Mandy Ginsberg’s three takeaways about Match Group
A month ago Match Group, the company behind dating sites Match.com, PlentyOfFish, Tinder and more, delivered a strong set of quarterly results that demonstrated continued growth and the fact that, when it comes to finding love on line, it’s pretty much the only game in town. On the company’s earnings call, CEO Amanda Ginsberg made three points that demonstrate exactly why Match is so well positioned in the market.
Investors are eating up Match’s story, sending its share price up by more than 85% so far this year
SOURCE: Yahoo Finance
The first point – and the one that, it has to be said, most analysts and investors can’t seem to stop talking about – is Tinder. The ‘casual dating’ or ‘hook-up’ app is geared towards younger consumers looking for less long-term relationships, and it has leveraged trends like gamification to deliver phenomenal growth. How phenomenal? Ms. Ginsberg summed that up succinctly on the company’s last earnings call:
“Tinder remains the growth driver of our business. Direct revenue in the second quarter for Tinder was up 136% compared to last year, subscribers grew 81%, and ARPU [average revenue per subscriber] rose 33%.”
Further growth is being provided by Tinder Gold, a premium tier subscription service – as of the last quarter, more than 50% of the app’s regular users have bought into Gold. And a ‘student-focussed’ experience inside the Tinder app is helping to make it more attractive to the major demographic that still has to get on board: the U.S.’s 20 million-strong student cohort and their international peers.
The second interesting area that Ms. Ginsberg highlighted on the call is a recent acquisition: Hinge. What is Hinge, you ask? According to Ms. Ginsberg, an “innovative product” in its infancy that offers the same type of meaningful relationships Match.com does – but for a younger demographic. She said:
“Since our initial investment, there has been fantastic consumer traction and momentum, particularly among young cosmopolitan singles. The user interface has been a hit with relationship-minded millennials, leading to strong word-of-mouth growth. Over the past year, Hinge's monthly downloads have increased by 400%. The momentum was compelling enough for us to invest further and increase our initial stake to 51%, and we have the option to acquire the rest of the company.”
Perhaps the biggest opportunity of all, though, is international markets – many of which are far behind the U.S. in terms of uptake, and offer Match plenty of room to grow:
“We also see large opportunities for us to build presence in additional international markets where there's a large and growing single population. Tinder has a toehold in many of these markets, and we have a strong business in Pairs in Japan. There's room for us to have more products in more markets. In particular, we see a massive opportunity in certain Asian, North African, and Middle Eastern markets that have very young and highly mobile-savvy populations and plan to build share there over time, either organically or through M&A.”
While these three points just scratch the surface when it comes to Match as an investment proposition, they highlight why many investors view Match as “the one” to keep hold of.
Dominion holds Match Group in its Global Trends Ecommerce Fund.
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