Paltalk, Inc. (PALT) CEO Jason Katz on Q1 2022 Outcomes – Earnings Name Transcript

Paltalk, Inc. (NASDAQ:PALT) Q1 2022 Earnings Convention Name Could 10, 2022 4:30 PM ET

Firm Members

Jason Katz – Chief Government Officer

Kara Jenny – Chief Monetary Officer


Good afternoon and welcome to the Paltalk First Quarter 2022 Earnings Name. [Operator Instructions] It’s now my pleasure to show the ground over to your host, Jason Katz, Chief Government Officer of Paltalk and Kara Jenny, Chief Monetary Officer of Paltalk. Kara, the ground is yours.

Kara Jenny

Hi there, everybody and welcome to the Paltalk first quarter 2022 working and monetary outcomes convention name for the three months ended March 31, 2022. By now, everybody ought to have entry to the earnings outcomes press launch, which was issued earlier at present after the market closed at 4:00 p.m. Jap Time. This name is being webcast and might be obtainable for replay.

In our remarks at present, we are going to embrace statements which are thought of forward-looking throughout the which means of the Personal Securities Litigation Reform Act of 1995, together with forward-looking statements about future outcomes of operations, enterprise methods and plans, {our relationships} with our clients in addition to market and potential development alternatives. As well as, administration might make extra forward-looking statements in response to your questions. Ahead-looking statements are primarily based on administration’s present information and expectations as of at present and are topic to sure dangers, uncertainties and assumptions associated to components which will trigger precise outcomes to vary materially from these anticipated within the forward-looking statements. We provide no assurance that these expectations and beliefs will show to be right.

An in depth dialogue of such dangers and uncertainties are contained in our filings with the SEC, together with our most up-to-date annual report on Kind 10-Ok for the yr ended December 31, 2021. You must refer and think about these components when counting on such forward-looking info. The corporate doesn’t undertake and expressly disclaims any obligation to replace or alter our forward-looking statements, whether or not on account of new info, future occasions or in any other case, besides as required by relevant legislation.

On this name, we are going to consult with sure non-GAAP measures, together with adjusted EBITDA that, when utilized in mixture with GAAP outcomes, offers us with extra analytical instruments to know our operations. For every non-GAAP measure, we’ve offered a reconciliation to probably the most immediately comparable GAAP monetary measure in our earnings press launch, which might be posted on the Investor Relations part of our web site at

And with that, I wish to introduce Paltalk’s Chief Government Officer, Jason Katz.

Jason Katz

Thanks, Kara and good afternoon everybody. We tremendously admire you taking the time to affix us on at present’s name. We are going to focus on our working highlights and monetary outcomes for the primary quarter ended March 31, 2022. Moreover, we are going to present some colour on our development initiatives, together with our ramp up in advertising spend and plan for strategic accretive acquisitions. After my opening assertion, our CFO, Kara Jenny, will give a abstract of our first quarter ended March 31, 2022 monetary outcomes. Following our ready remarks, we are going to transfer into the Q&A portion and reply questions that have been pre-submitted previous to this name.

With that, I wish to now stroll you thru the latest highlights. Whereas we’re disillusioned with the decline in subscription income over the past quarter, we attribute this lower primarily to the easing of COVID-19 restrictions in sure of our goal markets. We imagine we’ve began to put the groundwork for development in subscription and promoting income.

As beforehand disclosed, we lately started to execute our plan to extend advertising spend and put money into product improvement. For instance, along with our latest advertising initiatives, we launched a cell backgammon recreation, which is interactive with real-time voice and video. Our money steadiness of greater than $20 million affords us the chance to make these investments, however we are going to proceed conservatively. Our measured method is mirrored in our first quarter’s elevated advertising bills of $200,000 and elevated product improvement bills of $200,000.

We’re optimistic that our new advertising instruments and partnerships, with a give attention to rising visibility, person engagement and subscribers, will allow us to return to development. As well as, our staff continues to establish and assessment potential strategic acquisitions to bolster our development even additional. We stay up for updating the market and our stockholders with our progress on each inner development initiatives and potential strategic accretive acquisitions.

I’ll now present some additional insights into a few of the particular development initiatives and advertising spend we’ve lately began. In the course of the first quarter, we engaged and began working with yellowHEAD, an AI-powered efficiency advertising firm that enhances development with unified paid and natural methods, to guide our elevated advertising efforts for Camfrog.

yellowHEAD makes a speciality of person acquisition, app retailer optimization, SEO, inventive manufacturing and analytics expertise. yellowHEAD’s ASO and search engine optimisation options have been instrumental in serving to many manufacturers enhance their visitors, conversion and customers. One of many particular makes use of of the proceeds from the October 2021 capital raised final yr is to fastidiously ramp up our advertising spend to assist contribute to development in customers and income.

Additionally throughout the first quarter, we partnered and began working with NoGood, a development advertising agency that makes a speciality of person acquisition, to speed up person acquisition for our flagship Paltalk software. yellowHEAD’s experience in search engine optimisation, content material advertising, SEM, PPC, social labs, CRO, e-mail advertising, video advertising, SMS advertising and efficiency branding. NoGood has been instrumental in serving to many start-ups and scale-ups to dramatically enhance their visitors conversion and customers. We’re very excited to work with NoGood to assist us as we search to speed up person development and income development. As a result of each of those advertising initiatives are of their early levels, it’s too quickly to report any significant traction of information. We’re fastidiously monitoring the outcomes of our market initiatives and tweaking our plan for optimization and decision-making going ahead.

