundred thousand shares during that window of time

Speaker Change: and which was effectively...

Speaker Change: resulted in using about one hundred

Speaker Change: $30,000 of the $5 million that was authorized by the board.

John Doherty: We continue to invest in the business, first and foremost, in areas where we see opportunity for growth. AI is one such main focus point. However, we did feel it was important given where the stock had traded to for whatever reasons that we don't need to get into. But ultimately, it was in no way, shape, or form reflective of the underlying business performance.

John Doherty: For the third quarter, we are forecasting a sequential stabilization of subscription revenue which we believe will be followed by return to growth. We are also forecasting a continued sequential decline in our lower margin professional services revenue which has the positive benefits of enabling faster deployments and higher gross margins. Accordingly, we expect subscription revenue in the third quarter to be between 40.5 million in 41.2 million in total revenue to be between 42.6 million and 43.3 million. We expect the justity of a down to third quarter to be between negative 0.3 million and positive 0.7 million.

Speaker Change: We continue to invest in the business, first and foremost, in areas where we see opportunity for growth. AI is being one from a main focus point.

Speaker Change: However, we did feel it was important given where the stock had traded to for

Matthew Niknam: So, with board support, obviously, they authorized the buyback, and we thought it was an important tool for us to have in our toolkit. We will continue to be active in the market this quarter and to monitor it. But certainly, we're doing what we can, and our main focus around capital deployment is doing what we need to do to ensure that we're moving this business in the right direction and putting it in a position to maximize value for shareholders. Thank you. The next question is from Matthew Niknam from Deutsche Bank; please go ahead.

John Doherty: So, with board support, obviously, they authorized the buyback, and we thought it was an important tool for us to have in our toolkit. We will continue to be active in the market this quarter and to monitor it. But certainly, we're doing what we can, and our main focus around capital deployment is doing what we need to do to ensure that we're moving this business in the right direction and putting it in a position to maximize value for shareholders. Thank you. The next question is for Matthew Niknam from Deutsche Bank. Please go ahead.

Speaker Change: You know, whatever reasons that we don't need to get into, but ultimately, it was in no way, shape, or form reflective of the underlying business performance. So, you know, with the board's support, obviously, they authorized the buyback, and we thought it was a...

Speaker Change: An important tool for us to have in our toolkit.

Speaker Change: We continue to be active in the market this quarter and to monitor it, but certainly we're doing what we can. Our main focus around capital deployment is doing what we need to do to ensure that we're moving this business in the right direction and putting it in a place to maximize value for shareholders.

John Doherty: As we look towards the full year, we expect to see an increase in subscription revenue driven by our improved gross retention rate and new bookings as well as the continued decline in revenues from professional services. As a result, for the full year, we are increasing the bottom of our guidance ranges for subscription and total revenues up by 2 million and 1 million respectively and narrowing both guidance ranges from 3 million to 2 million.

Matthew Niknam: The next question is from Matthew Niknam from Deutsche Bank. Please go ahead. This is Michael Allen on behalf of Matt.

Michael Allen: The next question is from Matthew Niknam from Deutsche Bank. Please go ahead. This is Michael Allen on behalf of Matt.

Speaker Change: thank you

matthew nickon: the next question is your matthew nickon from dorie bank please go ahead

John Doherty: Accordingly, we expect subscription revenue for the year to be between 163.2 million and 165.2 million in total revenue to be between 174.7 million and 176.7 million. We expect the justity of a down to third quarter to be between 2 million and 3 million which compared to the negative 2.5 million and justity of 2023 would be an improvement of 5 million at the midpoint of the guidance range.

matthew nickon: This is Michael Allen on for Matt. I just want to dig in a little more on the churn.

Michael Allen: so it ssoundlt like it's improving was there an area where there was improving more that you talked about last quarter downsales or seventy five percent of the churn there's any area saw that there was imve this quarter and where you'reseeing the trajectory better

Michael Allen: Yeah, thanks for the question. So yeah, in the second quarter, as noted, we posted the same high quarterly gross retention rate that we did in the first quarter of the year. And you remember, that kind of followed three consecutive quarters of improvement. And we also noted that the current gross retention rate is the highest since the fourth quarter of 2022.

Ron Yekutiel: Yeah, thanks for the question. So yeah, in the second quarter, as noted, we posted the same high quarterly gross retention rate that we did in the first quarter of the year. And you remember, that kind of followed three consecutive quarters of improvement. And we also noted that the current gross retention rate is the highest since the fourth quarter of 2022.

Speaker Change: Yeah, thanks for the question. So yeah, so in the second quarter, as noted, we posted the same high quarterly gross retention that we did in the first quarter of the year, and you remember there it kind of followed three consecutive quarters of improvement.

John Doherty: As Ron mentioned, we also continue to forecast a positive cash flow from operations for the full year. We believe the company continues to be well positioned to benefit from emerging tailwinds we are seeing of spend consolidation to a single vendor, digital transformation and the hybrid workplace that is continuing to drive demand for video based offerings. As we move into the second half of 2024 and beyond, we expect to continue to demonstrate that we can achieve both revenue growth and sustained and improving profitability.

matthew nickon: and we also notedthat the current gross intentuated is the highest

Ron Yekutiel: So better than last year, which again was abnormally high for us and for the industry. And also, kind of saying that it represents an annualized retention rate that's better than the last three fiscal years as well. So it's altogether at a point that we're feeling good about. To your question about down churn versus or partial churn versus full churn, it's still kind of the same. Around 25% of our churn was full churn this quarter versus about 75%, which was down cells. So it's the same ratio. And it was both an M&T and an E&T, so there's no specific topical area that's associated with that.

