The paragraph is from the introduction of the Match Group's Third Quarter 2024 Earnings Conference Call. The operator welcomes participants, explains the format, and introduces Tanny Shelburne, the Senior Vice President of Investor Relations. Tanny Shelburne outlines that the call will feature remarks from CEO Bernard Kim and President/CFO Gary Swidler, followed by a Q&A session. Tanny emphasizes that forward-looking statements made during the call involve risks and uncertainties. Bernard Kim then begins his remarks by expressing pride in the company's achievements in Q3, highlighting their focus on innovation, product development, and long-term growth. He acknowledges that Tinder's direct revenue was slightly below expectations due to some optimization issues.

Tinder experienced a sequential increase of 311,000 payers and a 4% year-over-year decline, surpassing expectations. Despite less-than-expected progress on monthly active users, the company focuses on long-term improvements, like testing mandatory face photos to improve user experience. Initial results are promising, particularly in enhancing engagement and outcomes for women, with features like Spotlight Drops and an updated Explore tab. Women's engagement metrics have stabilized, showing progress in product execution. Tinder acknowledges that its transformation will take time but is committed to better user trends and revenue growth. Meanwhile, Hinge continues to demonstrate strong user engagement and revenue growth.

Hinge's download rankings are rising in English-speaking and European markets, becoming the second most downloaded dating app in the US. It introduced "Your Turn Limits" globally, increasing user focus and response rates by 20%. Hinge is incorporating AI into its platform to enhance user experiences and facilitate meaningful conversations. MG Asia's live video app, Azar, expanded into the US, appealing to Gen Z with its engaging nature. In Japan, Pairs is stabilizing, with the online dating market seeing its highest download levels since late 2022, indicating renewed momentum.

At E&E, efforts to streamline operations are progressing well, with two additional brands integrated into a shared tech platform in October. Emerging brands continue to perform strongly in their segments in the US, helping offset declines from evergreen brands. The company is focused on building a highly profitable business and will invest in innovation while exercising financial discipline. Match Group plans to manage its diverse portfolio strategically and will share more at their first Investor Day on December 11th. Financially, the company met revenue expectations and exceeded AOI expectations, with a solid margin of 38%. However, total revenue and AOI growth rates of 2% and 3%, respectively, are below target. OI declined by 14% year-over-year, impacted by $37 million in impairments and charges related to exiting live streaming services. Severance costs in Q3 were lower than expected, at $3 million.

In the quarter, Tinder's payers decreased by 4% year-over-year, showing improvement from the previous quarter's 8% decline, and surpassed expectations with 311,000 additional payers. Despite a 1% year-over-year decline in Tinder's direct revenue to $503 million, it rose 1% when adjusted for foreign exchange. Initiatives to boost ALC revenue were delayed due to unexpected effects on subscription revenue, impacting Q3 revenue and expected to more significantly impact Q4. Price testing of a weekly subscription increased payers but decreased revenue per payer (RPP), which still rose 4% to $16.87. Tinder's monthly active users (MAU) fell 9%, with a weaker new user trend noted since mid-September, mainly affecting iOS users. The company is collaborating with Apple to determine the cause, potentially linked to iOS 18 or safety enhancements. Despite these challenges, Tinder maintained high profitability with a 52% AOI margin, and the Hinge brand is performing well.

In Q3, Hinge experienced significant growth with a 36% increase in direct revenue, driven by a rise in payers and revenue per payer (RPP), alongside 20% growth in monthly active users (MAU). The brand achieved strong profitability with a 35% AOI margin, despite reduced marketing spend. MG Asia's direct revenue decreased by 6% year-over-year, but only 1% when adjusted for foreign exchange (FX). Payers increased by 14%, although RPP dropped due to FX impacts. Azar's revenue slightly fell by 2%, but rose 5% FX neutral, with a notable 14% MAU growth thanks to European market expansion. The app recently entered the US market. Pairs' revenue declined 1%, but grew 2% FX neutral, with stabilization observed in the Japanese dating market. Direct revenue for Evergreen and Emerging brands dropped by 9% year-over-year.

