Spark Networks, Inc.

Hello, ladies and gentlemen, and thank you for waiting. Welcome to Spark Network's conference call to provide the company's results for the first half of 2020. This call is being recorded, and we are broadcasting live in listen-only mode. I would now like to turn the conference over to Chris Camara, VP of Investor Relations. Mr. Camara, you may begin your conference.

Thank you, Operator, and thank you, everyone, for joining us this morning. On this call are SPARC's Chief Executive Officer, Eric Eichmann, and Chief Financial Officer, Bert Althaus. As a reminder, this morning we published our first half 2020 financial results, which can be found on our investor relations section on our company's website at www.sparc.net. Before we begin, I'd like to remind everyone that in the press release and in the prepared remarks on this call, we referred to adjusted EBITDA, which is defined in our SEC filings. A reconciliation of adjusted EBITDA to net loss can be found in the consolidated statements of operations included in our earnings release. Additionally, 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 can 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 in the company's filings with the SEC. Following our prepared remarks, Eric and Bert will conduct a question-and-answer session. This call is being recorded and will be available for playback on the investor relations section of our website. With that being said, I will now turn the call over to Mr. Eric Eichmann, CEO of Spark Networks. Eric, please go ahead.

Thank you, Chris, and many thanks to everyone for joining us on the call today. Let me begin by saying that our thoughts are with individuals and businesses around the world impacted by the COVID-19 pandemic. At Spark, we are focused on executing our strategic priorities. Our Berlin employees have returned to the offices in a limited capacity while our staff in the US continues to work from home. We remain connected as a team and productivity and morale are strong. we believe our business has proven to be COVID-19 resilient. In this pandemic, Spark's products fulfill people's needs to connect with others and forge new and meaningful relationships at a safe social distance. We have a very clear roadmap for success. After having grown to a meaningful size with the Zoosk acquisition, we are now focused on maximizing our dating brand to take advantage of the meaningful, organic, growth opportunities. 2020 is a stabilization year by getting the fundamental right to prepare for future top-line growth. And the signs of progress are very clear. Meaningful product fixes, strong marketing synergies, quarter-on-quarter flat revenue, and year-on-year growth for three of our top four brands in North America. I am very happy with our H1 2020 performance. We preannounced positive top line results and raised fiscal 2020 guidance earlier this month. First half 2020 revenues increased to $114 million compared to $55.6 million during the first half of 2019. The increase in revenue is attributable to the integration of Zeus and the growth of our other core brands in North America. First half of 2020 adjusted EBITDA was $18.8 million with adjusted EBITDA margin of 16.5%. This represents an increase compared to $4.3 million in the prior year period and an adjusted EBITDA margin of 7.8%. The increase in adjusted EBITDA is largely due to successful execution of our 2020 business plan and strength of our offering in the COVID-19 environment. Our top-line overperformance did not fully translate to the bottom line, mostly due to one-time expenses related to the ZUSC transaction. Finally, our operating cash flow after interest payment more than doubled to $13.4 million from $5.1 million on a year-on-year basis, demonstrating our financial model strength. There are several drivers for our improved performance. First, better marketing efficiencies coming from Zoosk's spending optimization due to increased performance tracking capabilities and to marketing synergies thanks to a larger brand portfolio. Second, we made good progress improving Zoosk's products, including the implementation of enhanced matchmaking algorithms, responsive design, and a simplified onboarding flow. Third, people staying at home due to COVID-19 led to higher engagement and subscription for our products. Despite tougher economic conditions for consumers, we maintain stable turn levels. Zeus, Silver Singles, Elite Singles, and Christian Mingle are our four largest brands and represent over 90% of our revenues. We have now fully completed Juice's integration and are making good progress towards improving its user experience. Our three biggest brands after Juice, Silver Single, Elite Singles, and Christian Mingle, collectively grew year-on-year revenues by 8% in North America. We expect continued momentum for these brands. Turning to our key performance indicators, average paying subscribers and marketing contribution increased, and our pool was stable on a year-on-year basis. Average paying subscribers grew from 0.45 million in H1 2019 to 0.92 million in H1 2020, while our crew was stable at $20.8. Marketing contribution increased from $23 million to $57 million on a year-on-year basis. North America is our top priority market representing 73% of our H1 2020 revenue versus 54% in 2019 first half. International revenues represent 27% led by our UK, Australia, and France presence. During our previous earnings call, we outlined four priorities for 2020. Driving product innovation, improving and scaling marketing, running cost-effective operations, and enhancing our capital structure. We have made good progress on these priorities. First, we have improved key product functionality for each of our brands, in particular for Zeus. We also made good progress in building unified platform services such as CRM, data warehousing, and billing. We are now working on updating the look and feel and usability of several of our brands, premium features. Our new Spark app, focused on a younger demographic and easy, fun self-expression, is currently undergoing testing in Canada and preliminary feedback has been positive. We've also enhanced the scale and scope of our marketing capabilities. During the first half of 2020, we improved efficiencies by working to target, identify, and leverage those areas that provide the strongest ROI. On the Zeus side, we implemented a sophisticated marketing tracking solution that was used to improve acquisition costs and enable marketing teams to optimize campaigns. Additionally, the company was also able to capitalize on the reduced acquisition costs related to discounted COVID-19 pricing, most notably in paid social media and television. For the remainder of the year, we are focused on testing and scaling retargeting and app channels, areas that we believe have significant potential. In terms of improving our cost structure, we have performed a thorough review of our external vendors, reducing costs, and implemented strict oversight to our operations. We are now running our 12 brands with one product, one marketing and one tech team out of Berlin, leading to lower costs, consolidating purchasing power and shared expertise. Lastly, we are exploring ways to improve our capital structure. We are actively working with an external party to review our current debt. In summary, I am very excited about the future of Spark. We operate 12 data platforms in an attractive 6 billion US dollar market growing 6% annually. While the company operates across the globe, approximately 90% of our revenue is generated in the leading markets for online dating, the US, Canada, the United Kingdom, Australia, and France. We are a world leader in premium and community-based dating. Our strong differentiated presence in the serious relationship segment targeted at the 40-plus demographic and religious communities, position us well for future growth. The 45-plus demographic is expected to be 68% of the U.S. adult population in 2025, up from 63% today. This, combined with a low online dating penetration of 19%, for adults 45 plus versus 40% for singles overall creates a large organic growth opportunity for Spark's current brand portfolio. Historically, Spark focused on acquisitions, resulting in a combined organization with significant size, a critical success factor in our industry. Product innovation is the other important success factor, and we are making good progress on that front. We believe that strong marketing and product capabilities will allow us to take advantage of our brand's growth potential. I am pleased with the company's financial performance for the first half of 2020 and with our improved 2020 outlook. I am proud of our team who is working hard every day to make our company better and to drive higher engagement for our users. As the second largest publicly traded online dating player, I am optimistic about our future and look forward to updating you on our progress. I would now like to turn the call over to our Chief Financial Officer, Mr. Bert Althaus. Bert, please go ahead.

