Match Group (MTCH) Q4 2018 Earnings Conference Call Transcript
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Match Group (NASDAQ: MTCH)
Q4 2018 Earnings Conference Call
Feb. 7, 2019 8:30 a.m. ET
Contents:
Prepared Remarks
Questions and Answers
Call Participants
Prepared Remarks:
Operator
Good morning, and welcome to the Match Group fourth-quarter 2018 earnings conference call. [Operator instructions] Please note, this event is being recorded. I would now like to turn the conference over to Lance Barton, senior vice president of corporate development and investor relations. Please go ahead.
Barton Lance -- Senior Vice President of Corporate Development and Investor Relations
Thank you, operator, and good morning, everyone. Match Group CEO Mandy Ginsberg and CFO Gary Swidler will review the fourth-quarter investor presentation that is available on the Match Group Investor Relations website, and then we'll open it up for questions. But before we start, I'd like to remind everyone that during this call, we may discuss our outlook and future performance. These forward-looking statements may be preceded by words such as: we expect, we believe, we anticipate or similar statements.
These statements are subject to risk and uncertainty, and our actual results could differ materially from the views expressed today. Some of these risks have been set forth in our earnings release and our periodic reports filed with the SEC. Over to you, Mandy.
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Mandy Ginsberg -- Chief Executive Officer
Thanks, Lance, and good morning, everyone. As I pass my one-year anniversary as a CEO of Match Group, I wanted to quickly take stock of how we're set up for 2019 and beyond. Our key growth driver, Tinder, continues to show its strength with outperformance in Q4 even against a really tough comp from the prior year. Tinder has a robust set of initiatives to drive strong growth for the foreseeable future.
It is the go-to dating app for young singles, and we continue to cement our leadership among college students while fueling growth in emerging markets like India. While Tinder rightly gets most of the spotlight, we have a number of other brands that are poised for impressive growth and serve a different demographic or psychographic than Tinder. Hinge, which has seen accelerated growth under our leadership, is a differentiated product that has clear momentum and should turn into another star. The recent launch of Ship is resonating strongly with young women, and our African American and Latina-focused apps continue to grow their user bases impressively.
Match and Meetic continue to evolve their product, and we think that those brands will see growth again heading into next year as they resonate with serious-minded daters in their 30s and 40s. OkCupid has shown early traction in India, and Pairs continues to ramp as a leader in Japan. Along with Tinder, these brands give us some solid weapons in a large and growing Asian market. What all this tells you is that we have tremendous amount of exciting product work under way at Match Group.
We are driving innovation by incubating new products, advancing our existing ones and acquiring businesses with early traction that we can supplement with our deep experience and best practices, all of which provides us with multiple levers to drive long-term growth. We also generate significant profitability and cash flow, giving us the financial flexibility to strategically deploy capital for compelling M&A or greenfield opportunities. Before I talk about how we are executing on this strategy, I want to provide context for why we see plenty of room for continued growth with our products and the category. Slide 4 highlights our belief that out of the more than 600 million internet-connected singles in the world, a whopping 400 million people have never even tried a dating product.
Most people naturally assume that everyone who is single in the U.S. is on a dating app, but that's far from the truth. The reality is that more than half of all singles, both in U.S. and Europe, have never tried dating products.
Before Tinder launched, only one-third of all singles in the U.S. used online dating products, and the number was dramatically lower for Tinder's core demographic. Only 16% of 18 to 24-year olds used the category back in 2012. You can see from the dating product usage charts how many -- how much of an impact the growth of Tinder has brought to the category, but there's still significant amount of room to increase market penetration.
While 50% is a significant number, categories like travel and retail have reached 90% penetration, and I don't see why dating should be that different. For singles using dating products, we've seen a continued increase in the number of the apps they use at the same time. People want to improve their chances of success, so young people are using 4 products at once, and their time spent on dating apps is increasing. Our portfolio strategy and continued emphasis on launching in new apps has and will continue to pay dividends.
The opportunity is even larger when looking outside the U.S. and Europe where roughly 75% of the addressable market lives. We know that 2 out of every 3 singles outside North America and Europe have never tried a dating product, driven by a combination of category stigma and a lack of access to high-speed internet. We believe category adoption in most countries today is where the U.S.
and Europe were more than 10 years ago and should have a long runway. Penetration remains quite low in geographies we are investing in, such as Japan, India and South Korea. Taiwan, which is more penetrated but still a growth market, offers proof that there is plenty of room for adoption to increase in Asia. Facebook has acknowledged the opportunity this category presents by launching their dating products in Columbia, Thailand and Canada.
Given Facebook's scale, it could possibly help further erode the category stigma and increase multiple product usage, especially in underpenetrated geographies throughout Asia. But I want to be clear, in terms of their impact on us today, we scoured the metrics across all of our brands that operate in these three countries, and we have seen no discernible impact on our KPIs from the launch of Facebook Dating. To summarize, the category is large and underpenetrated. As a market leader for over 20 years with a portfolio of iconic brands around the world, our energies are focused on expanding category penetration, just as Tinder did for a generation of younger users.
Turning to Slide 5. In its fourth year of monetization, Tinder nearly doubled direct revenue to $805 million. In 2018, Tinder added 1.2 million average subscribers and increased ARPU by 23%. Our strategy to increase the number of Gold subscribers was a key component of ARPU growth, as was the continued ramp in à la carte purchases.
Tinder's top line remains impressive with 57% direct revenue growth, driven by 40% average subscriber growth and ARPU up 12% in the fourth quarter. Tinder exceeded our expectations for subscriber growth, primarily due to a number of ongoing products and merchandising optimizations that drove conversion wins, particularly in the back half of Q4. The increase in conversion led to a high volume of Tinder first-time subscribers and resubscribers in the quarter, which allowed us to offset most of the impact from the elevated number of expiring six and 12-month Gold subscribers that we discussed on last quarter's call. À la carte revenue also reached record levels in the fourth-quarter, driven in part by the high volume of subscribers at Tinder.
