via NewMediaWire --
Paltalk, Inc. (“Paltalk,” the
“Company,” “we,” “our” or “us”) (Nasdaq: PALT), a leading
communications software innovator that powers multimedia social
applications, today announced financial and operational results for
the first quarter ended March 31, 2022.
Key Financial Highlights for First Quarter
Ended March 31, 2022 Compared to Prior Year Period
- Revenue decreased 13% to $2.9 million, due to the decrease in
subscription revenue and technology service revenue in the first
quarter of 2022
- Subscription revenue decreased 9% to $2.8 million
- Advertising revenue increased 5% to $0.1 million
- Net loss of $0.7 million compared to net income of $0.9
million; the first quarter of 2021 includes a one-time charge of
$0.5 million related to the forgiveness of the proceeds from the
Small Business Administration Paycheck Protection Program loan (the
“PPP loan”) the Company received in 2020
- Adjusted EBITDA of $(0.5) million compared to Adjusted EBITDA
of $0.5 million; the decrease in Adjusted EBITDA was primarily due
to decreased revenue, increased marketing expenses and increased
product development expenses
- Cash balance at March 31, 2022 of $20.4 million
Business Highlights for the First Quarter
Ended March 31, 2022
- Selected yellowHEAD, an AI-powered performance marketing
company, to lead the Company’s increased marketing efforts for its
Camfrog application;
- Partnered with NoGood, a growth marketing firm, to accelerate
user acquisition for the Company’s Paltalk application;
- Partnered with Hive Automated Content Moderation Solutions to
roll out new content moderation software for increased user
experience;
- The Board of Directors of the Company approved a stock
repurchase plan for up to $1.75 million of the Company’s common
stock, which was effective March 29, 2022 and expires on the
one-year anniversary of such date; and
- Subsequent to quarter end, the Company launched a
mobile backgammon game with interactive real-time voice and
video.
Management Commentary
Jason Katz, Chairman and CEO of Paltalk,
commented, “While we are disappointed with the decline in
subscription revenue, we attribute this decrease primarily to the
easing of COVID-19 restrictions in certain of our target markets.
We believe we have started to lay the groundwork for growth in
subscription and advertising revenue. As previously
disclosed, we recently began to execute our plan and increase
marketing spend and invest in product development. For example, in
addition to our recent marketing initiatives, we launched a mobile
backgammon game, which is interactive with real-time voice and
video. Our cash balance of more than $20 million affords us the
opportunity to make these investments, but we will proceed
conservatively. Our measured approach is reflected in our first
quarter’s increased marketing expenses of $0.2 million and
increased product development expenses of $0.2 million.”
Katz, continued, “We are optimistic that
our new marketing tools and partnerships, with a focus on
increasing visibility, user engagement, and subscribers, will
enable us to return to growth. In addition, our team continues to
identify and review potential strategic acquisitions to bolster our
growth even further. We look forward to updating the
market and our stockholders with our progress on both internal
growth initiatives and potential strategic accretive
acquisitions.” Financial Results for Three Months
Ended March 31, 2022
- Revenue for the three months ended March 31, 2022
decreased by 13% to $2.9 million, compared to $3.4 million for the
three months ended March 31, 2021. This decline was primarily
attributable to the decrease in technology service revenue as a
result of the termination of our partnership with Open Props, Inc.
(formerly “YouNow”) as well as a decrease in subscription revenue
of 9.3% or $0.3 million, which was primarily attributable to the
easing of COVID-19 restrictions in certain of our target markets.
Advertising revenue increased 4.6% to $0.1 million.
- Loss from operations for the three months ended March 31,
2022 totaled $0.7 million, a decrease of $1.1 million compared to
operating income of $0.4 million for the three months ended March
31, 2021. The decrease is primarily due to a decrease in revenue of
$0.4 million coupled with increased marketing expenses of $0.2
million, or 60%, in connection with our investment in marketing,
increased product development expenses of $0.2 million, or 18%, in
connection with implementation of newly purchased software, as well
as increased general and administrative expenses of $0.3 million,
or 37%, in connection with non-cash stock compensation, and
increased professional fees.
