Match Group, Inc. (MTCH) Earnings

Management highlights

### Tinder Turnaround Progress - After a year of product improvements, monthly active user (MAU) declines narrowed to 7% year-over-year in Q2 (an improvement from an 8% decline in Q1), and daily active user (DAU) declines improved to 4% year-over-year in Q2 (the best result in 10 quarters), falling to just 2.5% year-over-year in July. DAU is expected to turn positive year-over-year imminently, which would be the first positive reading in over three years. - Key product innovations launched or tested include: in-app real-world Events (currently live in 10 US/European cities, expanding to 26 by end-September and 75 by end-2026), Missed Connections, text-based search in Canada, updated recommendation algorithms, a full global rebrand (first in a decade) with positive early engagement results, and improved trust and safety features. Payer penetration grew year-over-year in Q2, and direct revenue per MAU increased 6% globally. - AI has accelerated product development timelines, allowing faster execution of the Gen Z-focused roadmap, and employee engagement at Tinder is at its highest level in years. ### Hinge Growth Strategy - Hinge delivered 13% year-over-year global MAU growth in Q2, driven by international expansion, with double-digit aggregate revenue growth even in scaled core markets. It remains on track to hit $1 billion in annual revenue by 2027. - Recent product launches and tests include: Friends Take (lets friends/family contribute to user profiles), AI-powered recommendation improvements, pre-filled account setup for returning users, and Signals (which rewards thoughtful participation and enables subscriber filtering). Hinge will test a new additional subscription tier in Q3. - Hinge entered 6 new European markets in Q2, with 86% year-over-year direct revenue growth in European expansion markets, and maintains the top downloaded dating app position in aggregate across these markets. Asia (starting with India) is the next major expansion target. ### E&E Restructuring - Match Group completed a strategic review of the E&E portfolio (which includes Asia-based Azar and Pears, plus niche brands like BLK, Match, R-Time, and Upward) and refocused resources on a smaller set of high-potential brands, after completing major platform migrations. - E&E brands are leveraging shared Match Group capabilities (trust and safety, algorithms, marketing, analytics, event infrastructure) under the shared 1MG framework, with early progress already visible. Azar's post-App Store removal redesign revenue impact was $5 million better than expected in Q2.

Guidance

- **Q3 2026 Guidance**: Total revenue is expected to be $885 million to $895 million, down 2% to 3% year-over-year (down 1% to 2% FX-neutral), including a $10 million negative impact from Tinder user experience tests and a $15 million negative impact from the Azar app redesign. Adjusted EBITDA is expected to be $330 million to $335 million, representing a 10% year-over-year increase, with a 37% adjusted EBITDA margin at the midpoint. - **Full-Year 2026 Guidance**: Total revenue is expected to be near the midpoint of the prior February guidance range on an as-reported basis, and at or above the midpoint on an FX-neutral basis. Full-year indirect revenue is still expected to decline in the mid-teens percent. - Tinder direct revenue is now expected to decline in the low single digits, an upward revision from prior guidance. The full-year negative revenue impact from user experience and product tests is now expected to be $30 million to $40 million, a meaningful downward revision from the initial $60 million estimate, driven by no unexpected revenue impact from the global rebrand. - Hinge full-year direct revenue is expected to be in line with prior February guidance. - E&E direct revenue is now expected to decline in the mid-teens percent (a downward revision from the prior low double-digit expectation), driven by the Azar app redesign. E&E adjusted EBITDA margin is now expected to be in the high 20%, up from the prior mid-to-high 20% guidance. - Full-year free cash flow is expected to be at the high end of the prior guidance range, and stock-based compensation expense is expected to be $230 million to $240 million, a $20 million improvement at the midpoint from initial guidance. - **Long-Term Tinder Outlook**: Management expects Tinder MAU to be flat by Q4 2027, with payers returning to growth by Q4 2027, and full-year 2027 Tinder revenue to be up over 2026.

