MTCH - NASDAQ

Welcome to the Match Group Fourth 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 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. As I reflect on 2023, I am deeply proud of the accomplishments and progress that we made as a team. Just one year ago, we introduced an entirely new operating structure with several new leaders put in place across Tinder, Hinge, MG Asia and E&E, and it's been working. Together, we deepened our focus on execution and innovation, helping lay the foundation for sustained longer-term growth. At the same time, we recaptured financial momentum, ending the year with strong revenue growth and our third consecutive quarter of record AOI. Before we dive into more detail regarding our ambitious plans and goals for this coming year, I wanted to take a moment to recognize Faye Iosotaluno as Tinder's new CEO, which we announced earlier this month. Faye has been an impactful leader at Match Group for several years and most recently as COO of Tinder. Her intimate understanding of the online gaming category, as well as her deep expertise in strategy and business development, among many other skills are just a few of the reasons why I believe Faye is best suited to lead Tinder in its next chapter of growth. Faye is also supported by Tinder's strong management team, which we set in place last year, giving me the utmost confidence in their ability to execute together. The plans for Tinder reflect our shared vision, and I look forward to working with her and the team along this journey. Now, taking a step back at Match Group, we come to work highly motivated every day to foster genuine human connections. But the tools and technologies that people use to connect, match and date today must evolve to meet modern expectations of today's daters. And as Tinder once did a decade ago, it's imperative that we boldly innovate to create engaging, joyful and exciting experiences for users on our apps. There are certain things that are table stakes for us. We need to continue to foster online communities where women and all underrepresented groups of people can show up as their true authentic selves, feel safe and be respected. But this new generation of singles is digital-first and expect platforms like ours to allow daters to showcase their unique personalities in an engaging setting and be shown highly curated matches. In 2024, our road maps are shaped with this in mind. First, we are working to improve existing dating apps, beginning with our two largest brands, Tinder and Hinge. Leveraging AI, Tinder will focus on creating a more inclusive experience beginning with improving the Gen

