Greetings, and welcome to the Paltalk Second Quarter 2024 Results Conference Call. At this time, all participants are on a listen-only mode. [Operator Instructions] Please note this call is being recorded. I will now turn the conference over to your host, Kara Jenny, CFO of Paltalk. Ma'am, the floor is yours.

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 4:00 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 quarterly reports on Form 10-Q and annual report 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. 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. For adjusted EBITDA, we have provided a 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 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 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. With that, 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 Newtek Technology Solutions, Inc., a wholly owned subsidiary of NewtekOne, 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. 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' 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. Now on to our second…

Thank you, Jason. Revenue for the 3 months ended June 30, 2024, decreased by 24.7% to $2.2 million compared to $2.9 million for the 3 months ended June 30, 2023. This decrease was attributed to a decrease in virtual gift revenue of 47.7%. Loss from operations for the 3 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 3 months ended June 30, 2023. The increase in loss from operations was attributed to a decrease in revenue for the 3 months ended June 30, 2024, as well as an increase in professional fees. Net loss for the 3 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 3 months ended June 30, 2023. Adjusted EBITDA loss for the 3 months ended June 30, 2024, increased by approximately 6,164% or $0.9 million to an adjusted EBITDA loss of $0.9 million compared to adjusted EBITDA loss of $14,945 for the 3 months ended June 30, 2023. Now turning to our financial results for the 6 months ended June 30, 2024. Revenue for the 6 months ended June 30, 2024, decreased by 12.6% to $4.8 million compared to $5.5 million for the 6 months ended June 30, 2023. This decrease was attributed to a decrease in virtual gift revenue of 26.6%. Loss from operations for the 6 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 6 months ended June 30, 2023. The decrease in loss from operations was attributed to a decrease in revenue for the 6 months ended June 30, 2024. Net loss for the 6 months ended June 30, 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 6 months ended June 30, 2023. Adjusted EBITDA loss for the 6 months ended June 30, 2024, increased by approximately 116.1% or $0.7 million to adjusted EBITDA loss of $1.4 million compared to an adjusted EBITDA loss of $0.7 million for the 6 months ended June 30, 2023. 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. 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. 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 August 26? Or could something happen like in the past to further delay it?

While there is no assurance that the trial will start on August 26, we believe management believes that it will commence on that date. In addition, jury selection for the trial has already been set for August 20 as well.

Jason, back to you to close out the presentation.

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 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.