if tinder pursues multiple monetization strategies: analysis of outcomes

Tinder Analysis

Michael Jones Bio Long-time entrepreneur and former CEO of Myspace, Michael Jones now serves as the CEO of Science, Inc., the disruptive media, marketing and brand building company. Science Inc. nurtures successful digital businesses by bringing together the best ideas, talent, resources and financing through a centralized platform. As a serial internet entrepreneur, Jones has founded, advised, invested in and sold numerous businesses, including application platform Userplane, which he led from startup to its acquisition by AOL, Tsavo Media, Maker Studios, GoodReads, PeopleMedia and Myspace. Disclosure: Michael Jones both personally invested as well as invested through Science in Chill, Inc which was acquired by Tinder in 2015, meaning that both Jones and Science are now passive equity holders of Tinder and IAC.

Disclosure

2

Core Assumptions

•  Tinder in the short and long term will remain a dating service.

•  Tinder will penetrate the global singles audience at an order of magnitude larger than Match ever did.

This is similar to the original Myspace/Facebook position, Myspace trained

a 100M user audience about social network, Facebook perfected the platform

and drove to over 1B people.

•  Tinder at scale will monetize simliar to…

- Match with premium subscription

- a game with advertising and in app transaction

- or both.

For this analysis we looked at revenue, growth and market assumptions and then assumed the final result

was a public company – using comparable public company trading multiples around projected revenue

and EBITDA.

Tinder Breakout Scenario

3

•  The US market has always seen online dating as a less desirable commerce activity, this position has prevented

Yahoo, AOL, Google or Facebook to engage deeply into the business practice.

•  IAC with match.com has been the only large scale valued dating property in the US

•  International buyers are a possibility, and market could change its opinion on large players like Facebook

owning Dating properties

•  Most likely outcome is Tinder looks for a 2018 IPO and competes or compliments match.com IPO spin out.

Exit Scenarios

4

$122 $157 $237 $267

$265

30% 30%

33% 33%

30%

27%

28%

29%

30%

31%

32%

33%

34%

$0 $100 $200 $300 $400 $500 $600 $700 $800 $900

$1,000

2010 2011 2012 2013 2014

EBIT

DA

Mar

gin

Reve

nues

Mill

ions

MATCH SEGMENT PERFORMANCE 2010-2015

Revenues EBITDA EBITDA Margin

Source: SEC.gov!

$14.57 $14.85 $15.07

$14.62 $14.07 $14.21

$14.47 $14.81

$16.04 $15.97 $15.47

$16.39 $16.33 $16.24

$14.99

$15.88

$12.50 $13.00 $13.50 $14.00 $14.50 $15.00 $15.50 $16.00 $16.50 $17.00

Q1-13 Q2-13 Q3-13 Q4-13 Q1-14 Q2-14 Q3-14 Q4-14

MATCH REVENUE PER PAID SUBSCRIBER

North American Revenue Per Subscriber International Revenue Per Subscriber

Match is a Market Leader with a 22% Market Share, 30% EBITDA, and $15.00 Revenue Per Paid Subscriber

5

Despite Garnering a Small Portion of the Singles Market

Source: SEC.gov, Pew Research, IBIS World!

1.96%

1.97% 1.97%

1.94% 1.94%

1.96%

1.99%

1.97%

1.90%

1.91%

1.92%

1.93%

1.94%

1.95%

1.96%

1.97%

1.98%

1.99%

2.00%

Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014

MATCH.COM US SINGLES PENETRATION

Singles Market

Key Assumptions: According to Pew Research, only 9% of singles utilize online dating, and of that 9%, 22% utilize Match.com.

6

Tinder Currently has 25M MAU trending toward 50M MAU by end of year

-

10,000,000

20,000,000

30,000,000

40,000,000

50,000,000

60,000,000

March April May June July August September October November December

TINDER 2015 EXPECTED GROWTH

Monthly Users Monthly Change Daily Users

Key Assumptions: Tinder will reach 50MM Monthly Users and reach 24MM Daily users by December 2015

7

$0

$10

$20

$30

$40

$50

$60

$70

$0.0000

$0.0100

$0.0200

$0.0300

$0.0400

$0.0500

$0.0600

$0.0700

March April May June July August September October November December

Reve

nues

M

illio

ns

Reve

nue

Per

Use

r

T INDER DAILY REVENUE PER USER

Monthly Revenue Monthly Revenue Change Daily Revenue Per Monthly Users Daily Revenue Per Daily User

Based on Tinder’s Current Monetization Strategy and MAU Trend, Daily Revenue Per User Will Approximate $0.04 by December

Key Assumptions: Tinder Monthly Revenue will reach $60MM by December and Monthly Users will Reach 50MM

8

Other Social Media Players have Proven that Monthly Active Users in Excess of 100MM are Attainable

Source:http://www.thesocialmediahat.com/active-users!

