Match Group Inc (MTCH) 2014 Q4 法說會逐字稿

Good day, everyone, and welcome to the IAC reports Q4 2014 results call. As a reminder, today's call is being recorded. At this time, I'd like to turn the conference over to Mr. Jeff Kip, Chief Financial Officer. Please go ahead, sir.

Thanks, Operator. Good morning, everyone. Welcome to our fourth-quarter earnings call. I have here with me Greg Blatt, Chairman of the Match group, and Joey Levin, CEO of our Search and Applications segment. Just to remind you, we will not be reading any prepared remarks on this call. They are currently available on Investor Relations section of our website. Before we get to Q&A, though, I would like to remind you that during this call, we may discuss our outlook and future performance.

These forward-looking statements typically may be preceded by 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 will also today discuss certain non-GAAP measures, which, as a reminder, include adjusted EBITDA, which we will refer to today as EBITDA, for simplicity, during the call. I'll also point you to our press release, and again, to the Investor Relations section of our website, for all comparable GAAP measures and full reconciliations for all material non-GAAP measures. And with that, we will jump right into Q&A. Operator?

(Operator Instructions)

John Blackledge, Cowen and Company.

Great, thanks. Three questions. First, with Core Match registrations up 30% year over year in January, does that imply a year-over-year increase in net paying sub-ads in 1Q 2015? What are mobile and desktop registration to paid conversion rates?

And are the January results evidence that Core Match has turned the corner? Second, at Match, can you quantify the significant first-quarter EBITDA decline on a year-over-year percentage basis? And also quantify investment losses in the non-dating businesses in 1Q 2015 and 4Q 2014? And then lastly, for Tinder, just timing for global monetization? And is advertising on Tinder in the plan for 2015? Thank you.

You have challenged my note-taking prowess, so let me --

I can repeat.

I think we've got it.

Let me try and hit all of it. There were a lot of, I think, subparts in there. So let me try and hit. On the 30% red growth, think about it this way. Which is, in any given period, your paid subscribers, your new paid -- sorry. During a period, your subscribers are going to be partly the subscribers who came into the period. And then a new set of subscribers. And those new set of subscribers are going to come, really, from three different places. One is the regs that you are getting at that time, call that the 30% in January.

Then you get a piece from regs who didn't convert as quickly who are the prior period. And then you get a bunch from re-subs. So people who had subbed before, and come in. We're seeing big growth in that top section, which is the 30%. But it certainly doesn't translate into 30% paid sub growth in the same period. In February, we will have another good February. And then we'll also have a better reserve of old regs from January, because we will have had a great January.

So the momentum builds over the course of the year. It is very positive sign, but it takes a while to trickle into that PMC growth. But just as an example, though, like I just looked at the flash numbers for January, and we ended January with North America subs up 6.3%, versus, I think, December ending in the 4%s. So it shows you it's not -- it doesn't translate directly, but the momentum is building, and we expect that momentum to build throughout the quarter. One of the things that's going to drive a lower Q1 EBITDA rate is, we are increasing marketing spend overall. But January to January was actually even. The big increase is coming in February and March.

So we expect North American PMC growth to accelerate meaningfully over the course of Q1. In terms of, I think, mobile to desktop conversion, there is different conversion for mobile web, for the iOS app, the Android app. In general, it's a little behind desktop. It's been getting better. But it differs across three, so I'd say there's a small deficit on a blended basis. But clearly, with the kind of volume we are seeing, that is a net pickup. Meaning we will take the dilutive conversion for the significant increase in regs. There is no question that the positive offsets the negative there.

In terms of whether it means Match has turned the corner, look, I think we are having a really good January. We expect to have a good year. I think last year was obviously not our best. We are doing a lot on product, our marketing is better. I think there was a shock to the system last year, for the overall, with Tinder's explosive growth. I think the system has digested that, meaning Tinder is still growing really well. But we are seeing accelerating growth in everything else. So we feel really good about it.

Next, I think, was a question on Tinder monetization, but I'm not sure exactly what it was. Why don't you repeat?

Yes, just the timing for the global monetization? And then is advertising on Tinder in the plan for 2015? And I had one other one.

