Q2 2020 Match Group Inc Earnings Call
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Good morning, and welcome to the match group second quarter 2020, <unk> earnings Conference call. All participants will be in listen only mode should you need assistance. Please signal conference specialist by pressing the star Keith.
Then zero on your telephone keypad. After today's presentation, there will be an opportunity to ask questions to ask a question. You mean for Star then one on your telephone keypad to withdraw your question. Please press Star then to please note. This event is being recorded I would now like to turn the conference over to Lance Barton Senior Vice President of corporate development and Investor really.
<unk>. Please go ahead.
Thank you operator, and good morning, everyone.
Well once again going to do that called <unk> <unk>. So joining me on various locations, our CEO shard, UK CFO and COO Gary Swindler.
Before we start I need to remind everyone that during this call we made our outlook in future format.
These forward looking statements may be preceded by words, but should we expect we believe we anticipate or similar statement.
These statements are subject to risks and uncertainties and our actual results could differ materially from the views expressed today.
Some of these risks have been set forth in our earnings release, and our periodic reports filed with that you see with that I'd like to trying to calibrate ashar.
Thank you land.
Good morning, and thank you all for joining the call.
I spent the last quarter, a along with the earnings release me shared our commentary in a shareholder letter last night Hope you had a chance to meet them I know how wipers summarized the very brief highlights and then galleries will add some color to the financials. Then we'll open it up for Q anyway.
You know a tiny tiny thus far has certainly been an extra ordinary year, we're running out of adjectives to describe it.
I, even as we've been navigating the various Michael events.
These last few months in particular have been fairly eventful for our business.
We completed the separation from I see at the end of June.
It's particularly remarkable given that it was all accomplished in the middle of the pandemic.
And I'm proud of the team that made that all happen so smoothly.
As our financial results indicate our business has shown resilience.
As we mentioned the flat or even though we've come down from the high engagement levels before saw in March and April at the beginning of the lock down.
We're still seeing how youre engagement and when this all started.
The.
Declines in propensity to pay but be talked about last call a big old steadily you book copper across all brands and across subscriber conversions as well as I look hard portrazza.
Our first time subscribers and direct revenue grew year over year across almost all of our major brands.
No the organic word of mouth, given you use a trend those haven't fully recovered yet probably because the much lower level of socializing going on in the world.
Paid marketing has been performing very well and we're going to take advantage of test market opportunity in Q3 by investing have youre on c. away.
Last quarter, when we talked about how the non tender businesses had grown by 2% and I'd Wanna get on a year over year basis for the first time since 2016.
Q2 that trends continued and then I will get these businesses grew 9%.
And by solid product and marketing efforts.
I tender business continues to grow very nicely, despite being far more exposed to the code that impacted markets internationally.
And you know despite impacts in fairly large markets like India, which we called out which by the way India has been about the worst impacted than any other market. We've seen since the pandemic began.
Okay. So Brazil for some period of time, despite all of that tender in aggregate has recovered in terms of propensity to pay trends and they were starting to experiment new features that we're excited about the later this year.
[laughter] I should also addressed the leadership change we made a tender last week.
At least I've been stepped down in vivo lucky to be able to bring in a very talented and experienced executive trim line zone as CEO to lead. This next chapter of growth for tender.
We also brought in a seasoned product executive from the gaming world as the CPL, So tender and I'm feeling very optimistic about tenders next chapter.
As we look ahead, we've created several levers of growth in our portfolio.
And do it continues to show strain been opportunity both in new addressable markets as well as opportunity for you softness areas for user engagement and monetization.
Our older brands that have been a driver for a while our him I feel good growing again there are many different stories here new sources of revenue in new markets, you marketing channels other product when all of which gives us confidence that they should continue this trajectory.
And our new all girls brands are doing very well both hinge on payers continue to perform well.
Are you are apps like be okay, and she's brought that rebuilds and invested in I'll now growing nicely and contributing to the growth.
And we're continuing to see doesn't back to the future with our Muslim App Hawaiian that just launched in 12 new markets.
New Christian half, we launched a few months ago and our continued investment in Asia.
As I said the last time the value proposition about products has gotten stronger as people have fewer traditional alternatives to meet people.
And you know with a growing usage of video and other features we have an opportunity to truly expanded they use a tape use cases on experienced within our apps.
What does the favorite parts of the jobs for me are at the store usually hear from users every day, so I thought I'd share a couple of non business fun facts.
