Q4 2020 Spark Networks SE Earnings Call
Good afternoon, ladies and gentlemen, and thank you for waiting and welcome to Spark networks conference call to provide the company's preliminary results for the second half and full year 2020. This call is being recorded or broadcast.
And live in listen only mode I would now like to turn the conference over to Chris Kamara VP of Investor Relations. Mr. <unk> you may begin your conference.
Thank you operator, and thank you everyone for joining us this afternoon.
With me on this call CEO, Eric Eichmann, and CFO Bert outhouse.
<unk> as a reminder, today, we published our second half and full year, 2020 financial results, which can be found on our Investor Relations section of our company's website www dot spark doctor and I'd like to remind everyone listening today that any comments made on this call may contain forward looking information or projections regarding future results or events.
We caution you that such statements are in fact predictions that are subject to risks and uncertainties that could cause actual events or results to differ materially from our statements or projections.
Additional risks uncertainties and factors that cause actual events or results to differ materially from these forward looking statements may be found on the company's filings.
C C.
Following our prepared remarks, Eric and Bert will conduct a question and answer session. This call is being recorded for the available playback for Investor Relations section of our website.
But that being said I will now turn the call over to Eric Eichmann.
Spark networks, Eric Please go ahead.
Thank you.
And that's with you and thank you to all our listeners for joining us on the call. Today. This call will be our first official call as a domestic violence and therefore for today's call and for all future earnings calls park will be reporting our financials and U S dollars and utilizing U S. GAAP.
Reported.
This will also mark the first off for reports in 2020, one and we will now be filing on a quarterly basis instead of bi annually these increasing transparency.
Coupled with a more robust shareholder communications program will provide investors with greater.
Insights into the company in 2020, one management intends to participate and approximately six investor conferences. This year, whilst conducting quarterly roadshows with both current and prospective stakeholders.
As many of you know, we announced that our CFO Bert outhouse, and we'll be exiting the company.
And I would like to thank Bob for all his contributions to spark for has been and integral member of our executive management team since joining the spark team in 2019, we have worked closely during my tenure as CEO and I. Appreciate you can bleeder shape and building a strong financial foundation here at spark we are actively.
Looking for a new CFO Bert will support spark during this transition period.
2020 with a unique time for the company and everyone around the world I am pleased with the way that spark responded to the challenges brought about by the lockdown and social distancing restrictions our employees have.
Remain efficient and flexible as a work from home and office dependence have fluctuated.
And the circumstances created hurdles for online Daters, our business remain largely COVID-19 resilient as we come out of this pandemic, we are confident that our brands will emerge stronger and.
People will seek to establish new and meaningful connections.
Management focused on several core goals in 'twenty, and 'twenty, which we believe provided a strong foundation for sustainable long term growth. The first of those initiatives was the successful integration of <unk> business and the stability and of its platform.
Reducing its user decline we are now running the entire <unk> business out of our Berlin office.
Second we leverage marketing synergies across our brands part of the spark strength.
Lies within our marketing capabilities, the integration of Zeus allowed us to optimize our marketing efforts improving our.
Our marketing campaigns and ROI.
Finally, we improved our products delivering product enhancements for Zeus and all our other key brands.
We are proud that our three largest legacy brands silver singles Elite singles and Christian Mingle All grew in North America in the North American market.
And using <unk>.
Engagement for these properties increased for the year and we received positive feedback on our product features and brand enhancements.
I'm happy to report that spark 2020 revenue came in at $233 million and adjusted EBITDA at 37 seven.
Million Boe.
Both exceeding our prior guidance of 230 million to $232 million and bottom line guidance of 34 million for 36 months.
Yeah.
Operating cash flow after interest paid increased from eight 5 million.
219 million.
The cash position increased from $17 2 million as of December 31st 2019 to $19 3 million as of December 31, 2020. The main drivers of our 2020 success, where strong execution marketing.
<unk> and improvements and product enhancement.
On the product perspective, we drove faster response times and streamlined or user experiences enhanced matchmaking algorithms and started implementing new contemporary aesthetics, we ramped up our product investment in H to 2020.
And trying to increase those investments throughout 2021.
Zeus Hill for singles Elite singles, and Christian Mingle are our four largest brands and combined generated more than 90% of spark total revenue. We have made progress in our efforts to improve Zeus.
Just for largest brands, which represents about half of our revenue Zeus topline revenues were declining 15% per year in North America, when we acquired it.
By the end of 'twenty, and 'twenty, Zeus and North Americans topline was declined by high single digits and we now expect it to.
To begin growing organically by the end of this year silver.
Sales are singles Elite singles, and Christian Mingle grew collectively by 4% year over year and 10% during the second half of 2020 driven mostly by 18%.
And with American growth we.
We expect these brands to continue to.
