$MTCH Earnings, MAU's -> Top Line Acceleration

Match Group Model and A Few Notes From Earnings

I updated my model a bit after earnings and it shows Match is pretty fairly valued right now, taking into account the three activists pushing for change in the stock, I think it has a floor now as none of these guys want to lose money on their positions. Sensitivity analysis also gives a pretty clear picture. This is a pretty surface-level overview of their shareholder letter but if you want to read the letter it’s linked at the bottom.

Hinge revenue grew at 48% clip (sheesh) while Tinder see’s growth at only 1%. Starting to see a little inflection with Tinder as their MAUs are finally stabilizing but overall total payers declined 5% to 14.8 million QoQ. This might be seen as a great sign for the Tinder growth plan that Match put in place but payers declined 8% YoY.

The stock is up 9% after the market due to a top-line beat and Tinder being seen as growing again after users stabilized. Revenue of $864.1 million beat estimates of $856.65 million, while EPS of $0.48 came right in line with street expectations. I don’t think investors realize that Match’s q3 revenue guidance came in under street estimates.

Match deployed all of its FCF to buy back its stock, which is impressive. They’ve now got a total of $395 million of stock bought back this year.

In my eyes, the print doesn’t matter in the long term unless Tinder MAUs can accelerate top-line growth, which can’t happen unless payers increase…

I definitely think the stock now has a floor with all the activists being in and do see management changes in the near future.

Not sure a near 10% move is warranted though…until we see consistent Tinder revenue growth again, which will come from consistent growth in MAUs, which will then lead to a consistent stream of payers, which only comes if they continue to hit on their initiatives/KPIs.

Hinge continues to grow and also cannibalize a bit from Tinder with results of a 19% YoY increase in revenue per payer and a 24% increase in payers to nearly 1.5 million. Not a bad thing but definitely something to keep in mind when reading the mind-blowing numbers of the app.

The obvious bull case is we keep seeing an inflection with Tinder (growth in MAUs, Payers), continued intervention from the activists, and they keep returning capital to shareholders (maybe a dividend..??). I see q3 being the biggest confirmation of this as Match still has key initiatives to roll out in the coming quarter.

The base case is Hinge growth continues but eventually stabilizes in q4 or so and Tinder MAUs stabilize but we don’t see any growth in the top line from this.

The bear case is Tinder's plan doesn’t work out at all and Hinge growth stabilizes quicker than expectations. If this happens, Starboard value recommends a take private, which isn’t a bad thing depending on the premium put on the company.

One aspect that I believe can add to the bull case is ozempic, the drug is taking people from not wanting to use dating apps because of their looks to jumping on the apps because of the effectiveness of the drug on their looks. Something to keep an eye out for.

“We believe we have a clear plan to drive shareholder value over the coming years: (1) re-establish sustainable growth at Tinder; (2) establish Hinge as the second largest dating app globally; (3) continue to build new growth brands including Azar, our Emerging brands, and new experiences, leveraging the latest technology; (4) maintain our historically strong financial discipline, including through efficiencies at our established platforms; and (5) return a significant amount of capital to shareholders. We look forward to sharing more about our long-term strategy and plans at our first-ever Investor Day to be held in December.” Management