MTCH - NASDAQ

Welcome to the Match Group Second Quarter 2025 Earnings Conference Call. [Operator Instructions] Please note that 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, ma'am.

Thank you, operator, and good morning, everyone. Today's call will be led by CEO, Spencer Rascoff; and CFO, Steven Bailey. 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 in our periodic reports with the SEC. Also during this call, we will discuss certain non-GAAP financial measures. Reconciliations to the most directly comparable GAAP financial measures are provided in the published materials on our IR website. These non-GAAP measures are not intended to be a substitute for our GAAP results. With that, I'd like to turn the call over to Spencer.

Thanks, everyone, for joining. Since stepping into the CEO role 6 months ago, my goal has been to confront the hard truths take decisive action and reshape Match Group and Tinder into an innovative product and engineering first company optimized for user outcomes and built for the long term. Over the last 6 months, that is exactly what we have done. This is a 3-phase turnaround. First, we reset the company, then we revitalize the products and last, we undergo a resurgence with our audience and investors. Let's start with a recap of Phase 1. I spent the first few months of this reset phase, learning the businesses, getting to know our teams, and rebooting the culture to emphasize urgency and accountability. Match Group is a multi-brand company with over 20 different dating apps in the dating and human connection space. Some of them, like Hinge and Azar are growing rapidly and simply need more resources and time to achieve their full potential. Other brands need more focused attention in order to improve their results. Tinder needs a lot of work, and it is therefore my primary focus. As the largest dating app in the world by revenue and usage, Tinder has unparalleled brand awareness and scale, but the product had grown stale through a lack of innovation and a focus on short-term monetization. To address this, we acted quickly by installing new management, improving the product road map and placing Tinder under my direct leadership given its central role in Match Group's performance. We started by fixing what wasn't working at Tinder, beginning with organizational design. We flattened the org by removing over 20% of managers and reducing the size of teams. We then created autonomous product and engineering pods with greater accountability. We retooled the culture to prioritize urgency and user outcomes. We doubled our release cadence. We now ship new code to production every week instead of every 2 weeks. We have changed decision-making, so it is informed by data, but no longer burdened by analysis paralysis. We broke down silos between Tinder and other Match Group brands in order to gain the benefits of our company's scale and centralized core functions like shared data and content moderation. We now allow nearly 1,000 engineers at Match Group across all of our brands to see one another's code in a shared GitHub repository, allowing for unprecedented cross brand visibility and collaboration. In addition to rolling out cursor and other AI coding assistants globally, we created a centralized AI group building shared AI tooling for all of our brands. The most important changes at Tinder centered around our product strategy and our road map, which we realigned to prioritize low-pressure ways to connect, more on that in a moment. An important part of Phase 1's reset was communicating with employees and shareholders about what needed to change, both internally in our culture and across our products. I shared that directly with employees in the company-wide letter in March. And then when I took the helm at Tinder followed through with new product principles that are already showing up in how we operate. We are now guided by a commitment to speed, accountability and relentless product execution. We also aligned all of our brands around a single organizing principle, delivering real user outcomes. We now think about those outcomes across a broad spectrum from casual to serious, romantic to platonic and we're building apps that support the full range of user preferences. We have crystallized our brand strategy such that Hinge is singularly focused on winning in the intentioned dating category. Tinder is focused on winning in the casual connections category. Our E&E brands are focused on unleashing the power of a unified platform and supporting communities with shared identities and MG Asia is focused on launching and growing our brands in Asia and expanding Azar's low-pressure one-on-one video service globally. With Phase 1 complete, we're now entering Phase 2, revitalize, where the products begin to reflect our renewed commitment to users and user outcomes. I'm going to talk through the rapid product acceleration at Tinder, the tremendous momentum and growth at Hinge and how we're scaling new brands across the portfolio with focus and intention. Let's start with Tinder. The product road map aims to solve 3 core user pain points: Authenticity, dating fatigue and outcomes. In just the last few months, there has been a burst of energy and urgency to launch several initiatives at Tinder. We launched Double Date globally in June, giving users a new social way to connect as a payer. Rolled out 6 months ahead of schedule, it's showing strong early traction with 92% of Double Date users being under 30. Women who are pairing up are 3x more likely to send a like and 4x more likely to match compared to when using Tinder Solo. In New

