From “Match Group: Maturation” (August 2023): “I think these risks are worth taking, and I’m encouraged that management is experimenting. The other point, which is tied to what we’re seeing in the current results and 2H FY23 guidance, is that the financial goal is ultimately to maximize revenues, not Payers or RPP (given the product that they’re selling, there’s an inherent trade-off at the extremes between the growth of these two variables).”

The trends discussed in “Maturation” continued in Q3 FY23 (as expected), with a mid-single digit decline in Payers offset by a mid-teens increase in revenue per Payer (RPP). The net result was 9% revenue growth in Q3 FY23; while that remains below the growth rate investors came to expect from Match, it’s an acceleration from the weak results over the past year.

The reaction to the print was decidedly negative: the stock, which has been pummeled over the past two years, fell another ~15% following the Q3 results. What’s clear is that the investment community continues to harbor serious questions / doubts about management’s strategic vision. Above all, Mr. Market is very concerned about the trade-off between Payers and RPP, particularly at Tinder; do RPP lifts justify the Payer declines? Is the second variable even an active choice? In today’s write-up, I’ll share my updated thoughts on Match’s competitive position and long-term strategy, along with my thoughts on the road that lies ahead for the global leader in online dating.