Stock Story -
Dating app company Match (NASDAQ:MTCH) beat analysts' expectations in Q2 CY2024, with revenue up 4.2% year on year to $864.1 million. On the other hand, next quarter's revenue guidance of $900 million was less impressive, coming in 1.6% below analysts' estimates. It made a GAAP profit of $0.48 per share, improving from its profit of $0.47 per share in the same quarter last year.
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Match Group (NASDAQ:MTCH) Q2 CY2024 Highlights:
- Revenue: $864.1 million vs analyst estimates of $856.5 million (small beat)
- EPS: $0.48 vs analyst expectations of $0.48 (in line)
- Revenue Guidance for Q3 CY2024 is $900 million at the midpoint, below analyst estimates of $914.8 million
- Gross Margin (GAAP): 71.6%, up from 70.8% in the same quarter last year
- Free Cash Flow of $116.3 million, down 56.4% from the previous quarter
- Payers: 14.8 million, down 830,000 year on year
- Market Capitalization: $8.82 billion
Consumer SubscriptionConsumers today expect goods and services to be hyper-personalized and on demand. Whether it be what music they listen to, what movie they watch, or even finding a date, online consumer businesses are expected to delight their customers with simple user interfaces that magically fulfill demand. Subscription models have further increased usage and stickiness of many online consumer services.
Sales GrowthMatch Group's revenue growth over the last three years has been unremarkable, averaging 9.6% annually. This quarter, Match Group reported lacklustre 4.2% year-on-year revenue growth, in line with analysts' expectations.
Guidance for the next quarter indicates Match Group is expecting revenue to grow 2.1% year on year to $900 million, slowing from the 8.9% year-on-year increase it recorded in the comparable quarter last year. Ahead of the earnings results, analysts were projecting sales to grow 6.4% over the next 12 months.
Usage Growth As a subscription-based app, Match Group generates revenue growth by expanding both its subscriber base and the amount each subscriber spends over time.
Match Group has been struggling to grow its users, a key performance metric for the company. Over the last two years, its users have declined 3.6% annually to 14.8 million. This is one of the lowest rates of growth in the consumer internet sector.
In Q2, Match Group's users decreased by 830,000, a 5.3% drop since last year.
Revenue Per UserAverage revenue per user (ARPU) is a critical metric to track for consumer internet businesses like Match Group because it measures how much the average user spends. ARPU is also a key indicator of how valuable its users are (and can be over time).
Match Group's ARPU growth has been decent over the last two years, averaging 8.4%. Although its users have shrunk during this time, the company's ability to increase prices demonstrates its platform's value for existing users. This quarter, ARPU grew 9.4% year on year to $19.05 per user.
Key Takeaways from Match Group's Q2 Results This was a decent quarter for Match. Although it continued losing payers, its Tinder monthly active users stabilized while its payer declines slowed. This was an encouraging data point for the market as it's laser-focused on Tinder payers, and the stock traded up 5.4% to $35.50 immediately after reporting. Match expects to see a sequential improvement in payers next quarter.
