Conference Transcript - MTCH 2026-05-27

Speaker 1

Okay. Good morning, everyone. We're pleased to have Stephen Bailey, CFO of Match Group, here at the conference. Thanks for coming. Appreciate it. I was just going to kick it off with Tinder. You guys called out improving engagement metrics in 1Q, including improving declines in the Sparks metric. What do you think are the best kind of leading indicators that you're seeing at Tinder that's kind of moving more towards even a stable or potentially a re-accelerating trajectory. And yeah, we'll start there. Skipping the safe harbor whole thing?

Steven Bailey, CFO

Normally, I do. Do you want to do that or not do that? I'll keep going. Maybe we can do it at the end. Sorry. No problem. So, yeah. So, look, I think here's the way I'm thinking about it. One is it's not just one metric. It's actually the thesis being proven out. So it's the fact that leading indicators are improving. So that sparks and sparks coverage, which is a six-way conversation, a meaningful connection. That was always what we thought would move first. And then we said, well, the thesis was that would lead to more lagging indicators or more core user metrics improving. And so we've seen that happen now. MAUs improve from minus 10 to minus 7. So that's proving out the thesis that the leading indicators, which is improved product experience, are going to translate into more core user metrics improving. Retention's also improved. So that's a core user metric. And then we said that that would ultimately lead to the core financial metrics improving too, what investors ultimately care about. And so we've seen that actually start to happen too. Pairs is a great example of that. Pairs improved from minus 8 in Q4 to minus 5. So that's a pretty marked improvement in Q1. And so to me, it's actually the most important thing is that the thesis is starting to be proven out, that fix the product. You'll see that first in metrics like Sparks. That'll lead to improving user trends. We're seeing that in MAU and retention. That will lead to better financial results. We're already starting to see that in payers and revenue, too, where at Tinder, revenue's coming better than expected lately, too. So it's more that the sequencing is playing out like we had hoped. That's what I'm most excited about.

Speaker 1

And I think it might have been March where it was the first month of new user registration growth since 2024. What demos are maybe driving that new user trend? And what do you view as the biggest driver of these gains?

Steven Bailey, CFO

Yeah, that was incredibly exciting to see, first of all. Registration's up 1% year over year. It's been many, many years since that's happened. So that's another step function change in the right direction. So that's new users downloading the app for the first time using Tinder. And what's really exciting to see is that it's pretty broad-based. I was looking at it just the other day, and it's really across almost, I would say, most cohorts. So it's both men, it's both women, it's largely speaking both older cohorts and younger users, and it's both international and the U.S. It's not every cohort, but it's pretty broad-based, which is fantastic to see. And it's really coming from a combination of, I would say, three things. One, probably the most impactful has been the shift in strategy of the marketing, which is more lower funnel now versus more brand perception shifting spend. It's still a combination of both, but we've shifted more heavily to down funnel. That's probably had the biggest impact. More spend just in general. Tinder, we spent up about $50 million year over year. So that's helping. And then features like Double Date, that's really resonating with Gen Z. It's helping that word of mouth flywheel. That's so important to the overall equation, too. So it's really those three things leading to better reg trends, which is fantastic to see.

Speaker 1

Yeah, that stood out to me huge this last quarter. Maybe on the product roadmap, you've mentioned a few, and we're getting towards the midpoint of the year. But I think as we get towards the back half of the year, what on the product roadmap is exciting or would you call out as something to look for?

Steven Bailey, CFO

I don't want to spill the beans on any super exciting new product roadmap things in the back half of the year. I'll let Spencer do that. I can talk more broadly, though. I think what I'm most excited about is there's clearly, at our company, I think broadly speaking across the category, a push to more IRL. I think that's going to be a big theme. And we've started to trial it in LA. It's going very well. We can talk more about that if you want. But we're going to amp up the IRL connections on Tinder, which is what Gen Z wants. And then sort of a related theme is more group-type features. So double date's just been hugely successful. One in four Gen Z women in the U.S. are using it. That's when you pair up with a partner and you swipe on other pairs and you go out on a double date. That's exactly what they're looking for. It's fun. It's lightweight. It's lower pressure. It's perceived to be safer. I think we're going to branch out into even more group-type features. Think beyond just a pair.

