Q4 2010 12 Mos. 2010
-------------- --------------
Revenue $ 10.1 Million $ 40.9 Million
Contribution Margin 68% 74%
Net Income $ 0.6 Million $ 3.7 Million
Net Income Per Share $ 0.03 $ 0.18
"Fourth quarter revenue grew sequentially for the first time in four
years," said Adam Berger, Spark's Chairman and CEO. "We are particularly
pleased with the 5% sequential average paying subscriber(1) growth in our
Other Affinity Networks Segment, most of which came in the latter half of
the quarter behind the roll out of new marketing initiatives. The decline
in contribution(2) in Other Affinity Networks for the fourth quarter was
expected given the nature of our business where increased revenue lags
increases in marketing spend and cash sales, resulting in increased
deferred revenue. The rapid growth of Other Affinity Networks in the fourth
quarter may mark a turning point for Spark Networks."
Financial Results
Revenue for the fourth quarter of 2010 was $10.1 million, a decrease of 9%
compared to $11.1 million for the fourth quarter 2009, and an increase of
2% compared to $9.9 million in the prior quarter. Revenue for the full year
of 2010 was $40.9 million, a 10% decrease compared to $45.4 million for the
12 months ended December 31, 2009.
Contribution for the fourth quarter of 2010 was $6.9 million, a decrease of
13% compared to $7.9 million for the fourth quarter of 2009, and an 8%
decrease compared to $7.5 million in the prior quarter. Contribution for
the full year of 2010 was $30.1 million, a 10% decrease compared to $33.3
million for the 12 months ended December 31, 2009.
Total cost and expenses for the fourth quarter of 2010 were $9.0 million, a
56% decrease compared to $20.2 million in the fourth quarter of 2009, and
an 11% increase compared to $8.1 million in the prior quarter. Total cost
and expenses for the full year of 2010 were $34.6 million, a 30% decrease
compared to $49.4 million for the 12 months ended December 31, 2009.
Net income for the fourth quarter of 2010 was $0.6 million, or $0.03 per
share, compared to a loss of $9.6 million, or $0.47 per share, for the
fourth quarter of 2009 and $1.2 million or $0.06 per share for the prior
quarter. Net income for the full year of 2010 was $3.7 million, or $0.18
per share, compared to a loss of $6.4 million or $0.31 per share for the 12
months ended December 31, 2009.
Adjusted EBITDA(3) for the fourth quarter of 2010 was $2.0 million, a
decrease of 22% compared to $2.5 million for the fourth quarter of 2009,
and a decrease of 20% compared to $2.4 million in the prior quarter. An
increase in Other Affinity Networks direct marketing expense accounted for
a substantial portion of the decrease in Adjusted EBITDA. Adjusted EBITDA
for the full year of 2010 was $9.4 million, a 10% decrease compared to
$10.5 million for the 12 months ended December 31, 2009.
Average paying subscribers for the Company, as a whole, in the fourth
quarter of 2010 were 160,744, a decrease of 5% compared to 168,646 for the
fourth quarter of 2009 and a 1% increase compared to 158,422 for the prior
quarter. Average paying subscribers for the full year of 2010 were
162,311, a 2% decrease compared to 166,267 for the 12 months ended December
31, 2009.
Segment Reporting(4)
Fourth quarter 2010 revenue for Jewish Networks was $6.9 million, a
decrease of 3% compared to $7.1 million for the fourth quarter of 2009 and
a 2% increase compared to $6.8 million for the prior quarter. Jewish
Networks revenue for the full year of 2010 was $27.4 million, a 5% decrease
compared to $28.8 million for the 12 months ended December 31, 2009.
Fourth quarter 2010 revenue for Other Affinity Networks was $2.8 million, a
decrease of 6% compared to $3.0 million for the fourth quarter of 2009, and
an increase of 1% compared to $2.7 million in the prior quarter. Other
Affinity Networks revenue for the full year of 2010 was $11.3 million, a
12% decrease compared to $12.8 million for the 12 months ended December 31,
2009.
Fourth quarter 2010 revenue for General Market Networks was $236,000, a
decrease of 51% compared to $477,000 for the fourth quarter of 2009, and an
11% decrease compared to $264,000 in the prior quarter. General Market
Networks revenue for the full year of 2010 was $1.2 million, a 57% decrease
compared to $2.7 million for the 12 months ended December 31, 2009.
Fourth quarter 2010 revenue for Offline & Other Businesses was $160,000, a
decrease of 67% compared to $485,000 for the fourth quarter of 2009, and a
13% increase compared to $142,000 in the prior quarter. The year-over-year
lower revenue reflects fewer hosted events and the absence of a travel
offering in the fourth quarter of 2010. Offline & Other Businesses revenue
for the full year of 2010 was $964,000, an 11% decrease compared to $1.1
million for the 12 months ended December 31, 2009.
