Match Group, Inc. (MTCH) 2024 Q2 Earnings Call Summary

Optimistic Highlights

• Tinder's Progress and Stabilization

  Tinder shows signs of progress with user and payer trends stabilizing, expecting strong sequential payer growth in Q3 and improved MAU trends in the second half of the year.

• Hinge's Rapid Growth

  Hinge's direct revenue grew nearly 50% year-over-year in Q2, with strong user growth and successful new marketing campaigns.

• AI Integration and Product Innovation

  Tinder and Hinge are integrating AI to enhance the user experience, with new features like Photo Selector and Top Photo improving effectiveness and engagement.

• Financial Performance Exceeds Expectations

  Match Group's total revenue was $864 million, up 4% year-over-year, with Tinder and Hinge showing strong performance.

• Strategic Decisions and Cost Savings

  Exiting live streaming services and other initiatives across the portfolio are expected to result in a workforce reduction of approximately 6% globally, leading to annual cost savings of about $13 million.

Pessimistic Highlights

• Challenges in Live Streaming and Business Adjustments

  The decision to exit live streaming services and sunset Hyperconnect's Hakuna app due to decreased novelty and significant investment requirements.

• Revenue and Payer Declines

  Despite overall growth, there were areas of pressure, such as a decline in payers by 5% year-over-year and a la carte revenue pressure at Tinder.

Company Outlook

• Continued Growth and Innovation

  Match Group expects total revenue of $895 million to $905 million in Q3 2024, with a focus on Tinder's growth, Hinge's expansion, and AI-driven product enhancements.

• Strategic Focus on Efficiency and Growth

  The company is making efficiency moves and focusing on growth opportunities, especially at Tinder and Hinge, with investments in marketing, product, and technology.

• Long-term Revenue and Margin Improvement

  Match Group aims for sustained revenue growth and margin improvement, with a commitment to returning at least 75% of free cash flow to shareholders through buybacks.

Q & A Highlights

• Q: Can you discuss the factors leading to Tinder's user growth stabilization? (Nathan Feather, Morgan Stanley)

  A: Tinder's progress is due to a combination of product initiatives and strong marketing, with improvements in user engagement and retention. (Bernard Kim)

• Q: Has Tinder returned to normal payer seasonality in Q3? (Jason Helfstein, Oppenheimer)

  A: Q3 tends to be strong seasonally for dating, and we expect sequential improvement in payers Q3 over Q2, with typical seasonality impacting Q4. (Gary Swidler)

• Q: Can you elaborate on green shoots from changes at Tinder? (Youssef Squali, Truist)

  A: Tinder's turnaround is progressing with product and marketing efforts driving stabilization and improvements, highlighted by increased swipe activity during the Olympics. (Bernard Kim)

• Q: Could you provide insight into Tinder payers trends so far in Q3? (Dan Salmon, New Street Research)

  A: Momentum on Tinder payers has been strengthening, with solid sequential payer growth observed from April to July. (Gary Swidler)

• Q: Do you expect Tinder payers to grow sequentially in Q4? (Ken Gawrelski, Wells Fargo)

  A: While we expect year-over-year payer growth improvement in Q4, typical seasonal pressure may impact sequential payer additions. (Gary Swidler)

• Q: Can you discuss the new swipe gestures and Explore experience in Tinder? (Chris Kuntarich, UBS)

  A: Vertical swiping and revamped Explore are being tested to enhance user experience, with significant testing required for these changes. (Bernard Kim)

• Q: How are you improving trust, safety, and user outcomes in Tinder? (Justin Patterson, KeyBanc)

  A: Continuous efforts in trust and safety are crucial, with ongoing improvements and technology integration to enhance user experiences. (Bernard Kim)

• Q: Could you expand on the rationale behind exiting the live streaming business? (Cory Carpenter, JPMorgan)

  A: Exiting live streaming is due to lower margins, increased competition, and strategic focus, expecting margin improvement and cost savings. (Gary Swidler)

• Q: Can you expand on Hinge's growth and product factors? (Ygal Arounian, Citigroup)

  A: Hinge's growth is driven by market expansion, monetization, and AI-enabled features, with a focus on becoming a $1 billion revenue business. (Bernard Kim)

• Q: Could you discuss conversations with Starboard and specifics on Tinder's third-quarter net adds? (Shweta Khajuria, Wolfe Research)

  A: Initial interactions with Starboard focused on key areas like Tinder's growth and margins. Tinder's Q3 net adds are driven by a combination of product and marketing efforts. (Bernard Kim, Gary Swidler)

• Q: How are you thinking about capital allocation and the possibility of a dividend? (Benjamin Black, Deutsche Bank)

  A: The focus remains on buybacks with at least 75% of free cash flow returned to shareholders, considering dividends as a future component of capital return. (Gary Swidler)

• Q: How do you view Hinge's growth prospects and timing for reaching $1 billion in revenue? (Curtis Nagle, Bank of America)

  A: Confidence in Hinge is increasing with strong user trends and minimal revenue from European markets, highlighting significant growth potential. (Gary Swidler)