Match Group, Inc. (MTCH) Q3 2026 Earnings Call Transcript

Welcome to the Match Group 3rd Quarter 2026 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. To ask a question, you may press star, then 1 on your telephone keypad. To withdraw your question, please press star, then 2. Please note, this event is being recorded. I would now like to turn the conference over to Tani Shelburne, Senior Vice President of Investor Relations. Please go ahead.

Thank you, Operator, and good afternoon, everyone. Today's call will be led by CEO Spencer Raskoff and CFO Steve Bailey. They'll make a few brief remarks, and then we'll open it up for Q&A. 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 in our earnings release and our periodic reports with the SEC. Also, during this call, we will discuss certain non-GAAP financial measures. Reconciliations to the most directly comparable GAAP financial measures are provided in the published materials on our IR website. These non-GAAP measures are not intended to be substitutes for our GAAP results. With that, I'd like to turn the call over to Spencer.

Thanks, Tani. Good afternoon. Thanks, everyone, for joining us. We're trying something new this quarter. We've posted our full prepared remarks to the Investor Relations website at ir.mtch.com for you to read through. But our plan for today's call is for me and Steve to just spend a few minutes on the key highlights and then devote the majority of our time to answer your questions. A year ago, the big question you asked us was whether we could turn Tinder around. We knew we had to start by improving user outcomes, meaning we had to build better experiences that resonate with Gen Z, deliver more relevant recommendations, and improve trust and safety. And that if we got those foundations right, then better user trends and ultimately revenue would follow. Tinder has had multiple consecutive quarters of improvement in the metrics that matter. This quarter, we had our strongest quarterly year-over-year performance in both Sparks, that's six-way conversations, and Sparks coverage, the percentage of users getting a Spark, since we started tracking those metrics. In September, global daily active users returned to year-over-year growth for the first time in three and a half years, and we've cut year-over-year declines in monthly active users nearly in half over the last year. The improvement is broad-based. It spans women and men, age groups, and geographies. We're seeing growth again in parts of the business where trends were moving in the wrong direction not that long ago. In October, markets representing nearly 70% of Tinder's Dow and 50% of its revenue had growing or flat Dow year-over-year, with the U.S. crossing into positive territory, exiting the month. So we now have evidence that those changes are working. There's still a lot of work ahead, particularly with the youngest Gen Z users. While we've made substantial progress improving the experience for existing users, the next step is reconsideration. That means giving people a reason to come back or to try Tinder for the first time. And that's what our Better with Friends roadmap is designed to do. We're giving people more social and lower-pressure ways to meet, often with friends and in real life, because that's what users want. Events is the feature I'm most enthusiastic about, but they're all geared towards creating more opportunities for people to form meaningful connections in real life. We're building with our mission, always in focus, to make Tinder the most fun way to spark something new with someone new. We live and breathe this daily. Tinder employees can recite this clearly, and it's what keeps us working hard. Turning to Hinge, the business continues to deliver strong user growth and double-digit revenue growth year over year. We see clear opportunities ahead, too. Even in core markets, where we've operated the longest, Hinge has room to reach more people beyond urban metro markets and grow with older daters. We're targeting these opportunities deliberately with more relevant marketing. The early results are strong as registration trends across all genders and age groups improved as we exited Q3, and we think Q4 U.S. new registrations will be up year over year. Hinge's 2027 product roadmap is the strongest we've had in the last several years. The depth of thinking about intentioned daters from what they need to what helps them get out on great dates is evident and gives me so much confidence in where Hinge is headed. At E&E, we've put a more focused strategy in place, prioritizing a smaller set of brands and taking learnings from Tinder and Hinge to improve user outcomes. We are still early in this work, and it will take time to see the impact. At Match Group, we're approaching 2027 with a stronger foundation built through a lot of hard work and a clearer path to durable growth. With that, I'll turn it to Steve.

