Match Group (MTCH - Free Report) delivered second-quarter 2019 adjusted earnings of 49 cents per share, which surpassed the Zacks Consensus Estimate of 45 cents and improved 19.5% year over year.
Revenues of $497.9 million rose 18% year over year and beat the Zacks Consensus Estimate of $487 million. Excluding the effect of Foreign Exchange, the top line was up 22% year over year. The increase was primarily driven by an improvement of 18% and 2% in average subscriber base and Average Revenue per Subscriber (ARPU), respectively.
Notably, shares were up 3.5%, yesterday, primarily due to better-than-expected second quarter results and encouraging third-quarter guidance. Further, robust Tinder average subscriber growth (up 36% year over year) positively impacted share price. Moreover, Match Group’s stock has gained 62.1% in a year, against the industry's decline of 24.3%.
Quarter Details
Average subscriber base and ARPU were 9.1 million and 58 cents, respectively, at the end of the reported quarter. North America subscriber base increased 9%, while International advanced 27%. Growth in ARPU was driven primarily by strength in both North America (up 4% year over year) and International (up 1%).
In the second quarter, Tinder average subscribers increased 1.5 million year over year and came in at 5.2 million. Sequentially, the same increased 503,000 ARPU, reflecting an improvement of 2% year over year. This primarily came on the back of higher number of Gold subscribers.
Direct revenues from Tinder grew 46% year over year, primarily backed by 39% increase from average subscriber growth and 6% year over increase from ARPU.
Adjusted EBITDA was $203.5 million, up 16% year over year. Adjusted EBITDA margins came in at 41%, down 100 bps year over year. Margins were primarily impacted by higher cost of revenue, partially offset by lower selling and marketing expense as a percentage of revenues.
Total cost and expenses increased 20% year over year to $325.1 million. Selling and marketing (S&M) were up 5.1% on a year-over-year basis. While General and administrative expense improved 47.6% on a year-over-year basis, product development expenses remained flat.
Operating income advanced 15% from the year-ago quarter to $172.9 million. However, operating margin contracted 100 bps to 35%.
Balance Sheet
Match Group exited the second quarter with cash and cash equivalent balance of $266.4 million, up from $224.9 million reported in the previous quarter. The company had long-term debt of $1.6 billion flat from the previous quarter.
Cash flow from operations was $233 million during six months ended Jun 30, 2019. Free cash flow came in at almost $212 million.
During the reported quarter, the company repurchased 0.8 million shares at an average price of $66.79 per share. The company had 1.4 million shares remaining under the previously announced share repurchase program.
Guidance
Match Group anticipates third-quarter 2019 revenues between $535 million and $545 million. Tinder remains the key catalyst. Unfavorable foreign exchange is expected to hurt the top line growth. The Zacks Consensus Estimate is pegged at $519.7 million.
Adjusted EBITDA is anticipated to be in the range of $200 million to $205 million.
For fiscal 20209, Match Group expects 1.6 million average subscriber additions at Tinder.
Zacks Rank and Stocks to Consider
Match Group currently carries a Zacks Rank #4 (Sell).
Some better-ranked stocks in the broader technology sector are Rosetta Stone , Fortinet, Inc. (FTNT - Free Report) and Nikon Corp. (NINOY - Free Report) , each flaunting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Rosetta, Fortinet and Nikon have a long-term earnings growth rate of 12.5%, 15% and 1%, respectively.
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Match Group (MTCH - Free Report) delivered second-quarter 2019 adjusted earnings of 49 cents per share, which surpassed the Zacks Consensus Estimate of 45 cents and improved 19.5% year over year.
Revenues of $497.9 million rose 18% year over year and beat the Zacks Consensus Estimate of $487 million. Excluding the effect of Foreign Exchange, the top line was up 22% year over year. The increase was primarily driven by an improvement of 18% and 2% in average subscriber base and Average Revenue per Subscriber (ARPU), respectively.
Notably, shares were up 3.5%, yesterday, primarily due to better-than-expected second quarter results and encouraging third-quarter guidance. Further, robust Tinder average subscriber growth (up 36% year over year) positively impacted share price. Moreover, Match Group’s stock has gained 62.1% in a year, against the industry's decline of 24.3%.
Quarter Details
Average subscriber base and ARPU were 9.1 million and 58 cents, respectively, at the end of the reported quarter. North America subscriber base increased 9%, while International advanced 27%. Growth in ARPU was driven primarily by strength in both North America (up 4% year over year) and International (up 1%).
In the second quarter, Tinder average subscribers increased 1.5 million year over year and came in at 5.2 million. Sequentially, the same increased 503,000 ARPU, reflecting an improvement of 2% year over year. This primarily came on the back of higher number of Gold subscribers.
Direct revenues from Tinder grew 46% year over year, primarily backed by 39% increase from average subscriber growth and 6% year over increase from ARPU.
Adjusted EBITDA was $203.5 million, up 16% year over year. Adjusted EBITDA margins came in at 41%, down 100 bps year over year. Margins were primarily impacted by higher cost of revenue, partially offset by lower selling and marketing expense as a percentage of revenues.
Total cost and expenses increased 20% year over year to $325.1 million. Selling and marketing (S&M) were up 5.1% on a year-over-year basis. While General and administrative expense improved 47.6% on a year-over-year basis, product development expenses remained flat.
Operating income advanced 15% from the year-ago quarter to $172.9 million. However, operating margin contracted 100 bps to 35%.
Balance Sheet
Match Group exited the second quarter with cash and cash equivalent balance of $266.4 million, up from $224.9 million reported in the previous quarter. The company had long-term debt of $1.6 billion flat from the previous quarter.
Cash flow from operations was $233 million during six months ended Jun 30, 2019. Free cash flow came in at almost $212 million.
During the reported quarter, the company repurchased 0.8 million shares at an average price of $66.79 per share. The company had 1.4 million shares remaining under the previously announced share repurchase program.
Guidance
Match Group anticipates third-quarter 2019 revenues between $535 million and $545 million. Tinder remains the key catalyst. Unfavorable foreign exchange is expected to hurt the top line growth. The Zacks Consensus Estimate is pegged at $519.7 million.
Adjusted EBITDA is anticipated to be in the range of $200 million to $205 million.
For fiscal 20209, Match Group expects 1.6 million average subscriber additions at Tinder.
Zacks Rank and Stocks to Consider
Match Group currently carries a Zacks Rank #4 (Sell).
Some better-ranked stocks in the broader technology sector are Rosetta Stone , Fortinet, Inc. (FTNT - Free Report) and Nikon Corp. (NINOY - Free Report) , each flaunting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Rosetta, Fortinet and Nikon have a long-term earnings growth rate of 12.5%, 15% and 1%, respectively.
This Could Be the Fastest Way to Grow Wealth in 2019
Research indicates one sector is poised to deliver a crop of the best-performing stocks you'll find anywhere in the market. Breaking news in this space frequently creates quick double- and triple-digit profit opportunities.
These companies are changing the world – and owning their stocks could transform your portfolio in 2019 and beyond. Recent trades from this sector have generated +98%, +119% and +164% gains in as little as 1 month.
Click here to see these breakthrough stocks now >>
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
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