Q4 2021 Paltalk Inc Earnings Call
Good day and welcome to the Paltalk fourth quarter and full year 2021 earnings call.
Good day, and welcome to the fourth quarter and full year 2021 earnings call.
At this time, all participants have been placed on a listen-only mode. It is now my pleasure to turn the floor
At this time, all participants have been placed on a listen only mode.
It is now my pleasure to turn the floor over to your host.
Jason Katz, Chief Executive Officer of Paltalk, and Cara Jenney, Chief Financial Officer of Paltalk.
Jason Katz, Chief Executive Officer of Couch walk in Carat journey, Chief Financial Officer of Tau talk.
The floor is yours.
Jason Katz: Hello, everyone, and welcome to the Paltalk Fourth Quarter and Full Year 2021 Operating and Financial Results Conference Call for the three-and-twelve-months-ended December 31st, 2021. By now, everyone should have access to the earnings results press release, which was issued yesterday after the markets closed around 4.30 p.m. Eastern Time. This call is being webcast and will be available for repurchase.
Hello, everyone and welcome to the power <unk> fourth quarter and full year 2021, operating and financial results conference call for the three and 12 months ended December 31, 2021 by now everyone should have access to the earnings results press release, which was issued yesterday after the markets closed around $4.
30 P M. Eastern time this call is being webcast and will be available for replay.
Jason Katz: In our remarks today, we will include statements that are considered forward-looking within the meanings of securities law, including forward-looking statements about future results of operations, business strategies and plans, our relationships with our customers, as well as market and potential growth opportunities.
In our remarks today. We will include statements that are considered forward looking within the meanings of securities law, including forward looking statements about future results of operations business strategies and plans our relationships with our customers as well as market and potential growth opportunities. In addition management may make.
Jason Katz: In addition, management may make additional forward-looking statements in response to your question.
All forward looking statements in response to your question.
Jason Katz: Forward-looking statements are based on management's current knowledge and expectations as of today and are subject to certain risks and uncertainties that may cause the actual results to differ materially from forward-looking statements.
Forward looking statements are based on management's current knowledge and expectations as of today and are subject to certain risks and uncertainties that may cause the actual results to differ materially from forward looking statements. We offer no assurance that these expectations or beliefs will prove to be correct, a detailed discussion of such.
Jason Katz: We offer no assurance that these expectations and beliefs will prove to be correct. A detailed discussion of such risks and uncertainties are contained in our filings with the SEC, including our most recent annual report on Form 10-K . You should refer to and consider these factors when relying on such forward-looking information.
Risks and uncertainties are contained in our filings with the SEC, including our most recent annual report on Form 10-K , you should refer too and consider these factors when relying on such forward looking information.
Jason Katz: The company does not undertake and expressly disclaims any obligation to update or alter our forward-looking statements, whether as a result of new information, future events, or otherwise as required by applicable law.
The company does not undertake and expressly disclaims any obligation to update or alter our forward looking statements, whether as a result of new information future events or otherwise as required by applicable law.
Jason Katz: On this call, we will refer to certain non-GAAP measures, including Adjusted EBITDA, that when used in combination with GAAP results, provides us with additional analytical tools to understand our operations. We have provided reconciliations to the most directly comparable GAAP financial measures in our earnings press release, which was posted to the investor relations section of our website at paltalk.com.
On this call, we will refer to certain non-GAAP measures, including adjusted EBITDA that when used in combination with GAAP results provide.
Rides us with additional analytical tools to understand our operations. We have provided reconciliations to the most directly comparable GAAP financial measures in our earnings press release, which was posted to the Investor Relations section of our website at <unk> Dot com and with that I would like to introduce <unk>.
Speaker Change: And with that, I would like to introduce Paltrow's Chief Executive Officer, Jason Katz.
Pups, Chief Executive Officer, Jason Castle.
Jason Katz: Thank you, Cara. And good morning, everyone. We greatly appreciate you taking the time to join us on today's call.
Thank you Tara and good morning, everyone. We greatly appreciate your taking the time to join us on today's call.
Jason Katz: We will discuss our operating highlights and financial results for our fourth quarter and year ended December 31, 2021. Additionally, we will outline our growth initiatives, including our plan for strategic accretive acquisition.
We will discuss our operating highlights and financial results for our fourth quarter and year ended December 31 2021.
Additionally, we will outline our growth initiatives, including our plan for strategic accretive acquisitions.
