Match Group, the company that owns several dating apps, including Tinder and Hinge, was released It reported first-quarter earnings on Tuesday, which showed Tinder’s paying user base declined for the sixth consecutive quarter. On the other hand, Hinge has seen an increase in members willing to pay for the app. Tinder had 10 million paying users in the first quarter of 2024, down 9% from the previous year. Meanwhile, Hinge now has 1.4 million paying users, up 31% year over year.
Tinder’s downfall was predictable given the change in dating app culture that has taken place in recent years. Younger users are more interested in pursuing serious, long-term relationships rather than casual hookups, which is what Tinder is known for. Since its inception, Hinge has gained popularity among users looking for more meaningful connections.
While Tinder struggles to retain paying users, Hinge is on track to become a “$1 billion revenue business,” CEO Bernard Kim says during a conference call with investors Wednesday morning. Hinge has seen significant revenue growth over the past six years, with direct revenue rising to $124 million in Q1, a 50% jump from a year earlier. In 2023 alone, Hinge brought in $396 million.
One problem Tinder currently faces is convincing members to see value in its “à la carte” (ALC) features, or in-app purchases, which include Super Likes, Boosts, “See Who Likes You” and more . ALC’s revenue represents about 20% of Tinder’s direct revenue. However, in the first quarter of 2024, ALC revenue fell by 13%. This contrasts with record high levels of à la carte shopping in 2018.
Match Group CFO Gary Swidler admitted on the call that weaker à la carte revenue growth has been a downward trend for some time. However, it has become “more severe lately” and “is preventing us from performing very well”.
“We believe the ALC revenue decline stems from user declines and lower average purchase volumes, in part due to weaker discretionary consumer spending among younger users, among other reasons,” Swidler said, adding that Tinder’s payers expected to decline by similar rates in the second quarter. The company expects there to be signs of improvement in the third quarter.
The main reason for adopting an à la carte offering was to meet the needs of price-conscious Gen Zers by helping them get noticed by potential matches at a lower price. Match says it will continue to introduce new à la carte features to Tinder “at affordable prices” in the coming quarters, Swidler added.
However, instead of adding more options, Tinder might want to look at its sister dating app, Hinge, which only offers two à la carte features: Boosts and Roses.
Tinder has made several efforts to improve the overall product experience, including adding new safety features like “Share My Date,” where users can share their date plans with friends. Later this summer, the app will require face photos on everyone’s profile. It will also launch an AI Photo Selector feature that selects 10 of the best photos from a user’s camera roll to improve profile quality.
In recent months, Tinder has worked to continue growing its revenue by raising more money from a dwindling base of paying users, such as by launching a $499-a-month plan for elite users. But her forecast for Tinder’s revenue next quarter indicates Growth will be flat or only up 1%, to $475 million to $480 million, respectively.
Post updated after publication with revenue details. 5:15 p.m. and 8/5/24
