Tinder continues to surprise Wall Street with the pace at which it adds new paying members.
Strong performance from the swipe-based dating app helped parent company Match Group Inc. MTCH, +1.22% post better-than-expected second-quarter results on Tuesday. Match recorded earnings per share of 45 cents on revenue of $421 million for the June quarter, up from 17 cents and $309.6 million in the year-earlier period. Analysts had been expecting 32 cents in EPS and $413.2 million in revenue.
Match shares were up 8% in after-hours trading.
Tinder added 299,000 paying subscribers during the quarter, coming in ahead of analyst estimates as well as the company’s own projections. Match had forecast 200,000 to 250,000 following its prior earnings report, while a collection of analyst estimates surveyed by MarketWatch were at the upper end of that range.
“Retention and conversion were a bit stronger than we thought they would be,” Chief Executive Mandy Ginsberg told MarketWatch. She said the company also made some “under-the-hood optimizations” to things like its artificial-intelligence recommendations, which helped improve the user experience.
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Going forward, Match is looking for ways to improve the value proposition of Tinder Gold, a paid tier, so that more users pay for the service and end up finding it valuable. One new initiative is Picks, a Tinder Gold feature that provides a daily assortment of four to 10 potential suitors that an algorithm deems to be highly relevant to a given user. It’s currently being tested in a handful of markets since its July launch.
“We think more people will opt into Gold as a result of having more valuable features,” Ginsberg said, though she noted that it was still too early to gauge the results of Picks.
Other Tinder efforts include Places, another test feature that lets people see others who have frequented their favorite spots. The company intends to “roll it out carefully because there are huge considerations when it comes to privacy,” according to Ginsberg.
She said that Match properties weren’t affected by post-Cambridge Analytica changes taken by Facebook Inc. FB, -1.01% which hurt mobile game companies Zynga Inc. ZNGA, -0.25% and Activision Blizzard Inc. ATVI, -0.48%
Tinder soon plans to launch Tinder U, a college-focused product aimed at making sure the next generation of daters uses Tinder’s product. College-aged users will be able to choose only to see matches from their universities and other nearby schools, and Tinder will advertise the service on dozens of campuses.
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Ginsberg said that the product isn’t in reaction to campus backlash to Tinder and that the goal of Tinder U is to make sure the service “stays relevant for that young audience,” as 4 million to 5 million U.S. students enter college every year.
So far, there aren’t any college-only features launching as part of Tinder U, but the company is exploring ways of integrating things that are relevant for college students but not the general public.
As for its other dating properties, Match intends to be patient with Hinge, a more relationship-focused product that the company recently took at 51% stake in. Hinge is popular in New York and is catching on in other cities, Ginsberg said. Hinge had been growing quickly with few marketing efforts prior to Match’s involvement, she said, and Match is currently more interested in growing the user base than heavily monetizing the service.
See also: Is Match Group’s latest acquisition a response to the Facebook dating threat?
“We want to have a fast-growing, healthy dynamic and give people a great free product,” she said. “Then we’ll see what features people are willing to pay for.”
The company raised its full-year revenue outlook to $1.68 billion to $1.72 billion, from a previous range of $1.6 billion to $1.7 billion.
Match shares are up 106% over the past 12 months, while the S&P 500 index SPX, +0.28% has gained 15%.