Tinder

Match Group released first quarter 2016 financial results on May 3. The company went public last November, and in its first earnings announcement as a publicly-traded company, Match Group fell short of earnings estimates by 5.3%. This time around, things are looking up.

Match Group reported sharply higher sales and profits in Q1 2016. Last quarter, the company’s dating revenues rose 14%, driven by a 30% increase in paid members. With that momentum, Match Group continued to perform well. Highlights of the quarter include:

• Total revenue rose 21% year over year to $285 million
• Dating revenue grew 24%, led by strong contributions from Tinder and PlentyOfFish
• Adjusted EBITDA nearly doubled over the prior year to $64.6 million
• Average PMC (paid member count) grew 36% to 5.1 million
• Tinder surpassed 1 million PMC as of the end of the quarter and successfully launched its first à la carte paid feature
• Operating income was up 8%, reflecting the strong Adjusted EBITDA growth
• Adjusted Net Income increased 30% as a result of the increase in Adjusted EBITDA
• Cash Flow nearly doubled to $68.5 million, while operating cash flow increased 88% to $75.0 million

Leading the charge is Tinder. “Tinder is really killing it. The numbers are great,” said Chairman and CEO Greg Blatt in an earnings call. “We're spending a lot of time improving the core product experience, experimenting with new product experiences, and yet continuing to rollout modernization initiatives, each of which has basically exceeded our expectations at the time of rolling it out.”

Along with its successes, the quarter saw Match Group slip in a few areas. Average revenue per paying user (ARPPU) declined 10% to $0.54, mostly due to the growth of relatively low-cost services such as Tinder, as well as the continued shift to mobile platforms. Non-dating revenue was flat at $25 million as a result of lower SAT test preparation course volume at The Princeton Review.

Looking forward, Match Group management expects second quarter dating revenue to grow by between 4% and 5% compared to Q1, with EBITDA margin percentage in the low to mid-30s. For the full year, the company predicts total dating revenue between $1.1 billion and $1.14 billion and overall adjusted EBITDA between $410 million and $425 million.

"Match Group posted very strong revenue and adjusted EBITDA growth in the first quarter, driven by exceptional growth at Tinder, solid performance of Meetic and Match, and the PlentyOfFish acquisition," Blatt said in a press release. "We expect solid year over year performance throughout the balance of 2016."

The Match Group list of dating services which we have reviewed include Match, OkCupid, Tinder, and Plenty of Fish.

Last year’s infamous Ashley Madison hack revealed a statistic that seemed to confirm what many already feared about online dating. The site’s database included over 31 million male users and just 5.5 million female users. Of those profiles, only a small percentage were real and active: around 20 million men and 2,500 women.

You don’t need to be a mathematician to know those numbers are bad.

The vast majority of Ashley Madison’s female users were inactive or, worse, not real to begin with. Since then, singles have become even more skeptical of the veracity of women’s profiles on dating sites. SurveyMonkey Intelligence recently put those suspicions to the test by studying which dating apps have the highest proportion of women.

The bottom of the bunch is no surprise: Grindr, an app geared towards gay and bisexual men. Some of the entries farther up on the list are equally unsurprising. Coffee Meets Bagel and Bumble, both female-friendly apps, scored relatively high. Tinder and PlentyOfFish found themselves in the middle of the pack, despite having more users than any of the other apps tested.

But the number one spot is where things get interesting. Topping the list, with a userbase that’s 58.6% female, is Christian Mingle. Christian Mingle, Coffee Meets Bagel, and eHarmony are the only apps that have a majority of female users. Who would have guessed that a niche, faith-focused dating app would rank so highly?

SurveyMonkey Intelligence also found that men and women use dating apps differently. Looking at what percentage of users engage with an app on a daily basis, the results are almost flipped. Grindr is the clear leader, with 70.3% of users engaged each day. Christian Mingle and eHarmony bring up the rear with 33.7% and 28.7%, respectively.

It could be that men are generally more engaged daters than women or, as SurveyMonkey Intelligence speculates, it could down to Grindr’s demographic. Because the app is geared towards a targeted market, Grindr users may stick to one app while other demographics spread their efforts among multiple services.

