Good morning, everyone, and welcome to the Kaltura Third Quarter 2021 Earnings Call. For opening remarks and introductions, I will now turn the call over to Erica Mannion at Sapphire Investor Relations. Please go ahead..

Thank you, and good morning. With me today from Kaltura are Ron Yekutiel, Co-Founder, Chairman and Chief Executive Officer; and Yaron Garmazi, Chief Financial Officer. Ron will begin with a brief recap of Kaltura's mission and market opportunity and with a summary of the business results for the third quarter ended September 30, 2021.

Yaron will then review the financial results for the third quarter, followed by the company's outlook for the fourth quarter and full year of 2021. We will then open the call for questions.

Please note that this will include forward-looking statements within the meaning of the Federal Securities Laws, including, but not limited to, statements regarding Kaltura's future financial results and management's expectations and plans for the business.

These statements are neither promises nor guarantees and involve risks and uncertainties that may cause actual results to differ materially from those discussed here.

Important factors could cause actual results to differ from forward-looking statements can be found in Risk Factors section of Kaltura's quarterly report on Form 10-Q for the period ended June 30, 2021, and other periodic SEC filings, including the quarterly report on Form 10-Q for the period ended June 30, 2021, to be filed with the SEC.

Any forward-looking statements made in this conference call, including responses to your questions, are based on current expectations as of today, and Kaltura assumes no obligation to update or revise them, whether as a result of new developments or otherwise, except as required by law.

All material contained in the webcast is a sole property and copyright of Kaltura with all rights reserved. Please note, this presentation describes a non-GAAP measure, adjusted EBITDA, which is not prepared in accordance with U.S. GAAP.

For a reconciliation of this non-GAAP financial measure to the most directly comparable GAAP metric, please refer to our earnings release. Now I'd like to turn the call over to Ron..

one, to launch our comprehensive second-generation virtual events platform that includes a user-friendly orchestration and management layer for marketers to easily set up and manage their events. This platform is well suited for all marketers who now need to execute on a large number of virtual and hybrid events of all sizes.

This platform is designed to shorten our sales and deployment cycles and reduce required professional services in an effort to help increase gross margins. Two, to continue advancing our recently added real-time conferencing engine, to best support our fast-growing meetings and event products in an effort to improve the unit cost and gross margins.

Three, to continue development towards launching our self-serve media services, webinars and virtual classroom offerings in the first half of next year.

This move is expected to increase our target market to include small and medium enterprises, smaller schools and start-ups and also to reduce required professional services, again, in an effort to increase gross margins. Fourth, to enable our services and products to run an OCI as discussed previously.

And lastly, five, for the M&T sector, to continue working on a more simplified end-to-end version of our offering for media companies and smaller telcos that would enable us to launch services quicker and without the need to procure separately individual tech stock components.

This is expected to broaden our target market and reduce required professional services, again, in an effort to increase gross margins.

Our product investment areas are in line with important market trends related to the adoption of video technology across all of our products and Use Cases, and we're excited about our upcoming launches and continued market disruption.

In summary, we had a great quarter with strong growth, retention rates and gross margins, and we're already hard-at-work on the next quarter. We're continuing to increase our sales and marketing spend and to ramp up additional sales staff.

We continue to be excited about the strong traction that we're seeing for our recent new product and solution releases and are excited to launch important enhancements in addition to these offerings, including lower touch and self-serve products that we expect will open up our target market to include also small organizations to which we could sell and deploy faster with less services and at higher gross margins.

With that, I'll turn it over to Yaron, our CFO, to discuss our financial results in more detail.

Yaron?.

Thank you, Ron, and good morning, everyone. As I review our third quarter results today, please note that I will be referring to a non-GAAP metric, adjusted EBITDA. A reconciliation of GAAP and non-GAAP financials is included in today's earnings release, which is available on our website.

Total revenue for the third quarter ended September 30, 2021, was $43 million, up 40% year-over-year. Subscription revenue was $37.7 million, up 40% year-over-year, while professional services revenue contributed $5.3 million, up 43% year-over-year.

The remaining performance obligation were $162.3 million, up 24% year-over-year, of which we expect to recognize 59% as revenue over the next 12 months. Annualized Recurring Revenue was $151.7 million, up 41% year-over-year.

Revenue benefited from our continued year-over-year growth in net dollar retention rate, which was 117% in the third quarter compared to 111% in Q3 2020. Within EE&T segment, total revenue was $30.4 million, up 45% year-over-year.

