Kaltura (KLTR) risk factors, FY2025 10-K

Risks Related to Our Business and Industry

1. 01Our dependency on existing customers' demand and exposure to change in demand by our customers, including due to reasons not under our control, makes it difficult to evaluate our current business and future prospects and may increase the risk that we will not be successful
2. 02The loss of one or more of our significant customers, or any other reduction in the amount of revenue we derive from any such customer, would adversely affect our business, financial condition, results of operations and growth prospects26% rewritten
3. 03We have a history of losses and may not be able to achieve or maintain profitability32% rewritten
4. 04The markets for our offerings are new and evolving and may develop more slowly or differently than we expect. Our future success depends on the growth and expansion of these markets and our ability to adapt and respond effectively to evolving market conditions
5. 05Our results of operations are likely to fluctuate from quarter to quarter and year to year, which could adversely affect the trading price of our common stock
6. 06Operating on public cloud infrastructure and the redundancy in cloud infrastructure to satisfy different local data privacy regimes have increased our variable costs, which may lead to higher overall costs
7. 07We may face risks associated with our use of certain AI and machine learning model technologies and compliance with the evolving regulatory framework around AI development and use47% rewritten
8. 08See “Our expanded use of AI and generative AI technologies, including their incorporation into our offerings, may expose us to increased liability and new regulatory, compliance, and ethical risks” below for further information100% rewritten
9. 09A version of our Rich Media Content Management System and its underlying APIs is licensed to the public under an open source license, which could negatively affect our ability to monetize our offerings and protect our intellectual property rights50% rewritten
10. 10Additionally, we compete with home-grown, start-up, and open source technologies across the categories described aboveNew
11. 11The failure to effectively develop and expand our marketing and sales capabilities could harm our ability to increase our customer base and achieve broader market acceptance of our offerings
12. 12In addition, because we rely primarily on a direct sales model, our customer acquisition costs are higher than those of organizations that rely primarily on a self-service model, which may limit our ability to cut costs in response to changing economic and competitive conditions
13. 13The sales prices of our offerings may change, which may reduce our revenue and gross profit and adversely affect our financial results
14. 14If we are unable to increase sales of our subscriptions to new customers, expand the offerings to which our existing customers subscribe, or expand the value of our existing customers’ subscriptions, our future revenue and results of operations will be adversely affected
15. 15If our existing customers do not renew their subscriptions, or if they renew on terms that are less economically beneficial to us, it could have an adverse effect on our business, financial condition, and results of operations
16. 16We rely on third parties, including third parties outside the United States, for some of our software development, quality assurance, operations, and customer support
17. 17Currency exchange rate fluctuations affect our results of operations, as reported in our financial statements
18. 18In addition, a significant portion of our expenses—including cost of revenue, research and development, sales and marketing, and general and administrative costs for our Israeli operations — is incurred in New Israeli Shekels (“NIS”)
19. 19We recognize a significant portion of revenue from subscriptions over the term of the relevant subscription period, and as a result, downturns or upturns in sales are not immediately reflected in full in our results of operations
20. 20We depend on our management team and other key employees, and the loss of one or more of these employees or an inability to attract and retain highly skilled employees could adversely affect our business
21. 21We believe that developing and maintaining widespread awareness of our brand, especially with developers and IT operators, in addition to new departments such as marketing, is critical to achieving widespread acceptance of our platform, products and solutions and attracting new users and customers
22. 22Our corporate culture has contributed to our success, and if we cannot maintain this culture as we grow, we could lose the innovation, creativity, and entrepreneurial spirit we have worked to foster, which could adversely affect our business
23. 23Our customers depend on our customer success managers to resolve issues and realize the full benefits relating to our platform, products, and solutionsNew
24. 24We expect our revenue mix to vary over time, which could negatively impact our gross margin and results of operations
25. 25The length of our sales cycle can be unpredictable, particularly with respect to sales to large customers, and our sales efforts may require considerable time and expense
26. 26Our international operations and expansion expose us to risk
27. 27If we are not successful in sustaining and expanding our international business, we may incur additional losses and our revenue growth could be adversely affected
28. 28A portion of our revenue is generated by sales to government entities, which are subject to a number of challenges and risks
29. 29Moreover, if we fail to timely respond to newly imposed restrictions or implement effective control over such sales, such failure could result in fines or civil, administrative or criminal liability which would adversely affect our reputation, business and financial results

Risks Related to Information Technology, Intellectual Property and Data Privacy and Security

