Match Group, Inc. (MTCH) Earnings Call Transcript & Summary

Great. So I think we're going to get started. Good morning, everyone. Thanks for joining us. My name is Alexandra Steiger. I'm part of the U.S. Internet research team here at Goldman Sachs. I'm very pleased to have Gary Swidler, CFO and COO of Match Group with us today. Thanks for coming. Good to see you in person.

Good to see you as well.

So let me jump right into it. Over the past few months, there have been a number of changes at Match Group with BK joining the firm, the departure of the former Tinder CEO as well as some changes and delays in the Tinder monetization and product strategy. From a high-level perspective, what are your and BK's top priorities right now?

Well, Tinder was clearly the top priority for him out of the box, and I think that makes sense given its contribution to our revenue and to the company's value. He came in, and I think on his second or third day, we did a big strategy review of Tinder. That was sort of preplanned, and he didn't come away particularly impressed with what had happened in the first 6 months of the year or kind of where they were headed for the back 6 months of the year. And I think then you sort of face a decision -- you're new to the job. Your instinct is -- kind of you're underwhelmed by what you've heard. And so do you make changes or do you leave things the way they are? And I think he rightly and kind of bravely made some quick changes, which affects us negatively in the back half of '22, but I think puts us in a better position to improve into 2023 as opposed to waiting and then having some impact on 2023 as well. So I think the changes he made were the absolute right ones. I think we're on a much better track now. The new team that he's implemented are people that we know, one of whom worked for me, one of whom worked in another part of Match Group and one of whom he knew well from his previous life. And so these are known quantities. They're working together well. They're gelling well. They're on a good track. They need some time to execute, but we're very optimistic that they will change the trajectory of that business. Tinder is the 800-pound gorilla in the space. I mean they've been at this a long time. They are the most iconic brand. They invented the Swipe. And so there's real opportunity there for executing properly. I think we were underexecuting. And I'm hoping that the team now is going to put that into the rearview mirror, and we're going to execute well, which is going to pay dividends for Tinder as well as for Match Group.

And I definitely want to talk more about Tinder before -- but before doing that, let me ask you 2 bigger picture questions. So unlike the macro side, I know that many investors view online dating as recession resistant. Given the current uncertain macro environment we're in, what are your thoughts on the health of the consumer and your user base going into the second half of this year and into next year? And have you noticed actually any change in terms of how your core user or like your user is engaging with some of your dating products?

So I think the evidence is still that the business is pretty recession-proof. It's a small purchase. It's a purchase that makes people happy. They're not very quick to cut it. I do think that it varies a little bit by business. For example, in our Plenty of Fish LIVE! streaming business, it is a little bit more susceptible to macroeconomics. You got a lower income demographic there, and we see spending patterns kind of moving with macroeconomic factors. It's less the case at Hinge, for example. Tinder is probably somewhere in the middle. So it varies by business. But I would say, generally, what I've seen, and the data is a little hard to parse out. What I've seen is the consumer did go through a kind of a rough patch when gas hit $5 a gallon back in June, and I think they readjusted spending a little bit. They do pull back a little more quickly on à la carte purchases than they do on subscription. We saw subscriptions stay pretty sticky. We saw a little bit of softness in à la carte. My sense, based on the data I see now, is that the consumer sort of made some of those adjustments and has kind of emerged from that. And I would say in the last little while, the business has looked pretty stable to me in terms of macroeconomic impacts. And so it gives me optimism that if the world kind of stays the way it is, we're kind of -- the consumer has adjusted, our business has felt whatever impact it was going to feel. Now obviously, as you well know, especially by being someone who lives in Europe, there's a lot of risk out there, a lot of uncertainty, especially as we go into the winter and the Fed continues to tighten everything else. So we'll see what the world kind of does over the next little while. There is some risk still lingering out there that is very hard for anybody to predict. But right now, I would say the business looks pretty stable, pretty solid from a macro impact standpoint.

