Match Group(MTCH) - 2025 Q2 - Quarterly Results

CEO's Strategic Vision & Three-Phase Turnaround CEO's Strategic Vision & Three-Phase Turnaround Match Group's CEO outlined a three-phase turnaround strategy—Reset, Revitalize, and Resurgence—aimed at transforming the company and Tinder into an innovative, product-and-engineering-first organization focused on user outcomes and long-term growth - The CEO's goal is to reshape Match Group and Tinder into an innovative, product-and-engineering-first company, optimized for user outcomes and built for the long term[1] - The turnaround strategy is structured into three phases: Reset, Revitalize, and Resurgence[2] Q2 2025 Financial Highlights Match Group's Q2 2025 performance saw total revenue remain flat year-over-year, with a decline in payers but an increase in revenue per payer (RPP); operating income and adjusted operating income experienced slight declines Q2 2025 Key Financial Metrics | Metric | Q2 2025 Value (in millions) | Change vs. Q2 2024 | | :--- | :--- | :--- | | Total Revenue | $864 million | 0% | | Direct Revenue | $845.5 million | 0% | | Operating Income | $194 million | (5)% | | Adjusted Operating Income | $290 million | (5)% | | Payers | 14.1 million | (5)% | | RPP | $20.00 | +5% | - Match Group's Total Revenue and Adjusted Operating Income exceeded the high-end of guidance, excluding a $14 million charge for a preliminary settlement with the Federal Trade Commission[40] Phase One: Reset Company-wide Reset Initiatives The 'Reset' phase involved rebooting company culture to emphasize urgency and accountability, addressing Tinder's product stagnation through new management and a revised roadmap, and implementing organizational changes like flattening the structure and creating autonomous product/engineering pods - The initial months of the 'Reset' phase focused on learning the businesses, understanding teams, and rebooting the culture to emphasize urgency and accountability[5] - Tinder, the world's largest dating app, was a primary focus due to product stagnation caused by a lack of innovation and a focus on short-term monetization[7] - Actions at Tinder included installing new management, improving the product roadmap, and placing it under direct CEO leadership[7] - Organizational changes at Tinder involved flattening the structure by removing over 20% of managers, reducing team sizes, and creating autonomous product and engineering pods with greater accountability[8] - The company doubled its release cadence, broke down silos between brands, and established a centralized AI group to build shared AI tooling across all brands[8][10] Brand Strategy Realignment Match Group realigned its brand strategy to deliver real user outcomes across a broad spectrum of preferences; Hinge is focused on intentioned dating, Tinder on casual connections, Evergreen & Emerging (E&E) brands on unified platforms, and Match Group Asia (MG Asia) on regional growth and global expansion of Azar's video service - All brands are now guided by a commitment to speed, accountability, relentless product execution, and delivering real user outcomes across a broad spectrum (casual to serious, romantic to platonic)[13][14] - Hinge is singularly focused on intentioned dating, Tinder on casual connections, E&E brands on unleashing a unified platform and supporting communities, and MG Asia on launching/growing brands in Asia and expanding Azar's 1-1 video service globally[14] Phase Two: Revitalize Tinder Product Acceleration Tinder's product roadmap is rapidly accelerating to address user pain points in authenticity, dating fatigue, and outcomes; recent launches include Double Date, expanded Face Check, and enhanced Bot Detection; upcoming initiatives for H2'25 include UI refresh, improved recommendations, and new interactive matching features, with early metrics showing positive trends in user outcomes - Tinder's product roadmap aims to solve three core user pain points: authenticity, dating fatigue, and outcomes[16] - Double Date launched globally in June, showing strong early traction with 92% of users under 30; women using it are 3x more likely to send a Like and 4x more likely to match[19] - Expanded Face Check service to new markets, including California, and enhanced Bot Detection systems to improve platform safety and trustworthiness[18][19] - Piloted