On the product improvement facet, we’re excited concerning the latest launch of our cell backgammon recreation, which allows Paltalk customers to play with pals, different customers or privately with real-time voice and video. As a part of our natural development plan to extend subscribers, promoting and income, we imagine that offering extra interactive choices and content material on our platform, equivalent to cell backgammon, will result in elevated person engagement. We imagine that current subscribers might introduce cell video games to potential new subscribers as properly.

Our latest launch of cell backgammon demonstrates our capability to develop extra purposes and content material, to supply our subscribers and using our real-time voice and video capabilities. We’re all the time trying to enhance our subscribers’ utilization inside our platform and anticipate to launch a 3rd cell recreation as we additional construct out our providing of our thoughts video games. Along with these natural development efforts, we proceed to establish and analyze potential strategic accretive acquisitions of each companies and property. Our staff continues to discover alternatives that might be accretive and complementary to our current enterprise.

As true with all of our development initiatives, we are going to transfer prudently and thoroughly measure our incremental return on funding to assist guarantee any acquisition would end in enhancing our worth and efficiency. I belief this provides you a way of a few of the firm initiatives we lately carried out with a purpose to enhance our subscribers and person engagement, and we anticipate to result in elevated income and profitability as we glance to construct stockholder worth.

Now I’d wish to cross it off to Kara for a monetary abstract of our first quarter ended March 31, 2022.

Kara Jenny

Thanks, Jason. Our outcomes of operations for the three months ended March 31, 2022, have been as follows. Income for the three months ended March 31, 2022 decreased by 13% to $2.9 million in comparison with $3.4 million for the three months ended March 31, 2021. This decline was primarily attributable to a lower in expertise service income on account of the termination of our partnership with Open Props Inc., previously YouNow, in addition to a lower in subscription income of 9.3% or roughly $300,000, which was primarily attributable to the easing of COVID-19 restrictions in sure of our goal markets.

Promoting income elevated 4.6% to roughly $100,000. Loss from operations for the three months ended March 31, 2022, totaled roughly $700,000, a rise of $1.1 million in comparison with working revenue of roughly $400,000 for the three months ended March 31, 2021. The lower is primarily because of the lower in subscription income of roughly $300,000, coupled with elevated advertising bills of roughly $200,000 or 60% in reference to our funding in advertising, elevated product improvement bills of roughly $200,000 or 18% in reference to implementation of newly bought software program included in different revenue for the three months ended March 31, 2021, with one-time cost of roughly $0.5 million associated to the forgiveness of the proceeds from the Paycheck Safety Program mortgage the corporate acquired in 2020. The ensuing internet loss per share of frequent inventory for the three months ended March 31, 2022, was a lack of $0.08 per share as in comparison with internet revenue per share per frequent inventory of $0.13 for the three months ended March 31, 2021.

Adjusted EBITDA for the three months ended March 31, 2022, decreased by roughly $1 million to roughly $0.5 million loss in comparison with adjusted EBITDA of constructive $0.5 million for the three months ended March 31, 2021. Money and money equivalents totaled $20.4 million at March 31, 2022, a lower of $1.2 million in comparison with $21.6 million at December 31, 2021. At present, the corporate has no long-term debt on its steadiness sheet.

We are going to now transfer on to the questions that have been beforehand submitted.

Query-and-Reply Session

A – Kara Jenny

The primary query, how are yellowHEAD and NoGood performing versus your earlier expectations, Jason?

Jason Katz

yellowHEAD and NoGood each simply began to implement their methods in the beginning of the second quarter. So, there’s not sufficient knowledge but to report on.

Kara Jenny

The subsequent query, is there any colour you may present on the affect of Hive Automated Content material Moderation Options, your new message board feed and newly revised reward level system?

Jason Katz

Certain. The Hive answer screens very giant numbers of pictures, movies and real-time video with glorious accuracy, which provides us confidence that customers are having fun with our software program throughout the phrases of service. As for the feeds and reward level programs, we’re consistently engaged on each of them and we are going to proceed to enhance every of them with each replace.

Kara Jenny

And the ultimate query we acquired, with regard to M&A, are there any funding bankers helping you together with your search or are you doing all of it internally? Ought to we anticipate one thing by yr finish? Are you in discussions or negotiations for something but?

Jason Katz

Effectively, we can not remark particularly about that, however we’ve been working very arduous to search out appropriate acquisitions. As we’ve said beforehand, making an accretive acquisition is a transparent purpose for 2022.

Kara Jenny

Thanks. Jason, now again to you to shut out the presentation.

Jason Katz

Thanks everybody on your help and for becoming a member of us at present. We’re very grateful on your curiosity in our enterprise. We stay up for updating the market and our stockholders with our progress on our development initiatives organically and potential strategic accretive acquisitions, which we proceed to establish and analyze. We plan on having our subsequent quarterly outcomes name in mid-August. Have an awesome day.

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