Item 1. Business
Item 1. Business.
Overview
Our mission is to power any video experience, for any organization.
Our Video Experience Cloud powers live, real-time, and on-demand video for webinars, events, virtual classrooms, and video sites. We also
offer robust Application Programming Interfaces ("APIs") and Software Development Kits ("SDKs") for developers and industry solutions
for education and media and telecom. Our Video Experience Cloud is used by leading brands across all industries, reaching millions of
users, at home, at school and at work, for communication, collaboration, marketing, sales, customer care, learning, and entertainment
experiences. With our flexible offerings, customers can experience the benefits of video across a wide range of use cases, while customizing
their deployments to meet their individual, dynamic needs.
Video is everywhere. It has become a driving force for online
interactions and engagement, and has revolutionized how we communicate, work, learn, and entertain. For businesses, video sits at the
heart of digital transformation, with organizations increasingly embracing video solutions to better engage with customers and employees.
Video adoption has been further fueled by the availability of broadband, increased penetration of smartphones, rise of over-the-top streaming
(“OTT”) and cloud technologies, consumerization of enterprise technology, elevation of video to strategic and mission-critical
use cases, the entry of younger professionals into the workforce and the growth in remote and distributed workforces. Furthermore, we
believe the COVID-19 pandemic has accelerated the use and adoption of video.
Our vision and technology are differentiated in the market, addressing
video as a unique data type that can and should be handled by a unified horizontal technology stack that powers all live, real-time, and
on-demand video use cases, maximizing engagement, interactivity and the collection of data. Our Video Experience Cloud powers a wide array
of video applications across industries and use cases. Our core offerings consist of various Software-as-a-Service (“SaaS”)
products and solutions and a Platform-as-a-Service (“PaaS”) offering, including:
•
Video Products – Video Sites, Webinars, Virtual Classroom, and Events. Customers leverage these products for video-based communication,
collaboration, training, and customer experience (marketing, sales, and customer care).
•
Video Industry Solutions – LMS Video (Learning Management System) and Lecture Capture for educational institutions to support
and enhance in-class and remote teaching and learning. We also offer a TV Solution for media companies and telecom operators, allowing
them to provide OTT advertising and subscription-based live and on-demand TV services for entertainment experiences.
•
Media Services – Live, real-time, and on-demand video APIs, SDKs, and Experience Components as well as Video and TV Content
Management Systems that govern the entire lifecycle of video, enabling customers to build any video experience and workflow. Our Media
Services also serve as a foundation for our products and industry solutions. Our APIs and SDKs address: media ingestion, creation, editing,
files transcoding, live transcoding, real-time video, publishing, streaming, distribution, recording and scheduling, video enrichment,
search, management, monitoring, engagement, video and image transformation, access control, user management, analytics, multi-tenancy,
security, digital rights management, and media repurposing at scale. Our Experience Components include video player, video editor, video
accessibility tools, video capture tools, large files upload SDKs, interactive video editor, quizzing, hot-spots, polling, native mobile
and TV SDKs, video applications framework, embedded live stream app, and embedded WebRTC meeting components.
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As of December 31, 2021, we had over 1,000 customers from
a wide range of industries, including financial services, high technology, healthcare, education, public sector, media and telecommunications.
Among our customers are 28 of the US Fortune 100, more than 50% of U.S. R1 educational institutions, including seven of the eight Ivy
League schools and some of the largest global media companies and telecom operators. This subset of customers accounted for approximately
39% of our revenue for the year ended December 31, 2021. Most of our top customers leverage several Kaltura products for a range of use
cases across their organization. Between December 31, 2018 and December 31, 2021, we expanded our base of customers with ARR greater
than $100,000 from 178 to 294, and the number of customers with ARR greater than $1.0 million from 4 to 21.
In 2021, we were recognized as a Visionary in the 2021 Gartner®
Magic Quadrant™, and we ranked 4th in the ‘External Presentation’ (4.44/5) Use Case, and 5th in the ‘Learning
and Training’ (4.32/5), and ‘Webinars’ (4.16/5) Use Cases in the Gartner 2021 Critical Capabilities for Meeting Solutions
Report. We were also recognized as a Representative Vendor in the 2020 Gartner Market Guide for Enterprise Video Content Management. We
have been included in Gartner research reports on this since 2013, where we were listed as a Leader for 5 consecutive times in the Magic
Quadrant for Enterprise Video Content Management report and ranked highest in all Use Cases in the last-published Critical Capabilities
for Enterprise Video Content Management report. Gartner discontinued publication of this Magic Quadrant for Enterprise Video Content Management
report in 2018 and of the correlating Critical Capabilities report in 2019.
