Q3 2024 Earnings Summary
- Tinder's new features, such as "Spotlight drops" and an expanded "Explore" tab, are showing promising early results in enhancing user engagement, especially among younger users and women.
- Hinge is advancing its innovations with AI-enabled features, like prompt suggestions, to enrich user experiences and facilitate more meaningful conversations that lead to great dates faster.
- The emerging brands are nearing the point where their revenue growth will offset the declines from the evergreen brands, with expectations to cross over in 2025, indicating future overall revenue growth.
- Delays in rolling out new monetization features at Tinder due to cannibalization concerns and mixed test results could impact revenue growth. Bernard Kim mentioned that features like "Like You" showed cannibalistic effects on Gold subscriptions, necessitating careful testing and refinement, which slows down revenue-enhancing feature rollouts.
- Revenue declines in Evergreen brands are not fully offset by growth in emerging brands, with the crossover point where growth exceeds declines not expected until 2025. Gary Swidler indicated that direct revenue from Evergreen and Emerging brands declined 9% year-over-year, and the company is "very close" but has not yet reached the point where emerging brands compensate for declines.
- Expectations of reduced advertising revenue in Q4 due to advertisers pulling back, leading to a slight guide down on ad revenue. Gary Swidler noted that some advertisers plan to spend less in Q4, affecting the company's advertising revenue outlook.
| Metric | Period | Guidance | Actual | Performance |
|---|---|---|---|---|
Tinder Direct Revenue | Q3 2024 | $505 million to $510 million | $516.78 million | Beat |
Match Group Total Revenue | Q3 2024 | $895 million to $905 million | $895.48 million | Met |
Hinge Direct Revenue | Q3 2024 | Approximately $145 million | $145.43 million | Beat |
| Topic | Previous Mentions | Current Period | Trend |
|---|---|---|---|
Tinder user & payer momentum | Previously cited stabilizing or improving trends, though always negative YoY; management was generally optimistic about sequential rebound. | Inconsistent MAU (-9% YoY), some sequential payer growth; weaker late-quarter iOS user trends. | Consistent topic, sentiment mixed |
Hinge revenue & user growth | Previously highlighted robust growth (30%+ YoY); viewed as a $1B+ potential business with expansion in Europe. | Delivered $145M (+36% YoY); strong payer/MAU growth; profitability at 35% AOI margin. | Consistent topic, remains strong |
Margin improvements & cost savings | Consistent focus on cost controls; exiting low-margin services, reducing overhead while investing in growth areas. | Emphasis on E&E margin expansion toward 30%+ by 2026; managing trade-offs to keep AOI margins 36%. | Consistent topic, stable outlook |
Exit from live streaming | Q2 2024: Announced exit from Hakuna, citing margin dilution and intensifying competition. No mention in Q1/Q4 2023 docs. | Mentioned as finalized; $37M in charges recognized, aligned with prior plans. | No longer mentioned after Q2 |
iOS user slowdown for Tinder | No references in prior quarters to an iOS-specific slowdown [—]. | Newly emerged issue in Q3 2024; mid-September drop in iOS sign-ups impacting MAUs. | New topic |
Advertising revenue decline | Not discussed in earlier calls [—]. | Anticipated Q4 2024 decline due to holiday-season ad pullbacks; viewed as timing-related. | New topic |
Tinder marketing spend | Q2 2024: Expected marketing spend up 6% YoY. Q1 2024: Focused on brand marketing; no major budget hike to drive payers. | No planned percentage increase next year; focus on product-driven marketing vs. broad brand spend. | Sentiment shift toward restraint |
Emerging brand offsets | Q1 2024: Noted strategy to grow emerging brands and manage evergreen declines, with $60M cost cuts. No Q4 2023 mention. | Close to offsetting evergreen declines; anticipated crossover in 2025. | Potential large impact topic |
AI investments | Repeatedly highlighted as key to enhancing user experience, e.g., Tinder Photo Selector, Hinge AI features. | Important for future; integrating AI into user flows (e.g., Hinge) for product innovation. | Consistent emphasis, growing role |
E&E tech consolidation | Cited as a multi-year effort; cost savings of 10 margin points once complete. | Continuing to migrate brands; E&E at 26% margins, aiming 30%+ by 2026. | Potential large impact |
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2025 Outlook Impact
Q: Can you give more color on the impact from the Q4 guidance on 2025 outlook?
