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Classified in: Science and technology, Business, Covid-19 virus
Subjects: ERN, CCA, ERP

Spark Networks SE Reports First Half 2020 Financial Results


BERLIN, Aug. 27, 2020 /PRNewswire/ -- Spark Networks SE (NYSE American: LOV), one of the world's leading online dating platforms leveraging premium, complementary brands including Zoosk, EliteSingles, Jdate, Christian Mingle, eDarling, JSwipe, and SilverSingles, today reported first half 2020 financial results.

"I am pleased with our execution and performance in H1 2020," said Eric Eichmann, CEO of Spark Networks. "Our increased revenue and Adjusted EBITDA guidance reflects strong business momentum thanks to the delivery of meaningful marketing and product enhancements. We have seen an uptick in both engagement and average paying subscribers year-over-year, showing that our business is Covid-19 resilient and setting a good foundation for future growth."

"Earlier this month, we raised full-year 2020 revenue guidance to the range of $224 to $228 million (?190 to ?193 million) and Adjusted EBITDA to the range of $34 to $36 million (?29 to ?31 million)," added Bert Althaus, CFO of Spark Networks."

First Half 2020 Financial Results

*First half 2020 results represent the first full-period reporting to include newly acquired Zoosk's financials

Key Performance Indicators

Financial Outlook

Key Metrics - Half Year


Six months ended


Growth Rates %


6/30/2020


12/31/2019


6/30/2019


1st Half 2020 vs.


1st Half 2020


2nd Half 2019


1st Half 2019


2nd Half 2019


1st Half 2019

Revenue

?103.4 Million



?99.9 Million



?49.2 Million



3.5

%


110.1

%

Contribution1

?51.9 Million



?43.2 Million



?20.4 Million



20.2

%


155.0

%

Net loss

?(0.4) Million



?(10.3) Million



?(4.9) Million



(96.0)

%


(91.5)

%

Adjusted EBITDA2

?17.1 Million



?4.3 Million



?3.8 Million



292.9

%


345.3

%

Cash Balance

?12.0 Million



?15.5 Million



?12.5 Million



(22.6)

%


(4.1)

%

Total Registrations3

7,668,580



8,229,976



4,488,104



(6.8)

%


70.9

%

Avg. Paying Subs4

914,798



1,017,321



444,857



(10.1)

%


105.6

%

Monthly ARPU5

?18.85



?16.37



?18.44



15.1

%


2.2

%

 

SPARK NETWORKS SE

SEGMENT6 RESULTS FROM OPERATIONS

(Revenue, Direct Marketing and Contribution figures in ? thousands)



Six Months Ended


Growth Rates %


6/30/2020


12/31/2019


6/30/2019


1st Half 2020 vs.


1st Half 2020


2nd Half 2019


1st Half 2019


2nd Half 2019


1st Half 2019

# of Registrations










North America

5,177,620



5,283,710



2,224,249



(2.0)

%


132.8

%

International

2,490,960



2,946,266



2,263,855



(15.5)

%


10.0

%

Total # of Registrations

7,668,580



8,229,976



4,488,104



(6.8)

%


70.9

%











Average Paying Subscribers










North America

600,126



665,023



185,364



(9.8)

%


223.8

%

International

314,672



352,298



259,493



(10.7)

%


21.3

%

Total Average Paying Subscribers

914,798



1,017,321



444,857



(10.1)

%


105.6

%











Monthly ARPU










North America

?

21.07



?

17.53



?

23.88



20.2

%


(11.8)

%

International

?

14.61



?

14.18



?

14.56



3.0

%


0.3

%

Total Monthly ARPU

?

18.85



?

16.37



?

18.44



15.1

%


2.2

%











Total Net Revenue










North America

?

75,857



?

69,947



?

26,561



8.4

%


185.6

%

International

?

27,583



?

29,970



?

22,663



(8.0)

%


21.7

%

Total Net Revenue

?

103,440



?

99,917



?

49,224



3.5

%


110.1

%











Direct Marketing










North America

?

39,946



?

42,132



?

16,160



(5.2)

%


147.2

%

International

?

11,582



?

14,586



?

12,706



(20.6)

%


(8.8)

%

Total Direct Marketing

?

51,528



?

56,718



?

28,866



(9.2)

%


78.5

%











Contribution










North America

?

35,911



?

27,815



?

10,401



29.1

%


245.3

%

International

?

16,001



?

15,384



?

9,957



4.0

%


60.7

%

Total Contribution

?

51,912



?

43,199



?

