Spark Networks(R) Reports Fourth Quarter and Full Year 2012 Financial Results
- Company-wide 2012 revenue increased 27% to
$61.7 million - Christian Networks 2012 revenue increased 101% to
$31.6 million - Q4 company-wide average paying subscribers1 grew 31% to 279,000
- Q4 Christian Networks average paying subscribers grew 80% to 168,000
Financial Highlights
Q4 2012 | Full Year 2012 | |||||||
Revenue | $ | 16.3 Million | $ | 61.7 Million | ||||
Contribution Margin | 23 | % | 26 | % | ||||
Net Loss | $ | (10.5) Million | $ | (15.0) Million | ||||
Net Loss Per Share | $ | (0.51 | ) | $ | (0.72 | ) | ||
Management Commentary
"I am proud of our 2012 performance, which was punctuated by a fourth quarter that marked our best of the year," said
"Looking ahead, we will continue to focus on strengthening our brands and leadership positions in both the Christian and Jewish Networks segments. And, as pleased as we are with our accomplishments in 2011 and 2012, we are even more excited about the opportunities that lie ahead."
Financial Results
Revenue in the fourth quarter of 2012 was
Contribution2 in the fourth quarter of 2012 was
Total cost and expenses in the fourth quarter of 2012 were
Net loss in the fourth quarter of 2012 was
Adjusted EBITDA3 in the fourth quarter of 2012 was a loss of
Total average paying subscribers in the fourth quarter of 2012 were 279,260, an increase of 31% compared to the year ago period and an increase of 5% compared to the prior quarter. Full year 2012 average paying subscribers were 259,244, a 32% increase compared to 2011. The growth in our Christian Networks average paying subscribers drove the total Company average paying subscriber increases.
Balance Sheet, Cash, Debt
As of
Segment Reporting4
During the first quarter of 2012, the Company changed its financial reporting to include data on two newly-defined operating segments, leaving two of the previous operating segments intact. The two new segments are Christian Networks and Other Networks. Christian Networks consists of ChristianMingle.com, ChristianMingle.co.uk, ChristianMingle.com.au, Believe.com, ChristianCards.net, ChristianDating.com, DailyBibleVerse.com, and Faith.com. Other Networks consists of Spark.com and related other general market Web sites, as well as other properties, which are primarily composed of sites targeted towards various religious, ethnic, geographic and special interest groups. The composition of our Jewish Networks and Offline and Other Businesses segments remain unchanged.
SPARK NETWORKS, INC. | ||||||||||||||||||||||||
QUARTERLY SEGMENT RESULTS FROM OPERATIONS | ||||||||||||||||||||||||
(in thousands except subscriber information) | ||||||||||||||||||||||||
Q4 2011 | Q1 2012 | Q2 2012 | Q3 2012 | Q4 2012 | Q4 '12 vs. Q4 '11 |
|||||||||||||||||||
Net Revenue | ||||||||||||||||||||||||
Jewish Networks | $ | 6,700 | $ | 6,580 | $ | 6,452 | $ | 6,385 | $ | 6,617 | -1.2 | % | ||||||||||||
Christian Networks | 4,952 | 6,853 | 7,505 | 8,495 | 8,721 | 76.1 | % | |||||||||||||||||
Other Networks | 1,104 | 1,031 | 995 | 903 | 836 | -24.3 | % | |||||||||||||||||
Offline & Other Businesses | 105 | 91 | 94 | 88 | 97 | -7.6 | % | |||||||||||||||||
Total Net Revenue | $ | 12,861 | $ | 14,555 | $ | 15,046 | $ | 15,871 | $ | 16,271 | 26.5 | % | ||||||||||||
Direct Marketing Expenses | ||||||||||||||||||||||||
Jewish Networks | $ | 929 | $ | 801 | $ | 647 | $ | 829 | $ | 834 | -10.2 | % | ||||||||||||
