A month has gone by since the last earnings report for Match Group (MTCH Quick QuoteMTCH - Free Report) . Shares have lost about 3% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Match Group due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

Match Group Q1 Earnings Decline Y/Y, Revenues Up

Match Group reported first-quarter 2021 earnings of 57 cents per share, which declined 6.6% from year-ago quarter’s figure.

Further, revenues of $667.6 million increased 23% year over year. Continued momentum at Tinder and solid performances of other apps like Hinge, Pairs and OkCupid drove the top line.

Excluding the effect of foreign exchange, the top line rose 19% year over year to $649.4 million, driven by rise in average subscriber base.

Notably, activity and engagement across all brands has been high since the COVID-19 outbreak, especially across western markets.

Quarter in Details

In the first quarter, average subscriber base increased 12% to 11.1 million and average revenues per user (ARPU) were up 9% year over year to 64 cents. Growth in subscriber base was driven by continued momentum in apps like Tinder, PlentyOfFish, BLK, Hinge, Meetic, Pairs and Chispa. The company continues to expand operations for apps like OkCupid across international markets.

Direct revenues from North America were up 24% to $326.8 million. In International markets, direct revenues increased 21% to $328.4 million for the first quarter.

North America subscriber base climbed up 9% to 4.99 million, while International advanced 15% to 6.12 million in the quarter under review.

North America ARPU increased 13% to 70 cents, while International ARPU increased 7% to 59 cents.

Improvement in North America ARPU was driven by addition of à la carte features and price optimization for Hinge app, higher premium subscription purchases at Tinder and OkCupid as well as increases in live video streaming for PlentyOfFish app. Internationally, growth was driven by favorable forex movement.

Moreover, robust Tinder average subscriber increased 15% year over year while Tinder APRU increased 4% in the first quarter.

Direct revenues from Tinder increased 18% year over year. The company is now offering Tinder Platinum subscription to all users and relaunched free Global Passport to help users find connections from all over the world. The dating app is also testing a slew of new revenue features like in-app virtual currency to suit changing preferences of its global user base.

Direct revenues from non-Tinder brands collectively increased 30% on a year-over-year basis. Non-Tinder brands witnessed 18% growth in ARPU as well as 8% increase in average subscribers.

The company expects the impending acquisition Hyperconnect as well as non-dating apps like Ablo to cushion the top line, going ahead. The company’s Ablo app helps people make friends around the world. Match Group is also directing significant resources to revamp tech capabilities to support video streaming as video date trend gains momentum. The company expects to spend incremental $40 million on sales and marketing in the second quarter of 2021.

For the first quarter, adjusted EBITDA was $230 million, up 32% year over year. Also, adjusted EBITDA margin expanded 200 basis points (bps) year over year to 34%.

Total operating costs and expenses increased 17% year over year to $478.4 million in the first quarter. The upside can be attributed to increase in cost of revenues, selling and marketing expenses, product development as well as general and administrative expenses.

However, total operating costs and expenses, as a percentage of revenues, contracted 300 bps on a year-over-year basis and came in at 72% in the reported quarter.

Operating income advanced 38% from the year-ago quarter’s tally to $189 million. Operating margin expanded 300 bps to 28%.

Balance Sheet & Cash Flow

As of Mar 31, 2021, Match Group had cash and cash equivalent balance of $846 million compared with $739.2 million as of Dec 31, 2020. As of Mar 31, 2021, the company had long-term debt of $3.8 billion compared with $3.53 billion as of Dec 31, 2020.

As of Mar 31, 2021, the company reported $1.7 billion of exchangeable senior notes. The company had $750 million under its revolving credit facility as of Mar 31, 2021. The amount was undrawn as of Mar 31.

For the first quarter of 2021, the company generated operating cash flow of $102 million and free cash flow was $92 million.

Guidance

Match Group expects second-quarter 2021 revenues of $680 million to $690 million, indicating year-over-year growth of 22-24%.

Adjusted EBITDA for the first quarter is anticipated in the range of $255-$260 million.

For 2021, Match Group added that it was on track to achieve the high end of the previous guidance for revenues and EBITDA growth for 2021.

For 2021, Match Group earlier projected revenues in the range of $2.75-$2.85 billion, suggesting year over year growth in mid to high-teens.  The company also expects to surpass $1 billion for adjusted EBITDA in 2021.

How Have Estimates Been Moving Since Then?

It turns out, estimates review have trended downward during the past month. The consensus estimate has shifted -8.61% due to these changes.

VGM Scores

Currently, Match Group has a nice Growth Score of B, a grade with the same score on the momentum front. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Match Group has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.