Q1 2021 Match Group Inc Earnings Call
[music].
Good morning, and welcome to the match group first quarter 2021 earnings Conference call.
All participants will be in listen only mode should you need assistance. Please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. Please note. This event is being recorded.
I'd like to turn the conference over to Bill Archer head of Investor Relations and corporate development. Please go ahead.
Thank you operator, and good morning, everyone.
Today's call will be led by CEO, Shar, Dubai, and CFO and CFO, Gary Smith or.
They will make a few brief remarks, and then we'll open it up for questions.
Before we start I need to remind everyone that during this call we may discuss our outlook and future performance.
These forward looking statements may be preceded by words, such as we expect we believe we anticipate or similar statements.
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 on our earnings release, and our periodic reports filed with the SEC.
I'd like to turn the call over to share.
Thank you Bill.
Good morning, and thank you for joining the call today.
For the first time in well over a year, Gary and I are actually doing this call from the same location were fully vaccinated, we've gotten on plane, which speaks to the optimism of our feeling about the situation here in the U S.
Our Q1 results reflect that the 23% year over year of growth and revenue came true re acceleration of tinder with 18% growth and non tinder brands posting a growth rate of 30% the high.
Those brands have achieved since our IPO in 2015.
A big driver of this momentum is the U S, where we have seen increases across all our brands as the quarter went on the.
The vaccination rates and control over the COVID-19 cases. These last few months have resulted in our users feeling more confident about the dating lives.
However of ultra gotten the tough reminder, that we're still not out of the woods of this pandemic.
Just a couple of months ago, we were feeling very good about the trends in India, which as you know has suffered last year.
These last few weeks my days of old started with Grim news from India, where we have of team and I still personally have a lot of friends and family, including my parents.
The dire situation in India, and somewhat worsening conditions in countries like Brazil, and even Japan that is going through its third emergency declaration.
As a reminder of that we've not gotten past the pandemic and much of the world and things could still turn on a dime. So we are still operating with the degree of uncertainty.
But back to the parts, we actually have more control over.
Tender made progress on Q1 across users subscribers in our booth and the trends look good but what's more exciting to me is the roadmap that Jim Jim Lanzone, who has now been on the CEO of Tinder since late summer of last year has laid out.
It's a journey to transform the tinder experience from a swipe match message funnel to a more multi dimensional and Richard one with more ways to self express discover flirt and connect.
And this in turn we think will open up new opportunities for increased engagement and monetization through 2022 and beyond.
Yeah.
Hinge.
Hinge continues to gain traction in the English speaking market that it is available in.
In addition to the progress they've made on revenue recently the focus of a hinge is on outcomes with the tagline designed to be deleted.
They have a track record of innovation that supports the brand promise of getting people off the phones and out on great dates with feature of suggest photo prompts most compatible Europe turn we match and most recently they introduce prompt packs into the video chat experience, which are being used on the approximate.
<unk> 20 per cent of video dates.
Also this year hinge on islands tinge labs and in House research team that is dedicated to helping daters be more successful research. There is fueling what we believe will be an exciting second half of the you're focusing on among other things and expansion of its what works Guy.
Items program for users, who need help getting out on great day again in line with their focus on outcomes for the users.
Finally, the team has been making progress on the plans for the pending hype of connect acquisition and post closing integration.
Including the various regulate regulatory approvals needed.
We still hope to be able to close by the end of Q2.
And while the growing trend of isolation and loneliness was already of thing across many parts of the world. The pandemic has really escalated its impacts on mental health.
Growing popularity of social discovery category is a testament to the need for more human interaction companion chip connections.
And while our apps of traditionally focused on romantic connections. We do think we can lend our expertise in the area of making meaningful connections. Among people you don't know in this new world evolving adjacent category.
We think we can leverage our product jobs as well as our.
Oh of Western market experience combined the type of connects video and AI technology, and our APAC market experience and we have an opportunity to succeed in both solving of social need and expanding our business footprint.
As we've said all year, we remain agile and ready to react to changing conditions.
Sitting here today, there are many reasons for us to feel optimistic about our social lives and hence our business.
Although the situation on a few parts of the world gives us appropriate pause about the uncertainty that still exists.
If nothing else. This past year has reinforced the urgency of our mission to work tirelessly on products that help people find meaningful connections love and relationships around the world.
And with that I'm going to hand, it over to Gary to talk more about the quarter.
