Press Release
Spark Networks SE Reports First Half 2019 Results
"With the completion of the Zoosk acquisition, 2019 is already the most transformational year in Spark's history," said
"I am very excited by what the future holds for Spark. We operate in a highly attractive industry and have built a large and cash generating business upon a foundation of strong brands. We now have both a leadership position in the North American market and a clear roadmap in place to capitalize on the assets we own. In the near-term, our roadmap is centered on continuing to right-size the business to secure our profitability goal of delivering over
Financial Results
- Revenue for the first half of 2019 was €49.2 million, a decrease of 7.1% from €53.0 million in the first half of 2018, and a decrease of 4.5% from €51.5 million in the second half of 2018. The year over year decrease was attributable to the 9.0% decrease in the number of Average Paying Subscribers offset by the 2.0% increase in Monthly Average Revenue Per User, or Monthly ARPU.
- Net Loss was €4.9 million in the first half of 2019, an increase of €3.8 million compared to €1.1 million in the first half of 2018, and an increase of €2.9 million compared to €2.0 million in the second half of 2018. The year over year increase in Net Loss was primarily attributable to higher professional fees related to the merger with
Zoosk, Inc. that closed in the second half of 2019, and an increase in income tax expense in the first half of 2019, compared to an income tax benefit recognized in the same period of 2018. - Adjusted EBITDA was €3.8 million in the first half of 2019, an increase of €1.4 million compared to €2.4 million in the first half of 2018, and a reduction of €4.7 million compared to €8.5 million in the second half of 2018.
- The Company ended the first half of 2019 with €12.5 million in cash and €11.3 million in debt.
Key Performance Indicators
- Average Paying Subscribers decreased 9.0% to 444.9 thousand in the first half of 2019, compared to 489.0 thousand in the same period of 2018.
- Monthly ARPU increased 2.0% to €18.44 in the first half of 2019, compared to €18.07 in the same period of 2018.
Financial Outlook
- Spark is focused on completing the post-close merger integration of the Zoosk Acquisition as efficiently as possible, and we believe our efforts will result in at least
$50 million of Adjusted EBITDA in 2020. - Spark's 2020 Adjusted EBITDA assumes
$15 million of realized cost synergies in 2020, which the Company is on-pace to achieve.
Key Metrics - Half Year
Six months ended |
Growth Rates % |
|||||||||||||
6/30/2019 |
12/31/2018 |
6/30/2018 |
1st Half 2019 vs. |
|||||||||||
1st Half 2019 |
2nd Half 2018 |
1st Half 2018 |
2nd Half 2018 |
1st Half 2018 |
||||||||||
Revenue |
€49.2 Million |
€51.5 Million |
€53.0 Million |
(4.5) |
% |
(7.1) |
% |
|||||||
Contribution1 |
€20.4 Million |
€24.2 Million |
€20.4 Million |
(16.0) |
% |
(0.3) |
% |
|||||||
Net loss |
€(4.9) Million |
€(2.0) Million |
€(1.1) Million |
149.2 |
% |
324.9 |
% |
|||||||
Adjusted EBITDA2 |
€3.8 Million |
€8.5 Million |
€2.4 Million |
(55.0) |
% |
57.6 |
% |
|||||||
Cash Balance |
€12.5 Million |
€11.1 Million |
€8.1 Million |
12.4 |
% |
54.9 |
% |
|||||||
Total Registrations3 |
4,488,104 |
4,791,652 |
5,352,521 |
(6.3) |
% |
(16.1) |
% |
|||||||
Avg. Paying Subs4 |
444,857 |
477,817 |
489,024 |
(6.9) |
% |
(9.0) |
% |
|||||||
Monthly ARPU5 |
€18.44 |
€17.98 |
€18.07 |
2.6 |
% |
2.0 |
% |
SPARK NETWORKS SE |
|||||||||||||||||
SEGMENT6 RESULTS FROM OPERATIONS |
|||||||||||||||||
(Revenue, Direct Marketing and Contribution figures in € thousands) |
|||||||||||||||||
Six Months Ended |
Growth Rates % |
||||||||||||||||
6/30/2019 |
12/31/2018 |
6/30/2018 |
1st Half 2019 vs. |
||||||||||||||
1st Half 2019 |
2nd Half 2018 |
1st Half 2018 |
2nd Half 2018 |
1st Half 2018 |
|||||||||||||
# of Registrations |
|||||||||||||||||
North America |
2,224,249 |
2,243,178 |
2,133,705 |
(0.8) |
% |
4.2 |
% |
||||||||||
International |
2,263,855 |
2,548,474 |
3,218,816 |
(11.2) |
% |
(29.7) |
% |
||||||||||
Total # of Registrations |
4,488,104 |
4,791,652 |
5,352,521 |
(6.3) |
% |
(16.1) |
% |
||||||||||
Average Paying Subscribers |
|||||||||||||||||
