Spark Networks(R) Reports First Quarter 2007 Financial Results

BEVERLY HILLS, Calif., May 3 /PRNewswire-FirstCall/ -- Spark Networks plc (Amex: LOV), a leading provider of online personals services, today reported first quarter 2007 financial results.

    Highlights
    *  First Quarter Revenue of $16.8 Million
    *  Other Businesses Revenue Up 54%
    *  Cash and Marketable Securities of $19.7 Million
    *  HurryDate(R) Acquisition Extends Offline Events Offerings

"The significant traction we are experiencing among our newer businesses continues to reinforce our strategy of focusing on targeted offerings for vertical markets," said Spark Networks' Chief Executive Officer, Adam Berger.

"Offline events and ad sales show potential to become contributors to our long-term growth. In addition to expanding JDate(R)'s existing events offerings, our acquisition of HurryDate, in February, enabled us to begin offering speed dating and other offline events to members across our network of communities."

Berger continued, "We maintain a leadership position in several key markets, and with a solid financial foundation in place, we believe we are well positioned to capture the significant growth opportunities we see ahead."

Financial Results

Reported revenue for the first quarter of 2007 was $16.8 million, which was flat compared to the same period in 2006.

The Company reported a net loss of $(2.0) million, or $(0.06) per share, for the first quarter of 2007, compared to net income of $710,000, or $0.02 per share, for the same period in 2006. Contributing to the loss in the first quarter were an impairment expense of approximately $1.9 million, related to the impairment of the book carrying value of goodwill under FAS 142 related to AmericanSingles(R) and $1.1 million in share-based compensation expense related to the acceleration of vesting and extension of the exercise period of options for our former CEO and current Chairman of the Board, in connection with his resignation as CEO of the Company.

Adjusted EBITDA(1) for the first quarter of 2007 was $2.6 million, a decrease of 19% compared to adjusted EBITDA of $3.2 million during the same period in 2006. Contributing to the decline in net income and adjusted EBITDA were costs of approximately $500,000 related to the Company's Scheme of Arrangement, which, pending shareholder approval, is intended to establish the Company as a Delaware corporation, as well as expenses related to compliance under the Sarbanes-Oxley Act. See the attached Consolidated Statement of Operations for a reconciliation of EBITDA and adjusted EBITDA to net income.

Average paying subscribers(2) for the Company, as a whole, in the first quarter of 2007 were approximately 231,313, compared to 230,641 from the same period in 2006.

Segment Reporting(3)

The Company reported first quarter 2007 revenue for its JDate segment of $7.2 million, an increase of 3% compared to $7.0 million in the same period in 2006.

The Company reported first quarter 2007 revenue for its AmericanSingles segment of $4.3 million, a decrease of 32% compared to $6.3 million in the same period in 2006. The decrease in revenues for AmericanSingles is largely attributable to a 27% decrease in the AmericanSingles marketing spend in the last half of 2006 compared to the last half of 2005.

The Company reported first quarter 2007 revenue for its Other Businesses segment of $5.3 million, an increase of 54% compared to $3.5 million in the same period in 2006.

Average paying subscribers for the Company's JDate segment were 75,211 during the first quarter of 2007, compared to 75,316 from the same period in 2006.

Average paying subscribers for the Company's AmericanSingles segment were 61,620 during the first quarter of 2007, a decrease of 32% compared to 90,323 from the same period in 2006.

Average paying subscribers for the Company's Other Businesses segment were 94,482 during the first quarter of 2007, an increase of 45% compared to 65,002 from the same period in 2006.

Balance Sheet, Cash, Debt

As of March 31, 2007, the Company had a cash and marketable securities position of $19.7 million, compared to $20.6 million at December 31, 2006. Cash and marketable securities, net of debt, was $18.2 million at March 31, 2007, compared to $19.3 million at December 31, 2006. In the first quarter of 2007, the Company paid $2.0 million with respect to the acquisition of HurryDate (net of cash acquired and including transaction costs) and repurchased approximately $1.8 million worth of shares under its share repurchase program.

During the quarter the Company repurchased 304,106 shares at a weighted average price of $5.92. All shares repurchased are earmarked for cancellation and are therefore not included as shares outstanding in the Company's share count and weighted average shares outstanding at quarter end.

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 Q1 '07 Financial Results
    Toll-Free (United States):    +1 888-371-9318
    International:                +1 973-935-2986
    Confirmation #:               8685977

    One-Week Replay
    Toll-Free (United States):    +1-877-519-4471
    International:                +1-973-341-3080

In addition, the Company will host a webcast of the call which will be accessible in the Investor Relations section of the Company's website under "Conference Calls and Presentations" at: 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; develop or acquire new product offerings and successfully implement and expand those offerings; 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), BlackSingles.com(R) (www.blacksingles.com), CatholicMingle(TM).com (www.catholicmingle.com) and Relationships.com(TM) (www.relationships.com).

    (1)  "Adjusted EBITDA" is defined as earnings before interest, taxes,
         depreciation, amortization, share-based compensation and long-lived
         impairment of assets.  Adjusted EBITDA 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 adjusted EBITDA is not defined by GAAP.
         However, the Company regards adjusted EBITDA 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)  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.

