The Match Group Second Quarter 2024 Earnings Conference Call is led by CEO Bernard Kim and President and CFO Gary Swidler. They discuss the company's positive Q2 results and progress across their portfolio, including Tinder's stabilization and Hinge's rapid expansion. Azar and Pairs also continue to perform strongly. Tinder has been working to improve the user experience, and initial signs of progress are starting to show.

Tinder expects user and payer trends to improve in the second half of the year, with strong sequential payer growth and better year-over-year MAU trends. They are focusing on increasing authenticity and safety, and plan to integrate AI to make the dating experience easier and more effective. They have already made progress in cleaning up their ecosystem and implementing AI-driven tools. The company is committed to innovation and will continue to build off of what makes Tinder successful while also reimagining the core experience. This requires a delicate balance and will be coupled with strong marketing efforts.

Match Group's Hinge dating app has shown significant growth in revenue and market share thanks to new features and successful marketing campaigns. The company also has other growing brands in its portfolio, such as Azar, and is focused on leveraging technology and ensuring trust and safety for users. In other areas, Match Group has decided to exit live streaming services and sunset its Hakuna app due to changing circumstances.

The pandemic has led to a decline in the novelty of live streaming video and has resulted in a workforce reduction of 6% globally for Match Group. However, the company recognizes the value of Hyperconnect and plans to redeploy some of the retained talent to other brands. They are focused on both short and long-term results and are being financially disciplined in their product innovation efforts. Tinder and Hinge are expected to see continued growth and success.

The company is cutting costs for brands that don't have a clear path to growth, but believes doomsday scenarios for dating apps are overblown. They are confident in the growth potential of their business and welcome shareholder input. The company has been buying back stock and plans to showcase their management team at an Investor Day in December. Despite unexpected headwinds, Match Group exceeded expectations in Q2 with total revenue of $864 million, up 4% year-over-year. Revenue per payer grew 9%, while payers declined 5%. Tinder delivered $480 million of direct revenue, up 1% year-over-year.

In the second quarter, Tinder saw an 8% increase in payers and a 10% increase in subscription revenue. However, there was a decline in a la carte revenue, which the company is addressing with new features and initiatives. Hinge saw a 48% increase in direct revenue and a 24% increase in payers. MG Asia and Azar also saw growth in direct revenue despite challenges in certain markets. Evergreen brands had a decline in direct revenue, while emerging brands saw a 17% increase. Overall, Tinder's monthly active users remained stable compared to the previous quarter.

The paragraph discusses the stability of MAU at Tinder since March, with a decline in July due to changes in trust and safety policies. The decline is expected to moderate with ongoing product and marketing initiatives. Hinge's user growth remains strong, with significant market share in English-speaking countries and expansion in Europe. Match Group's Q2 AOI and OI increased due to revenue growth at Hinge and other brands, offset by higher expenses for selling and marketing, G&A, and product development. The increase in selling and marketing expenses was mainly at Hinge, Tinder, and certain Emerging brands.

In the second quarter, Match Group's operating income was impacted by increased SBC expense and depreciation expense. They also repurchased 6.4 million shares and have deployed more than 100% of their free cash flow for buybacks. They have ample financial flexibility to continue returning at least 75% of their free cash flow to shareholders for the remainder of the year. For the third quarter, they expect total revenue of $895 million to $905 million, reflecting a 2-3% increase year-over-year. They also anticipate FX headwinds and expect direct revenue at Tinder to be approximately flat year-over-year.

The paragraph discusses the positive trends in ALC revenue and the decline in Tinder payers, leading to positive sequential payer additions. The company also expects growth in direct revenue from other brands, particularly Hinge. The overall AOI and margin are expected to be stronger in Q3, with a slight increase in marketing spend. However, the company will incur charges related to the exit of live streaming services.

Match Group expects to see a 5% year-over-year total revenue growth, with a 7.5% growth in FX neutral, and a 3% growth in direct revenue for Tinder. This is slightly lower than previous expectations due to the exit of live streaming services and worsened FX expectations. However, the company still aims to achieve a 36% AOI margin target and will continue to invest in the growth of Tinder and Hinge through product and marketing strategies. The company is also making efforts to improve efficiency and margins at other brands and Hyperconnect.

The speaker believes that investing in AI talent will be crucial for maintaining their position as a leader in facilitating meaningful connections. They expect modest improvement in AOI margins in the near term, with more expansion as revenue growth increases and costs remain controlled. However, if revenue growth does not meet expectations, they may have to consider reduced investment. They are confident in their future prospects, anticipating a significant increase in free cash flow by 2024. They plan to use 75% of this cash flow for buybacks, believing their current stock price is the best investment. They will provide more details on growth, margins, and free cash flow at their upcoming Investor Day. They then open the line for questions and the first question is about the stabilization of Tinder user growth in the quarter.

Bernard Kim, who is the Chief Executive Officer of Tinder, was asked about the recent stabilization of the app's user base. He explained that this was due to a combination of product improvements and strong marketing efforts. The company has also made strides in improving retention and attracting new users. Another analyst asked about the impact of this stabilization on the app's payer seasonality. The company's Chief Financial Officer, Gary Swidler, responded by stating that historically, Q3 tends to see an increase in payers due to the summer vacation season being an active time for dating.

