The News: Streaming platform vendor Kaltura this week reported a modest 3% gain in fourth quarter 2022 revenues, capping what had been a challenging year with a small uptick that marks a reversal from year-over-year revenue declines reported in the prior quarter. Full details on Kaltura’s fourth quarter performance are available in the company’s Press Release summarizing its year-end financial results.
Kaltura Reports Fourth Quarter Gain, Capping a Tumultuous 2022
Analyst Take: Kaltura’s performance is emblematic of the financial rollercoaster that many vendors of streaming video solutions have been riding since the beginning of the COVID crisis. During the height of the pandemic, developers of video solutions saw massive increases in sales activity. As we’ve seen across the industry as a whole, that has largely been followed by a significant slowdown in demand as many enterprises work their way back to normal operations.
For all of 2021, for instance, Kaltura logged a year-over-year revenue increase of 37% reaching $165.0 million for the year. In 2022, growth rates tumbled to 2%, with Kaltura revenues reaching $168.8 million for the year. The 2022 results included a third quarter in which revenues dropped by 4% on a year-over-year basis – an eye-opening result for a vendor that is valued by many investors for its ability to generate rapid growth.
Other challenges have made the past 12 months a year worth forgetting for Kaltura’s management. The company spent a large part of 2022’s second half fending off an unsolicited buyout bid by streaming rival Panopto. Then, in January 2023, the company announced an 11% work force reduction in a bid to cut $15 million in annual costs.
Profitability also remains elusive for Kaltura. The company reported a net loss of $68.5 million in 2022 compared with a net loss of $59.4 million in 2021. The company also reports “non-GAAP net loss” totals of $42.4 million for 2022 and $25.3 million in 2021. Kaltura’s management team suggests that the “non-GAAP” totals are more reflective of the company’s on-going performance.
Kaltura management, in a conference call with analyst, said the company is expected to lose money again in 2023 but projects break-even operations for 2024.
While the company has taken steps to trim costs via the workforce reduction in January, Kaltura Chairman and Chief Executive Officer Ron Yekutiel said that larger macroeconomic conditions will play a significant role in shaping 2023 results. The January workforce cutbacks were designed to help Kaltura stay on track, regardless of how economic conditions shake out in the coming year.
Yekutiel said that RFPs from prospects looking to buy and deploy streaming platform solutions had declined significantly during the second half of 2022. Yekutiel also reported, however, that customer interest in streaming solutions has picked up during the first quarter of 2023. Because of the long sales cycles typical of the streaming market, it is too soon to definitively project the extent of the rebound that can be expected in 2023 streaming sales.
Yekutiel’s market outlook is consistent with feedback our team here at Wainhouse has collected in one-on-one briefings with other streaming technology vendors. Overall, corporate prospects appear to be actively shopping for streaming solutions in significant numbers once again, but it still is difficult to project how many of those prospects will turn into actual buyers.
In the analyst call, Yekutiel did note that the sluggish sales cycle has fostered some pricing pressure in the market as some rivals have cut prices in order to land what deals they can from a limited set of would-be buyers. Yekutiel said Kaltura is not dropping prices in response to the competitive pressures.
Overall, the Kaltura results reflect the precarious nature of the current market for enterprise streaming solutions. Demand for these streaming platforms appears to be returning. However, following a rough 2022, most vendors are adopting a cautious posture until they see prospects convert into actual buyers.
Disclosure: Wainhouse Research, part of The Futurum Group family of companies, is a research and advisory firm that engages or has engaged in research, analysis, and advisory services with many technology companies, including those mentioned in this article. The author does not hold any equity positions with any company mentioned in this article.
Analysis and opinions expressed herein are specific to the analyst individually and data and other information that might have been provided for validation, not those of Wainhouse Research as a whole.
Other insights from Wainhouse Research:
Quickchannel Unveils Platform Revamp with “End-to-End” Streaming Solution
Eye on Business Video with Neal Stanton, Vice President of Alliances at Vbrick
The original version of this article was first published on Wainhouse Research.
Author Information
Steve Vonder Haar is a Senior Analyst with Wainhouse – a Futurum Group company. His area of expertise and focus is enterprise streaming and virtual events.
