MATCH GROUP, INC., 10-Q filed on 11/9/2018
Quarterly Report
v3.10.0.1
DOCUMENT AND ENTITY INFORMATION - shares
9 Months Ended
Sep. 30, 2018
Nov. 02, 2018
Entity Registrant Name Match Group, Inc.  
Entity Central Index Key 0001575189  
Current Fiscal Year End Date --12-31  
Entity Filer Category Large Accelerated Filer  
Emerging Growth Company false  
Small Business false  
Document Type 10-Q  
Document Period End Date Sep. 30, 2018  
Document Fiscal Year Focus 2018  
Document Fiscal Period Focus Q3  
Amendment Flag false  
Common Stock    
Entity Common Stock, Shares Outstanding   68,166,729
Class B Convertible Common Stock    
Entity Common Stock, Shares Outstanding   209,919,402
Class C Common Stock    
Entity Common Stock, Shares Outstanding   0
v3.10.0.1
CONSOLIDATED BALANCE SHEET (Unaudited) - USD ($)
$ in Thousands
Sep. 30, 2018
Dec. 31, 2017
ASSETS    
Cash and cash equivalents $ 402,598 $ 272,624
Accounts receivable, net of allowance of $735 and $778, respectively 138,167 116,751
Other current assets 66,902 55,369
Total current assets 607,667 444,744
Property and equipment, net of accumulated depreciation and amortization of $113,068 and $108,860, respectively 57,286 61,620
Goodwill 1,252,745 1,247,644
Intangible assets, net of accumulated amortization of $11,663 and $11,653, respectively 235,827 230,345
Deferred income taxes 145,263 123,199
Long-term investments 10,169 11,137
Other non-current assets 15,798 11,457
TOTAL ASSETS 2,324,755 2,130,146
LIABILITIES    
Accounts payable 12,103 10,112
Deferred revenue 221,884 198,095
Accrued expenses and other current liabilities 139,086 110,566
Total current liabilities 373,073 318,773
Long-term debt, net 1,255,088 1,252,696
Income taxes payable 6,638 8,410
Deferred income taxes 28,272 28,478
Other long-term liabilities 12,947 14,484
Redeemable noncontrolling interests 0 6,056
Commitments and contingencies
SHAREHOLDERS’ EQUITY    
Preferred stock; $0.001 par value; authorized 500,000,000 shares; no shares issued and outstanding 0 0
Additional paid-in capital (48,582) 81,082
Retained earnings 894,606 532,211
Accumulated other comprehensive loss (121,814) (112,318)
Treasury stock 2,012,600 and 0 shares, respectively (86,239) 0
Total Match Group, Inc. shareholders’ equity 638,252 501,249
Noncontrolling interests 10,485 0
Total shareholders’ equity 648,737 501,249
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY 2,324,755 2,130,146
Common stock, $0.001 par value, authorized 1,500,000,000 shares; 70,520,034 and 64,370,470 shares issued, and 68,507,434 and 64,370,470 shares outstanding at September 30, 2018 and December 31, 2017, respectively    
SHAREHOLDERS’ EQUITY    
Common stock 71 64
Class B convertible common stock; $0.001 par value; authorized 1,500,000,000 shares; 209,919,402 shares issued and outstanding    
SHAREHOLDERS’ EQUITY    
Common stock 210 210
Class C common stock; $0.001 par value; authorized 1,500,000,000 shares; no shares issued and outstanding    
SHAREHOLDERS’ EQUITY    
Common stock $ 0 $ 0
v3.10.0.1
CONSOLIDATED BALANCE SHEET (Unaudited) (Parenthetical) - USD ($)
$ in Thousands
Sep. 30, 2018
Dec. 31, 2017
Accounts receivable allowance and reserves $ 735 $ 778
Accumulated depreciation and amortization on property and equipment 113,068 108,860
Accumulated amortization on intangible assets $ 11,663 $ 11,653
Preferred stock, par value (USD per share) $ 0.001 $ 0.001
Preferred stock authorized (shares) 500,000,000 500,000,000
Preferred stock issued (shares) 0 0
Preferred stock outstanding (shares) 0 0
Treasury stock (shares) 2,012,600 0
Common stock, $0.001 par value, authorized 1,500,000,000 shares; 70,520,034 and 64,370,470 shares issued, and 68,507,434 and 64,370,470 shares outstanding at September 30, 2018 and December 31, 2017, respectively    
Common stock, par value (USD per share) $ 0.001 $ 0.001
Common stock authorized (shares) 1,500,000,000 1,500,000,000
Common stock issued (shares) 70,520,034 64,370,470
Common stock outstanding (shares) 68,507,434 64,370,470
Class B convertible common stock; $0.001 par value; authorized 1,500,000,000 shares; 209,919,402 shares issued and outstanding    
Common stock, par value (USD per share) $ 0.001 $ 0.001
Common stock authorized (shares) 1,500,000,000 1,500,000,000
Common stock issued (shares) 209,919,402 209,919,402
Common stock outstanding (shares) 209,919,402 209,919,402
Class C common stock; $0.001 par value; authorized 1,500,000,000 shares; no shares issued and outstanding    
Common stock, par value (USD per share) $ 0.001 $ 0.001
Common stock authorized (shares) 1,500,000,000 1,500,000,000
Common stock issued (shares) 0 0
Common stock outstanding (shares) 0 0
v3.10.0.1
CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited) - USD ($)
$ in Thousands
3 Months Ended 9 Months Ended
Sep. 30, 2018
Sep. 30, 2017
Sep. 30, 2018
Sep. 30, 2017
Revenue $ 443,943 $ 343,418 $ 1,272,506 $ 951,754
Operating costs and expenses:        
Cost of revenue (exclusive of depreciation shown separately below) 107,512 72,044 298,790 193,557
Selling and marketing expense 108,374 94,870 316,806 289,706
General and administrative expense 45,187 49,940 130,113 137,721
Product development expense 34,027 27,008 98,531 73,089
Depreciation 8,513 8,147 25,059 23,619
Amortization of intangibles 435 401 914 1,208
Total operating costs and expenses 304,048 252,410 870,213 718,900
Operating income 139,895 91,008 402,293 232,854
Interest expense (18,376) (19,548) (54,458) (57,570)
Other income (expense), net 894 (9,925) 4,677 (25,453)
Earnings from continuing operations, before tax 122,413 61,535 352,512 149,831
Income tax benefit 5,537 226,236 6,474 214,039
Net earnings from continuing operations 127,950 287,771 358,986 363,870
Loss from discontinued operations, net of tax (378) (85) (378) (4,647)
Net earnings 127,572 287,686 358,608 359,223
Net loss (earnings) attributable to noncontrolling interests 2,587 2 3,787 (52)
Net earnings attributable to Match Group, Inc. shareholders $ 130,159 $ 287,688 $ 362,395 $ 359,171
Net earnings per share from continuing operations:        
Net earnings per share from continuing operations - basic (USD per share) $ 0.47 $ 1.08 $ 1.31 $ 1.39
Net earnings per share from continuing operations - diluted (USD per share) 0.44 0.98 1.22 1.22
Net earnings per share attributable to Match Group, Inc. shareholders:        
Basic (USD per share) 0.47 1.08 1.31 1.38
Diluted (USD per share) $ 0.44 $ 0.98 $ 1.22 $ 1.21
Stock-based compensation expense by function:        
Stock-based compensation expense $ 16,141 $ 19,949 $ 49,810 $ 53,627
Cost of revenue        
Stock-based compensation expense by function:        
Stock-based compensation expense 493 430 1,768 1,246
Selling and marketing expense        
Stock-based compensation expense by function:        
Stock-based compensation expense 745 1,146 2,526 3,253
General and administrative expense        
Stock-based compensation expense by function:        
Stock-based compensation expense 8,567 12,669 23,817 35,740
Product development expense        
Stock-based compensation expense by function:        
Stock-based compensation expense $ 6,336 $ 5,704 $ 21,699 $ 13,388
v3.10.0.1
CONSOLIDATED STATEMENT OF COMPREHENSIVE OPERATIONS (Unaudited) - USD ($)
$ in Thousands
3 Months Ended 9 Months Ended 12 Months Ended
Sep. 30, 2018
Sep. 30, 2017
Sep. 30, 2018
Dec. 31, 2017
Statement of Comprehensive Income [Abstract]        
Net earnings $ 127,572 $ 287,686 $ 358,608 $ 359,223
Other comprehensive (loss) income, net of tax        
Change in foreign currency translation adjustment (871) 33,750 (9,616) 68,440
Total other comprehensive (loss) income (871) 33,750 (9,616) 68,440
Comprehensive income 126,701 321,436 348,992 427,663
Comprehensive loss (income) attributable to noncontrolling interests 2,640 (273) 3,907 (592)
Comprehensive income attributable to Match Group, Inc. shareholders $ 129,341 $ 321,163 $ 352,899 $ 427,071
v3.10.0.1
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY (Unaudited) - 9 months ended Sep. 30, 2018 - USD ($)
shares in Thousands, $ in Thousands
Total
Total Match Group Shareholders’ Equity
Redeemable Noncontrolling Interests
Common Stock
Common Stock $0.001 Par Value
Common Stock
Class B Convertible Common Stock $0.001 Par Value
Additional Paid-in Capital
Retained Earnings
Accumulated Other Comprehensive Loss
Treasury Stock
Noncontrolling Interests
Balance at beginning of period at Dec. 31, 2017 $ 6,056   $ 6,056              
Increase (Decrease) in Redeemable Noncontrolling Interests                    
Net earnings (loss) for the nine months ended September 30, 2018 (3,787)   109              
Other comprehensive loss, net of tax     (120)              
Purchase of redeemable noncontrolling interests     (3,503)              
Adjustment of redeemable noncontrolling interests to fair value     (2,542)              
Balance at end of period at Sep. 30, 2018 0   $ 0              
Balance at beginning of period at Dec. 31, 2017 501,249 $ 501,249   $ 64 $ 210 $ 81,082 $ 532,211 $ (112,318) $ 0 $ 0
Balance at beginning of period (shares) at Dec. 31, 2017       64,370 209,919          
Increase (Decrease) in Shareholders' Equity                    
Net earnings (loss) for the nine months ended September 30, 2018 358,499 362,395         362,395     (3,896)
Other comprehensive loss, net of tax (9,496) (9,496)           (9,496)    
Stock-based compensation expense 49,810 49,675       49,675       135
Issuance of common stock pursuant to stock-based awards, net of withholding taxes (181,874) (181,874)   $ 4   (181,878)        
Issuance of common stock pursuant to stock-based awards, net of withholding taxes (shares)       3,596            
Issuance of common stock to IAC pursuant to the employee matters agreement 0     $ 3   (3)        
Issuance of common stock to IAC pursuant to the employee matters agreement (shares)       2,554            
Purchase of treasury stock (86,239) (86,239)             (86,239)  
Adjustment of redeemable noncontrolling interests to fair value 2,542         2,542        
Noncontrolling interests created in an acquisition 14,246                 14,246
Balance at end of period at Sep. 30, 2018 $ 648,737 $ 638,252   $ 71 $ 210 $ (48,582) $ 894,606 $ (121,814) $ (86,239) $ 10,485
Balance at end of period (shares) at Sep. 30, 2018       70,520 209,919          
