ý | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the Quarterly Period Ended March 31, 2019 | |
Or | |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from__________to__________ |
Delaware (State or other jurisdiction of incorporation or organization) | 26-4278917 (I.R.S. Employer Identification No.) | |
8750 North Central Expressway, Suite 1400, Dallas, Texas 75231 (Address of registrant’s principal executive offices) | ||
(214) 576-9352 (Registrant’s telephone number, including area code) |
Large accelerated filer ý | Accelerated filer o | Non-accelerated filer o | Smaller reporting company o | Emerging growth company o |
Securities registered pursuant to Section 12(b) of the Act: | ||||
Title of each class | Trading Symbol | Name of exchange on which registered | ||
Common Stock, par value $0.001 | MTCH | The Nasdaq Stock Market LLC (Nasdaq Global Select Market) |
Common Stock | ||
Class B Common Stock | ||
Class C Common Stock | ||
Total outstanding Common Stock | 281,125,723 |
Page Number | ||
March 31, 2019 | December 31, 2018 | ||||||
(In thousands, except share data) | |||||||
ASSETS | |||||||
Cash and cash equivalents | $ | $ | |||||
Accounts receivable, net of allowance of $721 and $724, respectively | |||||||
Other current assets | |||||||
Total current assets | |||||||
Right of use assets | |||||||
Property and equipment, net of accumulated depreciation and amortization of $116,454 and $113,025, respectively | |||||||
Goodwill | |||||||
Intangible assets, net of accumulated amortization of $12,197 and $11,843, respectively | |||||||
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 | |||||||
Commitments and contingencies | |||||||
SHAREHOLDERS’ EQUITY | |||||||
Common stock; $0.001 par value; authorized 1,500,000,000 shares; 74,767,764 and 71,513,087 shares issued; and 71,260,240 and 68,460,563 shares outstanding at March 31, 2019 and December 31, 2018, 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; 3,507,524 and 3,052,524 shares, respectively | ( | ) | ( | ) | |||
Total Match Group, Inc. shareholders’ equity | |||||||
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | $ | $ |
Three Months Ended March 31, | |||||||
2019 | 2018 | ||||||
(In thousands, except per share data) | |||||||
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 expense, net | ( | ) | ( | ) | |||
Earnings before income taxes | |||||||
Income tax benefit | |||||||
Net earnings | |||||||
Net loss attributable to noncontrolling interests | |||||||
Net earnings attributable to Match Group, Inc. shareholders | $ | $ | |||||
Net earnings per share attributable to Match Group, Inc. shareholders: | |||||||
Basic | $ | $ | |||||
Diluted | $ | $ | |||||
Stock-based compensation expense by function: | |||||||
Cost of revenue | $ | $ | |||||
Selling and marketing expense | |||||||
General and administrative expense | |||||||
Product development expense | |||||||
Total stock-based compensation expense | $ | $ |
Three Months Ended March 31, | |||||||
2019 | 2018 | ||||||
(In thousands) | |||||||
Net earnings | $ | $ | |||||
Other comprehensive (loss) income, net of tax | |||||||
Change in foreign currency translation adjustment | ( | ) | |||||
Total other comprehensive (loss) income | ( | ) | |||||
Comprehensive income | |||||||
Comprehensive income attributable to noncontrolling interests | ( | ) | |||||
Comprehensive income attributable to Match Group, Inc. shareholders | $ | $ |
Match Group Shareholders’ Equity | ||||||||||||||||||||||||||||||||||||||
Common Stock $0.001 Par Value | Class B Convertible Common Stock $0.001 Par Value | |||||||||||||||||||||||||||||||||||||
Redeemable Noncontrolling Interests | $ | Shares | $ | Shares | Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive (Loss) Income | Treasury Stock | Total Shareholders’ Equity | |||||||||||||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||||||||||||||||
Balance as of December 31, 2018 | $ | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||||||||||
Net earnings for the three months ended March 31, 2019 | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||
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 | — | — | — | ( | ) | — | — | — | ( | ) | ||||||||||||||||||||||||||||
Purchase of treasury stock | — | — | — | — | — | — | — | — | ( | ) | ( | ) | ||||||||||||||||||||||||||
Balance as of March 31, 2019 | $ | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||||||||||
Balance as of December 31, 2017 | $ | $ | $ | $ | $ | $ | ( | ) | $ | $ | ||||||||||||||||||||||||||||
Net (loss) earnings for the three months ended March 31, 2018 | ( | ) | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||
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 treasury stock | — | — | — | — | — | — | — | — | ( | ) | ( | ) | ||||||||||||||||||||||||||
Balance as of March 31, 2018 | $ | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ |
Three Months Ended March 31, | |||||||
2019 | 2018 | ||||||
(In thousands) | |||||||
Cash flows from operating activities: | |||||||
Net earnings | $ | $ | |||||
Adjustments to reconcile net earnings to net cash provided by operating activities: | |||||||
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 | |||||||
Accounts receivable | ( | ) | ( | ) | |||
Other assets | ( | ) | |||||
Accounts payable and other liabilities | |||||||
Income taxes payable and receivable | ( | ) | ( | ) | |||
Deferred revenue | |||||||
Net cash provided by operating activities | |||||||
Cash flows from investing activities: | |||||||
Capital expenditures | ( | ) | ( | ) | |||
Other, net | |||||||
Net cash used in investing activities | ( | ) | ( | ) | |||
Cash flows from financing activities: | |||||||
Borrowings under the Credit Facility | |||||||
Proceeds from Senior Notes offering | |||||||
Principal payments on Credit Facility | ( | ) | |||||
Debt issuance costs | ( | ) | ( | ) | |||
Withholding taxes paid on behalf of employees on net settled stock-based awards | ( | ) | ( | ) | |||
Purchase of treasury stock | ( | ) | ( | ) | |||
Acquisition-related contingent consideration payments | ( | ) | |||||
Other, net | ( | ) | |||||
Net cash used in financing activities | ( | ) | ( | ) | |||
Effect of exchange rate changes on cash, cash equivalents, and restricted cash | |||||||
Net increase in cash, cash equivalents, and restricted cash | |||||||
Cash, cash equivalents, and restricted cash at beginning of period | |||||||
Cash, cash equivalents, and restricted cash at end of period | $ | $ |
Three Months Ended March 31, | ||||||||
2019 | 2018 | |||||||
(In thousands) | ||||||||
Direct Revenue: | ||||||||
North America | $ | $ | ||||||
International | ||||||||
Total Direct Revenue | ||||||||
Indirect Revenue (principally advertising revenue) | ||||||||
Total Revenue | $ | $ |
Leases | Balance Sheet Classification | March 31, 2019 | ||||
(In thousands) | ||||||
Assets: | ||||||
Right of use assets | Right of use assets | $ | ||||
Liabilities: | ||||||
Current lease liabilities | Accrued expenses and other current liabilities | $ | ||||
Long-term lease liabilities | Other long-term liabilities | |||||
Total lease liabilities | $ |
Lease Cost | Income Statement Classification | Three Months Ended March 31, 2019 | ||||
(In thousands) | ||||||
Fixed lease cost | Cost of revenue | $ | ||||
Fixed lease cost | General and administrative expense | |||||
Total fixed lease cost(a) | ||||||
Variable lease cost | Cost of revenue | |||||
Variable lease cost | General and administrative expense | |||||
Total variable lease cost | ||||||
Net lease cost | $ |
(a) |
March 31, 2019 | ||||
(In thousands) | ||||
2019 | $ | |||
2020 | ||||
2021 | ||||
2022 | ||||
2023 | ||||
After 2023 | ||||
Total | ||||
Less: Interest | ( | ) | ||
Present value of lease liabilities | $ |
(b) |
March 31, 2019 | |||
Remaining lease term | |||
Discount rate | % |
Three Months Ended March 31, 2019 | ||||
(In thousands) | ||||
Other information: | ||||