People are certainly adapting though dating behaviors to the pandemic and locked down and based on the stories. We are hearing some of the more popular dates. These days are walks in the park picnics and backyard barbecue.
Oh, we've continued to hear more and more stories about Super interesting video dates and even video and live streamed weddings, which might become a trend.
So despite all the uncertainties the walls in the market still hold we're feeling more confident about the rest of the year and with that I will let Gary you walked through some more financial specifics.
Thanks sharp.
Our financial performance has indeed improved markedly since our last call.
We continue to navigate a challenging environment very well.
Revenue in Q2 grew 12% year over year, 14%.
FX.
Performance was balanced with direct revenue up 13% in North America, and 11% internationally.
We crossed 10 million average subscribers for the total company, 11% year over year growth.
We saw a meaningful improvement in customers propensity to pay starting in May which drove these results.
April proved to be the low point for ARPU and we've seen a study increased since then.
Q2, ARPU declined 2% year over year at Tinder, but was about flat excluding FX it was especially strong in North America.
ARPU was up 5% year over year at the non tender brands led by hinge plenty of fish and okay Cupid.
Sequentially ARPU for Q2 at Tinder was down 2%.
For the non theater brands it was up 3% in aggregate.
Each figure was a little higher excluding FX.
Tenders average subscribers increased 128000 sequentially in Q2 up 18% year over year with direct revenue up 15% year over year.
Tinder has seen subscriber conversion Alec hurt revenue and ARPU improved nicely since our last earnings call.
Male and older payer trends, which had initially showing some softness in a pandemic have also improved.
Tenders recovery is slowed by broad global presence and particularly by weakness in certain countries, such as India, where the virus is still having major effects.
However July was another strong month for Tinder overall, the third straight month of increasing revenue since tinder hit its low in April.
We're pleased to see tinder trends clearly continuing to heading the right direction and excited about a robust product roadmap for the back half of the year.
We're also very encouraged by the 9% year over year direct revenue growth at the non tinder brands in Q2.
Largely as a result of strong product work across the portfolio that has been years into making.
The improvement in conversion that many of the legacy brands is pronounced.
In addition to the turnaround at the legacy brands newer brands like pairs cheese buying be okay are contributing meaningful revenue growth.
Traction at hinges accelerating with strong top of funnel growth solid progress on monetization and a robust product product roadmap ahead.
We're also starting to get a lift from revenue at our plenty of fish one to many live streaming video business from both subscribers and non subscribers, who are choosing to pay for live streaming services.
We're optimistic that Weve turned the corner on non tender growth and that these brands will grow in aggregate for the foreseeable future.
On the cost side, we pulled back on marketing spend in Q2 as the pandemic took hold which helped Q2 EBITDA.
Assuming ROI is remain attractive, though we plan to spend more heavily in Q3 to drive future growth, we expect approximately $50 million incremental marketing spend in Q3 over Q2 levels up $30 million year over year.
As a result of our separation pricey, we effectively stepped into their shoes from a reporting perspective, which means we show I see other businesses as discontinued operations.
Match group separation related costs of about $8 million. In Q2 are also included in discontinued operations.
We assumed I see is 1.7 billion of senior exchangeable notes in the separation.
At June Thirtyth, including the Exchangeables, our net leverage was 4.6 times, which is below the five times as we've been expecting.
We feel that we're well positioned to continue to invest in all of our businesses and to pursue compelling strategic M&A opportunities. We also remain focused on using our significant cash flow generation to rapidly de lever as we've communicated previously.
Despite the macro uncertainty we believe we're able to provide an outlook for Q3 and for the full year.
As the business momentum continues across the brands, we expect to deliver at least $600 million of total revenue in Q3, which would be low double digit year over year growth.
The revenue strength in Q3 evidences a solidly recovering business.
We expect EBITDA of $215 million to $225 million, which reflects the strong revenue growth and higher year over year marketing spend.
We expect margins in Q3 to be moderately below last years levels.
Predicting the pandemic impact as we go further in the year is more challenging but based on what we've seen of late absent a major change in the macro environment. We believe that we can deliver at least $2.3 billion of revenue in 2020, which would be 12% year over year growth.
Our outlook reflects general stability or even slight acceleration in top line year over year growth rates for the remaining two cores of the year.
We expect our current product road map to generate ARPU growth in the back half of the year to compliment solid subscriber growth.
