MATCH GROUP, INC. Key Terms:
Operating and financial metrics:
•Americas includes
•Europe includes continental
•APAC and Other includes
•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.
•Payers are unique users at a 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 identify unique individuals across brands inthe Match Group portfolio. •Revenue Per Payer ("RPP") is the average monthly revenue earned from a Payer and is Direct Revenue for a period divided by the Payers in the period, further divided by the number of months in the period.
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 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 monies paid to Apple and
•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 bothJune 30, 2022 andDecember 31, 2021 , there was$0.4 million outstanding in letters of credit and$749.6 million of availability under the Credit Facility. 29 --------------------------------------------------------------------------------
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•Term Loan - The term loan facility under the credit agreement ofMG Holdings II. AtDecember 31, 2021 , the Term Loan bore interest at LIBOR plus 1.75% and the then applicable rate was 1.91%. As ofJune 30, 2022 , the applicable rate was 3.19% and$425 million was outstanding. •5.00% Senior Notes -MG Holdings II's 5.00% Senior Notes dueDecember 15, 2027 , with interest payable eachJune 15 andDecember 15 , which were issued onDecember 4, 2017 . As ofJune 30, 2022 ,$450 million aggregate principal amount was outstanding. •4.625% Senior Notes -MG Holdings II's 4.625% Senior Notes dueJune 1, 2028 , with interest payable eachJune 1 andDecember 1 , which were issued onMay 19, 2020 . As ofJune 30, 2022 ,$500 million aggregate principal amount was outstanding. •5.625% Senior Notes -MG Holdings II's 5.625% Senior Notes dueFebruary 15, 2029 , with interest payable eachFebruary 15 andAugust 15 , which were issued onFebruary 15, 2019 . As ofJune 30, 2022 ,$350 million aggregate principal amount was outstanding. •4.125% Senior Notes -MG Holdings II's 4.125% Senior Notes dueAugust 1, 2030 , with interest payable eachFebruary 1 andAugust 1 , which were issued onFebruary 11, 2020 . As ofJune 30, 2022 ,$500 million aggregate principal amount was outstanding. •3.625% Senior Notes -MG Holdings II's $500 million aggregate principal amount of 3.625% Senior Notes dueOctober 1, 2031 , with interest payable eachApril 1 andOctober 1 , commencing onApril 1, 2022 , which were issued onOctober 4, 2021 . As ofJune 30, 2022 ,$500 million aggregate principal amount was outstanding. •2022 Exchangeable Notes - The 0.875% Exchangeable Senior Notes dueOctober 1, 2022 issued byMatch Group FinanceCo, Inc. , a subsidiary of the Company, which are exchangeable into shares of the Company's common stock. Interest is payable eachApril 1 andOctober 1 . As ofJune 30, 2022 ,$58.9 million aggregate principal amount was outstanding. •2026 Exchangeable Notes - The 0.875% Exchangeable Senior Notes dueJune 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 eachJune 15 andDecember 15 . As ofJune 30, 2022 ,$575 million aggregate principal amount was outstanding. •2030 Exchangeable Notes - The 2.00% Exchangeable Senior Notes dueJanuary 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 eachJanuary 15 andJuly 15 . As ofJune 30, 2022 ,$575 million aggregate principal amount was outstanding.
Non-GAAP financial measure:
•Adjusted Operating Income - is a Non-GAAP financial measure. See "Non-GAAP Financial Measures" below for the definition of Adjusted Operating Income and a reconciliation of net earnings attributable toMatch Group, Inc. shareholders to operating (loss) income and Adjusted Operating Income.
Management Overview
Match Group, Inc. , through its portfolio companies, is a leading provider of digital technologies designed to help people make meaningful connections. Our global portfolio of brands includes Tinder®, Match®, Hinge®, Meetic®, OkCupid®, Pairs™, PlentyOfFish®, OurTime®, Azar®, Hakuna Live™, and more, each built to increase our users' likelihood of connecting with others. Through our 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.
