Welcome to Needham's 26th Annual Growth Conference. I'm Ryan Koontz. I cover the cloud communication sectors here as the analyst here at Needham. Really joyful, happy to be joined today by Ron Yekutiel, the CEO of Kaltura. And, Ron, maybe you can start with just giving us a two-minute version of what, you know, Kaltura's main business is-
Sure.
Just at the outset here.
Good to be here. Thanks for having us, and a happy 2024 for everybody.
Yeah, welcome.
Kaltura is a video technology company. We sell solutions for businesses, enabling them to run complex workflows using video. We have solutions that go across enterprises of any sector, addressing internal content management as well as video portals, events, both hybrid and virtual webcasts, stuff of that nature. Catering both internally for learning, training, HR, CIO-type buyers, and externally for CMO and marketing. We also have vertical focuses currently in education and media and telecom, education supporting distance and hybrid teaching and learning, integrated into the learning platforms, and in media and telecom, mainly cloud-based television for telcos and media companies. The uniqueness of our offering is that it runs deep and wide.
Deep in the sense that there's a lot of APIs, so you could go deep into the workflows and provide value and ROI, and wide insofar as our ability to provide a single platform catering to multiple use cases, interconnected, offering a lower TCO and better scalability and less silos.
Yeah. It's a very impressive building block approach to, to the product. Maybe we can close that door there if we get a chance to. Thanks, Jerome. Let's start with maybe unpacking 2023 through your last results through September. You know, what were some of the puts and takes you saw during the year across your different sectors and different products?
Yeah, I'd start off by noting the obvious. We're in January, and yet we can't really speak about Q4, so we're gonna hold off until February, until we're gonna share what we saw in Q4. So I'm gonna have to revert-
Of course
... what we've been talking about until the beginning of the quarter. So, look, our industry has taken a beating in the last couple of years by way of growth.
Yeah.
Our own company has grown generally 20%-30%, up 40% during COVID, but the two years after had gone down.
Mm-hmm
... to a low single digit or mid-single digit, depending on subscription or total revenue. That was primarily because people, right after COVID, said, "You know what? Let's wait a while to figure out what we want to do strategically." And right after that came the financial downturn, that it caused a lot of people to postpone acquisitions and stick to the existing vendors, and even then, try to squeeze them together because there were less FTEs, less people in the company, and you get paid, in some cases, based on FTEs, and/or because certain activities with video were pushed. For example, if people did hybrid events, and they moved just to physical after COVID, then they took stuff down. So for various reasons, there was a bit less consumption, so increased churn rates.
Yep.
The booking had come down. So we've been doing better than other companies in our industry. You could look at growth rates. We've never declined.
Yeah.
The other companies have generally declined every year. But what-
Your subscription rates have been, yeah, revenue continued to motor up-
Yeah
... kind of mid-single digits, I think.
Kept a far cry from where we were and a far cry from where we believe we could come back to, but that's been the general direction. Now, when we zoom in into what had happened throughout the year, then on the churn, we, we do see a tick-up. We've shared that it's predominantly, you know, we started from high eighties gross retention rates , gone to more mid-eighties gross retention rates s for the year, which is very off for us.
Mm-hmm.
It's predominantly reduction as opposed to total churn, and it's usually because of, as I said earlier, either a squeeze in price and/or less services that are being used, as opposed to moving to a competitor because he has a better offering.
Yeah.
That's a predominant change. That's on the squeeze side, and so far as booking, we're still seeing good behavior on the top side of the funnel by way of leads, by way of meetings that are set with our SDRs, by way of number of RFPs. So leading indicators seem to be decent. I mean, they're not amazing, but they're not the issue of the reduction of booking. And on the flip side, on the other side, the bottom of the funnel, win rates, close rates have remained strong, and so we're not losing more, we're not winning more, we're winning the same amount, which is a strong number
The main issue we've seen throughout the year is that the sales cycles become elongated.
Right.
It takes longer, and people tell us, "Look, we're gonna have to push the budget into 2024," and that's mainly the reason around lower booking. And so the combination of these two things is what we're seeing, and it's across the board from an industry perspective
It's not, something specific. Like I said, we see that across the video industry. We're doing better than the other folks-
Yeah
... but that's what we're seeing.
One of the compelling use cases, I think, is consolidation of multiple vendors, right? When you go to the enterprise space.
You're absolutely right, and that touches actually an interesting point. So when you say consolidation, again, the history of Kaltura was a statement that we could build a unified platform that caters to seemingly different use cases. Because the underlying belief is that video is not an application, video is a data type, and how you harness that data type across different environments could be, could be done by a single platform. The merits of that are not just saving cost because TCO is lower, but that you don't have silos, and you can have streamlined workflows going between one and the other, and the metadata structure, et cetera.
Sure.
For example, if you have an internal solution for portals and you want to connect it to your events because they're recorded, and/or you can want to connect VOD to live to real time, and internal to external-
... 'cause you have a video done internally for training and then used externally for your partners or externally for your prospects or customers, you want to have the same system that does it all.
