Press Releases

BEVERLY HILLS, CA--(Marketwire - Mar 1, 2012) - Spark Networks, Inc. (NYSE Amex: LOV), a leading provider of online personals services, today reported financial results for the fourth quarter and full year ended December 31, 2011.

		Q4 2011				Full Year 2011
Revenue		$	12.9 Million			$	48.5 Million
Contribution Margin			41	%			47	%
Net Loss		$	1.1 Million			$	1.6 Million
Net Loss Per Share		$	0.05			$	0.08

"2011 was a year of many 'firsts' for us. Most notably, we objectively demonstrated Spark is more than just Jewish Networks with our Other Affinity Networks subscriber base cresting 100,000 and surpassing that of our Jewish Networks segment," said Greg Liberman, Spark's President and Chief Executive Officer. "The 78% increase in Other Affinity Networks revenue drove company-wide revenue up 19% for the year, the first time since 2006 we have grown annual revenue. And, that revenue growth was driven by an increase in subscribers, with company-wide average paying subscribers¹ up 21% for the year behind a 60% increase in Other Affinity Networks average paying subscribers."

"Not only am I pleased to report our full year results, but also another solid quarter, as company-wide revenue and average paying subscribers grew 27% and 32%, respectively, powered by Other Affinity Networks' 114% increase in revenue and 89% increase in average paying subscribers when compared to Q4 2010."

Financial Results
Revenue for the fourth quarter of 2011 was $12.9 million, an increase of 27% compared to $10.1 million for the fourth quarter of 2010, and an increase of 1% compared to $12.7 million in the prior quarter. Full year 2011 revenue was $48.5 million, a 19% increase compared to $40.9 million for full year 2010.

Contribution² for the fourth quarter of 2011 was $5.2 million, a decrease of 24% compared to $6.9 million for the fourth quarter of 2010, and a 15% decrease compared to $6.2 million in the prior quarter. Full year 2011 contribution was $22.8 million, a 24% decrease compared to $30.1 million for full year 2010.

Total cost and expenses for the fourth quarter of 2011 were $13.5 million, a 51% increase compared to $9.0 million in the fourth quarter of 2010, and a 7% increase compared to $12.7 million in the prior quarter. Full year total cost and expenses were $49.6 million, a 43% increase compared to $34.6 million for full year 2010.

Net loss for the fourth quarter of 2011 was $1.1 million, or $0.05 per share, compared to net income of $626,000 or $0.03 per share, for the fourth quarter of 2010 and a net loss of $238,000 or $0.01 per share for the prior quarter. Full year 2011 net loss was $1.6 million, or $0.08 per share, compared to net income of $3.7 million or $0.18 per share for full year 2010.

Adjusted EBITDA³ for the fourth quarter of 2011 was $1.0 million, a decrease of 47% compared to $2.0 million for the fourth quarter of 2010, and an increase of 61% compared to $639,000 in the prior quarter. A 173% increase in Other Affinity Networks direct marketing expense accounted for a substantial portion of the decrease in year-over-year Adjusted EBITDA results. Full year 2011 Adjusted EBITDA was $2.6 million, a 72% decrease compared to $9.4 million for full year 2010.

Average paying subscribers for the Company, as a whole, in the fourth quarter of 2011 were 212,850, an increase of 32% compared to 160,744 for the fourth quarter of 2010 and a 3% increase compared to 206,099 for the prior quarter. Full year 2011 average paying subscribers were 196,850, a 21% increase compared to 162,311 for full year 2010.

Segment Reporting⁴

Fourth quarter 2011 revenue for Jewish Networks was $6.7 million, a decrease of 3% compared to $6.9 million in the fourth quarter of 2010 and flat compared to the prior quarter. Full year 2011 Jewish Networks revenue was $27.1 million, a decrease of 1% compared to $27.4 million for full year 2010.

Fourth quarter 2011 revenue for Other Affinity Networks was $5.9 million, an increase of 114% compared to $2.8 million in fourth quarter 2010, and an increase of 4% compared to $5.7 million in the prior quarter. Full year 2011 Other Affinity Networks revenue was $20.1 million, a 78% increase compared to $11.3 million for full year 2010.

Fourth quarter 2011 revenue for General Market Networks was $107,000, a decrease of 55% compared to $236,000 in fourth quarter 2010, and a 16% decrease compared to $127,000 in the prior quarter. Full year 2011 General Market Networks revenue was $578,000, a 51% decrease compared to $1.2 million for full year 2010.

Fourth quarter 2011 revenue for Offline & Other Businesses was $105,000, a decrease of 34% compared to $160,000 in fourth quarter 2010, and a 5% decrease compared to $111,000 in the prior quarter. Full year 2011 Offline & Other Businesses revenue was $772,000, a 20% decrease compared to $964,000 for full year 2010.