We have also received customer recognition. As of January 19,
2022, we ranked 4.6/5 out of 57 reviews for Meeting Solutions and 4.6/5 out of 28 reviews for Enterprise Video Content Management by customers
on Gartner Peer Insights.
In March 2021, we were also cited as a Strong Performer in The
Forrester Wave™: B2B Marketing Events Management Solutions, Q1 2021.
To date, we have invested primarily in increasing the scope and
depth of our offerings. At the same time, we have accelerated our year-over-year revenue growth from 12% in 2018 to 18% in 2019, 24% in
2020 and 37% in 2021. We accomplished this growth without materially increasing our sales and marketing spend over 2019 and 2020. In the
fourth quarter of 2020, we began investing significantly in sales and marketing expenses to drive revenue growth, and we expect this trend
to continue for the foreseeable future. Additionally, for the year ended December 31, 2021, we generated net losses of $59.4 million and
had Adjusted EBITDA of $(12.2) million. See Part II, Item 7. “Management’s Discussion and Analysis of Financial Condition
and Results of Operations—Non-GAAP Financial Measures” for a discussion of the limitations of Adjusted EBITDA and a reconciliation
of Adjusted EBITDA to net loss, the most directly comparable GAAP performance measure.
Our platform provides a differentiated and comprehensive value
proposition for our customers. Additionally, we believe the demand for video offerings has reached an inflection point, with several trends
driving strong demand for video applications. We intend to continue expanding our Video Experience Cloud with new Media Services, as well
as new products and industry solutions. We have also begun to increase our sales and marketing investment to capture the significant market
opportunity ahead of us, including increasing the size and reach of our direct sales team, and investing in self-serve products and channel
partnerships to expand our presence with smaller customers across all industries.
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Key Trends Impacting the Video Market
The nature of video consumption has transformed in recent years.
Several major trends have played a role in this evolution:
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Availability of Broadband: The availability of internet-based services has increased in recent years, with global telecom operators
increasing investment in next-generation mobile networks to reach previously underpenetrated regions and enhance performance in existing
ones. This, coupled with the decreasing price of broadband, has accelerated the use of internet-based services such as video across a
global audience.
•
Broad Penetration of Smartphones: Billions of people around the world use smartphones today, equipped with sophisticated technology
that allows them to create, watch, and transmit video anytime and anywhere.
•
Rise of OTT and Cloud Technologies: Television has left its original home within cable and satellite networks and TV set-top boxes
and is now being delivered from the cloud as an internet-based service to any device. OTT video technology has enabled content providers
to bypass the traditional distribution value chain and reach consumers directly without relying on network owners as the middleman.
•
Consumerization of Enterprise Technology: Employees in today’s businesses expect consumer-like experiences with enterprise
technology, expanding their use case of technology at work from simply exchanging information and data, to interacting, socializing, and
learning. This has accelerated the use of video for both internal and external use cases.
•
The Shift to Remote Work and Education: The world is shifting to a new normal that includes remote and hybrid work practices that
rely heavily on video communication, including virtual meetings and asynchronous communications, each of which require complex, integrated
video workflows and analytics, to create comprehensive digital experiences at scale. Additionally, as entire campuses have shifted online,
video and virtual classrooms have become a requirement for business continuity and operations.
•
Virtual Events: Over the past two years, COVID-19 has forced conference and event organizers to adopt a virtual experience. Such
events have proven their ROI in marketing funnels and employee engagement, enabling a scale of events and digital touchpoints with a lower
budget. At the core of these events is video – for communication, content, education and more.
•
COVID-19 Pandemic Accelerating Preexisting Trends: We believe the COVID-19 pandemic has accelerated the use of video for numerous
use cases, including remote learning, remote work, remote healthcare, consumer communication, e-commerce and online entertainment. We
believe that the COVID-19 pandemic has accelerated preexisting trends, with video experiences poised to be a key element of online interactions
for decades to come.
Limitations of Existing Video Solutions
While various video solutions exist in the market today, we believe
they are mostly discrete inflexible point solutions that suffer from a lack of modularity, extensibility, and interoperability; offer
limited breadth and depth of functionality, data insights, and end user engagement; and do not provide the required cloud-based enterprise-grade
reliability, scalability, compliance, and security. As a result, these offerings limit the ability of customers to maximize the benefits
of video technology for their businesses and are also too costly and require significant time to value.
•
Discrete Point Solutions: Most existing solution providers lack workflows
and experiences connecting different video technologies (live, real-time and on-demand), devices, and use cases. As a result, businesses
are faced with the complexity of working with multiple vendors to meet their video needs, often leading to a lack of cohesiveness across
offerings, silos of content and disjointed workflows, and security and monitoring concerns.
