- New Debt Facility Sets the Stage to Invest for
Growth
BERLIN, March 14, 2022 /PRNewswire/ -- Spark Networks SE
(NASDAQ: LOV), a leading social dating platform for meaningful
relationships, today reported financial results for its 2021 fourth
quarter and full year ended December 31, 2021.
"Currently, our family of brands serve roughly four million page
views per day of singles searching for serious relationships and
millions of paid subscribers per year, making Spark the fourth
largest online subscription-based dating company across
North America and Europe," said Eric
Eichmann, CEO of Spark Networks. "With this scaled platform,
we have a large growth opportunity ahead of us and with our new
credit facility in place, we now have the financial flexibility to
begin to execute on a strong and well-developed roadmap of
strategies and investments that we believe will drive growth in
2022 and beyond. With the right talent in place, the right product
strategy, scalable technology and financial flexibility we are now
well positioned to return to growing our revenue."
Fourth Quarter 2021 Financial Results
- Revenue was $52.0 million,
compared to $58.1 million in the
fourth quarter of 2020.
- Net Loss was $9.9 million,
compared to $45.1 million in the
fourth quarter of 2020.
- Adjusted EBITDA(1) was $14.3
million, compared to $13.1
million in the fourth quarter of 2020.
- Total cash and cash equivalents were $16.1 million as of December 31, 2021.
- Total debt was $82.1 million,
compared to $99.1 million at
December 31, 2020, representing a
$17.0 million decline in total
debt.
- Net debt was $66.0 million as of
December 31, 2021.
Full Year 2021 Financial Results
- Revenue was $216.9 million,
compared to $233.0 million in
2020.
- Net Loss was $68.2 million,
compared to $46.6 million in
2020.
- Adjusted EBITDA(1) was $33.0
million, compared to $38.9
million in 2020.
Business Highlights and Financial Outlook
- Spark properties generated over 4 million daily page views and
a total free and paid user base of nearly 40 million people in
2021.
- Spark averaged 875,000 paid subscribers during 2021.
- Four of Spark's top five brands, representing close to half of
total revenue, collectively grew revenue 5% and subscribers 3% year
over year in 2021.
- Zoosk turnaround progressing as organic traffic increased 74%
year over year in the quarter.
- Spark successfully refinanced its debt facility following the
close of the year, to better fund its growth initiatives in 2022
and beyond.
- Spark intends to invest $110
million in customer acquisition in 2022.
- For full year 2022, Spark expects to return to total revenue
growth year over year, while still delivering solid Adjusted EBITDA
margins for the year.
Financial Outlook
"During 2021, we paid down $17.0
million in debt and continue to review expenses company-wide
with an aim at being more efficient in 2022," said David Clark, Chief Financial Officer of Spark
Networks. "Following the close of the year, we successfully
refinanced our existing debt facility to better fund our growth
initiatives in 2022. Under the new $100 million debt facility
with MGG Investment Group, we have extended our maturity dates and
improved our covenant flexibility, which will allow us to invest
appropriately in growing our business in 2022 and beyond. For full
year 2022, we expect to return to total revenue growth year over
year, while still delivering solid Adjusted EBITDA margins for the
year."
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 888-349-0106 (US) or +1
412-902-0131 (International) and ask to join the Spark Networks'
call.
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 it 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:
4725720.
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 widening
portfolio of premium and freemium dating apps include Zoosk,
EliteSingles, SilverSingles, Christian
Mingle, Jdate, and JSwipe, among others. Spark is
headquartered in Berlin, Germany,
with offices in New York and
Utah.
