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Spark Networks SE Reports Second Half And Full Year 2017 Results

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Spark Networks SE Reports Second Half And Full Year 2017 Results

PR Newswire

BERLIN, April 25, 2018 /PRNewswire/ -- Spark Networks SE (NYSE:LOV), one of the world's leading online dating platforms, leveraging premium, complementary brands including EliteSingles, eDarling, Jdate, Christian Mingle, JSwipe, SilverSingles, and Attractive World reported its second half and full year 2017 financial results today.

"With the close of the merger between Affinitas GmbH ("Affinitas") and Spark Networks, Inc. ("Spark") in November 2017, we have created a pure-play leader in the dating industry with increased scale and a portfolio of well-known brands," said Jeronimo Folgueira, Chief Executive Officer of Spark Networks SE.  "We have only just begun to realize the benefits of the merger, as the results we reported today include just two months of Spark's performance. While we look forward to our first full year of operating our newly expanded portfolio, we are also pleased with the strong standalone performance of Affinitas in 2017.  Affinitas revenue grew by more than 12% in 2017, resulting in Adjusted EBITDA growth before the addition of Spark.  We are energized by our 2017 momentum, our post-merger integration progress and the early success of our 2018 growth initiatives.

"We enter 2018 with three clear priorities, all of which are aimed at positioning Spark Networks for sustainable, long-term, and profitable growth," continued Folgueira. "First, we aim to build on the consistent growth momentum that Affinitas has achieved over the last several years, driven primarily by the success of EliteSingles.  Second, we are taking actions to stabilize and grow the Christian and Jewish brands that were added to our portfolio through the merger with Spark. Finally, we will launch and grow new, complementary brands in key markets such as North America.

"Nearly four full months into 2018, we are very pleased with the trajectory of our business and, more importantly, that we have multiple brands contributing to our growth," concluded Folgueira. "EliteSingles continues to grow strongly in North America, our Jewish and Christian brands have seen growth in new subscription sales in Q1, and SilverSingles, our newest platform, scaled rapidly and generated approximately 15% of our registrations in the first three months of 2018, despite launching in mid-December.  The initial performance of the SilverSingles brand reinforces our confidence in the brand and our ability to deploy capital effectively with positive returns. We expect this new addition to our portfolio to be a meaningful contributor to revenue growth in 2018 and beyond as we continue to invest in it as one of our key strategic priorities.  In the short-term, investments in marketing to SilverSingles are critical to building a sustainable base of subscribers that will position us for long-term growth and profitability in 2019 and beyond.  We believe these investments are essential to capitalizing on the tremendous growth potential we see with customers in the 50 and over age demographic, although they will negatively impact our Adjusted EBITDA in 2018.

"Our core brands are on-pace to exceed the 2018 goals we set twelve months ago when we announced the Affinitas / Spark Merger, and we now see an opportunity to continue to invest in additional marketing to build SilverSingles to become a meaningful part of our portfolio.  Given that the marketing investments for growing a new brand are recognized up-front while the resulting revenue is recognized over the life of the subscriptions we add, we are lowering our 2018 Adjusted EBITDA guidance while simultaneously raising our 2018 revenue guidance.  

"Capitalizing on the growth opportunities in front of us is an exciting challenge, and I am looking forward to providing updates as we execute against our 2018 plans." 

 

Key Metrics – Half Year


Six months ended


Growth Rates %


12/31/2017


6/30/2017


12/31/2016


2nd Half 2017 vs.


2nd Half 2017


1st Half 2017


2nd Half 2016


1st Half 2017


2nd Half 2016

Revenue

€43.5 Million


€42.1 Million


€37.9 Million


3.3%


15.0%

Contribution1

€17.5 Million


€14.6 Million


€14.7 Million


19.9%


19.7%

Net (Loss)/Profit

€(3.9) Million


€(1.7) Million


€760 Thousand


N.M.


N.M.

Adjusted EBITDA2

€4.2 Million


€2.4 Million


€4.4 Million


78.7%


(2.7%)

Cash Balance

€8.2 Million


€6.8 Million


€8.1 Million


21.3%


1.9%

Total Registrations3

4,329,541


4,122,092


3,543,594


5.0%


22.2%

Avg. Paying Subs4

393,979


364,825


326,989


8.0%


20.5%

Monthly ARPU5

€ 18.41


€ 19.24


€ 19.29


(4.3%)


(4.6%)

 

Six Months Ended December 31, 2017 Financial Results

Revenue:  For the six months ended December 31, 2017, total revenue was €43.5 million, an increase of 15.0% compared to the six months ended December 31, 2016, and a 3.3% increase from the six months ended June 30, 2017. The year over year and sequential increases were driven by growth in our average paying subscribers resulting from marketing efforts in North America and the addition of Jdate and Christian Mingle following the Affinitas / Spark Merger in November 2017.

Revenue in the six months ended December 31, 2017 includes €2.7 million of post-merger revenue from Spark, net of a €603 thousand write-off of deferred revenue relating to the Affinitas / Spark Merger.

Contribution:  Contribution was €17.5 million for the six months ended December 31, 2017, an increase of 19.7% compared to the six months ended December 31, 2016, and a 19.9% increase from the six months ended June 30, 2017. Our contribution margin increased to 40.3% from 38.7% in the six months ended December 31, 2016, and from 34.7% in the six months ended June 30, 2017. The margin expansion was primarily driven by revenue growth in North America.  North America contribution margin increased to 11.1% from 3.1% in the six months ended December 31, 2016and from 4.2% in the six months ended June 30, 2017.

Contribution in the six months ended December 31, 2017 includes €2.2 million of post-merger contribution from Spark, net of a €603 thousand write-off of deferred revenue relating to the Affinitas / Spark Merger.

Net Loss:  Net Loss was €(3.9) million in the six months ended December 31, 2017, a €4.6 million decline versus the six months ended December 31, 2016 and a €2.2 million decline from the six months ended June 30, 2017. The decline was primarily due to higher professional fees resulting from the Affinitas / Spark Merger in 2017.

Adjusted EBITDA:  For the six months ended December 31, 2017, Adjusted EBITDA was €4.2 million, a decrease of €118 thousand versus the six months ended December 31, 2016, and an increase of €1.9 million from the six months ended June 30, 2017.

Adjusted EBITDA in the six months ended December 31, 2017 includes €509 thousand of post-merger adjusted EBITDA from Spark.

Cash:  Cash used in operating activities in 2017 was €1.2 million.  At December 31, 2017, the Group had €8.2 million in cash and cash equivalents, compared to €8.1 million at the end of 2016. At year end, the Group had €5.9 million of debt outstanding, which was fully repaid in March 2018.

 

Key Metrics – Full Year






Growth Rates %


2017


2016


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