Match Group's Tinder posts further decline in payers, but Q1 results still top estimates

By Denny Jacob

Match Group (MTCH) posted further declines in the number of paying users at dating app Tinder, an issue that is likely to exacerbate concerns about saturation in the online dating space despite otherwise solid first-quarter results.

The online dating company logged net income of $123.2 million, or 44 cents a share, for the first-quarter ended March 31, up from $120.8 million, or 42 cents a share, a year earlier. Analysts polled by FactSet expected 41 cents a share.

Revenue rose 9% to $859.6 million from $787.1 million. Analysts polled by FactSet expected $855.8 million.

Payers declined 6% to 14.9 million over the prior-year period, while revenue per payer increased 16% to $18.87 during the same period.

The decline in payers has extended to six quarters in a row, an ongoing issue among concerned investors. What remains to be seen is how the results are considered in the eyes of activist investor Elliott Investment Management, which has built a sizable stake in the company. The two sides entered into an information sharing agreement in March. Match also appointed to its board Laura Jones, chief marketing officer at Instacart, and Spencer Rascoff, co-founder of Zillow, as part of the agreement.

Match forecast revenue between $850 million and $860 million in the second quarter, well below analysts' estimates of $882.7 million. For 2024, the company expects year-over-year revenue growth near the low end of its previously issued guidance between 6% and 9% on expectations for Tinder's year-over-year revenue growth for the remaining quarters of 2024 to be in the low single digits.

Chief Executive Bernard Kim noted that Tinder continues to see pressure on monthly active users as well as pressure on a la carte revenue given weaker consumer discretionary spending. A la carte product adjustments and new a la carte features are coming in future quarters, he added.

Kim also pointed out that certain initiatives aimed at improving the product experience, which are largely aimed at women and Generation Z users, are having mixed short-term impacts on Tinder's metrics.

"While building a better Tinder takes time, we expect to begin seeing some signs of improvement in the coming quarters, including positive sequential payer net additions in Q3 and slowing user declines in the back half of the year," said Kim in a letter to investors.

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05-07-24 1648ET

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