That's very helpful color. I actually wanted to follow up on Japan specifically, given that it's such an important region for you. So on your last call, you mentioned that Japan is slowing again after an initial surge in user growth after COVID restrictions were lifted. Can you just give us an update on that trend? What have you seen over the summer months?

Right. And by the way, you sort of raised a good point, which is, there's a lot of things going on in the world that are affecting businesses and our business in particular, right? You've got the macroeconomics, meaning the economy and people's spending power and so forth. And then you've got this COVID recovery, which varies by country, depending on what kind of restrictions there were in the country, how severe the case loads were, and people's behavior is still not 100% back to normal and may never go back to the way it was kind of prepandemic, although Goldman Sachs might be an exception to that. And so I would say that Japan is kind of on the far side of that chart. And if you look at kind of what happened in Japan, COVID actually didn't impinge on them for a while. While the U.S. is really struggling, Western Europe was really struggling, Japan actually didn't have much impact. But then it got hit very hard. It introduced these 5 states of emergencies, which were basically lockdowns. And society got very restricted in terms of its movement, and we saw a real decline in our business as people's mobility fell in that market. And 5 states of emergency, 5 sets of lockdowns is a lot of lockdowns. And I think people have gotten a bit subdued in their social interactions as a result of those lockdowns. And they haven't really bounced back. So the lockdowns -- the restrictions have been lifted. COVID cases have still been pretty high in Japan. It's going to take a little while for that market to bounce back. We saw a little bit of a bump kind of in the spring as soon as the restrictions were lifted, but it hasn't been a sustained improvement. And so it's really hard for anybody to say how long that's going to remain the case. It hurts us from a business perspective because we've got the top 2 apps in Japan in Pairs and Tinder, and it's been a great growth market, north of a 20% growth market for us for a while. So losing that has been unpleasant. But longer term, I think the drivers of growth in the Japanese market are still there, low marriage rates, hard to find a partner. The dating apps have a lot of validity in those markets and -- in that market. And so it's going to come back. It's just a question of exactly when, and that's a hard guess to make.

Let's pivot to Tinder, obviously, kind of like the key to your growth story and certainly where we are getting most questions on right now. So first of all, can you walk us through the various factors that is causing Tinder revenue growth to slow in the second half versus the 13% you reported in Q2?

So there's a bunch of different factors that go into it. I think the biggest driver is clearly a lack of successful product execution, especially in the first half of the year, which then sort of leads to more payers and improved ARPU in the second half of the year as those product features come online and people take them up. And so the fact that they underexecuted for a while, we're starting to feel it. We didn't really feel it in Q1. We didn't -- felt a little bit in Q2. It's more apparent in Q3 and into Q4. And so like I said, I think making quick changes there, reversing course of that is underway, and I feel good about it kind of medium term, even though it's painful in the very short term. And so most of it really is execution. And what that means is you've got a lot of good ideas at Tinder, but actually getting them out into the product is really critical. And testing them appropriately, rolling them out, refining them if they need to be, I think that is where Tinder missed some of the mark, both on some smaller stuff, less sexy stuff optimizations, however you want to characterize them, which we do quarter in, quarter out. I think that they did not do as good a job with some of the optimizations. Some they tried didn't work. But it's just a question of taking shots on goal. And you've got to continue to take shots on goal, and I think that they didn't quite get that done well. And then they have longer-term projects, bigger projects, more meaningful as well, and you got to continue to iterate on those and make progress. And so you've got to be able to do both the smaller, less sexy stuff and the bigger stuff simultaneously. And I don't think they were delivering appropriately on that. And so we've made changes. We've improved the team. The early signs are that, like I said, the team is working well and starting to have some optimizations that are working well. We've been making some adjustments in Boost. We've been making some other optimizations that are showing good signs here in the third quarter. And so those are early signs that things are working the way they're supposed to. We have seen an improvement in the trajectory. And we've given them some breathing room to just do a few things here in Q3 and Q4 and do those well, I think that they are accomplishing that, and then figure out, okay, what's the plan for 2023? What's the list of optimizations Q1, Q2, Q3, Q4? What's some of the bigger swings they're going to take, whether that's virtual goods, coins, some of the things we've been talking about and/or other things? The team is working on figuring out what 2023 looks like. We'll get a report on that in November, which is our typical kind of planning for next year. And they have very clear financial targets that they need to hit, which is after Q3 and Q4 being -- underperforming relative to what we typically expect, they've got to show some improvement in year-over-year revenue growth as we get into Q1, Q2, Q3, Q4 next year with a goal of getting back to the typical levels of mid- to high-teens growth that we want to see at that company.

