Q1 2025 Match Group Inc Earnings Call
The End
Speaker Change: Good day and welcome to the Match Group First Quarter 2025 Earnings Conference Call. All participants will be in a listen only mode. Should you need assistance, please signal conference specialists by pressing the start key, followed by zero.
Speaker Change: After today's presentation, there will be an opportunity to ask questions.
Speaker Change: To ask a question, you may press star than one on your telephone keypad. And to withdraw your question, please press star, Vintu. Please note this event is being recorded. I would now like to turn the conference over to Mrs. Tanny Shelburne, Senior Vice President of Investor Relations. Please go ahead, ma'am.
Tanny Shelburne: Thank you operator and good morning everyone. Today's call will be led by CEO , Spencer Rascoff and CFO , Steven Bailey. They'll make a few brief remarks and then we'll open her up for questions.
Speaker Change: Before we start, I need to remind everyone that during this call we may discuss our outlook and future performance.
Speaker Change: These forward-looking statements may be preceded by words such as we expect, we believe, we anticipate, or similar statements.
Speaker Change: These statements are subject to risks and uncertainties, and our actual results could differ materially from the views expressed today.
Speaker Change: Some of these risks have been set forth in our earnings release and our periodic reports with the SEC.
Speaker Change: Also, during this call, we will discuss certain non-GAAP financial measures.
Speaker Change: Reconciliation to the most directly comparable GAAP financial measures are provided in the published materials on our IR website.
Speaker Change: These non-GAAP measures are not intended to be a substitute for our gap results. With that, I'd like to turn the call over to Spencer.
Spencer Rascoff: Thanks, Tanny. Good morning, everyone. This is my first full-quarter earnings call as CEO and I want to start by saying how proud I am to be here and how energized I am by the opportunity ahead. We are a company with a powerful mission to spark meaningful connections.
Spencer Rascoff: Our job is to deliver on that mission with urgency, excellence, and a consumer first mindset by building products that reflect how people want to connect today.
Spencer Rascoff: Over the last three months, I have visited many of our offices around the world, spoken with hundreds of employees and gathered insights from thousands of users across our apps.
Spencer Rascoff: Each conversation with a Match Group team member has reinforced how deeply our people believe in this mission.
Spencer Rascoff: That mission orientation, combined with our product innovation and platform scale, puts us in a strong position to act decisively as we chart the future of personal connection. [inaudible]
Spencer Rascoff: One of my priorities is evolving Match Group from a collection of independently managed brands into a unified product-led organization that prioritizes innovation and user outcomes and operates as one company, not four divisions, to gain the full benefits of our scale and multi-brand portfolio. Daniel Salmon, Ross Sandler, Mark Kelley, John McLeod, John McLeod, John McLeod, John McLeod, John McLeod, John McLeod, John
Spencer Rascoff: Today, we announced a reorganization centralizing key functions, including select technology and data services, customer care and content moderation, media buying and international go-to-market functions, while still allowing each brand to maintain their independence and product roadmaps.
Spencer Rascoff: We've also taken some hard but appropriate steps today to sharpen our focus, including a planned 13% reduction of our workforce.
Spencer Rascoff: as well as closing a number of open roles and further tightening operating expenses.
Spencer Rascoff: These actions position us to achieve more than 100 million in annualized savings, including approximately 45 million of in-year savings in 2025.
Spencer Rascoff: But more importantly, these changes make us more nimble, more focused, and better aligned, enabling faster decision making, reducing management layers, including around one in five managers overall, so individuals can have greater impact, and accelerating our ability to ship products and features that deliver meaningful user outcomes. Thank you very much.
Spencer Rascoff: These savings will enable us to deliver the margin goals we outlined at our December investor day, while also providing the ability to invest in ways that we believe will return us to growth.
Spencer Rascoff: I want to acknowledge the extraordinary contributions from and give thanks to those who believe in the company as a result of these decisions.
Spencer Rascoff: Their hard work helps strengthen our position and make future success more possible.
Spencer Rascoff: We're acting with urgency making bold long-term decisions and relentlessly prioritizing user outcomes.
Spencer Rascoff: The best tech companies operate in product-first builder mode, and this next chapter at Match Group is about getting back to that. Fewer layers, faster execution, and a culture focused on creating value through innovation. [inaudible]
Spencer Rascoff: This is a big change, and the company is responding positively to this culture shift. We are already operating with greater clarity, discipline, and speed. In fact, our solid financial and operating performance to start the year reflects the focus and resilience of our teams. [inaudible]
Spencer Rascoff: In Q1, both Match Group Total Revenue and adjusted operating income came in above the high end of our guidance, driven by business performance that was in line with expectations, favorable foreign exchange trends, and ongoing rigorous cost management.
Spencer Rascoff: Turning now to Tinder, our biggest brand and the number one most downloaded dating app worldwide. We are making tangible progress on our product roadmap and starting to see green shoots.
Spencer Rascoff: Our priorities at Tinder are to rebuild trust on the platform through a cleaner ecosystem, to deliver better user outcomes, and to re-energize the user experience, all of which are foundational to driving long-term engagement and sustainable growth.
