Match Group: The Business Behind Tinder - [Business Breakdowns, EP.133]

29:07So reactivations are a prime source of replenishing the top of the funnel. So in our view, churn isn't a worry on the condition that you have a very low cost of user acquisition. And so churn has historically been a non -issue for the group due to the massive net user the additions that they've benefited from, this viral growth that's required next to no marketing spend. And the problem is that as the app matures, it potentially becomes more difficult, maybe more expensive to attract incremental users to the app. And given the very high -churn rates, you very much do not want to see increases in your customer acquisition cost, as it could potentially upend the unit economics of match.

29:50And the implication of that, if it did occur, would be that the company was over earning historically. To be clear, we have not yet seen any evidence of this. Match disclosed in its last 10K that actually seen a decline in the average amount they spend to acquire a new user across its portfolio. I want to start on the top line. It seems like that's the best visibility you have in terms of what's going on. And you might not be able to separate churn from additions and exactly what's going on. but you get some sense of how the business is performing. What has that looked like over the past one to two years?

30:28I know we had a weird environment with COVID, but what has happened to growth rates? And you have any context for what's going on, just in terms of balancing those net ads versus any type of term? The business has historically grown at pretty high rates. If you look, I think of the last five years, Tinder has grown at 40 % on average, but that has decelerated pretty dramatically and growth was just 9 % last year. I think that's what really upset the market. The stock experienced a more than 80 % peak to trough drawdown, which is an almost valued destruction because people were underwriting match group as a whole would it be a 20 % roller make for an ugly market environment and the stock would reflect that.

31:16But when you think about that in terms of the decelerated growth rate and what you brought up before in terms of marketing spend or lack thereof historically, what does this business do on a margin basis or how do you look at unit economics? What's the best way to think about whether it's a normalized earnings profile or normalized margin? What's the best way to think about it for this business? So that arson really good bull and bear debates around match group, but one thing is irrefutable. So this is a highly profitable, highly cash -generative business. So if you were to make some adjustments to the company to find operating earnings, you'd include share -based comp depreciation, match produced almost 900 million of operating income last year.

32:05That equates to a 28 % operating margin and historically a very high portion, north of 90 % of that EBIT A has converted to free cash flow. So they were doing 800 million of free cash flow last year and for every dollar and revenue that match produced a quarter of that converted to free cash flow, which is really solid. The business is extremely capital -like. Now, if you look over the last decade, they've spent cumulatively a little under 400 million in CAPEX and to give a bit of context around that, they're cumulative CAPEX over the last decade. That's equal to just 12 % of last year's revenue base.

32:47So the business requires minimal investment from both cash flow statement and the P &L to fund its growth. And the corollary of that is that reinvestment opportunities are insufficient to absorb all the earnings that match is generating. And so you're going to see buybacks become a more important part of the growth algorithm for match group going forward. And it is important to note that historically that was not always the case. The company, they suspended their buyback program after they spun off from IAC. So, Matt had to do lever from 4 .6 times net leverage to around 2 .8 times where they are today in terms of their leverage.

33:29And so right now the company, they've got a $1 billion share repurchase authorization and they're steadily working that down. And the CFO, Gary Swidlon, he has spoken about Matt's intention to return at least half of the free cash flow generated by the company of the next few years back to shareholders orders in the form of buybacks. And it was at a recent investor conference, he noted that match has gone 300 million in Q3 quarter to date. So that's around 2 .5 % of match's current market cap in one quarter. So buybacks, in our view, are going to form an increasingly important part of that value generation equation for match as we move forward.

34:14But I want to talk a little bit more on capital allocation there. But just in terms of the margin profile, what has been the historical marketing expense as a percentage of revenue? Is that being a normalized number over time? And is there a risk that that would have to take a material step up if growth is to slow down? If you look at sales and marketing expense, and it's worth noting that advertising expense comprises around 90 % of that line item, but that has been an enormous source of margin expansion for the business. There's been 21 percentage points of sales and marketing margin release over the last eight years.

