Can you unpack the ARR increase, distinguishing M&A-driven growth from organic, and explain expectations for PathFactory attrition?

PathFactory contributed $4.9 million to Q2 revenue. E&T revenue was flattish excluding one-time on-prem revenue, while M&T saw expected declines. PathFactory is expected to experience some attrition over the next few quarters due to legacy contracts, but the overall company is ahead of expectations and has raised full-year guidance. The strategic value is in PathFactory's integration into Kaltura's broader agentic solutions. “PathFactory contributed $4.9 million in revenue out of our 46.9 million in total. By the way, the same for subscription because it's all subscription there. So that's the amount that was there. It's higher than we expected to some extent.”

How is Kaltura managing the pivot to new agentic and avatar capabilities, including retraining existing sales force or hiring new skills?

Management described the transition as an 'evolution, not a revolution,' as target customers and buyers remain largely the same. Existing sales teams are being trained through programs like 'summer camp' to sell new solutions like Agentic Revenue Engagement and Learning & Enablement. While new talent is also being hired, existing relationships and expertise are leveraged, ensuring a smooth transition. “But generally speaking, the good news is, this is an evolution, not a revolution. So the customers we're going after are the same customers, the buyer, the same buyers, in some cases they're more.”

What is driving the anticipated churn in PathFactory's customer base?

PathFactory was a declining revenue company prior to acquisition due to its standalone positioning. The expected churn is partly due to legacy relationships and migrations from past acquisitions. Kaltura's strategy is not to sell PathFactory standalone, but to integrate its content intelligence as the 'brains' for new agentic solutions. While some short-term headwinds are expected for the core PathFactory product, the long-term value lies in its combination with Kaltura's platform. “As a layer for content and user intelligence that is enabling to create customer journeys, it was kind of fighting between some other players out there doing a lot more doing better doing exciting things but being somewhat pushed out by some of the other guys did The difference is as we take them, and we said that in the acquisition, is we're not taking PathFactory just to sell PathFactory standalone, but more so and most importantly and number one, is to turn that into the quote unquote brains of our agentic motion.”

KLTR

Kaltura (KLTR) Q2 FY26 earnings call: guidance and Q&A

Earnings call· Jun 2026 (Q2 FY26)· Information Technology· Aug 5, 2026

Source: earnings call transcript

Executive summary

Kaltura Q2 FY26 — Strong AI Product Adoption and Exceeding Guidance

Kaltura delivered a strong second quarter, surpassing revenue and adjusted EBITDA guidance, driven by record non-GAAP gross margins and significant traction in AI product adoption. The company is actively integrating PathFactory and expanding its agentic digital experience platform, with a growing AI-related pipeline indicating future revenue contributions. While some legacy contracts and the M&T segment face headwinds, management remains confident in its strategic transition and long-term growth trajectory.

Highlights

Total revenue reached $46.9 million, up 5% year-over-year, exceeding the high end of guidance.
Adjusted EBITDA was $5.9 million, a 44% year-over-year increase, also above the high end of guidance.
Achieved a record non-GAAP gross margin of 75% and a record non-GAAP subscription gross margin of 79%.
Signed a record 14 new deals including AI offerings, doubling previous records, with 9 featuring Agentic Avatars.
Delivered the strongest growth retention performance since Q4 2022.

Concerns

Professional services revenue declined 13% sequentially and 40% year-over-year to $1.3 million.
Media and Telecommunications (M&T) total revenue decreased 10% year-over-year to $10.1 million.
Remaining Performance Obligations (RPO) were down 1% year-over-year to $164.3 million.
Net cash used in operating activities was $2 million, compared to $2.7 million generated in the prior year quarter.

Guidance & targets

Category	Target	Timeline	Confidence
Subscription revenue	$43.9M-$44.6M high materiality	Q3 · FY26	High
Total revenue	$45.8M-$46.5M high materiality	Q3 · FY26	High
Adjusted EBITDA	$2M-$3M high materiality	Q3 · FY26	High
Subscription revenue	$176.6M-$178.6M high materiality	FY26	High
Total revenue	$183M-$185M high materiality	FY26	High
Adjusted EBITDA	$15.8M-$17.2M high materiality	FY26	High
M&T new bookings and retention	higher medium materiality	FY26	Medium
M&T revenue growth	decline medium materiality	FY26	High
Professional services revenue	material year-over-year reduction medium materiality	FY26	High
AI product revenue contribution	initial revenue contributions high materiality	H2 FY26	High

Segment performance

Segment	Revenue	YoY	QoQ	Margin
EENT (Enterprise, Education, and Technology) Strong year-over-year growth in total and subscription revenue, supported by contributions from the PathFactory customer base and early AI product contributions. Subscription revenue: $36.4MSubscription revenue growth YoY: 12%Professional services revenue: $0.4MProfessional services revenue growth YoY: -43%	$36.8M	11%	—	—
M&T (Media and Telecommunications) Experienced year-over-year revenue decline due to elevated churn in 2025, but new bookings and retention are expected to improve, leading to sequential quarterly revenue growth in 2027. Subscription revenue: $9.2MSubscription revenue growth YoY: -6%Professional services revenue: $0.9MProfessional services revenue growth YoY: -38%	$10.1M	-10%	—	—

Orderbook & backlog

Remaining Performance Obligations (RPOs) $164.3M 2026-06-30

up 6% sequentially, down 1% YoY

71% expected to be recognized as revenue over the next 12 months.

