Table of Contents
As filed with the Securities and Exchange Commission on November 7, 2019


6, 2020
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 September 30, 2019
Or
For the Quarterly Period EndedSeptember 30, 2020
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. 0-20570
001-34148
iaclogo2019331a07.jpgmtch-20200930_g1.jpg
IAC/INTERACTIVECORPMatch Group, Inc.
(Exact name of registrant as specified in its charter)
Delaware59-2712887
 (State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
555 West 18th Street, New York, New York10011
(Address of registrant's principal executive offices)
(212) 314-7300
(Registrant's telephone number, including area code)
Delaware59-2712887
(State or other jurisdiction of
incorporation or organization)		(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)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading SymbolName of exchange on which registered
Common Stock, par value $0.001IACMTCHThe 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“large accelerated filer," "accelerated” “accelerated filer," "smaller” “smaller reporting company,"” and "emerging“emerging growth company"company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer☒☑Accelerated filer☐Non-accelerated filer☐Smaller reporting company☐Emerging growth 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 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 November 1, 2019, the followingOctober 30, 2020, there were 265,983,244 shares of the registrant's common stock were outstanding:outstanding.


TABLE OF CONTENTS
Page
Number
Common Stock78,800,508
PART I
Class B Common Stock5,789,499
Total outstanding Common Stock84,590,007
3


TABLE OF CONTENTS
Page
Number3
PART I
Item 1.
3
Consolidated Balance Sheet
3
Consolidated Statement of Operations
4
5
6
810
911
1215
1416
1517
19
2625
27
29
Note 9—Consolidated Financial Statement Details
3530
3730
32
3834
Quantitative and Qualitative Disclosures about Market Risk
6351
6452
PART II
6553
6656
6759
6760
Exhibits61
68
Signatures
70


2

Table of Contents


PART I
FINANCIAL INFORMATION
Item 1.    Consolidated Financial Statements
IAC/INTERACTIVECORPMATCH GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(Unaudited)
 September 30, 2020December 31, 2019
(In thousands, except share data)
ASSETS  
Cash and cash equivalents$398,884 $465,676 
Accounts receivable, net of allowance of $306 and $578, respectively199,682 116,459 
Other current assets139,593 97,850 
Current assets of discontinued operations0 3,028,079 
Total current assets738,159 3,708,064 
Property and equipment, net of accumulated depreciation and amortization of $161,232 and $147,669, respectively106,006 101,065 
Goodwill1,252,715 1,239,839 
Intangible assets, net of accumulated amortization of $14,935 and $13,744, respectively226,126 228,324 
Deferred income taxes236,500 192,496 
Other non-current assets110,586 64,232 
Non-current assets of discontinued operations0 2,830,783 
TOTAL ASSETS$2,670,092 $8,364,803 
LIABILITIES AND SHAREHOLDERS’ EQUITY  
LIABILITIES  
Accounts payable$16,347 $20,191 
Deferred revenue240,954 218,843 
Accrued expenses and other current liabilities230,894 182,250 
Current liabilities of discontinued operations0 588,896 
Total current liabilities488,195 1,010,180 
Long-term debt, net3,521,092 2,889,626 
Income taxes payable13,147 30,295 
Deferred income taxes17,721 18,285 
Other long-term liabilities70,258 26,158 
Non-current liabilities of discontinued operations0 447,414 
Redeemable noncontrolling interests2,240 44,527 
Commitments and contingencies
SHAREHOLDERS’ EQUITY  
Common stock; $0.001 par value; authorized 1,600,000,000 shares; 263,759,289 and 0 shares issued and outstanding at September 30, 2020 and December 31, 2019, respectively264 0 
Former IAC common stock; $0.001 par value; authorized 1,600,000,000 shares; 0 and 263,229,724 shares issued; and 0 and 78,889,779 shares outstanding at September 30, 2020 and December 31, 2019, respectively0 263 
Former IAC Class B convertible common stock; $0.001 par value; authorized 400,000,000 shares; 0 and 16,157,499 shares issued; and 0 and 5,789,499 shares outstanding at September 30, 2020 and December 31, 2019, respectively0 16 
Additional paid-in capital7,296,618 11,683,799 
Retained (deficit) earnings(8,631,705)1,689,925 
Accumulated other comprehensive loss(108,111)(136,349)
Treasury stock; 0 and 194,708 shares, respectively0 (10,309,612)
Total Match Group, Inc. shareholders’ equity(1,442,934)2,928,042 
Noncontrolling interests373 970,276 
Total shareholders’ equity(1,442,561)3,898,318 
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY$2,670,092 $8,364,803 
 September 30, 2019 December 31, 2018
 (In thousands, except par value amounts)
ASSETS   
Cash and cash equivalents$2,946,180
 $2,131,632
Marketable securities157,174
 123,665
Accounts receivable, net of allowance and reserves of $25,003 and $18,860, respectively355,924
 279,189
Other current assets225,016
 228,253
Total current assets3,684,294
 2,762,739
    
Right-of-use assets177,797
 —
Property and equipment, net of accumulated depreciation and amortization of $308,987 and $286,798, respectively361,664
 318,800
Goodwill2,852,986
 2,726,859
Intangible assets, net of accumulated amortization of $196,563 and $136,405, respectively603,702
 631,422
Long-term investments333,980
 235,055
Deferred income taxes170,299
 64,786
Other non-current assets120,069
 134,924
TOTAL ASSETS$8,304,791
 $6,874,585
    
LIABILITIES AND SHAREHOLDERS' EQUITY   
LIABILITIES:   
Current portion of long-term debt$13,750
 $13,750
Accounts payable, trade100,858
 74,907
Deferred revenue414,325
 360,015
Accrued expenses and other current liabilities507,348
 434,886
Total current liabilities1,036,281
 883,558
    
Long-term debt, net3,111,882
 2,245,548
Income taxes payable36,297
 37,584
Deferred income taxes21,657
 23,600
Other long-term liabilities215,611
 66,807
    
Redeemable noncontrolling interests77,302
 65,687
    
Commitments and contingencies

 

    
SHAREHOLDERS' EQUITY:   
Common stock $.001 par value; authorized 1,600,000 shares; issued 263,110 and 262,303 shares, respectively, and outstanding 78,770 and 77,963 shares, respectively263
 262
Class B convertible common stock $.001 par value; authorized 400,000 shares; issued 16,157 shares and outstanding 5,789 shares16
 16
Additional paid-in capital11,761,711
 12,022,387
Retained earnings1,589,500
 1,258,794
Accumulated other comprehensive loss(144,604) (128,722)
Treasury stock 194,708 shares(10,309,612) (10,309,612)
Total IAC shareholders' equity2,897,274
 2,843,125
Noncontrolling interests908,487
 708,676
Total shareholders' equity3,805,761
 3,551,801
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY$8,304,791
 $6,874,585

The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.

3

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IAC/INTERACTIVECORPMATCH GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)
 Three Months Ended September 30,Nine Months Ended September 30,
 2020201920202019
 (In thousands, except per share data)
Revenue$639,770 $541,493 $1,739,862 $1,504,091 
Operating costs and expenses:
Cost of revenue (exclusive of depreciation shown separately below)169,823 138,225 462,570 385,114 
Selling and marketing expense129,859 113,581 345,150 327,132 
General and administrative expense88,961 68,668 236,484 187,135 
Product development expense39,280 36,609 124,979 113,563 
Depreciation11,221 8,533 30,284 25,578 
Amortization of intangibles459 641 7,262 1,464 
Total operating costs and expenses439,603 366,257 1,206,729 1,039,986 
Operating income200,167 175,236 533,133 464,105 
Interest expense(43,189)(38,993)(131,485)(99,990)
Other (expense) income, net(1,923)2,788 19,341 3,838 
Earnings from continuing operations, before tax155,055 139,031 420,989 367,953 
Income tax (provision) benefit(23,568)(1,240)(7,257)6,746 
Net earnings from continuing operations131,487 137,791 413,732 374,699 
Earnings (loss) from discontinued operations, net of tax508 21,981 (366,070)44,849 
Net earnings131,995 159,772 47,662 419,548 
Net loss (earnings) attributable to noncontrolling interests586 (31,228)(59,680)(88,842)
Net earnings (loss) attributable to Match Group, Inc. shareholders$132,581 $128,544 $(12,018)$330,706 
Net earnings per share from continuing operations:
     Basic$0.51 $0.60 $1.69 $1.63 
     Diluted$0.45 $0.52 $1.53 $1.42 
Net earnings (loss) per share attributable to Match Group, Inc. shareholders:
     Basic$0.51 $0.71 $(0.06)$1.82 
     Diluted$0.46 $0.63 $(0.10)$1.60 
Stock-based compensation expense by function:
Cost of revenue$1,007 $919 $3,143 $2,860 
Selling and marketing expense1,402 1,199 3,844 3,925 
General and administrative expense26,870 10,854 48,385 33,915 
Product development expense8,056 7,833 25,275 30,117 
Total stock-based compensation expense$37,335 $20,805 $80,647 $70,817 
 Three Months Ended September 30, Nine Months Ended September 30,
 2019 2018 2019 2018
 (In thousands, except per share data)
Revenue$1,246,874
 $1,104,592
 $3,539,375
 $3,158,789
Operating costs and expenses:       
Cost of revenue (exclusive of depreciation shown separately below)296,385
 237,238
 832,845
 657,424
Selling and marketing expense423,881
 386,802
 1,256,843
 1,159,294
General and administrative expense207,880
 190,903
 647,010
 563,450
Product development expense86,600
 77,740
 253,914
 230,122
Depreciation23,090
 18,925
 63,152
 56,987
Amortization of intangibles23,186
 20,152
 65,576
 60,293
Total operating costs and expenses1,061,022
 931,760
 3,119,340
 2,727,570
Operating income185,852
 172,832
 420,035
 431,219
Interest expense(42,132) (27,610) (110,481) (81,471)
Other income, net1,229
 8,113
 47,852
 174,635
Earnings before income taxes144,949
 153,335
 357,406
 524,383
Income tax benefit14,823
 18,242
 62,142
 15,887
Net earnings159,772
 171,577
 419,548
 540,270
Net earnings attributable to noncontrolling interests(31,228) (25,803) (88,842) (105,061)
Net earnings attributable to IAC shareholders$128,544
 $145,774
 $330,706
 $435,209
        
Earnings per share attributable to IAC shareholders:      
Basic earnings per share$1.52
 $1.75
 $3.93
 $5.22
Diluted earnings per share$1.35
 $1.49
 $3.45
 $4.55
        
Stock-based compensation expense by function:       
Cost of revenue$935
 $512
 $2,919
 $1,937
Selling and marketing expense2,338
 1,837
 7,815
 5,679
General and administrative expense36,883
 44,242
 131,842
 134,743
Product development expense9,897
 8,772
 37,346
 29,647
Total stock-based compensation expense$50,053
 $55,363
 $179,922
 $172,006
The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.

4

Table of Contents


IAC/INTERACTIVECORPMATCH GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF COMPREHENSIVE OPERATIONS
(Unaudited)
Three Months Ended September 30,Nine Months Ended September 30,
2020201920202019
(In thousands)
Net earnings$131,995 $159,772 $47,662 $419,548 
Other comprehensive income (loss), net of tax
Change in foreign currency translation adjustment16,206 (23,053)12,746 (20,647)
Change in unrealized losses on available-for-sale securities0 0 (1)(5)
Total other comprehensive income (loss)16,206 (23,053)12,745 (20,652)
Comprehensive income148,201 136,719 60,407 398,896 
Components of comprehensive loss (income) attributable to noncontrolling interests:
Net loss (earnings) attributable to noncontrolling interests586 (31,228)(59,680)(88,842)
Change in foreign currency translation adjustment attributable to noncontrolling interests(5)4,664 1,084 4,348 
Change in unrealized losses of available-for-sale debt securities attributable to noncontrolling interests0 0 0 1 
Comprehensive loss (income) attributable to noncontrolling interests581 (26,564)(58,596)(84,493)
Comprehensive income attributable to Match Group, Inc. shareholders$148,782 $110,155 $1,811 $314,403 
 Three Months Ended September 30, Nine Months Ended September 30,
 2019 2018 2019 2018
 (In thousands)
Net earnings$159,772
 $171,577
 $419,548
 $540,270
Other comprehensive loss, net of income taxes:       
Change in foreign currency translation adjustment(23,053) (1,050) (20,647) (12,233)
Change in unrealized gains and losses on available-for-sale securities (a)
—
 (28) (5) (15)
Total other comprehensive loss, net of income taxes(23,053) (1,078) (20,652) (12,248)
Comprehensive income, net of income taxes136,719
 170,499
 398,896
 528,022
Components of comprehensive income attributable to noncontrolling interests:       
Net earnings attributable to noncontrolling interests(31,228) (25,803) (88,842) (105,061)
Change in foreign currency translation adjustment attributable to noncontrolling interests4,664
 549
 4,348
 2,632
Change in unrealized gains and losses of available-for-sale debt securities attributable to noncontrolling interests—
 —
 1
 —
Comprehensive income attributable to noncontrolling interests(26,564) (25,254) (84,493) (102,429)
Comprehensive income attributable to IAC shareholders$110,155
 $145,245
 $314,403
 $425,593
_____________________
(a)
Net of income tax benefit of $4 for the three months ended September 30, 2018.



The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.

5

Table of Contents


IAC/INTERACTIVECORPMATCH GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF SHAREHOLDERS'SHAREHOLDERS’ EQUITY (Unaudited)
Three Months Ended September 30, 2020
Match Group Shareholders’ Equity
 Common Stock $0.001 Par Value 
 Redeemable
Noncontrolling
Interests		$SharesAdditional Paid-in CapitalRetained EarningsAccumulated
Other
Comprehensive
(Loss) Income		Total Match Group Shareholders’ EquityNoncontrolling InterestsTotal
Shareholders’
Equity
 (In thousands)
Balance as of June 30, 2020$(156)$242 241,617 $7,180,181 $(8,764,286)$(124,312)$(1,708,175)$337 $(1,707,838)
Net (loss) earnings for the three months ended September 30, 2020(617)— — — 132,581 — 132,581 31 132,612 
Other comprehensive income, net of tax— — — — — 16,201 16,201 5 16,206 
Stock-based compensation expense— — — 38,757 — — 38,757 — 38,757 
Issuance of Match Group common stock pursuant to stock-based awards, net of withholding taxes— 5 4,803 83,220 — — 83,225 — 83,225 
Issuance of Class M common stock— 17 17,339 (17)— — — — — 
Adjustment of redeemable noncontrolling interests to fair value3,013 — — (3,013)— — (3,013)— (3,013)
Other— — — (2,510)— — (2,510)— (2,510)
Balance as of September 30, 2020$2,240 $264 263,759 $7,296,618 $(8,631,705)$(108,111)$(1,442,934)$373 $(1,442,561)
6

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MATCH GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY (Unaudited) (Continued)
Three Months Ended September 30, 2019 and 2018
Match Group Shareholders’ Equity
 Former IAC
Common Stock
$0.001
Par Value		Former IAC
Class B Convertible Common Stock $0.001
Par Value		 
 Redeemable
Noncontrolling
Interests		$Shares$SharesAdditional Paid-in CapitalRetained EarningsAccumulated
Other
Comprehensive
Loss		Treasury StockTotal Match Group Shareholders’ EquityNoncontrolling InterestsTotal
Shareholders��
Equity
 (In thousands)
Balance as of June 30, 2019$80,502 $263 262,789 $16 16,157 $11,957,543 $1,460,956 $(125,705)$(10,309,612)$2,983,461 $860,136 $3,843,597 
Net (loss) earnings for the three months ended September 30, 2019(1,270)— — — — — 128,544 — — 128,544 32,498 161,042 
Other comprehensive loss, net of tax(365)— — — — — — (18,389)— (18,389)(4,299)(22,688)
Stock-based compensation expense36 — — — — 20,332 — — — 20,332 29,521 49,853 
Issuance of Former IAC common stock pursuant to stock-based awards, net of withholding taxes— — 321 — — (55,036)— — — (55,036)— (55,036)
Issuance of Former Match Group and ANGI Homeservices common stock pursuant to stock-based awards, net of withholding taxes— — — — — (22,749)— (510)— (23,259)(9,369)(32,628)
Purchase of redeemable noncontrolling interests(71)— — — — — — — — — — — 
Adjustment of redeemable noncontrolling interests to fair value(1,531)— — — — 1,531 — — — 1,531 — 1,531 
Equity component of exchangeable senior notes, net of deferred financing costs and deferred tax liabilities— — — — — (130)— — — (130)— (130)
Purchase of Former Match Group and ANGI Homeservices treasury stock— — — — — (139,779)— — — (139,779)— (139,779)
Other1 — — — — (1)— — — (1)— (1)
Balance as of September 30, 2019$77,302 $263 263,110 $16 16,157 $11,761,711 $1,589,500 $(144,604)$(10,309,612)$2,897,274 $908,487 $3,805,761 
(Unaudited)
7

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    IAC Shareholders' Equity    
        Class B
Convertible
Common
Stock $.001
Par Value		              
    Common
Stock $.001
Par Value		              
        Accumulated
Other
Comprehensive
Loss		   Total IAC
Shareholders'
Equity		    
 Redeemable
Noncontrolling
Interests		  Additional
Paid-in
Capital		 Retained Earnings Treasury
Stock		  Noncontrolling
Interests		 Total
Shareholders'
Equity
 $ Shares $ Shares  
    (In thousands)  
Balance at June 30, 2019$80,502
  $263
 262,789
 $16
 16,157
 $11,957,543
 $1,460,956
 $(125,705) $(10,309,612) $2,983,461
 $860,136
 $3,843,597
Net (loss) earnings(1,270)  —
 —
 —
 —
 —
 128,544
 —
 —
 128,544
 32,498
 161,042
Other comprehensive loss, net of income taxes(365)  —
 —
 —
 —
 —
 —
 (18,389) —
 (18,389) (4,299) (22,688)
Stock-based compensation expense36
  —
 —
 —
 —
 20,332
 —
 —
 —
 20,332
 29,521
 49,853
Issuance of common stock pursuant to stock-based awards, net of withholding taxes—
  —
 321
 —
 —
 (55,036) —
 —
 —
 (55,036) —
 (55,036)
Purchase of redeemable noncontrolling interests(71)  —
 —
 —
 —
 —
 —
 —
 —
 —
 —
 —
Adjustment of redeemable noncontrolling interests to fair value(1,531)  —
 —
 —
 —
 1,531
 —
 —
 —
 1,531
 —
 1,531
Issuance of Match Group and ANGI Homeservices common stock pursuant to stock-based awards, net of withholding taxes—
  —
 —
 —
 —
 (22,749) —
 (510) —
 (23,259) (9,369) (32,628)
Purchase of Match Group and ANGI Homeservices treasury stock—
  —
 —
 —
 —
 (139,779) —
 —
 —
 (139,779) —
 (139,779)
Equity component of exchangeable senior notes, net of deferred financing costs and deferred tax liabilities—
  —
 —
 —
 —
 (130) —
 —
 —
 (130) —
 (130)
Other1
  —
 —
 —
 —
 (1) —
 —
 —
 (1) —
 (1)
Balance at September 30, 2019$77,302
  $263
 263,110
 $16
 16,157
 $11,761,711
 $1,589,500
 $(144,604) $(10,309,612) $2,897,274
 $908,487
 $3,805,761
                         
Balance at June 30, 2018$75,719
  $262
 261,757
 $16
 16,157
 $12,008,684
 $921,268
 $(112,717) $(10,241,434) $2,576,079
 $660,869
 $3,236,948
Net (loss) earnings(275)  —
 —
 —
 —
 —
 145,774
 —
 —
 145,774
 26,078
 171,852
Other comprehensive loss, net of income taxes(424)  —
 —
 —
 —
 —
 —
 (529) —
 (529) (125) (654)
Stock-based compensation expense284
  —
 —
 —
 —
 16,748
 —
 —
 —
 16,748
 38,331
 55,079
Issuance of common stock pursuant to stock-based awards, net of withholding taxes—
  —
 283
 —
 —
 9,012
 —
 —
 —
 9,012
 —
 9,012
Purchase of IAC treasury stock—
  —
 —
 —
 —
 —
 —
 —
 (68,178) (68,178) —
 (68,178)
Purchase of redeemable noncontrolling interests59
  —
 —
 —
 —
 —
 —
 —
 —
 —
 —
 —
Purchase of noncontrolling interests(3,562)  —
 —
 —
 —
 —
 —
 —
 —
 —
 (418) (418)
Adjustment of redeemable noncontrolling interests to fair value(2,221)  —
 —
 —
 —
 2,221
 —
 —
 —
 2,221
 —
 2,221
Issuance of Match Group and ANGI Homeservices common stock pursuant to stock-based awards, net of withholding taxes—
  —
 —
 —
 —
 (74,480) —
 391
 —
 (74,089) 3,251
 (70,838)
Purchase of Match Group treasury stock—
  —
 —
 —
 —
 (6,433) —
 —
 —
 (6,433) —
 (6,433)
Other(50)  —
 —
 —
 —
 (123) —
 —
 —
 (123) 124
 1
Balance at September 30, 2018$69,530
  $262
 262,040
 $16
 16,157
 $11,955,629
 $1,067,042
 $(112,855) $(10,309,612) $2,600,482
 $728,110
 $3,328,592
MATCH GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY (Unaudited) (Continued)
Nine Months Ended September 30, 2020
Match Group Shareholders’ Equity
 Common Stock $0.001 Par Value
Former IAC
Common Stock
 $0.001
  Par Value
Former IAC
Class B Convertible Common Stock $0.001
Par Value
 
 Redeemable
Noncontrolling
Interests		$Shares$Shares$SharesAdditional
Paid-in
Capital		Retained EarningsAccumulated
Other
Comprehensive
(Loss) Income		Treasury StockTotal Match Group Shareholders’ EquityNoncontrolling InterestsTotal
Shareholders’
Equity
 (In thousands)
Balance as of December 31, 2019$44,527 $0 0 $263 263,230 $16 16,157 $11,683,799 $1,689,925 $(136,349)$(10,309,612)$2,928,042 $970,276 $3,898,318 
Net (loss) earnings for the nine months ended September 30, 2020(2,687)— — — — — — — (12,018)— — (12,018)62,367 50,349 
Other comprehensive (loss) income, net of tax(686)— — — — — — — — 13,829 — 13,829 (398)13,431 
Stock-based compensation expense15 — — — — — — 111,816 — — — 111,816 86,363 198,179 
Issuance of Match Group common stock pursuant to stock-based awards, net of withholding taxes— 5 4,803 — — — — 83,220 — — — 83,225 — 83,225 
Issuance of Former IAC common stock pursuant to stock-based awards, net of withholding taxes— — — 1 453 — — (34,518)— — — (34,517)— (34,517)
Issuance of Former Match Group and ANGI Homeservices common stock pursuant to stock-based awards, net of withholding taxes— — — — — — — (212,270)— 628 — (211,642)(11,405)(223,047)
Purchase of redeemable noncontrolling interests(3,165)— — — — — — — — — — — — — 
Adjustment of redeemable noncontrolling interests to fair value7,820 — — — — — — (7,820)— — — (7,820)— (7,820)
Purchase of Former Match Group and ANGI Homeservices treasury stock— — — — — — — (187,735)— — — (187,735)— (187,735)
Retirement of treasury stock— — — (184)(184,340)(10)(10,368)194 (10,309,612)— 10,309,612 — — — 
Exchange Former IAC common stock and Class B common stock for Match Group common stock and completion of the Separation(43,583)184 183,749 (80)(79,343)(6)(5,789)(4,748,030)— 13,781 — (4,734,151)(498,792)(5,232,943)
Acquire Former Match Group noncontrolling interest— 58 57,868 — — — — 608,110 — — — 608,168 (608,168)— 
Issuance of Class M common stock— 17 17,339 — — — — (17)— — — — — — 
Other(1)— — — — — — (131)— — — (131)130 (1)
Balance as of September 30, 2020$2,240 $264 263,759 $0 0 $0 0 $7,296,618 $(8,631,705)$(108,111)$0 $(1,442,934)$373 $(1,442,561)

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MATCH GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY (Unaudited) (Continued)
Nine Months Ended September 30, 2019
Match Group Shareholders’ Equity
Former IAC
Common Stock
 $0.001
  Par Value
Former IAC
Class B Convertible Common Stock $0.001
Par Value
Redeemable
Noncontrolling
Interests		$Shares$SharesAdditional Paid-in CapitalRetained EarningsAccumulated
Other
Comprehensive
(Loss) Income		Treasury StockTotal Match Group Shareholders’ EquityNoncontrolling InterestsTotal
Shareholders’
Equity
(In thousands)
Balance as of December 31, 2018$65,687 $262 262,303 $16 16,157 $12,022,387 $1,258,794 $(128,722)$(10,309,612)$2,843,125 $708,676 $3,551,801 
Net earnings for the nine months ended September 30, 20194,625 — — — — — 330,706 — — 330,706 84,217 414,923 
Other comprehensive loss, net of tax(514)— — — — — — (16,303)— (16,303)(3,835)(20,138)
Stock-based compensation expense113 — — — — 63,387 — — — 63,387 116,252 179,639 
Issuance of Former IAC common stock pursuant to stock-based awards, net of withholding taxes— 1 807 — — (78,059)— — — (78,058)— (78,058)
Issuance of Former Match Group and ANGI Homeservices common stock pursuant to stock-based awards, net of withholding taxes— — — — — (200,661)— 421 — (200,240)3,004 (197,236)
Purchase of redeemable noncontrolling interests(6,192)— — — — — — — — — — — 
Adjustment of redeemable noncontrolling interests to fair value8,607 — — — — (8,607)— — — (8,607)— (8,607)
Noncontrolling interests created in an acquisition5,009 — — — — — — — — — — — 
Purchase of exchangeable note hedges— — — — — (303,428)— — — (303,428)— (303,428)
Equity component of exchangeable Senior Notes, net of deferred financing costs and deferred tax liabilities— — — — — 320,998 — — — 320,998 — 320,998 
Issuance of warrants— — — — — 166,520 — — — 166,520 — 166,520 
Purchase of Match Group and ANGI treasury stock— — — — — (220,636)— — — (220,636)— (220,636)
Other(33)— — — — (190)— — — (190)173 (17)
Balance as of September 30, 2019$77,302 $263 263,110 $16 16,157 $11,761,711 $1,589,500 $(144,604)$(10,309,612)$2,897,274 $908,487 $3,805,761 
The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.





6
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IAC/INTERACTIVECORP AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
Nine Months Ended September 30, 2019 and 2018
(Unaudited)
    IAC Shareholders' Equity    
        Class B
Convertible
Common
Stock $.001
Par Value		              
    Common
Stock $.001
Par Value		              
        Accumulated
Other
Comprehensive
Loss		   Total IAC
Shareholders'
Equity		    
 Redeemable
Noncontrolling
Interests		  Additional
Paid-in
Capital		 Retained Earnings Treasury
Stock		  Noncontrolling
Interests		 Total
Shareholders'
Equity
 $ Shares $ Shares  
    (In thousands)  
Balance at December 31, 2018$65,687
  $262
 262,303
 $16
 16,157
 $12,022,387
 $1,258,794
 $(128,722) $(10,309,612) $2,843,125
 $708,676
 $3,551,801
Net earnings4,625
  —
 —
 —
 —
 —
 330,706
 —
 —
 330,706
 84,217
 414,923
Other comprehensive loss, net of income taxes(514)  —
 —
 —
 —
 —
 —
 (16,303) —
 (16,303) (3,835) (20,138)
Stock-based compensation expense113
  —
 —
 —
 —
 63,387
 —
 —
 —
 63,387
 116,252
 179,639
Issuance of common stock pursuant to stock-based awards, net of withholding taxes—
  1
 807
 —
 —
 (78,059) —
 —
 —
 (78,058) —
 (78,058)
Purchase of redeemable noncontrolling interests(6,192)  —
 —
 —
 —
 —
 —
 —
 —
 —
 —
 —
Adjustment of redeemable noncontrolling interests to fair value8,607
  —
 —
 —
 —
 (8,607) —
 —
 —
 (8,607) —
 (8,607)
Issuance of Match Group and ANGI Homeservices common stock pursuant to stock-based awards, net of withholding taxes—
  —
 —
 —
 —
 (200,661) —
 421
 —
 (200,240) 3,004
 (197,236)
Purchase of Match Group and ANGI Homeservices treasury stock—
  —
 —
 —
 —
 (220,636) —
 —
 —
 (220,636) —
 (220,636)
Noncontrolling interests created in acquisitions5,009
  —
 —
 —
 —
 —
 —
 —
 —
 —
 —
 —
Purchase of exchangeable note hedges—
  —
 —
 —
 —
 (303,428) —
 —
 —
 (303,428) —
 (303,428)
Equity component of exchangeable senior notes, net of deferred financing costs and deferred tax liabilities—
  —
 —
 —
 —
 320,998
 —
 —
 —
 320,998
 —
 320,998
Issuance of warrants—
  —
 —
 —
 —
 166,520
 —
 —
 —
 166,520
 —
 166,520
Other(33)  —
 —
 —
 —
 (190) —
 —
 —
 (190) 173
 (17)
Balance at September 30, 2019$77,302
  $263
 263,110
 $16
 16,157
 $11,761,711
 $1,589,500
 $(144,604) $(10,309,612) $2,897,274
 $908,487
 $3,805,761
                         
Balance at December 31, 2017$42,867
  $261
 260,624
 $16
 16,157
 $12,165,002
 $595,038
 $(103,568) $(10,226,721) $2,430,028
 $516,795
 $2,946,823
Cumulative effect of adoption of ASU No. 2014-09—
  —
 —
 —
 —
 —
 36,795
 —
 —
 36,795
 3,410
 40,205
Net earnings34,481
  —
 —
 —
 —
 —
 435,209
 —
 —
 435,209
 70,580
 505,789
Other comprehensive loss, net of income taxes(710)  —
 —
 —
 —
 —
 —
 (9,616) —
 (9,616) (1,922) (11,538)
Stock-based compensation expense1,084
  —
 —
 —
 —
 52,763
 —
 —
 —
 52,763
 118,159
 170,922
Issuance of common stock pursuant to stock-based awards, net of withholding taxes—
  1
 1,416
 —
 —
 34,902
 —
 —
 —
 34,903
 —
 34,903
Purchase of IAC treasury stock—
  —
 —
 —
 —
 —
 —
 —
 (82,891) (82,891) —
 (82,891)
Purchase of noncontrolling interests(3,562)  —
 —
 —
 —
 —
 —
 —
 —
 —
 (1,236) (1,236)
Adjustment of redeemable noncontrolling interests to fair value(372)  —
 —
 —
 —
 372
 —
 —
 —
 372
 —
 372
Issuance of Match Group and ANGI Homeservices common stock pursuant to stock-based awards, net of withholding taxes—
  —
 —
 —
 —
 (213,440) —
 329
 —
 (213,111) 7,695
 (205,416)
Purchase of Match Group treasury stock—
  —
 —
 —
 —
 (86,239) —
 —
 —
 (86,239) —
 (86,239)
Noncontrolling interests created in acquisitions2,261
  —
 —
 —
 —
 —
 —
 —
 —
 —
 14,246
 14,246
Other(6,519)  —
 —
 —
 —
 2,269
 —
 —
 —
 2,269
 383
 2,652
Balance at September 30, 2018$69,530
  $262
 262,040
 $16
 16,157
 $11,955,629
 $1,067,042
 $(112,855) $(10,309,612) $2,600,482
 $728,110
 $3,328,592

The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.