Slide 6 highlights key marketing and product projected at Tinder that support our overall strategy. The core of Tinder has always been fun and effective way to meet new people through swipe features and our double-blind opt-in. While improving the core experience of the app is always a focus, our long-term goal is to evolve the Tinder experience to a single lifestyle destination. In other words, if you are young and single, we want Tinder to become an essential part of your social life and the must-have app to meet new people, try new things, go to new places and attend social events.
As we build new features and introduce new experiences that support that strategy, three principles will and have always guided us: Tinder has to be effective, engaging and fun. Tinder got its start on college campuses, and last year, the launch of Tinder U meaningful increased engagement and usage within Tinder's core demographic. In 2019, we are planning to solidify our leadership position among college students by expanding Tinder U to cover even more schools throughout the U.S. while also launching Tinder U in select international markets.
We're also expanding marketing through our on-campus brand ambassadors and social media influencers. Expect to see more events and marketing tied to the school social calendar, such as a Rivalry Week and Spring Break. Moving to the middle of the slide. We will continue to drive in underpenetrated markets globally.
We're in the midst of a wave of rapid social and cultural change that should lead to increased appetite for dating products in these markets, like Japan and India to name a few. We're adding feet on the ground in various countries and are increasing marketing efforts to further accelerate the rapid organic growth that Tinder has experienced. We already have teams at about half a dozen key countries throughout Asia who activate our marketing programs and develop the cultural insights needed to further entrench Tinder in the lives of young singles in this region. Although Tinder is already the top grossing lifestyle app in over 100 countries around the world, we do see significant opportunity for us to further invest into growth.
Tinder's global growth happened despite the fact that we never really focused on adapting the product for different geographies or cultures. This is changing as we begin to localize the product and start to tailor areas such as login, profile, our algorithms and payments in various geographies. We will supplement our product localization with increased marketing to drive brand awareness. Historically, Tinder has used nontraditional channels, such as social media influencers and celebrities, to market the brand.
But in certain Asian markets, the reach and cultural credibility of TV are valuable. For the first time ever, we've launched TV campaigns in both India and South Korea to create awareness for the brand. In both of these markets, the campaign show how Tinder could expand single people's social circles and allow them to share real-life experiences based on common interests. January downloads in South Korea increased nearly 3.5 times versus last January, and we're seeing an increase in downloads in India by almost 50%.
As I said before, the biggest focus of our product work continues to be enhancing the core experience, increasing relevance, engagement and outcomes for all users. For example, Swipe Surge is a feature we rolled out that increased matches and conversations. We notify users during peak usage times on Tinder, kind of like signaling to people when a bar or a club is really hopping. We also continue to refine the post-match experience to increase conversations between matches and to make those conversations more contextual, engaging and fun.
In our messaging area of the app, users can now connect based on music they love, and through our Spotify partnership, share music with their matches. We have an extensive road map for the feed and post-match experience, so stay tuned. As you would expect, we also have a number of revenue initiatives sprinkled throughout the year. We have not assumed a big bang revenue feature in 2019, but you can be assured that Tinder team is working hard on a number of ideas.
And then more on those to come as the year progresses. Tinder has a number of vectors to focus on this year, all with one goal in mind, ensure that Tinder becomes the indispensable app for single life. As we do so, we'll drive engagement and outcomes, which, in turn, drive revenue, setting us up for a great 2019. Slide 7 lays out three of the exciting new brand opportunities we're making investments in, in 2019.
Our biggest area of investment outside of Tinder this year will be Hinge, which we now own 100% of. The Hinge product appeals to relationship-minded millennials by providing a differentiated experience where the interface is simple, yet the profiles are deep and engaging. It is resonating with users, evidenced by the fact that Hinge continues to gain momentum not only in the U.S. where downloads grew 4 times on a year-over-year basis in Q4 but also in the U.K.
where we saw a 10 times increase in downloads over the same time frame. Hinge has quickly become one of the most popular dating apps in New York and London, which are now its top two markets. The bottom-chart highlights a handful of dating apps that have attracted funding after the breakout success of Tinder. Most of these have not gained significant traction, but what you can see is that since we made our initial investment in Hinge, it has accelerated growth and meaningfully separated from that pack.
Hinge downloads are now 2.5 times more than the next largest app and 40% of Bumble's download as it continues to rapidly gain share. Armed with a differentiated and popular product and our knowledge of the category, we expect Hinge to continue to strengthen its position in this relationship-minded market. Right now, our focus is on driving user growth by raising awareness, driving downloads, increasing product affinity. We believe that Hinge can be a meaningful revenue contributor to Match Group beyond 2019.
We have confidence it can carve out a solid position in the dating app landscape among relationship-minded millennials and serve as a complementary role in our portfolio next to Tinder. At the end of January, just a few weeks ago, we launched a new brand called Ship in collaboration with Betches, a fast-growing digital media brand owned by three women that have been best friends since childhood. Betches has developed a very strong following on females in their 20s, evidenced by their more than 6.5 million followers on social media, 10 podcasts and two New York Times best-sellers. Ship is the first product we've launched where friends are actively involved in the dating experience.
The brand name is a play on words friendship, relationship as well as a reference to the slang shipping or to ship, which means endorsing a romantic relationship or rooting for a couple to be together. Ship mirrors the real-world behavior singles, particularly for women. The app allows users to invite their friends to select matches on their behalf and chat about matches with their close group of friends. We know that dating app users often send screenshots of their matches to their friends and that people in relationships love to choose matches for their single friends this app combines both of these behaviors, making it the first in-app group chat and dating product that let you pick -- let's your friends pick your matches.
The initial launch of Ship resulted in a huge influx of women, which is a critical success factor in this category. Although it's nearly launched, more than 80% of users on Ship are female, which is something I've never seen happen in the category really ever. It's still really early, but it's fun to see the traction that this product is getting already. We think the combination of a massive reach and strong female appeal of the Betches brand, combined with our category-leading knowledge of product and monetization, gives Ship a great chance for success.
