Match Group, Inc.
Report on Form 10-K for the
Fiscal Year ended December 31, 2018
As filed with the Securities and Exchange Commission on February 28, 2019
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended December 31, 2018
Commission File No. 001-37636
Match Group, Inc.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction
of incorporation or organization)
8750 North Central Expressway, Suite 1400, Dallas, Texas
(Address of Registrant’s principal executive offices)
26-4278917
(I.R.S. Employer Identification No.)
75231
(Zip Code)
(214) 576-9352
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Common Stock, par value $0.001
Name of exchange on which registered
The Nasdaq Stock Market LLC
(Nasdaq Global Select Market)
Securities registered pursuant to Section 12(g) of the Act:
None
Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes
Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes
Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports) and
(2) has been subject to such filing requirements for the past 90 days. Yes
No
No
No
Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant
to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the Registrant was required to submit such
files). Yes
No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of the Registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K.
Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting
company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,”
and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
Accelerated filer
Non-accelerated filer
Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for
complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
No
As of February 1, 2019, the following shares of the Registrant’s Common Stock were outstanding:
Common Stock
Class B Common Stock
Class C Common Stock
Total
68,529,512
209,919,402
—
278,448,914
The aggregate market value of the voting common stock held by non-affiliates of the registrant as of June 30, 2018 was $1,953,756,561.
For the purpose of the foregoing calculation only, shares held by IAC/InterActiveCorp and all directors and executive officers of the registrant
are assumed to be affiliates of the registrant.
Documents Incorporated By Reference:
Portions of the Registrant’s proxy statement for its 2019 Annual Meeting of Stockholders are incorporated by reference into Part III herein.
TABLE OF CONTENTS
Page
Number
Business
Item 1.
Item 1A. Risk Factors
Item 1B. Unresolved Staff Comments
Item 2.
Item 3.
Item 4. Mine Safety Disclosure
Properties
Legal Proceedings
PART I
PART II
Item 5. Market For Registrant's Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities
Selected Financial Data
Item 6.
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Consolidated Financial Statements and Supplementary Data
Item 8.
Note 1—Organization
Note 2—Summary of Significant Accounting Policies
Note 3—Income Taxes
Note 4—Discontinued Operations
Note 5—Goodwill and Intangible Assets
Note 6—Financial Instruments
Note 7—Long-term Debt, net
Note 8—Shareholders’ Equity
Note 9—Accumulated Other Comprehensive Loss
Note 10—Earnings per Share
Note 11—Stock-based Compensation
Note 12—Geographic Information
Note 13—Commitments and Contingencies
Note 14—Supplemental Cash Flow Information
Note 15—Related Party Transactions
Note 16—Benefit Plans
Note 17—Consolidated Financial Statement Details
Note 18—Quarterly Results (Unaudited)
Note 19—Subsequent Event (Unaudited)
Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
Item 9.
Item 9A. Controls and Procedures
Item 9B. Other Information
PART III
Item 10. Directors, Executive Officers and Corporate Governance
Item 11. Executive Compensation
Item 12.
Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
Item 13. Certain Relationships and Related Transactions, and Director Independence
Item 14.
Principal Accounting Fees and Services
Item 15. Exhibits and Financial Statement Schedules
PART IV
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Item 1. Business
Who we are
PART I
Match Group, Inc. is a leading provider of dating products available in over 40 languages to our users all
over the world through applications and websites we own and operate. We operate a portfolio of brands, including
Tinder, Match, PlentyOfFish, Meetic, OkCupid, OurTime, Pairs and Hinge, as well as a number of other brands,
each designed to increase our users’ likelihood of finding a meaningful connection. Through our portfolio of
trusted brands, we provide tailored products to meet the varying preferences of our users.
As used herein, “Match Group,” the “Company,” “we,” “our,” “us,” and similar terms refer to Match Group,
Inc. and its subsidiaries, unless the context indicates otherwise.
Consumers’ dating preferences vary significantly, influenced in part by demographics, geography, religion
and sensibility. As a result, the market for dating products is fragmented, and no single product has been able to
effectively serve the dating category as a whole.
Given these wide-ranging consumer preferences, our strategy focuses on a brand portfolio approach, through
which we attempt to offer dating products that collectively appeal to the broadest spectrum of consumers. We
believe that this approach maximizes our ability to capture additional users. We work to apply a centralized
discipline to learnings, by sharing best practices and technologies across our brands in order to increase growth,
reduce costs and maximize profitability. Additionally, we centralize certain other administrative functions, such as
legal, human resources, finance, tax, and others. This approach allows us to quickly introduce new products and
features, optimize marketing strategies, and more effectively deploy talent across our organization.
Enabling dating in a digital world
Prior to the proliferation of mobile devices and computers, human connections traditionally were limited by
social circles, geography and time. Today, the adoption of mobile technology and the internet has significantly
expanded the ways in which people can build relationships, create new interactions and develop romantic
connections. Additionally, the ongoing adoption of technology into more aspects of daily life continues to further
erode biases and stigmas that previously prevented individuals from using technology to help find and develop
those connections.
We believe that dating products serve as a natural extension of the traditional means of meeting people and
provide a number of benefits for their users, including:
• Expanded options: Dating products provide users access to a large number of like-minded people they
otherwise would not have a chance to meet.
• Efficiency: The search and matching features, as well as the profile information available on dating
products, allow users to filter a large number of options in a short period of time, increasing the
likelihood that users will make a connection with someone.
• More comfort and control: Compared to the traditional ways that people meet, dating products provide an
environment that reduces the awkwardness around the process of reaching out to new people. This leads
to many people who would otherwise be passive participants in the dating process taking a more active
role.
• Convenience: The nature of the internet and the proliferation of mobile devices allow users to connect
with new people at any time, regardless of where they are.
Depending on a person’s circumstances at any given time, dating products can act as a supplement to, or
substitute for, traditional means of meeting people. When selecting a dating product, we believe that users
consider the following attributes:
• Brand recognition: Brand is very important. Users generally associate strong dating brands with a higher
likelihood of success and a higher level of security. Generally, successful dating brands depend on large,
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active communities of users, strong algorithmic filtering technology and awareness of successful usage
among similar users.
•
Successful experiences: Demonstrated success of other users attracts new users through word-of-mouth
recommendations. Successful experiences also drive repeat usage.
• Community identification: Users typically look for dating products that offer a community or
communities with which the user can associate. By selecting a dating product that is focused on a
particular demographic, religion, geography or intent (for example, casual dating or more serious
relationships), users can increase the likelihood that they will make a connection with someone with
whom they identify.
• Product features and user experience: Users tend to gravitate towards dating products that offer features
and user experiences that resonate with them, such as question-based matching algorithms, location-
based features, offline events or search capabilities. User experience is also driven by the type of user
interface (for example, swiping versus scrolling), a particular mix of free and paid features, ease of use,
privacy and security. Users expect every interaction with a dating product to be seamless and intuitive.
Our portfolio
Dating is a highly personal endeavor and consumers have a wide variety of preferences that determine what
type of dating product they choose. As a result, our strategy focuses on a portfolio approach of various brands in
order to reach a broad range of users. Our brands are collectively available in over 40 languages all over the
world. The following is a list of our key brands:
Tinder. Tinder was launched in 2012 and has since risen to scale and popularity faster than any other product
in the online dating category with limited marketing spend, growing to over 4.3 million Subscribers today.
Tinder’s distinctive “right swipe” feature has led to significant adoption among the millennial generation,
previously underserved by the online dating category. Tinder employs a freemium model, through which users are
allowed to enjoy many of the core features of Tinder for free, including limited use of the “swipe right” feature
with unlimited communication with other users. However, to enjoy premium features, such as unlimited use of the
“swipe right” feature, a Tinder user must subscribe to either Tinder Plus, launched in early 2015, or Tinder Gold,
which was launched in late summer 2017. Tinder users and Subscribers may also pay for certain premium
features, such as Super Likes and Boosts, on a pay-per-use basis.
Match. Match was launched in 1995 and helped create the online dating category. Among its distinguishing
features are the ability to search profiles, receive algorithmic matches and attend live events, promoted by Match,
with other Subscribers. Additionally, new features, such as Missed Connections, which uses location-based
technology to enable users to connect with other users with whom they have crossed paths in the past, engage
users into more meaningful connections. Match is a brand that focuses on users with a higher level of intent to
enter into a relationship and its product and marketing are designed to reinforce that approach. Match relies
heavily on word-of-mouth traffic, repeat usage and paid marketing.
PlentyOfFish. PlentyOfFish was launched in 2003 and acquired in October 2015. Similar to Match, among
its distinguishing features is the ability to both search profiles and receive algorithmic matches. Similar to Tinder,
PlentyOfFish has grown to popularity over the years with very limited marketing spend and also relies on a
freemium model. PlentyOfFish has broad appeal in the central United States, Canada, the United Kingdom and a
number of other international markets.
Meetic. Meetic, a leading European online dating brand based in France, was launched in 2001. Similar to
Match, among its distinguishing features are the ability to search profiles, receive algorithmic matches, and attend
live events, promoted by Meetic, with other Subscribers and non-Subscribers from time to time. Also, similar to
Match, Meetic is a brand that focuses on users with a higher level of intent to enter into a relationship and its
product and marketing are designed to reinforce that approach. Meetic relies heavily on word-of-mouth traffic,
repeat usage and paid marketing.
OkCupid. OkCupid was launched in 2004 and has attracted users through a mathematical and Q&A
approach to the online dating category. Similar to Tinder and PlentyOfFish, OkCupid has grown in popularity over
the years without significant marketing spend and also relies on a freemium model. OkCupid has a loyal highly
educated user base predominately located in major cities in the United States and United Kingdom.
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OurTime. OurTime is the largest brand within our affinity-oriented brands. OurTime is the largest
community of singles over age 50 of any dating product.
Pairs. Pairs was launched in 2012 and acquired in May 2015. Pairs is a leading provider of dating products
in Japan, with a strong presence in Taiwan and a growing presence in other select Asian countries. Pairs is a dating
app that was specifically designed to address social barriers generally associated with the use of dating products in
Asian countries, particularly Japan.
Hinge. Hinge was launched in 2012 and following a series of investments, Match took a controlling stake in
Hinge in June 2018 and purchased all of the remaining outstanding equity in December 2018. Hinge is a mobile-
only experience and employs a freemium model. Hinge focuses on users with a higher level of intent to enter into
a relationship and its product is designed to reinforce that approach.
All our products enable users to establish a profile and review other users’ profiles without charge. Each
product also offers additional features, some of which are free, and some of which require payment depending on
the particular product. In general, access to premium features requires a subscription, which is typically offered in
packages (primarily ranging from one month to six months), depending on the product and circumstance. Prices
differ meaningfully within a given brand by the duration of a subscription purchased, the bundle of paid features
that a user chooses to access, and whether or not a Subscriber is taking advantage of any special offers. In addition
to subscriptions, many of our products offer the user certain features, such as the ability to promote themselves for
a given period of time, or to review certain profiles without any signaling to the other users, and these features are
offered on a pay-per-use, or à la carte, basis. The precise mix of paid and premium features is established over
time on a brand-by-brand basis and is constantly subject to iteration and evolution.
The brands in our portfolio both compete and collaborate with each other. We attempt to empower individual
business leaders with the authority and incentives to grow each of our brands. Our brands compete with each other
and with third-party dating businesses on brand characteristics, product features, and business model. We also
attempt to centrally facilitate excellence and efficiency across the entire portfolio by:
•
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•
•
centralizing operational functions across certain brands where we have strength in personnel and
sufficient commonality of business interest (for example, ad sales, online marketing and technology
centralized across some, but not all, brands);
developing talent across the portfolio to allow for expertise development and career advancement while
giving us the ability to deploy the best talent in the most critical positions across the company at any
given time;
sharing analytics and similar data to leverage product and marketing successes across our businesses
rapidly for competitive advantage; and
centralizing certain administrative functions, like legal, trust and safety, privacy, human resources, and
finance, across the entire portfolio to enable each brand to focus more on growth.
Revenue
Our revenue is primarily derived directly from users in the form of recurring subscriptions, which typically
provide unlimited access to a bundle of features for a specific period of time, and the balance from à la carte
features, where users pay a non-recurring fee for a specific action or event. Each of our brands offers a
combination of free and paid features targeted to its unique community. In addition to direct revenue from our
users, we generate indirect revenue from online advertising, which makes up a much smaller percentage of our
overall revenue as compared to direct revenue.
Sales and marketing
Certain of our brands attract the majority of their users through word-of-mouth and other free channels.
Other brands rely on paid user acquisition for a significant percentage of their users. Our online marketing
activities generally consist of purchasing social media advertising, banner and other display advertising, search
engine marketing, email campaigns, video advertising, business development or partnership deals, and hiring
influencers to promote our products. Our offline marketing activities generally consist of television advertising
and related public relations efforts, as well as events.
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Technology
Consistent with our general operating philosophy, each of our brands tends to develop its own technology
systems to support its product, leveraging both open-source and vendor supported software technology. Each of
our various brands has dedicated engineering teams responsible for software development and creation of new
features to support our products across the full range of devices, from native mobile applications to desktop and
mobile-web. Our engineering teams use an agile development process, allowing us to deploy frequent iterative
releases for product features.
We host the majority of our brands in leased data centers located within the general geography served by the
brand. Other brands, such as Tinder, utilize hosted web services, primarily Amazon Web Services, to support their
infrastructure.
Competition
The dating industry is competitive and has no single, dominant brand globally. We compete with a number
of other companies that provide similar dating and matchmaking products.
In addition to other online dating brands, we compete with social media platforms and offline dating
services, such as in-person matchmakers. Arguably, our biggest competition comes from the traditional ways that
people meet each other, and the choices some people make to not utilize dating products or services.
We believe that our ability to compete successfully will depend primarily upon the following factors:
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•
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•
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our ability to continue to increase consumer acceptance and adoption of online dating products,
particularly in emerging markets and other parts of the world where the stigma is only beginning to
erode;
continued growth in internet access and smart phone adoption in certain regions of the world, particularly
emerging markets;
the continued strength of our brands;
the breadth and depth of our active communities of users relative to those of our competitors;
our ability to evolve our products in response to our competitors’ offerings, user requirements, social
trends, the ever-evolving technological landscape, and the ever-changing regulatory landscape, in
particular, as it relates to the regulation of online platforms;
our ability to efficiently acquire new users for our products;
our ability to continue to optimize our monetization strategies; and
the design and functionality of our products.
A large portion of online dating customers use multiple dating products over a given period of time, either
concurrently or sequentially, making our broad portfolio of brands a competitive advantage.
Intellectual property
We regard our intellectual property rights, including trademarks, domain names and other intellectual
property, as critical to our success.
For example, we rely heavily upon the use of trademarks (primarily Tinder, Match, PlentyOfFish, OkCupid,
Meetic, OurTime, Pairs, and Hinge, and associated domain names, taglines and logos) to market our dating
products and applications and build and maintain brand loyalty and recognition. We have an ongoing trademark
and service mark registration program, pursuant to which we register our brand names and product names,
taglines and logos and renew existing trademark and service mark registrations in the United States and other
jurisdictions to the extent we determine it to be necessary or otherwise appropriate and cost-effective. In addition,
we have a trademark and service mark monitoring policy pursuant to which we monitor applications filed by third
parties to register trademarks and service marks that may be confusingly similar to ours, as well as potential
unauthorized use of our material trademarks and service marks. Our enforcement of this policy affords us valuable
protection under current laws, rules and regulations. We also reserve and file registrations (to the extent available)
and renew existing registrations for domain names that we believe are material to our business.
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We also rely upon a combination of in-licensed third-party and proprietary trade secrets, including
proprietary algorithms, and upon patented and patent-pending technologies, processes and features relating to our
matching process systems or related features, products and services with expiration dates from 2023 to 2036. We
have an ongoing invention recognition program pursuant to which we apply for patents to the extent we determine
it to be core to our product or businesses or otherwise appropriate and cost-effective.
We rely on a combination of internal and external controls, including applicable laws, rules and regulations
and contractual restrictions with employees, contractors, customers, suppliers, affiliates and others, to establish,
protect and otherwise control access to our various intellectual property rights.
Government regulation
We are subject to foreign and domestic laws and regulations that affect companies conducting business on
the internet generally, including laws relating to the liability of providers of online services for their operations
and the activities of their users. As a result, we could be subject to actions based on negligence, various torts and
trademark and copyright infringement, among other actions. See “Risk factors—Risks relating to our business—
Inappropriate actions by certain of our users could be attributed to us and damage our brands’ reputations, which
in turn could adversely affect our business” and “—Risks relating to our business—We may fail to adequately
protect our intellectual property rights or may be accused of infringing the intellectual property rights of third
parties.”
Because we receive, store and use a substantial amount of information received from or generated by our
users, we are also impacted by laws and regulations governing privacy, the storage, sharing, use, processing,
disclosure and protection of personal data and data breaches, primarily in the case of our operations in the United
States and European Union and our handling of personal data of users located in the United States and European
Union, respectively. As a result, we could be subject to various private and governmental claims and actions. See
“Risk factors—Risks relating to our business—Unauthorized access of personal data could give rise to liabilities
as a result of governmental regulation, conflicting legal requirements or differing views of personal privacy rights
and compliance with laws designed to prevent unauthorized access of personal data could be costly.”
As the provider of dating products with a subscription-based element, we are also subject to laws and
regulations in certain U.S. states and other countries that apply to our automatically-renewing subscription
payment models. Finally, certain U.S. states and certain countries in Asia have laws that specifically govern dating
services.
Employees
As of December 31, 2018, we had approximately 1,400 full-time employees and approximately 100 part-
time employees worldwide.
Additional Information
Corporate information. We were incorporated in the State of Delaware on February 12, 2009 as a wholly-
owned subsidiary of IAC/InterActiveCorp (“IAC”).
Company website and public filings. Investors and others should note that we announce material financial
and operational information to our investors using our investor relations website at http://ir.mtch.com, Securities
and Exchange Commission (“SEC”) filings, press releases and public conference calls. We use these channels as
well as social media to communicate with our users and the public about our company, our services and other
issues. It is possible that the information we post on social media could be deemed to be material information.
Accordingly, investors, the media, and others interested in our company should monitor the social media channels
listed on our investor relations website in addition to following our SEC filings, press releases and public
conference calls. Neither the information on our website, nor the information on the website of any Match Group
business, is incorporated by reference into this report, or into any other filings with, or into any other information
furnished or submitted to, the SEC.
The Company makes available, free of charge through its website, its Annual Reports on Form 10-K,
Quarterly Reports on Form 10-Q and Current Reports on Form 8-K (including related amendments) as soon as
reasonably practicable after they have been electronically filed with (or furnished to) the SEC.
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Code of ethics. The Company’s code of ethics applies to all employees (including Match Group’s principal
executive officer, principal financial officer and principal accounting officer) and directors and is posted on the
Company’s website at http://ir.mtch.com under the heading of “Corporate Governance.” This code of ethics
complies with Item 406 of SEC Regulation S-K and the rules of The Nasdaq Stock Market LLC. Any changes to
the code of ethics that affect the provisions required by Item 406 of Regulation S-K, and any waivers of such
provisions of the code of ethics for Match Group’s executive officers, senior financial officers or directors, will
also be disclosed on Match Group’s website.
Relationship with IAC
Equity ownership and vote. Match Group has outstanding shares of common stock, with one vote per share,
and shares of Class B common stock, with ten votes per share and which are convertible into common stock on a
share for share basis. As of February 1, 2019, IAC owned 209,919,402 shares of Class B common stock
representing 100% of our outstanding Class B common stock and 15,813,277 shares of common stock. These
holdings collectively represent approximately 81.1% of our outstanding shares of capital stock and approximately
97.6% of the combined voting power of our outstanding capital stock.
Intercompany agreements. In connection with the initial public offering of our common stock in November
2015, we entered into certain agreements relating to our relationship with IAC after the offering. These
agreements include, among others, the six agreements described below.
Master transaction agreement. The master transaction agreement sets forth the agreements between us and
IAC regarding the principal transactions necessary to separate our business from IAC, as well as governs certain
aspects of our relationship with IAC.
Investor rights agreement. Under the investor rights agreement, we are obligated to provide IAC with
certain registration and other rights relating to the shares of our common stock held by it and anti-dilution rights.
Tax sharing agreement. The tax sharing agreement governs our and IAC’s rights, responsibilities, and
obligations with respect to tax liabilities and benefits, entitlements to refunds, the preparation of tax returns, tax
contests and other tax matters regarding U.S. federal, state, local and foreign income taxes.
Services agreement. The services agreement currently governs services that IAC has agreed to provide
through November 24, 2019, with automatic renewal for successive one-year terms, subject to IAC’s continued
ownership of a majority of the combined voting power of our voting stock and any subsequent extension or
truncation agreed to by us and IAC.
Employee matters agreement. The employee matters agreement, as amended, covers a wide range of
compensation and benefit issues related to the allocation of liabilities associated with: (i) employment or
termination of employment, (ii) employee benefit plans and (iii) equity awards. In the event IAC no longer retains
shares representing at least 80% of the aggregate voting power of shares entitled to vote in the election of our
board of directors, we will no longer participate in IAC’s employee benefit plans, but will establish our own
employee benefit plans that will be substantially similar to the plans sponsored by IAC.
Subordinated loan credit facility. The subordinated loan facility with IAC (the “IAC Subordinated Loan
Facility”) allows the Company to make one or more requests to IAC to borrow funds. If IAC agrees to fulfill any
such borrowing request, such indebtedness will be incurred in accordance with the terms of the IAC Subordinated
Loan Facility. At December 31, 2018, the Company had no indebtedness outstanding under the IAC Subordinated
Loan Facility.
For additional information regarding these agreements, see “Note 15—Related Party Transactions” to the
consolidated financial statements included in “Item 8—Consolidated Financial Statements.”
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Item 1A. Risk Factors
Cautionary Statement Regarding Forward-Looking Information
This annual report on Form 10-K contains “forward-looking statements” within the meaning of the Private
Securities Litigation Reform Act of 1995. The use of words such as “anticipates,” “estimates,” “expects,” “plans”
and “believes,” among others, generally identify forward-looking statements. These forward-looking statements
include, among others, statements relating to: Match Group’s future financial performance, Match Group’s
business prospects and strategy, anticipated trends and prospects in the industries in which Match Group’s
businesses operate and other similar matters. These forward-looking statements are based on Match Group
management’s expectations and assumptions about future events as of the date of this annual report, which are
inherently subject to uncertainties, risks and changes in circumstances that are difficult to predict.
Actual results could differ materially from those contained in these forward-looking statements for a variety
of reasons, including, among others, the risk factors set forth below. Other unknown or unpredictable factors that
could also adversely affect Match Group’s business, financial condition and results of operations may arise from
time to time. In light of these risks and uncertainties, the forward-looking statements discussed in this annual
report may not prove to be accurate. Accordingly, you should not place undue reliance on these forward-looking
statements, which only reflect the views of Match Group’s management as of the date of this annual report. Match
Group does not undertake to update these forward-looking statements.
Risks relating to our business
The limited operating history of our newer dating brands and products makes it difficult to evaluate our
current business and future prospects.
We seek to tailor each of our dating brands and products to meet the preferences of specific communities of
users. Building a given brand or product is generally an iterative process that occurs over a meaningful period of
time and involves considerable resources and expenditures. Although certain of our newer brands and products
have experienced significant growth over relatively short periods of time, the historical growth rates of these
brands and products may not be an indication of future growth rates for such products or our newer brands and
products generally. We have encountered, and may continue to encounter, risks and difficulties as we build our
newer brands and products. The failure to successfully address these risks and difficulties could adversely affect
our business, financial condition and results of operations.
The dating industry is competitive, with low switching costs and a consistent stream of new products and
entrants, and innovation by our competitors may disrupt our business.
The dating industry is competitive, with a consistent stream of new products and entrants. Some of our
competitors may enjoy better competitive positions in certain geographical regions, user demographics or other
key areas that we currently serve or may serve in the future. These advantages could enable these competitors to
offer products that are more appealing to users and potential users than our products or to respond more quickly
and/or cost-effectively than us to new or changing opportunities.
In addition, within the dating industry generally, costs for consumers to switch between products are low,
and consumers have a propensity to try new approaches to connecting with people and to use multiple dating
products at the same time. As a result, new products, entrants and business models are likely to continue to
emerge. It is possible that a new product could gain rapid scale at the expense of existing brands through
harnessing a new technology or a new or existing distribution channel, creating a new or different approach to
connecting people or some other means.
Potential competitors include larger companies that could devote greater resources to the promotion or
marketing of their products and services, take advantage of acquisition or other opportunities more readily or
develop and expand their products and services more quickly than we do. Potential competitors also include
established social media companies that may develop products, features, or services that may compete with ours.
For example, Facebook has introduced a dating feature on its platform, which it is testing in certain markets, and
recently announced that it plans to roll this feature out globally in the near future. These social media competitors
could use strong or dominant positions in one or more markets, and ready access to existing large pools of
potential users and personal information regarding those users, to gain competitive advantages over us, including
by offering different product features or services that users may prefer or offering their products and services to
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users at no charge, which may enable them to acquire and engage users at the expense of our user growth or
engagement.
If we are not able to compete effectively against our current or future competitors and products that may
emerge, the size and level of engagement of our user base may decrease, which could have an adverse effect on
our business, financial condition and results of operations.
Each of our dating products monetizes users at different rates. If a meaningful migration of our user base
from our higher monetizing dating products to our lower monetizing dating products were to occur, it could
adversely affect our business, financial condition and results of operations.
We own, operate and manage a large and diverse portfolio of dating products. Each dating product has its
own mix of free and paid features designed to optimize the user experience and revenue generation from that
product’s community of users. In general, the mix of features for the various dating products within our more
established brands leads to higher monetization rates per user than the mix of features for the various dating
products within our newer brands. Over time, users of our newer brands with lower monetization rates per user
comprise an increasingly larger percentage of our user base. If this trend leads to a significant portion of users of
our brands with higher monetization rates migrating to our less profitable brands, our business, financial condition
and results of operations could be adversely affected. See “Item 7—Management’s discussion and analysis of
financial condition and results of operations—Management overview—Trends affecting our business.”
Our growth and profitability rely, in part, on our ability to attract and retain users through cost-effective
marketing efforts. Any failure in these efforts could adversely affect our business, financial condition and
results of operations.
Attracting and retaining users for certain of our dating products involve considerable expenditures for online
and offline marketing. Historically, we have had to increase our marketing expenditures over time in order to
attract and retain users and sustain our growth.
Evolving consumer behavior can affect the availability of profitable marketing opportunities. For example,
as traditional television viewership declines and as consumers spend more time on mobile devices rather than
desktop computers, the reach of many of our traditional advertising channels is contracting. Similarly, as
consumers communicate less via email and more via text messaging and other virtual means, the reach of email
campaigns designed to attract new and repeat users (and retain current users) for our dating products is adversely
impacted. To continue to reach potential users and grow our businesses, we must identify and devote more of our
overall marketing expenditures to newer advertising channels, such as mobile and online video platforms, as well
as targeted campaigns in which we communicate directly with potential, former and current users via new virtual
means. Generally, the opportunities in and sophistication of newer advertising channels are relatively
undeveloped and unproven, making it difficult to assess returns on investment associated with such advertising
channels, and there can be no assurance that we will be able to continue to appropriately manage and fine-tune our
marketing efforts in response to these and other trends in the advertising industry. Any failure to do so could
adversely affect our business, financial condition and results of operations.
Communicating with our users via email is critical to our success, and any erosion in our ability to
communicate in this fashion that is not sufficiently replaced by other means could adversely affect our
business, financial condition and results of operations.
Historically, one of our primary means of communicating with our users and keeping them engaged with our
products has been via email communication. Our ability to communicate via email enables us to keep our users
updated on activity with respect to their profile, present or suggest new or interesting users from the community,
invite users to offline events and present discount and promotional offers, among other things. As consumer
habits evolve in the era of web-enabled mobile devices and messaging/social networking apps, usage of email,
particularly among our younger users, has declined. In addition, deliverability and other restrictions imposed by
third party email providers and/or applicable law could limit or prevent our ability to send emails to our users. A
continued and significant erosion in our ability to communicate successfully with our users via email could have
an adverse impact on user experience, levels of user engagement and the rate at which non-paying users become
Subscribers.
While we continually work to find new means of communicating and connecting with our users (for
example, through push notifications), there is no assurance that such alternative means of communication will be
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as effective as email has been. Any failure to develop or take advantage of new means of communication or
limitations on those means of communications imposed by laws, device manufacturers or other sources could
have an adverse effect on our business, financial condition and results of operations.
Foreign currency exchange rate fluctuations could adversely affect our results of operations.
We operate in various international markets, primarily in various jurisdictions within the European Union
and Asia. During the fiscal years ended December 31, 2018 and 2017, 50% and 46% of our total revenues,
respectively, were international revenues. We translate international revenues into U.S. dollar-denominated
operating results and during periods of a strengthening U.S. dollar, our international revenues will be reduced
when translated into U.S. dollars. In addition, as foreign currency exchange rates fluctuate, the translation of our
international revenues into U.S. dollar-denominated operating results affects the period-over-period comparability
of such results and can result in foreign currency exchange gains and losses.
We have exposure to foreign currency exchange risk related to transactions carried out in a currency other
than the U.S. dollar, and investments in foreign subsidiaries with a functional currency other than the U.S. dollar.
Our exposure is primarily related to the Euro, and to a lesser extent, the British Pound (“GBP”). The average
GBP and Euro exchange rates strengthened against the U.S. Dollar by 4% and 5%, respectively, in 2018 compared
to 2017. See “Item 7A—Quantitative and Qualitative Disclosures About Market Risk—Foreign Currency
Exchange Risk.”
Brexit may continue to cause disruptions to capital and currency markets worldwide, and the full impact of
the Brexit decision remains uncertain. Ongoing negotiations between the United Kingdom and the European
Union will determine the terms of their relationship following Brexit. During this period of negotiation and
following the completion of Brexit, our operating results may be negatively affected by exchange rate and other
market and economic volatility. To the extent that the U.S. dollar strengthens relative to either the Euro, the GBP
or both, the translation of our international revenues into U.S. dollars will reduce our U.S. dollar denominated
operating results and will affect their period-over-period comparability.
Historically, we have not hedged any foreign currency exposures. The continued growth and expansion of
our international operations into new countries increases our exposure to foreign exchange rate fluctuations.
Significant foreign exchange rate fluctuations, in the case of one currency or collectively with other currencies,
could adversely affect our future results of operations.
Distribution and marketing of, and access to, our dating products depends, in significant part, on a variety of
third-party publishers, platforms and mobile app stores. If these third parties limit, prohibit or otherwise
interfere with or change the terms of the distribution, use, or marketing of our dating products in any material
way, it could adversely affect our business, financial condition and results of operations.
We market and distribute our dating products (including related mobile applications) through a variety of
third-party publishers and distribution channels, including Facebook, which recently announced its own dating
product. Our ability to market our brands on any given property or channel is subject to the policies of the
relevant third party. Certain publishers and channels have, from time to time, limited or prohibited advertisements
for dating products for a variety of reasons, including as a result of poor behavior by other industry participants.
There is no assurance that we will not be limited or prohibited from using certain current or prospective marketing
channels in the future. If this were to happen in the case of a significant marketing channel and/or for a significant
period of time, our business, financial condition and results of operations could be adversely affected.
Additionally, our mobile applications are increasingly accessed through the Apple App Store and the Google
Play Store. Both Apple and Google have broad discretion to change their respective terms and conditions
applicable to the distribution of our applications, including the amount of, and requirement to pay, certain fees
associated with purchases facilitated by Apple and Google through our applications, and to interpret their
respective terms and conditions in ways that may limit, eliminate or otherwise interfere with our ability to
distribute our applications through their stores, the features we provide and the manner in which we market our in-
app products. There is no assurance that Apple or Google will not limit, eliminate, or otherwise interfere with the
distribution of our products, the features we provide and the manner in which we market our in-app products
within our applications. To the extent either or both of them do so, our business, financial condition and results of
operations could be adversely affected.
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Lastly, in the case of Tinder, Hinge, and certain other of our products, many users historically registered for
(and logged into) the application exclusively through their Facebook profiles. While we have launched an
alternate authentication method that allows users to register for (and log into) Tinder, Hinge, and our other
products using their mobile phone number, no assurances can be provided that users will no longer register for
(and log into) Tinder, Hinge, and our other products through their Facebook profiles. Facebook has broad
discretion to change its terms and conditions applicable to the data collected by its platform and its use thereof and
to interpret its terms and conditions in ways that could limit, eliminate or otherwise interfere with our ability to
use Facebook as an authentication method or to allow Facebook to use such data to gain a competitive advantage.
If Facebook did so, our business, financial condition and results of operations could be adversely affected.
As the distribution of our dating products through app stores increases, in order to maintain our profit
margins, we may need to offset increasing app store fees by decreasing traditional marketing expenditures,
increasing user volume or monetization per user or by engaging in other efforts to increase revenue or
decrease costs generally, or our business, financial condition and results of operations could be adversely
affected.
As our user base continues to shift to mobile solutions, we increasingly rely on the Apple App Store and the
Google Play Store to distribute our mobile applications and related in-app products. While our mobile
applications are generally free to download from these stores, we offer our users the opportunity to purchase
subscriptions and certain à la carte features through these applications. We determine the prices at which these
subscriptions and features are sold; however, purchases of these subscriptions and features are required to be
processed through the in-app payment systems provided by Apple and, to a lesser degree, Google. Due to these
requirements, we pay Apple and Google, as applicable, a meaningful share (generally 30%) of the revenue we
receive from these transactions. While we are constantly innovating on and creating our own payment systems
and methods, given the increase of the distribution of our dating products through app stores and the strict
requirements to use the in-app payments systems tied into Apple’s, and to a lesser degree, Google’s distribution
services, we may need to offset these increased app store fees by decreasing traditional marketing expenditures as
a percentage of revenue, increasing user volume or monetization per user, or by engaging in other efforts to
increase revenue or decrease costs generally, or our business, financial condition and results of operations could
be adversely affected. Additionally, to the extent Google changes its terms and conditions or practices to require
us to process purchases of subscriptions and features through their in-app payment system, our business, financial
condition and results of operations could be adversely affected.
We depend on our key personnel.
Our future success will depend upon our continued ability to identify, hire, develop, motivate and retain
highly skilled individuals, with the continued contributions of our senior management being especially critical to
our success. Competition for well-qualified employees across Match Group and its various businesses is intense
and our continued ability to compete effectively depends, in part, upon our ability to attract new employees.
While we have established programs to attract new employees and provide incentives to retain existing
employees, particularly our senior management, we cannot guarantee that we will be able to attract new
employees or retain the services of our senior management or any other key employees in the future. Effective
succession planning is also important to our future success. If we fail to ensure the effective transfer of senior
management knowledge and smooth transitions involving senior management across our various businesses, our
ability to execute short and long term strategic, financial and operating goals, as well as our business, financial
condition and results of operations generally, could be adversely affected.
Our success depends, in part, on the integrity of our systems and infrastructures and on our ability to enhance,
expand and adapt these systems and infrastructures in a timely and cost-effective manner.
In order for us to succeed, our systems and infrastructures must perform well on a consistent basis. We have
in the past, and from time to time we may in the future, experience system interruptions that make some or all of
our systems or data unavailable and prevent our products from functioning properly for our users; any such
interruption could arise for any number of reasons. Further, our systems and infrastructures are vulnerable to
damage from fire, power loss, telecommunications failures, acts of God and similar events. While we have
backup systems in place for certain aspects of our operations, our systems and infrastructures are not fully
redundant, disaster recovery planning is not sufficient for all eventualities and our property and business
interruption insurance coverage may not be adequate to compensate us fully for any losses that we may suffer.
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Any interruptions or outages, regardless of the cause, could negatively impact our users’ experiences with our
products, tarnish our brands’ reputations and decrease demand for our products, any or all of which could
adversely affect our business, financial condition and results of operations.
