MTCH - NASDAQ

Good morning, and welcome to the Match Group Third Quarter 2023 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Tanny Shelburne, Senior Vice President of Investor Relations. Please go ahead.

Thank you, operator, and good morning, everyone. Today's call will be led by CEO, Bernard Kim; and President and CFO, Gary Swidler. They'll make a few brief remarks and then we'll open it up for questions. Before we start, I need to remind everyone that during this call 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 earnings release and our periodic reports filed with the SEC. With that, I'd like to turn the call over to BK.

Thanks, Tanny. Good morning, everyone, and thank you for joining today's call. I come to work every day energized because I get to work at a company dedicated to helping people find love, happiness, and human connections. That inspiration not only inspires me, but also our teams, and has enabled another strong quarter of strong operating and financial results from Match Group in Q3, highlighted by a second consecutive quarter of record total revenue and AOI. Our businesses have demonstrated that setting clear goals and objectives can not only build momentum in the current year, but also set up our company for a bright future. Tinder is a great example of this. Tinder's business model was built largely on virality, but it's not lost on me how important it is to continue to drive forward with innovative marketing and product initiatives, while also rebuilding the revenue momentum that Tinder has enjoyed for so long, not just in 2023, but for years to come. Looking at 2023 thus far, I deeply believe we made the right decision in prioritizing revenue growth initiatives at Tinder with U.S. price optimizations and weekly subscription packages. While we recognize that these actions have created short-term volatility in Tinder's Payer count, we're essentially resetting Tinder's Payer base at a significantly higher rate, which has enabled double-digit revenue growth one quarter ahead of our initial expectations, and outcome that we're very pleased with. The other component of Tinder's ongoing success is centered on product and marketing initiatives that reignite user growth and improve its brand narrative. We saw great strength through June in terms of total signups and reactivations as a result of the It Starts with a Swipe campaign. However, in late summer, Tinder pulled back its spend on the campaign, and concentrated more heavily into female-focused messaging. Although overall user trends remain slightly down as a result of the pullback, Tinder's younger female signups did not see the same pullback, proving that we continue to make good progress with this critical demographic. Tinder also began marketing again on college campuses for the first time in three years, and launched a new feature, called Matchmaker, in mid October, both of which feature well-known rappers as part of their campaigns. We are so excited to leverage the power of music into our work because we know how core it is to the lives of Gen

