Great! We can, we can jump right in. It's Brian Fitzgerald from Wells Fargo's Internet research team. We're very happy to have with us Gary Swidler, CFO of Match. Gary, thanks for being with us.
Thanks for having me. I think this thing's a tease. You can't get outside and see the nice weather.
I know. I want to start with a couple questions at the top of funnel on Tinder. The user base, the top of funnel trends there. You've approached stabilization over the summer, but zooming out, what are the puts and takes there in terms of what you're dealing with post-pandemic? Any shifts in user behavior, attitudes? What's key to what's going on at the top of funnel for Tinder?
Yeah, you know, I would say overall, you know, we made good progress on top of funnel from February to the end of June. The marketing campaign, I think, was really resonating, and some of the work that the Tinder team had been doing on product was helping. And, you know, that is an area that needs a lot of attention. We need to get the top of the funnel back to a reasonable level of growth, and that's, you know, the number one job at Tinder to make that happen. It's got to happen through a combination of marketing and product.
Yep.
You know, at the end of the day, this is a product-driven company. Marketing can help, but product really needs to drive it, and we need to see, you know, product innovation, which we can market, which people can talk about virally, and we can kind of get this flywheel of virality and marketing and product excitement going again at Tinder. And I think we have the resources and the focus to do it. We just have to kind of keep working at it. We've made good strides over the course of this year with the new team at Tinder. You know, firing on all cylinders with marketing improvement, with product execution, velocity improvement.
Yep.
So, you know, we're making progress. You know, we've seen a bit of a step back since the middle of the summer as we pulled back a little bit of marketing spend...
Right
... in kind of the quieter July, August time frame, and so that's kind of slowly bouncing back. And we've got a lot of product stuff going on at Tinder here at the end of the year. You know, UI/UX refresh, we're gonna market pretty aggressively at the end of this year and into next year. So, you know, the momentum just has to keep building.
Yep.
The other thing I would point out is that, you know, you asked about changes in behavior. You know, I do think that Gen Z is different.
Yep.
You know, they have different focuses. They have different approaches to socializing and dating. You know, they tend to date more like, or hang out in groups and have groups of friends, and sometimes date one of their friends for a while. They don't really like the label dating. So I think dating apps are still a bit more of a struggle for them, and we need to meet them where they are. We need to adjust our products to try to satisfy Gen Z a little better.
Yep.
When you look at the two key areas of initiatives for Tinder, as we make the turn into 2024, satisfying the next generation of daters, Gen Z, if you want to call them that, and satisfying women are the two key things. That's the recipe for success at Tinder, and the marketing efforts and the product efforts need to be focused with those two, goals in mind.
Okay. You talked about the campaign. You talked about pulling back a bit, and so it starts with a swipe. So I guess that's a bit of vindication or validation that the branding campaigns work. Could you talk about what you're seeing kind of exiting this year and going into the cadence of brand spend for 2024?
Yeah, sure. So, you know, I, I do think there's been some very good signs over the course of this year around the marketing spend. You know, it's been targeted at the younger users, it's been targeted at women, and it has worked with those groups. We've seen real improvement in brand consideration intent among women.
Yep.
In fact, you know, the user growth was more than we were expecting in that H1 of the year. So we were expecting more improvement in brand sentiment. We got that, especially with the targeted demographics of younger users and women. But we did get some lift in users as well. So we've taken all the learnings from this year, you know, we're factoring that into our plans for next year. I think there are a few important takeaways. One is, we do need to have some level of always-on marketing.
Right.
So, you know, that pullback in July and August was damaging to us. We can't allow that to happen. So in key markets like the U.S., the U.K., we have to have some level of constant brand marketing, as many brands do. And then we'll have some other markets where we focus on them from time to time, and we'll have some special events or pulses from time to time, too, throughout the year. So we have a very clearly laid out calendar of marketing for next year that has, you know, both those special events and that always-on marketing, you know, country by country. And so I think we have a good plan of attack on the marketing side. Obviously, we're also gonna try to market product. As new product-
Right
... innovations come out, we'll put some marketing muscle to call attention to those product features that are rolling out. I'm expecting that we're gonna make a pretty heavy marketing push, especially in the Q1 of the year. We're gonna spend heavily into that kind of peak season.
