Q4 2024 Intelligent Protection Management Corp Earnings Call

Operator: Greetings, welcome to the Intelligent Protection Management Corporation Q4 2024 results conference. 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.

Greetings and welcome to the Intelligent Protection Management Corporation Q4, 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.

Operator: Please note, this conference is being recorded.

Please note this conference is being recorded.

Operator: I will now turn the conference over to your host, Kara Jenny CFO. You may begin.

I'll now turn the conference over to your host Kara Jenny CFO.

Speaker Change: You may begin.

Kara Jenny: Hello, everyone, and welcome to the IPM Operating and Financial Results Conference call for the fourth quarter and year ended December 31st, 2024. By now, everyone should have access to the earnings results press release, which was issued earlier this afternoon at approximately 4 p.m. Eastern Time.

Speaker Change: Hello, everyone and welcome to the I P M operating and financial results conference call for the fourth quarter and year ended December 31, 2024 by now everyone should have access to the earnings results press release, which was issued earlier. This afternoon at approximately four P. M. Eastern time this call.

Kara Jenny: 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. 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 statement.

Speaker Change: 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.

Speaker Change: As well as market and potential growth opportunities. In addition management may make additional forward looking statements in response to your questions.

Speaker Change: 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. These expectations and beliefs may not ultimately prove to be correct a detailed.

Kara Jenny: These expectations and beliefs may not ultimately prove to be correct.

Kara Jenny: A detailed discussion of such risks and uncertainties are contained in our filings with the SEC, including our annual report on Form 10-K. You should refer to and consider these factors when relying on such forward-looking information.

Speaker Change: And of such risks and uncertainties are contained in our filings with the SEC, including our annual report on Form 10-K, you should refer to 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.

Kara Jenny: 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: 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 provide us and our investors with additional analytical tools to understand our operations for adjusted EBITDA. We have provided a reconciliation to the most.

Kara Jenny: On this call, we will refer to Adjusted EBITDA, a non-GAAP measure that, when used in combination with GAAP results, provides us and our investors with additional analytical tools to understand our operations. For Adjusted EBITDA, we've 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 www.ipm.com.

Speaker Change: Directly comparable GAAP financial measure in our earnings press release, which will be posted on the Investor Relations section of our website at Www Dot I P M Dot com.

Jason Katz: And with that, I would like to introduce IPM's Chief Executive Officer, Jason Katz. Thank you, Kara, and good afternoon, everyone. We greatly appreciate you taking the time to join us on today's call.

Jason Cats: With that I would like to introduce Itm's, Chief Executive Officer, Jason Cats.

Speaker Change: Thank you Jarrod and good afternoon, everyone. We greatly appreciate you taking the time to join us on today's call.

Jason Katz: As previously disclosed in January 2025, we completed our acquisition of NewTek Technology Solutions, or NTS, from NewTekOne, and the sale of our Paltalk, Camfrog, and Vumber applications and certain assets and liabilities related to such applications to Meteor Mobile Holdings, Inc. The financial results for the three months and year ended December 31st, 2024, discussed throughout this call, relate to our business prior to such transactions.

Speaker Change: As previously disclosed in January 2025, we completed our acquisition of New Tech technology solutions or N T S from new check one.

Speaker Change: The sale of our Pal Tau Cam Prague in bumper applications, and certain assets and liabilities related to such applications to maybe your mobile Holdings, Inc.

The financial results for the three months and year ended December 31, 2024 discussed throughout this call relate to our business prior to such transactions.

Jason Katz: We will also provide the rationale behind our transition into the cloud infrastructure and cybersecurity sectors and provide color on our new business objectives and strategies.

Speaker Change: We will also provide the rationale behind our transition into the cloud infrastructure and cyber security sectors.

Speaker Change: Rod color, a lot of new business objectives and strategies.

Jason Katz: After my opening statement, our CFO, Kara Jenny, will give a summary of our financial results for the fourth quarter and year ended December 31st, 2024, which again are reflective of our historic business prior to the transaction.

Speaker Change: After my opening statement CFO Cara Jenny will give a summary of our financial results for the fourth quarter and year ended December 31st 2024, which again are reflective of our historic business prior to the transactions.

Jason Katz: Following our prepared remarks, we'll move into the Q&A portion and answer any questions that were submitted prior to this call.