Yeah.
So when we IPO'd, we already stated that we had a stat that half of our, that our customers, 50% of them, have 3+ products-
Right
... that are used by Kaltura. Year- over- year, the average MRR per customer and the ARPU of new deals have gone up-
Mm-hmm
... because more and more products are being used. Last three years, from 2020 to 2023, we added real time. We launched with that... events, as well as webinars, as well as virtual classroom. We added CMOs as our buyers-
Mm-hmm.
not pivoted, but extended.
Yeah.
We now have CIOs and CMOs together, and a huge portion of our RFPs are coming for combined offerings. We have gone down market to midsize organizations, also changed the way we sell, so it's not just outside sales, but commercial sales, et cetera, et cetera.
Yeah.
It's a big shift.
Yeah.
That big shift had already commanded quite a lot, quite a lot of difference. So what we're seeing now is more, customers are coming to us saying, "We'd like to have the whole thing. We have six vendors replaced, three vendors replaced," a lot of examples. Sometimes they start external, move internal.
Yeah.
Sometimes they start internal, move external. Sometimes they go directly for the whole thing. I would just note with that consolidation statement and back into the situation of the industry and macro. Back in 2021, 2022, when we were coming out of COVID, a lot of folks said: Look, we're gonna hit the pause button-
Mm-hmm.
And we're gonna figure out what we wanna do. We love how you're positioned strategically to save cost and be a better solution. It's a premium product, and we'd love to shift to you. Let us just figure things out, and then we're gonna come back and replace.
Yeah.
And then, when the economy went down, a lot of folks said: Listen, at the mid to long term, makes a lot of sense. It saves us money, and it's better. But in the immediate term, it's gonna be more cost and more risk, and so I'm just gonna squeeze my existing vendor by 10%, and I'm gonna stick to my existing vendor.
Mm-hmm.
But when things get better, that makes more sense, and I'm gonna switch. So I believe that in addition to the fact that we've done better than the other players in the industry over the last couple of years, that I believe that coming out, which will come soon, and, you know, macro is gonna improve, budgets are gonna go up.
Yeah.
There'll be some backwind tailwind to be able to push the entire industry. Not only are we gonna continue to do better, but I believe, given this element, that we could do even better by a bigger margin.
Mm-hmm. Yeah.
Because as things get better, people are gonna say, "Now we could switch to Kaltura.
Yeah.
Now, we could look at the midterm and not the immediate term.
Yeah.
That's an important part of our strategy.
Yeah. Yeah, and I think the building block approach that you have to the product allows you to address a number of different market verticals. Can you kind of walk us through that, from education through enterprise, media? Like, it's pretty very impressive.
Well, again, this dates back, and this is important to note, 17, 15 years back, when we started building this platform. So this isn't some patch that we've done. You know, some people-
Yeah.
A lot of people claim they're a platform. Every single company that has API says, "We're a platform 'cause we have APIs." Every software has APIs.
It doesn't turn you into a platform. It's like taking something out of wood, putting Velcro on it, and saying, "Now it's Lego." It's not. It's just wood with Velcro. So every SaaS is connected somehow to other systems. The question is, is it built bottom up in a modular way so that you could build easily multiple products for multiple industries, for multiple buyers in a way that's interconnected?
Our thesis was that that is the right approach, and nobody had had that thesis prior. We've built that approach, and we've gradually scaled. As we've done that, we're able to have entered multiple markets and address multiple use cases.
Yeah.
So the very first one, which was the lowest hanging fruit, was publishers, 'cause at the time, OVPs-
Mm
... the Brightcove, Ooyala at the time, that was the easiest point of entry.
Yeah.
It was a commoditized market to some extent, so that's where we entered.
Yeah.
Immediately after we've done that and have risen to become top three at the time-
Yeah
... we said, "This is where the magic starts," and we said, "We're gonna take all this 80/20, take, take this, add 20% from something else, and launch a whole new product for something else.
Yeah.
We started with EDU because it was greenfield. Nobody did what we did at the time. As a point of example, the other players that didn't do it at the time, 10 years after, haven't done it. 15 years later, haven't done it.
Yeah.
They would have loved to have done it next month-
Yeah
... but 15 years have passed, they haven't built this because this is really modular.
In education.
So this in education means, at the time, a plugin for LMSs, learning management systems, that plug into-
Yeah
... Blackboard, or Moodle, or Canvas, or at the time, we started Learn.
Whole ecosystem there, and with-
Whole ecosystem
... it's in.
And we have now 50% of the R1 Schools, half of the Ivy League schools. We're the best provider in that space. Now, we have point competitors like, I don't know, Ooyala or other smaller company. Sorry, not the, I meant, Panopto.
Mm-hmm
... and other smaller companies, but they're just point competitors that don't have the R&D that we have and the ability, and they have never scaled and have never been able to have moved into the enterprise into other places. At the same time, we govern. I remember at the time we were speaking to investors, and they said: Look, we don't think you're gonna be able to remain a leader across all these different markets.
Mm-hmm.
