Morgan Stanley foresees volatility for Match, Bumble in Q2 as turnaround remains elusive

Morgan Stanley on Monday warned that it foresees "elevated volatility in key performance indicators and financial metrics" for online dating companies Match Group and Bumble in Q2 and 2025, with few signs that recent turnaround efforts are bearing fruit.

"The two online dating companies are under new management and are emphasizing faster product development and leaner operations as they attempt to set-up for medium-term user growth," the analysts said.

However, they added that this will cause turbulence in key performance indicators and financial metrics in the near term "especially as the turnaround efforts in 2024 didn't drive meaningful improvements."

"As a result, we expect minimal evidence in the quarter that will help frame the turnarounds' timing or change of success with industry-wide top of funnel trends pointing to further deceleration," the analysts said.

Both companies are restructuring operations in response to shifting user behaviours and an industry-wide slowdown in app engagement.

The online dating segment, once a dependable source of subscription revenue, has faced challenges ranging from inflation and user fatigue to a saturation of similar services.

Bumble slashes workforce, raises revenue forecast

Bumble Inc. has taken sweeping steps to realign its operations, announcing last month that it will lay off approximately 240 employees—nearly 30% of its global workforce—as part of a broad cost-cutting initiative.

Despite the layoffs, the company raised its second-quarter revenue forecast to a range of $244 million to $249 million, compared to its previous guidance of $235 million to $243 million.

Adjusted EBITDA is now expected to fall between $88 million and $93 million, up from the earlier range of $79 million to $84 million.

The company posted $247.1 million in first-quarter revenue, slightly above analyst estimates.

Bumble said the restructuring would result in one-time costs of $13 million to $18 million, primarily in severance and benefits, to be recognized across the third and fourth quarters.

Still, management expects the plan to yield $40 million in annual savings, which will be reinvested in product and technology enhancements, including AI-driven matchmaking tools.

Bumble stock is down by 0.82% YTD, while the broader NASDAQ index has gained over 9.6% during the same period.

Match trims costs, turns to AI and Gen-Z friendly features

In May, Match Group—the parent company of Tinder, Hinge, and OkCupid—announced plans to cut 13% of its workforce.

The move marked the first major strategic action under new CEO Spencer Rascoff, who took over in February with a mandate to reinvigorate user engagement and reverse declining trends.

The company’s March-quarter revenue fell 3% to $831 million, though it narrowly topped Wall Street expectations.

Match has forecast second-quarter revenue between $850 million and $860 million, slightly above analysts' consensus.

Match group share price is up by just over 5% YTD, while the broader NASDAQ index has seen a growth of over 9.6% during the same period.

As part of its revamp strategy, Match is introducing new features designed for younger users, including a “double date” function that allows two friends to pair up with another duo.

The feature is reportedly resonating with Gen-Z users, with 90% of double-date profiles coming from users under 29.

The company also debuted a voice-based game feature called "Game Game," which allows users to practice flirting with an AI character.

A narrowing focus and the AI gamble

With macroeconomic pressures squeezing user wallets and attention spans, both Bumble and Match are betting on artificial intelligence and more focused, engaged user bases to drive future growth.

UBS analysts noted that Bumble has trimmed marketing spend by $20 million and is pivoting away from performance-heavy marketing strategies.

“These efforts are expected to weigh on near-term payer growth and revenue,” UBS said, but they may position Bumble better for long-term stability.

As dating apps adapt to a new phase of slower growth and user skepticism, 2025 could prove decisive for how the industry reinvents itself—or risks being swiped left by an increasingly discerning digital generation.