Spark Networks SE

Revenue in the second quarter of 2023 was $41.2 million, down from $48 million in the second quarter of 2022. End-of-period paying subscribers were 2.0 million, versus 3.1 million a year ago, while monthly ARPU increased to $21.58 from $20.13. Net loss was $26.9 million, compared with a net loss of $8.8 million in the prior-year quarter, and adjusted EBITDA was $7.2 million, or a 17% margin, versus negative $1.7 million, or negative 3.6%, last year. The company ended the quarter with $5.7 million in cash and $94.2 million of GAAP debt, or $88.5 million of net debt. Full-year 2023 adjusted EBITDA is expected to be approximately $16 million to $18 million.

Colleen Brown framed the quarter as part of a “critical time” and said Spark is in the middle of a bold transformation intended to return the company to competitive levels. She highlighted outsourcing performance marketing, improving data analytics, focusing spend on higher-potential brands like EliteSingles and SilverSingles, and adding new channels. She also said the company plans to outsource significant technology and cybersecurity functions, reduce headcount from nearly 220 to 60 over 18 months, and ultimately create a simpler, more profitable business.

Kristie Goodgion said the revenue decline reflected lower user acquisition spend in earlier quarters, and the drop in paying subscribers was tied to the same cause. She noted ARPU increased to $21.58 because of a mix shift toward higher-priced brands and shorter-term subscriptions. She also pointed to adjusted EBITDA of $7.2 million and a 17% margin, helped by lower customer acquisition spend and reduced operating expenses, and said the company ended with $5.7 million of cash and $94.2 million of GAAP debt. For 2023, she guided to approximately $16 million to $18 million of adjusted EBITDA.

There was no live analyst Q&A in the transcript provided. Management’s main forward-looking discussion centered on the transformation plan, expected cost savings, and the need for external funding to cover restructuring costs. They also said the plan should support revenue growth and profitability in 2025, with a long-term target of 20% to 30%+ adjusted EBITDA margins.