ROU assets obtained in exchange for lease liabilities | $ | |||
Cash paid for amounts included in the measurement of lease liabilities | $ |
• | 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 assumptions market participants would use in pricing the assets or liabilities. |
March 31, 2019 | |||||||||||||||
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 | $ | $ | $ | $ |
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 arrangement | $ | $ | $ | ( | ) | $ | ( | ) |
Three Months Ended March 31, | |||||||
2019 | 2018 | ||||||
(In thousands) | |||||||
Balance at January 1 | $ | ( | ) | $ | ( | ) | |
Total net losses: | |||||||
Fair value adjustments | ( | ) | |||||
Included in other comprehensive loss | ( | ) | ( | ) | |||
Settlements | |||||||
Balance at March 31 | $ | $ | ( | ) |
March 31, 2019 | December 31, 2018 | ||||||||||||||
Carrying Value | Fair Value | Carrying Value | Fair Value | ||||||||||||
(In thousands) | |||||||||||||||
Long-term debt, net (a) | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) |
(a) |
March 31, 2019 | December 31, 2018 | ||||||
(In thousands) | |||||||
Credit Facility due December 7, 2023 | $ | $ | |||||
Term Loan due November 16, 2022 (the “Term Loan”) | |||||||
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 | |||||||
5.625% Senior Notes due February 15, 2029 (the “5.625% Senior Notes”); interest payable each February 15 and August 15, commencing August 15, 2019 | |||||||
Total debt | |||||||
Less: Unamortized original issue discount | |||||||
Less: Unamortized debt issuance costs | |||||||
Total long-term debt, net | $ | $ |
Three Months Ended March 31, | |||||||
2019 | 2018 | ||||||
(In thousands) | |||||||
Balance at January 1 | $ | ( | ) | $ | ( | ) | |
Other comprehensive (loss) income | ( | ) | |||||
Balance at March 31 | $ | ( | ) | $ | ( | ) |
Three Months Ended March 31, | |||||||||||||||
2019 | 2018 | ||||||||||||||
Basic | Diluted | Basic | Diluted | ||||||||||||
(In thousands, except per share data) | |||||||||||||||
Numerator | |||||||||||||||
Net earnings | $ | $ | $ | $ | |||||||||||
Net loss attributable to noncontrolling interests | |||||||||||||||
Impact from subsidiaries' dilutive securities | — | ( | ) | — | |||||||||||
Net earnings attributable to Match Group, Inc. shareholders | $ | $ | $ | $ | |||||||||||
Denominator | |||||||||||||||
Basic weighted average common shares outstanding | |||||||||||||||
Dilutive securities(a)(b) | — | — | |||||||||||||
Dilutive weighted average common shares outstanding | |||||||||||||||
Earnings per share: | |||||||||||||||
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 or vesting of restricted stock units. For the three months ended March 31, 2019 and 2018, |
(b) |
March 31, 2019 | December 31, 2018 | March 31, 2018 | December 31, 2017 | ||||||||||||
(In thousands) | |||||||||||||||
Cash and cash equivalents | $ | $ | $ | $ | |||||||||||
Restricted cash included in other current assets | |||||||||||||||
Total cash, cash equivalents and restricted cash as shown on the consolidated statement of cash flows | $ | $ | $ | $ |
• | 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. |
• | 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 |
• | Credit Facility - The Company’s $500 million revolving credit facility, which matures on December 7, 2023, and currently bears interest at LIBOR plus 1.50%. At March 31, 2019, $500 million is available under the Credit Facility. |
• | Term Loan - The Company’s seven-year term loan due November 16, 2022. The Term Loan bears interest at LIBOR plus 2.50%. The current rate at March 31, 2019 is 5.08%. At March 31, 2019, $425 million is outstanding. |
• | 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. At March 31, 2019, $400 million aggregate principal amount 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. At March 31, 2019, $450 million aggregate principal amount 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. At March 31, 2019, $350 million aggregate principal amount is outstanding. |
• | 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. |
Three Months Ended March 31, | ||||||||||||||
2019 | $ Change | % Change | 2018 | |||||||||||
(In thousands, except ARPU) | ||||||||||||||
Direct Revenue: | ||||||||||||||
North America | $ | 237,773 | $ | 26,416 | 12% | $ | 211,357 | |||||||
International | 216,189 | 34,809 | 19% | 181,380 | ||||||||||
Total Direct Revenue | 453,962 | 61,225 | 16% | 392,737 | ||||||||||
Indirect Revenue | 10,663 | (3,967 | ) | (27)% | 14,630 | |||||||||
Total Revenue | $ | 464,625 | $ | 57,258 | 14% | $ | 407,367 | |||||||
Percentage of Total Revenue: | ||||||||||||||
Direct Revenue: | ||||||||||||||
North America | 51% | 52% | ||||||||||||
International | 47% | 44% | ||||||||||||
Total Direct Revenue | 98% | 96% | ||||||||||||
Indirect Revenue | 2% | 4% | ||||||||||||
Total Revenue | 100% | 100% | ||||||||||||
Average Subscribers: | ||||||||||||||
North America | 4,361 | 385 | 10% | 3,976 | ||||||||||
International | 4,252 | 795 | 23% | 3,457 | ||||||||||
Total | 8,613 | 1,180 | 16% | 7,433 | ||||||||||
(Change calculated using non-rounded numbers) | ||||||||||||||
ARPU: | ||||||||||||||
North America | $ | 0.60 | 2% | $ | 0.58 | |||||||||
International | $ | 0.56 | (3)% | $ | 0.57 | |||||||||
Total | $ | 0.58 | $ | — | —% | $ | 0.58 |
Three Months Ended March 31, | |||||||||||||
2019 | $ Change | % Change | 2018 | ||||||||||
(Dollars in thousands) | |||||||||||||
Cost of revenue | $ | 120,224 | $ | 26,280 | 28% | $ | 93,944 | ||||||
Percentage of revenue | 26% | 23% |
Three Months Ended March 31, | |||||||||||||
2019 | $ Change | % Change | 2018 | ||||||||||
(Dollars in thousands) | |||||||||||||
Selling and marketing expense | $ | 118,663 | $ | 492 | —% | $ | 118,171 | ||||||
Percentage of revenue | 26% | 29% |
Three Months Ended March 31, | |||||||||||||
2019 | $ Change | % Change | 2018 | ||||||||||
(Dollars in thousands) | |||||||||||||
General and administrative expense | $ | 54,394 | $ | 11,633 | 27% | $ | 42,761 | ||||||
Percentage of revenue | 12% | 10% |
Three Months Ended March 31, | |||||||||||||
2019 | $ Change | % Change | 2018 | ||||||||||
(Dollars in thousands) | |||||||||||||
Product development expense | $ | 44,274 | $ | 12,405 | 39% | $ | 31,869 | ||||||
Percentage of revenue | 10% | 8% |
Three Months Ended March 31, | |||||||||||||
2019 | $ Change | % Change | 2018 | ||||||||||
(Dollars in thousands) | |||||||||||||
Depreciation | $ | 7,831 | $ | (316 | ) | (4)% | $ | 8,147 | |||||
Percentage of revenue | 2% | 2% |
Three Months Ended March 31, | |||||||||||||
2019 | $ Change | % Change | 2018 | ||||||||||
(Dollars in thousands) | |||||||||||||
Operating income | $ | 118,828 | $ | 6,595 | 6% | $ | 112,233 | ||||||
Percentage of revenue | 26% | 28% | |||||||||||
Adjusted EBITDA | $ | 155,067 | $ | 17,326 | 13% | $ | 137,741 | ||||||
Percentage of revenue | 33% | 34% |
Three Months Ended March 31, | |||||||||||||
2019 | $ Change | % Change | 2018 | ||||||||||
(Dollars in thousands) | |||||||||||||
Interest expense | $ | 22,086 | $ | 4,280 | 24% | $ | 17,806 |
Three Months Ended March 31, | |||||||||||||
2019 | $ Change | % Change | 2018 | ||||||||||
(Dollars in thousands) | |||||||||||||
Other expense, net | $ | (1,488 | ) | $ | 5,733 | (79)% | $ | (7,221 | ) |
Three Months Ended March 31, | |||||||||||||
2019 | $ Change | % Change | 2018 | ||||||||||
(Dollars in thousands) | |||||||||||||
Income tax benefit | $ | 27,780 | $ | 15,308 | 123% | $ | 12,472 | ||||||
Effective income tax rate | NM | NM |
Three Months Ended March 31, | |||||||
2019 | 2018 | ||||||
(In thousands) | |||||||
Net earnings attributable to Match Group, Inc. shareholders | $ | 123,034 | $ | 99,736 | |||
Add back: | |||||||
Net loss attributable to noncontrolling interests | — | (58 | ) | ||||
Income tax benefit | (27,780 | ) | (12,472 | ) | |||
Other expense, net | 1,488 | 7,221 | |||||