Our target is to grow EBITDA, 10% year over year for the full year, which could of course vary depending on the levels of investment we choose to make all that said we recognize that there is still uncertainty around what will happen with the pandemic in the fall, which could have a meaningful impact on our full year guidance.
Lastly, I wanted to update our outlook for a few other discrete financial items.
We expect GAAP interest expense in Egypt, Q3 in Q4 to be similar to Q2 levels of approximately $45 million. We expect cash paid for interest to be about $30 million per quarter, no will vary somewhat depending on timing of required interest payments.
The primary driver of the difference between GAAP interest expense and cash paid for interest is related to the streets. It to the three exchangeable senior notes, we assume from I see.
These notes have lower cash coupon rates than their associated GAAP interest expense.
We expect SBC expense of 100 million to $110 million in 2020, the change from our prior outlook stemming largely from the modification of certain equity awards, which will be reflected in Q3.
With that I'll ask the operator to open the line for questions.
We'll now begin the question answer session. Pesky question you May Press Star then one on your telephone keypad.
We're using speakerphone, please pick up your handset before pressing the keys if at any time. Your question has been addressing do you would like to withdraw your question. Please press Star then too.
First question is from learn castle from Morgan Stanley. Please go ahead.
Great. Thanks, so much I just wanted to follow up on on the July commentary anymore color. There on how July is trended versus June have you seen continued improvement in the business on both the subscriber conversion arm to side.
And then my second question is just curious how states like Florida, Texas, California, where maybe you know the Lockdowns had been reinstated have trended recently are you seeing any renewed softness in those markets any additional color that would be really helpful.
Okay.
Thanks, Lauren and welcome to your first match group called I'm actually I'm glad to glad to have our first woman analysts covering us after five years I think.
About July yes, the recovery that we saw throughout Q2 has continued into July and we've seen improvements in both subscribers and ARPU.
Yes, she shared a chart yesterday in our letter that showed the first time subscriber trends into July and that should illustrate the continued momentum were generally seeing in our propensity to pay a recovery.
This is basically what's guiding us for our kids suite.
The question about the G impact so call that and the trends have been really interesting.
It's very different by market.
And so I'll, maybe I'll give you a little bit of color off what we've seen and what we're continuing to see.
In the U.S. and a western Europe, where we saw most of the impact in March and April right and then but the Big news was going on and the initial Lockdowns were announced.
Since then things have steadily steadily improved in despite increases in cases, and Florida, Texas, Georgia et cetera, we haven't seen any impacts to any of our metrics now even back then there were certain parts of the country that war more impacted for instance, New York and California.
Well much more impacted Florida actually never a showed any decline in metrics inside they had super high engagement due to spring break right. When all this news was breaking in other parts of the World. However, we're seeing again they read levels of impact.
Brazil for instance, actually saw some of the worst impact in May and June and it's a recently starting to take backed out India. As we mentioned it's been the most impacted of any markets that we've seen thus far and it still remains under pressure Japan is another.
Good we've been watching closely in the early days it didn't seem to show any impact, but when the first round of.
States of emergencies, what declared Oh, we saw some degradation in metrics things have been improved but there have been some new rounds of emergency declaration of the last few days and we're watching to see if any of that has an impact.
I feel good though despite all these puts and takes all four businesses have continued improvement every month since it's bottomed out in April.
Wonderful thanks, so much.
The next question comes from Korean Carpenter from JP Morgan. Please go ahead.
Great. Thanks for the question.
As you think you've got your product pipeline in the second half of the year could you expand a bit on your priorities tender on in particular, the opportunity you see with regard to monetizing power users.
And then any comments on the patents here that was recently added your website or maybe what the keys or a lot could look like over the coming quarters. Thanks.
Thanks, Corey Evans waiting for the plan [laughter] shouldn't wondering whether that was gonna come up.
I'm asking about the broader road map, we have a pretty robust road map that's focused on core experiences as we always do Hezbollah buildings are foundational stop or new experiences the planning to roll out next year I can't get into a lot of details on all of that yet.
But to your question about power users and and you know the road a revenue Roadmaps focus it is true our second half 2020, a revenue road map on tender is focused on a power users we.
He has been testing some contextual merchandising around our existing Allah card products and a we have indeed jobs started testing a new subscription to your platinum or the it is designed to provide additional value beyond gold by increasing use.
<unk> chances to get more matches and more conversations. It is very very early and it's also a very minimum viable product version of the T or that we're testing.
