Welcome to the Match Group Third Quarter 2026 Earnings Conference Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. Please note, this event is being recorded. I would now like to turn the conference over to Tanny Shelburne, Senior Vice President of Investor Relations. Please go ahead.
Thank you, operator, and good afternoon, everyone. Today's call will be led by CEO Spencer Rascoff and CFO Steve Bailey. They will make a few brief remarks, and then we will open it up for Q&A. Before we start, I need to remind everyone that during this call, we may discuss our outlook and future performance. These forward-looking statements may be preceded by words such as "we expect," "we believe," "we anticipate," or similar statements. These statements are subject to risks and uncertainties, and our actual results could differ materially from the views expressed today. Some of these risks have been set forth in our earnings release and our periodic reports with the SEC. Also during this call, we will discuss certain non-GAAP financial measures. Reconciliations to the most directly comparable GAAP financial measures are provided in the published materials on our ir.mtch.com website.
These non-GAAP measures are not intended to be substitutes for our GAAP results. With that, I would like to turn the call over to Spencer.
Thanks, Tanny. Good afternoon. Thanks, everyone, for joining us. We are trying something new this quarter. We have posted our full prepared remarks to the investor relations website at ir.mtch.com for you to read through, but our plan for today's call is for me and Steve to just spend a few minutes on the key highlights and then devote the majority of our time to answer your questions. A year ago, the big question you asked us was whether we could turn Tinder around. We knew we had to start by improving user outcomes, meaning we had to build better experiences that resonate with Gen Z, deliver more relevant recommendations, and improve trust and safety. If we got those foundations right, then better user trends and ultimately revenue would follow. Tinder has had multiple consecutive quarters of improvement in the metrics that matter.
This quarter, we had our strongest quarterly year-over-year performance in both Sparks, that is six-way conversations, and Sparks coverage, the percentage of users getting a Spark, since we started tracking those metrics. In September, global daily active users returned to year-over-year growth for the first time in three and a half years, and we have cut year-over-year declines in monthly active users nearly in half over the last year. The improvement is broad-based. It spans women and men, age groups, and geographies. We are seeing growth again in parts of the business where trends were moving in the wrong direction not that long ago. In October, markets representing nearly 70% of Tinder's DAU and 50% of its revenue had growing or flat DAU year-over-year, with the U.S. crossing into positive territory exiting the month. We now have evidence that those changes are working.
There is still a lot of work ahead, particularly with the youngest Gen Z users. While we made substantial progress improving the experience for existing users, the next step is reconsideration. That means giving people a reason to come back or to try Tinder for the first time, and that is what our Better with Friends roadmap is designed to do. We are giving people more social and lower-pressure ways to meet, often with friends and in real life, because that is what users want. Events is the feature I am most enthusiastic about, but they are all geared towards creating more opportunities for people to form meaningful connections in real life. We are building with our mission always in focus, to make Tinder the most fun way to spark something new with someone new. We live and breathe this daily. Tinder employees can recite this clearly, and it is what keeps us working hard.
Turning to Hinge, the business continues to deliver strong user growth and double-digit revenue growth year-over-year. We see clear opportunities ahead too. Even in core markets where we have operated the longest, Hinge has room to reach more people beyond urban metro markets and grow with older daters. We are targeting these opportunities deliberately with more relevant marketing. The early results are strong, as registration trends across all genders and age groups improved as we exited Q3, and we think Q4 U.S. new registrations will be up year-over-year. Hinge's 2027 product roadmap is the strongest we have had in the last several years. The depth of thinking about intentioned daters, from what they need to what helps them get out on great dates, is evident and gives me so much confidence in where Hinge is headed.
At E&E, we put a more focused strategy in place, prioritizing a smaller set of brands and taking learnings from Tinder and Hinge to improve user outcomes. We are still early in this work, and it will take time to see the impact. At Match Group, we are approaching 2027 with a stronger foundation built through a lot of hard work and a clearer path to durable growth. With that, I will turn it to Steve.
Thanks, Spencer. We are happy with the Q3 results and with the momentum in the business as we close out the year and turn our focus to 2027. We expect to finish the year slightly above the midpoint of our full-year revenue guidance range and meaningfully exceed the full-year Adjusted EBITDA margin target we set back in February. We also expect to exceed the high end of our free cash flow guidance set back in February, and we remain committed to deploying 100% of free cash flow towards buybacks, dividends, and net settling of employee equity awards over time, recognizing that the pace of capital return may vary from quarter- to- quarter. Year-to-date, we have generated $832 million in free cash flow and deployed $591 million towards buybacks, dividends, and net settling of employee equity awards.
