- EBITDAS(1) Profit of $6.0 Million in 2005 vs. Loss of $6.0
Million in 2004 BEVERLY HILLS, Calif., Feb. 16
/PRNewswire-FirstCall/ -- Spark Networks plc (AMEX:LOV), a leading
provider of online personals services, today reported fourth
quarter and full year 2005 financial results. (Logo:
http://www.newscom.com/cgi-bin/prnh/20050202/LAW091LOGO )
Highlights "2005 was a turnaround year in which we made significant
strides towards right-sizing our cost structure and generating cash
flow from operations," stated David Siminoff, Spark Networks
president and chief executive officer. "We begin 2006 newly listed
on the American Stock Exchange. We are energized by recent
technology improvements and are poised for balanced growth with
significant operating leverage." The Company reported record
results for its JDate(R) operating segment. For the year ended
December 31, 2005, JDate revenue grew 9%, to $26.0 million, with
89% contribution margin. Revenue for the Company's Other Businesses
segment grew by 72%, partially driven by the purchase of
MingleMatch, Inc. in the second quarter of 2005. The Company also
reported that during the fourth quarter, it relaunched its JDate
and AmericanSingles(R) websites on its new technology platform. The
Company expects that its new three-tier architecture, based upon
distributed Service Oriented Architecture principles, will enable
it to more rapidly develop new capabilities and enhance its ability
to efficiently scale its websites. "While 2005 was a record year
for JDate, we were also able to successfully re-architect and
relaunch JDate and AmericanSingles on our new technology platform,"
stated Siminoff. "We plan to build on this performance in 2006. Our
next level of growth will come from leveraging the communities we
acquired in the MingleMatch acquisition in order to move quickly
into new vertical markets that show promising market potential, as
well as from our continuing focus on enhancing the consumer
experience and finding new ways for our members to communicate and
connect." Financial Results Reported revenue for the fourth quarter
of 2005 was $16.6 million, a decrease of 3%, compared to $17.1
million, over the same period in 2004. This decrease is primarily
the result of lower AmericanSingles revenue due to a significant
cut in marketing expenditures for the website, designed to improve
its contribution margin. Revenue for the year ended December 31,
2005 was $65.5 million, an increase of 1%, compared to revenue of
$65.1 million, for the year ended December 31, 2004. Total
operating expenses for the fourth quarter of 2005 were $10.8
million, a decrease of 10%, compared to $12.0 million, in the same
period in 2004. Total operating expenses for the year ended
December 31, 2005 were $42.0 million, a decrease of 8%, compared to
operating expenses of $45.5 million, for the same period ended
December 31, 2004. The decline in operating expenses was primarily
due to a decrease in G&A expense as a result of the continued
right-sizing of the Company's infrastructure. With share
compensation expenses included, the Company reported a net loss of
$403,000, or $(0.01) per share, for the fourth quarter of 2005,
compared to a net loss of $1.6 million, or $(0.06) per share, for
the same period in 2004. For the year ended December 31, 2005, the
Company reported a net loss of $1.4 million, or $(0.06) per share,
compared to a net loss of $11.6 million, or $(0.51) per share, for
the year ended December 31, 2004. During the third quarter of 2005,
the Company began accounting for share options in accordance with
the Statement of Financial Accounting Standards No. 123 (R),
Share-Based payment ("SFAS 123 (R)"). Periods prior to the third
quarter of 2005 do not contain any expense for share options in
accordance with SFAS 123(R). Due to the Company's implementation of
SFAS 123 (R), the net loss for the year ended December 31, 2005
includes compensation expense related to share options of $2.7
million. Excluding FAS 123 (R), the Company would have reported a
profit for the year of $0.05 per share, compared to a $(0.44) per
share loss in 2004(2). See the attached Consolidated Statement of
Operations for the Share-Based Compensation Expense for each
period. EBITDAS (EBITDA adjusted to remove share compensation
expense) for the fourth quarter of 2005 was $2.0 million, compared
to EBITDAS of $7,000, during the same period in 2004. EBITDAS for
the year ended December 31, 2005 was $6.0 million, compared to an
EBITDAS loss of $6.0 million, for the year ended December 31, 2004.