Thanks, BK, and hello, everyone. Thank you for joining us this morning. Our business demonstrated strong financial performance again this quarter. Tinder once again delivered double-digit year-over-year direct revenue growth as did the company as a whole. We achieved record quarterly AOI for the third consecutive quarter and record OI for the second consecutive quarter, further evaluating the steps we've taken to strengthen the business. Match Group's total revenue for Q4 was $866 million, up 10% year-over-year, an acceleration from 9% year-over-year in Q3. For the full year, Match Group delivered total revenue of $3.4 billion, up 6% year-over-year with AOI of $1.3 billion, representing margin of 37%. Excluding the $40 million we received as part of the Google settlement, full year AOI margins would have been up 80 basis points compared to 2022, meeting our goal of flat or better year-over-year AOI margin. Q4 Tinder direct revenue was up 11% year-over-year at $493 million. Tinder RPP was up 21% year-over-year at $16.49 due to the effects of the US price optimizations and weekly packages we rolled out earlier in 2023. We did see a continued pressure on users at Tinder both in the US and globally, during the November and December holiday months, resulting in a mid-single-digit year-over-year decline in new user registrations and reactivations in Q4. Q4 Tinder payers declined 8% year-over-year to 10 million, slightly below our expectations. For the year, Tinder delivered direct revenue of $1.9 billion, up 7% year-over-year with AOI margins in excess of 50%. Our Hinge brand continued to perform very well. Hinge direct revenue growth accelerated to 50% year-over-year, a further 6-point acceleration over Q3. Hinge Q4 payers were up 33% year-over-year to 1.4 million, while RPP of over $28 was up 13% year-over-year in Q4. For the full year, Hinge delivered direct revenue of $396 million, just shy of our $400 million target primarily due to slower top-of-funnel growth in Q4 than we were anticipating. Historically, Hinge has not seen a seasonal slowdown during Q4 like many brands see. This Q4, for the first time, Hinge did see that seasonal slowdown. That said, Hinge has had a very strong start to 2024 in terms of top-of-funnel in every market and among virtually every age and gender cohort. So there's been a clear bounce back. Match Group Q4 AOI was $362 million, up 27% year-over-year, including $40 million that was returned to us as part of the Google litigation settlement for margins of 42%. Excluding the $40 million, AOI would have been up 13% year-over-year, and margins would have been 37%. Operating income was $260 million in Q4 for a margin of 30%, 25% after adjusting out the impact of the Google settlement. Q4 2022 included an impairment of intangibles of approximately $100 million, and OI margin would have improved 3.5 points if not for the impairment in 2022. Overall expenses, including SBC expense, were down 11% year-over-year in Q4, down 5% excluding the Google settlement. Excluding the settlement, cost of revenue, including SBC expense, grew 5% year-over-year in Q4 and represented 29% of total revenue, down 1 point year-over-year. Excluding the settlement, App Store fees increased $17 million year-over-year, 20 basis points as a percent of total revenue in the fourth quarter. Selling and marketing costs, including SBC expense, increased $32 million or 25% year-over-year in Q4, primarily due to increased spend at Tinder. Selling and marketing spend was up 2 points as a percentage of total revenue at 18%. G&A costs, including SBC expense, declined 2% year-over-year in Q4 and 2 points as a percent of revenue to 12% as legal and professional fees declined by $11 million year-over-year. Product development costs, including SBC expense, grew 21% year-over-year in Q4, primarily as a result of higher compensation expense due to increased headcount at Hinge and Tinder and were up 1 point as a percent of total revenue at 11%. For Q1 2024, we expect total revenue for Match Group of $850 million to $860 million, up 8% to 9% year-over-year. We expect FX to be a 2-point year-over-year headwind in Q1. At Tinder, we expect direct revenue to be $480 million to $485 million, up 9% to 10% year-over-year in Q1. Again, we expect FX to be a 2-point year-over-year headwind. We expect RPP and payer year-over-year trends to be broadly in line with what we saw in Q4, with Q1 demonstrating less than half the sequential decline in number of payers than we saw in Q4. Across our other brands, we expect direct revenue of $355 million to $360 million, up 7% to 8% year-over-year. Within our other brands, we expect Hinge to deliver approximately $120 million of direct revenue in Q1, year-over-year growth of approximately 45%. We believe that macroeconomic conditions and consumers' willingness to spend has remained relatively stable since our last earnings call. We have not seen any additional impact on our subscription or ALC revenue. We expect Match Group AOI of $270 million to $275 million in Q1, representing year-over-year growth of 6% and margin of 32% at the midpoint of the ranges. We expect overall Q1 marketing spend to increase by approximately $30 million year-over-year collectively at Tinder and at Hinge compared to the levels these brands were spending at in early 2023 as we seek to reinvigorate user growth at Tinder and continue the stellar user growth at Hinge in both core and European expansion markets during our peak season in the first quarter. That said, we continue to monitor closely for marketing efficacy and can pull back if we don't see the desired results. We entered 2024 with solid revenue momentum and believe we're positioned to deliver total revenue of between $3.565 billion and $3.665 billion, representing year-over-year growth of 6% to 9%. At Tinder, we expect direct revenue of $2.025 billion to $2.075 billion or growth of 6% to 8% year-over-year. We believe this revenue target for Tinder provides the new leadership with sufficient room to focus on ecosystem improvements, product improvements and user growth initiatives to drive sustainable long-term growth. Our outlook assumes modest improvement in Tinder user trends over the course of 2024 but not yet a return to year-over-year user growth. We expect payer growth to improve through the year, achieving positive sequential payer net adds in Q3 and positive year-over-year payer growth by Q4. Across our other brands, we expect direct revenue to be $1.480 billion to $1.530 billion or 6% to 10% year-over-year growth. Within our other brands, at Hinge, we expect direct revenue of $535 million to $545 million, which represents growth of 35% to 38% year-over-year with a continued focus on driving share gains in Hinge's core and European markets. We've assumed FX to be a 1.5-point headwind to full year '24 total revenue growth. We expect 2024 indirect revenue of approximately $60 million, up approximately 8% year-over-year. For 2024, our current anticipation is for AOI margins to be at least 36%. Our margin will largely depend on the various brands' levels of revenue growth and how we calibrate certain investments that are critical to achieve our organic growth plans. There are several key investment areas that are impacting margins that we'd like to call out. The first is at Tinder in both product innovation and marketing. As we reinvent the Tinder experience, we're putting substantial incremental resources into product to improve the experience and cater better to women and Gen

We will now begin the question-and-answer session. [Operator Instructions] The first question today comes from Shweta Khajuria from Evercore ISI. Please go ahead.

