Jeff Kip – Executive Vice President and Chief Financial Officer Greg Blatt – Chairman, The Match Group Joey Levin – Chief Executive Officer-IAC Search & Applications.

Nat Schindler – Bank of America John Blackledge – Cowen and Company Ross Sandler – Deutsche Bank Brian Fitzgerald – Jefferies Jason Helfstein – Oppenheimer Brian Nowak – Morgan Stanley Peter Stabler – Wells Fargo Securities Kerry Rice – Needham Chris Merwin – Barclays Mark Mahaney – RBC Capital Markets John Blackledge – Cowen and Company Victor Anthony – Axiom Capital.

Good day, everyone, and welcome to the IAC Reports Q1 2015 Results Conference Call. Today's conference is being recorded. At this time I would like to turn the conference over to Mr. Jeff Kip. Please go ahead, sir..

Thanks, operator. Good morning, everybody. Welcome to our first quarter earnings call. Joining me today is Greg Blatt, Chairman of the Match Group; and Joey Levin, CEO of our Search and Application segment. As a reminder we won't be reading our prepared remarks on this call. They are currently available on the Investor Relations section of our website.

Before we get to Q&A I'd like to remind you that during this call we may discuss our outlook and future performance. These forward-looking statements typically may be proceeded words such as we expect, we believe, we anticipate or similar statements.

These forward-looking views 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 fourth quarter press release and our periodic reports filed with the SEC.

We'll also discuss certain non-GAAP measures which as a reminder include adjusted EBITDA, which we'll refer today as EBITDA for simplicity during the call. I'll also refer you to our press release and again the Investor Relations section of our website for all comparable GAAP measures and full reconciliations for all material non-GAAP measures.

Operator, we'll go to Q&A now..

Thank you. [Operator Instructions] We'll take our first question today from Nat Schindler of Bank of America..

Yes. Hi, guys. Thanks. Hey, now that you’re monetizing Twitter, I was wondering if you could give us some more detail on the size of the Twitter user base and....

Wrong call, Nat..

Sorry..

I think we're off the Twitter call right now. Just joking with you..

Oh.

Did I say Twitter?.

Yes. It's all right. I know it's on everyone's mind..

Did I say Twitter? Yes, the Tinder user base, much more important, and probably growing faster..

Yeah, as I said in the prepared remarks we're very pleased with penetration rates so far, renewal rates, you know again, look the data is early. We started a month and a half ago, I think, but so far the penetration rates are very solid. Renewal rates are higher than in our other products, so we're feeling good about that.

Obviously we're very much at the beginning of this journey. If you think about, you know we've talked about OkCupid as a sort of analog for this in the past. Let's just say that Tinder has reached this level of penetration certainly much quicker than OkCupid did, although that's a false analogy because OkCupid had been in existence for a long time.

I think the bigger point is that in the time since OkCupid was at this level, it has increased its penetration level multiple, multiple times, plus five x over the last couple years while growing MAUs dramatically during the same period.

So we are very, very bullish, as we've been since the beginning, about our ability to monetize this product, both directly and through ad revenue, as we started to do this quarter as well. So very, very pleased on all fronts on the monetization side..

Great. I don't want to push too much harder on this, but now that you're monetizing it and it doesn't seem to have a massive competitive threat, what can't we get a little bit more detail about just the size of the user base, MAUs, something to that effect so that we can really get a judgment on how valuable this property could be longer term..

So look, I understand the push. I think the comment to that is this is a business that is still two-and-a-half years old. There's new management in. It is really in every other circumstance but this it would not be subject to the granular quarterly scrutiny that I understand you guys want and I understand that you want it.

Think about Facebook, two-and-a-half years old and decisions they were making and it's just my job is to provide as much of a cocoon for them to avoid the pressures and distractions, frankly, that come from that sort of a disclosure. And I understand that we may pay a price for that right now if that's people's judgment.

I can tell you that in aggregate we've given you our sort of ballpark for the future growth of this business and that's really the best we can do at this point. I just don't want to get into with such an early-stage company the sort of month-to-month disclosure of highly granular months.

I'll tell you that this quarter we had more regs than any other quarter. The MAU growth continues to be solid.

