Good morning, everyone, and welcome to Kaltura Fourth Quarter and Full Year 2023 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. Please go ahead.

Thank you, and good morning. With me today from Kaltura are Ron Yekutiel, Co-Founder, Chairman and Chief Executive Officer; Yaron Garmazi, Chief Financial Officer; and John Doherty, Kaltura's incoming CFO. Ron will begin with a summary of the results for the fourth quarter ended December 31, 2023, and the company's plans and expected trends for 2024. Yaron will then review details of the financial results for the fourth quarter and full year of 2023, followed by the company's outlook for the first quarter and full year of 2024. 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 quarterly report on Form 10-Q for the quarterly period ended September 30, 2023, and other SEC filings, including the annual report on Form 10-K for the fiscal year ended December 31, 2023, to be filed with the SEC. Any forward-looking statements made in 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 a non-GAAP financial measure, adjusted EBITDA during this call. 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 the company's website.

Thank you, Erica, and thank you, everyone, for joining us on the call this morning. Today, we reported total revenue for the fourth quarter of 2023 of $44.5 million, up 1% year-over-year and subscription revenue of $40.8 million, up 3% year-over-year. Adjusted EBITDA for the quarter was $0.8 million. We posted record high total revenues in the fourth quarter, which also marked the fifth consecutive quarter of year-over-year growth. The quarter wrapped up a year where, as we had previously forecasted, we saw increased subscription revenue and growth rates despite declining professional services revenues, as expected, total revenue growth rates also increased. As for our bottom line, the fourth quarter was also a second consecutive quarter of adjusted EBITDA profitability and a positive cash flow from operations, both for the first time since 2020. It was also our highest adjusted EBITDA results since the fourth quarter of 2020. This concluded the year with marked bottom line improvements year-over-year, where we posted $2.5 million of adjusted EBITDA losses compared to $28.3 million in the prior year and reduced our cash flow used for operations by $38.5 million from $46.8 million to $8.3 million. As we draw 2023 to a close, we are pleased to have achieved and surpassed our revenue and adjusted EBITDA guidance for the year, delivering on our goal of accelerating revenue growth while returning to adjusted EBITDA profitability in the past two quarters and forecasting dramatically improved cash flows. At that end, we are reaffirming our expectation of posting both a positive adjusted EBITDA and positive cash flow from operations this year. Moving on to the business update. While bookings and retention results in the fourth quarter continued to be lower than in 2022, we closed more deals, achieved higher new bookings and posted a higher gross retention rate than in each of the first three quarters of 2023. In addition, the top of our sales funnel continued to show a sequential increase in the number of qualified leads in the passing quarter. We believe that our differentiated horizontal platform and continuous product portfolio expansion enable our customers to consolidate many video use cases internally and externally around Kaltura. By doing so, we help reduce their costs and complexities and eliminate workflows and content silos. This consolidation brought forth in 2023 larger deals and continued to increase our average customer size as evidenced by record high ARPU and a record high average ARR per customer in 2023, which we believe will help our future growth. In the fourth quarter, we saw our new event platform gain traction. We extended our reach within a couple of global enterprise software giants to support them with our events and webinar offerings, both for internal communication and training as well as external marketing and partner enablement. Additionally, a prominent technology company already leveraging our event platform expanded its usage and a leading U.S. automotive company upgraded from Kaltura webcasting to Kaltura events. Datavant webinars, a Fortune 100 financial institution, one of Kaltura's largest and earliest customers, purchased additional accessibility features to further extend the reach and inclusion of their internal video communication. One of the world's largest restaurant chains expanded its usage and increased its access to Kaltura's product suite capabilities, and a well-known global leader in the direct-to-consumer streaming space, a new customer, selected Kaltura to power its internal video-on-demand portal for employees and partners. In the education sphere, we continued our global expansion by securing a large European university and a prestigious European business school as new customers after conducting successful proof of concept with our product. We are also increasing the number of end users of our media and telecom platform with our top EMEA customers migrating hundreds of thousands of new households into our Cloud TV service. On the product front, during the fourth quarter, we continued boosting our event platform with roles and permissions, enriched registration reporting and an advanced landing page editor and additional features that encourage interactivity of both virtual and in-person audiences. Our video portal now enables users to seamlessly stitch videos together, and we also improved the user experience and branding options. We added to our video player additional call to action capabilities and enhanced podcast experience and customizable pre- and post-broadcast fleets. Kaltura real-time conferencing rooms continue to evolve with the launch of our proprietary new whiteboard, which complements existing third-party integrations. We have also introduced simulcast features to improve broadcast quality and network efficiency. On the infrastructure front, we continue to support