Okay. We started the test in, I think, December. The test is ongoing. We expect to be global, certainly, by the end of Q1, with a full rollout. It's a little later that we thought, but that's the life of a startup. And startups are inherently -- they are not as regimented, in terms of when everything exactly happens. That's the nature of a two-year-old, fast-growing enterprise. But we are out, we're testing in both iOS and Android right now, and we expect to be fully rolled out, certainly this month.

In terms of advertising, I think I said on the last call, when we've talked about Tinder numbers in the past, we've not included ad dollars, but I've also said we do expect add revenue to be a meaningful part of the mix. I think that exactly when we will bleed that in will be a combination of opportunity, resource allocation choices that we make. I would certainly expect to have some ad revenue this year. Exactly when, and to what extent, I'm not prepared to say at this point. And you said you had one other?

Yes, just quantifying the significant 1Q EBITDA decline on a year-over-year basis?

Sure.

And the non-dating losses.

Right. The biggest thing is, we are -- if you think about it, I think there's about $15 million more of COA spend in Q1 2015 over 2014. I think there's then, call it, $4 million or $5 million incremental net investment in our non-dating businesses. And our investment, part of that is Tinder, so our historical investment businesses. As I think I said in the prepared remarks, we are expecting more than 100% of the total losses for the year in our non-dating businesses to be in Q1. And so that takes a big hit, and that's different than last year. We accelerated a lot of the spend, especially in the DailyBurn business, where we just found that the returns are just much better early in the year.

And so when you put all those things together, that really drives the Q1 down. I think if you want to think about the non-dating businesses for the year, the investment there is in the low- to mid-teens in millions, which is down meaningfully from last year. And at least right now, we would expect that to be neutral to positive in 2016. That's how we think about it. So those factors together drive down the Q1 EBITDA. As I think I said, we expect Q2 EBITDA to be positive and healthy, and for the full year to be the same.

Thank you.

You're welcome.

Ross Sandler, Deutsche Bank.

Okay, guys, just one following up on Tinder, and then one on Search. On Tinder, can you give us an update of what the total number of MAUs currently on the platform are? Or maybe how fast MAUs are growing? And then what kind of total revenue contribution do you expect from Tinder in 2015?

And then, if Joey's on the call on Search, can you give us a little more color on the over $300 million in EBITDA guidance for 2015? You guys noted some of the hiccups from the recent changes at Google for Ask. But that's a pretty meaningful stepdown versus what was reported in 2014. So just more color on what's going on there? And then any update on the Google contract renewal? Thank you.

Yes, I think Tinder MAUs continue to grow really well. We've not disclosed the aggregate number. I think they are up approximately -- they were up about 200% of what it was. So up 100%, I guess, over last year. And growing very strong. In terms of --

January was the biggest month we've ever had.

Yes, January was the biggest month we ever had, which you would expect, because that's the seasonal best month for this category. But growth continues -- that's right. By far, growth continues very strong in this business, and globally and domestically. So it's continuing to roll from a user-growth perspective. In terms of monetization, I laid out last time, a general strawman that we thought was a reasonable strawman. Nothing's really changed in that. I also, in my prepared remarks, I think, talked about how it can be choppy and uneven.

We expect to generate meaningful revenue this year, with some modest EBITDA contribution and that slipping into significant contribution and revenue next year. But, look, this is a startup. Its an odd startup, because it's housed within a public company. But it's a two-year-old company. And we're not going to get it hung up on quarter-to-quarter projections, because it is not good for a Company like that. We are focused very much on long-term value creation here. We think it's a unique and tremendously valuable asset.

We started monetizing it, I think, earlier than many others would, just because that's our philosophy. We think that it is good for businesses to be able to both grow users and generate revenue at the same time. But there is certainly no stick we're going to be walking around with beating people up for quarterly revenue. So I think we are going to let it produce at the pace that it produces. We expect to be driving monetization improvements throughout the year. But we're also going to be doing a lot of other things. And I think once it's rolled out globally, I will be in a position to speak better, and more completely, on what I think the near-term expectations are, as opposed to the long-term, which I think are tremendous.