I'll point out that Tinder unlike, Tinder's really cross over between a traditional social network and the traditional dating product in that it has more churn, less engagement, et cetera than a traditional social network but less than a traditional dating product.

So the sort of new user to MAU relationship isn't going to be as strong as it is in say Facebook but it's going to be stronger than it is in a regular dating product. And similarly the ability to monetize is going to be much higher than a traditional social network, probably a little lower than in a traditional dating product.

And that's really the best I can do right now. Obviously if growth were to slow meaningfully or that sort of thing, I'd tell you that but we really just don't want to get into that mark-to-mark every quarter at this point.

And that's a real – you've got to believe me that for management and everything else the sort of distractions and pressures of that are real. And that's why traditionally companies at this stage don't have to do it. And we're lucky enough to have started it and we understand we have responsibilities to the public markets to give as much as we can.

But we really don't want to screw up the long-term value creation of this business..

I understand. Thank you..

You're welcome..

And we'll take our next question from John Blackledge with Cowen and Company..

Great. Thanks. A couple of questions, what was the North American Match paid sub growth, X-Tinder? We had 8%, just wondering if you can unpack that for us? Similarly, what was the international paid sub growth, X-Tinder? That's one.

And then on Tinder, what was the free-to-paid penetration rate in March? And could you compare that versus OkCupid at a similar stage in their life cycles and how that penetration may, penetration rate may ramp over time, if it could be higher than OkCupid? Thanks..

Yeah. I think – look, I'll give you some of these numbers now just because it's the first time with Tinder. Going forward we're really – again, we break down our sub numbers by North America and international and we'll continue to do that going forward.

But because this is sort of a first-time event, the North America numbers X-Tinder were a little higher than what you had. It was a high single-digit, very solid. I think I told you in January that we were in around 6% and it continued to increase throughout the quarter so your number's not far off but its a little low.

Internationally the growth X-Tinder was not as strong. It was more comparable to Q4 levels. Meetic as I said before had sort of a down 14% and now we're building up again, but I think just the nature of the way sort of new registrations come in and old subs rolloff, you're sort of in a trough for a little bit.

So we expect that, the sort of non-Tinder, international thugs to increase sort of later in the year. As far as penetration rate again, frankly we don't give that on any of our businesses and we're not going to give it on Tinder.

There's real competitive issues there but as I said in answer to the prior question it is meaningfully smaller than OkCupid today. We think as we've talked about, we think OkCupid is a good model meaning we think there's a long way to go, but there are some differences too meaning OkCupid is primarily North America where penetration rates are higher.

So we think that in North America and Europe we should be able to hit similar rates as OkCupid, in the rest of the world probably meaningfully lower. So an average it, we don't expect them to have comparable penetration rates, but frankly we think there's room to grow OkCupid from where it is as well.

So I think we're nowhere near the ceiling on Tinder's penetration rate. As for the trajectory I think as I've stressed in my prepared remarks and Q&A sort of for many of the last quarters, it's really hard to predict. And again it's this weird situation we're in by having this early stage company housed in a public company.

If you would look at sort of Facebook's monetization or Twitter's monetization, in the early day it was probably choppy and they were making various trade-offs and decisions, and it really wasn't hitting any particular trajectory. Wasn't really top of mind.

Here I think we're probably a little more focused on it just by our nature but the principle holds which is we're much focused on making sure we continue to get product right.

And frankly we've got a lot of product to do, non-monetization product to do over the next year to really, frankly make Tinder as strong and as great a user experience we think it can be. Obviously, we're monetizing at the same time, but there will be trade-offs along the way.

And that's why I've said in all my prepared remarks this year's sort of quote-un-quote guidance is probably a little, has a smaller degree of certainty than typical because we're faced trade-offs and new facts on Tinder everyday unlike a Match where there's a schedule product release cycle every two weeks and it works like clockwork.

This is still start-up and things slip and priorities change. So, we expect it to grow meaningfully over the duration of the year but whether it's on a straight-line basis or not, my guess would be no..

And we'll take our next question from Ross Sandler with Deutsche Bank..

