Good day, and welcome to the Match Group call to discuss the acquisition of Hyperconnect. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing star, then zero on your telephone keypad. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on your telephone keypad, and to withdraw your question, please press star, then two. Please note this event is being recorded. I would now like to turn the call over to Gary Swidler, Chief Financial Officer and Chief Operating Officer of Match Group. Please go ahead, sir. Thank you, operator. Joining me today on the call is Shar Dubey, our CEO. Before we start the call, I need to remind everyone that during this call, we may discuss our outlook and future performance. These forward-looking statements may be preceded by words such as "we expect," "we believe," "we anticipate," or similar statements. These statements are subject to risks and uncertainties, and our actual results could differ materially from the views expressed today. Some of these risks have been set forth in our earnings release and our periodic reports filed with the SEC. With that, let me turn the call over to Shar. Hi, everyone, thank you for joining us on such short notice. This evening, East Coast time, which is Wednesday morning, South Korea time, we are delighted to be announcing the acquisition by Match Group of Hyperconnect. We are super excited about this acquisition. We've been watching them for a while, having first met the CEO, Sam Ahn, and his team a few years ago in Seoul, and I've been so impressed with what they've built. They're a great team and great people who view the world much as we do. I'm thrilled that we finally got this agreement signed. Hyperconnect is a technology leader in video communication and mobile-optimized AI, having developed scalable and low-cost mobile live video technology with low latency back in 2013, which was a huge accomplishment at the time. Since then, they've taken their core technology and have rapidly experimented with new products. They have an incredibly strong engineering team and a lab dedicated to new technology and products. Importantly, they have already achieved two commercial successes with their Azar and Hakuna apps. They have achieved real user and revenue momentum, and we think we can help supercharge both globally with our experience and capabilities. The strategic rationale for acquiring Hyperconnect is multifold. Great team, scaled products, innovative technology, especially in video. Expansion for us in social discovery, which is an increasing area of opportunity for us, and expansion for us in Asia, which is a big focus for us. Hyperconnect's business is over 75% in Asia, so it really fits the bill for us on that front. We couldn't be happier to bring Hyperconnect into Match Group. With that, I'm going to turn it over to Gary to review the deal terms, then I'll come back and share some more details on Hyperconnect and their business. Thanks, Shar. Match Group is buying 100% of Hyperconnect for $1.725 billion. The $1.725 billion is payable in half cash, half stock, with the share price determined prior to closing. We also retain the option to pay up to all cash if we so choose. The transaction requires regulatory approval in a number of countries, therefore, we expect it to close sometime in Q2. We currently have just under $800 million of cash on hand and a $750 million revolving credit facility. We expect to pay the 50% cash portion from cash on hand and by tapping into the revolver if necessary. Importantly, in the 50% cash, 50% stock scenario, we believe that we will still be able to achieve net leverage of slightly less than 3x by the end of 2021, which has been our stated target. Before I hand it back to Shar, on slide four, I just wanted to point out a couple of items regarding Hyperconnect's financial performance. In 2020, the company had revenue of just over $200 million, so it's a fairly substantial company already. Most of that came from their Azar product, which has been monetizing for a number of years, but their Hakuna app is also showing strong monetization trends. The company is growing rapidly overall, with top line up over 50% year-over-year in 2020. We expect 40%-50% growth again in 2021. On a revenue basis, the $1.725 billion purchase price is roughly eight times trailing revenues but under six times forward revenues. The company is also slightly profitable. Our goal will be to ensure the proper level of investment in the business and to gradually improve its profitability. With that, I'll turn it back to Shar. Thanks, Gary. To those following the slide deck that we shared earlier, if you flip to slide four, let's first talk about a little bit more detail about the two global apps that Hyperconnect already has brought to market. When they launched the Azar app in 2014, it was a novel social discovery app. It employed very advanced technology to enable users to video chat with people in real time around the world, powered by real-time language translations. Azar monetizes well. It's ranked among the top 10 highest grossing non-game apps in the Google Play Store, which is the main distribution given the heavy presence in Asia. 90% of the company's revenue is derived from a la carte purchases, things like filters and badges and so on. Building on the live video technology they had developed, in late 2019, Hyperconnect launched Hakuna, which is a multi-party live streaming app for social connectivity. Hakuna is rapidly scaling users and revenue in a number of markets, including Korea and Japan. Hakuna monetizes via virtual gifting. It's still very early in its trajectory with lots of room to expand geographically. In our earnings call