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IAC/INTERACTIVECORPMATCH GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited)
(Unaudited)
 Nine Months Ended September 30,
 20202019
 (In thousands)
Cash flows from operating activities attributable to continuing operations:
Net earnings from continuing operations$413,732 $374,699 
Adjustments to reconcile net earnings from continuing operations to net cash provided by operating activities attributable to continuing operations:
Stock-based compensation expense80,647 70,817 
Depreciation30,284 25,578 
Amortization of intangibles7,262 1,464 
Deferred income taxes(6,594)(26,184)
Other adjustments, net57,042 22,912 
Changes in assets and liabilities
Accounts receivable(87,920)(68,557)
Other assets(26,132)3,251 
Accounts payable and other liabilities18,281 45,711 
Income taxes payable and receivable5,315 (6,006)
Deferred revenue26,928 24,570 
Net cash provided by operating activities attributable to continuing operations518,845 468,255 
Cash flows from investing activities attributable to continuing operations:
Net cash used in business combinations0 (3,759)
Capital expenditures(32,376)(30,273)
Net cash distribution related to Separation of IAC(3,870,550)0 
Purchases of investments(9,115)0 
Other, net(93)1,071 
Net cash used in investing activities attributable to continuing operations(3,912,134)(32,961)
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 offerings0 1,150,000 
Principal payments on Credit Facility(20,000)(300,000)
Principal payments on Senior Notes(400,000)0 
Purchase of exchangeable note hedges0 (303,428)
Proceeds from issuance of warrants0 166,520 
Debt issuance costs(13,517)(27,815)
Proceeds from stock offering1,421,801 0 
Proceeds from issuance of common stock pursuant to stock-based awards79,528 0 
Withholding taxes paid on behalf of employees on net settled stock-based awards of Former Match Group and Match Group(211,958)(167,183)
Purchase of Former Match Group treasury stock(132,868)(175,736)
Purchase of noncontrolling interests(15,827)0 
Other, net(15,188)(25)
Net cash provided by financing activities attributable to continuing operations1,711,971 732,333 
Total cash (used in) provided by continuing operations(1,681,318)1,167,627 
Net cash provided by operating activities attributable to discontinued operations13,630 220,511 
Net cash used in investing activities attributable to discontinued operations(963,420)(374,333)
Net cash used in financing activities attributable to discontinued operations(110,959)(196,803)
Total cash used in discontinued operations(1,060,749)(350,625)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash725 (2,534)
Net (decrease) increase in cash, cash equivalents, and restricted cash(2,741,342)814,468 
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$399,016 $2,948,153 
 Nine Months Ended September 30,
 2019 2018
 (In thousands)
Cash flows from operating activities:   
Net earnings$419,548
 $540,270
Adjustments to reconcile net earnings to net cash provided by operating activities:   
Stock-based compensation expense179,922
 172,006
Amortization of intangibles65,576
 60,293
Depreciation63,152
 56,987
Bad debt expense50,507
 35,521
Deferred income taxes(85,040) (36,866)
Unrealized gains on equity securities, net(24,181) (126,444)
Losses (gains) from the sale of investments and businesses, net6,028
 (27,240)
Other adjustments, net29,381
 12,677
Changes in assets and liabilities, net of effects of acquisitions and dispositions:

  
Accounts receivable(133,492) (78,665)
Other assets11,324
 (48,935)
Accounts payable and other liabilities53,957
 57,891
Income taxes payable and receivable(2,951) 1,971
Deferred revenue55,035
 52,234
Net cash provided by operating activities688,766
 671,700
Cash flows from investing activities:   
Acquisitions, net of cash acquired(200,338) (17,635)
Capital expenditures(103,645) (60,113)
Proceeds from maturities of marketable debt securities163,500
 125,000
Purchases of marketable debt securities(39,740) (326,906)
Net proceeds from the sale of businesses and investments24,757
 28,630
Purchases of investments(250,095) (32,180)
Other, net(1,733) 9,646
Net cash used in investing activities(407,294) (273,558)
Cash flows from financing activities:   
Proceeds from issuance of IAC debt1,150,000
 —
Repurchases of IAC debt(35,035) (363)
Purchase of exchangeable note hedges(303,428) —
Proceeds from issuance of warrants166,520
 —
Borrowings under Match Group Credit Facility40,000
 —
Proceeds from Match Group 2019 Senior Notes offering350,000
 —
Principal payments on Match Group Credit Facility(300,000) —
Principal payments on ANGI Homeservices Term Loan(10,313) (10,313)
Debt issuance costs(27,815) (532)
Purchase of IAC treasury stock—
 (82,891)
Purchase of Match Group and ANGI Homeservices treasury stock(209,715) (86,239)
Proceeds from the exercise of IAC stock options
10,225
 38,903
Proceeds from the exercise of ANGI Homeservices stock options573
 2,876
Withholding taxes paid on behalf of IAC employees on net settled stock-based awards
(88,269) (3,011)
Withholding taxes paid on behalf of Match Group and ANGI Homeservices employees on net settled stock-based awards(197,222) (208,962)
 Purchase of noncontrolling interests(6,192) (4,798)
Other, net(3,799) (4,526)
Net cash provided by (used in) financing activities535,530
 (359,856)
Total cash provided817,002
 38,286
Effect of exchange rate changes on cash, cash equivalents, and restricted cash(2,534) (207)
Net increase in cash, cash equivalents, and restricted cash814,468
 38,079
Cash, cash equivalents, and restricted cash at beginning of period2,133,685
 1,633,682
Cash, cash equivalents, and restricted cash at end of period$2,948,153
 $1,671,761
The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
10


8
Table of Contents
IAC/INTERACTIVECORP
MATCH GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(Unaudited)


NOTE 1—THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
NatureMatch Group, Inc., through its portfolio companies, is a leading provider of Operationsdating 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. Match Group has 1 operating segment, Dating, which is managed as a portfolio of dating brands.
Separation of Match Group and IAC
On June 30, 2020, the companies formerly known as Match Group, Inc. (referred to as “Former Match Group”) and IAC/InterActiveCorp (referred to as “Former IAC”) completed the separation of the Company from IAC has majority ownershipthrough a series of bothtransactions that resulted in two, separate public companies—(1) Match Group, which includes Tinder, Match, PlentyOfFish, OkCupid and Hinge, and ANGI Homeservices, which includes HomeAdvisor, Angie’s List and Handy, and operates Vimeo and Dotdash, among many other online businesses.
On October 10, 2019, IAC made a preliminary proposal to a special committeeconsists of disinterested directors formed by the businesses of Former Match Group Boardand certain financing subsidiaries previously owned by Former IAC, and (2) IAC/InterActiveCorp, formerly known as IAC Holdings, Inc. (“IAC”), consisting of Directors for a transaction that would result in the full separation ofFormer IAC’s businesses other than Match Group from IAC. The proposed separation transaction (the "Separation"“Separation”), if completed, would result in two independent public companies, referred to herein as "New Match" and "New IAC." IAC would no longer have an ownership stake in Match Group following. See “Note —Shareholders’ Equity” for additional information about the Separation and IAC stockholders would receive sharesseries of both New Match and New IAC in the transaction.transactions.
As used herein, "IAC,"“Match Group,” the "Company," "we," "our" or "us"“Company,” “we,” “our,” “us,” and similar terms refer to IAC/InterActiveCorpMatch Group, Inc. and its subsidiaries (unlessafter the completion of the Separation, unless the context requires otherwise)indicates otherwise.
The following diagram illustrates the simplified organizational and ownership structure immediately prior to the Separation.
mtch-20200930_g2.jpg
Under the terms of the Transaction Agreement (the “Transaction Agreement”) dated as of December 19, 2019 and amended as of April 28, 2020 and as further amended as of June 22, 2020, Former Match Group merged with and into Match Group Holdings II, LLC (“MG Holdings II”), an indirect wholly-owned subsidiary of Match Group, with MG Holdings II surviving the merger as an indirect wholly-owned subsidiary of Match Group. Former Match Group stockholders (other than Former IAC) received, through the merger, in exchange for each outstanding share of Former Match Group common stock that they held, 1 share of Match Group common stock and, at the holder’s election, either (i) $3.00 in cash or (ii) a fraction of a share of Match Group common stock with a value of $3.00 (calculated pursuant to the Transaction Agreement). As a result of the merger and other transactions contemplated by the Transaction Agreement, Former Match Group stockholders (other than Former IAC) became stockholders of the Company.
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Table of Contents
MATCH GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)
The following diagram illustrates the simplified organizational and ownership structure immediately after the Separation.
mtch-20200930_g3.jpg
Discontinued Operations
As a result of September 30, 2019, IAC’s economic and voting interest in:
the Separation, the operations of Former IAC businesses other than Match Group were 80.8%, and 97.5%, respectively. All references to "Match Group" or "MTCH" in this report are to Match Group, Inc.
ANGI Homeservices were 83.7%, and 98.1%, respectively. All reference to "ANGI Homeservices" or "ANGI" in this report are to ANGI Homeservices Inc.presented as discontinued operations. See “Note 3—Discontinued Operations” for additional details.
Basis of Presentation and Consolidation
The Company prepares its consolidated financial statements in accordance with U.S. generally accepted accounting principles ("GAAP"(“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'smanagement’s opinion, the unaudited interim consolidated financial statements have been prepared on the same basis as the annual consolidated financial statements and reflect, in management’s opinion, all adjustments, consisting of normal and recurring adjustments, necessary for the fair presentation of our consolidated financial position, consolidated results of operations and consolidated 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 interim consolidated financial statements should be read in conjunction with the audited consolidated financialand combined statements and notes thereto included in the Company'sCompany’s Annual Report on Form 10-K for the year ended December 31, 2018.
Accounting for Investments and Equity Securities
Investments in the common stock or in-substance common stock of entities in which the Company has the ability to exercise significant influence over the operating and financial matters of the investee, but does not have a controlling financial interest, are accounted for using the equity method and are included in "Long-term investments" in the accompanying consolidated balance sheet. At September 30, 2019 and December 31, 2018, the Company did not have any investments accounted for using the equity method.
Investments in equity securities, other than those of our consolidated subsidiaries and those accounted for under the equity method, are accounted for at fair value or under the measurement alternative of the Financial Accounting Standards Board's ("FASB") issued 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 income (expense), net each reporting period. Under the measurement alternative, equity investments without readily determinable fair

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IAC/INTERACTIVECORP AND SUBSIDIARIES
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(Unaudited)

values are carried at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for identical or similar securities of the same issuer; value is generally determined based on a market approach as of the transaction date. A security will be considered identical or similar if it has identical or similar rights to the equity securities held by the Company. The Company reviews its investments in equity securities without readily determinable fair values for impairment each reporting period when there are qualitative factors or events that indicate possible impairment. Factors we consider in making this determination include negative changes 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 investments in equity securities, which require judgment and the use of estimates. When our assessment indicates that the fair value of the investment is below its carrying value, the Company writes down the investment to its fair value and records the corresponding charge within other income (expense), net.2019.
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 and the related disclosure of contingent assets and liabilities. Actual results could differ from these estimates.
On an ongoing basis, the Company evaluates its estimates and judgments including those related to: the fair values of cash equivalents, and marketable debt securities; the carrying value of accounts receivable, including the determination of the
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allowance for doubtful accounts;credit losses; the determination of revenue reserves; the carrying value of right-of-use assets; the useful lives and recoverability of definite-lived intangible assets and property and equipment; the recoverability of goodwill and indefinite-lived intangible assets; the fair value of equity securities without readily determinable fair values; contingencies; the fair value of acquisition-related contingent consideration arrangements; 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.
General 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. A security will be considered identical or similar if it has identical or similar rights to the equity securities 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 income (expense), net.
Revenue Recognition
Revenue is recognized when control of the promised services or goods isare transferred to our customers, and in the amount that reflects the consideration the Company expects to be entitled to in exchange for those services or goods.
The Company's disaggregated revenue disclosures are presented in "Note 8—Segment Information."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 and non-current deferred revenue balances atbalance as of December 31, 2018 are $360.0 million and $1.7 million, respectively.2019 was $218.8 million. During the nine months ended September 30, 2019,2020, the Company recognized $346.5$216.6 million of revenue that was included in the deferred revenue balance as of December 31, 2018. During the nine months ended September 30, 2018, the Company recognized $317.2 million of revenue that was included in the2019. The current deferred revenue balance as of January 1, 2018. The current and non-current deferred revenue balances at September 30, 2020 is $241.0 million. At September 30, 2020 and December 31, 2019, are $414.3 million and $1.4 million, respectively. Non-currentthere was 0 non-current portion of deferred revenue is included in “Other long-term liabilities” in the accompanying consolidated balance sheet.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 expectedlength of one year or less, (ii) contracts with variable consideration that is allocated entirely to unsatisfied performanceobligations or to a wholly unsatisfied promise accounted for under the series guidance, and (iii) contracts for which theCompany recognizes revenue at the amount which we have the right to invoice for services performed.

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(Unaudited)

Disaggregation of Revenue
For sales incentive programs where the customer relationship period is one year or less, the Company has elected the practical expedient to expense the costs as incurred. The amount of capitalized sales commissions where the customer relationship period is greater than one year is $43.2 million and $40.5 million at September 30, 2019 and December 31, 2018, respectively.following table presents disaggregated revenue:
Certain Risks and Concentrations—Services Agreement with Google
 Three Months Ended September 30,Nine Months Ended September 30,
 2020201920202019
 (In thousands)
Direct Revenue:
North America$321,806 $268,863 $869,471 $758,135 
International306,460 262,086 840,360 714,076 
Total Direct Revenue628,266 530,949 1,709,831 1,472,211 
Indirect Revenue (principally advertising revenue)11,504 10,544 30,031 31,880 
Total Revenue$639,770 $541,493 $1,739,862 $1,504,091 
A meaningful portion of the Company's revenue is attributable to a services agreement with Google (the "Services Agreement"). In addition, the Company earns certain other advertising revenue from Google that is not attributable to the Services Agreement. For the three and nine months ended September 30, 2019, consolidated revenue earned from Google was $182.5 million and $574.7 million, respectively, representing 15% and 16%, respectively, of the Company's consolidated revenue. For the three and nine months ended September 30, 2018, consolidated revenue earned from Google was $204.4 million and $620.7 million, representing 19% and 20%, respectively, of the Company's consolidated revenue. Accounts receivable related to revenue earned from Google totaled $61.9 million and $69.1 million at September 30, 2019 and December 31, 2018, respectively.Recent Accounting Pronouncements
Revenue attributable to the Services Agreement is earnedAccounting pronouncements adopted by the Desktop business within the Applications segment and Ask Media Group within the Emerging & Other segment. For the three and nine months ended September 30, 2019, revenue from the Services Agreement of $68.1 million and $234.1 million, respectively, was earned within the Applications segment and $100.3 million and $298.4 million, respectively, within the Emerging & Other segment. For the three and nine months ended September 30, 2018, revenue from the Services Agreement of $110.8 million and $326.7 million, respectively, was earned within the Applications segment and $79.9 million and $248.2 million, respectively, within the Emerging & Other segment.
The current Services Agreement expires on March 31, 2020. On February 11, 2019, the Company and Google amended the Services Agreement, effective as of April 1, 2020.  The amendment extends the expiration date of the agreement to March 31, 2023; provided that during September 2020 and during each September thereafter, either party may, after discussion with the other party, terminate the services agreement, effective on September 30 of the year following the year such notice is given.  The Company believes that the amended agreement, taken as a whole, is comparable to the Company’s currently existing agreement with Google. The Services Agreement requires that the Company comply with certain guidelines promulgated by Google. Google may generally unilaterally update its policies and guidelines without advance notice. These updates may be specific to the Services Agreement or could be more general and thereby impact the Company as well as other companies. These policy and guideline updates could in turn require modifications to, or prohibit and/or render obsolete certain of our products, services and/or business practices, which could be costly to address or otherwise have an adverse effect on our business, financial condition and results of operations.
On May 31, 2019, Google announced industry-wide policy changes, which became effective on July 1, 2019, related to all extensions distributed through the Chrome Web Store. This industry-wide change, combined with recent changes to polices under the Services Agreement, have had a negative impact on the expected future results of operations of the Desktop business. As of September 30, 2019, the goodwill balance of the Desktop reporting unit and the carrying value of the related intangible asset are $265.1 million and $28.9 million, respectively. The fair values of the Desktop reporting unit and the related intangible asset approximate their carrying values, therefore, a modest reduction in the fair values of the Desktop reporting unit or the related intangible asset would result in an impairment charge, which would be equal to the excess of the carrying value over the fair value of such assets.
Adoption of ASU No. 2016-02, Leases (Topic 842)
The Company adopted ASU No. 2016-02, Leases (Topic 842) ("ASC 842")2016-13 effective January 1, 2019. ASC 842 superseded previously existing guidance2020. ASU No. 2016-13 replaces the “incurred loss” approach with an “expected loss” model, under which companies will recognize allowances based on accounting for leasesexpected rather than incurred losses. The Company adopted ASU No. 2016-13 using the modified retrospective approach and generally requires all leases to be recognized inthere was 0 cumulative effect arising from the statement of financial position.
adoption. The adoption of ASC 842 resulted inASU No. 2016-13 did not have a material impact on the recognition of $154.7 million of right-of-use assets ("ROU assets") and related lease liabilities as ofCompany's financial statements.
The Company adopted ASU No. 2019-12 effective January 1, 2019, with no cumulative effect adjustment.2020, which simplifies the accounting for income taxes, eliminates certain exceptions within ASC 740, Income Taxes, and clarifies certain aspects of the current guidance to promote consistency among reporting entities. Most amendments within ASU No. 2019-12 are required to be applied on a prospective basis, while certain amendments must be applied on a retrospective or modified retrospective basis. The Company adopted ASU No. 2019-12 on January 1, 2020 using the modified retrospective basis for those amendments that are not applied on a prospective basis. The adoption of ASC 842 had noASU No. 2019-12 did not have a material impact on the Company’s consolidated resultsfinancial statements.
Accounting pronouncements not yet adopted by the Company
In August 2020, the FASB issued ASU No. 2020-06, which simplifies the accounting for certain financial instruments with characteristics of operationsliabilities and equity, including convertible instruments and contracts in an entity’s own equity. Among other changes, ASU 2020-06 removes from U.S. GAAP the liability and equity separation model for convertible instruments with a cash conversion feature, and as a result, after adoption, entities will no longer separately present in equity an embedded conversion feature for such debt. Similarly, the embedded conversion feature will no longer be amortized into income as interest expense over the life of the instrument. Instead, entities will account for a convertible debt instrument wholly as debt unless (1) a convertible instrument contains features that require bifurcation as a derivative under ASC Topic 815, Derivatives and Hedging, or (2) a convertible debt instrument was issued at a substantial premium. Among other potential impacts, this change is expected to reduce reported interest expense, increase reported net income, and result in a reclassification of certain conversion feature balance sheet amounts from stockholders’ equity to liabilities as it relates to the Company’s exchangeable senior notes. Additionally, ASU 2020-06 requires the application of the if-converted method to calculate the impact of convertible instruments on diluted earnings per share, which will result in increased dilutive securities as the assumption of cash flows.

settlement of the notes will not be available for the purpose of calculating earnings per share. The provisions of ASU 2020-06 are effective for reporting periods beginning after December 15, 2021, with early adoption permitted for reporting periods beginning after December 15, 2020, and can be adopted on either a fully retrospective or modified retrospective basis. The Company is currently evaluating the timing, method of adoption, and overall impact of this standard on its consolidated financial statements.
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(Unaudited)

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 2—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.
NOTE 2—LEASES
The Company leases land, office space, data center facilities and equipment used in connection with its operations under various operating leases, the majority of which contain escalation clauses.
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 these 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 and its publicly-traded subsidiaries' 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(s). Lease expense is recognized on a straight-line basis over the term of the lease. As permitted by ASC 842, leases with an initial term of twelve months or less ("short-term leases") are not recorded on the accompanying consolidated balance sheet.
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.
Leases Balance Sheet Classification September 30, 2019
    (In thousands)
Assets:    
Right-of-use assets Right-of-use assets $177,797

   
Liabilities:    
Current lease liabilities Accrued expenses and other current liabilities 33,029
Long-term lease liabilities Other long-term liabilities 198,962
Total lease liabilities   $231,991


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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)

Lease Cost Income Statement Classification Three Months Ended September 30, 2019 Nine Months Ended September 30, 2019
    (In thousands)
Fixed lease cost Cost of revenue $975
 $3,181
Fixed lease cost Selling and marketing expense 2,836
 7,747
Fixed lease cost General and administrative expense 7,424
 24,014
Fixed lease cost Product development expense 450
 1,050
Total fixed lease cost (a)
   11,685
 35,992
Variable lease cost Cost of revenue 90
 354
Variable lease cost Selling and marketing expense 337
 1,007
Variable lease cost General and administrative expense 1,799
 5,487
Variable lease cost Product development expense 74
 173
Total variable lease cost   2,300
 7,021
Net lease cost   $13,985
 $43,013
_____________________
(a) Includes approximately $1.1 million and $4.2 million of short-term lease cost and $0.6 million and $1.6 million of sublease income for the three and nine months ended September 30, 2019, respectively.
Maturities of lease liabilities as of September 30, 2019 (in thousands) (b):
Remainder of 2019 $9,565
2020 46,199
2021 40,761
2022 33,659
2023 28,836
After 2023 249,912
Total 408,932
     Less: Interest 176,941
Present value of lease liabilities $231,991
_____________________
(b)
Lease payments exclude $6.0 million of legally binding minimum lease payments for leases signed but not yet commenced.
The following are the weighted average assumptions used for lease term and discount rate as of September 30, 2019:
Remaining lease term15.2 years
Discount rate6.02%

 Three Months Ended September 30, 2019 Nine Months Ended September 30, 2019
 (In thousands)
Other Information:   
Right-of-use assets obtained in exchange for lease liabilities$6,699
 $59,857
Cash paid for amounts included in the measurement of lease liabilities$10,719
 $34,433


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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)

NOTE 3—INCOME TAXES
At the end of each interim period, the Company estimates 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 a beginning-of-the-year deferred tax assetassets in future years or unrecognized tax benefits is recognized in the interim period in which the change occurs.
The computation of the estimated 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 expectedestimated annual effective income tax rate changes during a quarter, the effect of the change on prior quarters is included in the income tax provision in the quarter in which the change occurs. Included in the income tax benefit for
For the three months ended September 30, 2019 is a benefit of $3.6 million due to a lower estimated annual effective income tax rate from that applied to ordinary income through the six months ended June 30, 2019. The lower estimated annual effective income tax rate was primarily due to an increase in estimated research credits.
For the three2020 and nine months ended September 30, 2019, the Company recorded an income tax benefit, despite pre-tax income,provision of $14.8$23.6 million and $62.1$1.2 million, respectively, due primarily torepresenting effective tax rates of 15% and 1%, respectively. The effective tax rates in both three-month periods benefited from (i) excess tax benefits generated by the exercise and vesting of stock-based awards and (ii) research tax credits. For the three and nine months ended September 30, 2018,2020 and 2019, the Company recorded an income tax benefit, despite pre-tax income,provision of $18.2$7.3 million and $15.9benefit of $6.7 million, respectively, due primarily torespectively. Both nine-month periods benefited from excess tax benefits generated by the exercise and vesting of stock-based awards, a reduction inwith the Transition Tax described below, and research credits.
The Tax Cuts and Jobs Act subjected to U.S. taxation certain previously deferred earnings of foreign subsidiaries as of December 31, 2017 (“Transition Tax”). The Company was able to make a reasonable estimate of the Transition Tax and recorded a provisional tax expense in the fourth quarter of 2017. In the third quarter of 2018, the Company finalized this calculation, which resulted in a $9.2 million reduction in the Transition Tax. The net reduction in the Transition Tax was due primarily to the utilization of additional foreign tax credits and a reduction in state taxes,2020 period partially offset by a non-recurring increase in the valuation allowance for foreign tax credits.
At Separation, the Company became the parent of the Former IAC consolidated tax group. As a result, the Company’s net deferred tax asset was adjusted via additional taxable earningspaid-in capital for tax attributes allocated from our consolidated federal and profitsstate tax filings to IAC. The allocation of our foreign subsidiaries based on Internal Revenue Service ("IRS") guidance.tax attributes that was recorded as of the date of the Separation is preliminary and subject to adjustment. Any subsequent adjustment to allocated tax attributes will be recognized as an adjustment to deferred taxes and additional paid-in capital. See “Note 10—Related Party Transactions” for amounts outstanding under the tax matters agreement entered into with IAC at Separation.
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.
The CompanyMatch Group is routinely under audit by federal, state, local and foreign authorities in the area of income tax. These audits include questioning the timing and the amount of income and deductions, and the allocation of such income and deductions among various tax jurisdictions. The IRS is currently auditingInternal Revenue Service (“IRS”) has substantially completed its audit of the Company’s federal income tax returns for the years ended December 31, 2010 through 2016.2016, resulting in reductions to the manufacturing tax deduction and research credits claimed. The IRS began an audit of the year ended December 31, 2017 in the second quarter. The statute of limitations for the years 2010 through 2012 has been extended to JulyMay 31, 20202021, and the statute of limitations for the years 2013 through 2015to 2017 has been extended to December 31, 2020.2021. 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 adjustment.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
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)
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 September 30, 20192020 and December 31, 2018,2019, unrecognized tax benefits, including interest and penalties, are $68.3$42.0 million and $52.3$55.5 million, respectively. Unrecognized tax benefits, including interest and penalties, at September 30, 2019 increased2020 decreased by $16.0$13.5 million due primarily to the effective settlement of certain prior year tax positions with the IRS relating to the manufacturing tax deduction and research tax credits. If unrecognized tax benefits at September 30, 20192020 are subsequently recognized, $63.5$37.6 million, net of related deferred tax assets and interest, would reduce income tax expense. The comparable

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)

amount as of December 31, 20182019 was $49.1$51.9 million. The Company believes that it is reasonably possible that its unrecognized tax benefits could decrease by $24.5$3.2 million by September 30, 2020,2021 due to settlements and expirations of statutes of limitations, or other settlements;all of this amount, $24.3 millionwhich would reduce the income tax provision.
NOTE 4—FINANCIAL INSTRUMENTS3—DISCONTINUED OPERATIONS
Marketable Securities
At SeptemberOn June 30, 20192020, as part of the Separation described in “Note 1—The Company and December 31, 2018,Summary of Significant Accounting Policies,” the fair valueoperations of marketable securitiesFormer IAC businesses other than Match Group are presented as follows:
 September 30, 2019 December 31, 2018
 (In thousands)
Marketable equity securities$157,174
 $419
Available-for-sale marketable debt securities—
 123,246
     Total marketable securities$157,174
 $123,665

discontinued operations.
The Company has an investment in Pinterest, which is carried at fair value following its initial public offering in April 2019. Prior to this, the Company accounted for its investment in Pinterest as an equity security without a readily determinable fair value.  Unrealized gains or losses related to the Company's investment in Pinterest is included in "Other income, net"components of assets and liabilities of discontinued operations in the accompanying consolidated statement of operations. For the three and nine months ended September 30, 2019, the Company recognized an unrealized loss of $4.6 million and an unrealized gain of $25.3 million, respectively.
Atbalance sheet at December 31, 2018, current available-for-sale marketable debt securities were as follows:2019 consisted of the following:
December 31, 2019
(In thousands)
Cash and cash equivalents$2,673,619 
Marketable securities19,993 
Accounts receivable, net181,875 
Other current assets152,592 
Total current assets in discontinued operations$3,028,079 
Property and equipment, net$270,288 
Goodwill1,614,623 
Intangible assets, net350,150 
Long-term investments347,976 
Other non-current assets247,746 
Total non-current assets in discontinued operations$2,830,783 
Current portion of long-term debt$13,750 
Accounts payable, trade74,166 
Deferred revenue178,647 
Accrued expenses and other current liabilities322,333 
Total current liabilities in discontinued operations$588,896 
Long-term debt, net$231,946 
Income taxes payable6,410 
Deferred income taxes28,751 
Other long-term liabilities180,307 
Total long-term liabilities in discontinued operations$447,414 
 Amortized
Cost		 Gross
Unrealized
Gains		 Gross
Unrealized
Losses		 Fair Value
 (In thousands)
Treasury discount notes$112,291
 $3
 $(3) $112,291
Commercial paper10,955
 —
 —
 10,955
Total available-for-sale marketable debt securities$123,246
 $3
 $(3) $123,246
16

The following table presents the proceeds from maturitiesTable of available-for-sale marketable debt securities:Contents
MATCH GROUP, INC. AND SUBSIDIARIES
 Three Months Ended September 30, Nine Months Ended September 30,
 2019 2018 2019 2018
 (In thousands)
Proceeds from maturities of available-for-sale marketable debt securities$—
 $115,000
 $163,500
 $125,000
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)

The specific-identification method is used to determine the costkey components of available-for-sale marketable debt securities sold and the amount of unrealized gains and losses reclassified out of accumulated other comprehensive incomeearnings (loss) into earnings. There were 0 gross realized gains or losses from the sales of available-for-sale marketable debt securitiesdiscontinued operations for the three and nine months ended September 30, 2020 and 2019 and 2018.consist of the following:
Three Months Ended September 30,Nine Months Ended September 30,
2020201920202019
(In thousands)
Revenue$0 $705,381 $1,410,485 $2,035,284 
Operating costs and expenses0 (694,765)(1,840,178)(2,079,354)
Operating income (loss)0 10,616 (429,693)(44,070)
Interest expense0 (3,139)(3,772)(10,491)
Other (expense) income0 (1,559)(2,503)44,014 
Income tax benefit508 16,063 69,898 55,396 
Earnings (loss) from discontinued operations508 21,981 (366,070)44,849 

NOTE 4—FINANCIAL INSTRUMENTS
Equity securities without readily determinable fair values
At September 30, 20192020 and December 31, 2018,2019, the carrying valuesvalue of the Company'sCompany’s investments in equity securities without readily determinable fair values totaled $334.0$14.2 million and $235.1$5.1 million, respectively, and areis included in "Long-term investments"“Other non-current assets” in the accompanying consolidated balance sheet. All gains and losses on equity securities without readily

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)

determinable fair values, realized and unrealized, are recognized in "Other income, net" in the accompanying consolidated statement of operations.
In the third quarter of 2019, the Company made a $250 million investment in Turo, a peer-to-peer car sharing marketplace. As part of its investment, the Company received a warrant that is net settleable at the Company's option and is recorded at fair value each reporting period with any change included in "Other income, net" in the accompany consolidated statement of operations. The warrant is measured using significant unobservable inputs and is classified in the fair value hierarchy table below as Level 3. The warrant is included in "Other non-current assets" in the accompanying consolidated balance sheet.
The following table presents a summary of realized and unrealized gains and losses recorded in other income (expense), net, as adjustments to the carrying value of equity securities without readily determinable fair values held as of September 30, 2019 and 2018.
 Three Months Ended September 30, Nine Months Ended September 30,
 2019 2018 2019 2018
 (In thousands)
Upward adjustments (gross unrealized gains)$53
 $—
 $53
 $128,786
Downward adjustments including impairment (gross unrealized losses)(543) —
 (1,193) (2,588)
Total$(490) $—
 $(1,140) $126,198

The cumulative upward and downward adjustments (including impairments) to the carrying value of equity securities without readily determinable fair values, held atsince the adoption of ASU 2016-01 on January 1, 2018 through September 30, 2020, were $6.1 million. For both the nine months ended September 30, 2020 and 2019, there were $0.3 million and $3.0 million, respectively.
Realized and unrealized gains and losses for0 adjustments to the Company's marketablecarrying value of equity securities and investmentswithout readily determinable fair values.
For all equity securities without readily determinable fair values for the three and nine months endedas of September 30, 2020 and December 31, 2019, and 2018 are as follows:
 Three Months Ended September 30, Nine Months Ended September 30,
 2019 2018 2019 2018
 (In thousands)
Realized (losses) gains, net, for equity securities sold$(8) $702
 $2,136
 $27,874
Unrealized (losses) gains, net, on equity securities held(5,066) (115) 24,181
 126,444
Total (losses) gains recognized, net, in other income, net$(5,074) $587
 $26,317
 $154,318

the Company has elected the measurement alternative. As of September 30, 2020, 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:
•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'sCompany’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.

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IAC/INTERACTIVECORP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)

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.
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MATCH GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)
The following tables present the Company'sCompany’s financial instruments that are measured at fair value on a recurring basis:
 September 30, 2020
 Quoted Market
Prices in Active
Markets for
Identical Assets
(Level 1)		Significant Other Observable Inputs
(Level 2)		Total
Fair Value
Measurements
 (In thousands)
Assets:  
Cash equivalents:  
Money market funds$2,239 $0 $2,239 
 September 30, 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$818,158
 $—
 $—
 $818,158
Treasury discount notes—
 1,349,257
 —
 1,349,257
Time deposits—
 145,035
 —
 145,035
Marketable securities:       
Marketable equity security157,174
 —
 —
 157,174
Other non-current assets:       
Warrant—
 —
 8,929
 8,929
Total$975,332
 $1,494,292
 $8,929
 $2,478,553
        
Liabilities:       
Contingent consideration arrangement$—
 $—
 $(13,664) $(13,664)
 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$880,815
 $—
 $—
 $880,815
Treasury discount notes—
 561,733
 —
 561,733
Commercial paper—
 162,417
 —
 162,417
Time deposits—
 90,036
 —
 90,036
Marketable securities:       
  Treasury discount notes—
 112,291
 —
 112,291
  Commercial paper—
 10,955
 —
 10,955
Marketable equity security419
 —
 —
 419
Total$881,234
 $937,432
 $—
 $1,818,666
        
Liabilities:       
Contingent consideration arrangements$—
 $—
 $(28,631) $(28,631)


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IAC/INTERACTIVECORP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)

The following tables present the changes in the Company's financial instruments that are measured at fair value on a recurring basis using significant unobservable inputs (Level 3):
 Three Months Ended September 30,
 2019 2018
 Warrant Contingent
Consideration
Arrangements		 Contingent
Consideration
Arrangements
 (In thousands)
Balance at July 1$—
 $(29,803) $(1,910)
Total net (losses) gains:     
Included in earnings:     
Fair value adjustments(8,689) 16,139
 (55)
Included in other comprehensive loss—
 —
 (15)
Fair value date of acquisition17,618
 —
 —
Balance at September 30$8,929
 $(13,664) $(1,980)


 Nine Months Ended September 30,
 2019 2018
 Warrant Contingent
Consideration
Arrangements		 Contingent
Consideration
Arrangements
 (In thousands)
Balance at January 1$—
 $(28,631) $(2,647)
Total net (losses) gains:     
Included in earnings:     
Fair value adjustments(8,689) 12,993
 (265)
Included in other comprehensive loss—
 (14) (16)
Fair value at date of acquisition17,618
 —
 —
Settlements—
 1,988
 948
Balance at September 30$8,929
 $(13,664) $(1,980)

Contingent Consideration Arrangements
At September 30, 2019, the Company has one outstanding contingent consideration arrangement related to a business acquisition. The arrangement has a total maximum contingent payment of $45.0 million. At September 30, 2019, the gross fair value of this arrangement, before unamortized discount, is $22.3 million. During the first quarter of 2019, the Company paid $2.0 million to settle a contingent consideration arrangement that was outstanding at December 31, 2018.
Generally, our contingent consideration arrangements are based upon financial performance and/or operating metric targets and the Company generally determines the fair value of the contingent consideration arrangements by using probability-weighted analyses to determine the amounts of the gross liability, and, if the arrangements are initially long-term in nature, applying a discount rate that appropriately captures the risks associated with the obligations to determine the net amount reflected in the consolidated financial statements. The fair value of the contingent consideration arrangement at September 30, 2019 reflects a discount rate of 25%. The fair values of the contingent consideration arrangements at December 31, 2018 reflect discount rates ranging from 12% to 25%.
The fair value of contingent consideration arrangements is sensitive to changes in the expected achievement of the applicable targets and changes in discount rates. The Company remeasures the fair value of the contingent consideration

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IAC/INTERACTIVECORP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)

arrangements each reporting period, including the accretion of the discount, if applicable, and changes are recognized in "General and administrative expense" in the accompanying consolidated statement of operations. The contingent consideration arrangement liability at September 30, 2019 and December 31, 2018 includes a current portion of $2.0 million and $2.0 million, respectively, and a non-current portion of $11.7 million and $26.6 million, respectively. The current and non-current portions of the contingent consideration liability are included in “Accrued expenses and other current liabilities” and “Other long-term liabilities,” respectively, in the accompanying consolidated balance sheet.
 December 31, 2019
 Quoted Market
Prices in Active
Markets for
Identical Assets
(Level 1)		Significant Other Observable Inputs
(Level 2)		Total
Fair Value
Measurements
 (In thousands)
Assets:  
Cash equivalents:  
Money market funds$150,865 $0 $150,865 
Time deposits0 30,000 30,000 
Total$150,865 $30,000 $180,865 
Assets measured at fair value on a nonrecurring basis
The Company'sCompany’s non-financial assets, such as goodwill, intangible assets, and property and equipment, and right-of-use assets, are adjusted to fair value only when an impairment charge is recognized. The Company'sCompany’s financial assets, comprisingcomprised 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.
As of December 31, 2019, the net book value of both the Match brand in the UK and the Meetic brand in Europe approximated their fair values. An impairment of $4.6 million, which is included within amortization, was recognized on these brands during the nine months ended September 30, 2020, as the outbreak of COVID-19 placed additional pressure on projected 2020 revenues at these brands.
Financial instruments measured at fair value only for disclosure purposes
The following table presents the carrying value and the fair value of financial instruments measured at fair value only for disclosure purposes:purposes.
 September 30, 2019 December 31, 2018
 Carrying
Value		 Fair
Value		 Carrying
Value		 Fair
Value
 (In thousands)
Current portion of long-term debt$(13,750) $(13,681) $(13,750) $(12,753)
Long-term debt, net(a)
(3,111,882) (3,934,574) (2,245,548) (2,460,204)

September 30, 2020December 31, 2019
Carrying ValueFair ValueCarrying ValueFair Value
(In thousands)
Long-term debt, net (a)
$(3,521,092)$(5,301,037)$(2,889,626)$(3,904,406)
___________________________________________
(a)
At September 30, 2019 and December 31, 2018, the carrying value of long-term debt, net includes unamortized original issue discount and debt issuance costs of $417.8 million and $88.9 million, respectively.
At September 30, 20192020 and December 31, 2018,2019, the carrying value of long-term debt, net includes unamortized original issue discount and debt issuance costs of $371.4 million and $402.9 million, respectively.
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MATCH GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)
At September 30, 2020 and December 31, 2019, the fair value of long-term debt, net, is estimated using observable market prices or indices for similar liabilities, which are Level 2 inputs. At December 31, 2018, the Company considered the outstanding borrowings under the MTCH's $500 million revolving credit facility ("MTCH Credit Facility"), which has a variable interest rate, to have a fair value equal to its carrying value. The outstanding borrowings under the MTCH Credit Facility were repaid with a portion of the net proceeds from MTCH's $350 million aggregate principal amount of its 5.625% Senior Notes issued on February 15, 2019. See "Note 5—Long-term Debt" for additional information on the repayment of the MTCH Credit Facility.
NOTE 5—LONG-TERM DEBT, NET
Long-term debt consists of:
September 30, 2020December 31, 2019
(In thousands)
Credit Facility due February 13, 2025$0 $0 
Term Loan due February 13, 2027 (the “Term Loan”)425,000 425,000 
6.375% Senior Notes due June 1, 2024 (the “6.375% Senior Notes”); interest payable each June 1 and December 10 400,000 
5.00% Senior Notes due December 15, 2027 (the “5.00% Senior Notes”); interest payable each June 15 and December 15450,000 450,000 
4.625% Senior Notes due June 1, 2028 (the “4.625% Senior Notes”); interest payable each June 1 and December 1, commencing December 1, 2020500,000 0 
5.625% Senior Notes due February 15, 2029 (the “5.625% Senior Notes”); interest payable each February 15 and August 15350,000 350,000 
4.125% Senior Notes due August 1, 2030 (the “4.125% Senior Notes”); interest payable each February 1 and August 1500,000 0 
0.875% Exchangeable Senior Notes due October 1, 2022 (the “2022 Exchangeable Notes”); interest payable each April 1 and October 1517,500 517,500 
0.875% Exchangeable Senior Notes due June 15, 2026 (the “2026 Exchangeable Notes”); interest payable each June 15 and December 15575,000 575,000 
2.00% Exchangeable Senior Notes due January 15, 2030 (the “2030 Exchangeable Notes”); interest payable each January 15 and July 15575,000 575,000 
Total debt3,892,500 3,292,500 
Less: Unamortized original issue discount324,551 357,887 
Less: Unamortized debt issuance costs46,857 44,987 
Total long-term debt, net$3,521,092 $2,889,626 
Term Loan and Credit Facility
In connection with the Separation, Former Match Group was merged into and with MG Holdings II. MG Holdings II replaced Former Match Group as borrower under the Credit Agreement and assumed its obligations thereunder and under the Term Loan and Credit Facility, as successor to Former Match Group.
MG Holdings II, an indirect wholly-owned subsidiary of the Company, entered into the Term Loan under a credit agreement (the “Credit Agreement”) on November 16, 2015. On February 13, 2020, the Term Loan was amended to reprice the outstanding balance to LIBOR plus 1.75% and extend its maturity from November 16, 2022 to February 13, 2027. Additionally, the amendment provided for a benchmark replacement should the LIBOR rate not be available in the future. The rate used would be agreed to between the administrative agent and the Company and may be based upon a secured overnight financing rate at the Federal Reserve Bank of New York. Additional information about the benchmark replacement can be found in Amendment No. 6 to the Credit Agreement. At both September 30, 20192020 and December 31, 2018, long-term debt consists of:2019, the outstanding balance on the Term Loan was $425 million and the interest rate of the Term Loan was 2.00% and 4.44% as of those dates, 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.

