Exhibit 99.1
SPARK NETWORKS REPORTS FIRST QUARTER 2006 FINANCIAL RESULTS
- Record EBITDAS(1) Profit of $3.4 Million in Q1 '06
- Cash Flow from Operations Totals $4.3 Million
- Cash and Marketable Securities of $15.8 Million
- Company Launches Relationships.com(TM) for Christian Singles
BEVERLY HILLS, Calif., April 27 /PRNewswire-FirstCall/ -- Spark Networks
plc (Amex: LOV), a leading provider of online personals services, today reported
first quarter 2006 financial results.
Highlights
"During our traditionally strong first quarter, we reached a significant
milestone, reporting EBITDAS profit of $3.4 million, our highest EBITDAS
performance to date," stated David Siminoff, President and Chief Executive
Officer of Spark Networks. "In addition, we closed the quarter with a strong
balance sheet, having paid down an additional $5 million of debt from our
MingleMatch acquisition last year, leaving our cash and marketable securities
position at $15.8 million."
JDate(R) continued to deliver steady growth with revenue and average paying
subscribers increasing 8% and 13%, respectively, over the same period last year.
Also during the first quarter, the Company redesigned and rebranded its
Christian community as Relationships.com (www.relationships.com). Already the
most-visited online community for Christian singles2, the new Relationships.com
brand better represents today's Christian singles and provides a unique online
community created for Christian singles looking to make new friends or find
life-long partners who share similar values, traditions and beliefs.
Financial Results
Reported revenue for the first quarter of 2006 was $16.8 million, an
increase of 2% compared to $16.5 million over the same period in 2005. The
increase is largely a result of the Company's acquisition of MingleMatch in the
second quarter of 2005. The first quarter is typically a strong quarter for the
Company, and the first quarter of 2005 was particularly strong given the
carry-over effect of significant marketing expenditures for AmericanSingles(R)
in the last half of 2004. Since the last half of 2004, the Company has reduced
spending for AmericanSingles in order to lower overall customer acquisition
costs for AmericanSingles, thus improving its contribution margin. "I am
especially proud that we were able to show increases in both revenue and EBITDAS
against the difficult benchmark of first quarter 2005," said Siminoff.
Total operating expenses for the first quarter of 2006 were $10.2 million,
an increase of 10% compared to $9.3 million in the same period in 2005. The
increase in operating expenses was primarily attributable to share-based
compensation expense of approximately $1.4 million as a result of the Company's
adoption of the Statement of Financial Accounting Standards No. 123 (R) ("SFAS
123 (R)") in the third quarter of 2005. Periods prior to the third quarter of
2005 do not contain any expense for share options in accordance with SFAS
123(R). Even including operating expenses related to its MingleMatch subsidiary,
which the Company acquired in the second quarter of 2005, total operating
expenses for the first quarter of 2006 would actually have been lower than those
in the first quarter of 2005 absent the SFAS 123 (R) share-based compensation
expense.
The Company reported net income of $710,000, or $0.02 per share, for the
first quarter of 2006, compared to net income of $2.0 million, or $0.08 per
share, for the same period in 2005. Due to the Company's implementation of SFAS
123 (R), the net income for the quarter ended March 31, 2006 includes
compensation expense related to share options of $1.4 million. Excluding
share-based compensation, the Company would have reported a profit of $2.1
million, or $0.07 per share3, for the quarter.
EBITDAS (EBITDA adjusted to remove share-based compensation expense) for
the first quarter of 2006 was $3.4 million, and increase of 10% compared to
EBITDAS of $3.1 million during the same period in 2005. See the attached
Consolidated Statement of Operations for a reconciliation of EBITDA and EBITDAS
to net income.
Balance Sheet, Cash, Debt
As of March 31, 2006, the Company had a cash and marketable securities
position of $15.8 million, compared to $17.3 million at December 31, 2005. As of
March 31, 2006, the Company had remaining payments in respect of the purchase of
MingleMatch of $4.0 million, which are due in May 2006, and has accumulated over
$50.0 million of NOLs. Cash flow from operations during the first quarter was
$4.3 million driven by an increase in multi-month subscription sales, where cash
is received up front and service is provided over the life of the subscription.
Segment Reporting(4)
The Company reported first quarter 2006 revenue for its JDate segment of
$7.0 million, an increase of 8% compared to $6.5 million in the same period in
2005.
