Q2 2024 Paltalk Inc Earnings Call

Operator: [inaudible] I'm not sure if I'm right, but I'm not sure if I'm right, but I'm not welcome to the Paltalk second quarter 2024 results conference call. This time, all participants are in a listen-only mode.

Operator: and welcome to the Paltalk's second quarter 2024 results conference call. At this time, all participants are in a listen-only mode. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this call is being recorded.

Operator: If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note, this call is being recorded. I will now turn the conference over to your host, Kara Jenny, CFO of Paltalk. Mom, the floor is yours.

Speaker Change: [inaudible]

Speaker Change: Greetings and welcome to the Paltalk second quarter 2024 results conference call.

Operator: Are the low-turned-to-conference over to your host, Kara Jenny, CFO of Paltalk. Mom, floor is yours.

Speaker Change: At this time, all participants are on a listen-only mode.

Speaker Change: If anyone should require operator assistance during the conference, please press star zero on your telephone keypad.

Kara Jenny: Hello everyone and welcome to the Paltalk Operating and Financial Results Conference Call for the second quarter ended June 30th, 2024. By now, everyone should have access to the earnings press release, which was issued earlier this afternoon at approximately 4 p.m. Eastern time. This call is being webcast and will be available for replay.

Kara Jenny: Hello, everyone, and welcome to the Paltalk Operating and Financial Results Conference Call for the second quarter ended June 30, 2024. By now, everyone should have access to the earnings press release, which was issued earlier this afternoon at approximately 4 p.m. Eastern Time. This call is being webcast and will be available for replay.

Speaker Change: Please note, this call is being recorded.

Speaker Change: I will now turn the conference over to your host, Cara Jenny, CFO of Paltalk. Ma'am, the floor is yours.

Cara Jenny: Hello, everyone, and welcome to the Pals Talk Operating and Financial Results Conference Call for the second quarter ended June 30, 2024. By now, everyone should have access to the earnings press release.

Kara Jenny: In our remarks today, we will include statements that are considered forward-looking within the meaning 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 addition, 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.

Kara Jenny: In our remarks today, we will include statements that are considered forward-looking within the meaning 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 addition, management may make additional forward-looking statements in response to your questions. 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 and beliefs will prove to be correct.

Kara Jenny: A detailed discussion of such risks and uncertainties is contained in our filings with the SEC, including our most recent quarterly reports on Form 10-Q and annual reports on Form 10-K. You should refer to these and consider these factors when relying on such forward-looking information. The company does not undertake and expressly disclaims any obligation to update or alter its 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 Adjusted EBITDA, a non-GAAP measure that, when used in combination with GAAP results, provides our investors and us with additional analytical tools to understand our operations.

Speaker Change: which was issued earlier this afternoon at approximately 4 p.m. Eastern Time.

Speaker Change: This call is being webcast and will be available for replay.

Speaker Change: In our remarks today, we will include statements that are considered forward-looking within the meaning 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.

Speaker Change: In addition, management may make additional forward-looking statements in response to your question.

Kara Jenny: We offer no assurance that these expectations and beliefs will prove to be correct. A detailed discussion of such risks and uncertainties is contained in our filings with the SEC, including our most recent quarterly reports on Form 10-Q and annual reports on Form 10-K. You should refer to these and consider these factors when relying on such forward-looking information. 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, except as required by applicable law.

Speaker Change: Forward-looking statements are based on management's current knowledge and expectations as of today and are subject to certain risks.

Speaker Change: 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 and beliefs will prove to be correct.

Speaker Change: A detailed discussion of such risks and uncertainties are contained in our filings with the SEC, including our most recent quarterly reports on Form 10-Q and annual reports on Form 10-K. You should refer to these and consider these factors when relying on such information.

Kara Jenny: On this call, we will refer to adjusted evida, a non-GAAP measure that, when used in combination with GAAP results, provides our investors and us with additional analytical tools to understand our operations. For adjusted evida, we have provided a reconciliation to the most direct, comparable gap financial measure in our earnings press release, which will be posted on the Investor Relations section of our website at www.palthock.com.

Speaker Change: forward-looking information.

Speaker Change: 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

Kara Jenny: For Adjusted EBITDA, we have provided reconciliation to the most direct comparable GAAP financial measure in our earnings press release, which will be posted on the investor relations section of our website at www.paltalk.com. And with that, I would like to introduce Paltalk's Chief Executive Officer, Jason Kass. Thank you, Kara. And good afternoon, everyone.