Subscription revenue was $28 million, up 14.1% year-over-year, while professional services revenue contributed $2.5 million, up 99% year-over-year. Within M&T segment, total revenue was $12.6 million, up 13.1% year-over-year.

Subscription revenue was $9.7 million, up 37% year-over-year, while professional services revenue contributed [$2.9] million, up 15% year-over-year. Gross profit in the quarter was $27.8 million, representing a gross margin of 65%, up from 59% gross margin in Q3 2020.

Within EE&T segment, gross profit was $22.2 million, representing a gross margin of 73%, up from 72% gross margin in Q3 2020. Within M&T segment, gross profit was $5.7 million, representing a gross margin of 45%, up from 32% gross margin in Q3 2020. R&D expenses was $12.4 million, 29% of revenue compared to 24% in Q3 2020.

The increase was driven by additional headcount and payer expenses as we continue to invest in technology and innovation. Sales and marketing expenses were $11.3 million or 26% of revenue compared to 22% in Q3 2020. The increase was driven by additional sales and marketing investment, including headcount and personnel-related expenses.

We intend to continue to invest in sales and marketing as we expand our sales force and marketing efforts, leverage our position in the market and capture a significant opportunity in front of us. G&A expenses was $10.1 million or 23% of revenue compared to 28% in Q3 2020.

The decrease was in G&A and a result of a onetime expense related to addendum of data center equipment in Q3 2020. It is offset by IPO-related expenses, an increase in headcount and increase in stock-based compensation expenses. GAAP net loss in the quarter was $25.2 million or $0.26 per diluted share.

Adjusted EBITDA was a negative $2.3 million, decreasing from $1.7 million in Q3 2020. This result in line with our plan to increase our spending in order to further fuel our growth as discussed earlier. Turning to our balance sheet and cash flow.

We ended with a -- the quarter with $179.7 million in cash and short-term investments, reflecting preliminary net proceeds from our July public offering of approximately $160.4 million. Net cash used in operating activity was $5.7 million in the quarter. I would like now to turn to our outlook for the fourth quarter and the full year of 2021.

For the fourth quarter, we expect revenue to be $41.2 million to $43.2 million which is -- with a negative adjusted EBITDA of $7.5 million to $9.5 million. For the full year, we expect revenue of $163.5 million to $165.5 million with a negative adjusted EBITDA of $14.1 million to $12.1 million. These are both up from our previous guidance.

In summary, we believe our new products strong, elevated net dollar retention rate and increasing sales and marketing resources will enable us to continue and support a robust recurring revenue growth -- growth rate and our increased gross margin are in line with in our long-term goals. With that, we will operate the call for questions.

Operator?.

[Operator Instructions]. The first question is from Koji Ikeda from Bank of America..

Great quarter. I wanted to ask you a question about 2022 for a bit here. We're at the end of 2021 and specifically about your EE&T segment, the enterprise education and technology.

Maybe could you talk about which 1 of those 3 you're most excited about as a growth factor heading into 2022?.

Koji, thank you so much and thank you all for joining. And by the way, one slight correction that I've noticed after that I miss-represented, I said that M&T continues to lead our segment in 2022. In terms of percentage of growth versus 2020, obviously, it's 2021. So that's one small fix.

For your question about 2022, what we're excited about, across all our 4 areas, we're very excited because of all been growing very nicely. There's a lot of demand. We've already mentioned that M&T is on its way to grow and the highest percentage this year. So we're going to enjoy growth both at the end of next year and the following one.

There's some delay on this. But in -- so far as market demand within the EE&T sector, I'd say all 3 are very strong. Net dollar retention has generally led by a tech OEM followed by enterprise. But I'd say that the most explosive one by way of overall market size opportunity is the enterprise subsector within EE&T.

It is the largest one by way of booking right now. It's the largest one by way of revenue within EE&T. And it is one that with all the new products that we've started launching and the great demand that we see for them, we expect significant growth in.

And to remind you, we're also going to go down market towards the SME market with more self-serve products for virtual events and learning. And so we expect that to continue to push. So I'd say they're all exciting from a size and overall potential, I'd say enterprise would be at.

Does that answer your question, Koji?.

Yes, that's perfect. And just one follow-up here, if I may. I wanted to double click on the hiring plan. You stated that you're slightly behind, and I wanted to dig in a bit more on that.

