EX-99.1 2 mtch8-k20210202ex991.htm PRESS RELEASE OF MATCH GROUP, INC., DATED FEBRUARY 2, 2021 Document
Exhibit 99.1

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Match Group Reports Fourth Quarter and Full Year 2020 Results
Dallas, TX—February 2, 2021—Match Group, Inc. (NASDAQ: MTCH; “Match Group” or “Company”) reported fourth quarter and full year 2020 financial results today and separately posted a Letter to Shareholders on the Investor Relations section of its website at https://ir.mtch.com.
Q4 2020 HIGHLIGHTS
Total revenue grew 19% over the prior year quarter to $651 million.
Operating income was $213 million, an increase of 17% over the prior year quarter representing an operating margin of 33%.
Adjusted EBITDA was $245 million, an increase of 13% over the prior year quarter representing an Adjusted EBITDA margin of 38%.
Average Subscribers increased 12% to 10.9 million, up from 9.8 million in the prior year quarter. ARPU increased 5% over the prior year quarter to $0.62.
FULL YEAR HIGHLIGHTS
Total Revenue grew 17% over the prior year to $2.4 billion.
Operating income and Adjusted EBITDA were $746 million and $897 million, respectively, increasing 16% and 15%, respectively, over the prior year.
Tinder Direct Revenue was $1.4 billion for 2020, an 18% increase year-over-year.
Operating cash flow and free cash flow grew 22% and 23%, to $789 million and $746 million, respectively.
Key Financial and Operating Metrics from Continuing Operations
(In thousands, except EPS and ARPU)Q4 2020Q4 2019Change
Revenue$651,407 $547,167 19%
Operating Income$212,582 $181,349 17%
Operating Income Margin33 %33 %(0.5) pt
Net earnings attributable to shareholders$140,579 $94,657 49%
Diluted EPS(a)
$0.48 $0.46 4%
Adjusted EBITDA$245,453 $216,296 13%
Adjusted EBITDA Margin38 %40 %(1.8) pt
Average Subscribers10,939 9,809 12%
ARPU$0.62 $0.59 5%
YTD Operating Cash Flow$788,552 $647,989 22%
YTD Free Cash Flow$746,176 $608,954 23%
______________________
(a)Weighted average basic and diluted shares outstanding for all periods prior to the separation of Match Group from IAC/InterActiveCorp (“IAC”) on June 30, 2020 reflect the share position of the Company formerly known as IAC/InterActiveCorp (“Former IAC”). See page 7 for additional information.
See reconciliations of GAAP to non-GAAP measures starting on page 9.




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Revenue
(In thousands, except ARPU)Q4 2020Q4 2019Change
Direct Revenue:
North America$315,836 $266,026 19%
International319,057 268,937 19%
Total Direct Revenue634,893 534,963 19%
Indirect Revenue16,514 12,204 35%
Total Revenue$651,407 $547,167 19%
Average Subscribers
North America5,043 4,637 9%
International5,896 5,172 14%
Total Average Subscribers10,939 9,809 12%
(Change calculated using non-rounded numbers)
ARPU
North America$0.66 $0.62 7%
International$0.58 $0.56 4%
Total ARPU$0.62 $0.59 5%
Growth in Average Subscribers was primarily driven by Tinder, Hinge, Meetic, Pairs, BLK, and Chispa. North America ARPU increased primarily due to à la carte features and optimized pricing at Hinge and live streaming video at PlentyOfFish. International ARPU was favorably impacted by the strength of the Euro relative to the U.S. dollar.
Operating Costs and Expenses
(In thousands)Q4 2020% of RevenueQ4 2019% of RevenueChange
Cost of revenue$173,263 27%$142,070 26%22%
Selling and marketing expense134,757 21%100,308 18%34%
General and administrative expense
74,723 11%69,003 13%8%
Product development expense44,832 7%38,397 7%17%
Depreciation10,987 2%8,777 2%25%
Amortization of intangibles263 —%7,263 1%(96)%
Total operating costs and expenses$438,825 67%$365,818 67%20%
Total operating costs and expenses increased 20% in total dollars and was flat as a percentage of revenue compared to the prior year quarter. Cost of revenue increased primarily due to an increase of in-app purchase fees and fees associated with live streaming video at PlentyOfFish. Total selling and marketing expense increased due to higher marketing spend across our portfolio. General and administrative expense increased primarily due to increased headcount, partially offset by reductions in travel expenditures. Product development expense increased due to increased engineering-related headcount at Tinder and Hinge.