Last quarter, I mentioned that OkCupid was in its early testing to see whether their organic traction in India could lead to something more if we localized the product and put some modest marketing dollars to work. Those tests have resulted in a significant increase in registrations and users, so we now have plans to invest further behind that early traction. The heart of OkCupid's growth in the U.S. was a provocative question posed on the platform, which led to culturally relevant conversations in the press and among our users.
We're replicating that formula now in India by adding localized questions that resonate with young and increasingly progressive Indian population. As a result, OkCupid has been earning headlines for insights on dating and love in India. There have been over 100 press articles written about the business, with over 800 million press impressions since October. We believe OkCupid can complement Tinder's market-leading position in India where Tinder is already the No.2 overall grossing app in the country.
The Indian market is clearly large enough to support multiple apps, and a product gap currently exists between tinder and the legacy matrimonial websites that have existed in India for many years. Our hope is that OkCupid can fill that void, and early results show that we are on the right path. Before Gary goes through the financials, I want to say how proud I am of what -- of the team and what they've accomplished.
Our financial results have been terrific. Our employees have continued to push hard and execute on plans, rolling out exciting new brands and creative new product features and marketing campaigns. And we have continued to make a difference in so many people's lives by introducing them to fantastic people who have become their partners, fiancés, husbands and wives. We have great things ahead, and we look forward to continue the journey with you.
With that, I will turn it over to Gary.
Gary Swidler -- Chief Financial Officer
Thanks, Mandy. We finished 2018 on a high note, capping a very strong year with 30% year-over-year revenue growth and 39% EBITDA growth. We're optimistic we can deliver again for our investors in 2019. I will first review Q4 in detail, then discuss 2019 and specifically the Q1 outlook.
On Slide 10, you can see that average subscribers reached over 8.2 million in Q4, up 17% year over year. Tinder drove our growth again this quarter, with aggregate stability at our other brands. We saw some pressure at Match and Meetic as we spent down on marketing by about 13%. Our other brands generally performed well.
Tinder's sequential subscriber growth was stronger than we had expected as optimizations and merchandising changes drove higher conversion levels and more new subscribers and resubscribers, offsetting much of the impact from a higher-than-normal number of expiring 6- and 12-month packages in Q4. The benefits of small optimizations, such as PayWall tweaks or recommendation engine changes that we made in the quarter, give us confidence that we have much more headroom on this front in 2019. On Slide 11, the left-hand chart shows the rapid growth in Tinder ARPU over the last two years, up nearly 50%. This has been driven by a number of monetization features, most notably Tinder Gold as well as by strong à la carte sales.
The ARPU at our other brands has remained stable over the same period. You can further see that the gap between Tinder's ARPU and the other brands' ARPU continues to narrow and that Tinder ARPU now approaches the overall Match Group ARPU. In Q4, overall company ARPU was higher by 4% year over year, up $0.03 to $0.58. ARPU growth was driven by Tinder, which saw 12% higher ARPU year over year.
International ARPU was unfavorably impacted by strength in the U.S. dollar compared to certain international currencies. On a constant currency basis, international ARPU would have been up 9% to $0.59. On a constant currency basis, company ARPU would have been up $0.04 or 7%.
Flipping to Slide 12. You can see that the 17% subscriber and 4% ARPU growth led to total revenue growth of 21%, with total revenue reaching $457 million for the quarter. Indirect revenue continue to be impacted by declines in impressions of the non-Tinder brands, coupled with some impact from GDPR and from changes to the deal terms in our relationship with FAN. In terms of EBITDA, we saw year-over-year growth of 15% in Q4 to $176 million.
EBITDA margins declined 2 points year over year, partly due to the higher legal expenses that we mentioned before. EBITDA growth was also impacted by higher marketing expense, particularly at Hinge, Pairs and Tinder, which ran multiple marketing campaigns, including Tinder U and a national brand campaign in Q4. The campaigns were timed to coincide with back-to-school as well as to lead into the important Christmas to Valentine's Day period. Product development costs increased by $5 million in the quarter, largely due to increased headcount investments at Tinder and Hinge.
Operating income grew 18%, driven by the higher revenues, partly offset by higher in-app fees. The operating income growth rate exceeded our EBITDA growth rate due to slower growth of stock-based comp and lower depreciation expense. Total stock-based comp expense was $16 million in the quarter, up 5% from the prior year. Though, for the full year, SBC expense declined by 4%.
With full-year 2018 behind us, I thought it would be good to once more review how the company is delivering for shareholders. On Slide 13, you can see that over the past three years, we've grown total revenue at a 21% annual rate, with 2018 total revenue exceeding $1.7 billion. Tinder has really outperformed over that period with a variety of product initiatives driving the outstanding revenue growth you can see on the left side of the page. It's really quite amazing to see a business go from under $50 million of revenue to over $800 million in just three years.
When you look at our other businesses, you can see the trends that we've been talking about for a while now. From '16 to '17, revenue declined at the other brands, primarily because we reduced marketing spend at our Affinity business, which impacted subscribers and revenue. By 2018, the overall business ex Tinder was stable compared to the prior year. In terms of operating income, we have grown at a 32% CAGR over the past three years with margins reaching 32% and total operating income of $553 million in 2018.
We achieved $654 million of EBITDA in 2018, or just about double our EBITDA from three years prior. We've expanded margins by five points over the three years, with an exceptional 2.5-point increase in 2018. We continue to have confidence in our ability to drive margins over 40% as the business continues to scale. Both operating income and EBITDA growth have been driven by the strong revenue growth and lower expenses as a percent of revenues as the business continues to shift toward brands with lower marketing spend as a percent of revenues, partly offset by higher IAP fees.
