Spark Networks SE Reports First Quarter 2021 Financial Results

- Spark recorded revenue of $56.4 million for the First Quarter 2021

- Monthly Average Revenue Per User, or Monthly ARPU, increased to $20.97

BERLIN, May 17, 2021 /PRNewswire/ -- Spark Networks SE (NYSE American: LOV), one of the world's leading online dating platforms leveraging premium, complementary brands including Zoosk, EliteSingles, SilverSingles, Christian Mingle, Jdate, and JSwipe, today reported first quarter 2021 financial results.

"I am pleased with our first quarter financial results and the progress we are making in establishing Spark as a leader in social dating for meaningful relationships," said Eric Eichmann, CEO of Spark Networks.  "We are improving the dater's experience and setting a strong foundation for top line growth.  We are on track to launch livestreaming on Zoosk and complete the rollout of compelling new aesthetics for our top brands in Q3. These innovations, combined with additional future social features should lead to higher user engagement across our properties."

First Quarter 2021 Financial Results

  • Revenue for the first quarter of 2021 was $56.4 million, a decrease of $1.3 million compared to $57.7 million in the first quarter of 2020. The decrease in Revenue was attributable to the 3.0% decrease in the number of average paying subscribers.
  • Net Loss was $6.5 million in the first quarter of 2021, an increase of $2.7 million compared to Net Loss of $3.8 million in the first quarter of 2020. The increase in Net Loss was primarily driven by a decrease in contribution and an increase in personnel costs.
  • Adjusted EBITDA was $4.8 million in the first quarter of 2021, a decrease of $2.7 million compared to $7.5 million in the first quarter of 2020.
  • The Company ended the quarter with $17.3 million in cash and $96.1 million in debt.

Key Performance Indicators

  • Average Paying Subscribers decreased by 27,837, or 3.0%, to 896,344 in the first quarter of 2021, compared to 924,181 in the same period of 2020.
  • Monthly Average Revenue Per User, or Monthly ARPU, increased to $20.97 in the first quarter of 2021, compared to $20.80 in the same period of 2020.

Financial Outlook

  • Spark's first quarter 2021 financials remain in-line with its previously stated 2021 guidance of $238 to $244 million and Adjusted EBITDA of $33 to $36 million. The Company anticipates that both Second Quarter revenue and Adjusted EBITDA will increase and are providing revenue guidance of $54-$56 million and Adjusted EBITDA of $6 to $7 million.

Key Metrics

(Amounts in $ millions, except Total Registrations, Avg. Paying Subs, and Monthly ARPU)



Three Months Ended March 31,





2021


2020


% Change

Revenue


$

56.4



$

57.7



(2.2)

%

Contribution1


$

26.0



$

27.8



(6.6)

%

Net loss


$

(6.5)



$

(3.8)



69.9

%

Adjusted EBITDA2


$

4.8



$

7.5



(35.6)

%

Cash Balance


$

17.3



$

19.3



(10.4)

%

Total Registrations3


3,607,702



3,908,906



(7.7)

%

Avg. Paying Subs4


896,344



924,181



(3.0)

%

Monthly ARPU5


$

20.97



$

20.80



0.8

%

Investor Conference Call

Spark Networks will discuss its financial results during a live teleconference today at 10:00 a.m. Eastern time.

Toll-Free (United States):          1-877-705-6003
Toll-Free (Germany):                 0-800-182-0040
International:                              1-201-493-6725

In addition, Spark Networks will host a webcast of the call which will be accessible in the Investor Relations section of the Company's website at https://investor.spark.net/investor-relations/home

A replay will begin approximately three hours after completion of the call and run until May 31, 2021.

