Match Group Inc (MTCH) 2020 Q2 法說會逐字稿

Good morning, and welcome to the Match Group Second 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 Investor Relations.

Please go ahead.

Thank you, operator, and good morning, everyone.

We're once again going to do this call remotely.

So joining me from various locations are CEO, Shar Dubey; and CFO and COO, Gary Swidler.

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.

As with the last quarter, along with the earnings release, we shared our commentary in a shareholder letter last night.

I hope you've had a chance to read them.

I will, however, summarize the very brief highlights, and then Gary will add some color to the financials, and we'll open it up for Q&A.

2020 thus far has certainly been an extraordinary year.

We're running out of adjectives to describe it.

And even as we've been navigating the various macro events, these last few months, in particular, have been fairly eventful for our business.

We completed the separation from IAC at the end of June.

It's particularly remarkable given that it was all accomplished in the middle of the pandemic.

And I'm proud of the team that made that all happen so smoothly.

As our financial results indicate, our business has shown resilience.

As we mentioned in the letter, even though we've come down from the high engagement levels we first saw in March and April at the beginning of the lockdowns, we're still seeing higher engagement than when this all started.

The declines in propensity to pay that we talked about last call, they've all steadily recovered across all of our brands and across subscriber conversions as well as a la carte purchases.

Our first-time subscribers and direct revenue grew year-over-year across almost all of our major brands.

Now the organic word of mouth-driven new user trends, those haven't fully recovered yet, probably because the much lower level of socializing going on in the world.

But paid marketing has been performing very well, and we're going to take advantage of this market opportunity in Q3 by investing heavier on COA.

Last quarter, we talked about how the non-Tinder businesses have grown by 2% in aggregate on a year-over-year basis for the first time since 2016.

In Q2, that trend continued, and in aggregate, these businesses grew 9% driven by solid product and marketing efforts.

Our Tinder business continues to grow very nicely despite being far more exposed to the COVID-impacted markets internationally.

And despite impacts in fairly large markets like India, which we called out, which, by the way, India has been about the worst impacted than any other market we've seen since the pandemic began, also Brazil for some period of time.

Despite all of that, Tinder in aggregate has recovered in terms of propensity to pay trends, and they're starting to experiment new features that we're excited about for later this year.

I should also address the leadership change we made at Tinder last week.

Elie Seidman stepped down, and we were lucky to be able to bring in a very talented and experienced executive, Jim Lanzone, as CEO to lead this next chapter of growth for Tinder.

We also brought in a seasoned product executive from the gaming world as the CPO for Tinder.

And I'm feeling very optimistic about Tinder's next chapter.

As we look ahead, we've created several levers of growth in our portfolio.

Tinder continues to show strength and opportunity, both in new addressable markets as well as opportunity for new surface areas for user engagement and monetization.

Our older brands that have been a drag for a while are in aggregate growing again.

There are many different stories here, new sources of revenue, new markets, new marketing channels, other product wins, all of which gives us confidence that they should continue this trajectory.

And our newer growth brands are doing very well.

Both Hinge and Pairs continue to perform well.

Our newer apps like BLK and Chispa that we built and invested in are now growing nicely and contributing to the growth.

And we're continuing to seed and invest for the future with our Muslim app, Hawaya, that just launched in 12 new markets; a new Christian app we launched a few months ago; and our continued investment in Asia.

As I said the last time, the value proposition of our products has gotten stronger as people have fewer traditional alternatives to meet people.

And with the growing usage of video and other features, we have an opportunity to truly expand the use cases and experience within our apps.

One of the favorite parts of the job for me are the stories we hear from users every day.

So I thought I'd share a couple of non-business fun facts.

People are certainly adapting their dating behaviors to the pandemic and lockdowns.

And based on the stories we're hearing, some of the more popular dates these days are walks in the park, picnics and backyard barbecue.

We've continued to hear more and more stories about super interesting video dates and even video and live streamed weddings, which might become a trend.

So despite all the uncertainties the world and the markets still hold, we're feeling more confident about the rest of the year.

And with that, I will let Gary walk through some more financial specifics.

Thanks, Shar.

Our financial performance has indeed improved markedly since our last call.

We continue to navigate a challenging environment very well.