We also continually work to expand and enhance the efficiency and scalability of our technology and
network systems to improve the experience of our users, accommodate substantial increases in the volume of
traffic to our various products, ensure acceptable load times for our products and keep up with changes in
technology and user preferences. Any failure to do so in a timely and cost-effective manner could adversely affect
our users’ experience with our various products and thereby negatively impact the demand for our products, and
could increase our costs, either of which could adversely affect our business, financial condition and results of
operations.
We may not be able to protect our systems and infrastructures from cyberattacks and may be adversely affected
by cyberattacks experienced by third parties.
We are regularly under attack by perpetrators of random or targeted malicious technology-related events,
such as cyberattacks, computer viruses, worms, bot attacks or other destructive or disruptive software, distributed
denial of service attacks and attempts to misappropriate customer information, including credit card information
and account login credentials. While we have invested (and continue to invest) heavily in the protection of our
systems and infrastructures, in related personnel and training and in employing a strategy of data minimization,
where appropriate, there can be no assurance that our efforts will prevent significant breaches in our systems or
other such events from occurring. Some of our systems have experienced past security incidents, and, although
they did not have a material adverse effect on our operating results, there can be no assurance of a similar result in
the future. Any cyber or similar attack we are unable to protect ourselves against could damage our systems and
infrastructures, prevent us from providing our products, erode our reputation and brands, result in the disclosure of
confidential or sensitive information of our users and/or be costly to remedy, as well as subject us to investigations
by regulatory authorities and/or litigation that could result in liability to third parties.
The impact of cyber security events experienced by third-parties with whom we do business (or upon whom
we otherwise rely in connection with our day-to-day operations) could have a similar effect on us. Moreover,
even cyber or similar attacks that do not directly affect us or third parties with whom we do business may result in
widespread access to user account login credentials that such users have used across multiple internet sites,
including our sites, or a loss of consumer confidence generally, which could make users less likely to use or
continue to use online products generally, including our products. The occurrence of any of these events could
have an adverse effect on our business, financial condition and results of operations.
Our success depends, in part, on the integrity of third-party systems and infrastructures.
We rely on third parties, primarily data center service providers and cloud-based, hosted web service
providers, such as Amazon Web Services, as well as third party computer systems, broadband and other
communications systems and service providers, in connection with the provision of our products generally, as well
as to facilitate and process certain transactions with our users. We have no control over any of these third parties
or their operations.
Problems experienced by third-party data center service providers and cloud-based, hosted web service
providers, such as Amazon Web Services, upon whom we rely, the telecommunications network providers with
whom we or they contract or with the systems through which telecommunications providers allocate capacity
among their customers could also adversely affect us. Any changes in service levels at our data centers or hosted
web service providers, such as Amazon Web Services, or any interruptions, outages or delays in our systems or
those of our third party providers, or deterioration in the performance of these systems, could impair our ability to
provide our products or process transactions with our users, which would adversely impact our business, financial
condition and results of operations.
If the security of personal and confidential or sensitive user information that we maintain and store is
breached or otherwise accessed by unauthorized persons, it may be costly to mitigate the impact of such an
event and our reputation could be harmed.
We receive, process, store and transmit a significant amount of personal user and other confidential or
sensitive information, including credit card information, and enable our users to share their personal information
with each other. In some cases, we engage third party vendors to store this information. We continuously develop
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and maintain systems to protect the security, integrity and confidentiality of this information, but cannot guarantee
that inadvertent or unauthorized use or disclosure will not occur or that third parties will not gain unauthorized
access to this information despite our efforts. When such events occur, we may not be able to remedy them, and
we may have to expend significant capital and other resources to mitigate the impact of such events, including
developing and implementing protections to prevent future events of this nature from occurring. When breaches
of security (or the security of our vendors and partners) occur, the perception of the effectiveness of our security
measures, the security measures of our partners and our reputation may be harmed, we may lose current and
potential users and the recognition of our various brands and their competitive positions may be diminished, any
or all of which might adversely affect our business, financial condition and results of operations.
Our business is subject to complex and evolving U.S. and international laws and regulations. Many of these
laws and regulations are subject to change and uncertain interpretation, and could result in claims, changes to
our business practices, monetary penalties, increased cost of operations, or declines in user growth or
engagement, or otherwise harm our business.
We are subject to a variety of laws and regulations in the United States and abroad that involve matters that
are important to or may otherwise impact our business, including, among others, broadband internet access, online
commerce, advertising, user privacy, data protection, intermediary liability, protection of minors, consumer
protection, sex-trafficking, taxation and securities law compliance. The introduction of new products, expansion
of our activities in certain jurisdictions, or other actions that we may take may subject us to additional laws,
regulations, or other government scrutiny. In addition, foreign laws and regulations can impose different
obligations or be more restrictive than those in the United States.
These U.S. federal, state, and municipal and foreign laws and regulations, which in some cases can be
enforced by private parties in addition to government entities, are constantly evolving and can be subject to
significant change. As a result, the application, interpretation, and enforcement of these laws and regulations are
often uncertain, particularly in the new and rapidly evolving industry in which we operate, and may be interpreted
and applied inconsistently from state to state and country to country and inconsistently with our current policies
and practices. These laws and regulations, as well as any associated inquiries or investigations or any other
government actions, may be costly to comply with and may delay or impede the development of new products,
result in negative publicity, increase our operating costs, require significant management time and attention, and
subject us to remedies that may harm our business, including fines or demands or orders that we modify or cease
existing business practices.
Specifically, in the case of tax laws, positions that we have taken or will take are subject to interpretation by
the relevant taxing authorities. While we believe that the positions we have taken to date comply with applicable
law, there can be no assurances that the relevant taxing authorities will not take a contrary position, and if so, that
such positions will not adversely affect us. Any events of this nature could adversely affect our business, financial
condition and results of operations.
Proposed or new legislation and regulations could also adversely affect our business. For example, the
European Commission and several countries have issued proposals that would change various aspects of the
current tax framework under which we are taxed, including proposals to change or impose new types of non-
income taxes, including taxes based on a percentage of revenue. For example, the United Kingdom has proposed
taxes applicable to digital services, which includes business activities on social media platforms, and would likely
apply to our business. If enacted, one or more of these or similar proposals could adversely affect our business,
financial condition and results of operations.
The promulgation of new laws or regulations, or the new interpretation of existing laws and regulations, in
each case that restrict or otherwise unfavorably impact the ability or manner in which we provide our services
could require us to change certain aspects of our business and operations to ensure compliance, which could
decrease demand for services, reduce revenues, increase costs and subject us to additional liabilities. For
example, in February 2019, the Secretary of State for Digital, Culture, Media and Sport of the United Kingdom,
indicated in public comments that his office intends to inquire as to the measures utilized by online dating
platforms, including Tinder, to prevent access by underage users. To the extent any new or more stringent
measures are required to be implemented, our business, financial condition and results of operations could be
adversely affected.
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The adoption of any laws or regulations that adversely affect the popularity or growth in use of the internet
or our services, including laws or regulations that undermine open and neutrally administered internet access,
could decrease user demand for our service offerings and increase our cost of doing business. For example, in
December 2017, the Federal Communications Commission adopted an order reversing net neutrality protections
in the United States, including the repeal of specific rules against blocking, throttling or “paid prioritization” of
content or services by internet service providers. To the extent internet service providers engage in such blocking,
throttling, “paid prioritization” of content or similar actions as a result of this order and the adoption of similar
laws or regulations, our business, financial condition and results of operations could be adversely affected.
The varying and rapidly-evolving regulatory framework on privacy and data protection across jurisdictions
could result in claims, changes to our business practices, monetary penalties, increased cost of operations, or
declines in user growth or engagement, or otherwise harm our business.
There are numerous laws in the countries in which we operate regarding privacy and the storage, sharing,
use, processing, disclosure and protection of this kind of information, the scope of which are constantly changing,
and in some cases, inconsistent and conflicting and subject to differing interpretations, as new laws of this nature
are proposed and adopted. For example, in 2016 the European Commission adopted the General Data Protection
Act (“GDPR”), a comprehensive European Union privacy and data protection reform that became effective in
May 2018. The act applies to companies established in the European Union or otherwise providing services or
monitoring the behavior of people located in the European Union and which provides for significant penalties in
case of non-compliance. GDPR will continue to be interpreted by EU data protection regulators, which may
require that we make changes to our business practices, and could generate additional risks and liabilities. The
European Union is also considering an update to the EU’s Privacy and Electronic Communications (so-called “e-
Privacy”) Directive, notably to amend rules on the use of cookies. In addition, Brexit could result in the
application of new and conflicting data privacy and protection laws and standards to our operations in the United
Kingdom and our handling of personal data of users located in the United Kingdom. At the same time, certain
developing countries in which we do business have already or are also currently considering adopting privacy and
data protection laws and regulations. Legislative proposals concerning privacy and the protection of user
information are being considered by the U.S. Congress, such as the American Data Dissemination Act, which was
introduced in February 2019 by Senator Marco Rubio, as well as various U.S. state legislatures, including the
California Consumer Privacy Act of 2018, which was signed into law on June 28, 2018 and comes into effect on
January 1, 2020.
While we believe that we comply with industry standards and applicable laws and industry codes of conduct
relating to privacy and data protection in all material respects, there is no assurance that we will not be subject to
claims that we have violated applicable laws or codes of conduct, that we will be able to successfully defend
against such claims or that we will not be subject to significant fines and penalties in the event of non-compliance.
Any failure or perceived failure by us (or the third parties with whom we have contracted to process such
information) to comply with applicable privacy and security laws, policies or related contractual obligations or
any compromise of security that results in unauthorized access, or the use or transmission of, personal user
information could result in a variety of claims against us, including governmental enforcement actions, significant
fines, litigation, claims of breach of contract and indemnity by third parties and adverse publicity. When such
events occur, our reputation may be harmed, we may lose current and potential users and the competitive positions
of our various brands might be diminished, any or all of which could adversely affect our business, financial
condition and results of operations.
Lastly, compliance with the numerous laws in the countries in which we operate regarding privacy and the
storage, sharing, use, processing, disclosure and protection of personal data could be costly, as well as result in
delays in the development of new products and features as resources are allocated to these compliance projects,
particularly as these laws become more comprehensive in scope, more commonplace and continue to evolve. In
addition, the varying and rapidly-evolving regulatory frameworks across jurisdictions may result in decisions to
introduce products in certain jurisdictions but not others or to cease providing certain services or features to users
located in certain jurisdictions. If these costs or other impacts are significant, our business, financial condition
and results of operations could be adversely affected.
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We are subject to a number of risks related to credit card payments, including data security breaches and fraud
that we or third parties experience or additional regulation, any of which could adversely affect our business,
financial condition and results of operations.
We accept payment from our users primarily through credit card transactions and certain online payment
service providers. The ability to access credit card information on a real-time basis without having to proactively
reach out to the consumer each time we process an auto-renewal payment or a payment for the purchase of a
premium feature on any of our dating products is critical to our success and a seamless experience for our users.
When we or a third party experiences a data security breach involving credit card information, affected
cardholders will often cancel their credit cards. In the case of a breach experienced by a third party, the more
sizable the third party’s customer base and the greater the number of credit card accounts impacted, the more
likely it is that our users would be impacted by such a breach. To the extent our users are ever affected by such a
breach experienced by us or a third party, affected users would need to be contacted to obtain new credit card
information and process any pending transactions. It is likely that we would not be able to reach all affected
users, and even if we could, some users’ new credit card information may not be obtained and some pending
transactions may not be processed, which could adversely affect our business, financial condition and results of
operations.
Even if our users are not directly impacted by a given data security breach, they may lose confidence in the
ability of service providers to protect their personal information generally, which could cause them to stop using
their credit cards online and choose alternative payment methods that are not as convenient for us or restrict our
ability to process payments without significant user effort.
Additionally, if we fail to adequately prevent fraudulent credit card transactions, we may face litigation,
fines, governmental enforcement action, civil liability, diminished public perception of our security measures,
significantly higher credit card-related costs and substantial remediation costs, or refusal by credit card processors
to continue to process payments on our behalf, any of which could adversely affect our business, financial
condition and results of operations.
Finally, the passage or adoption of any legislation or regulation affecting the ability of service providers to
periodically charge consumers for recurring subscription payments may adversely affect our business, financial
condition and results of operations. For example, the European Union’s Payment Services Directive (PSD2),
which became effective in 2018, could impact our ability to process auto-renewal payments or offer promotional
or differentiated pricing for users in the EU. Similar legislation or regulation, or changes to existing legislation or
regulation governing subscription payments, are being considered in many U.S. states.
Inappropriate actions by certain of our users could be attributed to us and damage our brands’ reputations,
which in turn could adversely affect our business.
The reputations of our brands may be adversely affected by the actions of our users that are deemed to be
hostile, offensive, defamatory, inappropriate, untrue or unlawful. While we have systems and processes in place
that aim to monitor and review the appropriateness of the content accessible through our products, which include,
in particular, reporting tools through which users can inform us of such behavior on the platform, and have
adopted policies regarding illegal, offensive or inappropriate use of our products, our users could nonetheless
engage in activities that violate our policies. These safeguards may not be sufficient to avoid harm to our
reputation and brands, especially if such hostile, offensive or inappropriate use is well-publicized.
In addition, it is possible that a user of our products could be physically, financially, emotionally or
otherwise harmed by an individual that such user met through the use of one of our products. If one or more of
our users suffers or alleges to have suffered any such harm, we could experience negative publicity or legal action
that could damage our reputation and our brands. Similar events affecting users of our competitors’ products
could result in negative publicity for the dating industry generally, which could in turn negatively affect our
business.
Concerns about harms and the use of dating products and social networking platforms for illegal conduct,
such as romance scams, promotion of false or inaccurate information, financial fraud, and sex-trafficking, have
produced and could continue to produce future legislation or other governmental action. For example, on April
11, 2018, the Allow States and Victims to Fight Online Sex Trafficking Act became effective in the United States
and allows victims of sex trafficking crimes, as well as other state and local authorities, to seek redress from
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platforms in certain circumstances in connection with sex trafficking of individuals online. The European Union
and the United Kingdom have also launched consultations, and the United Kingdom is preparing to release its
Online Harms White Paper, regarding proposed legislation that would expose platforms to similar or more
expansive liability. If these proposed laws are passed, or if future legislation or governmental action is proposed or
taken to address concerns regarding such harms, changes could be required to our products that could restrict or
impose additional costs upon the conduct of our business generally or cause users to abandon our products.
We may fail to adequately protect our intellectual property rights or may be accused of infringing the
intellectual property rights of third parties.
We rely heavily upon our trademarks and related domain names and logos to market our brands and to build
and maintain brand loyalty and recognition, as well as upon trade secrets. We also rely upon patented and patent-
pending proprietary technologies relating to matching process systems and related features and products.
We also rely on a combination of laws, and contractual restrictions with employees, customers, suppliers,
affiliates and others, to establish and protect our various intellectual property rights. For example, we have
generally registered and continue to apply to register and renew, or secure by contract where appropriate,
trademarks and service marks as they are developed and used, and reserve, register and renew domain names as
we deem appropriate. Effective trademark protection may not be available or may not be sought in every country
in which our products are made available, and contractual disputes may affect the use of marks governed by
private contract. Similarly, not every variation of a domain name may be available or be registered, even if
available.
We also generally seek to apply for patents or for other similar statutory protections as and if we deem
appropriate, based on then-current facts and circumstances, and will continue to do so in the future. No
assurances can be given that any patent application we have filed or will file will result in a patent being issued, or
that any existing or future patents will afford adequate protection against competitors and similar technologies. In
addition, no assurances can be given that third parties will not create new products or methods that achieve similar
results without infringing upon patents we own.
Despite these measures, our intellectual property rights may still not be protected in a meaningful manner,
challenges to contractual rights could arise, third parties could copy or otherwise obtain and use our intellectual
property without authorization, or laws and interpretations of laws regarding the enforceability of existing
intellectual property rights may change over time in a manner that provides less protection. The occurrence of any
of these events could result in the erosion of our brands and limit our ability to market our brands using our
various domain names, as well as impede our ability to effectively compete against competitors with similar
technologies, any of which could adversely affect our business, financial condition and results of operations.
From time to time, we have been subject to legal proceedings and claims, including claims of alleged
infringement of trademarks, copyrights, patents and other intellectual property rights held by third parties. In
addition, litigation may be necessary in the future to enforce our intellectual property rights, protect our trade
secrets and patents or to determine the validity and scope of proprietary rights claimed by others. For example, on
March 17, 2018, we filed a lawsuit against Bumble Trading Inc., which operates and markets the online dating
application Bumble in the United States, for patent and trademark infringement, as well as trade secret
misappropriation. Bumble’s counterclaims request that our trademark registration for our SWIPE trademark be
cancelled and that a number of our pending applications for trademark registration be denied. This case is
currently pending in Federal Court in the Western District of Texas. Any litigation of this nature, regardless of
outcome or merit, could result in substantial costs and diversion of management and technical resources, any of
which could adversely affect our business, financial condition and results of operations.
We operate in various international markets, including certain markets in which we have limited experience.
As a result, we face additional risks in connection with certain of our international operations.
Our brands are available in over 40 different languages all over the world. Our international revenue
represented 50% and 46% of our total revenue for the fiscal years ended December 31, 2018 and 2017,
respectively.
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Operating internationally, particularly in countries in which we have limited experience, exposes us to a
number of additional risks, including:
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operational and compliance challenges caused by distance, language and cultural differences;
difficulties in staffing and managing international operations;
differing levels of social and technological acceptance of our dating products or lack of acceptance of
them generally;
foreign currency fluctuations;
restrictions on the transfer of funds among countries and back to the United States and costs associated
with repatriating funds to the United States;
differing and potentially adverse tax laws;
• multiple, conflicting and changing laws, rules and regulations, and difficulties understanding and
ensuring compliance with those laws by both our employees and our business partners, over whom we
exert no control;
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compliance challenges due to different laws and regulatory environments, particularly in the case of
privacy and data security;
competitive environments that favor local businesses;
limitations on the level of intellectual property protection; and
trade sanctions, political unrest, terrorism, war and epidemics or the threat of any of these events.
The occurrence of any or all of the events described above could adversely affect our international
operations, which could in turn adversely affect our business, financial condition and results of operations.
We may experience operational and financial risks in connection with acquisitions.
We have made numerous acquisitions in the past and we continue to seek potential acquisition candidates.
We may experience operational and financial risks in connection with historical and future acquisitions if we are
unable to:
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properly value prospective acquisitions, especially those with limited operating histories;
accurately review acquisition candidates’ business practices against applicable laws and regulations and,
where applicable, implement proper remediation controls, procedures, and policies;
successfully integrate the operations, as well as the accounting, financial controls, management
information, technology, human resources and other administrative systems, of acquired businesses with
our existing operations and systems;
successfully identify and realize potential synergies among acquired and existing businesses;
fully identify potential risks and liabilities associated with acquired businesses;
retain or hire senior management and other key personnel at acquired businesses; and
successfully manage acquisition-related strain on our management, operations and financial resources
and those of the various brands in our portfolio.
Furthermore, we may not be successful in addressing other challenges encountered in connection with our
acquisitions. The anticipated benefits of one or more of our acquisitions may not be realized or the value of
goodwill and other intangible assets acquired could be impacted by one or more continuing unfavorable events or
trends, which could result in significant impairment charges. In addition, such acquisitions can result in material
diversion of management’s attention or other resources from our existing businesses. The occurrence of any these
events could have an adverse effect on our business, financial condition and results of operations.
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We are subject to litigation and adverse outcomes in such litigation could have an adverse effect on our
financial condition.
We are, and from time to time may become, subject to litigation and various legal proceedings, including
litigation and proceedings related to intellectual property matters, privacy and consumer protection laws, as well
as stockholder derivative suits, class action lawsuits and other matters, that involve claims for substantial amounts
of money or for other relief or that might necessitate changes to our business or operations. For example, as
discussed in “Item 3—Legal Proceedings,” in August 2018, ten then-current and former employees of our Tinder
business filed a lawsuit against us in connection with a valuation of the Tinder business, and its subsequent merger
into Match Group, Inc., in July 2017. The defense of these actions is time consuming and expensive. We evaluate
these litigation claims and legal proceedings to assess the likelihood of unfavorable outcomes and to estimate, if
possible, the amount of potential losses. Based on these assessments and estimates, we may establish reserves
and/or disclose the relevant litigation claims or legal proceedings, as and when required or appropriate. These
assessments and estimates are based on information available to management at the time of such assessment or
estimation and involve a significant amount of judgment. As a result, actual outcomes or losses could differ
materially from those envisioned by our current assessments and estimates. Our failure to successfully defend or
settle any of these litigations or legal proceedings could result in liability that, to the extent not covered by our
insurance, could have an adverse effect on our business, financial condition and results of operations.
Risks related to our ongoing relationship with IAC
IAC controls our company and has the ability to control the direction of our business.
As of February 1, 2019, IAC owned 15,813,277 shares of our common stock and 209,919,402 shares of
Class B common stock representing 100% of our outstanding Class B common stock. IAC’s ownership of our
outstanding common stock and Class B common stock represents approximately 81.1% of our outstanding shares
of capital stock and approximately 97.6% of the combined voting power of our outstanding capital stock. As long
as IAC owns shares of our capital stock representing a majority of the combined voting power of our outstanding
capital stock, it will be able to control any corporate action that requires a stockholder vote, regardless of the vote
of any other stockholder. As a result, IAC has the ability to control significant corporate activities, including:
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the election of our board of directors and, through our board of directors, decision-making with respect to
our business direction and policies, including the appointment and removal of our officers;
acquisitions or dispositions of businesses or assets, mergers or other business combinations;
issuances of shares of our common stock, Class B common stock, Class C common stock and our capital
structure;
corporate opportunities that may be suitable for us and IAC, subject to the corporate opportunity
provisions in our certificate of incorporation, as described below;
our financing activities, including the issuance of additional debt and equity securities, or the incurrence
of other indebtedness generally;
the payment of dividends; and
the number of shares available for issuance under our equity incentive plans for our prospective and
existing employees.
This voting control will limit the ability of other stockholders to influence corporate matters and, as a result,
we may take actions that stockholders other than IAC do not view as beneficial. This voting control may also
discourage transactions involving a change of control of our company, including transactions in which holders of
our common stock might otherwise receive a premium for the holders’ shares. Furthermore, IAC generally has
the right at any time to sell or otherwise dispose of the shares of our capital stock that it owns, including the
ability to transfer a controlling interest in us to a third party, without the approval of the holders of our common
stock and without providing for the purchase of shares of common stock.
Even if IAC owns shares of our capital stock representing less than a majority of the combined voting power
of our outstanding capital stock, so long as IAC retains shares representing a significant percentage of our
combined voting power, IAC will have the ability to substantially influence these significant corporate activities.
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In addition, pursuant to an investor rights agreement between us and IAC, IAC has the right to maintain its
level of ownership in us to the extent we issue additional shares of our capital stock in the future and, pursuant to
an employee matters agreement between us and IAC, IAC may receive payment for certain compensation
expenses through the receipt of additional shares of our capital stock. For a more complete summary of our
agreements with IAC, see “Note 15—Related Party Transactions” to the consolidated financial statements
included in “Item 8—Consolidated Financial Statements.”
In addition, because of our relationship with IAC, credit rating agencies have considered, and could continue
to consider, IAC’s creditworthiness when determining a corporate credit rating for us or credit ratings for our debt,
including the notes offered hereby. Accordingly, the activities of, or developments at, IAC that are outside of our
control could have a negative impact on such credit ratings. A lowering of our corporate credit ratings or the credit
ratings assigned to our debt could harm our ability to incur additional debt on acceptable terms and may adversely
affect the market price or liquidity of the notes offered hereby. Until such time as IAC no longer controls or has
the ability to substantially influence us, we will continue to face the risks described in this “Risk factors” section
relating to IAC’s control of us and the potential conflicts of interest between IAC and us.
Our certificate of incorporation could prevent us from benefiting from corporate opportunities that might
otherwise have been available to us.
Our certificate of incorporation has a “corporate opportunity” provision in which we renounce any interests
or expectancy in corporate opportunities which become known to: (i) any of our directors or officers who are also
officers, directors, employees or other affiliates of IAC or its affiliates (except that we and our subsidiaries shall
not be deemed affiliates of IAC or its affiliates for the purposes of the provision) or (ii) IAC itself, and which
relate to the business of IAC or may constitute a corporate opportunity for both IAC and us. Generally, neither
IAC nor our officers or directors who are also officers or directors of IAC or its affiliates will be liable to us or our
stockholders for breach of any fiduciary duty by reason of the fact that any such person pursues or acquires any
corporate opportunity for the account of IAC or its affiliates, directs or transfers such corporate opportunity to
IAC or its affiliates, or does not communicate information regarding such corporate opportunity to us. The
corporate opportunity provision may exacerbate conflicts of interest between IAC and us because the provision
effectively permits any of our directors or officers who also serves as an officer or director of IAC to choose to
direct a corporate opportunity to IAC instead of to us.
IAC’s interests may conflict with our interests and the interests of our stockholders. Conflicts of interest
between IAC and us could be resolved in a manner unfavorable to us and our public stockholders.
Various conflicts of interest between us and IAC could arise. As of the date of this report, five of our ten
directors are current members of the board of directors or executive officers of IAC. Ownership interests of
directors or officers of IAC in our stock and ownership interests of our directors and officers in the stock of IAC,
or a person’s service as either a director or officer of both companies, could create or appear to create potential
conflicts of interest when those directors and officers are faced with decisions relating to our company. These
decisions could include:
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corporate opportunities;
the impact that operating decisions for our business may have on IAC’s consolidated financial
statements;
the impact that operating or capital decisions (including the incurrence of indebtedness) for our business
may have on IAC’s current or future indebtedness or the covenants under that indebtedness;
business combinations involving us;
our dividend policy;
• management stock ownership; and
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the intercompany services and agreements between IAC and us.
Potential conflicts of interest could also arise if we decide to enter into any new commercial arrangements
with IAC in the future or in connection with IAC’s desire to enter into new commercial arrangements with third
parties.
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Furthermore, disputes may arise between IAC and us relating to our past and ongoing relationships, and
these potential conflicts of interest may make it more difficult for us to favorably resolve such disputes, including
those related to:
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tax, employee benefit, indemnification and other matters;
the nature, quality and pricing of services IAC agrees to provide to us;
sales or other disposal by IAC of all or a portion of its ownership interest in us; and
business combinations involving us.
We may not be able to resolve any potential conflicts with IAC, and even if we do, the resolution may be
less favorable to us than if we were dealing with an unaffiliated party. While we are controlled by IAC, we may
not have the leverage to negotiate amendments to these agreements, if required, on terms as favorable to us as
those we would negotiate with an unaffiliated third party.
We are a “controlled company” as defined in the NASDAQ rules, and rely on exemptions from certain
corporate governance requirements that provide protection to stockholders of other companies.
As a result of IAC owning more than 50% of the combined voting power of our share capital, we are a
“controlled company” under the Marketplace Rules of the NASDAQ Stock Market, or the Marketplace Rules. As
a “controlled company,” we are exempt from the obligation to comply with certain Marketplace Rules related to
corporate governance, including the following requirements:
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that a majority of our board of directors consists of “independent directors,” as defined under the
Marketplace Rules; and
that we have a nominating/governance committee that is composed entirely of independent directors with
a written charter addressing the committee’s purpose and responsibilities.
Accordingly, for so long as we are a “controlled company,” our stockholders will not have the same
protections afforded to stockholders of companies that are subject to all of the corporate governance requirements
of the Marketplace Rules.
In order to preserve the ability of IAC to distribute its shares of our capital stock on a tax-free basis, we may be
prevented from pursuing opportunities to raise capital, to effectuate acquisitions or to provide equity incentives
to our employees, which could hurt our ability to grow.
Under current laws, IAC must retain beneficial ownership of at least 80% of our combined voting power and
80% of each class of our nonvoting capital stock (if any is outstanding) in order to effect a tax-free distribution of
our shares held by IAC to its stockholders. As of the date of this annual report, IAC has advised us that it does not
have any present intention or plans to undertake such a tax-free distribution. However, IAC does currently intend
to use its majority voting interest to retain its ability to engage in such a transaction. This intention may cause
IAC to not support transactions we wish to pursue that involve issuing shares of our common stock, including for
capital raising purposes, as consideration for an acquisition or as equity incentives to our employees. The inability
to pursue such transactions, if it occurs, may adversely affect our company. See “—IAC controls our company
and will have the ability to control the direction of our business” and “—IAC’s interests may conflict with our
interests and the interests of our stockholders.” Conflicts of interest between IAC and us could be resolved in a
manner unfavorable to us and our public stockholders.
Our agreements with IAC will require us to indemnify IAC for certain tax liabilities and may limit our ability to
engage in desirable strategic or capital raising transactions, including following any distribution by IAC of our
capital stock to its stockholders.
Under a tax sharing agreement between us and IAC, we generally are responsible and are required to
indemnify IAC for: (i) all taxes imposed with respect to any consolidated, combined or unitary tax return of IAC
or one of its subsidiaries that includes us or any of our subsidiaries to the extent attributable to us or any of our
subsidiaries, as determined under the tax sharing agreement, and (ii) all taxes imposed with respect to any
consolidated, combined, unitary or separate tax returns of us or any of our subsidiaries. To the extent IAC failed
to pay taxes imposed with respect to any consolidated, combined or unitary tax return of IAC or one of its
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subsidiaries that includes us or any of our subsidiaries, the relevant taxing authority could seek to collect such
taxes (including taxes for which IAC is responsible under the tax sharing agreement) from us or our subsidiaries.
Under the tax sharing agreement, we generally will be responsible for any taxes and related amounts
imposed on IAC or us that arise from the failure of a future spin-off of IAC’s interest in us to qualify as a
transaction that is generally tax-free, for U.S. federal income tax purposes, under Section 368(a)(1)(D) and/or
Section 355 of the Internal Revenue Code of 1986, as amended, or the Code, to the extent that the failure to so
qualify is attributable to: (i) a breach of the relevant representations and covenants made by us in the tax sharing
agreement or any representation letter provided in support of any tax opinion or ruling obtained by IAC with
respect to the U.S. federal income tax treatment of such spin-off, or (ii) an acquisition of our equity securities.
To preserve the tax-free treatment of any potential future spin-off by IAC of its interest in us, and in addition
to our indemnity obligation described above, the tax sharing agreement will restrict us, for the two-year period
following any such spin-off, except in specific circumstances, from: (i) entering into any transaction pursuant to
which all or a portion of shares of our stock would be acquired, whether by merger or otherwise, (ii) issuing
equity securities beyond certain thresholds, (iii) repurchasing our shares other than in certain open-market
transactions, (iv) ceasing to actively conduct our businesses or (v) taking or failing to take any other action that
prevents the distribution and related transactions from qualifying as a transaction that is generally tax-free, for
U.S. federal income tax purposes, under Section 368(a)(1)(D) and/or Section 355 of the Code.
These indemnity obligations and other limitations could have an adverse effect on our business, financial
condition and results of operations.
Future sales or distributions of our shares by IAC could depress our common stock price.
IAC has the right to sell or distribute to its stockholders all or a portion of the shares of our capital stock that
it holds (15,813,277 shares of our common stock and 209,919,402 shares of our Class B common stock,
representing all of our outstanding Class B common stock, as of February 1, 2019). As of the date of this annual
report, IAC has advised us that it does not have any present intention or plans to undertake such a sale or
distribution; however, any sales by IAC in the public market or distributions to its stockholders of substantial
amounts of our stock in the form of common stock or Class B common stock, or the filing by IAC of a registration
statement relating to a substantial amount of our stock, could depress the price of our common stock.
In addition, IAC has the right, subject to certain conditions, to require us to file registration statements
covering the sale of its shares or to include its shares in other registration statements that we may file. In the event
IAC exercises its registration rights and sells all or a portion of its shares of our capital stock, the price of our
common stock could decline.
The services that IAC provides to us may not be sufficient to meet our needs, which may result in increased
costs and otherwise adversely affect our business.
IAC currently provides (and is expected to continue to provide) us with corporate and shared services related
to certain corporate functions, including tax and other services, for a fee provided in the services agreement
described in “Item 1—Business-Relationship with IAC.” IAC is not obligated to provide these services in a
manner that differs from the nature of the service when we were a wholly-owned subsidiary of IAC, and thus we
may not be able to modify these services in a manner desirable to us as a stand-alone public company. Further, if
we no longer receive these services from IAC, we may not be able to perform these services ourselves, or find
appropriate third-party arrangements at a reasonable cost, and the cost may be higher than that charged by IAC.
Risks related to our indebtedness
Our indebtedness may affect our ability to operate our business, which could have a material adverse effect on
our financial condition and results of operations. We and our subsidiaries may incur additional indebtedness,
including secured indebtedness.
As of December 31, 2018, we had total debt outstanding of approximately $1.5 billion and borrowing
availability of $240 million under our revolving credit facility.
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Our indebtedness could have important consequences, such as:
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limiting our ability to obtain additional financing to fund our working capital needs, acquisitions, capital
expenditures or other debt service requirements or for other purposes;
limiting our ability to use operating cash flow in other areas of our business because we must dedicate a
substantial portion of these funds to service debt;
limiting our ability to compete with other companies who are not as highly leveraged, as we may be less
capable of responding to adverse economic and industry conditions;
restricting us from making strategic acquisitions, developing properties or exploiting business
opportunities;
restricting the way in which we conduct our business because of financial and operating covenants in the
agreements governing our and certain of our subsidiaries’ existing and future indebtedness, including, in
the case of certain indebtedness of subsidiaries, certain covenants that restrict the ability of subsidiaries
to pay dividends or make other distributions to us;
exposing us to potential events of default (if not cured or waived) under financial and operating
covenants contained in our or our subsidiaries’ debt instruments that could have a material adverse effect
on our business, financial condition and operating results; increasing our vulnerability to a downturn in
general economic conditions or in pricing of our products; and
limiting our ability to react to changing market conditions in our industry and in our customers’
industries.
In addition to our debt service obligations, our operations require substantial investments on a continuing
basis. Our ability to make scheduled debt payments, to refinance our obligations with respect to our indebtedness
and to fund capital and non-capital expenditures necessary to maintain the condition of our operating assets and
properties, as well as to provide capacity for the growth of our business, depends on our financial and operating
performance, which, in turn, is subject to prevailing economic conditions and financial, business, competitive,
legal and other factors.
Subject to the restrictions in our credit agreement (which includes our revolving credit facility and term
loan) and the restrictions included in the indentures related to our 6.375% Senior Notes due 2024, 5.00% Senior
Notes due 2027, and 5.625% Senior Notes due 2029 (the “Match Group Senior Notes”), we and our subsidiaries
may incur significant additional indebtedness, including additional secured indebtedness. Although the terms of
our credit agreement and the indentures related to the Match Group Senior Notes contain restrictions on the
incurrence of additional indebtedness, these restrictions are subject to a number of qualifications and exceptions,
and additional indebtedness incurred in compliance with these restrictions could be significant. If new debt is
added to our and our subsidiaries’ current debt levels, the risks described above could increase.
We may not be able to generate sufficient cash to service all of our current and planned indebtedness and may
be forced to take other actions to satisfy our obligations under our indebtedness that may not be successful.
Our ability to satisfy our debt obligations will depend upon, among other things:
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our future financial and operating performance, which will be affected by prevailing economic conditions
and financial, business, regulatory and other factors, many of which are beyond our control; and
our future ability to borrow under our revolving credit facility, the availability of which will depend on,
among other things, our complying with the covenants in the then-existing agreements governing our
indebtedness.
We cannot assure you that our business will generate sufficient cash flow from operations, or that we will be
able to draw under our revolving credit facility or otherwise, in an amount sufficient to fund our liquidity needs.
If our cash flows and capital resources are insufficient to service our indebtedness, we may be forced to
reduce or delay capital expenditures, sell assets, seek additional capital or restructure or refinance our
indebtedness. These alternative measures may not be successful and may not permit us to meet our scheduled
debt service obligations. Our ability to restructure or refinance our debt will depend on the condition of the
capital markets and our financial condition at such time. Any refinancing of our debt could be at higher interest
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rates and may require us to comply with more onerous covenants, which could further restrict our business
operations. In addition, the terms of existing or future debt agreements may restrict us from adopting some of
these alternatives. In the absence of such operating results and resources, we could face substantial liquidity
problems and might be required to dispose of material assets or operations, sell equity, and/or negotiate with our
lenders to restructure the applicable debt, in order to meet our debt service and other obligations. We may not be
able to consummate those dispositions for fair market value or at all. Our credit agreement and the indentures
related to the Match Group Senior Notes may restrict, or market or business conditions may limit, our ability to
avail ourselves of some or all of these options.
