Match Group (MTCH) Up 5.4% Since Last Earnings Report: Can This Continue?

It’s been a month since Match Group’s (MTCH) last earnings report. Shares have risen about 5.4% in that time, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Match Group headed for a pullback? Before we dive into the recent reaction from investors and analysts, let’s take a quick look at the company’s most recent earnings report in order to get a better handle on the important factors influencing the situation.

Match Group’s first quarter results exceed estimates, revenues grow y/y

Match Group reported first-quarter 2024 earnings of 44 cents per share, up 4.8% from the year-ago quarter. The bottom line surpassed the Zacks Consensus Estimate by 10%.

Revenues of $859.65 million increased 9% year-over-year and surpassed the Zacks Consensus Estimate by 0.4%. On a foreign-neutral basis, revenue increased 12% from the prior-year quarter to $880 million.

Direct revenues were $845.3 million, up 9% year-over-year, while indirect revenues were $14.35 million, up 13% from the same quarter last year.

Revenue growth was driven by the strength of Tinder and Hinge. Solid growth in the Americas and Europe regions was also positive.

Quarter in detail

In the first quarter, the total number of payers decreased year-on-year by 6% to 14.93 million. This number missed the Zacks Consensus Estimate by 0.3%.

The total number of payers from the Americas decreased 14% year-over-year to 6.87 million, while the total number of payers from Europe increased 2% year-over-year to 4.5 million. Meanwhile, the total number of Asia-Pacific (APAC) payers of 3.56 million grew 2% year-on-year.

Total revenue per payer (RPP) increased 16% year over year to $18.87. This number surpassed the Zacks Consensus Estimate by 0.6%.

Regionally, MPC increased 29% year-on-year in the Americas to $21.85 and 10% to $17.73 in Europe. However, in the APAC region it fell 2% year-on-year to $14.57.

Direct revenue from the Americas increased 11% to $450.25 million. Direct revenues from Europe increased by 13% to $239.36 million, while the same from Asia-Pacific decreased by 0.2% to $155.69 million.

Tinder’s direct revenue increased 9% year-over-year (12% on a currency-neutral basis) to $481.5 million. This number missed the Zacks Consensus Estimate by 0.3%.

Tinder RPP increased 20% year-over-year to $16.52, driven by price optimizations and new weekly subscription packages.

Payer volume declined 9% year-over-year to just under 10 million, primarily due to the impact of price optimization on payers, which reduced conversion. Tinder saw subscription revenue growth accelerate throughout the quarter.

Hinge’s revenue increased 50% year-over-year to $123.75 million, with a 31% year-over-year increase in payers to 1.4 million and a 14% year-over-year increase in RPP to $28.96. Hinge continued to grow in English-speaking markets and Western Europe, with total downloads increasing approximately 20% year-over-year.

Match Group Asia Direct revenues declined 6% year-on-year (up 7% on a currency neutral basis) to $71.5 million due to continued declines in Pairs and Hakuna. Nevertheless, the company’s business continued to grow, as evidenced by Azar’s 4% year-over-year growth to $37 million.

Evergreen and Emerging revenues declined 4% year-over-year to $168.6 million.

The story continues

Operational details

Total operating costs and expenses (79% of revenue) increased 15% year-over-year to $674.91 million in the first quarter.

Adjusted operating income was $279.45 million, up 6% year-over-year, representing an adjusted operating margin of 33%, which decreased 80 basis points.

Balance

As of March 31, 2024, Match Group had cash and cash equivalents and short-term investments of $921 million, compared to $869 million as of December 31, 2023.

As of March 31, 2024, MTCH had $3.9 billion of long-term debt, on a no-change basis.

During the quarter ended March 31, 2024, the company repurchased 5.6 million shares of common stock for $197.6 million. As of May 3, 2024, a total value of $800 million of Match Group shares was available under the previously announced share repurchase program.

Conductivity

Match Group expects Q2 2024 revenues in the range of $850 million to $860 million, representing year-over-year growth of 2% to 4% on a reported basis and 5% to 6% on a currency neutral basis.

Tinder Direct revenue is expected to be between $475 million and $480 million, suggesting year-over-year growth of 0% to 1% on a reported basis and 3% to 4% on a currency neutral basis.

For other brands, Match Group expects direct revenue to be in the range of $360 million to $365 million, representing growth of 5% to 7% year-over-year on a reported basis and 8% to 10% on a currency neutral basis, with Hinge Direct revenues are expected to be between $125 million and $130 million, representing year-over-year growth of 38% to 44%. The company expects indirect revenue to be approximately $15 million this quarter.

Second-quarter adjusted operating earnings are expected to be $300 million to $305 million, with an adjusted operating margin of 35%.

Match Group expects full-year 2024 revenue growth near the lower end of previously reported year-over-year growth of 6% to 9%.

Tinder Direct’s revenue growth is expected to be in the low single digits.

Adjusted operating margin is expected to be approximately 36%. The company also expects to generate free cash flow of $1.1 billion for the full year.

How have estimates changed since then?

Over the last month, investors have seen a downward trend in estimate revisions.

Due to these changes, the consensus estimate moved -7.82%.

VGM results

Match Group currently has a great Growth Score of A, although it lags behind in the Momentum Score with an F. However, the stock is rated an A on the value side, putting it in the top quintile for this investment strategy.

Overall, the company’s Total VGM Score is A. If you’re not focused on one strategy, this score should interest you.

Perspectives

Estimates for this company are generally on a downward trend, and the magnitude of these revisions indicates a downward shift. Notably, Match Group carries a Zacks Rank #3 (Hold). We expect a linear rate of return on the stock over the next few months.

Industry player performance

Match Group is a member of the Zacks Internet – Commerce industry. Another stock in the same industry, Booking Holdings (BKNG), has gained 4.7% over the past month. More than a month has passed since the company announced its results for the quarter ended March 2024.

In its most recently reported quarter, Booking Holdings reported revenue of $4.42 billion, representing a year-over-year change of +16.9%. EPS of $20.39 in the same period compared to $11.60 a year ago.

For the current quarter, Booking Holdings is expected to report earnings per share of $39.22, representing a change of +4.3% from the prior-year quarter. The Zacks Consensus Estimate has remained unchanged over the past 30 days.

Booking Holdings carries a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Rating of A.

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