As filed with the Securities and Exchange Commission on ~~May 6,~~August 5, 2021

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		~~March 31,~~June 30, 2021
Or
☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from__________to__________

Commission File No. 001-34148

Match Group, Inc.

(Exact name of registrant as specified in its charter)


Delaware						59-2712887
(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 class

Trading Symbol

Name of exchange on which registered

Common Stock, par value $0.001

MTCH

The Nasdaq Stock Market LLC

(Nasdaq Global Select Market)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☑

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting 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. ☐

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 ~~May 1,~~July 30, 2021, there were ~~270,274,610~~276,810,727 shares of common stock outstanding.

TABLE OF CONTENTS


		Page Number

PART I
Item 1.	Consolidated Financial Statements	3
	Consolidated Balance Sheet	3
	Consolidated Statement of Operations	4
	Consolidated Statement of Comprehensive Operations	5
	Consolidated Statement of Shareholders’ Equity	6
	Consolidated Statement of Cash Flows	810
	Note 1—The Company and Summary of Significant Accounting Policies	911

	Note 2 —Income Taxes	1114
	Note 3—Discontinued Operations	1215
	Note 4 ~~—Financial Instruments~~	13
	~~Note~~ 5 ~~—Long-term Debt, net~~4—Goodwill	15
	Note 5—Financial Instruments	16
	Note 6—Long-term Debt, net	18
	Note 7—Accumulated Other Comprehensive Loss	20
	~~Note 7—Earnings per Share~~	2123
	Note 8—Earnings per Share	24
	Note 9—Consolidated Financial Statement Details	22
	~~Note 9—Contingencies~~	2226
	Note 10—Contingencies	26
	Note 11—Related Party Transactions	2428
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	2630
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	3844
Item 4.	Controls and Procedures	3844
PART II
Item 1.	Legal Proceedings	3945
Item 1A.	Risk Factors	4147
Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	4248
Item 6.	Exhibits	4349
	Signatures	4450

Table of Contents

PART I

FINANCIAL INFORMATION

Item 1. Consolidated Financial Statements

MATCH GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET (Unaudited)

March 31, 2021 December 31, 2020
(In thousands, except share data)
ASSETS
Cash and cash equivalents $ 845,696 $ 739,164
Accounts receivable, net of allowance of $304 and $286, respectively 210,679 137,023
Other current assets 147,863 144,025
Total current assets 1,204,238 1,020,212
Property and equipment, net of accumulated depreciation and amortization of $175,459 and $169,321, respectively 106,957 107,799
Goodwill 1,254,248 1,270,532
Intangible assets, net of accumulated amortization of $15,495 and $15,551, respectively 226,673 230,900
Deferred income taxes 302,688 292,820
Other non-current assets 119,864 123,524
TOTAL ASSETS $ 3,214,668 $ 3,045,787
LIABILITIES AND SHAREHOLDERS’ EQUITY
LIABILITIES
Accounts payable $ 13,152 $ 29,200
Deferred revenue 248,201 239,088
Accrued expenses and other current liabilities 208,571 231,748
Total current liabilities 469,924 500,036
Long-term debt, net 3,843,244 3,840,930
Income taxes payable 13,261 14,582
Deferred income taxes 16,401 17,213
Other long-term liabilities 84,372 86,428
Redeemable noncontrolling interests 1,040 640
Commitments and contingencies 0 0
SHAREHOLDERS’ EQUITY
Common stock; $0.001 par value; authorized 1,600,000,000 shares; 270,082,027 and 267,329,284 shares issued and outstanding at March 31, 2021 and December 31, 2020, respectively 270 267
Additional paid-in capital 7,135,823 7,089,007
Retained deficit (8,248,654) (8,422,904)
Accumulated other comprehensive loss (102,030) (81,454)
Total Match Group, Inc. shareholders’ equity (1,214,591) (1,415,084)
Noncontrolling interests 1,017 1,042
Total shareholders’ equity (1,213,574) (1,414,042)
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $ 3,214,668 $ 3,045,787


	June 30, 2021		December 31, 2020

	(In thousands, except share data)
ASSETS
Cash and cash equivalents	$	236,460	$	739,164
Short-term investments	12,453		0
Accounts receivable, net of allowance of $307 and $286, respectively	259,325		137,023

Other current assets	126,238		144,025

Total current assets	634,476		1,020,212

Property and equipment, net of accumulated depreciation and amortization of $182,592 and $169,321, respectively	129,916		107,799
Goodwill	2,973,121		1,270,532
Intangible assets, net of accumulated amortization of $15,795 and $15,551, respectively	227,045		230,900
Deferred income taxes	314,029		293,487

Other non-current assets	155,346		123,524

TOTAL ASSETS	$	4,433,933	$	3,046,454
LIABILITIES AND SHAREHOLDERS’ EQUITY
LIABILITIES

Accounts payable	$	57,937	$	29,200
Deferred revenue	262,968		239,088

Accrued expenses and other current liabilities	257,062		231,748

Total current liabilities	577,967		500,036
Long-term debt, net	3,845,555		3,840,930
Income taxes payable	13,061		14,582
Deferred income taxes	16,415		17,213

Other long-term liabilities	114,783		86,428

Redeemable noncontrolling interests	1,240		640
Commitments and contingencies	0		0
SHAREHOLDERS’ EQUITY
Common stock; $0.001 par value; authorized 1,600,000,000 shares; 276,652,519 and 267,329,284 shares issued and outstanding at June 30, 2021 and December 31, 2020, respectively	277		267




Additional paid-in capital	8,068,659		7,089,007
Retained deficit	(8,107,092)		(8,422,237)
Accumulated other comprehensive loss	(104,089)		(81,454)

Total Match Group, Inc. shareholders’ equity	(142,245)		(1,414,417)
Noncontrolling interests	7,157		1,042
Total shareholders’ equity	(135,088)		(1,413,375)
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	4,433,933	$	3,046,454

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

Table of Contents

MATCH GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited)

Three Months Ended March 31,
2021 2020
(In thousands, except per share data)
Revenue $ 667,612 $ 544,642
Operating costs and expenses:
Cost of revenue (exclusive of depreciation shown separately below) 179,455 143,894
Selling and marketing expense 144,988 124,490
General and administrative expense 87,665 79,319
Product development expense 55,576 43,770
Depreciation 10,457 9,394
Amortization of intangibles 213 6,403
Total operating costs and expenses 478,354 407,270
Operating income 189,258 137,372
Interest expense (31,838) (31,894)
Other (expense) income, net (1,319) 3,854
Earnings from continuing operations, before tax 156,101 109,332
Income tax benefit 17,747 48,202
Net earnings from continuing operations 173,848 157,534
Loss from discontinued operations, net of tax 0 (331,967)
Net earnings (loss) 173,848 (174,433)
Net loss (earnings) attributable to noncontrolling interests 402 (28,397)
Net earnings (loss) attributable to Match Group, Inc. shareholders $ 174,250 $ (202,830)
Net earnings per share from continuing operations:
     Basic $ 0.65 $ 0.69
     Diluted $ 0.57 $ 0.61
Net earnings (loss) per share attributable to Match Group, Inc. shareholders:
     Basic $ 0.65 $ (1.11)
     Diluted $ 0.57 $ (1.00)
Stock-based compensation expense by function:
Cost of revenue $ 989 $ 1,167
Selling and marketing expense 1,265 1,147
General and administrative expense 18,480 10,881
Product development expense 9,382 7,977
Total stock-based compensation expense $ 30,116 $ 21,172


	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020

	(In thousands, except per share data)
Revenue	$	707,760	$	555,450	$	1,375,372	$	1,100,092
Operating costs and expenses:
Cost of revenue (exclusive of depreciation shown separately below)	193,099		148,853		372,554		292,747
Selling and marketing expense	128,918		90,801		273,906		215,291
General and administrative expense	113,393		68,204		201,058		147,523
Product development expense	52,133		41,929		107,709		85,699
Depreciation	10,061		9,669		20,518		19,063
Amortization of intangibles	242		400		455		6,803
Total operating costs and expenses	497,846		359,856		976,200		767,126
Operating income	209,914		195,594		399,172		332,966
Interest expense	(32,219)		(34,751)		(64,057)		(66,645)
Other (expense) income, net	(355)		17,410		(1,674)		21,264
Earnings from continuing operations, before tax	177,340		178,253		333,441		287,585
Income tax (provision) benefit	(37,320)		(36,856)		(19,573)		11,346
Net earnings from continuing operations	140,020		141,397		313,868		298,931



Earnings (loss) from discontinued operations, net of tax	509		(34,611)		509		(366,578)
Net earnings (loss)	140,529		106,786		314,377		(67,647)
Net loss (earnings) attributable to noncontrolling interests	366		(31,869)		768		(60,266)
Net earnings (loss) attributable to Match Group, Inc. shareholders	$	140,895	$	74,917	$	315,145	$	(127,913)

Net earnings per share from continuing operations:
Basic	$	0.52	$	0.61	$	1.17	$	1.30
Diluted	$	0.46	$	0.54	$	1.04	$	1.15
Net earnings (loss) per share attributable to Match Group, Inc. shareholders:
Basic	$	0.52	$	0.41	$	1.17	$	(0.70)
Diluted	$	0.46	$	0.36	$	1.04	$	(0.63)

Stock-based compensation expense by function:
Cost of revenue	$	1,012	$	969	$	2,001	$	2,136
Selling and marketing expense	3,087		1,295		4,352		2,442
General and administrative expense	27,580		10,634		46,060		21,515
Product development expense	10,717		9,242		20,099		17,219
Total stock-based compensation expense	$	42,396	$	22,140	$	72,512	$	43,312

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

Table of Contents

MATCH GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF COMPREHENSIVE OPERATIONS (Unaudited)

Three Months Ended March 31,
2021 2020
(In thousands)
Net earnings (loss) $ 173,848 $ (174,433)
Other comprehensive loss, net of tax
Change in foreign currency translation adjustment (20,609) (26,093)
Change in unrealized losses on available-for-sale securities 0 (12)
Total other comprehensive loss (20,609) (26,105)
Comprehensive income (loss) 153,239 (200,538)
Components of comprehensive loss (income) attributable to noncontrolling interests:
Net loss (earnings) attributable to noncontrolling interests 402 (28,397)
Change in foreign currency translation adjustment attributable to noncontrolling interests 33 4,766
Comprehensive loss (income) attributable to noncontrolling interests 435 (23,631)
Comprehensive income (loss) attributable to Match Group, Inc. shareholders $ 153,674 $ (224,169)


	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020

	(In thousands)
Net earnings (loss)	$	140,529	$	106,786	$	314,377	$	(67,647)
Other comprehensive (loss) income, net of tax
Change in foreign currency translation adjustment	(2,136)		22,633		(22,745)		(3,460)
Change in unrealized losses on available-for-sale securities	0		11		0		(1)
Total other comprehensive (loss) income	(2,136)		22,644		(22,745)		(3,461)
Comprehensive income (loss)	138,393		129,430		291,632		(71,108)
Components of comprehensive loss (income) attributable to noncontrolling interests:
Net loss (earnings) attributable to noncontrolling interests	366		(31,869)		768		(60,266)
Change in foreign currency translation adjustment attributable to noncontrolling interests	77		(3,677)		110		1,089

Comprehensive loss (income) attributable to noncontrolling interests	443		(35,546)		878		(59,177)
Comprehensive income (loss) attributable to Match Group, Inc. shareholders	$	138,836	$	93,884	$	292,510	$	(130,285)

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

Table of Contents

MATCH GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY (Unaudited)

Three Months Ended ~~March 31,~~June 30, 2021

Match Group Shareholders’ Equity
Common Stock $0.001 Par Value
Redeemable
Noncontrolling
Interests $ Shares Additional
Paid-in
Capital Retained Deficit Accumulated
Other
Comprehensive
(Loss) Income Total Match Group Shareholders’ Equity Noncontrolling Interests Total
Shareholders’
Equity
(In thousands)
Balance as of December 31, 2020 $ 640 $ 267 267,329 $ 7,089,007 $ (8,422,904) $ (81,454) $ (1,415,084) $ 1,042 $ (1,414,042)
Net (loss) earnings for the three months ended March 31, 2021 (410) — — — 174,250 — 174,250 8 174,258
Other comprehensive (loss) income, net of tax — — — — — (20,576) (20,576) (33) (20,609)
Stock-based compensation expense — — — 31,431 — — 31,431 — 31,431
Issuance of Match Group common stock pursuant to stock-based awards, net of withholding taxes — 3 2,753 19,422 — — 19,425 — 19,425
Adjustment of redeemable noncontrolling interests to fair value 810 — — (810) — — (810) — (810)
Other — — — (3,227) — — (3,227) — (3,227)
Balance as of March 31, 2021 $ 1,040 $ 270 270,082 $ 7,135,823 $ (8,248,654) $ (102,030) $ (1,214,591) $ 1,017 $ (1,213,574)


			Match Group Shareholders’ Equity
			Common Stock $0.001 Par Value
	Redeemable Noncontrolling Interests		$		Shares	Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive (Loss) Income		Total Match Group Shareholders’ Equity		Noncontrolling Interests		Total Shareholders’ Equity

			(In thousands)
Balance as of March 31, 2021	$	1,040	$	270	270,082	$	7,135,823	$	(8,247,987)	$	(102,030)	$	(1,213,924)	$	1,017	$	(1,212,907)
Net (loss) earnings for the three months ended June 30, 2021	(525)		—		—	—		140,895		—		140,895		159		141,054
Other comprehensive loss, net of tax	—		—		—	—		—		(2,059)		(2,059)		(77)		(2,136)
Stock-based compensation expense	—		—		—	44,656		—		—		44,656		—		44,656
Issuance of Match Group common stock pursuant to stock-based awards, net of withholding taxes	—		1		642	6,552		—		—		6,553		—		6,553


Issuance of common stock for the acquisition of Hyperconnect	—		6		5,929	890,845		—		—		890,851		—		890,851



Adjustment of redeemable noncontrolling interests to fair value	725		—		—	(725)		—		—		(725)		—		(725)


Purchase of noncontrolling interest	—		—		—	943		—		—		943		(2,571)		(1,628)

Adjustment of noncontrolling interests to fair value	—		—		—	(1,835)		—		—		(1,835)		1,835		0
Noncontrolling interest created by the exercise of subsidiary denominated equity awards	—		—		—	(7,102)		—		—		(7,102)		7,102		0






Other	—		—		—	(498)		—		—		(498)		(308)		(4,033)
Balance as of June 30, 2021	$	1,240	$	277	276,653	$	8,068,659	$	(8,107,092)	$	(104,089)	$	(142,245)	$	7,157	$	(135,088)

Table of Contents

MATCH GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY (Unaudited) (Continued)

Three Months Ended ~~March 31,~~June 30, 2020

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 $ Shares Additional Paid-in Capital Retained Earnings Accumulated
Other
Comprehensive
(Loss) Income Treasury Stock Total Match Group Shareholders’ Equity Noncontrolling Interests Total
Shareholders’
Equity
(In thousands)
Balance as of December 31, 2019 $ 44,527 $ 263 263,230 $ 16 16,157 $ 11,378,160 $ 1,724,640 $ (136,349) $ (10,309,612) $ 2,657,118 $ 970,276 $ 3,627,394
Net (loss) earnings for the three months ended March 31, 2020 (1,462) — — — — — (202,830) — — (202,830) 29,859 (172,971)
Other comprehensive income (loss), net of tax 99 — — — — — — (21,339) — (21,339) (4,865) (26,204)
Stock-based compensation expense 15 — — — — 11,499 — — — 11,499 44,586 56,085
Issuance of Former IAC common stock pursuant to stock-based awards, net of withholding taxes — 1 272 — — (20,516) — — — (20,515) — (20,515)
Issuance of Former Match Group and ANGI Homeservices common stock pursuant to stock-based awards, net of withholding taxes — — — — — (139,565) — 403 — (139,162) (9,442) (148,604)
Purchase of redeemable noncontrolling interests (3,165) — — — — — — — — — — —
Adjustment of redeemable noncontrolling interests to fair value 2,418 — — — — (2,418) — — — (2,418) — (2,418)
Purchase of Match Group and ANGI treasury stock — — — — — (120,658) — — — (120,658) — (120,658)
Other (1) — — — — 1 — — — 1 — 1
Balance as of March 31, 2020 $ 42,431 $ 264 263,502 $ 16 16,157 $ 11,106,503 $ 1,521,810 $ (157,285) $ (10,309,612) $ 2,161,696 $ 1,030,414 $ 3,192,110

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


			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	$		Shares	Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Treasury Stock		Total Match Group Shareholders’ Equity		Noncontrolling Interests		Total Shareholders’ Equity

