Match Group, Inc. (MTCH) CEO Shar Dubey on Q1 2020 Results - Earnings Call Transcript
Start Time: 08:30 January 1, 0000 9:16 AM ET
Match Group, Inc. (NASDAQ:MTCH)
Q1 2020 Earnings Conference Call
May 06, 2020, 08:30 AM ET
Shar Dubey - CEO
Gary Swidler - COO and CFO
Lance Barton - SVP, Corporate Development and IR
Conference Call Participants
Nicholas Jones - Citi Research
Daniel Salmon - BMO Capital Markets
Brian Fitzgerald - Wells Fargo Securities
Douglas Anmuth - JPMorgan
Eric Sheridan - UBS Equities
Jason Helfstein - Oppenheimer
Kunal Madhukar - Deutsche Bank
Benjamin Black - Evercore ISI
Brent Thill - Jefferies
Ross Sandler - Barclays
Good morning and welcome to the Match Group First Quarter 2020 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 Lance Barton, Senior Vice President of Corporate Development and Investor Relations. Please go ahead.
Thank you, operator, and good morning, everyone. I hope that everyone is staying safe. We are doing this call remotely for the first time, so joining me from various locations are CEO, Shar Dubey; and CFO and Chief Operating Officer, Gary Swidler. Last night we published our first quarter results along with a shareholder letter which can be found on our Investor Relations Web site.
Before we start though, I’d like to remind everyone that during this call, we may discuss our outlook and future performance. These forward-looking statements may be preceded by words such as we expect, we believe, we anticipate, or similar statements. These statements are subject to risks and uncertainties, and our actual results could differ materially from the views expressed today. Some of these risks have been set forth in our earnings release and our periodic reports filed with the SEC.
With that, I’d like to turn the call over to Shar.
Thank you, Lance. Good morning and thank you all for joining the call. I hope you’re all staying well. As Lance said, we’re doing this a little bit differently, so hopefully it all goes smooth. So what I’m going to do, this morning, I’m just going to share a few quick thoughts. Gary is going to provide a little more color on financials and then we’ll open it up for Q&A.
Back in Feb at the last call, we said we had a great start to the year. All of our brands had exciting plans and we were hoping for another great year under our belt, and then of course COVID happened. We actually started tracking this back in Asia in February, and as you know, we have offices in Seoul, Singapore and Tokyo.
And even as we were contemplating closing some of these offices, we were closely monitoring our businesses, particularly our Pairs business and Tinder in those markets. And for most of that period, our metrics remained largely un-impacted. Until around mid-March when the stories from Italy and then Spain followed by Washington, California, New York started coming in, and within about two weeks all of our offices around the world shattered.
Fortunately, we had two to three weeks’ head start and we were able to make sure all our employees had the right remote access to our systems, they had the right equipment and tools and we were able to quickly go remote with minimum disruption. And it's gone remarkably well thus far. The teams have managed to maintain their connectivity and productivity. In fact, we just did a survey and the vast majority of our employees say they can sustain this for a few more months, if needed.
In terms of business impact, between the letter at the end of March and the one yesterday, we’ve tried to explain in a lot of details what we’re seeing. But in case you haven’t read the letter, some very key highlights. Engagement is up, especially among young and especially among women. We did see software in new sign ups and propensity to pay as the pandemic unfolded.
Regarding new sign ups, we think there are three drivers for that. One, if you’ve been a resistor to the category, now may not seem like intuitively the right time to justify joining. Two, a number of our brands actually rely on word of mouth marketing quite a bit. And it’s hard – that becomes harder as social life has pretty much come to a standstill. And finally, we did reduce our marketing spend. We wanted to make sure channels that no longer made sense we pulled out of. We also wanted to make sure none of our creatives were dissonant.
In terms of propensity to pay, we first saw the impact in new subscribers, particularly in hard hit areas and among the older demographics. In fact, some of our brands with more older demos saw double digit declines in the second half of March. But once the worst of the new cycles were kind of done, April started seeing some stabilization in all our brands, particularly in North America.
Now there’s lots of puts and takes and specific trends by country and city, but in aggregate all of our brands saw some year-over-year growth in first-time subscribers in April. We are also seeing some declines in the price per payer, particularly on Tinder, both in terms of shift to lower price skews and some declines in à la carte purchases.