Average paying subscribers for Jewish Networks were 89,723 during the
fourth quarter of 2010, a decrease of 1% compared to 90,657 for the fourth
quarter of 2009, and flat compared to 89,792 for the prior quarter. Jewish
Networks average paying subscribers for the full year of 2010 were 90,452,
a 5% increase compared to 86,030 for the 12 months ended December 31, 2009.
Average paying subscribers for Other Affinity Networks were 65,172 during
the fourth quarter of 2010, a decrease of 4% compared to 67,725 for the
fourth quarter of 2009 and a 5% increase compared to 62,026 for the prior
quarter. Other Affinity Networks average paying subscribers for the full
year of 2010 were 64,851, a 2% decrease compared to 66,078 for the 12
months ended December 31, 2009.
Average paying subscribers for General Market Networks were 5,174 during
the fourth quarter of 2010, a decrease of 46% compared to 9,594 for the
fourth quarter of 2009, and a 12% decrease compared to 5,888 for the prior
quarter. General Market Networks average paying subscribers for the full
year of 2010 were 6,328, a 52% decrease compared to 13,219 for the 12
months ended December 31, 2009.
Balance Sheet, Cash, Debt
As of December 31, 2010, the Company had cash and cash equivalents of $13.9
million compared to $6.2 million at December 31, 2009. As of December 31,
2010, the Company had no outstanding debt.
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 '10 Financial Results Toll-Free (United States): 1-888-211-4439 International: 1-913-312-0640 Passcode: 7201062 Digital Replay through March 24, 2011: Toll-Free (United States): 1-888-203-1112 International: 1-719-457-0820 Passcode: 7201062In 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) "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. (2) "Contribution" is defined as revenue, net of credits and credit card chargebacks, less direct marketing and "Contribution Margin" is defined as Contribution divided by revenue, net of credits and credit card chargebacks. (3) 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. (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 at various religious, ethnic, geographic and special interest groups including BlackSingles.com and ChristianMingle.com. The Offline & Other Businesses segment consists of net revenue 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,
-------------- --------------
2010 2009
-------------- --------------
Assets
Current assets:
Cash and cash equivalents $ 13,901 $ 6,223
Restricted cash 996 681
Accounts receivable 847 684
Deferred tax asset - current 43 221
Prepaid expenses and other 911 853
-------------- --------------
Total current assets 16,698 8,662
Property and equipment, net 2,520 2,277
Goodwill 9,156 8,758
Intangible assets, net 3,017 3,586
Deferred tax asset - non-current 4,882 4,707
Deposits and other assets 295 1,866
-------------- --------------
Total assets $ 36,568 $ 29,856
============== ==============
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 1,371 $ 1,415
Accrued liabilities 3,635 4,232
Deferred revenue 4,331 4,244
-------------- --------------
Total current liabilities 9,337 9,891
Deferred tax liability 825 663
Other liabilities non-current 1,036 978
-------------- --------------
Total liabilities 11,198 11,532
Commitments and contingencies -- --
Stockholders' equity:
Authorized capital stock consists of
100,000,000 Common Stock, $0.001 par
value; issued and outstanding 20,587,336
at December 31, 2010 and 20,581,544 shares
as of December 31, 2009, at stated values
of: 21 21
Additional paid-in-capital 52,020 48,813
Accumulated other comprehensive
income 773 638
Accumulated deficit (27,444) (31,148)
-------------- --------------
Total stockholders' equity 25,370 18,324
-------------- --------------
Total liabilities and stockholders'
equity $ 36,568 $ 29,856
============== ==============
SPARK NETWORKS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS(1)
(unaudited, in thousands, except per share data)
Three Months Ended Years Ended
December 31, December 31,
------------------ ----------------------------
2010 2009 2010 2009 2008
-------- -------- -------- -------- --------
Revenue $ 10,109 $ 11,056 $ 40,851 $ 45,388 $ 57,266
Cost and expenses:
Cost of revenue
(exclusive of
depreciation shown
separately below) 4,002 3,953 13,749 15,207 18,715
Sales and marketing 788 904 3,496 3,507 4,234
Customer service 420 400 1,601 1,832 2,319
Technical operations 302 376 1,232 1,504 1,917
