Spark Networks SE

Good day and welcome to the SPARC Network's fiscal 2021 fourth quarter and year-end earnings conference call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. And to withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Mr. Todd Curley. Please go ahead, sir.

Thank you, operator. Good afternoon and welcome to SPARC Network's fiscal 2021 fourth quarter and year-end earnings conference call. With me on today's call are SPARC's CEO, Eric Eichmann, and Chief Financial Officer, David Clark. Before I turn the call over to Eric, I'd like to cover a few quick items. This afternoon, Spark Networks issued a press release announcing its fiscal 2021 fourth quarter and full year financial results. This release is available on the company's website at spark.net. Additionally, this call is being broadcast live over the internet for all interested parties and the webcast will be archived on the investor relations page of the company's website. I want to remind everyone that on today's call, management will discuss certain factors that are likely to influence the business going forward. Any factors discussed today that are not historical facts, particularly comments regarding our long-term prospects and market opportunities, should be considered forward-looking statements. These forward-looking statements may include comments about the company's plans and expectations of future performance. Forward-looking statements are subject to a number of risks and uncertainties, which could cause actual results to differ materially. We encourage all of our listeners to review our SEC filings, including our most recent 10-K and 10-Q statements, for a complete description of these risks. Our statements on this call are made as of today, March 14th, 2022, and the company undertakes no obligation to revise or update publicly any of the forward-looking statements contained herein, whether as a result of new information, future events, changes in expectations, or otherwise. Additionally, throughout this call, we'll be discussing certain non-GAAP financial measures. Today's earnings release and the related current report on Form 8K describe the differences between our non-GAAP and GAAP reporting, and present the reconciliation between the two for the periods reported in the release. With that said, I'll now turn the call over to Eric Eichmann, CEO of Spark Networks. Eric, please go ahead.