Thanks, BK, and hello everyone. Thank you for joining us this morning. The momentum in our financial performance strengthened again this quarter, and we hit our financial target of 10% Tinder year-over-year direct revenue growth one quarter earlier than we'd been expecting. As BK mentioned, we achieved record quarterly total revenue as well as record AOI NOI at Match Group in Q3, a clear demonstration of the financial power of the business. We're pleased by the revenue momentum at Tinder, and also by the exceptional user and revenue momentum at Hinge. Our judicious focus on costs across the company is enabling us to invest in our growth businesses and deliver record profits. Match Group's total revenue for Q3 was $882 million, up 9% year-over-year, compared to up 4% year-over-year in Q2. FX was a notable headwind once again and $10 million more severe than we anticipated at the time of our last earnings call. Tinder outperformed our expectations in the quarter as the revenue momentum we saw from price optimizations in the U.S. and weekly subscriptions continued to deliver. Tinder direct revenue was up 11% year over year at $509 million in Q3. Tinder RPP was 18% year over year at $16.28 due to the U.S. price optimizations and weekly packages. In the U.S., Tinder RPP was up 42% year over year. Tinder's U.S. price increases and the rollout of weekly subscriptions in the U.S. and a handful of key international markets have played an important role in accelerating revenue growth as the year has gone on. These optimizations have increased RPP dramatically and have clearly been revenue-enhancing at Tinder. However, they have also had impact Tinder's payer count this year. Q3, Tinder payers declined 6% year over year to 10.4 million, largely due to the U.S. price increases. Tinder payers were down by 56,000 sequentially in Q3 as weekly subscribers in the U.S. rolled off, partially offset by the addition of weekly subscribers in several key international markets. The sequential impact on Q3 payers from U.S. pricing optimizations was modest and far less than in Q2 as a majority of U.S. members had already been subject to the higher pricing. Tinder top-of-funnel trends, which includes new registrations and reactivations of lapsed users weakened slightly in Q3. Tinder pulled back on some It Starts with A Swipe brand marketing spend in late July and early August, electing to concentrate efforts on several key marketing initiatives in the back-to-college season in late August and September, which affected top-of-funnel trends in Q3. In the U.S., new users were down 6% year over year in September compared to June when they were down 2% year over year. That said, over that same period new users consisting of women 18 to 29 years old did not see the same step back, demonstrating the impact of Tinder's sharper focus on younger women. Our Hinge brand continues to perform exceptionally well. Hinge grew direct revenue 44% year over year, a 9 point acceleration over Q2. Hinge experienced strong user growth in both core English-speaking markets and its European expansion markets, leading to 37% year over year download growth in Q3. Hinge Q3 payers were 33% year over year at over 1.3 million while RPP of nearly $27 was up over 8% year over year again in Q3. Our Match Group Asia business saw a direct revenue decline 5% year over year to $77 million in Q3, but it was up 2% FX neutral. At Hyperconnect, Azar grew direct revenue 20% year over year as implementation of a new AI driven matching algorithm continued to drive meaningful increases in engagement and conversion. While Azar has been a real bright spot, Hakuna payers saw year over year direct revenue declines in Q3. The Japanese market continues to experience sub-par user growth although we have seen some recent improvement as a result of the new T.V. ad campaigns. At our Evergreen and emerging brands, direct revenue declines moderated to 3% year over year, which was a notable improvement compared to Q2 which itself was better than Q1. Indirect revenue was $15 million in Q3. Up 3% year over year driven by an increase in ad impressions. Q3 adjusted operating income or AOI was $333 million after just surpassing $300 million for the first time ever last quarter. It was up 17% year over year, representing a margin of 38%. Up 3 points year over year. Operating income was up 16% year over year to $244 million in Q3 for a margin of 28%. Up 2 points year over year. Overall expenses including SBC expense were up 7% year over year in Q3, but down 2 points as a percent of total revenue. Cost of revenue including SBC expense grew 3% year over year and represented 29% of total revenue. Down 2 points year over year as live streaming cost declined $6 million year over year. App store fees increased $19 million year over year, half a point as a percentage of total revenue. The quarter included a final $3 million escrow payment to Google in July. Selling and marketing cost including SBC expense increased $24 million or 18% year over year. Primarily due to increased spend at Tinder and at Hinge as it continue to expand internationally, offset by lower spending at multiple other brands. Selling and marketing spend was up 1 point as a percent of total revenue at 17%. G&A costs, including SBC expense, declined 6% year-over-year, and dropped 2 points as a percentage of total revenue to 12% as legal and professional fees declined by $9 million year-over-year. Product development costs, including SBC expense, grew 7% year-over-year, primarily as a result of higher compensation expense due to increased head count at Hinge, and were flat as a percentage of total revenue at 11%. Depreciation was up 62% year-over-year, or $7 million to $17 million, primarily due to an increase in internally developed software placed in service. Interest expense increased $4 million, or 10% year-over-year in Q3, to $40 million. Primarily due to higher interest costs due to the floating rate structure of our term loan. While interest income increased $7 million, given higher rates we're earning on our cash balances. Our gross leverage was 3.3 times trailing AOI, and net leverage was 2.7 times at the end of Q3, below our target of less than three times. We ended the quarter with $713 million of cash, cash equivalents, and short-term investments on hand. During the early part of the quarter, we repurchased $6.7 million of our common shares at an average price of approximately $45 per share, totaling approximately $300 million. Through September 30, 2023, we have reduced outstanding shares by 2.8% from our beginning of the year share count. Net of shares issued under employee equity programs. We now have $667 million remaining on our $1 billion share buyback program, providing ample ability to continue to buy back shares. As we discussed in the letter, the company has minimal capital expenditures and significant free cash flow generation. We disclosed in May that we intend to return at least 50% of our free cash flow to shareholders via buyback or other means. We intend to use the remainder of our free cash flow, first to invest in our businesses, which continue to be the best way to drive shareholder value. As we have shown with newly incubated apps like Chispa, BLK, and now Archer, as well as with various new product initiatives, we're confident we're funding the right new bets through