20,358



20.2

%


155.0

%

 

SPARK NETWORKS SE

UNAUDITED PRO FORMA FINANCIAL INFORMATION

(in ? thousands)




Six months ended June 30,

(in ? thousands)


2020
(actual)


2019
(pro forma)

Revenue(7)


103,440



119,815


Net loss(7)


(412)



(4,422)


The following table presents certain selected information and Adjusted EBITDA(2) for the unaudited pro forma periods presented:



Six months ended June 30,

(in ? thousands)


2020
(actual)


2019
(pro forma)

Net loss(7)


(412)



(4,422)


Net finance expenses


6,219



5,741


Income tax expense


2,458



421


Depreciation and amortization


5,100



5,829


Impairment of intangible assets and goodwill


?



3


Share-based compensation expense


2,125



3,045


Acquisition costs and other


1,580



267


Adjusted EBITDA(2)


17,070



10,884










Six months ended June 30,

Summary of acquisition costs and other (in ? thousands)


2020
(actual)


2019
(pro forma)

Project consultant costs


?



194


Merger integration costs


39



?


Other employee payments


939



27


Severance costs


602



46


Total adjustments


1,580



267


Investor Conference Call

Spark Networks will discuss its financial results during a live teleconference today at 8:00 a.m. Eastern time.

Toll-Free (United States):

1-877-705-6003

Toll-Free (Germany):

0-800-182-0040

International: 

1-201-493-6725

In addition, Spark Networks will host a webcast of the call which will be accessible in the Investor Relations section of the Company'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 September 10, 2020.

Replay


Toll-Free (United States):

1-844-512-2921         

International:

1-412-317-6671

Passcode:

13707517

Foreign Currency Exchange Rate:
Euro guidance referenced in this release applied a Euro to USD conversion rate of 1-1.18, which reflects the conversion rate as of August 20, 2020. This disclosure relates to amounts within the financial outlook only. This is not the conversion rate applied to actual results.

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 statements regarding Spark Networks' strong business momentum, Spark Networks' financial outlook and guidance for the second half and full year 2020, including with respect to Adjusted EBITDA and revenue, the impact of Covid-19 on Spark Networks' business and the Company's foundation for future growth.

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. 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' Annual Report on Form 20-F for the year ended December 31, 2019 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.

About Spark Networks SE:

Spark Networks SE is America's second largest dating company, listed on the New York Stock Exchange American under the ticker symbol "LOV," with headquarters in Berlin, Germany, and offices in New York and Utah. The Company's widening portfolio of premium and freemium dating apps include Zoosk, EliteSingles, Jdate, Christian Mingle, eDarling, JSwipe and SilverSingles, among others. Spark Networks SE in its current form is the result of the merger between Affinitas GmbH and Spark Networks, Inc. in 2017 and the addition of Zoosk, Inc. in 2019. Spark has approximately one million monthly paying subscribers globally.

For More Information           

Investors:
Christopher Camarra
Vice President of Investor Relations
christopher.camarra@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 Spark Networks' Consolidated Statements of Operations and Comprehensive Income/(Loss).

2 Adjusted EBITDA is not a measure defined by IFRS. The most directly comparable IFRS measure for Adjusted EBITDA is our net income/(loss) 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. This includes: (i) items such as share-based compensation, asset impairments, gains or losses on foreign currency transactions and interest expense, and (ii) items related to acquisitions or other costs that are non-recurring, infrequent, or unusual in nature including transaction and advisory fees, merger integration costs, other employee payments, and severance. Adjusted EBITDA should not be construed as a substitute for net income/(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, 2020, December 31, 2019, and June 30, 2019 can be found in the table below.

Adjusted EBITDA is defined as earnings before interest, taxes, depreciation, amortization, share-based compensation, impairment of intangible assets and goodwill, and acquisition or other costs.

Statements regarding our expectations as to the second half and full-year 2020 Adjusted EBITDA do not include certain charges and costs. The adjustments to EBITDA in future periods are generally expected to be similar to the kinds of charges and costs excluded from Adjusted EBITDA in prior periods, including (i) items such as share-based compensation, asset impairments, gains or losses on foreign currency transactions and interest expense, and (ii) items related to acquisitions or other costs that are non-recurring, infrequent, or unusual in nature including transaction and advisory fees, merger integration costs, other employee payments, and severance.  The exclusion of these charges and costs in future periods will have a significant impact on our Adjusted EBITDA. We are not able to provide a reconciliation of our non-IFRS financial guidance to the corresponding IFRS measures without unreasonable effort because of the uncertainty and variability of the nature and amount of these future charges and 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, Spark Networks' financial reporting includes detailed data on two separate operating segments. The North America segment consists of operations in the United States and Canada, and the International segment consists of all other operations except for the United States and Canada.