As we mentioned in the letter, we did a bunch of product and marketing pivots to make sure we were helping our users navigate these crazy times. And in all of the changes we’ve seen in the past six plus weeks, I particularly wanted to call out two positive trends. The first, women engagement is up meaningfully. There’s been a big positive gender mix shift in both new sign ups and active users and this is a very healthy thing for a dating ecosystem and should be beneficial to us on the other side.
The other is the use of video. We have long believed in the power of video, particularly to reduce the disconnect that happens between having a conversation online and then meeting in person for the first time. In fact, we first launched one-to-one live video back in 2011 when the world was mostly a desktop world. And we’ve made several attempts since, but have never really got much adoption. I do think this time, however, as users are being forced to use it, they’re seeing the benefits and are likely to continue using it even after all this is over.
And finally, much is uncertain today but the one thing that has become certain, our products fulfill a very fundamental human need and it’s become that much more critical now. Social isolation is hard for human beings, especially if you think of single people then suddenly all avenues from meeting other people like school, work, church, parties and concerts are all gone. Imagine if there was also no Tinder or Hinge or Match or PlentyOfFish. There is a reason we’re seeing this increased engagement and for the all the short-term hiccups we’re going to see, this need isn’t going to go away.
The other thing I wanted to mention over the past few weeks, we’ve heard some wonderful stories of how our users are dealing with these times. We’ve had our success couples getting married on video, on rooftops with their friends toasting them from other rooftops. We’ve even heard some stories about drive-thru weddings. We’ve heard stories about people who are slowing down and getting to know one another, spending time cooking and hanging out virtually.
We’ve also heard about people who have fast tracked their relationship and moved in to shelter in place together and having a good enough time that they wrote to us about it. We’ve heard stories of people meeting at a distance in grocery stores and dog parks and for all these users who have been chatting and video dating, we can’t wait for them to meet on the other side of this.
And with that, I’m going to hand it over to Gary.
Thanks, Shar. We’ve included most of the financial details in our letter and press release, so I’m only going to hit a few highlights. All things considered, we had a very respectable Q1 with 17% year-over-year revenue growth, 19% ex-FX as the virus impacted our trends in March.
EBITDA increased for the quarter 11% year-over-year to $172 million. We were able to reduce our deferred costs, including some marketing and legal spend in the last few weeks of March. Tinder showed solid user trends in Q1. The business added 1.3 million subscribers on a year-over-year basis, 28% growth and grew direct revenues 31%.
Our non-Tinder subscribers were roughly flat year-over-year in Q1 and these brands generated 2% direct revenue growth. Revenue in subscriber growth at Tinder and the non-Tinder brands were negatively impacted by the effects of the virus. The impact was most notable at our brands that have an older subscriber base, including OurTime, Meetic and Match which initially saw meaningful impact from the virus.
Brands like OkCupid and Hinge, which have a higher concentration of users in densely populated markets with the most severe outbreaks, such as New York City and London, also saw more initial impact from the virus. Despite this, Hinge, OkCupid, Pairs, Chispa and BLK all contributed solid year-over-year subscriber growth in Q1. Hinge’s pricing optimizations led to rate and revenue improvement, but conversion declines, a trend we expect to persist this year.
Our separation from IAC remains on track to close by the end of the second quarter, subject to the satisfaction of the closing conditions. We’ve set our virtual shareholder meeting for a vote on June 25. The strategic rationale for the separation that we laid out in December remains fully intact. Despite all the stock price volatility since December, the exchange ratio has barely moved, so the transaction looks pretty much the same as it did when we signed.
As a result of the virus’ impact on our EBITDA, we expect to end Q2 with a little higher leverage, slightly below 5x net leverage and delever a little more slowly than we had originally expected. Given our strong free cash flow generation, we're confident this leverage level is manageable for us. We still anticipate we’ll be under 3x net leverage in 18 months.
Like many companies, we have run countless scenarios on the outlook for the remainder of the year. It’s difficult to be precise about the full year right now given all the uncertainty about what might happen with the virus and the lockdowns. As you know, subscription businesses like ours tend to hold up a little better as things soften but may not bounce back as quickly as some other types of businesses, although our à la carte revenue portion can.
