What changed in this filing

/stocks — the workspaceLOADING

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

2022-02-24 compared with 2021-02-25 · 518 added, 504 removed, 1219 unchanged (46% of the section changed)

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If LIBOR were to increase or decrease by 100 basis points, then the annual interest expense and payments on the Term Loan would increase or decrease, respectively, by $4.3 million based upon the outstanding balance and rate in effect at December 31, 2021.

On February 13, 2020, the Credit Facility and the Term Loan were amended to, among other things, provide for a benchmark replacement should the LIBOR rate not be available in the future.

The Credit Facility and the Term Loan provide for a benchmark replacement should the LIBOR rate not be available.

The rate used would be agreed to between the administrative agent and Match Group and may be based upon a secured overnight financing rate at the Federal Reserve Bank of New York.

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Dollar by 7% and 4%, respectively, in 2021 compared to 2020.

Foreign currency exchange rate changes during the years ended December 31, 2020 and 2019 negatively impacted revenue by $6.4 million and $47.5 million, respectively, or less than 1% and 2% of total revenue, respectively.

See “Principles of Financial Reporting” in “Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations” for the definition of Revenue excluding foreign exchange effects and a reconciliation of Revenue to Revenue excluding foreign exchange effects.

Foreign currency exchange gains and losses included in the Company’s earnings for the years ended December 31, 2020, 2019 and 2018 are (losses) and gains of $(0.6) million, $(0.9) million and $5.3 million, respectively.

Foreign currency exchange rate changes during the years ended December 31, 2021 and 2020 positively impacted revenue by $35.2 million and negatively impacted revenue by $6.4 million, respectively, or 1% and less than 1% of total revenue, respectively.

See “Non-GAAP Financial Measures” in “Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations” for the definition of Revenue excluding foreign exchange effects and a reconciliation of Revenue to Revenue excluding foreign exchange effects.

Foreign currency exchange losses included in the Company’s earnings for the years ended December 31, 2021, 2020 and 2019 are $1.8 million, $0.6 million and $0.9 million, respectively.

Foreign currency exchange gains or losses historically have not been material to the Company.

As a result, we have not historically, hedged any foreign currency exposures.

As a result, we have not historically hedged any foreign currency exposures, although we may hedge foreign currencies in the future to limit the impact of foreign currency exchange gains and losses.

The continued growth and expansion of our international operations into new countries increases our exposure to foreign exchange rate fluctuations.

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The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Stock-Based Compensation

Description of the Matter During the year ended December 31, 2020, the Company recorded stock-based compensation expense of $102.3 million.

As discussed in Note 11 to the consolidated financial statements, the Company issues various types of equity awards, including stock options, restricted stock units, performance-based awards, market-based awards and equity instruments denominated in the shares of certain subsidiaries.

Auditing the Company’s accounting for stock-based compensation required complex auditor judgment due to the number and the variety of the types of equity awards, the subjectivity of assumptions used to value stock-based awards (e.g., expected term), the frequent use of performance-based vesting conditions and the existence of awards denominated in the shares of certain subsidiaries.

How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design and tested the operating effectiveness of the Company’s controls over stock-based compensation.

For example, we tested controls over the Company’s process to assess the completeness of its share-based awards and for measuring and recording stock-based compensation, including management’s review of the underlying calculations, and the significant assumptions used in valuing certain awards.

To test stock-based compensation expense, we performed audit procedures that included, among others, assessing the completeness of the awards granted and evaluating the methodologies used to estimate the fair value of the awards granted and the significant assumptions described above.

Our procedures also included, evaluating the key terms and conditions of awards granted to assess the accounting treatment for a sample of awards and testing the clerical accuracy of the calculation of the expense recorded.

Additionally, we involved our internal valuation specialists to assess certain assumptions used in estimating the fair value of the awards.

Acquisition of Hyperconnect, Inc.

- Valuation of Acquired Intangible Assets

Description of the Matter On June 17, 2021, the Company completed its acquisition of Hyperconnect, Inc.

for net consideration of $1.75 billion, as disclosed in Note 5 to the consolidated financial statements.

The transaction was accounted for as a business combination.

Auditing the Company's accounting for its acquisition of Hyperconnect, Inc.

was complex due to the significant estimation uncertainty in the Company’s determination of the fair value of identified intangible assets of $612 million, which principally consisted of trade names and associated trademarks and user bases.

The significant estimation uncertainty was primarily due to the sensitivity of the respective fair values to underlying assumptions about the future performance of the acquired business.

The Company used a discounted cash flow model to measure the intangible assets.

The significant assumptions used to estimate the value of the intangible assets included discount rates, revenue growth rates, royalty rates and the projected cash flow terminal growth rates.

These significant assumptions are forward looking and could be affected by future economic and market conditions.

How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design and tested the operating effectiveness of the Company’s controls over its accounting for the business combination.

For example, we tested controls over management's review of the valuation models and the significant assumptions described above used to develop such estimates.

To test the estimated fair value of the trade names and associated trademarks and user bases, we performed audit procedures that included, among others, evaluating the Company’s selection of the valuation methodologies, evaluating the methods and significant assumptions used by the Company’s valuation specialist, and evaluating the completeness and accuracy of the underlying data supporting the significant assumptions and estimates.

For example, we compared the significant assumptions to the historical results of the acquired business as well as to current industry, market, and economic trends and to the Company’s budgets and forecasts.

We performed sensitivity analyses of significant assumptions to evaluate the change in the fair value of the identifiable intangible assets resulting from changes in the assumptions.

We involved our valuation specialists to assist with our evaluation of the methodologies used by the Company and significant assumptions used in the fair value estimates.

Recoverability of Indefinite-Lived Intangible Assets

Description of the Matter As of December 31, 2020, the Company’s indefinite-lived intangible asset balance, excluding goodwill, was $226.6 million.

Description of the Matter As of December 31, 2021, the Company’s indefinite-lived intangible asset balance, excluding goodwill, was $576.7 million and consisted of trade names and trademarks.

As disclosed in Note 2 to the consolidated financial statements, indefinite-lived intangible assets are assessed annually for impairment as of October 1, or more frequently if an event occurs or circumstances change that would more likely than not reduce the fair value of an indefinite-lived intangible asset below its carrying value.

Auditing management’s impairment tests for indefinite-lived intangible assets was complex and judgmental due to the measurement uncertainty in estimating the fair value of indefinite-lived intangible assets.

Specifically, the fair value estimates for indefinite-lived intangible assets were sensitive to assumptions such as discount rates, revenue growth rates, royalty rates and projected cash flow terminal growth rates.

These assumptions are affected by such factors as expected future market or economic conditions.

Auditing management’s annual impairment tests for certain indefinite-lived intangible assets was complex and highly judgmental due to the significant estimation uncertainty required to determine the fair value of the indefinite-lived intangible assets.

In particular, the Company’s fair value estimates for indefinite-lived intangible assets were sensitive to significant assumptions, such as discount rates, revenue growth rates, royalty rates and projected cash flow terminal growth rates, which are affected by expectations about future market or economic conditions.

How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design and tested the operating effectiveness of the Company’s controls over its indefinite-lived intangible assets impairment review process.

For example, we tested controls over the Company’s forecasting and budgeting process as well as controls over management’s review of the significant assumptions used to estimate the fair values of the indefinite-lived intangible assets.

To test the estimated fair value of indefinite-lived intangible assets, our audit procedures included, among others, assessing the methodologies and testing the significant assumptions and underlying data used by the Company.

We evaluated the Company’s underlying forecast and budget information by comparing the significant assumptions to current industry and economic trends, changes in the Company’s business model and assessed the historical accuracy of management’s estimates.

To test the estimated fair value of certain indefinite-lived intangible assets, we performed audit procedures that included, among others, assessing the methodologies and testing the significant assumptions discussed above and the underlying data used by the Company in its analysis.

We compared the significant assumptions used by management to current industry and economic trends and to other guideline public companies and evaluated whether changes to the company’s business model would affect the significant assumptions.

We assessed the historical accuracy of management’s estimates and performed sensitivity analyses of significant assumptions to evaluate the changes in the fair value of the indefinite-lived intangible assets that would result from changes in the assumptions.

For example, we evaluated management’s forecasted revenue to identify, understand and evaluate changes as compared to historical results.

We performed sensitivity analyses of significant assumptions to evaluate the change in the fair value of indefinite-lived intangible assets resulting from changes in the assumptions.

In addition, we involved an internal valuation specialist to assist in evaluating management’s methodologies and significant assumptions applied in developing the fair value estimates.

Separation of Match Group and IAC/InterActiveCorp

Description of the Matter As described in Note 1 to the consolidated financial statements, the companies formerly known as Match Group, Inc.

(“Former Match Group”) and IAC/InterActiveCorp (“Former IAC”) completed the separation of Match Group from IAC on June 30, 2020.

At the effective date, the two public companies were fully separated as follows:

(1) Match Group, which consists of the businesses of Former Match Group and certain financing subsidiaries previously owned by Former IAC, and (2) IAC/InterActiveCorp, formerly known as IAC Holdings, Inc.

(“IAC”), consisting of Former IAC’s businesses other than Match Group and certain financing subsidiaries (the “Separation”).

As disclosed in Note 4, the operations of the Former IAC businesses other than Match Group and certain financing subsidiaries, are presented as discontinued operations.

Auditing the Separation transaction required a significant amount of audit effort due to the especially complex nature of the transaction among related parties and the presentation of the Former IAC businesses as discontinued operations.

In particular, significant audit effort was necessary to perform procedures and evaluate evidence relating to management's evaluation of the Separation transaction, including the determination of the U.S.

federal income tax consequences, which required complex auditor judgement in determining the appropriate tax treatment for the Separation.

For example, we tested controls over management’s analysis and review of the Separation documents, management’s review of the accounting conclusions reached related to the discounted operations presentation, management’s review of the recording of the related journal entries and management’s review and analysis of the appropriate tax treatment for the Separation.

To test the accounting for the transactions related to the Separation among related parties and the basis of presentation, our audit procedures included, among others, inspecting the Separation related documents, such as the transaction agreement and tax matters agreement;

inquiring of executive officers, key members of management, the Audit Committee of the Board of Directors and legal counsel regarding the Separation;

inspecting the Company’s minutes from meetings of the Board of Directors and related committees;

verifying that the discontinued operations were properly determined, calculated and presented and assessing the appropriateness of the composition of the consolidated financial statements.

