Release Date: August 13, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Paltalk Inc (PALT, Financial) entered into an agreement to acquire Newtek Technology Solutions, Inc., which is expected to significantly boost revenue.
- The acquisition of Newtek Technology Solutions, Inc. will allow Paltalk Inc (PALT) to enter the cloud infrastructure and cybersecurity sectors.
- Paltalk Inc (PALT) launched Version 9 of ManyCam, featuring a revamped user interface and templates designed to assist with onboarding.
- The company has a strong cash position with $12.8 million in cash and no long-term debt as of June 30, 2024.
- Paltalk Inc (PALT) is actively exploring strategic opportunities, including potential mergers or acquisitions, to drive future growth.
Negative Points
- Revenue for the second quarter decreased by 24.7% to $2.2 million compared to the same period last year.
- Loss from operations increased by 322.8% to $1.2 million for the second quarter compared to the same period last year.
- Net loss for the second quarter increased by 788% to $0.9 million compared to net income of $0.1 million for the same period last year.
- Adjusted EBITDA loss for the second quarter increased by approximately 6,164% to $0.9 million compared to the same period last year.
- The company experienced a significant decrease in virtual gift revenue, which dropped by 47.7% for the second quarter.
Q & A Highlights
Q: Jason, can you comment on the decline in Paltalk revenue and provide some color as to your insights on this being a short-term blip and not a long-term trend?
A: We believe our second quarter results reflect the decrease in discretionary subscriber spending as a result of an inflationary economic environment. However, we consider these impacts to be short term in nature and do not anticipate such impacts will have a long-term effect on our business. We are optimistic about the launch of Version 9 of ManyCam and its potential to gain traction with new and existing subscribers.
Q: Is the Cisco trial for certain starting August 26? Or could something happen like in the past to further delay it?
A: While there is no assurance that the trial will start on August 26, we believe -- management believes that it will commence on that date. In addition, jury selection for the trial has already been set for August 20 as well.
Q: Can you provide more details on the acquisition of Newtek Technology Solutions and its expected impact on Paltalk?
A: We are very pleased to announce that we entered into an agreement to acquire Newtek Technology Solutions, Inc., a wholly owned subsidiary of NewtekOne, Inc. NTS provides dedicated server hosting, cloud hosting, managed security, and other related services. This acquisition is transformational for Paltalk and is expected to have an immediate and meaningful impact on our revenue, as NTS' revenue in 2023 was approximately three times greater than Paltalk's 2023 revenue. We also expect enhanced opportunities for future growth and optimization.
Q: What are the main initiatives Paltalk is focusing on to return to growth?
A: Our team is working on several initiatives to return to growth, including exploring strategic opportunities such as potential mergers or acquisitions, leveraging the integration of the ManyCam product into our Paltalk product through upselling initiatives, improving user experience with ManyCam software, optimizing marketing spend, enhancing our live video chat applications, and developing our consumer application platform strategy by seeking potential partnerships with large third-party communities.
Q: Can you elaborate on the financial performance for the second quarter and the first half of 2024?
A: Revenue for the three months ended June 30, 2024, decreased by 24.7% to $2.2 million compared to $2.9 million for the same period in 2023. Loss from operations increased by 322.8% to $1.2 million, and net loss increased by 788% to $0.9 million. For the six months ended June 30, 2024, revenue decreased by 12.6% to $4.8 million, loss from operations increased by 63.2% to $1.9 million, and net loss increased by 136.7% to $1.4 million. Cash and cash equivalents totaled $12.8 million at June 30, 2024.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
