Q4 2009 12 Mos. 2009
--------------- ---------------
Revenue $ 11.1 Million $ 45.4 Million
Contribution Margin 71% 73%
Net Loss $ (9.6) Million $ (6.4) Million
Loss Per Share $ (0.47) $ (0.31)
"It's no surprise to anyone following us this past year that 2009 was
extremely challenging for us as revenue declined by 21% with nearly half of
the decline coming from our highly profitable Jewish Networks segment,"
said Adam Berger, Spark's Chairman and Chief Executive Officer.
"We accelerated our cost cutting program to offset the revenue decline but
were unable to overcome the $8.9 million contribution(1) decline and ended
up suffering a $5.7 million decline in Adjusted EBITDA. While nobody is
pleased with our 2009 results, we were able to re-build the Jewish
Networks' subscriber base with 4% more average subscribers in the fourth
quarter of 2009 than in the fourth quarter of 2008, and 5% more than the
third quarter of 2009, albeit at lower average revenue per subscriber."
Financial Results
Revenue for the fourth quarter of 2009 was $11.1 million, a decrease of 16%
compared to $13.2 million for the fourth quarter 2008, and flat with the
prior quarter. Revenue for the full year was $45.4 million, a decrease of
21% compared to $57.3 million for the 12 months ended December 31, 2008.
Contribution for the fourth quarter of 2009 was $7.9 million, a decrease of
19% compared to $9.7 million for the fourth quarter of 2008, and a 2%
decrease compared to $8.0 million in the prior quarter. Contribution for
the full year decreased 21% to $33.3 million compared to $42.3 million for
2008.
Operating expenses for the fourth quarter of 2009 were $17.0 million
compared to $8.5 million for the fourth quarter of 2008 and $6.0 million in
the prior quarter. The sequential increase in operating expenses can be
primarily attributed to the $11.1 million asset impairment charge,
reflecting a reduction in the book carrying value of assets under the Other
Affinity Networks segment and the final HurryDate earn-out payment.
Operating expenses for the full year were $37.3 million, a 13% increase
compared to $32.9 million for last year. Operating expenses for the full
year 2009 and 2008 include a $12.0 and $1.4 million charge, respectively,
associated with a reduction in goodwill and other assets.
Net loss for the fourth quarter of 2009 was $9.6 million, or $0.47 per
share, compared to net loss of $164,000, or $0.01 per share, for the fourth
quarter of 2008. A significant portion of the difference in net loss can
be attributed to the $11.1 million asset impairment charge. In 2008, net
income was reduced by a $1.2 million asset impairment charge, reflecting a
reduction in the value of the HurryDate assets.
Net loss for the full year of 2009 was $6.4 million, or $0.31 per share,
compared to net income of $4.8 million, or $0.20 per share in 2008. The
difference in net income can be primarily attributed to the $12.0 million
asset impairment charge.
Adjusted EBITDA(2) for the fourth quarter of 2009 was $2.5 million, a
decrease of 31% compared to $3.7 million for the fourth quarter of 2008,
and a decrease of 3% compared to $2.6 million in the prior quarter.
Adjusted EBITDA for the full year of 2009 was $10.5 million, a decrease of
35% compared to $16.2 million for 2008. See the attached Consolidated
Statements of Income for a reconciliation of EBITDA and Adjusted EBITDA to
net income.
Average paying subscribers(3) for the Company, as a whole, in the fourth
quarter of 2009 were 168,646, a decrease of 5% compared to 177,011 for the
fourth quarter of 2008. Average paying subscribers for the full year were
166,267, a decrease of 11% compared to 186,957 for last year.
Segment Reporting(4)
Fourth quarter 2009 revenue for Jewish Networks was $7.1 million, a
decrease of 11% compared to $8.0 million for the fourth quarter of 2008,
and flat with the prior quarter. Revenue from Jewish Networks for the full
year was $28.8 million, a decrease of 15% compared to $33.7 million for
last year.
Fourth quarter 2009 revenue for General Market Networks was $477,000, a
decrease of 63% compared to $1.3 million for the fourth quarter of 2008,
and a 17% decrease compared to $574,000 in the prior quarter. General
Market Networks' revenue for the full year was $2.7 million, a decrease of
65% compared to $7.8 million for 2008. The planned decrease in revenue for
General Market Networks is largely attributable to an 81% decrease in the
marketing spends for this segment in 2009 compared to 2008.
Fourth quarter 2009 revenue for Other Affinity Networks was $3.0 million, a
decrease of 15% compared to $3.5 million for the fourth quarter of 2008.
Other Affinity Networks revenue for the full year was $12.8 million, a
decrease of 7% compared to $13.7 million for 2008.
Fourth quarter 2009 revenue for Offline & Other Businesses was $485,000, an
increase of 9% compared to $446,000 for the fourth quarter of 2008, and a
126% increase compared to $215,000 in the prior quarter. Offline & Other
Businesses revenue for the full year was $1.1 million, a decrease of 46%
compared to $2.0 million for 2008.