last week, I had mentioned that there was a growing trend of online social discovery experience, particularly among young and especially in Asia and emerging markets. In addition to being a fast-developing space, it actually falls within our mission of using technology to enable meaningful connections. We've also learned from our Ablo and POF Live products. That's what gives us confidence in the potential of Hyperconnect and its strategic fit within our portfolio. Based on the trends we've seen in the past few years, this category has a potential addressable market more than twice that of dating. We had already started to invest here, and we think Hyperconnect will meaningfully accelerate our growth in social discovery. Slide five, for those who are following it, a little bit more about the Hyperconnect team and the capabilities they have. They're just under 400 employees, primarily in Seoul, South Korea. Roughly half of them are engineers, which is great. In its home market of South Korea, the company is regarded as an innovative startup and a desirable place to work, so it's able to attract very strong young engineering talent as a result. You can also see some of the experienced leadership team on this page, and I'm really looking forward to working with them, especially their co-founder and CEO, Sam Ahn, who I've gotten to know well over these past few years. He's a tremendous product tech talent and a leader who will be a great asset in addition to Match Group's leadership bench. The deal includes retention arrangements for the leadership team and employees. I mentioned earlier in my opening remarks, but I do want to reemphasize how groundbreaking the Hyperconnect team has been in video technology. We now take video for granted, but back in 2013, when Hyperconnect was one of the first to develop a mobile version of WebRTC and commercialize and scale it through the Azar product, delivering low-cost, high-quality video chats with low latency, even on low-end devices. That was cutting edge and a big accomplishment. That is this company's DNA. On top of that long history with video, they have deep AI capabilities that power their recommendation engines and all the way to real-time video content moderation. They are also among the few companies in the world that have developed on-device deep learning engines that's going to become increasingly important as a technology for more privacy-focused applications. We've been extremely impressed by Hyperconnect's efforts in privacy, moderation, and safety. This is going to be an area of collaboration for us, from applying our standards to leveraging their advanced technology and tools on our other products. Hyperconnect is also working on emerging technology areas of AR and audio technology, which could have broad applicability on our product portfolio. Flipping to slide six. In addition to all the technology capabilities, Hyperconnect's user footprint is really exciting to us. You can see that 70% of their users are Gen Z and millennials, and also 75%-80% of their users and revenue comes from Asia, which is very complementary to our existing footprint. As you know, we've talked about a 25% target for Match Group's revenue from Asia. This acquisition will move us much closer to hitting that goal. Importantly, they're starting to see real traction in markets in Europe and Japan, where we have a track record. We think we really can help leverage our expertise and teams on the ground to turbocharge growth in these markets post-acquisition. Of course, the Americas, where they don't have much of a presence today, could be real opportunities in the future under our umbrella. I will close on slide seven and just reemphasize a couple of points. We're buying a great team with a like-minded philosophy and view of the global opportunity and market evolution. They have a tremendous track record of innovation and AI that we can leverage across the combined portfolio. Their experience in virtual currency, a la carte, and gifting, as well as their broad footprint and base in India, which are areas we've been looking to expand in, makes this transaction a great strategic fit. We can also help increase the momentum of their business as we have done with prior acquisitions of Pairs and Hinge by leveraging our expertise and experience, especially in markets that are newer to Hyperconnect. I very much look forward to working with the Hyperconnect team and reaping the benefits of this combination for many years to come. With that, we'll ask the operator to open the line and see if there are any questions for us today. We will now begin our Q&A session, to ask a question, you may press star then one on your telephone keypad. If you're using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then two. At this time, we'll pause momentarily to assemble our roster. The first question will come from Mario Lu with Barclays. Please go ahead. Great. Thanks for taking our question. The first one is on the TAM of social connectivity and how you're going to implement that into your current apps. You mentioned that the TAM is more than twice of dating, but I guess the question is more on the strategy of implementing the live streaming and social connectivity within your core dating apps. I believe you've done that already with Plenty of Fish. Can you comment on whether you saw increased engagement from that, and if that drove further engagement within the dating app itself, or was it somewhat cannibalistic between the two functions? Gary, I can take this question. Thanks, Mario. The social discovery space is actually a pretty fast-growing and large space in Asia, in particular, and it's growing in other parts of