Interest expense | 22,086 | 17,806 | |||||
Operating Income | 118,828 | 112,233 | |||||
Stock-based compensation expense | 27,997 | 16,963 | |||||
Depreciation | 7,831 | 8,147 | |||||
Amortization of intangibles | 411 | 242 | |||||
Acquisition-related contingent consideration fair value adjustments | — | 156 | |||||
Adjusted EBITDA | $ | 155,067 | $ | 137,741 |
Three Months Ended March 31, | |||||||||||||
2019 | $ Change | % Change | 2018 | ||||||||||
(Dollars in thousands, except ARPU) | |||||||||||||
Revenue, as reported | $ | 464,625 | $ | 57,258 | 14% | $ | 407,367 | ||||||
Foreign exchange effects | 18,009 | ||||||||||||
Revenue excluding foreign exchange effects | $ | 482,634 | $ | 75,267 | 18% | $ | 407,367 | ||||||
(Percentage change calculated using non-rounded numbers) | |||||||||||||
ARPU, as reported | $ | 0.58 | —% | $ | 0.58 | ||||||||
Foreign exchange effects | 0.02 | ||||||||||||
ARPU, excluding foreign exchange effects | $ | 0.60 | 4% | $ | 0.58 | ||||||||
International ARPU, as reported | $ | 0.56 | (3)% | $ | 0.57 | ||||||||
Foreign exchange effects | 0.04 | ||||||||||||
International ARPU, excluding foreign exchange effects | $ | 0.60 | 5% | $ | 0.57 |
March 31, 2019 | December 31, 2018 | ||||||
(In thousands) | |||||||
Cash and cash equivalents: | |||||||
United States | $ | 115,499 | $ | 83,851 | |||
All other countries | 109,356 | 103,096 | |||||
Total cash and cash equivalents | $ | 224,855 | $ | 186,947 | |||
Long-term debt: | |||||||
Credit Facility due December 7, 2023 | $ | — | $ | 260,000 | |||
Term Loan due November 16, 2022 | 425,000 | 425,000 | |||||
6.375% Senior Notes | 400,000 | 400,000 | |||||
5.00% Senior Notes | 450,000 | 450,000 | |||||
5.625% Senior Notes | 350,000 | — | |||||
Total long-term debt | 1,625,000 | 1,535,000 | |||||
Less: Unamortized original issue discount | 7,023 | 7,352 | |||||
Less: Unamortized debt issuance costs | 16,321 | 11,737 | |||||
Total long-term debt, net | $ | 1,601,656 | $ | 1,515,911 |
Three Months Ended March 31, | |||||||
2019 | 2018 | ||||||
(In thousands) | |||||||
Net cash provided by operating activities | $ | 92,538 | $ | 122,278 | |||
Net cash used in investing activities | (8,814 | ) | (5,007 | ) | |||
Net cash used in financing activities | (46,305 | ) | (104,869 | ) |
Payments Due by Period | |||||||||||||||||||
Contractual Obligations(a) | Less Than 1 Year | 1–3 Years | 3–5 Years | More Than 5 Years | Total | ||||||||||||||
(In thousands) | |||||||||||||||||||
Long-term debt(b) | $ | 87,901 | $ | 179,385 | $ | 578,226 | $ | 1,401,188 | $ | 2,246,700 | |||||||||
Operating leases(c) | 17,120 | 33,482 | 16,283 | 16,956 | 83,841 | ||||||||||||||
Purchase obligation(d) | 23,727 | 23,898 | — | — | 47,625 | ||||||||||||||
Total contractual obligations | $ | 128,748 | $ | 236,765 | $ | 594,509 | $ | 1,418,144 | $ | 2,378,166 |
(a) | The Company has excluded $34.7 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 4—Income Taxes” to the consolidated financial statements included in “Item 1—Consolidated Financial Statements.” |
(b) | Represents contractual amounts due including interest on both fixed and variable rate instruments. Long-term debt at March 31, 2019 consists of the 6.375%, 5.00%, and 5.625% Senior Notes of $400 million, $450 million, and $350 million, respectively, which bear interest at fixed rates, and the Term Loan balance of $425 million which bears interest at a variable rate. The Term Loan bears interest at LIBOR plus 2.50%, or 5.08% at March 31, 2019. The amount of interest ultimately paid on the Term Loan may differ based on changes in interest rates and outstanding balances. For additional information on long-term debt, see “Note 6—Long-term Debt, net” to the consolidated financial statements included in “Item 1—Consolidated Financial Statements.” |
(c) | 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 3—Leases” to the consolidated financial statements included in “Item 1—Consolidated Financial Statements.” |
(d) | The purchase obligations consist primarily of a web hosting commitment. |
• | 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; |
• | 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 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. |
Period | (a) Total Number of Shares Purchased | (b) Average Price Paid Per Share | (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) | ||||||||
January 2019 | — | $ | — | — | 2,947,476 | |||||||
February 2019 | 130,000 | $ | 56.83 | 130,000 | 2,817,476 | |||||||
March 2019 | 325,000 | $ | 55.13 | 325,000 | 2,492,476 | |||||||
Total | 455,000 | $ | 55.62 | 455,000 | 2,492,476 |
(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 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. |
Incorporated by Reference | Filed (†) or Furnished (‡) Herewith (as indicated) | |||||||||||
Exhibit No. | Exhibit Description | Form | SEC File No. | Exhibit | Filing Date | |||||||
8-K | 001-37636 | 4.1 | 2/15/2018 | |||||||||
† | ||||||||||||
† | ||||||||||||
‡ | ||||||||||||
‡ | ||||||||||||
101.INS | XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. | ‡ | ||||||||||
101.SCH | XBRL Taxonomy Extension Schema Document | ‡ | ||||||||||
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document | ‡ | ||||||||||
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document | ‡ | ||||||||||
101.LAB | XBRL Taxonomy Extension Label Linkbase Document | ‡ | ||||||||||
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document | ‡ |
May 9, 2019 | MATCH GROUP, INC. | |||
By: | /s/ GARY SWIDLER | |||
Gary Swidler | ||||
Chief Financial Officer |
Signature | Title | Date | |
/s/ GARY SWIDLER | Chief Financial Officer | May 9, 2019 | |
Gary Swidler |
1. | I have reviewed this quarterly report on Form 10-Q for the quarter ended March 31, 2019 of Match Group, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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; |
c) | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
5. | The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
Dated: | May 9, 2019 | /s/ AMANDA W. GINSBERG | |
Amanda W. Ginsberg Chief Executive Officer |
1. | I have reviewed this quarterly report on Form 10-Q for the quarter ended March 31, 2019 of Match Group, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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; |
c) | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
5. | The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
Dated: | May 9, 2019 | /s/ GARY SWIDLER | |
Gary Swidler Chief Financial Officer |
(1) | the Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2019 of Match Group, Inc. (the "Report") which this statement accompanies fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and |
(2) | the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Match Group, Inc. |
Dated: | May 9, 2019 | /s/ AMANDA W. GINSBERG | |
Amanda W. Ginsberg Chief Executive Officer |
(1) | the Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2019 of Match Group, Inc. (the "Report") which this statement accompanies fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and |
(2) | the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Match Group, Inc. |
Dated: | May 9, 2019 | /s/ GARY SWIDLER | |
Gary Swidler Chief Financial Officer |
DOCUMENT AND ENTITY INFORMATION - shares |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
May 03, 2019 |
|
Entity Registrant Name | Match Group, Inc. | |
Entity Central Index Key | 0001575189 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Emerging Growth Company | false | |
Small Business | false | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2019 | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false | |
Common Stock | ||
Entity Common Stock, Shares Outstanding | 71,206,321 | |
Class B Convertible Common Stock | ||
Entity Common Stock, Shares Outstanding | 209,919,402 | |
Class C Common Stock | ||
Entity Common Stock, Shares Outstanding | 0 |
