Shares of Match Group (NASDAQ:MTCH) jumped after the bell Tuesday as Tinder's parent company reported better-than-expected revenue, but Wednesday has brought the stock back down to Earth.
The launch of more flexible subscription plans, including cheaper premium plans for shorter durations, helped Match generate revenue of $830 million in the second quarter, compared to Street estimates of $811.4 million. Earnings were $0.48 per share, beating expectations of $0.45.
However, paying users across Match’s dating apps fell 5% to 15.6 million. In addition to Tinder, the company operates Hinge, Match, OkCupid and others.
Looking ahead, the company is prioritizing returning to user growth.
“The year-over-year payer decline is also due to Tinder's new user trends still being below desired levels as well as the fact that pricing changes are still rolling through the US payer base,” CFO Gary Swidler said on the company’s earnings call.
“We're confident that these shorter packages are long-term revenue accretive and bring other meaningful benefits, such as increasing conversion, especially among younger users and females.”
After initially popping 10% higher in after-hours trading, shares of Match fell 0.2% Wednesday afternoon to $46.17.
Looking ahead, Match projects revenue between $875 million and $885 million for the third quarter. Analysts are expecting $863.8 million.
To get there, Tinder is turning its attention to Gen Z. The brand's "It Starts with a Swipe" campaign has helped boost usage, particularly among young women, the company said.
Additionally, the company is turning to generative AI.
“I believe this technology is also really fun and engaging, and when applied correctly, can drive curiosity and make the dating journey more enjoyable,” CEO Bernard Kim said during the earnings call.
“By the end of the year, we expect to have launched a number of initiatives that will use generative AI to eliminate awkwardness, make dating more rewarding, and surprise and delight users, all in a way that focuses on authenticity and maintaining the highest ethical and privacy standards.”
Contact Andrew Kessel at andrew.kessel@proactiveinvestors.com
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