Replay
Toll-Free (United States):          1-844-512-2921
International:                              1-412-317-6671
Passcode:                                  13719604

Safe Harbor Statement:

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, statements involving known and unknown risks, uncertainties, and other factors that may cause Spark Networks' performance or achievements to be materially different from those of any expected future results, performance, or achievements.  These statements include statements regarding Spark Networks' setting of a strong foundation for topline growth, Spark Networks being on track to launch livestreaming on Zoosk and complete the rollout of compelling new aesthetics for Spark Networks' top brands in Q3, Spark Networks' belief that such innovations combined with additional future social features should lead to higher user engagement across Spark Networks' properties, and Spark Networks' financial outlook for Second Quarter revenue and Adjusted EBITDA.

Any statements in this press release that are not statements of historical fact may be considered to be forward-looking statements. Written words, such as "believes," "hopes," "intends," "estimates," "expects," "projects," "plans," "anticipates," and variations thereof, or the use of future tense, 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, the risk that the benefits from the acquisition of Zoosk, Inc. may not be fully realized or may take longer to realize than expected; risks related to the degree of competition in the markets in which Spark Networks operates; risks related to the ability of Spark Networks to retain and hire key personnel, operating results and business generally; the timing and market acceptance of new products introduced by Spark Networks' competitors; Spark Networks' ability to identify potential acquisitions; Spark Networks' ability to comply with new and evolving regulations relating to data protection and data privacy; general competition and price measures in the market place; risks related to the duration and severity of COVID-19 and its impact on Spark Networks' business; and general economic conditions.  Additional factors that could cause actual results to differ are discussed under the heading "Risk Factors" in Spark Networks' Annual Report on Form 10-K for the year ended December 31, 2020 and in other sections of Spark Networks' filings with the Securities and Exchange Commission ("SEC"), and in Spark Networks' other current and periodic reports filed or furnished from time to time with the SEC. All forward-looking statements in this press release are made as of the date hereof, based on information available to the Company as of the date hereof, and the Company assumes no obligation to update any forward-looking statement except as required by law.

About Spark Networks SE:

Spark Networks SE is a leading global dating company, listed on the New York Stock Exchange American under the ticker symbol "LOV," with headquarters in Berlin, Germany, and offices in New York and Utah. The Company's widening portfolio of premium and freemium dating apps include Zoosk, EliteSingles, SilverSingles, Christian Mingle, Jdate, and JSwipe, among others. Spark Networks SE in its current form is the result of the merger between Affinitas GmbH and Spark Networks, Inc. in 2017 and the addition of Zoosk, Inc. in 2019. Spark has approximately one million monthly paying subscribers globally.

For More Information
Investors:
Christopher Camarra
Vice President of Investor Relations
christopher.camarra@spark.net

1 Contribution is defined as revenue, net of refunds and credit card chargebacks, less direct marketing. Direct Marketing is defined as online and offline advertising spend, and is included within Cost of revenue, exclusive of depreciation and amortization within Spark Networks' Condensed Consolidated Statements of Operations and Comprehensive Loss.

2 Adjusted EBITDA is one of the primary metrics by which we evaluate the performance of our business, budget, forecast and compensate management. We believe this measure provides management and investors with a consistent view, period to period, of the core earnings generated from the ongoing operations and excludes the impact of items that we do not consider representative of our ongoing performance. This includes: depreciation and amortization, share-based compensation, asset impairments, gains or losses on foreign currency transactions and net interest expense, acquisition related costs and other costs. Adjusted EBITDA has inherent limitations in evaluating the performance of the Company, including, but not limited to the following: 

  • Adjusted EBITDA does not reflect the cash capital expenditures during the measurement period;
  • Adjusted EBITDA does not reflect any changes in working capital requirements during the measurement period;
  • Adjusted EBITDA does not reflect the cash tax payments during the measurement period;
  • Adjusted EBITDA may be calculated differently by other companies in our industry, thus limiting its value as a comparative measure;

Because of these limitations, Adjusted EBITDA should be considered in addition to other financial performance measures, including net income and our other U.S. GAAP results.  A reconciliation of the Adjusted EBITDA for the three months ended March 31, 2021 and 2020 can be found in the table below.