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 Spark
Networks' making of necessary product improvements to return Zoosk
to revenue growth in 2022; the positive traction Spark Networks is
seeing from improvements and new features; Spark Networks'
continuation of work in 2022 on improving all of its properties'
features and functionality, as well as implementing several revenue
optimization efforts across its marketing and product
organizations; Spark Networks' confidence that these improvements
will result in Zoosk's subscriber and revenue growth in 2022, as
well as a return to year over year growth in Spark Networks'
revenues; Spark Networks' financial outlook including with respect
to full-year 2022 revenue and full-year 2022 Adjusted EBITDA; Spark
Networks' growth opportunity; the scalability of Spark Networks'
platform and its flexibility to execute its roadmap of strategies
and investments; Spark Networks' aim at being more efficient in
2022; Spark Networks' ability to invest appropriately in growing
its business in 2022 and beyond; Spark Network's intended
investment in customer acquisition in 2022; and Spark Networks'
expectation that for full year 2022 it expects to return to total
revenue growth year over year, while still delivering solid
Adjusted EBITDA margins for the year.
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, 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' 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 or Joo-Hun Kim
lov@mkr-group.com
1 Adjusted earnings before interest, taxes,
depreciation and amortization ("Adjusted EBITDA"), a non-GAAP
financial measure, is one of the primary metrics by which we
evaluate the performance of our business, 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 the ongoing operations and allows for
greater transparency with respect to key metrics used by senior
leadership in its financial and operational decision-making. We
define Adjusted EBITDA as net earnings (loss) excluding net
interest expense, (gain) loss on foreign currency transactions,
income tax (benefit) expense, depreciation and amortization, asset
impairments, stock-based compensation expense, acquisition related
costs and other costs. Adjusted EBITDA has inherent limitations in
evaluating the performance of the Company, including, but not
limited to the following:
- Adjusted EBITDA does not reflect the cash capital expenditures
during the measurement period;
- Adjusted EBITDA does not reflect any changes in working capital
requirements during the measurement period;
- Adjusted EBITDA does not reflect the cash tax payments during
the measurement period;
- Adjusted EBITDA may be calculated differently by other
companies in our industry, thus limiting its value as a comparative
measure;
Because of these limitations, Adjusted EBITDA should be
considered in addition to other financial performance measures,
including net income (loss) and our other U.S. GAAP results.
A reconciliation of the Adjusted EBITDA for the three months and
year ended December 31, 2021 and 2020
can be found in the table below.
Statements regarding our expectations as to the full-year 2022
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-GAAP financial
guidance to the corresponding GAAP measures without unreasonable
effort because of the uncertainty and variability of the nature and
amount of these future charges and costs.
Spark Networks
SE
|
Condensed
Consolidated Balance Sheets (Unaudited)
|
(in
thousands)
|
|
|
December 31,
2021
|
|
December 31,
2020
|
Assets
|
|
|
|
|
Cash and cash
equivalents
|
|
$
16,141
|
|
$
19,267
|
Accounts receivable,
net
|
|
6,261
|
|
5,507
|
Goodwill and intangible
assets
|
|
164,113
|
|
215,581
|
Other assets
|
|
23,286
|
|
50,088
|
Total assets
|
|
$
209,801
|
|
$
290,443
|