The team has more features that theyre, adding and designing and oldest that remains to be tested the thing I want to point out you know platinum were mostly expecting those to be an ARPU driver.
Unlike gold, which was by far the most successful and you need grab new feature will be ever launched which drove meaningful ARPU increases a long way it almost doubling of a subscriber convergence. This is not at all expected to be anywhere close to.
Gold this is more about adding giving a power users more control a better experience and more advantages.
Through this to our ARPU play.
But again, there's a fair bit of testing still to be done.
And our goal is that if all goes by we should be able to globally roll. This out by the end of the or later in Q4.
Thank you.
The next question comes from John Blackledge from Cowen. Please go ahead.
Oh, great things, just calling on hinge Where's the brand tracker.
Versus what you had it vision.
To start the year kind of pretty cold it and how should we think about.
The brand, though on the longer term basis. Thank you.
Thanks, Sean.
Hinges on T. tracking very vile relative to our expectations.
In terms of user growth, even though it was impacted during the initial lockdowns, mostly because of bear a geographic footprint being in larger cities like New York and L.A.
They have since rebounded very strongly and already in the first half of 2020, they're downloads are double a year over year and there's lots of good to go both in the U.S. as well as internationally, which we haven't made a huge play yet.
And you know as we've said before this year well was supposed to be the beginning of I'll focus on monetization and the team's been right on target and even slightly ahead than initially planned on rolling out revenue features it's been encouraging to see the features that.
Worked well on our other platforms also work well on a hinge in fact, one of the pleasant surprises for US was hinge turning profitable in Q2, which was well ahead of our expectations.
The next question comes from Dan Salmon from BMO capital markets. Please go ahead.
Good morning, everyone.
My question I was a two parter.
Our first maybe just.
Could you update us just a little bit around email engagement and video dating use we talked about that a little bit last quarter on sort of the opportunity to see those two trends there to converge together and what opportunity you see there, especially more on tinder and hinge and the more useful oriented ones and then beyond that.
Letter you also discussed how.
But your longest standing brands you know collectively grew for the first time in four years. So.
Maybe spend a little bit more time on the expectations for them going forward, maybe in particular for monetization and merchandising strategy.
Great. Thanks.
Sure so.
Female engagement and video.
As we said, yes, the role model really interesting learnings coming out of the a spike and engagement, we saw with women, which has allowed us to formulate a portions of our road map, particularly on tender to try to leverage the psychology.
What that was and you'll see us rolling out.
At the team has been testing a few different things and we but we will definitely be doing more on that front I'm.
Particularly next year.
The on video, we obviously have launched boat a one to one video on most from all platforms.
Including tender tenders now testing it a number of different markets their face to face a product our the thing we realize each of our products has a different who sat in terms of when you get to open up video in some cases it's.
After a couple of conversations back and forth in some cases, you have to have as many as 10 back and forth exchanges before the video becomes available and so people are still testing to make sure. What is the right a timing at which we should open up the people to talk on video.
So you know usage has been building across all of our platforms. The thing that we found is a once people use it majority of them use it again and so it is going to be one of those things that's going to develop over the long term I think.
About your second question related to.
The older expectations about the longstanding brands.
And what do we think it's going to happen.
You know, it's been two years into making with lots of product work and investments across these properties to you know.
Enhance or the user experience and increase the product appeal, there's lots of work that's gone into changing monetization mechanisms and pay walls and even business models in certain cases.
And then you know we've supplemented this led marketing campaigns and the true brand differentiation and that's what gives us confidence that they turned a corner and they should be set up for sustainable growth going forward. The other thing that actually is a super interesting is the Pos.
Team has found a new revenue stream and cost lives, which again open to US Oh, you know sort of gives us confidence in this idea of you surface area is a new monetization abilities that we can deploy across our platforms.
The next question comes from Ross Sandler from Barclays. Please go ahead.
Hey, guys, Gary just a follow up to that last.
Question about non Tinder brands. So we've got a couple of quarters in a row growth and your comment was that.
Do you expect them to grow for the foreseeable future. So.
How does that kind of turning the corner in on Tinder impact. Your your long term view on a margin profile for the overall match group.
Any comments there thanks.
Sure. So you know as we've said this was the second straight quarter, where those brands grew and the growth is a bit stronger in this quarter. So this is something we've been.