Spencer Rascoff: While our hinge brand leads the category for those looking for a serious relationship or what we call intentioned dating, Tinder is leading up for younger users looking for lighter, lower pressure connections.
Spencer Rascoff: To meet the needs of this Gen Z audience, age 18 to 27, we're focused on building features that feel more fun and more spontaneous. Our effort is on reducing friction in how people engage with one another and evolving the experience to reflect a broader definition of connection.
We're already seeing traction with this approach.
Spencer Rascoff: Let me give you a few examples of how this is already showing up in Tinder. [inaudible]
Spencer Rascoff: We recently launched our double date feature in several European markets, allowing users to team up with friend and match with other pairs.
Spencer Rascoff: It's resonating with our younger audience. Nearly 90% of double-date profiles are from users under 29, and women using double-date are three times as likely to swipe right on a pair than on an individual. [inaudible]
Spencer Rascoff: The feature isn't just driving engagement, it's also growing our audience with nearly 12% of invited users in these markets representing new registrations or reactivations. [inaudible]
Spencer Rascoff: We plan to launch in several additional European, Asian, and Latin American markets soon as we seek to create more fun opportunities for connection. The US launch is planned for later this year.
Spencer Rascoff: In addition, we launched the game game on iOS in numerous markets worldwide. This voice-based experience was out for only the month of April , and it let users practice flirting with an artificial intelligence date to learn to break the ice through humor, storytelling, and playful interaction. [inaudible]
Spencer Rascoff: Approximately three-quarters of a million Tinder users played it last month. Demonstrating its ability to tackle one of the most common challenges we hear. Just starting a conversation can feel intimidating.
Spencer Rascoff: In addition to demonstrating our leading edge use case of AI, the game game drove significant viral awareness and reconsideration of Tinder and gave us deep insights into how our users interact with Voice AI which will inform future product development.
Spencer Rascoff: And while we have been utilizing AI and machine learning for years in our core matching algorithm and in trust and safety efforts, we are bringing AI deeper into our product experience.
Spencer Rascoff: We're testing a new AI-enabled discovery experience in New Zealand that marks a major leap in utilizing AI in a new way to improve dating outcomes.
Spencer Rascoff: With permission of our users, it takes in more attributes such as insights glean from their phones' camera roll and responses to dynamic questions about what they're seeking to generate a curated, personalized, daily match.
Spencer Rascoff: Released signs are promising and we see this as a clear example of how AI and product innovation can drive more relevant, higher quality connections and reflects our commitment to reimagining the experience beyond this white feature.
Spencer Rascoff: Each of these features is a clear example of how we're reshaping the experience to better serve our target audiences. We're listening, learning, and building with their needs in mind. We are encouraged by our progress to date, and I look forward to sharing more as we move forward.
Spencer Rascoff: Finally, we continue to invest in our industry-leading trust and safety initiatives to ensure that Tinder and other Match Group apps are the safest way to meet new people. We've been testing several new features aimed at validating the authenticity of users.
Spencer Rascoff: In tests of these features, we've seen a more than 15% reduction in bad actor reports.
Spencer Rascoff: Last week, we announced another cutting-edge innovation aimed at ensuring user authenticity, our collaboration as the first dating or consumer social company to integrate with world ID.
Spencer Rascoff: Our broad-scale global reach, multi-brand portfolio, and our ability to invest more in trust and safety than anyone in our category, is an advantage that also improves user outcomes.
Spencer Rascoff: At Hinge, user momentum remains strong and we're seeing continued great product traction.
Spencer Rascoff: Since launching globally in late March, our new AI-powered recommendation algorithm has driven a greater than 15% increase in matches and contact exchanges, demonstrating the ability of our investment in AI to significantly improve user outcomes.
Spencer Rascoff: We're also continuing to enhance in-app coaching, including by providing prompt feedback, an AI-powered feature that suggests improvements to profile prompts in real time, in the onboarding flow, to increase the impact and its exposure.
Spencer Rascoff: We're planning to test warm introductions in the coming months which will highlight shared interests to improve match quality. With continued innovation, strong brand resonance and global expansion underway, we are confident hinge is well positioned to continue its leadership in the intentioned dating category.
Speaker Change: Turning to International Expansion. One of Match Group's core strengths is our ability to build and acquire compelling consumer apps.
Speaker Change: As it seeks to serve intention datars in new markets. The league is planning to launch in the Middle East and India to meet the demand for premium experiences in these regions Azar is continuing its U S and western Europe expansion and pairs recently launched in South Korea.
Speaker Change: Other transformation small focused teams across the company are fueling a wave of innovation from college focused concepts out of our New York Office to a group meetup experience boar team to offline events experimentation in Japan to changes to.
Speaker Change: And by leveraging a I staying relentlessly user first and moving with speed, we have a real opportunity to reignite and redefine the future of human connection the impact of deep learning is already reshaping our matching algorithms across the entire company powering more personalized more relevant and more effective.
Speaker Change: And this is just the beginning.
Speaker Change: Management team and I believe in our mission I believe in our team and I believe we'll execute to drive growth and ultimately shareholder value over time, along those lines. Following our last earnings call. Just four days into my role I personally purchase $2 million of match Groupstock at an average price Ok.