Expand throughout 2021.
Let's now turn to our key performance indicators average paying subscribers marketing contribution and our pool all increased during the second half and for the full year Sparks our pool for the full year increased nearly 8% to $28 93.
Dollars compared to $19 48 in the second and the same 12 months spirit and 12 months period and at December 31st 2019, mostly driven by one time purchase accounting effects in 2019 and a weaker dollar.
Spark average.
Paying subscribers for the full year, 2020 increased nearly 27%, reaching roughly 928000 compared to the 731000 and we recorded in 2019 for.
Full year marketing contribution increased to $180 million and increase of 42.
7 million when compared to the $75 $3 million achieved in 2019 earlier. This month, we filed an 8-K announcing that we had triggered certain events of default with our lenders. This was a clerical matter not operational relating to patent applications and.
And to previous tax filings the company and lenders signed a waiver agreement resolving this concern shortly after the original 8-K was filed we implemented new safeguards and processes to avoid similar issues in the future.
For.
For 2020 operational achievements have made us a stronger company today product enhancements such as improved algorithms have yielded more meaningful matches have deepened our connection with our user base, while our ability to scale and marketing and maintaining cost effective operations have strengthened our financial standing and additional.
Additionally, we worked with our lenders to successfully amend or debt facility, which provided financial covenant flexibility and strengthen our cash position by $6 million. These enhancements to our capital structure allows us to invest in product and marketing to drive growth.
Let me now turn to.
And spark strategy for.
Our focus is on serious dating for the 40, plus demographic and religious communities in North America segments that are expected to grow at a 7% CAGR in the next five years for.
Our strength and these segments with brands such as silver singles Elite <unk>.
<unk> news and Christian mingle and position us well to create distinctive offerings, we intend to incorporate more social features and our products with content community and social discovery functionality to allow our users to meet and more informal ways and to provide new ways to date.
On line or ambition is to become the leader and social dating for meaningful relationships.
As a first step and the direction I'm excited to announce that we will be launching a video live stream service in Q3 on the <unk> platform, we have partner with the meet group to join their V pass service.
Our video platform as a service.
<unk> users will be able to join livestreams 24, seven 365 days a year FIFO can to gift streamers and actively participating and these exciting new service. We expect that these new functionality will be embraced by Zeus users driving.
And additional revenue increased time spent and stickiness to our offering <unk> live streaming will provide additional incentives for users to come back for our platform every day and it will potentially.
Attract a broader demographic and importantly life streaming will allow users to meet new potential base.
And more informally as they would and the offline world and a concert or in our lives comedy show live streaming and makes the juice platform more social allowing users to meet the others outside of the traditional search and match functionality over time, we will augment spark platforms with.
And with more social discovery functionality and be the appropriate to the segments.
Our brands serve content.
Jamie and community features we will encourage users to come more often to a dating brands to meet like minded individuals in a more relaxed setting.
Kansas market after a successful test of our iOS App and Canada, we developed and deployed the Android App to strong results.
While we believe the spark cafes and strong offering for the younger casual dating audience, we decided to focus on growing our core brands before considering.
And second costly launch in the U S market and investment that would require two plus years to pay off instead, we will incorporate innovative spark app functionality within our core brands in time functionality, such as interactive profiles will be part of making the overall dating.
Social and farm.
We are excited about spark future and the large and expanding seven $3 billion online gaming sector.
As a result of the pandemic online dating is even more mainstream and offline social activities are moving online creating.
Morris and even bigger opportunity for dating platforms match Dot com reached.
And recent acquisition of hydro connect as well as bumble successful IPO demonstrates the potential of these opportunities we intend to build social elements into our brand offerings to capture and its growing social dating opportunity.
We're also working towards diversifying our shareholder base this year and domestic filer, we will now be reporting earnings four times, a year as opposed to the previous year and we intend to increase our interactions with U S investors with greater frequency than ever before going forward.
We believe that the progress made in 2020.
And he will continue to play a strong role in our future growth trajectory as announced last month spark provided guidance of 238 million to $244 million and topline revenue and 33 million to $36 million.
Dollars in adjusted.
And EBITDA for 2021, these projections show that we expect to see growth and our topline.
The stability in our EBITDA is a result of reinvestment into product and marketing activities with high ROI in the mid and long term, but that limits short term profitability.
We.
We are excited about spark future. Our goal in 2021 is to set the foundation to become the leader and social dating for a meaningful relationships.
I would now like to turn the call over to our Chief Financial Officer, Mr. Bert Outhouse Burke. Please go ahead.
Thank you Eric.
And to reemphasize sentiment the previous year, whereas the time focused on stabilization and development partner.
<unk> the company and concentrated on profitability, primarily driven by increasing marketing efficiency and the optimization of cash.