Thanks Shar.
It's great to be here in person with you on the team in Dallas today, it's been a long time coming.
Before I jump into my remarks, I, just want to point out that we adjusted the format of our quarterly disclosure this quarter.
We combined our earnings release and shareholder letter into one document to improve convenience for shareholders and make understanding the company's results easier I hope everyone likes the new format and as always we welcome any and all feedback.
Additionally, we expect to make some further changes and enhancements to our disclosed financial metrics. Once the hyper connect acquisition closes to better reflect the key metrics of the combined business I'll provide more.
More details later this year.
With that all said I am pleased to report that we had a very strong Q1 on essentially all metrics.
Total revenue growth continued to accelerate to 23% year over year in Q1 up from 19% year over year in Q4 2020.
Acceleration of occurred at both Tinder, which grew revenue, 18% and the non tinder brands, where direct revenue was up 30% year over year.
All major non tinder brands contributed year over year direct revenue growth again in Q1.
This was the fifth consecutive quarter of non tinder brands showing growth in aggregate.
Pairs plenty of fish on the strength of live streaming and our newer brands hinge G spun BLK all grew rapidly in the quarter.
Our direct revenue was evenly split between North America, which grew 24% year over year, and international which grew 21% year over year.
Indirect revenue grew 27% year over year, marking a second consecutive strong quarter as the advertising market continued to improve.
Average subscribers increased $1 2 million over the prior year to $11 1 million, representing 12% year over year growth up 9% in North America and 15% internationally.
Tenders average subscribers were up just under 900000 year over year or 15% and came in just shy of $7 million in total.
Non tinder brands average subscribers were up over 300000 year over year or 8% for the second consecutive quarter.
Total company <unk> was up 9% year over year to 64 cents up 13% in North America, and 7% internationally.
We did get about two cents or three points of growth in the quarter from foreign exchange impacts.
Tinder ARPA was up 4% year over year, driven by platinum subscribers and additional Ala Carte sales.
Non tinder brands, 18% year over year ARPA growth was remarkable improving upon the 16% year over year growth, we saw last quarter.
All major brands increased <unk> year over year in Q1.
The launch of several Ala Carte features and price optimization at hinge as well as the plenty of fish live streaming revenue were major contributors to the ARPA of improvement again in the quarter.
As always we continue to focus on overall revenue growth not specifically on subscriber or <unk> growth in.
In Q1, we did achieve some ARPA growth at the expense of more robust subscriber growth at some of our brands in particular hinge and okcupid.
Operating income grew 38% and EBITDA grew 32% year over year in Q1.
EBITDA margins were 34% two points higher than in Q1 2020.
Overall expenses dropped three points as a percentage of revenue to 72% in Q1, 'twenty one from 75% in Q1 'twenty.
Cost of revenue grew 25% year over year impacted by higher fees web hosting cost and fees related to live streaming video of plenty of fish.
Sales and marketing spend was up $20 million or 16% year over year and represented 22% of total revenue in Q1 slightly lower than typical levels.
Product development costs grew 27% year over year, as we increased head count at several brands, notably Tinder and hinge.
G&A expense rose, 11% year over year and comprised only 13% of revenue versus 15% in the prior period.
G&A in Q1 also included $4 million of costs related to the acquisition of hyper connect.
Our gross and net leverage declined to four one times and three two times, respectively down steadily from four eight times and four six times at the time of our separation from IAC.
We're pleased to see net leverage already well below four times, we ended the quarter with $846 million of cash on hand.
For Q2, we expect total revenue of $680 million to $690 million, which was which would represent 22% to 24% year over year growth.
In Q2, we expect above 20% year over year revenue growth at both the tender and non tinder brands in aggregate.
We expect EBITDA of $255 million to $260 million in Q2, we.
We expect to spend an additional $40 million year over year in sales and marketing in Q2 compared to the prior year period.
Recall that spend levels were lower in Q2 2020, as the pandemic took hold and we adjusted spending across a number of categories, most notably sales and marketing.
Litigation costs were also lower in Q2 2020 as actions were delayed on account of the pandemic.
Note that our outlook for Q2 'twenty. One includes a few million dollars of legal and other expenses related to the Hyperconnected acquisition, which we expect to close in the quarter.
Our outlook does not yet reflect any revenue or other contribution from hyperconnected itself.
