FriendFinder Networks Financials

This story was originally from December 28, 2008 and has been in my draft folder ever since. I thought it was about time I should finish it up.

As we know FriendFinder Networks Inc. (formerly Penthouse Magazine) filed to go public in late December, 2008 and intends to list under the symbol FFN, on the New York Stock Exchange. (see Story). In order to do this they released some financial and subscriber numbers for investors. Lets review the reason for the IPO first. Penthouse bought FriendFinder Networks from Various in December 2007 for $500 million (see Story). Since then Penthouse decided to change their name to FriendFinder Networks Inc. for a number of reasons including to help market themselves as a Social Network to would be investors. The main reason for the $460 million IPO is FriendFinder:

... has violated the terms of its debt agreements and may not be able to remain in business unless it raises money through the initial public offering ..] The funny thing is though, FriendFinder Networks (Penthouse) is largely in debt because it bought FriendFinder Networks, not because the dating sites couldn't be made profitable.

So what do we learn from the filing? For the nine months ended September 30, 2008, FriendFinder Networks averaged over 1 million paid subscribers (946,598 Adult + 78,501 General = 1,025,099). This makes up 77 percent of their total revenue. Each month on average 4 million new member registrations (non paying accounts) happen from more than 59 million unique worldwide visitors. The average monthly revenue per subscriber (ARPU) works out to $19.06 USD. The rate of loss of subscribers per month is 18 percent which means on average a subscriber pays membership fees for 5 months. With this information you can calculate that on average each member is worth $95.30 to the company. Paid-By-Usage products (the Adult Cams) is responsible for 19.6 percent of total revenue and on averaged there was approximately 1,715,845 paid minutes each month.

A large part of revenues is generated by Marketing Affiliates. In September, 2008 there was over 110,000 participants which resulted in 44 percent of the revenue ($107 Million). In total $46.4 million in payments have been made to the Affiliates.

In 2008 FriendFinder Networks adult dating sites make up the more than 93 percent of their total subscriber base. This is an increase of 2 percent since 2005.

For the nine months ended September 30, 2008, net revenue was $262.4 million with a net loss of over $32 million. Let's take a look at a condensed balance sheet of the last few years.

For one of the many articles on the subject of the IPO and FriendFInder's finances check out the New York Times. For the actual forms filed on December 23, 2008 by FriendFinder Network Inc with the Securities and Exchange Commission visit the SEC Archives.