34:55It's gone from 38 % in 2014, down to around 16, 17 % today. There is a risk and we believe that they will need to spend more against their assets. And that's because we think that they've dropped the ball a bit on the marketing front over the last few years, particularly relative to an app like Bumble. And so one of the issues that was observed throughout the pandemic was that many of the customer acquisition channels that match had historically used, particularly college recruiting, they disappeared overnight. And so you had Bumble, for example, as a point of contrast, they really pivoted their customer acquisition channels to out of home advertising, sponsorships, display advertising.

35:45All these areas essentially where dating apps had historically not been very involved. And I think that's really showing up in the fact that Bumble's namesake app over the last three years has more than doubled its total paying users. Whereas Tinder, they've only increased their paying user base by 30 % over the same period. But Tinder has also been clocking year -over -year declines for the last three consecutive quarters too. And so there's important top of final implications to the extent that Tinder under -invested over the last few years, particularly in terms of trying to be that initial dating up touch point for that 18 to 20 year old cohort.

36:28There's the risk that potentially the lack of daisicle marketing efforts from Tinder over the past few years are being felt on a lagged basis. And this is what's contributing to some of the new user and pay a weakness that we're seeing today. And the way to remedy that is to spend more on marketing. And so, yes, we think that there will be a step up in marketing, but also not to a level that will totally tank the margins. And if you think about match a stock price, we believe that a lot of that negativity is being reflected already today at current prices. When you look at Bumble, obviously the marketing budget has gone up, but some of that has been offset by revenue.

37:09What is their percentage of revenue that's been on advertising? Is it materially different than match. It is higher. If you think about matches, sales and marketing, it's around 16 to 17%. Currently, Bumble is at 27%. Sales and marketing margin. And again, advertising is a big portion of that for them as well. But that doesn't account for the scale difference. Bumble is only called 28 % of the revenue size of match. And so Bumble is spending around 200 million per year on advertising while match spends closer to 500 million. So there's almost a two and a half X delta in terms of advertising spend dollars between those two groups.

37:56I should have asked this earlier, but are users typically using multiple apps? Is there any form of loyalty when it comes to customers and their specific dating apps when you're thinking about the bigger brands. No, they do use multiple apps, particularly younger generations. They use even more apps than some of these older cohorts. And if I can remember correctly, it's around four apps on average that the Gen Z user is using for dating purposes. Do the apps compete at all on price or on promotion when you think about where the market is going? Seems like Tinder has been introducing all these premium monetization features, but just in terms of the base experience, once you move away from premium, has that changed all in terms of pricing?

38:47Is there any type of war going on when it comes to competition and pricing? No, so I think the benefit of the oligopolisting nature of this market is that there certainly is not price competition. In fact, it's the opposite. You've seen all these players steadily increasing their revenue per pay -up. One thing to point out is that Tinder is putting through some pretty hefty price increases for its subscriptions in the US. And this is after a period where prices arguably hadn't been properly optimized. They're really playing a bit of catch -up on pricing for Tinder. And we believe that there's actually latent pricing power for that asset.

39:28And the reason why they're able to exercise that is they have the user liquidity, they have the scale. No one else has the same level of scale. And that's a pretty good setup given the high incremental margins on pricing led revenue dollars you usually see. And so to frame some of the price differential for match against their biggest competitor, which is Bumble. Bumble and Q2 had average revenue per paying user of $28 per month. And that was 87 % higher than Tinder's revenue per pair of $15 a month. And while the products are different in terms of dating intent and they're a demographic and geographic mixed differences that explain some of that delta, that gap does both well for Tinder's ability to get traction with the price increases they're currently putting through.

