Spark Networks has released its financial results for the second quarter of 2023. The dating brand is in a transition phase amidst relocation and layoffs, and its financial results are reflecting this.
Overall, the company saw revenue drop to $41.2 million, compared with the $48.0 million that it received in the second quarter of 2022. Its Q2 net loss was $26.9 million, compared to $8.8 million in the second quarter of 2022.
Global Dating Insights reported in May that Spark Networks would be closing its Berlin offices and laying off around 200 full-time employees. These initiatives, among others, have seen operating expenses during the quarter reduce by 16% year over year, the recent report shared.
One significant change that Spark Networks is looking to implement is the overhaul of its marketing efforts. The company is working with a performance marketing agency to redevelop how it goes about acquiring new users.
In light of this, the company reduced its user acquisition spend during the quarter by 43% as compared to the same period last year. However, this led to a 21% reduction in subscription rates, compared with Q2 of 2022.
Looking ahead, the company will look to outsource more of its internal operations, leading to a further reduction in its staffing headcount.
Colleen Birdnow Brown, the recently appointed Interim CEO of Spark Networks, had this to say on the Q2 results:
“As we have previously reported, Spark has embarked on a transformational plan intended to drive the Company forward with revenue growth as well as improved margins, Adjusted EBITDA and cash flow. Teaming with a leading performance marketing agency, our first step in that plan was to completely reevaluate the ways in which we spend our marketing dollars.”
“As a result, we reduced our user acquisition spend during the quarter by 43% as compared to the second quarter of 2022. In addition, we also reduced our operating expenses during the quarter by 16% year over year, primarily by reducing headcount and renegotiating vendor spend.”
“With these cost reductions, we increased Adjusted EBITDA by $8.9 million compared to the second quarter of 2022. We note, however, that while we made immediate gains in Adjusted EBITDA, we also saw a negative impact on subscription rates, which were down 21% compared to the second quarter of 2022. We attribute this primarily to our reduced marketing spend.”
“Moving forward, we expect to identify more profitable ways to increase our marketing spend in order to improve subscription rates and drive future revenue, and we are already seeing promising results from our new outsourced performance marketing initiative.”
“As part of the next phase of the transformation plan, we look to partner with a major managed service provider and outsource a significant portion of our technology and operations. Through this plan, we believe we can materially improve our product and technology stack while at the same time delivering long-term cost savings, revenue growth and improved operating margins.”
“We expect to complete our outsourcing by the first quarter of 2024, resulting in a dramatically reduced employee headcount. In addition, we expect to continue to implement the initiatives in our plan over the next 18 months.”