Evercore ISI Reiterates In Line Rating on Match Group (MTCH)

Evercore ISI analyst Mark Mahaney reiterated an In Line rating and $32.00 price target on Match Group (NASDAQ: MTCH).

The analyst comments "Additional Detail on Cost Reinvestment. Of $100MM identified/actioned annualized cost reductions, MTCH expects to see $45MM of benefit in FY25, with this amount earmarked for reinvestment into the business. Approximately half is to be directed to investments in regional expansion and Archer—mgmt noted a list of priorities including Azar go-to-market and user acquisition in the United States, Pairs expansion in Korea, The League expansion into the Middle East, and incremental Archer GTM/UA spend. The remaining half is to be deployed primarily as revenue “givebacks” within Tinder, though mgmt noted such moves will remain within the framework of annual revenue guidance and financial targets set out at the company’s Investor Day in December ’24. Key potential vectors for “givebacks” include the core recommendation engine, trust/safety, curation/filtering/discoverability and improvements to the college/GenZ experience. Update on IAP Opportunity. Outside of current guidance, mgmt noted substantial cost savings opportunity related to IAP, with ~15/20 iOS apps now having been approved for web payments in the U.S.—approved apps include Tinder, POF, and OkCupid, with Hinge now in the process of building mobile web checkout and likely to achieve approval in coming weeks. MTCH is now testing various (i.e., 30-45) iterations of web checkout (both with and without user incentives/discounts), with the worst of tests now achieving “net revenue” neutral (i.e., higher take is fully offsetting any negative conversion or discounting impact) and some tests (e.g. pop out to Apple Pay) performing “a lot better”. Mr. Rascoff expects individual apps to settle on respective web payments tactics in coming weeks, with the company likely to be able to estimate impact by Q2 earnings. As a reminder, mgmt has previously stated that for every 10% of iOS U.S. transactions that MTCH is able to migrate to web payments, profit impact is expected to be positive $25MM—though we’d expect a substantial portion of savings to be reinvested into product/GTM/UA. Are The Kids Alright? Recent launch of new college-focused “Chemistry” dating app at University of Pennsylvania—with a mix of traditional Tinder UX mechanics and college-specific features—saw massive user adoption, driven by high levels of virality. MTCH is now assessing learnings and strategic next steps (e.g., integrate viral social features into Tinder, or launch a standalone competitor?), but we view as an encouraging indication that fresh category approaches can resonate with the Gen Z audience. If MTCH proceeds via standalone app route, key questions would be monetization potential and requisite level of marketing spend required to scale, though we note the responsible product team (also tasked with Tinder college product) has solid history scaling efficiently to Gen Z audience, given prior experience building highly viral Sidechat anonymous messaging app…"

For an analyst ratings summary and ratings history on Match Group click here. For more ratings news on Match Group click here.

Shares of Match Group closed at $29.42 yesterday.

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