			(In thousands)
Balance as of March 31, 2020	$	42,431	$	0	0	$	264	263,502	$	16	16,157	$	11,106,503	$	1,522,216	$	(157,285)	$	(10,309,612)	$	2,162,102	$	1,030,414	$	3,192,516
Net (loss) earnings for the three months ended June 30, 2020	(608)		—		—	—		—	—		—	—		74,917		—		—		74,917		32,477		107,394
Other comprehensive (loss) income, net of tax	(785)		—		—	—		—	—		—	—		—		18,967		—		18,967		4,462		23,429
Stock-based compensation expense	—		—		—	—		—	—		—	61,560		—		—		—		61,560		41,777		103,337
Issuance of Former IAC common stock pursuant to stock-based awards, net of withholding taxes	—		—		—	—		181	—		—	(14,002)		—		—		—		(14,002)		—		(14,002)
Issuance of Former Match Group and ANGI Homeservices common stock pursuant to stock-based awards, net of withholding taxes	—		—		—	—		—	—		—	(72,705)		—		225		—		(72,480)		(1,963)		(74,443)





Adjustment of redeemable noncontrolling interests to fair value	2,389		—		—	—		—	—		—	(2,389)		—		—		—		(2,389)		—		(2,389)






Purchase of Former Match Group and ANGI Homeservices treasury stock	—		—		—	—		—	—		—	(67,077)		—		—		—		(67,077)		—		(67,077)
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)	(4,745,520)		—		13,781		—		(4,731,641)		(498,792)		(5,230,433)
Acquire Former Match Group noncontrolling interest	—		58		57,868	—		—	—		—	608,110		—		—		—		608,168		(608,168)		—
Other	—		—		—	—		—	—		—	(132)		—		—		—		(132)		130		(2)
Balance as of June 30, 2020	$	(156)	$	242	241,617	$	0	0	$	0	0	$	6,874,542	$	(8,712,479)	$	(124,312)	$	0	$	(1,962,007)	$	337	$	(1,961,670)

Table of Contents

MATCH GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF ~~CASH FLOWS~~SHAREHOLDERS’ EQUITY (Unaudited) (Continued)

Three Months Ended March 31,
2021 2020
(In thousands)
Cash flows from operating activities attributable to continuing operations:
Net earnings (loss) $ 173,848 $ (174,433)
Add back: loss from discontinued operations, net of tax 0 331,967
Net earnings from continuing operations 173,848 157,534
Adjustments to reconcile net earnings from continuing operations to net cash provided by operating activities attributable to continuing operations:
Stock-based compensation expense 30,116 21,172
Depreciation 10,457 9,394
Amortization of intangibles 213 6,403
Deferred income taxes (10,007) (46,295)
Other adjustments, net 4,601 (294)
Changes in assets and liabilities
Accounts receivable (75,271) (52,583)
Other assets 19,626 10,714
Accounts payable and other liabilities (40,242) (18,280)
Income taxes payable and receivable (21,867) (49,351)
Deferred revenue 10,834 834
Net cash provided by operating activities attributable to continuing operations 102,308 39,248
Cash flows from investing activities attributable to continuing operations:
Capital expenditures (10,290) (9,781)
Other, net (255) (117)
Net cash used in investing activities attributable to continuing operations (10,545) (9,898)
Cash flows from financing activities attributable to continuing operations:
Proceeds from Senior Notes offerings 0 500,000
Debt issuance costs (730) (8,977)
Proceeds from issuance of common stock pursuant to stock-based awards 29,973 0
Withholding taxes paid on behalf of employees on net settled stock-based awards of Former Match Group and Match Group (10,548) (145,357)
Purchase of Former Match Group treasury stock 0 (81,686)
Other, net 0 1
Net cash provided by financing activities attributable to continuing operations 18,695 263,981
Total cash provided by continuing operations 110,458 293,331
Net cash provided by operating activities attributable to discontinued operations 0 41,727
Net cash used in investing activities attributable to discontinued operations 0 (576,108)
Net cash used in financing activities attributable to discontinued operations 0 (69,318)
Total cash used in discontinued operations 0 (603,699)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash (3,930) (5,996)
Net increase (decrease) in cash, cash equivalents, and restricted cash 106,528 (316,364)
Cash, cash equivalents, and restricted cash at beginning of period 739,302 3,140,358
Cash, cash equivalents, and restricted cash at end of period $ 845,830 $ 2,823,994
Six Months Ended June 30, 2021


			Match Group Shareholders’ Equity
			Common Stock $0.001 Par Value
	Redeemable Noncontrolling Interests		$		Shares	Additional Paid-in Capital		Retained Deficit		Accumulated Other Comprehensive (Loss) Income		Total Match Group Shareholders’ Equity		Noncontrolling Interests		Total Shareholders’ Equity

			(In thousands)
Balance as of December 31, 2020	$	640	$	267	267,329	$	7,089,007	$	(8,422,237)	$	(81,454)	$	(1,414,417)	$	1,042	$	(1,413,375)
Net (loss) earnings for the six months ended June 30, 2021	(935)		—		—	—		315,145		—		315,145		167		315,312
Other comprehensive loss, net of tax	—		—		—	—		—		(22,635)		(22,635)		(110)		(22,745)
Stock-based compensation expense	—		—		—	76,087		—		—		76,087		—		76,087
Issuance of Match Group common stock pursuant to stock-based awards, net of withholding taxes	—		4		3,395	25,974		—		—		25,978		—		25,978


Issuance of common stock for the acquisition of Hyperconnect	—		6		5,929	890,845		—		—		890,851		—		890,851



Adjustment of redeemable noncontrolling interests to fair value	1,535		—		—	(1,535)		—		—		(1,535)		—		(1,535)


Purchase of noncontrolling interest	—					943		—		—		943		(2,571)		(1,628)

Adjustment of noncontrolling interests to fair value	—		—		—	(1,835)		—		—		(1,835)		1,835		0
Noncontrolling interest created by the exercise of subsidiary denominated equity awards	—		—		—	(7,102)		—		—		(7,102)		7,102		0






Other	—		—		—	(3,725)		—		—		(3,725)		(308)		(4,033)
Balance as of June 30, 2021	$	1,240	$	277	276,653	$	8,068,659	$	(8,107,092)	$	(104,089)	$	(142,245)	$	7,157	$	(135,088)

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MATCH GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY (Unaudited) (Continued)

Six Months Ended June 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	$		Shares	Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive (Loss) Income		Treasury Stock		Total Match Group Shareholders’ Equity		Noncontrolling Interests		Total Shareholders’ Equity

						(In thousands)
Balance as of December 31, 2019	$	44,527	$	0	0	$	263	263,230	$	16	16,157	$	11,378,160	$	1,725,046	$	(136,349)	$	(10,309,612)	$	2,657,524	$	970,276	$	3,627,800
Net (loss) earnings for the six months ended June 30, 2020	(2,070)		—		—	—		—	—		—	—		(127,913)		—		—		(127,913)		62,336		(65,577)
Other comprehensive loss, net of tax	(686)		—		—	—		—	—		—	—		—		(2,372)		—		(2,372)		(403)		(2,775)
Stock-based compensation expense	15		—		—	—		—	—		—	73,059		—		—		—		73,059		86,363		159,422
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 value	4,807		—		—	—		—	—		—	(4,807)		—		—		—		(4,807)		—		(4,807)






Purchase of Match Group and ANGI treasury stock	—		—		—	—		—	—		—	(187,735)		—		—		—		(187,735)		—		(187,735)
Retire 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)	(4,745,520)		—		13,781		—		(4,731,641)		(498,792)		(5,230,433)
Acquire Former Match Group noncontrolling interest	—		58		57,868	—		—	—		—	608,110		—		—		—		608,168		(608,168)		—
Other	(1)		—		—	—		—	—		—	(131)		—		—		—		(131)		130		(1)
Balance as of June 30, 2020	$	(156)	$	242	241,617	$	0	0	$	0	0	$	6,874,542	$	(8,712,479)	$	(124,312)	$	0	$	(1,962,007)	$	337	$	(1,961,670)

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

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MATCH GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited)


	Six Months Ended June 30,
	2021		2020

	(In thousands)
Cash flows from operating activities attributable to continuing operations:
Net earnings (loss)	$	314,377	$	(67,647)
Add back: (earnings) loss from discontinued operations, net of tax	(509)		366,578
Net earnings from continuing operations	313,868		298,931
Adjustments to reconcile net earnings from continuing operations to net cash provided by operating activities attributable to continuing operations:
Stock-based compensation expense	72,512		43,312
Depreciation	20,518		19,063
Amortization of intangibles	455		6,803

Deferred income taxes	(20,731)		(16,060)

Other adjustments, net	7,407		19,667
Changes in assets and liabilities
Accounts receivable	(103,127)		(69,228)
Other assets	32,622		(10,144)
Accounts payable and other liabilities	(17,320)		(13,349)
Income taxes payable and receivable	18,899		(16,241)
Deferred revenue	25,712		13,133
Net cash provided by operating activities attributable to continuing operations	350,815		275,887
Cash flows from investing activities attributable to continuing operations:
Net cash (used) acquired in business combinations	(840,869)		0
Capital expenditures	(32,392)		(18,124)
Net cash distribution related to Separation of IAC	0		(2,448,749)



Other, net	(255)		(118)
Net cash used in investing activities attributable to continuing operations	(873,516)		(2,466,991)
Cash flows from financing activities attributable to continuing operations:
Borrowings under the Credit Facility	0		20,000

Proceeds from Senior Notes offerings	0		1,000,000

Principal payments on Credit Facility	0		(400,000)



Debt issuance costs	(851)		(13,195)

Proceeds from issuance of common stock pursuant to stock-based awards	37,333		0
Withholding taxes paid on behalf of employees on net settled stock-based awards of Former Match Group and Match Group	(11,380)		(209,698)

Purchase of Former Match Group treasury stock	0		(132,868)
Purchase of noncontrolling interests	(1,473)		(15,827)


Other, net	0		(12,745)
Net cash provided by financing activities attributable to continuing operations	23,629		235,667
Total cash used in continuing operations	(499,072)		(1,955,437)
Net cash provided by operating activities attributable to discontinued operations	0		20,031
Net cash used in investing activities attributable to discontinued operations	0		(963,420)
Net cash used in financing activities attributable to discontinued operations	0		(110,959)
Total cash used in discontinued operations	0		(1,054,348)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash	(3,636)		(1,152)
Net decrease in cash, cash equivalents, and restricted cash	(502,708)		(3,010,937)
Cash, cash equivalents, and restricted cash at beginning of period	739,302		3,140,358
Cash, cash equivalents, and restricted cash at end of period	$	236,594	$	129,421

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

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MATCH GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

NOTE 1—THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Match Group, Inc., through its portfolio companies, is a leading provider of ~~dating services available globally.~~digital technologies designed to help people make meaningful connections. Our global portfolio of brands includes Tinder®, Match®, Meetic®, OkCupid®, Hinge®, Pairs™, PlentyOfFish®, ~~and~~ OurTime®, ~~as well as a number of other brands,~~Azar®, Hakuna Live™, and more, each ~~designed~~built to increase our users’ likelihood of ~~finding a meaningful connection.~~connecting with others. Through our ~~portfolio companies and their~~ trusted brands, we provide tailored services to meet the varying preferences of our users. Our services are available in over 40 languages to our users all over the world. Match Group has 1 operating segment, ~~Dating,~~Connections, which is managed as a portfolio of ~~dating~~ brands.

As used herein, “Match Group,” the “Company,” “we,” “our,” “us,” and similar terms refer to Match Group, Inc. and its subsidiaries, unless the context indicates otherwise.

Basis of Presentation and Consolidation

The Company prepares its consolidated financial statements in accordance with U.S. generally accepted accounting principles (“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’s opinion, the unaudited interim consolidated financial statements have been prepared on the same basis as the annual consolidated financial statements ~~except for an update reflecting the new accounting standard related to convertible instruments,~~ 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 consolidated financial statements should be read in conjunction with the consolidated ~~and combined~~ statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2020.~~2020 included in the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on June 17, 2021.

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, the carrying value of accounts receivable, including the determination of the allowance for 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; 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.

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, 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 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

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MATCH GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)

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 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 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 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 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 are transferred to our customers, and in the amount that reflects the consideration the Company expects to be entitled to in exchange for those 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 deferred revenue balance as of December 31, 2020 was $239.1 million. During the ~~three~~six months ended ~~March 31,~~June 30, 2021, the Company recognized ~~$172.5~~$234.9 million of revenue that was included in the deferred revenue balance as of December 31, 2020. The current deferred revenue balance at ~~March 31,~~June 30, 2021 is ~~$248.2~~$263.0 million. At ~~March 31,~~June 30, 2021 and December 31, 2020, there was 0 non-current portion of deferred 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 expected length of one year or less, (ii) contracts with variable consideration that is allocated entirely to unsatisfied performance obligations or to a wholly unsatisfied promise accounted for under the series guidance, and (iii) contracts for which the Company recognizes revenue at the amount which we have the right to invoice for services performed.

Disaggregation of Revenue

The following table presents disaggregated revenue:

Three Months Ended March 31,
2021 2020
(In thousands)
Direct Revenue:
North America $ 326,829 $ 263,347
International 328,352 271,477
Total Direct Revenue 655,181 534,824
Indirect Revenue (principally advertising revenue) 12,431 9,818
Total Revenue $ 667,612 $ 544,642


	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020

	(In thousands)
Direct Revenue:
Americas	$	374,388	$	298,693	$	718,650	$	579,938
Europe	196,542		154,050		385,601		310,540
APAC and Other	123,392		93,998		245,252		191,087
Total Direct Revenue	694,322		546,741		1,349,503		1,081,565
Indirect Revenue (principally advertising revenue)	13,438		8,709		25,869		18,527
Total Revenue	$	707,760	$	555,450	$	1,375,372	$	1,100,092

Recent Accounting Pronouncements

Accounting pronouncements 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 liabilities 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,~~

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MATCH GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)

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 discount resulting from 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. ASU 2020-06 requires the application of the if-converted method to calculate the impact of convertible instruments on diluted earnings per share, which results in increased dilutive securities as the assumption of cash settlement of the notes is not 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 early adopted ASU No. 2020-06 as of January 1, 2021 on a fully retrospective basis. The impact of adopting ASU No. 2020-06 is as follows:


	Three Months Ended June 30, 2020						Six Months Ended June 30, 2020
	Prior to the adoption of ASU No. 2020-06		After adoption of ASU No. 2020-06		Effect of adoption of ASU No. 2020-06		Prior to the adoption of ASU No. 2020-06		After adoption of ASU No. 2020-06		Effect of adoption of ASU No. 2020-06

	(In thousands, except per share data)
Statement of operations impacts
Interest expense	$	45,647	$	34,751	$	(10,896)	$	88,296	$	66,645	$	(21,651)
Income tax (provision) benefit	$	(34,436)	$	(36,856)	$	(2,420)	$	16,311	$	11,346	$	(4,965)
Net earnings from continuing operations	$	132,921	$	141,397	$	8,476	$	282,245	$	298,931	$	16,686

Net earnings per share from continuing operations:
Basic	$	0.56	$	0.61	$	0.05	$	1.21	$	1.30	$	0.09
Diluted	$	0.51	$	0.54	$	0.03	$	1.10	$	1.15	$	0.05

Weighted average dilutive shares outstanding	194,988		207,840		12,852		193,032		206,142		13,110

Prior to the adoption of ASU No. 2020-06 After adoption of ASU No. 2020-06 Effect of adoption of ASU No. 2020-06
(In thousands)
Statement of operations impacts for the three months ended March 31, 2020
Interest expense $ 42,649 $ 31,894 $ (10,755)
Income tax benefit $ 50,747 $ 48,202 $ (2,545)
Net earnings from continuing operations $ 149,324 $ 157,534 $ 8,210
Net earnings per share from continuing operations:
Basic $ 0.65 $ 0.69 $ 0.04
Diluted $ 0.59 $ 0.61 $ 0.02
Weighted average dilutive shares outstanding 191,259 204,658 13,399
Balance sheet impacts at December 31, 2020:
Non-current deferred tax asset $ 224,013 $ 292,820 $ 68,807
Long-term debt, net $ 3,534,706 $ 3,840,930 $ 306,224
Additional paid-in capital $ 7,394,646 $ 7,089,007 $ (305,639)
Retained deficit $ (8,491,126) $ (8,422,904) $ 68,222


	Prior to the adoption of ASU No. 2020-06		After adoption of ASU No. 2020-06		Effect of adoption of ASU No. 2020-06

	(In thousands)
Balance sheet impacts at December 31, 2020:
Non-current deferred tax asset	$	224,013	$	293,487	$	69,474
Long-term debt, net	$	3,534,706	$	3,840,930	$	306,224
Additional paid-in capital	$	7,394,646	$	7,089,007	$	(305,639)
Retained deficit	$	(8,491,126)	$	(8,422,237)	$	68,889

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MATCH GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)

The impact of the adoption of ASU No. 2020-06 at December 31, 2019 resulted in an increase to retained earnings of ~~$34.7~~$35.1 million and a decrease in additional paid-in capital of $305.6 million.