v3.10.0.1
CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited) - USD ($)
$ in Thousands
9 Months Ended
Sep. 30, 2018
Sep. 30, 2017
Cash flows from operating activities attributable to continuing operations:    
Net earnings from continuing operations $ 358,986 $ 363,870
Adjustments to reconcile net earnings from continuing operations to net cash provided by operating activities attributable to continuing operations:    
Stock-based compensation expense 49,810 53,627
Depreciation 25,059 23,619
Amortization of intangibles 914 1,208
Deferred income taxes (23,821) (239,796)
Acquisition-related contingent consideration fair value adjustments 265 4,397
Other adjustments, net (100) 16,578
Changes in assets and liabilities, net of effects of acquisitions and dispositions:    
Accounts receivable (21,456) (42,902)
Other assets (22,059) (8,984)
Accounts payable and other liabilities 32,167 15,399
Income taxes payable and receivable 1,233 11,923
Deferred revenue 24,245 30,717
Net cash provided by operating activities attributable to continuing operations 425,243 229,656
Cash flows from investing activities attributable to continuing operations:    
Net cash acquired in a business combination 1,136 0
Capital expenditures (21,280) (21,638)
Proceeds from the sale of a business, net 0 96,144
Purchases of investments (3,000) (9,076)
Other, net 39 41
Net cash (used in) provided by investing activities attributable to continuing operations (23,105) 65,471
Cash flows from financing activities attributable to continuing operations:    
Term Loan borrowings 0 75,000
Debt issuance costs 0 (1,814)
Proceeds from issuance of common stock pursuant to stock-based awards 0 57,705
Withholding taxes paid on behalf of employees on net settled stock-based awards (181,756) (228,978)
Purchase of treasury stock (86,239) 0
Purchase of redeemable noncontrolling interests (3,503) (436)
Purchase of stock-based awards 0 (272,459)
Acquisition-related contingent consideration payments (185) (23,429)
Other, net (616) (165)
Net cash used in financing activities attributable to continuing operations (272,299) (394,576)
Total cash provided by (used in) continuing operations 129,839 (99,449)
Net cash used in operating activities attributable to discontinued operations 0 (6,061)
Net cash used in investing activities attributable to discontinued operations 0 (471)
Total cash used in discontinued operations 0 (6,532)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash 133 9,923
Net increase (decrease) in cash, cash equivalents, and restricted cash 129,972 (96,058)
Cash, cash equivalents, and restricted cash at beginning of period 272,761 253,771
Cash, cash equivalents, and restricted cash at end of period $ 402,733 $ 157,713
v3.10.0.1
THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
9 Months Ended
Sep. 30, 2018
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
NOTE 1—THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Match Group, Inc. is a leading provider of subscription dating products servicing North America, Western Europe, Asia, and many other regions around the world through applications and websites that we own and operate. We operate a portfolio of brands, including Tinder, Match, PlentyOfFish, Meetic, OkCupid, OurTime, and Pairs as well as a number of other brands, each designed to increase our users’ likelihood of finding a meaningful connection. Through our portfolio of trusted brands, we provide tailored products to meet the varying preferences of our users. We currently offer our dating products in 42 languages across more than 190 countries. Match Group has one operating segment, Dating, which is managed as a portfolio of dating brands.
As of September 30, 2018, IAC/InterActiveCorp’s (“IAC”) economic ownership interest and voting interest in Match Group were 80.9% and 97.5%, respectively.
All references to “Match Group,” the “Company,” “we,” “our,” or “us” in this report are to Match Group, Inc.
Basis of Presentation and Consolidation
The Company prepares its consolidated financial statements in accordance with U.S. generally accepted accounting principles (“GAAP”).
The consolidated financial statements include the accounts of the Company, all entities that are wholly-owned by the Company and all entities in which the Company has a controlling financial interest. All intercompany transactions and balances between and among the Company, its subsidiaries and the entities comprising Match Group have been eliminated.
Investments in equity securities, other than those of our consolidated subsidiaries, are accounted for at fair value or under the measurement alternative of Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities, upon its adoption on January 1, 2018, with changes recognized within other income (expense), net each reporting period. Under the measurement alternative, equity investments without readily determinable fair values are carried at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer. Under the measurement alternative, the value of our equity securities without readily determinable fair values is generally determined based on a market approach as of the transaction date. An investment will be considered identical or similar if it has identical or similar rights to the equity investments held by the Company. The Company reviews impairment of our equity securities each reporting period when there are qualitative indicators that may indicate impairment. Once the qualitative indicators are identified and the fair value of the security is less than its carrying value, the Company will write down the security to its fair value and record the corresponding charge within other income (expense), net. See “Accounting Pronouncements adopted by the Company below for further information.
In management’s opinion, the unaudited interim consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements and reflect, in management’s opinion, all adjustments, consisting of normal and recurring adjustments, necessary for the fair presentation of our financial position, results of operations and cash flows for the periods presented. Interim results are not necessarily indicative of the results that may be expected for the full year. The accompanying unaudited consolidated financial statements should be read in conjunction with the consolidated and combined statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017.
For the purposes of these financial statements, income taxes have been computed for Match Group on an as if stand-alone, separate tax return basis.
Accounting Estimates
Management of the Company is required to make certain estimates, judgments, and assumptions during the preparation of its consolidated financial statements in accordance with GAAP. These estimates, judgments, and assumptions impact the reported amounts of assets, liabilities, revenue, and expenses and the related disclosure of contingent assets and liabilities. Actual results could differ from these estimates.
On an ongoing basis, the Company evaluates its estimates and judgments including those related to: the recoverability of goodwill and indefinite-lived intangible assets; the useful lives and recoverability of definite-lived intangible assets and property and equipment; the fair values of equity securities without readily determinable fair values; the carrying value of accounts receivable, including the determination of the allowance for doubtful accounts; the determination of revenue reserves; the fair value of acquisition-related contingent consideration arrangements; unrecognized tax benefits; the valuation allowance for deferred income tax assets; and the fair value of and forfeiture rates for stock-based awards, among others. The Company bases its estimates and judgments on historical experience, its forecasts and budgets and other factors that the Company considers relevant.
Recent Accounting Pronouncements
Accounting Pronouncements adopted by the Company
In May 2014, the FASB issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers. ASU No. 2014-09 superseded nearly all previous revenue recognition guidance. The Company adopted ASU No. 2014-09 as of January 1, 2018 using the modified retrospective transition method for open contracts as of the date of initial application. There is no cumulative impact to the Company’s retained earnings at January 1, 2018. See “Note 2—Revenue Recognition” for additional information on the impact to the Company.
In January 2016, the FASB issued ASU No. 2016-01, which updates certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. Under ASU No. 2016-01, equity securities, other than those of our consolidated subsidiaries, will be measured at fair value with changes in fair value recognized in the statement of operations each reporting period. ASU No. 2016-01 is effective for reporting periods beginning after December 15, 2017. The Company’s adoption of ASU No. 2016-01 effective January 1, 2018 did not have a material effect on its consolidated financial statements. The adoption of ASU No. 2016-01 may increase the volatility of our results of operations as a result of the remeasurement of these investments.
In November 2016, the FASB issued ASU No. 2016-18, Restricted Cash, which requires companies to explain the changes in the total of cash, cash equivalents, restricted cash and restricted cash equivalents in the statement of cash flows. Therefore, amounts generally described as restricted cash or restricted cash equivalents are combined with unrestricted cash and cash equivalents when reconciling the beginning and end of period balances on the statement of cash flows. Additionally, when cash, cash equivalents, restricted cash, and restricted cash equivalents are presented within different captions on the balance sheet, a reconciliation of the totals in the statement of cash flows to the related captions in the balance sheet is required. ASU No. 2016-18 is effective for reporting periods beginning after December 15, 2017. The Company’s adoption of ASU No. 2016-18 effective January 1, 2018, on a retrospective basis, did not have a material effect on its consolidated financial statements.
The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the consolidated balance sheet to the total amounts shown in the consolidated statement of cash flows:
 
