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Match Group (MTCH) Q4 Earnings Preview: What to Expect?
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Match Group, Inc. (MTCH - Free Report) is set to report fourth-quarter and full-year 2016 earnings results on Feb 1.
The company went public in Nov 2015 and in its first earnings announcement, as a publicly-traded company, Match Group had missed earnings estimates by 5.3%.
The succeeding quarters proved to be much better, with the company’s earnings beating estimates in all three quarters, for an average beat of 11.9% in the trailing four quarters. Last quarter, it surpassed estimates by 25%.
Let's see how things are shaping up for its fifth earnings report as a public company.
Key Factors Influencing Q4 Results
Match Group is the world’s foremost provider of dating products and operates a portfolio of over 45 brands. Three of its biggest and best known brands are Match.com, OkCupid and Tinder. The company’s reputation, established user base and size should prove to be favorable in the upcoming earnings.
About 60% of the company’s revenues come directly from the users of its dating services in North America, mostly in the form of membership subscriptions. Online dating has been expanding, as users from more demographics join the fray. Most of Match Group’s users connect from mobile devices, where conversion to paid members is also higher. Last quarter, its dating revenues rose 22%, driven by solid contribution from Tinder, Pairs and PlentyOfFish. This momentum bodes well for the company’s top-line growth in the quarter under review, as the company expects Tinder Boost to drive revenues.
Match Group has been making profits over the past three years and has been recording top-line growth as well. The company is currently enjoying strong growth, driven by robust growth momentum at Tinder, solid performances from Meetic and Match and the recently acquired, PlentyOfFish. In terms of share price performance, Match Group appreciated 36.4% over the past one year, outperforming the Zacks categorized Internet Services industry’s modest average return of 7.7% over the same time frame.
However, the company is vulnerable to the cannibalization of users and revenues across its competing platforms. In fact, its average revenue per paying user fell sharply (down 8% year over year) in the last reported quarter, reflecting the shift of its focus toward lower-paying brands, such as Tinder and OkCupid. Its Princeton Review test-prep service also seems to have lost its momentum. These factors might affect the company’s top line in this quarter too.
Online dating is, by nature, a highly competitive and fragmented industry. New players and free services keep snatching market share, which makes it tough for established players to retain a foothold in the market. Further, the company has been struggling with monetization of its services, in the face of intensifying competition in the online dating space, with apps like Bumble, Hinge and Coffee Meets Bagel. This might just prove detrimental to the company’s top-line growth in the coming quarters.
Match Group anticipates revenue growth of 15%–20% year over year in 2017. Earlier in the year, Match Group had projected dating revenues of $1.1 billion–$1.4 billion with an adjusted EBITDA of $410 million–$425 million for full-year 2016.
Match Group, Inc. Price, Consensus and EPS Surprise
Our proven model does not conclusively show that Match Group will beat earnings estimates in this quarter. This is because a stock needs to have both a positive Earnings ESPand a Zacks Rank #1 (Strong Buy), #2 (Buy) or #3 (Hold) for this to happen. But that is not the case here as you will see below.
Zacks ESP: Earnings ESP for the company is currently pegged at 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate are currently pegged at 24 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Match Group has a Zacks Rank #5 (Strong Sell). As it is, we caution against Sell-rated stocks (Zacks Rank #4 or 5) going into an earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks That Warrant a Look
Here are some companies that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this quarter:
The Allstate Corporation (ALL - Free Report) has an Earnings ESP of +3.73% and a Zacks Rank #3. The company is expected to report fourth-quarter earnings around Feb 1.
AXIS Capital Holdings Limited (AXS - Free Report) has an Earnings ESP of +6.45% and a Zacks Rank #3. The company is expected to report fourth-quarter earnings around Feb 1.
Zacks' Top 10 Stocks for 2017
In addition to the stocks discussed above, would you like to know about our 10 finest tickers for the entirety of 2017?
Who wouldn't? These 10 are painstakingly hand-picked from 4,400 companies covered by the Zacks Rank. They are our primary picks to buy and hold. Be among the very first to see them >>
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Match Group (MTCH) Q4 Earnings Preview: What to Expect?