Thank you, Todd. Good afternoon, everyone, and welcome to our fiscal 2021 fourth quarter and year-end earnings conference call. Thank you for joining us today. Before I recap our progress in 2021, let me tell you why we are excited about the future of Spark Networks. Currently, our family of brands serve roughly 4 million page views per day of singles searching for serious relationships and millions of paid subscribers per year, making Spark the fourth largest online subscription-based dating company across North America and Europe. With this scaled platform, we have a large growth opportunity ahead of us, and with our new credit facility in place, we now have the financial flexibility to begin to execute on a strong and well-developed roadmap of strategies and investments that we believe will drive growth in 2022 and beyond. With the right talent in place, the right product strategy, scalable technology, and financial flexibility, we are now well-positioned to return to growing our revenues. Now, let me provide some background on Spark for those of you that are new to the company. Spark is a leading social dating platform for meaningful relationships, focusing on the 40-plus demographic and faith-based affiliation. This segment of the online dating market is large and underserved and one of the fastest-growing segments of the online dating market. For top five properties, Zoosk, Elite Singles, Silver Singles, Christian Mingle, and J-Date, provides Spark a significant opportunity for growth as users are increasingly looking for apps that deal in long-term relationships instead of casual dating. Four of the five properties, Elite Singles, Silver Singles, Christian Mingle, and JDate, are focused on more specific segments within the meaningful relationship market. Elite Singles and Silver Singles are aimed at a more mature demographic that is growing rapidly while Christian Mingle and J-Base are targeting meaningful relationships with space-based affiliations. These four brands made up close to half of our total revenue in 2021 and collectively grew their revenue 5% and subscribers 3% year over year in 2021. With these strong brands and limited competition in these growing market segments, We are confident that we can continue to grow these brands' revenue in 2022. Zoosk is our fifth and largest brand and targets a broader demographic within the meaningful relationship category. With 40 million members worldwide, Zoosk is designed to forge meaningful relationships with other singles using big data insights from its vast membership base to deliver highly accurate and tailored matches and to provide social features to make the dating journey as seamless as possible. While Zoosk revenue declined year over year in 2021, we have been making the necessary product improvements to return Zoosk to revenue growth in 2022. In the fourth quarter, we launched a new feature, Zoosk Great Dates, to complement Zoosk Live, our free live streaming service that is available 24-7 on our iOS and Android apps. Available on demand with a subscription, Zeus Great Dates allows you and your match to access interactive video dates designed to inspire fun conversations and avoid awkward silences. This first-of-its-kind feature is perfect for a low-impact first date. Today, subscribers can go on interactive virtual dates to four exciting destinations, Athens, Naples, Kyoto, and Paris. which we launched on Valentine's Day, with more new locations coming soon, including New Orleans and Las Vegas. Now more than ever, we are providing our community of singles new seamless ways to connect virtually, and Zeus Great Dates is part of our commitment to help people build more meaningful relationships. Users that have experienced Zeus Great Dates so far have provided strong positive feedback on these new features. With this new innovation, as well as several other products and user experience upgrades delivered during the year, we have reduced Zoosk's revenue decline. And for the second consecutive quarter, we saw new Zoosk organic registrations grow. In the fourth quarter, Zoosk's organic traffic grew 8% sequentially and 74% year over year. We are confident that the improvements we made to Zoosk in 2021 and will continue to make in 2022, are enhancing our competitive differentiation and will drive increased engagement, resulting in a return to revenue growth produced in 2022. As a matter of fact, so far in 2022, we have seen a significant acceleration of Q4 to Q1 billions growth versus last year. Looking ahead, we are investing in product, technology, marketing, and talent to capture the large market opportunity for Spark. On the product and technology front, we are working to further improve our properties, features, and functionality. First, we are putting in place a number of revenue-generating enhancements, such as improved first-time user experience, new matching technology, and optimization of payment pages. Second, we are revamping our apps, significantly improving the app user experience and app monetization capabilities. Finally, we are planning to simplify our technology platform's complexity by integrating our top four non-duced brands onto one platform. This should lead to better platform stability, reduced technology costs, and an increased ability to launch new features and functionalities on all brands. On the marketing front, we plan to continue to optimize our marketing efforts and increase our overall marketing spend during the year. For example, we have introduced fully automated customer relationship management campaigns, allowing us to increase their frequency, which has already resulted in higher billings. Additionally, with our new debt agreement in place and its less restrictive covenant, we expect to invest in excess of $110 million in 2022 marketing spend, and are exploring additional opportunities to expand our marketing efforts. Much of this increase in marketing spend will be on our renewed focus on brand building capabilities, ensuring our portfolio of brands clearly communicate our unique and differentiated brand propositions, which ultimately ensures our community of singles find their ideal matches on our platform. Lastly, we believe there are opportunities to further increase our performance marketing spend profitably in 2022 beyond 2021 levels. One of our most important strategies for growth is investing in talent to capture Spark's significant future potential. Adding to our recently hired CFO and head of brand marketing, we are excited to welcome Ken Chen, or new chief product officer who will start in early Q2. Ken comes with over 20 years experience in product leadership for online marketplace, eBay, and SeekAsia, and e-commerce, Farfetch, and World Travel. Also, Ishani Patel, our new head of corporate and business development, started in February and comes with extensive experience in strategy and business development in the media and online travel industries. So to recap, Both parts of the Spark business today are addressing the fast-growing, meaningful dating segment of the online dating market, representing an over $2.3 billion addressable market. The first part of our business includes four brands that make up close to half of our business that grew collectively both their revenue and subscribers for the full year 2021. We plan to continue to invest in marketing dollars and product resources in 2022 to increase these brands' share in the markets they serve. The second part is ZUSC, which is also addressing the meaningful market segment, as well as the emerging category of social discovery. The new features and upgrades we made to the platform in 2021 have been well received, and we are starting to see leading indicators of growth. Growth of organic registrations, an increase in conversion rates, and an acceleration of quarter-on-quarter growth are clear signs that the Zeus turnaround is working. We are confident in our strategy and execution for returning Zeus to revenue and subscriber growth in 2022. For the first time under my tenure, we have the financial flexibility to begin to execute on a strong and well-developed roadmap of strategic investments, which should, further our ability to scale. We believe this investment in talent, product, technology, and marketing in 2022, as well as our position in the market, will allow us to capture the significant market opportunity we have in front of us and return the company to total revenue growth in 2022. This is why I am excited about the future of Spark Networks. With that, Let me turn the call over to David, who will take us through our financials in more detail, and then we'll take any questions you may have. David?