What happened
Shares of Match Group (MTCH 0.17%) fell on Wednesday after the dating app leader released its second-quarter results and issued a tepid growth forecast for the second half of the year. As of 3:15 p.m. ET, its stock price was down more than 17%.
So what
In the second quarter, Match Group's revenue rose 12% year over year to $795 million. Excluding foreign exchange rate fluctuations, its sales were up 19%.
This growth was driven by a 10% jump in payers -- people who subscribe to Match Group's premium offerings or make a la carte purchases -- to 16.4 million. A 3% increase in revenue per payer also contributed to the gains.
However, Match Group's sales fell short of Wall Street's expectations. Analysts had projected revenue of $803.9 million.
Moreover, Match Group reported an unexpected operating loss of $10 million, largely due to a $217 million impairment charge relating to its $1.7 billion acquisition of Hyperconnect in June 2021. Match Group purchased the South Korea-based social discovery and video technology company to accelerate its growth in the Asia Pacific region. In the Q2 report, CEO Bernard Kim said he regards that region as the company's "largest untapped market opportunity."
Yet the pandemic has slowed Hyperconnect's pace of expansion. "There's no question that buying Hyperconnect while the world was shut down due to COVID slowed integration and our ability to work together to drive their growth," Kim said. Still, Kim said believes Hyperconnect can return to "reasonable levels of growth, despite what is clearly a tougher and more competitive market for video than before or even during the pandemic."
Now what
It may take some time for Match Group's growth to reaccelerate. The company told investors to brace for "muted" sales growth in the second half of 2022. Management expects revenue of $790 million to $800 million in the third quarter, which would be roughly flat compared to the prior-year period.
Match Group also announced the departure of Renate Nyborg, who served as CEO of its most important dating app, Tinder. "Tinder's current revenue growth expectations for the second half of the year are below our original expectations as a result of disappointing execution on several optimizations and new product initiatives," Kim said. "I believe Tinder's overall product execution and velocity can be improved and that we need to do more to excite our user base to drive top of funnel growth."
Kim will oversee Tinder's operations while the company conducts a search for a permanent CEO for the division.
