JDate Opens the Kimono

JDate is the site subscribers love to hate -- creaky technology, lackluster customer service, and weak quality control that lets scammers from Ghana (or someplace) send out email after email. But if you're Jewish and not Orthodox, it's just about the only game in the electronic shtetl.

Still, there's another side to consider: JDate the business. It's part of Spark Networks, a company with a new listing on the American Stock Exchange (trading under the ticker symbol LOV) and public financial results. Spark released its fourth quarter and year-end results on Feb. 16, providing insights into the size and performance of both JDate and Sparks.

Let's take a look as JDate opens the kimono, as they say on Wall Street.

First, how big is JDate? Membership numbers in the press are impressive but vague. A sponsored link on Google by JDate refers to "500,000+ Singles." This article from the Los Angeles Times claims 600,000 members, or "one in 10 Jewish singles."

Those figures don't indicate the number of paying customers -- the kind who can write and respond to emails, the big spenders, if you will. Here's the straight scoop:

Average paying subscribers for the Company's JDate segment were 73,700, during the fourth quarter of 2005, an increase of 8%, compared to 68,500, from the same period in 2004. For the year ended December 31, 2005, average paying subscribers for JDate were 70,500, an increase of 1%, compared to 69,800, for the year ended December 31, 2004.

By that measure, going with the 500,000 base JDate mentions in its Google ad, at any one time only 14 percent of profiles come from paid members. No wonder so many messages go unanswered -- the odds of one paying member writing to another paying member who has the ability, if not the inclination, to respond are low.

Financially, JDate's contribution to the Sparks revenues stacks up like this:

The Company reported fourth quarter 2005 revenue for its JDate segment of $6.8 million, an increase of 10%, compared to $6.2 million, in the same period in 2004. For the year ended December 31, 2005, JDate segment revenue was $26.0 million, an increase of 9%, compared to $23.8 million, in the year ended December 31, 2004.

So the revenue growth moved up with the increase in subscribers, rather than through an increase in subscription rates. The last time JDate raised its rate was in the summer of 2004, from $28.50 to $34.95. An interesting statistic would be the average length of subscription; do people pay for a month and stop, or keep paying month after lovelorn month?

However, JDate is spending more to acquire those subscribers. The release says,

Direct subscriber acquisition cost(4) (SAC) for the Company's JDate segment in the fourth quarter of 2005 was $12.25, an increase of 15%, compared to $10.68, from the same period in 2004. For the year ended December 31, 2005, SAC for the Company's JDate segment totaled $12.70, an increase of 57%, compared to $8.09, for the year ended December 31, 2004. "SAC metrics for JDate are not an apples-to-apples comparison when you consider the marketing mix has shifted from a primarily online, direct marketing effort to one that now includes a wide mix of offline initiatives focused on continuing to strengthen the JDate brand," stated [Sparks president and CEO David] Siminoff. "Because of these efforts, we proudly feel that, within the Jewish community, JDate has become a verb."

Sparks defines SAC as "total direct marketing costs divided by the number of new paying subscribers during the period. This represents the average cost of acquiring a new paying subscriber during the period."

Finally, JDate numbers suggest that the growth years of online dating may be over. Average paying subscribers for the years end Dec. 31 zoomed from 50,700 at year-end 2003 to 69,800 at year-end 2004. However, that number hardly budged over the next 12 months, reaching 70,500 at year-end 2005.

Over the same period, that SAC number discussed above almost tripled, from $4.39 in 2003 to $12.70 in 2005. So JDate is paying more to keep subscriptions at a steady level. Overall Sparks performance for the fourth quarter and the year show flattening performance:

Reported revenue for the fourth quarter of 2005 was $16.6 million, a decrease of 3%, compared to $17.1 million, over the same period in 2004. This decrease is primarily the result of lower AmericanSingles revenue due to a significant cut in marketing expenditures for the website, designed to improve its contribution margin. Revenue for the year ended December 31, 2005 was $65.5 million, an increase of 1%, compared to revenue of $65.1 million, for the year ended December 31, 2004.

Read the full release, because it provides even more numbers on JDate and other Sparks sites, with enough corporate jargon -- "2005 was a turnaround year in which we made significant strides towards right-sizing our cost structure" -- to make you a winner at Buzz Word Bingo.