Match Group announced a lower-than-expected fourth-quarter revenue forecast, citing negative impacts from foreign exchange rates and weaker user growth at its flagship dating app, Tinder. This news overshadowed the company’s announcement of its inaugural quarterly dividend and a significant share buyback program.
Match Group now anticipates Q4 revenue below its previous projection of $865 million to $875 million. This revised outlook falls short of analysts’ average estimate of $869.6 million, according to LSEG data. The company attributes the shortfall to a stronger US dollar and a challenging macroeconomic environment impacting user spending across its portfolio of dating apps, including Hinge, OkCupid, and Plenty of Fish.
The dating app giant, which experienced a surge in demand during the pandemic, has observed a slowdown in recent quarters. Economic uncertainties and a perceived lack of innovative features have contributed to users curtailing their spending on premium features. Match Group specified that the negative impact from foreign exchange fluctuations is expected to be approximately $15 million more than initially anticipated, with roughly two-thirds of this impact attributed to Tinder.
Geographically, revenue generated from Europe, Asia Pacific, and regions outside the Americas constituted over 40% of Match Group’s total revenue in the quarter ending in June. This exposure to international markets makes the company vulnerable to currency fluctuations. Tinder, the company’s primary revenue driver, is also projected to miss its direct revenue target of $480 million to $485 million for the fourth quarter.
While new user growth on Apple’s iOS platform has stabilized after a period of decline, it remains below levels observed in early September, indicating continued challenges in user acquisition. Despite these headwinds, Match Group maintains its projected adjusted operating income margin of 36% for 2024, signaling confidence in its long-term profitability. The company’s decision to introduce a dividend and implement a share buyback program suggests a strategic effort to enhance shareholder value amidst the current market challenges.
In conclusion, Match Group’s revised revenue forecast highlights the combined impact of unfavorable currency exchange rates and sluggish growth at Tinder. While the company is taking steps to address these challenges and maintain profitability, the near-term outlook remains uncertain. The introduction of a dividend and a share buyback program may provide some support to the stock price, but the company’s long-term success will depend on its ability to reignite user growth and adapt to evolving market dynamics.