Ron Yekutiel: So, better than last year, which again was abnormally high for us and for the industry. And also, to say that it represents an annualized retention rate that's better than the last three fiscal years as well. So, it's altogether at a point that we're feeling good about. To your question about down churn versus or partial churn versus full churn, it's still kind of the same. Around 25% of our churn was full churn this quarter versus about 75%, which was down cells. So, it's the same ratio. And it was both an M&T and an E&T. So, there's no specific topical area that's associated with that.

matthew nickon: this is the fourth quarter of two thousand and twenty-two so better than last year which again was abnormally ied for us and for the industry

Speaker Change: and also kind of saying that they represents annannualized reentiate that put in the last three fiscal years as well it's allaltogether and in a point that work we're feeling good about to your question about

Speaker Change: down-churned versus, or partial-churned versus full-churned, and still kind of the same, around 25% of our churn was full-churned this quarter versus about 75%, which was down-celled.

John Doherty: We believe that we are on the right path to achieve these objectives and to drive consistent returns to our shareholders. We are encouraged by the increased adoption of our products, demonstrated by our increasing bookings, our sustained high growth retention rate and deals in our pipeline that we believe could yield continued growth in bookings and by what we believe will be growing the industry tailwinds in the second half of the year and in 2025.

Ron Yekutiel: And so, no special area to put a finger on other than it's in a better place than it was a while back, and it's definitely maintaining the level of Q1. We continue to forecast that the second half of the year is going to be better than the second half of last year, and then the year is going to end in a much better place than last year. We'll just note, again, the NDR discussion, which is a lagging indicator.

Ron Yekutiel: And so there's no special area to put a finger on other than it's in a better place than it was a while back, and it's definitely maintaining the level of Q1. We continue to forecast that the second half of the year is going to be better than the second half of last year, and then the year is going to end in a much better place than last year. We'll just note again the NDR discussion, which is a lagging indicator.

Speaker Change: so 's the same ratio and it was both in mt in an et there's no specific topical area that's associated with that

matthew nickon: And so no special area to put a finger on other than it's at a better place than it was.

Operator: With that, we will open up the call for questions, operator. Thank you.

matthew nickon: A while back, and it's definitely maintaining the level of Q1.

Operator: We will now be conducting a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.

matthew nickon: We continue to forecast that the second half of the year is going to be better than the second half of last year, and that the year is going to come out with a much better place than last year.

Operator: One moment please, probably pull for questions.

matthew nickon: I will just note again the

Ron Yekutiel: In the second quarter, we posted the same results as the first quarter, and, in fact, also as the fourth quarter since the last three quarters were the same number. It's a better result than we had thought. We mentioned in the last earnings call that we expected it to dip further, so it's good that it didn't. And we do believe that the direction of the NDR is lagging, and it will turn around in the coming quarter. So that's what I think.

Ron Yekutiel: In the second quarter, we posted the same results as the first quarter and, in fact, also the fourth quarter since the last three quarters were the same number. It's a better result than what we had thought. We mentioned in the last earnings call that we expected it to dip further, so it's good that it didn't. And we do believe that the direction of the NDR is lagging, and it will turn around in the coming quarter. So that's...

matthew nickon: NDR discussion, which is a lagging indicator. In the second quarter, we posted the same results as the first.

matthew nickon: quarter, in fact, also as the fourth quarter, since the last three quarters were the same number, it's a better result than what we had thought. We mentioned in the last earnings call that we expected to dip further, so it's good that it didn't. And we do believe that the direction of the NDR being lagging, that it will turn around in the coming quarters.

Gabriela Borges: The first question is from Gabriela Borges from Goldman Sachs. Please go ahead. Hi, good morning. Thank you. Ron, you mentioned a process last from the logic customers that you have in the prepared remarks. We share it from a number of software companies that as some of these log enterprises evaluate their AI, they can sometimes change how they're thinking about spending with one specific software vendor or on core systems and software. Maybe share with us a little bit how some of those customers in the enterprise are thinking about their AI remaps. And to what extent does that either pull forward their enablement with Kaltura, or perhaps in some cases push it out. Thank you.

Speaker Change: umso that's my

Speaker Change: my summary

Speaker Change: awesome thank you

Patrick Walravens: The next question is from Patrick Walravens from JMP Securities. Please go ahead.

Patrick Walravens: The next question is from Patrick Walravens from JMP Securities.

Speaker Change: The next question is from Patrick Walravens from JMP Securities. Please go ahead.

Patrick Walravens: Oh, great. Thank you.

Patrick Walravens: And it's nice to see the bookings rebound. So I noticed in the script that you guys called out deals with two of the world's largest technology companies. And then one thing that I've just noticed in my travels, Ron, is that when I'm going to one of these user conferences, sometimes you've got to wait a long time for the sessions to be available in the app. And then other times, like at the NVIDIA GTC conference this year, As soon as you walk out, you can, like literally the second you walk out of the session, start watching the replay. And then I noticed that it was the Kaltura player.

Patrick Walravens: Oh great, thank you and it's nice to see the bookings rebound. So I noticed in the script that you guys called out deals with two of the world's largest technology companies.

Patrick Walravens: And it's nice to see the bookings rebound. So I noticed in the script that you guys called out deals with two of the world's largest technology companies. And then one thing that I've just noticed in my travels, Ron, is when I'm going to one of these user conferences, sometimes you have to wait a long time for the sessions to be available in the app. And then other times, like at the NVIDIA GTC conference this year, As soon as you walk out, you can, literally the second you walk out of the session, you can start watching the replay. And then I noticed that it was the Kaltura player.