Okay. Thank you for taking my question. BK, anything you can comment on Elliott's stake in the company and your conversations with them thus far? And then my follow-up is for Gary. Gary, could you please provide more color on your level of confidence in Tinder net adds turning positive in third quarter and a positive year-over-year payer growth in the fourth quarter? Thanks a lot.

Great. Thanks, Shweta, for the first question. We've had collaborative dialogue with Elliott over the past few weeks ever since we learned about their stake in the company. We are looking forward to continuing to engage with all of our shareholders, including Elliott.

And then, Shweta, on your questions around Tinder net adds, I think as we said in the letter and in our remarks, we have high confidence that we're going to see sequential improvement in Tinder by Q3 on the net add side and that we will get some modest payer growth year-over-year by Q4. And that's a combination of a few things, most notably the product and marketing initiatives we have that are -- that have been put in place through the course of 2023 and into 2024, which we think will drive the level of growth we need to achieve those goals of sequential net adds in Q3 and then payer growth year-over-year in Q4. And it's a series of things, not just one specific thing that we're relying on or expecting to drive that. It's a series of improvements and initiatives that Tinder has in the plans. And so we think that will culminate in achieving the goals around payer net adds by the middle of this year.

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

Great. Thanks. Just looking back on 2023, what do you believe caused Tinder user growth to be negative despite the incremental marketing spend? And how will the marketing message evolve in 2024, if at all? And then just one on the 1Q EBITDA guide. It was about $25 million below the Street. Is that just the incremental marketing push you've been speaking about, or are there other drivers there that we should take into account? And how should we think about the cadence of Tinder marketing spend through 2024? Thanks.

Yeah. So I think it's important to understand what went on in 2023 so that you can understand kind of the trajectory of the business. We put in place a new brand narrative to Tinder, something that we hadn't focused on for a long time. We finally did that in 2023. And when you try to put in place a brand narrative and start to tell that story, it takes time to build. And so it doesn't translate into user growth immediately. And in fact, what we saw in '23 was pretty good progress on the user growth side in the first half of the year as a result in part of the marketing initiatives. I think we hadn't been in the market very effectively on the market side in a while. And so we did see some really good user growth improvement from, let's call it, February of last year until the middle of the year. And then in the second half of the year, the trends kind of reverted to where they had been, down kind of mid single-digits on the user side year-over-year. And while we saw that step back, we did continue to see movement in some key metrics that we focus on for the brand campaign, brand consideration and improvement in consideration, particularly younger women. And so we were satisfied that the brand campaign was doing what we expected it to do over the course of 2023. The campaign has been very resident with the target demographic, and it's been very well awarded by some of the ad publications. And so we're continuing to invest in that marketing campaign. We're continuing to do it in the key global markets. And we're trying to have an always-on philosophy so there's not gaps in the marketing. And that's what we've budgeted for, for this year. I would just point out though that marketing can only do so much. Tinder, like many of our brands, is a product-driven company. And so while marketing can help on the user growth side, the user growth really needs to be driven by product and product innovation. And marketing needs to be aligned with product to drive people back to the app or to reconsider the app or consider it for the first time once product has really innovated and improved. So that is part of the plan for 2024. We are spending pretty heavily in Q1 on the marketing side, as you pointed out, because we do want to drive users back to the app after the refresh. And so that is part of the plan for the first quarter. I do think that people maybe didn't quite understand the magnitude of what we are planning to spend in the first quarter on Tinder marketing. I do think that accounts for maybe the gap in expectations versus what sell-side analysts had for the quarter. And so that -- and that plus a little bit of user softness that we saw in Q4, which leads to revenue softness and therefore, AOI softness as well are probably the two factors. We are planning to continue to spend heavily in the first quarter. I would say after that, the marketing cadence is probably pretty evenly spread throughout the rest of the year. But as we say, we're nimble on the marketing side. And to the extent we don't see the expected user growth trends or effectiveness of the marketing campaign, we can adjust and pull back. And so we're pushing hard in the first quarter at Tinder and frankly, at Hinge as well. And then we'll sort of recalibrate and see. But right now, I'd say it's spread pretty evenly the rest of the way.

