Spark Networks(R) Reports Second Quarter Financial ResultsLOS ANGELES, CA -- (Marketwired - August 08, 2013) - Spark Networks, Inc. (NYSE MKT: LOV)
- Total revenue growth of 17%
- Christian Networks revenue growth of 37%
- Jewish Networks revenue grew for second time since 2008
- 10 consecutive quarters of revenue growth
- Average paying subscriber(1) growth of 20% to 302,000
Spark Networks, Inc. (NYSE MKT: LOV), a leader in creating niche-focused brands that build and strengthen the communities they serve, today reported financial results for the second quarter ended June 30, 2013.
Q2 2013 Highlights
Q2 2012 Q2 2013
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Revenue $15.0 Million $17.6 Million
Contribution Margin(2) 33% 21%
Net Loss $(1.0) Million $(3.3) Million
Net Loss Per Share $(0.05) $(0.15)
Management Commentary
"Coming off the best first quarter in our company's history, the second quarter represented another record-breaking one for us," said Greg Liberman, Spark Networks' Chief Executive Officer. "Year-over-year revenue increased for the tenth consecutive quarter, growing 17% to a record $17.6 million and average paying subscribers grew another 20% to exceed the 300,000 threshold for the first time. While our category-leading Christian Networks segment, and its 37% increase in revenue and 43% increase in subscribers, was the biggest driver of that growth, our Jewish Networks segment also played a meaningful role. Jewish Networks' revenue and subscriber bases grew for only the second time since 2008 while maintaining its nearly 90% contribution margin.
"Immediately after our first quarter earnings call, we embarked on a multi-city roadshow that culminated in a successful follow-on offering. Not only did we raise approximately $12 million of primary proceeds but, with the addition of the secondary shares in the offering, we were also able to increase our liquidity profile post-offering, as reflected by both our increased average daily trading volume and average daily trading value. The follow-on offering also served as a catalyst for expanding our institutional investor base, as we added a number of terrific new stockholders. Going forward, we remain confident in the long-term growth prospects of our business and look forward to further expanding investor awareness of Spark Networks."
Q2 2013 Financial Results
Revenue was $17.6 million, an increase of 17% compared to $15.0 million in the second quarter of 2012. The Christian Networks segment was the primary driver of that growth.
Contribution(3) was $3.8 million, a decrease of 23% compared to $4.9 million in the second quarter of 2012.
Total cost and expenses were $20.8 million, an increase of 28% compared to $16.2 million in the second quarter of 2012. The higher costs primarily reflect a $3.7 million increase in Christian Networks direct marketing expenses, reflecting the company's continued focus on meaningfully growing its subscriber base in this segment.
Net loss was $3.3 million, or $0.15 per share, compared to a net loss of $1.0 million, or $0.05 per share, in the second quarter of 2012.
Adjusted EBITDA(4) was a loss of $2.3 million, compared to a loss of $592,000 in the second quarter of 2012.
Average paying subscribers for the Jewish Networks, Christian Networks and Other Networks segments were 302,268, an increase of 20% compared to 250,934 in the second quarter of 2012.
Balance Sheet, Cash, Debt
As of June 30, 2013, the Company had cash and cash equivalents of $18.4 million, an increase of 76% from $10.5 million at December 31, 2012. As of June 30, 2013, the Company had no outstanding debt.
SPARK NETWORKS, INC.
SEGMENT(5) RESULTS FROM OPERATIONS
(in thousands except subscriber and ARPU information)
Q2
'13
v. Q2
Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 '12
-------- -------- -------- -------- -------- -----
Net Revenue
Jewish Networks $ 6,452 $ 6,385 $ 6,617 $ 6,452 $ 6,460 0.1%
Christian Networks 7,505 8,495 8,721 9,908 10,260 36.7%
Other Networks 995 903 836 815 775 -22.1%
Offline & Other
Businesses 94 88 97 88 86 -8.5%
-------- -------- -------- -------- -------- -----
Total Net Revenue $ 15,046 $ 15,871 $ 16,271 $ 17,263 $ 17,581 16.8%
Direct Mktg. Exp.
Jewish Networks $ 647 $ 829 $ 834 $ 751 $ 776 19.9%
Christian Networks 9,205 10,920 11,480 11,722 12,866 39.8%
Other Networks 251 213 201 199 152 -39.4%
Offline & Other
Businesses 37 29 69 26 31 -16.2%
-------- -------- -------- -------- -------- -----
Total Direct
Mktg. Exp. $ 10,140 $ 11,991 $ 12,584 $ 12,698 $ 13,825 36.3%
Contribution
Jewish Networks $ 5,805 $ 5,556 $ 5,783 $ 5,701 $ 5,684 -2.1%
Christian Networks (1,700) (2,425) (2,759) (1,814) (2,606) -53.3%
Other Networks 744 690 635 616 623 -16.3%
Offline & Other
Businesses 57 59 28 62 55 -3.5%
-------- -------- -------- -------- -------- -----
Total
Contribution $ 4,906 $ 3,880 $ 3,687 $ 4,565 $ 3,756 -23.4%
Average Paying
Subs.