- Net loss for the three months ended March 31, 2022 totaled $0.7
million, an increase of $1.6 million compared to net income of $0.9
million for the three months ended March 31, 2021. Included in
other income for the three months ended March 31, 2021 was a
one-time charge of $0.5 million related to the forgiveness of the
proceeds from the PPP loan the Company received in 2020. The
resulting net loss per share of common stock loss for the three
months ended March 31, 2022, was ($0.08), as compared to a net
income per share of common stock of $0.13 for the three months
ended March 31, 2021.
- Adjusted EBITDA for the three months ended March 31, 2022
decreased by approximately $1.0 million to $(0.5) million, compared
to Adjusted EBITDA of $0.5 million for the three months ended March
31, 2021.
- Cash and cash equivalents totaled $20.4 million at March
31, 2022, a decrease of $1.2 million compared to $21.6 million at
December 31, 2021.
- Currently, the Company has no long-term debt on its balance
sheet.
Key Financial and Operating Metrics from
Operations (unaudited):(in thousands, except for
percentages)
|
|
|
|
|
Change |
|
Q1 2022 |
|
Q1 2021 |
|
$ |
|
% |
Subscription
revenue |
$2,846 |
|
$3,139 |
|
($293) |
|
-9% |
Advertising
revenue |
$80 |
|
$77 |
|
$3 |
|
4% |
Technology service
revenue |
$0 |
|
$156 |
|
($156) |
|
-100% |
Total revenues |
$2,926 |
|
$3,372 |
|
($446) |
|
-13% |
Income from operations |
($713) |
|
$409 |
|
($1,122) |
|
-274% |
Net (loss) income |
($739) |
|
$917 |
|
($1,656) |
|
-181% |
Net cash provided by operating
activities |
($1,233) |
|
$96 |
|
($1,329) |
|
-1,384% |
Adjusted EBITDA (a non-GAAP measure) |
($484) |
|
$535 |
|
($1,019) |
|
-190% |
The details for the conference call can be found
below.
First Quarter 2022 Conference Call
Date: Tuesday, May 10,
2022Time: 4:30 PM ETDial-In Phone
Numbers:
Toll Free: 877-545-0523International:
973-528-0016 Participant Access Code: 275986
Link: https://www.webcaster4.com/Webcast/Page/2856/45492
Replay:
Toll Free: 877-481-4010International:
919-882-2331Replay Passcode: 45492
ABOUT PALTALK, INC. (Nasdaq:
PALT)Paltalk, Inc. is a communications software innovator that
powers multimedia social applications. Our product portfolio
includes Paltalk and Camfrog, which together host one of the
world’s largest collections of video-based communities. Our other
products include Tinychat and Vumber. The Company has an over
20-year history of technology innovation and holds 14 patents. For
more information, please visit: http://www.paltalk.com.
To be added to our news distribution list,
please visit: http://www.paltalk.com/investor-alerts/.
FORWARD-LOOKING STATEMENTS:This press
release contains "forward-looking statements." Such statements may
be preceded by the words "intends," "may," "will," "plans,"
"expects," "anticipates," "projects," "predicts," "estimates,"
"aims," "believes," "hopes," "potential," or similar words.
Forward-looking statements are not guarantees of future
performance, are based on certain assumptions and are subject to
various known and unknown risks and uncertainties, many of which
are beyond the Company's control, and cannot be predicted or
quantified and consequently, actual results may differ materially
from those expressed or implied by such forward-looking statements.
Such risks and uncertainties include, without limitation, the
amount and timing of stock repurchases, if any, under the Company’s
stock repurchase plan and our ability to enhance stockholder value
through such plan; the Company’s ability to retain the listing of
its common stock on The Nasdaq Capital Market; the impact of the
COVID-19 pandemic on our results of operations and our business;
our ability to effectively market and generate revenue from our
applications; our ability to release new applications or improve
upon or add features to existing applications on schedule or at
all; risks and uncertainties related to our increasing focus on the
use of new and novel technologies to enhance our applications, and
our ability to timely complete development of applications using
new technologies; our ability to effectively secure new software
development and licensing customers; our ability to protect our
intellectual property rights; the use of the internet
and privacy and protection of user data; risks related to our
holdings of digital tokens, including risks related to the
volatility of the trading price of digital tokens and our ability
to convert digital tokens into fiat currency; and our ability to
manage our partnerships and strategic alliances. More detailed
information about the Company and the risk factors that may affect
the realization of forward-looking statements is set forth in the
Company's filings with the Securities and Exchange Commission
("SEC"), including the Company's most recent Annual Report on Form
10-K and Quarterly Reports on Form 10-Q. Investors and security
holders are urged to read these documents free of charge on the
SEC's website at www.sec.gov.