Speaker Change: 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 our recent financial and operating highlights and near-term business objectives. With the closing of our acquisition of NTS and our divestiture of our communication software and multimedia social platforms in early January 2025, we have officially moved our company into the cloud infrastructure and cybersecurity sectors. We believe these transformational transactions will have a meaningful impact on our revenue and will provide us with additional opportunities for growth and a strong value proposition for our stockholders. While we are focused on delivering growth and increasing profitability as a managed technology solutions provider, we believe we bolstered our value in 2024 by successfully defending our intellectual property.

Speaker Change: With that.

Speaker Change: Like to walk you through our recent financial and operating highlights our near term business objectives.

Speaker Change: With the closing of our acquisition of MTS, and our divestiture of our communication software and multimedia social platforms in early January 2025, we.

Speaker Change: We have officially moved our company into the cloud infrastructure and cyber security sectors.

Speaker Change: We believe these transformational transactions will have a meaningful impact on our revenue will provide us with additional opportunities for growth and a strong value proposition for our stockholders.

Speaker Change: We are focused on delivering growth and increasing profitability as a managed technology solutions provider. We believe we bolstered our value in 2020 four by successfully defending our intellectual property.

Jason Katz: In addition, as a result of the divestiture, IPM is eligible to receive certain earn-out payments in the future based on Meteor Mobile's cash revenue attributable to the Paltalk, Camfrog, and Bumber applications. We're very excited with the prospect of expanding our managed technology solutions business, particularly in the cloud infrastructure and cybersecurity sectors. Following the transactions, our team is re-energized and focused on the growth of our business. Additionally, we expect that the recently announced referral arrangement with NewTekOne, current client and a financial holding company with tens of thousands of its own business clients, has great potential to help us find new customers.

Speaker Change: In addition, as a result of the divestiture I B M is eligible to receive certain earn out payments in the future based on Meteor mobiles cash revenue attributable to the pallets are camped brog and bumper applications.

Speaker Change: We're very excited with the prospect of expanding our managed technology solutions business, particularly in the cloud infrastructure and cyber security sectors.

Speaker Change: Following the transactions our team has reenergized and focused on the growth of our business. Additionally, we expect that the recently announced referral arrangement with new Tech one current client and a financial holding company with tens of thousands of its own business clients as great potential to help us find new customers.

Jason Katz: We believe that cybersecurity is a technology area that is top of mind for all companies, small and large, and ripe for growth. Additionally, we believe there will be ample merger and acquisition opportunities to further scale growth. We look forward to growing the business and building a healthy pipeline of prospective and new customers.

Speaker Change: We believe that cyber security is a technology area that is top of mind for all companies small and large and ripe for growth.

Speaker Change: Additionally, we believe there will be ample merger and acquisition opportunities to further scale growth.

Speaker Change: We look forward to growing the business and building a healthy pipeline of prospective new customers.

Jason Katz: As a result of the transformative transactions, our near-term business objectives now include continuing the integration of our comprehensive range of IT-related solutions Incorporating ManyCam is an offering for our new customers and seeking to optimize our cross-selling efforts with our other technology solutions.

Speaker Change: As a result of the transformative transactions on near term business. Jack objectives. Now include continuing the integration of our comprehensive range by T related solutions.

Speaker Change: Incorporating many cameras and offering for our new customers and seeking to optimize our cross selling efforts with our other technology solutions.

Jason Katz: 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 continuing to defend our intellectual property.

Speaker Change: 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.

Speaker Change: And continuing to defend our intellectual property.

Jason Katz: In regards to our patent litigation, on July 23, 2021, our wholly owned subsidiary, Paltalk Holdings, Inc., filed a patent infringement lawsuit against Webex Communications, Inc., Cisco Webex LLC, and Cisco Systems, Inc., in the District Court for the Western District of Texas. We allege that certain of Cisco's products infringed U.S. patent number 6683858 and that we were entitled to damages. On August 26, 2024, a jury trial commenced in the Western District of Texas before the Honorable Judge Alan Albright. On August 29, 2024, after four days of trial, the jury awarded us $65.7 million in the jury verdict in connection with the lawsuit.

Speaker Change: In regards to our patent litigation on July 23rd 2021, or a wholly owned subsidiary Pallets Hog Holdings, Inc. Filed a patent infringement lawsuit against Webex Communications, Inc. Cisco Webex, LLC, and Cisco Systems, Inc, and the district court for the Western District of Texas.

Speaker Change: We alleged that certain of Cisco's products infringe U S. Patent number 6683858, and then we were entitled to damages.

Speaker Change: On August 26, 2020 for a jury trial commenced in the Western district of Texas before the honorable Judge Allen Albright.

