LOV - Earnings call transcript Q4 2017

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Operator

Good morning ladies and gentlemen and thank you for waiting. Welcome to the Spark Networks' Second Half and Full Year 2017 Earnings Conference Call. This call is being recorded and we are broadcasting live in listen-only mode. I would now like to turn the conference over to Mr. Rob O'Hare. Mr. the begin may you conference. O'Hare,

Rob O'Hare

Spark's joining Thank Chief with I’m Folgueira, O'Hare, today. Officer you me for Jeronimo call for Financial today's Spark Rob On Officer. us Networks Executive Chief is SE.

begin, results. with Today, our in the It our on cover second is Investor we need release the full and remarks company's a Relations you. Media there press both release items we in available we few In Before I and a year to in half press our issued call, EBITDA www.spark.net announcing are at this SEC XXXX website our adjusted filings. which prepared defined Center from and to sections. refer is financial

to investors evaluating current is performance. Company's EBITDA when non-IFRS financial adjusted we a useful believe measure, the Although be financial it may

not calculated IFRS, fact because adjusted consider cause subject or the information like other EBITDA projections adjusted consolidated or release. predictions measures statements or differ may or events. be actual companies. operations EBITDA regarding from to performance, made are of comments operations results listening reconciliation our today calculated is to with any We results forward-looking I adjusted in it A flow future that to earnings that employed net alternative caution in or by materially accordance income statements of included would that titled everyone comparable the call operating as any remind be on not that found you cash contain to income, this projections. to can in Company's risks similarly are investors events and EBITDA statements to such uncertainties could accordance However, Further, not other may in in with should net from measure determining for an IFRS. our

that the forward-looking Company's from cause found uncertainties actual differ may risks, factors and statements SEC. the filings results or these with to Additional events be could materially in

a our sections question-and-answer I weeks. being over session. be I period playback relations two will a and will prepared for will for Jeronimo remarks, conduct available turn of recorded is website Jeronimo. This that, now to investor the call our Following and With of call the on

Jeronimo Folgueira

and Rob, the are of It the been call Inc. made and progress months to Spark have since expecting has the six nearly trajectory joining the for closed and today. everyone the so we with we thank are Affinitas XXXX. SE we Networks businesses two that form Thanks, with pleased you in merger we to integrate Networks and growth far Spark

review merger full-year one created will for Rob open globally. I our the I earnings is closed, rationale our discussing to call back subscriber this of and our turn call merger results. financial XXXX then companies with first merger The second want strategic the a half top for priorities. since the Given strategic a of the before of to discussion the dating

diversified XXXX brands network the complement countries that financial and and of that positions our a nearly to us standalone just the any monthly Networks platform XX have EBITDA a on profitable and is created leader U.S. Spark existing entity portfolio merged quickly From of result realizing gives XXXX increase depth that different a basis, the and Both breadth base and consistent and Affinitas profitable in scale more of and built across larger of a Across the The dating launch brands these than $X in sum portfolio. Affinitas market. parts. our before and were and added of profitability compelling we and our serious global lower transitioned dependency cost half operational stable growing skilled have strong team merger segment in in can the us subscribers perspective, Post paying of highly marketing, The offers knowledge a efficiently Berlin. Our significantly we dating of the cost strong technological, of languages. million have the a brands Inc. XX reduced in Spark as in brands. based Los and a nearly Spark's to leverage a merger to synergies. outside Angeles all [ph] teams we million on and fields

We done structure efficient enter this have financial quickly and an very XXXX profile. and operating with

already anticipated. of operations all that our originally fully at Looking today, we cost we synergies realized the have

We the fund with expect capital with a currency also be March. an any in for €XX public million to acquisitions. was closed provision for improved an now Silicon future €XX future additional We Valley forward. both and Bank a million funded accretive accelerant access us available M&A we to that €XX facility late million with to going have closing credit at

have with for We pursuit profitable sustainable, a and and experience, highly industry selective spark long-term, scalable all at the acquisitions. our clear enter financial growth. XXXX three model to be in We aimed and of which capital the are positioning business of opportunistic priorities

on the growth that had driven achieved several the success build the to aim consistent of we First, momentum by EliteSingles. over years last Affinitas primarily

of XX% grow tremendous U.S. this X% for roughly Since actions subscribers our added excess nearly America. EliteSingles us through is the XXXX in platform. successful with our our market have and consolidated in is revenues. merger Spark less the markets we growing the in brands highest Christian grown of with of the Elite total and finally XX% to revenues. complementary late one brands highly still largest XXXX, the significantly. North in U.S. to and opportunity represented in third Today, to key XX stabilize we such and brands as Jewish and have revenue new launching contributing will in than growth there portfolio are America grow markets taking grow share we EliteSingles and Second, of With North that launch were

recognition and U.S. We additional our U.S. level marketing in with brand a are internal to capture improving increased unit from driving economics share the of with market efforts consumers. resulting combination optimizations

stabilize Christian and America, addition working parallel expanding in Jewish In to grow Spark brands. North EliteSingles to in and we are

