Kaltura, Inc. Common Stock 2026 Q2 Earnings Call

Please go ahead, Erica. Thank you, operator, and good morning.

I'm joined by Ron Yekutiel, Kaltura's co-founder, chairman, president, and Chief Executive Officer, and Liron Sharon, Executive Vice President of FP&A and interim Principal Financial Officer. Ron will begin with a summary of the results for the second quarter ended June 30, 2026, and provide a business update. Liron will then review the financial results for the second quarter of 2026 in greater detail, followed by the company's outlook for the third quarter and full year 2026. 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, management's expectations and plans for the business, including execution on strategic transition and upcoming product launches, integration and expected benefits of our recent acquisitions, our deal pipeline, trends in customer engagement, anticipated tailwinds, and our expectations around capabilities and benefits of our products, including AI technologies. 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, 2025, and other SEC filings, including the quarterly report on Form 10-Q for the quarter ended June 30, 2026, to be 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, adjusted EBITDA margin, 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'd like to turn the call over to Ron.

Thank you, Erica, thank you everyone for joining us today. We continued our strong execution in the second quarter, exceeding the high end of our guidance for both revenue and adjusted EBITDA. Total revenue was $46.9 million, up 5% year-over-year. Subscription revenue was $45.6 million, up 8% year-over-year. Adjusted EBITDA was $5.9 million, up 44% year-over-year, representing our highest second quarter result to date. We also delivered a record non-GAAP gross margin of 75%. New subscription bookings grew sequentially included 13 six-digit total contract value deals. Five of these were with new logos across the financial services, healthcare, and education industries. Beyond the strong financial results, the most important development during the quarter was the meaningful increase in the number of new deals that included our AI product.

Given this transition is still just beginning, we want to provide more detail than we normally would about where we see adoption, which products customers are selecting, and the business problems they're beginning to address. During the second quarter, we signed a record 14 new deals that included one or more of our AI offerings, representing a doubling of our previous record. Nine of these 14 deals included our new Agentic Avatars product. Four had six-digit total contract values. Eight were with new logos. The deals reflect a broad range of industries and use cases. Four were with higher education institutions, ed tech companies, and publishers that collectively engage tens of thousands of students. These customers intend to use our products to deliver richer and more personalized teaching and learning experiences.

Three were with real estate companies, including two subsidiaries of an organization with a network of hundreds of thousands of agents. One deal focused on personalized agent onboarding and training, while the other two focused on online property discovery, customer engagement, and lead qualification. Two were with technology companies, including a Fortune 10 company. One customer plans to use our technology for AI-enabled employee onboarding and training. The other plans to deploy a personalized customer concierge across its websites and virtual events. Two were with global consulting and business process outsourcing leaders. Both are Fortune 500 companies with hundreds of thousands of employees. One is using our products for employee onboarding, learning, and development. The other for personalized customer marketing. Two were with financial services companies that each manage trillions of dollars in assets.

One plans to use our products for personalized employee knowledge sharing and internal communications, while the other plans to use our products for interactive marketing and demand engagement. Finally, one was with Media and Telecommunications customer that intends to use our products for conversational advertising and point-of-sale experiences in large venues. All combined, these deals span six industries in a broad mix of employee, learner, customer, and audience-facing use cases, providing early evidence that adoption is not limited to one vertical, buyer, or workflow. From a revenue perspective, as expected, the contribution from these 14 deals remains limited. The combined total contract value is approximately $1 million. We view these deals as initial footholds that may expand over time to additional users, usage, business units, and use cases.

Consistent with the outlook we shared last quarter, we continue to expect initial revenue contributions from our new products in the second half of 2026, followed by a more meaningful ramp in 2027. I would now like to provide more details about our growing pipeline across all products, the increasing role that AI products are playing within it, and why we remain confident in the opportunity ahead. Our current pipeline for new subscription bookings in the second half indicates the potential to book more than two and a half times what we booked during the first half of the year. This expected growth is being driven by both our Enterprise, Education, and Technology business and our Media and Telecom business.

Looking at our sales pipeline of deals that also include one or more AI products for the second half of 2026 and 2027, we currently have more than 500 opportunities at various stages of engagement. These opportunities currently represent, in total, approximately $17 million of total non-weighted potential annual contract value, ACV. It is important to put that figure in context. This is a non-weighted pipeline number, which includes the full value of all deals across pipeline stages. While not all of these opportunities will convert to wins, it's worth noting that most of our AI products were launched very recently, our go-to-market motion is still developing, and many of these engagements remain in early stage of discovery and could grow, and additional opportunities are expected to emerge. We therefore view the current pipeline as an encouraging initial indicator rather than as a mature representation of the longer-term opportunity.

Let me provide more details about the composition of the current AI-related pipeline. About a third of the number of these opportunities and of the potential ACV comes from new logos. By industry, more than one-third of potential ACV comes from educational institutions, ed tech companies, and publishers. About 25% comes from Media and Telecommunications companies. Approximately 40% comes from enterprises across a range of industries led by technology, financial services, healthcare and life sciences, professional services, and consulting and government. By product, the pipeline includes over 200 opportunities involving our Agentic Avatars and close to 100 involving our Avatar Video Production Studio. It also includes over 60 proofs of concept that are either already active or currently being scoped. We see similarly broad patterns when we examine the pipeline by use case. About one-third of potential ACV is associated with personalized employee journeys.

These include employee onboarding, learning and development, compliance, sales enablement, knowledge sharing, internal communications, practice, role-playing simulation. Another roughly one-third is associated with personalized learner journeys delivered by universities, ed tech companies, and publishers. Approximately one-sixth relates to customer and partner journeys. These include onboarding, education and activation, marketing and demand engagement, digital sales rooms, customer care, and support. The remaining approximately one-sixth relates to audience journeys delivered by media and telecommunications companies, including interactive experiences for television viewers and audiences in physical venues. Together, these patterns suggest that the opportunity is developing across multiple industries and repeatable use cases, with agentic avatars emerging as an important entry point into the broader Kaltura platform. Turning to retention. We also delivered strong performance during the second quarter. The quarter represented our best gross retention results since the fourth quarter of 2022.