Thank you, Eric. As a reminder, the first half of 2020 will be our first full reporting period to include SUSE Financial, which now represents more than 50% of our top line. starting with the top line. We reported first half 2020 total revenue of 103.4 million euro, an increase of 110% compared to the same six-month period ended June 30th, 2019. For half year, the increase in revenue is attributable to the Spark Network-SUSC merger, which closed in July 2019. On a performer base, first half 2019 revenue was at 119.8 million euro, with 70.6 million euro attributable to SUSC, and 49.2 million euro to existing Spark brands. Our average paying subscribers increased from 0.45 million in the first half 2019 to 0.92 million during the same period 2020. This represents an increase of 106 percent in the year-over-year growth. Our first half 2020 end-of-period paying subscribers was stable at 0.94 million compared to end of year 2019. For our first half 2020, we stayed the total number of registrations of 7.7 million compared to 4.5 million in the first half 2019, reflecting a growth of 71%. the monthly average net revenue per user, or APU, increased from 18.4 euro to 18.9 euro due to an increasing share of revenue in North America. Contribution for the six-month period ended June 30, 2020, was 51.9 million euro. This represents an increase of €31.6 million, or 155%, when compared to the same six-month period in 2019. This change is attributable to the acquisition of SUSC and the efficiency in marketing spend. In terms of our balance sheet, SPARC continues to operate with an asset-light business model. More than 84% of our total assets are represented by intangible assets in Goodwill. We are also reporting that Spark ended the first half 2020 with €12 million in cash and cash equivalent compared to €12.5 million at the end of the first half 2019. and €15.5 million at the end of December 2019. As of June 30, 2020, we are reporting equity of €144.4 million compared to about €14.0 million as of the same day 2019 and €142.2 million. €1 million at the end of December 2019. As of June 30th, 2020, we are reporting our results to companies that position at €88.8 million. Cash flow generation from operating activities was €12.2 million in the first half 2020 compared to €4.6 million during the same period 2019, an increase of 165 percent. COVID-19 has resulted in an increase in chargebacks across all sectors, including online dating. We continue to work on mitigating actions to reduce the impact of chargebacks on our business. Now turning to our 2020 guidance. Earlier this month, we increased our previous estimates to both revenue and adjusted EBITDA. The primary reasons driving this guidance are, first, increased KPIs across our strongest brands, evidence that our product enhancement and marketing efforts are working. Second, a better than anticipated impact from COVID-19. As released on August 12th, we expect to achieve 2020 annual revenue of $224 to $228 million, or $190 to 193 million euro, and adjusted EBITDA of 34 to 36 million US dollar, or 29 to 31 million euro. For the second half of 2020, we are guiding to revenue of 110 to 140 million US dollar, or 87 to 90 million euro, and adjusted EBITDA of 16 to 18 million US dollar or 12 to 14 million Euro. As a reminder, this call is our second and final earnings call this year due to our foreign filer status. We are working on becoming a domestic filer in 2021 and looking forward to release earnings on a quarterly base beginning in Q1 2021. We are planning to actively communicate with our web investors in the intermediate. This concludes our prepared remarks. Now, let me turn the call over to the operator to take your questions. Operator?