Working on and trying to get too and we feel we finally gotten to the point, where we can say, we're confident that for the foreseeable future. We think those brands in aggregate are going to grow so that's clearly a.
A milestone for US I think from margin goal perspective, you know, we've always talked about getting to 40% EBITDA margins as a long term goal I think that's still remains our expectation that's not necessarily a one year goal, but that's an overtime goal and so we had always assume there would be some growth from the.
Non tender brands and now we've gotten there and I think that was always part of the plan and part of what we incorporated into the expectation of getting to the 40 plus percent EBITDA margins. So I think we're tracking pretty much as we hope than expected and you know our goals are not change there. We think we're on the path to achieving them overtime.
It's important to understand that you know its product work and improvements in conversion that is leading to the strength at a lot of the non tender brands and so that is going to drop to EBITDA and ultimately help us improve margins as brand. So it's a positive from our perspective and that's why we've been pushing towards that.
I'll also note that some of the margin drag comes from things like investments, we're making in new geographies and new products, New brands and hinge has been one of those.
But actually hinge has crossed into profitability in the second quarter for the first time, which is again a momentous event for us on hand, something we had been expecting but a little bit later in the year and we crossed it. So as you see these investments made and the drag they cause on margins. The goal is obviously to create profitable businesses.
We've got hinge into that category, we're optimistic that we'll be able to get she's been be okay into that category over time, and obviously other things we're investing in like Hawaii I like the matrimony businesses in Asia overtime. The goal is to get those to be profitable and reduce the drag on margins on the other big topic around this maybe a couple of big ones one is.
Legal expenses, which has been a headwind for us.
We were hoping to see those legal expenses reduced next year, but it's one of the impacts of co. Good that those things have been delayed and so we're having less legal expense. So far this year, but probably will delay somewhat into next year as some of that resumes and some of those matters.
Take a little bit more legal expense. So we'll see how that all plays out some of them are kind of stuck in the system right now with Kobin others might resume at some point in time and then just generally in margins were spending a little bit more money on.
Safety and compliance regulatory compliance has become a bigger part of the business. So that's another factor, but we think it's critical to be spending in those in those areas and then live streaming you know you're seeing a cost of live streaming basically run through our cost of revenue line. You know that probably is a little bit of a lower margin business.
For us as Weve constructed it right now, but we think it's still very appealing business and we'll see what the what the best way to manage the cost of that businesses over time. So those are some of the puts and takes in margin, but you know the headline is that our confidence remains in the ability to get to 40 plus percent overtime and a lot of what's happening in the business are things that we've been.
In expecting as we had that overall longer term objective.
The next question comes from Brent Thill from Jefferies. Please go ahead.
Good morning, sharp good to see a 15% growth the tender maybe if you can just.
Ah articulate the the next leg for tender this year.
And if you can also maybe just talk to India. I know you were a little disappointed what would need to change in India for you to turn around the trajectory there. Thank you.
Yeah.
Tend to eat the let me just in your question first India I think has been interesting to watch as I said.
You know some of our only markets that we saw the worst impacts were Spain, and Italy back in March and early April, but India has definitely been much worse impacted then even those market.
We are also pulled back on marketing, but the you know it has bottomed out lately and it does look like things are starting to open up a bad and is what we'll see in reading is right in the market. Our teams wants to go back.
Out with marketing and rebuild some of the lost momentum in India. So yes, yeah, I think was about as bad as you know it got for US I was uniquely just the only country that that was impacted that way surprisingly.
About 10 door, Yeah, I think you know a there's been because if its exposure to some of these geography that continue to have an impact as I said you know Brazil's a large market. They were seeing impacts in may and June, whereas North America.
In Western Europe, or cupboard, Oh, a better after the April bottom.
India being another one it's a little delayed for another quarter, maybe because of the international markets, but Oh, we should definitely start accelerating you know growth again in Q4 I tend to.
Next question comes from Eric Sheridan from you'd be yes. Please go ahead.
Thanks for taking the question hopefully as well with everyone on the team you alluded to during your remarks wanted to come back to the management change at Tinder just wanted to know if we get a little bit of the background of why that came about and in thinking about GM running that business now going forward any change in strategy any areas, where you see his focus by.
The difference than alleys, what's in the past thanks much.
Thanks, Terry Yeah. It's you know it was Ellie join tender or right. After we launched gold and you now has a steady hand was really critical that that's a time as tend to grow through let's first rebellion and now it's ready for its next chapter.
