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Online dating giant seeks investors for rich IPO

Match Group -- part of IAC/InterActiveCorp (IACI) and owner of dating sites OKCupid, and dating app Tinder -- is the latest tech firm seeking to go public. IAC's plan is to spin off Match, which will raise a currently estimated $100 million. IAC has a history of acquiring or building businesses, such as TicketMaster and Expedia, and then spinning them off into separate entities.

At the same time, a reworking of the stock structure will leave IAC with voting control and the ability to direct the company. The amount of distance between IAC and Match Group going forward is a question, as Match will contract with IAC for "administrative and other services."

Unlike many tech firms that are eyeing an IPO but haven't figured out how to make money yet, the 14-year-old company generates serious revenue as well as profits. The question is whether it will have the growth rates that endear technology companies to Wall Street.

Here are some of the highlights of Match's SEC filing:

  • The company has serious revenue. In 2014, the company had $888.3 million in revenue. For the first six months of 2015, revenue was $483.9 million, compared to $421.7 million for the same period last year.
  • Match makes money. The company had $148.4 million in after-tax profit last year. In the first six months of 2015, net earnings were $49.3 million, compared to $49 million in 2014, so profits for this year seem on track to be close to the same as last.
  • The company aims for a $1 billion size. The filing included an analysis of the 12 months preceding June 30. Revenue was $1 billion for the period, suggesting that revenue is weighted more heavily in the second half of a typical year and that Match might hit $1 billion in revenue this year.
  • Growth. Wall Street loves to see technology companies grow rapidly. Match Group doesn't have that characteristic. But growth between 2013 and 2014 was 10.6 percent. Given the profitability, that seems healthy and sustainable, if not dazzling. Growth between 2012 and 2013 was 12.6 percent.
  • Network of social networks. In a way, you could say that Match and its list of 45 brands have been in a particular form of social networking for a long time. The company claims 59 million monthly active users across 38 languages and 190 countries.
  • They depend on a small percentage of paying customers. Of the 59 million average monthly users, only 4.7 million pay to use the services. That means the company depends heavily on 8 percent of its customers for income. The good news is that unlike other social networks, the revenue per user internationally is actually higher than the revenue per U.S. user, so further expansion globally wouldn't offer a decreasing yield.
  • Ads could be a growth area. The company said that advertising revenue has never been a "substantial focus" and that they should be able to increase money from ads. For example, in 2014, $799.5 million of revenue came directly from users and $36.9 million was from advertising. That could offer the potential for revenue growth that investors might want.
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