We have reduced our diluted shares outstanding by 4% year-over-year through October, and by 10% since January of 2025. Here is how we are thinking about the financial performance and expectations at each of our business units. At Tinder, we expect to achieve our goal of improving year-over-year MAU and payer trends throughout the year, and we expect further improvement in both of these metrics, as well as an improvement in direct revenue trends in Q4. That is meaningful progress towards returning Tinder to sustainable growth. As we said last quarter, we continue to expect Tinder's full year 2026 direct revenue performance to be better than we expected in February, declining at low single-digit rates year-over-year as a result of both smaller-than-expected impact from user experience tests and stronger underlying trends.
As we begin to shift our focus to 2027, while there is still more work to do, we are feeling great about the momentum, and we are confident we can deliver full year 2027 Tinder direct revenue year-over-year growth, along with year-over-year payer growth by Q4, and flat MAU year-over-year by the end of Q4. At Hinge, performance continues to be strong, and we expect to be within the 2026 full year guidance range we provided in February. Our expectation for $1 billion in full year revenue in 2027 has not changed. E&E continues to face headwinds from Azar's app redesign, necessitated by the App Store ban earlier this year, and weakness at other E&E brands, but we expect the strategy changes Spencer just outlined to slow revenue declines over time, with the goal of returning to growth.
This will take time, and we expect E&E year-over-year revenue declines to only modestly improve in 2027 compared to 2026. Turning to Match Group profitability, we have done a good job this year executing on the Tinder turnaround while staying financially disciplined. We intend to take that same approach in 2027 as we balance making the right investments in our business to maximize long-term shareholder value with delivering near-term Adjusted EBITDA and free cash flow, which we are giving back to shareholders through buybacks and the dividend. We will give detailed Adjusted EBITDA guidance and a full year margin target on the call in February, but here is how we are thinking about 2027 profitability sitting here today. First, we expect to remain very disciplined on headcount and OpEx, including AI costs.
Second, we now expect IAP fees to be a one-point margin headwind in 2027 based on current App Store policies and expiration of our Google partnership agreement, which I will talk more about in a minute. Third, we are still evaluating the appropriate level and allocation of marketing spend across the portfolio using our PRISM framework. As a reminder, PRISM is our standardized marketing measurement framework that we recently introduced at Match Group. It gives us a consistent, rigorous, quantitative assessment of marketing effectiveness that we use to inform investment decisions across the company. 2027 will be the first time we are incorporating it into our annual planning process. Now let me give you a little more color on IAP fees. First, an update on Apple.
In the U.S., we continue to pay 0% in IAP fees on alternative payments on iOS, and we do not expect changes to this fee structure until there is a decision in the Epic Games v. Apple case. In the E.U., Apple actually raised fees on in-app purchases effective October 1st, and the fees we pay increased from the low 20% to 26%. At the same time, Apple will begin allowing alternative payments, which we plan to test, but there are a number of restrictions, and the economics are far less favorable than they are in the U.S. We expect the increased in-app purchase fees to cost us an additional $20 million in 2027. Now on Google.
In 2024, we entered into a partnership arrangement with Google that provided value exchange across our broad relationship that has effectively offset the additional fees we incurred when we adopted Google's billing options at that time. As we previously disclosed at the announcement of that deal and in subsequent filings, that partnership is set to expire in the first quarter of 2027, and we expect Play Store fees to meaningfully increase beginning in Q2 of next year. Our expectation when we entered into the agreement was that legal and regulatory pressure would reduce Google's in-app purchase fees by the time our agreement ended. However, Google's new global fee structure announced in March provides little benefit to us.
Taking into account both the Apple changes and the Google partnership agreement expiration, and making no assumptions on future fee changes, we expect IAP fees to result in a one-point headwind to Adjusted EBITDA margin in 2027. While we are looking for ways to mitigate the impact, we also need to ensure we are making the right investments in the business to drive long-term shareholder value. We will make that determination as part of our annual planning process, and we will give you more details on 2027 revenue and margin expectations next quarter. With that, let us open it up to Q&A.
We will now begin the question and answer session. To ask a question, you may press star, then one on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star, then two. At this time, we will pause momentarily to assemble our roster. The first question comes from Robert Coolbrith with Evercore ISI. Please go ahead.
Great. Thank you for the opportunity to ask a question. Just wondering if you could maybe talk us through the path to positive DAU that you had in the quarter, or had in September. Maybe if you could sort of disaggregate that across retention improvement, or if there's just been a case of stacking those retention gains that you've had in successful quarters across more cohorts, and then any early indications of improving levels of consideration or reconsideration. Thanks.
Yeah. Thanks, Robert, and thanks for your recent research note. Look, it was a big milestone this quarter. Turning DAU positive in September year-over-year for the first time in three and a half years felt great. There were a lot of high fives and just excitement around achieving that milestone. Just a couple weeks later, at the end of October, U.S. DAU turning positive year-over-year was also just felt great. Those are the DAU trends. MAU improving from - 10% to - 5.5% over the last few quarters also speaks to the quality of the improvements in the product, and also improvements in MAU, similar improvements in MAU across our top five revenue markets. The reason why I'm confident about the sustainability of the turnaround is how broad-based the improvements have been.