For example, we tested the Separation journal entries recorded and vouched the cash transactions.

In addition, we involved internal tax specialists to assist in reviewing the series of steps that effectuated the Separation and the related tax opinion, verifying the appropriateness of the tax treatment for the Separation.

/s/ ERNST & YOUNG LLP

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Cash and cash equivalents $ 815,384 $ 739,164

Short-term investments 11,818 —

Accounts receivable, net of allowance of $ 281 and $ 286 , respectively

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Other current assets 202,568 144,025

Current assets of discontinued operations — 3,028,079

Total current assets 1,218,252 1,020,212

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Other non-current assets 163,150 123,524

Non-current assets of discontinued operations — 2,830,783

TOTAL ASSETS $ 5,063,288 $ 3,046,454

LIABILITIES AND SHAREHOLDERS’ EQUITY

Current maturities of long-term debt, net $ 99,927 $ —

Accounts payable 37,871 29,200

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Accrued expenses and other current liabilities 768,366 231,748

Current liabilities of discontinued operations — 588,896

Total current liabilities 1,168,295 500,036

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Other long-term liabilities 116,051 86,428

Non-current liabilities of discontinued operations — 447,414

Redeemable noncontrolling interests 1,260 640

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283,470,334 and 267,329,284 shares issued and outstanding at December 31, 2021 and December 31, 2020, respectively

Former IAC common stock;

$ 0.001 par value;

authorized 1,600,000,000 shares;

0 and 263,229,724 shares issued;

and 0 and 78,889,779 shares outstanding at December 31, 2020 and December 31, 2019, respectively

Former IAC Class B convertible common stock;

$ 0.001 par value;

authorized 400,000,000 shares;

0 and 16,157,499 shares issued;

and 0 and 5,789,499 shares outstanding at December 31, 2020 and December 31, 2019, respectively

Additional paid-in capital 8,164,216 7,089,007

Retained earnings ( 8,491,126 ) 1,689,925

Retained deficit ( 8,144,514 ) ( 8,422,237 )

Accumulated other comprehensive loss ( 223,754 ) ( 81,454 )

Treasury stock;

0 and 194,707,945 shares, respectively

— ( 10,309,612 )

Total Match Group, Inc.

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Interest expense ( 130,493 ) ( 130,624 ) ( 111,008 )

Other income (expense), net

Other (expense) income, net

( 465,038 ) 15,861 ( 2,026 )

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256,148 630,952 532,420

Income tax provision

Income tax benefit (provision)

19,897 ( 43,273 ) ( 15,080 )

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276,045 587,679 517,340

(Loss) earnings from discontinued operations, net of tax

Earnings (loss) from discontinued operations, net of tax

509 ( 366,070 ) 49,187

276,554 221,609 566,527

Net earnings attributable to noncontrolling interests

Net loss (earnings) attributable to noncontrolling interests

1,169 ( 59,280 ) ( 112,689 )

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Net earnings $ 276,554 $ 221,609 $ 566,527

Other comprehensive income (loss), net of tax

Other comprehensive (loss) income, net of tax

Change in foreign currency translation adjustment

( 142,608 ) 39,415 ( 9,961 )

Change in unrealized losses and gains on available-for-sale securities

Change in unrealized losses on available-for-sale securities

— ( 1 ) ( 5 )

Total other comprehensive income (loss) 39,414 ( 9,966 ) ( 31,406 )

Total other comprehensive (loss) income ( 142,608 ) 39,414 ( 9,966 )

Comprehensive income 133,946 261,023 556,561

Comprehensive loss (income) attributable to noncontrolling interests:

Net earnings attributable to noncontrolling interests ( 59,280 ) ( 112,689 ) ( 130,786 )

Net loss (earnings) attributable to noncontrolling interests 1,169 ( 59,280 ) ( 112,689 )

Change in foreign currency translation adjustment attributable to noncontrolling interests 308 1,072 2,023

Change in unrealized losses and gains of available-for-sale debt securities attributable to noncontrolling interests — 1 ( 1 )

Comprehensive income attributable to noncontrolling interests ( 58,208 ) ( 110,665 ) ( 124,658 )

Change in unrealized losses of available-for-sale debt securities attributable to noncontrolling interests — — 1

Comprehensive loss (income) attributable to noncontrolling interests 1,477 ( 58,208 ) ( 110,665 )

Comprehensive income attributable to Match Group, Inc.

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Noncontrolling

Interests $ Shares $ Shares $ Shares Additional Paid-in Capital Retained Earnings Accumulated

Interests $ Shares $ Shares $ Shares Additional Paid-in Capital Retained Earnings (Deficit) Accumulated

Comprehensive

Loss Treasury Stock Total

(Loss) Income Treasury Stock Total

Match Group, Inc.

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Net earnings for the year ended December 31, 2019 2,835 — — — — — — — 453,838 — — 453,838 109,854 563,692

Other comprehensive loss, net of tax ( 702 ) — — — — — — — — ( 25,278 ) — ( 25,278 ) ( 5,426 ) ( 30,704 )

Other comprehensive income (loss), net of tax 39 — — — — — — — — ( 7,942 ) — ( 7,942 ) ( 2,063 ) ( 10,005 )

Stock-based compensation expense 148 — — — — — — 82,619 — — — 82,619 155,457 238,076

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— — — — — — — ( 236,897 ) — 315 — ( 236,582 ) ( 1,794 ) ( 238,376 )

Dividends paid to Former Match Group noncontrolling interests — — — — — — — — — — ( 105,126 ) ( 105,126 )

Purchase of treasury stock — — — — — — — — ( 82,891 ) ( 82,891 ) — ( 82,891 )

Purchase of noncontrolling interest

( 14,785 ) — — — — — — — — — ( 9,364 ) ( 9,364 )

Purchase of redeemable noncontrolling interests ( 40,432 ) — — — — — — — — — — — — —

Adjustment of redeemable noncontrolling interests to fair value

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Noncontrolling interests created in acquisitions 4,781 — — — — — — — — — — — — —

Purchase of exchangeable note hedges, net of deferred tax assets — — — — — — — ( 234,563 ) — — — ( 234,563 ) — ( 234,563 )

Issuance of warrants — — — — — — — 166,520 — — — 166,520 — 166,520

Purchase of Match Group and ANGI treasury stock — — — — — — — ( 274,302 ) — — — ( 274,302 ) — ( 274,302 )

Cumulative effect of adoption of ASU 2014-09

— — — — — — — — 36,795 — — 36,795 3,410 40,205

Other ( 85 ) — — — — — — ( 81 ) — — — ( 81 ) 146 65

Balance as of December 31, 2019 44,527 — — 263 263,230 16 16,157 11,378,160 1,725,046 ( 136,349 ) ( 10,309,612 ) 2,657,524 970,276 3,627,800

Net earnings for the year ended December 31, 2019 2,835 — — — — — — — 431,131 — — 431,131 109,854 540,985

Other comprehensive income (loss), net of tax 39 — — — — — — — — ( 7,942 ) — ( 7,942 ) ( 2,063 ) ( 10,005 )

Net (loss) earnings for the year ended December 31, 2020 ( 3,136 ) — — — — — — — 162,329 — — 162,329 62,416 224,745

Other comprehensive (loss) income, net of tax ( 686 ) — — — — — — — — 40,486 — 40,486 ( 386 ) 40,100

Stock-based compensation expense 15 — — — — — — 134,528 — — — 134,528 86,363 220,891

Issuance of Match Group common stock pursuant to stock-based awards, net of withholding taxes

— 8 8,373 — — — — 155,285 — — — 155,293 — 155,293

Issuance of Former IAC common stock pursuant to stock-based awards, net of withholding taxes — — — 1 453 — — ( 34,518 ) — — — ( 34,517 ) — ( 34,517 )

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6,669 — — — — — — ( 6,669 ) — — — ( 6,669 ) — ( 6,669 )

Noncontrolling interests created in an acquisition 4,781 — — — — — — — — — — — — —

Purchase of exchangeable note hedges — — — — — — — ( 303,428 ) — — — ( 303,428 ) — ( 303,428 )

Equity component of exchangeable Senior Notes, net of deferred financing costs and deferred tax liabilities — — — — — — — 320,998 — — — 320,998 — 320,998

Issuance of warrants — — — — — — — 166,520 — — — 166,520 — 166,520

Purchase of Match Group and ANGI treasury stock — — — — — — — ( 187,735 ) — — — ( 187,735 ) — ( 187,735 )

Retirement of treasury stock — — — ( 184 ) ( 184,340 ) ( 10 ) ( 10,368 ) 194 ( 10,309,612 ) — 10,309,612 — — —

Exchange Common stock and Class B for Class M common stock and spin off IAC ( 43,583 ) 184 183,749 ( 80 ) ( 79,343 ) ( 6 ) ( 5,789 ) ( 4,745,323 ) — 13,781 — ( 4,731,444 ) ( 498,792 ) ( 5,230,236 )

Acquire Former Match Group noncontrolling interest — 58 57,868 — — — — 608,110 — — — 608,168 ( 608,168 ) —

Issuance of common stock — 17 17,339 — — — — ( 17 ) — — — — — —

Other ( 1 ) — — — — — — ( 738 ) — — — ( 738 ) 738 —

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Common Stock $ 0.001 Par Value

Former IAC Common Stock

$ 0.001 Par Value

Former IAC Class B Convertible Common Stock $ 0.001

Noncontrolling

Interests $ Shares $ Shares $ Shares Additional Paid-in Capital Retained Earnings Accumulated

Interests $ Shares Additional Paid-in Capital Retained (Deficit) Earnings Accumulated

Comprehensive

Loss (Income) Treasury Stock Total

Match Group, Inc.

