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

Thanks for joining, everyone. We'll see, you probably know by now, Ygal Arounian on the Citi Internet team. Really excited to have Match Group's President and CFO, Gary Swidler, with us today and taking the story. Thanks for joining.

Yes. Thanks for having us. Great.

Before I start, I'm just going to read Match's disclosures. So during this presentation, during the question-and-answer session, 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 periodic reports filed with the SEC. So with that said, not going to be a surprise to you or anyone else, we're going to start with Tinder.

It's been about a year since the turnaround efforts there. We've seen the revamped product road map, pushed out some significant pricing optimizations, kind of undergone, I guess, what I'd call your first true marketing campaign. We'll touch on all of those in more detail. But just at a high level, where would you say Tinder is on that turnaround trajectory? And what does the time line look like?

Look, I feel like we've made great progress. It's been a lot of work. There was a lot to do. The change in the team has really worked. The improvement in the organizational dynamics and the culture of Tinder has definitely started to take hold. So that sets the right foundation. So I feel very good about that. I know everyone kind of skipped ahead from there to the next thing and the next thing after that. But getting the right foundation, getting the right team, getting stability has all been critically important. So I just want to kind of acknowledge, I feel like that's happened. And then from there, the revenue initiatives that were planned for this year, which I would consider kind of things that should have been done and we're clear that they need to be done, have been done. And so the revenue trajectory feels like it's in good shape for 2023, which has enabled us to really focus on things for 2024, improving top of funnel, getting the marketing campaign out. And those things have also started to pay dividends. You mentioned the marketing campaign, I think turning around perception, improving perception, getting more women interested in the product, those were all critical to dos. They've also started to take hold. And so I feel like we've made great progress in a relatively short period of time. But that being said, there's still a lot to do. We need to see the top of the funnel stronger. We need to see other product initiatives take hold. We've got a lot planned for the fall. So that will be important as we make the turn into 2024 to see kind of what momentum we build from these product initiatives. So we're in the middle of doing things, I would say, but the progress has been good so far, and the trajectory that we're on is good. And so I feel very good about it.

Okay. We'll talk about all those things. Just before we do, just talk about the components of growth and the confidence level for Tinder in 3Q and 4Q. So there's a couple of elements going on with the pricing and then the payers. You're guiding to see improvements in 3Q and then even more in 4Q to get into solid double digits. So just talk about the components and if there's any more color you could add around what double digits -- solid double digits is.

Yes. I mean we set a goal about a year ago to say that we needed to hit double digit, 10% growth by Q4 from a revenue perspective. And we're clearly tracking to do that. Q3 looks in good shape, and I think we'll be where we need to be in Q4 as well. So I feel good that we're going to hit our key financial metric, revenue, which is the thing we manage the business to and that we provide the outlook on and we're going to hit that. So -- and we're going to hit it probably a quarter earlier than we thought. We thought it would be Q4 we'd get to 10%. I think we're probably tracking to about a quarter earlier. So that's all great. And a lot of it is revenue per payer driven because a lot of the initiatives have been focused on pricing optimizations and on rolling out weekly subscription packages, both of which have worked very well, especially in the U.S. on the price optimization side and globally on the weekly subscriptions. And so the revenue is there and the revenue momentum is there, Q3, Q4, and then that should carry as well into 2024. So that's all critically important. When you ask about the turnaround, you want to see the revenue and the financial metrics pick up, and we're clearly seeing that. And so that all feels very good. The part that still needs work is to address the top of the funnel, which is affecting the payer numbers as well as all the variability that we've introduced by making these pricing changes, introducing weekly subscriptions, et cetera. So we're not dealing with the level of year-over-year payer growth that we want to see, probably down mid-single digits Q3, Q4. I think it will start to stabilize after that. And as we go into 2024, we'll be dealing with more of a kind of a new baseline of payers, and we can use product initiatives, marketing initiatives, top-of-funnel improvement to drive payers in 2024, something closer to what we've been used to historically.

