Financial statement review: Tinder (Match Group)

Are people falling out of love with dating apps?

We can try answering that question through user experience. Use a dating app like Tinder for free, or go premium which means paying a fee to unlock special features. Or see what other users think by looking at ratings and reviews.

Apparently, people either absolutely love Tinder, or absolutely hate it. Lots of users have given it a 5 star rating, but a 1 star rating is solidly in second place.

We can also try answering the question from the shareholder’s viewpoint:
You can analyze the financial reports of Match Group, the company that owns Tinder (as well as a range of other dating apps).
You can dive in head first and buy stock in the company, and experience what it is like.
Or review the “ratings of other shareholders” by looking at the actual share price over the years.

Apparently, the stock is not as hot as it used to be. Once upon a time, it was traded at $170 per share, but at the time of making this video it is now trading below $30 per share.

⏱️TIMESTAMPS⏱️
00:00 Financial statement review introduction
01:32 Financial statement review scope
02:48 Revenue analysis
06:55 Margin analysis
10:38 Earnings Per Share analysis
13:05 Balance sheet analysis
17:46 Balance sheet review summary
18:25 Cash flow statement analysis

Where are we going to focus in this video?
The Finance Storyteller doesn’t provide any dating advice, so we are going to swipe left on the first option.
The Finance Storyteller doesn’t provide any investing advice either, but can certainly help pulling together and analyze the data, for you to decide whether you swipe left, or swipe right, on buying shares in the company.
If you become a shareholder of the company, then you become the proportionate “owner” of the financial results.

Let’s review the Match Group #financialstatements of 2024, more specifically:
the income statement or P&L,
the balance sheet,
and the cash flow statement.

Where do we get financial information about a company? If it is publicly listed, then we can download its annual report, also known as the 10-K filing. This allows us to look back at the past to see what the financial results have been. There is no guarantee of similar results in the future, but we can certainly take a look at what expectations the management of the company is sharing in its latest investor day presentation.

What can we expect to find? Here’s a preview, a highly subjective and possibly sensationalized one. In my opinion, we find good margins on stagnant revenue in the income statement. My experience of reviewing the balance sheet was very surreal. And the cash flow statement seems to show that returns to shareholders are very large, possibly to the point of getting excessive! Let me back up each of these statements with data!

The most common way to review financial statements is to start with the profit and loss statement. We dive deep into the “top line”: revenue!

A very meaningful subtotal in the review of an income statement, is the line called Operating Income. You get there by taking revenue and deducting operating costs and expenses. In 2024, Match Group made $823MM of Operating Income on revenue of nearly $3.5B. On a relative basis, Operating Income is 24% of revenue.

To analyze Operating Income, put multiple years of financial data side by side. Oldest year on the right, latest year on the left. Operating Income was $515MM in 2022, went up to $917MM in 2023, and then came down to $832MM in 2024. What is driving those swings?

So what is the basis for me calling the balance sheet “surreal”? It’s a mix of three things. Per year-end 2024, the company had negative equity (which is unusual, and has been in place at Match Group for years), a $2.3B goodwill balance (not unusual, if you have done financial statement reviews of other companies, but there is a risk of impairment), and an almost intimidating 86% of its financing was long-term debt.

You can only assess the full situation of a company, if you review all three major financial statements. Onward to the cash flow statement. Just like the income statement, this is like a movie that shows the flow during a year, but instead of focusing on profitability (which is what the income statement does), the cash flow statement focuses on the sources and uses of cash.

Philip de Vroe (The Finance Storyteller) aims to make accounting, finance and investing enjoyable and easier to understand. Learn the business and accounting vocabulary to join the conversation with your CEO at your company. Understand how financial statements work in order to make better investing decisions. Philip delivers #financetraining in various formats: YouTube videos, livestreams, classroom sessions, and webinars. Connect with me through Linked In!

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