We are delighted by the broad based strength, we saw in Q1, and our improving business momentum.
To be sure risks remain and some caution in the outlook is still warranted. The world is not recovering at an even pace with slower of vaccine Rollouts and higher case counts in many markets.
Despite this we are increasingly confident that we'll be able to deliver the high end of our previously communicated revenue and EBITDA ranges for 2021.
With that I'll ask the operator to open the line for questions.
We will now begin the question and answer session to ask a question you May Press Star then one on your Touchtone phone.
If youre using a speakerphone please pick up your handset before pressing the keys to withdraw your question. Please press Star then two.
Our first question comes from Cory Carpenter from J P. Morgan. Please go ahead.
Thanks for the question.
Mark could you expand on how the U S reopening impacted user behavior into the level of pent up demand relative to your expectations you called out all of the cartridge journey, but curious what you saw with first time subs and engagement.
In the U S specifically across the portfolio and then maybe a follow up for Gary just hoping you could unpack some of the moving parts within North America subs. This quarter, given they were down a bit from <unk>. Thanks.
Sure. Thanks Cory.
Let me start I'll take the opportunity to maybe give some more color on the broader of COVID-19 trends on impacts.
So if you recall, our fab call, we spoke to how the peak season post Christmas and into the new year of is looking good.
On a much different than normal years.
As the quarter went on and vaccination rates in the U S. In particular picked up speed, we saw real divergence in countries like U S and Israel in UK for instance versus the rest of the world where vaccination rates are still lower on case counts of seeing spikes.
So the U S happens to be right now one of the few large markets, where we are seeing mobility trends.
Bob pre COVID-19 levels.
<unk>.
Some countries in Europe are starting to get close to that pre COVID-19 level too.
We've mentioned before that as we see lockdowns ease and mobility improve dating activity follows and so does propensity to pay.
So as a result, we're seeing propensity to say to pay indicators like Ala carte purchases trending in the right direction.
Across the U S and a few markets in western Europe as Lockdowns ease.
So UK, which we had highlighted is the down market back in fab.
They've also seen a solid recovery over the past.
The month ourselves as the country emerges from Lockdowns.
On the other hand, what's going on in India, right now and can only be described as <unk>.
Tyler and tragic and in fact, we had called out that India was starting to rebound. After trying 2020 that rebound has obviously stalled with mobility rates plunging over the last month.
Japan, and Brazil, or other markets to highlight that faced headwinds headwinds during the first quarter.
When lockdowns were imposed on their boats still very low on the vaccine distribution.
The situation is definitely more severe in Brazil, the Japan as I mentioned with the third emergency.
The declaration has been again up and down quite a bit.
The all of this to say this gets to the general uncertainty around trying to project what is to come next with the pandemic. There are certainly some promising signs, but given the slow progress on vaccine distribution globally as well of COVID-19 spikes in certain countries.
The new variants and mutations it's still a somewhat fluid picture around the world.
It's probably also maybe worthwhile to point out of couple of things that we're noticing.
As a result of COVID-19, we are seeing that normal seasonality patterns are not holding under COVID-19.
And.
The other thing that's shaped up as the marketing landscape, which has changed so we are seeing.
The pattern the.
Particularly among retailers who have shifted much more online.
Her spend has spread more evenly over the course of the year rather than concentrated around the holidays in Q4, and so this has changed the seasonality in marketing economics. So for instance, this year in Q1, we did not see the typically lower rates.
And that we normally do relative to Q4 and some of this has an impact on the Q4 to Q1, but I'm going to let Gary address that.
I think if you look over the last few years actually it's probably become a little bit out data to think of our business is having this strong seasonality pattern in Q1, and a big jump sequentially from Q on Q1 in terms of subs compared to Q4, I think that hasn't held actually in a while the business is much more globe.
Well now there's different trends and factors, we do things all throughout the year and so that way of thinking about the business probably isn't appropriate which is why we encourage people to look at year over year trends of subscribers as opposed to looking at things sequentially. So I would discourage people from focusing too much on that so.
I think that pattern was already breaking away as Shar mentioned COVID-19 is only a further muted that pattern as everybody knows on COVID-19 kind of every day is like Groundhog day Theres not much difference in the day in January of February versus the day in November or December. So I think that that has further come unraveled as part of COVID-19.
And because of some of these changing dynamics, we adjusted our business slightly as I mentioned in my remarks.