On Slide 14, you can see from the left chart that our leverage has declined noticeably over the last three years from over 4 times to about 2 times. Late last year, we paid a special cash dividend of $2 per share of Match Group common stock and Class B common stock. We used cash on hands and some borrowings under our revolver to pay the $556 million to shareholders for the dividend. We initially drew $260 million on the revolver, which was the drawn balance at 12/31/18, but we since paid it down.
Currently, our drawing stands at $185 million. It is possible that we'll access the debt markets to pay down the revolver if market conditions are favorable. We had $187 million of cash on hand at the end of 2018, and as I stated last quarter, our target gross leverage ratio is two-and-a-half to three times. We have plenty of flexibility to continue to invest appropriately in our businesses and follow-through on any attractive M&A opportunity that we find.
We would go above three times leverage for compelling M&A, assuming a reasonable deleveraging period. The company generated a phenomenal $573 million of free cash flow in 2018, up 96% year over year. This was helped by the fact that we were not a domestic cash taxpayer. We also had some working capital favorability in late 2018.
The business' CAPEX levels remained extremely low at $31 million for 2018. In Q4, we deployed $47 million of cash to repurchase just over 1 million shares. In 2018, in total, we repurchased 3.1 million shares at an average price of $43.72, effectively returning $134 million to shareholders. Combined with the $556 million for the dividend, we effectively returned nearly $700 million to shareholders in 2018.
We also used $208 million of cash to pay employee withholding taxes in 2018, issuing 4.9 million fewer shares as a result. For the full-year 2019, we're optimistic that we can continue to deliver strong financial performance. Consistent with my remarks on our last call, we believe we'll be able to deliver top-line growth in the mid-teens. We expect Tinder to continue to drive our growth, while our other brands remain stable and aggregate.
The 2019 growth outlook assumes solid monetization progress continues at Tinder, but not a step-change revenue feature like Tinder Gold. We believe the company's year-over-year revenue growth will accelerate slightly as the year progresses as the non-Tinder businesses begin to contribute more to the equation. At Tinder, we expect that user growth and the work we're doing on both product features and optimizations will lead to adding around 1 million average subscribers in 2019. Given the strength we saw in Q4 at Tinder, we're positioned to have slightly above-average subscriber additions in Q1, with the rest of the year pacing at more typical levels.
We believe we can continue to grow Tinder ARPU in the mid-single digits for the year, depending on the mix of developed and developing market subscribers. With all that said, we remain focused on driving overall revenue at Tinder, not specifically on subscriber or ARPU growth. In terms of EBITDA, we expect a range of $740 million to $790 million for the year. Where we end up in the range will depend on revenue and the precise levels of marketing and product investment that we choose to make.
I do not expect Tinder's marketing spend to grow as a percent of revenue in 2019. At the midpoint of our revenue and EBITDA ranges, margins would be up about 60 basis points for the year. We continue to have a tight focus on marketing spend at Match and Meetic, which is pressuring their revenue and subscribers, but we're refining these products to position them for growth in 2020 and beyond. Our other long-standing brands are performing well, and we're investing in new brands like Hinge, Ship, BLK and Chispa as well as payers to drive incremental growth.
We expect heavier year-over-year marketing investment in the first half of 2019, coincident with our peak season, major investment in Hinge and the launch of Ship, among other things. We expect margins in Q1 and Q2 will be down from unusually high levels in 2018 but fairly consistent with what we typically have seen in the years prior to 2018. The margin trends for the year also should be consistent with what we have seen historically, with our lowest margin in Q1 accelerate to a peak in Q4. For Q1 '19, we expect revenue of $455 million to $465 million.
This is in spite of nearly $15 million of negative FX impact compared to the year-ago quarter. We expect $150 million to $155 million of EBITDA in Q1 and margin of 33% at the midpoint of our ranges. As I said at the outset, we had a tremendous 2018, capping our third year of very strong financial performance as a public company. We're continuing to execute well against our strategic plans and our global opportunity and believe we're well-positioned for sustained, strong, top and bottom-line growth and increasing profitability.
With that, I'll ask the operator to open the line for questions.
Questions and Answers:
Operator
Thank you. [Operator instructions] OK. The first question comes from Ross Sandler with Barclays. Please go ahed.
Ross Sandler -- Barclays -- Analyst
Great. Thanks. So I guess, Gary or Mandy, it seems like something has improved at Tinder in the -- since we spoke 90 days ago, given that -- the beat in 4Q and the 1Q guide above the 250K net adds level. And you mentioned, Mandy, product and merchandising changes that drove an uptick in the second half of the quarter.
So I guess any additional color on what you're seeing? And then how does the net adds look from a geographic standpoint? Are they coming in kind of across the board? Or is this more on these new markets in Asia?
Gary Swidler -- Chief Financial Officer
Good morning, Ross. Let me try to take a stab at that. So as you know, we talked a lot about the large number of expiring six and 12-month packages that we had in Q4 when we had our last call. And what we basically did was we mobilized very hard.
We talked over the time about how much, we think, at Tinder there's room for us to make optimizations and drive subscribers, and we were able to do. We mobilized, especially in the back half of the quarter, and made a number of optimizations that really led to significant conversion improvements, brought in more first-time subscribers and resubscribers. And what that did was, basically, help offset a lot of the expiring six and 12-month subscribers. And so instead of coming in under the 200K level, which is what we thought at the time, we were able to get up to 233K sequential net adds in the quarter.
So we're very pleased with the progress that we made. And importantly, what it tells us is we're right about our belief that we have a lot of headroom to keep making those kinds of optimizations, whether it's PayWall changes, whether it's more significant changes, the recommendation engine that drives likes and, therefore, increases conversion. All those things on a platform of the scale of Tinder really moved the needle. And we saw that in Q4, and we have optimism that we're going to see benefits from that throughout 2019.
