Press Release
Spark Networks SE Reports First Half 2020 Financial Results
"I am pleased with our execution and performance in H1 2020," said Eric Eichmann, CEO of
"Earlier this month, we raised full-year 2020 revenue guidance to the range of $224 to $228 million (€190 to €193 million) and Adjusted EBITDA to the range of $34 to $36 million (€29 to €31 million)," added Bert Althaus, CFO of
First Half 2020 Financial Results
*First half 2020 results represent the first full-period reporting to include newly acquired
- Revenue for the first half of 2020 was €103.4 million, an increase of €54.2 million from €49.2 million in the first half of 2019, and an increase of €3.5 million from €99.9 million in the second half of 2019. The significant increase in revenue is primarily attributable to the integration of
Zoosk following theSpark Networks / Zoosk Merger inJuly 2019 . - Net Loss was €0.4 million in the first half of 2020, an improvement of €4.5 million compared to Net Loss of €4.9 million in the first half of 2019, and an improvement of €9.9 million compared to Net Loss of €10.3 million in the second half of 2019. The year over year improvement in Net Loss was primarily due to increases in revenue and contribution driven by the addition of
Zoosk . The improvement in Net Loss in the first half of 2020 compared to the second half of 2019 was primarily attributable to an increase in contribution driven by a decrease in direct marketing spend in theNorth America and International segments, and a decrease in operating expenses primarily related to lower personnel and overhead costs forZoosk . - Adjusted EBITDA was €17.1 million in the first half of 2020, an increase of €13.3 million compared to €3.8 million in the first half of 2019, and an increase of €12.8 million compared to €4.3 million in the second half of 2019.
- The Company ended the first half of 2020 with €12.0 million in cash and €88.8 million in debt.
Key Performance Indicators
- Average Paying Subscribers increased to 915 thousand in the first half of 2020, compared to 445 thousand in the same period of 2019.
- Monthly Average Revenue Per User, or Monthly ARPU, increased to €18.85 in the first half of 2020, compared to €18.44 in the same period of 2019, due to an increasing share of revenue in
North America .
Financial Outlook
- Due to increased user engagement and a better than anticipated response to shelter-in-place restrictions, management expects to deliver 2020 annual revenue of $224 to $228 million (€190 to €193 million) and Adjusted EBITDA of $34 to $36 million (€29 to €31 million).
- For the second half 2020, the Company expects to achieve revenue of $110 to $114 million (€87 to €90 million) and Adjusted EBITDA of $16 to $18 million (€12 to €14 million).
Key Metrics - Half Year
Six months ended |
Growth Rates % |
|||||||||||||
|
|
|
1st Half 2020 vs. |
|||||||||||
1st Half 2020 |
2nd Half 2019 |
1st Half 2019 |
2nd Half 2019 |
1st Half 2019 |
||||||||||
Revenue |
€103.4 Million |
€99.9 Million |
€49.2 Million |
3.5 |
% |
110.1 |
% |
|||||||
Contribution1 |
€51.9 Million |
€43.2 Million |
€20.4 Million |
20.2 |
% |
155.0 |
% |
|||||||
Net loss |
€(0.4) Million |
€(10.3) Million |
€(4.9) Million |
(96.0) |
% |
(91.5) |
% |
|||||||
Adjusted EBITDA2 |
€17.1 Million |
€4.3 Million |
€3.8 Million |
292.9 |
% |
345.3 |
% |
|||||||
Cash Balance |
€12.0 Million |
€15.5 Million |
€12.5 Million |
(22.6) |
% |
(4.1) |
% |
|||||||
Total Registrations3 |
7,668,580 |
8,229,976 |
4,488,104 |
(6.8) |
% |
70.9 |
% |
|||||||
Avg. Paying Subs4 |
914,798 |
1,017,321 |
444,857 |
(10.1) |
% |
105.6 |
% |
|||||||
Monthly ARPU5 |
€18.85 |
€16.37 |
€18.44 |
15.1 |
% |
2.2 |
% |
|
|||||||||||||||||
SEGMENT6 RESULTS FROM OPERATIONS |
