The index of love – Match Group | Summer Series

Bryce: [00:00:15] Welcome to another episode of the Equity Mates summer series. Over 12 episodes we're deep diving into some of the most exciting, interesting and well-known companies from both here in Australia and over in the US, in some instances we'll be hearing directly from the CEOs to give you firsthand insight into their companies. My name is Bryce and as always, I'm joined by my equity buddy Ren. How's it going? 

Alec: [00:00:36] Very good, Bryce. Very excited for this episode. They say, invest in what you know, and that's why you've chosen this company for us to look at today. 

Bryce: [00:00:46] That is not true at all. But I think you might have more information on this company than I do. 

Alec: [00:00:51] I may do 

Bryce: [00:00:53] so. Looking forward to hearing all about Match Group, which we're deep diving into today. The Summit Series is brought to you by Super Hero. Super Hero allow you to buy Aussie and US shares and ETFs with no monthly account fees, and you can now earn Candace points with Superhero Hero. Visit Superhero.com.au/qantas to learn more eligibility criteria, terms and conditions and fees and charges apply Ren today with deep diving. As we said on Match Group, the ticker is MTCH. listed over on the Nasdaq. 

Alec: [00:01:24] Yeah, so now you can buy it on Super Hero because they let you buy us and Aussie. They do, they do. 

Bryce: [00:01:30] And in today's episode, we're going to be covering what Match does a bit about the industry, that it's in its financials, future prospects and a few fun facts. It's going to be epic. 

Alec: [00:01:41] It is. It is. And this episode, like every Equity Mates summer series episode with Super Hero, is going to be interactive and give you a chance to win $1000 in your brokerage account. All you need to do is listen closely to this episode, head over to our socials and answer the question that will be there about this episode. We'll be picking one winner and giving them $1000 to invest as they choose. The original concept was invest in the company that we spoke about, but we'll just give you guys the choice. But Match Group is on Super Hero. 

Bryce: [00:02:15] that's it. So head across to our Instagram page at Equity Mates and find the corresponding post for this episode. Let us know in the comments. Your favourite fact about Match from this episode and will choose someone to win a thousand bucks in a superhero wallet. Pretty awesome. 12000 over this summer. 

Alec: [00:02:31] All right. Well, that's the preamble. Let's get into it. Bryce What if I told you that there was an ETF on love? Jaco, would you want to invest 

Bryce: [00:02:42] an ETF on love, do you think? Well, I believe in 

Alec: [00:02:45] love as structural growth wins or tailwinds. Love can be monetised. 

Bryce: [00:02:49] I think love can easily be monetised. It was Valentine's Day weddings, engagements. It's all expensive. 

Alec: [00:02:58] It is expensive. Yeah, well, they say there's like two times where price goes out the window, like weddings and babies babies. 

Bryce: [00:03:05] Yeah, and I feel like pets almost now as well. 

Alec: [00:03:08] Anyway, the reason I ask that is because the closest proxy to an ETF on love will online. Love is Match Group. Yes, that's how you got to think about this company because it's got some big names, so we're going to talk about. But basically, if you have ever online dated, if you've ever matched online with someone with one key exception that will get to that, you will probably using a match product. 

Bryce: [00:03:33] Yeah, they are one of the world's most popular with AI. How's the world? Some of the world's most popular online dating products. So think of all the ones that you've used Tinder Hinge Match. 

Alec: [00:03:47] Well, let's do all of that. I haven't used much. I feel like anyone our age probably hasn't used match. Was that because it's it's a website like operator, not an app operator. You know, it's very old school. So we'll get into some of those platforms. But I think where this conversation starts is talking about the change in, I guess, the way the world looks at online dating. And because even when we're at uni, there was like a real stigma around online dating. And, you know, like people didn't think that relationships came out of Tinder or anything like that. And you know, when the clock back another 10 15 years when Match.com was founded in the mid 90s, online dating was seen as weird. Like you were saying as someone who had, like, failed at real world dating if you had to use Match.com or any of those websites, but it was like the last resort, it's like 

Bryce: [00:04:39] pick up in a call, 

Alec: [00:04:42] OK? 