In terms of the $300 million, we said over $300 million, and I feel good about over $300 million. So I think we've got some room for flexibility there. But when you're comparing that to 2014, there's a few things in 2014 that don't flow through to 2015. The biggest one is, as you point out, the Google change that's affecting Ask.com's ability to market on Google. So when you carry that forward, that is by far the biggest factor in that. And then there's just some old things.

Like there's the Chrome run rate, which we have talked about. The older Chrome experience that was there in the second half of 2014, and some tail on that in the second half of 2014, which doesn't run through to 2015. And just a few other smaller things. We sold UrbanSpoon. We're doing a little investment in Ask.fm. Bloomware, from a P&L perspective, a GAAP P&L perspective, has investment in it, although not from a cash perspective. And so all those things flow through to the number there, but I feel good that we will be over $300 million.

And as it relates to the Google contract, we still have got over a year left on the existing agreement. And I don't think there's anything to report, other than there is an active market for people looking for this kind of business. You've seen Yahoo just won the Mozilla deal. There's a lot of activity going on right now. And everybody in the market, Google included, has suggested they are very interested in our business, after the current contract term. So we'll report on that when we have something to report.

Great. Thanks, guys.

(Operator Instructions)

Jason Helfstein, Oppenheimer

Two questions. Greg, can you just talk a little bit more about what's driving the lower [COA]? How much of it's competitive dynamics, as far as the (inaudible) less spending by competition? How much of this is, you guys are doing better things, whether it's with social marketing, or doing a better job with mobile conversions? So just a little bit more detail around what's happening there? Because obviously, you are saying you have significant confidence to invest behind it.

And then, secondly, I guess, the question for Jeff, for more broadly. To the extent if Search keeps declining on a consolidated basis for EBITDA, is there a point at which it does not make sense to spin off Match, because there's not enough value in the core? And then, do you consider effectively separating Search from everything else? And ultimately, how do you do that? How do you think about that? Thanks.

On COA, I think there's two things going on. We are seeing lower COA on a unit basis, and we're increasing aggregate COA, in part because of that. And I think what's drriving the better returns we are seeing, it is a combination of things. Our off-line marketing is working better, working really well, and better than it was.

We are getting better at mobile paid acquisition, which is something we've talked about is a discipline that we need to get better at, and that we're starting to. Opening up some channels there that are working really well for us. I think those are really the two big drivers, at this point. We are starting to play in video and social, and everything else, but still relatively small. I think that was it on the Match side?

Yes, and, look, we very often get the structural question. I don't think relative growth in any given business is a hugely material factor to these kinds of things. And, look, they've happened in the past, but we're not announcing or discussing them. And I understand your line of questioning; I just am not sure it is the right path to go down. And it's not really the way we think about it.

Peter Stabler, Wells Fargo Securities.

I've got one for Greg and one for Joey. Greg, could you give us a little more color around the pullback in marketing spend in Q4 for Match? It sounds like the marketing is more productive. Curious as to why that would lead to a pullback.

And then Joey, wondering if you could offer us a little color on the website page view metrics there? What were the drivers on those declines? And if you could break out any subcomponent color there, that would be great. I lied. One more for Greg. On the 4% growth, are in-app payments having any sort of negative impact on revenue generation? And that's it. Thank you.

On the fourth quarter, I think fourth quarter is always a seasonally low marketing period for us, and Q1 is always a seasonally high, in that Q4 pricing of inventory is the highest, and dating behavior is the lowest. And Q1 is the opposite, which is Q1 is the most active time for users to engage with our product, and it's when inventory is the lowest. So you have those two dynamics working on a seasonal basis. And then we just felt like what we are seeing in Q4, in terms of the marketing opportunities, what we expected to see in Q1, we thought better to spend heavy in Q1.

We're a business that likes to grow revenue and profit at the same time. Not necessarily every quarter, but over time. And we felt like Q4 was a good time to pull back on marketing a little bit, and take some extra profit, knowing that we were going to invest it further in Q1. So it is the -- call them the endgame decisions that we make along the way. We ended up pulling back more than we thought, more than we had originally expected. But we felt it was a good thing to do, and we're able to put cash in the bank, and have accelerated growth here in Q1.

