Match (MTCH 41.15, -10.32, -20.05%) is trading sharply lower after the company
reported strong third quarter results but issued downside guidance for the
fourth quarter yesterday afternoon.
Third quarter revenue grew 29% to $444 mln vs. $430-440 mln guidance. Average Subscribers increased 23% to 8.1 mln while average revenue per user grew 6% to $0.57.
Strong results continue to be driven by Tinder, which added 344K paid subscribers during the quarter. Match had said subscriber additions would be similar to the second quarter, when the company added 299K subs. Tinder paid subs increased 61% year/year to 4.11 mln.
As a result, third quarter EBITDA grew 38% to $165 mln versus $160-165 mln guidance. The company has now exceeded EBITDA guidance seven quarters in a row.
Despite guiding fiscal 2018 results toward the high end of its prior range, guidance for the fourth quarter was just below estimates. The company cited foreign exchange, indirect (advertising) softness due to GDPR (European data privacy regulation), and lower impressions on the top-line. Meanwhile, the company forecasted marketing spend up 20% due to major marketing campaigns at Tinder, Pairs, and the recently acquired Hinge, as well as higher litigation expenses.
Match also announced a $2/share special cash dividend, funded by cash on hand. Free Cash Flow increased 94% to $404 mln through the first nine months of the year.
Meanwhile, the company will continue to look for compelling acquisition targets in the online dating space.
Management hosted a call beginning at 8:30 this morning, providing additional color on its outlook for Tinder subscribers in coming quarters and providing commentary on next year’s top-line growth.
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