In the midst of a challenging Q3 2022, Match Group earned $810 million versus the expected $793 million, but expects flat revenue growth for Tinder in the fourth quarter.
Match Group, the parent company of Tinder, released a Q3 2022 earnings report that beat quarterly estimates. Shares of the Dallas-based company rose 16 percent as more people paid for subscriptions to the Tinder dating app in the period ending Sept. 30.
Given the turbulent phases Match Group has gone through this year, the company welcomed the positive news. So far in 2022, Match Group has experienced management upheaval and a poor rollout of new features for its dating apps. In addition, the internet and technology company has also seen rising inflation impact consumer spending on its suite of online dating services. Tinder also suspended its plans to enter the metaverse space after the deal revealed a huge debt for the company.
Against all odds, Match Group’s Q3 2022 revenue came in at $810 million. That figure comfortably beat the consensus estimate of $793 million for the same period. The company said it also expected to reap an additional $14 million from a stronger-than-expected U.S. dollar.
Match Group also reported third-quarter earnings of $128.7 million and net income of 44 cents per share. In addition, the company said it earned 58 cents per share on earnings adjusted for stock option expenses and depreciation costs. However, this figure fell short of Wall Street’s expectations of 64 cents per share in earnings.
During the third quarter, Tinder’s revenue rose 6 percent, with paid users climbing 7 percent thanks to the return of a “swipe left” and “swipe right” companion selection feature. “Product execution is already improving,” Match Group CEO Bernard Kim and CFO Gary Swidler explained in a note to shareholders. However, Match Group forecast zero revenue growth for Tinder in the fourth quarter of the year. In addition, the dating platform said it expects revenue of between $780 million and $790 million for the period ending Dec. 31.
Microeconomic and macroeconomic headwinds
Match Group explained that its line of services for low-income consumers has been negatively impacted by a stagnant economy. In addition, the company also stated that consumer discretionary spending was present in its applications.
Match Group plans to address the downturn by reducing headcount-related expenses. In addition, the Dallas-based company also plans to cut marketing expenses and expects to have flat margins in 2023. Some analysts had already predicted this development, with Jefferies analyst Brent Thill saying in August:
“We’re concerned that the decision to slow hiring and reduce marketing investments could make it more difficult to achieve next year’s higher revenue expectations.”
Match Group shares were trading at $51.21 during the extended trading session, and are down 66.1% year-to-date. The company says it is searching for a new Tinder CEO after Renate Nyborg suddenly left in August. The position has remained vacant since then.
In addition to Tinder, Match Group’s other online dating services include Match.com, Meetic, OKCupid, Hinge, PlentyOfFish, Ship and OurTime. In total, the company has more than 45 dating companies worldwide.