Kaltura Q2 2026 Earnings: Subscription Growth Expands Gross Margin

Kaltura (NASDAQ: KLTR) reported Q2 2026 revenue of $46.9 million, up 5% from $44.5 million a year earlier, while GAAP diluted loss per share improved to $0.04 from $0.05. Subscription growth and lower cost of revenue expanded GAAP gross margin to 74%, but operating cash flow turned negative and the company’s Q3 adjusted EBITDA outlook is below the Q2 result.

Core financial results

Subscription revenue accounted for roughly 97% of total revenue and increased 8% year over year. Professional services revenue fell about 40% to $1.3 million, limiting total revenue growth to 5%.

Gross profit grew faster than revenue as total cost of revenue declined. This supported a narrower GAAP operating loss and higher adjusted EBITDA, although Kaltura remained unprofitable on a GAAP basis.

All dollar amounts are in U.S. dollars. Adjusted EBITDA and non-GAAP gross margin exclude items identified by Kaltura as not representative of its core operating performance.

Business and segment performance

Growth was concentrated in Enterprise, Education and Technology, where revenue increased 11% and gross profit rose to $29.2 million from $25.9 million. Media & Telecom revenue declined 10%, primarily because of elevated gross customer churn during 2025, while its gross profit was nearly unchanged at $5.3 million.

Recurring revenue indicators were mixed. ARR increased 8%, but net dollar retention fell below 100% and remaining performance obligations declined slightly.

Kaltura said gross retention was at its strongest level since Q4 2022. However, the 96% net dollar retention rate indicates that contraction and attrition among existing customers still exceeded expansion during the quarter.

Gross-margin expansion narrowed the operating loss, but cash flow turned negative

Total cost of revenue declined to $12.4 million from $13.2 million even as revenue increased. Subscription gross margin improved to 78% from 77%, while the shift away from lower-margin professional services also supported consolidated gross margin.

Operating expenses increased to $35.3 million from $34.0 million. Research and development and sales and marketing expenses both rose, while general and administrative expenses declined to $8.5 million from $10.9 million. Kaltura also recorded $1.3 million of restructuring costs. The increase in gross profit was nevertheless sufficient to narrow the GAAP operating loss to $0.8 million.

Non-GAAP operating profit increased to $4.8 million from $3.0 million, with its margin rising to 10% from 7%. The difference from the GAAP result included $3.7 million of stock-based compensation, restructuring and acquisition-related costs, among other adjustments. Below the operating line, $2.3 million of net financial expense and a $2.5 million income-tax provision contributed to the remaining GAAP net loss.

Cash generation did not follow the improvement in adjusted profitability. Operating activities used $2.0 million during Q2, compared with $2.7 million provided a year earlier. Kaltura ended the quarter with $35.5 million in cash, cash equivalents and marketable securities, alongside $26.6 million in the current portion of long-term loans. Current assets totaled $75.3 million versus $134.5 million of current liabilities, although the latter included $58.3 million of current deferred revenue.

Financial outlook

Kaltura issued quantitative guidance for Q3 and full-year 2026. Every point in the Q3 revenue and adjusted EBITDA ranges is below the corresponding Q2 result; at the midpoints, total revenue would decrease approximately 1.6% sequentially and adjusted EBITDA would fall approximately 57%.

Kaltura did not provide a quantitative reconciliation of forecast adjusted EBITDA to GAAP net loss because it could not estimate certain reconciling items with sufficient confidence.

Management commentary

Management emphasized early commercial adoption of Kaltura’s AI products. The company signed 14 deals that included at least one AI offering, double its previous record. Nine included Agentic Avatars, and eight involved new customers.

Kaltura also signed 13 deals with six-figure total contract values, including five with new customers. Management cited a growing pipeline, more proofs of concept and progress integrating PathFactory and eSelf.ai as reasons for expecting stronger bookings momentum in the second half of 2026. It expects the newer products to make a more meaningful revenue contribution in 2027, meaning current deal activity has not yet translated into a separately quantified revenue stream.

Recent insider transactions

The supplied six-month summary reports 2.9 million shares purchased across 20 transactions and 798,620 shares sold across 49 transactions, resulting in a net 2.1 million shares purchased. The most recent itemized records were sales by officers and a director; these transactions should be viewed objectively because the data does not specify their motivation.

The records also show zero-price stock awards to five directors on June 24, 2026. All listed transactions involved direct ownership.

Risks investors need to monitor

• Existing-customer contraction: Net dollar retention declined to 96%, showing that expansion did not offset customer losses and reductions within the existing base.
• Media & Telecom weakness: Segment revenue fell 10% because of elevated churn during 2025, continuing to offset part of the growth in Enterprise, Education and Technology.
• Lower near-term adjusted profitability: Q3 adjusted EBITDA guidance of $2.0 million to $3.0 million is materially below the Q2 result of $5.9 million.
• Cash flow and liquidity: Operating cash flow shifted to an outflow, while current liabilities exceeded current assets at quarter-end. Kaltura also had $26.6 million of current long-term loan obligations.
• AI commercialization and integration: AI deal activity increased, but management does not expect a more meaningful revenue contribution from new products until 2027. Results therefore depend on converting the pipeline and completing product integrations.

Summary

Kaltura’s Q2 2026 results combined moderate revenue growth with a meaningful expansion in gross margin and a narrower operating loss. Enterprise, Education and Technology drove the gains, while Media & Telecom churn, net dollar retention below 100% and negative operating cash flow remained important constraints. The next points to monitor are the expected Q3 decline in adjusted EBITDA, customer retention and whether rising AI deal activity develops into measurable revenue growth.