Spark Networks SE (LOVLY) 13 Aug 222022 Q2 Earnings call transcript

Good day, and welcome to Spark Networks’ Second Quarter 2022 Financial Results Conference Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Todd Kehrli of MKR Investor Relations.

Thank you, operator. Good morning, and welcome to Spark Networks’ Fiscal 2022 Second Quarter Earnings Conference Call. call David CEO, Clark. today’s Chief Eichmann; on Officer, Financial me are Eric Spark’s and With

This issued Before spark.net. Eric, fiscal is cover items. available I’d turn XXXX like Spark I the results. company’s to a call second quarter on few This announcing the press release a over financial to morning, its Networks release quick at website

prospects Investor be Any business company’s be interested being not page the Additionally, over all alternatives. today should call, performance, today’s the live facts, certain to forward-looking company’s and likely is considered the everyone review I factors forward-looking Relations are that regarding statements. the discuss long-term expectations strategic factors may and for that broadcast including to parties, the this archived market discussed webcast about going website. comments will include call comments Internet our These the and opportunities, particularly management forward. remind future historical of will statements plans our comments influence are on regarding on of of want that

Forward-looking including cause results review and differ statements risks We number a complete risks. listeners materially. our all XX-Q our filings, description actual most encourage a of recent our to for which uncertainties, SEC are to subject these and to could of XX-K of

expectations as to contained August X, events, a today, statements in or company obligation as of being XXXX, of the no update revise or information, Our result made statements publicly are otherwise. future whether this on the undertakes any changes herein, call new forward-looking and of

related Eichmann, release. go reconciliation I’ll that Networks. of said, turn the over for the the in With X please report ahead. the earnings now discussing and our certain and differences on non-GAAP release we’ll between the Form call and financial non-GAAP to CEO reported this describe call be Spark measures. throughout present GAAP reporting between Eric periods X-K Today’s current the the Additionally Eric,

Todd, you, everyone. morning, and good Thank

we Before we time, remind I initiated alternatives comprehensive earnings X a still the want that announced this we June company. strategic is on review our had to ongoing. At the of begin commentary, for everyone that review

able with of be in and market billion the Mingle market the Christian dating While and progress $X.X material EliteSingles, and over can XX% We share say everyone JDate. to a capture SilverSingles, strong growing estimate brands, work portfolio affiliations. meaningful we of U.S. right worldwide year. value relationships a near our Board online religious identify to view with for that Spark’s this participate market is and revenue, meaningful strategic positioned social to has that to and understand largest market, that company What eager is strategic more I a no status. we on is alternatives and our uniquely our now, dating know there process large by Spark is in the dynamic hope Spark Europe enhance XX-plus advisers to is across updates external have relationships, the say people fourth dating demographics to on be with to online as company’s engaged the America review, you reinforced and and capitalize North leader of targeting We’ll future. update that ahead. range in with been for the we a to to legal and X% financial, Zoosk, are we at conclude and assess our the has which the about This our We highly the position. includes opportunities subscription-based in about

On second million. by in was the provide currencies $XX.X X/X to U.S. currency strategies color in we where would have foreign our the quarter exchange generate quarter drive we growth value particular, ultimately, quarter second been around and revenue revenue. revenue our in Now major more future. constant I’ll results, over headwinds place and of let European revenue our Overall, strengthened have shareholder against all me start impacted a by dollar investments currencies, reviewing and basis, our as then second put the

During the saw our return revenue year-over-year growth quarter, our acquisition XX% us Zoosk, new scaling growth. we brand, began user subscriber ability spend our to to for in gives which Zoosk, and confidence largest

renewals. experience, We we also the Zoosk adoption increased improving drive good progress which will user made on believe and

quarter, the and to drive profile during interaction from we user resulting greater profiles higher Specifically developed in personality representation, users. stronger completion our

impacting also subscriptions. engagement both positively and Zoosk’s We matching updated algorithm,

and flow Zoosk’s packages. across payment prices Finally, we started testing new optimized

increase the expectations. saw our the lower We of SilverSingles we we as a have cause root addressed result, believe in and, which platform, EliteSingles During increase and to improvements user an performance the seen versus our quarter, engagement. in on fraud led

metrics the We in further will to platforms. and on all and continue safety engagement, to quarter. improving focused on fraud work third conversion product even team reduce strengthening increasing our security is Overall,