7 The unaudited pro forma financial information in the table below presents the combined results of the Company and Zoosk as if the Spark Networks / Zoosk Merger had occurred on January 1, 2019. The unaudited pro forma financial information includes adjustments required under the acquisition method of accounting but excludes certain costs and charges that are deemed to be non-recurring in nature. This presentation is for informational purposes only and is not necessarily indicative of the results that would have been achieved had the acquisition actually occurred on January 1, 2019 or in future periods.

SPARK NETWORKS SE

CONSOLIDATED BALANCE SHEETS

(in ? thousands)





June 30, 2020 (unaudited)


December 31, 2019

ASSETS






Non-current assets



299,563



304,322


Intangible assets and goodwill



276,157



278,862


Internally generated software



6,341



5,040


Licenses and domains



132



160


Brands and trademarks



101,791



101,523


Purchased software



12



94


Intangible assets under development



2,023



3,159


Other intangible assets



7,129



10,658


Goodwill



158,729



158,228


Property, plant and equipment



1,819



2,317


Leasehold improvements



39



69


Other and office equipment



1,209



1,445


Right-of-use assets



571



803


Other non-current financial assets



6,357



7,040


Other non-current non-financial assets



220



251


Non-current income tax assets



86



85


Deferred tax assets



14,924



15,767


Current assets



26,737



27,720


Current trade and other receivables



14,212



11,911


Trade receivables



8,243



5,808


Other current financial assets



2,967



3,218


Other assets



3,002



2,885


Current income tax assets



566



359


Cash and cash equivalents



11,959



15,450


TOTAL ASSETS



326,300



332,042


SHAREHOLDERS' EQUITY AND LIABILITIES






Shareholders' equity



144,352



142,120


Subscribed capital



2,662



2,662


Capital reserves



183,349



183,349


Share-based payment reserve



8,156



6,031


Accumulated deficit



(54,729)



(54,317)


Accumulated other comprehensive income



4,914



4,395


Non-current liabilities



89,421



96,275


Non-current borrowings



78,126



85,157


Other non-current provisions



17



17


Other non-current financial liabilities



6,297



7,167


Deferred tax liabilities



4,099



3,054


Non-current income tax liabilities



879



876


Non-current contract liabilities



3



4


Current liabilities



92,527



93,647


Current borrowings



10,717



10,682


Other current provisions



2,322



2,047


Current trade and other payables



40,615



43,263


Trade payables



22,433



25,873


Other current financial liabilities



13,322



14,429


Other liabilities



4,860



2,961


Current income tax liabilities



1,357



815


Current contract liabilities



37,516



36,840


Total liabilities



181,948



189,922


TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES



326,300



332,042


 

SPARK NETWORKS SE

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME/(LOSS)

(unaudited, in ? thousands, except per share data)




Six Months Ended



6/30/2020


12/31/2019


6/30/2019








Revenue


103,440



99,917



49,224


Cost of revenue


(63,483)



(70,001)



(33,301)


Gross profit


39,957



29,916



15,923


Other income


182



1,558



?


Other operating expenses


(31,874)



(36,934)



(20,277)


Sales and marketing expenses


(2,126)



(3,382)



(2,726)


Customer service expenses


(3,492)



(4,537)



(2,293)


Technical operations and development expenses


(11,652)



(15,279)



(4,154)


General and administrative expenses


(14,604)



(13,736)



(11,104)


Operating income/(loss)


8,265



(5,460)



(4,354)


Finance income


1,399



3,813



423


Finance costs


(7,618)



(12,644)



(542)


Net finance expenses


(6,219)



(8,831)



(119)


Income/(loss) before taxes


2,046



(14,291)



(4,473)


Income tax (expense)/benefit


(2,458)



3,991



(401)


Net loss


(412)



(10,300)



(4,874)


Other comprehensive income


519



3,661



?


Total comprehensive income/(loss)


107



(6,639)



(4,874)


Loss per share







Basic loss per share (?)


(0.16)



(3.90)



(3.75)


Diluted loss per share (?)


(0.16)



(3.90)



(3.75)









Reconciliation of Net Loss to Adjusted EBITDA:







Net loss


(412)



(10,300)



(4,874)


Net finance expenses


6,219



8,831



119


Income tax expense/(benefit)


2,458



(3,991)



401


Depreciation and amortization


5,100



6,043



1,653


Impairment of intangible assets and goodwill


?



703



?


Share-based compensation expense


2,125



260



2,075


Acquisition costs and other


1,580



2,799



4,459


Adjusted EBITDA(2)


17,070



4,345



3,833









Summary of acquisition costs and other:







Gain realized upon sublease commencement


?



(1,259)



?


Transaction and advisory fees


?



348



4,413


Merger integration costs


39



493



?


Other employee payments


939



2,052



?


Severance costs


602



1,165



46


Total adjustments


1,580



2,799



4,459


 

SOURCE Spark Networks SE


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