Ron Yekutiel: Thank you, Gabriela for the great question and good morning everybody on the call. Yeah, AI is very exciting. It is very exciting for large enterprises and it our connect event around the world. We had very detailed discussion with a great many of them and they've all come extremely excited and have come out even more so about the possibilities and opportunities behind AI. The huge discussion there is how you could bring about further content creation, faster moderation of content in order to make sure that the right people are getting the right content in the right time and in the right context in order to improve their results, whether it be internally for rescaling and learning and training or be it externally for a better marketing and sales and better conversions of funnel.

Speaker Change: Sometimes you've got to wait a long time for the sessions to be available in the app. And then other times, like at the NVIDIA GCC conference this year,

Speaker Change: As soon as you walk out, literally the second you walk out of the session, you can start watching the replay. And then I noticed that's the culture of players.

Ron Yekutiel: So I'm just wondering, how big is that opportunity for you guys to power more of the user conferences of these big companies? How much do you guys make when you get, you know, an AWS or a Dreamforce or an NVIDIA GTC, and how many more of them are there out there?

Speaker Change: So I'm just wondering, how big is that opportunity for you guys to power more of the user conferences of these big companies? How much do you guys make when you get, you know, an AWS or a Dreamforce or an NVIDIA GTC? And how many more of them are there out there?

Ron Yekutiel: Thank you for the question, Pat. So, first of all, you've mentioned great technology companies and some of the largest ones. We are indeed very glad and honored to be providing solutions for the companies you mentioned and many others that are leading tech companies. We also appreciate the fact that these companies are the kind of, I'd say, quote unquote, smartest in choosing technology. They definitely understand what it takes to build great technology and how to test and vet great technology.

Ron Yekutiel: Thank you for the question, Pat. So, first of all, you've mentioned great technology companies and some of the largest ones. We are indeed very glad and honored to be providing solutions for the companies you have mentioned and many others that are leading tech companies. We also appreciate the fact that these companies are the kind of, I'd say, quote unquote, smartest in choosing technology. They definitely understand what it takes to build great technology and how to test and vet great technology.

Speaker Change: Thank you for the question, Pat.

Speaker Change: so yeah first of all you've mentioned great technology companies and some of the largest ones we indeed

Ron Yekutiel: And what people get excited about Kaltura is several things. Number one, the depth of the integration into the workflows, the fact that we don't just say, here we have video plus AI, but the video is going deep into learning with our integrations into LMS or going deep into marketing through our integration into the workflows for marketing. The second thing they really like is that we have a federated approach towards data with very advanced data collecting information and right now increasingly we're becoming the single vendor where people have all the data pool on our system.

Speaker Change: are

Speaker Change: very glad and honored to be providing solutions for the companies you had mentioned and many others that are leading tech companies. We also appreciate the fact that these companies

Speaker Change: are the kind of, I'd say, quote unquote, smartest in choosing technology. They definitely understand what it takes to build great technology and how to test and vet great technology. So the fact that we're able to be there, we believe

Ron Yekutiel: So the fact that we're able to be there, we believe is a prelude to being able to do much more in other areas. I'd say to your question first about getting content immediately after you step out. Yes, part of the value of Kaltura is the fact that when we converge the various video use cases, we also converge the various video technologies.

Speaker Change: is a preude to being able to do much more in other areas in which wewerere at

Speaker Change: i'd say to your question first about getting content immediately after years thatabout yes part of the value of culturea

Ron Yekutiel: And the reason this is really important, consider when you're trying to track the behavior of a prospect or a customer through multiple events. You want to have a system that would know how to track them across all their different interactions so that you'd know what is their taste, what is their interest, what products do they like, what service do they appreciate. And Kaltura is able to bring that to better prompt the system in order to yield better results.

Speaker Change: is the fact that when we consolidate.

Ron Yekutiel: To remind you, we originally were a leading content management company based on Gartner, the number one for years. And we have expanded in 2020 from content management into also events and added real time. And we said there that we believe that historical divide between on-demand live and real time is not natural, that you'd expect to have a continuous experience that spans across various technologies because the users don't care about technology. They care about their experience. To your point about stepping out and wanting to get the video immediately.

Speaker Change: the various video use cases we also consolidated various video technologies to remind you we originally we a leading content management company based on king to the number one for years and we have expanded in two thousand and twenty

Ron Yekutiel: To remind you, we originally were a leading content management company based on Gartner, number one for years. And we expanded in 2020 from content management into events and added real time. And we said there that we believe that the historical divide between on-demand live and real time is not natural.

Speaker Change: from content management into also events.

Speaker Change: in added real time

Ron Yekutiel: And of course when you put on top of that integration into the workflow and the metadata and data information that we have, the engagement layer that we offer, then we have a full sandwich that's really exciting. So customers are looking forward. You know we have mentioned this quarter of all the exciting releases that we've done around AI across multiple areas. As stated, we have both on the E&T and the M&T a lot of releases that have been put in place, both the new transcription and translation engine that we have fueled by Kaltura as well as the way to analyze reactions in real time as well as in the M&T side, better ways to curate content as well as to further engage in better recommendation at the user level. So there's a lot there. Absolutely, thank you for the detail.