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IAC/INTERACTIVECORPMATCH GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)
(Unaudited)

On February 13, 2020, the Credit Facility was amended to, among other things, increase the available borrowing capacity from $500 million to $750 million, reduce interest rate margins by 0.125%, and extend its maturity to February 13, 2025. At September 30, 2020 and December 31, 2019, there were 0 outstanding borrowings under the Credit Facility. At September 30, 2020, there were letters of credit of $0.2 million outstanding. At September 30, 2020, we had $749.8 million available under the Credit Facility. The annual commitment fee on undrawn funds, which was 30 basis points as of September 30, 2020, is based on the current leverage ratio. Borrowings under the Credit Facility bear interest, at MG Holdings II’s option, at a base rate or LIBOR, in each case plus an applicable margin, based on MG Holdings II’s consolidated net leverage ratio. The terms of the Credit Facility require MG Holdings II to maintain a consolidated net leverage ratio of not more than 5.0 to 1.0.
 September 30, 2019 December 31, 2018
 (In thousands)
MTCH Debt:   
MTCH Term Loan due November 16, 2022$425,000
 $425,000
MTCH Credit Facility due December 7, 2023—
 260,000
6.375% Senior Notes due June 1, 2024 (the "6.375% MTCH Senior Notes"); interest payable each June 1 and December 1400,000
 400,000
5.00% Senior Notes due December 15, 2027 (the "5.00% MTCH Senior Notes"); interest payable each June 15 and December 15450,000
 450,000
5.625% Senior Notes due February 15, 2029 (the "5.625% MTCH Senior Notes"); interest payable each February 15 and August 15350,000
 —
Total MTCH long-term debt1,625,000
 1,535,000
Less: unamortized original issue discount6,586
 7,352
Less: unamortized debt issuance costs15,786
 11,737
Total MTCH debt, net1,602,628
 1,515,911
    
ANGI Debt:   
ANGI Term Loan due November 5, 2023250,938
 261,250
Less: current portion of ANGI Term Loan13,750
 13,750
Less: unamortized debt issuance costs1,942
 2,529
Total ANGI debt, net235,246
 244,971
    
IAC Debt:   
0.875% Exchangeable Senior Notes due October 1, 2022 (the "2022 Exchangeable Notes"); interest payable each April 1 and October 1517,500
 517,500
0.875% Exchangeable Senior Notes due June 15, 2026 (the "2026 Exchangeable Notes"); interest payable each June 15 and December 15; commencing on December 15, 2019575,000
 —
2.00% Exchangeable Senior Notes due January 15, 2030 (the "2030 Exchangeable Notes"); interest payable each January 15 and July 15; commencing on January 15, 2020575,000
 —
4.75% Senior Notes due December 15, 2022 (the "4.75% Senior Notes"); interest payable each June 15 and December 15—
 34,489
Total IAC long-term debt1,667,500
 551,989
Less: unamortized original issue discount362,390
 54,025
Less: unamortized debt issuance costs31,102
 13,298
Total IAC debt, net1,274,008
 484,666
    
Total long-term debt, net$3,111,882
 $2,245,548

The Credit Facility and Term Loan contain covenants that would limit the ability of MG Holdings II to pay dividends, make distributions, or repurchase MG Holdings II’s stock in the event MG Holdings II’s secured net leverage ratio exceeds 2.0 to 1.0, while the Term Loan remains outstanding and, thereafter, if MG Holdings II’s consolidated net leverage ratio exceeds 4.0 to 1.0, or in the event a default has occurred. There are additional covenants under these debt agreements that limit the ability of MG Holdings II and its subsidiaries to, among other things, incur indebtedness, pay dividends or make distributions. Obligations under the Credit Facility and Term Loan are unconditionally guaranteed by certain MG Holdings II wholly-owned domestic subsidiaries and are also secured by the stock of certain MG Holdings II 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 Senior Notes to the extent of the value of the assets securing the borrowings under the Credit Agreement.
MTCH Senior Notes
In connection with the Separation on June 30, 2020, MG Holdings II replaced the Former Match Group as issuer of each of the Senior Notes and assumed its obligations thereunder and under the indentures governing each of the Senior Notes, respectively, as successor to Former Match Group.
The 6.375% MTCH4.625% Senior Notes were issued by MG Holdings II on June 1, 2016 and are currently redeemable. These notes may be redeemed at redemption prices set forth in the indenture governing the notes, together with accrued and unpaid interest thereon to the applicable redemption date.
May 19, 2020. The 5.00% MTCH Senior Notes were issued on December 4, 2017. At any time prior to December 15, 2022, the 5.00% MTCH Senior Notes may be redeemed at a redemption price equal to the sum of the principal amount thereof, plus accrued and

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IAC/INTERACTIVECORP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)

unpaid interest and a make-whole premium set forth in the indenture governing the notes. Thereafter,proceeds from these notes may be redeemed at redemption prices set forth in the indenture governing the notes, together with accrued and unpaid interest thereon to the applicable redemption date.
On February 15, 2019, MTCH issued its 5.625% Senior Notes. The proceeds were used to repayredeem the outstanding borrowings under the MTCH Credit Facility,6.375% Senior Notes, to pay expenses associated with the offering, and for general corporate purposes. At any time prior to February 15, 2024,June 1, 2023, these notes may be redeemed at a redemption price equal to the sum of the principal amount, thereof, 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 notes, together with accrued and unpaid interest thereon to the applicable redemption date.
The 4.125% Senior Notes were issued by MG Holdings II on February 11, 2020. The proceeds from these notes were used to fund a portion of the $3.00 per common share of Former Match Group that was payable in connection with the Separation. At any time prior to May 1, 2025, 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 notes, together with accrued and unpaid interest to the applicable redemption date.
The 5.625% Senior Notes were issued by MG Holdings II 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 notes, together with accrued and unpaid interest to the applicable redemption date.
The 5.00% Senior Notes were issued by MG Holdings II 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 notes, together with accrued and unpaid interest to the applicable redemption date.
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MATCH GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)
The 6.375% Senior Notes were redeemed on June 11, 2020 with proceeds from the 4.625% Senior Notes. The related call premium of $12.8 million and $2.9 million of unamortized original issue discount and debt issuance costs related to the 6.375% Senior Notes are included in “Other (expense) income, net” in the consolidated statement of operations for the nine months ended September 30, 2020.
The indentures governing the 6.375% and 5.00% MTCH Senior NotesNote contain covenants that would limit MTCH'sMG Holdings II’s ability to pay dividends or to make distributions and repurchase or repurchase MTCHredeem MG Holdings II’s stock in the event a default has occurred or MTCH'sMG Holdings II’s consolidated leverage ratio (as defined in the indentures) exceeds 5.0 to 1.0. At September 30, 2019,2020, there were no limitations pursuant thereto. There are additional covenants in those indentures that limit MTCH's ability and the ability of MG Holdings II and its subsidiaries to, among other things, (i) incur indebtedness, make investments, or sell assets in the event MTCHMG Holdings II is not in compliance with certain financial ratios set forth therein, and (ii) incur liens, enter into agreements restricting MTCH subsidiaries'the ability of MG Holdings II’s subsidiaries to pay dividends, enter into transactions with affiliates and consolidate, merge or sell substantially all of their assets. The indentureindentures governing the 4.125%, 4.625%, and 5.625% MTCH Senior Notes isare less restrictive than the indentures governing the 6.375% and 5.00% MTCH Senior Notes and generally only limits MTCH'slimit MG Holdings II’s and its subsidiaries’ ability and the ability of its subsidiaries to, among other things, create liens on assets, and limits MTCH'sour ability to consolidate, merge, sell or otherwise dispose of all or substantially all of itsour assets.
MTCH'sThe Senior Notes are ranked equally with each other.
MTCH Term Loan and MTCH Credit Facility
At both September 30, 2019 and December 31, 2018, the outstanding balance on the MTCH Term Loan was $425.0 million. The MTCH Term Loan bears interest at LIBOR plus 2.50%, and was 4.66% and 5.09% at September 30, 2019 and December 31, 2018, respectively. The MTCH 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. Interest payments are due at least quarterly through the term of the loan.
At September 30, 2019, there were 0 outstanding borrowings under the MTCH Credit Facility. At December 31, 2018, the outstanding borrowings under the MTCH Credit Facility were $260.0 million, which bore interest at LIBOR plus 1.50%, or approximately 4.00%, and were repaid with a portion of the net proceeds from the 5.625% MTCH Senior Notes, described above. MTCH's Credit Facility expires on December 7, 2023. The annual commitment fee on undrawn funds is based on the MTCH consolidated net leverage ratio and is 25 basis points at both September 30, 2019 and December 31, 2018, respectively. Borrowings under the MTCH Credit Facility bear interest, at MTCH's option, at a base rate or LIBOR, in each case plus an applicable margin, which is based on MTCH's consolidated net leverage ratio. The terms of the MTCH Credit Facility require MTCH 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).
The MTCH Term Loan and MTCH Credit Facility contain covenants that would limit MTCH’s ability to pay dividends, make distributions or repurchase MTCH stock in the event MTCH’s secured net leverage ratio exceeds 2.0 to 1.0, while the MTCH Term Loan remains outstanding and, thereafter, if the consolidated net leverage ratio exceeds 4.0 to 1.0, or in the event a default has occurred. There are additional covenants under these MTCH debt agreements that limit the ability of MTCH and its subsidiaries to, among other things, incur indebtedness, pay dividends or make distributions. Obligations under the MTCH Credit Facility and MTCH Term Loan are unconditionally guaranteed by certain MTCH wholly-owned domestic subsidiaries and are secured by the stock of certain MTCH domestic and foreign subsidiaries. The MTCH Term Loan and outstanding borrowings, if any, under the MTCH Credit Facilityall rank equally with each other, and have priority over the MTCH Senior Notes to the extentin right of the value of the assets securing the borrowings under the MTCH credit agreement.

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IAC/INTERACTIVECORP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)

ANGI Term Loan and ANGI Credit Facility
At September 30, 2019 and December 31, 2018, the outstanding balance on the ANGI Term Loan was $250.9 million and $261.3 million, respectively. At both September 30, 2019 and December 31, 2018, the ANGI Term Loan bears interest at LIBOR plus 1.50%. The spread over LIBOR is subject to change in future periods based on ANGI's consolidated net leverage ratio. The interest rate was 3.53% and approximately 4.00% at September 30, 2019 and December 31, 2018, respectively. Interest payments are due at least quarterly through the term of the loan. Additionally, there are quarterly principal payments of $3.4 million through December 31, 2021, $6.9 million for the one-year period ending December 31, 2022 and $10.3 million through maturity of the loan when the final amount of $161.6 million is due.
The ANGI Term Loan requires ANGI to maintain a consolidated net leverage ratio of not more than 4.5 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). The ANGI Term Loan also contains covenants that would limit ANGI’s ability to pay dividends, make distributions or repurchase ANGI stock in the event a default has occurred or ANGI’s consolidated net leverage ratio exceeds 4.25 to 1.0. There are additional covenants under the ANGI Term Loan that limit the ability of ANGI and its subsidiaries to, among other things, incur indebtedness, pay dividends or make distributions.
On November 5, 2018, ANGI entered into a five-year $250 million revolving credit facility (the "ANGI Credit Facility"). At September 30, 2019 and December 31, 2018, there were 0 outstanding borrowings under the ANGI Credit Facility. The annual commitment fee on undrawn funds is based on ANGI's consolidated net leverage ratio most recently reported and is 25 basis points at both September 30, 2019 and December 31, 2018. Borrowings under the ANGI Credit Facility bear interest, at ANGI's option, at either a base rate or LIBOR, in each case plus an applicable margin, which is based on ANGI's consolidated net leverage ratio. The financial and other covenants are the same as those for the ANGI Term Loan.

The ANGI Term Loan and ANGI Credit Facility are guaranteed by ANGI's wholly-owned material domestic subsidiaries
and are secured by substantially all assets of ANGI and the guarantors, subject to certain exceptions.
IAC Exchangeable Notespayment.
Exchangeable Notes
On October 2,During 2017, IACMatch Group FinanceCo, Inc., a direct, wholly-owned subsidiary of the Company, issued $517.5 million aggregate principal amount of its 2022 Exchangeable Notes. During the second quarter of 2019, IACMatch Group FinanceCo 2, Inc. and IACMatch Group FinanceCo 3, Inc., direct, wholly-owned subsidiaries of the Company, issued $575.0 million aggregate principal amount of its 2026 Exchangeable Notes and $575.0 million aggregate principal amount of its 2030 Exchangeable Notes, respectively.
The net proceeds from the sales of the 2026 Exchangeable Notes and the 2030 Exchangeable Notes were approximately $1.1 billion, after deducting fees and expenses. A portion of the net proceeds from the offerings were used to pay the net premium of $136.9 million on the 2026 Exchangeable Notes Hedge and Warrants and the 2030 Exchangeable Notes Hedge and Warrants (described below). The remainder will be used for general corporate purposes.
The 2022, 2026, and 2030 Exchangeable Notes (collectively the "Exchangeable Notes"“Exchangeable Notes”) are guaranteed by the Company. At September 30, 2019,Company but are not guaranteed by MG Holdings II or any of its subsidiaries.
Following the Company, excluding MTCH and ANGI, held $2.3 billion in cash and cash equivalents and marketable securities,Separation, the number of shares of the Company’s common stock into which is in excesseach $1,000 of $1.7 billionprincipal of the Exchangeable Notes outstanding.
is exchangeable and the approximate equivalent exchange price per share were adjusted under the terms of each of the respective Exchangeable Notes to reflect the conversion of each from Former IAC amounts to Match Group amounts. The following table presents detaildetails of the exchangeable feature:features under the amended Match Group terms:
Number of shares of the Company’s Common Stock into which each $1,000 of Principal of the Exchangeable Notes is Exchangeable(a)
Approximate Equivalent Exchange Price per Share(a)
Exchangeable Date
2022 Exchangeable Notes22.7331$43.99 July 1, 2022
2026 Exchangeable Notes11.4259$87.52 March 15, 2026
2030 Exchangeable Notes11.8739$84.22 October 15, 2029
  Number of shares of the Company's Common Stock into which each $1,000 of Principal of the Exchangeable Notes is Exchangeable* Approximate Equivalent Exchange Price per Share* Exchangeable Date
2022 Exchangeable Notes 6.5713 $152.18
 July 1, 2022
2026 Exchangeable Notes 3.3028 $302.77
 March 15, 2026
2030 Exchangeable Notes 3.4323 $291.35
 October 15, 2029
______________________

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IAC/INTERACTIVECORP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)

_____________________
* Subject to adjustment upon the occurrence of specified events.
The Exchangeable Notes are exchangeable under the following circumstances:
(1) during any calendar quarter (and only during such calendar quarter), if the last reported sale price of the Company's common stock for at least 20 trading days during the period of 30 consecutive trading days during the immediately preceding calendar quarter is greater than or equal to 130% of the exchange price on each applicable trading day;
(2) during the five-businessfive-business day period after any five-consecutivefive-consecutive trading day period in which the trading price per $1,000 principal amount of notes for each trading day of the measurement period was less than 98% of
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MATCH GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)
the product of the last reported sale price of the Company's common stock and the exchange rate on each such trading day;
(3) if the issuer calls the notes for redemption, at any time prior to the close of business on the scheduled trading day immediately preceding the redemption date; or
(4) upon the occurrence of specified corporate events as further described under the indentures governing the respective Exchangeable Notes.
On or after the respective exchangeable dates noted in the table above, until the close of business on the second scheduled trading day immediately preceding the maturity date, holders may exchange all or any portion of their Exchangeable Notes regardless of the foregoing conditions. Upon exchange, the Company, in its sole discretion, has the option to settle the Exchangeable Notes with any of the three following alternatives: (1) shares of the Company'sCompany’s common stock, (2) cash or (3) a combination of cash and shares of the Company's common stock. It is the Company'sCompany’s intention to settle the Exchangeable Notes with cash equal to the face amount of the notes upon exchange; any shares issued in further settlement of the notes would be offset by shares received upon exercise of the Exchangeable Note Hedges (described below).
The Company’s 2022 Exchangeable Notes are currently exchangeable;were exchangeable as of September 30, 2020; during the three and nine months ended September 30, 2019,2020, no notes were exchanged. The if-converted value ofAny dilution arising from the 2022 Exchangeable Notes would be mitigated by the 2022 Exchangeable Notes Hedge. The Company’s 2026 and 2030 Exchangeable Notes were not exchangeable as of September 30, 2020, however, their if-converted value exceeds their respective principal amount.
The following table presents the if-converted value that exceeded itsthe principal amount of $517.5 million by $223.7 million and $105.0 millioneach note based on the Company'sCompany’s stock price on September 30, 20192020 and December 31, 2018,2019, respectively. The amounts for September 30, 2020 represent the exchange occurring under the Match Group terms and for December 31, 2019 represent the exchange occurring under Former IAC terms.
September 30, 2020December 31, 2019
(In millions)
2022 Exchangeable Notes$784.2 $329.6 
2026 Exchangeable Notes$152.0 N/A
2030 Exchangeable Notes$180.5 N/A
Additionally, each of IACMatch Group FinanceCo 2, Inc. and IACMatch Group FinanceCo 3, Inc. may redeem for cash all or any portion of its applicable notes, at its option, on or after June 20, 2023 and July 20, 2026, respectively, if the last reported sale price of the common stock underlying the respective notes has been at least 130% of the exchange price then in effect for at least 20 trading days (whether or not consecutive), including at least one of the five trading days immediately preceding the date on which the notice of redemption is provided, during any 30 consecutive trading day period ending on, and including, the trading day immediately preceding the date on which the applicable issuer provides notice of redemption, at a redemption price equal to 100% of the principal amount to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date.
WeThe Company separately accountaccounts for the debt and equity components of the Exchangeable Notes, and therefore, the Company recorded an original issue discount and corresponding increase to additional paid-in capital, which is the fair value attributed to the exchange feature of each series of debt at issuance. The Company is amortizing the original issue discount and the debt issuance costs utilizing the effective interest method over the life of the Exchangeable Notes. The effective interest rates for the 2022, 2026, and 2030 Exchangeable Notes are 4.73%, 5.35%, and 6.59%, respectively.
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MATCH GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)
The following tabletables sets forth the components of the Exchangeable Notes as of September 30, 2019 and December 31, 2018 (in thousands):Notes:

September 30, 2020
2022 Exchangeable Notes2026 Exchangeable Notes2030 Exchangeable Notes
(In thousands)
Liability component:
Principal$517,500 $575,000 $575,000 
Less: unamortized original issue discount30,204 116,207 171,912 
Net carrying value of the liability component$487,296 $458,793 $403,088 
Equity component$70,363 $138,796 $189,213 
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IAC/INTERACTIVECORP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)

December 31, 2019
 2022 Exchangeable Notes 2026 Exchangeable Notes 2030 Exchangeable Notes2022 Exchangeable Notes2026 Exchangeable Notes2030 Exchangeable Notes
September 30, 2019      
(In thousands)
Liability component:      Liability component:
Principal $517,500
 $575,000
 $575,000
Principal$517,500 $575,000 $575,000 
Less: unamortized original issue discount 44,259
 133,188
 184,943
Less: unamortized original issue discount40,768 129,037 181,800 
Net carrying value of the liability component $473,241
 $441,812
 $390,057
Net carrying value of the liability component$476,732 $445,963 $393,200 
      
Equity component $70,363
 $138,796
 $189,213
Equity component$70,363 $138,796 $189,213 
      
 2022 Exchangeable Notes    
December 31, 2018      
Liability component:      
Principal $517,500
    
Less: unamortized original issue discount 54,025
    
Net carrying value of the liability component $463,475
    
      
Equity component $70,363
    
The following table sets forth interest expense recognized related to the Exchangeable Notes (in thousands):Notes:
  Three Months Ended September 30, 2019
  2022 Exchangeable Notes 2026 Exchangeable Notes 2030 Exchangeable Notes
Contractual interest expense $1,132
 $1,258
 $2,875
Amortization of original issue discount 3,006
 4,109
 3,124
Amortization of debt issuance costs 375
 294
 148
Total interest expense recognized $4,513
 $5,661
 $6,147
  Nine Months Ended September 30, 2019
  2022 Exchangeable Notes 2026 Exchangeable Notes 2030 Exchangeable Notes
Contractual interest expense $3,396
 $1,705
 $3,897
Amortization of original issue discount 9,765
 5,608
 4,270
Amortization of debt issuance costs 2,117
 425
 233
Total interest expense recognized $15,278
 $7,738
 $8,400
  Three Months Ended September 30, 2018 Nine Months Ended September 30, 2018
  2022 Exchangeable Notes
Contractual interest expense $1,138
 $3,396
Amortization of original issue discount 3,299
 9,802
Amortization of debt issuance costs 865
 2,619
Total interest expense recognized $5,302
 $15,817

Three Months Ended September 30, 2020
2022 Exchangeable Notes2026 Exchangeable Notes2030 Exchangeable Notes
(In thousands)
Contractual interest expense$1,132 $1,257 $2,875 
Amortization of original issue discount3,575 4,378 3,369 
Amortization of debt issuance costs885 332 183 
Total interest expense recognized$5,592 $5,967 $6,427 

Nine Months Ended September 30, 2020
2022 Exchangeable Notes2026 Exchangeable Notes2030 Exchangeable Notes
(In thousands)
Contractual interest expense$3,396 $3,773 $8,625 
Amortization of original issue discount10,564 12,830 9,888 
Amortization of debt issuance costs2,615 972 537 
Total interest expense recognized$16,575 $17,575 $19,050 

24
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IAC/INTERACTIVECORPMATCH GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)
(Unaudited)
Three Months Ended September 30, 2019
2022 Exchangeable Notes2026 Exchangeable Notes2030 Exchangeable Notes
(In thousands)
Contractual interest expense$1,132 $1,258 $2,875 
Amortization of original issue discount3,006 4,109 3,124 
Amortization of debt issuance costs375 294 148 
Total interest expense recognized$4,513 $5,661 $6,147 

Nine Months Ended September 30, 2019
2022 Exchangeable Notes2026 Exchangeable Notes2030 Exchangeable Notes
(In thousands)
Contractual interest expense$3,396 $1,705 $3,897 
Amortization of original issue discount9,765 5,608 4,270 
Amortization of debt issuance costs2,117 425 233 
Total interest expense recognized$15,278 $7,738 $8,400 
Exchangeable Notes Hedge and Warrants
In connection with the Exchangeable Notes offerings, the Company purchased call options allowing the Company to purchase initially (subject to adjustment upon the occurrence of specified events) the same number of shares that would be issuable upon the exchange of the applicable Exchangeable Notes at the price per share set forth below (the "Exchangeable“Exchangeable Notes Hedge"Hedge”), and sold warrants allowing the counterparty to purchase (subject to adjustment upon the occurrence of specified events) shares at the per share price set forth below (the "Exchangeable“Exchangeable Notes Warrants"Warrants”).
The Exchangeable Notes Hedges are expected to reduce the potential dilutive effect on the Company'sCompany’s common stock upon any exchange of notes and/or offset any cash payment IACMatch Group FinanceCo, Inc., IACMatch Group FinanceCo 2, Inc. or IACMatch Group FinanceCo 3, Inc. is required to make in excess of the principal amount of the exchanged notes. The Exchangeable Notes Warrants have a dilutive effect on the Company'sCompany’s common stock to the extent that the market price per share of the Company common stock exceeds their respective strike prices.
Following the Separation, the number of shares and the approximate equivalent exchange price per share for the related Exchangeable Notes Hedge were adjusted to reflect the conversion from Former IAC to Match Group. The Exchangeable Notes Warrants also had adjustments in the number of shares and strike price per share to reflect the conversion from Former IAC to Match Group. The following tables presentspresent details of the Exchangeable Notes Hedges and Warrants (shares in millions):under the amended Match Group terms:
Number of Shares(a)
Approximate Equivalent Exchange Price per Share(a)
(Shares in millions)
2022 Exchangeable Notes Hedge11.8$43.99 
2026 Exchangeable Notes Hedge6.6$87.52 
2030 Exchangeable Notes Hedge6.8$84.22 
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MATCH GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)
  Number of Shares* Approximate Equivalent Exchange Price per Share*
2022 Exchangeable Notes Hedge 3.4
 $152.18
2026 Exchangeable Notes Hedge 1.9
 $302.77
2030 Exchangeable Notes Hedge 2.0
 $291.35

Number of Shares(a)
Weighted Average Strike Price per Share(a)
(Shares in millions)
2022 Exchangeable Notes Warrants11.8$68.22 
2026 Exchangeable Notes Warrants6.6$134.76 
2030 Exchangeable Notes Warrants6.8$134.82 
  Number of Shares* Strike Price per Share*
2022 Exchangeable Notes Warrants 3.4
 $229.70
2026 Exchangeable Notes Warrants 1.9
 $457.02
2030 Exchangeable Notes Warrants 2.0
 $457.02
______________________
_____________________
* (a)Subject to adjustment upon the occurrence of specified events.
IAC Senior Notes
On August 23, 2019, the Company redeemed all outstanding 4.75% Senior Notes for $34.5 million plus a premium of $0.5 million and accrued interest of $0.3 million.
IAC Credit Facility
As of September 30, 2019, IAC has a $250 million revolving credit facility (the "IAC Credit Facility"), under which IAC Group, LLC, a subsidiary of the Company, is the borrower ("Borrower"), that expires on November 5, 2023. At September 30, 2019 and December 31, 2018, there were 0 outstanding borrowings under the IAC Credit Facility. The annual commitment fee on undrawn funds is based on the consolidated net leverage ratio (as defined in the agreement) most recently reported, and is 20 basis points at both September 30, 2019 and December 31, 2018. Borrowings under the IAC Credit Facility bear interest, at the Borrower's option, at a base rate or LIBOR, in each case, plus an applicable margin, which is determined by reference to a pricing grid based on the Borrower's consolidated net leverage ratio. The terms of the IAC Credit Facility require that the Borrower maintain a consolidated net leverage ratio of not more than 3.25 to 1.0 before the date on which the Borrower no longer holds majority of the outstanding voting stock of each of ANGI and MTCH ("Trigger Date") and no greater than 2.75 to 1.0 on or after the Trigger Date. The terms of the IAC Credit Facility also restrict the Borrower's ability to incur additional indebtedness. Borrowings under the IAC Credit Facility are unconditionally guaranteed by certain of our wholly-owned domestic subsidiaries and are also secured by the stock of certain of our domestic and foreign subsidiaries, including the shares of MTCH and ANGI owned by the Borrower.
Maturities of long-term debt as of September 30, 2019 (in thousands):

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IAC/INTERACTIVECORP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)

Remainder of 2019$3,438
202013,750
202113,750
2022970,000
2023192,500
After 20232,350,000
Total3,543,438
Less: current portion of long-term debt13,750
Less: unamortized original issue discount368,976
Less: unamortized debt issuance costs48,830
Total long-term debt, net$3,111,882

NOTE 6—ACCUMULATED OTHER COMPREHENSIVE LOSS
The following tables presenttable presents the components of accumulated other comprehensive (loss) income and items reclassified out of accumulated other comprehensive loss into earnings:earnings.
Three Months Ended September 30, 2020
Accumulated Other Comprehensive (Loss) Income
Balance at July 1$(124,312)
Other comprehensive income16,205 
Amounts reclassified to earnings(4)
Net current period other comprehensive income16,201 
Balance at September 30$(108,111)
 Three Months Ended September 30, 2019
 Foreign Currency Translation Adjustment Accumulated Other Comprehensive Loss
 (In thousands)
Balance as of July 1$(125,705) $(125,705)
   Other comprehensive loss(18,389) (18,389)
Net current period other comprehensive loss(18,389) (18,389)
Allocation of accumulated other comprehensive loss related to the noncontrolling interests(510) (510)
Balance as of September 30$(144,604) $(144,604)

 Three Months Ended September 30, 2018
 Foreign Currency Translation Adjustment Unrealized Gains (Losses) On Available-For-Sale Debt Securities Accumulated Other Comprehensive (Loss) Income
 (In thousands)
Balance as of July 1$(112,730) $13
 $(112,717)
   Other comprehensive loss(502) (27) (529)
Net current period other comprehensive loss(502) (27) (529)
Allocation of accumulated other comprehensive income related to the noncontrolling interests391
 —
 391
Balance as of September 30$(112,841) $(14) $(112,855)

Three Months Ended September 30, 2019
Accumulated Other Comprehensive Loss
(In thousands)
Balance at July 1$(125,705)
Other comprehensive loss(18,389)
Net period other comprehensive loss(18,389)
Allocation of accumulated other comprehensive loss related to the noncontrolling interests(510)
Balance at September 30$(144,604)
26
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IAC/INTERACTIVECORPMATCH GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)
(Unaudited)

Nine Months Ended September 30, 2020
Foreign Currency Translation AdjustmentUnrealized Gain (Loss) on Available-For-Sale SecurityAccumulated Other Comprehensive (Loss) Income
 (In thousands)
Balance at January 1$(136,349)$0 $(136,349)
Other comprehensive income (loss) before reclassifications13,998 (1)13,997 
Amounts reclassified to earnings(168)0 (168)
Net current period other comprehensive income (loss)13,830 (1)13,829 
Allocation of accumulated other comprehensive income related to the noncontrolling interests628 0 628 
Separation of IAC13,780 1 13,781 
Balance at September 30$(108,111)$0 $(108,111)

 Nine Months Ended September 30, 2019
 Foreign Currency Translation Adjustment Unrealized Gains (Losses) On Available-For-Sale Debt Securities Accumulated Other Comprehensive (Loss) Income
 (In thousands)
Balance as of January 1$(128,726) $4
 $(128,722)
    Other comprehensive loss(16,299) (4) (16,303)
Net current period other comprehensive loss(16,299) (4) (16,303)
Allocation of accumulated other comprehensive income related to the noncontrolling interests421
 —
 421
Balance as of September 30$(144,604) $—
 $(144,604)
 Nine Months Ended September 30, 2018
 Foreign Currency Translation Adjustment Unrealized Losses On Available-For-Sale Debt Securities Accumulated Other Comprehensive (Loss) Income
 (In thousands)
Balance as of January 1$(103,568) $—
 $(103,568)
    Other comprehensive loss before reclassifications(9,550) (14) (9,564)
    Amounts reclassified to earnings(52) —
 (52)
Net current period other comprehensive loss(9,602) (14) (9,616)
Allocation of accumulated other comprehensive income related to the noncontrolling interests329
 —
 329
Balance as of September 30$(112,841) $(14) $(112,855)
The amount reclassified out of foreign currency translation adjustment into earnings for the nine months ended September 30, 2018 relate to the liquidation of an international subsidiary.
Nine Months Ended September 30, 2019
Foreign Currency Translation AdjustmentUnrealized Gain (Loss) on Available-For-Sale SecurityAccumulated Other Comprehensive (Loss) Income
(In thousands)
Balance at January 1$(128,726)$4 $(128,722)
Other comprehensive loss(16,299)(4)(16,303)
Net period other comprehensive loss(16,299)(4)(16,303)
Allocation of accumulated other comprehensive loss related to the noncontrolling interests421 0 421 
Balance at September 30$(144,604)$0 $(144,604)
At both September 30, 20192020 and 2018,2019, there was 0 tax benefit or provision on the accumulated other comprehensive loss.
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MATCH GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)
NOTE 7—EARNINGS PER SHARE
As a result of the Separation, weighted average basic and dilutive shares outstanding for all periods prior to the Separation reflect the share position of Former IAC multiplied by the Separation exchange ratio of 2.1584. The following table setstables set forth the computation of the basic and diluted earnings per share attributable to IACMatch Group shareholders:

Three Months Ended September 30,
20202019
BasicDilutedBasicDiluted
(In thousands, except per share data)
Numerator
Net earnings from continuing operations$131,487 $131,487 $137,791 $137,791 
Net loss (earnings) attributable to noncontrolling interests586 586 (29,317)(29,317)
Impact from subsidiaries’ dilutive securities of continuing operations(a)
— (395)— (7,334)
Net earnings from continuing operations attributable to Match Group, Inc. shareholders$132,073 $131,678 $108,474 $101,140 
Earnings from discontinued operations, net of tax$508 $508 $21,981 $21,981 
Net earnings attributable to noncontrolling interests of discontinued operations0 0 (1,911)(1,911)
Impact from subsidiaries’ dilutive securities of discontinued operations(a)
— 0 — (8)
Net earnings from discontinued operations attributable to shareholders$508 $508 $20,070 $20,062 
Net earnings attributable to Match Group, Inc. shareholders$132,581 $132,186 $128,544 $121,202 
Denominator
Weighted average basic shares outstanding260,744 260,744 182,154 182,154 
Dilutive securities(a)(b)(c)(d)
— 29,206 — 10,997 
Denominator for earnings per share—weighted average shares(a)(b)(c)(d)
260,744 289,950 182,154 193,151 
Earnings per share:
Earnings per share from continuing operations$0.51 $0.45 $0.60 $0.52 
Earnings per share from discontinued operations, net of tax$0 $0 $0.11 $0.10 
Earnings per share attributable to Match Group, Inc. shareholders$0.51 $0.46 $0.71 $0.63 
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IAC/INTERACTIVECORPMATCH GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)
(Unaudited)

Nine Months Ended September 30,
20202019
BasicDilutedBasicDiluted
(In thousands, except per share data)
Numerator
Net earnings from continuing operations$413,732 $413,732 $374,699 $374,699 
Net earnings attributable to noncontrolling interests(59,999)(59,999)(78,124)(78,124)
Impact from subsidiaries’ dilutive securities of continuing operations(a)
— (9,823)— (20,107)
Net earnings from continuing operations attributable to Match Group, Inc. shareholders$353,733 $343,910 $296,575 $276,468 
(Loss) earnings from discontinued operations, net of tax$(366,070)$(366,070)$44,849 $44,849 
Net loss (earnings) attributable to noncontrolling interests of discontinued operations319 319 (10,718)(10,718)
Impact from subsidiaries’ dilutive securities of discontinued operations(a)
$— $(240)$— $(67)
Net (loss) earnings from discontinued operations attributable to shareholders(365,751)(365,991)34,131 34,064 
Net (loss) earnings attributable to Match Group, Inc. shareholders$(12,018)$(22,081)$330,706 $310,532 
Denominator
Weighted average basic shares outstanding209,113 209,113 181,624 181,624 
Dilutive securities(a)(b)(c)(d)
— 16,286 — 12,516 
Denominator for earnings per share—weighted average shares(a)(b)(c)(d)
209,113 225,399 181,624 194,140 
Earnings per share:
Earnings per share from continuing operations$1.69 $1.53 $1.63 $1.42 
(Loss) earnings per share from discontinued operations, net of tax$(1.75)$(1.62)$0.19 $0.18 
(Loss) earnings per share attributable to Match Group, Inc. shareholders$(0.06)$(0.10)$1.82 $1.60 
 Three Months Ended September 30,
 2019 2018
 Basic Diluted Basic Diluted
 (In thousands, except per share data)
Numerator:       
Net earnings$159,772
 $159,772
 $171,577
 $171,577
Net earnings attributable to noncontrolling interests(31,228) (31,228) (25,803) (25,803)
Impact from publicly-traded subsidiaries' dilutive securities (a) 
—
 (7,342) —
 (8,336)
Net earnings attributable to IAC shareholders$128,544
 $121,202
 $145,774
 $137,438
        
Denominator:       
Weighted average basic shares outstanding84,393
 84,393
 83,433
 83,433
Dilutive securities(a) (b) (c) (d)
—
 5,095
 —
 8,542
Denominator for earnings per share—weighted average shares (a) (b) (c) (d)
84,393
 89,488
 83,433
 91,975
        
Earnings per share attributable to IAC shareholders:
Earnings per share$1.52
 $1.35
 $1.75
 $1.49

______________________
 Nine Months Ended September 30,
 2019 2018
 Basic Diluted Basic Diluted
 (In thousands, except per share data)
Numerator:       
Net earnings$419,548
 $419,548
 $540,270
 $540,270
Net earnings attributable to noncontrolling interests(88,842) (88,842) (105,061) (105,061)
Impact from publicly-traded subsidiaries' dilutive securities (a)
—
 (20,174) —
 (19,490)
Net earnings attributable to IAC shareholders$330,706
 $310,532
 $435,209
 $415,719
        
Denominator:       
Weighted average basic shares outstanding84,147
 84,147
 83,342
 83,342
Dilutive securities (a) (b) (c) (d)
—
 5,799
 —
 8,076
Denominator for earnings per share—weighted average shares (a) (b) (c) (d)
84,147
 89,946
 83,342
 91,418
        
Earnings per share attributable to IAC shareholders:
Earnings per share$3.93
 $3.45
 $5.22
 $4.55
_____________________
(a)
(a)Former IAC had the option to settle certain Former Match Group and ANGI Homeservices (“ANGI”) stock-based awards with Former IAC has the option to settle certain MTCH and ANGI stock-based awards in its shares. For the three and nine months ended September 30, 2019 and for the three months ended September 30, 2018, it is more dilutive for IAC to settle certain ANGI equity awards and MTCH to settle certain MTCH equity awards. For the nine months ended September 30, 2018, it is more dilutive for IAC to settle certain MTCH and ANGI equity awards.
(b)
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, warrants and subsidiary denominated equity, exchange of the Company's Exchangeable Notes and vesting of restricted stock units. For the three and nine months ended September 30, 2019, 7.7 million and 11.2 million, respectively, potentially dilutive securities are excluded from the calculation of diluted earnings per share because their inclusion would have been anti-dilutive. For both the three and nine months ended

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IAC/INTERACTIVECORP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)

September 30, 2018, 3.42020 and the three and nine months ended September 30, 2019, it was more dilutive for Former Match Group to settle certain Former Match Group equity awards and ANGI to settle certain ANGI equity awards.
(b)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, warrants, and subsidiary denominated equity; exchange of the Company's Exchangeable Notes; and vesting of restricted stock units. For both the three and nine months ended September 30, 2020, 13.4 million potentially dilutive securities are excluded from the calculation of diluted earnings per share because their inclusion would have been anti-dilutive. For the three and nine months ended September 30, 2019, 16.7 million and 24.2 million, respectively, potentially dilutive securities are excluded from the calculation of diluted earnings per share because their inclusion would have been anti-dilutive.
(c)
28

MATCH GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)
(c)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 both the three and nine months ended September 30, 2020, 0.3 million shares underlying market-based awards, PSOs, and PSUs, and for both the three and nine months ended September 30, 2019, 0.7 million shares 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.
(d)It is the Company's intention to settle the Exchangeable Notes through a combination of cash, equal to the face amount of the notes, and shares; therefore, the Exchangeable Notes are only dilutive for periods after the Separation during which the average price of Match Group’s common stock exceeded the approximate $43.99, $87.52 and $84.22 per share exchange price per $1,000 principal amount of the 2022 Exchangeable Notes, the 2026 Exchangeable Notes, and the 2030 Exchangeable Notes, respectively. The average price of Match Group’s common stock was $105.90 for the three months ended September 30, 2020 and the dilutive impact of the 2022 Exchangeable Notes, 2026 Exchangeable Notes, and 2030 Exchangeable Notes was 6.9 million, 1.1 million, and 1.4 million shares, respectively. As a result of the Separation, the dilutive impact for the nine months ended September 30, 2020 was determined by calculating the dilutive impact for the period prior to the Separation using the Former IAC average price and for the period after the Separation using the Match Group average price. The resulting dilutive impact for each period was then weighted proportionally. For periods prior to the Separation, the Company determined the dilutive impact of the Exchangeable Notes when the average price of Former IAC common stock exceeded the approximately $152.18, $302.77 and $291.35 per share exchange price per $1,000 principal amount of the 2022 Exchangeable Notes, the 2026 Exchangeable Notes, and the 2030 Exchangeable Notes, respectively. The average price of Former IAC’s common stock was $235.09 for the six months ended June 30, 2020. For the nine months ended September 30, 2020, weighting the respective periods on a quarterly basis, the dilutive impact for the 2022 Exchangeable Notes, 2026 Exchangeable Notes, and 2030 Exchangeable Notes was 4.0 million, 0.4 million, and 0.5 million shares, respectively.
Market-based awards and performance-based stock units ("PSUs") are considered contingently issuable shares. Shares issuable upon exercise or vesting of market-based awards 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 and PSUs is dilutive for the respective reporting periods. For both three and nine months ended September 30, 2019, 0.3 million shares underlying market-based awards and PSUs were excluded from the calculation of diluted earnings per share because the market or performance conditions had not been met. For both the three and nine months ended September 30, 2018, 0.2 million shares underlying market-based awards and PSUs were excluded from the calculation of diluted earnings per share because the market or performance conditions had not been met.
(d)
It is the Company's intention to settle the Exchangeable Notes through a combination of cash, equal to the face amount of the notes, and shares; therefore, the Exchangeable Notes are only dilutive for periods during which the average price of IAC common stock exceeds the approximate $152.18, $302.77 and $291.35 per share exchange price per $1,000 principal amount of the 2022 Exchangeable Notes, the 2026 Exchangeable Notes and the 2030 Exchangeable Notes, respectively. The average price of IAC common stock was $238.90 and $223.32 for the three and nine months ended September 30, 2019, respectively, and the dilutive impact of the 2022 Exchangeable Notes, which is the only series of Exchangeable Notes that is currently dilutive, was 1.2 million and 1.1 million shares, respectively.
For the three and nine months ended September 30, 2018,2019, the average price of IACFormer IAC’s common stock was $181.60$238.90 and $160.85,$223.32, respectively, and the dilutive impact of the 2022 Exchangeable Notes, which was 0.6the only series of Exchangeable Notes that was dilutive for those periods, was 2.7 million and 0.22.3 million shares, respectively.
29
NOTE 8—SEGMENT INFORMATION
The overall concept that the Company employs in determining its operating segments is to present the financial information in a manner consistent with: how the chief operating decision maker views the businesses; how the businesses are organized as to segment management; and the focus of the businesses with regards to the types of services or products offered or the target market. Operating segments are combined for reporting purposes if they meet certain aggregation criteria, which principally relate to the similarity of their economic characteristics or, in the case of the Emerging & Other reportable segment, do not meet the quantitative thresholds that require presentation as separate reportable segments.
The following table presents revenue by reportable segment:
 Three Months Ended September 30, Nine Months Ended September 30,
 2019 2018 2019 2018
 (In thousands)
Revenue:       
Match Group$541,493
 $443,943
 $1,504,091
 $1,272,506
ANGI Homeservices357,358
 303,116
 1,004,697
 853,249
Vimeo52,145
 40,304
 141,439
 115,432
Dotdash40,285
 30,053
 111,974
 90,841
Applications126,071
 153,973
 402,557
 429,034
Emerging & Other129,581
 133,345
 374,871
 398,026
Inter-segment eliminations(59) (142) (254) (299)
Total$1,246,874
 $1,104,592
 $3,539,375
 $3,158,789

The following table presents the revenue of the Company's segments disaggregated by type of service:
 Three Months Ended September 30, Nine Months Ended September 30,
 2019 2018 2019 2018
 (In thousands)
Match Group       
Direct revenue:       
North America$268,863
 $233,643
 $758,135
 $667,163
International262,086
 197,902
 714,076
 564,846


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IAC/INTERACTIVECORPMATCH GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)
(Unaudited)

 Three Months Ended September 30, Nine Months Ended September 30,
 2019 2018 2019 2018
 (In thousands)
Total Direct revenue530,949
 431,545
 1,472,211
 1,232,009
Indirect revenue (principally advertising revenue)10,544
 12,398
 31,880
 40,497
  Total Match Group revenue$541,493
 $443,943
 $1,504,091
 $1,272,506
        
ANGI Homeservices       
Marketplace:       
Consumer connection revenue$252,552
 $195,065
 $695,370
 $531,297
Membership subscription revenue16,237
 17,034
 49,239
 49,226
Other revenue1,727
 950
 5,360
 2,869
Total Marketplace revenue270,516
 213,049
 749,969
 583,392
Advertising and other revenue68,628
 73,545
 195,569
 216,733
Total North America revenue339,144
 286,594
 945,538
 800,125
Consumer connection revenue14,125
 12,022
 46,480
 38,885
Membership subscription revenue3,465
 4,217
 10,820
 13,405
Advertising and other revenue624
 283
 1,859
 834
Total Europe revenue18,214
 16,522
 59,159
 53,124
 Total ANGI Homeservices revenue$357,358
 $303,116
 $1,004,697
 $853,249
        
Vimeo       
Platform revenue$52,145
 $37,245
 $139,160
 $106,470
Hardware revenue—
 3,059
 2,279
 8,962
 Total Vimeo revenue$52,145
 $40,304
 $141,439
 $115,432
        
Dotdash       
Advertising revenue$29,158
 $23,949
 $84,171
 $71,714
Affiliate commerce commission and other revenue11,127
 6,104
 27,803
 19,127
 Total Dotdash revenue$40,285
 $30,053
 $111,974
 $90,841
        
Applications       
Desktop:       
Advertising revenue:       
Google advertising revenue$68,076
 $110,855
 $234,211
 $326,982
Other advertising revenue3,179
 3,416
 9,373
 7,223
Total advertising revenue71,255
 114,271
 243,584
 334,205
Subscription and other revenue3,613
 4,271
 12,109
 16,355
 Total Desktop revenue74,868
 118,542
 255,693
 350,560
Mosaic Group:       
Subscription and other revenue49,079
 31,157
 139,907
 63,687
Advertising revenue2,124
 4,274
 6,957
 14,787
 Total Mosaic Group revenue51,203
 35,431
 146,864
 78,474
 Total Applications revenue$126,071
 $153,973
 $402,557
 $429,034
        
Emerging & Other       
Advertising revenue:       
Google advertising revenue$101,609
 $84,955
 $303,207
 $266,061
Other advertising revenue11,955
 20,918
 27,231
 50,986


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IAC/INTERACTIVECORP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)

 Three Months Ended September 30, Nine Months Ended September 30,
 2019 2018 2019 2018
 (In thousands)
Total advertising revenue113,564
 105,873
 330,438
 317,047
Other revenue16,017
 27,472
 44,433
 80,979
 Total Emerging & Other revenue$129,581
 $133,345
 $374,871
 $398,026

Revenue by geography is based on where the customer is located. Geographic information about revenue and long-lived assets is presented below:
 Three Months Ended September 30, Nine Months Ended September 30,
 2019 2018 2019 2018
 (In thousands)
Revenue:       
United States$807,188
 $738,599
 $2,293,664
 $2,104,750
All other countries439,686
 365,993
 1,245,711
 1,054,039
Total$1,246,874
 $1,104,592
 $3,539,375
 $3,158,789
 September 30,
2019		 December 31,
2018
 (In thousands)
Long-lived assets (excluding goodwill and intangible assets):   
United States$336,055
 $289,756
All other countries25,609
 29,044
   Total$361,664
 $318,800

The following tables present operating income (loss) and Adjusted EBTIDA by reportable segment:
 Three Months Ended September 30, Nine Months Ended September 30,
 2019 2018 2019 2018
 (In thousands)
Operating Income (Loss):       
Match Group$176,604
 $139,895
 $468,330
 $402,293
ANGI Homeservices24,726
 33,515
 32,488
 46,021
Vimeo(11,155) (6,161) (40,555) (25,502)
Dotdash3,695
 2,416
 13,752
 6,946
Applications39,099
 33,041
 85,422
 91,579
Emerging & Other(1,821) 10,893
 (6,130) 23,465
Corporate(45,296) (40,767) (133,272) (113,583)
Total$185,852
 $172,832
 $420,035
 $431,219


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IAC/INTERACTIVECORP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)

 Three Months Ended September 30, Nine Months Ended September 30,
 2019 2018 2019 2018
 (In thousands)
Adjusted EBITDA (a):
       
Match Group$206,131
 $165,039
 $564,720
 $478,341
ANGI Homeservices$58,923
 $77,700
 $147,534
 $181,319
Vimeo$(7,997) $(4,229) $(33,661) $(19,644)
Dotdash$7,026
 $3,071
 $22,551
 $8,914
Applications$25,433
 $34,989
 $80,440
 $97,145
Emerging & Other$(1,529) $12,235
 $(5,141) $28,733
Corporate$(21,945) $(21,478) $(60,751) $(54,038)

_____________________
(a)
The Company's primary financial measure is Adjusted EBITDA, which 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. The Company believes this measure is useful for analysts and investors as this measure allows a more meaningful comparison between our performance and that of our competitors. Moreover, our management uses this measure internally to evaluate the performance of our businesses, and this measure is one of the primary metrics on which our internal budgets are based and by which management is compensated. The above items are excluded from our Adjusted EBITDA measure because these items are non-cash in nature. Adjusted EBITDA has certain limitations because it excludes the impact of these expenses.
The following tables reconcile operating income (loss) to Adjusted EBITDA for the Company's reportable segments:
 Three Months Ended September 30, 2019
 
Operating
Income
(Loss)
 
Stock-Based
Compensation
Expense
 Depreciation 
Amortization
of Intangibles
 Acquisition-related Contingent Consideration Fair Value Adjustments 

Adjusted
EBITDA
 (In thousands)
Match Group$176,604
 $20,805
 $8,081
 $641
 $—
 $206,131
ANGI Homeservices24,726
 $8,784
 $11,244
 $14,169
 $—
 $58,923
Vimeo(11,155) $—
 $39
 $3,119
 $—
 $(7,997)
Dotdash3,695
 $—
 $216
 $3,115
 $—
 $7,026
Applications39,099
 $—
 $331
 $2,142
 $(16,139) $25,433
Emerging & Other(1,821) $—
 $292
 $—
 $—
 $(1,529)
Corporate(45,296) $20,464
 $2,887
 $—
 $—
 $(21,945)
Operating income185,852
          
Interest expense(42,132)          
Other income, net1,229
          
Earnings before income taxes144,949
          
Income tax benefit14,823
          
Net earnings159,772
          
Net earnings attributable to noncontrolling interests(31,228)          
Net earnings attributable to IAC shareholders$128,544
          

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IAC/INTERACTIVECORP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)

 Three Months Ended September 30, 2018
 
Operating
Income
(Loss)
 
Stock-Based
Compensation
Expense
 Depreciation 
Amortization
of Intangibles
 Acquisition-related Contingent Consideration Fair Value Adjustments 

Adjusted
EBITDA
 (In thousands)
Match Group$139,895
 $16,141
 $8,513
 $435
 $55
 $165,039
ANGI Homeservices33,515
 $22,474
 $6,100
 $15,611
 $—
 $77,700
Vimeo(6,161) $—
 $291
 $1,641
 $—
 $(4,229)
Dotdash2,416
 $—
 $246
 $409
 $—
 $3,071
Applications33,041
 $—
 $617
 $1,331
 $—
 $34,989
Emerging & Other10,893
 $323
 $294
 $725
 $—
 $12,235
Corporate(40,767) $16,425
 $2,864
 $—
 $—
 $(21,478)
Operating income172,832
          
Interest expense(27,610)          
Other income, net8,113
          
Earnings before income taxes153,335
          
Income tax benefit18,242
          
Net earnings171,577
          
Net earnings attributable to noncontrolling interests(25,803)          
Net earnings attributable to IAC shareholders$145,774
          


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IAC/INTERACTIVECORP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)

 Nine Months Ended September 30, 2019
 
Operating
Income
(Loss)
 
Stock-Based
Compensation
Expense
 Depreciation 
Amortization
of Intangibles
 Acquisition-related Contingent Consideration Fair Value Adjustments 

Adjusted
EBITDA
 (In thousands)
Match Group$468,330
 $70,817
 $24,109
 $1,464
 $—
 $564,720
ANGI Homeservices32,488
 $45,586
 $27,039
 $42,421
 $—
 $147,534
Vimeo(40,555) $—
 $364
 $6,530
 $—
 $(33,661)
Dotdash13,752
 $—
 $660
 $8,139
 $—
 $22,551
Applications85,422
 $—
 $1,139
 $6,872
 $(12,993) $80,440
Emerging & Other(6,130) $—
 $839
 $150
 $—
 $(5,141)
Corporate(133,272) $63,519
 $9,002
 $—
 $—
 $(60,751)
Operating income420,035
          
Interest expense(110,481)          
Other income, net47,852
          
Earnings before income taxes357,406
          
Income tax benefit62,142
          
Net earnings419,548
          
Net earnings attributable to noncontrolling interests(88,842)          
Net earnings attributable to IAC shareholders$330,706
          

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IAC/INTERACTIVECORP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)

 Nine Months Ended September 30, 2018
 
Operating
Income
(Loss)
 
Stock-Based
Compensation
Expense
 Depreciation 
Amortization
of Intangibles
 Acquisition-related Contingent Consideration Fair Value Adjustments 

Adjusted
EBITDA
 (In thousands)
Match Group$402,293
 $49,810
 $25,059
 $914
 $265
 $478,341
ANGI Homeservices46,021
 $69,433
 $18,170
 $47,695
 $—
 $181,319
Vimeo(25,502) $—
 $947
 $4,911
 $—
 $(19,644)
Dotdash6,946
 $—
 $741
 $1,227
 $—
 $8,914
Applications91,579
 $—
 $2,145
 $3,421
 $—
 $97,145
Emerging & Other23,465
 $1,747
 $1,396
 $2,125
 $—
 $28,733
Corporate(113,583) $51,016
 $8,529
 $—
 $—
 $(54,038)
Operating income431,219
          
Interest expense(81,471)          
Other income, net174,635
          
Earnings before income taxes524,383
          
Income tax benefit15,887
          
Net earnings540,270
          
Net earnings attributable to noncontrolling interests(105,061)          
Net earnings attributable to IAC shareholders$435,209
          

NOTE 9—8—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:
September 30, 2020December 31, 2019September 30, 2019December 31, 2018
(In thousands)
Cash and cash equivalents$398,884 $465,676 $366,447 $186,947 
Restricted cash included in other current assets132 127 125 193 
Cash, cash equivalents, and restricted cash included in current assets of discontinued operations0 2,674,146 2,581,178 1,946,125 
Restricted cash included in non-current assets of discontinued operations0 409 403 420 
Total cash, cash equivalents, and restricted cash as shown on the consolidated statement of cash flows$399,016 $3,140,358 $2,948,153 $2,133,685 
 September 30, 2019 December 31, 2018 September 30, 2018 December 31, 2017
 (In thousands)
Cash and cash equivalents$2,946,180
 $2,131,632
 $1,670,984
 $1,630,809
Restricted cash included in other current assets1,570
 1,633
 344
 2,873
Restricted cash included in other non-current assets403
 420
 433
 —
Total cash, cash equivalents and restricted cash as shown on the consolidated statement of cash flows$2,948,153
 $2,133,685
 $1,671,761
 $1,633,682

Restricted cash at September 30, 2019 and December 31, 2018 primarily consists of a cash collateralized letter of credit and a deposit related to corporate credit cards.
Restricted cash at December 31, 2017 primarily supports a letter of credit to a supplier, which was released to the Company in the second quarter of 2018.

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IAC/INTERACTIVECORP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)

Other income, net
 Three Months Ended September 30, Nine Months Ended September 30,
 2019 2018 2019 2018
 (In thousands)
Other income, net$1,229 $8,113 $47,852 $174,635

For the three months ended September 30, 2019 and 2018
Other income, net in 2019 includes: $15.9 million of interest income; an unrealized reduction of $8.7 million in the estimated fair value of a warrant; and a $4.6 million unrealized loss related to our investment in Pinterest, which is carried at fair value following its initial public offering in April 2019.
Other income, net in 2018 includes: interest income of $8.1 million; and $0.8 million in net foreign currency exchange gains due primarily to the strengthening of the U.S. dollar relative to the British Pound during the three months ended September 30, 2018.
For the nine months ended September 30, 2019 and 2018
Other income, net in 2019 includes: $42.8 million of interest income; a $25.3 million unrealized gain related to our investment in Pinterest; an unrealized reduction of $8.7 million in the estimated fair value of a warrant; a realized loss of $8.2 million related to the sale of Vimeo's hardware business in the first quarter of 2019; and a $1.3 million mark-to-market charge pertaining to a subsidiary denominated equity instrument.
Other income, net in 2018 includes: a $26.8 million realized gain on the sale of certain Pinterest shares held by the Company and a $128.8 million unrealized gain to adjust our remaining interest in Pinterest to fair value in accordance with ASU No. 2016-01, which was adopted effective January 1, 2018; $20.2 million of interest income; and $2.9 million in net foreign currency exchange gains due primarily to the strengthening of the U.S. dollar relative to the British Pound during the nine months ended September 30, 2018.


36
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IAC/INTERACTIVECORP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)

NOTE 10—9—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, 0 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'smanagement’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 1 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 3—“Note 2—Income Taxes"Taxes” for additional information related to income tax contingencies.
Pursuant to the Transaction Agreement, we have agreed to indemnify IAC for matters relating to any business of Former Match Group, including indemnifying IAC for costs related to the matters described below.
Note that the official names of legal proceedings in the descriptions below (shown in italics) reflect the original names of the parties when the proceedings were filed as opposed to the current names of the parties post the separation of Match Group and IAC.
Tinder Optionholder Litigation against IACFormer Match Group and Match Group
On August 14, 2018, 10 then-current and former employees of Match Group, LLC or Tinder, Inc. ("Tinder"(“Tinder”), an operating business of Former Match Group, filed a lawsuit in New York state court against IACFormer Match Group 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 Former Match Group, thereby depriving certain of the plaintiffs of their 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
30

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MATCH GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)
dealing, unjust enrichment, interference with contractual relations (as against Former 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. On August 31, 2018, 4 plaintiffs who were still employed by Former Match Group filed a notice of discontinuance of their claims without prejudice, leaving the 6 former employees as the remaining plaintiffs. On July 13, 2020, the four former plaintiffs filed arbitration demands asserting the same valuation claims and on September 3, 2020, the four arbitrations were consolidated. On August 14, 2020, the defendants filed a motion to stay the trial in the New York case until the related arbitrations have been decided, which motion has been fully briefed.
On October 9, 2018, the defendants filed a motion to dismiss the complaint on various grounds, including that the 2017 valuation of Tinder by the investment banks was an expert determination any challenge to which is both time-barred under applicable law and available only on narrow substantive grounds that the plaintiffs have not pleaded in their complaint; the plaintiffs opposed the motion. On June 13, 2019, the court issued a decision and order (i) granting the motion to dismiss the claims for breach of the implied covenant of good faith and fair dealing and for unjust enrichment, (ii) granting the motion to dismiss the merger-related claim for breach of contract as to 2 of the remaining 6 plaintiffs, and (iii) otherwise denying the motion to dismiss. On June 21, 2019, the defendants filed a notice of appeal from the trial court’s partial denial of their motion to dismiss, and the parties thereafter briefed the appeal. On October 29, 2019, the Appellate Division, First Department, issued an order affirming the lower court’s decision. On November 22, 2019, the defendants filed a motion for reargument or, in the alternative, leave to appeal the Appellate Division’s order to the New York Court of Appeals; the plaintiffs opposed the motion. On May 21, 2020, the Appellate Division, First Department, granted the motion for reargument, and upon reargument, substituted a new order which also affirmed the lower court’s decision. On June 5, 2020, the defendants filed a motion for leave to appeal to the Court of Appeals. On July 24, 2020, the Appellate Division, First Department, denied the motion for leave to appeal to the Court of Appeals. On June 3, 2019, the defendants filed a second motion to dismiss based upon certain provisions of the plaintiffs'plaintiffs’ agreement with a litigation funding firm; the plaintiffs have opposed the motion, which remains pending.
Document discovery in the case is largely complete, andsubstantially complete; deposition discovery is in abeyance pursuanthas resumed after a temporary pause due to the court’s suggestion thatCOVID-19 pandemic. On January 30, 2020, the parties pursueparticipated in a mediation that did not result in resolution of their dispute. IAC and Match Groupthe matter. We believe that the allegations against Former Match Group and Match Group in this lawsuit are without merit and will continue to defend vigorously against it. On September 20, 2020, Justice Joel M. Cohen was appointed to the New York case to fill the vacancy created when Justice Saliann Scarpula was appointed to the Appellate Division, First Department.

FTC Lawsuit Against Former Match Group

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. The FTC raised potential claims relating to Match.com’s marketing, chargeback, and online cancellation practices. In November 2018, the FTC proposed to resolve its potential claims via a consent judgment requiring certain changes in those practices, as well as a $60 million payment. Ensuing discussions between the Company and the FTC ended without resolution.
On August 7, 2019, the FTC voted to assert claims against the Company and referred the matter to the U.S. Department of Justice (“DOJ”). The DOJ subsequently declined to pursue a civil case against the Company and referred the matter back to the FTC.
On September 25, 2019, the FTC filed a lawsuit in the Northern District of Texas against Former Match Group. See FTC v. Match Group, Inc., No. 3:19-cv-02281-K (N.D. Tex.). The complaint alleges that, prior to mid-2018, for marketing purposes Match.com told non-paying users that other users were trying to communicate with them, even though Match.com had identified those subscriber accounts as potentially fraudulent, thereby inducing non-paying users to subscribe and exposing them to the risk of fraud should they subscribe. The complaint also challenges the adequacy of Match.com’s disclosure of the terms of its former six-month guarantee, the efficacy of its cancellation process, and its handling of chargeback disputes. The complaint seeks among other things permanent injunctive relief, civil penalties, restitution, disgorgement, and costs of suit. On October 17, 2019, the Company filed a motion to dismiss the complaint. The FTC opposed the motion. On April 22, 2020, the court stayed the case pending a ruling on the motion to dismiss, which remains pending. On
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MATCH GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)
July 17, 2020, the Company filed a motion for leave to request a stay until the United States Supreme Court issues a decision in Fed. Trade Comm’n v. Credit Bureau Ctr., in which it granted certiorari on July 9, 2020. The Company filed a motion to stay, which was fully briefed on September 29, 2020. The court granted the motion on October 9, 2020.
On September 26, 2019, the Company received a grand-jury subpoena from the DOJ for documents relating to certain of the marketing-related claims in the FTC’s complaint. The Company has cooperated with the DOJ in responding to its subpoena. On September 2, 2020, the DOJ informed the Company that it was releasing it from the subpoena and that it was no longer conducting an investigation into any areas or practices covered by the subpoena.
We believe that the FTC’s claims regarding Match.com’s practices, policies, and procedures are without merit and will defend vigorously against them.
NOTE 10—RELATED PARTY TRANSACTIONS
Relationship with IAC following the Separation
In connection with the Separation, the Company entered into certain agreements with IAC to govern the relationship between the Company and IAC following the Separation. These agreements, in certain cases, supersede the agreements entered into between Former Match Group and Former IAC in connection with Former Match Group’s IPO in November 2015 (the “IPO Agreements”) and include: a tax matters agreement; a transition services agreement; and an employee matters agreement. The IPO Agreements that were not superseded were terminated at closing of the Separation.
In addition to the agreements entered into at the time of the Separation, Match Group leases office space to IAC in a building owned by the Company in Los Angeles. Match Group also leases office space from IAC in New York City on a month-to-month basis, which the Company expects to terminate in the first half of 2021. For the three and nine months ended September 30, 2020, the Company received less than $0.1 million from IAC pursuant to the Los Angeles lease and the Company paid $0.5 million to IAC pursuant to the New York City lease.
Match Group has a payable to IAC of less than $0.1 million as of September 30, 2020.
In July 2020, in connection with the Separation, the sale of 17.3 million newly issued shares of Match Group common stock was completed by IAC. The proceeds of $1.4 billion, net of associated fees, were transferred directly to IAC pursuant to the terms of the Transaction Agreement.
Tax Matters Agreement
Pursuant to the tax matters agreement, each of Match Group and IAC is responsible for certain tax liabilities and obligations following the transfer by Former IAC (i) to Match Group of certain assets and liabilities of, or related to, the businesses of Former IAC (other than Former Match Group) and (ii) to holders of Former IAC common stock and Former IAC Class B common stock, as a result of the reclassification and mandatory exchange of certain series of Former IAC exchangeable preferred stock (collectively, the “IAC Distribution”). Under the tax matters agreement, IAC generally is responsible for, and has agreed to indemnify Match Group against, any liabilities incurred as a result of the failure of the IAC Distribution to qualify for the intended tax-free treatment unless, subject to certain exceptions, the failure to so qualify is attributable to Match Group's or Former Match Group’s actions or failure to act, Match Group's or Former Match Group’s breach of certain representations or covenants or certain acquisitions of equity securities of Match Group, in each case, described in the tax matters agreement (a "Match Group fault-based action"). If the failure to so qualify is attributable to a Match Group fault-based action, Match Group is responsible for liabilities incurred as a result of such failure and will indemnify IAC against such liabilities so incurred by IAC or its affiliates.
Under the tax matters agreement, as of September 30, 2020, Match Group is obligated to remit to IAC $1.9 million of expected state tax refunds relating to tax years prior to the Separation. This obligation is included in “Accrued expenses and other current liabilities” in the accompanying consolidated balance sheet. Additionally, IAC is obligated to indemnify Match Group for IAC’s share of tax liabilities related to various periods prior to the Separation. At September 30, 2020, a receivable of $2.0 million is included in “Other current assets” in the accompanying consolidated balance sheet representing an estimate of the amount that Match Group is
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MATCH GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)
expected to be indemnified under this arrangement. At September 30, 2020, Match Group has an indemnification asset of $0.6 million included in “Other non-current assets” in the accompanying consolidated balance sheet for uncertain tax positions that related to Former IAC prior to the Separation.
For the three and nine months ended September 30, 2020, the Company paid IAC $20.9 million pursuant to the tax matters agreement related to income tax refunds received by the Company. Additionally, the Company received $0.5 million from IAC under the tax matters agreement.
Transition Services Agreement
Pursuant to the transition services agreement, IAC continues to provides certain services to Match Group that Former IAC had historically provided to Former Match Group. Match Group also provides certain services to IAC that Former Match Group previously provided to Former IAC. The transition services agreement also provides that Match Group and IAC will make efforts to replace, amend, or divide certain joint contracts with third-parties relating to services or products used by both Match Group and IAC. Match Group and IAC also agreed to continue sharing certain services provided pursuant to certain third-party vendor contracts that were not replaced, amended, or divided prior to closing of the Separation.
For the three and nine months ended September 30, 2020, the Company paid IAC $0.2 million related to services provided by IAC under the transitions services agreement. Additionally, the Company received $2.4 million from IAC for services provided under the transitions services agreement.
Employee Matters Agreement
Pursuant to the amended and restated employee matters agreement Match Group will reimburse IAC for the cost of any IAC equity awards held by the Company’s employees and former employees upon exercise or vesting. In addition, Match Group employees will continue to participate in IAC’s U.S. health and welfare plans, 401(k) plan and flexible benefits plan until December 31, 2020 (or such earlier date as requested by Match Group upon 120 days’ notice), following which time, Match Group will have established its own employee benefit plans. Match Group will reimburse IAC for the costs of such participation pursuant to the amended and restated employee matters agreement.
For the three and nine months ended September 30, 2020, the Company paid IAC $1.3 million for the cost of IAC equity awards held by the Company’s employees upon vesting. Additionally, the Company paid IAC $8.7 million for health and welfare plans and 401(k) plan, inclusive of employee contributions to both.
Other Agreements
The Transaction Agreement provides that each of Match Group and IAC has agreed to indemnify, defend and hold harmless the other party from and against any liabilities arising out of: (i) any asset or liability allocated to such party or the other members of such party's group under the Transaction Agreement or the businesses of such party's group after the closing of the Separation; (ii) any breach of, or failure to perform or comply with, any covenant, undertaking or obligation of a member of such party's group contained in the Transaction Agreement that survives the closing of the Separation or is contained in any ancillary agreement; and (iii) any untrue or misleading statement or alleged untrue or misleading statement of a material fact or omission, with respect to information contained in or incorporated into the Form S-4 Registration Statement (the “Form S-4”) filed with the Securities and Exchange Commission (the “SEC”) by IAC and Former IAC in connection with the Separation or the joint proxy statement/prospectus filed by Former IAC and Former Match Group with the SEC pursuant to the Form S-4.
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Item 2.    Management'sManagement’s Discussion and Analysis of Financial Condition and Results of Operations