Great. Thank you.

The next question comes from Chris Kuntarich with UBS. Please go ahead.

Great. Thanks for taking the question. Can you just talk a little bit more about what those early learnings have been around the Tinder product refresh and how that is really tying into the marketing spend for Tinder that you're talking about this year? Thanks.

I'll take that one. Great question, Chris. The refresh in December was our first step in the product modernization that we're undergoing as a team. It's been less than two months since the refresh went live, and we're already seeing encouraging signs. For example, over 80% of our daily users are currently using dark mode. And as for prompts and quizzes, we're excited about the early adoption rates. Quizzes are already seeing a 15% adoption rate, and prompts are not that far behind. This is a strong indicator of user engagement, especially considering how recently these features were introduced. I'd like to add that it's important for us to remember that these features are optional. So not all users will adopt them, but their presence offers more ways for users to engage. Our approach last fall testing numerous features independently before combining them into a broader refresh has created tremendous learning across Tinder. These tests have taught us quickly to identify what works and what doesn't work, informing our fail-fast strategy for 2024. And as Gary mentioned, we are leaning in on our marketing strategy. However, it's crucial to leverage marketing to spotlight new product features. Therefore, we might adjust our spend levels to align with the rollout of these new features throughout the year.

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

Great. Thank you very much, and good morning. Could you elaborate a little bit more about the Hinge slowdown that occurred during December and what drove the reacceleration? I know you talked about that we haven't really seen seasonality in Hinge before. So I'm curious how that seasonality compares to what you've seen towards some of your more mature apps in there? Thank you.

Sure. Let me take that, Justin. So we do see seasonality in most of our apps, especially the larger ones, in the period in kind of November and December. That's typical. We see it at Tinder. We see it at other brands, because users in many parts of the world tend to focus on the holiday season, and they pull back from their dating activities in that period. And then what we tend to see is right after Christmas through Valentine's Day, we actually see a very strong period. That's our peak season from right after Christmas to Valentine's Day when people start looking for love. And so that's kind of the cadence that we typically see in the business. We haven't seen that historically at Hinge, but I think now that the business has achieved some reasonable level of scale in some of the core markets like the US, we are starting to see that seasonality like we do at Tinder and other brands. And so I'm expecting that we'll see that going forward. But 2023 was the first time that we've seen that. The good news is that, that is in the rearview mirror for us at this point. Hinge got off to a very strong start in January, kind of picked off -- picked up where it had left off before the holiday period. We've seen really good strength in all the geographies where it operates across all gender and age cohorts. And so we're very pleased with what's happened thus far in January. And that's very encouraging because when a brand gets off to a strong start in the peak season, it tends to bode well for its performance for the rest of the year. And so we're happy to see that, and we're looking forward to Hinge performing well in 2024.

The next question comes from

Great. Thank you. I appreciate the color on the Tinder's kind of product road map for this year that provided in the letter. And I wanted to, kind of, focus more on this a la carte opportunity that you stated. So can you share any kind of preliminary details on the kind of new a la carte offering products that you have planned for the second half of this year? I mean how that may differ versus kind of what is currently offered in the app. And then do you see this more as a payer penetration or monetization driver for this year? Thanks.

Hey,

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

Good morning and thank you for taking my question. I guess with the new leadership in place, what, I guess, any difference should we expect in Tinder strategy? How should we think about things like product output velocity, marketing strategy? For instance, I think you guys also mentioned sort of the renewed focus on ecosystem improvements. And BK, now that you have a permanent successor in place at Tinder, how do you envision your role sort of evolving? Thank you.

