Last year, Billion Dollar Unicorn player Match.com (Nasdaq: MTCH) went public and listed in times when most Unicorns and venture capitalists were re-evaluating valuations. But despite the circumstances, Match appears to have done well with the stock still trading above its initial listing price and the company still being valued at multi-billion dollars.
Match Group’s Financials
For the first quarter of the year, Match.com saw revenues grow 21% to $285.3 million, ahead of the Street’s forecast of $281.8 million. Excluding foreign currency movement, the revenues would have grown 23% over the year. For the quarter, adjusted net income increased 30% to $28 million, and free cash flow nearly doubled to $68.5 million. Adjusted EPS fell 18% to $0.11 due to the increased number of shares. It was still better than the market’s forecast of $0.08 per share.
By segment, dating revenues jumped 24% to $260 million, primarily due to Match’s acquisitions of Tinder and PlentyOfFish. Non-dating revenues, which includes revenues from educational websites Princeton Review and Tutor.com, was flat at $24.9 million.
Among operating metrics, average paid member count grew 36% to 5.1 million, with Tinder’s member count exceeding 1 million at the end of the quarter. Average revenue per paying user declined 10% to $0.54 primarily due to the comparatively low revenue rates for Tinder.
For the current year, Match Group expects dating revenues of $1.1 billion-$1.4 billion with an adjusted EBITDA of $410 million-$425 million.
Match Group’s Expansion Plan
Overall, things are expected to improve for Match. According to forecasts, Tinder expects its paid subscribers to grow two times by the end of the current year. On an average, Tinder users spend around 35 minutes daily on the app. Tinder has been experimenting with monetization capabilities. Last year, it launched several additional paid-for features such as the ability to go back and like someone who was accidentally rejected, or super-liking a partner. While Match did not disclose details, it did reveal that these a la carte features were doing well for Tinder. Analysts believe that the growth in user statistics at Tinder may translate into advertising revenues for the Match group.
Additionally, Tinder is also re-evaluating its user portfolio. Recently it announced plans to make the app more transgender friendly. The app will expand the user selection from male/female to include a comprehensive list that would be more in line with the transgender community’s requirements. Tinder also announced recently that it will close its operations for the under 18 age group. Till now, Tinder allowed users over age 13 to sign up and be paired with partners in the age group 13-17. With the recent updates, Tinder will let go off its under 18 user base. Tinder expects the change to impact less than 3% of its user base. The company believes that the change in the policy is needed for it to be more responsible to the community.
Its stock is trading at $15.76 with a market capitalization of $3.78 billion. It touched a high of $16.34 in November last year, soon after listing. It has recovered from the low of $8.41 it had fallen to in February this year.