As the adoption of ASU No. 2020-06 did not impact cash, the operating cash flows from continuing operations were not impacted. Certain reconciliation line items to net earnings from continuing operations were adjusted to reflect the impact of the adoption of ASU No. 2020-06.

Reclassifications

Certain prior year amounts have been reclassified to conform to the current year presentation.

NOTE 2—INCOME TAXES

At the end of each interim period, the Company estimates the annual 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 beginning-of-the-year deferred tax assets in future years or unrecognized tax benefits is recognized in the interim period in which the change occurs.

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~~MATCH GROUP, INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)~~

The computation of the estimated annual 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 estimated 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.

For the three months ended ~~March 31,~~June 30, 2021 and 2020, the Company recorded an income tax ~~benefit~~provision of ~~$17.7~~$37.3 million and ~~$48.2~~$36.9 million, respectively. The effective tax rate in the three months ended June 30, 2020 benefited from excess tax benefits generated by the exercise or vesting of stock-based awards, partially offset by a non-recurring increase in the valuation allowance for foreign tax credits. For the six months ended June 30, 2021 and 2020, the Company recorded an income tax provision (benefit) of $19.6 million and $(11.3) million, respectively. The effective tax rates in both ~~three-month~~six-month periods benefited from excess tax benefits generated by the exercise and vesting of stock-based ~~awards.~~awards, partially offset in the 2020 period by a non-recurring increase in the valuation allowance for foreign tax credits.

Match Group is routinely under audit by federal, state, local and foreign authorities in the area of income tax. These audits include a review of the timing and amount of income and deductions, and the allocation of such income and deductions among various tax jurisdictions. The Internal Revenue Service ~~(“IRS”)~~ has substantially completed its audit of the Company’s federal income tax returns for the years ended December 31, ~~2010~~2013 through ~~2016,~~2017, 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 of 2020. The statute of limitations for the years 2010 through 2012 has been extended to May 31, 2021, and the~~ statute of limitations for the years 2013 to 2017 has been extended to June 30, 2022. We are no longer subject to U.S. federal income tax examinations for years prior to 2013. Returns filed in various other jurisdictions are open to examination for tax years beginning with 2009. Although we believe that we have adequately reserved for our uncertain tax positions, the final tax outcome of these matters may vary significantly from our estimates.

At both ~~March 31,~~June 30, 2021 and December 31, 2020, unrecognized tax benefits, including interest and penalties, were $46.0 million and $46.7 ~~million.~~million, respectively. If unrecognized tax benefits at ~~March 31,~~June 30, 2021 are subsequently recognized, income tax expense would be reduced by ~~$41.1~~$40.4 million, net of related deferred tax assets and interest. The comparable amount as of December 31, 2020 was $41.8 million. The Company believes that it is reasonably possible that its unrecognized tax benefits could decrease by ~~$3.7~~$1.8 million by ~~March 31,~~June 30, 2022 due to settlements and expirations of statutes of limitations, all of which would reduce the income tax provision.

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MATCH GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)

The Company recognizes interest and, if applicable, penalties related to unrecognized tax benefits in the income tax provision. ~~Our income tax provision~~Accruals of interest and penalties for the three months ended ~~March 31,~~June 30, 2021 and 2020 ~~includes a decrease of interest and penalties of $0.4 million and $1.8 million, respectively.~~were not material. At ~~March 31,~~June 30, 2021 and December 31, 2020, noncurrent income taxes payable includes accrued interest and penalties of $1.4 million and $1.9 million, respectively.

As a result of the Company’s separation from IAC/InterActiveCorp (“IAC”), temporary differences and tax attributes from our federal and consolidated state income tax filings were allocated between the Company and IAC. The allocation attributable to IAC resulted in an increase to the Company’s net deferred tax asset and additional paid-in capital. A preliminary allocation attributable to the Company was recorded in 2020. Any subsequent adjustment to allocated tax attributes will be recognized as an adjustment to deferred taxes and additional paid-in capital. See “Note ~~10—~~11—Related Party Transactions” for amounts outstanding under the tax matters agreement with IAC.

NOTE 3—DISCONTINUED OPERATIONS

Pursuant to the terms of the transaction agreement dated as of December 19, 2019 (as amended, the “Transaction Agreement”), 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 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, formerly known as IAC Holdings, Inc., consisting of Former IAC’s businesses other than Match Group (the “Separation”). Accordingly, the businesses of Former IAC other than Match Group are presented as discontinued operations.

The key components of loss from discontinued operations for the three and six months ended June 30, 2021 and 2020 consist of the following:


	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020

	(In thousands)
Revenue	$	0	$	726,361	$	0	$	1,410,485
Operating costs and expenses	0		(840,902)		0		(1,840,178)
Operating loss	0		(114,541)		0		(429,693)
Interest expense	0		(1,555)		0		(3,772)
Other income (expense)	0		51,244		0		(2,503)
Income tax benefit	509		30,241		509		69,390
Earnings (loss) from discontinued operations	$	509	$	(34,611)	$	509	$	(366,578)

NOTE 4—GOODWILL

Goodwill is as follows:


	June 30, 2021		December 31, 2020

	(In thousands)
Goodwill	$	2,973,121	$	1,270,532

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MATCH GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)

The ~~key components~~following table presents the balance of ~~loss from discontinued operations~~goodwill, including the changes in the carrying value of goodwill, for the ~~three~~six months ended ~~March 31, 2020 consist of the following:~~June 30, 2021:

~~Three Months Ended March 31,~~

~~2020~~

(In thousands)

~~Revenue~~Balance at December 31, 2020

~~684,124~~1,270,532

~~Operating costs and expenses~~Additions

~~(999,276)~~1,721,538

~~Operating loss~~Foreign Exchange Translation

~~(315,152)~~(18,949)

~~Interest expense~~

~~(2,217)~~

~~Other expense~~Balance at June 30, 2021

~~(53,747)~~

~~Income tax benefit~~

~~39,149~~

~~Loss from discontinued operations~~

~~(331,967)~~2,973,121

On June 17, 2021, Match Group completed the acquisition of all capital stock of Hyperconnect, Inc. (“Hyperconnect”), a leading social discovery and video technology company based in Seoul, South Korea. The acquisition increases our presence in Asian markets and enhances the real-time video capabilities of Match Group. The accounting purchase price was $1.75 billion, net of cash acquired, which consists of $840.9 million of cash, net of cash acquired; 5.9 million shares of Match Group common stock at a basis of the closing market price on the acquisition date; and $22.6 million of withholding taxes payable in the third quarter of 2021 on behalf of certain sellers. The initial allocation of the accounting purchase price has been allocated to the underlying assets acquired and liabilities assumed based upon their estimated fair value, with the remaining purchase price allocated to goodwill. The allocation of the accounting purchase price is preliminary and will be finalized within the allowable measurement period once independent valuations of the fair value of the assets acquired and liabilities assumed, including identified intangible assets and goodwill, are completed.

NOTE 4—5—FINANCIAL INSTRUMENTS

Equity securities without readily determinable fair values

At both ~~March 31,~~June 30, 2021 and December 31, 2020, the carrying value of the Company’s investments in equity securities without readily determinable fair values totaled $14.2 million, and is included in “Other non-current assets” in the accompanying consolidated balance sheet. The cumulative downward adjustments (including impairments) to the carrying value of equity securities without readily determinable fair values through ~~March 31,~~June 30, 2021 were $2.1 million. For both the ~~three~~six months ended ~~March 31,~~June 30, 2021 and 2020, there were 0 adjustments to the carrying value of equity securities without readily determinable fair values.

For all equity securities without readily determinable fair values as of ~~March 31,~~June 30, 2021 and December 31, 2020, the Company has elected the measurement alternative. For the three months ended ~~March 31,~~June 30, 2021 and 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’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.

•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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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)

The following tables present the Company’s financial instruments that are measured at fair value on a recurring basis:

March 31, 2021
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 $ 294,001 $ 0 $ 294,001
Time deposits 0 50,000 50,000
Total $ 294,001 $ 50,000 $ 344,001


	June 30, 2021
	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	$	2,053	$	0	$	2,053

Short-term investments:
Time deposits	0		12,453		12,453
Total	$	2,053	$	12,453	$	14,506


	December 31, 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	$	147,615	$	0	$	147,615
Time deposits	0		50,000		50,000
Total	$	147,615	$	50,000	$	197,615

Assets measured at fair value on a nonrecurring basis

The Company’s non-financial assets, such as goodwill, intangible assets, property and equipment, and right-of-use assets, are adjusted to fair value only when an impairment charge is recognized. The Company’s financial assets, comprised 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.

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.

March 31, 2021 December 31, 2020
Carrying Value Fair Value Carrying Value Fair Value
(In thousands)
Long-term debt, net (a) (b)
$ (3,843,244) $ (5,894,051) $ (3,840,930) $ (6,267,976)


	June 30, 2021				December 31, 2020
	Carrying Value		Fair Value		Carrying Value		Fair Value

	(In thousands)

Long-term debt, net (a) (b)	$	(3,845,555)	$	(6,458,340)	$	(3,840,930)	$	(6,267,976)

______________________

(a)At ~~March 31,~~June 30, 2021 and December 31, 2020, the carrying value of long-term debt, net includes unamortized original issue discount and debt issuance costs of ~~$49.3~~$46.9 million and $51.6 million, respectively.

(b)At ~~March 31,~~June 30, 2021, the fair value of the of the 2022 Exchangeable Notes, 2026 Exchangeable Notes, and 2030 Exchangeable Notes is ~~$1,617.8~~$1,898.1 million, ~~$970.6~~$1,096.2 million, and ~~$1,031.2~~$1,168.9 million, respectively. At

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MATCH GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)

December 31, 2020, the fair value of the of the 2022 Exchangeable Notes, 2026 Exchangeable Notes, and 2030 Exchangeable Notes is $1,780.3 million, $1,052.1 million, and $1,113.9 million, respectively.

At ~~March 31,~~June 30, 2021 and December 31, 2020, the fair value of long-term debt, net, is estimated using observable market prices or indices for similar liabilities, which are Level 2 inputs.

NOTE 5—6—LONG-TERM DEBT, NET

Long-term debt consists of:

March 31, 2021 December 31, 2020
(In thousands)
Revolving Credit Facility due February 13, 2025 (the “Credit Facility”) $ 0 $ 0
Term Loan due February 13, 2027 (the “Term Loan”) 425,000 425,000
Delayed Draw Term Loan due March 25, 2022 (the “Delayed Draw Term Loan”) 0 0
5.00% Senior Notes due December 15, 2027 (the “5.00% Senior Notes”); interest payable each June 15 and December 15 450,000 450,000
4.625% Senior Notes due June 1, 2028 (the “4.625% Senior Notes”); interest payable each June 1 and December 1 500,000 500,000
5.625% Senior Notes due February 15, 2029 (the “5.625% Senior Notes”); interest payable each February 15 and August 15 350,000 350,000
4.125% Senior Notes due August 1, 2030 (the “4.125% Senior Notes”); interest payable each February 1 and August 1 500,000 500,000
0.875% Exchangeable Senior Notes due October 1, 2022 (the “2022 Exchangeable Notes”); interest payable each April 1 and October 1 517,500 517,500
0.875% Exchangeable Senior Notes due June 15, 2026 (the “2026 Exchangeable Notes”); interest payable each June 15 and December 15 575,000 575,000
2.00% Exchangeable Senior Notes due January 15, 2030 (the “2030 Exchangeable Notes”); interest payable each January 15 and July 15 575,000 575,000
Total debt 3,892,500 3,892,500
Less: Unamortized original issue discount 5,830 6,029
Less: Unamortized debt issuance costs 43,426 45,541
Total long-term debt, net $ 3,843,244 $ 3,840,930


	June 30, 2021		December 31, 2020

	(In thousands)
Revolving Credit Facility due February 13, 2025 (the “Credit Facility”)	$	0	$	0
Term Loan due February 13, 2027 (the “Term Loan”)	425,000		425,000



5.00% Senior Notes due December 15, 2027 (the “5.00% Senior Notes”); interest payable each June 15 and December 15	450,000		450,000
4.625% Senior Notes due June 1, 2028 (the “4.625% Senior Notes”); interest payable each June 1 and December 1	500,000		500,000
5.625% Senior Notes due February 15, 2029 (the “5.625% Senior Notes”); interest payable each February 15 and August 15	350,000		350,000
4.125% Senior Notes due August 1, 2030 (the “4.125% Senior Notes”); interest payable each February 1 and August 1	500,000		500,000
0.875% Exchangeable Senior Notes due October 1, 2022 (the “2022 Exchangeable Notes”); interest payable each April 1 and October 1	517,500		517,500
0.875% Exchangeable Senior Notes due June 15, 2026 (the “2026 Exchangeable Notes”); interest payable each June 15 and December 15	575,000		575,000
2.00% Exchangeable Senior Notes due January 15, 2030 (the “2030 Exchangeable Notes”); interest payable each January 15 and July 15	575,000		575,000
Total debt	3,892,500		3,892,500

Less: Unamortized original issue discount	5,628		6,029
Less: Unamortized debt issuance costs	41,317		45,541
Total long-term debt, net	$	3,845,555	$	3,840,930

Credit Facility ~~Term Loan,~~ and ~~Delayed Draw~~ Term Loan

Our wholly-owned subsidiary, Match Group Holdings II, LLC (“MG Holdings II”) is the borrower under a credit agreement (as amended, the “Credit Agreement”) that provides for the Credit Facility ~~the Term Loan,~~ and ~~as of March 26, 2021,~~ the ~~Delayed Draw~~ Term Loan.

The Credit Facility has a borrowing capacity of $750 million and matures on February 13, 2025. At both ~~March 31,~~June 30, 2021 and December 31, 2020, there were 0 outstanding borrowings under the Credit Facility, ~~there were~~$0.2 million in outstanding letters of credit, ~~of $0.2 million,~~ and ~~we had~~ $749.8 million ~~available~~of availability under the Credit Facility. The annual commitment fee on undrawn funds, which is based on MG Holdings II’s consolidated net leverage ratio, was 25 basis points as of ~~March 31,~~June 30, 2021. 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. If MG Holdings II borrows under the Credit Facility, ~~or the Delayed Draw Term Loan,~~ it will be required to maintain a consolidated net leverage ratio of not more than 5.0 to 1.0.

At both ~~March 31,~~June 30, 2021 and December 31, 2020, the outstanding balance on the Term Loan was $425 million. The Term Loan bears interest at LIBOR plus 1.75%, which was ~~1.95%~~1.91% and 1.96% at ~~March 31,~~June 30, 2021 and December 31, 2020, respectively. The Term Loan matures on February 13, 2027. Interest payments are due at

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~~MATCH GROUP, INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)~~

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 as set forth in the Credit Agreement.

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MATCH GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)

On March 26, 2021, MG Holdings II amended the Credit Agreement to provide for ~~the~~a $400 million Delayed Draw Term Loan, the proceeds of which ~~may be~~could have been used only to finance a portion of the consideration for the acquisition of Hyperconnect, Inc. ~~MG Holdings II will pay a ticking fee, starting May 11, 2021, on the Delayed Draw Term Loan until it is drawn, in an amount equal to the commitment fee for the Credit Facility.~~ The Delayed Draw Term Loan ~~bears interest~~was terminated effective June 18, 2021, in accordance with the consolidated net leverage ratio pricing grid applicable to borrowings under the Credit Facility and matures, whether or not drawn, on March 25, 2022. There were 0 outstanding borrowings under the Delayed Draw Term Loan at March 31, 2021.its terms.

The Credit Agreement includes 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 if an event of default has occurred. The Credit Agreement includes additional covenants 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 ~~Term Loan,~~ and ~~Delayed Draw~~ 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, ~~and Delayed Draw Term Loan~~ 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.

Senior Notes

The 5.00% Senior Notes were issued 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.

The 4.625% Senior Notes were issued on May 19, 2020. At any time prior to June 1, 2023, 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 on February 15, 2019. 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 4.125% Senior Notes were issued on February 11, 2020. 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 indenture governing the 5.00% Senior Notes contains covenants that would limit MG Holdings II’s ability to pay dividends or to make distributions and repurchase or redeem MG Holdings II’s stock in the event a default has occurred or MG Holdings II’s consolidated leverage ratio (as defined in the indenture) exceeds 5.0 to 1.0. No such limitations were in effect at ~~March 31,~~June 30, 2021. There are additional covenants in the 5.00% Senior Notes indenture that limit the ability of MG Holdings II and its subsidiaries to, among other things, (i) incur indebtedness, make investments, or sell assets in the event MG Holdings II is not in compliance with specified financial ratios, and (ii) incur liens, enter into agreements restricting their ability to pay dividends, enter into transactions with affiliates, or consolidate, merge or sell substantially all of their assets. The indentures

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~~MATCH GROUP, INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)~~

governing the 4.125%, 4.625%, and 5.625% Senior Notes are less restrictive than the indenture governing the 5.00% Senior Notes and generally only limit MG Holdings II’s and its subsidiaries’ ability to, among other things, create liens on assets, or consolidate, merge, sell or otherwise dispose of all or substantially all of their assets.