We made some trade offs of who at the expense of some subscriber growth and so you see that we focused on delivering overall revenue growth.
In the non Tinder brands, we delivered 30%.
Year over year revenue growth in North America, we had high Twenty's revenue growth year over year. So we feel really good about the revenue growth. We delivered the components are going to vary depending on factors in the markets. As Shar also mentioned, we're seeing a more competitive marketing environment. As a result of COVID-19 with kind of always on marketing spend by.
A lot of retailers and others, who have moved their business online. So we haven't seen as many spend opportunities and we've had to adjust to that which is also affecting some of the trends in our business. So the good news is we have a very dynamic business. We're very nimble, we can adjust to the trends and things that are going on in the market, particularly around marketing.
Ben we did it when COVID-19 first hit back last year in March and April we've adjusted again throughout the year with COVID-19 and again in the first quarter and we will continue to do that and so youre going to see variability in our trends certainly when you look sequentially as a result of us trying to manage for all of those factors and differences in behavior.
And I'm sure we're going to see differences in behavior now as the reopening happens you go into Q2, and Q3, and we're going to adjust our spend.
Something Thats reflected for example in our guidance as we look at the Q2 expectations as well.
Yeah.
Okay.
Hopefully that answers your questions Corey.
And with that maybe we'll go to the next question.
Next question comes from Nick Jones from Citi. Please go ahead.
Great. Thanks for taking the question.
Maybe on social discovery can you expand a little bit more on your plans within this category. How are you thinking about the opportunities of interest groups in social.
Social entertainment is more of a social network approach or more kind of of one to many approach and then maybe the last thing you touched on.
Touch on how you address some of the safety concerns within the products. Thanks.
Okay I can take it.
So here's how I see it.
We are on the business of helping people make meaningful connections with people you don't know our definition of meaningful connections generally implies a one to one connection.
So on our dating platforms. These connections are generally with the objective of romantic relationships and the intent to meet in real life.
And if you think about the traditional the dating flow. It is discover true revealing profiles for instance match and then message chat video chat now and the ultimate goal is to get to a one to one conversation that hopefully leads to a date.
But technology has finally come to a point that it's now enabling people to meet of interact with people more broadly and through much richer experiences online.
And the social discovery at least the bits that are interesting to US is also ultimately about a one to one connection and conversation, but it is more of Platonic and does not have the necessary expectation of meeting in real life, it's not constrained by geography, or even gender for that matter.
But it also follows a similar discoverer of match message chat video chat paradigm that we have on dating apps.
The difference is.
These apps on new leveraging new technology. The way you discover of people in order to match and chat with them is much more social many too many interactive dynamic and in the lot of ways much more akin to how people meet in the real world. So.
So the technology like live video audio of et cetera has allowed these apps to build experiences for people to meet on a more social and entertaining setting on line, but eventually they are at least the ones that are on the use cases that are interesting to us are eventually optimize to help you meet someone that you.
Share something wed find something interesting to talk about and wants to continue of one to one conversation.
These social activities can be anything from.
Audio forums to multi player games to watch parties to two streamers competing in our rap battle all kinds of social activities that helps people engage and discover and learn about others and chat.
So in some ways, it's the easy way to think about it is the these are online analogs of meeting and parties and concerts and events.
And if you.
As you can imagine some of these multi dimensional ways of discovering people also makes a lot of sense on some of our larger and more social dating platform.
As we've proven out by pulse of alive.
The recently of record number of users on path watched and engaged with the premier of our show through our partnership the discovery plus.
Or are they participate of watch of dating game called next date.
Or the ability of community around the cause of our stream or they like and it is another way to more serendipitously discover of people and then eventually match on chat.
Swipe night on Tinder was another somewhat similar construct.
If you're both covered for Graham you certainly had something to talk about and for those who don't have the specific swipe night reference covering for Graham was not a very popular thing to do.
So the other thing I'd say is while the social experiences.
Our fun and entertaining they are not designed to be entertainment for the sake of passive entertainment rather they are fun and entertaining ways that sort of has an alibi on an avenue to ultimately drive connections and conversations which is really the point of interest for us and that's why we think there is so much.
Synergy in the technology.
I mean dating and social discovery, but also they are very distinct use cases, so hopefully that gives a little bit more sort of a broader view of how we think about it obviously.
