Spark Networks Reports Second Quarter 2023 Results
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Colleen Birdnow Brown, Interim CEO of Spark Networks, said: "As we have previously reported, Spark has embarked on a transformational plan intended to drive the Company forward with revenue growth as well as improved margins, Adjusted EBITDA and cash flow. Teaming with a leading performance marketing agency, our first step in that plan was to completely reevaluate the ways in which we spend our marketing dollars. As a result, we reduced our user acquisition spend during the quarter by
"As part of the next phase of the transformation plan, we look to partner with a major managed service provider and outsource a significant portion of our technology and operations. Through this plan, we believe we can materially improve our product and technology stack while at the same time delivering long-term cost savings, revenue growth and improved operating margins. We expect to complete our outsourcing by the first quarter of 2024, resulting in a dramatically reduced employee headcount. In addition, we expect to continue to implement the initiatives in our plan over the next 18 months."
Second Quarter 2023 Financial Results
- Revenue was
, compared to$41.2 million in the second quarter of 2022.$48.0 million - Net loss was
, compared to$26.9 million in the second quarter of 2022.$8.8 million - Adjusted EBITDA(3) was
, or a$7.2 million 17.5% Adjusted EBITDA margin, compared to , or a (3.6)% Adjusted EBITDA margin, in the second quarter of 2022.$(1.7) million
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-
Investor Conference Call
Spark Networks management will host a conference call and live webcast for analysts and investors today at 5:00 p.m. Eastern Time (2:00 p.m. Pacific Time) to discuss the Company's financial results.
To access the live call, dial 1-833-816-1417 (US and
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 1-877-344-7529 (US) or +1 412-317-0088 (International) and enter the replay passcode: 8925104.
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 portfolio of premium and freemium dating apps include Zoosk, EliteSingles, SilverSingles, Christian Mingle, Jdate, and JSwipe, among others. Spark is headquartered in
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 whether we will execute our transformation plan as expected; whether our transformational plan will drive the Company forward with growth as well as improved margins, Adjusted EBITDA and cash flow; whether we will identify more profitable ways to increase our marketing spend in order to improve subscription rates and drive future revenue; whether we will continue to see promising results from our new outsourced performance marketing initiative; whether we will work with a managed service provider and outsource a significant portion of our technology and other operations as expected; whether we will improve our product and technology stack as expected, while at the same time achieving long-term cost savings, revenue growth and improved operating margins; whether we will complete our outsourcing by the first quarter of 2024 and whether it will result in a dramatically reduced employee headcount; and whether we will continue to implement the initiatives in our plan over the next 18 months as expected.
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, 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 comply with new and evolving regulations relating to data protection and data privacy; general competition and price measures in the market place; 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, Adjusted EBITDA and Adjusted EBITDA margin. These measures are derived on the basis of methodologies other than in accordance with
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 Revenue for the three and six months ended June 30, 2023 includes virtual currency deferred revenue of
3 Adjusted earnings before interest, taxes, depreciation and amortization ("Adjusted EBITDA"), a non-
- Adjusted EBITDA and Adjusted EBITDA margin do not reflect the cash capital expenditures during the measurement period;
- Adjusted EBITDA and Adjusted EBITDA margin do not reflect any changes in working capital requirements during the measurement period;
- Adjusted EBITDA and Adjusted EBITDA margin do not reflect the cash tax payments during the measurement period; and
- Adjusted EBITDA and Adjusted EBITDA margin may be calculated differently by other companies in our industry, thus limiting its value as a comparative measure.