Separation
GENERALOn June 30, 2020, the companies formerly known as Match Group, Inc. (referred to as “Former Match Group”) and IAC/InterActiveCorp (referred to as “Former IAC”) completed the separation of the Company from IAC through a series of transactions that resulted in two, separate public companies—(1) Match Group, which consists of the businesses of Former Match Group and certain financing subsidiaries previously owned by Former IAC, and (2) IAC, consisting of Former IAC’s businesses other than Match Group (the “Separation”). As a result of the Separation, the operations of Former IAC businesses other than Match Group are presented as discontinued operations.
Other 2020 Developments
On February 11, 2020, MG Holdings II completed a private offering of $500 million aggregate principal amount of the 4.125% Senior Notes. The proceeds from these notes were used to pay expenses associated with the offering and to fund a portion of the cash consideration of $3.00 per Former Match Group common share in connection with the Separation.
On February 13, 2020, the Credit Facility was amended to, among other things, increase the available borrowing capacity to $750 million, reduce interest rate margins by 0.125%, and extend its maturity to February 13, 2025. Additionally, on February 13, 2020, the Term Loan was amended to reprice the outstanding balance to LIBOR plus 1.75% and extend its maturity to February 13, 2027.
On May 19, 2020, MG Holdings II completed a private offering of $500 million aggregate principal amount of the 4.625% Senior Notes. The proceeds from these notes were used to redeem the outstanding 6.375% Senior Notes, for general corporate purposes, and to pay expenses associated with the offering.
In July 2020, in connection with the Separation, the sale of 17.3 million newly issued shares of Match Group common stock was completed by IAC. The proceeds of $1.4 billion, net of associated fees, were transferred directly to IAC pursuant to the terms of the Transaction Agreement.
Key Terms:
Operating metrics:
•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.
Operating costs and expenses:
•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
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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 include online marketing (such as 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 (if any), 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.
Long-term debt:
•Credit Facility - The revolving credit facility of Match Group Holdings II, LLC (“MG Holdings II”), an indirect wholly-owned subsidiary of the Company. As of December 31, 2019, $500 million was available under the Credit Facility. On February 13, 2020, the Credit Facility was amended to, among other things, increase the available borrowing capacity from $500 million to $750 million, reduce interest rate margins by 0.125%, and extend its maturity from December 7, 2023 to February 13, 2025. As of September 30, 2020, the Company had letters of credit of $0.2 million outstanding and therefore $749.8 million was available under the Credit Facility.
•Term Loan - MG Holdings II’s term loan. At December 31, 2019, the Term Loan bore interest at LIBOR plus 2.50% and the then applicable rate was 4.44%. On February 13, 2020, the Term Loan was amended to reprice the outstanding balance to LIBOR plus 1.75% and extend its maturity from November 16, 2022 to February 13, 2027. As of September 30, 2020, the current rate was 2.00% and $425 million was outstanding.
•6.375% Senior Notes - MG Holdings II’s 6.375% Senior Notes, which were redeemed on June 11, 2020 with the proceeds from the 4.625% Senior Notes.
•5.00% Senior Notes - MG Holdings II’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. As of September 30, 2020, $450 million aggregate principal amount was outstanding.
•5.625% Senior Notes - MG Holdings II’s 5.625% Senior Notes due February 15, 2029, with interest payable each February 15 and August 15, which were issued on February 15, 2019. As of September 30, 2020, $350 million aggregate principal amount was outstanding.
•4.125% Senior Notes - MG Holdings II’s 4.125% Senior Notes due August 1, 2030, with interest payable each February 1 and August 1, which were issued on February 11, 2020. The proceeds were used to pay expenses associated with the offering and fund a portion of the $3.00 per common share of Former Match Group that was payable in connection with the Separation. As of September 30, 2020, $500 million aggregate principal amount was outstanding.
•4.625% Senior Notes - MG Holdings II’s 4.625% Senior Notes due June 1, 2028, with interest payable each June 1 and December 1, commencing on December 1, 2020, which were issued on May 19, 2020. The proceeds were used to redeem the outstanding 6.375% Senior Notes, for general corporate purposes, and to pay expenses associated with the offering. As of September 30, 2020, $500 million aggregate principal amount was outstanding.
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•2022 Exchangeable Notes - During the third quarter of 2017, Match Group FinanceCo, Inc., a subsidiary of the Company, issued $517.5 million aggregate principal amount of 0.875% Exchangeable Senior Notes due October 1, 2022, which are exchangeable into shares of the Company's common stock. Interest is payable each April 1 and October 1. The outstanding balance of the 2022 Exchangeable Notes as of September 30, 2020 was $517.5 million.
•2026 Exchangeable Notes - During the second quarter of 2019, Match Group FinanceCo 2, Inc., a subsidiary of the Company, issued $575.0 million aggregate principal amount of 0.875% Exchangeable Senior Notes due June 15, 2026, which are exchangeable into shares of the Company's common stock. Interest is payable each June 15 and December 15. The outstanding balance of the 2026 Exchangeable Notes as of September 30, 2020 was $575 million.
•2030 Exchangeable Notes - During the second quarter of 2019, Match Group FinanceCo 3, Inc., a subsidiary of the Company, issued $575.0 million aggregate principal amount of 2.00% Exchangeable Senior Notes due January 15, 2030, which are exchangeable into shares of the Company's common stock. Interest is payable each January 15 and July 15. The outstanding balance of the 2030 Exchangeable Notes as of September 30, 2020 was $575 million.
Non-GAAP financial measure:
•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.
Management Overview
IAC has majority ownership of both Match Group, whichInc., 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 OkCupid®, and Hinge,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 ANGI Homeservices, which includes HomeAdvisor, Angie’s List and Handy, and operates Vimeo and Dotdash, among many other online businesses.
On October 10, 2019, IAC made a preliminary proposaltheir trusted brands, we provide tailored products to a special committeemeet the varying preferences of disinterested directors formed byour users. Our products are available in over 40 languages to our users all over the Match Group Board of Directors for a transaction that would result in the full separation of Match Group from IAC. The proposed separation transaction (the "Separation"), if completed, would result in two independent public companies, referred to herein as "New Match" and "New IAC." IAC would no longer have an ownership stake in Match Group following the Separation and IAC stockholders would receive shares of both New Match and New IAC in the transaction.world.
As used herein, "IAC,"“Match Group,” the "Company," "we," "our" or "us"“Company,” “we,” “our,” “us,” and similar terms refer to IAC/InterActiveCorpMatch Group, Inc. and its subsidiaries, (unlessunless the context requires otherwise).indicates otherwise.
For a more detailed description of the Company'sCompany’s operating businesses, see “Item 1. Business—Match Group” of the Company'sCompany’s Annual Report on Form 10-K for the year ended December 31, 2018.2019.
Key Terms:
When the following terms appear in this report, they have the meanings indicated below:Additional Information
Reportable SegmentsInvestors and others should note that we announce material financial and operational information to our investors using our investor relations website at (for additional information see "Note 8—Segment Information" to the consolidated financial statements included in "Item 1—Consolidated Financial Statements"):
•
Match Group ("MTCH") - is a leading provider of subscription dating products, with a portfolio of dating brands, including Tinder, Match, PlentyOfFish and OkCupid. At September 30, 2019, IAC’s economic and voting interest in MTCH were 80.8% and 97.5%, respectively.
•
ANGI Homeservices ("ANGI") - connects quality home service pros across 500 different categories, from repairing and remodeling to cleaning and landscaping, with consumers through category-transforming products with brands such as HomeAdvisor, Angie’s List, Handy and Fixd Repair. On September 29, 2017, IAC's HomeAdvisor business and Angie's List, Inc. ("Angie's List") combined under a new publicly-traded company called ANGI Homeservices Inc. (the "Combination"). At September 30, 2019, IAC’s economic and voting interest in ANGI were 83.7% and 98.1%, respectively.
•
Vimeo - operates a global video platform for creative professionals, marketers and enterprises to connect with their audiences, customers and employees.
•
Dotdash - is a portfolio of digital brands providing expert information and inspiration in select vertical content categories.
•
Applications - consists of Desktop, which includes our direct-to-consumer downloadable desktop applications and the business-to-business partnership operations, and Mosaic Grouphttps://ir.mtch.com, which is a leading provider of global subscription mobile applications comprised of the following businesses: Apalon, iTranslate, TelTech and Daily Burn, transferred from the Emerging & Other segment effective April 1, 2018.
•
Emerging & Other - consists of Ask Media Group, Bluecrew, The Daily Beast, College Humor Media, IAC Films and NurseFly, a temporary healthcare staffing platform acquired on June 26, 2019; it also includes Daily Burn, for periods prior to its transfer to Mosaic Group, and CityGrid, Dictionary.com and Electus, for periods prior to the sales of these businesses.

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Operating Metrics:
In connection with the management of our businesses, we identify, measurenewsroom website at https://newsroom.mtch.com, Securities and assess a variety of operating metrics. The principal metrics weExchange Commission (“SEC”) filings, press releases, and public conference calls. We use in managing our businesses are set forth below:
Match Group
•
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 its products and includes both subscription and à la carte revenue.
•
Subscribers - are users who purchase a subscription to one of MTCH's 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 àla carte revenue from Subscribers) 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.
ANGI Homeservices
•
Marketplace Revenue - includes revenue from the HomeAdvisor and Handy domestic marketplace, including consumer connection revenue for consumer matches, revenue from completed jobs sourced through the HomeAdvisor and Handy platforms and membership subscription revenue from service professionals. It excludes revenue from Angie's List, mHelpDesk, HomeStars, Fixd Repair and Felix.
•
Advertising & OtherRevenue - includes Angie’s List revenue (revenue from service professionals under contract for advertising and membership subscription fees from consumers) as well as revenue from mHelpDesk, HomeStars, Fixd Repair (which includes Fixd Repair, LLC and Fixd Services LLC, a home warranty and service company acquired on January 25, 2019) and, for periods prior to its sale on December 31, 2018, Felix.
•
Marketplace Service Requests - are fully completed and submitted domestic customer service requests to HomeAdvisor and completed jobs sourced through the HomeAdvisor and Handy platforms.
•
Marketplace Paying Service Professionals ("Marketplace Paying SPs") - are the number of HomeAdvisor and Handy domestic service professionals that paid for consumer matches or completed a job sourced through the HomeAdvisor and Handy platforms in the last month of the period and/or had an active HomeAdvisor membership subscription on the last day of the relevant period.
Vimeo
•
Platform Revenue - primarily includes revenue from Software-as-a-Service ("SaaS") subscription fees and other related revenue from Vimeo subscribers.
•
Hardware Revenue - included sales of our live streaming accessories. Vimeo sold its hardware business in the first quarter of 2019.

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•
Vimeo Ending Subscribers - is the number of subscribers to Vimeo's SaaS video tools at the end of the period (including the addition of subscribers from Magisto, a video creation service enabling businesses to create short-form videos acquired on May 28, 2019).
Operating Costs and Expenses:
•
Cost of revenue - consists primarily of traffic acquisition costs and includes (i) the amortization of in-app purchase fees and (ii) payments made to partners who distribute our business-to-business customized browser-based applications and who integrate our paid listings into their websites. 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. Traffic acquisition costs include payment of amounts based on revenue share and other arrangements. Cost of revenue also includes hosting fees, compensation expense (including stock-based compensation expense) and other employee-related costs for personnel engaged in data center operations and MTCH customer care functions, payments made to workers staffed by Bluecrew, credit card processing fees, production costs related to IAC Films, College Humor Media and, for periods prior to its sale on October 29, 2018, Electus, content costs and expenses associated with the operation of the Company's data centers.
•
Selling and marketing expense - consists primarily of advertising expenditures, which include online marketing, including fees paid to search engines, social media sites and third parties that distribute our direct-to-consumer downloadable desktop applications, offline marketing, which is primarily television advertising, and partner-related payments to those who direct traffic to the brands within our MTCH and ANGI segments, and compensation expense (including stock-based compensation expense) and other employee-related costs for ANGI's sales force and marketing personnel.
•
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, human resources and customer service functions (except for MTCH which includes customer service costs within cost of revenue), fees for professional services (including transaction-related costs related to acquisitions), rent expense, facilities costs, bad debt expense, software license and maintenance costs and acquisition-related contingent consideration fair value adjustments (described below). The customer service function at ANGI includes personnel who provide support to its service professionals and consumers.
•
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 and software license and maintenance costs.
•
Acquisition-related contingent consideration fair value adjustments - relate to the portion of the purchase price of certain acquisitions that is contingent upon the financial performance and/or operating metric targets 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 financial performance 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 one year, are recognized in "General and administrative expense" in the accompanying consolidated statement of operations.
Long-term debt (for additional information see "Note 5—Long-term Debt" to the consolidated financial statements included in "Item 1—Consolidated Financial Statements"):
•
MTCH Term Loan - due November 16, 2022. The outstanding balance of the MTCH Term Loan as of September 30, 2019 is $425.0 million. The MTCH Term Loan bears interest at LIBOR plus 2.50% and was 4.66% and 5.09% at September 30, 2019 and December 31, 2018, respectively.
•
MTCH Credit Facility - The MTCH $500 million revolving credit facility expires on December 7, 2023. At September 30, 2019, there were no outstanding borrowings under the MTCH Credit Facility. At December 31, 2018, the outstanding borrowings under the MTCH Credit Facility were $260.0 million, which bore interest at LIBOR plus

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1.50%, or approximately 4.00%. The MTCH Credit Facility was repaid with a portion of the net proceeds from the 5.625% MTCH Senior Notes issued on February 15, 2019 (described below).
•
6.375% MTCH Senior Notes - MTCH's 6.375% Senior Notes due June 1, 2024, with interest payable each June 1 and December 1. The outstanding balance of the 6.375% MTCH Senior Notes as of September 30, 2019 is $400.0 million.
•
5.00% MTCH Senior Notes - MTCH's 5.00% Senior Notes due December 15, 2027, with interest payable each June 15 and December 15. The outstanding balance of the 5.00% MTCH Senior Notes as of September 30, 2019 is $450.0 million.
•
5.625% MTCH Senior Notes - On February 15, 2019, MTCH issued $350 million aggregate principal amount of its 5.625% Senior Notes due February 15, 2029, with interest payable each February 15 and August 15. The proceeds were used to repay outstanding borrowings under the MTCH Credit Facility, to pay expenses associated with the offering, and for general corporate purposes. The outstanding balance of the 5.625% MTCH Senior Notes as of September 30, 2019 is $350.0 million.
•
ANGI Term Loan - due November 5, 2023. The outstanding balance of the ANGI Term Loan as of September 30, 2019 is $250.9 million. At both September 30, 2019 and December 31, 2018, the ANGI Term Loan bears interest at LIBOR plus 1.50% and has quarterly principal payments. The interest rate was 3.53% and approximately 4.00% at September 30, 2019 and December 31, 2018, respectively.
•
ANGI Credit Facility - The ANGI $250 million revolving credit facility expires on November 5, 2023. At September 30, 2019 and December 31, 2018, there were no outstanding borrowings under the ANGI Credit Facility.
•
2022 Exchangeable Notes - On October 2, 2017, IAC FinanceCo, Inc., a subsidiary of the Company, issued $517.5 million aggregate principal amount of 0.875% Exchangeable Senior Notes due October 1, 2022, which are exchangeable into shares of the Company's common stock. Interest is payable each April 1 and October 1. The outstanding balance of the 2022 Exchangeable Notes as of September 30, 2019 is $517.5 million.
•
2026 Exchangeable Notes - During the second quarter of 2019, IAC FinanceCo 2, Inc., a subsidiary of the Company, issued $575.0 million aggregate principal amount of 0.875% Exchangeable Senior Notes due June 15, 2026, which are exchangeable into shares of the Company's common stock. A portion of the net proceeds were used to pay the net premium on the exchangeable note hedge transactions and the remainder will be used for general corporate purposes. Interest is payable each June 15 and December 15; commencing on December 15, 2019. The outstanding balance of the 2026 Exchangeable Notes as of September 30, 2019 is $575.0 million.
•
2030 Exchangeable Notes - During the second quarter of 2019, IAC FinanceCo 3, Inc., a subsidiary of the Company, issued $575.0 million aggregate principal amount of 2.00% Exchangeable Senior Notes due January 15, 2030, which are exchangeable into shares of the Company's common stock. A portion of the net proceeds were used to pay the net premium on the exchangeable note hedge transactions and the remainder will be used for general corporate purposes. Interest is payable each January 15 and July 15; commencing on January 15, 2020. The outstanding balance of the 2030 Exchangeable Notes as of September 30, 2019 is $575.0 million.
•
4.75% Senior Notes - IAC's 4.75% Senior Notes due December 15, 2022, with interest payable each June 15 and December 15. On August 23, 2019, the Company redeemed all outstanding 4.75% Senior Notes for $34.5 million plus a premium of $0.5 million and accrued interest of $0.3 million.
•
IAC Credit Facility - The IAC $250 million revolving credit facility, under which IAC Group, LLC, a subsidiary of the Company, is the borrower, expires on November 5, 2023. At September 30, 2019 and December 31, 2018, there were no outstanding borrowings under the IAC Credit Facility.
Non-GAAP financial measure:
•
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

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reconciliation of net earnings attributable to IAC shareholders to operating income to consolidated Adjusted EBITDA for the three and nine months ended September 30, 2019 and 2018.
Certain Risks and Concentrations—Services Agreement with Google
A meaningful portion of the Company's revenue is attributable to a services agreement with Google (the "Services Agreement"). In addition, the Company earns certain other advertising revenue from Google that is not attributable to the Services Agreement. For the three and nine months ended September 30, 2019, consolidated revenue earned from Google was $182.5 million and $574.7 million, respectively, representing 15% and 16%, respectively, of the Company's consolidated revenue. For the three and nine months ended September 30, 2018, consolidated revenue earned from Google was $204.4 million and $620.7 million, representing 19% and 20%, respectively, of the Company's consolidated revenue. Accounts receivable related to revenue earned from Google totaled $61.9 million and $69.1 million at September 30, 2019 and December 31, 2018, respectively.
Revenue attributable to the Services Agreement is earned by the Desktop business within the Applications segment and Ask Media Group within the Emerging & Other segment. For the three and nine months ended September 30, 2019, revenue from the Services Agreement of $68.1 million and $234.1 million, respectively, was earned within the Applications segment and $100.3 million and $298.4 million, respectively, within the Emerging & Other segment. For the three and nine months ended September 30, 2018, revenue from the Services Agreement of $110.8 million and $326.7 million, respectively, was earned within the Applications segment and $79.9 million and $248.2 million, respectively, within the Emerging & Other segment.
The current Services Agreement expires on March 31, 2020. On February 11, 2019, the Company and Google amended the Services Agreement, effective as of April 1, 2020.  The amendment extends the expiration date of the agreement to March 31, 2023; provided that during September 2020 and during each September thereafter, either party may, after discussion with the other party, terminate the services agreement, effective on September 30 of the year following the year such notice is given.  The Company believes that the amended agreement, taken as a whole, is comparable to the Company’s currently existing agreement with Google. The Services Agreement requires that the Company comply with certain guidelines promulgated by Google. Google may generally unilaterally update its policies and guidelines without advance notice. These updates may be specific to the Services Agreement or could be more general and thereby impact the Companythese channels as well as social media to communicate with our users and the public about our company, our services and other companies. These policy and guideline updates could in turn require modifications to, or prohibit and/or render obsolete certain of our products, services and/or business practices, whichissues. It is possible that the information we post on social media could be costlydeemed to address or otherwise have an adverse effectbe material information. Accordingly, investors, the media, and others interested in our company should monitor the social media channels listed on our business, financial conditioninvestor relations website in addition to following our newsroom website, SEC filings, press releases and results of operations.
On May 31, 2019, Google announced industry-wide policy changes, which became effectivepublic conference calls. Neither the information on July 1, 2019, related to all extensions distributed throughour websites, nor the Chrome Web Store. This industry-wide change, combined with recent changes to polices under the Services Agreement, have had a negative impactinformation on the expected future resultswebsite of operations ofany Match Group business, is incorporated by reference into this report, or into any other filings with, or into any other information furnished or submitted to, the Desktop business. As ofSEC.
Third Quarter and Year-to-Date September 30, 2019, the goodwill balance of the Desktop reporting unit and the carrying value of the related intangible asset are $265.1 million and $28.9 million, respectively. The fair values of the Desktop reporting unit and the related intangible asset approximate their carrying values, therefore, a modest reduction in the fair values of the Desktop reporting unit or the related intangible asset would result in an impairment charge, which would be equal to the excess of the carrying value over the fair value of such assets.

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Third Quarter 2019 and Year to Date September 20192020 Consolidated Results
 Three Months Ended September 30, Nine Months Ended September 30,
 2019 $ Change % Change 2018 2019 $ Change % Change 2018
 (Dollars in thousands)
Revenue:               
Match Group$541,493
 $97,550
 22 % $443,943
 $1,504,091
 $231,585
 18 % $1,272,506
ANGI Homeservices357,358
 54,242
 18 % 303,116
 1,004,697
 151,448
 18 % 853,249
Vimeo52,145
 11,841
 29 % 40,304
 141,439
 26,007
 23 % 115,432
Dotdash40,285
 10,232
 34 % 30,053
 111,974
 21,133
 23 % 90,841
Applications126,071
 (27,902) (18)% 153,973
 402,557
 (26,477) (6)% 429,034
Emerging & Other129,581
 (3,764) (3)% 133,345
 374,871
 (23,155) (6)% 398,026
Inter-segment eliminations(59) 83
 58 % (142) (254) 45
 15 % (299)
Total$1,246,874
 $142,282
 13 % $1,104,592
 $3,539,375
 $380,586
 12 % $3,158,789
                
Operating Income (Loss): 
      
  
      
Match Group$176,604
 $36,709
 26 % $139,895
 $468,330
 $66,037
 16 % $402,293
ANGI Homeservices24,726
 (8,789) (26)% 33,515
 32,488
 (13,533) (29)% 46,021
Vimeo(11,155) (4,994) (81)% (6,161) (40,555) (15,053) (59)% (25,502)
Dotdash3,695
 1,279
 53 % 2,416
 13,752
 6,806
 98 % 6,946
Applications39,099
 6,058
 18 % 33,041
 85,422
 (6,157) (7)% 91,579
Emerging & Other(1,821) (12,714) NM
 10,893
 (6,130) (29,595) NM
 23,465
Corporate(45,296) (4,529) (11)% (40,767) (133,272) (19,689) (17)% (113,583)
Total$185,852
 $13,020
 8 % $172,832
 $420,035
 $(11,184) (3)% $431,219
                
Adjusted EBITDA:               
Match Group$206,131
 $41,092
 25 % $165,039
 $564,720
 $86,379
 18 % $478,341
ANGI Homeservices58,923
 (18,777) (24)% 77,700
 147,534
 (33,785) (19)% 181,319
Vimeo(7,997) (3,768) (89)% (4,229) (33,661) (14,017) (71)% (19,644)
Dotdash7,026
 3,955
 129 % 3,071
 22,551
 13,637
 153 % 8,914
Applications25,433
 (9,556) (27)% 34,989
 80,440
 (16,705) (17)% 97,145
Emerging & Other(1,529) (13,764) NM
 12,235
 (5,141) (33,874) NM
 28,733
Corporate(21,945) (467) (2)% (21,478) (60,751) (6,713) (12)% (54,038)
Total$266,042
 $(1,285) — % $267,327
 $715,692
 $(5,078) (1)% $720,770
                
_____________________
NM = Not meaningful.
For the three months ended September 30, 2019:
Revenue increased $142.3 million, or 13%2020 compared to the three months ended September 30, 2019, revenue, operating income and Adjusted EBITDA grew 18%, to $1.2 billion,14%, and 21%, respectively, primarily due to subscriber growth from MTCHat Tinder, Hinge, Pairs, and PlentyOfFish, as well as the growth of $97.6 millionà la carte features primarily at Tinder and ANGI of $54.2 million, increases of $11.8 million from Vimeo and $10.2 million from Dotdash, partially offset by decreases of $27.9 million from Applications and $3.8 million from Emerging & Other.
PlentyOfFish. Operating income increased $13.0 million, or 8%, to $185.9 million, despite a decrease inand Adjusted EBITDA were impacted by higher cost of $1.3 million, described below,revenue expense as a percentage of revenue due primarily to a changehigher percentage of $16.2 million in acquisition-related contingent consideration fair value adjustments (incomerevenue being sourced from app
36

Table of $16.1 million in 2019 compared toContents


stores with in-app purchase fees, partially offset by lower selling and marketing expense as a percentage of $0.1 million in 2018) and a decrease of $5.3 million inrevenue. Operating income was further impacted by higher stock-based compensation expense partially offset by increasesas a percentage of $4.2 million in depreciation and $3.0 million in amortization of intangibles. The decrease in stock-based compensation expense wasrevenue primarily due primarily to a decrease of $8.6 millionmodification charge recorded in modification and acceleration charges related to the Combination ($7.5 million in 2019 compared to $16.0 million in 2018) and the reversal of $7.6 million in cumulative expense related to certain performance-based awards in

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the current period that are no longer expected to vest, partially offset by the issuance of new equity awards since 2018, including those issued in connection with recent acquisitions.
Adjusted EBITDA decreased $1.3 million to $266.0 million, despite growth of $41.1 million from MTCH and $4.0 million from Dotdash, due primarily to decreases of $18.8 million from ANGI and $9.6 million from Applications, a loss of $1.5 million in 2019 from Emerging & Other compared to a profit of $12.2 million in 2018, and increased losses of $3.8 million from Vimeo.2020.
For the nine months ended September 30, 2019:
Revenue increased $380.6 million, or 12%2020 compared to the nine months ended September 30, 2019, revenue, operating income, and Adjusted EBITDA grew 16%, to $3.5 billion,15%, and 16%, respectively, primarily due to growth from MTCH of $231.6 million and ANGI of $151.4 million, increases of $26.0 million from Vimeo and $21.1 million from Dotdash, partially offset by a decrease of $26.5 million from Applications and $23.2 million from Emerging & Other due, in part, to the sales of Electus, Dictionary.com and CityGridfactors described above in the fourth quarter of 2018.
Operating income decreased $11.2 million, or 3%, to $420.0 million, due to a decrease in Adjusted EBITDA of $5.1 million, described below, increases of $7.9 million in stock-based compensation expense, $6.2 million in depreciation and $5.3 million in amortization of intangibles, partially offset by a change of $13.3 million in acquisition-related contingent consideration fair value adjustments (income of $13.0 million in 2019 compared to expense of $0.3 million in 2018). The increase in stock-based compensation expense was due primarily to expense of $9.4 million related to the vesting of certain awards for which the market condition was met in the first quarter of 2019, the issuance of new equity awards since 2018, including those issued in connection with recent acquisitions, and modification charges at MTCH and Corporate, partially offset by a decrease of $26.6 million in modification and acceleration charges related to the Combination ($25.2 million in 2019 compared to $51.9 million in 2018), the reversal of $7.6 million in cumulative expense related to certain performance-based awards in the current period that are no longer expected to vest and a net decrease in a mark-to-market adjustment. The increase in amortization of intangibles was due primarily to recent acquisitions, partially offset by lower expense from the Combination.
Adjusted EBITDA decreased $5.1 million, or 1%, to $715.7 million, despite growth of $86.4 million from MTCH and $13.6 million from Dotdash, due primarily to decreases of $33.8 million from ANGI and $16.7 million from Applications, a loss of $5.1 million in 2019 from Emerging & Other compared to a profit of $28.7 million in 2018, and increased losses of $14.0 million and $6.7 million from Vimeo and Corporate, respectively.
Acquisitions and dispositions affecting year-over-year comparability include:three-month discussion.
Acquisitions:Reportable Segment:Acquisition Date:
Bluecrew - controlling interestEmerging & OtherFebruary 26, 2018
Hinge - controlling interest *MTCHSecond quarter of 2018
iTranslateApplicationsMarch 15, 2018
TelTechApplicationsOctober 22, 2018
HandyANGIOctober 19, 2018
Fixd RepairANGIJanuary 25, 2019
MagistoVimeoMay 28, 2019
NurseFly - controlling interestEmerging & OtherJune 26, 2019
37
_____________________
* In the fourth quarter of 2018, MTCH acquired the remaining noncontrolling interests in Hinge.
Dispositions:Reportable Segment:Sale Date:
ElectusEmerging & OtherOctober 29, 2018
Dictionary.comEmerging & OtherNovember 13, 2018
FelixANGIDecember 31, 2018
CityGridEmerging & OtherDecember 31, 2018
Vimeo's hardware businessVimeoMarch 29, 2019

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Results of Operations for the three and nine months ended September 30, 20192020 compared to the three and nine months ended September 30, 20182019
Revenue
 Three Months Ended September 30, Nine Months Ended September 30,
 2019 $ Change % Change 2018 2019 $ Change % Change 2018
 (Dollars in thousands)
Match Group$541,493
 $97,550
 22% $443,943
 $1,504,091
 $231,585
 18% $1,272,506
ANGI Homeservices357,358
 54,242
 18% 303,116
 1,004,697
 151,448
 18% 853,249
Vimeo52,145
 11,841
 29% 40,304
 141,439
 26,007
 23% 115,432
Dotdash40,285
 10,232
 34% 30,053
 111,974
 21,133
 23% 90,841
Applications126,071
 (27,902) (18)% 153,973
 402,557
 (26,477) (6)% 429,034
Emerging & Other129,581
 (3,764) (3)% 133,345
 374,871
 (23,155) (6)% 398,026
Inter-segment eliminations(59) 83
 58% (142) (254) 45
 15% (299)
Total$1,246,874
 $142,282
 13% $1,104,592
 $3,539,375
 $380,586
 12% $3,158,789
Three Months Ended September 30,Nine Months Ended September 30,
2020$ Change% Change20192020$ Change% Change2019
(In thousands, except ARPU)
Direct Revenue:
North America$321,806 $52,943 20%$268,863 $869,471 $111,336 15%$758,135 
International306,460 44,374 17%262,086 840,360 126,284 18%714,076 
Total Direct Revenue628,266 97,317 18%530,949 1,709,831 237,620 16%1,472,211 
Indirect Revenue11,504 960 9%10,544 30,031 (1,849)(6)%31,880 
Total Revenue$639,770 $98,277 18%$541,493 $1,739,862 $235,771 16%$1,504,091 
Percentage of Total Revenue:
Direct Revenue:
North America50%50%50%50%
International48%48%48%48%
Total Direct Revenue98%98%98%98%
Indirect Revenue2%2%2%2%
Total Revenue100%100%100%100%
Average Subscribers:
North America5,112 417 9%4,695 4,796 270 6%4,526 
International5,684 767 16%4,917 5,463 884 19%4,579 
Total10,796 1,184 12%9,612 10,259 1,154 13%9,105 
(Change calculated using non-rounded numbers)
ARPU:
North America$0.66 8%$0.62 $0.65 7%$0.61 
International$0.58 1%$0.57 $0.55 (1)%$0.56 
Total$0.62 $0.03 4%$0.59 $0.60 $0.02 2%$0.58 
For the three months ended September 30, 20192020 compared to the three months ended September 30, 20182019
MTCH revenue increased 22% to $541.5 million driven by International Direct Revenue growth of $64.2 million, or 32%, and North America Direct Revenue growth of $35.2grew $52.9 million, or 15%. Both20%, in 2020 versus 2019, driven by 9% growth in Average Subscribers, 8% growth in ARPU, and growth in non-subscriber revenue from one-to-many video revenue at PlentyOfFish. International and North America Direct Revenue growth weregrew $44.4 million, or 17%, in 2020 versus 2019, driven by higher Average Subscribers, up 29% to 4.9 million and 10% to 4.7 million, respectively, due primarily to16% growth in Subscribers at Tinder and, to a lesser extent, Hinge, with Pairs also contributing to international growth. Total ARPU increased 4% driven by increases of 5%Average Subscribers.
Growth in North America Average Subscribers was primarily driven by Tinder, Hinge, BLK, and Chispa. Growth in International Average Subscribers was primarily driven by Tinder, with several other brands also contributing, including Pairs, Meetic, and Hinge. North America ARPU increased primarily due to pricing optimization at Hinge and increased purchases of à la carte features at Tinder, as Subscribers purchased premium subscriptions,Hinge, and 3% inPlentyOfFish. International ARPU increased primarily due to a higher percentage of subscribers from Pairs, which was unfavorably impacted by the strengtheninghas higher ARPU than other brands, and impacts of the U.S. dollar relative to the Euro, British Pound ("GBP") and certain other currencies.
ANGI revenue increased 18% to $357.4 million driven by the Marketplace growth of $57.5 million, or 27%, and growth of $1.7 million, or 10%, at the European businesses,foreign exchange rates, partially offset by a decrease of $4.9 million, or 7%, in Advertising & Other Revenue. Advertising & Othermix-shift to lower subscription tiers at Tinder.
Indirect Revenue decreased dueincreased primarily to the sale of Felix on December 31, 2018, partially offset by the contribution from Fixd Repair, acquired on January 25, 2019. Marketplace Revenue growth was driven by a 19% increase in Marketplace Service Requests to 7.6 million and a 10% increase in Marketplace Paying SPs to 226,000, reflecting, in part, the contribution from Handy. Revenue growth at the European businesses was driven by growth across several countries, partially offset by the unfavorable impact from the strengthening of the U.S. dollar relative to the Euro and GBP.
Vimeo revenue grew 29% to $52.1 million due to Platform Revenue growth of $14.9 million, or 40%, partially offset by the inclusion in 2018 of $3.1 million of Hardware Revenue. The hardware business was sold in the first quarter of 2019. Platform Revenue growth was driven by a 30% increase in Vimeo Ending Subscribers to 1.2 million and a 7% increase in average revenue per subscriber, including the contribution from Magisto.
Dotdash revenue increased 34% to $40.3 million due to 44% higher traffic resulting in strong advertising growth, as well as growth in affiliate commerce commission revenue.
Applications revenue decreased 18% to $126.1 million, despite an increase of $15.8 million, or 45%,ad impressions at Mosaic Group, due to a decrease of $43.7 million, or 37%, at Desktop. The decrease at Desktop was driven by lower consumer queries and continuing partnership declines. The increase at Mosaic Group was driven primarily by the contribution from TelTech, growth of 14% related to the ongoing transition to subscription products and new products.
Emerging & Other revenue decreased 3% to $129.6 million due primarily to the sales of Electus, Dictionary.com and CityGrid in the fourth quarter of 2018 and lower revenue at IAC Films and College Humor Media, partially offset by higher revenue at Ask Media Group due to growth in paid traffic, primarily in international markets, and at Bluecrew.

