Online dating website group Cupid spent most of last year building its international businesses – and with success as more than half of its business is now generated outside the UK. Moreover, singles have continued to flock to Cupid's websites, while also taking longer to commit, which helped boost subscriber numbers by 50 per cent to 486,776 and reduce churn from 25 per cent to 18 per cent.
Cupid's established markets – the UK, Ireland, Australia and New Zealand – account for 79 per cent of profits and generated most of the growth. These operations require less marketing spend, so a 38 per cent increase in revenues to £30.5m resulted in a 58 per cent increase in underlying profits from these territories. Revenues from newer markets (the US, Canada and Western Europe) are also growing quickly, up from £3.5m to £22.3m, but profits have been held back by higher direct marketing costs, which are currently about 79 per cent of turnover. However, as churn drops and subscriber numbers in these regions rises then profit margins will increase sharply.
Chief executive Bill Dobbie says that operations in the US and Western Europe are driving sales this year with total revenues of £12m already booked in the first two months of 2012, prompting analysts at Peel Hunt to raise their pre-tax profit estimates by 7 per cent to £16.3m, giving EPS of 14.8p (from £10.5m and 9.5p in 2011).
CUPID (CUP) | ||||
|---|---|---|---|---|
| ORD PRICE: | 224p | MARKET VALUE: | £181m | |
| TOUCH: | 218-224.25p | 12-MONTH HIGH: | 260p | LOW: 113.5p |
| DIVIDEND YIELD: | 1.0% | PE RATIO: | 31 | |
| NET ASSET VALUE: | 30p* | NET CASH: | £7.7m | |
| Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2008 | 4.1 | -0.12 | – | nil |
| 2009 | 8.5 | 0.98 | – | nil |
| 2010 | 25.7 | 4.16 | 4.74 | 1.32 |
| 2011 | 53.6 | 7.05 | 7.14 | 2.25 |
| % change | +108 | +69 | +51 | +70 |
Ex-div: 30 May Payment: 29 Jun *Includes intangible assets of £12.5m, or 15p a share | ||||
