Match Group (MTCH) Q3 Earnings Decline Y/Y, Revenues Improve
Match Group MTCH reported third-quarter 2020 earnings of 45 cents per share, which declined 13% from year-ago quarter’s figure. The Zacks Consensus Estimate was pegged at 57 cents.
Nevertheless, revenues of $639.8 million increased 18% year over year. The Zacks Consensus Estimate stood at $604.4 million.
Continued momentum at Tinder and solid performances of Hinge, Pairs and OkCupid aided top line growth. Excluding the effect of foreign exchange, the top line rose 18% year over year to $636.7 million, driven by rise in average subscriber base.
Match Group Inc. Price, Consensus and EPS Surprise
Match Group Inc. price-consensus-eps-surprise-chart | Match Group Inc. Quote
Notably, activity and engagement across all brands has been high since the COVID-19 outbreak, especially across western markets.
Quarter Details
Average subscriber base increased 12% to 10.8 million and average revenues per user (ARPU) were up 4% year over year to 62 cents.
North America subscriber base climbed 9% to 5.1 million, while International advanced 16% to 5.7 million. Improvement in subscriber base in North America was driven by Tinder, Chispa, Hinge, and BLK. Internationally, growth was driven by Tinder as well as Pairs and Meetic apps.
North America ARPU increased 8% to 66 cents, while International ARPU increased 1% to 58 cents. North America ARPU was driven by increased purchases of à la carte features at Tinder, PlentyofFish and Hinge. Also, streamlining of pricing for Hinge app added to North America ARPU growth.
The company continues to expand operations across international markets. The company rolled out Tinder Platinum (test version) subscription service to 10 countries. It expects to launch the subscription service to more countries in the fourth quarter of 2020. The company recently unveiled Upward, which is a Christian community-focused app.
Moreover, robust Tinder average subscriber increased 16% year over year came to 6.6 million that contributed to the quarterly results. However, Tinder APRU dropped 1% in the third quarter.
Direct revenues from Tinder increased 15% year over year. The company launched Swipe Night series across 24 countries in September 2020 and relaunched the feature in the United States. The Swipe Night feature aided Tinder boost daily usage, with viewership hitting 15 million driven by traction in the Swipe Night series.
Direct revenues from non-Tinder brands collectively increased 23% on a year-over-year basis. Non-Tinder brands witnessed 13% growth in ARPU as well as 7% increase in average subscribers and contribution from non-subscriber one-to-many video revenues.
Markedly, Hinge’s ARPU was up more than 100% on a year-over-year basis in the third quarter. The launch of two à la carte features boosted Hinge ARPU growth.
Moreover, Match Group owned dating app — Plenty of Fish — saw 5.5 million users for its one-to-many live streaming service, which encourages members to practice social distancing while dating amid the coronavirus pandemic.
Adjusted EBITDA was $249.2 million, up 21% year over year. Adjusted EBITDA margin expanded 110 basis points (bps) year over year to 39%.
Total operating costs and expenses, as a percentage of revenues, expanded 100 basis points (bps) on a year-over-year basis and came in at 69% in the reported quarter. This was driven by increases in selling and marketing expenses, and general and administrative expenses, partly offset by reduced spend on travel.
Operating income advanced 14.2% from the year-ago quarter’s tally to $200.2 million. Operating margin contracted 100 bps to 31%.
Balance Sheet & Cash Flow
As of Sep 30, 2020, Match Group had cash and cash equivalent balance of $399 million compared with $129.3 million as of Jun 30, 2020. As of Sep 30, 2020, the company had long-term debt of $3.52 billion compared with $3.53 billion as of Jun 30, 2020.
As of Sep 30, 2020, the company also reported $1.7 billion of exchangeable senior notes. The company had $750 million under its revolving credit facility as of Sep 30, 2020. The amount was undrawn as of Sep 30.
For nine months ended Sep 30, 2020, the company generated operating cash flow of $518.9 million compared with $468.3 million in the nine-month period ended Sep 30, 2019. For nine months ended Sep 30, 2020, free cash flow was $486.5 million compared with $438 million in the nine-month period ended Sep 30, 2019.
Guidance
Match Group expects fourth-quarter revenues of $640 million to $650 million. The Zacks Consensus Estimate is currently pegged at $629.3 million.
Adjusted EBITDA is anticipated in the range of $235-$245 million.
Zacks Rank & Stocks to Consider
Currently, Match Group carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader sector are Himax Technologies HIMX, NVIDIA NVDA and Covetrus CVET. All carry a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
Covetrus is set to report Nov 10, while Himax and NVIDIA are scheduled to report earnings on Nov 12 and Nov 18, respectively.
These Stocks Are Poised to Soar Past the Pandemic
The COVID-19 outbreak has shifted consumer behavior dramatically, and a handful of high-tech companies have stepped up to keep America running. Right now, investors in these companies have a shot at serious profits. For example, Zoom jumped 108.5% in less than 4 months while most other stocks were sinking.
Our research shows that 5 cutting-edge stocks could skyrocket from the exponential increase in demand for “stay at home” technologies. This could be one of the biggest buying opportunities of this decade, especially for those who get in early.
See the 5 high-tech stocks now>>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
NVIDIA Corporation (NVDA) : Free Stock Analysis Report
Himax Technologies, Inc. (HIMX) : Free Stock Analysis Report
Match Group Inc. (MTCH) : Free Stock Analysis Report
Covetrus, Inc. (CVET) : Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research
