Impact of App Store Fees on Match Group's Financials

This is Matt Reustle and today we are breaking down the giant of online dating. Even if you found love the old-fashioned way, you're likely familiar with the Match brands like Tinder and Hinge, amongst many others.

To break down Match, I'm joined by George Hadjia, founder of Bristlemoon Capital. George goes through a background on this industry, what made Match who it is today, and all of the key debates that are driving this stock and all the commentary around it. Please enjoy this breakdown of Match Group.

Read the Bristlemoon Capital MTCH Report.

Interested in hiring from the Colossus Community? Click here.

For the full show notes, transcript, and links to the best content to learn more, check out the episode page here.

-----

This episode is brought to you by Tegus Converge — the first virtual event centered on the world of investor research. When twin brothers Tom and Mike Elnick realized that the research process for investors was broken, they founded Tegus to fix it. Now the people behind the most trusted research platform are bringing institutional investors together to investigate the state — and the future — of fundamental research. On November 8th, join industry luminaries like IGSB Founder Reece Duca and Daniel Gross, AI Expert, Entrepreneur and Investor, to dig into the latest research trends and breakthrough technologies shaping the investment landscape. Register today at tegus.com/register.

-----

Business Breakdowns is a property of Colossus, LLC. For more episodes of Business Breakdowns, visit joincolossus.com/episodes.

Stay up to date on all our podcasts by signing up to Colossus Weekly, our quick dive every Sunday highlighting the top business and investing concepts from our podcasts and the best of what we read that week. Sign up here.

Follow us on Twitter: @JoinColossus | @patrick_oshag | @jspujji | @zbfuss | @ReustleMatt | @domcooke

Show Notes

(00:03:10) - (First question) - George’s response since releasing his recent report on Match

(00:04:55) - A general overview of the online dating market

(00:10:55) - Comparing the different brands within the dating app industry  

(00:14:10) - The reason for the existence of so many niche brands in the market

(00:18:55) - The different avenues for these brands when it comes to monetization 

(00:21:25) - The breakdown of revenue per customer and the different tiers dating apps offer 

(00:24:10) - Customer turnover due to the nature of dating and how the retention rate differs between the different apps

(00:28:40) - A snapshot of how the industry has been growing over recent years

(00:29:50) - Determining normalized earning profiles and margins when taking into account the lack of marketing spend historically

(00:32:40) - The historical percentage of revenue that goes into marketing expenses

(00:35:10) - How Bumble’s advertising expenditure differs from Match Group brands

(00:36:40) - Price competition between different brands and a look at Tinder’s introduction of premium monetization tiers

(00:39:20) - Dissecting top-line growth and the percentage due to recent price increases 

(00:40:10) - An overview of the business’ capital allocation and how they intend to invest in the growth of the business

(00:42:50) - The new management team’s strategy and how it differs from the previous regimes

(00:46:25) - Potential changes to Apple app store fees and how it could affect the business 

(00:51:10) - A forward outlook at where George expects the business to go in the coming years

(00:54:40) - The key risks to the business moving forward

(00:57:20) - The threat that Facebook poses in terms of its entry into the market 

(01:02:20) - The lessons learned from researching Match