Release Date: November 12, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Paltalk Inc (NASDAQ:PALT) signed a merger agreement to acquire New Tech Technology Solutions, expected to significantly increase revenue.
• The acquisition will allow Paltalk Inc (NASDAQ:PALT) to enter the cloud infrastructure and cybersecurity sectors, which are deemed ripe for growth.
• Paltalk Inc (NASDAQ:PALT) has a strong cash balance of $12.1 million as of September 30, 2024, providing financial stability.
• The company won a $65.7 million verdict against Cisco Systems for patent infringement, which could enhance financial resources.
• Paltalk Inc (NASDAQ:PALT) expects the acquisition to provide enhanced opportunities for future growth and optimization.

Negative Points

• Revenue for the third quarter decreased by 23.4% compared to the same period in 2023, indicating a decline in business performance.
• Loss from operations increased by 333% for the third quarter, reflecting higher operational challenges.
• Net loss for the third quarter increased by 731.2%, highlighting significant financial setbacks.
• Adjusted EBITDA loss for the third quarter increased by approximately 1046.2%, showing deteriorating profitability.
• The company experienced a decrease in subscription revenue by 23.9%, impacting overall revenue negatively.

Q & A Highlights

• Warning! GuruFocus has detected 3 Warning Signs with PALT.

Q: Congratulations on winning the trial against Cisco Webex. Can you provide any color on when you would expect to see any money from that judgment? And a date range of when that might be. A: On October 8th, 2024, an order granting a motion for final judgment was entered into by the court and signed by Judge Alan Albright in the amount of $65.7 million in connection with the lawsuit. The final judgment was entered in our favor and started the time for filing any post-trial motions or appeal. (Jason Katz, CEO)

Q: In regards to the new technology solutions acquisition, can you please explain and give some detail as to what the business specifically does and perhaps give an example of a client and what it does for them. A: NTS provides a range of IT-related services including managed IT, managed security, managed backup and disaster recovery, secure private cloud hosting, professional services, consulting, product procurement services, web hosting, and e-commerce solutions. NTS delivers secure and compliant services to customers within heavily regulated industries including financial services and healthcare. (Jason Katz, CEO)

Q: Final question as a follow-up to New Tech Technology Solutions. It appears to generate significantly more revenue than your prior Paltalk business. But what gives you the confidence it's a business with growth prospects and are there additional likewise businesses you feel you can also acquire? A: Well-managed cybersecurity and managed cloud hosting are growing rapidly worldwide. We believe the acquisition of NTS gives us the ability to enter the cloud infrastructure and cybersecurity sectors, both business deemed ripe for growth both organically and through potential accretive acquisitions in the future. (Jason Katz, CEO)

For the complete transcript of the earnings call, please refer to the full earnings call transcript.