our P&L. But M&A has always been a meaningful component of our strategy as well. And we intend to maintain financial flexibility to pursue M&A as a second use of free cash flow. I want to emphasize though that the bar for M&A is high. And we expect acquisitions will be in our category or near adjacent and consistent with our stated mission or of tech capabilities that we need to help accelerate delivery of our mission. If we do not find compelling acquisition opportunities, we expect to return the remaining excess capital to shareholders as well. Turning to our financial outlook for Q4 '23, we expect total revenue for Match Group of $855 million to $865 million up 9% to 10% year-over-year. This range reflects $27 million more of FX headwinds than we had anticipated at the time of our last earnings call, as well as risk that our brands will not generate a portion of the approximately $7 million quarterly revenue that we derive from Israel, given the ongoing events there. It also reflects approximately $3 million less than we previously expected because of trends we are seeing in our ad sales business. Where we've seen a number of advertisers delay or pull scheduled Q4 campaigns. Also note that Q4 tends to be a weaker quarter sequentially than Q3, as data start to focus on the holiday season in November and December. We expect FX to be less than a 1 point year-over-year headwind in Q4. That said, we continue to expect significant FX volatility as we've seen over the past three months. At Tinder, we expect direct revenue to be up approximately 11% year-over-year in Q4, a second consecutive quarter of double-digit year-over-year direct revenue growth, and again reflecting seasonal trends. We expect FX to be less than a 1 point year-over-year headwind. Our outlook attempts to factor in the likely impacts of a weakening consumer, as well as the resumption of U.S. student loan repayments on Tinder's more discretionary a la carte revenue. We expect Tinder RPP to increase year-over-year in Q4 at slightly greater levels than in Q3, and Tinder payers to decline slightly more year-over-year than in Q3. The additional year-over-year payer decline reflects the late summer weakness in Tinder's new user and reactivation trends. In Q4, we expect Tinder's sequential payer count to be negatively impacted as weekly package subscribers continue to fall out of the payer count, but without the offsetting benefit of the initial rollouts of weekly packages in large markets that we had in Q2 and Q3. We estimate this to be more than a 200,000 negative sequential impact to payers. We expect Hinge to deliver meaningfully accelerating year-over-year direct revenue growth again in Q4, driven by continued strong performance in English speaking markets, continued European expansion, and various monetization initiatives. We remain confident that Hinge's momentum will lead it to deliver approximately $400 million of direct revenue in 2023. We expect MG Asia direct revenue to be down mid-single-digits year-over-year in Q4. We expect similar year-over-year direct revenue growth rates for Hyperconnect payers in Q4 as in Q3. We expect our evergreen and emerging brands direct revenue to decline mid-single-digits year-over-year in Q4, with continued strong growth at the emerging brands. We expect indirect revenue to be down modestly year-over-year in Q4, given the weakening ad demand with advertisers pulling or delaying several campaigns. We expect AOI of $305 million to $310 million in Q4 representing year-over-year growth of 7% to 9% and margin of 36% at the mid points of the ranges. We expect overall marketing spend to increase modestly year-over-year in Q4, with a meaningful increase at Tinder and some of our newer growth apps, including Archer and The League. For full-year 2023, Match Group is on pace to achieve approximately 5% top-line growth and deliver slightly better AOI margins than we did in 2022, consistent with our recent expectations. Our Q4 and full-year 2023 results do not include the impact of the settlement with Google that was reached yesterday. We expect to enter 2024 with momentum to deliver 10% plus year-over-year total revenue growth early in the year. The most critical component to maintaining that level of revenue growth for the full-year will be the ability of Tinder's ongoing marketing and product initiatives to deliver as the impacts of the '23 optimizations anniversary. At the moment, we feel confident in the team's execution and believe the most likely outcome is for full-year, '24 year-over-year total revenue growth in the high single-digits. But we want to allow Tinder's execution momentum to build for another quarter before pinpointing a precise '24 year-over-year total revenue growth expectation. We also want to continue to monitor the volatile macro environment to assess that impact on our outlook. These factors could drive our revenue growth outlook positively or negatively. We've assumed FX to be a two point headwind for full-year '24 total revenue growth, but that also could change materially given current macro conditions. We believe we can deliver AOI margins at least at the same level as we expect to deliver in '23. There are a few anticipated margin headwinds that are out of our control, including App Store fees and compliance costs related to the EU's Digital Services Act. There is also some uncertainty around digital services taxes in certain markets, such as Canada, which would affect AOI. We have attempted to incorporate the impact of the Google settlement into our '24 margin outlook. We are currently deep in our planning process for '24. We're contemplating investments in innovation and particularly in AI to drive new sources of monetization, resolve user pain points to increase our product's value, and potentially build new apps that can deepen our TAM penetration. We're also carefully analyzing the appropriate level of marketing spend to drive user growth at Tinder, Hinge, and some of our newer apps. We expect spend reductions in other areas to help offset the impact of increased spend in these areas. We also expect to limit hiring to positions that are vital to driving growth. Our current expectation is for Tinder to deliver direct revenue growth in a high single-digit range next year, through a combination of RPP growth and improving year-over-year payer growth throughout the year. We expect the non-Tinder brands to collectively deliver direct revenue growth in a high single-digit range in '24. At Hinge, we expect similar year-over-year direct revenue growth as in '23, in excess of 35% and a continued focus on driving share gains in its core and European markets. We're pleased by the momentum we've seen in the business over the past two quarters. It is the result of a lot of hard work from many people across the portfolio. We're confident that this momentum will carry into 2024. Importantly, our setup entering next year is much better than it was for 2023. While we're happy with the progress, there is still a lot to do, especially at Tinder. We're delivering stronger user trends and sustained payer and revenue growth is paramount, and in product innovation across the portfolio, particularly in harnessing AI capabilities to increase adoption of our products and drive higher monetization. With that, I'll ask the operator to open the line for questions.