So much more on this to come as we close type of connect and we've sort of foray into the various areas.
About safety. So look we safety has been existential to us since the beginning of our category and.
As we mentioned on our letter and I am sure.
We will talk more about it we make huge investments in it.
One of the reasons, we like hyper connect.
As a business and technology is theyre very maniacal focus on safety and the technologies they've developed.
Specifically things like device side, AI, which of privacy friendly ways of helping with moderation and safety. So it is going to be a huge area for us but this is an area that we feel we have real expertise and.
Great. Thank you.
The next question comes from Schroeder coach area from Evercore ISI. Please go ahead.
Okay. Thank you let me try two please could you. Please provide an update on your conversations with Google on the changes that are coming up in September. This year I know you talked about in the last earnings call, but if theres any update that you could provide us that'd be great.
And then similarly, if you have any thoughts on Apple iOS in the current regulatory environment here in the U S and in Europe. That's the first question on the second question is if you could please provide a little bit more color on.
On what.
What were the key drivers that you think have the most impact in bringing hinged on 13th most of that most downloaded the third.
In them you know in a couple of years that'd be great. Thanks.
Okay, Let me at least try the the questions about Google and Apple.
First of all just generally there is a lot going on in the global regulatory environment The court system.
Related to Google and Apple as you probably know.
It's a very fluid situation, it's really hard to predict exactly how this is going to play out or what comes next but there's I think a few things debt.
That are apparent the first is that there is concern globally among regulators about the behavior of Apple and Google as it relates to their conduct with the App ecosystem.
In the U S. There was a hearing in the Senate.
The committee last week.
And politicians in the U S rarely agree on anything.
On the one thing they seem to agree on is there are significant concerns related to the app ecosystem as it relates to both Google and Apple and.
And we've seen the same kind of concerns come out of Australia. We've seen the same concerns coming out of the European Union and frankly, we expect that they're going to continue to come from various jurisdictions around the world.
Now, we're realistic and that we know the pace of regulatory change is slow and we don't know how long it's going to take to see change what we would like to see is actually Apple and Google recognizing the valid concerns around their behaviors related to the ecosystem and <unk>.
Proactive changes to address developers and consumers concerns about the.
Yeah ecosystem don't know if that's going to happen, we're in conversations with Apple and Google about this we're happy to share our thoughts whenever they want to listen to our thoughts on this we think there are ways to improve the situation, but don't know how that's going to play out in particular as it relates to Google they've announced the policy change effective.
Later this year.
We have been having discussions with them about the economic impact of that.
And we continue to have those discussions and we're hopeful that we're going to find the resolution that is <unk>.
Compelling for both us and Google on that front, but given the fluidity of the situation of everything else, it's difficult to say how any of this is going to play out. We are we are watching it obviously with a lot of interest.
The other thing that is of significant development that has happened in the iOS ecosystem really just this week is the changes they've made to the collection of IVF.
Which is integrated into the $14 five iOS update that has just started to rollout and so we don't know yet adoption of that is still very low we don't know yet exactly what the impacts of ramifications of that are going to be.
And so we're monitoring that and I would say we've been preparing for this for a while we feel we're well equipped to manage through the changes.
Fortunately, we're not a significantly add.
The revenue generating business most of our revenue comes directly from the consumer is not on we're not AD supported so we're going to be less impacted than virtually anybody else out there.
But we have been preparing we've adopted the Apple S. K AD network.
<unk>.
We also have a lot of history and experience and user acquisition without this level of attribution, we've been operating in TV and out of home for a long time. So we have a lot of tools and preparedness to handle the different environment, but admittedly, it's going to be of different environment with these changes the idea FAA everyone's going on.
To adjust US included we feel prepared for that but we'll have to see how that all plays out and I think it's going to be a little bit volatile on the user acquisition front for us and for others frankly over the coming weeks and months until some of this plays out.
I would expect that there will be adjustments in the marketplace itself changes to pricing and user acquisition efficiency as the market adjusts to a changing set of circumstances, but it's really difficult still to quantify or estimate what those impacts are going to be but we will learn a lot more of the coming quarter and we will.
I'll come back on our next earnings call with a better update in terms of the changes the idea of FAA and the and the impact of all of that so a lot going on on the Apple and Google front.
In a multitude of ways and.
We are on top of it all as best we can and will continue to update everybody on it.
Okay.
The next question Im sorry.