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Liquidity and Capital Resources
For the year ended December 31, 2020, we generated operating cash flow attributable to continuing operations of $789 million and Free Cash Flow of $746 million.
As of December 31, 2020, the Company had $739 million in cash and cash equivalents and $3.5 billion of long-term debt, including $1.7 billion of Exchangeable Senior Notes. The Company’s $750 million revolving credit facility was undrawn as of December 31, 2020. The following table sets forth the trailing twelve-month leverage and trailing twelve-month leverage excluding the Exchangeable Senior Notes on a gross and net basis:
June 30, 2020September 30, 2020December 31, 2020
Trailing twelve-month leverage
Gross basis4.8x4.5x4.3x
Net basis4.6x4.0x3.5x
Trailing twelve-month leverage excluding the Exchangeable Senior Notes
Gross basis2.7x2.6x2.5x
Net basis2.6x2.1x1.7x
Income Taxes
In the fourth quarter of 2020 and 2019, Match Group recorded an income tax provision from continuing operations of $26 million and $15 million, for effective tax rates of 15% and 11%, respectively. The tax rate in both quarters benefited from excess tax benefits generated by the exercise or vesting of stock-based awards.
Conference Call
Match Group will audiocast a conference call to answer questions regarding its fourth quarter and full year financial results on Wednesday, February 3, 2021 at 8:30 a.m. Eastern Time. This call will include the disclosure of certain information, including forward-looking information, which may be material to an investor’s understanding of Match Group’s business. The live audiocast will be open to the public on Match Group’s investor relations website at https://ir.mtch.com.




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GAAP FINANCIAL STATEMENTS
MATCH GROUP CONSOLIDATED STATEMENT OF OPERATIONS
 Three Months Ended December 31,Twelve Months Ended December 31,
 2020201920202019
 (In thousands, except per share data)
Revenue$651,407 $547,167 $2,391,269 $2,051,258 
Operating costs and expenses:
Cost of revenue (exclusive of depreciation shown separately below)
173,263 142,070 635,833 527,184 
Selling and marketing expense134,757 100,308 479,907 427,440 
General and administrative expense74,723 69,003 311,207 256,138 
Product development expense44,832 38,397 169,811 151,960 
Depreciation10,987 8,777 41,271 34,355 
Amortization of intangibles263 7,263 7,525 8,727 
Total operating costs and expenses438,825 365,818 1,645,554 1,405,804 
Operating income212,582 181,349 745,715 645,454 
Interest expense(43,306)(40,580)(174,791)(140,570)
Other (expense) income, net(3,480)(5,864)15,861 (2,026)
Earnings from continuing operations, before tax165,796 134,905 586,785 502,858 
Income tax provision
(25,617)(14,971)(32,874)(8,225)
Net earnings from continuing operations140,179 119,934 553,911 494,633 
Earnings (loss) from discontinued operations, net of tax
— 4,338 (366,070)49,187 
Net earnings
140,179 124,272 187,841 543,820 
Net loss (earnings) attributable to noncontrolling interests
400 (23,847)(59,280)(112,689)
Net earnings attributable to Match Group, Inc. shareholders
$140,579 $100,425 $128,561 $431,131 
Net earnings per share from continuing operations:
     Basic
$0.53 $0.52 $2.21 $2.15 
     Diluted
$0.48 $0.46 $2.00 $1.88 
Net earnings per share attributable to Match Group, Inc. shareholders:
     Basic$0.53 $0.55 $0.58 $2.37 
     Diluted$0.48 $0.48 $0.49 $2.08 
Basic shares outstanding266,395 182,598 223,433 181,869 
Diluted shares outstanding294,975 194,969 242,464 194,349 
Stock-based compensation expense by function:
Cost of revenue$1,058 $833 $4,201 $3,693 
Selling and marketing expense1,297 1,187 5,141 5,112 
General and administrative expense10,789 8,948 59,174 42,863 
Product development expense8,477 7,939 33,752 38,056 
Total stock-based compensation expense$21,621 $18,907 $102,268 $89,724 