Speaker Change: And we said there that we believe that historical divide between on-demand live and real-time is not natural. That you'd expect to have a continuous experience that spans across various technologies because the users don't care about technology, they care about their experience, to your point about stepping out and wanting to get the video immediately.

Ron Yekutiel: But you'd expect to have a continuous experience that spans across various technologies because the users don't care about technology. They care about their experience. To your point about stepping out and wanting to get the video immediately.

Ron Yekutiel: And so we've put a lot of emphasis on being able to insert VOD within live and real-time experiences and to immediately convert an experience to VOD right after, so that you have a continuum of experiences before, during, and after events. So I'm happy you've noted that. And indeed, it is a big value that we provide. Lastly, to your question about the potential of these deals. You know, Amazon at the time, I could say that because, for a certain period, they were also defined as more than 10% of our revenue.

Ron Yekutiel: And so we've put a lot of emphasis on being able to insert VOD within live and real-time experiences and to immediately convert and experience VOD right after, so that you have a continuum of experience before, during, and after events. So I'm happy you've noted that. And indeed, it is a big value that we provide. Lastly, to your question about the potential of these deals. You know, Amazon at the time, I could say that because, for a certain period, they were also defined as more than 10% of our revenue.

Speaker Change: And so we've put a lot of emphasis on being able to insert.

Speaker Change: vd would then live and real-time experiences into immediately convert an experience v of d y after so that you have a continuum of experience

Speaker Change: I'm happy you've noted that, and indeed it is a big value that we provide. Lastly, to your question about the potential of these deals.

Speaker Change: You know, Amazon at the time, I could say to that, because for a certain period they were also defined as more than 10% of our revenue, they remain the second largest customer of the company, they're very large, multi-multi-million, and there's a lot more upside there, as much as there's similar upside in some of the other large tech companies that you have mentioned, and more others that you haven't.

Ron Yekutiel: They remain the second largest customer of the company. They're very large, multi-multi-million, and there's a lot more upside there, as much as there's similar upside in some of the other large tech companies that you have mentioned and many others that you haven't mentioned. We are in discussions with various companies about potential upsells and growing these accounts, both by way of the number of activities they do of the same type that they do with us today, also consolidating other vendors, and as I said earlier, not just increasing quality but also having a better economy of scale, and also moving into other adjacent use cases so that they don't use us just externally, but internally and for other use cases.

Ron Yekutiel: The follow-up for either Ron or John is the normalized for questions. So we've talked about how the booktings last year have impacted the revenue this year. Your comments and bookings today are actually more positive. Given everything you know about what customers have been doing with Kaltura, New Logos, Cross-Hile, etc., how do you think about the normalized for a file of culture in the medium term? Yeah, let me set a few words about booking trends in this quarter, and then let John speak a bit about maybe a forward looking and thoughts about where things could go.

Speaker Change: we are in discussions with various companies about potential upsells and growing these accounts

Speaker Change: Both by way of the number of activities they do of the same type that they do with us today, also consolidating other vendors, and as I said earlier, not just increasing quality, but also having better economy of scale, but also moving into other adjacent use cases.

Ron Yekutiel: So yeah, we expect it to grow. I would just finalize by saying the one KPI that keeps on growing in Kaltura year after year after year is the average ARR per customer. It has always grown, and it will continue to grow, and that is because we can offer more and more value for each customer.

Ron Yekutiel: So yeah, we expect this to grow. I would just finalize by saying the one KPI that keeps on growing in Kaltura year after year after year is the average ARR per customer. Has always grown, and will continue to grow, and that is because we can offer more and more value for each customer. Great.

Speaker Change: So that they don't use this just externally, but internally and for other use cases. So yeah, we expect this to grow. I would just finalize by saying the one KPI that keeps on growing in Kaltura year after year after year is the average ARR per customer.

Ron Yekutiel: And so, yeah, Q2, as you said, we're more positive. It's correct. It's the highest new booking since the fourth quarter of 2022, so it's better than earlier quarters throughout all of last year. It was also as expected a sequential increase compared to Q1. We also have larger deals compared to Q1, so we have more six digit deals than in general. We also saw a sequential increase in the number and in the dollar bookings from you customers, so not just total between upsells and you, but also in the new.

Speaker Change: Has always grown, continue to grow, and that is because we could offer more and more value for each customer.

Patrick Walravens: Great, thanks for that perspective. Thank you, Pat.

Speaker Change: Great, thanks for that perspective.

Operator: As a reminder, it is star number one to ask a question. There are no further questions at this time. I would like to turn the floor back over to Ron Yekutiel for a closing comment.

Pat: Thank you, Pat.

Speaker Change: As a reminder, it is star one to ask a question.

Speaker Change: There are no further questions at this time. I would like to turn the floor back over to Ron Yekutiel for closing comments.

Ron Yekutiel: And that was also achieved with larger first deals. So our ARPU had grown. In fact, it's the highest ARPU since the first quarter of 2023. By the way, just about trends, most of the new bookings came from North America Enterprise, but most of the new logos came from Europe from Amia Enterprise, both in the dollar and in a percentage, and the number of units and in the dollar value. So we're seeing a good turn around of the European market.

Ron Yekutiel: Thank you very much for all your great questions and continued support and interest in Kaltura. You know, it was a solid quarter from our perspective, but as we said, it's generally within the context of years that have been quite tough with quite a lot of headwinds. We're not declaring any form of victory. There's a lot more work ahead. There'll be flunky quarters, this or that direction, but at the end of the day, we believe we're up and to the right, both by way of bookings and retention and how that translates into top-line growth and, for sure, how it also translates into bottom-line profitability, both accrual-based and cash-based. We look forward to continuing to demonstrate that and to generate both growth and profitability. Thank you again, and have a great day and week.