Thanks, Ben, for the question. Now over the last 18 months, Faye has been a real partner to me. She's so passionate about Tinder and knows the business and product inside out. We've stabilized and returned Tinder to revenue growth. And I believe that Faye is only going to accelerate that momentum. The team is fully aligned and clear on their goals. Faye has been instrumental in shaping our road map. And now as CEO, she is pushing forward with modernizing the product, boosting development speed and bringing vital leadership. And her focus will be particularly in enhancing women's experience and the overall ecosystem health at Tinder. She will share more of our plan later this year, but the core focus is clear: making Tinder more engaging for younger users and ensure superior experiences for women. Now as for my role, I have a ton of rewarding work to do across the portfolio. There's a wealth of exciting innovation sprint across Match Group that I'm deeply involved in. Now at the same time, I'm committed to maintaining a close and effective partnership with Faye and the Tinder leadership team. We will ensure that we continue to drive Tinder growth together as a team.

The next question comes from Mark Kelley with Stifel. Please go ahead.

Great. Thanks very much. I just have one, probably for BK. A lot of AI commentary in the note and in your prepared remarks. I guess, my question is, is the goal to have like a unified AI infrastructure on the back end that will be utilized across the portfolio, or do you think there are unique needs across each individual brand where it makes sense to maybe modify those AI capabilities? And I guess second to that, I know you gave us guidance for the full year in terms of margins, but any cost implications that we should be aware of? Thank you.

Thanks, Mark. I was actually hoping that someone ask me about AI. And I want to just share some of my thoughts around AI. I mean, I believe that AI is existential to the future of Match Group and our business. AI will help us create improved user experiences and will truly make our products better. And that puts us in a different category from other companies that are just looking at optimizing through AI and slight improvements. This technology is revolutionary for dating, and we're bringing it to life across our entire portfolio. I envision AI to be felt through the entire experience, influencing everything from profile creation to matching and connecting for dates, literally everything. Our data as a team and deep understanding of dating and singles is a rich resource for informing our AI dating models internally. Our two biggest brands, Tinder and Hinge, have their own AI strategies tailored to its unique needs and listening to daters and what they want. Now, we do have this central innovation team working across the entire portfolio on moonshot ideas and incubating new products. And our talented team at Hyperconnect is playing a crucial role in supporting all of these initiatives across the company. I'm really excited about this revolution going across the entire team. Gary mentioned in his comments that we are investing $20 million to $30 million in AI innovation. And I absolutely believe it's the right thing for us to do to drive enduring strength, better experiences and future growth for our business.

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

Hey, good morning, guys. Just one follow-up on the AI thought. And obviously, lots of talk around this here. And just trying to understand how much AI contribution is kind of embedded into the expectations for 2024, when you see it having a more meaningful impact. And maybe at least for this year, do you see it as more of a driver for payers or for RPP, or does it -- can it contribute to both? Thanks.

Why don't I jump in and take that one? So as BK said, we've got a lot of exciting AI initiatives planned for Tinder, for Hinge and for new products as well that we're going to roll over the course of 2024. So we do have very high expectations for delivery of all these products and features that we think they will enhance the user experience. And so I think it's logical to think that they would benefit RPP, because it will be a better experience, people should see more value in the product and be willing to pay more. But I would tell you that at this point, given that it's still very early in the evolution of these various products and features, we haven't included any notable revenue in our 2024 outlook from the AI efforts. As BK mentioned, we've put in all of the costs, which we've estimated at $20 million to $30 million, so we can go hire people, do the work to build out these different products and features and roll them out over the course of the year. But we are waiting on the revenue side. Now you might view that as a conservative assumption, and it very well could be. But I think at this point in time, it's the right thing to do. And we'll obviously continue to update what we're seeing from the AI initiatives as the year progresses.

The next question comes from Cory Carpenter with JPMorgan. Please go ahead.

Thanks. Anything you would call out or highlight on the Tinder product road map that you think could be particularly impactful in driving that Tinder payer turnaround in second half? And Gary, just to clarify, the $20 million App Store benefit, is that included in the guide, or is that something that would be upside? Thank you.