After we've come into education, we're one of the top, top three publishers, and EDU became number one. Then we get into the enterprise, and we launched our video portal. We became the best video portal, and they said: Look, we've seen you do it time and time again-
Mm-hmm
... and it's true, a true platform play, and we're gonna move on.
Yeah.
To your question, we now have EDU-
Yeah
... in which we power integration into LMS, as well as lecture capture, as well as virtual classrooms. So they would have a Zoom or a Teams together with a Kaltura. A CIO would have us on the speed dial, and-
Yeah
... that would be the system of record for all things video, integrated into the learning objects. And that's, you know, a nice portion of our revenue. And then we have another piece in the media and telecom, which historically was publishers, and then we decided to shift to the more mission-critical TV enabling.
Mm-hmm.
'Cause in the world of media, if you're just watching video on a website, and it's short-form, that doesn't move the needle for the company.
Yeah.
So just being a video on a... That's not the core revenue-
Right
... of a big media or telecom.
Yeah, just doing the streaming only. Yeah.
When Netflix basically launched, and we understood that over-the-top is becoming the thing, then we basically added long-form subscription, everything else that would enable us to be the mission-critical infrastructure-
Yeah
... behind TV. And then we've launched the very first customer was, was Vodafone-
Yeah
... which is the largest operator outside of the U.S., and we ousted Cisco, Ericsson, and TiVo.
Yep.
Just like when we got into events, the very first customer in events was no less than AWS during COVID, with 600,000 registrants.
Yeah.
When Andy Jassy made the call himself, he got everybody there, Zoom, and everybody said, "That doesn't work, that doesn't work." He said, "I want a Netflix-grade experience. I want something really robust." I said, "Well, we actually deliver TV and clickers in the living room, and look what it does. Boom, boom, boom, boom, boom, boom.
Yeah.
They actually bet the farm on us and did the biggest event in history that was in the tech world that's virtual, and it worked without a hitch, and that was it.
Yeah.
So that proves the horizontality-
Exactly
... that we're able to come in and have a hole-in-one, if you may, with these type of customers and then continue to grow.
Yep.
Despite the fact that we're across multiple places, be number one. I will say, when we IPO'd and the world was rosier, we thought by now we'd be able to go deeper. We'll start another vertical in financial services with specific products, which we started.
Mm-hmm.
We have one for wealth management.
Mm-hmm.
Healthcare, which we have great customers, but. So we had other plans.
Yeah.
They're all on pause at the moment.
Sure.
We're going deeper into enterprise just 'cause we can't bet on everything.
Yep.
But we're gonna come back.
Yeah.
There'll be more vertical solutions.
That's great. I think this week, just changing gears here, you had a big announcement on the management change here.
Yep.
Can you walk us through that?
Yeah, absolutely.
The CFO change.
Yaron's here, so, we'll have him join the stage in a second to say hi. So for those that have been following, Yaron, our great CFO, had been with us for seven years, is moving on gradually. Yaron had been prior to IPO, during the IPO, and a few years after the IPO. It's the longest he'd been in his career, in a company, and we love him, and he's a great Kalturian. A year ago, he said, "Ron, you know, we're trying to think about kind of a last run and one, one additional move in my career, and when's the right time? When's the right, way to do this?" I said, "Look, let's gradually start looking for a good candidate.
Is there a timeframe?" He said, "No, we'll just do it at the right pace, and let's just get it done." And so we've taken the better part of the year to reach out through professional headhunters and look for the right people and narrow it down, and ultimately very, very happy to have landed John who is
John Doherty.
John Doherty.
Yep.
John, which I already call him John, 'cause he already feels as if he's a Kalturian for a while. Has been with us in a long process and conversation, and we really feel good about him. He feels great about the company. You'll have a chance, obviously, to speak to him shortly. And John was prior to that in Magic Leap, which some of you may know. You know, a high-flying company that's changed certain directions. He's raised a lot of money there. There's been some change of control and shifts, and the CEO had recently left, and he felt that that's the right time for him, for various reasons to continue in his career, and we're happy to have had the opportunity to have him join.
Prior to that, he was in Interxion, which was a $6+ billion public company that was sold for $8 something-
Mm-hmm
... $ point something billion when he was CFO to a private equity. And part of that, he had a very long, beautiful career at Verizon, 30+ years-
Yeah
... where he ran Verizon Ventures and the corp dev of Verizon. He was also head of IR for all of Verizon, and he was running multiple departments there as CFO, which are selling in the billions. Which you might ask: "So if these are—there's a lot of Bs there, billions—and big companies and Verizon, and so why Kaltura?" And, you know, we were having a good chat, and he said, "Look, I love the company, and I think, you know, it makes a ton of sense that this is undervalued, and we'll re-accelerate, you know, regress back to the mean, and this industry is gonna bounce back. We're leading technology and a great company, and more so, I really believe it can be a consolidator of this space.