The Senior Notes all rank equally in right of payment.

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MATCH GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)

Exchangeable Notes

During 2017, Match Group FinanceCo, Inc., a direct, wholly-owned subsidiary of the Company, issued $517.5 million aggregate principal amount of its 2022 Exchangeable Notes. During 2019, Match Group FinanceCo 2, Inc. and Match 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 2022, 2026, and 2030 Exchangeable Notes (collectively the “Exchangeable Notes”) are guaranteed by the Company but are not guaranteed by MG Holdings II or any of its subsidiaries.

The following table presents details of the exchangeable features:


	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 Notes	22.7331	$	43.99	July 1, 2022
2026 Exchangeable Notes	11.4259	$	87.52	March 15, 2026
2030 Exchangeable Notes	11.8739	$	84.22	October 15, 2029

______________________

(a)Subject to adjustment upon the occurrence of specified events.

As more specifically set forth in the applicable indentures, 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 (whether or not consecutive) during the period of 30 consecutive trading days ending on, and including, the last trading day of 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-business day period after any five-consecutive trading day period (the “measurement 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 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 in 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 issuer, in its sole discretion, has the option to settle the Exchangeable Notes with cash, shares of the Company’s common stock, or a combination of cash and shares of the Company's common stock. 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, 2026, and 2030 Exchangeable Notes were exchangeable as of ~~March 31,~~June 30, 2021. NoNaN 2022 Exchangeable Note was exchanged during the three and six months ended June 30, 2021 and was settled in July 2021; 0 Exchangeable Notes were exchanged during ~~the three months ended March 31, 2021 and for~~ the year ended December 31, 2020.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)

The following table presents the if-converted value that exceeded the principal of each note based on the Company’s stock price on ~~March 31,~~June 30, 2021 and December 31, 2020.

March 31, 2021 December 31, 2020
(In millions)
2022 Exchangeable Notes $ 1,098.7 $ 1,261.2
2026 Exchangeable Notes $ 327.6 $ 418.3
2030 Exchangeable Notes $ 363.0 $ 457.2


	June 30, 2021		December 31, 2020

	(In millions)
2022 Exchangeable Notes	$	1,379.5	$	1,261.2
2026 Exchangeable Notes	$	484.4	$	418.3
2030 Exchangeable Notes	$	525.9	$	457.2

Additionally, each of Match Group FinanceCo 2, Inc. and Match 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 Company’s common stock 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.

The following table sets forth the components of the Exchangeable Senior Notes within long-term debt, net:

March 31, 2021 December 31, 2020
2022 Exchangeable Notes 2026 Exchangeable Notes 2030 Exchangeable Notes 2022 Exchangeable Notes 2026 Exchangeable Notes 2030 Exchangeable Notes
(In thousands)
Principal $ 517,500 $ 575,000 $ 575,000 $ 517,500 $ 575,000 $ 575,000
Less: Unamortized debt issuance costs 5,604 8,299 9,370 6,511 8,700 9,627
Net carrying value included in long-term debt, net $ 511,896 $ 566,701 $ 565,630 $ 510,989 $ 566,300 $ 565,373


	June 30, 2021						December 31, 2020
	2022 Exchangeable Notes		2026 Exchangeable Notes		2030 Exchangeable Notes		2022 Exchangeable Notes		2026 Exchangeable Notes		2030 Exchangeable Notes

	(In thousands)
Principal	$	517,500	$	575,000	$	575,000	$	517,500	$	575,000	$	575,000
Less: Unamortized debt issuance costs	4,684		7,912		9,127		6,511		8,700		9,627
Net carrying value included in long-term debt, net	$	512,816	$	567,088	$	565,873	$	510,989	$	566,300	$	565,373

The following table sets forth interest expense recognized related to the Exchangeable Senior Notes:

Three Months Ended March 31, 2021 Three Months Ended March 31, 2020
2022 Exchangeable Notes 2026 Exchangeable Notes 2030 Exchangeable Notes 2022 Exchangeable Notes 2026 Exchangeable Notes 2030 Exchangeable Notes
(In thousands)
Contractual interest expense $ 1,132 $ 1,258 $ 2,875 $ 1,132 $ 1,258 $ 2,875
Amortization of debt issuance costs 907 401 257 898 380 235
Total interest expense recognized $ 2,039 $ 1,659 $ 3,132 $ 2,030 $ 1,638 $ 3,110

~~The effective interest rates for the 2022, 2026, and 2030 Exchangeable Notes are 1.6%, 1.2%, and 2.2%, respectively.~~


	Three Months Ended June 30, 2021						Three Months Ended June 30, 2020
	2022 Exchangeable Notes		2026 Exchangeable Notes		2030 Exchangeable Notes		2022 Exchangeable Notes		2026 Exchangeable Notes		2030 Exchangeable Notes

	(In thousands)
Contractual interest expense	$	1,132	$	1,258	$	2,875	$	1,132	$	1,258	$	2,875
Amortization of debt issuance costs	920		387		243		905		380		237
Total interest expense recognized	$	2,052	$	1,645	$	3,118	$	2,037	$	1,638	$	3,112

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)


	Six Months Ended June 30, 2021						Six Months Ended June 30, 2020
	2022 Exchangeable Notes		2026 Exchangeable Notes		2030 Exchangeable Notes		2022 Exchangeable Notes		2026 Exchangeable Notes		2030 Exchangeable Notes

	(In thousands)
Contractual interest expense	$	2,264	$	2,516	$	5,750	$	2,264	$	2,516	$	5,750
Amortization of debt issuance costs	1,827		788		500		1,803		760		472
Total interest expense recognized	$	4,091	$	3,304	$	6,250	$	4,067	$	3,276	$	6,222

The effective interest rates for the 2022, 2026, and 2030 Exchangeable Notes are 1.6%, 1.2%, and 2.2%, respectively.

Exchangeable Notes Hedges 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 prices per share set forth below (the “Exchangeable Notes Hedge”), and sold warrants allowing the counterparty to purchase (subject to adjustment upon the occurrence of specified events) shares at the per share prices set forth below (the “Exchangeable Notes Warrants”).

The Exchangeable Notes Hedges are expected to reduce the potential dilutive effect on the Company’s common stock upon any exchange of notes and/or offset any cash payment Match Group FinanceCo, Inc., Match Group FinanceCo 2, Inc. or Match 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’s common stock to the extent that the market price per share of the Company common stock exceeds their respective strike prices.

The following tables present details of the Exchangeable Notes Hedges and Warrants:


	Number of Shares(a)	Approximate Equivalent Exchange Price per Share(a)

	(Shares in millions)
2022 Exchangeable Notes Hedge	11.8	$	43.99
2026 Exchangeable Notes Hedge	6.6	$	87.52
2030 Exchangeable Notes Hedge	6.8	$	84.22


	Number of Shares(a)	Weighted Average Strike Price per Share(a)

	(Shares in millions)
2022 Exchangeable Notes Warrants	11.8	$	68.22
2026 Exchangeable Notes Warrants	6.6	$	134.76
2030 Exchangeable Notes Warrants	6.8	$	134.82

______________________

(a)Subject to adjustment upon the occurrence of specified events.

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MATCH GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)

NOTE 6—7—ACCUMULATED OTHER COMPREHENSIVE LOSS

The following table presents the components of accumulated other comprehensive loss and items reclassified out of accumulated other comprehensive loss into earnings.

Three Months Ended March 31, 2021
Foreign Currency Translation Adjustment Accumulated Other Comprehensive Loss
(In thousands)
Balance at January 1 $ (81,454) $ (81,454)
Other comprehensive loss (20,576) (20,576)
Balance at March 31 $ (102,030) $ (102,030)


	Three Months Ended June 30, 2021
	Foreign Currency Translation Adjustment		Accumulated Other Comprehensive Loss
	(In thousands)
Balance at April 1	$	(102,030)	$	(102,030)
Other comprehensive loss	(2,059)		(2,059)



Balance at June 30	$	(104,089)	$	(104,089)


	Three Months Ended June 30, 2020
	Foreign Currency Translation Adjustment		Unrealized Loss on Available-For-Sale Security		Accumulated Other Comprehensive (Loss) Income
	(In thousands)
Balance at April 1	$	(157,273)	$	(12)	$	(157,285)
Other comprehensive income before reclassifications	19,100		11		19,111
Amounts reclassified into earnings	(144)		0		(144)

Net period other comprehensive income	18,956		11		18,967
Allocation of accumulated other comprehensive loss related to the noncontrolling interests	225		0		225
Separation of IAC	13,780		1		13,781
Balance at June 30	$	(124,312)	$	0	$	(124,312)

Three Months Ended March 31, 2020
Foreign Currency Translation Adjustment Unrealized Loss on Available-For-Sale Security Accumulated Other Comprehensive Loss
(In thousands)
Balance at January 1 $ (136,349) $ 0 $ (136,349)
Other comprehensive loss (21,307) (12) (21,319)
Amounts reclassified into earnings (20) 0 (20)
Net period other comprehensive loss (21,327) (12) (21,339)
Allocation of accumulated other comprehensive loss related to the noncontrolling interests 403 0 403
Balance at March 31 $ (157,273) $ (12) $ (157,285)


	Six Months Ended June 30, 2021
	Foreign Currency Translation Adjustment		Accumulated Other Comprehensive Loss
	(In thousands)
Balance at January 1	$	(81,454)	$	(81,454)
Other comprehensive loss	(22,635)		(22,635)





Balance at June 30	$	(104,089)	$	(104,089)

~~At both March 31, 2021 and 2020, there was 0 tax benefit or provision on the accumulated other comprehensive loss.~~


	Six Months Ended June 30, 2020
	Foreign Currency Translation Adjustment		Unrealized Loss on Available-For-Sale Security		Accumulated Other Comprehensive Loss
	(In thousands)
Balance at January 1	$	(136,349)	$	0	$	(136,349)
Other comprehensive loss before reclassifications	(2,207)		(1)		(2,208)
Amounts reclassified into earnings	(164)		0		(164)

Net period other comprehensive loss	(2,371)		(1)		(2,372)
Allocation of accumulated other comprehensive loss related to the noncontrolling interests	628		0		628
Separation of IAC	13,780		1		13,781
Balance at June 30	$	(124,312)	$	0	$	(124,312)

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)

At both June 30, 2021 and 2020, there was 0 tax benefit or provision on the accumulated other comprehensive loss.

NOTE 7—8—EARNINGS PER SHARE

As a result of the Separation on June 30, 2020, 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 sets forth the computation of the basic and diluted earnings per share attributable to Match Group shareholders:

Three Months Ended March 31,
2021 2020
Basic Diluted Basic Diluted
(In thousands, except per share data)
Numerator
Net earnings from continuing operations $ 173,848 $ 173,848 $ 157,534 $ 157,534
Net loss (earnings) attributable to noncontrolling interests 402 402 (30,769) (30,769)
Impact from subsidiaries’ dilutive securities of continuing operations(a)
— (467) — (5,480)
Interest on dilutive Exchangeable Senior Notes, net of income tax(b)
— 4,075 — 4,070
Net earnings from continuing operations attributable to Match Group, Inc. shareholders $ 174,250 $ 177,858 $ 126,765 $ 125,355
Loss from discontinued operations, net of tax $ 0 $ 0 $ (331,967) $ (331,967)
Net loss attributable to noncontrolling interests of discontinued operations 0 0 2,372 2,372
Net loss from discontinued operations attributable to shareholders 0 0 (329,595) (329,595)
Net earnings (loss) attributable to Match Group, Inc. shareholders $ 174,250 $ 177,858 $ (202,830) $ (204,240)
Denominator
Weighted average basic shares outstanding 268,649 268,649 183,117 183,117
Dilutive securities(a)(c)(d)
— 16,774 — 5,842
Dilutive shares from Exchangeable Senior Notes, if-converted(b)
— 25,162 — 15,699
Denominator for earnings per share—weighted average shares(a)(b)(c)(d)
268,649 310,585 183,117 204,658
Earnings per share:
Earnings per share from continuing operations $ 0.65 $ 0.57 $ 0.69 $ 0.61
Loss per share from discontinued operations, net of tax $ 0 $ 0 $ (1.80) $ (1.61)
Earnings (loss) per share $ 0.65 $ 0.57 $ (1.11) $ (1.00)


	Three Months Ended June 30,
	2021				2020
	Basic		Diluted		Basic		Diluted

	(In thousands, except per share data)
Numerator
Net earnings from continuing operations	$	140,020	$	140,020	$	141,397	$	141,397
Net loss (earnings) attributable to noncontrolling interests	366		366		(29,816)		(29,816)
Impact from subsidiaries’ dilutive securities of continuing operations(a)	—		(388)		—		(3,947)
Interest on dilutive Exchangeable Notes, net of income tax(b)	—		4,075		—		4,070
Net earnings from continuing operations attributable to Match Group, Inc. shareholders	$	140,386	$	144,073	$	111,581	$	111,704

Earnings (loss) from discontinued operations, net of tax	$	509	$	509	$	(34,611)	$	(34,611)
Net earnings attributable to noncontrolling interests of discontinued operations	0		0		(2,053)		(2,053)
Impact from subsidiaries’ dilutive securities of discontinued operations(a)	—		0		—		(356)
Net earnings (loss) from discontinued operations attributable to shareholders	509		509		(36,664)		(37,020)
Net earnings attributable to Match Group, Inc. shareholders	$	140,895	$	144,582	$	74,917	$	74,684

Denominator
Weighted average basic shares outstanding	271,254		271,254		183,477		183,477
Dilutive securities(c)(d)	—		14,671		—		8,664
Dilutive shares from Exchangeable Notes, if-converted(b)	—		25,162		—		15,699
Denominator for earnings per share—weighted average shares(b)(c)(d)	271,254		311,087		183,477		207,840

Earnings per share:
Earnings per share from continuing operations	$	0.52	$	0.46	$	0.61	$	0.54
Earnings (loss) per share from discontinued operations, net of tax	$	0.00	$	0.00	$	(0.20)	$	(0.18)
Earnings per share attributable to Match Group, Inc. shareholders	$	0.52	$	0.46	$	0.41	$	0.36


	Six Months Ended June 30,
	2021				2020
	Basic		Diluted		Basic		Diluted

	(In thousands, except per share data)
Numerator
Net earnings from continuing operations	$	313,868	$	313,868	$	298,931	$	298,931
Net loss (earnings) attributable to noncontrolling interests	768		768		(60,585)		(60,585)
Impact from subsidiaries’ dilutive securities of continuing operations(a)	—		(428)		—		(9,427)
Interest on dilutive Exchangeable Notes, net of income tax(b)	—		8,150		—		8,139
Net earnings from continuing operations attributable to Match Group, Inc. shareholders	$	314,636	$	322,358	$	238,346	$	237,058

Earnings (loss) from discontinued operations, net of tax	$	509	$	509	$	(366,578)	$	(366,578)
Net loss attributable to noncontrolling interests of discontinued operations	0		0		319		319
Impact from subsidiaries’ dilutive securities of discontinued operations(a)	—		0		—		(240)
Net earnings (loss) from discontinued operations attributable to shareholders	509		509		(366,259)		(366,499)
Net earnings (loss) attributable to Match Group, Inc. shareholders	$	315,145	$	322,867	$	(127,913)	$	(129,441)

Denominator
Weighted average basic shares outstanding	269,959		269,959		183,297		183,297
Dilutive securities(c)(d)	—		15,735		—		7,146
Dilutive shares from Exchangeable Notes, if-converted(b)	—		25,162		—		15,699
Denominator for earnings per share—weighted average shares(b)(c)(d)	269,959		310,856		183,297		206,142

Earnings per share:
Earnings per share from continuing operations	$	1.17	$	1.04	$	1.30	$	1.15
Earnings (loss) per share from discontinued operations, net of tax	$	0.00	$	0.00	$	(2.00)	$	(1.78)
Earnings (loss) per share attributable to Match Group, Inc. shareholders	$	1.17	$	1.04	$	(0.70)	$	(0.63)

______________________

(a)Former IAC had the option to settle certain Former Match Group and ANGI Homeservices (“ANGI”) stock-based awards with Former IAC shares. For the three and six months ended ~~March 31,~~June 30, 2020, 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)The Company uses the if-converted method for calculating the dilutive impact of the outstanding Exchangeable ~~Senior~~ Notes. For the three and six months ended ~~March 31,~~June 30, 2021, the Company adjusted net earnings from continuing operations attributable to Match Group, Inc. shareholders for the cash interest expense, net of income taxes, incurred on the 2022, 2026, and 2030 Exchangeable ~~Senior~~ Notes and dilutive shares were included for the same set of notes at the Match Group exchange rates. For the three and six months ended June 30, 2020, the Company adjusted net earnings from continuing

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)

~~and dilutive shares were included for the same set of notes at the Match Group exchange rates. For the three months ended March 31, 2020, the Company adjusted net earnings from continuing~~ operations attributable to Match Group, Inc. shareholders for the cash interest expense, net of income taxes, incurred on the 2022, 2026, and 2030 Exchangeable ~~Senior~~ Notes and dilutive shares were included for the same set of notes at the Former IAC exchange rates multiplied by the Separation exchange ratio.

