Earnings call transcript Q3 2022

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Operator

Good afternoon, and welcome to the Spark Networks Fiscal 2022 Third Quarter Earnings Conference Call. All participants are in a listen-only mode. [Operator Instructions] Please note, this event is being recorded.

I would now like to turn the conference over to Todd Kehrli, MKR Investor Relations. Please go ahead.

Todd Kehrli

operator. you, Thank welcome earnings and Networks' XXXX fiscal Good call. to quarter conference third afternoon, Spark With call on Financial me today's Officer, and Eric David Chief Eichmann; Clark. are Spark's CEO,

like at This afternoon, on release Networks the to call fiscal Before announcing press is spark.net. the Spark a financial XXXX I items. Eric, available third issued turn quarter I'd quick few to release over website its a company's cover This results.

parties, website. interested the Additionally, Relations the is Internet be this on webcast being over archived all call will live page broadcast for of and the Investor the company's

should I on to particularly discuss influence will remind are factors want likely going comments certain regarding business that to facts, Any forward. everyone today's call, historical the are discussed that factors that today management our not and of considered alternatives. of statements company's prospects These forward-looking about opportunities, regarding include expectations plans and long-term comments statements. review market may including forward-looking comments the strategic performance, be future our

of which our XX-Q, SEC subject complete our We our these a review to to Forward-looking to of actual recent XX-K listeners most encourage risks. all and description materially. could risks a filings, statements differ results for cause of are number and uncertainties, including

in as of a result the of statements this are revise or contained whether as November any statements expectations herein, changes call otherwise. Our undertakes of X, new XXXX, publicly on future and no update today, made company or to obligation the events, forward-looking information,

and and reported release. measures. the earnings current on the two report in throughout the our differences describe this be related periods GAAP the the present Additionally, release Form and non-GAAP reporting we'll the between certain non-GAAP Today's call, reconciliation for discussing X-K financial between

Spark Eric call said, now Networks. I'll CEO of With the over please go ahead. Eric, that to turn Eichmann,

Eric Eichmann

Todd everyone. you, and good afternoon, Thank

At initiated is the I strategic company. commentary, still earnings for alternatives regular that this had the Spark time, on review we everyone our that to wanted comprehensive begin we review a June X, remind announced Before of ongoing.

a fourth social Europe the for across with online demographic relationships, dating relationships We worldwide America meaningful is leader people annually, annual over the is estimate in online largest subscription five XX-plus XX% company North single of approximately market meaningful SilverSingles, of with brands, is dating Zoosk, for and We percentage markets anticipated the affiliations. strong religious U.S. Jdate. and Spark and EliteSingles, and growth revenue by dating spend capture Christian the years. with digit portfolio of billion these next in includes the which $X.X Mingle our about targeting

Let me results. first quarter review third our

by against third impacted U.S. headwinds being quarter currencies. quarter year-over-year dollar the X.X% revenue to This our the be exchange to foreign in million. third continue down $XX.X as strengthened We all to major contributed

have On currency would a $XX.X million, basis, revenue constant been year-over-year. third X.X% down quarter

brand, profitability a average focus Zoosk, largest user impacted ability we During for of on the our to in of seasonally spend for delivered scaled to quarter, of to during third time our X.X% acquisition subscriber revenue account quarter. for subscriber growth we quarter. dating, initial Despite the which our the the growth this, grow year and slow total X.X% back and online

subscriber three Since its years Zoosk we base quarter. every acquired last declined until ago, quarter has

our subscriber paying second are off of with around to quarter consecutive this we work to hard excited Zoosk So, turn see the growth.

revenue of quarter $X.X to X% XX% From of $X in of million third of the last million or year. perspective, or in EBITDA compared a profitability delivered a we XX% adjusted increase revenue

believe the and some me improvements conversion detail Now which made we engagement. rates we increased product drove quarter, let significant the provide around during

well product improvements as the traffic. we subscription drive XX%, our quarter, fact, to attribute conversion rates both ability increased during Zoosk as for we our which higher-quality and In non-Zoosk brands made to

engagement increased to users content modernizing profile completion profiles, profile Zoosk's create and experience, encouraged the driving we users. by between high streamlining First, quality

positively our result, fivefold. interaction profile and Stronger with users completion user drive profiles profiles and users' of engagement greater improved between improving rates a rates As impact completion new subscriptions. dramatically

with the an app During conversion U.K., improved uplift and retention engagement quarter, of the Android in and metrics we launched refresh Zoosk the rates. in a

app Zoosk's Google Store refresh, points. X.X improved this Following Play ratings

We will improve update our that to our we as expect continue other apps. ratings app also

rolling updates are We out other to the and U.S. these markets.