Thanks, Spencer. We are pleased with the Q2 results as both Match Group total revenue and adjusted operating income exceeded the high end of our guidance, excluding a $14 million charge for a preliminary settlement with the Federal Trade Commission relating to a case filed in September 2019, which we did not anticipate at the time of May earnings. The team is executing well against the 3-part turnaround Spencer laid out to drive sustainable long-term user growth, revenue growth and profitability. In Q2, Match Group's total revenue was $864 million, flat year-over-year, down 1% year-over-year on an FX-neutral basis. FX was in line with our expectations at the time of our last earnings call. Excluding the exit of our live streaming businesses, total revenue was up 1% year-over-year and flat year-over-year FXN. Payers declined 5% year-over-year to $14.1 million, while RPP grew 5% to $20. Indirect revenue was up 15% year-over-year, driven by continued strength in the advertising business. Moving to total company profitability. In Q2, Match Group's operating income was $194 million, down 5% year-over-year, representing an OI margin of 22% and AOI was $290 million, down 5% year-over-year, representing an AOI margin of 34%. Excluding the costs associated with restructuring of our operations of $18 million, and the legal settlement charge of $14 million, OI increased 10% year-over-year, representing an OI margin of 26% and AOI increased 5% year-over-year, representing an AOI margin of 37%. Tinder direct revenue in Q2 was $461 million, down 4% year-over-year and down 5% year-over-year FXN. Payers declined 7% year- over-year to $9.0 million and RPP grew 3% year-over-year to $17.14. OI in the quarter was $217 million, down 1% year-over-year, representing an OI margin of 46%. AOI in the quarter was $246 million, down 2% year-over-year, representing an AOI margin of 52%. OI and AOI were negatively impacted by costs associated with the restructuring of our operations. Hinge continued its strong momentum in Q2 with direct revenue of $168 million, up 25% year-over-year and up 24% year-over-year FXN. Payers grew 18% year-over-year to $1.7 million and RPP grew 6% to $31.96, driven by strong user growth across all markets, combined with continued monetization optimization. OI was $39 million in the quarter, up 29% year-over-year, representing an OI margin of 23%. AOI was $54 million, up 27% year-over-year, representing an AOI margin of 32%. E&E direct revenue in Q2 was $148 million, down 8% year-over-year and down 10% year-over-year FXN. Ex live, E&E direct revenue in Q2 was down 6% year-over-year and down 8% year-over-year FXN. Payers declined 15% year-over-year to $2.3 million, while RPP rose 8% year-over-year to $21.34. In Q2, E&E delivered an operating loss of $4 million, a decrease of $24 million year-over-year and AOI of $16 million, down 62% year-over-year, representing an AOI margin of 11%. OI and AOI were impacted negatively by the legal settlement charge and costs associated with restructuring of our operations. Match Group Asia delivered direct revenue in Q2 of $69 million, down 6% year-over- year and down 8% year-over-year FXN. Ex live, direct revenue in Q2 was up 3% year-over-year and up 2% year-over-year FXN. Azar direct revenue was up 3% year-over-year and up 6% year-over-year FXN, payers direct revenue was up 3% year-over-year and down 5% year-over-year FXN. Across Match Group Asia, payers increased 6% year-over-year to $1.1 million, while RPP declined 12% year-over-year to $21.53, partially due to the exit of Hakuna mid-last year. Match Group Asia had an operating loss of $0.3 million in the quarter, an improvement of $5 million year-over-year and delivered AOI of $16 million, up 16% year-over-year, representing an AOI margin of 23%. Looking at costs, including stock-based compensation expense, total expenses were up 2% year-over-year in Q2. Cost of revenue decreased 1% year-over-year and represented 28% of total revenue, flat year-over-year driven by reduced variable expenses from the shutdown of our live streaming services mid-last year and lower web services costs at Tinder, offset by an increase in IP fees primarily at Hinge. Selling and marketing costs decreased $6 million or 4% year-over-year due to lower marketing spend at Tinder and E&E and was down 1 point year-over-year as a percentage of total revenue at 17%. General and administrative costs increased 19% year-over- year, up 3 points year-over-year as a percentage