Match Group, Inc. (MTCH) Q3 2025 Earnings Call Transcript

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Overview

The earnings call presents mixed signals: while there are positive developments in product innovation and international expansion, concerns about declining MAUs, a negative revenue headwind in Q4, and vague guidance on future profitability create uncertainties. The positive impact of cost-saving measures and strategic marketing efforts is offset by the lack of clear timelines for user growth recovery and profitability. Given these factors, the overall sentiment is neutral, as the potential upside from strategic initiatives is balanced by the current challenges and uncertainties.

Key Financial Performance

Total Revenue $914 million, up 2% year-over-year, up 1% year-over-year on a foreign exchange neutral basis. FX was $4 million better than expected at the time of the last earnings call.

Adjusted EBITDA $301 million, down 12% year-over-year, representing an adjusted EBITDA margin of 33%. Excluding the $61 million settlement charge and $2 million of restructuring costs, adjusted EBITDA would have been $364 million, up 6% year-over-year, representing adjusted EBITDA margin of 40%.

Tinder Direct Revenue $491 million, down 3% year-over-year and down 4% year-over-year FXN. Payers declined 7% year-over-year to 9.3 million and RPP increased 5% year-over-year to $17.66. Adjusted EBITDA in the quarter was $204 million, down 23% year-over-year, representing an adjusted EBITDA margin of 40%. Excluding the legal settlement charge, adjusted EBITDA would have been $264 million, representing an adjusted EBITDA margin of 52%.

Hinge Direct Revenue $185 million, up 27% year-over-year and up 26% year-over-year FXN. Payers increased 17% year-over-year to 1.9 million and RPP increased 9% to $32.87. Adjusted EBITDA was $63 million, up 22% year-over-year, representing an adjusted EBITDA margin of 34%.

E&E Direct Revenue $152 million, down 4% year-over-year and down 5% year-over-year FXN. Payers decreased 13% year-over-year to 2.3 million, while RPP increased 10% year-over-year to $22.22. Adjusted EBITDA was $47 million, up 14% year-over-year, representing an adjusted EBITDA margin of 30%.

Match Group Asia Direct Revenue $69 million, down 4% year-over-year on both an as-reported and FXN basis. Excluding the exit of live streaming businesses, direct revenue was flat year-over-year on both an as-reported and FXN basis. Payers increased 6% year-over-year to 1.1 million, while RPP declined 10% year-over-year to $20.73. Adjusted EBITDA was $15 million, down 14% year-over-year, representing an adjusted EBITDA margin of 22%.

Operating Cash Flow $758 million year-to-date through Q3.

Free Cash Flow $716 million year-to-date through Q3.

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Operating Highlights

Tinder's new mission statement: Tinder is the most fun way to spark something new with someone new, focusing on Gen Z.

Chemistry feature: AI-powered matching feature that learns user interests and personality, live in New Zealand and Australia, with plans for expansion.

Modes navigation: Introduced new ways to connect, such as Double Date and College Mode, with significant adoption rates.

Hinge's AI innovation: Introduced conversation starters and improved recommendation systems, driving better user engagement.

Face Check: Facial verification feature to confirm user authenticity, launched in several countries.

Addressable market expansion: Targeting 250 million actively dating singles worldwide, including 30 million lapsed users and 220 million potential first-time entrants.

Hinge's international expansion: Launched in Mexico, with Brazil planned for Q4 and new markets in 2026.

HER acquisition: Expanded reach among queer women and gender-diverse communities, driving a 20% revenue increase in test markets.

Operational rigor: Improved execution, hitting deadlines, and shipping features like alternative payments faster.

Cost savings: Achieved $100 million in annualized savings, reinvesting $50 million into the portfolio.

App performance improvements: Tinder's Android startup times are 38% faster, and crash rates reduced by over 32%.

Trust and safety: Doubling down on trust with features like Face Check and improved moderation tools.

Financial discipline: Generated $758 million in operating cash flow and repurchased shares, reducing diluted shares by 8% year-over-year.

Project Aurora: Testing Tinder advancements in Australia to refine user experience and long-term strategy.