The Company reported first quarter 2006 revenue for its AmericanSingles
segment of $6.3 million, a decrease of 22% compared to $8.1 million in the same
period in 2005. The decrease in revenues for AmericanSingles is largely
attributable to a 34% decrease in the AmericanSingles marketing spend in the
last half of 2005 compared to the last half of 2004. "Online marketing spend
tends to have a lagging impact so that spending in prior periods affects
revenues in subsequent periods. That lag effect is consistent with impact of the
higher marketing expenses we incurred in late 2004 compared to last year and the
resulting impact upon AmericanSingles revenue in the first quarters of 2005 and
2006," stated Siminoff.
The Company reported first quarter 2006 revenue for its Other Businesses
segment of $3.5 million, an increase of 75% compared to $2.0 million in the same
period in 2005. The increase in revenue was primarily driven by the acquisition
of MingleMatch in the second quarter of 2005, and strong growth from the
websites associated with the acquisition.
Business Metrics
Average paying subscribers for the Company's JDate segment were 79,500
during the first quarter of 2006, an increase of 13% compared to 70,400 from the
same period in 2005. "We believe the increase in average paying subscribers is a
result of focused marketing efforts that we've designed to both increase
awareness and enhance the reputation of the JDate brand," stated Siminoff.
Average paying subscribers for the Company's AmericanSingles segment were
98,800 during the first quarter of 2006, a decrease of 19% compared to 121,600
from the same period in 2005.
Average paying subscribers for the Company's Other Businesses segment were
66,000 during the first quarter of 2006, an increase of 116% compared to 30,600
from the same period in 2005.
Average paying subscribers for the Company, as a whole, in the first
quarter of 2006 were approximately 244,300, an increase of 10% compared to
222,600 from the same period in 2005.
Direct subscriber acquisition cost(5) (SAC) for the Company's JDate segment
in the first quarter of 2006 was $13.20, an increase of 47% compared to $9.01
from the same period in 2005. When comparing JDate SAC in the first quarter to
that in the same period in 2005, it is important to consider that SAC metrics
for JDate now reflect a wider mix of offline initiatives focused on continuing
to build the JDate brand.
SAC for the Company's AmericanSingles segment in the first quarter of 2006
was $35.19, an increase of 37% compared to $25.61 in the same period in 2005.
The increase in SAC for AmericanSingles is the result of the previously
discussed significant cuts in marketing spending in the first quarter of 2005
compared to the last half of 2004. The carry-over effect in the first quarter of
2005 of increased subscriptions from previous marketing, combined with reduced
marketing expense, made for an atypically low SAC in the first quarter of 2005.
Since the first quarter of 2005, the Company has slightly increased marketing
spending for AmericanSingles.
SAC for the Company's Other Businesses segment in the first quarter of 2006
was $24.68, a decrease of 47% compared to $46.97 from the same period in 2005.
The significant decrease in SAC for the Other Businesses segment is due to the
addition of the 20+ affinity-focused websites that were acquired with
MingleMatch and the lower customer acquisition cost the Company encounters with
regard to JDate and its other affinity-focused websites.
SAC for the Company as a whole in the first quarter of 2006 was $26.11, an
increase of 10% compared to $23.84 from the same period last year.
Investor conference call:
The Company will discuss its financial results during a live teleconference
today at 1:30 p.m. Pacific time and 10:30 p.m. Frankfurt time.
Call Title: Spark Networks Q1 '06 Financial Results
Toll-Free (United States): +1-888-802-7346
International: +1-973-582-2785
Confirmation #: 7293857
One-Week Replay
Toll-Free (United States): +1-877-519-4471
International: +1-973-341-3080
The company will also be hosting a webcast of its call which can be
accessed here:
http://www.visualwebcaster.com/event.asp?id=33440
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; keep pace with rapid
technological changes; maintain the strength of our existing brands; and
maintain and enhance those brands and our dependence upon the telecommunications
infrastructure and our networking hardware and software infrastructure. For a
discussion of those and further risks and uncertainties, please see our filings
with the Securities and Exchange Commission. We file annual, quarterly and
special 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 plc:
Spark Networks' American Depository Shares trade on the American Stock
Exchange under the symbol "LOV," and its Global Depositary Shares trade on the
Frankfurt Stock Exchange under the symbol "MHJG." The Spark Networks portfolio
of consumer websites includes, among others, JDate.com (www.jdate.com),
AmericanSingles.com (www.americansingles.com), BlackSinglesConnection(TM).com
(www.blacksinglesconnection.com), LDSMingle(TM) (www.ldsmingle.com) and
Relationships.com (www.relationships.com).