September 30, 2018
 
December 31, 2017
 
September 30, 2017
 
December 31, 2016
 
(In thousands)
Cash and cash equivalents
$
402,598

 
$
272,624

 
$
157,576

 
$
253,651

Restricted cash included in other current assets
135

 
137

 
137

 
120

Total cash, cash equivalents and restricted cash as shown on the consolidated statement of cash flow
$
402,733

 
$
272,761

 
$
157,713

 
$
253,771


In June 2018, the FASB issued ASU No. 2018-07, Improvements to Nonemployee Share-Based Payment Accounting, which largely aligns the measurement and classification guidance for share-based payments granted to non-employees with the guidance for share-based payments granted to employees. The new guidance supersedes Subtopic 505-50, Equity - Equity-Based payments to Nonemployees. ASU No. 2018-07 is effective for reporting periods beginning after December 15, 2018, with early adoption permitted. The Company adopted ASU No. 2018-07 effective April 1, 2018 and its adoption did not have a material effect on its consolidated financial statements. The effect of the adoption of ASU No. 2018-07 will be to minimize the volatility of expense related to stock-based awards to non-employees in the future.
Accounting Pronouncement not yet adopted by the Company
In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), which supersedes existing guidance on accounting for leases and generally requires all leases to be recognized in the statement of financial position. The provisions of ASU No. 2016-02 are effective for reporting periods beginning after December 15, 2018. The Company will adopt the new lease guidance effective January 1, 2019. In July 2018, the FASB issued ASU No. 2018-11, Leases (Topic 842): Targeted Improvements, which provides the option of an additional transition method that allows entities to initially apply the new lease guidance at the adoption date and recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. The Company expects to implement the transition method option provided by ASU No. 2018-11.
The Company is not a lessor, has no capitalized leases, and does not expect to enter into any capitalized leases prior to the adoption of ASU No. 2016-02. Accordingly, the Company does not expect the amount or classification of rent expense in its statement of operations to be affected by the adoption of ASU No. 2016-02. The primary effect of the adoption of ASU No. 2016-02 will be the recognition of a right of use asset and related liability to reflect the Company's rights and obligations under its operating leases. The Company will also be required to provide the additional disclosures stipulated in ASU No. 2016-02.
The adoption of ASU No. 2016-02 will not have an impact on the leverage calculation set forth in any of the agreements governing the outstanding debt of the Company, or our credit agreement, because in each circumstance, the leverage calculations are not affected by the liability that will be recorded upon adoption of the new standard.
While the Company's evaluation of the impact of the adoption of ASU No. 2016-02 on its consolidated financial statements continues, outlined below is a summary of the status of the Company's progress:
the Company has selected a software solution to implement ASU No. 2016-02;
the Company has input lease summaries into the software solution;
the Company is assessing the other inputs required in connection with the adoption of ASU No. 2016-02; and
the Company is developing its accounting policy, procedures and internal controls related to the new standard.
Development of our selected software solution is ongoing, as it is not yet fully compliant with the requirements of ASU No. 2016-02. The timely readiness of the software solution is critical to ensure an efficient and effective adoption of ASU No. 2016-02. The Company's ability to calculate an estimate of the right of use asset and related liability is dependent upon the readiness of the software solution.
Reclassifications
Certain prior year amounts have been reclassified to conform to the current year presentation.
v3.10.0.1
REVENUE RECOGNITION
9 Months Ended
Sep. 30, 2018
Revenue from Contract with Customer [Abstract]  
REVENUE RECOGNITION
NOTE 2—REVENUE RECOGNITION
Revenue Recognition
The Company accounts for a contract when it has approval and commitment from all parties, the rights of the parties and payment terms are identified, the contract has commercial substance and collectability of consideration is probable. Revenue is recognized when control of the promised services is transferred to our customers, and in an amount that reflects the consideration the Company is contractually due in exchange for those services.
The Company’s revenue is primarily derived directly from users in the form of recurring subscriptions. Subscription revenue is presented net of credits and credit card chargebacks. Subscribers pay in advance, primarily by credit card or through mobile app stores, and, subject to certain conditions identified in our terms and conditions, generally all purchases are final and nonrefundable. Revenue is initially deferred and is recognized using the straight-line method over the term of the applicable subscription period, which primarily range from one to six months. Revenue is also earned from online advertising, the purchase of à la carte features and offline events. Online advertising revenue is recognized when an advertisement is displayed. Revenue from the purchase of à la carte features is recognized based on usage. Revenue associated with offline events is recognized when each event occurs.
As permitted under the practical expedient available under ASU No. 2014-09, the Company does not disclose the value of unsatisfied performance obligations for (i) contracts with an original expected length of one year or less, (ii) contracts with variable consideration that is allocated entirely to unsatisfied performance obligations or to a wholly unsatisfied promise accounted for under the series guidance, and (iii) contracts for which the Company recognizes revenue at the amount which we have the right to invoice for services performed.
Transaction Price
The objective of determining the transaction price is to estimate the amount of consideration the Company is due in exchange for services, including amounts that are variable. The Company determines the total transaction price, including an estimate of any variable consideration, at contract inception and reassesses this estimate each reporting period.
The Company excludes from the measurement of transaction price all taxes assessed by governmental authorities that are both (i) imposed on and concurrent with a specific revenue-producing transaction and (ii) collected from customers. Accordingly, such tax amounts are not included as a component of revenue or cost of revenue.
For contracts that have an original duration of one year or less, the Company uses the practical expedient available under ASU No. 2014-09 applicable to such contracts and does not consider the time value of money.
Accounts Receivables, net of allowance for doubtful accounts and revenue reserves
Accounts receivable include amounts billed and currently due from customers. The Company maintains an allowance for doubtful accounts to provide for the estimated amount of accounts receivables that will not be collected. The allowance for doubtful accounts is based upon a number of factors, including the length of time accounts receivable are past due, the Company’s previous loss history, and the specific customer’s ability to pay its obligation. The time between the Company issuance of an invoice and payment due date is not significant, customer payments that are not collected in advance of the transfer of promised services are generally due no later than 30 days from invoice date. The Company also maintains allowances to reserve for potential credits issued to consumers or other revenue adjustments. The amounts of these reserves are based primarily upon historical experience.
Deferred Revenue
Deferred revenue consists of advance payments that are received or due in advance of the Company's performance. The Company’s deferred revenue is reported on a contract by contract basis at the end of each reporting period. The Company generally classifies deferred revenue as current when the term of the applicable subscription period or expected completion of our performance obligation is one year or less. The deferred revenue balance as of January 1, 2018 was $198.3 million. During the nine months ended September 30, 2018, the Company recognized $191.6 million of revenue that was included in the deferred revenue balance as of January 1, 2018. The deferred revenue balance as of June 30, 2018 was $212.6 million. During the three months ended September 30, 2018, the Company recognized $157.4 million of revenue that was included in the deferred revenue balance as of June 30, 2018. The current deferred revenue balance at September 30, 2018 is $221.9 million. At September 30, 2018, there is no non-current portion of deferred revenue.
Assets Recognized from the Costs to Obtain a Contract with a Customer
The Company has determined that certain costs, primarily mobile app store fees, meet the requirements to be capitalized as a cost of obtaining a contract. The Company recognizes an asset for these costs if we expect to recover those costs. Mobile app store fees are amortized over the period of contract performance. The Company capitalizes and amortizes mobile app store fees over the term of the applicable subscription. During the three and nine months ended September 30, 2018, the Company recognized expense of $75.0 million and $205.4 million, respectively, related to the amortization of these costs. The contract asset balance at September 30, 2018 related to costs to obtain a contract is $30.1 million and included in “Other current assets” in the accompanying consolidated balance sheet.
Disaggregation of Revenue
The following table presents disaggregated revenue:
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2018
 
2017
 
2018
 
2017
 
(In thousands)
Direct Revenue:
 
 
 
 
 
 
 
