Spark Networks(R) Reports Fourth Quarter Financial Results
- Total revenue grew Y/Y for 12th consecutive quarter
- Total contribution1 grew 16% Y/Y
- Christian Networks revenue grew Y/Y for 13th consecutive quarter
- Christian Networks ARPU2 grew Q/Q for first time since Q1 2013
Financial Highlights
Q4 2012 | Q4 2013 | ||
Revenue | $16.3 Million | $17.2 Million | |
Contribution Margin3 | 23% | 25% | |
Net Loss | $10.5 Million | $3.5 Million | |
Net Loss Per Share | $0.51 | $0.15 | |
Management Commentary
"2013 marked our third consecutive year of growth as we continued to execute our long-term strategic plan," said
"Our dual engines -- the Christian and Jewish Networks segments, anchored by ChristianMingle and JDate -- once again drove our performance. In 2013, Christian Networks grew 27%, generated more than
Financial Results
Revenue in the fourth quarter of 2013 was
Contribution in the fourth quarter of 2013 was
Total cost and expenses in the fourth quarter of 2013 were
Net loss in the fourth quarter of 2013 was
Adjusted EBITDA4 in the fourth quarter of 2013 was a loss of
Total average paying subscribers5 in the fourth quarter of 2013 were 292,760, an increase of 5% compared to the year ago period. Full year 2013 average paying subscribers were 297,696, a 15% increase compared to 2012. The growth in our Christian Networks average paying subscribers drove the total company average paying subscriber increases.
Balance Sheet, Cash, Debt
As of
SPARK NETWORKS, INC. SEGMENT6 | |||||||||||||||||||||||
RESULTS FROM OPERATIONS | |||||||||||||||||||||||
(in thousands except subscriber and ARPU information) | |||||||||||||||||||||||
Q4 2012 | Q1 2013 | Q2 2013 | Q3 2013 | Q4 2013 | Q4 '13 v. Q4 '12 | ||||||||||||||||||
Net Revenue | |||||||||||||||||||||||
Jewish Networks | $ | 6,617 | $ | 6,452 | $ | 6,460 | $ | 6,433 | $ | 6,444 | -2.6 | % | |||||||||||
Christian Networks | 8,721 | 9,908 | 10,260 | 10,088 | 9,989 | 14.5 | % | ||||||||||||||||
Other Networks | 836 | 815 | 775 | 715 | 667 | -20.2 | % | ||||||||||||||||
Offline & Other Businesses | 97 | 88 | 86 | 125 | 104 | 7.2 | % | ||||||||||||||||
Total Net Revenue | $ | 16,271 | $ | 17,263 | $ | 17,581 | $ | 17,361 | $ | 17,204 | 5.7 | % | |||||||||||
Direct Mktg. Exp. | |||||||||||||||||||||||
Jewish Networks | $ | 834 | $ | 751 | $ | 776 | $ | 822 | $ | 991 | 18.8 | % | |||||||||||
Christian Networks | 11,480 | 11,722 | 12,866 | 11,659 | 11,769 | 2.5 | % | ||||||||||||||||
Other Networks | 201 | 199 | 152 | 123 | 121 | -39.8 | % | ||||||||||||||||
Offline & Other Businesses | 69 | 26 | 31 | 30 | 36 | -47.8 | % | ||||||||||||||||
Total Direct Mktg. Exp. | $ | 12,584 | $ | 12,698 | $ | 13,825 | $ | 12,634 | $ | 12,917 | 2.6 | % | |||||||||||
Contribution | |||||||||||||||||||||||
Jewish Networks | $ | 5,783 | $ | 5,701 | $ | 5,684 | $ | 5,611 | $ | 5,453 | -5.7 | % | |||||||||||
Christian Networks | (2,759 | ) | (1,814 | ) | (2,606 | ) | (1,571 | ) | (1,780 | ) | 35.5 | % | |||||||||||
Other Networks | 635 | 616 | 623 | 592 | 546 | -14.0 | % | ||||||||||||||||
Offline & Other Businesses | 28 | 62 | 55 | 95 | 68 | 142.9 | % | ||||||||||||||||
Total Contribution | $ | 3,687 | $ | 4,565 | $ | 3,756 | $ | 4,727 | $ | 4,287 | 16.3 | % | |||||||||||
Average Paying Subs. | |||||||||||||||||||||||
Jewish Networks | 85,736 | 85,200 | 84,487 | 83,732 | 83,175 | -3.0 | % | ||||||||||||||||
Christian Networks | 168,394 | 186,896 | 196,598 | 197,420 | 192,349 | 14.2 | % | ||||||||||||||||
Other Networks | 25,130 | 23,435 | 21,183 | 19,073 | 17,236 | -31.4 | % | ||||||||||||||||
Total Avg. Paying Subs.7 | 279,260 | 295,531 | 302,268 | 300,225 | 292,760 | 4.8 | % | ||||||||||||||||
ARPU | |||||||||||||||||||||||
Jewish Networks | $ | 24.93 | $ | 24.86 | $ | 25.15 | $ | 25.28 | $ | 25.34 | 1.7 | % | |||||||||||
Christian Networks | 16.43 | 16.84 | 16.55 | 16.07 | 16.14 | -1.7 | % | ||||||||||||||||
Other Networks | 10.36 | 10.84 | 11.49 | 12.08 | 12.44 | 20.0 | % | ||||||||||||||||
Total ARPU7 | $ | 18.49 | $ | 18.68 | $ | 18.60 | $ | 18.38 | $ | 18.54 | 0.3 | % | |||||||||||
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: 13574700
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; continue to depend upon the telecommunications infrastructure and our networking hardware and software infrastructure; estimate on-going general and administrative costs, 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 "Contribution" is defined as revenue, net of credits and credit card chargebacks, less direct marketing.
