Match Group (NASDAQ:MTCH) is the market leader when it comes to online dating apps. The company is most known for the Tinder app, which is popular all around the world. However, Match Group owns a portfolio of 14 dating apps including Hinge and Plenty Of Fish. On the other hand, Bumble (NASDAQ:BMBL) is a much more focused company relying primarily on its namesake Bumble app.
In this video from Motley Fool Live, recorded on Feb. 17, Motley Fool contributor Luis Sanchez, Motley Fool analyst Meilin Quinn, and Industry Focus host Nick Sciple discuss Match Group, Bumble, and the online dating industry.
Nick Sciple: Match Group, that's the big dog in the space, the top dog and first mover, to use the David Gardner Rule Breakers language. Meilin, I know you've done some work on Match Group, analyzing this company. Just a high-level, can you compare and contrast Match Group from Bumble, the company which we've been talking about so far?
Meilin Quinn: Definitely, yeah. I've looked a little bit into Match Group, I'm a fan of the company. One thing that comes to mind, I am a recent college graduate, I remember being surprised that many of my peers were using the Hinge app. Hinge is owned by Match Group. Match Group owns Hinge, Tinder, Plenty Of Fish, and a handful of other well-known dating apps. I was surprised that Hinge was gaining traction because it again seemed like so much effort. I'm pretty sure you have to answer certain prompts about yourself on your profile. In order to match with someone, you have to respond to one of the replies they give to one of those questions. [laughs] It seems like it's something you can't really be too lazy about unlike Tinder, but I noticed it's gaining traction. If you look at Match Group's quarterly numbers, Tinder has been growing its user account pretty rapidly and it actually just turned profitable in quarter 2 of 2020. So being profitable for Hinge is at least one thing, Hinge has that, Bumble does not, although Hinge is a much smaller brand than Bumble. But I would say the biggest differentiator between the two stocks or two companies is just Match Group's portfolio approach to dating apps.
Sciple: Yeah, just sheer scale. You look at Bumble's market cap, I called it out a little bit earlier, about $9 billion. Compare that to Match Group in the $43 billion to $45 billion range depending on where it's trading today, there's been some volatility in the market of Match Group. You mentioned Hinge as part of Match's portfolio, they do have 14 properties. As you mentioned, Hinge is probably the most directly analogous as far as competing with the market that Bumble is going after, these more committed relationships, those sorts of things. Hinge's tag line is "the app that's designed to be deleted," and there's really been some exciting growth from that property to your point. I pulled some stats Hinge estimated to have tripled revenue in 2020, estimated to have grown its user base 20 times since Match acquired the company, it was something that was treading water before Match acquired them. But the story for Match, while we have seen a lot of positive growth and development in some of these non-Tinder properties particularly Hinge, the story of the company is still driven in a very significant way by Tinder or Tinder has the highest grossing app on the App Store, has been for a very long time, drives 56% of revenue. Luis, when you talk about the importance of Tinder to Match as a business, is there a way to understate how much Tinder is driving the bus for this company today?
Luis Sanchez: It's the majority of the company's revenue. [laughs] One app, so it's a portfolio of assets like 14 apps, but this one app has just really taken off. However, in the past couple of quarters, we've actually seen the non-Tinder side of Match's business grow faster than Tinder. That's actually been a really interesting development that has caused people to realize that, "Hey, this company is more than just Tinder." You have to think about how this company was formed. It goes all the way back to 1995 when it was just Match.com, and slowly they've added so many of these other apps. They've added OkCupid, Plenty Of Fish, Tinder, Hinge. It's really interesting to see that they could actually reaccelerate the growth of some of their older apps by taking some of their learnings from an app like Tinder and saying, "Hey, this monetization feature, people seem to really like it on Tinder. Let's see if people like it on Match." They started this new initiative during the pandemic to do more video, and they experimented with that and they found, "So people in OkCupid or Plenty Of Fish really like video, I wonder what happens if we add video elements to Tinder." Tinder really is a driver, but it is interesting how the company uses its different assets to collect data and to make the whole portfolio better.
Sciple: They have all these little incubators around these different assets that the company owns. That brings me to a topic we were discussing a little bit before we taped the show, this idea of Match, which has historically been a very acquisitive company. You can almost call it a roll-off in the online dating space, doubling up lots of different companies versus Bumble, which you could say it's maybe innovating a little bit more. They were the first mover on Bumble's Bee line product, it was actually something that Tinder imitated with Tinder Gold. Is that a fair distinction to think about Bumble as the innovator in the space and Match Group as the acquirer? Or are we just not giving Match Group enough fair credit for the work or the innovations that they're doing? Meilin.
Quinn: I think it's clear that Match is making efforts to innovate. You mentioned, Luis, Match is reaching into live-streaming through its Plenty Of Fish platform, and they just acquired a company called Hyperconnect, and that offers some more live-streaming video capabilities. I don't know if I'd necessarily say that Bumble is more of an innovator than Match Group.
Sciple: What do you think Luis?
Sanchez: I think it's really hard to say because they're all copying from each other and running their different experiments. I think the Hyperconnect acquisition is really interesting because they're acquiring really popular apps in Asia where they might do things a little bit differently. Hyperconnect isn't as much a dating app as it is just like a live streaming and social app, but there's definitely some interesting things you could learn about the way that they use their apps in Asia and the way that even companies like TikTok operate, like the algorithms. There's so much happening that you could just look across different types of apps. Another thing that's really interesting about Match is that it used to be part of IAC, and it was spun-off partially in 2015, and the last 80% of the company was spun off last year. It's interesting. IAC is a rollup of a lot of different apps across different categories including Angie's List and Expedia. You just got to think that there are probably things that IAC learned at Angie's List that they applied to Match and vice versa. It's hard to say where the innovation is coming from, it might not even be coming from other dating products, right?