And outside of these product, management transition headwinds, you just briefly talked about, just how do you feel about the health of the Tinder brand long term? Is this more a, we're going to fix this. This is a short- to medium-term problem, but long term, like we believe in the brand, that the brand is healthy. How do you think about that?

I mean when you look at it, the brand has a large multiple of users compared to any other app. The brand name is the most recognized around the world. It's the leading revenue app in a significant number of countries globally. So if you didn't know anything about Tinder, and I told you those facts, you would say, well, it's a pretty big and successful business. And so what's happened, as I said before, is I just think in the most recent kind of 2, 3 quarters, they've underexecuted. They haven't had some enough shots on goal. They haven't had enough winners. And so they just need to do better. And I think they understand that very clearly now, and they're pushing in that direction. You also have a more competitive environment for them. You've got Hinge, our own business, that's performing really well. The product is really well liked. They're expanding scale. They're going more global. So Tinder has to just push itself harder, and I'm expecting to see that over the coming quarters.

Let's quickly move on to virtual goods actually specifically. So you're rolling back virtual coins -- or not rolling back, but you delayed the rollout of virtual coins and virtual goods, at least for now. Can you just like -- you briefly touched on missed execution, but how do you think about virtual goods longer term? And how do you think about the monetization strategy for virtual goods and coins in addition to your subscription and à la carte offering?

Yes. I think we remain very optimistic about the potential for virtual goods to be a meaningful part of the Tinder ecosystem and the Tinder monetization strategy. We know that there are people who see value in sending Super Likes, and we think Super Likes could be other kinds of goods, not just a Super Like. And so we think there's real opportunity. People want to spend. They want to get attention. They want to stand out. We know that about the Tinder ecosystem, and virtual goods seem like a great way for that to happen. But we've got to execute that properly. That's a new area for us, something we don't have a lot of familiarity with. We were a subscription-based business. We learned à la carte and have been really successful at that. And now this is kind of the next thing to go into. And I think when BK came in, and he's got some experience with these kinds of things. He said, "Look, I think there's real opportunity here. This is a great idea, but it's not yet ready for prime time." And so rather than roll it out in a rushed or sub-optimal fashion in the back half of this year, he basically said, let's push that into 2023. Let's spend a little more time on it. He's delving into it. The new CPO at Tinder, who comes from gaming, Mark van Ryswyk, also is spending a lot of time on this, and we'll see kind of what the plan is for virtual goods for 2023 and how that fits into the overall Tinder product road map as they're rethinking the opportunities and what makes sense to do in 2023. So that's something I think we'll have more to say on possibly in November, certainly by the start of next year as we refine their product road map and figure out what the priorities are and what the timing is.

One future we're very excited about is the female-focused package. What is it? Why could it be important for the Tinder growth story? And can you just share any update on the launch time line?

Yes. I mean it's coming before the end of the year. I think that there's real opportunity with women on Tinder. We've always known that. Figuring out exactly what to offer and how to offer it is challenging. And so we've been working on it for a while, and I think we feel we're getting there. Women are definitely undermonetized at Tinder, and women consistently look for ways to improve their experience. A lot of that centers around kind of meeting their preferences, allowing them to avoid having people who they're not really interested in, having to spend time kind of having those people come to them, giving them more control over their experience. And so we believe women will pay for some of those capabilities, giving them more control over their experience, making their Tinder experience better. And so we've been refining this for a while. I think we're getting close to where we want to be. And once we feel it's ready, that will roll out. And I think there's a real opportunity with women on Tinder. And women are going to continue to be a big focus for Tinder not only in the next 2 quarters, but just generally. We've always skewed the focus towards men. We've always known there was opportunities with women. It's important that we do better with women, whether that's on safety, whether that's on preferences, whether that's on their overall quality of their experience and meeting their needs. And the Tinder team has this kind of as job one, to improve the female experience. And so this is something you're going to hear about not just as it relates to the overall kind of subscription package focused on women, but just overall, enhancing the Tinder experience for women is going to continue to be a big theme for the rest of '22 and well into 2023 at a minimum.