(1) "EBITDAS" is defined as earnings before interest, taxes, depreciation,
amortization and share-based compensation. EBITDAS should not be construed as a
substitute for net income (loss) or net cash provided by (used in) operating
activities (all as determined in accordance with GAAP) for the purpose of
analyzing our operating performance, financial position and cash flows, as
EBITDAS is not defined by GAAP. However, the Company regards EBITDAS as a
complement to net income and other GAAP financial performance measures,
including an indirect measure of operating cash flow. As such, management
believes that the investment community finds it to be a useful tool to perform
meaningful comparisons of past, present and future operating results and as a
means to evaluate the results of core on-going operations.
(2) An analysis of comScore Media Metrix data for the three months ended
March 31, 2006, revealed that Relationships.com (formerly ChristianMingle.com)
attracted more unique visitors than any other Christian online personals service
in the United States, making it the most-visited Christian online personals
service in the U.S.
"Christian online personals services" sub-category defined by Spark
Networks (Relationships.com) as: BigChurch.com, ChristianMingle.com,
LoveAndSeek.com, Relationships.com, WhereChristiansMeet.com.
(3) Share-based compensation is a non-cash charge recorded in the
Company's income statements. The Company believes that the non-GAAP financial
measures that exclude share-based compensation from net income (loss) provide
useful information to management and investors regarding how the expenses
associated with the application of SFAS 123 (R) are reflected on the statements
of operations and facilitate comparisons to the Company's historical operating
results. The Company's management uses this information internally for reviewing
the financial results, forecasting and budgeting.
(4) In accordance with Financial Accounting Standard No. 131, the
Company's financial reporting includes detailed data on three separate operating
segments. The JDate segment consists of the Company's JDate.com website and its
co-branded websites. The AmericanSingles segment consists of the Company's
AmericanSingles.com website and its co-branded and private label websites. The
Other Businesses segment consists of all of the Company's other websites and
businesses and gives effect to the MingleMatch acquisition on May 19, 2005.
(5) Direct subscriber acquisition cost is defined as total direct
marketing costs divided by the number of new paying subscribers during the
period. This represents the average cost of acquiring a new paying subscriber
during the period.
SPARK NETWORKS PLC
(formerly known as MatchNet plc)
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
March 31, December 31,
2006 2005
------------ ------------
(unaudited)
Assets
Current assets:
Cash and cash equivalents $ 15,640 $ 17,096
Marketable securities 193 196
Restricted cash 1,998 1,085
Accounts receivable, net of allowance of $13 for
March 31, 2006 and December 31, 2005 475 932
Prepaid expenses and other 1,294 1,493
------------ ------------
Total current assets 19,600 20,802
Property and equipment, net 4,064 4,453
Goodwill, net 17,277 17,344
Intangible assets, net 4,683 4,627
Investment in noncontrolled affiliate 1,092 1,099
Deposits and other assets 460 295
------------ ------------
Total assets $ 47,176 $ 48,620
============ ============
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $ 2,383 $ 2,267
Accrued liabilities 4,268 3,632
Deferred revenue 5,676 4,991
Notes payable - current portion 4,697 9,930
Current portion of obligations under capital leases 39 --
------------ ------------
Total current liabilities 17,063 20,820
Deferred tax liabilities 1,746 1,717
Notes payable - long term 900 900
Obligations under capital leases 92 --
------------ ------------
Total liabilities 19,801 23,437
Shares subject to rescission 6,089 6,089
Commitments and contingencies -- --
Shareholders' equity:
Authorized capital 800,000 pounds divided into 80,000,000
ordinary shares of 1p each; issued and outstanding 30,296,396
shares as of March 31, 2006 and 30,241,496 shares as of
December 31, 2005, at a stated value of: 488 487
Additional paid-in-capital 65,547 64,064
Accumulated other comprehensive (loss) (386) (302)
Notes receivable from employees -- (82)
Accumulated deficit (44,363) (45,073)
------------ ------------
Total shareholders' equity 21,286 19,094
------------ ------------
Total liabilities and shareholders' equity $ 47,176 $ 48,620
============ ============
SPARK NETWORKS PLC
(formerly known as MatchNet plc)
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
Three Months Ended March 31,