Bryce: [00:04:42] That's dangerous. 

Alec: [00:04:43] But the stigma around online dating has completely changed data from like 2010 from the states, five percent of those married or in committed long term relationships met their spouses online, and I would hazard a guess that that number has grown exponentially from there. Like it is, it is really common these days. Some interesting data from this again only goes up to 2010 from the same survey. But basically, couples that met online was nothing until the 1990s because the internet didn't really exist. By 2010, it had gone from basically nothing to 20 percent for heterosexual couples and almost 70 percent for homosexual couples. Wow. So just like massive uptake in a very short period of time, the stigma was going away. And when you're looking at an industry that has tailwinds of massive uptake and, you know, breaking down the barriers or the stigmas around an industry, online dating and online love was one that had some big structural growth drivers for the last 20 or 30 years. 

Bryce: [00:05:54] Yeah. And matches sitting pretty 

Alec: [00:05:56] much sitting right in the middle of it. So let's get into the company because we've sort of danced around it. But this is a portfolio of some big names. 

Bryce: [00:06:06] That's it. Ren. As we said, Match Group is home to some of the world's most popular and well-known dating products. As we said, Tinder Hinge. They don't have Bumble, which we'll get to. In a sense, we'll get to that. But it it started in Dallas, Texas, ran. It was previously owned by IAC, who then decided to bundle several businesses together, creating Match Group, and they now have more than forty five dating apps, with Tinder being the most downloaded dating app around the world. Forty five, what did I say? 

Alec: [00:06:38] No. You said forty minutes. Want to stress 40 45? 

Bryce: [00:06:41] I didn't even know, though, that men and I want 

Alec: [00:06:43] to stress 45 because I've designed a bit of a game for you in a second. OK. What were you surprised about? 

Bryce: [00:06:49] Well, it feels like there's the big three or four. And then there's obviously this huge tail of dating apps that are either really, really, really niche or just not like, I don't have a huge audience. 

Alec: [00:07:03] Yeah, geography becomes important, and we'll get to that. But what we're thinking of in terms of Tinder, Hinge, Bumble not owned by Match, but Bumble being the other big one. Very US Australia centric. Oh, true. True, yeah, yeah. Yeah. So we'll get to that. But yeah, you're right, there are some really obscure ones, which is where my game comes in, OK? But before then, I want to talk about the Bumble situation because the Bumble situation is a really important situation. So a lot of people know. The founding story of Bumble Whitney Wolfe Herd worked at Tinder. She was a VP. She left Tinder, she founded Bumble, and there's always been a level of competition there, obviously. But Match Group has tried to buy Bumble at least once, probably multiple times, and it didn't go well for match groups. So in the middle of 2017, Match tried to acquire Bumble for four hundred and $50 million. Now, for reference, Bumble a time of recording has a market cap of 10 billion dollars, so a little bit more than the four hundred and fifty million a few years ago. So in response, Bumble published a public letter to Match, and it was pretty scathing. Dear Match Group. We swipe left on you. We swipe left on your multiple attempts to buy us, copy us and now to intimidate us will never be yours. No matter the price tag, we'll never compromise our values. We swipe left on your attempted scare tactics, and on these endless games, we swipe left on your assumptions on your assumption that a baseless lawsuit would intimidate us. Given your enduring interest in our company, we expected you to know a bit better by now. Bang. So pretty scathing from a competitor to another competitor. You don't say such blunt language used too often. Do you love to say it? Do you love to say it would love to say Telstra and Optus write such scathing public letters to each other? But I think the long and the short of it is that Bumble will not be getting acquired by Match any time soon. No match will likely continue to own all of the big platforms. 

Bryce: [00:09:05] Bah bah bumble. We did mention 45 companies within the Match Group, so a couple of their key ones we've mentioned Tinder. Obviously, Match is the main old school scalper website. 