North America
$
233,643

 
$
186,868

 
$
667,163

 
$
540,701

International
197,902

 
143,230

 
564,846

 
376,572

Total Direct Revenue
431,545

 
330,098

 
1,232,009

 
917,273

Indirect Revenue (principally advertising revenue)
12,398

 
13,320

 
40,497

 
34,481

Total Revenue
$
443,943

 
$
343,418

 
$
1,272,506

 
$
951,754

v3.10.0.1
INCOME TAXES
9 Months Ended
Sep. 30, 2018
Income Tax Disclosure [Abstract]  
INCOME TAXES
NOTE 3—INCOME TAXES
Match Group is included within IAC’s tax group for purposes of federal and consolidated state income tax return filings. In all periods presented, current income tax provision and deferred income tax benefit have been computed for Match Group on an as if stand-alone, separate return basis. Match Group’s payments to IAC for its share of IAC’s consolidated federal and state tax return liabilities have been reflected within cash flows from operating activities in the accompanying consolidated statement of cash flows.
At the end of each interim period, the Company makes its best estimate of the annual expected effective income tax rate and applies that rate to its ordinary year-to-date earnings or loss. The income tax provision or benefit related to significant, unusual, or extraordinary items, if applicable, that will be separately reported or reported net of their related tax effects are individually computed and recognized in the interim period in which they occur. In addition, the effect of changes in enacted tax laws or rates, tax status, judgment on the realizability of beginning-of-the-year deferred tax assets in future years or unrecognized tax benefits is recognized in the interim period in which the change occurs.
The computation of the annual expected effective income tax rate at each interim period requires certain estimates and assumptions including, but not limited to, the expected pre-tax income (or loss) for the year, projections of the proportion of income (and/or loss) earned and taxed in foreign jurisdictions, permanent and temporary differences, and the likelihood of the realization of deferred tax assets generated in the current year. The accounting estimates used to compute the provision or benefit for income taxes may change as new events occur, more experience is acquired, additional information is obtained or our tax environment changes. To the extent that the expected annual effective income tax rate changes during a quarter, the effect of the change on prior quarters is included in income tax provision in the quarter in which the change occurs.
For the three and nine months ended September 30, 2018, the Company recorded an income tax benefit from continuing operations of $5.5 million and $6.5 million, respectively, due primarily to excess tax benefits generated by the exercise and vesting of stock-based awards and research credits, partially offset by state income taxes. For the three and nine months ended September 30, 2017, the Company recorded an income tax benefit from continuing operations of $226.2 million and $214.0 million, respectively, due to excess tax benefits generated by the exercise and vesting of stock-based awards.
On December 22, 2017, the U.S. enacted the Tax Cuts and Jobs Act (the “Tax Act”). The Tax Act subjected to U.S. taxation certain previously deferred earnings of foreign subsidiaries as of December 31, 2017 (“Transition Tax”) and implemented a number of changes that took effect on January 1, 2018, including but not limited to, a reduction of the U.S. federal corporate tax rate from 35% to 21% and a new minimum tax on global intangible low-taxed income (“GILTI”) earned by foreign subsidiaries. The Company was able to make a reasonable estimate of the Transition Tax and recorded a provisional tax expense in the fourth quarter of 2017. In the third quarter of 2018, the Company finalized this calculation, which resulted in a $3.2 million reduction in the Transition Tax. The net reduction in the Transition Tax was due primarily to the utilization of additional foreign tax credits, partially offset by additional taxable earnings and profits of our foreign subsidiaries based on recently issued Internal Revenue Service (“IRS”) guidance. The adjustment of the Company’s provisional tax expense was recorded as a change in estimate in accordance with Staff Accounting Bulletin No. 118, Income Tax Accounting Implications of the Tax Cuts and Jobs Act, which is also included in ASU No. 2018-05, Income Taxes (Topic 740), Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 118 (“SAB 118”), which was issued and adopted by the Company in March 2018. Despite the completion of the Company’s accounting for the Tax Act under SAB 118, many aspects of the law remain unclear and we expect ongoing guidance to be issued at both the federal and state levels. We will continue to monitor and assess the impact of any new developments.
The Company recognizes interest and, if applicable, penalties related to unrecognized tax benefits in the income tax provision. Accruals for interest and penalties are not material.
Match Group is routinely under audit by federal, state, local and foreign authorities in the area of income tax as a result of previously filed separate company tax returns and consolidated tax returns with IAC. These audits include questioning the timing and the amount of income and deductions and the allocation of income and deductions among various tax jurisdictions. The IRS is currently auditing IAC’s federal income tax returns for the years ended December 31, 2010 through 2016, which includes the operations of Match Group. The statute of limitations for the years 2010 through 2012 has been extended to December 31, 2019, and the statute of limitations for the years 2013 through 2014 has been extended to March 31, 2019. Various other jurisdictions are open to examination for tax years beginning with 2009. Income taxes payable include unrecognized tax benefits considered sufficient to pay assessments that may result from examination of prior year tax returns. We consider many factors when evaluating and estimating our tax positions and tax benefits, which may not accurately anticipate actual outcomes and, therefore, may require periodic adjustments. Although management currently believes changes in unrecognized tax benefits from period to period and differences between amounts paid, if any, upon resolution of issues raised in audits and amounts previously provided will not have a material impact on the liquidity, results of operations, or financial condition of the Company, these matters are subject to inherent uncertainties and management’s view of these matters may change in the future.
At September 30, 2018 and December 31, 2017, unrecognized tax benefits, including interest and penalties, are $28.1 million and $26.8 million, respectively. At September 30, 2018 and December 31, 2017, approximately $20.5 million and $17.6 million, respectively, was included in unrecognized tax benefits for tax positions included in IAC’s consolidated tax return filings. If unrecognized tax benefits at September 30, 2018 are subsequently recognized, $26.5 million, net of related deferred tax assets and interest, would reduce income tax expense. The comparable amount as of December 31, 2017 was $25.3 million. The Company believes that it is reasonably possible that its unrecognized tax benefits could decrease by $9.3 million by September 30, 2019, due to expirations of statutes of limitations; all of which would reduce the income tax provision.
The Company regularly assesses the realizability of deferred tax assets considering all available evidence including, among other things, the nature, frequency and severity of prior cumulative losses, forecasts of future taxable income, the duration of statutory carryforward periods, available tax planning and historical experience, to the extent these items are applicable.  As of September 30, 2018, the Company has a gross deferred tax asset of $154.7 million that the Company expects to fully utilize on a more likely than not basis.
v3.10.0.1
DISCONTINUED OPERATIONS
9 Months Ended
Sep. 30, 2018
Discontinued Operations and Disposal Groups [Abstract]  
DISCONTINUED OPERATIONS
NOTE 4—DISCONTINUED OPERATIONS
On March 31, 2017, Match Group sold its Non-dating business, which operated under the umbrella of The Princeton Review, to ST Unitas, a global education technology company. We recognized additional loss on the sale of the business of $0.4 million for the three and nine months ended September 30, 2018. We recognized a loss on the sale of the business of $1.2 million for the nine months ended September 30, 2017, which is reported within discontinued operations.
The key components of loss from discontinued operations for the three and nine months ended September 30, 2017 consist of the following:
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2018
 
2017
 
2018
 
2017
 
(In thousands)
Revenue
$

 
$

 
$

 
$
23,980

Operating costs and expenses

 

 

 
(29,601
)
Operating loss

 

 

 
(5,621
)
Other expense
(378
)
 
(168
)
 
(378
)
 
(1,171
)
Income tax benefit

 
83

 

 
2,145

Loss from discontinued operations
$
(378
)
 
$
(85
)
 
$
(378
)
 
$
(4,647
)
v3.10.0.1
FAIR VALUE MEASUREMENTS AND FINANCIAL INSTRUMENTS
9 Months Ended
Sep. 30, 2018
Fair Value Disclosures [Abstract]  
FAIR VALUE MEASUREMENTS AND FINANCIAL INSTRUMENTS
NOTE 5—FAIR VALUE MEASUREMENTS AND FINANCIAL INSTRUMENTS
The Company categorizes its financial instruments measured at fair value into a fair value hierarchy that prioritizes the inputs used in pricing the asset or liability. The three levels of the fair value hierarchy are:
Level 1: Observable inputs obtained from independent sources, such as quoted market prices for identical assets and liabilities in active markets.
Level 2: Other inputs, which are observable directly or indirectly, such as quoted market prices for similar assets or liabilities in active markets, quoted market prices for identical or similar assets or liabilities in markets that are not active and inputs that are derived principally from or corroborated by observable market data. The fair values of the Company’s Level 2 financial assets are primarily obtained from observable market prices for identical underlying securities that may not be actively traded. Certain of these securities may have different market prices from multiple market data sources, in which case an average market price is used.
Level 3: Unobservable inputs for which there is little or no market data and require the Company to develop its own assumptions, based on the best information available in the circumstances, about the assumptions market participants would use in pricing the assets or liabilities. See below for a discussion of fair value measurements made using Level 3 inputs.
The following tables present the Company’s financial instruments that are measured at fair value on a recurring basis:
 
September 30, 2018
 
Quoted Market
Prices in Active
Markets for
Identical Assets
(Level 1)
 
Significant Other Observable Inputs
(Level 2)
 
Significant
Unobservable
Inputs
(Level 3)
 
Total
Fair Value
Measurements
 
(In thousands)
Assets:
 
 
 
 
 
 
 
Cash equivalents:
 
 
 
 
 
 
 
Money market funds
$
150,576

 
$

 
$

 
$
150,576

Time deposits

 
35,000

 

 
35,000

Total
$
150,576

 
$
35,000

 
$

 
$
185,576

 
 
 
 
 
 
 
 
Liabilities:
 
 
 
 
 
 
 
Contingent consideration arrangements
$

 
$

 
$
(1,980
)
 
$
(1,980
)
 
December 31, 2017
 
Quoted Market
Prices in Active
Markets for
Identical Assets
(Level 1)
 
Significant Other Observable Inputs
(Level 2)
 
Significant
Unobservable
Inputs
(Level 3)
 
Total
Fair Value
Measurements
 
(In thousands)
Assets:
 
 
 
 
 
 
 
Cash equivalents:
 
 
 
 
 
 
 
Money market funds
$
71,197

 
$

 
$

 
$
71,197

Time deposits

 
35,023

 

 
35,023

Total
$
71,197

 
$
35,023

 
$

 
$
106,220

 
 
 
 
 
 
 
 
Liabilities:
 
 
 
 
 
 
 
Contingent consideration arrangements
$

 
$

 
$
(2,647
)
 
$
(2,647
)

The Company’s financial instruments that are measured at fair value on a recurring basis using significant unobservable inputs (Level 3) are its contingent consideration arrangements.
 