Beyond that, we talked about virtual goods. Is there anything on the horizon from a product innovation or optimization perspective we should be focused on over the next couple of quarters?

I think that in the next couple of quarters, we're focused on the women-oriented features. We're focused on the short-term packages, which we think has some interesting potential. We're going to start testing that over the next few weeks as well as some of these optimizations around Boost and other things that we've got kind of rolling. It's a relatively simple, straightforward road map for the next couple of quarters. We wanted to simplify it for the team. It's a new team. We want them to succeed with a limited number of things and remain focused and galvanized behind a small handful of things. And so all indications are that's what's happening. Progress is being made, and we're on track for those quarters. And then we have a pretty good sense of where the priorities are and what needs to be accomplished in 2023. But the precise recipe and timing is what we're going to be adjusting over the coming couple of months, and we'll report back on what the plan is for next year. But there's a lot of opportunity. There's a lot of good ideas. There's a lot to do. And as long as the team kind of makes its priorities and kind of galvanizes the team behind that, I'm optimistic for '23 as well.

You recently announced the departure of Renate Nyborg, Tinder's former CEO. How do you feel about Tinder management today? And what are some of the attributes you're looking for in the new Tinder CEO?

As people have pointed out to me mercilessly over the last few weeks, we've had too much turnover at Tinder in the last few years at the CEO level, at the CPO level, at the CMO level, and we need to arrest those things. The instability leads to confusion among the team, lack of prioritization, changing prioritization, frustration. There's a lot of things that the lack of stability really leads to. And so the goal is to arrest that. And so one of the reasons we brought in known quantities -- we brought in a COO, who used to work for me, who's been very successful at Match Group; a CMO from our OkCupid business, who's recognized by Forbes as one of the best marketing people in the country; a CPO, who BK knew from his gaming days, who he had a lot of respect for. So we have known quantities now, which should lead to more success, should lead to less turnover. These people are motivated. They're excited by the new roles. They are totally into working with each other and on Tinder. And so we're optimistic that those changes that have been too rapid and too many over the last few years are a thing of the past. You never know, but that's the plan. And I think the Tinder team has responded extremely well to the changes. We talked to the top 25 Tinder employees kind of one-to-one to make sure everyone is on board. We didn't lose anybody out of these changes, which was great. I think the rest of the team has kind of rallied behind the top 4 new leaders and the next 25. So there's been real stability on the Tinder team despite all of this happening. And like I said, I don't think we've skipped a beat. I think things have improved already and will continue to improve. And so the goal is to just have more clarity of goals, more galvanization and more stability. And we can really operate with the current structure for a long time. We're not waiting for this new CEO to arrive. It's not going to lead to massive changes in the plan or in the team. So we're kind of firing on all cylinders now. We're moving ahead. Obviously, we want to find a CEO that we feel great about. We are talking to people. And if we find that person, we won't hesitate to bring them in. But we want to make sure we get the right person for the long term that can work with the team, that's excited about the business, that will be there for a while. And so I'm spending time on this personally. BK is spending time on it as well. And when we find the right person, I'm sure we'll know. And until then, we're kind of all systems go.

Shifting gears to one of Match Group's strongest assets right now, Hinge. You just announced to accelerate the launch time line to 2 markets per quarter. How is that going so far? And what are some of the early learnings?