CONSOLIDATED STATEMENT OF COMPREHENSIVE OPERATIONS (Unaudited) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Statement of Comprehensive Income [Abstract] | ||
Net earnings | $ 123,034 | $ 99,678 |
Other comprehensive (loss) income, net of tax | ||
Change in foreign currency translation adjustment | (782) | 30,601 |
Total other comprehensive (loss) income | (782) | 30,601 |
Comprehensive income | 122,252 | 130,279 |
Comprehensive income attributable to noncontrolling interests | 0 | (146) |
Comprehensive income attributable to Match Group, Inc. shareholders | $ 122,252 | $ 130,133 |
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY (Unaudited) (Parenthetical) |
Mar. 31, 2019
$ / shares
|
---|---|
Common Stock $0.001 Par Value | |
Common stock, par value (USD per share) | $ 0.001 |
Class B Convertible Common Stock $0.001 Par Value | |
Common stock, par value (USD per share) | 0.001 |
Common Stock | Common Stock $0.001 Par Value | |
Common stock, par value (USD per share) | 0.001 |
Common Stock | Class B Convertible Common Stock $0.001 Par Value | |
Common stock, par value (USD per share) | $ 0.001 |
THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
3 Months Ended |
---|---|
Mar. 31, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 1—THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Match Group, Inc. is a leading provider of dating products available in over 40 languages to our users all over the world. Our portfolio of brands includes 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. 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 March 31, 2019, IAC/InterActiveCorp’s (“IAC”) economic ownership interest and voting interest in Match Group were 80.4% and 97.5%, respectively. 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. In management’s opinion, the unaudited interim consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements and reflect, in management’s opinion, all adjustments, consisting of normal and recurring adjustments, necessary for the fair presentation of our financial position, results of operations and cash flows for the periods presented. Interim results are not necessarily indicative of the results that may be expected for the full year. The accompanying unaudited consolidated financial statements should be read in conjunction with the consolidated and combined statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018. 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 and 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 the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Update (“ASU”) No. 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities, following its adoption on January 1, 2018, with any changes to fair value recognized within other 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 a similar investment of the same issuer; 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 indicators 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 expense, net. 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. Actual results could differ from these estimates. On an ongoing basis, the Company evaluates its estimates and judgments including those related to: contingencies; the recoverability of goodwill and indefinite-lived intangible assets; the useful lives and recoverability of definite-lived intangible assets and property and equipment; the fair values of cash equivalents and 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; 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. Recent Accounting Pronouncements Adopted by the Company The Company adopted ASU 2016-02, Leases (Topic 842) (“ASC 842”) effective January 1, 2019. ASC 842 superseded previously existing guidance on accounting for leases and generally requires all leases to be recognized in the statement of financial position. The adoption of ASC 842 resulted in the recognition of right of use assets (the “ROU assets”) and related lease liabilities of $53.0 million and $57.9 million, respectively, as of January 1, 2019, with no cumulative effect adjustment. The adoption of ASC 842 had no impact on the Company’s consolidated statement of operations and consolidated statement of cash flows. In addition, the adoption of ASC 842 did not impact the leverage calculations set forth in the agreements governing the outstanding debt or credit agreements of the Company, because, in each circumstance, the leverage calculations are not affected by the lease liabilities that were recorded upon adoption of ASC 842. The Company adopted ASC 842 prospectively and, therefore, did not revise comparative period information or disclosure. In addition, the Company elected the package of practical expedients permitted under ASC 842. See “Note 3—Leases” for additional information on the adoption of ASC 842. Reclassifications Certain prior year amounts have been reclassified to conform to the current year presentation.
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REVENUE RECOGNITION |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Revenue from Contract with Customer [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
REVENUE RECOGNITION | NOTE 2—REVENUE RECOGNITION General Revenue Recognition Revenue is recognized when control of the promised services are transferred to our customers, and in the amount that reflects the consideration the Company expects to be entitled to in exchange for those services. 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 current deferred revenue balance as of December 31, 2018 was $209.9 million. During the three months ended March 31, 2019, the Company recognized $158.7 million of revenue that was included in the deferred revenue balance as of December 31, 2018. The current deferred revenue balance at March 31, 2019 is $219.7 million. At March 31, 2019 and December 31, 2018, there was no non-current portion of deferred revenue. Practical Expedients and Exemptions As permitted under the practical expedient available under ASU No. 2014-09, Revenue from Contracts with Customers, 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. Disaggregation of Revenue The following table presents disaggregated revenue:
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LEASES |
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Leases [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
LEASES | NOTE 3—LEASES 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. Several of these lease agreements relate to properties owned by IAC. See “Note 11—Related Party Transactions” for additional information on the intercompany lease agreements. The Company does not have any financing leases. ROU assets represent the Company’s right to use the underlying assets for the lease term and lease liabilities represent the present value of the Company’s obligation to make payments arising from leases. ROU assets and related lease liabilities are based on the present value of fixed lease payments over the lease term using the Company’s respective incremental borrowing rates on the lease commencement date or January 1, 2019 for leases that commenced prior to that date. The Company combines the lease and non-lease components of lease payments in determining ROU assets and related lease liabilities. If the lease includes one or more options to extend the term of the lease, the renewal option is considered in the lease term if it is reasonably certain the Company will exercise the option. Leases with an initial term of twelve months or less (“short-term leases”) are not recorded on the accompanying consolidated balance sheet. Lease expense is recognized on a straight-line basis over the term of the lease. Variable lease payments consist primarily of common area maintenance, utilities, and taxes, which are not included in the recognition of ROU assets and related lease liabilities. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants.
