The operator introduces the Match Group Third Quarter 2023 Earnings Conference Call, led by CEO Bernard Kim and President and CFO Gary Swidler. Before opening up for questions, the operator reminds participants of the risks and uncertainties involved in discussing future performance. Kim expresses his enthusiasm for working at a company dedicated to helping people find love and announces strong operating and financial results in Q3, driven by clear goals and objectives. He highlights Tinder as an example of this success.

Tinder's business model relies on virality and the company is focused on driving revenue growth and rebuilding momentum. The decision to prioritize revenue growth initiatives, such as price optimizations and subscription packages, has resulted in double-digit revenue growth. In addition, product and marketing initiatives, such as the It Starts with a Swipe campaign and targeting younger female users, have shown positive results. Tinder has also begun marketing on college campuses and launched a new feature, Matchmaker, with well-known rappers. The company recognizes the importance of music to Gen Z users and is excited to incorporate it into their campaigns.

The paragraph discusses the success of Tinder SELECT, a high-end tier of the dating app, and the company's plans to continue iterating and improving the user experience. The company has also learned from launching weekly subscriptions and is exploring opportunities to increase monetization through revisiting their à la carte portfolio. The CEO expresses confidence in Tinder's ability to achieve future growth, especially in international markets. The paragraph also mentions the success of Hinge, which has become the most downloaded dating app in several important markets and has seen strong revenue growth.

The paragraph discusses the strong financial performance of Match Group, with Hinge on track to meet its revenue target and other initiatives driving growth. The company's Asian division, Azar, is also seeing double-digit revenue growth thanks to a new AI matching algorithm. The launch of a TV campaign for Pairs and a new dating app for gay men, Archer, have also been successful. The company remains committed to innovation and using AI to improve the user experience. The financial momentum has continued to strengthen, with record quarterly revenue and AOI NOI.

Match Group is pleased with the revenue growth at Tinder and Hinge, and their focus on cost control has led to record profits. In Q3, total revenue was $882 million, up 9% year-over-year. Tinder's revenue was up 11% year-over-year, driven by price optimizations in the U.S. and the introduction of weekly subscriptions. However, these changes have also resulted in a decline in the number of Tinder payers. The impact on payers in Q3 was modest compared to Q2, as many U.S. members were already subject to the higher pricing. Top-of-funnel trends for Tinder weakened slightly in Q3.

Tinder reduced its marketing spend in late July and August, focusing on back-to-college initiatives, which affected new user growth in the U.S. However, the Hinge brand performed well with a 44% increase in direct revenue and strong user growth. Match Group Asia saw a decline in direct revenue, while Hyperconnect's Azar saw a 20% increase thanks to a new AI matching algorithm. Evergreen and emerging brands also saw a decline in direct revenue, but indirect revenue increased by 3% due to an increase in ad impressions. Overall, adjusted operating income for Q3 was $333 million.

In the third quarter, the company's operating income and margin both saw significant increases compared to the previous year. Overall expenses, including SBC expense, were up but decreased as a percentage of total revenue. Cost of revenue also decreased as a percentage of total revenue, with a decline in live streaming costs and an increase in app store fees. Selling and marketing costs increased, primarily due to investments in Tinder and Hinge, while G&A costs declined. Product development costs grew, but remained flat as a percentage of total revenue. Depreciation and interest expenses also increased, while gross and net leverage both remained below the company's target.

In the third quarter, Match Group had $713 million in cash and repurchased $6.7 million of common shares. They have reduced outstanding shares by 2.8% and have $667 million remaining for buybacks. They plan to use free cash flow to invest in their businesses and potentially pursue M&A. The bar for M&A is high and they will only consider opportunities that align with their mission or provide necessary tech capabilities. If they do not find suitable opportunities, they will return excess capital to shareholders. For the fourth quarter of 2023, they expect total revenue to be between $855 million to $865 million, a 9-10% increase from the previous year.