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MATCH GROUP CONSOLIDATED BALANCE SHEET
December 31, 2020December 31, 2019
(In thousands)
ASSETS
Cash and cash equivalents$739,164 $465,676 
Accounts receivable, net137,023 116,459 
Other current assets144,025 97,850 
Current assets of discontinued operations— 3,028,079 
Total current assets1,020,212 3,708,064 
Property and equipment, net107,799 101,065 
Goodwill1,270,532 1,239,839 
Intangible assets, net230,900 228,324 
Deferred income taxes224,013 192,496 
Other non-current assets123,524 64,232 
Non-current assets of discontinued operations— 2,830,783 
TOTAL ASSETS$2,976,980 $8,364,803 
LIABILITIES AND SHAREHOLDERS’ EQUITY  
LIABILITIES  
Accounts payable$29,200 $20,191 
Deferred revenue239,088 218,843 
Accrued expenses and other current liabilities231,748 182,250 
Current liabilities of discontinued operations— 588,896 
Total current liabilities500,036 1,010,180 
Long-term debt, net3,534,706 2,889,626 
Income taxes payable14,582 30,295 
Deferred income taxes17,213 18,285 
Other long-term liabilities86,428 26,158 
Non-current liabilities of discontinued operations— 447,414 
Redeemable noncontrolling interest640 44,527 
Commitment and contingencies
SHAREHOLDERS’ EQUITY 
Common stock267 — 
Former IAC common stock— 263 
Former IAC class B convertible common stock— 16 
Additional paid-in capital7,394,646 11,683,799 
Retained (deficit) earnings(8,491,126)1,689,925 
Accumulated other comprehensive loss(81,454)(136,349)
Treasury stock— (10,309,612)
Total Match Group, Inc. shareholders’ equity(1,177,667)2,928,042 
Noncontrolling interests1,042 970,276 
Total shareholders’ equity(1,176,625)3,898,318 
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $2,976,980 $8,364,803 