Total revenue for the fiscal year ended 2020.
Was 233 million U S dollar increase.
62 point, and 1 million U S dollar compared to $117 9.002 million 19.
Registrations and average paying subscriber.
We increased 16 and 27% respectively.
From 2019 to 2020 related to.
<unk> acquisition in July 2019.
In 2020 months till the alcohol free.
We remain on the same level as in 2019, we're eliminating the acquisition accounting attack on Susquehanna and new and 2019 after Gulfport and nine building.
On a pro forma basis.
Revenue declined by 7% for 257.002 million 19.
Two 233, and milking in 2020.
Revenue.
For the second half of 'twenty 'twenty.
Was it Hungary and.
And 18.9 million U S dollar and increase of $3 9 million debt compared.
Okay.
And 15 months and U S dollars and the second half of 'twenty and 19.
The increase in revenue for the second half of 'twenty 'twenty is primarily.
And for beautiful to a one time effect from the acquisition accounting and the second half of 2019.
$12 9 million.
And compensating top line.
And Luckily a.
Point 5 million U S dollar.
The effect from the reduction of marketing expenses.
The decrease in marketing spend.
And that to a decline in average paying subscribers of 7% and the total.
Registration.
13%.
And from the second half of 'twenty and 19, two the second half of 'twenty 'twenty.
Sparks and marketing contribution increased by 42.7 million from 75, four and 3.002 million 19.
Two hamburgers and 18 million U S dollar 2025 fully consolidating soups.
For the second half 2020 it increase.
266 million and increase of $8 6 million and win.
Compared to.
252 million U S dollar during the second half of 2019 due.
Due to a more efficient marketing spend.
Adjusted EBITDA increased.
From 10.3, even though again in 2019.
And team.
237.7, Logan you at all in 'twenty, and 'twenty because of consolidation of Suez.
For them for 12 month.
Hi on marketing efficiency and centralized operations and building.
Based headquarter.
Net loss for 2020.
One.
And $46 6 million U S dollar compared to a net loss of 34.9 million in 2019.
Hugh.
Impairment of goodwill and intangible assets of 20.3 emails and in 2019, and $51 2 million in 2020.
Yeah.
Turning to the balance sheet the company ended the year.
With 19.
And point to free them up again, and cash and 99 point and one login and debt.
Notable.
We also improved our balance sheet.
Via our revised debt agreement, which provided greater working capital and warm and that you're both covenant.
This advancement.
Our credit facility was the primary objective of ours.
And which allows us to invest and future growth initiatives.
As of December 31st 2020.
We are reporting equity of Nike for.
<unk> 9 million compared to about INR 241.2 million U S dollar.
And that's the same day 2019.
As of December 31st 2020, the company's long term debt position stats and handle it and four points.
For.
All right.
Cash flow generation.
From operating activities was 19 million.
You asked on and are in 'twenty, and 'twenty compared to eight four and 5 million U S. Dollar during the same period of 2019 and Inc.
Increase.
Seven of 10.
<unk> 5 million U S dollar.
And we're improving performance indicators, coupled with new service.
Offerings like V pass and our foray into the mobile application market provides a strong sentiment.
And of growth for 2020 one.
Additionally, we are appear.
To be emerging.
From the pandemic and anticipate that as lockdown and social restrictions topside.
There will be and increased desire for people to connect with.
And as I forget.
Earlier. This month, we stated and we expect to achieve 2021 annual revenue of 238 to 244 million and adjusted EBITDA of 33 two.
Two.
36 million U S dollars.
For the first quarter of 2021.
We expect revenue of 55.5 to 56 million U S dollar as adjusted EBITDA.
And for two for 5 million.
And that's all.
Projections, which are in line with our previously discussed and your old guidance for 2020 one.
The GAAP.
This is somewhere in the short call as domestic filer, and we look for ward to providing updates.
To our investors on a quarterly basis from here on out.
On a personal note.
Please allow me to thank our investors for many fruitful conversation and their trust during my time and CFO.
On spark.
Most importantly, I congratulate the spark team for transitioning to be domestic partner.
Thank you for the incredible dedication.
And the intensive work.
Each one of you contributed.
This concludes our prepared remarks.
Now, let me turn the call over to the operator to take your questions operator.
Thank you we will now be conducting a question and answer session. If you would like to ask a question. Please press star one on your telephone keypad.
Keypad and confirmation tone will indicate that your line is and the question queue. You May Press Star two if you would like to remove your question from the queue for participants using speaker equipment and may be necessary to pick up your handset before pressing the star keys.
One moment, please while we poll for questions.
Cool.
Yeah.
Okay.
Yeah.
Yeah.
Yeah.
Thank you. Our first question comes from Kara Anderson with B Riley and company. Please proceed with your question.
Hi, good afternoon.
Take care.
