2Q18 Takeaways
- 2Q18 ≈ Flawless Print: Clean beat and raise with accelerating revenue growth on a FX neutral basis. The US accelerated across the board with both subs and ARPU accelerating on a y/y basis, while Int'l revenue growth also accelerated on a FXN basis. Tinder subs came in ahead of mgmt's guide (~300K vs. 200K), and mgmt expect to sustain that level of net adds into 3Q18 vs. the 200K run-rate it previously guided to.
- 3Q18 Already be in the Bag? Remember the strength in net adds in any particular quarter isn't fully reflected in revenue until the following quarter. We estimate that the revenue run-rate for its existing sub base is largely inline with the low-end of MTCH's 3Q guide, so MTCH could likely get there on fewer net adds than it guided to. But we expect an incremental sub tailwind from Tinder's upcoming "Picks" feature, which appears to be designed toward driving Gold subs (link).
- Tracker Beta Test Failed Hard: Our tracker was calling for accelerating growth in net adds, and MTCH printed the opposite. We're not sure if there is now a lag in the correlation between the two metrics given that mgmt upped its guide for 3Q, but we're back to the drawing board for now.
- FB is the Next Upside Catalyst: As a reminder, we don't see FB as a material risk given that online daters tend to use multiple apps, and more importantly, Tinder and anything FB will be debuting will likely be different use cases (no, we don't mean a hook-up app, see deck & replay below for detail). Still, the next big upside catalyst is refuting that bear case narrative, which we expect to occur when MTCH proves it can sustain its sub-add trajectory after FB's dating service goes live.
MTCH 2018 BEST IDEA DECKS & REPLAYS
- MTCH | BEST IDEA LONG | 6/11/2018 | CLICK HERE
See the deck & replay above for supporting detail/analysis on our Long thesis. Let us know if you have any questions or would like to discuss further.