Okay. Because we're in this period -- for the next couple of quarters, with the prices -- price increases rolling through, and you're working more towards pricing optimization, can you just expand on the philosophy going forward between how you think about pricing and subscriber growth for -- payer growth for Tinder?

I mean as I consistently say, we don't come up with things and say we want to introduce this to drive payer growth and we want to introduce this product to drive revenue per payer growth. We try to roll out products and features that we think will be of interest to our user base and that our members will see value in. And so one of the things that we've already talked about pretty significantly is this new premium tier -- super premium tier, whatever you want to call it, for Tinder. That's going to have a relatively tiny amount of new payers. But we think given that the rate we're going to charge for that feature, because it's going to be so appealing to this small group of people, it's going to have a significant impact on revenue per payer and ultimately on revenue. And that's a very valid feature in my mind. If we can satisfy a small group of people with something really exciting and really value creating for them that they see real value in, that's something that we should be rolling out. So in that case, it will have significant effect on revenue and significant effect on 2024 revenue per payer. But there's obviously other things going on across the product that are more designed to drive payers. The most important thing is to attract and retain new users or reactivate users who have previously used Tinder. I think that's all part of the plan to improve the top of the funnel and therefore, drive payers growth. And so that's something we've been working on all year and will continue to work on as we make the turn year into 2024.

Can we dig into that a little bit more? Understandably, that's the biggest focus area for investors. So we'll get through -- there's more -- not that there's not more pricing opportunity like you're talking about coming through, but we're going to get through this big kind of price increase here, will lap in the middle part of next year. So investors are trying to understand what are the factors that get us back to subscriber or payer growth at Tinder, right? So when you talk about the products and marketing, what should we be thinking about looking for to see if those things are coming through to keep you on track to get back to payer growth?

So look, the first thing to understand is this is a product-driven business. So marketing is an important component of it, but you need product, you need people to be excited about the product innovation to drive people back to the product. And so as we look at it, we've driven top of funnel from down, let's call it, double digits, 10%, to close to flat over the last 7, 8, 9 months. That's a significant improvement, but still not where we need to be to drive payers to the point where we have single-digit payer growth contributing to double-digit revenue growth. And so a combination of marketing and new product initiatives are needed to get top of funnel to be stronger than that. I would like to see at least single-digit top of the funnel growth next year to drive kind of the similar level of payer growth. When you then add the revenue prepare initiatives on it, that recipe gets you to the double-digit growth that we'd ultimately like to see for Tinder.

Got it. Okay. Let's talk about the marketing campaign a little bit. You talked about some of the top-of-funnel improvements that you're seeing there. Is the marketing, this effect, something you think Tinder will need going forward? And anything else to share in terms of how the marketing is improving the top of funnel or trends right now?

Look, I think marketing, like everything else, needs to be a component of the strategy. And it's great to see that we got an exciting campaign out. We've made some changes to the campaign for the fall and are pushing again. And so that velocity around marketing is something that was lacking at Tinder for a period of time. We've reinvigorated it with a new team and a new leader, and it really is working. It's helping to drive top of funnel. It's also helping with the critical demographics where Tinder needs to focus on our key drivers of Tinder success, younger people, in particular, and younger women, especially. And so all those things are working. We also do a lot of survey work around brand consideration and intent and how you perceive Tinder. And all of those metrics are moving in the right direction. So that marketing work is clearly helping, and it's going to be a component of the strategy going forward as it needed to be. Previously, we're going to spend a portion of Tinder's revenue on marketing. It's not going to jump dramatically from where it's been, but I think incremental spending on marketing is going to be an important component of the strategy. There is a little bit less [ virality ] in the business than there was 10 years ago. That's hard to deny. There's more competition today than there was a few years ago. That's hard to deny. And so as a result of that, for Tinder to continue to do what it needs to do, we're going to need to have a focused marketing effort. That's a component of the strategy. It's not as large a component of the strategy as product innovation because that drives more people to the business and is much more important part of the strategy than marketing. That's a more minor part. Product is a more significant part. So all the innovation, the refresh that's coming and other things that are planned over the coming months and years are going to be critical to driving people back to the brand or to retain people in the brand and lead to the kind of financial performance that you and investors are rightly asking about.