There's just a lot of smaller companies around, whether it's Remo or just them dying on the vine, it's just—there's not... If you fast-forward two, three, four years, there's not gonna be that much companies around. There'll be far less, and I think that you're gonna be a winner here," and that was the thesis, and excited to take the company to the next stage of its growth, and we're excited to be working together. Yaron, through this whole process, was amazing and in the discussion, he's like: "Look, just gradually, let's figure out what we do," and then we said, "You know what? We're gonna do this at the beginning of the year-
Mm-hmm
... because we're gonna have Yaron take us through the earnings season in February, summarize the year-
Yep
... brief the next year, put the numbers," but John is joining before, so we'll have an overlap. He won't be formally the CFO. He's joining on February 1st, so he's gonna be sitting and joining. He'll be at the next earnings call to introduce him, but Yaron's gonna lead it, and then Yaron is staying for another quarter to support John and the team in whatever it is that they'd like, while John is CFO. So could not be a smoother-
No
... transition, well-planned, and I wanna come in and thank Yaron for his-
Yeah
... great contribution.
Yeah.
And, Yaron, you wanna say a couple words, please? Here, grab my seat.
Yeah, just few words. So first of all, it was a great seven years. We took the company, we tripled the revenue of the company, we took the company public in a very strange environment. We launched it as a public company, and I think that even now, after a tough two years, the growth balance itself, we believe that we are getting very close to an inflection point, and therefore, for me, it was the perfect time. We decided to do it, as Ron mentioned, the best way for the company, so first we choose the replacement, and we brought a great candidate. We are doing it at the right time. I'm still responsible for the results of the quarter. I will sign for the quarter, meaning I definitely not leave because of the results, maybe even the other way around.
So excited to be here, and I will continue to support the company in the next few quarters and right after.
That's great. That's a very unique and warm handoff of your spot.
Mm.
Yeah, thanks for your-
That's our culture.
Thanks for that.
This company has people that have been here for 15, 17, 10, 7-
Yeah
... and we have a saying that, "Once a Culturian, always a Culturian." People leave, and they stay very close, and, you know, it's a, it's a tight family.
Yeah. And I know you're not guiding right now, but let's talk at a high level about some of the key milestones in 2024. You've set some financial goals for 2024, and, you know, how investors should think about how this can, how this is gonna, you know, set up.
Well, the one thing that we said ahead of time was that we're gonna be profitable, Adjusted EBITDA profitable in 2024, and that the second half of 2024, we're gonna be cash flow positive, for cash flow ops-
Mm-hmm
... positive on an ongoing basis.
Yeah.... So the first part is clear, and we already delivered a quarter of adjusted EBITDA positive. By the way, it was also cash flow ops positive last quarter. It's the first quarter since 2020.
Yeah.
We're on mark, and we're on plan, even ahead of plan and doing well, and so I'm very positive about that, very excited about that. Just to be clear, we had -$22 million the year before, and now, you know, we guided latest at about -$4-ish.
Mm-hmm.
So it's a big improvement next year, positive, and we were profitable before. This is not news for us. 2019, 2020, you know, we got into an investment just like it wasn't popular at the time to be profitable. People ask me, "Why are you profitable?
Mm-hmm.
I said, "Sue me for believing a company needs to make money." Then now people are like: I gotta cut costs. And like, we're doing this in an organized way 'cause we've gotta stick the landing in our expansion into marketing, and we've been doing that great and getting exactly what we've guided throughout the years and getting into the right place. So that's Adjusted EBITDA. And then cash flow, you know, things have dramatically changed as well. So profitability-wise, as you talk about next year-
Mm-hmm.
-we're definitely on course. We have not guided on revenue. We're not gonna obviously talk now about that. But I think generally the statement is we believe the company will and shall gradually grow into, you know, profitable growth again. It's really more so, I believe, a question of macro rather than anything else. The problem is visibility, and we're gonna also have to be careful with guidance, as everybody would, to not set expectations to the point that we just can't, you know, we can't-
Yeah
... 100% be able to say that that's gonna underwrite that. So we're gonna be careful, but at the same time, our belief is that the year ahead of us would be a year of increased booking and reduced churn compared to the year that had passed-
Mm-hmm
... for the industry at large and within it for Kaltura. For reasons that I've mentioned, I believe that we are gonna be even more so advantageous at the point when the things even pick up.
Yeah.
That regression to the mean, as I stated, is a powerful force, and we've been there, done that, and we think we're gonna come back.
Yeah.
You know, for the entire industry, I'd say the multiples right now are abysmal. Ours aren't good, and the rest are even worse, and so it's really, really bad. And I say to investors that we speak to is like: Look, first you need to have a thesis on video to believe that everything we're talking about, and it's not conferencing, it's more advanced video experiences, are bound to continue to grow and expand, and there is merit there. People were showing me how their kids train with video and market with video. If you believe that's the case, then it's reasonable to assume there'll be decent growth that's far more than now. It's then just a question of which one of the different players.
I humbly believe that Kaltura has demonstrated over the years we're definitely not lesser than anybody else there, and therefore, you know, if the comparison is right now, no growth with a 1-point-something times revenue, then there's a lot of upside-
Mm-hmm.