As used herein, "
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
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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 anyMatch Group business, is incorporated by reference into this report, or into any other filings with, or into any other information furnished or submitted to, theSEC . 31 --------------------------------------------------------------------------------
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Results of Operations for the three and six months ended
Revenue
Three Months Ended June 30, Six Months Ended June 30,
2022 $ Change % Change 2021 2022 $ Change % Change 2021
(In thousands, except RPP)Direct Revenue: Americas$ 408,730 $ 34,342 9%$ 374,388 $ 808,708 $ 90,058 13%$ 718,650 Europe 208,471 11,929 6% 196,542 423,799 38,198 10% 385,601 APAC and Other 162,952 39,560 32% 123,392 331,479 86,227 35% 245,252 Total Direct Revenue 780,153 85,831 12% 694,322 1,563,986 214,483 16% 1,349,503 Indirect Revenue 14,360 922 7% 13,438 29,158 3,289 13% 25,869 Total Revenue$ 794,513 $ 86,753 12%$ 707,760 $ 1,593,144 $ 217,772 16%$ 1,375,372 Percentage of Total Revenue: Direct Revenue: Americas 51% 53% 51% 52% Europe 26% 28% 26% 28% APAC and Other 21% 17% 21% 18% Total Direct Revenue 98% 98% 98% 98% Indirect Revenue 2% 2% 2% 2% Total Revenue 100% 100% 100% 100% Payers: Americas 8,225 324 4% 7,901 8,192 444 6% 7,748 Europe 4,564 232 5% 4,332 4,648 354 8% 4,294 APAC and Other 3,606 870 32% 2,736 3,524 872 33% 2,652 Total 16,395 1,426 10% 14,969 16,364 1,670 11% 14,694 RPP: Americas$ 16.56 $ 0.77 5%$ 15.79 $ 16.45 $ 0.99 6%$ 15.46 Europe$ 15.23 $ 0.11 1%$ 15.12 $ 15.20 $ 0.23 2%$ 14.97 APAC and Other$ 15.06 $ 0.03 -%$ 15.03 $ 15.68 $ 0.26 2%$ 15.42 Total$ 15.86 $ 0.40 3%$ 15.46 $ 15.93 $ 0.62 4%$ 15.31
For the three months ended
Americas Direct Revenue grew$34.3 million , or 9%, in 2022 versus 2021, driven by 5% growth in RPP and 4% growth in Payers. RPP growth was driven by both higher average prices paid for subscriptions and increased average à la carte purchases per Payer at Tinder and Hinge. Growth in Payers was primarily driven by Tinder with contributions from Hinge and the Swipe Apps (BLK, Chispa, and Upward), partially offset by decreases at PlentyOfFish, Match, Match Affinity, and OkCupid. Europe Direct Revenue grew$11.9 million , or 6%, in 2022 versus 2021, driven by 5% growth in Payers and 1% growth in RPP. Growth in Payers was primarily due to Tinder and the acquisition ofHyperconnect in the second quarter of 2021, partially offset by decreases atMeetic . RPP growth was driven by the acquisition ofHyperconnect , which has a higher RPP relative to our other brands, and Tinder, partially offset by unfavorable impacts from the strength of theU.S. dollar compared to the Euro and British Pound between the two periods. 32 --------------------------------------------------------------------------------
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APAC and Other Direct Revenue grew$39.6 million , or 32%, in 2022 versus 2021, driven by 32% growth in Payers. Payer growth was primarily driven by Tinder and the acquisition ofHyperconnect . RPP was positively impacted by the acquisition ofHyperconnect , offset by the strength of theU.S. dollar compared to the Japanese Yen and Turkish Lira.
Indirect Revenue increased primarily due to receiving a higher rate per impression.
For the six months ended
All revenue categories increased primarily due to the factors described above in the three-month discussion.
Cost of revenue (exclusive of depreciation)
For the three months endedJune 30, 2022 compared to the three months endedJune 30, 2021 Three Months Ended June 30, 2022 $ Change % Change 2021 (Dollars in thousands) Cost of revenue$ 240,840 $ 47,741 25%$ 193,099 Percentage of revenue 30% 27% Cost of revenue increased due to the acquisition ofHyperconnect . Excluding the increase from theHyperconnect acquisition, cost of revenue increased 14% primarily due to an increase in in-app purchase fees of$15.6 million , which included a$5.0 million escrow amount related to litigation regarding the fees paid to the$7.7 million . For the six months endedJune 30, 2022 compared to the six months endedJune 30, 2021 Six Months Ended June 30, 2022 $ Change % Change 2021 (Dollars in thousands) Cost of revenue$ 477,076 $ 104,522 28%$ 372,554 Percentage of revenue 30% 27%
Cost of revenue increased primarily due to the factors described above in the three-month discussion.