As all merger marketing the proven began as we the soon to brands. have successful and the that product closed, apply tactics with

currency XXXX allowing premium we daters early exceeded product. brand France, JDate markets, are and over of perspective Germany, and recent done SilverSingles high and on year-over-year launch brands half with of and can SilverSingles these December and this the customer Jewish The have already JSwipe UK, have has to the confidence in a match-making results launched ability positive to Since established the to serious of expect Australia. have we Mingle product future. that the platform This work We XXXX. reinforces performance. optimize local XXXX SilverSingles to initial our and in to feature second basis we in in to years. first the pleased our same optimistic be grow The we the through the age and trajectory, in powers sustainable in growth runs Christmas the the Canada, but results new ability Jewish marketing achieving platform XXXX performance a return modest EliteSingles revenue by in will with with a that we expectations to currency throughout the this five we're There capital targets to registrations is SilverSingles winter in QX brands returns. potential the portfolio our sites revenue early season more and in in continued compared XXXX. months based this base. where growing to a growth quickly and us Day. XX and growth the these from a to meaningful and consistent beyond. are brand period of key Christian addition initial generated In and contributor very XXXX the U.S., We be reach our set three be Christian The customers years allocated Valentine's deploy resulted from launching brand. expect XX% capital very of XXXX. were our effectively efforts efficiently growth countries is half brands, our of XXXX stable These encouraged The still positive approximately a stability Similarly, on now to this we profitably which first been of revenue performance and of and by six in our convert annual grow in local first mid-December, to

We scaling priorities. will invest strategic this our continue in to brand one key as of

subscriber As Rob impact the dollars synergies we Effectively this company. XXXX and success for will we growth. driver believe will Growth revenue our our investment negatively recognize a positions XXXX new and as discuss, and invest long-term cost to in we [indiscernible] stronger is year to are we help vital higher to worth profitability long-term growth and expect growth marketing for beyond. this investing a create single us of

and our our have am updates look stated earlier, XXXX dating I As business in we I the forward on the about as plans execute plans. as I as you we online to for with growth excited the opportunities tremendous market. capitalizing providing ever

I'll review to results Now turn call our Rob? updated guidance. XXXX financial to over the Rob and

Rob O'Hare

full Thanks second XXXX results. Jeronimo. half financial additional some share our and I am year color going on to

average to December increase XX.X% resulting XX.X% the efforts XXXX addition the and both XXXX ended of of growth increase to attributable in increase XXXX marketing the compared of Full-year XXXX. and our Inc. December months JDate XXXX. following in the the resulting increased was we North the merger revenue Mingle revenue of million The ended results. America as finished by includes both average months an six during a Affinitas-Spark following of subscribers periods from year in relating and subscribers the with results Networks second paying December in write-off two efforts sequential XX, driven million net growth million the half the the North deferred Christian with XXXX year-over-year the merger paying months reminder, Affinitas-Spark addition X.X% The revenue €XX.X Revenue six million in our a XX aforementioned and a America compared were to XX% of Christian in post from November in XX, €XX.X Starting XX, marketing €XX.X the merger. XXXX. XX, of to increases Mingle only €X.X Spark As of June in ended €XXX,XXX spark and November the Affinitas-Spark and revenue ended to and revenue merger JDate include total months of from six from XXXX.

of contribution million XX, six the June and Moving increase XX.X% for from six December the XXXX an December XXXX increase months six the down XXXX. the ended statement XX, income XX, €XX.X XX.X% ended compared to was months ended months

contribution revenue contribution in the growth XX.X% in increase The contribution months six Full and six €XX.X to six North ended XX.X% by year from months ended margin XX, XX.X% margin increased XX.X% XX, was contribution from X.X% XXXX ended from XX, America. six year margin margin December months in in of and was XXXX. in North XX, the primarily period. million ended XXXX Our an the months America to the expansion increased X.X% XXXX. December XXXX compared ago driven XX.X% to the from June June