We will now begin the question-and-answer session. [Operator Instructions] And our first question comes from John Blackledge of TD Cowen. Please go ahead.

Great, thanks. Gary, maybe could you discuss further the puts and takes of your initial view on the '24 revenue growth and margin assumptions? Thank you.

Sure, John. Let me give it a shot at unpacking some of that for you in a little detail. I think on the revenue side, the biggest swing factor for 2024 performance is really, of course, related to Tinder; how well the execution continues to be, how much delivery of growth Tinder delivers in 2024. And as we've talked about many times, we feel really good about how the team is executing, the product velocity, the marketing initiatives. And so, we've been planning for this for a while, and we are aware that Tinder needs to deliver in 2024 on both top of funnel and on improving payer conversion and overall payers and revenue. And so that is probably the biggest swing factor as we look at the 2024 revenue guidance. The second factor that I would point to, and we called it out, is the macro environment. We're particularly monitoring Tinder on that front because there's a lot of younger users there with less disposable income. There's a lot of à la carte revenue at Tinder, which tends to be a more discretionary purchase. And so, we're watching to see what happens in the economies globally as we turn the corner in '24. We know the consumer has held on well to this point, but we're increasingly nervous about what's to come in the months ahead. And we're factoring that into our thoughts on outlook for '24 revenue as well. And then you've got the events in the Middle East, the horrific events going on in the Middle East that we're obviously monitoring very closely as well. We quantified the impact of that on our fourth quarter, but obviously much more challenging to get visibility on what's going to happen across the Middle East and what the impact is going to be on our business specifically, which obviously a more minor concern but nonetheless something we're trying to factor in as we think about '24. And then last but sort of relatedly to the economy and what's going on in the Middle East as well is what happens with FX rates. We use the forward curve to predict the FX impact for the coming year. And we've done so again this year. But as we've seen consistently and repeatedly, the forward curve tends to be not always the best predictor of actually what's to come, and there's been a lot of volatility in FX rates. And I think it's fair to assume that that volatility is going to continue as we go forward. And so that's another swing factor on our 2024 revenue growth outlook. I think those are the biggest ones. Obviously, there are others, but I would call those out. On the margin side which you asked about, in addition to the contribution from Tinder, I mentioned that we're analyzing the incremental marketing spend at Hinge, at some of our newer growth businesses like Archer and The League, and also at Tinder. I think we will have some guardrails on the increased marketing spend at Tinder. I don't see that being more than a point or two of revenue next year, incrementally, but it's something that we're analyzing as we go through our planning process, and we'll have more of an update as we get into the early part of next year. But we do recognize that we need to continue to build the brand narrative at Tinder, and to supplement the viral growth with marketing as BK talked about in his remarks. And I think that we can offset the incremental marketing spend at Tinder, should we choose to do that, with reductions elsewhere across the portfolio, which is something that we've been doing through the course of '23. And then last, I would point to innovation, which I called out in my remarks as well. We think it's critically important that we make the proper level of investments in innovation to drive more users into the brands and to increase the value of our products to the users. We think that AI is really providing us with a once-in-a-decade opportunity to do that. And we want to make sure that we harness that opportunity and make the right level of investments in AI. We're still trying to calibrate what that means in terms of hiring, in terms of adding capabilities. We want to do this in a disciplined way, and we're cognizant that we're still very early on in AI and what it requires and what the opportunity is. So, we want to calibrate this properly, and it's something that we're carefully doing, and we'll have more on that as well as we make some final determinations and provide a more detailed outlook, in February, for 2024. But I would say the marketing investments, the AI investments are the two biggest "Swing factors" on margins that I would point to for '24. So, I hope that's helpful and I answered your question with a little more detail.

