Posted on Wednesday, Nov 18th 2015
According to an IBISWorld report, dating sites in the US are expected to earn $1.17 billion in 2015 with dating apps expected to bring in $628.8 million. In 2014, dating sites had generated $1.08 billion in revenues with dating apps accounting for $572 million in revenues. The market has seen significant consolidation in the online dating industry with over 10 dating companies getting acquired last year. Analysts attribute the consolidation to there being “too many players and not a lot generating sufficient revenue for these sites”. Among the leading players in the segment is Billion Dollar Unicorn player Match.com, which recently filed to go public.
Dallas-based Match.com has been around for a while now. It was a pioneer in the online dating market when it launched its services in 1995 under the leadership of entrepreneur Gary Kremen. Its platform allows people looking for relationships to express themselves through free writing sections. Users are also able to update as many as 26 photos of themselves and include selected preferences for the person that they are looking for. After creating a profile, the user can see photos and read about potential matches in their area. To maintain user privacy, members communicate through an anonymous email network. The names and contact information of members are kept confidential till the time the member decides to share the information with the match.
Today, Match.com is the leading subscription-based online dating site. It also powers online dating on MSN across Asia, Australia, Canada, the United States, and Latin America and the online dating for Yahoo! Personals in Australia and North America. Along with its international properties, it owns over 45 brands, including Match, OkCupid, Tinder, Meetic, Twoo, OurTime, and FriendScout24. It offers its dating products in 38 languages across more than 190 countries and boast of over 59 million monthly active users of which 4.7 million are paid subscribers. Earlier this year, Match.com announced the acquisition of another dating site PlentyOfFish for $575 million. Vancouver-based PlentyofFish had a listing of 90 million registered users with nearly 3.6 million active daily users. The acquisition will help Match.com add more single members to its portfolio.
Match.com earns most of its revenues from its dating business. It offers a freemium service where the basic membership is free and a subscription charge of a recurring membership fees grants unlimited access to certain features for a specific period of time. For instance, Tinder charges users a fee ranging from $2.99 to $19.99 for features such as undoing accidentally swiping out a potential match or to find a match outside a 100-mile radius. Besides revenues from their users, Match.com also earns advertising revenues. It also earns non-dating revenues through their stake in the Princeton Review, which provides a variety of test preparation, academic tutoring, and college counseling services.
Overall, Match.com’s revenues have increased from $713.4 million in 2012 to $803.1 million in 2013 and to $888.3 million in 2014. During the same period, adjusted EBITDA has increased from $236.5 million in 2012 to $271.2 million in 2013 and $273.4 million in 2014. For the six-month period ending June this year, Match.com’s revenues have increased 14% to $483.9 million. Over the same period, adjusted EBITDA has fallen 22% to $96.7 million.
Match.com was initially venture funded, but in 1999, IAC bought Match.com for an estimated $50 million. Recently, Match.com filed to go public. It plans to issue 33.3 million shares at a price of $12 to $14 a share. The funding will value it at $3.1 billion. Post the IPO, IAC will continue to hold 50% voting rights in the company. Match.com plans to use the new funds to pay back IAC’s debt and pursue acquisitions.
More investigation and analysis of Unicorn companies can be found in my latest Entrepreneur Journeys book, Billion Dollar Unicorns. Unicorns will also be discussed with some special guests during our 1M/1M Roundtable programs over the next few weeks. To be a part of the conversation, please register here. The term Unicorn was coined in a TechCrunch article by Aileen Lee of Cowboy Ventures.
This segment is a part in the series : Billion Dollar Unicorns
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