Alec: [00:09:24] Not now, but that's what I think of when I think of Match.com. 

Bryce: [00:09:27] Then there's I haven't heard of any of these meetings. 

Alec: [00:09:31] No, no. Surely you've heard of Hinge? 

Bryce: [00:09:33] Oh, yeah, I've heard of him. Yeah, yeah, yeah. 

Alec: [00:09:35] Tinder is number one in terms of users revenue. All of that stuff. That's the Big Kahuna in the portfolio. Yeah, yeah. Hinge and Match are probably next. Next big? Yeah. And probably bigger than match. And then there's plenty of fish. Our time may take OkCupid. A bunch of plenty of fish 

Bryce: [00:09:54] will love that name. 

Alec: [00:09:56] One mate, and I'm not going to name check him here, but that is a plenty of fish. So, yeah, you know

Bryce: [00:10:04] any of his broad appeal in the central US, EU, Canada and the UK. Interesting.

Alec: [00:10:11] All of these different apps have different focuses, and that's the portfolio approach for Matt and for a lot of mainstream app operators who just are a Tinder Hinge Bumble. You know that Tinder and Hinge is targeting like slightly different people. I guess Hinges tagline is designed to be deleted. It's a lot more relationship focussed. Tinder's not as relationship focussed. And so basically darts matches play to to try and cover all the nations to give you a sense of just how narrow these natures go. I've got a game called real or fake. The real dating apps are all in Match's portfolio. The fake ones are obviously ones that I've made up. Okay, so I'm going to give you the name a sentence description you mulled over and told me if it's real or fake. All right. First, one hour time, a dating app that is exclusively for people 50 or over, 

Bryce: [00:11:07] I think for 50 or over would exist. But I think you've made that up now. 

Alec: [00:11:11] It's real and it's owned by Match. Ship, a dating app that lets your friends find matches on your behalf. 

Bryce: [00:11:22] Fake. 

Alec: [00:11:23] It's real. It's owned by Match Friends, do the chatting in the swiping for you. On a similar vein, approved a dating app that lets your parents approve matches before you can shop real fake. Up next one pairs a dating app that requires you to verify that you're single before you can use it. Fake, real, wow. Yeah, primarily used in Japan. They go travel spelt with Tuesdays allows users to set locations and dates for where they're travelling rather than, you know, like all the other apps being where we are now. And then it allows you to match with people who will be in those locations when you're going to be there. 

Bryce: [00:12:11] Yeah, but I feel like most dating apps are location based, so you go over and you turn tinder on. And why are you guys so fake? 

Alec: [00:12:17] No, the idea is like, we're going to Europe in six weeks. So you say, I'm going to be in Europe in six weeks and you match with people who are going to be in Europe in six weeks. Real, it's fake, but it's a pretty good idea, so the free licence to anyone that wants to take that idea. Also, any really heavily religious community that wants to take my parental approval dating app as well. Next one Wild Things, a dating app for outdoorsy people that requires the first date be an outdoor activity, you know, like hiking, camping, fishing, whatever like fake, correct. And then last one par perfetto allows you to search for people rather than not algorithmically based swiping real. Real? Yeah. So that gives you a sense of some of the the different ones out there.

Bryce: [00:13:06] Huge tile a lot and a lot

Alec: [00:13:08] of names, each tile. Then there's like really specific demographic ones. I think, as you know, specifically for, like African-American users, there's a Jewish one, but I don't think much owns it. J Day, you know, there's a whole bunch of like demographic niches as well. That's match. That's its portfolio approach that some of its big names. Let's take a step back and look at the industry more broadly. 

Bryce: [00:13:30] Yeah, well, you mentioned Ren. The stigma around online dating is, you know, it's getting better, and more and more people are turning to it as a as their first way, I guess, of trying to find dates. But the global dating app revenue was one point six nine billion in 2015, but it's grown to over three billion in 2020, and that growth is continuing. Projections of five point seven billion by 2025, so pretty significant growth over the last decade or so. 

