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Match Group (MTCH) to Report Q3 Earnings: Is a Beat in Store?

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Match Group, Inc. (MTCH - Free Report) is scheduled to release third-quarter 2018 results on Nov 6.

The company has surpassed the Zacks Consensus Estimate in the two of the trailing four quarters, recording an average positive surprise of 1.7%.

In the last reported quarter, Match Group delivered adjusted earnings of 41 cents per share, which surpassed the Zacks Consensus Estimate of 36 cents per share. Moreover, the figure increased from the year-ago earnings of 16 cents per share.

Revenues of $421.2 million surged 36% year over year and beat the Zacks Consensus Estimate of $413 million. Year-over-year growth was primarily driven by 27% increase in average subscriber base and 8% rise in Average Revenue per Subscriber (“ARPU”).

Notably, shares of Match Group have returned 87.6% in the past year, against the industry’s decline of 19.6%.

What to Expect?

Match Group anticipates fiscal third-quarter 2018 revenues to be in the range of $430 million to $440 million. The Zacks Consensus Estimate for revenues is pegged at $438.3 million (near the higher end of the guided range), representing an increase of approximately 27.6% from the year-ago quarter.

For third-quarter fiscal 2019, the Zacks Consensus Estimate for earnings is pegged at 36 cents per share, reflecting a rise of 89.5% from the year-ago quarter.

Favorable ESP

According to the Zacks model, a company with Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) along with a positive Earnings ESP has a good chance of beating estimates. The Sell-rated stocks (Zacks Rank #4 or 5) are best avoided.

Match Group has a Zacks Rank #2 and an Earnings ESP of +3.59%, which makes us optimistic regarding an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Let’s see how things are shaping up prior to this announcement.

Factors Influencing Q3 Results

Match Group is benefiting from increasing subscriber addition in the form of membership subscriptions. Total average subscribers in the second quarter came in at 7.7 million, surging 26.7% from the year-ago quarter. The Zacks Consensus Estimate is pegged at approximately 8 million for the to-be-reported quarter.

The company boasts of a robust product portfolio comprising Tinder, Match.com, Meetic, PlentyOfFish and OkCupid. Notably, portfolio expansion with the acquisition of 51% stake in Hinge, the NY-based “relationship” app also bodes well.

Management anticipates Tinder to be the key growth driver in the to-be-reported quarter. Notably, revenues from Tinder soared 136% year over year in the prior quarter. It remains as the key catalyst behind the company’s year-over-year growth. Tinder average subscribers increased 81% year over year and came in at 3.8 million.

Better-than-expected renewal rates for Gold are noteworthy. In the last reported quarter, Average Revenue per Subscriber (“ARPU”) in Tinder grew 33% year over year, primarily due to Gold adoption and a la carte revenues from subscribers.

In a bid to boost Gold adoption, the company recently rolled out “Top Picks” feature on Tinder. This feature is anticipated to bolster Tinder Gold subscribers, consequently aiding the company to generate incremental revenues, going forward. Tinder also introduced Tinder U service custom made for college going students.

Moreover, expanding footprint in India, the biggest market in Asia with regard to Tinder, is likely to be a tailwind.

Other Stocks to Consider

Here are some other companies, which as per our model, also have the right combination of elements to post an earnings beat this quarter:

Himax Technologies, Inc. (HIMX - Free Report) has an Earnings ESP of +48.15% and a Zacks Rank #1. The company is slated to report third-quarter 2018 earnings on Nov 8. You can see the complete list of today’s Zacks #1 Rank stocks here.

CRISPR Therapeutics AG (CRSP - Free Report) has an Earnings ESP of +3.53% and a Zacks Rank #1. The company is expected to report third-quarter 2018 earnings on Nov 14.

ICU Medical, Inc. (ICUI - Free Report) has an Earnings ESP of +8.65% and a Zacks Rank #2. The company is slated to report third-quarter 2018 earnings on Nov 8.

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