Shares of Match Group (NASDAQ: MTCH) rose 5.3 percent on Feb. 2 after the online dating giant reported fourth-quarter earnings. The post-earnings gain was surprising as the company generally missed analysts' expectations, but it was short-lived as shares gave back those gains the next day.

Let's dive into Match's report to understand why its headline numbers mask some core improvements before deciding whether the stock is still worth buying.

How fast is Match growing?

Match revenue grew 24 percent year-over-year to $806.1 million, below expectations of approximately $18 million.

CEO Shar Dubey attributed the shortage to the new COVID-19 variant, which has "disproportionately impacted" Match's high-growth markets in Asia. Dubey also noted that while these variants have had less of an impact on Western markets, Match is still seeing "new users hesitant" to start using the dating app before the pandemic ends.

Photo credit: Getty Images.

Despite these challenges, Match's payer base grew 15 percent year-over-year in the fourth quarter to 16.2 million (including 10.6 million Tinder users) as its revenue per payer (RPP) grew 8 percent. Tinder's own RPP grew 4 percent year-over-year, indicating that Match's smaller apps, such as Hinge, are now generating stronger sales per payer growth than its flagship service.

Match expects its revenue to grow 18 to 20 percent in the first quarter, with payer growth in the low-to-mid range and RPP growth in the mid-single digits. For the full year, it expects its revenue to grow 15 to 20 percent, with most of that growth driven by Tinder and Hinge. This stable outlook assumes that the pandemic-related headwinds will ease in the second half of 2022.

How profitable is Match?

Match's revenue growth looked steady, but it reported a net loss of $168.6 million in the fourth quarter, compared with a net profit of $148.6 million a year earlier. The loss of $0.60 per share was well below analysts' expectations of a $0.54 profit.

However, these results were distorted by the $1.73 billion acquisition of South Korean social network Hyperconnect (which closed last June), a significant increase in stock-based compensation expense associated with the deal, and legal fees related to the long-running legal battle with Tinder's founders. . Match eventually settled the lawsuit last December for $441 million and plans to pay the full amount from cash on hand in the first quarter of 2022.

Match's adjusted operating income – previously known as adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) – excludes most one-time costs and gives us a clearer picture of the company's underlying profitability. Adjusted operating income for the quarter increased 18 percent year-over-year to $290 million, exceeding analysts' expectations by approximately $53 million.

However, the consolidation of Hyperconnect's lower-margin (but faster-growing) businesses still drove Match's adjusted operating margin from 38 percent to 36 percent year-over-year. Excluding Hyperconnect, adjusted operating margin would have expanded by approximately 0.5 percentage points.

For the full year, COO and CFO Gary Swidler expects Match's overall margins to remain "roughly flat. He believes Match will benefit from lower fees for Alphabet's subscription-based apps on the Google Play Store and lower legal fees, but he also expects these savings to be offset by lower margins at Hyperconnect, Match's investments in corporate security and social responsibility programs, and "higher employee costs" related to the "ongoing war for talent.

Still, analysts expect Match's annual earnings per share to grow 23 percent in 2022 as its portfolio of more than a dozen dating apps locks in more users.

Is Match reasonably valued relative to its growth?

Matching deals are nine times more expensive than this year's sales. That makes it much more expensive than its smaller rival, Bumble, which has less than four times the deal revenue. Match is also growing at a slower rate than Bumble, which operates just two dating apps.

But Match is also more diverse than Bumble in terms of geographic reach and niche demographics. The former is also profitable on a full-year GAAP basis, while Bumble is not.

Is Match stock worth buying?

These strengths may make Match a better buy than Bumble, but I'm not impressed with its earnings or guidance on buying the stock. Its outlook for 2022 is stable, but it also depends heavily on the pandemic fading and other macro headwinds abating later in the year.

It's easy to find other high-growth technology stocks trading at comparable price-to-sales ratios in this market – and many of these companies are not as vulnerable to the ongoing epidemic.