Thank you. Thanks, Gary.

The next question comes from Shweta Khajuria of Evercore ISI. Please go ahead.

Okay. Thank you for taking my question. Could you please provide a high-level overview of the top-of-mind product and feature investment areas for Tinder that you think will have maximum impact on payer growth next year? Thanks a lot.

Thanks, Shweta, for that question. I can take that one. There's a lot going on with our Tinder team. And this is our daily grind, but we continue to evolve the product experience that resonates with our users. And we're continually listening to what Gen

Thanks, BK.

The next question comes from Justin Patterson of KeyBanc. Please go ahead.

Great, thank you very much, and good morning. I was hoping you could comment on when you think weekly payers can get back to more normal growth? You alluded to less sequential volatility within the letter, but curious if you have a more [clear view] (ph) there. And then related, as we're a few more months into this now, I would love to hear you comment on just your learnings on accretion and lifetime value from these weekly plans? Thank you.

I just want to make sure I understood your question, Justin. You asked about weekly payers returning to year-over-year growth or payers, more broadly, at Tinder?

Great, thank you.

The next question comes from Cory Carpenter of J.P. Morgan. Please go ahead.

Thank you. Can you expand on your decision to settle the Google lawsuit before trial, just how you think about this outcome for Match, and then, more specifically, Gary, could you talk about the financial impact embedded in your 2024 outlook from this? Thank you.