So that was really the thinking. On the other question, I'm not sure I understood it. Can you repeat the other Match question? And then Joey can --

I was wondering, with the growth of mobile, whether you guys are impacted by a sharing of revenue in-app?

I think that it's still small today. There are two ways to think about the App Store fee. One is as a pretty reasonable cost of acquisition rev share deal, and the other is as a highly unreasonable payment processing fee. And the reality is probably somewhere in between. It's a little bit of both. And the trick is, over time, as that number grows, are you able to improve the efficiency of the rest of your marketing spend? And are you able to improve the monetization of those channels? We believe the answer is yes.

In fact, I told you that our COA is down this year overall. In part, that's because we're getting a bunch of registrations and users in the App Store that we weren't getting last year. And so, so far, so good in that area. I think it is something that we need to watch. But I do think that over time, we are going to be expanding margins outside of the App Store, by reducing marketing cost on a per-unit basis. And I think that's why, over time, we still expect margins, overall, to expand meaningfully in this business.

Thanks. And then any color on websites from Joey?

We're not thrilled to see the page views down. But it's also not a huge concern. I'd like to see that start to grow. But if you look at the mix, we're losing page views in lower RPM channels, and growing them in higher RPM channels. So we are growing revenue while the page views is declining, it's not because we're putting more ads on anything. In fact, if anything, we are decreasing the ad load where we can. It's because we're, A, getting better at selling the ads, and they are optimizing the ad funnel programmatic, premium, et cetera. But also because we are shifting to higher RPM channels.

So overall, that's an okay trend, but we'd very much like to see the page views start to grow. And I think what will drive that -- there will be some noise over the year on this, especially with the sale of UrbanSpoon, and making adjustments for all that. But the page views should start to grow. And where we'd like to see it start to grow is on About.com, and through high-quality content. We're putting a lot of investment into that content. We know, empirically, that we are publishing the best quality content in the categories where we're publishing.

So we'd like to start to start to see the traffic grow on that. And that's definitely a bet we're making. In terms of other components, the mobile is certainly growing faster. And probably the biggest decliner, in terms of page views, is, for sure, Ask.com. And that will continue to be the case over the course of 2015, especially with the change that rolled out over the last few weeks.

(multiple speakers) I want to correct an earlier question that I jumbled. Tinder's MAUs are up more than three times year over year, not two times. And as Jeff said, we had a fantastic January. So I just jumbled that one, sorry about it.

Brian Fitzgerald, Jefferies.

Thanks, guys, maybe a bit of a follow-up on About. You mentioned the new platform and site design is driving engagement and monetization. Wondering how much of About advertising is done programmatically, maybe? If you could give us that? A loose break? And then how much of it would you consider native maybe versus display versus video at About? So that's the first question.

The second one, just broadly on, in terms of investment at Vimeo, is that more around content or distribution or growing subs? Any color there would be great.

Sure. On About, I'm not going to break out the pieces of revenue, but I'll try and give you some color. Native is, for sure, important and, for sure, growing. And I can't really give you the slice that comes from native. Because the way it really works, in terms of the sale, is native is a component of really, most premium campaigns now. So you'd buy some standard units, and some components of that would be native. And native very much drives the sale. And the new platform enables us to sell native in ways that we have never sold it before. So we are seeing great demand on that, and it is working to supplement or accelerate the premium display stuff.

But I don't want to do the breakout of what's where. I'd only also say that everything is sold -- the more we sell premium, and our average deal size continues to grow there, and the momentum in the market continues to grow there, the more we sell premium, the more it lifts up the rest of the stack. So from premium, it goes to private marketplaces. And the more inventory we're eating up up there, the better it's been for the overall. And that's a good trend that has accelerated every quarter. And I think we expect that to continue throughout 2015.

In terms of Vimeo, for the year and for the quarter, the biggest piece of the increase is really COA, in terms of increasing marketing. And there's also some increase in content acquisition for Vimeo on demand.

Great, thanks, guys.

Chris Merwin, Barclays.

