Match Group: Second Date?
Note: TSOH Investment Research will be off next week for Christmas; I hope that everyone has a happy holiday! If you still need to add another present or two under the tree, “Buffett And Munger Unscripted” would be the perfect gift for family members or friends who are interested in business and investing.
From “The Dating Game” (August 2024):
“While it’s unlikely I’ll take action anytime soon, two prerequisites for that to happen down the road are a clearer understanding of what exactly happened in the dating industry of late and rebuilding trust with management… My hope is Match management will take the opportunity at the Investor Day (set for December) to take a different approach to investor relations.”
Match management held their first ever Investor Day event last week, which followed their recent decision to start providing clarity on certain segment KPI’s. As I’ll discuss today, I think that the Investor Day was a mixed bag.
While I was encouraged to see management finally address important topics like Tinder MAU trends (slide 34), the broader discussion and presentation was typical of what I’ve come to expect from Match: they were happy to provide granular financial details on segments exhibiting strong results - for example, the Hinge regional data on slide 60 – but the level of disclosure seems correlated to the trajectory of a given segment. At the other extreme is Evergreen & Emerging (E&E), where management gave very little historic context for thinking about the segment (slide 81), which would be particularly helpful given recent changes to the business. Tinder landed between those two examples, with some clarity on historic MAU’s offset by vague language on the expected results for their largest brand – by far - in the years ahead.
In summary, this was an opportunity to clear the air. While management took some steps to live up to those expectations, their backs are still against the wall; it seems they don’t have the luxury to (primarily) focus on the long-term.
Despite my concerns about management, I’m still drawn to Match as a potential investment idea; that reflects their leadership position in online dating, along with my industry maturation thesis. I don’t own the stock, but there’s a scenario where I would (again). For that reason, I want to highlight some positive and negative takeaways from last week’s Investor Day.