Contributed by: kellyseal on Monday, May 15 2023 @ 09:27 am
Last modified on Monday, May 15 2023 @ 09:30 am
Shares of Match Group stock rose following the company’s second quarter forecasts, despite the decline in earnings for Q1.
Match Group reported EPS (earnings per share) of 42 cents, beating the consensus of 41 cents, per Reuters. It’s also a 5 percent increase from the same period last year. Revenue however was $787.12 million for the quarter, below the expected $793.87 million, and a 2 percent decline from the same time last year according to Yahoo! Finance.
Paying app users decreased by 1.1 percent to 15.87 million, according to Yahoo!, but revenue per payer actually increased to $16.26, up from $16 in the last quarter, a hopeful sign.
The company shared with investors that it is seeing growth at Tinder after making changes that focus on marketing and product execution, a restructuring of the executive team, and developing and leveraging technology like AI. Match Group wrote in its letter to shareholders that while revenue growth isn’t yet apparent, it is seeing “early signs of greater momentum,” according to Reuters[*1] .
The company said that paying users for Tinder did not change much year over year from the first quarter of 2022, and cited ongoing concerns like inflation which were hindering ARPU (average revenue per user). Industry analysts expect continued revenue decline industry-wide throughout 2023 because of such belt-tightening among dating app users.
The company said it expects revenue between $805 million and $815 million for the second quarter, which is below analyst expectations of $822.6 million.
In addition, Match Group announced a $1 billion share buyback program, with a plan to return at least half of its cash flow to shareholders.
Match Group also plans to increase marketing spend year over year for Tinder’s ongoing brand campaign, Hinge’s expansion into new markets, to promote exclusive dating app The League, and to launch a brand new app which is scheduled for this summer. CEO Bernard Kim also added that more focus would be on technology developments, specifically AI.
“We’re leaning in on AI, where we believe developments could transform the dating experience, much like the shift to mobile transformed our business in the early 2010s, leading to the advent of Tinder,” said Kim.
“Given our significant levels of cash flow, we expect to return at least half to shareholders over the next few years, and our board has authorized a new $1-billion share buyback program to do so,” he added.