Q3 2022 Paltalk Inc Earnings Call
Good afternoon, and welcome to the <unk> third quarter 2022 earnings call.
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 Paul talk and care of Ginnie, Chief Financial Officer of Tau talk.
Sir the floor is yours.
Hello, everyone and welcome to the Powell talk third quarter 2022, operating and financial results Conference call by now everyone should have access to the earnings results press release, which was issued earlier today. After the market closed four P. M. Eastern time. This call is being webcast and will be available for.
A replay.
Our remarks today. We will include statements that are considered forward looking within the meanings of the private Securities Litigation Reform Act of 1995, 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 it.
Management may make additional forward looking statements in response to your question.
Forward looking statements are based on management's current knowledge and expectations as of today and are subject to certain risks uncertainties and assumptions related to factors that may cause actual results to differ materially from those anticipated in the forward looking statements. We offer no assurance that these expectations or beliefs will prove.
To be correct.
He tailed discussion of such risks and uncertainties are contained in our filings with the SEC, including our most recent annual report on Form 10-K for the year ended December 31, 2021, you should refer to and consider these factors when relying on such forward looking information the company does not undertake and <unk>.
Presley disclaims any obligation to update or alter our forward looking statements, whether as a result of new information future events or otherwise, except as required by applicable law on this call we will refer to certain non-GAAP measures, including adjusted EBITDA that when used in combination with GAAP results.
Abides us and our investors with additional analytical tools to understand our operation for each non-GAAP measure we have provided a reconciliation to the most directly comparable GAAP financial measure in our earnings press release, which will be posted on the Investor Relations section of our website at Pal talk dotcom.
And with that I would like to introduce Powell talks Chief Executive Officer, Jason Cat.
Thank you Karen and good afternoon, everyone. We greatly appreciate you taking the time to join us on today's call.
Discuss our operating highlights and financial results for the third quarter ended September 32022.
Additionally, we will provide an update on our business strategy, including initiatives to reinvigorate growth in subscribers advertising and revenue.
The highlight of our first few months of owning and operating the many cam software and our initiatives with our investment banking firm for strategic accretive acquisitions.
After my opening statement, our CFO carrier, Jimmy you won't give a summary of our financial results for the third quarter ended September 32022.
Following our prepared remarks, we will move into the Q&A portion and answer any questions that were pre submitted prior to this call.
With that I would now like to walk you through the recent highlights while our revenue continues to be impacted by the macroeconomic environment.
We are pleased with the early traction and results of many cam and its ongoing integration with our portfolio of products I'll talk Cam program timing Chad.
Cameras are live streaming software and virtual camera that allows users to deliberate professional live videos on streaming platforms video conferencing apps.
Distance learning tools, which greatly complements our large collection of video based communities.
During the past three months, we signed up corporate customers for many calm subscriptions advancing the business to business channel as <unk>.
Many cabins sold primarily pursuant to annual subscriptions. It's revenue was accounted for in a manner consistent with our other subscription models and accordingly, we expect the cash received upfront to initially outpaced the subscription revenue recognized.
We anticipate that subscription revenue related to men and Kim will increase in future quarters. That's the deferred revenue generated from many calm subscriptions was recognized.
We have several near term objectives that we believe when achieved will result in positive milestones for our business and potential growth for our company.
Our team is continuing to adjust our spend to better align with overall macroeconomic conditions and invest in a measured way that ensures responsible cash management.
This was apparent during the third quarter as our operating expenses decreased considerably compared to the previous quarter, resulting in a 1% decline in our overall expenses more specifically sales and marketing expense decreased 23% compared to the second quarter of 2022.
Which had the effect of increasing adjusted EBITDA by 14% compared to the prior quarter.
A reduction in expenses and efforts to streamline business efficiencies was ongoing throughout the third quarter and we expect this reduction to continue into the fourth quarter.
Second we continue to work with our investment banking firm to explore strategic opportunities, including but not limited to potential mergers or acquisitions of other assets or entities that are synergistic to our business.
In addition, our product team continues to optimize our acquisition of the many cam software to not only maximize subscription revenue, but to integrate and cross sell with our existing customer base and explore business to business sales opportunities.