All forward-looking statements speak only as of
the date on which they are made. The Company undertakes no
obligation to update any forward-looking statement or statements to
reflect events or circumstances after the date on which such
statement was made, except to the extent required by applicable
securities laws.
Investor Contacts:IR@paltalk.com
Brian
LoperClearThinkbloper@clearthink.capital347-413-4234
PALTALK,INC.RECONCILIATION OF GAAP TO
NON-GAAP RESULTS(Unaudited)
|
|
Three Months Ended |
|
March 31, |
|
|
2022 |
|
|
2021 |
|
Reconciliation
of Net (loss) income to Adjusted EBITDA: |
|
|
|
|
|
|
Net (loss)
income |
|
$ |
(738,945 |
) |
|
$ |
916,729 |
|
Interest expense (income), net |
|
|
1,862 |
|
|
|
(2,467 |
) |
Other expense, net |
|
|
7,886 |
|
|
|
- |
|
Gain on the extinguishment of term debt |
|
|
- |
|
|
|
(506,500 |
) |
Provision for income taxes |
|
|
16,031 |
|
|
|
1,100 |
|
Depreciation and amortization expense |
|
|
76,264 |
|
|
|
94,947 |
|
Stock-based compensation expense |
|
|
152,471 |
|
|
|
31,368 |
|
Adjusted
EBITDA |
|
$ |
(484,431 |
) |
|
$ |
535,177 |
|
|
|
|
|
|
|
|
|
|
Non-GAAP Financial Measures and Key
MetricsThe Company has provided in this release certain
non-GAAP financial measures, including Adjusted EBITDA, and other
key metrics, including subscription bookings, to supplement the
consolidated financial statements, which are prepared in accordance
with generally accepted accounting principles in the United States
("GAAP"). The Company Adjusted EBITDA is defined as net income
(loss) adjusted to exclude stock-based compensation expense,
depreciation and amortization expense, interest income (expense),
net, gain on extinguishment of term debt, other income, net and
provision for income taxes. The Company calculates subscription
bookings as subscription revenue recognized during the period plus
the change in deferred subscription revenue recognized during the
period.
Management uses these financial metrics
internally in analyzing the Company’s financial results to assess
operational performance and to determine the Company’s future
capital requirements. The presentation of this financial
information is not intended to be considered in isolation or as a
substitute for the financial information prepared in accordance
with GAAP. The Company believes that both management and investors
benefit from referring to these financial metrics in assessing our
performance and when planning, forecasting and analyzing future
periods. The Company believes these financial metrics are useful to
investors and others to understand and evaluate the Company’s
operating results and it allows for a more meaningful comparison
between the Company’s performance and that of competitors. Our use
of Adjusted EBITDA has limitations as an analytical tool, and you
should not consider this performance measure in isolation from or
as a substitute for analysis of our results as reported under GAAP.
Some of these limitations are that Adjusted EBITDA does not
reflect: cash capital expenditures for assets underlying
depreciation and amortization expense that may need to be replaced
or for new capital expenditures; interest income (expense), net;
other income, net; the potentially dilutive impact of stock-based
compensation; gain on the extinguishment of term debt; and the
provision for income taxes. Other companies, including companies in
our industry, may calculate Adjusted EBITDA differently, which
reduces its usefulness as a comparative measure.
Because of these limitations, you should
consider these financial metrics along with other financial
performance measures, including total revenues, subscription
revenue, deferred revenue, net income (loss), cash and cash
equivalents, restricted cash, net cash used in operating activities
and our financial results presented in accordance with
GAAP.