Sure. So, first of all, I would say that we're pleased with the outcome of the settlement. Getting the litigation resolved from our perspective is a good thing. There's always uncertainty when you're going into a trial, and we feel good that we've been able to provide shareholders with certainty around this topic for at least the next few years. And more importantly, we've been able to provide our users with a choice of billing, which is something that we have consistently said is critical to our users, something that we want to be able to provide, and we're happy that we have the opportunity now to provide user choice billing to our consumer base, so we think that's a real positive. Now, unfortunately, the terms of the settlement are confidential, so there's not a ton of detail that we can go into but let me try to unpack some of the pieces for you. And if you go back all the way to October of 2021 that's where Google wanted to start implementing the change in their billing policies, and we're sitting here now more than 2 years later, effectively, and Google had asked us to escrow $40 million against the incremental costs from October 21 through the lawsuit, and as part of the settlement, we basically said we basically agreed that we won't owe any amounts prior to the end of this year, and so what that means is everything that we've been processing on credit cards for the last two-plus years there's no incremental fees owed, and I think if you go back to our earnings release in May of 2022, we estimated that the change in policy was probably about a $6 million per month cost, and so you can probably do the math on those savings over that period of time that I just enumerated. So, that's clear value we don't owe any more money, and we're getting back the $40 million, so that's how we calculate the initial piece of value. And then there's the second piece of value, which is the ongoing arrangement that we're entering into with Google, a new partnership with Google across their myriad services, which includes distribution, includes marketing, includes cloud services, it includes other things that we do with them, so it's a broad partnership, and basically, the settlement agreement, the new partnership agreement says that we will implement user choice billing, we will pay the fees that are required under that policy, which is 11% and 26%, and as a result of the new broad partnership we're going to get benefits such that we essentially offset the impact of the implementation of user choice billing, and so we view that as largely neutral in the '24, '25, and '26 period, and we'll kind of go from there. As you also, I'm sure, know and asked about there's a lot of changes afoot on the regulatory front, on the legal front, related to App Store policies, there's frequently decisions coming down that basically question the fairness of the current policies, and so as a result of that, we think it's likely that over time, there will be more change to the App Store ecosystem. Importantly, we haven't assumed any changes in our financial outlook for 2024 as a result of any regulatory or legal actions, but I think it's fair to assume that over time, there will be some, and so we'll quantify those at the appropriate time, but we certainly expect to get the benefits of whatever changes occur in whatever jurisdictions globally they occur in, and they're occurring in a lot of jurisdictions. So, that's something that we're continuing to watch, and we'll continue to monitor and discuss with you as things evolve.

I'd like to add a couple more points, and Gary, that was a great summary of where we are. I feel now that we're, like today, starting and going forward, I feel like we're in a good place with Google, and it really reduces the amount of distractions that we've had as a team, and we can really focus together on growth. I view this as a reset of our relationship, and it helps our partnership with Google on many fronts, from marketing, to surfacing on their store, to promotion of our brands, and then, being at the table to really collaborate around innovation, AI, cloud opportunities. I believe that this can significantly benefit our business, and we look forward to actually working much closer with Google on many of these different fronts. We're also very confident now with our relationship with Google that we'll help our brands continue to innovate, but also improve the ability to reach Android users worldwide. And we can focus day-in and day-out on how we can grow together and drive product innovation.

The next question comes from Benjamin Black of Deutsche Bank. Please go ahead.

Good morning, and thanks for taking my question, and thanks for the disclosure on Hinge, and actually specifically on Hinge. Could you talk about some of the initiatives that have supported this recent momentum that we're seeing? Also, I'd be curious to hear if you anticipate a similar headwind to payers from the launch of weekly subscriptions like you've seen with Tinder. And then, lastly, in the past, you said you expect Hinge to be a billion-dollar business over the next few years. Given the strong fundamental trends that you're seeing right now, could you perhaps give us an update on your thoughts as to when that milestone could be hit? Thank you.

Thanks for the question, Benjamin. I can take this one. Hinge is a great product and has a super clear brand narrative that continues to resonate in English-speaking markets, along with the European markets that we've just expanded to. They've really done a great job of focusing on single high-intent daters and has tremendous momentum and fantastic word of mouth. The combination of natural and driven user growth alongside monetization initiatives is driving accelerating revenue growth. The team continues to build on this position of strength. To answer your question on weekly subs, the weekly subs at Hinge is actually similar to that at Tinder, but it's less apparent because of Hinge's continued top-of-funnel strength. Like Gary mentioned, we continue to believe that weekly subscription packages were the right decision for the company and are a strong driver of revenue growth, and it's what daters want. Now, to tackle your $1 billion question, we expect Hinge to generate $400 million in direct revenue this year, and we expect a 35-plus percent growth rate for next year. So, we're basically adding about $140 million-plus in revenue for next year. If we extrapolate that growth rate as well as the revenue that we're adding, we can get to about $1 billion in maybe 4 to 5 years. Thanks for the question.

Thank you.

The next question comes from James Heaney of Jefferies. Please go ahead.