But that's for investors to decide. We're excited about the year that's ahead and also about organic growth and maybe other strategic directions in which we're gonna continue to explore, especially because we do believe that we could be a very strong consolidator in this space.
Yeah
regardless of what structure we shape or form.
Yeah.
We're gonna continue to think about these things.
Yeah, yeah. With your platform approach, you're a natural fit to do that.
Like I said, deep, deep and wide, so-
Yeah.
Yep.
It's impressive. In terms of 2024, are there particular verticals you're most excited about? You think, I kind of read through your commentary around enterprise, that that's really the, the head of the spear for you guys to grow.
You know, one needs to be hyper-focused, you know?
Mm-hmm.
You cannot say focus and then do everything. That's not focused.
Yep.
Focus is what you're not doing, not what you're doing, you know? And we said: Look, right now, we're gonna de-emphasize our verticals-
Yeah
... not because we don't believe in them-
Yeah
... 'cause we're still gonna do better than competition there 'cause nobody's investing a lot. And we've invested a lot leading into it. So take media and telecom.
Yeah.
We've built a new front end and delivered that with a major telco in Europe, to millions of households. Now we have a complete end-to-end. We've deployed 15 enhancements to our back end in addition to the front end the past year, including POC with AI, and that's when we're not investing as much. So there's still stuff to be done there to be leaders. The same goes to education, which we've done a lot. But we believe right now, given that one needs to decide where you put a bit more emphasis, is where you go quickest from quote to cash, and also where the largest TAM is and where the most strategic value is at.
We believe that's in the horizontal platform offering for the enterprise, and specifically to stick the landing in our expansion from internal to external, from just VOD to also RTC and products like EP, Event Platform.
Mm-hmm
... and Webinar and Virtual Classroom for enterprise, and that's the biggest one.
Yeah. So this internal to external, that's your also your sales motion change from CIO to CMO. I'm assuming.
Not change, expansion-
Expansion
...'cause we're doing both.
Yeah, right.
We're not. Right now, the way it's going in most cases is that they partner together, and the CIO is writing the RFP.
Mm-hmm
... and the CMO is also there, and it's not a single on sale.
Mm-hmm.
They're coming together and saying, "We need to deploy this as a CIO anyway," and it's serving cross-enterprise, including external and internal.
Yeah.
In most places, the definition of internal and external is really not clear.
Mm-hmm.
'Cause you have partners, you have, you know-
Yeah
... you have people in the ecosystem. It's just, you know, where do you start? Where do you end? It's the same.
Yeah, great. Let's talk about the innovation side, where you're investing a lot, and maybe touch on some things you're really excited about, maybe what you're doing in AI. Can you unpack the R&D efforts a little bit for us?
Yeah, I'm happy to do this. So look, I mean, first, on the basic platform, there's a lot of things we keep on developing. On the underlying, underlying platform, core capabilities around, stability and growth. By the way, just this year, for example, we launched our global cloud initiative, regional cloud initiative-
Mm-hmm
... that enables you to get the full SaaS capability regionally within different places like Europe-
Mm-hmm
... so that we could be GDPR compliant-
Right
... and everything else.
Yep.
Not within local separate clouds, but within our multi-cloud environment. And so things like that-
Yeah
... that are really infrastructural, that are enabling us to grow fast and do really well because we're an enterprise-grade solution. We have the biggest tech companies, the biggest bank, five biggest banks in the U.S. We got the biggest insurance companies. We got the biggest in each one, and so we need to be really, really good, and we're enterpriseable. And so we've invested in infrastructure. We're more stable, we're more scalable, we're more reliable, we're more secure. That's number one. Now, on top of that, looking into the application layer, then we've continued to put a lot of focus on EP and will continue with Event Platform, and turning it into not just a solution for single events, but multiple events, and reducing the amount of services that are required with it.
Right.
It's more low touch.
Historically, it was a heavy-handed professional services-
When we just started off with Amazon, we need to put a lot of PS.
Yeah
... and now it's far less, and that ratio of PS is coming down.
Yeah.
Which has put a weight on our revenue, 'cause the nominal-
Yeah
... non-subscription professional services,
It's coming down.
... revenue number has come down, but now we're come to an asymptote-
Yeah
... we're at about 96% subscription, and I expect that to remain there. So now we're going to pull back up with both numbers.
Mm-hmm. Yeah.
But that's something that's happening. But if you look beyond the kind of the basic products, which is EP, and the portals, and the media and telecom, the front-end, and all the different things, I guess what we've started talking about that excites us as well as AI. The reason is, and put aside the buzzwords, the story is, so what we're doing, and the beauty of Kaltura, because we're integrated into the workflows, and we're not just a video player. It's not about run video, click, you're running video. It's how do you harness video to better learn and teach? How do you harness video to better market and sell? And this is the use. We're in events, how do you convert leads better? This is where we are.
