Last week Kaltura amended their Form S-1 filing, detailing how many shares they were offering to the market and their expected IPO price of $14-$16, in an effort to raise about $275M this month. But like some other tech companies, Kaltura has now postponed their IPO. The market for tech IPOs isn’t great right now and other companies like Intermedia, have also announced they are putting their IPO on hold while they wait for “favorable IPO conditions”. In the last few months, tech stocks have taken a beating on Wall Street and while we don’t know how long it will last, a perfect storm took place preventing some IPOs from going forward.
Some have asked what this all means for Vimeo’s upcoming IPO and if they are at jeopardy of postponing as well. As of the writing of this post I don’t have any other details on Vimeo’s IPO except that they were originally targeting an April time frame, which I’m hearing has now been updated to May. Vimeo has not yet filed an amended Form S-1 for the pricing of their shares, so that’s the next step we would expect to see in the process and keep an eye out for. [Updated April 1: Vimeo has announced their Board of Directors as they prepare to spin-off from IAC and said their IPO is scheduled for the end of Q2.]
Even without some IPOs not taking place right now and the potential for others to be impacted, it’s important to take a look at the differences between all the different video companies in the space, especially around the term of “enterprise video platform”. The goal of this post to lay out some of the numbers and differences between vendors, but it is not a complete product review comparison for all vendors side-by-side, with regards to functionality. As always, customers have to look at the strengths and weakness of vendors based on what they are trying to accomplish for their specific needs. All that aside, there are a lot of differences form a numbers standpoint when it comes to vendors in the market, with some overlap of services.
Kaltura had $120M in 2020 revenue, with year-over-year revenue growth of 17%, 21%, 27% and 30%, for each quarter last year. 2019 total revenue was $97.3M. Year-over-year revenue growth was 12% in 2018, 18% in 2019 and 24% in 2020. The company had net losses of $15.6M in 2019 and $58.8M in 2020. Kaltura’s top ten customers accounted for approximately 29% of their revenue in 2020, with Vodafone accounting for approximately 12% of that. The company grew revenue by 24% in 2020, while only increasing sales and marketing costs by $3.9M, compared to 2019.
While I hear Kaltura get compared to a lot of “enterprise” video platforms in the market, many vendors mentioned are not truly comparable from a revenue, scale or product functionality standpoint. Qumu and MediaPlatform are mentioned most often and do have some crossover into a few of the same vertical markets as Kaltura’s, but they are much smaller companies. MediaPlatform (private) had sub $10M in revenue for 2020 and not a lot of cash. Qumu (public) did $29.1M in total 2020 revenue and projects revenue to grow to about $35M in 2021. Qumu was running low on capital ending 2020 with $11.9M in cash and cash equivalents. The company did a raise of approximately $23.1M in January of this year to get more operating capital. While Qumu grew revenue 15% from 2019 to 2020, it’s off of a very small base and the company disclosed that the increase in revenue was “primarily due to a large customer order received at the end of Q1 2020.” If you strip out that single customer, Qumu’s year-over-year revenue would have been pretty flat. In comparison, Kaltura had $27.7M in cash and cash equivalents at the end of 2020 and had revenue grow 5X larger than Qumu.
Some are comparing Vimeo to Kaltura because Vimeo is using the term “enterprise” very heavily, but don’t believe the hype. Vimeo isn’t really an “enterprise” grade video platform from a product functionality standpoint. Vimeo’s “enterprise” offering is almost entirely Vimeo’s core product, simply with different levels of usage-based pricing and is not tied into other pieces of the enterprise video stack. Vimeo doesn’t have deep integration with vendors that enterprise organizations use for ingestion, LMS, CMS, analytics or a large number of third-party on-prem encoders. Kaltura is the opposite with integrations into just about every aspect of the enterprise video workflow, from ingestion to delivery. Companies like Ramp, SharePoint, Google Analytics, Blackboard, Matrix, dotsub and others are all in the Kaltura video ecosystem.
Vimeo has the largest percentage of their customer base paying an average of $17.83 a month in revenue, which isn’t the business Kaltura is going after. Vimeo said that at the end of 2020, the company had 3,300 hundred “enterprise” customers paying an ARPU of $1,833 a month, but the majority of that revenue is from their OTT related product, not “enterprise”, when defined by use case and application. Vimeo’s definition of an enterprise customer is simply the requirement that the customer purchase their plan through direct contact with their sales force. That’s it. This might be why Vimeo doesn’t break out verticals or use cases in their S-4 filing when it comes to what their “enterprise” revenue really consists of. I also expect a large portion of Vimeo’s revenue specifically tied to their OTT product to not renew throughout 2021. At the end of 2020, less than 1% of Vimeo’s subscribers paid more than $10,000 per year. By comparison, almost all of Kaltura’s customers paid at least $10,000 PER MONTH, over the same time.
If you look at Vimeo’s ARPU growth, the largest portion of it has come from their top ten customers. ARPU amongst their 1.5M+ paying customers grew only $24 a month, over 5 quarters from Q3 of 2019 to Q4 of 2020. That’s an average increase of only $4.80 per quarter. Vimeo’s “enterprise” customers saw over 100% growth, from their top ten customers that I estimate to be in the $100k-$250k a year contract size. So a small segment of Vimeo’s customers is making up the largest percentage of their highest ARPU growth. On the marketing front, Vimeo calls themselves the “world’s leading all-in-one video solution”, amongst many other high-level and generic marketing terms they use, which means nothing. Kaltura on the other hand is very clear about what they do in the market, with lots of details around product support for solving specific problems based on use case, vertical and size of customer.