Sorry.
No go ahead.
The next question comes from Justin Patterson from Keybanc. Please go ahead.
Great. Thank you two if I can share on hinge I was curious what are the investments and steps are needed to capture but number two spot on the U S and free.
Gary safety, how much of that 100 million spend is one time versus recurring in nature. Thank you.
Sure I just realized should wait the had asked the hinge question too so maybe I'll address it a little bit more broadly.
You know.
We said, we said hinge has moved from I forget 13, or so of spot when we acquire them two of the three.
And they've got a triple revenue last year, we were hoping the double revenue this year.
All of that is driven by both user growth and improvements within subscription on Ala Carte.
And this is just you asked on there is the only currently available in.
English speaking markets of few English speaking market.
The us being the most important market for them.
However, the thing to remember about hinge is it has really grown in the few of the largest cities in the U S and mostly on the backs of word of mouth.
And word of mouth is really strong for hinge because the product really resonates with its user base.
So as I said in my opening remarks as hinge has generally done in the past the second half a roadmap of hinges again focused on helping users have greater outcomes on the App and this in turn will help word of mouth.
Marketing and as the World opens up a little bad people go hang out and talk to each other about their dating lives on successes et cetera, all of that should be helpful to hinge.
The one other thing I would note for the U S itself.
On a windows of hinge in smaller cities and the rest of the U S is still quite low.
So we do have an opportunity to target marketing spend into strengthening and broadening awareness more broadly of crowds across the U S, which is something we're going to do this year as well.
Gary are you going to take on trust and safety.
The $100 million that we spend is obviously a meaningful number because safety is a key component of what we do we've been talking about it a lot recently and it's always been a key focus of ours, keeping our user safe.
Virtually all of the 100 million is recurring.
For us we have some one time project here and there, but theyre very tiny component of the $100 million and I think the way to think of the 100 million is there as the baseline safety things that we need to provide to our users until we've got.
Product and engineering head count and we've got customer care agents on all sorts of things embedded into that number and we also have a central safety team now there is making sure we maintain the standards across our brands that make sense to maintain and we also contemplate new safety initiatives.
<unk> groundbreaking things that we're doing on the safety front to keep pushing ourselves and the category forward, We announced a couple of those over the last a little bit wanted to bring out background checks to our users and another to enhance our processes on how we relate to our users and we're going to keep doing that theres going to be a number of flagship initiatives, we're going to roll.
Out across the brands as well as improvements of the safety baseline to continue to invest and to make sure. We're keeping our user safe, we think thats not only mission critical but compelling long term strategic investment for us and we're going to keep making it. So we expect that number to continue to grow as our.
Business continues to grow.
Thank you.
The next question comes from Alexandra Staiger from UBS. Please go ahead.
Thanks for taking my questions.
So with Tinder platinum now being available to all users could you maybe share some of like the trends in our learnings youre seeing across your user base and then second.
How should we think about the different components of the Timna ARPA growth as we move through the year.
Including the contribution from Todd on the recovering all of the card revenue and then any potential new revenue features. Thank you so much.
Sure.
Yeah, I can take that.
So the platinum was always designed to be a high value tier.
Most of them for the Super user in order to help them Inc.
<unk> meaningfully the matches on messages and so we've been steadily testing it to make sure there's actually meet the promise and the great News is of does and as of April we have rolled it out fully across all geographies. However.
However, it is still mostly merchandize to subscribers, who have experience with the product and they understand the value and hence most of the take rate is through upgrades to those premium tier, which is obviously a higher price tier.
Platinum is already a meaningful contributor to our <unk> and revenue.
And it is on track to cross our goal of.
On millions subscribers that share.
And so we do expect solid <unk> growth of Tinder for the rest of the year definitely helped by platinum and as one of those other.
All of the card growth et cetera.
It does not contemplate any new major revenue features however.
Okay.
The next question comes from John Blackledge from Cowen. Please go ahead.
Great. Thanks at the non Tinder brands of reported revenue growth accelerated again this quarter.
You highlighted earlier.
Earlier in the call maybe could you discuss the other key drivers and then kind of how should we think about the growth of the non tinder businesses as we round through the year on in the comps get a bit more difficult. Thank you.
Thanks, John why don't I give that a shot so.
We're obviously very happy with what's going on in the non Tinder brands.