2 ARPU is defined as average revenue per user per month. Total ARPU excludes results from the company's HurryDate business due to its relative size.
3 "Contribution Margin" is defined as Contribution divided by revenue, net of credits and credit card chargebacks.
4 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. 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 an inter-company loan and the income (loss) recognized from non-cash assets received in connection with a legal judgment.
5 "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.
6 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.
7 Total Average Paying Subscribers excludes results from the company's HurryDate business due to its relative size.
SPARK NETWORKS, INC. | |||||||||
CONSOLIDATED BALANCE SHEETS | |||||||||
(in thousands, except share data) | |||||||||
December 31, | December 31, | ||||||||
2012 | 2013 | ||||||||
Assets | |||||||||
Current assets: | |||||||||
Cash and cash equivalents | $ | 10,458 | $ | 14,723 | |||||
Restricted cash | 1,232 | 1,296 | |||||||
Accounts receivable | 1,510 | 1,569 | |||||||
Deferred tax asset - current | 8 | 10 | |||||||
Prepaid expenses and other | 861 | 1,787 | |||||||
Total current assets | 14,069 | 19,385 | |||||||
Property and equipment, net | 3,133 | 3,901 | |||||||
Goodwill | 8,861 | 9,305 | |||||||
Intangible assets, net | 2,143 | 2,269 | |||||||
Deferred tax asset - non-current | 5 | 186 | |||||||
Deposits and other assets | 153 | 208 | |||||||
Total assets | $ | 28,364 | $ | 32,254 | |||||
Liabilities and Stockholders' Equity | |||||||||
Current liabilities: | |||||||||
Accounts payable | $ | 1,093 | $ | 1,516 | |||||
Accrued liabilities | 5,339 | 5,761 | |||||||
Deferred revenue | 8,128 | 8,830 | |||||||
Deferred tax liability - current portion | 257 | 526 | |||||||
Total current liabilities | 14,817 | 16,633 | |||||||
Deferred tax liability | 1,413 | 1,781 | |||||||
Other liabilities - non-current | 588 | 1,717 | |||||||
Total liabilities | 16,818 | 20,131 | |||||||
Commitments and contingencies | |||||||||
Stockholders' equity: | |||||||||
Authorized capital stock consists of 100,000,000 shares of Common Stock, $0.001 par value; issued and outstanding: 24,001,937 and 20,945,364 shares at December 31, 2013 and 2012, respectively: | 21 | 24 | |||||||
Additional paid-in-capital | 54,857 | 70,747 | |||||||
Accumulated other comprehensive income | 712 | 776 | |||||||
Accumulated deficit | (44,044 | ) | (56,424 | ) | |||||
Total stockholders' equity | 11,546 | 15,123 | |||||||
Total liabilities and stockholders' equity | $ | 28,364 | $ | 35,254 |
SPARK NETWORKS, INC. | ||||||||||||||||||||
CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||||||||||||
(unaudited, in thousands, except per share data) | ||||||||||||||||||||
Three Months Ended December 31, | Years Ended December 31, | |||||||||||||||||||
2012 | 2013 | 2011 | 2012 | 2013 | ||||||||||||||||
Revenue | $ | 16,271 | $ | 17,204 | $ | 48,493 | $ | 61,743 | $ | 69,409 | ||||||||||
Cost and expenses: | ||||||||||||||||||||
Cost of revenue (exclusive of depreciation shown separately below) | 13,491 | 13,911 | 28,955 | 49,216 | 55,958 | |||||||||||||||
