Contributed by: kellyseal Wednesday, May 29 2019 @ 09:20 am
Match Group recently paid $9 million in stock awards to Tinder employees, thanks to the stellar growth of its most valuable dating app. But this good news could sour for the online dating giant if it helps former Tinder execs win their lawsuit, led by Tinder’s co-founder Sean Rad.
Rad and other former Tinder employees filed a lawsuit against Match Group last year, claiming it devalued Tinder stock options to avoid paying them billions in stock. The new hefty $9.4 million payout to current Tinder employees, based on the popular dating app’s performance over the last year, could be an indication that Match Group might have undervalued Tinder, as Rad argues in the lawsuit.
Match Group has countersued Rad, claiming that he took proprietary information including emails and other communication when he left the company, against the terms of his employment contract. Rad subsequently filed a motion to dismiss, claiming that his contract allowed him to backup files, including his email.
Earlier this year, website Cheddar reported a $10 billion valuation for Tinder, which would trigger performance-based payouts to the employees. And while Match Group has not stated that it hit this number, the payout is an indication that the goal was met. The bonus was reported in company earnings reports, according to The Verge[*1] .
Two years before, when Rad left the company, Match Group valued Tinder at only $3 billion.
Rad’s lawyer, Orin Snyder, told The Verge that “IAC and Match ripped off the Tinder founders and early employees to the tune of billions of dollars.”
Match Group reported a growth in earnings for the first quarter of 2019, thanks in large part to Tinder. Subscribers of the app totaled 4.7 million, 384,000 more than in the previous quarter and up 1.3 million compared to first quarter last year, according to Tech Crunch.
Match Group’s total average subscribers for its suite of apps – which also include Hinge, OkCupid and PlentyofFish among others - increased 16% to 8.6 million, up from 7.4 million a year ago. Match Group said in its earnings statement that total quarterly revenue grew 14% year over year to $465 million.
Match Group has been aggressive in acquiring dating apps and going head-to-head with Facebook Dating, appealing to various types of daters by differentiating its suite of apps. Tinder is focused on a younger, more casual dating demographic whereas OkCupid and Hinge are focused on daters looking for relationships.
Most recently, Match Group has been targeting Asia for its growth potential, and appointed three new executives to help grow markets in India, Japan, and Southeast Asia.