I'm wondering if that could and will provide further color around and a subscriber and hard to expectations embedded in the guide for this year.
Sorry, that'd be just I.
I wasn't sure I heard you right for the color on the <unk> expectations for this year.
And the balance between subscriber growth and.
And <unk> on embedded in that guide for top line growth.
And Bert I don't know if you want to you want to talk about it and maybe let me just maybe say a.
A couple of things.
One obviously you know from for just don't remain service, we don't expect a dramatic change.
Arco that has been something that you know even even when you consider the 2020 versus 2019 are sort of differences. They were driven by events that were not really driven by the bank debt by the core offerings. We are however are introducing a new service lenses.
With life streaming with the meet group and that any child could sort of bring our blew up and and we are also as we do every year and testing our pricing different pricing mechanism and something that we haven't done as much on this because obviously, we've just integrated the platform. So those two elements could lead to improvements and are.
And in particular and in juice, but we have not I don't think assume meaningful improvements there.
Bert you want to add anything to that yeah, no I I can I I agree with you on the optical side of course, we as mentioned before they were checking on the pricing.
And on a frequent basis to optimize the other pricing. So also debt that has an impact on Apple of course, but of all the way we see the and the topline development really comes from additional subscribers.
Yeah.
Got it on and then can you guys talk a little bit about the EBITDA stability that you're.
And can you give up on a bit more detail on it.
And to make.
Yeah. So we you know what as we've said I think right now for a while.
It's important for us to continue to evolve our offerings and we've talked about some of the things that we're intending to do going forward some of them up and she related.
Collating and share.
It's very exciting because what you are seeing independent make is that a lot of offline activities have moved online and they're very relevant today and platform strike for today on Disney plus you can watch a movie with somebody else you can and maybe many of you both clubhouse and listened to conversations.
And.
And B office for example to get together with others, we use tools like gather the town, which allows you to sort of basically meet people more and formally and so all of those things I think are going to be part of a.
What we expect to start integrating and thinking about which make our platforms more sticky. So you know as we continue to look at that.
I think one other things that we realized that we need to invest a mooring and or product. We started that process in H two.
And of last year, and the second half of last year and we can continue to do that this year those investments dental ER positive ROI investments, but theyre more midterm investments in terms of getting the pool.
And so on the short term.
It sounds like it's more like an investment that hurts, our immediate profitability, but on the long term there theyre very high ROI investments from our perspective. So that's why what you have in 2020. One is a meaningful increase on the top line.
But a bottomline EBITDA that's more stable.
<unk> versus an increase.
Is that does that address the issue Kara yes.
Yes, that's helpful. And then can you talk about the economics of the on.
But live streaming with our ship me grip.
Yeah. So so it's an exciting offering that has been sort of proven out there and the marketplace.
The benefits are something that gets people excited.
The economics, and so that people understand the model there will be live streamers that are part of our networks, including the meet group and and other properties like plenty of fish.
And those users can come in watch are the streamers and if they so choose.
Great and they can buy tokens or diamonds to offer.
And the streamers at different points in time and that is a purchase that's gone through does this platform.
And there is a and agreement and to share those revenues with with the meet group.
Got it and then can you touch on totally different topic, but can you touch a bit on safety and how your brands compared to others out there, especially in the context on your larger peer and match recently, adding that background check technology for their users.
Yeah look I think I think its great that these things are happening and if you many of you.
Now one of the challenges that we happens and industries, making sure that a you know safety is one of the main things that we have we're adding a number of things from a fraud perspective to our platform.
And we're looking at different ways to do background checks I think that's important and.
So I think this is just an evolution.
Towards that and and we we think about it more as a service that we offer as opposed to a revenue opportunity for people to go out there and be able to trust that they're meeting people that are safe and debt or platforms.
Provide sort of that kind of service.
Got it. Thank you for my mentor for me.
Yeah. Thank you Sir.
Yeah.
Thank you. Our next question comes from Austin <unk> with Canaccord. Please proceed with your question.
Hi, Thanks for taking my questions as it pertains to the lives drums and <unk>.
Lucian Hi.
Hi, as it pertains to the live streaming agreement will Zeus and the opened up for more robust free usage to give more users access to the streaming.
And.
So yeah, yeah at this point keep debt the Zeus users will have access to the streaming.
Agreement and it will be able to see other profiles and so part of you know it's not just about the stickiness of the offering and being able to spend more time on the platform and and coming back, but it's also about and formally which goes to the to the social dating theme that we've talked about and the call which is really about meeting other people. So.
You can see the profile of other people and Eve and.
People agree that and you can meet and chat a separately with those people. So you know hopefully not only will it be sort of better again in terms of bringing people back in and getting them moving both on the platform going beyond the search and match functionality that we offer but also getting.
