Match Group, the company that owns several dating apps including Tinder and Hinge, released its first-quarter earnings report on Tuesday, showing that Tinder's paying user base has declined for the sixth consecutive quarter. On the other hand, Hinge has seen an increase in members who are willing to pay for the app. Tinder had 10 million paying users in the first quarter of 2024, which is a 9% decrease from the previous year. Meanwhile, Hinge now has 1.4 million paying users, an increase of 31% year over year.
Tinder's decline was foreseeable due to the change in dating app culture that has occurred in recent years. Younger users are more interested in forming serious, long-term relationships rather than casual encounters, which is what Tinder is known for. Since its inception, Hinge has gained popularity among users looking for bigger connections.
As Tinder struggles to retain paying users, Hinge is on track to become a “billion-dollar revenue business,” CEO Bernard Kim touts during a conference call with investors Wednesday morning. Hinge has seen significant revenue growth over the past six years, with direct revenue growing to $124 million in the first quarter, a 50% increase from the previous year. In 2023 alone, Hinge raised $396 million.
One problem Tinder currently faces is convincing members to see the value of 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 around 20% of Tinder's direct revenue. However, in the first quarter of 2024, ALC's revenue decreased by 13%. This contrasts with record a la carte purchases in 2018.
Match Group CFO Gary Swidler admitted during the call that weaker on-demand revenue growth has been a downward trend for quite some time. However, it has become “more serious lately” and “prevents us from performing very well.”
“We believe the decline in ALC's revenue is due to declining users and lower average purchase volumes, in part due to lower consumer discretionary spending among its younger user base, among other reasons,” Swidler said, adding that Tinder payers are expected to decline at a similar rate. rates in the second quarter. The company expects there to be signs of improvement in the third quarter.
The main reason for adopting an a la carte offering was to address the needs of price-conscious Generation Z, helping them get noticed by potential matches at a lower price. Match says it will continue to introduce new on-demand features to Tinder “at affordable prices” in the coming quarters, Swidler added.
Instead of adding more options, however, Tinder may want to consider its sister dating app, Hinge, which only offers two a la carte features: Boosts and Roses.
Tinder has made several attempts to improve the overall product experience, including adding new security features like “Share My Date,” where users can share their dating plans with friends. Later this summer, the app will require headshots on everyone's profile. It will also launch an ai photo selection feature that chooses 10 of the best images from a user's camera roll to improve profile quality.
