Match Group Inc Q4 2016 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Jason Helfstein - Oppenheimer & Co. - Analyst : I will ask two, so just to start, the deal you started with Facebook is that a change in strategy? Are you thinking about -- the reason I think there was a discussion that you guys doing more of it on your own, what made you change your mind if it is a change and without giving us exact details, do you think you are getting better terms now from Facebook that you would have gotten 12 to 18 months ago? And then with respect to the guidance, you referenced revenue guidance is back end loaded. It's IE you expect growth to accelerate as you move through the year. How much without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies. FEBRUARY 01, 2017 / 1:30PM, MTCH.OQ - Q4 2016 Match Group Inc Earnings Call of that is dependent upon marketing spending? So IE, you spend more, you hit the higher end of the range or IE you spend lower at the lower end, but you see better margins? So kind of take us through those dynamics. Thanks.

Question: Jason Helfstein - Oppenheimer & Co. - Analyst : Thank you.

Question: Peter Stabler - Wells Fargo Securities, LLC - Analyst : Thanks very much. Good morning, a couple if I could. Greg, could you give us a little bit more color on your comments on the Affinity. Yes, we know that you mentioned that in Q3, just wondering given that some of these are -- most of these are hard paywall assets, what's your commitment to them? Are these strategically important, could you envision a scenario where you reduce the number of Affinity brands? And then one for Gary, could you give us any more color on the PMC outlook now that we are past the pro forma issue with POF, 15%, would you be willing to give us any sort of separation between Tinder and non-Tinder assets? Thanks so much. without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies. FEBRUARY 01, 2017 / 1:30PM, MTCH.OQ - Q4 2016 Match Group Inc Earnings Call

Question: Peter Stabler - Wells Fargo Securities, LLC - Analyst : Very helpful. Thanks.

Question: Douglas Anmuth - JPMorgan - Analyst : Thanks for taking the question. Can you just translate that conversation that we just had on PMCs into revenue a little bit more? And just thinking about the 2017 guide you are at 15% to 20% growth before and now at about 13% to 17%, I know Gary you called out the 1.5 percentage points of impact from FX. Is it fair to think that the rest there is all in the classic brands, if you could just clarify that or if there's something else? And then also can you just talk about your confidence in having flat EBITDA margins given the doubling of the Tinder tech headcount, marketing investments, how you see that playing out through the year? Thanks.

Question: Douglas Anmuth - JPMorgan - Analyst : What is the spend at Tinder on headcount and marketing --

Question: Douglas Anmuth - JPMorgan - Analyst : Okay. If I could just follow with one -- just on a one-time basis, maybe just because we're kind of kicking off the year, is there any color you can give on total dating MAUs, DAUs, just to help us level set around the business and the brands?

Question: Douglas Anmuth - JPMorgan - Analyst : Got it. That's helpful. Thank you.

Question: John Blackledge - Cowen and Company - Analyst : Great. Thanks for the questions, so Greg you transitioned to CEO of Tinder in December. Could you just discuss the rationale for the move and perhaps the biggest strategic initiatives you're thinking about for Tinder in 2017 and going forward? And then secondly, just a follow-up on the sub question, with Match North America and OkCupid returning to kind of PMC growth in the back half of 2017, how should we think about longer term core Match North America sub growth starting in 2018 and going forward? Do we get back to kind of mid single-digit, high single-digits sub growth in 2018 and going forward? Thank you.

Question: John Blackledge - Cowen and Company - Analyst : That's great. If I could just have one follow-up, you didn't call Tinder advertising out as a driver, you called PMC growth and a la carte, but with direct advertising revenue tripling in 1Q, just trying to figure out how you look at ad load. In 2016 was it 1 of 100 swipes were an ad and where is that going, is it 1.5 or 2 out of 100 swipes in 2017 will be in ad, when you factor in Facebook and ramping up direct sales? Thanks.

Question: John Blackledge - Cowen and Company - Analyst : Great. Thank you.

Question: Chris Merwin - Barclays Capital - Analyst : I just had a couple. You talked about the Facebook partnership for Tinder a bit but is there an opportunity to extend that partnership to the rest of your brand? And how are you thinking about integrating ads more generally in a way that's additive to revenue and doesn't impact engagement? And then secondly, on Tinder, as you start to push a la cart a bit more, do you anticipate any increase in churn if users are able to use some of these features without having to sign up for a subscription? And in that case, does it make sense to start reporting a la carte separately? Thank you. without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies. FEBRUARY 01, 2017 / 1:30PM, MTCH.OQ - Q4 2016 Match Group Inc Earnings Call

Question: Chris Merwin - Barclays Capital - Analyst : All right. Thank you.

Question: Lloyd Walmsley - Deutsche Bank - Analyst : Thanks guys. A couple if I can, sounds like you are pretty excited of the ROW opportunity for Tinder and some of the marketing experiments you've been running. Can you just kind of talk about the competitive environment in some of these bigger markets, like is it pretty open or are there local incumbents you're going up against? And secondly on the Tinder web app, are there any markets where you've rolled that out on a test basis that give you any indication of how much low hanging fruit there might be? Or is that kind of rollout just happen at once across geos, how should we think about that rollout and any tests you may have run.

Question: Lloyd Walmsley - Deutsche Bank - Analyst : Okay thanks guys.

Question: Eric Sheridan - UBS - Analyst : Thanks for taking the question, maybe two if I can. One, on Tinder, as we continue to see strong subscriber growth and obviously the monetization comes through, what are you seeing in terms of engagement with the platform as you layer monetization on top of it? So if we were to look at an older cohort of Tinder users, any color you could give us about either improvements or flat in terms of the engagement trends broadly and towards the older cohorts? And question two, I don't know if we touched upon it early in the call, but on the Affinity disclosure with respect to lower subs and lower marketing spend, as you sort of sort through that business, is there any way to quantify the impact, either on a sub basis or a marketing basis for Q4? Thanks so much.

Question: Eric Sheridan - UBS - Analyst : Thanks.

Question: Dan Salmon - BMO Capital Markets - Analyst : Hey guys good morning, one for each of you. Greg, as you look out, I know it's very early in the marketing spending that you are investing in the rest of world for Tinder just yet, and I'd assume usage PMC growth. Those are the early things, thinking of users and growing the number of people using it. But when you look at sort of early monetization, are there any sort of early insights to take? One assumes that sort of emerging markets typically monetize at lower rates than Western markets, but just interested if you're seeing any early dynamics there on monetization? And then for Gary, could you just get a little deeper into the CapEx and the reduction there and how you look at it on a bit more of a run-rate basis? Thanks.

Question: Dan Salmon - BMO Capital Markets - Analyst : Great, that's very helpful. Thank you to both.

Question: Victor Anthony - Aegis Capital - Analyst : Thanks. Maybe two questions. In the past you've talked about resubscription conversion as well as older cohort conversion as an opportunity, so maybe you could talk to that and what your expectations are for 2017? And on capital allocation, you call it M&A as you have in the past, so maybe you could talk to what's missing from the portfolio, maybe you could go outside of your core platform? Thanks.