We updated iOS iOS and the EliteSingles for couple launch next Android, plan to of on apps in on months. and Zoosk

the the first on some by product much quarter reducing the brands. made year fraud in our also to improvements combat of as during as half We fraud, XX% increases of during

average Based to higher there During the for increased these quarter, additional price in subscriptions. we is changes, successfully Zoosk and Zoosk pricing future. successful room believe leading improvement conversion on prices, a the for on new deployed we

efforts, these in the saw positive since of in to the customer we increase have meaningful feedback result a seen Zoosk. As we levels highest a acquiring quarter

focus, QX, marketing in spend expanding On by we subscriber profitability measure the our With front, focus the quarter year. QX. QX and third user after XX% our new versus driving acquisition profitability our increased during this to last of for shifted

life drive advance made and potential In great should QX and in profitability cycle increased tool a CRM revenue addition, we subscribers, we progress which beyond. with our communications that implementing significantly believe will

product The our higher-quality configurations the rates over all XX% conversion and brands improvements, quarter. focus enhanced traffic, in to marketing subscription led an by payment including on across increase

touch to macro the on I Finally, want environment.

are we climate. XX%. revenue of a quarterly While economic it slowdown our demand favorably progress And while are results suggests tougher issued brands, a to revenue for the established am Publicly happy making, products. facing declines trajectory compares showed brands our dating other with temporary from these year-over-year we I in other

focus throughout to of investments plan contain the prioritize to we result, on a to years rest profitability. the costs continue and further As

saw made QX, saw in profitability improved for in products. significantly and row, metrics. growth our summary, a in second subscription We at good And evolving we progress In Zoosk. and increased conversion quarter engagement the

execute to while on product position continue focus outlook. we profitability and market strengthening will improvements financial on We on our and

for add our color to performance Financial our Chief Officer, around I'll ask more financial that, With David? quarter. David Clark, the

David Clark

decrease third to afternoon, million the $XX.X lower revenues basis, for a the period. We in total constant good fluctuation the you, $XX.X been user quarter and would Revenue have On currency third Thank during XXXX. revenue was currency XXXX of to of spend this largely and year-over-year million. quarter compared acquisition million in $XX.X attribute Eric everyone.

decline $XX.XX the in to on fluctuations period paying ARPU, quarter, and the subscribers XXX,XXX, sequentially down compared revenue of XXXX in of subscriptions end third per the in in incentives. to duration price third factors, emphasis of ARPU including We to Spark's For through several average period were XXXX. monthly monthly $XX.XX quarter attribute quarter. our currency from second user, same XXX,XXX or the decreased longer

$XX.X quarter same XXXX million of a period to third net in loss of Net million XXXX. compared the $X.X of loss was in the

related the $XX.X to Zoosk During third non-cash impairment the million an we charge trade name. quarter, incurred

third was during $X adjusted attribute increasing third quarter, the in primarily million EBITDA in adjusted the adjusted EBITDA $X.X increase the of increase Adjusted a to XXXX. EBITDA compared XX% increased to a quarter We we as of million year-over-year profitability. lower margin acquisition the and spend when quarter XX% on our EBITDA in focus

debt and million sheet. or quarter debt cash million Shifting with to $XX.X in balance The ended $XX.X the of net balance $XX.X million. GAAP of company a third the

no agreement. the is there new amortization year principal MGG reminder, a required As this under

full total basis number Due for expect year revising on are year to factors, down to XXXX we compared to the revenue. of a largest Turning dollar, depreciation the is our XXXX. a which down We be revenue the of expectations low U.S. now percentage to of double-digits guidance. of the as

percentage on expect to a a be On basis. single down year constant full digits currency basis, revenue we

digits, the and On year margins expect EBITDA profitability be side, to quarter high fourth adjusted EBITDA to we XX%. be margins approximately the full single adjusted in

