Intelligent Protection Management (IPM) Q3 2024 earnings summary

Executive summary

• Q3 2024 revenue declined 23.4% year-over-year to $2.1 million, mainly due to lower subscription and virtual gift revenue, with net loss rising to $1.5 million from $0.2 million in Q3 2023.

• Entered into a merger agreement to acquire Newtek Technology Solutions (NTS) for $4 million cash and 4 million preferred shares, plus up to $5 million earn-out, and an asset purchase agreement to divest Vumber, Paltalk, and Camfrog applications for $1.35 million plus potential earn-outs.

• Acquisition of NTS is expected to triple revenue and provide entry into cloud infrastructure and cybersecurity sectors, with NTS's 2023 revenue about three times greater than Paltalk's.

• Awarded a $65.7 million patent infringement verdict against Cisco Systems, with final judgment entered in October 2024; actual proceeds are estimated at no more than one third after legal expenses and subject to appeal.

• Cash and cash equivalents were $12.1 million as of September 30, 2024, with no long-term debt.

Financial highlights

• Q3 2024 revenue was $2.1 million (down 23.4% YoY); nine-month revenue was $6.9 million (down 16.2% YoY).

• Q3 2024 net loss was $1.5 million (up 731.2% YoY); nine-month net loss was $2.9 million (up 274.3% YoY).

• Q3 2024 adjusted EBITDA loss was $1.4 million; nine-month adjusted EBITDA loss was $2.9 million.

• Cash and equivalents at September 30, 2024: $12.1 million; no long-term debt.

• Operating cash outflow for nine months was $1.6 million, up 58.2% year-over-year.

Outlook and guidance

• Focused on closing the NTS acquisition and Vumber divestiture, integrating NTS, and pursuing growth in technology solutions, cybersecurity, and cloud hosting.

• NTS acquisition expected to close by end of Q1 2025.

• Management expects continued pressure on virtual gift revenue and higher G&A expenses due to transaction costs.