Match Group, Inc. (MTCH - Free Report) is set to report fourth-quarter and full-year 2016 earnings results on Feb 1.
The company went public in Nov 2015 and in its first earnings announcement, as a publicly-traded company, Match Group had missed earnings estimates by 5.3%.
The succeeding quarters proved to be much better, with the company’s earnings beating estimates in all three quarters, for an average beat of 11.9% in the trailing four quarters. Last quarter, it surpassed estimates by 25%.
Let's see how things are shaping up for its fifth earnings report as a public company.
Key Factors Influencing Q4 Results
Match Group is the world’s foremost provider of dating products and operates a portfolio of over 45 brands. Three of its biggest and best known brands are Match.com, OkCupid and Tinder. The company’s reputation, established user base and size should prove to be favorable in the upcoming earnings.
About 60% of the company’s revenues come directly from the users of its dating services in North America, mostly in the form of membership subscriptions. Online dating has been expanding, as users from more demographics join the fray. Most of Match Group’s users connect from mobile devices, where conversion to paid members is also higher. Last quarter, its dating revenues rose 22%, driven by solid contribution from Tinder, Pairs and PlentyOfFish. This momentum bodes well for the company’s top-line growth in the quarter under review, as the company expects Tinder Boost to drive revenues.
Match Group has been making profits over the past three years and has been recording top-line growth as well. The company is currently enjoying strong growth, driven by robust growth momentum at Tinder, solid performances from Meetic and Match and the recently acquired, PlentyOfFish. In terms of share price performance, Match Group appreciated 36.4% over the past one year, outperforming the Zacks categorized Internet Services industry’s modest average return of 7.7% over the same time frame.
However, the company is vulnerable to the cannibalization of users and revenues across its competing platforms. In fact, its average revenue per paying user fell sharply (down 8% year over year) in the last reported quarter, reflecting the shift of its focus toward lower-paying brands, such as Tinder and OkCupid. Its Princeton Review test-prep service also seems to have lost its momentum. These factors might affect the company’s top line in this quarter too.
Online dating is, by nature, a highly competitive and fragmented industry. New players and free services keep snatching market share, which makes it tough for established players to retain a foothold in the market. Further, the company has been struggling with monetization of its services, in the face of intensifying competition in the online dating space, with apps like Bumble, Hinge and Coffee Meets Bagel. This might just prove detrimental to the company’s top-line growth in the coming quarters.
Match Group anticipates revenue growth of 15%–20% year over year in 2017. Earlier in the year, Match Group had projected dating revenues of $1.1 billion–$1.4 billion with an adjusted EBITDA of $410 million–$425 million for full-year 2016.
Match Group, Inc. Price, Consensus and EPS Surprise
Match Group, Inc. Price, Consensus and EPS Surprise | Match Group, Inc. Quote
Earnings Whispers
Our proven model does not conclusively show that Match Group will beat earnings estimates in this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), #2 (Buy) or #3 (Hold) for this to happen. But that is not the case here as you will see below.
Zacks ESP: Earnings ESP for the company is currently pegged at 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate are currently pegged at 24 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Match Group has a Zacks Rank #5 (Strong Sell). As it is, we caution against Sell-rated stocks (Zacks Rank #4 or 5) going into an earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks That Warrant a Look
Here are some companies that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this quarter:
American Financial Group, Inc. (AFG - Free Report) , which is expected to report fourth-quarter earnings around Feb 1, has an Earnings ESP of +5.56% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Allstate Corporation (ALL - Free Report) has an Earnings ESP of +3.73% and a Zacks Rank #3. The company is expected to report fourth-quarter earnings around Feb 1.
AXIS Capital Holdings Limited (AXS - Free Report) has an Earnings ESP of +6.45% and a Zacks Rank #3. The company is expected to report fourth-quarter earnings around Feb 1.
Zacks' Top 10 Stocks for 2017
In addition to the stocks discussed above, would you like to know about our 10 finest tickers for the entirety of 2017?
Who wouldn't? These 10 are painstakingly hand-picked from 4,400 companies covered by the Zacks Rank. They are our primary picks to buy and hold. Be among the very first to see them >>