Adjusted EBITDA is defined as earnings before interest, taxes, depreciation, amortization, share-based compensation, impairment of intangible assets and goodwill, and acquisition or other costs.

Statements regarding our expectations as to the second quarter 2021 Adjusted EBITDA do not include certain charges and costs. The adjustments to EBITDA in future periods are generally expected to be similar to the kinds of charges and costs excluded from Adjusted EBITDA in prior periods, including (i) items such as share-based compensation, asset impairments, gains or losses on foreign currency transactions and interest expense, and (ii) items related to acquisitions or other costs that are non-recurring, infrequent, or unusual in nature including transaction and advisory fees, merger integration costs, other employee payments, and severance.  The exclusion of these charges and costs in future periods will have a significant impact on our Adjusted EBITDA. We are not able to provide a reconciliation of our non-GAAP financial guidance to the corresponding GAAP measures without unreasonable effort because of the uncertainty and variability of the nature and amount of these future charges and costs.

3 Total registrations are defined as the total number of new members registering to the platforms with their email address. Those include members who enter into premium subscriptions and free memberships.

4 Paying subscribers are defined as individuals who have paid a monthly fee for access to premium services, which include, among others, unlimited communication with other registered users, access to user profile pictures and enhanced search functionality. Average paying subscribers for each month are calculated as the sum of the paying subscribers at the beginning and the 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.

5 Monthly Average Revenue Per User, or Monthly ARPU, 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.


Spark Networks SE

Condensed Consolidated Balance Sheets

(in thousands, except share data)



March 31, 2021


December 31, 2020

Assets





Current assets:





Cash and cash equivalents


$

17,258



$

19,267


Accounts receivable, net of allowance of $441 and $93, respectively


8,613



5,507


Prepaid expenses


5,129



4,366


Other current assets


505



2,140


Total current assets


31,505



31,280


Property and equipment, net of accumulated depreciation of $6,241 and $6,252,
respectively


10,802



11,418


Goodwill


156,552



156,582


Intangible assets, net of accumulated amortization of $21,043 and $21,768,
respectively


57,295



58,999


Deferred tax assets


20,754



23,522


Other assets


8,164



8,642


Total assets


$

285,072



$

290,443


Liabilities and Shareholders' Equity





Current liabilities:





Current portion of long-term debt


$

19,373



$

19,037


Accounts payable


12,241



11,127


Deferred revenue


40,017



38,304


Accrued expenses and other current liabilities


26,742



28,429


Total current liabilities


98,373



96,897


Long-term debt, net of current portion


76,701



80,109


Deferred tax liabilities


950



993


Other liabilities


17,259



17,541


Total liabilities


193,283



195,540


Contingencies (Note 6)





Shareholders' Equity:





Common stock, €1.00 nominal value; 2,661,386 shares issued as of March 31,
2021 and December 31, 2020; 2,605,689 shares outstanding as of March 31,
2021 and December 31, 2020


3,064



3,064


Treasury stock, at nominal value; 55,697 shares as of March 31, 2021 and
December 31, 2020


(61)



(61)


Additional paid-in capital


221,888



220,852


Accumulated deficit


(138,752)



(132,248)


Accumulated other comprehensive income


5,650



3,296


Total shareholders' equity


91,789



94,903


Total liabilities and shareholders' equity


$

285,072



$

290,443


 

 

Spark Networks SE

Condensed Consolidated Statements of Operations and Comprehensive Loss

(in thousands, except share and per share data)








Three Months Ended March 31,



2021


2020

Revenue


$

56,379



$

57,657


Operating costs and expenses:





Cost of revenue, exclusive of depreciation and amortization


36,918



36,541


Sales and marketing expenses


833



879


Customer service expenses


1,770



2,040


Technical operations and development expenses


4,455



5,380


General and administrative expenses


9,093



7,184


Depreciation and amortization


2,290



2,321


Total operating costs and expenses


55,359



54,345


Operating income


1,020



3,312


Other income (expense):