Segment performance

Match Group reported total Q2 2026 revenue of $853 million, down 1% year-over-year (down 2% on a foreign exchange neutral basis), with total adjusted EBITDA of $331 million, up 14% year-over-year, for an adjusted EBITDA margin of 39%. 1. **Tinder**: Direct revenue was $457 million, down 1% year-over-year (down 2% FX-neutral), contributing 53.6% of total Match Group revenue. Payers declined 5% to 8.5 million, while revenue per payer (RPP) increased 4% to $17.90. Adjusted EBIT was $233 million, down 5% year-over-year, for an adjusted EBIT margin of 50%. 2. **Hinge**: Direct revenue was $204 million, up 22% year-over-year (up 20% FX-neutral), contributing 23.9% of total Match Group revenue. Payers increased 17% to 2 million, while RPP increased 4% to $33.11. Adjusted EBITDA was $79 million, up 48% year-over-year, for an adjusted EBITDA margin of 39%. 3. **E&E (Everyone Everywhere)**: Direct revenue was $179 million, down 17% year-over-year (down 17% FX-neutral), contributing 21.0% of total Match Group revenue. Payers declined 21% to 2.7 million, while RPP increased 4% to $22.24. Adjusted EBITDA was $54 million, up 69% year-over-year, for an adjusted EBITDA margin of 30%.

Risks & headwinds

- Product tests and UI/UX changes for Tinder's product turnaround can create short-term negative impacts on revenue and payer counts, even as they benefit long-term growth. - Azar's required App Store redesign following its removal in March 2027 has created persistent negative revenue pressure for the E&E segment, with a continued expected $15 million quarterly headwind. - Regulatory and legal changes to app store commission structures (particularly for Google Play) have delivered less cost savings than management initially expected, limiting potential margin benefits. - Legal disputes over app store payment policies with Apple are still working through the court system, creating uncertainty around future commission costs. - Broader category headwinds, including consumer hesitancy around traditional one-on-one online dating and shifting user preferences among Gen Z, create pressure to continuously evolve product offerings to retain product-market fit.

Analyst Q&A

• Q: What is driving the faster-than-expected improvement in Tinder DAU, how will the events feature scale to drive user growth, and what is July MAU growth?

  A: DAU improvement is the result of widespread product changes across all areas of Tinder over the past 12 months, with recommendation algorithm upgrades identified as the single biggest driver of improved retention. Key engagement metrics (matches, spark coverage, DAU) have continued to improve sequentially from Q2 to July to August, with DAU now almost positive year-over-year. A: Events are scaled cost-effectively via third-party partnerships, and even non-attending users benefit from perception shifting driven by social media amplification, so the initiative can drive reconsideration even with relatively low direct event attendance. Management did not share July MAU data due to incomplete final auditing of monthly metrics. ---

• Q: Why is payer penetration up but total payers still down at Tinder, and what is the expected lag between DAU improvement and MAU/payer growth?

  A: Payer declines are smaller than MAU declines, which is why penetration is up, a consistent long-term trend that has held for several quarters. Short-term disconnects between quarterly metrics stem from planned product and user experience tests that can temporarily impact payer counts, but are viewed as necessary for long-term growth. A: Management expects payer declines to narrow further in the second half of 2026, which is already baked into the current guidance, consistent with the expected lag of turning around user metrics first before monetization metrics improve. ---

• Q: What is the long-term evolution of the Tinder user experience, and why was the expected negative impact of user experience tests revised lower for full-year 2026?

  A: Tinder is shifting from a photo-first product orientation to one that highlights more holistic user compatibility, including text-based prompts and more contextual profile information aligned with changing Gen Z preferences. This work is ongoing, with ongoing testing to balance user experience improvements with monetization. A: The original full-year negative impact estimate of $60 million was set with a conservative buffer for potential revenue disruption from Tinder's global rebrand. No material revenue impact materialized, and engagement was actually positive, so the full-year expected impact was lowered to $30-$40 million, with remaining uncertainty tied to ongoing testing of the new profile experience. ---

• Q: What is your outlook for Tinder pricing, and how will scaling the events feature impact margins?

  A: New product features like events and search create new potential surfaces for monetization, but management has not yet finalized a strategy for monetizing these features, and will leverage learnings from Hinge's upcoming new subscription tier to inform 2027 Tinder pricing decisions. A: Events do not create material incremental costs: product/engineering and marketing costs are reallocated from other initiatives, the small event sourcing team uses AI to scale efficiently, and the event infrastructure will be amortized across multiple Match Group brands, so there is no material negative impact to Tinder profitability.