Ron Yekutiel: Thank you very much for all your great questions and continued support and interest in Kaltura. You know, it was a solid quarter from our perspective, but as we said, it's generally within the context of years that have been quite tough with quite a lot of headwinds. We're not declaring any form of victory. There's a lot more work ahead. There'll be flunky quarters in this or that direction, but at the end of the day, we believe we're up and to the right, both by way of bookings and retention and how that translates into top-line growth and, for sure, how it also translates into bottom-line profitability, both accrual-based and cash-based. We look forward to continuing to demonstrate that and to generate both growth and profitability. Thank you again, and have a great day and week.

Ron Yekutiel: Thank you very much for all your great questions and continued support and interest in Kaltura.

Ron Yekutiel: You know, it was a solid quarter from our perspective, but as we said, it's generally within the context of years that have been quite tough with quite a lot of headwinds. We're not declaring any form of victory. There's a lot more work ahead. There'll be flunky quarters this or that direction, but at the end of the day, we believe we're up and to the right.

Speaker Change: book but we bookings and retention and how that translates to top on growth and for sure how it also translates into bottom line profitability both a crel base and cash based we look forward to continue to demonstrate that and to generate both growth and profitability thank you again and have a great day and week

Ron Yekutiel: We still see customers that continue to consolidate around culture for both internal and external, and that touches on the earlier comment about having data across the enterprise. And we're seeing success across many sectors. Again, we've noted a few from tech and financial services and government and professional services and farm and health care and education, of course. And we also see continued awakening in the median telecom market. So both organically growing as well as you potential customers that are picking up.

Operator: This concludes today's teleconference. You may disconnect your lines at this time. Thank you.

Operator: This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.

Speaker Change: this concludes today's teleconference you may disconnect your lines at this time thank you for your participation

Ron Yekutiel: You remember that market tends to be a bit clunkier. And but we're seeing some good buying signs there and we're excited as we look into the future. And maybe a couple of other points that I would note that we mentioned earlier price increases in the first quarter. And we said that data gone up. We continue to see that. It was actually 3x the booking we had a year prior in the second quarter of 2023.

Ron Yekutiel: So competitively, we're able to command better prices for a better value provided by cultural aid and compared to our own services offered the year before. And then from a lead gen perspective, we still saw a sequential increase in the meeting sub by SBRs and RFP. So all in all, the trend is going in a good direction. Again, this isn't as high as we expected to continue to be and grow. There's a lot more to grow, a lot more to look forward to. We still broadly see the headwinds that we believe will turn into further tailwinds, but let John comments on that. And thanks, Ron.

John Doherty: And thanks for the question, Gabriella. So we talked about how we were working through some of the headwinds that were coming out of 2023. And that was, some of that was in our guide for Q2. It's also a bit in our guide for Q3 overall, but we did come out. And as we've mentioned, we beat where we got it to on Q2, so we're certainly managing through it. The stronger bookings, the increase in RPO, we think boats well for where we're headed as we finish this year and as we head into 2025. And our guide certainly supports that as well. Thank you very much.

George Iwanyc: The next question is from George Iwanyc from Oppenheimer School. Hi, thank you for taking my question. So John may be building on the guidance.

Speaker Change: For more information, contact the Office of Education of the Syrian Republic

John Doherty: Can you give us a sense of what linearity was like as the quarter progression into July? For the quarter specifically, yeah, I'll talk about through June.

John Doherty: I won't necessarily talk about it into July. And it's not unlike any typical quarter, you see strength towards the back end of it. And that's what we saw in the second quarter. Our guide reflects both for the third quarter and full year, where we expect. But certainly as I said, there are certain things that we're managing through as a business. One of the keys that I focus folks on as we move forward is also what we're doing around growth profit and margin in particular.

John Doherty: Our guide does support the fact that we're going to see a little bit lighter P.S. But P.S, comes with lower margins than subscription. We're confident we're headed on the subscription side of things. And as we've also talked about, we have a strong focus on each kind of line item of profitability. And I think that's showing up in terms of what we're doing. With growth margin, where we expect growth margin to be plus our performance around adjusted EBITDA and cash flow, which is obviously critical importance for us and for shareholders. All right.

Ron Yekutiel: And Ron, with the leadership changes that you highlighted, are you making any changes to the organizational structure, especially on the sale side? And you know, kind of falling up on that, John, would you maybe give us some highlights from an investment priority standpoint over the next six months? Yeah, thank you for the good question. Obviously, we continue to optimize our organization. We do that at least once a year as we look into the situation, both in the market as well as where we're at and where we could take it to the next level.

Ron Yekutiel: As part of the changes that were made yesterday were various optimizations made and everybody's excited about that. The energy levels are high. I'll give you an example. I mean, marketing have been put now under non-vis organization, but trying to put together closer product marketing, marketing together with sales enablement in a way that would streamline better. FDRs have been moved. They were for a certain period on the marketing organization. They're back in the sales organization within the sales teams.

Ron Yekutiel: We had further double down on large enterprise opportunities within the court team and had moved the smaller ones into what's defined as kind of our operations team or customer care group in a separate place where they're doubling down and kind of fishing within that versus the others are fishing, and the fishing rod and a more effective way within that we have further focus on verticalization, but there's a list of things as we get to any one of these changes. We think broadly and we kind of collect all the wisdom points that we've gathered for recent quarters and we've come back with with a good outcome.