(c)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 and vesting of restricted stock units. For both the three and six months ended ~~March 31,~~June 30, 2021, ~~and 2020,~~ 0.7 ~~million and 15.7~~ million potentially dilutive securities, ~~respectively,~~and for both the three and six months ended June 30, 2020, 8.4 million potentially dilutive securities, are excluded from the calculation of diluted earnings per share because their inclusion would have been anti-dilutive.

(d)Market-based awards and performance-based ~~and~~ 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 the three and six months ended ~~March 31,~~June 30, 2021, 1.0 million shares underlying market-based awards and PSUs, and for both the three and six months ended June 30, 2020, ~~0.5 million and~~ 0.2 million shares ~~respectively,~~ 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.

NOTE 8—9—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:

March 31, 2021 December 31, 2020 March 31, 2020 December 31, 2019
(In thousands)
Cash and cash equivalents $ 845,696 $ 739,164 $ 791,321 $ 465,676
Restricted cash included in other current assets 134 138 123 127
Cash, cash equivalents, and restricted cash included in current assets of discontinued operations 0 0 2,032,152 2,674,146
Restricted cash included in non-current assets of discontinued operations 0 0 398 409
Total cash, cash equivalents, and restricted cash as shown on the consolidated statement of cash flows $ 845,830 $ 739,302 $ 2,823,994 $ 3,140,358


	June 30, 2021		December 31, 2020		June 30, 2020		December 31, 2019

	(In thousands)
Cash and cash equivalents	$	236,460	$	739,164	$	129,294	$	465,676
Restricted cash included in other current assets	134		138		127		127
Cash, cash equivalents, and restricted cash included in current assets of discontinued operations	0		0		0		2,674,146
Restricted cash included in non-current assets of discontinued operations	0		0		0		409

Total cash, cash equivalents, and restricted cash as shown on the consolidated statement of cash flows	$	236,594	$	739,302	$	129,421	$	3,140,358

NOTE 9—10—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’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

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MATCH GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)

material impact on the liquidity, results of operations, or financial condition of the Company. See “Note 2—Income Taxes” for additional information related to income tax contingencies.

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 following the separation of Match Group and IAC.

Tinder Optionholder Litigation Against Former Match Group and Match Group

On August 14, 2018, 10 then-current and former employees of Match Group, LLC or Tinder, Inc. (“Tinder”), a former subsidiary of Former Match Group, filed a lawsuit in New York state court against Former 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 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 June 13, 2019, the court issued a decision and order granting defendants’ motion to dismiss the claims for breach of the implied covenant of good faith and fair dealing and for unjust enrichments, as well as the merger-related claim for breach of contract as to 2 of the remaining 6 plaintiffs, and otherwise denying defendants’ motion to dismiss. On July 13, 2020, the 4 former plaintiffs filed arbitration demands with the American Arbitration Association asserting the same valuation claims and on September 3, 2020, the 4 arbitrations were consolidated. The 4 former plaintiffs’ request to stay the arbitration was denied on January 28, 2021, and arbitration is scheduled to begin on February 7, 2022. On November 17, 2020, the defendants’ motion to stay the trial in Rad was denied. Trial has been scheduled for November 2021. On June 9, 2021, the plaintiffs filed a Note of Issue and Certificate of Readiness for Trial in which they amended the amount of damages they are now claiming to “[m]ore than $5.6 billion”. 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 them.

FTC Lawsuit Against Former Match Group

On September 25, 2019, the United States Federal Trade Commission (the “FTC”) filed a lawsuit in federal district court in Texas against Former Match Group. See FTC v. Match Group, Inc., No. 3:19:cv-02281-K (Northern District of Texas). The complaint alleges that, prior to mid-2018, for marketing purposes Match.com notified non-paying users that other users were attempting 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 9, 2020, the court granted the Company’s motion to stay the case until the United States Supreme Court issues a decision in the consolidated appeal of Federal Trade Commission v. Credit Bureau Center, LLC and AMG Capital Management, LLC v. FTC. On April 22, 2021, the Supreme Court issued its decision, rejecting that the FTC has the ability to seek equitable monetary relief using Section 13(b) of the FTC Act. We believe that the FTC’s claims regarding Match.com’s practices, policies, and procedures are without merit and will defend vigorously against them.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)

NOTE ~~10—~~11—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~~leased 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~~through June 2021. For the three and six months ended ~~March 31,~~June 30, 2021, the Company received less than $0.1 million from IAC pursuant to the Los Angeles ~~lease~~lease. For the three and six months ended June 30, 2021, the Company paid ~~$0.2~~less than $0.1 million and $0.3 million, respectively, to IAC pursuant to the New York City lease.

All such amounts were paid in full by the Company and IAC, and there is 0 receivable balance due to, or from, IAC at ~~March 31,~~June 30, 2021.

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 ~~March 31,~~June 30, 2021, Match Group is obligated to remit to IAC ~~$2.0~~$1.4 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 ~~March 31,~~June 30, 2021, a receivable of $1.8 million is included in “Other current assets” in the accompanying consolidated balance sheet representing an estimate of the amount that Match Group expects to be indemnified for under this arrangement. At ~~March 31,~~June 30, 2021, 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.

Transition Services Agreement

Pursuant to the transition services agreement, IAC can provide certain services to Match Group that Former IAC had historically provided to Former Match Group. Match Group can also provide 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.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)

For the three and six months ended ~~March 31,~~June 30, 2021, the Company paid IAC less than $0.1 million related to services provided by IAC under the transitions services agreement. ~~Additionally,~~For the six months ended June 30, 2021, the Company received $0.1 million from IAC for services provided under the transitions services ~~agreement.~~agreement; 0 amounts were received for the three months ended June 30, 2021.

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 participated in IAC’s U.S. health and welfare plans, 401(k) plan and flexible benefits plan through December 31, 2020, and Match Group reimbursed IAC for the costs of such participation pursuant to the amended and restated employee matters agreement. Match Group

established its own employee benefit plans effective January 1, 2021.

For the ~~three~~six months ended ~~March 31,~~June 30, 2021, the Company paid IAC $0.1 million for the cost of IAC equity awards held by the Company’s employees upon ~~vesting.~~vesting; 0 amounts were paid for the three months ended June 30, 2021. At ~~March 31,~~June 30, 2021, the Company has accrued

~~$1.8~~ $1.9 million as the estimated cost due to IAC for IAC equity awards held by Match Group employees. Additionally, the Company paid IAC less than $0.1 million for residual costs associated with the health and welfare plans and 401(k) plan, inclusive of employee contributions to both, related to the period prior to December 31, 2020.

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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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

2021 Developments

In February 2021, the Company entered into a definitive agreement to acquire Hyperconnect, Inc. (“Hyperconnect”), a leading social discovery and video technology company based in Seoul, South Korea. The acquisition is valued at approximately $1.725 billion, subject to customary adjustments for cash, debt-like items, and net working capital at the closing of the acquisition. The Company has the option to pay up to 50% of the consideration in common stock of the Company, with the remaining balance of the consideration paid in cash. The Company expects to fund the cash portion of the consideration through a combination of cash on hand and draws on its existing Credit Facility and Delayed Draw Term Loan. The acquisition is anticipated to close in the second quarter of 2021, subject to customary closing conditions and receipt of certain regulatory approvals.

On March 26, 2021, Match Group Holdings II, LLC (“MG Holdings II”), amended its credit agreement to provide for ~~the~~a $400 million incremental “delayed draw” term loan facility (“Delayed Draw Term Loan”), the proceeds of which ~~may~~could be used only to finance a portion of the consideration for the acquisition of ~~Hyperconnect.~~Hyperconnect Inc. (“Hyperconnect”). The Delayed Draw Term Loan ~~provides~~was terminated effective June 18, 2021 according to its terms.

On June 17, 2021, Match Group completed the acquisition of Hyperconnect. The purchase price was $1.75 billion, net of cash acquired. The acquisition was funded with ~~an additional potential source~~cash on hand and the issuance of ~~funding for the Hyperconnect acquisition, including in the event we determine to deliver cash in lieu of some or all of the consideration otherwise payable in~~5.9 million shares of Match Group common stock.

Updated Operating and Financial Metrics

We have adjusted our key operating and financial data to provide better insight into the performance of our business. We are disclosing this data in three geographic areas—Americas, Europe, and APAC and Other.

Additionally, rather than presenting Average Subscribers and Average Revenue per Subscriber (“ARPU”), we will present Payers and Revenue per Payer (“RPP”) (as defined below). Unlike Average Subscribers, which include only users who purchase a subscription, and are counted on a daily basis, Payers include all users from whom we earn revenue (including those who make only à la carte purchases) and are counted as unique users in a given month. Similarly, ARPU is a daily metric and includes Direct Revenue sourced from subscribers only, whereas RPP is a monthly metric and includes all Direct Revenue. We believe that Payers and RPP, which account for non-subscriber users and the associated revenue, will be more useful in evaluating the performance of our business.

We believe presenting Direct Revenue, Payers, and RPP in three geographic regions enables investors to better understand our operating performance and is appropriate given our expanding global footprint. The new metrics also better account for the increasing à la carte revenue as a percentage of total revenue that the company earns and enhance comparability with our peers.

Key Terms:

Operating and financial metrics:

•Americas includes North America, ~~- consists of~~Central America, South America, and the ~~financial results and metrics associated with users located in the United States and Canada.~~Caribbean islands.

•~~International~~ Europe~~- consists of~~ includes continental Europe, the ~~financial results~~British Isles, Iceland, Greenland, and ~~metrics associated with users located outside of~~Russia, but excludes Turkey (which is included in APAC and Other).

•APAC and Other includes Asia, Australia, the ~~United States~~Pacific islands, the Middle East, and ~~Canada.~~Africa.

•Direct Revenue - is revenue that is received directly from end users of our services and includes both subscription and à la carte revenue.

•Indirect Revenue - is revenue that is not received directly from an end user of our services, substantially all of which is advertising revenue.

•~~Subscribers~~Payers - are unique users ~~who purchase~~at a ~~subscription~~brand level in a given month from whom we earned Direct Revenue. When presented as a quarter-to-date or year-to-date value, Payers represents the average of the monthly values for the respective period presented. At a consolidated level, duplicate Payers may exist when we earn revenue from the same individual at multiple brands in a given month, as we are unable to ~~one of our services. Users who purchase only à la carte features are not included~~identify unique individuals across brands in ~~Subscribers.~~the Match Group portfolio.

•~~Average Subscribers~~Revenue per Payer (“RPP”) - is the ~~number of Subscribers at the end of each day in the relevant measurement~~average monthly revenue earned from a Payer and is Direct Revenue for a period divided by the ~~number of calendar days in that period.~~

•~~Average Revenue per Subscriber (“ARPU”)~~ ~~- is Direct Revenue from Subscribers~~Payers 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~~months in ~~such~~the 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, live video costs, and data center rent, energy and bandwidth costs. In-app purchase fees are fees paid to Apple and Google in connection with the processing of in-app purchases of subscriptions and service 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, including fees paid to search engines and social media sites, offline

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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 under the credit agreement of MG Holdings II. As of both ~~March 31,~~June 30, 2021 and December 31, 2020, the Company had letters of credit outstanding of $0.2 million and $749.8 million available under the Credit Facility.

•Term Loan - The term loan facility under the credit agreement of MG Holdings II. At December 31, 2020, the Term Loan bore interest at LIBOR plus 1.75% and the then applicable rate was 1.96%. As of ~~March 31,~~June 30, 2021, the applicable rate was ~~1.95%~~1.91% and $425 million was outstanding.

•~~Delayed Draw Term Loan~~ - The delayed draw term loan facility established under the credit agreement of MG Holdings II on March 26, 2021 to allow for a $400 million incremental delayed draw term loan, the proceeds of which may be used only to finance a portion of the consideration for the acquisition of Hyperconnect. The maturity of the Delayed Draw Term Loan, whether or not drawn, is March 25, 2022, and any outstanding balance would bear interest in accordance with the consolidated net leverage ratio pricing grid applicable to borrowings under the Credit Facility.

•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 ~~March 31,~~June 30, 2021, $450 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, which were issued on May 19, 2020. As of ~~March 31,~~June 30, 2021, $500 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 ~~March 31,~~June 30, 2021, $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. As of ~~March 31,~~June 30, 2021, $500 million aggregate principal amount was outstanding.

•2022 Exchangeable Notes - The 0.875% Exchangeable Senior Notes due October 1, 2022 issued by Match Group FinanceCo, Inc., a subsidiary of the Company, which are exchangeable into shares of the Company's common stock. Interest is payable each April 1 and October 1. As of ~~March 31,~~June 30, 2021, $517.5 million aggregate principal amount was outstanding.

•2026 Exchangeable Notes - The 0.875% Exchangeable Senior Notes due June 15, 2026 issued by Match Group FinanceCo 2, Inc., a subsidiary of the Company, which are exchangeable into shares of the Company's common stock. Interest is payable each June 15 and December 15. As of ~~March 31,~~June 30, 2021, $575 million aggregate principal amount was outstanding.

•2030 Exchangeable Notes - The 2.00% Exchangeable Senior Notes due January 15, 2030 issued by Match Group FinanceCo 3, Inc., a subsidiary of the Company, which are exchangeable into shares of ~~the Company's common stock. Interest is payable each January 15 and July 15. As of March 31, 2021, $575 million aggregate principal amount was outstanding.~~

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the Company's common stock. Interest is payable each January 15 and July 15. As of June 30, 2021, $575 million aggregate principal amount was outstanding.

Non-GAAP financial measure:

•Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (“Adjusted EBITDA”) - 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

As used herein, “Match Group,” the “Company,” “we,” “our,” “us,” and similar terms refer to Match Group, Inc. and its subsidiaries, unless the context indicates otherwise.

For a more detailed description of the Company’s operating businesses, see “Item 1. Business” of the Company’s Annual Report on Form 10-K for the year ended December 31, 2020.

Additional Information

Investors and others should note that we announce material financial and operational information to our investors using our investor relations website at https://ir.mtch.com, our newsroom website at https://newsroom.mtch.com, Securities and Exchange Commission (“SEC”) filings, press releases, and public conference calls. We use these channels as well as social media to communicate with our users and the public about our company, our services and other issues. It is possible that the information we post on social media could be deemed to be material information. Accordingly, investors, the media, and others interested in our company should monitor the social media channels listed on our investor relations website in addition to following our newsroom website, SEC filings, press releases and public conference calls. Neither the information on our websites, nor the information on the website of any 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 SEC.

Second Quarter and Year-to-Date ~~March 31,~~June 30, 2021 Consolidated Results

For the three months ended ~~March 31,~~June 30, 2021 compared to the three months ended ~~March 31,~~June 30, 2020, revenue, operating income, and Adjusted EBITDA grew ~~23%~~27%, ~~38%~~7%, and ~~32%~~15%, respectively, primarily due to ~~subscriber~~Payer growth at a number of ~~brands, as well~~brands. Operating expenses in the 2021 quarter were impacted as the ~~growth~~global economy began to reopen following the lifting of ~~à la carte revenue primarily at Hinge~~COVID-19 pandemic restrictions, compared to the second quarter of 2020 when costs and ~~PlentyOfFish.~~expenses were reduced due to the start of the pandemic. Operating income and Adjusted EBITDA grew at ~~higher~~lower rates primarily due to higher general and administrative ~~expenses (excluding stock-based compensation) remaining relatively flat compared~~expenses; higher selling and marketing expense as brands increased marketing activities as the global economy began to reopen following the ~~prior year quarter.~~lifting of COVID-19 pandemic restrictions; and higher cost of revenue primarily due to in-app purchase fees. Operating income was further ~~favorably~~ impacted by higher stock-based compensation expense, primarily due to new grants made during the year and new grants associated with the Hyperconnect acquisition.

For the six months ended June 30, 2021 compared to the six months ended June 30, 2020, revenue, operating income, and Adjusted EBITDA grew 25%, 20%, and 23%, respectively, primarily due to Payer growth at a number of brands. Operating income and Adjusted EBITDA were impacted by higher in-app purchase fees and product development expenses. Operating income was further impacted by higher non-cash compensation, partially offset by lower amortization of ~~intangibles, partially offset by higher stock-based compensation expense.~~intangibles.

