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Finance of Startups: For Dummies (Part 10 – Match Group, Inc. S-1)


Last week, Match Group, Inc. filed its S-1 in its initial public offering under the stock symbol “MTCH”. You probably know MTCH as one of the largest online dating sites in the world as Match.com. They also own and operate OkCupid, and Tinder and over 37 other brands. Outside of dating, they also own The Princeton Review – an education site devoted to test preparation, academic tutoring, and the like.

The company is looking to raise $100M through its IPO. Here are some of my notes:
  • Three classes of common stock: common stock, Class B common stock, and Class C common stock – generally “similar”, but common stock will have one vote per share. Class B will have 10 votes per share. Class C has virtually no votes per share.
  • Match Group, Inc. is owned by IAC/InterActiveCorp (IAC)
  • The company’s mission: “Establishing a romantic connection is a fundamental human need. Whether it's a good date, a meaningful relationship or an enduring marriage, romantic connectivity lifts the human spirit. Our mission is to increase romantic connectivity worldwide.”
  • 59 million monthly active users (MAU) with 4.7 million paid subscribers (8.0% of MAU) across its brands today up from 8 million MAU in 2011 representing a 63% compound annual growth rate (48% excluding acquisitions)
  • OkCupid was acquired in 2011
  • First half of 2015 saw 68% of new users sign up via mobile vs. 27% in 2013
  • Benefits for users include: Expanded Options; Efficiency; More Comfort and Control; and Convenience
  • A few competitive advantages listed: brand (4 out of the 5 top online dating brands are represented by MTCH); scale (significant scale = more opportunities for users to meet); multiple brands (address the many different markets MTCH is selling to)
  • Acquiring PlentyOfFish Media, Inc. ~$575.0M… scheduled to close Q4 2015
  • Because the company has less than $1.0B in revenue in its last fiscal year, the company qualifies as an “emerging growth company” as defined by the Jumpstart Our Business Startups Act of 2012 (JOBS)
  • Revenues (2012-2014): $713.4M, $803.1M, $888.3M.
  • Key metrics
o   “Total Dating Revenue” which includes both direct user-paid monies and indirect (amounts wholly from advertising)
o   “Paid Member Counts” (PMC). From 2012-2014, Total PMC grew 25% to 3.5M
o   Average Revenue per Paying User (ARPPU)
  • Company notes decline of email usage as a risk to the business. Many of MTCH’s communities (users of the various brands) rely on email to communicate new users, new interactions, and the like. However, consumer habits have changed so that email usage has declined. The absence of a communication method as effective as email is a significant risk
  • Given the Ashley Madison hack earlier this year, no surprise MTCH lists its potential inability to protect from cyber threats as a major risk factor
  • International revenue accounts for 31% of total revenue through 1H 2015
  • 36% of all members in 2011 were under the age of 35. By end of the 1H 2015, that number is 62% reflecting mobile adoption, lower average revenue per user (ARPU), etc.
  • Due to the shift of monetization towards lower cost brands, “youthfulness”, and the like, user acquisition channels has also shifted to lower cost channels. Thus, cost of acquisition has accordingly dropped
  • Demand is highest in the first quarter of the year with Q4 being the lowest demand
  • Over 40 brands represented in MTCH with 25 acquisitions since Jan 2009
  • The CEO, Sam Yagan, founded OkCupid in 2003. He also founded SparkNotes in 1999 and eDonkey in 2002

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