So really, any way you cut it, by age, by gender, by geography, we're seeing improvements across really every which way you look at it. So for example, looking at it by gender, our female MAU is improving at an even faster rate than male MAU in every region and every age group. Female MAU declines narrowed by eight points year-over-year and two points quarter-over-quarter. So this is not a turnaround that's just focused on male users. Quite the contrary, it's actually, we're improving among female users even more quickly. Looking at it by age, again, this is not a turnaround focused on just adding easier to acquire older users. Our under 30 MAU trends have improved even more than our over 30 MAU trends, and we're improving across every single age group. So that's the exciting news about the MAU turnaround.
I think kind of the question behind your question perhaps is, why is DAU growing faster than MAU? The answer to that is, we have made so many product improvements that help the existing experience basically improve our users' current experience, but we still have more work to do to drive reconsideration. That is where the Better with Friends social roadmap comes into play. We had a hit in Double Date. We layered on another hit with Events. We are in the process of building a third hit with Groups. When you take those three things together and you do brand studies and ask users about their perception of Tinder, you start to see really good promising results about people changing their perception of what Tinder is. So we still have work to do.
It is definitely too soon to declare victory, but I really am proud of and impressed by where we are at today. Steve, anything to add or is that
No, I think you covered it.
Okay. Next question, please.
The next question is from Shweta Khajuria with Wolfe Research. Please go ahead.
Okay. Thank you for taking my questions. Spencer, could I please ask a follow-up to what you were just talking about in terms of the delta between DAU growth and MAU growth? There is this idea of perception and bringing people back into the ecosystem, and that is why the delta. So how long do you think it takes for that lag to narrow? In other words, for that perception to change, bringing those people back, and turning around MAU growth? Then the second question I have is around next year, Steve, you spoke about Tinder expectations. To the degree that you can speak to other segments, Hinge, E&E, that would be very helpful, or just at a platform level, the puts and takes for both revenue and EBITDA. Understood, you are not guiding just yet in terms of EBITDA.
Where would the levers be coming from to offset the headwind, and how should we be thinking about overall top line growth? Thanks a lot.
Yeah. We will take this in a couple pieces. Let me talk a little bit more about the Tinder sort of metrics improvements, and Spencer, jump in as you wish. The way to think about DAU outpacing MAU, here is kind of where things stand. Of course, we are very excited that DAU crossed over to positive growth. We are just as excited about MAU improving. So we got about one point improvement on MAU from Q2 to Q3, with MAU down 6%, which is better than the 7% it was down the quarter before. We also saw an improvement in payers, which we are very excited about. So the payers were down - 5% in Q2. They were down - 4% in Q3. So progress there as well. Revenue, we like to look at it FX neutral, was down 2%. That was the same as Q2.
I will just stress that these metrics are not going to move completely in lockstep every quarter, but if you take a step back and look at the revenue FX neutral trends, you have got a diagram in the prepared release, you can see progress over the last few quarters, from down 5% in Q4 last year to down 2% now. What I think is also encouraging is, we expect all those metrics to improve in Q4. We expect payers to get better in Q4, we expect MAU to get better in Q4, and we expect that FX neutral direct revenue to get better as well. We are starting to see it flow through more than just DAU, but to these other core metrics as well. Did you want to add anything to that, Spencer?
No, that is good.
Let us talk about 2027 a bit. We are not going to give, as you sort of alluded to, full year revenue guidance or EBITDA guidance until February, which is our normal course. I tried to give some color on how we were thinking about things. The only things I would add is, if we break it down, you look at Tinder, we are feeling really good, right. We are making progress. I just told you we expect further progress in Q4, and we are really setting ourselves up well to meet the goals I laid out in terms of payers, revenue, and MAU improvement next year. Could it be sooner? Maybe. It is hard to pinpoint exactly, but I think we are on a really good trajectory at Tinder.
When you look at Hinge, that achieving the $1 billion in revenue, which we still feel very good about, I think about it this way. Revenue growth was about 19% in Q3. We expect it to be about the same, maybe a little bit better in Q4, so think of 19%-19.5%. We have got to keep the growth rate at about that same level next year, and if we do that, we will hit the $1 billion. So, we think we have got the right roadmap and strategy in place to do it. That is going to come from improving core trends and expansion. We talked about expanding into Japan in the prepared remarks too, and so I am feeling good about the trajectory there too. E&E, what we said was modest improvement from the declines we are seeing this year.