Speaker Change: One quarter later today my conviction in our mission our strategy and our team has only strengthened given my confidence in our company I plan to purchase an additional $1 million of stock soon after our trading window opens now I'll hand, it over to Steve to walk through the financials. Thank you.
Speaker Change: Hello, everyone. Thank you for joining the call. This morning, we're pleased with our starts of the year and with our Q1 financial results as Spencer mentioned, both match group total revenue and AOI exceeded the high end of our guidance range in the quarter driven by business performance that was I.
Speaker Change: Favorable F X trends and ongoing cost discipline in Q1 match group's total revenue was 831 million down 3% year over year down 1% year over year F X neutral FX headwinds were $5 million less than we anticipated.
Speaker Change: House earnings call, excluding the exit of our live streaming businesses total revenue was down 2% year over year up 1% year over year FX M. R. Pp grew 1% to $19.07, while payers declined 5% year over year to 14.2 million.
Speaker Change: Two 9.1 million and R. P. P decline, 1% year over year to $16.38 year over year pair declines were impacted by user trends, which are still declining year over year, but at a stable rate tinder's monthly active percent.
Speaker Change: Operating income in the quarter was 193 million down 8% year over year, representing an O I margin of 42% a O in the quarter was 228 million down 5% year over year, representing an a O I margin of 49%.
Speaker Change: Hinge continued its strong momentum in Q1 with direct revenue of 152 million up 23% year over year up 24% FX M. Hinges strong download performance continue to cross both core English speaking and western European markets.
Speaker Change: Banking across 10 countries and the number two ranking in its western European markets overall in the quarter payers grew 19% year over year to 1.7 million driven by strong user growth RP grew.
Speaker Change: Driven largely by subscription price optimizations across several core markets Oi was 29 million in the quarter up 55% year over year, representing an O I margin of 19% AOI was 43 million up 47% year over year, representing an [noise].
Speaker Change: 8% E N E's direct revenue was 149 million down 12% year over year down 11% Upx on driven by evergreen brands declined of 15% year over year, partially offset by a 3% year over year increase at emerging brands excellent.
Speaker Change: I need direct revenue was down 8% year over year down 7% year over year FX M. E is executing on its consolidation plans and is on track to migrate plenty of fish and Meatic. It's final two brands later this year payers declined 16% year over year to two point.
Speaker Change: RPP rose, 5% year over year to $20.76 in Q1, EE delivered O I of 7 million down 61% year over year, representing an O I margin of 4% AOI of 29 million was down 25%.
Speaker Change: Partially due to the timing of marketing spend for an AI margin of 19%.
Speaker Change: Match Group Asia delivered direct revenue of 64 million down 11% year over year down 7% FX M X live direct revenue was down 2% year over year up 3% FX N and Q1 Azar direct revenue was down 1% year over year up 5%.
Speaker Change: As a continued executing on his European and U S expansion efforts Harris direct revenue was down 3% year over year flat year over year F X M driven by ongoing stability in the Japanese market across match group Asia payers increased 5% year over year to 1 million.
Speaker Change: Repeat declined 15% year over year to $21.23, partially due to FX impacts Oi was $3 million in the quarter, representing an oi margin of 5% and AI was 19 million up 43% year over year, representing an.
Speaker Change: L I and AOI benefited from a tax reserve release in the quarter moving to profitability in Q1 total company Oi was 173 million down 7% year over year, representing a margin of 21% and Ali was 275 million.
Speaker Change: 2% year over year, representing a margin of 33% looking at costs, including stock based compensation expense total expenses were down 2% year over year in Q1 cost of revenue decreased 8% year over year and represented 29% of total.
Speaker Change: Year over year, driven by lower IP fees and reduced variable expenses from the shutdown of our live streaming services mid last year, selling and marketing costs decreased 8 million or 5% year over year due to lower marketing spend at tender and MAGE and with.
Speaker Change: 19%.
Speaker Change: General administrative costs increased 5% year over year up one point year over year as a percent of total revenue to 13% driven primarily by severance and other employee compensation related expenses product development costs grew 4% year over year as a result.
Speaker Change: Primarily at Tinder, and Hench, and we're up one point as a percent of total revenue to 15% depreciation and amortization increased by $1 million year over year to 32 million turning to the balance sheet. Our gross leverage was 2.8 times a network.
Speaker Change: At the end of Q1, we ended the quarter with 414 million of cash cash equivalents and short term investments on hand in Q1, we repurchased 6.1 million of our shares at an average price of $32 per share on a trade date basis for a total of 105.
Speaker Change: Paid 48 million in dividends deploying over 135% of our free cash flow for capital return to shareholders. We maintain our commitment to return 100% of free cash flow to shareholders through share buybacks in the dividend in late January we pay.
Speaker Change: 5 million outstanding balance on our term loan with cash on hand, now turning to guidance. We expect Q2 total revenue for match group of 850 million to 860 million down 2% to flat year over year. This range assumes a one point yearver.
Speaker Change: And a one point year over year headwind for the exit of Acuna and other of our live streaming businesses F X N X live we expect total revenue to be down 2% to down 1% year over year.
Speaker Change: We expect match group, a oi of 295 million to 300 million in Q2, representing a year over year decline of 3%, an a O I margin of approximately 35% at the midpoint of the ranges.
