EXHIBIT 99.1
SPARK NETWORKS(R) REPORTS RECORD REVENUE, EBITDAS AND NET INCOME IN
THIRD QUARTER 2006
Quarterly Revenue of $17.5 Million
Quarterly Net Income of $2.8 Million; Nine-Month Net Income of $3.9 Million
Q3 EBITDAS(1) Increases to $4.3 Million vs. $2.6 Million in Q2 '06 and
$0.6 Million in Q3 '05
Nine-Month EBITDAS of $10.3 Million
BEVERLY HILLS, Calif., Nov. 7 /PRNewswire-FirstCall/ -- Spark Networks plc
(Amex: LOV), a leading provider of online personals services, today reported
third quarter 2006 financial results.
"Since I joined Spark Networks in August 2004, we have worked diligently to
stabilize and turnaround the Company, and the financial results speak for
themselves. We have successfully restructured the Company with an emphasis on
free cash flow growth, and we continue to set new performance records," stated
David Siminoff, Chairman and Chief Executive Officer of Spark Networks. "Our
continued focus on high margin affinity groups, product enhancements and
accretive acquisitions has been successful thus far."
Siminoff continued, "During the quarter we expanded on existing marketing
initiatives to target new consumers. As part of a continued effort to increase
conversion and retention rates, we added new features such as E-cards to our
websites as well as redesigned and relaunched CatholicMingle(TM).com."
"Moving forward, we plan to build on our current momentum. Our balance
sheet, already strong with $15.6 million in cash and marketable securities,
continues to grow stronger. Given our current leadership position in several key
markets, we believe that tremendous opportunities exist to expand and increase
our presence within other targeted communities. In addition, we remain committed
to providing the best user experience in order to attract and retain new
subscribers."
Financial Results
Reported revenue for the third quarter of 2006 was $17.5 million, an
increase of 4% compared to $16.9 million for the same period in 2005. Revenue
for the nine months ended September 30, 2006 was $51.6 million, an increase of
6% compared to $48.9 million for the nine months ended September 30, 2005. The
Company noted that strong performance from the Other Businesses segment,
including solid performance from BlackSingles.com(R) and Relationships.com(TM),
was a key contributor to revenue growth in the quarter.
Total operating expenses for the third quarter of 2006 were $8.8 million, a
decrease of 25% compared to $11.8 million for the same period in 2005. Operating
expenses for the nine months ended September 30, 2006 were $29.4 million, a
decrease of 6% compared to $31.2 million for the nine months ended September 30,
2005.
The Company reported net income of $2.8 million, or $0.09 per diluted share,
for the third quarter of 2006, compared to a net loss of $2.2 million, or
$(0.08) per share, for the same period in 2005. Net income for the nine months
ended September 30, 2006 was $3.9 million, or $0.12 per diluted share, compared
to a net loss of $1.0 million, or $(0.04) per share, for the same period in
2005.
EBITDAS for the third quarter of 2006 was $4.3 million, an increase of 603%
compared to EBITDAS of $612,000 during the same period in 2005. EBITDAS for the
nine months ended September 30, 2006 was $10.3 million, an increase of 164%
compared to EBITDAS of $3.9 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 September 30, 2006, the Company had cash and marketable securities of
$15.6 million compared to $17.3 million at December 31, 2005. Cash and
marketable securities, net of debt, was $14.2 million at September 30, 2006,
compared to $6.5 million at December 31, 2005. During the first nine months of
2006, the Company paid the final $9.0 million in debt due as a result of the
MingleMatch acquisition, as well as $2.0 million with respect to the acquisition
of LDSSingles(TM).
Cash flow from operations during the first nine months of 2006 was $8.3
million, an increase of 388% compared to cash flow from operations of $1.7
million in the first nine months of 2005. The increased operating cash flow was
driven by increased revenue combined with a reduction in operating costs,
excluding stock compensation. As of September 30, 2006, the Company had
accumulated over $50 million of NOLs.