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•
Inflexible Offerings: Many existing video solutions are turnkey applications
that provide little by way of integration and customization. Their inflexible architecture often inhibits existing vendors’ ability
to innovate quickly and extend the offering to keep up with the rapidly growing and evolving needs for video. Additionally, existing vendors
provide few tools for businesses to build their own advanced video workflows and products.
•
Limited Integration with Ecosystem: Most existing video solution providers
have only a few integrations with third-party platforms, and therefore offer limited interoperability and a disjointed end-user experience.
•
Limited Analytics Capabilities: Existing solutions often lack the robust
analytics tools that enable interactivity and personalization. This limits the ability of businesses to make data-driven business decisions,
further translating to limited end user engagement and a lower return on investment.
•
Not Optimized for End Users: The interfaces of existing solutions are
often not intuitive, and do not generate an immersive and engaging end user experience across devices.
•
Not Built for the Cloud: Many existing offerings are not cloud-native
and instead rely on legacy on-premise deployments to deliver their solutions, limiting their ability to innovate quickly and provide video
seamlessly across devices. This also creates operational complexities for customers managing multiple video solutions and limits their
ability to leverage economies of scale.
•
Insufficient Support of Enterprise Standards: Many existing offerings
lack the scale, security, and compliance needed by today’s enterprises, and also lack the development, contribution, and support
for industry standards that promote openness, interoperability, and accessibility. This creates a growing risk for businesses that are
using video for mission-critical use cases at scale.
•
Unnecessary Costs: Existing solutions frequently require extensive implementation,
hardware maintenance and custom integrations with other video solutions and adjacent tools, often resulting in excess costs for the customer.
Kaltura’s Video Experience Cloud
Our Video Experience Cloud powers all types of video experiences:
live, real-time, and on-demand. We designed it from the ground up using API-based building blocks that govern the entire video lifecycle
and provide the foundation for our video applications. We believe our Video Experience Cloud is differentiated by the following characteristics:
•
Unified Experiences: Our native support for video solutions across the
tech stack – live, real-time, and on-demand, enables us to create unified experiences that bridge technologies to create simple,
cohesive workflows. This enables us to not only simplify operations, but also create new video experiences and richer content, avoiding
the content and data silos generated by having several fragmented and disjointed point solutions.
•
Interactive Media Experiences: We provide the complete stack, from video
creation tools to playback. By providing tools for creators, we can create more immersive playback experiences, with interactive options
for viewers. Live experiences such as webinars and meetings can be translated to interactive on-demand videos, providing not only a better
experience for each viewer, but also a longer shelf life for content created. With content-centric experiences, we create engagement around
the content, powering learning and collaboration.
•
Media Services and Extensive Developer Tools: We offer developers extensive
APIs, SDKs and media capabilities, enabling them to bring video experiences to any application. With embeddable experience components,
application developers can shorten time to market, while bringing a complete and mature experience to their users.
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•
Ecosystem: We have built a rich ecosystem of over 125 technology partners,
extending our experiences with AI, video creation, and network optimization, among others. We make our partners’ solutions available
to our customers through our marketplace, complete with a variety of plugins and out-of-the-box integrations with our platform. This ecosystem
further simplifies our customers’ workflows, enabling them to weave video capabilities into non-video workflows and discover new
technologies to further enhance their own offerings, ultimately increasing their satisfaction and stickiness with our platform.
•
Analytics: Our platform offers powerful analytics across multiple dimensions,
including insights related to engagement, time and seasonality comparisons, bottleneck identification, and congestion detection. These
features help companies maximize the use of the data they are gathering across video channels, and better guide workflows associated with
subscription. They also enable us to generate a significant amount of valuable data, which, when coupled with our proprietary AI/ML-powered
analytics capabilities, drives further usage of our platform, creating a powerful virtuous cycle.
•
Cloud-Agnostic: While most of our customers use our public cloud products
and solutions, our solutions can be deployed across any private, public, or hybrid cloud environment, as well as on-premise, providing
our customers with complete flexibility around their deployment.
•
Enterprise-Grade: Our platform offers enterprise-grade reliability, security,
and scalability, allowing us to support mission-critical workflows for experiences of any scale. We also offer proactive monitoring and
various tiers of customer support. For customers that rely on Kaltura to power TV experiences, we offer service availability commitments
of up to 99.995%, the highest industry benchmark required by major media and telecom customers. Additionally, we are a leader in the market
with the development, contribution, and support for industry standards such as MPEG-DASH, LTI, Caliper and Open Video Capture standards
by IMS Global Learning Consortium. We maintain compliance with accessibility standards, such as 508, CVAA, and WCAG 2.0 AA, and issued
a self-disclosing Voluntary Product Accessibility Template (“VPAT”) to ensure we adhere to the highest standards.