Can you, operator?

Yes, Eric, your line is live.

Oh, good. Okay, great. One quick correction to everybody. I mentioned in the script that operating cash flow after interest payments grew. Obviously, that was wrong. It is operating cash flow before interest, not after. Sorry about that. All right, ready to take questions.

Thank you. And this time we'll be conducting a question and answer session. If you'd like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.

One moment, please, while we poll for questions.

Your first question comes from line of Kara Anderson with B Riley. Please proceed with your question.

Hi, good morning or good afternoon, depending on where you're at. How are you guys doing?

Great. Thank you.

Good. So first, just can you discuss the trends in the total paying subs kind of throughout the first half? And then second piece of the question is how we should read into the decline in total registrations in the first half versus I guess, to age 2019.

Hey, sorry, Kara. Can you repeat the first part of the question?

Yeah, the first part was just whether you could discuss some trends on paying subs throughout the first half, if you saw any trends there.

All right, great. Got it. Well, thank you very much, Kara, and thank you for waking up early. I know it is early in the the West Coast. So look, on the first question, what we saw, and this was reflected in our comments that we made in April when we talked about 2019 results and provided guidance, is we have seen a bit of a slowdown as soon as the pandemic hit in the U.S. in a big way. So towards the end of March and when people sort of went a bit crazy to go and buy toilet paper and other things, sort of goods at the store, there we were a bit more cautious. And as you remember, we had mentioned in our first at that time that we had seen a low double-digit sort of dip. And so that had us worried a little bit. What happened afterwards, and this was good news, we had seen engagement go up. So that was good. And that was followed with subscription optics. And so as you can see from the results that we talked about in the first half of 2020, it's been a good first half for us. I think a big part of that came not just from a, I would say, a generally good environment with people staying at home, but more importantly, we made significant improvements to our products. Zoosk in particular was the area that sort of required more work. We implemented a matchmaking algorithm that sort of led to results, an onboarding flow that was simpler. We also had a full sort of marketing tracking that didn't exist before, and so we were now able to optimize marketing and scale the things that were working well and sort of limit the spending on things that were not working well. And so those things, I mean, it's hard to know how much was the environment becoming a bit more with people staying at home and how much was product and marketing enhancements, but at least we could measure product and marketing, and I would say that that was a big part of it. So that's that. The decline in total registrations, a couple of things that I would mention on that. First is that if you look at the total number of registrations, The majority of the decline is in international, not in North America, and it really follows from a decline that existed from Zusk. I think Zusk was a brand, if you take now North America, that was in decline. It was very clear to us that when we acquired Zusk, it was to reach a certain size, and we also believe that it was a very strong brand that needed some revival, if you will. We're in the process of doing that. I think we have a number of proof points that show that that process is working well. And so I would say when you look at the decline in North America, I'm trying to do the quick math, it's 100,000 from the end of 2019 to the end of the first half of 2020. That's out of 5 million. So what is that, like 2%?