Yep
... that happens between Christmas and Valentine's Day. So, you know, you should expect some pretty heavy marketing from us, not only at Tinder, but at Hinge, as we try to really build momentum for 2024, get user growth going at Tinder in particular, and try to, you know, have a strong year with a good Q1 and a good start to the year from a user perspective.
Okay. The other thing you talked about in terms of driving Tinder is the product redesign. Anything else to unpack there or a timeline for how that product redesign is kind of rolling out?
So, you know, the way that I think about all these things is, you know, they're a series of things.
Yep.
It's not sort of one big splash and once and done.
Right.
So, you know, the product redesign, the first couple of pieces of it are coming out imminently, certainly in the next week or two. And, you know, there's gonna be more to come. There's gonna be a series of product features focused on women, a series of product features focused on younger users. It's gonna happen all through the course of 2024 and into 2025. It's gonna be constant refinement, and we're just trying to make sure we calibrate it to, you know, have benefit with those target audiences and do it in a way that's, you know, revenue-enhancing and logical for the Tinder, Tinder ecosystem.
Okay. So just a bow around it, the product enhancements, the product redesigns, the marketing changes. How are you thinking about 2024 Tinder users and top of funnel?
So, you know, look, we've been down single digits, and we just need-
Yep
... to see improvement from there. You know, it's sort of get back to flat and improve from there, and I, I would just like to see us make progress on those lines, over the course of the year. You know, moving the top of the funnel is definitely the hardest piece, but it's also the most important piece, and we need that combination of, you know, strong marketing and product execution to really make that happen. And so, you know, I just want to see constant improvement, to get ourselves into a better position. So when I sit here looking at the good weather next year, we'll-
Yep
... we'll be in a lot better shape from a top of funnel perspective.
Okay. Wanted to move on further down the funnel right now, just talking about monetization at Tinder. What have you seen with, with younger user cohorts over the past couple of years? You know, changes in the overall, propensity to pay or lifetime value. Anything unique with, with cohorts?
I mean, not really. I would say that, you know, I do think the younger users have been under a little bit of pressure from the macroeconomic environment.
Right.
Not just in terms of the cost of the dating app, but just the cost of dating and going out generally, which has-
Right
... you know, inflation has driven those costs up pretty significantly. I think people have been a little bit more careful with their spending, you know, especially their discretionary income. What we've seen is, you know, pretty good stability on the subscription side-
Yep
... but a little bit more pressure on the à la carte side. You know, that's something that's discretionary. If you feel you have extra money, you do it. If you don't, you don't do it. And I think in the last, you know, 12 months and in certain pockets of the last 12 months, when gas prices went to $5, as the student loan thing becomes an issue, you know, you start to see some level of pullback on some of those kinds of purchases.
Yep.
So, you know, I think a stronger economy would give a little help to us in that regard, that people would feel a little better about purchasing à la carte. I think there's things we can do to tweak the à la carte offerings. You know, it was very interesting to see when we tweaked subscriptions and went to more weekly subscription.
Yep.
Lower price point, you know, really saw, people take that at a very high level. And so I think there's room for the... on the à la carte side to make some adjustments and see some kind of similar benefits.
Okay. You mentioned on the Q3 call, you know, student loan repayments, and those are first coming due right now in November. Any further anecdotes on that?
Nothing worse than we were expecting.
Okay.
I think, you know, there was a little bit of a shock to the system back in July when people first sort of became aware of this issue. October, November, I think people sort of, you know, realized it was a real thing for the first time. But in general, it's tracking what we expected.
Okay. You know, you've had the opportunity to catch up on price. The changes have been really nice, right? U.S. RPP up more than 40% in the Q3. Now that you've kind of caught up in the U.S., how are you thinking about your pricing strategy going forward? A more regular cadence of pricing alongside other optimizations, or how should we see that panning out?
Yeah, I mean, I... The easiest way to think about this is, you know, pricing optimizations is something that just needs to happen on a continuous basis.
Yep.
It's part of running one of these apps, and Tinder didn't do it for a period of time very effectively. With inflation and other apps raising prices, Tinder fell behind, and so the gap between where Tinder was priced and where competitors and other apps were priced had become pretty significant. And so we closed most of that gap-
Right
... and so Tinder is, you know, more appropriately priced now versus the other alternatives out there. And so a lot of that work has been done, at least in the U.S., where the gap was the most pronounced. And now I think, you know, we'll go sort of market by market.