Can you remind us what you view as the -- maybe a little bit of an update on the refresh and what are the biggest product features and innovations that you think will kind of get you to a [ flat ] here?

Well, in the short term, meaning like the rest of the year, there's 3 key things that we're focused on. One is the introduction of this new premium tier, which is imminent and, I think, could be a significant financial driver as well as an exciting opportunity for a select group of members at Tinder. There's another feature that's planned just after that, that we haven't specifically described yet, but we think it will change the experience on Tinder a little bit and will be exciting for people. So that's coming. And then there's this refresh, which is intended to appeal particularly to Gen Z, with a younger focus, allow people to go a bit more in depth if they want to. So have a more casual swiping experience if that's what they're used to and like about Tinder, but also go more in depth with content and information about the person, if that's what they want to do. So those 3 things are planned over the coming 3 months. It's a big push in the final quarter of the year to set us up with the momentum that we want to have as we get to the busy season, which really runs from Christmas to Valentine's there through most of the first quarter and get us with the right momentum into 2024, something that we didn't have in 2023, which is hard to overcome, and so we want to make sure we're well positioned. So you're seeing the effort on the marketing side, back-to-school push, highlighting some of these new features. That's all happening. The new product work is leading to these new things coming out as well. So you've got this double-barreled approach, which I think will give us the right level of momentum as we make the turn into 2024.

Okay. Got it. A little bit more on Tinder and then we'll move on to other things. One of the things that stood out and you really pointed to in your investor letter at earnings was some of those improvements you're seeing from new and reactivated users on the top of funnel. And then you shared some data around improvements in seeing kind of women sign-up. I think it was specifically in the U.K., but the weekly subscription has been a big driver of that. I know there's a big focus on the kind of more equitable share with women and making it a better experience. So can you talk about those 2 things and what you're seeing from there and quite positive on that?

What I would say about women is we're less focused on specifically driving revenue from women, although I think there's opportunity there because it does monetize better with men than it does with women. But the key thing is to attract and retain female users. And so marketing and product features that speak to women are critical to do that as well as making sure that women have a good experience while they're in the product. They feel safe. They feel secure. They feel well treated, respected, et cetera. Those are things that we're focused on. So it's a broad effort that we're making. It's a multifaceted effort that we're making to attract women and retain women. And I think we're making progress in that regard, but still clearly more work to do. So that's really the focus. The key, I think, takeaways when you look at weekly subscriptions is really that it has resonated really well. It's improved conversion very significantly across the board. It's particularly resonated with younger users, who I think maybe feel a little more concerned about their disposable income. And so committing to a month may have seemed too significant, but committing to a week, I think, seems more in the cards for them, and so that's really worked well. And so we're happy with the conversion lifts we're seeing, especially with younger users at Tinder from the weekly subscriptions. And so we've rolled that out now, the Hinge and other products just given demonstration of the success that, that feature has had. And so that's really, I think, the key thing. We showed in that letter the impact on conversion in the U.K. because you didn't have noise from price changes. If we had shown the U.S., you would have had the impact from price changes and from the introduction weekly. So to have kind of a clean comparison, we showed the U.K. Well, you see similar conversion improvement from weekly subscriptions in the various geographies. And so that's an important step forward when we talk about what success we're having. We conceptualize weekly subscriptions for Tinder. We rolled them out. They've been a big success, helped improve conversion, especially the younger people, which is a key demographic. And so we feel like that's a big win across the board.

Okay. Is the churn component different for weekly? Does that limit some of the visibility you have?

