Spark Networks, a Match Made in Heaven or Hell?

My favorite clandestine Spark Networks tracker sent in the following and said I could print it, so here it goes (no they do not work for a competing dating site). Your counter-points in the comments, or do you agree with the below perspective?  Let me know, curious what the dating industry audience thinks about Spark Networks recent performance.

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Spark Networks, a match made in hell for investors.

We’ve all had bad dates. Most of us are smart enough to walk away. However, there are many investors that continue to get abused repeatedly by Spark Networks.

Truth, the stock has performed far better than the financial projections dictate that it should. It’s starting to come back down to earth.

Management continues to focus on the tiny wins, and ignores the bigger picture. Growing revenue by losing money consistently tends to bankrupt companies.

One of the largest expenses in the online dating field is customer acquisition, of which marketing expenses is typically the lion’s share.  Historically, JDate’s marketing expenses are some of the lowest in the industry, averaging just 12% over the last 11 quarters. Christian Mingle has been averaging 126% during the same time period.

In spite of huge gains in membership levels for Christian Mingle, Spark Networks has not turned in a quarterly profit on a per share basis since Q4 2010. The one major thing that has changed during that time, is the focus on Christian Mingle.

The crux of the problem comes down to this:

Both Christian Mingle and JDate are “freemium” sites, meaning that you don’t have full access to the site unless you pay the monthly fee. That said a very low percentage of their members are considered subscribers (Spark’s language for paid members). A Christian Mingle ad stated that they get over 5,000 sign ups a day. Multiply that by 90 days in a quarter, and the answer is 450,000. At the end of Q3 2013, average paying subscribers was 197,420, an increase of only 822, after a marketing spend of $11.7 million. After 5,000 sign ups per day, almost $12 million spent, and only 822 additional members in the quarter.  This follows on the heels of last quarter where they only picked up 9,700 additional members. The average gains for the past 8 quarters was over 17,000.

This leads me to believe that they must have an incredibly high churn rate. My bold prediction, Spark will have to slow their ad spend at some point, and Christian Mingle will drop like a stone like American Singles did.