Thanks, guys. Okay, I had two quick questions on Dating and then one on the buybacks. So just following up on Tinder, can you just – I guess you guys had called out the 200% year-on-year growth from Jan to Jan last call.

Any update there on just MAU growth? And then I think in the prepared remarks there was a sentence around don't be surprised if there's future pivots.

So can you just elaborate on what you might mean there? And then the second question on Dating is, there was some one-time expenses in the remarks, $3 million in this first quarter, $9 million for the second quarter.

I assume that's related to the re-platforming so can you just confirm that? And then on the re-platforming, can you talk about what you're going to be able to do once that's completed and some of the new flexibility that, that offers? And then, Jeff, on buybacks so you guys historically have said that you'll do buybacks opportunistically when you feel like the stock is at a certain threshold or when you're not restricted by any sort of corporate activity.

So this is the first time we've seen it in a while, which best explains the buyback in the quarter and where's the optimism coming from in terms of kicking this back on? Thanks..

Why don't I just take the buyback question first, Ross. I mean as we always say, our policy is that we buy back opportunistically and that's what we did this quarter. Our policy hasn't changed. We say it every quarter. There's nothing different. It still hasn't changed and we just did it this quarter. So with that I'll pass it back to Greg..

Yeah, MAU growth, as I said earlier Q1 was the highest reg quarter we've had. MAU growth continues to be strong. The law of large numbers has the rate of MAU growth declining somewhat as we had just huge growth last year, but still very solid MAU growth.

In terms of pivots, I guess what I mean is just – I'll give you an example and maybe it's more granular than you want but it just gives you some insight. In February when we launched our new release, there was a feature in the product that put an aggregate limitation on the number of right swipes that someone could do in a day.

And the objective there was to effectively help the ecosystem, meaning what we wanted to do was improve the value/quality of any given match. And the way we did that was by limiting the total number of matches.

So what we did is we decreased the volume of matches while increasing the quality and we measure that basically through number of messages sent per match and a whole bunch of other things. So we succeeded directionally.

And then along with that payment monetization outcome, meaning when you hit that sort of limitation you had the ability to effectively buy additional right swipes.

That's worked very well directionally but we're testing whether we sort of got the calibration right, meaning did we – should be constrain volume more to increase quality of matches? Should we constrain it less? Did we get – all that sort of stuff.

And depending on where that ends up that could have a positive or negative impact on monetization in the near term giving the existing feature that we have. Long-term it doesn't matter because we've got 10 other features that we're going to layer on top, et cetera.

But those are the kinds of pivots that I mean, which make sort of tracking linearly in the early days difficult. Again, it could be a positive, it could be a negative, neither with any long-term implications.

It's just in this world of sort of quarterly reporting and everyone is so hawkishly looking at this at a time when that wouldn't ordinarily happen, I'm just preparing the world for non-linearity. It's really nothing more than that.

In terms of the one-time expenses, yes, basically we're doing a massive project that includes sort of rebuilding our technology to make it much more nimble, much more able to sort of with a given amount of work to leverage the benefits both within a given product line, across multiple devices, desktop, iOS, Android, also across product lines, People Media, Match, et cetera.

So all that's happening. That will result in a smaller work force and simultaneously we are reducing the number of principle locations in Europe from seven to three all as part of the same process.

So, if you look at sort of the $3.3 million of Q1 costs, two thirds of that was severance and about one third was sort of contract labor relating to this project. When you look at the $9 million we talk about for Q2, about 80% of it is severance/related legal with the balance mostly contract labor.

So it's all related to this process that will leave us both faster and leaner at the end. I think that hit all of them..

Yeah. That was it. Thanks for the color, guys. Thanks..

All right..

And we'll take our next question from Brian Fitzgerald with Jefferies..

Thanks. Joey, in the letter you mentioned some of the experimental marketing spend at Ask didn't – it drove revenue but it didn't deliver kind of to expectations.

Can you opine a bit on kind of what you were trying to do there and there maybe why it didn't hit what you wanted to and how you're adjusting that and what the implications are for the back half of the year?.

Sure. So you know we talked about the hit that Ask took in terms of its ability to market at the beginning of this year, and so we were doing a bunch of experimental things to figure out where to resume the growth, or return the growth.

