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spk09: Good morning and welcome to the Match Group First Quarter 2021 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. Please note, this event is being recorded. I'd now like to turn the conference over to Bill Archer, Head of Investor Relations and Corporate Development. Please go ahead.
spk12: Thank you, Operator, and good morning, everyone. Today's call will be led by CEO Char Dubé and CFO and COO Gary Swidler. They will make a few brief remarks, and then we'll open it up for questions. 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 filed with the SEC. With that, I'd like to turn the call over to Char.
spk05: Thank you, Bill. Good morning, and thank you for joining the call today. For the first time in well over a year, Gary and I are actually doing this call from the same location. We're fully vaccinated. We've gotten on planes, which speaks to the optimism we're feeling about the situation here in the U.S. Our Q1 results reflect that. The 23% year-over-year growth in revenue came through reacceleration of Tinder with 18% growth and non-Tinder brands posting a growth rate of 30%, the highest those brands have achieved since our IPO in 2015. A big driver of this momentum is the US, where we have seen increases across all our brands as the quarter went on. The vaccination rates and control over the COVID cases these last few months have resulted in our users feeling more confident about their dating lives. However, I've also gotten a tough reminder that we're still not out of the woods with this pandemic. Just a couple months ago, we were feeling very good about the trends in India, which, as you know, has suffered last year. These last few weeks, my days have all started with grim news from India, where we have a team, and I still personally have a lot of friends and family, including my parents. The dire situation in India and somewhat worsening conditions in countries like Brazil and And even Japan that is going through its third emergency declaration is a reminder that we've not gotten past the pandemic in much of the world, and things could still turn on a dime. So we are still operating with a degree of uncertainty. But back to the parts we actually have more control over. Tinder made progress in Q1 across users, subscribers, and ARPU, and the trends look good. But what's more exciting to me is the roadmap that Jim Lanzone, who's now been the CEO at Tinder since late summer last year, has laid out. It's a journey to transform the Tinder experience from a swipe, match, message funnel to a more multidimensional and richer one with more ways to self-express, discover, flirt, and connect. And this in turn we think will open up new opportunities for increased engagement and monetization through 2022 and beyond. Hinge continues to gain traction in the English speaking market that it is available in. In addition to the progress they've made on revenue recently, the focus for Hinge is on outcomes with its tagline designed to be deleted. They have a track record of innovation that supports their brand promise of getting people off their phones and out on great dates. Features such as photo prompts, most compatible, your turn, we met. And most recently, they introduced prompt packs into the video chat experience, which are being used on approximately 20% of video dates. Also this year, Hinge announced Hinge Labs, an in-house research team that is dedicated to helping daters be more successful. Research there is fueling what we believe will be an exciting second half of the year, focusing on, among other things, an expansion of its What Works guidance program for users who need help getting out on great dates. Again, in line with their focus on outcomes for their users. Finally, the team has been making progress on the plans for the pending HyperConnect acquisition and post-closing integration, including the various regulatory approvals needed. We still hope to be able to close by the end of Q2. And while the growing trend of isolation and loneliness was already a thing across many parts of the world, the pandemic has really escalated its impacts on mental health. Growing popularity of social discovery category is a testament to the need for more human interaction, companionship, connections. And while our apps have traditionally focused on romantic connections, we do think we can lend our expertise in the area of making meaningful connections among people you don't know in this newer, evolving, adjacent category. We think we can leverage our product jobs as well as our Western market experience combined with HyperConnect's video and AI technology and their APAC market experience, and we have an opportunity to succeed in both solving a social need and expanding our business footprint. As we've said all year, we remain agile and ready to react to changing conditions. Sitting here today, there are many reasons for us to feel optimistic about our social lives and hence our business, although the situation in a few parts of the world gives us appropriate pause about the uncertainty that still exists. If nothing else, this past year has reinforced the urgency of our mission to work tirelessly on products that help people find meaningful connections, love, and relationships around the world. And with that, I'm going to hand it over to Gary to talk more about the quarter.