Christian Networks | 6,303 | 9,795 | 9,205 | 10,920 | 11,480 | 82.1 | % | |||||||||||||||||
Other Networks | 354 | 312 | 251 | 213 | 201 | -43.2 | % | |||||||||||||||||
Offline & Other Businesses | 49 | 30 | 37 | 29 | 69 | 40.8 | % | |||||||||||||||||
Total Direct Mktg. Expenses | $ | 7,635 | $ | 10,938 | $ | 10,140 | $ | 11,991 | $ | 12,584 | 64.8 | % | ||||||||||||
Contribution | ||||||||||||||||||||||||
Jewish Networks | $ | 5,771 | $ | 5,779 | $ | 5,805 | $ | 5,556 | $ | 5,783 | 0.2 | % | ||||||||||||
Christian Networks | (1,351 | ) | (2,942 | ) | (1,700 | ) | (2,425 | ) | (2,759 | ) | -104.2 | % | ||||||||||||
Other Networks | 750 | 719 | 744 | 690 | 635 | -15.3 | % | |||||||||||||||||
Offline & Other Businesses | 56 | 61 | 57 | 59 | 28 | -50.0 | % | |||||||||||||||||
Total Contribution | $ | 5,226 | $ | 3,617 | $ | 4,906 | $ | 3,880 | $ | 3,687 | -29.4 | % | ||||||||||||
Average Paying Subscribers | ||||||||||||||||||||||||
Jewish Networks | 87,101 | 86,433 | 84,348 | 84,650 | 85,736 | -1.6 | % | |||||||||||||||||
Christian Networks | 93,357 | 124,158 | 137,768 | 154,747 | 168,394 | 80.4 | % | |||||||||||||||||
Other Networks | 31,940 | 30,115 | 28,818 | 26,678 | 25,130 | -21.3 | % | |||||||||||||||||
Total Avg. Paying Subscribers5 | 212,398 | 240,706 | 250,934 | 266,075 | 279,260 | 31.5 | % | |||||||||||||||||
ARPU | ||||||||||||||||||||||||
Jewish Networks | $ | 25.12 | $ | 24.99 | $ | 24.77 | $ | 24.61 | $ | 24.93 | -0.8 | % | ||||||||||||
Christian Networks | 16.44 | 17.35 | 17.13 | 17.26 | 16.43 | -0.1 | % | |||||||||||||||||
Other Networks | 10.74 | 10.77 | 10.36 | 10.61 | 10.36 | -3.6 | % | |||||||||||||||||
Total ARPU6 | $ | 19.14 | $ | 19.27 | $ | 18.92 | $ | 18.93 | $ | 18.49 | -3.4 | % | ||||||||||||
SPARK NETWORKS, INC. | ||||||||||||
ANNUAL SEGMENT RESULTS FROM OPERATIONS | ||||||||||||
(in thousands except subscriber information) | ||||||||||||
12 Mos. 2011 | 12 Mos. 2012 | 2012 v. 2011 | ||||||||||
Net Revenue | ||||||||||||
Jewish Networks | $ | 27,054 | $ | 26,034 | -3.8 | % | ||||||
Christian Networks | 15,742 | 31,574 | 100.6 | % | ||||||||
Other Networks | 4,925 | 3,765 | -23.6 | % | ||||||||
Offline & Other Businesses | 772 | 370 | -52.1 | % | ||||||||
Total Net Revenue | $ | 48,493 | $ | 61,743 | 27.3 | % | ||||||
Direct Marketing Expenses | ||||||||||||
Jewish Networks | $ | 3,389 | $ | 3,111 | -8.2 | % | ||||||
Christian Networks | 19,356 | 41,400 | 113.9 | % | ||||||||
Other Networks | 2,467 | 977 | -60.4 | % | ||||||||
Offline & Other Businesses | 512 | 165 | -67.8 | % | ||||||||
Total Direct Mktg. Expenses | $ | 25,724 | $ | 45,653 | 77.5 | % | ||||||
Contribution | ||||||||||||
Jewish Networks | $ | 23,665 | $ | 22,923 | -3.1 | % | ||||||
Christian Networks | (3,614 | ) | (9,826 | ) | -171.9 | % | ||||||
Other Networks | 2,458 | 2,788 | 13.4 | % | ||||||||
Offline & Other Businesses | 260 | 205 | -21.2 | % | ||||||||
Total Contribution | $ | 22,769 | $ | 16,090 | -29.3 | % | ||||||
Average Paying Subscribers | ||||||||||||
Jewish Networks | 89,429 | 85,292 | -4.6 | % | ||||||||
Christian Networks | 71,311 | 146,267 | 105.1 | % | ||||||||
Other Networks | 35,595 | 27,685 | -22.2 | % | ||||||||
Total Avg. Paying Subscribers | 196,335 | 259,244 | 32.0 | % | ||||||||
ARPU | ||||||||||||
Jewish Networks | $ | 24.72 | $ | 24.83 | 0.4 | % | ||||||
Christian Networks | 17.38 | 17.01 | -2.1 | % | ||||||||