Speaker 1

that's a big opportunity for us to yeah maybe just the IRL or in real life um so at the product event in March you you guys talked about these events and catering to the younger users that I think you just mentioned how are these efforts going and then like do we view this as as driving significant revenue over a long period of time or is it part of like kind of the marketing and branding funnel for

Steven Bailey, CFO

Tinder? I think it's more the latter. I don't think it's a big revenue growth driver, at least for now. That's not the focus. It's really changing perception for Tinder, away from this is a hookup app and I'm tired of swipe fatigue, to this is a new people app where I'm finding and making meaningful connections in real life. We're trying to shift the sort of perception in that direction, and it's what Gen Z wants. They want more in real life connections, and Tinder's the largest platform in the world that can make those connections happen. And so that's how I see it. How is it going? Extremely well. That's why I'm saying in the back half of the year, I think you'll see a lot more of it. Because we piloted it in LA with 20 events so far. I think we're going to do 30. We'll have 30 done soon. And the feedback's just been incredible. The attendance is, I think, at about 85% attendance, which is great. So that's been the problem in the past. We've tried this at Match.com a long time ago. And the issue was there was always like, yes, yes, yes, I'd love to go to an event. But then when it came the day to actually go, people wouldn't show up. There's a lot of anxiety. I think the Gen Z generation is different. It's because they've lowered the pressure a bit. They want lower pressure connections. They don't need to find the love of their life at this event. right they want to go meet new people and see where it goes and so i think they think about events like through a different lens than prior generations and so 20 events uh really strong attendance you know we serve everybody after the event and say how you liked it the feedback's been incredibly strong we've been surveying just our broader users in la about just the offering of events. And the results are great. It's something like 50% of Gen Z in LA is saying they're interested in going to events, which is great. So the interest is there. I think it's 40% of Gen Z in LA on Tinder saying, you know, events are a really cool feature on Tinder. So the demand is definitely there. And I see us rolling it out much more broadly.

Speaker 1

Do you have a team dedicated to this in LA or is it just...

Steven Bailey, CFO

We have a small team. We have a small team that we borrowed from other parts of the company. What we're going to do is we're not going to curate the events, right? We're going to do this in a scalable way. We want to be the technology platform that makes these connections happen, not an events business. So we're really partnering with other events businesses that already have the event set up and they're curating the event. we're sponsoring it that's sort of the model we're using so it actually doesn't take a lot a lot of people to do it and the cost has been relatively reasonable to actually most of the expense has just been in marketing the event and kind of like what you said using it as a marketing tool for the broader tinder you know product experience more generally and we could we could expect

Speaker 1

maybe because it seems like it's been initially a pretty pretty good success like maybe we would see it in other markets or something down the road yes

Steven Bailey, CFO

Yes. I think we'll talk more about it in the next earnings call, but I think we've got pretty big plans in this area. I think it's going to be a big unlock for how do we win over Gen Z events is definitely part of that.

Speaker 1

Right. That's great. Sticking with Tinder, how much progress do you think you've guys made in improving the recommendation algorithm over the last year or so? and do you see an opportunity to drive further engagement and user experience improvements from recommendation changes?

Steven Bailey, CFO

A couple things. One, recommendations, I would say, has been the biggest win of the year. If you look at the metrics we just talked about, Sparks and retention and what's driving it, I would say the algo changes is about two-thirds of that. And so that's been the biggest win. combined with features like double date that's changing perception and marketing, that's been the winning formula but if you just look at pure A-B tests, what's driving metrics? It's retention and it's coming from better matches and the algos so that's great to see and so we get the question a lot was that low-hanging fruit and it's over now and now you've got to come up with something new and the answer is really no, honestly I just asked the team and they confirmed for me We're doing six algo tests right now, live. So the core algo changes are not done. We'll keep testing and keep optimizing. What other people also don't realize is that it's not just one algo. It's many algos across the app for different parts of the experience. And so there's a lot there that can be optimized.

Speaker 1

But effectively, what we've done so far

Steven Bailey, CFO

is really change the weighting of the algorithms. We've talked a lot about this. From generate as many likes as possible able to generate revenue to more keying off of user outcomes and sparks, meaningful connections. It might be less likes, but more meaningful connections. That's basically the work we've done so far. And what's been great to see is not only is it improving metrics like retention, but it's not having the revenue hit that we anticipated, less of a revenue hit than we anticipated. So that's great. Where we go from here is continued optimization, six tests live right now. And then I think the other big unlock that we have, it's really super early days, is feeding these algos more data and insights so they get better. The trick, you know, the challenge with Tinder was always there's not a lot of data to go off of, right? Like compared to a hinge, the profile is much lighter. That's by design, right? And so the algos are working off of a sliver of information about you and your profile and your interactions on the app, right? But, you know, we're testing a lot of really interesting AI-driven features. For example, you know, we talked a lot about some of the camera roll features we're doing. So there's an ongoing test right now that looks at, you know, with your permission, your camera roll. Most people have got thousands of photos on their camera roll. Not only can we say these are the best photos for you, which people struggle with, and this is the right order to put them in, but here's what we, you know, here's insights about you that we've cleaned from your photos. You like to cook. You like to travel. And we're going to start helping people not only fill out their profile better, which is another struggle, but also think about feeding all that information, like the metadata on the photos into the algos, can create much better connections, or much better matches. So I think that's the other big lens of this, is how do we get data to feed the algorithms still in a light, fun way? With chemistry, we've tested some of that, where it's like a back and forth Q&A, let me learn a little bit about you. let me feed it into the algos, that's still a huge opportunity.