Revenue in Q2 grew 12% year-over-year, 14% ex FX.

Performance was balanced, with direct revenue up 13% in North America and 11% internationally.

We crossed 10 million average subscribers for the total company, 11% year-over-year growth.

We saw a meaningful improvement in customers' propensity to pay starting in May, which drove these results.

April proved to be the low point for ARPU, and we've seen a steady increase since then.

Q2 ARPU declined 2% year-over-year at Tinder but was about flat excluding FX.

It was especially strong in North America.

ARPU was up 5% year-over-year at the non-Tinder brands, led by Hinge, Plenty of Fish and OkCupid.

Sequentially, ARPU for Q2 at Tinder was down 2%, while for the non-Tinder brands, it was up 3% in aggregate.

Each figure was a little higher excluding FX.

Tinder's average subscribers increased 128,000 sequentially in Q2, up 18% year-over-year, with direct revenue up 15% year-over-year.

Tinder has seen subscriber conversion, a la carte revenue and ARPU improve nicely since our last earnings call.

Male and older payer trends, which had initially shown some softness in the pandemic, have also improved.

Tinder's recovery has slowed by its broad global presence and particularly by weakness in certain countries such as India where the virus is still having major effects.

However, July was another strong month for Tinder overall, the third straight month of increasing revenue since Tinder hit its low in April.

We're pleased to see Tinder trends clearly continuing to head in the right direction and excited about a robust product road map for the back half of the year.

We're also very encouraged by the 9% year-over-year direct revenue growth at the non-Tinder brands in Q2 largely as a result of strong product work across the portfolio that has been years in the making.

The improvement in conversion at many of the legacy brands is pronounced.

In addition to the turnaround at the legacy brands, newer brands like Pairs, Chispa and BLK are contributing meaningful revenue growth.

Traction at Hinge is accelerating with strong top-of-the-funnel growth, solid progress on monetization and a robust product road map ahead.

We're also starting to get a lift from revenue at our Plenty of Fish one-to-many live streaming video business from both subscribers and nonsubscribers who are choosing to pay for live streaming services.

We're optimistic that we've turned the corner on non-Tinder growth and that these brands will grow in aggregate for the foreseeable future.

On the cost side, we pulled back on marketing spend in Q2 as the pandemic took hold, which helped Q2 EBITDA.

Assuming ROIs remain attractive, though, we plan to spend more heavily in Q3 to drive future growth.

We expect approximately $50 million of incremental marketing spend in Q3 over Q2 levels, up $30 million year-over-year.

As a result of our separation from IAC, we effectively stepped into their shoes from a reporting perspective, which means we show IAC's other businesses as discontinued operations.

Match Group's separation-related costs of about $8 million in Q2 are also included in discontinued operations.

We assumed IAC's $1.7 billion of senior exchangeable notes in the separation.

At June 30, including the exchangeables, our net leverage was 4.6x, which is below the 5x as we've been expecting.

We feel that we're well positioned to continue to invest in all of our businesses and to pursue compelling strategic M&A opportunities.

We also remained focused on using our significant cash flow generation to rapidly delever, as we've communicated previously.

Despite the macro uncertainty, we believe we're able to provide an outlook for Q3 and for the full year.

As the business momentum continues across the brands, we expect to deliver at least $600 million of total revenue in Q3, which would be low double-digit year-over-year growth.

The revenue strength in Q3 evidences a solidly recovering business.

We expect EBITDA of $215 million to $225 million, which reflects the strong revenue growth and higher year-over-year marketing spend.

We expect margins in Q3 to be moderately below last year's levels.

Predicting the pandemic's impact as we go further in the year is more challenging, but based on what we've seen of late, absent a major change in the macro environment, we believe that we can deliver at least $2.3 billion of revenue in 2020, which will be 12% year-over-year growth.

Our outlook reflects general stability or even slight acceleration in top line year-over-year growth rates for the remaining 2 quarters of the year.

We expect our current product road map to generate ARPU growth in the back half of the year to complement solid subscriber growth.

Our target is to grow EBITDA 10% year-over-year for the full year, which could, of course, vary depending on the levels of investment we choose to make.