an Interactive Matching product in New Zealand, with plans for expansion, and testing a more flexible Preferences system[19] - Planned H2'25 initiatives include a UI Refresh, See Who Likes You Redesign, Improved Recommendations, Contextual Liking, and Modes[17][25] - Tinder's pace of product innovation is strong, with deeper signals like match rate, contact exchange, and inferred IRL meetups trending up[23] Hinge Momentum and Growth Hinge is a key growth engine, poised for accelerating year-over-year revenue growth and margin expansion in 2025; its success is driven by product innovations like an AI-powered Recommendation Algorithm (15% increase in matches) and Prompt Feedback, alongside robust user growth, with MAU up nearly 20% Y/Y globally and over 60% Y/Y in European expansion markets - Hinge is well-positioned to deliver accelerating year-over-year revenue growth in each subsequent quarter of 2025, while also continuing to expand margins[26] - A new AI-powered Recommendation Algorithm launched in March is driving a 15% increase in matches and contact exchanges, leading to meaningful upticks in payer conversion[28] - Prompt Feedback, a first-of-its-kind AI feature, reduced generic answers by a third and more than doubled thoughtful, high-quality responses during onboarding[28] - Hinge grew its Monthly Active Users (MAU) by nearly 20% year-over-year in the first half of 2025[30] - MAU in European Expansion markets increased by over 60% year-over-year in the first half of 2025, with planned launches in Mexico and Brazil later this year[32] - Planned H2 2025 product strategies include noticeably improving Recommendations throughout the app experience with more AI-powered algorithms and testing new AI-powered coaching capabilities like Warm Intros and Conversation Starters[29] Strategic Growth Drivers Across Portfolio Match Group is reinvesting approximately $50 million in the second half of 2025, leveraging a stronger financial foundation, favorable foreign exchange trends, and reduced in-app purchase fees; these investments target product testing at Tinder, geographic expansion for Hinge, Azar, and The League, and early-stage bets on new dating app concepts - The company plans to allocate approximately $50 million in the second half of 2025 towards product testing at Tinder, geographic expansion for Hinge, Azar, and The League, and early-stage bets like Archer, HER, and a new dating app concept[35] - These investments are supported by a stronger financial foundation from recent restructuring, favorable foreign exchange trends, and reduced in-app purchase fees through alternative payments testing[35] - The strategy across the portfolio focuses on building for distinct audiences, prioritizing user outcomes, and driving urgency[34] Phase Three: Resurgence Future Outlook and Long-Term Vision Expected in 2026-2027, the 'Resurgence' phase aims to transform Tinder into a low-pressure, serendipitous experience for Gen Z and extend Hinge's leadership in intentioned dating through continued AI innovation and international growth; the company anticipates a new era for the dating category with renewed trust and long-term growth potential - The third phase, 'Resurgence,' is expected in 2026 and 2027[37] - Tinder is intended to transform into a low-pressure, serendipitous experience designed for Gen Z[37] - Hinge is expected to extend its leadership in intentioned dating, powered by continued AI innovation and international growth[37][38] - The dating category is projected to enter a new era with renewed trust, strong demand, and long-term growth potential[38] Q2 2025 Financial Performance Consolidated Financial Results Match Group's Q2 2025 Total Revenue was $864 million, flat year-over-year, and Adjusted Operating Income was $290 million, down 5% year-over-year; Payers declined 5% to 14.1 million, while RPP grew 5% to $20.00; excluding restructuring and legal settlement charges, Operating Income increased 10% and Adjusted Operating Income increased 5% year-over-year - Match Group's Total Revenue was $864 million, flat Y/Y, and down 1% Y/Y on an FX neutral basis; Excluding the exit of live streaming businesses, Total Revenue was up 1% Y/Y[42] - Payers declined 5% Y/Y to 14.1 million, while Revenue Per Payer (RPP) grew 5% to $20.00[42] - Operating Income was $194 million (down 5% Y/Y, 22% margin), and Adjusted Operating Income (AOI) was $290 million (down 5% Y/Y, 34% margin)[43] - Excluding $18 million in restructuring costs and a $14 million legal settlement charge, Operating Income increased 10% Y/Y (26% margin) and AOI increased 5% Y/Y (37% margin)[43] Operating Costs and Expenses Total operating expenses increased 2% year-over-year in Q2; cost of revenue decreased 1% due to live streaming shutdown and lower web services, offset by increased in-app purchase fees; selling and marketing costs decreased 4%, while general and administrative costs rose 19% primarily due to restructuring and legal settlement charges - Total expenses, including stock-based compensation, were up 2% Y/Y in Q2[45] - Cost of revenue decreased 1% Y/Y (28% of Total Revenue), driven by reduced variable expenses from live streaming shutdown and lower web services costs at Tinder, partially offset by increased IAP fees at Hinge[45] - Selling and marketing costs decreased $6 million (4% Y/Y), primarily due to lower marketing spend at Tinder and E&E[45] - General and administrative costs increased 19% Y/Y (16% of Total Revenue), mainly due to restructuring costs and the legal settlement charge[45] - Product development costs grew 1% Y/Y and remained flat as a percentage of Total Revenue at 13%[45] Brand-Specific Financial Performance Q2 2025 saw varied performance across Match Group's brands: Tinder's Direct Revenue and Payers declined, Hinge continued strong growth in revenue and payers, E&E experienced revenue and payer declines with an operating loss, and MG Asia's Direct Revenue declined but showed improved operating loss and increased Adjusted Operating Income Tinder Financial Performance Tinder's Direct Revenue in Q2 was $461 million, down 4% year-over-year, with Payers declining 7% to 9.0 million; RPP, however, grew 3% to $17.14; Operating Income and Adjusted Operating Income also saw slight declines, impacted by restructuring costs Tinder Q2 2025 Financial Performance | Metric | Q2 2025 Value (in millions) | Change vs. Q2 2024 | | :--- | :--- | :--- | | Direct Revenue | $461.2 million | (4)% Y/Y, (5)% Y/Y FXN | | Payers | 9.0 million | (7)% Y/Y | | RPP | $17.14 | +3% Y/Y | | Operating Income | $217.0 million | (1)% Y/Y | | Operating Income Margin | 46% | | | Adjusted Operating Income | $246.2 million | (2)% Y/Y | | Adjusted Operating Income Margin | 52% | | - Tinder's Operating Income and Adjusted Operating Income were negatively impacted by costs associated with restructuring operations[44] Hinge Financial Performance Hinge continued its strong momentum in Q2, with Direct Revenue increasing 25% year-over-year to $168 million; this growth was driven by an 18% increase in Payers to 1.7 million and a 6% rise in RPP to $31.96; both Operating Income and Adjusted Operating Income saw significant year-over-year increases Hinge Q2 2025 Financial Performance | Metric | Q2 2025 Value (in millions) | Change vs. Q2 2024 | | :--- | :--- | :--- | | Direct Revenue | $167.5 million | +25% Y/Y, +24% Y/Y FXN | | Payers | 1.7 million | +18% Y/Y | | RPP | $31.96 | +6% Y/Y | | Operating Income | $38.9 million | +29% Y/Y | | Operating Income Margin | 23% | | | Adjusted Operating Income | $53.8 million | +27% Y/Y | | Adjusted Operating Income Margin | 32% | | - Hinge's growth was driven by strong user growth across all markets combined with continued monetization optimizations[46] Evergreen & Emerging (E&E) Financial Performance Evergreen & Emerging (E&E) Direct Revenue in Q2 was $148 million, down 8% year-over-year, with Payers declining 15% to 2.3 million; RPP, however, rose 8% to $21.34; the segment reported an Operating Loss of $(4.4) million and a 62% decline in Adjusted Operating Income, impacted by legal settlement and restructuring charges Evergreen & Emerging (E&E) Q2 2025 Financial Performance | Metric | Q2 2025 Value (in millions) | Change vs. Q2 2024 | | :--- | :--- | :--- | | Direct Revenue | $147.9 million | (8)% Y/Y, (10)% Y/Y FXN | | Payers | 2.3 million | (15)% Y/Y | | RPP | $21.34 | +8% Y/Y | | Operating Income (Loss) | $(4.4) million | NM (decrease of $24 million Y/Y) | | Operating Income Margin | (3)% | | | Adjusted Operating Income | $16.1 million | (62)% Y/Y | | Adjusted Operating Income Margin | 11% | | - E&E's Operating Income and Adjusted