new regional SaaS cloud and have made strategic investments in enhancing our capabilities around hold-your-own key options, enforcing our commitment to security and data sovereignty. As for AI, as previously discussed, we believe that we are on the cusp of a transformative era for video-first AI-infused experiences that will drive greater engagement and improve business results. In the passing quarter, we expanded our AI assistant to provide real-time insights and suggested actions to organizers and presenters during webinars and other events by identifying changes in viewer engagement in real time and initiating actions such as launching relevant quizzes and evoking audience reactions. The AI accelerator program, which we launched last quarter, continued to grow with more technology partners joining and more customers exploring AI-powered video experiences and how they can support their interests and needs and boost their business results. Throughout 2024, we expect to gradually cater to many of their needs and for AI to become an increasingly important part of our offering. As we look ahead to 2024 and beyond, we anticipate a more favorable market environment that is expected to ease budgetary constraints for enterprises, particularly in North America. We believe that enterprises will gradually reinvest in digital technologies, including video-based experiences for employees, customers, and prospects. This will be fueled by an increasingly hybrid workplace with less travel to reduce costs and carbon emissions and by the increasing reliance on video from the millennial and Gen Z workforce, which is savvy and reliant on video and by the much greater expected ROI generated by AI-infused video experiences. We believe Kaltura provides the most robust, engaging, and impactful advanced video-based solutions, powering use cases such as marketing and customer engagement, employee and partner communication and training, student learning and engagement, and online entertainment. Beyond this, we believe we are unique in offering a single platform that addresses all these use cases and others to follow. As mentioned, we see the single platform approach not only boosting functionality, reliability, and scalability but also being much more cost-effective. While we believe our advantages helped us outperform many of our competitors in the past challenging year, we believe that we will become even more impactful when improved macroeconomic conditions will cause customers to start making longer-term investments to elevate their systems' quality, performance, and efficiency. As mentioned, we've already seen this trend affect our entire sales funnel with growing leading demand indicators such as the number of new qualified leads fueling higher win rates and continuing to increase our new logo ARPU and average ARR per customer. In 2024, we will continue to focus on and cater to the growing demand for our event platform from existing and new customers for both internal and external use cases. We also plan to continue our expansion down-market and increase the size of our commercial sales team that sells low-touch solutions to SMEs and departments within large enterprises. To that end, while in 2023 we reduced for the first time the size of our sales team to match the lower enterprise budgets and longer sales cycles to address our profitability goals, this year we plan to gradually regrow our sales force. In summary, we wrapped up a tough year with strong macroeconomic headwinds that weighed down our new bookings and gross retention and generated a revenue growth rate that, albeit better than last year's guidance, is still far below our historical level. We entered 2024 with a robust product offering, a clear strategic direction, and a validated go-to-market thesis. With market conditions improving, enterprise spending recovering, and new opportunities arising from AI, we believe we are well-positioned to capture the increasing demand for video experiences. While we believe we have the right products and market positioning to support faster growth, given the still unclear macro conditions and considering last year's outcome, we are thoughtful with our revenue guidance for 2024. Regardless of our top-line growth, we are reaffirming our expectations of posting both a positive adjusted EBITDA and positive cash flow from operations this year. Now, before handing it over to Yaron Garmazi, our CFO, to discuss our financial results in more detail, I would like to address his planned transition, which we announced a few weeks ago. First, I'd like to extend our deepest gratitude for his great contributions to the company throughout the past seven years. His commitment to Kaltura's growth and professional excellence have been invaluable. We wish him success in his next endeavor. As we have shared, Yaron shall remain CFO until March 1 and will continue to support the company throughout the second quarter to ensure a smooth transition. We have a saying at Kaltura: Once a Kalturian, always a Kalturian. While Yaron is moving on, he'll remain close and will forever be a partner and friend of the company. With that, I am pleased to warmly welcome and briefly introduce our soon-to-be CFO, Mr. John Doherty. John joined us earlier this month and shall formally take the reins of CFO on March 1. John brings more than three decades of financial and operational experience. Most recently, he served as CFO and COO at Magic Leap. Prior to that, he served as CFO of publicly-traded InterXion until after its $8 billion-plus acquisition. Part of that, John held a variety of senior financial and operational roles at Verizon, including Head of Corporate Development and Verizon Ventures, Head of Investor Relations, and CFO of multiple large divisions. I am excited to welcome John to our team. His experience in both financial and corporate development functions at large publicly-traded enterprises will greatly contribute to our efforts, including our plans to explore strategic opportunities that advance our commercial goals. Welcome on board, John.