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Results of Operations for the three and six months ended ~~March 31,~~June 30, 2021 compared to the three and six months ended June 30, 2020

Revenue


	Three Months Ended June 30,							Six Months Ended June 30,
	2021		$ Change		% Change	2020		2021		$ Change		% Change	2020

	(In thousands, except RPP)
Direct Revenue:
Americas	$	374,388	$	75,695	25%	$	298,693	$	718,650	$	138,712	24%	$	579,938
Europe	196,542		42,492		28%	154,050		385,601		75,061		24%	310,540
APAC and Other	123,392		29,394		31%	93,998		245,252		54,165		28%	191,087
Total Direct Revenue	694,322		147,581		27%	546,741		1,349,503		267,938		25%	1,081,565
Indirect Revenue	13,438		4,729		54%	8,709		25,869		7,342		40%	18,527
Total Revenue	$	707,760	$	152,310	27%	$	555,450	$	1,375,372	$	275,280	25%	$	1,100,092









Percentage of Total Revenue:
Direct Revenue:
Americas	53%					54%		52%					53%
Europe	28%					28%		28%					28%
APAC and Other	17%					16%		18%					17%
Total Direct Revenue	98%					98%		98%					98%
Indirect Revenue	2%					2%		2%					2%
Total Revenue	100%					100%		100%					100%



Payers:
Americas	7,901		1,065		16%	6,836		7,748		984		15%	6,764
Europe	4,332		502		13%	3,830		4,294		430		11%	3,864
APAC and Other	2,736		397		17%	2,339		2,652		274		12%	2,378
Total	14,969		1,964		15%	13,005		14,694		1,688		13%	13,006



RPP:
Americas	$	15.79	$	1.23	8%	$	14.56	$	15.46	$	1.17	8%	$	14.29
Europe	$	15.12	$	1.71	13%	$	13.41	$	14.97	$	1.58	12%	$	13.39
APAC and Other	$	15.03	$	1.63	12%	$	13.40	$	15.42	$	2.03	15%	$	13.39
Total	$	15.46	$	1.45	10%	$	14.01	$	15.31	$	1.45	10%	$	13.86

For the three months ended June 30, 2021 compared to the three months ended ~~March 31,~~June 30, 2020

~~Revenue~~

Three Months Ended March 31,
2021 $ Change % Change 2020
(In thousands, except ARPU)
Direct Revenue:
North America $ 326,829 $ 63,482 24% $ 263,347
International 328,352 56,875 21% 271,477
Total Direct Revenue 655,181 120,357 23% 534,824
Indirect Revenue 12,431 2,613 27% 9,818
Total Revenue $ 667,612 $ 122,970 23% $ 544,642
Percentage of Total Revenue:
Direct Revenue:
North America 49% 48%
International 49% 50%
Total Direct Revenue 98% 98%
Indirect Revenue 2% 2%
Total Revenue 100% 100%
Average Subscribers:
North America 4,987 417 9% 4,570
International 6,122 778 15% 5,344
Total 11,109 1,195 12% 9,914
(Change calculated using non-rounded numbers)
ARPU:
North America $ 0.70 13% $ 0.63
International $ 0.59 7% $ 0.55
Total $ 0.64 $ 0.05 9% $ 0.59

~~North America~~Americas Direct Revenue grew ~~$63.5~~$75.7 million, or ~~24%~~25%, in ~~the first quarter of~~ 2021 versus 2020, driven by 9%16% growth in ~~Average Subscribers, 13%~~Payers and 8% growth in ARPU, and growth in non-subscriber live streaming video revenue at PlentyOfFish. International Direct Revenue grew $56.9 million, or 21%, in the first quarter of 2021 versus 2020, driven by 15% growth in Average Subscribers and 7% growth in ARPU.

RPP. Growth in ~~North America Average Subscribers was primarily driven by Tinder, Hinge, BLK, PlentyOfFish, and Chispa. Growth in International Average Subscribers~~Payers was primarily driven by Tinder with ~~several other brands also~~contributions from Hinge and the Swipe Apps (BLK, Chispa, and Upward). RPP growth was driven by Hinge, from both subscriptions and à la carte, with Tinder and POF Live à la carte contributing ~~including Pairs, Meetic,~~as well.

Europe Direct Revenue grew $42.5 million, or 28%, in 2021 versus 2020, driven by growth in Payers and ~~Hinge. North America ARPU increased~~RPP of 13% each. Growth in both Payers and RPP was primarily due to à la carte features and optimized pricing at Hinge, live streaming video at PlentyOfFish, an increase in premium subscription purchases at Tinder, and pricing optimization at OkCupid. International ARPU was favorably impacted by theTinder. The strength of the Euro ~~relative~~compared to the U.S. ~~dollar.~~dollar between the two periods also contributed.

~~Indirect~~Asia and Other Direct Revenue ~~increased~~grew $29.4 million, or 31%, in 2021 versus 2020, driven by 17% growth in Payers and 12% growth in RPP. Payer growth was primarily ~~due to a higher rate per impression received.~~driven by Tinder, with contributions from Pairs and

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the acquisition of Hyperconnect. RPP growth was primarily driven by Tinder, with contributions from the acquisition of Hyperconnect.

Indirect Revenue increased primarily due to our receiving a higher rate per impression.

For the six months ended June 30, 2021 compared to the six months ended June 30, 2020

All revenue categories increased primarily due to the factors described above in the three-month discussion.

Cost of revenue (exclusive of depreciation)

Three Months Ended March 31,
2021 $ Change % Change 2020
(Dollars in thousands)
Cost of revenue $ 179,455 $ 35,561 25% $ 143,894
Percentage of revenue 27% 26%
For the three months ended June 30, 2021 compared to the three months ended June 30, 2020


	Three Months Ended June 30,
	2021		$ Change		% Change	2020

	(Dollars in thousands)
Cost of revenue	$	193,099	$	44,246	30%	$	148,853
Percentage of revenue	27%					27%

Cost of revenue increased primarily due to an increase inof in-app purchase fees paid to mobile app stores of ~~$23.3 million; an increase of $8.5~~$33.3 million, increases in ~~partner related costs~~partner-related cost associated with live streaming, ~~video;~~ and increased hosting fees.

For the six months ended June 30, 2021 compared to the six months ended June 30, 2020


	Six Months Ended June 30,
	2021		$ Change		% Change	2020

	(Dollars in thousands)


Cost of revenue	$	372,554	$	79,807	27%	$	292,747
Percentage of revenue	27%					27%

Cost of revenue increased primarily due to an increase of in-app purchase fees paid to mobile app stores of $56.6 million, increases in ~~web operations of $2.0 million, consisting primarily of~~partner-related cost associated with live streaming, and increased hosting fees.

Selling and marketing expense

Three Months Ended March 31,
2021 $ Change % Change 2020
(Dollars in thousands)
Selling and marketing expense $ 144,988 $ 20,498 16% $ 124,490
Percentage of revenue 22% 23%
For the three months ended June 30, 2021 compared to the three months ended June 30, 2020


	Three Months Ended June 30,
	2021		$ Change		% Change	2020
	(Dollars in thousands)
Selling and marketing expense	$	128,918	$	38,117	42%	$	90,801
Percentage of revenue	18%					16%

Selling and marketing expense increased primarily due to higher marketing spend at multiple brands as the global economy began to reopen following the lifting of COVID-19 pandemic restrictions. In the second quarter of 2020, we reduced marketing spend due to the pandemic.

For the six months ended June 30, 2021 compared to the six months ended June 30, 2020


	Six Months Ended June 30,
	2021		$ Change		% Change	2020

	(Dollars in thousands)
Selling and marketing expense	$	273,906	$	58,615	27%	$	215,291
Percentage of revenue	20%					20%

Selling and ~~an increase~~marketing expense increased primarily due to the factors described above in ~~compensation expense~~the three-month discussion.

Table of ~~$2.5 million.~~Contents

General and administrative expense

Three Months Ended March 31,
2021 $ Change % Change 2020
(Dollars in thousands)
General and administrative expense $ 87,665 $ 8,346 11% $ 79,319
Percentage of revenue 13% 15%
For the three months ended June 30, 2021 compared to the three months ended June 30, 2020


	Three Months Ended June 30,
	2021		$ Change		% Change	2020
	(Dollars in thousands)
General and administrative expense	$	113,393	$	45,189	66%	$	68,204
Percentage of revenue	16%					12%

General and administrative expense increased primarily due to an increase in compensation expense of ~~$10.1~~$10.9 million primarily related to an increase in stock-based compensation expense related to new awards granted in the current year and $8.7 million of stock-based compensation related to new grants associated with the Hyperconnect acquisition, an increase in legal fees and other professional fees, other miscellaneous costs, and $3.5 million of professional fees associated with the acquisition of Hyperconnect.

For the six months ended June 30, 2021 compared to the six months ended June 30, 2020


	Six Months Ended June 30,
	2021		$ Change		% Change	2020

	(Dollars in thousands)
General and administrative expense	$	201,058	$	53,535	36%	$	147,523
Percentage of revenue	15%					13%

General and administrative expense increased primarily due to an increase in compensation expense of $21.0 million primarily related to an increase in stock-based compensation expense related to modifications of certain stock-based awards, ~~and~~ new awards granted in the current year, and ~~other increases in compensation, excluding~~$8.7 million of stock-based compensation ~~expense, due~~related to ~~higher headcount,~~new grants associated with the Hyperconnect acquisition, an increase in legal fees and ~~legal and consulting costs~~other professional fees, $7.5 million of ~~$4.0 million~~professional fees associated with the acquisition of ~~Hyperconnect. Partially offsetting these increases were decreases in~~Hyperconnect, and other ~~legal and professional expenses, and a reduction in travel expenses primarily due to the impacts of COVID.~~miscellaneous costs.

Product development expense

Three Months Ended March 31,
2021 $ Change % Change 2020
(Dollars in thousands)
Product development expense $ 55,576 $ 11,806 27% $ 43,770
Percentage of revenue 8% 8%
For the three months ended June 30, 2021 compared to the three months ended June 30, 2020


	Three Months Ended June 30,
	2021		$ Change		% Change	2020
	(Dollars in thousands)
Product development expense	$	52,133	$	10,204	24%	$	41,929
Percentage of revenue	7%					8%

Product development expense increased primarily due to an increase in compensation expense of ~~$11.7~~$9.7 million, primarily due to ~~an increase~~increases in headcount at ~~Tinder~~both Hinge and ~~Hinge.~~Tinder.

For the six months ended June 30, 2021 compared to the six months ended June 30, 2020


	Six Months Ended June 30,
	2021		$ Change		% Change	2020

	(Dollars in thousands)
Product development expense	$	107,709	$	22,010	26%	$	85,699
Percentage of revenue	8%					8%

Product development expense increased primarily due to the factors described above in the three-month discussion.

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Depreciation

Three Months Ended March 31,
2021 $ Change % Change 2020
(Dollars in thousands)
Depreciation $ 10,457 $ 1,063 11% $ 9,394
Percentage of revenue 2% 2%
For the three months ended June 30, 2021 compared to the three months ended June 30, 2020


	Three Months Ended June 30,
	2021		$ Change		% Change	2020
	(Dollars in thousands)
Depreciation	$	10,061	$	392	4%	$	9,669
Percentage of revenue	1%					2%

Depreciation increased primarily due to an increase in internally developed software placed in service.

For the six months ended June 30, 2021 compared to the six months ended June 30, 2020


	Six Months Ended June 30,
	2021		$ Change		% Change	2020

	(Dollars in thousands)
Depreciation	$	20,518	$	1,455	8%	$	19,063
Percentage of revenue	1%					2%

Depreciation increased primarily due to the factors described above in the three-month discussion.

Operating income and Adjusted EBITDA

Three Months Ended March 31,
2021 $ Change % Change 2020
(Dollars in thousands)
Operating income $ 189,258 $ 51,886 38% $ 137,372
Percentage of revenue 28% 25%
Adjusted EBITDA $ 230,044 $ 55,703 32% $ 174,341
Percentage of revenue 34% 32%


	Three Months Ended June 30,							Six Months Ended June 30,
	2021		$ Change		% Change	2020		2021		$ Change		% Change	2020

	(Dollars in thousands)
Operating income	$	209,914	$	14,320	7%	$	195,594	$	399,172	$	66,206	20%	$	332,966



Percentage of revenue	30%					35%		29%					30%

Adjusted EBITDA	$	262,613	$	34,810	15%	$	227,803	$	492,657	$	90,513	23%	$	402,144



Percentage of revenue	37%					41%		36%					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 ~~March 31,~~June 30, 2021 compared to the three months ended ~~March 31,~~June 30, 2020

Operating income and Adjusted EBITDA increased ~~38%~~7% and ~~32%~~15%, respectively, primarily driven by ~~revenue~~Payer and RPP growth at ~~multiple brands~~a number of brands. Operating income and Adjusted EBITDA were further impacted by higher general and administrative expenses, ~~(excluding stock-based compensation) remaining relatively flat compared~~higher selling and marketing expense as brands increased marketing activity as the global economy began to reopen following the ~~prior year quarter.~~lifting of COVID-19 pandemic restrictions, and higher cost of revenue primarily due to in-app purchase fees and live streaming costs. Operating income was further ~~favorably~~ impacted by higher stock-based compensation expense, primarily due to new grants made during the year and new grants associated with the Hyperconnect acquisition.

For the six months ended June 30, 2021 compared to the six months ended June 30, 2020

Operating income and Adjusted EBITDA increased 20% and 23%, respectively, primarily driven by the factors described above in the three-month discussion. Operating income was further impacted by higher non-cash compensation, partially offset by lower amortization of ~~intangibles, partially offset by higher stock-based compensation expense.~~intangibles.

At ~~March 31,~~June 30, 2021, there was ~~$293.2~~$286.6 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 ~~2.9~~2.7 years.

~~Interest expense~~

Three Months Ended March 31,
2021 $ Change % Change 2020
(Dollars in thousands)
Interest expense $ 31,838 $ (56) —% $ 31,894

~~Interest expense was flat compared to the prior period.~~

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Interest expense

For the three months ended June 30, 2021 compared to the three months ended June 30, 2020


	Three Months Ended June 30,
	2021		$ Change		% Change	2020
	(Dollars in thousands)
Interest expense	$	32,219	$	(2,532)	(7)%	$	34,751

Interest expense decreased primarily due to the lower interest rate on the 4.625% Senior Notes compared to the 6.375% Senior Notes, which were issued and redeemed, respectively, in the prior period, and a lower LIBOR rate on the Term Loan in the current period.

For the six months ended June 30, 2021 compared to the six months ended June 30, 2020


	Six Months Ended June 30,
	2021		$ Change		% Change	2020

	(Dollars in thousands)
Interest expense	$	64,057	$	(2,588)	(4)%	$	66,645

Interest expense decreased primarily due to the factors described above in the three-month discussion.

Other (expense) income, net

Three Months Ended March 31,
2021 $ Change % Change 2020
(Dollars in thousands)
Other (expense) income, net $ (1,319) $ (5,173) NM $ 3,854
For the three months ended June 30, 2021 compared to the three months ended June 30, 2020


	Three Months Ended June 30,
	2021		$ Change		% Change	2020
	(Dollars in thousands)
Other (expense) income, net	$	(355)	$	(17,765)	NM	$	17,410

Other income, net, in 2020 includes a favorable legal settlement of $35.0 million, partially offset by a loss on redemption of bonds of $15.7 million and expense of $1.7 million related to a mark-to-market adjustment pertaining to a subsidiary denominated equity instrument.

For the six months ended June 30, 2021 compared to the six months ended June 30, 2020


	Six Months Ended June 30,
	2021		$ Change		% Change	2020

	(Dollars in thousands)
Other (expense) income, net	$	(1,674)	$	(22,938)	NM	$	21,264

________________________

NM = not meaningful

Other expense, net, in 2021 includes foreign currency losses of ~~$1.6 million, partially offset by interest income of $0.2~~$1.1 million.

Other income, net, in 2020 includes ~~income~~a favorable legal settlement of ~~$3.6~~$35.0 million, ~~in net~~ foreign currency gains ~~due primarily to the strengthening~~ of ~~the U.S. dollar and Euro relative to the British Pound (“GBP”)~~$2.7 million, and interest income of ~~$1.9 million.~~$2.4 million, partially offset by a loss on redemption of bonds of $16.5 million and expense of $1.0 million related to a mark-to-market adjustment pertaining to a subsidiary denominated equity instrument.