Operating Income were negatively impacted by the legal settlement charge and costs associated with restructuring operations[46] Match Group Asia (MG Asia) Financial Performance Match Group Asia (MG Asia) delivered Direct Revenue of $69 million in Q2, down 6% year-over-year, though up 3% Y/Y excluding live streaming; Payers increased 6% to 1.1 million, while RPP declined 12% to $21.53; the segment showed an improved Operating Loss of $(0.3) million and a 16% increase in Adjusted Operating Income Match Group Asia (MG Asia) Q2 2025 Financial Performance | Metric | Q2 2025 Value (in millions) | Change vs. Q2 2024 | | :--- | :--- | :--- | | Direct Revenue | $68.9 million | (6)% Y/Y, (8)% Y/Y FXN | | Direct Revenue (Ex-Live) | $68.9 million | +3% Y/Y, +2% Y/Y FXN | | Azar Direct Revenue | $40.3 million | +3% Y/Y, +6% Y/Y FXN | | Pairs Direct Revenue | $28.7 million | +3% Y/Y, (5)% Y/Y FXN | | Payers | 1.1 million | +6% Y/Y | | RPP | $21.53 | (12)% Y/Y | | Operating Income (Loss) | $(0.3) million | Improvement of $5 million Y/Y | | Operating Income Margin | (0)% | | | Adjusted Operating Income | $16.0 million | +16% Y/Y | | Adjusted Operating Income Margin | 23% | | - The decline in RPP was partially due to the exit of Hakuna mid-last year[46] Capital Allocation & Liquidity Match Group maintained gross leverage of 2.8x and net leverage of 2.5x at the end of Q2, with $340 million in cash; the company repurchased $225 million of shares and paid $47 million in dividends, deploying nearly 120% of Free Cash Flow to shareholders, and remains committed to returning 100% of Free Cash Flow annually - Gross leverage was 2.8x and net leverage was 2.5x at the end of Q2[47] - The company ended the quarter with $340 million of cash, cash equivalents, and short-term investments[47] - In Q2, Match Group repurchased 7.6 million shares for $225 million and paid $47 million in dividends, deploying nearly 120% of Free Cash Flow for capital return to shareholders[47] - The company maintains its commitment to target returning 100% of Free Cash Flow to shareholders on a full-year basis through share buybacks and dividends[47] Financial Guidance Q3 2025 Outlook For Q3 2025, Match Group anticipates Total Revenue between $910 million and $920 million, representing 2-3% year-over-year growth (1-2% FXN); Adjusted Operating Income is projected at $330 million to $335 million, a 3% year-over-year decline, with a 36% AOI margin at midpoints, primarily due to increased marketing spend Q3 2025 Financial Guidance | Metric | Q3 2025 Guidance (in millions) | Y/Y Change | | :--- | :--- | :--- | | Total Revenue | $910 million to $920 million | +2% to +3% (+1% to +2% FXN) | | Adjusted Operating Income | $330 million to $335 million | (3)% | | Adjusted Operating Income Margin | 36% (at midpoints) | | - The expected Y/Y decline in Adjusted Operating Income is driven by an anticipated 17% Y/Y increase in marketing spend due to the timing of brand campaigns at Tinder and Hinge, and savings reinvestments[48] Full Year 2025 Outlook Match Group expects full year 2025 Total Revenue towards the high-end of guidance, benefiting from positive FX impacts, and mid-teens year-over-year Indirect Revenue growth; the company aims for a 36.5% Adjusted Operating Income margin (35.4% as reported) after excluding restructuring and legal settlement costs, and projects Free Cash Flow of $1.06 billion to $1.09 billion, a significant improvement - Full year 2025 Total Revenue is expected towards the high-end of guidance, primarily due to positive FX impacts, with a nearly half-point FX tailwind[50] - Indirect Revenue growth is expected in the mid-teens year-over-year[50] - The company expects to achieve a 36.5% Adjusted Operating Income (AOI) margin (approximately 35.4% as reported) after excluding $25 million in restructuring costs and a $14 million legal settlement charge[51] - Free Cash Flow is projected at $1.06 billion to $1.09 billion, a meaningful improvement from initial guidance, driven by increased Free Cash Flow conversion and expected lower cash taxes[52][64] - Capital expenditures are expected to be $55 million to $65 million, and stock-based compensation expense is projected at $260 million to $270 million[52][53][64] - Continued testing of alternative payments, with Hinge expected to have an option by late Q3, could