Seeking Alpha

Online dating site Zoosk files for $100M IPO

  • Zoosk, an online dating platform claiming 26.4M members and 650K subscribers, has filed for a $100M IPO under the symbol ZSK. The underwriters: BofA/Merrill, Citi, RBC, Oppenheimer, and William Blair.
  • Zoosk tries to differentiate itself in a crowded market by leveraging behavioral data to form connections. The company has users in 80 countries, and claims to have the top-grossing iPhone dating app in the U.S.
  • 2013 revenue totaled $178.2M (+63% Y/Y), and net loss $2.6M. Competitors include InterActiveCorp's (IACI) Match, OKCupid, and Tinder properties. Tinder was reportedly valued at $500M in a recent transaction.
  • Prospectus
This was corrected on 04/17/2014 at 12:30 PM.
Comments (5)
  • FernandoArdenghi
    , contributor
    Comments (158) | Send Message
     
    Zoosk: 6 (six) long years operating at a loss!

     

    Zoosk's IPO is a dirty trick for its former investors to recover their money and then put Zoosk to sleep.
    I really hope they fail in its IPO.
    Remember its Management Team can not innovate and revolutionize the Online Dating Industry. They can cook a barbecue under the water, they are smoke sellers, but they are not going to innovate in nothing, like
    Badoo
    and
    eHarmony.
    (and perhaps HowAboutWe and PlentyOfFish)

     

    They do not deserve success.

     

    eHarmony failed its IPO several times (last 2011, 2010, er ... even 2008?), also failed to be sold to IAC Personals during the eHarmony Japan bluff.

     

    Badoo also failed its USD2 Billion IPO? (during 2011)

     

    There is a large dotcom bubble fueled by venture investment funds, investors who are dragging other investors to continue investing until they can sell shares of the company and recover leveraged money, but the last holder of shares is going to lose.
    Many technology companies, without having a concrete business model (supposedly will generate revenue from advertising and premium subscription accounts) receive millions of dollars in funding to offer something free, acquiring fastly a large mass of captive users as if they had made them addicts, and then, the exit strategy (for investors) is to get someone to buy the company at a staggering figure, as did Blogger, Fotolog, MySpace, YouTube, Skype, Bebo and others. They are like continually inflating ballons and they need to find a buyer before they explode. If they can not find a private buyer for the entire company, the investors had the strategy of going public, to start trading its shares on the New York Stock Exchange, they turn those pieces of paper (shares) in real money, they get thousands of buyers purchasing lower small parts (shares).

     

    Social dating is vaporware. Online Dating for serious daters does not need to be more social, it needs to be more effective/efficient. It needs to reduce the false positives problem.

     

    The key to long-lasting romance is STRICT PERSONALITY SIMILARITY and not "meet other people with similar interests".

     

    Behavioural Recommender Systems CAN NOT outperform compatibility matching engines based on personality similarity. Several times I had written about punches to behavioural matching algorithms like the one used at Match, the one used at Zoosk, and the one used at PlentyOfFish (POF).
    Behavioural recommender systems or other system that learns your preferences are useless for serious online dating purposes and Personality Based Recommender Systems are the next generation of recommender systems because they perform far better than Behavioural ones (past actions and pattern of personal preferences)
    That is the only way to improve recommender systems, to include the personality traits of their users. They need to calculate personality similarity between users.

     

    The Online Dating Industry needs Innovations, but the innovations the Online Dating Industry needs will come from only one source: the latest discoveries in theories of romantic relationships development with commitment.
    17 Apr 2014, 03:20 PM Reply Like
  • FernandoArdenghi
    , contributor
    Comments (158) | Send Message
     
    From S1 filing read:

     

    - (Zoosk) We have a history of losses, anticipate increasing our operating expenses in the future, and may not achieve or sustain profitability in the future. We have incurred net losses in all fiscal years since our inception, including net losses of USD12.2 million, USD20.7 million and USD2.6 million in 2011, 2012 and 2013, respectively.
    As of December 31, 2013, we had an accumulated deficit of USD 95.6 million.

     

    - Intellectual Property: As of December 31, 2013, we had one issued U.S. patent and a total of eleven patent applications in the United States and certain foreign countries. We have a number of registered and unregistered trademarks in the United States and in certain other jurisdictions. We own the Internet domain name zoosk as well as approximately 400 related and other domain names that could have future use in our business.
    Zoosk's Intellectual Property == a bunch of bogus patents.

     

    - Government Regulation: We are also subject to, or may be subject in the future to, federal, state and foreign laws regarding privacy and the protection of member data. Foreign data protection, privacy, consumer protection, content regulation and other laws and regulations are often more restrictive than those in the United States. There are also a number of legislative proposals pending before the U.S. Congress, various state legislative bodies and foreign governments concerning data protection that could affect us.
    READ as NEW Legislation cooming soon!