We provided an outlook for Q2 which shows year-over-year revenue growth, but a slight percentage decline sequentially. As a subscription business, the effects of a slower March and April in terms of new users and first-time subscribers will continue to be felt through Q2.
We expect Q2 EBITDA to be close to flat when compared to last year, if you add back the $7 million of separation-related costs we expect to incur in Q2 2020. We generally don't adjust for these costs when we report, so we expect our reported EBITDA next quarter to be down by around the amount of the separation costs.
As a result of the crisis, many advertisers have left the market leading rates to decline and making our ad spend more effective. Therefore, we’re planning to continue spending where we see solid opportunities to drive subscriber growth even at the expense of near-term margin.
In general, while we’re deferring some non-critical hiring and generally trying to be judicious with costs, we intend to keep investing in our businesses because we know people are increasingly engaging with our products and are eager to get out and date in real life again. While the short term may be choppy, longer term we’re very confident in our ability to drive solid growth for our shareholders.
With that, I’ll ask the operator to open the lines for questions.
We will now begin the question-and-answer session. [Operator Instructions]. The first question today comes from Nick Jones of Citi. Please go ahead.
Great. Thank you for taking my question. Just one, I guess it’s probably a little nuance. Can you give an update on what trends you’re seeing in the country, states, regions, cities where social distancing measures are loosening and businesses are starting to reopen?
Sure. I can take that. As you look at the geographic effects, it’s been rather interesting and there’s obviously lots of different stories. But broadly we’ve been thinking about this as all markets fall in one of three categories. The first bucket was the really severely impacted markets. I would put markets like Italy, Spain and even New York in that category. These markets had the largest impact on our business and they all have been the slowest to recover. The second group of markets I would say are the ones that have either a low or moderate impact of the virus. And while they’ve had some restrictions, they’ve never really locked down and I would put Sweden, South Korea, a number of states in Central and Southern U.S. in that bucket. And most of these markets barely saw any impact. And then there is a large part of the remaining, which is somewhat in between where the effects haven’t been as – the virus effects haven’t been as bad as Italy and Spain and New York, but they did go into a much more restrictive lockdown. And these are the markets where we saw a real impact during the heavy new cycle, but they have all stabilized and recovered. And the types of markets in here I would include most of U.S., except states in the two coasts, Nordics, Germany, et cetera. And of course, there’s a lot of exception, for instance, Japan which we first thought was in our number two bucket of un-impacted, once they cancelled the Olympics and went into the emergency restrictions, we are now seeing a moderate impact there and so we call it in our number three bucket. Also, markets like India, Brazil and several South Asian markets are more impacted in April than they were in March, for instance. And about your question about how are we seeing when businesses are reopening. The two markets we’ve been watching closely, one is Germany that’s sort of loosened some of its restrictions for about two weeks now and then Georgia of course in the U.S. In Germany, Tinder, Meetic and even OkCupid which is smaller there, have seen some nice uptick. Georgia has also seen some nice trends, but I wouldn’t yet jump to any conclusions. It’s too early. It’s hard to tell how much and how long this might stay.
Great. Thank you.
The next question comes from Dan Salmon of BMO Capital Markets. Please go ahead.
Hi. Good morning, everyone. Shar, maybe return to those two big ideas that you features about female engagement and video, and one must imagine that those two things are similar, correlated together. And so I wanted to ask a big picture question about what I think you and management have talked about before as the challenge of always bringing the female experience up to be a little bit more in line with expectations. And how important do you think video might be to that? And what I’m saying is that we’ve seen features like females message first, we’ve seen those sort of things roll out. Does it make sense where you have a product where, for example, you need to go on a video pre-date first before you could ever meet in person? And then just broadly if you could talk about some of the more important video initiatives across the platform, I know you touched on a few things in there. But what would be some of the most important in your mind and what are some of the key sort of milestones for them that you have? Thanks.