That is really in recognition of, Spencer talked about putting the right strategy in place, but it is going to take some time to get that business back to growth. We think only modest improvement, but still negative at E&E next year. In terms of profitability, the way I would think about it is, we have got the one point IAP fee headwind. We said we would be really controlled in terms of headcount and AI costs. The really big consideration is really around marketing spend. What is the right level of marketing spend, particularly at Tinder and Hinge in 2027, to maximize long-term returns and shareholder value. We need to balance that against hitting short-term margin targets, and that is what we will do, we will think very hard about.
We will do it in a very quantitative way through the PRISM framework, and we will give you a lot more details on all that in February.
Next question, please, operator.
The next question is from Jason Helfstein with Oppenheimer. Please go ahead.
Thanks. Just some more color on the givebacks. I think it sounds like the full year givebacks for Tinder are going to come in below expectations. Why have they not been necessary this year relative to your plan, and any more color there? Thanks.
Yeah. Hi, Jason. Thanks for the question. We've been fortunate to discover that when we launch improvements to the user experience, the accompanying MAU retention mitigates revenue loss. For example, we changed our recommendation algorithms to maximize user outcomes, and we nervously wondered if it would hurt revenue, and what we found was that the benefits of improving user retention outweighed the detriment of prioritizing user outcomes over revenue. That might not always be the case, but that's what we mostly saw in 2026.
Yeah, let me just add a finer point to that too. That's all exactly right, and what it means financially is that we thought at the beginning of the year, we would need $60 million in user givebacks in 2026. What we're now saying is that we only ended up using $25 million. If you do the math, that's about 2 points of revenue at Tinder, and that's what's driving about 2 points of that improvement versus expectations we had set back in February. There's about another point of improvement in there in terms of what we think we'll actually finish the year at for Tinder full year revenue relative to what we said in February. That other point is improving trends, so I want to be really clear about that.
Really what we're seeing at Tinder is two things, the need for less user givebacks and also improving trends, so that sets us up really well for continued improvement in 2027.
Next question, please.
The next question is from Bryan Smilek with JP Morgan. Please go ahead.
Great. Thanks for taking the question. Spencer, as you enter Tinder's resurgence phase, can you just help us think about the allocation of marketing spend by channel to reignite the consideration set? I think in the prepared remarks, you had mentioned Gen Z marketing around creator and social content and event partners, so just curious anything that you can share on the LTV curves of those channels. Thank you.
Sure. Thanks, Bryan. We made a lot of changes to how we allocate and how we invest our marketing in 2026. Firstly, we shifted a lot of our spend towards down-funnel user acquisition instead of up-funnel brand building. Secondly, we pointed much more of our marketing spend towards actual features rather than high-level positioning about Tinder or the category, and we saw both of those changes drive really improved results in 2026. The second one, I think, is particularly important and reminds us how product and marketing work hand in hand.
For example, when we market on Instagram that Tinder has Events in your city, and we look at the cost per registration or cost per reactivation for those types of marketing creatives and compare it with a year or two ago when we were buying the same channel but promoting, "Use Tinder because Tinder is a dating app," it is really night and day in terms of the lift that we get, and in most cases, the efficacy of how far the dollar goes when we are focusing on product innovation rather than not. As Steve alluded to, we also now have a framework where, for really the first time ever going into an annual planning process, we have a cross-brand rubric and analytics framework to decide what the right marketing spend and right marketing allocation should be between business units and brands within business units.
We are deep in the midst of that right now as we finalize our 2027 plans. We do not have any more detail to report, but we are just in a much smarter place here as we speak to you in fall of 2026 than we were in fall of 2025, coming off the heels of a really effective 2026 for marketing and also the development of these new frameworks to assess marketing efficacy. Operator, next question, please.
The next question is from Nathan Feather with Morgan Stanley. Please go ahead.
Hey, everyone. Thanks for the question. I guess, as you think about DAUs turning positive, the focus on MAUs, what are kind of the one to two key leading factors to returning to flat MAU growth from here? How do you think about the main levers you can pull to really drive that reconsideration of the brand as you continue to push the products out?
Yeah. Thanks, Nathan. The biggest lever is convincing people who are not already on Tinder or who maybe used Tinder two, four, five, 10 years ago to give it another shot. This Better with Friends roadmap is the best idea that we have to execute on that. As I said, Double Date is a winner. We have delivered 30 million matches on Double Date so far, which just speaks to the scale and product market fit that Double Date has. We just launched Groups in the U.S. and a couple weeks earlier in a couple other countries. Just to give you some insight into Groups, women are twice as likely to like a group profile as they are to like a single male profile. Again, that speaks to the product market fit that we think Groups will have within our product.
15% of our users in Norway, age 18 to 22, are already in a group. The reason I mention Norway is that was the first country that we launched in, so it has been up for a couple extra weeks. We think Groups has the potential to be another hit and to change the way people perceive Tinder. Then finally, Events, which we have been very vocal about the potential that we think Events has. Events has absolutely started to change perception of Tinder. When we look at our measures of brand health, questions that we ask users, like, "Does Tinder have people that you want to meet on it? Is Tinder an app with your kind of people?