Selling and marketing expense For the three months endedJune 30, 2022 compared to the three months endedJune 30, 2021 Three Months Ended June 30, 2022 $ Change % Change 2021 (Dollars in thousands)
Selling and marketing expense
$ 128,918 Percentage of revenue 16% 18% Selling and marketing expense, excluding the increase fromHyperconnect due to the acquisition in the second quarter of 2021, decreased$12.7 million primarily due to reductions in marketing spend at multiple brands. 33 --------------------------------------------------------------------------------
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For the six months endedJune 30, 2022 compared to the six months endedJune 30, 2021 Six Months Ended June 30, 2022 $ Change % Change 2021 (Dollars in thousands)
Selling and marketing expense
$ 273,906 Percentage of revenue 17% 20%
Selling and marketing expense increased primarily due to the acquisition of
General and administrative expense
For the three months endedJune 30, 2022 compared to the three months endedJune 30, 2021 Three Months Ended June 30, 2022 $ Change % Change 2021 (Dollars in thousands) General and administrative expense$ 110,638 $ (2,755) (2)%$ 113,393 Percentage of revenue 14% 16% ExcludingHyperconnect and related acquisition expenses incurred in 2021, general and administrative expense increased 3% primarily due to an increase in compensation expense of$10.7 million primarily related to 1) an increase in stock-based compensation related to modifications of certain stock-based awards and new awards granted in the current year, and 2) an increase in headcount. Additionally, general and administrative expense increased due to an increase in travel expenses of$2.3 million as our return to office activities continue to progress; partially offset by a decrease in legal and other professional fees. General and administrative expense related toHyperconnect decreased primarily due to a decrease in stock-based compensation related to grants in 2021 associated with theHyperconnect acquisition and a decrease in professional fees related to the acquisition ofHyperconnect that were incurred in 2021. For the six months endedJune 30, 2022 compared to the six months endedJune 30, 2021 Six Months Ended June 30, 2022 $ Change % Change 2021 (Dollars in thousands)
General and administrative expense
$ 201,058 Percentage of revenue 13% 15%
Excluding
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Product development expense
For the three months endedJune 30, 2022 compared to the three months endedJune 30, 2021 Three Months Ended June 30, 2022 $ Change % Change 2021 (Dollars in thousands) Product development expense$ 86,410 $ 34,277 66%$ 52,133 Percentage of revenue 11% 7% Product development expense increased in part due to the acquisition ofHyperconnect . ExcludingHyperconnect , product development expense increased 51% primarily due to an increase in compensation expense of$25.2 million related to increased headcount at Tinder and Hinge, and an increase in stock-based compensation associated with new awards granted in the current year. For the six months endedJune 30, 2022 compared to the six months endedJune 30, 2021 Six Months Ended June 30, 2022 $ Change % Change 2021 (Dollars in thousands)
Product development expense
10% 8%
Product development expense increased primarily due to the factors described above in the three-month discussion.
Depreciation
For the three months endedJune 30, 2022 compared to the three months endedJune 30, 2021 Three Months Ended June 30, 2022 $ Change % Change 2021 (Dollars in thousands) Depreciation$ 11,488 $ 1,427 14%$ 10,061 Percentage of revenue 1% 1%
Depreciation increased primarily due to an increase in internally developed software placed in service and building improvements.
For the six months endedJune 30, 2022 compared to the six months endedJune 30, 2021 Six Months Ended June 30, 2022 $ Change % Change 2021 (Dollars in thousands) Depreciation$ 21,985 $ 1,467 7%$ 20,518 Percentage of revenue 1% 1%
Depreciation increased primarily due to an increase in building and leasehold improvements.
