Tinder's Explosive Growth Fuels Match Group's Q2 Earnings

Match Group (NASDAQ: MTCH) reported second-quarter results on Aug. 7. The parent company of dating products including Tinder, PlentyOfFish, OkCupid, and is enjoying strong subscriber gains, prompting it to raise its full-year revenue and profit forecast.

Match Group results: The raw numbers

Metric Q2 2018 Q2 2017 Change (YOY)
Revenue $421.2 million $309.6 million 36%
Operating income $150.2 million $83.0 million 81%
Earnings per share $0.45 $0.17 165%

Data source: Match Group Q2 2018 earnings release (link opens PDF).

What happened with Match Group this quarter?

Tinder's torrid growth continued, with the dating app adding 299,000 paid members in the second quarter and a total of 1.7 million in the past year. In all, Tinder averaged 3.8 million subscribers in Q2 -- signifying year-over-year growth of 81%. That helped Match Group's overall subscriber base jump 27% to more than 7.7 million.

A flame in the shape of a heart

Tinder is growing like wildfire. Image source: Getty Images.

Moreover, Match Group is getting better at monetizing its crown jewel. New premium versions of the app such as Tinder Gold are proving popular with users. In turn, Tinder's average revenue per subscriber (ARPU) leapt 33%, driving an 8% rise in Match Group's overall ARPU, to $0.57.

These subscriber and monetization gains fueled a 36% surge in Match Group's revenue, to $421 million.

Match Group's profitability also improved. EBITDA -- adjusted to exclude stock-based compensation expense and acquisition-related items -- jumped 60% to $176 million, as adjusted EBITDA margin rose 6.2 percentage points to 42%.

Better still, Match Group's year-to-date operating and free cash flow increased 59% and 65%, respectively, to $243 million and $229 million.

Looking forward

This robust performance led Match Group to boost its full-year guidance. The company now expects:

  • Total revenue of $1.68 billion to $1.72 billion, up from a prior estimate of $1.6 billion to $1.7 billion.
  • Adjusted EBITDA of $625 million to $650 million, up from $600 million to $650 million.

For the third quarter, Match Group anticipates revenue of $430 million to $440 million and adjusted EBITDA of $160 million to $165 million.

"Certainly a good day to be in the love business," CEO Mandy Ginsberg said during an interview with CNBC . "We're on pace to see $800 million in revenue for Tinder this year, so things are firing on all cylinders."

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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 .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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