Paltalk, Inc. (NASDAQ:PALT) Q3 2023 Earnings Call Transcript November 7, 2023
Operator: Good afternoon, and welcome to the earnings call for Paltalk’s Third Quarter Ended September 30, 2023. At this time, all participants have been placed on a listen-only mode. It is now my pleasure to turn the floor over to your host, Jason Katz, Chief Executive Officer of Paltalk; and Kara Jenny, Chief Financial Officer of Paltalk. Kara, the floor is yours.
Kara Jenny: Hello, everyone, and welcome to the Paltalk operating and financial results conference call for the third quarter September 30, 2023. By now, everyone should have had access to the earnings results press release, which was issued earlier today after the close of market at 4:00 p.m. Eastern Time. This call is being webcast and will be available for replay. In our remarks today, we will include statements that are considered forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995, including forward-looking statements about future results of operations, business strategies and plans, our relationships with our customers as well as market and potential growth opportunities. In addition, management may make additional forward-looking statements in response to your questions.
Forward-looking statements are based on management’s current knowledge and expectations as of today and are subject to certain risks, uncertainties and assumptions related to factors that may cause actual results to differ materially from those anticipated in the forward-looking statements. We offer no assurance that these expectations and beliefs will prove to be correct. A detailed discussion of such risks and uncertainties are contained in our filings with the SEC, including our most recent annual report on Form 10-K for the year ended December 31, 2022. You should refer to and consider these factors when relying on such forward-looking information. The company does not undertake and expressly disclaims any obligation to update or alter our forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law.
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On this call, we refer to adjusted EBITDA, a non-GAAP measure that when used in combination with GAAP results, provides us and our investors with additional and analytical tools to understand our operations. For adjusted EBITDA, we’ve provided a reconciliation to the most directly comparable GAAP financial measure in our earnings press release, which will be posted on the Investor Relations section of our website at paltalk.com. And with that, I would like to introduce Paltalk’s Chief Executive Officer, Jason Katz.
Jason Katz: Thank you, Kara, and good afternoon, everyone. We greatly appreciate you taking the time to join us on today’s call. We will discuss our operating highlights and financial results for the third quarter ended September 30, 2023. Additionally, we will provide an update on our business and near-term business objectives. After my opening statement, our CFO, Kara Jenny, will give a summary of our financial results for the third quarter ended September 30, 2023. Following our prepared remarks, we will move into the Q&A portion and answer any questions that were pre-submitted prior to this call. With that, I would now like to walk you through the recent financial and operating highlights and near-term business objectives.
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Q&A Session
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We are pleased with our continued revenue growth and achievement of generating positive cash flow from operations in the third quarter. Our efforts to optimize our platforms and streamline our costs have resulted in a significant decrease in operating expenses and an improvement in reducing our operating losses and net losses. As we continue to prudently execute on our revenue growth plans, we believe we are well positioned for profitability with our current expense infrastructure. The third quarter ended September 30, 2023, revenue increased by 5.5% to $2.8 million compared to the same period in the prior year. We also generated positive cash flow from operations for the quarter. Our near-term business objectives are the following with a keen eye on profitability and enhancing shareholder value, leveraging our integration of the ManyCam product into Paltalk through up-selling initiatives, further optimizing marketing spend to effectively realize a positive return on our investment, evaluating ways to optimize and reduce expenses, continuing to explore strategic opportunities, including, but not limited to, potential mergers or acquisitions of other assets or entities that are synergistic to our businesses, continuing to defend our intellectual property.
Now I’d like to share a little color on two recent announcements we made that I’m very excited about. We are excited to have Geoff Cook join our Board as he has successfully accomplished what we intend to do, which is grow via strategic acquisitions to enhance shareholder value. In July of 2023, Geoff was named CEO of Noom Inc., a leading digital health platform combining personalized psychology with modern medicine. Before that, Geoff executed numerous acquisitions while growing the Meet group and ultimately sold it in 2020 for approximately $500 million. We look forward to leveraging Geoff’s experience, knowledge, success and relationships to complement what we are currently doing with our strategic and M&A efforts with Roth Capital. At the end of the quarter, we engaged Cleverbridge, a growth engine for global technology companies, Cleverbridge’s robust suite of global payment and e-commerce capabilities empowers Paltalk to optimize international geographic markets while minimizing risk and administrative work.
We believe Cleverbridge can help us increase our acceptance rates and reduce fraud on a global scale. It’s chargeback prevention algorithms have earned at one of the highest trust scores in the payment processing industry. We are pleased to offer such outstanding capabilities to our current and prospective international subscribers, particularly in Europe. Moving on to an update on our trial against Cisco. While it was pushed back again to an expected trial date in May of 2024, we are now number one in line on the judge’s calendar. The court recently denied Cisco’s motion for summary judgment, and we look forward to continuing to defend our intellectual property trial. Now I’d like to pass it to Kara for a financial summary of our third quarter ended September 30, 2023.
Kara Jenny: Thank you, Jason. Total revenue for the three months ended September 30, 2023, increased by 5.5% to $2.8 million compared to $2.6 million for the three months ended September 30, 2022. The increase in revenue was primarily attributed to an increase in sales of virtual goods revenue from Paltalk, increased revenue from Vumber as well as an increase in ManyCam revenue. Loss from operations for the three months ended September 30, 2023, decreased by 63.3% or $0.7 million compared to a loss of $1.1 million for the three months ended September 30, 2022. The decrease in loss from operations was attributed to increased revenue and reduced operating expenses for the three months ended September 30, 2023. The net loss for the three months ended September 30, 2023, decreased 82.7% to $0.2 million compared to a net loss of $1.1 million for the three months ended September 30, 2022.