Because of these limitations, Adjusted EBITDA and Adjusted EBITDA margin should be considered in addition to other financial performance measures, including net income (loss) and our other
Spark Networks SE | ||||
Condensed Consolidated Balance Sheets (Unaudited) | ||||
(in thousands) | ||||
June 30, 2023 | December 31, 2022 | |||
Assets | ||||
Cash and cash equivalents | $ 5,683 | $ 11,438 | ||
Accounts receivable, net | 5,473 | 5,154 | ||
Goodwill and intangible assets | 109,013 | 132,575 | ||
Other assets | 14,617 | 15,210 | ||
Total assets | 134,786 | $ 164,377 | ||
Liabilities and Shareholders' Deficit | ||||
Debt | $ 94,197 | $ 94,817 | ||
Accounts payable | 7,142 | 6,487 | ||
Deferred revenue | 27,401 | 28,085 | ||
Accrued expenses and other current liabilities | 27,611 | 24,247 | ||
Other liabilities | 17,065 | 17,527 | ||
Total liabilities | 173,416 | 171,163 | ||
Total shareholders' deficit | (38,630) | (6,786) | ||
Total liabilities and shareholders' deficit | $ 134,786 | $ 164,377 |
Spark Networks SE | ||||||||
Condensed Consolidated Statements of Operations (Unaudited) | ||||||||
(in thousands) | ||||||||
Three Months Ended June 30, | Six Months Ended June 30, | |||||||
2023 | 2022 | 2023 | 2022 | |||||
Revenue | $ 41,202 | $ 48,035 | $ 82,541 | $ 97,942 | ||||
Operating costs and expenses: | ||||||||
Cost of revenue, exclusive of | 22,790 | 36,356 | 50,082 | 70,602 | ||||
Other operating costs and expenses | 41,392 | 15,097 | 56,616 | 31,135 | ||||
Total operating costs and expenses | 64,182 | 51,453 | 106,698 | 101,737 | ||||
Operating loss | (22,980) | (3,418) | (24,157) | (3,795) | ||||
Other expense, net | (3,998) | (5,150) | (7,135) | (12,536) | ||||
Loss before income taxes | (26,978) | (8,568) | (31,292) | (16,331) | ||||
Income tax benefit (expense) | 52 | (193) | 7 | 99 | ||||
Net loss | $ (26,926) | $ (8,761) | $ (31,285) | $ (16,232) |
Reconciliation of Net loss to Adjusted EBITDA | ||||||||
Three Months Ended June 30, | Six Months Ended June 30, | |||||||
(in thousands) | 2023 | 2022 | 2023 | 2022 | ||||
Net loss | $ (26,926) | $ (8,761) | $ (31,285) | $ (16,232) | ||||
Interest expense | 4,058 | 2,706 | 7,875 | 9,588 | ||||
(Gain) loss on foreign currency | 216 | 2,441 | (464) | 3,208 | ||||
Income tax (benefit) expense | (52) | 193 | (7) | (99) | ||||
Depreciation and amortization | 625 | 577 | 1,243 | 1,180 | ||||
Impairment of intangible assets | 21,847 | — | 22,947 | — | ||||
Stock-based compensation expense | 251 | 490 | 424 | 992 | ||||
Other costs(1) | 7,172 | 614 | 8,823 | 636 | ||||
Adjusted EBITDA | $ 7,191 | $ (1,740) | $ 9,556 | $ (727) | ||||
Adjusted EBITDA margin(2) | 17.5 % | (3.6) % | 11.6 % | (0.7) % |
(1) Includes consulting and advisory fees related to special projects, CFO severance fees, and retention bonuses |
(2) We define "Adjusted EBITDA margin" as Adjusted EBITDA divided by revenue. |
Spark Networks SE | ||||
Six Months Ended June 30, | ||||
2023 | 2022 | |||
Net loss | $ (31,285) | $ (16,232) | ||
Adjustments to reconcile net loss to net cash used in operating activities: | ||||
Non-cash items and other non-operating charges | 26,819 | 12,536 | ||
Change in operating assets and liabilities | 1,796 | (6,999) | ||
Net cash used in operating activities | (2,670) | (10,695) | ||
Capital expenditures | (1,393) | (1,268) | ||
Net cash used in investing activities | (1,393) | (1,268) | ||
Net cash (used in) provided by financing activities | (1,250) | 7,774 | ||
Effects of exchange rate fluctuations on cash and cash equivalents and restricted cash | (439) | (613) | ||
Net decrease in cash and cash equivalents and restricted cash | (5,752) | (4,802) | ||
Cash and cash equivalents and restricted cash at beginning of period | 11,569 | 16,279 | ||
Cash and cash equivalents and restricted cash at end of period | $ 5,817 | $ 11,477 |
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SOURCE Spark Networks SE
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