OPW - Match Group's CEO Bernard Kim and President & CFO Gary Swidler talked about opportunities and challenges, the product roadmap for Tinder and Hinge, the company's acquisition of Hyperconnect, and the in-app payment policies of Apple and Google. They were interviewed by Dan Salmon, U.S. Internet Team Lead, New Street Research, at the Online Dating Summit that took place this week in New York.
Q: What was the most surprising opportunity and challenge you encountered when you joined Match Group?
Bernard Kim: The most pleasant surprise was how welcoming the team was and their openness to new ideas and change. Having been in similar situations before, I know that some teams can be hesitant toward newcomers. But I was impressed by how the team embraced me. The unexpected challenge was how quickly we needed to work on Tinder.
Q: Do you agree that Match and Tinder are at the highest risk due to oversaturation in the online dating market, as investors often suggest?
BK: I see it as a big opportunity, not a risk. Initially, marketing and product weren't aligned, so I saw a chance to improve. The stigma around online dating is gone, and now we need to focus on engagement.
Q: When you look at the product roadmap, what are the things that you are most excited about for the Tinder team?
BK: Laying out the product roadmap. We have to rebuild trust with investors. Accountability is very important and we know we need to execute this year.
Q: Justin McLeod thinks Hinge should be a $1B business. What do you need to see from Hinge to turn it into a 1B business?
BK: Match Group is excited to have Hinge and Justin on the team. I do think we are still on an early runway of what we can do with Hinge. Hinge's focus on product innovation and execution has been successful, and now the company is moving towards global expansion and monetization. After thorough testing, Hinge X was launched at $50 and Hinge+ was lowered from $35 to $30. Hinge is currently being rolled out in the EU and generating excitement among users.
Q: What's your view on the mixed perception of the Hyperconnect deal? How did you view it when you bought it, and what have you learned since then?
Gary Swidler: We acknowledge that our investors may not be entirely satisfied with how it has turned out so far. However, we remain committed to the long-term potential of the acquisition and are working to improve profitability. Azar, the one-to-one video chat app, is performing well, but Hakuna needs more work. We have a new head of Hakuna with a new strategy, and we are eager to see how that unfolds. Despite challenges, we have successfully returned Hyperconnect to growth, and we see a lot of potential for the acquisition in the Asian market.
BK: The story of Hyperconnect is not completely told. I joined the company post-Covid and we have not had as many IRL meetings as we would like. A lot of magic happens during in-person meetings. Despite the challenges, I do believe that the talent at Hyperconnect is well-positioned and super-motivated.
Q: Let's talk about in-app payments. Do you think there is a change coming?
GS: This year is critical as the current app store policy needs to change. I believe they need to comply by the end of 2023. The discussions with regulators on what's fair will continue throughout the year.
BK: Gary mentioned fair and unfair. App store fees are a big issue. Match Group spent $600M+ on fees last year, more than R&D. It's unfair and needs to change.
Q: How important is advertising for the long term?
BK: It's important, but we need time to get there. Young people experience in-app content differently than older generations, and we need to be open to this, especially since most of our users don't pay.
Q: What's the plan for M&A and buy-back over the next 12-18 months?
GS: Our cash flow this year is over $800M. We've been successful with M&A in the past, but buying back stocks also makes sense. We'll continue to consider both options.
Q: What do you think your role is in mental health and trust and safety across the industry?
BK: Our role in mental health and trust and safety is crucial for our survival. We have invested heavily in building tools within our apps to verify users and create a better experience.
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