Tinder.
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For the nine months ended September 30, 20192020 compared to the nine months ended September 30, 20182019
MTCH revenue increased 18% to $1.5 billion driven by International Direct Revenue growth of $149.2grew $126.3 million, or 26%18%, andin 2020 versus 2019, driven by 19% growth in Average Subscribers, partially offset by a decline in ARPU. North America Direct Revenue growth of $91.0grew $111.3 million, or 14%. Both International and North America Direct Revenue growth were due primarily to the factors described above15%, in the three-month discussion.
ANGI revenue increased 18% to $1.0 billion2020 versus 2019, driven by the Marketplace6% growth of $166.6 million, or 29%,in Average Subscribers, 7% growth in ARPU, and growth of $6.0 million, or 11%,in non-subscriber revenue from one-to-many video revenue at the European businesses, partially offset by a decrease of $21.2 million, or 10%,PlentyOfFish.
The changes in Advertising & Other Revenue drivenAverage Subscribers and ARPU are primarily by the factors described above in the three-month discussion. Marketplace Service Requests increased 17% to 21.3 million, reflecting, in part, the contribution from Handy.
Vimeo revenue grew 23% to $141.4 million due to Platform Revenue growth of $32.7 million, or 31%, partially offset by lower Hardware Revenue of $6.7 million due to the sale of the hardware business in the first quarter of 2019.
Dotdash revenue increased 23% to $112.0 million due to the factors described above in the three-month discussion.
ApplicationsIndirect revenue decreased 6% to $402.6 million, despite an increase of $68.4 million, or 87%, at Mosaic Group,primarily due to a decrease of $94.9 million, or 27%, at Desktop. The decrease at Desktop and the increase at Mosaic Group were driven by the factors described above in the three-month discussion. Mosaic Group revenue was further driven by the acquisition of iTranslate on March 15, 2018 and the transfer of Daily Burn from the Emerging & Other segment effective April 1, 2018.lower ad impressions.
Emerging & Other revenue decreased 6% to $374.9 million due primarily to the sales of Electus, Dictionary.com and CityGrid in the fourth quarter of 2018 and lower revenue at IAC Films, as well as from the transfer of Daily Burn to Mosaic Group, partially offset by higher revenue at Ask Media Group due to growth in paid traffic, primarily in international markets, and the contribution from Bluecrew.
Cost of revenue(exclusive (exclusive of depreciation shown separately below)
 Three Months Ended September 30, Nine Months Ended September 30,
 2019 $ Change % Change 2018 2019 $ Change % Change 2018
 (Dollars in thousands)
Cost of revenue (exclusive of depreciation shown separately below)$296,385 $59,147 25% $237,238 $832,845 $175,421 27% $657,424
As a percentage of revenue24%     21% 24%     21%
depreciation)
For the three months ended September 30, 20192020 compared to the three months ended September 30, 20182019
Three Months Ended September 30,
2020$ Change% Change2019
(Dollars in thousands)
Cost of revenue$169,823 $31,598 23%$138,225 
Percentage of revenue27%26%
Cost of revenue in 2019 increased from 2018primarily due to increases of $30.7 million from MTCH, $23.2 million from Emerging & Other, $3.4 million from Vimeo and $2.4 million from Dotdash.
The MTCHan increase was due primarily to increases of $19.6 million in in-app purchase fees paid to Apple and Googleof $17.5 million, as MTCH's revenue continues to be increasingly sourced through mobile app stores, $7.3stores; an increase of $6.2 million in partner related costs associated with our one-to-many video streaming; an increase in web operations of $6.0 million, primarily representing SMS authentication and hosting feesfees; and $3.8 millionan increase in compensation expense of $1.3 million related to increased customer care personnel. Many brands in MTCH's portfolio have historically offered subscribers a variety of payment methods to purchase subscriptions and à la carte features.  Beginning the second quarter of 2019, Tinder began offering subscribers an alternative payment method to Google's in-app payment system similar to the payment alternatives other brands in our portfolio have historically offered to subscribers through our mobile apps on Android.  If MTCH continues to offer these alternative payment methods to Tinder subscribers, depending on adoption levels, MTCH may see a reduction in Google in-app purchases fees as a percentage of Android revenue in the future.
The Emerging & Other increase was due primarily to an increase of $30.5 million in traffic acquisition costs principally driven by an increase at Ask Media Group in the proportion of revenue that results in the payment of traffic acquisition costs and an increase of $3.4 million in payments made to workers staffed by Bluecrew, principally due to higher revenue, partially offset by a decrease of $6.9 million in production costs, driven primarily by the sale of Electus in 2018 and lower revenue from IAC Films, and the sale of CityGrid in 2018.

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The Vimeo increase was due primarily to an increase of $2.6 million in hosting fees and the inclusion of expense from Magisto, partially offset by the sale of the hardware business.
The Dotdash increase was due primarily to an increase in content costs.various brands.
For the nine months ended September 30, 20192020 compared to the nine months ended September 30, 20182019
Cost of revenue in 2019 increased from 2018 due to increases of $86.3 million from MTCH and $80.6 million from Emerging & Other.
Nine Months Ended September 30,
2020$ Change% Change2019
(Dollars in thousands)
Cost of revenue$462,570 $77,456 20%$385,114 
Percentage of revenue27%26%
The MTCH increase was due primarily to increases of $63.9 million in in-app purchase fees paid to Apple and Google, $14.9 million in hosting fees and $7.7 million in compensation expense.
The Emerging & Other increase was due primarily to an increase of $98.7 million in traffic acquisition costs, principally driven by higher revenue at Ask Media Group, and an increase of $17.2 million in payments made to workers staffed by Bluecrew, partially offset by a decrease of $23.7 million in production costs, driven by the sale of Electus in 2018 and lower revenue from IAC Films, the sale of CityGrid in 2018 and the transfer of Daily Burn to Mosaic Group.
Selling and marketing expense
 Three Months Ended September 30, Nine Months Ended September 30,
 2019 $ Change % Change 2018 2019 $ Change % Change 2018
 (Dollars in thousands)
Selling and marketing expense$423,881 $37,079 10% $386,802 $1,256,843 $97,549 8% $1,159,294
As a percentage of revenue34%     35% 36%     37%
For the three months ended September 30, 2019 compared to the three months ended September 30, 2018
Selling and marketing expense in 2019 increased from 2018 due to increases of $59.1 million from ANGI, $6.4 million from Vimeo and $5.2 million from MTCH, partially offset by decreases of $22.2 million from Applications and $12.7 million from Emerging & Other.
The ANGI increase was due primarily to increases in advertising expense of $43.7 million and compensation expense of $5.9 million as well as $9.7 million of expense from the inclusion of Handy, acquired on October 19, 2018, and Fixd Repair. The increase in advertising expense was due primarily to increased online marketing and television spend. The efficiency of online marketing spend was negatively impacted by traffic sourced through Google. Service requests from free search engine traffic declined from the prior year, while service requests from paid search engine marketing increased, and were considerably more expensive than the prior year on average. While we expect this trend to continue for the balance of 2019, we expect the year over year increase in average cost of service requests from paid search engine marketing in 2020 to be more modest due, in part, to changes we recently implemented. Compensation expense increased due primarily to growth in the sales force.
The Vimeo increase was due primarily to higher marketing of $3.6 million, due primarily to expense from the inclusion of Magisto, and an increase in compensation expense of $2.8 million, due, in part, to growth in the sales force.
The MTCH increase was due primarily to increases in spending for various marketing campaigns at Tinder, Match, Hinge and Pairs. As a percentage of revenue, selling and marketing expense decreased due primarily to continued revenue growth from brands with lower marketing spend.
The Applications decrease was due primarily to lower online marketing of $22.9 million as we mitigate the negative impact on revenue from Google's Chrome Web Store policy changes as well as recent changes to policies under the Services Agreement.

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The Emerging & Other decrease was due primarily to decreases in marketing of $7.9 million at Ask Media Group, driven by a shift in revenue resulting in the payment of traffic acquisition costs, and $2.5 million at IAC Films, and the sale of Electus, partially offset by an increase in compensation expense of $0.7 million at Bluecrew.
For the nine months ended September 30, 2019 compared to the nine months ended September 30, 2018
Selling and marketing expense in 2019 increased from 2018 due to increases of $150.8 million from ANGI, $20.1 million from Vimeo and $10.3 million from MTCH, partially offset by decreases of $59.1 million from Emerging & Other and $25.0 million from Applications.
The ANGI increase was due primarily to increases in advertising expense of $108.9 million and compensation expense of $17.1 million as well as $23.8 million of expense from the inclusion of Handy and Fixd Repair. The increase in advertising expense was due primarily to increased online marketing and television spend. The efficiency of online marketing spend was negatively impacted by traffic sourced through Google as described above in the three-month discussion. Compensation expense increased due primarily to growth in the sales force
The Vimeo increase was due primarily to increases in marketing of $14.2 million and compensation expense of $6.3 million due primarily to the factors described above in the three-month discussion. The increase in marketing was further impacted by a brand campaign in the first half of 2019.
The MTCH increase was due primarily to increases in spending for various marketing campaigns at Tinder, Hinge and Pairs.
The Emerging & Other decrease was due primarily to decreases in marketing of $42.7 million at Ask Media Group and $5.1 million at IAC Films, the sales of Electus, CityGrid and Dictionary.com, and the transfer of Daily Burn to Mosaic Group, partially offset by increases in compensation expense of $2.2 million at Bluecrew and marketing of $1.8 million at College Humor Media.
The Applications decrease was due primarily to lower online marketing of $49.5 million at Desktop as we mitigate the negative impact on revenue from Google's Chrome Web Store policy changes as well as recent changes to policies under the Services Agreement, partially offset by higher online marketing of $23.0 million at Mosaic Group due primarily to increases at iTranslate and Daily Burn, and expense from the inclusion of TelTech.
General and administrative expense
 Three Months Ended September 30, Nine Months Ended September 30,
 2019 $ Change % Change 2018 2019 $ Change % Change 2018
 (Dollars in thousands)
General and administrative expense$207,880 $16,977 9% $190,903 $647,010 $83,560 15% $563,450
As a percentage of revenue17%     17% 18%     18%
For the three months ended September 30, 2019 compared to the three months ended September 30, 2018
General and administrative expense in 2019 increased from 2018 due to increases of $22.6 million from MTCH, $3.6 million from Corporate and $3.2 million from Vimeo, partially offset by a decrease of $13.2 million from Applications.
The MTCH increase was due primarily to increases of $14.8 million in legal fees, $2.7 million in non-income taxes, primarily related to the recently enacted French digital services tax, which is retroactive to the beginning of 2019, and $1.8 million in compensation expense related to an increase in stock-based compensation expense. The increase in stock-based compensation expense isare primarily due to the issuance of new equity awards since the prior year period.
The Corporate increase was due primarily to an increase in stock-based compensation expense due primarily to the issuance of new equity awards since the prior year period and higher professional fees, including $1.0 million in costs related to the Separation.

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The Vimeo increase was due primarily to an increase of $1.2 million in compensation expense due primarily to higher headcount and expense from the inclusion of Magisto.
The Applications decrease was due primarily to income of $16.1 million in acquisition-related contingent consideration fair value adjustments, partially offset by an increase of $2.5 million in compensation due primarily to recent acquisitions.
For the nine months ended September 30, 2019 compared to the nine months ended September 30, 2018
General and administrative expense in 2019 increased from 2018 due to increases of $54.3 million from MTCH, $17.7 million from Corporate and $16.7 million from ANGI, partially offset by a decrease of $9.9 million from Emerging & Other.
The MTCH increase was due primarily to increases of $27.3 million in legal fees, $12.8 million in compensation expense, including an increase in stock-based compensation expense and headcount, and $4.3 million in non-income taxes. The increase in stock-based compensation expense was due to the factor described above in the three-month discussion and the impact from a modification charge in the second quarter of 2019.
The Corporate increase was due primarily to an increase in stock-based compensation expense and higher professional fees, including $1.0 million in costs related to the Separation. The increase in stock-based compensation expense was due primarily to the factor described above in the three-month discussion and from modification charges in the second quarter of 2019, partially offset by a net decrease in a mark-to-market adjustment.
The ANGI increase was due primarily to $22.7 million of expense from the inclusion of Handy and Fixd Repair, including $6.8 million of stock-based compensation expense related to awards issued in connection with these acquisitions, an increase of $14.4 million in bad debt expense due to higher Marketplace Revenue, and increases of $2.4 million in software license and maintenance costs and $1.6 million in facilities costs, partially offset by a decrease of $24.3 million in compensation expense and the inclusion in 2018 of $3.6 million in integration-related costs in connection with the Combination. The decrease in compensation expense was due primarily to a decrease of $30.0 million in stock-based compensation expense reflecting a decrease of $24.4 million in expense due to the modification and acceleration charges related to the Combination ($20.9 million in 2019 compared to $45.3 million in 2018) and the reversal of $7.3 million in cumulative expense related to certain performance-based awards in the current period that are no longer expected to vest, partially offset by the issuance of new equity awards since 2018.
The Emerging & Other decrease was due primarily to sales of Electus and Dictionary.com in 2018 and the transfer of Daily Burn to Mosaic Group, partially offset by an increase in compensation expense of $2.7 million from Bluecrew. General and administrative expense was further impacted by the inclusion in 2018 of a $4.8 million favorable legal settlement.
Product development expense
 Three Months Ended September 30, Nine Months Ended September 30,
 2019 $ Change % Change 2018 2019 $ Change % Change 2018
 (Dollars in thousands)
Product development expense$86,600 $8,860 11% $77,740 $253,914 $23,792 10% $230,122
As a percentage of revenue7%     7% 7%     7%
For the three months ended September 30, 2019 compared to the three months ended September 30, 2018
Product development expense in 2019 increased from 2018 due to increases of $2.6 million from both Vimeo and MTCH, $2.4 million from Dotdash and $0.9 million from Applications.
The Vimeo increase was due primarily to an increase of $2.3 million in compensation expense due primarily to higher headcount and expense from the inclusion of Magisto.
The MTCH increase was due primarily to an increase of $2.0 million in compensation expense, including an increase of $1.5 million in stock-based compensation expense, due primarily to new equity awards associated with higher headcount at Tinder.

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The Dotdash increase was due primarily to an increase of $2.4 million in compensation expense due primarily to higher headcount and an increase in expense for contractors engaged in content development.
The Applications increase was due primarily to expense from the inclusion of TelTech.
For the nine months ended September 30, 2019 compared to the nine months ended September 30, 2018
Product development expense in 2019 increased from 2018 due to increases of $15.0 million from MTCH, $5.2 million from Dotdash and $4.0 million from Vimeo.
The MTCH increase was due primarily to an increase of $13.4 million in compensation expense, including an increase of $8.4 million in stock-based compensation expense due primarily to expense related to the vesting of certain awards for which the market condition was met in the first quarter of 2019, and higher headcount at Tinder.
The Dotdash increase was due primarily to an increase of $4.6 million in compensation expense due primarily to higher headcount and an increase in expense for contractors engaged in content development.
The Vimeo increase was due primarily to an increase of $3.1 million in compensation expense due primarily to higher headcount and expense from the inclusion of Magisto.
Depreciation
 Three Months Ended September 30, Nine Months Ended September 30,
 2019 $ Change % Change 2018 2019 $ Change % Change 2018
 (Dollars in thousands)
Depreciation$23,090 $4,165 22% $18,925 $63,152 $6,165 11% $56,987
As a percentage of revenue2%     2% 2%     2%
For the three months ended September 30, 2019 compared to the three months ended September 30, 2018
Depreciation in 2019 increased from 2018 due primarily to increased capital expenditures at ANGI, partially offset by certain fixed assets becoming fully depreciated.
For the nine months ended September 30, 2019 compared to the nine months ended September 30, 2018
Depreciation in 2019 increased from 2018 due primarily to the factors described above in the three-month discussion.
Operating income (loss)
 Three Months Ended September 30, Nine Months Ended September 30,
 2019 $ Change % Change 2018 2019 $ Change % Change 2018
 (Dollars in thousands)
Match Group$176,604
 $36,709
 26% $139,895
 $468,330
 $66,037
 16% $402,293
ANGI Homeservices24,726
 (8,789) (26)% 33,515
 32,488
 (13,533) (29)% 46,021
Vimeo(11,155) (4,994) (81)% (6,161) (40,555) (15,053) (59)% (25,502)
Dotdash3,695
 1,279
 53% 2,416
 13,752
 6,806
 98% 6,946
Applications39,099
 6,058
 18% 33,041
 85,422
 (6,157) (7)% 91,579
Emerging & Other(1,821) (12,714) NM 10,893
 (6,130) (29,595) NM 23,465
Corporate(45,296) (4,529) (11)% (40,767) (133,272) (19,689) (17)% (113,583)
Total$185,852
 $13,020
 8% $172,832
 $420,035
 $(11,184) (3)% $431,219
                
As a percentage of revenue15%     16% 12%     14%
Selling and marketing expense
For the three months ended September 30, 20192020 compared to the three months ended September 30, 20182019

Three Months Ended September 30,
2020$ Change% Change2019
(Dollars in thousands)
Selling and marketing expense$129,859 $16,278 14%$113,581 
Percentage of revenue20%21%
Selling and marketing expense increased primarily due to higher marketing spend at multiple brands prompted by the availability of lower marketing rates during the current year period, and an increase in compensation expense of $2.2 million.
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Operating income in 2019 increased from 2018, despite a decrease in Adjusted EBITDA of $1.3 million, described below, due primarily to a change of $16.2 million in acquisition-related contingent consideration fair value adjustments (income of $16.1 million in 2019 compared to expense of $0.1 million in 2018) and a decrease of $5.3 million in stock-based compensation expense, partially offset by increases of $4.2 million in depreciation and $3.0 million in amortization of intangibles. The decrease in stock-based compensation expense was due primarily to a decrease of $8.6 million in modification and acceleration charges related to the Combination ($7.5 million in 2019 compared to $16.0 million in 2018) and the reversal of $7.6 million in cumulative expense related to certain performance-based awards in the current period that are no longer expected to vest, partially offset by the issuance of new equity awards since 2018, including those issued in connection with recent acquisitions.
For the nine months ended September 30, 20192020 compared to the nine months ended September 30, 20182019
Operating income in 2019 decreased from 2018
Nine Months Ended September 30,
2020$ Change% Change2019
(Dollars in thousands)
Selling and marketing expense$345,150 $18,018 6%$327,132 
Percentage of revenue20%22%
The changes are primarily due to the factors described above in the three-month discussion.
General and administrative expense
For the three months ended September 30, 2020 compared to the three months ended September 30, 2019
Three Months Ended September 30,
2020$ Change% Change2019
(Dollars in thousands)
General and administrative expense$88,961 $20,293 30%$68,668 
Percentage of revenue14%13%
General and administrative expense increased primarily due to an increase in compensation of $21.8 million primarily related to a decrease in Adjusted EBITDA of $5.1 million, described below, increases of $7.9 million inmodification charge to stock-based compensation expense $6.2 millionand an increase in depreciation and $5.3 million in amortization of intangibles,headcount, partially offset by a change of $13.3 milliondecrease in acquisition-related contingent consideration fair value adjustments (income of $13.0 million in 2019travel expenditures.
For the nine months ended September 30, 2020 compared to the nine months ended September 30, 2019
Nine Months Ended September 30,
2020$ Change% Change2019
(Dollars in thousands)
General and administrative expense$236,484 $49,349 26%$187,135 
Percentage of revenue14%12%
General and administrative expense increased primarily due to an increase in compensation of $0.3$33.9 million primarily related to an increase in 2018). Theheadcount and an increase in stock-based compensation expense was due primarily to expenseresulting from a modification charge, an increase in legal fees of $9.4$5.3 million, and an increase of $4.8 million related to the vesting of certain awards for which the market condition was met in the first quarter of 2019, the issuance of new equity awards since 2018, including those issued in connection with recent acquisitions, and modification charges at MTCH and Corporate,non-income taxes, partially offset by a decrease of $26.6 million in modification and acceleration charges relatedtravel expenditures.
Product development expense
For the three months ended September 30, 2020 compared to the Combination ($25.2 million inthree months ended September 30, 2019 compared
Three Months Ended September 30,
2020$ Change% Change2019
(Dollars in thousands)
Product development expense$39,280 $2,671 7%$36,609 
Percentage of revenue6%7%
Product development expense increased primarily due to $51.9 million in 2018), the reversal of $7.6 million in cumulative expense related to certain performance-based awards in the current period that are no longer expected to vest and a net decrease in a mark-to-market adjustment. Thean increase in amortizationcompensation expense of intangibles was$4.0 million, primarily due primarily to recent acquisitions,an increase in headcount at several brands, including Tinder, partially offset by a decrease in travel expenditures.
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For the nine months ended September 30, 2020 compared to the nine months ended September 30, 2019
Nine Months Ended September 30,
2020$ Change% Change2019
(Dollars in thousands)
Product development expense$124,979 $11,416 10%$113,563 
Percentage of revenue7%8%
The changes are primarily due to the factors described above in the three-month discussion.
Depreciation
For the three months ended September 30, 2020 compared to the three months ended September 30, 2019
Three Months Ended September 30,
2020$ Change% Change2019
(Dollars in thousands)
Depreciation$11,221 $2,688 32%$8,533 
Percentage of revenue2%2%
Depreciation increased primarily due to an increase in internally developed software placed in service.
For the nine months ended September 30, 2020 compared to the nine months ended September 30, 2019
Nine Months Ended September 30,
2020$ Change% Change2019
(Dollars in thousands)
Depreciation$30,284 $4,706 18%$25,578 
Percentage of revenue2%2%
Depreciation increased primarily due to the factors described above in the three-month discussion.
Operating income and Adjusted EBITDA
Three Months Ended September 30,Nine Months Ended September 30,
2020$ Change% Change20192020$ Change% Change2019
(Dollars in thousands)
Operating income$200,167 $24,931 14%$175,236 $533,133 $69,028 15%$464,105 
Percentage of revenue31%32%31%31%
Adjusted EBITDA$249,182 $43,967 21%$205,215 $651,326 $89,362 16%$561,964 
Percentage of revenue39%38%37%37%
For a reconciliation of net earnings attributable to Match Group, Inc. shareholders to Adjusted EBITDA, see “Principles of Financial Reporting.”
For the three months ended September 30, 2020 compared to the three months ended September 30, 2019
Operating income and Adjusted EBITDA increased 14% and 21%, respectively, primarily driven by revenue growth at multiple brands and lower selling and marketing expense fromas a percentage of revenue, partially offset by higher cost of revenue, due to higher in-app purchase fees, as revenue is increasingly sourced through mobile app stores, and increased web operation costs. Operating income was further impacted by higher stock-based compensation expense due to a modification charge recorded in 2020.
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For the Combination.nine months ended September 30, 2020 compared to the nine months ended September 30, 2019
Operating income and Adjusted EBITDA increased 15% and 16%, respectively, primarily due to the factors described above in the three-month discussion.
At September 30, 2019,2020, there was $308.1$160.1 million of unrecognized compensation cost, net of estimated forfeitures, related to all equity-based awards, which is expected to be recognized over a weighted average period of approximately 2.32.5 years.
Adjusted EBITDA
 Three Months Ended September 30, Nine Months Ended September 30,
 2019 $ Change % Change 2018 2019 $ Change % Change 2018
 (Dollars in thousands)
Match Group$206,131
 $41,092
 25% $165,039
 $564,720
 $86,379
 18% $478,341
ANGI Homeservices58,923
 (18,777) (24)% 77,700
 147,534
 (33,785) (19)% 181,319
Vimeo(7,997) (3,768) (89)% (4,229) (33,661) (14,017) (71)% (19,644)
Dotdash7,026
 3,955
 129% 3,071
 22,551
 13,637
 153% 8,914
Applications25,433
 (9,556) (27)% 34,989
 80,440
 (16,705) (17)% 97,145
Emerging & Other(1,529) (13,764) NM 12,235
 (5,141) (33,874) NM 28,733
Corporate(21,945) (467) (2)% (21,478) (60,751) (6,713) (12)% (54,038)
Total$266,042
 $(1,285) —% $267,327
 $715,692
 $(5,078) (1)% $720,770
                
As a percentage of revenue21%     24% 20%     23%
For a reconciliation of net earnings attributable to IAC shareholders to operating income to consolidated Adjusted EBITDA, see "Principles of Financial Reporting." For a reconciliation of operating income (loss) to Adjusted EBITDA for the Company's reportable segments, see "Note 8—Segment Information" to the consolidated financial statements included in "Item 1—Consolidated Financial Statements."Interest expense
For the three months ended September 30, 20192020 compared to the three months ended September 30, 20182019
MTCH Adjusted EBITDA increased 25% to $206.1 million due primarily to the increase of $97.6 million in revenue due to growth at Tinder and lower selling and marketing expense as a percentage of revenue, partially offset by higher in-app purchase fees as revenue continues to be increasingly sourced through mobile app stores and higher legal fees.

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ANGI Adjusted EBITDA decreased 24% to $58.9 million, despite higher revenue, due primarily to higher selling and marketing expense as a percentage of revenue, and investments in Fixd Repair and Handy, partially offset by the inclusion in 2018 of $1.3 million in transaction-related costs related to the acquisition of Handy and $1.0 million in costs related to the Combination (including deferred revenue write-offs, severance, retention and integration-related costs).
Vimeo Adjusted EBITDA loss increased 89% to $8.0 million, despite higher revenue, due primarily to higher marketing, including expense from the inclusion of Magisto, as well as higher compensation expense due primarily to an increase in headcount, including its sales force.
Dotdash Adjusted EBITDA increased 129% to $7.0 million due primarily to higher revenue and lower operating expenses as a percentage of revenue.
Applications Adjusted EBITDA decreased 27% to $25.4 million due primarily to a decrease in revenue, partially offset by lower selling and marketing expense as a percentage of revenue.
Emerging & Other Adjusted EBITDA decreased to a loss of $1.5 million in 2019 from a profit of $12.2 million in 2018 due primarily to increased investments in College Humor Media and Bluecrew, reduced profits at Ask Media Group, reflecting an increase in traffic acquisition costs, partially offset by lower marketing, and the sales of Dictionary.com and CityGrid.
Corporate Adjusted EBITDA loss increased 2% to $21.9 million due primarily to higher professional fees, including $1.0 million in costs related to the Separation.
For the nine months ended September 30, 2019 compared to the nine months ended September 30, 2018
MTCH Adjusted EBITDA increased 18% to $564.7 million due primarily to the factors described above in the three-month discussion.
ANGI Adjusted EBITDA decreased 19% to $147.5 million, despite higher revenue, due primarily to higher selling and marketing expense as a percentage of revenue, an increase of $14.4 million in bad debt expense due to higher Marketplace Revenue, and investments in Fixd Repair and Handy, partially offset by the inclusion in 2018 of $8.9 million in costs related to the Combination (including deferred revenue write-offs, severance, retention and integration-related costs).
Vimeo Adjusted EBITDA loss increased 71% to $33.7 million, despite higher revenue, due primarily to higher marketing related to a brand campaign in the first half of 2019, as well as higher compensation expense due primarily to an increase in headcount.
Dotdash Adjusted EBITDA increased 153% to $22.6 million due the factors described above in the three-month discussion.
Applications Adjusted EBITDA decreased 17% to $80.4 million due primarily to a decrease in revenue, partially offset by lower selling and marketing expense as a percentage of revenue.
Emerging & Other Adjusted EBITDA decreased to a loss of $5.1 million in 2019 from a profit of $28.7 million in 2018 due primarily to reduced profits at Ask Media Group, reflecting an increase in traffic acquisition costs, partially offset by lower marketing, increased investments in Bluecrew and College Humor Media, and the sales of Dictionary.com and CityGrid, partially offset by the transfer of Daily Burn to Mosaic Group, and the inclusion of losses in 2018 related to Electus.
Corporate Adjusted EBITDA loss increased 12% to $60.8 million due primarily to higher professional fees, including $1.0 million in costs related to the Separation.

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Interest expense
 Three Months Ended September 30, Nine Months Ended September 30,
 2019 $ Change % Change 2018 2019 $ Change % Change 2018
 (Dollars in thousands)
Interest expense$42,132 $14,522 53% $27,610 $110,481 $29,010 36% $81,471
For the three months ended September 30, 2019 compared to the three months ended September 30, 2018
Three Months Ended September 30,
2020$ Change% Change2019
(Dollars in thousands)
Interest expense$43,189 $4,196 11%$38,993 
Interest expense in 2019 increased from 2018primarily due primarily to the increaseissuance of the 4.125% Senior Notes on February 11, 2020 and the issuance of the 4.625% Senior Notes on May 19, 2020. Partially offsetting these increases were decreases due to the redemption of the 6.375% Senior Notes during the 2020 period and a lower LIBOR rate on the Term Loan in the average outstanding long-term debt balance compared to the priorcurrent year period.
For the nine months ended September 30, 20192020 compared to the nine months ended September 30, 20182019
Nine Months Ended September 30,
2020$ Change% Change2019
(Dollars in thousands)
Interest expense$131,485 $31,495 31%$99,990 
Interest expense in 2019 increased from 2018primarily due primarily to the increasefactors described above in the averagethree-month discussion. Additionally, the 2026 and 2030 Senior Exchangeable Notes were outstanding long-term debt balance and higher interest rates on variable rate debt compared tofor the prior yearentire 2020 period.
Other (expense) income, net
 Three Months Ended September 30, Nine Months Ended September 30,
 2019 $ Change % Change 2018 2019 $ Change % Change 2018
 (Dollars in thousands)
Other income, net$1,229 $(6,884) (85)% $8,113 $47,852 $(126,783) (73)% $174,635
For the three months ended September 30, 2020 compared to the three months ended September 30, 2019 and 2018
Three Months Ended September 30,
2020$ Change% Change2019
(Dollars in thousands)
Other (expense) income, net$(1,923)$(4,711)NM$2,788 
________________________
NM = not meaningful
Other expense, net, in 2020 includes foreign currency losses of $1.3 million.
Other income, net, in 2019 includes: $15.9 million of interest income; an unrealized reduction of $8.7 million in the estimated fair value of a warrant; and a $4.6 million unrealized loss related to our investment in Pinterest, which is carried at fair value following its initial public offering in April 2019.
Other income, net in 2018 includes: interestincludes income of $8.1 million; and $0.8$1.8 million in net foreign currency exchange gains due primarily to thea strengthening of the U.S. dollarEuro relative to the GBP during the three months ended September 30, 2018.2019 and interest income of $1.3 million.
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For the nine months ended September 30, 2020 compared to the nine months ended September 30, 2019
Nine Months Ended September 30,
2020$ Change% Change2019
(Dollars in thousands)
Other income, net$19,341 $15,503 404%$3,838 
Other income, net, in 2020 includes a legal settlement of $35.0 million, foreign currency gains of $1.4 million, and 2018interest income of $2.5 million, partially offset by a loss on redemption of bonds of $16.5 million.
Other income, net, in 2019 includes: $42.8 millionincludes income of interest income; a $25.3 million unrealized gain related to our investment in Pinterest; an unrealized reduction of $8.7$1.9 million in net foreign currency gains due primarily to a strengthening of the estimated fair valueEuro relative to GBP in the period, and interest income of a warrant; a realized loss$3.0 million, partially offset by expense of $8.2$1.3 million related to the sale of Vimeo's hardware business in the first quarter of 2019; and a $1.3 million mark-to-market chargeadjustment pertaining to a subsidiary denominated equity instrument.
Other income, net in 2018 includes: a $26.8 million realized gain onIncome tax (provision) benefit
For the sale of certain Pinterest shares held by the Company and a $128.8 million unrealized gain to adjust our remaining interest in Pinterest to fair value in accordance with
ASU No. 2016-01, which was adopted effective January 1, 2018; $20.2 million of interest income; and $2.9 million in net foreign currency exchange gains due primarilythree months ended September 30, 2020 compared to the strengtheningthree months ended September 30, 2019
Three Months Ended September 30,
2020$ Change% Change2019
(Dollars in thousands)
Income tax provision$(23,568)$(22,328)NM$(1,240)
Effective income tax rate15%1%
The income tax provisions in 2020 and 2019 are reduced by (i) excess tax benefits generated from the exercise and vesting of the U.S. dollar relative to the GBP duringstock-based awards and (ii) research tax credits.
For the nine months ended September 30, 2018.2020 compared to the nine months ended September 30, 2019
Income
Nine Months Ended September 30,
2020$ Change% Change2019
(Dollars in thousands)
Income tax (provision) benefit$(7,257)$(14,003)NM$6,746 
Effective income tax rate2%NM
The income tax provision in 2020 and the income tax benefit, despite pre-tax income, in 2019, are primarily due to excess tax benefits generated from the exercise and vesting of stock-based awards. In 2020, this benefit was partially offset by an increase in the valuation allowance for foreign tax credits.
 Three Months Ended September 30, Nine Months Ended September 30,
 2019 $ Change % Change 2018 2019 $ Change % Change 2018
 (Dollars in thousands)
Income tax benefit$14,823 $(3,419) (19)% $18,242 $62,142 $46,255 291% $15,887
Effective income tax rateNM     NM NM     NM

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For further details of income tax matters see "Note 3—“Note 2—Income Taxes"Taxes” to the consolidated financial statements included in "Item 1. “Item 1—Consolidated Financial Statements."Statements.”
Related party transactions
For the three months ended September 30, 2019 and 2018
The income tax benefit in 2019, despite pre-tax income, was due primarily to excess tax benefits generated by the exercise and vestingdiscussions of stock-based awards and research credits.
The income tax benefit in 2018, despite pre-tax income, was due primarily to excess tax benefits generated by the exercise and vesting of stock-based awards, a reduction in the Transition Tax described below, and research credits.
The Tax Cuts and Jobs Act subjected to U.S. taxation certain previously deferred earnings of foreign subsidiaries as of December 31, 2017 (“Transition Tax”). In the third quarter of 2018, the Company finalized this calculation, which resulted in a $9.2 million reduction in the Transition Tax. The net reduction in the Transition Tax was due primarilyrelated party transactions see “Note 10—Related Party Transactions” to the utilization of additional foreign tax credits and a reduction in state taxes, partially offset by additional taxable earnings and profits of our foreign subsidiaries based on Internal Revenue Service guidance.
For the nine months ended September 30, 2019 and 2018
The income tax benefits in 2019 and 2018 were due primarily to the factors described above in the three-month discussion.
Net earnings attributable to noncontrolling interests
Noncontrolling interests represent the noncontrolling holders’ percentage share of earnings or losses from the subsidiaries in which the Company holds a majority, but less than 100%, ownership interest and the results of which areconsolidated financial statements included in our consolidated financial statements.“Item 1—Consolidated Financial Statements.”
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 Three Months Ended September 30, Nine Months Ended September 30,
 2019 $ Change % Change 2018 2019 $ Change % Change 2018
 (Dollars in thousands)
Net earnings attributable to noncontrolling interests$31,228 $5,425 21% $25,803 $88,842 $(16,219) (15)% $105,061
For the three months ended September 30, 2019 and 2018

Net earnings attributable to noncontrolling interests in 2019 primarily represents the publicly-held interest in MTCH and ANGI's earnings, partially offset by the net loss attributable to the noncontrolling interests in the subsidiary that holds the Company's investment in Pinterest.
Net earnings attributable to noncontrolling interests in 2018 primarily represents the publicly-held interest in MTCH and ANGI's earnings.
For the nine months ended September 30, 2019 and 2018
Net earnings attributable to noncontrolling interests in 2019 and 2018 primarily represents the publicly-held interest in MTCH and ANGI's earnings and the net earnings attributable to the noncontrolling interests in the subsidiary that holds the Company's investment in Pinterest.