Speaker Change: We expect costs associated with restructuring of our operations to be 17 million in the quarter.
Speaker Change: Excluding these restructuring costs, we expect AOI to increase year over year by 3% and a oi margins to be approximately 37% at the midpoint of the ranges.
Speaker Change: Our full year 2025 match group total revenue guidance of 3.375 to 3.5 billion remains unchanged. Our four year results could be impacted by macroeconomic conditions or changes in F X rates both.
Speaker Change: Our business is not directly subject to tariffs and because of significant portion of our revenue is derived from subscriptions, which tend to be stickier than impulse purchases like Ala Carte our business has historically been relatively resilient to macroeconomic impacts.
Speaker Change: Put it in the past a specially at our brands with younger users for those with less discretionary income and we've started to see some impacts to a L. C revenue at Tinder in recent weeks, which we are monitoring closely we are prepared to take pricing merchandising or other actions to minimum impact.
Speaker Change: The.
Speaker Change: A O I to be within the previously disclosed four year guidance range of $1.232 billion to $1.278 billion on an as reported basis and roughly in the middle of the range when excluding approximately $25 million in costs associated with.
Speaker Change: We expect to achieve our full year, a O I margin target of 36.5%. Excluding these restructuring costs. We now expect S. P. C expense in 2025 of 280 to 290 million.
Speaker Change: Due to restructuring of our operations and are continued focus on managing headcount and S. P. C expense, a spencer outlined we've taken meaningful steps to become a flatter more efficient product first organization. We expect these changes.
Speaker Change: Now, let's open it up to Q a.
Speaker Change: Thank you we will now begin the question and answer session to ask a question you May Press Star then one on your telephone keypad, if we're using a speakerphone. Please pick up your handset before pressing the keys and twist press start.
Speaker Change: Will pause momentarily to a simple our roster.
Speaker Change: And the first question will come from Nathan Feather with Morgan Stanley. Please go ahead, hey, everyone. Thanks for the question. It should here given the cost reduction actions you just announced can you help us think through how you're balancing investment in axi.
Speaker Change: And product thank you.
Speaker Change: Yeah. Thank you for the question. So what we announced today were fairly deep cuts 45 million of in your savings 100 million of annualized savings primarily from labor and now we turn our attention to Opex, where we think we can find even more savings that.
Speaker Change: Top of those numbers, it's about a 15% reduction in stock based compensation expense, which is about $45 million a year of annualized S. P. C. The cuts today really had two goals. The first was to create a more nimble organization to breakdown silos to cred.
Speaker Change: The organizational changes associated with the cuts speak to that and the second goal was to cut deeply enough that we could feel confident in hitting the investor day targets and also reinvest for growth. So the nature of your question was about the reinvestment so to provide a little more CLA.
Speaker Change: Basically taking these savings and turning around and investing them in international expansion. Both in terms of product development as well as customer acquisition for a variety of brands, including Tinder hinge. The league pairs azar and others were also investing in the gay mail segment through product.
Speaker Change: Position and third we're continuing to invest in tinder product as well. So I'd say these to summarize these cuts they make us increasingly confident in our investor day targets. They allow us to leave four year guidance unchanged and they also allow us to reinvest for growth.
Speaker Change: Operator next question. Please the next question will come from Corey Carpenter with Jpmorgan. Please go ahead. Thank you and good morning, Spencer you certainly enacted a lot of change in your first few months, hoping you could talk about your priorities for the company in how you may do things.
Speaker Change: I'm still standing behind the Investor Day targets you just mentioned thank you. Thanks, Corey Yeah. It's been a busy first couple first hundred days or so so firstly I'd say I've been incredibly impressed with the quality of the team here and their mission focus and their desire to innovate I'm also.
Speaker Change: In our ability to improve user and consumer and even media perception of the category. I think this category is fixable I feel like we've made a lot of progress in the first hundred days, reducing red tape and reducing process and changing a culture away from analysis pro.
Speaker Change: Of urgency breaking down barriers and really driving culture shift at the company, including a prioritization of our users in terms of my priorities. My first priority is operating as one match group so that each of our brands from.
Speaker Change: Our affinity brands to of course, Tinder and hinge so each of our brands can benefit from the combined scale of match group that is new news. This company was not acting like one company. It was acting like many different individual apps, many of which are subscale and match groups.
Speaker Change: Structure speed product strategy product positioning a lot is changing at tender number three my third priority is to help hinge continue its growth in the intentional dating category hinge is doing amazing and making sure that hinge continues to benefit from match group overall.
Speaker Change: Mmm, that's a key priority for me and then finally and sort of overarching all of these other more tactical priorities, where I spend much of my time and attention and focuses on employee engagement and company culture, creating urgency driving innovation, creating accountability.
Speaker Change: The more than 2000 people that work here better so I'm driving a high degree of urgency I'm operating in founder mode. I am locked in and we're off to a really good start so far operator next question. Please the next question will come from.
Speaker Change: With city. Please go ahead.
Speaker Change: Hey, good morning, guys, just on the cost cuts and reinvestment.