<unk>, 30% growth this year of the best we've seen since IPO of <unk> said was really stellar and I think it probably helps to unpack a little bit more of what's going on inside what we aggregate of the non tinder brands and really I think you've got two categories of businesses in there you've got what we could call the emerge.
<unk> one's high growth brands hinge BLK cheaper to name a few and we're seeing growth in that set of businesses, that's probably approaching 100%, maybe its 75% of year over year or something like that so those businesses are growing very rapidly there, obviously newer faster growing and smaller businesses.
And then you've got the long standing brands, the <unk> and matches on Okcupid <unk> of the world that have been around for a long time. They are generally larger businesses and those businesses are also growing.
Thirdly double digits.
In aggregate, that's as a result of great product and marketing work that our teams have been doing as.
As well as new initiatives that we've brought into some of those businesses like live streaming of plenty of fish international expansion at Okcupid et cetera, all of the brands in those buckets in that bucket are performing well and so when you combine that the emerging brands plus the longer standing brands growing strongly you.
Get to the 30% growth now over time.
I think that we'll probably expect some moderation of growth in the long standing brands bucket, maybe that gets into the single digits somewhere, but we're obviously aspiring for more and we've shown the ability to generate more so we'll see how that ends up going and then as the emerging businesses become larger obviously the growth rate will.
Slow as well, but one of the things that we need to try to do is make some more bets for the future and innovate and come up with new things that can help drive growth in that bucket as well so behind the hinges BLK and <unk> of the world. We've got businesses like all below like Hawaii in the Muslim markets that we are optimistic we will.
Great growth in the future as well and we'll continue to try to innovate in the emerging bucket.
So that's kind of of the strategy and as all of that comes together. The goal is to achieve 15% to 20% topline growth in the non tinder brands.
As we.
Kind of implement all of the various strategies that I just went through and.
One thing that we're thinking about is frankly, how to adjust our disclosure to help make some of these pictures a little more clear and give people a little more insight into the various growth patterns inside the non tinder brands bucket and so I mentioned in my earlier remarks that we're thinking through some changes on the disclosure front and hopefully we'll have some more for you as the year progresses.
Get a clearer sense quarter to quarter of the trends in some of these buckets inside of the tender the non tinder brands. So more of that to come but I wanted to give you some of that color. So you could have a sense of some of the dynamics and trends overall across the non tinder brands hopefully that was helpful.
Yes.
The next question comes from Brian Fitzgerald from Wells Fargo. Please go ahead.
And we wanted to ask a follow on on Hyperconnected, maybe when you think about that asset and the opportunity. There. What would you say is most attractive and where would you want to prioritize your time on your efforts is it scaling as our in accoona across existing.
Markets and extending those products and brands the new additional geographies or is it increasing monetization at those two or is it leveraging hyperconnected <unk> technology and expertise.
Across your existing portfolio.
Thanks.
Sure. So obviously until we close theres not a whole lot I can share yet, but as we said back in fab.
We were excited by hydro connect for several reasons of fast growing revenue business revenue generating business and social discovery that we can help scale, particularly investment markets and other markets that we have expertise in.
They're real time video technology as well as they are.
Hi.
Robots privacy friendly moderation technology, all of which is increasingly relevant and important to our dating platforms and also very strong talented team with over 200 engineers in Asia, where we believe which we believe is a strategically important growth market.
For us and to all of those are rationale still holds for us and as soon as the acquisition closes we hope to be able to share more details of what we can do together so hopefully next call.
Awesome, Thanks sharp mhm.
Uh-huh.
The next question comes from Brent Thill from Jefferies. Please go ahead.
On your guidance.
It seems roughly 23% year over year revenue growth, which is in line with Q1, despite a really easy comp.
Just talk to any of that.
<unk> to consider there.
Oh on on EBITDA.
It looks like a little bit below what the <unk>.
Street was expecting can you just give us a sense on on both the both the topline on the bottom line. Thanks.
Sure happy to do that so look I think that.
We're optimistic about Q2 that the momentum is going to continue we provided a range of estimated topline growth for Q2 and.
That range contemplates the potential for an acceleration.
Into Q2 compared to Q1 on the on a year over year basis, as Shar said Theres still a lot of risk out there and theres a lot of markets that are still challenging. So the guidance I think reflects that but the U S is clearly, giving us a nice tailwind and we're optimistic that Europe is going to continue to get better and so we feel very good about.