Segment Reporting(2)
The Company reported third quarter 2006 revenue for its JDate segment of
$7.1 million, an increase of 9% compared to $6.5 million in the same period in
2005. JDate revenue for the nine months ended September 30, 2006 was $21.1
million, an increase of 10% compared to $19.2 million for the nine months ended
September 30, 2005. The increase in JDate revenue was largely attributable to an
increase in average paying subscribers for JDate.
The Company reported third quarter 2006 revenue for its AmericanSingles(R)
segment of $5.3 million, a decrease of 26% compared to $7.2 million in the same
period in 2005. AmericanSingles revenue for the nine months ended September 30,
2006 was $17.7 million, a decrease of 21% compared to $22.5 million for the nine
months ended September 30, 2005. The decrease in revenue was due to a reduction
in the marketing spend for AmericanSingles that was implemented in order to
improve the contribution margin from this business.
The Company reported third quarter 2006 revenue for its Other Businesses
segment of $5.0 million, an increase of 52% compared to $3.3 million for the
same period in 2005. Other Businesses revenue for the nine months ended
September 30, 2006 was $12.8 million, an increase of 78% compared to $7.2
million for the nine months ended September 30, 2005. The increase in revenue
from the Other Business Segment was partially driven by solid growth from its
BlackSingles.com and Relationships.com websites.
Business Metrics
Average Paying Subscribers:
Average paying subscribers for the Company's JDate segment were 74,753
during the third quarter of 2006, an increase of 9% compared to 68,403 from the
same period in 2005. Average paying subscribers for the nine months ended
September 30, 2006 were 75,053, an increase of 10% compared to 68,410 for the
nine months ended September 30, 2005.
Average paying subscribers for the Company's AmericanSingles segment were
72,926 during the third quarter of 2006, a decrease of 24% compared to 95,877
from the same period in 2005. Average paying subscribers for the nine months
ended September 30, 2006 were 84,410, a decrease of 22% compared to 107,662 for
the nine months ended September 30, 2005.
Average paying subscribers for the Company's Other Businesses segment were
93,180 during the third quarter of 2006, an increase of 89% compared to 49,213
from the same period in 2005. Average paying subscribers for the nine months
ended September 30, 2006 were 77,167, an increase of 104% compared to 37,894 for
the nine months ended September 30, 2005.
Average paying subscribers for the Company as a whole in the third quarter
of 2006 were 240,859, an increase of 13% compared to 213,493 from the same
period in 2005. Average paying subscribers for the nine months ended September
30, 2006 were 236,630, an increase of 11% compared to 213,966 for the nine
months ended September 30, 2005.
Subscriber Acquisition Cost(3) (SAC):
Direct subscriber acquisition cost for the Company's JDate segment in the
third quarter of 2006 was $13.81, a decrease of 13% compared to $15.84 from the
same period in 2005. SAC for the nine months ended September 30, 2006 was
$13.98, an increase of 9% compared to $12.88 in the nine months ended September
30, 2005.
SAC for the Company's AmericanSingles segment in the third quarter of 2006
was $39.85, an increase of 1% compared to $39.35 in the same period in 2005. SAC
for the nine months ended September 30, 2006 was $38.17, an increase of 10%
compared to $34.72 for the nine months ended September 30, 2005.
SAC for the Company's Other Businesses segment in the third quarter of 2006
was $23.62, a decrease of 16% compared to $28.09 from the same period in 2005.
SAC for the nine months ended September 30, 2006 was $30.33, a decrease of 9%
compared to $33.23 for the nine months ended September 30, 2005.
SAC for the Company as a whole in the third quarter of 2006 was $24.87, a
decrease of 18% compared to $30.23 from the same period last year. SAC for the
nine months ended September 30, 2006 was $27.33, a decrease of 4% compared to
$28.57 for the nine months ended September 30, 2005. The decrease in SAC for the
Company as a whole was due to the increasing share of new subscribers coming
from the Company's Other Businesses segment, where the SAC is lower, combined
with a decreasing share of new subscribers as a percentage of total new
subscribers coming from AmericanSingles (the Company's highest SAC property).
