Match Group (MTCH) Down 10.6% Since Last Earnings Report: Can It Rebound?

A month has gone by since the last earnings report for Match Group (MTCH). Shares have lost about 10.6% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Match Group due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

Match Group Q2 Earnings Fall Y/Y, Revenues Lag Estimates

Match Group reported second-quarter 2022 loss of 11 cents per share against earnings of 46 cents reported in the year-ago quarter.

The Zacks Consensus Estimate for second-quarter 2022 earnings was pegged at 70 cents per share.

Revenues of $794.5 million increased 12% year over year but missed the Zacks Consensus Estimate by 0.95%.

Excluding forex, the top line increased 19% year over year to $842.3 million, driven by continued steady growth in both payers and revenue per payer (RPP).

Quarter in Detail

In the second quarter, the number of total payers increased 10% to 16.3 million. The number of total payers from the Americas, Europe, and the Asia Pacific (APAC) and Other increased 4%, 5% and 32%, respectively, on a year-over-year basis.

Growth in Payers was driven by Tinder across all geographies. Hinge, Chispa, Upward and BLK contributed to the growth in Payers in the Americas. The acquisition of Hyperconnect contributed to Payer growth in APAC and Other. There were decreases in Payers at Plenty of Fish, Match, Meetic and OkCupid in the Americas and Europe.

Total RPP increased 3% year over year to $15.86 million. Region-wise, RPP from the Americas and Europe increased 5% and 1%, respectively while APAC and Other remained unchanged year over year.

The Americas RPP increased primarily due to increases in subscriptions and a la carte purchases at Tinder and Hinge. Europe RPP was unfavorably impacted by the strength of the U.S. dollar relative to the euro and British pound, while APAC and Other RPP was unfavorably impacted by the strength of the U.S. dollar relative to the Japanese yen and Turkish lira.

Direct revenues from the Americas were up 9% to $408.7 million. Direct revenues from Europe increased 6% to $208.5 million, while APAC and Other reported a 32% surge in direct revenues to $163 million.

Direct revenues from Tinder grew 13% from the prior-year quarter, driven by 14% Payers growth to 10.9 million, partially offset by an RPP decline of 1%.

Direct revenues from All Other Brands collectively grew 12% year over year, driven by 10% RPP growth and 2% Payers growth to 5.5 million.

Operating Details

Total operating costs and expenses increased 62% year over year to $804.5 million in the second quarter with more than 86% of the total increase resulting from increased operating costs from the acquisition of Hyperconnect, subsequent amortization expense, and the $217 million impairment of related intangible assets.

Adjusted operating income was $286 million, an increase of 9% from the prior-year quarter, representing an adjusted operating income margin of 36%.

Balance Sheet

As of Jun 30, 2022, Match Group had a cash and cash equivalent balance of $473 million compared with $912 million as of Mar 31, 2022.

As of Jun 30, 2022, Match Group had long-term debt of $3.9 billion compared with $4 billion as of Mar 31, 2022.

As of Jun 30, 2022, Match Group reported $1.2 billion of exchangeable senior notes and $750 million under its revolving credit facility. The amount was undrawn as of Jun 30.

Guidance

Match Group expects third-quarter 2022 revenues to be $790-$800 million, indicating flat numbers year over year.

Adjusted operating income for the third quarter is anticipated to be $255-$260 million.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates have trended downward during the past month.

The consensus estimate has shifted -18.66% due to these changes.

VGM Scores

At this time, Match Group has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Match Group has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

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