I mean I think if you take one step back and you look at Hinge, it's really performing extremely well. The user growth is extremely strong, especially in these English-speaking markets where it's been for a little while. People really like the product. It's a differentiated product. So we feel great about Hinge's momentum. We've done a lot on the monetization side as well, which has worked extremely well. But we want to remain long-term focused on Hinge and really drive that business where it's success is going to be measured over the next 3, 5 years and beyond. We're not looking at it quarter-to-quarter as much, just given the trajectory we see for that business and what they've accomplished. So we feel really good about it. They are coming third to a lot of these markets after Tinder and, in some cases, Bumble. And so we want to go as quickly as we can. We don't want to allow more time to elapse. And so we are pushing them to move faster into these markets. The biggest constraint has been kind of people, resources and the ability to kind of do so many things at once. It's hard to do multiple countries at once. It's hard to do so many things on one app at the same time. And so -- but we pushed them. We've hired faster. The market has cooperated by getting a little easier to find good people. And so those things are conspiring in a good way for us. And so we've accelerated the growth rollout and are just trying to move as fast as we possibly can, and that's instead of 1 market per quarter, it's now 2. I think that's kind of capacity for Hinge, and we're just going to kind of crank away on it.

Versus the $300 million in revenue contribution you announced for this year, just how should we think about the growth cadence into '23? And just from a long-term revenue perspective, could Hinge be the new Tinder at some point in the future?

Well, I think in terms of adding revenue, I start off as kind of adding a similar quantum of revenue that we've done this year over last year for next year. That's kind of my sort of baseline expectation. And then we'll see how they execute on these international markets, how much they contribute as well as this new premium tier. That's going to be a big deal. We'll get that tested and out hopefully before the end of the year, but that will be a factor for 2023 and beyond as well. So there's a couple of variables that are still too early to call. Obviously, we're optimistic about both the new tier, which has been hugely successful on Tinder, as well as the international expansion, but they're all still kind of so early and to come that it's a bit too early to say. So we'll give some more guidance about '23 and beyond for Hinge as we get a little further into this year. But those are the 2 big variables, big things to watch. I think that Tinder had a big advantage. It was the first of its kind. It got a lot of viral growth early. It has spread globally for a long period of time and has become a really big business. Hinge is coming much later, and it's not going to be as easy for it. It's going to kind of have to do hand-to-hand combat in all these markets with 2 other big competitors of note. And so we'll see how it does. But again, it has a differentiated product. People are really gravitating to it. Organic traction is really strong. So we'll have to watch and see. That would be a massive accomplishment if Hinge could come along and be the size of Tinder. But you never know. If they're creative and clever, anything is possible. So we'll see how that kind of goes. That would not be my baseline expectation, but I wouldn't short-sell them. I had lunch with the CEO of Tinder the day before yesterday on Monday. And I was telling him, sky's the limit for you. You should keep pushing. He was super enthusiastic and kind of had a plan in mind as to how to go tackle the opportunity, and I'm fully behind him with whatever he can do.

Quickly on margins. Tinder is obviously best-in-class in terms of EBITDA margins. Are there any like other costs associated with Hinge? Or are there any reasons why Hinge could not get eventually to that type of EBITDA margin?

Well, it's the initial virality that Tinder got. People just knew the app. The unaided awareness is really high globally. And so that's a big advantage that's built in. You just don't have to spend as much to teach people what your brand is, what it does, why they should use it. Hinge is going to have to do more of that. And so certainly, I don't see Hinge getting to Tinder margins over the next little while, especially as they do all these international expansions. I'm expecting Hinge to be more in line with kind of Match Group margins over time. I'm happy to be pleasantly surprised on that front. Hinge has been pretty efficient and effective with its marketing spend. I think I'd put them up against anyone in terms of their efficiency, but we'll see how it goes. But that's not, again, my baseline expectation. They're not going to be as big as Tinder nor kind of -- from a margin perspective, but I'm happy to be surprised to the upside on both of those metrics.

Beyond Hinge, what are the assets within your emerging brand bucket you are very excited about and we should be watching?