SurveyMonkey Intelligence tested a variety of other factors (read the full report here) and closed with a few tips. “Straight men may want to check out Coffee Meets Bagel, while straight women can confidently choose between a number of apps where the gender ratio is favorable,” the report advises.

It’s also important to take your dating style into account. If you’re the spontaneous type who wants dating to be part of your daily life, SurveyMonkey suggests trying your luck with the highly-engaged users of Happn. If, on the other hand, you take a more relaxed approach, the more infrequent users of Coffee Meets Bagel could be more your speed.

According to a recent article in Bloomberg News, Tinder expects its paid subscriber base will double by the end of the year.

The Tinder app is free to use, but about 1 million users are currently paying for its tiered service, which provides special features, such as the ability to “super-like” a profile. Super-like allows you to let the person know you think they are extra special, instead of just swiping right as usual. Other paid features include “Rewind” where users can return to a previous profile they swiped left on, or rejected, for the opportunity to choose differently.

Tinder announced recently that it will launch a new social feature to its app to connect groups of friends who share common interests. There is no news on whether that will be part of its free platform or a new paid feature, too.

Gary Swidler, chief financial officer of Tinder's parent company, Match Group Inc., described efforts to monetize the dating app as being "ahead of schedule."

Subscribers aren’t Tinder’s only source of income. The company originally started drawing revenue from ad sales.

Tinder’s huge database of more than 9 million daily users and its well-known brand, especially among the coveted Millennial age group, makes the app a great advertising vehicle for many companies looking to expand their brand awareness. Users of the service spend roughly 35 minutes per day on the app and swipe left or right 140 times, according to company executives. This means a captive audience, which is also appealing to marketers.

While Tinder will continue to sell advertising over its platform (one of the drawbacks of using the free app), they will also push forward with gaining more subscribers and developing more paid features. Tinder garnered criticism last year for charging more money to users over 30, but the company has not since changed its pricing policy.

Because of the growth in Tinder’s revenue, the management team told Bloomberg they feel confident in adding new features to the service and “taking some swings,” in terms of taking chances with the features. The company admitted it hasn’t made any significant changes to the app since adding the “Super-like” feature last November, though recently they were testing the social feature which links you through your Facebook friends to other friend groups and garnered criticism for its lack of privacy. (Users could see their Facebook friends’ Tinder profiles without their knowledge.)

Tinder is owned by Match Group, which also owns popular dating platforms Match, OkCupid, and Plenty of Fish.

There has been speculation that Match Group’s star performer in the online dating space – dating app Tinder – would cannibalize its other online dating companies. But so far, contrary to analysts’ reports, this hasn’t happened.

Tinder is by far the dating app industry giant, with over 25 million active users and about 1 million paid subscribers in its tiered program. Some analysts have feared that because of Tinder’s rapid growth and free platform, it would mean users would leave other popular online dating sites in Match Group (like Match, Plenty of Fish and OkCupid) to join Tinder, making them obsolete.

What they found instead was that Match Group’s overall earnings were up in the first quarter of 2016, thanks in part to the POF acquisition and Match Group’s strategy to grow and invest in Tinder’s rivals.

Overall revenue came in at $285 million in its first quarter, $3 million over expected revenues.

Greg Blatt, chairman and CEO of Match Group, said in the first quarter earnings release: "Match Group posted very strong revenue and Adjusted EBITDA growth in the first quarter, driven by exceptional growth at Tinder, solid performance of Meetic and Match, and the PlentyOfFish acquisition."

Bank of America Merrill Lynch explained that "even without Tinder, Match would have grown its core Dating subscribers by 6% (up from about 1% last quarter) and its Dating revenue by significantly more."

The POF acquisition is an important factor in the revenue numbers. The dating website grew tremendously itself over the years with 70 million registered users, and operated for many years on a shoestring budget with one employee, Markus Frind, who created the dating site and sold it to IAC (Match Group’s parent company) for $575 million in 2015.

Over time if Tinder’s popularity continues to grow, and the app itself makes improvements that resonate with its users, then there could be an impact to Match Group’s other businesses. For now, POF, Match, and OkCupid are still going strong.