Development 760 674 3,092 3,895 4,463
General and
administrative 2,141 2,390 9,782 9,932 13,290
Depreciation 263 236 962 873 867
Amortization of
intangible assets other
than goodwill 97 165 421 663 787
Impairment of goodwill,
long-lived assets and
other assets 187 11,119 308 11,999 1,354
-------- -------- -------- -------- --------
Total cost and expenses 8,960 20,217 34,643 49,412 47,946
-------- -------- -------- -------- --------
Operating income (loss) 1,149 (9,161) 6,208 (4,024) 9,320
Interest expense (income)
and other, net (72) 338 (54) (1,099) 107
-------- -------- -------- -------- --------
Income (loss) before
income taxes 1,221 (9,499) 6,262 (2,925) 9,213
Provision for income
taxes 595 109 2,558 3,479 4,425
-------- -------- -------- -------- --------
Net income (loss) $ 626 $ (9,608) $ 3,704 $ (6,404) $ 4,788
======== ======== ======== ======== ========
Net income (loss) per
share - basic and
diluted $ 0.03 $ (0.47) $ 0.18 $ (0.31) $ 0.20
-------- -------- -------- -------- --------
Weighted average shares
outstanding - basic 20,587 20,582 20,586 20,570 23,637
Weighted average shares
outstanding - diluted 20,588 20,582 20,590 20,570 23,640
Three Months Ended Twelve Months Ended
December 31, December 31,
------------------ ----------------------------
Stock-Based Compensation 2010 2009 2010 2009 2008
(in thousands) -------- -------- -------- -------- --------
Cost of revenue $ 3 $ 3 $ 11 $ 17 $ 33
Sales and marketing 35 49 233 184 649
Customer service - (23) 1 (14) 65
Technical operations 33 44 167 158 602
Development 12 (55) 54 29 553
General and
administrative 187 161 1,044 667 1,966
Reconciliation of Net Income to Adjusted EBITDA:
Three Months Ended Years Ended
December 31, December 31,
------------------ ----------------------------
2010 2009 2010 2009 2008
-------- -------- -------- -------- --------
Net income (loss) $ 626 $ (9,608) $ 3,704 $ (6,404) $ 4,788
Interest 51 69 207 378 152
Taxes 595 109 2,558 3,479 4,425
Depreciation 263 236 962 873 867
Amortization 97 165 421 663 787
-------- -------- -------- -------- --------
EBITDA 1,632 (9,029) 7,852 (1,011) 11,019
Stock-based compensation 270 179 1,510 1,041 3,868
Impairment of goodwill,
long-lived assets and
other assets 187 11,119 308 11,999 1,354
Non-cash currency
translation adjustments (133) 19 (269) (30) (41)
Non-repetitive property
possession -- 235 -- (1,507) --
-------- -------- -------- -------- --------
Adjusted EBITDA $ 1,956 $ 2,523 $ 9,401 $ 10,492 $ 16,200
1. Prior period amounts have been reclassified to conform to current
period presentation.
SPARK NETWORKS, INC.
SEGMENT RESULTS FROM OPERATIONS
(in thousands except subscriber information)
Three Months Ended Years Ended
December 31, December 31,
------------------ ----------------------------
2010 2009 2010 2009 2008
-------- -------- -------- -------- --------
Revenue
Jewish Networks $ 6,930 $ 7,121 $ 27,440 $ 28,842 $ 33,740
Other Affinity Networks 2,783 2,973 11,279 12,771 13,749
General Market Networks 236 477 1,168 2,692 7,762
Offline & Other
Businesses 160 485 964 1,083 2,015
-------- -------- -------- -------- --------
Total Revenue $ 10,109 $ 11,056 $ 40,851 $ 45,388 $ 57,266
======== ======== ======== ======== ========
Direct Marketing Expenses
Jewish Networks $ 586 $ 559 $ 2,321 $ 2,346 $ 2,519
Other Affinity Networks 2,436 2,157 7,292 8,502 7,875
General Market Networks 175 117 582 676 3,488
Offline & Other
Businesses 62 344 535 541 1,128
-------- -------- -------- -------- --------
Total Direct
Marketing Expenses $ 3,259 $ 3,177 $ 10,730 $ 12,065 $ 15,010
======== ======== ======== ======== ========
Contribution
Jewish Networks $ 6,344 $ 6,562 $ 25,119 $ 26,496 $ 31,221
Other Affinity Networks 347 816 3,987 4,269 5,874
General Market Networks 61 360 586 2,016 4,274
Offline & Other
Businesses 98 141 429 542 887
-------- -------- -------- -------- --------
Total Contribution $ 6,850 $ 7,879 $ 30,121 $ 33,323 $ 42,256
======== ======== ======== ======== ========
Average Paying
Subscribers
Jewish Networks 89,723 90,657 90,452 86,030 90,806
Other Affinity Networks 65,172 67,725 64,851 66,078 63,859
General Market Networks 5,174 9,594 6,328 13,219 30,486
Offline & Other
Businesses 675 670 680 940 1,806
-------- -------- -------- -------- --------
Total Average Paying
Subscribers 160,744 168,646 162,311 166,267 186,957
======== ======== ======== ======== ========
Contact Information: For More Information Investors: Brett Zane + 1-323-658-3000 ext. 4001