Good morning, everyone, and welcome to Kaltura's 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. Please go ahead.

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. 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 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. 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, during this call, we will be discussing a non-GAAP financial measure, adjusted EBITDA. 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.

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. Of note, 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. 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 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 new Enterprise Education and Technology customers was at its highest level since the second quarter of 2023. 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. Use cases ran the gamut from customer marketing and engagement, employee and channel communication and re-skilling, student learning and engagement, and entertainment. 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. On the product front, in the second quarter we continued boosting our event platform functionality and user experience with an improved SMB 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, this quarter we added several 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 SMBs 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. 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 in Business MarTech Awards for Best Virtual Events Platform, the 2024 Event Technology Award for Best Virtual and Hybrid Event Platform, and four 2024 Eventex Awards for Best Event Technology, Best Audience Engagement Technology, Best Data Collection and Event Analytics Technology, and Best Virtual Events Platform. In the passing quarter, 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 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, an Amazon company, Bank of America, Bloomberg, FIDE, IBM, Intuit, Netflix, Salesforce, and Siemens Healthineers. Lastly, I want to mention a couple of recent executive changes in Kaltura. Renan Gutman, 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. Navi Azaria, who joined Kaltura 3.5 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, 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. Liad Eshkar, who has been with Kaltura for over 10 years, has assumed the role of Chief Revenue Officer. Liad's most recent role was that of Chief Business Development Officer. Prior to that, Liad led all our sales customers and partners in the technology sector, including the largest and most complex Enterprise Education and Technology sales cycles and customers, which also contributed the most to our growth. Liad holds an MBA from Columbia Business School, an MA in business law, and a degree in engineering. 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. Fueling these initiatives are factors such as an 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, accelerate our revenue growth, and increase our profits. With that, I'll turn it over to John, our CFO, to discuss our financial results in more detail. 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, 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. 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. Our sustainable 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 is 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. 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 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-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 renewal and improvement in new bookings in both Enterprise Education and 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. 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. 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 we've 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-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. 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. GAAP gross 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. 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. 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, 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. GAAP 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. 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 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 and an $8.8 million year-over-year improvement. 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 improved in recent quarters, new bookings were still low in the first quarter for reasons mentioned in the last earnings call. Last quarter, we guided 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 have come out above guidance, as I mentioned. Revenues from professional services were indeed sequentially lower as also expected. 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. 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, up by $2 million and $1 million, respectively, and narrowing both guidance ranges from $3 million to $2 million. 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 compares to the negative $2.5 million adjusted EBITDA of 2023 and would be an improvement of $5 million at the midpoint of the guidance range. 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. 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 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 the industry tailwinds in the second half of the year and in 2025. With that, we'll open up the call for questions.

The first question is from Gabriela Borges from Goldman Sachs.

Ron, you mentioned the impressive work of some of the larger customers that you have in the prepared remarks. In conversations from a number of software companies, 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 certain aspects of the 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 even pull forward their enablement with Kaltura or perhaps in some cases push it out?

Yes, AI is very exciting. It is very exciting for large enterprises. And at our Connect event around the world, we had a very detailed discussion with 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 at the right time and in the right context in order to improve their results, whether it be internally for re-skilling, learning, and training, or externally for better marketing and sales and better conversions of the funnel. And what people get excited about concerning Kaltura is several factors. 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 integrates deeply into learning with our integrations into LMS or goes 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 collection methods. Right now, increasingly, we're becoming the single vendor where people have all the data pooled on our system. This is really important when you're trying to track the behavior of a prospect or a customer through multiple events; you want to have a system that knows how to track them across all their different interactions, so that you can understand their tastes, interests, what products they like, and what services they appreciate. Kaltura is able to do that to better prompt the system 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, along with the engagement layer we offer, it becomes a very compelling solution. Customers are looking forward to the future. We mentioned this quarter all the exciting releases that we've done around AI across multiple areas. As stated, we have both on the Enterprise Technology and Media & Telecom sides several releases that have been put in place, both the new transcription and translation engine that we have fueled by Kaltura as well as better ways to analyze user reactions in real time, along with ways to curate content and further engage users.