All this said, we recognize that there is still uncertainty around what will happen with the pandemic in the fall, which could have a meaningful impact on our full year guidance.

Last, I wanted to update our outlook for a few other discrete financial items.

We expect GAAP interest expense in each of Q3 and Q4 to be similar to Q2 levels of approximately $45 million.

We expect cash paid for interest to be about $30 million per quarter, though it will vary somewhat depending on timing of required interest payments.

The primary driver of the difference between GAAP interest expense and cash paid for interest is related to the 3 exchangeable senior notes we assumed from IAC.

These notes have lower cash coupon rates than their associated GAAP interest expense.

We expect SBC expense of $100 million to $110 million in 2020, the change from our prior outlook stemming largely from the modification of certain equity awards, which will be reflected in Q3.

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

(Operator Instructions) First question is from Lauren Cassel from Morgan Stanley.

Great.

I just wanted to follow up on the July commentary.

Any more color there on how July has trended versus June?

Have you seen continued improvement in the business on both the subscriber conversion and ARPU side?

And then my second question is just curious how states like Florida, Texas, California where maybe the lockdowns have been reinstated have trended recently.

Are you seeing any renewed softness in those markets?

Any additional color there would be really helpful.

Okay.

Thanks, Lauren, and welcome to your first Match Group call.

Glad to have our first woman analyst covering us after 5 years, I think.

About July, yes, the recovery that we saw throughout Q2 has continued into July, and we've seen improvements in both subscribers and ARPU.

We actually shared a chart yesterday in our letter that showed the first-time subscriber trend into July.

And that should illustrate the continued momentum we're generally seeing in our propensity to pay recovery.

And this is basically what's guiding us for our Q3.

The question about -- the geo impacts of COVID and the trends have been really interesting.

It's very different by market.

And so maybe I'll give you a little bit of color of what we've seen and what we're continuing to see.

In the U.S. and Western Europe, where we saw most of the impact in March and April right when the big news was going on and the initial lockdowns were announced, since then, things have steadily improved.

And despite increases in cases in Florida, Texas, Georgia, et cetera, we haven't seen any impacts to any of our metrics.

Now even back then, there were certain parts of the country that were more impacted.

For instance, New York and California were much more impacted.

Florida actually never showed any decline in metrics.

In fact, they had super high engagement due to spring break, right, when all this news was breaking.

In other parts of the world, however, we're seeing again varied levels of impact.

Brazil, for instance, actually saw some of the worst impacts in May and June, and it's recently starting to tick back up.

India, as we mentioned, it's been the most impacted of any markets that we've seen thus far, and it still remains under pressure.

Japan is another market we've been watching closely.

In the early days, it didn't seem to show any impact, but when the first round of states of emergencies were declared, we saw some degradation in metrics.

Things have been improved.

But there have been some new rounds of emergency declarations of the last few days, and we're watching to see if any of that has an impact.

In aggregate, though, despite all these puts and takes, all of our businesses have continued improvement every month since it's bottomed out in April.

The next question comes from Cory Carpenter from JPMorgan.

Great.

As we think about your product pipeline in the second half of the year, could you expand a bit on your priorities at Tinder, in particular, the opportunity you see with regards to monetizing power users?

And then any comments on the Platinum tier that was recently added to your website, maybe what the potential rollout could look like over the coming quarters?

Thanks, Cory.

I was waiting for the Platinum question, wondering when that was going to come up.

As we mentioned, about the broader road map, we have a pretty robust road map that's focused on core experiences as we always do as well as building some foundational stuff for new experiences we're planning to roll out next year.

I can't get into a lot of details on all of that yet.

But to your question about power users and the revenue road map focus, it is true, our second half 2020 revenue road map on Tinder is focused on power users.

The team has been testing some contextual merchandising around our existing a la carte products.

And we have indeed just started testing a new subscription tier, Platinum.

It is designed to provide additional value beyond Gold by increasing users' chances to get more matches and more conversations.

It is very, very early.

And it's also a very minimum viable product version of the tier that we're testing.

The team has more features that they're adding and designing, and all of that remains to be tested.

The thing I want to point out, Platinum, we're mostly expecting this to be an ARPU driver.

