Finances

It’s been a busy month for Spark Networks. The owner of ChristianMingle, JDate, BlackSingles. and more, has released its financial results for the second quarter of 2014, and will soon be getting a new CEO.

Revenue in Q2 2014 was $15.8 million, a decrease of 10% from the previous year’s $17.6 million. A 9% decrease in average paying subscribers – reflecting an 8% and 7% decline in average paying subscribers for the Christian and Jewish Networks segments, respectively – is the primary reason for the overall drop in revenue.

On the plus side, expenses were down. Direct marketing expenses in the second quarter of 2014 were $7.9 million, a decrease of 43% from Q2 2013. Total cost and expenses dropped 19% from the previous year, to $16.8 million this year. Net loss in the second quarter of 2014 was $1.1 million, or $0.05 per share, compared to a net loss of $3.3 million, or $0.15 per share, in the year-ago period. Adjusted EBITDA in the second quarter of 2014 was a loss of $363,000, an improvement of 84% compared to the year-ago period.

Much of the good news comes from Christian Networks, which accounted for most of the decreased expenses thanks to improved marketing efficiency and growth in the winback and renewal subscriber bases. Christian Networks was also responsible for bumping contribution up in the second quarter of 2014 to $7.8 million, an increase of 109% from the year before. This is the first time Christian Networks has generated positive contribution in 15 quarters.

All this comes at a time of major change for Spark Networks. President & CEO Greg Liberman has left the company, leaving Michael McConnell – the company’s Chairman of the Board – to serve as Executive Chairman until Liberman’s successor is in place.

“It has been an incredible ten years, and I am honored to have spent more than half of my professional career at such a special company,” said Liberman. “Spark is a relationship business in every sense of the word. Through iconic brands like JDate and ChristianMingle, we create countless relationships for our members every day. But, behind the scenes, it’s the relationships we have in the communities we serve and the relationships within our team that drive everything.

Suffice it to say, I am extremely proud and grateful to have played a role in building and leading such an amazing team, and to have had the opportunity to work hand-in-hand with them to transform this company and business. In their hands, Spark’s future is very bright.”

For more on these two dating sites you can read our reviews of ChristianMingle.com and JDate.com.

IAC fell slightly short of expectations in Q2 2014, but nevertheless had a solid second quarter.

Subscribers are up where IAC's dating sites are concerned, but revenue dropped in its Search & Applications unit. Match Group revenue increased 8%, as paid dating subscribers grew 10% to 3.5 million globally.

The Media segment fell 36% to $36.7 million, due primarily to the closure of the Newsweek print business and the sale of its digital business. However, video site Vimeo increased revenue over 45% and reached nearly 500,000 paid subscribers. Websites revenue also increased 1% and page views grew 8% to 8.5 billion.

Search & Applications was the weak link in the chain for Q2 2014. Revenue declined 7%, enough that it could not be offset by growth elsewhere. On the whole, consolidated revenue declined 5% year-over-year. Consolidated Adjusted EBITDA dropped 10% compared to the previous year. Total revenue for Q2 2014 is $756.3 million, down from $799.4 million in Q2 2013 and below the $796.6 million consensus estimate of analysts consulted by Thompson Reuters.

Looking to the future, IAC will push forward with its new marketing campaign for Match and plans to put a renewed focus on native mobile apps. IAC will also acquire the Princeton Review, an in-person tutoring service that publishes college rankings, via its online-only tutoring firm Tutor.com. And then there’s one thing that gets more attention than any other: Tinder.

IAC says it intends to monetize the popular dating app this year, and stands to make quite a hefty sum. Greg Blatt, chairman of IAC’s Match Group unit, said recently that Tinder has the potential to generate as much as $75 million a year in earnings (before interest, taxes, depreciation and amortization).

“It’s growing like a weed,” Blatt said, but earning money from Tinder is still “a work in progress in terms of exact manner and timing.” Several monetization possibilities are available to IAC at this point. Back in April, IAC chairman Barry Diller said three approaches are currently under consideration:

• Subscription
• Advertising
• Freemium (which offers basic access for free and charges for additional services)

Tinder certainly isn’t hurting for opportunities, so at this point any direction seems like a real possibility. “I have been developing online businesses for quite a while now,” Diller claims, “since the Internet started. I have never had the number of people banging through our doors to see if we would sell them a little piece of Tinder.”

So far it hasn’t happened, but don’t think he doesn’t have something up his sleeve. “We have got lots of little areas marked for revenue,” Diller said. “You bleed into them over time.”

For more on these 2 dating services you can read our reviews of Tinder and Match.com.

Just when you think Facebook couldn’t possibly get any bigger than it already is, it goes and shatters all expectations. For the 8^th quarter in a row, Facebook’s earnings beat projections.

Much of that growth is in mobile, where Facebook is growing twice as fast as it is compared to its services as a whole. Facebook currently logs 654 million daily mobile users and 1.07 billion mobile users each month. Thanks to the continued increase in smartphone usage, 62% of the social network’s ad revenue came from mobile in Q2. In total, Facebook now has 829 million daily users and 1.32 billion monthly users. Altogether, they are responsible for a spectacular 2^nd quarter for Facebook. The company beat Wall Street’s estimated earnings of $2.81 billion to end Q2 2014 with $2.91 billion in revenue.