Average paying subscribers for Jewish Networks were 87,101 during the fourth quarter of 2011, a decrease of 3% compared to 89,723 in the fourth quarter of 2010, and a decrease of 2% compared to 88,976 in the prior quarter. Full year 2011 Jewish Networks average paying subscribers were 89,429, a decrease of 1% compared to 90,452 for full year 2010.

Average paying subscribers for Other Affinity Networks were 123,139 during the fourth quarter of 2011, an increase of 89% compared to 65,172 in the fourth quarter of 2010 and an increase of 8% compared to 113,972 in the prior quarter. Full year Other Affinity Networks average paying subscribers were 103,768, an increase of 60% compared to 64,851 for full year 2010.

Average paying subscribers for General Market Networks were 2,158 during the fourth quarter of 2011, a decrease of 58% compared to 5,174 in the fourth quarter of 2010, and a decrease of 20% compared to 2,702 in the prior quarter. Full year 2011 General Market Networks average paying subscribers were 3,138, a decrease of 50% compared to 6,328 for full year 2010.

Balance Sheet, Cash, Debt

As of December 31, 2011, the Company had cash and cash equivalents of $15.1 million, an increase of 8.7% compared to $13.9 million at December 31, 2010. As of December 31, 2011, the Company had no outstanding debt.

Investor Conference Call

The Company will discuss its financial results during a live teleconference today at 1:30 p.m. Pacific time.

Call Title:	Spark Networks Q4 '11 Financial Results
Toll-Free (United States):	1-888-634-7543
International:	1-719-325-2106
Passcode:	1049461
Digital Replay through March 15, 2012:
Toll-Free (United States):	1-888-203-1112
International:	1-719-457-0820
Passcode:	1049461

In addition, the Company will host a webcast of the call which will be accessible in the Investor Relations section of the Company's Web site under "Conference Calls and Presentations" at: http://www.spark.net/investor.htm.

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; identify and consummate strategic acquisitions and integrate acquired companies or assets; obtain financing on acceptable terms; and successfully implement both cost cutting initiatives and our current long-term growth strategy. For a discussion of these and further risks and uncertainties, please see our filings with the Securities and Exchange Commission. We file annual, quarterly and current reports, proxy statements and other information with the SEC. You may read and copy any reports, statements or other information that we file at the SEC's public reference room at 100 F Street, N.E., Washington, D.C., 20549. Please call the SEC at 1-800-SEC-0330 for further information on the public reference room. Our public filings with the SEC also are available from commercial document retrieval services and at the Web site maintained by the SEC at http://www.sec.gov/.

About Spark Networks, Inc.:

The Spark Networks portfolio of consumer websites includes, among others, JDate^®.com (www.jdate.com), Spark^®.com (www.spark.com), BlackSingles.com^® (www.blacksingles.com), ChristianMingle^®.com (www.christianmingle.com) and SilverSingles®.com (www.silversingles.com).

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 and "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 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 General Market Networks segment consists of the Company's Spark.com Web site (formerly known as AmericanSingles.com, Date.co.uk and Date.ca) and its co-branded and private label Web sites. The Other Affinity Networks segment consists of all of the Company's Provo, Utah-based properties which primarily consist of sites targeted at various religious, ethnic, geographic and special interest groups including BlackSingles.com, ChristianMingle.com and SilverSingles.com. The Offline & Other Businesses segment consists of revenue generated from offline activities and HurryDate events and subscriptions.

(Consolidated financial statements to follow)

SPARK NETWORKS, INC.
BALANCE SHEET
(in thousands, except share data)
						December 31,				December 31,
						2011				2010
Assets
Current assets:
	Cash and cash equivalents					$	15,106			$	13,901
	Restricted cash						958				996
	Accounts receivable						1,146				847
	Deferred tax asset - current						44				43
	Prepaid expenses and other						1,164				911
		Total current assets					18,418				16,698
Property and equipment, net							2,839				2,520
Goodwill							8,683				9,156
Intangible assets, net							1,900				3,017
Deferred tax asset - non-current							5,641				4,882
Deposits and other assets							455				295
			Total assets			$	37,936			$	36,568
Liabilities and Stockholders' Equity
Current liabilities:
	Accounts payable					$	952			$	1,371
	Accrued liabilities						4,046				3,635
	Deferred revenue						5,723				4,331
	Deferred tax liability - current						203				--
		Total current liabilities					10,924				9,337
Deferred tax liability							1,219				825
Other liabilities non-current							1,141				1,036
			Total liabilities				13,284				11,198
Commitments and contingencies							--				--
Stockholders' equity:
Authorized capital stock consists of 100,000,000 Common Stock, $0.001 par value; issued and outstanding 20,594,670 at December 31, 2011 and 20,587,336 shares as of December 31, 2010, at stated values of:							21				21
			Additional paid-in-capital				53,014				52,020
			Accumulated other comprehensive income				672				773
			Accumulated deficit				(29,055	)			(27,444	)
			Total stockholders' equity				24,652				25,370
				Total liabilities and stockholders' equity		$	37,936			$	36,568

 