Growth Strategies
We intend to drive significant growth by executing on the following
key strategies:
•
Acquire New Customers: We believe we have a significant opportunity to
expand our presence with Fortune Global 2000 companies and other global enterprises. We are in the process of increasing our investment
in sales and marketing to capitalize on our significant market opportunity and on the strong sales efficiency unit economics that we have
demonstrated. We are growing our base of field sales representatives and customer success managers, which we believe will drive both geographic
and vertical expansion. Additionally, we are investing for the first time in inside sales, self-serve offerings, and distribution channels.
We believe this will enable us to expand our presence across all industries – beyond enterprises into SMEs, beyond universities
into K-12 schools, beyond tier 1 media and telecom companies to tier 2 and 3 media and telecom companies, and beyond providing Media Services
to large technology companies to also addressing smaller technology firms and startups.
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Extend Product Leadership: We believe our platform is ideally suited for
expansion across products, solutions, industries, and use cases. We will continue to invest in new technologies and harness existing ones.
We intend to continue to invest in our solutions across multiple dimensions:
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Recent Product Introductions: In 2020, we entered the real-time-conferencing
market for the first time with the introduction of our Webinars, Virtual Classroom, and Events products. We believe these products present
a significant long-term opportunity, and we intend to harness our growing presence with them.
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◦
Future New Offerings, including:
▪
Products: We will continue to invest in new video products for training,
communication and collaboration, marketing, sales and customer care, some of which will be made available as self-serve products.
▪
I ndustry Solutions: We believe there is a significant opportunity to extend
our platform into more industries. Following the success of our media and telecom and education solutions, we intend to launch solutions
for industries such as healthcare and financial services, among others.
▪
Media Services: We intend to enhance our Media Services offerings with
additional core capabilities and invest in areas such as content creation, personalization and interactivity, content aggregation and
syndication, AI and smart monetization. We also intend to add these capabilities into our existing and new products and industry solutions.
•
Increase Revenue from Existing Customers: We plan to continue to increase
sales within our existing customer base through increased usage of our platform and the cross-selling of additional products and solutions.
For the years ended December 31, 2021 and 2020, our Net Dollar Retention Rate was 118% and 107%, respectively, demonstrating our ability
to expand within our existing customer base.
•
Augment our Platform Offering through Partnerships and Opportunistic M&A:
We plan to increase the breadth of partnerships with our technology partners, further allowing us to provide the most comprehensive
video solutions to our customers. Additionally, we intend to continue to explore potential transactions that could enhance our capabilities
or increase the scope of our technology footprint.
Kaltura Video Experience Cloud
Video experiences are the driving force for online interactions,
at home, at work and at school. Our Video Experience Cloud powers all types of video experiences: live, real-time, and on-demand, engaging
millions of end users daily. We designed our Video Experience Cloud from the ground up using API-based building blocks which govern the
entire video lifecycle and provide the foundation for our video applications.
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Our Media Services underpin our products and industry solutions,
addressing all Media Services required for creation, transcoding, management, security, distribution, publishing, and analytics across
live, real-time, and on demand video experiences. We believe this offering sets us apart by enabling ease of integration and customization,
and by allowing us to innovate at a very high pace. Our Media Services are also offered to technology companies and developers in the
form of a PaaS that includes APIs, SDKs, and Experience Components.
Companies across all industries use our Video Sites, Virtual
Classroom, Webinars and Events products for communication, collaboration, training, and customer experience (marketing, sales, and customer
care). Our industry solutions are used by educational institutions for in-class and remote teaching and learning, and by media and telecom
companies to power TV and entertainment experiences.
Kaltura Media Services
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APIs, SDKs, and Experience Components: These offerings include a comprehensive
set of cloud video services addressing creation, ingestion, transcoding, management, security, editing, distribution, publishing, engagement,
monetization, monitoring, multi-tenancy, and analyzing of video, audio, and images at scale. We also offer SDKs and Experience Components
(a cluster of APIs that together form a software component with a front-end experience, such as a video player, live Q&A widget, online
video editor, or polling tool) for fast development of advanced experiences, such as for video creation, capture, playback, webcasting,
conferencing. or editing. These offerings not only serve as the video engine and experience layer of our own products and industry solutions,
but are also offered to our customers to enable them to build their own video workflows and products. Our Media Services also serve technology
partners within our marketplace who build plugins to our platform and enable our and their customers to leverage their value-add services
such as for advanced media creation, AI, transcription, and delivery. Our Media Services are used today primarily by technology and healthcare
companies; however, we believe they have potential applications across all industries.