Thanks, Spencer. Minister, we're happy with the Q3 results and with the momentum in the business as we close out the year and turn our focus to 2027. We expect to finish the year slightly above the midpoint of our full-year revenue guidance range and meaningfully exceed the full-year adjusted EBITDA margin target we set back in February. We also expect to exceed the high end of our free cash flow guidance setback in February, and we remain committed to deploying 100% of free cash flow towards buybacks, dividends, and net settling of employee equity awards over time, recognizing that the pace of capital return may vary from quarter to quarter. Year-to-date, we've generated $832 million in free cash flow and deployed $591 million towards buybacks, dividends, and net selling of employee equity awards, and we've reduced our diluted shares outstanding by 4% year-over-year through October and by 10% since January of 2025. Here's how we're thinking about the financial performance and expectations at each of our business units. At Tinder, we expect to achieve our goal of improving year-over-year MAU and payer trends throughout the year, and we expect further improvement in both of these metrics as well as an improvement in direct revenue trends in Q4. That means that's meaningful progress towards returning Tinder to sustainable growth. As we said last quarter, we continue to expect Tinder's full-year 2026 direct revenue performance to be better than we expected in February, declining at low single-digit rates year-over-year as a result of both smaller-than-expected impact from user experience tests and stronger underlying trends. As we begin to shift our focus to 2027, while there's still more work to do, we're feeling great about the momentum, and we're confident we can deliver full-year, 2027, tender direct revenue year-over-year growth, along with year-over-year payer growth by Q4 and flat MAU year-over-year by the end of Q4. At Hinge, performance continues to be strong, and we expect to be within the 2026 full-year guidance range we provided in February. Our expectation for $1 billion in full-year revenue in 27 hasn't changed. E&E continues to face headwinds from Azar's app redesign, necessitated by the App Store ban earlier this year, and weakness at other E&E brands, but we expect the strategy changes Spencer just outlined to slow revenue declines over time with the goal of returning to growth. But this will take time, and we expect E&E year-over-year revenue declines to only modestly improve in 27 compared to 2026. Turning to match group profitability, we've done a good job this year executing on the Tinder turnaround while staying financially disciplined. We intend to take that same approach in 2027 as we balance making the right investments in our business to maximize long-term shareholder value with delivering near-term adjusted EBITDA and free cash flow, Which we're giving back to shareholders through buybacks from the dividend. We'll give detailed adjusted EBITDA guidance and a full-year margin target on the call in February, but here's how we're thinking about 2027 profitability sitting here today. First, we expect to remain very disciplined on headcount and OPEX, including AI costs. Second, we now expect IAP fees to be a one-point margin headwind in 2027, Thank you.

2027 will be the first time we're incorporating it into our annual planning process.

Now let me give you a little more color on IAP fees. First, an update on Apple. In the U.S., we continue to pay 0% in IAP fees on alternative payments on iOS, and we don't expect changes to this fee structure until there's a decision in the Epic vs. Apple case. In the EU, Apple actually raised fees on in-app purchases effective October 1st, and the fees we pay increased from the low 20% to 26%. At the same time, Apple will begin allowing alternative payments, which we plan to test, but there are a number of restrictions, and the economics are far less favorable than they are in the U.S. We expect the increased in-app purchase fees to cost us an additional $20 million in 2027. Now on Google. In 2024, we entered into a partnership arrangement with Google that provided value exchange across our broad relationship that has effectively offset the additional fees we incurred when we adopted Google's billing options at that time. As we previously disclosed at the announcement of that deal and in subsequent filings, that partnership is set to expire in the first quarter of 2027, and we expect Play Store fees to meaningfully increase beginning in Q2 of next year. Our expectation when we entered into the agreement was that legal and regulatory pressure would reduce Google's in-app purchase fees by the time our agreement ended. However, Google's new global fee structure, announced in March, provides little benefit to us. Taking into account both the Apple changes and the Google partnership agreement expiration, and making no assumptions on future fee changes, we expect IEP fees to result in a one-point headwind to adjusted EBITDA margin in 2027. While we're looking for ways to mitigate the impact, we also need to ensure we're making the right investments in the business to drive long-term shareholder value. We'll make that determination as part of our annual planning process, and we'll give you more details on 2027 revenue and margin expectations next quarter. With that, let's open it up to Q&A.

We will now begin the question and answer session. To ask a question, you may press star, then 1 on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star, then 2. At this time, we will pause momentarily to assemble our roster. The first question comes from Robert Kulbrith with Evercore ISI. Please go ahead. Great.

Thank you for the opportunity to ask the question. Just wondering if you could maybe talk us through the path to positive DAU that you had in September. Maybe if you could sort of disaggregate that across retention improvement or if there's just been a – just a case of stacking those retention gains that you've had in successful quarters across more cohorts, and then any early indications of improving levels of consideration or reconsideration. Thanks.