Speaker Change: On August 29th 'twenty 'twenty four after four days of trial, the jury awarded a $65 $7 million in the jury verdict in connection with the law soon.

Jason Katz: On October 8, 2024, an order granting a motion for final judgment was entered into in the court in connection with the lawsuit. The final judgment was entered in our favor in the Amality Award and started the time for filing any post-trial motions or appeals. The exact amount of the award proceeds to be received by us will be determined based on a number of factors and will reflect the deduction of significant litigation related expenses including legal fees. Consequently, we estimate that we would receive no more than one-third of the gross proceeds in connection with the award subject to post-trial proceedings, including any potential appellate proceedings by Cisco.

Speaker Change: On October eight 2020 for an order granting emotion final judgment was entered into in the court in connection with the lawsuit.

Speaker Change: Final judgment was entered in our favor in the amount of the award and started the time for filing any post trial motions or appeal.

Speaker Change: The exact amount of the award proceeds to be received by US will be determined based on a number of factors and will reflect the deduction of significant litigation related expenses, including legal fees.

Consequently, we estimate that we would receive no more than one third of the gross proceeds in connection with the award subject to post trial proceedings, including any potential appellate proceedings by Cisco.

Jason Katz: We have not recorded any game contingency in connection with the award.

Speaker Change: We have not recorded any game contingency in connection with the award.

Kara Jenny: Now I'd like to pass it to Kara for a financial summary of the fourth quarter and year ended December 31st, 2024. Thank you, Jason. Revenue from continuing operations increased 9.1% to 0.3 million from nearly 0.3 million as a result of increased sales from ManyCam, including revenue from discontinued operations of 1.9 and 2.4 for the three months ended December 31st, 2024 and 2023, respectively, which is included in the loss from discontinued operations on the statement of operations, revenue decreased 21% to 2.1 million from 2.7 million, primarily due to a decrease in subscription revenue and virtual gift revenue from Paltalk, Camfrog, partially offset by increased revenue from advertising.

Cara Jenny: Now I'd like to pass it to Cara for a financial summary of the fourth quarter and year ended December 31 2024.

Cara Jenny: Thank you Jason.

Cara Jenny: Revenue from continuing operations increased nine 1% to point 3 million from nearly one 3 million as a result of increased sales from many can including revenue from discontinued operations of $1 nine in two point for the three months ended December 31, 2024, and 2023, respectively, which is.

Cara Jenny: Included in the loss from discontinued operations on the statement of operations revenue decreased 21% to $2 1 million from $2 7 million, primarily due to a decrease in subscription revenue and virtual gift revenue from power Park Cam frog, partially offset by increased revenue from advertising.

Kara Jenny: Net loss from continuing operations increased by 142% to $1.4 million compared to a net loss from continuing operations of $0.6 million and included $0.6 million of increased professional fees incurred in connection with the transactions, as well as increased public company expenses and an increase in compensation expense related to the transaction. Loss from discontinued operations increased by 1,449% to $4.1 million compared to income from discontinued operations of $0.3 million and included a one-time impairment loss on a divested assets of $3.8 million as well as a decrease in virtual gift revenue from discontinued operations compared to the three months ended December 31, 2020.

Cara Jenny: Net loss from continuing operations increased by 142% to $1 4 million compared to a net loss from continuing operations of <unk> 6 million and included <unk> 6 million of increased professional fees incurred in connection with the transaction as well as increased public company expense.

Cara Jenny: And an increase in compensation expense related to the transaction.

Cara Jenny: Loss from discontinued operations increased by 1449% to $4 1 million compared to income from discontinued operations of <unk> 3 million and included a one time impairment loss on divested assets of $3 8 million as well as a decrease in virtual.

Cara Jenny: Revenue from discontinued operations compared to the three months ended December 31st 2023.

Kara Jenny: Net loss increased by 1,840% to $5.5 million compared to $0.3 million. Adjusted EBITDA loss was $1.5 million compared to adjusted EBITDA loss of $0.2 million, an increase of 594%.

Cara Jenny: Net loss increased by 1840% to $5 5 million compared to point 3 million adjusted EBITDA loss was $1 5 million compared to adjusted EBITDA loss of $2 million, an increase of 594% net.

Kara Jenny: Net cash used in operating activities for the quarter was $1.5 million.

Cara Jenny: Net cash used in operating activities for the quarter was $1 5 million.

