Paltalk, Inc.

Good afternoon, and welcome to the Powell Talk first quarter 2022 earnings conference. 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 hosts, Jason Katz, Chief Executive Officer of Powell Talk, and Cara Jenny, Chief Financial Officer of Powell Talk. Cara, the floor is yours.

Hello, everyone, and welcome to the Powell Talk first quarter 2022 operating and financial results conference calls. for the three months ended March 31st, 2022. By now, everyone should have access to the earnings results press release, which was issued earlier today after the market closed at 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. 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. A detailed discussion of such risks and uncertainties are contained in our filings with the SEC, including our most recent annual report on Form 10-K for the year ended December 31st, 2021. You should refer 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 certain non-GAAP measures, including adjusted EBITDA, that when used in combination with GAAP results, provides us with additional analytical tools to understand our operations. 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 Paltalk.com. And with that, I would like to introduce Paltalk'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. We will discuss our operating highlights and financial results for the first quarter ended March 31st, 2022. Additionally, we will provide some color on our growth initiatives, including our ramp up in marketing spend and plan for strategic accretive acquisitions. After my opening statement, our CFO, Cara Jenny, will give a summary of our first quarter ended March 31st, 2022 financial results. Following our prepared remarks, we will move into the Q&A portion and answer questions that were pre-submitted prior to this call. With that, I would like to now walk you through the recent highlights. While we are disappointed with the decline in subscription revenue over the last quarter, we attribute this decrease primarily to the easing of COVID-19 restrictions in certain of our target markets. We believe we have started to lay the groundwork for growth in subscription and advertising revenue. As previously disclosed, we recently began to execute our plan to increase marketing spend and invest in product development. For example, in addition to our recent marketing initiatives, we launched a mobile backgammon game, which is interactive with real-time voice and video. Our cash balance of more than $20 million affords us the opportunity to make these investments, but we will proceed conservatively. Our measured approach is reflected in our first quarter's increased marketing expenses of $200,000 and increased product development expenses of $200,000. We are optimistic that our new marketing tools and partnerships with a focus on increasing visibility, user engagement, and subscribers will enable us to return to growth. In addition, our team continues to identify and review potential strategic acquisitions to bolster our growth even further. We look forward to updating the market and our stockholders with our progress on both internal growth initiatives and potential strategic accretive acquisitions. I will now provide some further insights into some of the specific growth initiatives and marketing spend we have recently started. During the first quarter, we engaged and started working with Yellowhead, an AI-powered performance marketing company that boosts growth with unified paid and organic strategies, to lead our increased marketing efforts for CAMPFROG. Yellowhead specializes in user acquisition, app store optimization, search engine optimization, creative production, and analytics technology. Yellowhead's ASO and SEO solutions have been instrumental in helping many brands increase their traffic, conversion, and users. One of the specific uses of the proceeds from the October 2021 capital raise last year is to carefully ramp up our marketing spend to help contribute to growth in users and revenue. Also during the first quarter, we partnered and started working with NoGood, a growth marketing firm that specializes in user acquisition to accelerate user acquisition for our flagship PalTalk application. NoGood has expertise in SEO, content marketing, SEM, PPC, social ads, CRO, email marketing, video marketing SMS marketing, and performance branding. No Good has been instrumental in helping many startups and scale-ups dramatically increase their traffic conversion and users. We're very excited to work with No Good to help us as we seek to accelerate user growth and revenue growth. Because both of these marketing initiatives are in their early stages, it's too soon to report any meaningful traction or data. We are carefully monitoring the results of our marketing initiatives and tweaking our plan for optimization and decision-making going forward. On the product development side, we are excited about the recent launch of our mobile backgammon game, which enables PalTalk users to play with friends, other users, or privately in real-time voice and video. As part of our organic growth plan to increase subscribers, advertising, and revenue, we believe that providing additional interactive offerings and content on our platform, such as mobile backgammon, will lead to increased user engagement. We believe that existing subscribers may introduce mobile games to potential newer subscribers as well. Our recent release of Mobile Backgammon demonstrates our ability to develop additional applications and content to offer our subscribers in utilizing our real-time voice and video capabilities. We're always looking to increase our subscribers' usage within our platform and expect to release a third mobile game as we further build out our offering of online games. In addition to these organic growth efforts, we continue to identify and analyze potential strategic accretive acquisitions of both businesses and assets. Our team continues to explore opportunities that could be accretive and complementary to our existing business. As is true with all of our growth initiatives, we will prudently and carefully measure our incremental return on investment to help ensure any acquisition would result in enhancing our value and performance. I trust this gives you a sense of some of the company initiatives we recently implemented in order to increase our subscribers and user engagement that we expect to lead to increased revenue and profitability as we look to build stockholder value. Now I'd like to pass it off to Kara for a financial summary of our first quarter ended March 31st, 2022.