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Net (loss) earnings for the year ended December 31, 2021

Other comprehensive (loss) income, net of tax ( 686 ) — — — — — — — — 40,486 — 40,486 ( 386 ) 40,100

( 2,047 ) — — — 277,723 — 277,723 878 278,601

Other comprehensive loss, net of tax — — — — — ( 142,300 ) ( 142,300 ) ( 308 ) ( 142,608 )

Stock-based compensation expense — — — 153,692 — — 153,692 — 153,692

Issuance of Match Group common stock pursuant to stock-based awards, net of withholding taxes — 5 4,678 42,709 — — 42,714 — 42,714

Issuance of Former IAC common stock pursuant to stock-based awards, net of withholding taxes — — — 1 453 — — ( 34,518 ) — — — ( 34,517 ) — ( 34,517 )

Issuance of Former Match Group and ANGI Homeservices common stock pursuant to stock-based awards, net of withholding taxes — — — — — — — ( 212,270 ) — 628 — ( 211,642 ) ( 11,405 ) ( 223,047 )

Purchase of redeemable noncontrolling interests ( 3,165 ) — — — — — — — — — — —

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

Adjustment of redeemable noncontrolling interests to fair value 2,667 ( 2,667 ) — — ( 2,667 ) — ( 2,667 )

Purchase of Match Group and ANGI treasury stock — — — — — — — ( 187,735 ) — — — ( 187,735 ) — ( 187,735 )

Retire treasury stock — — — ( 184 ) ( 184,340 ) ( 10 ) ( 10,368 ) 194 ( 10,309,612 ) — 10,309,612 — — —

Exchange Common stock and Class B for Class M Common stock and spin off IAC ( 43,583 ) 184 183,749 ( 80 ) ( 79,343 ) ( 6 ) ( 5,789 ) ( 4,745,323 ) — 13,781 — ( 4,731,444 ) ( 498,792 ) ( 5,230,236 )

Acquire Former Match Group noncontrolling interest — 58 57,868 — — — — 608,110 — — — 608,168 ( 608,168 ) —

Issuance of common stock — 17 17,339 — — — — ( 17 ) — — — — — —

Adjustment of noncontrolling interests to fair value — ( 1,835 ) — — ( 1,835 ) 1,835 —

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

Noncontrolling interest created by the exercise of subsidiary denominated equity award — — — ( 7,102 ) — — ( 7,102 ) 7,361 259

Settlement and exercises of note hedges and warrants — — — 246,842 — — 246,842 — 246,842

Settlement and exchanges of 2022 Exchangeable Notes — 5 5,534 ( 238,777 ) — — ( 238,772 ) — ( 238,772 )

Other — — — ( 9,441 ) — — ( 9,441 ) ( 310 ) ( 9,751 )

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Cash flows from operating activities attributable to continuing operations:

Net earnings $ 276,554 $ 221,609 $ 566,527

(earnings) loss from discontinued operations, net of tax ( 509 ) 366,070 ( 49,187 )

Net earnings from continuing operations 276,045 587,679 517,340

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Deferred income taxes ( 57,969 ) 15,384 ( 12,753 )

Accretion of original issue discount of Exchangeable Senior Notes 44,743 30,429 13,134

Other adjustments, net 27,690 27,281 13,561

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Cash flows from investing activities attributable to continuing operations:

Net cash (used) acquired in business combinations — ( 3,759 ) 1,136

Acquisitions, net of cash ( 859,905 ) — ( 3,759 )

Capital expenditures ( 79,971 ) ( 42,376 ) ( 39,035 )

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Principal payments on Credit Facility — ( 20,000 ) ( 300,000 )

Payments to settle exchangeable notes

( 630,658 ) — —

Purchase of exchangeable note hedges — — ( 303,428 )

Proceeds from issuance of warrants — — 166,520

Proceeds from the settlement of exchangeable note hedges

1,089,592 — —

Payments to settle warrants related to exchangeable notes

( 882,187 ) — —

Debt issuance costs ( 7,124 ) ( 13,517 ) ( 27,815 )

Purchase of Former Match Group treasury stock — ( 132,868 ) ( 216,353 )

Dividends — — ( 105,126 )

Proceeds from stock offering — 1,421,801 —

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Other, net 258 ( 15,187 ) ( 73 )

Net cash provided by (used in) financing activities attributable to continuing operations

Net cash provided by financing activities attributable to continuing operations

111,106 1,787,846 654,024

Total cash (used in) provided by continuing operations ( 1,345,733 ) 1,260,283 374,483

Total cash provided by (used in) continuing operations 83,780 ( 1,345,733 ) 1,260,283

MATCH GROUP, INC.

AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CASH FLOWS (continued)

Years Ended December 31,

2021 2020 2019

(In thousands)

Net cash provided by operating activities attributable to discontinued operations — 13,630 289,949

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— ( 110,959 ) ( 254,193 )

Total cash (used in) provided by discontinued operations ( 1,060,749 ) ( 252,042 ) 127,407

Total cash used in discontinued operations — ( 1,060,749 ) ( 252,042 )

Effect of exchange rate changes on cash, cash equivalents, and restricted cash ( 7,570 ) 5,426 ( 1,568 )

Net (decrease) increase in cash, cash equivalents, and restricted cash ( 2,401,056 ) 1,006,673 500,003

Net increase (decrease) in cash, cash equivalents, and restricted cash 76,210 ( 2,401,056 ) 1,006,673

Cash, cash equivalents, and restricted cash at beginning of period 739,302 3,140,358 2,133,685

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NOTE 1—ORGANIZATION

Match Group, Inc., through its portfolio companies, is a leading provider of dating products available globally.

Our portfolio of brands includes Tinder ® , Match ® , Meetic ® , OkCupid ® , Hinge ® , Pairs™, PlentyOfFish ® , and OurTime ® , as well as a number of other brands, each designed to increase our users’ likelihood of finding a meaningful connection.

Through our portfolio companies and their trusted brands, we provide tailored products to meet the varying preferences of our users.

Our products are available in over 40 languages to our users all over the world.

Match Group has one operating segment, Dating, which is managed as a portfolio of dating brands.

Separation of Match Group and IAC

On June 30, 2020, the companies formerly known as Match Group, Inc.

(referred to as “Former Match Group”) and IAC/InterActiveCorp (referred to as “Former IAC”) completed the separation of the Company from IAC through a series of transactions that resulted in two, separate public companies—(1) Match Group, which consists of the businesses of Former Match Group and certain financing subsidiaries previously owned by Former IAC, and (2) IAC/InterActiveCorp, formerly known as IAC Holdings, Inc.

(“IAC”), consisting of Former IAC’s businesses other than Match Group (the “Separation”).

See “Note 8—Shareholders’ Equity” for additional information about the series of transactions.

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.

Match Group has one operating segment, Connections, which is managed as a portfolio of brands.

As used herein, “Match Group,” the “Company,” “we,” “our,” “us,” and similar terms refer to Match Group, Inc.

and its subsidiaries after the completion of the Separation, unless the context indicates otherwise.

The following diagram illustrates the simplified organizational and ownership structure immediately prior to the Separation.

Under the terms of the Transaction Agreement (the “Transaction Agreement”) dated as of December 19, 2019 and amended as of April 28, 2020 and as further amended as of June 22, 2020, Former Match Group merged with and into Match Group Holdings II, LLC (“MG Holdings II”), an indirect wholly-owned subsidiary of Match Group, with MG Holdings II surviving the merger as an indirect wholly-owned subsidiary of Match Group.

Former Match Group stockholders (other than Former IAC) received, through the merger, in exchange for each outstanding share of Former Match Group common stock that they held, one share of Match Group common stock and, at the holder’s election, either (i) $ 3.00 in cash or (ii) a fraction of a share of Match Group common stock with a value of $ 3.00 (calculated pursuant to the Transaction Agreement).

As a result of the merger and other transactions contemplated by the Transaction Agreement, Former Match Group stockholders (other than Former IAC) became stockholders of the Company.

MATCH GROUP, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The following diagram illustrates the simplified organizational and ownership structures of IAC and Match Group immediately after the Separation.

NOTE 2—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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Intercompany transactions and accounts have been eliminated.

Discontinued Operations

Separation of Match Group and IAC and Discontinued Operations

On June 30, 2020, the companies formerly known as Match Group, Inc.

(“IAC”), consisting of Former IAC’s businesses other than Match Group (the “Separation”).

See “Note 8—Shareholders’ Equity” for additional information about the series of transactions.

As a result of the merger and other transactions contemplated by the Transaction Agreement, Former Match Group stockholders (other than Former IAC) became stockholders of the Company.

As a result of the Separation, the operations of Former IAC businesses other than Match Group are presented as discontinued operations.

6 unchanged sentences

A security will be considered identical or similar if it has identical or similar rights to the equity securities held by the Company.

The Company reviews its investments in equity securities without readily determinable fair values for impairment each reporting period when there are qualitative factors or events that indicate possible impairment.

Factors we consider in making this determination include negative changes in industry and market conditions, financial performance, business prospects, and other relevant events and factors.

When indicators of impairment exist, the Company prepares quantitative assessments of the fair value of our investments in equity securities, which require judgment and the use of

The Company reviews its investments in equity securities without readily determinable fair values for impairment each reporting period when there are

MATCH GROUP, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

When our assessment indicates that the fair value of the investment is below its carrying value, the Company writes down the investment to its fair value and records the corresponding charge within Other income (expense), net.

qualitative factors or events that indicate possible impairment.

Factors we consider in making this determination include negative changes in industry and market conditions, financial performance, business prospects, and other relevant events and factors.

When indicators of impairment exist, the Company prepares quantitative assessments of the fair value of our investments in equity securities, which require judgment and the use of estimates.

Accounting Estimates

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the fair values of cash equivalents;

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

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

the determination of revenue reserves;

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the valuation allowance for deferred income tax assets;

the fair value of derivatives;

and the fair value of and forfeiture rates for stock-based awards, among others.

16 unchanged sentences

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.

MATCH GROUP, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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.

6 unchanged sentences

During the years ended December 31, 2021 and 2020, the Company recognized expense of $ 552.6 million and $ 414.7 million, respectively, related to the amortization of these costs.

The contract asset balances at December 31, 2020 and 2019, and 2018 related to costs to obtain a contract are $ 33.5 million, $ 28.5 million, and $ 29.2 million, respectively, included in “Other current assets” in the accompanying consolidated balance sheet.

The contract asset balances at December 31, 2021, 2020, and 2019 related to costs to obtain a contract are $ 41.7 million, $ 33.5 million, and $ 28.5 million, respectively, included in “Other current assets” in the accompanying consolidated balance sheet.

Accounts Receivables, Net of Allowance for Credit Losses and Revenue Reserves

The majority of our users purchase our products through mobile app stores.