Three Months Ended September 30,
 
2018
 
2017
 
(In thousands)
Balance at July 1
$
(1,910
)
 
$
(24,829
)
Total net losses:
 
 
 
Fair value adjustments
(55
)
 
(59
)
Included in other comprehensive loss
(15
)
 
(333
)
Settlements

 
23,429

Balance at September 30
$
(1,980
)
 
$
(1,792
)
 
Nine Months Ended September 30,
 
2018
 
2017
 
(In thousands)
Balance at January 1
$
(2,647
)
 
$
(19,418
)
Total net losses:
 
 
 
Fair value adjustments
(265
)
 
(4,397
)
Included in other comprehensive loss
(16
)
 
(1,406
)
Settlements
948

 
23,429

Balance at September 30
$
(1,980
)
 
$
(1,792
)

Contingent consideration arrangements
As of September 30, 2018, there are two contingent consideration arrangements related to business acquisitions. One of the contingent consideration arrangements has limits as to the maximum amount that can be paid. The maximum contingent payment related to this arrangement and the gross fair value of this arrangement, before the unamortized discount, at September 30, 2018, is $2.0 million. No payment is expected for the other contingent consideration arrangement, which does not have a limit on the maximum earnout.
The current contingent consideration arrangements are based upon earnings performance. Previous contingent consideration arrangements were based upon earnings performance and/or operating metrics. The Company determined the fair value of the current contingent consideration arrangement for which a payment is expected by using probability-weighted analyses to determine the amount of the gross liability. For arrangements that are long-term in nature, a discount rate is applied, to appropriately capture the risks associated with the obligation to determine the net amount reflected in the consolidated financial statements. The fair values of the contingent consideration arrangements at both September 30, 2018 and December 31, 2017 reflect a discount rate of 12%.
The fair value of contingent consideration arrangements is sensitive to changes in the forecasts of earnings and changes in discount rates. The Company remeasures the fair value of contingent consideration arrangements each reporting period, including the accretion of the discount, if applicable, and changes are recognized in “General and administrative expense” in the accompanying consolidated statement of operations. The contingent consideration arrangement liability at September 30, 2018 and December 31, 2017 includes a current portion of $2.0 million and $0.6 million, respectively, which is included in “Accrued expenses and other current liabilities” and a non-current portion of $2.0 million at December 31, 2017, which is included in “Other long-term liabilities” in the accompanying consolidated balance sheet. At September 30, 2018, there is no non-current portion of the contingent consideration liability.
Equity securities without readily determinable fair values
At September 30, 2018 and December 31, 2017, the carrying values of the Company’s investments in equity securities without readily determinable fair values totaled $10.2 million and $11.1 million, respectively, and are included in “Long-term investments” in the accompanying consolidated balance sheet. Following the adoption of the measurement alternative under ASU No. 2016-01 on January 1, 2018, the Company’s equity securities without readily determinable fair values are carried at cost minus impairment minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer.
For all equity securities without readily determinable fair values as of September 30, 2018, the Company has elected the measurement alternative. As of September 30, 2018, under the measurement alternative election, the Company did not identify any fair value adjustments using observable price changes in orderly transactions for an identical or similar investment of the same issuer. During the first quarter of 2017, prior to the adoption of ASU No. 2016-01, we recognized an other-than-temporary impairment charge of $2.3 million related to certain cost method investments as a result of our assessment of the near-term prospects and financial condition of the investees. This charge is recognized in “other income (expense), net” in the accompanying consolidated statement of operations.
Assets measured at fair value on a nonrecurring basis
The Company’s non-financial assets, such as goodwill, intangible assets and property and equipment, are adjusted to fair value only when an impairment charge is recognized. The Company’s financial assets, comprising of equity securities without readily determinable fair values, are adjusted to fair value when observable price changes are identified or an impairment charge is recognized. Such fair value measurements are based predominantly on Level 3 inputs.
Financial instruments measured at fair value only for disclosure purposes
The following table presents the carrying value and the fair value of financial instruments measured at fair value only for disclosure purposes.
 
September 30, 2018
 
December 31, 2017
 
Carrying Value
 
Fair Value
 
Carrying Value
 
Fair Value
 
(In thousands)
Long-term debt, net (a)
$
(1,255,088
)
 
$
(1,299,070
)
 
$
(1,252,696
)
 
$
(1,320,289
)

______________________
(a)
At September 30, 2018 and December 31, 2017, the carrying value of long-term debt, net includes unamortized original issue discount and debt issuance costs of $19.9 million and $22.3 million, respectively.
The fair value of long-term debt, net is estimated using observable market prices or indices for similar liabilities, which are Level 2 inputs.
v3.10.0.1
LONG-TERM DEBT
9 Months Ended
Sep. 30, 2018
Debt Disclosure [Abstract]  
LONG-TERM DEBT
NOTE 6—LONG-TERM DEBT
Long-term debt consists of:
 
September 30, 2018
 
December 31, 2017
 
(In thousands)
Term Loan due November 16, 2022 (the “Term Loan”)
$
425,000

 
$
425,000

6.375% Senior Notes due June 1, 2024 (the “2016 Senior Notes”); interest payable each June 1 and December 1
400,000

 
400,000

5.00% Senior Notes due December 15, 2027 (the “2017 Senior Notes”); interest payable each June 15 and December 15
450,000

 
450,000

Total debt
1,275,000

 
1,275,000

Less: Unamortized original issue discount
7,681

 
8,668

Less: Unamortized debt issuance costs
12,231

 
13,636

Total long-term debt, net
$
1,255,088

 
$
1,252,696


Senior Notes:
The 2017 Senior Notes were issued on December 4, 2017 at 99.027% of par. The proceeds of $445.6 million, along with cash on hand, were used to redeem the 6.75% Senior Notes due December 15, 2022 and pay the related call premium. At any time prior to December 15, 2022, these notes may be redeemed at a redemption price equal to the sum of the principal amount, plus accrued and unpaid interest and a make-whole premium set forth in the indenture governing the notes. Thereafter, these notes may be redeemed at redemption prices set forth in the indenture governing the 2017 Senior Notes, together with accrued and unpaid interest to the applicable redemption date.
The 2016 Senior Notes were issued on June 1, 2016. The proceeds of $400 million were used to prepay a portion of indebtedness then outstanding under the Term Loan. At any time prior to June 1, 2019, these notes may be redeemed at a redemption price equal to the sum of the principal amount, plus accrued and unpaid interest and a make-whole premium set forth in the indenture governing the notes. Thereafter, these notes may be redeemed at redemption prices set forth in the indenture governing the 2016 Senior Notes, together with accrued and unpaid interest to the applicable redemption date.
The indentures governing the 2017 and 2016 Senior Notes contain covenants that would limit the Company’s ability to pay dividends or to make distributions and repurchase or redeem Match Group stock in the event a default has occurred or Match Group’s leverage ratio (as defined in the indentures) exceeds 5.0 to 1.0. The 2017 and 2016 Senior Notes rate equally in right of payment. At September 30, 2018, there were no limitations pursuant thereto. There are additional covenants that limit the ability of the Company and its subsidiaries to, among other things, (i) incur indebtedness, make investments, or sell assets in the event the Company is not in compliance with certain financial ratios set forth in the indentures, and (ii) incur liens, enter into agreements restricting the ability of the Company’s subsidiaries to pay dividends, enter into transactions with affiliates and consolidate, merge or sell substantially all of their assets.
Term Loan and Credit Facility:
The Company entered into the Term Loan under a credit agreement (the “Credit Agreement”) on November 16, 2015. At both September 30, 2018 and December 31, 2017, the outstanding balance on the Term Loan was $425 million and the loan bears interest at LIBOR plus 2.50%. The interest rate of the Term Loan was 4.67% and 3.85% at September 30, 2018 and December 31, 2017, respectively. Interest payments are due at least quarterly through the term of the loan. The Term Loan provides for annual principal payments as part of an excess cash flow sweep provision, the amount of which, if any, is governed by the secured net leverage ratio contained in the Credit Agreement.
As of September 30, 2018, the Company has a $500 million revolving credit facility (the “Credit Facility”) that expires on October 7, 2020. At September 30, 2018 and December 31, 2017, there were no outstanding borrowings under the Credit Facility. The annual commitment fee on undrawn funds based on the current leverage ratio is 25 basis points. Borrowings under the Credit Facility bear interest, at the Company’s option, at a base rate or LIBOR, in each case plus an applicable margin, which is determined by reference to a pricing grid based on the Company’s consolidated net leverage ratio. The terms of the Credit Facility require the Company to maintain a consolidated net leverage ratio of not more than 5.0 to 1.0 and a minimum interest coverage ratio of not less than 2.5 to 1.0 (in each cash as defined in the agreement).
There are additional covenants under the Credit Facility and the Term Loan that limit the ability of the Company and its subsidiaries to, among other things, incur indebtedness, pay dividends or make distributions. While the Term Loan remains outstanding, these same covenants under the Credit Agreement are more restrictive than the covenants that are applicable to the Credit Facility. Obligations under the Credit Facility and Term Loan are unconditionally guaranteed by certain Match Group wholly-owned domestic subsidiaries, and are also secured by the stock of certain Match Group domestic and foreign subsidiaries. The Term Loan and outstanding borrowings, if any, under the Credit Facility rank equally with each other, and have priority over the 2017 and 2016 Senior Notes to the extent of the value of the assets securing the borrowings under the Credit Agreement.
v3.10.0.1
ACCUMULATED OTHER COMPREHENSIVE LOSS
9 Months Ended
Sep. 30, 2018
Equity [Abstract]  
ACCUMULATED OTHER COMPREHENSIVE LOSS
NOTE 7—ACCUMULATED OTHER COMPREHENSIVE LOSS
The following table presents the components of accumulated other comprehensive loss and items reclassified out of accumulated other comprehensive loss into earnings. For the three and nine months ended September 30, 2018 and 2017, the Company’s accumulated other comprehensive loss relates to foreign currency translation adjustments.
 
