Match Group, Inc. (Exact Name of Registrant As Specified in Its Charter)

As filed with the Securities and Exchange Commission on August 8, 2019 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended June 30, 2019 Or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from__________to__________ Commission File No. 001-37636 Match Group, Inc. (Exact name of registrant as specified in its charter) Delaware 26-4278917 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) 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) 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) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐ Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐ Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. Large accelerated filer ☑ Accelerated filer ☐ Non-accelerated filer ☐ Smaller reporting ☐ Emerging growth ☐ company company If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑ As of August 2, 2019 , the following shares of the registrant’s common stock were outstanding: Common Stock 71,058,751 Class B Common Stock 209,919,402 Class C Common Stock — Total outstanding Common Stock 280,978,153 TABLE OF CONTENTS Page Number PART I Item 1. Consolidated Financial Statements 3 Consolidated Balance Sheet 3 Consolidated Statement of Operations 4 Consolidated Statement of Comprehensive Operations 5 Consolidated Statement of Shareholders’ Equity 6 Consolidated Statement of Cash Flows 8 Note 1—The Company and Summary of Significant Accounting Policies 9 Note 2—Revenue Recognition 10 Note 3—Leases 11 Note 4—Income Taxes 13 Note 5—Financial Instruments 14 Note 6—Long-term Debt, net 17 Note 7—Accumulated Other Comprehensive Loss 19 Note 8—Earnings per Share 20 Note 9—Consolidated Financial Statement Details 21 Note 10—Contingencies 21 Note 11—Related Party Transactions 22 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 24 Item 3. Quantitative and Qualitative Disclosures about Market Risk 40 Item 4. Controls and Procedures 41 PART II Item 1. Legal Proceedings 42 Item 1A. Risk Factors 43 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 44 Item 5. Other Information 45 Item 6. Exhibits 46 Signatures 47 2 Table of Contents PART I FINANCIAL INFORMATION Item 1. Consolidated Financial Statements MATCH GROUP, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET (Unaudited) June 30, 2019 December 31, 2018 (In thousands, except share data) ASSETS Cash and cash equivalents $ 266,374 $ 186,947 Accounts receivable, net of allowance of $904 and $724, respectively 160,622 99,052 Other current assets 78,115 57,766 Total current assets 505,111 343,765 Right-of-use assets 46,879 — Property and equipment, net of accumulated depreciation and amortization of $118,643 and $113,025, respectively 63,941 58,351 Goodwill 1,251,693 1,244,758 Intangible assets, net of accumulated amortization of $12,656 and $11,843, respectively 237,005 237,640 Deferred income taxes 149,574 134,347 Long-term investments 9,076 9,076 Other non-current assets 22,492 25,124 TOTAL ASSETS $ 2,285,771 $ 2,053,061 LIABILITIES AND SHAREHOLDERS’ EQUITY LIABILITIES Accounts payable $ 13,798 $ 9,528 Deferred revenue 225,657 209,935 Accrued expenses and other current liabilities 143,902 135,971 Total current liabilities 383,357 355,434 Long-term debt, net 1,602,607 1,515,911 Income taxes payable 12,845 13,918 Deferred income taxes 20,285 20,174 Other long-term liabilities 55,726 21,760 Redeemable noncontrolling interests 1,035 — Commitments and contingencies SHAREHOLDERS’ EQUITY Common stock; $0.001 par value; authorized 1,500,000,000 shares; 75,584,202 and 71,513,087 shares issued; and 71,244,933 and 68,460,563 shares outstanding at June 30, 2019 and December 31, 2018, respectively 76 72 Class B convertible common stock; $0.001 par value; authorized 1,500,000,000 shares; 209,919,402 shares issued and outstanding 210 210 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 (146,116) (57,575) Retained earnings 704,785 453,778 Accumulated other comprehensive loss (134,906) (137,166) Treasury stock; 4,339,269 and 3,052,524 shares, respectively (214,312) (133,455) Total Match Group, Inc. shareholders’ equity 209,737 125,864 Noncontrolling interests 179 — Total shareholders’ equity 209,916 125,864 TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $ 2,285,771 $ 2,053,061 The accompanying Notes to Consolidated Financial Statements are an integral part of these statements. 