Great, thank you. You mentioned in your prepared remarks that you are expecting phenomenal growth in 2016 for Match. Is that just effectively reaffirming your long-term guidance of $500 million in EBITDA for the Match group in 2016? And if so, I was just wondering if you could help us walk through that bridge from 2015 to 2016 Match EBITDA? Greg, you obviously mentioned the non-dating investments for the full year of 2015. But what level of Tinder losses should we be expecting in 2015? And how much of that won't recur? Just really trying to bridge that gap between 2015 and 2016. And what that implies for both Tinder and the core. Because just on simple math, it looks like it's about 10 points of margin expansion, year on year.

Okay, the way I think about the $500 million is the way I've always thought about the $500 million, which is, I'm not saying we will necessarily hit it. I'm saying it's a good target, and representative of the kind of growth we expect to have. It's still a long ways off. I'm totally confident that this business is going to hit $500 million of EBITDA. Whether it does it in the four quarters ending December 31, 2016, or whether it misses by a quarter or two, that's just hard for me to pinpoint at this point.

Obviously, as I said in my prepared remarks, we just lost $10 million plus of -- just on FX movements in 2016. It makes it that much harder. FX goes back the other way, it's that much easier.

So I don't want to get too hung up on the precision of the $500 million in 2016, although I'm not backing off the general statement, which is, we think we can get there. We may or we may not, but we are certainly going to get there at some point soon, and frankly beyond. If you look at the business, we're still only 20% to 25% penetrated in this business in North America, never mind the rest of the world. We think that's going to grow dramatically. So I think we are talking about dramatic growth, whether we hit the $500 million precisely or not. That said, we still see the same reasonable path to get there in 2016. And we're not backing off. And it's just the nature of these long-term things.

I think the way you'd get there is really, in the non-Tinder businesses, modest expansion of revenue growth rate, back up to the low double-digits by 2016. Meaningful margin expansion in 2016. Dating margins are going to be flattish in 2015, but we expect significant expansion in 2016, due both to increased Tinder contribution, but also the payoff from the tech projects that I've been talking about.

A nice rebound in Meetic. Meetic lost a fair amount of PMC in 2014. That is going to -- we'll pay the price for that in 2015, as we try and build it back up, just the nature of deferred revenue. And then FriendScout, which we bought at the end of 2014, is negative in 2015. And then we complete the integration at the end of 2015, and it slips into a nice positive in 2016.

So when you combine those things, plus with what should be a normalization of marketing increases in 2016, versus more meaningful ones in 2015, you get meaningful margin expansion there. And then you have Tinder, which, as I said on the last call, I laid out a strawman, which is basically doubling MAUs over a two-year period, and getting the monetization rates that are two-thirds the rate of OkCupid in North America and Western Europe, and one-tenth that everywhere else. Those things will either happen or not.

On the Tinder side, I'm quite confident they'll happen. Again, whether they happen in precisely that time frame, or whether it takes a little longer, or we beat it by a little bit, I don't know. I'll be in a better position to talk about that over the next couple quarters. So I think the general point is, we think it's a reasonable target. I don't want to get too hung up on the precision, though. We're going to get there, if not precisely then, very soon thereafter.

And if I could just add in one follow-up. As it relates to Tinder monetization, can you talk a little bit about what type of strategies you are using internationally? What has worked well, what hasn't worked well? And have you settled on how exactly you're going to be monetizing this business globally by the end of the first quarter?

Yes, I think long-term, we've talked about the fact that it's going to be a mix of three fundamental revenue streams, which is recurring revenue subscriptions, a la carte revenue payments, and advertising. We've started out primarily with the direct recurring payments. That's what we've been testing. That's going to roll out globally. And we expect the others to roll in over time. But I don't want to be too precise, in terms of that timing, because it is going to play out over the course of the year.

Thank you.

Heath Terry, Goldman Sachs.

Great, thanks. Just a few questions. You guys spent $260 million or so on acquisitions last year. What would you say the level that you feel like you'll probably end up at for 2015 is, from an M&A perspective? And then, given the size of that number, can you give us some clarity on the organic growth at IAC? Or at the very least, the contribution that you are seeing from these acquisitions in the quarter and the impact that it's having on your guidance?