Kara Jenny: Now turning to financial results for the year ended December 31st, 2024. Revenue from continuing operations increased 14 percent to $1.1 million from $1 million as a result of increased sales from many When including the revenue from discontinued operations of $8 million and $10 million for the year ended December 31, 2023, respectively, which is included in the loss from discontinued operations on the statement of operations, revenue decreased 17% to $9.1 million from $10.9 million, primarily due to a decrease in subscription and virtual gift revenue from Paltalk and Camfrog, partially upset by increased revenue from advertisers. Net loss from continuing operations increased by 59% to $4.3 million, compared to net loss from continuing operations of $2.7 million, and included $1.8 million of increased professional fees incurred in connection with the transactions, as well as increased public company expenses and an increase in compensation expense related to the transactions.

Cara Jenny: Now turning to financial results for the year ended December 31 2024.

Cara Jenny: Revenue from continuing operations increased 14% to $1 1 million from $1 million as a result of increased sales from many cam.

Cara Jenny: When including the revenue from discontinued operations.

Cara Jenny: 8 million and $10 million for the year ended December 31st 2023, respectively, which is included in the loss from discontinued operations on the statement of operations revenue decreased 17% to $9 1 million from $10 9 million, primarily due to a decrease in subscription and virtual.

Cara Jenny: Gift revenue from Pal talk and Cam frog, partially offset by increased revenue from advertising.

Cara Jenny: Net loss from continuing operations increased by 59% to $4 3 million compared to net loss from continuing operations of $2 7 million and included $1 8 million of increased professional fees incurred in connection with the transaction as well as increased public company expenses and an increase in <unk>.

Cara Jenny: <unk> expense related to the transactions.

Kara Jenny: loss from discontinued operations increased by 357% to $4.2 million compared to income from discontinued operations of $1.6 million for the year ended December 31st, 2024, and included a one-time impairment loss on divested assets of $3.8 million as well as a decrease in virtual gift revenue from discontinued operations compared to the three months ended December 31st, 2023. Net loss increased by 690% to $8.4 million compared to a net loss of $1.1 million. Adjusted EBITDA loss was $4.4 million compared to adjusted EBITDA loss of $1 million, an increase of 338%.

Cara Jenny: Loss from discontinued operations increased by 357% to $4 2 million compared to income from discontinued operations of $1 6 million for the year ended December 31, 2024 and included a one time impairment loss on divested assets of $3 8 million as well as a decrease in <unk>.

Virtual gift revenue from discontinued operations compared to the three months ended December 31, 2023, net loss increased by 690% to $8 4 million compared to a net loss of $1 1 million adjusted EBITDA loss was $4 4 million compared to adjusted EBITDA loss of 1 million.

Cara Jenny: An increase of 338%.

Kara Jenny: The company had $10.6 million in cash and no long-term debt on its balance sheet as of December 31, 2024.

Cara Jenny: The company had $10 $6 million in cash and no long term debt on its balance sheet as of December 31st 2024.

Jason Katz: We will now move on to the questions we received for Jace. First question. Should we expect to see additional patent infringement lawsuits filed by you?

Speaker Change: We will now move on to the questions that you received for Jason.

Cara Jenny: First question should.

Speaker Change: Should we expect to see additional patent infringement lawsuits filed by you.

Jason Katz: Intellectual property is a very important asset for the company and we continuously review our patent portfolio in order to protect our intellectual property.

Speaker Change: Intellectual property is a very important asset for the company and we continuously review our patent portfolio in order to protect our intellectual property.

Jason Katz: Next question. Since you've now owned cybersecurity and cloud infrastructure business for more than two months, are you more or less enthusiastic about its growth process? I remain very enthusiastic about the managed hosted cloud and managed cybersecurity businesses and its prospects for growth.

Speaker Change: Next question since you've now on cyber security and cloud infrastructure business for more than two months are you more or less enthusiastic about its growth prospects.

I remain very enthusiastic about the manage hosted cloud managed cyber security businesses and its prospects for growth cyber security is essential for all businesses large and small and truly a necessity in today's world.

Jason Katz: Cybersecurity is essential for all businesses, large and small, and truly a necessity in today's world.

Speaker Change: Yeah.

Jason Katz: Next question, what are the biggest challenges with the cybersecurity and cloud infrastructure business? As a cybersecurity and cloud infrastructure business, one of our main priorities is to deliver secure, compliant, and resilient technology to customers operating in highly regulated industries such as banking and finance. With the growth of AI and increased sophistication of cyber-related threats, one of our greatest challenges is remaining proactive and responsive and fortifying our infrastructure against the spectrum of potential risks that are continuously evolving.

