SPARK NETWORKS™ REPORTS THIRD QUARTER 2005 FINANCIAL RESULTS
- JDate® Revenue Grows 7% to $6.5 Million over Q3 ’04 with 86% Contribution Margin in Q3 '05
- MingleMatch™ Acquisition Helps Drive 85% Revenue Growth of Other Businesses Segment vs. Q3 '04
- Company Adopts SFAS 123 (R)
JDate continued to deliver steady growth in the third quarter of 2005, with contribution margin of 86% and revenue increasing 7% over the third quarter of last year.
An analysis of comScore Media Metrix data for the first nine months of 2005 revealed that JDate.com experienced more average daily visitors and page views than any other religion-focused online personals service in the United States.
Results for MingleMatch Inc., acquired by the company in May 2005, are included for the entire third quarter of 2005, and helped drive the 85% revenue growth of the Other Businesses segment in the third quarter of 2005 compared to the same quarter last year.
Beginning on July 1, 2005, the company began accounting for share options in accordance with the Statement of Financial Accounting Standards No. 123 (R), Share-Based Payment ("SFAS 123 (R)"), which means the quarter ending September 30, 2005 is the first quarter in which the company reflected compensation expenses associated with share options in its generally accepted accounting principles (GAAP) income statement. The company’s implementation of SFAS 123 (R) in the third quarter of 2005 resulted in a reduction of the company’s earnings by approximately $1.4 million, or $0.05 per share. It should be noted that the compensation expense recorded as part of SFAS 123 (R) is a non-cash expense and will never become a cash expense.
Also in the third quarter of 2005, the company expensed $650,000 in costs which had been capitalized as part of the company’s public offering process, for which a Registration Statement on Form S-1 was initially filed with the United States Securities and Exchange Commission (SEC) on March 10, 2005. Although the company is still in the process of registering with the SEC and seeking a listing for its American Depositary Shares (ADS) on a securities exchange in the United States, the company’s decision to proceed with the registration and listing process unaccompanied by a sale of equity (as had been previously contemplated) requires that the previously capitalized costs be expensed.
“Had we not adopted SFAS 123 (R) and decided to pursue the U.S. listing without raising capital and, therefore, incurred the associated $2.1 million non-cash accounting charges during the third quarter, we would have once again delivered strong EBITDA profitability,” stated David Siminoff, the company’s President and Chief Executive Officer. “Even taking those non-cash expenses into account, we significantly improved EBITDA performance compared to the third quarter of last year.”
In addition, the company’s Registration Statement on Form 10, which will make Spark Networks an SEC reporting company, will be effective tomorrow, November 15, 2005.
Financial Results
Revenue for the third quarter of 2005 was $16.9 million, a decrease of 1%, compared to $17.1 million, from the same period last year. Revenue for the nine months ended September 30, 2005 was $48.9 million, an increase of 2%, compared to $48.0 million, for the nine months ended September 30, 2004.
The company reported a net loss of $2.2 million, or $(0.08) per share, for the third quarter of 2005, compared to a net loss of $3.0 million, or $(0.13) per share, in the same period last year. Excluding the impact of the adoption of SFAS 123 (R) the company would have reported a net loss of $754,000 for the third quarter of 2005.
For the nine months ended September 30, 2005, the company reported a net loss of $1.0 million, or $(0.04) per share, compared to a net loss of $10.1 million, or $(0.45) per share, for the nine months ended September 30, 2004. Excluding the impact of the adoption of SFAS 123 (R) the company would have reported a net profit of $374,000 for the first nine months of 2005.
EBITDA1 loss for the third quarter of 2005 was $608,000, compared to an EBITDA loss of $2.0 million in the same period last year. Excluding the impact of the adoption of SFAS 123 (R) the company would have reported an EBITDA gain of $801,000 for the third quarter of 2005. The company reported an EBITDA profit of $2.8 million for the nine months ended September 30, 2005, compared to an EBITDA loss of $7.2 million, for the nine months ended September 30, 2004. Excluding the impact of the adoption of SFAS 123 (R) the company would have reported an EBITDA profit of $4.2 million for the first nine months of 2005.
Segment Reporting2
The company reported third quarter 2005 revenue for its JDate segment of $6.5 million, an increase of 7%, compared to $6.0 million, from the same period last year. JDate revenue for the nine months ended September 30, 2005 was $19.2 million, an increase of 9%, compared to $17.6 million, for the nine months ended September 30, 2004.
Third quarter 2005 revenue for the company’s AmericanSingles® segment was $7.2 million, a decrease of 23%, compared to $9.3 million, from the same period last year. AmericanSingles revenue for the nine months ended September 30, 2005 was $22.5 million, a decrease of 15%, compared to $26.6 million, for the nine months ended September 30, 2004.