Jason Katz: After my opening, our CFO , Cara Jenny, will give a summary of our fourth quarter and year-ended December 31st, 2021 financial results.
After my opening our CFO Jenny will give a summary of our fourth quarter and year ended December 31st 2021 financial results.
Cara Jenny: Following our prepared remarks, we will move into the Q&A portion and answer questions that were pre-submitted prior to this call.
Following our prepared remarks, we will move into the Q&A portion and answer questions that were pre submitted prior to this call.
Cara Jenny: With that, I would now like to walk you through the recent highlights.
With that I would now like to walk you through the recent highlights.
Cara Jenny: Our quarterly results remain positive and consistent due to our recurring subscription revenue, which makes up the majority of our revenue and has provided us excellent predictability and visibility for our business.
Our quarterly results remain positive and consistent due to our recurring subscription revenue, which makes up the majority of our revenue and that's provided us excellent predictability and visibility for our business. During the fourth quarter. We also raised $11.6 million at $7.50 per share.
Cara Jenny: During the fourth quarter, we also raised $11.6 million at $7.50 per share.
Cara Jenny: This capital infusion gives us added flexibility in growing our business organically and potentially through acquisitions, which we continue to explore.
This capital infusion gives us added flexibility and growing our business organically and potentially through acquisitions, which we continue to explore.
Cara Jenny: We believe we have laid the groundwork for the next growth phase of our business.
We believe we have laid the groundwork for the next growth phase of our business.
Cara Jenny: During the fourth quarter, we invested in new marketing tools with a focus on increasing visibility, user engagement, subscribers, and customer engagement, though we did not markedly increase marketing spend.
During the fourth quarter, we invested in new marketing tools with a focus on increasing visibility user engagement subscribers and customer engagement.
Did not markedly increase marketing spend.
Cara Jenny: first quarter of twenty twenty two we forged new partnerships with marketing agencies and these efforts are just now starting to ramp up.
In the first quarter of 2022, we forged new partnerships with marketing agencies.
These efforts are just now starting to ramp up.
Cara Jenny: We plan to begin an incremental marketing spend with a careful eye on our internal metrics of users, subscribers, and engagement, as return on investment is very important to us.
We plan to begin an incremental marketing spend with a careful eye on our internal metrics of users subscribers and engagement.
The return on investment is very important to us.
Cara Jenny: While we are looking to increase marketing and customer engagement, we'll be careful with our capital.
While we are looking to increase marketing and customer engagement, we will be careful with our capital.
Cara Jenny: I will now provide some insights into some of the specific growth initiatives we have recently put in place.
I will now provide some insights into some of the specific growth initiatives. We have recently put in place.
Cara Jenny: We launched the PalTalk feed message board functionality aimed at increasing user engagement. It's a real-time asynchronous message board granting users the ability to interact with the platform without a video cam.
We launched the power torque feed message board functionality aimed at increasing user engagement.
As a real time asynchronous message board.
Granting users the ability to interact with the platform without a video camera.
Cara Jenny: Functionality of the new feature allows users to comment, add photos or videos, and contribute to conversations around shared interests on a digital message board.
Now the other new feature allows users to comment add photos or videos and contribute to conversations around shared interests on a digital message board.
Cara Jenny: These comments can be shared at the user's option with either friends of the user or the entire PalTalk community.
These comments can be sure that the user's option with either friends of the user or the entire powerful community.
Cara Jenny: The new message board feature is designed to support increased user engagement, which we expect will create value.
The new message Board features designed to support increased user engagement, which we expect will create value.
Cara Jenny: We successfully upgraded our rewards loyalty program for our users with the launch of PalTalk RewardsPoint.
We successfully upgraded our rewards loyalty program for our users with the launch of Papa rewards points Gander.
Cara Jenny: Gamification of loyalty programs continues to dominate as users are accustomed to earning rewards in exchange for app engagement.
Gamification of loyalty programs continues to dominate as users are accustomed to earning rewards in exchange for App engagement.
Cara Jenny: Paltalk now offers more opportunities for users to earn rewards such as specialty coins, subscription stickers, and flares by adding 25 new reward tiers.
I'll talk now offers more opportunities for users to earn rewards such as specialty coins subscription stickers and flares.
Adding 25, new reward peers.
Cara Jenny: We expect that our new internal system will incentivize valuable activity, increase revenue, and generate user engagement.