See the attached Consolidated Statement of Operations for a
reconciliation of EBITDA and EBITDAS to net income (loss). Balance
Sheet, Cash, Debt As of December 31, 2005, the Company had a cash
and marketable securities position of $17.3 million, compared to
cash and marketable securities of $7.4 million for the year ended
December 31, 2004. The increase in cash and marketable securities
on the balance sheet is partially the result of the exercise of
options to purchase 4.0 million shares by the Company's founders.
As a result of this exercise, the share count increased from 26.2
million to 30.2 million. As of December 31, 2005, the Company had
remaining payments in respect of the purchase of MingleMatch, Inc.
of $9.0 million. Of this amount, $2.0 million was paid in January
2006, $3.0 million is due in March 2006 and $4.0 million is due in
May 2006. As of December 31, 2005, the Company has accumulated over
$50.0 million of NOLs. Segment Reporting(3) The Company reported
fourth quarter 2005 revenue for its JDate segment of $6.8 million,
an increase of 10%, compared to $6.2 million, in the same period in
2004. For the year ended December 31, 2005, JDate segment revenue
was $26.0 million, an increase of 9%, compared to $23.8 million, in
the year ended December 31, 2004. The Company reported fourth
quarter 2005 revenue for its AmericanSingles segment of $6.7
million, a decrease of 22%, compared to $8.6 million, in the same
period in 2004. For the year ended December 31, 2005,
AmericanSingles segment revenue was $29.2 million, a decrease of
17%, compared to $35.2 million, in the year ended December 31,
2004. "In early 2005, we re-oriented management of our marketing
program and realigned our spending, which impacted revenue results
for AmericanSingles," stated Siminoff. "We have since begun to
capitalize on efficient marketing opportunities as they present
themselves." The Company reported fourth quarter 2005 revenue for
its Other Businesses segment of $3.1 million, an increase of 41%,
compared to $2.2 million, in the same period in 2004. For the year
ended December 31, 2005, the Other Businesses segment reported
revenue of $10.3 million, an increase of 72%, compared to $6.0
million, in the year ended December 31, 2004. The 2005 results for
the Other Businesses Segment includes the financial results for
MingleMatch, Inc. which the Company acquired and consolidated
during the second quarter of 2005. Business Metrics Average paying
subscribers for the Company's JDate segment were 73,700, during the
fourth quarter of 2005, an increase of 8%, compared to 68,500, from
the same period in 2004. For the year ended December 31, 2005,
average paying subscribers for JDate were 70,500, an increase of
1%, compared to 69,800, for the year ended December 31, 2004.
Average paying subscribers for the Company's AmericanSingles
segment were 91,900, during the fourth quarter of 2005, a decrease
of 29%, compared to 129,400, from the same period in 2004. For the
year ended December 31, 2005, average paying subscribers for
AmericanSingles were 105,300, a decrease of 21%, compared to
132,500, for the year ended December 31, 2004. Average paying
subscribers for the Company's Other Businesses segment were 58,600,
during the fourth quarter of 2005, an increase of 88%, compared to
31,100, from the same period in 2004. For the year ended December
31, 2005, average paying subscribers for the Company's Other
Businesses were 44,200, an increase of 86%, compared to 23,800, for
the year ended December 31, 2004. Average paying subscribers for
the Company, as a whole, in the fourth quarter of 2005, were
approximately 224,200, a decrease of 2%, compared to 229,000, from
the same period in 2004. For the year, average paying subscribers
were 220,000, a decrease of 3%, compared to 226,100, for the year
ended December 31, 2004. Direct subscriber acquisition cost(4)
(SAC) for the Company's JDate segment in the fourth quarter of 2005
was $12.25, an increase of 15%, compared to $10.68, from the same
period in 2004. For the year ended December 31, 2005, SAC for the
Company's JDate segment totaled $12.70, an increase of 57%,
compared to $8.09, for the year ended December 31, 2004. "SAC
metrics for JDate are not an apples-to-apples comparison when you
consider the marketing mix has shifted from a primarily online,
direct marketing effort to one that now includes a wide mix of
offline initiatives focused on continuing to strengthen the JDate
brand," stated Siminoff. "Because of these efforts, we proudly feel
that, within the Jewish community, JDate has become a verb." SAC
for the Company's AmericanSingles segment in the fourth quarter of
2005 was $36.66, compared to $36.52, in the same period in 2004.