If I get it right, something like that.

So it's not significant. And our hope, obviously, is, as I've said, 2020 for us is a year to reach stabilization and the idea, obviously, is to prepare ourselves for future growth.

We are not, obviously, focusing as much on the international segment. We have said North America is the key market that we're focusing on, and so I would look at the metrics there more than the overall metrics.

Okay, got it. And then, can you talk about expectations for the second half? I know you provided some guidance that implies a pretty sharp decline from the first half for both revenue and EBITDA, and even includes the margin erosion from 1H. So, just give us some color there.

Yeah, I think that's another great question, Kara. Thank you. So, look, we feel quite... optimistic and quite bullish about how the business is going. And so all of that is good. But as we think about guidance for the future, we're also thinking about some of the potential mitigating risks. And as you're seeing now, it seems like a second wave seems quite, you know, it's happening already in the US. It seems to have reached another peak and now are slowing down. And in Europe now, it seems to be speaking up again. So we're still, I mean, we're in uncharted territories here in terms of the pandemic and what it means. And it's not necessarily clear, though we are optimistic, it's not necessarily clear that what happened in the first wave might be what happens in the second. So that would be the most likely scenario. But again, there's some risk. And then there's also the effects of potential recession. So I guess the answer to that is we're being I'm perfectly cautious when you think about the guidance given still some of the uncertainty in the times that we're living with, but not anything related to our beliefs in the corporations or our ability to continue to improve the product and drive marketing for us.

Got it. And then on the tech integration with Zoosk, I think that was the final piece that we were all waiting on. When did that happen, and is there any savings related to that in the second half that's in the guide?

Yeah, so the last people that were part of Zoosk, the company out of San Francisco, left the company – I think it was early Q3 or late Q2. And so the integration is completely done. All of the product and tech is being done out of Berlin now. And so all of that is done. And any synergies that we'll get from that are included in the guidance that we provided for the rest of the year.

Got it. And then just one last question. With respect to the direct marketing spend, I think you called it out, but you did see a significant improvement in the contribution there. Can you talk about what you think is the biggest driver behind that improvement, and is that kind of the level of performance you should expect going forward?

Yeah, so, you know, I think probably the biggest factor is being able to do things. One, taking on Zoosk and being able to improve the tracking capabilities allowed us to drastically improve the ROI and the spending there. And so just understanding which channels work, how they work, and then scaling those to their full extent was probably one of the big areas. The second one, I would say, which is fully related to marketing, is the ability to improve the product. When you improve the product, obviously you get better conversion, better engagement, and particularly the onboarding flow was a big area there. And that generally leads to better marketing spend, right? Because if you have a conversion that's 10%, 20% better, then that's just 10%, 20% better in your ROI of marketing, which gives you more room to spend. So I would say those are... probably the two biggest things and then the third has to do with the improved engagement that we've seen with people staying at home and it's hard to know exactly what that means for the future but my belief is that the staying at home has led to a step up or step increase in penetration of online dating and that's something that that's very good and it's not going to change in the future. So that's a very positive area. The last thing I would say, and we mentioned it in the script, is that we saw some prices decline from a media perspective, in particular in paid social and in TV, and obviously we took advantage of that. And, you know, in terms of marketing contribution for the future, I think, you know, very much the idea that we have, And what we intend to do is continue to improve that. That's one of the key metrics we look at all the time, is how well our marketing contribution is doing.

And our guidance obviously sort of implies that we continue to do well on that front.

Thank you.

Thank you. Your next question comes from Austin Moldo. with Canaccord Genuity. Please proceed with your question.

