14 DAY TRIAL // Chat service provider Paltalk certainly isn't a representative example of Internet companies in this economic environment. Not only is the IM company profitable, a very rare occurrence for this type of services, but it is actually buying back shares, at a premium, from one of its investors, Softbank Capital Partners.
The startup sold 20 percent of its shares to the Softbank venture investment company, raking in $6 million from the deal. Now Paltalk is buying its shares back but, unlike most recent deals of this type, it will not pay only the $6 million but also an undisclosed premium over the original sum. With most venture firms happy just to get rid of under-performing stock this is a welcomed change.
Paltalk can afford to buy back its investment as it is actually making money and has been profitable since 2004, it claims. The company offers video chat and instant messaging and other related services and operates with a freemium model. It also offers premium services for enterprises like video conferencing and other features for which it also charges. While it hasn't disclosed any sum overall, it had to have made at least the $6 million plus it paid to get its shares back.
While the basic service is free, certain advanced features come for a price, like the possibility to create video chat rooms with up to 5,000 users connected at any one time. It also charges for its SuperIM product, which lets users do live video chat with up to 10 friends simultaneously. While its 4 million user base is big but not impressive, it has managed to turn it into profit, something that much larger companies, notably Meebo, which boasts 50 million users at the moment, have been struggling to do. Paltalk hasn't laid out any plans for the future, now that it has recuperated the 20 percent stake, but CEO and Founder Jason Katz says there are no plans to sell the company.