Investors have recently fallen out of favor with tech subscription businesses, faced with the reality that there is no such thing as infinite growth. From Netflix to Peloton, even the best platforms seem to end up facing commodification. Dating is no exception: Shares of Match and Bumble have fallen an average of nearly 59% year over year through the end of Wednesday. During that time, the tech-focused S&P 500 has lost less than 5% of its value.
Dating the Giant Match Group MTCH ONLY -0.71%
addressed its lifecycle debate directly on last week’s earnings call, fixing the total addressable market excluding China at more than 700 million people. Match’s shareholder letter shows that its total monthly active users last year were close to 100 million, indicating that there is a lot of untapped opportunity. Then again, the company also said that in the US and Western Europe, almost half of its addressable market has tried a dating app at one time or another.
Like other US-based subscription platforms, online dating companies are looking to expand internationally to tap markets where their apps are under-distributed in the past, but they think the opportunity is particularly ripe. Bumble BMBL -8.32%
For example, in India there has been a big push to attract women in particular; while Match has enjoyed great success with its Pairs app in Japan.
But they also seem to be looking to regain attention in older markets where they may have lost some of their luster. Despite the variety of dating apps that cater to everyone from cat lovers to bearded people, large communities are still relatively underserved. Earlier this year, for example, Match launched Stir, an app for single parents. This seems especially relevant in the United States, where more children live with single parents than in any other country, according to Pew Research. And in what Match says is first and foremost a dating app, last quarter its app Hinge released chat starters specifically for the LGBTQ+ community.
Last week, Match said it plans to introduce premium features on Tinder for women later this year. While Tinder is the #1 dating app globally, Match says its revenue features are already more appealing to men in terms of the value they offer. On Bumble’s app, women make the first move. Its indicators have shown that female users may be more inclined to pay for dating apps than men.
Meanwhile, Bumble is looking to expand from dating to friendship and professional networking. On Wednesday, it said it was planning a broader consumer-facing announcement of its friendship feature, BFF, in the third quarter. It also said it will add virtual goods purchases as gifts later this year.
Last year, Match’s Tinder launched Tinder Explore, giving users the chance to search for goals like friendship or tonight’s readiness before they swiped. Last year, they also purchased South Korea-based Hyperconnect, a company focused on social and video discovery. It plans to apply its technology across its app portfolio as demand for video explodes on apps like TikTok and even video-focused dating apps like Snack.
Match said last week it would welcome a new chief executive officer, Bernard Kim, at the end of the month, replacing former Tinder CEO Shar Dubey. Mr. Kim’s background at video game developers Zynga and Electronic Arts suggests that Match will focus more on social and exploration gaming in the near future. Jefferies analyst Brent Thill estimates the social discovery market could be twice the size of dating.
It is not even though the more traditional dating platforms have taken to the grasslands. Amid a sea of tech companies suddenly shifting their focus from growth to profitability, Match and Bumble made money last quarter — and not just on an adjusted basis.
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Match increased user revenue by 20% in the first quarter, with Tinder increasing revenue by 18% year over year. Bumble said its total revenue for the first quarter grew 24%, while revenue from the Bumble app surged 38% – better than Wall Street had forecast. That at least sent Bumble’s shares up 10% in after-hours trading on Wednesday, even though they’ve fallen 65% over the past year when it announced quarterly earnings.
Both companies warn the current quarter will bring a number of different difficulties, such as the war in Ukraine, macroeconomic challenges and perhaps most worryingly, tensions with Google over how to handle the issues. payments on its mobile operating system, all of which may have some short-term impact. evolution.
Dating Investors seem bored with the status quo. Match and Bumble will have to give them another reason to fall again.
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