----------------------------
2006 2005
------------ -------------
Net revenues $ 16,805 $ 16,526
Direct marketing expenses 5,657 5,228
------------ -------------
Contribution margin 11,148 11,298
Operating expenses:
Indirect marketing (including share-based
compensation of $13 and $0) 366 265
Customer service (including share-based
compensation of $23 and $0) 908 577
Technical operations (including share-based
compensation of $174 and $0) 2,230 1,402
Product development(including share-based
compensation of $118 and $0) 845 830
General and administrative (including
share-based compensation of $1,043 and $87) 5,632 6,079
Amortization of intangible assets other than
goodwill 239 110
------------ -------------
Total operating expenses 10,220 9,263
------------ -------------
Operating income 928 2,035
Interest (income), loss and other expenses, net 39 (24)
------------ -------------
Income before income taxes 889 2,059
Provision (benefit) for income taxes 179 72
------------ -------------
Net income $ 710 $ 1,987
============ =============
Net income per share - basic $ 0.02 $ 0.08
------------ -------------
Net income per share - diluted $ 0.02 $ 0.07
------------ -------------
Weighted average shares outstanding - basic 30,266 25,117
Weighted average shares outstanding - diluted 31,258 29,236
Three Months Ended March 31,
----------------------------
2006 2005
------------ -------------
EBITDA
Net income $ 710 $ 1,987
Interest 70 (24)
Taxes 179 72
Depreciation 817 848
Amortization 239 110
----------------------------
EBITDA 2,015 2,993
------------ -------------
Share-based compensation 1,371 87
------------ -------------
EBITDAS $ 3,386 $ 3,080
------------ -------------
SPARK NETWORKS PLC
(formerly known as MatchNet plc)
SEGMENT RESULTS FROM OPERATIONS
(in thousands)
Three Months Ended
March 31,
----------------------------
2006 2005
------------ -------------
Net Revenues
JDate $ 6,996 $ 6,468
AmericanSingles 6,343 8,097
Other Businesses 3,467 1,961
------------ -------------
Total net revenues $ 16,806 $ 16,526
============ =============
Direct Marketing Expenses
JDate $ 796 $ 503
AmericanSingles 3,360 3,258
Other Businesses 1,502 1,467
------------ -------------
Total direct marketing expenses $ 5,658 $ 5,228
============ =============
Contribution Margin
JDate $ 6,200 $ 5,965
AmericanSingles 2,983 4,839
Other Businesses 1,965 494
------------ -------------
Total contribution margin $ 11,148 $ 11,298
============ =============
SPARK NETWORKS PLC
(formerly known as MatchNet plc)
SEGMENT METRICS (For the Period)
Three Months Ended
March 31,
---------------------------
2006 2005
------------ ------------
Average Paying
Subscribers (Thousands)
JDate 79.5 70.4
AmericanSingles 98.8 121.6
Other Businesses 66.0 30.6
------------ -------------
Total 244.3 222.6
============ =============
Average Monthly Net
Revenue Per Paying
Subscriber
JDate $ 29.33 $ 30.61
AmericanSingles 21.40 22.19
Other Businesses 17.52 18.33
Total 22.93 24.32
Direct Subscriber
Acquisition Cost
JDate $ 13.20 $ 9.01
AmericanSingles 35.19 25.61
Other Businesses 24.68 46.97
Total 26.11 23.84
Monthly Subscriber Churn
JDate 24.5% 26.0%
AmericanSingles 30.1% 35.8%
Other Businesses 27.1% 28.6%
Total 27.5% 31.7%
We define our key business metrics as follows:
* Average paying subscribers: Paying subscribers are defined as individuals
who have paid a monthly fee for access to communication and website
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.
* Average monthly net revenue per paying subscriber: Average monthly net
revenue per paying subscriber represents the total net subscriber revenue
for the period divided by the number of average paying subscribers for the
period, divided by the number of months in the period.
* Direct subscriber acquisition cost: Direct subscriber acquisition cost is
defined as total direct marketing costs divided by the number of new paying
subscribers during the period. This represents the average cost of
acquiring a new paying subscriber during the period.
* Monthly subscriber churn: Monthly subscriber churn represents the ratio,
expressed as a percentage, of (i) the number of paying subscriber
cancellations during the period divided by the number of average paying
subscribers during the period and (ii) the number of months in the period.
Available Topic Expert(s): For information on the listed expert(s), click
appropriate link.
David Siminoff
http://profnet.prnewswire.com/ud_public.jsp?userid=517761
SOURCE Spark Networks plc
-0- 04/27/2006
/CONTACT: Investors, Mark Thompson, mthompson@spark.net, or Media, Gail
Laguna, glaguna@spark.net, both of Spark Networks plc, +1-323-836-3000/
/Web site: http://www.spark-networks.com
http://www.visualwebcaster.com/event.asp?id=33440 /