Online dating company Match (MTCH 44.76, +5.88, +15.12%) is trading higher
after the company reported second quarter results above guidance and raised its
forecast for the year.
Second quarter EBITDA grew 60% to $176 mln as revenue rose 36% to $413 mln. The company had guided for EBITDA of $160-165 mln on revenue of $405-415 mln.
That marks the sixth quarter in a row that EBITDA came in above the company's forecast.
So, what is driving Match's financial success? Paid members on the company's most prized dating asset, Tinder, continue to exceed expectations.
Tinder added 299K subscribers during the quarter, well above the company's forecast of 200-250K adds. Tinder subscribers are up 81% year/year to 3.77 mln.
Total subscribers across all of Match's dating brands were up 27% to 7.72 mln, and average revenue per user (ARPU) grew 8% to $0.57.
Tinder continues to innovate and improve its current dating offerings, experiment with new brands, and acquire emerging dating apps to remain the leader in online dating.
Match guided for third quarter revenue and EBITDA above estimates and raised guidance for the year. Match raised EBITDA guidance to $625-650 mln from $600-650 mln and raised revenue expectations to $1.68-1.72 bln from $1.60-1.70 bln.
Note that nearly half of the stock's float (the shares available to trade) are sold short. IAC (IAC) still owns over 80% of the stock.
At ~20x EBITDA or ~30x EPS, the $13 bln market cap is not frothy like many high-quality software stocks in the current market.
Skeptics have always been wary of the low barrier to entry (competition) in the online dating space, but negative impact from that element has been largely offset by strong networks effects. Facebook's announcement of a feature within the Facebook app that will let users find potential dates through common events caused shares to plummet in early May, but that minor effort by Facebook ultimately seems unlikely to have an impact on Match or Tinder.
Match management was scheduled to host a call at 8:30 this morning.
- OUR VIEW
- LEARNING CENTER