Our net Affinitas-Spark margin million merger. Affinitas-Spark period. to North ago XX.X% €XXX,XXX by year The from deferred XX contribution expansion and includes relating of margin the from write-off to December €X.X Spark driven in America X.X% XX.X% growth contribution in America a the the ago merger. post primarily Contribution six contribution merger period. to year the from was increased North of X.X% increased in XX, margin months in the following both revenue XXXX ended of

nonrecurring six half June XX, was XXXX versus For XXXX. €X.X XXXX an months XX, second the of months €X.X million, increase excluding a €XXX,XXX the adjusted and of decrease December charges ended ended million for EBITDA the of six

months in For both Adjusted full XXXX adjusted period. adjusted XX, XXXX EBITDA includes of from the €X.X €X.X an million, ended ago EBITDA from EBITDA and post was XX six merger the million €XXX,XXX year Spark. the year December increase in

on last structure already will As merger we cost made cost Jeronimo surpassed progress that the basis XXXX announced On have plans. initiatives of post allow $X in merger had that growth spring. us we've minimizing million an improved rate while We when we invest integration with enter great we mentioned, our identified synergies to run the operational a overhead.

ended year-end XXXX. end XXXX of group in outstanding Spark debt Turning cash fully and the At repaid which million the compared sheet, balance was March to XXXX. €X.X at in million cash equivalents €X.X the had of million with €X.X to

a credit ��X X% €X facility as higher a with As Jeronimo mentioned, fulfill terminate cost and we cost and million closed was €XX borrowing a March a a XXXX million merger. of term that million loan facility late per is This allowed of negotiated that currently in the payment annum. to us part four-year below obligation

materially change loan million an did capital we Today €XX million of undrawn repay net to and an acquisition term position used have additional near cash our Our aforementioned €XX million capital the facility. we the as on as acquisitions of obligations. of we opportunities. ability access €XX execute identify accretive to should of funded committed to million result this we pre-existing With proceeds a have additional incremental committed not €XX attractive improved

to our move let's Now guidance. XXXX

As set the announced the to we million the a create relative has we merger targets look U.S. XXXX in that to average XXXX dollar $XXX us adjusted XX% noting revenue by of reported million our This for comes $XX to of a third it worth $XXX revenue strengthened of terms in the XXXX ago, and one in growth to versus $XX so about from will euro nearly million for and rate. far we is the headwind in XXXX results When million EBITDA. year Spark-Affinitas nearly euros XXXX. of of

Our the become opportunity an marketing see a XXXX growth marketing strategic to we meaningful review additional invest detailed core are by our we to in of long-term XX performance informed exceed SilverSingles line to months with and our and brands part build ago set This of now our is is to decision strategy. goals portfolio. pace in a on

we over revenue our investments subscriptions that are a the is are new adjusted add, for Given of resulting the lowering while revenue while our life EBITDA the recognized guidance. the raising for growing we XXXX guidance marketing recognized brand simultaneously upfront

$XX the now EBITDA generate revenue adjusted For $XXX million. of year to we to to million $XX $XXX expect and million million of

have team sheet and a EBITDA our an target maintaining the concludes off conclusion, XX% to entire for start margin growth. That executing on plan to is assets Spark. In The the strong at our support exciting focused are remarks. we balance long-term year set we We XXXX have of our XX%. and prepared is great to

the now Operator? open will We line questions. to up

Operator

question Kara question. first proceed Our and your Instructions] Please Anderson Company. [Operator comes you. B. Thank from Riley with with

Kara Anderson

morning. Hi good

Rob O'Hare

Hi Kara.

Kara Anderson

Can period ending you subscriber any provide metrics?

Rob O'Hare

can give with for we year, ended about so year the XXX,XXX endings Yes, period the we subs. paying

Kara Anderson

to able out further that between International? Are America you break North and

Rob O'Hare

was XXX,XXX it XXX,XXX in in America Yes, North and international.