Could you quantify or maybe talk about qualitatively about your current sales capacity? And how we should be thinking about any sort of catch-up there in sales and the ramp from here heading into 2022?.

Yes, happy to do that. So we don't report specific numbers around sales force size and ramp. But I can say that we've been growing our team very, very nicely. In EE&T, our ramp salespeople and customer success managers grew by 50% in quarter 3 compared to quarter 1, so it's a huge jump.

And in M&T, the combination of sales in CSN grew by 20% in quarter 3 compared to quarter 1, so it's a significant growth that was planned. When we say that we're slightly behind, it's kind of a single-digit type of a lag. We expect that to be covered over the next few quarters with a lot more growth that we're putting in place.

And it's important to remind everybody, we anticipated that towards the end of the year, we're going to need to pass the baton from growth because of increased efficiency that we've seen over the years to growth also because of more salespeople that are rented.

And that's something we're starting to see now, by way of bookings, we're going to see in Q4 and definitely entering 2022. So that re-acceleration, if you may, is ahead of us, and we're seeing early signs, and we're excited about it.

Yaron, do you want to add anything here?.

Yes. First of all, as Ron mentioned, the most important point that the increase in our sales force since the beginning of the year is significant. It's like, as we mentioned, is between 30% to 50% of the sales force.

And we believe that by adding the people that we are adding and catching up during Q4 and getting into Q1, we will have the right amount of people to support the growth for next year. And at this point, as Ron also mentioned, we see that productivity level is still remain very high. So we definitely don't see erosion in productivity.

So by adding the people, we believe that we will see a very nice increase going into next year..

The next question is from DJ Hynes from Canaccord..

Great to see the 40% growth across the board. Congrats. I want to ask about the bookings environment and execution in the quarter. I mean the qualitative commentary obviously sounded pretty upbeat. If I look at the amount of net new ARR you added in the quarter, it's the lowest we've seen in more than a year.

So can you just double-click on what you saw in the quarter? I mean, is it the last couple of quarters benefited from some of those chunky kind of M&T deals dropping in? Or maybe just talk about close rates and what the pipeline looks like in Q4?.

Yes, happy to do that, DJ. So -- a bit more color. So segment-wise, we had contribution for all segments. The largest contributor, as I mentioned earlier, continues to be enterprise. From a product perspective, the large majority of the EE&T deals are meetings-related, so they include live and/or real-time conferencing.

I'll say that from a concentration perspective, in the past, we've had much more push in both booking and revenue coming from a single few very large customers. That's not the case now. Concentration, you've seen that in our comments, are coming down. You'll see that in the 10-Q as well.

Vodafone year-to-date is under 10% versus last year that was at 12%. Amazon came down to single digits. Top 10 customers are sliding down from Q2. So that's good. From an ARPU perspective, the EE&T new deal ARPU grew to the highest level this year.

And so we're seeing this mainly driven by the new products, virtual events and virtual class and for large companies or bigger ticket item. So we're seeing bigger and bigger deals come in. We already mentioned from how we close the deal in so far as productivities, they have been as forecasted for 2021. They continue to be strong.

They continue to be as planned. We don't report [indiscernible], but I can tell you that it's still very strong. We did tell you that we've grown our sales force and the numbers that we've set is just a question of catching up a bit slightly more. And then I can give you examples.

I mean, and new logos and enterprise, we give a lot of meetings-related stories, just a couple of non-meeting examples.

We had 2 Fortune 500 companies, one of very large retail companies, the other very large shipping and business service companies both into Kaltura to manage all of their externally facing videos on their website to support marketing and e-commerce workflows.

In Edu, we're seeing folks purchasing solutions that are combined between content management together with the new virtual classroom and also integrated with things like Microsoft Teams and Zoom.

In media, we saw more media companies like the biggest kids channel in European country, launching with Kaltura new ad-base direct-to-consumer offering and a bunch of upsells on the virtual event side, one of the largest chip manufacturers just conducted their second virtual event with tens of thousands of folks.

One of our biggest customers that have been using us extensively has added a bunch more events, smaller ones with our platform that supports both large and small. I mentioned earlier, a very big accounting firm that joined us, and they've replaced an existing vendor for learning development.