So the moment we can add these capabilities to further our why, that's really, really valuable. Now, in addition to which, the world historically has been separated in the world of video and media between production, people that are creating content, and distribution, people that are distributing content, right? If you think about media companies, you had the folks that created cinema and created TV, and then you had the actual cable companies that would be the ones finding the end user and licensing it and delivering it. These were two separate types of technology. Now, they've been getting closer and closer, right? Netflix is now producing their own, and Disney's pro-
Yeah.
And the other direction-
Yeah
... like Disney is now distributing 'cause they have Disney Plus, so it's being compressed. But what didn't happen yet with AI is that you're automating this cycle into a virtual cycle. AI, by the nature that it could actually create synthetic content on the fly that is hyper-personalized, hyper-interactive, and it could also enable to repurpose content very quickly and smartly. So you have a video-
Yeah
... and then you're chopping it down based on snippets, depending on the context and the user, you could deliver different pieces of content. It could generate a lot more content on the fly, depending on the user and depending on the context, and deliver it. If you do that as a vendor like us, and you're introducing technology that is actually creating content... Now, right now, we've not been a content company, and definitely not on the fly, definitely not hyper-personalized.
Mm-hmm.
But if we, we're in half the universities in the U.S., right? During COVID, they were like, "Ah, you gotta help Harvard, you gotta help Yale, you gotta help this." We're, we're like. Just example, there's content companies that are producing content for universities that are getting 10x easily what we're getting for that, if not more, if not 100x, for just the textbooks.
Yeah.
Right? If you consider Pearson and McGraw Hill, there's just a whole industry. Gradually, that's gonna shift towards content is ubiquitous, everything is everywhere. It's more about what that person needs right now, which could be the understanding of what they understand and what they don't. Right now, it's recompiled immediately into a video, delivered to them, but we could be that engine. And that could be kind of a Khan Academy on steroids, in which everybody learns what they need to learn with a tutor that's actually helping them with rich. So we are, we believe we could be that video-first, AI-infused infrastructure that would deliver content and close the loop with the analytics. So we have the sandwich. We have the integration into the workflows, which is unique. We have the metadata that we own, and today we federate it.
Mm
... so in the customers, across multiple use cases, internal and external, we have one analytics that's federating everything to the user base. Then we'll add AI, and then we have the system of engagement, which is the actual interaction.
Yeah.
When we bring that sandwich, that's a valuable offering. Without that, we already have an interesting story that will come back to grow-
Yeah
... what we believe normal growth rates. But if that is added, then that changes the story, because then you can really increase usage, and you can increase ARPU, and you can create the different value. In a way, you could become the future LXP or DXP, learning experience platform, digital experience plat-- that is video first-
Mm-hmm
... AI infused.
Yeah.
That's a bigger vision, but part of what we're gonna look at is, you know, can we go further down that rabbit hole with our customers...
Yeah, yeah
... without, you know, over investing in the short run because we're still gonna remain profitable? Are we gonna do that organically or inorganically, and gradually go there? I mean, we're not. One thing that you may have learned on Kaltura over the years, definitely not as a public company, nor private, is we don't like to just hype stuff. We don't wanna talk stuff. We understand it's a show-me market, it's not a tell-me market. It's where you're as good as your last quarter. But if you're asking me about where we're gonna gradually go-
Yeah
... I think that could take us to a much, much more interesting arena.
And, does that go back to your roots as a content management system that-
It comes to the differentiation, right? 'Cause we moved from a VCMS, video content management system-
Right
... to a video experience platform-
Yeah
... in a way.
Yep.
When shifting from the back-end content management capabilities into more of the end-user experience and the interaction with it.
Mm-hmm.
And so that's a big shift that's happened increasingly over the years. We was not on plan, it was planned. I called it the salmon move, right? So we started in the ocean, and we're going up the rivers. In what sense?... The ocean is where all the content comes down, and then is a repository of all things video, right? It's the system of record. There could be only one. This is the recording area, and we started there, and it's a CIO sale, only one. You run everything. It's a content management, it's a video portal. It's not the place where it's generated, like, you know-
Yeah
- individual events-
All the usage.
- individual conferencing.
Usage, yeah.
But our view was that once you're in the ocean, and you own the CIO relationship, and this is the rest, and you bring that content management and the APIs into the workflows, and you add real time, you could go up the rivers to where content is created.
Mm.
If it's AI, you could automate the creation of the content, and then you could govern the whole cycle of video.
Mm.
And so we're going against the current. Sometimes good, sometimes bad, but we are.
Yeah.
And I think we're headed in the right direction, but it's been a couple of tough years, right?
Yeah.
It's nice talk, right? But-
Yeah
... people are like: "Where's the growth rate?" Let's, let's wait and see. Right?
Right. You've talked about a trend towards self-service as a general model. It sounds like you may be pulling back from that a little bit. Can you update us there on the self-service opportunity downmarket, and how you think about it today?
Yeah, back to focus, and I said earlier, focus means what you're doing, what you're not doing. I always said that. We're gonna go downmarket. It's a question of rapidity and a question of where we go.
Mm-hmm.
There's two stops along the way, right?
Mm-hmm.
