Match Group’s much-anticipated integration of social-networking company Hyperconnect fell short of revenue expectations during the company’s third quarter.

Management pointed to COVID-19, marketing issues, and product delays for the underperformance of Hyperconnect’s failure to make it to their online dating platforms. 

The pandemic has impacted Hyperconnect’s main revenue generator, the platform Azar, which provides a one-to-one video element that Match Group hopes to weave into their dating apps. Match Group acquired the South Korea-based Hyperconnect in February of this year in an effort to build out their virtual app offerings in the relationship arena.   

For the company’s third quarter total revenue was $801 million excluding Hyperconnect. This is an 25% increase for the company year over year. Revenue, including Hyperconnect, comes in lower at $748 million yet still boasts a 17% increase in revenue year over year. 

“Revenue of 801 million was a tad lower than the Street’s $802  million,” writes Shewta Khajurua CFA at Evercoreisi on revenue not meeting analysts predictions.

In early November, Match Group’s stock fell from $154 a share to $148 a share before increasing to $160 a share a few days later.   

Hyperconnect Azar fell below the company’s revenue projection for the third quarter. In September, CEO Shar Dubey predicted in an earnings call that Hyperconnect would contribute over 20% of overall revenue. Hyperconnect Azar’s performance came in just under that mark generating $53 million compared to the $59 million projected by analysts. Asia Pacific remains a large growth category for the company with Japan posed as their number two market where Match Group has the number one and two apps including Tinder, which generates substantial revenue for the company.

“We’re working closely with [Hyperconnect] now on marketing, to product road map, in order to reverse the trend,” said Dubey on the third quarter earnings call on November 2. 

Regions in Asia-Pacific had some of the most stringent restrictions concerning border control and quarantining during the COVID-19 pandemic. In recent days, countries like Thailand, Australia, and now South Korea, which is home to Hyperconnect, eased some of those travel limitations. 

“Hyperconnect and Azar have a major presence in Asia and the Middle East. Covid continues to be an issue in many of those markets,” Gary Swidler, chief operating and financial officer at Match Group said on the company’s third quarter earnings call. 

Swidler pointed to a lot of people spending more time at home and living with their families, which has changed the way consumers interact with the one-to-one video chat. Match Group is looking to alter the app in ways that makes the user experience more conducive to the current environment. 

Forthcoming, Match Group anticipates $810-$820 million for the fourth quarter which would represent 24%-26% year over year growth. Additionally, they anticipate Hyperconnect’s fourth quarter performance will be similar to the third quarter. Overall, Match Group has lowered their fiscal year 21 quarterly expectations by a little over $20 million. What was an expected $846 million has been reduced to $819 million for how much Hyperconnect would contribute to the company’s revenue. 

In the third quarter, Hyperconnect did begin to test a virtual dating space called Single Town in an attempt to improve engagement. Initial engagement was positive in that consumers seemed to enjoy the experience. Of Single Town analysts said,

“Much of the upside from Hyperconnect should come from tech integrations to the rest of Match Group over time, ” writes analyst Ygal Arounian of Wedbush Securities.