Good afternoon, everyone, and welcome to the Kaltura third quarter 2025 Earnings Call. All material contained in the webcast is the sole property and copyright of Kaltura, Inc. 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.

Thank you, Operator. I am 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 the results for the quarter ended September 30, 2025, and provide a business update. John will review the financial results for 2025 in greater detail, followed by the company's outlook for the fourth quarter and full year of 2025. 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 but not limited to statements regarding Kaltura's expected future financial results and management's expectations and plans for the business, including our planned acquisition announced earlier today. 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 ended December 31, 2024, and our other SEC filings, including the quarterly report on Form 10-Q for the quarter ended September 30, 2025, filed with the SEC. 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, we will be discussing non-GAAP financial measures, adjusted EBITDA, non-GAAP net loss, and non-GAAP gross margin during this call. For a reconciliation of these measures to the most directly comparable GAAP metric, please refer to our earnings release, which is available on our website at investors.kaltura.com. Now, I will turn the call over to Ron.

Thank you, Erica, and thanks to everyone joining us on the call this afternoon. Today, we reported total revenue of $43.9 million for 2025 and subscription revenue of $42 million. We posted a record adjusted EBITDA of $4.2 million, representing our ninth consecutive quarter of adjusted EBITDA profitability driven by a strong non-GAAP gross margin of 70%, up from 68% in the same quarter last year. Cash flow from operations was $9.3 million, in line with our forecast of strong cash flow in the second half of the year. Non-GAAP net profit in the third quarter was $2 million, representing the fifth consecutive quarter of non-GAAP profitability. Before continuing the review of our third quarter results, I would like to discuss some exciting news. After market close today, we announced that we signed on November 5 a definitive agreement to acquire Ethof.ai, a deep tech GenAI lab developing conversational AgenTek AI technology and models for real-time photorealistic avatars, speech recognition and generation, and screen understanding. Esoft Avatar technology is planned to power a new line of Kaltura immersive real-time conversational virtual agents which will hear, speak, see, and understand, and harness video in other forms of rich media to provide highly engaging, personalized, customer and employee experiences. It is also planned to serve as the foundation of a new Kaltura content creation tool which would enable customers to create and publish videos with recorded avatars. This dual capability positions ESOP as an important driver of both our live conversational agentic experiences and next-generation video on demand content creation offerings. In our previous earnings call, we reiterated our vision to transform our AI agent from reactive prompt-based agents into proactive, automated, conversational, ambient agents that will anticipate needs and take action to not only drive productivity but become intelligent enough to…

Thanks, Ron. I really appreciate the kind words, and thanks to all of you joining the call this afternoon. I will say a few words about my departure after I cover our third quarter 2025 results. In the third quarter, we surpassed our top and bottom-line guidance, improved our M and T gross retention rates sequentially, and took strategic and tactical actions to allocate resources towards higher ROI opportunities while improving our overall operating efficiency. Touching on a few highlights in the quarter that demonstrate this, surpassing the high end of both subscription and total revenue guidance ranges, a record level of adjusted EBITDA, also surpassing the high end of our guidance range, and representing the ninth consecutive positive quarter of adjusted EBITDA profitability, highlighting our continued focus on operating expense management. Strong cash flow from operations, improved M and T gross retention rate, and a continued strong E and T gross retention, which is still forecasted to yield an annual E and T gross retention rate in 2025 that is better than that of the previous four years. And working throughout the quarter to subsequently announce the signing of the ESOP definitive agreement and the repurchase of our shares from Goldman Sachs. With that, let me move on to our results. Total revenue for the quarter ended September 30, 2025, was $43.9 million, down 1% year over year as expected and above the high end of our guidance range of $42.8 million to $43.6 million. Subscription revenue was $42 million, flat year over year. This was also above the high end of our guidance range of $40.8 million to $41.6 million. Professional services revenue contributed $1.9 million for the quarter, down 14% year over year and consistent with the expected trends we discussed on our previous earnings calls. Before…

Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press A. You may press 2 if you would like to remove your question from the queue. For participants using speed equipment, it may be necessary to pick up your handset before pressing the star keys. And our first question will come from Ryan Koontz with Needham. Hi, this is Jeff Hopson on for Ryan. Thank you for the question and congrats on the acquisition.

I guess I had one on the acquisition. Any thoughts on, you know, the investments that are gonna go into, you know, the new product and how it's gonna integrate in. I guess, and, like, day one, will sales reps be able to sell the product? Or was that second-half revenue contribution kinda got into, you know, like, six-month period of investing in a product.

Yeah. Thank you very much. So in short, I would say I would focus more on the second half, not to say that things can come earlier. But we would like to set the goal kind of in a realistic comfortable way for us to get there. Big move for us, there's a lot installed for this, and it's not about immediate gratification. It's about strategic long-term value. Share a little bit about that, maybe give you a bit more information about cost structure, and how much will be needed to be invested plus what are the type of developments for your question. But first, why are we buying new stuff? And as I noted, it's like for twenty years enterprises have been streaming video. But with the advent of AI, video can be created on the fly in a very hyper-personalized, contextualized way, and we have been talking about that. Last one and a half years, we have been building AI-based agentic video workflows, and we launched our Genie family of products for work, school, and TV. And with that, we are able to repurpose video delivered in real-time. Customers, employees use that, flashcards, images, short videos. But what it did not include is an actual video representation. And now what we are doing with ESOP technology is we are giving Genie a face, mouth, ears, eyes, that's gonna be human. It's gonna be fully conversational. It's gonna also see, quote, unquote, your screen. They could do a sharing and maybe at a later time take over your screen. And that's really important. It's part of this move where we are gradually changing our mission statement, from powering video experiences to powering immersive virtual agents and experiences. So the immersive virtual agents are, again, the genie and the next…

Awesome. Thank you. And maybe just one follow-up. As we kind of look into Q4, just curious if there's any specific verticals or customer cohorts that are kinda coming in better or worse than your expectations. That's a good question.