9

Match monetizes its users at an average rate of 8%, but Match targets a much smaller market than Tinder

Source: SEC.gov!

Key Assumptions: Match will revert to its long-run average mean of 8% monetization. Assumes Match.com has 40MM users. Monetization is the percentage of MAUs that are paid subscribers.

7.85%

7.99%

8.27%

8.39%

8.67% 8.75%

9.03%

8.77%

7.20%

7.40%

7.60%

7.80%

8.00%

8.20%

8.40%

8.60%

8.80%

9.00%

9.20%

$0.00

$0.50

$1.00

$1.50

$2.00

$2.50

$3.00

Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014

Mill

ions

MATCH.COM MONETIZATION RATE

North American Paid Subscribers InternationalPaid Subscribers Monetization Rates

10

Mobile Game Networks like Glu are Monetizing with Premium In App Transactions at an Average Rate of 2%.

Source: SEC.gov, GLU Mobile!

Key Assumptions: While gaming revenues are extremely cyclical , they have on average monetized at a rate of 2%. The assumption is that gaming revenues will revert back to 2%.

1.33%

1.74%

1.19%

1.83% 1.70% 1.45%

4.30% 3.98%

0.00%

0.50%

1.00%

1.50%

2.00%

2.50%

3.00%

3.50%

4.00%

4.50%

5.00%

0

10,000,000

20,000,000

30,000,000

40,000,000

50,000,000

60,000,000

70,000,000

Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014

MOBILE GAMING MONETIZATION

Purchases MAU Monetization Rate

11

GLU’s Mobile Games Earn on Average $0.17 in Ad Revenue per MAU

Source: SEC.gov, GLU Mobile!

Key Assumptions: Based on historical ad revenues, mobile gaming earns $0.17 per monthly active user.

0.18 0.18

0.12

0.18

0.13

0.16

0.21

0.19

0.00

0.05

0.10

0.15

0.20

0.25

0

10,000,000

20,000,000

30,000,000

40,000,000

50,000,000

60,000,000

70,000,000

Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014

MAU Ad Revenue Per MAU

12

We can expect Tinder to address up to 49% of the global singles market

Consumers 18 to 24 Years Old, 15.20%





Consumers 65 and Older, 4.50%

Tinder’s Addressable Market, 49% of all

Global Singles

Source: IBISWorld!

Key Assumptions: Tinder will target the key consumer segments of 25 to 34 Years Old and 18 to 24 Year Olds.

13

Recent Internet and Mobile IPOs are Trading at a Median of 7.9x Revenue

1.2x

3.7x

1.1x 0.5x

16.9x

7.9x 8.3x

19.9x

10.7x

0.0x

5.0x

10.0x

15.0x

20.0x

25.0x

Onvia Inc. (NasdaqCM:ONVI)

Salon Media Group Inc.

(OTCPK:SLNM)

QuoteMedia Inc. (OTCPK:QMCI)

Marchex, Inc. (NasdaqGS:MCHX)

Facebook, Inc. (NasdaqGS:FB)

Box, Inc. (NYSE:BOX)

Yelp, Inc. (NYSE:YELP)

Twitter, Inc. (NYSE:TWTR)

CoStar Group Inc. (NasdaqGS:CSGP)

TEV/TOTAL REVENUES LTM

Source: Capital IQ, SEC.gov, Company Filings! 14

Recent Internet and Mobile IPOs are Trading at a Median of 33.9x EBITDA (Excluding Yelp)

Source: Capital IQ, SEC.gov, Company Filings!

11.3x

0 0

10.5x

33.9x

0

127.8x

0 0

39.9x

0.0x

20.0x

40.0x

60.0x

80.0x

100.0x

120.0x

140.0x

Onvia Inc. (NasdaqCM:ONVI)

Salon Media Group Inc.