Average paying subscribers for Jewish Networks were 90,657 during the
fourth quarter of 2009, an increase of 4% compared to 87,205 for the fourth
quarter of 2008, and a 5% increase compared to 86,051 for the prior
quarter. Average paying subscribers for the full year were 86,030, a 5%
decrease compared to 90,806 for 2008.
Average paying subscribers for General Market Networks were 9,594 during
the fourth quarter of 2009, a decrease of 58% compared to 23,094 for the
fourth quarter of 2008, and a 16% decrease compared to 11,452 for the prior
quarter. Average paying subscribers for the full year were 13,219, a
decrease of 57% compared to 30,486 for 2008.
Average paying subscribers for Other Affinity Networks were 67,725 during
the fourth quarter of 2009, an increase of 4% compared to 65,395 for the
fourth quarter of 2008 and a 1% increase compared to 66,786 for the prior
quarter. Average paying subscribers for the full year were 66,078, an
increase of 3% compared to 63,859 for 2008.
Balance Sheet, Cash, Debt
As of December 31, 2009, the Company had cash and cash equivalents of $6.2
million compared to $7.4 million at December 31, 2008. As of December 31,
2009, the Company had no outstanding debt, compared to $7.8 million as of
December 31, 2008.
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 '09 Financial Results Toll-Free (United States): 1-888-601-3884 International: 1-913-312-1472 Confirmation #: 4259397 One-Month Replay Toll-Free (United States): 1-888-203-1112 International: 1-719-457-0820 Confirmation #: 4259397In addition, the Company will host a webcast of the call which will be accessible in the Investor Relations section of the Company's website 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 special 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), and ChristianMingle®.com (www.christianmingle.com). (1) "Contribution" is defined as net revenue less direct marketing and "Contribution Margin" is defined as Contribution divided by revenue. (2) 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 assets received in connection with a legal judgment. (3) 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. (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 towards various religious, ethnic, geographic and special interest groups including BlackSingles.com and ChristianMingle.com. The Offline & Other Businesses segment consists of net revenues generated from offline activities, HurryDate events and subscriptions and other Web sites and businesses.
SPARK NETWORKS, INC.
BALANCE SHEET
(in thousands, except share data)
December 31, December 31,
------------ ------------
2009 2008
------------ ------------
Assets
Current assets:
Cash and cash equivalents $ 6,223 $ 7,417
Restricted cash 681 766
Accounts receivable 684 1,102
Deferred tax asset - current 221 52
Prepaid expenses and other 853 1,869
------------ ------------
Total current assets 8,662 11,206
Property and equipment, net 2,277 1,685
Goodwill, net 8,758 17,964
Intangible assets, net 3,586 5,750
Deferred tax asset - long-term 4,707 5,002
Deposits and other assets 1,866 401
------------ ------------
Total assets $ 29,856 $ 42,008
============ ============
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 1,415 $ 2,260
Accrued liabilities 4,232 4,830
Deferred revenue 4,244 4,093
Notes payable -- 7,750
------------ ------------
Total current liabilities 9,891 18,933
Deferred tax liabilities 663 756
Other non-current liabilities 978 906
------------ ------------
Total liabilities 11,532 20,595
Commitments and contingencies -- --
Stockholders' equity:
Authorized capital stock consists of
100,000,000 Common Shares, $0.001 par value;
issued and outstanding 20,581,544 at
December 31, 2009 and 20,541,744 shares as
of December 31, 2008, at stated values of: 21 21
Additional paid-in-capital 48,813 45,545
Accumulated other comprehensive income 638 591
Accumulated deficit (31,148) (24,744)
------------ ------------
Total stockholders' equity 18,324 21,413
------------ ------------
Total liabilities and stockholders'
equity $ 29,856 $ 42,008
============ ============
SPARK NETWORKS, INC.