Yep.
The other markets are smaller, aren't going to cause as much kind of disturbance on the payer side as what we've seen in the U.S. But we'll go market by market and optimize and make sure, we're constantly optimizing and we're on top of our game. We've dedicated a team to this, so this is their primary job, and this will be a, you know, an always-on kind of thing for Tinder. And that is a source of some of the revenue growth every year-
Yep
... that we can always be optimizing and generating a base level of revenue growth, you know, just from those optimization efforts.
Okay. Okay, and so, pricing is clearly a lever for international monetization through all of 2024?
Yeah, I mean, if you look at it, you know, we did the U.S., and then we looked at about five or six other markets, you know, U.K., Canada, Japan, et cetera. But Tinder operates in 190 markets.
Yep.
And so, you know, there's work for this pricing team to do to go market by market, you know, cohort by cohort, and figure out, you know, how to maximize price. And we can leverage, you know, ML and AI to be smart about this. We can have dynamic paywalls. There's lots we can do. So that's gonna be a big, you know, body of work into 2024 as well for Tinder. And, you know, that gives us a base level of revenue growth-
Yep
... that we can reliably expect is gonna be there, which gives us some ability to focus on top of funnel and engagement and other things aside from revenue generation. 'Cause we know that there's the ability to generate revenue from some things that need to be done around the world on the Tinder monetization side.
Okay. And last point on international Tinder monetization, is that focused more on the subscription programs? Is that focused on à la carte, or is it both?
It could be both.
Yeah.
You know, certainly on subscription, you know, that's where we've made changes, rolled out weekly subscriptions, adjusted pricing. You know, that will happen in more markets. I think, you know, the payer effect will be much more muted than it was here because they're smaller, but, but there's work to do there. I think on à la carte, you know, we haven't done a lot with à la carte over the last years either.
Yep.
We've had these two à la carte offerings for a long time. Thinking about what else we can do on the à la carte side, I think is very interesting, how we merchandise and price those à la carte offerings, how we bundle them. All of that needs to be further explored and provide, I think, a significant amount of opportunity for us.
Okay. Wanted to switch over to Hinge for a bit. You're seeing accelerating user momentum, strong product market fit. We've talked earlier about some of the attitude shifts among users in dating, and it seems like Hinge aligns well with how the market is evolving. So just to start, could you talk a bit about how you weigh your investments across the portfolio? Maybe specifically investments to reposition the Tinder brand versus stepping on the gas at Hinge.
Yeah, you know, what you said about Hinge is all right. I mean, the product market fit is extremely strong. The momentum there is great. It's really performed well, not only in the core English-speaking markets, but also in all these European expansion markets. And, you know, they're different. France is different than Germany, and the product is, is resonating in all these markets. So we're really happy with the progress Hinge has made. There's a lot more to do in Europe, and so we're focused on Europe in the short term because I think there's still a lot more, you know, open space there in Europe for, for Hinge. And, you know, all the work of user growth that we've done in 2023 will start to pay off in terms of revenue generation for Hinge next year, in Europe.
you know, really we're firing on all cylinders on Hinge and, you know, our plan is to invest in that business, you know, as if it was our only business.
Yep.
We're gonna continue to, you know, put the pedal to the metal, put gas in the fire, or whatever analogy you want to use, to keep driving the growth of users at Hinge. That's the key, and, you know, the revenue will continue to follow. So I feel really good about the outlook for Hinge, you know, through the course of 2024 and really beyond.
Okay. You've talked about testing pricing optimization at Hinge as well. What can we expect there? Is it gonna be more gradual than what we saw at Tinder in 2023?
Yeah, I mean, I think it's a much more minor component of the strategy-
Yep
... given the level of user growth there and the opportunity to keep that going. You know, we'll continue to tweak, but, you know, we'll do some, but it's really not a main focus of the Hinge team.
Yep.
The main focus of the Hinge team is to continue to drive user growth and continue to make the product fun and exciting, and something that people enjoy using, which is what's been key to its success so far.
Okay. Hinge, it seems to be resonating really well, international markets, it's with the launches across Europe, how should we think about additional market expansions for Hinge and how you roll out?
We don't plan to go beyond Europe in 2024.
Okay.