Speaker Change: First so in with with the cost cuts here on 100 million annual run rate and kind of using that to feel more confident in hitting investor day margin targets, while while reinvesting so what what's changed exactly since December.
Speaker Change: Is it is it the feeling that you need more product investment to get to better growth just trying to understand that that dynamic and then maybe we can talk a little bit about the tender products stuff and that broader definition of of connection.
Speaker Change: The letter and and your remarks, you talked you talked a little bit about some of the products today that are trying to achieve that maybe just expanding a little bit on on how that roadmap product roadmap might change to to achieve this a little bit better over the coming years. Thanks.
Speaker Change: Why don't I take thanks for the question you go why don't I take the first part the Investor day targets from a margin perspective haven't changed where we said we would improve margins by 5100 basis points per year over the next few years what has changed is we've.
Speaker Change: Some of those cost reduction plans, we weren't counting on you know a restructuring to achieve our 2025 margin targets. We've accelerated those plans we've done it with urgency and that's allowed us to stick with our commitment of 36.5%.
Speaker Change: Yeah, So basically I I came in here and said why do something in 2027 that we could do in 2025, and we we we lit a fire under the team here and we pulled forward a lot of organizational changes cost reductions reorganization reshaping and restru.
Speaker Change: Great and that pulled forward savings, which now we're reinvesting regarding tinder today's changes they rightsize. The team. So we are reducing 18% of the tinder org, we're removing 24% of managers at tinder.
Speaker Change: It a much more nimble more accountable team from a leadership standpoint, we're also taking the Asl the art and science lab team, which was a standalone innovation function and we are putting those folks directly into the.
Speaker Change: The new burst of of energy innovation Technical excellence product excellence into tender, which is is going to be terrific.
Speaker Change: Just focusing on product velocity for a moment by by many measures such as code commits or experiments that we have in flight. We're operating at about twice the pace as we were just a couple quarters ago, and we've had two great quarters of really good product mom.
Speaker Change: The prepared remarks, the early success of of double dating and the daily curated AI drop we've an exciting college roadmap as well so I feel a high degree of confidence in the Tinder roadmap, there's definitely high degree of urgency I can assure you.
Speaker Change: Take time, though this is a product led turnaround and we've seen other companies like snap or pinterest or or even Uber built innovative products that take time in order for their ecosystem to absorb them product driven turns are difficult.
Speaker Change: Do it scale and today, we took a big step forward in terms of of moving that ball down the field. Operator next question. Please. Your next question will come from Suetu Kajoria with Wolf Research. Please go ahead.
Suetu Kajoria: Thank you for taking my questions. Let me try two please one is on App store changes and impact potential impact are you.
Speaker Change: Are you, making any changes across your apps to allow for alternative routes and if so have you tested them and what are you seeing any update on that would be great. Thank you and excuse me and then the second question is you mentioned if.
Speaker Change: You you have some thoughts on maybe potential pricing changes or other changes that you could do you could make could you. Please provide some color on that thanks a lot.
Speaker Change: So thanks for the question why don't I take this one thanks for the question appreciate it so I on IP, Yeah. We're encouraged by the court's decision and the Apple verse F. A case, which allows link outs to web purchases without incurring IP fees I think it's.
Speaker Change: Payment options on rate cards, and we'll share those learnings across the portfolio, which is a unique strength of ours Apple did file an emergency motion yesterday on parts of this ruling including commissions. So we're gonna have to see that place.
Speaker Change: The way I would think about opportunity sizing is this about 45% of our revenue is in the U S. Two thirds of that is in Apple's App store for which we pay Apple about a 27% commission on average so.
Speaker Change: App store purchases to web that would save us approximately $25 million in fees, assuming same conversion rates and before any discounting. So it could be very meaningful for us and again, we're going to have to see how this thing plays out we have.
Speaker Change: But I think it does offer some meaningful potential upside.
Speaker Change: On the second part of your question on macro.
Speaker Change: Let me just remind everybody we talked about a little a little bit about this in a prepared remarks, our business is relatively recession resilient historically not entirely recession proof, though subscription revenue tends to hold up quite well which is.
Speaker Change: You know, but we have seen some impacts to a L. C revenue in the past at brands with younger users or those with less discretionary income like Tinder for example, and so over the past few weeks. We've just started to see some early signs of weekend.
Speaker Change: Younger users in particular, so it's still early we're watching it closely we're prepared to take pricing merchandising or other actions to limit its impact and if some of you might recall you know we we did a similar we took a similar tax.
Speaker Change: A couple of years back when we were faced some sort of consumer weakness and we're able to do things like reduce the bundle size of Ala carte offerings like boost effectively offer lower income price points that are more palatable to.
Speaker Change: I'd also say that you know the restructuring efforts, we announced today does position us to weather potential macro headwinds.
Speaker Change: So you know I I think we're in fairly good shape. The last thing I would say is we're not seeing any of these macro headwinds across the subscription revenue base at tinder or at any of our other brands, thus far including hinge where.
Speaker Change: Thanks for the question. Thank you that was very helpful.
Speaker Change: Next question will come from John Blackledge with Cowan. Please go ahead Oh, great. Thanks, two questions first on Tinder any way to think about tinder's paying user trajectory as we work through the year and then second question you mentioned earlier.