In Q3, the company's direct revenue, excluding live streaming services, decreased by 4%, but gains in Emerging brands offset declines from Evergreen brands. E&E achieved a 26% AOI margin, expected to improve with consolidation efforts. Indirect revenue increased by 10% year-over-year, driven by improved pricing and ad impressions. Costs decreased slightly; cost of revenue was down 1%, selling and marketing expenses were up by 2%, and G&A costs dropped by 3%. Product development costs rose by 10% due to increased headcount and lower capitalized labor costs, with depreciation rising $8 million largely due to software write-offs. Impairments and amortization increased due to a $31 million impairment of intangible assets following the termination of live streaming services and the Hakuna brand.

Beginning this quarter, the company will report its business in four segments: Tinder, Hinge, MG Asia, and E&E, along with a category for corporate and unallocated costs. This aims to provide better insight into performance and a focus on revenue growth. The company reported a gross leverage of three times trailing AOI and net leverage of 2.3 times at the end of Q3, both below the target. The quarter ended with $861 million in cash and short-term investments. Additionally, 7.1 million shares were repurchased for $241 million, deploying approximately all of the free cash flow. The company plans to continue returning at least 75% of free cash flow to shareholders. For Q4 '24, Match Group anticipates total revenue of $865 million to $875 million, essentially flat year-over-year, with specific expectations for Tinder revenue to decline by 2% to 3%.

In the article paragraph, the company discusses its financial outlook for Q4, highlighting that Tinder's performance will be impacted by reduced monthly active users (MAUs) and delayed initiatives, leading to a mid-single-digit decline in payers but some improvement in revenue per payer (RPP). Other brands are expected to see a revenue increase of 3% to 5%, lower than previously expected due to weaker trends in certain businesses. Hinge is projected to achieve around 25% revenue growth, driven by strong user trends. Overall, the company's total revenue outlook is reduced by about $35 million, with $25 million attributed to Tinder's issues and $10 million due to underperformance and reduced advertiser spending. The anticipated Adjusted Operating Income (AOI) is $335 million to $340 million, with additional costs from severance charges and related taxes. Marketing expenses are expected to be lower due to reduced spending at Tinder but increased at Hinge. The company's margins are projected to be 39%.

Match Group anticipates approximately 4% total revenue growth for 2024, with a 5% growth rate when excluding certain past revenues and on an FX-neutral basis. Tinder is expected to see direct revenue growth of 1% to 2%. The company foresees AOI margins of at least 36% despite unexpected costs and revenue shortfalls. They project free cash flow of around $1 billion for 2024. While Hinge and other business units perform as expected, Tinder faces challenges in user trends and initiative delays, impacting its momentum into 2025. However, new product features are in testing, and future revenue growth will depend on these initiatives. Match Group plans to share more details and medium-term financial outlooks at an upcoming Investor Day, focusing on financial discipline to enhance shareholder value.

The article discusses the company's plans to address their programs and expected margin trajectory at an upcoming Investor Day. Despite challenges in the dating category and some of their brands, the company maintains strong profitability and free cash flow generation. They plan to return significant capital to shareholders, aiming to drive growth in free cash flow per share in the coming years. Product innovation, particularly through AI, is expected to contribute to growth in the medium term. The session opens for questions, with Ross Sandler from Barclays asking about Tinder's top-of-funnel trends and operating margins. BK responds to the MAU growth issues observed since mid-September, citing possible causes related to iOS 18 and trust and safety updates.

The paragraph discusses Tinder's focus on product innovation and improving user experiences, especially for younger users and women, rather than viewing recent setbacks as long-term issues. Marketing is deemed important to bolster Tinder's brand, but sustainable growth is believed to come from product-led strategies. Despite investments in marketing and product development leading to reduced AOI margins, the company remains confident in its plans to improve the product and is ready to increase marketing efforts once significant product enhancements are made. Both product development and brand storytelling are emphasized as key areas of focus.