The follow-up for either Ron or John is the normalized growth question. So you'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 regarding new logos, cross-sell, etc., how do you view the normalized growth profile of Kaltura in the medium term?

Yes. Let me say a few words about booking trends in this quarter, and then let John speak a bit about maybe forward-looking thoughts about where things could go. Yes, Q2, as you said, were more positive; it's correct. It's the highest new bookings since the fourth quarter of 2022. So it's better than earlier quarters throughout all of last year. It was also expected to see a sequential increase compared to Q1. We also had larger deals compared to Q1. So we had more six-digit deals generally. We also saw a sequential increase in the number and dollar bookings from new customers, not just total between upsells and new but also in new bookings. That was also achieved with larger first deals. Our average revenue per user (ARPU) had grown; in fact, it's the highest ARPU since the first quarter of 2023. Most of the new bookings came from North American enterprise, while most of the new logos came from Europe, specifically from EMEA enterprise, both in terms of the number of units and in the dollar value. We are seeing a good turnaround in the European market, and we continue to see customers consolidating around Kaltura for both internal and external use cases. This comes back to the earlier comment about having data across the Enterprise. We're seeing success across many sectors, including tech, financial services, government, professional services, pharma, healthcare, and education. We also see continuous awakening in the Media and Telecom market. We understand that market tends to be somewhat clunky, but we are observing some good buying signs there and we're excited as we look into the future. Additionally, I want to note the price increases we implemented in the first quarter, which we mentioned had gone up. We continue to see that, with bookings in the second quarter actually being 3x compared to the same period last year. Competitively, we're able to command better prices for better value provided by Kaltura, compared even to our own services offered a year prior. From a lead generation perspective, we still saw a sequential increase in meetings set by SDRs and Requests for Proposals (RFPs). Overall, the trend is moving in a good direction. Although it isn't as high as we expect it to continue to be and grow, there's a lot more to grow and look forward to. We still broadly see the headwinds that we believe will turn into further tailwinds; but with that, I'll let John comment.

Thanks, Ron. We talked about how we were working through some of the headwinds that were coming out of 2023. That was ingrained in our guidance for Q2. We're certainly managing through it. The stronger bookings and the increase in remaining performance obligations (RPO) bode well for our outlook as we finish this year and head into 2025. Our guidance certainly supports that as well.

The next question is from George Iwanyc from Oppenheimer & Co.

So John, maybe building on the guidance. Can you give us a sense of what linearity was like as the quarter progressed and into July?

For the quarter specifically, and yes, I'll talk about through June. It's not unlike any typical quarter; you see strength towards the back end of it. That's what we observed in the second quarter. Our guidance reflects both for the third quarter and the full year, where we expect. But certainly, there are certain things we're managing through as a business. One of the keys that I would focus on moving forward is what we're doing around gross profit and margin. Our guidance does support the fact that we're going to see lighter professional services, which come with lower margins than subscription. We have a strong focus on every kind of profitability line item. That focus is reflected in our gross margin performance, where we expect gross margin to be, along with our performance around adjusted EBITDA and cash flow, which is obviously of critical importance for us and our shareholders.

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?

Yes. 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 made, yes, various optimizations were discussed and everybody is excited about that. The energy levels are high. I'll give you an example: marketing has now been placed under Navi's organization to streamline better. SDRs have been moved back into the sales organization after a period of being in marketing. Within the sales team, we are doubling down on large enterprise opportunities within the core team that had moved the smaller ones into a separate customer care group, where they are focused on effectively increasing efficiency. Additionally, we have further focus on verticalization. So following any of these changes, we gather feedback from recent quarters and have implemented a good outcome, fueled by strong leadership.

