Finances

I've been sick lately (and still am) so I have some catching up to do on news posting.

On December 23, 2008 FriendFinder Networks filed for a $460 million IPO. My first thought was it is an interesting time to file with the downturn of the economy. Adult FriendFinder is the major revenue generator of the FriendFinder Networks and with the latest posts about dating sites doing better in these market conditions, maybe the recession is not as much a concern. Still, there are less people out there with money to invest.

The other big issue is the proceeds of this will be used for the most part to pay off debt. Most investors tend not to like this type of scenario. I'm not sure where this debt came from. FriendFinder Networks was bought last December (see Story) by Penthouse for $500 million. I assume at this point, the FriendFinder accounting books where in a positive territory. I can't see Penthouse buying them for so much money if FriendFinder had a huge debt. This new debt must of come from Penthouse.

Spark Networks released their 3rd quarter financial results this past week. It wasn't a very good quarter for the company when compared to 2007 Q3 and last quarter.

Revenue for the third quarter of 2008 was $14.0 million, an 11% decrease compared to $15.8 million in the third quarter of 2007, and a 6% decrease compared to $15.0 million in the prior quarter. Revenue for the nine months was $44.1 million, a 10% decrease compared to $49.2 million for the same period last year.

Subscribers are also down.

I was doing some research and I ran across this CNN Money article again. In it CNN mentions that eHarmony has annual revenues of almost $200 million. In 2007 this dating service spent upwards of $100 million in advertising (from our stats page you will see they spent $88 million for the first 3 quarters of the year). This means, about 50% of revenue (membership fees) goes towards advertising. I know eHarmony is not the only dating site spending this type of money on marketing. Other dating sites that have similar spending habits includes Match.com and Friend Finder. I wonder how this compares to other industries?

For more information on eHarmony, read our dating review.

Match.com and Chemistry's parent company IAC reported their Quarter 3 Financials last week. IAC revenue grew by 10% to $369.3 million when compared to the same quarter last year. It's not all good news as they reported a net loss of $14.8 million. In Q3 2007 they had a $70 million net income.

Q3 operating loss was driven by the spin-off expenses and a $16.2 million non-cash charge related to the modification of certain IAC equity awards in connection with the spin-offs.

Match.com revenue is reported to be $93.5 million, this is up $4 million over quarter 3 last year and up $200,000 from last quarter. This revenue gave Match an operating income (before amortization) of $30.3 million.

For more information, read IACs press release in their media room.

India's matrimony market is estimated to be worth almost $230 million annually (£118 million). This includes online dating and matrimony services which brings in about $13.5 million (£7 million). An Indian matchmaking service called Shaadi.com has become quite popular among singles in the 20 to 40 age range and is now one of India's five most popular sites according to the Britain’s Telegraph newspaper. The dating and marriage service reports it has over 10 million members and is responsible for a million marriages worldwide since its inception in 1997. 6000 profiles are created every day on the site with 60% of them being male. Shaadi.com is not just a website, there are more than 150 Shaadi Centres in 87 Indian cities. This allows parents and children to sit down with a relationship adviser and review the dating services huge database of potential matches.

One of the reasons Shaadi.com succeeds according to the Telegraph is because:

InformationWeek has a press release from True.com that is called "TRUE.com Increases Advertising Spend to $75 Million, Reflecting Positive Corporate Growth ". I had to laugh at the title. When is growth meassured by the amount of money you spend on advertising. It isn't even money they have spent yet, just forecasted too.