I think that we've done a very good job creating these new apps focused on targeted demographics, something that people don't spend a lot of focus on. But we've kind of built a good model of how to build strong margin, efficient models off the same platform with these -- what we call the verticals. So you've had BLK on the Black community, Chispa on the Hispanic community, now Stir for single parents. We're going to have The League into that mix, and I think that's going to be very effective. We're very excited about The League. I'm flying to L.A. tonight to go meet with the CEO tomorrow. I think there's real opportunity there. She's really excited about working with the Match family on how to drive that business. And that's going to be a global business. There's real opportunity there. And there's more of those kinds of things to come. And we're talking about bringing them into Europe as well as the U.S., where some of these already exist. So those verticals really provide us with a lot of opportunity. And what you realize is dating is a tailored business. There are some people who really want a business -- a brand that's focused on their demographics, Hispanic, Black, et cetera. There are some who want a more general business, Hinge, Tinder, et cetera. And people will use both of those one at a time or 2 simultaneously, but they have 2 go-to brands. And so we need to cater to all those different kinds of daters out there. We do a pretty good job at that, but there's still more opportunity. And there's untapped areas, which we're focused on as well, which I'm not ready to get into yet, where we think there's more opportunity as well on a global basis. So we're focused on the next places to go as well. And the nature of our business is such as we've got some slower growers that have been around for a long time, some faster growers like Hinge that are continuing to blow the doors off things. And then we've got to make some new bets over time, and we have some good ideas about where those things can come. And we've got to manage all that and allocate capital properly, which is one of our core strengths. And so you're going to constantly hear that portfolio strategy, more mature businesses, less mature businesses, faster growers, slower growers, that's the nature of our portfolio approach. And it's our secret sauce, and we're going to continue to drive that way.

Great. So I mean -- so we talked about the consumer. We briefly touched on the TAM. We talked about your key brands, Tinder. Taking all of this together, how are each of these factors contributing to the slowdown in revenue growth that you've guided for? And what gives you confidence that Match can actually accelerate revenue growth in '23 or through '23?

Well, like I said before, you've got a number of different crosscurrents, and it's always a little hard to parse them out. You still have some lingering COVID effects, like in Japan, our second biggest market, still being subject to COVID. I know everyone here is like, I barely remember COVID. I want it in the rearview mirror, but that's not the case in Japan. And that's just a reality we're dealing with. So there's still some COVID effects. Even people back to the office full time. I joked about Goldman being back to the office, but a lot of places, that's not the case. And so if you were somebody who met your dates a couple of days, a week at happy hour or after, at work or for a morning coffee, it's not as easy as it was in 2019 to do some of those things. So you've had to adjust. And mobility is still down. And so you still got some COVID effects, but especially in a market like Japan. I think Western Europe, the U.S., we're mostly past most of those effects. So that's one piece. Then you've got macroeconomics. And what does that look like? U.S. still feels pretty good. Europe, people are a little more nervous. We'll see how the winter plays out. But you've got some of those things going on. So that's another factor out there. And then you have the Tinder lack of execution and the fact that they just haven't innovated and brought product out the way we'd like to see them do. I'm hoping that, that gets cured. It's already underway of being cured and will not be a factor in 2023 by the time we're sitting here hopefully next year at this conference. So you've got a lot of different things going on in these businesses. You've also got some things that have been positive. We had a really tight labor market, which was making it really hard to hire good engineers and good product people. Now you don't go a day without seeing layoffs of significant extent at some of our peers and competitors, which gives us a good opportunity to pick up talent, and we are making adjustments in our team to take advantage of people who are out there and suddenly become available. The start-up world is not what it was. The funding is not there. So there's lots of different things going on in the world. Some of them affect us negatively. Some of them affect us positively, but we've got to continue to manage in this dynamic environment, play to our strengths, use our advantages. We've got lots of resources, the ability to invest and keep driving the business forward. And I think we're doing all of those things. And when we look back next year when we sit here or the year after, that's how the success will get measured, is how do we execute in a complicated and changing environment. But we have a good track record of doing that. We've got the people to do it, and I'm optimistic that we'll continue to execute well.