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Impairment and amortization of intangibles
For the three months endedJune 30, 2022 compared to the three months endedJune 30, 2021 Three Months Ended June 30, 2022 $ Change % Change 2021 (Dollars in thousands) Impairment and amortization of intangibles$ 229,539 $ 229,297 NM$ 242 Percentage of revenue 29% -% ________________________ NM = not meaningful Impairment and amortization increased primarily due to an impairment of$217.4 million recognized in 2022 related toHyperconnect intangible assets that stemmed from a decline in projections related to a lower outlook for the business, including foreign currency impacts in certain ofHyperconnect's key markets, as well as the use of increased discount rates. For the six months endedJune 30, 2022 compared to the six months endedJune 30, 2021 Six Months Ended June 30, 2022 $ Change % Change 2021 (Dollars in thousands)
Impairment and amortization of intangibles
NM$ 455 Percentage of revenue 15% -%
Impairment and amortization of intangibles increased primarily due to the factor described above in the three-month discussion.
Operating (loss) income and Adjusted Operating Income
Three Months Ended June 30, Six Months Ended June 30,
2022 $ Change % Change 2021 2022 $ Change % Change 2021
(Dollars in thousands)Operating (loss) income$ (10,081) $ (219,995) NM$ 209,914 $ 197,737 $ (201,435) (50)%$ 399,172 Percentage of revenue (1)% 30% 12% 29% Adjusted Operating Income$ 285,713 $ 23,100 9%$ 262,613 $ 559,016 $ 66,359 13%$ 492,657 Percentage of revenue 36% 37% 35% 36%
For a reconciliation of net earnings attributable to
For the three months ended
The operating loss of$10.1 million was driven by the impairment ofHyperconnect intangibles; the increase in cost of revenue due to higher in-app fees, including a$5.0 million escrow accrual in 2022; and an increase in product development expense primarily due to increases in compensation expense. Adjusted Operating Income increased 9% or$23.1 million primarily driven by the increase in revenue of$86.8 million which was driven by growth at Tinder and Hinge and the acquisition ofHyperconnect , and lower selling marketing expense as a percentage of revenue. These increases were partially offset by an increase in cost of revenue due to higher in-app fees and an increase in product development expense primarily due to increases in compensation expense. 36 --------------------------------------------------------------------------------
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For the six months ended
Operating income decreased 50% or$201.4 million and Adjusted Operating Income increased 13% or$66.4 million primarily due to the factors described above in the three-month discussion. AtJune 30, 2022 , there was$427.3 million of unrecognized compensation cost, net of estimated forfeitures, related to equity-based awards, which is expected to be recognized over a weighted average period of approximately 2.8 years.
Interest expense
For the three months endedJune 30, 2022 compared to the three months endedJune 30, 2021 Three Months Ended June 30, 2022 $ Change % Change 2021 (Dollars in thousands) Interest expense$ 35,623 $ 3,404 11%$ 32,219 Interest expense increased primarily due to the issuance of the 3.625% Senior Notes onOctober 4, 2021 and a higher LIBOR rate on the Term Loan in the current period; partially offset by decreases from the settlement of a portion of the 2022 Exchangeable Notes. For the six months endedJune 30, 2022 compared to the six months endedJune 30, 2021 Six Months Ended June 30, 2022 $ Change % Change 2021 (Dollars in thousands) Interest expense$ 70,519 $ 6,462 10%$ 64,057
Interest expense increased primarily due to the factors described above in the three-month discussion.
Other income (expense), net For the three months endedJune 30, 2022 compared to the three months endedJune 30, 2021 Three Months Ended June 30, 2022 $ Change % Change 2021 (Dollars in thousands) Other income (expense), net$ 5,291 $ 5,646 NM$ (355) Other income, net in 2022 includes gains of$3.5 million related to finalization of a legal settlement, income of$1.0 million related to a mark-to-market adjustments pertaining to liability classified equity instruments, and interest income of$1.0 million . For the six months endedJune 30, 2022 compared to the six months endedJune 30, 2021 Six Months Ended June 30, 2022 $ Change % Change 2021 (Dollars in thousands) Other income (expense), net$ 6,109 $ 7,783 NM$ (1,674) Other income, net in 2022 includes gains of$3.5 million related to finalization of a legal settlement, income of$1.8 million related to a mark-to-market adjustments pertaining to liability classified equity instruments, and interest income of$1.2 million .
