Good day, and welcome to the Paltalk Fourth Quarter and Full Year 2021 Earnings Call. [Operator Instructions] It is now my pleasure to turn the floor over to your host, Jason Katz, Chief Executive Officer of Paltalk; and Kara Jenny, Chief Financial Officer of Paltalk. Kara, the floor is yours.

Hello, everyone, and welcome to the Paltalk Fourth Quarter and Full Year 2021 Operating and Financial Results Conference Call for the 3 and 12 months ended December 31, 2021. By now, everyone should have access to the earnings results press release, which was issued yesterday after the markets closed, around 4:30 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 securities laws, 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 and uncertainties that may cause the actual results to differ materially from forward-looking statements. We offer no assurance that these expectations and believe will prove to be correct. A detailed discussion of such risks and uncertainties and are contained in our filings with the SEC, including our most recent annual report on Form 10-K. You should refer to 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 as required by applicable law. On this call, we will refer to certain non-GAAP measures, including adjusted EBITDA, that when used in combination with GAAP results, provides us with additional analytical tools to understand our operations. We have provided reconciliations to the most directly comparable GAAP financial measures in our earnings press release, which was posted to the Investor Relations section of our website at paltalk.com. And with that, I would like to introduce Paltalk's Chief Executive Officer, Jason Katz.

Thank you, Kara, and good morning, 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 our fourth quarter and year ended December 31, 2021. Additionally, we will outline our growth initiatives, including our plan for strategic accretive acquisitions. After my opening, our CFO, Kara Jenny, will give a summary of our fourth quarter and year ended December 31, 2021, financial results. Following our prepared remarks, we will move into the Q&A portion and answer questions that were pre-submitted prior to this call. With that, I would now like to walk you through the recent highlights. Our quarterly results remain positive and consistent due to our recurring subscription revenue, which makes up the majority of our revenue and has provided us excellent predictability and visibility for our business. During the fourth quarter, we also raised $11.6 million at $7.50 per share. This capital infusion gives us added flexibility in growing our business organically and potentially through acquisitions, which we continue to explore. We believe we have laid the groundwork for the next growth phase of our business. During the fourth quarter, we invested in new marketing tools, with a focus on increasing visibility, user engagement, subscribers and customer engagement though we did not markedly increase marketing spend. In the first quarter of 2022, we forged new partnerships with marketing agencies, and these efforts are just now starting to ramp up. We plan to begin an incremental marketing spend with a careful eye on our internal metrics of users, subscribers and engagement as return on investment is very important to us. While we are looking to increase marketing and customer engagement, we'll be careful with our capital. I will now provide some insights into some of the…

Thank you, Jason. Our annual total revenue growth of 3% led to full year 2021 net income of $1.3 million. We continue to have strong liquidity and capital with over $21 million of cash on our balance sheet as of December 31, 2021. Total revenue for the 3 months ended December 31, 2021, decreased by 9% to $3.1 million compared to $3.4 million for the 3 months ended December 31, 2020. This decline was mainly attributable to a decrease in technology service revenue. Of note, subscription revenue decreased 1% and advertising revenue increased 18%. Income from operations for the 3 months ended December 31, 2021, decreased by $0.5 million to a loss of $10,000 compared to income from operations of $0.5 million for the same period in 2020. Net income for the 3 months ended December 31, 2021, decreased by $0.5 million to a net loss of [ $5,000 ] compared to income of $0.5 million for the 3 months ended December 31, 2020. And adjusted EBITDA for the 3 months ended December 31, 2021, decreased by $1 million to a loss of $0.2 million compared to the positive adjusted EBITDA of $0.8 million in the 3 months ended December 31, 2020. Total revenue for the 12 months ended December 31, 2021, increased by 3% to $13.3 million compared to the $12.8 million for the 12 months ended December 31, 2020. This growth was mainly driven by an increase in subscription revenue and advertising revenue. Income from operations for the 12 months ended December 31, 2021, decreased by $0.7 million to $0.5 million compared to $1.2 million for the same period in 2020. The income from operations for the 12 months ended December 31, 2021, included a noncash impairment loss on digital tokens of approximately $0.8 million. Net income for the 12 months ended December 31, 2021, decreased by 3% to $1.3 million compared to $1.4 million for the 12 months ended December 31, 2020. Adjusted EBITDA for the 12 months ended December 31, 2021, decreased by $0.7 million to $1.3 million compared to $2 million for the 12 months ended December 31, 2020. We will now move on to questions that were previously submitted.

The first question, what actions are you taking to increase consumer experience and engagement?

Thank you, Kara. We provided a lot of these new initiatives in our prepared remarks. Just please keep in mind that we are going to move prudently on these and be sure they have a positive effect before we accelerate our spend.

The next question, what is behind the increase in advertising revenue?

As we discussed, the introduction of advertising partners has served us well, and we are pleased with the initial growth we've seen in the area. We will continue to improve and refine those programs with those partners.

Can you explain what is behind changes in gross margin and operating expenses?

Well, in general, we incurred incremental costs associated with the uplift of the NASDAQ as well as had an increase in public company expenses. We also had an increase in marketing expenses related to the increase in and the investment in marketing tools we discussed above.

Okay. Can you provide any qualitative guidance?

I would just reiterate that with regards to spending, we have chosen marketing agencies, hired them in this quarter and look forward to working with them to optimize our spending in a measurable way. Since our historic investment in marketing has been modest, I believe partnering with leaders in the industry should be impactful.

Jason, I'll turn it back to you to close out the presentation.

Thank you, everyone, for your support and for joining us today. We are very grateful for your interest in our business. We look forward to updating the market and our stockholders with our progress on our growth initiatives organically and potential strategic accretive acquisitions, which we continue to identify and analyze. We plan on having our next quarterly results call in mid-May and plan to attend a few conferences, the first of which is the Maxim conference at the end of this month. Have a great day.

Thank you. Ladies and gentlemen, this does conclude today's event. You may disconnect your phone lines at this time, and have a wonderful day. Thank you for your participation.