PALTALK, INC.CONDENSED CONSOLIDATED
BALANCE SHEETS
|
|
March 31, |
|
|
December 31, |
|
|
|
2022 |
|
|
2021 |
|
Assets |
|
(unaudited) |
|
|
|
|
Current
assets: |
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
20,403,906 |
|
|
$ |
21,636,860 |
|
Accounts receivable, net of allowances of $3,648 as of March 31,
2022 and December 31, 2021 |
|
|
109,088 |
|
|
|
153,448 |
|
Prepaid expense and other current assets |
|
|
277,100 |
|
|
|
239,258 |
|
Total current assets |
|
|
20,790,094 |
|
|
|
22,029,566 |
|
Operating lease right-of-use asset |
|
|
219,586 |
|
|
|
239,491 |
|
Property and equipment, net |
|
|
39,501 |
|
|
|
69,599 |
|
Goodwill |
|
|
6,326,250 |
|
|
|
6,326,250 |
|
Intangible assets, net |
|
|
150,377 |
|
|
|
196,543 |
|
Digital tokens |
|
|
7,262 |
|
|
|
7,262 |
|
Other assets |
|
|
13,937 |
|
|
|
13,937 |
|
Total assets |
|
$ |
27,547,007 |
|
|
$ |
28,882,648 |
|
|
|
|
|
|
|
|
|
|
Liabilities and stockholders’ equity |
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
Accounts payable |
|
$ |
923,737 |
|
|
$ |
1,332,632 |
|
Accrued expenses and other current liabilities |
|
|
93,714 |
|
|
|
344,441 |
|
Operating lease liabilities, current portion |
|
|
80,771 |
|
|
|
80,309 |
|
Deferred subscription revenue |
|
|
1,845,853 |
|
|
|
1,915,493 |
|
Total current liabilities |
|
|
2,944,075 |
|
|
|
3,672,875 |
|
Operating lease liabilities, non-current portion |
|
|
138,815 |
|
|
|
159,182 |
|
Total liabilities |
|
|
3,082,890 |
|
|
|
3,832,057 |
|
Commitments and contingencies (Note 12) |
|
|
|
|
|
|
|
|
Stockholders’ equity: |
|
|
|
|
|
|
|
|
Common stock, $0.001 par value, 25,000,000 shares authorized,
9,864,120 shares issued and 9,832,157 shares outstanding as of
March 31, 2022 and December 31, 2021 |
|
|
9,864 |
|
|
|
9,864 |
|
Treasury stock, 31,963 and 9,950 shares as of March 31, 2022 and
December 31, 2021, respectively |
|
|
(194,200 |
) |
|
|
(194,200 |
) |
Additional paid-in capital |
|
|
35,792,381 |
|
|
|
35,639,910 |
|
Accumulated deficit |
|
|
(11,143,928 |
) |
|
|
(10,404,983 |
) |
Total stockholders’ equity |
|
|
24,464,117 |
|
|
|
25,050,591 |
|
Total liabilities and stockholders’ equity |
|
$ |
27,547,007 |
|
|
$ |
28,882,648 |
|
|
|
|
|
|
|
|
|
|
PALTALK, INC.CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS(Unaudited)
|
|
Three Months Ended |
|
|
|
March 31, |
|
|
|
2022 |
|
|
2021 |
|
Revenues: |
|
|
|
|
|
|
Subscription revenue |
|
$ |
2,846,339 |
|
|
$ |
3,139,365 |
|
Advertising revenue |
|
|
80,362 |
|
|
|
76,821 |
|
Technology service revenue |
|
|
- |
|
|
|
155,816 |
|
Total revenues |
|
|
2,926,701 |
|
|
|
3,372,002 |
|
Costs and expenses: |
|
|
|
|
|
|
|
|
Cost of revenue |
|
|
652,096 |
|
|
|
646,715 |
|
Sales and marketing expense |
|
|
411,482 |
|
|
|
257,451 |
|
Product development expense |
|
|
1,530,141 |
|
|
|
1,297,264 |
|
General and administrative expense |
|
|
1,046,148 |
|
|
|
761,710 |
|
Total costs and expenses |
|
|
3,639,867 |
|
|
|
2,963,140 |
|