     

    - Astronomical Salaries and Compensations paid to 3 persons from a company that had not made a dime in profit since 6 years ago!!!
    They have not deserved to earn USD300,000 per year + big bonuses and compensations reaching nearly USD 1.2 million two of them and USD 543,862 the other!

     

    Please read also:
    My answer to the Topeka Analysis: Why Investors Should NOT Be Enthusiastic About Tinder.
    http://bit.ly/1mNwavs

     

    ardenghifer AT gmail DOT com
    17 Apr 2014, 03:22 PM Reply Like
  • FernandoArdenghi
    , contributor
    Comments (158) | Send Message
     
    Zoosk S-1/A 1 AMENDMENT NO.1 TO FORM S-1
    Preliminary Prospectus dated April 17, 2014
    http://1.usa.gov/1linlGi

     

    "Our Behavioral Matchmaking engine generally prioritizes the display of profiles of members who are more active higher in displays of potential connections, although we do not specifically monitor the number of profiles that have not had recent activity."
    READ as 20% of most active members will be responsible of the 80% of whole traffic/activity of the site, if those 20% most active persons migrate to Tinder, then Zoosk will be GAME OVER.

     

    "Subscription. We primarily generate revenues from subscriptions. We offer our members one-, three- and six-month subscription plans which typically automatically renew. "

     

    BUT they have TERRIBLE expensive subscription rates.
    1 Month: USD 69.98
    3 Months: USD 52.49 per month
    6 Months: USD 34.99 per month

     

    See also info from:
    http://bit.ly/1linlGk

     

    My conclusion:
    Tinder is demolishing Zoosk. Zoosk is NOT profitable and will never be profitable, it is only a bubble sustained by a big marketing budget. Investors had put over USD 61 Million and now want to recover that money and after that, they will put Zoosk to sleep.
    http://bit.ly/1linolo

     

    Please read also:
    More juicy info about Zoosk IPO.
    http://bit.ly/1linolq

     

    My answer to the Topeka Analysis: Why Investors Should NOT Be Enthusiastic About Tinder.
    http://bit.ly/1mNwavs
    18 Apr 2014, 09:11 PM Reply Like
  • FernandoArdenghi
    , contributor
    Comments (158) | Send Message
     
    Please see this interesting article
    IPO Of The Dating App Everyone IS NOT Talking About
    By Jeff Bailey
    http://bit.ly/1mngsVr

     

    My bet: Tinder is demolishing Zoosk.
    Zoosk is NOT profitable and will never be profitable, it is only a bubble sustained by a big marketing budget. Investors had put over USD 61 Million and now want to recover that money and after that, they will put Zoosk to sleep.
    19 Apr 2014, 07:42 PM Reply Like
  • FernandoArdenghi
    , contributor
    Comments (158) | Send Message
     
    More Big Losses from Zoosk Q1 2014
    http://bit.ly/1rKP18F

     

    From Zoosk Amendment No. 2 Registration No. 333-195320

     

    NET LOSS: USD 6.7 million Q1 2014!
    Revenue: USD 50.12 million during Q1 2014 (USA USD 26.71 million, International USD 23.40 million)
    721,000 subscribers
    27 million registered members
    Working capital (deficit) of USD 33.5 million!
    Total accumulated deficit of USD 102.28 million.

     

    721,000 subscribers / 27 million registered members == 2.7% conversion rate.
    (Profitable sites operate with a 5% conversion rate)
    Zoosk subscription plans are terrible expensive ("in the United States range from approximately USD 30 for our one-month plan to approximately USD 75 for our six-month plan.) Prospective daters can use Tinder or PlentyOfFish (POF) for free.

     

    Many online dating sites have Behavioral Matchmaking engines like Zoosk. Synapse from Match, UltraMatch from PlentyOfFish (POF) and they can not outperform personality matching methods like the one used at eHarmony.

     

    Moreover, since Zoosk was founded and funded, never made a dime in profit. Since 2007 operating at a loss!
    Astonished to see how they try to sell a failure as a big success citing rubbish statistics from IBISWorld report.
    1 May 2014, 10:42 PM Reply Like
DJIA (DIA) S&P 500 (SPY)
ETF Hub
ETF Screener: Search and filter by asset class, strategy, theme, performance, yield, and much more
ETF Performance: View ETF performance across key asset classes and investing themes
ETF Investing Guide: Learn how to build and manage a well-diversified, low cost ETF portfolio
ETF Selector: An explanation of how to select and use ETFs