Other Networks | 10.96 | 10.53 | -3.9 | % | ||||||||
Total ARPU | $ | 19.89 | $ | 19.01 | -4.4 | % | ||||||
Investor Conference Call
The Company will discuss its financial results during a live teleconference today at
Toll-Free (
International: 1-201-689-8562
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 at www.spark.net or by clicking http://investor.spark.net.
A replay will begin approximately three hours after completion of the call and run until
Replay
Toll-Free (
International: 1-858-384-5517
Passcode: 409224
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; and obtain financing on acceptable terms. For a discussion of these and further risks and uncertainties, please see our filings with the
About
The
1 "Average paying subscribers" are defined as individuals who have paid a monthly fee for access to communication and Web site 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.
2 "Contribution" is defined as revenue, net of credits and credit card chargebacks, less direct marketing. "Contribution Margin" is defined as Contribution divided by revenue, net of credits and credit card chargebacks.
3 The Company reports Adjusted EBITDA as a supplemental measure to generally accepted accounting principles ("GAAP"). 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 on-going operations and excludes the impact of: (i) non-cash items such as stock-based compensation, asset impairments, non-cash currency translation adjustments related to an inter-company loan and (ii) one- time items that have not occurred in the past two years and are not expected to recur in the next two years, such as the Scheme of Arrangement. Adjusted EBITDA should not be construed as a substitute for net income (loss) (as determined in accordance with GAAP) for the purpose of analyzing our operating performance or financial position, as Adjusted EBITDA is not defined by GAAP.
"Adjusted EBITDA" is defined as earnings before interest, taxes, depreciation, amortization, stock-based compensation, impairment of long-lived assets, non-cash currency translation adjustments for inter-company loans and the income (loss) recognized from non-cash assets received in connection with a legal judgment.
4 In accordance with Segment Reporting guidance, the Company's financial reporting includes detailed data on four separate operating segments. The Jewish Networks segment consists of the Company's JDate.com, JDate.co.il, JDate.fr, JDate.co.uk and Cupid.co.il Web sites and their respective co-branded Web sites. The Christian Networks segment consists of the Company's ChristianMingle.com, ChristianMingle.co.uk, ChristianMingle.com.au, Believe.com, ChristianCards.net, ChristianDating.com, DailyBibleVerse.com and Faith.com Web sites. The Other Networks segment consists of Spark.com and related other general market Web sites as well as other properties which are primarily composed of sites targeted towards various religious, ethnic, geographic and special interest groups. The Offline & Other Businesses segment consists of revenue generated from offline activities and HurryDate events and subscriptions.
5 Total Average Paying Subscribers excludes results from the Company's HurryDate business due to its relative size.
6 ARPU is defined as average revenue per user. Total ARPU excludes results from the Company's HurryDate business due to its relative size.