The majority of our users purchase our services through mobile app stores.

At December 31, 2021, two mobile app stores accounted for approximately 67 % and 12 %, respectively, of our gross accounts receivables.

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Direct Revenue:

North America $ 1,185,307 $ 1,024,161 $ 902,478

International 1,159,417 983,013 774,693

Americas $ 1,512,057 $ 1,247,961 $ 1,090,158

Europe 821,827 680,128 584,412

APAC and Other 588,987 416,635 332,604

Total Direct Revenue 2,922,871 2,344,724 2,007,174

9 unchanged sentences

Domestically, cash equivalents primarily consist of (i) AAA rated government money market funds and (ii) time deposits.

Internationally, cash equivalents primarily consist of money market funds.

Internationally, cash equivalents primarily consist of (i) time deposits and (ii) money market funds.

Property and Equipment

13 unchanged sentences

The Company typically engages outside valuation experts to assist in the allocation of purchase price to the identifiable intangible assets acquired, but management has ultimate responsibility for the valuation methods, models, and inputs used and the resulting purchase price allocation.

The excess purchase price over the net tangible and identifiable intangible assets is recorded as goodwill and assigned to the reporting unit that is expected to benefit from the combination as of the acquisition date.

The excess purchase price over the net tangible and identifiable intangible assets is

MATCH GROUP, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

recorded as goodwill and assigned to the reporting unit that is expected to benefit from the combination as of the acquisition date.

Goodwill and Indefinite-Lived Intangible Assets

3 unchanged sentences

If the carrying value of the reporting unit exceeds its fair value, an impairment loss equal to the excess is recorded.

As a result of the Separation, the Company had a negative carrying value for the Company’s annual goodwill test at October 1, 2020.

As a result of the Separation in 2020, the Company had a negative carrying value for the Company’s annual goodwill test at both October 1, 2020 and 2021.

Additionally, an impairment test of goodwill was not necessary because there were no factors identified that would indicate an impairment loss.

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While the Company has the option to qualitatively assess whether it is more likely than not that the fair values of its indefinite-lived intangible assets are less than their carrying values, the Company’s policy is to determine the fair value of each of its indefinite-lived intangible assets annually as of October 1, in part, because the level of effort required to perform the quantitative and qualitative assessments is essentially equivalent.

The Company determines the fair value of its indefinite-lived intangible assets using an avoided royalty discounted cash flow (“DCF”) valuation analysis.

Due to the recent acquisition of Hyperconnect and the process to allocate the purchase price as of the purchase date, the intangible assets of Hyperconnect were considered qualitatively as of October 1, 2021.

For assets in which a quantitative assessment was performed, the Company determines the fair value of its indefinite-lived intangible assets using an avoided royalty discounted cash flow (“DCF”) valuation analysis.

Significant judgments inherent in this analysis include the selection of appropriate royalty and discount rates and estimating the amount and timing of expected future cash flows.

3 unchanged sentences

Assumptions used in the avoided royalty DCF analyses, including the discount rate and royalty rate, are assessed annually based on the actual and projected cash flows related to the asset, as well as macroeconomic and industry specific factors.

The discount rates used in the Company’s annual indefinite-lived impairment assessment ranged from 10 % to 23 % in 2020 and 11 % to 26 % in 2019, and the royalty rates used ranged from 5 % to 8 % in 2020 and 3 % to 8 % in 2019.

The discount rates used in the Company’s annual indefinite-lived impairment assessment ranged from 10 % to 16 % in 2021 and 10 % to 23 % in 2020, and the royalty rates used ranged from 5 % to 8 % in both 2021 and 2020.

During the year ended December 31, 2020, the Company recognized an impairment charge related to the Match brand in the UK and the Meetic brand in Europe of $ 4.6 million, which is included within amortization.

During the year ended December 31, 2019, the Company recognized an impairment charge on the Match brand in the UK of $ 6.6 million, which is included within amortization.

At December 31, 2019, the aggregate indefinite-lived intangible asset balance for which the estimate of fair value at that time was less than 110% of their carrying values was approximately $ 92.3 million.

At December 31, 2020, no indefinite-lived intangible asset balance had an estimated fair value less than 110% of carrying value.

At December 31, 2021 and 2020, no indefinite-lived intangible asset balance had an estimated fair value less than 110% of carrying value.

Long-Lived Assets and Intangible Assets with Definite Lives

Long-lived assets, which consist of ROU assets, property and equipment, and intangible assets with definite lives, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable.

The carrying value of a long-lived asset is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset.

If the carrying value is deemed not to be recoverable, an impairment loss is recorded equal to the amount by which the carrying value of the long-lived asset exceeds its fair value.

Amortization of definite-lived intangible assets is

The carrying value of a long-lived asset is not recoverable if it exceeds the

MATCH GROUP, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

computed either on a straight-line basis or based on the pattern in which the economic benefits of the asset will be realized.

sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset.

If the carrying value is deemed not to be recoverable, an impairment loss is recorded equal to the amount by which the carrying value of the long-lived asset exceeds its fair value.

Amortization of definite-lived intangible assets is computed either on a straight-line basis or based on the pattern in which the economic benefits of the asset will be realized.

Fair Value Measurements

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Such tax benefits are measured based on the largest benefit that has a greater than 50% likelihood of being realized upon settlement.

The Company records interest and penalties related to uncertain tax positions as a component of income tax expense.

MATCH GROUP, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Company records interest and penalties related to uncertain tax positions as a component of income tax expense.

Earnings Per Share

Basic earnings per share is computed by dividing net earnings attributable to Match Group shareholders by the weighted average number of common shares outstanding during the period.

Diluted earnings per share reflects the potential dilution that could occur if stock options and other commitments to issue common stock were exercised or equity awards vested resulting in the issuance of common stock that could share in the earnings of the Company.

Diluted earnings per share reflects the potential dilution that could occur if stock options and other commitments to issue common stock using the treasury stock or the as if converted methods, as applicable.

See “Note 10—Earnings per Share” for additional information on dilutive securities.

3 unchanged sentences

Translation gains and losses are included in accumulated other comprehensive income as a component of shareholders’ equity.

See “Note 17—Consolidated Financial Statement Details” for additional information regarding foreign currency exchange gains and losses.

Transaction gains and losses resulting from assets and liabilities denominated in a currency other than the functional currency are included in the consolidated statement of operations as a component of “other (expense) income, net.” See “Note 17—Consolidated Financial Statement Details” for additional information regarding foreign currency exchange gains and losses.

Translation gains and losses relating to foreign entities that are liquidated or substantially liquidated are reclassified out of accumulated other comprehensive loss into earnings.

Losses of $ 0.2 million and $ 0.1 million during the years ended December 31, 2020 and 2018 are included in “Other income (expense), net” in the accompanying consolidated statement of operations.

There were no such gains or losses for the year ended December 31, 2019.

A loss of $ 0.2 million during the year ended December 31, 2020 is included in “other (expense) income, net” in the accompanying consolidated statement of operations.

There were no such gains or losses for the years ended December 31, 2021 and 2019.

Stock-Based Compensation

10 unchanged sentences

These put and call arrangements become exercisable by the Company and the counterparty at various future dates.

One of these arrangements was exercised during each of the years ended December 31, 2020 and 2019, and two of these arrangements were exercised during the year ended December 31, 2018.

One of these arrangements was exercised during each of the years ended December 31, 2020 and 2019.

These put arrangements are exercisable by the counter-party outside the control of the Company.

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Financial instruments, which potentially subject the Company to concentration of credit risk, consist primarily of cash and cash equivalents.

Cash and cash equivalents are principally maintained with financial institutions that are not covered by deposit insurance.

Cash and cash equivalents are principally maintained with financial institutions and are not covered by deposit insurance.

Recent Accounting Pronouncements

Accounting pronouncements adopted by the Company

The Company adopted ASU No.

2016-13 effective January 1, 2020.

2016-13 replaces the “incurred loss” approach with an “expected loss” model, under which companies will recognize allowances based on expected rather than incurred losses.

The Company adopted ASU No.

2016-13 using the modified retrospective approach and there was no cumulative effect arising from the adoption.

The adoption of ASU No.

2016-13 did not have a material impact on the Company's financial statements.

The Company adopted ASU No.

2019-12 effective January 1, 2020.

2019-12 simplifies the accounting for income taxes, eliminates certain exceptions within ASC 740, Income Taxes, and clarifies certain aspects of the current guidance to promote consistency among reporting entities.

Most amendments within ASU No.

2019-12 are required to be applied on a prospective basis, while certain amendments must be applied on a retrospective or modified retrospective basis.

The Company adopted ASU No.

2019-12 on January 1, 2020 using the modified retrospective basis for those amendments that are not applied on a prospective basis.

The adoption of ASU No.

2019-12 did not have a material impact on the Company’s consolidated financial statements.

Accounting pronouncements not yet adopted by the Company

In August 2020, the FASB issued ASU No.

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Instead, entities will account for a convertible debt instrument wholly as debt unless (1) a convertible instrument contains features that require bifurcation as a derivative under ASC Topic 815, Derivatives and Hedging , or (2) a convertible debt instrument was issued at a substantial premium.

Among other potential impacts, this change is expected to reduce reported interest expense, increase reported net income, and result in a reclassification of certain conversion feature balance sheet amounts from stockholders’ equity to liabilities as it relates to the Company’s exchangeable senior notes.

Additionally, ASU 2020-06 requires the application of the if-converted method to calculate the impact of convertible instruments on diluted earnings per share, which will result in increased dilutive securities as the assumption of cash settlement of the notes will not be available for the purpose of calculating earnings per share.

ASU 2020-06 requires the application of the if-converted method to calculate the impact of convertible instruments on diluted earnings per share, which results in increased dilutive securities as the assumption of cash settlement of the notes is not available for the purpose of calculating earnings per share.

The provisions of ASU 2020-06 are effective for reporting periods beginning after December 15, 2021, with early adoption permitted for reporting periods beginning after December 15, 2020, and can be adopted on either a fully retrospective or modified retrospective basis.

The Company anticipates adopting ASU No.

The Company early adopted ASU No.

2020-06 as of January 1, 2021 on a fully retrospective basis.

For the year ended December 31, 2020 after adoption of ASU No.

