Financial Performance - Total revenues for Q2 2023 were $2,956,002, a 11.8% increase from $2,644,468 in Q2 2022[20] - Subscription revenue increased to $2,884,989 in Q2 2023, up 12.6% from $2,560,706 in Q2 2022[20] - Net income for Q2 2023 was $135,629, compared to a net loss of $1,128,706 in Q2 2022[20] - For the six months ended June 30, 2023, the net loss was $602,669, a significant improvement compared to a net loss of $1,867,651 for the same period in 2022, representing a reduction of approximately 68.7%[24] - Net income improved by 112% to $135,629 for the three months ended June 30, 2023, compared to a net loss of approximately $1.1 million for the same period in 2022, attributed to increased revenues and reduced expenses[88] Revenue Breakdown - Virtual gift revenue for Q2 2023 was $1,312,113, up from $1,091,487 in Q2 2022, representing a year-over-year increase of 20.2%[45] - For the six months ended June 30, 2023, virtual gift revenue was $2,322,313, slightly down from $2,361,024 in the same period of 2022, a decrease of 1.6%[45] - Total revenue increased by 11.8% to $2,956,002 for the three months ended June 30, 2023, compared to $2,644,468 for the same period in 2022, driven by subscription revenue growth and the acquisition of ManyCam[105] - Subscription revenue rose by $324,283, or 12.7%, to $2,884,989 for the three months ended June 30, 2023, primarily due to new subscribers and virtual gift revenue in the Paltalk application[107] - Advertising revenue decreased by $12,749, or 15.2%, to $71,013 for the three months ended June 30, 2023, attributed to a decline in advertising impressions[108] Expenses and Costs - Cost of revenue for Q2 2023 was $774,028, an increase from $661,548 in Q2 2022[20] - General and administrative expenses for Q2 2023 were $1,075,520, slightly up from $1,053,347 in Q2 2022[20] - Total costs and expenses decreased by $494,354, or 13.3%, to $3,233,700 for the three months ended June 30, 2023, compared to $3,728,054 in the same period of 2022[109] - Sales and marketing expense decreased by $263,621, or 54.5%, to $220,512 for the three months ended June 30, 2023, primarily due to reduced user acquisition marketing expenses[111] - Product development expense decreased by $358,124, or 23.5%, to $1,163,640 for the three months ended June 30, 2023, due to streamlined offshore development efforts[112] Assets and Liabilities - Total current assets decreased to $14,813,324 as of June 30, 2023, down from $15,405,429 as of December 31, 2022[17] - Total liabilities decreased to $3,910,814 as of June 30, 2023, compared to $4,457,366 as of December 31, 2022[17] - Stockholders' equity as of June 30, 2023, was $20,476,671, down from $20,974,242 as of December 31, 2022[17] - Total intangible assets net value decreased to $3,115,644 as of June 30, 2023, from $3,526,811 at the end of 2022, a decline of 11.7%[48] Cash Flow - Net cash used in operating activities for the six months ended June 30, 2023, was $996,778, down from $1,643,934 in the prior year, indicating a 39.5% decrease[24] - The balance of cash and cash equivalents at the end of the period was $13,650,942, down from $16,850,818 at the end of June 2022, reflecting a decrease of 19.5%[24] - Cash used in investing activities was $85,000 for the six months ended June 30, 2023, significantly lower than $2,928,928 for the same period in 2022[135] - Cash used in financing activities was $7,213 for the six months ended June 30, 2023, primarily due to stock repurchases[136] Acquisitions and Investments - The Company recorded an Adjusted Earn-Out Payment of $85,000 related to the ManyCam acquisition, which was paid during the second quarter of 2023[31] - The Company incurred approximately $242,000 in expenses related to the ManyCam acquisition, which were capitalized accordingly[29] - The fair value of identifiable intangible assets acquired in the ManyCam acquisition was determined to be $2.7 million, with significant components including $1.5 million for internally developed software and $875,000 for subscriber relationships[29] Tax and Compliance - The Company recorded a receivable of $343,045 for the refundable employee retention tax credit (ERTC), with $129,416 received as of June 30, 2023[87] - The Company applied for the Employee Retention Tax Credit (ERTC) and recorded a receivable of $343,045 during the three months ended June 30, 2023[34] - The Company recorded an income tax provision of $101,059 for Q2 2023, with an effective tax rate of 42.70%, compared to a provision of $4,753 and an effective rate of (0.39)% in Q2 2022[52][53] Stock and Shareholder Information - As of June 30, 2023, the Company had 641,963 shares classified as treasury shares, an increase from 636,771 shares at the end of 2022[62] - The average purchase price for shares repurchased under the Stock Repurchase Plan during the six months ended June 30, 2023, was $1.39[62] - The Company has a stock repurchase plan approved for up to $1,750,000 of its outstanding common stock, which expired on March 29, 2023[85] Legal and Regulatory Matters - A patent infringement lawsuit was filed against Cisco, with a trial expected to be scheduled for late in the fourth quarter of 2023[146][147] - There were no material changes to the risk factors disclosed in the Form 10-K during the six months ended June 30, 2023[148] - No unregistered sales of equity securities occurred during the quarter ended June 30, 2023[149] Future Outlook - The Company aims to attract new users through the introduction of new applications and features, as well as partnerships and advertising campaigns[82] - The Company may seek to grow its business by expending capital resources on strategic acquisitions, investments, and partnership opportunities[133] - The Company’s results may continue to be negatively impacted by macro-economic factors, including inflation and financial institution liquidity challenges[33]
Paltalk(PALT) - 2023 Q2 - Quarterly Report