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 Q3 '06 Financial Results
Toll-Free (United States): +1-888-562-3654
International: +1-973-582-2703
Confirmation #: 7964972
One-Week Replay
Toll-Free (United States): +1-877-519-4471
International: +1-973-341-3080
The company will also host a webcast of the call which will be accessible on
the company's website in the Investor Relations section under "Featured Events":
http://www.spark.net/investor.htm
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 these 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), BBWPersonalsPlus(R).com
(www.bbwpersonalsplus.com), BlackSingles.com (www.blacksingles.com),
CatholicMingle.com (www.catholicmingle.com), LDSMingle(R).com
(www.ldsmingle.com), LDSSingles.com (www.ldssingles.com), PrimeSingles(TM).net
(www.primesingles.net), 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) 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.
(3) 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.
(Consolidated financial statements to follow)
SPARK NETWORKS PLC
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
September 30, December 31,
2006 2005
------------- ------------
(unaudited)
Assets
Current assets:
Cash and cash equivalents $ 15,423 $ 17,096
Marketable securities 196 196
Restricted cash 2,004 1,126
Accounts receivable, net of allowance of
$0 and $13 for September 30, 2006
and December 31, 2005 1,111 932
Prepaid expenses and other 1,125 1,452
Total current assets 19,859 20,802
Property and equipment, net 2,969 4,453
Goodwill, net 19,139 17,344
Intangible assets, net 4,808 4,627
Investment in noncontrolled affiliate 1,074 1,099
Deposits and other assets 245 295
Total assets $ 48,094 $ 48,620
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $ 1,251 $ 2,267
Accrued liabilities 4,428 3,632
Deferred revenue 4,520 4,991
Notes payable - current portion 915 9,930
Current portion of obligations under
capital leases 43 --
Total current liabilities 11,157 20,820
Deferred tax liabilities 1,827 1,717
Notes payable - long term 500 900
Obligations under capital leases 69 --
Total liabilities 13,553 23,437
Shares subject to rescission 7,491 6,089
Commitments and contingencies -- --
Shareholders' equity:
Authorized capital 800,000 pounds Sterling
divided into 80,000,000 ordinary shares of
1p each; issued and outstanding
30,828,196 shares as of September 30, 2006
and 30,241,496 shares as of December 31, 2005,
at a stated value of: 500 487
Additional paid-in-capital 67,601 64,064
Accumulated other comprehensive income (loss) 160 (302)
Notes receivable from employees -- (82)
Accumulated deficit (41,211) (45,073)
Total shareholders' equity 27,050 19,094
Total liabilities and shareholders' equity $ 48,094 $ 48,620
SPARK NETWORKS PLC
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited, in thousands, except per share data)
Three Months Ended Nine Months Ended
September 30, September 30,
------------------------ ------------------------
2006 2005 2006 2005
---------- ---------- ---------- ----------
Net revenues $ 17,506 $ 16,935 $ 51,616 $ 48,925
Direct marketing expenses 5,903 7,073 18,350 18,352
Contribution margin 11,603 9,862 33,266 30,573
Operating expenses:
Indirect marketing
(including share-based
compensation of $7,
$10, $33, and $10) 311 287 933 900
Customer service
(including share-based
compensation of $7,
$22, $54, and $22) 910 726 2,716 1,923
Technical operations
(including share-based
compensation of $129,
$168, $505, and $168) 1,701 2,168 6,138 5,433