Three Months Ended September 30,
 
2018
 
2017
 
(In thousands)
Balance at July 1
$
(120,996
)
 
$
(141,959
)
Other comprehensive (loss) income
(818
)
 
33,475

Balance at September 30
$
(121,814
)
 
$
(108,484
)
 
Nine Months Ended September 30,
 
2018
 
2017
 
(In thousands)
Balance at January 1
$
(112,318
)
 
$
(176,384
)
Other comprehensive (loss) income before reclassifications
(9,496
)
 
67,186

Amounts reclassified into earnings

 
714

Net period other comprehensive (loss) income
(9,496
)
 
67,900

Balance at September 30
$
(121,814
)
 
$
(108,484
)
The amount reclassified out of accumulated other comprehensive loss into earnings for the nine months ended September 30, 2017 relates to the liquidation of an international subsidiary.
At both September 30, 2018 and 2017, there was no tax benefit or provision on the accumulated other comprehensive loss.
v3.10.0.1
EARNINGS PER SHARE
9 Months Ended
Sep. 30, 2018
Earnings Per Share [Abstract]  
EARNINGS PER SHARE
NOTE 8—EARNINGS PER SHARE
The following tables set forth the computation of the basic and diluted earnings per share attributable to Match Group shareholders:
 
Three Months Ended September 30,
 
2018
 
2017
 
Basic
 
Diluted
 
Basic
 
Diluted
 
(In thousands, except per share data)
Numerator
 
 
 
 
 
 
 
Net earnings from continuing operations
$
127,950

 
$
127,950

 
$
287,771

 
$
287,771

Net loss attributable to noncontrolling interests
2,587

 
2,587

 
2

 
2

Net earnings from continuing operations attributable to Match Group, Inc. shareholders
130,537

 
130,537

 
287,773

 
287,773

Loss from discontinued operations, net of tax
(378
)
 
(378
)
 
(85
)
 
(85
)
Net earnings attributable to Match Group, Inc. shareholders
$
130,159

 
$
130,159

 
$
287,688

 
$
287,688

 
 
 
 
 
 
 
 
Denominator
 
 
 
 
 
 
 
Basic weighted average common shares outstanding
277,492

 
277,492

 
267,487

 
267,487

Dilutive securities including stock options, RSU awards, and subsidiary denominated equity (a)(b)

 
19,297

 

 
25,573

Dilutive weighted average common shares outstanding
277,492

 
296,789

 
267,487

 
293,060

 
 
 
 
 
 
 
 
Earnings (loss) per share:
 
 
 
 
 
 
 
Earnings per share from continuing operations
$
0.47

 
$
0.44

 
$
1.08

 
$
0.98

Loss per share from discontinued operations, net of tax
$
0.00

 
$
0.00

 
$
0.00

 
$
0.00

Earnings per share attributable to Match Group, Inc. shareholders
$
0.47

 
$
0.44

 
$
1.08

 
$
0.98

 
Nine Months Ended September 30,
 
2018
 
2017
 
Basic
 
Diluted
 
Basic
 
Diluted
 
(In thousands, except per share data)
Numerator
 
 
 
 
 
 
 
Net earnings from continuing operations
$
358,986

 
$
358,986

 
$
363,870

 
$
363,870

Net loss (earnings) attributable to noncontrolling interests
3,787

 
3,787

 
(52
)
 
(52
)
Net earnings from continuing operations attributable to Match Group, Inc. shareholders
362,773

 
362,773

 
363,818

 
363,818

Loss from discontinued operations, net of tax
(378
)
 
(378
)
 
(4,647
)
 
(4,647
)
Net earnings attributable to Match Group, Inc. shareholders
$
362,395

 
$
362,395

 
$
359,171

 
$
359,171

 
 
 
 
 
 
 
 
Denominator
 
 
 
 
 
 
 
Basic weighted average common shares outstanding
276,634

 
276,634

 
260,876

 
260,876

Dilutive securities including stock options, RSU awards, and subsidiary denominated equity (a)(b)

 
20,683

 

 
36,431

Dilutive weighted average common shares outstanding
276,634

 
297,317

 
260,876

 
297,307

 
 
 
 
 
 
 
 
Earnings (loss) per share:
 
 
 
 
 
 
 
Earnings per share from continuing operations
$
1.31

 
$
1.22

 
$
1.39

 
$
1.22

Loss per share from discontinued operations, net of tax
$
0.00

 
$
0.00

 
$
(0.02
)
 
$
(0.02
)
Earnings per share attributable to Match Group, Inc. shareholders
$
1.31