The back-to-school period and the holiday season have a significant impact on dating app usage and revenue. Q3 tends to be a strong period for dating apps due to increased activity and new features, while Q4 is weaker as people shift their focus to holiday activities. Marketing efforts are also adjusted accordingly, with more investment in Q3 and a reduction in Q4. This year, the company plans to follow a similar pattern, with a new global marketing campaign for Tinder in Q3 and a decrease in marketing spending in Q4.

The speaker discusses the progress being made in Tinder and the momentum that the team is seeing. They mention behind-the-scenes improvements such as recommendation changes and strong marketing efforts. The speaker believes that these changes will lead to a turnaround and solidify Tinder's brand position in the marketplace.

The speaker discusses the success of integrating product and marketing, specifically in regards to the Olympics, which has resulted in increased activity on the app. They also mention upcoming plans for Tinder's future and hint at potential improvements in the business for 2024 and beyond.

The speaker discusses the importance of Tinder driving its product and marketing efforts to attract better users, which will lead to increased user and payer growth. They mention seeing positive signs of this already and express confidence in continued growth for the third quarter.

The speaker believes that the sequential payer trends for Tinder are positive and will lead to a strong period of net adds in Q3. However, they caution that it is still early in the quarter and there is still work to be done. They expect to see an improvement in the year-over-year growth rate, with a goal of reaching a negative 5% in Q3. They also expect to see more progress in Q4, with the goal of surpassing the negative 5% year-over-year growth rate.

The speaker discusses the potential for growth in the fourth quarter and the importance of seasonal patterns in the dating app market. They also mention recent product updates in Tinder and how they may impact revenue in the future.

The speaker believes that changes being made to Tinder will lead to a better user experience and more revenue in the future. They are being tested and are not expected to have a significant impact in 2024. The company is also focused on improving trust, safety, and user outcomes within the Tinder ecosystem and has seen positive changes in user perceptions over the past year.

Bernard Kim, COO of Tinder, discusses the importance of trust and safety in the success of the app. He mentions ongoing efforts to improve user experiences and highlights features such as mandated face photos and new technologies for authenticating users. He also mentions the company's focus on improving brand perception, with a 50% increase in the perception of Tinder as a place for meaningful connections and a 20% decrease in its hookup stigma among women aged 18-30 in the US. In response to a question about the exit of the live streaming business, Gary Swidler, CFO of Match Group, explains that the company has two live streaming components: the Hakuna app in Asia and live streaming services in some US-based apps, primarily PlentyOfFish.

The company plans to exit certain businesses in the third quarter, including live streaming, due to lower margins and increased competition. Live streaming requires a revenue share with streamers, resulting in lower margins compared to the dating business. Despite an initial attraction to live streaming as an additional source of revenue, the changing landscape and competition have made it difficult to grow and scale the business, leading the company to decide it is not strategic to their overall goals.

The company has decided to exit certain businesses that are not likely to contribute to revenue growth and may even dilute margins. This decision will result in a 50 basis point improvement in margins and a 6% reduction in workforce, leading to $13 million in savings. The company is also replatforming its E&E businesses for additional savings by 2026. The focus is now on Hinge, which is expected to drive revenue growth.

The investor call addressed Hinge's strong performance and the factors contributing to it, such as market expansion, product initiatives, and AI integration. The team is constantly working on improving the user experience and has a strong product roadmap in place. The CEO also mentioned ongoing conversations with Starboard, but did not provide further details.

Bernard Kim and Gary Swidler address concerns raised by Starboard, a potential investor, about Tinder's third quarter net adds. They explain that these concerns are already areas of focus for the company, including investing in Tinder's product and marketing, reducing headcount, and redeploying cash flow to buy back shares. They also mention that the trajectory of Tinder's growth is driven by a combination of factors, not just one specific issue, and that the company's recent efforts to clean up the ecosystem and improve marketing are helping to stabilize user numbers and improve payer trends.

The speaker discusses the success of Tinder and the various factors that have contributed to its improvement. They also mention the company's commitment to returning at least 75% of capital and the involvement of the Board in deciding the right amount for buybacks.

The company has been aggressive in buying back stock in the first half of the year due to the low share price. They believe this will benefit shareholders in the long-term. The company has considered implementing dividends, but is currently focused on buybacks. The potential for Hinge to reach over $1 billion in revenue is promising and the company is targeting to become the number two brand in the market.

The speaker acknowledges that confidence in the Hinge platform has been increasing due to positive user trends and its ranking in various countries. They believe Hinge has the potential to be a $1 billion business in the future, especially as it continues to expand in European markets. The company's business model involves making investments in new markets and then harvesting the benefits later on, which will contribute to future revenue growth. The speaker concludes by saying they are optimistic about the prospects for Hinge and other potential opportunities in the future.

The speaker thanks everyone for attending the morning conference and wishes them a happy summer. The operator then concludes the conference and allows attendees to disconnect.

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