- Total Paid Subscribers Grew from 831,000 to 838,000
Sequentially
- Zoosk Grew New Subscribers 17% Year Over Year and 7%
Sequentially
- Zoosk Grew Organic Traffic 19% Year Over Year
- Strategic Alternatives Review In Progress
BERLIN, Aug. 9, 2022
/PRNewswire/ -- Spark Networks SE (NASDAQ: LOV), a leading
social dating platform for meaningful relationships, today
reported financial results for its 2022 second quarter ended
June 30, 2022.
Eric Eichmann, CEO of Spark
Networks, commented, "We saw new subscriber growth of 17% year over
and a 19% increase in organic traffic year over year for our
largest brand Zoosk in the second quarter, as we began scaling our
user acquisition spend, supporting Zoosk's trajectory back to
revenue growth. We continue to make good progress on improving the
Zoosk user experience, which we believe will drive increased
adoption and renewals. As the fourth largest online
subscription-based dating company across North America and Europe by revenue, we remain focused on
successfully executing the well-developed roadmap of strategies and
investments we have in place to drive revenue growth and ultimately
shareholder value."
Second Quarter 2022 Financial Results
- Revenue was $48.0 million,
compared to $55.3 million in the
second quarter of 2021. On a constant currency basis
(1), revenue would have been $50.3 million in the second quarter of
2022.
- Net loss was $8.8 million,
compared to $49.0 million in the
second quarter of 2021.
- Adjusted EBITDA loss(2) was $1.7 million, compared to Adjusted EBITDA of
$8.6 million in the second 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-U.S. GAAP
measure, to U.S. GAAP.
Business Highlights
- Total Paid Subscribers: Total paid subscribers grew from
831,000 to 838,000 sequentially in the second quarter. Zoosk end of
period subscribers grew 4% year over year and 5% sequentially in
the second quarter.
- Zoosk Delivered Improving Growth Metrics: Zoosk new
subscribers grew 17% year over year and 7% sequentially in the
second quarter. Zoosk organic traffic grew 19% year over year.
- Product and Marketing Improvements: Spark
successfully expanded TV and radio ads during the quarter and is
adding other channels, including TikTok. Spark plans to roll out
new mobile apps by year-end.
- Strategic Review: A robust and active strategic
alternatives review process has been underway since June 2022.
Financial Outlook
"As we look to the rest of the year, due to a number of factors,
the largest of which is the appreciation of the U.S. dollar, we are
revising down our guidance for our full-year 2022 revenue," said
David Clark, Chief Financial Officer
of Spark Networks. "We now expect total revenue for the year to be
down low to mid-single digits on a percentage basis as compared to
2021. On a constant currency basis, we expect full-year 2022
revenue to be consistent with full-year 2021 revenue. On the
profitability side, although we expect full-year Adjusted EBITDA to
be lower than previously anticipated, we expect to deliver low
double-digit Adjusted EBITDA margins for the full year. It is
important to note that in periods of subscriber growth, revenue and
Adjusted EBITDA tend to lag as we recognize revenue over the entire
subscription length, while 100% of the user acquisition cost is
recognized ahead of this growth in the quarter that it is
incurred."
Investor Conference Call
Spark Networks management will host a conference call and live
webcast for analysts and investors today at 8:30 a.m. Eastern Time (5:30 a.m. Pacific Time) to discuss the Company's
financial results.
To access the live call, dial 1-800-225-9448 (US and
Canada) or +1 203-518-9708
(International) and ask to join the Spark Networks' call.
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 1-877-481-4010 (US) or +1
919-882-2331 (International) and enter the replay passcode:
46271.
About Spark Networks SE
Spark Networks SE (NASDAQ: LOV) is a leading social dating
platform for meaningful relationships focusing on the 40+
demographic and faith-based affiliations. Spark's widening
portfolio of premium and freemium dating apps include Zoosk,
EliteSingles, SilverSingles, Christian
Mingle, Jdate, and JSwipe, among others. Spark is
headquartered in Berlin, Germany,
with offices in New York and
Utah.