Furthermore, any proceeds that we could realize from any such dispositions may not be adequate to meet our
debt service obligations then due.
Our debt agreements contain restrictions that will limit our flexibility in operating our business.
Our credit agreement and the indentures related to the Match Group Senior Notes contain, and any
instruments governing future indebtedness of ours would likely contain, a number of covenants that will impose
significant operating and financial restrictions on us, including restrictions on our ability to, among other things:
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create liens on certain assets;
incur additional debt;
• make certain investments and acquisitions;
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consolidate, merge, sell or otherwise dispose of all or substantially all of our assets;
sell certain assets;
pay dividends on or make distributions in respect of our capital stock or make restricted payments;
enter into certain transactions with our affiliates; and
place restrictions on distributions from subsidiaries.
Any of these restrictions could limit our ability to plan for or react to market conditions and could otherwise
restrict corporate activities. Any failure to comply with these covenants could result in a default under our credit
agreement and/or the indentures related to the Match Group Senior Notes or any instruments governing future
indebtedness of ours. Upon a default, unless waived, the lenders under our credit agreement could elect to
terminate their commitments, cease making further loans, foreclose on our assets pledged to such lenders to secure
our obligations under our credit agreement and force us into bankruptcy or liquidation. Holders of the Match
Group Senior Notes also have the ability to force us into bankruptcy or liquidation in certain circumstances,
subject to the terms of the related indentures. In addition, a default under our credit agreement or the indentures
related to the Match Group Senior Notes may trigger a cross default under our other agreements and could trigger
a cross default under the agreements governing our future indebtedness. Our operating results may not be
sufficient to service our indebtedness or to fund our other expenditures and we may not be able to obtain financing
to meet these requirements.
Variable rate indebtedness that we have incurred or may incur under our credit agreement will subject us to
interest rate risk, which could cause our debt service obligations to increase significantly.
We currently have $260 million and $425 million of indebtedness outstanding under our revolving credit
facility and term loan, respectively. Borrowings under the revolving credit facility and term loan are at variable
rates of interest. Indebtedness that bears interest at variable rates exposes us to interest rate risk. Our revolving
credit facility and term loan bear interest at LIBOR plus 1.50% and LIBOR plus 2.50%, respectively. As of
December 31, 2018, the rate in effect was 3.97% and 5.09%, respectively. If LIBOR were to increase or decrease
by 100 basis points, then the annual interest and expense payments on the outstanding balance as of December 31,
2018 on the term loan and revolving credit facility would increase or decrease by $2.6 million and $4.3 million,
respectively. See also “Item 7A—Quantitative and Qualitative Disclosures About Market Risk.”
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Risks related to ownership of our common stock
The multi-class structure of our capital stock has the effect of concentrating voting control with holders of our
Class B common stock and limiting the ability of holders of our common stock to influence corporate matters.
Our publicly held common stock has one vote per share and our Class B common stock has ten votes per
share. As of February 1, 2019, IAC owned all of the shares of our outstanding Class B common stock and
15,813,277 shares of our common stock, collectively representing approximately 81.1% of our outstanding shares
of capital stock and approximately 97.6% of the combined voting power of our outstanding capital stock. Due to
the ten-to-one voting ratio between our Class B common stock and common stock, the holders of our Class B
common stock collectively will continue to control a majority of the combined voting power of our capital stock,
even when the outstanding shares of Class B common stock represent a small minority of our outstanding capital
stock, and such voting control will be concentrated with IAC. This concentrated control will significantly limit
your ability to influence corporate matters.
The difference in the voting rights of our common stock and our Class B common stock may harm the value
and liquidity of our common stock.
Holders of our Class B common stock are entitled to ten votes per share and holders of our common stock
are entitled to one vote per share. The difference in the voting rights of our common stock and Class B common
stock could harm the value of our common stock to the extent that any investor or potential future purchaser of
our common stock ascribes value to the right of the holders of our Class B common stock to ten votes per share.
The existence of two classes of common stock with different voting rights could result in less liquidity for either
class of stock than if there were only one class of our common stock.
The price of our common stock has been and may continue to be volatile or may decline regardless of our
operating performance, and you could lose all or part of your investment.
During 2018, our common stock traded as high as $60.05 and as low as $31.40 and on February 27, 2019,
the closing price of our common stock was $55.78. The market price of our common stock has been and may
continue to be subject to wide fluctuations in response to various factors, many of which are beyond our control
and may not be related to our operating performance. These fluctuations could cause you to lose part of your
investment in our common stock since you might be unable to sell your shares at or above the price you paid.
Factors that could cause fluctuations in the market price of our common stock include the following:
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price and volume fluctuations in the overall stock market from time to time;
volatility in the market prices and trading volumes of technology stocks generally, or those in our
industry in particular;
changes in operating performance and stock market valuations of other technology companies generally,
or those in our industry in particular;
volatility in the market price of our common stock due to the limited number of shares of our common
stock held by the public;
sales of shares of our stock by us and/or our directors, executive officers, employees and stockholders;
the failure of securities analysts to maintain coverage of us, changes in financial estimates by securities
analysts who follow our company or our failure to meet these estimates or the expectations of investors;
the financial projections we may provide to the public, and any changes in those projections or our
failure to meet those projections;
announcements by us or our competitors of new brands, products or services;
the public’s reaction to our earnings releases, other public announcements and filings with the SEC;
rumors and market speculation involving us or other companies in our industry;
actual or anticipated changes in our operating results or fluctuations in our operating results;
actual or anticipated developments in our business, our competitors’ businesses or the competitive
landscape generally;
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litigation involving us, our industry or both, or investigations by regulators into our operations or those of
our competitors;
developments or disputes concerning our intellectual property or other proprietary rights;
announced or completed acquisitions of businesses or technologies by us or our competitors;
new laws or regulations or new interpretations of (or changes to) existing laws or regulations applicable
to our business;
changes in accounting standards, policies, guidelines, interpretations or principles;
any significant change in our management; and
general economic conditions and slow or negative growth in any of our significant markets.
In addition, in the past, following periods of volatility in the overall market and the market price of a
particular company’s securities, securities class action litigation has often been instituted against these companies.
We currently are, and in the future may be, the target of this type of litigation. See “Item 3—Legal Proceedings.”
Securities litigation against us could result in substantial costs and a diversion of our management’s attention and
resources.
You may experience dilution due to the issuance of additional securities in the future.
Our dilutive securities consist of vested and unvested options to purchase shares of our common stock,
restricted stock unit awards, shares of our common stock issuable to IAC as reimbursement for the cost of vested
and unvested IAC equity awards held by our employees and stock appreciation rights settled in IAC stock.
These dilutive securities are reflected in our share calculations underlying our dilutive earnings per share
calculation contained in our financial statements for fiscal years ended December 31, 2018, 2017 and 2016. For
more information, see “Note 10—Earnings per Share” to the consolidated financial statements included in “Item 8
—Consolidated Financial Statements and Supplementary Data.” Intra-quarter movements in our stock price,
could lead to more or less dilution than reflected in these calculations.
At the option of IAC, the shares Match Group issues in connection with former subsidiary equity awards,
which were converted into Match Group equity awards in 2017, will either be issued to holders of such awards or
to IAC. In the event they are issued to IAC, IAC would in turn provide the equity holders with IAC shares of
equivalent value to the Match Group shares issued to it. In cases where Match Group shares are issued directly to
equity holders, recipients may sell such stock into the open market. If sales are significant and concentrated, these
sales could have a temporary impact on the trading value of our stock.
Our quarterly results or operating metrics could fluctuate significantly, which could cause the trading price of
our common stock to decline.
Our quarterly results and operating metrics have fluctuated historically, and we expect that they could
continue to fluctuate in the future as a result of a number of factors, many of which are outside of our control and
may be difficult to predict, including:
•
•
•
•
•
•
the timing, size and effectiveness of our marketing efforts;
fluctuations in the rate at which we attract new users, the level of engagement of such users and the
propensity of such users to subscribe to our brands or to purchase à la carte features;
increases or decreases in our revenues and expenses caused by fluctuations in foreign currency exchange
rates;
the timing, size and effectiveness of non-marketing operating expenses that we may incur to grow and
expand our operations, develop new products and remain competitive;
the performance, reliability and availability of our technology, network systems and infrastructure and
data centers;
operational and financial risks we may experience in connection with historical and potential future
acquisitions and investments; and
26
•
general economic conditions in either domestic or international markets.
The occurrence of any one of these factors, as well as other factors, or the cumulative effect of the
occurrence of one or more of such factors could cause our quarterly results and operating metrics to fluctuate
significantly. As a result, quarterly comparisons of results and operating metrics may not be meaningful.
In addition, the variability and unpredictability of our quarterly results or operating metrics could result in
our failure to meet our expectations, or those of any of our investors or of analysts that cover our company, with
respect to revenues or other operating results for a particular period. If we fail to meet or exceed such
expectations for these or any other reasons, the market price of our common stock could fall substantially.
We do not expect to declare any regular cash dividends in the foreseeable future.
We paid a special cash dividend in December 2018; however, we have no current plans to pay cash
dividends on our common stock and Class B common stock. Instead, we anticipate that all of our future earnings
will be retained to support our operations and to finance the growth and development of our business. Any future
determination relating to our dividend policy will be made by our board of directors and will depend on a number
of factors, including:
•
•
•
•
•
•
•
•
our historic and projected financial condition, liquidity and results of operations;
our capital levels and needs;
tax considerations;
any acquisitions or potential acquisitions that we may consider;
statutory and regulatory prohibitions and other limitations;
the terms of any credit agreements or other borrowing arrangements that restrict our ability to pay cash
dividends, including the Match Group Credit Agreement and the indenture relating to the Match Group
Senior Notes;
general economic conditions; and
other factors deemed relevant by our board of directors.
We are not obligated to pay dividends on our common stock or Class B common stock. Consequently,
investors may need to rely on sales of their common stock after price appreciation, which may never occur, as the
only way to realize any future gains on their investment. Investors seeking regular cash dividends should not
purchase our common stock.
Provisions in our certificate of incorporation and bylaws or Delaware law may discourage, delay or prevent a
change of control of our company or changes in our management and, therefore, depress the trading price of
our common stock.
Delaware corporate law and our certificate of incorporation and bylaws contain provisions that could
discourage, delay or prevent a change in control of our company or changes in our management that the
stockholders of our company may deem advantageous, including provisions which:
•
•
•
•
authorize the issuance of “blank check” preferred stock that our board could issue to increase the number
of outstanding shares and to discourage a takeover attempt;
limit the ability of our stockholders to call special meetings of stockholders;
provide that certain litigation against us can only be brought in Delaware; and
provide that the board of directors is expressly authorized to make, alter or repeal our bylaws.
Any provision of our certificate of incorporation, our bylaws or Delaware law that has the effect of delaying
or deterring a change in control could limit the opportunity for our stockholders to receive a premium for their
shares of our common stock, and could also affect the price that some investors are willing to pay for our common
stock.
27
Item 1B. Unresolved Staff Comments
None.
Item 2. Properties
Match Group’s corporate headquarters consists of approximately 73,000 square feet of office space in
Dallas, Texas. This office space, which also houses offices for the Match and Match Affinity brands, is leased
pursuant to a lease agreement that expires on March 31, 2027. We do not own any real property.
The facilities for our various businesses, which we lease (in some cases, from IAC) both in the United States
and abroad, consist of executive and administrative offices and data centers. We lease space in five data centers:
three for our North American, Latin American and Asian operations (one in Dallas, Texas, one in Waco, Texas and
one in Vancouver, British Columbia), and two for our European operations (one in Paris, France and another in
Zaventem, Belgium).
We believe that our current facilities are adequate to meet our ongoing needs. We also believe that, if we
require additional space, we will be able to lease additional facilities on commercially reasonable terms.
Item 3. Legal Proceedings
Overview
We are, and from time to time may become, involved in various legal proceedings arising in the normal
course of our business activities, such as patent infringement claims, trademark oppositions and consumer or
advertising complaints, as well as stockholder derivative actions, class action lawsuits and other matters. The
amounts that may be recovered in such matters may be subject to insurance coverage. The litigation matters
described below involve issues or claims that may be of particular interest to our stockholders, regardless of
whether any of these matters may be material to our financial position or results of operations based upon the
standard set forth in the SEC’s rules.
Consumer Class Action Challenging Tinder’s Age-Tiered Pricing
On May 28, 2015, a putative state-wide class action was filed against Tinder in state court in California. See
Allan Candelore v. Tinder, Inc., No. BC583162 (Superior Court of California, County of Los Angeles). The
complaint principally alleged that Tinder violated California’s Unruh Civil Rights Act by offering and charging
users age 30 and over a higher price than younger users for subscriptions to its premium Tinder Plus service. The
complaint sought certification of a class of California Tinder Plus subscribers age 30 and over and damages in an
unspecified amount. On September 21, 2015, Tinder filed a demurrer seeking dismissal of the complaint. On
October 26, 2015, the court issued an opinion sustaining Tinder’s demurrer to the complaint without leave to
amend, ruling that the age-based pricing differential for Tinder Plus subscriptions did not violate California law in
essence because offering a discount to users under age 30 was neither invidious nor unreasonable in light of that
age group’s generally more limited financial means. On December 29, 2015, in accordance with its ruling, the
court entered judgment dismissing the action. On February 1, 2016, the plaintiff filed a notice of appeal from the
judgment, and the parties thereafter briefed the appeal. On January 29, 2018, the California Court of Appeal
(Second Appellate District, Division Three) issued an opinion reversing the judgment of dismissal, ruling that the
lower court had erred in sustaining Tinder’s demurrer because the complaint, as pleaded, stated a cognizable claim
for violation of the Unruh Act. Because we believe that the appellate court’s reasoning was flawed as a matter of
law and runs afoul of binding California precedent, on March 12, 2018, Tinder filed a petition with the California
Supreme Court seeking interlocutory review of the Court of Appeal’s decision. On May 9, 2018, the California
Supreme Court denied the petition. The case has been returned to the trial court for further proceedings and is
currently in discovery. We believe that the allegations in this lawsuit are without merit and will continue to defend
vigorously against it.
Bumble Claims against Match Group, LLC
On March 28, 2018, Bumble and its parent company filed a lawsuit against Match Group, LLC (“Match”) in
state court in Texas. See Bumble Trading, Inc. and Bumble Holding, Ltd. v. Match Group, LLC, No. DC-18-04140
(160th Judicial District Court of Texas, County of Dallas). The petition alleged that Match wrongfully obtained
confidential information from the plaintiffs in connection with a potential Bumble sale process and filed an
intellectual property lawsuit against Bumble in bad faith to undermine that process. The petition asserts claims for
28
tortious interference with business relationships, fraud, misappropriation of trade secrets, unfair competition,
promissory estoppel, and disparagement. The petition seeks damages in excess of $400 million and an injunction
against interference with the plaintiffs’ prospective business relationships or use of their confidential information.
On September 26, 2018, Match filed its answer and counterclaims, a notice of removal of the case to the U.S.
District Court for the Northern District of Texas, and a motion to transfer the case to the U.S. District Court for the
Western District of Texas, where Match’s intellectual property lawsuit against Bumble is pending. On October 18,
2018, Bumble filed a motion to dismiss its own petition without prejudice. On November 1, 2018, Match opposed
the motion as an attempt to circumvent the federal court’s jurisdiction and also amended its counterclaims to seek
declaratory judgments of non-liability on the claims asserted in Bumble’s petition. On November 15, 2018,
Bumble filed a motion to dismiss those counterclaims, which motion Match has opposed. On November 29,
2018, the court granted Match’s motion to transfer the case to the Western District of Texas. On January 15, 2019,
Bumble filed a motion for leave to file another petition, this one against Match and IAC/InterActiveCorp, in state
court in Dallas County. Bumble’s proposed claims are for fraud, negligent misrepresentation, unfair competition,
promissory estoppel, and interference with prospective business relations and are based upon the allegation that
Match and IAC misled Bumble in its sale process by falsely representing they would make a higher offer to
purchase Bumble. On January 22, 2019, Match filed its opposition to Bumble’s motion for leave. In response to
Match’s original intellectual property lawsuit (18-cv-80), Bumble also answered and counterclaimed on January
25, 2019. Bumble’s counterclaims ask the district court to cancel Match’s trademark registration for its SWIPE
trademark and to deny registration of a number of pending applications for which Match seeks trademark
registration. On February 15, 2019, Bumble amended those counterclaims to also seek declarations that Bumble
does not infringe the patents asserted in Match’s complaint and that those patents are invalid. We believe that the
plaintiffs’ allegations in both the pending and the proposed lawsuits are without merit and will continue to
vigorously defend against them.
Tinder Optionholder Litigation against IAC and Match Group
On August 14, 2018, ten then-current and former employees of Match Group, LLC or Tinder, Inc.
(“Tinder”), an operating business of Match Group, filed a lawsuit in New York state court against IAC and Match
Group. See Sean Rad et al. v. IAC/InterActiveCorp and Match Group, Inc., No. 654038/2018 (Supreme Court,
New York County). The complaint alleges that in 2017, the defendants: (i) wrongfully interfered with a
contractually established process for the independent valuation of Tinder by certain investment banks, resulting in
a substantial undervaluation of Tinder and a consequent underpayment to the plaintiffs upon exercise of their
Tinder stock options, and (ii) then wrongfully merged Tinder into Match Group, thereby depriving one of the
plaintiffs (Mr. Rad) of his contractual right to later valuations of Tinder on a stand-alone basis. The complaint
asserts claims for breach of contract, breach of the implied covenant of good faith and fair dealing, unjust
enrichment, interference with contractual relations (as against Match Group only), and interference with
prospective economic advantage, and seeks compensatory damages in the amount of at least $2 billion, as well as
punitive damages. On August 31, 2018, four plaintiffs who were still employed by Match Group filed a notice of
discontinuance of their claims without prejudice, leaving the six former employees as the remaining plaintiffs. On
October 9, 2018, the defendants filed a motion to dismiss the complaint on various grounds, including that the
2017 valuation of Tinder by the investment banks was an expert determination any challenge to which is both
time-barred under applicable law and available only on narrow substantive grounds that the plaintiffs have not
pleaded in their complaint. On December 17, 2018, Plaintiffs filed their opposition to the motion to dismiss. On
January 15, 2019, the defendants filed their reply brief. A hearing on the motion is scheduled for March 6, 2019,
and discovery in the case is proceeding. IAC and Match Group believe that the allegations in this lawsuit are
without merit and will continue to defend vigorously against it.
FTC Investigation of Certain Match.com Business Practices
In March 2017, the Federal Trade Commission (“FTC”) requested information and documents in connection
with a civil investigation regarding certain business practices of Match.com. In November 2018, the FTC
proposed to resolve its potential claims relating to Match.com’s marketing, chargeback and online cancellation
practices via a consent judgment mandating certain changes in the company’s business practices, as well as a
payment in the amount of $60 million. Match Group believes that the FTC’s legal challenges to Match.com’s
practices, policies, and procedures are without merit and is prepared to vigorously defend against them.
Item 4. Mine Safety Disclosure
Not applicable.
29
PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities
Market for Registrant’s Common Equity and Related Stockholder Matters
Our common stock is quoted on the Nasdaq Global Select Market (“NASDAQ”) under the ticker symbol
“MTCH.” There is no established public trading market for our Class B common stock. As of February 27, 2019,
the closing price of our common stock on NASDAQ was $55.78.
As of February 1, 2019, there were 22 holders of record of the Company’s common stock and one holder of
record of the Company’s Class B common stock. Because the substantial majority of the outstanding shares of our
common stock are held by brokers and other institutions on behalf of shareholders, we are not able to estimate the
total number of beneficial shareholders represented by these record holders.
Unregistered Sales of Equity Securities
Under the terms of the Employee Matters Agreement dated as of November 24, 2015, by and between IAC/
InterActiveCorp (“IAC”) and Match Group, Inc. (the “Company”), as amended effective as of April 13, 2016 (the
“Employee Matters Agreement”), IAC may cause certain equity awards of the Company to be settled in shares of
IAC common stock, par value $0.001 (“IAC Common Stock”) and cause the Company to reimburse IAC for the
cost of such shares of IAC Common Stock by issuing shares of Company common stock, par value $0.001
(“Company Common Stock”) to IAC. The Employee Matters Agreement also provides that the Company will
reimburse IAC for the cost of any IAC equity awards held by the Company’s employees and former employees
and that IAC may elect to receive payment either in cash or Company Common Stock.
On December 31, 2018, 94,351 shares of Company Common Stock were issued to IAC as reimbursement
for shares of IAC Common Stock issued in connection with the exercise of IAC stock options held by Match
Group employees.
On December 3, 2018 and December 31, 2018, 306,131 and 15,294 shares, respectively, of Company
Common Stock were issued to IAC as reimbursement for shares of IAC Common Stock issued in connection with
the exercise and settlement of equity shares of a subsidiary of the Company pursuant to the Employee Matters
Agreement.
The issuances of Company Common Stock described above did not involve any underwriters or public
offerings and the Company believes that such issuances were exempt from the registration requirements of the
Securities Act of 1933, as amended, pursuant to Section 4(a)(2) of such act.
Issuer Purchases of Equity Securities
The following table sets forth purchases by the Company of its common stock during the quarter ended
December 31, 2018:
Period
October 2018
November 2018
December 2018
Total
(a)
Total Number of
Shares Purchased
(b)
Average Price
Paid Per Share
369,658
670,266
$
$
— $
1,039,924
$
50.41
42.64
—
45.40
______________________
(c)
Total Number of Shares
Purchased as Part of Publicly
Announced Plans or
Programs(1)
(d)
Maximum Number of Shares
that May Yet Be Purchased
Under Publicly Announced
Plans or Programs(2)
369,658
670,266
—
1,039,924
3,617,742
2,947,476
2,947,476
2,947,476
(1) Reflects repurchases made pursuant to the 6 million share repurchase authorization previously announced
in May 2017, which has no expiration.
(2) Represents the total number of shares of common stock that remained available for repurchase pursuant
to the May 2017 repurchase authorization. The timing and actual number of any shares repurchased will
30
depend on a variety of factors, including price, general business and market conditions, and alternative
investment opportunities. The Company is not obligated to purchase any shares under the repurchase
program, and repurchases may be commenced, suspended or discontinued from time to time without
prior notice.
31
Item 6. Selected Financial Data
The selected financial data set forth in the table below as of December 31, 2018, 2017, 2016, and 2015 and
for the years then ended were derived from our audited consolidated and combined financial statements. The
selected financial data set forth in the table below as of December 31, 2014 and for the year then ended were
derived from our audited combined financial statements. This selected financial data should be read in
conjunction with the consolidated financial statements and accompanying notes included herein.
Years Ended December 31,
2018
2017
2016
2015
2014
(Dollars in thousands, except per share data)
Statement of Operations Data:
Revenue
$ 1,729,850
$ 1,330,661
$ 1,118,110
$
909,705
$
836,458
Earnings from continuing operations
472,969
355,977
178,341
Loss from discontinued operations
(378)
(5,650)
(6,328)
133,163
(12,676)
165,091
(16,732)
Net earnings attributable to Match Group, Inc.
shareholders
Earnings per share from continuing operations
attributable to Match Group, Inc.
shareholders:
Basic
Diluted
Earnings per share attributable to Match Group,
Inc. shareholders:
Basic
Diluted
Dividend declared per share
$
$
$
$
$
477,939
350,148
171,451
120,383
147,764
1.73
1.61
1.73
1.61
$
$
$
$
1.35
1.20
1.33
1.18
$
$
$
$
0.71
0.66
0.68
0.64
$
$
$
$
0.76
0.72
0.69
0.65
$
$
$
$
1.02
0.98
0.92
0.88
2.00
$
— $
— $
— $
—
December 31,
2018
2017
2016
2015
2014
(In thousands)
Balance Sheet Data:
Total assets
$ 2,053,061
$ 2,130,146
$ 2,048,678
$ 1,909,392
$ 1,302,109
Long-term debt, net including current maturities
1,515,911
1,252,696
1,176,493
1,216,871
—
Long-term debt, related party
—
—
—
—
190,586
32
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Key Terms:
Operating metrics:
•
•
•
•
•
•
•
North America - consists of the financial results and metrics associated with users located in the United
States and Canada.
International - consists of the financial results and metrics associated with users located outside of the
United States and Canada.
Direct Revenue - is revenue that is received directly from end users of our products and includes both
subscription and à la carte revenue.
Indirect Revenue - is revenue that is not received directly from an end user of our products,
substantially all of which is advertising revenue.
Subscribers - are users who purchase a subscription to one of our products. Users who purchase only à
la carte features are not included in Subscribers.
Average Subscribers - is the number of Subscribers at the end of each day in the relevant measurement
period divided by the number of calendar days in that period.
Average Revenue per Subscriber (“ARPU”) - is Direct Revenue from Subscribers in the relevant
measurement period (whether in the form of subscription or à la carte revenue) divided by the Average
Subscribers in such period and further divided by the number of calendar days in such period. Direct
Revenue from users who are not Subscribers and have purchased only à la carte features is not included
in ARPU.
Operating costs and expenses:
•
•
Cost of revenue - consists primarily of the amortization of in-app purchase fees, compensation expense
(including stock-based compensation expense) and other employee-related costs for personnel engaged
in data center and customer care functions, credit card processing fees, hosting fees, and data center
rent, energy and bandwidth costs. In-app purchase fees are monies paid to Apple and Google in
connection with the processing of in-app purchases of subscriptions and product features through the in-
app payment systems provided by Apple and Google.
Selling and marketing expense - consists primarily of advertising expenditures and compensation
expense (including stock-based compensation expense) and other employee-related costs for personnel
engaged in selling and marketing, and sales support functions. Advertising expenditures includes online
marketing, including fees paid to search engines and social media sites, offline marketing (which is
primarily television advertising), and payments to partners that direct traffic to our brands.
• General and administrative expense - consists primarily of compensation expense (including stock-
based compensation expense) and other employee-related costs for personnel engaged in executive
management, finance, legal, tax and human resources, acquisition-related contingent consideration fair
value adjustments (described below), fees for professional services (including transaction-related costs
for acquisitions) and facilities costs.
•
•
Product development expense - consists primarily of compensation expense (including stock-based
compensation expense) and other employee-related costs that are not capitalized for personnel engaged
in the design, development, testing and enhancement of product offerings and related technology.
Acquisition-related contingent consideration fair value adjustments - relate to the portion of the
purchase price of certain acquisitions that is contingent upon the future earnings performance and/or
operating metrics of the acquired company. The fair value of the liability is estimated at the date of
acquisition and adjusted each reporting period until the liability is settled. Significant changes in
forecasted earnings and/or operating metrics will result in a significantly higher or lower fair value
measurement. The changes in the estimated fair value of the contingent consideration arrangements
during each reporting period, including the accretion of the discount if the arrangement is longer than
33
one year, are recognized in “General and administrative expense” in the accompanying consolidated
statement of operations.
Long-term debt:
•
•
•
•
•
•
Credit Facility - On December 7, 2018, the Company’s $500 million revolving credit facility was
amended to, among other things, modify the leverage ratio levels in the pricing grid used to calculate the
applicable rate and extend its maturity to December 7, 2023. The Credit Facility currently bears interest
at LIBOR plus 1.50%, based on a pricing grid included in the credit agreement. At December 31, 2018,
$260 million is outstanding.
Term Loan - The Company’s seven-year term loan due November 16, 2022. The Term Loan bears
interest at LIBOR plus 2.50% and has a LIBOR floor of 0.00%. At December 31, 2018, $425 million is
outstanding.
6.75% Senior Notes - The Company’s previously outstanding 6.75% Senior Notes issued on November
16, 2015 which were redeemed in full on December 17, 2017 using the proceeds from the 5.00% Senior
Notes and cash on hand.
6.375% Senior Notes - The Company’s 6.375% Senior Notes due June 1, 2024, with interest payable
each June 1 and December 1, which were issued on June 1, 2016. The proceeds were used to prepay a
portion of the indebtedness outstanding under the Term Loan. At December 31, 2018, $400 million is
outstanding.
5.00% Senior Notes - The Company’s 5.00% Senior Notes due December 15, 2027, with interest
payable each June 15 and December 15, which were issued on December 4, 2017. The proceeds, along
with cash on hand, were used to redeem the 6.75% Senior Notes and pay the related call premium. At
December 31, 2018, $450 million is outstanding.
5.625% Senior Notes - The Company’s 5.625% Senior Notes due February 15, 2029, with interest
payable each February 15 and August 15, commencing on August 15, 2019, which were issued on
February 15, 2019. The proceeds were used to repay outstanding borrowings under our Credit Facility,
to pay expenses associated with the offering, and for general corporate purposes.
Non-GAAP financial measure:
•
Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (“Adjusted EBITDA”) -
is a Non-GAAP financial measure. See “Principles of Financial Reporting” for the definition of
Adjusted EBITDA and a reconciliation of net earnings attributable to Match Group, Inc. shareholders to
operating income and Adjusted EBITDA for the years ended December 31, 2018, 2017, and 2016.
MANAGEMENT OVERVIEW
Match Group is a leading provider of dating products available in over 40 languages to our users all over the
world through applications and websites we own and operate. We operate a portfolio of brands, including Tinder,
Match, PlentyOfFish, Meetic, OkCupid, OurTime, Pairs, and Hinge, as well as a number of other brands, each
designed to increase our users’ likelihood of finding a meaningful connection. Through our portfolio of trusted
brands, we provide tailored products to meet the varying preferences of our users.
Sources of Revenue
All our products provide the use of certain features for free, and then offer a variety of additional features to
Subscribers. Our revenue is primarily derived directly from users in the form of recurring subscription fees.
Subscription revenue is presented net of credits and credit card chargebacks. Subscribers pay in advance,
primarily by using a credit card or through mobile app stores, and, subject to certain conditions identified in our
terms and conditions, all purchases are final and nonrefundable. Fees collected, or contractually due, in advance
for subscriptions are deferred and recognized as revenue using the straight-line method over the term of the
applicable subscription period, which primarily ranges from one to six months, and corresponding mobile app
store fees incurred on such transactions, if any, are deferred and expensed over the same period. We also earn
revenue from online advertising, the purchase of à la carte features and offline events. Online advertising revenue
is recognized every time an ad is displayed. Revenue from the purchase of à la carte features is recognized based
34
on usage. Revenue and the related expenses associated with offline events are recognized when each event
occurs.
Trends affecting our business
Over the last several years, we have seen significant changes in our business. Tinder has grown from
incubation to the largest contributing brand in our portfolio and our other brands remain generally stable in the
aggregate. This in turn has allowed us to invest in or acquire brands such as Hinge and incubate new brands such
as Chispa, BLK, and Ship, where we see significant potential future growth opportunities. With our evolving
portfolio of brands, we have seen a number of significant trends in our business including the following:
Lower cost users. All of our brands rely on word-of-mouth, or free, customer acquisition to varying
degrees. Word-of-mouth acquisition is typically a function of scale (with larger communities driving greater
numbers of referrals), youthfulness (with the viral effect being more pronounced in younger populations due, in
part, to a significantly higher concentration of single people in any given social circle and the increased adoption
of social media and similar platforms among such populations) and monetization rate (with people generally more
likely to talk openly about using online dating products that are less heavily monetized). Additionally, some, but
not all, of our brands spend meaningfully on paid marketing. Accordingly, the average amount we spend to
acquire a user differs significantly across brands based in large part on each brand’s mix of paid and free
acquisition channels. As our mix has shifted toward younger users, our mix of acquisition channels has shifted
toward free channels, driving a significant decline over the past several years in the average amount we spend to
acquire a new user across our portfolio. As a percentage of revenue, our costs of acquiring Subscribers have
declined. We expect the dynamics that have led to the growth in word-of-mouth user acquisition to continue
going forward and for our brands to continue to acquire significant numbers of users through low-cost means.
Changing paid acquisition dynamics. Even as our acquisition of lower cost users increases, paid
acquisition of users remains an important driver of our business. The channels through which we market our
brands are always evolving, but we are currently in a period of rapid change as TV and video consumption
patterns evolve and internet consumption occurs regularly on mobile devices. As we adapt our paid marketing
activities to maximize user engagement with our brands, we may increase our use of paid advertising at brands
where we traditionally relied on word-of-mouth engagement to leverage these shifts in media consumption
patterns and fuel international growth. Other brands in our portfolio may reduce paid marketing activities to
reflect the change in audience engagement.
Increase in acceptance and growth of dating products globally. Similar to the recent growth in dating
product usage in North America and Western Europe, we see the potential for similar growth in the rest of the
world. As more internet-connected singles utilize online dating products and the stigma around online dating
continues to erode, we believe that there is potential for accelerating growth in the use of dating products globally.
Other factors affecting the comparability of our results
Advertising spend. Our advertising spend, which is included in our selling and marketing expense, has
consistently been our largest operating expense. Generally, we focus our advertising spend on display, mobile,
television, social media and search channels. We seek to optimize for total return on advertising spend by
frequently analyzing and adjusting this spend to focus on marketing channels and markets that generate a high
return. Our data-driven approach provides us the flexibility to scale and optimize our advertising spend. We
spend marketing dollars against an expected lifetime value of a Subscriber that is realized by us over a multi-year
period; and while this marketing is intended to be profitable on that basis, it is nearly always negative during the
period in which the expense is incurred. Accordingly, our operating results, in particular our profit measures, for a
particular period may be meaningfully impacted by the timing, size, number or effectiveness of our advertising
campaigns in that period. Additionally, advertising spend is typically higher during the first quarter of our fiscal
year, and lower during the fourth quarter. See “Seasonality” below.
Seasonality. Historically, our business has experienced seasonal fluctuations in quarterly operating results,
particularly with respect to our profit measurements. This is driven primarily by a higher concentration of
advertising spend in the first quarter, when advertising prices are lowest and demand for our products is highest,
and a lower concentration of advertising spend in the fourth quarter, when advertising costs are highest and
demand for our products is lowest.
35
International markets. Our products are available across the world. Our international revenue represented
50% and 46% of our total revenue for the years ended December 31, 2018 and 2017, respectively. We vary our
pricing to align with local market conditions and our international businesses typically earn revenue in local
currencies. As foreign currency exchange rates change, translation of the statement of operations of our
international businesses into U.S. dollars affects year-over-year comparability of operating results.
2018 Developments
On December 7, 2018, we amended the Company’s credit agreement to extend the maturity date of the
Credit Facility to December 7, 2023 and modify the leverage ratio levels in the pricing grid used to calculate the
applicable interest rate under the Credit Facility.
On December 19, 2018, we paid a special dividend of $2.00 per share on Match Group common stock and
Class B common stock, to stockholders of record as of the close of business on December 5, 2018, in the
aggregate amount equal to $556.4 million, which was funded with cash on hand and borrowings under the Credit
Facility.
2018 Consolidated Results
In 2018, revenue, operating income and Adjusted EBITDA grew 30%, 53% and 39%, respectively. Revenue
growth was primarily due to strong growth at Tinder and additional contributions from certain other brands. The
growth in operating income and Adjusted EBITDA was due to higher revenue and lower selling and marketing
expense as a percentage of revenue due to the continued product mix shift toward brands with lower marketing
spend as a percentage of revenue, partially offset by an increase in cost of revenue expense primarily due to higher
in-app purchase fees as a result of growing revenue from mobile app stores.