Speaker Change: or otherwise except as required by applicable law. On this call we will refer to adjusted EBITDA, a non-GAPP measure that when used in combination with GAPP results provides our investors and us with additional analytical tools to understand our operations.

Jason Katz: And with that, I would like to introduce Palthock's Chief Executive Officer, Jason Katz. Thank you, Cara, and good afternoon, everyone. We greatly appreciate you taking the time to join us on today's call. We will discuss our operating highlights and financial results for the second quarter ended June 30th, 2024. We will also provide an update on our business objectives and strategies.

Justin Iveda: For Justin Iveda, we've provided a reconciliation to the most direct comparable gap financial measure in our earnings press release, which will be posted on the investor relations section of our website at www.palasock.com.

Jason Katz: We greatly appreciate you taking the time to join us on today's call. We will discuss our operating highlights and financial results for the second quarter ended June 30, 2024. We will also provide an update on our business objectives and strategies. After my opening statement, our Chief Financial Officer, Kara Jenny, will give a summary of our financial results for the second quarter ended June 30, 2024. Following our prepared remarks, we'll move into the Q&A portion and answer any questions that were submitted prior to this call.

Justin Iveda: And with that, I would like to introduce PALTalk's Chief Executive Officer, Jason Katz.

Jason Katz: After my opening statement, our Chief Financial Officer, Cara Jenning, will give a summary of our financial results for the second quarter ended June 30th, 2024. Following our prepared remarks, we will move into the Q&A portion and answer any questions that were submitted prior to this call. With that, I would now like to walk you through the recent financial operating highlights and near-term business objectives. We are very pleased to announce that we entered into an agreement to acquire new tech technology solutions in a wholly owned subsidiary of New Tech One, Inc. NTS provides dedicated server hosting, cloud hosting, managed security, and other related services, including consulting and implementing technology solutions for enterprise and commercial clients across the United States.

Jason Katz: Thank You Cara and good afternoon everyone. We greatly appreciate you taking the time to join us on today's call.

Jason Katz: We will discuss our operating highlights and financial results for the second quarter ended June 30th, 2024. We will also provide an update on our business objectives and strategies.

Jason Katz: After my opening statement, our Chief Financial Officer, Cara Jenny, will give a summary of our financial results for the second quarter ended June 30, 2024. Following our prepared remarks, we'll move into the Q&A portion and answer any questions that were submitted prior to this call.

Jason Katz: With that in mind, I would now like to walk you through the recent financial and operating highlights and near-term business objectives. We are very pleased to announce that we entered into an agreement to acquire New Tech Technology Solutions, Inc., a wholly owned subsidiary of New Tech One, Inc. NTS provides dedicated server hosting, cloud hosting, managed security, and other related services, including consulting and implementing technology solutions for enterprise and commercial clients across the United States.

Cara Jenny: With that, I would now like to walk you through the recent financial and operating highlights and near-term business objectives.

Speaker Change: 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.

Jason Katz: This is a transformational acquisition for Paltalk that we believe will provide excellent value for our stockholders. We expect that the acquisition, once completed, will have an immediate and meaningful impact on our revenue since NTS's revenue in 2023 was approximately three times greater than Paltalk's 2023 revenue. We also expect the acquisition to provide enhanced opportunities for future growth and optimization. We are extremely excited to enter the cloud infrastructure and cybersecurity sectors with the acquisition of a business we deem right for growth both organically and through potential accretive acquisitions in the future. Given our management team's extensive technology expertise that has been demonstrated throughout the years, we are confident in our ability to integrate, operate, and grow this business and enhance stockholder value.

Jason Katz: This is a transformational acquisition for Paltalk that we believe will provide excellent value for our stockholders. We expect that the acquisition, once completed, will have an immediate and meaningful impact on our revenue since NTS's revenue in 2023 was approximately three times greater than Paltalk's revenue in 2023. We also expect the acquisition to provide enhanced opportunities for future growth and optimization.

Speaker Change: NTS provides dedicated server hosting, cloud hosting, managed security, and other related services including consulting and implementing technology solutions for enterprise and commercial clients across the United States.

Speaker Change: This is a transformational acquisition for Paltalk that we believe will provide excellent value for our stockholders.

Speaker Change: We expect that the acquisition, once completed, will have an immediate and meaningful impact on our revenue, since NTS's revenue in 2023 was approximately three times greater than Paltalk's 2023 revenue.