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 Spark Networks'
performance or achievements to be materially different from those
of any expected future results, performance, or achievements. These
statements include, without limitation, statements regarding
leading indicators revenue growth; our focus on successfully
executing the well-developed roadmap of strategies and investments
we have in place to drive revenue growth and ultimately shareholder
value in 2022 and beyond; our expectations with respect to
financial outlook for full year 2022 including with respect to
revenue and Adjusted EBITDA; Zoosk's trajectory back to revenue
growth; the scaling of our user acquisition spend; improvements to
the Zoosk user experience; increased adoption and renewals for
Zoosk; our plans to roll out new mobile apps by year end; the
expansion of our marketing channels; and the impact of the
appreciation of the U.S. dollar on our business.
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 Zoosk, Inc. may not be fully realized or may take longer to
realize than expected; risks related to the degree of competition
in the markets in which Spark Networks operates; risks related to
the ability of Spark Networks to retain and hire key personnel,
operating results and business generally; the timing and market
acceptance of new products introduced by Spark Networks'
competitors; Spark Networks' ability to identify potential
acquisitions; Spark Networks' ability to comply with new and
evolving regulations relating to data protection and data privacy;
general competition and price measures in the market place; risks
related to the duration and severity of COVID-19 and its impact on
Spark Networks' business; and general economic conditions.
Additional factors that could cause actual results to differ are
discussed under the heading "Risk Factors" in Spark Networks' most
recent Annual Report on Form 10-K and in other sections of Spark
Networks' filings with the Securities and Exchange Commission
("SEC"), and in Spark Networks' other current and periodic reports
filed or furnished from time to time with the SEC. All
forward-looking statements in this press release are made as of the
date hereof, based on information available to the Company as of
the date hereof, and the Company assumes no obligation to update
any forward-looking statement except as required by law.
For More Information
Investor contact:
MKR Investor Relations, Inc.
Todd Kehrli
lov@mkr-group.com
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
and Adjusted EBITDA. These measures are derived on the basis of
methodologies other than in accordance with U.S. GAAP.
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 Adjusted earnings before interest, taxes,
depreciation and amortization ("Adjusted EBITDA"), a non-U.S. GAAP
financial measure, is one of the primary metrics by which we
evaluate the performance of our business, 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 the ongoing operations and allows for
greater transparency with respect to key metrics used by senior
leadership in its financial and operational decision-making. We
define Adjusted EBITDA as net earnings (loss) excluding interest
expense, (gain) loss on foreign currency transactions, income tax
(benefit) expense, depreciation and amortization, asset
impairments, stock-based compensation expense, acquisition related
costs and other costs. Adjusted EBITDA has inherent limitations in
evaluating the performance of the Company,and you should not
consider these measures in isolation or as a substitute for
analyzing the Company's results as reported under U.S. GAAP. Some
of these limitations include:
- Adjusted EBITDA does not reflect the cash capital expenditures
during the measurement period;
- Adjusted EBITDA does not reflect any changes in working capital
requirements during the measurement period;
- Adjusted EBITDA does not reflect the cash tax payments during
the measurement period; and
- Adjusted EBITDA may be calculated differently by other
companies in our industry, thus limiting its value as a comparative
measure.
Because of these limitations, Adjusted EBITDA should be
considered in addition to other financial performance measures,
including net income (loss) and our other U.S. GAAP results.
A reconciliation of the Adjusted EBITDA for the three and six
months ended June 30, 2022 and 2021
can be found in the table below captioned "Reconciliation of Net
loss to Adjusted EBITDA."
