This Thanksgiving, Match Group (NASDAQ: MTCH) is grateful for subscribers, boasting 23 percent growth in average subscribers in the third quarter of 2018. The company now has 8.1 million total subscribers across all of its products including Tinder, Match, PlentyofFish, OKCupid and other dating sites. The company also reported double-digit growth for total revenue. The company’s total revenue for the third quarter was $444 million, representing growth of 29 percent year-over-year. This was driven by average subscriber growth and average revenue per user growth of 6 percent.

“Match Group delivered another quarter of strong top and bottom line growth, with Tinder continuing as our growth engine,” said Match Group CEO Mandy Ginsberg in a November 6 news release. “We are making product and marketing investments in our brands to drive growth across our portfolio. Even with these investments, Match Group is generating significant free cash flow and reducing leverage levels, and we have returned a meaningful amount of capital to shareholders.”

Ginsberg also announced a special dividend of $2.00 per share of Match Group common stock and class B common stock, payable on December 19 to stockholders of record as of December 5. With 278.4 million outstanding shares of common and class B stock, this will cost the company about $556.8 million. Match said it would pay for the dividend with cash on hand and debt, if needed. As of September 30, the company had $403 million in cash and cash equivalents and $1.3 billion in long-term debt.

“We remain on the lookout for strategically compelling M&A and have the financial flexibility to acquire companies when we find innovative products with long-term potential,” added Ginsberg.

Other highlights for the quarter included:

• Direct revenue at Tinder was up close to 100 percent, subscribers grew 61 percent and ARPU grew 24 percent.
• More than 60 percent of Tinder’s 4.1 million subscribers are Tinder Gold subscribers, a 50 percent increase over the second quarter.
• Operating income was $140 million, a 54 percent increase year-over-year.
• Operating income margin was 32 percent, compared to 27 percent in Q3 2017.
• Adjusted EBITDA was $165 million, a 38 percent increase year-over-year.
• Net earnings attributable to shareholders are $130.2 million, or $0.44 diluted earnings per share (GAAP), compared to net earnings of $287.7 million, or $0.98 per share, in Q3 2017.

CFO Gary Swidler provided Match Group’s fourth quarter outlook during the earnings call, transcribed by Seeking Alpha:

• Estimated revenue between $440 million to $450 million, driven by Tinder
• Estimated EBITDA of $165 million to $170 million and margin of 37.5 percent
• Marketing spending will be up about 20 percent, primarily because of Tinder.
• An added expense of $3 million for litigation for the company’s intellectual property claim against Bumbler and a Tinder lawsuit which Match Group says “is without merit.”

For the full year, Match Group estimates revenue between $1.5 billion and $1.6 billion.

This summer, Match acquired a 51 percent ownership in Hinge, a relationship app based in New York City. As part of the agreement, Match has the option to buy the company’s remaining shares over the next 12 months. No additional terms of the acquisition were disclosed.

“Hinge’s passion for the user experience and their innovative approach to dating has created a product that is highly relevant particularly among urban, educated millennial women looking for relationships,” said Ginsberg of the acquisition.

Despite the strong financial report, investors were clearly not impressed. Perhaps they are disappointed by the company’s full-year outlook, fourth quarter estimates and/or the potential outcomes of the company’s lawsuits. On November 6, Match Group stock was valued at $51.47 per share. It dropped nearly $10 per share to $42.72 the following day. As of 7:59 p.m. Eastern yesterday, Match Group stock was down to $36.26, a drop of $15.21 per share in just two weeks’ time. To keep things in perspective, however, on November 20, 2017, Match Group stock was $28.76.

Insider Take:

Overall, Match Group is still doing well, as it continues to explore potential acquisitions and invests in its flagship product Tinder. Its stock will likely rebound. What doesn’t make sense though is the special dividend. Why pay a special dividend of $2 per share when the company doesn’t have the cash to support such a large payment? The company will have to go into debt to pay such a dividend.