Match Group Inc (MTCH) 2020 Q3 法說會逐字稿

Good morning, and welcome to the Match Group Third Quarter 2020 Earnings Conference Call. (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 IR. Please go ahead.

Thank you, operator, and good morning, everyone. Today's call will be led by CEO, Shar Dubey; and CFO and COO, Gary Swidler. We're all remote again for the third quarter in a row, so excuse any technical problems we may run into. Shar and Gary will make a few brief remarks, and then we're going to open it up for questions.

But before we start, I need to remind everyone that during this call, we may discuss our outlook and future performance. These forward-looking statements may be preceded by words such as we expect, we believe, we anticipate or similar statements. These statements are subject to risks and uncertainties, and our actual results could differ materially from the views expressed today. Some of these risks have been set forth in our earnings release and our periodic reports 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 today. I know there's a lot on everyone's minds this week, so I'm going to keep my remarks short. Also because our Q3 results speaks for itself.

We're very happy to see the growth levels we saw across all our businesses, including the 23% increase in non-Tinder revenue. Hopefully, it all reinforces what we've been saying for some time now: One, our products serve a fundamental need that isn't going to go away. Two, we've been talking about our growth strategy that is based on a three-pronged approach of, one, growing Tinder; two, returning our legacy brands to growth; and three, making new bets that contribute to growth in a reasonably short time frame. And hopefully, Q3 results are a good illustration of the contributions of all of these 3 levers.

We believe in our portfolio strategy because it's designed to help members across geographies, demographics and intent because there is no "one size fits all" dating product. And we understand this category and business well. Hopefully, we've demonstrated that both with growing assets we've acquired and brands we've incubated and grown. So even though there are uncertainties around new lockdowns in Europe, and elections here in the U.S. and all of this could cause temporary dislocations, we generally feel very good about how we've navigated this year.

And I'll take questions later. But first, let me hand it over to Gary to give us a little more color on the financials.

Thanks, Shar. As you said, our financial performance was excellent in Q3, with year-over-year revenue growth of 18%, operating income growth of 14% and EBITDA growth of 21%. EBITDA margins were 39%, 1 point better than in Q3 '19. Despite all the global macro challenges, we hit all-time highs in both revenue and EBITDA in Q3. In fact, revenue was up 15% sequentially, with both Tinder and the non-Tinder brands in aggregate contributing similarly to the significant sequential improvement in business momentum.

Top line year-over-year growth was balanced, with direct revenue up 20% in North America and 17% internationally. The growth in North America was a step-function improvement over recent levels driven by 4 areas: one, continued acceleration at many of our long-standing brands; two, newer bets like Hinge, Chispa and BLK; three, live streaming video at Plenty of Fish; and four, of course, strong growth at Tinder. Indirect revenue grew 9% year-over-year, marking a turn for that metric as well.

Average subscribers for the total company reached 10.8 million, up 12% year-over-year. North American average subscribers grew 9% year-over-year compared to 4% year-over-year in Q2, and international subscribers grew 16%. Overall ARPU increased 4% year-over-year, driven by 8% growth in North America and 1% growth internationally. Overall ARPU also improved 6% sequentially. Pairs and Hinge each contributed meaningfully to the ARPU improvement in the quarter.

Tinder's average subscribers increased a little over 900,000 year-over-year, 16% growth, leading to direct revenue up 15% year-over-year. ARPU declined 1% year-over-year, but was up 6% sequentially. Tinder's developed markets are performing well, but there are certain geographies like India, parts of Latin America and Southeast Asia, where the virus is still meaningfully impacting Tinder users.

We're thrilled by the 23% year-over-year direct revenue growth at the non-Tinder brands in Q3. These brands added nearly 275,000 average subscribers year-over-year, up 7%; and increased ARPU, 13% year-over-year. We also saw solid live streaming revenue growth at Plenty of Fish. Performance at these long-standing brands is a result of strong product work and innovation that has been years in the making.

