Release Date: November 07, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Match Group Inc (MTCH, Financial) met expectations for total revenue and exceeded expectations for AOI with solid margins at 38%.
- Hinge delivered another strong quarter with impressive revenue growth, becoming the second most downloaded dating app in the US.
- Hinge's new feature, Your Turn Limits, increased response rates by 20% and helped users focus on current matches.
- MG Asia's Azar app expanded into the US, showing promising engagement with Gen Z users.
- The company is committed to returning at least 75% of its free cash flow to shareholders, having repurchased 7.1 million shares in Q3.
Negative Points
- Tinder's direct revenue was slightly below expectations due to under-delivery of certain optimizations.
- Tinder's MAU declined 9% in the quarter, with weaker new user trends starting in mid-September.
- The company faced a $37 million impact from impairments and charges related to exiting live streaming services.
- Tinder's new ALC initiatives were more cannibalistic to subscription revenue than anticipated, delaying rollout and impacting Q4 revenue.
- The company expects total revenue for Q4 2024 to be essentially flat year-over-year, with Tinder's direct revenue expected to decline.
Q & A Highlights
Q: Could you elaborate on Tinder's top-of-funnel trends and the weaker MAU at the end of Q3? What might help drive top-of-funnel growth at Tinder?
A: Bernard Kim, CEO, explained that Tinder's MAU growth saw a setback starting in mid-September, possibly due to iOS 18 introduction and trust and safety enhancements. The focus remains on product innovation to improve user experiences, especially for younger users and women. Marketing will support these efforts but isn't the primary driver for growth. Gary Swidler, CFO, added that Tinder's AOI margins are high, and while investments have increased, the focus is on product transformation before ramping up marketing.
Q: What's contributing to the a la carte delays at Tinder, and when might these features go live?
A: Bernard Kim, CEO, stated that careful testing of a la carte features is crucial to understand their impact on revenue and the ecosystem. Features like Passport and Likes You are being tested for optimal approaches due to some cannibalization effects. New features like First Impressions and engagement-boosting mechanics are also in testing. The rollout of these features is expected in the coming months, targeting specific user segments.
Q: Can you provide more color on Hinge's Q4 revenue growth and its drivers?
A: Gary Swidler, CFO, noted that Hinge's Q4 revenue growth appears to decelerate due to comping against last year's rollout of weekly subscription packages. Despite this, user growth and market share gains remain strong, and Hinge is expected to continue growing significantly in 2025, adding substantial revenue.
Q: How is the Your Turn Limits feature at Hinge impacting user engagement and growth?
A: Bernard Kim, CEO, highlighted that Your Turn Limits, which introduces friction to focus on quality conversations, has been positively received globally. It addresses ghosting issues and aligns with Hinge's strong Q3 and early Q4 performance. The feature's success is shared across the portfolio to enhance user engagement.
Q: How are you balancing investments across the business to maintain a 36% margin target?
A: Gary Swidler, CFO, emphasized the importance of managing a portfolio of brands at different growth stages. Investments are made in Tinder and Hinge for product and marketing, while cost efficiencies are realized through consolidation efforts in other areas. The focus is on making strategic trade-offs to support growth while maintaining profitability.
Q: Are there any considerations for divestitures within the portfolio?
A: Gary Swidler, CFO, stated that while the company constantly evaluates its portfolio for strategic opportunities, the recent enhanced disclosures are not tied to potential divestitures. The focus is on providing investors with a deeper understanding of each business unit's performance.
Q: How is Tinder's brand perception trending, and what are the plans to improve it?
A: Bernard Kim, CEO, mentioned that the focus remains on Gen Z and women, with product initiatives and brand marketing reinforcing Tinder's perception. Product marketing will target key launches, but marketing spend as a percentage of revenue will remain disciplined.
Q: Can you explain the shift in marketing spend into Q4 and the advertiser pull-back during the holidays?
A: Gary Swidler, CFO, explained that some advertisers are pulling back during the crowded holiday season, with plans to resume in Q1. Marketing spend is being adjusted, with more focus on Hinge due to its strong performance, while Tinder's marketing is being timed with product traction.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