of total revenue to 16%, driven primarily by costs associated with the restructuring of our operations and the legal settlement charge. Product development costs grew 1% year-over-year and were flat year-over-year as a percentage of total revenue up 13%. Depreciation and amortization decreased by $3 million year-over-year to $29 million. Turning to the balance sheet. Our gross leverage was 2.8x, and net leverage was 2.5x at the end of Q2. We ended the quarter with $340 million of cash, cash equivalents and short-term investments on hand. In Q2, we repurchased $7.6 million of our shares at an average price of $29.45 per share on a trade date basis for a total of $225 million and paid $47 million in dividends, deploying nearly 120% of our free cash flow for capital return to shareholders. We maintain our commitment to target returning 100% of free cash flow to shareholders on a full year basis through share buybacks and the dividend. Now turning to guidance. We expect Q3 total revenue for Match Group of $910 million to $920 million, up 2% to 3% year-over-year. This range assumes a 1 point year-over-year tailwind from FX. FXN, we expect total revenue to be up 1% to 2% year-over-year. We expect Match Group AOI of $330 million to $335 million in Q3 representing a year-over-year decline of 3%, and AOI margin of 36% at the midpoint of the ranges. The expected year-over-year decline in AOI is driven by an expected 17% year-over-year increase in marketing spend due to the timing of brand campaigns at Tinder and Hinge and our savings reinvestments. For the full year 2025, we expect Match Group total revenue to be towards the high end of our guidance range primarily due to positive FX impacts. We now expect a nearly 0.5 point tailwind from FX, which is nearly 3 points better than we expected when we provided our initial outlook in February. FXN ex live, we expect total revenue growth to be within the initial guidance range we provided in February. We expect year-over-year indirect revenue growth in the mid-teens, given strong performance in the first half of the year. We expect to achieve our 36.5% AOI margin target after excluding an expected $25 million in cost associated with the restructuring of our operations, of which $18 million was realized in Q2 and the $4 million legal settlement charge, which would equate to an approximately 35.4% AOI margin on an as-reported basis. Our margin expectations include the approximately $50 million of reinvestments Spencer outlined earlier. We will continue to monitor the return on these investments as well as business and FX trends as the year progresses. We expect free cash flow of $1.06 billion to $1.09 billion, a meaningful improvement from our initial guidance in February, driven by an increase in free cash flow conversion, partially due to expected lower cash taxes from the new U.S. tax law. We expect capital expenditures of $55 million to $65 million. We expect SBC expense to be $260 million to $270 million, an improvement from the guidance we provided at our last earnings in May, due to restructuring of operations and our continued focus on managing headcount costs. We continue to test alternative payments across our brands, including Tinder, and expect to have alternative payment options in test at Hinge by late Q3. Additional savings from further rollout and optimizations of alternative payments is not included in our guidance and could provide margin upside or fund growth initiatives. In June, Canada announced its intention to rescind its digital service tax. If and when it enacts the change in the law, we expect a onetime benefit to AOI related to expenses accrued in prior periods. We anticipate this change could be enacted into law as soon as September. However, we have not included it in our AOI guidance. In other updates, we plan to make changes to how we report certain financial measures and metrics to better align ourselves with our tech peers. Starting next quarter, we will rename our non-GAAP profitability measure from adjusted operating income to adjusted EBITDA. There's no numerical difference between adjusted EBITDA and AOI. We plan to continue to include discrete expenses such as restructuring costs, but intend to reference such expenses, if significant, in our earnings materials. We also plan to change our MAU definition from a last 28-day to a calendar month basis. We plan to provide a reconciliation of MAU using both definitions. Now let's open it up to Q&A.