In addition to the turnaround at our long-standing brands, newer brands like Chispa and BLK are contributing significant revenue growth. Hinge has been the standout this year, with 82% year-to-date growth in downloads and outstanding progress on monetization. Collectively, these new and emerging brands, including Pairs, grew 88% in the third quarter.

On the cost side, we had expected approximately $50 million of incremental marketing spend in Q3 over Q2 levels, but we ended up increasing by only $39 million sequentially as we held steadfast in our ROI discipline. Sales and marketing expense fell 1 point year-over-year to 20% of revenue, increasing $16 million year-over-year or 14%. The year-over-year decrease in sales and marketing expense as a percent of revenue was offset by higher cost of revenues driven by App Store fees and web operation costs.

Our gross and net leverage declined to 4.5 and 4x, respectively, down from 4.8x and 4.6x at the end of Q2. We're making progress on our stated goal of delevering and feel that we're well positioned to both invest in our businesses and to pursue compelling strategic M&A opportunities. Note that our free cash flow conversion was 92% in Q3, and we ended the quarter with nearly $400 million of cash on hand. Stock-based comp expense for the quarter included a large modification charge. Without it, SBC expense would have been at a more typical quarterly level of just over $20 million.

For Q4, we expect total revenue of $640 million to $650 million, which would represent 17% to 19% year-over-year growth. If we achieve our range, we would also hit our full year revenue growth target of mid- to high teens that we communicated back in February. We expect year-over-year subscriber and ARPU growth in Q4 to be fairly consistent with Q3 levels and also expect similar year-over-year revenue growth levels at Tinder and the non-Tinder brands in Q4 as what we saw in Q3.

We are watching carefully for impacts on the business from new waves of coronavirus and from the U.S. election. We believe we have factored into our Q4 outlook all of these effects, but where we end up may be impacted by how the election and the virus affect our business for the remainder of Q4. Recall that we did see some softness following the 2016 U.S. presidential election.

We expect EBITDA of $235 million to $245 million in Q4, which reflects the strong revenue growth and approximately $40 million of higher year-over-year sales and marketing expense. We expect Q4 margins to be modestly below last year's levels as we invest to drive 2021 growth. Our stated Q4 EBITDA range also puts us on track to essentially reach our initial full year 2020 EBITDA expectations.

Sitting here today, despite all of the uncertainty, we feel very well positioned to make the turn into 2021. Our objective remains to drive mid- to high-teens revenue growth. However, the level of 2021 growth will depend in part on the pandemic and its social and economic impacts. We're going to watch these trends for another quarter and provide specific outlooks for 2021 revenue and EBITDA on our next call in early February of next year.

We maintain our 40% long-term EBITDA margin target, but reiterate that it is a long-term goal, not a short-term one. For 2021, areas of investment include expanding our capabilities in Asia, building out crucial user trust and safety initiatives and continuing to evolve our product lineup. We expect to expand our live streaming video efforts and to offer a broader array of experiences to our users at various brands across the portfolio.

On the legal side, COVID has delayed some of our ongoing matters, which created expense savings for us in 2020, but we now expect those expenses to be incurred in 2021. We are hopeful that some of our key legal proceedings will be resolved by the end of 2021.

Overall, we've had a lot to manage in 2020 but are thrilled with the resiliency of our business and our team. We have a spectacular portfolio of brands, which we are confident will enable us to continue to generate consistent strong revenue growth at high levels of profitability and cash flow for many years to come.

With that, I'll ask the operator to open the line for questions.

(Operator Instructions) The first question comes from Kunal Madhukar from Deutsche Bank.

Could you discuss user engagement and propensity to subscribe trends in the countries where we are seeing a second wave right now with lockdowns, specifically the ones in Europe? And then what are you seeing in places like Brazil, where there has been a recent decline, a material decline in new cases?