Speaker 1

And AI has been a pretty big catalyst.

Steven Bailey, CFO

I think AI does a great job of two things. One, basically inference, like inferring something about you that's not explicit. The old algos is very rules-based. What are you looking for? What are your rule breakers? And it doesn't infer anything. But now, even in that short snippet of your profile, without you explicitly saying it, AI is better at inferring kind of what you like, what you dislike. And then two, it's what I said is it's very good at gleaning information about users in a lightweight way. Everybody's interacting with ChatGPT and everything else. You can have a conversation where it collects data, but it's not taxing on you as a user. Whereas in the past, it was like, fill out this huge profile to gather data. So I think that's the other place that AI does a really good job in.

Speaker 1

And just faster, like speed, too? Does it help from an efficiency perspective relative to if you're tuning up algorithms in the past when you weren't deploying AI?

Steven Bailey, CFO

It does. We can iterate on it faster, and it can learn more about you more quickly. You're right. And we've got something in Test right now, which is a feature in Tinder where we actually explicitly tell the user, hey, look, take your time, go through some of these profiles, swipe right or swipe left, because we're learning about you by doing that, especially for women who tend to not swipe right very often. We're asking them to take action so that AI can quickly glean insight into what they like and what they don't like, which is getting you better matches more quickly. It used to take a few days to figure it out. Now it takes, you know, a single session. So you're right.

Speaker 1

Maybe just, maybe one more on Tinder. And I think you touched on it, but I think it was probably one of the biggest issues for the platform was just the younger users, Gen Z. um and and maybe you've already touched on it but um do you think the perception of tinder with that cohort um has changed over the past year or so with all the things that you guys are doing and is there more kind of room to go um there with again with that with that younger cohort it's

Steven Bailey, CFO

It is changing, but the job is not done. Clearly, we've got further to go. How we know it's changing? Well, first of all, let me take a step back. The first thing is, does Gen Z want to meet new people? That's the first question to ask. And so we've asked that in surveys in many different ways. And effectively, the survey results say 80% of Gen Z, want to get into meaningful connections. So the want is there. They just want to do it in a different way. And I think the sort of headline is lower the pressure a lot from where it used to be. And so they want to get in connections. They want to do it a different way. And we're trying to build the products to do that. And I think what we're seeing, I'll just give you a couple of stats that we're building our confidence in. It's working. I mentioned this earlier. Double Date is a feature where 25% of Gen Z women in the U.S. are using it, and they're using it at far higher rates than millennials or older coercive users. The other, I think, probably best stat metric that we've given so far is retention of U.S. Gen Z women, so how long they're staying on the app. When we talk about good churn and bad churn, good churn is you met someone, you left the app. We want that all day long, because that means you come back when you're single again, and you tell your friends, and we get the word of mouth. What we're trying to do is reduce bad churn, right? Bad churn is, I'm not meeting new people on this app, so I'm not going to use it anymore. And we've started to see that. U.S., women, Gen Z, retention is up three points year over year. That's year over year improvement and retention, and it continues to improve. So that's telling us that what we're doing is working. It's really two things we're doing. One is the app is more effective. It just works better, right? That's the algos. And two, we're starting to change perception with features like double date and with features like IRL. So I do think it's starting to work. We used to talk a lot about Tinder perception as well. We tracked this metric. I don't know if you remember. It was like, is Tinder a hookup app? And we used that to measure brand marketing efficacy. And so I just looked at that the other day. But that's continued to meaningfully decline. And so I do think perception is changing. And we're starting to get Gen Z to reconsider Tinder. The other good, I guess, good stat is, as a survey result, is that about half of Gen Z women say Double Date is a defining feature of Tinder. So these features are starting to work. But it's going to take a little bit more time to really get back to growth. I think we're on the right path.

