Match Group, Inc.

as Tinder's new initiatives continue to roll out. Hinge delivered another exceptionally strong quarter with continued user momentum and impressive revenue growth. Hinge's download rankings continue to climb across its core English-speaking and European markets, demonstrating just how much the experience resonates with intentioned users. Hinge also gained momentum against its next largest competitor, becoming the second most downloaded dating app in the US in October, a testament to its strength and high appeal of Hinge's experience. Hinge also made improvements to its product in the quarter, announcing the global launch of Your Turn Limits. The feature is supporting daters by helping them focus on their current conversations, making good on their brand promise to help get users out on great dates faster. This feature has been powerful in increasing response rates, which were up 20% in tests, and nearly half of users said it helped them increase their focus on current matches. This exciting feature is just one piece of Hinge's strategy to deliver a richer experience for daters. We're embedding even more product innovations like AI-enabled features into every step of the user journey. Hinge also continues to advance its innovations as it seeks to transform the future of intentional dating by creating the feeling of working with a trusted guide. As part of this, Hinge began testing AI-enabled prompt suggestions to help users have more meaningful conversations that lead to great dates faster. This is just one example of how Hinge is embedding AI throughout the dating journey, and I look forward to sharing additional product updates in the future. At MG Asia, our live video app Azar expanded into the U.S., applying learnings from its success in Europe. Azar's more casual and engaging experience is striking a chord with Gen Z users. Meanwhile, in Japan, PEARS is showing encouraging signs of stabilization. Downloads across the category are reaching their highest levels since late 2022, a sign that online dating is regaining momentum in the market. At E&E, efforts to streamline operations and drive efficiencies are going well, with two additional brands successfully migrating into the shared tech platform in October. At the same time, emerging brands continue to perform strongly, holding leading positions by downloads in their respective segments in the U.S. Their continued revenue growth over the past four quarters is helping offset some of the declines from our evergreen brands. As a company, we must continue to take the necessary steps to build a durable and highly profitable business. We remain confident that Match Group is well positioned to capture the significant opportunities ahead and will keep investing in innovation to seize them. That said, until we see clearer signs of improved revenue growth, we need to be highly strategic with our resources and exercise rigorous financial discipline. As a result of our portfolio approach, we have brands at various stages of their growth cycles, and we remain committed to managing each one to match its unique circumstances. We look forward to sharing more of our strategy, product roadmaps, and outlook at our first-ever Investor Day on December 11th. And with that, I will hand it off to Gary.

Thanks, BK, and good morning, everyone. Great to be with you today. We met our expectations for total revenue in the quarter and exceeded our expectations for AOI, with margins solid at 38%. That said, the levels of total revenue and AOI growth we achieved, 2% and 3% respectively, remain below the levels we are targeting to consistently deliver. OI in the quarter was down 14% year over year. OI was impacted by $37 million of impairments and other charges related to our exit of Hakuna and other of our live streaming services, which was within the expectations we provided on the last earnings call. Severance and similar costs in Q3 were $3 million, which was less than what we had been expecting. Overall, payers declined 3% in the quarter to $15.2 million, while RPP increased 5% year-over-year to $19.26. Tinder direct revenue of $503 million was down 1% year-over-year, but up 1% FX neutral in Q3. Additionally, Tinder began testing several initiatives to improve ALC revenue trends. These initiatives were generally more cannibalistic to subscription revenue than we had anticipated, and we opted to delay their rollout to allow time for additional iteration. This modestly impacted Q3 direct revenue, but we expect the delays in these ALC initiatives to have a more significant impact on Q4 revenue versus what we previously expected. We were expecting these features to contribute to Q4 revenue. Tinder payers declined 4% year-over-year in Q3, an improvement from down 8% in Q2, delivering 311,000 sequential payer additions, which was above our expectation of 250,000. We did some price testing of the weekly subscription package in the quarter, which drove higher payers than we had anticipated but reduced RPP, which was up 4% year-over-year in the quarter to $16.87. Tinder and Mao were down 9% in the quarter, consistent with Q2 trends. We had expected to see improvement in year-over-year Mao trends in the quarter. However, in mid-September, we began to see weaker new user trends, which includes new registrations and reactivations of lapsed users, than is typical at this time of year, a trend that has stabilized in October. The pressure on new users was largely confined to iOS. We are working collaboratively with Apple to investigate whether it's related to the introduction of iOS 18 in mid-September, certain