Yeah, thanks, Robert, and thanks for your recent research note. Look, it was a big milestone this quarter. Turning Dow positive in September year-over-year for the first time in three-and-a-half years felt great. There was, you know, there were a lot of high fives and just excitement around achieving that milestone. And then just a couple weeks later, at the end of October, U.S. Dow turning positive year over year was also just felt great. You know, those are the Dow trends. As Mao, improving from negative 10 to negative 5.5 over the last few quarters also speaks to the quality of the improvements in the product and also improvements in Mao, similar improvements in Mao and across our top five revenue markets. The reason why I'm confident about the sustainability of the turnaround is how broad-based the improvements have been. So really, any way you cut it by age, by gender, by geography, we're seeing improvements across really every which way you look at it. So for example, looking at it by gender, our female male is improving at an even faster rate than male male in every region and every age group. Female Mao declines narrowed by eight points year over year and two points quarter over quarter. So this is not a turnaround that's just focused on male users. Quite the contrary. It's actually we're improving among female users even more quickly. Looking at it by age, again, this is not a turnaround focused on just adding easier to acquire older users. Our under 30 Mao trends have improved even more than our over 30 Mao trends, and we're improving across every single age group. So that's, you know, that's the exciting news about the Mao turnaround. I think kind of the question behind your question, perhaps, is why is Dow growing faster than Mao? And the answer to that is we have made so many product improvements that help the existing experience basically improve our users' current experience, but we still have more work to do to drive reconsideration. And that's where the Better with Friends social roadmap comes into play. We had a hit in Double Date. We layered on another hit with events. We're in the process of building a third hit with groups. And when you take those three things together and you do brand studies and ask users about their perception of Tinder, you start to see really good, promising results about people changing their perception of what Tinder is. So we still have work to do. It's definitely too soon to declare victory, but I really am proud of and impressed by where we're at today. Steve, anything to add?

No, I think you covered it.

Okay. Next question, please.

The next question is from Shweta Kajuria with Wolf Research. Please go ahead.

Okay. Thank you for taking my questions. Spencer, could I please ask a follow-up to what you were just talking about in terms of the delta between BAU growth and MAU growth? So there is this idea of perception and bringing people back into the ecosystem, and that's why the delta. So, how long do you think that lag, how long do you think it takes for that lag to narrow? In other words, for that perception to change, bringing those people back and turning around mild growth. And then the second question I have is around next year, Steve, you spoke about Tinder expectations. To the degree that you can speak to other segments, Hinge and E&E, that would be very helpful, or just at a platform level, the puts and takes for both revenue and EBITDA understood. You're not guiding just yet. In terms of EBITDA, where would the levers be coming from to offset the headwind, and how should we be thinking about overall top-line growth? Thanks a lot.

Yeah, let me take, we'll take this into a couple pieces. Let me talk a little bit more about the Tinder sort of metrics improvements, and Spencer, jump in as you wish. The way to think about DAU outpacing MAU, here's kind of where things stand. Of course, we're very excited that DAU crossed over to positive growth. We're just as excited about MAU improving. So we got about one point improvement We also saw an improvement in payers, which we're very excited about. So, the payers were down negative 5% in Q2. They were down negative 4% in Q3. So, progress there as well. Revenue, we like to look at FX neutral, was down 2%. That was the same as Q2. And I'll just stress that these metrics aren't going to move completely in lockstep every quarter. But if you take a step back and look at the revenue FX neutral trends, you've got a diagram in the prepared release, you can see progress over the last few quarters from down 5% in Q4 last year to down 2% now. And then what I think is also encouraging is, you know, we expect all those metrics to improve in Q4. So we expect payers to get better in Q4. We expect MAU to get better in Q4. And we expect that FX neutral direct revenue to get better as well. So we are starting to see it flow through more than just DAU, but to these other core metrics as well. Did you want to add anything to that? And then let's talk about 2027 a bit. We're not going to give, as you sort of alluded to, full-year revenue guidance or even a guidance until February, which is sort of our normal course. I tried to give some color on how we were thinking about things. The only things I would add is, yeah, like if we break it down, you look at Tinder, we're feeling really good, right? We're making progress. I just told you we expect further progress in Q4, and we're really setting ourselves up well to meet the goals I laid out in terms of payers' revenue and MAU improvement next year. Could it be sooner? Maybe. You know, it's hard to pinpoint exactly, but I think we're on a really good trajectory at Tinder. When you look at Hinge, achieving the billion dollars in revenue, which we still feel very good about, I think about it this way. Revenue growth was about 19% in Q3. We expect it to be about the same, maybe a little bit better in Q4, so think at 19%, 19.5%. And then we've got to keep the growth rate at about that same level next year. And if we do that, we'll hit the billion dollars. So we think we've got the right roadmap and strategy in place to do it. That's going to come from improving core trends and expansion. We talked about expanding into Japan in the prepared remarks, too. And so I'm feeling good about the trajectory there, too. And then E&E, what we said was modest improvement from the declines we're seeing this year. That's really in recognition of, you know, Spencer talked about putting the right strategy in place, but it's going to take some time to get, you know, that business back to growth. And we don't, so we think only modest improvement, but still negative at E&E next year. In terms of profitability, the way I would think about it is we've got the one-point IEP fee headwind. We said we'd be really controlled in terms of headcount and AI costs. The really big consideration is really around marketing spend. What is the right level of marketing spend, particularly at Tinner and Hinge, in 2027 to maximize long-term returns and shareholder value? And so we need to balance that against hitting short-term margin targets. And that's what we'll do. We'll think very hard about it. We'll do it in a very quantitative way through the PRISM framework, and we'll give you a lot more details on all that in February.

Next question, please, Albert.