So, you know, Asia will be something we'll think about for 2025. You know, Hinge has a lot of the revenue potential really is in Europe, so Hinge has a lot of momentum, for example, in India, and that's a market we could go into for Hinge. But when you look at the revenue opportunity in India versus Germany or France, the European markets are just much more fruitful from a revenue perspective. So it makes sense to sort of go down in revenue order, and that's why, you know, we remain focused on Europe. But, you know, we look at markets like Korea, we look at markets like India. Southeast Asia has become a very good dating market, and then certain markets in Central and Latin America, like Brazil, Mexico. So those are logical to come over time.
Yep
... but they're not planned for 2024.
Okay. Wanted to finish on Hinge with maybe a broader, bigger picture question. What about Hinge's experience really makes it appeal to its users, particularly women?
You know, Hinge has, like, a little bit of a layer of more seriousness that I think does appeal to people.
Yep.
It takes a little bit more work to onboard. There's certain questions you have to answer, and there's, you know, a certain number of photographs you have to put on. And so, you know, because people have to do a little bit more work, they're taking it a little bit more seriously, and that sends signals to people that, "Hey, I've put in the work. I've been willing to spend the time on this. I'm a bit more serious about this. I'm not just jumping on." And I think that that has, you know, really resonated well with people. And as a result of that environment being created, you know, the behavior and the way people interact on Hinge, I think resonates with people, particularly women, better. You know, when Tinder was created, it, it, it had a mantra of fa- you know, getting on quickly and easily.
You know, just one picture, not very much information, and get going. At the time, I think that really resonated very well with people.
Yep.
But it has had some other effects, because you have people who aren't very serious. You have people who don't fill out their profiles. You know, you don't know a lot about them. And so, you know, when we go back to learnings from Hinge that we can apply to Tinder, there are certain things that now, ten years later, we learn from Hinge and, and other things we do, that we have to incorporate back into the Tinder product experience-
Yep
... and raise the bar a little bit. So Tinder had a very viable and thoughtful approach, you know, 10 years ago. It is still a great business that satisfies a lot of people and has a really big user base, but like everything, things evolve, and we need to make sure that Tinder adjusts to kind of keep up with what people want today.
Okay, maybe thinking out loud, can you talk a little bit about how you kind of cross-market or grow people out of Tinder and into Hinge? Do you get good momentum with that type of movement, or
You know, we don't do a lot of that.
Yep.
We don't kind of cross-sell.
Yeah.
And so, you know, the brands really sort of compete with one another-
Yep
... based on their marketing and based on their product. You know, Hinge's product and marketing has clearly been resonating. The overlap between Tinder and Hinge is not nearly as high as I think people think it is.
Yep.
But, you know, Hinge really resonating is having some, you know, knock-on effects to Tinder. I think it's hard to deny that. And, there's also the factor of the fact that people use more than one of these apps at the same time.
Right.
So you have a lot of people who have both of these apps on their phone. They might use Hinge for a while, they might use Tinder for a while, they go back and forth. Some people use two at once, some people flip from one to another, and so that is a factor for us. You know, the average younger person can use two, three, four of these at a time.
Yep.
And so, you know, that makes our category a little different than probably some other types of companies that you and the investors, you know, pay attention to.
Okay. I want to shift over to the opportunities at Match Group Asia. You've seen really nice uptick at Azar, but what else are you seeing in terms of the Japanese market with Match Group Asia?
Yeah, look, I mean, you know, when we acquired Hyperconnect, the business wasn't delivering-
Yep
What we needed to deliver. We've spent a lot of cycles there, you know, with them, and they've done a lot of great work improving their AI algorithms. They're very advanced on the AI side, and Azar has really benefited from a much better AI matching algorithm. And so, you know, we've seen, you know, double-digit revenue growth there for a while now. I'm expecting that to continue into next year. The momentum is very strong, and we're trying to take learnings from that AI-
Yep
-matching algorithm and see where else we could apply it across the portfolio. We're also trying to deploy the AI capabilities that Hyperconnect engineering team has-
Yep
-across our portfolio as well. So there's some really good benefits we're getting out of that acquisition now, and we just need to keep that going. But, you know, the outlook for next year for Hyperconnect is very strong. I just came back from Seoul and Tokyo, right before Thanksgiving, and, you know, very optimistic about what that business can deliver next year and what it can do for the overall platform. You know, Japan is a more complicated story. You know, Japan has the lowest dater penetration of any Western market.