Jason Katz: We are extremely excited to enter the cloud infrastructure and cybersecurity sectors with the acquisition of a business we deem right for growth, both organically and through potential accretive acquisitions in the future. Given our management team's extensive technology expertise, which has been demonstrated throughout the years, we're confident in our ability to integrate, operate, and grow this business and enhance shareholder value. Now on to our second quarter results. We believe our second quarter results reflect the softness and discretionary spending by our subscribers, due in part to the overall economic and inflationary environment.

Speaker Change: We also expect the acquisition to provide enhanced opportunities for future growth and optimization.

Speaker Change: We are extremely excited to enter the cloud infrastructure and cybersecurity sectors with the acquisition of a business we deem right for growth, both organically and through potential accretive acquisitions in the future.

Jason Katz: Now on to our second quarter results. We believe our second quarter results reflect the softness and discretionary spending by our subscribers, due in part to the overall economic and inflationary environment. We believe these impacts are macroeconomic in nature and not long term for our business. We expect to continue to make adjustments to our promotional spending until we see a pickup in our metrics. We are excited about the recent launch of version nine of ManyCam, which features a revamped user interface and templates designed to assist with onboarding. During the second quarter, our cash positions decreased by $200,000 when the first quarter of 2024, which resulted in a cash balance of $12.8 million at the end of the quarter.

Speaker Change: Given our management team's extensive technology expertise that has been demonstrated throughout the years, we are confident in our ability to integrate, operate, and grow this business and enhance stockholder value. Now on to our second quarter results.

Jason Katz: We believe these impacts are macroeconomic in nature and not long-term for our business. We expect to continue to make adjustments to our promotional spending until we see a pickup in our metrics. We are excited about the recent launch of version 9 of ManyCam, which features a revamped user interface and templates designed to assist with onboarding.

Speaker Change: We believe our second quarter results reflect the softness and discretionary spending by our subscribers, due in part to the overall economic and inflationary environment.

Speaker Change: We believe these impacts are macroeconomic in nature and not long-term for our business. We expect to continue to make adjustments to our promotional spending until we see a pickup in our metrics.

Jason Katz: During the second quarter, our cash position decreased by $200,000 from the first quarter of 2024, which resulted in a cash balance of $12.8 million at the end of the quarter. Our trial against Cisco is set to begin later this month, and we look forward to continuing to defend our intellectual property. While we experienced a decline in revenue during the second quarter as compared to the prior year period, our team is working on several initiatives to return to growth. These include 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 and divestitures of certain assets.

Speaker Change: We are excited about the recent launch of version 9 of ManyCam, which features a revamped user interface and templates designed to assist with onboarding.

Jason Katz: Our trial in Cisco is set to begin later this month, and we look forward to continuing to defend our intellectual property. While we experience the decline in our revenue during the second quarter as compared to the prior year period, our team is working on several initiatives to return to growth. These include 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 and divestitures of certain assets. Continuing our efforts to leverage the integration of the many cam product into our PAL Talk product through upselling initiatives.

Speaker Change: During the second quarter, our cash position decreased by $200,000 from the first quarter of 2024, which resulted in a cash balance of $12.8 million at the end of the quarter.

Speaker Change: Our trial against Cisco is set to begin later this month and we look forward to continuing to defend our intellectual property.

Speaker Change: While we experienced a decline in our revenue during the second quarter as compared to the prior year period, our team is working on several initiatives to return to growth.

Jason Katz: 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. We are 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.

Jason Katz: Continuing our efforts to improve user experience with many cam software and optimize features to 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 develop our consumer application platform strategy by seeking potential partnerships with large third-party communities, 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.

Speaker Change: These include 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 and divestitures of certain assets.

Speaker Change: continuing our efforts to leverage the integration of the ManyCam product into our PalTalk product through upselling initiatives.

Speaker Change: Continuing our efforts to improve user experience with ManyCam software and optimized features for both consumer and enterprise applications.

Speaker Change: further optimizing marketing spend to effectively realize a positive return on our investment.

Jason Katz: Continuing to develop our consumer application platform strategy by seeking potential partnerships with large third-party communities with whom we could promote a co-branded version of our video chat products and potentially share in the incremental revenues generated by these partner communities. Now moving on to an update on our trial against Cisco, which is expected to begin on August 26, 2024. On July 23, 2021, a wholly owned subsidiary of the company, Paltalk Holdings, Inc., filed a patent infringement lawsuit against Webex Communications, Cisco Webex LLC, and Cisco Systems, collectively known as Cisco, and the U.S. District Court for the Western District of Texas.