trust and safety enhancements we made, or another cause. This in turn has caused pressure on Tinder MAU. We are working on a number of initiatives to improve this trend. Tinder remained a very high margin business with 52% AOI margins in Q3. Our Hinge brand continues to perform exceptionally well. Hinge delivered $145 million of direct revenue, up 36% year-over-year, driven by 21% year-over-year payer growth and 12% year-over-year RPP growth in Q3. Hinge continues to experience strong user growth in both core English-speaking markets and its European expansion markets, leading to 20% year-over-year malgrowth in Q3. The brand continues to climb the rankings in various countries and regions and to gain share versus key competitors. Hinge also continues to iterate on a variety of product advances, including those that implement AI technologies to improve the user experience and outcomes. Hinge's profitability picture was strong in Q3, with 35% AOI margins and year-over-year AOI growth of 65%. Margins were slightly elevated as Hinge pulled back on some marketing spend in this quarter in preparation for a Q4 marketing campaign. Our MG Asia business delivered direct revenue of $72 million, a decline of 6% year-over-year, but down only 1% FX neutral. Payers increased 14%, while RPP fell 18% year-over-year, partially due to FX impacts. Excluding the now-exited Hakuna app from the prior year quarter, MG Asia direct revenue was down 2% year-over-year in Q3. MG Asia AOI margins were 25% in the quarter, leading AOI to be up 9% year over year. Azar's direct revenue declined 2%, but was up 5% FX neutral in Q3. Azar grew now 14% year over year in the quarter. European expansion continued to be solid, with MAU in that market up 27% in the quarter. Azar has just entered the U.S. market, which will be a critical market for success for the app to become a truly global brand. Pairs direct revenue declined 1% in Q3, but was up 2% FX neutral as a number of marketing and product initiatives are contributing to stronger performance. User trends in the Japanese dating market appear to finally be stabilizing. At our evergreen and emerging brands, direct revenue was $158 million, a decline of 9% year over year. However, direct revenue was down only 4% when excluding revenue from live streaming services in the prior year quarter. Excluding live streaming revenue, gains in emerging brands over the past few quarters have largely been offsetting declines from the evergreen brands, as we illustrated in the shareholder letter. E&E achieved a 26% AOI margin in Q3. We expect E&E's margins to continue to improve as we realize the benefits of the consolidation efforts. Indirect revenue was $16 million in Q3, up 10% year-over-year, driven by a higher price per impression received and higher ad impressions. Turning to the cost side, including SBC expense. Cost of revenue declined 1% year-over-year and represented 28% of total revenue, down one point year-over-year, as live streaming costs declined $8 million year-over-year. Credit card and app store fees declined $3 million year-over-year, while web hosting fees increased $4 million. Selling and marketing costs increased $3 million, or 2% year-over-year, primarily due to increased spend at Tinder, Hinge, and certain emerging brands. Selling and marketing spend was flat as a percentage of total revenue at 17%. G&A costs declined 3% year-over-year and remained at 12% of total revenue, as legal and professional fees declined by $6 million year-over-year. Product development costs grew 10% year-over-year, primarily as a result of higher headcount and lower capitalized labor costs at Tinder, along with higher software and hardware costs, and were up 1% as a percent of total revenue at 12%. Depreciation was up $8 million year-over-year to $25 million, $5 million of which was related to the write-off of capitalized software due to the Hakuna and live streaming services shutdowns. Impairments and amortization of intangibles increased primarily due to impairments of intangible assets of $31 million at E&E and MJ Asia as a result of the termination of our live streaming services and our Hakuna brand. Beginning this quarter, we are disclosing our business units as four operating segments, Tinder, Hinge, MG Asia, and E&E. In addition, we disclose a corporate and unallocated cost category for expenses, which includes the corporate costs like board of directors and investor relations costs, certain corporate costs that have not been allocated to individual business units, such as legal and accounting costs, and certain shared services and central technology that we don't allocate to individual business units, such as central trust and safety services and certain central software. Providing these additional disclosures offers better insight into the company's performance and reflects our in-depth focus on revenue growth and profitability. We may consider adjusting our methodology for allocating shared costs in the future to best reflect the profitability of each of our business units. Turning to our balance sheet, our gross leverage was three times trailing AOI and net leverage was 2.3 times AOI at the end of Q3, below our target of less than three times. We ended the quarter with $861 million of cash, cash equivalents, and short-term investments on hand. In Q3, we repurchased 7.1 million of our shares at an average price of approximately $34 per share on a trade date basis for a total of $241 million. Year to date, we have deployed approximately 100% of our free cash flow, well above our latest commitment to deploy more than 75% of our free cash