Boulogne-Billancourt, 9th November 2010
MEETIC (FR0004063097 – MEET), the European leader in online dating, today announces its consolidated results for the third quarter and first 9 months of 2010.
The Group’s consolidated revenue for the first 9 months of the year totalled €137.7 million, up +22.5% on the same period last year.
Subscription sales (excluding deferred revenue) came to €137.4 million over the first 9 months of 2010, an increase of +24.2% on the same period of 2009.
Internet revenue totalled €44.9 million over the 3rd quarter, with €47.9 million in subscription sales (excluding deferred revenue).
The quarter saw buoyant sequential growth, notably doped by the growth of Matchmaking:
- Subscription sales, an indicator of the growth of Internet activity, were up 8% on the 3rd quarter of 2009, at €47.9 million vs. €44.4 million, and up 4% on the second quarter of 2010 (€45.9 million).
- The Group had 869,000 subscribers at 30th September 2010 compared to 858,000 at 30th June 2010, an increase of +11,000 subscribers over the quarter.
Subsequently, the buoyant sequential growth in Matchmaking resulted in a significant change in the client mix over the quarter, as well as a substantial increase in deferred revenue, which stood at €3.0 million for the third quarter alone.
Increase in profitability over the third quarter
Marketing investments totalled €23.3 million over the quarter, i.e. 50.3% of revenue, notably reflecting the ongoing promotional efforts being undertaken on the Matchmaking segment and the good control of advertising campaigns on the Dating segment. Total marketing investments since the start of the year stand at €79.3 million, or 58% of 9-month revenue.
As a consequence of the controlled marketing investments over the quarter, the EBITDA margin (including the cost of free shares) was 24% over the third quarter, putting the Group’s profitability for the first 9 months of the year at close to 14%.
Share of the profit of Match.com Global Investments
The Group’s share of the profits of Match.com Global Investments (JV for the development of Match and Meetic in Latin America) came to €0.3 million over the quarter, giving a total of €0.5 million between 10th March and 30th June 2010. As a reminder, the Group’s share of the JV’s profits is consolidated in the Group’s accounts with a one-quarter lag.
Sound financial structure
At 30th September 2010, the Group had a net cash surplus of €28.2 million. Operating cash flow totalled €21.2 million over the first 9 months of the year, before the payment of €6.0 million in tax.
Annual guidance and outlook
For 2010 as a whole, the significant change in the client mix in favour of longer subscriptions over the summer perpetuates the Group’s growth in activity, but reduces the published net sales growth figure by increasing the amount of deferred revenue, which is characteristic of a growing subscriber model.
The Group feels that the momentum seen over the last two quarters, driven by the marketing investments agreed since March, should be reaffirmed in the fourth quarter and should thus allow the Group to record a similar or higher level of subscription sales compared to that recorded in the 3rd quarter.
However, Meetic has been penalised in its growth by unexpected competitive pressure from new competitors on the Matchmaking segment in Germany who have massively invested on their main market, thus reducing Meetic’s advertising share of voice in that country. This situation will lead the Group to quickly reassess its strategy on the German market, which is henceforth the most contested in Europe.
Subsequently, the Group currently feels that it can achieve, over 2010 as a whole, subscription sales growth of around 5%, compared to 2009 pro forma activity. However, given the recent changes in the client mix, it is not able to provide net sales growth guidance, as was the case previously.
For comparison purposes, pro forma revenue including Match.com’s European activities as if they had been incorporated from 1st January 2009 totalled €137.0 million for the first nine months of 2009 and €182.3 million for 2009 as a whole. Pro forma subscription sales for the whole of 2009 totalled €177.9 million Meetic is reaffirming its guidance of an EBITDA margin, after the cost of free shares, of more than 20% over FY 2010. The Group has substantial control over its profitability thanks to the steering of its marketing investments. It intends to achieve the margin target it has set without slowing the growth recorded by the Matchmaking segment and by preparing itself to start 2011 in the best possible conditions. The marketing investments agreed in the fourth quarter will meet this twofold objective.
Marc Simoncini, CEO of Meetic, concludes: “In 2011, Meetic will begin the third phase of its history. After establishing itself on the European Dating market and then successfully launching its Matchmaking sites in Europe, the Group intends to make the most of the boom in Smartphone services to establish itself on this new media form. Thus, from the first quarter of 2011, Meetic will provide paying Dating applications on the main mobile platforms that will create a significant growth relay for the next three years on the Dating segment. Furthermore, the Group will continue to heavily invest on the Matchmaking segment, with the aim of being the European leader in terms of revenue from 2011. Meetic will also pay particular attention to the external growth opportunities that will present themselves on the European Dating or Matchmaking segments. Lastly, the Group will continue to launch new sites in order to cover segments as yet not utilised by its main brands. Meetic’s management team will be in charge of deploying this strategic plan in coming years; this team’s complementary nature and their control of the Internet and Mobile environments will be the best assets of this Group, which will remain one of Europe’s foremost Internet groups and will become a significant player in Smartphone services.”