North America |
185,364 |
189,533 |
178,101 |
(2.2) |
% |
4.1 |
% |
||||||||||
International |
259,493 |
288,284 |
310,923 |
(10.0) |
% |
(16.5) |
% |
||||||||||
Total Average Paying Subscribers |
444,857 |
477,817 |
489,024 |
(6.9) |
% |
(9.0) |
% |
||||||||||
Monthly ARPU |
|||||||||||||||||
North America |
€ |
23.88 |
€ |
22.45 |
€ |
21.47 |
6.4 |
% |
11.2 |
% |
|||||||
International |
€ |
14.56 |
€ |
15.03 |
€ |
16.12 |
(3.1) |
% |
(9.7) |
% |
|||||||
Total Monthly ARPU |
€ |
18.44 |
€ |
17.98 |
€ |
18.07 |
2.6 |
% |
2.0 |
% |
|||||||
Total Net Revenue |
|||||||||||||||||
North America |
€ |
26,561 |
€ |
25,531 |
€ |
22,939 |
4.0 |
% |
15.8 |
% |
|||||||
International |
€ |
22,663 |
€ |
26,006 |
€ |
30,075 |
(12.9) |
% |
(24.6) |
% |
|||||||
Total Net Revenue |
€ |
49,224 |
€ |
51,537 |
€ |
53,014 |
(4.5) |
% |
(7.1) |
% |
|||||||
Direct Marketing |
|||||||||||||||||
North America |
€ |
16,160 |
€ |
13,277 |
€ |
14,585 |
21.7 |
% |
10.8 |
% |
|||||||
International |
€ |
12,706 |
€ |
14,026 |
€ |
18,000 |
(9.4) |
% |
(29.4) |
% |
|||||||
Total Direct Marketing |
€ |
28,866 |
€ |
27,303 |
€ |
32,585 |
5.7 |
% |
(11.4) |
% |
|||||||
Contribution |
|||||||||||||||||
North America |
€ |
10,401 |
€ |
12,254 |
€ |
8,354 |
(15.1) |
% |
24.5 |
% |
|||||||
International |
€ |
9,957 |
€ |
11,980 |
€ |
12,075 |
(16.9) |
% |
(17.5) |
% |
|||||||
Total Contribution |
€ |
20,358 |
€ |
24,234 |
€ |
20,429 |
(16.0) |
% |
(0.3) |
% |
Investor Conference Call
The Group will discuss its financial results during a live teleconference today at
Toll-Free (United States): |
1-877-705-6003 |
Toll-Free (Germany): |
0-800-182-0040 |
International: |
1-201-493-6725 |
In addition, the Group will host a webcast of the call which will be accessible in the Investor Relations section of the Group's website at https://investor.spark.net/investor-relations/home.
A replay will begin approximately three hours after completion of the call and run until
Replay |
|
Toll-Free (United States): |
1-844-512-2921 |
International: |
1-412-317-6671 |
Passcode: |
13693171 |
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.
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. These forward-looking statements include statements regarding the expected cost synergies of the combined company, the launch of new products, and our positioning to deliver Adjusted EBITDA of over
About
For More Information
Investors:
Chief Financial Officer
rohare@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 the Group's Consolidated Statements of Operations and Comprehensive Loss.
2 Adjusted EBITDA is not a measure defined by IFRS. The most directly comparable IFRS measure for Adjusted EBITDA is our net (loss)/profit 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, including: (i) non-cash items such as share-based compensation, asset impairments, net finance expenses 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 including severance, transaction advisory fees, and merger integration costs, and (iii) discontinued operations. Adjusted EBITDA should not be construed as a substitute for net 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 June 30, 2019 and June 30, 2018, and the six months ended
Statements regarding our positioning to deliver Adjusted EBITDA for 2020 in excess of
Adjusted EBITDA is defined as earnings before interest, taxes, depreciation, amortization, share-based compensation, impairment of intangible assets and goodwill, and non-recurring 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, the Group's financial reporting includes detailed data on two separate operating segments. The
SPARK NETWORKS SE |
|||||||
CONSOLIDATED BALANCE SHEETS |
|||||||
(in € thousands) |
|||||||
June 30, 2019 (unaudited) |
December 31, 2018 |
||||||
ASSETS |
|||||||
Non-current assets |
46,684 |
44,729 |
|||||
Intangible assets and goodwill |
34,394 |
33,015 |
|||||
Internally generated software |
5,856 |
2,221 |
|||||
Licenses and domains |
185 |
209 |
|||||
Brands and trademarks |
4,839 |
4,894 |
|||||
Purchased software |
18 |
23 |
|||||
Intangible assets under development |
1,703 |
3,691 |
|||||
Other intangible assets |
863 |
1,173 |
|||||
Goodwill |
20,930 |
20,804 |
|||||
Property, plant and equipment |
