Match Group (NASDAQ:MTCH) Posts Q1 Sales In Line With Estimates But Quarterly Guidance Underwhelms

Jabin Bastian /
2024/05/07 4:26 pm EDT

Dating app company Match (NASDAQ:MTCH) reported results in line with analysts' expectations in Q1 CY2024, with revenue up 9.2% year on year to $859.6 million. On the other hand, next quarter's revenue guidance of $855 million was less impressive, coming in 3.1% below analysts' estimates. It made a GAAP profit of $0.44 per share, improving from its profit of $0.41 per share in the same quarter last year.

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Match Group (MTCH) Q1 CY2024 Highlights:

  • Revenue: $859.6 million vs analyst estimates of $855.8 million (small beat)
  • EPS: $0.44 vs analyst estimates of $0.41 (8.6% beat)
  • Revenue Guidance for Q2 CY2024 is $855 million at the midpoint, below analyst estimates of $882.4 million
  • Gross Margin (GAAP): 70.1%, in line with the same quarter last year
  • Free Cash Flow of $266.9 million, similar to the previous quarter
  • Payers: 14.9 million, down 1 million year on year
  • RPP: $18.87, up 16% year on year
  • Market Capitalization: $8.56 billion

Originally started as a dial-up service before widespread internet adoption, Match (NASDAQ:MTCH) was an early innovator in online dating and today has a portfolio of apps including Tinder, Hinge, Archer, and OkCupid.

Consumer Subscription

Consumers today expect goods and services to be hyper-personalized and on demand. Whether it be what music they listen to, what movie they watch, or even finding a date, online consumer businesses are expected to delight their customers with simple user interfaces that magically fulfill demand. Subscription models have further increased usage and stickiness of many online consumer services.

Sales Growth

Match Group's revenue growth over the last three years has been unremarkable, averaging 11.5% annually. This quarter, Match Group reported mediocre 9.2% year-on-year revenue growth, in line with analysts' expectations.

Match Group Total Revenue

Guidance for the next quarter indicates Match Group is expecting revenue to grow 3.1% year on year to $855 million, slowing from the 4.4% year-on-year increase it recorded in the comparable quarter last year. Ahead of the earnings results, analysts were projecting sales to grow 7% over the next 12 months.

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Usage Growth

As a subscription-based app, Match Group generates revenue growth by expanding both its subscriber base and the amount each subscriber spends over time.

Match Group has been struggling to grow its users, a key performance metric for the company. Over the last two years, its users have declined 1.8% annually to 14.9 million. This is one of the lowest rates of growth in the consumer internet sector.

Match Group Payers

In Q1, Match Group's users decreased by 1 million, a 6.3% drop since last year.

Revenue Per User

Average revenue per user (ARPU) is a critical metric to track for consumer internet businesses like Match Group because it measures how much the average user spends. ARPU is also a key indicator of how valuable its users are (and can be over time).

Match Group ARPU

Match Group's ARPU growth has been decent over the last two years, averaging 7.5%. Although its users have shrunk during this time, the company's ability to increase prices demonstrates its platform's value for existing users. This quarter, ARPU grew 16.1% year on year to $18.87 per user.

Key Takeaways from Match Group's Q1 Results

We struggled to find many strong positives in these results. Although this quarter's revenue and EPS beat Wall Street's estimates thanks to its continued price increases, its payers declined and its revenue guidance for next quarter missed Wall Street's estimates. The Tinder payer declines are what the market is homing in on, and this quarter's results and guidance weren't what we were looking for. The company is down 4.6% on the results and currently trades at $30.05 per share.

Match Group may have had a tough quarter, but does that actually create an opportunity to invest right now? When making that decision, it's important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it's free.