Sales and marketing | 1,015 | 1,629 | 3,722 | 3,991 | 5,601 | |||||||||||||||
Customer service | 647 | 765 | 1,980 | 2,534 | 2,902 | |||||||||||||||
Technical operations | 296 | 280 | 1,367 | 1,363 | 1,167 | |||||||||||||||
Development | 797 | 799 | 2,710 | 3,346 | 3,129 | |||||||||||||||
General and administrative | 2,237 | 2,790 | 8,068 | 8,787 | 10,494 | |||||||||||||||
Depreciation | 431 | 533 | 1,320 | 1,673 | 1,987 | |||||||||||||||
Amortization of intangible assets | - | 10 | 370 | 13 | 20 | |||||||||||||||
Impairment of goodwill, long-lived assets and other assets | - | - | 1,145 | - | 265 | |||||||||||||||
Total cost and expenses | 18,914 | 20,717 | 49,637 | 70,923 | 81,523 | |||||||||||||||
Operating loss | (2,643 | ) | (3,513 | ) | (1,144 | ) | (9,180 | ) | (12,114 | ) | ||||||||||
Interest (income) expense and other, net | (188 | ) | (56 | ) | 162 | (238 | ) | (229 | ) | |||||||||||
Loss before income taxes | (2,455 | ) | (3,457 | ) | (1,306 | ) | (8,942 | ) | (11,885 | ) | ||||||||||
Provision for income taxes | 8,083 | 92 | 305 | 6,047 | 495 | |||||||||||||||
Net loss | $ | (10,538 | ) | $ | (3,549 | ) | $ | (1,611 | ) | $ | (14,989 | ) | $ | (12,380 | ) | |||||
Net loss per share - basic and diluted | $ | (0.51 | ) | $ | (0.15 | ) | $ | (0.08 | ) | $ | (0.72 | ) | $ | (0.54 | ) | |||||
Weighted average shares outstanding - basic and diluted | 20,816 | 23,938 | 20,591 | 20,781 | 22,795 | |||||||||||||||
Stock-based compensation: | |||||||||||||||
(in thousands) | |||||||||||||||
Three Months Ended December 31, | Year Ended December 31, | ||||||||||||||
2012 | 2013 | 2011 | 2012 | 2013 | |||||||||||
Cost of revenue | $ | 2 | $ | - | $ | 8 | $ | 8 | $ | - | |||||
Sales and marketing | 21 | 38 | 80 | 76 | 145 | ||||||||||
Customer service | 1 | - | - | 2 | - | ||||||||||
Technical operations | 29 | - | 119 | 118 | 4 | ||||||||||
Development | 11 | - | 42 | 42 | 10 | ||||||||||
General and administrative | 150 | 153 | 657 | 567 | 608 | ||||||||||
Reconciliation of Net Loss (Income) to Adjusted EBITDA: (in thousands) |
Three Months Ended December 31, | Years Ended December 31, |
||||||||||||||||||
2012 | 2013 | 2011 | 2012 | 2013 | ||||||||||||||||
Net loss | $ | (10,538 | ) | $ | (3,549 | ) | $ | (1,611 | ) | $ | (14,989 | ) | $ | (12,380 | ) | |||||
Interest | 16 | 18 | 102 | 59 | 71 | |||||||||||||||
Taxes | 8,083 | 92 | 305 | 6,047 | 495 | |||||||||||||||
Depreciation | 431 | 533 | 1,320 | 1,673 | 1,987 | |||||||||||||||
Amortization | - | 10 | 370 | 13 | 20 | |||||||||||||||
EBITDA | (2,008 | ) | (2,896 | ) | 486 | (7,197 | ) | (9,807 | ) | |||||||||||
Stock-based compensation | 214 | 191 | 906 | 813 | 767 | |||||||||||||||
Impairment of long-lived assets and other assets | - | - | 1,145 | - | 265 | |||||||||||||||
Non-cash currency translation adjustments | (201 | ) | (82 | ) | 337 | (124 | ) | (297 | ) | |||||||||||
Non-repetitive property possession | - | - | (247 | ) | (151 | ) | - | |||||||||||||
Adjusted EBITDA | $ | (1,995 | ) | $ | (2,787 | ) | $ | 2,627 | $ | (6,659 | ) | $ | (9,072 | ) | ||||||
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