(OTCPK:SLNM)

QuoteMedia Inc. (OTCPK:QMCI)

Marchex, Inc. (NasdaqGS:MCHX)

Facebook, Inc. (NasdaqGS:FB)

Box, Inc. (NYSE:BOX)

Yelp, Inc. (NYSE:YELP)

Twitter, Inc. (NYSE:TWTR)

Ancestry.com LLC CoStar Group Inc. (NasdaqGS:CSGP)

TEV/EBITDA LTM - Latest

Key Assumptions: Although EBITDA multiples within the internet and mobile space are highly volatile, industry players with strong earnings streams and conservative valuations have EBITDA multiples between 10 and 20 times.

15

..if Tinder Monetizes at Rates Similar to Match.com, Enterprise Value Could be in Excess of $2B by 2019

$450,314,235

$599,999,999

$900,000,000

$1,260,000,000

$1,638,000,000

$0

$200,000,000

$400,000,000

$600,000,000

$800,000,000

$1,000,000,000

$1,200,000,000

$1,400,000,000

$1,600,000,000

$1,800,000,000

2015 2016 2017 2018 2019

TINDER MONETIZES LIKE MATCH-BASE CASE ENTERPRISE VALUE

Enterprise Value Average Monthly Users EBITDA

EV#EBITDA#Multiple 2015 2016 2017 2018 201910.00 $300,209,490 $399,999,999 $600,000,000 $840,000,000 $1,092,000,00012.50 $375,261,863 $499,999,999 $750,000,000 $1,050,000,000 $1,365,000,00015.00 $450,314,235 $599,999,999 $900,000,000 $1,260,000,000 $1,638,000,00017.50 $525,366,608 $699,999,998 $1,050,000,000 $1,470,000,000 $1,911,000,00020.00 $600,418,980 $799,999,998 $1,200,000,000 $1,680,000,000 $2,184,000,000


Tinder Assumptions Match.com

•  125MM MAU by 2019 •  40MM MAU

•  0.20% monetization rate •  8% monetization rate

•  $9.99/ subscriber •  $15 / subscriber

•  FY 2015 revenue-$100MM


•  FY 2017 Revenue-$200MM



•  EBITDA Margin: 30%

Enterprise Value Sensitivities

16

..if Tinder Monetizes its 125MM MAU at a Rate of Only 1.25%, Revenues Could be in Excess of $2.2bn by 2019 and over 10B EV.

$606,892,500

$1,618,380,000

$3,641,355,000

$6,473,520,000

$10,114,875,000

$0

$2,000,000,000

$4,000,000,000

$6,000,000,000

$8,000,000,000

$10,000,000,000

$12,000,000,000

2015 2016 2017 2018 2019

TINDER MONETIZES LIKE MATCH-UPSIDE CASE ENTERPRISE VALUE

Enterprise Value Average Monthly Users EBITDA

EV#EBITDA#Multiple 2015 2016 2017 2018 201910.00 $404,595,000 $1,078,920,000 $2,427,570,000 $4,315,680,000 $6,743,250,00012.50 $505,743,750 $1,348,650,000 $3,034,462,500 $5,394,600,000 $8,429,062,50015.00 $606,892,500 $1,618,380,000 $3,641,355,000 $6,473,520,000 $10,114,875,00017.50 $708,041,250 $1,888,110,000 $4,248,247,500 $7,552,440,000 $11,800,687,50020.00 $809,190,000 $2,157,840,000 $4,855,140,000 $8,631,360,000 $13,486,500,000


Tinder Assumptions Match.com

•  125MM MAU by 2019 •  40MM MAU

•  1.25% paid to subscription •  8% monetization rate

•  $9.99/ subscriber •  $15 / subscriber

•  FY 2015 revenue $134MM


•  FY 2017 Revenue $809MM

•  FY 2018 Revenue $1,439MM




17

Tinder has the potential to monetize like a game and if its able to earn only $0.03 per DAU, it will be worth over $4.9bn by 2019

