Match, you're coming up on your 100th day, I believe this week, actually, as CEO. Where have you spent your time, and what are your priorities going forward for the company?
My first priority, and the way I've spent most of my time, has been rebooting the company culture. I know that can kind of sound sort of touchy-feely, sometimes, at settings like this. I will tell you, from having run tech companies for 25 years, it starts with people and culture. Great people, properly motivated, properly organized, build great products, which attract audience, which generate revenue and profit and stock price appreciation. It starts with people. I have entered the company with enormous impact and force, shaking the company from a slumber. It is responding incredibly well. Motivating over 2,000 people to do their best work, that's the single best way I can spend my time. That's been number one.
My second priority is improving the Tinder product roadmap and Tinder innovation so that we can start growing audience at Tinder again. My third priority is helping support Hinge in its continued growth. My fourth priority is extracting the value from the combined Match Group. This is a company that was a category roll-up that IAC did. When it spun out from IAC five years ago, and by the way, IAC is completely separated from the company. There is no IAC involvement anymore. When we spun out five years ago, the benefits of that scale were never extracted. When I got here 100 days ago, it was really run as 20 different companies. Each app, basically, has their own company with its own head of marketing, its own head of technology, its own head of engineering. I have changed a lot of that in just 100 days.
I'll continue to change a lot of it because there are enormous synergies to be had by recognizing the combined power of Match Group, just as we did at Zillow Group, where truly, as StreetEasy, HotPads, Zillow each had their own identity and went after different customer segments and had their own product roadmaps. The combined benefits of scale of Zillow Group are what really made that company perform.
Back to innovation. I think there's hope that AI could be what ultimately drives innovation in the category. How is this playing into your product roadmap? And how do you just more broadly feel about the AI opportunity in dating?
It's significant. I mean, the core of what we do is, like TikTok, we put forward a stream of user-generated content for people to assess. The way that we decide what user-generated content to put in front of people is based on AI algorithms. I mean, that's what TikTok does with video. That's what we do with still photos and sometimes videos for profiles. We're using AI recommendation algorithms to personalize your feed with an infinite stream of UGC, of user-generated content. AI has been wildly successful to drive engagement on TikTok, on YouTube Shorts, on Instagram Reels. You see that in all their engagement stats on Snap as well. That's the potential for us with our recommendation algorithm. We put out some data last week that Hinge's new AI-driven Recs Algo is driving a 15% improvement in match rates.
We're starting to see it. It's still early. That's the potential just on that one feature, which is, I mean, it's the core to what we do, but just on the quality of recommendations. The other ways that AI can be infused into the product we're already pretty—we've made great progress on, which are around improving the quality of profiles. Now we have prompt feedback, for example, when you're entering—I updated when I onboarded a couple of weeks ago to one of our apps, it says, "What's an example of a thing that you're afraid of?" I said, "Snakes." The AI-driven prompt feedback said, "Why don't you try to offer a more creative way to describe it? Did you once have a scary encounter with a snake?" I mean, that's AI-driven. Now I get that as a user.
I am prompted based on that to write a three or four-sentence story about an encounter I had with a snake. The result is, when you're looking at my profile, it's now much more engaging because it doesn't just say, "Snakes." It says I was, it tells a little story. Prompt feedback is another example of how AI can be infused into the product in order to improve the quality of the experience and drive engagement. Finally, you're starting to see this among lots of public companies talking about AI enablement at the employee level. We're at the forefront of that as well. Every software engineer uses Cursor, for example. We use lots of AI prototyping tools like Origami and others that allow us to move straight from Figma to basically mobile prototypes, which allow for faster product iteration.
All of that, I've done. I've got us from 0 to 100 miles an hour just in the last 100 days on that front as well. That was basically a standing start until I got here. We have made a lot of progress on that in a short period of time.
You announced some pretty significant changes last week with earnings, including a reorganization that impacted 13% of employees. Could you talk about the rationale behind these actions? Where do you plan to reinvest those savings?