And we – some of that stuff worked and some of that stuff didn't, but the major of it is you try out different marketing channels or you try out different marketing different experiences and we put a lot of things out there over the course of the quarter. And we're able to drive revenues through those things but not really profits.

I think where we came out in the beginning of the year, sort of the impact of the business in the beginning of the year we bounced back from that bottom a little bit but I don't see us taking back the volume that we lost and just to give a sense of it, it probably across the website's revenue or website's revenue for us tend in the 10% to 15% range.

And we've gotten back a little bit of that but we didn't get back the majority of it and it will take I think the course of the year to figure out how to build that back. So it's still experimental.

We're trying – I mentioned in the remarks we're – we've been investing in the content and sort of unique proprietary content at Ask to drive a more unique content experience with real reliable answers and we're rolling that out and we'll see how that goes over the course of the year. But we'll have this year to prove that out or not..

Great. And then maybe a quick follow-on.

You mentioned, you comments around improving yield, on programmatic inventory at the various properties like dictionary.com, would you – we think you're doing a great job in terms of the degree of programmatic baked into About, would you say, hey we're trying to – that's the gold standard and we're trying to take some of our other properties and bring them up to About's level of sophistication of yield on the programmatic side.

Is that a valid point and then how should we think about timing in terms of movement to that higher level of yield..

Yeah, so it's definitely a valid point. It's not just though sort of the execution on the product. It's also pulling the data together. So the more data we have across all the properties and we have a good range of properties.

So in there we have dictionary, we have handful of shopping properties and the shopping properties have very good data in terms of what users are interested in, and data that advertiser's value in terms of targeting users.

So there is the data component too on top of just simply executing better and having more sophisticated processes in terms of what use sell premium, what you put into the programmatic marketplaces and how you price though things. So it's a combination of all those things and I think that that continues to phase in over the course of the year.

We have more properties slated for the basically the new programmatic technology and I think we're pretty optimistic about what that will do but it phases in slowly over the course of the year..

Great. Thanks, guys..

And we'll take our next question from Jason Helfstein of Oppenheimer..

Thanks. A few questions. Just back on dating for second. So I think Match EBITDA was a bit lower than expected, a bit lower than kind of us and a few we're looking for.

Can you talk about how much you think that was either perhaps FX being a little bit worse than you'd thought? Did you spend a bit more on marketing because you saw higher, or you saw more attractive CPAs so effectively a bit of a, kind of a pull forward on marketing spend in the second quarter? And then also can you clarify the full-year revenue and EBITDA guidance for Match and if it's change from the last quarter as far as for the full-year guidance? Is that a change from the last guidance? Thanks..

Yeah. I'd have to go back and reconcile but at least excluding FX, Match came in basically where I expected it to come in. So I sort of think about it excluding FX and I'm not sure what the exact intra-quarter impacts were. So I don't if that made it worse or better than where it was three months ago.

But I think I said last quarter that we were going to take EBITDA down meaningfully due to an increase investment in the non-dating businesses which we did and a variety of other factors which we talked about in the release.

So it sort of came on where I expected it, and I don't know exactly where The Street landed or anything else or how we did against that. But FX impacts were real and I think called out but I can't reconcile it against where we were. Certainly nothing unexpected happened in the quarter. Things went generally as we expected.

In terms of the guidance I don't think there was intention to meaningfully move the guidance again. I don't remember the exact words that were used last quarter but I think it's still pretty much the same. We expect, we had lower revenue growth in Q1.

We expect that revenue growth to increase pretty meaningfully and sort of be in that increased ballpark the rest of the year with a return to EBITDA growth in Q2, although still we're riding a wave of opportunistic marketing spend in Dating, which especially in mobile we haven't seen before. So we're enjoying it.

Obviously that comes at the expense of current period earnings but then in the back half of the year we expect to make it up and we expect to be in solid double-digit EBITDA growth for the year. So I'm pretty sure that's generally where we've been. If there was any nuanced word differences they weren't intentional from my part..

Yeah and I would just add there was zero change..

Okay..