And you meet with new people and a more informal setting so we're excited about that.
Mhm, so so it'll just be and it'll just be available to Zeus subscribers, but not to someone who downloads, but wants to use our free cash.
Membership.
On them too. So I think just accusers can and will be able to access are the lifespan and service.
And they will be able to connect with other two skus and that's part of it.
Do you have to be subscribed.
I don't believe that you have to be subscribe I do believe.
You have to be right to purchase, but let me get back to you on debt.
And we're thinking about at this point and yet.
Okay, and well will you be trying to attract users that stream regardless of their willingness to date or what's your.
Thought process.
Believe it and.
On usage.
Yeah, I mean look we're very happy for people to stream, we would we would like nothing but people are becoming celebrities on on and the live streaming platform.
And generally tends to happen by looking at this is that you have a number of streamers that drive the majority of the usage.
Usage, but become a bit celebrities on the platform.
But it's open for people to stream. So you know again, and we're hoping that that would happen.
The one thing that's clear in and these offerings is that people that are watching the live streaming our single.
Because they come to and.
Zeus cause dating platform and so when you think about that that's that's one thing that unifies them and that drives the interest and so you know generally.
People that come to our platform for single I think I think they they self described himself for single and until that's that seems to be a requirement. If you will and you come here.
Okay.
And just can you define social data and a little bit.
How does that differ from the previous strategy and how is it different.
You know what your peers are doing.
Yeah, Yeah, Great question. So look I think some of this has been very much accelerated by depends on and even the fact that.
Well have to stay home they had social distance and so what's been happening and I think people more and more and have started to conduct more social activities online right. So you might have wine tasting events that happen on line you might have gatherings I you know I had.
You for.
And events.
And you know that in itself. If you think about it in a way to meet new people.
Thats transferring off on line, which was offline before and so there's been a a social discovery.
Sector.
And that has grown because of these needs to meet new people and now it's it's grown at large because some people just want to sort of get to know and your people socialize and not necessarily looking for a day for when it relates to dating and each one of the core propositions that we bring to consumer and stuff the past.
Well, if you think about the traditional functionality, it's really setting up a profile are providing matchmaking.
Capability and algorithms for you to be matched with other people you might for the start of search as a single person on the platform and once you're matched then you can connect and most of that connection happens to.
Or if you, which then of course can can can end up being a meeting offline well you know both on the sort of meeting new people and on the connection and Theres been development that our social gaming developments on the on the connection it's going to events potentially playing games with other people. It's it's sharing of ice cream with somebody.
Charleston, and and and talking to them looking at their profile and being interested and so there's more ways to connect that are more informal that don't require you to just you know do the search which is very directed behavior. So we think that that's very.
Exciting because you will make or platforms on a lot more sticky and people will come just because.
And what's going on.
And on disk and they are in the process of finding somebody as opposed to going through just pure search they can meet people and more informally they might sort of do it in a game they might doing by you know and Uh huh.
On a movie nice evening that they do on line as opposed to doing it the way that you traditionally do it and then the.
They wanted to me is you can also connect.
Not just through a chat you can do it for you Chad that's pretty advance that's pretty easy.
You have to you have to feel pretty confident youre at that stage, but you can also potentially watching movies together you can play your game together you can go to and event you can do a museum toward together so there's lots of.
Events like this that could very much and reached the experience and make it a lot more natural for you to meet people and I think that that's the big difference from what what continues to be court for the experience of course is the search and match functionality to one where you have many more ways to meet people online and desktop.
Platforms.
Got it that's really helpful and just a really quick follow up to that and he's experiences like movie watching and museum viewing comedy show and that part of the and meet a live streaming experience or is this a separate and video product that you'll.
And the developing.
So these are you know I wouldn't say at this point and we have specific plans to develop but these are things that are happening online today that can be integrated they're not part of meats group sort of life streams have led screen services. The live streaming service, but I believe that there many offerings out there.
There that you can sort of reach out to and incorporated within your offering either developing it ourselves or looking at partnerships with other parties.
Okay, and very last question kicked that revenue share on the purchasing activity from your users.
There.
Or are is there a number there that you'd be able to share what how much of the economics.
Yeah.
And not on the economics, obviously, that's a that's a confidential, but I would say look we're excited I mean.
I would say first and foremost we're excited about bringing sort.
A lot of activity that will make or Zeus platform more exciting for people, bringing them back and could potentially have a positive impact on retention and we don't know yet.
And we'll see how it evolves, but my expectation and this will be well received by our users. Some some might not be interest it but you know if we get a moving.
And for a portion of our consumers interested and it could be a very good thing for the platform.
Okay. Thank you for the color and and good luck.
Thank you.
Thank you.
Thank you. Our next question comes from John Lewis with Osmium. Please proceed with your question.