 
$
1.22

 
$
1.38

 
$
1.21

______________________
(a)
If the effect is dilutive, weighted average common shares outstanding include the incremental shares that would be issued upon the assumed exercise of stock options and subsidiary denominated equity or vesting of restricted stock units (“RSUs”). For each of the three and nine months ended September 30, 2018, 0.1 million potentially dilutive securities and for the three and nine months ended September 30, 2017, 2.9 million and 4.4 million, respectively, are excluded from the calculation of diluted earnings per share because their inclusion would have been anti-dilutive.
(b)
Market-based awards and performance-based stock options (“PSOs”) and units (“PSUs”) are considered contingently issuable shares. Shares issuable upon exercise or vesting of market-based awards, PSOs, and PSUs are included in the denominator for earnings per share if (i) the applicable market or performance condition(s) has been met and (ii) the inclusion of the market-based awards, PSOs and PSUs is dilutive for the respective reporting periods. For each of the three and nine months ended September 30, 2018, 1.0 million shares underlying market-based awards, PSOs, and PSUs, and for each of the three and nine months ended September 30, 2017, 4.5 million shares underlying market-based awards, PSOs, and PSUs, respectively, were excluded from the calculation of diluted earnings per share because the market or performance conditions had not been met.
v3.10.0.1
CONTINGENCIES
9 Months Ended
Sep. 30, 2018
Commitments and Contingencies Disclosure [Abstract]  
CONTINGENCIES
NOTE 9—CONTINGENCIES
In the ordinary course of business, the Company is a party to various lawsuits. The Company establishes reserves for specific legal matters when it determines that the likelihood of an unfavorable outcome is probable and the loss is reasonably estimable. Management has also identified certain other legal matters where we believe an unfavorable outcome is not probable and, therefore, no reserve is established. Although management currently believes that resolving claims against us, including claims where an unfavorable outcome is reasonably possible, will not have a material impact on the liquidity, results of operations, or financial condition of the Company, these matters are subject to inherent uncertainties and management’s view of these matters may change in the future. The Company also evaluates other contingent matters, including income and non-income tax contingencies, to assess the likelihood of an unfavorable outcome and estimated extent of potential loss. It is possible that an unfavorable outcome of one or more of these lawsuits or other contingencies could have a material impact on the liquidity, results of operations, or financial condition of the Company. See “Note 3—Income Taxes” for additional information related to income tax contingencies.
v3.10.0.1
RELATED PARTY TRANSACTIONS
9 Months Ended
Sep. 30, 2018
Related Party Transactions [Abstract]  
RELATED PARTY TRANSACTIONS
NOTE 10—RELATED PARTY TRANSACTIONS
Relationship with IAC
In connection with the IPO in November 2015, the Company entered into certain agreements relating to our relationship with IAC after the IPO. These agreements include a master transaction agreement; an investor rights agreement; a tax sharing agreement; a services agreement; an employee matters agreement and a subordinated loan agreement.
For the three and nine months ended September 30, 2018, the Company incurred $1.9 million and $5.6 million, respectively, and for the three and nine months ended September 30, 2017, the Company incurred $2.6 million and $7.9 million, respectively, pursuant to the services agreement. Included in these amounts for the three and nine months ended September 30, 2018 is $1.3 million and $3.9 million, respectively, and for the three and nine months ended September 30, 2017 is $1.2 million and $3.8 million, respectively, for the leasing of office space for certain of our businesses at properties owned by IAC. All such amounts were paid in full by the Company at September 30, 2018.
The master transaction agreement provides, among other things, that the Company will indemnify IAC for matters relating to any business of the Company. Under this provision, the Company may be required to indemnify IAC for costs related to the lawsuit brought by current and former employees of the Tinder business against IAC and the Company.
The employee matters agreement provides, among other things, that: (i) with respect to equity awards denominated in shares of certain of the Company’s subsidiaries, IAC may elect to cause such equity awards to be settled in either shares of IAC common stock or Company common stock and, to the extent that shares of IAC common stock are issued in settlement of such equity awards, the Company will reimburse IAC for the cost of such shares of IAC common stock by issuing to IAC additional shares of Company common stock; and (ii) the Company will reimburse IAC for the cost of any IAC equity awards held by the Company’s employees and former employees and that IAC may elect to receive payment either in cash or Company common stock.
During the nine months ended September 30, 2018 and 2017, 2.6 million and 11.1 million shares, respectively, of Company common stock were issued to IAC pursuant to the employee matters agreement. This includes 2.2 million and 10.6 million shares, respectively, issued during the nine months ended September 30, 2018 and 2017, as reimbursement for shares of IAC common stock issued in connection with the exercise of equity awards originally denominated in shares of a subsidiary of the Company and 0.4 million and 0.5 million shares, respectively, during the nine months ended September 30, 2018 and 2017, issued as reimbursement for shares of IAC common stock issued in connection with the exercise and vesting of IAC equity awards held by Company employees.
Relationship with others
On August 10, 2018, Gregory R. Blatt resigned as a director of the Company and entered into an advisory agreement with the Company, pursuant to which he will advise the Company on matters relating to its business, strategy and operations. The term of the advisory agreement will end on February 29, 2020. Pursuant to their terms, Mr. Blatt’s outstanding stock options will remain exercisable and continue to vest, as applicable, as long as he continues to perform services for the Company.
v3.10.0.1
SUBSEQUENT EVENT
9 Months Ended
Sep. 30, 2018
Subsequent Events [Abstract]  
SUBSEQUENT EVENT
NOTE 11—SUBSEQUENT EVENT
On November 6, 2018, the Board of Directors declared a special cash dividend of $2.00 per share on Match Group common stock and Class B common stock, payable on December 19, 2018, to stockholders of record as of the close of business on December 5, 2018.  Based on the Company’s current shares outstanding, the total amount of this dividend will be approximately $560 million. The special dividend will be funded with cash on hand and incremental debt, as necessary.
v3.10.0.1
THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)
9 Months Ended
Sep. 30, 2018
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Nature of Operations
Match Group, Inc. is a leading provider of subscription dating products servicing North America, Western Europe, Asia, and many other regions around the world through applications and websites that we own and operate. We operate a portfolio of brands, including Tinder, Match, PlentyOfFish, Meetic, OkCupid, OurTime, and Pairs as well as a number of other brands, each designed to increase our users’ likelihood of finding a meaningful connection. Through our portfolio of trusted brands, we provide tailored products to meet the varying preferences of our users. We currently offer our dating products in 42 languages across more than 190 countries. Match Group has one operating segment, Dating, which is managed as a portfolio of dating brands.
As of September 30, 2018, IAC/InterActiveCorp’s (“IAC”) economic ownership interest and voting interest in Match Group were 80.9% and 97.5%, respectively.
All references to “Match Group,” the “Company,” “we,” “our,” or “us” in this report are to Match Group, Inc.
Basis of Presentation
The Company prepares its consolidated financial statements in accordance with U.S. generally accepted accounting principles (“GAAP”).
The consolidated financial statements include the accounts of the Company, all entities that are wholly-owned by the Company and all entities in which the Company has a controlling financial interest. All intercompany transactions and balances between and among the Company, its subsidiaries and the entities comprising Match Group have been eliminated.
Investments in equity securities, other than those of our consolidated subsidiaries, are accounted for at fair value or under the measurement alternative of Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities, upon its adoption on January 1, 2018, with changes recognized within other income (expense), net each reporting period. Under the measurement alternative, equity investments without readily determinable fair values are carried at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer. Under the measurement alternative, the value of our equity securities without readily determinable fair values is generally determined based on a market approach as of the transaction date. An investment will be considered identical or similar if it has identical or similar rights to the equity investments held by the Company. The Company reviews impairment of our equity securities each reporting period when there are qualitative indicators that may indicate impairment. Once the qualitative indicators are identified and the fair value of the security is less than its carrying value, the Company will write down the security to its fair value and record the corresponding charge within other income (expense), net. See “Accounting Pronouncements adopted by the Company below for further information.
In management’s opinion, the unaudited interim consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements and reflect, in management’s opinion, all adjustments, consisting of normal and recurring adjustments, necessary for the fair presentation of our financial position, results of operations and cash flows for the periods presented. Interim results are not necessarily indicative of the results that may be expected for the full year. The accompanying unaudited consolidated financial statements should be read in conjunction with the consolidated and combined statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017.
For the purposes of these financial statements, income taxes have been computed for Match Group on an as if stand-alone, separate tax return basis.
Consolidation
The Company prepares its consolidated financial statements in accordance with U.S. generally accepted accounting principles (“GAAP”).
The consolidated financial statements include the accounts of the Company, all entities that are wholly-owned by the Company and all entities in which the Company has a controlling financial interest. All intercompany transactions and balances between and among the Company, its subsidiaries and the entities comprising Match Group have been eliminated.
Investments in equity securities, other than those of our consolidated subsidiaries, are accounted for at fair value or under the measurement alternative of Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities, upon its adoption on January 1, 2018, with changes recognized within other income (expense), net each reporting period. Under the measurement alternative, equity investments without readily determinable fair values are carried at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer. Under the measurement alternative, the value of our equity securities without readily determinable fair values is generally determined based on a market approach as of the transaction date. An investment will be considered identical or similar if it has identical or similar rights to the equity investments held by the Company. The Company reviews impairment of our equity securities each reporting period when there are qualitative indicators that may indicate impairment. Once the qualitative indicators are identified and the fair value of the security is less than its carrying value, the Company will write down the security to its fair value and record the corresponding charge within other income (expense), net. See “Accounting Pronouncements adopted by the Company below for further information.
In management’s opinion, the unaudited interim consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements and reflect, in management’s opinion, all adjustments, consisting of normal and recurring adjustments, necessary for the fair presentation of our financial position, results of operations and cash flows for the periods presented. Interim results are not necessarily indicative of the results that may be expected for the full year. The accompanying unaudited consolidated financial statements should be read in conjunction with the consolidated and combined statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017.
For the purposes of these financial statements, income taxes have been computed for Match Group on an as if stand-alone, separate tax return basis.
Accounting Estimates
Management of the Company is required to make certain estimates, judgments, and assumptions during the preparation of its consolidated financial statements in accordance with GAAP. These estimates, judgments, and assumptions impact the reported amounts of assets, liabilities, revenue, and expenses and the related disclosure of contingent assets and liabilities. Actual results could differ from these estimates.
On an ongoing basis, the Company evaluates its estimates and judgments including those related to: the recoverability of goodwill and indefinite-lived intangible assets; the useful lives and recoverability of definite-lived intangible assets and property and equipment; the fair values of equity securities without readily determinable fair values; the carrying value of accounts receivable, including the determination of the allowance for doubtful accounts; the determination of revenue reserves; the fair value of acquisition-related contingent consideration arrangements; unrecognized tax benefits; the valuation allowance for deferred income tax assets; and the fair value of and forfeiture rates for stock-based awards, among others. The Company bases its estimates and judgments on historical experience, its forecasts and budgets and other factors that the Company considers relevant.
Recent Accounting Pronouncements
Accounting Pronouncements adopted by the Company
In May 2014, the FASB issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers. ASU No. 2014-09 superseded nearly all previous revenue recognition guidance. The Company adopted ASU No. 2014-09 as of January 1, 2018 using the modified retrospective transition method for open contracts as of the date of initial application. There is no cumulative impact to the Company’s retained earnings at January 1, 2018. See “Note 2—Revenue Recognition” for additional information on the impact to the Company.
In January 2016, the FASB issued ASU No. 2016-01, which updates certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. Under ASU No. 2016-01, equity securities, other than those of our consolidated subsidiaries, will be measured at fair value with changes in fair value recognized in the statement of operations each reporting period. ASU No. 2016-01 is effective for reporting periods beginning after December 15, 2017. The Company’s adoption of ASU No. 2016-01 effective January 1, 2018 did not have a material effect on its consolidated financial statements. The adoption of ASU No. 2016-01 may increase the volatility of our results of operations as a result of the remeasurement of these investments.
In November 2016, the FASB issued ASU No. 2016-18, Restricted Cash, which requires companies to explain the changes in the total of cash, cash equivalents, restricted cash and restricted cash equivalents in the statement of cash flows. Therefore, amounts generally described as restricted cash or restricted cash equivalents are combined with unrestricted cash and cash equivalents when reconciling the beginning and end of period balances on the statement of cash flows. Additionally, when cash, cash equivalents, restricted cash, and restricted cash equivalents are presented within different captions on the balance sheet, a reconciliation of the totals in the statement of cash flows to the related captions in the balance sheet is required. ASU No. 2016-18 is effective for reporting periods beginning after December 15, 2017. The Company’s adoption of ASU No. 2016-18 effective January 1, 2018, on a retrospective basis, did not have a material effect on its consolidated financial statements.
The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the consolidated balance sheet to the total amounts shown in the consolidated statement of cash flows:
 
September 30, 2018
 
December 31, 2017
 
September 30, 2017
 
December 31, 2016
 
(In thousands)
Cash and cash equivalents
$
402,598

 
$
272,624

 
$
157,576

 
$
253,651

Restricted cash included in other current assets
135

 
137

 
137

 
120

Total cash, cash equivalents and restricted cash as shown on the consolidated statement of cash flow
$
402,733

