Adam Berger, Chairman and Chief Executive Officer of Spark Networks, Inc. had this to say about their recent performance:
2008 was a mixed year for us. We achieved moderate annual revenue increases in Jewish Networks and Other Affinity Networks, improved Contribution margins to 74%, cut Operating Expenses by 19%, drove annual Adjusted EBITDA to record levels at a 28% margin and returned capital to stockholders by using cash flow to repurchase 21% of the shares outstanding at the start of 2008.
That is the sound of a man eager to please shareholders with tales of stock buybacks, serious belt-tightening and efficiency improvements. All that hard work and look at the stock price.
So much for the benefits of recession.
Revenue down 18% to $13.2 million.
Net loss for the fourth quarter of 2008 was $164,000, or $0.01 per share, compared to net income of $6.6 million, or $0.25 per share, for the fourth quarter of 2007.
JDate: down 7% to $8 million for 4Q, yearly up $100,000. Lost 7,000 subscribers in 4Q.
We will continue to invest in and enhance the JDate product, adding fresh looks, new tools and relevant content to meet the needs of the single Jewish community.
Most Jewish people I talk to don’t like JDate, but its the only site they are aware of. Enviable market position or not, the reality is that less people are visiting and while on the site they are browsing fewer profiles. JDate needs to do something before a new site swoops in.
I know one company that has JDate squarely in their sights but it’s going to take several years and an enormous amount of marketing spend to get even 1/3 of JDate’s business. I don’t see the usual remnant social networking junk traffic as an option, either. Competitors need to purchase the highest quality traffic they can afford, otherwise the site simply will not take off and become sustainable.
Just look at the embarrassment that is JLove. What stinker that site is, including their ill-fated marketing campaign, which tanked the company before they could get any sort of traction. Case study on how not to start a new dating site, and some of the staff were from JDate!
Fourth quarter 2008 revenue for Offline & Other Businesses was $446,000, a decrease of 54% compared to $965,000 for the fourth quarter of 2007. I wish they would mention what brands are in each category. If HurryDate is part of Offine & Other Businesses and revenue is down 22% for the year.
I believe General Market Networks is where they hide the albatross that is American Singles. Almost a 60% decline in revenue due to a 59% decrease in marketing spend. See what happens when you buy junk traffic based on spammy pop-under ads?
Imagine if American Singles was able to buy social networking traffic like True and SinglesNet, they could have been a contender. What a difference a few years can make.
Final answer: You can increase margins, add bells and whistles and buy back all the stock you want, but Spark is in trouble and I don’t think a website refresh is the answer.
I welcome comments from the more astute financial experts reading this.
Details at Spark Networks Investor area.
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{ 7 comments… read them below or add one }
Jlove is full of the least-Jewish-looking Jewish people I’ve ever seen. Is it all about hitting the “trawling for Shiksas” market or what.
People Media, the global leader in niche dating, is addressing the void of a solid #2 player in the jewish segment with the rapidly growing community: JPeopleMeet.com.
We have launched a new site redesign and structured a partnership with AOL Personals to power their Jewish dating portal. We are growing at a rapid clip and look to offer our 3 pronged value proposition to the Jewish community:
1. Focus & Relevance: Jewish community
2. Scale & Choice: One of the largest Jewish dating communities online and growing rapidly
3. Value: we provide a solid user experience for the price they pay for a premium subscription
Greg, good to see you here. We should talk about your AOL deal. Congrats btw, nice job, hope you struck a fair deal.
I think JDate could use some serious competition, because we know that competition breeds innovation, right? Right.
Hi Dave,
Not sure if you were referring to Tribester.com above, but hope so.
We’re bootstrapped, and not hooked up with AOL, so I hope it’s not true that “it’s going to take several years and an enormous amount of marketing spend to get even 1/3 of JDate’s business.” I had trouble enough paying for my “Berry Topper” from Jamba Juice today.
Our events company, LetMyPeopleGo.com, has sponsored the biggest Jewish Singles event in the country 14 years in a row (4,200+ people in NYC) on the biggest Jewish night of the year. We competed with JDate many of those years and outdrew them significantly each time (by thousands of people). In fact, my understanding is that one year they bought a company based in LA (“Schmoozapalooza”) for the purpose of competing with us in NYC and, when that didn’t work, they asked to work with us, instead of competing with us, subsequently.
I realize that you may think that that doesn’t necessarily translate to online dating. But I think we are going to (soon) launch a compelling product and I believe that there are other means to catalyze it besides buying high-quality traffic.
Even apart from the bus ads and the like, I think the problem with JLove is that if you plan to compete with a site as dominant as JDate, and as ingrained in the public consciousness and popular culture as JDate, you have to offer both a significantly more compelling product and a compelling reason for people to switch allegiances.
Again, I just don’t think that buying a tremendous amount of traffic is the only way to launch and sustain a site like this. We”ll see, though. It should be interesting (it’s already fun).
Spark doesn’t really hide their sites and is pretty open about disclosing which sites fall into each segment… ok, maybe they are a little vague… but it’s pretty easy to figure it out.
They divide it into 4 catagories, Jewish which is jDate, General which is American Singles, Niche which is primarily BlackSingles.com & ChristianMingle.com (and also the other smaller MingleMatch properties), Offline & Other Business is Hurry Date, their cruises, parties, etc.
If you read their financials and spend time on their sites it’s obvious that they’ve hit a wall. In the past few years they grew jDate by raising prices. Now that they can no longer raise the subscription price any more they are trying to get a few dollars more from each customer by implementing features like highlighted profiles. I don’t think this strategy is going to work; jDate which is their cash-cow has peaked.
IMHO if the company is going to be a leader in online dating it must have a presence in the mainstream market, however, they’ve abandoned American Singles and let more nimble companies like Singlesnet take the position that they once held atop this segment. Instead they’ve focused on niche sites like BlackSingles and ChristianMingle, and Speed Dating which probably consumes a ton of energy for little returns.
Didn’t mean they are hiding categorization. Good points Meir.
It seems they hired Elmer Fudd to redesign the JDate website.
In the past, they had introduced the silly member spotlight, which seems to pick randomly select individuals display at the top of the search. I say it’s random because it picks matches I’ve already clicked “no†to. You’d think it wouldn’t be hard to program it to look for these and skip them. Now they’ve enlarged it to take 1/4 of the page! I wonder if their programmers are far-sighted.
The profile thumbnails, which were a fine size, are now twice as large. There is no new information, so why did they do that? Oh, I forgot, it’s those far-sighted programmers.
The click system was a useful way to show which profiles I’ve visited. Now I can’t see which profiles I clicked on because it’s the same color as everything else. So the programmers are colorblind too.
And lest I forget a while ago, they changed the profile layout, so instead of displaying everything on one page, it requires four pages, which means I have manually navigate all of them. Is it a profile or a book?
BTW, I couldn’t complain about all this in the contact form because it’s limited to 500 characters. Do their customer service reps have a problem with reading comprehension?