Thank you, Eric and Chris and Bert So I guess I'd start with congratulations.
For relief.
Persevering and doing a great COVID-19 and solid numbers today and it sounds like you've got your feet.
Well set for 2021, so that's great to see.
As a longtime industry watcher it for.
Feels like we've gone from 400 competitors really tough for which are.
Bumble match hardship and spark and as I look at the math I think the industry out of the big for.
For spending.
Spending about $900 million, a year and customer acquisition and you guys are about 14% of that so your guidance for spending basically the same amount as bumbles around 125 billion. I think you guys spent for 115 million and customer acquisition.
And so.
I guess, when I really take and I'll get to the question, but just give you how I'm thinking about it.
And when I aggregator match.
Bumble par shipped and spark, it's about $4 3 billion and annual revenue and the public market.
<unk> is about 50 billion.
Spark is about one half of one per cent of the industry value, but about 6% of the industry's revenue.
And about almost 14% of the industry's marketing budget. So.
Your marketing budgets punching way above your weight your revenue as you know far above.
And you know you're punching above your weight and so when I look at the industry I'm not saying you guys are a bundle or match, but you guys are trading at about $1 12 per value.
<unk> and so I think one of the questions that I have is.
Registering almost 15 billion dangers of year really opens up.
A lot of re targeting opportunities win backs.
Can you just talk about what you're doing.
Going with all the registrations and how you could.
Leverage that data.
Two.
To help here.
Yes, that's a great question and I appreciate it.
The data that you shared with us John So I would say.
A couple of things first.
First off and obviously were.
And.
At the company, we're trying to do everything to have a valuable company and it's possible.
And and last year and today, he's one of the important events.
We focused on one making sure we have covenant flexibility to invest.
In the company and we'll talk about a bit about that because I think it is about sort of increasing retention and driving more people into our platforms and taking advantage of that 50 million and sort of users that we see.
And the other thing that was important for US was establishing you know more transparency with investors.
And so.
But by becoming a domestic filer, you'll hear from us for times of years with numbers, we'll be able to discuss the trajectory of the company something that was harder to do last year as we were a four and filer with 20-F. So I think those are important and very important as part of it too and I always thought it was.
And component.
On the story at spark was to show topline growth.
And our guidance. This year is shown on your topline growth after pro forma numbers. If you take the different properties that had been declining over the last couple of years and so I think that's very important because we're turning the corner.
And.
And we're becoming more relevant to consumers throughout the world and particularly in North America, which is our focus and.
We do have 50 million data as of year I think there are things that we can do from marketing perspective, and that will continue and that's like we are targeting is important.
For us win backs are important and we continue to focus on that I think.
Think we have opportunities also from a marketing perspective to be more active from a mobile perspective, we haven't focused as much on that and we've had a.
And it demographics that is older that has stayed a bit longer on the browser, but it's high time for us to engage a lot more and that area.
And then and it goes back to the discussion, we're having just with Austin, which is.
We need to bring more activity to our platforms, where people can do more things more informally as opposed to just to search directed behavior.
And as we think about social and as we think about things like you know obviously by stream is one for <unk>.
Example, but as we think about these things and we're hoping that people will come back more often and we'll see more interesting things to do on our platforms and will meet people moving formerly and.
That will extend the life of people that are in the platform and will also sort of.
Make people debt with otherwise leaps of platform stay with us so.
So I think I think a lot of it is about and reaching or platforms with more activity. So that people are excited about coming back to us and staying with us and so I think theres lots of value to be captured there.
And we have people coming in right. So now that we can create richer experiences I think we'll have a good channel.
And.
Keeping them on the platforms.
Okay I appreciate that.
So Eric.
Looked at and your background.
A long continuous string is a public CEO of not missing guidance, which is variable.
So congratulations on that and I guess last year at this time.
And we thought we'd be I guess guidance was for 212 to 18, you exceeded that by $15 million to $20 million seems like a you know I appreciate your conservatism on.
And and and track record. So I guess the question is is when you look out at 2021 and what areas do you see.
See where there could be potential upside it sounds like the potential.
You know with with the partial partnership.
But I, but I guess I was more curious around anything on mobile.
On retention increases.
For any any other.
Areas that that you think has the potential to surprise and 2021.
Yeah, I, you know I don't know, which one would be a surprise for we certainly have and the plans are meaningful product improvements.
So we are continuing to deploy a new aesthetics to a product aesthetic.
And for the North face because you know how you present yourself as an individual and if you're surrounded by something that looks 2015 and not 2021.
Not as good. So that's one one component that were taken out as I said, we're gonna be testing as we do normally different sort of prices and we'll see where that takes us and will also.
Also be doing things around marketing and so you know as you as you start testing some of these things sometimes you find something that works very well and you're able to scale a rapidly and I do think we have a well balanced set of initiatives and are you know you never know what what can work and what does better.