Liabilities and
Shareholders' Equity
|
|
|
|
|
Current portion of
long-term debt
|
|
$
17,593
|
|
$
19,037
|
Accounts
payable
|
|
11,474
|
|
11,127
|
Deferred
revenue
|
|
36,973
|
|
38,304
|
Accrued expenses and
other current liabilities
|
|
27,042
|
|
28,429
|
Long-term debt, net of
current portion
|
|
64,531
|
|
80,109
|
Other
liabilities
|
|
19,495
|
|
18,534
|
Total
liabilities
|
|
177,108
|
|
195,540
|
Total shareholders'
equity
|
|
32,693
|
|
94,903
|
Total liabilities and
shareholders' equity
|
|
$
209,801
|
|
$
290,443
|
Spark Networks
SE
|
Condensed
Consolidated Statements of Operations (Unaudited)
|
(in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
December 31,
|
|
Year Ended December
31,
|
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
Revenue
|
|
$
51,976
|
|
$
58,068
|
|
$
216,905
|
|
$
233,036
|
Total operating costs
and expenses
|
|
63,072
|
|
102,782
|
|
250,925
|
|
266,215
|
Operating
loss
|
|
(11,096)
|
|
(44,714)
|
|
(34,020)
|
|
(33,179)
|
Other expense,
net
|
|
(3,252)
|
|
(59)
|
|
(15,737)
|
|
(8,440)
|
Loss before income
taxes
|
|
(14,348)
|
|
(44,773)
|
|
(49,757)
|
|
(41,619)
|
Income tax benefit
(expense)
|
|
4,414
|
|
(363)
|
|
(18,398)
|
|
(4,989)
|
Net loss
|
|
$
(9,934)
|
|
$
(45,136)
|
|
$
(68,155)
|
|
$
(46,608)
|
Reconciliation of
Net loss to Adjusted EBITDA (Unaudited):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
December 31,
|
|
Year Ended December
31,
|
(in
thousands)
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
Net
loss
|
|
$
(9,934)
|
|
$
(45,136)
|
|
$
(68,155)
|
|
$
(46,608)
|
Net interest
expense
|
|
3,101
|
|
3,368
|
|
13,453
|
|
13,281
|
Loss (gain) on foreign
currency transactions
|
|
796
|
|
(2,439)
|
|
2,918
|
|
(3,771)
|
Income tax (benefit)
expense
|
|
(4,414)
|
|
363
|
|
18,398
|
|
4,989
|
Depreciation and
amortization
|
|
945
|
|
2,219
|
|
6,593
|
|
9,384
|
Impairment of goodwill,
intangible assets, and capitalized software
|
|
20,864
|
|
51,236
|
|
52,950
|
|
51,236
|
Stock-based
compensation expense
|
|
627
|
|
930
|
|
2,725
|
|
4,780
|
Acquisition-related
costs(1)
|
|
—
|
|
—
|
|
—
|
|
1,545
|
Other
costs(2)
|
|
2,333
|
|
2,549
|
|
4,155
|
|
4,106
|
Adjusted
EBITDA
|
|
$
14,318
|
|
$
13,090
|
|
$
33,037
|
|
$
38,942
|
|
(1)
Acquisition related costs primarily consist of transaction costs,
including legal, consulting, advisory fees, and severance and
retention costs.
|
(2) Includes primarily consulting and
advisory fees related to special projects, as well as non-cash
acquisition related expenses, post-merger integration activities
and long-term debt transaction and advisory fees.
|
Spark Networks
SE
|
Condensed
Consolidated Statements of Cash Flows (Unaudited)
|
(in
thousands)
|
|
|
|
Year Ended December
31,
|
|
|
2021
|
|
2020
|
Net loss
|
|
$
(68,155)
|
|
$
(46,608)
|
Adjustments to
reconcile net loss to cash provided by operating
activities:
|
|
|
|
|
Non-cash
items
|
|
86,998
|
|
72,467
|
Change in operating
assets and liabilities
|
|
(2,180)
|
|
(6,909)
|
Net cash provided by
operating activities
|
|
16,663
|
|
18,950
|
Capital
expenditures
|
|
(1,086)
|
|
(2,734)
|
Acquisitions of
businesses, net of cash acquired
|
|
—
|
|
(513)
|
Net cash used in
investing activities
|
|
(1,086)
|
|
(3,247)
|
|
|
|
|
|
Net cash used in
financing activities
|
|
(19,920)
|
|
(10,677)
|
Effects of exchange
rate fluctuations on cash and cash equivalents and restricted
cash
|
|
(495)
|
|
(1,366)
|
Net (decrease) increase
in cash and cash equivalents and restricted cash
|
|
(4,838)
|
|
3,660
|
|
|
|
|
|
Cash and cash
equivalents and restricted cash at beginning of period
|
|
21,117
|
|
17,457
|
Cash and cash
equivalents and restricted cash at end of period
|
|
$
16,279
|
|
$
21,117
|
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SOURCE Spark Networks SE