Match Group, the parent company of Tinder, saw a steep drop in paying users over the last quarter, revealing that it lost more than 826,000 customers in a letter to shareholders.
Despite engagement boosting efforts that Match Group employed over the previous quarter, shares tumbled by more than 16 percent following the announcement of its third quarter earnings.
In a bid to counteract the decline in users and revitalize its youth base, Match Group, which is worth over $8 billion owns brands including Tinder, Hinge, OKCupid, Plenty of Fish, and others, introduced a nationwide "Swipe Off" challenge on college campuses.
Arizona State University won as the most active college, earning a free concert at the Arizona Financial Theater headlined by rapper Saweetie, exclusively for ASU students, scheduled for November 11.
The challenge was in direct response to a 6 percent dip in new U.S. users observed in September.
The company on Tuesday reported a 9 percent growth in Total Revenue, amounting to $882 million, compared to the prior year. Tinder's Direct Revenue increased 11 percent, while other brands in the group saw a 7 percent rise. Notably, Hinge's Direct Revenue skyrocketed with a 44 percent growth.
However, the number of total paying customers took a hit, declining 5 percent to 15.7 million from the prior year.
"While our collective efforts have put the company on much improved footing, there is still much work to be done," Match Group CEO Bernard Kim said in a statement to shareholders.
Despite outperforming analyst estimates with an Earnings Per Share of 57 cents compared to the estimated 54 cents and a minor bump in revenue, Match Group's forward guidance disappointed investors.
Forward guidance, which provides investors with a company's own projections for its future earnings or revenues, came in lower than analyst expectations.
For the fourth quarter, the Tinder owner predicts total revenue to be between $855 million to $865 million.
Analysts commented on the company's outlook, pointing to challenges like stubborn inflation, and unrest in certain markets. "Investor expectations were low for Tinder payers in the back half of the year, but the implied number for Q4 is likely even below the depressed expectations," Piper Sandler analyst Matt Farrell said to investors.
Other brands under Match Group, like Hinge, OKCupid, and Plenty of Fish, have been impacted as well, with U.S. consumers hesitating to spend on non-essentials amid economic uncertainties.
Recent initiatives at Match Group to drum up new business include the introduction of new features on Tinder and Hinge, and a premium $499 per month offering on Tinder. While the immediate future appears rocky, the company remains optimistic about its long-term prospects.
Uncommon Knowledge
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Aj Fabino is a Newsweek reporter based in Chicago. His focus is reporting on Economy & Finance. Aj joined Newsweek ... Read more
