Tinder-owner InterActiveCorp (IAC) believes its new paid-for subscription service “Tinder Plus” has been a hit since it first rolled out in March.
Speaking on the company’s first quarter earnings call, the chairman of IAC’s Match group Greg Blatt said payment and renewal rates for Tinder came in “solidly against expectations.”
The launch of a paid subscription service on Tinder was a risk, principally because it would limit the amount of swipes (right if you like someone, left if you don’t) users on the free version would have. And there are plenty of other free dating apps out there for people to choose from.
In addition, Tinder has also started testing advertising on the free app as another revenue source.
Broadly, analysts seemed pretty positive about Tinder’s ability to make money in the future too, according to notes sent out on Wednesday night and Thursday morning.
JMP Securities was the most bullish: Its analysts think Tinder could add 5% to 2016 revenue. And were Tinder a standalone business, JMP Securities predicts it would be worth $US1.6 billion.
Tinder monetisation progressing, although we expect near-term choppiness. As Tinder launched in March, we are encouraged by Tinder’s payment and renewal rates, which management indicated were strong. While Tinder is seeing strong momentum in paid subscription, we expect IAC to prioritise customer experience over monetisation. Meanwhile, we expect Tinder to roll-out additional ad unit formats in the coming quarters, and as a reminder, Tinder partnered with Bud Light to test a new video ad format this month and management commentary suggests user engagement has been strong.
Credit Suisse says there is “interesting underlying growth” at Tinder, and estimates Tinder Plus had ~100k subscribers since launching in March.
We maintain our LT revenue growth trajectory and margin forecast for IAC’s Match group, as we believe the on-going investments in the non-dating properties and the potential for a Tinder-driven product cycle will result in incremental revenue and profit.
Jefferies says “Tinder monetisation remains the focus” during a heavy investment quarter.
Tinder Plus — launched in late Q1 — looks promising buit rev/EBITDA will be lumpy going forward as the early-stage asset continues to experiment with the monetisation model.
Deutsche Bank says “Tinder remains the call-option around IACI” and also estimates several hundred thousands of paid subscribers in the initial roll-out month.
The company was bullish in its commentary on Tinder monetisation indicating solid penetration rates in the early days and even that renewal rates are higher than other products.
Morgan Stanley remains bearish, declaring in its note: “The swipe is still hype,” adding that Tinder monetisation is underwhelming investors and not ramping fast enough.
Tinder monetisation has begun, as company commentary indicates Tinder’s paying sub base has reached 297k (or an estimated 0.4% of our total member base estimate) in its first 4 weeks on the market. We estimate roughly 67% of the paying sub base is international and the rest is domestic. It’s early and we continue to monitor Tinder trends, but it will still take a material ramp in paying sub growth for Tinder to deliver on the bull-case $US50-75mn of 2016 EBITDA we often hear. For perspective, even if Tinder’s 2016 revenue is split 70% subscription and 30% advertising, we estimate that the company will need to average 680k paying subs in 2016 to deliver $US65mn of EBITDA.
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