And then what your expectations are so well.
We'll see we'll see how it develops throughout the year, but we certainly are excited about what we can do with the brands that we have.
But thank you for that I guess, if I could just follow back up.
And to try to wrap my head.
And the perspective of what 15 billion.
And dealers look like it's our it's the equivalent of registering the entire state of Idaho, and Washington State, Oregon, and Nevada every year.
And so [laughter].
I mean, it's a tremendous number of registrants and literally you're spending the same as bumble.
And on acquisition and so my question really just to probe more deeply is what once you get a registrant.
And what what can you do to monetize that leader Festively.
And over time and I mean is this if you acquire.
If you register someone and 2020 or 2019.
What is the.
Process to try to monetize the flow of registrants.
Yeah look I think theres and were targeting opportunities that we haven't looked at or that we're sort of starting to scratch the.
Surface off we could bring them back and become subscribers. So I think thats a potential area of.
Of our value and.
And bringing those back but beyond beyond sort of like the.
And then the other thing I would say is and.
And I've said this before is we're not doing as much as we should on.
Aside and so capturing those people that come through the App and might sort of we might have seen they might have clicked on and out of ours and I come to the website. But then you know we see them again and in App and we should be able to bring them back. So I think on the marketing from marketing perspective, there are opportunities like that I do think debt.
And what.
The biggest potential impact in terms of reducing and retention are and you realize also and we have obviously natural churn and defense debt you know as people, which we want to our successful and finding a partner and nor platforms there and no.
They don't really serious relationships, they're bound to.
On the App to leave our platforms.
But the most important thing I think is just to give people opportunities to meet.
People are in different ways, so matchmaking algorithms, becoming better and and matching the right people early and important but also providing them activities that they can come on to the platforms to meet people.
Moving formerly which goes to the social abating and so I think.
And we're able to do that we could affect also retention and once people sort of show off on our door. If you will just it just it looks like a better party. When you have lots of things going on when you show on somebody's house as opposed to a.
Search and match functionality on it so I think that's part.
And of what we want to do and.
As we do and and as we have these things too.
And I've streaming the ability for us to tell the story from a marketing perspective becomes broader and just the single story.
And I really appreciate that I'll, just sleep with those last comment which is I'm really well I'm really enthusiastic.
Pick and happy to hear that you're back to being a domestic filer you said six I think six sell side conferences.
You know and I think you know when I.
Look at the debt as I said earlier, the huge gap between and your market prices to what you know even even kind.
Bare minimum my eye.
And if you've got a third the valuation of match or bundle of.
A 20% discount to par shifts 'twenty, and 'twenty and nuclear winter valuation or just and S&P market multiple you'd be at about $24 a share so.
There's a lot of upside.
Side for just getting a market multiple and I think for you guys.
Overshoot, if you have some successful and these initiatives. So thanks again.
I appreciate it thank you John.
Thank you John.
Yeah.
Okay.
And as a reminder, if you would like to ask a question. Please press star one on your telephone.
Phone keypad and confirmation tone will indicate that your line is and the question queue.
Our next question comes from Adam Waldo with Lismore Partners LLC. Please proceed with your question.
A good day. Thank you very much for taking my questions My questions are.
Balance sheet issues and and the context of <unk>.
Improving the financial flexibility of company and the runway for accelerated growth and accelerate reinvestment. So you know we've had since we are debt does this deal closed in July of 2019, We've obviously had this high cost debt on our balance sheet and we're now down to the point, where we have you know kind of run rate.
Our around on net.
Our debt to EBITDA adjusted EBITDA I should say of around two point for two five times, our free cash flow and.
Multiple is about four times net debt is about four times free cash flow that you report for 2020.
And interest rates are at rock bottom levels for around the world.
Rate backed up a little bit recently, but what are we doing to try to refinance that debt, where we're paying you know.
Double digit interest rates and and how quickly do we think we'll be able to refinance that debt.
And then I have a couple of follow ups.
Yeah, and I'm thinking very much for that question. So obviously you know these and these are important.
Although they are of us, becoming more flexible and having a stronger balance and so we couldn't agree more we'd love to have a more flexible covenants and and and and lower cost of our debt. We did sort of a run a process last year and we ended up sort of.
For it and having great agreement with our lenders I do think that as a company as we start showing progress from an income statement perspective, the ability for us to.
And do we think core debt will be there, it's not something that we're sort of focused on immediately but I do think that that once you know and and.
For being a domestic filer I think will help because it eliminates a little bit of uncertainties and and might open up.
And for certain people to to make an investment from that perspective, and so I think we're very open.
Open to that and we will certainly consider it and when the opportunity presents itself. So I. This is of course top of mind, but it's.