We by to working are moving platforms primary brands X our from simplify infrastructure our to technology X.

we we to resources of delaying next made While HX good on our to some year. in focus progress safety, prioritize have plan, our transition our

by look progressing all are year. We of represents fair launch the this end a our opportunity for our capture mobile we will mobile to share we in future apps apps we EliteSingles new as expect for app that well believe of of Spark and revamping Lastly, and significant Zoosk the revenue.

we Zoosk new traffic a XX% the year-on-year able to in second quarter partners with front, positive added expanding in during and on user the we saw TV platform. activities marketing acquisition, Once ramp radio ads up quarter. organic results. and began including new we’re during the On our user and affiliate We’ve XX% increase results, our started solid subscribers we acquisition a increase

QX, channels, that We newsletters. test improved and advertising intend investments TikTok, and expect native revenue increased these to and additional continued continue to social to content drive including profitability. we In

months. We expect few decline the potential will we the also that in rates advertising next from benefit in

anticipate investments half of summary, growth. our European challenging Zoosk we In our contain and year. and more We U.S. for the further to second economic looking we progress continue are Finally, getting on the outlook, back the to acquisition make subscriber product given prioritize to lead Chief more costs financial growth growth that, user in the our to with strong XXXX. efforts, in XXXX color Financial With our around Clark, to Officer, for performance and David quarter. to add I’ll ask momentum combined David?

of based the basis, decrease In fraud-related $X.X same been the and quarter duration currency subscriptions fluctuations loss Thank from and user, balance loss decline monthly compared in constant in would of revenue quarter factors, to impairment in on a million to year-over-year Net by ARPU, morning, of quarter net fluctuation, and a revenue and $XX.X million, company attribute in Spark’s in of decline We result ARPU quarter. second cash the of on our due the The everyone. ended price in million million of quarter quarter good or net longer total in second to in with the during the revenue period XXXX. was a have currency quarter. non-Zoosk Adjusted primarily brands. the in the for up was average the $XX.X you, Eric, decreased impacted acquisition million of first the large to subscribers million. a XXXX $XX.XX Revenue and and balance $XX.X the quarter emphasis loss of or decrease were the the $XX.X second per including loss was product compared user sheet, and in was million. a noncash Zoosk million the through of million million quarter quarter, debt The monthly of decline XXXX our was the of investments EBITDA in XXXX. currency was paying compared revenue second the end-of-period company’s year-over-year second $XX.XX to second the of intangibles Shifting XXXX. the quarter incentives. $XX a $XX.X second Zoosk’s debt compared in to $XX $X.X XXX,XXX GAAP decline second second revenue On quarter year’s XXXX. growth-oriented to Last sequentially second several to for revaluation in $X.X a in net XXXX goodwill. XXX,XXX,

under there amortization year is MGG a new agreement. no principal As required this reminder, the

of the company return quarter, to we to successfully as our today, growth. MGG announced invest were to agreement to the able loan we Following to with continue back renegotiate the allow end us to

$X.X XX-Q Before to an want recognition to million X-K result we are This I an was adjustment to statements We quarter an that to of quarters plan and system we company’s has in over quarter. revenue turn unaudited amendment to guidance, included resolved mention revenue our first the in this to interim XX-Q. error filed a the we quarter this This the a financial that led of the regarding revenue. the XXXX of error first adjustment morning taking the later restatement first file original consolidated to year. the recognized reflect in subsequent been

