Shares in Scottish dating firm Cupid slumped more than 14% yesterday as it revealed how the course of true love will likely remain far from smooth.
Pre-tax losses jumped almost eight-fold to £7.36m in the online firm’s continuing businesses last year, after it chose to dispense with the highly profitable “casual” dating assets which had accounted for up to 70% of revenues.
But Edinburgh-based Cupid used the announcement of its 2013 results to rail against the “significant impact” of a negative press on both the firm and the dating industry after reports last year alleged wrongdoing as it sought to entice new customers to sign up to paid-for services.
However, it insisted the business had emerged from a period of “positive transformation” following an audit and independent review in which allegations over false profiles were among those “categorically proven to be entirely without substance”.
The number of new member registrations halved compared to the previous period during the six months to the end of December, though, with the fall to 4.3 million new sign-ups likely significantly created by the adverse publicity.
The rate of conversion to full subscription remained steady at around 3.1%, with around 135,000 paying customers at some point during the second half. By the end of the year, the total had halved again to around 69,000.
Total revenues, including discontinued operations, came in at £56.1m for the full year, a fall of 31% on the £80.9m recorded in 2012.
A group pre-tax loss of £7.97m marked a considerable turnaround on the £9.17m profit booked this time last year.
Cupid sold its casual dating businesses and German arm during the year, booking £23.4m, and expects an additional £26m in cash over the next three years.
The move left revenues in the continuing business flat at £26.6m.
It said its transition into a better-quality, more long-term business was 95% complete, with newly-migrated platforms and processes, and a reduced staffing complement of around 225 across sites in the UK, France, USA and the Ukraine.
CEO Phil Gripton who took over from major shareholder and co-founder Bill Dobbie in December said a full review had been completed at the group, which reached its “inflection point” last year.
He expects to be able to use the data harvested from customers to improve the company’s fortunes as part of a new three-year plan, calling it “a unique opportunity” in an attractive and fragmented market.
“I have tremendous faith in the long-term future of Cupid plc,” Mr Gripton 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.”
Cupid said the dating market remained “highly competitive” in the first quarter of the present year, adding it had held marketing spend at an inflated level ahead of new product launches to come during the current quarter.
But Mr Gripton warned revenues would likely fall in the first half, with a target for profitability to be regained as the firm enters 2015.
Holding the proposed final dividend at 3p per share did little to reassure investors, with stock closing the day down 10.25p at 59.25p.