A little bit. I mean it's just we don't have as much data and experience with weekly. It's only a few months old. So you never know what are the retention rates, what are the renewal rates going to be. So we've actually gotten pretty good. I feel like projecting this now for Tinder. We had rolled it out on a couple of our other brands, and we kind of experimented and learned. We rolled it out with Tinder. Tinder behaved relatively similarly. So we had a pretty good sense what it was going to look like, but you're always tweaking a little bit. It varies a little bit by geography, et cetera. So -- but I feel like we have a pretty good handle on it. It creates this noise in the payer numbers where we got a boost in the second quarter and the third quarter in terms of weekly subscriptions as we rolled them out, and you're going to see that reverse itself in the fourth quarter. So it's creating this kind of mountain up, mountain down, but then we'll sort of have that work through the system. That's really the biggest issue.

Okay. All right. Let's switch gears to Hinge. Continues to see strong growth. It's on track. You noted 40% growth in 2023. It's going to have $400 million of revenue this year. It does imply a meaningful 2H '23 acceleration. Can you just talk about what's driving that acceleration and how confident you are that Hinge can deliver?

Yes. I mean I think the most important takeaway on Hinge is that, that product is really working and really resonating. And we're really happy with the growth. First of all, on users, when you look at it as it expanded internationally, Germany, France, Spain, it's really climbed the charts in all those markets. Everyone sort of says, well, we expected that. But the reality is you don't know until you go into these markets if the product is going to resonate in Germany. And if it resonates in Germany, is it going to resonate in France? You've got 2 different cultures. The fact that it's showing broad acceptability, broad interest in that product across the world, to me, is the most important factor, right? That's a big check mark in my mind. And so we've been making a lot of investments in Hinge to expand internationally. I think that's going to continue. And I would point to the core markets, which are really the English speaking markets, U.K., U.S., Australia, Canada, et cetera, and the user growth there is really strong, too. So Hinge is still very early in its monetization. It's very early in its life cycle generally. The user growth is critically important, and we're seeing really nice user growth in all the markets that it's focused on. That to me is the most important thing. And then when you add on strong user growth in the core markets and strong user growth in these new European expansion markets, and we rolled out 2 tiers. So if you kind of go back to your Tinder history, there was 1 tier, then there was 2 tiers, now there's 3 tiers, and there's soon to be 4. You look at Hinge, and you say, okay, it was 1, now it's 2. And those 2 tiers are working extremely well also and helping drive revenue. So when you look at the back half of 2023 compared to the first half of '23, you say, we're going to get serious revenue acceleration because all this user growth, we didn't have Germany, we didn't have France. We've got a lot more users to monetize. We've got 2 tiers of monetization instead of 1. We're going to get significant acceleration in revenue growth. And in fact, we're seeing that. We're seeing really strong Q3, and the outlook for Q4 remains very good as well. And that also is going to carry into 2024. All of this growth in users, all this investment is going to continue to pay. We're going to see really strong growth from Hinge into 2024 as well. So those things I can tell just by the trajectory that, that business is on. Whether it's $400 million or $402 million is not really that important in the scheme of things. The fast user growth, the international expansion, the fact that the things we're doing that are working are the critically important things. And so from a performance perspective, very pleased with how Hinge is doing.

Great. Given Hinge is earlier and how important product is, can you talk about the product innovation and upcoming product road map at Hinge? How that -- a lot of the growth is driven by monetization and international expansion. How does product play a role for Hinge right now?

The one thing I would say is that Hinge's ability to attract strong talent has really been phenomenal. And so we just hired a new Head of Product out of Facebook. He's probably been here, I think, since the spring. We hired a new Head of Trust and Safety out of Google, just from some big successful companies. And this team is really focused on what's next for Hinge on the trust and safety side, on the product innovation side. And I happened to see them in my office yesterday. They were having a big meeting talking about all these things. So I'm not going to spoil kind of their plans. We'll talk about it as we talk about our 2024 outlook. They've taken a wholesale look at the product and to try to reprioritize and figure out what they want to focus on. And we'll talk about that more as we make the turn. But it's something that they're actively focused on. We have, I think, a very strong team there with a lot of great ideas. I do think that user safety is going to be a focus. There's going to be some other innovation that they're going to do on the product side. That may be something that we haven't seen in the category yet. So there's a lot of interesting ideas coming out of there and more to come on the Hinge side. But I feel great about that team and what they're going to be able to accomplish.