Speaker 1

That's great. Let's go to pivot over to a platform that's growing very nicely, Hinge. You recently maintained the billion-dollar revenue guide for 2027. Maybe just talk about product-led growth drivers there as we get through this year and into next year. What's kind of working and what are the biggest growth drivers?

Steven Bailey, CFO

Yeah, I mean, phenomenal growth, 28% revenue growth in Q1. And they're on track to deliver the full-year expectations we put out earlier in the year and on the path to $1 billion in 2027 with expanding margins. So incredibly strong results there. There's a few things. One, I think the growth is coming from a number of areas. One is there's a long runway on monetization in core markets. They still monetize far lower than Tinder. That's a misconception. I think there's some confusion because if you just look at the external results, we break it down with RPP and payers, and at face value, you look at Hinge, and it's like, well, RPP is double what Tinder's is, so that monetization opportunity is not there. That's not really the right way to look at it. You really have to look at it from a revenue per MAU perspective, which bakes in pair penetration and RPP. And if you look at it that way, and the other benefit I have in looking at the internal data is, I can sort of look at it apples to apples, right? And I can control for the geomix of those two businesses. So Tinder's, you know, RPP and pair penetration gets weighted down because it's so global. And these other international markets monetize less than the U.S., where Hinge is more, you know, concentrating those core markets that tend to monetize higher. So basically, if you control for all that, there's still a long runway to go for monetization improvement by hinge and core markets. So I think that's going to drive some growth. Europe is also still pretty early days from a monetization perspective and growing extremely strong. I don't know if we've said this. I don't think we've said this on earnings, but if you just look at revenue growth in European expansion markets, it's 100% year over year the last three quarters. They're just massive growth and still a long runway to go if you look at it relative to Tinder. And then third is, and I think probably most importantly at this point in its growth trajectory, is it continues to resonate in every new market it enters. So it's the number two or three dating app in Mexico and a couple other countries in South America where it just entered in Brazil. And so that's just another continent that it's resonating in. And so it's building our confidence in its ability to just be a global brand, right? And so then the question becomes, okay, well, when is it going to – it probably is going to resonate in Asia, too. It resonated in Europe. It resonated in South America. It's resonated in core-English-speaking markets. It's probably going to work in Asia, too. And that's a huge market that's just completely untapped. I mean, Japan is one of the biggest markets in the world just from a dollar's perspective. And so we're, to be honest, talking more and more now about, okay, hey, we're going to get to the billion through basically momentum. I mean, we've got to keep executing. So how do we get to the two billion? That's kind of where the lens has shifted, which I think is because we see, okay, this could be a global brand. So that's super exciting. And then the last thing I would just say about Hinge that I think is important is, you know, we've, in a way, kind of learned from the Tinder mistakes a little bit. and they are myopically focused on product innovation. And so they're not letting their foot off the gas on, okay, we've got the user growth, so let's shift all the focus to monetization. It's a really balanced roadmap between monetization and true product innovation, which is necessary to get back to category growth, right? And so you see that in this last quarter where we rolled out three super interesting new product features. There's a friend's product feature, friends take that brings your friends into the experience and helps them give insights about you on the profile. There's a feature called Signals that we're working on that adds basically you could earn a badge through good behavior. That is a feature that really will resonate with women. So we're really innovating on the product too, I think at a really good pace to help. um so that just that you know that is the way to you know long-term sustainable growth product and continued product innovation investment combined with you know monetization and the global appeal i think there's a long runway to go there that's awesome um how do we think like

Speaker 1

so if tinder uh you know trends continue um and and things continue to improve and and then hinges has a lot of runway and great growth right now. Over a three- to five-year period, how do you see the brands coexisting within Match?