______________________
Maturities of lease liabilities(b):
______________________
The following are the weighted average assumptions used for operating lease term and discount rate:
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INCOME TAXES |
3 Months Ended |
---|---|
Mar. 31, 2019 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | NOTE 4—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. At the end of each interim period, the Company makes its best estimate of the annual expected effective income tax rate and applies that rate to its ordinary year-to-date earnings or loss. The income tax provision or benefit related to significant, unusual, or extraordinary items, if applicable, that will be separately reported or reported net of their related tax effects are individually computed and recognized in the interim period in which they occur. In addition, the effect of changes in enacted tax laws or rates, tax status, judgment on the realizability of beginning-of-the-year deferred tax assets in future years or unrecognized tax benefits is recognized in the interim period in which the change occurs. The computation of the annual expected effective income tax rate at each interim period requires certain estimates and assumptions including, but not limited to, the expected pre-tax income (or loss) for the year, projections of the proportion of income (and/or loss) earned and taxed in foreign jurisdictions, permanent and temporary differences, and the likelihood of the realization of deferred tax assets generated in the current year. The accounting estimates used to compute the provision or benefit for income taxes may change as new events occur, more experience is acquired, additional information is obtained or our tax environment changes. To the extent that the expected annual effective income tax rate changes during a quarter, the effect of the change on prior quarters is included in income tax provision in the quarter in which the change occurs. For the three months ended March 31, 2019 and 2018, the Company recorded an income tax benefit from continuing operations of $27.8 million and $12.5 million, respectively, due primarily to excess tax benefits generated by the exercise and vesting of stock-based awards. The Company recognizes interest and, if applicable, penalties related to unrecognized tax benefits in the income tax provision. Accruals for interest and penalties are not material. 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 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 has been extended to December 31, 2019. Returns filed in various other jurisdictions are open to examination for tax years beginning with 2009. Income taxes payable include unrecognized tax benefits 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 not accurately anticipate actual outcomes and, therefore, may require periodic adjustments. Although management currently believes changes in unrecognized tax benefits 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. At March 31, 2019 and December 31, 2018, unrecognized tax benefits, including interest and penalties, are $36.5 million and $37.6 million, respectively. At both March 31, 2019 and December 31, 2018, approximately $22.6 million was included in unrecognized tax benefits for tax positions included in IAC’s consolidated tax return filings. If unrecognized tax benefits at March 31, 2019 are subsequently recognized, $34.7 million, net of related deferred tax assets and interest, would reduce income tax expense. The comparable amount as of December 31, 2018 was $35.6 million. The Company believes that it is reasonably possible that its unrecognized tax benefits could decrease by $16.6 million by March 31, 2020 due to settlements and expirations of statutes of limitations, all of which would reduce the income tax provision.
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FINANCIAL INSTRUMENTS |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FINANCIAL INSTRUMENTS | NOTE 5—FINANCIAL INSTRUMENTS Equity securities without readily determinable fair values At both March 31, 2019 and December 31, 2018, the carrying value of the Company’s investments in equity securities without readily determinable fair values totaled $9.1 million and is included in “Long-term investments” in the accompanying consolidated balance sheet. The cumulative downward adjustments (including impairments) to the carrying value of equity securities without readily determinable fair values, since the adoption of ASU 2016-01 on January 1, 2018 through March 31, 2019, were $2.1 million. For both the three months ended March 31, 2019 and 2018, there were no adjustments to the carrying value of equity securities without readily determinable fair values held. For all equity securities without readily determinable fair values as of March 31, 2019 and December 31, 2018, the Company has elected the measurement alternative. As of March 31, 2019, under the measurement alternative election, the Company did not identify any fair value adjustments using observable price changes in orderly transactions for an identical or similar investment of the same issuer. 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:
The following tables present the Company’s financial instruments that are measured at fair value on a recurring basis:
The Company’s financial instruments that are measured at fair value on a recurring basis using significant unobservable inputs (Level 3) are its contingent consideration arrangements.
Contingent consideration arrangements As of March 31, 2019, there are no contingent consideration arrangements related to business acquisitions. The contingent consideration arrangement liability at December 31, 2018 of $2.0 million is included in “Accrued expenses and other current liabilities.” Assets measured at fair value on a nonrecurring basis The Company’s non-financial assets, such as goodwill, intangible assets, and property and equipment, are adjusted to fair value only when an impairment charge is recognized. The Company’s financial assets, comprised of equity securities without readily determinable fair values, are adjusted to fair value when observable price changes are identified or an impairment charge is recognized. Such fair value measurements are based predominantly on Level 3 inputs. 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.
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LONG-TERM DEBT, NET |
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Mar. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
LONG-TERM DEBT, NET | NOTE 6—LONG-TERM DEBT, NET Long-term debt consists of:
Senior Notes: The 5.625% Senior Notes were issued on February 15, 2019. The proceeds from these notes were used to repay outstanding borrowings under the Credit Facility, to pay expenses associated with the offering, and for general corporate purposes. At any time prior to February 15, 2024, 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 redemption prices set forth in the indenture governing the 5.625% Senior Notes, together with accrued and unpaid interest to the applicable redemption date. The 5.00% Senior Notes were issued on December 4, 2017. 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 redemption prices set forth in the indenture governing the 5.00% Senior Notes, together with accrued and unpaid interest to the applicable redemption date. The 6.375% Senior Notes were issued on June 1, 2016. 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, 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 redemption prices set forth in the indenture governing the 6.375% Senior Notes, together with accrued and unpaid interest to the applicable redemption date. 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 consolidated leverage ratio (as defined in the indentures) exceeds 5.0 to 1.0. At March 31, 2019, there were no limitations pursuant thereto. There are additional covenants in those indentures 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 financial ratios set forth in the indentures, 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. The indenture governing the 5.625% Senior Notes is less restrictive than the indentures governing the 6.375% and 5.00% Senior Notes and generally only limits the Company’s and its subsidiaries’ ability to, among other things, create liens on assets, and our ability to consolidate, merge, sell or otherwise dispose of all or substantially all of our assets. The 5.00%, 5.625%, and 6.375% Senior Notes rank equally in right of payment. Term Loan and Credit Facility: The Company entered into the Term Loan under a credit agreement (the “Credit Agreement”) on November 16, 2015. At both March 31, 2019 and December 31, 2018, the outstanding balance on the Term Loan was $425 million and the loan bears interest at LIBOR plus 2.50%. The interest rate of the Term Loan was 5.08% and 5.09% at March 31, 2019 and December 31, 2018, respectively. Interest payments are due at least quarterly through the term of the loan. The Term Loan provides for 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. As of March 31, 2019, the Company has a $500 million revolving credit facility that expires on December 7, 2023. At March 31, 2019, there were no outstanding borrowings under the Credit Facility. At December 31, 2018, the outstanding balance on the Credit Facility was $260 million, which bore interest at LIBOR plus 1.50%, or 3.97%, and was repaid with a portion of the net proceeds from the issuance of the 5.625% Senior Notes, described above. The annual commitment fee on undrawn funds based on the current leverage ratio is 25 basis points. 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, based on the Company’s consolidated net leverage ratio. 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). 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 also 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%, 5.625%, and 6.375% Senior Notes to the extent of the value of the assets securing the borrowings under the Credit Agreement.
