It has been about a month since the last earnings report for Match Group (MTCH). Shares have added about 10.5% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Match Group due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Match Group Q3 Earnings Grow Y/Y, Revenues Top Estimates
Match Group reported third-quarter 2022 diluted earnings of 44 cents per share, up 2.3% from the year-ago quarter.
The Zacks Consensus Estimate for third-quarter 2022 earnings was pegged at 64 cents per share.
Revenues of $810 million increased 1% year over year, beating the Zacks Consensus Estimate by 2.14%.
Excluding forex, the top line increased 10% year over year to $883 million, driven by 9% growth in revenue per payer (RPP).
Quarter in Detail
In the third quarter, the number of total payers increased 2% to 16.5 million. The number of total payers from America and Europe decreased by 0.9% and 1.31%, respectively, whereas the Asia Pacific (APAC) saw an increase of 11% on a year-over-year basis.
Total RPP was flat over the prior year’s quarter at $16.02. Region-wise, RPP increased 6.07% in America and decreased 14.5% in APAC, while remaining unchanged in Europe year-over-year.
America’s RPP increased primarily due to increases in subscriptions and a la carte purchases at Tinder and Hinge. Europe’s RPP was unfavorably impacted by the strength of the U.S. dollar relative to the euro and British pound, while APAC and Other’s RPPs were unfavorably impacted by the strength of the U.S. dollar relative to the Japanese yen and Turkish lira.
Direct revenues from the Americas were up 4.9% to $413.8 million. Direct revenues from Europe and APAC decreased 1.35% to $214.7 million and 4.72 to $166.5 million, respectively.
Direct revenues from Tinder grew 6% from the prior-year quarter, driven by 7% Payers growth to 11.1 million, partially offset by an RPP decline of 1%.
Direct revenues from All Other Brands collectively declined 5% year over year, along with an 8% Payers decline, which was offset by 3% RRP growth. Within All Other Brands, Hinge Direct Revenue grew nearly 40% year-over-year in the third quarter 2022.
Match, Meetic, OkCupid and Plenty of Fish, saw both direct revenue and payers decline 15% year-over-year basis. APAC-based businesses, Pairs and Hyperconnect, saw direct revenue decline 15% year-over-year basis.
Total operating costs and expenses increased 3% year over year to $598.9 million in the third quarter.
Adjusted operating income was $284.1 million, declining 0.4% from the prior-year quarter, representing an adjusted operating income margin of 35%.
As of Sep 30, 2022, Match Group had a cash and cash equivalent balance of $398 million compared with $473 million as of Jun 30, 2022.
As of Sep 30, 2022, Match Group had long-term debt of $3.9 billion, the same as the previous quarter.
As of Sep 30, 2022, Match Group reported $1.2 billion of exchangeable senior notes and $750 million under its revolving credit facility. The amount was undrawn as of Sep 30.
Match Group expects fourth-quarter 2022 revenues to be in the range of $780-$790 million, flat year over year.
Adjusted operating income for the fourth quarter is anticipated to be $270-$275 million.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month.
The consensus estimate has shifted -15.54% due to these changes.
Currently, Match Group has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. Following the exact same course, the stock was allocated a grade of F on the value side, putting it in the lowest quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Match Group has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.
Performance of an Industry Player
Match Group belongs to the Zacks Internet - Commerce industry. Another stock from the same industry, Overstock.com (OSTK), has gained 23.1% over the past month. More than a month has passed since the company reported results for the quarter ended September 2022.
Overstock reported revenues of $460.28 million in the last reported quarter, representing a year-over-year change of -33.2%. EPS of $0.13 for the same period compares with $0.54 a year ago.
For the current quarter, Overstock is expected to post earnings of $0.05 per share, indicating a change of -86.1% from the year-ago quarter. The Zacks Consensus Estimate remained unchanged over the last 30 days.
Overstock has a Zacks Rank #4 (Sell) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of F.
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