Yeah. So we cut 13% of employees company-wide. At Tinder, I think it was 18%. And at Tinder, it was 24% of managers. Company-wide, we basically took out a whole layer of managers. The reason for this was there were several reasons for it. The first reason, and I think most important reason, frankly, was to be more nimble, to get people to a higher degree of accountability, to have more doers, less managers, so that we can move faster. Even if we did not save any money from having done it, that would have been reason enough to do it. The second reason was to save money. We are saving $45 million in year, $100 million annualized, plus another $45 million a year of stock-based compensation, which is not insignificant.
As you know, one of our investor day goals is to get to $5 of free cash flow per share. You can get there two ways: by increasing cash flow and also by reducing share count. Avoiding $45 million a year of SPC is no small thing. What are we doing with these savings? We are reinvesting them in the business. What I mean by that is about, well, a significant portion of it is going towards helping individual brands expand into more geographies. These are things like Hinge expanding into Brazil and Mexico, and then eventually into Asia, Azar expanding into the US, and also Latin America, The League expanding into the Middle East. That takes budget in terms of product development, but also cost of acquisition to start the network effects in each of those local markets.
A portion of the savings I'm basically holding back to give back to the users at Tinder as we start to release more features that give them more value in order to grow audience. That is what we're doing with the cost savings. I'll just sort of tie this answer to the investor day conversation, which is to say, in December, we laid out these investor day goals. I've now stood by them in last earnings call and also my first earnings call a quarter ago by saying, I intend to still achieve the investor day goals. I'm trying to have my cake and eat it too. I'm trying to have enough cushion so that we can innovate and we can make some bold decisions that will drive audience growth and also achieve the investor day targets.
The way to do that is to cut costs so that we have enough cushion to do both without having to do a reset on the investor day targets in the name of growth and longer-term bets. That was the driving force behind the cost cuts.
You answered my next question was why you elected to stick with the financial framework. It sounds like you can do both. Maybe before we dive into the brand specifically, macro and tariffs, two topics I think we have to ask every company about.
I thought the tariffs were done. We're good, no?
Today. You do not have any tariff exposure, of course, directly. Could you just talk about what you are seeing on the macro side in recent weeks? What type of impact, just more broadly, would you expect on the company should the economy materially weaken more, even though this morning it looks like it is going the other way?
Yeah. We do not have tariffs directly. We are not immune to the macroeconomic environment. We are not advertising-driven. In that sense, we do not have revenue dependent on advertiser sentiment. About a third of our revenue is à la carte, meaning consumers buy individual features in-app, and about two-thirds is subscription. For more price-sensitive consumers, especially younger consumers, in past recessions, sometimes we do see some softening of the à la carte purchases as people start to say to themselves, hold on, I have to make rent, and my hours have been cut back. Should I still buy that $1.99 digital rose to send to somebody or not? Actually, it is not just the à la carte purchasing. It is also the cost of dating itself.
If a date is going to be $40-$100, then maybe I'm going to date less if the recession is particularly deep. That can impact the use of dating apps. We are seeing this a very small amount, but enough that we thought it was worth mentioning last week as consumer confidence was starting to weaken in the U.S. among just a small cohort of users, less affluent, younger users just on one brand, Tinder, just on the à la carte purchases, not subscription. It is nothing to panic about. We did mention it on the call last week.
OK. A couple of questions now on Tinder, your biggest brand and in focus. This is a brand that's been in turnaround, was in turnaround when you joined. Could you talk about your strategy to reinvigorate growth, maybe how it differs from the prior teams? What gives you confidence the brand's best days are still ahead?
