People around the world are flocking to Tinder in search of love. They're also displaying an increasing willingness to pay more for the popular dating app's best features. In turn, Match Group (NASDAQ:MTCH) is enjoying accelerating revenue growth and a sharp rise in profits, as evidenced by the company's robust first-quarter financial report.

Match Group results: The raw numbers

Metric

Q1 2018

Q1 2017

Year-Over-Year Change

Revenue

$407.367 million

$298.764 million

36%

Operating Income

$112.233 million

$58.871 million

91%

Earnings per share

$0.33

$0.08

313%

Data source: Match Group Q1 2018 earnings release.

What happened with Match Group this quarter?

Match Group's revenue growth accelerated to 36% from 28% in the fourth quarter and 15% in the year-ago period. The dating product company's fourth-quarter sales of $407 million bested its forecast for revenue of $380 million to $390 million.

Tinder saw its revenue soar more than 150% year over year in the first quarter, thanks to an 87% year-over-year surge in new subscribers and a 37% jump in average revenue per user (ARPU).  ARPU gains were boosted by the success of Tinder Gold, the premium version of the app that offers upgraded features for a higher subscription fee.

In all, Match Group's total subscriber base increased 26% to 7.4 million, including 3.5 million Tinder subscribers. 

A woman and a man touching their hands together in the shape of a heart

Millions of people are turning to Match Group to find love. Image source: Getty Images.

All of this shows that Match Group is becoming more profitable as it expands. EBITDA -- adjusted to exclude stock-based compensation expense and acquisition-related items -- leapt 60% to $138 million, as adjusted EBITDA margin improved to 34% from 29% in the prior-year quarter. That topped Match Group's guidance for adjusted EBITDA of $115 million to $120 million.

Better still, operating cash flow rose 36% to $122 million, and free cash flow climbed 39% to $117 million. 

Looking forward 

These strong results prompted Match Group to raise its full-year financial outlook, which now includes: 

  • Total revenue of $1.6 billion to $1.7 billion -- up from a previous forecast of $1.5 billion to $1.6 billion -- signifying year-over-year growth of 24% at the midpoint of this range.
  • Adjusted EBITDA of $600 million to $650 million -- up from $550 million to $600 million -- representing growth of 33% at the midpoint.

For the second quarter, Match Group expects revenue of $405 million to $415 million and adjusted EBITDA of $160 million to $165 million.

"We continue to deliver innovative products that customers across our portfolio of brands find valuable, and we are not slowing down anytime soon," CEO Mandy Ginsberg said in a press release. "I am highly confident that our product roadmap, particularly at Tinder, will allow us to remain the clear leader in this category and deliver continued growth for Match Group shareholders."

Joe Tenebruso has no position in any of the stocks mentioned. The Motley Fool recommends Match Group. The Motley Fool has a disclosure policy.