[Operator Instructions] And your first question today will come from Cory Carpenter with JPMorgan.

Spencer, you've been clear that one of your big priorities at Tinder is to improve engagement with the U.S. users, particularly under the age of 30. Hoping you could give us an update on how this cohort of users have responded to some of your recent product launches and how Tinder engagement trended during the quarter?

Thanks, Cory. At Match Group and at Tinder, we have incredible insights into Gen

And your next question today will come from Nathan Feather with Morgan Stanley.

As it really came through in the letter, it seems like product testing velocity has accelerated over the past few months. Given the large number of changes the company is making across brands, what's the best way for investors to track the status of the turnaround as you go through this revitalized phase? And what are you monitoring internally?

Yes. So it's a whole new team in place. I'm running Tinder personally. We have a new Head of Products. We have a new CTO. We have several new product leads. We have a new Head of Design. And as we've discussed, it's a new road map. All of this has happened within the last couple of months. But the team has really reacted incredibly well, and I'm very proud of what we're building. To answer your question about the metrics that I look at, you should think of our product like a funnel. And at the top of the funnel is what we call regs or new accounts created, registrations. Then just below that, you kind of layer in existing accounts. And just below that, you get to MAU or DAU or audience. So it goes from regs to MAU, then number three, a deeper funnel, you get to 4-way chats. This is the chats that go back and forth 4 or more times. And then at the bottom of the funnel, you get to what we call contact exchange. That's when in-chat somebody shares their iMessage phone number to move to texting or their WhatsApp handle or their Instagram handle to be able to DM with the user. The reason we care about contact exchange is, that's usually -- the purpose of that is to arrange of date. So those are the 4 points in the funnel that I look at every single day that the team looks at every day. Number one, Regs; number two, audience, MAU or DAU; number three, 4 way chat; number four, contact exchange. As I said in the prepared remarks, I understand and empathize from an external standpoint, it's difficult for investors to track the progress of the turnaround without more visibility into some of these metrics. Steve and I and the team are actively trying to determine which of these metrics, if any, we can start providing investors more transparency on. What I can tell you for now is that all of these metrics are doing better today than they were just a couple of months ago. They're also declining year-over-year, but the rate of decline has significantly lessened. For example, regs or new accounts created is down around 7% year-over-year. And a couple of months ago, that metric was down about 15% year-over-year. MAU is today down around 8% to 9% year-over-year. And at the time of last earnings, it was down around 9% to 10% year-over-year. So even a metric like MAU, which is very hard to move, that is starting to show some improvement. Frankly, I'm pleasantly surprised that we're already starting to see some of these metrics start to move in the right direction, given that it's just been a couple of months that this new team has been shipping product.

Your next question today will come from [ Robert Hildreth ] with Evercore ISI.

And congratulations on some of the early progress. But just curious on some of the things you're rolling out or expanding like face check. I wanted to just ask about that one in particular, the expansion there. Curious if you've made any changes to the experience or if you're just seeing users more willing to make the trade-off of verification in exchange for improved experience? And then I know you said that there could be an opportunity for upside related to it, but I just wanted to ask about the alternative payments experiments. And anything that you can share about your early learnings there and the financial potential of potential expansion there?

Regarding face check on Tinder, we've had it live in Canada and Colombia for a while, more than 6 months. And we just launched it in California, just a month or 2 ago. What we're studying in all 3 of those markets is the impact on trust and safety, the impact on revenue, the impact on audience. But perhaps most importantly, the impact on user perception of the safety of the community. Starting about a month ago, we launched an ad campaign, mostly on social media in Canada, promoting face check. And now we're in market with research to assess what impact the face check is having qualitatively on perception of Tinder safety. So that's one of the metrics that we're looking at and just assessing what the results are in California before we decide whether to move forward. I'll let Steve answer the question about in-app purchase and alternative payments.

Yes, happy to. Thanks for the question. We're making really good progress testing alternative payments on iOS. The first thing I'll say is this is a great example of the power of our portfolio. We mentioned this last quarter, we first started testing across E&E, the E&E brands who have a more mature web presence. And now we've applied those learnings to help guide the testing we're doing at Tinder today and start to inform the plans at Hinge, where we plan to start testing later in Q3. We're testing a lot of different variants, 3 to 5 variants, I would say, across any particular brand, and we're continuing to optimize the experience. So the tests are ongoing. But if you look at the average results we've seen thus far, I would say we're seeing more than a 30% shift in transactions from IP to the web. And that's resulting in more than a 10% increase in what we call net revenue, which is revenue less IP fees. In some cases, we're seeing a little bit of a top line revenue impact that we're optimizing to improve. But in nearly all cases, we're seeing net revenue increase across the board. The impacts to 2025 AOI have been relatively small thus far, call it, in the $5 million range, given the Tinder tests are still a relatively low percentage, and we haven't yet rolled it out at Hinge. But I think it's a big opportunity for later this year and in 2026, in particular. If you extrapolate the test results out to full rollout across all our brands, including in the U.S. including Tinder and Hinge, that equates to about at least $65 million AOI savings opportunity in 2026. So it could be a big opportunity for us. We continue to test rapidly. We look forward to rolling it out in a test at Hinge in later in the quarter. And we're also continuing to monitor the Epic versus Google case and growing regulatory pressure and other geos, too. So hopefully, that gives you a little bit of guidance on the size of the opportunity we're seeing.

Your next question today will come from Shweta Khajuria with Wolfe Research.