Annualized Recurring Revenue (ARR) $184.6M Q2 FY26

up 9% sequentially, 8% YoY

Product announcements

Product	Type	Timeline
Agentic Avatars	launch	recently launched
Avatar Video Production Studio	launch	recently launched
Agentic Revenue Engagement solution	launch	recently packaged and showcased
Agentic Learning and Enablement solution	launch	recently packaged
Avatar capabilities	roadmap	H2 FY26

Deals & partnerships

PathFactory Acquisition of content intelligence platform to serve as the 'brains' for Kaltura's agentic motion.

Integration of PathFactory and Kaltura platforms is progressing, synchronizing content and workflows. The acquisition is key to building agentic digital experience platform.

Risks & headwinds

Legacy contract pressure and PathFactory customer roll-off Near-term (next few quarters)

Anticipated roll-off of certain PathFactory customers; PathFactory revenue expected to come down from Q2 levels over next couple of quarters.

Mitigation:Strategic integration of PathFactory into broader agentic solutions; focus on new AI product adoption and cross-sales.

M&T segment revenue decline FY26

10% YoY decline in Q2 FY26 total revenue; 6% YoY decline in Q2 FY26 subscription revenue. Forecasted year-over-year revenue decline for FY26.

Mitigation:Expect to post higher M&T new bookings and retention in FY26, forecasted to regenerate sequential quarterly M&T revenue growth in 2027.

Professional services revenue reduction FY26

40% YoY decline in Q2 FY26 to $1.3M. Forecasted material year-over-year reduction for FY26.

Mitigation:Aligned with strategic focus on recurring subscription revenues.

FX headwinds FY26

Approximately $1M impact on GAAP operating expenses in Q2 FY26.

Mitigation:Incorporated into guidance.

What to watch in Q3 FY26

AI product revenue contribution

H2 FY26

Current Limited at this stage (combined TCV ~$1M for 14 deals in Q2)

Target Initial revenue contributions in H2 FY26

Why it matters

This is a key indicator of the monetization of Kaltura's strategic shift to AI and its future growth drivers.

Consistent with the outlook we shared last quarter, we continue to expect initial revenue contributions from our new products in the second half of 2026, followed by a more meaningful ramp in 2027.

Find out whether KLTR delivers this. Inve re-checks your case every morning.

Q&A highlights

How is Kaltura building pipeline and breaking into new verticals with AI products like Agentic Avatars, and where are the most interesting opportunities?

Management noted a pickup in new logos, with 33% of the AI pipeline from new customers. The pipeline includes over 200 Agentic Avatar opportunities and 100 Avatar Video Production Studio opportunities. Go-to-market is vertically segmented (EDU, M&T, enterprise sub-segments) and geographically. Four main GTM motions are conversational agents, AI content creation, cross-sales between PathFactory and Kaltura, and full bundle wins.

“Now, with the advent of the agentic offerings that we're offering, along with and together with the rest of what we're doing, people are excited to go ahead and make that move and they're happy to make that move across both.”

asked by DJ Hines · answered by Unknown Speaker

2 min read 5 chapters

Detailed narrative

AI Product Adoption & Pipeline Growth

Kaltura reported a record 14 new deals in Q2 FY26 that included one or more AI offerings, doubling previous records. Nine of these deals featured the new Agentic Avatars product, with four having six-digit total contract values and eight being with new logos.

The AI-related pipeline for H2 FY26 and FY27 currently comprises over 500 opportunities, representing approximately $17 million in non-weighted potential Annual Contract Value (ACV). This pipeline is broadly distributed across industries, with over one-third from educational institutions and 40% from enterprises, indicating diverse adoption.

PathFactory Integration & Strategic Shift

The integration of PathFactory into Kaltura's platform is progressing, with content and workflows now synchronizable across both. PathFactory contributed $4.9 million in Q2 revenue, exceeding initial cautious expectations. While some near-term pressure from legacy PathFactory contracts is anticipated, the acquisition's primary goal is to leverage its content intelligence as the 'brains' for Kaltura's agentic motion.

This strategic shift aims to combine PathFactory's content and user intelligence with Kaltura's platform to create comprehensive agentic digital experiences, driving long-term growth.

Product Development & Platform Evolution

Kaltura enhanced its avatar production workflows with B-roll and URL to video automation, expanded multilingual capabilities, and introduced enterprise templates. Significant progress was made in integrating content management and intelligence, creating a unified first-party signal layer. The company also continued embedding conversational AI across its product portfolio, enabling interactive experiences with intelligent agents.

Looking ahead, Kaltura plans to expand avatar capabilities with richer gestures and emotional expression, and develop real-time generative user interface experiences.

Market Opportunity & Solution Focus

Kaltura is packaging its AI capabilities into two comprehensive solutions: Agentic Revenue Engagement and Agentic Learning and Enablement. The Agentic Revenue Engagement solution, showcased at recent industry events, combines video, content intelligence, and conversational AI to help organizations understand customer buying intent and personalize buyer journeys.

This solution addresses an estimated market opportunity of over $20 billion, growing at more than 15% annually. The Agentic Learning and Enablement solution aims to transform traditional learning systems into adaptive, conversational, and personalized experiences for employees, customers, partners, and students, also targeting an estimated $20 billion market.

Retention Performance & Outlook

The company delivered its strongest growth retention results since Q4 2022. Net dollar retention (NDR) for Q2 FY26 was 96%, up from 95% in the prior quarter but down from 101% YoY, reflecting legacy dynamics. Management expects NDR to gradually improve over time as the transition towards powering agentic digital experiences supports sustainable growth retention.

While some pressure from legacy contracts, including anticipated roll-off of certain PathFactory customers, is expected, the overall trend in retention is positive.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.