And so while we did spend up in marketing at Tinder in the fourth quarter of '18, that did help drive things, but the real significant driver of the uptick was the optimization work that we did. And what you see is because we had more significant subscriber growth than we were expecting, that higher level of subscribers carried into Q1. And so as a result of that, we're expecting a higher number of subscribers than our kind of typical average in Q1 as well, probably something approaching 300,000-or-so subscribers. And it really is strength across the board.
It's not confined to one particular geography, which I think was the last part of your question. It really is strength across the board on conversion and subscriber growth. OK. Hopefully, that's helpful, Ross.
Next question, please.
Operator
OK. The next question is from Brandon Ross with BTIG. Please go ahead.
Brandon Ross -- BTIG -- Analyst
Hi. Good morning. I actually had one on Hinge. You mentioned its popularity in New York City and London during the prepared remarks.
Can you speak to the market share you've seen in those markets and the monetization rates, maybe as a leading indicator for that brand's going? And then maybe what's the strategy for achieving growth from here at Hinge? Is it a city-by-city approach or kind of a national approach? And then just on Tinder, could you just tell us how to really think about subs domestically versus internationally? Any more color you could give on that? Thanks.
Mandy Ginsberg -- Chief Executive Officer
Sure, OK. Let me start with Hinge. So the first thing I want to say about Hinge is that we've seen Hinge have this incredible product market fit. So what that means is that people just love the product.
And if you talk to users who use the products, there's just really strong word-of-mouth marketing because they're just getting great value out of it. And so as a result of that strong product traction, we're seeing organic growth in large cities, cosmopolitan cities, throughout the U.S. New York, certainly, the strength, it's where it started, but in L.A. and Chicago and San Francisco.
And then we're also seeing English-speaking international markets where we're seeing either some traction like Toronto and Sydney. We do think that sort of looking ahead at Hinge over time, there is an opportunity to grow in non-English-speaking cities once the app is translated because at this point, it's just in English. Regarding marketing efforts, we're spending on marketing really around brand and elevating the brand Hinge because in New York, a lot of people have heard about it but there's still relatively low awareness in places across the country, and it's really focused on reaching young millennial men and women, mostly in online channels. So that addresses your question of how are you reaching them.
And then the question around monetization, we really haven't focused on monetization on Hinge. In fact, if you use the app, it's not easy to come across rate cards. It's just -- we have not really spent a lot of our energy. We'll begin spending a little bit more time and focus in the back half of the year.
I mean, as we have sort of proven time and time again that we take best practices and real institutional knowledge and bring it to sort of the next business we either acquire or build, so we feel confident that we have real opportunity there. And then the last thing I just wanted to mention when it comes to Hinge, there's question about sort of marketing, but it's really around how do we make sure we're constantly improving the product to continue to get that word-of-mouth traction, which is really important as well. So last year, we launched a couple of features that focused on really improving success rates. We met, as an example, that -- I can't remember if I talked about it on last call, but what it does is it gives people the ability to tell us what they think of their dates.
About two-thirds of people who go on dates participate in the surveys. And it's great because we think it's going to give us, over time, a robust signal for how to take, like, off-line feedback and build it into our matching algorithms. And so for Hinge, we're just -- we're really sort of early in the journey, and we feel like this is going to be a great business and a great contributor beyond '19. Second question, I think you asked around domestic versus international?
Brandon Ross -- BTIG -- Analyst
Yes, for Tinder.
Mandy Ginsberg -- Chief Executive Officer
Yes. So let me first say, so domestically, what we've really focused on is the -- in the last six months, primarily is college audience. There's 20 million college students in the U.S. We think they're incredibly important audience.
They also happen to be vibrant and dating a lot, so very relevant. Turning to international, where you see the growth and will continue decision growth, it is a big focus. And I'll touch on a couple of regions. Asia, there's really social change that's happening in these markets.
I mentioned in my remarks that in South Korea and India, we just launched TV ads really to drive increased awareness, and we're seeing nice momentum there. And then there are other markets where there's just some really interesting cultural relevance. So Brazil, for example, in the last month or so, the No. 1 pop song on is about media girl on Tinder named Jennifer.
And it's been a smash hit, and we've seen a big surge in traffic. But what it tells you is that Tinder is really integrated into the dating culture, and we think there's -- we continue to see momentum on that front as well. And then the last thing I'd just say is that not only are we putting marketing dollars into emerging markets, but we're also continuing to put more feet on the streets to make sure that not only can we market from -- execute from a marketing standpoint, but we need to continue to adopt the product, everything from login, to profile, to payments geographically, and that's an area that we just haven't focused on until now. And so we do think that the international markets will see momentum in growth, especially since that's where 75% of our addressable audience is.
Brandon Ross -- BTIG -- Analyst
Thank you.
Operator
OK. The next question comes from Eric Sheridan with UBS. Please go ahead.
Eric Sheridan -- UBS -- Analyst
Thanks so much. Given the disclosure of Tinder and sort of non-Tinder revenue in the release in the slides, I'm just curious how you're thinking about that non-Tinder revenue. It's been sort of flattish over the last couple of years. Is that going to be an area we should look for continued stability? Or is that an area where you could possibly put marketing dollars to work to stimulate growth? How those brands fit into the broader portfolio? A good update on all of that would be helpful.
Thanks so much.
Gary Swidler -- Chief Financial Officer
Sure. So let me take a crack at it, Eric. I think that we've been talking about stability for a while now on the non-Tinder brands, and I think that's very fair to point out. I think we view that as kind of the minimum case that we're going to be able to achieve stability.
It was important for us to get to that point, and we've gotten there. And our goal is to get that piece of the business growing again. And I think we can accomplish that late this year and certainly into next year. And so that's the goal, and we're mobilizing on a number of fonts to do that.
If you unpack kind of what's going on in the non-Tinder brands a little bit more, I think you can kind of think about it in three components. The first is these new emerging growth businesses that we've been talking about, and I include Hinge in that category, I include Ship in that category, which just launched but shows really good user growth out of the gate. Chispa and BLK as well on the Latino and the African-American side. So we have a number of bets that we've made that we think will be able to drive growth for us aside from Tinder.