I can take that. I'm going to take the opportunity to talk about sort of a little more overarching trends of what we are seeing now, especially since we gave you an update back in August. In general, we have seen recovery in both engagement and propensity to pay metrics across the board. But in markets which we mentioned that were suffering back in August, like India and Brazil, India has since bottomed out but hasn't recovered to normal momentum yet. And that sort of seems true both in India and a few other Southeast Asian markets.

Brazil, the propensity to pay and subscription metrics have mostly recovered, although it is still lagging a bit on new user sign-ups there. And that seems to be representative of a few other LatAm markets, Argentina is, for instance, an example.

Europe had a very strong summer across our various platforms as people were outdoors with the good weather. But with the new lockdowns coming down, we're seeing some volatility there, but nothing like what we saw back in mid-March. We are tracking it carefully as it's recent.

U.S., even though you didn't ask me the question, has actually been an interesting one where there's been no pattern of correlation related to case surges. We have, however, seen some volatility in the past few days, which we are attributing to distractions related to the elections. But again, nothing to the degree that we saw back in 2016. So hopefully, that gives you a comprehensive view of up-to-date trends that we're seeing around the world.

The next question comes from Benjamin Black from Evercore ISI.

I have 2. I know you mentioned the future is hard to predict. But if the macro environment holds up as the calendar turns up, I'd be curious to hear your thoughts on the puts and takes that pertains to your ability to perhaps show revenue growth acceleration in 2021.

And secondly, it'd be interesting to hear your view on the longer-term gross margin outlook, particularly in the context of App Store fees after Google closed its bypass. And any commentary on Apple's App Store fees would also be helpful.

Sure. Why don't I give that a shot, and Shar can certainly jump in. So I think the short answer to the first part of your question is that if there were a magic wand and everything could go back to normal on January 1 of next year, we very likely would see an acceleration in growth rates. Because we wouldn't see things like the headwinds we're seeing in an important market for us like India, which is affecting Tinder and OkCupid. And so all of that would reverse itself, and we would have had a weaker year than otherwise in 2020 because we did have some COVID impact, especially in the second quarter.

So while we've performed well in Qs 1 and 3, for the most part, we'd be coming off a little bit of a weaker year, and so I would expect we'd have an acceleration in growth rate in 2021. But the reality is sort of despite your optimism, which I'd certainly like to believe as well, we don't think that, that's what's going to happen. There's just no indications that things are going to completely snap back anytime soon, let alone on January 1.

Now there's puts and takes for our business in that. We are getting some tailwinds from things like people not having as many options to meet people. Or people, particularly lonely at this time of the year and wanting to take an opportunity to go out and meet people. So there are some tailwinds, but there are also some headwinds. It's harder to meet in real life. People are more nervous. They're more distracted. And so there's puts and takes on what's happening as a result of the pandemic.

And it's our belief that we're going to live with some of those effects through the course of much of next year. And so as we think about what we're communicating about next year, sitting here today, as I said, we maintain our overall objective of driving mid- to high-teens growth, just like we said last year at this time, and that's how we feel about it.

But there are scenarios where we could do better. There are scenarios where things could get worse, and it could affect us worse. And so we're going to wait and see because the future does seem very uncertain right now. We're going to wait another 3 months and kind of see, and then we'll come back in 2021 and give you more specifics on the latest view and what we think we're going to be able to deliver next year. So that is kind of how we thought about providing the outlook at this point in time, just all things considered.

As far as your second question goes around App Store, that is a very complex, very fluid kind of multifaceted situation globally. And as I'm sure you read about extensively, there's a lot of legal and regulatory actions and developer actions and other things going on in the U.S., in Europe, in other places, in India, in Australia. There's lots of things going on related to the App Store. And so we believe that's going to continue to be the case, and there's going to be twists and turns as that plays out.

Now as it relates specifically to Google, they made an adjustment to their policy recently, which has a long period before it goes into effect, which is slated for September of next year. And so we are trying to work this through and resolve it favorably prior to that effective date. And we're also watching the overall environment to see how things play out. And so there's a long time between now and then, and we'll see.