Steven Bailey, CFO

Yeah, I always harp back to the gem, which we rolled out a few quarters ago, which I think is a simple way to think about it, where our brands fit on sort of three axes, focus, fun, and familiarity. and focus is Hinge, fun is Tinder. Familiarity is a lot of the E&E brands that we talk about that are a little bit more demographically focused and there's really a place for all of them. And we're going to ensure that remains the case. A good example is, you know, IRL is applicable to both Hinge and Tinder, right? And they both have a Gen Z user base. But it's going to look very different and how that sort of manifests itself in the app looks very different, right? So there's an IRL experience, which is the third product feature that Tinge just rolled out, that basically gets you out on a date right away. Gets you out in IRL with a connection. But the way it does it is very different than the Tinder events product strategy we just talked about. It's more a drop down. You match with someone. You get to say, do you want to go straight to a date? Where would you like to go? coffee, dinner, whatever, pick a time, okay, let's meet. Let's get rid of the back and forth chatting and let's just go out on a date. That's IRL for Hinge. That's way different than the IRL for Tinder, which is let's go to an event and sort of just hang and see what happens. And so we'll keep those paths pretty separate and distinct. And the couple other points I would make is it's a multi-app category, right? Users are using three to four apps at a time, So there's no reason why someone can't be on Tinder and Hinge. That's actually what happens quite frequently. And we think there's a huge opportunity around cross-sell and bundling and just making better use of our portfolio of brands. It's a strategic advantage we have that we haven't done a lot on. So we do have an internal project called Mercury, which is cross-sell. It's generating $20, $30 million a year in revenue already, which is, you know, you're on, you know, BLK, and we show you an ad for Tinder, and we say, would you like to join Tinder too? And it's one-click profile transfer. So I think that's the path forward, is keeping these apps unique and distinct, and then offering, and then providing offerings that only we can around bundling and cross-sell that a lot of our competitors can't.

Speaker 1

Okay, we, I have time for a couple more questions here, so I'm going to try to go quick because I have a lot more to get through. I'll try to give quicker answers, too. No, no, no. The Sniffy is just staying with the brands. You invested in Sniffy's. How should we think about it? Can you just remind people roughly minority stake?

Steven Bailey, CFO

I'll give you the one-minute answer. $100 million investment, large minority stake, off-balance sheet. not consolidated, number two player in that non-heterosexual male category, which is the largest demographic segment in the category. Just look at Grindr and their market cap and how well they've done. We think there's a path to make it number one, and that's why we've invested in it. We're going to help support it with trust and safety. We're going to work together to get back in the app store with a safe-for-work product. and, you know, we're super excited. It has great brand residents, huge following, 3 million MAU, founders are great and we're going to do it in a way where we're playing the supporting role but we're not going to sort of mess up what, you know, all the great things they've done as being an independent founder-led business. So that's the strategy. I think it's super exciting. We're shutting down Archer. That was a bet we made, just hasn't found the product market fit that we wanted

Speaker 1

and so this is a better bet for us. Okay. I want to hit margin and capital allocation. On the margin, 200 bps of margin expansion guide at the midpoint, just talk about just the drivers for margin, and then I'll finish with capital allocation. Great. Thank you. I think capital allocation is an underappreciated part of

Steven Bailey, CFO

the story. Margin in one minute is, first of all, you're giving us, first of all, there's a lot of one-time costs in 2025, which we've been explicit about. We're extremely clean with our EBITDA definition, more so than most companies. So we try to call it out. But if you sort of strip all those one-time costs out, margins are basically flat year over year, 37.5%-ish. That's by design. We could have expanded margins further through IP fee savings, through the headcount reductions we've made, but we've plowed it back into growth, which has been a great strategy for We've effectively created $100 million of headcount-related savings, $125 million-ish in IAPP-related savings, $225 million that we plowed back into Tinder and Hinge product and marketing. Where it goes from here is it's mostly structural, too. You know, it's not – but I think ultimately my goal is to get growth back. I'm thinking about long-term adjusted EBITDA, not necessarily margins for the sake of margins. And the way, you know, I always say that the best way, the easiest way to generate margin expansion is revenue growth, right? Just because of the operating leverage in the business. So if we can get Tinder and the brands back to better growth, which we think we can over the next couple of years, that will give us lots of optionality to expand margins further. That's great.

Speaker 1

Let's close with capital allocation. I mean, Match is an incredible free cash flow generator. You guys have been super disciplined with capital allocation in recent years. So just, yeah, just a couple, like a minute on, you know, how you see capital.

Steven Bailey, CFO

Yeah, I mean, we think of it as like the coiled spring analogy, right? What we're doing, we're coiling the spring up by working hard to turn around Tinder and get free cash flows back to growth. They've been about flat for the last few years, right? We're still $1.1 billion in free cash flow. And we're buying back shares all along. And so we've reduced share count outstanding. We think we'll reduce it 5% to 7% each year over the next few years. like a CAGR sort of rate. And when we get through the end of this, the share count's a lot lower. The cash flow starts to grow. And it's a coiled spring that just generates fantastic free cash per share and returns. And free cash per share was up in the 20% year-over-year growth last year. It'll be in the high teens this year. It's just phenomenal. I think people don't appreciate it. It's a big part of the overall turnaround story. That's great. All right. So I think we're out of time. Thank you so much.

Speaker 1

Thank you. Appreciate it. Great to see you.