And then, of course, we have big hopes for Hinge in particular, as Mandy talked about. And then when you look at some of our other brands, like OkCupid and PlentyOfFish more domestically, although they're starting to branch out internationally as well. And then you've got Pairs in Japan, which has been growing nicely in a market that's really growing very strongly. So we've got some good growth drivers there as well.
And then the third piece of it is the Matches and Meetics of the world that have been tougher on the growth side because of what's been going on, particularly with TV spend, which we've talked about on a number of our calls. And we're doing a lot of product work at Match and Meetic, and we think that will drive improved word of mouth. We're also thinking through how to be more effective on the marketing side of those businesses. And the goal is to get those businesses growing again late this year into next, and they can be significant contributors, just given the size of those businesses.
So the early signs are that the work we're doing at those brands are starting to pay dividends, but we have a little bit more work to do over the next couple of quarters. And I think you'll start to see the result late this year, and certainly in 2020. So overall, our goal is to have that, at minimum, stability, get to kind of low single-digit growth in those brands and then go from there. And hopefully, we can have those businesses contribute nicely to the overall equation while Tinder continues to power a lot of the growth.
And that's kind of how we're thinking about the overall position of the company from a growth -- a revenue-growth perspective.
Eric Sheridan -- UBS -- Analyst
Great. Thanks for the color.
Gary Swidler -- Chief Financial Officer
OK. Thank you.
Operator
OK. The next question comes from Ben Schachter with Macquarie. Please go ahead.
Ben Schachter -- Macquarie -- Analyst
Congratulations on a great execution. Can you talk about the potential to improve commission rates on the mobile app stores? Is there a way for Match to pay fees that would be more in line with traditional subscription models? Or can you go direct in any way to avoid the commission fees? And related to that, Epic Games recently announced that they're going to be hosting a new app store on Android devices that will only charge developers about 12%. Should we expect that you would try to shift some usage there or to other third-party stores that may evolve around there? Thanks.
Gary Swidler -- Chief Financial Officer
Thanks, Ben, for the question and for all your good reports on this topic. It's, obviously, a huge topic among developers, given the amount of fees that we pay to Apple and Google. It's something that we're incredibly focused on. If you just look at our Tinder business, at $805 million of revenue in 2018 and growing this year, and you assume we pay pretty close to 30% across the board, it's a massive expense for us.
And you know that we make frequent trips to Cupertino to discuss this with Apple and Google as well. And it's something that we are thinking about very carefully. I know that there's a lot of noise being made in the industry, generally by players like Fortnite, by Netflix and the shift that they just announced. So it's something that we're watching incredibly carefully.
And it is, of course, not just an issue for us, but it's an issue for everyone. But it's a complicated one. There is certainly real benefits that the stores bring to the table from a distribution standpoint in particular. For our brands, they don't bring us much on the marketing side just because we have such high brand awareness at so many of our brands, and the reality is that when people go to the stores, they're searching for a particular app, and so there's not as much benefit.
So the 30% to us does feel like a big number compared to the benefits that are being brought, but obviously, as we've sort of a balanced this out, all of our financial assumptions assume that we're going to keep paying that 30% because that's currently the business model. So we're not assuming any relief there, but we're watching all these developments, including what you point out as new stores cropping up. And to the extent there are tools that we can use, whether it's new stores, whether it's something else, to reduce the overall 30%, we will certainly focus and try to benefit from that. But so far, we haven't made any significant moves in that direction, but we'll continue to watch this and see how we can benefit from it financially.
Operator
OK. The next question comes from Anthony DiClemente with Evercore ISI. Please go ahead.
Anthony DiClemente -- Evercor ISI -- Analyst
Thanks so much for taking my questions. Just one on monetization products and product pipeline. Usually, you have a new monetization product out in the late summer, let's say the third quarter time frame. I think your prepared remarks suggested you'll not have one this year.
So I just wanted to get a little bit more behind that and the strategy or timing of future monetization products? And then maybe one more real quick on competition. Can you just, Mandy, give us a characterization of the competitive landscape domestically and internationally? Couldn't help but see the Bumble Super Bowl ads, and you mentioned Bumble in the prepared remarks and the slide. So is that sort of informing your response in marketing spend at least here in the U.S.? Is that what's -- is that part of what's driving the marketing strategy to counteract the competition? Thanks.
Gary Swidler -- Chief Financial Officer
So let me give a shot to the first part of your question, Anthony. I think if you look at our Q4 results, which were very strong, it's clear that we're not dependent on a big revenue feature to really drive subs, drive conversion, there's a lot that we can do. And so as we look into '19, that's going to be a big piece of what we're going to do on the optimization side. And Mandy went through a lot of that in her remarks, so I won't go through it again, but that will be a part of it.
We've got some revenue features kind of -- what she said was kind of sprinkled throughout the year. So not planning for one big bang in September or something like that as we've done in the last years. It could happen. There's a lot of things on the road map, and we're excited about a lot of different initiatives at Tinder.
So we're not committing specifically to that, but we believe we can deliver the number that we put out there without that big bang revenue feature. And we think there'll be incremental things, there'll be things that are a little bit larger than that, and we'll kind of see how the year plays out. But we feel very good about the product pipeline and very good about our ability to deliver what we've said from an outlook perspective without some very significant revenue-specific feature like we've had the last couple of years.
Mandy Ginsberg -- Chief Executive Officer
OK. So let me take the competition one. So if you think about the competition, looking back over my tenure, I mean, it's been a incredibly competitive industry, really in every market. There's a couple of global players.
We often see a ton of local players. And the constraint is not building an app, the constraint is really getting to scale. Very few players have done that. Asking about how we view our position in the market, we feel great competitively, just because we've got so many strong products in the category and can compete in both domestically and internationally.
