2 Match Group Analysts On Q2 Earnings Miss: 'Product Execution Issues At Tinder'

Match Group Inc (NASDAQ: MTCH) shares dropped 17% on Wednesday after the online dating company reported disappointing second-quarter revenue and issued lackluster guidance.

On Tuesday, Match reported a second-quarter EPS loss of 11 cents, well short of the 53-cent profit analysts had expected. Revenue for the quarter was $795 million, also missing consensus analyst estimates of $804 million. Revenue was 12% from a year ago.

Match reported its number of paid users grew 10% in the quarter to 16.4 million, while its revenue per user was up 3% to $15.86. Tinder revenue was up 13%.

Looking ahead, Match guided for third-quarter revenue of between $790 million and $800 million, well short of Wall Street expectations.

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Voices From The Street: On Wednesday, RBC analyst Brad Erickson said the disastrous second quarter is merely a bump in the road for Match.

"MTCH's Q2 revenue and operating income was relatively in-line with expectations but the guidance fell well short of Street estimates and, importantly, [the] new CEO announced several sweeping changes at Tinder in particular related to what sounds like broad-based product changes as well as parting ways with the prior CEO (search underway) and doing a broader executive reorg within the company's largest brand," Erickson wrote.

He said the company is notably stepping back from initiatives related to Tinder coins and virtual goods.

RBC has an Outperform rating and $115 price target for Match.

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KeyBanc analyst Justin Patterson said he was surprised at the severity of Match's second-quarter headwinds.

"2H headwinds were even more severe than we previewed as the combination of FX headwinds and product execution issues at Tinder are combining to create flattish sequential revenue growth in 3Q and 4Q, and materially softer adj. operating income," Patterson wrote.

He said an unexpected Hyperconnect impairment charge in the second quarter was particularly troubling, but Match plans to continue to leverage its strong balance sheet to repurchase stock.

KeyBanc has an Overweight rating and $90 price target for Match.

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