Other expense, net in 2021 includes foreign currency losses of
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Income tax (benefit) provision
For the three months endedJune 30, 2022 compared to the three months endedJune 30, 2021 Three Months Ended June 30, 2022 $ Change % Change 2021 (Dollars in thousands)
Income tax (benefit) provision
$ 37,320 Effective income tax rate NM 21%
The income tax benefit in 2022 and the income tax provision in 2021 both approximate the federal statutory rate.
For the six months endedJune 30, 2022 compared to the six months endedJune 30, 2021 Six Months Ended June 30, 2022 $ Change % Change 2021 (Dollars in thousands)
Income tax (benefit) provision
$ 19,573 Effective income tax rate NM 6%
The income tax benefit in 2022 and income tax provision in 2021 benefited from excess tax benefits generated by the exercise or vesting of stock-based awards.
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-Related Party Transactions" to the consolidated financial statements included in "Item 1-Consolidated Financial Statements."
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NON-GAAP FINANCIAL MEASURES
Match Group reports Adjusted Operating Income and Revenue excluding foreign
exchange effects, both of which are supplemental measures to U.S. generally
accepted accounting principles ("GAAP"). Adjusted Operating Income 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
how our business performed 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 Operating Income
Adjusted Operating Income is defined as operating (loss) 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 this measure 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 Operating Income measure because they are non-cash in nature. Adjusted
Operating Income has certain limitations because it excludes the impact of
certain expenses.
Non-Cash Expenses That Are Excluded From Adjusted Operating Income
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, we remit the required tax-withholding amounts from 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 (loss) earnings attributable to
Three Months Ended June 30, Six Months Ended June 30,
2022 2021 2022 2021
(In thousands)
Net (loss) earnings attributable to Match
Group, Inc. shareholders $ (31,858) $ 140,895 $ 148,675 $ 315,145
Add back:
Net loss attributable to noncontrolling
interests (507) (366) (433) (768)
Earnings from discontinued operations, net
of tax - (509) - (509)
Income tax (benefit) provision (8,048) 37,320 (14,915) 19,573
Other (income) expense, net (5,291) 355 (6,109) 1,674
Interest expense 35,623 32,219 70,519 64,057
Operating (Loss) Income (10,081) 209,914 197,737 399,172
Stock-based compensation expense 54,767 42,396 97,062 72,512
Depreciation 11,488 10,061 21,985 20,518
Impairment and amortization of intangibles 229,539 242 242,232 455
Adjusted Operating Income $ 285,713 $
262,613
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 inU.S. dollars, international revenue is favorably impacted as theU.S. dollar weakens relative to other currencies, and unfavorably impacted as theU.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 ofMatch 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. 40 --------------------------------------------------------------------------------
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The following tables present the impact of foreign exchange effects on total revenue and Direct Revenue by geographic region, and RPP on a total basis and by geographic region, for the three and six months endedJune 30, 2022 , compared to the three and six months endedJune 30, 2021 : Three Months Ended June 30, Six Months Ended June 30, 2022 $ Change % Change 2021 2022 $ Change % Change 2021 (Dollars in thousands) Revenue, as reported$ 794,513 $ 86,753 12%$ 707,760 $ 1,593,144 $ 217,772 16%$ 1,375,372 Foreign exchange effects 47,802 73,973 Revenue excluding foreign exchange effects$ 842,315 $ 134,555 19%$ 707,760 $ 1,667,117 $ 291,745 21%$ 1,375,372 Americas Direct Revenue, as reported$ 408,730 $ 