36
Results of Operations for the years ended December 31, 2018, 2017 and 2016
Revenue
Direct Revenue:
2018
$ Change
% Change
2017
$ Change
% Change
2016
(Amounts in thousands, except ARPU)
Years Ended December 31,
North America
$
902,478
$
161,144
International
774,693
Total Direct Revenue
1,677,171
Indirect Revenue
52,679
234,778
395,922
3,267
Total Revenue
$ 1,729,850
$
399,189
22%
43%
31%
7%
30%
$
741,334
$
67,390
539,915
1,281,249
146,495
213,885
49,412
(1,334)
$ 1,330,661
$
212,551
10%
37%
20%
(3)%
19%
$
673,944
393,420
1,067,364
50,746
$ 1,118,110
Direct Revenue
Tinder
Other brands
$
805,316
$
402,100
871,855
(6,178)
Total Direct Revenue
$ 1,677,171
$
395,922
Percentage of Total Revenue:
Direct Revenue:
North America
International
Total Direct Revenue
Indirect Revenue
Total Revenue
Average Subscribers:
North America
International
Total
52%
45%
97%
3%
100%
4,161
3,712
7,873
592
873
1,465
(Change calculated using non-rounded numbers)
ARPU:
North America
International
Total
$
$
$
0.59
0.56
0.57
$
0.03
100%
(1)%
31%
$
403,216
$
234,694
878,033
(20,809)
$ 1,281,249
$
213,885
139%
(2)%
20%
$
168,522
898,842
$ 1,067,364
56%
40%
96%
4%
100%
17%
31%
23%
4%
10%
6%
3,569
2,839
6,408
301
699
1,000
$
$
$
0.56
0.51
0.54
$
—
9%
33%
18%
—%
3%
1%
60%
35%
95%
5%
100%
3,268
2,140
5,408
$
$
$
0.56
0.50
0.54
For the year ended December 31, 2018 compared to the year ended December 31, 2017
International Direct Revenue grew $234.8 million, or 43%, in 2018 versus 2017, driven by 31% growth in
Average Subscribers, and a 10% increase in ARPU. North America Direct Revenue grew $161.1 million, or 22%,
in 2018 versus 2017, driven by 17% growth in Average Subscribers, and a 4% increase in ARPU.
Growth in International and North America Average Subscribers was primarily driven by Tinder.
International and North America ARPU increased primarily due to increases in ARPU at Tinder as Subscribers
purchased premium subscriptions, such as Tinder Gold, as well as additional à la carte features.
Indirect Revenue increased $3.3 million primarily due to increased advertising revenue at Tinder, partially
offset by lower impressions at brands excluding Tinder.
37
For the year ended December 31, 2017 compared to the year ended December 31, 2016
North America Direct Revenue grew $67.4 million, or 10%, in 2017 versus 2016, driven by 9% growth in
Average Subscribers. International Direct Revenue grew $146.5 million, or 37%, in 2017 versus 2016, driven by
33% growth in Average Subscribers and a 3% increase in ARPU.
Growth in North America Average Subscribers was primarily due to Tinder, partially offset by declines at
our Match Affinity brands as marketing spend was reduced to better align with the expected lifetime value of a
Subscriber. North America ARPU was flat as the continuing mix shift towards lower ARPU brands with lower
price points compared to most of our other brands, was offset by increases in ARPU at Tinder and PlentyOfFish,
as these brands are offering premium and multi-tiered subscriptions, such as Tinder Gold.
Growth in International Average Subscribers was primarily due to Tinder and additional contributions from
Pairs. Growth in International ARPU was primarily due to rate increases at Tinder and Meetic, partially offset by
the continued mix shift towards lower ARPU brands.
Cost of revenue (exclusive of depreciation)
Years Ended December 31,
2018
$ Change % Change
$ Change % Change
Cost of revenue
Percentage of revenue
$410,000
24%
$130,501
47%
2017
(Dollars in thousands)
$279,499
21%
$83,851
43%
2016
$195,648
17%
For the year ended December 31, 2018 compared to the year ended December 31, 2017
Cost of revenue increased due primarily to an increase in in-app purchase fees of $123.8 million as our
revenues are increasingly sourced through mobile app stores.
For the year ended December 31, 2017 compared to the year ended December 31, 2016
Cost of revenue increased, outpacing revenue growth, primarily due to an increase in in-app purchase fees of
$75.4 million and an increase in hosting fees of $5.9 million, both as a result of growth at Tinder.
Selling and marketing expense
2018
$ Change % Change
2017
$ Change % Change
2016
Years Ended December 31,
(Dollars in thousands)
Selling and marketing
expense
Percentage of revenue
$419,954
24%
$44,344
12%
$375,610
28%
$26,491
8%
$349,119
31%
For the year ended December 31, 2018 compared to the year ended December 31, 2017
Selling and marketing expense increased in total but declined as a percentage of revenue. The increase in
selling and marketing expense is primarily due to $45.6 million of increased marketing expense as a result of
marketing initiatives at Tinder, Pairs, PlentyOfFish, OkCupid, and Meetic and the acquisition of Hinge, partially
offset by lower offline marketing spend at Match and Match Affinity brands.
For the year ended December 31, 2017 compared to the year ended December 31, 2016
Selling and marketing expense increased with the growth in the business but continued to decline as a
percentage of revenue. The increase in total selling and marketing expense is primarily due to an increase of $15.3
million in marketing spend primarily at Tinder related to strategic investments in certain international markets and
increased marketing related to the launch of a new brand in Europe, partially offset by a reduction in marketing
spend at our Match Affinity brands. Additionally, compensation increased $9.1 million primarily related to
increased headcount at Tinder and the employer portion of payroll taxes paid upon the exercise of Match Group
options. The decline as a percentage of revenue is due to a continued shift towards brands with lower marketing
spend as a percentage of revenue and reductions in marketing spend at our Match Affinity brands.
38
General and administrative expense
2018
$ Change % Change
2017
$ Change % Change
2016
Years Ended December 31,
(Dollars in thousands)
General and
administrative expense
Percentage of revenue
$180,286
10%
$482
—%
$179,804
14%
$44,785
33%
$135,019
12%
For the year ended December 31, 2018 compared to the year ended December 31, 2017
General and administrative expense increased, driven primarily by an increase of $6.9 million in
compensation expense, excluding stock-based compensation expense, primarily due to an increase in headcount,
an increase in professional fees of $3.7 million primarily related to increased litigation costs, and an increase in
other miscellaneous expenses of $5.9 million. Partially offsetting these increases is a decrease of $10.5 million in
stock-based compensation expense due primarily to a decrease in expense related to a subsidiary denominated
equity award issued to a non-employee (which was settled in 2017) and a decrease in acquisition-related
contingent consideration expense of $4.9 million.
For the year ended December 31, 2017 compared to the year ended December 31, 2016
General and administrative expense increased, driven primarily by an increase of $20.6 million in
compensation, an increase of $14.5 million in acquisition-related contingent consideration fair value adjustments
(expense of $5.3 million in 2017 versus income of $9.2 million in 2016) and an increase of $6.8 million in
professional fees in 2017 primarily related to the settlement of the Tinder equity plan. The increase in
compensation expense is due to a $9.1 million increase in stock-based compensation expense primarily related to
a subsidiary denominated equity award held by a non-employee, which was settled in the third quarter of 2017,
the employer portion of payroll taxes paid upon the exercise of Match Group options and an increase in headcount
from business growth.
Product development expense
2018
$ Change
% Change
2017
$ Change
% Change
2016
Years Ended December 31,
(Dollars in thousands)
Product development
expense
Percentage of revenue
$132,030
8%
$30,880
31%
$101,150
8%
$23,033
29%
$78,117
7%
For the year ended December 31, 2018 compared to the year ended December 31, 2017
Product development expense increased, driven primarily by an increase of $28.8 million in compensation
expense primarily related to higher headcount at Tinder.
For the year ended December 31, 2017 compared to the year ended December 31, 2016
Product development expense increased, driven primarily by an increase of $20.7 million in compensation
expense, of which $14.4 million relates primarily to 1) higher headcount and 2) the employer portion of payroll
taxes paid upon the exercise of Match Group options and $6.3 million of stock-based compensation expense due
primarily to new grants issued since 2016.
39
Depreciation
2018
$ Change
% Change
2017
$ Change
% Change
2016
Depreciation
Percentage of revenue
$32,968
2%
$355
1%
(Dollars in thousands)
$32,613
2%
$4,887
18%
$27,726
2%
Years Ended December 31,
For the year ended December 31, 2018 compared to the year ended December 31, 2017
Depreciation was relatively flat during the period increasing $0.4 million, or 1%.
For the year ended December 31, 2017 compared to the year ended December 31, 2016
Depreciation increased $4.9 million, or 18%, driven by an increase in computer hardware, internally
developed software and leasehold improvements.
Operating Income and Adjusted EBITDA
2018
$ Change
% Change
2017
$ Change
% Change
2016
Years Ended December 31,
Operating income
Percentage of revenue
$553,294
32%
$192,777
53%
(Dollars in thousands)
$360,517
27%
$44,968
14%
Adjusted EBITDA
Percentage of revenue
$653,931
38%
$184,990
39%
$468,941
35%
$65,561
16%
$315,549
28%
$403,380
36%
For a reconciliation of net earnings attributable to Match Group, Inc. shareholders to operating income and
Adjusted EBITDA, see “Principles of Financial Reporting.”
For the year ended December 31, 2018 compared to the year ended December 31, 2017
Operating income and Adjusted EBITDA increased $192.8 million, or 53%, and $185.0 million, or 39%,
respectively, primarily as a result of the increase in revenue of $399.2 million and lower selling and marketing
expense as a percentage of revenue due to the ongoing product mix shift toward brands with lower marketing
spend as a percentage of revenue and a reduction in marketing spend at our Match Affinity brands, partially offset
by an increase in cost of revenue primarily due to higher in-app purchase fees. Operating income was further
impacted by lower stock-based compensation expense as a percentage of revenue resulting in increased growth
compared to Adjusted EBITDA.
At December 31, 2018, there was $119.3 million of unrecognized compensation cost, net of estimated
forfeitures, related to all equity-based awards, which is expected to be recognized over a weighted average period
of approximately 2.4 years.
For the year ended December 31, 2017 compared to the year ended December 31, 2016
Operating income and Adjusted EBITDA increased $45.0 million, or 14%, and $65.6 million, or 16%,
respectively, primarily as a result of the increase in revenue of $212.6 million and lower selling and marketing
expense as a percentage of revenue due to the ongoing product mix shift toward brands with lower marketing
spend as a percentage of revenue and a reduction in marketing spend at our Match Affinity brands, partially offset
by an increase in cost of revenue primarily due to higher in-app purchase fees. Operating income was further
impacted by an increase in stock-based compensation expense of $16.7 million, an increase in acquisition-related
contingent consideration fair value adjustments of $14.5 million, and an increase in depreciation of $4.9 million
due to growth in our business, partially offset by a $15.5 million decrease in amortization of intangibles as a
significant portion of our scheduled amortization from the acquisition of PlentyOfFish concluded at the end of
2016.
40
Interest expense
2018
$ Change
% Change
2017
$ Change
% Change
2016
Years Ended December 31,
(Dollars in thousands)
Interest expense
$73,417
$(4,148)
(5)%
$77,565
$(4,634)
(6)%
$82,199
For the year ended December 31, 2018 compared to the year ended December 31, 2017
Interest expense decreased primarily due to the issuance of the 5.00% Senior Notes which replaced the
6.75% Senior Notes, partially offset by an increase in the weighted average interest rate of the Term Loan and an
increase in the outstanding balance of the Term Loan beginning with the third quarter of 2017.
For the year ended December 31, 2017 compared to the year ended December 31, 2016
Interest expense decreased primarily due to the reduction of the average outstanding balance in the Term
Loan and the December 2016 and August 2017 repricings of the Term Loan, which reduced the contractual
interest rates, partially offset by the issuance of the 6.375% Senior Notes in June 2016, which replaced a
corresponding amount outstanding on the Term Loan with debt at a higher interest rate.
Other income (expense), net
2018
$ Change
% Change
2017
$ Change
% Change
2016
Years Ended December 31,
(Dollars in thousands)
$7,765
$38,592
NM
$(30,827)
$(38,693)
NM
$7,866
Other income
(expense), net
________________________
NM = not meaningful
Other income, net, in 2018 includes $5.3 million in net foreign currency exchange gains due primarily to a
strengthening of the U.S. dollar relative to the British Pound in the period and $4.9 million of interest income,
partially offset by impairments of certain equity investments of $2.1 million and $0.7 million of expense related to
a mark-to-market adjustment pertaining to a subsidiary denominated equity instrument.
Other expense, net, in 2017 includes expenses of $15.4 million related to the extinguishment of our 6.75%
Senior Notes and repricing of the Term Loan, $13.0 million related to a mark-to-market adjustment pertaining to a
subsidiary denominated equity award held by a non-employee, $10.3 million in net foreign currency exchange
losses primarily due to the strengthening of the British Pound relative to the dollar, and a $2.3 million other-than-
temporary impairment charge related to a cost method investment resulting from our assessment of the near-term
prospects and financial condition of the investee. These expenses were partially offset by a gain on the sale of a
cost method investment of $9.1 million.
Other income, net in 2016 includes $20.0 million in foreign currency exchange gains due to strengthening of
the dollar relative to the British Pound and Euro and a $3.1 million gain related to the sale of a marketable equity
security, partially offset by a non-cash charge of $12.1 million related to the write-off of a proportionate share of
original issue discount and deferred financing costs associated with prepayments of $440 million of the Term
Loan, $2.1 million of expense related to mark-to-market adjustment pertaining to a subsidiary denominated equity
award held by a non-employee, $1.5 million repricing fees related to the Term Loan, and a $0.7 million other-
than-temporary impairment charge related to a certain cost method investment.
41
Income tax (provision) benefit
2018
$ Change
% Change
2017
$ Change
% Change
2016
Years Ended December 31,
(Dollars in thousands)
Income tax
(provision) benefit
$(14,673)
$(118,525)
NM
$103,852
$166,727
NM
$(62,875)
Effective income tax
rate
3%
NM
26%
For discussion of income taxes, see “Note 3—Income Taxes” to the consolidated financial statements
included in “Item 8—Consolidated Financial Statements and Supplementary Data.”
For the year ended December 31, 2018, the Company recorded an income tax provision of $14.7 million,
which represents an effective tax rate of 3%, which is lower than the statutory rate of 21% due primarily to excess
tax benefits generated by the exercise and vesting of stock-based awards.
In 2017, the Company recorded an income tax benefit of $103.9 million, which was due primarily to the
effect of adopting the provisions of the Financial Accounting Standards Board issued Accounting Standards
Update (“ASU”) No. 2016-09, Compensation-Stock Compensation (Topic 718): Improvements to Employee
Share-Based Payment Accounting, on January 1, 2017, partially offset by the effect of the Tax Cuts and Jobs Act
(“Tax Act”) discussed below. Under ASU No. 2016-09, excess tax benefits generated by the exercise, purchase or
settlement of stock-based awards of $279.7 million in 2017 are recognized as a reduction to the income tax
provision rather than additional paid-in capital.
The Tax Act, enacted on December 22, 2017, subjected to U.S. taxation certain previously deferred earnings
of foreign subsidiaries as of December 31, 2017 (“Transition Tax”) and implemented a number of changes that
took effect on January 1, 2018, including but not limited to, a reduction of the U.S. federal corporate tax rate from
35% to 21% and a new minimum tax on global intangible low-taxed income (“GILTI”) earned by foreign
subsidiaries. The Company was able to make a reasonable estimate of the Transition Tax and recorded a
provisional tax expense in the fourth quarter of 2017. In 2018, the Company finalized this calculation, which
resulted in a $3.2 million reduction in the Transition Tax. The net reduction in the Transition Tax was due
primarily to the utilization of additional foreign tax credits, partially offset by additional taxable earnings and
profits of our foreign subsidiaries based on IRS guidance. The adjustment of the Company’s provisional tax
expense was recorded as a change in estimate in accordance with Staff Accounting Bulletin No. 118, Income Tax
Accounting Implications of the Tax Cuts and Jobs Act, which was also included in ASU No. 2018-05, Income
Taxes (Topic 740), Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 118 (“SAB
118”), which was adopted by the Company upon issuance in March 2018. Despite the completion of the
Company’s accounting for the Tax Act under SAB 118, many aspects of the law remain unclear and we expect
ongoing guidance to be issued at both the federal and state levels. We will continue to monitor and assess the
impact of any new developments.
For the year ended December 31, 2016, the Company recorded an income tax provision of $62.9 million,
which represents an effective income tax rate of 26%, which was lower than the statutory rate of 35% due
primarily to foreign income taxed at lower rates, including non-taxable foreign currency exchange gains, and a
reduction in deferred tax liabilities for a foreign tax law change.
Related party transactions
For discussion of related party transactions, see “Note 15—Related Party Transactions” to the consolidated
financial statements included in “Item 8—Consolidated Financial Statements and Supplementary Data.”
42
PRINCIPLES OF FINANCIAL REPORTING
Match Group reports Adjusted EBITDA, which is a supplemental measure to U.S. generally accepted
accounting principles (“GAAP”). Adjusted EBITDA is among the primary metrics by which we evaluate the
performance of our business, on which our internal budget is based and by which management is compensated.
We believe that investors should have access to, and we are obligated to provide, the same set of tools that we use
in analyzing our results. This non-GAAP measure should be considered in addition to results prepared in
accordance with GAAP, but should not be considered a substitute for or superior to GAAP results. Match Group
endeavors to compensate for the limitations of the non-GAAP measure presented by providing the comparable
GAAP measure with equal or greater prominence to and descriptions of the reconciling items, including
quantifying such items, to derive the non-GAAP measure. We encourage investors to examine the reconciling
adjustments between the GAAP and non-GAAP measure, which we discuss below.
Adjusted EBITDA
Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (“Adjusted EBITDA”) is defined
as operating income excluding: (1) stock-based compensation expense; (2) depreciation; and (3) acquisition-
related items consisting of (i) amortization of intangible assets and impairments of goodwill and intangible assets,
if applicable, and (ii) gains and losses recognized on changes in the fair value of contingent consideration
arrangements. We believe this measure is useful for analysts and investors as this measure allows a more
meaningful comparison between our performance and that of our competitors. The above items are excluded from
our Adjusted EBITDA measure because they are non-cash in nature. Adjusted EBITDA has certain limitations in
that it does not take into account the impact to our consolidated statement of operations of certain expenses.
Non-Cash Expenses That Are Excluded From Non-GAAP Measure
Stock-based compensation expense consists principally of expense associated with the grants of stock
options, restricted stock units (“RSUs”), performance-based RSUs and market-based awards. These expenses are
not paid in cash, and we include the related shares in our fully diluted shares outstanding using the treasury stock
method. Performance-based RSUs and market-based awards are included only to the extent the applicable
performance or market condition(s) have been met (assuming the end of the reporting period is the end of the
contingency period). To the extent that stock-based awards are settled on a net basis, the Company remits the
required tax-withholding amounts in cash from its current funds. Certain awards provide the employee the option
to pay the applicable strike price and withholding taxes or to allow for the award to be net settled.
Depreciation is a non-cash expense relating to our property and equipment and is computed using the
straight-line method to allocate the cost of depreciable assets to operations over their estimated useful lives, or, in
the case of leasehold improvements, the lease term, if shorter.
Amortization of intangible assets and impairments of goodwill and intangible assets are non-cash expenses.
At the time of acquisition, identifiable definite-lived intangible assets, such as customer lists, trade names, and
technology are valued and amortized over their estimated lives. Value is also assigned to acquired indefinite-lived
intangible assets, which comprise trade names and trademarks, and, in the case of an acquired company, goodwill,
all of which are not subject to amortization. An impairment is recorded when the carrying value of an intangible
asset or goodwill exceeds its fair value. We believe that intangible assets represent costs incurred by the acquired
company to build value prior to its acquisition and the related amortization and impairment charges of intangible
assets or goodwill, if applicable, are not ongoing costs of doing business.
Acquisition-related gains and losses recognized on changes in the fair value of contingent consideration
arrangements are accounting adjustments to report contingent consideration liabilities at fair value. These
adjustments can be highly variable and are excluded from our assessment of performance because they are
considered non-operational in nature and, therefore, are not indicative of current or future performance or the
ongoing cost of doing business.
43
The following table reconciles net earnings attributable to Match Group, Inc. shareholders to operating
income and Adjusted EBITDA:
Net earnings attributable to Match Group, Inc.
shareholders
Add back:
Net (loss) earnings attributable to noncontrolling interests
Loss from discontinued operations, net of tax
Income tax provision (benefit)
Other (income) expense, net
Interest expense
Operating Income
Stock-based compensation expense
Depreciation
Amortization of intangibles
Years Ended December 31,
2018
2017
2016
(In thousands)
$
477,939
$
350,148
$
171,451
(5,348)
378
14,673
(7,765)
73,417
553,294
66,031
32,968
1,318
179
5,650
(103,852)
30,827
77,565
360,517
69,090
32,613
1,468
562
6,328
62,875
(7,866)
82,199
315,549
52,370
27,726
16,932
(9,197)
403,380
Acquisition-related contingent consideration fair value
adjustments
Adjusted EBITDA
320
5,253
$
653,931
$
468,941
$
44
FINANCIAL POSITION, LIQUIDITY AND CAPITAL RESOURCES
Financial Position
Cash and cash equivalents:
United States
All other countries (a)
Total cash and cash equivalents
Long-term debt, net:
Credit Facility due December 7, 2023
Term Loan due November 16, 2022
6.375% Senior Notes
5.00% Senior Notes
Total long-term debt
Less: unamortized original issue discount and original issue premium, net
Less: unamortized debt issuance costs
Total long-term debt, net
______________________
$
$
$
December 31,
2018
December 31,
2017
(In thousands)
83,851
103,096
186,947
$
$
203,452
69,172
272,624
260,000
$
—
425,000
400,000
450,000
1,535,000
7,352
11,737
425,000
400,000
450,000
1,275,000
8,668
13,636
$
1,515,911
$
1,252,696
(a) At December 31, 2018, all of the Company’s international cash can be repatriated without significant tax
consequences. During the year ended December 31, 2018, foreign cash of $25.2 million was repatriated
to the U.S.
Senior Notes:
On December 4, 2017, we issued $450 million of 5.00% Senior Notes due December 15, 2027. The notes
were issued at 99.027% of par. The proceeds, along with cash on hand, were used to redeem the 6.75% Senior
Notes and pay the related call premium.
On June 1, 2016, we issued $400 million aggregate principal amount of 6.375% Senior Notes due June 1,
2024. The proceeds were used to prepay a portion of indebtedness outstanding under the Term Loan.
The indentures governing the 5.00% and 6.375% Senior Notes contain covenants that would limit the
Company’s ability to pay dividends or to make distributions and repurchase or redeem Match Group stock in the
event a default has occurred or Match Group’s leverage ratio (as defined in the indentures) exceeds 5.0 to 1.0. As
of December 31, 2018, Match Group was in compliance with all applicable covenants and was below the 5.0 to
1.0 leverage ratio.
Term Loan and Credit Facility:
On November 16, 2015, the Company entered into a credit agreement (the “Credit Agreement”) under which
the Company has a Term Loan. At both December 31, 2018 and 2017, the outstanding balance on the Term Loan
was $425 million. The Term Loan bears interest at LIBOR plus 2.50% and includes a LIBOR floor of 0.00%.
The interest rate at December 31, 2018 and 2017 was 5.09% and 3.85%, respectively. Interest payments are due
at least quarterly through the term of the loan. The Term Loan provides for additional annual principal payments
as part of an excess cash flow sweep provision, the amount of which, if any, is governed by the secured net
leverage ratio set forth in the Credit Agreement.
Additionally, the Company has a $500 million revolving credit facility. On December 7, 2018, the
Company amended the Credit Facility to extend the maturity to December 7, 2023 and modify the pricing grid
used to calculate the applicable interest rate for revolving loans. At December 31, 2018, the outstanding balance
45
was $260 million. At December 31, 2017, there were no outstanding borrowings under the Credit Facility.
Borrowings under the Credit Facility bear interest, at the Company’s option, at a base rate or LIBOR, in each case
plus an applicable margin, which is determined by reference to a pricing grid based on the Company’s
consolidated net leverage ratio. At December 31, 2018, borrowings under the Credit Facility bear interest at
LIBOR plus 1.50%. The weighted average interest rate at December 31, 2018 is 3.97%. The annual commitment
fee on undrawn funds based on the current leverage ratio is 25 basis points. The terms of the Credit Facility
require the Company to maintain a consolidated net leverage ratio of not more than 5.0 to 1.0 and a minimum
interest coverage ratio of not less than 2.0 to 1.0 (in each case as defined in the Credit Agreement). Borrowings
under the Credit Facility were repaid with proceeds from the 5.625% Senior Notes issued on February 15, 2019.
There are additional covenants under the Credit Facility and the Term Loan that limit the ability of the
Company and its subsidiaries to, among other things, incur indebtedness, pay dividends or make distributions.
While the Term Loan remains outstanding, these same covenants under the Credit Agreement are more restrictive
than the covenants that are applicable to the Credit Facility. Obligations under the Credit Facility and Term Loan
are unconditionally guaranteed by certain Match Group wholly-owned domestic subsidiaries and are secured by
the stock of certain Match Group domestic and foreign subsidiaries. The Term Loan and outstanding borrowings
under the Credit Facility rank equally with each other and have priority over the 5.00% and 6.375% Senior Notes
to the extent of the value of the assets securing the borrowings under the Credit Agreement.
IAC Subordinated Loan Facility:
The Company has an uncommitted subordinated loan facility with IAC (the “IAC Subordinated Loan
Facility”), which allows the Company to make one or more requests to IAC to borrow funds from it. If IAC
agrees to fulfill any such borrowing request from the Company, such borrowing will be incurred in accordance
with the terms of the IAC Subordinated Loan Facility. Any indebtedness outstanding under the IAC Subordinated
Loan Facility will be by its terms subordinated in right of payment to the obligations under the Credit Facility, the
Term Loan and the 5.00% and 6.375% Senior Notes. The IAC Subordinated Loan Facility has a scheduled final
maturity date of no earlier than 90 days after the maturity date of the Credit Facility or the latest maturity date in
respect of any Term Loan outstanding under the Credit Agreement. At December 31, 2018, the Company has no
indebtedness outstanding under the IAC Subordinated Loan Facility.
Cash Flow Information
In summary, the Company’s cash flows are as follows:
Net cash provided by operating activities attributable to continuing
operations
Net cash (used in) provided by investing activities attributable to
continuing operations
Net cash used in financing activities attributable to continuing
operations
2018
Years ended December 31,
2018
2017
2016
(In thousands)
$
603,455
$
321,108
$
259,549
(37,761)
118,188
(27,199)
(649,555)
(423,714)
(61,194)
Net cash provided by operating activities attributable to continuing operations in 2018 includes adjustments
to earnings consisting primarily of $66.0 million of stock-based compensation expense, $33.0 million of
depreciation, and $1.3 million of amortization of intangibles. Partially offsetting these adjustments was deferred
income tax of $19.6 million primarily related to an increase in tax credit carryforwards, partially offset by the
utilization of net operating losses. The increase in cash from changes in working capital primarily consists of an
increase in accounts payable and accrued expenses and other current liabilities of $20.8 million due to the timing
of payments; a decrease in accounts receivable of $17.3 million primarily related to an accelerated cash receipt
from a mobile app store provider; an increase in deferred revenue of $13.1 million, due mainly to growth in
subscription sales; and an increase from income taxes payable and receivable of $12.8 million due primarily to the
timing of tax payments. These increases in cash were partially offset by an increase in other assets of $14.6
million primarily related to an increase in capitalized mobile app fees.
46
Net cash used in investing activities attributable to continuing operations in 2018 consists primarily of
capital expenditures of $31.0 million that are primarily related to computer hardware and internal development of
software to support our products and services and purchases of investments of $3.8 million, partially offset by net
cash acquired in a business combination of $1.1 million.
Net cash used in financing activities attributable to continuing operations in 2018 is primarily due to a cash
dividend payment of $556.4 million, withholding taxes paid on behalf of employees for net settled stock awards
of $207.7 million, purchases of treasury stock of $133.5 million, purchases of non-controlling interests of $10.0
million, and debt issuance costs of $1.3 million. Partially offsetting these payments were proceeds of $260
million from a draw on the Credit Facility.
2017
Net cash provided by operating activities attributable to continuing operations in 2017 includes adjustments
to earnings consisting primarily of deferred income tax benefits of $118.3 million primarily related to the net
operating loss created by tax deductions created from stock-based awards. Partially offsetting this adjustment was
$69.1 million of stock-based compensation expense, $32.6 million of depreciation, $5.3 million of acquisition-
related contingent consideration fair value adjustments, $1.5 million of amortization of intangibles, and $22.1
million in other adjustments that consist primarily of non-cash loss on extinguishment of debt of $15.4 million,
net foreign currency losses of $9.0 million, non-cash interest expenses of $4.1 million, and a non-cash other-than-
temporary impairment on a cost method investment of $2.3 million, partially offset by a gain on the sale of a cost
method investment of $9.1 million. The decrease in cash from changes in working capital primarily consists of
increases in accounts receivable of $51.6 million primarily related to timing of cash receipts and revenue
increasingly sourced through mobile app stores, which are settled with the Company more slowly than traditional
credit cards; a decrease in accounts payable and accrued expenses and other current liabilities of $16.8 million,
due primarily to the cash settlement of a former subsidiary denominated equity award held by a non-employee;
and decreases in cash from other assets of $10.6 million primarily related to the prepayment of certain expenses.
These uses of cash were partially offset by an increase in deferred revenue of $32.8 million, due mainly to growth
in subscription sales.
Net cash provided by investing activities attributable to continuing operations in 2017 consists primarily of
net proceeds of $96.1 million from the sale of a business and net proceeds of $60.2 million from the sale of a cost
method investment, partially offset by capital expenditures of $28.8 million that are primarily related to
development of capitalized software to support our products and services and the purchase of investments of $9.1
million.
Net cash used in financing activities attributable to continuing operations in 2017 is primarily due to cash
payments of $272.5 million for the purchase of certain fully vested stock-based awards, $254.2 million for
withholding taxes paid on behalf of employees for net settled stock awards, a $23.4 million payment related to an
acquisition-related contingent consideration agreement, and debt issuance costs of $12.3 million. Offsetting these
payments were proceeds of $75.0 million from the increase in the Term Loan; proceeds from the issuance of
common stock pursuant to stock-based awards of $59.4 million; and net Senior Notes increase of $4.8 million as
$445.2 million of 6.75% Senior Notes were redeemed with the proceeds from the issuance of $450.0 million of
5.00% Senior Notes.
2016
Net cash provided by operating activities attributable to continuing operations in 2016 includes adjustments
to earnings consisting primarily of $52.4 million of stock-based compensation expense, $27.7 million of
depreciation, $16.9 million of amortization of intangibles, $9.2 million in gains from acquisition-related
contingent consideration fair value adjustments and $4.8 million in other adjustments that consist primarily of a
non-cash charge on the prepayment of $400 million of the Term Loan, partially offset by foreign currency
exchange gains on intercompany loans. The increase in cash from changes in working capital primarily consists of
an increase in deferred revenue of $19.2 million, due mainly to growth in subscription revenue, and an increase of
the income tax payable as accruals exceeded payments, partially offset by an increase from accounts receivable
and a decrease in accounts payable and accrued expenses and other current liabilities.
Net cash used in investing activities attributable to continuing operations in 2016 consists primarily of
capital expenditures of $46.1 million that are related to the development of software capitalized to support our
47
products and services, as well as computer equipment and leasehold improvements as we continue to grow and
expand our operations, partially offset by the proceeds of $11.7 million from the sale of a marketable security.
Net cash used in financing activities attributable to continuing operations in 2016 mainly relates to the
prepayment of $450.0 million of the Term Loan, of which $400.0 million was financed by the issuance of the
6.375% Senior Notes.
Liquidity and Capital Resources
The Company’s principal sources of liquidity are its cash flows generated from operations as well as cash
and cash equivalents. The Company has a $500 million Credit Facility that expires on December 7, 2023. At
December 31, 2018, there were outstanding borrowings of $260 million under the Credit Facility. Borrowings
under the Credit Facility were repaid with proceeds from the 5.625% Senior Notes issued on February 15, 2019.
The Company anticipates that it will need to make capital and other expenditures in connection with the
development and expansion of its operations. The Company expects that 2019 capital expenditures will be
between $35 million and $40 million, an increase from 2018 capital expenditures primarily related to additional
leasehold improvements as Tinder expands office space.
The Company believes its expected positive cash flows generated from operations together with its existing
cash and cash equivalents and available borrowing capacity under the Credit Facility will be sufficient to fund its
normal operating requirements, including the payment of withholding taxes on behalf of employees for net-settled
equity plans, capital expenditures, debt service, investing, and other commitments for the foreseeable future. The
Company’s liquidity could be negatively affected by a decrease in demand for our products and services.
On November 6, 2018, the Board of Directors declared a special dividend of $2.00 per share on Match
Group common stock and Class B common stock, which was paid on December 19, 2018, to stockholders of
record as of the close of business on December 5, 2018. The total amount of the dividend was $556.4 million.
The special dividend was funded with cash on hand and borrowings under the Credit Facility.
In May 2017, the Board of Directors of the Company authorized Match Group to repurchase up to 6 million
shares of its common stock. The timing and actual number of any shares repurchased will depend on a variety of
factors, including price, general business and market conditions, and alternative investment opportunities. The
Company is not obligated to purchase any shares under the repurchase program, and repurchases may be
commenced, suspended or discontinued from time to time without prior notice. We purchased 3.1 million shares
related to this repurchase authorization through December 31, 2018 for $133.5 million. A total of 2.9 million
shares remain available for repurchase.
The Company settles substantially all equity awards on a net basis. Assuming all equity awards outstanding
on February 1, 2019 were net settled, we would issue 10.2 million common shares (of which 2.0 million are
related to vested shares and 8.1 million are related to unvested shares) and, assuming a 50% withholding rate,
would remit $556.2 million in cash for withholding taxes (of which $110.7 million is related to vested shares and
$445.4 million is related to unvested shares). If we decided to issue a sufficient number of shares to cover the
$556.2 million employee withholding tax obligation, 10.2 million additional shares would be issued by the
Company.
The Company does not currently expect to be a material U.S. federal cash income tax payer until 2021. The
ultimate timing is dependent primarily on the performance of the Company and the amount and timing of tax
deductions related to stock-based awards.
All of the Company’s international cash can be repatriated without significant tax consequences. During the
year ended December 31, 2018, foreign cash of $25.2 million was repatriated to the U.S.
Our indebtedness could limit our ability to: (i) obtain additional financing to fund working capital needs,
acquisitions, capital expenditures, debt service or other requirements; and (ii) use operating cash flow to pursue
acquisitions or invest in other areas, such as developing properties and exploiting business opportunities. As of
December 31, 2018, IAC owns 81.1% of our outstanding shares of capital stock and has 97.6% of the combined
voting power of our outstanding capital stock. As a result of IAC’s ability to control the election and removal of
our board of directors, IAC effectively has the ability to control our financing activities, including the issuance of
additional debt and equity securities, the incurrence of other indebtedness, or distributions to shareholders. While
48
the Company believes we will have the ability to access debt and equity markets if needed, such transactions may
require the concurrence of IAC.
49
CONTRACTUAL OBLIGATIONS AND COMMERCIAL COMMITMENTS
Contractual Obligations(a)
Less Than
1 Year
1–3
Years
3–5
Years
More Than
5 Years
Total
Payments Due by Period
Long-term debt(b)(c)
Operating leases(d)
Purchase obligation(e)
Total contractual obligations
(In thousands)
$
78,271
$
164,546
$
827,699
$
952,750
$ 2,023,266
11,559
27,153
25,570
23,897
12,833
17,471
—
—
67,433
51,050
$
116,983
$
214,013
$
840,532
$
970,221
$ 2,141,749
_______________________________________________________________________________
(a) The Company has excluded $35.6 million in unrecognized tax benefits and related interest from the table
above as we are unable to make a reasonably reliable estimate of the period in which these liabilities
might be paid. For additional information on income taxes, see “Note 3—Income Taxes” to the
consolidated financial statements included in “Item 8—Consolidated Financial Statements and
Supplementary Data.”