There's a lot of -- we did mention Oracle for the tech OEM expansion. There's a lot. So I'd say it's a good quarter, very rich, very well diversified. I wouldn't take too strongly on some shift between this quarter and the other by way of bookings. That's why we don't report on it. It catches up. Q4 is generally a very, very strong quarter.

Q2 was also strong because of one mega large deal in M&T. Sometimes they take a while and they come a bit after. So these are some of my thoughts.

Yaron, you want to add anything?.

Yes. And you asked about the fact that you see a slow growth in the ARR for this quarter. So in general, we are focusing from the beginning of the year, we were focusing the growth slowdown for the second half, it will be some slowdown. And this is because of the fact that we have maximized the effect of improving the sales of productivity.

And now it's mainly the turnaround, which we discussed it from day 1 is coming from the fact that we are adding more and more people. And we will see the impact going into Q4 booking in beginning of next year. And as Ron mentioned, typically, Q4 is a very strong booking.

And with the new salespeople that we are adding, we believe that it will create a very interesting effect going forward. At the same time, we are not reporting on a specific deal, but we are negotiating some big deals that hopefully we'll be able to close.

So to make a long story short, we guided this kind of slowdown in the ARR growth from day 1 almost, but we are taking all the actions in order to reaccelerate it again. It was always from the plan, we see that it's going the right way..

Yes. Okay. Very helpful color. One follow-up. Ron, I'd love to get your thoughts on kind of the efforts to drive more self-serve buying.

I mean just -- maybe you can talk about what you're doing to make that happen, right? You talked about some of the products that make sense, but how do you layer that into the go-to-market motion, right? I feel like we often see folks layer direct sales efforts on top of self-serve, but it's less common to see it go the other way.

So I'd love to get some color there..

Yes. So we -- we've been talking about this for a while, working on our self-serve solutions that are expected to launch in the first half of next year. They're both SaaS and PaaS solutions, both solutions for internal use for learning development and external for webinars, virtual event et cetera, as well as the platforms-as-service for developers.

The main work we need to do is adding the right internal workflows that are tying all the way from marketing to registration and some self-support self-care and stuff like that, we're hard-at-work on that. We expect that to launch. We're not going to go all the way down to SMBs. We're definitely not targeting consumers. It's expected to be SMEs.

I mean the world of media will come to intermediate-sized media companies and the world of developers will be start-ups. But we expect that to be a material change for what we're doing. We feel very confident about this move.

One of the things that we started doing more this quarter, we're going to do a lot more in the next quarter is to start working on more spend on marketing. You're going to see the whole funnel all the way from the top of the funnel on digital campaigns that are promoting our brand and promoting our solutions.

We brought people that are experts in this from other companies. We're putting funding towards this even a bit in advance for the actual launch of these products, and we feel that we are going to be well equipped to do that.

And to be clear, part of it is also making departmental sales for the larger organizations that we're working with anyway as opposed to coming as a unified sale from a CIO perspective with full FTE coverage. And definitely, we have a strong pursuit on that.

That address your question?.

Totally. It makes sense and again, very helpful..

The next question is from Michael Turrin from Wells Fargo..

This is Austin Williams on for Michael. So it looks like the revenue growth in the quarter grew 3% sequentially, but the guide implies is down roughly about 2% sequentially at the midpoint despite being a 4Q.

So what are the drivers of that sequential step down? And is there any color you can give on the split between Subscription and Professional Services?.

Yes. It's a good question. Thank you for asking it.

Yes, we said it before in the previous calls, and we are saying it again because of the fact that we had a significant non-recurring revenue in previous quarters related to the fact that some of the big virtual events still where we've -- a lot of significant part of non-recurring revenue, it's not going to happen this quarter. We said it before.

So this is one of the reasons for the decrease. Hopefully, we will work out to beat these numbers. But I already elaborated on the fact that we are adding more and more people. So we -- the impact on the coming quarters is definitely going to change from this direction. Other than that, I don't think that I have anything to add.

But there is also some big deals that we are negotiating right now that also can contribute for the future growth. So to make a long story, the main point is obviously the non-recurring revenue that was very significant and it's not going to be this quarter.

And when we are looking on it on a recurring revenue, the fact that we are adding in the people, the fact that we are going to beat the numbers and some of the big deals that we have, we believe that the acceleration of the growth will continue into the future..

Yes. I'll just add it. Thanks for the good question that other than the fact we've been saying this since the beginning of the year because we knew the non-recurring fees for Q4 is not going to come back.