spk08: Thanks, Char. It's great to be here in person with you and the team in Dallas today. It's been a long time coming. Before I jump into my remarks, I just want to point out that we adjusted the format of our quarterly disclosure this quarter. We combined our earnings release and shareholder letter into one document to improve convenience for shareholders and make understanding the company's results easier. I hope everyone likes the new format, and as always, we welcome any and all feedback. Additionally, we expect to make some further changes and enhancements to our disclosed financial metrics once the HyperConnect acquisition closes to better reflect the key metrics of the combined business. I'll provide more details later this year. With that all said, I'm pleased to report that we had a very strong Q1 on essentially all metrics. Total revenue growth continued to accelerate to 23% year-over-year in Q1, up from 19% year-over-year in Q4 2020. Acceleration occurred at both Tinder, which grew revenue 18%, and the non-Tinder brands, where direct revenue was up 30% year-over-year. All major non-Tinder brands contributed year-over-year direct revenue growth again in Q1. This was the fifth consecutive quarter of non-Tinder brands showing growth in aggregate. Pears, plenty of fish on the strength of live streaming, and our newer brands, Hinge, Chispa, and BLK, all grew rapidly in the quarter. Our direct revenue was evenly split between North America, which grew 24% year over year, and international, which grew 21% year over year. Indirect revenue grew 27% year-over-year, marking a second consecutive strong quarter as the advertising market continued to improve. Average subscribers increased 1.2 million over the prior year to 11.1 million, representing 12% year-over-year growth, up 9% in North America and 15% internationally. Tinder's average subscribers were up just under 900,000 year-over-year, or 15%, and came in just shy of 7 million in total. Non-Tinder brands' average subscribers were up over 300,000 year-over-year, or 8% for the second consecutive quarter. Total company ARPU is up 9% year-over-year to $0.64, up 13% in North America and 7% internationally. We did get about two cents or three points of growth in the quarter from foreign exchange impacts. Tinder ARPU was up 4% year-over-year, driven by platinum subscribers and additional a la carte sales. Non-Tinder brands, 18% year-over-year ARPU growth was remarkable, improving upon the 16% year-over-year growth we saw last quarter. All major brands increased ARPU year-over-year in Q1. The launch of several a la carte features and price optimization at Hinge, as well as the Plenty of Fish live streaming revenue, were major contributors to the ARPU improvement again in the quarter. As always, we continue to focus on overall revenue growth, not specifically on subscriber or ARPU growth. In Q1, we did achieve some ARPU growth at the expense of more robust subscriber growth at some of our brands, in particular, Hinge and OKCupid. Operating income grew 38%, and EBITDA grew 32% year-over-year in Q1. EBITDA margins were 34%, two points higher than in Q1 2020. Overall expenses dropped three points as a percentage of revenue to 72% in Q1 2021 from 75% in Q1 2020. Cost of revenue grew 25% year-over-year, impacted by higher IAP fees, web hosting costs, and fees related to live streaming video at Plenty of Fish. Sales and marketing spend was up $20 million, or 16% year-over-year, and represented 22% of total revenue in Q1, slightly lower than typical levels. Product development costs grew 27% year-over-year as we increased headcount at several brands, notably Tinder and Hinge. G&A expense rose 11% year over year and comprised only 13% of revenue versus 15% in the prior period. G&A and Q1 also included $4 million of costs related to the acquisition of HyperConnect. Our gross and net leverage declined to 4.1 times and 3.2 times, respectively, down steadily from 4.8 times and 4.6 times at the time of our separation from IAC. We're pleased to see net leverage already well below four times. We ended the quarter with $846 million of cash on hand. For Q2, we expect total revenue of $680 to $690 million, which would represent 22% to 24% year-over-year growth. In Q2, we expect above 20% year-over-year revenue growth at both the Tinder and non-Tinder brands in aggregate. We expect EBITDA of $255 million to $260 million in Q2. We expect to spend an additional $40 million year-over-year in sales and marketing in Q2 compared to the prior year period. Recall that spend levels were lower in Q2 2020 as the pandemic took hold, and we adjusted spending across a number of categories, most notably sales and marketing. Litigation costs were also lower in Q2 2020 as actions were delayed on account of the pandemic. Note that our outlook for Q2 2021 includes a few million dollars of legal and other expenses related to the HyperConnect acquisition, which we expect to close in the quarter. our outlook does not yet reflect any revenue or other contribution from HyperConnect itself. We're delighted by the broad-based strength we saw in Q1 and our improving business momentum. To be sure, risks remain and some caution and outlook is still warranted. The world is not recovering at an even pace, with slower vaccine rollouts and higher case counts in many markets. Despite this, we're increasingly confident that we'll be able to deliver the high end of our previously communicated revenue and EBITDA ranges for 2021. With that, I'll ask the operator to open the line for questions.
