Social Media Mobile App Growth Stalls in August - Cowen (FB) (IACI) (TWTR)

Cowen and Company offered the following update on mobile app trends in August.

August Mobile App Metrics

In August, mobile app UVs were mostly flattish with the Universe declining 0.4% m/m. Growth in the mobile social group was essentially split with 5 of the 8 names we track modestly growing UVs m/m. Core FB increased ~1% m/m in August, while Instagram was up 2.4%. TWTR grew 2% m/m, while Pinterest and Tumblr were up 4.2% and 5.6%, respectively. LinkedIn declined 5.4% m/m and Snapchat was down 6.7% m/m (the third month in a row of m/m declines). See Tinder metrics comments below. As for engagement, total industry average minutes were flat y/y at ~144 minutes/ month while rising ~3% m/m. At ~32 minutes/day, FB slipped 1.8% m/m but was flat y/y. Overall, Snapchat, Instagram and LinkedIn showed rising usage m/m at 9.5%, 2.8% and 1.6%, respectively. Conversely, Twitter, Pinterest, and Tumblr were down 2%, 10%, and 15% m/m, respectively, with Twitter’s minutes/UV/day down four consecutive months potentially implying newer users spend less time on the platform and/or seasonality with power-users.

Total Mobile Trends: Mostly In-line with Mobile App

When looking at the total mobile data (app + web), the overall trends were mostly inline with the mobile app trends. However, we note that Twitter, Pinterest, Tumblr and LinkedIn appear to have much larger mobile web audiences than mobile app alone. We think this likely reflects the impact of search referral (for example, a Google search leading to a LinkedIn profile). In the case of Tumblr, total mobile UVs increased 17% m/m (versus a 6% sequential increase for app-only) and LinkedIn increased 14% m/m (versus a 5% decline for the app).

Tinder US Metrics Update Ahead of Monetization

Tinder, the mobile dating and discovery personals app owned by IACI (Outperform, PT $92) recorded 3.5MM UVs in August, down 7% m/m, cooling off after recording 38% m/m growth in July, but up significantly versus the 0.2MM UV’s in Aug. ’13. Tinder recorded 6.3 minutes/UV/day, largely flat vs. July. We expect IACI to start monetizing Tinder shortly, either at the end of 3Q14 or 4Q14. We expect three forms of monetization, (1) Advertising, (2) Subscription and (3) 1x payments for services. We expect mgmt. will leverage monetization knowledge from other personals assets (Match.com and OKCupid). For ad monetization, the prospects appear bright given the platform’s rising MAU’s, engagement and desirable demo (core age 18-29). While we expect moderate impact to financials in 2014, we estimate Tinder revenue of $88.2MM in 2015 and EBITDA of $17.6MM. Tinder is available in over 100 markets and is a top 100 app in 39 countries and top 5 lifestyle app in 45 countries per App Annie. For the Match segment, a benefit of Tinder over time is insights into user monetization in markets where Match didn’t formerly have a presence.

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