Chris Kuntarich

Chris Kuntarich requested an update on web-based advertising availability for EU advertisers. He also asked Matt Stumpf about any assumptions for advertisers not currently onboarded in the Q4 guidance.

Answer

Adam Foroughi, Co-Founder, CEO, and Chairperson, AppLovin, clarified they can work with EU advertisers but don't open inventory for website/shop advertisers in the EU audience due to GDPR and lower priority. Matt Stumpf, CFO, AppLovin, stated that Q4 guidance is conservative and does not include incremental assumptions for new advertisers from the referral program or their ramp-up.

Chris Kuntarich sought details on the mechanics of the upcoming advertiser referral program and asked if the faster sequential growth in the Q3 guidance was related to the recent divestiture of the App Portfolio.

Answer

Co-Founder, CEO & Chairperson Adam Foroughi explained that the referral program is still in an iterative phase, but they do not anticipate offering financial bonuses, as the exclusivity of the platform makes an invitation a perk in itself. CFO Matt Stumpf confirmed that the Q3 guidance incorporates a slight revenue benefit resulting from the divestiture of the apps business, which accounts for the slightly accelerated sequential growth rate.

Chris Kuntarich of UBS Group inquired about the functional details of the upcoming referral program, including potential bonuses and international participation, and asked if the faster Q3 guidance reflects any benefit from the App Portfolio divestiture.

Answer

CEO Adam Foroughi explained that the referral program will likely not include paid bonuses, as the exclusivity of the platform makes an invitation a perk in itself. CFO Matt Stumpf confirmed that the Q3 guidance does include a slight revenue pickup resulting from the divestiture of the apps business, contributing to the stronger sequential growth.

Chris Kuntarich of UBS Group inquired about the expected revenue impact from the back-to-school marketing campaign and asked about the company's mix of brand versus performance marketing, especially with the potential rise of web-based payments.

Answer

CFO Russell Burke noted that direct revenue impact is limited in the short-term due to the marketing payback model, but strong returns are fueling confidence for further investment. He confirmed performance marketing remains a key tool, particularly for web onboarding. CEO Lauren Antonoff added that their strategy is a blend, with brand-focused 'demand creation' driving long-term growth.

Chris Kuntarich of UBS Group asked about the political ad spend headwind for Q4, the visibility on previously paused advertisers returning, and the typical ramp-up time for new large clients.

Answer

CFO Larry Madden stated the Q4 political headwind would be around 400 basis points for contribution ex-TAC, similar to Q3. CEO Tim Vanderhook confirmed no new updates on the paused advertisers. Regarding new clients, COO Chris Vanderhook noted the $250M pipeline represents full-year 2026 budgets, and CEO Tim Vanderhook added that the typical client onboarding and ramp-up takes one to two quarters.

Chris Kuntarich from UBS Group inquired about Duolingo Max retention trends for early cohorts nearing renewal and the key drivers of churn compared to the Super tier. He also asked for the gross margin outlook for the second half of the year, considering AI cost savings and the impact of web-based checkouts.

Answer

CFO Matt Skaruppa stated that it is too early for definitive Max renewal data, as its main feature, 'video call,' only scaled in late 2024, but early signs are attractive. He emphasized the focus is on platform LTV, which is highest for Max. For gross margin, Skaruppa noted that web checkout will not have a significant impact this year due to accounting rules. The Q2 outperformance was driven by lower-than-expected AI costs, a trend anticipated to continue, which is reflected in the updated guidance.

Chris Kuntarich of UBS Group AG asked about the retention and churn drivers for early Duolingo Max cohorts as they approach renewal, compared to Super subscribers. He also followed up on the gross margin outlook for the second half of the year.

Answer

CFO Matthew Skaruppa explained that it's too early for definitive Max renewal data, as its key feature scaled late last year, but early signs are attractive. He emphasized the focus is on platform LTV, which is highest for Max. For gross margin, Skaruppa noted that web checkout benefits will be minimal this year. The positive Q2 performance was driven by lower AI costs, a trend expected to continue, and favorable ad pricing, which is less certain going forward.

Chris Kuntarich from UBS Group asked about the scalability of ad spend on the Vector platform and the pacing of growth throughout the second quarter.

Answer

CEO Matthew Bromberg acknowledged that while many customers see lifts, some have not or have hit diminishing returns, stating that improving scalability is part of the ongoing daily work. He emphasized they are just 'scratching the surface.' He declined to break down intra-quarter pacing further, reiterating that the key takeaway is strong early returns with a long runway for future growth.

Chris Kuntarich asked if Match Group plans to increase prices at Tinder in the second half of the year and sought clarification on the expected relationship between MAU and payer trends.

Answer

CEO Spencer Rascoff stated definitively that there are no plans to take price at Tinder. He elaborated that a portion of the $50 million reinvestment is specifically for improving user value, such as prioritizing user outcomes over revenue in the recommendation algorithm. CFO Stephen Bailey reiterated that the company does not guide to payers but expects payer trends to generally follow user and MAU trends.

Asked for data to dimensionalize the impact of agentic search on B2C discovery traffic compared to earlier periods, and how this new traffic source ranks against traditional channels like email or SMS.

Answer

The company has heard of a general 20% drop-off in organic search for many brands, but it's too early for precise comparative data. The immediate focus for customers is stemming this drop-off. While exact numbers aren't available, traffic from agentic search is growing faster than other channels, and its importance will increase as trust in the technology builds.

Chris Kuntarich from UBS Group asked what factors could drive non-GAAP OpEx to the low end of the full-year guidance range. He also sought an update on the rollout of the 'one-click' T&E feature, specifically regarding market coverage and availability on Android devices.

Answer

CFO Kalani Reelitz stated that reaching the low end of the OpEx guide would depend on continued cost controls and efficiency gains from leaders in the field. Founder, Chairman & CEO Robert Reffkin confirmed that 'one-click title' is now available in all of their markets and that an Android version is in development.

Chris Kuntarich inquired about the growth in the Etsy app, asking if it's primarily a shift from web users and what steps are needed for the app to become a source of incremental growth.

Answer

CEO Josh Silverman explained that driving users to the app is a key strategy because it causally increases their lifetime value (LTV). He stated the focus is on making the app a destination for inspiration and discovery, not just transactions. While this creates some near-term friction for mobile web GMS, the company believes the long-term LTV gains are worth it. He noted most app growth is organic, with paid app marketing also increasing.