•
Video and TV Content Management Systems : Kaltura Video and TV Content
Management Systems are a market leading multi-tenant media content management systems (“CMS”). Our Video CMS offers integrations
with social business applications, learning management systems, marketing automation systems, content management systems, and video conferencing
solutions. It also provides users with a Video Player Studio to design and configure lightweight, fast, and customizable video players
for optimal viewing experiences on any device. Furthermore, it offers video AI and enrichment tools for captions, translations, and auto-chaptering.
Our Video CMS also offers deep analytics built in, as well as support for Caliper and xAPI along with reporting APIs. Users can leverage
our Video CMS’ extensible service framework for connecting third-party video enrichment services, as well as a centralized dashboard
to manage workflows and budgets across services and departments. Our TV CMS serves as the administration console for our full-service
offering which enables the launch and operation of a robust and scalable end-to-end, full-feature TV service. It enables Pay-TV and content
providers to manage offers, content catalogs, users, devices and payments, handle marketing campaigns, and collect business intelligence
to initiate data-driven decisions to optimize the business outcomes of their TV service. It also offers users a consistent and continuous
viewing experience across devices, with TV apps available on Android TV streamers, Android TV STB, Apple TV, Web browsers, iOS, and Android
mobile devices and tablets, as well as LG and Samsung Smart TVs.
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Kaltura Video Products
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Webinars: Kaltura Webinars offers branded webinars
with interactive tools to engage audiences. It provides customers with a brandable solution to ensure consistent brand messaging and customizable
management to fit different needs. Additionally, Webinars offers interactive tools with rich video playback, polls, and other features,
as well as integrated, advanced analytics to track engagement and connect to marketing automation workflows. Furthermore, via Kaltura
Webinars users can scale to any audience with live broadcast, without the need to plan or incur more cost, and rich media recordings are
immediately ready for reuse in embeddable galleries and for distribution to social channels.
•
Events : Kaltura Events is a fully customizable events
platform designed to support differentiated experiences at scale, supporting live, simulated live, real-time, and on-demand experiences,
with unique networking and engagement functionality. Kaltura Events supports any event size and type, from single session meetings, to
town halls, to multi-session flagship events, creating dedicated journeys for all attendee types, flexible sponsor packages, and robust
analytics. With fully customizable branded templates, organizations can scale their event strategy and create immersive experiences with
a click of a button.
•
Video Sites: Video Sites is a market-leading enterprise
video portal for watching, searching, creating, and engaging with live, real-time, and on-demand rich media content. This customizable
portal can be used for learning and development, knowledge sharing and collaboration, as well as internal and external communication.
It allows users, based on their permissions, to create, upload, share, search, browse, respond to quizzes, and watch live, real-time,
and on-demand videos, video presentations, screencasts, conferencing recordings, and other rich media content, with full user management
and moderation capabilities that enforce compliance and governance.
•
Virtual Classroom: We enable both synchronous learning
with Kaltura Virtual Classroom and asynchronous learning with training videos, video quizzes, and much more. User-level and content-level
analytics provide feedback for learners and instructors. Kaltura Virtual Classroom offers a persistent virtual learning environment
focused on engagement, interaction, and analytics. It enables users to join virtual classrooms with one click where participants interact
face-to-face from any device, with no downloads or installations required. Kaltura Virtual Classroom offers collaboration and moderation
tools, including whiteboard, quizzes, breakout rooms, and Q&A. Furthermore, Kaltura Virtual Classroom includes integrations to all
leading LMS platforms and provides a white-label solution that can be customized to match each instructor’s class management style.
Kaltura Industry Solutions – Education
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LMS Video: Kaltura Learning Management Systems (“LMS”) Video
allows customers to experience rich media as a native part of their LMS workflows by embedding video creation, publishing, search, playback,
editing, captioning, analytics, and quizzing anywhere within the learning environment (course content, assignments, discussions, and more).
These solutions enable customers to organize media repositories within course media galleries, personal user spaces, and instructor repositories
for collaboration, reuse, and sharing of content. Quiz results and video engagement metrics can be seamlessly integrated into LMS gradebooks
or analytics features. Kaltura LMS Video is available for various systems, including Moodle, Blackboard, Sakai, Canvas, and Brightspace.