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MATCH GROUP CONSOLIDATED STATEMENT OF CASH FLOWS
 Twelve Months Ended December 31,
 20202019
 (In thousands)
Cash flows from operating activities attributable to continuing operations:  
Net earnings from continuing operations$553,911 $494,633 
Adjustments to reconcile net earnings from continuing operations to net cash provided by operating activities attributable to continuing operations:
Stock-based compensation expense102,268 89,724 
Depreciation41,271 34,355 
Amortization of intangibles7,525 8,727 
Deferred income taxes4,985 (19,608)
Accretion of original issue discount of Exchangeable Senior Notes44,743 30,429 
Other adjustments, net26,705 12,694 
Changes in assets and liabilities
Accounts receivable(24,213)(17,861)
Other assets(33,224)(24,162)
Accounts payable and other liabilities24,155 33,741 
Income taxes payable and receivable16,913 (4,161)
Deferred revenue23,513 9,478 
Net cash provided by operating activities attributable to continuing operations788,552 647,989 
Cash flows from investing activities attributable to continuing operations:  
Net cash used in business combinations— (3,759)
Capital expenditures(42,376)(39,035)
Purchases of investments(9,115)— 
Net cash distribution related to Separation of IAC(3,870,550)— 
Other, net(90)1,064 
Net cash used in investing activities attributable to continuing operations(3,922,131)(41,730)
Cash flows from financing activities attributable to continuing operations:  
Borrowings under the Credit Facility20,000 40,000 
Proceeds from Senior Notes offerings1,000,000 350,000 
Proceeds from Exchangeable Notes offerings— 1,150,000 
Principal payments on Credit Facility(20,000)(300,000)
Principal payments on Senior Notes(400,000)— 
Net premium on the Exchangeable Senior Notes hedges and warrants— (136,908)
Debt issuance costs(13,517)(27,815)
Proceeds from stock offering1,421,801 — 
Proceeds from issuance of common stock pursuant to stock-based awards155,402 — 
Withholding taxes paid on behalf of employees on net settled stock-based awards of Former Match Group and Match Group
(211,958)(203,177)
Purchase of Former Match Group treasury stock(132,868)(216,353)
Purchase of noncontrolling interests(15,827)(1,650)
Other, net(15,187)(73)
Net cash provided by financing activities attributable to continuing operations1,787,846 654,024 
Total cash (used in) provided by continuing operations
(1,345,733)1,260,283 
Net cash provided by operating activities attributable to discontinued operations13,630 289,949 
Net cash used in investing activities attributable to discontinued operations(963,420)(287,798)
Net cash used in financing activities attributable to discontinued operations(110,959)(254,193)
Total cash used in discontinued operations
(1,060,749)(252,042)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash5,426 (1,568)
Net (decrease) increase in cash, cash equivalents, and restricted cash(2,401,056)1,006,673 
Cash, cash equivalents, and restricted cash at beginning of period3,140,358 2,133,685 
Cash, cash equivalents, and restricted cash at end of period$739,302 $3,140,358 




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MATCH GROUP EARNINGS PER SHARE
Weighted average basic and diluted shares outstanding for all periods prior to the separation of Match Group from IAC on June 30, 2020 reflect the share position of Former IAC multiplied by the separation exchange ratio of 2.1584.
The following tables set forth the computation of the basic and diluted earnings per share attributable to Match Group shareholders:
Three Months Ended December 31,
20202019
BasicDilutedBasicDiluted
(In thousands, except per share data)
Numerator
Net earnings from continuing operations
$140,179 $140,179 $119,934 $119,934 
Net loss (earnings) attributable to noncontrolling interests
400 400 (25,277)(25,277)
Impact from subsidiaries’ dilutive securities— (176)— (5,889)
Net earnings from continuing operations attributable to Match Group, Inc. shareholders
$140,579 $140,403 $94,657 $88,768 
Earnings from discontinued operations, net of tax$— $— $4,338 $4,338 
Net loss attributable to noncontrolling interests of discontinued operations— — 1,430 1,430 
Net earnings from discontinued operations attributable to shareholders— — 5,768 5,768 
Net earnings attributable to Match Group, Inc. shareholders
$140,579 $140,403 $100,425 $94,536 
Denominator
Weighted average basic shares outstanding266,395 266,395 182,598 182,598 
Dilutive securities— 28,580 — 12,371 
Denominator for earnings per share—weighted average shares266,395 294,975 182,598 194,969 
Earnings per share:
Earnings per share from continuing operations$0.53 $0.48 $0.52 $0.46 
Earnings per share from discontinued operations, net of tax$— $— $0.03 $0.03 
Earnings per share attributable to Match Group, Inc. shareholders$0.53 $0.48 $0.55 $0.48 