So given the guidance for slower top line growth in the second half, specifically at Tinder, which is a higher-margin asset, how should we think about the adjusted operating income margin progression from here? And what are some of like the biggest swing factors? You just talked about hiring talent, marketing could -- is maybe another factor. But can you just like elaborate on that a little bit?

Yes. I mean our margin targets have not changed. We think we can get the business to 40% margins, and then we'll see what happens with the app stores, which is on top of that. We're still pushing in that direction. Obviously, Tinder is slowing down, hurts us in that regard, as you say, because it's a higher-margin business. So getting Tinder back to strong growth is a key component of getting the margins where we want them to be. But my guidance to the team is we need to remain disciplined on cost. We need to remain disciplined on marketing spend. The market remains very competitive. It kind of hasn't caught up yet with the realities of the economy, but it will. It's just taking longer. We need to be smart on hiring. We need to do more with less. We need to be more efficient and effective. And the teams have responded really well to that. And so our goal is to continue to see expanding margins next year and beyond. That's the charge we've given people as they plan for next year. We want to see margins continue to improve, and we're going to beat the drum on that. I'm not expecting a significant amount of new hiring into next year unless it's a critical thing that we don't have that we need a critical capability. And so we're going to be very judicious on costs. We are investing in certain places. We are investing in Hinge in Europe. We are investing in new apps and new ideas. So it's not like a one blanket answer of, yes, we're doing that. No, we're not doing that. We're being really judicious on apps that are struggling to grow. We're being much more willing to invest in apps that show a lot of growth. And I think that's logical. And that's -- again, it goes back to that portfolio strategy. It's not a one size fits all. There's different marching orders, different approaches depending on the performance of the business, the outlook for the business and some of our priorities. And as a company, we are very nimble and dynamic. If a business is doing well and then starts slowing down, we'll curtail the marketing. We will curtail the hiring, and we can do that relatively quickly, and we'll continue to do that.

One topic you're very passionate about are app store fees. So -- and we have seen a number of changes really across the globe in terms of the regulatory landscape over the past few months. Can you just like give us an update on how you think app store fee and app store fee structure will evolve from here? And next -- or let's say, in 5 years, do we still going to talk about app stores -- app store fees?

Well, look, the app stores are obviously a very important component of our business. Just the reality is that there's 2 companies that dominate the app stores, and they behave in a way that I don't consider to be competitive, I think, that they are able to price without any market forces really driving that, which is unfair to developers and unfair to the consumers who don't fully understand the cost of that, but they're bearing the cost of a 30% tax on these apps. And so I'm looking forward to the day where there's adjustments to that system, where there's more competitive fees and benefit that we can pass on to the consumer and relationships that we can have more directly with the consumer as opposed to being required to go through the app stores, which is the way they control, making sure they get their 30%. And it took a while for the regulators to kind of realize what was happening in this space. But clearly, people understand it now, and it's something that regulators are focusing on across the world and rightfully so. And so South Korea went first, but the European Union has come on now. And this has become a real focus of regulators. And the app stores are ultimately going to have to respond or be forced to respond. And I think you probably know, the Europeans take this very seriously and tend to pretty dogged. And just yesterday, basically, they said, Google's behavior violates antitrust rules in Europe. And this continues to be a big focus of regulators around the world. And so we started to see some movement, not requiring use of their payment system in some geographies by Google. Apple hasn't really made any concessions yet. Ultimately, I think that's an untenable position. And I think Google knows there's going to be more concessions to be made. There's lawsuits pending in the U.S. by state attorneys general, the Department of Justice, developers like us. There's a lot of stuff going on in the system. And it's just a long battle, and these companies have a lot of resources to throw at the battle. But ultimately, I don't think we're going to land where we are today. There's going to continue to be change, which will be healthy and good for everybody. It's just taking time. It's not a very quick resolution, but we're going in the right direction. And ultimately, that will benefit our consumers. It will benefit developers. It will allow developers to make more investments because they won't be paying as much to Apple and Google, and that will be good for hiring, and it will be good for innovation. And so this is a long-term thing that has made a lot of progress. I think 2023 is an important year. I think you'll see a lot of significant developments on this front. So we'll have to have a little bit more patience, but I think that we're kind of getting to the crux of it. And I think ultimately, the outcome will be a very positive one for consumers and for developers.