•
Lecture Capture: Kaltura Lecture Capture is a capture tool to record lectures
and classrooms and make recordings available to students via Kaltura’s platform. Lectures and classes can be captured from multiple
different devices. Kaltura Lecture Capture allows users to automatically publish course capture recordings to LMS courses, and videos
can be enriched with captioning, interactive video quizzes, and advanced metadata. Users can leverage advanced analytics on viewership
with user-level heatmaps, insights on engagement, and comparative analysis. Furthermore, they can use learning tools such as video quizzes,
dynamic layers, hotspots, and interactive video paths to increase engagement. Customers can also leverage Lecture Capture for automated
transcription, editing, advanced analytics, and metadata extraction.
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Kaltura Industry Solutions – Media & Telecom
•
TV Solution: Our TV Solution is a turn-key solution powering TV operators
to maximize their revenues, drive conversion and increase customer retention while providing the ability to conduct experiments and evaluate
new monetization techniques. Geared towards medium-size media companies and operators, who do not need the level of customization required
by tier-1 companies, Kaltura TV Solution contains all the required modules out-of-the-box to manage the TV service offering: content packages,
pricing, discounts and coupons (in multiple currencies), support for free trials, seasonal pass and Pay-Per-View, box sets, Electronic-Sell-Through,
and Advertising, Subscription, and Transactional offerings, as well as the user interface and apps for consumers.
Customers
As of December 31, 2021, we served over 1,000 customers,
including several of the world’s leading brands across multiple industries, including financial services, high technology, healthcare,
education, public sector, media and telecommunications. We serve 28 of the US Fortune 100, and more than 50% of U.S. R1 educational institutions,
including seven of the eight Ivy League schools. Additionally, our solutions power 16 major global TV initiatives.
Our customers are global, spanning 50 countries, and during the
year ended December 31, 2021, our technology reached end users in over 200 countries. For the year ended December 31, 2021, approximately
62% of our revenue was generated from customers in the Americas, 31% from customers in EMEA and 7% from customers in APAC. We have sold
our products to customers of all sizes, selling to large global enterprises as well as more recently to SMEs.
Sales & Marketing
Our sales organization is primarily comprised of direct sales
and account teams that focus mainly on acquisition, retention, and growth of large customers, including Fortune Global 2000 organizations.
We currently have four direct sales and account teams, as noted below. Each of our teams sells the following offerings:
•
M&T team, which sells our Media Services and TV Solution to media and telecom companies.
•
Education team, which sells our Media Services, Video Products and specialized education industry solutions to universities and K-12
institutions.
•
Technology team, which sells our Media Services and Video Products to technology companies who want to integrate our offerings into
their own video workflows and products.
•
“All Other Enterprises” team, which sells our Media Services and Video Products to all other customers (as well as sells
our Video Products to our M&T customers).
Additionally, we leverage reseller relationships globally to
help market and sell our products to customers worldwide, especially in areas in which we have a limited presence.
We are investing in initiatives to more efficiently reach new
customers and expand our partnerships with existing ones. For example, we recently launched the option to purchase our Webinars, Virtual
Classroom, and Media Services offerings directly from our website, allowing us to reduce our cost of customer acquisition, drive additional
opportunities to our direct sales team, reach smaller customers, and broaden our target market.
Our marketing efforts are focused on creating preference for
our brand, and driving leads to Kaltura through thought leadership, participation in industry events, analyst and press coverage, customer
referrals, community work, customer user groups, and Kaltura produced customer and industry events like “Kaltura Connect”
and “Kaltura Virtually Live”. We also leverage digital campaigns and make free trials available for many of our products to
drive engagement and conversion.
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Research & Development
Our business has been driven by constant innovation, anticipating
trends ahead of other participants in the market. We believe we are one of the first organizations to recognize the importance and mission-critical
nature of video experiences, and the subsequent need for Media Services that allow both us and our customers to support any video experience
and workflow. Our ability to be a leader in our target markets and rapidly introduce new applications depends on the constant expansion
of our Media Services, and the development of new products and industry solutions that rely on them.
We work closely with our customers to address their growing needs
for video experiences across all areas of operation. Our engineers aim to stay on the cutting edge of video experiences and have released
over 100 new and enhanced features a year, on average for the last several years.
Our main research and development facility is located near Tel
Aviv, Israel, which we believe is a strategic advantage for us, allowing us to leverage a talented pool of engineers and product experts.
Technology & Operations
We believe our unique specialized Video Experience Cloud and
technology enable a high level of reliability, scalability, performance, and security. Our cloud platform was specifically designed to
address the entire lifecycle of video, addressing the need for intense computing resources for encoding, processing, synchronization,
and delivery, as well as a higher level of bandwidth and network utilization and performance. We have addressed this in our platform design
and development from the start. Our SaaS and PaaS offerings are deployed on AWS across several regions, including in Virginia, Oregon,
Canada, Ireland, Frankfurt, Singapore, and Australia. In each region we are deployed on several availability zones for improved availability
and resilience. We are also in the process of deploying our platform on Oracle Cloud Infrastructure, which we believe will further enhance
the resilience, reach and scale of our operations.