Speaker Change: 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.

Jason Katz: Ladies. Now I'm moving on to an update on our trial against Cisco, which is expected to begin on August 26th, 2024. On July 23rd, 2021, a wholly-owned subsidiary at a company, Paltalk Holdings Inc., filed a patent infringement lawsuit against WebEx Communications, Cisco WebEx LLC, and Cisco Systems, collectively Cisco, in the US District Court for the Western District of Texas. We allege that certain of Cisco's products have been infringed to US Pat. number 6683858, and that we are entitled to damages. A mark been hearing took place on February 24th, 2022. On September 7th, 2022, the United States Patent Office issued a re-examination of US patent number 6668358.

Speaker Change: Continuing to develop our consumer application platform strategy by seeking potential partnerships with large third-party communities 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.

Jason Katz: We allege that certain of Cisco's products have infringed U.S. patent number 6683858 and that we are entitled to damages. A Markman hearing took place on February 24th, 2022. On September 7th, 2022, the United States Patent Office issued a re-examination of U.S. patent number 6683858, and on January 19th, 2023, the examiner issued an ex parte re-examination certificate ending the re-examination and confirming the patentability of claims 1 through 10 of U.S. patent number 6683858.

Kara Jenny: On June 29, 2023, the court held a pretrial conference with the parties and denied Cisco's motion for summary judgment. On August 1st, 2024, the court held the final pretrial conference, and the trial is now set to proceed on August 26th, 2024. Now, I'd like to pass this to Kara for a financial summary of our second quarter ended June 30, 2021. Thank you, Jason.

Speaker Change: Now moving on to an update on our trial against Cisco, which is expected to begin on August 26, 2024.

Speaker Change: On July 23, 2021, a wholly owned subsidiary of the company, Paltalk Holdings, Inc., filed a patent infringement lawsuit against Webex Communications, Cisco Webex LLC, and Cisco Systems, collectively Cisco, and the U.S. District Court for the Western District of Texas.

Speaker Change: We allege that certain of Cisco's products have infringed U.S. patent number 683858 and that we are entitled to damages.

Jason Katz: In on January 19th, 2023, the examiner issued an X Part A re-examination certificate ending the re-examination and confirming the patentability of claims 1 through 10 of US Patent number 6668358. On June 29th, 2023, the Court held the pretrial conference with the parties and denied Cisco's motion for summary judgment. On August 1st, 2024, the Court held the final pretrial conference, and the trial is now set to proceed on August 26th, 2024.

Speaker Change: A Markman hearing took place on February 24, 2022.

Speaker Change: On September 7, 2022, the United States Patent Office issued a re-examination of U.S. Patent No. 6683858.

Speaker Change: 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. 6683858.

Kara Jenny: Now, I'd like to pass it to Cara for a financial summary of our second quarter ended June 30th, 2024. Thank you, Jason. Revenue for the three months ended June 30th, 2024, decreased by 24.7% to 2.2 million compared to 2.9 million for the three months ended June 30th, 2023. This decrease was attributed to a decrease in virtual gift revenue of 47.7%. Loss from operations for the three months ended June 30th, 2024, increased by 322.8% or 0.9 million to a loss of 1.2 million compared to a loss of 0.3 million for the three months ended June 30th, 2023.

Kara Jenny: Revenue for the three months ended June 30th, 2024 decreased by 24.7% to 2.2 million compared to 2.9 million for the three months ended June 30th, 2023. This decrease was attributed to a decrease in virtual gift revenue of 47.7%. Loss from operations for the three months ended June 30th, 2024 increased by 322.8% or 0.9 million to a loss of 1.2 million compared to a loss of 0.3 million for the three months ended June 30th, 2023.

Speaker Change: On June 29, 2023, the court held a pre-trial conference with the parties and denied Sisco's motion for summary judgment.

Speaker Change: On August 1st, 2024, the court held the final pre-trial conference and the trial is now set to proceed on August 26th, 2024.

Speaker Change: Now, I'd like to pass it to Cara for a financial summary of our second quarter ended June 30, 2024.