Okay. Great. One maybe philosophical or kind of big-picture question. You mentioned there's more competition in the industry now. Do you think Hinge is a competitor to Tinder at all? Is it more complementary, people use it differently, people use both at the same time? That's an area that people kind of want to understand a little bit better.

I mean I think all of those things are true. There are lots of people who use 2, 3, 4 of these apps. They might use a couple of ours and a competitor. Some people will use one for a while and then decide they're going to try their luck somewhere else and then sometimes they come back. There's a lot of shifting around. It is a multiuse factor category. There's no question about that. At the same time, there is some natural competition among these apps. And so there is some overlap. And if one of them comes up with great product innovation, they will attract users as a result of that. And so we have some friendly sibling rivalry within our portfolio, which we foster and encourage. Hinge and Tinder kind of keep a little eye on each other, and we also share learnings and share mistakes so that we can avoid them and don't do them twice or 3 times. They also look outside of the competition and see what's going on there and have some focus on beating the competition, which I think they've been doing a great job at, especially in the last 6 to 12 months. So all of that is a factor. And then you've also got other factors. They're still competing with people meeting at work and school. They're still competing with people meeting through their grandmother. They're still competing with other ways to meet online, which there are many of those. And so that's always been the nature. When dating apps were first created, they competed extensively with people meeting on setups and blind dates and things like that because that's how everyone met. And dating apps have slowly captured more and more of the market because it's a better way to meet. You meet more people, you have more choice, et cetera. And so that's why the technology has been turned through time and time again. And as these apps innovate, they're going to attract more users as well. We've still got a lot of resistors to the category, let's say, 50% use the category and 50% don't. We've got to keep going after that 50% with innovation, however that may come. It may come from AI. It may come from group chat. It may come from video. There's lots of ways to innovate. But the category as a whole and we, as a leading player and a long-term player in the category, need to push on innovation to continue to attract more people into the category. That's got to be a key focus of ours.

Okay. You want to talk about AI? I feel like that's a good transition on that.

Sure.

Some of the things you're doing and how you think that improves the opportunity for bringing people on, both into the funnel and converting.

