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spk00: Good afternoon and welcome to the Paltalk second 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 hosts, Jason Katz, Chief Executive Officer of Paltalk, and Cara Jenny, Chief Financial Officer of Paltalk. Cara, the floor is yours.
spk01: Hello, everyone, and welcome to the PAL Talk second quarter 2022 operating and financial results conference call for the three months ended June 30th, 2022. By now, everyone should have had 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 and 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. 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 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 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 to the investor relations section of our website at paltalk.com. And with that, I would like to introduce Paltalk's Chief Executive Officer, Jason Kass.
spk02: Thank you, Cara, and good afternoon to 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, 2022. Additionally, we will provide an update on our strategy to target subscribers and advertising growth, discuss our recent acquisition of many cam assets and our engagement of Roth capital partners for strategic accretive acquisitions. After my opening statement, our CFO will give a summary of our financial results for the second quarter ended June 30th, 2022. With that, I would now like to walk you through the recent highlights. We've continued to fine tune our strategy to focus on adjusted EBITDA optimization, the integration of the newly acquired Minicam assets, and adjusting our spending to align with current macroeconomic conditions. Our cash position as of June 30th, 2022 remains solid at $16.9 million after utilizing $2.7 million for the acquisition of the Minicam assets. We plan to continue to invest in a measured way with responsible cash management. Now I'd like to provide an update on ManyCam, our recently closed asset acquisition that I am very excited about, and our engagement with Roth Capital Partners. During the second quarter, we closed an asset acquisition involving ManyCam software. ManyCam is a live streaming software and virtual camera that allows users to deliver professional live videos on streaming platforms. video conferencing apps, and distance learning tools. We were pleased that within days of acquiring the ManyCam assets, we were able to launch ManyCam version 8, a software update with vast improvements over prior versions. ManyCam version 8 offers quicker access, dark and light modes, and overall rendering performance improvement for high-resolution users, as well as improved quality and performance with regard to virtual backgrounds. Users can now access a library of virtual backgrounds and playlists. We expect these features will help make the product more desirable and a better complement for PalTalk and CamFrog, which is a priority on our roadmap. Our team now plans to actively promote and cross-market ManyCam Version 8 to our PalTalk and CamFrog communities. Our team is optimizing the ManyCam assets to maximize subscription revenue integrate and cross-sell with existing customers, and explore business-to-business sales opportunities. Since our launch of ManyCam, there have been over 300,000 new installs of the software. We believe, although early, this is a positive sign. Also during the second quarter, we announced our engagement of Roth Capital Partners as our financial advisor and investment banker to explore strategic initiatives focused on buy-side acquisitions. We look forward to working with Roth and exploring strategic opportunities as we build upon our acquisition of the ManyCamp assets. We feel there are multiple ways to expand our communication software and multimedia social applications, which we believe have the potential to provide substantial value to PalTalk stockholders. Our NASDAQ listing status, catch position, and current operating business strategy are provide us a strong platform to execute our strategic plan to acquire additional complementary and synergistic businesses. Our goal is to get back to profitability. While a portion of our strategy will come from the streamlining of expenses, we believe enhancements to our live video chat applications, many cam sales and cross sales, integration of games, and our focus on retention and monetization have the potential to increase revenue opportunities. We plan to continue to develop our consumer application platform and defend our intellectual property as we seek to build stockholder value. In addition, as previously disclosed, our board of directors approved the stock repurchase plan for up to $1.75 million of the company's common stock, pursuant to which the company purchased 110,000 shares during the quarter. Also, some stockholders have been asking for an update on our patent litigation. As you already know, on July 23, 2021, we filed a patent infringement lawsuit against WebEx Communications, Cisco WebEx LLC, and Cisco Systems in the U.S. District Court for the Western District of Texas. We've alleged that Cisco's WebEx products have infringed our U.S. patent number 683858, and that we're entitled to damages. A Markman hearing took place in February 2022, and the trial is scheduled for February 2023. I trust this gives you a sense of some of the company initiatives we have implemented in order to spend prudently to conserve cash as we look to increase our subscribers and user engagement, return to positive cash flow and profitability, and to build stockholder value. Now I'd like to pass it to Kara for a financial summary of our second quarter ended June 30th, 2022.
spk01: Thank you, Jason. Our results of operations for the three months ended June 30th, 2022 are as follows. Revenue for the three months ended June 30th, 2022 decreased by 23% to 2.6 million compared to 3.4 million for the three months ended June 30th, 2021. This decline was attributed to the decrease in technology service revenue as a result of the termination of our partnership with Open Props Inc., formerly YouNow, as well as a decrease in subscription revenue of 18% or 0.6 million, which we believe was primarily attributed to the macroeconomic environment conditions. Advertising revenue increased by over 11% to 0.1 million. Lost from operations for the three months ended June 30th, 2022, totaled $1.1 million, a decrease in operating income of $1.7 million compared to operating income of $0.6 million for the three months ended June 30th, 2021. The decrease in operating income is primarily due to a decrease in revenue of $0.8 million coupled with increased marketing expenses of $0.2 million or 90%. in connection with our investment in marketing, increased product development expenses of $0.2 million or 17% in connection with the implementation of newly purchased software tools for marketing, as well as increased general and administrative expenses of $0.6 million or 124% in connection with non-cash stock-based compensation and increased professional fees. Net loss for the three months ended June 30th, 2022 totaled 1.1 million, a decrease of 1.9 million compared to net income of 0.8 million for the three months ended June 30th, 2021. The resulting net loss per share of common stock for the three months ended June 30th, 2022 was a loss of 12 cents as compared to net income per share of common stock of 12 cents for the three months ended June 30th, 2021. Adjusted EBITDA for the three months ended June 30th decreased by 1.6 million to a loss of 0.9 million compared to adjusted EBITDA of 0.7 million for the three months ended June 30th, 2021. Cash and cash equivalents totaled 16.9 million at June 30th, 2022. a decrease of $4.7 million compared to $21.6 million at December 30th, 2021. Of the $4.7 million change in cash, $2.9 million of cash was used in connection with the ManyCam transaction, and $0.2 million was used in connection with the repurchase of shares, and $1.6 million was used in operations. Currently, the company has no long-term debt on its balance sheet. Jason, back to you to close out the presentation.
spk02: 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 and our growth initiatives organically and potential strategic accretive acquisitions, which we continue to identify and analyze. We plan on having our next quarterly results call in early to mid-November. Have a great day.
spk00: Thank you, ladies and gentlemen. This does conclude today's conference call. You may disconnect your phone lines at this time and have a wonderful day. Thank you for your participation.
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