(Loss) income from operations |
|
|
(713,166 |
) |
|
|
408,862 |
|
Interest (expense) income, net |
|
|
(1,862 |
) |
|
|
2,467 |
|
Gain on extinguishment of term debt |
|
|
- |
|
|
|
506,500 |
|
Other expense |
|
|
(7,886 |
) |
|
|
- |
|
(Loss) income from operations before provision for income
taxes |
|
|
(722,914 |
) |
|
|
917,829 |
|
Provision for income taxes |
|
|
(16,031 |
) |
|
|
(1,100 |
) |
Net (loss) income |
|
$ |
(738,945 |
) |
|
$ |
916,729 |
|
|
|
|
|
|
|
|
|
|
Net (loss) income per share of common stock: |
|
|
|
|
|
|
|
|
Basic |
|
$ |
(0.08 |
) |
|
$ |
0.13 |
|
Diluted |
|
$ |
(0.08 |
) |
|
$ |
0.13 |
|
Weighted average number of shares of common stock used in
calculating net (loss) income per share of common stock: |
|
|
|
|
|
|
|
|
Basic |
|
|
9,832,157 |
|
|
|
6,906,454 |
|
Diluted |
|
|
9,832,157 |
|
|
|
6,906,454 |
|
PALTALK, INC.CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS(Unaudited)
|
|
Three Months Ended |
|
March 31, |
|
|
2022 |
|
|
2021 |
|
Cash flows
from operating activities: |
|
|
|
|
|
|
Net (loss) income |
|
$ |
(738,945 |
) |
|
$ |
916,729 |
|
Adjustments to
reconcile net (loss) income from operations to net cash (used in)
provided by operating activities: |
|
|
|
|
|
|
|
|
Depreciation of property and equipment |
|
|
30,098 |
|
|
|
48,780 |
|
Amortization of intangible assets |
|
|
46,166 |
|
|
|
46,167 |
|
Amortization of operating lease right-of-use assets |
|
|
19,905 |
|
|
|
16,134 |
|
Gain on extinguishment of term debt |
|
|
- |
|
|
|
(506,500 |
) |
Stock-based compensation |
|
|
152,471 |
|
|
|
31,368 |
|
Bad debt expense |
|
|
- |
|
|
|
(3,235 |
) |
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
|
Digital tokens |
|
|
- |
|
|
|
(218,285 |
) |
Accounts receivable |
|
|
44,360 |
|
|
|
24,937 |
|
Operating lease liability |
|
|
(19,905 |
) |
|
|
(16,133 |
) |
Digital tokens payable |
|
|
- |
|
|
|
62,469 |
|
Prepaid expense and other current assets |
|
|
(37,842 |
) |
|
|
47,524 |
|
Accounts payable, accrued expenses and other current
liabilities |
|
|
(659,622 |
) |
|
|
(318,973 |
) |
Deferred subscription revenue |
|
|
(69,640 |
) |
|
|
(34,927 |
) |
Net cash (used
in) provided by operating activities |
|
|
(1,232,954 |
) |
|
|
96,055 |
|
Cash flows from investing activities: |
|
|
|
|
|
|
|
|
Net cash
provided by investing activities |
|
|
- |
|
|
|
- |
|
Cash flows from financing activities: |
|
|
|
|
|
|
|
|
Net cash
provided by financing activities |
|
|
- |
|
|
|
- |
|
Net (decrease) increase in cash and cash equivalents |
|
|
(1,232,954 |
) |
|
|
96,055 |
|
Balance of
cash and cash equivalents at beginning of period |
|
|
21,636,860 |
|
|
|
5,585,420 |
|
Balance of
cash and cash equivalents at end of period |
|
$ |
20,403,906 |
|
|
$ |
5,681,475 |
|
Supplemental
disclosure of cash flow information: |
|
|
|
|
|
|
|
|
Non-cash
investing and financing activities: |
Write-off of
property and equipment |
|
$ |
1,475,649 |
|
|
|
- |
|
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