Contributed by: kellyseal Friday, November 16 2018 @ 09:18 am
Match Group stock fell 10% 2 weeks ago in response to falling short of analysts’ Q4 goals, which were released along with their third quarter earnings reports[*1] .
Match Group reported revenue of $444 million, topping analyst estimates of $437 million for quarter 3. This is an increase of 29% when compared to quarter 3 of 2017 ($343 million). Match said it expects revenue of $1.72 billion for the year. But despite the growth and positive news, it was the projections for the last quarter which caused the dip in confidence from Wall Street. Analysts projected $454.5 million in Q4, while Match Group estimates it will only reach between $440 and $450 million.
Match Group lowered its estimates because of its higher-than-anticipated spending for Tinder and its other dating apps. Marketing costs are expected to rise 20% for Tinder and other brands like Hinge.
"While a slightly underwhelming 4Q guide is a negative, we note that the majority of the softness is external rather than fundamental," Jefferies analyst Brent Thill said in a note sent out to clients on Tuesday. He added the decline in revenue might be due in part to lawsuits and the new EU General Data Protection Regulation, which requires online companies to make sure they have permission from users to handle their personal data, according to Reuters.
Match also said that it would provide a $2.00 per share special cash dividend for common stock and Class B common stock, which will be paid out in December. This also confused analysts, since the majority of cash will go to parent company IAC, though it wasn’t stated what the additional cash will be used for.
Despite the disappointing loss, Match Group stock year-to-date is up 60%, and Match Group expects revenue to continue to grow, thanks to booming business from dating app Tinder and its paid service Tinder Gold. Tinder is responsible for half of Match Group’s user base across all their apps, as well as half of their total revenue, according to website Tech Crunch[*2] .
Match Group isn’t deterred from their winning streak. "Match Group delivered another quarter of strong top and bottom line growth, with Tinder continuing as our growth engine," CEO Mandy Ginsberg said in a press release.
Still, analysts favor Match Group and have offered optimistic forecasts based on the significant and consistent growth in revenue. The company earned 39 cents per share on an adjusted basis, above analysts’ estimates of 36 cents.
Tinder added about 344,000 subscribers in the latest quarter (Q3), bringing its total to 4.1 million. Match Group’s suite of apps have a total of 8.1 million subscribers as of the last quarter.