We expect that our new internal system will incentivize valuable activity increase revenue and generate user engagement.
Cara Jenny: Our users are terrific content creators, enriching the social experience for everyone. Our data show that in-app rewards are an innovative tool through which users regularly interact, benefiting our stockholders, users, and the entire Paltalk ecosystem to drive engagement with loyalty and retention.
Our users are terrific content creators enriching the social experience for everyone. Our data show that in App rewards are an innovative tool through which uses regularly interact benefiting our stockholders users in the entire Pal talk ecosystem to drive engagement with loyalty and retention benefits.
Cara Jenny: We also adopted Yellowhead, an AI-powered performance marketing company that boosts growth with unified paid and organic strategies to lead our increased marketing efforts for camfrogues.
Cause yellow head and AI powered performance marketing company.
<unk> growth with a unified paid and organic strategies.
Our increased marketing efforts for Cam frog.
Cara Jenny: Yellowhead specializes in user acquisition, app store optimization, search engine optimization, creative production, and analytics technology.
Yellow had specializes in user acquisition App store optimization search engine optimization creative production and analytics technology.
Cara Jenny: Yellowhead's ASO and SEO solutions have been instrumental in helping many brands increase their traffic, conversion, and users.
Yellow heads ASO and SCR solutions have been instrumental in helping many brands increased their traffic conversion and users.
Cara Jenny: One of the specific uses of the proceeds from our capital raise is to carefully ramp up our marketing spend and contribute to growth in users and revenue.
One of the specific uses of the proceeds from our capital raise is to carefully ramp up our marketing spend and contribute to growth in users and revenue.
Cara Jenny: We look forward to working with Yellowhead and its leading performance marketing solution.
We look forward to working with yellow had them its leading performance marketing solutions.
Cara Jenny: We also partnered with No Good, a growth marketing firm that specializes in user acquisition to accelerate user acquisition for our flagship PalTalk application.
We also partnered with no good growth marketing firm that specializes in user acquisition to accelerate user acquisition for our flagship Pal talk application.
Cara Jenny: NoGood has expertise in SEO, content marketing, SEM, PPC, social ads, CRO, email marketing, video marketing, SMS marketing, and performance branding.
Good has expertise in SCO content marketing.
M. P. P C social ads C or ROE email marketing video marketing SMS marketing and performance branding.
Cara Jenny: NoGood has been instrumental in helping many startups and scale-ups dramatically increase their traffic, conversion, and users.
No. Good has been instrumental in helping many startups and scale ups dramatically increase their traffic conversion and users we have.
Cara Jenny: We are very excited to work with no good to help us as we speak to accelerate user growth and revenue growth.
We're very excited to work with no good to help us as we seek to accelerate user growth and revenue growth.
Cara Jenny: We also rolled out new content moderation software with the integration of Hive's automated content moderation solution.
We also rolled out new content moderation software with the integration of hives automated content moderation solutions for increased user experience on <unk> product.
Cara Jenny: for increased user experience on PalTalk and CAMProg.
Cara Jenny: We are taking the next step to ensure a safe experience for our users by cracking down on spam and objectionable content.
We are taking the next step to ensure a safe experience for our users cracking down on spam and objectionable content.
Cara Jenny: The Hive software and its AI are automatically able to detect offensive video, audio, and text through online content moderation in order to better moderate user-generated content in our video chat.
The software and its AI are automatically able to detect offensive video audio and text through online content moderation in order to better moderate user generated content video chat rooms.
Cara Jenny: We'll also leverage the text moderation feature of the Hive software platform to moderate our Powtalk feed feature to ensure it is being utilized within our terms of service.
We'll also leverage the text moderation feature of the <unk> software platform to moderate our power plant feed feature to ensure it is being utilized within our terms of service.
Cara Jenny: In addition to these organic growth efforts, we continue to identify and analyze potential strategic accretive acquisitions.
In addition to these organic growth efforts, we continue to identify and analyze potential strategic accretive acquisitions.
Cara Jenny: The team continues to explore opportunities that can be additive and complementary to our existing business.
Our team continues to explore opportunities that can be additive and complementary to our existing business.
Cara Jenny: As is true with all of our growth initiatives, we will move prudently and carefully measure our incremental return on investment to ensure any acquisition would result in enhancing our value and performance.
