This Valentine’s Day show them you care, with shares of a love-based company.
Online dating was once considered a dirty little secret, but now it is how 30 million Americans will find a date, according to market research firm Nielson. The business of love and online dating is a nearly two billion dollar industry, up from $900 million in 2007.
Men used to need a watering hole to meet a woman. Then they needed a matchmaker. Now they have the internet. According to a study sponsored by the world’s largest dating site, Match.com (owned by IAC/InterActiveCorp (NASDAQ:IACI)), an historically unprecedented number of single Americans use the Internet to find love: nearly 1/3 of singles report they have dated someone whom they met online.
Spark Networks Inc (NYSEMKT:LOV) unveiled a study of their own in January citing 87% of singles think online dating is a great way to meet people. The Match.com survey showed that 20% of singles met their most recent first date online vs. 7% who met at a bar.
InterActive Corp owns more than 20 operating businesses, comprising over 150 brands and products, in the following five segments: Search & Applications, Match, Local, Media and Other. The company is one of the largest site networks in the world, and is home to Match.com, OKCupid, Chemistry.com, and MeeticGroup, the European leader in online dating.
InterActive corp released 2012 fourth quarter earnings in early February. It posted a profit of $40.7 million, down from $48.8 million, a year earlier. Total revenue grew 28% to $765.3 million, beating analysts’ expectations. Revenue from dating sites like Match.com and OKCupid.com improved 16% to $182.6 million.
Match.com and Chemistry.com increased the number of paid subscribers (for a total of 1.8 million subscribers) by 8% compared to the same quarter in the previous year.
Spark Networks focuses on niche dating sites including ChristianMingle.com, SingleParentsMingle.com, and Jdate.com. Considering the survey results indicating that nearly three-quarters of singles are looking for a partner who shares their religious faith, the niche market approach seems wise, but the company’s income says differently.
In the third quarter of 2011 Spark’s revenue increased 25% year-over-year to $15.9 million, hitting its highest level in nineteen quarters. Average paid subscribers grew 29% to more than 266,000, setting another all-time high. The Christian Networks segment powered that growth, with an 84% increase in revenue, driven by an 89% jump in average paying subscribers.
Unfortunately, just like an online dating profile, a deeper look reveals the important details. Net income decreased a whopping 630% (from -$0.24 million to -$1.74 million) when compared to the same quarter one year ago. Earnings per share has declined over the last year, and analysts expect more of the same in 2013. For the next year, the market is expecting a loss of 264% in earnings.
Love knows no boundaries and is a very universal thing. While forty million Americans are looking for love online, China has 120 million potential dates searching the internet. Jiayuan.com International Ltd (NASDAQ:DATE) is so popular in China that its name is synonymous with dating. Net revenues for the third quarter 2012 were $18.1 million, a year-over-year increase of 24.8%. Net income for the quarter was $2.5 million, down 35.9% from the year previous. Jiayuan only went public in May 2011, and opened at $11. It is currently trading at $5.56. Clearly the company still has a few kinks to work out before it can be considered entirely reliable.