Cara Jenny: Thank you, Jason. Revenue for the three months ended June 30, 2024 decreased by 24.7% to $2.2 million, compared to $2.9 million for the three months ended

Cara Jenny: June 30th, 2023. This decrease was attributed to a decrease in virtual gift revenue of 47.7 percent.

Kara Jenny: The increase in loss from operations was attributed to a decrease in revenue for the three months ended June 30th, 2024, as well as an increase in professional fees. Net loss for the three months ended June 30th, 2024, increased by 788% or 1.1 million to a net loss of 0.9 million compared to net income of 0.1 for the three months ended June 30th, 2023. Adjusted EBITDA loss for the three months ended June 30th, 2024, increased by approximately 6,164% or 0.9 million to an adjusted EBITDA loss of 0.9 million compared to an adjusted EBITDA loss of $14,945 for the three months ended June 30th, 2023.

Kara Jenny: The increase in loss from operations was attributed to a decrease in revenue for the three months ended June 30th, 2024 as well as an increase in professional fees. Net loss for the three months ended June 30, 2024, increased by 788%, or $1.1 million, to a net loss of $0.9 million compared to net income of $0.1 million for the three months ended June 30, 2023. Adjusted EBITDA loss for the three months ended June 30, 2024, increased by approximately 6,164 percent or 0.9 million to an adjusted EBITDA loss of 0.9 million compared to an adjusted EBITDA loss of $14,945 for the three months ended June 30, 2023.

Cara Jenny: Loss from operations for the three months ended June 30, 2024 increased by 322.8% or 0.9 million to a loss of 1.2 million, compared to a loss of 0.3 million for the three months ended June 30, 2023.

Cara Jenny: The increase in loss from operations was attributed to a decrease in revenue for the three months ended June 30, 2024, as well as an increase in professional fees.

Cara Jenny: Net loss for the three months ended June 30, 2024, increased by 788%, or $1.1 million to a net loss of $0.9 million compared to net income of $0.1 million for the three months ended June 30, 2023.

Kara Jenny: Now turning to our financial results for the six months ended June 30th, 2024. Revenue for the six months ended June 30th, 2024, decreased by 12.6% to $4.8 million compared to $5.5 million for the six months ended June 30th, 2023. This decrease was attributed to a decrease in virtual gift revenue of 26.6%. Loss from operations for the six months ended June 30th, 2024, increased by 63.2% or 0.7 million to a loss of 1.9 million compared to a loss of 1.2 million for the six months ended June 30th, 2023. The decrease in loss from operations was attributed to a decrease in revenue for the six months ended June 30th, 2024.

Kara Jenny: Now turning to our financial results for the six months ended June 30th, 2024 revenue for the six months ended June 30th, 2024 decreased by 12.6% to $4.8 million compared to 5.5 million for the six months ended June 30th, 2023. This decrease was attributed to a decrease in virtual gift revenue of 26.6%. Loss from operations for the six months ended June 30th, 2024 increased by 63.2% or 0.7 million to a loss of 1.9 million compared to a loss of 1.2 million for the six months ended June 30th, 2023.

Cara Jenny: Adjusted EBITDA loss for the three months ended June 30, 2024 increased by approximately 6,164 percent or 0.9 million.

Speaker Change: to an adjusted E-visa loss of $0.9 million compared to adjusted E-visa loss of $14,945 for the three months ended June 30, 2023.

Speaker Change: Now, turning to our financial results for the six months ended June 30, 2024.

Speaker Change: Revenue for the six months ended June 30, 2024, decreased by 12.6% to $4.8 million, compared to $5.5 million for the six months ended June 30, 2023. This decrease was attributed to a decrease in virtual gift revenue of 26.6%.

Kara Jenny: Net loss for the six months ended June 30th, 2024, increased by 136.7% or 0.8 million to a net loss of 1.4 million compared to a net loss of 0.6 million for the six months ended June 30th, 2023. Adjusted EBITDA loss for the six months ended June 30th, 2024, increased by approximately 116.1% or 0.7 million to an adjusted EBITDA loss of 1.4 million compared to an adjusted EBITDA loss of 0.7 million for the six months ended June 30th, 2023. Cash equivalence totaled 12.8 million at June 30th, 2024, a decrease of 0.8 million compared to 13.6 million at December 31st, 2023, and we continue to have no long-term debt on our balance sheet at June 30th, 2024.

