The dating app Tinder is shown on a mobile phone in this picture illustration taken September 1, 2020. Picture taken September 1, 2020. REUTERS/Akhtar Soomro/Illustration

By Kritika Lamba

(Reuters) -Match Group forecast fourth-quarter revenue below analysts' estimates on Tuesday, underscoring ongoing challenges in its turnaround efforts as the Tinder parent struggles to convert casual swipers into loyal, paying users.

Shares of the company fell about 2% in extended trading.

The company, which also owns popular dating platforms OkCupid and Plenty of Fish, has invested heavily in rolling out new features and integrating advanced artificial intelligence features designed to revitalize user engagement and bolster security. However, these efforts have yet to produce substantial gains, with user growth falling short of expectations.

The turnaround under the new CEO Spencer Rascoff is taking longer than expected, with slower progress on re-engaging paying users and some scaled-back initiatives, reflecting a gradual recovery path, said M Science analyst Chandler Willison.

The online dating sector itself is grappling with "swiping fatigue," pushing younger consumers to seek more interactive and meaningful ways to connect.

This shift has reshaped the online dating industry, pushing rivals such as Bumble, along with numerous niche apps, to rapidly evolve their offerings to better align with changing user demands.

Hinge, often regarded as Match's rising star, fell short of expectations by reporting a 17% decline in paying users, raising concerns among analysts, given that the app has been one of Match Group's core engines of expansion.

Match Group's ambitious AI-driven security enhancements, including facial verification and automated profile authenticity checks, have been widely praised as industry-leading, but have yet to show tangible results.

For the third quarter, the company posted a 5% decrease in its paying users to 14.5 million.

The company forecasts fourth-quarter revenue between $865 and $875 million, widely missing analysts' estimates of $882.8 million, according to data compiled by LSEG.

Revenue for the third quarter came in at $914 million, slightly below estimates of $915 million.

(Reporting by Kritika Lamba in Bengaluru; Editing by Alan Barona)