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ACCUMULATED OTHER COMPREHENSIVE LOSS |
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Mar. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
ACCUMULATED OTHER COMPREHENSIVE LOSS | NOTE 7—ACCUMULATED OTHER COMPREHENSIVE LOSS The following table presents the components of accumulated other comprehensive loss. For the three months ended March 31, 2019 and 2018, the Company’s accumulated other comprehensive (loss) income relates to foreign currency translation adjustments.
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EARNINGS PER SHARE |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
EARNINGS PER SHARE | NOTE 8—EARNINGS PER SHARE The following tables set forth the computation of the basic and diluted earnings per share attributable to Match Group shareholders:
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(b) Market-based awards and performance-based stock options (“PSOs”) and units (“PSUs”) are considered contingently issuable shares. Shares issuable upon exercise or vesting of 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 awards, PSOs and PSUs is dilutive for the respective reporting periods. For three months ended March 31, 2019 and 2018, 1.6 million and 1.8 million shares, respectively, underlying market-based awards, PSOs, and PSUs were excluded from the calculation of diluted earnings per share because the market or performance conditions had not been met.
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CONSOLIDATED FINANCIAL STATEMENT DETAILS |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
CONSOLIDATED FINANCIAL STATEMENT DETAILS | NOTE 9—CONSOLIDATED FINANCIAL STATEMENT DETAILS Cash, Cash Equivalents, and Restricted Cash The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the consolidated balance sheet to the total amounts shown in the consolidated statement of cash flows:
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CONTINGENCIES |
3 Months Ended |
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Mar. 31, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
CONTINGENCIES | NOTE 10—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 liquidity, results of operations, or financial condition of the Company. See “Note 4—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. We 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.
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RELATED PARTY TRANSACTIONS |
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Mar. 31, 2019 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | NOTE 11—RELATED PARTY TRANSACTIONS Relationship with IAC In connection with the IPO in November 2015, the Company entered into certain agreements relating to our relationship with IAC after the IPO. 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 three months ended March 31, 2019 and 2018, the Company incurred $1.9 million and $1.8 million pursuant to the services agreement. Included in these amounts for the three months ended March 31, 2019 is $1.4 million and for the three months ended March 31, 2018 is $1.3 million for the leasing of office space for certain of our businesses at properties owned by IAC. All such amounts were paid in full by the Company at March 31, 2019. At March 31, 2019, $17.0 million of both the ROU assets and the lease liabilities represented leases between the Company and IAC. The master transaction agreement provides, among other things, that the Company will indemnify IAC for matters relating to any business of the Company. Under this provision, the Company may be required to indemnify IAC for costs related to the lawsuit brought by current and former employees of the Tinder business against IAC and the Company. The employee matters agreement provides, among other things, that: (i) with respect to equity awards denominated in shares of certain of the Company’s subsidiaries, IAC may elect to cause such equity awards to be settled in either shares of IAC common stock or Company common stock and, to the extent that shares of IAC common stock are issued in settlement of such equity awards, the Company will reimburse IAC for the cost of such shares of IAC common stock by issuing to IAC additional shares of Company common stock; and (ii) 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. During the three months ended March 31, 2019 and 2018, 0.2 million and 1.1 million shares, respectively, of Company common stock were issued to IAC pursuant to the employee matters agreement. This includes less than 0.1 million and 0.8 million shares, respectively, issued during the three months ended March 31, 2019 and 2018, as reimbursement for shares of IAC common stock issued in connection with the exercise of equity awards originally denominated in shares of a subsidiary of the Company and 0.2 million and 0.3 million shares, respectively, during the three months ended March 31, 2019 and 2018, 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.
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THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) |
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Mar. 31, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Nature of Operations | Match Group, Inc. is a leading provider of dating products available in over 40 languages to our users all over the world. Our portfolio of brands includes 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. 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 March 31, 2019, IAC/InterActiveCorp’s (“IAC”) economic ownership interest and voting interest in Match Group were 80.4% and 97.5%, respectively.
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Basis of Presentation | 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. In management’s opinion, the unaudited interim consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements and reflect, in management’s opinion, all adjustments, consisting of normal and recurring adjustments, necessary for the fair presentation of our financial position, results of operations and cash flows for the periods presented. Interim results are not necessarily indicative of the results that may be expected for the full year. The accompanying unaudited consolidated financial statements should be read in conjunction with the consolidated and combined statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018. 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 and 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 the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Update (“ASU”) No. 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities, following its adoption on January 1, 2018, with any changes to fair value recognized within other 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 a similar investment of the same issuer; 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 indicators 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 expense, net.
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Basis of 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. In management’s opinion, the unaudited interim consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements and reflect, in management’s opinion, all adjustments, consisting of normal and recurring adjustments, necessary for the fair presentation of our financial position, results of operations and cash flows for the periods presented. Interim results are not necessarily indicative of the results that may be expected for the full year. The accompanying unaudited consolidated financial statements should be read in conjunction with the consolidated and combined statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018. 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 and 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 the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Update (“ASU”) No. 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities, following its adoption on January 1, 2018, with any changes to fair value recognized within other 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 a similar investment of the same issuer; 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 indicators 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 expense, net.
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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. Actual results could differ from these estimates.On an ongoing basis, the Company evaluates its estimates and judgments including those related to: contingencies; the recoverability of goodwill and indefinite-lived intangible assets; the useful lives and recoverability of definite-lived intangible assets and property and equipment; the fair values of cash equivalents and 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; 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. |
Recent Accounting Pronouncements Adopted by the Company | he Company adopted ASU 2016-02, Leases (Topic 842) (“ASC 842”) effective January 1, 2019. ASC 842 superseded previously existing guidance on accounting for leases and generally requires all leases to be recognized in the statement of financial position. The adoption of ASC 842 resulted in the recognition of right of use assets (the “ROU assets”) and related lease liabilities of $53.0 million and $57.9 million, respectively, as of January 1, 2019, with no cumulative effect adjustment. The adoption of ASC 842 had no impact on the Company’s consolidated statement of operations and consolidated statement of cash flows. In addition, the adoption of ASC 842 did not impact the leverage calculations set forth in the agreements governing the outstanding debt or credit agreements of the Company, because, in each circumstance, the leverage calculations are not affected by the lease liabilities that were recorded upon adoption of ASC 842. The Company adopted ASC 842 prospectively and, therefore, did not revise comparative period information or disclosure. In addition, the Company elected the package of practical expedients permitted under ASC 842. See “Note 3—Leases” for additional information on the adoption of ASC 842.