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Twelve Months Ended December 31,
20202019
BasicDilutedBasicDiluted
(In thousands, except per share data)
Numerator
Net earnings from continuing operations
$553,911 $553,911 $494,633 $494,633 
Net earnings attributable to noncontrolling interests
(59,599)(59,599)(103,401)(103,401)
Impact from subsidiaries’ dilutive securities
— (9,999)— (25,997)
Net earnings from continuing operations attributable to Match Group, Inc. shareholders
$494,312 $484,313 $391,232 $365,235 
(Loss) earnings from discontinued operations, net of tax
$(366,070)$(366,070)$49,187 $49,187 
Net loss (earnings) attributable to noncontrolling interests of discontinued operations
319 319 (9,288)(9,288)
Impact from subsidiaries’ dilutive securities of discontinued operations
— (240)— (67)
Net (loss) earnings from discontinued operations attributable to shareholders
(365,751)(365,991)39,899 39,832 
Net earnings attributable to Match Group, Inc. shareholders
$128,561 $118,322 $431,131 $405,067 
Denominator
Weighted average basic shares outstanding223,433 223,433 181,869 181,869 
Dilutive securities
— 19,031 — 12,480 
Denominator for earnings per share—weighted average shares223,433 242,464 181,869 194,349 
Earnings per share:
Earnings per share from continuing operations
$2.21 $2.00 $2.15 $1.88 
(Loss) earnings per share from discontinued operations, net of tax
$(1.64)$(1.51)$0.22 $0.20 
Earnings per share attributable to Match Group, Inc. shareholders
$0.58 $0.49 $2.37 $2.08 
MATCH GROUP COMPONENTS OF INTEREST EXPENSE
Three Months Ended December 31,Twelve Months Ended December 31,
2020201920202019
(In thousands)
Credit Facility, Term Loan, and Senior Notes$25,153 $23,146 $103,438 $91,720 
Exchangeable Senior Notes18,153 17,434 71,353 48,850 
Total Match Group interest expense$43,306 $40,580 $174,791 $140,570 





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RECONCILIATIONS OF GAAP TO NON-GAAP MEASURES
MATCH GROUP RECONCILIATION OF NET EARNINGS TO ADJUSTED EBITDA
Three Months Ended December 31,Twelve Months Ended December 31,
2020201920202019
(Dollars in thousands)
Net earnings attributable to Match Group, Inc. shareholders$140,579 $100,425 $128,561 $431,131 
Add back:
Net (loss) earnings attributable to noncontrolling interests
(400)23,847 59,280 112,689 
(Earnings) loss from discontinued operations, net of tax
— (4,338)366,070 (49,187)
Income tax provision25,617 14,971 32,874 8,225 
Other expense (income), net3,480 5,864 (15,861)2,026 
Interest expense
43,306 40,580 174,791 140,570 
Operating Income
212,582 181,349 745,715 645,454 
Stock-based compensation expense21,621 18,907 102,268 89,724 
Depreciation10,987 8,777 41,271 34,355 
Amortization of intangibles
263 7,263 7,525 8,727 
Adjusted EBITDA$245,453 $216,296 $896,779 $778,260 
Revenue$651,407 $547,167 $2,391,269 $2,051,258 
Operating income margin33 %33 %31 %31 %
Adjusted EBITDA margin38 %40 %38 %38 %
MATCH GROUP RECONCILIATION OF OPERATING CASH FLOW ATTRIBUTABLE TO CONTINUING OPERATIONS TO FREE CASH FLOW
Twelve Months Ended December 31,
20202019
(In thousands)
Net cash provided by operating activities attributable to continuing operations
$788,552 $647,989 
Capital expenditures(42,376)(39,035)
Free Cash Flow$746,176 $608,954 




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MATCH GROUP RECONCILIATION OF GAAP REVENUE TO NON-GAAP REVENUE, EXCLUDING FOREIGN EXCHANGE EFFECTS
(Dollars in thousands, except ARPU)Three months ended December 31,
2020Change% Change2019
Revenue, as reported$651,407 $104,240 19%547,167 
Foreign exchange effects(9,958)
Revenue Excluding Foreign Exchange Effects$641,449 $94,282 17%$547,167 
(Change calculated using non-rounded numbers, rounding differences may occur)
ARPU, as reported$0.62 5%$0.59 
Foreign exchange effects(0.01)
ARPU, excluding foreign exchange effects$0.61 4%$0.59 
International ARPU, as reported$0.58 4%$0.56 
Foreign exchange effects(0.02)
International ARPU, excluding foreign exchange effects$0.56 1%$0.56 

