via NewMediaWire –
Paltalk, Inc.
(“Paltalk,”
the “Company,” “we,”
“our” or “us”)
(Nasdaq:
PALT), a communications software innovator that
powers multimedia social applications, today announced financial
and operational results for the first quarter ended March 31, 2023.
Key Financial Highlights for
First Quarter
Ended March
31,
2023 Compared to Prior
Year Period
- Revenue decreased 12.4% to $2.6
million
- Subscription revenue decreased
12.0% to $2.5 million
- Advertising revenue decreased 27.4%
to $0.1 million
- Net loss remained relatively
unchanged at $0.7 million
- Adjusted EBITDA loss increased
33.8% to $0.6 million
- Deferred revenue increased 17% to
$2.2 million
- Repurchased 5,192 shares of common
stock during the three months ended March 31, 2023 pursuant to our
stock repurchase plan at an average price per share of $1.39; the
stock repurchase plan expired on March 29, 2023
- The Company had $13.9 million in
cash and no long-term debt on its balance sheet as of March 31,
2023
Near Term Business
Objectives
- Promoting expansion of the ManyCam
product into business-to-business markets as well as working to
integrate ManyCam as an upsell into our Paltalk product
- Continuing to implement several
enhancements to our live video chat applications as well as the
integration of card and board games and other features focused on
retention and monetization, which collectively are intended to
increase user engagement and revenue opportunities
- 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 develop our consumer
application platform strategy by seeking potential partnerships
with large third-party communities to whom we could promote a
co-branded version of our video chat products and potentially share
in the incremental revenues generated by these partner
communities
- Continuing to defend our
intellectual property
Patent Litigation
On July 23, 2021, a wholly owned subsidiary of
the Company, Paltalk Holdings, Inc., filed a patent infringement
lawsuit against WebEx Communications, Inc., Cisco WebEx LLC, and
Cisco Systems, Inc. (collectively, “Cisco”), in the U.S. District
Court for the Western District of Texas. The Company alleges that
Cisco’s products have infringed U.S. Patent No. 6,683,858, and that
the Company is entitled to damages.
A Markman hearing took place on February 24,
2022. On September 7, 2022, the United States Patent Office issued
a reexamination of U.S. Patent No. 6,683,858, and on
January 19, 2023, the Examiner issued an Ex
Parte Reexamination Certificate, ending the
reexamination and confirming the patentability of claims 1-10 of
U.S. Patent No. 6,683,858. A trial is scheduled for early
third quarter of 2023. Management
Commentary
Jason Katz, Chairman and CEO of Paltalk,
commented, “Despite a decline in revenue, we reduced our operating
expenses, which enabled us to reduce the cash used in operations by
$0.4 million for the three months ended March 31, 2023 compared to
the prior year period. We were able to achieve this as a result of
increased operating efficiencies, generated mainly as a result of
streamlining our offshore development efforts and expect to realize
further decreases in expense as a result of these actions. We
continue to invest in a conservative way, being highly responsible
in cash management, even though we ended the quarter with $13.9
million in cash.”
Katz concluded, “Our objectives for 2023 are
centered on returning to an increase in revenue and building
shareholder value. As we approach the one-year anniversary of
the addition of ManyCam to our product offering, we expect the
one-year annual auto renewals of existing ManyCam subscriptions to
help contribute to growth in subscription revenue. We also
seek to grow new user acquisition and user engagement by enhancing
our live video chat applications and other features. We will
continue to defend our intellectual property and look forward to
providing progress updates once our trial against Cisco begins in
early third quarter of 2023.”