Is Tinder just for hookups or for things more than that?" All those measures of brand health have improved over the summer and into the fall as we have rolled out Events into more and more markets. I am happy to talk more about Events if there are other questions about it. But those are the types of initiatives that we are focused on in order to drive reconsideration, which is what will take us these last couple points from - 5.5% MAU to eventual MAU growth. Next question, please.
The next question is from James Heaney with Jefferies. Please go ahead.
Great. Thank you. You mentioned in the letter an increased focus on Tinder revenue initiatives in 2027. Curious what kinds of options you'd be looking to explore and how you think you can improve monetization without disrupting the user engagement momentum that you have. Thank you.
Yeah. Thanks. Good question. When I took over Tinder, I started by focusing on the user experience. We had this theory, which has proven to be true, that if you improve the user experience, then the audience metrics will improve, and then other good things will flow from that. We moved very quickly. We changed a lot of the user experience, and today, Tinder works better than it did before. We're now turning our attention towards revenue, and we're really looking at everything. We understand what we have currently and what we can learn from other brands, and we're approaching it from pretty much a blank slate in terms of a starting point.
It's a bit early to say where that will go, but I can assure you we're bringing the same level of focus, energy, vigor, urgency, innovation to monetization in 2027 that we brought to the user experience in 2026. We have a lot of ideas that we're not ready to talk about yet, but I'm optimistic that 2027 will be a year of a lot of monetization innovation. Next question, please.
The next question is from Youssef Squali with Truist Securities. Please go ahead.
Great. Thank you so much. Maybe a quick question for Steve. Can you just quantify the marketing spend that was pushed into Q4 for Q3, the reasons for it, and would you have been able to grow a little faster had you actually met that marketing spend in that quarter? Thanks.
Yeah. In terms of quantity, we pushed about $8 million or so in marketing spend from Q3 to Q4. I think we came in about $12 million better than we expected, but $8 million of that was marketing spend. It's a couple reasons. One is just timing of campaigns, and two is, we're going to stay financially disciplined, right? In any given quarter, if we're not seeing the returns that we expect on marketing spend, we're not going to go spend those dollars just to fill the budget, right? I like to see us underspend for those reasons because it means we can deploy them in a different quarter at higher ROI. It's really a combination of those two things.
How much revenue we would have generated had we not done that's a little bit of a hypothetical that I'm not going to do at the moment. But, what I would say is, and I'll repeat it again, which I think is an important fact, we're going out and saying we expect MAU, payers, and revenue, direct revenue. While direct revenue didn't improve in Q3, we do expect it to improve in Q4 from a year-over-year growth perspective relative to Q3. So, with the marketing spend in Q4 and everything else we have going, we expect to see improvement across all those metrics next quarter.
Next question, please.
The next question is from Benjamin Black with Deutsche Bank. Please go ahead.
Great. Thanks for taking my question. The recommendation system looks to be at least a big part of the foundation of Tinder's turnaround. How much better can matching outcomes become as the system moves towards more real-time personalization? What advantages does the Tinder scale really have and the data that you guys have? How much of an advantage is that for you guys? Secondly, I would be interested in hearing the learnings from Missed Connections. I think in the letter you mentioned a four times improvement in likes from women, and it seems a bit of a game-changer to me. What are some of the hurdles to broadening out in Missed Connections? Thank you.
Yeah. Thanks, Benjamin. Queue Unification and our Recs improvements have been really critical to our improving business results in 2026. We just rolled out Queue Unification to other user types. I think we just rolled it out to women seeking men and women seeking anyone or other different LGBTQ audiences, but we still have more to go. Real-time Recs, we have said we intend to launch by the end of the year. We are very confident in the potential that that will bring, but it is also unproven. I think that event that we did, the CEO Connection event, where I spoke with Vinay and Mark, our CTO and Head of Product at Tinder, about Recs.
I think Vinay said something like he thinks it is the second or third inning, or maybe he said the third or fourth inning maybe, in terms of Recs, to try to size the amount of potential improvements that still lay ahead. I think that is probably about right. Already huge improvements, but more to come. On Missed Connections, this is a feature that we are testing in Canada right now. If you have location services turned on, then once a week, we give you specific drops that say, "Here is somebody that you have crossed paths with in the week in a given neighborhood or in a given coffee shop," et cetera. Users love it. The serendipity and kind of excitement is really meaningful, especially for Gen Z users.
The nostalgia, the sense of a meet-cute, which is what our users are really looking for, and the digital bridge between an app and an IRL experience is really powerful. We are now working to improve it. We will be assessing when and whether to roll it out more broadly. There is still a lot of work to do to improve the product, but so far, so good in what we have launched so far. Operator, next question, please.
The next question comes from Alec Brondolo with Wells Fargo. Please go ahead.