Yeah. Tinder has massive brand awareness. I mean, it is the category in the sense that if you ask somebody to name a dating app or name an app to meet new people, they will overwhelmingly say Tinder globally. That's the good news. The challenging news is that the next word they'll probably use is hookup. They'll say, oh, it's a hookup app. And 10 years ago, that had enormous product-market fit among 18 to 24-year-olds who today are 28 to 30-something. And they're primarily married. And so with consumer social apps, especially those that serve a young audience, you have to continue to innovate in order to make sure that you're serving your audience as your other audience ages up. And so we've seen Snap, for example, do this very well. Their original core users are now in their early 30s.
They're continuing to add new features like Snap Map and others that are appealing to my 13-year-old, my 16-year-old, my 20-year-old. They're using Snap just as the prior generation was, but for slightly different reasons as innovation has kept the brand relevant and the product relevant. Tinder has not done that. If you look at Tinder today, it's very, very similar to what it was 10 years ago. It's really lost product-market fit because that's not what the world wants. This is solvable. This is solvable with enough innovation. The primary ways to innovate are to make the product less on the nose, I guess is how a 20-year-old would probably describe it, more vibes, less hookup, which basically means, hey, use Tinder to meet new people. Use Tinder to discover ways to meet new friends.
The easiest way to understand it as grown-ups, as people in this audience, is think about the difference between going to a concert where you buy a ticket and you know who you're going to see, some band at a particular time in a particular place, or going to a festival. You go to Lollapalooza. You go to some other music festival. You go, and there are four stages. You go, and you maybe watch a couple of songs. You go to this other one. Your friends aren't feeling that vibe, so they go to this other stage. Maybe then you watch a whole band perform. Once they're done, you go to another. You kind of meander your way through this experience. That's how Gen Z wants to date.
That's how they want to go through life and interact with new people in a serendipitous way rather than an obvious transactional way. The Tinder product has to evolve to that. What do I mean by that? Maybe that makes sense in the abstract. What do I mean by that? It means features like double dating. We do not even really call it double dating. We basically think of it as duos. Cory and I use Tinder. Maybe Cory stopped using it a couple of years ago because he viewed it as sort of ick, which is what the kids would say. I message Cory from inside the app. I say, hey, you should check out Tinder again. It's fun. Now he and I are teamed up. Our profiles are side by side. Now we're swiping through other pairs of people.
It's not so hookup-y. It's not so on the nose. It's more, hey, we're going to have a good time as friends because we're going to meet these two people. Maybe they're two guys for pickup basketball. Maybe they're two girls if that's what we want, whatever. It could be for anything. In the very worst case, we're going to have a good time and laugh about it later. It's lower pressure. It's more chill. It's like going to a festival, not going to a concert. This feature is out in about 10 European countries. Another couple of Latin American countries launched this week. I'm pulling forward the U.S. launch. It was going to be late this year. Now it's going to be mid-year.
The data coming out of this is excellent, not just around usage, but also around changing perception of how audiences think of Tinder. There are a whole host of other features and product strategy changes that are like that, which change how you think about Tinder. Did you have a question on that? Yeah. Is that right, Cory?
Yeah, totally.
I have a 19-year-old.
Yeah.
She’s an occasional Tinder user.
She calls it a buffet. I just thought that that's a great word.
That's a great word. That's really interesting. Yeah.
It's that. I'm going to see many options. I'll connect with people. Maybe something happens. Maybe it doesn't. Drives me nuts. That's how people.
Sorry. Yeah. I have a 20-year-old. She texted me yesterday and said, when are you taking double dating? When are you launching double dating in the U.S.? Because Zoe, my college roommate, and I think it sounds like fun. My 20-year-old would never have used Tinder before. Now she and her college roommate are interested. They're going to be in New York this summer. They're like, hey, we'll meet new people. It'll be fun. They, by the way, even though they're hetero, they'll probably pair with girls also because they just want to meet new people and expand their network because they're at this festival, this music festival. We'll see where it goes or this buffet. I'm going to steal that. Thank you.
Anyway, these are the types of ways that we need to change Tinder to regain product-market fit in the U.S. and abroad among young people.
