Millions of people are turning to Match Group (NASDAQ: MTCH) for help finding love. That's driving solid increases in sales and profits for the world's leading provider of dating products, as can be seen in its strong fourth-quarter results.
Match Group results: The raw numbers
Adjusted earnings before interest, taxes, depreciation, and amortization
Data source: Match Group Q4 2017 earnings release .
What happened with Match Group this quarter?
Tinder -- Match Group's most popular dating app -- added a record 544,000 paid members in the fourth quarter and a total of 1.5 million in 2017. That brought the popular dating app's average subscriber base to 3.1 million members. Moreover, Match Group's overall total rose to more than 7 million subscribers, representing year-over-year growth of 24%.
People are flocking to Match Group's apps in search of love. Image source: Getty Images.
Better still, Match Group enjoyed a 4% rise in average revenue per user (ARPU) to $0.55. The increase was primarily driven by the success of Tinder Gold , which helped to boost Tinder's ARPU by 32%.
In all, Match Group's revenue surged 28% year over year to $379 million. The company's international growth was particularly strong; Match Group's international direct revenue soared 51%, to $161 million, fueled by a 36% jump in average subscribers and an 11% increase in ARPU.
Still, operating costs ballooned by 38%, to $251 million. With more of its sales now coming via app stores, which are subject to revenue share agreements, Match Group paid out $27.2 million more in in-app purchase fees. As a result, its cost of revenue increased to $86 million, or 23% of revenue, compared to $54 million, or 18% of revenue, in the fourth quarter of 2016. In turn, operating income rose 13% to $128 million, with operating margin falling to 34% from 38% in the year-ago period.
All told, EBITDA -- adjusted to exclude stock-based compensation expense and acquisition-related items -- increased 20% to $153 million. And adjusted net income, which was negatively impacted by charges related to tax reform, fell 31% to $54 million, or $0.18 per share.
More importantly, Match Group's full-year operating cash flow jumped 24% to $321 million in 2017, while its free cash flow soared 37% to $292 million.
Match Group expects first-quarter revenue of $380 million to $390 million and adjusted EBITDA of $115 million to $120 million.
For fiscal 2018, the company expects full-year revenue of $1.5 billion to $1.6 billion and adjusted EBITDA of $550 million to $600 million. That compares to revenue of $1.3 billion and adjusted EBITDA of $469 million in 2017.
"While reporting results like these is a great way to kick off 2018, there are still plenty of untapped market opportunities, products, and features that we'll be rolling out," CEO Mandy Ginsberg said in a press release. "I feel great about this team's ability to execute and drive continued growth."
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Joe Tenebruso has no position in any of the stocks mentioned. The Motley Fool recommends Match Group. The Motley Fool has a disclosure policy .