Kara Jenny: The decrease in loss from operations was attributed to a decrease in revenue for the six months ended June 30th, 2024. Net loss for the six months ended June 30th, 2024 increased by 136.7% or 0.8 million to a net loss of 1.4 million compared to a net loss of 0.6 million for the six months ended June 30th, 2023 adjusted loss for the six months ended June 30th, 2024 increased by approximately 116.1% or 0.7 million to adjusted loss of 1.4 million compared to an adjusted loss of 0.7 million for the six months ended June 30th, 2023.

Speaker Change: Loss from operations for the six months ended June 30, 2024, increased by 63.2%, or $0.7 million to a loss of $1.9 million, compared to a loss of $1.2 million for the six months ended June 30, 2023. The decrease in loss from operations was attributed to a decrease in revenue for the six months ended June 30.

Speaker Change: 2024. Net loss for the six months ended June 30th, 2024, increased by 136%.

Speaker Change: 0.7% or 0.8 million to a net loss of 1.4 million compared to a net loss of 0.6 million.

Kara Jenny: Cash and cash equivalents totaled $12.8 million at June 30, 2024, a decrease of $0.8 million compared to $13.6 million at December 31, 2023, and we continue to have no long-term debt on our balance sheet at June 30, 2024.

Speaker Change: For the six months ended June 30th, 2023 adjusted even though lost for the six months ended June 30th.

Speaker Change: 2024 increased by approximately 116.1% or 0.7 million to adjusted evidence at a loss of 1.4 million compared to an adjusted evidence at a loss of 0.7 million for the six months ended June 30, 2023.

Operator: We will now move on to questions.

Jason Katz: We will now move on to questions. 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? We believe our second quarter results reflect a decrease in discretionary subscriber spending as a result of an inflationary economic environment.

Jason Katz: 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? 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.

Operator: and welcome to the Paltalk's second quarter 2024 results conference call. At this time, all participants are on a listen only mode. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this call is being recorded.

Speaker Change: Cash and cash equivalents totaled $12.8 million at June 30, 2024, a decrease of $0.8 million compared to $13.6 million at December 31, 2023, and we continue to have no long-term debt on our balance sheet at June 30, 2024.

Operator: 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. Is the Cisco trial for certain starting on August 26, or can something happen like in the past to further delay it? While there is no assurance that the trial will start on August 26th, we believe, management believes that it will commence on that date. In addition, jury selection for the trial has already been set for August 20th as well.

Operator: Are the low-turned-to-conference over to your host, Kara Jenny, CFO of Paltalk. Mom, floor is yours.

Speaker Change: We will now move on to questions.

Jason Katz: We are optimistic about the launch of version 9 of many candidates' potential to gain traction with new and existing subscribers.

Speaker Change: 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?

Kara Jenny: Hello everyone and welcome to the Paltalk operating and financial results conference call for the second quarter ended June 30th, 2024. By now, everyone should have access to the earnings press release, which was issued earlier this afternoon at approximately 4 p.m. Eastern time. This call is being webcast and will be available for replay. In our remarks today, we will include statements that are considered forward-looking within the meaning 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.

Jason Katz: Is the Cisco trial for certain starting August 26, or can something happen like in the past to further delay it? While there is no assurance that the trial will start on August the 26th, we believe management believes that it will commence on that date. In addition, jury selection for the trial has already been set for August 20th as well.

Speaker Change: We believe our second quarter results reflect the decrease in discretionary subscriber spending as a result of an inflationary economic environment.

Speaker Change: 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.

Kara Jenny: In addition, 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 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 quarterly reports on form 10Q and annual reports on form 10K.

Speaker Change: We are optimistic about the launch of version 9 of ManyCam and its potential to gain traction with new and existing subscribers.

Jason Katz: Jason, 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.

Jason Katz: Jason, back to you to close out the presentation. Thank you everyone for your support and for joining us today. We're very grateful for your interest in our business. We look forward to updating the market and our stockholders with our progress on our business objectives, our pending patent litigation against Cisco WebEx, with the trial scheduled to start on August 26, 2024, and our potential strategic accretive acquisitions, which we continue to identify and analyze. Have a great day. Thank you. This concludes today's conference, and you may disconnect your lines at this time, and we thank you for your participation.

Speaker Change: Is the Cisco trial for certain starting August 26 or can something happen like in the past to further delay it?

Jason Katz: We look forward to updating the market in our stockholders with our progress in our business.