Yeah. Hey, thanks so much. Maybe two from me. First, how did you choose the new focus brands for E&E, and does refocusing on a smaller number of brands create an incremental headwind to that business beyond Azar in 2027? Secondly, on Hinge, the new subscriptions you are launching in the fourth quarter, giving users more choice and control, is there any incremental detail you could provide around the value proposition? What is the opportunity here on paid conversion? Thanks.
Yeah, I will take the E&E question, and Steve, you can answer the Hinge question. So, in deciding which brands to prioritize with E&E, we looked at the white space that the different brands are going after and also the size, and in order to prioritize. So, for example, Upward and BLK and HER all are going after white space in their respective user segments, where we think there is a real right to win, a reason to exist, a category white space that is not fully won by a Hinge or a Match or a Tinder or any standalone competitor.
Brands like Match, which are more general population, we think there's a reason for them to exist in the 50-plus age segment, and just the brand awareness and brand power of the term Match, and just the size and scale of that really represents something that is worthy of prioritization. The other non-focused brands, like an OkCupid, like a Plenty Of Fish, like a Salams, these are brands that are still being worked on, but only synergistically across the portfolio. For example, we have a dedicated team that is improving profile creation, and a dedicated team that is improving photo selection, and a team that's building chat, and a team that's building recommendations algorithm. When each of those teams launch a feature or set of features, it goes out across the whole portfolio. Something like OkCupid is not left to its own devices.
It's still being improved upon by these shared teams that are building E&E-wide technologies. That's how we prioritize the different brands. Steve, you want to take the Hinge question?
Yeah. I think, look, we're pretty excited about the lower price subscription tier in test right now. It's designed for women in particular, but also for price-sensitive users. Remember that Hinge is one of the highest priced products we have. The revenue per payer, for example, at Hinge is almost twice that of Tinder, around $30. It also has one of the lower payer penetrations. Its payer penetration is only slightly more than half that of Tinder. So, we think it makes sense to offer a lower priced-offering in what is otherwise a higher-priced product to get more payer conversion from more price-sensitive users. In terms of what it includes, think of it I'm not going to get into every specific feature, but the broad brushstrokes are additional filters and custom location boundaries, features that women find valuable.
What we've seen in tests is it has improved conversion for both men and women, but women's conversion has been up more than men. The other interesting thing here is that, remember, Hinge's gender balance between men and women is far better than most other apps. Women pay at far lower rates. That's true for Hinge, and that's true for everybody. So, if we can get this feature right and a feature set that really resonates with women, that will be really potentially powerful from a monetization perspective for Hinge in particular, with a large women user base and really good gender balance. So we're going to keep testing and tweaking, but the early reads are good, and then we expect to roll it out more in Q4, so stay tuned. Next question.
The next question is from Jamesmichael Sherman-Lewis with Citi. Please go ahead.
Good afternoon. Thank you for taking my questions. Two here, please. First, Tinder payer penetration increased sequentially and year-over-year, and MAUs are still declining faster than payers. How much additional payer conversion runway remains as we work to inflect back to MAU growth, and how do you think about the balance of conversion gains versus audience growth into 2027? Then as a quick follow-up, Hinge's opportunity in core markets, I think you noted an uptick in U.S. marketing contributing to the improving registration trends. Could you talk a little bit about the opportunity to drive MAU growth and reconsideration in mature Hinge geographies? Thank you.
Yeah, on the Tinder payer penetration, you are right. Payer penetration was up again. That is something we have consistently seen, is that the improvement in MAU is flowing through to improvement in payers, which is great. In terms of how much more room to go, while payer penetration at Tinder is higher than Hinge, which I just mentioned, it is still relatively low. It is in the low 20%. So, we are always looking to optimize not only for the payer experience, but the free experience too. But in terms of the ability to drive further incremental payer conversion, I think there is lots of room. I think as we look ahead, what we are doing is we are not optimizing around short-term revenue growth. We are really taking a look, Spencer got into this earlier, but finding ways to add value to the experience, both for free and paid users.
If we can add value, then I see no reason why we cannot increase monetization and payer conversion at Tinder going forward.
I will take the Hinge MAU and TAM question. In the U.S., Hinge is most highly penetrated on the coasts and in the 20 to 30 age group. If you look at smaller cities outside of the coasts and age 30 to 40, there is ample room for Hinge to grow. We think at least another one million monthly active users in the U.S. as we focus more on those other user segments and geographies. We have already started implementing that playbook with different marketing tactics and messages in order to focus on those secondary cities and slightly older age users. We think that that playbook also is extendable to other core markets outside the U.S., like the U.K., Australia, and Canada. Operator, next question, please.
The next question is from Eric Sheridan with Goldman Sachs. Please go ahead.