the world. As I've mentioned, we've been sort of testing the waters with our Ablo product as well as POF Live. The reason we got more and more interested in this area and Hyperconnect in particular is because of a mutual synergy that we see. POF Live is entirely accretive to the POF experience. We also think within the social discovery applications, there is a use case of dating that happens as well. That's how we think our worlds sort of make all the sense to be together because both are technology in the pursuit of meaningful connections. Hope that's helpful. Great. That's helpful. Then just one on monetization. Hyperconnect is 90% à la carte. I believe Tinder is currently around 30%. In the longer term, do you guys believe one monetization strategy between the two will eventually win out, or is it purely a regional difference that will likely remain the same in those areas? Thanks. Sure. I have always thought that on applications such as ours, we have the ability to monetize both through subscriptions and through à la carte purchases. The way I generally describe our monetization strategy is you sort of have subscription models that lend itself for pay for access, and you have à la carte consumable-type revenue models that work well for paying for advantages. Both of them coexist on our platforms. However, there are absolutely regional differences where in Asia it is much more friendly for because the consumer mindset is more used to pay-as-you-go models instead of the recurring renewing subscription, we think there is a greater propensity for a consumable à la carte type price model to work better in Asia. I do think there is a lot of learnings we can take from each other, and eventually some mixed hybrid of both of these models will exist on all of our platforms. Got it. Thank you, and congrats on the agreement. Thank you. The next question will come from Justin Patterson with KeyBanc. Please go ahead. Great. Thank you very much. Two, if I can. First, could you talk about just a little more of the history of the transaction? Was this a competitive bid? That's question number one. Question number two, it sounds like there's a lot of opportunity to really refine the product with this. Would love to hear about some of the key learnings you think you can get from Hyperconnect that you can apply back to the rest of the business. Thanks so much. Let me take the first part, and Shar, if you want to take the second part. The company really had a lot of opportunities on its own, and it had a great path. You can imagine that every strategic option was on the table. Ultimately, we wanted to pursue a control transaction with them. We convinced them to join the fold, but they certainly had options to raise money and keep going independently. An IPO was possible for them. They certainly had lots of options, and we're delighted that it ended up working out this way. I think they're excited to be part of our organization, and we're very excited to have them. That's kind of how this ended up turning out this way, and we think we can do a lot together. Yeah. In terms of learnings of what we could do with each other, as I mentioned, there are a number of different areas where I think we learn are able to deploy both their technologies as well as their learning. As I mentioned, video, real-time video in particular, has been growing in its footprint on our products. They have one of the best. That obviously becomes helpful and useful to us. They have learnings around moderation and AI. They have technology around some more emerging technology that could become so much more useful as we work to develop richer experiences on our dating apps themselves. Of course, the monetization is another area where there is a lot of cross-learning that can happen, which is why we are so excited about having them in our portfolio. Got it. Thank you very much. The next question will come from Brian Fitzgerald with Wells Fargo. Please go ahead. Thanks, guys. Congrats. We want to know if you could give a sense of the scale of the user base at Azar and Hakuna, and then how that user growth versus ARPU is contributing to that top line 50% growth in 2020. I have one more. Thanks. Hakuna's user base is relatively small, but growing quite quickly. That's really driving a lot of the success there. Monetization is ramping up relatively quickly at Hakuna as well. The Azar MAU base is actually quite substantial into the double digits. That's definitely a piece of it. We think we can further accelerate the growth of MAU there as it expands into more geographies and becomes more of a household name in Europe and in the Americas. Again, I think there's room on the ARPU side as well to continue to increase ARPU and drive growth. It's going to be both prongs of things as we develop both apps. You should understand that Hakuna is much, much, much earlier stage. Azar has been around for a few years now, though still growing very nicely. Thanks. The follow-up was just, we noticed on the Hyperconnect website, they talk a little bit about an enterprise product and an opportunity. Is that something you plan to continue to invest in and pursue or not? Yeah. In fact, their enterprise product, we could be the first test beds for it, because today we use third-party vendors to power all of our one-to-one and one-to-many video instances on all of our platforms. That's obviously the very first step for us to be able to do at some point after closing, and then we will have to see where this all goes. Got it. Thanks, guys. Congrats. Thank you. Thank you. The next question will come from Lauren Schenk with Morgan Stanley. Please go ahead. Great. Thanks so much. I guess from a timeline