Makes sense. I think investors have historically thought of Tinder payers as the kind of key KPI for the company. What metrics are you looking at to gauge progress in the turnaround? What do you think a realistic timeline is to start seeing improvement on the payer side?
Yeah. I do not manage the business to payers. I do not look at it very often. I look at audience. For us, that is our internal data around monthly active users, daily active users, in particular around under the age of 30 cohort, especially in the U.S., which is a leading indicator. Those are the key metrics that I look at. I understand why. I mean, we had this at Zillow, too, where investors looked at the number of paying real estate agents and the amount that they paid to advertise. That was never the metric that we ran the business against. I know why outsiders want to model some P times Q equals revenue. I get it. In the case of Zillow, we gave investors a couple of years to sunset that metric because we just thought it was not the right metric.
As we kept, we were intentionally removing lower spending agents. The metric, it did not make sense. I feel very similarly to that as I do to the payer metric. Do not worry. I am not getting ready to sunset it or anything like that because I understand it is important for investors. I do want you to understand that it is just not something that I look at every day. It is actually not even something I look at most weeks. I look at audience every single day. That to me is the key leading indicator. Your other question, Cory, about timing, I mean, that is the fundamental question. I get it. I know that investors are frustrated and impatient. I have only been here a short while. Try not to take that out on me.
I understand why we're kind of in the penalty box and a bit of a wait-and-see story and a show-me story. That makes sense. I'm moving as fast as humanly possible. I'm moving very, very fast. The company is moving very fast with me. I am hesitant to give you specific timing because it's not going to happen overnight. It's going to be a series of gradual things. These product-led turnarounds are difficult. They're possible. It can take a little while. It could take a little while. It starts with people and culture. We build innovative products. They gain product-market fit and audience. Then good things happen. I'm moving with incredible urgency.
Maybe shifting to Tinder pricing. That was a big initiative of the company before your time, to be fair, just to get it up to parity with the rest of the industry. Revenue per payer declined last quarter for the first time in a while. Curious how you're thinking about just the current Tinder price point.
I think the team has done a great job on monetization on a declining user base. There are still some levers to pull, especially AI-driven levers. That is not going to be sufficient to return the company to glory. We operate a bar, essentially, where people come to meet. There are 9% fewer people in the bar than there were a year ago. I forget what the year-over-year decline was the prior year. We have had two or three years of declining attendance at our bar. The solution to date has been to increase the price of the drinks at the bar and then occasionally come up with slightly different drinks or maybe sell food to an ever-decreasing number of people at the bar.
We must increase the number of people at the bar if we are going to return to revenue growth and get the stock to work. That is my focus. There is a whole revenue pod, a revenue team that is run by a very talented woman who used to work for me at Zillow. She was here before I got here. Match Group stole her away from me a couple of years ago. She does an excellent job. That team does excellent work. There is still more work to be done on revenue maximization. That is going to be insufficient. We must return to audience growth.
OK. Let's move to the other brands. Then we'll open it up to Q&A as well. Hinge continues to be a bright spot, not just for the company, but for the industry overall. What are your priorities for Hinge this year? Kind of what gives you the confidence in reaching that $1 billion goal?
Hinge has been a bright spot for two reasons. The first is that the culture of Hinge, which is about 400 to 500 people in the New York office, is incredibly tight-knit, mission-oriented, innovative, and urgent, all of which I'm bringing to Tinder and was lacking at Tinder. The second reason is that they have incredible consumer insight. I'll tell you a quick story here. I don't think I've told this story publicly. My investor relations officer might get mad at me later. I'll deal with that. When I first started, I asked the Tinder leadership team and the Hinge leadership team to orient me. I said, let's do two, three hours and tell me about your business. I intentionally gave them no specific instructions. I just kind of wanted to see how they would each react. The Tinder team presented to me.