The next question is from Jason Helfstein with Oppenheimer. Please go ahead.

Thanks. Just some more color on the givebacks. I think it sounds like the full-year givebacks for Tinder are going to come in below expectations. Why have they not been necessary this year relative to your plan and any more color there? Thanks.

Yeah. Hi, Jason. Thanks for the question. You know, we've been fortunate to discover that when we launch improvements to the user experience, The accompanying malretention mitigates revenue loss. For example, we changed our recommendation algorithms to maximize user outcomes, and we nervously wondered if it would hurt revenue, and what we found was that the benefits of improving user retention outweighed the detriment of prioritizing user outcomes over revenue. That might not always be the case, but that's what we mostly saw in 2026.

Yeah, let me just add a finer point to that, too. That's all exactly right. And what it means financially is that, you know, we thought at the beginning of the year we would need $60 million in user givebacks in 26. What we're now saying is that we only ended up using 25 million. If you do the math, that's about two points of revenue at Tinder, and that's what's driving about two points of that improvement versus expectations we had set back in February. There's about another point of improvement in there in terms of what we think we'll actually finish the year at for Tinder full-year revenue relative to what we said in February. That other point is improving trends, so I want to be really clear about that. Really, what we're seeing at Tinder is two things, the need for less user givebacks and also improving trends. So, that sets us up really well for continued improvement in 27. Next question, please.

The next question is from Brian Smilak with J.P. Morgan. Please go ahead.

Great. Thanks for taking the question. Spencer, as you enter Tinder's resurgence phase, can you just help us think about the allocation of marketing spend by channel to reignite the consideration set? I think in the prepared remarks, you had mentioned Gen Z marketing around creator and social content and event partners. So just curious, anything that you can share on the LTV curves of those channels? Thank you.

Sure. So thanks, Brian. We made a lot of changes to how we allocate and how we invest our marketing in 2026. Firstly, we shifted a lot of our spend towards down funnel user acquisition instead of up funnel brand building. Secondly, we pointed much more of our marketing spend towards actual features rather than sort of high-level positioning about Tinder or the category. And we saw both of those changes drive really improved results in 26. The second one, I think, is particularly important and reminds us how product and marketing work hand-in-hand. So, for example, when we market on Instagram that Tinder has events in your city and we look at the cost per registration or cost per reactivation for those types of marketing creatives and compare it with a year or two ago when we were buying the same channel but promoting, you know, use Tinder because Tinder is a dating app. It's really night and day in terms of the lift that we get and, in most cases, the efficacy of how far the dollar goes when we're focusing on product innovation rather than not. As Steve alluded to, we also now have a framework where, for really the first time ever going into an annual planning process, We have a cross-brand rubric and analytic framework to decide what the right marketing spend and right marketing allocation should be between business units and brands within business units. And so we're deep in the midst of that right now as we finalize our 2027 plans. So I don't have any more detail to report, but we're just in a much smarter place here as we speak to you in fall of 2026 than we were in fall of 2025, coming off the heels of a really effective 26 for marketing and also the development of these new frameworks to assess marketing efficacy. Operator, next question, please.

The next question is from Nathan Feather with Morgan Stanley. Please go ahead.

Hey, everyone. Thanks for the question. I guess as you think about Dow's turning positive, the focus on mouse, what are the kind of one to two key dating factors to returning to flat mouse growth from here? How do you think about the main levers you can pull to really drive that reconsideration of the brand as you continue to push the product side?

Yeah, thanks, Nathan. You know, the biggest lever is convincing people who are not already on Tinder or who maybe used Tinder two, four, five, ten years ago to give it another shot. And this Better with Friends roadmap is the best idea that we have to execute on that. So, as I said, Double Date is a winner. We've delivered 30 million matches on Double Date so far, which just speaks to the scale and product market fit that Double Date has. We just launched groups in the U.S. a couple weeks earlier and a couple other countries, just to give you some insight into groups. Women are twice as likely to like a group profile as they are to like a single male profile. Um, that's, you know, again, that speaks to the product market fit that we think groups will have within our product. 15% of our users in Norway age 18 to 22 are already in a group. The reason I mentioned Norway is that was the first country that we launched in. So it's been up for a couple extra weeks. So we think groups has the potential to start to be another hit and to change the way people perceive Tinder. And then finally, events, which we've been very vocal about the potential that we think events has. Events has absolutely started to change perception of Tinder. When we look at our measures of brand health, questions that we ask users like, does Tinder have people that you want to meet on it? Is Tinder an app with your kind of people? Is Tinder just for hookups or for things more than that? But all those measures of brand health have improved over the summer and into the fall as we've rolled out events into more and more markets. So I'm happy to talk more about events if there are other questions about it. But those are the types of initiatives that we're focused on in order to drive reconsideration, which is what will take us these last couple points from negative 5.5% mal to eventual mal growth. Next question, please.