Speaker Change: While there is no assurance that the trial will start on August the 26th

Jason Katz: Objectives are pending patent litigation against Cisco WebEx, with the trial scheduled to start on August the 26th, 2024. And our potential strategic accretive acquisitions, which we continue to identify and analyze. Have a great day. Thank you.

Speaker Change: we believe, management believes, that it will commence on that date. In addition, jury selection for the trial has already been set for August the 20th as well.

Speaker Change: Jason, back to you to close out the presentation.

Operator: This concludes today's conference, and you may disconnect your lines at this time. We thank you for your participation.

Jason Katz: Thanks everyone for your support and for joining us today. We're very grateful for your interest in our business. We look forward to updating the market and our stockholders with our progress on our business.

Kara Jenny: You should refer to these and consider these factors when relying on such forward-looking information. 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, except as required by applicable law. On this call, we will refer to adjusted evida, a non-gap measure that when used in combination with gap results provides our investors and us with additional analytical tools to understand our operations.

Jason Katz: Objectives are pending patent litigation against Cisco Webex with the trial scheduled to start on August the 26 2024 and our potential strategic accretive acquisitions which we continue to identify and analyze. Have a great day.

Speaker Change: Thank you. This concludes today's conference and you may disconnect your lines at this time and we thank you for your participation.

Kara Jenny: For adjusted evida, we have provided a reconciliation to the most direct, comparable gap financial measure in our earnings press release, which will be posted on the Investor Relations section of our website at www.palthock.com.

Jason Katz: And with that, I would like to introduce Palthock's Chief Executive Officer, Jason Katz. Thank you, Cara, and good afternoon, everyone. We greatly appreciate you taking the time to join us on today's call. We will discuss our operating highlights and financial results for the second quarter ended June 30th, 2024. We will also provide an update on our business objectives and strategies.

Jason Katz: After my opening statement, our Chief Financial Officer, Cara Jenning, will give a summary of our financial results for the second quarter ended June 30th, 2024. Following our prepared remarks, we will move into the Q&A portion and answer any questions that were submitted prior to this call.

Jason Katz: With that, I would now like to walk you through the recent financial operating highlights and near-term business objectives.

Jason Katz: We are very pleased to announce that we entered into an agreement to acquire new tech technology solutions in a wholly owned subsidiary of new tech one, Inc. NTS provides dedicated server hosting, cloud hosting, managed security, and other related services, including consulting and implementing technology solutions for enterprise and commercial clients across the United States.

Jason Katz: This is a transformational acquisition for Paltalk that we believe will provide excellent value for our stockholders. We expect that the acquisition, once completed, will have an immediate and meaningful impact on our revenue since NTS's revenue in 2023 was approximately three times greater than Paltalk's 2023 revenue. We also expect the acquisition to provide enhanced opportunities for future growth and optimization. We are extremely excited to enter the cloud infrastructure and cybersecurity sectors with the acquisition of a business we deem right for growth both organically and through potential accretive acquisitions in the future.

Jason Katz: Given our management team's extensive technology expertise that has been demonstrated throughout the years, we are confident in our ability to integrate, operate, and grow this business and enhance stockholder value.

Jason Katz: Now on to our second quarter results. We believe our second quarter results reflect the softness and discretionary spending by our subscribers, doing part to the overall economic and inflationary environment. We believe these impacts are macroeconomic in nature and not long term for our business. We expect to continue to make adjustments to our promotional spending until we see a pickup in our metrics.

Jason Katz: We are excited about the recent launch of version nine of many cam, which features a revamped user interface and templates designed to assist with onboarding. During the second quarter our cash positions decreased by $200,000 when the first quarter of 2024, which resulted in a cash balance of $12.8 million at the end of the quarter.

Jason Katz: Our trial in Cisco is set to begin later this month and we look forward to continuing to defend our intellectual property. While we experience the decline in our revenue during the second quarter as compared to the prior year period, our team is working on several initiatives to return to growth. These include continuing to explore strategic opportunities, including but non-limited to potential mergers or acquisitions of other assets or entities that are synergistic to our businesses and divestitures of certain assets.

Jason Katz: Continuing our efforts to leverage the integration of the many cam product into our PAL talk product through upselling initiatives. Continuing our efforts to improve user experience with many cam software and optimize features to 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.

Jason Katz: Continuing to develop our consumer application platform strategy by seeking potential partnerships with large third-party communities, 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.