Yep.
You know, sub-20% dater penetration in online dating. They have this massive problem, where it's hard to find a partner, and the marriage rates and the birth rates are low, and the Japanese government is actually really concerned about this.
Yes.
So dating apps really, you know, fulfill a need that really is acute in the Japanese market. But I think there's a real reluctance from, you know, that 82% or whatever it is, of people who haven't been using these apps to try them. They're worried about safety. They're worried about how to interact on these apps. They need more education and more comfort. And so, you know, we have a new head of our Japanese business. He's been spending, you know, the bulk of his initial time helming the business, you know, understanding the user issues and concerns. And, you know, the 2024 plan is to go out and make changes to the product to address those concerns and really try to grow the user base. So that is the plan for 2024.
Plus, we're getting a bit of a lift because we're being allowed to market on TV now-
Yep
... which hasn't been allowed in Japan, and that shows you, you know, the skepticism that Japanese society has around dating apps. They didn't think they were worthy of being marketed on TV. But now, you know, given the pressures to get people to get married and, and meet others, you know, they're allowing the apps to be marketed on TV. And being on TV, you know, gives the apps a certain kind of level of trust in society. People see it on TV, it feels like a legitimate product, and so I do think that's a really good step forward for us. So we're hopeful that the combination of some changes to the product to better account for the concerns of Japanese society, particularly-
Yep
-around trust and safety, and the marketing on TV and improving the credibility, should really drive, you know, better user growth in that market. And in fact, you know, we're partnering with the Japanese government-
Yeah
in a bunch of different jurisdictions in Japan to try to team up with them and have them speak to their constituents and demonstrate that dating apps are a valid way to meet people. And so I'm hopeful that those three things, the government partnerships, the increased marketing efforts, and the changes to the product, should lead to enhanced user growth. You know, we're not contemplating that in our financial outlook-
Yep
-because, you know, we want to see it actually happen before we plan for it, but we're pushing to make that happen.
So, beyond the trust and safety, beyond the marketing issues, are there any other things you have to do to the product to deal with the cultural nuances of the Japanese market in terms of how you monetize? Who pays for what? Is that different in that-
Well, it-
-ecosystem versus-
It's different than in other places.
Yeah.
You know, mostly men pay in Japan. Women don't really pay. But, you know, the app that we have there is an app called Pairs-
Yep
... that is solely focused on the Japanese market and has been for a long time. So that market is, you know, properly localized and optimized for the Japanese market. You know, the issue really is that it has captured the people who are willing to use the app as it's currently constructed.
Yep.
So we need to make evolutions on that app to capture people who have, you know, not been as comfortable using it. There's things we can do with verification, selfie verification, ID verification, to try to enhance the perception and the actual safety of that app, and then market that to make sure people understand, "Hey, we've confirmed that this person is a real person, that, you know, we know who they are, and we've verified them." So there's work we can do on that front in Japan, and that's what we're planning to do.
Okay. I want to spend some time talking on investment plans and, and margin outlook. So, so, for 2024, margins, at least the same level as, as 2023. Could you go over what factors into that outlook and, and maybe the, the key swing factors we should be aware of?
Yeah, I mean, so there's a lot of considerations, right? You know, the first is investment at Tinder and Hinge.
Yep.
We talked a little bit about Hinge before. You know, we're investing in people there. We're investing in marketing spend to continue to build momentum in that app.
Yep.
So, you know, that's clear. I actually think that despite all that, given the strong revenue growth, you know, it may not be an investment year for Hinge. I think we could keep-
Yep
... margins pretty similar at Hinge to what we've seen this year, and still do all the things that we want to do at Hinge. So that's a very, very good story. You know, I think Tinder, when you look at it, you know, it's been around a 50% margin business. You know, we've talked a little bit about needing to spend a few more marketing dollars there. I don't think it's a lot as a percentage of revenue. It's probably one or maybe two points. And so, you know, we're prepared to do that to try to drive that top of funnel, to market the product innovation, to invest in some people at Tinder, to really build out some more AI capabilities and other capabilities to innovate on the product and drive growth.
So, you know, I think there'll be, you know, modest margin degradation at Tinder, but not, not very significant. And the way to pay for that is really by, you know, being more efficient across the company-
Yep.
with overhead, you know, kind of keeping the belt tight on our Asia business and also, you know, continuing to be judicious on our evergreen and emerging businesses. We're going to start combining platforms and, you know, reducing, continuing to reduce duplication. And so the impact of that, you know, cost efficiency in our evergreen and emerging brands-
Yep.