Speaker Change: Addressing potential opex savings after this restructuring announced today just curious if you could extend a little bit there. Thank you.
Speaker Change: Yeah. Thanks for the question on payers as you know it's not a metric. We're specifically focused on we're focused on improving user trends M. A U trends, which will in turn lead to improved revenue trends. So that's really the focus.
Speaker Change: Of the management team and of Tinder, specifically, but what I would say is you know we don't expect.
Speaker Change: Let me start with M. A U trends M. A U trends continue to decline they declined about 9% in Q1, which is which is a similar rate of decline that we've seen in the past handful of quarters, so still declining but at a stable rate that is leading to.
Speaker Change: Continue to decline at a relatively stable rate as well and so what we're focused on doing is turning around improving those mu trends through product innovation that will lead to ultimately to pay or improvement and revenue I wouldn't expect payer trends to grow.
Speaker Change: Those trends to continue to decline, but likely a stable rate like we're seeing with M. A until some of the product innovation work bears fruit.
Speaker Change: On Opex, Yes, Spencer mentioned the focus you know of the last three months was on reorganizing the company and reaping not only headcount savings, but you know reorganizing the company to be Leanor faster an.
Speaker Change: We have now shifted our focus to opex or we think there are a number of opportunities we talked about IP fees as well just a few minutes ago and so we're we're looking across the entire cost base for ways to do things better and so I think.
Speaker Change: Low savings come through not necessarily in 25, but as we head into 26 and again either helps us achieve the margin expansion targets, we set out over the next three years or gives us more room to reinvest in the business. Yeah, just one other thing.
Speaker Change: Apple just to kind of combine two threads here the thread around operating like one match group and the thread around looking at Opex savings in the cost reductions that we announced today, we did not take down marketing spend at all.
Speaker Change: However, we're looking at unifying our marketing measurements across the company, we already unify our media buying for certain types of digital advertising, but we haven't unified marketing measurement and we think there's a lot of opportunity as one match group to start looking at the.
Speaker Change: And at a central level and that should drive savings and synergies as well operator next question. Please. The next question will come from Curtis Nagel with Bank of America. Please go ahead.
Curtis Nagel: Terrific. Yeah. So just a couple of ones for me would you be able to leverage just on the surge in advertising Q1I guess was there something you specifically did what drove it and would you expect us to stay in for the year.
Speaker Change: Yeah. Thanks for the question. We did have it was a record quarter for advertising, which was fantastic to see we saw really strong demand from advertising around the Valentine's day holiday, which was great and we had a few large of our advertising.
Speaker Change: It's been quite a bit of money with us in the quarter I I would not expect it to continue we're not changing our four year guidance for advertising revenue, which is approximately flat year over year. So I would think of it as a really good quarter, we'll take it but not.
Speaker Change: Of course, you know, we always have to keep in mind that the macro effect on advertising too. So we'll have to see how the macro environment plays out over the rest of the year and what impact if any of that has an advertising revenue.
Speaker Change: Thanks for the question. The next question will come from bin Black with Deutsche Bank. Please go ahead, great. Thank you for taking my question. So Santa can you just dig in a little bit into what you're seeing in New Zealand for Hinderland AI discover.
Speaker Change: Creates improving are you seeing ellip sort of dating outcomes and then I guess Relatedly you touch on this letter, but in your prepared remarks, but you know how do you find in the data that you need to power. Your AI efforts and then secondly, you know your competitor Bumble last night spoke about pulling back.
Speaker Change: Yeah. So what we are testing in New Zealand and coming soon to other countries is a daily drop so a single.
Speaker Change: Spoke a I driven match and this is important for two reasons number one the quality of the match is driven by a I because by the user inputting more information about themselves answering questions and also sharing access to their camera Ro.
Speaker Change: And so the quality of the matches are better through that than our traditional also a I driven algorithm, but more importantly, it's changing the perception of how users consider tinder and if you think about.
Speaker Change: Double dating feature and this single daily drop in tandem you start to understand how we're trying to change how people think about tinder for a decade Tinder has been an infinite card stock, where you swipe left or attractive.
Speaker Change: That you're looking at and we're and and that worked well 10 years ago. When there was more of a hookup culture when smartphones were new and when there was novelty around that type of feature set but as millennials, aged up and as Gen Z entered into our sweet spot that product.
Speaker Change: Cents and Tinder has less product market fit today than in the past and we think that by adding new ways to use tinder, including a daily drop and also a double dating feature and other features in our roadmap we'll start to change.
Speaker Change: Encouraged by the specific data coming out of the daily AI drop including around the quality of the matching but more importantly, I'm excited about the ways that we can change brand perception of Tinder, which is what which is the first step in arresting our.
Speaker Change: Lines, and returning to traffic and audience growth Steve I'll, let you answer the question about performance marketing sure. The way I would think about it is this.
Steve I'll: Performance marketing plays an important role in some of our brands, namely our E E brands like match Dot Com and there we take a very rigorous ROI driven approach. So if the rois aren't meeting our thresholds, we don't spend the dollars.
