Match profit forecast misses as Tinder marketing costs rise

February 6, 2019

(Reuters) – Dating services provider Match Group Inc forecast first-quarter revenue and profit below Wall Street estimates on Wednesday, hurt by higher marketing expenses at its Tinder, Hinge and other apps.

Online dating market is expected to grow to $12 billion by 2020, according to Nomura analysts, and Match has been investing heavily to grab a bigger slice of the pie.

The company has boosted its marketing spend on its money-spinner Tinder in emerging markets, including India and Latin America, while ramping up its other services, PlentyOfFish and Hinge.

Match faces stiff competition from a host of rivals including Bumble, which recently launched its app in India, a market with huge potential for dating-related services.

Match’s total operating expenses rose about 22 percent to $306.34 million in the fourth quarter.

Higher spending, however, helped boost subscriber growth at Match’s apps. Tinder — which has made “swipe left” and “swipe right” a point of pop culture conversations – added 233,000 average subscribers in the quarter bringing its total average subscriber count to 4.3 million.

Marketing push leads to Tinder Growth png – https://tmsnrt.rs/2TyQXGN

Overall subscribers at Match rose to 8.2 million.

The company forecast first-quarter revenue of $455 million to $465 million, while analysts on average were expecting $469.7 million, according to IBES data from Refinitiv. The company said a strong dollar weighed on its forecast.

Match said it also expects first-quarter adjusted earnings before interest, tax, depreciation and amortization (EBITDA) of $150 million to $155 million, below estimates of $155.28 million.

Total revenue rose 20.7 percent to $457.34 million in the quarter, beating analysts’ estimates of about $448.5 million.

Net earnings attributable to Match Group shareholders was $115.5 million, or 39 cents per share, for the three months ended Dec 31, compared with a loss of $9 million, or 3 cents per share.

(Click here https://tmsnrt.rs/2TBLVt8 for an interactive on Match subscriber growth)

(Reporting by Arjun Panchadar and Pushkala Aripaka in Bengaluru)

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