Sure. Yes, women engagement is a metric that we always strive in all of our product and marketing efforts to try to increase because it is one of the most beneficial things to the ecosystem. And we have believed in video. I have certainly believed in the power of the live video technology for a lot of years here. We’ve given it a try many different times and I said, I’ve always been disappointed with the level of adoption and usage we’ve seen over the years. But last year we actually – as we were seeing people become a little more comfortable with video generally, we wanted to make sure we were prepared to leverage video when we thought consumers were ready for it. And so there were two particular initiatives last year that we launched around video. The first was one-on-one video on our platform called Ablo. And that particular experience was actually quite rich for one-on-one video. They have icebreakers. They have great moderation capabilities, et cetera. And the moment this lockdown happened, we did take some quick learnings from Ablo and we wanted to roll it out on our other platforms. In terms of where things are, we’ve already rolled it out at Match and Pairs in April. It’s coming in the next week or two on Meetic and Hinge and Tinder should be testing it out in June. So that’s the one-on-one experience. On the other use case we’ve been experimenting with since about Q4 of last year is the one-to-many live video experience and as we went into this situation, we expedited our global rollout and we are now out fully on POF and Twoo, two of our platforms. And I’m very hopeful that this time around it’s going to stick. I have always believed that a half date on video is a great and safe way to increase the quality of your first date. And so hopefully this stays.
That’s great. Thank you very much.
The next question comes from Brian Fitzgerald of Wells. Please go ahead.
Thanks. And this might be a follow up to Dan’s question, but as you mentioned video is becoming more important in your platforms both for communication but also for content consumption with things like Swipe Night. Can you tell us a bit about the cost structure there? Are you using cloud resources there? Anything you can tell us about how that’s evolving maybe to the multi-cloud or forward commitments to reduce the costs and get ahead of that cost curve as you continue to see video ramping as a feature?
Hi, Brian. It’s Gary. Why don’t I take a crack at that? Yes, we are using third party providers all on cloud to handle video. As you may know, a lot of third party providers have emerged over the last few years and they take advantage of the benefits of scale and really drive down the costs. So it’s actually become a lot more economical than it was just a few years ago and technology has gotten a lot better. So we’re working with a couple of them already and we’re talking to some others. We’ll see how this evolves as we kind of get up the curve on video. But so far so good. If at some point it makes sense for us to do more in-house, we could certainly consider that. But right now it looks to us like using third parties is a pretty cost effective and efficient way of doing this. And as you know, I think on the one-to-many we’ve done that through some partnerships as well. So we feel good about our approach. We think it’s giving us the flexibility that we need. And we’ll see how adoption and usage really scales up and kind of go from there. So we’re negotiating different rates, different structures, trying to be as mindful of costs as we can because we’re not on one-to-one initially monetizing that directly, we want to try to be as judicious as possible on the cost front. But we do think that the benefits overall to the ecosystem of taking on that cost will be significant and essentially will pay for themselves. So we’re optimistic about that. And then as we get more sophisticated as usage ramps up, we’ll see if there’s some opportunities to monetize either directly or indirectly through increased subscriptions, whatever it may be and that we think will also help us cover the cost. So there might be some short-term impact to these costs, but we think over time we’ll find ways both to drive them down through the third party providers and find some ways to monetize and make this into a strong business for us. So that’s kind of how we see the approach on video.
All right, thanks, Gary.
The next question comes from Doug Anmuth of JPMorgan. Please go ahead.
Thanks. I just wanted to circle back on the increased engagement that you’re seeing with females and particularly under 30. Just curious if you can talk about whether these are mostly existing users or are you also adding new users in the demographic? And then just given the importance of this user group, is there anything that you’d highlight that you’re planning to do to retain these users or convert them more into paying subscribers? Thanks.
Yes, sure. We are as excited about this increased women engagement as the questions that are coming in. We’ve said – in terms of new users, generally we said we’ve seen some weakness there. But of all the demographics, the younger female users have been the least impacted; in fact, in some instances have even been up. So the increased engagement among women and young women is coming from both new and existing users. And our hypothesis at the moment as to why that’s happening, we’ve always known that the pace of dating varies by age and certainly by gender and we think that as the pressure to meet in real life reduced amidst the pandemic, women got more comfortable engaging more actively on the platform. And we expect some of this may dissipate after life goes back to normal, but we’re learning a lot of insights and the teams are hard at work to making sure we adapt the product to ensure we maintain some of this increased activity. I can’t get into a lot of details about it, but we’re definitely looking at this area very closely.
The next question comes from Eric Sheridan of UBS. Please go ahead.
Thanks so much. I hope all is well with the team. Maybe following up on Doug’s question and broadening out beyond just one gender or age demo, what learnings have you so far to date that might change the way you think about allocating marketing dollars either by degree or dollars or channels that you might expect a higher return when you think about acquisition retention and reengagement not only in this environment but looking beyond this environment? Thanks so much.
