Investors are getting back together with Match Group after the dating giant indicated the worst was behind it in its second quarter earnings. That confidence sent shares up more than 14% Wednesday afternoon.
Match posted better-than-expected results for the second quarter. A key indicator was that Tinder, its star app, posted a smaller decline in paying users than in the previous quarter, with its 9.6 million paying users even being slightly ahead than Wall Street estimates. Match Group said in a letter to shareholders that the decline is stabilizing, and executives expect improved performance in the third quarter.
“We’ve been pretty clear that 2024 needed to be a year of progress,” CFO Gary Swidler said on a call with investors. “First, stabilizing things and then starting to show improvement. And I think if you look at the outlook we’re providing . . . that’s exactly what’s happening in the business. We’ve reached a point of stabilizing users.”
Those results were music to investors’ ears. Investors were relieved “as trends don’t appear to be getting worse,” Citi analysts wrote in a note. Shares of Match are still down more than 17% from the same time a year ago.
Match has attracted attention from a range of activist investors who are pushing for changes in an effort to revive Tinder and the broader dating app industry. Elliott Investment Management, Anson Funds Management, and Starboard Value have all built stakes in the company, with the latter urging Match to explore a sale if it doesn’t revitalize its business.
Bumble, Match Group’s largest competitor, is also grappling with broader behavior changes that include less interest in using dating apps and monetary concerns over paying for expensive subscriptions. Shares of Bumble are down nearly 50% from this time last year.
Match also announced it was laying off 6% of its global workforce as part of a move to shut down live streaming services across its portfolio of dating apps. The shift coincides with a push to further embrace generative AI, the company said on the investor call. The company already offers AI-powered tools like a photo selector for Tinder profiles, and more offerings could soon be on the way.
“We continually evaluate our portfolio with an emphasis on making strategic decisions that strengthen our overall growth and margin profile and allow us to focus on businesses where we have deep expertise, and we’re confident this is the case with our decision to exit live streaming,” CEO Bernard Kim and Swidler wrote in a joint note to shareholders.
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