    (3)  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.



                              SPARK NETWORKS PLC
                         CONSOLIDATED BALANCE SHEETS
                      (in thousands, except share data)

                                                     March 31,    December 31,
                                                       2007          2006
    Assets                                          (unaudited)
    Current assets:
       Cash and cash equivalents                       $19,492       $20,412
       Marketable securities                               197           196
       Restricted cash                                   2,013         2,070
       Accounts receivable, net of allowance of $50
        and $0 for March 31, 2007 and December 31, 2006  1,029         1,200
       Deferred tax asset - current portion                632           219
       Prepaid expenses and other                        1,444         1,509
            Total current assets                        24,807        25,606
    Property and equipment, net                          1,816         2,306
    Goodwill, net                                       17,917        19,236
    Intangible assets, net                               5,826         4,406
    Deposits and other assets                               56            72
            Total assets                               $50,422       $51,626

    Liabilities and Shareholders' Equity
    Current liabilities:
       Accounts payable                                 $1,692        $1,487
       Accrued liabilities                               4,621         4,985
       Deferred revenue                                  4,320         4,051
       Notes payable - current portion                   1,491         1,314
       Current portion of obligations under
        capital leases                                      --            43
            Total current liabilities                   12,124        11,880
    Deferred tax liabilities                             1,826         1,782
    Obligations under capital leases                        --            59
            Total liabilities                           13,950        13,721
    Shares subject to rescission                         8,309         8,079
    Commitments and contingencies                           --            --
    Shareholders' equity:
       Authorized capital 800,000 pounds sterling
        divided into 80,000,000 ordinary shares of 1p
        each; issued and outstanding 30,761,855 shares
        as of March 31, 2007 and  30,941,465 shares
        as of December 31, 2006, at a stated value of:     442           517
         Additional paid-in-capital                     67,824        67,571
         Accumulated other comprehensive income            375           248
         Notes receivable from employees                    --            --
         Accumulated deficit                           (40,478)      (38,510)
         Total shareholders' equity                     28,163        29,826
            Total liabilities and shareholders'
             equity                                    $50,422       $51,626



                              SPARK NETWORKS PLC
                    CONSOLIDATED STATEMENTS OF OPERATIONS
               (unaudited in thousands, except per share data)

                                                  Three Months Ended March 31,
                                                         2007         2006

    Net revenues                                        $16,820      $16,805
    Direct marketing expenses                             6,757        5,657
           Contribution margin                           10,063       11,148

    Operating expenses:
      Indirect marketing (including share-based
       compensation of $10 and $13)                         327          366
      Customer service (including share-based
       compensation of $19 and $23)                         929          908
      Technical operations (including share-based
       compensation of $179 and $174)                     1,424        2,230
      Product development (including share-based
       compensation of $88 and $118)                        806          845
      General and administrative (including share-based
       compensation of $1,763 and $1,028)                 6,585        5,632
      Amortization of intangible assets other than
       goodwill                                             344          239
      Impairment of goodwill                              1,894           --
    Total operating expenses                             12,309       10,220

    Operating (loss) income                              (2,246)         928

    Interest (income), loss and other expenses, net        (205)          39

    (Loss) income before income taxes                    (2,041)         889

    Provision (benefit) for income taxes                    (73)         179

    Net (loss) income                                   $(1,968)        $710

    Net (loss) income per share - basic                  $(0.06)       $0.02
    Net (loss) income per share - diluted                $(0.06)       $0.02
    Weighted average shares outstanding - basic          30,868       30,266
    Weighted average shares outstanding - diluted        30,868       31,258

    EBITDA
      Net (loss) income                                 $(1,968)        $710
      Interest                                             (226)         (71)
      Taxes                                                 (73)         179
      Depreciation                                          547          779
      Amortization                                          344          239
    EBITDA                                               (1,376)       1,836
      Share-based compensation                            2,059        1,356
      Impairment of long-lived assets                     1,894           --
      Adjusted EBITDA                                    $2,577       $3,192



                              SPARK NETWORKS PLC
                       SEGMENT RESULTS FROM OPERATIONS
                 (in thousands except subscriber information)

                                                        Three Months Ended
                                                             March 31,
                                                      2007             2006

    Net Revenues
    JDate                                           $7,210           $6,996
    AmericanSingles                                  4,288            6,343
    Other Businesses                                 5,322            3,466
    Total net revenues                             $16,820          $16,805

    Direct Marketing Expenses
    JDate                                             $714             $796
    AmericanSingles                                  3,071            3,360
    Other Businesses                                 2,972            1,501
    Total direct marketing expenses                 $6,757           $5,657

    Contribution Margin
    JDate                                           $6,496           $6,200
    AmericanSingles                                  1,217            2,983
    Other Businesses                                 2,350            1,965
    Total contribution margin                      $10,063          $11,148

    Average Paying
    Subscribers
    JDate                                           75,211           75,316
    AmericanSingles                                 61,620           90,323
    Other Businesses                                94,482           65,002
    Total                                          231,313          230,641

SOURCE Spark Networks plc