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Match Group Inc (NASDAQ:MTCH)'s Tinder is showing tentative signs of improving user trends, but Jefferies said it remains too early to call a turnaround.

The brokerage said Match Group's most recent quarter showed early signs of improvement in new user registrations and monthly active user (MAU) declines, a trend that appears to have held up based on third-party MAU and download data.

Jefferies added that Tinder revenue and payers could outperform Street estimates this year if user givebacks come in lower than budgeted.

Still, the firm cautioned that it does not view recent product changes as materially altering Tinder's trajectory.

Jefferies is modeling Match Group's second-quarter total revenue down 1% year-over-year and Tinder payers down 110,000 quarter-over-quarter, largely in line with Street estimates and guidance. The firm sees possible upside toward the high end of guidance if a guided roughly $20 million Azar headwind and roughly $10 million Tinder UX testing impact prove less severe than expected.

Third-quarter revenue is expected to worsen to down 2% year-over-year as Tinder user givebacks pick up in the second half, with Jefferies modeling a 5% year-over-year decline in Tinder payers for the rest of the year. The firm noted Match Group still has roughly $45 million of givebacks budgeted after using less than expected earlier in the year, meaning payer declines could be more modest than expected if givebacks again come in below plan.

Jefferies also continues to expect revenue pressure from Azar's lower-monetizing relaunch over coming quarters.

While Match Group is targeting flat Tinder MAU growth by the end of 2027, Jefferies said it remains skeptical that incremental changes like branding refreshes and feature launches can drive a durable turnaround.

Jefferies called recent Tinder product changes, including Double Date, Astrology Mode and new event formats, helpful but still early. It does not expect the recent Tinder rebrand to materially shift user growth trends.

The firm remains concerned about structural challenges in the dating category and made no changes to its estimates. Its price target is based on 8x FY27 EBITDA, with a Hold rating and $35 price target on the stock.

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SummaryMatch Group remains a Buy, with valuation still implying a significant discount even after a 20% rally.MTCH posted strong Q1 results: 4% revenue growth, a 42% net income increase, and a 25% higher Adj. EBITDA, despite a 5% decline in payers.Tinder's user decline is offset by price hikes, but Hinge's 15% YoY growth and international expansion are key future drivers while they work on their pillar's turnaround.Solid balance sheet, robust cash flow, and ongoing turnaround efforts position MTCH well for industry growth despite macro and competitive risks.Jonathan Kitchen/DigitalVision via Getty Images

Introduction During my last coverage of Match Group (MTCH), I upgraded it to a Strong Buy, initiating a position not long afterwards as the re-rating setup was too compelling to ignore at that point, with

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