Speaker Change: Next question what are the biggest challenges with the cyber security and cloud infrastructure business.

Speaker Change: Well, it's the cyber security and cloud infrastructure business one of our main priorities is to deliver secure compliant and resilient technology to customers operating in highly regulated industries, such as banking and finance with the growth of AI and increased sophistication of cyber related threats one of our greatest challenges as Roma.

Speaker Change: Proactive and responsive and fortifying our infrastructure against the spectrum of potential risks, there's a continuously evolving.

Jason Katz: Do you disclose any significant customers by name, and can you be more specific about what you do for your customers, narrowing it down within cybersecurity or cloud infrastructure? As mentioned above, NewTek One is currently our largest customer. We serve a diverse customer base across various industries, including, among others, finance, legal, healthcare, and manufacturing.

Speaker Change: Do you disclose any significant customers by name and can you be more specific about what you do for your customers narrowing it down within cyber security or cloud infrastructure.

Speaker Change: As mentioned above new Tech one is currently our largest customer.

Speaker Change: We serve a diverse customer base across various industries, including among others finance legal health care and manufacturing.

Jason Katz: As far as our offered services, we provide managed IT, security services, professional services, procurement services, secure private cloud hosting, managed backup and disaster recovery, and web hosting, each of which is discussed in greater detail in our annual report.

Speaker Change: As far as our offered services, we provide managed security services professional services procurement services secure private cloud hosting managed backup and disaster recovery.

Speaker Change: Webhosting each of which as discussed in greater detail in our annual report.

Jason Katz: Are there opportunities to further expand and grow with existing customers? We think there are numerous opportunities to expand and grow with both existing and new customers. In addition to managing client relationship, our sales force is focused on expanding the number of solutions our customers purchase from us by introducing them to additional solutions.

Speaker Change: Are there opportunities to further expand and grow with existing customers.

Speaker Change: Oh, we think there are numerous opportunities to expand and grow with both existing and new customers.

Speaker Change: In addition to managing client relationships. Our sales force is focused on expanding the number of solutions our customers purchase from us by introducing them to additional solutions. We believe our proactive high touch service model insurers long term client relationships and sustained competitive advantage in a rapidly evolving.

Jason Katz: We believe our proactive, high-touch service model ensures long-term client relationships and sustained competitive advantage in a rapidly evolving market. Additionally, in the future, we plan to make arrangements with third parties to incorporate AI features into our secure private cloud offerings, which we believe will have the potential to expand our service offerings with our existing customers.

Speaker Change: Market. Additionally.

Speaker Change: Additionally, in the future we plan to make arrangements with third parties to incorporate AI features into our secure private cloud offerings, which we believe will have the potential to expand our service offerings with our existing customers.

Jason Katz: The last question, can you discuss your product suite in a little more detail? Well sure, IPM provides managed hosting, managed cyber security, backup and disaster recovery, procurement and web hosting.

Speaker Change: The last question can you discuss your product suite and a little more detail well sure I P. M provides managed hosting managed cyber security backup and disaster recovery procurement and web hosting.

Jason Katz: The global managed services market is projected to grow to over $875 billion by 2032, according to Forbes Business Insights, which we believe creates an enormous opportunity. We differentiate ourselves with our expert IT staff and technical capability, including our 24-7 NOC. There are myriad tools and software available for all of these functions, but they are only as good as the people running them.

Speaker Change: The global managed services market is projected to grow to over $875 billion by 2032. According to Forbes business insights, which we believe creates an enormous opportunity we differentiate ourselves with our expert IP staff and technical capability, including our 24 seven not.

Speaker Change: There are myriad tools and software available for all of these functions, but they are only as good as the people running them. Our goal is to provide the most reliable secure environment possible for our customers.

Jason Katz: Our goal is to provide the most reliable, secure environment possible for our customers.

Jason Katz: Thank you. Jason, back to you to close out the presentation. Thanks again everyone for your support and for joining us today. We're very grateful for your interest in our business.

Jason Cats: Thank you Jason back to you to close out the presentation.

Jason Cats: Thanks again, 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 and reporting our first full quarter as I P. M. In the early to mid May have a great day.

Jason Katz: We look forward to updating the market and our stockholders with our progress and reporting our first full quarter as IPM in early to mid-May.

Operator: Have a great day.

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

Jason Cats: This concludes today's conference and you may disconnect. Your lines at this time. Thank you for your participation.