And the fact that there is a certain expected slowdown that's going to be catapulted by salespeople is that what we've guided for Q4 revenue numbers is equal to what we've done kind of before.

So we're maintaining kind of the gains at mid-range if you kind of run the annual expectations that we put earlier and you kind of run what Q4 would have meant. That hasn't changed. We're maintaining Q4. We just increased the range a bit to allow for swings up and down. But otherwise, we haven't changed.

And for the full year, we increased the full range by $1 million. So we basically upped the full range and for the year and maintain Q4, and let's see where it takes us. We always want to be cautious..

Okay. That's helpful color. And then just as a follow-up, it looks like the gross margin improved pretty nicely over the prior quarter and the prior year. I just wanted to unpack that a little bit.

Was usage and impact here driving the improvement? Or whether any other major drivers to call out in any other segment?.

No. No. The main driver, as we told everybody before, we are going to focus heavily in improving the system, especially post-COVID. So I don't think it's related so much to the marketing part, but some of the actions that we are taking.

And you can see that, by the way, the enterprise education and tech OEM, we made some mileage in the way of improving the numbers, but we are still not where we want to be, which is the number pre-COVID. So there is still room for improvement despite the fact that we improved gross margin of Enterprise E&T from 70% to 73%.

The big change was in Media and Telecom. We always say that there is a lot of room there for improvement. We improved from 42% to 45%. And when you look from the -- compared to the quarter last year, it's from 32% to 45%.

And by taking some of the other actions, including the reduction of the size of the non-recurring revenue, we believe that we will see a room to grow. So most of the actions are related to what we did in the company to improve and to continue to improve.

It's not going -- we are not committing that right now, it will continue to be for the short-term, again, the 65%. Because obviously, when we discussed before, it was high 50s, low 60s. And now we had 65% after we had 62% in last quarter.

But we are definitely going to see a continued improved above the low 60s going into the rest of the year and especially for next year. And we will provide more detailed guidance when we will get to at the beginning of next year..

I'll just add that one of the good things that we're seeing and we've been targeting and we're building our product for that is a continued reduction of the percentage of professional services, so a reduction in non-recurring. It's both the Media and Telecom and an Enterprise Education and Tech.

And the other one is the growth in usage-based pricing that's coming together with the new products and also a shift of post-pandemic, which is great. And obviously, in general, growing scale introduces lower IS pricing and improved economy of scale. So we're definitely expecting to continue to go towards our long-term goals.

With the [indiscernible], as Yaron had said, that we do expect to see some jumps and fluctuations in gross margin in the short-term. So I would not necessarily expect to see better gross margins. It could come up back down again in Q4 before it continues to go up. We're very optimistic and working hard towards improving gross margin..

The next question is from Matt Niknam from Deutsche Bank..

One on bookings from channel. I'm just curious, I guess, where you are today? What percent of new business is actually coming from sort of non-direct sales? And then where you envision this going over time with some of the expanded efforts both in channel and some newer self-serve products? And then maybe as a follow-up to the gross margin question.

How do you think about migrating more workflows beyond Oracle-specific ones on to the Oracle Cloud or other maybe public cloud partners beyond AWS? And then would that be sort of a meaningful tailwind for gross margins over time?.

Yes. Thank you. So first in so far as percent of business coming from channels it's continued to go up. EE&T is actually at the highest recent level that we were. It went beyond 10%. Typically, it's on a mid- and single-digits. So that's going well. M&T is not really a channel business in most cases. Sometimes we do have some channel business coming in.

So I would focus one EE&T there. So channel is building up the biggest jump is going to be when we launch our self-serve products, and that's next year, and we expect that we'll be able to push more things easily through the channel partners that we have. So we're optimistic and it's going in the right direction.

And as far as your question about Oracle and maybe at large, we're excited about the relationship. As mentioned, they're very valued customer since 2012. We announced the OEM agreement with them in 2019.

We've now announced the next step of that, which enables both the live and the real time, which enables to push it into more products and we have a lot of big plans. So that's exciting. Yes, we are putting stuff running on OPI to support that, and we are enabling Oracle salespeople to offer Kaltura products to Oracle customers.

That's not in order to improve gross margin, and it's not in order to migrate them from AWS. We continue to be a very, very good partner to AWS. They're important for us. We have ongoing engagements with them. They're going to be important for us in the future.