Unlike Gold, which was by far the most successful and unique revenue feature we've ever launched, which drove meaningful ARPU increases along with almost doubling of subscriber conversion, this is not at all expected to be anywhere close to Gold.

This is more about adding -- giving our power users more control, a better experience and more advantages through our ARPU plan.

But again, there's a fair bit of testing still to be done.

And our goal is that if all goes well, we should be able to globally roll this out by the end of the year, later in Q4.

The next question comes from John Blackledge from Cowen.

Just on Hinge, where is the brand tracking now versus what you had envisioned to start the year kind of pre-COVID?

And how should we think about the brand on a longer-term basis?

Thanks, John.

Hinge is actually tracking very well relative to our expectations.

In terms of user growth, even though it was impacted during the initial lockdowns, mostly because of their geographic footprint being in larger cities like New York and L.A., they have since rebounded very strongly.

And already in the first half of 2020, their downloads are double year-over-year.

And there's a lot of room to grow, both in the U.S. as well as internationally, which we haven't made a huge play yet.

And as we've said before, this year was supposed to be the beginning of our focus on monetization, and the team has been right on target and even slightly ahead than initially planned on rolling out revenue features.

It's been encouraging to see the features that have worked well on our other platforms also work well on Hinge.

In fact, one of the pleasant surprises for us was Hinge turning profitable in Q2, which was well ahead of our expectations.

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

My question, I had a 2-parter.

First, maybe just -- could you update us just a little bit around female engagement and video dating use?

We've talked about that a little bit last quarter on sort of the opportunity to see those 2 trends sort of converge together and what opportunity you see there and especially more on Tinder and Hinge and the more youth-oriented ones.

And then in the letter, you also discussed how your longest-standing brands collectively grew for the first time in 4 years.

So maybe spend a little bit more time on the expectations for them going forward, maybe in particular for monetization and merchandising strategy.

That would be great.

Sure.

So on female engagement and video, as we said, yes, there were a lot of really interesting learnings coming out of the spike in engagement we saw with women, which has allowed us to formulate portions of our road map, particularly on Tinder, to try to leverage the psychology of what that was.

And you'll see us rolling out -- the team has been testing a few different things, and we will definitely be doing more on that front, particularly next year.

On video, we obviously have launched both one-to-one video on most of our platforms, including Tinder.

Tinder is now testing it in a number of different markets, their Face-to-Face product.

I mean each of our products has a different rule set in terms of when you get to open up video.

In some cases, it's after a couple of conversations back and forth.

In some cases, you have to have as many as 10 back and forth exchanges before the video becomes available.

And so people are still testing to make sure what is the right timing at which we should open up -- people to talk on video.

Usage has been building across all of our platforms.

The thing that we found is once people use it, majority of them use it again.

And so it is going to be one of those things that's going to develop over the long term, I think.

About your second question related to the older expectations about the long-standing brands and what do we think is going to happen, it's been 2 years in the making with lots of product work and investments across these properties to enhance the user experience and increase the product appeal.

There's lots of work that's gone into changing monetization mechanisms and paywalls and even business models in certain cases.

And then we've supplemented this with marketing campaigns and with true brand differentiation.

And that's what gives us confidence that they've turned the corner, and they should be set up for sustainable growth going forward.

The other thing that actually is super interesting is the POF team has found a new revenue stream in POF LIVE, which again sort of gives us confidence in this idea of new surface areas and new monetization abilities that we can deploy across our platforms.

The next question comes from Ross Sandler from Barclays.

Gary, just a follow-up to that last question about non-Tinder brands.

So we've got a couple of quarters in a row of growth, and your comment was that you expect them to grow for the foreseeable future.

So how does that, kind of turning the corner in non-Tinder, impact your long-term view on margin profile for the overall Match Group?

Any comments there?

Sure.

So as we've said, this was the second straight quarter where those brands grew, and the growth was a bit stronger in this quarter.

So this is something we've been working on and trying to get to, and we feel we've finally gotten to the point where we can say with confidence that for the foreseeable future, we think those brands in aggregate are going to grow.

So that's clearly a milestone for us.

I think from a margin goal perspective, we've always talked about getting to 40% EBITDA margins as a long-term goal.

I think that still remains our expectation.

That's not necessarily a 1-year goal, but that's an over-time goal.