For the year ended December 31, 2005, SAC for the Company's
AmericanSingles segment totaled $35.16, a decrease of 19%, compared
to $43.29, for the year ended December 31, 2004. The decrease in
SAC for AmericanSingles is a result of the re-orientation of the
Company's marketing program during 2005, which resulted in a
reduced AmericanSingles marketing spend. SAC for the Company's
Other Businesses segment in the fourth quarter of 2005 was $29.73,
a decrease of 11%, compared to $33.51, from the same period in
2004. For the year ended December 31, 2005, SAC for the Company's
Other Businesses segment totaled $32.05, a decrease of 8%, compared
to $34.74, for the year ended December 31, 2004. SAC for the
Company, as a whole, in the fourth quarter of 2005 was $27.78, a
decrease of 5%, compared to $29.37, from the same period last year.
For the year ended December 31, 2005, SAC totaled $28.36, a
decrease of 16%, compared to $33.85, for the year ended December
31, 2004. Investor conference call: The Company will discuss its
financial results during a live teleconference today at 1:30 p.m.
Pacific time and 10:30 p.m. Frankfurt time. Call Title: Spark
Networks 2005 Financial Results Toll-Free (United States):
+1-800-370-0898 International: +1-973-409-9260 Confirmation #:
7023107 One-Week Replay Toll-Free (United States): +1-877-519-4471
International: +1-973-341-3080 PIN Number: 7023107 The company will
also be hosting a webcast of its call which can be accessed here:
http://www.visualwebcaster.com/event.asp?id=32397 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, our
ability to keep pace with rapid technological changes, the strength
of our existing brands and our ability to maintain and enhance
those brands and our dependence upon the telecommunications
infrastructure and out networking hardware and software
infrastructure. For a discussion of those 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 plc: Spark Networks'
American Depository Shares trade on the American Stock Exchange
under the symbol "LOV" and its Global Depositary Shares trade on
the Frankfurt Stock Exchange under the symbol "MHJG". The Spark
Networks portfolio of consumer websites includes, among others,
JDate.com (http://www.jdate.com/), AmericanSingles.com
(http://www.americansingles.com/), BlackSinglesConnection(TM).com
(http://www.blacksinglesconnection.com/) and ChristianMingle(R).com
(http://www.christianmingle.com/). (1) "EBITDAS" is defined as
earnings before interest, taxes, depreciation, amortization and
share-based compensation. EBITDAS should not be construed as a
substitute for net income (loss) or net cash provided by (used in)
operating activities (all as determined in accordance with GAAP)
for the purpose of analyzing our operating performance, financial
position and cash flows, as EBITDAS is not defined by GAAP.
