Match Group’s Q3 Earnings: A Mixed Bag Amid Growth Challenges

Match Group (MTCH) reported earnings of 51 cents per share for the third quarter of 2024, surpassing the Zacks Consensus Estimate by 10.87%. However, this figure represents a decline of 10.5% from the same period last year.

Revenues reached $895.48 million, reflecting a year-over-year increase of 1.5%. Despite this growth, revenues fell short of the Zacks Consensus Estimate by 0.54%. When excluding currency fluctuations, revenues rose by 3% from the previous year, totaling $907 million.

Direct revenues accounted for $879.19 million, up 1% from last year, while indirect revenues increased by 10% to $16.28 million.

The revenue growth was primarily driven by a strong performance from Hinge. The platform’s direct revenues skyrocketed by 36% year over year, reaching record download numbers this quarter. Additionally, steady growth in Azar across North America and Europe contributed positively.

Revenue Breakdown and Highlights

Match Group Inc. price-consensus-eps-surprise-chart | Match Group Inc. Quote

Diving Deeper into the Quarter

Match Group saw the total number of payers decline by 3% from last year to 15.21 million. This figure exceeded the Zacks Consensus Estimate by 0.39%.

Revenue per payer (RPP) increased by 5% year over year to $19.26, although it fell short of the Zacks Consensus Estimate by 0.78%.

Tinder’s direct revenues decreased by 1% year over year to $503 million, though it rose by 1% on a currency-neutral basis. This number also missed the Zacks Consensus Estimate by 0.49%.

Tinder’s RPP improved by 4% year over year to $16.87, bolstered by enhanced app performance and user satisfaction initiatives. Despite this, slow growth in new users hindered overall progress.

The number of payers on Tinder fell by 4% to 9.94 million, although there were strides made in product innovation to strengthen the brand.

Conversely, Hinge’s revenues surged 36% to $145.4 million, with a 21% increase in payers to 1.6 million and a 12% rise in RPP to $30.26. Strong growth was noted in English-speaking countries and Western Europe, with Hinge becoming the second most downloaded dating app. In the Nordic and DACH regions, downloads grew approximately 20%, and in France, they surged over 40% year on year.

Match Group Asia experienced a 6% decline in direct revenues, resulting in $72.16 million. This pattern was largely attributed to currency exchange impacts. However, on a currency-neutral basis, direct revenues at Azar and Pairs rose by 5% and 2%, respectively.

Evergreen and Emerging revenues fell by 9% to $158.39 million.

Examining Operating Metrics

Operating costs and expenses constituted 76% of revenues, totaling $684.82 million—an increase of 7% from last year.

Adjusted operating income climbed 3% year over year to $342.5 million, reflecting an adjusted operating margin of 38%, which expanded by 50 basis points.

Financial Position Overview

As of September 30, 2024, Match Group reported $861 million in cash and cash equivalents, up from $844 million as of June 30, 2024.

The company’s long-term debt stood at $3.9 billion, unchanged from previous quarters.

During the third quarter, Match Group repurchased 7.1 million shares of common stock for $241 million. As of November 1, 2024, the company has $252 million in stock available for repurchase under its existing program.

Future Outlook

For the fourth quarter of 2024, Match Group anticipates revenues between $865 million and $875 million, which would remain flat compared to the previous year. Excluding the now-exited Hakuna and other live-stream services, revenue is expected to increase by 2% to 3%. The Zacks Consensus Estimate for Q4 revenues is pegged at $903.18 million, which signals 4.27% growth year-over-year.

Tinder’s direct revenues are projected in the range of $480 million to $485 million, reflecting a decline of 2% to 3% year over year due to ongoing challenges with monthly active users and other initiatives.

In other areas, Match Group expects direct revenues between $370 million and $375 million, indicating a year-over-year growth of 3% to 5%. Hinge’s direct revenues are expected to reach approximately $145 million, marking a year-over-year increase of 25%. The company estimates indirect revenues of around $15 million for the quarter.

Adjusted operating income for Q4 is expected in the range of $335 million to $340 million, accounting for $7 million in employee severance and other similar expenses, as well as the Canada Digital Services Tax. This would result in an adjusted operating margin of 39%.

Market Standing and Peer Comparison

Match Group currently holds a Zacks Rank #3 (Hold).

Better-ranked stocks in the broader retail-wholesale sector include Alibaba (BABA), Boot Barn (BOOT), and Dutch Bros (BROS), each carrying a Zacks Rank #1 (Strong Buy) at present. You can view the complete list of Zacks #1 Rank stocks here.

BABA shares have gained 24.4% year-to-date, with a long-term earnings growth rate projected at 10.44%.

BOOT shares have seen a significant increase of 65.6% this year, boasting a long-term earnings growth rate of 12.99%.

BROS shares have increased by 29.5% year-to-date, with an anticipated long-term earnings growth rate of 30%.

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