Jewish Networks 84,348 84,650 85,736 85,200 84,487 0.2%
Christian Networks 137,768 154,747 168,394 186,896 196,598 42.7%
Other Networks 28,818 26,678 25,130 23,435 21,183 -26.5%
-------- -------- -------- -------- -------- -----
Total Avg. Paying
Subs.(6) 250,934 266,075 279,260 295,531 302,268 20.5%
ARPU
Jewish Networks $ 24.77 $ 24.61 $ 24.93 $ 24.86 $ 25.15 1.5%
Christian Networks 17.13 17.26 16.43 16.84 16.55 -3.4%
Other Networks 10.36 10.61 10.36 10.84 11.49 10.9%
-------- -------- -------- -------- -------- -----
Total ARPU(7) $ 18.92 $ 18.93 $ 18.49 $ 18.68 $ 18.60 -1.7%
Investor Conference Call
The Company will discuss its financial results during a live teleconference today at 1:30 p.m. Pacific time.
Toll-Free (United States): 1-877-407-0789
International: 1-201-689-8562
In addition, the Company will host a webcast of the call which will be accessible in the Investor Relations section of the Company's website at www.spark.net or by clicking http://investor.spark.net.
A replay will begin approximately three hours after completion of the call and run until August 22, 2013.
Replay
Toll-Free (United States): 1-877-870-5176
International: 1-858-384-5517
Passcode: 418527
Safe Harbor Statement:
This press release contains forward-looking statements. Any statements in this news release that are not statements of historical fact may be considered to be forward-looking statements. Written words, such as "may," "will," "expect," "believe," "anticipate," "estimate," "intends," "goal," "objective," "seek," "attempt," or variations of these or similar words, identify forward-looking statements. By their nature, forward-looking statements and forecasts involve risks and uncertainties because they relate to events and depend on circumstances that will occur in the near future. There are a number of factors that could cause actual results and developments to differ materially, including, but not limited to our ability to: attract members; convert members into paying subscribers and retain our paying subscribers; develop or acquire new product offerings and successfully implement and expand those offerings; keep pace with rapid technological changes; maintain the strength of our existing brands and maintain and enhance those brands; continue to depend upon the telecommunications infrastructure and our networking hardware and software infrastructure; estimate on-going general and administrative costs, and obtain financing on acceptable terms. For a discussion of these and further risks and uncertainties, please see our filings with the Securities and Exchange Commission. We file annual, quarterly and current reports, proxy statements and other information with the SEC. You may read and copy any reports, statements or other information that we file at the SEC's public reference room at 100 F Street, N.E., Washington, D.C., 20549. Please call the SEC at 1-800-SEC-0330 for further information on the public reference room. Our public filings with the SEC also are available from commercial document retrieval services and at the Web site maintained by the SEC at http://www.sec.gov.
About Spark Networks, Inc.:
The Spark Networks portfolio of consumer Web sites includes, among others, JDate®.com (www.jdate.com), ChristianMingle®.com (www.christianmingle.com), Spark®.com (www.spark.com), BlackSingles.com® (www.blacksingles.com), and SilverSingles®.com (www.silversingles.com).
(1) "Average paying subscribers" are defined as individuals who have paid a monthly fee for access to communication and Web site features beyond those provided to our members. Average paying subscribers for each month are calculated as the sum of the paying subscribers at the beginning and end of the month, divided by two. Average paying subscribers for periods longer than one month are calculated as the sum of the average paying subscribers for each month, divided by the number of months in such period.
(2) "Contribution Margin" is defined as Contribution divided by revenue, net of credits and credit card chargebacks.
(3) "Contribution" is defined as revenue, net of credits and credit card chargebacks, less direct marketing.
(4) The Company reports Adjusted EBITDA as a supplemental measure to generally accepted accounting principles ("GAAP"). This measure is one of the primary metrics by which we evaluate the performance of our businesses, budget, forecast and compensate management. We believe this measure provides management and investors with a consistent view, period to period, of the core earnings generated from on-going operations and excludes the impact of: (i) non-cash items such as stock-based compensation, asset impairments, non-cash currency translation adjustments related to an inter-company loan and (ii) one-time items that have not occurred in the past two years and are not expected to recur in the next two years. Adjusted EBITDA should not be construed as a substitute for net income (loss) (as determined in accordance with GAAP) for the purpose of analyzing our operating performance or financial position, as Adjusted EBITDA is not defined by GAAP.
"Adjusted EBITDA" is defined as earnings before interest, taxes, depreciation, amortization, stock-based compensation, impairment of long-lived assets, non-cash currency translation adjustments for an inter-company loan and the income (loss) recognized from non-cash assets received in connection with a legal judgment.
(5) In accordance with Segment Reporting guidance, the Company's financial reporting includes detailed data on four separate operating segments. The Jewish Networks segment consists of the Company's JDate.com, JDate.co.il, JDate.fr, JDate.co.uk and Cupid.co.il Web sites and their respective co-branded Web sites. The Christian Networks segment consists of the Company's ChristianMingle.com, ChristianMingle.co.uk, ChristianMingle.com.au, Believe.com, ChristianCards.net, ChristianDating.com, DailyBibleVerse.com and Faith.com Web sites. The Other Networks segment consists of Spark.com and related other general market Web sites as well as other properties which are primarily composed of sites targeted towards various religious, ethnic, geographic and special interest groups. The Offline & Other Businesses segment consists of revenue generated from offline activities and HurryDate events and subscriptions.