2020-16, we expect interest expense will decrease by approximately $ 44 million and the income tax provision will increase approximately $ 10 million resulting in an increase in net earnings from continuing operations of approximately $ 34 million.

Basic earnings per share from continuing operations would increase approximately $ 0.16 and dilutive earnings per share from continuing operations would increase approximately $ 0.09 with an increase of weighted average dilutive shares outstanding of approximately 14 million shares.

As of December 31, 2020 after adoption of ASU No.

2020-06, we expect long-term debt, net to increase approximately $ 300 million, with a similar reduction in additional paid-in capital.

The impact of adopting ASU No.

2020-06 is as follows:

Year Ended December 31, 2020 Year Ended December 31, 2019

Prior to the adoption of ASU No.

2020-06 After adoption of ASU No.

2020-06 Effect of adoption of ASU No.

2020-06 Prior to the adoption of ASU No.

2020-06 After adoption of ASU No.

2020-06 Effect of adoption of ASU No.

(In thousands, except per share data)

Statement of operations impacts

Interest expense $ 174,791 $ 130,624 $ ( 44,167 ) $ 140,570 $ 111,008 $ ( 29,562 )

Income tax provision $ 32,874 $ 43,273 $ 10,399 $ 8,225 $ 15,080 $ 6,855

Net earnings from continuing operations $ 553,911 $ 587,679 $ 33,768 $ 494,633 $ 517,340 $ 22,707

Net earnings per share from continuing operations:

Basic $ 2.21 $ 2.36 $ 0.15 $ 2.15 $ 2.28 $ 0.13

Diluted $ 2.00 $ 2.09 $ 0.09 $ 1.88 $ 1.95 $ 0.07

Weighted average dilutive shares outstanding

242,464 256,020 13,556 194,349 201,782 7,433

MATCH GROUP, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Prior to the adoption of ASU No.

2020-06 After adoption of ASU No.

2020-06 Effect of adoption of ASU No.

(In thousands)

Balance sheet impacts at December 31, 2020:

Non-current deferred tax asset $ 224,013 $ 293,487 $ 69,474

Long-term debt, net $ 3,534,706 $ 3,840,930 $ 306,224

Additional paid-in capital $ 7,394,646 $ 7,089,007 $ ( 305,639 )

Retained deficit $ ( 8,491,126 ) $ ( 8,422,237 ) $ 68,889

The impact of the adoption of ASU No.

2020-06 at December 31, 2018 resulted in an increase to retained earnings of $ 12.4 million and a decrease in additional paid-in capital of $ 53.5 million.

As the adoption of ASU No.

2020-06 did not impact cash, the operating cash flows from continuing operations were not impacted.

Certain reconciliation line items to net earnings from continuing operations were adjusted to reflect the impact of the adoption of ASU No.

Accounting pronouncements not yet adopted by the Company

In October 2021, the FASB issued ASU No.

2021-08, which requires entities to recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with ASC Topic 606, Revenue from Contracts with Customers .

The update will generally result in an entity recognizing contract assets and contract liabilities as if the acquirer had originated the contracts, which, for the most part, results in no change to the value of deferred revenue when measured in purchase accounting.

The new standard is effective on a prospective basis for fiscal years beginning after December 15, 2022, with early adoption permitted.

The adoption of the new standard is not expected to have a material impact on our operating results, financial position, or cash flows.

Reclassifications

8 unchanged sentences

Total $ 256,148 $ 630,952 $ 532,420

MATCH GROUP, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The components of the provision (benefit) for income taxes are as follows:

11 unchanged sentences

Foreign ( 6,619 ) ( 5,190 ) ( 896 )

Deferred income tax provision (benefit) 4,985 ( 19,608 ) ( 23,005 )

Income tax provision $ 32,874 $ 8,225 $ 11,307

MATCH GROUP, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Deferred income tax (benefit) provision ( 57,969 ) 15,384 ( 12,753 )

Income tax (benefit) provision $ ( 19,897 ) $ 43,273 $ 15,080

The tax effects of cumulative temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities are presented below.

The valuation allowance is primarily related to deferred tax assets for foreign tax credits and net operating losses.

The valuation allowance is primarily related to deferred tax assets for foreign net operating losses and U.S.

foreign tax credits.

(In thousands)

4 unchanged sentences

Stock-based compensation 15,491 16,073

Accrued expenses 116,415 9,283

Exchangeable notes 52,177 64,212

Other 33,211 25,532

10 unchanged sentences

The Company’s tax group for federal and consolidated state income tax purposes includes Former IAC up to and including the Separation date.

As a result of the Separation, a portion of the Company’s temporary differences and tax attributes from our federal and consolidated state income tax filings were allocated between the Company and IAC.

The allocation attributable to IAC resulted in an increase to the Company’s deferred tax asset and additional paid-in capital.

The allocation attributable to the Company was recorded in 2020 and is preliminary and subject to adjustment.

Any subsequent adjustment to allocated tax attributes will be recognized as an adjustment to deferred taxes and additional paid-in capital.

As a result of the Separation, the Company’s net deferred tax asset was adjusted via additional paid-in capital for tax attributes allocated to Match Group from our consolidated federal and state income tax returns.

A preliminary allocation was recorded as of June 30, 2020.

The final adjustment

MATCH GROUP, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

recorded in 2021 as a result of filing the 2020 consolidated federal and state income tax returns was not significant.

At December 31, 2021, the Company has federal and state net operating losses (“NOLs”) of $ 174.1 million and $ 276.5 million, respectively.

If not utilized, $ 13.8 million of the federal NOLs can be carried forward indefinitely, and $ 485.8 million will expire at various times, primarily between 2034 and 2037.

Of the state NOLs, $ 168.4 million can be carried forward indefinitely and $ 176.3 million will expire at various times, primarily between 2022 and 2037.

If not utilized, $ 17.3 million of the federal NOLs can be carried forward indefinitely, and $ 156.8 million will expire at various times between 2031 and 2037.

Of the state NOLs, $ 3.8 million can be carried forward indefinitely and $ 272.7 million will expire at various times between 2024 and 2041.

Federal and state NOLs of $ 142.6 million and $ 252.1 million, respectively, can be used against future taxable income without restriction and the remaining NOLs will be subject to limitations under Section 382 of the Internal Revenue Code, separate return limitations, federal taxable income limitations, and applicable state law.

5 unchanged sentences

Of this amount, $ 125.1 million relates to federal and state tax credits for research activities, of which $ 80.8 million will expire at various times between 2033 and 2041.

Our credit carryforwards also include $ 38.2 million of foreign tax credits, of which $ 36.2 million will expire between 2021 and 2027.

MATCH GROUP, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Our credit carryforwards also include $ 37.0 million of foreign tax credits, of which $ 35.1 million will expire primarily in 2027.

The Company regularly assesses the realizability of deferred tax assets considering all available evidence, including, to the extent applicable, the nature, frequency and severity of prior cumulative losses, forecasts of future taxable income, tax filing status, the duration of statutory carryforward periods, available tax planning and historical experience.

During the year ended December 31, 2020, we recorded a valuation allowance of $ 29.8 million related to U.S.

foreign tax credits for which we do not believe a tax benefit is more likely than not to be realized within the carryforward period.

At December 31, 2020, the Company has a valuation allowance of $ 71.1 million related to the portion of credits, NOLs, and other items for which it is more likely than not that the tax benefit will not be realized.

During the year ended December 31, 2021, we recorded an increase to the valuation allowance of $ 15.0 million primarily related to foreign losses for which we do not believe a tax benefit is more likely than not to be realized.

At December 31, 2021, the Company had a valuation allowance of $ 86.1 million related to the portion of credits, NOLs, and other deferred tax assets for which it is more likely than not that the tax benefit will not be realized.

A reconciliation of the income tax provision to the amounts computed by applying the statutory federal income tax rate to earnings before income taxes is shown as follows:

7 unchanged sentences

Research credits ( 25,830 ) ( 21,306 ) ( 27,248 )

Change in valuation allowance for foreign tax credits 29,787 — —

Change in valuation allowance 8,523 29,787 —

Foreign income taxed at a different statutory rate 5,808 4,884 3,526

1 unchanged sentence

Change in uncertain tax positions ( 948 ) ( 5,770 ) ( 637 )

Non-taxable foreign currency exchange gains and losses 688 ( 557 ) ( 2,086 )

Transition tax — — ( 3,178 )

Other, net ( 3,077 ) 3,645 2,708

Income tax provision $ 32,874 $ 8,225 $ 11,307

Income tax (benefit) provision $ ( 19,897 ) $ 43,273 $ 15,080

MATCH GROUP, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

A reconciliation of the beginning and ending amount of unrecognized tax benefits, including penalties but excluding interest, is as follows:

5 unchanged sentences

Reductions for tax positions of prior years ( 1,028 ) — ( 283 )

Settlements ( 2,348 ) ( 16,512 ) —

Expiration of applicable statute of limitations ( 878 ) ( 778 ) ( 892 )

4 unchanged sentences

Match Group is routinely under audit by federal, state, local and foreign authorities in the area of income tax.

These audits include questioning the timing and the amount of income and deductions and the allocation of

MATCH GROUP, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

income and deductions among various tax jurisdictions.

The Internal Revenue Service (“IRS”) has substantially completed its audit of the Company’s federal income tax returns for the years ended December 31, 2010 through 2016 resulting in reductions to the manufacturing deduction and research credits claimed.

The IRS began an audit of the year ended December 31, 2017 in the second quarter of 2020.

The statute of limitations for years 2010 through 2012 has been extended to May 31, 2021, and the statute of limitations for years 2013 through 2017 has been extended to June 30, 2022.

Various other jurisdictions are open to examination for tax years beginning with 2009.

Income taxes payable include reserves 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 require periodic adjustment, and which may not accurately anticipate actual outcomes.

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 Internal Revenue Service (“IRS”) has substantially completed its audit of the Company’s federal income tax returns for the years ended December 31, 2013 through 2017 and has begun its audit of the years ended December 31, 2018 and 2019.

The statute of limitations for years 2013 through 2019 has been extended to December 31, 2023.

We are no longer subject to U.S.

federal income tax examinations for years prior to 2013.

Returns filed in various other jurisdictions are open to examination for tax years beginning with 2009.