I'm sure our lawyers would want me to give you a health warning that says, on things like this, there's a great deal of uncertainty, and there's no assurance as to how this is going to play out, which is true. But this is something that we're watching and involved with very, very closely, and we'll see how things continue to play out between now and next September.

The next question comes from John Blackledge from Cowen.

On the non-Tinder revenue growth, a big acceleration in 3Q, a great number and well above what we were looking for. Could you just discuss further the leading drivers of the acceleration? And what was the mix of sub and ARPU growth for non-Tinder brands? And just from a modeling perspective, should we expect further acceleration into 4Q? And how should we think about next year's growth?

Yes. Gary, let me take that. So for non-Tinder, the growth was actually pretty broad-based. And a larger proportion of the growth was driven by ARPU, but also overall sub growth. And there are several drivers of improvement, as Gary mentioned. Hinge was a meaningful contributor, driven by incremental revenue features that we launched during the quarter. Pairs continued its sub growth. Chispa and BLK which started monetizing a little while ago were nice contributors.

There's a new revenue stream with POF Live, which was mostly an ARPU play. But also our oldest brands, Match and Meetic, they were also flat to slightly up. In fact, Meetic saw its highest subscriber count in 4 years. So it's a mix of both ARPU and subs that drove the growth. And because it was so broad-based, it gives us confidence about the sustainability of this. And I think Gary did mention, our guidance for Q4 does include the assumption that a similar level of performance as Q3 roughly.

The next question comes from Lauren Cassel from Morgan Stanley.

I guess just following up on that. Hinge ARPU growth clearly has been a key highlight of 2020. How are you thinking about the Hinge product road map as we head into 2021? Will there be continued focus on ARPU growth? Or is '21 really about accelerating subscriber growth of that platform?

Thanks, Lauren. So the good news is, on Hinge, all of our monetization efforts we've done this year have worked. And people love the product. It has translated to people's willingness to pay. And the team has been very successful with experiments that drive actually both conversion and ARPU this year.

So I mentioned they launched a couple of à la carte features. Recently, one of them is Standouts, which is a somewhat unique feature that lends itself well to the Hinge product; but also Roses, which is akin to say, Super Like on Tinder. And both of these have contributed to ARPU.

But we're still early and have room to move both levers, which will be the focus for 2021. So the team is currently focused on both user growth and monetization across both of these levers in English-speaking markets, and I think there's still a runway in these markets. And then at some point, we will turn our focus to international markets.

The next question comes from Cory Carpenter from Morgan Stanley -- sorry, JPMorgan.

Wanted to ask about your key learnings from the Tinder Platinum test that you're running, I think, right now in 10 countries. And how this shapes your expectations around the upcoming global launch? And then maybe just beyond Platinum, how should we think about your key product focus areas for Tinder over the coming months and into '21?

Okay. Thanks, Cory. So Platinum, I think we mentioned in our letter, we've now expanded the testing to about 10 markets. And I think we talked about it last quarter. Our expectation for Platinum was for it to be largely an ARPU play, which is what the initial testing is bearing out.

The bigger reason we're experimenting it for longer periods of time is to make sure this tier provides the value proposition that we are promising, which is increased matches and conversation for people who take us up on this offer. And the good news is that is bearing out as well. So there's a few different variants still in test markets, but our hope is to be able to roll out globally the winning variant by the end of the quarter or the end of this year.

And as regards to product focus areas for 2021, it's still early. There are a number of things the team has been working on to try to identify opportunities through small tests and other kinds of work they're doing, all of which is going to inform our road map. Again, it's going to be a combination of both user experience-driven items as well as revenue and monetization-driven effort.

The next question comes from Ross Sandler from Barclays.