However, the Company regards EBITDAS as a complement to net income
and other GAAP financial performance measures, including an
indirect measure of operating cash flow. As such, management
believes that the investment community finds it to be a useful tool
to perform meaningful comparisons of past, present and future
operating results and as a means to evaluate the results of core
on-going operations. (2) Share-Based Compensation is a non-cash
charge recorded in the Company's income statements. The Company
believes that the non-GAAP financials measures that exclude
share-based compensation from net income (loss) provide useful
information to management and investors regarding how the expenses
associated with the application of SFAS 123(R) are reflected on the
statements of operations and facilitates comparisons to the
Company's historical operating results. The Company's management
uses this information internally for reviewing the financial
results, forecasting and budgeting. (3) In accordance with
Financial Accounting Standard No. 131, the Company's financial
reporting includes detailed data on three separate operating
segments. The JDate segment consists of the Company's JDate.com
website and its co-branded websites. The AmericanSingles segment
consists of the Company's AmericanSingles.com website and its
co-branded and private label websites. The Other Businesses segment
consists of all of the Company's other websites and businesses and
gives effect to the MingleMatch acquisition on May 19, 2005. (4)
Direct subscriber acquisition cost is defined as total direct
marketing costs divided by the number of new paying subscribers
during the period. This represents the average cost of acquiring a
new paying subscriber during the period. (Consolidated financial
statements to follow) SPARK NETWORKS PLC (formerly known as
MatchNet plc) CONSOLIDATED BALANCE SHEETS (in thousands, except
share data) December 31, Assets 2005 2004 Current assets: Cash and
cash equivalents $17,096 $4,265 Marketable securities 196 3,158
Restricted cash 1,085 1,330 Accounts receivable, net of allowance
of $13 932 641 Advances to employees 1 20 Prepaid expenses and
other 1,492 879 Total current assets 20,802 10,293 Property and
equipment, net 4,453 6,467 Goodwill, net 17,344 7,955 Intangible
assets, net 4,627 1,069 Investment in noncontrolled affiliate 1,099
1,167 Deposits and other assets 295 408 Total assets $48,620
$27,359 Liabilities and Shareholders' Equity Current liabilities:
Accounts payable $2,267 $3,014 Accrued liabilities 3,632 8,052
Deferred revenue 4,991 3,933 Notes payable - current portion 9,930
400 Current portion of obligations under capital leases -- 173
Total current liabilities 20,820 15,572 Deferred tax liability
1,717 -- Notes payable - long term 900 1,300 Total liabilities
23,437 16,872 Shares subject to rescission 3,819 3,819 Commitments
and contingencies -- -- Shareholders' equity: Authorized capital
800,000 pounds Sterling divided into 80,000,000 ordinary shares of
1p each; issued and outstanding 30,241,496 shares as of December
31, 2005, 24,587,351 shares as of December 31, 2004 at a stated
value of: 508 401 Additional paid-in-capital 66,313 50,423 Deferred
share-based compensation -- (305) Accumulated other comprehensive
income (loss) (302) (13) Notes receivable from employees (82) (203)
Accumulated deficit (45,073) (43,635) Total shareholders' equity
21,364 6,668 Total liabilities and shareholders' equity $48,620
$27,359 SPARK NETWORKS PLC (formerly known as MatchNet plc)
CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per
share data) Three Months Ended Years Ended December 31, December
31, 2005 2004 2005 2004 2003 Net revenues $16,586 $17,052 $65,511
$65,052 $36,941 Direct marketing expenses 6,059 6,628 24,411 31,240
18,395 Contribution margin 10,527 10,424 41,100 33,812 18,546
Operating expenses(1): Indirect marketing 450 547 1,208 2,607 986
Customer service 1,040 778 2,827 3,379 2,536 Technical operations
2,698 1,983 7,546 7,184 4,481 Product development 1,169 637 4,118
2,013 959 General and administrative 5,061 7,694 25,074 29,253
18,537 Amortization of intangible assets other than goodwill 237
190 1,085 860 555 Impairment of long-lived assets 105 208 105 208
1,532 Total operating expenses 10,760 12,037 41,963 45,504 29,586