Regarding investment priorities, I covered some of that when I spoke a moment ago, but I want to highlight that we're focused on continued improvement around operating efficiency. Some leadership changes allowed us to implement these efficiencies at the top level and across the organization. Moreover, we've talked about lighter professional services; that decision will allow for related cost adjustments as well. Additionally, we've seen growth in the Media and Telecom sector, and we see that area as well-positioned for growth moving forward. Finally, we're focusing on growing within our existing customer base, as there are opportunities for deeper engagement that can positively impact our growth.

The next question is from DJ Hynes from Canaccord Genuity.

Congrats on the nice bookings this quarter. Ron, how would you characterize the environment as we think about the go-forward opportunity between new customer growth versus cross-sell? Looking at the pipeline, is one faring better than the other? Or how would you frame it?

Yes. I will refer back to my general comments on this topic in prior calls. Initially, we were roughly on a 50-50 basis, and that ratio changed during COVID to about 75-25 in favor of new logos, as there was a rush for those without a solution to implement it quickly. After COVID, we saw a shift back to about 25-75 favoring upsells as companies grew risk-averse and remained with their existing vendors. We expect it to gradually shift back to 50-50. There is a significant opportunity for upsells as we offer new products, and the total number of customers using multiple products from Kaltura is increasing year-over-year. We see many customers looking to buy more and engage with us in various events and activities. We expect this trend to continue, and we should see a rebound in acquiring new logos as companies broaden their perspectives on long-term value. This aligns with our capabilities as a unified vendor that provides superior value.

In terms of bookings, we had a record quarter. However, while churn has stabilized, you are 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 simply trying to maintain targets that you know you can achieve? Certainly nothing from a revenue recognition perspective that you should be concerned about. We're working through some of what happened in 2023 relative to our lower bookings. We feel we're in a very strong shape, and I wouldn't characterize it as you did concerning our guidance. Still, I would say our posture remains conservative.

I want to add one more thing. Just to remind everyone that since we work with large enterprises, deployments typically take several months. I'm not even referring to Media & Telecom, where it can take significantly longer. However, regarding Enterprise Technology, it is not an immediate solution launch most of the time. Therefore, if you're seeing increased bookings, the lag in revenue recognition follows suit. The Q1 bookings were lower; Q2 showed better performance, and Q3 reflects Q1 results, which is not unexpected. We aim to create room to exceed guidance numbers, which is standard practice for companies, including ours.

The next question is from Ryan Koontz from Needham & Co.

Regarding the improvement in bookings, what are the top factors you attribute it to? Was it a change in the product, or adjustments to your go-to-market processes?

First of all, let's remember that the first quarter is typically lower. We indicated that a few deals were postponed from Q1 to Q2, which caused it to be lower earlier. Second, there was a historic low in the general market in 2023. We anticipated and are now seeing better buying signals this year. Furthermore, we are continually enhancing our products and solidifying our position across multiple markets. For example, our expansion from Video on Demand (VOD) and live content into real-time solutions is gaining traction among clients. We have increasingly convinced former internal customers to engage with us externally across multiple activities and events. Consequently, we believe that positive momentum is building, and this will likely continue in the following quarters.

Concerning the core gross margin for your subscription product, what key factors can contribute to increasing that margin? Is it principally about achieving scale, or do you have other levers?

Yes. It's primarily about achieving scale, while also ensuring we're focused on the right customer profile overall.

I would like to remind you that our gross margin is also a blend between subscription and professional services. The reduction in professional services alongside our capacity to scale and enhance the subscription component will collectively increase our blended gross margin.

The next question is from Michael Turrin from Wells Fargo.

This is Burnett Shaw on for Michael. I would like to discuss the AI investment and its impact on deal pipeline conversion. Any metrics you could share would be very helpful.