A: Gary Swidler explained that while they have a good handle on Hinge's trajectory and other stable businesses, Tinder's performance will significantly influence the 2025 outlook. Recent developments at Tinder, including weaker momentum over the last 1.5 months, have introduced some uncertainty ( ). They plan to provide more details at the Investor Day and are focusing on improving Tinder's ecosystem and margins. -
Tinder MAU Trends and Margins
Q: What's happening with Tinder's top-of-funnel trends and is the 52% operating margin appropriate long-term?
A: Bernard Kim noted a step back in Tinder's MAU growth starting mid-September due to possible causes like iOS 18 introduction and trust and safety enhancements, but doesn't see it as a long-term shift ( ). Gary Swidler mentioned that Tinder's margins have declined slightly due to increased investments in marketing and product development, and they will proceed carefully on margins until they see real product transformations ( ). -
Tinder Payer Trends
Q: Is lower Q4 payer number due to pull-forward or other issues like MAU and iOS?
A: Gary Swidler indicated that weaker MAU momentum starting in late Q3 and into Q4, combined with iOS issues affecting higher-value users, is making it more difficult on the payer front in Q4 ( ). They are targeting a mid-single-digit year-over-year payer decline and are working to improve the MAU situation. -
Hinge Revenue Growth
Q: Can you provide color on Hinge's revenue growth deceleration in Q4?
A: Gary Swidler explained that the deceleration is due to tough comparisons against last year's Q4, when Hinge rolled out weekly subscription packages leading to a significant revenue jump ( ). Despite this, they are pleased with Hinge's strong user growth and expect continued robust revenue additions in 2025 similar to 2024. -
Tinder Product Delays
Q: What's contributing to delays in a la carte features and unbundling at Tinder?
A: Bernard Kim stated that careful testing is essential to understand the impact on revenue and the ecosystem, which sometimes leads to more rounds of iteration ( ). They are refining features like Passport and Like You due to cannibalization effects on subscriptions and are optimistic about rolling out the first three features broadly in the coming months. -
Emerging Brands Offsetting Declines
Q: How close are emerging brands to offsetting Evergreen declines?
A: Gary Swidler mentioned that gains in revenue at emerging brands are coming close to offsetting declines in Evergreen brands ( ). They expect to cross the threshold where emerging growth exceeds Evergreen declines sometime in 2025 and see significant margin improvement in the E&E business, aiming for margins north of 30% by 2026. -
Managing Margins and Investments
Q: How do you ensure appropriate investment levels across the business while maintaining margins?
A: Gary Swidler explained that they carefully balance investments, focusing on making the right trade-offs among brands at different stages of growth ( ). They've invested in Tinder and expanded Hinge internationally, while offsetting costs by actions like exiting live streaming and redeploying funds to higher-return areas. -
Consideration of Divestitures
Q: Are you and the Board considering divestitures?
A: Gary Swidler stated that they are open to any actions that drive shareholder value and constantly evaluate their portfolio and investments ( ). However, the enhanced disclosure this quarter was not driven by considerations of divestitures but to provide investors with deeper insights into each business unit. -
Advertising Pullback and Marketing Shift
Q: Why is there an advertiser pullback during the holidays and a shift in marketing spend into Q4?
A: Gary Swidler noted that some large advertisers plan to spend less in Q4 due to the crowded holiday market, resuming spending in Q1 ( ). They are being cautious with Tinder's marketing, focusing on product improvements first, while increasing marketing spend for Hinge due to its strong performance. -
Tinder Brand Perception and New CFO
Q: How is Tinder's brand perception trending and what's the reason for appointing Steve Bailey as CFO now?
A: Bernard Kim stated that focus remains on Gen Z and women, with product initiatives rolling out to address their needs and reinforce brand perception without increasing marketing spend as a percentage of revenue ( ). Regarding Steve Bailey, he has deep knowledge from over 12 years at Match Group, and the transition has been in the works for quite a while ( ). -
Hinge's 'Your Turn Limits' Feature
Q: Has the 'Your Turn Limits' feature at Hinge impacted user growth or churn?
A: Bernard Kim mentioned that the feature has received positive global response, addressing the ghosting problem in dating apps, but it's tough to link product launches directly to user growth immediately ( ). The timing of Hinge's strong Q3 and early Q4 performance aligns with this feature's launch. -
Tinder Product Developments
Q: What impact are you seeing from Tinder's new products like Spotlight Drops and the expanded Explore tab?
A: Bernard Kim reported that these features are helping users find more people they are genuinely interested in, with early promising results ( ). They are gathering valuable insights to shape future innovations planned for 2025, focusing on improving ecosystem health and user outcomes.
Research analysts covering Match Group.