Alec: [00:14:04] Well, yeah, it almost doubled in five years, and they expected to almost double again in the next five years. 

Bryce: [00:14:10] That is off the back of app users growing pretty significantly as well. One hundred and eighty five million in 2015. And now that is 270 million, probably a little bit more because that was a figure from 2020. But more and more people now starting to get online and use these apps, 

Alec: [00:14:29] especially during Covid services, they go to bars or restaurants or anything. 

Bryce: [00:14:33] Yeah, true. So we've mentioned some of the major competitors in this space, Bumble. But there's another one, Badoo. 

Alec: [00:14:40] haven't heard of. I've never heard of it. Someone in the office had. But it's yeah, it's big. 

Bryce: [00:14:45] You know, these are the second and third most downloaded apps behind Tinder in May 2021. Tinder had 6.5 million monthly downloads compared to Badoo with 3.9 and Bumble with 1.7. So Tinder still has a pretty significant market share in terms of monthly downloads, and it makes a fair bit of cash. 

Alec: [00:15:05] It does so. Tinder's monthly in-app revenue in May 2021 was a little over $65 million compared to Bumble 20 million and Badoo, which was actually seventh with five point seven million. I guess the question is how do they produce revenue? Two main things like every tech platform, they love a freemium model where the free users get ads for people have used Tinder, you know, swipe you swipe, swipe and then ad comes up for, you know, like a movie or whatever. The second one is the premium model. Now you when you're in your single days, were a tinder premium. Right? 

Bryce: [00:15:43] I honestly say I've never used a dime. Really? 

Alec: [00:15:47] Yeah. Well, you didn't do any prep for this episode, though. The Premium offering, it's like there's a whole bunch of things. I think the main thing is unlimited swiping, whereas if you're a free user, they limit you swiped a certain amount in a day. That's the model, freemium model, advertising and paid subscription. And that's pretty universal. Like all of the dating apps have slight variations on it, but really, it's all much of a much less. That's the business model ads and pages Ren. 

Bryce: [00:16:17] You also mentioned that geography plays an important part here. Tinder's the most popular dating app in North America, but their major competitive Badoo is actually the front runner in South America and Europe. So something to consider when when thinking about investing in these companies. However, the market share for Match as a total group is pretty significant home to, as we said, Tinder and, you know, a bunch of the other key players. If you look at the breakdown, 

Alec: [00:16:42] they have a pretty significant share. Globally, they have over 50 percent of the market share. Yeah. So Tinder alone has a massive chunk, but yeah, globally that. That's huge. Yeah. Let's take a break, and then we've got a few, a few other interesting things that you should know about match in the industry, the financials and then some thoughts about the company. So before then, let's take a break and hear from our sponsors. So Bryce before the break, we spoke about Match, we spoke about the portfolio of platforms it has under it. If if you want an ETF on Love, Match might be the closest thing, and then we spoke about the industry more broadly and how it's growing incredibly quickly as more users come online globally. Let's now talk about the numbers. Let's talk about the business. Is love a profitable business? 

Bryce: [00:17:35] Good question. Depends what you define as you mean monetary profitability or Bryce investing. But that's well, look, the we've got all these numbers from ticker.com, TIKR. It's in beta at the moment. Awesome platform. So head to ticker dot com slash Equity Mates if you'd like to sign up. Current share price at the time of recording is one hundred and fifty four bucks and you can check that out over on the superhero platform. Its market cap, Ren is forty two point sixty five billion. It has current revenue of two point four billion in 2022 and compound annual growth rate of 21 percent between 2016 and 2020, according to their latest annual report. So spitting out some pretty decent revenue and growing at a great compound right over the last five years. 

Alec: [00:18:30] So my biggest takeaway putting some of those numbers together and putting them in context. Earlier, you said the industry's rev revenue was three point eight billion in 2020. That's probably going a little bit up for 2021, but keep that $3.1 billion number in your head. So in an industry that makes three point one billion, much makes two point four, I think that is just online dating dominance. 