And just to step back, if you look at our products, Tinder, for example, is in sort of a league of its own. It grew to scale so significantly and is maintaining sort of great leadership position. And then Hinge, which I talked a little bit about, it's gaining ground, particularly in the sort of serious space, and it is taking share in that serious space market in the domestic market. And we're excited about what we see, and we think it is definitely a contender to continue to increase momentum in a space where Tinder is a little bit younger, a little bit more casual and Hinge is a little bit older and more serious.
And then it is other products that we're introducing in international markets, for example, OkCupid, which I mentioned, has showed demonstrating traction -- showed some interesting traction in India. So we don't think about a single competitor. And you asked me specifically about the Bumble question and the Super Bowl. So I'll tell you, it definitely seems like Bumble is spending a large amount of money and marketing dollars in celebrity endorsements, especially looking at sort of the Super Bowl ad.
It's our belief and my belief in particular, as being a career-long marketer, that spending millions and millions of dollars on one ad in our category just doesn't have sustainable impact on the business. And what I can tell, we're looking at, based on U.S. downloads post the Super Bowl and India downloads after a big celebrity push, our belief is reinforced. On the flipside, there are opportunities to grow without big marketing dollars.
So OkCupid, with very minimal marketing spend, has seen just nearly tremendous momentum in the Indian market, which is really exciting by adapting the product and getting people to talk about the product through these really interesting, provocative questions embedded into the product. So it's not always spending a lot of dollars that drive traction, but just spending them in a really smart way. And then that said, we're always evaluating areas of opportunity to invest in marketing, especially to drive awareness for these brands. But as you all know, we are pretty measured and prudent in our marketing approach.
Anthony DiClemente -- Evercor ISI -- Analyst
Thanks a lot.
Operator
OK. The next question comes from Brent Thill with Jefferies. Please go ahead.
Brent Thill -- Jefferies -- Analyst
Good morning. I had a question for Mandy and Gary. For Mandy, you're coming off 30% growth in '18, yet that growth is staying in the mid-teens in '19. Can you just talk a little bit about what the assumptions you're taking into play here and the potential headwinds and tailwinds that you're considering? And for Gary, just on North American subs, that was down sequentially in the fourth quarter.
It's the first time we've seen that in two years. Can you just talk a little bit about what was the play on that sequential decline in North America?
Gary Swidler -- Chief Financial Officer
Sure, Brent. Why don't I take a crack at your question? And if I miss something, Mandy can certainly jump in. So if you -- first of all, let me handle the North America, subs declined substantially. First of all, important to point out that Q4 tends to be our weakest quarter from a seasonality standpoint.
So that's a factor in the sequential comparison. But as I pointed out, we did spend down at Match on the marketing side, in particular. And that really is the business that's responsible for the trend that you're noticing. So it's not a Tinder trend, it's a Match trend because of the decline in marketing.
And we just think that given both what's going on from a TV-efficiency standpoint and also because we're in the middle of making significant product changes, it really wasn't the quarter to go hard on the marketing side at Match. And so we saw the flow-through effect on revenue and subs from that. And as the year progresses and we make the changes in the product we want to make, we'll dial back up marketing and dial back up subs and revenue. So you're probably going to see that trend that you're referring to on the North America subs persist for a quarter or two as we make those changes at Match.
And then I think it will rebound nicely as we get toward the end of this year. So that's an important thing, I think, for people to factor in. But we have confidence that that's going to be the trajectory. As far as what we're seeing going from 30% kind of revenue growth in '18 to what we're saying is mid-teens in '19, I think there's a few things to keep in mind.
First of all, for the year, you've got a significant amount of FX negative impact. So that's just one thing that's out of our control that's probably a 2% or something off growth just from FX impact for the year. So that's a piece of it that's out of our control. Then there's the reality of what happened with Tinder Gold, which was a very unique set of circumstances where we rolled out a product that drove step-function changes in both conversion and ARPU.
And while we'll continue to swing for that to happen with other products that we introduced at Tinder and, frankly, across all the brands, you don't see that that often. So it was a significant jump that led to a massive increase in revenue in '18, and we'll continue to push for that, but that's not what our base case assumptions are for '19. And of course, there's also just the law of large numbers. As you look at it, we're now a $1.7 billion based on revenue in 2018.
It gets tougher to grow that by 30% as you turn the quarter into '19. So those are some of the puts and takes, FX, the Gold effect being two significant ones. When you look at kind of the composition and what's driving revenue growth across the business, as we've been saying for a while now and continues to be the case that Tinder is carrying the load and it's really driving our revenue growth. And so what it's leading to across the company is kind of single-digit ARPU growth and double-digit subscriber growth that leads to that kind of mid-teens revenue growth.
But we'll see how the year progresses. If Tinder is able to drive additional features that really drive more growth, which is certainly possible, I think you could see upside to that number. If the Match and Meetic turnarounds progress faster than what we're currently anticipating, you could see upside to that number. If Hinge monetized more quickly or has more success, you could certainly see upside to that number.
And the same is true to a smaller extent at the Chispas, BLKs of the world as well, or Ship surprised us as well. So we've got a lot of levers to pull. I think that's the most important thing for people to understand. While Tinder continues to be phenomenal, you've got a lot of different growth levers that are building at the company.
And I think that early this year, you won't see as much contribution from the non-Tinder businesses, but as the year progresses, you will. And we'll start to see that sequential improvement in revenue growth on a year-over-year basis as we get through '19. And the most important thing that I want people to understand is: our goal is to create this company into something that can sustain mid-high teens revenue growth over time by having all these different levers. And so while I know that Tinder is only what people love to focus on and it has been fantastic and continues to be fantastic, it's really important to understand that we've got a lot of other levers as well to pull on growth.
And once we get all those going in the right direction, you're going to see really strong, sustained revenue growth of this company for a long time, and that's what we're planning for.