Q2, and I think the possibility for continued acceleration growth is absolutely there.
For us and so there is a little bit of conservatism reflected in the in the outlook to be mindful of the uncertain World, We're still operating in but our path to Reacceleration in Q2 is definitely on the table as far as the EBITDA Guide.
For Q2 look the reality is that.
We are in kind of a unique moment in time, where after people have been cooped up in their houses for 14 15 months, we're starting to see a path to get back out there and socialize and frankly as someone who has been doing it for the last few days. It's after the vaccine it feels pretty good and people are going to want to do it.
And so we want to spend into that opportunity where people are going to go out there and theyre going to want a date and meet people and socialize and that is what we are expert in and so spending a little bit more money than we might have otherwise anticipated.
Of this unique moment in time and encouraging people to go out of me people is something we absolutely want to do it's good long term for our business.
And so that's why you see a $40 million increase in marketing spend in our numbers for Q2 and you have to remember frankly that last Q2 and 2020, we pulled back pretty hard on sales and marketing. So it's a big jump, but it was abnormally low in Q2 last year and.
It's higher this year in part off the lower comp and in part because we are in this unique moment of time and frankly, we might spend into Q3 as well last year, we had a great summer the true.
We're really strong and if we see people start to really get out there and socialized through Q3, we may spend a little more heavily into Q3 as well to take advantage of this moment in time as the economy expands and people feel happy and start socializing. So that's something that we're absolutely thinking about longer term as we've turned the corner from Q2.
To Q3, as well and we think of positioned our business to continue performing well from a topline perspective, this year and frankly into next year.
Thanks, Gary.
The last question comes from Jason <unk> from Oppenheimer. Please go ahead.
Thanks, I'll ask two.
So it'll be quick so just on hinge I think you said in the letter.
The.
In 2022, it would be more of an international focus just maybe expand a little bit there or is that more on driving engagement of you actually think you can start to drive some monetization internationally and then just to the implied guidance for the back half. If you do kind of like a two year average taking out the comps from last year. It does assume.
There's like a D cell on the business.
Even though on the two year comp obviously.
The second quarter implies stability. So just asking of you are seeing anything behind that or that just overall being conservative with the back end of things.
We wanted to take the guidance sure sure.
Yes, I think there is some conservatism in the second half of the year, because theres still a lot of uncertainty don't know how some of these international markets are going to recover don't know exactly how these trends are going to play out and so we're going to watch and wait and see on that.
For a little bit more time, plus we did have a very good Q3 last year. So it does set up a tougher comp.
The people did get back out after the two months of Lockdown and we did have a strong performance. So you have to kind of bear that in mind as you look at.
How we can grow off of Q3 Q4, with a weaker number and so I.
I think theres more room for growth there, but Q3 is going to be interesting to see how that all plays out.
And so we are being a little cautious on Q3 and four until we see a little bit more how that goes plus you have to remember we did have some initiatives like live streaming that also made the comp a little tougher we didn't have any live streaming revenue in Q3 or.
Our Q4, a year prior and now we will have that to compare ourselves to so there's some of that as well in the dynamics of the comparables that youll have to factor in so there's a few moving parts to it that I think you just have to be mindful of as you look at Q3, and Q4 growth rates and what sort of reasonable to expect based on both the dynamics. We saw on the market last year as well as the <unk>.
The initiatives, we rolled out on how we reacted to COVID-19, which is true both on an issue of the standpoint and also as I was saying to Brent on the answer to his question on of spending standpoint as well.
And.
About hinge on international so.
Tinder has been focused on.
Both user experience and monetization for English speaking markets only and they are growing nicely in the U S of course, but also in UK and Australia for instance.
And our plan for 2021 is largely expanding and broadening growth in these markets.
As I mentioned before the second half road map is focused on a number of features to further optimize user experience on outcomes, which are generally relevant.
Yeah.
Across the user base.
Internationalization, including basics, such as translation does not yet exist on hinge and so that is something we are targeting for 2022 and that will come with.
Plans to expand markets in.
The non English speaking markets are.
The next year and beyond.
So with that.
We're going to wrap up.
Thank you everyone for joining us today as of is driving in this morning, I heard about the CDC report that a record low number of babies were born in the U S. In 2020, so as a nation be of a lot of catching up to do so thank you again for joining us on stay safe out there.
Sure.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.
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