spk09: We will now begin the question and answer session. To ask a question, you may press star, then 1 on your touchtone phone. If you're using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star, then 2. Our first question comes from Corey Carpenter from JP Morgan. Please go ahead. Thanks for the question.
spk03: Char, could you expand on how the U.S. reopening impacted user behavior and the level of pent-up demand relative to your expectations? You called out all the cart returning, but curious what you saw with first-time subs and engagement in the U.S., specifically across the portfolio. And then maybe a follow-up for Gary, just hoping you could unpack some of the moving parts within that. North America subs this quarter, given that we're down a bit from 4Q. Thanks.
spk05: Sure. Thanks, Corey. Let me start. I'll take the opportunity to maybe give some more color on the broader COVID trends and impacts. So if you recall our Feb call, we spoke to how the peak season post-Christmas and into the new year was looking much different than normal years. But as the quarter went on and vaccination rates in the U.S. in particular picked up speed, we saw a real divergence in countries like U.S. and, say, Israel and U.K., for instance, versus the rest of the world where vaccination rates are still lower and case counts are seeing spikes. So the U.S. happens to be right now one of the few large markets where we are seeing mobility trends above pre-COVID levels. And some countries in Europe are starting to get close to that pre-COVID level, too. We've mentioned before that as we see lockdowns ease and mobility improve, dating activity follows, and so does propensity to pay. So as a result, we're seeing propensity to pay indicators like a la carte purchases trending in the right direction across U.S. and a few markets in Western Europe as lockdowns ease. So U.K., which we had highlighted as a down market back in Feb, they've also seen a solid recovery over the past month or so as the country emerges from lockdowns. On the other hand, what's going on in India right now can only be described as dire and tragic. And in Feb, we had called out that India was starting to rebound after a trying 2020. That rebound has obviously stalled with mobility rates plunging over the last month. Japan and Brazil are other markets to highlight that faced headwinds during the first quarter. when lockdowns were reimposed, and they're both still very low on vaccine distribution. The situation is definitely more severe in Brazil, but Japan, as I mentioned with its third emergency declaration, has been, again, up and down quite a bit. All this to say, this gets to the general uncertainty around trying to project what is to come next with the pandemic. There are certainly some promising signs, but given the slow progress in vaccine distribution globally, as well as COVID spikes in certain countries, new variants and mutations, it's still a somewhat fluid picture around the world. It's probably also maybe worthwhile to point out a couple of things that we're noticing as a result of COVID. We are seeing that normal seasonality patterns are not holding under COVID. And the other thing that's shaped up is the marketing landscape, which has changed. So we are seeing the pattern, particularly among retailers who have shifted much more online, their spend has spread more evenly over the course of the year rather than concentrated around the holidays in Q4. And so this has changed the seasonality in marketing economics. So for instance, this year in Q1, we did not see the typically lower rates that we normally do relative to Q4. And some of this has an impact on the Q4 to Q1, but I'm going to let Gary address that.
spk08: Yeah, I think if you look over the last few years, actually, it's probably become a little bit outdated to think of our business as having this strong seasonality pattern in Q1 and a big jump sequentially from Q1 in terms of subs compared to Q4. I think that hasn't held actually in a while. The business is much more global now. There's different... trends and factors. We do things all throughout the year. And so that way of thinking about the business probably isn't appropriate, which is why we encourage people to look at year-over-year trends of subscribers as opposed to looking at things sequentially. So I would discourage people from focusing too much on that. So I think that pattern was already breaking away As Char mentioned, COVID has only further muted that pattern. As everybody knows, you know, in COVID, kind of every day is like Groundhog Day. There's not much difference in a day in January or February versus a day in November or December. So I think that that has further come unraveled as part of COVID. Because of some of these changing dynamics, we adjusted our business slightly, as I mentioned in my remarks. We made some tradeoffs, ARPU at the expense of some subscriber growth, and so you see that. We focused on delivering overall revenue growth. In the non-Tinder brands, we delivered revenue. 30% year-over-year revenue growth. In North America, we had high 20s revenue growth year-over-year. So we feel really good about the revenue growth we delivered. The components are going to vary depending on factors in the markets. As Char also mentioned, we're seeing a more competitive marketing environment as a result of COVID with kind of always-on marketing spend. by a lot of retailers and others who have moved their business online. So we haven't seen as many spend opportunities, and we've had to adjust to that, which is also affecting some of the trends in our business. So the good news is we have a very dynamic business. We're very nimble. We can adjust to the trends and things that are going on in the market. particularly around marketing spend. We did it when COVID first hit back last year in March and April. We've adjusted again throughout the year with COVID and again in the first quarter, and we'll continue to do that. And so you're going to see variability in our trends, certainly when you look sequentially, as a result of us trying to manage for all of those factors and differences in behavior. And I'm sure we're going to see differences in behavior now as the reopening happens. You go into Q2 and Q3, and we're going to adjust our spend, you know, something that's reflected, for example, in our guidance as we look at the Q2 expectations as well. Okay. Hopefully that answers your questions, Corey. And with that, maybe we'll go to the next question.