In guidance. Just....

More definitive..

Just on the earlier comment I think we said there would be a significant decline in EBITDA. To Greg's point, we had internal numbers. We were on top of our internal number. The Street averaged to a higher number than our internal number, so it's – there's nothing really driving a "miss" there or anything.

It was just the math of the Street analysts that drove that. So....

And then was there a follow-up there?.

Yeah, just quick follow-up on the platform improvements, consolidations. Is there a chance that you got this done kind of sooner? Just kind of how is that going relative? I think the thought would be you'd be done maybe perhaps sometime early next year or early to mid-next year.

Is there a chance that you get the platform upgraded on this year?.

Well, I would say to my limited knowledge if we got it done ahead of schedule it would be the first in history to do that. I mean that tends not to happen. But I'll say it differently in seriousness, it's not going to be a single moment when it's done meaning there are parts that we get benefits as it goes. For instance we have shrunk heads.

We get some of that benefit on the cost side. On particularly sort of the benefits – if you think about this way, there are benefits that – we'll get the benefits that apply sort of directly to like the Match U.S. business this year.

Then the ability to export those benefits to our other product lines happen sort of at the beginning of next year and on into – so it's like a sequence as we sort of roll things on. It's not like there is a single moment where you flip the switch..

That's helpful. Thank you..

And we'll take our next question from Brian Nowak with Morgan Stanley..

Great. Thanks for taking my questions.

The first one, can you talk a little bit more about the Tinder paying sub characteristics? Are they often also paying subs to other dating sites like Match or OkCupid? So are you seeing people pay for multiple sites? Or are they switching from OkCupid toward Tinder? And then the second one just on the full-year revenue and EBITDA guidance, recognizing there's a lot more uncertainty this year kind of given Tinder, but can you just talk a little bit about what's embedded in the guidance for non-Tinder sub growth versus Tinder sub growth for the year? Thanks..

Sure. I think I don't have specific data that shows – again we're a month-and-a-half into this. And I don't have specific data that shows me the cross, specific crossover characteristics of Tinder paying users and other products. What I will say is that Tinder, unlike these other products, are global business, is a global business.

And we're getting very strong payment sort of throughout the world. And what we've seen with regard to payers but just looking at Tinder users generally is that there is a fair amount of crossover but still a huge number of people that Tinder had brought into the category on its own.

So it's always been a characteristic of this space that a fair number of users use multiple products and I don't expect Tinder to be any different. It's one of the reasons that we pursued and continue to pursue a portfolio strategy in this space.

Tinder is clearly the biggest property certainly that we have and I think anywhere if it's sort of measured sort of correctly. But I think there are people who use other products and there are people who use this product and both.

So I don't, there's no overwhelming, there's no like [indiscernible] information that we have relating to Tinder in this area that differs meaningfully from our other products. In terms of PMC growth, I think – just got the, I want to look at an exact number here for a second before I speak out of school.

Yeah, I think for the full year I think if you exclude Tinder you think about it on a global basis, we're looking at the high single-digits is sort of what's embedded in our numbers. So sort of – I said earlier that North America X-Tinder was already there and international was behind.

And I'm not saying it will be an equal blend between the two but on a blended basis we think that we're going to get back to the high single-digit blended rate X-Tinder..

Great. Thanks..

And we'll go next to Peter Stabler with Wells Fargo Securities..

Good morning. Thanks for taking the questions. A couple for Joey. Wondering if you could step back and talk a little bit at a high level on the Applications business, how you feel you are navigating the mobile transition and talk about some of the success or challenges you're seeing on the mobile side X-Tinder.

And then maybe some comment on the B2B side, maybe a little color on trends you're seeing there, how we should be thinking about that issue of the B2B side. Thanks very much..

Sure. On Applications, first I'll start by saying just 300 million PCs shipped this year or somewhere in that ballpark, and that's' down maybe, or will ship this year, and that's down maybe 5% year over year.

I think in five years there will be a billion PCs, if you believe it's dropped 5% a year and I think that's probably an aggressive assumption for how quickly it drops. And when we look at our data we don't see the people abandoning their PCs for search. So I mean it's small, it's probably a low single-digit percent.