Thank you very much for that. Maybe let's pause here and see if there are any questions from the audience.

And you've done a good job asking all the questions and people are hungry.

Lunch time. That's right. So then the last few minutes, maybe we could spend on your capital allocation strategy. What are your priorities? And have they changed at all given the current macroeconomic environment we're in?

Well, I mean, our overall priorities haven't changed in that we have lots of capital. We generate a lot of cash, close to around $1 billion a year, give or take, depending on what year you're looking at. So we can invest in our business. And as I say to our teams internally, we have the resources. It's just a question of making sure we spend them in the right places, whether that's hiring, whether that's marketing. I'm happy to spend whatever resource makes sense to invest in our businesses. We just have to be thoughtful and judicious about it. And we are pretty disciplined. And so I'll stand behind our track record on any of that. Our margins are as good as anybody's out there. So I feel good about our ability to invest in our business. We are good at M&A. We have a good track record with M&A, and we'd like to continue to do M&A to add to our portfolio. Valuations obviously come down. Opportunities look better from that standpoint. And so we'll continue to look for M&A opportunities. Absent M&A opportunities that are compelling or use up all of our capital, we'll also continue to return capital to shareholders. We're not just going to husband capital to kind of stockpile it for indefinitely. We want to use it wisely or return it to shareholders. And so we've got this big buyback plan now. Right now, given the dislocation in the market, our stock looks extremely attractive to us. We have been using it to buy back stock pretty consistently. And we'll plan to continue to do so because investing in ourselves, believing in ourselves, I think, makes all the sense in the world. And so that's a very viable use of our capital right now, and we're continuing to do that. And then we'll see what happens in the world, whether M&A opportunities, buying back stock or both continue to make sense. But we look at this on a consistent basis, evaluate with our Board. It's something we talk about and think about all the time and again, try to be nimble depending on what the opportunities are for strategic M&A versus investing in our own company. And we've got a lot of financial flexibility to do all the things we want to do.

Well, thank you so much. One last question, and we're asking that question to all of our companies. What is the one thing you're most excited about over a 1-, 3- and 5-year time horizon?

Look, I think that people's online behavior has really changed over the last 2 or 3 years and, certainly, generationally, meaning kind of the young teenagers today are behaving differently online than people who are 10 years older or even 5 years older and certainly the people who are 20 and 30 years older. They have online friends. They spend lots of time online, playing games, interacting with their friends. Those things didn't exist really kind of going back more than 5 years ago. And so the opportunity for us now that people are socializing so much online and spending so much time meeting people online is to continue to refine our product offerings to capture that. To capture that next generation. If you look at the history, when kind of computers and algorithms kind of burst onto the scene, Match.com said, let's use those to introduce people to meet people for dating. And that was really successful for a long time. Then when the phone was developed and everyone had the phone in their pocket, the Tinder founders basically said, let's create an app that people can really use even if they're sitting in the back of the cab or in line at the deli, they can use it to meet people. And that was really successful and has been great, right? And now we're kind of at this next phase of things where people have become so used to meeting people online and socializing online, and we do Zoom meetings for work and play video games and -- with Discord and Twitch and everything else. And so we've got to figure out what's coming next, and we are the leader in the category and great at these innovations, and we've got real opportunity to capture some of that. And so that's the challenge to us and our teams, to figure out kind of how to capture as the online behavior has shifted and evolved. And I think there's a real opportunity there. And that's the thing that I'm the most excited about.

Great. Well, thank you so much for joining us today. And...

Thanks for having us. Really appreciate it.

Thank you so much.