40:21those price increases as well are a huge reason why there's pay a turn occurring. And the company has even said that they expect Q3 sequential payer additions to be positive absent those US price increases. So there's probably some initial sticker shock. If you think about the tender gold subscription here, that's seen monthly prices increase 60 % since the beginning of the year. For the introductory Tinder Plus tier, prices are up more than threefold from $8 a month to $25 a month. So you can probably imagine that users are pretty unhappy about that and those price increases and some portion of the user base would cancel their subscription once they hit those price increases.

41:11What we do find encouraging is that many of those paying users that do turn out due to the higher prices, they remain in the ecosystem, that generally remaining active on the platform, and there's still that opportunity to reactivate those uses and have them return as pay as at some point down the track. Am I right to think about the number you mentioned before, about 9 % top line growth, comparing that to these massive price increases that there is some turn going on in the payer group for sure and that the majority of revenue growth is coming from price increases? Yes, correct. Now, those price increases are for Tinder specifically, which is call it 55 % of total revenue.

41:59It's probably worth pointing out that Tinder is a really, really important asset to match group. So it's a little more than half the revenue, but because it's a scaled asset in the past, the management team has said it's a 50 % EBITDA margin asset. So if you do some back of the envelope math, that equates to around 75, 80 % of matches total earnings coming from Tinder alone. And so those price increases are specifically for the US Tinder users. And around 50 % of the US pay -a -base has now moved up and are paying those higher prices. They're kind of feathering in those price increases. But yes, the magnitude of those price increases, for any business, you'd see some level of elasticity response.

42:46And so what you've seen is that Tinder payers are declining and they decline by 4 % in the latest quarter. But that's what you'd expect when you're putting through that level of price increase. Yeah, it is. When you think about this business and the economic curves associated with pricing properly and the different tiers is one that certainly stands out and having to think about the trade -offs there. I want to go back to capital allocation and you mentioned it's a business that generates free cash flow. Historically, they've used some of that free cash flow to buy back shares, which is interesting for a business that's growing as rapidly as it has grown over time to be buying back shares in a period of that massive growth.

43:31I have some questions in terms of are there opportunities to actually invest in growth? And I know they've made some acquisitions over time. So how much is that going to play into the DNA moving forward as well? Funnily enough, match actually tried to acquire Bumble back in 2017 for almost half a billion dollars, but the offer was rejected. If you think about today, the regulatory apparatus in the US is particularly hawkish would likely take a dim view towards match trying to acquire Bumble. In terms of other acquisitions, I'd say there are less opportunities to acquire companies and particularly ones that will move the needle given how big matches become relative to the other dating assets out there.

44:20But in terms of the ability to allocate capital to new apps, If you look at match historical group, they have been acquiring apps and not so much organically starting new apps. Now, what's really encouraging is recently they rolled out a new app called Archer, which caters to gay and bi -men and it's a competitor to Grindr, which is the listed competitor, which is an app for gay men as well and so in that community. So I think that's really positive to the extent that they've started one of these new businesses to tap into that market, which is potentially a really attractive market. And what we've heard so far from the company is positive.

45:03They've rolled it out in New York and LA. And the user response was so positive that they're actually accelerating that rollout. So it's very early days. It's a tiny asset at the moment. But if you roll it forward three, five years, that could potentially become a decent contributor to revenue and earnings. in that group. Maybe we can talk about management a bit because they were under the IAC umbrella, they have since spun off, and IAC spin -offs don't have the best track records in the market, and we can come up with various reasons as to why. But one thing that stands out is the changes in the management team here.

45:46So talk a little bit about the new management team, what gets you comfortable with their strategy and how they're different from the previous regimes. There was a lot of management turnover at Match Group. I think if you were to look at the history since 2017, for example, they've had four CEOs. Tinder has had five CEOs. They had a period where they didn't have a CMO. They didn't have a chief product officer. That has led to a lot of internal chaos, which I think has contributed to some of the issues their facing. Bernard Kim, the new CEO, he's been at the helm since May of last year and I think he's doing all the right things.