One is low touch, and one is no touch. So we dabbled with no touch. We launched our full no-touch webinar. It's around there, it's playing, whatever. But in 2023, which did not turn out the year that everybody hoped for it to be, people thought maybe that's gonna be the year things are gonna get better, way back at the beginning of 2023, when people in our industry said, in the middle of the year, we're gonna grow, and then the middle of the year, they took down their numbers. It didn't really work, and so we thought that maybe we could continue to also do this and that. Turned out that we couldn't do so we're slower on the full self-serve side, which was always gravy.
Yeah
... for our numbers.
Yeah.
But what we haven't, and, and again, we're not stopping it, and it's still there, and we're gonna continue down that. It's just the pace.
Yeah.
The low touch is continuing 100%, so we moved to more departmental, as well as SME, with the EP product, Event Platform, and we have a commercial sales group that actually this year will be growing.
Mm-hmm.
Um, and-
So inside reps?
Inside reps-
Mm
... which is historically we didn't have.
Yeah.
We're still going and committed to the march downstream.
Mm-hmm.
It's just we need to manage the speed in which we do this.
Sure, sure. I think I saw a question?
Yeah, please.
Quick question about AI. Hallucinations being as ridiculous as they are with that, how do you manage auto-promulgation of video and the hallucinations associated with that?
Hmm.
Hallucinations in what sense?
Well, theoretically, if you're auto content creation, and you basically don't know what you're being created until after the fact, how do you protect from something nefarious being created?
Yeah, that's a good question. So, a few things to note. The one thing to note about security in this, insofar as AI, 'cause part of the question we get asked beyond that, I'm gonna answer that as well, is, are you redistributing, are you using third-party content? Are you sharing content or stuff? That's not the case, by the way. Every customer brings us their content. We use that. We prompt the system with the metadata, with the information of a specific customer, but the engine underneath that, the NLP, is not, is not something that we share. That's one point.
Yeah.
To your point about how do we make sure that nothing weird comes up, whatever, this is where I think it, it's all a question of the governing process post creation of content. I don't necessarily think that initially people are gonna let it rip and let everybody do that. I think they'll be... In the middle of right now, we're running pilots with a bunch of very large companies, including for repurposing of video, some big, Silicon Valley companies as well, and they have people that are there that are in charge of checking what the repurposed videos look like and to approve them, and then they go out. This is still costing them a tenth of what it would cost them, if not less than that, to actually create these pieces of content by themselves and generate a lot more value. Is this sustainable over time?
Good question. I can tell you we're working with one of the biggest banks in America to offer their wealth managers tools to be able to create, distribute, and engage the wealth management customers with videos. That was a huge point prior that people said, "Look, for compliance purposes, we need to approve every single video that comes out with a wealth manager to their customers, because he could be offering them a piece of advice that should not be given." They made that quantum leap with our system, and it's out there. It's actually publicly available, so what the heck? Bank of America, check it out, Merrill Lynch. But and there's stuff about them, happy about their stuff. So there's, there's good things that are happening on automating workflows through automatic approvals and permissions and rights and the whole compliance thing. It'll take time.
I don't know where it's gonna end. The other point here is that ultimately there could also be the type of small print warranties saying that, "Look, if it's external, internal, that, you know, we, you know, it's not our fault if something weird happens. You know, this is a third-party AI engine," and I don't know, maybe people, it's gonna be in the small print, in which it's—Consider a student that goes to university and wants to have a tutoring system that creates content automatically. Before, maybe the university is gonna say, "Look, you're gonna have to sign off here that we're not responsible, but we believe that it's gonna be helpful." But it's early, early days. I'm with you that—That's why we're also not over-hyping the whole discussion around AI, and every time I'm being asked about monetization, and, and what's...
I'm always saying: Look, this is getting there. This is really interesting, and I think strategically it's gonna change the game in a lot of different ways. Higher usage, more videos, more ROI, all, everything I just said earlier, let's wait and see how quickly it impacts and where it goes. I just don't know. There may be some more roadblocks ahead.
Yeah, go ahead.
I would imagine you're very frustrated with your stock price.
No, I'm having a field day.
You, Brightcove, making improvements. I know there are competitors-
Uh...
Whatever. They sometimes can be with you, and it seems like the street just doesn't look at companies like yours.
Yeah.
You know, all the things that you say about the growth, and we all know video is growing like crazy, and it's not gonna stop, but companies like yours don't seem to get any credit as a public company.
Yep.
Right? And-
... you know, you mentioned, you know, early you said possibly going out, you know, looking at other companies, to add to your portfolio-
Yeah.
Things like that. That makes sense to me.
Yeah.
But I'm having trouble still looking at companies like yours-
Yeah
as a public company, and yet I, I get, you know, I also see the big media companies not embracing... I know they do the, the stuff you did with Amazon, but Amazon Prime Video does their own internal stuff, right?
Yeah.
You know what I'm saying? Netflix does it, et cetera. And I say, maybe there'll be ad tech, you know, you know, something, but it seems so difficult for you guys to break out and finally-
Yeah.
get a high valuation going.