(6) Total Average Paying Subscribers excludes results from the Company's HurryDate business due to its relative size.
(7) ARPU is defined as average revenue per user per month. Total ARPU excludes results from the Company's HurryDate business due to its relative size.
(Consolidated financial statements to follow)
SPARK NETWORKS, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
December 31, June 30,
------------ ------------
2012 2013
------------ ------------
Assets (unaudited)
Current assets:
Cash and cash equivalents $ 10,458 $ 18,407
Restricted cash 1,232 1,363
Accounts receivable 1,510 1,330
Deferred tax asset, net - current 8 10
Prepaid expenses and other 861 1,455
------------ ------------
Total current assets 14,069 22,565
Property and equipment, net 3,133 3,623
Goodwill 8,861 9,029
Intangible assets, net 2,143 2,147
Deferred tax asset, net - non-current 5 4
Other assets 153 328
------------ ------------
Total assets $ 28,364 $ 37,696
============ ============
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 1,093 $ 1,263
Accrued liabilities 5,339 4,512
Deferred revenue 8,128 9,024
Deferred tax liability - current 257 257
------------ ------------
Total current liabilities 14,817 15,056
Deferred tax liability - non-current 1,413 1,582
Other liabilities 588 1,438
------------ ------------
Total liabilities 16,818 18,076
Commitments and contingencies
Stockholders' equity:
Authorized capital stock consists of 100,000,000
shares of Common Stock, $0.001 par value; issued
and outstanding: 23,574,416 shares at June 30,
2013 and 20,945,364 shares at December 31, 2012: 21 24
Additional paid-in-capital 54,857 69,122
Accumulated other comprehensive income 712 734
Accumulated deficit (44,044) (50,260)
------------ ------------
Total stockholders' equity 11,546 19,620
------------ ------------
Total liabilities and stockholders' equity $ 28,364 $ 37,696
============ ============
SPARK NETWORKS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited, in thousands, except per share data)
Three Months Ended Six Months Ended
June 30, June 30,
------------------ ------------------
2012 2013 2012 2013
-------- -------- -------- --------
Revenue $ 15,046 $ 17,581 $ 29,601 $ 34,844
Cost and expenses:
Cost of revenue (exclusive of
depreciation shown separately
below) 10,976 14,770 22,824 28,427
Sales and marketing 983 1,287 1,956 2,549
Customer service 622 688 1,235 1,391
Technical operations 355 267 705 599
Development 844 793 1,690 1,584
General and administrative 2,052 2,274 4,290 5,208
Depreciation 413 472 816 925
Amortization of intangible assets - - 13 -
Impairment of long-lived assets - 265 - 265
-------- -------- -------- --------
Total cost and expenses 16,245 20,816 33,529 40,948
Operating loss (1,199) (3,235) (3,928) (6,104)
Interest expense (income) and other,
net 113 (43) (14) (96)
-------- -------- -------- --------
Loss before income taxes (1,312) (3,192) (3,914) (6,008)
(Benefit) provision for income taxes (311) 84 (1,200) 208
-------- -------- -------- --------
Net loss $ (1,001) $ (3,276) $ (2,714) $(6,216)
======== ======== ======== ========
Net loss per share--basic and diluted $ (0.05) $ (0.15) $ (0.13) $ (0.29)
======== ======== ======== ========
Weighted average shares outstanding -
basic and diluted 20,625 22,485 20,611 21,745
======== ======== ======== ========
Three Months Six Months
Stock-based compensation: Ended June 30, Ended June 30,
(in thousands)
2012 2013 2012 2013
------- ------- ------- -------
Cost of revenue $ 2 $ - $ 4 $ -
Sales and marketing 18 37 38 71
Customer service 1 - 1 -
Technical operations 30 1 60 2
Development 10 3 21 7
General and administrative 138 153 279 302
Reconciliation of Net Loss to Adjusted
EBITDA: Three Months Six Months
(in thousands) Ended June 30, Ended June 30,
---------------- ----------------
2012 2013 2012 2013
------- ------- ------- -------
Net loss ($1,001) ($3,276) ($2,714) ($6,216)
Interest 15 19 27 34
Taxes (311) 84 (1,200) 208
Depreciation 413 472 816 925
Amortization - - 13 -
------- ------- ------- -------
EBITDA (884) (2,701) (3,058) (5,049)
Stock-based compensation 199 194 403 382
Impairment of long-lived assets - 265 - 265
Non-cash currency translation adjustments 244 (37) 119 (116)
Non-repetitive property possession (151) - (151) -
------- ------- ------- -------
Adjusted EBITDA ($592) ($2,279) ($2,687) ($4,518)
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For More Information
Investors:
Addo Communications
Laura Bainbridge, Kimberly Esterkin
laurab@addocommunications.com
kimberlye@addocommunications.com
310-829-5400
