Thread by @investing_city

Ok, here goes the second "10k in 10 tweets"

Let's break down Match Group, owner of Tinder, Match.com and a bunch of other online dating sites.

[THREAD] 👇🏽

1/ Match Group has taken a brand portfolio approach to online dating because of "consumer dating preferences."

Basically, each dating site fulfills a niche and if you are within that, you have a better chance of finding a date.

These are the company's most popular brands.

2/ Each dating site is a freemium model but then the monetization differs slightly.

With Tinder, people can pay for extra "Swipes" or upgrade to "Plus" or "Gold"

Plus is $10/month if you're under 30 and $20/month if you're over 30 (the company was sued for this but won).

3/ On the other hand, Match.com is $35/month as it caters towards slightly older individuals.

Other examples are Meetic (based in France), Pairs (based in Japan), OurTime (over the age of 50), and Hinge (similar interface to Tinder but focused on relationships).

4/ Before getting into the numbers, the separation from IAC is important. Match was incubated within IAC since 2009 and it is still a majority owner.

In a few months, the separation will be complete, giving Match more flexibility and IAC more cash.

5/ This is basically saying that the popularity and growth of Tinder has improved profitability.

Why?

Scale, youthfulness and monetization rate.

6/ Tinder, started in 2012, now makes up 57% of the company's revenues. This is compared to 31% of sales just 2 years ago.

In the latest year, the "other brands" actually contracted in size but Tinder grew 43%.

7/ Revenues are split about 50/50 between North America and International. The company also makes a tiny bit from advertising.

As you can see, subscriber growth has been good, with 9.3 million globally. Tinder is responsible for most of that.

8/ Since Tinder is the highest-grossing non-gaming app, Apple & Google take their fair share.

App Store take rates are 30%, but Match's gross margins are 74%, how is that possible?

It's because 69% goes through app stores. Some of the other brands are just purchased online.

9/ We can calculate how much Match pays to Apple (I imagine that was the 56%) and Google (the 13%).

80 mil in in-app purchase fees out of 117 mil growth in COGS is 68.5%. Very close to that 69%!

69% of $527 million is $364 million

- $295 mil to Apple
- $69 million to Google

10/ Match has a unique asset in Tinder as the goal of most dating apps is for people to ultimately delete them.

Tinder...not so much. That's why the company can boast 32% EBIT margins & 100% free cash flow conversion.

Other notes:

- Barry Diller, the Chairman of IAC (who is a legend) used the company jet to the tune of $672k but he still made sure to get that free 401k match 😂
- Ryan Reynolds, the actor, is now on the BoD
- Match will likely pay IAC $2 billion for its independence