Finances

MeetMe is a smaller player in the social networking space, but it has undertaken a number of initiatives to boost its customer base. Looking at the company's financial results for the second quarter of 2015, they appear to be paying off.

Highlights of Q2 include:

• Mobile revenue was $8.3 million, up 47% from the second quarter of 2014
• Mobile revenue represented 75% of total revenue, the highest in MeetMe's history
• Total revenue was $11.1 million, up 4% from the second quarter of 2014
• Cash and Cash Equivalents totaled $16.2 million at June 30, 2015
• Net income was $1.2 million compared to a net loss of $1.4 million for the second quarter of 2014

We're halfway through 2015 and IAC has good news to share. The company's profit in Q2 2015 exceeded expectations, thanks in large part to the overwhelming success of the paid version of its mobile app Tinder.

Match Group, the star of the conglomerate, has driven consistently strong results for the last few quarters, and this one has been particularly momentous. IAC announced its intent to pursue an initial public offering of less than 20% of the common stock of the Match Group. The IPO is expected to be completed during the fourth quarter of 2015.

“The IPO positions The Match Group for continued success with an independent currency, and allows us to focus our attention and capital on growing the rest of IAC’s assets,” said IAC CEO Joey Levin in a statement.

The Match Group also announced plans to purchase PlentyOfFish for $575 million on July 14, 2015. The transaction is expected to close early in the fourth quarter of 2015.

The paid version of Tinder, launched in March, has garnered good responses from users, despite concerns from many that the model would fail.

"Monetization continues to perform at or above our expectations on key metrics like renewal, conversion and resubscription rates,” said Match Group Chairman Greg Blatt. “We’ve seen no discernible negative correlation between monetization and growth."

IAC reported that the number of paid subscribers for its dating services grew 18% to 4.1 million in the second quarter ended June 30. Revenue at Match Group, which accounts for about a third of total revenue, rose 19%.

Outside of IAC's dating businesses, the company has other successes to report. Within Search & Applications, Applications queries increased 8% driven by 20% B2C growth. B2C revenue increased 18% versus prior year. In the Media segment, Vimeo grew paid subscribers 25% to nearly 630,000. In the eCommerce segment, HomeAdvisor revenue grew 26%.

On the downside, Websites revenue decreased 20% due primarily to a decline in revenue at Ask.com and certain legacy businesses. Applications revenue decreased 2% due to lower revenue in B2B. Revenue in Media was down 1% versus last year, despite the strong growth at Vimeo. Operating income for the match Group in the current year period was negatively impacted by a $4.2 million year-over-year increase in amortization of intangibles.

All in all, revenue growth clocked in at 2% for a total of $771.1 million. IAC's net income was $59.3 million, or 68 cents per share, compared with a net loss of $18 million, or 22 cents per share.

Late last year, a lawsuit was discreetly filed by Spark’s popular niche dating website JDate against dating app JSwipe. According to Forbes who broke the story, JDate claimed that JSwipe was infringing on the company’s trademark “J” by using it in the name of their app.

JDate isn’t the only Jewish online dating website that caters to the Jewish community and uses the letter “J” in its offerings. There is also JCrush, JWed, JPeopleMeet, Jewish Café, and Jewcier to name a few. In fact, it seems difficult to name a niche dating app catering to the Jewish community without using the letter J. But there is more to the story, which potentially puts all online dating sites and apps in danger of patent infringement.

In the lawsuit, JDate also claims it owns the patent on software that “confidentially determines matches and notifies users of mutual matches in feelings and interests.” JSwipe is similar in its process to Tinder, which also notifies users when matches swipe right on their picture. This is in violation of JDate’s patent.

Why then has JDate not sued other websites or dating apps, since this is such a broad definition of matching that almost every dating app and website uses? Notifying users of potential matches is the bread and butter of online dating. Why not go after an app like Tinder?

The key might lie in the competition JSwipe presents, especially if it is gaining market share in the niche online dating space. According to the Forbes writer who broke the story, JSwipe’s founder David Yarus confidentially confessed the lawsuit to him, though he is forbidden from discussing details. Instead of accepting JDate’s acquisition offer (which he considered too low), he decided to fight the lawsuit rather than sell. (For all you fans of Silicon Valley on HBO, this sounds vaguely similar to Pied Piper’s plight as an up-and-comer in the tech world.)

But JDate might have a case against JSwipe. According to Forbe’s research into intellectual property law, the language used in JDate’s patent was registered in 1999, and it is broad – broad enough (as mentioned earlier) to cover most dating websites and apps on the market today – so they could essentially claim IP infringement over any other company in the space. According to analysts, this might be a move by JDate to acquire JSwipe for a steal. Chances are if they tried to sue Match or Tinder, those companies' lawyers would be able to fight and win. JSwipe is too small a player.