Our technology and platform are cloud agnostic, allowing us to
also offer private cloud, on-premise, and hybrid deployment options. While the great majority of our customers are deployed on our AWS
public cloud infrastructure, some customers are hosted on separate and dedicated AWS private cloud environments that are also managed
by us. Some customers have a hybrid cloud deployment, running our platform from the public cloud alongside a locally hosted Kaltura Enterprise
CDN service or with locally hosted content storage. We also cater to self-hosted on-premise customers that deploy the same Kaltura Video
Experience Cloud fully on their own infrastructure, and manage it for themselves.
Our cloud operation teams are responsible for maintaining and
upgrading our production environments, and for our system availability service-level agreements which vary from 99.9% to 99.995% (depending
on the service).
Our customer care teams are located around the world and operate
on a “follow-the-sun” model, providing 24/7 service and ensuring that issues with our products and platform are addressed
quickly, and according to our service level agreements.
Our Video Operations Center (“VOC”) is responsible
for monitoring our applications and services 24/7, responding to system alerts, and managing incidents.
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Partner Ecosystem
We have built an ecosystem consisting of over 125 partners that
have integrated with our solutions, and extend our products and platform capabilities with creation, AI, transcripts, and delivery capabilities.
We make our partners’ solutions available to our customers through our marketplace, complete with a variety of plugins and out-of-the-box
integrations with our platform. This ecosystem further simplifies our customers’ workflows, enabling them to weave video capabilities
into non-video workflows and discover new technologies to further enhance their own offerings, ultimately increasing their satisfaction
and stickiness with our platform. It also allows us to test new experiences and components with our customers and determine which of the
partnerships or technologies are strategic to our business.
We also leverage a network of value-add resellers that add additional
services or integrations to our products, helping us drive the acquisition of new customers around the world, notably those in regions
in which we do not have significant presence.
We also maintain relationships with cloud partners, most notably
Amazon Web Services (“AWS”). We are an AWS Technology Partner and certified as an AWS competency partner in Education and
Digital Workspace, with validated qualifications in Public Sector. As a member of the AWS ISV Accelerate Program, we are able to co-sell
with the AWS sales organization to accelerate sales cycles and drive new business. Additionally, our offerings are available in the AWS
marketplace.
Human Capital Resources
As of December 31, 2021, we had 758 employees operating
across 34 countries on 5 continents.
We aim to provide our employees with a competitive salary and
benefits that will enable them to achieve a good quality of life and plan for the future. In addition to competitive base salaries and
cash compensation, we maintain equity incentive plans to attract, retain and reward personnel through share-based compensation awards.
We are committed to ensuring a culture of diversity and equality.
Our culture embraces our employees’ differences in age, race, gender and gender identity, sexual orientation and nationality.
Except for certain of our employees in Brazil, our employees
are not represented by a labor union in respect to their employment or covered by a collective bargaining agreement.
We have not experienced any work stoppages and largely
consider our relationship with our employees to be good and mutually beneficial.
Competition
We believe our technology positions us well to compete with other
video solution providers. Our key competitors vary based on market and industry.
•
Our main competitors for Media Services (including Kaltura
Video Content Management System ) are Microsoft/Azure Media Services, Amazon/AWS Media Services, and Twilio
•
Our main competitors for Video Sites are Microsoft and Vimeo
•
Our main competitors for Webinars are Zoom and Cisco
•
Our main competitors for Events are Cvent, Intrado and Hopin
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•
Our main competitor for Virtual Classroom is Adobe Connect
•
Our main competitors for our Education Solutions (Kaltura LMS Video and Lecture Capture) are
Zoom, Microsoft, and Cisco
•
Our main competitors for our Media & Telecom Solution are Synamedia (formerly under Cisco),
MediaKind (formerly under Ericsson), and Comcast Technology Solutions (part of Comcast)
We believe the principal competitive factors in our markets include,
but are not limited to:
•
breadth and scale of products, solutions, and Media Services;
•
ability to provide a cross-organization video platform with multiple interoperable video solutions;
•
ability to support converging experiences across live, real time, and on-demand video;
•
flexibility to build and support custom workflows using video technology;
•
ease of customization and integration with other products;
•
quality of service and customer satisfaction;
•
flexibility of deployment options;
•
ability to innovate quickly;
•
data capabilities, including advanced analytics and AI;
•
enterprise-grade reliability, security, and scalability;
•
cost of implementation and ongoing use;
•
brand recognition; and
•
corporate culture.