One solution that has been floated in the media is for Tinder to advertise other Match Group properties on its app. (Tinder’s revenue comes mainly from paid advertising, rather than its tiered service.)

For the most part, online daters are not beholden to one site or app, preferring to join two or more at any given time. Because of Tinder’s growth, it has grown the entire online dating industry in just three short years, and made online dating a more acceptable practice. Numerous dating apps are launching every week, hoping to cash in on Tinder’s market share and success.

It seems to be a win-win for the online dating industry as a whole, even in a saturated market.

Tinder is looking to be more social – or at least hook you up along with your group of friends to connect with other friend groups out in the real world. The problem? Tinder users are being opted in to this feature by default, so you don't have a choice. Which means Tinder Social automatically displays which of your Facebook friends are also using Tinder.

This can make for some awkward conversation, especially for those who would rather keep their dating practices private.

To make matters more uncomfortable, Tinder Social presents a list of your friends along with their dating app profiles so you can not only see they are using the app, but how they are presenting themselves on Tinder. (Sexy photos, anyone?)

And worse yet, some Tinder users think Tinder Social is a way to meet others for group sex (and considering the whole hook-up reputation, it’s not that far of a stretch).

The new feature is only in the testing stages in certain parts of Australia, so chances are you haven’t encountered the feature just yet. This will give Tinder some time to refine it. The company will need to make some changes to reassure people about their privacy on the app. Over the years, it has stressed to users that their social networks would not be compromised, and that anything they do on the app wouldn’t be seen on Facebook or in their other social networks.

While there’s currently a way to opt out of the friend-finding feature, Tinder users are automatically opted in, so you actively have to disengage. A good fix would be to make it an opt-in feature only, so Tinder doesn’t risk alienating users who didn’t realize their profiles were being put on display among their social media friends.

Finding circles of friends seems to be a new wave in the dating app space, and an untapped market for an already attentive dating app population. CEO of Bumble Whitney Wolfe announced the company would be unveiling a similar group friend-finding feature on their app, and Grouper, a dating app that’s been around for a few years, offers group dates for people who don’t want the pressure of one-on-one dating. There’s also MeetUp, a networking site that has been around for a while to help people find friends in their communities through activities and other interests.

Many other apps are jumping on this new friend-finding bandwagon, hoping to capitalize on the social networking market. We’ll see if Tinder or another app can get people excited about the friend-finding potential of apps.

Millions of singles using dating services each day, searching through a stream of faces in hopes of finding a mate. Pictures have always been an important part of the online dating process, but with the rise of simple, image-centric mobile apps like Tinder, photographs are more important than ever.

New online dating research reveals a secret side to swiping. According to the study, potential dates may be evaluating you based not on your profile, but on the profile they saw before yours.

Huh?

"From an evolutionary perspective, attractiveness is a key social characteristic that determines how approachable or desirable we are. Perceived attractiveness is determined not only by our own attributes but by the attractiveness of people around us," says the study.

Here’s how that relates to your luck on Tinder. If your profile comes after an attractive person’s profile, you appear more attractive as a result and are more likely to score a left swipe. The opposite is also true: if an unattractive face comes before yours, you’re more likely to get a rejection.

Over two experiments, 32 women were shown 60 male profile pictures and asked to rate them as either attractive or unattractive. The images varied in composition, face size, clothing, and background cues. Researchers presumed that all the pictures were intended to attract female attention as they were sourced from heterosexual sections of dating sites.

Each participant looked at a computer screen that presented the profile photos. After about 300ms, they were asked to rate the image as attractive or unattractive. At the end of the experiments, the researchers concluded that profile pictures were significantly more likely to be deemed attractive if the picture in the previous profile was rated as attractive.

"While online dating is popular, and is certainly an efficient (and anonymous) way to sort through potential mates from the comfort of one's own home,” concludes the study, “it may not be quite as reliable as it seems given the recent evidence for sequential dependencies when judging rapid sequences of faces."

As you sort through a string of faces, evaluating each one in the few seconds it takes to swipe, you could be affected by this phenomenon - in which case, your final choice of desirable mate might be one face too late. Is this the start of songs about love at second sight?

The findings are published in the journal Scientific Reports and can be read in full here.To find out more about the dating app you can read our Tinder reviews.