Well, look, if you look at the history again, it is helpful, right? The original dating apps were created on desktop. You had to kind of input your resume. It was a lot of work putting a lot of information. And then when Tinder came along, the innovation was, that's a lot of work, put some pictures up, a little bit of information, you can be swiping in 3 minutes, right? And that was really successful. People thought it was fun. It was interesting. You could do it quickly, and that has really worked. And that has been the gold standard for the last 12 years, right? There's been innovation on the model and changes around the edges, but that has basically been the gold standard. And it has led to a lot of benefits, and it also created some issues around a lot of choice, not sure when to stop swiping or what to do and then scary interactions for some people with a blank text box and the cursor blinking and saying, what do I put here? What do I say? And also, you still need to kind of provide your photos and present yourself, which for some people is very intimidating. So when we ask people, hey, would you like to meet someone? They say, yes. We say, do you use dating apps? They say, no. We say, why not? They say, well, figuring out which photos to you use is complicated. I don't really know what to write. I don't know what to say. We need to address those pain points that clearly exist in the category. That's the way to bring the resistors in. That's the way to continue to grow the category. So when we look at AI as a tool to use -- because we've been using AI since 2019 for matching algorithms, for safety, for moderation of photos, figuring out which photos are inappropriate. That has always been part of our toolbox on the product side, but we're trying to figure out now, can we use AI to reduce the pain points? Can we help people figure out what photos to use? We know what photos are more successful, what photos are less successful. We can look at your camera roll and say, these are your 5 best to go with. Job done, right? And we think for a lot of people who think of picking the photo as a pain point, right, especially for men, there's a significant drop-off. You go on to Tinder and sign up and then it says to you, please select a photo. And you're like, I don't really have a good photo. I don't know which photo to use. And so if AI can say to you, I see your 3,000 photos on your camera, these are the 5 to go with, that reduces the friction. That reduces the drop-off. That increases our user base and could be really helpful to the business. And so I think tools like AI, when I hear about what they can do, when I sit in meetings where people describe the thinking around what AI can bring to the table, it's really exciting, and we're pushing on a lot of things. So photo selection is one of them, giving context to matches is another one. You match me up with this other person and said, we're a match. Why? The person sees that on the app, they don't really know the answer to that. And so now AI writes a description, right, and says, we matched you because you both like hiking and skiing and whatever. And so that's really helpful. It gives people context, and it brings the person more alive than just the photo and the profile kind of sitting there. And so we've got people around the world who are now focused on harnessing AI and innovation to build out new ideas and improve the experience. And I think the sky is the limit in terms of what we can do. We're harnessing our team in Korea that is very skilled on the AI front. We're able to attract really good talent there, much more inexpensively than we could do in the U.S. Tinder has significant capabilities in AI. And so we're leveraging all of that, and we're going to try to push the envelope in terms of what's happened on these apps over the last 10 years. The last time we saw a real change in the technology was when the mobile phones came out. And you saw what happened in the dating category back then. There hasn't really been anything as interesting. I think we're in the early stages of what AI can do. We're going to roll out a series of things, leveraging AI to change the experience, and I'm very optimistic. But we have work to do. But again, I was in a meeting yesterday, and the team is super excited about rolling out a bunch of new ideas. I'm sure some will work and some will work less well, but we're going to keep bringing things out and trying to make the experience better, trying to reduce the friction for existing users and trying to make the category more appealing to people who have said, it isn't for me, I'm not ready yet, try to bring them off the sidelines and increase the satisfaction. And I think if we can do those things, we are going to see a step-change function in the outlook for the company.

Right. Can it help you with pickup lines?

What's that?

Can it help you with pickup lines?

The flip side of AI technology in dating is that we need to be thoughtful about people being authentic, right?

Right. You don't want to show a person [indiscernible].

Yes. It's like, well, we made you really funny in the app, but then when I met you in person, you were really boring, that is a bit of an issue for us. And so we just set up this board to try to analyze what we think is okay to do in AI and what's not. And we have some things to navigate there as I'm sure many companies do. For example, a photo of you skydiving even if you've never been skydiving, is that okay or not okay? A photo of you as Superman, is that okay or not okay? Well, probably nobody will think that you're actually Superman, so maybe that's safe. But a photo of you near your Lamborghini if you don't really have one, I'm not sure that we want to do that. So we have to figure out where to draw the lines and where not to. We've set ourselves up to do that. A little help on the pickup lines, maybe, but full personality change, probably not.

Yes. That was a joke, but I guess, much more serious topic than I expected. Okay, let's shift. So international kind of broadly, but -- so one of the big things since COVID that kind of hasn't come back the way you expected is Japan. Let's talk about that, and you mentioned at earnings something that's, I think, pretty meaningful in that you'll be able to start to advertise on TV. Can you talk about what's changing there and what you think that can do to improve Japan from here?