(b) Represents contractual amounts due including interest on both fixed and variable rate instruments. Long-
term debt at December 31, 2018 consists of the 6.375% and 5.00% Senior Notes of $400 million and
$450 million, respectively, which bear interest at fixed rates, and the Credit Facility and Term Loan
balances of $260 million and $425 million, respectively, which both bear interest at a variable rate. The
Credit Facility and the Term Loan bear interest at LIBOR plus 1.50%, or 3.97%, and LIBOR plus 2.50%,
or 5.09%, respectively, at December 31, 2018. The amount of interest ultimately paid on the Credit
Facility and Term Loan may differ based on changes in interest rates and outstanding balances. For
additional information on long-term debt, see “Note 7—Long-term Debt, net” to the consolidated
financial statements included in “Item 8—Consolidated Financial Statements and Supplementary Data.”
(c) Subsequent to December 31, 2018, the Credit Facility was repaid in full with the issuance of the 5.625%
Senior Notes. The interest and principal related to the 5.625% Senior Notes are not reflected in the table
above.
(d) The Company leases office space, data center facilities and equipment used in connection with its
operations under various operating leases, many of which contain escalation clauses. The Company is
also committed to pay a portion of the related operating expenses under certain lease agreements. These
operating expenses are not included in the table above. For additional information on operating leases,
see “Note 13—Commitments and Contingencies” to the consolidated financial statements included in
“Item 8—Consolidated Financial Statements and Supplementary Data.”
(e) The purchase obligations consist primarily of a web hosting commitment.
We also had $0.4 million of letters of credit and surety bonds outstanding as of December 31, 2018 that
could potentially require performance by the Company in the event of demands by third parties or contingent
events.
Off-Balance Sheet Arrangements
Other than the items described above, the Company does not have any off-balance sheet arrangements as of
December 31, 2018.
50
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
The following disclosure is provided to supplement the descriptions of Match Group’s accounting policies
contained in “Note 2—Summary of Significant Accounting Policies” to the consolidated financial statements
included in “Item 8—Consolidated Financial Statements and Supplementary Data” in regard to significant areas
of judgment. Management of the Company is required to make certain estimates, judgments and assumptions
during the preparation of its consolidated financial statements in accordance with U.S. generally accepted
accounting principles. These estimates, judgments and assumptions impact the reported amount of assets,
liabilities, revenue and expenses and the related disclosure of contingent assets and liabilities. Actual results could
differ from these estimates. Because of the size of the financial statement elements to which they relate, some of
our accounting policies and estimates have a more significant impact on our consolidated financial statements
than others. What follows is a discussion of some of our more significant accounting policies and estimates.
Business Combinations and Contingent Consideration Arrangements
Acquisitions have been, and will continue to be, an important part of the Company’s growth strategy. The
purchase price of each acquisition is attributed to the assets acquired and liabilities assumed based on their fair
values at the date of acquisition, including identifiable intangible assets that either arise from a contractual or legal
right or are separable from goodwill. The fair value of these intangible assets is based on valuations that use
information and assumptions provided by management. The excess purchase price over the net tangible and
identifiable intangible assets is recorded as goodwill and is assigned to the reporting unit that is expected to
benefit from the combination as of the acquisition date.
In connection with certain business combinations, the Company has entered into contingent consideration
arrangements that are determined to be part of the purchase price. Each of these arrangements is initially recorded
at its fair value at the time of the acquisition and reflected at current fair value for each subsequent reporting
period thereafter until settled. The contingent consideration arrangements are generally based upon earnings
performance and/or operating metrics. The Company determines the fair value of the contingent consideration
arrangements by using probability-weighted analyses to determine the amounts of the gross liability, and, if the
arrangement is long-term in nature, applying a discount rate that appropriately captures the risk associated with
the obligation to determine the net amount reflected in the consolidated financial statements. Significant changes
in forecasted earnings or operating metrics would result in a significantly higher or lower fair value measurement.
The changes in the remeasured fair value of the contingent consideration arrangements during each reporting
period, including the accretion of the discount, if applicable, are recognized in “General and administrative
expense” in the accompanying consolidated statement of operations.
Recoverability of Goodwill and Indefinite-Lived Intangible Assets
Goodwill is the Company’s largest asset with a carrying value of $1.2 billion at both December 31, 2018 and
2017, representing 61% and 59%, respectively, of the Company’s total assets. Indefinite-lived intangible assets,
which consist of the Company’s acquired trade names and trademarks, have a carrying value of $230.7 million
and $228.3 million at December 31, 2018 and 2017, respectively.
Goodwill and indefinite-lived intangible assets are assessed annually for impairment as of October 1, or
more frequently if an event occurs or circumstances change that would more likely than not reduce the fair value
of a reporting unit or the fair value of an indefinite-lived intangible asset below its carrying value. In performing
its annual assessment, the Company has the option to qualitatively assess whether it is more likely than not that
the fair value of a reporting unit is less than its carrying value. The 2018 and 2017 annual assessments did not
identify any material impairments.
For the Company's annual goodwill test at October 1, 2018, a qualitative assessment of goodwill was
performed because the Company concluded it was more likely than not that the fair value of its single reporting
unit was in excess of its carrying value. The primary factors that the Company considered in its qualitative
assessment were that its market capitalization of $15.7 billion exceeded the carrying value by approximately
$15.1 billion and the Company’s strong operating performance.
The Company tests goodwill for impairment when it concludes that it is more likely than not that there may
be an impairment. If needed, the annual or interim quantitative test of the recovery of goodwill involves a
comparison of the estimated fair value of each reporting unit to its carrying value, including goodwill. If the
51
estimated fair value of the reporting unit exceeds its carrying value, goodwill of the reporting unit is not impaired.
If the carrying value of the reporting unit exceeds its estimated fair value, an impairment loss equal to the excess
is recorded.
While the Company has the option to qualitatively assess whether it is more likely than not that the fair
value of its indefinite-lived intangible assets is less than their carrying values, the Company’s policy is to
determine the fair value of each of its indefinite-lived intangible assets annually as of October 1. The Company
determines the fair value of indefinite-lived intangible assets using an avoided royalty DCF valuation analysis.
Significant judgments inherent in these analyses include the selection of appropriate royalty and discount rates
and estimating the amount and timing of expected future cash flows. The discount rates used in the DCF analyses
are intended to reflect the risks inherent in the expected future cash flows generated by the respective intangible
assets. The royalty rates used in the DCF analyses are based upon an estimate of the royalty rates that a market
participant would pay to license the Company’s trade names and trademarks. Assumptions used in the avoided
royalty DCF analyses, including the discount rate and royalty rate, are assessed annually based on the actual and
projected cash flows related to the asset, as well as macroeconomic and industry specific factors. The discount
rates used in the Company’s annual indefinite-lived impairment assessment ranged from 11% to 26% in both 2018
and 2017, and the royalty rates used ranged from 3% to 8% in 2018 and 3% to 7% in 2017. The aggregate
indefinite-lived intangible asset balance for which the most recent estimate of fair value is less than 110% of their
carrying values is approximately $101.7 million.
Recoverability and Estimated Useful Lives of Long-Lived Assets
We review the carrying value of all long-lived assets, comprising property and equipment and definite-lived
intangible assets, for impairment whenever events or changes in circumstances indicate that the carrying value of
an asset may not be recoverable. The carrying value of a long-lived asset is not recoverable if it exceeds the sum
of the undiscounted cash flows expected to result from the use and eventual disposition of the asset. If the
carrying value is deemed not to be recoverable, an impairment loss is recorded equal to the amount by which the
carrying value of the long-lived asset exceeds its fair value. In addition, the Company reviews the useful lives of
its long-lived assets whenever events or changes in circumstances indicate that these lives may be changed. The
carrying value of property and equipment and definite-lived intangible assets is $65.3 million and $63.7 million,
at December 31, 2018 and 2017, respectively.
Income Taxes
Match Group is included within IAC’s tax group for purposes of federal and consolidated state income tax
return filings. In all periods presented, current income tax provision and deferred income tax benefit have been
computed for Match Group on an as if stand-alone, separate return basis. The Company’s payments to IAC for its
share of IAC’s consolidated federal and state tax return liabilities have been reflected within cash flows from
operating activities in the accompanying consolidated statement of cash flows. The tax sharing agreement
between the Company and IAC governs the parties’ respective rights, responsibilities and obligations with respect
to tax matters, including responsibility for taxes attributable to the Company, entitlement to refunds, allocation of
tax attributes and other matters.
The Company accounts for income taxes under the liability method, and deferred tax assets and liabilities
are recognized for the future tax consequences attributable to differences between the financial statement carrying
values of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are
measured using enacted tax rates in effect for the year in which those temporary differences are expected to be
recovered or settled. A valuation allowance is provided on deferred tax assets if it is determined that it is more
likely than not that the deferred tax asset will not be realized. At December 31, 2018 and 2017, the balance of the
Company’s net deferred tax asset is $114.2 million and $94.7 million, respectively.
We evaluate and account for uncertain tax positions using a two-step approach. Recognition (step one)
occurs when we conclude that a tax position, based solely on its technical merits, is more-likely-than-not to be
sustained upon examination. Measurement (step two) determines the amount of benefit that is greater than 50%
likely to be realized upon ultimate settlement with a taxing authority that has full knowledge of all relevant
information. De-recognition of a tax position that was previously recognized would occur when the Company
subsequently determines that a tax position no longer meets the more-likely-than-not threshold of being sustained.
This measurement step is inherently difficult and requires subjective estimations of such amounts to determine the
52
probability of various possible outcomes. At December 31, 2018 and 2017, the Company has unrecognized tax
benefits of $37.6 million and $26.8 million, including interest and penalties, respectively. We consider many
factors when evaluating and estimating our tax positions and tax benefits, which may require periodic adjustment,
and which may not accurately anticipate actual outcomes. Although management currently believes changes to
reserves from period to period and differences between amounts paid, if any, upon resolution of issues raised in
audits and amounts previously provided will not have a material impact on the liquidity, results of operations, or
financial condition of the Company, these matters are subject to inherent uncertainties and management’s view of
these matters may change in the future.
The ultimate amount of deferred income tax assets realized and the amounts paid for deferred income tax
liabilities and uncertain tax positions may vary from our estimates due to future changes in income tax law, state
income tax apportionment or the outcome of any review of our tax returns by the various tax authorities, as well
as actual operating results of the Company that vary significantly from anticipated results.
At December 31, 2018, the Company has $103.1 million in foreign cash that can be repatriated without any
significant tax consequences. The Company has not provided for approximately $1.0 million of deferred taxes as
the foreign cash earnings are indefinitely reinvested outside the U.S. The Company reassess its intention to remit
or permanently reinvest these cash earnings each reporting period; any required adjustment to the income tax
provision would be reflected in the period that the Company changes this intention.
On December 22, 2017, the U.S. enacted the Tax Act. The Tax Act imposes a new minimum tax on GILTI
earned by foreign subsidiaries beginning in 2018. The Financial Accounting Standards Board Staff Q&A, Topic
740 No. 5, Accounting for Global Intangible Low-Taxed Income, states that an entity can make an accounting
policy election to either recognize deferred taxes for temporary differences expected to reverse as GILTI in future
years or provide for the tax expense related to GILTI in the year the tax is incurred. The Company elects to
recognize the tax on GILTI as a period expense in the period the tax is incurred.
Stock-Based Compensation
The Company recorded stock-based compensation expense of $66.0 million, $69.1 million and $52.4 million
for the years ended December 31, 2018, 2017 and 2016, respectively. The Company estimated the fair value of
stock options issued in 2018, 2017 and 2016 using a Black-Scholes option pricing model measured at the grant
date and is expensing this fair value over the vesting term. The impact on stock-based compensation expense for
the year ended December 31, 2018, assuming a 1% increase in the risk-free interest rate, a 10% increase in the
volatility factor and a one-year increase in the weighted average expected term of the outstanding options would
be an increase of $0.9 million, $7.6 million and $2.5 million, respectively. The Company also issues RSUs. For
RSUs issued, the value of the instrument is measured at the grant date as the fair value of Match Group common
stock and, for those with a market condition, the fair value is estimated using a lattice model, and expensed as
stock-based compensation expense over the vesting term.
Recent Accounting Pronouncements
For a discussion of recent accounting pronouncements, see “Note 2—Summary of Significant Accounting
Policies” to the consolidated financial statements included in “Item 8—Consolidated Financial Statements and
Supplementary Data.”
53
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Interest Rate Risk
The Company’s exposure to market risk for changes in interest rates relates primarily to the Company’s
long-term debt.
At December 31, 2018, the Company’s outstanding long-term debt was $1.5 billion, of which $850 million
of Senior Notes bear interest at fixed rates. If market rates decline, the Company runs the risk that the required
payments on the fixed rate debt will exceed those based on market rates. A 100 basis point increase or decrease in
the level of interest rates would, respectively, decrease or increase the fair value of the fixed-rate debt by $49.8
million. Such potential increase or decrease in fair value is based on certain simplifying assumptions, including a
constant level and rate of fixed-rate debt for all maturities and an immediate across-the-board increase or decrease
in the level of interest rates with no other subsequent changes for the remainder of the period. The $260 million
Credit Facility and the $425 million Term Loan bear interest at variable rates, LIBOR plus 1.50% and LIBOR plus
2.50%, respectively. As of December 31, 2018, the rates in effect were 3.97% and 5.09%, respectively. If LIBOR
were to increase or decrease by 100 basis points, then the annual interest expense and payments on the Credit
Facility and the Term Loan would increase or decrease by $2.6 million and $4.3 million, respectively, based upon
the outstanding balances on each at December 31, 2018.
Foreign Currency Exchange Risk
The Company conducts business in certain foreign markets, primarily in various jurisdictions within the
European Union (“EU”) and Asia. We are primarily exposed to foreign exchange risk for both the Euro and
British Pound (“GBP”).
For the years ended December 31, 2018, 2017 and 2016, international revenue accounted for 50%, 46% and
40%, respectively, of our consolidated revenue. We have exposure to foreign currency exchange risk related to
transactions carried out in a currency other than the U.S. dollar, and investments in foreign subsidiaries with a
functional currency other than the U.S. dollar. As foreign currency exchange rates change, translation of the
statement of operations of our international businesses into U.S. dollars affects year-over-year comparability of
operating results. The average GBP and Euro exchange rates strengthened against the U.S. Dollar by 4% and 5%,
respectively, in 2018 compared to 2017. Additionally, the announcement of the United Kingdom (“UK”)
referendum in which voters approved an exit from the EU, commonly referred to as “Brexit,” and the subsequent
negotiations between the UK and EU, has previously caused, and may continue to cause, significant volatility in
currency exchange rates between the U.S. dollar and the GBP. Foreign currency exchange rate changes during the
years ended December 31, 2018 and 2017 did not have a material impact on revenue.
Foreign currency exchange gains and losses included in the Company’s earnings for the years ended
December 31, 2018, 2017 and 2016 are gains and (losses) of $5.3 million, $(10.3) million and $20.0 million,
respectively. Historically, foreign currency exchange gains and losses have not been material to the Company.
The loss in 2017 is primarily related to a U.S. dollar denominated intercompany loan in which the receivable is
held by a foreign subsidiary with a GBP functional currency. As the GBP strengthened against the U.S. Dollar
during the year, the intercompany loan incurred losses. The gain in 2016 is primarily related to the significant
decline in the GBP in 2016 following the Brexit vote on June 23, 2016.
Foreign currency exchange gains or losses historically have not been material to the Company. As a result,
historically, we have not hedged any foreign currency exposures. The continued growth and expansion of our
international operations into new countries increases our exposure to foreign exchange rate fluctuations.
Significant foreign exchange rate fluctuations, in the case of one currency or collectively with other currencies,
could adversely affect our future results of operations.
54
Item 8. Consolidated Financial Statements and Supplementary Data
Report of Independent Registered Public Accounting Firm
To the Shareholders and the Board of Directors of Match Group, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheet of Match Group, Inc. and subsidiaries (the
Company) as of December 31, 2018 and 2017, and the related consolidated statements of operations,
comprehensive operations, shareholders’ equity and cash flows for each of the three years in the period ended
December 31, 2018, and the related notes and the financial statement schedule listed in the Index at Item 15(a)
(collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial
statements present fairly, in all material respects, the financial position of the Company at December 31, 2018 and
2017, and the results of its operations and its cash flows for each of the three years in the period ended December
31, 2018, in conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board
(United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2018,
based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission (2013 framework) and our report dated February 28, 2019 expressed
an unqualified opinion thereon.
Adoption of ASU No. 2016-09
As discussed in Note 11 to the consolidated financial statements, the Company changed its method of accounting
for stock compensation in 2017 due to the adoption of ASU No. 2016-09, Compensation - Stock Compensation
(Topic 718): Improvements to Employee Share-Based Payment Accounting.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express
an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered
with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.
federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and
the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial statements are free of material
misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of
material misstatement of the financial statements, whether due to error or fraud, and performing procedures that
respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and
disclosures in the financial statements. Our audits also included evaluating the accounting principles used and
significant estimates made by management, as well as evaluating the overall presentation of the financial
statements. We believe that our audits provide a reasonable basis for our opinion.
/s/ ERNST & YOUNG LLP
We have served as the Company’s auditor since 2014.
New York, New York
February 28, 2019
55
MATCH GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
ASSETS
Cash and cash equivalents
Accounts receivable, net of allowance of $724 and $778, respectively
Other current assets
Total current assets
Property and equipment, net
Goodwill
Intangible assets, net
Deferred income taxes
Long-term investments
Other non-current assets
TOTAL ASSETS
LIABILITIES AND SHAREHOLDERS’ EQUITY
LIABILITIES
Accounts payable
Deferred revenue
Accrued expenses and other current liabilities
Total current liabilities
Long-term debt, net
Income taxes payable
Deferred income taxes
Other long-term liabilities
December 31,
2018
2017
(In thousands, except share data)
$
$
$
$
$
$
186,947
99,052
57,766
343,765
58,351
1,244,758
237,640
134,347
9,076
25,124
2,053,061
9,528
209,935
135,971
355,434
1,515,911
13,918
20,174
21,760
272,624
116,751
55,369
444,744
61,620
1,247,644
230,345
123,199
11,137
11,457
2,130,146
10,112
198,095
110,566
318,773
1,252,696
8,410
28,478
14,484
Redeemable noncontrolling interests
—
6,056
Commitments and contingencies
SHAREHOLDERS’ EQUITY
Common stock; $0.001 par value; authorized 1,500,000,000 shares; 71,513,087 and
64,370,470 shares issued; and 68,460,563 and 64,370,470 shares outstanding at
December 31, 2018 and December 31, 2017, respectively
Class B convertible common stock; $0.001 par value; authorized 1,500,000,000 shares;
209,919,402 shares issued and outstanding
Class C common stock; $0.001 par value; authorized 1,500,000,000 shares; no shares
issued and outstanding
Preferred stock; $0.001 par value; authorized 500,000,000 shares; no shares issued and
outstanding
Additional paid-in capital
Retained earnings
Accumulated other comprehensive loss
Treasury stock; 3,052,524 and 0 shares, respectively
Total Match Group, Inc. shareholders’ equity
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
$
72
210
—
64
210
—
—
(57,575)
453,778
(137,166)
(133,455)
125,864
2,053,061
$
—
81,082
532,211
(112,318)
—
501,249
2,130,146
The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
56
MATCH GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
Revenue
Operating costs and expenses:
Cost of revenue (exclusive of depreciation shown separately
below)
Selling and marketing expense
General and administrative expense
Product development expense
Depreciation
Amortization of intangibles
Total operating costs and expenses
Operating income
Interest expense
Other income (expense), net
Earnings from continuing operations, before tax
Income tax (provision) benefit
Net earnings from continuing operations
Loss from discontinued operations, net of tax
Net earnings
Net loss (earnings) attributable to noncontrolling interests
Net earnings attributable to Match Group, Inc. shareholders
Net earnings per share from continuing operations:
Basic
Diluted
Net earnings per share attributable to Match Group, Inc.
shareholders:
Basic
Diluted
Dividend declared per share
Stock-based compensation expense by function:
Cost of revenue
Selling and marketing expense
General and administrative expense
Product development expense
Years Ended December 31,
2018
2017
2016
(In thousands, except per share data)
$ 1,729,850
$ 1,330,661
$ 1,118,110
410,000
419,954
180,286
132,030
32,968
1,318
1,176,556
553,294
(73,417)
7,765
487,642
(14,673)
472,969
(378)
472,591
5,348
477,939
$
1.73
1.61
1.73
1.61
2.00
$
$
$
$
$
279,499
375,610
179,804
101,150
32,613
1,468
970,144
360,517
(77,565)
(30,827)
252,125
103,852
355,977
(5,650)
350,327
(179)
350,148
1.35
1.20
1.33
1.18
$
$
$
$
$
— $
2,287
$
1,701
$
3,599
32,346
27,799
4,545
42,840
20,004
$
$
$
$
$
$
$
195,648
349,119
135,019
78,117
27,726
16,932
802,561
315,549
(82,199)
7,866
241,216
(62,875)
178,341
(6,328)
172,013
(562)
171,451
0.71
0.66
0.68
0.64
—
1,447
3,426
33,784
13,713
52,370
Total stock-based compensation expense
$
66,031
$
69,090
$
The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
57
MATCH GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF COMPREHENSIVE OPERATIONS
Net earnings
Other comprehensive (loss) income, net of tax
Change in foreign currency translation adjustment
Change in fair value of available-for-sale securities
Total other comprehensive (loss) income
Comprehensive income
Comprehensive loss (income) attributable to noncontrolling
interests
Comprehensive income attributable to Match Group, Inc.
shareholders
Years Ended December 31,
2018
2017
2016
(In thousands)
$
472,591
$
350,327
$
172,013
(24,967)
—
(24,967)
447,624
64,588
—
64,588
414,915
(36,239)
(2,964)
(39,203)
132,810
5,467
(701)
(923)
$
453,091
$
414,214
$
131,887
The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
58
MATCH GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY
Years Ended December 31, 2018, 2017 and 2016
Common Stock
$0.001
Par Value
Class B Convertible
Common Stock $0.001
Par Value
Match Group, Inc. Shareholders’ Equity
Redeemable
Noncontrolling
Interests
$
Shares
$
Shares
Additional
Paid-in
Capital
Retained
Earnings
Accumulated
Other
Comprehensive
Loss
Treasury
Stock
Total
Match Group, Inc.
Shareholders’
Equity
Noncontrolling
Interests
Total
Shareholders’
Equity
Balance as of December 31, 2015
$
5,907
$
Net earnings for the year ended December 31, 2016
Other comprehensive income (loss), net of tax
Stock-based compensation expense
Issuance of common stock pursuant to stock-based awards, net of
withholding taxes
Issuance of common stock to IAC pursuant to the employee matters
agreement
Income tax benefit related to stock-based awards and other
Purchase of redeemable noncontrolling interests
Adjustment of redeemable noncontrolling interests to fair value
Other
Balance as of December 31, 2016
Net earnings for the year ended December 31, 2017
Other comprehensive income, net of tax
Stock-based compensation expense
Issuance of common stock pursuant to stock-based awards, net of
withholding taxes
Issuance of common stock to IAC pursuant to the employee matters
agreement
Purchase of redeemable noncontrolling interests
Adjustment of redeemable noncontrolling interests to fair value
Other
Balance as of December 31, 2017
Net earnings (loss) for the year ended December 31, 2018
Other comprehensive loss, net of tax
Stock-based compensation expense
Issuance of common stock pursuant to stock-based awards, net of
withholding taxes
Issuance of common stock to IAC pursuant to the employee matters
agreement
Dividends ($2.00 per share of Common Stock and Class B Convertible
Common Stock)
Purchase of treasury stock
Purchase of redeemable noncontrolling interests
Adjustment of redeemable noncontrolling interests to fair value
Noncontrolling interests created in an acquisition
Adjustment to noncontrolling interests related to business acquisition
Purchase of noncontrolling interest
Balance as of December 31, 2018
562
361
—
—
—
—
(1,129)
361
—
6,062
179
522
—
—
—
(436)
(107)
(164)
6,056
108
(119)
—
—
—
—
—
(3,503)
(2,542)
—
—
—
$
— $
38
—
—
—
7
1
—
—
—
—
46
—
—
—
6
12
—
—
—
64
—
—
—
5
3
—
—
—
—
—
—
—
72
38,343
$
210
209,919
$
404,771
$
10,612
$
(136,820)
$
— $
278,811
$
— $
278,811
—
—
—
6,495
959
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
44,524
10,224
—
27,407
—
(361)
4,022
45,797
210
209,919
490,587
—
—
—
6,688
11,885
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
54,604
(248,787)
(215,429)
—
107
—
64,370
210
209,919
81,082
—
—
—
4,173
2,970
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
66,031
(207,950)
(3)
—
—
—
2,542
—
723
—
171,451
—
—
—
—
—
—
—
—
182,063
350,148
—
—
—
—
—
—
—
532,211
477,939
—
—
—
—
(556,372)
—
—
—
—
—
—
—
(39,564)
—
—
—
—
—
—
—
(176,384)
—
64,066
—
—
—
—
—
—
(112,318)
—
(24,848)
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
— (133,455)
—
—
—
—
—
—
—
—
—
—
171,451
(39,564)
44,524
10,231
1
27,407
—
(361)
4,022
496,522
350,148
64,066
54,604
(248,781)
(215,417)
—
107
—
501,249
477,939
(24,848)
66,031
(207,945)
—
(556,372)
(133,455)
—
2,542
—
723
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(5,456)
—
—
—
—
—
—
—
—
14,307
(723)
(8,128)
171,451
(39,564)
44,524
10,231
1
27,407
—
(361)
4,022
496,522
350,148
64,066
54,604
(248,781)
(215,417)
—
107
—
501,249
472,483
(24,848)
66,031
(207,945)
—
(556,372)
(133,455)
—
2,542
14,307
—
(8,128)
71,513
$
210
209,919
$
(57,575)
$ 453,778
$
(137,166)
$ (133,455)
$
125,864
$
— $
125,864
The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
59
MATCH GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
Years Ended December 31,
2018
2017
2016
(In thousands)
Cash flows from operating activities attributable to continuing operations:
Net earnings from continuing operations
$
472,969
$
355,977
$
178,341
Adjustments to reconcile net earnings from continuing operations to net cash
provided by operating activities attributable to continuing operations:
Stock-based compensation expense
Depreciation
Amortization of intangibles
Deferred income taxes
Acquisition-related contingent consideration fair value adjustments
Other adjustments, net
Changes in assets and liabilities, net of effects of acquisitions and dispositions:
Accounts receivable
Other assets
Accounts payable and other liabilities
Income taxes payable and receivable
Deferred revenue
Net cash provided by operating activities attributable to continuing
operations
Cash flows from investing activities attributable to continuing operations:
Net cash acquired (used) in business combinations
Capital expenditures
Proceeds from the sale of a business, net
Proceeds from the sale of a long-term investment
Proceeds from sale of a marketable security
Purchases of investments
Other, net
Net cash (used in) provided by investing activities attributable to continuing
operations
Cash flows from financing activities attributable to continuing operations:
Borrowings under the Credit Facility
Term Loan borrowings
Proceeds from bond offering
Principal payment on Senior Notes
Principal payments on Term Loan
Debt issuance costs
Purchase of treasury stock
Dividends
Proceeds from issuance of common stock pursuant to stock-based awards
Withholding taxes paid on behalf of employees on net settled stock-based
awards
Purchase of noncontrolling interests
Purchase of stock-based awards
Acquisition-related contingent consideration payments
Other, net
Net cash used in financing activities attributable to continuing operations
Total cash (used in) provided by continuing operations
60
66,031
32,968
1,318
69,090
32,613
1,468
(19,639)
(118,251)
320
230
17,272
(14,606)
20,769
12,765
13,058
5,253
22,142
(51,587)
(10,547)
(16,801)
(1,002)
32,753
52,370
27,726
16,932
(10,298)
(9,197)
(4,797)
(10,731)
(5,327)
(24,346)
29,641
19,235
603,455
321,108
259,549
1,136
(30,954)
—
—
—
(3,800)
(4,143)
(280)
(28,833)
96,144
60,163
—
(9,076)
70
(686)
(46,098)
—
—
11,716
(500)
8,369
(37,761)
118,188
(27,199)
260,000
—
—
—
—
(1,281)
(133,455)
(556,372)
12
(207,720)
(9,980)
—
(185)
(574)
(649,555)
(83,861)
—
75,000
450,000
(445,172)
—
(12,285)
—
—
—
—
400,000
—
(450,000)
(7,811)
—
—
59,442
39,378
(254,210)
(436)
(272,459)
(23,429)
(165)
(423,714)
15,582
(29,830)
(1,129)
—
—
(11,802)
(61,194)
171,156
MATCH GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS (continued)
Years Ended December 31,
2018
2017
2016
(In thousands)
Net cash (used in) provided by operating activities attributable to discontinued
operations
Net cash used in investing activities attributable to discontinued operations
Total cash (used in) provided by discontinued operations
Effect of exchange rate changes on cash, cash equivalents, and restricted cash
Net (decrease) increase in cash, cash equivalents, and restricted cash
Cash, cash equivalents, and restricted cash at beginning of period
—
—
—
(1,760)
(85,621)
272,761
(6,061)
(471)
(6,532)
9,940
18,990
253,771
Cash, cash equivalents, and restricted cash at end of period
$
187,140
$
272,761
$
4,231
(4,152)
79
(5,763)
165,472
88,299
253,771
The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
61
MATCH GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1—ORGANIZATION
Match Group, Inc. is a leading provider of dating products available in over 40 languages to our users all
over the world through applications and websites that we own and operate. We operate a portfolio of brands,
including Tinder, Match, PlentyOfFish, Meetic, OkCupid, OurTime, Pairs, and Hinge, as well as a number of
other brands, each designed to increase our users’ likelihood of finding a meaningful connection. Through our
portfolio of trusted brands, we provide tailored products to meet the varying preferences of our users. Following
the sale of our Non-dating segment in March 2017, Match Group has one operating segment, Dating, which is
managed as a portfolio of dating brands.
As used herein, “Match Group,” the “Company,” “we,” “our,” “us,” and similar terms refer to Match Group,
Inc. and its subsidiaries, unless the context indicates otherwise.
As of December 31, 2018, IAC/InterActiveCorp’s (“IAC”) economic ownership interest and voting interest
in Match Group were 81.1% and 97.6%, respectively.
NOTE 2—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation and Consolidation
The Company prepares its consolidated financial statements in accordance with U.S. generally accepted
accounting principles (“GAAP”). The consolidated financial statements include the accounts of the Company, all
entities that are wholly-owned by the Company and all entities in which the Company has a controlling financial
interest. Intercompany transactions and accounts have been eliminated.
For the purposes of these consolidated financial statements, income taxes have been computed for Match
Group on an as if stand-alone, separate tax return basis.
Accounting for Investments in Equity Securities
Investments in equity securities, other than those of our consolidated subsidiaries, are accounted for at fair
value or under the measurement alternative of Financial Accounting Standards Board (“FASB”) issued
Accounting Standards Update (“ASU”) No. 2016-01, Recognition and Measurement of Financial Assets and
Financial Liabilities, upon its adoption on January 1, 2018, with any changes to fair value recognized within other
income (expense), net each reporting period. Under the measurement alternative, equity investments without
readily determinable fair values are carried at cost minus impairment, if any, plus or minus changes resulting from
observable price changes in orderly transactions for identical or similar investments of the same issuer and value
is generally determined based on a market approach as of the transaction date. An investment will be considered
identical or similar if it has identical or similar rights to the equity investments held by the Company. The
Company reviews its equity securities for impairment each reporting period when there are qualitative factors or
events that indicate possible impairment. Factors we consider in making this determination include negative
change in industry and market conditions, financial performance, business prospects, and other relevant events
and factors. When indicators of impairment exist, the Company prepares quantitative assessments of the fair
value of our equity securities, which require judgment and the use of estimates. When our assessment indicates
that the fair value of the security is below the carrying value, the Company writes down the security to its fair
value and records the corresponding charge within other income (expense), net. See “Accounting
Pronouncements adopted by the Company” below for further information.
Accounting Estimates
Management of the Company is required to make certain estimates, judgments and assumptions during the
preparation of its consolidated financial statements in accordance with GAAP. These estimates, judgments and
assumptions impact the reported amounts of assets, liabilities, revenue and expenses and the related disclosure of
contingent assets and liabilities. Actual results could differ from these estimates.
On an ongoing basis, the Company evaluates its estimates and judgments, including those related to: the
recoverability of goodwill and indefinite-lived intangible assets; the useful lives and recoverability of definite-
62
MATCH GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
lived intangible assets and property and equipment; the fair values of equity securities without readily
determinable fair values; the carrying value of accounts receivable, including the determination of the allowance
for doubtful accounts; the determination of revenue reserves; the fair value of acquisition-related contingent
consideration arrangements; unrecognized tax benefits; the valuation allowance for deferred income tax assets;
and the fair value of and forfeiture rates for stock-based awards, among others. The Company bases its estimates
and judgments on historical experience, its forecasts and budgets and other factors that the Company considers
relevant.
Revenue Recognition
The Company adopted the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers,
effective January 1, 2018 using the modified retrospective transition method for open contracts as of the date of
initial application. See "Accounting Pronouncements adopted by the Company" below for further information.
The Company accounts for a contract with a customer when it has approval and commitment from all
parties, the rights of the parties and payment terms are identified, the contract has commercial substance and
collectability of consideration is probable. Revenue is recognized when control of the promised services is
transferred to our customers, and in an amount that reflects the consideration the Company is contractually due in
exchange for those services.
The Company’s revenue is primarily derived directly from users in the form of recurring subscriptions.
Subscription revenue is presented net of credits and credit card chargebacks. Subscribers pay in advance,
primarily by credit card or through mobile app stores, and, subject to certain conditions identified in our terms and
conditions, generally all purchases are final and nonrefundable. Revenue is initially deferred and is recognized
using the straight-line method over the term of the applicable subscription period, which generally ranges from
one to six months. Revenue is also earned from online advertising, the purchase of à la carte features and offline
events. Online advertising revenue is recognized when an advertisement is displayed. Revenue from the purchase
of à la carte features is recognized based on usage. Revenue associated with offline events is recognized when
each event occurs.
As permitted under the practical expedient available under ASU No. 2014-09, the Company does not
disclose the value of unsatisfied performance obligations for (i) contracts with an original expected length of one
year or less, (ii) contracts with variable consideration that is allocated entirely to unsatisfied performance
obligations or to a wholly unsatisfied promise accounted for under the series guidance, and (iii) contracts for
which the Company recognizes revenue at the amount which we have the right to invoice for services performed.
Transaction Price
The objective of determining the transaction price is to estimate the amount of consideration the Company is
due in exchange for services, including amounts that are variable. The Company determines the total transaction
price, including an estimate of any variable consideration, at contract inception and reassesses this estimate each
reporting period.
The Company excludes from the measurement of transaction price all taxes assessed by governmental
authorities that are both (i) imposed on and concurrent with a specific revenue-producing transaction and (ii)
collected from customers. Accordingly, such tax amounts are not included as a component of revenue or cost of
revenue.
For contracts that have an original duration of one year or less, the Company uses the practical expedient
available under ASU No. 2014-09 applicable to such contracts and does not consider the time value of money.
Assets Recognized from the Costs to Obtain a Contract with a Customer
The Company has determined that certain costs, primarily mobile app store fees, meet the requirements to be
capitalized as a cost of obtaining a contract. The Company recognizes an asset for these costs if we expect to
recover those costs. Mobile app store fees are amortized over the period of contract performance. Specifically,
the Company capitalizes and amortizes mobile app store fees over the term of the applicable subscription. During
the year ended December 31, 2018, the Company recognized expense of $284.7 million related to the
63
MATCH GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
amortization of these costs. The contract asset balance at December 31, 2018 related to costs to obtain a contract
is $29.2 million and included in “Other current assets” in the accompanying consolidated balance sheet.
