Spark Networks Reports Third Quarter 2022 Results with Continued Subscriber Growth for Zoosk and Focus on Profitability
- Zoosk Initial Subscribers Grew 5.1% Year Over Year
- Zoosk Average Subscribers Grew 3.4% Year Over Year
- Double-Digit Percentage Increases in Conversion Rates Across All Brands
Third Quarter 2022 Financial Results
- Revenue was
$48.2 million , compared to$53.3 million in the third quarter of 2021. On a constant currency basis,(1) revenue would have been$51.5 million in the third quarter of 2022.(2) - Net loss was
$10.7 million , including an$11.8 million non-cash impairment charge to theZoosk trade name, compared to a net loss of$2.7 million in the third quarter of 2021. - Adjusted EBITDA(3) increased 66% to
$8.3 million , a 17% Adjusted EBITDA margin, compared to Adjusted EBITDA of$5.0 million , a 9% margin, in the third quarter of 2021.
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-
Third Quarter Business Highlights
- Zoosk Initial Subscriber Growth:
Zoosk initial subscriber registration grew 5.1% year over year. - Zoosk Subscriber Growth:
Zoosk average paying subscribers grew 3.4% year over year. - Increased Pricing:
Zoosk successfully deployed new pricing, leading to increased conversion rates and a higher average price forZoosk subscriptions year over year. - Subscription Conversion Rate Improvement: Across all brands, subscription conversion rates increased 11% year over year following product improvements and a focus on higher quality traffic.
- Product Improvements: Several product improvements on user profiles, payment authorizations and fraud reduction contributed to improved subscription conversion rates.
- Strategic Review: The company continued its strategic alternatives review.
Financial Outlook
"We expect total revenue for the year to be down low double-digits on a percentage basis as compared to 2021, a drop which we attribute mainly to the negative impact of foreign exchange rates on our revenue," said
Investor Conference Call
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A live and archived webcast of the conference call will be accessible on the Investor Relations section of the Company's website at https://investor.spark.net/investor-relations/home. In addition, a phone replay will be available approximately two hours following the end of the call and will remain available for one week. To access the call replay, dial 1-877-344-7529 (US) or +1 412-317-0088 (International) and enter the replay passcode: 3285585.
About
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
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, the risk that the benefits from the acquisition of
For More Information
Investor contact:
MKR Investor Relations, Inc.
[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 includes
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 |
$ 12,728 |
$ 16,141 |
||
Accounts receivable, net |
4,792 |
6,261 |
||
|
151,275 |
164,113 |
||
Other assets |
20,222 |
23,286 |
||
Total assets |
$ 189,017 |
$ 209,801 |
||
Liabilities and Shareholders' Equity |
||||
Current portion of long-term debt |
$ 2,364 |
$ 17,593 |
||
Accounts payable |
10,778 |
11,474 |
||
Deferred revenue |
30,078 |
36,973 |
||
Accrued expenses and other current liabilities |
19,293 |
27,042 |
||
Long-term debt, net of current portion |
92,181 |
64,531 |
||
Other liabilities |
18,500 |
19,495 |
||
Total liabilities |
173,194 |
177,108 |
||
Total shareholders' equity |
15,823 |
32,693 |
||
Total liabilities and shareholders' equity |
$ 189,017 |
$ 209,801 |
|
||||||||
Condensed Consolidated Statements of Operations (Unaudited) |
||||||||
(in thousands) |
||||||||
Three Months Ended |
Nine Months Ended |
|||||||
2022 |
2021 |
2022 |
2021 |
|||||
Revenue |
$ 48,180 |
$ 53,297 |
$ 146,122 |
$ 164,929 |
||||
Operating costs and expenses: |
||||||||
Cost of revenue, exclusive of depreciation and amortization |
27,231 |
34,804 |
97,833 |
104,603 |
||||
Other operating costs and expenses |
26,144 |
15,501 |
57,279 |
83,250 |
||||
Total operating costs and expenses |
53,375 |
50,305 |
155,112 |
187,853 |
||||
Operating (loss) income |
(5,195) |
2,992 |
(8,990) |
(22,924) |
||||
Other expense, net |
(5,970) |
(4,081) |
(18,506) |
(12,485) |
||||
Loss before income taxes |
(11,165) |
(1,089) |
(27,496) |
(35,409) |
||||
Income tax benefit (expense) |
453 |
(1,601) |
552 |
(22,812) |
||||
Net loss |
$ (10,712) |
$ (2,690) |
$ (26,944) |
$ (58,221) |
Reconciliation of Net loss to Adjusted EBITDA |
||||||||
Three Months Ended |
Nine Months Ended |
|||||||
(in thousands) |
2022 |
2021 |
2022 |
2021 |
||||
Net loss |
$ (10,712) |
$ (2,690) |
$ (26,944) |
$ (58,221) |
||||
Net interest expense |
3,182 |
3,110 |
12,770 |
10,352 |
||||
Loss on foreign currency transactions |
2,799 |
978 |
6,007 |
2,122 |
||||
Income tax (benefit) expense |
(453) |
1,601 |
(552) |
22,812 |
||||
Depreciation and amortization |
576 |
1,060 |
1,756 |
5,648 |
||||
Impairment of goodwill and intangible assets |
11,790 |
— |
11,790 |
32,086 |
||||
Stock-based compensation expense |
518 |
482 |
1,510 |
2,098 |
||||
Other costs(1) |
578 |
412 |
1,214 |
1,822 |
||||
Adjusted EBITDA |
$ 8,278 |
$ 4,953 |
$ 7,551 |
$ 18,719 |
||||
Adjusted EBITDA margin(2) |
17.2 % |
9.3 % |
5.2 % |
11.3 % |
(1) |
Includes primarily consulting and advisory fees related to special projects, as well as non-cash acquisition related expenses, |
(2) |
We define "Adjusted EBITDA margin" as Adjusted EBITDA divided by revenue. |
|
||||
Nine Months Ended |
||||
2022 |
2021 |
|||
Net loss |
$ (26,944) |
$ (58,221) |
||
Adjustments to reconcile net loss to net cash (used in) provided by operating activities: |
||||
Non-cash items and other non-operating charges |
29,090 |
69,818 |
||
Change in operating assets and liabilities |
(10,423) |
(2,008) |
||
Net cash (used in) provided by operating activities |
(8,277) |
9,589 |
||
Capital expenditures |
(1,982) |
(905) |
||
Net cash used in investing activities |
(1,982) |
(905) |
||
Net cash provided by (used in) financing activities |
7,336 |
(16,766) |
||
Effects of exchange rate fluctuations on cash and cash equivalents and restricted cash |
(509) |
(453) |
||
Net decrease in cash and cash equivalents and restricted cash |
(3,432) |
(8,535) |
||
Cash and cash equivalents and restricted cash at beginning of period |
16,279 |
21,117 |
||
Cash and cash equivalents and restricted cash at end of period |
$ 12,847 |
$ 12,582 |
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