perspective, how quickly do you think you can leverage some of Hyperconnect's technology and product features to other Match portfolio apps? I guess beyond Ablo and POF, which apps do you see the greatest opportunity to leverage some of this video technology to? One follow-up, if I can, just any incremental color on the level of profitability of the business today and ultimately where you think that can go over time? Sure. I'll let Gary address part of it. In terms of timeline of how quickly, if you think about it, in 2020, pretty much all of our platforms deployed video in some shape or form. We just think that's the beginning, there are going to be both one-to-one use cases that'll make sense on some platforms. The more higher intent platforms will probably have richer one-to-one experiences. In the other platforms, we do think both a combination of one-to-one and one-to-many video applications will make sense. Obviously I can't, sitting here, be able to say exactly when the timeline, that is something, as soon as we close the deal, we will be working to figure out what the right testing of experimentation with their SDK, et cetera, would be. It is an exciting thing for us to be able to have that technology of that quality within in-house versus having it as a third-party component. As far as the profitability, Lauren, I think last year they achieved about 10% or so margins. They're investing heavily as they're in kind of hyper-growth mode. We think that's completely appropriate, and so we're not going to manage this business for margins in particular in the short term. We want to make the right investments on the marketing side and on the product side. I think if you look intermediate term, our goal is to drive margins here into the upper 20s to 30%. I think that's achievable for this business. As we learn a little bit more about the marketing spend that's required and some of the other dynamics around live streaming and live video, we'll see where we take it from there. That doesn't include sort of any of the benefits of the combination directly or things that we might bring to our other apps that Hyperconnect brings to the table. That's purely kind of on a standalone basis under our auspices. We feel good about the overall profile, but it's going to be a process to invest in this business and get it where we want to go. There's a lot of opportunity here that we're excited about investing in. Great. Very helpful. Thank you. The next question will come from Cory Carpenter with JP Morgan. Please go ahead. Great. Thanks for the questions. Maybe first, just how impactful do you think Hyperconnect could be in helping Match gain traction on the dating side in Asia, maybe especially in countries like South Korea that have been tougher to break into? Then, for second question, maybe if you could just talk a bit some about the competitive landscape you see within social discovery in Asia, probably a market that a lot of us are less familiar with today, but just where Hyperconnect fits in competitively in the market. Thanks. Sure. The first question was around Well, maybe I'll talk about competition first, and then how it fits within the dating and social discovery relative size, I guess, is what you wanted to find out. In terms of competitive market, the one-to-one live video social discovery apps, Azar was a pioneer in that space. The one-to-many multi-party group live app that is Hakuna, which is a slightly different use case than the normal live streaming apps out there, is definitely in a super fast-growing category. We do think both in terms of the product experience as well as technology, they have some real differentiated assets that we can leverage in order to fuel growth and compete in those markets. In terms of how the space between dating versus social discovery, as I mentioned before, we do think there are opportunities to have social experiences on our dating platforms. Similarly, dating is a use case on social discovery platforms as well. South Korea, that you particularly mentioned, which is a particularly strong market for Hyperconnect, their revenue is already, I don't know, 10x that of our Match Group's revenue in that market. That gives you a sense of the various levers that we have to play to bring to bear in these markets, where our ultimate goal is still sort of connecting people for meaningful connections. A subset of those meaningful connections are relationships and other contexts that we enable from dating apps that could happen on these social discovery platforms as well. I just want to pick up also on one thing, Cory. When you look at Japan for us as an example, we had an okay business there, and then we made an acquisition, and we've really turbocharged what we had there. You're right, we've had a tougher time in Korea. Now having a very well-respected, high-quality team there, I think really sets us up much, much better than we've been, and we're hoping to take that success more pan-Asia. It's a big benefit to us to get a high-quality team like this right in the region in Asia. Great. Thank you both. Thank you. The next question will come from Brent Thill with Jefferies. Please go ahead. Thanks, Shar. Just as it relates to the geographic diversity of where you think longer-term Hyperconnect can live and be successful outside Asia, can you talk to that? For Gary, this is your largest acquisition ever in terms of dollar value. Maybe just underscore, is this a new sign and kind of a new boundary for you in terms of where you're willing to go in the future? Can you just talk to how you manage your largest transaction? Sure. Gary, you want to take that question first? Sure. It is a large dollar