This post was originally published on this site
As COVID-19 has spread across the globe, online daters are having longer conversations but finding fewer new dating prospects, Match Group Inc. said Tuesday, which is leading to a change in strategy.
The new chief executive of Match Group MTCH, -0.94% — which owns Tinder, Match.com and other online-dating properties — wrote a letter about the effects of the coronavirus pandemic that was posted Tuesday on the company’s website and filed with the Securities and Exchange Commission. In it, she said that the length of Tinder users’ conversations increased 10% to 30% after the virus struck their countries, but services were struggling to attract new and paying users in countries hit hard by infections.
“In Europe, we’ve seen new subscriber declines of around 5% in aggregate since the crisis began, but in countries severely impacted by COVID-19, like Italy and Spain, we have seen more significant declines,” CEO Shar Dubey wrote. “In the U.S., the impact also depends on the level of cases in the region and varies by brand. For example, Tinder in New York State has seen low double-digit declines in new subscribers since the outbreak accelerated, but much of the rest of the country has held up much better.”
See also: This is why loneliness and dating apps are such a bad match
As a result, Dubey said that Match was looking to “pivot” to add video chat to more of its services. Dubey said Match had begun rolling out video chat on two services, Plenty of Fish and Twoo, and that usage had “exceeded our expectations.” The company now plans to roll out one-on-one video-chat services on its namesake Match.com service in early April.
“As nearly every aspect of our lives is now conducted via video, singles are also becoming increasingly comfortable with video dates, and we are integrating video chat into our apps,” she wrote. “We have offered video chat features in the past and seen low usage, but we think this time user behavior is likely to change more permanently.”
Match did not mention any plans for video on Tinder, its mobile-focused dating app. A spokeswoman said that the company had nothing to add beyond the letter.
The company also did not mention if it plans to charge for video-chat offerings. Fewer new subscribers would hurt the company’s finances, as paying subscribers for services like Tinder Gold have powered much of Match Group’s gains in recent years. Earlier this month, JP Morgan analyst Doug Anmuth cut his target for Match’s 2020 revenue by 15% because he expected to see “less social interaction likely weighing on dating subscriptions, which are largely month-to-month & easy to turn on and off.”
“Higher engagement is likely as users stay home with more time for entertainment, but if the event drags on, the company is likely to face headwinds as consumer behavior changes, and as product releases/marketing are pushed off,” Suntrust Robinson Humphrey analysts wrote in a March 13 note.
Read: More people meet online than through friends or family or work
Dubey said that Match’s first-quarter results would likely come in at the low end of the company’s guidance range, which called for sales of $545 million to $555 million.
“Predicting the rest of the year at this point is premature given the uncertain overall impacts of the virus,” she wrote. “We expect the virus’s impact may make it challenging to grow revenue from Q1 to Q2 this year, although we currently believe we will have year-over-year Q2 revenue growth.”
The letter also noted that the company’s divorce from parent company IAC/Interactive Corp. IAC, -0.43% is on track to be completed in the second quarter, though noted that the pandemic could impact the move.
Match stock declined 19.6% to a market cap of roughly $18.7 billion in the first quarter of 2020 as the novel coronavirus spread across the globe, roughly in line with an 18.7% decline for the S&P 500 index SPX, -1.60% . No analysts tracked by FactSet suggest selling the stock, with 10 rating it a buy and eight rating the shares as a hold.