Spark Networks
SE
|
Condensed
Consolidated Balance Sheets (Unaudited)
|
(in
thousands)
|
|
|
June 30,
2022
|
|
December 31,
2021
|
Assets
|
|
|
|
|
Cash and cash
equivalents
|
|
$
11,350
|
|
$
16,141
|
Accounts receivable,
net
|
|
5,584
|
|
6,261
|
Goodwill and intangible
assets
|
|
163,418
|
|
164,113
|
Other assets
|
|
24,313
|
|
23,286
|
Total
assets
|
|
$
204,665
|
|
$
209,801
|
Liabilities and
Shareholders' Equity
|
|
|
|
|
Current portion of
long-term debt
|
|
$
1,182
|
|
$
17,593
|
Accounts
payable
|
|
8,319
|
|
11,474
|
Deferred
revenue
|
|
34,877
|
|
36,973
|
Accrued expenses and
other current liabilities
|
|
25,690
|
|
27,042
|
Long-term debt, net of
current portion
|
|
93,343
|
|
64,531
|
Other
liabilities
|
|
18,828
|
|
19,495
|
Total
liabilities
|
|
182,239
|
|
177,108
|
Total shareholders'
equity
|
|
22,426
|
|
32,693
|
Total liabilities and
shareholders' equity
|
|
$
204,665
|
|
$
209,801
|
Spark Networks
SE
|
Condensed
Consolidated Statements of Operations (Unaudited)
|
(in
thousands)
|
|
|
|
|
|
|
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
Revenue
|
|
$
48,035
|
|
$
55,253
|
|
$
97,942
|
|
$
111,632
|
Operating costs and
expenses:
|
|
|
|
|
|
|
|
|
Cost of revenue,
exclusive of depreciation and amortization
|
|
36,356
|
|
32,881
|
|
70,602
|
|
69,799
|
Other operating costs
and expenses
|
|
15,097
|
|
49,308
|
|
31,135
|
|
67,749
|
Total operating costs
and expenses
|
|
51,453
|
|
82,189
|
|
101,737
|
|
137,548
|
Operating
loss
|
|
(3,418)
|
|
(26,936)
|
|
(3,795)
|
|
(25,916)
|
Other expense,
net
|
|
(5,150)
|
|
(3,220)
|
|
(12,536)
|
|
(8,404)
|
Loss before income
taxes
|
|
(8,568)
|
|
(30,156)
|
|
(16,331)
|
|
(34,320)
|
Income tax (expense)
benefit
|
|
(193)
|
|
(18,871)
|
|
99
|
|
(21,211)
|
Net loss
|
|
$
(8,761)
|
|
$
(49,027)
|
|
$
(16,232)
|
|
$
(55,531)
|
Reconciliation of
Net loss to Adjusted EBITDA (Unaudited):
|
|
|
|
|
|
|
|
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
(in
thousands)
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
Net
loss
|
|
$
(8,761)
|
|
$
(49,027)
|
|
$
(16,232)
|
|
$
(55,531)
|
Interest
expense
|
|
2,706
|
|
3,802
|
|
9,588
|
|
7,242
|
Loss (gain) on foreign
currency transactions
|
|
2,441
|
|
(584)
|
|
3,208
|
|
1,144
|
Income tax expense
(benefit)
|
|
193
|
|
18,871
|
|
(99)
|
|
21,211
|
Depreciation and
amortization
|
|
577
|
|
2,298
|
|
1,180
|
|
4,588
|
Impairment of goodwill
and intangible assets
|
|
—
|
|
32,086
|
|
—
|
|
32,086
|
Stock-based
compensation expense
|
|
490
|
|
580
|
|
992
|
|
1,616
|
Other
costs(1)
|
|
614
|
|
615
|
|
636
|
|
1,410
|
Adjusted
EBITDA
|
|
$
(1,740)
|
|
$
8,641
|
|
$
(727)
|
|
$
13,766
|
(1) Includes primarily consulting and
advisory fees related to special projects, as well as non-cash
acquisition related expenses, post-merger integration activities
and long-term debt transaction and advisory fees.
|
Spark Networks
SE
|
Condensed
Consolidated Statements of Cash Flows (Unaudited)
|
(in
thousands)
|
|
|
|
Six Months Ended
June 30,
|
|
|
2022
|
|
2021
|
Net loss
|
|
$
(16,232)
|
|
$
(55,531)
|
Adjustments to
reconcile net loss to net cash (used in) provided by operating
activities:
|
|
|
|
|
Non-cash items and
other non-operating charges
|
|
12,536
|
|
64,183
|
Change in operating
assets and liabilities
|
|
(6,999)
|
|
(4,023)
|
Net cash (used in)
provided by operating activities
|
|
(10,695)
|
|
4,629
|
Capital
expenditures
|
|
(1,268)
|
|
(661)
|
Net cash used in
investing activities
|
|
(1,268)
|
|
(661)
|
|
|
|
|
|
Net cash provided by
(used in) financing activities
|
|
7,774
|
|
(13,610)
|
Effects of exchange
rate fluctuations on cash and cash equivalents and restricted
cash
|
|
(613)
|
|
(275)
|
Net decrease in cash
and cash equivalents and restricted cash
|
|
(4,802)
|
|
(9,917)
|
|
|
|
|
|
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
|
|
$
11,477
|
|
$
11,200
|
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SOURCE Spark Networks SE