GURU FOCUS – Aug 13 – Transformation progress makes the stock a risky buy. The market is ignoring Spark's potential. The company ~1m monthly paying subs. Properties are: Zoosk, EliteSingles, SilverSingles, Christian Mingle, Jdate and JSwipe. Spark's efforts to turn itself around include a new C-level management team and R&D spending of $54mover the last 2 years for crucial product enhancements. Investments and changes will be realized in 2H 2021: live streaming video (launching Q3), social discovery functionality, improved matching algorithms, portfolio rebranded/look. Financial results were slightly down in Q4. YOY Q4 revenue decreased by $1.3 million to $56.4m because of a 3% decrease in average paying subscribers on Zoosk. The three largest legacy brands, SilverSingles, EliteSingles and Christian Mingle, grew at low double-digits in North America. Q1 2021 adjusted Ebitda was $4.8m, a decrease of $2.7m compared to $7.5m in Q1 2020, due to Zoosk and coupled with a headcount increase. Paying subscribers decreased 3% to 896,344 in Q1 2021. Monthly ARPU increased to $20.97 in Q1 2021. Spark's valuation ratios are ~90% lower than peers.
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Mark Brooks: Zoosk was a big pill for Spark to swallow. I trust the very considerable (former long term CEO of Criteo) Spark CEO, Eric Eichmann, and pragmatic MD/COO, Gitte Bendzulla to pull off this transformation.
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