 
$
272,761

 
$
157,713

 
$
253,771


In June 2018, the FASB issued ASU No. 2018-07, Improvements to Nonemployee Share-Based Payment Accounting, which largely aligns the measurement and classification guidance for share-based payments granted to non-employees with the guidance for share-based payments granted to employees. The new guidance supersedes Subtopic 505-50, Equity - Equity-Based payments to Nonemployees. ASU No. 2018-07 is effective for reporting periods beginning after December 15, 2018, with early adoption permitted. The Company adopted ASU No. 2018-07 effective April 1, 2018 and its adoption did not have a material effect on its consolidated financial statements. The effect of the adoption of ASU No. 2018-07 will be to minimize the volatility of expense related to stock-based awards to non-employees in the future.
Accounting Pronouncement not yet adopted by the Company
In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), which supersedes existing guidance on accounting for leases and generally requires all leases to be recognized in the statement of financial position. The provisions of ASU No. 2016-02 are effective for reporting periods beginning after December 15, 2018. The Company will adopt the new lease guidance effective January 1, 2019. In July 2018, the FASB issued ASU No. 2018-11, Leases (Topic 842): Targeted Improvements, which provides the option of an additional transition method that allows entities to initially apply the new lease guidance at the adoption date and recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. The Company expects to implement the transition method option provided by ASU No. 2018-11.
The Company is not a lessor, has no capitalized leases, and does not expect to enter into any capitalized leases prior to the adoption of ASU No. 2016-02. Accordingly, the Company does not expect the amount or classification of rent expense in its statement of operations to be affected by the adoption of ASU No. 2016-02. The primary effect of the adoption of ASU No. 2016-02 will be the recognition of a right of use asset and related liability to reflect the Company's rights and obligations under its operating leases. The Company will also be required to provide the additional disclosures stipulated in ASU No. 2016-02.
The adoption of ASU No. 2016-02 will not have an impact on the leverage calculation set forth in any of the agreements governing the outstanding debt of the Company, or our credit agreement, because in each circumstance, the leverage calculations are not affected by the liability that will be recorded upon adoption of the new standard.
While the Company's evaluation of the impact of the adoption of ASU No. 2016-02 on its consolidated financial statements continues, outlined below is a summary of the status of the Company's progress:
the Company has selected a software solution to implement ASU No. 2016-02;
the Company has input lease summaries into the software solution;
the Company is assessing the other inputs required in connection with the adoption of ASU No. 2016-02; and
the Company is developing its accounting policy, procedures and internal controls related to the new standard.
Development of our selected software solution is ongoing, as it is not yet fully compliant with the requirements of ASU No. 2016-02. The timely readiness of the software solution is critical to ensure an efficient and effective adoption of ASU No. 2016-02. The Company's ability to calculate an estimate of the right of use asset and related liability is dependent upon the readiness of the software solution.
Reclassifications
Certain prior year amounts have been reclassified to conform to the current year presentation.
Revenue Recognition
Revenue Recognition
The Company accounts for a contract when it has approval and commitment from all parties, the rights of the parties and payment terms are identified, the contract has commercial substance and collectability of consideration is probable. Revenue is recognized when control of the promised services is transferred to our customers, and in an amount that reflects the consideration the Company is contractually due in exchange for those services.
The Company’s revenue is primarily derived directly from users in the form of recurring subscriptions. Subscription revenue is presented net of credits and credit card chargebacks. Subscribers pay in advance, primarily by credit card or through mobile app stores, and, subject to certain conditions identified in our terms and conditions, generally all purchases are final and nonrefundable. Revenue is initially deferred and is recognized using the straight-line method over the term of the applicable subscription period, which primarily range from one to six months. Revenue is also earned from online advertising, the purchase of à la carte features and offline events. Online advertising revenue is recognized when an advertisement is displayed. Revenue from the purchase of à la carte features is recognized based on usage. Revenue associated with offline events is recognized when each event occurs.
As permitted under the practical expedient available under ASU No. 2014-09, the Company does not disclose the value of unsatisfied performance obligations for (i) contracts with an original expected length of one year or less, (ii) contracts with variable consideration that is allocated entirely to unsatisfied performance obligations or to a wholly unsatisfied promise accounted for under the series guidance, and (iii) contracts for which the Company recognizes revenue at the amount which we have the right to invoice for services performed.
Transaction Price
The objective of determining the transaction price is to estimate the amount of consideration the Company is due in exchange for services, including amounts that are variable. The Company determines the total transaction price, including an estimate of any variable consideration, at contract inception and reassesses this estimate each reporting period.
The Company excludes from the measurement of transaction price all taxes assessed by governmental authorities that are both (i) imposed on and concurrent with a specific revenue-producing transaction and (ii) collected from customers. Accordingly, such tax amounts are not included as a component of revenue or cost of revenue.
For contracts that have an original duration of one year or less, the Company uses the practical expedient available under ASU No. 2014-09 applicable to such contracts and does not consider the time value of money.
Accounts Receivables, net of allowance for doubtful accounts and revenue reserves
Accounts receivable include amounts billed and currently due from customers. The Company maintains an allowance for doubtful accounts to provide for the estimated amount of accounts receivables that will not be collected. The allowance for doubtful accounts is based upon a number of factors, including the length of time accounts receivable are past due, the Company’s previous loss history, and the specific customer’s ability to pay its obligation. The time between the Company issuance of an invoice and payment due date is not significant, customer payments that are not collected in advance of the transfer of promised services are generally due no later than 30 days from invoice date. The Company also maintains allowances to reserve for potential credits issued to consumers or other revenue adjustments. The amounts of these reserves are based primarily upon historical experience.
Deferred Revenue
Deferred revenue consists of advance payments that are received or due in advance of the Company's performance. The Company’s deferred revenue is reported on a contract by contract basis at the end of each reporting period. The Company generally classifies deferred revenue as current when the term of the applicable subscription period or expected completion of our performance obligation is one year or less. The deferred revenue balance as of January 1, 2018 was $198.3 million. During the nine months ended September 30, 2018, the Company recognized $191.6 million of revenue that was included in the deferred revenue balance as of January 1, 2018. The deferred revenue balance as of June 30, 2018 was $212.6 million. During the three months ended September 30, 2018, the Company recognized $157.4 million of revenue that was included in the deferred revenue balance as of June 30, 2018. The current deferred revenue balance at September 30, 2018 is $221.9 million. At September 30, 2018, there is no non-current portion of deferred revenue.
Assets Recognized from the Costs to Obtain a Contract with a Customer
The Company has determined that certain costs, primarily mobile app store fees, meet the requirements to be capitalized as a cost of obtaining a contract. The Company recognizes an asset for these costs if we expect to recover those costs. Mobile app store fees are amortized over the period of contract performance. The Company capitalizes and amortizes mobile app store fees over the term of the applicable subscription.
v3.10.0.1
THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)
9 Months Ended
Sep. 30, 2018
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Schedule of Cash and Cash Equivalents
The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the consolidated balance sheet to the total amounts shown in the consolidated statement of cash flows:
 
September 30, 2018
 
December 31, 2017
 
September 30, 2017
 
December 31, 2016
 
(In thousands)
Cash and cash equivalents
$
402,598

 
$
272,624

 
$
157,576

 
$
253,651

Restricted cash included in other current assets
135

 
137

 
137

 
120

Total cash, cash equivalents and restricted cash as shown on the consolidated statement of cash flow
$
402,733

 
$
272,761

 
$
157,713

 
$
253,771

Schedule of Restrictions on Cash and Cash Equivalents
The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the consolidated balance sheet to the total amounts shown in the consolidated statement of cash flows:
 
September 30, 2018
 
December 31, 2017
 
September 30, 2017
 
December 31, 2016
 
(In thousands)
Cash and cash equivalents
$
402,598

 
$
272,624

 
$
157,576

 
$
253,651

Restricted cash included in other current assets
135

 
137

 
137

 
120

Total cash, cash equivalents and restricted cash as shown on the consolidated statement of cash flow
$
402,733

 
$
272,761

 
$
157,713

 
$
253,771

v3.10.0.1
REVENUE RECOGNITION (Tables)
9 Months Ended
Sep. 30, 2018
Revenue from Contract with Customer [Abstract]  
Schedule of Disaggregation of Revenue
The following table presents disaggregated revenue:
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2018
 
2017
 
2018
 
2017
 
(In thousands)
Direct Revenue:
 
 
 
 
 
 
 
North America
$
233,643

 
$
186,868

 
$
667,163

 
$
540,701

International
197,902

 
143,230

 
564,846

 
376,572

Total Direct Revenue
431,545

 
330,098

 
1,232,009

 
917,273

Indirect Revenue (principally advertising revenue)
12,398

 
13,320

 
40,497

 
34,481

Total Revenue
$
443,943

 
$
343,418

 
$
1,272,506

 
$
951,754

v3.10.0.1
DISCONTINUED OPERATIONS (Tables)
9 Months Ended
Sep. 30, 2018
Discontinued Operations and Disposal Groups [Abstract]  
Schedule of Components of Assets Held For Sale and Discontinued Operations
The key components of loss from discontinued operations for the three and nine months ended September 30, 2017 consist of the following:
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2018
 
2017
 
2018
 
2017
 
(In thousands)
Revenue
$

 
$

 
$

 
$
23,980

Operating costs and expenses

 

 

 
(29,601
)
Operating loss

 

 

 
(5,621
)
Other expense
(378
)
 
(168
)
 
(378
)
 
(1,171
)
Income tax benefit

 
83

 

 
2,145

Loss from discontinued operations
$
(378
)
 
$
(85
)
 
$
(378
)
 
$
(4,647
)
v3.10.0.1
FAIR VALUE MEASUREMENTS AND FINANCIAL INSTRUMENTS (Tables)
9 Months Ended
Sep. 30, 2018
Fair Value Disclosures [Abstract]  
Schedule of Assets and Liabilities Measured at Fair Value on a Recurring Basis
The following tables present the Company’s financial instruments that are measured at fair value on a recurring basis:
 
September 30, 2018
 
Quoted Market
Prices in Active
Markets for
Identical Assets
(Level 1)
 
Significant Other Observable Inputs
(Level 2)
 
Significant
Unobservable
Inputs
(Level 3)
 
Total
Fair Value
Measurements
 
(In thousands)
Assets:
 
 
 
 
 
 
 
Cash equivalents:
 
 
 
 
 
 
 
Money market funds
$
150,576

 
$

 
$

 
$
150,576

Time deposits

 
35,000

 

 
35,000

Total
$
150,576

 
$
35,000

 
$