They started with financial results. Here are all the financial results, then the business metrics, then product roadmap, then people and culture. The Hinge team presented to me in the exact opposite order. They started with consumer insights. This is the zeitgeist of the world. This is where Gen Z is at. This is where millennials are at. This is what they want. This is how they date. This is how they think. This is how they connect. This is our organization and our culture and our people and how we take what we see in the world. We bring it internally. Then we build stuff. Only at the very end did they actually share briefly revenue and financial metrics. It was totally fascinating. If you want to understand why Hinge is winning and Tinder was losing, that is it. That is why.
To continue on why Hinge is going to continue winning, they will continue that philosophy. It's counterintuitive, right? It's like if you focus less on the business metrics and the financial metrics, they'll actually do better. It can be a little surprising and uncomfortable. I've seen it to be the case repeatedly. What Hinge is doing now is infusing AI into their products, both into their Recs algorithm. They're working on other features that will continue to strengthen their lead in what we call the intentioned dating category. I believe the dating category and the meet new people category is really bifurcating into two sections. Let's call it a buffet and a specific restaurant where you order something or a festival or a concert. Hinge is the clear leader in this concert or single restaurant type metaphor.
They've got other features that are coming that are very specifically tied to that use case. We're also expanding Hinge globally into a bunch of other countries they've never been in. Finally, I'm making sure that Hinge, while still maintaining its independence and its independent product roadmap and what makes Hinge Hinge, I'm making sure that they benefit from the combined scale of Match Group. For example, there's an AI team in our Korea office that has built an AI photo selector. When you onboard, it connects to your camera roll, and it pulls out the best photos for your profile based on what it sees in your camera roll. They built that in Seoul for Tinder and for Hinge.
Hinge is now using a variety of trust and safety features that have been built out of California in the Tinder offices and our Korean dev office that improve the trust and safety of Hinge. Finding ways for Hinge to benefit from the combined scale of Match Group while still maintaining what makes Hinge Hinge, that's a key priority for us as well.
One question on Asia, then maybe one question on Evergreen emerging just to make sure we hit the whole portfolio. Asia, it's been a tough region really since the pandemic. It seems like it started to stabilize. What are your priorities for Azar and Pairs, and what's your outlook on that region more broadly?
Pairs is the leader in Japan. We are expanding to Korea. We just launched in Korea maybe a month ago. I am very optimistic. I was there about six weeks ago to spend time with the team. I am excited. I believe that Pairs will be able to find the same product-market fit in Korea that it has in Japan. That is a big market opportunity for it. That is the focus of Pairs. Azar has great product-market fit, especially in the Middle East. Azar, for those that do not know, Azar is a video matching app. Within Azar, you press a button. Now you get paired with a stranger somewhere in the world. Or if you selected a country, somewhere in a country of your choosing, and you are having—think of it as like a FaceTime with a stranger. Now you are having a video chat with them.
That sounds very strange to a lot of people, perhaps all of you. It has incredible product-market fit among young people who are very lonely and want to interact with people. They love the product. It is doing incredibly well. It is our third biggest app by revenue after Tinder and Hinge. Azar is something worth learning about. Try it. I have. It is a very fun and unique and interesting experience to just get paired all of a sudden with a stranger somewhere in the world. Now you are talking with them on video. Anyway, the Azar focus is expanding to different countries. We are doing that under a couple of different brands as well with different feature sets in different countries. The same core underlying technology is the same.
Finally, we're also expanding Hinge and Tinder and The League to other countries within Asia through a combined—this is a big deal. This is the first time this has ever happened—a combined go-to-market team. As you've heard me say over and over again, I'm running this company as one company, one Match Group. We talk internally now a lot as one MG. What I did was I combined the Asian marketing team. It was the Tinder marketing team. Now it's the Match Group Asia marketing team. They're responsible for expanding all of our brands to Asia. It might sound like a small thing. Previously, every brand was responsible for launching and marketing their own products in India and in Thailand and in Korea, which made no sense to me at all. I unified that.
That is going to have, I think, a great impact on that region.