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PRINCIPLES OF FINANCIAL REPORTING

IACMatch Group reports Adjusted EBITDA as aand Revenue excluding foreign exchange effects, both of which are supplemental measuremeasures to U.S. generally accepted accounting principles ("GAAP"(“GAAP”). This measureAdjusted EBITDA is one ofamong the primary metrics by which we evaluate the performance of our businesses,business, on which our internal budgets arebudget 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, and we are obligated to provide, the same set of tools that we use in analyzing our results. ThisThese non-GAAP measuremeasures should be considered in addition to results prepared in accordance with GAAP, however,but should not be considered a substitute for or superior to GAAP results. IACMatch Group endeavors to compensate for the limitations of the non-GAAP measuremeasures presented by providing the comparable GAAP measuremeasures with equal or greater prominence and descriptions of the reconciling items, including quantifying such items, to derive the non-GAAP measure.measures. We encourage investors to examine the reconciling adjustments between the GAAP and non-GAAP measure,measures, which we discuss below.
Definition of Non-GAAP MeasureAdjusted EBITDA
Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization ("(“Adjusted EBITDA"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.arrangements, as applicable. We believe this measure 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 these itemsthey are non-cash in nature. Adjusted EBITDA has certain limitations because it excludes the impact of these expenses.
The following table reconciles net earnings attributable to IAC shareholders to operating income to consolidated Adjusted EBITDA:
 Three Months Ended September 30, Nine Months Ended September 30,
 2019 2018 2019 2018
 (In thousands)
Net earnings attributable to IAC shareholders$128,544
 $145,774
 $330,706
 $435,209
Add back:       
Net earnings attributable to noncontrolling interests31,228
 25,803
 88,842
 105,061
Income tax benefit(14,823) (18,242) (62,142) (15,887)
Other income, net(1,229) (8,113) (47,852) (174,635)
Interest expense42,132
 27,610
 110,481
 81,471
Operating income185,852
 172,832
 420,035
 431,219
Stock-based compensation expense50,053
 55,363
 179,922
 172,006
Depreciation23,090
 18,925
 63,152
 56,987
Amortization of intangibles23,186
 20,152
 65,576
 60,293
Acquisition-related contingent consideration fair value adjustments(16,139) 55
 (12,993) 265
Adjusted EBITDA$266,042
 $267,327
 $715,692
 $720,770
For a reconciliation of operating income (loss) to Adjusted EBITDA for the Company's reportable segments, see "Note 8—Segment Information" to the consolidated financial statements included in "Item 1—Consolidated Financial Statements."
Non-Cash Expenses That Are Excluded From Adjusted EBITDA
Stock-based compensationexpense consists principally of expense associated with the grants including unvested grants assumed in acquisitions (including the Combination), of stock options, restricted stock units ("RSUs"(“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-basedmethod; however, 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 that stock-based awards are settled on a net basis, the Company remits the required tax-withholding amounts from its current funds.

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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 (including the Combination).acquisitions. At the time of an acquisition, the identifiable definite-lived intangible assets of the acquired company, such as technology, service professional relationships, customer lists, and user base, memberships, trade names, and content,technology, are valued and amortized over their estimated lives. Value is also assigned to acquired indefinite-lived intangible assets, which comprise trade names and trademarks, and goodwill that 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.
Gains and losses recognized on changes in the fair value of contingent consideration arrangementsare accounting adjustments to report contingent consideration liabilities at fair value. These adjustments can be highly variable and are excluded from our assessment of performance because they are considered non-operational in nature and, therefore, are not indicative of current or future performance or the ongoing cost of doing business.


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The following table reconciles net earnings attributable to Match Group, Inc. shareholders to Adjusted EBITDA:
Three Months Ended September 30,Nine Months Ended September 30,
2020201920202019
(In thousands)
Net earnings (loss) attributable to Match Group, Inc. shareholders$132,581 $128,544 $(12,018)$330,706 
Add back:
Net (loss) earnings attributable to noncontrolling interests(586)31,228 59,680 88,842 
(Earnings) loss from discontinued operations, net of tax(508)(21,981)366,070 (44,849)
Income tax provision (benefit)23,568 1,240 7,257 (6,746)
Other expense (income), net1,923 (2,788)(19,341)(3,838)
Interest expense43,189 38,993 131,485 99,990 
Operating Income200,167 175,236 533,133 464,105 
Stock-based compensation expense37,335 20,805 80,647 70,817 
Depreciation11,221 8,533 30,284 25,578 
Amortization of intangibles459 641 7,262 1,464 
Adjusted EBITDA$249,182 $205,215 $651,326 $561,964 
Effects of Changes in Foreign Exchange Rates on Revenue
The impact of foreign exchange rates on the Company, due to its global reach, may be an important factor in understanding period over period comparisons if movement in exchange rates is significant. Since our results are reported in U.S. dollars, international revenue is favorably impacted as the U.S. dollar weakens relative to other foreign currencies, and unfavorably impacted as the U.S. dollar strengthens relative to other foreign currencies. We believe the presentation of revenue excluding the effects from foreign exchange, in addition to reported revenue, helps improve investors’ ability to understand the Company’s performance because it excludes the impact of foreign currency volatility that is not indicative of Match Group’s core operating results.
Revenue excluding foreign exchange effects compares results between periods as if exchange rates had remained constant period over period. Revenue excluding foreign exchange effects is calculated by translating current period revenue using prior period exchange rates. The percentage change in revenue excluding foreign exchange effects is calculated by determining the change in current period revenue over prior period revenue where current period revenue is translated using prior period exchange rates.
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The following table presents the impact of foreign exchange on total revenue, ARPU, and International ARPU for the three and nine months ended September 30, 2020 compared to the three and nine months ended September 30, 2019, respectively:
 Three Months Ended September 30,
 2020$ Change% Change2019
 (Dollars in thousands, except ARPU)
Revenue, as reported$639,770 $98,277 18%$541,493 
Foreign exchange effects(3,085)
Revenue excluding foreign exchange effects$636,685 $95,192 18%$541,493 
(Percentage change calculated using non-rounded numbers, rounding differences may occur)
ARPU, as reported$0.62 4%$0.59 
Foreign exchange effects— 
ARPU, excluding foreign exchange effects$0.62 4%$0.59 
International ARPU, as reported$0.58 1%$0.57 
Foreign exchange effects(0.01)
International ARPU, excluding foreign exchange effects$0.57 —%$0.57 

 Nine Months Ended September 30,
 2020$ Change% Change2019
 (Dollars in thousands, except ARPU)
Revenue, as reported$1,739,862 $235,771 16%$1,504,091 
Foreign exchange effects16,370 
Revenue excluding foreign exchange effects$1,756,232 $252,141 17%$1,504,091 
(Percentage change calculated using non-rounded numbers, rounding differences may occur)
ARPU, as reported$0.60 2%$0.58 
Foreign exchange effects— 
ARPU, excluding foreign exchange effects$0.60 3%$0.58 
International ARPU, as reported$0.55 (1)%$0.56 
Foreign exchange effects0.01 
International ARPU, excluding foreign exchange effects$0.56 —%$0.56 

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FINANCIAL POSITION, LIQUIDITY AND CAPITAL RESOURCES
Financial Position
  September 30, 2019 December 31, 2018
  (In thousands)
MTCH, Cash and cash equivalents:    
United States $220,175
 $83,851
All other countries 146,272
 103,096
Total MTCH cash and cash equivalents 366,447
 186,947
     
ANGI, Cash and cash equivalents and marketable securities:    
United States 390,535
 328,795
All other countries 12,379
 8,189
Total cash and cash equivalents 402,914
 336,984
Marketable securities (United States) —
 24,947
Total ANGI cash and cash equivalents and marketable securities 402,914
 361,931
     
IAC, Cash and cash equivalents and marketable securities:    
United States 2,077,372
 1,558,636
All other countries 99,447
 49,065
Total cash and cash equivalents 2,176,819
 1,607,701
Marketable securities (United States) 157,174
 98,718
Total IAC cash and cash equivalents and marketable securities 2,333,993
 1,706,419
     
Total cash and cash equivalents and marketable securities $3,103,354
 $2,255,297
MTCH Debt:    
  MTCH Term Loan $425,000
 $425,000
  MTCH Credit Facility —
 260,000
  6.375% MTCH Senior Notes 400,000
 400,000
  5.00% MTCH Senior Notes 450,000
 450,000
  5.625% MTCH Senior Notes 350,000
 —
  Total MTCH long-term debt 1,625,000
 1,535,000
Less: unamortized original issue discount 6,586
 7,352
Less: unamortized debt issuance costs 15,786
 11,737
Total MTCH debt, net 1,602,628
 1,515,911
     
ANGI Debt:    
 ANGI Term Loan 250,938
 261,250
Less: current portion of ANGI Term Loan 13,750
 13,750
Less: unamortized debt issuance costs 1,942
 2,529
Total ANGI debt, net 235,246
 244,971
     
IAC Debt:    
  2022 Exchangeable Notes 517,500
 517,500
  2026 Exchangeable Notes 575,000
 —
  2030 Exchangeable Notes 575,000
 —
  4.75% Senior Notes —
 34,489
Total IAC long-term debt 1,667,500
 551,989
Less: unamortized original issue discount 362,390
 54,025
Less: unamortized debt issuance costs 31,102
 13,298
Total IAC debt, net 1,274,008
 484,666
     
Total long-term debt, net $3,111,882
 $2,245,548
September 30, 2020December 31, 2019
(In thousands)
Cash and cash equivalents:
United States$251,742 $322,267 
All other countries147,142 143,409 
Total cash and cash equivalents$398,884 $465,676 
Long-term debt:
Credit Facility due February 13, 2025$— $— 
Term Loan due February 13, 2027425,000 425,000 
6.375% Senior Notes— 400,000 
5.00% Senior Notes450,000 450,000 
4.625% Senior Notes500,000 — 
5.625% Senior Notes350,000 350,000 
4.125% Senior Notes500,000 — 
2022 Exchangeable Notes517,500 517,500 
2026 Exchangeable Notes575,000 575,000 
2030 Exchangeable Notes575,000 575,000 
Total long-term debt3,892,500 3,292,500 
Less: Unamortized original issue discount324,551 357,887 
Less: Unamortized debt issuance costs46,857 44,987 
Total long-term debt, net$3,521,092 $2,889,626 

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IAC, MTCH and ANGI Long-term Debt
For a detailed description of IAC, MTCH and ANGI long-term debt, see "Note“Note 5—Long-term Debt," net” to the consolidated financial statements included in "Item 1. “Item 1—Consolidated Financial Statements."Statements.”
Cash Flow Information
In summary, the Company'sCompany’s cash flows are as follows:
Nine Months Ended September 30,
20202019
(In thousands)
Net cash provided by operating activities attributable to continuing operations$518,845 $468,255 
Net cash used in investing activities attributable to continuing operations(3,912,134)(32,961)
Net cash provided by financing activities attributable to continuing operations1,711,971 732,333 
 Nine Months Ended September 30,
 2019 2018
 (In thousands)
Net cash provided by (used in)   
     Operating activities$688,766
 $671,700
     Investing activities(407,294) (273,558)
     Financing activities535,530
 (359,856)
2020
Net cash provided by operating activities consists of earnings adjusted for non-cash items, the effect of changesattributable to continuing operations in working capital and acquisition-related contingent consideration payments (to the extent greater than the liability initially recognized at the time of acquisition). Non-cash2020 includes adjustments include stock-based compensation expense, deferred income taxes, amortization of intangibles, depreciation, bad debt expense, unrealized gains and losses on equity securities, and losses and gains from the sale of investments and businesses.
2019
Adjustments to earnings consist primarily of $179.9$80.6 million of stock-based compensation expense, $65.6$57.0 million of other adjustments, $30.3 million of depreciation, and $7.3 million for amortization of intangibles. Partially offsetting these adjustments was deferred income tax of $6.6 million primarily related to net operating loss created by the settlement of stock-based awards. Other adjustments include $33.3 million of amortization of intangibles, $63.2original issuance discount related to the Exchangeable Senior Notes and $16.5 million of losses on the redemption of the Senior Notes. The decrease in cash from changes in working capital primarily consists of an increase in accounts
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receivable of $87.9 million primarily related to the timing of cash receipts, including cash received in the fourth quarter of 2019 rather than in the first quarter of 2020, and an increase in revenue; and an increase from other assets of $26.1 million primarily due to a legal settlement. These changes were partially offset by an increase in deferred revenue of $26.9 million, due mainly to growth in subscription sales; an increase in accounts payable and other liabilities of $18.3 million due mainly to the timing of payments, including interest payments; and an increase from income taxes payable and receivable of $5.3 million primarily due to the receipt of an income tax refund, partially offset by payments of taxes during the year.
Net cash used in investing activities attributable to continuing operations in 2020 consists primarily of the net cash distributed to IAC related to the Separation of $3.9 billion, which includes $1.4 billion of net proceeds from the stock issuance in connection with the Separation, and capital expenditures of $32.4 million that are primarily related to internal development of software and computer hardware to support our products and services.
Net cash provided by financing activities attributable to continuing operations in 2020 is primarily due to proceeds of $1.4 billion from the stock offering in connection with the Separation, which were subsequently transferred to IAC as noted above, proceeds of $1.0 billion from the issuance of the 4.125% and 4.625% Senior Notes and borrowings under the Credit Facility of $20.0 million, partially offset by the redemption of $400.0 million of the 6.375% Senior Notes, payments of $212.0 million for withholding taxes paid on behalf of employees for net settled equity awards of both Former Match Group and Match Group, and purchases of treasury stock of Former Match Group of $132.9 million.
2019
Net cash provided by operating activities attributable to continuing operations in 2019 includes adjustments to earnings of $70.8 million of stock-based compensation expense, $25.6 million of depreciation and $50.5$22.9 million of bad debt expense, partially offset by $85.0 million of deferred income taxes and $24.2 million of net unrealized gains on certain equity securities. Theother adjustments. Partially offsetting these adjustments was deferred income tax benefitof $26.2 million primarily relatesrelated to the net operating loss created by the exercise and vestingsettlement of stock-based awards. Other adjustments include $22.4 million of Exchangeable Senior Note amortization of the original issuance discount. The decrease in cash from changes in working capital primarily consists of an increase in accounts receivable of $133.5$68.6 million partially offset by increases in deferred revenue of $55.0 million and accounts payable and other liabilities of $54.0 million. The increase in accounts receivable is primarily duerelated to revenue growth at ANGI and MTCH as well as the timing of cash receipts, at MTCH and Applications, including cash received in the fourth quarter of 2018 rather than in the first quarter of 2019. The2019 and an increase in deferred revenue is due primarily to growth in subscription sales at MTCH, Vimeo, and Mosaic Group. Therevenue. Partially offsetting this decrease was an increase in accounts payable and other liabilities is primarilyof $45.7 million, due to an increase in (i) accrued advertising and related payables at ANGI and MTCH, (ii) accrued interest primarily related to the MTCH Senior Notes duemainly to the timing of payments, including interest paymentspayments; and the Exchangeable Notes, which were issuedan increase in the second quarterdeferred revenue of 2019, and (iii) accrued legal fees at MTCH.$24.6 million, due mainly to growth in subscription sales.
Net cash used in investing activities includes cash used for investments and acquisitionsattributable to continuing operations in 2019 consists primarily of $450.4 million, principally related to the investment in Turo and acquisitions of Magisto and Fixd Repair, and capital expenditures of $103.6$30.3 million that are primarily related to investments in theinternal development of capitalized software at ANGI and MTCHcomputer hardware to support theirour products and services, leasehold improvements at ANGI, and the payment of a deposit for an ownership interest in an aircraft at Corporate, partially offset by proceeds from maturities (net of purchases) of marketable debt securities of $123.8 million, and net proceeds from the sale of businesses and investments of $24.8 million, principally related to the December 31, 2018 sale of Felix.services.
Net cash provided by financing activities includesattributable to continuing operations in 2019 is primarily due to proceeds of $1.2 billion in proceeds from the issuance of the 2026 and 2030 Exchangeable Notes,Notes; proceeds of $350.0 million in proceeds from the issuance of the 5.625% MTCH Senior Notes,Notes; and proceeds of $40.0 million infrom borrowings under the MTCH Credit Facility, and $10.2 million inFacility. Partially offsetting these proceeds from the exercisewere cash payments of IAC stock options, partially offset by $300.0 million to repayfor the outstandingrepayment of borrowings under the MTCH Credit Facility,Facility; purchases of treasury stock of Former Match Group of $175.7 million; $167.2 million and $30.0 million for withholding taxes paid on behalf of MTCH and ANGI employees respectively, for stock-based awards that were net settled $175.7 million for the repurchaseequity awards of 2.5 million shares of MTCH common stock, on a settlement date basis, at an average price of $69.51 per share,Former Match Group; and $136.9 million used to pay the net premium on the exchangeable note2026 and 2030 Exchangeable Notes hedge and warrant transactions, $88.3 million for withholding taxes paid on behalf of IAC employees for stock-based awards that were net settled, $35.0 million for repurchases of IAC debt, $34.0 million for the repurchase of 4.1 million shares of ANGI common stock, on a settlement date basis, at an average price of $8.23 per share, $27.8 million of debt issuance costs, $10.3 million in principal payments on ANGI debt, and $6.2 million for the purchase of noncontrolling interest.

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2018
Adjustments to earnings primarily consist of $172.0 million of stock-based compensation expense, $60.3 million of amortization of intangibles, $57.0 million of depreciation and $35.5 million of bad debt expense, partially offset by $126.4 million of net unrealized gains on certain equity securities, $36.9 million of deferred income taxes and $27.2 million of gains from the sale of investments. The deferred income tax benefit primarily relates to the net operating loss created by the exercise and vesting of stock-based awards, partially offset by the deferred income tax provision on the net unrealized gains on certain equity securities. The decrease from changes in working capital primarily consists of an increase in accounts receivable of $78.7 million, an increase in other assets of $48.9 million, partially offset by increases in accounts payable and other liabilities of $57.9 million and deferred revenue of $52.2 million. The increase in accounts receivable is primarily due to revenue growth at ANGI, MTCH and Ask Media Group. The increase in other assets is primarily related to increases in prepaid hosting services and capitalized mobile app store fees at MTCH and increases in capitalized sales commissions and prepaid marketing at ANGI. The increase in accounts payable and other liabilities is primarily due to increases in (i) accrued compensation costs, (ii) payables and accruals at Ask Media Group due to growth in paid traffic primarily in international markets, (iii) accrued interest primarily related to the MTCH Senior Notes due to the timing of interest payments and (iv) accrued advertising driven by MTCH and ANGI. The increase in deferred revenue is due primarily to growth in subscription sales at MTCH and Vimeo.
Net cash used in investing activities includes purchases (net of maturities) of marketable debt securities of $201.9 million, capital expenditures of $60.1 million, primarily related to investments in the development of capitalized software at ANGI and MTCH to support their products and services and computer hardware, and cash used for investments and acquisitions of $49.8 million, partially offset by net proceeds from the sale of investments of $28.6 million and $10.4 million in net proceeds from the sale of Angie's List's campus located in Indianapolis.
Net cash used in financing activities includes $181.8 million and $27.2 million for withholding taxes paid on behalf of MTCH and ANGI employees, respectively, for stock-based awards that were net settled, $86.2 million for the repurchase of 2.0 million shares of MTCH common stock, on a settlement date basis, at an average price of $42.85 per share, $82.9 million for the repurchase of 0.5 million shares of IAC common stock, on a settlement date basis, at an average price of $152.23 per share, and $10.3 million in principal payments on ANGI debt, partially offset by $38.9 million in proceeds from the exercise of IAC stock options.transactions.
Liquidity and Capital Resources
The Company'sCompany’s principal sources of liquidity are its cash and cash equivalents and marketable securities,as well as cash flows generated from operations andoperations. As of September 30, 2020, $749.8 million was available borrowings under the IAC Credit Facility. IAC's consolidated cash and cash equivalents and marketable securities at September 30, 2019 were $3.1 billion, of which $402.9 million was held by ANGI and $366.4 million was held by MTCH. The Company generated $688.8 million of operating cash flows for the nine months ended September 30, 2019, of which $472.9 million was generated by MTCH and $182.1 million was generated by ANGI. Each of MTCH and ANGI is a separate and distinct legal entity with its own public shareholders and board of directors and has no obligation to provide the Company with funds. As a result, the Company cannot freely access the cash of MTCH and ANGI and their respective subsidiaries. In addition, certain agreements governing MTCH and ANGI indebtedness limit the payment of dividends or distributions and loans or advances to stockholders, including the Company, in the event a default has occurred or in the case of MTCH, its secured net leverage ratio (as defined in the MTCH Term Loan) exceeds 2.0 to 1.0 or its consolidated leverage ratio (as defined in certain MTCH indentures) exceeds 5.0 to 1.0, and in the case of ANGI, its consolidated net leverage ratio (as defined in the ANGI Term Loan) exceeds 4.5 to 1.0. There were no such limitations at September 30, 2019.
There were no outstanding borrowings under the IAC, MTCH and ANGI credit facilities at September 30, 2019.Facility that expires on February 13, 2025.
The Company anticipates that it will need to make capital and other expenditures in connection with the development and expansion of its operations. The Company'sCompany expects that 2020 capital expenditures will be between approximately $50 million and $55 million, an increase compared to 2019 capital expenditures, are expected to be higher than 2018 capital expenditures
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Table of $85.6 million by approximately 65% to 70%, driven by higher capital expenditures at ANGI and MTCHContents


primarily related to the development ofbuilding improvements as Tinder expands office space and additional capitalized software to support their products and services and leasehold improvements, including the expansion of office space at Tinder, and higher capital expenditures at Corporate. During 2019, the Company will make payments totaling approximately $23.0 million to purchase a 50% ownership interest in an aircraft, of which $13.5 million was made in April of 2019. A balance of approximately $13.5 million is due upon delivery of the new aircraft, which is expected to occur in late 2020 or early 2021.
At September 30, 2019, IAC has 8.0 million shares remaining in its share repurchase authorization.

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On August 30, 2019, the Board of Directors of MTCH authorized MTCH to repurchase an additional 10 million shares of its common stock; this authorization was in addition to the 1.3 million remaining under a previous authorization. During the nine months ended September 30, 2019, MTCH repurchased 2.7 million shares, on a trade date basis, of its common stock at an average price of $69.63 per share, or $186.5 million in aggregate. From October 1, 2019 through November 1, 2019, MTCH repurchased an additional 0.3 million shares at an average price of $73.64 per share, or $24.4 million in aggregate. MTCH has 9.9 million shares remaining in its share repurchase authorization.
On February 6, 2019, the Board of Directors of ANGI authorized ANGI to repurchase up to 15 million shares of its common stock. During the nine months ended September 30, 2019, ANGI repurchased 4.2 million shares, on a trade date basis, of its common stock at an average price of $8.22 per share, or $34.2 million in aggregate. From October 1, 2019 through November 1, 2019, ANGI repurchased an additional 1.1 million shares at an average price of $6.85 per share, or $7.4 million in aggregate. ANGI has 9.8 million shares remaining in its share repurchase authorization.
IAC, MTCH and ANGI may purchase shares over an indefinite period of time on the open market and in privately negotiated transactions, depending on those factors management deems relevant at any particular time, including, without limitation, market conditions, share price and future outlook.
The Company has granted stock settled stock appreciation rights denominated in the equity of certain non-publicly traded subsidiaries to employees and management of those subsidiaries. These equity awards are settled on a net basis, with the award holder entitled to receive a payment in IAC shares equal to the intrinsic value of the award at exercise less an amount equal to the required cash tax withholding payment which, for purposes of this paragraph is assumed at a 50% withholding rate. The number of IAC common shares that would be required to net settle these vested and unvested interests at current estimated fair values, other than for MTCH, ANGI and their subsidiaries, at November 1, 2019, is 0.1 million shares. In addition, withholding taxes, which will be paid by the Company on behalf of the employees upon exercise, would have been $15.7 million at November 1, 2019. The number of IAC common shares ultimately needed to settle these awards may vary significantly as a result of both movements in the Company's stock price and the determination of fair value of the relevant subsidiary that is different than the Company's estimate. The Company's RSUs are awards in the form of phantom shares or units denominated in a hypothetical equivalent number of shares of IAC common stock. These equity awards are settled on a net basis. The number of IAC common shares that would be required to net settle these awards at November 1, 2019 is 0.1 million shares. In addition, withholding taxes, which will be paid by the Company on behalf of the employees upon vest, would have been $12.8 million at November 1, 2019.
The Company currently settles all stock options on a net basis. Assuming all stock options outstanding on November 1, 2019, were net settled on that date, the Company would have issued 1.8 million common shares (of which 1.4 million is related to vested options and 0.4 million is related to unvested options) and would have remitted $404.2 million (of which $321.6 million is related to vested options and $82.5 million is related to unvested options) in cash for withholding taxes (in each case assuming a 50% withholding rate).
Certain equity awards issued prior to the MTCH initial public offering and the Combination to employees of MTCH and ANGI and denominated in the shares of those subsidiaries may be settled using IAC shares at the Company's election.
MTCH currently settles substantially all equity awards on a net basis. Assuming all MTCH equity awards outstanding on November 1, 2019 were net settled on that date, MTCH would have issued 7.9 million common shares (of which 1.9 million is related to vested shares and 5.9 million is related to unvested shares) and would have remitted $575.3 million (of which $141.9 million is related to vested shares and $433.5 million is related to unvested shares) in cash for withholding taxes (in each case assuming a 50% withholding rate). Certain MTCH stock options ("Tandem Awards") can be settled in MTCH or IAC common stock at the Company's election. Assuming all vested and unvested Tandem Awards outstanding on November 1, 2019 were exercised on that date and settled using IAC stock, 0.3 million IAC common shares would have been issued in settlement and MTCH would have issued 1.0 million shares, which is included in the amount above, to IAC as reimbursement.
ANGI currently settles all equity awards on a net basis. In connection with the Combination, previously issued stock appreciation rights related to the common stock of HomeAdvisor (US) were converted into ANGI stock appreciation rights that are settleable, at ANGI's option, on a net basis with ANGI remitting withholding taxes on behalf of the employee or on a gross basis with ANGI issuing a sufficient number of Class A shares to cover the withholding taxes. In addition, at IAC's option, these awards can be settled in either Class A shares of ANGI or shares of IAC common stock. If settled in IAC common stock, ANGI reimburses IAC in either cash or through the issuance of Class A shares to IAC. Assuming all of the stock appreciation rights outstanding on November 1, 2019 were net settled on that date using IAC stock, 0.2 million IAC common shares would have been issued in settlement, IAC would have been issued 6.2 million shares of ANGI Class A stock and ANGI would have remitted $43.7 million in cash for withholding taxes (assuming a 50% withholding rate). ANGI's cash withholding obligation

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on all other ANGI net settled awards, including stock options, RSUs and subsidiary denominated equity, outstanding on November 1, 2019 is $21.7 million (assuming a 50% withholding rate), which is the equivalent of 3.1 million shares.cost.
As of September 30, 2019, IAC's economic and voting interest in MTCH is 80.8% and 97.5%, respectively, and in ANGI is 83.7% and 98.1%, respectively. As described above, certain MTCH and ANGI equity awards can be settled either in IAC common shares or the common shares of these subsidiaries at IAC's election. The Company currently expects to settle a sufficient number of awards in IAC shares to maintain an economic interest in both MTCH and ANGI of at least 80% and to otherwise take such other steps as necessary to maintain an economic interest in each of MTCH and ANGI of at least 80%.
The Company does not expect to be a full U.S. federal cash income taxpayer until 2022. The ultimate timing is dependent upon a number of factors, including the performance of the Company, other components of pre-tax income (including realized gains and losses), the amount and timing of tax deductions related to stock-based awards and the impacts of the Separation.
At September 30, 2019,2020, all of the Company’s international cash can be repatriated without significant tax consequences.
The Company believes its existing cash, cash equivalents, marketable securities, available borrowings under the IAC Credit Facility and expected positive cash flows generated from operations will be sufficient to fund its normal operating requirements, including capital expenditures, debt service, the payment of withholding taxes paid on behalf of employees for net-settled stock-based awards, and investing and other commitments for the foreseeable future. The Company's liquidity could be negatively affected by a decrease in demand for its products and services. The Company’sOur indebtedness could limit itsour ability to: (i) obtain additional financing to fund working capital needs, acquisitions, capital expenditures, debt service or other requirements; and (ii) use operating cash flow to makepursue acquisitions or capital expenditures, or invest in other areas, such as developing properties and exploiting business opportunities. The Company may need to raise additional capital through future debt or equity financing to make additional acquisitions and investments or to provide for greater financial flexibility. Additional financing may not be available on terms favorable to the Company or at all.

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CONTRACTUAL OBLIGATIONS AND COMMERCIAL COMMITMENTS
Payments Due by Period Payments Due by Period
Contractual Obligations(a)
Less Than
1 Year
 
1–3
Years
 
3–5
Years
 
More Than
5 Years
 Total
Contractual Obligations(a)
Less Than
1 Year		1–3
Years		3–5
Years		More Than
5 Years		Total
(In thousands)
(In thousands)
Long-term debt(b)
$129,874
 $271,099
 $1,727,153
 $2,190,656
 $4,318,782
Long-term debt(b)
$114,928 $746,327 $222,058 $3,742,296 $4,825,609 
Operating leases(c)
44,765
 79,896
 57,243
 232,989
 414,893
Operating leases(c)
14,353 21,415 14,307 46,565 96,640 
Purchase obligations(d)
24,656
 —
 —
 —
 24,656
Purchase obligation(d)
Purchase obligation(d)
50,000 50,000 — — 100,000 
Total contractual obligations$199,295
 $350,995
 $1,784,396
 $2,423,645
 $4,758,331
Total contractual obligations$179,281 $817,742 $236,365 $3,788,861 $5,022,249 

(a)
(a)The Company has excluded $37.6 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 2—Income Taxes” to the consolidated financial statements included in “Item 1—Consolidated Financial Statements.”
(b)
The Company has excluded $63.5 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 3—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 September 30, 2019 consists of $2.9 billion bearing interest at fixed rates and $675.9 million bearing interest at variable rates. The variable rate instruments consist of a $425.0 million MTCH Term Loan and a $250.9 million ANGI Term Loan. The MTCH Term Loan bears interest at LIBOR plus 2.50%, or 4.66%, at September 30, 2019. The ANGI Term Loan bears interest at LIBOR plus 1.50%, or 3.53% at September 30, 2019. The amount of interest ultimately paid on the MTCH and ANGI term loans may differ based on changes in interest rates. For additional information on long-term debt arrangements, see "Note 5—Long-term Debt" to the consolidated financial statements included in "Item 1—Consolidated Financial Statements."
(c)
The Company leases land, office space, data center facilities and equipment used in connection with operations under various operating leases, the majority of which contain escalation clauses. Operating leases obligations include legally binding minimum lease payments for leases signed but not yet commenced. 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 2—Leases" to the consolidated financial statements included in "Item 1—Consolidated Financial Statements."
(d)
The purchase obligations principally include web hosting commitments.
Other Commercial Commitments
At September 30, 2019, there have been no material2020 consisted of the 5.00%, 5.625%, 4.125%, and 4.625% Senior Notes of $450 million, $350 million, $500 million, and $500 million, respectively, which bear interest at fixed rates; the 2022, 2026, and 2030 Exchangeable Notes of $518 million, $550 million, and $550 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 1.75%, or 2.00% at September 30, 2020. The amount of interest ultimately paid on the Term Loan may differ based on changes in the interest rate and outstanding balance. For additional information on long-term debt, see “Note 5—Long-term Debt, net” to the Company's commercial commitments sinceconsolidated 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 disclosurerelated operating expenses under certain lease agreements. These operating expenses are not included in our Annual Report on Form 10-K for the year ended December 31, 2018.table above.
Off-Balance Sheet Arrangements(d)The purchase obligations consist primarily of a web hosting commitment.
Other than the items described above, the Company does not have any off-balance sheet arrangementsWe also had $0.2 million of letters of credit and surety bonds outstanding as of September 30, 2019.