spk09: Next question comes from Nick Jones from Citi. Please go ahead.
spk10: Great. Thanks for taking the question. Maybe on social discovery, can you expand a little bit more on your plans within this category? How are you thinking about the opportunities within interest groups and social entertainment? Is this more of a social network approach or more kind of a one-to-many approach? And then maybe lastly, can you touch on how you address some of the safety concerns within these products? Thanks.
spk05: Okay, I can take it. So here's how I see it. We are in the business of helping people make meaningful connections with people you don't know. Our definition of meaningful connections generally implies a one-to-one connection. So on our dating platforms, these connections are generally with the objective of romantic relationships and the intent to meet in real life. And If you think about the traditional dating flow, it is discover through reviewing profiles, for instance, match, and then message, chat, video chat now. And the ultimate goal is to get to a one-to-one conversation that hopefully leads to a date. But technology has finally come to a point where that it's now enabling people to meet and interact with people more broadly and through much richer experiences online. And so social discovery, at least the bits that are interesting to us, is also ultimately about a one-to-one connection and conversation, but it is more platonic and does not have the necessary expectation of meeting in real life. It's not constrained by geography or even gender, for that matter. But it also follows a similar discover, match, message, chat, video chat paradigm that we have on dating apps. The difference is Because these apps are new, leveraging new technology, the way you discover people in order to match and chat with them is much more social, many-to-many, interactive, dynamic, and in a lot of ways, much more akin to how people meet in the real world. So technology like live video, audio, et cetera, has allowed these apps to build experiences for people to meet in a more social and entertaining setting online. But eventually they are, at least the use cases that are interesting to us, are eventually optimized to help you meet someone that you share something with, find something interesting to talk about, and want to continue a one-to-one conversation. And these social activities can be anything from audio forums to multiplayer games to watch parties to two streamers competing in a rap battle, all kinds of social activities that helps people engage and discover and learn about others and chat. So in some ways, the easy way to think about it is these are online analogs of meeting in parties and concerts and events. And as you can imagine, some of these multidimensional ways of discovering people also makes a lot of sense on some of our larger and more social dating platforms, as we've proven out by POF Live. So recently, a record number of users on POF watched and engaged with the premiere of a show through a partnership with Discovery+. Or they participate or watch a dating game called Next Date. Or they build a community around a cause or a streamer they like. And it is another way to more serendipitously discover people and then eventually match and chat. Swipe night on Tinder was another somewhat similar construct. If you both covered for Graham, you certainly had something to talk about. And for those who don't have the specific Swipe Night reference, covering for Graham was not a very popular thing to do. So the other thing I'd say is while these social experiences are fun and entertaining. They are not designed to be entertainment for the sake of passive entertainment. Rather, they are fun and entertaining ways that serve as an alibi and an avenue to ultimately drive connections and conversations, which is really the point of interest for us. And that's why we think there's so much synergy in the technology between dating and social discovery, but also they are very distinct use cases. So hopefully that gives a little bit more sort of broader view of how we think about it. Obviously, so much more on this to come as we close HyperConnect and we foray into the various areas. About safety, so look, safety has been existential to us since the beginning of our category, and as mentioned, We mentioned in our letter, and I'm sure we'll talk more about it, we make huge investments in it. One of the reasons we like HyperConnect as a business and technology is there are very maniacal focus on safety and the technologies they've developed, specifically things like device-side AI, which are privacy-friendly ways of helping with moderation and safety. So it is going to be a huge area for us, but this is an area that we feel we have real expertise in.