Accounts Receivables, net of allowance for doubtful accounts and revenue reserves
Accounts receivable include amounts billed and currently due from customers. The Company maintains an
allowance for doubtful accounts to provide for the estimated amount of accounts receivable that will not be
collected. The allowance for doubtful accounts is based upon a number of factors, including the length of time
accounts receivable are past due, the Company’s previous loss history, and the specific customer’s ability to pay
its obligation. The time between the Company issuance of an invoice and payment due date is not significant;
customer payments that are not collected in advance of the transfer of promised services are generally due no later
than 30 days from invoice date. The Company also maintains allowances to reserve for potential credits issued to
consumers or other revenue adjustments. The amounts of these reserves are based primarily upon historical
experience.
Deferred Revenue
Deferred revenue consists of advance payments that are received or are contractually due in advance of the
Company's performance. The Company’s deferred revenue is reported on a contract by contract basis at the end
of each reporting period. The Company classifies deferred revenue as current when the term of the applicable
subscription period or expected completion of our performance obligation is one year or less. The deferred
revenue balance as of January 1, 2018 was $198.3 million. During the year ended December 31, 2018, the
Company recognized $198.3 million of revenue that was included in the deferred revenue balance as of January 1,
2018. The current deferred revenue balance at December 31, 2018 is $209.9 million. At December 31, 2018,
there is no non-current portion of deferred revenue.
Disaggregation of Revenue
The following table presents disaggregated revenue:
Direct Revenue:
North America
International
Total Direct Revenue
Indirect Revenue (principally advertising revenue)
Total Revenue
Direct Revenue
Tinder
Other brands
Total Direct Revenue
Cash and Cash Equivalents
For the Years Ended December 31,
2018
2017
2016
$
$
$
$
902,478
774,693
1,677,171
52,679
1,729,850
805,316
871,855
1,677,171
$
$
$
$
741,334
539,915
1,281,249
49,412
1,330,661
403,216
878,033
1,281,249
$
$
$
$
673,944
393,420
1,067,364
50,746
1,118,110
168,522
898,842
1,067,364
Cash and cash equivalents include cash and short-term investments, with maturities of less than 91 days
from the date of purchase. Domestically, cash equivalents include AAA rated government money market funds.
Internationally, cash equivalents include money market funds.
64
MATCH GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Property and Equipment
Property and equipment, including significant improvements, are recorded at cost. Repairs and maintenance
costs are expensed as incurred. Depreciation is computed using the straight-line method over the estimated useful
lives of the assets or, in the case of leasehold improvements, the lease term, if shorter.
Asset Category
Computer equipment and capitalized software
Furniture and other equipment
Leasehold improvements
Estimated
Useful Lives
2 to 3 years
5 years
6 to 10 years
The Company capitalizes certain internal use software costs including external direct costs utilized in
developing or obtaining the software and compensation for personnel directly associated with the development of
the software. Capitalization of such costs begins when the preliminary project stage is complete and ceases when
the project is substantially complete and ready for its intended purpose. The net book value of capitalized internal
use software is $19.5 million and $20.9 million at December 31, 2018 and 2017, respectively.
Business Combinations
The purchase price of each acquisition is attributed to the assets acquired and liabilities assumed based on
their fair values at the date of acquisition, including identifiable intangible assets that either arise from a
contractual or legal right or are separable from goodwill. The fair value of these intangible assets is based on
valuations that use information and assumptions provided by management. The excess purchase price over the net
tangible and identifiable intangible assets is recorded as goodwill and is assigned to the reporting unit that is
expected to benefit from the combination as of the acquisition date.
In connection with certain business combinations, the Company has entered into contingent consideration
arrangements that are determined to be part of the purchase price. Each of these arrangements is initially recorded
at its fair value at the time of the acquisition and reflected at current fair value for each subsequent reporting
period thereafter until settled. The contingent consideration arrangements are generally based upon earnings
performance and/or operating metrics. The Company determines the fair value of the contingent consideration
arrangements using probability-weighted analyses to determine the amounts of the gross liability, and, if the
arrangement is long-term in nature, applying a discount rate that appropriately captures the risk associated with
the obligation to determine the net amount reflected in the consolidated financial statements. Significant changes
in forecasted earnings or operating metrics would result in a significantly higher or lower fair value measurement.
The changes in the remeasured fair value of the contingent consideration arrangements during each reporting
period, including the accretion of the discount, if applicable, are recognized in “General and administrative
expense” in the accompanying consolidated statement of operations. See “Note 6—Financial Instruments” for a
discussion of contingent consideration arrangements.
Goodwill and Indefinite-Lived Intangible Assets
The Company assesses goodwill on its one reporting unit and indefinite-lived intangible assets for
impairment annually as of October 1, or more frequently if an event occurs or circumstances change that would
more likely than not reduce the fair value of a reporting unit or the fair value of an indefinite-lived intangible asset
below its carrying value.
When the Company elects to perform a qualitative assessment and concludes it is not more likely than not
that the fair value of the reporting unit is less than its carrying value, no further assessment of that reporting unit's
goodwill is necessary; otherwise, a quantitative assessment is performed and the fair value of the reporting unit is
determined. If the carrying value of the reporting unit exceeds its fair value an impairment loss equal to the
excess is recorded.
For the Company's annual goodwill test at October 1, 2018, a qualitative assessment of goodwill was
performed because the Company concluded it was more likely than not that the fair value of its single reporting
65
MATCH GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
unit was in excess of its carrying value. The primary factors that the Company considered in its qualitative
assessment were that its market capitalization of $15.7 billion exceeded its carrying value by approximately $15.1
billion and the Company’s strong operating performance. A qualitative assessment was also performed for 2017
and the Company concluded it was more likely than not that the fair value of the reporting unit was in excess of its
carrying value.
The Company foregoes a qualitative assessment and tests the goodwill for impairment when it concludes
that it is more likely than not that there may be an impairment. If needed, the annual or interim quantitative test of
the recovery of goodwill involves a comparison of the estimated fair value of the Company's reporting unit to its
carrying value, including goodwill. If the estimated fair value of the reporting unit exceeds its carrying value,
goodwill of the reporting unit is not impaired. If the carrying value of the reporting unit exceeds its estimated fair
value, an impairment loss equal to the excess is recorded.
While the Company has the option to qualitatively assess whether it is more likely than not that the fair
value of its indefinite-lived intangible assets is less than their carrying values, the Company’s policy is to
determine the fair value of each of its indefinite-lived intangible assets annually as of October 1. The Company
determines the fair value of its indefinite-lived intangible assets using an avoided royalty DCF valuation analyses.
Significant judgments inherent in these analyses include the selection of appropriate royalty and discount rates
and estimating the amount and timing of expected future cash flows. The discount rates used in the DCF analyses
are intended to reflect the risks inherent in the expected future cash flows generated by the respective intangible
assets. The royalty rates used in the DCF analyses are based upon an estimate of the royalty rates that a market
participant would pay to license the Company’s trade names and trademarks. Assumptions used in the avoided
royalty DCF analyses, including the discount rate and royalty rate, are assessed annually based on the actual and
projected cash flows related to the asset, as well as macroeconomic and industry specific factors. The discount
rates used in the Company’s annual indefinite-lived impairment assessment ranged from 11% to 26% in both 2018
and 2017, and the royalty rates used ranged from 3% to 8% in 2018 and 3% to 7% in 2017. The aggregate
indefinite-lived intangible asset balance for which the most recent estimate of fair value is less than 110% of their
carrying values is approximately $101.7 million.
Long-Lived Assets and Intangible Assets with Definite Lives
Long-lived assets, which consist of property and equipment and intangible assets with definite lives, are
reviewed for impairment whenever events or changes in circumstances indicate that the carrying value of an asset
may not be recoverable. The carrying value of a long-lived asset is not recoverable if it exceeds the sum of the
undiscounted cash flows expected to result from the use and eventual disposition of the asset. If the carrying
value is deemed not to be recoverable, an impairment loss is recorded equal to the amount by which the carrying
value of the long-lived asset exceeds its fair value. Amortization of definite-lived intangible assets is computed
either on a straight-line basis or based on the pattern in which the economic benefits of the asset will be realized.
Fair Value Measurements
The Company categorizes its financial instruments measured at fair value into a fair value hierarchy that
prioritizes the inputs used in pricing the asset or liability. The three levels of the fair value hierarchy are:
• Level 1: Observable inputs obtained from independent sources, such as quoted market prices for identical
assets and liabilities in active markets.
• Level 2: Other inputs, which are observable directly or indirectly, such as quoted market prices for
similar assets or liabilities in active markets, quoted market prices for identical or similar assets or
liabilities in markets that are not active, and inputs that are derived principally from or corroborated by
observable market data. The fair values of the Company's Level 2 financial assets are primarily obtained
from observable market prices for identical underlying securities that may not be actively traded. Certain
of these securities may have different market prices from multiple market data sources, in which case an
average market price is used.
• Level 3: Unobservable inputs for which there is little or no market data and require the Company to
develop its own assumptions, based on the best information available in the circumstances, about the
66
MATCH GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
assumptions market participants would use in pricing the assets or liabilities. See “Note 6—Financial
Instruments” for a discussion of fair value measurements made using Level 3 inputs.
The Company’s non-financial assets, such as goodwill, intangible assets, and property and equipment, are
adjusted to fair value only when an impairment is recognized. The Company’s financial assets, consisting of
equity securities without readily determinable fair values, are adjusted to fair value when observable price changes
are identified or an impairment is recognized. Such fair value measurements are based predominantly on Level 3
inputs.
Advertising Costs
Advertising costs are expensed in the period incurred (when the advertisement first runs for production costs
that are initially capitalized) and represent online marketing, including fees paid to search engines and social
media sites, offline marketing, which is primarily television advertising, and partner-related payments to those
who direct traffic to our websites. Advertising expense is $386.0 million, $340.4 million and $325.0 million for
the years ended December 31, 2018, 2017 and 2016, respectively.
Legal Costs
Legal costs are expensed as incurred.
Income Taxes
Match Group is included within IAC’s tax group for purposes of federal and consolidated state income tax
return filings. In all periods presented, current income tax provision and deferred income tax benefit have been
computed for Match Group on an as if stand-alone, separate return basis.
The Company accounts for income taxes under the liability method, and deferred tax assets and liabilities
are recognized for the future tax consequences attributable to differences between the financial statement carrying
values of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are
measured using enacted tax rates in effect for the year in which those temporary differences are expected to be
recovered or settled. A valuation allowance is provided on deferred tax assets if it is determined that it is more
likely than not that the deferred tax asset will not be realized. The Company records interest, net of any applicable
related income tax benefit, on potential income tax contingencies as a component of income tax expense.
The Company evaluates and accounts for uncertain tax positions using a two-step approach. Recognition
(step one) occurs when the Company concludes that a tax position, based on its technical merits, is more-likely-
than-not to be sustainable upon examination. Measurement (step two) determines the amount of the benefit that is
greater than 50% likely to be realized upon ultimate settlement with a taxing authority that has full knowledge of
all relevant information. De-recognition of a tax position that was previously recognized would occur when the
Company subsequently determines that a tax position no longer meets the more-likely-than-not threshold of being
sustained.
On December 22, 2017, the U.S. enacted the Tax Cuts and Jobs Act (the “Tax Act”). The Tax Act imposes a
new minimum tax on global intangible low taxed income (“GILTI”) earned by foreign subsidiaries beginning in
2018. The FASB Staff Q&A, Topic 740 No. 5, Accounting for Global Intangible Low-Taxed Income, states that
an entity can make an accounting policy election to either recognize deferred taxes for temporary differences
expected to reverse as GILTI in future years or provide for the tax expense related to GILTI in the year the tax is
incurred. The Company elects to recognize the tax on GILTI as a period expense in the period the tax is incurred.
Earnings Per Share
Basic earnings per share is computed by dividing net earnings attributable to Match Group shareholders by
the weighted average number of common shares outstanding during the period. Diluted earnings per share
reflects the potential dilution that could occur if stock options and other commitments to issue common stock
were exercised or equity awards vested resulting in the issuance of common stock that could share in the earnings
of the Company.
67
MATCH GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Foreign Currency Translation and Transaction Gains and Losses
The financial position and operating results of foreign entities whose primary economic environment is
based on their local currency are consolidated using the local currency as the functional currency. These local
currency assets and liabilities are translated at the rates of exchange as of the balance sheet date, and local
currency revenue and expenses of these operations are translated at average rates of exchange during the period.
Translation gains and losses are included in accumulated other comprehensive income as a component of
shareholders’ equity. Transaction gains and losses resulting from assets and liabilities denominated in a currency
other than the functional currency are included in the consolidated statement of operations as a component of
“Other income (expense), net.”
Translation gains and losses relating to foreign entities that are liquidated or substantially liquidated are
reclassified out of accumulated other comprehensive loss into earnings. Losses of $0.7 million during the year
ended December 31, 2017 are included in “Other income (expense), net” in the accompanying consolidated
statement of operations.
Stock-Based Compensation
Stock-based compensation is measured at the grant date based on the fair value of the award and is generally
expensed over the requisite service period. See “Note 11—Stock-based Compensation” for a discussion of the
Company’s stock-based compensation plans.
Redeemable Noncontrolling Interests
Noncontrolling interests in the consolidated subsidiaries of the Company are ordinarily reported on the
consolidated balance sheet within shareholders’ equity, separately from the Company’s equity. However,
securities that are redeemable at the option of the holder and not solely within the control of the issuer must be
classified outside of shareholders’ equity. Accordingly, all noncontrolling interests that are redeemable at the
option of the holder are presented outside of shareholders’ equity in the accompanying consolidated balance sheet.
In connection with the acquisition of certain subsidiaries, current and former senior management of these
businesses has retained an ownership interest. The Company is party to fair value put and call arrangements with
respect to these interests. These put and call arrangements allow management of these businesses to require the
Company to purchase these interests or allow the Company to acquire such interests at fair value, respectively.
The put arrangements do not meet the definition of a derivative instrument as the put agreements do not provide
for net settlement. No put and call arrangements were exercised during 2018, 2017 or 2016. These put
arrangements are exercisable by the counter-party outside the control of the Company. Accordingly, to the extent
that the fair value of these interests exceeds the value determined by normal noncontrolling interest accounting,
the value of such interests is adjusted to fair value with a corresponding adjustment to additional paid-in capital.
During the years ended December 31, 2018, 2017 and 2016, the Company recorded adjustments of $(2.5) million,
$(0.1) million and $0.4 million, respectively, to (decrease) increase these interests to fair value. Fair value
determinations require high levels of judgment and are based on various valuation techniques, including market
comparables and discounted cash flow projections. At December 31, 2018, no redeemable noncontrolling interest
remained outstanding.
Certain Risks and Concentrations
The Company’s business is subject to certain risks and concentrations including dependence on third-party
technology providers, exposure to risks associated with online commerce security and credit card fraud.
Financial instruments, which potentially subject the Company to concentration of credit risk, consist
primarily of cash and cash equivalents. Cash and cash equivalents are principally maintained with financial
institutions that are not covered by deposit insurance.
68
MATCH GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Recent Accounting Pronouncements
Accounting Pronouncements adopted by the Company
In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers. ASU No.
2014-09 superseded nearly all previous revenue recognition guidance. The Company adopted ASU No. 2014-09
as of January 1, 2018 using the modified retrospective transition method for open contracts as of the date of initial
application. There is no cumulative impact to the Company’s retained earnings at January 1, 2018.
In January 2016, the FASB issued ASU No. 2016-01, which updates certain aspects of recognition,
measurement, presentation, and disclosure of financial instruments. Under ASU No. 2016-01, equity securities,
other than those of our consolidated subsidiaries, will be measured at fair value with changes in fair value
recognized in the statement of operations each reporting period. ASU No. 2016-01 is effective for reporting
periods beginning after December 15, 2017. The Company’s adoption of ASU No. 2016-01 effective January 1,
2018 did not have a material effect on its consolidated financial statements. The adoption of ASU No. 2016-01
may increase the volatility of our results of operations as a result of the remeasurement of these investments.
In November 2016, the FASB issued ASU No. 2016-18, Restricted Cash, which requires companies to
explain the changes in the total of cash, cash equivalents, restricted cash and restricted cash equivalents in the
statement of cash flows. Therefore, amounts generally described as restricted cash or restricted cash equivalents
are combined with unrestricted cash and cash equivalents when reconciling the beginning and end of period
balances on the statement of cash flows. Additionally, when cash, cash equivalents, restricted cash, and restricted
cash equivalents are presented within different captions on the balance sheet, a reconciliation of the totals in the
statement of cash flows to the related captions in the balance sheet is required. ASU No. 2016-18 is effective for
reporting periods beginning after December 15, 2017. The Company’s adoption of ASU No. 2016-18 effective
January 1, 2018, on a retrospective basis, did not have a material effect on its consolidated financial statements.
See “Note 14—Supplemental Cash Flow Information” for a reconciliation of cash, cash equivalents, and restricted
cash included in the consolidated statement of cash flows.
In June 2018, the FASB issued ASU No. 2018-07, Improvements to Nonemployee Share-Based Payment
Accounting, which largely aligns the measurement and classification guidance for share-based payments granted
to non-employees with the guidance for share-based payments granted to employees. The new guidance
supersedes Subtopic 505-50, Equity - Equity-Based payments to Nonemployees. ASU No. 2018-07 is effective for
reporting periods beginning after December 15, 2018, with early adoption permitted. The Company adopted ASU
No. 2018-07 effective April 1, 2018 and its adoption did not have a material effect on its consolidated financial
statements. The effect of the adoption of ASU No. 2018-07 will be to minimize the volatility of expense related to
stock-based awards to non-employees in the future.
In August 2018, the FASB issued ASU No. 2018-15, Intangibles - Goodwill and Other - Internal-Use
Software (Subtopic 350-40): Customer's Accounting for Implementation Costs Incurred in a Cloud Computing
Arrangement That Is a Service Contract, which clarifies the accounting for implementation costs in a cloud
computing arrangement that is a services contract to follow the internal-use software guidance of ASC 350-40,
Intangibles - Goodwill and Other, Internal-use Software. The provisions of ASU No. 2018-15 are effective for
reporting periods beginning after December 15, 2019, including interim periods and early adoption is permitted,
including adoption in any interim period. The provisions of ASU No. 2018-15 may be adopted prospectively to
all implementation costs incurred after the date of adoption or retrospectively. The Company early adopted the
provisions of ASU No. 2018-15 on October 1, 2018 prospectively and the adoption of this standard did not have
material impact on its consolidated financial statements.
Accounting Pronouncements not yet adopted by the Company
In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), which supersedes existing
guidance on accounting for leases and generally requires all leases to be recognized in the statement of financial
position. The provisions of ASU No. 2016-02 are effective for reporting periods beginning after December 15,
2018. The Company will adopt the new lease guidance effective January 1, 2019. In July 2018, the FASB issued
ASU No. 2018-11, Leases (Topic 842): Targeted Improvements, which provides the option of an additional
transition method that allows entities to initially apply the new lease guidance at the adoption date and recognize a
69
MATCH GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. The Company
expects to implement the transition method option provided by ASU No. 2018-11.
The Company is not a lessor, has no capitalized leases, and does not expect to enter into any capitalized
leases prior to the adoption of ASU No. 2016-02. Accordingly, the Company does not expect the amount or
classification of rent expense in its statement of operations to be affected by the adoption of ASU No. 2016-02.
The primary effect of the adoption of ASU No. 2016-02 will be the recognition of a right of use asset and related
lease liability to reflect the Company's rights and obligations under its operating leases. The Company will also
be required to provide the additional disclosures stipulated in ASU No. 2016-02.
The adoption of ASU No. 2016-02 will not have an impact on the leverage calculation set forth in any of the
agreements governing the outstanding debt of the Company, or our credit agreement, because in each
circumstance, the leverage calculations are not affected by the lease liability that will be recorded upon adoption
of the new standard.
While the Company's evaluation of the impact of the adoption of ASU No. 2016-02 on its consolidated
financial statements continues, outlined below is a summary of the status of the Company's progress:
•
•
•
•
the Company has selected a software solution to implement ASU No. 2016-02;
the Company has input lease summaries into the software solution;
the Company is assessing the other inputs required in connection with the adoption of ASU No. 2016-02;
and
the Company is developing its accounting policy, procedures and internal controls related to the new
standard.
Development of the selected software solution by the third-party vendor is ongoing. While significant
progress has been made, certain key deliverables remain, which the Company expects to be delivered in March
2019. The Company’s ability to adopt ASU No. 2016-02 in an efficient and effective manner is contingent upon
the delivery and testing of these remaining deliverables. The Company has been able to develop a preliminary
estimate of the impact of the adoption of ASU No. 2016-02 through the use of the third-party software solution,
supplemented by our user acceptance testing. This preliminary estimate is that a $55 million right-of-use asset
and related lease liability will be recognized on the Company’s consolidated balance sheet upon adoption. The
Company does not expect a material impact on its consolidated statement of operations or its consolidated
statement of cash flows.
Reclassifications
Certain prior year amounts have been reclassified to conform to the current year presentation.
70
MATCH GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 3—INCOME TAXES
Match Group is included within IAC's tax group for purposes of federal and consolidated state income tax
return filings. In all periods presented, current income tax provision and deferred income tax benefit have been
computed for Match Group on an as if stand-alone, separate return basis. Match Group’s payments to IAC for its
share of IAC’s consolidated federal and state tax return liabilities have been reflected within cash flows from
operating activities in the accompanying consolidated statement of cash flows.
U.S. and foreign earnings before income taxes are as follows:
Years Ended December 31,
2018
2017
2016
U.S.
Foreign
Total
$
$
392,798
94,844
487,642
$
$
$
109,457
131,759
241,216
108,839
252,125
(In thousands)
143,286
$
The components of the provision (benefit) for income taxes are as follows:
Current income tax provision (benefit):
Federal
State
Foreign
Current income tax provision
Deferred income tax benefit:
Federal
State
Foreign
Deferred income tax benefit
Income tax provision (benefit)
Years Ended December 31,
2018
2017
2016
(In thousands)
$
$
(688) $
341
34,659
34,312
(11,158)
(1,846)
(6,635)
(19,639)
14,673
$
(11,533) $
(512)
26,444
14,399
(102,337)
(15,731)
(183)
(118,251)
(103,852) $
44,782
4,427
23,964
73,173
(2,119)
(280)
(7,899)
(10,298)
62,875
For the year ended December 31, 2018, the current income tax payable was reduced by $94.7 million for
excess tax deductions attributable to stock-based compensation and the related income tax benefit was recorded as
a decrease to the current income tax provision. For the year ended December 31, 2017, the deferred tax asset for
net operating losses (“NOLs”) was increased by $279.7 million for excess tax deductions attributable to stock-
based compensation and the related income tax benefit was recorded as a component of the deferred income tax
benefit. For the year ended December 31, 2016, the current income tax payable was reduced by $29.7 million for
excess tax deductions attributable to stock-based compensation and the related income tax benefit was recorded as
an increase to additional paid-in capital.
The tax effects of cumulative temporary differences that give rise to significant portions of the deferred tax
assets and deferred tax liabilities are presented below. The valuation allowance is primarily related to deferred tax
assets for tax credits and net operating losses.
71
MATCH GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Deferred tax assets:
Net operating loss carryforwards
Tax credit carryforwards
Stock-based compensation
Other
Total deferred tax assets
Less valuation allowance
Net deferred tax assets
Deferred tax liabilities:
Intangible assets
Fixed assets
Other
Total deferred tax liabilities
Net deferred tax assets
December 31,
2018
2017
(In thousands)
$
127,630
$
143,474
43,501
12,684
26,770
210,585
(47,448)
163,137
(45,363)
(2,686)
(915)
(48,964)
114,173
$
6,629
13,236
12,423
175,762
(24,795)
150,967
(52,838)
(3,164)
(244)
(56,246)
94,721
$
At December 31, 2018, the Company has federal and state net operating losses (“NOLs”) of $458.4 million
and $169.8 million, respectively. If not utilized, $10.3 million of the federal NOLs can be carried forward
indefinitely, and $448.1 million will expire at various times primarily between 2031 and 2037. The state NOLs
will expire at various times primarily between 2032 and 2037. Federal and state NOLs of $434.3 million and
$148.5 million, respectively, can be used against future taxable income without restriction and the remaining
NOLs will be subject to limitations under Section 382 of the Internal Revenue Code, separate return limitations,
and applicable state law. At December 31, 2018, the Company has foreign NOLs of $79.0 million available to
offset future income. Of these foreign NOLs, $74.2 million can be carried forward indefinitely and $4.8 million
will expire at various times between 2019 and 2028. During 2018, the Company recognized tax benefits related to
NOLs of $6.7 million. At December 31, 2018, the Company has federal capital losses of $12.2 million. If not
utilized, the capital losses will expire during 2021 and 2022. Utilization of capital losses will be limited to the
Company’s ability to generate future capital gains.
At December 31, 2018, the Company has tax credit carryforwards of $51.1 million. Of this amount, $29.0
million relates to foreign tax credits, $21.5 million relates to federal and state tax credits for research activities,
and $0.6 million to various other credits. Of these credit carryforwards, $8.4 million can be carried forward
indefinitely and $42.7 million will expire at various times primarily between 2021 and 2038.
The Company regularly assesses the realizability of deferred tax assets considering all available evidence,
including, to the extent applicable, the nature, frequency and severity of prior cumulative losses, forecasts of
future taxable income, tax filing status, the duration of statutory carryforward periods, available tax planning and
historical experience.
During 2018, the Company’s valuation allowance increased by $22.7 million primarily due to an increase in
foreign tax credits, and foreign interest deduction carryforwards. At December 31, 2018, the Company has a
valuation allowance of $47.4 million related to the portion of credits, NOLs, and other items for which it is more
likely than not that the tax benefit will not be realized.
72
MATCH GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
A reconciliation of the income tax provision (benefit) to the amounts computed by applying the statutory
federal income tax rate to earnings before income taxes is shown as follows:
Years Ended December 31,
2018
2017
2016
(In thousands)
Income tax provision at the federal statutory rate of 21% (35%
for 2017 and 2016)
$
102,405
$
88,244
$
State income taxes, net of effect of federal tax benefit
Foreign income taxed at a different statutory rate
Foreign rate change
Transition tax
Deferred tax adjustment for enacted changes in tax laws and
rates
Equity compensation
Non-taxable foreign currency exchange gains and losses
Other, net
Income tax provision (benefit)
$
7,742
13,129
278
(3,178)
(142)
(92,140)
(2,086)
(11,335)
14,673
2,471
(15,014)
(1,523)
23,748
68,594
(278,343)
6,231
1,740
(103,852) $
$
84,425
2,804
(13,761)
(4,454)
—
—
3,247
(6,837)
(2,549)
62,875
A reconciliation of the beginning and ending amount of unrecognized tax benefits, including penalties but
excluding interest, is as follows:
Balance at January 1
Additions based on tax positions related to the current year
Additions for tax positions of prior years
Reductions for tax positions of prior years
Settlements
Expiration of applicable statute of limitations
Balance at December 31
December 31,
2018
2017
2016
(In thousands)
25,913
$
$
697
1,104
(1,233)
—
(1,418)
25,063
$
$
25,063
8,589
3,901
(134)
—
(1,740)
35,679
$
$
24,908
1,706
1,414
(783)
(258)
(1,074)
25,913
The Company recognizes interest and, if applicable, penalties related to unrecognized tax benefits in the
income tax provision. At December 31, 2018 and 2017, the Company had accrued $1.9 million and $1.8 million,
respectively, for the payment of interest. At December 31, 2018 and 2017, the Company had accrued $1.2 million
and $1.5 million, respectively, for penalties.
Match Group is routinely under audit by federal, state, local and foreign authorities in the area of income tax
as a result of previously filed separate company tax returns and consolidated tax returns with IAC. These audits
include questioning the timing and the amount of income and deductions and the allocation of income and
deductions among various tax jurisdictions. The Internal Revenue Service (“IRS”) is currently auditing IAC’s
federal income tax returns for the years ended December 31, 2010 through 2016, which includes the operations of
Match Group. The statute of limitations for the years 2010 through 2015 have been extended to December 31,
2019. Various other jurisdictions are open to examination for tax years beginning with 2009. Income taxes
payable include reserves considered sufficient to pay assessments that may result from examination of prior year
tax returns. We consider many factors when evaluating and estimating our tax positions and tax benefits, which
may require periodic adjustment, and which may not accurately anticipate actual outcomes. Although
management currently believes changes to reserves from period to period and differences between amounts paid,
if any, upon resolution of issues raised in audits and amounts previously provided will not have a material impact
73
MATCH GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
on the liquidity, results of operations, or financial condition of the Company, these matters are subject to inherent
uncertainties and management’s view of these matters may change in the future.
At December 31, 2018 and 2017, unrecognized tax benefits, including interest, were $37.6 million and $26.8
million, respectively. At December 31, 2018 and 2017, approximately $22.6 million and $17.6 million,
respectively, were included in unrecognized tax benefits for tax positions included in IAC’s consolidated tax
return filings. If unrecognized tax benefits at December 31, 2018 are subsequently recognized, $35.6 million, net
of related deferred tax assets and interest, would reduce income tax expense. The comparable amount as of
December 31, 2017 was $25.3 million. The Company believes that it is reasonably possible that its unrecognized
tax benefits could decrease by approximately $16.8 million by December 31, 2019, primarily due to settlements
and expirations of statutes of limitations.
On December 22, 2017, the U.S. enacted the Tax Act, which subjected to U.S. taxation certain previously
deferred earnings of foreign subsidiaries as of December 31, 2017 (“Transition Tax”) and implemented a number
of changes that take effect on January 1, 2018, including but not limited to, a reduction of the U.S. federal
corporate tax rate from 35% to 21% and a new minimum tax on GILTI earned by foreign subsidiaries. The
Company was able to make a reasonable estimate of the Transition Tax and recorded a provisional transition tax
expense in 2017. During 2018, the Company finalized this calculation, which resulted in a $3.2 million reduction
in the Transition Tax. The net reduction in the Transition Tax was due primarily to the utilization of additional
foreign tax credits, partially offset by additional taxable earnings and profits of our foreign subsidiaries based on
recently issued IRS guidance. The adjustment of the Company’s provisional tax expense was reflected as a
change in estimate in its results in the period in which the change in estimate is made in accordance with Staff
Accounting Bulletin No. 118, Income Tax Accounting Implications of the Tax Cuts and Jobs Act. Despite the
completion of the Company’s accounting for the Tax Act under SAB 118, many aspects of the law remain unclear
and we expect ongoing guidance to be issued at both the federal and state levels. We will continue to monitor and
assess the impact of any new developments.
At December 31, 2018, the Company has $103.1 million in foreign cash that can be repatriated without any
significant tax consequences. The Company has not provided for approximately $1.0 million of deferred taxes as
the foreign cash earnings are indefinitely reinvested outside the U.S. The Company reassesses its intention to
remit or permanently reinvest these cash earnings each reporting period; any required adjustment to the income
tax provision would be reflected in the period that the Company changes this intention.
74
MATCH GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 4—DISCONTINUED OPERATIONS
On March 31, 2017, Match Group sold its Non-dating business, which operated under the umbrella of The
Princeton Review, to ST Unitas, a global education technology company. We recognized a loss on the sale of the
business in the years ended December 31, 2018 and 2017 of $0.4 million (reflecting an adjustment to the loss on
sale recorded in 2017), and $2.1 million, respectively, which is reported within discontinued operations.
The key components of loss from discontinued operations for the years ended December 31, 2018, 2017 and
2016 consist of the following:
Revenue
Operating costs and expenses
Operating loss
Other (expense) income
Income tax benefit
Loss from discontinued operations
NOTE 5—GOODWILL AND INTANGIBLE ASSETS
Goodwill and intangible assets, net, are as follows:
Goodwill
Intangible assets with indefinite lives
Intangible assets with definite lives, net
Total goodwill and intangible assets, net
For the years Ended December 31,
2018
2017
2016
(In thousands)
— $
—
—
(378)
—
(378) $
$
23,980
(29,601)
(5,621)
(2,136)
2,107
(5,650) $
104,416
(114,057)
(9,641)
11
3,302
(6,328)
$
$
December 31,
2018
2017
(In thousands)
$
1,244,758
$
1,247,644
230,684
6,956
228,296
2,049
$
1,482,398
$
1,477,989
The following table presents the balance of goodwill, including the changes in the carrying value of
goodwill, for the years ended December 31, 2018 and 2017:
Balance at January 1
Additions
Deductions
Foreign Exchange Translation
Balance at December 31
December 31,
2018
2017
(In thousands)
$
1,247,644
$
1,206,447
11,187
—
(14,073)
1,244,758
$
120
(29)
41,106
$
1,247,644
75
MATCH GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Intangible assets with indefinite lives are trade names and trademarks acquired in various acquisitions. At
December 31, 2018 and 2017, intangible assets with definite lives are as follows:
December 31, 2018
Gross
Carrying
Amount
Accumulated
Amortization
Net
Weighted-
Average
Useful Life
(Years)
Patent and technology
Trade names
Customer lists
Other
Total
Trade names
Technology
Other
Total
$
$
$
$
(In thousands)
$
10,715
4,814
270
3,000
18,799
$
(4,859) $
(4,814)
(270)
(1,900)
(11,843) $
5,856
—
—
1,100
6,956
8.5
—
—
5.0
7.9
December 31, 2017
Gross
Carrying
Amount
Accumulated
Amortization
(In thousands)
Net
Weighted-
Average
Useful Life
(Years)
5,830
$
4,592
3,280
13,702
$
(5,765) $
(4,588)
(1,300)
(11,653) $
65
4
1,980
2,049
3.0
2.0
4.4
4.4
At December 31, 2018, amortization of intangible assets with definite lives is estimated to be as follows:
2019
2020
2021
2022
2023 and thereafter
Total
NOTE 6—FINANCIAL INSTRUMENTS
Marketable Securities
(In thousands)
1,645
$
1,245
645
645
2,776
6,956
$
During the second quarter of 2016, the Company sold its marketable security in its entirety. Proceeds and
gross realized gains from the sale of the available-for-sale marketable security were $11.7 million and $3.1
million, respectively, for the year ended December 31, 2016.
Long-term investments
At December 31, 2018, the carrying value of the Company’s investments in equity securities without readily
determinable fair values totaled $9.1 million and at December 31, 2017, the carrying value of the Company’s cost
method investments totaled $11.1 million, both of which are included in “Long-term investments” in the
accompanying consolidated balance sheet.
76
MATCH GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Equity securities without readily determinable fair values
For all equity securities without readily determinable fair values as of December 31, 2018, the Company has
elected the measurement alternative. As of December 31, 2018, under the measurement alternative election, the
Company did not identify any fair value adjustments using observable price changes in orderly transactions or an
identical or similar investment of the same issuer.
During the year ended December 31, 2018, we recognized an impairment charge of $2.1 million, which is
included in “Other income (expense), net” in the accompanying consolidated statement of operations.
Cost method investments (prior to the adoption of ASU No. 2016-01)
During the year ended December 31, 2017, we recognized an other-than-temporary impairment charge of
$2.3 million related to certain cost method investments as a result of our assessment of the near-term prospects
and financial condition of the investees.
On October 23, 2017, a cost method investment with a carrying value of $51.1 million was sold for net
proceeds of $60.2 million resulting in a pre-tax gain of $9.1 million, which is included in “Other income
(expense), net” in the accompanying consolidated statement of operations.
Fair Value Measurements
The following tables present the Company’s financial instruments that are measured at fair value on a
recurring basis:
December 31, 2018
Quoted Market
Prices in Active
Markets for
Identical Assets
(Level 1)
Significant
Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Total
Fair Value
Measurements
(In thousands)
Assets:
Cash equivalents:
Money market funds
Liabilities:
Contingent consideration arrangements
$
$
72,546
$
— $
— $
72,546
— $
— $
(1,974) $
(1,974)
December 31, 2017
Quoted Market
Prices in Active
Markets for
Identical Assets
(Level 1)
Significant
Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Total
Fair Value
Measurements
(In thousands)
Assets:
Cash equivalents:
Money market funds
Time deposits
Total
Liabilities:
Contingent consideration arrangements
$
$
$
71,197
—
71,197
$
$
— $
35,023
35,023
$
— $
—
71,197
35,023
— $
106,220
— $
— $
(2,647) $
(2,647)
77
MATCH GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The following table presents the changes in the Company’s financial instruments that are measured at fair
value on a recurring basis using significant unobservable inputs (Level 3):
Balance at January 1
Total net (losses):
Fair value adjustments
Included in other comprehensive income (loss)
Settlements
Balance at December 31
Contingent consideration arrangements
December 31,
2018
2017
Contingent Consideration
Arrangements
(In thousands)
$
(2,647) $
(19,418)
(320)
45
948
(1,974) $
(5,253)
(1,405)
23,429
(2,647)
$
As of December 31, 2018, there is one contingent consideration arrangement, related to a business
acquisition, for $2.0 million. This arrangement has been earned in full as of December 31, 2018 and will be paid
by the Company in the first quarter of 2019.
