Cash Balance of $13.0 Million at March 31, 2024
JERICHO, NY - 
(NewMediaWire) - May 09, 2024 - 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, 2024.
Key Financial Highlights for First Quarter Ended March 31, 2024 Compared to Prior Year Period
- Total Revenue increased 1.3% to $2.6 million
- Subscription revenue decreased 0.9% to $2.5 million
- Advertising revenue increased 96.7% to $0.1 million
- Net loss was $0.5 million compared to a net loss of $0.7 million, an improvement of 33%
- Adjusted EBITDA1 loss was $0.5 million compared to Adjusted EBITDA1 loss of $0.6 million, an improvement of 23%
- Net cash used in operating activities for the quarter decreased 35% to $0.5 million
- The Company had $13.0 million in cash and no long-term debt on its balance sheet as of March 31, 2024
Operational Highlights and Business Objectives
- Continuing our efforts to leverage the integration of the ManyCam product into our Paltalk product through upselling initiatives
- Continuing our efforts to improve user experience with ManyCam software and optimize features for both consumer and enterprise applications
- Further optimizing marketing spend to effectively realize a positive return on our investment
- 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 who 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
1 Adjusted EBITDA is a non-GAAP financial measure. Please see the discussion below under the heading “Non-GAAP Financial Measures and Key Metrics” and the reconciliations at the end of this release for additional information concerning this and other non-GAAP financial measures.
Management Commentary
Jason Katz, Chairman and CEO of Paltalk, commented, “While we continue to look for additional revenue opportunities, we are encouraged by the stability in the revenue as we continue to enhance ManyCam and expand its availability into our Paltalk products and enterprise applications. Although not representative of a large share of our revenue, we are also excited about the rapid growth in our advertising revenue, which we attribute to new advertising partners and the roll out of our new advertising units. Our technology and business teams are working on additional features for our live video chat products and partnerships with large third-party communities with the goal of increasing our number of customers, customer retention and monetization, and potentially revenue. We believe we remain in a good position for both organic and acquisitive growth, as our expense infrastructure has been optimized to support additional revenue, and our cash position of $13.0 million at quarter end provides us flexibility for growth. Our trial against Cisco is now set to begin in August 2024, and we look forward to continuing to defend our intellectual property.”
Patent Litigation Update – Trial Expected to Begin in August 2024
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 “Court”). We allege that certain of Cisco’s products have infringed U.S. Patent No. 6,683,858, and that we are 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. On June 29, 2023, the Court held a pretrial conference with the parties and denied Cisco’s motion for summary judgement. The trial is expected to begin on August 26, 2024.
Financial Results for Three Months Ended March 31, 2024
- Revenue for the three months ended March 31, 2024 increased by 1.3% to $2.59 million, compared to $2.56 million for the three months ended March 31, 2023. This increase was attributed to the increase in advertising revenue of 97%;
- Loss from operations for the three months ended March 31, 2024 decreased by 16%, or $0.1 million, to a loss of $0.8 million, compared to a loss of $0.9 million for the three months ended March 31, 2023. The improvement in loss from operations was attributed to an increase in revenue and decreases in sales and marketing, product development, and general and administrative expenses for the three months ended March 31, 2024;
- Net loss for the three months ended March 31, 2024 decreased by 33%, or $0.2 million, to a loss of $0.5 million, compared to a net loss of $0.7 million for the three months ended March 31, 2023;
- Adjusted EBITDA1 loss for the three months ended March 31, 2024 decreased by approximately 23%, or $0.1 million, to an Adjusted EBITDA1 loss of $0.5 million, compared to Adjusted EBITDA1 loss of $0.6 million for the three months ended March 31, 2023;
- Cash and cash equivalents totaled $13.0 million at March 31, 2024, a decrease of $0.5 million compared to $13.6 million at December 31, 2023; and
- The Company had no long-term debt on its balance sheet at March 31, 2024.
