Match Group, Inc. :MTCH-US: Earnings Analysis: Q3, 2016 By the Numbers : November 18, 2016

Match Group, Inc. reports financial results for the quarter ended September 30, 2016.

We analyze the earnings along side the following peers of Match Group, Inc. – Points International Ltd. and Cafepress Inc. (PTS-CA and PRSS-US) that have also reported for this period.

Highlights

  • Summary numbers: Revenues of USD 316.45 million, Net Earnings of USD 56.41 million.
  • Gross margins narrowed from 78.39% to 76.58% compared to the same period last year, operating (EBITDA) margins now 31.70% from 25.60%.
  • Year-on-year change in operating cash flow of 68.04% is about the same as the change in earnings, likely no significant movement in accruals or reserves.
  • Earnings growth from operating margin improvements as well as one-time items.

The table below shows the preliminary results and recent trends for key metrics such as revenues and net income growth:

2016-09-30 2016-06-30 2016-03-31 2015-12-31 2015-09-30
Relevant Numbers (Quarterly)
Revenues (mil) 316.45 301.12 285.28 267.57 268.97
Revenue Growth (%YOY) 17.65 21.02 21.36 N/A N/A
Earnings (mil) 56.41 34.08 7.15 35.59 35.26
Earnings Growth (%YOY) 59.99 46.1 -72.71 N/A N/A
Net Margin (%) 17.83 11.32 2.51 13.3 13.11
EPS 0.21 0.13 0.03 0.14 0.06
Return on Equity (%) 55.25 40.17 9.56 22.71 15.93
Return on Assets (%) 11.04 6.88 1.47 8.27 9.82

Access our Ratings and Scores for Match Group, Inc.

Market Share Versus Profits

Revenues History
Earnings History

MTCH-US‘s change in revenue this period compared to the same period last year of 17.65% is almost the same as its change in earnings, and is about average among the announced results thus far in its peer group, suggesting that MTCH-US is holding onto its market share. Also, for comparison purposes, revenues changed by 5.09% and earnings by 65.53% compared to the immediate last period.

Revenues Growth Versus Earnings Growth

Quadrant label definitions. Hover to know more

Leader, Earnings Focus, Laggard, Revenues Focus

Earnings Growth Analysis

The company’s gross margins showed no year-on-year improvement. In spite of this, the company’s earnings rose, influenced primarily by the improvement in operating margins (EBITDA margins) from 25.60% to 31.70%. For comparison, gross margins were 76.52% and EBITDA margins were 29.51% in the last period.

Gross Margin Versus EBITDA Margin

Quadrant label definitions. Hover to know more

Differentiated; Low Cost, Commodity; Low Cost, Commodity; High Cost, Differentiated; High Cost

Cash Versus Earnings – Sustainable Performance?

MTCH-US‘s change in operating cash flow of 68.04% compared to the same period last year is about the same as its change in earnings this period. Additionally, this change in operating cash flow is about average among its peer group. This suggests that the company did not use accruals or reserves to manage earnings this period, and that, all else being equal, the earnings number is sustainable.

Operating Cash Flow Growth Versus Earnings Growth

Quadrant label definitions. Hover to know more

Cash Flow based Earnings, Likely Non-cash Earnings, Low Cash Flow Base, Likely Undeclared Earnings

Margins

The company’s earnings growth has also been influenced by the following factors: (1) Improvements in operating (EBIT) margins from 21.70% to 27.61% and (2) one-time items. The company’s pretax margins are now 24.35% compared to 21.40% for the same period last year.

EBIT Margin Versus PreTax Margin

Quadrant label definitions. Hover to know more

Operation driven Earnings, One-time Favorables, Low Earnings Base, One-time Unfavorables
EBIT Margin History
PreTax Margin History

Access our Ratings and Scores for Match Group, Inc.

Company Profile

Match Group provides dating products. It operates its business through the following segments: Match, Meetic, OurTime and OkCupid. The company was founded on February 12, 2009 and is headquartered in Dallas, TX.

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