provide margin upside or fund growth initiatives not included in current guidance[54] - A potential one-time benefit to AOI related to expenses accrued in prior periods could arise if Canada rescinds its Digital Services Tax, though this is not included in current guidance[55] Other Updates Reporting Changes Match Group plans to rename its non-GAAP profitability measure from Adjusted Operating Income to Adjusted EBITDA, with no numerical difference; additionally, the definition of Monthly Active Users (MAU) will change from a last 28-day to a calendar month basis, with a reconciliation provided - Starting next quarter, the non-GAAP profitability measure 'Adjusted Operating Income' will be renamed to 'Adjusted EBITDA,' with no numerical difference[56] - The definition of Monthly Active User (MAU) will change from a last 28-day to a calendar month basis, with a reconciliation of both definitions to be provided[57] Appendix Reconciliations of GAAP to Non-GAAP Measures This section provides detailed reconciliations of GAAP to non-GAAP financial measures, including Operating Income to Adjusted Operating Income for Q2 2025 and Q2 2024, forecasted Q3 2025, and for leverage ratios; it also includes reconciliations of Operating Cash Flow to Free Cash Flow for H1 2025 and full year 2025 forecasts, and GAAP Revenue to Non-GAAP Revenue excluding foreign exchange effects Q2 2025 GAAP to Non-GAAP Reconciliation by Brand | Metric (Q2 2025) | Tinder (in millions) | Hinge (in millions) | E&E (in millions) | MG Asia (in millions) | Corporate & unallocated costs (in millions) | Total Match Group (in millions) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Operating Income (Loss) | $216.968 million | $38.926 million | $(4.397) million | $(0.262) million | $(57.314) million | $193.921 million | | Stock-based compensation expense | 23.722 million | 14.044 million | 10.409 million | 5.652 million | 13.640 million | 67.467 million | | Depreciation | 5.524 million | 0.865 million | 6.500 million | 3.623 million | 1.549 million | 18.061 million | | Amortization of intangibles | — | — | 3.559 million | 6.939 million | — | 10.498 million | | Adjusted Operating Income (Loss) | $246.214 million | $53.835 million | $16.071 million | $15.952 million | $(42.125) million | $289.947 million | | Revenue | $476.701 million | $167.505 million | $151.349 million | $69.155 million | — | $863.738 million | | OI Margin | 46% | 23% | (3)% | 0% | NA | 22% | | AOI Margin | 52% | 32% | 11% | 23% | NA | 34% | Q3 2025 Forecasted GAAP to Non-GAAP Reconciliation | Metric (Q3 2025 Forecast) | Amount (in millions) | | :--- | :--- | | Operating Income | $241 million to $246 million | | Stock-based compensation expense | 63 million | | Depreciation and amortization of intangibles | 26 million | | Adjusted Operating Income | $330 million to $335 million | | Revenue | $910 million to $920 million | | Operating Income Margin (mid-point) | 27 % | | Adjusted Operating Income Margin (mid-point) | 36 % | H1 2025 Free Cash Flow Reconciliation | Metric (H1 2025) | Amount (in millions) | | :--- | :--- | | Net cash provided by operating activities | $436.959 million | | Capital expenditures | $(28.297) million | | Free Cash Flow | $408.662 million | Full Year 2025 Forecasted Free Cash Flow Reconciliation | Metric (FY 2025 Forecast) | Amount (in millions) | | :--- | :--- | | Net cash provided by operating activities | $1,125 million to $1,145 million | | Capital expenditures | $(55 million to $65 million) | | Free Cash Flow | $1,060 million to $1,090 million | Q2 2025 Revenue Excluding Foreign Exchange Effects | Metric (Q2 2025) | As Reported ($M) | FX Effects ($M) | Excl. FX ($M) | % Change Excl. FX | | :--- | :--- | :--- | :--- | :--- | | Total Revenue | $863.7 million | $(11.2) million | $852.5 million | (1)% | | Total Revenue (Ex-Live) | $863.7 million | $(11.2) million | $852.5 million | 0% | | Direct Revenue | $845.5 million | $(11.1) million | $834.3 million | (2)% | | Tinder Direct Revenue | $461.2 million | $(6.2) million | $454.9 million | (5)% | | Hinge Direct Revenue | $167.5 million | $(1.6) million | $165.9 million | 24% | | E&E Direct Revenue | $147.9 million | $(2.2) million | $145.6 million | (10)% | | E&E Direct Revenue (Ex-Live) | $147.9 million | $(2.2) million | $145.6 million | (8)% | | MG Asia Direct