The current contingent consideration arrangement is based upon earnings performance. Contingent
consideration arrangements related to other previous acquisitions were based upon earnings performance and/or
operating metrics. The Company determined the fair values of contingent consideration arrangements using
probability-weighted analyses to determine the amounts of the gross liability, and, for arrangements that are long-
term in nature, applying a discount rate, that appropriately captures the risks associated with the obligation to
determine the net amount reflected in the consolidated financial statements. The fair values of the current
contingent consideration arrangement at both December 31, 2018 and 2017 reflect a discount rate of 12%.
The fair value of the contingent consideration arrangements is sensitive to changes in the forecasts of
earnings and changes in discount rates. The Company remeasures the fair value of the contingent consideration
arrangements each reporting period, including the accretion of the discount, if applicable, and changes are
recognized in “General and administrative expense” in the accompanying consolidated statement of operations.
The contingent consideration arrangement liability at December 31, 2018 and 2017 includes a current portion of
$2.0 million and $0.6 million, respectively, which is included in “Accrued expenses and other current liabilities”
and a non-current portion of $2.0 million at December 31, 2017, which is included in “Other long-term liabilities”
in the accompanying consolidated balance sheet. At December 31, 2018, there is no non-current portion of the
contingent consideration liability.
78
MATCH GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Financial instruments measured at fair value only for disclosure purposes
The following table presents the carrying value and the fair value of financial instruments measured at fair
value only for disclosure purposes.
Long-term debt, net (a)
______________________
December 31, 2018
December 31, 2017
Carrying Value
Fair Value
Carrying Value
Fair Value
(In thousands)
$ (1,515,911) $ (1,513,683) $ (1,252,696) $ (1,320,289)
(a) At December 31, 2018 and December 31, 2017, the carrying value of long-term debt, net includes
unamortized original issue discount and debt issuance costs of $19.1 million and $22.3 million,
respectively.
The fair value of long-term debt, net, excluding the revolving credit facility (the “Credit Facility”), is
estimated using observable market prices or indices for similar liabilities, which are Level 2 inputs. We consider
the Credit Facility, which has a variable interest rate, to have a fair value equal to its carrying value.
NOTE 7—LONG-TERM DEBT, NET
Long-term debt, net consists of:
Credit Facility due December 7, 2023
Term Loan due November 16, 2022
6.375% Senior Notes due June 1, 2024 (the “6.375% Senior Notes”); interest
payable each June 1 and December 1
5.00% Senior Notes due December 15, 2027 (the “5.00% Senior Notes”);
interest payable each June 15 and December 15
Total long-term debt
Less: Unamortized original issue discount and original issue premium, net
Less: Unamortized debt issuance costs
Total long-term debt, net
December 31,
2018
2017
(In thousands)
$
260,000
$
—
425,000
425,000
400,000
400,000
450,000
1,535,000
7,352
11,737
450,000
1,275,000
8,668
13,636
$
1,515,911
$
1,252,696
79
MATCH GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Senior Notes:
We issued the 5.00% Senior Notes on December 4, 2017. These notes were issued at 99.027% of par. The
proceeds of $445.6 million, along with cash on hand, were used to redeem the $445.2 million of outstanding
senior notes due in 2022 (the “6.75% Senior Notes”) and pay the related call premium. At any time prior to
December 15, 2022, these notes may be redeemed at a redemption price equal to the sum of the principal amount,
plus accrued and unpaid interest and a make-whole premium set forth in the indenture governing the notes.
Thereafter, these notes may be redeemed at the redemption prices set forth below, together with accrued and
unpaid interest thereon to the applicable redemption date, if redeemed during the twelve-month period beginning
on December 15 of the years indicated below:
Beginning December 15,
2022
2023
2024
2025 and thereafter
Percentage
102.500%
101.667%
100.833%
100.000%
The 6.375% Senior Notes were issued on June 1, 2016. The proceeds of $400 million were used to prepay a
portion of indebtedness outstanding under the Term Loan. At any time prior to June 1, 2019, these notes may be
redeemed at a redemption price equal to the sum of the principal amount thereof, plus accrued and unpaid interest
and a make-whole premium set forth in the indenture governing the notes. Thereafter, these notes may be
redeemed at the redemption prices set forth below, together with accrued and unpaid interest thereon to the
applicable redemption date, if redeemed during the twelve-month period beginning on June 1 of the years
indicated below:
Beginning June 1,
2019
2020
2021
2022 and thereafter
Percentage
104.781%
103.188%
101.594%
100.000%
The 6.75% Senior Notes were redeemed on December 17, 2017 with proceeds from the 5.00% Senior Notes
and cash on hand. The related call premium of $10.6 million is included in “Other (expense) income, net” in the
consolidated financial statements.
The indentures governing the 5.00% and 6.375% Senior Notes contain covenants that would limit the
Company’s ability to pay dividends or to make distributions and repurchase or redeem Match Group stock in the
event a default has occurred or Match Group’s leverage ratio (as defined in the indentures) exceeds 5.0 to 1.0.
The 5.00% and 6.375% Senior Notes rate equally in right of payment. At December 31, 2018, there were no
limitations pursuant thereto. There are additional covenants that limit the ability of the Company and its
subsidiaries to, among other things, (i) incur indebtedness, make investments, or sell assets in the event the
Company is not in compliance with certain ratios set forth in the indenture, and (ii) incur liens, enter into
agreements restricting the ability of the Company’s subsidiaries to pay dividends, enter into transactions with
affiliates and consolidate, merge or sell substantially all of their assets.
Term Loan and Credit Facility:
At both December 31, 2018 and 2017, the outstanding balance on the Term Loan was $425 million. The
Term Loan bears interest at LIBOR plus 2.50% and has a LIBOR floor to 0.00%. The interest rate at
December 31, 2018 and 2017 is 5.09% and 3.85%, respectively. Interest payments are due at least quarterly
through the term of the loan. The Term Loan provides for additional annual principal payments as part of an
excess cash flow sweep provision, the amount of which, if any, is governed by the secured net leverage ratio
contained in the Credit Agreement.
80
MATCH GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
On December 7, 2018, the $500 million Credit Facility was amended to, among other things, modify the
leverage ratio levels in the pricing grid used to calculate the applicable rate and extend its maturity to December 7,
2023. At December 31, 2018, there were outstanding borrowings of $260 million under the Credit Facility,
bearing interest at LIBOR plus 1.50%, or 3.97%. At December 31, 2017, there was no outstanding borrowings
under the Credit Facility. Borrowings under the Credit Facility bear interest, at the Company’s option, at a base
rate or LIBOR, in each case plus an applicable margin, which is determined by reference to a pricing grid based
on the Company’s consolidated net leverage ratio. The annual commitment fee on undrawn funds, based on the
current leverage ratio, is 25 basis points and 30 basis points at December 31, 2018 and 2017, respectively. The
terms of the Credit Facility require the Company to maintain a consolidated net leverage ratio of not more than 5.0
to 1.0 and a minimum interest coverage ratio of not less than 2.0 to 1.0 (in each case as defined in the agreement).
The Credit Facility and Term Loan contain covenants that would limit our ability to pay dividends, make
distributions or repurchase stock in the event the secured net leverage ratio exceeds 2.0 to 1.0, while the Term
Loan remains outstanding and, thereafter, if the consolidated net leverage ratio exceeds 4.0 to 1.0, or in the event a
default has occurred. There are additional covenants under the Credit Facility and the Term Loan that limit the
ability of the Company and its subsidiaries to, among other things, incur indebtedness, pay dividends or make
distributions. Obligations under the Credit Facility and Term Loan are unconditionally guaranteed by certain
Match Group wholly-owned domestic subsidiaries and are secured by the stock of certain Match Group domestic
and foreign subsidiaries. The Term Loan and outstanding borrowings, if any, under the Credit Facility rank
equally with each other, and have priority over the 5.00% and 6.375% Senior Notes to the extent of the value of
the assets securing the borrowings under the Credit Agreement.
Long-term debt maturities:
Years Ending December 31,
2022
2023
2024
2027
Total
Less: Unamortized original issue discount
Less: Unamortized debt issuance costs
Total long-term debt, net
NOTE 8—SHAREHOLDERS' EQUITY
(In thousands)
425,000
$
260,000
400,000
450,000
1,535,000
7,352
11,737
$
1,515,911
Description of Common Stock, Class B Convertible Common Stock and Class C Common Stock
The rights of holders of Match Group common stock, Class B common stock and Class C common stock are
identical, except for voting rights, conversion rights and dividend rights. Holders of common stock are entitled to
one vote per share on all matters to be voted upon by the stockholders. Holders of Class B common stock are
entitled to ten votes per share on all matters to be voted upon by stockholders. Holders of Class C common stock
have no voting rights, except as otherwise required by the laws of the State of Delaware, in which case holders of
Class C common stock are entitled to one one-hundredth (1/100) of a vote per share. Holders of the Company’s
common stock, Class B common stock and Class C common stock do not have cumulative voting rights in the
election of directors.
Shares of Match Group’s Class B common stock are convertible into shares of our common stock at the
option of the holder at any time on a share for share basis. Such conversion ratio will in all events be equitably
preserved in the event of any recapitalization of Match Group by means of a stock dividend on, or a stock split or
combination of, our outstanding common stock or Class B common stock, or in the event of any merger,
consolidation or other reorganization of Match Group with another corporation. Upon the conversion of a share
of our Class B common stock into a share of our common stock, the applicable share of Class B common stock
81
MATCH GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
will be retired and will not be subject to reissue. Shares of common stock and Class C common stock have no
conversion rights.
The holders of shares of Match Group common stock, Class B common stock and Class C common stock
are entitled to receive, share for share, such dividends as may be declared by Match Group’s Board of Directors
out of funds legally available therefor. In the event of a liquidation, dissolution or winding up, holders of the
Company’s common stock, Class B common stock and Class C common stock are entitled to receive ratably the
assets available for distribution to the stockholders after payment of all liabilities and accrued but unpaid
dividends and liquidation preferences on any outstanding preferred stock.
At December 31, 2018, IAC holds 209.9 million shares of our Class B common stock, representing 100% of
our outstanding Class B common stock, and 15.8 million shares of our common stock, representing 23.1% of our
outstanding common stock. IAC’s ownership interest is 81.1% and IAC holds 97.6% of the outstanding total
voting power of the Company.
In the event that Match Group issues or proposes to issue any shares of Match Group common stock, Class
B common stock or Class C common stock (with certain limited exceptions), including shares issued upon the
exercise, conversion or exchange of options, warrants and convertible securities, IAC will generally have a
purchase right that permits it to purchase for fair market value, as defined in an investor rights agreement, up to
such number of shares of the same class as the issued shares as would (i) enable IAC to maintain the same
ownership interest in the Company that it had immediately prior to such issuance or proposed issuance, with
respect to issuances of our voting capital stock, or (ii) enable IAC to maintain ownership of at least 80.1% of each
class of the Company’s non-voting capital stock, with respect to issuances of our non-voting capital stock.
Special Dividend
On December 19, 2018, we paid a special dividend of $2.00 per share on Match Group common stock and
Class B common stock, to stockholders of record as of the close of business on December 5, 2018, in the
aggregate amount equal to $556.4 million, which was funded with cash on hand and borrowings under our
revolving credit facility.
Reserved Common Shares
In connection with equity compensation plans, 55.1 million shares of Match Group common stock are
reserved at December 31, 2018.
Common Stock Repurchases
During 2018, the Company repurchased 3.1 million shares of Match Group common stock for aggregate
consideration, on a trade date basis, of $133.5 million. No repurchases were made during 2017 or 2016.
In May 2017, Match Group’s Board of Directors authorized the repurchase of 6.0 million shares of Match
Group common stock. At December 31, 2018, the Company has approximately 2.9 million shares remaining in its
share repurchase authorization.
82
MATCH GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 9—ACCUMULATED OTHER COMPREHENSIVE LOSS
The following tables present the components of accumulated other comprehensive loss and items
reclassified out of accumulated other comprehensive loss into earnings:
Balance at January 1
Other comprehensive loss
Balance at December 31
Balance at January 1
Other comprehensive income before reclassifications
Amounts reclassified into earnings
Net period other comprehensive income
Balance at December 31
Balance at January 1
Other comprehensive (loss) income before reclassifications
Gain on sale of available-for-sale security reclassified into
earnings
Net period other comprehensive loss
Balance at December 31
$
$
Year Ended December 31, 2018
Foreign
Currency
Translation
Adjustment
Accumulated
Other
Comprehensive
Loss
(In thousands)
$
$
(112,318) $
(24,848)
(137,166) $
(112,318)
(24,848)
(137,166)
Year Ended December 31, 2017
Foreign
Currency
Translation
Adjustment
Accumulated
Other
Comprehensive
(Loss) Income
(In thousands)
(176,384) $
63,352
(176,384)
63,352
714
714
64,066
(112,318) $
64,066
(112,318)
$
$
Year Ended December 31, 2016
Foreign
Currency
Translation
Adjustment
Unrealized
Gain (Loss) on
Available-For-
Sale Security
Accumulated
Other
Comprehensive
Loss
(In thousands)
2,964
(139,784) $
(36,600)
—
(36,600)
(176,384) $
$
(136,820)
(36,506)
(3,058)
(39,564)
(176,384)
94
(3,058)
(2,964)
— $
At December 31, 2018, 2017 and 2016, there was no tax benefit or provision on the accumulated other
comprehensive loss.
83
MATCH GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 10—EARNINGS PER SHARE
The following table sets forth the computation of the basic and diluted earnings per share attributable to
Match Group shareholders:
Years Ended December 31,
2018
2017
2016
Basic
Diluted
Basic
Diluted
Basic
Diluted
(In thousands, except per share data)
$
472,969
$ 472,969
$
355,977
$
355,977
$
178,341
$
178,341
5,348
5,348
(179)
(179)
(562)
(562)
478,317
478,317
355,798
355,798
177,779
177,779
(378)
(378)
(5,650)
(5,650)
(6,328)
(6,328)
$
477,939
$ 477,939
$
350,148
$
350,148
$
171,451
$
171,451
277,005
277,005
264,014
264,014
251,522
251,522
—
19,770
—
32,062
—
18,203
277,005
296,775
264,014
296,076
251,522
269,725
1.73
$
1.61
$
1.35
$
1.20
$
0.71
$
0.66
— $
— $
(0.02) $
(0.02) $
(0.03) $
(0.02)
1.73
$
1.61
$
1.33
$
1.18
$
0.68
$
0.64
Numerator
Net earnings from
continuing operations
Net loss (earnings)
attributable to
noncontrolling interests
Net earnings from
continuing operations
attributable to Match
Group, Inc. shareholders
Loss from discontinued
operations, net of tax
Net earnings attributable to
Match Group, Inc.
shareholders
Denominator
Basic weighted average
common shares
outstanding
Dilutive securities
including stock options,
RSUs, and subsidiary
denominated equity
awards (a)(b)
Dilutive weighted average
common shares
outstanding
Earnings (loss) per share:
Earnings per share from
continuing operations
Loss per share from
discontinued operations,
net of tax
$
$
Earnings per share
attributable to Match
Group, Inc. shareholders $
______________________
(a)
If the effect is dilutive, weighted average common shares outstanding include the incremental shares that
would be issued upon the assumed exercise of stock options and subsidiary denominated equity and the
vesting of restricted stock units (“RSUs”). For the years ended December 31, 2018, 2017, and 2016, 0.2
84
MATCH GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
million, 4.7 million and 6.1 million potentially dilutive securities, respectively, are excluded from the
calculation of diluted earnings per share because their inclusion would have been anti-dilutive.
(b) Market-based awards and performance-based stock options (“PSOs”) and restricted stock units (“PSUs”)
are considered contingently issuable shares. Market-based awards, PSOs and PSUs are included in the
denominator for earnings per share if (i) the applicable market or performance condition(s) has been met
and (ii) the inclusion of the market-based award, PSOs and PSUs are dilutive for the respective reporting
periods. For the years ended December 31, 2018, 2017, and 2016, 0.7 million, 3.8 million, and 2.5
million market-based awards, PSOs and PSUs, respectively, were excluded from the calculation of
diluted earnings per share because the market or performance conditions had not been met.
NOTE 11—STOCK-BASED COMPENSATION
The Company currently has two active stock and annual incentive plans, one which became effective in
2015 upon the completion of the IPO and another plan approved by shareholders in 2017. The 2015 plan replaced
two historical plans that governed equity awards granted prior to the IPO. The 2015 plan covers stock options to
acquire shares of Match Group common stock and RSUs granted pursuant to the historical plans and stock options
and stock settled stock appreciation rights denominated in the equity of certain of our subsidiaries granted prior to
the IPO, as well as provides for the future grant of these and other equity awards. The 2015 and 2017 plans
authorize the Company to grant awards to its employees, officers, directors and consultants. At December 31,
2018, there were 28.1 million shares available for the future grant of equity awards under the 2015 and 2017 plans
collectively.
The 2015 and 2017 plans have a stated term of ten years and provide that the exercise price of stock options
granted will not be less than the market price of the Company’s common stock on the grant date. Neither plan
specifies grant dates or vesting schedules of awards as those determinations have been delegated to the
Compensation and Human Resources Committee of Match Group’s Board of Directors (the “Committee”). Each
grant agreement reflects the vesting schedule for that particular grant as determined by the Committee. Stock
options granted subsequent to September 1, 2015 will generally vest in four equal annual installments over a four-
year period. RSU awards outstanding generally vest over a three- or four-year period. Market-based awards
outstanding generally vest over a two- to four-year period.
Stock-based compensation expense recognized in the consolidated statement of operations includes expense
related to the Company’s stock options and RSUs, performance-based stock options, market-based RSUs and
PSUs for which vesting is considered probable, equity instruments denominated in shares of subsidiaries, and IAC
denominated stock options, RSUs and market-based awards held by Match Group employees. The amount of
stock-based compensation expense recognized is net of estimated forfeitures, as the expense recorded is based on
awards that are ultimately expected to vest. The forfeiture rate is estimated at the grant date based on historical
experience and revised, if necessary, in subsequent periods if actual forfeitures differ from the estimated rate. At
December 31, 2018, there is $119.3 million of unrecognized compensation cost, net of estimated forfeitures,
related to all equity-based awards, which is expected to be recognized over a weighted average period of
approximately 2.4 years.
The total income tax benefit recognized in the accompanying consolidated statement of operations for the
years ended December 31, 2018, 2017 and 2016 related to all stock-based compensation is $107.2 million, $295.1
million and $16.4 million, respectively. The increase in total income tax benefit recognized in the consolidated
statement of operations during 2017 relative to 2016 is due to the adoption of ASU 2016-09, effective January 1,
2017, which required the associated recognition of excess tax benefits attributable to stock-based compensation to
be included as a component of the current year provision for income taxes rather than recognized as an adjustment
to additional paid-in capital. The aggregate income tax benefit recognized related solely to stock-based
compensation for the years ended December 31, 2018, 2017, and 2016, including the portion recognized as a
component of equity in 2016 is $103.3 million, $310.9 million, and $40.1 million, respectively.
As the Company is currently in a NOL position there will be some delay in the timing of the realization of
cash benefits of income tax deductions related to stock-based compensation because it will be dependent upon the
amount and timing of future taxable income and the timing of estimated income tax payments.
85
MATCH GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Adjustment for Special Dividend
On November 6, 2018, the Board of Directors declared a special dividend of $2.00 per share on Match
Group common stock and Class B common stock. See “Note 8—Shareholders' Equity” for additional information
on the dividend. As required by our equity incentive plans, an adjustment was made to outstanding awards to
prevent dilution of their value resulting from the special dividend. These adjustments did not result in incremental
stock-based compensation expense as the anti-dilutive adjustments were required by our equity incentive plans.
The adjustments to awards included increasing the number of outstanding stock options and RSUs, performance-
based stock options, and market-based RSUs, as well as reducing the exercise prices of outstanding stock options.
The impact of these adjustments is reflected in the disclosures below.
Stock Options
Stock options outstanding at December 31, 2018 and changes during the year ended December 31, 2018 are
as follows:
December 31, 2018
Weighted
Average
Exercise
Price
Weighted
Average
Remaining
Contractual
Term (In Years)
(Shares and intrinsic value in thousands)
Aggregate
Intrinsic
Value
Shares
Outstanding at January 1, 2018
35,878
$
Granted
Adjustment for special dividend
Exercised
Forfeited
Expired
Outstanding at December 31, 2018 (a)
Options exercisable
______________________
580
953
(14,160)
(3,750)
(6)
19,495
5,143
$
$
13.50
33.45
N/A
11.61
13.97
12.07
14.72
13.60
7.6
6.9
$
$
546,911
150,033
(a)
Included in the outstanding balance at December 31, 2018 are 0.6 million performance-based stock
options, which vest in varying amounts and years depending upon certain performance conditions. The
Company does not expect any shares to vest based on our current assessment of the performance
conditions. The table above includes these awards at their maximum potential payout.
The aggregate intrinsic value in the table above represents the difference between Match Group’s closing
stock price on the last trading day of 2018 and the exercise price, multiplied by the number of in-the-money
options that would have been exercised had all option holders exercised their options on December 31, 2018. The
total intrinsic value of stock options exercised during the years ended December 31, 2018, 2017 and 2016 is
$455.1 million, $533.8 million and $37.3 million, respectively.
86
MATCH GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The following table summarizes the information about stock options outstanding and exercisable at
December 31, 2018:
Range of Exercise Prices
$0.01 to $5.00
$5.01 to $10.00
$10.01 to $15.00
$15.01 to $20.00
$20.01 to $25.00
$25.01 to $30.00
$30.01 to $35.00
$35.01 to $40.00
Options Outstanding
Weighted-
Average
Remaining
Contractual
Life in Years
Outstanding at
December 31,
2018
Weighted-
Average
Exercise
Price
Exercisable at
December 31,
2018
(Shares in thousands)
Options Exercisable
Weighted-
Average
Remaining
Contractual
Life in Years
Weighted-
Average
Exercise
Price
156
4,723
7,075
4,368
1,744
1,050
274
105
19,495
6.4
7.4
6.7
8.1
8.7
8.9
9.1
9.1
7.6
$
$
4.32
8.97
12.61
17.08
22.53
26.89
30.75
38.98
14.72
92
894
3,073
532
402
150
—
—
5,143
6.4
7.3
6.2
8.0
8.7
8.9
—
—
6.9
$
$
4.36
8.72
12.95
17.00
22.40
26.12
—
—
13.60
The fair value of stock option awards, with the exception of market-based awards, is estimated on the grant
date using the Black-Scholes option pricing model. The Black-Scholes option pricing model incorporates various
assumptions, including expected volatility and expected term. At December 31, 2018, the Company uses a blend
of Match Group’s historical volatility and IAC’s historical volatility. The risk-free interest rates are based on U.S.
Treasuries with comparable terms as the awards, in effect at the grant date. The expected term is based upon the
combination of the initial vesting term and the historical exercise behavior of our employees after vest. The
following are the weighted average assumptions used in the Black-Scholes option pricing model:
Expected volatility
Risk-free interest rate
Expected term
Dividend yield
Years Ended December 31,
2018
2017
2016
29%
2.5%
27%
1.9%
27%
1.3%
5.3 years
5.0 years
4.8 years
—%
—%
—%
Approximately 0.6 million, 8.2 million and 8.7 million stock options were granted by the Company during
the years ended December 31, 2018, 2017 and 2016, respectively. The weighted average fair value of stock
options granted during the years ended December 31, 2018, 2017 and 2016 is $10.63, $5.67 and $2.98,
respectively.
Cash received from stock option exercises for the years ended December 31, 2018, 2017, and 2016 is less
than $0.1 million, $59.4 million, and $39.4 million respectively. The decrease in cash received from stock option
exercises in 2018 compared to prior years is due to substantially all options being net settled for the exercise price
beginning in late 2017.
87
MATCH GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Restricted Stock Units and Performance-based Stock Units
RSUs and PSUs are awards in the form of phantom shares or units denominated in a hypothetical equivalent
number of shares of Match Group common stock and with the value of each RSU and PSU equal to the fair value
of Match Group common stock at the date of grant. Each RSU and PSU grant is subject to service-based vesting,
where a specific period of continued employment must pass before an award vests. PSUs also include
performance-based vesting, where certain performance targets set at the time of grant must be achieved before an
award vests. For RSU grants, the expense is measured at the grant date as the fair value of Match Group common
stock and expensed as stock-based compensation over the vesting term. For PSU grants, the expense is measured
at the grant date as the fair value of Match Group common stock and expensed as stock-based compensation over
the vesting term if the performance targets are considered probable of being achieved.
All outstanding PSUs were forfeited during the year ended December 31, 2017 and no additional PSUs were
granted in 2018. Unvested RSUs outstanding at December 31, 2018 and changes during the year ended
December 31, 2018 are as follows:
Unvested at January 1, 2018
Granted
Adjustment for special dividend
Vested
Forfeited
Unvested at December 31, 2018
RSUs
Weighted
Average
Grant Date
Fair Value
Number
of shares
(Shares in thousands)
2,214
$
1,389
136
(493)
(487)
2,759
$
18.65
42.24
N/A
18.21
20.75
29.38
The weighted average fair value of RSUs and PSUs granted during the years ended December 31, 2018,
2017, and 2016, based on market prices of Match Group’s common stock on the grant date, was $42.24, $19.21
and $12.65, respectively. The total fair value of RSUs that vested during the years ended December 31, 2018,
2017, and 2016 was $9.0 million, $6.7 million and $1.1 million, respectively.
Market-based Awards
During 2018, 2017, and 2016, the Company granted market-based awards to certain employees. The
number of awards that ultimately vest for certain awards is dependent upon Match Group’s stock price and for
other awards on the valuation of a wholly-owned business. The grant date fair value of each market-based award
is estimated using a lattice model that incorporates a Monte Carlo simulation of Match Group’s stock price and, as
necessary, the valuation of the subsidiary. Each market-based award is subject to service-based vesting, where a
specific period of continued employment must pass before an award vests in addition to the market condition.
88
MATCH GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Market-based awards outstanding at December 31, 2018 and changes during the year ended December 31,
2018 are as follows:
Unvested at January 1, 2018
Granted
Adjustment for special dividend
Vested
Forfeited
Unvested at December 31, 2018
Market-based awards
Number
of shares
Weighted
Average
Grant Date
Price
(Shares in thousands)
6,107
$
527
225
(343)
(1,907)
4,609
$
19.41
26.91
N/A
14.20
19.26
18.28
The weighted average fair value of market-based awards granted during the years ended December 31, 2018,
2017, and 2016, based on the valuation model, was $6.88, $7.50 and $1.77, respectively. The total fair value of
market-based awards that vested during the years ended December 31, 2018, 2017, and 2016 was $4.9 million,
$3.1 million and $0.1 million, respectively.
Net Settlement of Awards
We settle substantially all equity awards on a net basis. Assuming all equity awards outstanding on
December 31, 2018 were net settled on that date, we would have issued 9.7 million common shares (of which 1.7
million are related to vested shares and 8.0 million are related to unvested shares) and, assuming a 50%
withholding rate, would have remitted $416.2 million in cash for withholding taxes (of which $75.0 million is
related to vested shares and $341.2 million is related to unvested shares). If we decided to issue a sufficient
number of shares to cover the $416.2 million employee withholding tax obligation, 9.7 million additional shares
would be issued by the Company.
Converted Tinder Options
In July 2017, the Company elected to convert all outstanding equity awards of its wholly-owned Tinder
business into Match Group options at a value determined through a process involving two investment banks.
These converted Match Group options are included in the option tables above.
These former subsidiary denominated awards, when exercised, can be settled by Match Group issuing shares
of its common stock equal in value to the intrinsic value of the award being settled, net of shares with a value
equal to the withholding taxes due, which taxes are remitted by Match Group to the government on behalf of the
employees or the employee can pay the exercise price and applicable withholding taxes and receive the number of
Match Group shares equal to the number of options exercised. At the time of settlement, IAC has the option to
issue its own shares directly to the award holders, in which case Match Group would in turn issue its shares to
IAC as reimbursement. In either settlement scenario, the same number of Match Group shares would be issued.
During the year ended December 31, 2017, we made cash payments totaling $272.5 million to purchase
certain fully vested options.
Equity Instruments Formerly Denominated in the Shares of Certain Subsidiaries
The Company issued 1.7 million Match Group common shares, and paid $22.8 million of withholding taxes,
to settle awards granted to current and former employees who exercised their subsidiary options during the year
ended December 31, 2016.
During 2014, the Company granted an equity award denominated in shares of a subsidiary of the Company
to a non-employee, which was marked to market each reporting period. In the third quarter of 2016, the Company
89
MATCH GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
settled the vested portion of the award for cash of $13.4 million. In the third quarter of 2017, the award was
modified and the Company settled the remaining portion of the award for cash of $33.9 million.
IAC Denominated Stock Options
There were no IAC stock options granted by IAC under its equity incentive plans to employees of Match
Group during the years ended December 31, 2018 and 2017. During the year ended December 31, 2016, there
were less than 0.1 million IAC stock options granted by IAC under its equity incentive plans to employees of
Match Group. Approximately 0.2 million IAC stock options remain outstanding to employees of Match Group as
of December 31, 2018. The fair value of each stock option award was estimated on the grant date using the
Black–Scholes option pricing model. IAC stock options were granted with exercise prices at least equal to the fair
value on the date of grant, vest ratably in annual installments over a four-year period and expire ten years from the
date of grant.
IAC Denominated RSUs and Market-based Awards
During both the years ended December 31, 2018 and 2016, less than 0.1 million IAC RSUs and market-
based awards were granted by IAC to employees of Match Group. There were no IAC RSUs or market-based
awards granted by IAC to employees of Match Group during the year ended December 31, 2017. RSUs are
awards in the form of phantom shares or units, denominated in a hypothetical equivalent number of shares of IAC
common stock and with the value of each RSU equal to the fair value of IAC common stock at the date of grant.
Each RSU grant is subject to service-based vesting, where a specific period of continued employment must pass
before an award vests. The number of market-based awards that ultimately vest is dependent upon Match Group’s
stock price. The grant date fair value of each market-based award is estimated using a lattice model that
incorporates a Monte Carlo simulation of Match Group’s stock price. Each market-based award is subject to
service-based vesting, where a specific period of continued employment must pass before an award vests. Some
of the market-based awards contain performance targets set at the time of grant that must be achieved before an
award vests.
NOTE 12—GEOGRAPHIC INFORMATION
Revenue by geography is based on where the customer is located. Geographic information about revenue
and long-lived assets is presented below:
Revenue
United States
All other countries
Total
Years Ended December 31,
2018
2017
2016
(In thousands)
$
872,977
$
722,446
$
668,699
856,873
608,215
449,411
$ 1,729,850
$ 1,330,661
$ 1,118,110
The United States is the only country from which revenue is greater than 10 percent of total revenue.
90
MATCH GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Long-lived assets (excluding goodwill and intangible assets)
United States
France
Canada
All other countries
Total
December 31,
2018
2017
(In thousands)
$
35,004
$
11,591
8,927
2,829
37,547
13,635
6,738
3,700
$
58,351
$
61,620
NOTE 13—COMMITMENTS AND CONTINGENCIES
Commitments
The Company leases office space, data center facilities and equipment used in connection with its operations
under various operating leases, many of which contain escalation clauses. The Company is also committed to pay
a portion of the related operating expenses under certain lease agreements. These operating expenses are not
included in the table below.
Future minimum payments under operating lease agreements are as follows:
2019
2020
2021
2022
2023
Thereafter
Total
(In thousands)
11,559
$
13,470
12,100
6,812
6,021
17,471
67,433
$
Expenses charged to operations under these agreements were $18.0 million, $16.0 million and $15.5 million
for the years ended December 31, 2018, 2017 and 2016, respectively. See “Note 15—Related Party Transactions”
for additional information related to related party transactions associated with operating leases.
The Company also has funding commitments in the form of a purchase obligation and surety bonds. The
purchase obligations due in less than one year are $27.2 million and the purchase obligations due between one and
three years are $23.9 million for a total of $51.1 million in purchase obligations. The purchase obligations
primarily relate to web hosting services with $20.0 million due for both the years ended December 31, 2019 and
2020. Letters of credit and surety bonds totaling $0.4 million expire within twelve months of December 31, 2018.
Contingencies
In the ordinary course of business, the Company is a party to various lawsuits. The Company establishes
reserves for specific legal matters when it determines that the likelihood of an unfavorable outcome is probable
and the loss is reasonably estimable. Management has also identified certain other legal matters where we believe
an unfavorable outcome is not probable and, therefore, no reserve is established. Although management currently
believes that resolving claims against us, including claims where an unfavorable outcome is reasonably possible,
will not have a material impact on the liquidity, results of operations, or financial condition of the Company, these
matters are subject to inherent uncertainties and management’s view of these matters may change in the future.
The Company also evaluates other contingent matters, including income and non-income tax contingencies, to
assess the likelihood of an unfavorable outcome and estimated extent of potential loss. It is possible that an
unfavorable outcome of one or more of these lawsuits or other contingencies could have a material impact on the
91
MATCH GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
liquidity, results of operations, or financial condition of the Company. See “Note 3—Income Taxes” for
additional information related to income tax contingencies.
Tinder Optionholder Litigation against IAC and Match Group
On August 14, 2018, ten then-current and former employees of Match Group, LLC or Tinder, Inc.
(“Tinder”), an operating business of Match Group, filed a lawsuit in New York state court against IAC and Match
Group. See Sean Rad et al. v. IAC/InterActiveCorp and Match Group, Inc., No. 654038/2018 (Supreme Court,
New York County). The complaint alleges that in 2017, the defendants: (i) wrongfully interfered with a
contractually established process for the independent valuation of Tinder by certain investment banks, resulting in
a substantial undervaluation of Tinder and a consequent underpayment to the plaintiffs upon exercise of their
Tinder stock options, and (ii) then wrongfully merged Tinder into Match Group, thereby depriving one of the
plaintiffs (Mr. Rad) of his contractual right to later valuations of Tinder on a stand-alone basis. The complaint
asserts claims for breach of contract, breach of the implied covenant of good faith and fair dealing, unjust
enrichment, interference with contractual relations (as against Match Group only), and interference with
prospective economic advantage, and seeks compensatory damages in the amount of at least $2 billion, as well as
punitive damages. On August 31, 2018, four plaintiffs who were still employed by Match Group filed a notice of
discontinuance of their claims without prejudice, leaving the six former employees as the remaining plaintiffs. On
October 9, 2018, the defendants filed a motion to dismiss the complaint on various grounds, including that the
2017 valuation of Tinder by the investment banks was an expert determination any challenge to which is both
time-barred under applicable law and available only on narrow substantive grounds that the plaintiffs have not
pleaded in their complaint. On December 17, 2018, Plaintiffs filed their opposition to the motion to dismiss. On
January 15, 2019, the defendants filed their reply brief. A hearing on the motion is scheduled for March 6, 2019,
and discovery in the case is proceeding. IAC and Match Group believe that the allegations in this lawsuit are
without merit and will continue to defend vigorously against it.
FTC Investigation of Certain Match.com Business Practices
In March 2017, the Federal Trade Commission (“FTC”) requested information and documents in connection
with a civil investigation regarding certain business practices of Match.com. In November 2018, the FTC
proposed to resolve its potential claims relating to Match.com’s marketing, chargeback and online cancellation
practices via a consent judgment mandating certain changes in the company’s business practices, as well as a
payment in the amount of $60 million. Match Group believes that the FTC’s legal challenges to Match.com’s
practices, policies, and procedures are without merit and is prepared to vigorously defend against them.