$1,231,875,000

$1,847,812,500

$2,463,750,000

$3,695,625,000

$4,927,500,000

$0

$1,000,000,000

$2,000,000,000

$3,000,000,000

$4,000,000,000

$5,000,000,000

$6,000,000,000

2015 2016 2017 2018 2019

TINDER MONETIZES LIKE A GAME-BASE CASE ENTERPRISE VALUE

Enterprise Value Average Daily Users EBITDA

EV#EBITDA#Multiple 2015 2016 2017 2018 201910.00 $821,250,000 $1,231,875,000 $1,642,500,000 $2,463,750,000 $3,285,000,00012.50 $1,026,562,500 $1,539,843,750 $2,053,125,000 $3,079,687,500 $4,106,250,00015.00 $1,231,875,000 $1,847,812,500 $2,463,750,000 $3,695,625,000 $4,927,500,00017.50 $1,437,187,500 $2,155,781,250 $2,874,375,000 $4,311,562,500 $5,748,750,00020.00 $1,642,500,000 $2,463,750,000 $3,285,000,000 $4,927,500,000 $6,570,000,000


Tinder Assumptions GLU

•  $0.03 R/DAU •  $0.08 R/DAU

•  100MM DAU by 2019 •  5.25MM DAU








18

..if Tinder is able to monetize at a rate similar to GLU, at Tinder’s current Revenue Per DAU of $0.12, its revenues will be in excess of $4.3bn by 2019


$1,231,875,000 $2,463,750,000

$4,106,250,000

$7,391,250,000

$19,710,000,000

$0

$5,000,000,000

$10,000,000,000

$15,000,000,000

$20,000,000,000

$25,000,000,000

2015 2016 2017 2018 2019

TINDER MONETIZES LIKE A GAME-UPSIDE CASE ENTERPRISE VALUE

Enterprise Value Average Daily Users EBITDA


Tinder Assumptions GLU

•  $0.12 R/DAU •  $0.08 R/DAU

•  100MM DAU by 2019 •  5.25MM DAU








19

..if Tinder has Premium Subscription Revenue, Converts 0.20% of all Users and Game-Like Ad Revenue of $0.03 per DAU, its Revenues Could be in excess of $1.1bn by 2019

$1,374,220,485

$1,985,859,374

$2,747,812,500

$4,031,718,750

$5,333,625,000

$0

$1,000,000,000

$2,000,000,000

$3,000,000,000

$4,000,000,000

$5,000,000,000

$6,000,000,000

2015 2016 2017 2018 2019

PREMIUM SUBSCRIPTION AND GAME LIKE AD REVENUE-BASE CASE ENTERPRISE VALUE

Enterprise Value Average Monthly Users EBITDA Average Daily Users




Tinder Assumptions

•  $0.03 R/DAU

•  100 MM DAU by 2019

•  125MM MAU by 2019

•  0.20% paid to subscription

•  $9.99/ subscriber





•  FY 2019 Revenue-$1,185MM



$1,530,798,750 $3,466,192,500

$6,721,042,500

$12,016,957,500

$24,897,375,000

$0

$5,000,000,000

$10,000,000,000

$15,000,000,000

$20,000,000,000

$25,000,000,000

$30,000,000,000

2015 2016 2017 2018 2019

PREMIUM SUBSCRIPTION AND GAME LIKE AD REVENUE-UPSIDE CASE ENTERPRISE VALUE

Enterprise Value Average Monthly Users EBITDA Average Daily Users

EV#EBITDA#Multiple 2015 2016 2017 2018 201910.00 $1,020,532,500 $2,310,795,000 $4,480,695,000 $8,011,305,000 $16,598,250,00012.50 $1,275,665,625 $2,888,493,750 $5,600,868,750 $10,014,131,250 $20,747,812,50015.00 $1,530,798,750 $3,466,192,500 $6,721,042,500 $12,016,957,500 $24,897,375,00017.50 $1,785,931,875 $4,043,891,250 $7,841,216,250 $14,019,783,750 $29,046,937,50020.00 $2,041,065,000 $4,621,590,000 $8,961,390,000 $16,022,610,000 $33,196,500,000

..if Tinder has Premium Subscription Revenue, Converts 1.25% of all Users and Game-Like Ad Revenue at Rates of $0.09 per DAU its Revenues will be in Excess of $5.5bn by 2019


Tinder Assumptions

•  $0.09 R/DAU

•  100MM DAU by 2019

•  125MM MAU by 2019

•  1.25% paid to subscription

•  $9.99/ subscriber







Science Media

Michael Jones @mjones

if tinder pursues multiple monetization strategies: analysis of outcomes

Mobile

match revenue

us market

market assumptions

tinder analysis

subscriber match

singles market source

market leader

market share