We try and look at a lot of different ways and it's probably a low-single-digit percentage year-over-year. So we're not seeing, it's not that we're not seeing the massive growth of mobile of course. We're just not seeing a huge hit to users searching on PCs at least our users and our product.

Now our users may lag the market by 6 to 18 months or something like that but still it's not obvious or pronounced in the numbers. But all that said of course we're trying to embrace mobile. I don't think that the search monetization business translates naturally to mobile.

But there is alternatives in mobile that have similar features which is a relatively easy and quick conversion in terms of payment through the App store, or in App purchases, or advertising and we're very early on that with Apalon. But we like the progress we have on Apalon.

We like the progress we have in Dictionary.com in terms of our presence in the App store, our distribution, our MAUs. Although the issue is outside of games, you know the monetization on our Apps is not huge and not yet comparable to what we're doing in search. So we've got a make those formulas work.

I think we like where we are on the product in terms of mobile, in terms of what we have Apalon and others. But getting the monetization up there is going to take us some time and we got to get the monetization up to a level where we think we can market profitability at scale and we're seeing early signs of marketing working nicely on Facebook.

We're seeing some early signs of marketing start to work on Google but we've got, I think we've got a long way to go in terms of reaching the same scale we've reached on the desktop business we're monetizing primarily with searched. B2B was your next question.

The B2B business has, what we're doing well there is we have a nicely monetizing products that has – within the set of principles where we operate it's I think the best monetizing product and large downloadable branded software players still very much want that service.

We just renewed one of our biggest deals for a three-year renewal and that's, with a leading brand and that's very encouraging in the product.

I think that there is a segment of the market that has gotten away from us that we're not chasing and I – and our existing partners have probably lost some share to that segment of the market, so that's been the confluence of events that's led to where we are in B2B.

I think that we have and will have a sustainable core business there but it's been a drag and especially in terms of year-on-year, not so much sequentially anymore but in terms of year-on-year it is a drag on the earnings growth..

Very helpful. Thanks..

And we'll take our next question from Kerry Rice with Needham..

Thanks. A couple of questions, one back on Tinder but related to advertising. I think you guys had a pretty big ad campaign with Budweiser I think in Q1.

Can you talk a little bit about that and maybe the strategy going forward? Was that a test? Or will we continue to see that grow? And then back on Search and the websites, with things coming down still in the websites but the content coming up, how do we think about that stabilizing through 2015? Do we expect to see some growth in the second half of the year, year-over-year? Or will kind of just pretty much through 2015 we'll kind of see that continue to come down even though we'll see maybe some sequential uptick there? Those are my questions.

Thanks..

Yeah. On the Bud campaign, it was a great campaign. It was a test in that we set out to learn a bunch but they paid us to do the test. So it was also just regular old advertising and it did great and I think it taught us a lot and we are in the process of formulating that ad strategy.

Nothing really to talk about other than that it literally blew away our expectations in terms of user engagement. User experience was actually positive, not negative in the way we did it and so we feel really great about the opportunities there and I'm sure we'll have more to talk about on that front next quarter.

Websites growth year-on-year, I think you should think about probably over the course of the year being a decline. Maybe by Q4 we get back to growth. I think it's somewhere between Q4 and next year just given the impact on the Ask changes..

Thank you..

And we'll take our next question from Chris Merwin with Barclays..

Great. Thank you.

So could just talk a bit about some of the things that you're doing to improve engagement with the app manager eliminating likes? Are there any ways to add some personalization like giving people the option of only seeing profiles of people where there's a friend in common? I think Hinge still gets brought up as a competitor and it really seems the only source of differentiation is just showing people with friends in common.

So could you add that layer of personalization in, except with a much larger user base? And then secondly, is there any change to the long-term guidance that gave for the $500 million in Match EBITDA in 2016? Or is that still the right way to think about the opportunity? Thanks..

Okay. On the first question, we don't, we do a fair amount with the social graphs sort of behind the scenes and the algorithm but not nearly as much as we should and I do think that, that will play a larger role.