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Reclassifications | Certain prior year amounts have been reclassified to conform to the current year presentation. |
General Revenue Recognition | General Revenue Recognition Revenue is recognized when control of the promised services are transferred to our customers, and in the amount that reflects the consideration the Company expects to be entitled to in exchange for those services. 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.
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REVENUE RECOGNITION (Tables) |
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Revenue from Contract with Customer [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Disaggregation of Revenue | The following table presents disaggregated revenue:
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LEASES (Tables) |
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Leases [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Supplemental Balance Sheet Information of Leases |
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Schedule of Lease Cost and Other Information |
______________________ (a) Includes approximately $0.7 million of short-term lease cost and $0.1 million of sublease income.
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Schedule of Maturities of Operating Lease Liabilities | Maturities of lease liabilities(b):
______________________ (b) Operating lease payments exclude $22.9 million of legally binding minimum lease payments for leases signed but not yet commenced.
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Schedule of Weighted-Average Lease Term and Discount Rate of Leases | The following are the weighted average assumptions used for operating lease term and discount rate:
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FINANCIAL INSTRUMENTS (Tables) |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Assets and Liabilities Measured at Fair Value on a Recurring Basis | The following tables present the Company’s financial instruments that are measured at fair value on a recurring basis:
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Schedule of Changes in Liabilities Measured at Fair Value on a Recurring Basis Using Significant Unobservable Inputs (Level 3) | The Company’s financial instruments that are measured at fair value on a recurring basis using significant unobservable inputs (Level 3) are its contingent consideration arrangements.
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Schedule of Carrying Value and Fair Value of Financial Instruments | The following table presents the carrying value and the fair value of financial instruments measured at fair value only for disclosure purposes.
______________________ (a) At March 31, 2019 and December 31, 2018, the carrying value of long-term debt, net includes unamortized original issue discount and debt issuance costs of $23.3 million and $19.1 million, respectively.
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LONG-TERM DEBT, NET (Tables) |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Long-Term Debt | Long-term debt consists of:
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ACCUMULATED OTHER COMPREHENSIVE LOSS (Tables) |
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Accumulated Other Comprehensive Loss | The following table presents the components of accumulated other comprehensive loss. For the three months ended March 31, 2019 and 2018, the Company’s accumulated other comprehensive (loss) income relates to foreign currency translation adjustments.
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EARNINGS PER SHARE (Tables) |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Computation of Basic and Diluted Earnings per Share | The following tables set forth the computation of the basic and diluted earnings per share attributable to Match Group shareholders:
______________________
(b) Market-based awards and performance-based stock options (“PSOs”) and units (“PSUs”) are considered contingently issuable shares. Shares issuable upon exercise or vesting of 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 awards, PSOs and PSUs is dilutive for the respective reporting periods. For three months ended March 31, 2019 and 2018, 1.6 million and 1.8 million shares, respectively, underlying market-based awards, PSOs, and PSUs were excluded from the calculation of diluted earnings per share because the market or performance conditions had not been met.
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CONSOLIDATED FINANCIAL STATEMENT DETAILS (Tables) |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Cash and Cash Equivalents | The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the consolidated balance sheet to the total amounts shown in the consolidated statement of cash flows:
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Schedule of Restricted Cash | The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the consolidated balance sheet to the total amounts shown in the consolidated statement of cash flows:
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THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Narrative (Details) $ in Thousands |
3 Months Ended | ||
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Mar. 31, 2019
USD ($)
segment
language
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Jan. 01, 2019
USD ($)
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Dec. 31, 2018
USD ($)
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||
Number of languages where products are available (more than) | language | 40 | ||
Number of operating segments | segment | 1 | ||
Class of Stock | |||
Right of use assets | $ 49,668 | $ 0 | |
Lease liability | $ 53,718 | ||
Accounting Standards Update 2016-02 | |||
Class of Stock | |||
Right of use assets | $ 53,000 | ||
Lease liability | $ 57,900 | ||
Match Group | IAC | |||
Class of Stock | |||
Economic ownership interest (as a percent) | 80.40% | ||
Voting interest (as a percent) | 97.50% |
REVENUE RECOGNITION - Narrative (Details) - USD ($) |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Dec. 31, 2018 |
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Revenue from Contract with Customer [Abstract] | ||
Current deferred revenue | $ 219,739,000 | $ 209,935,000 |
Deferred revenue recognized | 158,700,000 | |
Noncurrent deferred revenue | $ 0 | $ 0 |
REVENUE RECOGNITION - Disaggregation of Revenue (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
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Disaggregation of Revenue [Line Items] | ||
Total Revenue | $ 464,625 | $ 407,367 |
Direct Revenue | ||
Disaggregation of Revenue [Line Items] | ||
Total Revenue | 453,962 | 392,737 |
Indirect Revenue (principally advertising revenue) | ||
Disaggregation of Revenue [Line Items] | ||
Total Revenue | 10,663 | 14,630 |
North America | Direct Revenue | ||
Disaggregation of Revenue [Line Items] | ||
Total Revenue | 237,773 | 211,357 |
International | Direct Revenue | ||
Disaggregation of Revenue [Line Items] | ||
Total Revenue | $ 216,189 | $ 181,380 |
LEASES - Balance Sheet Information (Details) - USD ($) $ in Thousands |
Mar. 31, 2019 |
Dec. 31, 2018 |
---|---|---|
Assets: | ||
Right of use assets | $ 49,668 | $ 0 |
Liabilities: | ||
Current lease liabilities | 13,490 | |
Long-term lease liabilities | 40,228 | |
Total lease liabilities | $ 53,718 |
LEASES - Lease Cost (Details) $ in Thousands |
3 Months Ended |
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Mar. 31, 2019
USD ($)
| |
Lessee, Lease, Description [Line Items] | |
Fixed lease cost | $ 4,597 |
Variable lease cost | 799 |
Net lease cost | 5,396 |
Short-term lease cost | 700 |
Sublease income | 100 |