Yes. I mean Japan, I think of every market, has been the most confounding market to me in the last 18 months or so. That's a market that for us was growing 35%, 30% pre-COVID and even through most of COVID was okay. And then when they went into severe lockdowns, the market never bounced back, and it has stayed pretty flat from a growth perspective ever since then. And unfortunately, for us, it's an important market for us because we've got 2 big apps there, the top 2 apps, in Pairs and Tinder in that market. And it's always been a great market because it had low usage penetration and it has high per capita income. It's hard to find somebody in Japan. And so the dating apps are really valuable, and you got a lot of room to increase user penetration. So we were on a clear trajectory to do that with a more serious app in Pairs and a more casual app in Tinder. And then something happened in that market, and the user growth kind of disappeared. And it has stayed that way. And the only other thing I'll add to the color around that market is there's always been a pretty high level of stigma in that market. And that's why the penetration was pretty low. And so we needed to do more to beat back the stigma and to get people comfortable that dating apps were okay to use, that they were safe. And we've been working on building our credibility in that regard over the last 8 years as long as I can remember. And so the channel that has always been close to us, which has been very successful at breaking down the stigma in other markets, if you're old enough to remember, I think Match.com and eHarmony battled it out on TV in the U.S. for many years to get people to reduce the stigma and get people to use the apps, and that was successful, right? We needed to run a similar kind of play in Japan to increase credibility, reduce stigma, but the broadcasters there were unwilling to allow that to happen. And after a lot of discussions, they finally changed their mind as of September 1. We've been allowed to advertise on TV in Japan for the first time. And so we did start running a campaign in Japan on TV in a bunch of cities, in Tokyo and some of the other major cities on September 1. So it's been out for 4 or 5 days. I'm optimistic that, that's going to help turn the tide and give that market a shot in the arm. It's too early to say for sure. But it's a good tool for us, and I'm optimistic that, that will help turn the tide. We did hire a new CEO of our Pairs business as well, and he's been reexamining the app and trying to figure out where else we can take it to drive growth. So I'm expecting product innovation there and some changes in strategy to try to reinvigorate the growth as well. We can't have a flat Japanese market. We need to see growth in that market. We need to find a way to stir the growth, to build the growth, and the team is focused on doing so.

Okay. That's just for Pairs on TV right now, correct? Any expectation that Tinder could start advertising on TV also?

I don't know. You have to kind of apply app by app. Tinder hasn't made that move yet. Pairs and a couple of others have. Obviously, we'll watch to see -- Pairs will be sort of our guinea pig there. We'll watch to see what it does from a TV perspective. If it works, it would be logical to think that we'd want Pairs -- that we'd want Tinder to follow.

Okay. Let's talk about Hyperconnect for a sec. That was a big acquisition. A lot happened since then with -- I think IDFA was an impact there as well. And then you have COVID and struggled for a little bit. Seems to be gaining some footing here. Can you talk about where that is, your expectations for that going forward?

Yes. I mean there's a lot of reasons why Hyperconnect underperformed our expectations after the acquisition. It's frustrating to us, and we're not happy with the way that turned out. But at this point, it's water under the bridge. We just have to do work to get that business where it needs to be. And we're making progress. And we're happy with the progress we're making so far. So the first place we turned our attention was to the Azar app, which was its bigger app, a bigger piece of the revenue. And the team there, as I mentioned earlier, is very skilled on the AI side. They came up with a new AI-driven matching algorithm, which has really helped figure out who to get into conversations with and has helped on the monetization front as well. And we've seen a real turnaround in that business to double-digit growth rates again. And so we're really happy with the turn there. And I think there's real opportunity for international expansion of that app now that it's really working. And so we're going to try to push further into Europe, and we're going to try to push further into other markets as well. And I think we can drive real growth on a continuous basis in the Azar app. So that feels very good, a lot of progress. A heavy lift again, but I think we're clearly on the right track with that app. And they also have an app called Hakuna, and Hakuna has struggled a little bit to figure out what it should be. We've revamped the strategy, focused on live streaming. And the initial indications over the first few months of this new strategy are good. So I think we're finally headed in the right direction there. I'd like to see continued improvement in the Hakuna app. So it's a walk before you run strategy. Let's make sure it's working in its core markets, and then we'll sort of figure out where it goes from there. So those are the 2 businesses, the 2 brands within Hyperconnect. And then the other thing which I mentioned is there are tech capabilities, which are very significant. We're leveraging them on the AI side. So they've helped us build this photo selector tool, which we're going to use at Tinder, but it would be logical to think that we could use that in other of our apps as well. They're going to build some other things for us, which we're still discussing and thinking about. And they're also going to start to power our live streaming business, which we have been using a third party to power, but now we're going to bring that in-house and have Hyperconnect solution power our live streaming business. So we're using that as the backbone for the portfolio in AI innovation in live streaming, and that's a really helpful contributor as well. So kind of 3 pieces to the Hyperconnect story, Azar, Hakuna and then the tech backbone for a bunch of the Match Group portfolio.