Evergreen and Emerging, excuse me, you've been right-sizing the legacy brands for a while but investing in Emerging. Where are you at in that process? Any brands on the emerging side you'd highlight?
I would highlight Archer. And Archer is a gay dating app. It competes with Grindr. I'm happily married to a woman. But I've been using Archer to learn a lot about the product. My phone is a hilarious place to live, by the way, my notifications from Hinge and The League and Archer and Tinder and all the messages and chats that I'm having. In case you're curious, I indicate all of my profiles. Sam, the CEO of Match Group, I'm here to learn and use the products. But I'm in hundreds of chats with our users around the world across all these apps, including Archer. Archer is really important because of the TAM. And Grindr is obviously wildly successful. And we're not going to cede the gay male category to them. We are fighting back in a big way. And we've just done a significant product refresh at Archer.
I'm very optimistic about it. You'll be hearing me talk a lot more about it. We're not going to cede that category to Grindr.
Capital allocation, you've done M&A in prior leadership roles. Kind of given where Match is today, what's your appetite to either add more brands to the portfolio? Or are you more in divestment mode if that's something you'd consider?
I like M&A. We did 17 acquisitions in my time at Zillow. They were very additive to Zillow Group's success. Acquiring StreetEasy and Trulia were two notably very important acquisitions for Zillow Group. M&A has always been in the DNA of Match Group. Hinge was an important acquisition. OKCupid, Salams, these have all been very good acquisitions for Match Group. I intend to do M&A. It is a high bar. The bigger the deal, the higher the bar. The further afield from our core business, the higher the bar. Small-tucking acquisitions that can be re-platformed onto our E&E backend are very interesting. We've now migrated—we probably have about 15 apps running on our what we call E2P platform, so the E&E backend. At least three of those have been acquisitions that we've bought a startup. Then we've integrated them onto our platform.
When we do that, we're able to take out costs. We also generate incremental revenue because it gets all of our monetization, all the weekly and à la carte features that all come with our standard E2P backend. I think we'll do more of those small acquisitions, which are usually accretive day one. They're quite accretive after synergies once we do the integration. The bigger deals, while I'm intrigued by them, it's quite a high bar given everything that we have going on.
I have one audience question. We might have time for one more in the back after this one. This was submitted online. Spencer, how should we think about the dividend and your commitment to it?
I'm committed to it. We've said we're going to return 100% of free cash flow to shareholders through dividends and buybacks. I think this year we're pacing to 135% year-to-date return of free cash flow. That will come down over the course of the year to end up at about the 100% target. I'm committed to the dividend.
OK.
Hi, there. It feels like you're making all the right steps to fix the different products. I'm curious about the Tinder rework and kind of how that fits from a competitive standpoint. If we think about TikTok and Instagram, they've already got the network groups, the friendship groups. They've got the algorithms to show what the individuals like and whether it's a band or a restaurant or whatever. It sort of feels like they've got that data advantage to pair people up and do this. That's sort of question one, that sort of competitive positioning. Secondly, sort of the à la carte side of does that go away in this—not go away. Is that less of an opportunity set? Is it more of a subscription-based model? You talked about—I honestly have not used the app. I don't know.
I can't imagine many people are going out buying digital roses for groups of mates, where you might do on a one-on-one basis. I don't know if that's a revenue base that falls away.
Yeah. We have 20 seconds, so let me try to answer them as quickly as I can. À la carte is still an opportunity. We're not walking away from that, to be clear. The TikTok, Instagram, and these other user-generated content, AI-driven algos, I don't view them as competitive at all. I view them as inspiration for what they've done to their engagement by doing better personalization of the content. It is a totally different use case. Our competition is really the offline use case of I'm going to just stay home and play video games and not meet anybody. Or I'm going to go to a bar or ask my friends to introduce me. That's really our competition. It's not Instagram or TikTok. I think we'll probably have to leave it at that.
That's it. Thank you all.
OK.