Ron Yekutiel: We have great leaders leading the teams going forward. Like I said, energy is really high. Mike. And I guess the other one was to me in terms of investment priorities. Yeah, I covered some of that in when I spoke a moment ago, but just to kind of highlight. So continued improvement around operating efficiency. You certainly, you know, some of the leadership changes allowed us to do that at the top level as well as, you know, flow some of that through the organization.

Ron Yekutiel: In addition, we talked about lighter PS. You know, that also provides presents us with an opportunity to make some related costs, adjustments there as well. In addition, you know, and Ron covered kind of, you know, broad, you know, focus on AI across the business and how, you know, external customers are using it as well. Certainly will present us with an opportunity both to enhance our product portfolio as we deploy it across, you know, different parts of our product portfolio, but also, you know, and how we run our business and how we can gain some efficiencies, you know, from the deployment of that, you know, from an overall operating perspective.

Ron Yekutiel: Additionally, we have seen some growth in M and T. I don't want to say revitalization, but we think that business is also set up. You're pretty well to provide some growth going forward and that wasn't always the case. So certainly we're working closely with that team and that's one of our priorities. And then you're on touch on this, but it's key and also can be part of our profit and margin story is focusing on growing within our existing customer base, you know.

Ron Yekutiel: So where they have a, you know, a certain engagement, there's other opportunities for us to work across, you know, existing clients and you're starting, you're certainly starting to see that. You're based on what we reported this past quarter and what we see going forward from what we talk to from Bookings perspective.

John Doherty: Thank you.

DJ Hines: The next question is from DJ Hines from Canacorn Genuity. Please go ahead. Hey guys, congrats on the nice bookings quarter here. Ron, how would you characterize the environment as we think about the go forward opportunity between new customer growth versus cross sell kind of as you look at the pipeline? Is one fairing better than the other? How would you kind of frame that? Yeah, hi DJ. So I'm going to take you back to my general comments that I've made on this topic in previous calls.

DJ Hines: And I said that way back, we were more or less on a 50-50. And then it picked up during COVID through 75-25 favoring new logos. I guess it was kind of a rush, but those that didn't have it, go ahead and get it in the very short period followed by a return to the other direction, which had become more 25-75 in favor of upsells after COVID, where people stuck to their guns and each one kind of stayed with a vendor, because even though many had understood that there's a longer term opportunity in consolidating or improving or going to a better solution, many were quite myopic.

DJ Hines: And their budget process or risk averse to the point that they've stuck to the main vendor that they had. We expected to continue to kind of shift back towards the 50-50 I'd say. There's a lot of opportunity around upsell as we offer new products. You know, the number of customers over the years that have three-plus products, Michael Thura has grown consistently year-to-year. And so people are buying more and moving from inside-hand outside and multiple events and multiple activities to expect that to continue, but we do expect gradually to see a rebound in new logos, especially as I said earlier, when companies stop being myopic and have the opportunity to think forward what's better for them for the next few years, not just for that year.

DJ Hines: Should they switch to a vendor that would not just provide the more value or actually offer them a more cost-efficient solution because there's an economy of scale and you could save money on the mid to long term by switching to a unified leading vendor. And as I said, this is where we win with a knockout. I mean, we in various places are better, but if you're looking at a unified platform that brings it all together.

DJ Hines: And I also mentioned earlier the virtues of that from an application level in Safari's data harmonization that people move to us. So the short answer is expect a relatively faster growth in new bookings over time. Does it mean it's going to be next quarter or the one after its gradual? And ultimately, we're coming back to the 50- 50. Yeah, sure. That makes perfect sense. John, a follow-up for you. So, we'll be posted record bookings.

DJ Hines: You know, I guess, record recent bookings. You know, churn has stabilized, but you're guiding subscription revenue down sequentially at the midpoint in Q3. Is there anything from a revenue recognition standpoint that we should be aware of? Or are you just trying to keep numbers in a spot where you know you can hit them? Certainly nothing from a revenue recognition perspective that you should be concerned about. As I mentioned, we're still working through some of what happened in 2023 relative to our lower bookings.

DJ Hines: We feel we're in very strong shape. And as we said, I wouldn't characterize it as you did in terms of relative to how we approach guidance. But certainly, I would say we are posture still conservative. Yeah. Yeah, I'll add one more thing just to remind us because we're working with large enterprises. And in most cases deployment takes a few months. You know, I'm not even talking about M&T where it could take a year or sometimes more, but on the A&T front, it's not an immediate kind of launch in most cases.

DJ Hines: Then from a revenue recognition per your point, if you're seeing a revival or a growth in booking, the usually is at least a quarter lag into the behavior of revenue. And so Q1 was the lower booking and Q2 was where it was. Q3 is more a selection of Q1 than it would be of Q2. So that's not completely enough. But that aside, obviously we're thoughtful in trying to leave space in order to achieve more than we guide for that. Every company does that. And so do we. Yeah. Very good.

Ron Yekutiel: Thank you guys. The next question is Ryan Conz from Anita Minko. Please go ahead. Hi, thanks. You know, I see the improvement in bookings. Where are the top factors area to be that to cross a change in the product or change in your own go to market processes. Thanks. Yeah, thanks for asking.

Ron Yekutiel: First of all, let's just remind us that the first quarter is typically lower. We also said there were a couple of deals that have been pushed from the first to the second, which had caused it to be lower by the way we closed them in the second. And so we were expecting to see a rebound in the second. The second point is from the general macro move 2023 was a historic low.

