Earnings Alert: Are Investors Swiping Left on These Two Dating App Stocks?

We’ll just come out and say it, dating sucks. In today’s world most singles have taken to dating apps which have transformed the way people connect and form relationships, to make it easier to meet new people based on shared interests, location, and preferences. Popular platforms like Tinder, Bumble, and Hinge each offer unique approaches to online dating. But it’s not to say that it’s always considered to be a good time. Couch surf swiping takes time after reviewing hundreds of profile pictures of men holding their biggest catch and women with dog/cat filter faces it gets to be taxing. Let’s not even start talking about the dreaded ‘ghosting’ that is now the new norm. Turns out, its not all its cracked up to be for the makers of these apps either as they both have cited struggles across their platforms.

What’s the Buzz with Bumble?

In its third quarter financial release, Bumble (BMBL) delivered revenue within its outlook ranges and exceeded expectations for adjusted EBITDA. Total Bumble Inc. revenue was $274M, down 1% year-over-year, with total paying users growing 11% to 4.3M. Bumble App revenue declined 1% to $220 million, with paying users growing 10% to 2.9 million. Badoo App and other revenue was $53M, down 1% but up slightly excluding FX impact. On a non-GAAP basis, total costs and expenses declined 5%, and adjusted EBITDA increased 10% to $83M or 30% margin. The company generated $92 million in free cash flow and returned $140M to shareholders through share repurchases.

For Q4 2024, Bumble expects total revenue of $256M to $262M, a 5% year-over-year decline at the midpoint. For the full year 2024, Bumble expects total revenue of $1.07Bn to $1.07Bn, or 1.6% growth at the midpoint, and Bumble App revenue of $861M to $865M, up 2% at the midpoint. The company expects at least 200bps of adjusted EBITDA margin expansion for the full year.

On its conference call, management discussed the progress Bumble has made in strengthening its ecosystem, improving customer experience, and reimagining its revenue strategy highlighting positive results from marketing tests in Europe and improvements to customer support and safety. Additionally, Bumble boasted a strong balance sheet and capital allocation, including continued share buybacks, while noting the company is focused on investing for long-term growth.

The company noted that while it is making progress on its strategic initiatives, the full realization of its work will take multiple quarters, and it expects to provide more details on its outlook and plans on the next earnings call.

Currently, shares are up modestly at 1% after dipping 4%, upon the open.

Up In Flames

In the latest quarter, Match Group (MTCH) delivered solid 3Q financial results, with total revenue meeting expectations and adjusted operating income (AOI) exceeding expectations. However, the levels of total revenue and AOI growth, at 2% and 3% respectively, remain below the company’s targets.

Tinder’s direct revenue was slightly below expectations, driven by under delivery of certain optimizations. Tinder added 311,000 payers sequentially and declined by only 4% year-over-year, which was above the company’s outlook. However, Tinder saw less progress on monthly active users (MAUs) than expected. Tinder remains focused on long-term testing of new features aimed at improving the ecosystem and user outcomes.
Hinge delivered another strong quarter with continued user momentum and impressive revenue growth. Hinge’s download rankings continue to climb, and it became the second most downloaded dating app in the US in October. Hinge also launched the “Your Turn Limits” feature globally, which has been powerful in increasing response rates and is helping to address the ghosting problem in dating apps.

For its Q4 outlook, the company expects total revenue of $865M to $875M, essentially flat year-over-year. Tinder’s direct revenue is expected to be $480M to $485M, down 2% to 3% year-over-year. The company expects AOI of $335M to $340M in Q4, including severance and similar charges. The company’s overall revenue growth outlook for 2024 has been reduced, with the Tinder headwinds accounting for about half of the reduction, and weaker trends in the evergreen brands accounting for the other half. For FY 2024, the company expects total revenue growth of approximately 4%, or 5%, with Tinder expected to achieve direct revenue growth of 1% to 2%, up roughly 3%. The company expects to deliver AOI margins of at least 36% for FY24.

On the conference call, the company highlighted its focus on product-led strategies to drive sustainable engagement at Tinder, including testing features like mandated face photos, Spotlight drops, and improvements to the Explore tab. These initiatives are aimed at cleaning up Tinder’s ecosystem and improving user outcomes, especially for younger users and women. Additionally, Match is being financially disciplined, balancing investments in growth with margin expansion. They are considering various initiatives to drive shareholder value, which they plan to discuss in more detail at the upcoming Investor Day. On the contrary, Tinder has seen a step back in MAU growth starting in mid-September, which the company is investigating potential causes for, including the introduction of iOS 18 and recent trust and safety enhancements.

Currently shares are trading down close to 20%.