Key Financial and Operating Metrics from Operations:
(in thousands, except for percentages)
| Three Months Ended | |||||||
| March 31, (unaudited) | Change | ||||||
| 2024 | 2023 | $ | % | ||||
| Subscription revenue | $2,483 | $2,506 | $(23 | ) | -0.9% | ||
| Advertising revenue | 115 | 58 | 57 | 96.7% | |||
| Total revenues | 2,598 | 2,564 | 34 | 1.3% | |||
| Loss from operations | (762 | ) | (909 | ) | 147 | 16.2% | |
| Net loss | (492 | ) | (738 | ) | 246 | 33.3% | |
| Net cash used in operating activities | (521 | ) | (803 | ) | 282 | 35.1% | |
| Adjusted EBITDA (a non-GAAP measure) | (497 | ) | (648 | ) | 151 | 23.3% | |
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 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 8 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.com
ClearThink
917-658-7878
PALTALK, INC.
RECONCILIATION OF GAAP TO NON-GAAP RESULTS
| Three Months Ended | ||||||||
| March 31, (Unaudited) | ||||||||
| 2024 | 2023 | |||||||
| Reconciliation of Net Loss to Adjusted EBITDA: | ||||||||
| Net loss | $ | (492,307 | ) | $ | (738,298 | ) | ||
| Interest income, net | (151,984 | ) | (121,167 | ) | ||||
| Income tax benefit | (117,900 | ) | (49,554 | ) | ||||
| Depreciation and amortization expense | 205,583 | 205,584 | ||||||
| Stock-based compensation expense | 59,311 | 55,141 | ||||||
| Reported Adjusted EBITDA | $ | (497,297 | ) | $ | (648,294 | ) | ||
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) income adjusted to exclude interest (income) expense, net, other (income) expense, net, income tax (benefit) expense, depreciation and amortization expense, 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: cash capital expenditures for assets underlying depreciation and amortization expense that may need to be replaced or for new capital expenditures; net loss from discontinued operations; interest income, net; other expense, net; income tax expense from continuing operations; our working capital requirements; the potentially dilutive impact of stock-based compensation; 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 Adjusted EBITDA along with other financial performance measures, including total revenues, subscription revenue, deferred revenue, net 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, | |||||||
| 2024 (Unaudited) | 2023 | |||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 13,047,255 | $ | 13,568,049 | ||||
| Accounts receivable, net of allowances of $26,559 as of March 31, 2024 and $23,326 as of December 31, 2023, respectively | 95,435 | 92,704 | ||||||
| Employee retention tax credit receivable, net | 114,212 | 114,212 | ||||||
| Prepaid expense and other current assets | 795,868 | 990,634 | ||||||
| Total current assets | 14,052,770 | 14,765,599 | ||||||
| Operating lease right-of-use asset | 56,164 | 77,005 | ||||||
| Goodwill | 6,326,250 | 6,326,250 | ||||||
| Intangible assets, net | 2,498,894 | 2,704,477 | ||||||
| Other assets | 13,937 | 13,937 | ||||||
| Total assets | $ | 22,948,015 | $ | 23,887,268 | ||||
| Liabilities and stockholders’ equity | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 711,598 | $ | 792,053 | ||||
| Accrued expenses and other current liabilities | 105,188 | 226,120 | ||||||
| Operating lease liabilities, current portion | 56,164 | - | ||||||
| Contingent Consideration | - | 77,005 | ||||||
| Deferred subscription revenue | 1,890,417 | 2,043,362 | ||||||
| Total current liabilities | 2,763,367 | 3,138,540 | ||||||
| Operating lease liabilities, non-current portion | - | - | ||||||
| Deferred tax liability | 482,957 | 614,041 | ||||||
