Spark Networks Inc (LOV, Financial) filed Quarterly Report for the period ended 2010-09-30.
Spark Networks Inc has a market cap of $61.8 million; its shares were traded at around $3 with a P/E ratio of 14.3 and P/S ratio of 1.4. LOV is in the portfolios of Whitney Tilson of T2 Partners Management, LP.
Cost of Revenue. Cost of revenue consists primarily of direct marketing costs, compensation and other employee-related costs (including stock-based compensation) for personnel dedicated to maintaining our data centers, data center expenses and credit card fees. Cost of revenue decreased 16.7% to $3.2 million for the three months ended September 30, 2010, compared to $3.8 million for the same period in 2009. Direct marketing expenses decreased 19.5% to $2.5 million for the three months ended September 30, 2010, compared to $3.1 million for the same period in 2009. The majority of this decline can be attributed to a reduction in inefficient online marketing investments for the Other Affinity Networks segment. Direct marketing expenses for the Jewish Networks segment increased 10.8% to $696,000 in the third quarter of 2010 compared to $628,000 in the third quarter of 2009. The increase reflects additional online and offline marketing investments. Direct marketing expenses for the Other Affinity Networks segment decreased 26.8% to $1.6 million for the third quarter of 2010 compared to $2.2 million in the third quarter of 2009, reflecting a reduction in inefficient online marketing investments and a shift in brand focus. Direct marketing expenses for the General Market Networks segment decreased 12.3% to $121,000 in the third quarter of 2010 compared to $138,000 in
Revenue decreased 10.5% to $30.7 million in the first nine months of 2010 compared to $34.3 million in the first nine months of 2009. The decrease can be attributed to lower subscription revenue in our Jewish, Other Affinity and General Market Networks segments. Revenue for the Jewish Networks segment decreased 5.6% to $20.5 million in the first nine months of 2010 compared to $21.7 million in the first nine months of 2009. The decrease in revenue is driven by lower average revenue per user (ARPU), reflecting a shift in the mix of plans purchased by our subscribers and their related price points, as we focused on growing our network. Revenue for our Other Affinity Networks segment decreased 13.3% to $8.5 million in the first nine months of 2010 compared to $9.8 million in the first nine months of 2009. The decrease in revenue results from a 23.5% reduction in direct marketing investment and lower ARPU. The lower ARPU reflects a shift in the mix of plans purchased by our subscribers and their related price points as we shifted our focus to a select group of brands within this segment. The reduction in direct marketing expense reflects a shift in brand investment. Revenue for the General Market Networks segment decreased 57.9% to $932,000 in the first nine months of 2010, compared to $2.2 million in the first nine months of 2009. The decrease in General Market Networks revenue is primarily due to the decrease in average paying subscribers, reflecting managements decision to eliminate inefficient online marketing expenses. Revenue for our Offline & Other Businesses segment increased 34.6% to $805,000 in the first nine months of 2010 compared to $598,000 in the first nine months of 2009. The higher revenue reflects a large travel offering in the nine months ended September 30, 2010 when compared to the same period in 2009 which had no similar travel offering.
Cost and expenses consist primarily of cost of revenue, sales and marketing, customer service, technical operations, development and general and administrative expenses. Cost and expenses for the nine months ended September 30, 2010 were $25.7 million, a decrease of 12.0% compared to $29.2 million for the nine months ended September 30, 2009. The decrease is primarily attributable to a $1.5 million decrease in cost of revenue, an $889,000 decrease in development expense and a $759,000 decrease in impairment of goodwill expense.