SPARK NETWORKS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited, in thousands, except per share data)
			Three Months Ended December 31,								Years Ended December 31,
			2011				2010				2011				2010				2009
Revenue			$	12,861			$	10,109			$	48,493			$	40,851			$	45,388
Cost and expenses:
	Cost of revenue (exclusive of depreciation shown separately below)			8,420				4,002				28,955				13,749				15,207
	Sales and marketing			1,062				788				3,722				3,496				3,507
	Customer service			539				420				1,980				1,601				1,832
	Technical operations			281				302				1,367				1,232				1,504
	Development			643				760				2,710				3,092				3,895
	General and administrative			1,071				2,141				8,068				9,782				9,932
	Depreciation			343				263				1,320				962				873
	Amortization of intangible assets			89				97				370				421				663
	Impairment of intangible assets and other assets			1,100				187				1,145				308				11,999
Total cost and expenses				13,548				8,960				49,637				34,643				49,412
Operating (loss) income				(687	)			1,149				(1,144	)			6,208				(4,024	)
Interest expense (income) and other, net				144				(72	)			162				(54	)			(1,099	)
(Loss) income before income taxes				(831	)			1,221				(1,306	)			6,262				(2,925	)
Provision for income taxes				277				595				305				2,558				3,479
Net (loss) income			$	(1,108	)		$	626			$	(1,611	)		$	3,704			$	(6,404	)
Net (loss) income per share - basic and diluted			$	(0.05	)		$	0.03			$	(0.08	)		$	0.18			$	(0.31	)
Weighted average shares outstanding - basic				20,595				20,587				20,591				20,586				20,570
Weighted average shares outstanding - diluted				20,595				20,588				20,591				20,590				20,570

 

			Three Months						Twelve Months
			Ended December 31,						Ended December 31,
Stock-Based Compensation			2011			2010			2011			2010			2009
	(in thousands)
Cost of revenue			$	2		$	3		$	8		$	11		$	17
Sales and marketing				15			35			80			233			184
Customer service				-			-			-			1			(14	)
Technical operations				31			33			119			167			158
Development				10			12			42			54			29
General and administrative				125			187			657			1,044			667

 

Reconciliation of Net Income to Adjusted EBITDA:
			Three Months Ended								Years Ended
	(in thousands)		December 31,								December 31,
			2011				2010				2011				2010				2009
Net (loss) income			$	(1,108	)		$	626			$	(1,611	)		$	3,704			$	(6,404	)
Interest				13				51				102				207				378
Taxes				277				595				305				2,558				3,479
Depreciation				343				263				1,320				962				873
Amortization				89				97				370				421				663
EBITDA				(386	)			1,632				486				7,852				(1,011	)
Stock-based compensation				183				270				906				1,510				1,041
Impairment of intangible assets and other assets				1,100				187				1,145				308				11,999
Non-cash currency translation adjustments				132				(133	)			337				(269	)			(30	)
Non-repetitive property possession				--				--				(247	)			--				(1,507	)
Adjusted EBITDA			$	1,029			$	1,956			$	2,627			$	9,401			$	10,492

 

SPARK NETWORKS, INC.
SEGMENT RESULTS FROM OPERATIONS
(in thousands except subscriber information)
			Three Months Ended							Years Ended
			December 31,							December 31,
			2011				2010			2011				2010			2009
Revenue
Jewish Networks			$	6,700			$	6,930		$	27,054			$	27,440		$	28,842
Other Affinity Networks				5,949				2,783			20,089				11,279			12,771
General Market Networks				107				236			578				1,168			2,692
Offline & Other Businesses				105				160			772				964			1,083
	Total Revenue		$	12,861			$	10,109		$	48,493			$	40,851		$	45,388
Direct Marketing Expenses
Jewish Networks			$	929			$	586		$	3,389			$	2,321		$	2,346
Other Affinity Networks				6,640				2,436			21,459				7,292			8,502
General Market Networks				17				175			364				582			676
Offline & Other Businesses				49				62			512				535			541
	Total Direct Marketing Expenses		$	7,635			$	3,259		$	25,724			$	10,730		$	12,065
Contribution
Jewish Networks			$	5,771			$	6,344		$	23,665			$	25,119		$	26,496
Other Affinity Networks				(691	)			347			(1,370	)			3,987			4,269
General Market Networks				90				61			214				586			2,016
Offline & Other Businesses				56				98			260				429			542
	Total Contribution		$	5,226			$	6,850		$	22,769			$	30,121		$	33,323
Average Paying Subscribers
Jewish Networks				87,101				89,723			89,429				90,452			86,030
Other Affinity Networks				123,139				65,172			103,768				64,851			66,078
General Market Networks				2,158				5,174			3,138				6,328			13,219
Offline & Other Businesses				452				675			515				680			940
	Total Average Paying Subscribers			212,850				160,744			196,850				162,311			166,267

Contact Information

For More Information
Investors:
Brett Zane
+ 1-323-658-3000 ext. 4001
Email Contact