Match Group reported its first quarterly earnings since separating from IAC last fall. The company, whose properties include dating sites Match.com, Tinder and OkCupid, saw its revenue rise 12% to $268 million, yet fell short of analyst expectations of $277 million. Shares fell about 3% in after-hours trading.
The company posted adjusted fourth quarter earnings of 24 cents per share, above analyst estimates of 20 cents, yet 26% below the same period last year. Profits were dragged down by increased spending on marketing and other administrative costs.
Average revenue per paid user fell to just 53 cents, down from 62 cents last year. Net income fell from $48 million to $36 million.
“Match Group had a seminal fourth quarter, completing our initial public offering, the acquisition of PlentyOfFish, and the realignment of our management structure to better reflect our increasing global scale,” said Greg Blatt, Chairman and CEO of Match Group, in a statement. “At the same time, we delivered solid revenue and profit growth and we head into 2016 with increasing momentum, which we expect will continue to build throughout the year.”
The online dating space is very competitive — While Match owns 45 brands, others in the space include Bumble ,Hinge, Coffee Meets Bagel and Happn.
Tinder popularized the “double opt-in,” meaning that users must mutually agree to connect before striking a conversation. But the concept has been replicated and many, if not most, of the competing dating apps use this concept today.
Monetization is also a challenge. The availability of countless free dating apps means that many users no longer want to pay a premium for sites like Match.com and OkCupid. And the most active users drop off when they find matches.
Competitor Zoosk has struggled in the wake of Tinder and has even called off its IPO. Spark Networks, which owns JDate and ChristianMingle, has seen its stock fall significantly since Tinder became popular in 2013.
Match closed Tuesday at $12.19, just cents above the $12 the company priced at when it separated from IAC in November. Shares ticked down in after-hours trading to about $11.80. The company has a market cap of $3 billion.