This is a good time to be in the online dating business, at least if quarterly financials are any indication. Match Group (NASDAQ: MTCH) reported its second quarter financial results last week, including total revenue of $421 million, a 36 percent increase year-over-year. This increase was driven by 27 percent average subscriber growth and 8 percent growth in average revenue per user (ARPU). The company’s Tinder dating app along grew by 299,000 new subscribers to 3.8 million at the end of the second quarter.

Other highlights from the quarter include:

• Operating income was $150.2 million, an 81 percent increase year-over-year.
• Operating income margin was 36 percent, compared to 27 percent in Q2 2017.
• Adjusted EBITDA was $175.6 million, a 60 percent increase year-over-year.
• Net earnings were $132.5 million, a 158 percent increase year-over-year.
• GAAP diluted earnings per share were $0.45, a 165 percent increase.
• Match had 7.7 million subscribers, a 27 percent increase.
• The average revenue per user was $0.57, compared to $0.53 in Q2 2017.
• At the end of the quarter, the company had $310 million in cash and cash equivalents and $1.3 billion in long-term debt.

Match Group CEO Mindy Ginsberg commented on the company’s second quarter financials on an August 8 earnings call.

“I’ve been in this role for nearly eight months and it is really exciting to post the best first half performance in our history with 36% topline growth and 60% EBITDA growth. I’m proud of the team for all of the hard work they’ve put in, which has enabled us to achieve results that few other companies are able to match,” said Ginsberg.

Ginsberg reported that Tinder is currently Match’s growth driver with Tinder revenue up 136 percent, subscriber growth of 81 percent and ARPU growth of 33 percent year-over-year. After a full year of the company’s Tinder Gold subscription, Tinder is seeing “healthy adoption rates” with new subscribers trying the product and existing subscribers upgrading to Gold.

“As Gold continues to drive revenue, the team at Tinder is in focus on improving the user experience through a number of both visible and under the HUD [ph] initiatives,” Ginsberg added.

Some of those user experiences include Picks, a customized daily selection of four to 10 “interesting and popular users” for Gold subscribers to check out. Picks include hobbies, interests and passions along with tags. Tinder places is a new feature, launched a quarter ago, that allows a subscriber to see if another subscriber visits the same places they do.

“We’ve been testing places and a few markets with positive early results for our users. Two people that match this feature are 20 percent more likely to engage in a conversation,” explained Ginsberg. “Thus far users who enable places enjoy the feature and retention remains high, and we believe places is the first step in a broader focus on location drive features at Tinder.”

Another initiative coming soon is Tinder U, a student-focused experience within the Tinder app. The company will launch a major marketing campaign to support this initiative.

CFO Gary Siwdler offered the company’s outlook:

• In the third quarter, Match expects revenue of $430 million to $440 million.
• In Q3, EBITDA will range between $160 million and $165 million.
• The company anticipates subscriber growth in the 300,000 range, similar to Q2.
• For the full year, the company raised its revenue guidance because of its strong performance so far this year. It is now between $1.68 billion and $1.72 billion.
• For the full year, EBITDA is estimated to be between $625 million and $650 million.

The news for Match Group and parent company IAC is not all good though. Earlier this week, a group of Tinder founders and executives filed a lawsuit against Match and IAC for as much as $2 billion. The lawsuit alleges that Match and IAC “lowballed” a valuation to cheat the plaintiffs out of stock options, reports TechCrunch. Match and IAC deny the allegations, calling them meritless.

Investors don’t seem rattled. On August 8, the day the earnings report came out, Match Group Inc. stock was valued at $45.60 per share. It peaked at $50.82 on August 10 but has dipped slightly to $46.49 per share as of 4:36 PM EDT yesterday.

Insider Take:

Match Group is having a strong year with solid financials, significant growth and big plans to expand on its success with Tinder. A lawsuit, however, could change it all, whether it is a $2 billion price tag or a lesser amount if the defendants would settle to make the suit go away. Lawsuits take a long time though and it sounds like Match and IAC plan to fight the lawsuit vigorously. It won’t affect daily operations until a decision – or settlement – is made.