Thank you, Ron, and hello to everyone on the call today. I'm very excited to join Ron and the talented Kaltura team. I firmly believe that Kaltura has the potential for significant growth in an exciting domain and that it is well-positioned to lead the market. I'm looking forward to the exciting journey ahead and to getting to know many of you personally soon.

Thank you, John. And now over to you, Yaron.

Thank you, Ron, and good morning, everyone. I would like to start off by welcoming John and thanking Ron and the team for the amazing past seven years. My period at Kaltura left me with great learnings, close friendships, and very fond memories. I'm very excited about the road ahead of the company, and I'm confident that it has the right leadership, product, and strategy in place to return to meaningful profitable growth and lead the market. As Ron said, I shall be supporting John and the company on a full-time basis throughout the second quarter to ensure a smooth transition. As Ron also said, once a Kalturian, always a Kalturian. Now, back to our financial results. As I review the fourth quarter and the full fiscal year results today, please note that I will be referring to a non-GAAP metric adjusted EBITDA. A reconciliation of CapEx to non-GAAP financials is included in today's earnings release, which is available on our website at investors.kaltura.com. Total revenue for the fourth quarter ended December 31, 2023, was $44.5 million, up 1% year-over-year. Subscription revenue was $40.8 million, up 3% year-over-year, while professional services revenue contributed $3.7 million, down 18% year-over-year. The remaining performance obligations were $185.3 million, up 8% year-over-year, of which we expect to recognize 59% as revenue over the next 12 months. Annualized recurring revenue was $164.7 million, up 3% year-over-year. Our net dollar retention rate was 99% in the fourth quarter, up from 96% in Q4 2022. Within our E&P segment, total revenue for the fourth quarter was $31.6 million, up 5% year-over-year. Subscription revenue was $30.4 million, up 5% year-over-year, while professional services revenue contributed $1.1 million, up 13% year-over-year. Within our M&T segment, total revenue for the fourth quarter was $12.9 million, down 8% year-over-year. Subscription revenue was $10.4 million, down 2% year-over-year, while professional services revenue contributed $2.5 million, down 27% year-over-year. The gross profit in the quarter was $28.6 million, representing a gross margin of 64%, up from 63% in Q4 2022. Within our E&P segment, gross profit for the fourth quarter was $23 million, representing a gross margin of 73%, up from 70% in Q4 2022. Within our M&T segment, gross profit for the fourth quarter was $5.6 million, representing a gross margin of 44%, down from 46% gross margin in Q4 2022. GAAP net loss in the quarter was $12.1 million, or $0.09 per diluted share. Adjusted EBITDA for the quarter was $0.8 million, improving from a negative $4.2 million in Q4 of 2022. And now for the full fiscal year results: Total revenue for the year ended December 31, 2023, was $175.2 million, up 4% year-over-year. Subscription revenue was $162.8 million, up 7% year-over-year, while professional services revenue contributed $12.4 million, down 24% year-over-year. Within our E&T segment, total revenue for 2023 was $125.2 million, up 4% year-over-year. Subscription revenue was $120.6 million, up 6% year-over-year, while professional services revenue contributed $4.6 million, down 31% year-over-year. Within our M&T segment, total revenue for 2023 was $50 million, up 3% year-over-year. Subscription revenue was $42.2 