Kara Anderson

the the for that? space that Europe the there and it. And Got then of awareness incremental in with any costs Christian doing like JDate to brand respect launch is in Mingle something and what’s

Rob O'Hare

Kara, can you repeat Sorry question? the

Kara Anderson

awareness So markets, space be Mingle is announced associated something cost kind and I believe with and Christian what if of JDate guys brands you some for wondering just you'd launching in this them like brand doing that? European those there's already then in

Jeronimo Folgueira

growing capital a but of those brands are there grow those. these the have to answer we so term and large awareness those lot no, deploy languages to outside to no is North not the of a of near is Sure, we added brand marketing platform planning America brands, to in in

we deploy most international we're North can them and building being the for Mingle not time, we and our markets Christian on will have America. lot scaling for of yet. of there of platform, not America at So JDate so In but the growing are growth capital we right focusing those up basically start initiatives for be marketing businesses time will North the outside investment therefore really a

Kara Anderson

of and I sort taken elaborate color sort the what success little seeing to around Christian deployed North that you’re then you bit in? respect maybe give from And effective in specifically in about of it. a and the U.S. guess Mingle talk can Affinitas just Got America and or team with marketing JDate strategies to of

Jeronimo Folgueira

both continue users to more and scale year on the market. acquire and improving, economics because EliteSingles effectively so North unit the every in that is side, the awareness of brand keep part we increasing we American Yes, are

of part of overall America is the that building we in TV doing building so brand. performance So budget brand for the our activities advertising, are basically helps North

initial been the more acquiring faster we do economics. more been so very with results, better we bigger than keep have much and to more pleased spending of with scale EliteSingles with and back as So North an case at in brand have ability SilverSingles able SilverSingles, we the see to XXXX. America In keep in did up users at EliteSingles we known gets unit

we we with build to So our able profitably basically initial strong with very And brand been SilverSingles. deploy a different very, comfortable the Therefore success are second results. the in now capital channels very perspective. marketing we have happy feel with to already the EliteSingles from replicating ability performance lifetime

Kara Anderson

Christian over I the EliteSingles with do what you've Mingle, seen it learned apply in pressure think and those take some effectively U.S. with JDate well have Okay you years. and here mean but SilverSingles known from you're they're What can doing largely you and brands? about towards and the what what subscriber

Jeronimo Folgueira

as starting part brands the in of finally decline over last years a to reduction those spend. For marketing driven also the we by been said has are stabilize, so

are starting that brands the the can growth We now pleased by and we these this expect again some money end back the see growth therefore XXXX these with to spend in basis that see beginning bring we currency very on we and of especially to on at year. now a we're local these in we initials brands of brands

capital and basically So profitably. we therefore be to also starting are them to but start able deploy growing

Kara Anderson

did Got $X year hear about so maybe it and the incremental I or as Jeronimo, savings is you of SilverSingles cost a say you then million? that Rob, launching of

Jeronimo Folgueira

out revenues marketing in obviously spend generate XXXX this will but Yes, so already investment. the that, will probably of exceed

so on so will average have coming upfront. revenues a course revenues the six time and spend of months subscriptions the over to recognized lifetime start we Of longer, or will subscription long the the but sell we

of we the a one but will impact part synergies, the already whole So probably year of that that this we of worth suspect the will but year XXXX. come be in on then cost recovered bit more, be will year bulk and invest will

Kara Anderson

Got incremental in immediately I guess it $X savings in months and then what’s with in the and in that two guide? the million respect was recognized the how much to of XXXX XXXX

Rob O'Hare

in Yes, have the I it. and think we closing announcing ways some deal between were six months to fortunate

a put that $X the contracts of lot staff. a were So plan the in and of I and with recognize to savings operational drove to able terminate detailed of reductions couple XXXX. We together calendar able savings XXX% a the along would say we we able to had within large in were that million we some were very

Kara Anderson

Okay, all right.

Jeronimo Folgueira

But the cost saving will in XXXX. come really

Kara Anderson

I so a much year-over-year from guess is ‘XX how should perspective, Right, savings? include we in

Rob O'Hare

I think we $X be expense I full get terms million the will in able sure of for operating to mean, savings.

Kara Anderson

That's then, last guess the rate Thank it. and I Got me assuming? year exchange are you. from helpful you outlook, ’XX full on what one

Rob O'Hare

The current per $X.XX guidance assumes euro.