spk10: Great. Thank you.
spk09: The next question comes from Shweta Kajaria from Evercore ISI. Please go ahead.
spk00: Okay, thank you. Let me try two, please. Could you please provide an update on your conversations with Google and the changes that are coming up in September this year? I know you talked about it last turning call, but if there's any update that you could provide us, that would be great. And similarly, if you have any thoughts on Apple iOS and the current regulatory environment here in the U.S. and Europe. That's the first question. And then the second question is, if you could please provide a little bit more color on what were the key drivers that you think had the most impact in bringing Hinge from 13th most downloaded to third in a couple years? That would be great. Thanks.
spk08: Okay, let me at least try the questions about Google and Apple. You know, first of all, just generally, there's a lot going on in the global regulatory environment, the court system related to Google and Apple, as you probably know. It's a very fluid situation. It's really hard to predict exactly how this is going to play out or what comes next. But there's, I think, a few things that are apparent. The first is that there's concern globally about among regulators about the behavior of Apple and Google as it relates to their conduct with the app ecosystem. In the US, there was a hearing in the Senate subcommittee last week, and politicians in the U.S. rarely agree on anything. And the one thing they seem to agree on is there are significant concerns related to the app ecosystem as it relates to both Google and Apple. And we've seen the same kind of concerns come out of Australia. We've seen the same concerns coming out of the European Union. And, frankly, we expect that they're going to continue to come from various jurisdictions around the world. Now, we're realistic in that we know the pace of regulatory change is slow, and we don't know how long it's going to take to see change. What we would like to see is actually Apple and Google recognizing the valid concerns around their behaviors related to the app ecosystem and making proactive changes to address developers' and consumers' concerns about the app ecosystem. Don't know if that's going to happen. We're in conversations with Apple and Google about this. We're happy to share our thoughts whenever they want to listen to our thoughts on this. We think there are ways to improve the situation, but don't know how that's going to play out. In particular, as it relates to Google, they've announced the policy change effective later this year. We have been having discussions with them about the economic impact of that. And we continue to have those discussions. And we're hopeful that we're going to find a resolution that is compelling for both us and Google on that front. But given the fluidity of the situation and everything else, it's difficult to say how any of this is going to play out. We are watching it obviously with a lot of interest. The other thing that is a significant development that has happened in the iOS ecosystem, really just this week, is the changes they've made to the collection of IDFA, which is integrated into the 14.5 iOS update that has just started to roll out. And so we don't know yet. Adoption of that is still very low. We don't know yet exactly what the impacts or ramifications of that are going to be. And so we're monitoring that. And I would say we've been preparing for this for a while. We feel we're well-equipped to manage through the changes. Fortunately, we're not a significantly ad revenue-generating business. Most of our revenue comes directly from the consumer, and we're not ad-supported. So we're going to be less impacted than virtually anybody else out there. But we have been preparing. We've adopted the Apple SKAd network. And we also have a lot of history and experience In user acquisition, without this level of attribution, we've been operating in TV and out of home for a long time. So we have a lot of tools and preparedness to handle the different environment. But admittedly, it's going to be a different environment with these changes to IDFA. Everyone is going to have to adjust, us included. We feel prepared for that. But we'll have to see how that all plays out. And I think it's going to be a little bit volatile in the user acquisition front for us and for others, frankly, over the coming weeks and months until some of this plays out. I would expect that there will be adjustments in the marketplace itself. changes to pricing and user acquisition efficiency as the market adjusts to a changing set of circumstances. But it's really difficult still to quantify or estimate what those impacts are going to be. But we'll learn a lot more over the coming quarter, and we'll come back on our next earnings call with a better update in terms of the changes to IDFA and the impact of all that. So a lot going on on the Apple and Google front in a multitude of ways. And, you know, we're on top of it all as best we can. And we'll continue to update everybody on it.
spk09: The next question. Oh, sorry.
spk05: No, go ahead.
spk09: Next question comes from Justin Patterson from KeyBank. Please go ahead.
spk04: Great. Thank you. Two, if I can. Shar, on Hinge, I was curious what investments and steps are needed to capture that number two spot in the U.S.? And for Gary, safety, how much of that $100 million spend is one-time versus recurring in nature? Thank you.
