Match Group, Inc. — 2024 Q1
Transcript
Each turn shows the speaker, their inferred role, the section, and that turn's net sentiment (×1000).
Welcome to the Match Group First Quarter 2024 Earnings Conference Call. [Operator Instructions] Please note, this event is being recorded.
Thank you, operator, and good morning, everyone. Today's call will be led by CEO, Bernard Kim; and President and CFO, Gary Swidler. They'll make a few brief remarks, and then we'll open it up for questions.
Good morning, everyone, and thanks for joining today's call. I know much of our discussion today will focus on near-term trends and challenges. Both Gary and I will address those headwinds, and we will discuss it in Q&A. And while some of the current trends are challenging, it does not dissuade us from what we believe is long-term opportunity.
Thanks, BK, and hello, everyone. Thank you for joining us this morning. Our business demonstrated strong financial performance to start the year with FX-neutral results coming in ahead of our expectations.
[Operator Instructions] The first question today comes from Benjamin Black with Deutsche Bank.
Great. It'd be great to hear what's giving you confidence that Tinder net adds will return to sequential growth in the third quarter, despite the steady decline in payers we're seeing today. And is there something that you're seeing maybe as it pertains to conversion trends that you can point us to that is providing this optimism?
Thanks, Ben, for the question. First of all, in terms of trends that we're seeing at Tinder, I just want to point out a few different things.
The next question comes from Nathan Feather with Morgan Stanley.
So when thinking about how to reignite user growth at Tinder, are there any case studies you draw on internally from the rest of your portfolio, especially with some brands now around for 3 decades? Are brands successfully evolve the product to appeal to the next generation? And how do you incorporate your learnings from that for where Tinder is at today?
Thanks, Nathan, for that question. Sure. We have a lot of great examples across the portfolio of products that show true evolution. We've consistently seen that true product innovation can lead to material impacts on the user experience. We know that this can appeal to new demographics and expand the total industry. Our portfolio of brands, which have existed for more than 10-plus years, is a major benefit.
The next question comes from Ken Gawrelski with Wells Fargo.
You maintained the margin guidance for the full year, despite revenue expected to come in toward the lower end of previous expectations. It would seem from the outside that you should take the opportunity to invest more in marketing and get Tinder back -- Tinder net payer growth in 3Q. What are we missing here? Why not be more aggressive here at this point?
Great question, Ken. Like we said earlier, it's really the product experience that needs to resonate, first and foremost. While marketing is a component of top of funnel growth, it needs to be combined with evolving product experience that resonates with users.
The next question comes from Jason Helfstein with Oppenheimer.
Maybe I'll ask, and some of this you did allude to, but maybe elaborate. So what's changed specifically since February at Tinder, which is driving the low to mid-teens -- or low to mid-teen revenue -- or the low to mid-single-digit revenue growth versus the prior 6% to 8% as subs are still expected to turn positive in the third quarter?
Sure. Why don't I take a shot at that, Jason? So a couple of things have changed. I mean, one, our year-over-year payer growth expectations have come down a little bit, right? We had the negative 9% in the first quarter, and we're predicting something similar. We'd like to see obviously improvement in that metric.
The next question comes from Chris Kuntarich with UBS.
Great. Maybe one around your product efforts. Last year was more focused on pricing, and now that focus seems to be shifting towards product tweaks that should be driving more conversion events.
I'll take that one. Last year, we implemented a number of monetization initiatives, which we know how to do really well, and we have a great team behind it. That drove short-term revenue growth at Tinder.
The next question comes from Dan Salmon with New Street Research.
Okay. Great. I'd like to talk AI a little bit and just first to ask about any of the early learnings you've seen from the tests of the AI photo selector on Tinder. And I think the wording in the letter was about launching it more widely in the summer. Just curious if you had a little bit more details on the time line, if that's first half of the year or later on in the summer months.
Thanks for that question. I absolutely love talking about AI and photo selector, and we'll work closely with our Hyperconnect team in conjunction with our Tinder team to create this great feature that we think is really scalable.
The next question comes from Justin Patterson with KeyBanc.
Great. I just wanted to ask about Hinge. You had outlined the path to $1 billion in the letter, so appreciate that. I wanted to actually dive in the margins around that. Just as we see Hinge scale moving towards that $1 billion revenue target, how do you think about margin potential there?
Thanks, Justin. Why don't I take that? So Hinge margins are expected to be in the high 20s percent range for the year. So short of the corporate number, and they're about stable with where they were last year.
The next question comes from Cory Carpenter with JPMorgan.
Gary, could you expand on how you're planning to maintain your 36% or better margin target this year, despite the softer revenue outlook? And more broadly, are there any incremental areas you've identified to reduce costs?
Sure. Happy to take that. So first of all, I would say, early in the year, we provided an outlook of 6% to 9% total company year-over-year revenue growth. And we were prepared to deliver 36% margins, even at the low end of that.
The next question comes from Ygal Arounian with Citi.
I want to follow up on the product side and particularly around women and Gen Z. For women, you called out better product recommendations, better outcomes there. And you're calling out here and talking on the call a lot about being bolder on the product side.
Great question. Gen Z and women, and women's experience, in particular, is our top priority. They are literally the most critical demographic for all dating apps. We know that women need to feel empowered and respected when they're on our apps. We have a series of initiatives to improve outcomes for women to make sure they're getting great matches.
The next question comes from Jian Li with Evercore ISI.
A couple. First, if you can talk about the macro assumptions that came to this guide. Are you assuming that what you're seeing today in macro persist? And any improvement in payer growth has purely driven off, say, pricing optimization on product development?
So let me jump in and take some of those. I mean, first of all, at Archer, I would just point out, it's a pre-revenue business. So really, what's happening is that we're seeing strong user growth. We haven't yet gotten to the point where we're monetizing that business.
The next question comes from James Heaney with Jefferies.
In the letter, you reiterated your confidence in sequential payer growth in Q3 and slowing user declines in the back half of the year. So I'm just curious what this would imply for Q4 payers and things that you can talk about Q1.
Sure. Thanks, James. Happy to take the question. And so we're expecting -- as I talked about as it related to Q3 sequential payer adds, we're expecting improved year-over-year payer growth as the year goes on.
The next question comes from Curtis Nagle with Bank of America.
Terrific. Maybe just one real quick one and then a follow-up. Gary, you just mentioned initial headcount coming in to Hinge. Any other parts of the business where we'll see growth?
So just -- we don't have a lot of time, but I'll try to answer that relatively quickly. On the Hinge headcount, I did mention we are making significant investments there. It's primarily in product development.
Thanks, Gary, and thanks, everyone, for joining today's call. Gary and I appreciate your questions, and thank you so much for your interest.
The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.