Communications software company Paltalk, Inc. (Nasdaq: PALT) disclosed its third quarter financial results for the period ending September 30, 2024, revealing a notable decrease in revenue and an expanded net loss compared to the previous year. The company's revenue fell by 23.4% year-over-year to $2.1 million, with subscription revenue dropping 23.9% to $2.0 million. The net loss for the quarter was reported at $1.5 million, a significant increase from the $0.2 million loss recorded in Q3 2023. Adjusted EBITDA loss also widened to $1.4 million from $0.1 million in the prior year period.
Despite these financial challenges, Paltalk announced a pivotal legal achievement in its patent infringement lawsuit against Cisco, with a jury awarding the company $65.7 million in damages. Although the final amount Paltalk will receive remains uncertain due to potential appeals, the company anticipates it may ultimately secure up to one-third of the gross proceeds. This legal victory represents a critical milestone for Paltalk, offering a potential financial boost amidst its current fiscal difficulties.
Jason Katz, Paltalk's Chairman and CEO, emphasized the company's ongoing strategic shift, stating, 'We are in midst of a transformational shift in our business strategy that we believe will enhance stockholder value.' This transformation includes the acquisition of Newtek Technology Solutions (NTS) and the divestiture of its Paltalk, Camfrog, and Vumber applications. The acquisition of NTS is particularly significant, as NTS's revenue is approximately three times that of Paltalk's 2023 figures, promising a substantial uplift in the company's financial performance.
Katz further highlighted the company's solid cash position, with $12.1 million as of September 30, 2024, and expressed enthusiasm for focusing on expanding its cybersecurity, cloud hosting, and technology solutions business. These strategic moves, pending various closing conditions including stockholder approval, signify a major pivot in Paltalk's business model and operations. While the company navigates through immediate financial challenges, its legal triumph and strategic initiatives present potential avenues for revitalizing its financial health and delivering value to shareholders in the future.