34,342 9%$ 374,388 $ 808,708 $ 90,058 13%$ 718,650 Foreign exchange effects 1,255 1,622 Americas Direct Revenue, excluding foreign exchange effects$ 409,985 $ 35,597 10%$ 374,388 $ 810,330 $ 91,680 13%$ 718,650 Europe Direct Revenue, as reported$ 208,471 $ 11,929 6%$ 196,542 $ 423,799 $ 38,198 10%$ 385,601 Foreign exchange effects 25,266 39,066 Europe Direct Revenue, excluding foreign exchange effects$ 233,737 $ 37,195 19%$ 196,542 $ 462,865 $ 77,264 20%$ 385,601 APAC and Other Direct Revenue, as reported$ 162,952 $ 39,560 32%$ 123,392 $ 331,479 $ 86,227 35%$ 245,252 Foreign exchange effects 20,686 32,439 APAC and Other Direct Revenue, excluding foreign exchange effects$ 183,638 $ 60,246 49%$ 123,392 $ 363,918 $ 118,666 48%$ 245,252 Three Months Ended June 30, Six Months Ended June 30, 2022 $ Change % Change 2021 2022 $ Change % Change 2021 RPP, as reported$ 15.86 $ 0.40 3%$ 15.46 $ 15.93 $ 0.62 4%$ 15.31 Foreign exchange effects 0.96 0.74 RPP, excluding foreign exchange effects$ 16.82 $ 1.36 9%$ 15.46 $ 16.67 $ 1.36 9%$ 15.31 Americas RPP, as reported$ 16.56 $ 0.77 5%$ 15.79 $ 16.45 $ 0.99 6%$ 15.46 Foreign exchange effects 0.05 0.04 Americas RPP, excluding foreign exchange effects$ 16.61 $ 0.82 5%$ 15.79 $ 16.49 $ 1.03 7%$ 15.46 Europe RPP, as reported$ 15.23 0.11 1%$ 15.12 $ 15.20 0.23 2%$ 14.97 Foreign exchange effects 1.84 0.79 Europe RPP, excluding foreign exchange effects$ 17.07 $ 1.95 13%$ 15.12 $ 15.99 $ 1.02 7%$ 14.97 APAC and Other RPP, as reported$ 15.06 $ 0.03 -%$ 15.03 $ 15.68 $ 0.26 2%$ 15.42 Foreign exchange effects 1.92 1.53 APAC and Other RPP, excluding foreign exchange effects$ 16.98 $ 1.95 13%$ 15.03 $ 17.21 $ 1.79 12%$ 15.42 41
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FINANCIAL POSITION, LIQUIDITY AND CAPITAL RESOURCES
Financial Position
June 30, 2022 December 31, 2021
(In thousands)
Cash and cash equivalents:
United States $ 332,736 $ 642,686
All other countries 130,950 172,698
Total cash and cash equivalents 463,686 815,384
Short-term investments 9,240 11,818
Total cash and cash equivalents and short-term
investments $ 472,926 $ 827,202
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 3.625% Senior Notes due October 1, 2031 500,000 500,000 2022 Exchangeable Notes 58,896 100,500 2026 Exchangeable Notes 575,000 575,000 2030 Exchangeable Notes 575,000 575,000 Total long-term debt 3,933,896 3,975,500 Less: Current maturities of long-term debt 58,896 100,500 Less: Unamortized original issue discount 4,796 5,215 Less: Unamortized debt issuance costs 37,670 40,364 Total long-term debt, net$ 3,832,534 $ 3,829,421 Long-term Debt
For a detailed description of long-term debt, see "Note 5-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:
Six Months Ended June 30,
2022 2021
(In thousands) Net cash provided by operating activities attributable to continuing operations
$
19,964
(25,518) (873,516)
Net cash (used in) provided by financing activities attributable to continuing operations
(335,368) 23,629 2022 Net cash provided by operating activities in 2022 includes adjustments to earnings of$242.2 million of impairment and amortization of intangibles,$97.1 million of stock-based compensation expense, and$22.0 million of depreciation, partially offset by deferred income taxes of$32.7 million . The decrease in cash from 42 --------------------------------------------------------------------------------
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changes in working capital primarily consists of a decrease in accounts payable and other liabilities of$476.1 million due mainly to the settlement payment for Rad, et al. v.IAC/InterActiveCorp , et al. and related arbitrations and the timing of payments. These changes were partially offset by an increase from other assets of$30.6 million primarily due to the settlement of a derivative asset related to the 2022 Exchangeable Notes Hedges and the amortization of prepaid hosting services; and a decrease in income taxes payable of$15.1 million primarily related to the timing of payments related to international taxes.