Facebook also is changing some of its rules about access to the graphs, which I think ultimately the way those rules changes come benefit people with existing scale far more than not. So I think we feel pretty good about that. I think there, literally I mean when you think about the Tinder product, its genius is its simplicity.

So I don't think you'll see it cluttered up with a million things. But the counter to that is it really hasn't changed very much from the beginning and I think we've got new leadership in and a new push to really do a lot of really clever things.

And I'm not going to get into what they are now but I think over the course of the next year you'll see both a lot of things that improve sort of the core functionality, which is better matches, more engagement just through better matches and through sort of easier means of communication.

And then also probably a few what I'll call game changes, meaning things that fundamentally enable some new functionalities that will be really exciting and that's a little further down the road. But we've got big ambitions on the product side and really in some ways it's an untended garden.

We sort of launched it and have been sort of harnessing its growth without really sort of putting in the kind of rigor and discipline on the product side where you're sort of constantly improving. And I think we're bringing that to the experience now so we're very excited. I somehow lost the second part of the question.

What was it?.

Sure. Just following up on the....

The $500 million. The $500 million. Right..

Yeah..

I guess I'd put it this way, which is when I first talked about it, it was sort of a way to think about the growth as a way that could happen. Since then, unfortunately, we've lost about $15 million to $20 million from pure FX off that number, meaning just FX has worked against us in that way. So if you put that aside, I feel good about it.

Meaning it is still very hittable. We may miss it, as I said last quarter. If we miss it, I don't think it will be more than by a quarter or two. But that's certainly the zip code. We're in that zip code for 2016 and not $400 million as a zip code. That's much more where we think we are.

And I think we're probably two quarters away from giving you real thoughts like this is our real outlook. But in terms of a ballpark way to think of where we should land, I think it's still very solid..

All right. Thank you..

And we'll go next to Mark Mahaney with RBC Capital Markets..

Thanks. Just a question about HomeAdvisor.

Could you just remind us, this $350 million total revenue this year, what kind of profitability, what kind of EBITDA margins can you get against that, either where you think the long-term EBITDA margins for that segment can go or where they have hit in the past? And then just in terms of the sustainability of growth at HomeAdvisor, you talk about the instant booking and instant connect, so it sounds like there's still some interesting, exciting new product developments coming out.

Do you think that of all of the changes and adjustments you've made to restimulate growth there that you've got most of them out except for maybe those two? Or do you think there's still a lot of new product innovations there and that gives you a lot of confidence to say this kind of growth is relatively sustainable, not just for a couple of quarters, but for a couple of years? Thanks..

A couple things. One is I think at its peak, HomeAdvisor EBITDA margins were in the high teens. It's right now a little bit below that. And we think that longer term the margins can certainly exceed that number as it gets more scale and potentially get materially higher.

If you think about the characteristics of a two-sided marketplace that gets scale, if we drive retention appropriately and the sales force becomes a smaller percentage of the revenue, you can get very high margins. I think secondly in terms of new products, we are in the middle of rolling out the direct booking.

We think that's a very exciting product, and it will gain traction through liquidity with both the consumers and the service professionals using it. We'll have a consumer-facing product. We also are rolling a service provider-facing product which is management software that includes calendaring and CRM.

And so we think that both products on both sides of the marketplace are the real key to establishing leadership in the segment. And look, we think, I don't know what inning we're in, but we think that there is a great deal of innovation yet to be done.

We're not done with just these products and we're going to continue to look at improving the user experience and the quality of the technology on both sides of the marketplace. It's a pretty significant marketplace.

I think there are estimates that $7 billion to $10 billion is spent by service professionals on advertising for home services annually, and I think if you look at the leading players in this space we're talking about maybe 10% penetration of that.

Of course then when you involve of online advertising I think it gets bigger, but it's been a space that's been slower to move online than other professional categories given the sophistication of the professionals with technology.

So I think we really can't sustain these growth rates longer than the acceleration we've seen over the last three plus quarters in the over 20% range. Up to over now the over 30% range..

Okay. Thanks..

[Operator Instructions] We'll go next to John Blackledge with Cowen and Company..

Great. Thanks. Just a couple of follow-ups. The search deal with Google is up 1Q 2016, can you give us an update on how discussions are going either for renewal or a potentially new deal with new partners.