As is true with all of our growth initiatives, we will move prudently and carefully measure our incremental return on investment to ensure any acquisition would result in enhancing our value and performance.
Cara Jenny: On another note, this week, Paltalk's Board of Directors approved the stock repurchase plan for up to $1.75 million of the company's common stock.
On another note. This week <unk> board of directors approved the stock repurchase plan for up to $1 $75 million of the company's common stock.
Cara Jenny: The stock repurchase plan is effective as of March 29, 2022 and expires on the one-year anniversary of such date.
Stock repurchase plan is effective as of March 29, 2022, and expires on the one year anniversary of such date.
Cara Jenny: We believe that at times, the equity market value of the company does not fairly represent the present value of our business and its future opportunity, and a buyback program will permit the company to deploy surplus capital to opportunistically repurchase shares at attractive prices, which we believe will increase stockholder value.
We believe that that times the equity market value of the company does not fairly represent the present value of our business and its future opportunity in the <unk>.
Back program will permit the company to deploy surplus capital to Opportunistically repurchase shares at attractive prices, which we believe will increase stockholder value over time.
Cara Jenny: I trust this gives you a sense of some of the growth initiatives we recently implemented in order to increase our subscribers and user engagement that are expected to lead to increased revenue and profitability as we look to build stockholder value.
I Trust. This gives you a sense of some of the growth initiatives. We recently implemented in order to increase our subscribers and user engagement that are expected to lead to increased revenue and profitability as we look to build stockholder value now.
Cara Jenny: Now I'd like to pass it off to Kara for a financial summary of our fourth quarter and year ended December 31st 2021.
Now I'd like to pass it off to Cara for a financial summary of our fourth quarter and year ended December 31 2021.
Kara: Thank you Jason. Our annual total revenue growth of three percent led to full year 2021 net income of 1.3 million. We continue to have strong liquidity and capital with over 21 million of cash on our balance sheet as of December 31st 2021.
Thank you Jason our annual total revenue growth of 3% led to full year 2021, net income of $1.3 million. We continue to have strong liquidity and capital with over $21 million of cash on our balance sheet as of December 31 2021.
Kara: Total revenue for the three months ended December 31, 2021 decreased by 9% to $3.1 million compared to $3.4 million for the three months ended December 31, 2020. This decline was mainly attributable to a decrease in technology service revenue.
Total revenue for the three months ended December 31st 2021 decreased by 9% to $3 1 million compared to $3 4 million for the three months ended December 31, 2020. This decline was mainly attributable to a decrease in technology service revenue of note subscription revenue decreased one.
Kara: Of note, subscription revenue decreased 1% and advertising revenue increased 18%.
Percent and advertising and revenue increased 18%.
Kara: Income from operations for the three months ended December 31st, 2021 decreased by half a million dollars to a loss of ten thousand dollars compared to income from operations of half a million dollars for the same period in 2020.
Income from operations for the three months ended December 31, 2021 decreased by half a million dollars to a loss of $10000 compared to income from operations of half a million dollars for the same period in 2020 net income for the three months ended December 31st 2020.
Kara: Net income for the three months ended December 31, 2021, decreased by $0.5 million to a net loss of $5,000.
One decreased by <unk> 5 million to a net loss of $5000 compared to income of <unk> 5 million for the three months angled December 31st 2020, and adjusted EBITDA for the three months ended December 31st 2021 decreased by $1 million 12.
Kara: compared to income of 0.5 million for the three months ended December 31st, 2020. And adjusted EBITDA for the three months ended December 31st, 2021, decreased by $1 million to a loss of 0.2 million compared to the positive adjusted EBITDA of 0.8 million in the three months ended December 31st, 2020.
Loss of point $2 million compared to positive adjusted EBITDA point $8 million in the three months ended December 31st 2020.
Kara: Total revenue for the 12 months ended December 31st, 2021, increased by 3% to $13.3 million compared to the $12.8 million for the 12 months ended December 31st, 2020. This growth was mainly driven by an increase in subscription revenue and advertising.
Total revenue for the 12 months ended December 31, 2021 increased by 3% to $13 3 million compared to the $12 8 million for the 12 months ended December 31st 2020. This growth was mainly driven by an increase in subscription revenue and advertising revenue.
Kara: Income from operations for the 12 months ended December 31, 2021 decreased by $0.7 million to $0.5 million compared to $1.2 million for the same period in 2020.