The next question is from James Heaney with Jeffries. Please go ahead.

Great. Thank you. You mentioned in the letter an increased focus on Tinder revenue initiatives in 2027. Curious what kinds of options you'd be looking to explore and how you think you can improve monetization without disrupting the user engagement momentum that you have. Thank you.

Yeah, thanks. Good question. When I took over Tinder, I started by focusing on the user experience. We had this theory, which has proven to be true, that if you improve the user experience, then the audience metrics will improve and then other good things will flow from that. We moved very quickly. We changed a lot of the user experience, and today, Tinder works better than it did before. We're now turning our attention towards revenue, and we're really looking at everything. We understand what we have currently and what we can learn from other brands, and we're approaching it from pretty much a blank slate in terms of a starting point. It's a bit early to say where that will go, but I can assure you we're bringing the same level of focus, energy, vigor, urgency, innovation to monetization that in 27 that we brought to the user experience in 26. And, you know, it's – we have a lot of ideas that we're not ready to talk about yet, but, you know, I'm optimistic that 27 will be a year of a lot of monetization innovation. Next question, please.

The next question is from Yousef Scully with Truist Securities. Please go ahead.

Great. Thank you so much. Maybe a quick question for Steve. Can you just quantify the marketing spend that was pushed into Q4 for Q3, the reasons for it, and would you have been able to grow a little faster had you actually met that marketing spend in intra-quarter? Thanks.

Yeah. In terms of quantity, we pushed about $8 million or so marketing spend from Q3 to Q4. I think we came in about $12 million better than we expected, but $8 million of that was marketing spend. It's a couple of reasons. One is just timing of campaigns. And two is, you know, we're going to stay financially disciplined, right? So in any given quarter, if we're not seeing the returns that we expect on marketing spend, we're not going to go spend those dollars just to fill the budget, right? And so I like to see us underspend for those reasons because it means we can deploy them in a different quarter at higher ROI. So it's really a combination of those two things. How much revenue we would have generated had we not done that is a little bit of a hypothetical that I'm not going to do at the moment. But, I mean, what I would say is, and I'll repeat it again, which I think is an important fact, you know, we're going out and saying we expect, you know, MAU, payers, and revenue, direct revenue. So while direct revenue didn't improve in Q3, we do expect it to improve in Q4 from a year-over-year growth perspective relative to Q3. So with the marketing spend in Q4 and everything else we have going, we expect to see improvement across all those metrics next quarter.

Next question, please.

The next question is from Benjamin Black with Deutsche Bank. Please go ahead.

Great. Thank you for taking my question. So the recommendation system looks to be, you know, at least a big part of the foundation of Tinder's turnaround. So how much better can matching outcomes become as, you know, the system moves towards more real-time personalization? And, you know, what advantages does Tinder scale really have and the data that you guys have? How much of an advantage is that for you guys? And then secondly, I'll be interested in hearing the learning from misconnections. I think, you know, that you mentioned a four times improvement in likes from women. It seems a bit of a game changer to me. So what are some of the hurdles sort of broadening out in misconnections? Thank you.

Yeah, thanks, Benjamin. QUnification and our RECS improvements have been really critical to our improving business results in 2026. We just rolled out QUnification to other user types. I think we just rolled it out to women seeking men and women seeking anyone or other different LGBTQ audiences, but we still have more to go. Real-time Rex, we've said we intend to launch by the end of the year. We're very confident in the potential that that will bring, but it's also unproven. So I think that event that we did, the CEO Connection event, where I spoke with Vinay and Mark, our CTO and head of product at Tinder, about Rex, I think Vinay said something like he thinks it's the second or third inning, or maybe he said the third or fourth inning maybe in terms of Rex to try to size the amount of potential improvements that still lay ahead. I think that's probably about right. So, you know, already huge improvements, but more to come. On missed connections, you know, this is a feature that we're testing in Canada right now. If you have no location services turned on, then once a week, we give you specific drops that say, here's somebody that you've crossed paths with in the week in a given neighborhood or in a given coffee shop, et cetera. And users love it. You know, the serendipity and kind of excitement is really meaningful, especially for Gen Z users. The nostalgia, the sense of a meet-cute, which is what our users are really looking for, and the digital bridge between an app and an IRL experience is really powerful. We are now working to improve it. We'll be assessing when and whether to roll it out more broadly. There's still a lot of work to do to improve the product, but so far, so good in what we've launched so far. Operator, next question, please.

The next question comes from Alec Brondolo with Wells Fargo. Please go ahead.

Yeah, hey, thanks so much. Maybe two from me. First, how did you choose the new focus brands for E&E, and does refocusing on a smaller number of brands create an incremental headwind to that business beyond Azar in 27? And then secondly, on Hinge, are the new subscriptions here launching in the fourth quarter giving users more choice and control? Is there any incremental detail you could provide around the value proposition? What is the opportunity here on paid conversion? Thanks.