Cost of Revenue. Cost of revenue consists primarily of direct marketing costs, compensation and other employee-related costs (including stock-based compensation) for personnel dedicated to maintaining our data centers, data center expenses and credit card fees. Cost of revenue decreased 13.4% to $9.7 million for the nine months ended September 30, 2010 compared to $11.3 million for the same period in 2009. Direct marketing expenses decreased 16.0% to $7.5 million for the nine months ended September 30, 2010, compared to $8.9 million for the same period in 2009. The majority of this decline can be attributed to a reduction in inefficient online marketing investments for the Other Affinity Networks segment. Direct marketing expenses for the Jewish Networks segment decreased 2.9% to $1.7 million in the nine months ended September 30, 2010 compared to $1.8 million in the nine months ended September 30, 2009. The decrease reflects our shift to more efficient online marketing investments. Direct marketing expenses for the Other Affinity Networks segment decreased 23.5% to $4.9 million for the nine months ended September 30, 2010 compared to $6.3 million in the nine months ended September 30, 2009, reflecting a reduction in inefficient online marketing investments and a shift in brand focus. Direct marketing expenses for the General Market Networks segment decreased 27.2% to $407,000 in the nine months ended September 30, 2010 compared to $559,000 in the same period in 2009. The decrease reflects managements decision to pursue cost effective online subscriber acquisition marketing campaigns. Direct marketing expenses for the Offline & Other Businesses segment increased to $473,000 for the nine months ended September 30, 2010 compared to $197,000 for the same period in 2009, reflecting a large travel offering in the nine months ended September 30, 2010 when compared to the same period in 2009, which had no similar travel offering.
Impairment of Goodwill and Other Long-lived Assets. Impairment of goodwill and other long-lived assets expenses primarily represent the write-down of investments in businesses and computer software. Impairment of goodwill and other long-lived assets decreased to $121,000 for the first nine months of 2010 from $880,000 for the first nine months of 2009. In the first quarter of 2010 and 2009, the Company impaired approximately $121,000 and $110,000 of capitalized software development costs when we determined that certain web-based products failed to perform to Company standards. In addition, in the first quarter of 2009, the Company expensed a $770,000 HurryDate earn-out payment.
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Spark Networks Inc has a market cap of $61.8 million; its shares were traded at around $3 with a P/E ratio of 14.3 and P/S ratio of 1.4. LOV is in the portfolios of Whitney Tilson of T2 Partners Management, LP.
Highlight of Business Operations:
Revenue decreased 10.3% to $9.9 million in the third quarter of 2010 compared to $11.1 million in the third quarter of 2009. The decrease can be attributed to lower subscription revenue in our Jewish, Other Affinity and General Market Networks segments. Revenue for the Jewish Networks segment decreased 4.4% to $6.8 million in the third quarter of 2010 compared to $7.1 million in the third quarter of 2009. The decrease in revenue is driven by lower average revenue per user (ARPU), reflecting a shift in the mix of plans purchased by our subscribers and their related price points, as we focused on growing our network. Revenue for our Other Affinity Networks segment decreased 14.1% to $2.7 million in the third quarter of 2010 compared to $3.2 million in the third quarter of 2009. The decrease in revenue results from a 26.8% reduction in direct marketing investment, which contributed to a lower average paying subscriber base, and lower ARPU. The lower ARPU reflects a shift in the mix of plans purchased by our subscribers and their related price points as we shifted our focus to a select group of brands within this segment. The reduction in direct marketing expense reflects a shift in brand investment. Revenue for the General Market Networks segment decreased 54.0% to $264,000 in the third quarter of 2010, compared to $574,000 in the third quarter of 2009. The decrease in revenue is primarily due to a decrease in average paying subscribers, reflecting managements decision to eliminate inefficient online marketing investments in prior periods. Revenue of our Offline & Other Businesses segment decreased 34.0% to $142,000 in the third quarter of 2010 compared to $215,000 in the third quarter of 2009. The lower revenue reflects fewer travel and event offerings in the third quarter of 2010 when compared to the same period last year.Cost of Revenue. Cost of revenue consists primarily of direct marketing costs, compensation and other employee-related costs (including stock-based compensation) for personnel dedicated to maintaining our data centers, data center expenses and credit card fees. Cost of revenue decreased 16.7% to $3.2 million for the three months ended September 30, 2010, compared to $3.8 million for the same period in 2009. Direct marketing expenses decreased 19.5% to $2.5 million for the three months ended September 30, 2010, compared to $3.1 million for the same period in 2009. The majority of this decline can be attributed to a reduction in inefficient online marketing investments for the Other Affinity Networks segment. Direct marketing expenses for the Jewish Networks segment increased 10.8% to $696,000 in the third quarter of 2010 compared to $628,000 in the third quarter of 2009. The increase reflects additional online and offline marketing investments. Direct marketing expenses for the Other Affinity Networks segment decreased 26.8% to $1.6 million for the third quarter of 2010 compared to $2.2 million in the third quarter of 2009, reflecting a reduction in inefficient online marketing investments and a shift in brand focus. Direct marketing expenses for the General Market Networks segment decreased 12.3% to $121,000 in the third quarter of 2010 compared to $138,000 in