Ron Yekutiel: You know, can come back to retention later. It was low on retention. It was definitely low on booking and we expect that to turn around was a low behavior across the industry. It's not just cultural. And we expected and are seeing better signs, better buying signs this year. But yeah, we are continuing to beef our products. We are continuing to strengthen and solidify our position across multiple markets. In the case, for example, of our expansion from VOD and live into real time associated also with the move from internal solutions into external for CMOs.

Ron Yekutiel: They said been getting stronger and stronger and we're able to take away customers from other vendors and expand customers that have just just just internal into external and increasing ways. The ones that have started with us with one event or a few things are now consolidating further and growing.

Ron Yekutiel: So we believe the momentum is being built and we believe it will continue to be built in the quarter. Joseph Head.

Ron Yekutiel: Great, thanks Ron, and on the core gross margin for your subscription product, what are the kind of keys to getting that margin up as it mainly scale because it picks costs or, whether you have any other levers you have there to get the gross margin up? Yeah, it's really scale and also making sure that we're focused on the right spaces from an overall customer profile perspective. All right, great, thanks. I just remind us on that good question that ultimately our gross margin is also a blend between subscription and PS, and regardless of our ability to build scale and increase subscription, the fact that we're going to have less PS, and the fact that we're going to have a better blend is going to increase our blended gross margin to a higher level as well, in addition to your question. Thanks Ron.

Operator: Thank you.

Michael Turin: The next question is from Michael Turin from Wells Fargo. Please go ahead. Hey, good morning.

Ron Yekutiel: This is Ronit Shah on for Michael. I would love to double click on the AI investment and how that's translating into the opipeline conversion. Any metrics that you guys would shine light on would be super helpful. Yeah, sure. Thank you for the question.

Ron Yekutiel: Again, let me just reclarify what we've been doing by way of AI because it comes on the heels of more work that we've done earlier. I mentioned the fact that we added the UASR solution, which is based on whisper and that's automatic captioning. We use third parties to date to do the whole transcription work and for now ongoing forward, it's predominantly cultural, which not only improves the quality and the ability to do this real time, multiple images, et cetera, but also to earlier question about margin improvements, could support margin improvements.

Ron Yekutiel: I mentioned improvements around AI for events with capabilities to automatically generate email notifications, as well as the sentiment analysis for chat so we're learning better our end users and how we could better cater to them. We had a new AI quiz generator in our video portal, which enables to increase ROI so that within the portal itself, it could generate the right quiz and the right context. This is taking us closer to a world where you could have kind of this Khan Academy in steroids where people continuously learn based on their individual knowledge and get pushed and created content for what they need to get. We also talked about noise cancellation, so improved quality of audio and room.

John Doherty: And as I said earlier, this is just the beginning and the big focus for us in the second half is around content repurposing. We are a big package that's going to be released that is going to talk about how we can repurpose content in an automated way, provide AI summaries for key insights for specific users. And of course, everything else I mentioned earlier about media telecom. We have our TV Genie Chatbot, which is for search and recommendation, looking for similar people like you, personal homepage and channels with daily recommendation feeds for each, and then for curational content, we have our AI curator assistance for dynamic content editing and suggestions and clips and subtitling.

John Doherty: So a lot to your question about how this is monetized. We keep on saying the same thing. It's a bit early days, and you'd find that a quasi-entire industry, and those that are talking about things going picked up, and maybe kind of a year we are growth, and these things that year we are a zero number. And so, you know, we are going slowly on declaring exactly what the impact is going to be.

John Doherty: It's helping us with more business, helping us increase the ARPU. You know, as it were, like I said, the ARPU for you logo in the last quarter was the highest it's been for a long while. And so, yeah, it could be that it's supporting our ability to sell and sell at higher numbers, also mention our ability to renew and increase the size of our existing customers. Could that be also supporting it, because people are happy. It doesn't mean that we necessarily charge for it separately. At this point, we're not charging for it separately. We will continue to consider our ways in this, in the future.

Operator: That's a super helpful color.

John Doherty: And then just to follow up for John, can you remind us how you think about capital deployment given your current cash position on the balance sheet and the buyback that you announced earlier this quarter? Sure, let's focus on the buyback first. I mean, certainly where we announced it on the 11th of June, we effectively, we had a bit of a cooling off period, we started, we launched it on June 25th, so there's really only a few days actually in the quarter itself, where we were actually in the market.

John Doherty: We purchased just over 100,000 shares during that window of time, which was effectively resulted in using about 130,000 dollars of the five million that was authorized by the board. We're going to continue to invest in the business first and foremost in areas where we see opportunity for growth. AI is being won from a main focus point. However, we did feel it was important given where the stock had traded to for whatever reasons that we don't need to get into, but ultimately it was in no way shape or form reflective of the underlying business performance.

John Doherty: So, you know, with the board support, obviously they authorized the buyback and we thought it was an important tool for us to have in our toolkit. We continued to be active in the market in this quarter and to monitor it, but certainly we're doing what we can and our main focus around capital deployment is to doing what we need to do to ensure that we're moving this business in the right direction and putting it in a place to maximize value for shareholders. Thank you.

Matthew Niknam: The next question is from Matthew Nicknan from Deutsche Bank. Please go ahead. This is Michael Allen on from Matt. I just want to dig in a little more on the churn. So, it's not like it's improving. Was there an area where it was improving more? I know you talked about last quarter, down sales were 75% of the churn. Just wondering if there's any area where you saw that there was improvement this quarter and where you're seeing the trajectory.