Bryce: [00:18:55] Yeah. Well, as you said, if you want to get in the online love game, it feels like this is certainly a stock to consider. So then to answer your question, Ren does love pay? It feels like it does. 

Alec: [00:19:08] It does $128 million in profit in 2020, to be exact. I say that that number was down from previous years because of, well, there was a few few like one off costs in there Covid, but also some discontinued operations. But four hundred and thirty one million the year before, you know, it pays, does pay, pays very handsomely. 

Bryce: [00:19:31] Yes. And if you were lucky enough to invest when it hit the hit the markets public markets in February of 2019, you'd be up over 160 percent. So stock prices is certainly going pretty well. 

Alec: [00:19:43] I guess the question the important question, though, is will it continue to pay? Is Tinder an app that is at the peak of its power and is having a moment? Does a portfolio approach actually mean anything for the parent business? Like does that actually given any competitive advantages? Is this business like this business has been phenomenal, and like the the original thesis of aggregating all these platforms together has obviously been good so far. The question is, will it continue to do so? 

Bryce: [00:20:14] Yeah. Well, for me, it's like they've got what other than Bumble and Badoo, they've got the next biggest. 

Alec: [00:20:23] no, no, no, they've they've got the biggest 

Bryce: [00:20:25] tinder. Well, I mean, yes, I tinder then bond. 

Alec: [00:20:27] But and then the fourth and fourth 

Bryce: [00:20:30] and everything else of that. Yeah, so you really can really looking at the mix around is Bumble and Badoo likely to, yes, beat Tinder, but also how likely a new start is going to come into this space? Is that something that all of a sudden you're going to have another company start up similar to Bumble with a platform that captures the imagination of everyone out there who's still single and gets and takes it to the number one spot? I don't know how likely that is, but if that doesn't happen, then the bull case for these companies, I think, still looks pretty, pretty rosy because the search for love in the search for dating online, I think, will only continue. So it's just going to be that tussle between Bumble and Tinder and Hinge.

Alec: [00:21:11] I think I look at this and I say there's no doubt in my mind that the industry as a whole will continue to grow as all the taboos get swept away. As more and more success stories come out of online dating, that is just going to have an exponential effect on the amount of people willing to use it. That's going to be good for the industry. Then there's obviously all the other tailwinds of like tech generally, you know, more smartphone users coming online or internet services being rolled out faster. Internet services being rolled up like all of that stuff is going to be good for the industry as a whole. My big question when it comes to this dating app, to me, like a classic example of a network effect, the value of the network becomes more valuable to each existing user with each new user. And that's because if you and I are the only two people on a dating app, it doesn't matter how good the technology is, it doesn't matter how good you know the concept is. You and I are going to be dating Ren Ren Candace popping up on my fave, he keeps talking. And once I swipe left on you once, then there's no one else to chat to. So this is a network effect business, and Tinder has this impressive position because everyone goes first to Tinder. Yeah, but it's also an example of an incredibly localised network effect. I don't care if there's three hundred and fifty million users of Tinder in the US. If I'm the only user in my local area and there, I think, lies the opportunity for competitors. We don't need to be a global dating app to her match or her tinder. We just need to say we're going to be a an Australian focussed dating app and just take all of Tinder's Australian users and make something that is specific for Australians and build a local network effect here. And then if you know, like if more and more platforms do that in different regions around the world, it doesn't matter that Tinder has the most users globally. It matters where those users are distributed and where there's a local network effect and where they're being disrupted because Tinder could have a billion users globally. But if they've got three users in Australia and Equity Mates has 20 million users in Australia, everyone in Australia isn't going to be downloading Tinder. And so that's the example of like a network effect being really valuable, but needing to really focus on local networks rather than a global network.

Bryce: [00:23:36] The thing that surprises me with this is that some of the biggest networks social networks in the world, as far as I'm aware, could be completely wrong aren't involved in this. 

Alec: [00:23:46] Yeah, it's good.