Although we believe that we have adequately reserved for our uncertain tax positions, the final tax outcome of these matters may vary significantly from our estimates.

To the extent that the final tax outcome of these matters is different from the amounts recorded, such differences will affect the income tax provision in the period in which such determination is made, and could have a material impact on our financial condition and operating results.

At December 31, 2021 and 2020, unrecognized tax benefits, including interest, were $ 51.8 million and $ 46.7 million, respectively.

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The Company believes that it is reasonably possible that its unrecognized tax benefits could decrease by approximately $ 0.9 million by December 31, 2022, primarily due to settlements and expirations of statutes of limitations.

On December 22, 2017, the U.S.

enacted the Tax Cuts and Jobs Act (the “TCJA”), which, among other things, reduced the U.S.

federal corporate income tax rate from 35% to 21%, subjected to U.S.

taxation certain previously deferred earnings of foreign subsidiaries as of December 31, 2017 (“Transition Tax”) and generally eliminated U.S.

taxes on foreign subsidiary distributions.

The Company was able to make a reasonable estimate of the Transition Tax and recorded a provisional transition tax expense in 2017.

During 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 guidance issued by the IRS subsequent to December 21, 2017.

Generally, our ability to distribute the $ 172.7 million cash and cash equivalents held by our foreign subsidiaries at December 31, 2021 is limited to that subsidiary’s distributable reserves and after considering other corporate legal restrictions.

As a result of the TCJA, our earnings in foreign jurisdictions are generally available for distribution to the U.S.

Our earnings in foreign jurisdictions are generally available for distribution to the U.S.

without significant tax consequences.

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NOTE 4—DISCONTINUED OPERATIONS

On June 30, 2020, as part of the Separation described in “Note 1—Organization,” the operations of Former IAC businesses other than Match Group are presented as discontinued operations.

The components of assets and liabilities of discontinued operations in the accompanying consolidated balance sheet at December 31, 2019 consisted of the following:

December 31, 2019

(In thousands)

Cash and cash equivalents $ 2,673,619

Marketable securities 19,993

Accounts receivable, net 181,875

Other current assets 152,592

Total current assets in discontinued operations $ 3,028,079

Property and equipment, net $ 270,288

Goodwill 1,614,623

Intangible assets, net 350,150

Long-term investments 347,976

Other non-current assets 247,746

Total non-current assets in discontinued operations $ 2,830,783

Current portion of long-term debt $ 13,750

Accounts payable, trade 74,166

Deferred revenue 178,647

Accrued expenses and other current liabilities 322,333

Total current liabilities in discontinued operations $ 588,896

Long-term debt, net $ 231,946

Income taxes payable 6,410

Deferred income taxes 28,751

Other long-term liabilities 180,307

Total long-term liabilities in discontinued operations $ 447,414

MATCH GROUP, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The key components of (loss) earnings from discontinued operations for the years ended December 31, 2020, 2019, and 2018 consist of the following:

As part of the Separation described in “Note 1—Organization,” the operations of Former IAC businesses other than Match Group are presented as discontinued operations.

The key components of earnings (loss) from discontinued operations for the years ended December 31, 2021, 2020, and 2019 consist of the following:

Years Ended December 31,

3 unchanged sentences

Operating costs and expenses — ( 1,840,178 ) ( 2,769,918 )

Operating (loss) income ( 429,693 ) ( 64,121 ) 15,670

Operating loss — ( 429,693 ) ( 64,121 )

Interest expense — ( 3,772 ) ( 12,993 )

1 unchanged sentence

Income tax benefit 509 69,898 57,534

(Loss) earnings from discontinued operations $ ( 366,070 ) $ 49,187 $ 306,643

Earnings (loss) from discontinued operations $ 509 $ ( 366,070 ) $ 49,187

NOTE 5—GOODWILL AND INTANGIBLE ASSETS

18 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

On June 17, 2021, Match Group completed the acquisition of all capital stock of Hyperconnect, Inc.

(“Hyperconnect”), a leading social discovery and video technology company based in Seoul, South Korea.

The acquisition increases our presence in certain Asian markets and enhances the real-time video capabilities of Match Group.

The accounting purchase price was $ 1.75 billion, which consisted of $ 859.9 million of cash, net of cash acquired, and 5.9 million shares of Match Group common stock at a basis of the closing market price on the acquisition date.

The purchase price has been preliminarily allocated to goodwill of $ 1.2 billion that is not deductible for tax purposes;

intangible assets of $ 612.0 million primarily consisting of tradenames and associated trademarks, both of which are indefinite life intangible assets, with a related deferred tax liability of $ 134.7 million;

and $ 30.4 million of other net assets.

The allocation of the accounting purchase price, which is based on Level 3 inputs, is substantially complete and will be finalized within the allowable measurement period.

Intangible assets with indefinite lives are trade names and trademarks acquired in various acquisitions.

4 unchanged sentences

(In thousands)

Customer lists $ 129,427 $ ( 15,487 ) $ 113,940 4.9

Patent and technology 99,512 ( 18,657 ) 80,855 4.2

6 unchanged sentences

(In thousands)

Customer lists $ 288 $ ( 288 ) $ — —

Patent and technology 11,044 ( 6,943 ) 4,101 9.3

4 unchanged sentences

(In thousands)

2022 $ 51,336

2026 and thereafter 12,428

Total $ 195,044

NOTE 6—FINANCIAL INSTRUMENTS

Equity securities without readily determinable fair values

At December 31, 2020 and 2019, the carrying value of the Company’s investments in equity securities without readily determinable fair values totaled $ 14.2 million and $ 5.1 million, respectively, and is included in “Other non-current assets” in the accompanying consolidated balance sheet.

The cumulative downward adjustments (including impairments) to the carrying value of equity securities without readily determinable fair values held as of December 31, 2020, since the adoption of ASU 2016-01 on January 1, 2018 through December 31, 2020, were $ 2.1 million.

For the year ended December 31, 2020, there were no adjustments to the carrying value of equity securities without readily determinable fair values.

For the years ended December 31, 2019 and 2018, we recognized impairments of $ 4.0 million and $ 2.1 million, respectively, which are included in “Other income (expense), net” in the accompanying consolidated statement of operations.

MATCH GROUP, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 6—FINANCIAL INSTRUMENTS

Equity securities without readily determinable fair values

At both December 31, 2021 and 2020, the carrying value of the Company’s investments in equity securities without readily determinable fair values totaled $ 14.2 million, and is included in “Other non-current assets” in the accompanying consolidated balance sheet.

The cumulative downward adjustments (including impairments) to the carrying value of equity securities without readily determinable fair values held as of December 31, 2021, since the adoption of ASU 2016-01 on January 1, 2018 through December 31, 2021, were $ 2.1 million.

For both the years ended December 31, 2021 and 2020, there were no adjustments to the carrying value of equity securities without readily determinable fair values.

For the year ended December 31, 2019, we recognized an impairment charge of $ 4.0 million which is included in “Other (expense) income, net” in the accompanying consolidated statement of operations.

Fair Value Measurements

10 unchanged sentences

Time deposits — 36,831 36,831

Short-term investments:

Time deposits — 11,818 11,818

Total $ 260,582 $ 48,649 $ 309,231

10 unchanged sentences

Total $ 147,615 $ 50,000 $ 197,615

MATCH GROUP, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Financial instruments measured at fair value only for disclosure purposes

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(In thousands)

Long-term debt, net (a)

Current maturities of long-term debt, net (a)(b)(c)

$ ( 84,333 ) $ ( 254,472 ) $ — $ —

Long-term debt, net (b)(c)

$ ( 3,829,421 ) $ ( 4,725,403 ) $ ( 3,840,930 ) $ ( 6,267,976 )

(a) At December 31, 2020 and 2019, the carrying value of long-term debt, net includes unamortized original issue discount and debt issuance costs of $ 357.8 million and $ 402.9 million, respectively.

______________________

(a) The carrying value excludes the $ 15.6 million aggregate principal amount of the exchanged 2022 Exchangeable Notes as that amount is carried at fair value as described below.

(b) At December 31, 2021, the carrying value of current maturities of long-term debt, net includes unamortized debt issuance costs of $ 0.6 million.

At December 31, 2021 and 2020, the carrying value of long-term debt, net includes unamortized original issue discount and debt issuance costs of $ 45.6 million and $ 51.6 million, respectively.

(c) At December 31, 2021, the fair value of the outstanding 2022 Exchangeable Notes, 2026 Exchangeable Notes, and 2030 Exchangeable Notes is $ 302.2 million, $ 932.6 million, and $ 1,017.7 million, respectively.

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

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

Derivatives associated with the repurchase and exchanges of 2022 Exchangeable Notes

On September 22, 2021, we entered into privately negotiated agreements with a limited number of holders of the 2022 Exchangeable Notes to repurchase a portion of the outstanding 2022 Exchangeable Notes.

The Company determined that the terms of the repurchase agreements included an embedded derivative, indexed to the value of the Company’s stock, that required bifurcation and separate accounting as a derivative liability under ASC Topic 815, Derivatives and Hedging .

The Company measures embedded derivatives at their estimated fair value and recognizes changes in their estimated fair value in net income during the current reporting period.

At the inception of these agreements on September 22, 2021, the fair value of the embedded derivative was zero and the number of shares to be issued to holders of the 2022 Exchangeable Notes was not yet determinable.

At September 30, 2021, under the terms of the agreements, the number of shares to be issued became fixed at 5.5 million.

The corresponding loss of $ 14.5 million, related to the change in the fair value of the embedded derivative, which was driven by an increase in our stock price from September 22, 2021 to October 4, 2021, the settlement date of the transaction, was recorded within “other (expense) income, net” in the accompanying consolidated statement of operations.

During the year ended December 31, 2021, $ 18.6 million aggregate principal amount of the 2022 Exchangeable Notes were presented for exchange prior to maturity at the option of the noteholder, $ 3.0 million of which was settled during the year ended December 31, 2021 and $ 15.6 million of which will be settled in January 2022.

In accordance with the 2022 Exchangeable Notes Indenture, the Company elected to settle these exchanges entirely in cash with the settlement amount determined by the volume weighted average price of Match Group common stock over a 40-day measurement period.

At the time that the Company elected cash settlement, the embedded derivative for the conversion option of the 2022 Exchangeable Notes no longer qualified for the derivative scope exception for contracts indexed to an entity’s own equity.

