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What's in the Cards for Match Group (MTCH) in Q4 Earnings?

Zacks Equity Research

Match Group, Inc. MTCH is scheduled to release fourth-quarter 2018 results on Feb 6.

The company has surpassed the Zacks Consensus Estimate in the three of the trailing four quarters, recording average positive surprise of 7.2%.

Match Group delivered third-quarter 2018 adjusted earnings of 39 cents per share, which surpassed the Zacks Consensus Estimate by 3 cents. Further, earnings were significantly higher than year-ago quarter figure of 19 cents.

Revenues of $443.9 million surged 49.2% year over year and beat the Zacks Consensus Estimate of $437 million. The year-over-year growth was primarily driven by 23% increase in average subscriber base and 6% rise in Average Revenue per Subscriber (“ARPU”).

Notably, shares of Match Group have returned 54.1% in the past year, against the industry’s decline of 23.3%.

What to Expect?

Match Group anticipates fourth-quarter 2018 revenues between $440 million and $450 million. Tinder remains the key catalyst. The Zacks Consensus Estimate for revenues is pegged at $447.8 million, representing an increase of approximately 18.2% from the year-ago quarter.

The Zacks Consensus Estimate for earnings is pegged at 39 cents per share, reflecting a rise of 34.5% from the year-ago quarter.

Let’s see how things are shaping up prior to this announcement.

Factors Influencing Q4 Results

Match Group is benefiting from increasing subscriber addition in the form of membership subscriptions. Total average subscribers in the third quarter came in at 8.1 million, surging 23% from the year-ago quarter. The Zacks Consensus Estimate is pegged at approximately 8.3 million for the to-be-reported quarter.

The company boasts of a robust product portfolio comprising Tinder, Match.com, Meetic, PlentyOfFish and OkCupid. Notably, revenues from Tinder soared 100% year over year in the prior quarter. Tinder average subscribers increased 61% year over year and came in at 4.1 million.

Better-than-expected renewal rates for Gold are noteworthy. In the last reported quarter, ARPU in Tinder grew 24% year over year, primarily on the back of higher number of Gold subscribers.

In a bid to boost Gold adoption, the company rolled out “Top Picks” feature on Tinder. This feature is anticipated to bolster Tinder Gold subscribers, consequently aiding the company to generate incremental revenues, going forward. Tinder also introduced Tinder U service custom made for college going students.

Moreover, expanding footprint in India, the biggest market in Asia with regard to Tinder, is likely to be a tailwind.

What the Zacks Model Unveils

According to the Zacks model, a company with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) has a good chance of beating estimates if it also has a positive Earnings ESP. The Sell-rated stocks (Zacks Rank #4 or 5) are best avoided.

Match Grouphas a Zacks Rank #3 and an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks to Consider

Here are some companies, which as per our model, have the right combination of elements to post an earnings beat this quarter:

Archer Daniels Midland Company ADM has an Earnings ESP of +2.45% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Lumentum Holdings Inc. LITE has an Earnings ESP of +1.10% and a Zacks Rank #2.

Inspire Medical Systems, Inc. INSP has an Earnings ESP of +6.25% and a Zacks Rank #3.

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