Match Group, Inc.
CEO : Mr. Bernard J. Kim
Quarterly earnings growth(YoY,%)
| Period | Revenue | Operating Income | EPS | Release Date |
|---|---|---|---|---|
| 2022 Q4 | -2.5% YoY | -54.0% | -150.0% | 2023-02-01 |
Gary Swidler says,
Revenue and Payers
- Total revenue for Q4 2022 was $786 million, down by 2% YoY, while adjusted operating income was $286 million, a decrease of 2% YoY.
- Direct revenue was down by 2% YoY, with growth at Tinder, Hinge, BLK and Chispa but declines at the Evergreen Brands.
- Total payers were 16.1 million, a decrease of 1% YoY.
- Tinder payers globally were up 3% YoY.
Regional Performance
- Direct revenue declined 4% YoY in Europe but was up 8% on an FX-neutral basis driven by Tinder and Hinge.
- Direct revenue declined 9% YoY in APAC and Other, but was up 9% on an FX-neutral basis driven by Tinder.
Operating Income and Expenses
- Operating income was $107 million in Q4, a 54% YoY decrease for a margin of 14%.
- Adjusted operating income was $286 million, down 2% YoY, representing a margin of 36%.
- Cost of revenue grew 1% YoY and represented 30% of total revenue.
- Selling and marketing spend decreased $12 million or 9% YoY, while G&A expense was flat YoY.
- Product development costs grew 21% YoY and were 10% of revenue primarily reflecting increased engineering headcount at Tinder and Hinge.
Outlook and Growth
- For Q1 ’23, total revenue for Match Group is expected to be roughly flat YoY, with adjusted operating income of $250 million to $255 million, representing a margin of about 32% at the midpoint of the ranges.
- Macroeconomic factors are impacting the business, but Match Group can deliver 5% to 10% YoY revenue growth in 2023, with Tinder positioned to deliver a similar range of growth.
- Hinge’s momentum will lead it to delivering nearly $400 million of direct revenue in 2023, approximately $100 million more than in 2022.
- Match Group expects to reduce its global workforce by approximately 8% in aggregate and to incur $6 million of severance and similar costs related to its cost-saving initiatives in 2023.
App Store Policies and Taxes
- Match Group’s financial outlook reflects no change to current App Store policies, though the company believes that the stores are moving to comply with aspects of the Digital Markets Act that is now in effect in Europe.
- Match Group expects to be a U.S. Federal cash taxpayer in 2023.
Bernard Kim says,
Product Roadmap Changes and Momentum
- The Tinder team made changes to the roadmap and team to focus on experience and future monetization.
- Foundational improvements were prioritized to lead to better user experience and monetization, which set the company up for accelerated growth in the second half of 2023.
Innovative Initiatives
- The platform plans to cater to Gen Z through authentic content and self-expression features.
- Machine learning will be leveraged to enhance recommendations, and pricing optimization initiatives will lead to significant revenue growth.
- The company also plans to broaden monetization by unlocking power users through high-price tiers and testing the appetite for ultra-premium subscriptions on the largest pool of daters on the planet.
ALC Weakness and Solutions
- The chart in the letter showed that à la carte revenue was under significant pressure due to the macro environment.
- The team rallied quickly to offset this weakness by changing the merchandising approach around ALC, rolling out Primetime Boost, and introducing Compound Boost.
Delivery Dates and Testing
- The company has published a clear and detailed product roadmap for 2023 with delivery dates and is holding themselves accountable for its delivery.
- Features will be tested and iterated upon over time, and it may take some time for these features to translate into visible payer and revenue metrics.
Machine Learning and Talent
- The company is already using machine learning for safety and moderation and plans to enhance recommendations on the platform through machine learning.
- Hyperconnect also has a significant team of machine learning talent that can be utilized to move faster in this area.
Q & A sessions,
Impact of ALC Revenue and Macro Factors on Q4 Performance
- Tinder saw significant pressure on ALC revenue due to macro factors, especially younger consumers affected by economic environment.
- This impacted Q4 performance and was a potential challenge for 2023 outlook.
Stability in ALC Revenue Trends
- Tinder put out initiatives to reverse trend in ALC and succeeded in reversing a significant portion of decline.
- Stable ALC trends are encouraging and give confidence in 2023 outlook, and there is no impact on subscription revenue trends.
Impact of Pricing Optimizations on Tinder Payer Numbers
- Eliminating intro pricing and discount pricing at Tinder is having an adverse effect on Tinder payer numbers.
- Goal is to get Tinder to optimal price points, which will impact payer numbers but is longer-term revenue positive.
Tinder Payer Growth Expectations for 2023
- Forecast calls for relatively balanced growth between payers and RPP for the year with softer payer growth in the first half and stronger growth in the back half of the year.
- Momentum is building, initiatives will be rolled out, and there should be stronger revenue growth and payer growth in the back half of the year.
Expectations for Margins and Swing Factors
- Commitment to delivering at least flat, if not improved, margins year-over-year in 2023.
- Swing factors include Tinder executing on its product roadmap and new Hinge tiers performing better.
- App Store relief is a potential significant event in 2024.
No bad stock 