So the point here is not to reduce or change or move rather than create incremental additional business that's going to enable us to flourish across our partners that are associated with that.

Does that address your question?.

That's great. Thanks, Ron. Congrats on the quarter..

The next question is from Steve Enders from KeyBanc..

I want to ask a little bit more on just the hiring environment that you're seeing now. I think I've been hearing a bit about great resignations and people quitting and also a lot of movement just in the hiring market today.

But just how are you finding the ability to bring in new talent and how competitive are a lot of these engagements today?.

Yes. Thank you for asking. I mean, it's in the heart of what we're all trying to do, right? At the end of the day, it's all about people. And yes, it is a bit more competitive than it was in the past for sure. But Kaltura is a very exciting company.

I mean, we're definitely in a lot of different markets, many of which are extremely appealing to folks all the way from powering TV at home, to education, to enterprise.

I think people love the breadth of what we do, but also that it's not a back-office type company that supports kind of technology in the hospice of the CIO, but something that touches end users, and you can take pride in how this actually help people around the world and people relate to that. I think the culture of the company is a big draw.

The fact that we're open, flexible, collaborative and this is not just a matter of words, but actions, how our strategy goes and how we're perceived within our industry.

Being the public company is really helpful by way of portraying our potential to grow and accelerate both on innovation and our go-to-market, but also in providing new public company comp, which is exciting for the folks.

So yes, it's a bit harder than it would have been a year or 2 or 3 ago, given the amount of companies that are hiring, but we see great excitement from folks to join the company..

Okay. Good to hear. And just a follow-up on the non-recurring piece. And as we kind of think about the impact on the model here.

I mean, is this primarily coming on the services side? Or is there a usage component that's coming in here that's beginning to roll off? I guess how should we just kind of think about the mix there?.

Pure services. When we refer to the non-recurring, we're referring to lower margin work that is done and you're done. So it's bespoke development in order to customize integrator build specific solutions for specific customers.

And historically, I mean, it's high in media and telecom, but it's been higher in EE&T ever since we launched our new product last year because we ran to customize them for specific large customer. That's often the case in the cycle of new products.

And so when we came with our virtual event platform, we charge an awful lot initially on professional services because it just wasn't ready yet. And so we kind of loaded it on the customers to customize it to what they need. Now we've created more automated capabilities that enable that within the product.

So we've pushed more revenue from non-recurring to recurring. And we've accelerated sales cycles and deployment cycles and improved gross margin in the process, but it does hurt our professional services revenue, and it's a good thing. We've seen a declining on the booking.

We've seen a declining in the revenues coming down, and it's actually a very good thing for the company..

The next question is from Ryan Koontz from Needham & Company..

I wanted to ask maybe a little bit different way about the professional services aspect. Sounds like the ramp there is the challenge of ramping new wins and converting to revenue.

So in addition to the transition to self-service for the low end of the sector, do you have any other strategies there to reduce that dependence or add hires or make it -- just -- is there kind of any medium ground there in the professional services aspect to get customers onboarded faster? Any color there would be helpful..

Yes. Thank you. I mean, the work that we've been doing across our product has always been geared towards accelerating sales cycles and deployment cycles. Now we've done that over the years as years go by.

It's just that when you have a new set of products, you cannot come with a minimal viable product that has everything tailored, especially when the claim is the same and what's very unique about our ability is to offer enterprise great capabilities with a lot of branding and integrations. I mean that's the power of Kaltura.

There's a bunch of vendors out there later to very small initiatives and projects, which are not coming with a degree of enterprise ability, if you may, that we do. And so it's not necessarily an evil.

It's something that goes well with our offering, but we've been working hard last year, this year, next year, to find that middle ground and one end, enabling all these integration customizations, one platform-fits-all. On the other hand, not to go too deep into creating all this [indiscernible]. But enabling our customers to do so.

So it's an ongoing effort that has been going for years. We're not waiting for the self complete self-serve. And look at the percentages, we're 88% recurring revenue at the moment for the company. We expect it to continue to go and cross the 90%. So we're not that heavy.

And when you look at EE&T, you'd note that EE&T is much better than it has always been. It's M&T that takes it down. So in both cases, I think we're in a good place and continuing to improve..

Okay. Great. And just a quick follow-up on the education sector.

We've seen a couple of ed tech misses in the last couple of weeks with the reopening, and it sounds like it's more K to 12 , but what kind of color can you share with us on kind of the impact of the reopening on your education goals?.