We believe that we compare favorably on the basis of the factors
listed above. However, many of our competitors have substantially greater financial, technical, and marketing resources; relationships
with large vendor partners; larger global presence; larger customer bases; longer operating histories; greater brand recognition; larger
and more mature intellectual property portfolios; and more established relationships in the industry than we do. Furthermore, new entrants
not currently considered to be competitors may enter the market through acquisitions, partnerships, or strategic relationships. See Part
I, Item 1A. “Risk Factors—Risks Related to Our Business and Industry—The markets in which we compete are nascent and
highly fragmented, and we may not be able to compete successfully against current and future competitors, some of whom have greater financial,
technical, and other resources than we do. If we do not compete successfully, our business, financial condition and results of operations
could be harmed.”
Intellectual Property
Intellectual property is an important aspect of our business
and we seek protection for our intellectual property rights as appropriate. To establish and protect our proprietary rights, we rely on
a combination of patent, copyright, trade secret and trademark laws, know-how and continuing innovation, and contractual restrictions
such as confidentiality agreements, licenses, and intellectual property assignment agreements.
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As of December 31, 2021, we owned nine issued U.S. patents
and eleven non-U.S. patents and patent applications. The issued U.S. patents are expected to expire between 2028 and 2035.
We pursue the registration of our domain names, trademarks and
service marks in the United States and in certain locations outside the United States. To protect our brand, we file trademark registrations
in the United States and in some other jurisdictions. As of December 31, 2021, we owned five registered trademarks in the United
States and three registered trademarks in foreign jurisdictions, including the European Union and Brazil, that we consider material to
the marketing of our products, including the “Kaltura” name and logo.
We generally seek to enter into confidentiality agreements and
proprietary rights agreements with our employees and consultants and to control access to, and distribution of, our proprietary information.
However, we cannot guarantee that all applicable parties have executed such agreements. Such agreements can also be breached, and we may
not have adequate remedies for such breach.
Intellectual property laws, procedures, and restrictions provide
only limited protection, and any of our intellectual property rights may be challenged, invalidated, circumvented, infringed, misappropriated
or otherwise violated. Furthermore, the laws of certain countries do not protect intellectual property and proprietary rights to the same
extent as the laws of the United States, and we therefore may be unable to protect our proprietary technology in certain jurisdictions.
Moreover, our platform and many of our products and services incorporate software components licensed to the general public under open-source
software licenses. We obtain some components from software developed and released by contributors to independent open-source components
of our platform. Open-source licenses grant licensees broad permissions to use, copy, modify and redistribute certain components of our
platform. As a result, open-source development and licensing practices can limit the value of our proprietary software assets.
Despite our efforts to protect our proprietary rights, unauthorized
parties may attempt to copy or obtain and use our technology to develop products and services with the same functionality as our platform.
Policing unauthorized use of our technology is difficult. Our competitors could also independently develop technologies like ours, and
our intellectual property rights may not be broad enough for us to prevent competitors from selling products and services incorporating
those technologies. For more information regarding the risks relating to intellectual property, see Part I, Item 1A. “Risk Factors—Risks
Related to Information Technology, Intellectual Property and Data Privacy and Security.”
Seasonality
Historically, we have experienced seasonality in bookings and
collections from customers within the education market, with a pattern of higher sales and new academic customers in the second and third
quarters of the year as a result of school procurement periods, resulting in lower sequential sales and customer growth in other quarters
of the year. We also experience increased usage by these customers during periods when school is in session, leading to higher cost of
revenue during the first and fourth quarters of the year. Because the agreements for certain of our solutions do not limit usage or increase
pricing for usage in excess of a specified amount, these additional costs may not result in a corresponding increase in revenue.
The rapid growth we have experienced in recent years may have
masked the full effects of these seasonal factors on our business to date, and as such, these factors may have a greater effect on our
results of operations in future periods.
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Additional Information
Kaltura, Inc. was incorporated as a Delaware corporation in October
2006. We completed our initial public offering of our common stock in July 2021.
Our website is www.kaltura.com. At our Investor Relations website,
investors.kaltura.com, we make available free of charge a variety of information for investors, including our annual report on Form 10-K,
quarterly reports on Form 10-Q, current reports on Form 8-K and any amendments to those reports, as soon as reasonably practicable after
we electronically file that material with or furnish it to the SEC. The information found on our website is not part of this or any other
report we file with, or furnish to, the SEC.