Bryce: [00:23:46] Why isn't Facebook getting involved? I have three billion people in their network. They know how they interact. I know what they like. They have. They know what photos they post on Instagram. They know everything about them. Why do they not just have a role off a side dining out? That's like your 

Alec: [00:24:03] Facebook and Instagram. Do you have a dating app when you slide into people's day and like you in particular 

Bryce: [00:24:09] said, it just surprises me that they're not in the game. They and yeah, 

Alec: [00:24:13] so it's a good if you're listening.

Bryce: [00:24:14] Yeah, I just know everything that have everyone in network already. They have all the communication tools available. Yeah.

Alec: [00:24:21] And the thing is, when you sign up to these dating apps, often you will sign in with Facebook and then you will link your Instagram and stuff like that. So it's like, you know, they're they're pushing a heap of that data to these platforms.

Bryce: [00:24:33] Yeah, it's not. Yeah, Warren. Yeah, it look very interesting business, one that I hadn't really had much experience with, I guess, real life experience. But I know a lot of friends in our friendship group do use it. And I remember back in the day, as we said, right at the top, you're at school going to uni. The stigma around online dating was pretty negative. You know, why do you need to resort to online dating if you can can't go to the pub or a restaurant? But no doubt that it's proving to be successful for more and more people and is breaking that barrier and giving more people the opportunity to find love. 

Alec: [00:25:08] Yeah, just on your socials, Facebook thing got you thinking, Yeah, dating in the Metaverse. Oh, I love it. Well, that's not going to be like that. That's your advice. That's why Facebook met us. Sorry. Maybe that's where they make their dating. Quite true. 

Bryce: [00:25:23] Yeah, just dating avatars. 

Alec: [00:25:26] Yeah, just strap on your VR headsets and you never even need to leave the house. 

Bryce: [00:25:31] Crazy, uncomfortable thought. For me, it's yeah, 

Alec: [00:25:34] I would kind of say 

Bryce: [00:25:35] it's a Ren look. As I said, really interesting company. Plenty more fun facts to come, but any sort of closing fun facts from you?

Alec: [00:25:44] Yeah, I think the swipe right feature that is so synonymous with Tinder. Yeah, Match is actually copyrighted that they go, Yeah, yeah, yeah. So and now I'm wondering why Bumble can you can swipe on Bumble? 

Bryce: [00:25:59] Yeah, maybe it's a swipe left. I've no idea. 

Alec: [00:26:02] It's not. But anyway, that's that's an interesting little titbit. But I think, look, if we're going to share some closing thoughts, I think it's a fascinating company in a fascinating industry. For me, this is the kind of example of why Australians need to look outside of Australia, because this is an industry that so many of us say touch feel all the time. We're very familiar with the platforms, but there's no Australian option to invest in this. This is this is something that you can only invest in if you invest overseas. So the good thing is, platforms like Superhero now have made that available. You know, they say, invest in what you know. So this probably isn't going on your watch list, but it might be going on all. 

Bryce: [00:26:47] This is not a buy, hold or sell recommendation. This was just us looking at some of the companies that are interesting to not only us, but the Equity Mates and superhero communities. We are going to continue Ren with another exciting company that's just hit the markets over in the US in next week's episode, and that is forty five. It's listed over in the US and I'm sure. Or many of the community know about it 

Alec: [00:27:11] started in Australia, listed in the U.S. that's the kind of stories you love to hear. 

Bryce: [00:27:15] So Ren before we wrap. Just a reminder that the summer series was brought to you by Superhero. They Allow you to buy Aussie and US shares and ETFs with no monthly account fees, and you can now earn Qantas points with superheroes. So visit superhero.com.au/qantas To learn more. Eligibility criteria, terms and conditions and fees and charges apply. And don't forget you can win a thousand bucks to go to your superhero wallet. Head over to our Instagram page at Equity Mates to find out more, and we will be announcing the winners at the end of this week. 

Alec: [00:27:46] Loved this episode! Bryce loved this summer series. We get to Deep Dive on a variety of interesting companies until next time. Swipe right?