spk05: Sure. I just realized Shweta had asked a Hinge question, too, so maybe I'll address it a little bit more broadly. You know, we said Hinge has moved from, I forget, 13 or so spots when we acquired them to three, and they've tripled revenue last year. We're hoping they double revenue this year. All of that is driven by both user growth and improvements within subscription and a la carte, and this is just U.S., and it's only currently available in English-speaking markets, a few English-speaking markets, and U.S. being the most important market for them. However, the thing to remember about Hinge is it has really grown in the few of the largest cities in the U.S., and mostly on the backs of word of mouth. And word of mouth is really strong for Hinge because the product really resonates with its user base. So as I said in my opening remarks, as Hinge has generally done in the past, the second half roadmap for Hinge is again focused on helping users have greater outcomes on the app. And this in turn will help word of mouth marketing. And as the world opens up a little bit, people go hang out and talk to each other about their dating lives and successes, etc. All of that should be helpful to Hinge. The one other thing I would note for the U.S. itself, awareness of Hinge in smaller cities and the rest of U.S. is still quite low. So we do have an opportunity to target marketing spend into strengthening and broadening awareness more broadly across the U.S., which is something we're going to do this year as well. Gary, are you going to take this?
spk08: On trust and safety, the $100 million that we spend is obviously a meaningful number because safety is a key component of what we do. We've been talking about it a lot recently, and it's always been a key focus of ours, keeping our users safe. Virtually all of the $100 million is recurring. for us. We have some one-time projects here and there, but they're a very tiny component of the $100 million. And I think the way to think of the $100 million is there's the baseline safety things that we need to provide to our users. And so we've got you know, product and engineering headcount, and we've got customer care agents and all sorts of things embedded into that number. And we also have a central safety team now that is making sure we maintain the standards across our brands that make sense to maintain. And we also contemplate new safety initiatives, groundbreaking things that we're doing on the safety front, to keep pushing ourselves and the category forward. We announced a couple of those over the last little bit, one to bring out background checks to our users and another to enhance our processes and how we relate to our users, and we're going to keep doing that. There's going to be a number of flagship initiatives we're going to roll out across the brands as well as improvements to the safety baseline to continue to invest and to make sure we're keeping our users safe. We think that's not only mission critical, but compelling long-term strategic investment for us, and we're going to keep making it. So, you know, we expect that number to continue to grow as our business continues to grow.
spk09: Thank you. The next question comes from Alexandra Speiger from UBS. Please go ahead.
spk01: Thanks for taking my questions. So with Tinder Platinum now being available to all users, could you maybe share some of the trends and learnings you're seeing across your user base? And then second, how should we think about the different components of Tinder ARPU growth as we move through the year, including the contribution from Platinum, the recovery and a la carte revenue, and then any potential new revenue features? Thank you so much.
spk05: Yeah, I can take that. So Platinum was always designed to be a high-value tier, mostly for the super user in order to help them increase meaningfully their matches and messages. And so we've been steadily testing it to make sure this actually meets its promise. And the great news is it does. And as of April, we have rolled it out fully across all geographies. However, it is still mostly merchandise to subscribers who have experience with the product and they understand the value and hence most of the take rate is through upgrades to this premium tier which is obviously a higher price tier. Platinum is already a meaningful contributor to ARPU and revenue and it is on track to cross our goal of million subscribers this year. And so we do expect solid ARPU growth for Tinder for the rest of the year, definitely helped by Platinum, as well as other a la carte growth, et cetera. It does not contemplate any new major revenue features, however.
spk09: The next question comes from John Blackledge from Cowan. Please go ahead.
spk11: Great. Thanks. At the non-tender brands, reportment revenue growth accelerated again this quarter. And you highlighted Hinge earlier in the call. Maybe could you discuss the other key drivers? And then, you know, kind of how should we think about the growth of the non-tender businesses as we round through the year and the comps get a bit more difficult? Thank you.