46:28He's brought a level of stability to the management ranks. He's got the right background to extract more value from matches, power users. He's spending money on marketing in ways which are getting traction. So if you look at the top of funnel trends after Tinder started their marketing campaign, which they've called, it starts with a swipe. Since that, every single month you've had an improving trajectory in Tinder daily new users. So that's really positive. And I think if you were to look at match group historically, the level of product innovation has been lackluster in recent years. There really hasn't been that much that's come out from the group.

47:11And following a period where BK was finding his stride, he's now at a point where he's introducing new apps like Archup. He's introduced weekly subscriptions, which is really interesting because the company's taking this barbell approach, which I think makes a ton of sense. So on the lower end, they've introduced weekly subscription packages, which are a lower sticker price, which really helps get some of those Gen Z younger users convert to become payers. It's more digestible for them to come on at these lower prices of a weekly tier as opposed to the greater financial outlay needed for monthly or a yearly subscription.

47:54So that's great. And it's leading to a massive uptick and pay conversion rates. So the company gave some data around this with UK female users and particularly younger users. They saw a more than 70 % uplift in pay a conversion after that weekly subscription tier was released. So that's really good news on the lower end. And then on the higher end, you have what they're doing with the super premium tier. and the potential there is quite meaningful by our numbers. If Tinder select can tap into just 0 .1 % of Tinder's 10 .5 million payers and convert the call at 10 .5 thousand power users to that super premium tier, then that could yield an additional 30 million in revenues.

48:44And there's a very high pull -through on that because it's just pricing. So you could be saying 90, 95 % plus incremental margins. And when you flow that through, it could equate to a 3 % boost to the earnings power of match just from that new tier that extracts more value from the 0 .1 % of Tinder's user base. I know another potential catalyst for any app -based business is if anything were to ever happen to the Apple App Store fee and that 30 % take rate that they have there, is that something that just flows through the business right now? Is there anything else to it besides it being a massive tax on the business?

49:28How do you think about that? And you have any context for how you would actually think about that ever changing in the market or then ever being able to find ways around that 30 % tax? Would love to hear about that. Matches mobile apps are subject to the 30 % app store fee and this says how to notice will impact on their financials historically. So if you look at the last eight years, Match Group more than three X to its revenue base, but at the same time they saw their gross margin compressed by almost 17 percentage points. So went from an almost 87 % margin in 2014 down to 70 % in 2022. Now that is very much not how a scaling internet business's gross margin progression is supposed to look like.

50:16A big part of that gross margin compression is a mixed shift away from web -based dating portals towards mobile dating properties given just such extraordinary growth from Tinder, which is mobile -based. So from that, we can gauge that over the past six years where we have the data, a match has paid out 25 cents on average to app stores for every incremental dollar of revenue. So that's been part of the gross margin decline. Now we see that being potential for reductions in what match has to pay to the app stores. There's been a lot of movement on this front in recent years and matches been involved directly in pursuing antitrust actions against Apple and Google.

51:00And so the two ongoing developments with the greatest potential for seeing these app store fees be lowered, one, the passing of the Digital Markets Act in the EU late last year, and two, the Google Play Store antitrust trial. So if you think about the EU's DMA, Apple and Google fall within the ambit of that legislation, requires them to basically not block side loading. They can't force developers to use their own services, such as payment systems. There are pretty severe penalties for non -compliance that find scale up to 10 % of global turnover. So, Apple and Google have until March of next year to become compliant.

51:41So, we think that that's potentially a catalyst which could lead to feverly for match in the EU at some point over the next few quarters. And it's probably only a small chance, but there is still a possibility that that legislation could catalyzed broader app store fee relief if a unified global policy on fees is adopted rather than say a piecemeal approach of only changing your fee structure in the EU. And then you've got the Google Play Store antitrust case being led by match and epic games. So that goes to jury trial in November and that could be another catalyst for app store relief. In terms of how consequential it could be for match, it has potentially a very significant impact.