1. 30A real or perceived bug, defect, security vulnerability, error, or other performance failure involving our platform, products or solutions could cause us to lose revenue, damage our reputation, and expose us to liability57% rewritten
2. 31support resources to address these problems. Despite our efforts, such corrections may take longer to develop and release than we or our customers anticipate and expectNew
3. 32Our IT Systems, and those of third-party providers we rely on, involve the collection, storage, processing, transmission, and other use of data, including certain proprietary, confidential, sensitive, and Personal Information of ours and our customers (collectively, “Confidential Information”)
4. 33Data security breaches could also expose us to liability under various laws and regulations across jurisdictions and increase the risk of litigation and governmental or regulatory investigation
5. 34We have launched and recently further enhanced AI-driven offerings, including Work Genie and Class Genie, Agentic Avatars, Publishing Agents and Content Lab, that rely on generative models or other advanced algorithmsNew
6. 35Our AI-driven offerings could generate output that is infringing, and we could be subject to claims or lawsuits, including for infringement of third-party intellectual property rights as a result of the output of such AI offeringsNew
7. 36In 2025, we acquired eSelf AI, a multimodal AI lab developing technology for agentic interactions with live avatars. We may pursue other targeted acquisitions or investments in specialized verticals or AI-centric companies as part of our strategy to expand our product offerings
8. 37Incorrect implementation or use of, or our customers’ failure to update, our software could result in customer dissatisfaction and negatively affect our business, financial condition, results of operations and growth prospects54% rewritten
9. 38Customers of our offerings need to be able to access our platform at any time, without interruption or degradation of performanceNew
10. 39In addition, third-party cloud providers run their own platforms that we access, and we are, therefore, vulnerable to their service interruptions and any changes in their product offerings23% rewritten
11. 40We also rely on cloud technologies from third parties in order to operate critical functions of our business, including financial management services, relationship management services, and lead generation management servicesNew
12. 41Failure to protect our proprietary technology, or to obtain, maintain, protect, and enforce sufficiently broad intellectual property rights therein, could substantially harm our business, financial condition, and results of operations
13. 42Further, the steps we take to protect our intellectual property and proprietary rights may be inadequate
14. 43In order to protect our intellectual property and proprietary rights and to monitor for and take action against any infringement, misappropriation or other violations thereof, we may be required to spend significant resources22% rewritten
15. 44We could incur substantial costs and otherwise suffer harm as a result of any claim of infringement, misappropriation or other violation of another party’s intellectual property or proprietary rights
16. 45We may become subject to claims for remuneration or royalties for assigned service invention rights by our employees and consultants, which could result in litigation and would adversely affect our business
17. 46Indemnity provisions in various agreements potentially expose us to substantial liability for intellectual property infringement, misappropriation, violation, and other losses
18. 47Our use of open-source software could negatively affect our ability to sell our offerings and subject us to possible litigation31% rewritten
19. 48We are subject to stringent and changing laws, regulations, standards, and contractual obligations related to privacy, data protection, and data security. Our actual or perceived failure to comply with such obligations could adversely affect our business22% rewritten
20. 49In addition, in the EU and the UK, we are subject to the European Union General Data Protection Regulation (the “EU GDPR”) and to the United Kingdom General Data Protection Regulation and UK Data Protection Act 2018 (collectively, the “UK GDPR”) (the EU GDPR and UK GDPR together referred to as the “GDPR”)New
21. 50We also rely on the EU standard contractual clauses (“SCCs”) and the UK Addendum to the SCCs, as relevant, to transfer personal information outside the EEA and the UK with respect to both intragroup and third party transfersNew
22. 51We may be subject to online content regulations, and our actual or perceived failure to comply with applicable regulations could adversely affect our businessNew
23. 52Components of our offerings include various types of software and services licensed from unaffiliated partiesNew

Risks Related to our Debt, Liquidity and Capitalization

1. 53Our failure to raise additional capital or generate the significant capital necessary to expand our operations and invest in new offerings could reduce our ability to compete and could adversely affect our business
2. 54Our indebtedness could adversely affect our ability to raise additional capital to fund operations, limit our ability to react to changes in the economy or our industry and prevent us from meeting our financial obligations