Thanks so much for taking the question. My first one would be following up on, I think Benjamin Black asked earlier about the broader AI strategy. The flip side of that coin would be, how are you thinking about managing token costs or input costs within your broader cost structure as you continue to move from testing to scaling some of your AI initiatives? That would be one. In the shareholder letter, you also talked about finding ways to drive tech platform efficiencies through elements of shared technology platforms or cross-pollinating. The second part would be, how should we be thinking about some of the efficiency dynamics that could be gained through some of those initiatives as we move out of 2026 and into 2027? Thanks so much.
Yeah, let me take the AI token costs. I think we have done a really good job here. The costs are definitely going up. Let me give you some more details around how we are managing it. We started probably with a budget this year of about $5 million for AI cost, but we had pretty low usage. We basically had engineers using AI and nobody else, and it was spotty at that. Early in the year, May timeframe, we really wanted to push AI adoption and become a truly AI-native company. We thought it was important for the overall long-term success of the business.
We gave all our employees tools like Claude, tools like OpenAI, enterprise search tools like Glean, and gave them the training, gave them the tokens to go use these tools, and our costs probably went from $5 million to about $10 million, a little more than $10 million. The way we It was unplanned doubling of costs, but we think worthwhile, and we are getting really good efficiency gains out of it. The way we offset those costs was by controlling headcount. Not reducing the employee base, but hiring less, slowing headcount growth, and saying, "Let's do more with less through the use of AI," and that has been really effective. Right now, I would say we are maturing as a company in terms of AI token usage, and we are really in that sort of efficiency phase.
We have an AI gateway that controls what models we are defaulting to and what models engineers can use. We are doing all sorts of things like making the most expensive models only available by request. We have speed bumps or soft caps. Engineers get about $1,000 a month, and non-engineers get about $250. Once you hit that cap, that does not mean you can stop. It means you have to go to your manager, and say, "Look at the work I am producing," and if it makes sense, you can keep going. We have given all the managers really great visualization into the spend within their departments, basically real-time token spending, and I think we have done an incredible job as a company overall in this regard.
We do expect costs to go up a little again next year, but the hope is, through these efficiency gains, we are now starting to look at open-weight models, we will be able to keep them under control. In terms of in the product and in the features themselves, and feel free to jump in, Spencer, there are more features that are using AI tokens and AI costs, and you want to cover how we are thinking about that?
Well, let me answer it from a shared tech platform standpoint and efficiencies across the company. I will give you four quick examples. We have integrated our trust and safety tooling so that features like Face Check are now built centrally across all brands. Another example of a shared service is Tinder's Events product, so the module tab two on Tinder where you can see who is going to an event and you can see the different types of events and this whole product roadmap around Events, now powers not just Tinder but also BLK, and likely in the future, other Match Group brands. Those are two examples of things that we are building centrally across multiple brands.
Then, two other potential examples that we're working towards is Tinder has built an AI prototyping tool where any employee at Tinder can enter a prompt to visualize a new feature to Tinder, and it will instantly build a prototype of it and also build code for that prototyped new feature. That's something that has really changed the software development life cycle at Tinder, made us more design-forward, just brought a higher pace of innovation, and that's something that we're looking to extend to some of our other brands, including E&E.
A fourth example is Tinder has a homegrown customer relationship management platform that manages all of Tinder's push notifications, text messages, and emails, and it's really best in class, better than what companies pay millions or tens of millions of dollars a year to SaaS providers for that type of technology, and we're considering extending that to some of our other brands. So, those are just a couple examples, Eric, of how we're building centralized technology and extending it across the whole company. Operator, next question, please.
The next question is from John Blackledge with TD Cowen. Please go ahead.
Great. Thanks. For Hinge's newer markets outside of the U.S., is user growth and payer conversion following similar growth curves to Hinge's more mature markets? Then just another one on Hinge. On the RPP, should we expect that trend that we saw in 3Q to continue as you roll out the new lower-priced sub tier? Thank you.
Yeah. Let me start, and feel free to jump in, Spencer. On the MAU growth, it is an important point to make. Global MAU growth came in at around 12%. What we saw under the covers is actually core MAU improved a bit, which is great to see. Spencer talked a little bit about that. Growth in Europe slowed a little bit. Still phenomenally high growth, but to your point, there is a growth curve. As these countries scale, we expect their growth to slow over time. That is really what you saw in the headline number, was core getting a little bit better, Europe slowing down a bit, and us netting out to about 12% growth. That is right around what we expected, puts us right in track, not only for MAU, but also for revenue for the full year 2026.
We feel good about the way those curves are playing out. It is just what we expected. We are entering LATAM, that is growing faster, but still small. We have relaunched in India, where we have a pretty big MAU base today. What we are doing is we are laying the foundation for expansion into Japan in 2027. I would not expect a lot of revenue from Japan in 2027, or users, but it is an important, first of all, it is one of our top, it is probably the top five largest markets from a TAM perspective, from a revenue perspective in the category. So an important one for Hinge to enter, and I think we will be, we think there is a nice white space for it between Pairs, which is a little bit more marriage-focused, and Tinder, which is more casual.