Let me try two, please. So Spencer, on -- understood on the MAU growth and the context there. But when you think about just the trajectory of these metrics that you're trying to improve, not payers necessarily the registrations to contact exchanges. How are you thinking about it in terms of improvement in terms of the magnitude of improvement? Any context there would be helpful. And then the second thing is on marketing spend. Could you please provide a little bit more color on when you think about investing it for Tinder and for Hinge, how are you thinking about it for the back half of this year and especially into Q1 of next year?

So the first thing we have to do is create new product offerings that we think will be well received by younger users, some of whom we had lost product market fit with. The next thing we have to do is drive reconsideration by making sure that people know that they should reconsider Tinder. I know there's -- sports analogies are probably overused here, but it feels like we're probably in the second of 9 innings on this front. The team has really just assembled now. We're just starting to ship product. We have a really robust road map, and then we have to drive reconsideration of it. So that's how I think about moving these metrics. And while nobody here is particularly proud of seeing these metrics be down year-over-year, metrics like registrations or the number of 4-way chats or the number of contact information exchanged. It doesn't feel good to see those down year-over-year. It feels great to start seeing the rates of decline lessen before a line can go -- if a line has a negative slope, the only way to get it to a positive slope is first to get it to flat. So to see the first derivative of that line, the slope of that line start to change is where it has to begin. Steve, I'll let you answer the question about marketing expense as it relates to the reinvestment.

Sure. Why don't we just take a little step back and talk about the $50 million investment as a whole and give you a little bit more context there. The way I would think about it is about 1/3 of that investment is going towards Tinder product tests that optimize user outcomes, really in 3 main areas: The recommendation algos, trust and safety initiatives and UI/UX improvements. These tests could have some impact on short-term revenue that flow through to AOI. We'll have to -- we're going to test and see, but that accounts for about 1/3 of the $50 million investment. The next 1/3 is in marketing at Tinder and Hinge to support product launches like Double Date and to drive user growth in core markets. And then the last 1/3 is really in geographic expansion at Hinge, Azar, The League, and investments in new growth bets like Archer, Her and a new dating concept. So that's really how the $50 million investment splits up 1/3, 1/3, 1/3. If you look at Tinder marketing, in particular, of the sort of 2/3 it's going to largely towards marketing, the bulk of that is going towards Tinder and a piece is going to hinge as well. Hinge has ample COA budget to begin with. They're spending up in line with revenue more or less year-over-year in COA. Tinder's where we've held marketing a little flatter year-over-year and this reinvestment allows us to really put some dollars behind exciting new rollouts like Double Date. Hopefully that helps.

Your next question today will come from Brad Erickson with RBC Capital Markets.

So just had a follow-up on this kind of secular industry trends. Spencer, you mentioned the Gen

That would be welcome news. I don't think we yet know how Gen Alpha is going to interact with the online dating category overall. I'm focused for now on improving product market fit with Gen

And your next question today will come from John Blackledge with TD Securities.

This is Bill on for John. So could you please just talk about some of the -- you had seen some weakness in a la carte trends among younger users. Have you seen those persist? And how are you addressing those weaknesses caused by macro factors and potential economic weakness? And then I have another follow-up question as well.

Yes, why don't I take that one. You're right. Last quarter, we talked about some concern about macro more generally. I think a lot of companies were talking about it at that time. and we specifically called out an area where we were starting to see some, which was Tinder a la carte revenue amongst younger users. A quarter later, I think we're feeling a lot better about the macro in general. We haven't seen any further macro pressure in any of the data we're looking at. We do still see it a bit at Tinder, again, amongst younger users. So it hasn't necessarily gotten better, but it also hasn't gotten worse. And it's relatively small in the grand scheme of things. We're continuing to test various merchandising and monetization strategies that help deal with the pricing and macro pressures on younger users today. But I think at the highest level, we feel much better about the macro environment and impacts on our business than we did a quarter ago. We're not really seeing it aside from some small pressure at Tinder that we mentioned last call. Next question.

And then just my follow-up was, you mentioned in the prepared remarks that you're expecting Hinge revenue acceleration in the back half of the year. Could you just talk about some of the key drivers there that will get you to that accelerating growth?

