Match Group (MTCH) will report Q3 results after the bell. The company will release a slide presentation with guidance soon after the press release and host a call tomorrow morning at 8:30.

  • The Street is looking for adj. EPS of $0.20 with revenue +16% to $318 mln and Adj. EBITDA +29% to $108.5 mln.
    • Match guided for Dating revenue up 2-3% Q/Q (to $280.8-283.6 mln) with a Dating adj. EBITDA margin of 35-37%.
  • Match already guided for Q4 Dating revenue +4-6% Q/Q with Dating adj. EBITDA margins in the mid 40% range.
  • Match also guided for FY16 adj. EBITDA of $400-415 mln with Dating revenue of $1.10-1.14 bln. Last quarter, strength in Dating revenue, led by Tinder, was offset by lower than expected indirect (adverting) revenue.
  • Last quarter, Match pushed out expectations for the advertising model as Tinder chose to focus on driving user growth and engagement. Less advertising was more than offset by higher direct rev but the company also increased its investment in Tinder (mostly headcount), which resulted in lower EBITDA guidance for 2016.
  • Tinder's Q2 paid member count (PMC) was up 20% Q/Q to 1.23 mln. Match reaffirmed guidance for PMC doubling this year to 1.6 mln. Match is focused on adding features to drive Tinder user growth and engagement as there is competition in this low barrier to entry business. That said, network effects are on its side. Still, Tinder is focused on growing the business before really ramping up the advertising business model on top of it.
  • Q2 total dating rev was up 23% with avg. PMC +30% to 5.3 mln. Indirect (advertising) revenue was up 25% at just $11.9 mln. Non-dating revenue consists of just the Princeton Review, which averages ~$25 mln in revenue per quarter.
  • Tinder essentially changed the game of dating with its simple swipe left/right app based on location and a quick profile with pictures.
    • Bears see competition in a low barriers to entry business and Tinder cannibalizing the company's legacy dating brands as serious risks.
    • Bulls point to secular tailwinds like the shift to online dating and the fact that millennials are staying single longer.
  • Match's legacy dating brands like Match and OkCupid have struggled with the shift to mobile. As Tinder reduces the stigma of online dating, it could be a benefit to the legacy dating brands longer term.
  • IAC (IAC) still owns 83.8% of the shares outstanding after spinning off MTCH one year ago.
  • Meanwhile, 23% of the float is sold short.
  • MTCH broke out to a new all time high two weeks ago but the stock has since pulled back to retest the level that offered resistance for most of October.