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Income tax ~~benefit~~provision (benefit)

Three Months Ended March 31,
2021 $ Change % Change 2020
(Dollars in thousands)
Income tax benefit $ 17,747 $ (30,455) (63)% $ 48,202
Effective income tax rate NM NM
For the three months ended June 30, 2021 compared to the three months ended June 30, 2020


	Three Months Ended June 30,
	2021		$ Change		% Change	2020
	(Dollars in thousands)
Income tax provision	$	37,320	$	464	1%	$	36,856
Effective income tax rate	21%					21%

The income tax ~~benefits~~provision in 2021 and 2020 benefited from excess tax benefits generated by the exercise or vesting of stock-based awards. In 2020, this benefit was offset by a non-recurring increase in the valuation allowance for foreign tax credits.

For the six months ended June 30, 2021 compared to the six months ended June 30, 2020


	Six Months Ended June 30,
	2021		$ Change		% Change	2020

	(Dollars in thousands)
Income tax provision (benefit)	$	19,573	$	30,919	NM	$	(11,346)
Effective income tax rate	6%					NM

The income tax provision in 2021 and the income tax benefit in 2020, despite pre-tax income, are ~~due primarily to~~impacted by excess tax benefits generated by the exercise and vesting of stock-based ~~awards.~~awards, partially offset in the 2020 period by a non-recurring increase in the valuation allowance of foreign tax credits.

For further details of income tax matters see “Note 2—Income Taxes” to the consolidated financial statements included in “Item 1—Consolidated Financial Statements.”

Related party transactions

For a discussion of related party transactions see “Note ~~10—~~11—Related Party Transactions” to the consolidated financial statements included in “Item 1—Consolidated Financial Statements.”

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PRINCIPLES OF FINANCIAL REPORTING

Match Group reports Adjusted EBITDA and Revenue excluding foreign exchange effects, both of which are supplemental measures to U.S. generally accepted accounting principles (“GAAP”). Adjusted EBITDA is among the primary metrics by which we evaluate the performance of our business, on which our internal budget is based and by which management is compensated. Revenue excluding foreign exchange effects provides a comparable framework for assessing the performance of our business without the effect of exchange rate differences when compared to prior periods. We believe that investors should have access to the same set of tools that we use in analyzing our results. These non-GAAP measures should be considered in addition to results prepared in accordance with GAAP, but should not be considered a substitute for or superior to GAAP results. Match Group endeavors to compensate for the limitations of the non-GAAP measures presented by providing the comparable GAAP measures with equal or greater prominence and descriptions of the reconciling items, including quantifying such items, to derive the non-GAAP measures. We encourage investors to examine the reconciling adjustments between the GAAP and non-GAAP measures, which we discuss below.

Adjusted EBITDA

Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (“Adjusted EBITDA”) is defined as operating income excluding: (1) stock-based compensation expense; (2) depreciation; and (3) acquisition-related items consisting of (i) amortization of intangible assets and impairments of goodwill and intangible assets, if applicable, and (ii) gains and losses recognized on changes in the fair value of contingent consideration arrangements, as applicable. We believe Adjusted EBITDA is useful to analysts and investors as this measure allows a more meaningful comparison between our performance and that of our competitors. The above items are excluded from our Adjusted EBITDA measure because they are non-cash in nature. Adjusted EBITDA has certain limitations because it excludes the impact of certain expenses.

Non-Cash Expenses That Are Excluded From Adjusted EBITDA

Stock-based compensation expense consists principally of expense associated with the grants of stock options, restricted stock units (“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; 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 stock-based awards are settled on a net basis, the Company remits the required tax-withholding amounts from its current funds.

Depreciation is a non-cash expense relating to our property and equipment and is computed using the straight-line method to allocate the cost of depreciable assets to operations over their estimated useful lives or, in the case of leasehold improvements, the lease term, if shorter.

Amortization of intangible assets and impairments of goodwill and intangible assets are non-cash expenses related primarily to acquisitions. At the time of an acquisition, the identifiable definite-lived intangible assets of the acquired company, such as customer lists, trade names, and technology, are valued and amortized over their estimated lives. Value is also assigned to (i) acquired indefinite-lived intangible assets, which consist of trade names and trademarks, and (ii) goodwill, which are not subject to amortization. An impairment is recorded when the carrying value of an intangible asset or goodwill exceeds its fair value. We believe that intangible assets represent costs incurred by the acquired company to build value prior to acquisition and the related amortization and impairment charges of intangible assets or goodwill, if applicable, are not ongoing costs of doing business.

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The following table reconciles net earnings attributable to Match Group, Inc. shareholders to Adjusted EBITDA:

Three Months Ended March 31,
2021 2020
(In thousands)
Net earnings (loss) attributable to Match Group, Inc. shareholders $ 174,250 $ (202,830)
Add back:
Net (loss) earnings attributable to noncontrolling interests (402) 28,397
Loss from discontinued operations, net of tax — 331,967
Income tax benefit (17,747) (48,202)
Other expense (income), net 1,319 (3,854)
Interest expense 31,838 31,894
Operating Income 189,258 137,372
Stock-based compensation expense 30,116 21,172
Depreciation 10,457 9,394
Amortization of intangibles 213 6,403
Adjusted EBITDA $ 230,044 $ 174,341


	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020

	(In thousands)
Net earnings (loss) attributable to Match Group, Inc. shareholders	$	140,895	$	74,917	$	315,145	$	(127,913)
Add back:
Net (loss) earnings attributable to noncontrolling interests	(366)		31,869		(768)		60,266
(Earnings) loss from discontinued operations, net of tax	(509)		34,611		(509)		366,578
Income tax provision (benefit)	37,320		36,856		19,573		(11,346)
Other expense (income), net	355		(17,410)		1,674		(21,264)
Interest expense	32,219		34,751		64,057		66,645
Operating Income	209,914		195,594		399,172		332,966
Stock-based compensation expense	42,396		22,140		72,512		43,312
Depreciation	10,061		9,669		20,518		19,063
Amortization of intangibles	242		400		455		6,803

Adjusted EBITDA	$	262,613	$	227,803	$	492,657	$	402,144

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 currencies, and unfavorably impacted as the U.S. dollar strengthens relative to other 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~~tables present the impact of foreign exchange effects on total revenue ~~ARPU,~~ and ~~International ARPU~~Direct Revenue by geographic region, and RPP on a total basis and by geographic region, for the three and six months ended ~~March 31,~~June 30, 2021, compared to the three and six months ended ~~March 31,~~June 30, 2020:

Three Months Ended March 31,
2021 $ Change % Change 2020
(Dollars in thousands, except ARPU)
Revenue, as reported $ 667,612 $ 122,970 23% $ 544,642
Foreign exchange effects (18,238)
Revenue excluding foreign exchange effects $ 649,374 $ 104,732 19% $ 544,642
(Percentage change calculated using non-rounded numbers, rounding differences may occur)
ARPU, as reported $ 0.64 9% $ 0.59
Foreign exchange effects (0.02)
ARPU, excluding foreign exchange effects $ 0.62 6% $ 0.59
International ARPU, as reported $ 0.59 7% $ 0.55
Foreign exchange effects (0.03)
International ARPU, excluding foreign exchange effects $ 0.56 1% $ 0.55


	Three Months Ended June 30,							Six Months Ended June 30,
	2021		$ Change		% Change	2020		2021		$ Change		% Change	2020

	(Dollars in thousands)
Revenue, as reported	$	707,760	$	152,310	27%	$	555,450	$	1,375,372	$	275,280	25%	$	1,100,092
Foreign exchange effects	(24,216)							(42,454)
Revenue excluding foreign exchange effects	$	683,544	$	128,094	23%	$	555,450	$	1,332,918	$	232,826	21%	$	1,100,092

Americas Direct Revenue, as reported	$	374,388	$	75,695	25%	$	298,693	$	718,650	$	138,712	24%	$	579,938
Foreign exchange effects	(2,480)							(647)
Americas Direct Revenue, excluding foreign exchange effects	$	371,908	$	73,215	25%	$	298,693	$	718,003	$	138,065	24%	$	579,938

Europe Direct Revenue, as reported	$	196,542	$	42,492	28%	$	154,050	$	385,601	$	75,061	24%	$	310,540
Foreign exchange effects	(18,524)							(33,084)
Europe Direct Revenue, excluding foreign exchange effects	$	178,018	$	23,968	16%	$	154,050	$	352,517	$	41,977	14%	$	310,540

APAC and Other Direct Revenue, as reported	$	123,392	$	29,394	31%	$	93,998	$	245,252	$	54,165	28%	$	191,087
Foreign exchange effects	(2,724)							(7,951)
APAC and Other Direct Revenue, excluding foreign exchange effects	$	120,668	$	26,670	28%	$	93,998	$	237,301	$	46,214	24%	$	191,087


	Three Months Ended June 30,							Six Months Ended June 30,
	2021		$ Change		% Change	2020		2021		$ Change		% Change	2020

RPP, as reported	$	15.46	$	1.45	10%	$	14.01	$	15.31	$	1.45	10%	$	13.86
Foreign exchange effects	(0.53)							(0.48)
RPP, excluding foreign exchange effects	$	14.93	$	0.92	7%	$	14.01	$	14.83	$	0.97	7%	$	13.86

Americas RPP, as reported	$	15.79	$	1.23	8%	$	14.56	$	15.46	$	1.17	8%	$	14.29
Foreign exchange effects	(0.10)							(0.01)
Americas RPP, excluding foreign exchange effects	$	15.69	$	1.13	8%	$	14.56	$	15.45	$	1.16	8%	$	14.29

Europe RPP, as reported	$	15.12	1.71		13%	$	13.41	$	14.97	1.58		12%	$	13.39
Foreign exchange effects	(1.43)							(0.71)
Europe RPP, excluding foreign exchange effects	$	13.69	$	0.28	2%	$	13.41	$	14.26	$	0.87	6%	$	13.39

APAC and Other RPP, as reported	$	15.03	$	1.63	12%	$	13.40	$	15.42	$	2.03	15%	$	13.39
Foreign exchange effects	(0.34)							(0.52)
APAC and Other RPP, excluding foreign exchange effects	$	14.69	$	1.29	10%	$	13.40	$	14.90	$	1.51	11%	$	13.39

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FINANCIAL POSITION, LIQUIDITY AND CAPITAL RESOURCES

Financial Position

March 31, 2021 December 31, 2020
(In thousands)
Cash and cash equivalents:
United States $ 719,918 $ 581,038
All other countries 125,778 158,126
Total cash and cash equivalents $ 845,696 $ 739,164
Long-term debt:
Credit Facility due February 13, 2025 $ — $ —
Term Loan due February 13, 2027 425,000 425,000
Delayed Draw Term Loan due March 25, 2022 — —
5.00% Senior Notes due December 15, 2027 450,000 450,000
4.625% Senior Notes due June 1, 2028 500,000 500,000
5.625% Senior Notes due February 15, 2029 350,000 350,000
4.125% Senior Notes due August 1, 2030 500,000 500,000
2022 Exchangeable Notes 517,500 517,500
2026 Exchangeable Notes 575,000 575,000
2030 Exchangeable Notes 575,000 575,000
Total long-term debt 3,892,500 3,892,500
Less: Unamortized original issue discount 5,830 6,029
Less: Unamortized debt issuance costs 43,426 45,541
Total long-term debt, net $ 3,843,244 $ 3,840,930


	June 30, 2021		December 31, 2020

	(In thousands)
Cash and cash equivalents:
United States	$	44,825	$	581,038
All other countries	191,635		158,126
Total cash and cash equivalents	$	236,460	$	739,164



Long-term debt:
Credit Facility due February 13, 2025	$	—	$	—
Term Loan due February 13, 2027	425,000		425,000


5.00% Senior Notes due December 15, 2027	450,000		450,000
4.625% Senior Notes due June 1, 2028	500,000		500,000
5.625% Senior Notes due February 15, 2029	350,000		350,000
4.125% Senior Notes due August 1, 2030	500,000		500,000
2022 Exchangeable Notes	517,500		517,500
2026 Exchangeable Notes	575,000		575,000
2030 Exchangeable Notes	575,000		575,000
Total long-term debt	3,892,500		3,892,500

Less: Unamortized original issue discount	5,628		6,029
Less: Unamortized debt issuance costs	41,317		45,541
Total long-term debt, net	$	3,845,555	$	3,840,930

Long-term Debt

For a detailed description of long-term debt, see “Note 5—6—Long-term Debt, net” to the consolidated financial statements included in “Item 1—Consolidated Financial Statements.”

Cash Flow Information

In summary, the Company’s cash flows are as follows:

Three Months Ended March 31,
2021 2020
(In thousands)
Net cash provided by operating activities attributable to continuing operations $ 102,308 $ 39,248
Net cash used in investing activities attributable to continuing operations (10,545) (9,898)
Net cash provided by financing activities attributable to continuing operations 18,695 263,981


	Six Months Ended June 30,
	2021		2020

	(In thousands)
Net cash provided by operating activities attributable to continuing operations	$	350,815	$	275,887
Net cash used in investing activities attributable to continuing operations	(873,516)		(2,466,991)
Net cash provided by financing activities attributable to continuing operations	23,629		235,667

2021

Net cash provided by operating activities attributable to continuing operations in 2021 includes adjustments to earnings of ~~$30.1~~$72.5 million of stock-based compensation expense, ~~$10.5~~$20.5 million of depreciation, and ~~$4.6~~$7.4 million of other adjustments; partially offset by deferred income taxes of ~~$10.0~~$20.7 million primarily related to the net operating loss created by settlement of stock-based awards. The decrease in cash from changes in working capital primarily consists of an increase in accounts receivable of ~~$75.3~~$103.1 million primarily related to the timing of cash receipts, including cash received in the fourth quarter of 2020 rather than in the first quarter of 2021, and an increase in revenue; and a decrease in accounts payable and other liabilities of ~~$40.2~~$17.3 million due mainly to the timing of payments, including interest payments. These changes were partially offset by an increase from other assets of $32.6 million primarily due to the amortization of prepaid hosting services; an

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to the timing of payments, including interest payments; and a decrease from income taxes payable and receivable of $21.9 million primarily related to payments of international taxes. These changes were partially offset by an increase from other assets of $19.6 million primarily due to the amortization of prepaid hosting services and an increase from deferred revenue of ~~$10.8~~$25.7 million, due mainly to growth in subscription ~~sales.~~sales; and an increase in income taxes payable of $18.9 million primarily related to the timing of payments related to international taxes.

Net cash used in investing activities attributable to continuing operations in 2021 consists primarily of cash used to acquire Hyperconnect, net of cash acquired of $840.9 million, and capital expenditures of ~~$10.3~~$32.4 million that are primarily related to internal development of software and computer hardware to support our services.

Net cash provided by financing activities attributable to continuing operations in 2021 is primarily due to ~~$30.0~~$37.3 million of proceeds from the issuance of common stock pursuant to stock-based awards, partially offset by payments of ~~$10.5~~$11.4 million ~~for~~of withholding taxes paid on behalf of employees for net settled equity awards.

2020

Net cash provided by operating activities attributable to continuing operations in 2020 includes adjustments to earnings of ~~$332.0~~$366.6 million of loss related to discontinued operations, ~~$21.2~~$43.3 million of stock-based compensation expense, ~~$9.4~~$19.1 million of depreciation and ~~$6.4~~$6.8 million for amortization of intangibles. Partially offsetting these adjustments was deferred income tax of ~~$46.3~~$16.1 million primarily related to the net operating loss created by settlement of stock-based awards. The decrease in cash from changes in working capital primarily consists of an increase in accounts receivable of ~~$52.6~~$69.2 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;~~2020, and an increase in revenue; a decrease from ~~income taxes payable and receivable~~other assets of ~~$49.4 million due to a tax refund receivable, tax payments in excess of tax accruals in foreign jurisdictions, and the effect of audit settlements;~~$10.1 million; and a decrease in accounts payable and other liabilities of ~~$18.3~~$13.3 million, due mainly to the timing of payments, including interest payments. These changes were partially offset by an increase ~~from other assets~~in deferred revenue of ~~$10.7~~$13.1 million, ~~primarily~~ due mainly to ~~amortization of prepaid hosting services.~~growth in subscription sales.

Net cash used in investing activities attributable to continuing operations in 2020 consists primarily of the net cash distributed to IAC at the Separation of $2.4 billion and capital expenditures of ~~$9.8~~$18.1 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 ~~$500.0 million~~$1.0 billion from the issuance of the 4.125% and 4.625% Senior ~~Notes;~~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 ~~$145.4~~$209.7 million for withholding taxes paid on behalf of employees for net settled equity awards of Former Match Group, and purchases of treasury stock of Former Match Group of ~~$81.7~~$132.9 million.

Liquidity and Capital Resources

The Company’s principal sources of liquidity are its cash and cash equivalents as well as cash flows generated from operations. As of ~~March 31,~~June 30, 2021, $749.8 million was available under the Credit Facility that expires on February 13, 2025. ~~Additionally, the Company also has access to the $400 million Delayed Draw Term Loan, which is available only to fund a portion of the Hyperconnect acquisition.~~

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 expects that 2021 capital expenditures will be between approximately $80 million and $90 million, an increase from 2020 cash capital expenditures primarily due to leasehold improvements in our new leased New York office space, and building improvements at our ~~company owned~~company-owned buildings in Los Angeles.