million, up 8% year-over-year, while professional services revenue contributed $7.9 million, down 19% year-over-year. Our net dollar retention rate was 100% in 2023, consistent with 2022. GAAP gross profit in 2023 was $112.2 million, representing a gross margin of 64%, up from 63% gross margin in 2022. Subscription revenue gross margin was 73%, down from 74% in 2022. Within our E&P segment, gross profit in 2023 was $91.6 million, representing a gross margin of 73%, up from a gross margin of 70% in 2022. Subscription revenue gross margin was 79%, up from 78% in 2022. Within our M&T segment, gross profit in 2023 was $20.6 million, representing a gross margin of 41%, down from 48% in 2022. Subscription revenue gross margin was 55%, down from 63% in 2022. GAAP net loss in 2023 was $46.4 million, or $0.34 per diluted share. Adjusted EBITDA in 2023 was negative $2.5 million, improving from a negative $28.3 million in 2022. Turning to the balance sheet and cash flow, we ended the quarter with $75.2 million in cash and marketable securities. Net cash provided by operating activity was $1.6 million in the quarter compared to $5.8 million net cash used in operating activities in Q4 2022. For the full year 2023, net cash used in operating activity was $8.3 million compared to $46.8 million net cash used in operating activities in 2022. In the fourth quarter, we also entered into a new agreement with our lenders, extending the maturity and amending certain financial terms as discussed in our Form 8-K filed on December 27, 2023. I would now like to turn to our outlook for the first quarter of 2024 and for the fiscal year ending December 31, 2024. In the first quarter, we expect subscription revenue to range from a 1% decrease to a 1% increase to between $39.9 million and $40.6 million and total revenue to range from a 1% decrease to a 1% increase to between $42.7 million and $43.5 million. We expect an adjusted EBITDA to be between a negative $0.5 million and a positive $0.3 million. For the full year, we expect subscription revenue to range from a 1% decrease to a 1% increase to between $161.2 million and $164.2 million and total revenue to range from a 1% decrease to a 1% increase to between $173.7 million and $176.7 million. We expect adjusted EBITDA to be between $0 million and $1 million. In summary, due to tough macro conditions and industry headwinds, we closed a much slower growth year than usual, albeit better than last year's guidance and that of the previous year. While we believe that we have the right product and market positioning to accelerate growth and that market conditions shall gradually improve, considering the market uncertainty and last year's outcome, we are thoughtful with our guidance for 2024. We are proud to have achieved our bottom-line accrual and cash flow goals from the last year and reaffirm our expectation of posting positive adjusted EBITDA and positive cash flow from operations this year. With that, we will open the call for questions.

Thank you. We will now begin the question-and-answer session. Our first question comes from Matt Niknam with Deutsche Bank. Please go ahead with your question.

Hi, guys. Thanks so much for taking the question. Maybe two, if I could. One, Ron, if you could talk about some of the confidence you have in terms of improving market conditions that you referenced and when you could maybe see this driving more positive inflections in subscription revenue? And then secondly, just in terms of the competitive backdrop, if you could just talk about what you're seeing there? And then any change in terms of competitive dynamics over the last couple of months? Thanks.