Kara Anderson

the Okay, can ARPU provide growth guide, for more assumptions in the sorry around any subscriber one that? from color or you embedded

Rob O'Hare

because Spark a overall a be will headwind headwind year there for think be brands I will ARPU. impact full down modest of ARPU pushing the probably the the slightly just

I growth revenue the will come of subscribers. from So most assume would that

Kara Anderson

it, you. thank Got

Rob O'Hare

Kara. Thanks

Operator

[Operator Instructions] Our next Please Steve question. Mangrove. proceed question comes with your from Cole with

Steve Cole

curious at could out expect a you a two lay your to big little congratulations guys. kind of obviously I hear going guess morning could gap. SilverSingles SilverSingles I'm to on speak Thank progression a much if voice the for ask It's of what very forward. update. EliteSingles nice you Could and I you just and we Good bit questions. such after wanted

So excited is return what I'm just presume investments but curious let's going obviously type you of say the several follow thinking to growth hurdles just somewhere months a for years on than few look trajectory, making similar I'm a are years. over assuming return maybe, at type us out should you over and next this look the looking I more few looking are you're these we guys because

Jeronimo Folgueira

is, there the coming that and way already of into Of we've of will first subscription. a of Silver And we the the you of the revenues, a North so When course, numbers SilverSingles meaningful XX% revenues look you said results from this that especially how seen of in can that quarter impact next on year just end XXXX. at which for the that hint XXXX, with gives It's so quickly in on see part year. especially America, expect the on meaningful and mostly meaningful the a what we topline do our have that SilverSingles getting size I historical EliteSingles think become profitability, become is registrations at account this good we we relatively published. our we will example our we

had negative EBITDA very and mostly year in the substantial we launched similar spent a bottom building Then SilverSingles path. negative became breakeven we the and second do marketing to So expect our we third upfront year first then beginning, then XXXX especially the we to the follow brand. when a year XXXX was meaningful contribution and at a line because the was

Steve Cole

for of okay. on EliteSingles term the That's is we to target Rob, And a do some from opportunities change longer obviously important cash but the how what manage that kind now get certain see obviously saw the timeframes term you keying one is and can how target of to up challenge hitting, question this probability things idea the long to the and of kind target the or on model? like XX%, EBITDA trajectory of new if generating and priorities come in is level and sort you, that for XX% business here,

Rob O'Hare

Yes, great question. a it's

some to we against opportunities have evaluate or growth allocate really allocate great capital I think capital towards. to fortunate and to we're not need then that decide

a step so, heavily EBITDA And we're see I to think the direction. the going think guidance, that in be right with perspective, from you'll digits pretty I within margin so double that's an new

to going XXXX ultimately of we how think and scale function profitability a really I is we be scaling to be is be think and want beyond profitability where quickly so, growth. growing to And I

in going so with able marketing to leverage that. keep to growing expand do business see ways those opportunities we be And forward so think think given investments we're that you're generate to be We'd if It rapid and if and inherent I and as we're to low the this healthy to at operating just do I percentages should rates. won't then quite returns costs think But slightly. business, we're that's grow the I going operating have margin to as find love able we double-digit committed.

Steve Cole

Okay money and at, curious, and question and the you on that expense? to been in in I'm redeploying some you've last is do we expect been I progression next what the JDate few from that ’XX businesses, when actually to you as Singles out for by me, mentioned congratulations look the has bang what two that stabilizing into’XX those Christian way marketing I see balance those guess know realistic guys area, look you the type of buck again the on growing brands of those in expecting are years? we accelerate as for spending into look brands you

Jeronimo Folgueira

want we we Sure, have healthy is approach our returns. marketing marketing the manage way so to basically

get we we So usually has our therefore portfolio good brands. that different opportunities can a manage where marketing capital we portfolio grow And highest and way approach the But to the ones profitably. basically we returns where money we have push that our deploy is feel returns. spend the that to we strongly feel we we we have we when invest

and Christian other then will we around on Mingle or the push that the probably returns Mingle that not it's first So get will higher on if for Elite depending returns. we example Christian push way we specifically

quite the return. do the product, we try capital the us to in highest get we portfolio is we deploy that our to in currently and invest give then places seen will where feel the well what So perform product

look brand approach a our for at So there's push regions plan to optimize particular to returns. portfolio specific we no the overall single

Steve Cole

good. Very responses. I appreciate the very Thank much guys. you

Jeronimo Folgueira

Steve. Thanks

Operator

There would over questions back closing time. Instructions] to queue turn [Operator call I management to are the like comments. in for no further this at

Rob O'Hare

for in. you. it. thanks Great, Thank everyone dialing appreciate We

Operator

ladies teleconference. you, This and gentlemen. does conclude Thank today's

You lines for thank at time participation. this may disconnect you your and your

Spark Networks SE (LOVLY) 25 Apr 182017 Q4 Earnings call transcript