What happened
Shares of Match Group (MTCH 2.43%) rallied on Wednesday after the online-dating specialist's third-quarter sales exceeded investors' expectations. As of 12:18 p.m. ET, the stock was up more than 8% after rising as much as 18% earlier in the session.
So what
Match Group's revenue inched up 1% year over year to $810 million. That was above Wall Street's estimates, which had called for revenue of $793 million.
The strength of the U.S. dollar was a major drag on growth. Excluding foreign exchange rate movements, Match Group's sales grew by 10%.
NASDAQ: MTCH
Key Data Points
The company -- which owns dating apps like Tinder, Hinge, The League, and Plenty of Fish, as well as its namesake Match.com site -- saw paying users rise by 2% to 16.5 million. These users subscribe to one of Match Group's premium services or make in-app purchases.
Notably, Tinder's paying users grew by 7%, despite lapping strong results in the year-ago period.
All told, Match Group's adjusted operating income was essentially flat at $284 million. That, too, was better than analysts' estimates for adjusted operating profits of $254 million.
Now what
Match Group expects total revenue of $780 million to $790 million in the fourth quarter, which would represent a year-over-year decline of 2% to 3%. Management also guided for adjusted operating income to fall by roughly 6% to between $270 million and $275 million.
"While our subscription revenues overall remain relatively resilient, we have seen some impact from deteriorating macroeconomic conditions on brands like Plenty of Fish, which serves consumers with less discretionary income, and on à la carte spending, which tends to be more discretionary than subscriptions," CEO Bernard Kim and CFO Gary Swidler said in a letter to shareholders.
Given these challenges, Match Group plans to rein in its marketing investments and slow hiring to cut costs and bolster its profitability.
Looking further ahead, the company said its sales could rise as much as 10% next year as its growth initiatives take hold.
"In addition to reigniting Tinder growth, in 2023 we plan to focus on targeted, high-returning investments, especially in Hinge and The League, as well as some newly incubated apps," Kim and Swidler said.