Sure. Hinge is firing on all cylinders. I mean it's got a really impressive and distinctive company culture, very highly engaged employees, shipping innovative products. They've got a terrific brand and a clear product strategy and they understand their users incredibly well and what users want from them. And the last compliment I'll pay is that more than any of our other brands, they've infused AI into the product at an even greater rate than others, and it really shows. In terms of the road map of where they're going from here, there are a lot of features on Hinge coming that will increase AI usage towards the bottom of the funnel that's driving people from chats to dates. Number two, there's significant focus on the female experience and making sure that we improve that even more. Number three, there's a lot of work to do on onboarding and profile creation, and that's a big focus of theirs over the next 6 months. And then number four, international expansion. So just to size it, for example, Hinge is only in 25 countries and Tinder is in 188. And even that 25 really overstates it because there are many countries that Hinge -- of those 25 that Hinge is nominally in, but Hinge hasn't really marketed in. Two-thirds of Hinge's revenue is still U.S. based, whereas only 45% of Tinder's revenue is U.S. base. So there's a lot of opportunity for hands with global expansion, and that will be a focus in late '25 going into 2026.

Your next question today will come from Jason Helfstein with Oppenheimer.

Just one. So Spencer, to your point that the naysayers out that, like just online dating is dead and we just hit a secular wall. Some -- again, it sounds like you believe a lot of this has to do with making the product better. So as you roll out more features in Tinder. Do you think this helps you better understand kind of who either the bad actors are or those who don't really want to engage in real life. And then ultimately, you can kind of use the algorithm to make sure those people don't get surfaced and just you have is improvement in the overall experience. So just maybe elaborate a little bit more on how like the new feature -- the future road map could ultimately kind of fix some of the complaints that you've heard from users about that, right, like converting to...

Yes. So trust and safety is a huge driver of user satisfaction or lack of satisfaction, and it absolutely impacts brand perception of the category. So as the category leader to the extent that we can improve trust and safety, that will start to change category perception of the prevalence of bad actors. The new product pods and organizational design that we talked about on the last quarter call is helping address this quite significantly. So we now have an integrated trust and safety engineering team between Tinder and our E&D brands that gives us better combined scale, better ability to use AI across brand to stop bad actors, better AI models to detect bad actors, a better ability to reduce heuristic rules that were incorrectly banning good users, which is that false positive issue. It can be a real issue, and we've gotten a lot better at that over the last 6 months. So it's -- this is -- it's a constant focus of ours, improving trust and safety. And as I said, one thing that we also now need to do, which we're doing in Canada, for example, is marketing our improved trust and safety, so we can start to change category perception. While I will not give an inch on the question of whether the category is dead or not because it's clearly not. I will concede that the category suffers from a perception issue with respect to trust and safety. And that's something that we have to deliver actual improvements on, and then we have to tell that story to our users and to the media, so they understand that meeting people through a dating app like Tinder or Hinge is the safest way to meet somebody actually, it's certainly safer than meeting a stranger in real life.

And your next question today will come from Benjamin Black with Deutsche Bank.

This is Jeff on for Ben. Maybe could you just give a little bit of color on the RPP trends that you're seeing at Tinder and maybe some of the initiatives that you have there to improve that? You mentioned some of the upcoming features like the see who likes you tab could be a driver of revenue. Maybe you could talk about that feature and others how they could drive monetization?

Sure. Well, the see who likes you section or what we call [ Gold Home ] hasn't been redesigned or that code has barely been touched in about 5 years. So it hasn't -- there is a lot of opportunity there. We'll have to do it carefully and test and learn our way through those changes because it is so important. But the revenue team who is excellent here at Tinder is totally focused on that redesign of the see who likes you section of the app. We don't really -- just to try to give you a little more insight into how we think about product road map. We don't really have initiatives other than a small handful, like an important one like the redesign of [ Gold Home ], which are specifically tied to revenue per payer. We have a very robust road map around improving audience growth through new regs, through contact exchange, everything that I've discussed. And we have a strong belief that as we grow audience and improve user outcomes at the bottom of the funnel, that will generate more revenue, and that will have the effect of growing RPP and payers. But we don't go after RPP as a metric, and we don't go after the number of payers as a metric. We go after audience and user outcomes and corresponding revenue and then revenue per payer and number of payers are really outputs of those numbers.

Your next question today will come from Ygal Arounian with Citi.