Why don’t I give that a shot and we can kind of go from there. I think in general it’s been a very interesting environment for marketing since the pandemic really struck, Eric. At first, we kind of pulled back. It was kind of our natural reaction as it wasn’t clear kind of where things were going. We pulled back pretty hard, maybe in retrospect a little bit too hard back in March. And we’ve been adjusting ever since and we’re having a lot of conversation about what to do with marketing kind of the rest of the way. The reality is that advertisers have pulled back very significantly in a lot of places and the returns we’re seeing on our marketing are incredibly strong right now. So we’re trying to take advantage of that. We’re putting back some marketing spend in pretty quickly here in April. The good news is, we tend to have a very flexible and fluid approach to marketing and we analyze returns very carefully. And so we can pivot and keep moving and adjusting and that’s what we’re going to keep doing and I think we’ll be doing that clearly through the year. So on the acquisition front, first of all if you look at our businesses like Meetic and Match which focus a lot on TV and on online like Facebook, the opportunities there, the returns there are very, very strong. And so those are places where we can go and increase spending and really see strong returns on that spend. In Japan, we’ve seen some additional opportunities open up with new social networks coming online and increased usage of those social networks in Japan. So we’re optimistic that we’re going to see more channels and that should help offset some of the effects of the lockdown that we’ve seen more recently kind of imposed in Japan. In general for the year, I’m not expecting our marketing spend to be up dramatically right now but we are holding back a reserve, if you want to think of it that way, in terms of marketing spend and we’ll see how this plays out. If marketers don’t come back, if travel and other really stay shut the rest of the way and we continue to see great opportunities to acquire customers, we’re going to spend into that, as I said, even at the impact of a little bit of margin through the rest of this year, because we think that will help us late this year into next year and continue to drive growth. We’ve got lots of room, especially internationally, to drive more brand awareness, more understanding of the category. We’re going to continue to spend there. And there’s other places where we can look to spend too, for example, our PlentyOfFish business showing a lot of momentum, generally a lot of momentum in live streaming. It’s a place where we haven’t spent a lot of marketing recently. But if we see some opportunities, we could go somewhere like that. The Hinge business, with a lot of momentum on the user side, is starting to really generate some revenue for us now. I think there’s real opportunity there as well in the back half of the year to continue to gain share even right here in the U.S. as things hopefully continue to open up. So we’re watching this all very carefully trying to adjust literally week by week. We have that flexibility. As we said, there’s not a lot committed so we can adjust and pivot and that’s what we’re going to continue to do through the year.
Great. Thanks for the color.
The next question comes from Ross Sandler of Barclays. Please go ahead.
Ross, are you there? Ross? It doesn’t sound like we have Ross. If you wouldn’t mind may be just going to the next question?
Certainly. The next question comes from Jason Helfstein of Oppenheimer. Please go ahead.
Thanks. Two questions. One, maybe talk about we should think about or your expectation for renewal or churn kind of maybe exiting this quarter and into next quarter? And then second, coming out of COVID, has that changed your thinking for '21 or 2022 investment plans around Asia and India? Thanks.
