Cupid’s making eyes at further expansion in overseas markets

ONLINE dating company Cupid is eyeing further overseas growth opportunities after seeing its sales from “new” markets such as France, Italy and North America more than double during the first six months of the year.

The Edinburgh-based firm said it had grown its US market share to 2 per cent after only two years, while it has grabbed a 10 per cent slice of the French market since early 2011 and expects to see further gains following its recent acquisition of local firm AGL.

Chief executive Bill Dobbie said new markets had now overtaken the company’s original business in terms of revenues and the group was “well placed to take advantage of the numerous opportunities that exist”.

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He added: “During the period, we concentrated on growth within our existing global footprint, particularly in the USA, where our strong performance gives us increased confidence in our ability to continue to unlock further sustained growth at rates that are well above market trends.”

Cupid averaged 540,000 monthly subscribers in the first half, up from 410,000 in the same period last year.

The Aim-quoted company, which also runs “niche dating” sites such as services for over-50s and single parents, said 30 per cent of its users were accessing its services through mobile channels such as tablets and smartphones.

Revenues from new markets leapt 122 per cent to £22.2 million in the six months to 30 June, and by 67 per cent in developing countries Brazil and India to £500,000. Income from established areas – Australia, Ireland, New Zealand and the UK – rose just 6 per cent to £16m.

Overall, revenues grew 51 per cent to £38.6m in the first half of the year, boosted by a 69 per cent jump in marketing spending to £23.2m. Earnings before interest, tax, depreciation and amortisation were flat at £5.9m, but that beat the £5.5m that Peel Hunt analyst Paul Morland had pencilled in.

Morland said: “The strong first-half revenue performance and current trading increase our confidence that Cupid can deliver earnings growth over 50 per cent this year.”

Numis analyst Ivor Jones, who expects Cupid to post earnings of around £16m for the full year, said the firm would be able to generate revenues of around £80m if it was able to build a 10 per cent market share in the US.

He added: “When Cupid’s revenues are a multiple of the current level, we expect Cupid to be bought out, hopefully at a premium valuation. But in the meantime there is long road of organic growth opportunity ahead.”

Dobbie said the bulk of Cupid’s growth during the first half had been delivered organically, but the group, whose websites include BeNaughty.com, would continue to seek bolt-on acquisitions across the 15 territories it currently operates within.

He added: “Our goal is to try to build a company that will take up to 15 per cent market share in those countries where we choose to operate. That’s a very sizeable company.

“I can’t give a definite timescale on how long that will take, but that’s our ambition.”