NOTE 14—SUPPLEMENTAL CASH FLOW INFORMATION
Supplemental Disclosure of Non-Cash Transactions:
The Company recorded an acquisition-related contingent consideration liability of $0.2 million during the
year ended December 31, 2016. There were no acquisition-related contingent consideration liabilities recorded
for the years ended December 31, 2018 and 2017. See “Note 6—Financial Instruments” for additional
information on contingent consideration arrangements.
Supplemental Disclosure of Cash Flow Information:
Years Ended December 31,
2018
2017
2016
(In thousands)
Cash paid (received) during the year for:
Interest
Income tax payments, including amounts paid to IAC for
Match Group’s share of IAC’s consolidated tax liability
Income tax refunds
$
71,308
$
71,893
$
82,494
39,267
(17,720)
28,938
(13,537)
44,733
(962)
92
MATCH GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31,
2018
2017
2016
2015
(In thousands)
Cash and cash equivalents
$
186,947
$
272,624
$
253,651
$
88,173
Restricted cash included in other current
assets
Total cash, cash equivalents and restricted
cash as shown on the consolidated
statement of cash flow
193
137
120
126
$
187,140
$
272,761
$
253,771
$
88,299
NOTE 15—RELATED PARTY TRANSACTIONS
Relationship with IAC
In connection with the IPO in 2015, the Company entered into certain agreements relating to our relationship
with IAC. These agreements include a master transaction agreement; an investor rights agreement; a tax sharing
agreement; a services agreement; an employee matters agreement and a subordinated loan agreement.
For the years ended December 31, 2018, 2017 and 2016, the Company incurred $7.6 million, $9.9 million,
and $11.8 million, respectively, pursuant to the services agreement. Included in these amounts are $5.2 million,
$5.1 million and $4.3 million, respectively, for leasing of office space for certain of our businesses at properties
owned by IAC. Additionally, the Company paid an IAC subsidiary $1.2 million for the sublease of space in a data
center for the year ended December 31, 2016, and discontinued subleasing as of December 31, 2016. In
December 2017, certain international subsidiaries of the Company agreed to sell net operating losses that were not
expected to be utilized to an IAC subsidiary for $0.9 million. All amounts were paid in full by the Company at
December 31, 2018, 2017 and 2016, respectively.
Master Transaction Agreement
The master transaction agreement sets forth the agreements between IAC and the Company regarding the
principal transactions necessary to separate our business from IAC, as well as governs certain aspects of our
relationship with IAC post IPO. Under the master transaction agreement, the Company agrees to assume all of the
assets and liabilities related to its business and agrees to indemnify IAC against any losses arising out of any
breach by the Company of the master transaction agreement or the other transaction related agreements described
below. IAC also agrees to indemnify the Company against losses arising out of any breach by IAC of the master
transaction agreement or any of the other transaction related agreements.
Investor Rights Agreement
Under the investor rights agreement, the Company provides IAC with (i) specified registration and other
rights relating to its shares of our common stock and (ii) anti-dilution rights. See “Note 8—Shareholders' Equity”
for additional information on the anti-dilution rights.
Tax Sharing Agreement
The tax sharing agreement governs the rights, responsibilities, and obligations of the Company and IAC with
respect to tax liabilities and benefits, entitlements to refunds, preparation of tax returns, tax contests and other tax
matters regarding U.S. federal, state, local and foreign income taxes. Under the tax sharing agreement, the
Company is generally responsible and required to indemnify IAC for: (i) all taxes imposed with respect to any
consolidated, combined or unitary tax return of IAC or one of its subsidiaries that includes the Company or any of
its subsidiaries to the extent attributable to the Company or any of its subsidiaries, as determined under the tax
sharing agreement, and (ii) all taxes imposed with respect to any of the Company’s subsidiaries’ consolidated,
combined, unitary or separate tax returns.
At December 31, 2017, the Company had tax receivables of $7.3 million due from IAC pursuant to the tax
sharing agreement, which is included in “Other current assets” in the accompanying consolidated balance sheet.
Refunds from IAC during 2018 and 2017 pursuant to this agreement were $7.0 million and $10.9 million,
93
MATCH GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
respectively. There were no outstanding receivables or payables pursuant to the tax sharing agreement as of
December 31, 2018.
Services Agreement
The services agreement governs services that IAC provides to the Company including, among others: (i)
assistance with certain legal, finance, internal audit, treasury, information technology support, insurance and tax
matters, including assistance with certain public company reporting obligations; (ii) payroll processing services;
(iii) tax compliance services; and (iv) such other services as to which IAC and the Company may agree. In
addition, under the services agreement the Company provides IAC informational technology services and such
other services as to which IAC and the Company may agree. The services agreement had an initial term of one
year from the date of the IPO, and provides for automatic renewals for additional one-year periods, subject to
IAC’s continued ownership of a majority of the combined voting power of the Company’s voting stock.
Employee Matters Agreement
The employee matters agreement covers a wide range of compensation and benefit issues related to the
allocation of liabilities associated with: (i) employment or termination of employment, (ii) employee benefit plans
and (iii) equity awards. Under the employee matters agreement, the Company’s employees participate in IAC’s
U.S. health and welfare plans, 401(k) plan and flexible benefits plan and the Company reimburses IAC for the
costs of such participation. In the event IAC no longer retains shares representing at least 80% of the aggregate
voting power of shares entitled to vote in the election of the Company’s Board of Directors, Match Group will no
longer participate in IAC’s employee benefit plans, but will establish its own employee benefit plans that will be
substantially similar to the plans sponsored by IAC.
The employee matters agreement also requires the Company to reimburse IAC for the cost of any IAC
equity awards held by Match Group’s employees and former employees and that IAC may elect to receive
payment either in cash or Company common stock. With respect to equity awards originally denominated in
shares of the Company’s subsidiaries, IAC may require those awards to be settled in either shares of IAC’s
common stock or in shares of the Company’s common stock and, to the extent shares of IAC common stock are
issued in settlement, the Company will reimburse IAC for the cost of those shares by issuing to IAC additional
shares of the Company’s common stock.
During the years ended December 31, 2018, 2017 and 2016, 3.0 million, 11.9 million and 1.0 million shares,
respectively, of Company common stock were issued to IAC pursuant to the employee matters agreement; 2.5
million, 11.3 million and 0.5 million, respectively, of which were issued as reimbursement for shares of IAC
common stock issued in connection with the exercise and settlement of equity awards originally denominated in
shares of a subsidiary of the Company; and 0.5 million, 0.6 million and 0.5 million, respectively, of which were
issued as reimbursement for shares of IAC common stock issued in connection with the exercise and vesting of
IAC equity awards held by Company employees.
IAC Subordinated Loan Facility
Prior to the IPO, the Company entered into an uncommitted subordinated loan facility with IAC (the “IAC
Subordinated Loan Facility”), which allows the Company to make one or more requests to IAC to borrow funds.
If IAC agrees to fulfill any such borrowing request, the related indebtedness will be incurred in accordance with
the terms of the IAC Subordinated Loan Facility. Any indebtedness outstanding under the IAC Subordinated
Loan Facility will be by its terms subordinated in right of payment to the obligations under the Match Group
Credit Agreement and the Match Group Senior Notes, and will bear interest at the applicable rate set forth in the
pricing grid in the Match Group Credit Agreement, which rate is based on the Company’s consolidated net
leverage ratio at the time of borrowing, plus an additional amount to be agreed upon. The IAC Subordinated Loan
Facility has a scheduled final maturity date of no earlier than 90 days after the maturity date of the Match Group
Credit Facility or the latest maturity date in respect of any class of Term Loans outstanding under the Match
Group Credit Agreement. At December 31, 2018, the Company had no indebtedness outstanding under the IAC
Subordinated Loan Facility.
94
MATCH GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Other Related Party Transactions
On August 10, 2018, Gregory R. Blatt resigned as a director of the Company and entered into an advisory
agreement with the Company, pursuant to which he will advise the Company on matters relating to its business,
strategy and operations. The term of the advisory agreement will end on February 29, 2020. Pursuant to their
terms, Mr. Blatt’s outstanding stock options will remain exercisable and continue to vest, as applicable, as long as
he continues to perform services for the Company.
NOTE 16—BENEFIT PLANS
Match Group employees are eligible to participate in a retirement savings plan sponsored by IAC in the
United States, which is qualified under Section 401(k) of the Internal Revenue Code. Under the IAC/
InterActiveCorp Retirement Savings Plan (the “Plan”), participating employees may contribute up to 50% of their
pre-tax earnings, but not more than statutory limits. The employer match under the Plan is fifty cents for each
dollar a participant contributes in this Plan, with a maximum contribution of 3% of a participant’s eligible
earnings. Matching contributions under the Plan for the years ended December 31, 2018, 2017 and 2016 were
$2.8 million, $2.2 million and $1.6 million, respectively. Matching contributions are invested in the same manner
as each participant’s voluntary contributions in the investment options provided under the Plan. An investment
option in the Plan is IAC common stock, but neither participant nor matching contributions are required to be
invested in IAC common stock. The increase in matching contributions in 2018 and 2017 is due primarily to an
increase in participation in the Plan due to increased headcount.
Internationally, Match Group also has or participates in various benefit plans, primarily defined contribution
plans. The Company’s contributions for these plans for the years ended December 31, 2018, 2017 and 2016 were
$2.8 million, $2.2 million and $1.9 million, respectively.
NOTE 17—CONSOLIDATED FINANCIAL STATEMENT DETAILS
Other current assets:
Capitalized mobile app fees
Prepaid expenses
Other
Other current assets
December 31,
2018
2017
(In thousands)
$
$
29,216
$
19,476
9,074
57,766
$
22,070
16,374
16,925
55,369
December 31,
2018
2017
(In thousands)
Property and equipment, net:
Computer equipment and capitalized software
$
136,083
$
134,757
Leasehold improvements
Furniture and other equipment
Projects in progress
Accumulated depreciation and amortization
Property and equipment, net
24,529
7,395
3,369
171,376
(113,025)
58,351
$
$
22,390
7,216
6,117
170,480
(108,860)
61,620
95
MATCH GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Accrued expenses and other current liabilities:
Accrued advertising expense
Accrued employee compensation and benefits
Other
Accrued expenses and other current liabilities
December 31,
2018
2017
(In thousands)
$
$
40,894
$
38,378
56,699
28,878
30,375
51,313
135,971
$
110,566
Other income (expense), net
Years Ended December 31,
2018
2017
2016
$
7,765
(In thousands)
$
(30,827) $
7,866
Other income, net in 2018 includes $5.3 million in net foreign currency exchange gains due primarily to a
strengthening of the U.S. dollar relative to the British Pound in the period and $4.9 million of interest income,
partially offset by $2.1 million related to impairments of certain equity investments and $0.7 million related to a
mark-to-market adjustment pertaining to a subsidiary denominated equity instrument.
Other expense, net, in 2017 includes expenses of $15.4 million related to the redemption of our 6.75%
Senior Notes and repricing of the Term Loan, $13.0 million related to a mark-to-market adjustment pertaining to a
subsidiary denominated equity award held by a non-employee, $10.3 million in net foreign currency exchange
losses, and a $2.3 million other-than-temporary impairment charge related to a cost method investment resulting
from of our assessment of the near-term prospects and financial condition of the investee. These expenses were
partially offset by a gain on the sale of a cost method investment of $9.1 million.
Other income, net in 2016 includes $20.0 million in foreign currency exchange gains due to strengthening of
the dollar relative to the British Pound and Euro and a $3.1 million gain related to the sale of a marketable equity
security, partially offset by a non-cash charge of $12.1 million related to the write-off of a proportionate share of
original issue discount and deferred financing costs associated with prepayments of $440 million of the Term
Loan, $2.1 million of expense related to mark-to-market adjustment pertaining to a subsidiary denominated equity
award held by a non-employee, $1.5 million repricing fees related to the Term Loan, and a $0.7 million other-
than-temporary impairment charge related to a certain cost method investment.
96
MATCH GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 18—QUARTERLY RESULTS (UNAUDITED)
Year Ended December 31, 2018
Revenue
Cost of revenue
Operating income
Earnings from continuing operations
Loss from discontinued operations, net of
tax
Net earnings attributable to Match Group,
Inc. shareholders
Quarter Ended
March 31
Quarter Ended
June 30
Quarter Ended
September 30 (a)
(In thousands, except per share data)
Quarter Ended
December 31 (b)
$
407,367
$
421,196
$
443,943
$
93,944
112,233
99,678
97,334
150,165
131,358
107,512
139,895
127,950
457,344
111,210
151,001
113,983
—
—
(378)
—
99,736
132,500
130,159
115,544
Per share information from continuing operations attributable to the Match Group, Inc. shareholders:
Basic (c)
0.48
Diluted (c)
0.45
Per share information attributable to the Match Group, Inc. shareholders:
Basic (c)
Diluted (c)
0.36
0.33
0.47
0.44
0.44
0.33
0.47
0.36
0.45
0.48
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
0.42
0.39
0.42
0.39
Year Ended December 31, 2017
Revenue
Cost of revenue
Operating income
Earnings (loss) from continuing operations
(Loss) earnings from discontinued
operations, net of tax
Net earnings (loss) attributable to Match
Group, Inc. shareholders
$
298,764
$
309,572
$
343,418
$
378,907
58,848
58,871
24,555
62,665
82,975
51,544
72,044
91,008
287,771
85,942
127,663
(7,893)
(4,491)
(71)
(85)
(1,003)
20,053
51,430
287,688
(9,023)
Per share information from continuing operations attributable to the Match Group, Inc. shareholders:
Basic (c)
0.20
Diluted (c)
0.17
Per share information attributable to the Match Group, Inc. shareholders:
Basic (c)
Diluted (c)
1.08
0.98
0.10
0.08
0.07
1.08
0.17
0.98
0.20
0.08
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
(0.03)
(0.03)
(0.03)
(0.03)
______________________
(a) Net earnings for the third quarter of 2017 was impacted by an income tax benefit of $226.2 million
primarily due to excess tax deductions attributable to stock-based compensation.
(b) Net loss for the fourth quarter of 2017 was impacted by an incremental income tax provision of $92.3
million related to the Tax Act, of which, $23.7 million relates to the Transition Tax and a $68.6 million
relates to the remeasurement of U.S. net deferred tax assets due to the reduction in the corporate income
tax rate.
(c) Quarterly per share amounts may not add to the related annual per share amount because of differences in
the average common shares outstanding during each period.
97
MATCH GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 19—SUBSEQUENT EVENT (UNAUDITED)
On February 15, 2019, we completed a private offering of $350 million aggregate principal amount of
5.625% Senior Notes due 2029. The proceeds from these notes were used to repay outstanding borrowings under
our existing Credit Facility, to pay expenses associated with the offering, and for general corporate purposes.
98
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Not applicable.
Item 9A. Controls and Procedures
Conclusion Regarding the Effectiveness of the Company’s Disclosure Controls and Procedures
The Company monitors and evaluates on an ongoing basis its disclosure controls and procedures in order to
improve their overall effectiveness. In the course of these evaluations, the Company modifies and refines its
internal processes as conditions warrant.
As required by Rule 13a-15(b) of the Exchange Act, Match Group management, including the Chief
Executive Officer (“CEO”) and the Chief Financial Officer (“CFO”), conducted an evaluation, as of the end of the
period covered by this report, of the effectiveness of the Company’s disclosure controls and procedures as defined
in Exchange Act Rule 13a-15(e). Based on this evaluation, the CEO and the CFO concluded that the Company’s
disclosure controls and procedures were effective as of the end of the period covered by this report.
Management’s Report on Internal Control Over Financial Reporting
Management of the Company is responsible for establishing and maintaining adequate internal control over
financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) for the Company. The Company’s
internal control over financial reporting is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance
with accounting principles generally accepted in the United States. Management assessed the effectiveness of the
Company’s internal control over financial reporting as of December 31, 2018. In making this assessment, our
management used the criteria for effective internal control over financial reporting described in “Internal Control
—Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission in
2013. Based on this assessment, management has determined that, as of December 31, 2018, the Company’s
internal control over financial reporting is effective. The effectiveness of our internal control over financial
reporting as of December 31, 2018 has been audited by Ernst & Young LLP, an independent registered public
accounting firm, as stated in their attestation report, included herein.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect
misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that
controls may become inadequate because of changes in conditions, or that the degree of compliance with the
policies or procedures may deteriorate.
Changes in Internal Control Over Financial Reporting
The Company monitors and evaluates on an ongoing basis its internal control over financial reporting in
order to improve its overall effectiveness. In the course of these evaluations, the Company modifies and refines
its internal processes as conditions warrant. As required by Rule 13a-15(d), Match Group management, including
the CEO and the CFO, also conducted an evaluation of the Company’s internal control over financial reporting to
determine whether any changes occurred during the quarter ended December 31, 2018 that have materially
affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
Based on that evaluation, there has been no such change during the quarter ended December 31, 2018.
99
Report of Independent Registered Public Accounting Firm
To the Shareholders and the Board of Directors of Match Group, Inc.
Opinion on Internal Control over Financial Reporting
We have audited Match Group, Inc. and subsidiaries’ internal control over financial reporting as of December 31,
2018, based on criteria established in Internal Control—Integrated Framework issued by the Committee of
Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion,
Match Group, Inc. and subsidiaries (the Company) maintained, in all material respects, effective internal control
over financial reporting as of December 31, 2018, based on the COSO criteria.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board
(United States) (PCAOB), the consolidated balance sheet of the Company as of December 31, 2018 and 2017, and
the related consolidated statements of operations, comprehensive operations, shareholders' equity, and cash flows
for each of the three years in the period ended December 31, 2018, and the related notes and the financial
statement schedule listed in the Index at Item 15(a), and our report dated February 28, 2019 expressed an
unqualified opinion thereon.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and
for its assessment of the effectiveness of internal control over financial reporting included in the accompanying
Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion
on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm
registered with the PCAOB and are required to be independent with respect to the Company in accordance with
the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange
Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether effective internal control over financial
reporting was maintained in all material respects.
Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a
material weakness exists, testing and evaluating the design and operating effectiveness of internal control based
on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We
believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles. A company’s internal control over financial reporting
includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail,
accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable
assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance
with generally accepted accounting principles, and that receipts and expenditures of the company are being made
only in accordance with authorizations of management and directors of the company; and (3) provide reasonable
assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the
company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect
misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that
controls may become inadequate because of changes in conditions, or that the degree of compliance with the
policies or procedures may deteriorate.
/s/ ERNST & YOUNG LLP
New York, New York
February 28, 2019
100
Item 9B. Other Information
Not applicable.
101
PART III
The information required by Part III (Items 10, 11, 12, 13 and 14) has been incorporated by reference to
Match Group’s definitive Proxy Statement to be used in connection with its 2019 Annual Meeting of Stockholders
(the “2019 Proxy Statement”), as set forth below in accordance with General Instruction G(3) of Form 10-K.
Item 10. Directors, Executive Officers and Corporate Governance
The information required by Items 401 and 405 of Regulation S-K relating to directors and executive
officers of Match Group and their compliance with Section 16(a) of the Exchange Act is set forth in the sections
entitled “Information Concerning Director Nominees” and “Information Concerning Match Group Executive
Officers Who Are Not Directors,” and “Section 16(a) Beneficial Ownership Reporting Compliance,” respectively,
in the 2019 Proxy Statement and is incorporated herein by reference. The information required by Item 406 of
Regulation S-K relating to Match Group’s Code of Ethics is set forth under the caption “Part I-Item 1-Business-
Additional Information-Code of ethics” of this annual report and is incorporated herein by reference. The
information required by subsections (c)(3), (d)(4) and (d)(5) of Item 407 of Regulation S-K is set forth in the
sections entitled “Corporate Governance” and “The Board and Board Committees” in the 2019 Proxy Statement
and is incorporated herein by reference.
Item 11. Executive Compensation
The information required by Item 402 of Regulation S-K relating to executive and director compensation is
set forth in the sections entitled “Executive Compensation” and “Director Compensation” in the 2019 Proxy
Statement and is incorporated herein by reference. The information required by subsections (e)(4) and (e)(5) of
Item 407 of Regulation S-K relating to certain compensation committee matters is set forth in the sections entitled
“The Board and Board Committees,” “Compensation Committee Report” and “Compensation Committee
Interlocks and Insider Participation” in the 2019 Proxy Statement and is incorporated herein by reference;
provided, that the information set forth in the section entitled “Compensation Committee Report” shall be deemed
furnished herein and shall not be deemed incorporated by reference into any filing under the Securities Act or the
Exchange Act.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters
The information regarding ownership of Match Group common stock and Class B common stock required
by Item 403 of Regulation S-K and securities authorized for issuance under Match Group’s various equity
compensation plans required by Item 201(d) of Regulation S-K is set forth in the sections entitled “Security
Ownership of Certain Beneficial Owners and Management” and “Equity Compensation Plan Information,”
respectively, in the 2019 Proxy Statement and is incorporated herein by reference.
Item 13. Certain Relationships and Related Transactions, and Director Independence
Information regarding certain relationships and related transactions involving Match Group required by Item
404 of Regulation S-K and director independence determinations required by Item 407(a) of Regulation S-K is set
forth in the sections entitled “Certain Relationships and Related Person Transactions” and “Corporate
Governance,” respectively, in the 2019 Proxy Statement and is incorporated herein by reference.
Item 14. Principal Accounting Fees and Services
Information required by Item 9(e) of Schedule 14A regarding the fees and services of Match Group’s
independent registered public accounting firm and the pre-approval policies and procedures applicable to services
provided to Match Group by such firm is set forth in the sections entitled “Fees Paid to Our Independent
Registered Public Accounting Firm” and “Audit and Non-Audit Services Pre-Approval Policy,” respectively, in
the 2019 Proxy Statement and is incorporated herein by reference.
102
PART IV
Item 15. Exhibits and Financial Statement Schedules
(a) List of documents filed as part of this Report:
(1) Consolidated Financial Statements of Match Group, Inc.
Report of Independent Registered Public Accounting Firm: Ernst & Young LLP.
Consolidated Balance Sheet as of December 31, 2018 and 2017.
Consolidated Statement of Operations for the Years Ended December 31, 2018, 2017 and 2016.
Consolidated Statement of Comprehensive Operations for the Years Ended December 31, 2018, 2017 and
2016.
Consolidated Statement of Shareholders’ Equity for the Years Ended December 31, 2018, 2017 and 2016.
Consolidated Statement of Cash Flows for the Years Ended December 31, 2018, 2017 and 2016.
Notes to Consolidated Financial Statements.
(2) Consolidated Financial Statement Schedule of Match Group, Inc.
Schedule
Number
II
Valuation and Qualifying Accounts.
All other financial statements and schedules not listed have been omitted since the required information is
either included in the Consolidated Financial Statements or the notes thereto, is not applicable or is not required.
103
The documents set forth below, numbered in accordance with Item 601 of Regulation S-K, are filed herewith,
incorporated by reference herein by reference to the location indicated, or furnished herewith.
EXHIBIT INDEX
Exhibit Description
Stock Purchase Agreement, dated as of July 13, 2015,
by and among Match.com Inc., Plentyoffish Media
Inc., Markus Frind, Markus Frind Family Trust No. 2,
and Frind Enterprises Ltd.
Incorporated by Reference
Form
8-K
SEC
File No.
Exhibit
Filing
Date
000-20570
2.1
7/17/2015
Filed (†) or
Furnished (‡)
Herewith
(as indicated)
Amended and Restated Certificate of Incorporation of
Match Group, Inc.
8-K
001-37636
Exhibit
No.
2.1
3.1
3.2
4.1
4.2
4.3
10.1
10.2
10.3
10.4
10.5
10.6
10.7
10.8
10.9
10.10
10.11
10.12
10.13
10.14
Amended and Restated By-laws of Match Group, Inc.
Indenture, dated June 1, 2016, between Match
Group, Inc. and Computershare Trust Company, N.A.,
as Trustee.
Investor Rights Agreement, dated as of November 24,
2015, by and between Match Group, Inc. and IAC/
InterActiveCorp.
Indenture, dated December 4, 2017, between Match
Group, Inc. and Computershare Trust Company, N.A.,
as Trustee.
Master Transaction Agreement, dated as of
November 24, 2015, by and between Match
Group, Inc. and IAC/InterActiveCorp.
Employee Matters Agreement, dated as of
November 24, 2015, by and between Match
Group, Inc. and IAC/InterActiveCorp.
Amendment No. 1 to the Employee Matters
Agreement, dated as of April 13, 2016, by and
between Match Group, Inc. and IAC/InterActiveCorp.
Tax Sharing Agreement, dated as of November 24,
2015, by and between Match Group, Inc. and IAC/
InterActiveCorp.
Services Agreement, dated as of November 24, 2015,
by and between Match Group, Inc. and IAC/
InterActiveCorp.
Match Group, Inc. 2015 Stock and Annual Incentive
Plan.(1)
First Amendment to the Match Group, Inc. 2015
Stock and Annual Incentive Plan.(1)
Form of Terms and Conditions for Stock Options
granted under the Match Group, Inc. 2015 Stock and
Annual Incentive Plan.(1)
Form of Terms and Conditions for Restricted Stock
Units granted under the Match Group, Inc. 2015
Stock and Annual Incentive Plan.(1)
Match Group, Inc. Amended and Restated 2017 Stock
and Annual Incentive Plan.(1)
Form of Terms and Conditions for Stock Options
granted under the Match Group, Inc. 2017 Stock and
Annual Incentive Plan.(1)
Form of Terms and Conditions for Restricted Stock
Units granted under the Match Group, Inc. 2017
Stock and Annual Incentive Plan.(1)
Summary of Non-Employee Director Compensation
Arrangements.(1)
Amended and Restated Credit Agreement, dated as of
November 16, 2015, among Match Group, Inc., as
borrower, the Lenders party thereto, JPMorgan Chase
Bank, N.A., as administrative agent, and the other
parties thereto.
8-K
8-K
001-37636
001-37636
3.1
3.1
4.1
11/24/2015
12/7/2017
6/2/2016
8-K
001-37636
4.1
11/24/2015
8-K
001-37636
4.1
12/4/2017
8-K
001-37636
10.1
11/24/2015
8-K
001-37636
10.2
11/24/2015
10-Q
001-37636
10.1
5/10/2016
8-K
001-37636
10.3
11/24/2015
8-K
001-37636
10.4
11/24/2015
8-K
001-37636
10.5
11/24/2015
10-Q
001-37636
10.1
8/4/2017
10-K
001-37636
10.7
2/28/2017
10-K
001-37636
10.8
2/28/2017
8-K
001-37636
10.1
6/21/2018
10-Q
001-37636
10.1
11/9/2017
10-Q
001-37636
10.2
11/9/2017
10-K
001-37636
10.9
3/28/2016
10-K
001-37636
10.11
3/28/2016
104
Exhibit
No.
10.15
10.16
10.17
10.18
10.19
10.20
10.21
10.22
21.1
23.1
31.1
31.2
32.1
32.2
Exhibit Description
Amendment No. 3, dated as of December 8, 2016, to
the Credit Agreement dated as of October 7, 2015, as
amended and restated as of November 16, 2015, as
further amended as of December 16, 2015, among
Match Group, Inc., as borrower, the Lenders party
thereto, JPMorgan Chase Bank, N.A., as
administrative agent, and the other parties thereto.
Amendment No. 4, dated as of August 14, 2017, to
the Credit Agreement dated as of October 7, 2015, as
amended and restated as of November 16, 2015, as
further amended as of December 16, 2015, as further
amended as of December 8, 2016, among Match
Group, Inc., as borrower, the Lenders party thereto,
JPMorgan Chase Bank, N.A., as administrative agent,
and the other parties thereto.
Amendment No. 5 dated as of December 7, 2018 to
the Credit Agreement dated as of October 7, 2015, as
amended and restated as of November 16, 2015, as
further amended as of December 16, 2015, as further
amended as of December 8, 2016, and as further
amended as of August 14, 2017, among Match Group,
Inc., as borrower, the Lenders party thereto,
JPMorgan Chase Bank, N.A., as administrative agent
and the other parties thereto.
Employment Agreement between Amanda W.
Ginsberg and Match Group, Inc. dated as of July 20,
2018.(1)
Employment Agreement between Gary Swidler and
Match Group, Inc. dated as of August 8, 2018.(1)
Employment Agreement between Jared Sine and
Match Group, Inc. dated as of August 8, 2018.(1)
Employment Agreement between Sharmistha Dubey
and Match Group, Inc. dated as of August 8, 2018.(1)
Advisory Agreement between Gregory R. Blatt and
Match Group, Inc. dated as of August 10, 2018.(1)
Subsidiaries of the Registrant as of December 31,
2018.
Consent of Ernst & Young LLP.
Certification of the Chief Executive Officer pursuant
to Rule 13a-14(a) or 15d-14(a) of the Securities
Exchange Act of 1934, as adopted pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.
Certification of the Chief Financial Officer pursuant
to Rule 13a-14(a) or 15d-14(a) of the Securities
Exchange Act of 1934, as adopted pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.
Certification of the Chief Executive Officer pursuant
to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.
Certification of the Chief Financial Officer pursuant
to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS
XBRL Instance Document
101.SCH
XBRL Taxonomy Extension Schema Document
101.CAL
101.DEF
101.LAB
101.PRE
XBRL Taxonomy Extension Calculation Linkbase
Document
XBRL Taxonomy Extension Definition Linkbase
Document
XBRL Taxonomy Extension Label Linkbase
Document
XBRL Taxonomy Extension Presentation Linkbase
Document
______________________
Incorporated by Reference
Form
8-K
SEC
File No.
Exhibit
Filing
Date
001-37636
10.1
12/8/2016
Filed (†) or
Furnished (‡)
Herewith
(as indicated)
8-K
001-37636
10.1
8/17/2017
8-K
001-37636
10.1
12/13/2018
8-K
001-37636
10.1
7/26/2018
8-K
001-37636
10.1
8/14/2018
8-K
001-37636
10.2
8/14/2018
10-Q
001-37636
10.5
11/9/2018
8-K
001-37636
10.1
8/10/2018
†
†
†
†
‡
‡
‡
‡
‡
‡
‡
‡
(1) Reflects management contracts and management and director compensatory plans.
105
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant
has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
February 28, 2019
MATCH GROUP, INC.
By:
/s/ GARY SWIDLER
Gary Swidler
Chief Financial Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the
following persons on behalf of the Registrant and in the capacities indicated on February 28, 2019:
Signature
Title
/s/ JOSEPH LEVIN
Joseph Levin
Chairman of the Board
/s/ AMANDA W. GINSBERG
Amanda W. Ginsberg
/s/ GARY SWIDLER
Gary Swidler
/s/ PHILIP D. EIGENMANN
Philip D. Eigenmann
/s/ ANN L. McDANIEL
Ann L. McDaniel
/s/ THOMAS J. McINERNEY
Thomas J. McInerney
Chief Executive Officer and Director
(Principal Executive Officer)
Chief Financial Officer
(Principal Financial Officer)
Senior Vice President and Chief Accounting Officer
(Principal Accounting Officer)
Director
Director
/s/ GLENN H. SCHIFFMAN
Director
Glenn H. Schiffman
/s/ PAMELA S. SEYMON
Pamela S. Seymon
/s/ ALAN G. SPOON
Alan G. Spoon
/s/ MARK STEIN
Mark Stein
/s/ GREGG WINIARSKI
Gregg Winiarski
/s/ SAM YAGAN
Sam Yagan
Director
Director
Director
Director
Director
106
MATCH GROUP, INC. AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
Schedule II
Balance at
Beginning of
Period
Charges to
Earnings
Charges to
Other
Accounts
(In thousands)
Deductions
Balance at
End of
Period
Description
2018
Allowance for doubtful accounts $
778
$
Deferred tax valuation allowance
Other reserves
2017
24,795
2,544
Allowance for doubtful accounts $
676
$
Deferred tax valuation allowance
Other reserves
2016
23,411
2,822
Allowance for doubtful accounts $
902
$
Deferred tax valuation allowance
Other reserves
22,945
2,514
______________________
83 (a) $
22,675 (b)
$
(15)
(22) (c)
(122) (d) $
—
427 (a) $
1,157 (e)
$
(47)
227 (f)
(278) (d) $
—
136 (a) $
(593) (g)
$
23
1,059 (h)
(385) (d) $
—
724
47,448
3,008
778
24,795
2,544
676
23,411
2,822
(a) Additions to the allowance for doubtful accounts are charged to expense.
(b) Amount is primarily related to foreign tax credits and foreign interest deduction carryforwards.
(c) Amount is related to currency translation adjustments on foreign net operating losses.
(d) Write-off of fully reserved accounts receivable.
(e) Amount is primarily related to an other-than-temporary impairment charge for a certain cost method
investment and an increase in foreign tax loss carryforwards.
(f) Amount is related to currency translation adjustments on foreign net operating losses.
(g) Amount is primarily related to an other-than-temporary impairment charge for a certain cost method
investment and an increase in foreign tax credits.
(h) Amount is related to the realization of previously unbenefited losses on an available-for-sale marketable
equity security included in accumulated other comprehensive loss.
107
PERFORMANCE GRAPH
The following graph compares the cumulative total return (assuming dividend reinvestment, as
applicable) of Match Group common stock, the Nasdaq Composite Index, the Russell 1000 Technology
Index and the Standard & Poor’s 500 Stock Index, in each case, based on $100 invested at the close of
trading on November 19, 2015 through December 31, 2018. In accordance with applicable SEC rules,
Match Group presents the cumulative return of peer issuers. Match Group has selected the Nasdaq
Composite Index and the Russell 1000 Technology Index as its peer issuers because they both include
companies engaged in many of the same businesses as Match Group.
Match Group, Inc.
Nasdaq-Composite
Russell 1000 Tech Index
S&P 500 Index
$330.00
$300.00
$270.00
$240.00
$210.00
$180.00
$150.00
$120.00
$90.00
$60.00
11/19/15
12/31/15
12/30/16
12/29/17
12/31/18
MTCH………………………..…..
NASDAQ-COMPOSITE………...
RUSSELL 1000 TECH INDEX…
S&P 500 INDEX……………..….
$100.00
$100.00
$100.00
$100.00
$91.93
$98.82
$97.81
$98.43
$116.01
$107.68
$111.59
$110.20
$212.42
$139.70
$154.44
$134.25
$305.27
$135.77
$152.58
$128.34
BOARD OF DIRECTORS
CORPORATE INFORMATION
Amanda Ginsberg
Chief Executive Officer
Match Group, Inc.
Joseph Levin
Chairman, Match Group, Inc.
Chief Executive Officer, IAC/InterActiveCorp
Ann L. McDaniel
Consultant
Graham Holdings Company
Thomas J. McInerney
Chief Executive Officer
Altaba Inc.
Glenn H. Schiffman
Executive Vice President & Chief Financial Officer
IAC/InterActiveCorp
Pamela S. Seymon
Former Partner
Wachtell, Lipton, Rosen & Katz
Alan G. Spoon
Former General Partner and Partner Emeritus
Polaris Venture Partners
Mark Stein
Executive Vice President & Chief Strategy Officer
IAC/InterActiveCorp
Gregg Winiarksi
Executive Vice President, General Counsel & Secretary
IAC/InterActiveCorp
Sam Yagan
Chief Executive Officer
ShopRunner
Corporate Headquarters
Match Group, Inc.
8750 North Central Expressway, Suite 1400
Dallas, TX 75231
(214) 576-9352
Investor Inquiries
All inquiries can be directed as follows:
IR@match.com
Stock Market
Match Group, Inc is listed on Nasdaq.
The ticker symbol is MTCH.
Transfer Agent and Registrar
Computershare
Stockholder correspondence by mail should be sent to:
P.O. Box 505000
Louisville, KY 40233-5000
Overnight correspondence:
Computershare Investor Services
462 South 4th Street
Suite 1600
Louisville, KY 40202
Stockholder inquiries may be made online at:
https://www-us.computershare.com/
investor?contact.
Independent Registered Public Accountants
Ernst & Young LLP
5 Times Square
New York, NY 10036