TipRanks Smart Value #34: Hidden Chemistry
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Dear Investors,
Dear Investors,
Welcome to the 34th edition of our recently launched TipRanks Smart Value Newsletter!
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This Week’s Top Value Pick: Match Group (MTCH)
Match Group (MTCH) is a leading provider of digital technologies focused on online dating and social discovery. The company operates through four segments – Tinder, Hinge, Evergreen & Emerging, and Match Group Asia – making it one of the world’s most dominant players in the online dating industry.
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Swipe Story
Match Group traces its roots to the early 2000s, when IAC/InterActiveCorp began assembling a portfolio of online dating services, including Match.com, OkCupid, and Meetic. These early ventures positioned the company to capitalize on the rapid rise of digital matchmaking as social technologies reshaped how people formed connections. The 2012 launch of Tinder proved transformative – its swipe-based interface revolutionized online dating and turned it into one of the world’s most downloaded lifestyle apps.
In 2015, IAC consolidated its dating assets under Match Group and took the company public on the Nasdaq under the ticker “MTCH,” marking its transition into a standalone global leader in online relationships. That same year, Match expanded its reach in the free dating segment with the acquisition of Plenty of Fish (POF), strengthening its presence across key demographics and pricing tiers.
Over the next several years, Match Group accelerated its expansion through strategic acquisitions and product innovation. In 2017, it consolidated full ownership of Tinder, which had already become its flagship brand and a dominant force in mobile dating. The company acquired a controlling stake in Hinge in 2018 and completed a full buyout in 2019, securing a strong position in the relationship-oriented segment. Hinge’s focus on users seeking serious relationships complemented Match’s broader ecosystem, which included Tinder and OkCupid catering to more casual audiences.
In 2020, Match Group completed its separation from IAC, gaining full independence and a sharper strategic focus. The following year, it undertook its largest acquisition to date – purchasing South Korea’s Hyperconnect for roughly $1.73 billion. The deal expanded Match’s reach beyond dating into real-time video and social discovery through Hyperconnect’s apps, Azar and Hakuna Live.
However, in mid-2024, Match Group made a strategic decision to exit the live streaming business to refocus on its core dating platforms and AI-driven innovation. The company announced that it would discontinue its live streaming services as part of a broader pivot toward greater cost efficiency and a stronger focus on its core business. Most recently, in 2025, the company acquired Salams, a Muslim-focused dating platform, underscoring its ongoing commitment to culturally specific markets.
Within two decades, Match Group evolved from a little-known online dating pioneer into a diversified global social discovery leader, operating over 45 brands across 190 countries.
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Connected Growth
Match Group operates a diversified digital platform that helps people form connections across various demographics and relationship preferences. Its business model is built around a portfolio of leading dating and social discovery brands – most notably Tinder and Hinge, alongside established platforms such as Match, OkCupid, Meetic, Pairs, and Azar – each designed to serve distinct user segments and cultural markets.
The company generates the vast majority of its revenue from direct user payments, primarily through premium subscriptions and in-app à la carte features that enhance engagement and visibility. Subscription tiers like Tinder Gold, Tinder Platinum, and Hinge+ offer users added benefits such as unlimited likes, advanced filters, and higher match visibility, encouraging greater spending and retention. Advertising represents a smaller portion of total revenue and is largely delivered through native in-app placements.
In the second quarter of FY25, approximately 98% of Match Group’s revenue came directly from users, underscoring the benefits of recurring subscription income and a resilient business model that provides predictable cash flows even in volatile economic conditions.
Tinder remains the company’s largest revenue contributor, accounting for more than half of total sales, while Hinge continues to grow rapidly, contributing around 20% of revenue. Hinge’s premium pricing and expanding global reach, particularly in Europe and Latin America, have made it a key driver of Match Group’s overall growth. Meanwhile, the company’s Evergreen and Emerging brands deliver steady revenue from mature markets, and Match Group Asia, led by Japan’s Pairs app, adds regional diversification and exposure to high-growth international segments.
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Swipe Reset
Earlier this year, Match Group appointed a new CEO, Spencer Rascoff, who introduced a three-phase turnaround strategy – Reset, Revitalize, and Resurgence – to reignite growth and innovation. The Reset phase focuses on streamlining operations by flattening management layers and forming smaller, agile teams to speed up decision-making and strengthen accountability. The company also unified its AI and engineering infrastructure, connecting nearly 1,000 engineers to improve collaboration and data-driven execution.
In the Revitalize phase, management clarified the strategic role of each brand. Tinder is being repositioned as the go-to app for casual connections and social discovery, particularly for Gen Z, while Hinge continues to dominate the “intentioned dating” space, helping users form meaningful relationships. The company’s Evergreen brands – Match, Meetic, and OkCupid – serve broad audiences, while its Emerging brands, such as Chispa, The League, and Archer, target specific communities. Meanwhile, MG Asia focuses on high-growth markets with video-based social platforms like Azar. This diversified structure enables Match Group to engage users across the full spectrum of dating intentions and cultural preferences.
Tinder remains the company’s most critical turnaround effort. Management admitted the platform had “grown stale” but highlighted encouraging momentum from new AI-driven matching tools and an overhauled user interface that enhances compatibility-based engagement. Early data show sequential gains in registrations, monthly active users, and message exchanges – early signs that the refresh is taking hold.