Yeah, I'll take the E&E question, and then, Steve, you can answer the hinge question. So, in deciding which brands to prioritize with E&E, we looked at the white space that the different brands are going after and also the size in order to prioritize. So, for example, Upward and BLK and Her all are going after white space in their respective user segments where we think there's a real right to win, a reason to exist, a category white space that is not fully won by a Hinge or a Match or a Tinder or any standalone competitor. And then brands like Match, which are kind of more general population, we think there's a reason for them to exist in the 50-plus age segment and just the brand awareness and brand power of the term Match and just the size and scale of that really represents something that is worthy of prioritization. The other non-focused brands like an OKCupid, like a Plenty of Fish, like Salam's, these are brands that are still being worked on, but only synergistically across the portfolio. So, for example, we have a dedicated team that is improving profile creation and a dedicated team that is improving photo selection and a team that's building chat and a team that's building recommendations algorithm. When each of those teams launch a set of features, it goes out across the whole portfolio. So something like OkCupid is not left to its own devices. It's still being improved upon by these shared teams that are building E&E-wide technologies. So that's how we prioritize the different brands. And Steve, you want to take the hinge question?

Yeah, I think, look, we're pretty excited about the lower price subscription tier in TES right now. It's designed for women in particular, but also for price sensitive users. Remember that Hinge is one of the highest priced products we have. The revenue per payer, for example, at Hinge is almost twice out of 10, around 30 bucks. It also has one of the lower pair penetrations. Its pair penetration is only slightly more than half that of Tinder. So, you know, we think it makes sense to offer a lower-priced offering in what is otherwise a higher-priced product to get more pair conversion from more price-sensitive users. In terms of what it includes, think of it, I'm not going to get into every specific feature, but the broad brushstrokes are additional filters and custom location boundaries, features that women find valuable, and what we've seen in tests is it has improved conversion for both men and women, but women's conversion has been up more than men. And, you know, the other interesting thing here is that, remember, Hinge's gender balance between men and women is far better than most other apps. And women pay at far lower rates. That's true for Hinge, and that's true for everybody. And so if we can get this feature right and a feature set that really resonates with women, that will be, you know, really potentially powerful from a monetization perspective for Hinge, in particular with, you know, a large, you know, women user base and really good gender balance. So, we're going to keep testing and tweaking, but the early reads are good, and then, you know, we expect to roll it out more in Q4, so stay tuned. Next question.

The next question is from James Michael with Citi. Please go ahead.

Good afternoon. Thank you for taking my questions. Two here, please. First, tender payer penetration increased sequentially in year-over-year, and males are still declining faster than So how much additional pair conversion runway remains as we work to inflect back to malgrowth, and how do you think about the balance of conversion gains versus audience growth into 2027? And then as a quick follow-up, hinges opportunity in core markets, I think you noted an uptick in U.S. marketing, contributing to the improving registration trends. Could you talk a little bit about the opportunity to drive malgrowth and reconsideration in mature hinge geographies? Thank you.

Yeah, on the tinder pair penetration, you're right. Payer penetration was up again. That's something we've consistently seen is that the improvement in MAU is flowing through to improvement in payers, which is great. In terms of how much more room to go, while payer penetration at tinder is higher than hinge, which I just mentioned, it's still relatively low. It's in the low 20%. So, you know, we're always looking to optimize not only for the payer experience, but the free experience too. But in terms of, you know, the ability to drive further incremental payer conversion, I think there's lots of room. I think as we look ahead, what we're doing is we're not optimizing around, you know, short-term revenue growth. If we're really taking a look, Spencer got into this earlier, but, you know, finding ways to add value to the experience, both for free and paid users. And if we can add value, then I, you know, I see no reason why we can't increase, you know, monetization and pair conversion at Tinder going forward.

And I'll take the Hinge, Mao and Tam question. So in the U.S., Hinge is most highly penetrated on the coasts and in the 20 to 30 age group. If you look at, Smaller cities outside of the coast and age 30 to 40, there's ample room for Hinge to grow. We think at least another million monthly active users in the U.S. as we focus more on those other user segments and geographies. We've already started implementing that playbook with different marketing tactics and messages in order to focus on those secondary cities and slightly older age users. And we think that that playbook also is extendable to other core markets outside the U.S. like the U.K., Australia, and Canada. Operator, next question, please.

The next question is from Eric Sheridan with Goldman Sachs. Please go ahead.

Thanks so much for taking the question. I mean, the first one would be following up on, I think Benjamin asked earlier about the broader AI strategy. The flip side of that coin would be, how are you thinking about managing token costs or input costs within your broader cost structure as you continue to move from testing to scaling some of your AI initiatives? That would be one. And in the shareholder letter, you also talked about finding ways to drive tech platform efficiencies through elements of shared technology platforms or cross-pollinating. So the second part would be how should we be thinking about some of the efficiency dynamics that could be gained through some of those initiatives as we move out of 26 and into 27. Thanks so much.

