You might think the big story of Match Group’s first-quarter results would be Tinder’s turnaround. The dating app’s revenue, which had continued to decline each quarter, is once again increasing slightly.
However, I would like to point out a comment made by the chief financial officer about the company currently slowing adoption because it needs more money to pay for AI tools for its employees.
Ah yes, the good old “blame it on the AI” strategy!
Speaking to analysts on the company’s first-quarter earnings call, Match Group CFO Stephen Bailey talked about how the dating app giant is investing in the AI technology it uses internally, and how Match is paying for it.
“We’re making a big push in AI. We’re giving every employee in the company access to all the cutting-edge tools. We’re giving them the training they need to be successful. We’re setting expectations. We really want to be an AI-native company,” Bailey said.
“We think this is a huge opportunity. But as you know, these tools cost a lot of money, so the way we’re going to cover that cost is by delaying our hiring plans for the rest of the year,” he added.
The company assured investors that the impact would not impact costs, as a slowdown in hiring and a reduction in the number of employees would offset the increase in software costs. Additionally, Match Group is betting that increased productivity through the use of AI among employees will ultimately lead to higher revenue, the person seeking the numbers explained.
On the surface, this seems like another example of AI taking away people’s jobs, in this case forcing companies to reduce the number of open positions, but there’s probably more nuance to the story.
Keep in mind that Match Group’s flagship app, Tinder, has struggled in recent years. This quarter could be the start of a turnaround, as monthly active users fell 7% in March compared to a 10% decline a year ago. As Bloomberg noted, Tinder’s registrations also increased for the first time since 2024, but the growth was only 1%.
This is probably a positive sign for Tinder. Or it could be a brief moment of user curiosity about various product improvements or new features, such as an IRL event. Time will tell.
Dating is undergoing a generational change
Match Group remains a company that has to work hard to squeeze more money out of its dwindling and less active user base, and to its credit, it’s done just that. Match’s first quarter revenue was $864 million, up 4% year over year. However, expectations for next quarter were even lower, at around $850 million to $860 million, flat from a 2% year-over-year decline.
All these woes come after months of indifference towards the use of dating apps by young people. With this generational shift, people choose to meet in real life, perhaps by pursuing interests like running, book clubs, or hobbies that connect them with other people, thereby expanding their network and increasing their chances of meeting new people.
This trend coincides with the resurgence of nostalgic technologies like digital cameras, flip phones, boomboxes, and even landline phones, and points to a generation tired of being constantly connected and looking for analog pleasures.
Match Group recognizes this significant shift and says it is focused on addressing this challenge by increasing the number of its own IRL events.
“Gen Z is hungry for connection. We know they want to meet new people. They just want to do interviews in a low-pressure, low-stakes way that doesn’t feel like a job interview,” Spencer Raskoff, Match’s chief financial officer, told investors on a conference call. “Traditional dating apps are very highly structured and can be intimidating for users under 30, so I think the rise of these alternative ways to meet new people speaks to how Gen Z is finding low-pressure ways to connect.”
“We have obviously adapted our roadmap to this reality,” he said.
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