Tinder’s parent company IAC announced on June 25 that it intends to pursue an initial public offering of The Match Group.
According to IAC, The Match Group will issue less than 20 per cent of its shares in an IPO which should be completed by the fourth quarter of 2015. The company’s remaining stake in the unit, which controls not only Tinder and Match.com, but also The Princeton Review, will be represented by high- and low-vote common shares. Barry Diller, IAC’s chairman, said in a statement that he does not believe in “simply agglomerating assets in perpetuity.” The senior executive also added that over the last 20 years, IAC and its “progeny” have gone from a base of US$275 million to a current shareholder value [of all its seven public companies] of more than US$44 billion.
Giants such as Expedia and TripAdvisor used to exist under IAC’s umbrella at a certain point, but they are now traded on the public market. Since 2008, IAC has quadrupled in value and The Match Group represents one of the engines that led the growth. Greg Blatt, chairman of The Match Group, stated that “the dating industry has come a long way since its inception,” but assured that “the category remains underpenetrated.” The Match Group chairman added that the company he leads “is poised for substantial growth in the coming years.”
However, the IPO is not the only change IAC announced; the company named Joey Levin, who previously managed the conglomerate’s search business, CEO –the first one since 2013, and revealed that finance chief Jeff Kip is resigning from the company to spend more time with his family in Boston. However, he will remain with IAC for a given period to help with transition to a new CFO. Greg Blatt will remain Chairman and Sam Yagan chief executive of The Match Group.
Dating apps are expected to pull in US$628.8 million and, since The Match Group has approximately a 22 per cent share of that market, it comes as no surprise that there are a lot of plans for the company in the foreseeable future. IBISWorld has recently concluded that dating sites in the United States are expected to make US$1.17 billion.
The Wall Street Journal cited Britanny Carter, analyst for the research firm saying that the online-dating industry has matured –in terms of revenue-, but there are a lot of players and not many of them are creating “sufficient revenue for these sites.” This industry is not challenge-free, especially since people do not usually push their friends to join a dating site, even if the stigma is not as strong as it used to be. Plus, dating properties cannot easily build up a consistent happy customer base, because they cannot control the level of customers’ satisfaction after using their services.
There are over 500 dating apps only in Apple’s App Store, which means competition is tough and an increasing number of such businesses are now trying to cater niche clients. For example, there are services created exclusively for people seeking extramarital affairs and there are other services for high-end clients. Plus, as Mark Brooks, CEO of Courtland Brooks, adviser to dating companies, told The Wall Street Journal, there has not been yet a significant win for venture investors in terms of an IPO.
“We need a success story” and The Match Group could be it, Brooks concluded.
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