(Consolidated financial statements to follow)
SPARK NETWORKS, INC. | |||||||||||
CONSOLIDATED BALANCE SHEETS | |||||||||||
(in thousands, except share data) | |||||||||||
December 31, | December 31, | ||||||||||
2011 | 2012 | ||||||||||
Assets | |||||||||||
Current assets: | |||||||||||
Cash and cash equivalents | $ | 15,106 | $ | 10,458 | |||||||
Restricted cash | 958 | 1,232 | |||||||||
Accounts receivable | 1,146 | 1,510 | |||||||||
Deferred tax asset - current | 44 | 8 | |||||||||
Prepaid expenses and other | 1,164 | 861 | |||||||||
Total current assets | 18,418 | 14,069 | |||||||||
Property and equipment, net | 2,839 | 3,133 | |||||||||
Goodwill | 8,683 | 8,861 | |||||||||
Intangible assets, net | 1,900 | 2,143 | |||||||||
Deferred tax asset - non-current | 5,641 | 5 | |||||||||
Deposits and other assets | 455 | 153 | |||||||||
Total assets | $ | 37,936 | $ | 28,364 | |||||||
Liabilities and Stockholders' Equity | |||||||||||
Current liabilities: | |||||||||||
Accounts payable | $ | 952 | $ | 1,093 | |||||||
Accrued liabilities | 4,046 | 5,339 | |||||||||
Deferred revenue | 5,723 | 8,128 | |||||||||
Deferred tax liability - current | 203 | 257 | |||||||||
Total current liabilities | 10,924 | 14,817 | |||||||||
Deferred tax liability | 1,219 | 1,413 | |||||||||
Other liabilities non-current | 1,141 | 588 | |||||||||
Total liabilities | 13,284 | 16,818 | |||||||||
Commitments and contingencies | |||||||||||
Stockholders' equity: | |||||||||||
Authorized capital stock consists of 100,000,000 shares of Common Stock, $0.001 par value; issued and outstanding: 20,945,364 shares at December 31, 2012 and 20,594,670 shares at December 31, 2011: | 21 | 21 | |||||||||
Additional paid-in-capital | 53,014 | 54,857 | |||||||||
Accumulated other comprehensive income | 672 | 712 | |||||||||
Accumulated deficit | (29,055 | ) | (44,044 | ) | |||||||
Total stockholders' equity | 24,652 | 11,546 | |||||||||
Total liabilities and stockholders' equity | $ | 37,936 | $ | 28,364 | |||||||
SPARK NETWORKS, INC. | |||||||||||||||||||||
CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||||||||||||
(unaudited, in thousands, except per share data) | |||||||||||||||||||||
Three Months Ended December 31, |
Years Ended December 31, | ||||||||||||||||||||
2011 | 2012 | 2010 | 2011 | 2012 | |||||||||||||||||
Revenue | $ | 12,861 | $ | 16,271 | $ | 40,851 | $ | 48,493 | $ | 61,743 | |||||||||||
Cost and expenses: | |||||||||||||||||||||
Cost of revenue (exclusive of depreciation shown separately below) | 8,420 | 13,491 | 13,749 | 28,955 | 49,216 | ||||||||||||||||
Sales and marketing | 1,062 | 1,015 | 3,496 | 3,722 | 3,991 | ||||||||||||||||
Customer service | 539 | 647 | 1,601 | 1,980 | 2,534 | ||||||||||||||||
Technical operations | 281 | 296 | 1,232 | 1,367 | 1,363 | ||||||||||||||||
Development | 643 | 797 | 3,092 | 2,710 | 3,346 | ||||||||||||||||
General and administrative | 1,071 | 2,237 | 9,782 | 8,068 | 8,787 | ||||||||||||||||