All our research says it should do very well there, and I think it will be a growth driver for 2028 and beyond. Those are some of the Hinge growth curves. What was the second part of the question?
I don't remember.
What was your second question? Sorry.
The RPP was down a little bit in 3Q.
Yeah.
Just how confident you guys are about it going forward.
Yeah. Thanks for pointing that out. What you are seeing is we saw an acceleration in payers, and we saw RPP down a little bit year-over-year in Q3. That is price optimizations, a new model we rolled out at Hinge, that was playing the biggest effect. To a lesser effect is the new lower-priced tier. That could have a bigger effect down the road. Then you normally, sort of underneath all that, we naturally get some RPP pressure because the growth in these expansion markets is still so much higher than the core markets, and the RPP on average is lower there than in a market like the U.S. On the price optimization models, let me just give you a little bit more detail there. What that is a propensity to subscribe model. Most brands have it. It is something Tinder has been doing for years.
I'd say most brands in the category do this. Hinge is just maturing in its monetization capabilities, and so is now rolling this out where what it's doing is it's looking for those that haven't subscribed after a certain number of days and are unlikely to subscribe ever. Again, Hinge is a high-priced product, we talked about that, and giving a targeted lower price to those users, and driving payer conversion. That's accelerating payer growth and being offset by some RPP degradation. I'd expect that to actually increase a bit in Q4 just because this pricing model was rolled out mid-Q3 and will be a full quarter in Q4. But it's generating net positive revenue. It's another lever for offering a paid experience to more price-sensitive users. Third, I think this is overlooked sometimes, payers help the ecosystem too.
So there's indirect benefits of higher paid conversion. Payers retain longer, they respond to likes better, they are more likely to buy ALC features. So there's a lot of reasons why having a little bit higher payer penetration at Hinge still won't be even close to the levels of Tinder, makes a lot of sense, but that's what's causing a little noise in those metrics. I'd expect that to continue in Q4.
Operator, next question, please.
The last question will be from Andrew Marok with Raymond James. Please go ahead.
Hi, thanks for taking my question. Maybe one more on Hinge and the international business. You called out in the shareholder letter, and I think you answered a bit of this in the last question about the momentum in Europe and the newly launched LATAM markets. I guess, what kind of common threads are you seeing between these disparate geos? On Japan specifically, what is kind of giving you the confidence that there is a space in the market which has kind of been a tricky market for everyone in the past? Thanks.
Yeah, thanks, Andrew. What we're seeing as the common thread in the different markets is that Hinge's slow and steady approach of customizing the product, customizing the marketing for the individual geography is working. For example, in India, having a slightly different set of features like screenshot banning, wait list for men, and a couple other unique trust and safety features like ID verification and others are particularly useful. We're taking a deliberate approach to Japan, learning from, gosh, probably 10 years of Pairs' success in the matrimony space. We've done a huge amount of original research in Japan to identify that there is white space between the matrimony apps and the more casual apps like Tinder, so we think there's an opportunity for Hinge to succeed without cannibalizing Pairs and Tinder.
We're going to customize the Hinge product and marketing in order to achieve product market fit there, just as we have in Brazil and Mexico and India over the last year or so. I think, operator, are there any other questions or is that the last question?
That was the last question, sir.
Okay. All right. I will just wrap up here. As a reminder for anyone who joined late, we posted the full prepared remarks to the investor relations website for you to read through, so you can find the full script there. Hopefully, you liked this new, more efficient approach. I just want to close by taking stock of my first seven quarters as CEO here. When I joined 21 months ago, Tinder users and revenue were declining, and there was skepticism that Tinder could be saved at all. Today, we have put points on the board and mostly put that question to rest. Several quarters of improving user trends at Tinder, top to bottom, from Sparks to Spark coverage to DAU to MAU, and improvement in payers and revenue when adjusting for FX. We have demonstrated that this turnaround is real and sustainable.
We also took Hinge from $150 million-ish in quarterly revenue back in Q1 2025 when I started to over $220 million in quarterly revenue in Q2 of 2026. We purchased HER. We purchased about half of Sniffies. We significantly improved employee engagement. We drove massive productivity improvements from AI. We got a lot done in a pretty short period of time. Meanwhile, we bought back $1.2 billion of stock and paid $369 million in dividends and reduced diluted share count by 10% year-over-year as of yesterday. I am very proud of what we have accomplished in these last 21 months, and I am even more optimistic about where we will be 21 months from now. We will talk to you in early February at Q4 earnings, and I hope to see many of you at our second Tinder Sparks event on February 23rd in New York. Until then, thanks, everybody. Bye-bye.
The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.