3 Table of Contents MATCH GROUP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited) Three Months Ended June 30, Six Months Ended June 30, 2019 2018 2019 2018 (In thousands, except per share data) Revenue $ 497,973 $ 421,196 $ 962,598 $ 828,563 Operating costs and expenses: Cost of revenue (exclusive of depreciation shown separately below) 126,665 97,334 246,889 191,278 Selling and marketing expense 94,888 90,261 213,551 208,432 General and administrative expense 62,233 42,165 116,627 84,926 Product development expense 32,680 32,635 76,954 64,504 Depreciation 8,197 8,399 16,028 16,546 Amortization of intangibles 412 237 823 479 Total operating costs and expenses 325,075 271,031 670,872 566,165 Operating income 172,898 150,165 291,726 262,398 Interest expense (23,817) (18,276) (45,903) (36,082) Other income, net 2,538 11,004 1,050 3,783 Earnings before income taxes 151,619 142,893 246,873 230,099 Income tax (provision) benefit (23,651) (11,535) 4,129 937 Net earnings 127,968 131,358 251,002 231,036 Net loss attributable to noncontrolling interests 5 1,142 5 1,200 Net earnings attributable to Match Group, Inc. shareholders $ 127,973 $ 132,500 $ 251,007 $ 232,236 Net earnings per share attributable to Match Group, Inc. shareholders: Basic $ 0.46 $ 0.48 $ 0.90 $ 0.84 Diluted $ 0.43 $ 0.45 $ 0.85 $ 0.78 Stock-based compensation expense by function: Cost of revenue $ 676 $ 642 $ 1,941 $ 1,275 Selling and marketing expense 1,330 889 2,726 1,781 General and administrative expense 13,290 7,590 23,061 15,250 Product development expense 6,719 7,585 22,284 15,363 Total stock-based compensation expense $ 22,015 $ 16,706 $ 50,012 $ 33,669 The accompanying Notes to Consolidated Financial Statements are an integral part of these statements. 4 Table of Contents MATCH GROUP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF COMPREHENSIVE OPERATIONS (Unaudited) Three Months Ended June 30, Six Months Ended June 30, 2019 2018 2019 2018 (In thousands) Net earnings $ 127,968 $ 131,358 $ 251,002 $ 231,036 Other comprehensive income (loss), net of tax Change in foreign currency translation adjustment 3,046 (39,346) 2,264 (8,745) Total other comprehensive income (loss) 3,046 (39,346) 2,264 (8,745) Comprehensive income 131,014 92,012 253,266 222,291 Comprehensive loss attributable to noncontrolling interests 1 1,413 1 1,267 Comprehensive income attributable to Match Group, Inc. shareholders $ 131,015 $ 93,425 $ 253,267 $ 223,558 The accompanying Notes to Consolidated Financial Statements are an integral part of these statements. 5 Table of Contents MATCH GROUP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY (Unaudited) Three Months Ended June 30, 2019 and 2018 Match Group Shareholders’ Equity Class B Common Convertible Stock Common Stock $0.001 $0.001 Par Value Par Value Accumulated Total Match Redeemable Additional Other Group Total Noncontrolling Paid-in Retained Comprehensive Treasury Shareholders’ Noncontrolling Shareholders’ Interests $ Shares $ Shares Capital Earnings (Loss) Income Stock Equity Interests Equity (In thousands) Balance as of March 31, 2019 $ — $ 75 74,768 $210 209,919 $(136,151) $ 576,812 $ (137,948) $(158,761) $ 144,237 $ — $ 144,237 Net (loss) earnings for the three months ended June 30, 2019 (7) — — — — — 127,973

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