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Match Group beat fourth-quarter Wall Street estimates on Tuesday but issued weak guidance as it invests in new products and artificial intelligence initiatives to turn around declining user growth at Tinder.
Shares popped during extended trading. The stock closed 8% lower on Tuesday.
Here’s how the company did versus LSEG estimates:
- Earnings per share: 83 cents vs. 70 cents expected
- Revenue: $878 million vs. $871 million expected
The dating platform issued lackluster guidance for 2026, forecasting between $3.41 billion and $3.54 billion in revenue, compared to a FactSet estimate of $3.59 billion.
Finance chief Steve Bailey attributed the weaker-than-expected forecast to the company’s strategic investments in Tinder and softness within its Asia brands and the evergreen and emerging segment, which includes OkCupid and Plenty of Fish.
Match has allocated a $60 million budget for AI and product rollouts at Tinder. Those initiatives will cause a one-and-a-half point headwind to near-term monetization but support a better app experience, Bailey told CNBC. The rollout of Face Check is projected to impact guidance by one point.
“We’re going to be willing to take that tradeoff because it will drive the product experience we need to get user growth back on track,” he said.
Match Group one-day stock chart.
Bailey also said that the impact tied to product changes was lower than expected during the fourth quarter and a continuation of this trend could provide upside to guidance.
Match is in the middle of a massive business overhaul as it tries to recover from declining user trends on Tinder and appeal to more younger users.
Under the leadership of CEO Spencer Rascoff, who took over last February, the dating company unveiled a three-year transformation plan that included restructuring and implementing new artificial intelligence tools.
Part of the turnaround target is to reach $1 billion in annual revenue by 2027 with Hinge. The company is expanding the platform internationally and has invested in new tools to boost engagement, such as AI-powered conversation starters.
Hinge’s direct revenue grew 26% from a year ago to $186 million.
Match’s paying users declined 5% from the prior year to 13.8 million during the fourth quarter, falling short of a 14.1 million estimate from StreetAccount.The segment also posted a year-over-year 5% decline during the third quarter.
Bailey said the drop in paying users takes into account a more significant decline in Tinder, where payers fell 8% from a year ago. Those declines, he said, were tied to business development deals that wrapped up in the fourth quarter and led to tougher comparisons.
Net income totaled $209.7 million, or 83 cents per share, up from $158.3 million, or 59 cents per share a year ago. Revenue rose 2% from a year ago.