value, and we obviously take every dollar incredibly seriously, and we've been thoughtful about this. As a percentage of the overall company market cap, it's probably in the, I don't know, 4% range or so. You're right. Dollar-wise, it is the largest deal we've done. We've been thinking about this very hard for a while. We've got a detailed integration plan on how we're going to approach this. We have a track record of acquiring companies and doing a good job with them, most recently Pairs and Hinge. Even though they were smaller than this company may be, we feel really good about our ability to put the right touch on this, not too heavy, and bring our capabilities to bear. I'm very confident we're going to be able to do this in the Hyperconnect case. We're excited to kind of get going as soon as we get to closing on the transaction. In terms of geographically where they can go, obviously, their main footprint is around Asia. 75%-80% of their user base and revenue comes from Asia. There are a couple of areas that we think we can immediately help leverage our skills and presence on the ground. One is they've started seeing some traction in Europe, which we think we can turbocharge with our presence in Europe that we have. We also think there is a real large opportunity for us to go grab in Japan, where, again, we have real talent and skills on the ground to be able to help turbocharge that as well. Once we've sort of played out those parts, Americas remains a white space for us as well. Thanks. The next question will come from Eric Sheridan with UBS. Please go ahead. Thanks for taking the question, and maybe two, if I can. First, following up on Brent, but maybe reversing it back into Asia. You talk about significant footprint in key Asia markets. Is there a way to click down, I hope I didn't miss it, on the 77% of users and the 80% of revenue in Asia and how geographically diverse that Asian footprint is today and what it might mean for broadening out the footprint, if it isn't already, over the medium to long term? Gary, maybe I can come back to something on slide three. It talked that Match has the option to pay up to 100% in cash at close. Can you talk a little bit through the process of what might make it a 50/50 cash stock deal or 100% cash deal at close and what the thought process is there? Thank you. Yeah. On the geography, again, Azar, which has been around for a little bit longer, has a pretty wide distribution by way of markets within Asia, East Asia, and broadly in Asia. Hakuna is relatively new, launched late 2019. They are in far fewer markets today. Again, they are seeing some really nice traction in markets like Japan and South Korea, certain markets in Southeast Asia, et cetera. A fairly broad and diverse presence in Asia overall. Gary? Yeah. In terms of the structure, there was a lot of interest in the company, as I mentioned earlier, and it was important to the sellers to have certainty around what they were receiving. As a result of that, we've got a price that has been set. We plan to deliver stock, and that is our expectation. We've kind of reserved the right to deliver more cash if we so choose. We're operating in a very volatile environment. You just never know what could happen. Just to have another option, we have the option to pay more cash. Our expectation going into this is to deliver half cash, half stock. Thank you. Okay. I think we have time for one more question, operator. Yes. The next question will come from John Blackledge of Cowen. Please go ahead. Great. Thanks. Two quick ones. If the deal closes in the second quarter, we'll see the bulk of the impact in the second half, just given their fast top-line growth. Is there any seasonality in the business as you think about adjusting our models after the deal closes? Secondly, just any color on the revenue mix between Azar and Hakuna, and any color on differences in year-over-year revenue growth? Thank you. Yeah. Why don't I try to take those? I think using the second half to kind of include basically half the revenue that you're expecting for the year, I think is a reasonable thing to do from a modeling perspective sitting here today. Maybe we're going to get one extra month or so in the first half, but it's hard to say sitting here right now. I think that's reasonable. There's not a significant amount of seasonality, so if you make an assumption around the full year revenue and put half in, I think that's a reasonable way to do it. Right now, the preponderance of the revenue comes from Azar, an increasing portion from Hakuna. Hakuna is growing much, much more rapidly. It is kind of catching up relatively quickly. Right now you can see, I think, in some of the databases in terms of the revenue that's coming from Azar and the Hakuna portion being much smaller, but really growing very, very solidly. We'll give you more color on some of these things as we get a little closer to closing. I know people are eager to figure out kind of how to model this and how to think about it. We wanted to give people a bit of a sense of its historical performance today and what we see into the future. As we get a little closer to closing, we will give a bit better sense of how to think about this in terms of our financials and our guidance so that you can make the appropriate adjustments. More to come on that front as the year progresses. Thank you. Hopefully, that was helpful for everybody. We appreciate everyone joining on short notice, as Shar said, and we look forward to talking about this more in our coming calls. We're thrilled to be able to announce the transaction today. Thank you again for joining us. 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