Kaltura exploring sale or merger at $400-$500M valuation
Kaltura exploring sale or merger at $400-$500M valuation
The Israeli video tech company, listed on Nasdaq, aims for a premium deal after financial improvements and stock recovery.
The Israeli video technology company Kaltura has its sights set on a merger or an acquisition. Calcalist has learned that the company, led by CEO Ron Yekutiel, has enlisted the services of investment bank Jefferies to explore its options, with the primary focus on selling the company or merging with another. Kaltura currently trades at a valuation of $350 million, with aspirations to finalize a deal valued between $400 million and $500 million. The company declined to comment on the matter.
The target valuation represents a premium compared to Kaltura’s current market value, but it remains significantly below the $1.24 billion valuation at which the company debuted on Nasdaq in July 2021. A few months earlier, Kaltura had attempted an IPO at a $2 billion valuation, but that offering did not materialize, despite a booming IPO market on Wall Street at the time.
Kaltura's current exploration of a sale or merger comes amidst a recovery in its stock price and an improved climate in the video technology sector. Since late October, Kaltura's stock has risen 84%, with an additional 11% jump last Friday, despite no significant announcements or events from the company.
The stock's recovery is partly attributed to improvements in Kaltura’s financial performance. The company’s quarterly revenues have stabilized at approximately $44 million throughout 2024, and losses have narrowed significantly. In Q3 2024, Kaltura reported a net loss of $3.6 million, down from $10 million in Q2 and $11 million in Q1. While the company has yet to reach profitability, its financial position is steadily improving.
The turnaround is partly the result of a cost-cutting initiative launched in August 2022. At the time, Kaltura employed 760 workers, 450 of whom were based in Israel. The company laid off 80 employees, including 30 in Israel. In January 2023, a second round of layoffs affected 80 more employees, representing 11% of the workforce.
Founded in 2006 by Ron Yekutiel, Michal Tzur, Dr. Shay David, and Eran Etam, Kaltura develops systems for uploading and viewing video content. Its technology is used for employee training videos, educational portals for universities, and streaming video from virtual conferences and meetings. Additionally, the company provides tools that allow customers to develop tailored video solutions. Kaltura’s clients include major corporations such as Deloitte, Oracle, Bosch, Reuters, AT&T, IKEA, and Intel.
It took Kaltura approximately 15 years to go public, but within a year of its IPO, its valuation had plummeted. The company was listed on Nasdaq just before the IPO market cooled due to rising inflation and interest rates, which dampened demand for riskier assets, particularly technology stocks. The decline in Kaltura’s valuation was not unique; many companies that went public during the same period suffered significant declines.
In July 2022, Kaltura received a $383 million acquisition offer from Panopto, a competitor, alongside the K1 investment fund. The offer represented a 27% premium over Kaltura’s then-market value of $301 million. However, Kaltura’s board rejected the proposal, partly because Panopto was smaller than Kaltura at the time.
At that point, Kaltura faced significant challenges. Revenues were approximately $40 million per quarter, but operational losses ranged from $5 million to $15 million per quarter. The end of the COVID-19 pandemic, which had been a boon for Kaltura, led to declining revenues and deeper losses. New competitors with lower-cost, online-based marketing strategies also eroded Kaltura’s market share. Unlike its rivals, Kaltura’s reliance on sales personnel and its focus on large, complex enterprise solutions increased its operating costs. Only after implementing efficiency measures did the company begin to stabilize.
The challenges also prompted changes in leadership. Two of Kaltura’s founders, Eran Etam and Shay David, left the company to establish new startups.
However, Kaltura’s fortunes have since improved. In Q3 2024, the company exceeded analysts’ expectations, reporting the addition of several new customers, including two generating seven-figure revenues and 22 with six-figure revenues. The company also announced significant product improvements, including the launch of new artificial intelligence tools. Kaltura stated that these changes, combined with a strategy to unify customers and focus vertically on sales, would drive continued growth and profitability.
