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Financial report summary
?Risks
- If we fail to retain existing users or add new users, our revenue, financial results, and business may be significantly harmed.
- The industry for social connection apps is competitive, with low switching costs and a consistent stream of new services and entrants, and innovation by our competitors may disrupt our business.
- The limited operating history of our newer brands and services makes it difficult to evaluate our current business and future prospects.
- Our growth and profitability rely, in part, on our ability to attract and retain users through cost-effective marketing efforts. Any failure in those efforts could adversely affect our business, financial condition, and results of operations.
- Distribution and marketing of, and access to, our services rely, in significant part, on a variety of third-party platforms, in particular, mobile app stores. If these third parties limit, prohibit, or otherwise interfere with features or services or change their policies in any material way, it could adversely affect our business, financial condition, and results of operations.
- The success of our services will depend, in part, on our ability to access, collect, and use personal data about our users and subscribers.
- As the distribution of our services through app stores increases, in order to maintain our profit margins, we have taken steps to, and in the future may need to further, offset increasing app store fees by decreasing traditional marketing expenditures, increasing user volume or monetization per user, consolidating back-office and technical functions, or by engaging in other efforts to increase revenue or decrease costs generally.
- Challenges with properly managing the use of artificial intelligence could result in reputational harm, competitive harm, and legal liability.
- Foreign currency exchange rate fluctuations have adversely affected and may in the future adversely affect our results of operations.
- We depend on our key personnel.
- Our success depends, in part, on the integrity of our systems and infrastructures and on our ability to enhance, expand, and adapt these systems and infrastructures in a timely and cost-effective manner.
- We may not be able to protect our systems and infrastructure from cyberattacks and may be adversely affected by cyberattacks experienced by third parties.
- Our success depends, in part, on the integrity of third-party systems and infrastructure.
- If the security of personal and confidential or sensitive user information that we maintain and store is breached or otherwise accessed by unauthorized persons, it may be costly to mitigate the impact of such an event and our reputation could be harmed.
- Our business is subject to complex and evolving U.S. and international laws and regulations, including with respect to data privacy and platform liability. These laws and regulations are subject to change and uncertain interpretation, and could result in changes to our business practices, increased cost of operations, declines in user growth or engagement, claims, monetary penalties, or other harm to our business.
- We are subject to a number of risks related to credit card payments, including data security breaches and fraud that we or third parties experience, any of which could adversely affect our business, financial condition, and results of operations.
- Inappropriate actions by certain of our users could be attributed to us and damage our brands’ reputations, which in turn could adversely affect our business.
- Our business and results of operations have been and may in the future be adversely affected by global health pandemics.
- We may fail to adequately protect our intellectual property rights or may be accused of infringing the intellectual property rights of third parties.
- We operate in various international markets, including certain markets in which we have limited experience, and some of our brands continue to seek to increase their international scope. As a result, we face additional risks in connection with certain of our international operations.
- We may experience operational and financial risks in connection with acquisitions.
- We have incurred impairment charges related to our intangible assets in the past and may incur further impairment charges related to our goodwill and other intangible assets in the future, which have required us to, and in the future may again require us to, record a significant charge to earnings.
- We are subject to litigation, and adverse outcomes in such litigation could have an adverse effect on our financial condition.
- Our operations are subject to volatile global economic conditions, particularly those that adversely impact consumer confidence and spending behavior.
- Our indebtedness may affect our ability to operate our business, which could have a material adverse effect on our financial condition and results of operations. We and our subsidiaries may incur additional indebtedness, including secured indebtedness.
- We may not be able to generate sufficient cash to service all of our indebtedness and may be forced to take other actions to satisfy our obligations under our indebtedness that may not be successful.
- Variable rate indebtedness that we have incurred or may incur under our credit agreement will subject us to interest rate risk, which could cause our debt service obligations to increase significantly.
- Exchange of our outstanding exchangeable notes may dilute the ownership interests of existing stockholders or may otherwise depress the price of our common stock.
- If the transactions effected in connection with the Separation were to fail to qualify as generally tax-free for U.S. federal income tax purposes, we and our stockholders could suffer material adverse consequences.
- We do not plan to declare any regular cash dividends in the foreseeable future.
- Provisions in our certificate of incorporation and bylaws or Delaware law may discourage, delay, or prevent a change of control of our company or changes in our management and, therefore, depress the trading price of our common stock.
- Our certificate of incorporation could prevent us from benefiting from corporate opportunities that might otherwise have been available to us.
Management Discussion
- In 2023, total revenue grew 6%, operating income increased 78%, and Adjusted Operating Income grew 11% year-over-year. Revenue growth was primarily due to strong growth at Tinder and Hinge. Operating income and Adjusted Operating Income were positively affected by the increase in revenue and decreases in general and administrative expenses primarily related to decreases in legal and other professional fees. Those positive effects were partially offset by increases in selling and marketing spend at Tinder and Hinge and increases in product development expense primarily due to an increase in compensation expense. Operating income further benefited from decreases in impairment and amortization expense compared to 2022, during which there was an impairment of certain intangible assets. That benefit was partially offset by increased stock-based compensation expense primarily due to new stock-based awards granted during the year.