Interest income




31


Interest expense


(3,440)



(3,376)


Loss on foreign currency transactions


(1,728)



(952)


Other income (expense)


(16)




Total other expense


(5,184)



(4,297)


Loss before income taxes


(4,164)



(985)


Income tax expense


(2,340)



(2,844)


Net loss


(6,504)



(3,829)


Other comprehensive income (loss):





Foreign currency translation adjustment


2,354



1,218


Comprehensive loss


$

(4,150)



$

(2,611)







Loss per share:





Basic earnings (loss) per share


$

(2.50)



$

(1.47)


Diluted earnings (loss) per share


$

(2.50)



$

(1.47)







Weighted average shares outstanding:





Basic


2,605,689



2,605,689


Diluted


2,605,689



2,605,689


 

Reconciliation of Net Loss to Adjusted EBITDA:





Three Months Ended March 31,

(in thousands)


2021


2020

Net loss


$

(6,504)

$

(3,829)

Net interest expense


3,440

3,345

Loss on foreign currency transactions


1,728

952

Income tax expense


2,340

2,844

Depreciation and amortization


2,290

2,321

Stock-based compensation expense


1,036

910

Acquisition related costs(1)


791

Other costs(2)


472

128

Adjusted EBITDA


$

4,802

$

7,462


(1) Acquisition related costs primarily consist of transaction costs, including legal, consulting,
advisory fees, and severance and retention costs.

(2) Includes primarily consulting and advisory fees related to special projects, as well as
post-merger integration activities and long-term debt transaction and advisory fees.

 

 

Spark Networks SE

Condensed Consolidated Statements of Cash Flows

(in thousands)







Three Months Ended March 31,







2021


2020

Net loss






$

(6,504)



$

(3,829)


Adjustments to reconcile net loss to cash used in operating activities:









Depreciation and amortization






2,290



2,321


Unrealized loss on foreign currency transactions






340



13


Stock-based compensation expense






1,036



910


Amortization of debt issuance costs and accretion of debt discounts






916



795


Deferred tax expense






2,340



2,844


Provision for credit losses






95



31


Non-cash lease expense






470



475


Change in operating assets and liabilities:









Accounts receivable






(3,328)



(3,589)


Prepaid expenses and other current assets






(2,095)



(737)


Other assets






(33)



35


Accounts payable, accrued expenses, and other current liabilities






1,533



(3,300)


Other liabilities






(93)



(472)


Deferred revenue






2,646



191


Net cash used in operating activities






(387)



(4,312)


Capital expenditures






(423)



(197)


Acquisitions of businesses, net of cash acquired








(513)


Net cash used in investing activities






(423)



(710)


Repayment of bank loans






(3,163)



(2,984)


Payments directly related to loan facility






(523)




Net cash used in financing activities






(3,686)



(2,984)











Net change in cash and cash equivalents and restricted cash






(4,496)



(8,006)


Effects of exchange rate fluctuations on cash and cash equivalents and
restricted cash






781



354


Net decrease in cash and cash equivalents and restricted cash






(3,715)



(7,652)


Cash and cash equivalents and restricted cash at beginning of period






21,117



17,457


Cash and cash equivalents and restricted cash at end of period






17,402



9,805











Supplemental disclosure of cash flow information:









Cash paid for interest






2,497



2,892











Reconciliation of cash, cash equivalents, and restricted cash to the
condensed consolidated balance sheets


Mar-21


Dec-20


Mar-20


Dec-19

Cash and cash equivalents


$

17,258



$

19,267



$

9,659



$

17,207


Restricted cash included in other current assets


144



1,850



146



250


Total cash and cash equivalents and restricted cash as shown on the
consolidated statements of cash flows


$

17,402



$

21,117



$

9,805



$

17,457


 

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SOURCE Spark Networks SE