- and our overall corporate overhead is enough to, you know, offset what the planned investment is at Tinder. And so that's how I get to, you know, roughly flat margins when you mix it all together. You know, and that assumes a certain level of growth for Tinder, consistent with, you know, what we've provided in terms of our outlook of high single digits. If Tinder can do better through new product innovation or the marketing, then that's very margin-enhancing because it's adding more revenue dollars, you know, at obviously very high margins. So, you know, that's the plan for next year. I feel good about it. We're still finalizing it and tweaking it-
Yep
and everything else, but that's what it's tracking to.
You talked earlier about AI and some of the matching algorithms, but I wanted to drill down on that a bit. It's an area of investment you've talked about. What are some of the key priorities there for using AI, and anything you can tell us about the scale of investment with your AI initiatives?
So, you know, I think there's a couple of things to keep in mind. One, you know, we operate in a very dynamic environment, and the preferences change, and-
Yep
what people are interested in and focus on change from a user perspective. And so we have to constantly be looking to buy or build kind of new, you know, new ideas. We operate a portfolio. The apps are at different stages of their growth curve, and we need to take that all into account. We also have to take into account the fact that while a significant percentage of the population is interested in using and has used the existing crop of dating apps-
Yep
the Hinges and the Tinders of the world, and we can evolve those apps to satisfy more people on the margins. There's lots of people who look at the universe of dating apps and say, "You know, that's not for me. Those don't resonate with me.
Yep.
They're single, they want to meet people, but they're not using the products. And so we need to continue to try to innovate new ideas to serve those category resisters and bring them into the fold. There's lots of them, right, around the world. And so, you know, we have a central innovation team whose job it really is to think about: How do we bring in those resisters? How do we create new products, come up with new ideas that can bring more people into the fold? And, you know, the advent of, you know, or sort of the momentum that's building on the AI front now-
Yep
really provides us with an exciting opportunity to come up with products that wouldn't have been possible five years ago, that have a different interface or have a different matching algorithm or both, and can really give people a different experience. And so we need to keep, you know, trying to build those. We have more data, you know, than any other company about daters, right?
Yep.
We've been in this business since 1995. We know this space extremely well. As you I'm sure know, you know, large language models depend on data, so the fact that we have this big repository makes us, you know, very likely to succeed in terms of building AI-driven products. And so, we've got to, you know, take shots on that front.
Yep.
I think we have a good chance of making it happen. It's hard to know if it's one product or it's five, and it's hard to know if it's two years from now or three years from now.
Yep
... or six months from now. But we have got a team leveraging the Hyperconnect capabilities, leveraging other capabilities we have, to really, you know, build in this area and see, you know, what other innovations can happen. And we have a pretty good track record of doing this. You know, when we took over Hinge, that was an idea that somebody else came up with, but that was a million-dollar revenue business.
Yep.
It's going to be a $400 million revenue business on its way to a $1 billion revenue business. So you know, we've incubated other things as well, Chispa, BLK, and other apps. So you know, we need to keep doing both buying and building those out and building for ourselves as part of our portfolio strategy, and I think AI gives us a real opportunity to build some exciting and very cool things.
Okay. A couple more from me. We got a few minutes left. Maybe not a margin driver, but you announced a settlement with Google on the Q3 call. Could you unpack the changes there?
Yeah, I mean, as you say, it's sort of net neutral. You know, we're going to adopt User Choice Billing, which we think will overall be a good thing. You know, the fee structure will be higher, but we're entering into this arrangement with them around marketing and other products that they have, which we think will roughly be net neutral to us. And so, you know, we think just kind of putting the uncertainty of the litigation behind us was a good thing, and focusing on our core business and having a good relationship with Google, who's such an important partner of ours, and there's a lot of things we can do together with them. So it's good to put that behind us, although it'll be interesting to see what happens with that trial. You know, as you probably know-
Yep
... you know, Epic continued along, and that trial continues to play out, and it'll be interesting to see how it plays out.
Yeah. And maybe riffing off of that point, does the Google settlement, in your mind, reflect any changes in terms of your outlook for regulatory relief on App Store fees or no?
Absolutely not.