Just wanted to shift gears and ask a question about Plenty of Fish. So is this the only app that has the one-to-many video product at this stage? And it seems like 5.5 million users uptake is pretty impressive. So I guess, what other apps could get this? Do you expect a similar type of uptake? And I guess, how does the product rank among just ARPU features that you've rolled out at POF or any of the legacy brands? How does that rank?

Yes. So yes, POF Live, it's demonstrated a couple of things for us. One is a desire for a subset of our user base on dating platforms to engage in a one-to-many community-based entertainment experience. And it has also proved to us that we can monetize this experience. And in terms of revenue products, it is a pretty meaningful contributor, as you saw its impact particularly on ARPU in Q3.

So what we're looking to do is to figure out how to apply these principles that we've learned from POF Live and figure out how it could live on a few of our other platforms. Some of them could be very similar to the implementation we have on POF Live. But I am actually more interested in seeing how it could live in applying the principles, but in different kind of experiences on some of our other larger platforms. So you'll see us taking these learnings as we develop our 2021 road map.

The next question comes from Alex Giaimo from Jefferies.

Gary, the $3.5 billion in long-term debt, I think that was unchanged from the second quarter. When should we expect a more aggressive approach to deleveraging? And if there are any other capital allocation priorities to call out, that would be helpful as well.

Sure. So look, we haven't paid down any debt yet, but we are making very good progress on our delevering plan. I think we were pretty clear about what we wanted to do, which was to get net leverage down below 3x by the end of 2021. And that remains a very achievable goal for us. We're tracking right along our plan.

In fact, if you look, we are down 0.3x on gross leverage and 0.6x on net leverage in this quarter alone compared to last quarter. So it was important for us coming out of the separation to delever and kind of move along that trajectory. We are doing that. The business is in healthy and strong shape, as you've been hearing throughout this call. And so we feel good about how that's going, and we're just going to continue to move along that pathway.

Now that we're separated and given the strength of our business, we are looking for strategic opportunities, which can further add to our product offerings, further expand us geographically. And we think there are some very interesting things out there in various parts of the world. And so we'll see how all that plays out.

If we can find something or a number of things that make sense for us, we'd like to add them to the portfolio. As we've proven with Pairs and with Hinge and with other businesses, we can really add a lot of value when we make an acquisition. We can really build things out. We can really add knowledge and expertise. And we'd like to replicate what we've done in some of those scenarios with other things that are out there.

So we have some things in mind, and we're going to be taking a hard look at that. And we've got the financial flexibility to do what we think makes sense. So we'll see how everything progresses. If we're successful, that will send us on one path. If we aren't able to make some acquisitions, that will send us on a different path from a leverage perspective potentially. But we'll see how that all plays out.

Right now, I'd just say we're comfortable with where we are and how we're progressing. We've got the flexibility to do what we need to do. We're excited about some opportunities that are out there, and we'll see how things progress. But we're not feeling pressure to do something different than what we had planned or than what we are currently accomplishing on the leverage side.

The next question is from Dan Salmon from BMO Capital Markets.

I've got a bit of a modeling question for Gary, then maybe I'll try to back into a high-level one for Shar. First, Gary, just -- could you update us on Match's legal -- remaining legal proceedings? The DOJ and Bumble litigation is behind you now. Just maybe a little color on how your cost base around that is evolving.

And then, Shar, the high-level one for you. I mean shedding some of these new term issues must be nice. My follow-up isn't really about legal issues or cost, but rather a high-level one about how you see the long-term path for the company. And what I mean is things like -- I don't -- I'm not going to ask you to take the temperature of the current legal climate. But you're seeing things like, for example, Section 230 protections for Internet platforms being poked at and reexamined, and social media CEOs back in Congress and things like that. Just thinking about your long-term vision for the company. Do those things matter for you? Do they matter for Match?

Do you want to take the bigger question first, Shar, and then I'll take the specific legal expenses? Or do you want to do it the other way?