spk08: Thanks, John. Why don't I give that a shot? So we're obviously very happy with what's going on in the non-Tinder brands. 30% growth this year, the best we've seen since IPO, as Char said, was really stellar. And I think it probably helps to unpack a little bit more what's going on inside what we aggregate as the non-Tinder brands. And really, I think you've got two categories combined. of businesses in there. You've got what we could call the emerging ones, high growth brands, Hinge, BLK, Chispa, to name a few. And we're seeing growth in that set of businesses that's probably approaching 100%. Maybe it's 75% a year over year or something like that. So those businesses are growing very rapidly. They're obviously newer, faster growing, and smaller businesses. And then you've got the long-standing brands, the Metix and Matches and OkCupid of the world that have been around for a long time. They're generally larger businesses. And those businesses are also growing. solidly double digits in aggregate. That's as a result of great product and marketing work that our teams have been doing, as well as new initiatives that we've brought into some of those businesses, like live streaming at Plenty of Fish, international expansion at OKCupid, et cetera. All the brands in that bucket are performing well. And so when you combine that, the emerging brands plus the longer-standing brands growing strongly, you get to the 30% growth. Now, over time, I think that we'll probably expect some moderation of growth in the longstanding brands bucket. Maybe that gets into the single digits somewhere, but we're obviously aspiring for more and we've shown the ability to generate more. So we'll see how that ends up going. And then as the emerging businesses become larger, obviously the growth rate will slow as well. But one of the things that we need to try to do is make some more bets for the future and innovate and come up with new things that can help drive growth in that bucket as well. So behind the Hinges, BLKs, and Chispas of the world, we've got businesses like Abloh, like Hawaii in the Muslim markets that we are optimistic will generate growth in the future as well. And we'll continue to try to innovate in the emerging buckets. And so that's kind of the strategy. And as all that comes together, the goal is to achieve 15% to 20% top-line growth in the non-Tinder brands as we kind of implement all the various strategies that I just went through. And... One thing that we're thinking about is, frankly, how to adjust our disclosure to help make some of these pictures a little more clear and give people a little more insight into the various growth patterns inside the non-tender brands bucket. And so I mentioned in my earlier remarks that we're thinking through some changes online. on the disclosure front, and hopefully we'll have some more for you as the year progresses so you can get a clear sense, quarter to quarter, of the trends in some of these buckets inside the non-Tinder brands. So more of that to come, but I wanted to give you some of that color so you could have a sense of some of the dynamics and trends overall across the non-Tinder brands. Hopefully that was helpful.
spk12: Thank you. Yep.
spk09: The next question comes from Brian Fitzgerald from Wells Fargo. Please go ahead.
spk02: We want to ask a follow-on on HyperConnect, maybe. When you think about that asset and the opportunity there, what would you say is most attractive, and where would you want to prioritize your time and your efforts? Is it scaling as are, and Hakuna across existing markets and extending those products and brands into additional geographies, or is it increasing monetization at those two, or is it leveraging HyperConnect's technology and expertise across your existing portfolio? Thanks.
spk05: Sure. So obviously until we close, there's not a whole lot I can share yet, but as we said back in Feb, We were excited by HyperConnect for several reasons. A fast-growing revenue business, revenue-generating business and social discovery that we can help scale, particularly in Western markets and other markets that we have expertise in. Their real-time video technology, as well as their AI and robust privacy-friendly moderation technology, all of which is increasingly relevant and important to our dating platforms. And also a very strong, talented team with over 200 engineers in Asia, which we believe is a strategically important growth market for us. And so all of those rationales still hold for us. And as soon as the acquisition closes, we hope to be able to share more details of what we can do together. So hopefully next call.
spk02: Awesome. Thanks, Char.
spk05: Mm-hmm.
spk09: The next question comes from Brent Phil from Jefferies. Please go ahead.
spk07: Gary, your guidance assumes roughly 23% year-over-year revenue growth, which is in line with T1 despite a really easy comp. Can you just talk to any factors to consider there? And also on EBITDA, it looks like a little bit below what the street was expecting for. Can you just give us a sense on both the top line and the bottom line? Thanks.