Yes, sure. Let me clarify our work around AI, which builds on previous efforts. I mentioned the launch of our new ASR solution based on Whisper, which is automatic capturing. Until now, we relied on third parties for transcription work, but we are now primarily developing the capability in-house, improving quality and enabling real-time capabilities. I also mentioned improvements in our event offerings, with capabilities to generate email notifications automatically and perform sentiment analysis for user chat. This helps us understand our end users better and cater to their needs. We have introduced an AI quiz generator within our video portal, which enhances ROI by producing relevant assessments. This positions Kaltura closer to a learning environment akin to a Khan Academy model. We expect a significant package to be released in the second half, demonstrating how we can automate content repurposing and provide AI summaries with key insights for users. We also have our AI chatbot for recommendations in a personalized viewing experience. While the impact on sales is yet to be fully realized, we do see indications that our higher ARPU suggests satisfaction among clients.

Following 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 you announced earlier this quarter?

Certainly. Regarding the buyback, it was announced on June 11; we effectively had a cooling-off period and started on June 25. We purchased just over 100,000 shares during this time, which expended about $130,000 of the $5 million authorized by the Board. We will continue to invest in the business primarily in areas where we see opportunity for growth. AI has become a main focus, and while the stock has seen fluctuations, it's crucial to emphasize that this does not reflect our underlying business performance. With the Board's backing, we found the buyback an important tool in our toolkit. We will remain active in the market this quarter and next and will keep monitoring market dynamics.

The next question is from Matthew Niknam from Deutsche Bank.

This is Michael Allen speaking for Matt. I would like to investigate the churn in more detail. It seems to be getting better. Did you notice any specific area where there was more improvement? I know you mentioned that last quarter, down sales accounted for 75% of the churn. Was there any area this quarter where you saw improvement, and what trajectory do you expect going forward?

Yes, in the second quarter, we posted the same high quarterly gross retention that we did in the first quarter of the year. It represents our highest rate since the fourth quarter of 2022, showing improvement over the prior year. We also noted that our current gross retention rate is better than the last three fiscal years. Regarding the 25% full churn versus down sales of 75%, there has been no significant topical area to pinpoint. Both Enterprise Education and Technology and Media and Telecom segments maintained this ratio. While retention is improving, we continue to see room for enhanced performance in the latter part of the year. The net dollar retention discussed is a lagging indicator, it remained stable and is better than expected. We believe that churn will further improve as we advance.

The next question is from Patrick Walravens from JMP Securities.

It's nice to see the bookings rebound. I noticed in your script that you called out deals with two of the world's largest technology companies. I have observed that sometimes, while attending user conferences, there can be long wait times for sessions to be available in an app whereas at NVIDIA's GTC conference, you had immediate access to replays. I've also noticed this happens with Kaltura's player. How significant is the opportunity for you to power more of these large companies' user conferences? How much do you typically earn from partnerships with companies like AWS or Dreamforce? And are there more opportunities you foresee?

Yes, first of all, it's rewarding to partner with those amazing technology companies. They clearly understand how to select impactful technology. The fact that we are a part of their ecosystem is promising for further engagement. Regarding your question about accessible content, we focus on delivering consistent experiences across various uses. We've emphasized the integration of VOD with live and real-time experiences, which enables our clients to access content smoothly and promptly. On the potential revenue generation front, regarding specific figures like Amazon, I can mention that they are categorized as a significant customer, constituting over 10% of our revenue, remaining one of our largest clients. Their investments in our solutions span several multimillion-dollar agreements, and the potential for growth within these large accounts continues to be significant. Additionally, we are in talks with various companies to expand engagements further, both in increasing service volume and engaging in new use cases.

There are no further questions. At this time, I would like to turn the floor back over to Ron Yekutiel for closing comments.

Thank you very much for all your great questions and continued support and interest in Kaltura. 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 is much more work ahead. There will be one key quarter in either direction. We believe we are on an upward trajectory, both regarding bookings and retention, and how that translates into top-line growth, as well as bottom-line profitability, both accrual-based and cash-based. We look forward to continuing to demonstrate that we can generate both growth and profitability. Thank you again, and have a great day and week.

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