We recognized an obligation of $ 48.5 million in “accrued expenses and other current liabilities” to settle the conversion option as of the date of the exchanges, with an offset to paid-in capital.

Subsequently, we recognized $ 9.7 million in gains, which is included in “other (expense) income, net” within the accompanying consolidated statement of

MATCH GROUP, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

operations for the year ended December 31, 2021 related to the change in the fair value of the embedded derivative between the date we elected to settle in cash and the end of the 40-day measurement period, or December 31, 2021, if the measurement period extended past year-end.

For the exchanged 2022 Exchangeable Notes that were still outstanding at December 31, 2021 and were settled in January 2022, the following items were outstanding on the consolidated balance sheet at December 31, 2021:

• The fair value of the outstanding embedded derivative of $ 7.4 million, which is included as an asset within “other current assets;”

• the aggregate principal amount of $ 15.6 million for 2022 Exchangeable Notes presented for exchange, which is presented within “current maturities of long-term debt, net;” and

• an incremental $ 39.5 million liability recorded on the date of exchange, which is presented within “accrued expenses and other current liabilities.“

Additionally, when the Company elected to settle the exchanged 2022 Exchangeable Notes entirely in cash, a proportionate amount of note hedges were also exercised and were settled in cash based on the same 40-day measurement period to determine the settlement value.

Similar to the exchanged 2022 Exchangeable Notes, the derivative scope exception for contracts indexed to an entity’s own equity no longer applied to the exercised note hedges as a result of the requirement to settle the securities in cash.

We recognized an asset of $ 48.5 million related to the settlement of these note hedges, with an offset to paid-in capital.

Subsequently, we recognized a loss of $ 9.7 million, which is included in “other (expense) income, net” in the accompanying consolidated statement of operations for the year ended December 31, 2021 related to the change in the related derivative fair value between the date we elected to settle in cash and the end of the 40-day measurement period, or December 31, 2021, if the measurement period extended past year-end.

For the exercised note hedges that were settled in January 2022, the fair value of the outstanding note hedges at December 31, 2021 is $ 32.1 million, which is included as an asset within “other current assets” on the consolidated balance sheet.

At December 31, 2021, the net position of the various assets and liabilities associated with the unsettled exchanged 2022 Exchangeable Notes and the note hedges, described above, is a $ 15.6 million liability, representing the principal amount of the exchanged 2022 Exchangeable Notes, which was settled in January 2022.

MATCH GROUP, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 7—LONG-TERM DEBT, NET

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425,000 425,000

6.375 % Senior Notes (the “6.375% Senior Notes”)

5.00 % Senior Notes due December 15, 2027 (the “5.00% Senior Notes”);

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interest payable each June 1 and December 1

500,000 500,000

5.625 % Senior Notes due February 15, 2029 (the “5.625% Senior Notes”);

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interest payable each February 1 and August 1

500,000 500,000

3.625 % Senior Notes due October 1, 2031 (the “3.625% Senior Notes”);

interest payable each April 1 and October 1 commencing on April 1, 2022

0.875 % Exchangeable Senior Notes due October 1, 2022 (the “2022 Exchangeable Notes”);

8 unchanged sentences

Total long-term debt 3,975,500 3,892,500

Current maturities of long-term debt 100,500 —

Unamortized original issue discount 5,215 6,029

1 unchanged sentence

Total long-term debt, net $ 3,829,421 $ 3,840,930

Term Loan and Credit Facility

In connection with the Separation, Former Match Group was merged into and with MG Holdings II.

MG Holdings II replaced Former Match Group as borrower under the Credit Agreement and assumed its obligations thereunder and under the Term Loan and Credit Facility, as successor to Former Match Group.

MG Holdings II, an indirect wholly-owned subsidiary of the Company, entered into the Term Loan under a credit agreement (the “Credit Agreement”) on November 16, 2015.

On February 13, 2020, the Term Loan was amended to reprice the outstanding balance to LIBOR plus 1.75 % and extend its maturity from November 16, 2022 to February 13, 2027.

Additionally, the amendment provided for a benchmark replacement should the LIBOR rate not be available in the future.

Credit Facility and Term Loan

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

The Credit Agreement provides for a benchmark replacement should the LIBOR rate not be available in the future.

The rate used would be agreed to between the administrative agent and the Company and may be based upon a secured overnight financing rate at the Federal Reserve Bank of New York.

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6 to the Credit Agreement.

At both December 31, 2020 and December 31, 2019, the outstanding balance on the Term Loan was $ 425 million and the interest rate of the Term Loan was 1.96 % and 4.44 % as of those dates, respectively.

Interest payments are due at least quarterly through the term of the loan.

The Term Loan provides for annual principal payments as part of an excess cash flow sweep provision, the amount of which, if any, is governed by the secured net leverage ratio contained in the Credit Agreement.

On February 13, 2020, the Credit Facility was amended to, among other things, increase the available borrowing capacity from $ 500 million to $ 750 million, reduce interest rate margins by 0.125 %, and extend its maturity to February 13, 2025.

At December 31, 2020 and December 31, 2019, there were no outstanding borrowings under the Credit Facility.

At December 31, 2020, there were letters of credit of $ 0.2 million outstanding.

At December 31, 2020, we had $ 749.8 million available under the Credit Facility.

No letters of credit

The Credit Facility has a borrowing capacity of $ 750 million and matures on February 13, 2025.

At both December 31, 2021 and 2020, there were no outstanding borrowings under the Credit Facility.

At December 31, 2021, there was $ 0.4 million in outstanding letters of credit and $ 749.6 million of availability under the Credit Facility.

At December 31, 2020, there was $ 0.2 million in outstanding letters of credit and $ 749.8 million of availability under the Credit Facility.

The annual commitment fee on undrawn funds, which is based on MG Holdings II’s consolidated net leverage ratio, was 25 basis points as of December 31, 2021.

Borrowings under the Credit Facility bear interest, at MG Holdings II’s option, at a base rate or LIBOR, in each case plus an applicable margin, based on MG Holdings II’s consolidated net leverage ratio.

If MG Holdings II borrows under the Credit Facility, it will be required to maintain a consolidated net leverage ratio of not more than 5.0 to 1.0.

At both December 31, 2021 and 2020, the outstanding balance on the Term Loan was $ 425 million.

The Term Loan bears interest at LIBOR plus 1.75 %, which was 1.91 % and 1.96 % at December 31, 2021 and 2020,

MATCH GROUP, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

were outstanding at December 31, 2019.

The annual commitment fee on undrawn funds, which was 25 basis points as of December 31, 2020, is based on the current leverage ratio.

The terms of the Credit Facility require MG Holdings II to maintain a consolidated net leverage ratio of not more than 5.0 to 1.0.

The Credit Facility and Term Loan contain covenants that would limit the ability of MG Holdings II to pay dividends, make distributions, or repurchase MG Holdings II’s stock in the event MG Holdings II’s secured net leverage ratio exceeds 2.0 to 1.0, while the Term Loan remains outstanding and, thereafter, if MG Holdings II’s consolidated net leverage ratio exceeds 4.0 to 1.0, or in the event a default has occurred.

There are additional covenants under these debt agreements that limit the ability of MG Holdings II and its subsidiaries to, among other things, incur indebtedness, pay dividends or make distributions.

respectively.

The Term Loan matures on February 13, 2027.

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 set forth in the Credit Agreement.

On March 26, 2021, MG Holdings II entered into an amendment of the Credit Agreement to provide for a $ 400 million Delayed Draw Term Loan, the proceeds of which could have been used only to finance a portion of the consideration for the acquisition of Hyperconnect.

The Delayed Draw Term Loan was terminated effective June 18, 2021, in accordance with its terms.

The Credit Agreement includes covenants that would limit the ability of MG Holdings II to pay dividends, make distributions, or repurchase MG Holdings II’s stock in the event MG Holdings II’s secured net leverage ratio exceeds 2.0 to 1.0, while the Term Loan remains outstanding and, thereafter, if MG Holdings II’s consolidated net leverage ratio exceeds 4.0 to 1.0, or if an event of default has occurred.

The Credit Agreement includes additional covenants that limit the ability of MG Holdings II and its subsidiaries to, among other things, incur indebtedness, pay dividends or make distributions.

Obligations under the Credit Facility and Term Loan are unconditionally guaranteed by certain MG Holdings II wholly-owned domestic subsidiaries and are also secured by the stock of certain MG Holdings II domestic and foreign subsidiaries.

The Term Loan and outstanding borrowings, if any, under the Credit Facility rank equally with each other, and have priority over the Senior Notes to the extent of the value of the assets securing the borrowings under the Credit Agreement.

In connection with the Separation on June 30, 2020, MG Holdings II replaced the Former Match Group as issuer of each of the Senior Notes and assumed its obligations thereunder and under the indentures governing each of the Senior Notes, respectively, as successor to Former Match Group.

The 3.625 % Senior Notes were issued on October 4, 2021.

The proceeds from these notes were used to redeem a portion of the 2022 Exchangeable Notes and for general corporate purposes.

At any time prior to October 1, 2026, 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 the redemption prices set forth below, together with accrued and unpaid interest to the applicable redemption date:

Beginning October 1, Percentage

2026 101.813 %

2027 101.208 %

2028 100.604 %

2029 and thereafter 100.000 %

The 4.625 % Senior Notes were issued on May 19, 2020.

1 unchanged sentence

At any time prior to June 1, 2023, these notes may be redeemed at a redemption price equal to the sum of the principal amount, plus accrued and unpaid interest and a make-whole premium set forth in the indenture governing the notes.

Thereafter, these notes may be redeemed at redemption prices set forth in the indenture governing the notes, together with accrued and unpaid interest to the applicable redemption date, if redeemed during the twelve-month period beginning on June 1 of the years indicated below:

Thereafter, these notes may be redeemed at the redemption prices set forth below, together with accrued and unpaid interest to the applicable redemption date:

Beginning June 1, Percentage

2 unchanged sentences

2025 and thereafter 100.000 %

MATCH GROUP, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The 4.125 % Senior Notes were issued on February 11, 2020.

1 unchanged sentence

At any time prior to May 1, 2025, these notes may be redeemed at a redemption price equal to the sum of the principal amount, plus accrued and unpaid interest and a make-whole premium set forth in the indenture governing the notes.