Using the letter “J” in a dating app or website is apparently less clear-cut in legal terms. JDate would have to find evidence that users confuse Jswipe with JDate, which means asking users to testify that they thought Jswipe was part of JDate, or somehow affiliated, which would be trickier and more time-consuming.

JSwipe is fighting back. They have set up a crowdfunding website and asked for Jewish lawyers to take them on pro bono. 

For more on the Spark Networks dating site, you can read our review of JDate.

Anupam Mittal, Founder and CEO of Shaadi.com, has stepped down from his role as CEO of the company. According to reports, he will now focus on Shaadi's corporate developments, new businesses, and international expansions. Gourav Rakshit, former chief operating officer, will take over Mittal's role as CEO of Shaadi.com.

“Day to day responsibilities will now move to Gourav, while I still continue to guide the company with a focus on corporate development and acquisitions,” said Mittal.

Rakshit, who has already been looking after day to day operations of the venture, will take on full responsibility for Shaadi.com. He is an MBA alumnus of IIM-Ahmedabad who has held various positions at Shaadi since October 2007. Previously, he worked at Infosys, Planetasia, and Nestle.

The change comes after a few major moves in Mittal's world. His People Group, which includes app store Mobango and mobile media firm Mauj, merged its property listing portal Makaan with online property broker Proptiger for an undisclosed sum. Makaan continues to operate as an independent entity following the deal.

In January this year, People Group acquired a 25% stake in dating app Thrill, which merged with People Group's dating website Fropper.com.

People Group hopes its next big move will be a new round of funding for Shaadi. The company is looking for at least $100 million to finance its expansion plans.

In preparation, Shaadi has hired Aditya Save, former head of Marico's global centre of excellence for digital and media, to replace Abhishek Maloo as chief marketing officer. Maloo will join Mittal in the corporate development team.

Finally, Shaadi has brought on Ketan Doshi as chief technology officer. Doshi is an IIT-Bombay and Stanford graduate, as well as the former director of product development at BMC Software. Both Save and Doshi will report to Rakshit.

Mittal started Shaadi.com in 1996 before forming People Group to look at other opportunities in the technology arena. He is an active angel investor who has contributed to over 60 startups. According to reports, Shaadi has made over 3.2 million matches as of 2013.

IAC is no doubt a leader in the dating market, with such prominent online dating brands as Match.com, Tinder, and OkCupid, which make up a company subsidiary called The Match Group.

The Match Group has announced its plans to launch its first IPO, making the company available for investment dollars from the general public. Match.com has long been a cash cow in the online dating industry with its paid subscription service, and Tinder with its new premium paid service has been reported to be worth about $1 billion by the end of the year. In fact, the combined revenues of all the companies in The Match Group accounted for nearly one third of IAC's overall revenue in the most recent quarter. They're also growing rapidly, surging 13% year-over-year in the most recent quarter to about $239 million.

Greg Blatt, Chairman of The Match Group said in a statement: "The Match Group is poised for substantial growth in the coming years. The dating industry has come a long way since its inception, but the category remains underpenetrated.  We believe the combination of our more established businesses such as Match, Meetic, and OurTime, and earlier stage businesses such as Tinder and OkCupid, creates an attractive combination of significant cash flow generation, strong margins and meaningful growth potential.” 

This comes at a good time, as Zoosk recently pulled its plans to launch an IPO, leaving the dating space wide open for potential investors. Ashley Madison, a dating site for infidelity, was quick to throw its hat in the ring, too. They are planning a second attempt at an IPO for later this year after a forfeited attempt in 2011.

The Match Group joins other prominent and publicly traded online dating services, notably Spark Networks, which owns several niche dating sites such as JDate, Christian Mingle, and BlackSingles.com, as well as Jiayuan.com, the largest online dating site in China.

After the IPO, investors will be able to buy stock in the company, although the ticker symbol is not yet known. Notably, IAC made the decision to split The Match Group from its parent company to do the IPO.

Barry Diller, IAC’s Chairman and Senior Executive said in a statement: "As many know from our actions over the last 20 years, I'm not a believer in simply agglomerating assets in perpetuity.  I've long felt that as entities grow into size and maturity it's healthy to give them separation and independence from a mother church.”

Spark Networks – owner of ChristianMingle.com, JDate.com, BlackSingles.com, and more – has released financial results for the first quarter of 2015.

Revenue in the first quarter of 2015 was $13.5 million, a decrease of 19% compared to the year ago period and a 5% decrease from the prior quarter. The decrease was primarily driven by a 25% drop in average paying subscribers, particularly in the Christian Networks segment.

Direct marketing expenses in the first quarter of 2015 were $6.1 million, a decrease of 47% compared to the year ago period and an 18% increase compared to the prior quarter. Much of the decrease resulted from a new marketing strategy for Christian Networks.