In the paragraph, Bernard Kim discusses the progress of testing a la carte features at Tinder, emphasizing the careful approach needed to understand their impact on revenue and the ecosystem. He mentions testing four features in Q3, with a focus on unbundling features like Passport and Likes You from subscriptions. Although Passport has shown some cannibalization effects, they continue to test with targeted groups to optimize the approach. The Likes You feature has also shown cannibalistic effects on gold subscriptions, leading to further refinement and experimentation with customer segments and merchandising strategies.

The paragraph discusses the testing and implementation of new features for a platform, specifically highlighting a feature called "First impressions" that allows personalized messages to enhance connections. Another feature being tested sets time limits on matches to boost engagement, though it affects daily active users, particularly women. Despite the positive engagement outcomes, adjustments are needed to minimize ecological impacts. The company is optimistic about broader rollouts of three features, aiming to effectively target specific user segments. Following this update, Jason Helfstein from Oppenheimer asks about the impact of initiatives on quarterly performance, particularly regarding Tinder's payer metrics. Gary Swidler explains that momentum in the third quarter was strong, influencing payer performance, and notes both seasonal effects and other potential headwinds, such as iOS issues and ALC impacts, as factors in their quarterly results.

The paragraph discusses the challenges faced by Tinder in maintaining its monthly active users (MAUs) and payer growth. Despite initial positive momentum, there was a decline starting late in the third quarter, leading to a projected year-over-year and sequential decline in payers for the fourth quarter. The company acknowledges that this challenge is partly due to an ongoing product transformation and an issue primarily affecting iOS users, who are typically high-value customers. Tinder is focused on addressing these issues to drive improvements in MAUs, key performance indicators (KPIs), payer growth, and ultimately revenue in the long term.

John Blackledge from TD Cowen asked about the factors driving Hinge's strong yet slightly decelerating revenue growth in Q4. Gary Swidler responded by explaining that the deceleration is due to Hinge's comparison against the previous year's Q4 when weekly subscription packages were launched, causing a significant revenue increase. Despite the deceleration, Swidler expressed confidence in Hinge's performance, highlighting strong user growth, market share gains, and the brand's resonance, expecting continued revenue growth into 2025. Nathan Feather from Morgan Stanley then inquired about the "Your Turn Limits" feature, noting its unique ability to increase both friction and engagement, and asked about its impact on user growth or churn.

The paragraph discusses the introduction and impact of a new feature called "Your Turn Limits" on the dating app Hinge. Bernard Kim emphasizes the counterintuitive approach of adding friction to user interactions, which ultimately enhances user focus and responsiveness by encouraging people to engage more deeply with a few conversations at a time. This innovation, recognized as addressing the ghosting problem, has received positive global feedback and aligns with Hinge's strong recent performance. While it's difficult to directly link product launches to user growth, the timing suggests a positive impact. The learnings from this feature are being shared across the company's portfolio. The paragraph concludes with a segue to a new question about Tinder.

In the paragraph, Bernard Kim discusses new features on Tinder, such as Spotlight Drops and an expanded Explore tab, which are intended to enhance user engagement and improve match quality. Early results are positive, suggesting potential for further refinement. These features are designed to cater to users' shared interests and intentions, particularly targeting younger demographics and women. They are also helping Tinder gather insights on user experience and match preferences. This information is shaping Tinder’s future innovations, planned for 2025, and aims to improve overall user outcomes. The development and rollout of these features are deliberate, ensuring they meet user needs both now and in the future.

In the paragraph, Gary Swidler discusses the 2025 outlook for Match Group's business, highlighting the importance of Tinder's performance. He notes that Hinge, the E&E business, and Match Group Asia are stable and predictable, but Tinder's future impact on the outlook is uncertain due to ongoing product transformations. Swidler emphasizes the need to improve Tinder's ecosystem and appeal to young users, especially women, to drive growth in 2025. More details on product rollouts and their anticipated impact will be shared in December, followed by further updates at Investor Day and the earnings call in February.