And then, I guess, Joey, if you could give us a sense of exactly what changes that you saw from Google that are negatively impacting Ask? And now that you've been through nearly two years, or over two years, of these one-off events from Google, do you see a point where this is going to end? Or is this just what you're going to have to deal with? That they are going to continue to be making these kind of revisions that negatively impact the business?

And then last question, if you could just give us a sense of what the strategy is for IAC Films? Given the success of Top Five, is this something that the Company is going to incrementally invest in?

So let me start with a little bit of the first, and let Greg and Joey comment, as well, then take the last. IAC Films is a small business. We got a couple of films out at the end of last year. I think that's a reasonable rate to expect. Although I do think you'll see IAC investing in content broadly against several businesses. Obviously, we have Vimeo; obviously, we have Electus. So it's consistent with what we're doing there.

In terms of acquisitions, we don't have a bunch of stuff slated or anything like that. But I think over the last few years, we've pretty consistently done a few small or mid-sized acquisitions. We obviously did About, which was fairly significant, a couple of years ago. So I think, all else equal, you'd expect some activity. But it's not a number we forecast, or we give a number out. I think broadly, growth is primarily organic, because there is some offsetting things. This year, we took some deferred revenue write-downs.

You have some deferred revenue accounting at SlimWare that, as we ramp up, we actually end up with a negative EBITDA number. So I think we're largely organic, with probably, modestly, a little more contribution in Search than in Match. But not really significant contributions overall, from last year's numbers, based on the puts and takes. Joey, Greg, do you want to add anything to that?

I think that is generally right. We look at lots of things. We don't budget for anything. Each acquisition tends to be its own analysis. And when they pan out, you can get it done, you get it done. And sometimes, they come in bunches, I think. Looking at the dating category, I think that there are definitely things out there that, at the right place, we buy, because we think we can meaningfully improve the multiple. There is a smaller group of things that we think are more exciting strategically versus financially, that you could see doing at some point in the future, or you could do none of them.

I think education is an area where, obviously, we bought Princeton Review. I think you could see some small things there, or not. Just really depends on the opportunity, I think that -- I haven't gone back and looked at the stats. If you do, I would probably project them forward. Because over a multi-year period, I don't think we are in a particularly different place, one way or the other, than we've been, in terms of our general M&A appetite.

My answer is similar. We're going to continue to prioritize. In terms of M&A, we are going to continue to prioritize content businesses where we think we have an edge. And then on the application side, probably favoring non-Search- based application models. Because I think that has been an interesting vein for us. But we don't have a certain amount of capital set aside. And nothing meaningful planned. And generally, we've been making relatively smaller bets.

I think the Ask [FM], [Avalon] and SlimWare combined was roughly equivalent to what we sold UrbanSpoon for. So it's targeted measure bets where we think that most of the execution happens post-acquisition. Or most of the growth happens post-acquisition. I think probably, I'll take the next questions. So Google changed specifically on Ask. This is a change to the advertising. There's an algorithm that people talk about a lot, with respect to the organic results. There's also algorithms that drive the advertising results. And a bunch of things go into there.

Significantly price, for sure, but it's definitely not just the highest bid that gets you into the ad placement. It's also a lot of factors, like click-through rate, [blanding] page, relevance, keyword category, and a bunch of other factors. And that's the thing that they updated. I think they updated the algorithm and the inputs to that. And that change effectively made it ineffective to market Ask.com on Google. We've been told explicitly by Google that it was not targeted at us. There was a broad change that impacted us.

And I think that with Ask.com, I think we were a very large advertiser on Google. So the magnitude of this, the impact to Ask is going to be bigger. And when you think about it in the broad context of multi-years, multiple impacts, and a series of things we've seen, we do exist in Google's ecosystem, and they do have a meaningful impact in media companies, digital publishers, on the web. And certainly, search-supported businesses, and, of course, our partnership. So we are meaningfully existing within their ecosystem.

