KALTURA INC Q3 FY2025 earnings call

• Announced the acquisition of Ethof.ai, a deep tech GenAI lab, which will power new lines of Kaltura immersive real-time conversational virtual agents and a new content creation tool.
• Discussed investments in AI offerings, including expanding Genie agents, enabling custom instructions in ContentLab, and launching a new publishing agent.
• New subscription bookings in the third quarter included twelve six-digit deals, with AI deals also being closed.
• Product enhancements in areas like virtual events, video portal, LMS and CMS extensions, and underlying platforms.
• Hosted education events and showcased products at industry conferences.
• John Doherty's upcoming departure on December 5, with the company initiating a search for a new CFO.

Total revenue for the quarter ended September 30, 2025 was $43.9 million. Subscription revenue was $42 million, and professional services revenue contributed $1.9 million. For the E & T segment, total revenue was $32.4 million in the third quarter, with subscription revenue of $31.8 million and professional services revenue of $500,000. The M & T segment had total revenue of $11.5 million in the third quarter, with subscription revenue of $10.1 million and professional services revenue of $1.4 million. Adjusted EBITDA for the quarter was $4.2 million, a new record, with a non-GAAP gross margin of 70%, up from 68% in the same quarter last year.

• Fourth quarter total revenue is expected to have a sequential increase, with subscription revenue at the same level as the third quarter considering revenue recognition delays with two existing customers.
• Adjusted EBITDA guidance for the year is increased, with a record high expected in the fourth quarter.
• Forecasts positive cash flow from operations for the fourth quarter.
• ESOP acquisition is expected to close around year-end with minimal financial impact on 2025 numbers, and incremental revenue from 2026 onwards.

• Non-GAAP financial measures differ from GAAP, and relevant disclosures can be found in SEC filings.
• Risks associated with integrating the acquired Ethof.ai, including time and resource requirements for product development and commercialization.
• Potential customer termination of contracts with termination for convenience clauses, though currently low and not expected to change materially.
• Uncertain macroeconomic environment impacting business performance.

Q: Thoughts on investments in the new product and how it will integrate, and if sales reps can sell it from day one, and Q4 customer cohorts.

A: Ron Yekutiel mentioned the acquisition is about strategic long-term value, with the immersive virtual agents being a big move. Sales reps will be able to sell the product over time, and new bookings are expected to pick up in Q4 in both E & T and M & T.

Q: Tangible signs of increased AI technology adoption in customer base and cause of revenue recognition delays with two customers.

A: Ron Yekutiel noted there is excitement around Genie and ContentLab, with buying signs for new offerings. Revenue recognition delays with two customers are due to issues on the customer end, not Kaltura's delivery, with the projects spilling over into next year