By Kritika Lamba
(Reuters) -Match Group on Thursday posted a 5% fall in paying users for the first quarter, sending its shares down 7% as investors concerned about the Tinder owner’s business revamp looked past its estimate-beating results.
The dating app operator also announced plans to slash 13% of its workforce to cut costs – its first big move since new CEO Spencer Rascoff took the helm in February with a focus on tackling a slowdown in user engagement.
The online dating industry has hit a rough patch as persistent inflation, a lack of innovative features, and market stagnation pull consumers away from dating apps such as Tinder and Bumble.
Paying users at Match – parent of dating sites Tinder, Hinge and OkCupid – fell to 14.2 million in the first quarter, from 14.9 million a year ago.
Payers play a crucial role in the business, and the observed underperformance, despite a strong top-line outlook, contributes to a more cautious perspective among investors, said Chandler Willison, research analyst at M Science.
The company forecast second-quarter revenue between $850 and $860 million, above analysts’ average estimate of $846.7 million, according to data compiled by LSEG.
Activist investors have also been pressing Match for over a year to rethink capital allocation, cut costs, and consider a strategic review of its MG Asia business.
Match and Bumble have been refining their applications and introducing artificial intelligence features such as AI-enabled discovery to improve the dating experience for users.
“Product enhancements are the critical lever to return to payer growth,” said Michael Ashley Schulman, CFA at Running Point Capital.
For the quarter ended March 31, the company’s revenue declined by 3% to $831 million, beating estimates of $827.5 million.
Rival Bumble on Wednesday reported a more than 7% fall in first-quarter revenue, but met market estimates.
(Reporting by Kritika Lamba in Bengaluru; Editing by Devika Syamnath)
