Match Revenue Forecast Disappoints Amid Lingering Covid Effects

(Bloomberg) -- Match Group Inc. gave a forecast for revenue in the current quarter that lagged behind analysts' estimates, signaling that new restrictions prompted by the Covid-19 omicron variant have put a damper on people's appetite for socializing. The shares tumbled 6% in extended trading.

The Dallas-based company, which owns dating apps such as Tinder, Hinge and OKCupid, said it expects first-quarter revenue of $790 to $800 million. That compares with the average analyst estimate of $832.9 million, according to data compiled by Bloomberg. Adjusted operating income will be $260 million to $265 million, according to a statement on Tuesday. Analysts projected $289.2 million.

Even before omicron began to tear through the U.S. and Europe late last year, with its much higher rate of transmission prompting a new round of office and event closures, Match said Covid was still taking a toll on its second-biggest market of Japan. Hyperconnect, the South Korean video technology company that Match purchased early last year has also suffered from Covid-related difficulties in Asia, but the company said its integrating its technology into two apps during the quarter.

Match continued to experience “Covid impacts, especially in certain Asian markets like Japan and more recently due to the emergence of Omicron, which reduced mobility in many markets starting in early December,” Chief Executive Officer Shar Dubey and Chief Financial Officer Gary Swidler said in a statement.

The pandemic required Match to explore new features such as virtual dates and an in-app virtual currency to boost engagement with users who were no longer socializing in person. The virtual currency is now available in a dozen countries, Match said.

“A lot of investors may be asking them about the potential there,” said Shweta Khajuria, an analyst at Evercore ISI. Match will hold a conference call with analysts on Wednesday morning.

Match reported a 15% increase in paying users, to 16.2 million, falling short of analysts' estimates of 16.6 million, according to data compiled by Bloomberg. Revenue for Hinge more than doubled in 2021 to almost $200 million from a year earlier, Match said, adding that the app will launch in some European countries in the second quarter.

Shares of Match and its rival Bumble Inc. have slumped 15% and 11%, respectively, this year, compared with the 4.6% decline on the S&P 500 Index. Like the broader technology sector, both dating companies have taken a hit from the prospect of higher interest rates. Evercore's Khajuria, who has an outperform rating on the stock, still sees the fundamentals of both companies remaining strong and calls Match and Bumble good stocks for investors looking for companies that will do well as social restrictions ease.

For the fourth quarter, Match reported sales of $806.1 million, a 24% increase from last year and missing the average analyst estimate of $818.6 million. Match reported a loss per share of 60 cents. Analysts were estimating a profit of 60 cents. The company attributed the loss to foreign exchange changes and Covid-19 effects.