Here’s how that stacks up against Q1 2014:

• Facebook's total user count is up 3.125% from 1.28 billion total monthly users to 1.32 billion
• Total daily user count is up 3.36% from 803 million to 829 million
• Monthly mobile user count is up 5.9% from 1.01 billion to 1.07 billion
• Daily mobile user count is up 7.4% from 609 million to 654 million

Revenue isn't the only way Facebook is exceeding expectations. Some critics have said the social network is losing its influence with Western users, but its monthly user count in the USA and Canada grew by 2 million this quarter. And for anyone who dared to suggest that Facebook wouldn't survive the transition from desktop to mobile, Facebook's 391 million mobile-only users dwarf its 240 million desktop-only users.

Internationally, Facebook is showing equally impressive numbers. Ad revenue is up everywhere, and the site hit an all-time high average revenue per user in every region around the world.

The only low point was payments revenue, which Facebook largely derives from the 30% tax on the in-app purchases from its Web games platform. Total payments revenue dropped slightly to $234 million from $237 million in Q1. On the plus side, it's still up 9% compared to Q2 2013.

On the horizon for Facebook now is the launch of Facebook Audience Network, the company’s mobile ad network that will bring in revenue by incorporating its targeted ads in other companies' apps. Another big development is Slingshot, a photo and video messaging app that Facebook hopes will be a competitor for Snapchat.

When asked for his thoughts on Facebook’s remarkable 2^nd quarter, all CEO Mark Zuckerberg had to say was “We had a good second quarter. Our community has continued to grow, and we see a lot of opportunity ahead as we connect the rest of the world.”

To find out if this social network makes a good dating tool you can read our Facebook review.

There are many online dating sites and mobile apps competing for the same market of single men and women, looking for innovative ways to position themselves differently than “just another dating site/app.” But How About We continues to make innovative moves in this industry and buck the trends, including its initial hook – taking online dating offline for better results. Now they're also offering services to couples and getting into the digital content space.

Online Personals Watch recently interviewed CEO Aaron Schildkrout about the success and challenges of How About We, the choices he’s made, and what he wants to do next with the brand.

How About We is focusing on the couples space, since Schildkrout claims it will be "twenty times bigger" than the dating space will be. The fundamental problem with dating sites is that it works to their advantage for people to stay single and looking, so the focus is on gathering more subscribers, not necessarily making a product that helps customers meet their goals of finding partners. Shildkrout maintains that meeting up in the real world works better for singles, which is why they made it their focus.

Despite still facing the occasional naysayer, the Internet and dating have proved to be a match made in heaven. With consumers using the Internet more and more each year, demand for online dating services continues its meteoric rise. In particular, the ever-increasing popularity of smartphones has made mobile applications a booming business for dating services.

IBISWorld, a global business intelligence leader specializing in Industry Market Research and Procurement and Purchasing research reports, recently put together a comprehensive guide to the online dating industry's market size and growth prospects. By all accounts, the future looks bright for the industry's biggest forces.

InterActiveCorp is the one to beat. The largest company in the industry, IAC counts Match, OkCupid, and Tinder amongst its brands. The New York City-based company is expected to grab 27% of the estimated $2.2 billion market for US dating services in 2014, according to the new IBISWorld report. Analyst Jeremy Edwards predicts IAC's US Match revenue will rise 11.5% to $605.1 million this year, with operating income up 14% to $192.8 million.

Coming solidly in second place is eHarmony, a privately held company based out of Santa Monica, CA. eHarmony proudly dominates 13.8% of the US dating service market, IBISWorld says. The company’s projected US revenue for 2014 is $310 million, up 6.9%, with operating income up 9.6% to $35.3 million.

Spot #3 goes to San Francisco-based Zoosk, with 5.1% market share. 2014 has been a big year for Zoosk so far. The company filed for an initial public offering in April and IBISWorld predicts it will generate $114.2 million in US sales, up 24.5%, and operating income of $3.5 million. That's a nice change from a loss of $100,000 in 2013.

Finally, occupying fourth place, is dating service Spark Networks, with 3.2% US market share.

Altogether, the four largest companies account for 49.1% of US dating service revenue. The industry’s other winners are mobile dating (26%), matchmakers (14%), and singles events (7%).  IBISWorld expects the US dating service industry to grow at an annual rate of 4.2% from 2014 through 2019 - at which point it predicts sales will reach a whopping $2.7 billion.

"It is estimated that niche dating networks and services catering to the baby boomer generation will see the most growth," Edwards said. "In addition, revenue for the mobile dating market is expected to nearly double in the next five years, with rising smartphone adoption and new location-based features leading the market." 

Launched in August 2011, Chinese dating app Momo was one of the first location-based mobile apps in China. Like its American counterparts, the app allows members to upload personal information and photos, then locates the positions of other users in the area. And, again like its American counterparts,  Momo is plagued with a reputation for being a service for one night stands. Though Beijing Momo Technology Co. claims the app's purpose is to assist users in making friends and broadening their social networks, its salacious reputation just won't go away.

Despite being thought of as “a magical tool to get laid,” BMT is now working with banks including Morgan Stanley and Credit Suisse Group AG for the IPO in US, which Wall Street Journal reports is likely to happen later this year. According to WSJ, Momo was recently valued at around $1.2 billion in private fundraising. An earlier fundraising 1 1/2 years ago put Momo’s market value at just $500 million. The app seems to be on the right track, whatever reputation it has.