You're saying misses in so far as lower software revenues and bookings or?.

Yes. Yes. Sounds like it was mostly K to 12 and that sort of thing..

Yes. So as you know, first of all, the majority of our business is not K-12, it's higher ed, albeit that we are coming down to also address K-12. And so we definitely have seen continued demand and interest on the education front.

It's true that in the height of the pandemic, a lot of folks that didn't have anything had to run and quickly get things done within a day or 2 and also that there were significant upsells by way of usage but might not necessarily continue into the future. But, a, we are a content management platform.

That means that it's not just the right-now type of a class that's happening, but the storage of all of your content and the management of all of your metadata. And so that is accumulative. And so we still need to cater to that in universities and schools still use us with a higher volume because it needs to be carried into the future.

The second is that I think we are in the second inning of EdTech really for video because what happened very quickly in the pandemic was to offer a very quick solution for folks to join remotely and to manage the content, but not truly be the first class that is net of teaching and learning with video.

If you're thinking if it's connected to your score cards or to your analytics, it's still not 100% there. So the next move is to have an end-to-end solution that looks at teaching and learning first remotely than second in campus.

By the way, not just for the purpose of folks that are never coming to campus, but even if it's just flipping the classroom, so you could actually deliver the lectures remotely and then come to classroom to do the actual homework. I think that the best is still ahead of us.

And Kaltura is best situated for it given the degree of integrations, APIs, connections into the LMS, into the classroom software, now our virtual classroom. So I'm very optimistic for the future for education, and we're not seeing more churn or very significant softening in education..

The next question is from Ittai Kidron from Oppenheimer..

Most of my questions have been answered, but I guess, Ron, maybe you can talk about meetings and what has been progressed there?.

Yes. So when we launched real-time conferencing, we said clearly that we're not targeting kind of the regular meetings that Zoom or Teams would be, but what we like to call 'meetings with a purpose'. And this is exactly where we've advanced.

If you look at Gartner report as an eco to that, showing how we've grown year-by-year and scores and positioning. We're right after Microsoft, Zoom and Cisco Webex and most of these reports in an area that we have not been in, and they've been in for the last 10-plus years as very strong players.

But that is in places where there is a combination of our content management system together with our real time. And this is where we're focused. So we've advanced in 2 ways. One is to harden our classic RTC capabilities.

by way of quality, by way of scale, and we are -- and also unit economic by way of efficiencies, and we're putting a lot of smart people to get that done. But I think even more importantly is how do you harness that capability within virtual classroom, within virtual events. They're not separated.

There is a very significant convergence in the market, and we're leading that convergence. And the demand for these solutions is huge, and we are ousting existing big vendors because of that very unique combination of content management in real time. So this is our focus, and we're excited about it..

Got it. I guess maybe as a follow-up, if I'm tying that up with your sales ramp with your ability to kind of unleash the self-serve model early next year as you've talked about it.

and with the strong backlog that you have, should we anticipate '22 to be an acceleration year from a revenue and ARR growth standpoint?.

Yes. Thanks for the question. Obviously, we're not yet providing guidance for the year. We will definitely provide guidance. There's a lot of things that get thrown into the mix as we kind of put it all together. But I could say again, that all the plans that we've had before is still the plans that we have now.

We've spoken about self-serve, and we intend to continue to do that. It was planned to be launched next year, and it's still planned to be there. I think there is very, very strong engines behind the company. and we're excited to next year, but we'll wait a bit with guidance.

Yaron, do you have any specific words?.

No. I think that what you heard in this call and what you see in the numbers we are continuing to build the infrastructure for a strong number going forward. At this point, we will try to continue to plan. But hopefully, we will be able to deliver some good numbers when we'll be ready for -- to do it..

This concludes the question-and-answer session. I would like to turn the conference back over to Ron Yekutiel for any closing remarks..

Yes. Thank you all for making time for your great questions and for those who are just listening in, thank you for listening in. Hopefully, everybody is safe and sound and continue to be healthy. And thank you for your time and attention. It's been another great quarter across our markets, fueled by continued strong productivities and retention rates.

And we're ramping up our resources across the board, especially in sales and marketing to fuel our future growth. Excited towards the future, onward and upward everybody. Take care..

This concludes today's conference call. You may disconnect your lines. Thank you for participating, and have a pleasant day..