Yeah, let me take the AI token costs. I think we've done a really good job here. The costs are definitely going up. But, you know, let me give you some more details around how we're managing it. We started probably with a budget this year of about $5 million for AI costs, but we had pretty low usage. We basically had engineers using AI and nobody else, and it was spotty at that. We sort of early in the year, May timeframe, we really wanted to push AI adoption and become a truly AI native company. We thought it was important for the overall, you know, long-term success of the business. And so we gave all our employees, you know, tools like Claude, tools like OpenAI, enterprise search tools like Glean, and gave them the training, gave them the tokens to go use these tools, and our cost probably went from $5 million to about $10 million, a little more than $10 million. So, it was unplanned, doubling of costs, but we think worthwhile and we're getting really good efficiency gains out of it. The way we offset those costs was by controlling headcount. So, not reducing the employee base, but hiring less, slowing headcount growth and saying, let's do more with less through the use of AI, and that's been really effective. Right now, I would say we're maturing as a company in terms of AI token usage, and we're really in that sort of efficiency phase. We've got an AI gateway that controls what models we're defaulting to and what models engineers can use. We're doing all sorts of things like making the most expensive models only available by request, but we have speed bumps or soft caps. Engineers get about $1,000 a month, and non-engineers get about $250. Once you hit that cap, that doesn't mean you have to stop your work. It means you have to go to your manager and say, look at the work I'm producing, and if it makes sense, you can keep going. And so we've given all the managers really great visualization into the spend within their departments, basically real-time token spending. And I think we've done an incredible job as a company overall in this regard. We do expect costs to go up a little again next year, but the hope is through these efficiency gains, we're now starting to look at open weight models, we'll be able to, you know, keep them under control. And then in terms of in the product and in the features themselves, and feel free to jump in, Spencer, there are more features that are using AI tokens and AI costs. And you want to cover how we're thinking about that?

Yeah. Well, let me answer it from a shared tech platform standpoint and efficiencies across the company. So I'll give you four quick examples. We've integrated our trust and safety tooling so that features like FaceCheck are now built centrally. across all brands. Another example of a shared service is Tinder's events products. So the module tab two on Tinder, where you can see who's going to an event and you can see the different types of events and this whole product roadmap around events. Now power is not just Tinder, but also BLK and likely in the future, other match group brands. So those are two examples of things that we're building centrally across multiple brands. Then two other potential examples that we're working towards is Tinder has built an AI prototyping tool where any employee at Tinder can enter a prompt to visualize a new feature to Tinder, and it'll instantly build a prototype of it and also build code for that prototyped new feature. And that's something that has really changed the software development lifecycle at Tinder, made us more design forward, just brought a higher pace of innovation. And that's something that we're looking to extend to some of our other brands, including E&E. And then a fourth example is Tinder has a homegrown customer relationship management platform that manages all of Tinder's push notifications, text messages, and emails. And it's really best in class, better than what companies pay millions or tens of millions of dollars a year to SaaS providers for that type of technology. And we're considering extending that to some of our other brands. So those are just a couple examples, Eric, of how we're building centralized technology and extending it across the whole company. Operator, next question, please.

The next question is from John Blackledge with TD Cowan. Please go ahead.

Great, thanks. For Hinge's newer markets outside of the U.S., is user growth and payer conversion following similar growth curves to Hinge's more mature markets? And then just another one on Hinge. On the RPP, should we expect that trend that we saw on 3Q to continue as you roll out the new lower-priced sub-tier? Thank you.

Yeah. Let me start, and feel free to jump in, Spencer. On the MAU growth, yeah, it's an important point to make. Global MAU growth came in at around 12%. What we saw sort of under the covers is actually core MAU improved a bit, which is great to see. Spencer talked a little bit about that. And growth in Europe slowed a little bit. Still phenomenally high growth, but to your point, there's a growth curve. As these countries scale, we expect their growth to slow over time. And so that's really what you saw in the headline number was core getting a little bit better, Europe slowing down a bit, and us netting out to about 12% growth. That's right around what we expected. Puts us right in track, not only for MAU, but also for the full year of 2026. So we feel good about the way those curves are playing out. It's just what we expected. We're entering LATAM. That's growing faster, but still small. And we've relaunched in India, where we have a pretty big MAU base today. And then what we're doing is we're laying the foundation for expansion into Japan in 27. I wouldn't expect a lot of revenue from Japan in 27 or users, but it's an important – first of all, it's one of our top – it's probably the top five largest markets from a TAM perspective, from a revenue perspective in the category, so an important one for a hinge to enter. And I think we'll be – we think there's a nice white space for it between pairs, which is a little bit more marriage-focused, and Tinder, which is more casual. All our research says it should do very well there, and I think it'll be a growth driver for 2028 and beyond. So, those are some of the hinge growth curves. What was the second part of the question? What was your second question? Sorry.

