Now that Bumble (NASDAQ:BMBL) has gone public, what do investors need to know about the company, and how does it compare to its rival Match Group (NASDAQ:MTCH)?
In this video from the Industry Focus podcast recorded on Feb. 17, Motley Fool contributor Luis Sanchez and Industry Focus host Nick Sciple discuss Match Group, Bumble, and the online dating industry.
Nick Sciple: How has Match performed over the past year? How did the company hold up during the pandemic? What should we be paying attention to with them going forward as far as drivers for the business?
Luis Sanchez: The pandemic definitely slowed down the company’s growth rate, and I guess if you look at it in isolation, it slowed down to 12 percent in Q2 of last year, which doesn’t sound that bad, but this company was growing a lot faster heading into Q2. As the world started to adjust to the new normal, the company was able to start reaccelerating its growth rate to where last quarter, the fourth quarter of 2020, it got back to a 19 percent year-over-year growth rate. Like I said before, that was largely driven by the non-Tinder apps. If you think about it, it makes sense that the non-Tinder apps did better because if you think about what Tinder stands for, it’s synonymous with being more spontaneous, meet someone at a bar app or hookup app, and that’s probably a behavior that people are less inclined to do in this environment. Whereas apps like Hinge are more about developing longer-term relationships, and you could definitely see people probably invest more or still be willing to invest more into relationships that they could probably wait till after the pandemic is over or when things are safe to meet up. It’ll be interesting to see what happens next. The company did give pretty good guidance that basically revenue is going to keep growing like a hiking rate. What we could actually see is that Tinder business reaccelerate faster than the rest of it if Tinder is more associated with going out to bars and meeting people in person. That’ll be an interesting thing to watch. I think the last thing, one of the stories here that I think is really interesting is just the difference between where Match is today and where Bumble is. Match has double the EBITDA margin, the profitability as Bumble. Match is doing a high-30% EBITDA margin, whereas Bumble is doing a mid-20% EBITDA margin. We’ve actually seen, even though Bumble has seen its revenue growth to accelerate in the past year, they’ve still managed to show a lot of operating margin in the sense that their profit margin went up from 20% in 2019 to 25% in the first three quarters of last year. As Bumble continues to grow, it’ll be really interesting to see if they could catch up to Match’s margins. That could definitely be a bull case for owning Bumble.
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