Brent Thill -- Jefferies -- Analyst
Thank you.
Operator
OK. The next question comes from Dan Salmon with BMO Capital Markets. Please go ahead.
Dan Salmon -- BMO Capital Markets -- Analyst
Good morning, everyone. Just two questions. Mandy, first, I think Swipe Surge rolled out late in the year and would love to just hear a little bit more on that product. How you see it rolling out more broadly and globally? And how you're thinking about merchandising? And then second, you spoke a little bit about some of the sort of individual opportunities in the emerging markets, like OkC in India.
But just maybe to take it up a little bit of a higher level, could you just review the sort of competitive approach in emerging markets where, in some cases, sort of broader social media apps sort of act as the base layer of the internet as opposed to an operating system or a browser, and some of that social activity kind of bleeds together between dating and family and friends and otherwise? The common question is, Facebook sort of creeps into the market. What are the sort of different dynamics? And how social media and dating apps usage maybe different in emerging markets? And how you approach it? Thanks.
Mandy Ginsberg -- Chief Executive Officer
OK, great. So let me take the first one on Swipe Surge. So Swipe Surge we launched not too long ago globally on IoS. So we still haven't -- it's still developing on Android.
So we're planning on launching on Androids, which is going to be great because that's a very large portion of our audience. What Swipe Surge is doing is it's, of course -- in the product itself, it's telling people when there's high traffic when there's a lot of activity. And as I mentioned, it's kind of like telling people the bar is full or the club is hopping. So once people show up, there's just a lot more activity.
And what that activity does is it allows people to increase messaging and also increase matches. So we actually see double-digit increase in likes and messaging. And also just the response times are really quick because people are sort of -- are in the club or the bar, so to speak. So I think that covers the Swipe Surge question.
So let me address the other question you had just around underpenetrated markets and emerging markets. So as I talked about, if you look at the TAM, it's like a huge number. 75% of our market is outside of North America and Europe, which are more mature markets. And what you mentioned, which is you talked about what's happening with social media, but I think even what's more pronounced is that there's this massive cultural shift around dating because you're dealing with people in their 20s, they're the first generation that's dating.
Their parents didn't date. And so the phenomenon is really sort of changing things. I'll give you an example. Japan is a really interesting example of this.
We've been operating in Japan for, I don't know, a decade or so, maybe more, and it's only been in the last couple of years where we've seen acceleration, and it is due to this eroding stigma. And this also just happens to be a market where there's just people are also willing to pay. And it's also a market, interestingly enough, where people really want to date outside their social circles. And so for each of these markets, we really have to make sure we understand what's happening culturally.
And the momentum is there, and for us, it's more about making sure that we're sort of there to capture that momentum. So when it comes to Tinder in some of these markets because we're -- they're still early on dating, Tinder is starting to find and leading the conversation around dating, and you see this in several markets. And that's why I do think it's really important as we are in these markets, it's not just about marketing messages but make sure that we start to adapt the product so it's more relevant for these markets that are just sort of early on in the journey.
Dan Salmon -- BMO Capital Markets -- Analyst
Great. Thanks, Mandy.
Operator
OK. The next question comes from John Blackledge with Cowen. Please go ahead.
John Blackledge -- Cowen and Company -- Analyst
Great. Thanks. Just on Tinder ARPU maybe, Gary, what's the expectation for ARPU growth in '19 and kind of key drivers, mix drivers? And then also on Tinder, just à la carte as a percent of total Tinder direct revenue? And then if you can give the mix of à la carte Tinder subs versus nonpaying Tinder users? Thank you.
Gary Swidler -- Chief Financial Officer
OK. We're running a little bit tight on time, so let me try to answer those questions quickly. On Tinder à la carte, it remains about 30% or so of direct revenue. That's been pretty consistent now for a few quarters, and so that's kind of where we stand there.
From an ARPU perspective, I said mid-single digits for Tinder as 2019 happens. I think that's what we're looking at. I think there's a few components of that. We've been able to drive Gold mix up significantly and, obviously, that adds to ARPU.
I think that will continue to be a component of it. Obviously, as the percentage has gotten higher and higher, it's tougher to drive more and more Gold mix. But I think there's still more room on that front, and that will help drive. On the à la carte front in particular, which you raised, when you think about Tinder, there's really one kind of two features on the à la carte side that are really driving things, right, with Boost and Super Likes.
And I think you could imagine a much broader, longer menu of à la carte features that could be appealing at Tinder. So that is an area that we're focused on in 2019 and beyond for Tinder. I think there's room there. And then something that we talked about frequently is the ability to optimize price at Tinder.
Country-by-country, market-by-market basis, based on a number of factors, I think when we look at it, as we talked about before, pricing is a bit of a blunt instrument at Tinder. We haven't been that refined or sophisticated on it, and we are very sophisticated on it at a number of the other brands. And so we need to get more sophisticated on Tinder. We've got a team focused on that, and I think we'll make good progress on that over 2019.
So those are the three drivers, I think, that contribute to our confidence that we're going to be able to drive Tinder ARPU up single digits as '19 progresses. So I'm going to leave it there, just given the time, but hopefully, that answers your questions, John. We appreciate everyone joining the call again this quarter, and we forward to talking to you all on the next call. Thank you very much.
Operator
[Operator signoff]
Duration: 60 minutes
Call Participants:
Barton Lance -- Senior Vice President of Corporate Development and Investor Relations
Mandy Ginsberg -- Chief Executive Officer
Gary Swidler -- Chief Financial Officer
Ross Sandler -- Barclays -- Analyst
Brandon Ross -- BTIG -- Analyst
Eric Sheridan -- UBS -- Analyst
Ben Schachter -- Macquarie -- Analyst
Anthony DiClemente -- Evercor ISI -- Analyst
Brent Thill -- Jefferies -- Analyst
Dan Salmon -- BMO Capital Markets -- Analyst
John Blackledge -- Cowen and Company -- Analyst
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