Hi, thanks for taking my questions. The first one's on ARPU. I understand that the total ARPU line is improving from a mixed shift towards North America, but can you talk about the North American ARPU segment and the kind of mixed shift that might be happening there and the relative ARPU levels of all those different brands, given that you're seen growth in some, not in others, and I imagine they have sort of different price points.

Yeah, so a couple things, and then I'll sort of pass on also to Bert if there are any comments, but if you look at the ARPU from our press release, it's improved from 16.37% in the second half of 2019 to 18.85. There's a couple of things there. And, you know, maybe more relevant in the first half of 2019, the increase is not as big, 18.44 to 18.85. And so what you should know from that is that there is a seasonality to our business end of Q4 after Christmas to Valentine's Day are sort of high season. So we see generally higher ARPU because of it. And so that's reflected in these numbers. And so that seasonality is there. But the other thing is in North America, you have an increase in ARPU that sort of has to do with the different brands. And, you know, we've seen growth in those three brands. That we talked about the top three and you know the pricing associated with those particular silver singles and a lead single is Carries hierarchies. So that's a bit of a mixed shift But the difference is not that big if you think if you look at it, but I would say that that's The majority of the driver and birds. I don't know if you have any other comments Yeah, I think

One thing to add is the second half of 2019 is hardly comparable to accounting effect out of the purchase price allocation that we had. So that has an impact on this part. So I think that's not comparable. I think that, as Eric explained, the first half of 2019 compared to the first half of 2020 is more appropriate. But adding that the shift increases to the North American revenue significantly and by that improving our overall output.

And I guess the last comment on South Austin is, you know, we haven't implemented any sort of significant new premium features or additional revenue enhancing features like advertising, potentially video and things like this. These are things that are, uh, things that we're looking at. Uh, but obviously from a priority perspective, we're trying to, uh, bring product improvements that have the highest ROI. And most of those have led to engagements and to subscription revenues, which, which is, um, obviously very positive, but those, those things, um, are things for the future to, uh,

additional revenue drivers, if you will.

Got it. And just a quick follow-up on ARPU. Considering Zoosk is sort of different from the rest of the portfolio, where does that ARPU level fit within the portfolio? And also, should there be an expectation that of some sort of mixed shift down as, I don't know, as sort of becomes a big piece of the total pie.

Yeah, I mean, so if I understand, Austin, you're asking if the offers are different for different brands and you have a mixed shift in terms of the registration, then does that lead to a different shift? I mean, I would say a couple of things. One, you know, we expect that we can sort of over time provide and drive new revenue initiatives. And so those should all contribute to ARPU. And, you know, as we've mentioned, the top three or three of our top four brands are growing in North America. That's Christian Mingle, Silver Singles, and Elite Singles. And just in general, Silver and Elite have a higher ARPU than Christian, and they're growing a bit faster. And so those would probably sort of end up sort of driving ARPU a little bit up. And as we sort of start, you know, seeing growth in Zeus again, I think that would stabilize. So I don't know that we would. point to a particular trend. I think it's fairly stable, but let me turn it to Bert. Bert, any comments on that?

Yeah. Thank you, Eric. There's no particular trend towards SUSE or differentiation in the way we are pricing SUSE compared to others. It is really the optimization on the pricing that we have over all our brands.

And obviously, we spoke earlier We like to see ARPU up, but if ARPU goes down while volume is going up and our contribution and our revenue is going up, we like that too. So ARPU in itself is not a metric. So when we think about new revenue initiatives, we obviously want to make sure that those are contributing to ARPU once you exclude all the factors like mix, shifts, and things like that. But at the end, we're really trying to drive contribution as a main metric and revenues.

Okay, got it. And my last question is on product innovation. You mentioned Zoosk several times, so can you talk about product innovation outside of Zoosk and what kind of features maybe have been implemented recently or that you're thinking of? I think you just mentioned that you were evaluating video in the previous answer. Can you talk through some of those new features outside of Zoosk that are on the horizon? Of course.