Yeah. Look, it's been a tough couple of years, and then it's okay. We, you know, we don't necessarily need to smell the flowers every other day, and we're resilient, and we know where we're going, and it's okay. You know, it's—we've seen in various cycles, 2000, 2008, a lot of companies get beaten, and this industry had fallen out of, you know, preference, right after COVID, and has never turned back because of the growth. But, you know, when there's blood in the streets, a time to invest, and it's really a question of, is this—are you gonna build it? If you build it, they will come. I don't believe in the short-term view of, is this a darling or not a darling? I believe in the fundamentals of the business. Is it gonna grow? Is it gonna be profitable?
Is it gonna generate real value? We got real customers, they're sticky, even when things are down, it's not terrible gross churn or gross retention rates. We're keeping on bringing big logos in, and it's not the end of video. It's gonna come back, and some people are gonna wait it off, and some people are not. That's okay. It's not for everybody's taste to invest, and some people wait when things are already climbing, and then they invest in the past and not in the future. That's okay. I get it. I don't think that there's anything to be upset or uncomfortable about. I appreciate that when this industry is flat, that there's less interest in it, and it will grow, and when it does grow, it will create more interest.
That's as simple as that. We are busy executing, first of all, being the masters of our own future, and so making sure that we don't lose money, and we're back. That's our culture. We've been there. We're now back there. It's fine. And we're not falling backwards in any way, shape, or form. We're not, "Oh, my God, things are bad." We've been investing over the last few years, and our strategy, unlike just, I think, any other company in our industry that's really kind of stuck in the last few years. We've gone through this very important cycle of the last three years with expansion of product and technology and everything else that I mentioned earlier. We've completed that despite the situation. We're winning with that despite the situation.
So I feel very comfortable that when the, you know, headwinds turn back into no winds or let alone tailwinds, that's gonna be enough. The current multiples are such that you don't need to be the best company in the history of mankind to make a good return for investors, and for everybody to make their own decision if they think that is doable or not. I'm not gonna suggest. I'm not gonna push anybody. Yeah, you know, we're here. Had I chosen to have been public during a time like this? Probably not, right? It's... my wife would see more of me. But it is what it is, and I embrace it, and I'm. Don't blame the player, blame the game. All good.
Yeah, can I try to encapsulate your business in a sense, you invested in all this technology to optimize costs and quality of video? You go to a large corporation, not the biggest ones, that you've already cracked. You go to a large one, you say: "Listen, it's costing you X. You've had some problems. Why don't you let us reduce your costs and for a better product? How do you like that?" Is that the pitch?
The pitch is a bit different. So to start, so it's not far, but to start, what we're selling to companies is the ability to digitally transform using video, to achieve better learning, to achieve better marketing using video. To start, that's our value prop. We're offering video products, like a video portal to better train, like a video event system to better create events. So it's all about engagement, and with that turning into our why using video, because video is the most popular medium. Now, to the extent that people have another system or another solution that seemingly does something similar, then it becomes a different question of why you and not this other thing. There's a few things that set us apart from other solutions that might be providing the same value. There are four things by and large.
Number 1 is, we have a lot more APIs, and we run deep. So if they wanna have more integrations into their workflows and to get this connected or whatever, because we, for 15 years, have created all these APIs, and this is what we're really good at, which provides more ROI, more value, better integration. So that's the depth of our API. Number 2 is we interconnect between multiple case studies and use cases. You don't need to have 3 or 4 or 5, 6 different systems, and that's valuable twice. 1, to save money, to your point, and 2, because you don't have things breaking. Like, you, I gotta get the video from here to there, you gotta take it and take it off and put it in, and so the whole thing works seamlessly with less cost and less complexities, whatever. So that's the second, right?
Yeah.
Right. Again, the first being the depth of the APIs, and the second being the horizontality of our platform. The third would be the enterprise ability that we offer. It's a very, a lot of the folks that are there saying we're selling an enterprise-grade solution are just doing a video player with stuff that's not, doesn't have the resilience. When we sell to mission critical to a TV company, it's because it works without a hitch, it's because it's secure, it's because it's reliable, it's because it's scalable, so it's a real enterprise-grade system. That's the third. And the fourth is the engagement and analytics that we offer. 'Cause, the first three that I mentioned, they're really back-end in a way. They're not the end user feel when they play with the system.
It kind of sounds like a very heavy-duty, good system, not necessarily the fun one, not, not the exciting one. We are absolutely focused on experience for the end user, and we have very engaging toolkits and systems, so, and great analytics. So when we speak to our customers, we sell them the value I said, digitally transform your company with video to better learn, better teach, better market, better everything. And when they share us what they have, we tell them: "Look, on these four points, we're gonna do better than what your alternative is." And then we hope that it's not gonna be 2022 or 2023, so we could actually make more money.
Great, Ron. Well, any last words? We'll just wrap it up here. We're just about out of time. Anything you wanna say to finish up?
Thank you for your support. Thank you for interest. Have a great-