Parent company for Match.com, Tinder, and OkCupid to go public

Match Group, home to a variety of dating startups like Tinder, Match.com, and OkCupid, has filed to go public. The company will list on the NASDAQ under the ticker symbol $MTCH and hopes to raise at least $100 million.

A wholly-owned subsidiary of IAC/InterActive Corp, Match Group is a conglomerate of popular dating products.

In total, the company owns 45 brands including the aforementioned Tinder and OkCupid, as well as, Meetic, Twoo, OurTime and FriendScout24. Perhaps a more lesser known fact is that it also owns The Princeton Review, Match Group’s only non-dating business. The company’s dating products are predominately distributed in the North America and Western Europe, however they span more than 190 countries total.

Match Group caters to roughly 59 million monthly active users, 4.7 million of which are paid users. Its products also seem to be striking a chord with younger users: More than 60 percent of its users identified as under 35 years old. That’s a significant increase from 2011 numbers, when a little more than a third of its users were under 35. Between the quarter that ended in September 30, 2011 and until the same quarter in 2015, monthly active user growth increased 63 percent while paid member count grew 23 percent.

The company estimates that its total target demographic is approximately 511 million strong.

In 2014, the company earned $799 million in revenue from subscriptions (most came from users in North America); another $36 million in revenue came from advertising. In the last two years the Match Group has seen an increase in revenue of 13 percent from 2012 to 2013, and then another 11 percent increase in revenue year over year from 2013 to 2014. International markets make up a third of its overall revenue, showing lots of room for growth overseas.

The average revenue per paying user in 2014 was listed at $0.60 in North America while it was slightly higher at $0.68 everywhere else, which could indicate that there’s more engagement internationally than within the confines of North America.

The majority of cost to the Match Group is from selling and marketing its products ($335 million in 2014), which represents 42 percent of its total spending.

The Match Group’s IPO faces some risks: There is a lot of competition in the dating space, though Match Group does own some of the most buzzworthy platforms. The company also identifies distribution as a potential problem, if a product is somehow restricted from being able to reach its audience by an app store or other digital marketplace. For instance, Tinder uses a Facebook account information help new users login. If Facebook substantially changes its terms and conditions in a way that affects Tinder’s ability to onboard customers, it could negatively impact Match’s business.

Perhaps more importantly, Match Group lists hackers as a potential issue:

“We may not be able to protect our systems and infrastructures from cyber attacks and may be adversely affected by cyber attacks experienced by third parties,” the company noted in its S-1 filing. Cyber threats have caused a problem for a number of companies recently including Sony and fellow dating site, Ashley Madison. The cost of leaked user data can be enormous, especially considering the sensitive nature of Match’s products.

Other risks include government regulations and also potential litigation brought against the company, such as a lawsuit by disgruntled daters, one alleging ineffective user security by a user who was stabbed by a match, and a $1.5 billion class action case in 2013 against Match.com brought by a model that claims there’s fake profiles on the dating site.

But of concern for potential investors may be IAC’s stake in the company. Not only is it listed as the sole shareholder on Match Group’s S-1 filing, but IAC will own all of the company’s Class B common stock, which gives it a 10:1 voting power ratio. Once Match goes public, IAC will have more than 50 percent control of the company. From the filing:

“As long as IAC owns shares of Class B common stock representing a majority of the total voting power of our outstanding capital stock, it will be able to control any corporate action that requires a stockholder vote, regardless of the vote of any other stockholder.”

Since 2009, Match Group has spent over $1.28 billion in order to acquire 25 brands for its dating portfolio, including OkCupid, Meetric, Twoo, and PlentyofFish. The last one is a recent deal for $575 million and Match Group says that it anticipates the acquisition will close sometime in Q4 2015.

JP Morgan, Allen & Company, and Merrill Lynch, Pierce, Fenner & Smith Incorporated are underwriting Match’s public offering.