All right. Why don’t I start and Shar if you want to jump in, feel free. So on renewal rates, it’s a good question. It’s something that we’ve always been watching very closely. As people are locked down, would renewal rates really be affected? And thus far across the brands we have really not seen any impact in renewal rates. So they’ve been a stable really pretty consistently across the portfolio which is very good. But it is an area of risk as the lockdowns persist and so we’re watching it day-to-day, week-to-week but so far pretty static and that’s what we’ve assumed through Q2 and in our minds kind of through the rest of the year, but obviously that’s one area where things could swing depending on how those go. But it looks good so far and obviously we’re kind of six weeks in, seven weeks in to the teeth of this. So that is very encouraging on the renewal rates front. In terms of the impact on our overall Asia long-term strategy, we don’t really think anything has changed. We’re still very optimistic about that market. That’s where there’s a lot of population growth, a lot of people generally. So I don’t think anything has changed. That’s always been a long-term strategy we’ve been talking about 2022, 2023 revenue contribution from Asia, so it was always kind of a five-year plan for us. And we think a lot of the dynamics are very much still in place. So we’re still focusing on building our Muslim business which we think will have a real impact in Asia in a bunch of Asian markets. We’re still building our matrimony business in Japan which we think there’s a lot of opportunity to take share in that market and potentially bring that into other countries that have matrimony markets, like India. So strategically we’re still focused on all of this. Nothing has stopped or slowed, but we’ll have to see how the virus plays out and whether that adjust things for us over time. As Shar mentioned, geographically the markets have been affected in different ways over there. So India is under pretty severe effects right now. It’s an important market for us. It’s a place where we had a lot of expectations, so we’ll see how that market fairs going through all this. It’s probably a little tougher for India to bounce back than maybe some other markets. Japan had been holding up extremely well. More recently, it’s been a little bit softer as they’ve encouraged people to stay home. And then you’ve got a mixed bag through Southeast Asia. Hong Kong and Singapore have been stronger. So it’s not one monolithic market in Asia and we’ll have to see what the effects of this virus are and whether we should adjust, but right now certainly high level strategically we don’t see a difference whether it changes timing by a quarter or two for some of our initiatives, some of our spend, some of our marketing spend or other efforts, we’ll have to wait and see. But right now we’re pretty much all systems go on the Asia front.
The next question comes from Kunal Madhukar of Deutsche Bank. Please go ahead.
Hi. Thanks for taking the question. I’m curious about the guide especially insofar as you extend April – the 9% growth in April through the rest of the months, you actually see a bit of sequentially flat revenue for 2Q. So I was wondering what the assumptions were as far as the guidance is concerned? And a quick one on the February growth which was like 23% ex-FX, that is reminiscent of the growth that you had in the second and third quarter of last year before the Apple iOS kind of impacted. So is that the kind of run rate we should be kind of thinking of on a more normalized basis? Thanks.
Okay. Let me try to take those and just again Shar certainly if you’d like to jump in, please do. I think on the guide in terms of kind of the impact on revenue for the quarter given what we showed you that we did in April, I just think there’s – it’s important to understand the dynamics of this subscription business. Things that have happened in March and April around new users, which we’ve said, have been tougher around first-time subscribers which were down in March and have recovered some in April will affect – we’ll feel those effects through the quarter. So you can’t just look at kind of that one month in isolation. We’re going to feel those effects because obviously the duration of a subscriber is multiple months. And so the impact of what we’re able to see from a new users sign ups perspective and a first-time subscriber perspective affect us through the quarter. So we’ll see how the rest of the quarter plays out, but our view on the quarter is obviously very much informed by April. In general, we looked at the trends that we saw across the businesses. We looked at them in March. We looked at them in April to try to get a sense of what the virus was doing. Obviously, there was some improvement in April. We tried to then kind of go brand by brand and make some adjustments for what we expect to see in May and June as a result of the trends that we had seen in these brands once the pandemic really got going in March and April. And so that’s where there’s a little bit of uncertainty. But in aggregate, we’re sort of assumed that the April levels kind of flow through the rest of the quarter, but we did go brand-by-brand and tried to figure that out. And again, that’s where guiding is a little challenging in this kind of market because the trends have moved around week to week to a pretty significant extent and predicating them through the rest of the quarter is not easy. But given that we’re probably through the quarter and given the recurring nature of our business, we’re able to give you a pretty good sense of where we think things are going to come out. But we did say, I think absent significant changes from April, this is kind of what the quarter looks like. So that’s how we’ve kind of factored that through the guide. And then in terms of kind of our longer-term expectations, I don’t think anything has really changed. We’ve always thought of trying to drive a business that could grow in that kind of 15% to 20% range, mid high teens range if you want to think of it that way, from a top line basis. And nothing has shaken our faith in our business that we don’t think we can continue to grow like that once we start to get back to kind of “more normal times.” I don’t know exactly when that’s going to be or what normal is really going to be like. But we still believe the business should be able to do that once we get there. Again, it’s important to remember the dynamics of the subscription business. If we’re having these softer impacts through the rest of this year or 2020 is affected by what’s going on, that will linger into 2021 to some extent. So there will be a period of time that it’s going to take to kind of recover and dig back from the softness that’s created this year from the virus. That’s the nature of the subscription business, so it won’t bounce back right away but longer term we remain confident in being able to drive a business that grows at the same rates that we’ve always talked about. Nothing has shaken our confidence in that at all.