I mean, we have seen so what are we seeing in the third quarter? We have seen the gross retention starting to get better in M and T. We said that Q4 is going to get even better. So we are happy to see this kinda land in the right place. We did say that the new bookings, the kind of the sequential increase did not happen in the third quarter, and it is, we said, second half. So it's gonna what we see is we expect that to happen in the fourth quarter. It is happening in both M and T and E and T. So we expect that trend to build up in both of them.

Thank you very much.

No. Thank you. Appreciate it.

And, again, that is star one if you would like to ask a question. And we will go next to DJ Hynes with Canaccord.

Hey. Good evening, guys. Congrats on all the news. Very exciting stuff.

Thank you, DJ.

Well, maybe also yeah. Of course. Ron, maybe I will start with you. I am just curious. Are you seeing any tangible signs in the customer base that the adoption of AI technologies is increasing either the velocity or the amount of video content created? I am just curious if there are data points that support that the thesis is already starting to play out or if it's still a little too early here.

So it's definitely there's excitement that, you know, the more we have seen more people interested in utilizing Genie and ContentLab. Again, we closed five deals this quarter. Both education, enterprise, there's more around the corner. The list is growing. They are using that to generate more video, period. The whole idea of recreation, repurposing of videos, is one of the biggest issues of AI. So we are seeing that happen. Like I said, I think that the big jump is gonna happen in continuous investment in the regular stuff we have done, but also with this Genie 2.0. And I think that's 2026, so I am very excited about that. From a multi-quarter trend, there's no doubt it's getting there. Again, we have been careful from the beginning to talk about how quickly revenue is gonna hit. Because there are issues pertaining to compliance and just the rapidity in which people fully adopt these things that take a bit of time. But we have been out there in conferences showcasing also the new vision. We have people take cameras out and take photos of what we have been doing in video. Their jaws dropped. The excitement level is really high. We have had some of our customers, including the very biggest customers that we have, couldn't talk to us about what they could do with us now. So there are very, very interesting buying signs to the new stuff that we are doing. But look. We, you know, as we do not overpromise. We like to overdeliver and we also want to build this company for the mid to long term. It's not a tell-me market. You know, it's a show-me market. And, it's not overnight. I also want to set that stage that it's gonna take a few quarters here. It could come quicker. It could take a bit longer. But I think that as we go through this, we are gonna have more and more design partners, more and more launch partners. Hopefully, we would be able to share these as they come by. Hopefully, they are gonna be big and exciting, so everybody's gonna get excited by that. But we see this as very, very disruptive.

Yeah. Good to hear. And then maybe we could just follow-up on the rev rec delays you called out with two customers. What is causing those? And when do you expect those issues to be rectified, and we could start to see that revenue drop in?

Yeah. That particular there's a couple of customers that's to the tune of half a million-ish in that. Otherwise, if you add that up and it's kind of look at our current guide and maybe if we were as usually yes or no gonna meet our guidance, maybe go above and kind of coming back to the original numbers. Because we have taken it just a tad down. But let's wait and see what happens in Q4. These two are one of them is E and T. The other one is M and T. And it's really projects that were planned to have happened by the end of the year. And they spilled over into next year. And so that's gonna take a little bit longer after that, whether it's fully in Q1 or a little bit after. That's just news coming for the customers for reasons that relate to them which was not pre-known to us. And when it did come up, we needed to adjust for.

Okay. So it's not a Kaltura delivery issue. It's counters on behalf of the on the customer end. Okay. Got it. Okay.

That's correct. It's something that has to do with them. You know?

Yeah. Makes sense. Okay. Thank you, guys.

I appreciate it.

And this now concludes our question and answer session. I would like to turn the floor back over to Ron Yekutiel for closing comments.

Yeah. Appreciate that. Again, a special day for us. You know, it's once every few years, we make a leap that is inorganic in this form. If you look at our past behavior, when we have done these, they have landed significant big customers. Required DaVinci in 2014, brought in Vodafone that kinda brings $20 million a year. We brought in Neuro in 2020, and that brought in AWS. Brought in on the first year close close to $13 million a year. So it's not just the issue of technology and strategy and positioning. But the very significant, we believe, potential commercialization and revenue. It's an exciting new step, which is aligned very much with what we have been talking about for a long time. It's not a new direction. It is an evolution into the right direction, which is to become a full CX and EX platform that harnesses video in order to be a better CX and EX platform and that harnesses AI at Genie 2.0. We are excited. We love the team that's joining us, and we love the DNA mix that they bring. We commend them for what they have done so far, and thank Alan, Alon, and his team for choosing Kaltura as their partner and to continue the journey together. We are excited from what lies ahead. We did not mention, but we also repurchased stock, quite significant stock this quarter. So we are ending up as I mentioned earlier, with a lot more technology and exciting opportunity with far less shares. So it's anti-dilutive accretive value for shareholders at a great price. We are able to hopefully command the growth and profitability that we are planning to command in the quarters ahead. And that's it. I want to thank everybody for their continued trust and support. Once again, as we wrap up, thank my friend here and colleague, John, for his great support and partnership. We are gonna remain close friends, and we are gonna continue to work together. And he's gonna continue to consult the company in the months ahead as we bring in the new CFO. So and, of course, amazing, amazing finance team and leadership within the finance team that's enabling this transition to happen. We have the number one finance team in the world. So thank you, folks. Appreciate it. Have a wonderful day. Take care.

Ladies and gentlemen, thank you for your participation. This does conclude today's teleconference. You may disconnect your lines, and have a wonderful day.