Risks Related to Other Legal, Regulatory and Tax Matters

1. 55We are subject to various governmental export control, trade and economic sanctions, and import laws and regulations that could impair our ability to compete in international markets or subject us to liability if we violate these controls45% rewritten
2. 56Our global operations expose us to the risk of violating, or being accused of violating, Trade Controls83% rewritten
3. 57Changes in laws and regulations related to the internet, changes in the internet infrastructure itself, or increases in the cost of internet connectivity and network access may diminish the demand for our offerings and could harm our business22% rewritten
4. 58Internet access is frequently provided by companies that have significant market power and the ability to take actions that degrade, disrupt, or increase the cost of user access to our offeringsNew
5. 59In order for our services to be successful, there must be a reasonable price model in place to allow for the continuous distribution of digital media files
6. 60Our business may be adversely affected by third-party claims, including by governmental bodies, regarding the content and advertising distributed through our offerings
7. 61Our business depends on the ability of our customers and end users to access the internet, and our offerings could be blocked or restricted in some countries for various reasons
8. 62Failure to comply with anti-bribery, anti-corruption, anti-money laundering laws, and similar laws, could subject us to penalties and other adverse consequences
9. 63We sometimes leverage third parties to sell our offerings and conduct our business abroad
10. 64Changes in financial accounting standards or practices may cause adverse, unexpected financial reporting fluctuations and affect our results of operations
11. 65Changes in U.S. and foreign tax laws could have a material adverse effect on our business, cash flow, results of operations, or financial conditions55% rewritten
12. 66Unanticipated changes in effective tax rates or adverse outcomes resulting from examination of our income or other tax returns could expose us to greater than anticipated tax liabilities71% rewritten
13. 67The taxing authorities of the jurisdictions in which we operate may challenge our methodologies for valuing developed technology or intercompany arrangements or our revenue recognition policies, which could increase our worldwide effective tax rate and adversely affect our financial position and results of operationsNew
14. 68Our corporate structure and intercompany arrangements are subject to the tax laws of various jurisdictions, and we could be obligated to pay additional taxes, which would adversely affect our results of operations73% rewritten
15. 69The authorities in the jurisdiction in which we operate and do business could review our tax returns or require us to file tax returns in jurisdictions in which we are not currently filing, and could impose additional tax, interest, and penaltiesNew
16. 70We could be required to collect additional sales, use, value added, digital services or other similar taxes or be subject to other liabilities that may increase the costs our clients would have to pay for our offerings and adversely affect our results of operations
17. 71Our ability to use our net operating loss carryforwards to offset future taxable income may be subject to certain limitations

Risks Related to Our Operations in Israel

1. 72Political, economic, and military conditions in Israel could materially and adversely affect our business45% rewritten
2. 73Certain tax benefits that are available to us require us to continue to meet various conditions and may be terminated or reduced in the future, which could increase our costs and taxes

Risks Related to Ownership of our Common Stock

1. 74The market price for our common stock may be volatile or may decline regardless of our operating performance, and you may not be able to resell your shares at or above the price at which you purchased your shares
2. 75Furthermore, the stock market has experienced extreme volatility that in some cases has been unrelated or disproportionate to the operating performance of particular companies
3. 76An active public trading market for our common stock may not be sustained. The lack of an active market may impair your ability to sell your shares at the time you wish to sell them or at a price that you consider reasonable
4. 77Future sales of substantial amounts of our common stock in the public markets, or the perception that such sales might occur, could reduce the price that our common stock might otherwise attain
5. 78We have registered the offer and sale of all common stock that we may issue from time to time under our equity compensation plans. Once we register these shares, they will be freely tradable in the public market
6. 79Your ownership and voting power may be diluted by the issuance of additional shares of our common stock in connection with financings, acquisitions, investments, our equity incentive plans or otherwise31% rewritten
7. 80We may issue shares of preferred stock in the future, which could make it difficult for another company to acquire us or could otherwise adversely affect holders of our common stock, which could depress the price of our common stock
8. 81Anti-takeover provisions in our governing documents and under Delaware law could make an acquisition of our company more difficult, limit attempts by our stockholders to replace or remove our current management, and depress the market price of our common stock
9. 82Our Certificate of Incorporation provides that the doctrine of “corporate opportunity” will not apply with respect to any director or stockholder who is not employed by us or our subsidiaries
10. 83The requirements of being a public company may strain our resources, divert management’s attention, and affect our ability to attract and retain qualified board members72% rewritten
11. 84We are an “emerging growth company”, and we cannot be certain if the reduced disclosure requirements applicable to us will make our common stock less attractive to investors69% rewritten
12. 85We may take advantage of these exemptions until the last day of our fiscal year following the fifth anniversary of the closing of our IPO or such earlier time that we are no longer an emerging growth companyNew
13. 86We do not anticipate paying dividends on our common stock in the foreseeable future. As a result, your ability to achieve a return on your investment will depend on appreciation in the price of our common stock
14. 87The current uncertainty in the global economy and financial and stock markets may depress our stock price, which may cause stockholders, activists and others to take advantage of the distressed stock price and pursue aggressive actions that may not be in the interests of all stockholders
15. 88Unfavorable conditions in our industry or the global economy or reductions in information technology spending could limit our ability to grow our business and negatively affect our results of operations
16. 89From time to time we may provide estimates of market opportunity and forecasts of market growth. These estimates may prove to be inaccurate, and even if the markets in which we compete achieve the forecasted growth, our business could fail to grow at similar rates, or at all
17. 90If industry or financial analysts do not publish research or reports about our business, or if they issue inaccurate or unfavorable research regarding our common stock, the market price and trading volume of our common stock could decline
18. 91Our disclosure controls and procedures may not prevent or detect all errors or acts of fraud
19. 92If our estimates or judgments relating to our critical accounting policies are based on assumptions that change or prove to be incorrect, our results of operations could fall below the expectations of securities analysts and investors, resulting in a decline in the trading price of our common stock
20. 93Increased attention to environmental, social and governance (“ESG”) matters may require us to incur additional costs or otherwise adversely impact our business