Revenue | $68.9 million | $(1.1) million | $67.8 million | (8)% | | MG Asia Direct Revenue (Ex-Hakuna) | $68.9 million | $(1.1) million | $67.8 million | 2% | | Azar Direct Revenue | $40.3 million | $1.0 million | $41.3 million | 6% | | Pairs Direct Revenue | $28.7 million | $(2.1) million | $26.6 million | (5)% | Definitions of Non-GAAP Measures This section defines key non-GAAP financial measures, including Adjusted Operating Income (AOI), AOI Margin, Free Cash Flow (FCF), and Revenue Excluding Foreign Exchange Effects; it explains their calculation, rationale for use by management and investors, and acknowledges their limitations compared to GAAP results - Adjusted Operating Income (AOI) is defined as operating income excluding stock-based compensation expense, depreciation, and acquisition-related items (amortization of intangible assets and impairments)[69] - AOI is considered useful for comparing performance, internal budgeting, and management compensation, as excluded items are non-cash in nature[68][69] - Free Cash Flow (FCF) is defined as net cash provided by operating activities less capital expenditures, representing cash generated by operating businesses before non-operational movements[71] - Revenue Excluding Foreign Exchange Effects is calculated by translating current period revenues using prior period exchange rates to provide a comparable framework for assessing performance without currency volatility[73][74] - Non-cash expenses excluded from non-GAAP measures include stock-based compensation expense, depreciation, and amortization/impairments of intangible assets[75][76][77] Additional Definitions This section provides definitions for specific operational and financial terms used in Match Group's reporting, including the composition of its brands (Tinder, Hinge, Evergreen & Emerging, Match Group Asia), types of revenue (Direct, Indirect), user metrics (Payers, Revenue Per Payer, Monthly Active User), and leverage ratios - Tinder consists of the worldwide activity of the Tinder® brand, and Hinge consists of the worldwide activity of the Hinge® brand[78][79] - Evergreen & Emerging (E&E) includes brands like Match®, Meetic®, OkCupid®, Plenty Of Fish®, BLK®, Chispa™, The League®, Archer®, HER, and other smaller brands[80] - Match Group Asia (MG Asia) consists of the worldwide activity of the Pairs® and Azar® brands[80] - Direct Revenue is received directly from end users (subscription and à la carte), while Indirect Revenue is not directly from end users (majority advertising revenue)[80][81] - Payers are unique users at a brand level from whom Direct Revenue is earned; Revenue Per Payer (RPP) is the average monthly revenue earned from a Payer[82][83] - Monthly Active User (MAU) is a unique registered user who visited the brand's app or website in the last 28 days (definition changing to calendar month)[84][57] - Leverage (gross and net) is calculated as principal debt balance divided by Adjusted Operating Income[85] Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995 Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995 This statement clarifies that the prepared remarks and conference call may contain forward-looking statements, which are based on management's current expectations and assumptions; these statements are inherently subject to uncertainties and risks, such as user growth, product strategies, competition, and macroeconomic conditions, that could cause actual results to differ materially; readers are cautioned not to place undue reliance on these statements, and Match Group does not undertake to update them - The document contains 'forward-looking statements' regarding Match Group's future financial performance, business prospects, strategy, and anticipated trends[86] - These statements are based on management's current expectations and assumptions, which are inherently subject to uncertainties, risks, and changes in circumstances that are difficult to predict[86] - Actual results could differ materially due to various factors, including the ability to maintain user base, success of product strategies, competition, risks related to AI, foreign currency fluctuations, and macroeconomic conditions[86] - Readers should not place undue reliance on these forward-looking statements, and Match Group does not undertake to update them[88]