Steve I'll: First now and and we'll continue to be our our approach going forward for our brands like Tinder and hinge performance marketing plays a very small part of the total marketing spend and so we really don't have a situation, where we're driving a lot of traffic through.
Steve I'll: To reassess, it's really brand marketing at both Tinder and hinge that's driving organic traffic and that's something we're going to continue to do as long as it makes sense for us. Thanks for the question. Thank you.
Steve I'll: Ken Gorrowski with Wells Fargo. Please go ahead. Thank you very much two for Spencer if I may. Please first Spencer how would you assess the health of the overall online dating industry, if we're still seeing industry headwinds overall effective.
Ken Gorrowski: I believe match can be in driving improved momentum strictly through company specific product innovation, especially at your most scale brands and then a second follow up for you Spencer you spoke to the increased product velocity I think that you can see internally.
Speaker Change: Etcetera, what are the external markers that that we that you would point us to to monitor your progress. Thanks.
Speaker Change: So let me I'll take the second part of the question first I think the most there aren't enough external monitors for you I guess now is the single best one I wish there was a way for you to see you.
Speaker Change: Sure to Mao I, you know if if if Mao hypothetically was exactly the same but the users inside of our ecosystem were more pleased and had higher resonance with the brand and the future set that's a leading indicator to Mao improvements just a couple months later, but obviously.
Speaker Change: That type of visibility so I think the the best external metric would be things related to audience.
Speaker Change: Regarding the category the data the online data category is clearly challenged the good news is that it's these challenges are are of our own making and I really believe that tinder as the category leader sets the tone and the category challenges have been.
Speaker Change: User use case, where tinder is the clear category leader, we need to improve the perception of category, though and the way to do that is number one to improve trust and safety, that's foundational and we that's within our own control and as we continue to make.
Speaker Change: The safest way to meet new people I think that will start improving category perception number two we have to innovate and to innovate we have to prioritize users over short term revenue and profit that has not been the way. This company has operated historically and that's been to our detriment and one.
Speaker Change: The category is is ill is because of the way we have not prioritized user outcomes, we have to build lower pressure ways for Gen Z Gen Z users to interact with each other which is how what they seek from us.
Speaker Change: Around the product I already explained how this swipe of an infinite card stock is really only one of several ways that people can now use tinder in certain markets and over time that will those other ways will continue to rise in prominence so.
Speaker Change: Category is like ride sharing it wasn't too long ago that ride sharing as a category was was really challenged and what happened there like I mean, I remember it just a couple years ago. The idea of getting in the back seat of a stranger's car that seemed kind of crazy and.
Speaker Change: A new CEO entered the category at the category leader and drove a culture of innovation prioritized Trust and safety unlocked new Tam as they expanded into other adjacencies, both quality of of cars as well as food.
Speaker Change: Here and I think if we do a great job at Tinder and at match Group. Then we will start to change the perception of the category and also the investor attitude towards the category next question. Please.
Speaker Change: Okay next question will come from Jason Healthstein with Oppenheimer. Please go ahead.
Speaker Change: Thanks for taking the question. So I just want to ask just dig a little more into the Tinder Mao down nine I guess, how much of that is still intentional I E. Whether it's it's still getting bad actors off the platform or kind of there's you know there's traffic.
Speaker Change: Your date of show that like low conversion and you're kind of either choosing to invest in other ways or maybe non invest money in certain ways. So just maybe dig a little into like you know how much of that I guess, 9% down was in.
Speaker Change: And then just longer term I mean, there's definitely been a discussion of you know you know should you be running the business you know more for kind of revenue and EBITDA kind of like Netflix is now and and not disclosing kind of users.
Speaker Change: Just give us your thought as disclosing all this data to us inhibit your ability to make the right long term decisions for the business. Thank you. Thanks, Jason Great question, and you and I had this discussion at Zillow for many many years around.
Speaker Change: Alright number of paying advertisers, our number of real estate agent advertisers and whether that was a good metric to disclose and of course, you you know and other others on the call who cover both companies know that I always explained that that was not a great metric and I regretted.
Speaker Change: Closed it when we went public and then of course over time, we sunsetted. It so to answer your specific question. Your specific question was does the fact that we disclose payers prevent us from making the right long term decisions. The answer on that is no because I am making the right long term decisions around the product and.
Speaker Change: Third number is an output of that and if that goes up okay. If that goes down okay. Like we're driving this business towards long term sustainable profitability shareholder value creation et cetera, and as Steve already answered, we don't run the business to short.
Speaker Change: Account number would it be easier if we didn't disclose it I don't know it doesn't it doesn't really affect decision, making so it doesn't bother me that much regarding the audience and.
Speaker Change: Better some of the declines are due to bad actors and so it's desirable you know I don't have a great answer to that I would say some of the decline is intentional and desirable, but certainly not all of it and I I'm working.
Speaker Change: And the team is working like Mad to grow Tinder audience. The right kind of audience of course, I mean, we could grow tin the wrong kind of audience quite quickly and we're not gonna do that but I guess, the easiest way to describe it would be some of the decline is is due to intentional bad actor, but not.
Speaker Change: I look forward to the days when Tinder is flat and then up in terms of audience and we've improved trust and safety at the same time. Operator next question. Please. The next question will come from Chris Coutaric with U B S. Please go ahead.
