Coverage: Match kicks off IPO roadshow

The Match Group, which owns the popular dating app Tinder, is kicking off its IPO roadshow. The Dallas company hopes to raise about $433 million from the IPO, giving it a $3.1 billion valuation.

Leslie Picker of The Wall Street Journal had news about the company’s plan:

The Match Group is seeking a valuation of about $3.1 billion as it prepares for an initial public offering.

The company, which owns the online dating brands OkCupid and Tinder, said on Monday that it planned to sell 33.3 million shares for $12 to $14 apiece. Those terms indicate an offering size of $433 million and a market valuation of $3.1 billion at the midpoint.

In setting these terms, Match begins a roadshow, meeting with investors who will help the company set an official I.P.O. price in a few weeks, based on demand.

The media conglomerate that owns Match, IAC/InterActiveCorp, whose chairman is Barry Diller, has been acquiring a number of dating sites over the last few years. As the online-dating industry increased in popularity, legacy sites like Match.com started facing more competition from free models like OkCupid. Mr. Diller’s strategy was to build scale by acquiring a portfolio of brands – now 45 in all – and eventually spin them off under the Match umbrella.

Match is selling 14 percent of itself in the I.P.O., the first step in a split from IAC. But IAC will maintain control.

The Associated Press broke down the three types of stock options the company plans to offer:

About 31 million Americans have used a dating site or app, according to a 2013 Pew Research Center study.

The Dallas company says it has turned a profit in each of the last three year and had $1 billion in revenue over the 12 months ended June 30.

Match Group has about 59 million active monthly users, 4.7 million of them paid, using 38 languages in more than 190 countries.

There will be three classes of stock: common stock, Class B common stock and Class C common stock. Common stockholders will be entitled to one vote per share, while Class B shareholders will get 10 votes per share. Class C shareholders cannot vote.

Parent company IAC/InterActiveCorp will own all shares of outstanding class B stock. It will maintain majority control of the company after the offering.

Danielle Abril of The Dallas Business Journal broke down the company’s third quarter earnings:

Here is a look at the latest numbers in revenue and users it reported up to the third quarter:

The company had 59 million active users and 4.7 million paid members as of the third quarter. Its market penetration included 190 countries, with international revenue representing 35 percent of total sales in fiscal 2014.

In fiscal 2014, it reported revenue of $888.3 million, up from $803.1 million the year prior and $713.4 million in 2012. Match had $136.4 million in liquidity on June 30.

The company said in order to grow, it will focus on product development to create new features; become more mobile; continue the optimization of pricing and bundle packages; maintain portfolio growth and make operations more efficient by consolidating functions across brands.

The company said its risk factors include financial risks in connection with its acquisitions, the operational challenges associated with working across international markets and the security of its confidential user information, which could be impacted by cyber attacks.

Lead underwriters for the IPO include JPMorgan Chase, Allen & Co. and Bank of America Merrill Lynch, with nine other banks helping to manage the offering.

Kerry Flynn of the International Business Times explained how Tinder will be a major selling point in the company’s roadshow:

Tinder may be shiny to young users, advertisers and investors now, but the startup is just 3 years old, and its market is forever inundated with newer apps and sites. For instance, Tinder co-founder Whitney Wolfe went on to create Bumble, a dating app that lets women initiate all conversation. Bumble reached 500,000 members in June and has yet to release an Android version. There’s also Hinge and Happn and a slew of demographic-specific apps like JSwipe and The League.

The number of options for online dating are growing as more consumers turn to the Web and, of late, mobile apps to find romance. The industry will see a healthy growth rate of 4.2 percent through 2019 to $2.7 billion, according to IBISWorld.

Tinder is just one of Match Group’s nearly 50 brands, yet some analysts say that the app could be the most crucial component of the company’s public listing. One of the bright spots in the continuously growing dating app industry, Tinder will now have to answer to Wall Street investors’ questions on user data and future plans to generate revenue.

“A lot of how Match goes depends on how Tinder gets monetized,” Daniel Kurnos, a senior research analyst at Benchmark Co., said. “They’re going to have to give more data. They’re going to have to give a lot more data.”

IAC is already listening. In its SEC filing Monday, Match Group updated its sections on user growth and future revenue with some new statistics about Tinder and its recent acquisition PlentyOfFish. Tinder now boasts 9.6 million daily active users and 583,000 paid members.