|||||||||||||||||
(Revenue, Direct Marketing and Contribution figures in € thousands) |
|||||||||||||||||
Six Months Ended |
Growth Rates % |
||||||||||||||||
|
|
|
1st Half 2020 vs. |
||||||||||||||
1st Half 2020 |
2nd Half 2019 |
1st Half 2019 |
2nd Half 2019 |
1st Half 2019 |
|||||||||||||
# of Registrations |
|||||||||||||||||
|
5,177,620 |
5,283,710 |
2,224,249 |
(2.0) |
% |
132.8 |
% |
||||||||||
International |
2,490,960 |
2,946,266 |
2,263,855 |
(15.5) |
% |
10.0 |
% |
||||||||||
Total # of Registrations |
7,668,580 |
8,229,976 |
4,488,104 |
(6.8) |
% |
70.9 |
% |
||||||||||
Average Paying Subscribers |
|||||||||||||||||
|
600,126 |
665,023 |
185,364 |
(9.8) |
% |
223.8 |
% |
||||||||||
International |
314,672 |
352,298 |
259,493 |
(10.7) |
% |
21.3 |
% |
||||||||||
Total Average Paying Subscribers |
914,798 |
1,017,321 |
444,857 |
(10.1) |
% |
105.6 |
% |
||||||||||
Monthly ARPU |
|||||||||||||||||
|
€ |
21.07 |
€ |
17.53 |
€ |
23.88 |
20.2 |
% |
(11.8) |
% |
|||||||
International |
€ |
14.61 |
€ |
14.18 |
€ |
14.56 |
3.0 |
% |
0.3 |
% |
|||||||
Total Monthly ARPU |
€ |
18.85 |
€ |
16.37 |
€ |
18.44 |
15.1 |
% |
2.2 |
% |
|||||||
Total Net Revenue |
|||||||||||||||||
|
€ |
75,857 |
€ |
69,947 |
€ |
26,561 |
8.4 |
% |
185.6 |
% |
|||||||
International |
€ |
27,583 |
€ |
29,970 |
€ |
22,663 |
(8.0) |
% |
21.7 |
% |
|||||||
Total Net Revenue |
€ |
103,440 |
€ |
99,917 |
€ |
49,224 |
3.5 |
% |
110.1 |
% |
|||||||
Direct Marketing |
|||||||||||||||||
|
€ |
39,946 |
€ |
42,132 |
€ |
16,160 |
(5.2) |
% |
147.2 |
% |
|||||||
International |
€ |
11,582 |
€ |
14,586 |
€ |
12,706 |
(20.6) |
% |
(8.8) |
% |
|||||||
Total Direct Marketing |
€ |
51,528 |
€ |
56,718 |
€ |
28,866 |
(9.2) |
% |
78.5 |
% |
|||||||
Contribution |
|||||||||||||||||
|
€ |
35,911 |
€ |
27,815 |
€ |
10,401 |
29.1 |
% |
245.3 |
% |
|||||||
International |
€ |
16,001 |
€ |
15,384 |
€ |
9,957 |
4.0 |
% |
60.7 |
% |
|||||||
Total Contribution |
€ |
51,912 |
€ |
43,199 |
€ |
20,358 |
20.2 |
% |
155.0 |
% |
|
||||||
UNAUDITED PRO FORMA FINANCIAL INFORMATION |
||||||
(in € thousands) |
||||||
Six months ended |
||||||
(in € thousands) |
2020 |
2019 |
||||
Revenue(7) |
103,440 |
119,815 |
||||
Net loss(7) |
(412) |
(4,422) |
The following table presents certain selected information and Adjusted EBITDA(2) for the unaudited pro forma periods presented:
Six months ended |
||||||
(in € thousands) |
2020 |
2019 |
||||
Net loss(7) |
(412) |
(4,422) |
||||
Net finance expenses |
6,219 |
5,741 |
||||
Income tax expense |
2,458 |
421 |
||||
Depreciation and amortization |
5,100 |
5,829 |
||||
Impairment of intangible assets and goodwill |
— |
3 |
||||
Share-based compensation expense |
2,125 |
3,045 |
||||
Acquisition costs and other |
1,580 |
267 |
||||
Adjusted EBITDA(2) |
17,070 |
10,884 |
||||
Six months ended |
||||||
Summary of acquisition costs and other (in € thousands) |
2020 |
2019 |
||||
Project consultant costs |
— |
194 |
||||
Merger integration costs |
39 |
— |
||||
Other employee payments |
939 |
27 |
||||
Severance costs |
602 |
46 |
||||
Total adjustments |
1,580 |
267 |
Investor Conference Call
Toll-Free ( |
1-877-705-6003 |
Toll-Free ( |
0-800-182-0040 |
International: |
1-201-493-6725 |
In addition,
A replay will begin approximately three hours after completion of the call and run until
Replay |
|
Toll-Free ( |
1-844-512-2921 |
International: |
1-412-317-6671 |
Passcode: |
13707517 |
Foreign Currency Exchange Rate:
Euro guidance referenced in this release applied a Euro to USD conversion rate of 1-1.18, which reflects the conversion rate as of August 20, 2020. This disclosure relates to amounts within the financial outlook only. This is not the conversion rate applied to actual results.