And also sort of the core focus of the company at this point.
Well, okay, but we're paying 10 $11 million a year of cash interest and.
So how have we have we thought about going to the capital markets to issue term debt and going out of the bank market.
Okay and then.
Okay.
And and and.
And what what is our current thinking there.
Yeah, and so I look again.
That'd be the first one two and look at all these options and Ah if.
And if they look.
And realistic and when they look realistic and I'll I'll just I'll just go back to you know where where the company we're.
We're not and domestic filer.
Or top line was not growing.
And so I think all of those sort of limit our ability to to do what we wanted to do and as we move forward and we'll certainly be looking at all those options no fair enough now that we're a domestic violence and do we feel that weekend, we can pursue those activities more I think we need to.
Yeah, we will explore those things and in in time, but.
But I you know I I felt there was a number of things and and number one is always sort of taken care of the health of the business. Once you have a healthy business I think people are much more receptive to.
Q2 be lenders, then and if you don't have enough proof.
Points for show that your business is healthy so I think I think we're moving and the right direction and when the opportunity presents itself I think we're being a position and to do that I don't like high interest rates more than you do believe me and I certainly don't like constraints in terms of covenants to allow us to invest to drive shareholder value. So.
But we couldn't be more aligned from that perspective.
Fair enough I appreciate now in terms of your guidance then for 2020, one you've given adjusted EBITDA guidance for $33 million to $36 million, if you're sort of cash conversion would look.
Pretty similar to what it was last year should we be expecting kind of high teens free cash flow this year and.
On the you know on the on the intangible asset side, obviously, a sizable write down here at the end of last year.
Of course, I presume most of that's related to Zeus and do we think we're reaching a point where.
And we're likely to have considerably.
Considerably smaller if if any intangible asset write downs going forward now that.
And then on giving guidance to grow the top line again.
And it's hard to do you know, what one impairment or what about reinsurance will look like for the future, but I think we gave you sort of take a hard look at this now and so we're making some adjustments as you've seen and and the balance sheet. So I you know I would expect that.
For your adjustments if there are any going forward would be.
And I would be less and less significant but you know of course, it's always hard to tell which I don't have a crystal ball, but yes, and then on on you for a question on your question about free cash flow I don't know Bert you want to address that one.
Sure Yeah and.
So oh and I think the way to look at it is if you look at it is completely right. So two is just arriving from the and EBIT.
I think it totally makes sense to assume assuming a resolve that this year on the operating cash flow.
And so okay to ethanol and the big change.
With respect to our capitalization.
Okay terrific. Thank you well congratulations.
Congratulations on becoming a domestic filer, we look forward to hearing from you a quarterly and a good luck getting out and telling your story this year as the pandemic receipts.
And I appreciate it thank you very much.
As a reminder, if you would like to ask a question. Please press star one on your telephone keypad and confirmation tone will indicate that your line is and the question queue.
Okay.
Okay.
Yeah.
And.
Thank you. Our next question comes from Patrick Retzer with Retzer Capital Management. Please proceed with your question.
Good afternoon gentlemen.
Good afternoon.
Hum.
I mean, God, Thanks, and I hope you're the same I wanted to congratulate you on.
And several things first of all on their transition and become a non domestic filer I think that's a big deal.
And it looks like your engineering, a nice turnaround that's wonderful.
I think the robust IR program you talked about is appropriate I think this company and especially and it's reinvigorated and farm is virtually unknown to most of our U S investments.
So for me on that day.
And.
And finally I wanted to congratulate you on and a positive guidance. It's been awhile since we've seen a top line growth. So great work there I have questions regarding.
The build out of mobile and also on monetizing.
Zane These 15 million subscribers you have every year, but I think they've mostly been addressed already but if there's anything you'd care to add on and mouse topics I'd love to hear them.
No I think look back. Thank you very much for your AR positive feedback.
Remember as excited as you are about a lot of these things that we've talked about domestic filer, the positive topline guidance et cetera.
Look there's no question debt, there's value and those 50 million registered registrations that we get and we try hard to convert them, we have to try new things and some of them.
And with our marketing tactics.
Tactics like re targeting some of the things are product improvements and and more excitement on our platforms and we will see what works, but we certainly are very aligned in terms of making we're taking full advantage of that stream of users coming our way.
Okay.
And well keep up the good work on.
And make your Investor Relations Guy work harder. Thanks, Okay, you heard of that interest.
I'll do my best.
Thank you.
There are no further questions at this time.
This concludes today's conference we would like to thank everyone on behalf of spark networks for attending and if you have any follow up questions. Please feel free to reach out to Chris <unk>, The Vice President of Investor Relations. Thank you for your participation and have a wonderful evening.
Thank you.
Thank you.
Yeah.
Yeah.
Yeah.
Okay.