Operating loss (233) (1,613) (863) (11,692) (11,040) Interest
(income) and other expenses, net 426 (52) 711 (66) (188) Loss
before income taxes (659) (1,561) (1,574) (11,626) (10,852)
Provision for income taxes (256) -- (136) 1 -- Net loss $(403)
$(1,561) $(1,438) $(11,627) $(10,852) Net loss per share - basic
and diluted $(0.01) $(0.06) $(0.06) $(0.51) $(0.57) Weighted
average shares outstanding - basic and diluted 27,530 24,234 26,105
22,667 18,970 EBITDA Net income (loss) $(403) $(1,561) $(1,438)
$(11,627)$ (10,852) Interest 81 (21) 193 (32) (163) Taxes (256) --
(136) 1 -- Depreciation 913 857 3,624 3,065 1,441 Amortization 237
190 1,085 860 555 EBITDA 572 (535) 3,328 (7,733) (9,019) Share
based compensation 1,393 542 2,717 1,704 1,871 EBITDAS $1,965 $7
$6,045 $(6,029) $(7,148) 1.Share based compensation included in
operating expenses: Indirect marketing $14 $28 $24 $156 $79
Customer service 22 -- 44 -- -- Technical operations 170 -- 338 22
140 Product development 124 -- 248 -- -- General and administrative
1063 514 2,063 1,526 1,652 SPARK NETWORKS PLC (formerly known as
MatchNet plc) SEGMENT RESULTS FROM OPERATIONS (in thousands) Three
Months Ended Years Ended December 31, December 31, 2005 2004 2005
2004 2003 Net Revenues JDate $6,800 $6,198 $25,961 $23,820 $16,091
AmericanSingles 6,691 8,639 29,217 35,224 19,253 Other Businesses
3,095 2,215 10,333 6,008 1,597 Total Net revenues $16,586 $17,052
$65,511 $65,052 $36,941 Direct Marketing Expenses JDate $775 $587
$2,885 $1,740 $739 AmericanSingles 3,597 4,666 15,167 24,954 15,887
Other Businesses 1,687 1,375 6,359 4,546 1,769 Total Direct
marketing expenses $ 6,059 $6,628 $24,411 $31,240 $18,395
Contribution Margin JDate $6,025 $5,611 $23,076 $22,080 $15,352
AmericanSingles 3,094 3,973 14,050 10,270 3,366 Other Businesses
1,408 840 3,974 1,462 (172) Total Contribution margin $10,527
$10,424 $41,100 $33,812 $18,546 SPARK NETWORKS PLC (formerly known
as MatchNet plc) SEGMENT METRICS (For the Period) Three Months
Ended Years Ended December 31, December 31, 2005 2004 2005 2004
2003 Average Paying Subscribers (Thousands) JDate 73.7 68.5 70.5
69.8 50.7 AmericanSingles 91.9 129.4 105.3 132.5 71.5 Other
Businesses 58.6 31.1 44.2 23.8 3.6 Total 224.2 229.0 220.0 226.1
125.8 Average Monthly Net Revenue Per Paying Subscriber JDate
$30.74 $ 30.15 $30.70 $28.42 $26.44 AmericanSingles 24.26 22.25
23.12 22.16 22.43 Other Businesses 17.61 18.16 17.58 16.75 23.72
Total 24.66 24.06 24.44 23.53 24.09 Direct Subscriber Acquisition
Cost JDate $ 12.25 $ 10.68 $12.70 $8.09 $ 4.39 AmericanSingles
36.66 36.52 35.16 43.29 45.70 Other Businesses 29.73 33.51 32.05
34.74 80.32 Total 27.78 29.37 28.36 33.85 33.84 Monthly Subscriber
Churn JDate 25.1% 26.0% 25.9% 25.8% 22.4% AmericanSingles 35.0%
36.4% 36.3% 35.6% 32.1% Other Businesses 27.2% 29.6% 25.6% 26.8%
33.4% Total 29.7% 32.4% 30.8% 31.7% 28.2% We define our key
business metrics as follows: * Average paying subscribers: Paying
subscribers are defined as individuals who have paid a monthly fee
for access to communication and website 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. * Average monthly net revenue
per paying subscriber: Average monthly net revenue per paying
subscriber 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. * Direct
subscriber acquisition cost: Direct subscriber acquisition cost is
defined as total direct marketing costs divided by the number of
new paying subscribers during the period. This represents the
average cost of acquiring a new paying subscriber during the
period. * Monthly subscriber churn: Monthly subscriber churn
represents the ratio, expressed as a percentage, of (i) the number
of paying subscriber cancellations during the period divided by the
number of average paying subscribers during the period and (ii) the
number of months in the period. First Call Analyst: FCMN Contact:
Photo: NewsCom:
http://www.newscom.com/cgi-bin/prnh/20050202/LAW091LOGO AP Archive:
http://photoarchive.ap.org PRN Photo Desk, photodesk@prnewswire.com
DATASOURCE: Spark Networks plc CONTACT: Investors, Mark Thompson,
+1-323-836-3000, , or Media, Gail Laguna, +1-323-836-3000, , both
of Spark Networks plc Web site: http://www.jdate.com/
http://www.americansingles.com/
http://www.blacksinglesconnection.com/
http://www.christianmingle.com/
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