Match Group Hinge Revenue Soars 48%

Key PointsMatch Group revenue of $864 million topped management guidance despite foreign currency headwinds.Hinge direct revenue outperformed expectations, soaring 48% year over year.Payers continued to decline, reflecting ongoing challenges in user retention.Match Group (MTCH 1.48%), the parent company of popular dating apps like Tinder and Hinge, reported second-quarter earnings on Tuesday that topped management’s guidance range but also highlighted significant challenges in user engagement and retention. Despite revenue beats, the company is faced with declining user metrics, particularly a 5% drop in payers. Adjusted operating income (AOI) came in at $306 million, showing a 2% year-over-year growth.Earnings DataMetricQ2 2024Management ExpectationsQ2 2023Change (YOY)Total revenue$864 million$850 million to $860 million$829.6 million4%Tinder revenue$480 million$475 million to $480 million$474.7 million1%Hinge revenue$134 million$125 million to $130 million$90.3 million48%Adjusted operating income$306 million$300 million to $305 million$301.3 million1.6%Payers14.8 millionN/A15.6 million(5%)Revenue per payer$19.05N/A$17.419%Source: Match Group. Note: Management guidance provided in Q1 earnings report released on May 7. YOY = Year over year.The Business of Match GroupMatch Group is a leading provider of online dating services, with a portfolio that includes popular apps like Tinder, Hinge, Match, OkCupid, and Plenty of Fish. The company’s focus is on leveraging its brand recognition and diverse app portfolio to attract a wide range of users and cater to different demographic preferences.Q2 Financial and Operational HighlightsThe most notable aspect of Q2 2024 was the solid revenue performance. Excluding foreign exchange impacts, revenue would have risen 8% to $892 million, highlighting effective revenue management amidst FX headwinds. Hinge was the star segment performer with a 48% year-over-year increase in revenue, reaching $134 million.Operationally, the company exited its live streaming services to refocus on its core strengths. This move is expected to enhance margins and better position the company for future profitability. Furthermore, Match Group saw an increase in its revenue per payer (RPP), rising by 9% to $19.05, despite the total number of payers declining by 5% year over year to 14.8 million.Regionally, the Asia and Europe segments faced challenges. Direct revenue in MG Asia declined by 4% year over year, while the Evergreen and Emerging (E&E) brands saw an 8% drop. These declines were attributed to macroeconomic factors affecting those regions.One-time events included a $198 million repurchase of the company's stock, deploying approximately 75% of its free cash flow for the quarter. This emphasized management's confidence in the company’s valuation and outlook.Outlook for the Quarter AheadFor Q3 2024, Match Group’s management expects total revenue between $895 and $905 million, indicating a modest year-over-year growth of 2% to 3% (4% to 5% FX Neutral). Tinder's direct revenue is expected to remain roughly flat year-over-year, marking a potential stabilization of its performance.AOI for Q3 is projected to be slightly up, continuing the company’s emphasis on cost management. The company maintains an AOI margin target of 36%, emphasizing operational efficiency.Moving forward, investors should keep an eye on user engagement and retention metrics, as well as the company’s success in navigating macroeconomic challenges and regulatory landscapes.