And so we had always assumed there would be some growth from the non-Tinder brands, and now we've gotten there, and I think that was always part of the plan and part of what we incorporated into the expectation of getting to 40-plus percent EBITDA margin.

So I think we're tracking pretty much as we hoped and expected, and our goals are not changed there.

We think we're on the path to achieving them over time.

It's important to understand that it's product work and improvements in conversion that is leading to the strength at a lot of the non-Tinder brands.

And so that is going to drop to EBITDA and ultimately help us improve margins of those brands.

So it's a positive from our perspective, and that's why we've been pushing towards that.

I'll also note that some of the margin drag comes from things like investments we're making in new geographies, in new products, new brands.

And Hinge has been one of those.

But actually, Hinge has crossed into profitability in the second quarter for the first time, which is, again, a momentous event for us on Hinge, something we had been expecting but a little bit later in the year and we crossed it.

So as you see these investments made and the drag they cause on margins, the goal is obviously to create profitable businesses.

We've got Hinge into that category.

We're optimistic that we'll be able to get Chispa and BLK into that category over time, and obviously, other things we're investing in like Hawaya, like the matrimony businesses in Asia.

Over time, the goal is to get those to be profitable and reduce the drag on margins.

The other big topic around this, maybe a couple of big ones, one is legal expenses, which has been a headwind for us.

We are hoping to see those legal expenses reduced next year, but it's one of the impacts of COVID that those things have been delayed.

And so we're having less legal expense so far this year but probably will delay somewhat into next year as some of that resumes and some of those matters take a little bit more legal expense.

So we'll see how that all plays out.

Some of them are kind of stuck in the system right now with COVID and others might resume at some point in time.

And then just generally in margins, we're spending a little bit more money on safety and compliance.

Regulatory compliance has become a bigger part of the business.

So that's another factor, but we think it's critical to be spending in those areas.

And then live streaming, you're seeing the cost of live streaming basically run through our cost of revenue line.

That probably is a little bit of a lower-margin business for us as we've constructed it right now, but we think it's still a very appealing business.

And we'll see what the best way to manage the cost of that business is over time.

So those are some of the puts and takes in margin.

But the headline is that our confidence remains in the ability to get to 40-plus percent over time.

And a lot of what's happening in the business are things that we've been expecting as we had that overall longer-term objective.

The next question comes from Brent Thill from Jefferies.

Shar, good to see 15% growth at Tinder.

Maybe if you can just articulate the next leg for Tinder this year.

And if you could also maybe just talk to India, I know you were a little disappointed.

What needs to change in India for you to turn around the trajectory there?

Yes.

Let me take the India question first.

India, I think, has been interesting to watch, as I said.

Some of our early markets that we saw the worst impacts were Spain and Italy back in March and early April.

But India has definitely been much worse impacted than even those markets.

We also pulled back on marketing, but it has bottomed out lately, and it does look like things are starting to open up a bit.

And if what we're seeing and reading is right in the market, our teams want to go back out with marketing and rebuild some of the lost momentum in India.

So yes, India, I think, was about as bad as it got for us.

And it was uniquely just the only country that was impacted that way, surprisingly.

About Tinder, yes, I think because of its exposure to some of these geographies that continue to have an impact.

As I said, Brazil is a large market, they were seeing impacts in May and June, whereas North America and Western Europe recovered better after the April bottom, India being another one.

It's a little delayed for another quarter maybe because of the international markets.

But we should definitely start accelerating growth again in Q4 at Tinder.

The next question comes from Eric Sheridan from UBS.

Hope all is well with everyone on the team.

You alluded to it in your remarks, I wanted to come back to the management change at Tinder.

Just wanted to know if we can get a little bit of the background of why that came about.

And then thinking about Jim running that business now going forward, any change in strategy?

Any areas where you see his focus might be different than Elie's was in the past?

Thanks, Eric.

Yes, Elie joined Tinder right after we launched Gold, and his steady hand was really critical at that time as Tinder grew through its first billion and now it's ready for its next chapter.

And I really think Jim, with his track record and experience, is absolutely the right leader for this next chapter for Tinder.

He's seasoned.

He has a strong track record, both building businesses as well as running large digital businesses.

