Spark Networks presents its restructuring plan to save its brands

As we announced a few months ago, Spark Networks is in dire straits and is launching a restructuring plan. Owner of brands such as Elite Singles, SilverSingles, Jdate, Christian Mingle and Zoosk, the group has been in dire financial straits since 2020.

On November 8, 2023, Spark Networks presented its restructuring plan to get back on track. For behind the financial difficulties lie a large number of debts that the group is no longer able to pay…

Spark Network estimates that the situation deteriorated significantly in 2020. The main reason for this is a poor marketing strategy and technical difficulties such as an increase in credit card fraud and cyber-attacks.

Insufficient marketing expenditure has led to a decline in the number of users across all the Group’s brands, and thus to a reduction in cash flow over the past 3 years.

We very much agree with this diagnosis. When you compare the major efforts of groups like Match Group or Bumble Inc in recent years, both in terms of communication and new features, Spark Networks has been far too conservative.

But these difficulties are due to a combination of two factors. Firstly, following the acquisition of Zoosk in 2019, part of the financing for which was provided by a loan, and then COVID in 2020. Add to this that in the Zoosk acquisition deal, there is a debt of around 13.7 million still owed to the former shareholders…

The accumulated debt between 2020 and 2022 alone is estimated at approximately $158,953,000. In total, between the German subsidiary and the U.S. subsidiary, the debt is, in September 2023, approximately $190,000,000.

The Spark Networks rescue plan

Spark Networks’ objective is, of course, to generate revenues again, reduce costs and thus increase margins. The aim is to be profitable again by 2024.

To reduce costs, the Group has announced that it will reduce the number of Spark Networks employees by outsourcing a significant part of marketing, development, maintenance and customer service. The plan is to reduce the number of employees from 250 to 60. The aim is to have less of a fixed workload and to be more flexible by outsourcing. To give you an idea, Match Group has almost 3,000 employees.

In terms of marketing and acquisition, Spark Networks says it has already signed up a specialist marketing and IT agency. The agency is Lamark Media Group, which will handle internet and TV advertising, as well as development.

A series of new functionalities will soon be deployed across the Group’s various brands, mainly in applications. In particular, the compatibility algorithm will be improved to be more competitive with that of competitors.

The project is still in progress, and can be viewed publicly here. We’re very curious to see what Spark Networks will do with all its brands in the coming months. In our opinion, 2024 will be an exciting but decisive year…