Match: Users' demand for dating at home increased during the epidemic

Match, the world's largest online dating and stranger-surfing platform, released its first-quarter 2020 financial report. Although the epidemic affected user payments and new users of its products, the platform's active users increased during the home quarantine period, especially the demand for video usage.

Revenue and profit data: In the first quarter, the company's revenue increased by 17% year-on-year, and EBITDA increased by 11% year-on-year to US$172 million.

The impact of the epidemic on the first quarter's operations is reflected in the following time periods: January and February were peaceful. Although the epidemic had begun to affect Asian markets such as Japan and Singapore in February, products like Pairs in Japan were basically unaffected by the epidemic. In March, with the outbreak of the epidemic in Europe and the United States and the widespread adoption of home isolation measures, the company's business began to be significantly affected by the epidemic.

The company reduced marketing spending in the last few weeks of March. The company's cost structure has a large proportion of variable costs, and costs and expenses have great flexibility during the epidemic. After being cautious at the beginning, the company has begun to resume and make appropriate marketing investments based on the marketing ROI of different markets and media.

Impact of the epidemic on user behavior: User usage is increasing, especially among young users and female users. However, new users are weak, and users' payment preferences have weakened due to the epidemic.

Reasons for the slowdown in the number of new users: 1. The epidemic period is not a suitable time to join a dating product; 2. Many of the company's products rely on word-of-mouth communication, and users cannot meet offline, making this communication channel difficult; 3. The company has reduced marketing expenses.

Changes in new users' payment propensity: First, there is a decrease in new paying users, which is more prominent among older groups in areas with severe epidemics. In the second half of March, the company's products with a high proportion of older users saw a double-digit decline in payments. But after the worst time passed, all products have stabilized, especially in the North American market. Although performance varies from market to market and city to city, overall, the number of first-time paying users in April has increased year-on-year, but the average user spending has declined, especially on the Tinder product, where users tend to choose lower-priced services and the per-item charges have also declined.

The company has made many adjustments to its products and marketing to help users get through this period . Among the phenomena the company has observed in the past six weeks, there are two trends that the company believes are particularly worthy of attention:

The first is that the number of female users has increased significantly . The proportion of new and active female users has improved compared to the past, which is very healthy for the social ecosystem. The company believes that the increase in female users is likely due to the fact that during the epidemic, the reduction in concerns about meeting people has eased the pressure on women to use dating products.

The second is the use of video. The company actually launched a one-on-one video service as early as 2011, but the user usage has always been low. But this time when users have to use video, they discovered the benefits of video and are likely to continue to use it in the future.

Changes in paid users of different products: In the first quarter, the company's overall year-on-year net increase of 1.3 million paid users, Tinder's paid subscription users continued to grow steadily, up 28%, and direct revenue growth was 31%. In the first quarter, the number of paid users of non-Tinder products remained flat year-on-year, and the direct revenue of these products increased by 2%.

Paid revenues for both Tinder and non-Tinder products were negatively impacted by the pandemic. Products with older users were the most affected, including OurTime, Meetic, and Match. Products like OKcupid and Hinge, which have many users concentrated in areas with severe outbreaks, also reflected the impact of the pandemic earlier. Despite this, paid subscribers for Hinge, OkCupid, Pairs, Chispa, and BLK still contributed good year-on-year growth in the first quarter. Hinge's price optimization increased conversion rates and revenue, but conversations were slightly affected and declined, and the company believes that this trend will continue this year.

At present, the overall renewal rate of the company's products has not been negatively affected, but the company is continuing to follow up on the subsequent impact of epidemic isolation on products and payments.

The company's progress in video: In 2019, the company had two actions in video. One was the 1-to-1 video chat platform Ablo. After the outbreak, the company applied the experience learned from Ablo to other products. In April, the video chat function was launched in Match and Pairs. It will be launched on Meetic and Hinge in the next few weeks, and Tinder will be tested in June. The second is the 1-to-many live broadcast experience launched in Q4 last year. In view of the current situation, the company has fully launched live broadcast services on POF and Twoo. The company believes that video dating is a safe and effective way to improve the quality of first dates.

The company's expectations for the second quarter and the full year: The company did not directly give its second quarter performance expectations, but gave April data for investors' reference. The company remains confident in achieving the full-year revenue target of 15% to 20%.