Cost of revenue | |
Lessee, Lease, Description [Line Items] | |
Fixed lease cost | 832 |
Variable lease cost | 91 |
General and administrative expense | |
Lessee, Lease, Description [Line Items] | |
Fixed lease cost | 3,765 |
Variable lease cost | $ 708 |
LEASES - Operating Lease Liabilities Maturities (Details) $ in Thousands |
Mar. 31, 2019
USD ($)
|
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Leases [Abstract] | |
2019 | $ 11,689 |
2020 | 15,467 |
2021 | 13,781 |
2022 | 7,955 |
2023 | 3,380 |
After 2023 | 8,633 |
Total | 60,905 |
Less: Interest | (7,187) |
Present value of lease liabilities | 53,718 |
Leases signed but not yet commenced | $ 22,900 |
LEASES - Weighted-Average Remaining Term and Discount Rate (Details) |
Mar. 31, 2019 |
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Leases [Abstract] | |
Remaining lease term | 4 years 7 months 6 days |
Discount rate (as a percent) | 5.05% |
LEASES - Other Information (Details) $ in Thousands |
3 Months Ended |
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Mar. 31, 2019
USD ($)
| |
Other information: | |
ROU assets obtained in exchange for lease liabilities | $ 36 |
Cash paid for amounts included in the measurement of lease liabilities | $ 4,850 |
INCOME TAXES - Narrative (Details) - USD ($) $ in Thousands |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
Dec. 31, 2018 |
|
Income Tax Contingency | |||
Income tax provision (benefit) | $ (27,780) | $ (12,472) | |
Unrecognized tax benefits including interest and penalties | 36,500 | $ 37,600 | |
Unrecognized tax benefits that would reduce income tax expense | 34,700 | 35,600 | |
Decrease in unrecognized tax benefits unrelated to Federal income taxes statute of limitations expiring within twelve months of current reporting period | 16,600 | ||
IAC | |||
Income Tax Contingency | |||
Unrecognized tax benefits including interest and penalties | $ 22,600 | $ 22,600 |
FINANCIAL INSTRUMENTS - Narrative (Details) |
Mar. 31, 2019
USD ($)
arrangement
|
Dec. 31, 2018
USD ($)
|
---|---|---|
Long-Term Investments | ||
Carrying value of investments in equity securities without readily determinable fair value | $ 9,100,000 | $ 9,100,000 |
Gross unrealized losses of downward adjustments to the carrying value of equity securities without readily determinable fair values | $ 2,100,000 | |
Contingent Consideration Arrangements | ||
Number of contingent consideration arrangements related to business acquisitions | arrangement | 0 | |
Contingent consideration arrangement liability, current | 2,000,000.0 | |
Credit Facility due December 7, 2023 | Credit Facility | ||
Contingent Consideration Arrangements | ||
Maximum borrowing capacity on Credit Facility | $ 500,000,000 | $ 500,000,000 |
5.625% Senior Notes | Senior Notes | ||
Contingent Consideration Arrangements | ||
Stated interest rate (as a percent) | 5.625% |
FINANCIAL INSTRUMENTS - Changes in Level 3 Liabilities Measured at Fair Value on a Recurring Basis (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation | ||
Balance at beginning of period | $ (1,974) | $ (2,647) |
Fair value adjustments | 0 | (156) |
Included in other comprehensive loss | (14) | (110) |
Settlements | 1,988 | 948 |
Balance at end of period | $ 0 | $ (1,965) |
FINANCIAL INSTRUMENTS - Carrying Value and Fair Value of Financial Instruments (Details) - USD ($) $ in Thousands |
Mar. 31, 2019 |
Dec. 31, 2018 |
---|---|---|
Carrying Value | ||
Balance Sheet Grouping, Financial Statement Captions | ||
Long-term debt, net | $ (1,601,656) | $ (1,515,911) |
Unamortized original issue discount and debt issuance costs | 23,300 | 19,100 |
Fair Value | ||
Balance Sheet Grouping, Financial Statement Captions | ||
Long-term debt, net | $ (1,654,734) | $ (1,513,683) |
LONG-TERM DEBT, NET - Summary (Details) - USD ($) $ in Thousands |
Mar. 31, 2019 |
Dec. 31, 2018 |
---|---|---|
Debt Instrument [Line Items] | ||
Total debt | $ 1,625,000 | $ 1,535,000 |
Less: Unamortized original issue discount | 7,023 | 7,352 |
Less: Unamortized debt issuance costs | 16,321 | 11,737 |
Total long-term debt, net | 1,601,656 | 1,515,911 |
Credit Facility | Credit Facility due December 7, 2023 | ||
Debt Instrument [Line Items] | ||
Total debt | 0 | 260,000 |
Term Loan | Term Loan | ||
Debt Instrument [Line Items] | ||
Total debt | 425,000 | 425,000 |
Senior Notes | 6.375% Senior Notes | ||
Debt Instrument [Line Items] | ||
Total debt | $ 400,000 | 400,000 |
Stated interest rate (as a percent) | 6.375% | |
Senior Notes | 5.00% Senior Notes | ||
Debt Instrument [Line Items] | ||
Total debt | $ 450,000 | 450,000 |
Stated interest rate (as a percent) | 5.00% | |
Senior Notes | 5.625% Senior Notes | ||
Debt Instrument [Line Items] | ||
Total debt | $ 350,000 | $ 0 |
Stated interest rate (as a percent) | 5.625% |
ACCUMULATED OTHER COMPREHENSIVE LOSS - Summary (Details) - USD ($) |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Accumulated Other Comprehensive Loss | ||
Balance at beginning of period | $ 125,864,000 | $ 501,249,000 |
Other comprehensive (loss) income | (782,000) | 30,397,000 |
Balance at end of period | 144,237,000 | 538,305,000 |
Tax benefit / provision in accumulated other comprehensive loss | 0 | 0 |
Accumulated Other Comprehensive Loss | ||
Accumulated Other Comprehensive Loss | ||
Balance at beginning of period | (137,166,000) | (112,318,000) |
Balance at end of period | $ (137,948,000) | $ (81,921,000) |
CONSOLIDATED FINANCIAL STATEMENT DETAILS - Cash, Cash Equivalents, and Restricted Cash (Details) - USD ($) $ in Thousands |
Mar. 31, 2019 |
Dec. 31, 2018 |
Mar. 31, 2018 |
Dec. 31, 2017 |
---|---|---|---|---|
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||
Cash and cash equivalents | $ 224,855 | $ 186,947 | $ 287,510 | $ 272,624 |
Restricted cash included in other current assets | 192 | 193 | 142 | 137 |
Total cash, cash equivalents and restricted cash as shown on the consolidated statement of cash flows | $ 225,047 | $ 187,140 | $ 287,652 | $ 272,761 |
CONTINGENCIES - Narrative (Details) |
1 Months Ended | ||
---|---|---|---|
Aug. 14, 2018
USD ($)
plaintiff
|
Nov. 30, 2018
USD ($)
|
Mar. 31, 2019
USD ($)
lawsuit
|
|
Loss Contingencies [Line Items] | |||
Loss contingency reserve | $ 0 | ||
Number of lawsuits with possible material impact (one or more) | lawsuit | 1 | ||
Tinder Optionholder Litigation | |||
Loss Contingencies [Line Items] | |||
Number of plaintiffs | plaintiff | 10 | ||
Tinder Optionholder Litigation | Pending Litigation | |||
Loss Contingencies [Line Items] | |||
Damages sought | $ 2,000,000,000 | ||
FTC Investigation of Business Practices | Pending Litigation | |||
Loss Contingencies [Line Items] | |||
Damages sought | $ 60,000,000 |
RELATED PARTY TRANSACTIONS - Narrative (Details) - USD ($) $ in Thousands, shares in Millions |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
Dec. 31, 2018 |
|
Related Party Transaction | |||
Right of use assets | $ 49,668 | $ 0 | |
Lease liability | 53,718 | ||
IAC | |||
Related Party Transaction | |||
Right of use assets | 17,000 | ||
Lease liability | 17,000 | ||
IAC | Services Agreements | |||
Related Party Transaction | |||
Amount of related party transaction | 1,900 | $ 1,800 | |
IAC | Leased Office Space | |||
Related Party Transaction | |||
Amount of related party transaction | $ 1,400 | $ 1,300 | |
IAC | Employee Matters Agreement | |||
Related Party Transaction | |||
Stock issued pursuant to employee matters agreement (shares) | 0.2 | 1.1 | |
Stock issued as reimbursement for IAC stock issued in settlement of equity plan (shares) | 0.1 | 0.8 | |
Stock issued as reimbursement for IAC stock issued in connection with exercise and vesting of equity awards (shares) | 0.2 | 0.3 |
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