Match Earnings: Tinder and Hinge Remain Top-Line Growth Drivers; Others Await Turnaround

Match Group’s MTCH price strategy is generating returns in terms of revenue growth, which, combined with continuing cost control, created operating leverage and produced an impressive third quarter. Third-quarter results displayed continuing strength of the Tinder app and its brand and further adoption and increased monetization of the Hinge app. Fourth-quarter guidance was disappointing, albeit mainly due to currency headwinds and recently heightened geopolitical tensions. Match’s initial 2024 revenue growth outlook was in line with our assumption. After reducing our longer-term revenue projections and margin assumptions—as we expect the narrow-moat firm to market its apps more aggressively next year and beyond—we are lowering our fair value estimate to $65 per share from $70.

Match also reached an agreement with Google regarding the antitrust case involving Google Play’s app distribution and fee, which we think could contribute around 20 basis points to Match’s revenue growth next year. Users of Match’s apps will now have the choice to use either Match’s own billing system, which has a lower revenue share with Google, or stick with Google Play as they did in the past.

Total revenue of $881.6 million increased 9% year over year driven mainly by higher prices, which helped pushed higher direct revenue from Tinder (up 11%) and Hinge (up 44%) and more than offset declines in Match Group Asia (down 5%) and evergreen and emerging (down 3%). Advertising revenue growth accelerated to 8% from the second quarter’s 4%.

While Match’s user count declined 5% to 15.7 million, mainly because of the higher prices, user monetization increased 15% to $18.39 of revenue generated per user. Adjusted operating margin expanded 3 percentage points from last year to 38% due to lower streaming costs, which increased gross margin, and a decline in general and administrative costs, since legal fees declined as the firm and Google progressed toward an agreement during the quarter.