Got it. Okay. I think we got more questions on Match than anyone in our coverage list. So I think we'll have some from the audience. But just one more before we do that. I just want to make sure we hit on margins. You ticked up your margin expectations for the year at earnings, expecting them to be higher now than last year. A lot of questions from investors around investments and margins and how to think about it. Any kind of color you can shed on that as you think about that this year or next year?

Look, I think our target for this year has been flat or better than last year, which I think has been very well received by the investment community, and we're going to be able to deliver better as opposed to flat. We're on track to do that. And so again, just like we're exceeding the 10% Tinder goal for revenue in Q4, we're going to exceed on margin as well. So growth and margin, especially in our space, is a good combination and unusual combination. So we feel good about that. And so I understand that, that's what we need to shoot for, for next year as well, should be a similar goal. We do have things to think about on the investment side, how much in Hinge and how many international markets and how much expansion. The Tinder marketing spend, it's working, as you asked about earlier, and we want to keep invigorating that. We've got some new bets, the game and dating app in Archer, which I think we should invest in next year. So there are some things to think about as well as AI and then we'll have to balance. We're also finding ways to save money in the corporate expense line at our Evergreen brands where we've been reducing marketing spend. So we'll have to balance all that out. That's going to be a subject of a lot of debate over the next 2 or 3 months as we kind of get into detailed planning for 2024. And as we get to the November call, I'm sure we'll shed some more light on 2024 margins growth, et cetera. And then, of course, we'll provide our detailed outlook for 2024 on the February call. So much more to come, but we're mindful of the considerations and the focus on this. And we're going to debate all this very vigorously.

All right. Great. We got a couple of minutes left. I can open it up, if there's any questions.

You missed everybody's favorite, capital allocation question.

Well, I have that here, but I want to give people a chance. All right. I guess people are shy.

Now you have to ask it, I guess.

Capital allocation. You [ set through ] buyback, bought more in 1Q than 2Q. People just want to, I guess, get a feeling for where you are in capital allocation and what you're thinking.

I mean, look, we think our stock is attractively priced. Given the fact that we're going to get to 10% growth and the margins or what we just talked about, we think the stock is attractively priced. We missed the window of opportunity last quarter to go buy it back in a significant way. We've been buying it back. I think we're around $300 million or so thus far on the buyback side this quarter. We're going to continue to be aggressive. As we've talked about with our revised capital allocation policy, we have a lot of excess cash flow. We can reinvest in our business and still generate a lot of cash. We don't have a desire to build cash just for cash's sake. And so we're going to return at least 50% of it to shareholders through buybacks or whatever means makes sense. And so we're pushing in that regard and feel good about it. And so we're trying to maintain somewhat of a pace, especially in situations like now when I think the stock is appealing as a buy candidate.

Does that change your approach to M&A at all?

Look, I think we just have to balance everything. We've historically been acquisitive. We haven't done a significant acquisition in a while. We're not really focused on M&A right now. We're focused on continuing to right the ship at Tinder, build on our opportunities with Hinge, The League, Archer, et cetera. And so I wouldn't rule anything out. I think they're more likely to be tuck-ins than major acquisitions, but the market continues to move around. Things have gotten cheaper as a whole over the last couple of years. So we'll continue to be looking at things and interested and we'll have to manage the balance sheet. But the good news is we have lots of capital. We have flexibility, and we'll do whatever we think generates real returns for our investors.

Great. We're out of time. Thanks, Gary.

Thank you.

Thanks, everyone, for joining.