Our technology and development teams continue 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 user retention and monetization, which collectively are intended to increase user engagement and revenue opportunities we.
We remain focused on developing our consumer application platform strategy.
Seeking potential partnerships with large third party communities to whom we can promote a co branded version of our video chat products potentially share in the incremental revenues generated by these partner communities.
Finally, we are continuing to defend our intellectual property.
In regards to our July 23, 2021 filing of a patent infringement lawsuit.
Webex Communications, Inc.
Cisco Webex LLC and Cisco Systems, Inc. In the U S District Court for the Western District of Texas. The trial is currently scheduled for the first quarter of 2023.
On September seven the United States Patent office issued a reexamination of the relevant part.
Our cash position as of September 32022 remains strong at $15 $5 million, which we believe puts us in a good position as we seek a return to growth and profitability.
We plan to continue to develop our consumer application platforms as we seek to build stockholder value.
Of note earlier this year, our board of directors approved a stock repurchase plan for up to $1 $75 million of the company's common stock.
Pursuant to the plan, we have repurchased 317089 shares of common stock in an average price per share of $1 80 for an aggregate amount of $572000. During the nine months ended September 32022.
I Trust. This gives you some insight into the company initiatives, we have implemented in order to conserve cash as we look to increase our subscribers in user engagement and returned to positive cash flow and profitability to build stockholder value.
Now I'd like to pass it to Cara for a financial summary of our third quarter ended September 32022.
Thank you Jason.
Results of operations for the three months ended September 32022 were as follows revenue for the three months ended September 32022 decreased by <unk> 8 million or 22% to $2 6 million compared to $3 4 million for the three months ended September 32020.
This decline was primarily attributable to the decrease in subscription revenue of 19% of <unk> 6 million related to the macroeconomic environment as well as a decrease in technology services revenue as a result of the termination of our partnership with open props, Inc. Formerly known as you know last.
From operation for the three months ended September 32022 totaled $1 1 million, an increase of <unk> 6 million or 132% compared to operating loss of <unk> 5 million for the three months ended September 32021.
The increase in operating loss is primarily due to a decrease in revenue a point 8 million coupled with increased product development expenses of point 2 million or 11% in connection with implementation of newly purchased software tools for marketing as well as increased general and administrative expenses.
As of <unk> 2 million or 22% in connection with noncash amortization related to the many kam asset acquisition.
Net loss for the three months ended September 32020, Q totaled $1 1 million, an increase of <unk> 6 million or 157% compared to net loss of <unk> 4 million for the three months ended September 30th 2021, the resulting net loss per share of <unk>.
In stock for the three months ended September 32022 was <unk> 11 per share as compared to a net loss per share of common stock of five cents for the three months ended September 30th 2021.
Just an EBITDA for the three months ended September 30th 2022, total negative <unk> 8 million compared to adjusted EBITDA of <unk> 3 million for the three months ended September 32021.
Cash and cash equivalents totaled $15 5 million at September 32022, a decrease of $6 1 million compared to the $21 6 million at December 31st 2021 of note $2 9 million of cash was used for the acquisition of many kam asset.
And <unk> 6 million was utilized and repurchasing common stock pursuant to the stock repurchase plan.
Currently the company has no long term debt on its balance sheet.
We will now move on to questions that were previously submitted.
The first question are.
Are you still working with third party companies in trying to market to new potential users and subscribers.
In response to the economic downturn and reduced sales, we reduced our overall marketing spending however, we still continue to work strategically with partners wherever possible.
The next question in mid August you previously reported that you had over 300000, new installs of many Cam since June has that pace or growth continued.
That pace is consistent with what we are seeing since and although still early we are encouraged.
Our final question that we got what percentage of many cam installed from existing power customers.
Well most of the installs are currently not Pal talk users. So we believe that bodes well once we are able to really effectively cross market.
Products fully.
Right.
I'll turn it back to you to close out the presentation.
Thanks, 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 organic growth initiatives and potential strategic accretive acquisitions, which we continue to identify and analyze.
Have a good day.
Thank you ladies and gentlemen. This concludes today's event you may disconnect at this time and have a wonderful day. Thank you for your participation.