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Risk or Challenges

Legal Settlement Impact: The company incurred a $61 million charge to settle the Candelore v. Tinder, Inc. case, which negatively impacted adjusted EBITDA. This legal settlement reflects ongoing risks related to historical pricing practices.

User Experience Testing Impact: User experience testing at Tinder resulted in a $3 million negative impact on direct revenue in Q3, indicating potential risks in balancing innovation with revenue generation.

Azar Block in Turkey: Azar was blocked in Turkey by regulators, leading to an estimated $3 million revenue loss in Q3. The timeline for resolution remains unclear, posing risks to revenue stability in the region.

Gross Revenue Impact from Alternative Payments: Tests of alternative payment methods at Tinder and Hinge have shown some negative impacts on gross revenue, highlighting risks in transitioning to new payment systems.

Operational and Financial Discipline: While operational improvements are noted, the company acknowledges potential short-term revenue and adjusted EBITDA impacts from ongoing tests and strategic shifts, which could affect financial performance.

Emerging and Evergreen Brands Performance: Weaker-than-expected performance at E&E brands and the inability of emerging brands to offset declines in evergreen brands pose risks to overall revenue growth.

Regulatory and Compliance Risks: The block of Azar in Turkey and the legal settlement highlight ongoing regulatory and compliance risks that could impact operations and financials.

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Guidance & Outlook

Tinder's 2026 Reintroduction: Tinder is set to be reintroduced in 2026 with a focus on Gen Z, featuring innovations like the AI-powered Chemistry feature, Modes navigation, and improved app performance.

Hinge's Growth and Expansion: Hinge plans to continue its international expansion with Brazil in Q4 2025 and new markets in 2026. It will also introduce category-first features to enhance user experience and drive growth.

Face Check Rollout: The Face Check feature, aimed at improving user trust and safety, will expand to additional U.S. states and countries in the coming months, with testing on Hinge beginning soon.

Alternative Payments Rollout: Alternative payments will be fully rolled out across major apps, including Tinder and Hinge, in the U.S. in Q4 2025, with expected savings of approximately $90 million in 2026.

Hinge's Revenue and User Growth: Hinge continues to show strong revenue and user growth, supported by innovation and disciplined execution, with plans for further international expansion and feature enhancements.

Financial Guidance for Q4 2025: Match Group expects Q4 2025 total revenue of $865 million to $875 million, up 1% to 2% year-over-year, and adjusted EBITDA of $350 million to $355 million, representing a 9% year-over-year increase.

Free Cash Flow Guidance for 2025: The company has increased its 2025 full-year free cash flow guidance to $1.11 billion to $1.14 billion, assuming the Candelore settlement will not be paid until Q1 2026.

Hinge's AI Innovations: Hinge will introduce new AI-driven features like personalized prompts and reimagined preferences to improve user outcomes and matching quality.

Project Aurora: This large-scale test in Australia integrates Tinder's advancements for a faster, safer, and more personal experience, with potential short-term revenue impacts but long-term growth benefits.

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Shareholder Return Plan

Dividends Paid: $141 million in dividends paid year-to-date through Q3 2025.

Commitment to Shareholder Returns: Targeting 100% of free cash flow to be returned to shareholders through buybacks and dividends.

Share Repurchase: Repurchased 17.4 million shares at an average price of $32 per share for a total of $550 million year-to-date through Q3 2025.

Additional Share Repurchase: Repurchased an additional 3 million shares in October 2025 for $100 million at an average price of $33 per share.

Reduction in Diluted Shares Outstanding: Reduced diluted shares outstanding by 8% year-over-year as of October 31, 2025.

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Key Q&A

Q:Could you expand on the green shoots you're seeing across the broader company and at Tinder specifically?

A:Spencer Rascoff highlighted improvements at Tinder, including a clear mission statement, consumer personas, and metrics like Sparks (6-way conversations). Sparks are improving globally and are close to flat year-over-year. Key improvements include better recommendation algorithms, which improved women matches by 4% without revenue trade-offs, and features like Double Date, which has 17% adoption among U.S. users aged 18-22. Other features like contextual likes and biographical information have improved user outcomes without impacting revenue.

Q:Is the faster product velocity at Tinder accelerating user outcomes and metrics? What about the negative Tinder revenue headwind in Q4?