The RPP was down a little bit in three cubes.

Yeah, yeah.

That's how RPP is about going forward.

Yeah, thanks for pointing that out. So, yeah, what you're seeing is we saw an acceleration in payers, and we saw RPP down a little bit year over year in Q3. That is price optimizations, a new model we rolled out at Hinge. That was playing the biggest effect. To a lesser effect is the new lower price tier. That can have a bigger effect down the road. And then you normally, sort of underneath all that, we naturally get some RPP pressure because the growth in these expansion markets is still so much higher than the core markets, and the RPP on average is lower there than in a market like the U.S. On the price optimization models, let me just give you a little bit more detail there. What that is is, you know, a propensity to subscribe model. Most brands have it. It's something Tinder has been doing for years. I'd say most brands in the category do this. Hinge is just maturing in its monetization capabilities and so is now rolling this out where what it's doing is it's looking for those that haven't subscribed after a certain number of And, you know, are unlikely to subscribe ever. Again, Hinge is a high-priced product. We talked about that. And giving a targeted lower price to those users and driving pair conversion. That's driving up – that's accelerating pair growth and being offset by some RPP degradation. I'd expect that to actually increase a bit in Q4 just because this pricing model was rolled out sort of mid-Q3 and will be a full quarter in in Q4. But it's generating net positive revenue. It's another lever for offering a paid experience to more price-sensitive users. And third, and I think this is overlooked sometimes, payers help the ecosystem too. So, there's indirect benefits of higher paid conversion. Payers retain longer. They respond to likes better. They are more likely to buy ALC features. So, there's a lot of reasons why having a little bit higher payer penetration at hinge still won't be even close to the levels of Tinder makes a lot of sense, but that's what's causing a little noise in those metrics. And I'd expect that to continue in Q4. Operator, next question, please.

The last question will be from Andrew Marrock with Raymond James. Please go ahead.

Hi, thanks for taking my question. And maybe one more on that hinge in the international business. So you called out in the shareholder letter, and I think you answered a bit of this in the last question about the momentum in Europe and the newly launched LATAM markets. So I guess what kind of common threads are you seeing between these disparate geos? And on Japan specifically, what is kind of giving you the confidence that there is a space in the market, which has kind of been a tricky market for everyone in the past? Thanks.

Yeah, thanks, Andrew. You know, what we're seeing as the common thread in the different markets is that Hinge's slow and steady approach of customizing the product, customizing the marketing for the individual geography is working. So, for example, in India, having a slightly different set of features like screenshot banning, waitlist for men, and a couple other unique trust and safety features like ID verification and others are particularly useful. So we're taking a deliberate approach to Japan, learning from, gosh, probably 10 years of PEARS's success in the matrimony space. We've done a huge amount of original research in Japan to identify that there is white space between the matrimony apps and the more casual apps like Tinder. So we think there's an opportunity for Hinge to succeed without cannibalizing pairs in Tinder. And we're going to customize the Hinge product and marketing in order to achieve product market fit there, just as we have in Brazil and Mexico and India over the last year or so. So, I think, Operator, are there any other questions, or is that the last question?

That was the last question, sir.

Okay. All right. So, I'll just wrap up here. You know, as a reminder for anyone who joined late, we posted the full prepared remarks to the Investor Relations website for you to read through, so you can find the full script there. Hopefully, you like this new, more efficient approach. I just want to close by taking stock of my first seven quarters as CEO here. When I joined 21 21 months ago, Tinder users and revenue were declining, and there was skepticism that Tinder could be saved at all. Today, we've put points on the board and mostly put that question to rest. Several quarters of improving user trends at Tinder, top to bottom, from Sparks to Spark Coverage to Dow to Mal, and improvement in payers and revenue when adjusting for FX. So we've demonstrated that this turnaround is real and sustainable. We also took Hinge from $150-ish We purchased $220 million in quarterly revenue back in Q1 2025 when I started to over $220 million in quarterly revenue in Q2 of 26. We purchased her. We purchased about half of Sniffy's. We significantly improved employee engagement. We drove massive productivity improvements from AI. So we got a lot done in a pretty short period of time. Meanwhile, we bought back $1.2 billion of stock and paid $369 million of dividends and reduced diluted share count by 10% year over year as of yesterday. I'm very proud of what we've accomplished in these last 21 months, and I'm even more optimistic about where it will be 21 months from now. We'll talk to you in early February at Q4 earnings, and I hope to see many of you at our second Tinder Sparks event on February 23rd in New York. Until then, thanks, everybody. Bye-bye.

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.