Yes. Yes, let me address the bigger question. There is no doubt that the regulatory activity around online and digital platforms is increasing and will likely continue to increase. Section 230 is going to be a topic of conversation, I'm sure. And look, we've gotten ahead of it in certain areas already with our support for the EARN IT and the protection of kids regulation, if you will. And I think we will. We will continue to take a leadership position in some of these areas that matter to our platforms.

Some of the areas of 230, which are related to free speech in more public settings, are less applicable for our platforms. But in general, you should expect us to be thinking about this and talking about this and working on these areas more and more, I think.

Yes. I think that's right. And from a sort of financial perspective, we have to continue to invest in some of these areas to make sure that we're on the leading edge in terms of user safety and things like that. And we think those are critical investments to make. I mentioned them in my remarks, and we intend to continue to invest in areas like that to make sure that we stay where we want to be in those areas. So that is something that we think will continue. As you're saying, the environment just continues to evolve.

On our specific legal expenses, Dan, you're right to point out that we resolved Bumble litigation favorably, and that's behind us. The DOJ decided not to pursue anything, and so that has been resolved.

The FTC matter related to the Match brand is stayed, pending another case that's going in front of the U.S. Supreme Court this year that will get resolved by June of next year. So nothing is going to happen on the FTC, I wouldn't expect for the foreseeable future, and then we'll see how that shakes out. But we're cautiously optimistic that the Supreme Court ruling will be favorable for us. And so we've chipped away and we resolved some of the litigation, which is very good.

The one sort of larger matter that remains is the Sean Rad, Tinder employee lawsuit about the valuation. We feel very strongly that we have a good case there. And that is continuing to move through the legal process. Unfortunately, it moved slowly and, particularly because of COVID, has gotten more delayed. But our best sense right now is it will go to trial sometime late next year. And we're excited to get through that and prove our side of the case there. So it's kind of a necessary evil that has to happen, but it's going to happen.

The problem is that trials tend to be expensive. And if that's how that situation plays out, we're going to have incremental expenses from it next year. I don't have that specifically quantified out for you right now, but we will have that when we go through in February, kind of EBITDA for next year.

But that's the one sort of big remaining matter that we need to deal with, and it's going to create a headwind next year. But if it sticks to its schedule, it should very well resolve by the end of next year. And so as you look to 2022, those elevated legal expenses for outside matters that are being driven by things like the Sean Rad litigation will no longer be something that we're carrying in 2022, and we're very much looking forward to that.

The next question is from Nick Jones from Citi.

If I could sneak in 2. I guess, first, can you touch on some of the non-Tinder brands that contributed to the 88% year-over-year growth? I guess, in particular, the Hawaya and Ablo. And maybe with Ablo, what are you learning here that might open doors outside of dating?

And then I guess a quick second question is, are you able to see if users are actually meeting in person? Or are dates kind of happening at a distance still?

Sure. I can take this. So in the bucket that we called out, which is the 88% year-over-year growth in non-Tinder brands, I could talk to some of the piece parts of this bucket, including Hawaya and Ablo, of course.

So part of this bucket, Pairs has been part of the portfolio the longest and is one of the larger contributors there. Hinge, which has now been with us for about 2 years, and it's fast becoming a bigger part of the story. Chispa and BLK, which we incubated, are now becoming meaningful contributors.

And if you think about Hawaya and Ablo, they are actually early in their journey but are emerging opportunities. So Hawaya is targeting the fast-growing Muslim market, which we estimate is one of the fastest-growing demographics out there and is a very global demographic. And the product is very much designed to focus on the you-date-to-marry intent. So we've now rolled this out in 12 markets, and we're focused on getting the product and the brand messaging right first, and then we'll worry about revenue and monetization.

Ablo, on the other hand, is actually a very different sort of product on the other side of the spectrum where it's designed to bring people together globally. It's a fun, exciting product. It's actually had over 16 million downloads to date. And the team has been launching some very fun experiences and features. They recently launched a short-form video content called Around The World, where people are participating in challenges to showcase the parts of the world that they live in, and those become the alibi to have conversations. And they're also experimenting with competitive gifting features, et cetera. But it's still early. It's still focused on -- very much on a user growth story.

