Morgan Stanley warned on Monday that the company expects “an elevated volatility of key financial and performance metrics in Q2 2025” among online dating firms Match Group and Bumble, as recent efforts to turn things around are not showing any signs.
Analysts said that the two dating sites are now under new management. They are focusing on faster product development, leaner operations and preparing for medium-term growth in users.
They added, however, that the turbulent situation will affect key financial and performance metrics “especially since the turnaround effort in 2024 did not lead to meaningful improvements.”
Analysts said: “As such, we anticipate minimal evidence during the first quarter to help us frame turnarounds or changes in success. Industry-wide trends at the top of the funnel point towards a further slowdown.”
The two companies have restructured their operations to respond to changing user behavior and a slowdown across the industry in terms of app engagement.
Online dating, which was once a reliable source of revenue from subscriptions, is now facing challenges, ranging anywhere between inflation, user fatigue, and saturation.
Bumble cuts workforce and raises revenue forecast
Bumble Inc. announced last month it would lay off about 240 workers, or nearly 30% of the global workforce. This is part of an extensive cost-cutting program.
The company has raised its revenue guidance for the second quarter to an estimated $244 to $249 millions, up from its prior range of $235 to $243millions.
The adjusted EBITDA range is expected to increase from $79 to $84 to between $88 and $93 millions.
Its first-quarter revenues were $247.1 millions, which was slightly higher than analyst expectations.
Bumble stated that the restructuring will result in one-off costs between $13 and $18 millions, which are primarily severance benefits and severance pay. These costs would be spread across the third quarter and the fourth.
The management still expects to save $40 million annually, and will reinvest the savings in new technology, such as AI-driven matching tools.
The Bumble share price is down 0.82% YTD while the broader NASDAQ has gained more than 9.6% in the same time period.
Match reduces cost, and turns AI-friendly features for Gen-Z.
Match Group, the parent company for Tinder, Hinge, OkCupid, announced plans in May to reduce its staff by 13%.
This was the first strategic move under Spencer Rascoff’s leadership. He took office in February and had a mandate for reinvigorating user engagement, as well as reversing declining trends.
Although it was slightly above Wall Street’s expectations, the company’s revenue for March quarter fell by 3% to 831 million dollars.
Match’s second-quarter revenues are expected to be between $850 and $860 millions, which is slightly higher than the consensus of analysts.
The Match Group share price has risen by over 5% YTD while the NASDAQ Index has grown over 9.6% in the same time period.
Match’s revamped strategy includes new features for its younger users. One of these is the “double-date” feature, which allows two friends to be paired up with a different duo.
According to reports, the feature has been well received by Gen-Z. 90% of profiles with double dates are from people under 29 years old.
A new voice-based feature, “Game Game”, allows users to flirt with an artificial intelligence character.
The AI Gamble and a narrowed focus
Bumble and Match, which are both under macroeconomic pressures that squeeze user attention and wallets, are relying on AI and focused user bases for future growth.
UBS analysts have noted that Bumble is shifting away from marketing strategies focused on performance and has cut marketing spending by $20,000,000.
UBS stated that these efforts will likely have a negative impact on revenue and payer growth in the near term, but may help Bumble to be more stable over time.
Dating apps will have to adapt as they enter a phase of slow growth and skepticism from users. 2025 may be the year that determines how this industry reinvents itself.
The post Morgan Stanley predicts Match, Bumble volatility in Q2, as turnaround is elusive, may change as new information becomes available.
This site is for entertainment only. Click here to read more