In connection with the anticipated Hyperconnect acquisition, the Company has the option to pay up to 50% of the consideration in common stock of the Company, with the remaining balance of the consideration payable in cash. The Company expects to fund the cash portion of the consideration with a combination of cash on hand and draws on its existing Credit Facility and Delayed Draw Term Loan. The acquisition is anticipated to close in the second quarter of 2021, subject to customary closing conditions and receipt of certain regulatory approvals.

As of ~~March 31,~~June 30, 2021, all of the Company’s international cash can be repatriated without significant tax consequences.

Our indebtedness could limit our 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 pursue

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acquisitions 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

During the ~~three~~six months ended ~~March 31,~~June 30, 2021, there were no material changes to the Company’s contractual obligations since the disclosure in our Annual Report on Form 10-K for the year ended December 31, 2020.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

During the ~~three~~six months ended ~~March 31,~~June 30, 2021, there were no material changes to the Company’s instruments or positions that are sensitive to market risk since the disclosure in our Annual Report on Form 10-K for the year ended December 31, 2020.

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”), Match Group management, including our principal executive and principal financial officers, evaluated the effectiveness of the Company’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’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 includes 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’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

We are, and from time to time may become, involved in various legal proceedings arising in the normal course of our business activities, such as patent infringement claims, trademark oppositions, and 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 SEC’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 matters described below other than the matter described under the heading “Newman Derivative and Stockholder Class Action Regarding Separation Transaction”.

Consumer Class Action Litigation Challenging Tinder’s Age-Tiered Pricing

On May 28, 2015, a putative state-wide class action was filed against Tinder in state court in California. See Allan Candelore v. Tinder, Inc., No. BC583162 (Superior Court of California, County of Los Angeles). The complaint principally alleged that Tinder violated California’s Unruh Civil Rights Act by offering and charging users age 30 and over a higher price than younger users for subscriptions to its premium Tinder Plus service. The complaint sought certification of a class of California Tinder Plus subscribers age 30 and over and damages in an unspecified amount. On December 29, 2015, in accordance with a prior ruling sustaining Tinder’s demurrer, the court entered judgment dismissing the action. On January 29, 2018, the California Court of Appeal (Second Appellate District, Division Three) issued an opinion reversing the judgment of dismissal. On May 9, 2018, the California Supreme Court denied Tinder’s petition seeking interlocutory review of the Court of Appeal’s decision and the case was returned to the trial court for further proceedings.

In a related development, on June 21, 2019, in a substantially similar putative class action asserting the same substantive claims and pending in federal district court in California, the court entered judgment granting final approval of a class-wide settlement, the terms of which are not material to the Company. See Lisa Kim v. Tinder, Inc., No. 18-cv-3093 (Central District of California). Because the approved 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 appeal from the Kim judgment with the U.S. Court of Appeals for the Ninth Circuit. Oral argument on the appeal occurred on January 15, 2021.

On November 13, 2019, the trial court in Candelore issued an order staying the class claims in the case pending the Ninth Circuit’s decision on the Kim appeal. We believe that the allegations in the Candelore lawsuit are without merit and will continue to defend vigorously against it.

Tinder Optionholder Litigation Against Former Match Group and Match Group

On August 14, 2018, ten then-current and former employees of Match Group, LLC or Tinder, Inc. (“Tinder”), a former subsidiary of Former Match Group, filed a lawsuit in New York state court against Former 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

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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 June 13, 2019, the court issued a decision and order granting defendants’ motion to dismiss the claims for breach of the implied covenant of good faith and fair dealing and for unjust enrichments, as well as the merger-related claim for breach of contract as to two of the remaining six plaintiffs, and otherwise denying defendants’ motion to dismiss. On July 13, 2020, the four former plaintiffs filed arbitration demands with the American Arbitration Association asserting the same valuation claims and on September 3, 2020, the four arbitrations were consolidated. The four former plaintiffs’ request to stay the arbitration was denied on January 28, 2021, and arbitration is scheduled to begin on February 7, 2022. On November 17, 2020, the defendants’ motion to stay the trial in Rad was denied. Trial has been scheduled for November 2021. On June 9, 2021, the plaintiffs filed a Note of Issue and Certificate of Readiness for Trial in which they amended the amount of damages they are now claiming to “[m]ore than $5.6 billion”. 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 them.

FTC Lawsuit Against Former Match Group

Securities Class Action Lawsuit Against Former Match Group

On October 3, 2019, a Former Match Group shareholder filed a securities class action lawsuit in federal district court in Texas against Former Match Group, its then Chief Executive Officer, and its Chief Financial Officer, on behalf of a class of acquirers of Former Match Group securities between August 6, 2019 and September 25, 2019. See Phillip R. Crutchfield v. Match Group, Inc., Amanda W. Ginsberg, and Gary Swidler, No. 3:19-cv-02356-C (Northern District of Texas). Invoking the allegations in the FTC lawsuit described above, the complaint alleges (i) that defendants failed to disclose 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 March 30, 2021, the court granted defendants’ motion to dismiss with leave to amend. Plaintiff filed an amended complaint on April 23, 2021. We believe that the allegations in this lawsuit are without merit and will defend vigorously against them.

Derivative Complaint against Former Match Group

On February 28, 2020, a Former Match Group shareholder filed a shareholder derivative complaint in federal district court in Delaware against Former Match Group and its board of directors seeking to recover unspecified monetary damages on behalf of the Company and require the Company to implement and maintain unspecified internal controls and corporate governance practices and procedures. See Michael Rubin et al. v.

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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

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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. On February 25, 2021, another Match Group shareholder filed a shareholder derivative complaint in the Delaware Court of Chancery on behalf of nominal defendant Match Group, Inc. against its board of directors seeking to recover unspecified monetary damages. See Daniel Ochoa v. Match Group, Inc. et al, C.A. No. 2021-0158-MTZ (Delaware Court of Chancery). The complaint alleges federal securities laws violations and that Match Group’s directors breached their fiduciary duties by purportedly exercising inadequate oversight to prevent the alleged issues giving rise to the FTC complaint and by purportedly transacting in Match Group stock while possessing knowledge of these issues. We believe that the allegations in these lawsuits are without merit and will defend vigorously against them.

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 Company is cooperating with the investigation.

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 connection 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 the 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 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. On January 21, 2021, the case was consolidated with other shareholder actions, and an amended complaint was filed on April 14, 2021. See In Re Match Group, Inc. Derivative Litigation, Consolidated C.A. No. 2020-0505-MTZ (Delaware Court of Chancery). We believe that the allegations in this lawsuit are without merit and will defend vigorously against it.

Item 1A. Risk Factors

This quarterly report on Form 10-Q contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. All statements that are not historical facts are “forward-looking statements.” The use of words such as “anticipates,” “estimates,” “expects,” “plans,” and “believes,” among others, generally identify forward-looking statements. These forward-looking statements include, among others, statements relating to: Match Group’s future financial performance, Match Group’s business prospects and strategy, anticipated trends, the effects of the separation of Match Group from IAC, and other similar matters. These forward-looking statements are based on Match 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.

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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

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monetizing ~~dating~~ services, our ability to attract users to our ~~dating~~ services through cost-effective marketing and related efforts, foreign currency exchange rate fluctuations, our ability to distribute our ~~dating~~ services through third parties and offset related fees, the integrity and scalability of our systems and infrastructure (and those of third parties) and our ability to adapt ours to changes in a timely and cost-effective manner, our ability to protect our systems from cyberattacks and to protect personal and confidential user information, risks relating to certain of our international operations and acquisitions, certain risks relating to our relationship with IAC post-separation, the impact of the outbreak of COVID-19 coronavirus, the risks inherent in separating Match Group from IAC, including uncertainties related to, among other things, the expected benefits of the separation, any litigation arising out of or relating to the transaction, the tax treatment of the transaction, and the impact of the separation on the businesses of Match Group, and risks relating to the acquisition of Hyperconnect, including uncertainties related to, among other things, the costs and expected benefits of the transaction, the expected timing of the transaction or whether it will be completed, whether the conditions to the transaction can be satisfied or any event, change or other circumstance occurs that could give rise to the termination of the transaction (including the failure to receive any required regulatory approvals), any litigation arising out of or relating to the transaction, and the impact of the transaction on the business of Match Group.

Certain of these and other risks and uncertainties are discussed in Match Group’s filings with the Securities and Exchange Commission, including in Part I “Item 1A. Risk Factors” of our annual report on Form 10-K for the fiscal year ended December 31, 2020. Other unknown or unpredictable factors that could also adversely affect Match Group’s business, financial condition, and results of operations may arise from time to time. In light of these risks and uncertainties, these forward-looking statements 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 Match Group management as of the date of this quarterly report. Match Group does not undertake to update these forward-looking statements.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Unregistered Sales of Equity Securities

~~The~~Other than as previously disclosed in connection with the Hyperconnect acquisition, 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 ~~March 31,~~June 30, 2021.

Issuer Purchases of Equity Securities

The Company did not purchase any shares of its common stock during the quarter ended ~~March 31,~~June 30, 2021.

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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.

Incorporated by Reference Filed (†) or
Furnished (‡)
Herewith
(as indicated)
Exhibit
No. Exhibit Description Form SEC
File No. Exhibit Filing
Date
2.1
Share Purchase Agreement, dated as of February 10, 2021, by and among the Company, the Buyer and the Sellers
8-K 001-34148 2.1 2/10/2021
10.1
Amendment No. 7 dated as of March 26, 2021 to the Credit Agreement dated as of October 7, 2015, as amended and restated as of November 16, 2015, as further amended as of December 16, 2015, as further amended as of December 8, 2016, as further amended as of August 14, 2017, as further amended as of December 17, 2018 and as further amended as of February 13, 2020, among Match Group Holdings II, LLC, as borrower, the lenders party thereto, JPMorgan Chase Bank, N.A., as administrative agent and the other parties thereto.
8-K 001-34148 10.1 3/31/2021
10.2
Form of Terms and Conditions for Performance-based Restricted Stock Units granted under the Match Group, Inc. Amended and Restated 2017 Stock and Annual Incentive Plan.
†
31.1
Certification of the Chief Executive Officer pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
†
31.2
Certification of the Chief Financial Officer pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
†
32.1
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 of 2002.
‡
32.2
Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
‡
101.INS Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH Inline XBRL Taxonomy Extension Schema Document †
101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document †
101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document †
101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document †
101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document †
104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

Incorporated by Reference

Filed (†) or
Furnished (‡)
Herewith
(as indicated)

Exhibit
No.

Exhibit Description

Form

SEC
File No.

Exhibit

Filing
Date

2.1

Amendment and Supplement No. 1 to Share Purchase Agreement, dated as of June 17, 2021, by and among Sellers’ Representatives, the Buyer and the Company

†

3.1

Third Amended and Restated By-Laws of Match Group, Inc.

8-K

001-34148

3.2

4/30/2021

10.1

First Amendment to Transition Services Agreement, dated effective as of March 31, 2021, by and between Match Group, Inc. and IAC/InterActiveCorp

†

10.2

Match Group, Inc. 2021 Global Employee Stock Purchase Plan

†

31.1

Certification of the Chief Executive Officer pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

†

31.2

Certification of the Chief Financial Officer pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

†

32.1

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 of 2002.

‡

32.2

Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

‡

101.INS

Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

101.SCH

Inline XBRL Taxonomy Extension Schema Document

†

101.CAL

Inline XBRL Taxonomy Extension Calculation Linkbase Document

†

101.DEF

Inline XBRL Taxonomy Extension Definition Linkbase Document

†

101.LAB

Inline XBRL Taxonomy Extension Label Linkbase Document

†

101.PRE

Inline XBRL Taxonomy Extension Presentation Linkbase Document

†

104

Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

4348

Table of Contents

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.

~~May 6,~~August 5, 2021

MATCH GROUP, INC.

By:

/s/ GARY SWIDLER

Gary Swidler

Chief Operating Officer and
Chief Financial Officer



Signature	Title	Date

/s/ GARY SWIDLER	Chief Operating Officer and Chief Financial Officer	~~May 6,~~August 5, 2021
Gary Swidler

4449


	March 31, 2021		December 31, 2020

	(In thousands, except share data)
ASSETS
Cash and cash equivalents	$	845,696	$	739,164

Accounts receivable, net of allowance of $304 and $286, respectively	210,679		137,023

Other current assets	147,863		144,025

Total current assets	1,204,238		1,020,212

Property and equipment, net of accumulated depreciation and amortization of $175,459 and $169,321, respectively	106,957		107,799
Goodwill	1,254,248		1,270,532
Intangible assets, net of accumulated amortization of $15,495 and $15,551, respectively	226,673		230,900
Deferred income taxes	302,688		292,820

Other non-current assets	119,864		123,524

TOTAL ASSETS	$	3,214,668	$	3,045,787
LIABILITIES AND SHAREHOLDERS’ EQUITY
LIABILITIES

Accounts payable	$	13,152	$	29,200
Deferred revenue	248,201		239,088

Accrued expenses and other current liabilities	208,571		231,748

Total current liabilities	469,924		500,036
Long-term debt, net	3,843,244		3,840,930
Income taxes payable	13,261		14,582
Deferred income taxes	16,401		17,213

Other long-term liabilities	84,372		86,428

Redeemable noncontrolling interests	1,040		640
Commitments and contingencies	0		0
SHAREHOLDERS’ EQUITY
Common stock; $0.001 par value; authorized 1,600,000,000 shares; 270,082,027 and 267,329,284 shares issued and outstanding at March 31, 2021 and December 31, 2020, respectively	270		267




Additional paid-in capital	7,135,823		7,089,007
Retained deficit	(8,248,654)		(8,422,904)
Accumulated other comprehensive loss	(102,030)		(81,454)

Total Match Group, Inc. shareholders’ equity	(1,214,591)		(1,415,084)
Noncontrolling interests	1,017		1,042
Total shareholders’ equity	(1,213,574)		(1,414,042)
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	3,214,668	$	3,045,787


	Three Months Ended March 31,
		2021		2020

		(In thousands, except per share data)
Revenue		$	667,612	$	544,642
Operating costs and expenses:
Cost of revenue (exclusive of depreciation shown separately below)		179,455		143,894
Selling and marketing expense		144,988		124,490
General and administrative expense		87,665		79,319
Product development expense		55,576		43,770
Depreciation		10,457		9,394
Amortization of intangibles		213		6,403
Total operating costs and expenses		478,354		407,270
Operating income		189,258		137,372
Interest expense		(31,838)		(31,894)
Other (expense) income, net		(1,319)		3,854
Earnings from continuing operations, before tax		156,101		109,332
Income tax benefit		17,747		48,202
Net earnings from continuing operations		173,848		157,534



Loss from discontinued operations, net of tax		0		(331,967)
Net earnings (loss)		173,848		(174,433)
Net loss (earnings) attributable to noncontrolling interests		402		(28,397)
Net earnings (loss) attributable to Match Group, Inc. shareholders		$	174,250	$	(202,830)

Net earnings per share from continuing operations:
Basic		$	0.65	$	0.69
Diluted		$	0.57	$	0.61
Net earnings (loss) per share attributable to Match Group, Inc. shareholders:
Basic		$	0.65	$	(1.11)
Diluted		$	0.57	$	(1.00)

Stock-based compensation expense by function:
Cost of revenue		$	989	$	1,167
Selling and marketing expense		1,265		1,147
General and administrative expense		18,480		10,881
Product development expense		9,382		7,977
Total stock-based compensation expense		$	30,116	$	21,172


	Three Months Ended March 31, 2021						Three Months Ended March 31, 2020
	2022 Exchangeable Notes		2026 Exchangeable Notes		2030 Exchangeable Notes		2022 Exchangeable Notes		2026 Exchangeable Notes		2030 Exchangeable Notes

	(In thousands)
Contractual interest expense	$	1,132	$	1,258	$	2,875	$	1,132	$	1,258	$	2,875
Amortization of debt issuance costs	907		401		257		898		380		235
Total interest expense recognized	$	2,039	$	1,659	$	3,132	$	2,030	$	1,638	$	3,110


	March 31, 2021		December 31, 2020		March 31, 2020		December 31, 2019

	(In thousands)
Cash and cash equivalents	$	845,696	$	739,164	$	791,321	$	465,676
Restricted cash included in other current assets	134		138		123		127
Cash, cash equivalents, and restricted cash included in current assets of discontinued operations	0		0		2,032,152		2,674,146
Restricted cash included in non-current assets of discontinued operations	0		0		398		409

Total cash, cash equivalents, and restricted cash as shown on the consolidated statement of cash flows	$	845,830	$	739,302	$	2,823,994	$	3,140,358