Financial
Results for Three Months
Ended March
31,
2023
- Revenue for the three months ended
March 31, 2023 decreased by 12.4% to $2.6 million, compared to $2.9
million for the three months ended March 31, 2022. This decline was
attributed to the decrease in subscription revenue of 12% and a
decrease in advertising revenue of 27.4%;
- Loss from operations for the three
months ended March 31, 2023 increased by 27.5%, or $0.2 million, to
a loss of $0.9 million, compared to a loss of $0.7 million for the
same period in 2022;
- Net loss for the three months ended
March 31, 2023 remained relatively unchanged at $0.7 million,
compared to the three months ended March 31, 2022;
- Adjusted EBITDA loss for the three
months ended March 31, 2023 increased by 33.8%, or $0.2 million, to
an Adjusted EBITDA loss of $0.6 million, compared to Adjusted
EBITDA loss of $0.5 million for the three months ended March 31,
2022;
- Cash and cash equivalents totaled
$13.9 million at March 31, 2023, a decrease of $0.8 million
compared to $14.7 million at December 31, 2022; and
- The Company had no long-term debt
on its balance sheet at March 31, 2023.
Key Financial and Operating Metrics from
Operations: (in thousands, except for
percentages)
|
Three Months Ended |
|
|
|
|
|
March 31, (unaudited) |
|
Change |
|
2023 |
|
2022 |
|
$ |
|
% |
Subscription revenue |
$2,506 |
|
$2,846 |
|
($340) |
|
-12.0% |
Advertising revenue |
$58 |
|
$80 |
|
($22) |
|
-27.4% |
Technology service revenue |
$0 |
|
$0 |
|
$0 |
|
0.0% |
Total
revenues |
$2,564 |
|
$2,926 |
|
($362) |
|
-12.4% |
Loss from
operations |
($909) |
|
($713) |
|
($196) |
|
-27.5% |
Net
loss |
($738) |
|
($739) |
|
($1) |
|
-0.01% |
Net cash used
in operating activities |
($803) |
|
($1,233) |
|
($430) |
|
-34.9% |
Adjusted
EBITDA (a non-GAAP measure) |
($648) |
|
($484) |
|
($164) |
|
-33.9% |
Paltalk, Inc. is a communications software
innovator that powers multimedia social applications. Our product
portfolio includes Paltalk and Camfrog, which together host a large
collection of video-based communities. Our other products include
ManyCam, Tinychat and Vumber. The Company has an over 20-year
history of technology innovation and holds 10 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, any economic recession and the overall
inflationary environment on our results of operations and our
business; our ability to effectively market and generate revenue
from our applications; our ability to generate and maintain active
users and to effectively monetize our user base; our ability to
improve, market and promote the ManyCam software; the Company’s
ability to retain the listing of its common stock on The Nasdaq
Capital Market; 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 compete with existing
competitors and new market entrants; 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; our
ability to consummate favorable acquisitions and effectively
integrate any companies or properties that we acquire; 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.comClearThinknyc@clearthink.capital917-658-7878
PALTALK,
INC.RECONCILIATION
OF GAAP TO
NON-GAAP RESULTS
|
|
Three Months Ended |
|
|
|
March 31, |
|
|
|
(Unaudited) |
|
|
|
|
2023 |
|
|
|
2022 |
|
|
Reconciliation of
Net Loss to Adjusted EBITDA: |
|
Net loss |
|
$ |
(738,298 |
) |
|
$ |
(738,945 |
) |
|
Stock-based compensation expense |
|
|
55,141 |
|
|
|
152,471 |
|
|
Depreciation and amortization expense |
|
205,584 |
|
|
|
76,264 |
|
|
Other expense, net |
|
|
-- |
|
|
|
7,886 |
|
|
Interest (income) expense, net |
|
|
(121,167 |
) |
|
|
1,862 |
|
|
Income tax (benefit) expense |
|
|
(49,554 |
) |
|
|
16,031 |
|
|
Reported Adjusted
EBITDA |
|
$ |
(648,294 |
) |
|
$ |
(484,431 |
) |
|
Non-GAAP Financial Measures and Key
Metrics
The Company has provided in this release
Adjusted EBITDA, a non-GAAP financial measure, to supplement the
consolidated financial statements, which are prepared in accordance
with generally accepted accounting principles in the United States
("GAAP"). Adjusted EBITDA is defined as net loss adjusted to
exclude interest (income) expense, net, income tax (benefit)
expense, depreciation and amortization expense, other expense, net
and stock-based compensation expense.