In Q4, the company expects a $27 million FX headwind and a potential loss of $7 million in revenue from Israel due to ongoing events. Ad sales have also been impacted, with many advertisers delaying or pulling campaigns. However, Tinder's direct revenue is expected to increase by 11% year-over-year, with FX having less of an impact. The company is also taking into consideration a weakening consumer and the resumption of U.S. student loan repayments, which may affect Tinder's discretionary revenue. The payer count for Tinder is expected to decline slightly more year-over-year, with a negative impact on the sequential payer count due to the falling out of weekly package subscribers without the offsetting benefit of initial rollouts in previous quarters. This is estimated to have a negative impact of over 200,000 on the sequential payer count.

Match Group expects Hinge to continue delivering strong revenue growth in Q4 due to its performance in English speaking markets, European expansion, and monetization efforts. They also anticipate a decline in MG Asia direct revenue, similar growth rates for Hyperconnect payers, and a decline in indirect revenue. For Q4, they expect an AOI of $305 million to $310 million and overall marketing spend to increase modestly. They are on track to achieve 5% top-line growth for the full year and expect to enter 2024 with momentum for 10% plus revenue growth. This does not include the impact of the recent settlement with Google. The success of Tinder's ongoing initiatives will be crucial for maintaining revenue growth in 2023.

The team is confident in their execution and predicts high single-digit revenue growth for the full year of '24, but wants to wait another quarter before giving a precise estimate. They will monitor the macro environment and factors such as FX and potential margin headwinds. They expect to maintain AOI margins at the same level as '23, but there are some anticipated headwinds such as App Store fees and compliance costs. The impact of the Google settlement has been incorporated into their '24 margin outlook. The team is currently planning for '24 and considering investments in AI and marketing to drive growth. They expect Tinder to have high single-digit revenue growth through a combination of RPP and payer growth.

The company expects its non-Tinder brands to experience high single-digit revenue growth in 2024, with Hinge leading the way with over 35% growth. The company is pleased with its recent momentum and expects it to continue into 2024. However, there is still work to be done, particularly at Tinder, where sustained payer and revenue growth is crucial. The company plans to focus on product innovation and leveraging AI to increase adoption and monetization. The biggest factor for 2024 revenue growth is how well Tinder performs, but the company is confident in its execution and product velocity.

The biggest swing factor for 2024 revenue guidance is the macro environment, particularly the impact on younger users with less disposable income. The company is also monitoring events in the Middle East and factoring in potential FX rate volatility. These are the main factors that could affect revenue growth in 2024.

The speaker discusses the company's plans for increased marketing spend at Tinder and the importance of investing in innovation, particularly in AI. They mention the need to balance this spending with potential reductions elsewhere in the company's portfolio and the need for careful calibration and planning. More details will be provided in February for the company's outlook in 2024.

The speaker discusses the two biggest factors that will impact margins in 2024, marketing and AI investments. They also mention the constant evolution of the Tinder product experience and the need to listen to Gen Z's wants and needs. Two potential revenue opportunities for Tinder are expanding merchandizing in international markets and revisiting à la carte options. The speaker also mentions the success of weekly package offerings with younger users.

The speaker responds to a question about when weekly payers at Tinder can return to normal growth and discusses the company's focus on driving sustainable revenue growth through a combination of payer growth and revenue per payer growth. They also mention their upcoming 2024 planning and the potential for driving new payers into their paying ecosystem.

The company's product roadmap tends to focus on either payer growth or revenue per payer growth in different years, but they aim for a balance between the two. This year, they focused more on revenue per payer growth due to pricing opportunities in the market, leading to a significant increase in revenue for Tinder. However, they plan to have a more balanced approach in 2024, with gradual improvement in payer growth over the coming quarters. The company has been planning for this and it is reflected in their outlook for next year.