So a couple of things, one of the things that is important in particular within our segment of online dating is how you present yourself in an online dating platform is important. And so a novel refresh of our brand is important, includes Zoosk. It's one of the things we're working on. And so that's something we think we'll have. meaningful impact on our users. So that's positive. In addition to that, we also have, and we talked about this, we're also working on consolidating a number of global services to serve the different front-end platforms. And we've done great work from a CRM data warehousing, you know, the tracking that we talked about where Zeus really comes out of a global service that we're providing all brands. And so it allows for, you know, shared expertise, if you will, around all brands with one marketing team. But we're also working there on billing. Billing is an important part of us being able to have different pricing structures, different tests that we launch on all the brands. And so that's one of the areas that we're excited about. It takes a little bit longer. It's obviously a more complicated area that involves third parties, but that's an area that we're excited about. Another area that we're excited about over time is just fraud and safety and security are areas where we're implementing a number of features for users to feel safer within our platforms and have meaningful interactions with people that have been fully vetted. And so some of the things that we're doing there are things that we're putting in place now. And obviously, that's not just necessarily features, but also the ability operationally to address issues as they come, so we're beefing all of that up. The other thing that I would say is, as I mentioned, we are testing our Spark app in Canada. It is targeted at the younger demographic. It is currently just an iOS app, and the idea is to have it on Android. We've seen sort of initial good feedback.

from users, so we're excited about that. And it's a very distinct, differentiated proposition for consumers. So that's a little bit of the rainbow of things that we're doing around product.

Okay, thank you very much.

Your next question comes from the mind of Roger Berry, private investor. Please proceed with your question.

Hello, everybody. And this is Roger from the UK. So we're in the afternoon here. And just two, three questions, actually. First question is on the revenue line compared with the pro forma 2019. I wonder if you could explain that drop of 16 and a bit million euros. Next thing is probably a cheeky question. When you might expect the net loss line to turn positive, in your best guess based on the current trajectory. And finally, bearing in mind that the 50-somethings and above are much more adept now as a result of lockdown with Zoom and various other platforms, probably a move into video for that market is more than necessary at this point in time. When can you put that in place and how far down the line do you expect it to be available? End of question. Great.

Thank you very much, Roger, from the UK. Appreciate your question. All right, so first off, you asked about revenue versus performance. There is a decrease. So I would take two factors. There's a mix of factors, obviously, some positive, some negative. But the biggest factor is we had a declining brand in Zoosk. And so that decline is now being worked on. And the hope is that we will stabilize all of that and start growing again in 2021 and beyond. And so that's, you know, what we're seeing is really good sort of proof points that we're able to start turning the corner around that. The second thing that's important in that line is that we decrease marketing expenses. The second half of last year, because we're a subscription business, obviously that affects future revenues. We did that to comply with one, the covenants on our debt, and then two, also because we wanted to make sure we fixed some of the key things around the product before we spent in particular things like marketing tracking those things were in place in H1 so you know I think all of those things are things that we're hoping we're going to see a different trend in the future and the second thing is we obviously you know we said very clearly we're investing in North America and so you know we have a number of cash cows in international you know we have a brand in Hungary and we have a number of brands that contribute EBITDA and we like that, but obviously we're not sort of looking to grow those numbers and so that's another factor that comes into it. As we ramp up marketing, as we continue to improve our products, our expectation again is 2020, we're stabilizing and then we're preparing ourselves for future growth. So hopefully that gives you A little bit of color there. On the net loss turning positive, we're not providing guidance on net loss. Obviously, we are providing guidance on adjusted EBITDA, and that line is increasing, right? So we just provide guidance for the full year of 34 to 36, and that's positive. I don't know if you have Bert, any comments on that front? But generally, you know, that's something obviously we're not providing guidance on. But Bert, anything on that? That's why I said it was a cheeky question, so that's fine. Don't worry.

I guess that's right.

No, but let's take the opportunity on that question, saying yes, we're providing guidance on the adjusted EBITDA and we expect the EBITDA to develop, but our focus is really on investing into our products and to our marketing scale to turn the company into further growth. And this is a priority for us to set the base. This year we said it's a transition year and we want to turn into the growth. So that will be our focus going forward.

It would be great going forward if you could combine, say, your platform with Deliveroo, Eat, or any of the food providers to actually take someone out on a date virtually to sit and chat to them on video, and I hope that that sort of thing will develop going forward, particularly bearing in mind the old crusties like me are much more video-enabled than they were before we had this virus. Got it, yes.