Management uses Adjusted EBITDA 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 Adjusted EBITDA in assessing its performance and when planning,
forecasting and analyzing future periods. The Company believes
Adjusted EBITDA is 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, among other things: interest
(income) expense, net, provision for income taxes, depreciation and
amortization expense, other expense, net, and stock-based
compensation. 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 Adjusted EBITDA 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, |
|
|
|
2023 |
|
|
2022 |
|
Assets |
|
(unaudited) |
|
|
|
|
Current assets: |
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
13,929,729 |
|
|
$ |
14,739,933 |
|
Accounts receivable, net of allowances of $3,648 as of March 31,
2023 and December 31, 2022 |
|
|
107,115 |
|
|
|
122,297 |
|
Prepaid expense and other current assets |
|
|
422,667 |
|
|
|
543,199 |
|
Total current assets |
|
|
14,459,511 |
|
|
|
15,405,429 |
|
Operating lease right-of-use asset |
|
|
138,814 |
|
|
|
159,181 |
|
Goodwill |
|
|
6,326,250 |
|
|
|
6,326,250 |
|
Intangible assets, net |
|
|
3,321,227 |
|
|
|
3,526,811 |
|
Other assets |
|
|
13,937 |
|
|
|
13,937 |
|
Total assets |
|
$ |
24,259,739 |
|
|
$ |
25,431,608 |
|
|
|
|
|
|
|
|
|
|
Liabilities and stockholders’ equity |
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
Accounts payable |
|
$ |
802,399 |
|
|
$ |
1,013,637 |
|
Accrued expenses and other current liabilities |
|
|
124,864 |
|
|
|
225,193 |
|
Operating lease liabilities, current portion |
|
|
82,769 |
|
|
|
82,176 |
|
Contingent Consideration |
|
|
85,000 |
|
|
|
85,000 |
|
Deferred subscription revenue |
|
|
2,162,841 |
|
|
|
2,257,452 |
|
Total current liabilities |
|
|
3,257,873 |
|
|
|
3,663,458 |
|
Operating lease liabilities, non-current portion |
|
|
56,045 |
|
|
|
77,005 |
|
Deferred tax liability |
|
|
661,949 |
|
|
|
716,903 |
|
Total liabilities |
|
|
3,975,867 |
|
|
|
4,457,366 |
|
Commitments and
contingencies |
|
|
|
|
|
|
|
|
Stockholders’ equity: |
|
|
|
|
|
|
|
|
Common stock, $0.001 par value, 25,000,000 shares authorized,
9,864,120 shares issued and 9,222,157 and 9,227,349 shares
outstanding as of March 31, 2023 and December 31, 2022,
respectively |
|
|
9,864 |
|
|
|
9,864 |
|
Treasury stock, 641,963 and 636,771 shares outstanding as of March
31, 2023 and December 31, 2022, respectively |
|
|
(1,199,337 |
) |
|
|
(1,192,124 |
) |
Additional paid-in capital |
|
|
36,028,876 |
|
|
|
35,973,735 |
|
Accumulated deficit |
|
|
(14,555,531 |
) |
|
|
(13,817,233 |
) |
Total stockholders’ equity |
|
|
20,283,872 |
|
|
|
20,974,242 |
|
Total liabilities and stockholders’ equity |
|
$ |
24,259,739 |
|
|
$ |
25,431,608 |
|
PALTALK,
INC.CONDENSED CONSOLIDATED
STATEMENT OF
OPERATIONS(Unaudited)
|
|
Three Months Ended |
|
|
|
March 31, |
|
|
|
2023 |
|
|
2022 |
|
Revenues: |
|
|
|
|
|
|
Subscription revenue |
|
$ |
2,505,670 |
|
|
$ |
2,846,339 |
|
Advertising revenue |
|
|
58,347 |
|
|
|
80,362 |
|
Total revenues |
|
|
2,564,017 |
|
|
|
2,926,701 |
