COVID-19 has changed the world forever. With social-distancing guidelines and lockdown mandates, many have been unable to be social and meet new people under normal circumstances. It has also made it difficult for folks who wanted to begin dating. Match Group (MTCH -0.84%) -- owner of Tinder, Hinge, OkCupid, and several other popular dating platforms -- initially saw a dramatic decrease in usage of its services, but eventually, daters came back in large numbers.
Match Group's COVID-19 impact
April was a slow month for Match Group after people dropped everything (including dating) to stay safe. After a sharp initial decline, the company saw a steady recovery in its business over the following months. The rebound happened across the board, with increased usage from most demographics including young adults, females, and older males.
Image source: Getty Images.
Across its dating platforms, Match Group is maintaining an average of 10 million subscribers, which included 6 million from Tinder alone. In fact, Tinder usage quickly surpassed its pre-COVID-19 levels. International markets like India and Brazil were two of the worst-impacted markets during the lockdowns, yet these hard-hit regions were also able to recover.
The longest-standing brands in Match Group's portfolio showed signs of increased usage and engagement during the second quarter. Platforms like Match, Affinity, OkCupid, and Plenty of Fish all notched revenue growth for the first time in four years.
This just goes to show that people still crave the human connection, and if it is not safe to meet in person, they will find other means. Match Group has been a bridge to serving those needs and the boost it is getting during 2020 will likely result in strong customer loyalty in future years as well.
Financial impact
Match Group's financial performance during the pandemic demonstrates the business model's resiliency.
| Metric | Q2 2020 | Q2 2019 | Change |
|---|---|---|---|
| Revenue | $555.5 million | $498.0 million | 12% |
| Adjusted EBITDA | $227.8 million | $202.5 million | 13% |
| Diluted earnings per share | $0.51 | $0.45 | 13% |
Data source: Match Group financial reports. EBITDA = earnings before interest, taxes, depreciation, and amortization.
As the table shows, the company saw growth across the board in Q2 2020 compared to 2019. Revenue rose 12%, boosted by an increase in paid subscribers although average revenue per user (ARPU) declined slightly. Earnings before interest, taxes, depreciation, and amortization (EBITDA) jumped 13% as revenue grew faster than expenses.
The strong performance posted during such a precarious period is a bullish indicator of what could come in less uncertain times.
Growth opportunity in video dating
As Match Group celebrates its performance in the second quarter, the company is looking at new ways to change how online dating is done. Recently, its platform Plenty of Fish adopted live video-streaming. Tinder also introduced one-on-one video chat features. There are many interesting features that can be built around video. Right now Tinder is just allowing users to connect with a video chat in lieu of an in-person date.
Video features delivered via online dating platforms could be monetized in interesting ways and help Match find new streams of revenue growth. If anything, video is simply more engaging than text and pictures and would lead to users spending more time on the platform.
It is still early days in the development of Match's video-enabled features, but there is a lot of potentials. This underscores another example of how the company has continued to innovate and find new ways to grow.
Attractive long-term growth
COVID-19 likely accelerated the shift to online dating, as it forced many people who had no other options during quarantine to use it. As recently as a decade ago, online dating was seen as taboo or embarrassing, but as the products mature, it has become socially normalized.
Match Group stands to benefit from the growth in online dating because it dominates the category. But this tech company doesn't rest on its laurels: It is constantly innovating and finding ways to grow and improve its business.