CONSOLIDATED STATEMENTS OF INCOME
(unaudited, in thousands, except per share data)
Three Months Ended Years Ended
December 31, December 31,
------------------ ----------------------------
2009 2008 2009 2008 2007
-------- -------- -------- --------- --------
Net revenues $ 11,056 $ 13,216 $ 45,388 $ 57,266 $ 65,218
Direct marketing expenses 3,177 3,506 12,065 15,010 21,095
-------- -------- -------- --------- --------
Contribution 7,879 9,710 33,323 42,256 44,123
Operating expenses(1):
Sales and marketing
(including stock-based
compensation of $49,
$135, $184, $682 and
$884) 927 973 3,590 4,236 3,626
Customer service
(including stock-based
compensation of $(23),
$13, $(14), $65 and
$117) 402 511 1,832 2,322 3,103
Technical operations
(including stock-based
compensation of $47,
$91, $175, $602 and
$633) 833 892 3,343 3,976 4,416
Development (including
stock-based
compensation of $(55),
$96, $29, $553 and
$534) 760 1,037 4,118 4,513 4,249
General and
administrative
(including stock-based
compensation of $161,
$422, $667, $1,966 and
$3,153) 2,834 3,696 11,802 15,748 21,848
Amortization of
intangible assets
other than goodwill 165 129 663 787 1,356
Impairment of goodwill
and other assets 11,119 1,235 11,999 1,354 1,894
-------- -------- -------- --------- --------
Total operating expenses 17,040 8,473 37,347 32,936 40,492
-------- -------- -------- --------- --------
Operating (loss) income (9,161) 1,237 (4,024) 9,320 3,631
Interest (income) and
other expenses, net 338 516 (1,099) 107 (913)
-------- -------- -------- --------- --------
(Loss) income before
income taxes (9,499) 721 (2,925) 9,213 4,544
Provision (benefit) for
income taxes 109 885 3,479 4,425 (4,434)
-------- -------- -------- --------- --------
Net (loss) income $ (9,608) $ (164) $ (6,404) $ 4,788 $ 8,978
======== ======== ======== ========= ========
Net (loss) income per
share - basic and
diluted $ (0.47) $ (0.01) $ (0.31) $ 0.20 $ 0.31
-------- -------- -------- --------- --------
Weighted average shares
outstanding - basic 20,582 21,300 20,570 23,637 29,218
Weighted average shares
outstanding - diluted 20,582 21,300 20,570 23,640 29,250
Reconciliation of Net
Income to Adjusted
EBITDA Three Months Ended Years Ended
------------------ ----------------------------
December 31, December 31,
2009 2008 2009 2008 2007
Net (loss) income $ (9,608) $ (164) $ (6,404) $ 4,788 $ 8,978
Interest 69 99 378 152 (751)
Taxes 109 885 3,479 4,425 (4,434)
Depreciation 238 229 873 867 1,684
Amortization 165 129 663 787 1,356
-------- -------- -------- -------- --------
EBITDA (9,027) 1,178 (1,011) 11,019 6,833
Stock-based compensation 179 757 1,041 3,868 5,321
Impairment 11,119 1,235 11,999 1,354 1,894
Scheme of Arrangement -- -- -- -- 1,897
Non-cash currency
translation adjustments 19 496 (30) (41) (204)
Non-repetitive property
possession 235 -- (1,507) -- --
-------- -------- -------- -------- --------
Adjusted EBITDA $ 2,525 $ 3,666 $ 10,492 $ 16,200 $ 15,741
1. Prior period amounts have been reclassified to conform to current period
presentation.
SPARK NETWORKS, INC.
SEGMENT RESULTS FROM OPERATIONS (1)
(in thousands except subscriber information)
Three Months Ended Years Ended
December 31, December 31,
------------------- -----------------------------
2009 2008 2009 2008 2007
--------- --------- --------- --------- ---------
Net Revenues
Jewish Networks $ 7,121 $ 7,985 $ 28,842 $ 33,740 $ 33,624
General Market Networks 477 1,291 2,692 7,762 15,707
Other Affinity Networks 2,973 3,494 12,771 13,749 13,314
Offline & Other
Businesses 485 446 1,083 2,015 2,573
--------- --------- --------- --------- ---------
Total Net Revenues $ 11,056 $ 13,216 $ 45,388 $ 57,266 $ 65,218
========= ========= ========= ========= =========
Direct Marketing Expenses
Jewish Networks $ 559 $ 626 $ 2,346 $ 2,519 $ 3,281
General Market Networks 117 520 676 3,488 8,462
Other Affinity Networks 2,157 2,054 8,502 7,875 7,828
Offline & Other
Businesses 344 306 541 1,128 1,524
--------- --------- --------- --------- ---------
Total Direct
Marketing Expenses $ 3,177 $ 3,506 $ 12,065 $ 15,010 $ 21,095
========= ========= ========= ========= =========
Contribution
Jewish Networks $ 6,562 $ 7,359 $ 26,496 $ 31,221 $ 30,343
General Market Networks 360 771 2,016 4,274 7,245
Other Affinity Networks 816 1,440 4,269 5,874 5,486
Offline & Other
Businesses 141 140 542 887 1,049
--------- --------- --------- --------- ---------
Total Contribution $ 7,879 $ 9,710 $ 33,323 $ 42,256 $ 44,123
========= ========= ========= ========= =========
Average Paying
Subscribers
Jewish Networks 90,657 87,205 86,030 90,806 94,246
Other Affinity Networks 67,725 65,395 66,078 63,859 61,398
General Market Networks 9,594 23,094 13,219 30,486 56,071
Offline & Other
Businesses 670 1,317 940 1,806 1,783
--------- --------- --------- --------- ---------
Total Average Paying
Subscribers 168,646 177,011 166,267 186,957 213,498
========= ========= ========= ========= =========
1. Prior period amounts have been reclassified to conform to current period
presentation.
Contact Information: For More Information Investors: Brett Zane + 1-323-658-3000 ext. 4001