Spark Networks Reports Second Quarter 2023 Results
"As part of the next phase of the transformation plan, we look to partner with a major managed service provider and outsource a significant portion of our technology and operations. Through this plan, we believe we can materially improve our product and technology stack while at the same time delivering long-term cost savings, revenue growth and improved operating margins. We expect to complete our outsourcing by the first quarter of 2024, resulting in a dramatically reduced employee headcount. In addition, we expect to continue to implement the initiatives in our plan over the next 18 months."
Second Quarter 2023 Financial Results
- Revenue was
$41.2 million , compared to$48.0 million in the second quarter of 2022. - Net loss was
$26.9 million , compared to$8.8 million in the second quarter of 2022. - Adjusted EBITDA(3) was
$7.2 million , or a 17.5% Adjusted EBITDA margin, compared to$(1.7) million , or a (3.6)% Adjusted EBITDA margin, in the second quarter of 2022.
Please see the table captioned "Reconciliation of Net loss to Adjusted EBITDA" included at the end of this release for a reconciliation of Adjusted EBITDA, which is a non-
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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
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," "guides," 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, risks related to the degree of competition in the markets in which
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Investor contact:
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[email protected]
Non-GAAP Financial Measures
To supplement our consolidated financial statements, which are prepared and presented in accordance with GAAP, we use the following non-GAAP financial measures: constant currency revenue, Adjusted EBITDA and Adjusted EBITDA margin. These measures are derived on the basis of methodologies other than in accordance with
1 We provide a constant currency revenue amount to present a period-to-period comparison of business performance that excludes the impact of foreign currency fluctuations. We define non-GAAP constant currency revenue as total revenue excluding the effect of foreign exchange rate movements. Non-GAAP constant currency revenue are calculated by translating current quarter revenues using prior period exchange rates.
2 Revenue for the three and six months ended
3 Adjusted earnings before interest, taxes, depreciation and amortization ("Adjusted EBITDA"), a non-
- Adjusted EBITDA and Adjusted EBITDA margin do not reflect the cash capital expenditures during the measurement period;
- Adjusted EBITDA and Adjusted EBITDA margin do not reflect any changes in working capital requirements during the measurement period;
- Adjusted EBITDA and Adjusted EBITDA margin do not reflect the cash tax payments during the measurement period; and
- Adjusted EBITDA and Adjusted EBITDA margin may be calculated differently by other companies in our industry, thus limiting its value as a comparative measure.
Because of these limitations, Adjusted EBITDA and Adjusted EBITDA margin should be considered in addition to other financial performance measures, including net income (loss) and our other
|
||||
Condensed Consolidated Balance Sheets (Unaudited) |
||||
(in thousands) |
||||
|
|
|||
Assets |
||||
Cash and cash equivalents |
$ 5,683 |
$ 11,438 |
||
Accounts receivable, net |
5,473 |
5,154 |
||
|
109,013 |
132,575 |
||
Other assets |
14,617 |
15,210 |
||
Total assets |
134,786 |
$ 164,377 |
||
Liabilities and Shareholders' Deficit |
||||
Debt |
$ 94,197 |
$ 94,817 |
||
Accounts payable |
7,142 |
6,487 |
||
Deferred revenue |
27,401 |
28,085 |
||
Accrued expenses and other current liabilities |
27,611 |
24,247 |
||
Other liabilities |
17,065 |
17,527 |
||
Total liabilities |
173,416 |
171,163 |
||
Total shareholders' deficit |
(38,630) |
(6,786) |
||
Total liabilities and shareholders' deficit |
$ 134,786 |
$ 164,377 |
|
||||||||
Condensed Consolidated Statements of Operations (Unaudited) |
||||||||
(in thousands) |
||||||||
Three Months Ended |
Six Months Ended |
|||||||
2023 |
2022 |
2023 |
2022 |
|||||
Revenue |
$ 41,202 |
$ 48,035 |
$ 82,541 |
$ 97,942 |
||||
Operating costs and expenses: |
||||||||
Cost of revenue, exclusive of |
22,790 |
36,356 |
50,082 |
70,602 |
||||
Other operating costs and expenses |
41,392 |
15,097 |
56,616 |
31,135 |
||||
Total operating costs and expenses |
64,182 |
51,453 |
106,698 |
101,737 |
||||
Operating loss |
(22,980) |
(3,418) |
(24,157) |
(3,795) |
||||
Other expense, net |
(3,998) |
(5,150) |
(7,135) |
(12,536) |
||||
Loss before income taxes |
(26,978) |
(8,568) |
(31,292) |
(16,331) |
||||
Income tax benefit (expense) |
52 |
(193) |
7 |
99 |
||||
Net loss |
$ (26,926) |
$ (8,761) |
$ (31,285) |
$ (16,232) |
Reconciliation of Net loss to Adjusted EBITDA |
||||||||
Three Months Ended |
Six Months Ended |
|||||||
(in thousands) |
2023 |
2022 |
2023 |
2022 |
||||
Net loss |
$ (26,926) |
$ (8,761) |
$ (31,285) |
$ (16,232) |
||||
Interest expense |
4,058 |
2,706 |
7,875 |
9,588 |
||||
(Gain) loss on foreign currency |
216 |
2,441 |
(464) |
3,208 |
||||
Income tax (benefit) expense |
(52) |
193 |
(7) |
(99) |
||||
Depreciation and amortization |
625 |
577 |
1,243 |
1,180 |
||||
Impairment of intangible assets |
21,847 |
— |
22,947 |
— |
||||
Stock-based compensation expense |
251 |
490 |
424 |
992 |
||||
Other costs(1) |
7,172 |
614 |
8,823 |
636 |
||||
Adjusted EBITDA |
$ 7,191 |
$ (1,740) |
$ 9,556 |
$ (727) |
||||
Adjusted EBITDA margin(2) |
17.5 % |
(3.6) % |
11.6 % |
(0.7) % |
(1) Includes consulting and advisory fees related to special projects, CFO severance fees, and retention bonuses |
(2) We define "Adjusted EBITDA margin" as Adjusted EBITDA divided by revenue. |
|
||||
Six Months Ended |
||||
2023 |
2022 |
|||
Net loss |
$ (31,285) |
$ (16,232) |
||
Adjustments to reconcile net loss to net cash used in operating activities: |
||||
Non-cash items and other non-operating charges |
26,819 |
12,536 |
||
Change in operating assets and liabilities |
1,796 |
(6,999) |
||
Net cash used in operating activities |
(2,670) |
(10,695) |
||
Capital expenditures |
(1,393) |
(1,268) |
||
Net cash used in investing activities |
(1,393) |
(1,268) |
||
Net cash (used in) provided by financing activities |
(1,250) |
7,774 |
||
Effects of exchange rate fluctuations on cash and cash equivalents and restricted cash |
(439) |
(613) |
||
Net decrease in cash and cash equivalents and restricted cash |
(5,752) |
(4,802) |
||
Cash and cash equivalents and restricted cash at beginning of period |
11,569 |
16,279 |
||
Cash and cash equivalents and restricted cash at end of period |
$ 5,817 |
$ 11,477 |
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