Parent company for Match.com, Tinder, and OkCupid to go public, seeks $100M in IPO

Match Group, home to a variety of dating startups—including Tinder, Match.com, and OkCupid—has filed to go public. The company will list on the NASDAQ under the ticker symbol $MTCH and hopes to raise at least $100 million.

A wholly owned subsidiary of IAC/InterActive Corp, Match Group is a conglomerate of popular dating products.

In total, the company owns 45 brands — among them, the aforementioned Tinder and OkCupid as well as Meetic, Twoo, OurTime, and FriendScout24. Perhaps less well-known is that it also owns The Princeton Review, its only non-dating business. The company’s dating products are predominately distributed in North America and Western Europe, however they span more than 190 countries.

Match Group caters to roughly 59 million monthly active users, 4.7 million of whom are paid users. Its products also seem to be striking a chord with younger users: More than 60 percent of its users identified as under 35 years old. That’s a significant increase from 2011 numbers, when a little more than a third of its users were under 35. From the quarter that ended on September 30, 2011 to the same quarter in 2015, monthly active user growth increased 63 percent, while the paying member count grew 23 percent.

The company estimates that its total target demographic is approximately 511 million strong.

In 2014, the company earned $799 million in revenue from subscriptions (most came from users in North America). Another $36 million in revenue came from advertising. In the last two years, the Match Group has seen an increase in revenue of 13 percent (from 2012 to 2013), and then another 11 percent increase in revenue year-over-year (from 2013 to 2014). International markets make up a third of its overall revenue, showing lots of room for growth overseas.

The average revenue per paying user in 2014 was listed at $0.60 in North America and was slightly higher (at $0.68) everywhere else, which could indicate that there’s more engagement internationally than within the confines of North America.

The major costs to the Match Group are those of marketing and selling its products ($335 million in 2014), and together represent 42 percent of its total spending.

The Match Group’s IPO faces some risks. There is a lot of competition in the dating space, though Match Group does own some of the most buzzworthy platforms. The company also identifies distribution as a potential problem, referring to a product being somehow restricted by an app store or other digital marketplace. Tinder, for instance, uses Facebook account information help new users log in. If Facebook substantially changes its terms and conditions in a way that affects Tinder’s ability to onboard customers, that could negatively impact Match’s business.

Perhaps more importantly, Match Group lists hackers as a potential issue:

“We may not be able to protect our systems and infrastructures from cyber attacks and may be adversely affected by cyber attacks experienced by third parties,” the company noted in its S-1 filing. Cyber threats have caused a problem for a number of companies recently, including Sony and fellow dating site, Ashley Madison. The cost of leaked user data can be enormous, especially considering the sensitive nature of Match’s products.

Other risks include government regulations and potential litigation brought against the company, such a lawsuits by disgruntled daters, one alleging ineffective security after the user was stabbed by a match, and a $1.5 billion class action case brought against Match.com in 2013 by a model who claims there are fake profiles on the dating site.

An additional concern for potential investors may be IAC’s stake in the company. Not only is it listed as the sole shareholder on Match Group’s S-1 filing, but IAC will own all of the company’s Class B common stock, giving it a 10:1 voting power ratio. Once Match goes public, IAC will have more than 50 percent control of the company. From the filing:

“As long as IAC owns shares of Class B common stock representing a majority of the total voting power of our outstanding capital stock, it will be able to control any corporate action that requires a stockholder vote, regardless of the vote of any other stockholder.”

Since 2009, Match Group has spent over $1.28 billion in order to acquire 25 brands for its dating portfolio, most recently, PlentyofFish in a deal for $575 million that is expected to close sometime in Q4 2015.

JP Morgan, Allen & Company, and Merrill Lynch, Pierce, Fenner & Smith Inc. are underwriting Match’s public offering.

Additional reporting by Ken Yeung.