The paragraph is a discussion about the financial strategy of a company, focusing on the balance between investments and margin growth. The company executives have been concentrating on improving margins amidst pressure from top-line trends. They anticipate continued improvement in margins, which will be discussed further at an Investor Day event. Justin Patterson from KeyBanc inquires about the stability between the company's Evergreen and Emerging businesses, noting that revenue declines were less severe this quarter. Gary Swidler responds, explaining that revenue gains in Emerging brands are almost offsetting the declines in the Evergreen part of the business, and they are implementing cost efficiencies to boost margins, although investments are still needed to support Emerging growth.

The paragraph discusses the strategy for managing declines in Evergreen brands while boosting growth in Emerging brands, with the expectation that by 2025, growth in Emerging brands will surpass declines in Evergreen. It also highlights a focus on margin expansion, specifically in the E&E business, which had low margins in the low 20s percent range in 2023. A consolidation project was initiated to improve margins, aiming for over 30% by 2026. This involves cost savings, marketing investments, and revenue considerations for both Evergreen and Emerging brands. The paragraph ends with an operator handing over to James Heaney from Jefferies for the next question, which deals with maintaining a 36% margin target amid various investments in businesses like Tinder and Hinge. Gary Swidler responds to the question.

The paragraph discusses the challenges and strategic decisions faced by a company in managing a portfolio of brands amid unexpected developments and less-than-anticipated revenue. Despite these hurdles, the company maintains a margin of 36% or better by making strategic trade-offs. It emphasizes the importance of investment in various brands at different growth stages, such as Tinder and Hinge, highlighting efforts to improve products and expand internationally. Additionally, new ventures like Archer are part of the company's future growth strategy. The company is balancing these investments with actions to mitigate costs.

The paragraph highlights a discussion about the strategic focus of Match Group, emphasizing their realignment of investments to enhance margins. They have exited certain businesses, like live streaming and the Hakuna app, to redirect funds into more promising ventures like Tinder and Hinge. The strategy involves maintaining a balance across various stages of brand development within their portfolio, advising more initial investment for emerging brands and focusing on profitability for mature ones. Daniel Salmon from New Street Research asks if the company is considering divestitures, given recent strategic shifts and disclosures. Gary Swidler responds by indicating that the board is open to actions that enhance shareholder value, though he doesn't speak directly for them.

The paragraph discusses the company's proactive approach to evaluating its portfolio and investments, emphasizing the potential for mergers and acquisitions if they align with long-term value creation. While recent enhanced disclosures are not linked to sales or divestitures, they aim to provide investors with a deeper understanding of the company's four business units. This transparency is intended to clarify growth and profitability dynamics ahead of an Investor Day presentation. Bernard Kim emphasizes the company's focus on core execution, innovation, and effective marketing.

In the paragraph, Bernard Kim addresses questions from Shweta Khajuria regarding Tinder's brand perception and the transition to a new CFO, Steve Bailey. Kim emphasizes Tinder's focus on Gen Z and women through targeted product initiatives and marketing efforts. Despite these initiatives, they plan to maintain their marketing budget as a percentage of revenue for next year. Regarding the CFO transition, Kim highlights Steve Bailey's extensive experience within the company and mentions that this change has been planned for some time. Steve will participate in their upcoming Investor Day and future earnings calls in 2025.

In the paragraph, Curtis Nagle from Bank of America asks Gary Swidler about a reduction in advertising spend during the holiday season and a shift in marketing spend into the fourth quarter, traditionally a weaker period. Gary Swidler explains that some large advertisers are spending less in Q4 due to a crowded market but plan to resume in Q1, making it more of a timing issue. The company is trying to replace this spend with other advertisers. Additionally, there's a cautious approach to marketing for Tinder, holding back some marketing efforts until there's more product traction, as user growth needs to be driven by product improvements rather than marketing alone.

The paragraph discusses the strategic marketing decisions of the dating app company, particularly focusing on Hinge and Tinder. The company has decided to increase marketing spending for Hinge in the fourth quarter due to its strong performance and effective brand marketing, despite reducing spending in the third quarter. Conversely, Tinder will experience a reduction in marketing spend. The company emphasizes that these spending patterns may vary among different brands. The paragraph concludes with Gary Swidler expressing appreciation for the participants and mentions an upcoming Investor Day on December 11.

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