flow for share repurchases. We intend to continue returning at least 75% of our free cash flow to shareholders. Turning to our outlook, for Q4 24, we expect total revenue for Match Group of $865 to $875 million, essentially flat year over year. Excluding revenue from Hakuna and other live streaming services that we have exited from the prior year quarter, total revenue growth would be 2% to 3% year over year. At Tinder, we expect direct revenue to be $480 to $485 million, down 2% to 3% year-over-year in Q4. This range for Tinder incorporates the current MAU trends as well as the delayed ALC initiatives I noted earlier, each accounting for approximately half of the reduction to our Q4 expectations for Tinder. We expect tender payers to decline mid-single digits year-over-year in Q4 with modest year-over-year RPP improvement offsetting a portion of that decline. Within our other brands, we expect direct revenue to be $370 to $375 million, up 3% to 5% year-over-year, lower than our previous expectations due to weaker trends in our E&E businesses. We expect Hinge to deliver direct revenue of approximately $145 million, roughly 25% year-over-year growth in Q4, driven by continued strong user trends and monetization efforts. The reduction in our outlook for company total revenue compared to the one we provided last quarter reflects approximately $25 million related to Tinder, half of which is attributable to weaker than expected MAU trends and half to delayed ALC initiatives. The additional roughly $10 million reduction versus our prior expectations primarily reflects underperformance in direct revenue at our evergreen brands and less than previously expected indirect revenue as we anticipated a few of our larger advertisers to pull back on spend during the holiday period. We expect AOI of $335 to $340 million in Q4, including approximately $7 million of severance and similar charges, as well as the Canada Digital Services Tax. This would translate it to year-over-year AOI declines, 6% to 7% on an as-reported basis, but year-over-year growth of 4% to 6% when excluding the $40 million we received from Google as part of the settlement of our lawsuit in the prior year quarter. We expect marketing spend in the fourth quarter to be lower than the prior year quarter, primarily due to lower planned spend at Tinder, but higher expected spend at Hinge, as we spend into the strength at that brand. At the midpoints of our total revenue and AOI ranges, margins in Q4 would be 39%. We now expect match group total revenue growth for the full year of 2024 of approximately 4%, roughly 5% FX neutral. Total revenue growth would be up 5% when excluding revenue from Hakuna and live streaming from the prior year quarter. We expect Tinder to achieve direct revenue growth of 1 to 2%, up roughly 3% FX neutral for full year 2024. For full year 2024, Match Group is on pace to deliver AOI margins of at least 36%, despite approximately $20 million of severance and other charges and the retroactive Canada DST, most of which we did not foresee at the beginning of the year, and a shortfall in total revenue versus our expectations. We expect free cash flow for 2024 to be approximately $1 billion. While Hinge continues to perform exceptionally well and is solidly on the path to a billion dollars of direct revenue that we have been speaking about, and our MG Asia and E&E business units are performing relatively in line with our expectations and are roughly stable in aggregate in terms of direct revenue, we expect Tinder's recent user trends and delays in ALC initiatives that are affecting our Q4 revenue outlook to create weaker momentum for Tinder heading into 2025. That said, Tinder has significant new product features in various stages of testing that we expect to roll out in the coming quarters. The impact of these initiatives, as well as the trends over the balance of 2024 and into 2025, will dictate what we can deliver in terms of Tinder direct revenue growth and therefore whole company total revenue growth in 2025. We plan to review Tinder and our other businesses' product plans in detail at our upcoming Investor Day. We will translate all of this into a medium-term financial outlook for the company and provide our initial 2025 expectations. We recognize that the company's growth trajectory requires us to be extremely financially disciplined to drive shareholder value and are contemplating several initiatives in that regard. We plan to discuss these programs and our expected margin trajectory at our investor day. While growth in the dating category and for some of our brands remains challenging, our profitability and free cash flow generation remains strong. When combined with a program to return significant amounts of capital to shareholders, we believe the company remains well positioned to drive meaningful free cash flow per share growth for the next several years and beyond. We are also confident that our product innovation, especially with AI, could drive additional growth over the medium term. We plan to lay out our capital allocation approach and overall view on shareholder value creation when we meet in December. With that, I'll ask the operator to open the line for questions.

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 are using a speakerphone, please pick up your handset before pressing the key. If at any time your question has been addressed and you would like to withdraw your question, please press star, then 2. At this time, we will pause momentarily to assemble our roster. Our first question today comes from Ross Sandler with Barclays. Please go ahead.