And how would the new deal compare to the current deal? And then on HomeAdvisor, Amazon and Google are getting into the local services business which may validate the size of the market or opportunity, how do you think HomeAdvisor is competitively positioned with some of these larger players getting into the market? Thank you..

On a search deal, we're not going to comment on negotiations. I'll say we have active discussions with all the players in the market and we'll certainly report when we have something to report on that. The other one was for you, I think.

Wasn't it?.

Can you repeat the question?.

Yeah. On HomeAdvisor with Amazon and Google's getting into the local services business. How do you think HomeAdvisor is competitively positioned with those players entering the market? Thanks..

Listen. Amazon and Google obviously have tremendous reach in traffic and pose a threat anytime they decide to enter a business. At the same time they're also incredibly broad and have a lot of real estate dedicated to a lot of businesses whereas HomeAdvisor brings a singular brand and focus that they don't.

So we'll have to respect the reach, focus and obviously technological and operational acumen they bring as a real threat we do think that HomeAdvisor's focus is an advantage.

I think secondly, HomeAdvisor has a network of engaged paying professionals that may hit 100,000 service professionals this year which is almost double the second largest network that we know of that's public, which is Angie's List.

Building a two-sided marketplace with engagement on both sides is a little bit of a different job than Google and Amazon have performed in their core businesses to date. And it's hard. We know it's hard because we've been doing it for a long time, and we haven't always been highly successful.

But we do think that having built it, it's something of a moat that we want to keep building with the obvious risk that the other large players present. So we think we're in a good position..

Thank you..

We'll take our next question from Victor Anthony of Axiom Capital..

Thanks. Thanks for taking the call. Just one quick question on Tinder.

I believe you have two pricing schemers, so I wanted to know as far as sub growth the subscribers on Tinder, what's the mix between those two pricing cohorts? And second on the core Match.com business, hoping that you could shed some light on churn rates and the direction or the trend of ARPU over the course of the year. Thanks..

There was a little feedback in your question, so I got the second one. The first one had to do with Tinder pricing, but I couldn't quite get the words.

Can you try again? Well, let me take the ARPU one first which is, as I said before, I think in virtually all of our businesses, putting aside quarter to quarter seasonal variations that I think pricing is going up over time year to year, there are mix issues though that especially Tinder is now in the number. That's a little lower priced.

OkCupid's a bigger part at a little lower price. So on average I think that the rate will come down. The reported aggregate rates will come down slightly over time. But that's net. Each product line is holding or increasing its price. With respect to Tinder, I think you were asking about two pricing levels. I think the two pricing levels are pretty basic.

It's, they're different from country to country. We test things all the time. But it's a, there's a general price and then in general for younger people, there's a discounted price. Think of it like a student membership or junior membership or whatever analog you want to do, it's a relatively common construct. And we've employed that pretty well.

Right now we do no discounting or special offers, but over time that could come as well as the product gets more sophisticated. If that didn't answer your question, please elaborate..

Yeah. I was actually more focused on the subs that you've attracted in North America.

Are they, what's the mix in terms of the pricing plans?.

Oh. I don't get into that direct mix. I think that you've got pretty good balance between, across the A groups from a sub perspective. Obviously the people in the higher price group are more likely to pay for the product, but there's also a higher price. So they normalize against each other to some extent..

Okay.

And how should we think about churn rates on the core Match business?.

They're relatively unchanged over time. They've really been pretty consistent. It's a periodic consumption business. People come; they use it for a while. And then they stop using it and then many of them come back and use it again. So you've got people coming in and out of the system all the time. But at any given time, just taking Match, the Match U.S.

product as an example, at any given time about 50% of the people who are paying that paid previously stopped paying and then come back to pay it again. So you've got people coming in and out of the system all the time which just makes it I won't say unique. But it's certainly got its own characteristics..

Okay. Thank you..

Okay. Operator, I think we're going to wrap it up there..

Thanks, everybody, for joining the call and we're obviously available if you have additional questions..

Thanks, everybody..

Thank you..

Thank you. And that does conclude today's conference. Thank you for your participation..