Turning guidance. Due we of be full consistent year are On revenue compared currency now dollar, revenue. to We revenue to down revising of our be constant year the year of of the XXXX as to basis, is a which down for low- XXXX. with a expect XXXX on a expect factors, expectations we to to for revenue. largest number the U.S. depreciation total the full to mid-single percentage digits full year basis XXXX that

are including with longer increase an later new pleased in of seeing which for our our trends, While we duration than means be we renewals are in new past. subscriptions, Zoosk, the customer in coming will subscribers

of quarter questions. we subscription EBITDA for and to ahead On It take in growth, the periods to expect EBITDA that, to cost than occurred. of note the over we profitability subscriber as in acquisition previously that we’re anticipated, it important the recognize EBITDA while of deliver to this full happy adjusted the adjusted adjusted year revenue your user we growth the double-digit length, be revenue low full XXX% year. margins recognized side, And is although is entire with lower Operator? lag expect

[Operator Riley. Instructions] And our come will first Raj from with B. Sharma questions

better reason up, mean marketing Can you much -- spend about are up. this And new of Is I I up? for guide the ForEx-related? that? guide also the organic are down and subscribers talk down? book how wanted to is understand what’s

Yes.

So Raj, much This question. thank Eric. the very you is for

great. things subscribers, subscribers the quarter-on-quarter, on which like is mentioned is we up for great. Overall particular, are -- is in up Zoosk, new subscriber which the indeed, good growth is that call So that

to in couple I think extent. foreign But exchange a I’ll to big we David things, dollar the -- about the and what a certainly, factor. second by let one affected of were talk you was

than The second renewals coming in one expected. later is

had portion restatement the about had in in we in good And renewals lag obviously and a of quarter. and talked they QX, an make a any our that also we revenues I effect. coming So in think so

me have renewals just those So those factors, of were are about gone, any of not X the the But in particular David, future later. business in the worried since None really. the comments? they’re coming

Yes.

basis the is And an rest currency first provided, through least as foreign that quarter, being on adjustment full an takes is year. of mentioned Eric which dollar the million by the top year, the line affected So down the $X $X.X estimate absolute example. but million, by we in at the then rolling obviously

said And You an reason the fraud? -- were... And okay. a why big is in what numbers is increase fraud issue of the there’s

quickly and browsers, send On that fraudsters actually amongst and And you SilverSingles, was one in available X it issue environment, free. the EliteSingles quite that, that mobile mechanism for through them. on Yes. an was discovered actually properties, messages spread could

increasing significantly saw so a you found we if that loophole, closed And it. fraud and we was until will, that, we

from largely think find you’re bit obviously, a little not subscriber that I it. providing. And you’re getting fixed. satisfied and So messages with It fraudsters, a if XXX you’re the us we’re service to took was time of

closed, affected was for something So that and the out quickly but second those properties. found X that in us we quarter, it

in Your the subscribers drastically one the part of But it business, in you how? Elite? affected down went

Well, is so the [Card things. a one of is couple other one and renewals. spec]

wouldn’t that subscribers have had to going they experience, bad you renew. are a If renew but

we think I were way that it’s in so And that affected.

[quarter]? ARPU ARPU would do the that the over is think the how reason for rise And you the And decline? that

ARPU Yes, it. those lost subscribers. the would opposed think as the subscribers majority to also have for yes. related, think we a decline that we I I in revenue thing of having currency of -- is a The is But accounts decrease big cases, and from in part

certainly And on have currencies them. duration have subscription, pushing longer an then we effect been

seen haven’t to the local just on confirm significant basis, we Raj, a currency that, think ARPU. in changes I

So yes.

Thank turn or over like you. call back the I any to would management closing to now additional remarks. for

Have thank thank you, your our Well, Spark for day. in call. joining for Networks, everyone, a interest and great you

today’s conclude does ladies and Thank gentlemen. and you, participation. conference, we This appreciate your

may disconnect at time. You any