Match GroupMTCH

Match Group reported quarterly earnings of 70 cents per share, which was better than the 65 cents analysts expected. However, revenue of 850 million dollars slightly missed targets as Tinder, the company's largest app, saw its revenue fall 1 percent. While Tinder is struggling to grow, Hinge remains a bright spot, with revenue jumping 22 percent as it expands further into Europe.

The stock fell about 7 percent because the company's outlook for the next quarter was lower than what Wall Street anticipated. Management is working on a turnaround for Tinder to improve how many people use the app every day, but those efforts have not yet translated into higher sales. For now, the business is relying on Hinge's momentum and disciplined spending to protect its bottom line while it tries to fix its biggest moneymaker.

See the full quarter, and how our tracked metrics did

Source: 8-K filing

Key highlights

• Tinder turnaround gaining speed: The number of daily active users at Tinder fell 4% compared to last year, which is the best performance in 10 quarters. Management linked this improvement to new features like Double Date and Music Mode, which helped stabilize engagement after several years of steeper declines.
• Hinge international expansion: Hinge revenue grew 22% to help drive the app toward a $1 billion annual goal by 2027. This growth was fueled by moving into six new European countries and four markets in Latin America, where the app maintained its position as the most downloaded dating service.
• Efficiency gains lift margins: Adjusted EBITDA, which is a measure of profit that excludes certain non-cash costs and taxes, rose 14% to $331 million. The company widened its margin for this profit to 39% by cutting general and administrative expenses by 22% compared to the prior year.
• Stronger spending per user: Average revenue per payer reached $21.13, a 6% increase from the $20.00 reported a year ago. This higher spending from existing users helped offset a 6% decline in total payers, which dropped to 13.3 million as the company focuses on higher-value customers.
• Third quarter outlook: Management expects revenue between $885 million and $895 million for the next quarter, which would be a decrease of 2% to 3% compared to the same period last year. They also forecast a profit margin of 37% based on the mid-point of their financial targets.

Our take: This was a solid quarter that shows the company is successfully trading fewer users for more profitable ones. While the slight revenue dip is a drag, the 14% jump in operating profit and stabilizing user trends at Tinder suggest the turnaround is working. It strengthens the case that Match can grow earnings even while its total user base shrinks.