And sort of along this line of products and assets of different life tenure, I suppose, one of our newer brands that I think we talked about in the letter is Upward, which is similar to Chispa and BLK but targeted to the Christian community here in the U.S. So it's a bucket of different types of products at different stages.

But your second question is about whether people are actually meeting in person. So we've been looking in this and studying this. We have some recent data that came out of our pulse surveys here in the U.S. and -- which provides interesting insights. So there's a metric we look at, which is the percentage of single people that have gone on a real-life date. It is -- overall, it's down just a little bit. But turns out, there is a story by age. So young people are going on -- more young people are going on dates in real life, and they're going on more dates, which sort of makes sense given their social outlets are fewer now.

Older people -- and the older you get, there is a little bit more hesitancy to go on in real-life dates. However, the people who are meeting in real life, the share of those dates of people who met online has gone up. And there's another shift that we're seeing where people have shifted to virtual dates as a real valid replacement for in real-life dates.

And so one of our recent studies showed that a majority of users who have been on these long video virtual dates, they say they are able to find chemistry and build relationships, even with somewhat extended online relationships. So there are some shifts that overall, it's -- for the entire population of U.S., it's only down a couple of points in terms of percentage of single people who say they've been on in real-life dates.

The next question is from Jason Helfstein from Oppenheimer.

Maybe just I'll ask about Tinder monetization kind of shorter and longer term. Just how are you thinking about it between both the ability to raise monetization on a kind of a same user basis as well as kind of the, I guess, the negative mix from lower-priced geographies? And maybe talk about it a bit, how you're thinking about next year and also kind of just longer term.

Yes. So because the Tinder platform is so broad, it does allow us a lot of different opportunities to experiment with both sort of consumables as well as subscription and higher-priced subscription options. And that is going to continue to be a journey. Our general view is the people's perception of how they pay are different in different markets. I've talked about this before. In certain Southeast Asian markets, for instance, where the volumes are really high but the per user ARPU is probably going to be lower than other parts of the world, some of these more à la carte, consumable-type features will make sense. In other parts of the world, more higher-priced subscription packages for more advantages will make sense, and we will continue playing all of those different levers to drive both payer penetration as well as ARPU. And it will be different stories in different markets.

We'll take the last question from the line of Brian Fitzgerald from Wells Fargo.

I wanted to ask about Swipe Night, relaunched in the U.S. and now it's in 24 countries. It was a good success this quarter. Can you tell us about what you saw relative to kind of engagement patterns within the different geographies? Things you tweaked with this launch from the first launch in the U.S. that resonated particularly well. And then is the pandemic driving more reaction response to this type of kind of program because of it's video and episodic nature? That seems to be resonating, right, during the pandemic.

Yes. So this Swipe Night version was an international launch for us in 24 countries. So we had to, of course, translate it into 20 languages. And we did optimize some of the performance and flows based on learnings from the last time we experimented with that in the U.S., for instance, allowing for more persistent viewing of the episodes, more messaging based on choices that people have made during their interaction, et cetera.

So the interesting thing about the engagement was we saw real engagement in most of the markets we launched, and we didn't know whether such a U.S.-centric content would resonate globally, but it did. And so that's what gives us confidence about the fun, entertaining, live, episodic types of things does make the platform interesting, the user engagement interesting, the conversations interesting.

It is hard to put comparisons on the pandemic versus nonpandemic because we've only done it sort of once in the U.S. before, and then this was a more global launch. But we're overall very happy with the engagement and the buzz that this created in the markets that we tested it in.

All right. I think we're going to stop there. I did want to thank you all for your support during this particularly challenging year. And as we close out this year, here's hoping to a much more quiet and peaceful holiday season for everyone. So thank you all. We'll talk to you again in Feb.

Thank you. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.