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Match Group, Inc. (MTCH - Free Report) is set to report second-quarter 2017 earnings results on Aug 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 better, with the company’s earnings missing estimates just once and managing two beats in the trailing four quarters, for an average positive surprise of 3.2%. Last quarter, it missed estimates by 20%.

Let's see how things are shaping up for its seventh earnings report as a public company.

Key Factors Influencing Q2 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 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 15% year over year, driven by solid contribution from Tinder, PlentyOfFish, Pairs and Meetic. This momentum bodes well for the company’s top-line growth in the quarter under review.

Match Group has been making profits for the past three years and 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, as well as the recently acquired, PlentyOfFish.

However, the company is vulnerable to the cannibalization of users and revenues across its competing platforms. In fact, its average revenue per paying user was flat year over year in the last reported quarter, reflecting the shift of the company’s focus toward lower-paying brands, such as Tinder and OkCupid. The numbers were also adversely affected by appreciation of the U.S. dollar. These factors might dent the company’s top line in this quarter too. Also, the company has planned higher marketing expenditure for the second quarter, which should burden profits.

In addition, the company’s performance has suffered due to Affinity brands and their continued control run-off, which has reduced the paid member count (“PMC”) significantly on a year-over-year basis.

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 had earlier anticipated year-over-year revenue growth of 15–20% in 2017. However, recent currency trends (strengthening U.S. dollar against the Euro and the Yen), will likely hurt those projections. Also, the company expects ARPPU growth to be flat in the near future.

In the last quarterly report, Match Group had reiterated its revenue projections of $1.26–$1.31 billion, with an adjusted EBITDA of $450–$470 million for full-year 2017.

Match Group, Inc. Price, Consensus and EPS Surprise

Earnings Whispers

Our proven model does not conclusively show that Match Group will likely 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 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate are currently pegged at 16 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 #3, but the company’s ESP of 0.00% reduces the chances of a positive earnings surprise.

We caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the 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:

Sempra Energy (SRE - Free Report) has an Earnings ESP of +11.25% and a Zacks Rank #2. The company is expected to release earnings results on Aug 4. You can see the complete list of today’s Zacks #1 Rank stocks here.

Galapagos NV (GLPG - Free Report) has an Earnings ESP of +33.33% and a Zacks Rank #3. The company is anticipated to release earnings on Aug 4.

Calumet Specialty Products Partners, L.P. (CLMT - Free Report) has an Earnings ESP of +26.09% and a Zacks Rank #3. The company is likely to release earnings on Aug 4.

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