And I really think Jim the test track record and experience is absolutely the right either for this next chapter for tender ski season. He has a strong right right track record you know both building businesses as well as running large there's some businesses he brings a.
Unique blend of product and marketing chops and yeah I lived in the near term a we don't expect any major changes, but we do upgrade ambitions for tender and its expansion into new use cases on surface areas and yeah, I've always believed that fresh thinking can.
I find that a institutional knowledge can drives a step changes and I'm sure Jim will put his stamp on 2021 plans, but all in all I'm excited for rare tenders headed.
The next question is from you go Runion from Wedbush Securities. Please go ahead.
[laughter].
Good morning, so once that has there.
It's been a number of positives or at least rebound you know for business specifically during the pandemic.
There's also been some areas of focus over the past one two years that.
[laughter] come back I guess, namely the live experiences and Tinder you.
Noted you mentioned lives in the Mets or letter I was wondering with the current thoughts are on on those sense. You know maybe in particular, if you're building in anything and so to speak you guidance or your outlook for the year from from potential for college is around the country.
Continue remote learning in the fall.
Got it.
You know my Benson.
College campuses can have over the rest of the year.
Thanks.
Yeah. That's an interesting question online I think are you talking about festival mode and those kinds of Ah features we had launched so obviously the value of those kinds of features has come down since there's not many contracts and events going on.
<unk> going on but keep in mind. These are generally cool engagement features. So there are a direct impact on revenue is not that much. The life. He told me actually discussed and the shareholder letter is more around Sinclair shared experiences with India, South it's not dependent.
And on in real life events.
With that it's sort of a different thing.
Tend to you is a is again, it's interesting and today it was again and engage with each other than a direct revenue driver.
When you know school started closing a we did a Jonathan do you product to make sure students could continue to swipe both in their physical location. If they went back home as volumes within their schools, we saw a fairly large large spike in activity and engagement.
On the 18 to 22 year olds, you know in the early days of the a pandemic and through most of summer.
Generally towards the end of August we see some back to school seasonality. So.
So it'll be interesting to see what happens a this particular yard. The team is is ready to to figure out in a jost quickly.
It is sort of important to know that the tender you features it's sort of those doing mechanism and it's valuable to students. Even if they are not on campus now obviously it does change a few things you can't do campus.
Marketing and so we've got it resort to more digital avenues et cetera, but we're it'll be interesting to see what happens this fall.
The next question comes from Jason Helfstein from Oppenheimer. Please go ahead.
Thanks can you comment a bit on kind of the factors impacting international ARPU on organic basis, so excluding FX such as our car versus subscription in country mix and are you seeing any headwinds in international ARPU in the third quarter. Thanks.
Thanks, Jason why don't I tried to take that one so first of all you said ex FX, but it's important to note that there was a significant FX headwind in Q2 or along the lines of about $11 million. It's much less severe in Q3, probably in the order a $4 million. So that's just one aspect of it in terms of.
The overall drivers of it Ashar I think you mentioned.
We saw weakness from co did a in terms, particularly a tender in terms of our card and also some shifts to lower priced packages lower priced skews a tender.
And that really is the driver internationally, especially remembering that tinder is a bigger piece of the pie internationally that is domestically. So that's why you see some of those pressures they are kobin related, particularly the effects of the pandemic went through western Europe now, they're they're more pronounced in other places like India. So we'll still see some lingering effects, but I think you should.
We expect some pretty strong sequential acceleration international ARPU in Q3 at both at the FX impact is less but even organically I think we're going to see some meaningful improvement.
Already.
You know April to June we talked about 6% improvement at Tinder ARPU. So you can see the momentum on the ARPU side generally.
Thank you.
The next question comes from Benjamin Black from Evercore. Please go ahead.
Hey, Thanks to the question that you guys spoke about monetizing you started there is within tender with with potential new use cases could you kind of dig in just a little bit deeper into what opportunities you see there and then secondly, you mentioned 50 million of incremental marketing spend could you kinda talk about which brands that that cash it.
Earmarked for in house, you're thinking about the came from market going forward or tweak them like working before Q, if the if the macro environment remain supportive. Thank you.
Okay, Gary you should take the incremental marketing spend question I can address the unusual hysteria question a little bit.
Well, we you know one of the things that we that's become clear to US is people are turning to our platforms for the increased need to connect and communicate it was very clear during dependent making the lockdowns the.
And this has given us.
