In this segment from Motley Fool Money, host Chris Hill and analysts Jason Moser, David Kretzmann, and Andy Cross review a couple of winners in the online universe.
First up, dating app giant Match Group (NASDAQ:MTCH) reported on an excellent quarter, showing that it has the connections business down to a science. Tinder alone is now on pace to generate more than $800 million this year, and all of the company's key metrics -- like revenue per user and premium user numbers -- are rising sharply. Best of all, it's hardly resting on its laurels.
Next, Trade Desk (NASDAQ:TTD), which provides a different sort of matchmaking: It helps advertisers target customers. For Q2, it pulled in record revenue of $112.3 million, up 54%, and exceeding the analysts' consensus by almost 8%. The Fools consider where it's been, and where it looks to be headed.
A full transcript follows the video.
This video was recorded on Aug. 10, 2018.
Chris Hill: Great week for Match Group, the parent company of Tinder, Match.com and others. Shares of Match Group up more than 30% on a strong second quarter report. And, David, they also raised guidance for the full fiscal year.
David Kretzmann: Ah, the business of love, Chris! It's a wonderful thing. So much of this success is due to Tinder. Over the past four years -- when they just started monetizing the business, less than four years ago -- Tinder itself, on its own on, is on pace to generate more than $800 million in revenue this year. For this particular quarter, the number of premium subscribers for Tinder up 81%, subscription revenue up 136%.
Across all of their different dating properties now, match.com has nearly eight million global subscribers. Average revenue per user was up 8% worldwide this quarter. Total paid users up 27%. I also like the fact that the company isn't just sitting on their hands. They have an internal incubator where they're supporting start-ups and new projects within that dating space. They're not resting on their laurels, by any means.
Hill: In terms of the growth opportunity from here, is it still here in North America? Or is it outside?
Kretzmann: I'd say, within North America, you don't necessarily need to see more penetration, but you will continue to see them try to drive that average revenue per user up through the premium side of Tinder, with Tinder Plus and Tinder Gold. Internationally, I think there's a lot more room to increase penetration. In markets like Japan, where there's still a stigma around online dating, it's a matter of getting people onto those platforms. Once you have that audience, you can start to look at direct monetization.
Hill: Trade Desk is in the business of advertising technology, and cousin, business is a-booming. Shares of Trade Desk up 35% on Friday after second quarter revenue came in at a record $112 million. Andy, they keep this up, I don't think it's going to be a company record for very long.
Andy Cross: What a monster quarter. Actually, this is their second monster quarter in a row, now. Like you said, business is booming. When you think about the digital, the programmatic -- what Trade Desk does is, they offer technology to ad agencies and buy-side clients to basically make the bidding process for advertising, both online and offline, too, as they think about growing more toward programmatic television -- which is a big growth market. In the advertising market, televisions are a third of all spending. Very little of that is programmatic.
When you think about all the advertising we are exposed to, it's a $700 billion business. The programmatic side is growing 20% per year. Trade Desk is growing twice as fast as that, sales were up 54%. It's profitable. Jeff Green, the founder and CEO, owns 15% of the business. They are building tools for their clients, their clients are seeing the value there, and they are spending more and more money across those platforms. It's clearly working for not just Trade Desk the business, but for shareholders as well, who today are seeing a really nice pop in the stock.
Hill: Shares of Trade Desk, you look at the rise, you look at the market cap of Trade Desk, it's just north of $5 billion. Alphabet has that in pocket change. Are they going to be at target to be acquired, do you think?
Cross: They might, but here's a nice thing, Trade Desk really prides itself on independence. They are a technology company that's independent, there's no conflicts, they don't own the inventory. They just basically match up the buyers with the sellers of that inventory, and they really pride themselves on that. We talked about the Disney streaming, those kinds of properties, more and more of the bundles, the skinny bundles, the streaming services, that all speaks really well to the opportunity for Trade Desk.
If you look at where they're going, they're using more and more augmented intelligence and AI to drive their suggestions for their clients. They really are pushing both the technology and the media side in really healthy ways, and that's doing really well for their business right now.
Kretzmann: To me, it's really impressive, what they've been able to accomplish over the past few years, being profitable from a very early stage. When you look at the advertising technology space, which Trade Desk operates in, it's littered with a ton of companies that failed or really struggled after going public. But Trade Desk is really bucking those trends.
To Andy's point, when you're talking about the potential for a larger company to acquire Trade Desk, Jeff Green, founder and CEO -- who has about a 15% stake, like Andy mentioned -- strikes me as the type of person who wants to stick it out as an independent company. Having that healthy stake probably means they can be independent for a long time.
Cross: I'll just follow up with, the international business is really taking off. Jeff Green took the conference call from Hong Kong. To be able to reach out to more and more clients, more ad agencies, as well as other clients, is really attractive around the world for Trade Desk.