Thanks for taking the question. Just one for Gary, are the Tinder U.S. price increases still impacting the sequential payer growth in Q4, or is it really just the weekly subscriber turn dynamic and the weaker top-of-funnel, just wanted to put a finer point on that. Thanks.

Sure. Just to make sure that everybody understands, like you do, James, the way we implemented the U.S. price optimizations at Tinder in the U.S. was that not everybody saw the price changes immediately. It's only after you turn for a period of time as a subscriber, as a payer, that you see the higher prices. And so, the effect of that is sort of moving its way through the Tinder payer base on a gradual basis. I would tell you that by now, probably a majority, maybe 60% or so, of Tinder payers have seen the higher prices. So, there's still a tail of people who are going to see them over time. And so, there's still a modest sequential impact from all that in Q3. I expect there'll be a slightly more modest, I guess, impact on that in Q4. And that will continue and keep declining as an impact, but still be there as a lingering impact for the next few quarters. But it is fairly modest. Frankly, it's why you can't really see it on the chart that we have on page 13 of the shareholder letter. , it's such a small impact. And so, it's modest, but it's still there and will continue to be so for a bit longer now. And I would just say on the sequential impacts generally, you've got the impact from the U.S. price increase at Tinder, which is this modest impact that is continuing. And then, obviously, we've had the impact from the weekly subs. I think the impact from the weekly subs that we've introduced in 2023 will largely be neutralized by the end of this year. So, that's not an ongoing lingering effect into next year, as is the case with the U.S. price optimizations. Now, I do want to point out that we're going to continue to optimize prices, introduce weeklies in other markets. They're going to be smaller markets than the U.S. or some of these key international markets. But optimizations are something that Tinder is meant to be doing at all times. We didn't do it for a while in the U.S., and we played catch up this year. But in general, there's an always on kind of optimizations. There's opportunity to roll out weekly subs and price optimizations in other markets. And so, we'll do it. But because it's going to be in smaller markets, the effects of that will be much more modest over time. This year was the bigger shock to the system. And we're working our way through that, and we should be through that very soon. So, I think that should be encouraging for everybody.

The next question comes from Lauren Schenk of Morgan Stanley. Please go ahead.

Hey, everyone. This is Nathan Feather on for Lauren. Can you talk about the seasonality of Tinder marketing within 3Q and to what extent, if any, it impacted payer growth during the quarter? And then maybe taking a step back more broadly, how should we think about the lag time between marketing user growth and revenue growth? Thank you.

Thanks for the question. When we originally launched, it starts with a Swipe campaign, we planned to have multiple phases throughout the year. So, seasonally with Tinder, end of July, going into August tends to be slower months for Tinder. So, we took the opportunity between these phases to refresh the content for the balance of the year. It's important to note that during this time period, we're still targeting young women, and we did not see the same pullback in new users with this demo. We expect to take an overall step back in new users and have some impact of payers in Q4, which we've already articulated. We have learned a lot from this. I'm pushing the team now to have a consistent, steady beat on marketing going forward, especially in our larger markets. In that time period, we're also able to reallocate some spend into our college outreach marketing and the launch of our Matchmaker feature. Both of these campaigns integrated well-known rappers and targeted our Gen

The next question comes from Ygal Arounian of Citigroup. Please go ahead.

Good morning, guys. What's about Tinder Premium and early signage sheets in that? And then what contribution is expected in booking 4Q and in the preliminary outlook for next year?

I can take that one. I'm really proud of the product that the team has built and launched into the market. The amount of invites for Select that have gone out are still at a very low level. Tinder and the team have been working really hard to optimize the onboarding process and help users and Select members really understand the value proposition. So, we're continuing to iterate, learn from our users, and we'll continue to ramp up the number of invites. We do continue to feel optimistic about the financial potential of the product, and we believe that it will continue and we can generate tens of millions of dollars of revenue in the next year.

The next question comes from Dan Salmon of New Street Research. Please go ahead.

I think we are at time. Hopefully that was helpful, Dan and for everyone else's questions, thank you for asking this morning. We appreciate everyone joining. And we look forward to talking to everyone again on our next earnings call for Q4 which will be at the end of January and early February. Thank you very much.