52:25We estimate that match paid around 650 million in App Store fees last year, and that equates to around 20 % of their revenues and 68 % of their cogs. And given that Google has already cut their fee rate for the first year of a subscription to 15%, basically leads, call it 585 million of App Store fees that are most vulnerable to fee relief. Let's just say that there's a scenario where App Store fees dropped from 30 % to 15%. That would be an almost 9 % -point margin boost to the current year EBITDA. Now you wouldn't want to rest an entire investment thesis on in -app purchase fee relief being granted, but really is a nice kicker to the equity if it does come through, given that that cost elimination falls entirely through to the bottom line.

53:20In those sorts of asymmetric upside boosts, you can think of them like a call option and they can really be the icing on the cake for investment opportunities. Cell sides often reluctant to give credit to them because they're very hard to estimate and handicap the odds of it coming through. So if it did happen, you'd see a swap of EPS upgrades and the stock would likely re -rate as a result. Yeah, my compliance team and my sales side days would never allow that to be included in any forecast, but having that as a upside risk, the rare form of upside risk certainly makes a lot of sense. So when you step back and you just look at it from the 10 ,000 foot view, just walk me through how you view the business today in terms of where it's trading, whatever multiple you want to use and that forward it out, look, whatever you think is a reasonable expectation for where this can go over the next one to two years.

54:17Yeah, so a good starting point to think about the value equation is the fact that match currently trades on an 8 % free cash flow yield and 12 times forward earnings. We like to think about where free cash flow per share might be in five years time and what the market might be willing to capitalize that at. And so the way that we think about it is to segment Tinder and hinge and you can think about the rest of the assets. Break each of those down into the number of payers and then the revenue per payer to get your revenue build up. And so let's just be conservative and say that Tinder never grows its payer base ever again and it just stays flat.

54:56But they can increase their revenue per paying user so that that asset grows 7%. Again, worth noting that Tinder in the past, on average, over the last five years, has grown at 40%. So that marks a big deceleration. You're effectively assuming that Tinder is permanently a single -digit grower. When you look at Hinge, that's really the style of the portfolio. So it's growing top line at a mid -30s percent rate over the next couple of years. That's actually accelerating right now. If you look at their 400 million revenue guide for this year, it implies a north of 50 % Q4 exit rate for their growth.

55:39That's a really great trajectory. So maybe if you assume mid -30s and you're forecast horizon, it's again conservative given that they're currently accelerating beyond that and they've got a huge geographic expansion opportunity ahead. And so when you tie that together, Matt could be generating a bit under 5 billion and revenue in 2027, which is a high single digit Kager. Again, a big slowdown from the 20 % average growth that matches achieved the last five years. And so there should be potential for some margin expansion given that hinges start in its scale and will become less of a drag on group margins.

56:20And then you also have significant operating leverage in this business, particularly as a lot of the growth is pricing led with not a lot of costs attached to those incremental revenue dollars. So it's possible that they hit around 1 .7 billion of EBIT -A out in 2027 and north of 90 % of that could convert to free cash flow, which gets you a little over 1 .5 billion in free cash flow. So there's also the buyback equation and you also have to consider the offset to that being the share -based comp dilution, but maybe you can buy back a low single would a percentage of the shares outstanding each year, assuming that the earnings multiple doesn't totally blow out.

57:06So that gets you around $6 of free cash flow in 2027, which is above some of the street numbers. But if you capitalize that at 12 times, then you can back into a 14 % IRR over that period on a set of assumptions, which aren't particularly demanding. Now, if you throw a little more at it by way of growth assumptions and then layer on a scenario where fear relief is granted, then that five year IRR starts pushing up into the height 20%. We view this as a fairly asymmetric opportunity. Yeah, it was incredibly helpful and straightforward framework. So I appreciate that answer and level of detail there.