The company is focused on increasing top of funnel and driving payer growth through marketing and product initiatives. They have adjusted pricing, which has reduced the number of payers but has been beneficial for revenue. The introduction of weekly subscribers has caused some volatility in the payer base, but the company is confident that this will have a positive long-term impact on LTV. They have also tested weekly subscribers on other brands.

Match has been testing new subscription models at some smaller brands and have seen positive results. They have a lot of data on resubscriptions and renewal rates and are confident in the positive lifetime value (LTV) of these subscribers. These packages are meeting the needs of younger users who are willing to pay higher prices for shorter durations. During a Q&A session, they were asked about their decision to settle a lawsuit with Google before trial. They are pleased with the outcome and feel it provides certainty for shareholders and users. They are now able to offer user choice billing, which they believe is important to their users. The terms of the settlement are confidential, but they are happy with the outcome and believe it will have a positive impact on their financial outlook for 2024.

Google had planned to change their billing policies in October 2021, but the implementation was delayed due to a lawsuit. As part of the settlement, the company will not owe any fees for credit card processing from the past two years and will receive $40 million back. The ongoing partnership with Google will also involve implementing user choice billing and paying the associated fees, but the benefits from the partnership will offset these costs in the future. Overall, the company sees this as a neutral arrangement for the years 2024-2026.

Apple's CFO and President of Games discuss potential changes to App Store policies due to regulatory and legal actions, but state that they have not factored in any changes to their financial outlook for 2024. They expect to benefit from any changes that occur globally and are currently in a good place with Google, which will allow them to focus on growth and collaboration on various fronts such as marketing, surfacing on the Google store, and innovation. They are confident that this will improve their ability to reach Android users and drive product innovation.

Benjamin Black from Deutsche Bank asks about the recent momentum of Hinge and the initiatives that have supported it. He also asks about potential headwinds from the launch of weekly subscriptions and when Hinge could become a billion-dollar business. Bernard Kim responds, stating that Hinge has a strong brand narrative and resonates with high-intent daters. He also mentions the team's efforts in user growth and monetization. Kim also addresses the impact of weekly subscriptions and predicts that Hinge will generate $400 million in revenue this year and have a 35% growth rate for next year.

In response to a question, the speaker explains that the U.S. price increases at Tinder are still impacting the sequential payer growth in Q4, but the impact is gradually decreasing as more subscribers see the higher prices. This impact is small and can't be seen on the chart provided. The speaker also mentions the impact of weekly subscriptions on the sequential growth.

The company plans to have multiple phases of marketing throughout the year for Tinder, with a refresh in content during slower months like the end of July and August. The focus is still on targeting young women, and there was no decrease in new users for this demographic during the refresh period.

In paragraph 25, the speaker discusses their expectations for the upcoming quarter, which include a decrease in new users and a potential impact on paying users. They mention their plans for consistent marketing and reallocating spending towards college outreach and a new feature. They also mention the success of their recent campaigns and their potential financial impact. In response to a question about Tinder Premium, the speaker expresses confidence in the product's potential to generate revenue in the next year.

The speaker addresses the impact of higher interest rates and the conflict in the Middle East on the company's macro conditions. They also discuss the impact of student loan repayments on Tinder à la carte revenue, estimating it to be one or two points of annual growth. They mention that this trend has been observed since July and will continue to be monitored. The speaker also notes the resiliency of the consumer throughout the year.

The speaker discusses the strong GDP growth in the most recent quarter, but expresses caution about potential weaknesses in the consumer sector. They mention signs such as savings rates and credit card delinquencies that could indicate a potential risk for the consumer. They believe it is prudent to factor in the possibility of a weaker consumer in their outlook for 2024. They mention that this could impact their business, particularly for Tinder's younger users with less discretionary income. They conclude by saying there could be upside to their expectations if the consumer does not weaken as anticipated. The conference concludes with a thank you and a reminder for the next earnings call.

This summary was generated with AI and may contain some inaccuracies.