Intelligent Protection Management (IPM) Q2 2024 earnings summary

Executive summary

• Q2 2024 revenue declined 24.7% year-over-year to $2.2 million, mainly due to a 47.7% drop in virtual gift revenue and lower discretionary subscriber spending amid macroeconomic and inflationary pressures.

• Net loss for Q2 2024 was $0.9 million, compared to net income of $0.1 million in Q2 2023; adjusted EBITDA loss widened to $0.9 million.

• Entered agreement to acquire Newtek Technology Solutions for $4 million cash and 4 million preferred shares, with up to $5 million earn-out, requiring divestiture of core video chat applications.

• Cash and cash equivalents at June 30, 2024, were $12.8 million, with no long-term debt.

• Cash flows used in operations decreased 22.5% to $0.8 million for the six months ended June 30, 2024.

Financial highlights

• Q2 2024 total revenue: $2.2 million, down from $2.96 million in Q2 2023, with subscription revenue down 26.1% and advertising revenue up 29.2%.

• Net loss for Q2 2024: $0.9 million; net loss for six months: $1.4 million.

• Adjusted EBITDA loss for Q2 2024 was $0.9 million, up from a $15,000 loss in Q2 2023.

• Deferred subscription revenue at June 30, 2024: $1.9 million.

• Cost of revenue increased 4.7% year-over-year; sales and marketing expense decreased 12.7%.

Outlook and guidance

• Management expects the impact of reduced discretionary spending to be temporary and remains optimistic about new product launches and future growth.

• Focus remains on integrating ManyCam, optimizing marketing, and pursuing strategic acquisitions and divestitures.

• Expect continued increases in general and administrative expenses due to merger-related costs.

• Virtual gift revenue may continue to decline as users limit discretionary spending.

• Focus shifting to technology solutions business post-divestiture, with plans for organic and acquisitive growth.