Spark Networks Inc (LOV) filed Quarterly Report for the period ended 2009-03-31.
Spark Networks is a leading provider of online personals in the United States and internationally. Our comprehensive user-friendly websites offer convenient and safe places for likeminded singles to connect. Many of these connections lead to long term relationships and quite often marriage. Spark Networks Inc has a market cap of $51.8 million; its shares were traded at around $2.52 with a P/E ratio of 9.3 and P/S ratio of 0.9.
Highlight of Business Operations:
Net revenues decreased 20% to $12.0 million in the first quarter of 2009 compared to $15.0 million in the first quarter of 2008. The majority of this decrease can be attributed to the managed decline in the Company’s General Market Networks segment and lower net revenues for the Jewish Networks. Net revenues for the Jewish Networks segment decreased 12.5% to $7.6 million in the first quarter of 2009 compared to $8.7 million in the first quarter of 2008. The decrease in net revenues is primarily driven by a lower average paying subscriber base, reflecting a downturn in the economy. Net revenues for our Other Affinity Networks segment decreased 1.7% to $3.3 million in the first quarter of 2009 compared to $3.4 million in the first quarter of 2008. Net revenues for the General Market Networks segment decreased 63.5% to $940,000 in the first quarter of 2009, compared to $2.6 million in the first quarter of 2008. The decrease in General Market Networks net revenues is due to the decrease in average paying subscribers, reflecting management’s decision to eliminate inefficient marketing expenses. Net revenues of our Offline & Other Businesses segment decreased 50.2% to $212,000 in the first quarter of 2009 compared to $426,000 in the first quarter of 2008. The decrease in net revenues is largely attributable to a travel event for our members in the first quarter of 2008 versus no trips in the first quarter of 2009.
Direct marketing expenses decreased 30.0% to $2.9 million in the first quarter of 2009 compared to $4.1 million in the first quarter of 2008. The majority of this decline can be attributed to a reduction in inefficient marketing programs associated with the General Market Networks segment. Direct marketing expenses for the Jewish Networks segment decreased 20.1% to $563,000 in the first quarter of 2009 compared to $705,000 in the first quarter of 2008. The decrease reflects our shift to more efficient online marketing programs. Direct marketing expenses for the Other Affinity Networks segment increased 6.7% to $2.0 million for the first quarter of 2009 compared to $1.8 million in the first quarter of 2008, reflecting growth initiatives in this segment. Direct marketing expenses for the General Market Networks segment decreased 79.6% to $273,000 in the first quarter of 2009 compared to $1.3 million in the same period in 2008. The decrease reflects management’s decision to pursue cost effective subscriber acquisition marketing campaigns. Direct marketing expenses for the Offline & Other Businesses segment decreased 74.1 % to $49,000 for the first quarter of 2009 compared to $189,000 in the same period in 2008 reflecting the cost of a travel event in 2008 and the absence of one in 2009.
Operating expenses consist primarily of sales and marketing, customer service, technical operations, development and general and administrative expenses. Operating expenses for the first quarter of 2009 were $8.0 million, a decrease of 5.9% compared to $8.5 million for the first quarter of 2008. The decrease over the first quarter of 2009 is primarily attributable to a $132,000 decrease in sales and marketing expense, a $193,000 decrease in technical operations expense and a $910,000 decrease in general and administrative expense, offset by $880,000 of asset impairment charges. We did not incur an impairment charge in the first quarter of 2008.
Net Income and Earnings Per Share. Net income for the first quarter of 2009 was $311,000, or $0.02 per share, compared to $1.6 million, or $0.06 per share for 2008. The decrease to net income reflects lower contribution and higher asset impairment charges in the first quarter of 2009. First quarter 2009 earnings per share benefited from an approximate 5.5 million share reduction in fully diluted weighted average shares outstanding compared to the first quarter of 2008, reflecting our stock repurchase activities throughout 2008.
Net cash used in investing activities was $1.2 million in the first quarter of 2009 compared to net cash provided in 2008 of $177,000. In the first quarter of 2009, we paid $770,000 to the former owners of HurryDate pursuant to an earn-out obligation. Additionally, we invested $427,000 of cash in computer hardware and software.
Net cash provided in financing activities was $7,000 for the first quarter of 2009 compared to net cash used in 2008 of $3.6 million. Cash used in financing activities in 2008 was primarily due to stock repurchases totaling $3.3 million and payments for costs associated with our revolving credit facility of $284,000.
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