Third quarter 2005 revenue for the company’s Other Businesses segment was $3.3 million, an increase of 86%, compared to $1.8 million, from the same period last year. Other Businesses revenue for the nine months ended September 30, 2005 was $7.2 million, an increase of 91%, compared to $3.8 million, for the nine months ended September 30, 2004.
“Our acquisition of MingleMatch, in the second quarter, helped drive the performance of our Other Businesses segment,” stated Mr. Siminoff. “As we have previously stated, in the first quarter of this year, we re-oriented management of our marketing program and significantly cut marketing spending for AmericanSingles, which continued to impact revenue for that segment.”
Business Metrics
Average paying subscribers for the company’s JDate segment were 69,600 during the third quarter of 2005, an increase of 2%, compared to 68,400, from the same period last year. For the nine months ended September 30, 2005, average paying subscribers for JDate were 69,400, a decrease of 1%, compared to 70,300, for the nine months ended September 30, 2004.
Average paying subscribers for the company’s AmericanSingles segment were 98,600 during the third quarter of 2005, a decrease of 30%, compared to 140,800, from the same period last year. For the nine months ended September 30, 2005, average paying subscribers for AmericanSingles were 109,800, a decrease of 18%, compared to 133,500, for the nine months ended September 30, 2004.
Average paying subscribers for the company’s Other Businesses segment were 52,600 during the third quarter of 2005, an increase of 72%, compared to 30,500, from the same period last year. For the nine months ended September 30, 2005, average paying subscribers for the company’s Other Businesses were 39,500, an increase of 85%, compared to 21,400, for the nine months ended September 30, 2004.
Average paying subscribers for the company, as a whole, in the third quarter of 2005 were approximately 220,800, a decrease of 8%, compared to 239,700, from the same period last year. For the nine months ended September 30, 2005, average paying subscribers were 218,700, a decrease of 3%, compared to 225,100, for the nine months ended September 30, 2004.
Direct subscriber acquisition cost3 (SAC) for the company’s JDate segment in the third quarter of 2005 was $15.84, an increase of 79%, compared to $8.84, from the same period last year. For the nine months ended September 30, 2005, SAC for the company’s JDate segment totaled $12.89, an increase of 77%, compared to $7.27, for the nine months ended September 30, 2004.
SAC for the company’s AmericanSingles segment in the third quarter of 2005 was $39.35, a decrease of 16%, compared to $46.90, from the same period last year. For the nine months ended September 30, 2005, SAC for the company’s AmericanSingles segment totaled $35.42, a decrease of 22%, compared to $45.39, for the nine months ended September 30, 2004.
SAC for the company’s Other Businesses segment in the third quarter of 2005 was $28.08, a decrease of 30%, compared to $39.99, from the same period last year. For the nine months ended September 30, 2005, SAC for the company’s Other Businesses segment totaled $35.17, an increase of 1%, compared to $34.73, for the nine months ended September 30, 2004.
SAC for the company, as a whole, in the third quarter of 2005 was $30.23, a decrease of 19%, compared to $37.41, from the same period last year. For the nine months ended September 30, 2005, SAC totaled $28.67, a decrease of 19%, compared to $35.25, for the nine months ended September 30, 2004.
“The increasing subscriber acquisition cost for JDate is reflective of the additional capital we have deployed to enhance the JDate brand, with billboards like the ones that can be seen in Times Square in New York and along Sunset Boulevard in Los Angeles,” stated Mr. Siminoff. “The decrease in subscriber acquisition cost for AmericanSingles is a direct result of the re-orientation of the management of our marketing program which resulted in the reduced AmericanSingles marketing spend.”
Investor Conference Call:
The company will discuss its financial results during a live teleconference today at 10:30 a.m. Pacific time (US & Canada) and 7:30 p.m. Frankfurt time.
| Call Title: | Spark Networks plc 3rd Quarter 2005 Results |
| Toll-Free (United States): | +1-800-370-0898 |
| International: | +1-973-409-9260 |
On March 10, 2005, Spark Networks announced that it filed a registration statement, on Form S-1, with the United States Securities and Exchange Commission (SEC) for a proposed public offering. The company filed a first amendment to the S-1 on September 16, 2005 and a second amendment on November 7, 2005. As a result of the filing, the Company is in a "quiet period" which extends from the time a company files a registration statement with the SEC until the SEC staff declares the registration statement "effective." During this period, as dictated by United States securities laws, the Company is limited in the amount of information that it can release to the public and unable to legally provide any further outlook.
About Spark Networks plc:
Spark Networks plc’s Global Depositary Shares trade on the Frankfurt Stock Exchange (FSE) 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™.com (www.blacksinglesconnection.com) and ChristianMingle®.com (www.christianmingle.com). The company was formed in England in 1998.
For More Information:
| Media: | Gail Laguna + 1 323 836 3000 Email: Media Relations |
| Investors: | Mark Thompson + 1 323 836 3000 Email: Investor Relations |
1 EBITDA is defined as earnings before interest, taxes, depreciation and amortization.
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 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.
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.
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