Product development
(including share-based
compensation of $68,
$124, $307, and $124) 713 1,111 2,526 3,199
General and administrative
(including share-based
compensation of $388,
$1,028, $2,117,
and $1,000) 4,900 7,099 16,176 18,900
Amortization of intangible
assets other than goodwill 290 437 884 848
Total operating expenses 8,825 11,828 29,373 31,203
Operating income (loss) 2,778 (1,966) 3,893 (630)
Interest (income), loss and
other expenses, net (80) 141 (174) 285
Income (loss) before
income taxes 2,858 (2,107) 4,067 (915)
Provision for income taxes 34 56 205 120
Net income (loss) $ 2,824 $ (2,163) $ 3,862 $ (1,035)
Net income (loss)
per share - basic $ 0.09 $ (0.08) $ 0.13 $ (0.04)
Net income (loss)
per share - diluted $ 0.09 $ (0.08) $ 0.12 $ (0.04)
Weighted average shares
outstanding - basic 30,741 26,080 30,457 25,621
Weighted average shares
outstanding - diluted 31,271 26,080 31,299 25,621
Three Months Ended Nine Months Ended
September 30, September 30,
------------------------ ------------------------
2006 2005 2006 2005
---------- ---------- ---------- ----------
Reconciliation of
Net Income to EBITDAS
Net income (loss) $ 2,824 $ (2,163) $ 3,862 $ (1,035)
Interest (78) (5) 32 (49)
Taxes 34 56 205 120
Depreciation 671 935 2,272 2,694
Amortization 290 437 884 848
EBITDA 3,741 (740) 7,255 2,578
Share-based compensation 599 1,352 3,016 1,324
EBITDAS $ 4,340 $ 612 $ 10,271 $ 3,902
SPARK NETWORKS PLC
SEGMENT RESULTS FROM OPERATIONS
Three Months Ended Nine Months Ended
September 30, September 30,
------------------------ ------------------------
(in thousands) 2006 2005 2006 2005
- ----------------------------- ---------- ---------- ---------- ----------
Revenues
JDate $ 7,141 $ 6,457 $ 21,125 $ 19,161
AmericanSingles 5,346 7,173 17,695 22,526
Other Businesses 5,019 3,305 12,796 7,238
Total $ 17,506 $ 16,935 $ 51,616 $ 48,925
Direct Marketing
JDate $ 825 $ 901 $ 2,445 $ 2,110
AmericanSingles 2,900 4,001 9,194 11,570
Other Businesses 2,178 2,171 6,711 4,672
Total $ 5,903 $ 7,073 $ 18,350 $ 18,352
Contribution
JDate $ 6,316 $ 5,556 $ 18,680 $ 17,051
AmericanSingles 2,446 3,172 8,501 10,956
Other Businesses 2,841 1,134 6,085 2,566
Total $ 11,603 $ 9,862 $ 33,266 $ 30,573
Unallocated operating
expenses 8,825 11,828 29,373 31,203
Operating income $ 2,778 $ (1,966) $ 3,893 $ (630)
SPARK NETWORKS PLC
SEGMENT METRICS
(For the Period)
Three Months Ended Nine Months Ended
September 30, September 30,
------------------------ ------------------------
2006 2005 2006 2005
---------- ---------- ---------- ----------
Average Paying Subscribers:
JDate 74,753 68,403 75,053 68,410
AmericanSingles 72,926 95,877 84,410 107,662
Other Businesses 93,180 49,213 77,167 37,894
Total 240,859 213,493 236,630 213,966
Average Monthly Net Revenue
per Paying Subscriber:
JDate $ 31.84 $ 31.47 $ 31.28 $ 31.12
AmericanSingles $ 24.44 $ 24.93 $ 23.36 $ 23.25
Other Businesses $ 17.17 $ 17.89 $ 17.31 $ 18.30
All Segments $ 23.92 $ 25.40 $ 24.14 $ 24.89
Direct Subscriber
Acquisition Cost:
JDate $ 13.81 $ 15.84 $ 13.98 $ 12.88
AmericanSingles $ 39.85 $ 39.35 $ 38.17 $ 34.72
Other Businesses $ 23.62 $ 28.09 $ 30.33 $ 33.23
All Segments $ 24.87 $ 30.23 $ 27.33 $ 28.57
Monthly Subscriber Churn:
JDate 26.7% 26.4% 25.8% 26.7%
AmericanSingles 38.3% 37.7% 34.2% 37.7%
Other Businesses 26.4% 30.1% 26.7% 26.3%
All Segments 31.9% 32.4% 29.6% 31.2%
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.
SOURCE Spark Networks plc
-0- 11/07/2006
/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.net/investor.htm /
(LOV)