Thank you, Matt. And hello to everyone on the call today. Let's start with the first one, confidence for market conditions. Let's wrap what we had this quarter by way of demand and trends and leading indicators. It was, as mentioned, the highest booking quarter of last year, albeit relatively flattish, but also the best retention that we had in the year past, which is returning to the levels that we had in prior years. So from a net booking perspective, it was a better quarter than the ones before. Again, it's been a tough year, but it is another quarter of improvement. We're going to wait a bit and see where things go, but it is headed in the right direction. Also important to note that as we wrapped up the year and our bookings had come down from the year before by about 25%, we also had approximately 25% fewer salespeople than the year before, which is the first time that we've actually done that. And so productivity hasn't declined; it has stayed consistent. Now that we have achieved profitability, we believe we can cater to the demand with more personnel. It’s not just about demand but about our ability to cater to the demand. Regarding demand, we look at the leading indicators we had throughout the year, including the growth in qualified marketing leads. They continued to grow and showed a sequential rise throughout the entire year. They had come down from the year before at the beginning of the year but have gradually increased since. RFP submissions have also grown materially, both sequentially and year-over-year, and that’s a good sign. Lastly, we are selling larger deals into bigger customers thanks to the additional product offerings and our strategy to consolidate around Kaltura for both internal and external use cases. We’ve seen record ARPU and continued increases in average MRR per customer, all while win rates have remained high. So if you look at all these factors together, we believe things are moving in the right direction. In North America, we sense a growing comfort level among clients for making investment decisions.

It does, yes. Just one quick follow-up. In terms of sales cycles, are you seeing those maybe shortening or stabilizing? Just curious about how that’s been impacted as well of late?

Good question. Not yet. But the good news is that the deals that come into the pipeline have to come out. So, we are closing the deals. As mentioned at the beginning of the year, the pressures and headwinds that have affected 2023 were significant lengthening of the sales cycle as well as price pressures, and we're still seeing that. It is too early to say that things are suddenly getting better. However, since win rates have been held and the top of the funnel continues to grow, we are closing these deals. We believe there will be more opportunities to close these deals in 2024.

That's great. Thank you so much.

Thank you, Matt.

Our next question comes from George Iwanyc with Oppenheimer & Co. Please proceed with your question.

Thank you for taking my question. And just to start off Ron, best of luck on what's ahead, and congratulations to you, John. So maybe, Ron, starting off with the comments on the sales productivity. Can you give us some perspective on what you're expecting from a hiring perspective this year and when those additions might happen during the year?

Sure. Happy to do that. So first, on sales productivity, as mentioned, it has kept up compared to last year, but I can also say it's broadly aligned with the pre-COVID productivity metrics. However, we materially reduced our sales force after previously growing it year-over-year, resulting in a 25% drop to meet our profitability goals. It's not the best scenario for productivity that we’ve seen historically, but we’re ready to start hiring again. We're looking to add roughly another 10 salespeople gradually throughout the year. There will be a greater focus on inside sales and commercial sales rather than extensive outside sales, as we plan to expand down market.

Yes. So first of all, you are right; there was a decline of 1%. It was 99% this quarter. But as you can see, for the year, it was 100%. We said in the previous call that we believe that for the short term, it's going to be around the 100% based on the fact that we saw, as Ron mentioned, the improvement in both bookings and retention rates. We believe that we will be able to see our coming in with slightly better numbers. But at least for the short term, I believe that this is the new normal. Obviously, if and when we see a reacceleration of both bookings and retention rates, we believe we will see an increase to the rate that we saw before COVID, which was in the low 100s.

Thank you.

Our next question comes from Gabriela Borges with Goldman Sachs. Please proceed with your question.

Hi, good morning. Thank you. I wanted to follow up on your comments regarding the macro. I appreciate the detail. I wanted to understand what you think is driving that? How much of this is just curve normalization? We're a couple of years out, and customers are ready to reinvest again. Any qualitative color from your customer conversations that you can share with us?

Well, thank you, Gabriela. I think we had two back-to-back issues: COVID was the first one, and then the financial downturn. During COVID, people said they had just purchased a lot and needed time to figure out their strategies more effectively. We heard that at the end of 2021 and early 2022. When people said, they loved the consolidation we offer for video solutions, they just needed time due to the financial impact. Since then, the financial downturn has led to price pressures and a preference for sticking with incumbent vendors, even if it's not ideal. What we're hearing now is that after waiting long enough, businesses feel they need to be smarter with their investments. They're looking at long-term strategies, not just immediate needs. While we are seeing favorable trends, caution remains in our approach, and that's reflected in our guidance. The industry is gradually moving toward re-establishing budgets and making longer-term investments.

