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match group On Tuesday, the company beat Wall Street’s fourth-quarter forecasts, but issued weak guidance to invest in new products and artificial intelligence efforts to turn around Tinder’s declining user numbers.
Shares soared 8% in extended trading. Shares ended Tuesday down 8%.
Here’s how the company performed against LSEG’s estimates:
Earnings per share: 83 cents vs. 70 cents expected Earnings: $878 million vs. $871 million expected
The dating platform released lackluster guidance for 2026, predicting revenue of $3.41 billion to $3.54 billion, compared to FactSet’s estimate of $3.59 billion.
Finance chief Steve Bailey said the weaker-than-expected result was due to strategic investments in Tinder and weakness in Asian brands and evergreen emerging segments, including OkCupid and Plenty of Fish.
Match has earmarked a $60 million budget for AI and product deployment at Tinder. Bailey told CNBC that these efforts will create a 1.5-point headwind to short-term monetization, but will support a better app experience. The introduction of the Face Check authentication feature is expected to impact guidance by 1 point.
“We’re willing to make that tradeoff to facilitate the product experience we need to get user growth back on track,” he said.
Match Group’s daily stock price chart.
Bailey also said the impact associated with product changes was lower than expected during the fourth quarter, which could result in an upside to guidance if this trend continues.
Match is in the midst of a major overhaul as it seeks to recover from Tinder’s user decline and appeal to younger users.
Under the leadership of CEO Spencer Rascoff, who took over last February, the company announced a three-year transformation plan that included restructuring and introducing new artificial intelligence tools.
Part of the turnaround goal is for Hinge to reach $1 billion in annual revenue by 2027. The company is expanding its platform internationally and investing in new tools to increase engagement, including AI-powered conversation starters.
Hinge’s direct revenue increased 26% year over year to $186 million.
Match’s paid users in the fourth quarter fell 5% year over year to 13.8 million, falling short of StreetAccount’s forecast of 14.1 million. The sector also recorded a 5% year-over-year decline in the third quarter.
Bailey said the decline in paying users takes into account a more significant decline at Tinder, where payers are down 8% compared to a year ago. He said these decreases were related to business development agreements completed in the fourth quarter, leading to a more challenging comparison.
Net income was $209.7 million, or 83 cents per share, up from $158.3 million, or 59 cents per share, in the year-ago period. Sales increased by 2% compared to the previous year.
