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Why Meet Group Stock Fell Today

By Evan Niu, CFA - Nov 7, 2018 at 5:08PM

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Despite the company beating earnings expectations, investors wanted more.

What happened

Shares of Meet Group (MEET) fell 6% on Wednesday after the company reported third-quarter earnings results. Results and outlook came in above expectations, so it's unclear what investors were disappointed with. Shares had been up 60% year to date before today, though, so the market may have been pricing in even higher expectations.

So what

Revenue in the third quarter jumped 42% to $45.7 million, resulting in non-GAAP net income of $7.6 million, or $0.10 per share. Analysts were looking for $43.9 million in revenue and an adjusted profit of $0.08 per share. On a GAAP basis, net income was $1.3 million, or $0.02 per share. Meet Group, which helps people connect through a suite of mobile apps, finished the quarter with $21.8 million in cash and equivalents on the balance sheet.

Two men and two women meeting in a coffee shop

Image source: Getty Images.

The company has executed remarkably well on transitioning away from advertising toward user pay revenue. User pay revenue represented 61% of revenue during the quarter, up from 27% a year ago. Mobile monthly active users (MAUs) grew to 14.6 million, including 4.3 million mobile daily active users (DAUs).

Now what

"We continue to grow video revenue across all of our apps," CEO Geoff Cook said in a statement. "In one year, we have increased the annualized video revenue run rate from virtually zero to $55 million for the month of October. Our successful Lovoo acquisition and integration, together with the dramatic growth of video revenue, have contributed to transforming our revenue mix."

Guidance for the fourth quarter calls for sales of $47.8 million to $48.8 million, with adjusted EBITDA of $8.7 million to $9.1 million. The consensus estimate for fourth-quarter revenue is currently $45.8 million.

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