Hinge continues to be Match Group’s primary growth driver. Direct revenue grew 25% year-over-year in the second quarter, supported by international expansion and AI-led features that improved user matches by 15%. Monthly active users increased 20% overall and 60% in Europe, with further gains expected as the app enters Mexico and Brazil. Hinge is on track to approach $1 billion in revenue by 2027.
Across the portfolio, AI is now central to Match Group’s user and product strategy – powering personalized profiles, improving conversation quality, refining match recommendations, and accelerating product testing cycles. Management also emphasized efficiency initiatives that support margin recovery. About 30% of transactions have shifted from in-app to web-based payments, improving net revenue by over 10% and expected to deliver $65 million in annual adjusted operating income (AOI) savings by 2026.
Looking ahead, management sees further growth potential in community-oriented and identity-driven brands, as well as in developing markets where dating app adoption remains low. With Tinder’s recovery underway, Hinge’s global momentum accelerating, and AI integration reshaping user engagement, Match Group is laying the foundation for sustainable, long-term growth, with the full benefits of its transformation expected to become visible in 2026.
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Profit Spark
Over the past three years, Match’s revenues have grown at a CAGR of 5.3% while its EPS has grown at 28.5% driven by a combination of portfolio diversification, improved monetization, and disciplined cost management, even amid a challenging macro backdrop and competitive digital landscape.
In Q2 2025, Match Group reported $864 million in revenue, flat year-over-year but slightly ahead of expectations when excluding the divested live-streaming business. The results reflected mixed brand performance – Hinge’s 25% revenue surge offsetting a 4% decline at Tinder, underscoring the company’s shifting growth drivers. The total number of payers fell 5% year-over-year to 14.1 million, but revenue per payer rose 5% to $20, highlighting effective pricing and monetization initiatives. Adjusted operating income reached $290 million, with a roughly 37% margin, after excluding legal and restructuring costs.
On the bottom line, earnings came in at $0.49 per share, up 2% year-over-year and in line with estimates, supported by ongoing cost discipline and prudent reinvestment. The company ended the quarter with $340 million in cash, $3.5 billion in long-term debt, and net leverage of 2.5x, maintaining solid credit ratings of “BB” from S&P and “Baa2” from Moody’s.
Cash flow generation remained robust, reflecting Match Group’s strong profitability and capital efficiency. In the second quarter alone, the company generated $231 million in free cash flow, contributing to $908 million over the past twelve months, with a healthy free cash flow conversion rate of 74%.
Looking ahead, Match expects Q3 2025 revenue of about $915 million at the midpoint, with adjusted operating income of $333 million and a 36% margin, representing a modest 3% year-over-year decline. For FY25, management projects total revenue near the high end of its guidance range and targets an adjusted operating margin of 36.5%. Full-year free cash flow is forecast between $1.06 billion and $1.09 billion, consistent with Match Group’s strong historical cash generation.
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Value Match
Match Group has adopted a modest but consistent dividend policy, initiating quarterly payouts in 2024 as part of its broader capital return strategy. The company most recently declared a quarterly dividend of $0.19 per share, translating to an annualized dividend of $0.76 per share and a 1.16% yield.
Alongside dividends, Match Group actively repurchases shares to enhance shareholder value. In January 2024, the company authorized a $1 billion buyback program, which was fully utilized by April 2025. A new $1.5 billion program, approved in December 2024, succeeded it, with $1.28 billion remaining as of July 31, 2025. During the first half of 2025, Match repurchased roughly $420 million worth of shares, followed by an additional $47.4 million in July.
Over the past year, shares of MTCH have declined by around 12%. The stock appears significantly undervalued, now trading at more than a 50% discount to its historical averages on key measures such as non-GAAP trailing and forward P/E ratios and forward EV/EBITDA, and over a 60% discount on forward price-to-cash-flow. Compared with peers, Match sits at the lower end of the valuation range across forward P/E, EV/EBITDA, and trailing price-to-cash-flow metrics. Such deep discounts indicate that much of the market’s caution around near-term growth and user trends may already be priced in – potentially offering long-term investors an opportunity to accumulate a high-margin, cash-generative business at a value multiple.
Analysts remain constructive on the outlook, citing strong cash flow generation that supports reinvestment, debt management, and long-term stability. Consensus estimates point to a roughly 22% upside from current levels, with some projections exceeding 50%. Meanwhile, DCF analysis suggests the stock trades about 64% below intrinsic value, indicating meaningful upside potential if the company’s turnaround continues to gain traction – which appears likely as Match Group refocuses on product innovation, pricing optimization, and Gen Z engagement to reignite user growth and monetization.
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Investing Takeaway
Match Group’s recent transformation presents an appealing opportunity for value-oriented investors. The company’s shares trade at a deep discount relative to both historical averages and its peers, even as its fundamentals strengthen through steady cash generation, disciplined cost control, and a growing portfolio of high-margin brands. Ongoing product innovation, including AI-driven matching and revamped user experiences, is revitalizing Tinder and fueling Hinge’s rapid expansion. With a leaner structure, a renewed focus on growth, and consistent free cash flow, Match Group appears positioned to restore earnings momentum and long-term shareholder value. For investors seeking an undervalued technology platform with durable global reach and improving profitability, Match’s current valuation offers a compelling entry point ahead of its expected resurgence.
