How Tinder Became the Highest Grossing Mobile App of 2019

Match Group's (NASDAQ: MTCH) Tinder was the highest-grossing mobile app last year, according to App Annie's annual "State of Mobile" report. Netflix (NASDAQ: NFLX) and Tencent (OTC: TCEHY) Video ranked second and third, respectively.

This marked the first time Tinder surpassed Netflix in annual spending. Tinder ranked fifth in 2015, fourth in 2016, and second in both 2017 and 2018. Let's look back at how Tinder rose to the top, and why it could retain that crown for the foreseeable future.

A smiling woman tosses dollar bills into the air.

Image source: Getty Images.

How Tinder became the world's highest-grossing app

Tinder was created in 2012 within the start-up incubator Hatch Labs, which was a joint venture between IAC/InterActiveCorp (NASDAQ: IAC) and Xtreme Labs. Tinder became a major growth engine for IAC, which spun it off with other dating apps in Match's initial public offering in 2015.

Tinder's innovative system of swiping left and right on potential matches simplified the dating process and caught fire with younger users. Over a third of Tinder's users are now between the ages of 18 to 24, making Generation Z its largest demographic. Match subsequently monetized Tinder with two premium subscription tiers.

Tinder Plus, which was introduced in 2015, lets users undo swipes, swipe for overseas matches, use five "super likes" to get other users' attention, and deploy monthly "boosts" to increase the visibility of their profiles. In developed markets like the U.S., Tinder Plus costs $10 per month for users under the age of 30 and $20 per month for older users. Users in developing markets generally pay lower rates.

Tinder Gold, which was launched as an upgrade for Plus in 2017, added curated "top picks" and the ability to see who likes you to start chatting right away. Gold costs an extra $5 a month for Plus users, $15 per month on an annual basis, or $30 per month on a monthly basis. Last August, Match claimed that Gold subscribers accounted for over 70% of Tinder's entire subscriber base.

Tinder's total subscribers grew 39% annually to 5.7 million last quarter, as the app's average revenue per user (ARPU) rose 9%. By comparison, Match's total subscribers (across all its apps) grew 19% to 9.6 million, and its total ARPU rose just 4%. Tinder's audience remains small relative to those of other mobile apps, but it generates most of its revenue from stable high-margin subscriptions instead of lower-margin ad revenue.

A man uses a dating app.

Image source: Getty Images.

No, Tinder isn't making more money than Netflix

Investors should note that App Annie's results don't indicate that Tinder actually generates more revenue than Netflix. Analysts still expect Netflix, which ended last quarter with 158 million paid subscribers worldwide, to generate 10 times as much revenue as Match next year.

However, App Annie's numbers indicate that Tinder's mobile app generates more revenue than Netflix's mobile apps for iOS and Android. This isn't surprising, since the vast majority of Netflix's subscribers watch videos on TVs instead of mobile devices.

Moreover, Netflix is actively pushing customers to sign up for memberships on web browsers instead of its mobile app, which prevents Apple and Alphabet's Google from retaining their cuts of the monthly fees. Both factors likely throttled Netflix's growth in mobile revenue.

Yet Tinder is still the only dating app in App Annie's top 10 highest-grossing apps of 2019. Tinder's biggest rivals, including Bumble and Coffee Meets Bagel, didn't make the cut, which indicates that it still enjoys a strong first-mover's advantage and possesses a wide moat against potential challengers like Facebook Dating.

Will Tinder retain that lead in 2020?

Match spooked the bulls last November when it followed up a solid third-quarter earnings report with a slight guidance miss for the fourth quarter. Concerns about an FTC probe regarding ads on and extra expenses from IAC's full spin-off of Match exacerbated the sell-off. Yet Match's stock subsequently rebounded with the broader market, and analysts still expect its revenue and earnings to rise 17% and 8%, respectively, next year.

Meanwhile, Tinder continues to expand its ecosystem with interactive videos, and it's still growing in higher-growth markets like India and Japan. That expansion, along with a higher penetration rate for its Gold upgrades, could help Tinder retain its crown as the highest-grossing app of 2020.

10 stocks we like better than Match Group
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*

David and Tom just revealed what they believe are the ten best stocks for investors to buy right now... and Match Group wasn't one of them! That's right -- they think these 10 stocks are even better buys.

See the 10 stocks


*Stock Advisor returns as of December 1, 2019


Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to its CEO, Mark Zuckerberg, is a member of The Motley Fool's board of directors. Leo Sun owns shares of Apple, Facebook, and Tencent Holdings. The Motley Fool owns shares of and recommends Alphabet (A shares), Alphabet (C shares), Apple, Facebook, Match Group, Netflix, and Tencent Holdings. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


More Related Articles

Info icon

This data feed is not available at this time.

Sign up for the TradeTalks newsletter to receive your weekly dose of trading news, trends and education. Delivered Wednesdays.