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," 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
About
For More Information
Investors:
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 within
2 Adjusted EBITDA is not a measure defined by IFRS. The most directly comparable IFRS measure for Adjusted EBITDA is our net income/(loss) for the relevant period. This measure is one of the primary metrics by which we evaluate the performance of our businesses, 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 ongoing operations and excludes the impact of items that we do not consider representative of our ongoing operating performance. This includes: (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. Adjusted EBITDA should not be construed as a substitute for net income/(loss) (as determined in accordance with IFRS) for the purpose of analyzing our operating performance or financial position, as Adjusted EBITDA is not defined by IFRS. A reconciliation of the Adjusted EBITDA for the six months ended
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 half and full-year 2020 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-IFRS financial guidance to the corresponding IFRS 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.
6 In accordance with segment reporting guidance,
7 The unaudited pro forma financial information in the table below presents the combined results of the Company and
|
|||||||
CONSOLIDATED BALANCE SHEETS |
|||||||
(in € thousands) |
|||||||
|
|
||||||
ASSETS |
|||||||
Non-current assets |
299,563 |
304,322 |
|||||
Intangible assets and goodwill |
276,157 |
278,862 |
|||||
Internally generated software |
6,341 |
5,040 |
|||||
Licenses and domains |
132 |
160 |
|||||
Brands and trademarks |
101,791 |
101,523 |
|||||
Purchased software |
12 |
94 |
|||||
Intangible assets under development |
2,023 |
3,159 |
|||||
Other intangible assets |
7,129 |
10,658 |
|||||
|
158,729 |
158,228 |
|||||
Property, plant and equipment |
1,819 |
2,317 |
|||||
Leasehold improvements |
39 |
69 |
|||||
Other and office equipment |
1,209 |
1,445 |
|||||
Right-of-use assets |
571 |
803 |
|||||
Other non-current financial assets |
6,357 |
7,040 |
|||||
Other non-current non-financial assets |
220 |
251 |
|||||
Non-current income tax assets |
86 |
85 |
|||||
Deferred tax assets |
14,924 |
15,767 |
|||||
Current assets |
26,737 |
27,720 |
|||||
Current trade and other receivables |
14,212 |
11,911 |
|||||
Trade receivables |
8,243 |
5,808 |
|||||
Other current financial assets |
2,967 |
3,218 |
|||||
Other assets |
3,002 |
2,885 |
|||||
Current income tax assets |
566 |
359 |
|||||
Cash and cash equivalents |
11,959 |
15,450 |
|||||
TOTAL ASSETS |
326,300 |
332,042 |
|||||
SHAREHOLDERS' EQUITY AND LIABILITIES |
|||||||
Shareholders' equity |
144,352 |
142,120 |
|||||
Subscribed capital |
2,662 |
2,662 |
|||||
Capital reserves |
183,349 |
183,349 |
|||||
Share-based payment reserve |
8,156 |
6,031 |
|||||
Accumulated deficit |
(54,729) |
(54,317) |
|||||
Accumulated other comprehensive income |
4,914 |
4,395 |
|||||
Non-current liabilities |
89,421 |
96,275 |
|||||
Non-current borrowings |
78,126 |
85,157 |
|||||