I'll take the first part of that question, Cory. We feel really good about the progress that we've made at Tinder over the past few months, and the results have aligned really well with our expectations. We've demonstrated Tinder's capability to deliver. They've achieved double-digit revenue growth for the last two quarters consecutively. And I'm really excited about the continued strong execution velocity and the product and marketing road maps for 2024. Now we acknowledge that Q4 was a large sequential payer decline, but we are optimistic about the future as we see these declines moderating. Looking ahead, we're confident that in Q3, Tinder payers will turn positive on a sequential basis. This confidence stems from marketing coupled with several product initiatives that are underway. Our key strategies include enhancing the visibility and value of our paid packages and dynamically showing the right offer to the right user at the right time. Now additionally, our monetization team is working on more market-specific conversion strategies and experimenting with unbundling certain premium features that currently sit behind a paywall.

And then on the DMA question, Cory, we've got this margin floor in our financial outlook. And so the $15 million, that would probably accrue in 2024, because we're saying, it's $20 million annualized. So if you say, it's three-quarters, let's call it, $15 million. That obviously helps us achieve our margin target or even gives us an ability to exceed the margin target as the year goes on. And so it's helpful in that regard to kind of push us maybe at the top end or higher than kind of what people might be expecting. And so it's definitely a positive from our perspective. Obviously, we've got a lot of investment going on, and so we'll have to think about whether any of that should be reinvested. But ultimately, I do think it's a $15 million positive for the year.

The next question comes from Youssef Squali with Truist Securities. Please go ahead.

Thank you. Hi, guys. So the company has been talking about steps to reduce duplicative functions and migrate the Evergreen & Emerging Brands onto one technology platform to consolidate the brands onto a single stack. Where are you in that process? What kind of cost savings or margin impact are you baking in, in 2024? And ultimately, how much do you anticipate to be deriving from that over time? Thanks a lot.

Sure. We haven't spent a lot of addressing that. So appreciate the question. What's been happening, and this is related to our E&E business, both the Emerging businesses and the Evergreen businesses, where we're trying to be more efficient. What we've started to do is centralize teams and reduce redundancies in various aspects of the E&E business. So if you look at the marketing function, you look at the customer care function, other aspects of their operations, we're reducing duplication. And that's leading to some savings this year and on an ongoing basis. So that's kind of the first piece of what's going on there. But the second and more important piece is that we've got a number of brands within that mini portfolio inside the company. We're consolidating the technology platforms onto a single technology platform. We did a couple of the smaller bands last year. We're going to do a couple of more brands this year, and then we're going to do some of the bigger brands next year. So it's a multiyear process. And the reason for that is, it has customer implications. And so you have to be cautious. It's a complex and risky undertaking. And we want to do it right and not have any unexpected consequences. And so we're working kind of very deliberately and very carefully to make all of that happen. When those consolidations take place, we do see significant cost savings from them. And so that's where we really started to get the financial benefit. So as I mentioned, we got a little bit as a result of what we did last year. We've got a little bit more as well we will do this year. And then the real benefits will accrue fully by 2026, where we'll see all the benefits of having one single platform, and we'll have reduced all of the various redundancies. I would estimate that there's probably a 10-point margin improvement in the E&E business once all of those cost savings are fully included. So that's a substantial amount of money on a business that is somewhere between $600 million and $700 million of revenue. And so that enables us to reinvest the savings into growth businesses around the company, whether that's into Tinder, whether that's at the Hinge or wherever we want to put it. That's the plan once those savings are achieved. So this is a pretty significant undertaking for the company. It gives us the ability to reinvest the dollars that are coming out as a result of the platform consolidations, and we're working very hard and carefully to make all of that happen.

The next question comes from Ross Sandler with Barclays. Please go ahead.

Great. Thanks. Gary, can we go back to the App Store fees topic in the DMA? So it sounds like based on public statements anyway, that Spotify and Fortnite have very little interest in paying Apple anything for apps that are side loaded where there's direct billing in that app at least in Europe. So would you guys fall into that camp? And is that $20 million that you called out just from the fee changes that have been announced assuming that you actually have to pay them for these changes? And then I guess the second question is, if Google, kind of, matches a similar fee structure and then this, kind of, becomes the global standard, what would that total number look like in some future state versus the $20 million you called out? Thanks a lot.