(Dollars in thousands, except ARPU)Twelve Months Ended December 31,
2020Change% Change2019
Revenue, as reported$2,391,269 $340,011 17%$2,051,258 
Foreign exchange effects6,412 
Revenue Excluding Foreign Exchange Effects$2,397,681 $346,423 17%$2,051,258 
(Change calculated using non-rounded numbers, rounding differences may occur)
ARPU, as reported$0.60 3%$0.58 
Foreign exchange effects0.00 
ARPU, excluding foreign exchange effects$0.60 3%$0.58 
International ARPU, as reported$0.56 —%$0.56 
Foreign exchange effects0.00 
International ARPU, excluding foreign exchange effects
$0.56 —%$0.56 





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DILUTIVE SECURITIES
Match Group has various tranches of dilutive securities. The table below details these securities and their potentially dilutive impact (shares in millions; rounding differences may occur).
Average. Exercise Price1/29/2021
Share Price$139.86
Absolute Shares267.4
Vested Options
Match Group Options$13.902.3
Match Group Options, converted from Former IAC Options$23.402.5
Total Dilution - Vested Options4.8
Unvested Options and Awards
Match Group Options$20.641.5
Match Group RSUs and subsidiary denominated equity awards
4.7
Total Dilution - Unvested Options and Awards6.2
Outstanding Warrants
Warrants expiring on January 1, 2023 (11.8 million outstanding)$68.226.0
Warrants expiring on September 15, 2026 (6.6 million outstanding)$134.760.2
Warrants expiring on April 15, 2030 (6.8 million outstanding)$134.820.2
Total Dilution - Outstanding Warrants6.5
Total Dilution17.5
% Dilution6.2%
Total Diluted Shares Outstanding285.0
The dilutive securities presentation above is calculated using the methods and assumptions described below; these are different from GAAP dilution, which is calculated based on the treasury stock method.
Options — The table above assumes the option exercise price is used to repurchase Match Group shares.
RSUs and subsidiary denominated equity awards — The table above assumes RSUs are fully dilutive. All performance-based and market-based awards reflect the expected shares that will vest based on current performance or market estimates. The table assumes no change in the fair value estimate of the subsidiary denominated equity awards from the values used for GAAP purposes at December 31, 2020.
Exchangeable Senior Notes — The Company has three series of Exchangeable Senior Notes outstanding. In the event of an exchange, each series of Exchangeable Senior Notes can be settled in cash, shares, or a combination of cash and shares. At the time of each Exchangeable Senior Notes issuance, the Company purchased call options with a strike price equal to the exchange price of each series of Exchangeable Senior Notes (“Note Hedge”), which can be used to offset the dilution of each series of the Exchangeable Senior Notes. No dilution is reflected in the table above for any of the Exchangeable Senior Notes, all of which are currently exchangeable, because it is the Company’s intention to settle the Exchangeable Senior Notes with cash equal to the face amount of the notes; any shares issued would be offset by shares received upon exercise of the Note Hedge.
Warrants — At the time of the issuance of each series of Exchangeable Senior Notes, the Company also sold warrants for the number of shares with the strike prices reflected in the table above. The cash generated from the exercise of the warrants is assumed to be used to repurchase Match Group shares and the resulting net dilution, if any, is reflected in the table above.