A:Spencer Rascoff stated it is too early to determine the impact on 2026. Current tests in key markets like Australia aim to evaluate user outcomes and marketing efficiencies. A $14 million impact on Tinder revenue is expected in Q4 due to features like new recommendation algorithms, new Modes, and open messaging. A product event in spring 2026 will showcase developments.

Q:You plan to unlock $40 million of payment savings. Could this offset revenue headwinds next year?

A:Steven Bailey explained that the $90 million savings provide flexibility. The $14 million Q4 impact from Tinder user outcome testing is an estimate, and it is premature to speculate on revenue declines. Testing will continue, and detailed guidance for 2026 will be provided after the annual planning process.

Q:Has the engagement profile of Hinge users changed since its inception? How does Hinge's expansion into Mexico and Brazil affect the addressable market?

A:Spencer Rascoff stated Hinge's positioning as the last dating app remains consistent. Hinge launched in Mexico with faster adoption than in Europe and will launch in Brazil soon. The success in these markets suggests a massive addressable market for Hinge globally, with plans to expand further in 2026.

Q:How do you think about rolling out Tinder changes globally versus being strategic by region?

A:Spencer Rascoff explained that while some features like the REX algorithm and Face Check are being rolled out globally, testing in markets like Australia helps understand the ecosystem's response. Insights from these tests will guide the 2026 strategy.

Q:What is the timeline for MAUs to turn around and move in the other direction? What is driving the upside in in-app payment savings?

A:Spencer Rascoff noted that some product initiatives, like Face Check, initially hurt MAUs but improve user outcomes. MAUs are stabilizing in the high single-digit decline range. Steven Bailey highlighted faster rollout of alternative payments, with 40%-60% shift to web payments, leading to $90 million in savings. Google’s updated Play Store policy could add $10-$15 million in savings.

Q:What traction have you seen from recent marketing efforts? How do you approach marketing for lapsed versus new users?

A:Spencer Rascoff mentioned Project Prism, which standardizes marketing efficacy across brands. Hinge's marketing is more effective than Tinder's due to its newer brand and focus on user acquisition. Tinder focuses more on brand marketing to drive reconsideration. Marketing spend is lighter in Q4 due to higher media costs.

Q:What will you assess to determine next year's growth and investment opportunities?

A:Spencer Rascoff stated decisions will be based on maximizing the stock price in three years. Key considerations include Tinder's profitability, user benefits, and cost of acquisition. The focus is on long-term value creation.

Q:What is the state of the broader dating market in the U.S., and what is the impact of Facebook Dating?

A:Spencer Rascoff noted that competition, including from Facebook Dating, is welcome as it grows category acceptance. Match Group focuses on converting the 250 million singles globally who have never used dating apps. Steven Bailey mentioned slight macroeconomic weakness among younger Tinder users but no broader impact.

Q:What is the update on Face Check and its rollout?

A:Spencer Rascoff confirmed Face Check applies only to new accounts, reducing spam interactions by 60% and improving perceived authenticity by 5%-10%. It will be fully rolled out in the U.S. by year-end.

Q:What are the early findings from Project Prism on marketing spend?

A:Spencer Rascoff stated Hinge's marketing is more cost-effective than Tinder's due to its focus on user acquisition. Tinder's brand marketing aims to change user perception, which is less efficient on paper but necessary for its strategy.

Q:What is the update on Tinder's top-of-the-funnel metrics?

A:Spencer Rascoff noted Tinder's MAUs are stabilizing in the high single-digit decline range, and revenue is down 3% year-over-year, showing signs of stabilization. The focus is on flattening declining trends before achieving growth.

Q:Review of Unclear Management Responses

A:Management avoided providing a clear timeline for when MAUs would turn around, stating that some initiatives initially hurt MAUs but improve user outcomes. They also did not provide specific guidance on 2026 profitability, citing ongoing tests and the need for further evaluation. Additionally, they did not clarify the exact impact of marketing spend adjustments or the detailed outcomes of Project Prism, leaving some aspects vague.

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Earnings Word Cloud

The most frequently occurring keywords in this quarter's earning call

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