But when they sneeze, given their scale, when they sneeze, it's going to shake things up in our building. We talk to them very regularly. It's not a concerted effort on their part to hurt us, or to impact us. And in the last couple quarters, I think we've delivered some very strong numbers, thanks, in part, to Google and lifts they've delivered on RPQ. So the overall thing is, movements at Google are magnified in their impact on our business. But there's not a -- and we've discussed this with them directly. There's not a concerted direct pattern to hurt or impact our business.

Was there another question? I can't remember now.

No, that's it. Just one clarification. I want to make sure I understand exactly what Jeff was saying with regard to organic. Jeff, when you say that there was no net impact, I'm assuming you're referring to EBITDA. Because obviously, if you spent $260 million, there had to be a revenue impact.

And we expect EBITDA going forward, but I think that the impact this year was net, about neutral, actually. And next year, modest contribution from those businesses.

Okay. Thank you.

Mark Mahaney, RBC Capital Markets.

Two questions related to Tinder. Could you talk about whether the user profile, how that's changed, which demographic groups are starting to get much larger on the Tinder platform? That 200% year-over-year growth? Are you pulling in for much older or materially older demographics than you have in the past? And then, Greg, I think you mentioned there is 20% to 25% market penetration. Could you just provide a little more color around that? What do you mean there? And what's the TAM? Are you doing that in base of users or spend? Just a little explanation on that?

Sure. On the Tinder demo, I think -- and I'd caveat by saying, I don't have the stats directly in front of me, and so I'm speaking from a my general sense of it all. It's getting a little older, although not dramatically so. And it is more about bulking out in that younger demo so far than meaningfully increasing the age bracket. And it's also a lot about global. It is a lot about growth. It is growing meaningfully in the US, too. But a big part of that growth is also coming from new markets and new areas.

So I think it still continues to be a predominately under-age-35 business, with certainly some users, and a growing amount older than that. But not yet meaningfully changing the profile, I think. In terms of the 25% number, again, I confess, this is internal stats that we do through some surveys and otherwise. I think it is generally the percentage of single people not in a committed relationship in the US, who have used a dating product within X period of time, I want to say three months, I'm not sure exactly.

And that number has been rising. It had been rising steadily, but has accelerated over the past two years, especially in that youth demo, as I went in in some detail last time. And our general view is that, A, that youth demo will continue to get older. And within the youth demo -- and they are not going to stop. And within the youth demo, that concentration will continue to increase with the proliferation of mobile. And this is just such a great mobile use case. I've said for a while now, I think in the not-too-distant future, everyone who is single is going to use a product like this for their single life.

They are going to use it as one of the things that they do. And so I think we've got a long way to go before, from a user perspective, the market is saturated, both in the US and globally.

Thank you, Greg.

John Blackledge, Cowen.

Great, thanks. The Tinder MAUs of 3X's, could you just clarify that that's January 2015 versus January 2014? Second is, HomeAdvisor had a huge fourth quarter. Can you talk about the 2015 growth profile and where HomeAdvisor stacks up versus competition? And then lastly, there's a higher EBITDA loss for media/e-commerce in the first quarter. What are the key drivers there? Thanks.

Yes, the January -- sorry, year end. Month's end January over month's end January, MAU's are more than 3 times.

In terms of media and e-commerce in the first quarter, really, substantially all of the year-over-year increase is COA, more at HomeAdvisor than Vimeo, but at both HomeAdvisor and Vimeo. So it's increased marketing spend, because we are having great success with marketing in both of those businesses, and it will pay back well during the year. In terms of HomeAdvisor, HomeAdvisor has accelerated the last couple of quarters. It's gotten to almost $300 million in total revenue. It's profitable.

We think the business is doing very well. And we expect, probably on a consolidated basis, not to reach quite that level. But in the domestic business, we'll probably still be approaching that level of growth, in the 20% to 30% range, for the coming year. And I think we stack up well against the competition. As the remarks said, we have by far the largest service provider network. And when you look at the satisfaction data, we have best-in-class customer satisfaction in the Internet, when people get a service provider. And not as good when they don't.

And we think that that's a huge key in this business. And while there's some very good businesses out there attacking the space, it's very hard to build this kind of network and retain them, and provide the service to the consumers. So I think we're pretty excited and optimistic.