57:46When you think about the risks associated with that, I think some are obvious, but what are the key risks that stand out to you and maybe compare that to what you hear from the investor base in terms of the main risks that they see as well? I would say a big risk is around that some of those unit economics that we discussed. And if Match does need to materially step up what they're spending on marketing, then that's problematic. And the management team has tacitly admitted that they've underspent on marketing, they've said that they've been less active than their peers from marketing perspective several years.

58:26That's pretty well flagged. People understand that. And I think it is being reflected in the price. Something that is a risk that is perhaps not being discussed as much and it's much, much harder to underwrite is some of the change that could occur as we move into the next form factor of computing, just looking like AR VR and what that could mean in terms of the online dating category. I think it pays to be paranoid, especially when it comes to technological change. And we're already seeing AI being used in online dating in ways that potentially alter user behavior. So for starters, there are AI chatbots.

59:06There's an app called Riz which helps users come up with opening lines and responses to matches. And so these utilizations of AI run counter to the authenticity that many users, particularly that Gen Z cohort are looking for, so arguably a negative for the health of the platform, if it would have become more commonplace. And I think if you get really imaginative about the future of what AI holds for dating, admittedly this benches into the realm of science fiction, but this potentially world where AI girlfriends become more commonplace. There are versions of this concept already via apps such as Blasch or Romantic AI and it sounds totally far -fetched and I sound stupid saying it.

59:48But if you think about these risks, what if there's a world where you have compelling AI -generated dialogue and you combine that with photo -realistic codec, avatars, rendered in VR with someone with whatever physical traits you desire, then maybe there's a certain portion of the market that seek that IOI companionship and then maybe a the cease to use matches apps or don't use them as readily. So that is a risk. As you mentioned, as ridiculous as a consent, I understand that it has to at least be acknowledged as a risk, especially with the advancements that AI has had in the social category, which I think truly stands out and lives up to all of the hype that has been mentioned.

1:00:30When I think about competition outside of the names that we've referenced so far, there There are the 8 ,000 pound gorillas in the room, like a Facebook. How do you think about Facebook in regards to competition and any other threats that you think could exist in terms of going after matches business, tinders business, any of the match group names business? Competition, as it relates to the Dating Up category, before getting to Facebook, there are very few skydiving apps. And while these apps don't disclose users, Tinder has 10 .5 million payers, and Match Group overall has a little over 15 .5 million payers.

1:01:10If you compare that to the next biggest competitor, the Bumble app has 2 .5 million payers. So the next scaled dating app is less than a quarter of the size of Tinder, terms of the number of payers. And that pay account drops off precipitously for the long tail of hundreds of dating apps out there. So that supports this idea that it's very hard to start a new dating app and get it to any sort of reasonable scale So while there's competition I think where the effects of that competition of perhaps most likely to be observed would be in the usage behavior and app download choices of younger users people tend to age out of using the dating apps and Look, maybe it's less of an age thing and more of a life phase thing that's correlated with age such that people in their 30s tend to settle down and get married.

1:02:00But what we're saying is this younger cohort of users, they age in and they become dating app users. One massive positive that is in our view overlooked is that the Gen Z group is a core part of Tinder. More than half of the Tinder users are Gen Z. If you think about other consumer -facing internet businesses, they'd kill for that privilege. and it really does speak to the utility like status Tinder has achieved, whereby it's able to capture those younger cohorts as opposed to them flocking to other apps like you'd see in other parts of the consumer app landscape. It actually sets match up very well for user longevity within the app, provided that they can execute on the product front and dedicated to the needs and wants of Gen Z users.

1:02:47the millennials who were the initial adopters of Tinder a decade ago, a phasing out of Tinder's prime 18 to 28 year old demographic being replaced by Gen Z's. And that's this inexorable trend where by 2027 there will be no millennials left in that target cohort. Gen Z's approach dating differently to millennials. And so that's part of the pay -a -weekness we're seeing. They're not getting as much out of the product. But BK and the team are cognizant of that and they're looking to do a Gen Z -focused product refresh of the Tinder app, which is slated for Q4, which will improve self -expression and inclusivity of Tinder for that Gen Z cohort.