2020 that could potentially require performance by the Company in the event of demands by third parties or certain contingent events.
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Item 3.    Quantitative and Qualitative Disclosures about Market Risk
During the three and nine months ended September 30, 2019, the Company'sInterest Rate Risk
The Company’s exposure to market risk for changes in interest rates relating to long-term debt, including current maturities, has changed since the disclosure in our Annual Report on Form 10-K for the year ended December 31, 2018, for:
the redemption, on August 23, 2019, of all of the Company's outstanding 4.75% Senior Notes of $34.5 million, which was prior to their maturity date of December 15, 2022;

IAC FinanceCo 2, Inc.’s issuance during the second quarter of 2019, of $575.0 million aggregate principal amount of its 0.875% Exchangeable Senior Notes due June 15, 2026 and IAC FinanceCo 3, Inc.’s issuance during the second quarter of 2019, of $575.0 million aggregate principal amount of its 2.00% Exchangeable Senior Notes due January 15, 2030 (together with the 2022 Exchangeable Notes the "Exchangeable Notes"); and

MTCH's issuance, on February 15, 2019, of $350 million aggregate principal amount of its 5.625% Senior Notes due February 15, 2029; a portion of the proceeds were used to repay outstanding borrowings under the MTCH Credit Facility.
The Company's outstanding debt is described in "Note 5—Long-term Debt"relates primarily to the consolidated financial statements included in "Item 1—Consolidated Financial Statements."
Market Risk
The Company carries the Exchangeable Notes at face value less unamortized original issue discount on the consolidated balance sheet included in "Item 1—Consolidated Financial Statements." Since the Exchangeable Notes bear interest at fixed rates, the Company has no financial statement risk associated with changes in interest rates. However, the fair value of the Exchangeable Notes change when the market price of our common stock fluctuates or interest rates change.
Interest Rate RiskCompany’s long-term debt.
At September 30, 2019,2020, the Company'sCompany’s outstanding long-term debt was $3.5$3.9 billion, of which $2.9$3.5 billion bears interest at fixed rates. If market rates decline, the Company runs the risk that the related required payments on the fixed rate debt will exceed those based on market rates. A 100-basis point increase or decrease in the level of interest rates would, respectively, decrease or increase the fair value of the fixed-rate debt by $130.4$192.2 million. Such potential increase or decrease in fair value is based on certain simplifying assumptions, including a constant level and rate of fixed-rate debt for all maturities and an immediate across-the-board increase or decrease in the level of interest rates with no other subsequent changes for the remainder of the period. The $425.0$425 million MTCH Term Loan and the $250.9 million outstanding balance on the ANGI Term Loan bear interest at variable rates. The MTCH Term Loan bears interest at a variable rate, of LIBOR plus 2.50%1.75%. As of September 30, 2019,2020, the rate in effect was 4.66%2.00%. If LIBOR were to increase or decrease by 100 basis points, then the annual interest expense and payments on the MTCH Term Loan would increase or decrease by $4.3 million. The ANGImillion, based upon the outstanding balance at September 30, 2020.
On February 13, 2020, the Credit Facility and the Term Loan bears interestwere amended, among other things, to provide for a benchmark replacement should the LIBOR rate not be available in the future. The rate used would be agreed to between the administrative agent and Match Group and may be based upon a secured overnight financing rate at LIBOR plus 1.50%.the Federal Reserve Bank of New York. Additional information about the benchmark replacement can be found in the latest amendment of the Credit Agreement.
Foreign Currency Exchange Risk
The Company conducts business in certain foreign markets, primarily in the European Union, and is exposed to foreign exchange risk for both the Euro and GBP.
We have exposure to foreign currency exchange risk related to transactions carried out in a currency other than the U.S. dollar, and investments in foreign subsidiaries with a functional currency other than the U.S. dollar. As foreign currency exchange rates change, translation of the statements of operations of our international businesses into U.S. dollars affects year-over-year comparability of operating results. For the three and nine months ended September 30, 2020, the impact on revenue for all foreign currencies was favorable by $3.1 million and unfavorable by $16.4 million, respectively. The three month period ended September 30, 2020 was favorable compared to the comparable prior year period due to due to the strength of foreign currencies compared to the U.S. Dollar, while the nine month period ended September 30, 2020 was unfavorably impacted compared to the comparable prior year period due to the strength of the U.S. Dollar compared to the Euro and certain other currencies. For a reconciliation of Revenue excluding foreign exchange effects, see “Principles of Financial Reporting.”
Foreign currency exchange (losses) or gains included in the Company’s earnings for the three and nine months ended September 30, 2020 were $(1.3) million and $1.4 million, respectively. Foreign currency exchange gains for the three and nine months ended September 30, 2019 were $1.8 million and $1.9 million, respectively. Historically foreign currency exchange gains and losses have not been material to the Company and the Company has not hedged foreign currency exposures. Our continued international expansion increases our exposure to exchange rate in effect was approximately 3.53%. If LIBOR were to increase or decrease by 100 basis points, then the annual interest expensefluctuations and as a result such fluctuations could have a significant impact on the ANGI Term Loan would increase or decrease by $2.5 million.

our future results of operations.
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Item 4.    Controls and Procedures
The Company monitors and evaluates on an ongoing basis its disclosure controls and procedures and internal control over financial reporting in order to improve their overall effectiveness. In the course of these evaluations, the Company modifies and refines its internal processes as conditions warrant.
As required by Rule 13a-15(b) under the Securities Exchange Act of 1934, as amended (the "Exchange Act"“Exchange Act”), IACMatch Group management, including our principal executive and principal financial officers, or persons performing similar functions, evaluated the effectiveness of the Company'sCompany’s disclosure controls and procedures, as defined by Rule 13a-15(e) under the Exchange Act. Based on this evaluation, management has concluded that the Company'sCompany’s disclosure controls and procedures were effective as of the end of the period covered by this report in providing reasonable assurance that information we are required to disclose in our filings with the Securities and Exchange Commission under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Commission's rules and forms, and includeincludes controls and procedures designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure.
There were no changes to the Company'sCompany’s internal control over financial reporting during the period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II
OTHER INFORMATION
Item 1. Legal Proceedings
Overview
InWe are, and from time to time may become, involved in various legal proceedings arising in the ordinarynormal course of our business the Companyactivities, such as patent infringement claims, trademark oppositions, and its subsidiaries are (or may become) parties to litigation involving property, personal injury, contract, intellectual property and other claims,consumer or advertising complaints, as well as stockholder derivative actions, class action lawsuits, and other matters. The amounts that may be recovered in such matters may be subject to insurance coverage. The litigation matters described below involve issues or claims that may be of particular interest to our stockholders, regardless of whether any of these matters may be material to our financial position or operations based upon the standard set forth in the rulesSEC’s rules.
Pursuant to the Transaction Agreement, we have agreed to indemnify IAC for matters relating to any business of Former Match Group, including indemnifying IAC for costs related to the matter described below other than the matter described under the heading “Newman Derivative and Stockholder Class Action Regarding Separation Transaction”.
Note that the official names of legal proceedings in the descriptions below (shown in italics) reflect the original names of the Securitiesparties when the proceedings were filed as opposed to the current names of the parties post the separation of Match Group and Exchange Commission.IAC.
Consumer Class Action Litigation Challenging Tinder’s Age‑TieredAge-Tiered Pricing
ThisOn May 28, 2015, a putative state-wide class action was filed against Tinder and pending in state court in California is described in detail on pages 28-29 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2018, page 57 of our Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2019California. See and page 74 of our Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2019. See Allan Candelore v. Tinder, Inc., No. BC583162 (Superior Court of California, County of Los Angeles). The lawsuitcomplaint principally allegesalleged that Tinder violated California’s Unruh Civil Rights Act (the “Unruh Act”) by offering and charging users age 30 and over a higher price than younger users for subscriptions to its premium Tinder Plus serviceservice. The complaint sought certification of a class of California Tinder Plus subscribers age 30 and seeksover and damages in an unspecified amount. There have been noOn September 21, 2015, Tinder filed a demurrer seeking dismissal of the complaint. On October 26, 2015, the court issued an opinion sustaining Tinder’s demurrer to the complaint without leave to amend, ruling that the age-based pricing differential for Tinder Plus subscriptions did not violate California law in essence because offering a discount to users under age 30 was neither invidious nor unreasonable in light of that age group’s generally more limited financial means. On December 29, 2015, in accordance with its ruling, the court entered judgment dismissing the action. On February 1, 2016, the plaintiff filed a notice of appeal from the judgment, and the parties thereafter briefed the appeal. On January 29, 2018, the California Court of Appeal (Second Appellate District, Division Three) issued an opinion reversing the judgment of dismissal, ruling that the lower court had erred in sustaining Tinder’s demurrer because the complaint, as pleaded, stated a cognizable claim for violation of the Unruh Act. Because we believe that the appellate court’s reasoning was flawed as a matter of law and runs afoul of binding California precedent, on March 12, 2018, Tinder filed a petition with the California Supreme Court seeking interlocutory review of the Court of Appeal’s decision. On May 9, 2018, the California Supreme Court denied the petition. The case was then returned to the trial court for further proceedings.
In a related development, on June 19, 2019, in a substantially similar putative class action asserting the same substantive claims and pending in federal district court in California, the court issued an order granting final approval of a class-wide settlement, the terms of which are not material or otherwise noteworthy developmentsto the Company. See Lisa Kim v. Tinder, Inc., No. 18-cv-3093 (U.S. District Court, Central District of California). On June 21, 2019, the Kim court entered judgment in this case sinceaccordance with its prior order. Because the filingapproved settlement class in Kim subsumes the proposed settlement class in Candelore, the judgment in Kim would effectively render Candelore a single-plaintiff lawsuit. Accordingly, on July 11, 2019, two objectors to the Kim settlement, represented by the plaintiff’s counsel in Candelore, filed a notice of our Quarterly Report on Form 10-Qappeal from the Kim judgment to the U.S. Court of Appeals for the fiscal quarter ended June 30, 2019. IACNinth Circuit, which is fully briefed and Match Groupawaiting a hearing for oral argument.
On September 13, 2019, Tinder filed a motion to stay the Candelore case pending the Ninth Circuit’s decision on the appeal of the court-approved settlement in the Kim case. On November 13, 2019, the court issued an order staying the class claims in the Candelore case pending the Ninth Circuit’s decision on the Kim
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appeal. We believe that the allegations in thisthe Candelore lawsuit are without merit and will continue to defend vigorously against them.it.
Tinder Optionholder Litigation against IACAgainst Former Match Group and Match Group
On August 14, 2018, ten then-current and former employees of Match Group, LLC or Tinder, Inc. ("Tinder"(“Tinder”), an operating business of Former Match Group, filed a lawsuit in New York state court against IACFormer Match Group 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 Former Match Group, thereby depriving certain of the plaintiffs of their contractual right to later valuations of Tinder on a stand‑alonestand-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 Former 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. On August 31, 2018, four plaintiffs who were still employed by Former Match Group filed a notice of discontinuance of their claims without prejudice, leaving the six former employees as the remaining plaintiffs. On July 13, 2020, the four former plaintiffs filed arbitration demands asserting the same valuation claims and on September 3, 2020, the four arbitrations were consolidated. On August 14, 2020, the defendants filed a motion to stay the trial in the New York case until the related arbitrations have been decided, which motion has been fully briefed.
On October 9, 2018, the defendants filed a motion to dismiss the complaint on various grounds, including that the 2017 valuation of Tinder by the investment banks was an expert determination any challenge to which is both time‑barredtime-barred under applicable law and available only on narrow substantive grounds that the plaintiffs have not pleaded in their complaint; the plaintiffs opposed the motion. On June 13, 2019, the court issued a decision and order:order (i) granting the motion to dismiss the claims for breach of the implied covenant of good faith and fair dealing and for unjust enrichment, (ii) granting the motion to dismiss the merger-related claim for breach of contract as to two of the remaining six plaintiffs, and (iii) otherwise denying the motion to dismiss. On June 21, 2019, the defendants filed a notice of appeal from the trial court’s partial denial of their motion to dismiss, and the parties thereafter briefed the appeal. On October 29, 2019, the Appellate Division, First Department, issued an order affirming the lower court’s decision. On November 22, 2019, the defendants filed a motion for reargument or, in the alternative, leave to appeal the Appellate Division’s order to the New York Court of Appeals; the plaintiffs opposed the motion. On May 21, 2020, the Appellate Division, First Department, granted the motion for reargument, and upon reargument, substituted a new order which also affirmed the lower court’s decision. On June 5, 2020, the defendants filed a motion for leave to appeal to the Court of Appeals. On July 24, 2020, the Appellate Division, First Department, denied the motion for leave to appeal to the Court of Appeals.
On June 3, 2019, the defendants filed a second motion to dismiss or for other relief based upon certain provisions of the plaintiffs’ agreement with a litigation funding firm; the plaintiffs have opposed the motion, which remains pending. On July 15, 2019, the defendants filed an answer denying the material allegations of the complaint, as well as counterclaims against Sean Rad for breach of contract and unjust enrichment based upon his alleged misappropriation of confidential company information. On September 13, 2019, the defendants filed an amended answer and counterclaims, adding claims based on Rad'sRad’s alleged unauthorized recording of conversations with company employees. On November 21, 2019, the defendants filed a second amended answer and counterclaims, adding claims based on Rad’s alleged unauthorized destruction of company information and breach of his non-solicitation obligations. On the same day, Rad filed a revised consolidated motion to dismiss. On June 1, 2020, the court issued its decision, dismissing the request for damages, a claim for breach of contract occurring after Rad’s termination, and an unjust enrichment claim, but denying dismissal as to all other claims.
Document discovery in the case is nearing completion;substantially complete; deposition discovery is in abeyance pursuantresumed after a temporary pause due to the court’s suggestion thatCOVID-19 pandemic. On January 30, 2020, the parties pursueparticipated in a mediation that did not result in resolution of their dispute. IAC

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and Match Groupthe matter. We believe that the allegations against IACFormer Match Group and Match Group in this lawsuit are without merit and will continue to defend vigorously against it. On September 20, 2020,
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Justice Joel M. Cohen was appointed to the New York case to fill the vacancy created when Justice Saliann Scarpula was appointed to the Appellate Division, First Department.
FTC Investigation of Certain Match.com Business PracticesLawsuit Against Former Match Group
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. The FTC raised potential claims relating to Match.com’s marketing, chargeback, and online cancellation practices. In November 2018, the FTC proposed to resolve its potential claims via a consent judgment requiring certain changes in those practices, as well as a $60 million payment. Ensuing discussions between Match Groupthe Company and the FTC ended without resolution.
On August 7, 2019, the FTC voted to assert claims against Match Groupthe Company and referred the matter to the U.S. Department of Justice (“DOJ”). The DOJ subsequently declined to pursue a civil case against Match Groupthe Company and referred the matter back to the FTC.
On September 25, 2019, the FTC filed a lawsuit in the Northern District of Texas against Former Match Group. See FTC v. Match Group, Inc., No. 3:19:cv-02281-K (N.D. Tex.). The complaint alleges that, prior to mid-2018, for marketing purposes Match.com told non-paying users that other users were trying to communicate with them, even though Match.com had identified those subscriber accounts as potentially fraudulent, thereby inducing non-paying users to subscribe and exposing them to the risk of fraud should they subscribe. The complaint also challenges the adequacy of Match.com’s disclosure of the terms of its six-month guarantee, the efficacy of its cancellation process, and its handling of chargeback disputes. The complaint seeks among other things permanent injunctive relief, civil penalties, restitution, disgorgement, and costs of suit. On October 17, 2019, Match Groupthe Company filed a motion to dismiss the complaint. The FTC filed its opposition toopposed the motion. On April 22, 2020, the court stayed the case pending a ruling on the motion to dismiss, which remains pending. On July 17, 2020, the Company filed a motion for leave to request a stay until the United States Supreme Court issues a decision in Fed. Trade Comm’n v. Credit Bureau Ctr., in which it granted certiorari on November 5, 2019. Match Group's reply is due November 19, 2019.July 9, 2020. The Company filed a motion to stay, which was fully briefed on September 29, 2020. The court granted the motion on October 9, 2020.
On September 26, 2019, Match Groupthe Company received a grand-jury subpoena from the DOJ for documents relating to certain of the marketing-related claims in the FTC’s complaint. The Company has cooperated with the DOJ in responding to its subpoena. On September 2, 2020, the DOJ informed the Company that it was releasing it from the subpoena and that it was no longer conducting an investigation into any areas or practices covered by the subpoena.
IAC and Match GroupWe believe that the FTC’s claims regarding Match.com’s practices, policies, and procedures are without merit and will defend vigorously against them.
Securities Class Action Lawsuit Against Former Match Group intends
On October 3, 2019, a Former Match Group shareholder filed a securities class action lawsuit in federal court in Texas against Former Match Group, its CEO, and its CFO, on behalf of a class of acquirers of Former Match Group securities between August 6, 2019 and September 25, 2019. SeePhillip R. Crutchfield v. Match Group, Inc., Amanda W. Ginsberg, and Gary Swidler, No. 3:19-cv-02356-C (Northern District of Texas, Dallas Division). Invoking the allegations in the FTC lawsuit described above, the complaint alleges (i) that Defendants failed to cooperatedisclose to investors that Former Match Group induced customers to buy and upgrade subscriptions using misleading advertisements, that Former Match Group made it difficult for customers to cancel their subscriptions, and that, as a result, Former Match Group was likely to be subject to regulatory scrutiny; (ii) that Former Match Group lacked adequate disclosure controls and procedures; and (iii) that, as a result of the foregoing, Defendants’ positive statements about Former Match Group’s business, operations, and prospects, were materially misleading and/or lacked a reasonable basis. On January 6, 2020, the court approved a stipulation appointing two lead plaintiffs as well as co-lead counsel. On April 14, 2020, Plaintiffs filed their amended complaint. Former Match Group filed a motion to dismiss on June 12, 2020. Plaintiff’s response was filed on August 26, 2020, and Former Match Group filed its reply on September 25, 2020. We believe that the allegations in this lawsuit are without merit and will defend vigorously against them.
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Derivative Complaint against Former Match Group
On February 28, 2020, a Former Match Group shareholder filed a shareholder derivative complaint in federal court in Delaware against Former Match Group and its board of directors seeking to recover unspecified monetary damages on behalf of the Company, as well seeking to require the Company to implement and maintain unspecified internal controls and corporate governance practices and procedures. See Michael Rubin et al. v. Match Group, Inc. et al., Case No. 1:20-cv-00299 (District of Delaware). Invoking the allegations of the FTC lawsuit and Crutchfield securities class action lawsuit described above, the complaint alleges that the defendants caused or failed to prevent the alleged issues giving rise to the FTC complaint, received or approved compensation tied to the alleged wrongful conduct and sold Former Match Group stock with inside knowledge of the purported conduct. The parties filed a proposed stipulation and order staying the case until the motion to dismiss is decided in the Crutchfield litigation. The court granted the stay on April 9, 2020.
House Oversight Committee Investigation of Online Dating
On January 30, 2020, Former Match Group received a letter from the House of Representatives’ Subcommittee on Economic and Consumer Policy (the “Oversight Committee”) regarding its inquiry into underage use of online dating services and efforts by those services to remove registered sex offenders from their platforms. The Oversight Committee is also inquiring under what circumstances online dating services share or sell sensitive user information with third parties. The Oversight Committee has requested documents and information related to its inquiry. The Company is cooperating with the DOJinvestigation.
Irish Data Protection Commission Inquiry Regarding Tinder’s Practices
On February 3, 2020, we received a letter from the Irish Data Protection Commission (the “DPC”) notifying us that the DPC has commenced an inquiry examining Tinder’s compliance with the EU’s General Data Protection Regulation, focusing on Tinder’s processes for handling access and deletion requests and Tinder’s user data retention policies. We are fully cooperating with the DPC in respondingconnection with this inquiry.
Newman Derivative and Stockholder Class Action Regarding Separation Transaction
On June 24, 2020, a Former Match Group shareholder filed a complaint in Delaware Court of Chancery against Former Match Group and its board of directors, as well as Match Group, IAC Holdings, Inc., and Barry Diller seeking to recover unspecified monetary damages on behalf of the Company and directly as a result of his ownership of Former Match Group stock in relation to the separation of Former Match Group from its subpoena.former majority shareholder, Match Group. See David Newman et al. v. IAC/Interactive Corp. et al., C.A. No. 2020-0505-MTZ (Delaware Court of Chancery). The complaint alleges that that the special committee established by Former Match Group’s board of directors to negotiate with Match Group regarding the separation transaction was not sufficiently independent of control from Match Group and Mr. Diller and that Former Match Group board members failed to adequately protect Former Match Group’s interest in negotiating the separation transaction, which resulted in a transaction that was unfair to Former Match Group and its shareholders. The Defendants’ filed their motions to dismiss on September 24, 2020. Plaintiff’s answering brief is due on November 17, 2020. We believe that the allegations in this lawsuit are without merit and will defend vigorously against it.
Item 1A. Risk Factors
Cautionary Statement Regarding Forward-Looking Information
This quarterly report on Form 10-Q contains "forward-looking statements"“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"“anticipates,” “estimates,” “expects,” “plans,” and "believes,"“believes,” among others, generally identify forward-looking statements. These forward-looking statements include, among others, statements relating to: IAC'sMatch Group’s future financial performance, IAC'sMatch Group’s business prospects and strategy, includinganticipated trends, the possibilityeffects of separatingthe separation of Match Group from IAC, IAC’s intentions with respect to its investment in ANGI Homeservices, anticipated trends and prospects in the industries in which IAC's businesses operate and other similar matters. These forward-looking statements are based on IAC management'sMatch Group management’s current expectations and assumptions about future events as of the date of this quarterly report, 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
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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, the impact of the outbreak of COVID-19 coronavirus, and the risks inherent in separating Match Group from IAC, (includingincluding uncertainties related to, among other things, whether any agreement will be reached to proceed with a transaction, whether IAC will determine to proceed with any such transaction if an agreement can be reached, the final terms and conditions of any such transaction if such an agreement is reached, the costs and expected benefits of the proposed transaction, the expected timingany litigation arising out of the transaction, whether any conditionsor relating to the transaction, can be satisfied, the expected tax treatment of the transaction, and the impact of the transaction on the businesses of IAC and Match Group), any change in our intention with respect to our investment in ANGI Homeservices, our continued ability to successfully market, distribute and monetize our products and services through search engines, social media platforms and digital app stores, the failure or delay of the markets and industries in which our businesses operate to migrate online, our ability to build, maintain and/or enhance our various brands, our ability to develop and monetize versions of our products and services for mobile and other digital devices, adverse economic events or trends, either generally and/or in any of the markets in which our businesses operate, our continued ability to communicate with users and consumers via e-mail (or sufficient means), our ability to successfully offset increasing digital app store fees, our ability to establish and maintainGroup.

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relationships with quality service professionals, changes in our relationship with (or policies implemented by) Google, foreign exchange currency rate fluctuations, our ability to protect our systems from cyberattacks and to protect personal and confidential user information, the occurrence of data security breaches, fraud and/or additional regulation involving or impacting credit card payments, the integrity, quality, scalability and redundancy of our systems, technology and infrastructure (and those of third parties with whom we do business), changes in key personnel, our ability to service our outstanding indebtedness and interest rate risk, dilution with respect to our investments in Match Group and ANGI Homeservices, operational and financial risks relating to acquisitions and our continued ability to identify suitable acquisition candidates, our ability to expand successfully into international markets, regulatory changes, our ability to adequately protect our intellectual property rights and not infringe the intellectual property rights of third parties and the determination of whether to proceed with the distribution transactions referenced above and risks related thereto. Certain of these and other risks and uncertainties are discussed in IAC'sMatch Group’s filings with the SEC,Securities and Exchange Commission, including in Part I-Item 1A-Risk FactorsII “Item 1A. Risk Factors” of our Annual Reportquarterly report on Form 10-Q for the quarter ended June 30, 2020, which, because of the changes to our business resulting from the separation of Match Group from IAC, includes a full restatement of our risk factors and updates and replaces the risk factors disclosed in our annual report on Form 10-K for the fiscal year ended December 31, 2018.2019. Other unknown or unpredictable factors that could also adversely affect IAC'sMatch Group’s business, financial condition, and operating results of operations may arise from time to time. In light of these risks and uncertainties, thethese forward-looking statements discussed in this quarterly report may not prove to be accurate. Accordingly, you should not place undue reliance on these forward-looking statements, which only reflect the views of IACMatch Group management as of the date of this quarterly report. IACMatch Group does not undertake to update these forward-looking statements.
We are including the following revised risk factors, which supersede the corresponding risk factors disclosed in our quarterly report on Form 10-Q for the fiscal quarter ended June 30, 2020 and should be read in conjunction with Part II “Item 1A. Risk Factors” of such quarterly report on Form 10-Q:
As the distribution of our dating products through app stores increases, in order to maintain our profit margins, we may need to offset increasing app store fees by decreasing traditional marketing expenditures, increasing user volume or monetization per user or by engaging in other efforts to increase revenue or decrease costs generally, or our business, financial condition and results of operations could be adversely affected.
We rely on the Apple App Store and the Google Play Store to distribute our mobile applications and related in-app products. While our mobile applications are generally free to download from these stores, we offer our users the opportunity to purchase subscriptions and certain à la carte features through these applications. We determine the prices at which these subscriptions and features are sold; however, purchases of these subscriptions and features via our mobile applications are required to be processed through the in-app payment systems provided by Apple and Google. Due to these requirements, we pay Apple and Google, as applicable, a meaningful share (generally 30%) of the revenue we receive from these transactions. While we are constantly innovating on and creating our own payment systems and methods, given the ever increasing distribution of our dating products through app stores and the strict requirements to use the in-app payments systems tied into Apple’s and Google’s distribution services, we may need to offset these increased app store fees by decreasing traditional marketing expenditures as a percentage of revenue, increasing user volume or monetization per user, or by engaging in other efforts to increase revenue or decrease costs generally, or our business, financial condition and results of operations could be adversely affected. On September 28, 2020, Google announced that it would require all developers to process purchases of subscriptions and features entirely through their in-app payment system beginning on September 30, 2021. To date, Google has not enforced such a requirement, but if Google were to do so, our business, financial condition and results of operations would be adversely affected.
Our business is subject to complex and evolving U.S. and international laws and regulations. Many of these laws and regulations are subject to change and uncertain interpretation, and could result in claims, changes to our business practices, monetary penalties, increased cost of operations, or declines in user growth or engagement, or otherwise harm our business.
We are subject to a variety of laws and regulations in the United States and abroad that involve matters that are important to or may otherwise impact our business, including, among others, broadband internet access, online commerce, advertising, user privacy, data protection, intermediary liability, protection of minors, consumer protection, general safety, sex-trafficking, taxation and securities law compliance. The introduction of new products, expansion of our activities in certain jurisdictions, or other actions that we may take may subject
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us to additional laws, regulations or other government scrutiny. In addition, foreign laws and regulations can impose different obligations or be more restrictive than those in the United States.
These U.S. federal, state, and municipal and foreign laws and regulations, which in some cases can be enforced by private parties in addition to government entities, are constantly evolving and can be subject to significant change. As a result, the application, interpretation, and enforcement of these laws and regulations are often uncertain, particularly in the new and rapidly evolving industry in which we operate, and may be interpreted and applied inconsistently from state to state and country to country and inconsistently with our current policies and practices. These laws and regulations, as well as any associated inquiries or investigations or any other government actions, may be costly to comply with and may delay or impede the development of new products, require that we change or cease certain business practices, result in negative publicity, increase our operating costs, require significant management time and attention, and subject us to remedies that may harm our business, including fines or demands or orders that we modify or cease existing business practices.
Specifically, in the case of tax laws, positions that we have taken or will take are subject to interpretation by the relevant taxing authorities. While we believe that the positions we have taken to date comply with applicable law, there can be no assurances that the relevant taxing authorities will not take a contrary position, and if so, that such positions will not adversely affect us. Any events of this nature could adversely affect our business, financial condition and results of operations.
Proposed or new legislation and regulations could also adversely affect our business. For example, the Organization for Economic Co-Operation and Development (“OECD”) is revising its recommendations on how to tax international businesses, including expanding the jurisdiction of member countries to tax businesses based on some level of digital presence and subjecting these companies to a minimum tax.Also, the European Commission, as well as several countries both inside and outside the EU, have recently adopted or considered proposals that would change various aspects of the current tax framework under which we are taxed, including proposals to change or impose new types of non-income taxes, including taxes based on a percentage of revenue. One or more of these or similar proposals could adversely affect our business, financial condition and results of operations.
The promulgation of new laws or regulations, or the new interpretation of existing laws and regulations, in each case that restrict or otherwise unfavorably impact the ability or manner in which we provide our services could require us to change certain aspects of our business and operations to ensure compliance, which could decrease demand for services, reduce revenues, increase costs and subject us to additional liabilities. For example, the United Kingdom published proposed legislation, which would establish a new regulatory body to establish duties of care for internet companies and to assess compliance with these duties of care. Under the proposed law, failure to comply could result in fines, blocking of services and personal liability for senior management. In the United States, governmental authorities, elected officials, and political candidates have called for amendments to Section 230 of the Communications Decency Act that would purport to limit or remove protections afforded interactive computer service providers. Proposed legislation includes the EARN IT Act, the PACT Act, the BAD ADS Act and others.Similar proposed legislation in the EU, currently known as the Digital Services Act, also intends to limit or remove protections afforded technology platforms under the e-Commerce Directive. To the extent such new or more stringent measures are required to be implemented, or existing protections are limited or removed, our business, financial condition and results of operations could be adversely affected.
The adoption of any laws or regulations that adversely affect the popularity or growth in use of the internet or our services, including laws or regulations that undermine open and neutrally administered internet access, could decrease user demand for our service offerings and increase our cost of doing business. For example, in December 2017, the Federal Communications Commission adopted an order reversing net neutrality protections in the United States, including the repeal of specific rules against blocking, throttling or “paid prioritization” of content or services by internet service providers. To the extent internet service providers engage in such blocking, throttling, “paid prioritization” of content or similar actions as a result of this order and the adoption of similar laws or regulations, our business, financial condition and results of operations could be adversely affected.
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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.
Users of our products have been, and may in the future be, physically, financially, emotionally or otherwise harmed by other individuals that such users met or may meet through the use of one of our products. When one or more of our users suffers or alleges to have suffered any such harm, we have in the past, and could in the future, experience negative publicity or legal action that could damage our reputation and our brands. Similar events affecting users of our competitors’ products have in the past, and could in the future, result in negative publicity for the dating industry generally, which could in turn negatively affect our business.
In addition, the reputations of our brands may be adversely affected by the actions of our users that are deemed to be hostile, offensive, defamatory, inappropriate, untrue or unlawful. While we have systems and processes in place that aim to monitor and review the appropriateness of the content accessible through our products, which include, in particular, reporting tools through which users can inform us of such behavior on the platform, and have adopted policies regarding illegal, offensive or inappropriate use of our products, our users have in the past, and could in the future, nonetheless engage in activities that violate our policies. These safeguards may not be sufficient to avoid harm to our reputation and brands, especially if such hostile, offensive or inappropriate use is well-publicized.
Concerns about harms and the use of dating products and social networking platforms for illegal conduct, such as romance scams, promotion of false or inaccurate information, financial fraud, and sex-trafficking, have produced and could continue to produce future legislation or other governmental action. For example, in January 2020, the Committee on Oversight Subcommittee on Economic and Consumer Policy of the U.S. House of Representatives launched an investigation into the online dating industry’s user safety policies, including certain practices of Match Group’s businesses relating to the identification and removal of registered sex offenders and underage individuals from our platforms. The EU and the United Kingdom are also considering new legislation on this topic, with the United Kingdom having released its Online Harms White Paper and the EU contemplating introducing proposed legislation, currently referred to as the Digital Services Act, which in each case, would expose platforms to similar or more expansive liability. In the United States, government authorities, elected officials, and political candidates have called for amendments to Section 230 of the Communications Decency Act that would purport to limit or remove protections afforded interactive computer service providers. Proposed legislation includes the EARN IT Act, the PACT Act, the BAD ADS Act and others. Similar proposed legislation in the EU, currently known as the Digital Services Act, also intends to limit or remove protections afforded technology platforms under the e-Commerce Directive. If these proposed laws are passed, or if future legislation or governmental action is proposed or taken to address concerns regarding such harms, changes could be required to our products that could restrict or impose additional costs upon the conduct of our business generally or cause users to abandon our products.
Item 2.    Unregistered Sales of Equity Securities and Use of Proceeds
Unregistered Sales of Equity Securities

The Company did not issue or sell any shares of its common stock or any other equity securities pursuant to unregistered transactions during the quarter ended September 30, 2019.

2020.
Issuer Purchases of Equity Securities
The Company did not purchase any shares of its common stock during the quarter ended September 30, 2019. As of that date, 8,036,226 shares of IAC common stock remained available for repurchase under the Company's previously announced May 2016 repurchase authorization. IAC may repurchase shares pursuant to this repurchase authorization over an indefinite period of time in the open market and in privately negotiated transactions, depending on those factors IAC management deems relevant at any particular time, including, without limitation, market conditions, share price and future outlook.2020.

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Item 5.    Other Information
On August 7, 2019, IAC announced its intention to explore the possibility of a distribution of its interests in either or both of Match Group and ANGI Homeservices to its shareholders. On October 11, 2019, IAC disclosed that it had made a proposal to a special committee of the Board of Directors of Match Group with respect to a potential transaction involving its interest in Match Group (the “Match Group Proposal”). A description of the Match Group Proposal is set forth under the caption “Item 4. Purpose of the Transaction” of Amendments No. 13 and 14 (filed on October 11, 2019 and November 7, 2019, respectively) to the Schedule 13D relating to IAC’s interest in Match Group and is incorporated herein by reference. There can be no assurance that any transaction will occur or that if a transaction does occur, as to the timing and terms of any such transaction.

On October 11, 2019, IAC also disclosed that it does not currently intend to pursue a separation transaction with respect to its interest in ANGI Homeservices during the negotiation or execution of the potential Match Group transaction. However, IAC is evaluating its equity stake in ANGI Homeservices on an ongoing basis and may or may not pursue a transaction involving ANGI Homeservices in the future.




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Item 6.    Exhibits
The documents set forth below, numbered in accordance with Item 601 of Regulation S-K, are filed herewith, incorporated by reference herein by reference to the location indicated or furnished herewith.
Exhibit
Number
DescriptionLocationIncorporated by ReferenceFiled (†) or
Furnished (‡)
Herewith
(as indicated)
3.1Exhibit
No.		Restated Certificate of Incorporation of IAC/InterActiveCorp.
Exhibit 3.1 to the Registrant's Registration Statement on Form 8-A/A, filed on August 12, 2005Description.
3.2Certificate of Amendment of the Restated Certificate of Incorporation of IAC/InterActiveCorp (dated as of August 20, 2008).
Form
SEC
File No.		Exhibit 3.1 to the Registrant's Current Report on Form 8-K, filed on August 22, 2008.
3.3Amended and Restated By-Laws of IAC/InterActiveCorp (amended and restated as of December 1, 2010).
Exhibit 3.1(II) to the Registrant's Current Report on Form 8-K, filed on December 6, 2010Filing
Date.
3.4Certificate of Designations of Series C Cumulative Preferred Stock.
Exhibit 3.1 to the Registrant's Current Report on Form 8-K, filed on October 2, 2017.
3.5
Certificate of Designations of Series D Cumulative Preferred Stock.

Exhibit 3.5 to the Registrant's Quarterly Report on Form 10-Q, filed on November 9, 2018.
†
†
Certification of the Chief Financial Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act. (1)
Certification of the Chairman and Senior Executive pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act. (2)
32.2
Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act. (2)Act of 2002.‡
‡
101.INSInline XBRL Instance (1)TheDocument - the instance document does not appear in the interactive data fileInteractive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCHInline XBRL Taxonomy Extension Schema (1)Document†
101.CALInline XBRL Taxonomy Extension Calculation (1)Linkbase Document†
101.DEFInline XBRL Taxonomy Extension Definition (1)Linkbase Document†
101.LABInline XBRL Taxonomy Extension Labels (1)Label Linkbase Document†
101.PREInline XBRL Taxonomy Extension Presentation (1)Linkbase Document†
104Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

(1)Filed herewith.

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(2)Furnished herewith.


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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Dated:November 6, 2020November 7, 2019MATCH GROUP, INC.
IAC/INTERACTIVECORPBy:/s/ GARY SWIDLER
Gary Swidler
By:/s/ GLENN H. SCHIFFMAN
Glenn H. Schiffman
Executive Vice PresidentChief Operating Officer and
Chief Financial Officer




SignatureTitleDate
SignatureTitleDate
/s/ GLENN H. SCHIFFMANGARY SWIDLER
Executive Vice PresidentChief Operating Officer and

Chief Financial Officer
November 7, 20196, 2020
Glenn H. SchiffmanGary Swidler


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