And with to happy Operator? that, questions. take we're your

Operator

begin now question-and-answer will the [Operator We Instructions] session.

come Riley. first with from Our Sharma will question B. Raj

now go ahead. may You

Raj Sharma

brands, my any color on for the then -- of -- specifically taking what you not? give gave questions. Thank color working give is you churn? you color the color you on subscriber Hello. growth or on is on What and some and Zoosk. Could sort any Hi. some Could some non-Zoosk

Eric Eichmann

question. Appreciate Great. Thank Raj. you, the

last into going and that X.X%. up So, new initials, year we mention coming subscribers average on saw Zoosk, subscribers going up did X.X% Zoosk, we versus so

One of terms David numbers that about, end that of in bit of look talked they're of at you quarter, a profitability, us the if second focusing particular half that sort they're the we've about down provided on down; the in effects subscribers of the in is X%.

And same. so that, the expect the board, across that's

some future the at balanced of approach bit and look on a profitability, other sort the of which we Zoosk we focus deemphasizes are we brands. emphasizes a on and acquisition, sort of As more from more focusing customer

you should the will expect So, be future. in reflected that, that

in significant properties. Churn, changes for churn we haven't all seen

that we obviously, sort dramatically might of bit changed. We environment, areas mentioned, of to be positive have we due number as seen, engagement don't has normally, products have competitors but a a improved perspective. know a effect a macro churn but the we had believe of that have, churn And our better not And in I a -- have what other of engagement. softening in mean, in demand, metrics sort we from means higher

Raj Sharma

Any that then the lower forward? sort was on ARPU think little color and that does about Got going do year-on-year. a of it. is say ARPU And what -- any --? you I that the know

Eric Eichmann

that hurt over the Yeah. of ARPU come of our by a right, It's have interesting currency. in foreign because third because been part billings we of has obviously, strengthening dollar, the in sort

had, strengthened, pricing. at dollar of on some the same in decrease prices. the those of sort particular, we have the conversion as Zoosk, time, sort sort But and higher And test we ARPU. successfully So, of drove of sort higher

ARPU what of And front. effects read dollar. the of number of so, of would future dollar ARPU, lost this nothing had but that a trends that quarter. weakens I other bit of those sort anything knows of the sort -- lower some currencies, to ground some the bit for all that if is particular of think else, it sort reserves I does, as in would who sort against expect that of it a terms the a in lead on I in If recover of wouldn't the major But

Raj Sharma

any virtual that talked you sort live or dating, new helping? on else? of do that color new were then, introductions And it. The anything that the streaming Is -- Got to you going products? about

Eric Eichmann

No satisfaction be high No. that on to I The ratings be big continue front. mean, continue updates products. to they that. on

the virtual the locations have or I been As can that -- very I of mentioned, virtual trips to people video last take the the other trips, favorably. dates call, sort reviewed think of a in lot

what and for so now people that more connect, feature. can take more how is we of we're to opportunities I get on advantage that become to those think focusing them

big one on to able we're this things decrease quarter like big a And brands of of first that in of is and sort say bit was particular, before the we year I brought that fraud focused fraud. almost in of increase of the and the significantly, levels we of had to fraud the proud EliteSingles reducing increased. SilverSingles, down on that sort initiatives, where quite we seen number a through would half it we're a all that of a in

real has drives that obviously people, real when a because engagement that fraudsters. to up So effect you people obviously talking to on opposed big engagement, have as

Raj Sharma

update Got in obviously, it. then And there you. I the any terms review? mean, anything on of--? Thank strategic

Eric Eichmann

No Yeah. updates on that front.

the And been we'll there running talk is it. and think process. obviously I about an market update, to when if the we've

Raj Sharma

I Great. Thank offline. All Thank will you. take question right. my you.

Eric Eichmann

Raj. Appreciate you. Thank

Raj Sharma

Yeah. Sure.

Operator

[Operator Instructions]

no would Eric Eichmann session. conference remarks. closing are over for concludes any I to our to appears turn further back there question-and-answer questions. It the This like

Eric Eichmann

Have thank Networks, call. you Thanks great interest for day. a joining everyone for and our your Spark in

Operator

you The presentation. today's has Thank attending concluded. conference now for

You may disconnect. now

Spark Networks SE (LOVLY) 8 Nov 222022 Q3 Earnings call transcript