Yeah.
I mean, you know, just a couple of interesting data points. You know, the first thing is, you know, I don't know how many people read the risk factors in Apple's 10-K.
Yeah.
I'm guessing not that many. But you know, they just updated their risk factors to basically say: You know, we expect, you know, or it's possible that we're gonna have to make changes in light of regulatory changes that are happening related to App Store fees. So you know, that's not a guarantee that change is coming, but they clearly see it-
Yeah
as a possibility
Yeah
if not more.
Yeah.
and then you've got the trial, you know, which we just talked about. And then, you know, most notably, and I think this is what Apple was reacting to, you have the Digital Markets Act in Europe-
Right
... which is gonna start to be enforced in the Q1 of next year. And so we're getting pretty close to that, and I think Apple and Google both recognize that that is probably gonna require changes to their systems.
Yeah.
And so, you know, 2024, I think, you know, we haven't factored any of this into our margin outlook or anything else. Obviously, we're eager to see what happens, but 2024 could be a year of significant change on this front, which would be great for consumers and great for the developers overall.
Okay. Last question is on capital allocation, how you're thinking about that, and maybe what you're seeing in the markets, public and private.
You know, I'd like to think we've articulated this fairly clearly, which is, you know, we have a lot of cash flow generation. We plan to return at least 50% of that-
Right
- to shareholders through, you know, share buybacks or other means. Obviously, with our stock where it is, you know, we continue to buy stock back aggressively. And, you know, the other 50% we're holding for investments or we're holding for M&A. There's not a lot for us to buy, and we're planning to-
Yep
Stick pretty close to our knitting in terms of the dating space. And I don't see a lot of, you know, interesting sort of tech lift- outs out there, so I don't think that's, you know, likely to be a source of M&A, but we keep an eye on it. So, you know, unless something breaks on the M&A side, I expect to be returning a lot of capital to shareholders, but we'll continue to preserve it. People come up with new ideas all the time.
Yep.
Circumstances change. You know, companies in our space have definitely been hurt from a valuation perspective.
Yep.
Things have gotten a lot cheaper. So we'll see how things continue to play out. You know, we have financial resources to do whatever we need to do-
Yep
On the M&A side, on the investment side. We're primarily, obviously, investing through our P&L with these new efforts. So, I feel the company is in, you know, very good financial shape. We've got leverage levels below our targets.
Yep.
You know, we refinanced out our maturities a long time ago and put them out, you know, far away so that, you know, we don't have a debt maturity till 2026, and really the bonds don't start till 2027. So, you know, the company is in really good shape from a balance sheet perspective, and that lets me sleep well at night, and-
Okay
... we just gotta keep executing on the business.
Okay. So we touched upon a lot of different things. A couple seconds left. Anything in your mind that the street is not appreciating with your story?
You know, the only other thing I would add, which we didn't touch on, is on, you know, the Tinder payer front.
Yep.
That has become, you know, a very big focus, shall we say. And, and, you know, we created a lot of noise on payers with all the price changes and the introduction of weekly subscriptions, et cetera. You know, the noise from weekly subscriptions is pretty much behind us at this point or, or, or will be very shortly. And we will anniversary the effects of the U.S. pricing changes in Q2-
Yep
of next year. And so, you know, we've provided an outlook that says: You know, year-over-year payer growth will improve as the year goes on, which, you know, we continue to stand behind. And I think that should position us to, you know, get back to sequential payer growth at Tinder in the middle of next year. So, you know, the company's positioned for, you know, double-digit revenue growth here in Q3, Q4, positioned to carry that momentum into the beginning of next year and get to a point next year where we see sequential payer growth at Tinder as well, and year-over-year payer growth by the end of the year. So, you know, that all winds up, I think, to be a pretty good story with strong margins, strong cash flow, and return to capital.
You know, when I look at the $32-ish stock price-
Yep
I know that all those factors are out there from a financial and operating metric standpoint. You know, I struggle to understand, you know, kind of where people's heads are at. But it gives us an opportunity to keep buying back stock.
Yep
- and, you know, buying it back at pretty low prices. And I'm optimistic we'll look back in a few years from now and say: You know, we should have bought even more than we were buying-
Yep
- back in, in 2023. So, I feel, I feel good about all of that.
Okay. Well, we'll leave it there. Gary, thank you much.
Okay, thank you.