John Doherty: Yeah, thanks for the question. So, yeah, so in the second quarter as noted, we posted the same high quarterly grocery tension that we did in the first quarter of the year. And you remember there it kind of followed three consecutive quarters of improvement. And we also noted that the current grocery tension rate is the highest since the fourth quarter of 2022. So, better than last year, which again was abnormally high for us and for the industry and also kind of saying that it represents an annualized retention rate that's better than last three fiscal years as well.

John Doherty: So, it's all together in a point that we're feeling good about. To your question about down churn versus or partial churn versus full churn, and still kind of the same around 25% of our churn was full churn this quarter versus about 75% which was down sales. So, it's a same ratio and it was both an M&T and an E&T. So, there was no specific topical area that's associated with that. And so, no special area to put a finger on other than it's at a better place that it was a lot back and it's definitely maintaining the level of Q1.

John Doherty: We continue to forecast that the second half of the year is going to be better than the second half of last year and then the year is going to come up with a much better place in last year. I will just note again the NDR discussion, which is a lagging indicator in the second quarter we posted the same result as the first quarter. In fact, also as the fourth quarter since the last three quarters are the same number.

John Doherty: It's a better result than what we had thought we mentioned in the last reading call that we expected to dip further so it's good that it didn't and we do believe that the direction of the NDR being lagging that it will turn around in the coming quarters.

Operator: So that's my summary. Awesome.

Patrick Walravens: Thank you.

Ron Yekutiel: The next question is from Patrick Walravens from JMP Securities. Please go ahead. Oh, great. Thank you. And it's next to see the bookings rebound. So I noticed in the script that you guys called out deals with two of the world's largest technology companies and then one thing that I've just noticed in my travels, Ron, is when I'm going to one of these user conferences. Sometimes you got a wait a long time for the sessions to be available in the app.

Ron Yekutiel: And then other times, like at the like it'd be in video GTC conference this year, as soon as you walk out, you can like literally the second you walk out of the session, you can start watching the replay. And then I noticed that's the culture of players. So I'm just wondering, how big is that opportunity for you guys to power more of the user conferences of these big companies? How much does it, how much do you guys make when you get, you know, an AWS or a green poster and Nvidia GTC? And how many more of them are there out there?

Ron Yekutiel: Thank you for the question, Pat. So yeah, so first of all, you've, you've mentioned great technology companies and some of the largest ones we indeed are very glad and honored to be providing solutions for the companies you've mentioned and many others that are leading to companies. We also appreciate the fact that these companies are the kind of, I'd say, quote, unquote, smartest in choosing technology. They definitely understand what it takes to build great.

Ron Yekutiel: And how to test and vet great technology. So the fact that we're able to be there, we believe is a pretty good to be able to do much more in other areas in which we're at. I'd say to your question first about getting content immediately after you step out. Yes, part of the value of culture is the fact that when we consolidate the various video use cases, we also consolidate various data technologies.

Ron Yekutiel: To remind you, we originally were a leading content management company based on right through the number one for years, and we expanded in 2020 from content management into also events and added real time. And we said there that we believe that historical divide between on demand live and real time is not natural that you'd expect to have a continuous experience that spans across various technologies because the users don't care about technology.

Ron Yekutiel: They care about their experience to point about stepping out and wanting to get the video immediately. And so we've put a lot of emphasis on being able to insert VOD within live and real time experiences and to immediately convert and experience VOD right after so that you have a continuum of experience before, during and after events. I'm happy you've noted that and indeed it is a big value that we provide. Lastly, your question about the potential of these deals.

Ron Yekutiel: Rose. You know, Amazon at the time, I could say to that because for a certain period, they're also defined as north and 10% of our revenue. They remain the second largest customer of the company. They're very large, multi-multimillion. And there's a lot more upside there as much as there's similar upside in some of the other large companies that you have mentioned and more others that you haven't. We are in discussions with various companies about potential upsells and growing these accounts, both by way of the number of activities they do have the same type that they do with us today, also consolidating other vendors.

Ron Yekutiel: And as I said earlier, not just increasing quality, but also having better economy of scale, but also moving into other adjacent use cases so that they don't use us just externally, but internally and for other use cases. So, yeah, we expect this grow. I would just finalize by saying the one KPI that keeps on growing until through our year after year is the average year of our customer has always grown, continue to grow. And that is because we could offer more and more value for each customer.

Patrick Walravens: Great. Thanks for that perspective. Thank you, Pat.

Operator: As a reminder, it is star one to ask a question.

Operator: There are no further questions at this time.

Ron Yekutiel: I would like to turn the floor back over to Ron Yucatiel for closing comments. Thank you very much for all your great questions and continue the support and interest and culture. You know, was a solid quarter from our perspective, but as we said, it's generally within the context of years that I've been quite tough with quite a lot of headwind. We're not declaring any form of victory. There's a lot more work ahead.

Ron Yekutiel: There'll be one key quarters this of that direction, but at the end of the day, we believe we're up into the right book by with bookings and retention and how that translates into top on growth. And for sure how it also translates into bottom line profitability, both accrual based and cash based. We look forward to continue to demonstrate that and to generate both growth and profitability.

Operator: Thank you again and have a great day and week.

Operator: This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation. Thank you. Iwanyc, David Hynes, John Doherty, David Hynes, John Doherty,[inaudible] David Hynes, John Doherty, David Hynes, John[inaudible] David Hynes, John Doherty, David Hynes, John Doherty[inaudible] David Hynes, John

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