COVID-19 closed many traditional meeting places for singles, but the online equivalent was open and apparently thrived.
Match Group Inc. MTCH,
on Tuesday reported strong Q2 earnings and sales growth, beating Wall Street estimates in the first full period of shelter due to the spread of the corona virus. Shares in the parent company of Tinder, Match.com, OKCupid and other online dating properties rose about 4% outside the hours trading immediately after the report was released, after closing 2.6% during the regular session.
“Despite the pandemic, our user trends, such as commitment and willingness to pay for our products, are on the rise, proving what we have always known: our products are meeting a very critical human need and those needs are not going anywhere,” said Chief Executive Shar Dubey said in an email.
Match reported second quarter earnings of $ 103.1 million, or 51 cents per share, on revenues of $ 555.5 million, up from 45 cents a share on revenues of $ 498 million a year ago and better than Match expected three months ago, when it accompanied a consecutive drop in first quarter sales of about $ 545 million. Analysts expected on average earnings of 45 cents per share on revenues of $ 520.3 million, FactSet said.
Match showed greater confidence in its third-quarter outlook on Tuesday, and predicted sales of $ 600 million or more. According to FactSet, analysts had expected third-quarter revenues to average $ 563 million.
Match has attempted to roll out video offers on its online dating properties to respond to new needs during the pandemic, and executives said in a letter to shareholders on Tuesday that the effort paid off.
“Our one-to-many live streaming video products, especially at Plenty of Fish, are seeing healthy adoption and associated revenue generation,” executives said in the letter. “We’ve also introduced one-to-one video chat capabilities on most of our major platforms, including Face-to-Face at Tinder.”
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Services such as video dating are important to Match’s efforts to add paying subscribers to Tinder and other properties, a major reason for its recent higher earnings. Match surpassed 10 million average subscribers in the quarter, an 11% year over year gain and above analyst average expectations for 9.88 million subscribers.
“We have seen a recovery in the willingness to pay across the portfolio since early May,” Dubey and Chief Financial Officer Gary Swidler wrote in a letter to shareholders. “Increases in both subscription conversion and ARPU led in the second quarter to annualized revenue growth for almost all of our major brands. On top of 15% direct sales growth for Tinder, our non-Tinder brands delivered a second consecutive quarter of direct sales growth year-on-year for the first time since 2016, up 9% in the second quarter. “
The report comes shortly after a major change for Match, which has completed divorce from former main parent IAC / InteractiveCorp. IAC,
on June 30 after starting the process almost a year ago. Match also promoted Dubey to CEO earlier this year and appointed a new leader for Tinder last week.
Shares have gained about 8% since the separation of IAC was made official as the S&P 500 index SPX,
increased by 5.3%.