|
Costs and expenses: |
|
|
|
|
|
|
|
|
Cost of revenue |
|
|
802,475 |
|
|
|
652,096 |
|
Sales and marketing expense |
|
|
254,868 |
|
|
|
411,482 |
|
Product development expense |
|
|
1,248,582 |
|
|
|
1,530,141 |
|
General and administrative expense |
|
|
1,167,111 |
|
|
|
1,046,148 |
|
Total costs and expenses |
|
|
3,473,036 |
|
|
|
3,639,867 |
|
Loss from operations |
|
|
(909,019 |
) |
|
|
(713,166 |
) |
Interest income (expense), net |
|
|
121,167 |
|
|
|
(1,862 |
) |
Other expense |
|
|
- |
|
|
|
(7,886 |
) |
Loss from operations before provision for income taxes |
|
|
(787,852 |
) |
|
|
(722,914 |
) |
Income tax benefit (expense) |
|
|
49,554 |
|
|
|
(16,031 |
) |
Net loss |
|
$ |
(738,298 |
) |
|
$ |
(738,945 |
) |
|
|
|
|
|
|
|
|
|
Net loss per share of common stock: |
|
|
|
|
|
|
|
|
Basic |
|
$ |
(0.08 |
) |
|
$ |
(0.08 |
) |
Diluted |
|
$ |
(0.08 |
) |
|
$ |
(0.08 |
) |
Weighted average number of shares of common stock used in
calculating net loss per share of common stock: |
|
|
|
|
|
|
|
|
Basic |
|
|
9,222,356 |
|
|
|
9,832,157 |
|
Diluted |
|
|
9,222,356 |
|
|
|
9,832,157 |
|
PALTALK, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS(Unaudited)
|
|
Three Months
EndedMarch 31, |
|
|
|
2023 |
|
|
2022 |
|
Cash flows from operating activities: |
|
|
|
|
|
|
Net loss |
|
$ |
(738,298 |
) |
|
$ |
(738,945 |
) |
Adjustments to reconcile net loss from operations to net cash used
in operating activities: |
|
|
|
|
|
|
|
|
Depreciation of property and equipment |
|
|
- |
|
|
|
30,098 |
|
Amortization of intangible assets |
|
|
205,584 |
|
|
|
46,166 |
|
Amortization of operating lease right-of-use assets |
|
|
20,367 |
|
|
|
19,905 |
|
Stock-based compensation |
|
|
55,141 |
|
|
|
152,471 |
|
Income tax benefit |
|
|
(49,554 |
) |
|
|
- |
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
|
Accounts receivable |
|
|
15,182 |
|
|
|
44,360 |
|
Operating lease liability |
|
|
(20,367 |
) |
|
|
(19,905 |
) |
Prepaid expense and other current assets |
|
|
120,532 |
|
|
|
(37,842 |
) |
Accounts payable, accrued expenses and other current
liabilities |
|
|
(316,967 |
) |
|
|
(659,622 |
) |
Deferred subscription revenue |
|
|
(94,611 |
) |
|
|
(69,640 |
) |
Net cash used in operating activities |
|
|
(802,991 |
) |
|
|
(1,232,954 |
) |
|
|
|
|
|
|
|
|
|
Cash flows from financing activities: |
|
|
|
|
|
|
|
|
Purchase of treasury stock |
|
|
(7,213 |
) |
|
|
- |
|
Net cash used in financing activities |
|
|
(7,213 |
) |
|
|
- |
|
Net decrease in cash and cash equivalents |
|
|
(810,204 |
) |
|
|
(1,232,954 |
) |
Balance of cash and cash equivalents at beginning of period |
|
|
14,739,933 |
|
|
|
21,636,860 |
|
Balance of cash and cash equivalents at end of period |
|
$ |
13,929,729 |
|
|
$ |
20,403,906 |
|
Supplemental disclosure of cash flow information: Non-cash
investing and financing activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Taxes |
|
$ |
- |
|
|
$ |
- |
|
|
|
|
|
|
|
|
|
|
Write-off of property and equipment |
|
$ |
- |
|
|
|
1,475,649 |
|
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