Jason Katz: Ladies. Now I'm moving on to an update on our trial against Cisco, which is expected to begin on August 26th, 2024.

Jason Katz: On July 23rd, 2021, a wholly-owned subsidiary at a company, Paltalk Holdings Inc., filed a patent infringement lawsuit against WebEx communications, Cisco WebEx LLC, and Cisco Systems, collectively Cisco, and the US District Record for the Western District of Texas. We allege that certain of Cisco's products have been infringed to US Pat number 6683858, and that we are entitled to damages.

Jason Katz: A mark been hearing took place on February 24th, 2022.

Jason Katz: On September 7th, 2022, the United States Patent Office issued a re-examination of US Patent number 6668358. In on January 19th, 2023, the examiner issued an X Part A re-examination certificate ending the re-examination and confirming the patent ability of claims 1 through 10 of US Patent number 6668358.

Jason Katz: On June 29th, 2023, the Court held the pretrial conference with the parties and denied Cisco's motion for summary judgment. On August 1st, 2024, the Court held the final pretrial conference, and the trial is now set to proceed on August 26th, 2024.

Kara Jenny: Now, I'd like to pass it to Cara for a financial summary of our second quarter ended June 30th, 2024. Thank you, Jason. Revenue for the three months ended June 30th, 2024, decreased by 24.7% to 2.2 million compared to 2.9 million for the three months ended June 30th, 2023.

Kara Jenny: This decrease was attributed to a decrease in virtual gift revenue of 47.7%. Loss from operations for the three months ended June 30th, 2024 increased by 322.8% or 0.9 million to a loss of 1.2 million compared to a loss of 0.3 million for the three months ended June 30th, 2023. The increase in loss from operations was attributed to a decrease in revenue for the three months ended June 30th, 2024, as well as an increase in professional fees.

Kara Jenny: Net loss for the three months ended June 30th, 2024 increased by 788% or 1.1 million to a net loss of 0.9 million compared to net income of 0.1 for the three months ended June 30th, 2023.

Kara Jenny: Adjusted EBITDA loss for the three months ended June 30th, 2024 increased by approximately 6,164% or 0.9 million to an adjusted EBITDA loss of 0.9 million compared to a adjusted EBITDA loss of $14,945 for the three months ended June 30th, 2023.

Kara Jenny: Now turning to our financial results for the six months ended June 30th, 2024. Revenue for the six months ended June 30th, 2024 decreased by 12.6% to $4.8 million compared to $5.5 million for the six months ended June 30th, 2023. This decrease was attributed to a decrease in virtual gift revenue of 26.6%. Loss from operations for the six months ended June 30th, 2024 increased by 63.2% or 0.7 million to a loss of 1.9 million compared to a loss of 1.2 million for the six months ended June 30th, 2023. The decrease in loss from operations was attributed to a decrease in revenue for the six months ended June 30th, 2024.

Kara Jenny: Net loss for the six months ended June 30th, 2024 increased by 136.7% or 0.8 million to a net loss of 1.4 million compared to a net loss of 0.6 million for the six months ended June 30th, 2023. Adjusted EBITDA loss for the six months ended June 30th, 2024 increased by approximately 116.1% or 0.7 million to a adjusted EBITDA loss of 1.4 million compared to an adjusted EBITDA loss of 0.7 million for the six months ended June 30th, 2023.

Kara Jenny: Cash equivalence totaled 12.8 million at June 30th, 2024, a decrease of 0.8 million compared to 13.6 million at December 31st, 2023, and we continue to have no long term debt on our balance sheet at June 30th, 2024.

Jason Katz: We will now move on to questions. 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? We believe our second-quarter results reflect the decrease in discretionary subscriber spending as a result of an inflationary economic environment.

Jason Katz: 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 many candidates potential to gain traction with new and existing subscribers. Is the Cisco trial for certain starting August 26 or can something happen like in the past to further delay it? While there is no assurance that the trial will start on August the 26th, we believe management believes that it will commence on that date. In addition, jury selection for the trial has already been set for August the 20th as well.

Jason Katz: Jason, 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 in our stockholders with our progress in our business.

Jason Katz: Objectives are pending patent litigation against Cisco WebEx with the trial scheduled to start on August the 26th, 2024. And our potential strategic accretive acquisitions which we continue to identify and analyze. Have a great day. Thank you.

Operator: This concludes today's conference and you may disconnect your lines at this time and we thank you for your participation.