Chris Coutaric: Great. Thanks for taking the question, maybe just going back to the trust and safety dynamics any update to be sharing around mandatory face photos and how we should be thinking about a potential rollout in the U S. And then just one quick follow up I think associate.
Speaker Change: So on the topic of trust and safety just I want to reiterate how foundational. This is and this is work that never stops for US we must make match groups apps be the safest way to meet new people and we devote enormous resources, that's mad power technology over hundred.
Speaker Change: Driving trust and safety and improved user outcomes.
Speaker Change: C mandated liveness check that we're testing, which is basically a short face video and selfie in in in a couple markets. It takes time for the ecosystem to settle when we introduce new features especially a fe.
Speaker Change: I need time for the audience. The other folks that are using the apps in those in those geographies to recognize that there's a higher degree of safety there and it drives higher net promoter score from our existing users it drives better word of mouth. So.
Speaker Change: Marketplace with local network effects. This isn't a simple a b test that you can just say oh should the button be blue or Red. This is something that the ecosystem has to digest. So and also on on our end, we need time to mitigate any negative impacts of those tests, whether it be financial or otherwise.
Speaker Change: We are acting with care and consideration, but no lack of urgency on this issue I don't have any specific updates on rolling that particular feature out more broadly, but we're working very hard on this and.
Speaker Change: Even.
Speaker Change: We use the forward curves there also predicting a much weaker dollar than what we expected back in February when we set our full year guidance and so all else equal that would improve our our full year as reported expectations at the same time.
Speaker Change: Given some of the early signs we've we're seeing at Tinder and all the uncertainty around the general macro economic environment, you know, we're being cautious and so that those two forces have led us to leave our guidance a guidance unchanged for the full year.
Speaker Change: You know speak help by the declining dollar, but we want to stay cautious on potential macro impacts to the business as we see how things unfold.
Robert Taylor: Next question. Your next question will come from Yusef Squali with Trust. Please go ahead Hi. This is Robert Taylor on Frustrali. Thanks for taking the question I'm just curious what is it a rollout in a new market typically look like in terms of additional cost I.
Robert Taylor: Major growth and then the ramp of revenues. Thanks.
Speaker Change: Yeah, Hey, Robert I'll take that it depends on the brand so, but it's usually on the order of a couple million dollars of of spend depending upon how much customization is required and then how much C. O. A we decide to apply to that market. So it's not.
Speaker Change: You know, it's it's it's not it's not nothing but it's also not incredibly significant and it definitely depends on the complexity of the individual country. So pairs. For example, just which is the number one dating app in Japan, just launched in Korea and.
Speaker Change: There we use the combined match group Asia go to market team to launch pairs from Japan into Korea, and so that's a team that already was marketing Tinder in Korea, and then our other brands throughout Asia. So we have terrific synergies there is basically no.
Speaker Change: From a from a headcount standpoint in terms of go to market. There's a small incremental C. O a cost as we start to light up local network effects in the Korean market and then there are the product development costs of pairs to customize and the product fores.
Speaker Change: S and in that case, the incremental was very low so it's a playbook that we followed now globally across more than 15 different brands and it's a big focus of ours in 2025 and 2026 for the remaining geographies, where we don't have coverage yet from our brand.
Speaker Change: Operator next question please.
Speaker Change: Our final question today will come from Dan Salmon with New Street Research. Please go ahead.
Speaker Change: Great.
Speaker Change: And seeing excuse me to see Kelly Campbell join Alan Spoon exits, formerly expanding the size of it would love to just hear your thoughts on how those changes help.
Speaker Change: Improve the broader strategy for the company over the long term and then just any update you can give us on your dialogue with I don't know if we call them activist investors or maybe publicly actives investors just love to hear if there's anything you can add to that about where your.
Speaker Change: Steven does that reach up to your level or even to the boards any color would be great. Thanks.
Speaker Change: Sure. Thanks for the question, Yeah, I'm incredibly excited about Darryl and Kelly joining the board. They both bring incredible consumer expertise Darrel is a founder of two category, leading digital tech companies has an incredible background of product engineering.
Speaker Change: Yes performance marketing and and brand marketing so he's a great addition, and Kelly Kelly also has an extraordinary marketing and product background from technology and consumer media. So they both bring great expertise onto our board.
Speaker Change: Was a fantastic director of the company and I will Miss his counsel, though I know he I know how to reach him as well and so I'm sad to see him leave and very grateful for what he contributed over the years, but Darryl and Kelly are going to be terrific director.
Speaker Change: The in terms of our relationship with our shareholders. All all is well I'm engaging I personally am engaging actively with all key shareholders, including those that those that you reference and.
Speaker Change: Forward to continuing to learn from them and hear their perspectives on the business and as I did for 15 years as a public CEO before I like engaging with shareholders I like engaging with research analysts I always learn from those conversations and I don't shy away from them and so I look forward.
Speaker Change: With with the with all shareholders, whether they be activist or or not activist. So I think that with that we'll wrap up the call. Thank you very much I look forward to speaking with you all again very shortly have a great day. Thanks.
Speaker Change: Concluded. Thank you for attending today's presentation you may now disconnect.