Other non-current provisions |
17 |
17 |
|||||
Other non-current financial liabilities |
6,297 |
7,167 |
|||||
Deferred tax liabilities |
4,099 |
3,054 |
|||||
Non-current income tax liabilities |
879 |
876 |
|||||
Non-current contract liabilities |
3 |
4 |
|||||
Current liabilities |
92,527 |
93,647 |
|||||
Current borrowings |
10,717 |
10,682 |
|||||
Other current provisions |
2,322 |
2,047 |
|||||
Current trade and other payables |
40,615 |
43,263 |
|||||
Trade payables |
22,433 |
25,873 |
|||||
Other current financial liabilities |
13,322 |
14,429 |
|||||
Other liabilities |
4,860 |
2,961 |
|||||
Current income tax liabilities |
1,357 |
815 |
|||||
Current contract liabilities |
37,516 |
36,840 |
|||||
Total liabilities |
181,948 |
189,922 |
|||||
TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES |
326,300 |
332,042 |
|
|||||||||
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME/(LOSS) |
|||||||||
(unaudited, in € thousands, except per share data) |
|||||||||
Six Months Ended |
|||||||||
|
|
|
|||||||
Revenue |
103,440 |
99,917 |
49,224 |
||||||
Cost of revenue |
(63,483) |
(70,001) |
(33,301) |
||||||
Gross profit |
39,957 |
29,916 |
15,923 |
||||||
Other income |
182 |
1,558 |
— |
||||||
Other operating expenses |
(31,874) |
(36,934) |
(20,277) |
||||||
Sales and marketing expenses |
(2,126) |
(3,382) |
(2,726) |
||||||
Customer service expenses |
(3,492) |
(4,537) |
(2,293) |
||||||
Technical operations and development expenses |
(11,652) |
(15,279) |
(4,154) |
||||||
General and administrative expenses |
(14,604) |
(13,736) |
(11,104) |
||||||
Operating income/(loss) |
8,265 |
(5,460) |
(4,354) |
||||||
Finance income |
1,399 |
3,813 |
423 |
||||||
Finance costs |
(7,618) |
(12,644) |
(542) |
||||||
Net finance expenses |
(6,219) |
(8,831) |
(119) |
||||||
Income/(loss) before taxes |
2,046 |
(14,291) |
(4,473) |
||||||
Income tax (expense)/benefit |
(2,458) |
3,991 |
(401) |
||||||
Net loss |
(412) |
(10,300) |
(4,874) |
||||||
Other comprehensive income |
519 |
3,661 |
— |
||||||
Total comprehensive income/(loss) |
107 |
(6,639) |
(4,874) |
||||||
Loss per share |
|||||||||
Basic loss per share (€) |
(0.16) |
(3.90) |
(3.75) |
||||||
Diluted loss per share (€) |
(0.16) |
(3.90) |
(3.75) |
||||||
Reconciliation of Net Loss to Adjusted EBITDA: |
|||||||||
Net loss |
(412) |
(10,300) |
(4,874) |
||||||
Net finance expenses |
6,219 |
8,831 |
119 |
||||||
Income tax expense/(benefit) |
2,458 |
(3,991) |
401 |
||||||
Depreciation and amortization |
5,100 |
6,043 |
1,653 |
||||||
Impairment of intangible assets and goodwill |
— |
703 |
— |
||||||
Share-based compensation expense |
2,125 |
260 |
2,075 |
||||||
Acquisition costs and other |
1,580 |
2,799 |
4,459 |
||||||
Adjusted EBITDA(2) |
17,070 |
4,345 |
3,833 |
||||||
Summary of acquisition costs and other: |
|||||||||
Gain realized upon sublease commencement |
— |
(1,259) |
— |
||||||
Transaction and advisory fees |
— |
348 |
4,413 |
||||||
Merger integration costs |
39 |
493 |
— |
||||||
Other employee payments |
939 |
2,052 |
— |
||||||
Severance costs |
602 |
1,165 |
46 |
||||||
Total adjustments |
1,580 |
2,799 |
4,459 |
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