So that was your last question on video, and so video is an area that is developing, and we talked a little bit about this in our last call. And we think it's an important feature that will become an inherent part of most dating platforms in the future. What we found from talking to our subscribers and users is that they believe it's important. The sort of the benefit or the incremental from having it fully integrated within your platform or them using a Zoom or a FaceTime mechanism is is less than we originally thought. There is some benefits, but not as significant. And so as we thought about prioritizing or product initiatives, there were higher ROI items. But we think that this is going to be something in the future. Having said that, it doesn't stop people today on our platforms to meet, to make the contact, and then to use different video platforms to communicate. And that's what's happening. That's what we learned. We were concerned that people were worried about using FaceTime because of the phone numbers being sort of disclosed at that point with whoever they're connecting with. But we found out that that wasn't the case. So we will be looking at this. But again, we had other priorities that we thought had a higher ROI. And so since this wasn't as pressing, then we will be looking at that in the future. All right. Any other questions? Thank you, Roger.

As a reminder, if you'd like to ask a question, please press star 1 on your telephone keypad. As a reminder, if you'd like to ask a question, please press star 1 on your telephone keypad now. Your next question comes from line of Volman Christian with Mercutio. Please proceed with your question.

Hi. Christian Volman here from Germany calling. I'm one of the E-Darling founders and the shareholder. My question concerning the debt refinancing that you mentioned, and I would like to know whether you can talk about what the strategy there is, what the progress is, and give a little bit more color on the timing, et cetera. Thanks. Yeah.

Thank you, Christian. A couple of things there. We've engaged with an external third party to help us with that process. I think COVID-19 has had sort of a stop and go type effect on debt markets. And so it's been a longer process for us. What we've said and we continue to believe is that we will, you know, for this is a 2020 priority and it's something we're looking at this year. And so we'll have hopefully more news on these fronts by the end of the year. And I don't mean necessarily December 31st, but I think just, you know, right now there's not a lot of information that we can provide except for saying that we're making good progress in terms of sort of following a process and contacting different parties and having different conversations.

Thank you. You're welcome. Your next question comes from the line of John Lewis with Osmium. Please proceed with your question.

Good morning, Eric and Bert. I guess the quick question is, could you give an update on where you are in terms of progress with the Spark app, how that's progressing?

Sure. John, thank you very much. Thank you for waking up early. It's going to be pretty early for the web, so we'll try to come at better times in the future. So we're excited about Spark App. The Spark App is intended for a younger demographic, being 18 to 30. What we've seen to date is there's quite a bit of engagement. And just as a reminder, the Spark App makes... self-expression, fun, and easy to use. And so if you go, if you go to the Toronto app store or to the Canadian app store and download it, you'll see you can create the profile, and you have a number of different what we call frames that describe you as a person. And let me just give you an example in addition to the standard things you would have in any dating platform, like your picture and maybe a bit of a description of who you are, you have things like the ability for you to show out of a nine picture frame, which ones are your three favorite, uh, vacation spots or sports. Uh, and then when somebody sees your profile, they can interact with those nine pictures and choose their own three favorite, uh, things. And if they match, then we have an instant match. And so what we've seen is that, um, individuals or people that are signing up for the app are putting up or building a robust profile with different frames. We're excited about that. Then the interaction is happening within those frames. Most recently, we launched a frame that allows you to pose an interesting question. For example, should pizza ever have pineapple on it? Then you can post your own response as a profile maker. Say, you know, absolutely not. That was not what the Italians intended when they created pizza. And then people can come in and respond by creating a video of themselves sort of responding to that. And that should be seen obviously by the person that made the profile. So that's an example of video being used in a very interactive way where people can sort of safely talk about a subject and get to know each other a little bit better. So, net-net, we're excited about the progress on it. I think, you know, having an Android version of it is important to reach the full audience, of course, and that's one of the things we're working on. And we're also working on making sure that we get more information about the usage that people have. But all in all,

It's doing well, and assuming all goes well, we'll make a decision about putting a broader launch by year end. Ladies and gentlemen, we have reached the end of the question and answer session, and this concludes today's conference.

You may disconnect your lines at this time. Thank you for your participation.