He brings a unique blend of product and marketing chops.

And in the near term, we don't expect any major changes, but we do have great ambitions for Tinder and its expansion into new use cases and surface areas.

And I've always believed that fresh thinking, combined with institutional knowledge, can drive step changes.

And I'm sure Jim will put his stamp on 2021 plans.

But all in all, I'm excited for where Tinder is headed.

The next question is from Ygal Arounian from Wedbush Securities.

So I wanted to ask, there clearly have been a number of positives or at least rebounds for your business specifically during the pandemic.

There's also been some areas of focus over the past 1, 2 years that may be taking some more time to come back, namely the live experiences and Tinder U. So you mentioned live in the investor letter.

I was wondering what the current thoughts are on those events.

And maybe in particular, as you're building in anything into 3Q guidance or your outlook for the year from potential for colleges around the country to continue remote learning in the fall, what kind of impact events and college campuses can have over the rest of the year?

Yes.

That's an interesting question.

On live, I think you're talking about Festival Mode and those kinds of features we had launched.

So obviously, the value of those kinds of features have come down since there's not many concerts and events going on.

But keep in mind, these are generally core engagement features.

So their direct impact on revenue is not that much.

The live feature we actually discussed in the shareholder letter is more around synchronous shared experiences within the app itself.

It's not dependent on in-real-life events.

So it's sort of a different thing.

Tinder U is interesting.

Tinder U was again an engagement feature rather than a direct revenue driver.

When schools started closing, we did adjust our Tinder U product to make sure students could continue to swipe both in their physical location if they went back home as well as within their schools.

We saw a fairly large spike in activity and engagement among the 18- to 22-year-olds in the early days of the pandemic and through most of summer.

Generally, towards the end of August, we see some back-to-school seasonality.

So it will be interesting to see what happens this particular year.

The team is ready to figure out and adjust quickly.

It is sort of important to know that the Tinder U features is sort of a filtering mechanism, and it's valuable to students even if they are not on campus.

Now obviously, it does change a few things.

You can't do campus marketing, and so we've got to resort to more digital avenues, et cetera.

But it will be interesting to see what happens this fall.

The next question comes from Jason Helfstein from Oppenheimer.

Can you comment a bit on kind of the factors impacting international ARPU on an organic basis, so excluding FX, such as a la carte versus subscription and country mix?

And are you seeing any headwinds in international ARPU in the third quarter?

Thanks, Jason.

Why don't I try to take that one.

So first of all, you said ex FX, but it's important to note that there was a significant FX headwind in Q2 along the lines of about $11 million.

It's much less severe in Q3, probably in the order of $4 million.

So that's just one aspect of it.

In terms of the overall drivers of it, as Shar I think mentioned, we saw weakness from COVID particularly at Tinder in terms of a la carte and also some shifts to lower-priced packages, lower-priced SKUs at Tinder, and that really is the driver internationally, especially remembering that Tinder is a bigger piece of the pie internationally than it is domestically.

So that's why you see some of those pressures.

They are COVID related, particularly the effects of the pandemic went through Western Europe.

Now they are more pronounced in other places like India.

So we'll still see some lingering effects.

But I think you should expect some pretty strong sequential acceleration in international ARPU in Q3, both as the FX impact is less, but even organically, I think we're going to see some meaningful improvement.

Already, April to June, we talked about 6% improvement in Tinder ARPU.

So you can see the momentum on the ARPU side generally.

The next question comes from Benjamin Black from Evercore.

You guys spoke about monetizing new surface areas within Tinder with potential new use cases.

Could you perhaps dig just a little bit deeper into what opportunities you see there?

And then secondly, you mentioned $50 million in incremental marketing spend.

Could you kind of talk about which brands that cash is earmarked for?

And how should we think about the cadence of marketing spend going forward?

Should we see similar growth into 4Q if the macro environment remains supportive?

Okay.

Gary, you should take the incremental marketing spend question.

I can address the new surface area question a little bit.

Look, one of the things that's become clear to us is people are turning to our platforms for the increased need to connect and communicate.

It was very clear during the pandemic and the lockdowns.

And this has given us a lot of ammunition about the types of experiences we could launch.

One of the proof points is POF LIVE.