1:03:27As it relates to Facebook, Facebook does have a dating product called Facebook Dating, and it's an interesting risk to think about. So neta, they have a massive customer acquisition advantage. they've got over three billion daily active people across their properties. They have an enormous data advantage in what they know about users. They have best -in -class AI capabilities. So in theory, they should have a pretty good shot at cracking the dating market. When Facebook announced their push into online dating back in 2018 at the developer conference, Matchstock plunged 20 % in a day. But so far, it's really been a bit of a non -event and they've failed to get any real traction.

1:04:10Facebook dating, they've been around for five years and it's had no discernible impact on match group. And I think a big part of that problem for Facebook is the level of user distrust towards Facebook and how their data might be handled. And dating information is particularly sensitive, so that's worked against Facebook. Another thing I'd notice that meta is probably going to do 130 billion in revenue. Match has roughly caught three and a half billion in revenue. So even if Facebook dating took a decent slice of the online dating market, it won't be enough to move the needle. They're also not monetizing directly via subscriptions, but rather ad revenue.

1:04:48So there's a question mark over the monetization implications of directing user engagement towards meta's dating product rather than highly optimized ad properties such as feed, stories, and increasingly reels. So dating just isn't a key focus for meta. I don't think you should ever underestimate Mark Zuckerberg. And if you really did try to get a slice of that market, it's a risk being mindful of, but so far, we really haven't seen any impact from Facebook dating. Yes, the separation of church and state makes a lot of sense there and the dynamics around utility to like nature that match has adopted or built into is quite interesting.

1:05:30Jordan, this has been an absolutely excellent conversation. I've learned a lot about a business that I have been somewhat distant from and been an outside observer. We close these down with the lessons that you can take away from a business and potentially apply elsewhere. So in your research of matches, there are some lessons that stood out that you think could be applied elsewhere in a form of pattern recognition. One lesson I would bring up would be around narrative oscillation that occurs in stocks, with the market having a tendency to extrapolate the recent past. And I think Matches are pretty salient example of that.

1:06:08And so if you look back at 2021, Matches was a smid cap internet dialing. And then in a pretty short period of time, it became very hated. And the stock had an 80 % peak to trough drawdown. And so there's a tendency for the market to become very myopic and become fixated on current issues and then not give due credit to where the business is heading. And right now Tinder does have some genuine issues that they're working through. And in the eyes of the market, this is overshadowing the amazing performance we're seeing at Hinge. But when you look to the future, Hinge is only going to become a bigger growth driver for Match as a whole.

1:06:48just mathematically when you account for the growth differential between Tinder and Hinge. In the next five years, Hinge could be contributing 70 to 80 % of the incremental revenue dollars for Match Overall. And Hinge scales the margin profile will also improve which will underpin margin expansion for the group. So it really seems like the market isn't giving Hinge the credit it deserves. And so Match really has disappointed the market for a long time and many investors who were previously enamored with the stock have scars. I think the longer a company disappoints investors, the longer it takes to rebuild that trust.

1:07:28And Matt right now is very much a show me story where they will need to get some consistent runs on the board before we can see the narrative and flex towards it being more positive discourse on the stock. Well, I completely agree with you in terms of the discourse and the strong opinions in terms of that going from being a darling to really a hated name with a very polarizing environment and reputation around it. And George, I appreciate you trying to break it down with a clean and unbiased framework. Certainly have done a lot of work on this name, so I appreciate all of that. Thank you for joining us on Business Breakdowns.

1:08:06Thanks, Matt. My pleasure. To find more episodes of Breakdowns, ranging from Costco to Visa to Moderna, or to sign up for our weekly summary, Check out Join Colossus .com. That's J -O -I -N -C -O -L -O -S -S -U -S .com.