Okay. Thanks, Kunal.
The next question comes from Benjamin Black of Evercore ISI. Please go ahead.
Great. Thanks for the questions. Perhaps a broader one here with record unemployment claims coming through in Match and just dating products in general relying on consumer discretionary trend, I’m curious to get your thoughts on perhaps the puts and takes of how you guys are equipped or thinking about navigating a deeper recession? Thanks.
I can take a stab at it. We’ve obviously been thinking about that. And as you look back at the last time we were dealing with a financial downturn back in 2008, 2009, generally our category and industry performed well and Match in particular grew very nicely during those years. We had good wins on product and marketing but we were obviously a much smaller business. We had a far smaller footprint geographically back then. So in this time it’s also a little bit different in terms of how global the impact seems to be and it is a combination of sort of insecurity of livelihood combined with insecurity of life. So it’s hard to tell exactly how this is going to go on. The one thing I will, however, say, from everything I know, the need for relationships and dating is not going to go away. I often say that like if you look at Maslow's hierarchy of human needs, right above food, shelter and security is love and relationship. And also relative to all the other ways of meeting people, we’re – concerts and other sort of events, et cetera, we’re still far more inexpensive and efficient a way to meet. So that’s sort of the balance that we think is how it’s going to impact our business.
Great. Thank you.
The next question comes from Brent Thill of Jefferies. Please go ahead.
Good morning, Shar. Longer term, does this dynamic potentially accelerate the shift to online dating I imagine with the many first-time users coming in and they convert, those become a much bigger tailwind coming out of this.
Yes. One of the things that we’ve all done as we’ve sort of paused here in life, we’ve all reevaluated our priorities and the need for relationship and human connection we’ve realized has become so much more important. And as I said, a lot of the other sources of how people generally meet in schools, concerts, parties, events, those are becoming more challenging. And so our products have to be more attractive to the category of resistors over time. We should be able to tell a more compelling story about the value of our services to those who have resisted it thus far, particularly in markets where penetration is still low. And we provide a much more safer and efficient alternative that doesn’t even require to step out of your home should this continue for longer. So I do think there will be some implications to penetration of the category.
Just a quick follow-up for Gary on Hinge monetization. Can you just talk through where you’re at or kind of when you expect that to happen?
Yes, we’ve really gotten that underway now this year and we’re making good progress. We feel good about how that’s going. As I mentioned, we started to optimize a little bit on pricing which is coming at the expense of some conversion but really helping us from a revenue standpoint. So we feel that that plan continues to generally be on track. That business generally continues to be on track with what we had expected and we’ve got more to come on the product side as the year unfolds, both subscription and à la carte driven. So Hinge continues to execute well and we remain very optimistic with the trends there.
And the last question today comes from Ross Sandler of Barclays. Please go ahead.
Hi, Gary, can you hear me now?
Yes. I was a little worried about you before. Are you okay?
Yes, as good as I can be, I guess.
Yes, I understand.
So my question is, you guys mentioned in the letter the product pipeline remains on track with Tinder for 2020. So I guess given all the changes in behavior that you’re seeing, how does that impact the revenue product prioritization for this year? And how does it change your thinking on subs versus ARPU? You talked about pay as you go and a few other things that you were thinking about doing before COVID happened. So how has your thinking evolved on revenue products for Tinder?
Gary, I can take a stab at it. Ross, in times of sort of what has changed, you’ve seen us react already. We are definitely trying to capture and capitalize on the two key trends that I had mentioned, women’s engagement and using video, and so that obviously has been a change to most of our brands’ roadmap. But beyond that, our plan to continue building and testing features as we have planned before remains the same. I do think while there may be some pressure during these lockdown periods, particularly for certain types of monetization, once we’re on the other side of this it should bounce back. And we will build them out. We’re committed to building them out. We’re going to test them out. We may delay full rollout particularly if we don’t think market conditions are entirely favorable. But as of now, it hasn’t actually changed much of our plans on thinking around product roadmap.
Okay, great. I think we’re going to leave it there. Thanks everyone for joining us and stay safe. Hopefully, we’ll not have to do a call from multiple locations next quarter and we’ll be back to fully normal ways of doing things. So thanks again for joining and we’ll see you all next quarter.
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