On POF, it is a video-based, one-to-many live experience.

And the team has been trying different things there.

One of the recent things they've launched is NextDate, which is a version of a dating game, a live dating game on video on the app.

And in its very early days, it's already generating 60,000 video matches a week, for instance.

And it's fun and it does communities, and it's an experience people seem to like.

And so that's just a very early foray into the types of things that we're talking about.

Gary, why don't you take incremental marketing?

Yes.

Sure.

In terms of the marketing spend, I would say that the incremental marketing spend is at virtually every one of our brands with the momentum across the brands and the big opportunities on the marketing side we want to spend up at these brands.

So it's Tinder and it's non-Tinder brands.

It's pretty much across the board.

The sequential number looks particularly large because, obviously, we pulled back pretty heavily in Q2, so Q3 looks larger.

But it is a meaningful increase year-over-year because we are seeing big opportunities, high ROI market, TV still looks quite good, video generally looks good for us.

So we're going to spend into these opportunities to drive longer-term growth.

We don't know how long these opportunities are going to hold for.

In fact, they're not as great as they were in Q2, but they're still quite strong.

And so our plans call for that level of incremental spending in Q3 and something similar in Q4 right now, but we'll have to see how long this opportunity lasts.

And obviously, we have a disciplined ROI framework for most of our marketing spend.

And so we'll watch and see kind of what opportunities are out there.

But our view right now is, given our momentum across the portfolio and the opportunities in the market, we want to try to keep spending to drive growth into next year if that opportunity is still available to us.

The next question is from Brian Fitzgerald from Wells Fargo.

First of all, congratulations on the recent hires.

I want to know if you could talk about the efficiency of your teams during shelter-in-place and whether you're giving any thought to work from home, more flexibility longer term.

Any thoughts on the possibility for cost savings from that perspective?

I can take those, Gary.

In terms of efficiency and productivity, I do think we are lucky to be in a business where we can generally do almost everything remotely.

And so we haven't seen any sort of discernible impact from remote working yet.

However, there are lots of considerations here.

We're starting to hire more people and onboard them remotely.

And I think that's fine for some period of time, but eventually, the in-person interactions and the building of the team relationships and camaraderie is important.

There are studies that have been done in the past about innovation and et cetera and their impact for remote teams versus in-person teams.

So there's a lot of considerations here.

Also, not everybody is dealing with this remote working very well, which is why as some of our markets are opening up a little bit, we have started to open our offices to give people -- our employees a choice.

We are now open in Tokyo, Paris, Vancouver and Seoul.

And slowly but surely, more and more employees are coming into the office.

And so we've got to watch and see how this all plays out.

We're not rushing to a decision, but we're definitely providing our employees flexibility, at least for as long as we think there is any risk for this pandemic.

The next question comes from Nick Jones from Citi.

I guess at a high level, what is your view on consumer kind of perception of online dating?

Maybe kind of domestically and internationally, do you think COVID has kind of accelerated more kind of a positive perception and a willingness to date online and try to drive these types of interactions online?

Just your thoughts on kind of what you've seen through COVID and what you kind of expect post COVID.

Sure.

I'm going to caveat this by saying that awareness and perception takes a while to form and shape and change.

And it's only, believe it or not, been 3 to 4 months of us dealing with this.

But having said that, here's what we know.

For people who have tried online dating, they definitely found value and are using it more.

This is what's evidenced in all of our increased engagement and reactivation.

For people that have resisted the category, it's not clear yet that they are breaking, if you will, the resistance in larger numbers.

But the likelihood of that could increase as this drags on.

But what's also more important is it does tell us -- it gives us the opportunity to be able to market and tell our stories more strongly because our value proposition certainly has increased during this time.

So that's sort of where we are where the increased value perception among people who have tried it has gone up.

We can see it in all kinds of metrics.

Whether new users breaking through in larger numbers is going to happen, that's something we have to still keep an eye on.

This concludes our question-and-answer session.

I would now turn the call over to management for any closing remarks.

Thank you all.

It's been a tremendous quarter despite everything that we've been seeing.

I hope you all are staying safe.

We're hoping to be able to talk to you again in a quarter.

Thank you for attending today's presentation.

You may now disconnect.