Depreciation | 343 | 431 | 962 | 1,320 | 1,673 | ||||||||||||||||
Amortization of intangible assets | 89 | - | 421 | 370 | 13 | ||||||||||||||||
Impairment of long-lived assets and other assets | 1,100 | - | 308 | 1,145 | - | ||||||||||||||||
Total cost and expenses | 13,548 | 18,914 | 34,643 | 49,637 | 70,923 | ||||||||||||||||
Operating (loss) income | (687 | ) | (2,643 | ) | 6,208 | (1,144 | ) | (9,180 | ) | ||||||||||||
Interest (income) expense and other, net | 144 | (188 | ) | (54 | ) | 162 | (238 | ) | |||||||||||||
(Loss) income before income taxes | (831 | ) | (2,455 | ) | 6,262 | (1,306 | ) | (8,942 | ) | ||||||||||||
Provision (benefit) for income taxes | 277 | 8,083 | 2,558 | 305 | 6,047 | ||||||||||||||||
Net (loss) income | $ | (1,108 | ) | $ | (10,538 | ) | $ | 3,704 | $ | (1,611 | ) | $ | (14,989 | ) | |||||||
Net (loss) income per share--basic and diluted | $ | (0.05 | ) | $ | (0.51 | ) | $ | 0.18 | $ | (0.08 | ) | $ | (0.72 | ) | |||||||
Weighted average shares outstanding - basic | 20,595 | 20,816 | 20,586 | 20,591 | 20,781 | ||||||||||||||||
Weighted average shares outstanding -diluted | 20,595 | 20,816 | 20,590 | 20,591 | 20,781 | ||||||||||||||||
Stock-based compensation: | |||||||||||||||
(in thousands) | |||||||||||||||
Three Months Ended December 31, |
Year Ended December 31, | ||||||||||||||
2011 | 2012 | 2010 | 2011 | 2012 | |||||||||||
Cost of revenue | $ | 2 | $ | 2 | $ | 11 | $ | 8 | $ | 8 | |||||
Sales and marketing | 15 | 21 | 233 | 80 | 76 | ||||||||||
Customer service | - | 1 | 1 | - | 2 | ||||||||||
Technical operations | 31 | 29 | 167 | 119 | 118 | ||||||||||
Development | 10 | 11 | 54 | 42 | 42 | ||||||||||
General and administrative | 125 | 150 | 1,044 | 657 | 567 | ||||||||||
Reconciliation of Net Loss (Income) to Adjusted EBITDA: (in thousands) |
Three Months Ended December 31, |
Years Ended December 31, |
||||||||||||||||||
2011 | 2012 | 2010 | 2011 | 2012 | ||||||||||||||||
Net (loss) income | $ | (1,108 | ) | $ | (10,538 | ) | $ | 3,704 | $ | (1,611 | ) | $ | (14,989 | ) | ||||||
Interest | 13 | 16 | 207 | 102 | 59 | |||||||||||||||
Taxes | 277 | 8,083 | 2,558 | 305 | 6,047 | |||||||||||||||
Depreciation | 343 | 431 | 962 | 1,320 | 1,673 | |||||||||||||||
Amortization | 89 | - | 421 | 370 | 13 | |||||||||||||||
EBITDA | (386 | ) | (2,008 | ) | 7,852 | 486 | (7,197 | ) | ||||||||||||
Stock-based compensation | 183 | 214 | 1,510 | 906 | 813 | |||||||||||||||
Impairment of long-lived assets and other assets | 1,100 | - | 308 | 1,145 | - | |||||||||||||||
Non-cash currency translation adjustments | 132 | (201 | ) | (269 | ) | 337 | (124 | ) | ||||||||||||
Non-repetitive property possession | - | - | - | (247 | ) | (151 | ) | |||||||||||||
Adjusted EBITDA | $ | 1,029 | $ | (1,995 | ) | $ | 9,401 | $ | 2,627 | $ | (6,659 | ) | ||||||||
For More Information
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