A lot of ammunition about the types of experiences we could launch one of the proof points is cost lives on a on the on Paul's. It is a video based want to many lives experience.
And the team has been trying different things they all want as the recent things they've launched is next state, which is a aversion off a dating game a alive dating game on video on the out and a you know it's in a very early days it's already.
Generating 60000 video matches, a week for instance, and it's fun and its adults communities and its an experienced people seem to like and so that's just a better we only foray into the types of things that we're talking about.
Yeah sure in terms of the marketing spend I would say that the incremental marketing spend is at virtually every one of our brands with the momentum across the brands and the big opportunities in the market on the marketing side, we want to spend up at these brands so its tender and its non tender brands its.
Are you much across the board you know the sequential number looks particularly large because obviously, we pulled back pretty heavily in Q2, So Q3 looks larger but it is a meaningful increase year over year, because we are seeing big opportunities high or ROI market TV still looks quite good.
Video generally looks good for us so we're going to spend into these opportunity to drive longer term growth. We don't know how long these properties are going to hold for.
They're not as great as they work through two but there's still quite strong and so our plans call for a that level of incremental spend in Q3 and something similar.
In Q4, right now, but we'll have to see how long this opportunity last and obviously, we have a disciplined ROI framework and for the most of our marketing spend and so you know well, we'll watch and see you kind of what opportunities are out there, but our view right now is given our momentum across the portfolio and the opportunities in the market, we want to try to keep spending.
Turning to drive growth into next year, if that opportunity is still available to us.
Great.
The next question is from Brian Fitzgerald from Wells Fargo. Please go ahead.
Thanks, guys first of all congratulations on the recent hires I'm wondering if you could talk about the efficiency of your teams during shelter in place and and whether you're given any thought to work from home more flexibility longer term any thoughts on the possibility for cost savings from that perspective.
Thanks, [laughter] I can take those Gary in terms of you know a efficiency and productivity I do think we are lucky to be in a business, where we can generally do almost everything remotely and so we haven't seen a.
Any sort of discernible impact from remote working yet.
However, you know if there are a lot of considerations here, we we're starting to hire more people and onboard them remotely and I think that's fine for some period of time, but eventually the input.
Our son interactions and the building up the team a relationships and camaraderie is important there are you know the other studies have been down in the past about innovation and et cetera, and their impact absolute Trump for remote teams more so this person team to there's also.
Considerations. There are also not everybody is.
Is dealing with those from old working very well, which is why as some of our markets and are opening up a little bit we have started.
To open our offices to get people our employees a choice. We are now open in Tokyo, Perez, Vancouver, and sold and slowly, but surely more and more employees are coming into the office and so we've got a watch and.
See how this all plays out a were not rushing to a decision, but we're definitely providing all employees a flexibility at least as far as long as we think there is any risk for this pandemic.
Thanks Sharp appreciate it.
Mhm.
The next question comes from Dick Jones from Citi. Please go ahead.
Hi, Thanks for taking my questions just I guess at a high level you know what is your view on consumer kind of perception of online dating maybe kind of domestically and internationally do you think cove it has kind of accelerated.
I'm more kind of a positive perception in a willingness to date on line and kind of you know drive these types of interactive online or just your thoughts on kind of what you've seen through covered in what you kind of expect postcode. Thanks.
Sure Yeah, I'm going to copy out this by saying that awareness and perceptions change it takes a while to form and shape and change and it's only believe it or not been three to four months Abbas dealing with it but having said that yields would be no.
So people, who have tried online dating they definitely found value and all using it more this is what evidence and all of our increased engagement and reactivation.
So people that have resisted the category.
Not clear yet that they are oh, breaking if you will does distance in larger numbers, but the likelihood of that.
Could increase as says drives on but whats will also more important is it does tell us.
It gives us the option to be able to market and tell our story is more strongly because our value proposition certainly has in queens and in a you know during this time, so that's sort of where we are way our the.
The increase value perception among people, who have traded has gone up we see it and all kinds of metrics or whether you use or breaking through and larger numbers is going to happen. That's something you have to still keep an eye on.
Great. Thank you.
This concludes our question and answer session I would now I'll turn the call ever to management for any closing remarks.
[noise]. Thank you all its you know it's been a tremendous quarter despite everything that we've been.
See I hope you all are staying safe, we're hoping to be able to talk to you again in a quarter.
Thank you for attending today's presentation you may now disconnect.
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