Thank you.

Kevin Rippey, Maxim Group.

Hi, guys. Thanks for taking the question. If you could discuss some of the trends that were impacting the paid- user ARPU in the dating websites? It would be interesting, because it looks like it trended positive, especially in North America. And some of the puts and takes there would be interesting to hear about.

And I think after this question, we have time for one more.

Yes, I think when you look at the number that you look at, you are looking at total revenue divided by quarter-end paid users. That's going to be impacted by a number of factors. One is the rate within each product line. In general, rate is going up in the various product lines. There is then mix between the product lines.

That tends to be a negative trend, as OkCupid is the lowest price product, and it is growing faster than the other businesses. So that brings it down. I also think that -- I think when you net those things out, rate in North America was actually flat sequentially. But when you have a decline in paid users during the period, which we had in Q4, you're averaging the full quarter's revenue over a number that's lower than the average number throughout the period. So I think that made it look a little more favorable than it is. I think the overall trend for North America was about flat.

And then in Europe, Europe being impacted there by -- or North America -- sorry. Internationally, being impacted by negative FX, which Q3 was down. Because of the FriendScout acquisition, you had all this purchase accounting issues. And in Q4, you've got rate, again, within each product is basically flat to up. But you've got some FX negatives, and you've got, still, some purchase accounting issues from the FriendScout acquisition impacting the International number. So those are really the trends. As I said before, in general, we think that we should be able to increase rate within our various product lines. And then mix will be what it will be, as the different products perform over time.

Got it, thank you.

Last question.

Nat Schindler, Bank of America Merrill Lynch.

Yes. Hi, guys. Which of my questions have we not talked about? Okay. Joey, there is a belief that -- I believe this is the fifth time in two years that Google has made a change that has substantially impacted your business. Given this ability for them to directly affect you within an existing contract, is there anything you can do in the upcoming contract negotiations that will affect this risk? Or will the contract simply be setting the tack for the next three years?

And, Greg, can you tell me a little bit -- talk to a little bit about the Core dating cannibalization that is occurring by Tinder. Is it occurring because people are just going to Tinder first? Or are they reducing their time within Core Dating? Effectively, are you increasing your churn of paid subscribers by doing that?

I'll take that question -- I'll take the last question first. We're not seeing any meaningful change in churn. Frankly, the impact you've seen to churn have come from the credit card breaches, not from any other extraneous factors that we can see. As far as the cannibalization, look, I wish I could be more scientific about this. These businesses didn't have a great year last year, and Tinder did. And at some point, we started saying, okay, there is real cannibalization here. Now, they're both doing really well.

So it's hard to be scientific about this stuff. There's a lot of factors at play. I think clearly, there was a -- I use the term shock to the system, when you had just the explosive growth of this new thing that had a dynamic one-time impact of people who might have either been going back to use Match a second time, or who had never used Match, who would have who tried Tinder instead. I think that's normalizing a bit. And it's taking on more of a traditional dynamic, where there are people who use Tinder who also use Match. And there are people who have used Match who have gone to Tinder, and all that. It's still incredibly early in all this dynamic.

What I can say is that we're seeing growth in these Core businesses on the user front that is very healthy. And the healthy growth really continues at Tinder. So cannibalization is always this what if analysis. And it is hard to say. They're both going up into the right right now, which is really what we try and focus on.

In terms of the contract, we will certainly consider all information that we have, and everything that's happened over the last couple of years, and a bunch of other things, as we move into the next set of contract discussions. And some of the things, we may be able to address through a contract, and some we may not. Of course, everything that this Business is doing and experiencing is a factor, as we consider the next set of contracts. And the only thing I would say overall is, I think we do have a set of protections in there. And I think we have generally fared better than our competitors, in most of the events that have happened over the last couple of years. And I think that's a result of a good job on the last one.

Great, thank you.

And with that, I think we would just like to thank everybody for joining, and we will wrap up, and we will talk to you next quarter.

Thanks, everybody.

Thank you.

And that does conclude today's conference. We thank everyone again for their participation.