Finance

Match Group revenue guidance falls short, shares tank

Published

6 years ago

November 7, 2018

Ethel Jiang

Match Group CEO Mandy Ginsberg.Jerod Harris/Getty Images

Match Group, the owner of Tinder, beat on both the top and bottom lines.
The dating-service provider delivered fourth-quarter revenue guidance that fell short of Wall Street estimates.
The company said it will deliver a special cash dividend of $2.00 per share for all common stock.
Watch Match Group trade live.

Match Group, the owner of several online dating sites such as Tinder and OkCupid, tumbled as much as 20% Wednesday after the company’s revenue forecast missed Wall Street estimates.

The dating-service provider said after Tuesday’s closing bell that it earned an adjusted $0.39 a share in the third quarter, beating the $0.35 that was expected by analysts, according to Bloomberg data. Meanwhile, its revenue totaled $443.9 million, topping the $438.2 million that was estimated.

“Match Group delivered another quarter of strong top and bottom line growth, with Tinder continuing as our growth engine,” CEO Mandy Ginsberg said in a press release.

“We are making product and marketing investments in our brands to drive growth across our portfolio. Even with these investments, Match Group is generating significant free cash flow and reducing leverage levels, and we have returned a meaningful amount of capital to shareholders.”

Looking ahead, the company said it expects its fourth-quarter revenue to be between $440 million and $450 million. Analysts were expecting $454.5 million. Match Group also said it’s on pace to approach top end of prior revenue outlook of $1.72 billion for the fiscal year of 2018, which is in line with Wall Street estimates.

Meanwhile, management said it will deliver a special cash dividend of $2 per share for all Match Group common stock and class B common stock.

“While a slightly underwhelming 4Q guide is a negative, we note that the majority of the softness is external rather than fundamental,” Jefferies analyst Brent Thill said in a note sent out to clients on Tuesday.

He blamed external factors, including a foreign exchange headwind, advertising softness due to EU General Data Protection Regulation, and expenses on lawsuits as reasons for the soft guidance.

Thill added that the $2 per share cash dividend is a “head scratcher” as 80% of the cash will go to its parent company, IAC, and one may surmise that IAC has intentions to do something with the cash.

Thill has a “buy” rating and a price target of $70 for Match Group — 63% above where shares were trading Wednesday.