Match Slumps to Record Low as CEO Leaves and Results Disappoint
(Bloomberg) -- Shares of Match Group Inc. fell to a record low after Chief Executive Officer Shar Dubey announced she is stepping down from her role at the end of the month and the company reported results that disappointed analyst forecasts.
Dubey spent 16 years in various roles at Match, though her tenure as CEO has been short. She took up the role in March 2020 when Mandy Ginsberg stepped down just months before Match was spun off from IAC/InterActive Corp. Match said Dubey’s decision was “entirely personal.” Zynga Inc. President Bernard Kim will succeed her.
“At the time it made sense for me to step up and provide the continuity and help guide the company through that process,” Dubey said on a call with analysts Wednesday morning. “I had told the board then that I couldn’t commit to being a long-term CEO because where I was at my life and the things I wanted to do.”
Shares of Match declined as much as 12.3% Wednesday to $69.28 in early New York trading, their lowest levels since being spun out of IAC in July 2020. The announcement of Dubey’s resignation comes as Match gave a forecast for revenue that missed analysts’ estimates and announced a share buyback. Dubey will continue to serve as a director on the board and as an advisor, Match said in a statement.
Kim will be charged with turning around the prospects at Match, whose shares are down more than 40% this year, outpacing the 12% decline in the S&P 500. Kim is joining after more than five years as president at mobile gaming publisher Zynga, the maker of FarmVille, where he helped the company expand into new markets such as blockchain and hyper-casual gaming, as well as into new devices like the Nintendo Switch and Snapchat.
As a result of some of those initiatives, Zynga’s market value quadrupled between the end of 2015 and the end of 2020, leading to its pending acquisition by Take-Two Interactive Software Inc. for $11 billion, which was announced in January. Kim earlier worked for 10 years at Electronic Arts Inc. as a senior vice president of mobile publishing, Match said in the statement.
The Dallas-based company, which owns apps such as Tinder, Hinge and OKCupid, said in a letter to shareholders that it expects revenue of $800 million to $810 million in the second quarter, well below analysts’ estimates for revenue of $835.2 million. Match said the 13% to 14% increase reflects “the impact of the challenging current macroeconomic environment.”
The company said it is expecting adjusted operating income of $285 million to $290 million, including an estimated $6 million of negative impact from Google’s data privacy changes effective June 1. Match estimates it may face an additional $42 million in charges this year if Google forces apps to use its payment system.
Full-year revenue growth will be toward the bottom of the 15-20% range previously guided, taking into account a strong dollar and the war in Ukraine, Match Chief Financial Officer Gary Swidler said on the call.
“There is a lot of uncertainty – the macro negatives but also potential positives, particularly around post-Covid reopening around the globe – that make forward visibility challenging,” the company said.
In the first quarter, Match said the total number of payers on the site grew 13% to 16.3 million, in line with analysts’ estimates. The company reported revenue of $799 million, up 20% and beating the average analyst estimate of $791.2 million. Earnings per share were 60 cents, better than projections for 54 cents. The company also announced the board has authorized a buyback of as many as 12.5 million outstanding shares.
Match and its competitor Bumble Inc. have struggled with the ups and downs of Covid-19 infections, especially in Central Europe and Asia, where many countries still have onerous restrictions in place. Dating apps have seen activity decrease as people stay away from public interactions and also increase when people sought out connections online. The pandemic forced dating apps to experiment with new ways for users to connect, such as video dates and audio prompts that substituted for in-person meetings. Early in 2021, Match acquired South Korean video technology company Hyperconnect, which the company is integrating in to its apps.
Match also experimented with an in-app virtual currency in a dozen countries, saying earlier in the year that it planned to roll the coins out globally by the third quarter.
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