Income from operations for the 12 months ended December 31st 2021 decreased by <unk> 7 million $2.5 million compared to $1 2 million for the same period in 2020.
Kara: The income from operations for the 12 months ended December 31, 2021 included a non-cash impairment loss on digital tokens of approximately 0.8 million.
Income from operations for the 12 months ended December 31st 2021 included a noncash impairment loss on digital token of approximately <unk> 8 million.
Kara: Net income for the 12 months ended December 31st, 2021 decreased by 3% to $1.3 million compared to $1.4 million for the 12 months ended December 31st, 2021.
Net income for the 12 months ended December 31, 2021 decreased by 3% to $1 3 million compared to $1.4 million for the 12 months ended December 31st 2020.
Kara: Adjusted EBITDA for the 12 months ended December 31, 2021 decreased by 0.7 million to a 1.3 million compared to 2 million for the 12 months ended December 31, 2020.
Adjusted EBITDA for the 12 months ended December 31st 2021 decreased by <unk> 7 million to a 1.3 million compared to 2 million for the 12 months ended December 31st 2020.
Kara: We will now move on to questions that were previously submitted.
We will now move on to questions that were previously submitted.
Kara: first question. What actions are you taking to increase consumer experience and engagement?
The first question what actions are you taking to increase consumer experience and engagement.
Speaker Change: Thank you, Carol. We provided a lot of these new initiatives in our prepared remarks. Just please keep in mind that we are going to move prudently on these and be sure they have a positive effect before we accelerate our spend.
Thank you Kara we provided a lot of these new initiatives in our prepared remarks, just please keep in mind that we are going to move prudently on these and be sure. They have a positive effect before we accelerate our spend.
Okay.
Speaker Change: The next question, what is behind the increase in advertising revenue?
Your next question what is behind the increase in advertising revenue.
Speaker Change: As we discussed, the introduction of advertising partners has served us well and we are pleased with the initial growth we've seen in the area. We will continue to improve and refine those programs with those partners.
As we discussed the introduction of advertising partners has served us well and we are pleased with the initial growth we've seen in the area. We will continue to improve and refine those programs with those partners.
Okay.
Speaker Change: Can you explain what is behind changes in growth margins in operating?
Can you explain what is behind changes in gross margin and operating expenses.
Well in general we incurred incremental costs associated with the up listing to NASDAQ as well as an increase in public company expenses. We also had an increase in marketing expenses related to the increase.
Speaker Change: Well, in general, we incurred incremental costs associated with the uplift of the NASDAQ as well as had an increase in public company expenses.
Speaker Change: We also had an increase in marketing expenses related to the increase in and the investment in marketing tools we discussed above.
The investment in marketing tools, we discussed above.
Speaker Change: Can you provide any qualitative guidance?
Okay can you provide any qualitative guidance.
Speaker Change: I would just reiterate that with regard to spending, we have chosen marketing agencies, hired them in this quarter, and look forward to working with them to optimize our spending in a measurable way. Since our historic investment in marketing has been modest, I believe partnering with leaders in the industry should be impactful. Thank you.
I would just reiterate that with regard to spending we've chosen marketing agencies hired them in this quarter and look forward to working with them to optimize our spending in a measurable way since our historic investment in marketing has been modest I believe partnering with leaders in the industry should be impactful.
Jason I'll turn it back to you to close out the presentation.
Speaker Change: Thank you, everyone, for your support and for joining us today. We are very grateful for your interest in our business. We look forward to updating the market and our stockholders with our progress and our growth initiatives organically and potential strategic accretive acquisitions, which we continue to identify and analyze. We plan on having our next quarterly results call in mid-May and plan to attend a few conferences, the first of which is the Maxim Conference at the end of this month.
Thank you everyone for your support and for joining US today, we are very grateful for your interest in our business. We look forward to updating the market and our stockholders with our progress on our growth initiatives organically and potential strategic accretive acquisitions, which we continue to identify and analyze re planning.
Having our next quarterly results call in mid May and plan to attend a few conferences. The first of which is the maximum conference at the end of this month.
Have a great day.
Okay.
Speaker Change: Thank you, ladies and gentlemen. This does conclude today's event. You may disconnect your phone lines at this time and have a wonderful day. Thank you for your participation.
Thank you ladies and gentlemen, this does conclude todays event you may disconnect. Your phone lines at this time and have a wonderful day. Thank you for your participation.