2,804 |
2,015 |
|||||
Leasehold improvements |
98 |
127 |
|||||
Other and office equipment |
1,675 |
1,884 |
|||||
Property, plant and equipment under construction |
— |
4 |
|||||
Right-of-use assets |
1,031 |
— |
|||||
Other non-current financial assets |
21 |
24 |
|||||
Other non-current non-financial assets |
237 |
271 |
|||||
Deferred tax assets |
9,228 |
9,404 |
|||||
Current assets |
19,123 |
18,133 |
|||||
Current trade and other receivables |
6,604 |
7,004 |
|||||
Trade receivables |
2,924 |
3,042 |
|||||
Other current financial assets |
1,449 |
914 |
|||||
Other assets |
2,231 |
3,048 |
|||||
Current income tax assets |
48 |
34 |
|||||
Cash and cash equivalents |
12,471 |
11,095 |
|||||
TOTAL ASSETS |
65,807 |
62,862 |
|||||
SHAREHOLDERS' EQUITY AND LIABILITIES |
|||||||
Shareholders' equity |
16,534 |
19,409 |
|||||
Subscribed capital |
1,317 |
1,317 |
|||||
Capital reserves |
49,741 |
49,365 |
|||||
Share-based payment reserve |
5,772 |
4,149 |
|||||
Accumulated deficit |
(41,030) |
(36,156) |
|||||
Accumulated other comprehensive income |
734 |
734 |
|||||
Non-current liabilities |
1,924 |
9,582 |
|||||
Non-current borrowings |
— |
8,375 |
|||||
Other non-current provisions |
16 |
16 |
|||||
Other non-current financial liabilities |
709 |
54 |
|||||
Deferred tax liabilities |
1,195 |
1,132 |
|||||
Non-current contract liabilities |
4 |
5 |
|||||
Current liabilities |
47,349 |
33,871 |
|||||
Current borrowings |
11,291 |
3,750 |
|||||
Other current provisions |
518 |
305 |
|||||
Current trade and other payables |
19,934 |
12,863 |
|||||
Trade payables |
17,092 |
10,166 |
|||||
Other current financial liabilities |
1,060 |
878 |
|||||
Other liabilities |
1,782 |
1,819 |
|||||
Current income tax liabilities |
77 |
349 |
|||||
Current contract liabilities |
15,529 |
16,604 |
|||||
Total liabilities |
49,273 |
43,453 |
|||||
TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES |
65,807 |
62,862 |
SPARK NETWORKS SE |
|||||||||
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS |
|||||||||
(unaudited, in € thousands, except per share data) |
|||||||||
Six Months Ended |
|||||||||
6/30/2019 |
12/31/2018 |
6/30/2018 |
|||||||
Revenue |
49,224 |
51,537 |
53,014 |
||||||
Cost of revenue |
(33,301) |
(32,140) |
(37,350) |
||||||
Gross profit |
15,923 |
19,397 |
15,664 |
||||||
Other income |
— |
216 |
24 |
||||||
Other operating expenses |
(20,277) |
(18,788) |
(17,511) |
||||||
Sales and marketing expenses |
(2,726) |
(2,481) |
(2,457) |
||||||
Customer service expenses |
(2,293) |
(2,278) |
(2,348) |
||||||
Technical operations and development expenses |
(4,154) |
(3,821) |
(3,374) |
||||||
General and administrative expenses |
(11,104) |
(10,208) |
(9,332) |
||||||
Operating (loss)/income |
(4,354) |
825 |
(1,823) |
||||||
Interest income and similar income |
423 |
264 |
214 |
||||||
Interest expense and similar charges |
(542) |
(658) |
(778) |
||||||
Net finance expenses |
(119) |
(394) |
(564) |
||||||
(Loss)/income before taxes |
(4,473) |
431 |
(2,387) |
||||||
Income tax (expense) benefit |
(401) |
(2,387) |
1,240 |
||||||
Net loss |
(4,874) |
(1,956) |
(1,147) |
||||||
Other comprehensive income |
— |
790 |
827 |
||||||
Total comprehensive loss |
(4,874) |
(1,166) |
(320) |
||||||
Earnings per share |
|||||||||
Basic earnings/(loss) per share (€) |
(3.75) |
(1.51) |
(0.89) |
||||||
Diluted earnings/(loss) per share (€) |
(3.75) |
(1.51) |
(0.89) |
||||||
Reconciliation of Net Loss to Adjusted EBITDA: |
|||||||||
Net loss |
(4,874) |
(1,956) |
(1,147) |
||||||
Net finance expenses |
119 |
394 |
564 |
||||||
Income tax expense (benefit) |
401 |
2,387 |
(1,240) |
||||||
Depreciation and amortization |
1,653 |
1,928 |
1,637 |
||||||
Share-based compensation expense |
2,075 |
2,314 |
1,777 |
||||||
Non-recurring costs |
4,459 |
129 |
841 |
||||||
Adjusted EBITDA(2) |
3,833 |
8,520 |
2,432 |
||||||
Summary of non-recurring costs: |
|||||||||
Contract liabilities write-offs |
— |
— |
289 |
||||||
Transaction and advisory fees |
4,413 |
— |
264 |
||||||
Merger integration costs |
— |
87 |
14 |
||||||
Severance costs |
46 |
42 |
274 |
||||||
Total adjustments |
4,459 |
129 |
841 |
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