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PRINCIPLES OF FINANCIAL REPORTING
Match Group reports Adjusted EBITDA, Adjusted EBITDA Margin, Free Cash Flow, and Revenue Excluding Foreign Exchange Effects, all of which are supplemental measures to U.S. generally accepted accounting principles (“GAAP”). The Adjusted EBITDA, Adjusted EBITDA Margin, and Free Cash Flow measures are among the primary metrics by which we evaluate the performance of our business, on which our internal budget is based and by which management is compensated. Revenue Excluding Foreign Exchange Effects provides a comparable framework for assessing the performance of our business without the effect of exchange rate differences when compared to prior periods. We believe that investors should have access to the same set of tools that we use in analyzing our results. These non-GAAP measures should be considered in addition to results prepared in accordance with GAAP, but should not be considered a substitute for or superior to GAAP results. Match Group endeavors to compensate for the limitations of the non-GAAP measures presented by providing the comparable GAAP measures with equal or greater prominence and descriptions of the reconciling items, including quantifying such items, to derive the non-GAAP measures. We encourage investors to examine the reconciling adjustments, which we describe below, between the GAAP and non-GAAP measures. Interim results are not necessarily indicative of the results that may be expected for a full year.
Definitions of Non-GAAP Measures
Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (Adjusted EBITDA) is defined as operating income excluding: (1) stock-based compensation expense; (2) depreciation; and (3) acquisition-related items consisting of (i) amortization of intangible assets and impairments of goodwill and intangible assets, if applicable, and (ii) gains and losses recognized on changes in the fair value of contingent consideration arrangements, as applicable. We believe Adjusted EBITDA is useful for analysts and investors as this measure allows a more meaningful comparison between our performance and that of our competitors. The above items are excluded from our Adjusted EBITDA measure because they are non-cash in nature. Adjusted EBITDA has certain limitations because it excludes certain expenses.
Adjusted EBITDA Margin is defined as Adjusted EBITDA divided by revenues. We believe Adjusted EBITDA margin is useful for analysts and investors as this measure allows a more meaningful comparison between our performance and that of our competitors. Adjusted EBITDA margin has certain limitations in that it does not take into account the impact to our consolidated statement of operations of certain expenses.
Free Cash Flow is defined as net cash provided by operating activities from continuing operations, less capital expenditures. We believe Free Cash Flow is useful to investors because it represents the cash that our operating businesses generate, before taking into account non-operational cash movements. Free Cash Flow has certain limitations in that it does not represent the total increase or decrease in the cash balance for the period, nor does it represent the residual cash flow for discretionary expenditures. Therefore, we think it is important to evaluate Free Cash Flow along with our consolidated statement of cash flows.
We look at Free Cash Flow as a measure of the strength and performance of our businesses, not for valuation purposes. In our view, applying “multiples” to Free Cash Flow is inappropriate because it is subject to timing, seasonality and one-time events. We manage our business for cash and we think it is of utmost importance to maximize cash – but our primary valuation metric is Adjusted EBITDA.
Revenue Excluding Foreign Exchange Effects is calculated by translating current period revenues using prior period exchange rates. The percentage change in Revenue Excluding Foreign Exchange Effects is calculated by determining the change in current period revenues over prior period revenues where current period revenues are translated using prior period exchange rates. We believe the impact of foreign exchange rates on Match Group, due to its global reach, may be an important factor in understanding period over period comparisons if movement in rates is significant. Since our results are reported in U.S. dollars, international revenues are favorably impacted as the U.S. dollar weakens relative to other currencies, and unfavorably impacted as the U.S dollar strengthens relative to other currencies. We believe the presentation of revenue excluding foreign exchange effects in addition to reported revenue helps improve the ability to understand Match Group’s performance because it excludes the impact of foreign currency volatility that is not indicative of Match Group’s core operating results.




