Cast your mind back to 2004. The year was a big one for the blossoming industry known as social media. Facebook debuted and went on to become the world’s largest social networking platform. Tagged and Hi5 also launched in 2004, and though they remained relatively under the radar, both earned significant revenue through games and paid features.
Tagged purchased Hi5 in 2011. After renaming the parent company ‘If(we)’ and changing its focus to social app development, revenue began to drop. Plans for an IPO were also dropped. Now, six years later, social discovery platform MeetMe has acquired If(we) for $60 million in cash.
If(we) is a social and mobile technology company based in San Francisco with:
- Two leading mobile brands for meeting new people, Tagged and hi5
- A community that spans over 100 countries, and apps that are available in 15 different languages
- 2016 total revenue of approximately $44 million
- Q4 2016 mobile revenue up 56% over Q4 2015. Mobile advertising revenue up 93% in the same periods
- 2.3 million mobile and 5.4 million total monthly active users (MAU) in Q4 2016
- 10.4 million mobile chats per day in Q4 2016
- 18,000 new registered mobile users added each day on average in Q4 2016
The acquisition is part of MeetMe’s mission to innovate, acquire, and build the largest mobile portfolio of brands for meeting new people. Bringing If(we) aboard is expected to provide greater scale for monetization and increased profitability for the new combined company.
Key highlights of the expected scale of the combined company include:
- Mobile MAU of 10.6 million, an increase of 28% from MeetMe’s 8.3 million average in Q4 2016
- Mobile daily active users (DAU) of 2.8 million, an increase of 40% from MeetMe’s 2.0 million average in Q4 2016
- Mobile Chats sent per day of 65.3 million, an increase of 19% from MeetMe’s 54.9 million average in Q4 2016
- Mobile new users per day of 130,000, an increase of 16% from MeetMe’s 112,000 per day average in Q4 2016
- Nearly 1.1 million US mobile DAU
Geoff Cook, CEO of MeetMe, said, “We are very excited to add if(we) and its flagship brands Tagged and hi5 to our portfolio of mobile apps for meeting and chatting with new people. if(we) brings a sizable global community, with strength in the US, to our portfolio. Their mobile apps are experiencing significant revenue growth and we expect that to accelerate in 2017 as we introduce our best practices around engagement and monetization.”
This announcement follows a strong period of growth for MeetMe, with total revenue growth of 34 percent in 2016 and adjusted EBITDA margins of 39 percent. The acquisition is expected to provide significantly increased scale in user base and revenues, and exhibit strong operating leverage. If(we) is predicted to contribute at least $9.0 million of Adjusted EBITDA and be accretive to earnings in the first 12 months post-closing.
“We believe this combination provides a clear pathway to $150 million in annualized revenue with adjusted EBITDA of $50 million for our combined company,” concluded Cook.
For more on this online dating service you can read our review of MeetMe.