Yeah. So it's one of the reasons why in answering Cory's question, is it included or not, there's still a lot of uncertainty around this. I think if you just do the straight calculation as we understand the policy changes that Apple put in place, you get to that $20 million number for a full year. But I think there's still a lot of questions. As you point out, Spotify has raised questions and concerns. Microsoft has raised them. Others have raised them, and so you have to decide whether to opt into this or not. We have not yet done so. And so we're still considering what this all means, which is why just kind of putting it into the guidance or not is not exactly the way this all works. And so we're still looking at it, making sure we understand it. And frankly, if you understand the dynamics of all this, this is what Apple has proposed complies with the Digital Markets Act in Europe. The European Commission actually has to accept that this proposal complies and that and of itself is far from assured. And so I think that will continue to play itself out over the next weeks or months as we get to that March 6th deadline. So we'll see how this all plays out. From our perspective, the good news is that we expected the DMA to lead the changes on the App Store side, and we started to see that. And it's hard for us to fathom that it will end there because even if the changes that Apple has proposed are what goes into place in the EU, if you're a consumer in the US or you're a consumer in the UK right next door to the EU, you start to wonder, well, why are customers in the EU getting benefit, and we're not getting the same benefits. And so if you're the government in those jurisdictions, you'd say, well, our citizens deserve the same benefits as what we're seeing in the European Union. And so that's why in my remarks, I said we think it's the first brick. I think there's more to come. And just so you have an order of magnitude in your mind, we probably get five or six times the savings if the Apple changes as currently proposed were to be implemented in the rest of the world because while we have a relatively small percentage of our revenue in the European Union that comes from iOS, we've got a lot in the UK, we've got a lot in North America. And so there's really significant benefits in those jurisdictions if these policy changes are made. So that's where the significant benefits to us really would be, either further changes to the policies or expansions of the geographies. And I think both of those things are very, very possible. The impact of further change on Google is not nearly as dramatic as the Apple side. I think that's where we could see really meaningful steps forward. And we're excited to see kind of where this goes because we've been waiting for this for a long time, and this is the first tangible movement that we've seen from the regulators. And as I mentioned in my remarks, that's on top of some of the other things that have happened from a court perspective, which look like they're going to open up the ability to use other app stores, which again is very significant for us or other processors for payments as well, which again is very significant for us. So, there's a lot of moving pieces to this. What we can quantify today is the $20 million based on the changes that have been made, but I think you have to think a little bit more broadly about what's more likely to happen here over the next little while.

The next question comes from Brad Erickson with RBC. Please go ahead.

Yes. Thanks for squeezing me on. One of the questions we've been getting from investors a lot lately is just, given the impact you've seen on these pricing optimizations on Tinder, just curious if you'd ever consider any sort of like alternative path there on pricing in 2024, maybe rolling things back, et cetera, as a way to get payers back on earlier? And then maybe just to clarify as well, you talked about the RPP growth to Tinder, I think, looking out to the second half of the year. And it sounds like maybe AI could be having something to do with that. But then yes, you were pretty clear that like AI is not really in the forecast. Maybe if you could just reconcile that a bit. Thanks.

Yes. Look, I think that we look at all of these different levers all the time. But as we've talked about many times, we're focused on increasing revenue, not specifically increasing revenue per payer or payers just for the sake of moving either of those KPIs. And so, we remain focused with our north star on revenue. But as we prioritize things, we have the ability to focus a little bit more on payers and potentially make some more impact there, because there's always choices to be made on the product road map. So, we're mindful of the fact that everyone is very focused on what's going to happen with payers. We have enough in the road map to achieve the payer pivot in the third quarter as we described earlier and to get to payer growth in the fourth quarter. So naturally, you would expect that over the course of the year, as the benefits of all the pricing optimizations and with subscribers start to subside, we'll get to a better balance by the fourth quarter in terms of payer growth and RPP growth to equate to the revenue growth that we're expecting in the fourth quarter. So, we will start to see this kind of normalize and become more balanced over the course of the year as things wash through. We're not going to go to sort of abnormal efforts to drive payers because I don't think that's healthy for the business. But we are obviously cognizant of the various concerns around this. And I do think you will naturally see it become much more balanced as the year goes on.

All right. I want to thank everybody for joining us this morning. I think we're right at time. We appreciate it, as always, and we look forward to seeing everyone again next quarter. Thank you so much.