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Non-Cash Expenses That Are Excluded From Our Non-GAAP Measures
Stock-based compensation expense consists principally of expense associated with the grants of stock options, RSUs, performance-based RSUs and market-based awards. These expenses are not paid in cash, and we include the related shares in our fully diluted shares outstanding using the treasury stock method. Performance-based RSUs and market-based awards are included only to the extent the applicable performance or market condition(s) have been met (assuming the end of the reporting period is the end of the contingency period). To the extent stock-based awards are settled on a net basis, we remit the required tax-withholding amounts from our current funds.
Depreciation is a non-cash expense relating to our property and equipment and is computed using the straight-line method to allocate the cost of depreciable assets to operations over their estimated useful lives, or, in the case of leasehold improvements, the lease term, if shorter.
Amortization of intangible assets and impairments of goodwill and intangible assets are non-cash expenses related primarily to acquisitions. At the time of an acquisition, the identifiable definite-lived intangible assets of the acquired company, such as customer lists, trade names and technology, are valued and amortized over their estimated lives. Value is also assigned to (i) acquired indefinite-lived intangible assets, which consist of trade names and trademarks, and (ii) goodwill, which are not subject to amortization. An impairment is recorded when the carrying value of an intangible asset or goodwill exceeds its fair value. We believe that intangible assets represent costs incurred by the acquired company to build value prior to acquisition and the related amortization and impairment charges of intangible assets or goodwill, if applicable, are not ongoing costs of doing business.
DEFINITIONS
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 end users 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) 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.
Leverage on a gross basis - is calculated as principal debt balance divided by Adjusted EBITDA for the period referenced.
Leverage on a net basis - is calculated as principal debt balance less cash and cash equivalents divided by Adjusted EBITDA for the period referenced.




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OTHER INFORMATION
Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995
This press release and our conference call, which will be held at 8:30 a.m. Eastern Time on February 3, 2021, may contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. All statements that are not historical facts are “forward looking statements.” The use of words such as “anticipates,” “estimates,” “expects,” “plans” and “believes,” among others, generally identify forward-looking statements. These forward-looking statements include, among others, statements relating to: Match Group’s future financial performance, Match Group’s business prospects and strategy, anticipated trends, and other similar matters. These forward-looking statements are based on management’s current expectations and assumptions about future events, which are inherently subject to uncertainties, risks and changes in circumstances that are difficult to predict. Actual results could differ materially from those contained in these forward-looking statements for a variety of reasons, including, among others: competition, our ability to maintain user rates on our higher monetizing dating products, our ability to attract users to our dating products through cost-effective marketing and related efforts, foreign currency exchange rate fluctuations, our ability to distribute our dating products through third parties and offset related fees, the integrity and scalability of our systems and infrastructure (and those of third parties) and our ability to adapt ours to changes in a timely and cost-effective manner, our ability to protect our systems from cyberattacks and to protect personal and confidential user information, risks relating to certain of our international operations and acquisitions, certain risks relating to our relationship with IAC post-separation, the impact of the outbreak of COVID-19 coronavirus, and the risks inherent in separating Match Group from IAC, including uncertainties related to, among other things, the expected benefits of the separation, any litigation arising out of or relating to the transaction, the tax treatment of the transaction, and the impact of the separation on the businesses of Match Group. Certain of these and other risks and uncertainties are discussed in Match Group’s filings with the Securities and Exchange Commission. Other unknown or unpredictable factors that could also adversely affect Match Group’s business, financial condition and results of operations may arise from time to time. In light of these risks and uncertainties, these forward-looking statements may not prove to be accurate. Accordingly, you should not place undue reliance on these forward-looking statements, which only reflect the views of Match Group management as of the date of this press release. Match Group does not undertake to update these forward-looking statements.
About Match Group
Match Group (NASDAQ: MTCH), through its portfolio companies, is a leading provider of dating products available globally. Our portfolio of brands includes Tinder®, Match®, Meetic®, OkCupid®, Hinge®, Pairs™, PlentyOfFish®, and OurTime®, as well as a number of other brands, each designed to increase our users’ likelihood of finding a meaningful connection. Through our portfolio companies and their trusted brands, we provide tailored products to meet the varying preferences of our users. Our products are available in over 40 languages to our users all over the world.
Contact Us
Lance Barton
Match Group Investor Relations
(212) 314-7400
Justine Sacco
Match Group Corporate Communications
(212) 445-5088
Match Group
8750 North Central Expressway, Dallas, TX 75231, (214) 576-9352 https://mtch.com