Just to understand the puts and takes on the products for Tinder and kind of what's embedded. I know, you're not giving payer guidance anymore, but just how to think about the trends in the back half. For example, are you seeing any payer headwinds from the trust and safety features like bots and face checks, is that having an impact at all any of the products driving any kind of notable payer increase yet? Or well, improvement, I guess, not increase? Or is that not happening? And then on the NF fees or not happening yet. And then on the in-app fees, just wanted to see if you could bridge from what you're experiencing at E&E, which, like you said, has more of the kind of web -- historical web model versus Tinder and what you might expect to see at Hinge, I know you haven't done that yet. But are you seeing a similar reception from users moving to web-based? And -- or is it kind of a different hurdle on that front?

I'll take the first question around Tinder trust and safety. There are times, and I'm sure there will be quarters under my watch where trust and safety changes have the effect of reducing audience. And I know there were quarters in the past where we've -- where that had -- that's what happened. That was kind of the story of the quarter where we reduced the prevalence of bots and that had the effect of reducing audience. The changes -- that's not what we're experiencing right now. What we're experiencing right now on most of these trust and safety initiatives are having the effect of increasing audience and that's one of the reasons that we're starting to see some of these green shoots in audience and engagement, mid-funnel and bottom funnel metrics because we're reducing the number of false positives that -- of people that -- basically, we're letting in more good people or we're keeping out fewer good people that we otherwise would have been kept out in the past. So that's all been a good tailwind to the metrics over the last couple of months with respect to trust and safety. Steve, I'll let you answer the question about IP, I think it was.

Sure, happy to. Yes, here's the way I would think about it. You're right, E&E is a little bit more mature, and they've seen, in some cases, a bigger shift to web than the Tinder test. But in the few tests we're running at Tinder right now, we are seeing that roughly 30% shift to web and at least a 10-point increase in net revenue. So that's applying to Tinder as well. And I would assume -- we don't know, we haven't started testing it yet. But that gives me confidence Hinge be on a path -- a similar path as well. So that's why I'm sort of extrapolating that 30% shipped and 10-point net revenue increase to the entire U.S.-based company and getting to that $65 million plus AOI savings opportunity in '26.

And your next question today will come from Chris Kuntarich with UBS.

You guys have talked a lot today about some really good early success on the product front for Tinder. Are you expecting to capture any more value by taking price in the back half of the year? And Steve, I believe you made a comment last quarter that you're kind of expecting similar year-over-year payer declines at Tinder as you were kind of expecting similar year-over-year declines for MAUs. Just want to make sure if that's the right way to be thinking about it?

The first answer is no. We're not planning on taking price as a result of this product road map at Tinder. On the contrary, as Steve described, a significant portion of the $50 million is actually about improving the value that users get from Tinder. So I'll give you a very specific example. In our recommendations algorithm we -- when we're deciding whom to show to whom, we are changing the prioritization in that algorithm to be more focused on driving user outcomes. So more focused on showing the person that we think is the right match for you and less focused on driving revenue. So for example, if the AI is tuned more towards revenue optimization, it might put in front of me, somebody that was potentially going to churn. And if I then indicate interest in her, maybe she will be less likely to churn and we'll keep her revenue. So -- but if she's not right for me, then I wouldn't want to see her. So by prioritizing the recommendation algorithm more towards user outcomes and less towards revenue, that's what part of that $50 million investment is geared towards. We think that over the medium term and definitely over the long term, improving user outcomes will have the effect of growing audience, improving user outcomes and then in turn growing revenue. But in the short term, we're willing to make those trade-offs. I'm really pleased and proud that we're able to continue to hit the commitments that we've made around Investor Day and around guidance and consensus while still giving these user value improvements to Tinder users as part of this turnaround. Steve, what's the last...

Yes, I'll just reiterate what Spencer already said, which is we're not really focused on the payer metrics, specifically or sort of giving guidance around payers. I would think about it as users, and that's what we're focused on is turning around the MAU trends and some of the other funnel trends Spencer mentioned earlier on the call, which will -- I would expect payers to head in that same general direction when that happens.

And your last question today will come from Curtis Nagle with Bank of America.

So not really strong what you can say on the Spencer, but just very curious about the point you made about a new data concept. Would this theoretically be a new form factor maybe something less holistic in terms of brand focus in the demo group? Just anything you could say on that would be very helpful and enlightening.

Sorry to end on a disappointing answer, Curtis. For competitive reasons and other reasons, we're not going to share right now. But we periodically incubate brand-new apps and we've got something that we're picking up, which I'm excited about. Thank you, everyone, for joining the call today. We are excited to update you on our progress, and I can't wait to talk to you next quarter and maybe I'll have an update for you then on this front as well, Curtis.