After Dire 2014, Spark Networks Plan ‘Crawl, Walk and Run’ Growth Strategy

After a fraught leadership crisis and a poor financial year, Spark Networks have said they have entered a “crawl, walk and run strategy” for growth.

New CEO Michael S. Egan had his first earnings call yesterday, saying they are rebuilding the company, after a bad 2014.

Revenue in the fourth quarter of 2014 was $14.3m, a decrease of 17% compared to the year before, and a 5% decrease from the previous quarter.

This was driven by an average 22% decrease in paying subscribers across their dating sites, compared to 2013.

This put the total number of average paying subscribers at 227,874, by the end of 2014.

Their Christian segment, most notably Christian Mingle, saw a 27% decrease in subscribers year over year, and their Jewish network – JDate – saw a 12% decrease.

In the fourth quarter, the Christian sites accounted for 141,188 of subscribers, the Jewish network 73,429, and the rest 13,257.

This was a 12% decline in paying subscribers from the previous quarter.

Spark Networks’ total revenue for 2014 was $61.6m, an 11% decrease compared to 2013.

Egan said the company had made “significant changes” in the past six months, including moves to become profitable and to refocus their two core brands – Christian Mingle and JDate.

In the earnings call, he said: “We also completed a reduction in workforce in September and revamped the company’s marketing investment for ChristianMingle based off its efficiency and profitability.

“Finally, the team worked quickly to launch our first mobile applications, a great first step towards filling a gap in our product offering.

“The impact of these changes show in our fourth quarter results which included the company’s highest contribution and adjusted EBITDA performance in years.”

Spark Networks hired Egan in December 2014, and recently appointed former Square employee Robert O’Hare as their CFO, and are currently searching for a new CMO.

And in the fourth quarter direct marketing expenses were $5.1m, a 60% decrease from the year before, and a 15% decrease compared to the prior quarter – which was taken mostly from the Christian Networks.

Egan said the company was in “the midst of a crawl, walk and run strategy” to reinvigorate profitability and growth.

“The last four months of 2014 were our crawl phase, where significant changes were made to realign our cost structure and focus the team and our core businesses of Christian Mingle and JDate,” he said.

“The results of this are demonstrated in the profitability we experienced in the fourth quarter. The first three quarters of 2015 are expected to be a walk phase.

“We are rapidly bringing in successful talented executives whose breadth of experience will help transform the organization. In addition, we’ll be making investments to rework our product and technology infrastructure incorporates deeper data to improve our marketing efficiency.

“We expect we emerge from this phase a much more nimble, innovative and customer driven organization. By Q4 of 2015 we expect to start running again.”

See their full earnings report here, and read a transcript of the call here.