Revenue decreased 10.5% to $30.7 million in the first nine months of 2010 compared to $34.3 million in the first nine months of 2009. The decrease can be attributed to lower subscription revenue in our Jewish, Other Affinity and General Market Networks segments. Revenue for the Jewish Networks segment decreased 5.6% to $20.5 million in the first nine months of 2010 compared to $21.7 million in the first nine months of 2009. The decrease in revenue is driven by lower average revenue per user (ARPU), reflecting a shift in the mix of plans purchased by our subscribers and their related price points, as we focused on growing our network. Revenue for our Other Affinity Networks segment decreased 13.3% to $8.5 million in the first nine months of 2010 compared to $9.8 million in the first nine months of 2009. The decrease in revenue results from a 23.5% reduction in direct marketing investment and lower ARPU. The lower ARPU reflects a shift in the mix of plans purchased by our subscribers and their related price points as we shifted our focus to a select group of brands within this segment. The reduction in direct marketing expense reflects a shift in brand investment. Revenue for the General Market Networks segment decreased 57.9% to $932,000 in the first nine months of 2010, compared to $2.2 million in the first nine months of 2009. The decrease in General Market Networks revenue is primarily due to the decrease in average paying subscribers, reflecting managements decision to eliminate inefficient online marketing expenses. Revenue for our Offline & Other Businesses segment increased 34.6% to $805,000 in the first nine months of 2010 compared to $598,000 in the first nine months of 2009. The higher revenue reflects a large travel offering in the nine months ended September 30, 2010 when compared to the same period in 2009 which had no similar travel offering.
Cost and expenses consist primarily of cost of revenue, sales and marketing, customer service, technical operations, development and general and administrative expenses. Cost and expenses for the nine months ended September 30, 2010 were $25.7 million, a decrease of 12.0% compared to $29.2 million for the nine months ended September 30, 2009. The decrease is primarily attributable to a $1.5 million decrease in cost of revenue, an $889,000 decrease in development expense and a $759,000 decrease in impairment of goodwill expense.
Cost of Revenue. Cost of revenue consists primarily of direct marketing costs, compensation and other employee-related costs (including stock-based compensation) for personnel dedicated to maintaining our data centers, data center expenses and credit card fees. Cost of revenue decreased 13.4% to $9.7 million for the nine months ended September 30, 2010 compared to $11.3 million for the same period in 2009. Direct marketing expenses decreased 16.0% to $7.5 million for the nine months ended September 30, 2010, compared to $8.9 million for the same period in 2009. The majority of this decline can be attributed to a reduction in inefficient online marketing investments for the Other Affinity Networks segment. Direct marketing expenses for the Jewish Networks segment decreased 2.9% to $1.7 million in the nine months ended September 30, 2010 compared to $1.8 million in the nine months ended September 30, 2009. The decrease reflects our shift to more efficient online marketing investments. Direct marketing expenses for the Other Affinity Networks segment decreased 23.5% to $4.9 million for the nine months ended September 30, 2010 compared to $6.3 million in the nine months ended September 30, 2009, reflecting a reduction in inefficient online marketing investments and a shift in brand focus. Direct marketing expenses for the General Market Networks segment decreased 27.2% to $407,000 in the nine months ended September 30, 2010 compared to $559,000 in the same period in 2009. The decrease reflects managements decision to pursue cost effective online subscriber acquisition marketing campaigns. Direct marketing expenses for the Offline & Other Businesses segment increased to $473,000 for the nine months ended September 30, 2010 compared to $197,000 for the same period in 2009, reflecting a large travel offering in the nine months ended September 30, 2010 when compared to the same period in 2009, which had no similar travel offering.
Impairment of Goodwill and Other Long-lived Assets. Impairment of goodwill and other long-lived assets expenses primarily represent the write-down of investments in businesses and computer software. Impairment of goodwill and other long-lived assets decreased to $121,000 for the first nine months of 2010 from $880,000 for the first nine months of 2009. In the first quarter of 2010 and 2009, the Company impaired approximately $121,000 and $110,000 of capitalized software development costs when we determined that certain web-based products failed to perform to Company standards. In addition, in the first quarter of 2009, the Company expensed a $770,000 HurryDate earn-out payment.
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