That makes sense. And on the sales productivity metrics, remind us, how long does it typically take for a deal to go from top of the funnel to close? How long does it take typically for a salesperson to ramp up to full productivity? And any color on the training and enablement that you're providing to help with some of the larger deals?

On the third one, training enablement is for our new salespeople. We are well-structured in how we onboard new hires into the company, supported by our video-first approach. We have an internal group that is an expert in training our customers, which also helps us onboard new salespeople efficiently. To answer your first question, we put a six-month ramp time for outside salespeople and three months for Customer Success Managers. We factor that into our expectations around booking. For new logos, the sales cycle may take anywhere from 6 to 12 months, while the media and telecom vertical tends to take longer, around 1.5 to 2 years. We also have existing customers that create significant organic growth. Overall, we are cautiously optimistic and expect smooth progress in developing new relationships with customers. On the enterprise side, it's usually around 6 to 12 months for the sales cycle, but recently it started elongating due to economic conditions. We continue to monitor these trends, and while new logos are taking longer to bring in revenue, existing ones are growing nicely. Overall, we are likely to see continued interest from enterprises looking for high-quality video solutions.

Yes, thank you for the detail.

Thank you.

Our next question comes from Ryan Koontz with Needham & Co. Please proceed with your question.

Thanks for the question and welcome to John coming on board. On your guidance there for subscriptions for the year flat, how would you unpack that in terms of churn and downsells impacting your returning customers versus new logos in your guidance?

First of all, what you see is that, as Ron mentioned, we had some pressure on the year from bookings and retention levels, which were lower than in 2022. However, we do see an increase in Q4, both in retention rates and in booking rate, which should positively impact future forecasts. At this point, our forecast reflects that we believe these trends will continue. While we will be cautious with our outlook, our assumptions are based on current trends.

Let me elaborate on the churn versus upsell metrics. We have not incorporated any assumptions that are not currently occurring. We are expecting that the trends we see in retention rates will continue. Of the churn in the last quarter, only 12% was associated with customers discontinuing products. Most was due to budgetary pressures and downsells. We're assuming productivity for both upsell and downsell stays in line with our historical performance. When providing guidance, we considered a buffer for potential fluctuations to remain cautious while remaining optimistic about gradual improvements, which we are currently witnessing.

No, that was good, but I will follow up here if I could, on the inside sales focus. Is that more on renewals? Or is this more lead qualification for your inside sales hires?

Most of our customers have been managed by outside sales. The ARPU lets us look at the average MR. We have around 1,000 customers and about $175 million in revenues, so the typical customer brings us around $170,000. However, over the past couple of years, as we've added products that allow us to target small and medium enterprises, we are looking to shift towards more inside sales focusing on new deals rather than just renewals. We have formed a new team focused on lower touch renewals through structured approaches for some larger customers. The objective is to optimize efficiency and drive higher revenues from high-opportunity clients.

That's great, Ron. Thanks for the color.

Thank you.

Ladies and gentlemen, we have reached the end of our question-and-answer session. So I'd like to pass the floor back over to Ron Yekutiel for closing remarks.

Thank you, everyone, for your great questions and for participating today. As mentioned, we're feeling okay about the year that has passed. We achieved what we said we would while strengthening our capability to lead the market forward. It's been a tough year, yet we see positive macro trends that indicate improvement next year. We are thoughtful about our guidance, and above all else, I want to thank Yaron Garmazi for his partnership and work with the company. He remains with us for a while, assisting with the transition as we welcome John. There are a lot of great things for us to do together this year. Thank you, everybody, and have a wonderful day.

Ladies and gentlemen, this does conclude today's teleconference. We thank you for your participation, and you may disconnect your lines at this time.