Net cash used in investing activities in 2022 consists primarily of capital
expenditures of
Net cash used in financing activities in 2022 is primarily due to purchases of treasury stock of$191.0 million , payments of$101.1 million of withholding taxes paid on behalf of employees for net settled equity awards, payments of$94.3 million to repurchase a portion of the outstanding 2022 Exchangeable Notes, purchases of non-controlling interest for$10.6 million , and payments of$7.5 million to settle outstanding warrants associated with the 2022 Exchangeable Notes. These uses of cash were partially offset by proceeds of$52.6 million related to the settlement of certain outstanding note hedges associated with the 2022 Exchangeable Notes, and$16.4 million of proceeds from the issuance of common stock pursuant to stock-based awards.
2021
Net cash provided by operating activities attributable to continuing operations in 2021 includes adjustments to earnings of$72.5 million of stock-based compensation expense,$20.5 million of depreciation, and$7.4 million of other adjustments; partially offset by deferred income taxes of$20.7 million primarily related to the net operating loss created by the settlement of stock-based awards. The decrease in cash from changes in working capital primarily consists of an increase in accounts receivable of$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$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 increase from deferred revenue of$25.7 million , due mainly to growth in subscription 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 acquireHyperconnect , net of cash acquired of$840.9 million , and capital expenditures of$32.4 million that are primarily related to internal development of software and purchased computer hardware to support our services. Net cash provided by financing activities attributable to continuing operations in 2021 is primarily due to$37.3 million of proceeds from the issuance of common stock pursuant to stock-based awards, partially offset by payments of$11.4 million for withholding taxes paid on behalf of employees for net settled equity awards.
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 ofJune 30, 2022 ,$749.6 million was available under the Credit Facility that expires onFebruary 13, 2025 . The Company has various obligations related to long-term debt instruments and operating leases. For additional information on long-term debt, including maturity dates and interest rates, see "Note 5-Long-term Debt, net" to the consolidated financial statements included in "Item 1-Consolidated Financial Statements." For additional information on the operating lease payments, including a schedule of obligations by year, see "Note 13-Leases" to the consolidated financial statements included in "Item 8-Consolidated Financial Statements and Supplementary Data" of the Company's Annual Report on Form 10-K for the year endedDecember 31, 2021 . The Company believes it has sufficient cash flows from operations to satisfy these future obligations.
We paid
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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 2022 cash capital expenditures will be between$65 million and$70 million , a decrease from 2021 cash capital expenditures as several leasehold and building improvements were completed in 2021.
In connection with our agreement with
We have entered into various purchase commitments, primarily consisting of web hosting services. Our obligations under these various purchase commitments are$6.0 million for the remainder of 2022 and between$7.0 million and$12.5 million per year from 2023 through 2026.
At
OnMay 2, 2022 , our Board of Directors approved a new share repurchase program (the "Share Repurchase Program") to repurchase up to 12.5 million shares of our common stock. Under the Share Repurchase Program, shares of our common stock may be purchased on a discretionary basis from time to time, subject to general business and market conditions and other investment opportunities, through open market purchases, privately negotiated transactions or other means, including through Rule 10b5-1 trading plans. The Share Repurchase Program may be commenced, suspended or discontinued at any time. During the six months endedJune 30, 2022 , we repurchased 2.9 million shares for$215.5 million , on a trade date basis. Additionally, fromJuly 1, 2022 toJuly 5, 2022 , we purchased 0.2 million shares for$16.5 million . As ofAugust 1, 2022 , a total of 9.3 million shares remain available for repurchase under the repurchase program.
As of
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 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.
CRITICAL ACCOUNTING POLICIES AND 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 U.S. GAAP. These estimates, judgments and assumptions impact the
reported amount of assets, liabilities, revenue and expenses and the related
disclosure of contingent assets and liabilities. Actual results could differ
from these estimates.
During the six months ended June 30, 2022 , there were no material changes to the
Company's critical accounting policies and estimates since the disclosure in our
Annual Report on Form 10-K for the year ended December 31, 2021 .
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