Since day one, Kaltura has been in the live streaming space with deep knowledge and experience in what it takes to be successful with live, which requires solving a very different set of problems. As an example, Kaltura was the platform that powered Amazon’s AWS re:Invent conference last year and virtual trade shows are a use case Kaltura has been successfully selling into. In 2016, Vimeo tried to get into the live business by building the functionality in-house and then realized how hard it really was. They had to acquire Livestream in 2017 to get into the live business, but live streaming has never been in the DNA of Vimeo as a company. Now, four years after Vimeo acquired Livestream, customers are telling me Vimeo is shutting down the Livestream platform and trying to transition them over to the Vimeo live platform, at a much higher cost, with less functionality.
Vimeo’s live platform does not support streams longer than 12 hours, which is a problem for many current Livestream enterprise clients who have 24/7 linear channels. With Vimeo live, you also can’t restart a live stream without creating a new event as you could previously do with the Livestream platform. Most importantly, the functionality around APIs is essential when it comes to the enterprise video stack and is one of the major deciding factors on which vendors customers use. The Vimeo live API functionality is much weaker compared to the Livestream API. Many of Vimeo’s biggest Livestream customers were deeply using the Livestream API, so that’s a problem for some customers they want to move off the Livestream platform. Customers I have spoken to haven’t seen the value in paying the additional multiple so it puts into question what percentage of Livestream customers Vimeo will be able to retain with the change. By comparison, Kaltura has no limit on the length of a live stream and their platform is open-source, with one of the deepest set of video API functionality in the industry.
In addition to the vendors already mentioned, Kaltura more closely competes with Panopto, especially when it comes to the education vertical and use cases around corporate communications. While Panopto is private and doesn’t disclose numbers, I put their revenue to be around $50M in annual recurring revenue (ARR) last year, with about 40% year-over-year growth. Panopto is well funded, have a very solid platform with scale, and lots of product flexibility targeting specific use cases and verticals. Panopto doesn’t cross over into all the verticals Kaltura sells into as they don’t sell their platform into telecom companies for any cloud TV services. This is a common theme amongst all the vendors, they don’t all compete in the exact same verticals for 100% of their revenue.
Brightcove is another vendor that has overlap into some of Kaltura’s verticals and competes mostly around media and entertainment customers looking for an end-to-end video stack for publishing, broadcast and ad supported business models. Brightcove had $197.4M $194.7M (thank you Brightcove for noticing my wrong number) in 2020 revenue, growing 7% year-over-over, with a net loss of $5.7M, down from the net loss of $21.9M in 2019. The company has projected 2021 revenue to be in the range of $211M-$217.0M, which at the midpoint would be 8% revenue growth. Over the past four years, Brightcove average year-over-year revenue growth was 7.7%. What these numbers show is that the market for certain types of video services and the rate at which they are growing is not as big or as fast as some want to suggest.
Brightcove ended 2020 with $37.5M in cash and cash equivalents. At the end of Q4 2020, Brightcove had 1,051 customers paying an average of $4,400 a year, ($366 monthly) and 2,279 “premium” customers spending an average of $97,200 a year ($8,100 monthly). Brightcove defines a premium customer based on their revenue spend and refers to the non-premium customers as those who use “our volume offerings”, saying it’s “designed for customers who have lower usage requirements and do not typically require advanced features or functionality”. You can read Brightcove’s recent 10-K from February 24 if you want to see all the detailed language on how they bucket their customers based on various products. Like Kaltura, when it comes to the media and publishing space, Brightcove is very deep with their product functionality and API support for use cases around marketing, events and corporate communications.
There are so many high-level umbrella terms used to describe video platforms that it can be confusing when it comes to what vendors really do and who they are targeting with their services. With terms like “enterprise video platform”, “video as a service”, “online video platform”, “business broadcasting platform”, “video cloud platform” etc. many companies may or may not be competitive to one another, depending on what is being compared and your definition of these terms. Amongst all the generic terms I mentioned, you would also hear vendor names including Microsoft (Stream), Zype, Wowza, ON24, Hive Streaming, Frame.io, Zoom, Cisco (Webex), Hopin and many others in the discussion.
In most instances, the vendors I mentioned specialize in other core aspects of the video stack like building video apps, offering API tools for video developers, or focusing on players, video analytics and content management systems. These vendors wouldn’t truly be competitive with one another in an apples-to-apples product showdown. That said, Microsoft, with their Microsoft Stream product, Wowza and ON24 would have some competitive crossover to Kaltura based on product functionality in similar vertical markets. Hopin would compete when it comes to live trade shows and multi-day conferences and Zoom and Cisco with Vbrick compete in the town hall meetings market. If you add up all the use cases for video, verticals, size of customers, region(s) and product functionality needs, there are close to 50 vendors in the “video platforms” market. Many of the vendors names being thrown into the same bucket when it comes to “enterprise video platforms” would simply not be accurate, based on real methodology.
Note: I am an actual user of a lot of these platforms mentioned. I currently have account access to platforms at Brightcove, Kaltura, Wowza, Vimeo, Panopto and others.