| Total liabilities | 3,246,324 | 3,752,581 | ||||||
| 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 shares outstanding as of March 31, 2024 and December 31, 2023, respectively | 9,864 | 9,864 | ||||||
| Treasury stock, 641,963 shares repurchased as of March 31, 2024 and December 31, 2023, respectively | (1,199,337 | ) | (1,199,337 | ) | ||||
| Additional paid-in capital | 36,268,039 | 36,208,728 | ||||||
| Accumulated deficit | (15,376,875 | ) | (14,884,568 | ) | ||||
| Total stockholders’ equity | 19,701,691 | 20,134,687 | ||||||
| Total liabilities and stockholders’ equity | $ | 22,948,015 | $ | 23,887,268 | ||||
PALTALK, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
| Three Months Ended | ||||||||
| March 31, | ||||||||
| 2024 | 2023 | |||||||
| Revenues: | ||||||||
| Subscription revenue | $ | 2,482,982 | $ | 2,505,670 | ||||
| Advertising revenue | 114,748 | 58,347 | ||||||
| Total revenues | 2,597,730 | 2,564,017 | ||||||
| Costs and expenses: | ||||||||
| Cost of revenue | 819,075 | 802,475 | ||||||
| Sales and marketing expense | 190,594 | 254,868 | ||||||
| Product development expense | 1,211,701 | 1,248,582 | ||||||
| General and administrative expense | 1,138,551 | 1,167,111 | ||||||
| Total costs and expenses | 3,359,921 | 3,473,036 | ||||||
| Loss from operations | (762,191 | ) | (909,019 | ) | ||||
| Interest income, net | 151,984 | 121,167 | ||||||
| Loss from operations before provision for income taxes | (610,207 | ) | (787,852 | ) | ||||
| Income tax benefit | 117,900 | 49,554 | ||||||
| Net loss | $ | (492,307 | ) | $ | (738,298 | ) | ||
| Net loss per share of common stock: | ||||||||
| Basic | $ | (0.05 | ) | $ | (0.08 | ) | ||
| Diluted | $ | (0.05 | ) | $ | (0.08 | ) | ||
| Weighted average number of shares of common stock used in calculating net loss per share of common stock: | ||||||||
| Basic | 9,222,157 | 9,222,356 | ||||||
| Diluted | 9,222,157 | 9,222,356 | ||||||
PALTALK, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
| Three Months Ended | ||||||||
| March 31, | ||||||||
| 2024 | 2023 | |||||||
| Cash flows from operating activities: | ||||||||
| Net loss | $ | (492,307 | ) | $ | (738,298 | ) | ||
| Adjustments to reconcile net loss from operations to net cash used in operating activities: | ||||||||
| Amortization of intangible assets | 205,583 | 205,584 | ||||||
| Amortization of operating lease right-of-use assets | 20,841 | 20,367 | ||||||
| Income tax benefit | (13,184 | ) | - | |||||
| Allowance for credit losses | 3,233 | - | ||||||
| Deferred tax benefit | (117,900 | ) | (49,554 | ) | ||||
| Stock-based compensation | 59,311 | 55,141 | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | (5,964 | ) | 15,182 | |||||
| Operating lease liability | (20,841 | ) | (20,367 | ) | ||||
| Prepaid expense and other current assets | 194,766 | 120,532 | ||||||
| Accounts payable, accrued expenses and other current liabilities | (201,387 | ) | (316,967 | ) | ||||
| Deferred subscription revenue | (152,945 | ) | (94,611 | ) | ||||
| Net cash used in operating activities | (520,794 | ) | (802,991 | ) | ||||
| Cash flows from investing activities: | ||||||||
| Net cash used in financing activities | - | - | ||||||
| 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 | (520,794 | ) | (810,204 | ) | ||||
| Balance of cash and cash equivalents at beginning of period | 13,568,049 | 14,739,933 | ||||||
| Balance of cash and cash equivalents at end of period | $ | 13,047,255 | $ | 13,929,729 | ||||
| Supplemental disclosure of cash flow information: Non-cash investing and financing activities: | ||||||||
| Taxes | $ | 50 | $ | - | ||||