spk08: Sure, happy to do that. So, look, I think that we're optimistic about Q2, that the momentum is going to continue. We've provided a range of estimated top-line growth for Q2, and that range contemplates the potential for an acceleration into Q2 compared to Q1 on a year-over-year basis. As Char said, there's still a lot of risk out there, and there's a lot of markets that are still challenging. So the guidance, I think, reflects that. But the U.S. is clearly giving us a nice tailwind, and we're optimistic that Europe is going to continue to get better. And so we feel very good about Q2, and I think the possibility for continued acceleration growth is absolutely there. for us. And so, you know, there is a little bit of conservatism reflected in the outlook to be mindful of the uncertain world we're still operating in. But a path to reacceleration in Q2 is definitely on the table. As far as the EBITDA guide for Q2, look, the reality is that We are in kind of a unique moment in time where after people have been cooped up in their houses for 14, 15 months, we're starting to see a path to get back out there and socialize. And frankly, as someone who's been doing it for the last few days, it's after the vaccine, it feels pretty good and people are going to want to do it. And so we want to spend into that opportunity where people are going to go out there and they're going to want to date and meet people and socialize. And that is what we are expert in. And so spending a little bit more money than we might have otherwise anticipated in this unique moment in time and encouraging people to go out and meet people is It's something we absolutely want to do. It's good long-term for our business. And so that's why you see a $40 million increase in marketing spend in our numbers for Q2. And, you know, you have to remember, frankly, that last Q2 in 2020, we pulled back pretty hard on sales marketing, so it's a big jump. but it was abnormally low in Q2 last year, and it's higher this year in part off the lower comp and in part because we are in this unique moment in time. And frankly, we might spend into Q3 as well. Last year we had a great summer. The trends were really strong, and if we see people start to really get out there and socialize through Q3, we may spend a little more heavily into Q3 as well to take advantage of this moment in time as the economy expands and people feel happy and start socializing. So that's something that we're absolutely thinking about longer term as we turn the corner from Q2 to Q3 as well. And we think it positions our business to continue performing well from a top line perspective this year and frankly into next year.
spk07: Thanks, Gary.
spk09: The last question comes from Jason Helfstice from Oppenheimer. Please go ahead.
spk06: Thanks. I'll just be quick. So just on Hinge, I think you said in the letter that in 2022, it would be more of an international focus. Just maybe expand a little bit there. Is that more on driving engagement, or do you actually think you can start to drive some monetization internationally? And then just to the implied guidance for the back half, if you do kind of like a two-year average taking out the comps from last year, it does assume there's like a decel in the business even though on a two-year comp, it's obviously, you know, the second quarter implies stability. So just asking if you're seeing anything behind that or that just overall being conservative with the back end. Thanks.
spk05: Do you want to take the guidance?
spk08: Sure. Sure. I mean, yes, I think, you know, there is some conservatism in the second half of the year because there's still a lot of uncertainty. Don't know how some of these international markets are going to recover. You know, don't know exactly how these trends are going to play out. And so we're going to watch and wait and see on that, you know, for a little bit more time. You know, plus we did have a very good Q3 last year. So it does set up. a tougher comp. People did get back out after the two months of lockdown, and we did have a strong performance. So you have to kind of bear that in mind as you look at, you know, how we can grow off of Q3. Q4 was a weaker number. And so, you know, I think there's more room for growth there. But Q3 is going to be interesting to see how that all plays out. And so we are being a Plus, you have to remember we did have some initiatives like live streaming that also make the comp a little tougher. We didn't have any live streaming revenue in Q3 or Q4 a year prior, and now we will have that to compare ourselves to. So there's some of that as well in the dynamics of the comparables that you have to factor in. So there's a few moving parts to it that I think you just have to be mindful as you look at Q3 and Q4 growth rates. and what's sort of reasonable to expect based on both the dynamics we saw in the market last year, as well as the initiatives we rolled out and how we reacted to COVID, which is true both on an initiative standpoint and also, as I was saying to Brent in the answer to his question, on a spending standpoint as well.
spk05: And, you know, about Hinge and international. So Hinge has been focused on both user experience and monetization for English-speaking markets only. And they're growing nicely in the U.S., of course, but also in U.K. and Australia, for instance. And our plan for 2021 is largely expanding and broadening growth in these markets. As I mentioned before, the second half roadmap is focused on a number of features to further optimize user experience and outcomes, which are generally relevant across their user base. Internationalization, including basics such as translation, does not yet exist on Hinge. And so that is something we are targeting for 2022, and that will come with plans to expand markets in non-English-speaking markets next year and beyond. So with that, I think we're going to wrap up. Thank you, everyone, for joining us today. As I was driving in this morning, I heard about the CDC report that a record low number of babies were born in the U.S. in 2020. So as a nation, we have a lot of catching up to do. So thank you again for joining us, and stay safe out there.
spk09: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.
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