The dating app industry has seen a shift in recent years, with users increasingly seeking more meaningful connections rather than casual hookups. This change in culture has been reflected in the declining number of paying users on Tinder, one of the most popular dating apps owned by Match Group.
According to Match Group’s first-quarter earnings report, Tinder’s paying user base has decreased for the sixth consecutive quarter. In Q1 2024, Tinder had 10 million paying users, representing a 9% decrease from the previous year. This decline can be attributed to the app’s association with casual relationships, which is not aligned with the preferences of younger users who are looking for long-term commitments.
In contrast, Hinge, another dating app owned by Match Group, has experienced an increase in paying members. Hinge has gained popularity among users seeking more substantial connections. In Q1 2024, Hinge boasted 1.4 million paying users, a 31% increase year over year.
During a conference call with investors, CEO Bernard Kim stated that Hinge is on track to become a “billion-dollar revenue business.” The app has seen significant revenue growth in recent years, with direct revenue reaching $124 million in Q1, a 50% jump from the previous year. In 2023 alone, Hinge generated $396 million in revenue.
One of the challenges faced by Tinder is convincing its members to see value in its “à la carte” (ALC) features or in-app purchases. ALC revenue accounts for about 20% of Tinder’s direct revenue, but in Q1 2024, it experienced a 13% decrease. This decline can be attributed to weaker consumer discretionary spending among Tinder’s younger user base, as well as decreased purchase volumes.
Match Group CFO Gary Swidler acknowledged that the decline in ALC revenue has been a trend for some time and is hindering overall performance. The company expects Tinder payers to decline at similar rates in the second quarter, with signs of improvement projected for Q3.
In an effort to cater to price-conscious Gen Z users, Match Group introduced à la carte offerings on Tinder. These offerings aimed to help users get noticed by potential matches at a lower price tag. Swidler mentioned that Match Group will continue to introduce new à la carte features on Tinder at affordable price points in the future.
Interestingly, while Tinder has added various features and safety measures to enhance the user experience, such as Share My Date and face photo requirements, it may benefit from taking cues from its sister app, Hinge. Hinge only offers two à la carte features: Boosts and Roses. This streamlined approach may be more appealing to users who are overwhelmed by the plethora of options on Tinder.
Despite efforts to squeeze more revenue from a declining paying user base, such as the introduction of a $499 per month plan for elite users, Tinder’s forecast for the coming quarter indicates flat or minimal growth. The projected revenue for the next quarter is expected to be between $475 million and $480 million.
In conclusion, the dating app landscape is evolving, with users increasingly seeking meaningful connections. This shift has impacted Tinder’s paying user base, while Hinge has experienced growth due to its focus on substantial relationships. Tinder faces challenges in convincing users of the value of its à la carte features, while Hinge’s streamlined approach may be more appealing. Both apps continue to innovate and introduce new features to enhance the user experience and drive revenue growth.