• Text size      
  • Send this article to a friend
  • Print this article

Cupid chief optimistic despite fall in shares

Cupid, the Edinburgh-based dating website empire, saw its shares fall 15% after unveiling 2013 results suggesting a painful transition into a higher-quality business.

HOPEFUL FUTURE: Cupid's new chief executive Phil Gripton is optimistic despite a 15% share drop.
HOPEFUL FUTURE: Cupid's new chief executive Phil Gripton is optimistic despite a 15% share drop.

It now plans to complement its core websites by moving into 'data adtech', selling anonymous customer data to advertisers, and digital services.

Phil Gripton, the new chief executive, said: "Cupid will be successful in these dynamic fields because it owns an ever-growing pool of unique first party data produced by our core dating service, which we can monetise by using our efficient and cost effective digital operation." But he said Cupid subscribers could rest assured use of their personal data would be protected by regulation.

The shares, which peaked at 249p three years ago, fell below their 2010 list price of 60p as the group said adjusted earnings had crashed from a £4.2m profit in 2012 to a £2.8m loss as profitable sites accounting for 70% of revenues were finally sold off last July.

The group said the disposal of its 'casual' dating sites, BeNaughty, Flirt and CheekyLovers, would provide £26 million of cash over the next three years and that the migration of staff and assets was 95% complete.

The seven-year-old Cupid's 'traditional' sites, led by a relaunched Cupid.com, Uniform Dating, and a new international over-45s site called Lovebeginsat.com, will also broaden into "helping our customers access offers for services they may want to consume as part of their dating experience".

But revenues from the 'sustainable' business were marginally lower at £26.6m. The transition saw Cupid reverse from a pre-tax profit of £9.2m in 2012 to a pre-tax loss of £7.4m as its £81m of revenues fell to £56m, including almost £30m from discontinued sites. Earnings per share dropped from 8.89p to a negative 7.24p. The group says underlying earnings from sustainable business fell from £200,000 in 2012 to a loss of £7.4m, and revenues from £28m to £22m. Cash eased from £14.1m to £12.5m, and the dividend is held at 3p.

Last year claims of 'fake profiles' on Cupid websites and inappropriate interventions by staff spooked investors and prompted a review commissioned by the company from KPMG though not published. Chairman George Elliott said the criticisms of the company were "categorically proven by an independent review to be entirely without substance". But the group also said there had been "significant investment in customer relationship systems and customer service staffing to meet the changing demands of the business".

Mr Gripton, who replaced co-founder Bill Dobbie (now non-executive) as chief executive four months ago, said: "We are turning around and implanting solid foundations to our core dating division, transforming it into a sustainable, high-quality, customer-centric business. This solid foundation will in turn underpin an exciting high-growth data-driven future."

He said a three-year strategic plan would create "a robust, scalable digital technology business". He added that profitability would reach a "positive run rate as we enter 2015".He said Cupid had a "unique opportunity" in the market for RTB (real-time bidding) where advertisers bid for instant webpage display based on the personal data of the visitors.

"The holy grail of RTB is providing rich and accurate data," Mr Gripton said. "Because of the way in which a dating website works, when people join sites they provide data willingly as part of the process."

But the key priority this year was to "fix the core business". Mr Gripton said there had been "positive signs in the second half", with measures to achieve "better quality traffic" with higher conversion rates and lower churn (turnover), but subscriber numbers had fallen to 69,000.

Cupid cut 115 jobs in the final quarter, largely in Ukraine, but has relocated some senior staff to Edinburgh where it now employs 25 out of its 225 globally.

Mr Gripton said data adtech represented a growing market worth £2billion, more than half of it addressable by the company.

Contextual targeting label: 
Business

Commenting & Moderation

We moderate all comments on HeraldScotland on either a pre-moderated or post-moderated basis.
If you're a relatively new user then your comments will be reviewed before publication and if we know you well and trust you then your comments will be subject to moderation only if other users or the moderators believe you've broken the rules

Moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours. Please be patient if your posts are not approved instantly.

223766