Thereafter, these notes may be redeemed at the redemption prices set forth below, together with accrued and unpaid interest to the applicable redemption date:

Beginning May 1, Percentage

3 unchanged sentences

2028 and thereafter 100.000 %

MATCH GROUP, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The 5.625 % Senior Notes were issued on February 15, 2019.

1 unchanged sentence

At any time prior to February 15, 2024, these notes may be redeemed at a redemption price equal to the sum of the principal amount, plus accrued and unpaid interest and a make-whole premium set forth in the indenture governing the notes.

Thereafter, these notes may be redeemed at redemption prices set forth below, together with accrued and unpaid interest to the applicable redemption date, if redeemed during the twelve-month period beginning on February 15 of the years indicated below:

Thereafter, these notes may be redeemed at the redemption prices set forth below, together with accrued and unpaid interest to the applicable redemption date:

Beginning February 15, Percentage

6 unchanged sentences

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 the redemption prices set forth below, together with accrued and unpaid interest thereon to the applicable redemption date, if redeemed during the twelve-month period beginning on December 15 of the years indicated below:

Thereafter, these notes may be redeemed at the redemption prices set forth below, together with accrued and unpaid interest thereon to the applicable redemption date:

Beginning December 15, Percentage

5 unchanged sentences

The related call premium of $ 12.8 million and $ 2.9 million of unamortized original issue discount and debt issuance costs related to the 6.375 % Senior Notes are included in “Other (expense) income, net” in the consolidated statement of operations for the year ended December 31, 2020.

The indentures governing the 5.00 % Senior Note contain covenants that would limit MG Holdings II’s ability to pay dividends or to make distributions and repurchase or redeem MG Holdings II’s stock in the event a default has occurred or MG Holdings II’s consolidated leverage ratio (as defined in the indentures) exceeds 5.0 to 1.0.

The indenture governing the 5.00 % Senior Notes contains covenants that would limit MG Holdings II’s ability to pay dividends or to make distributions and repurchase or redeem MG Holdings II’s stock in the event a default has occurred or MG Holdings II’s consolidated leverage ratio (as defined in the indenture) exceeds 5.0 to 1.0.

At December 31, 2021, there were no limitations pursuant thereto.

There are additional covenants in those indentures that limit the ability of MG Holdings II and its subsidiaries to, among other things, (i) incur indebtedness, make investments, or sell assets in the event MG Holdings II is not in compliance with certain financial ratios set forth therein, and (ii) incur liens, enter into agreements restricting the ability of MG Holdings II’s subsidiaries to pay dividends, enter into transactions with affiliates and consolidate, merge or sell substantially all of their assets.

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

There are additional covenants in the 5.00 % Senior Notes indenture that limit the ability of MG Holdings II and its subsidiaries to, among other things, (i) incur indebtedness, make investments, or sell assets in the event MG Holdings II is not in compliance with specified financial ratios, and (ii) incur liens, enter into agreements restricting their ability to pay dividends, enter into transactions with affiliates, or consolidate, merge or sell substantially all of their assets.

The indentures

MATCH GROUP, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

governing the 3.625 % , 4.125 %, 4.625 %, and 5.625 % Senior Notes are less restrictive than the indentures governing the 5.00 % Senior Notes and generally only limit MG Holdings II’s and its subsidiaries’ ability to, among other things, create liens on assets, or consolidate, merge, sell or otherwise dispose of all or substantially all of their assets.

The Senior Notes all rank equally in right of payment.

3 unchanged sentences

and Match Group FinanceCo 3, Inc., direct, wholly-owned subsidiaries of the Company, issued $ 575.0 million aggregate principal amount of its 2026 Exchangeable Notes and $ 575.0 million aggregate principal amount of its 2030 Exchangeable Notes, respectively.

MATCH GROUP, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The 2022, 2026, and 2030 Exchangeable Notes (collectively the “Exchangeable Notes”) are guaranteed by the Company but are not guaranteed by MG Holdings II or any of its subsidiaries.

Following the Separation, the number of shares of the Company’s common stock into which each $1,000 of principal of the Exchangeable Notes is exchangeable and the approximate equivalent exchange price per share were adjusted under the terms of each of the respective Exchangeable Notes to reflect the conversion of each from Former IAC amounts to Match Group amounts.

The following table presents details of the exchangeable features under the amended Match Group terms:

The following table presents details of the exchangeable features:

Number of shares of the Company’s Common Stock into which each $1,000 of Principal of the Exchangeable Notes is Exchangeable (a)

6 unchanged sentences

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

The Exchangeable Notes are exchangeable under the following circumstances:

(1) during any calendar quarter (and only during such calendar quarter), if the last reported sale price of the Company's common stock for at least 20 trading days during the period of 30 consecutive trading days during the immediately preceding calendar quarter is greater than or equal to 130 % of the exchange price on each applicable trading day;

As more specifically set forth in the applicable indentures, the Exchangeable Notes are exchangeable under the following circumstances:

(1) during any calendar quarter (and only during such calendar quarter), if the last reported sale price of the Company's common stock for at least 20 trading days (whether or not consecutive) during the period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter is greater than or equal to 130 % of the exchange price on each applicable trading day;

(2) during the five -business day period after any five -consecutive trading day period in which the trading price per $1,000 principal amount of notes for each trading day of the measurement period was less than 98 % of the product of the last reported sale price of the Company's common stock and the exchange rate on each such trading day;

(3) if the issuer calls the notes for redemption, at any time prior to the close of business on the scheduled trading day immediately preceding the redemption date;

(4) upon the occurrence of specified corporate events as further described under the indentures governing the respective Exchangeable Notes.

(4) upon the occurrence of specified corporate events as further described in the indentures governing the respective Exchangeable Notes.

On or after the respective exchangeable dates noted in the table above, until the close of business on the second scheduled trading day immediately preceding the maturity date, holders may exchange all or any portion of their Exchangeable Notes regardless of the foregoing conditions.

Upon exchange, the Company, in its sole discretion, has the option to settle the Exchangeable Notes with any of the three following alternatives:

Upon exchange, the issuer, in its sole discretion, has the option to settle the Exchangeable Notes with any of the three following alternatives:

(1) shares of the Company’s common stock, (2) cash or (3) a combination of cash and shares of the Company's common stock.

It is the Company’s intention to settle the Exchangeable Notes with cash equal to the face amount of the notes upon exchange.

Any dilution arising from the 2022, 2026, and 2030 Exchangeable Notes would be mitigated by the 2022, 2026, and 2030 Exchangeable Notes Hedges, respectively.

The Company’s 2022, 2026, and 2030 Exchangeable Notes were exchangeable as of December 31, 2020;

during the three and twelve months ended December 31, 2020, no notes were exchanged.

The following table presents the if-converted value that exceeded the principal of each note based on the Company’s stock price December 31, 2020 and December 31, 2019, respectively.

The amounts for December 31, 2020 represent the exchange occurring under the Match Group terms and for December 31, 2019 represent the exchange occurring under Former IAC terms.

Any dilution arising from the 2022, 2026, and 2030 Exchangeable Notes would be mitigated by the 2022, 2026, and 2030 Exchangeable Notes Hedges (defined below), respectively.

MATCH GROUP, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The Company’s 2022, 2026, and 2030 Exchangeable Notes were all exchangeable as of December 31, 2021.

During the year ended December 31, 2021, a portion of the 2022 Exchangeable Notes were presented for exchange, see “Redemption and exchange of 2022 Exchangeable Notes and related note hedges and warrants” below for details.

No other Exchangeable Notes were presented for exchange during the year ended December 31, 2021.

None of the Exchangeable Notes were exchanged, or presented for exchange, during the year ended December 31, 2020.

The following table presents the if-converted value that exceeded the principal of each Exchangeable Note outstanding as of December 31, 2021 and 2020 based on the Company’s stock price on December 31, 2021 and 2020, respectively.

December 31, 2021 December 31, 2020

1 unchanged sentence

2022 Exchangeable Notes $ 170.4 $ 1,261.2

2026 Exchangeable Notes $ 418.3 N/A

2030 Exchangeable Notes $ 457.2 N/A

Additionally, each of Match Group FinanceCo 2, Inc.

and Match Group FinanceCo 3, Inc.

may redeem for cash all or any portion of its applicable notes, at its option, on or after June 20, 2023 and July 20, 2026, respectively, if the last reported sale price of the common stock underlying the respective notes has been at least 130 % of the exchange price then in effect for at least 20 trading days (whether or not consecutive), including at least one of the five trading days immediately preceding the date on which the notice of redemption is provided, during any 30 consecutive trading day period ending on, and including, the trading day immediately preceding the date on which the applicable issuer provides notice of redemption, at a redemption price equal to 100 % of the principal amount to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date.

The Company separately accounts for the debt and equity components of the Exchangeable Notes, and therefore, the Company recorded an original issue discount and corresponding increase to additional paid-in capital, which is the fair value attributed to the exchange feature of each series of debt at issuance.

The Company is amortizing the original issue discount and debt issuance costs utilizing the effective interest method over the life of the Exchangeable Notes.

The effective interest rates for the 2022, 2026, and 2030 Exchangeable Notes are 4.73 %, 5.35 %, and 6.59 %, respectively.

The following tables sets forth the components of the Exchangeable Notes:

December 31, 2020

2022 Exchangeable Notes 2026 Exchangeable Notes 2030 Exchangeable Notes

(In thousands)

Liability component:

Principal $ 517,500 $ 575,000 $ 575,000

unamortized original issue discount 26,525 111,806 168,531

Net carrying value of the liability component $ 490,975 $ 463,194 $ 406,469

Equity component $ 70,363 $ 138,796 $ 189,213

December 31, 2019

2022 Exchangeable Notes 2026 Exchangeable Notes 2030 Exchangeable Notes

2026 Exchangeable Notes $ 293.9 $ 418.3

2030 Exchangeable Notes $ 327.9 $ 457.2

Additionally, all or any portion of the 2026 Exchangeable Notes and 2030 Exchangeable Notes may be redeemed for cash, at the respective issuer’s option, on or after June 20, 2023 and July 20, 2026, respectively, if the last reported sale price of the Company’s common stock has been at least 130 % of the exchange price then in effect for at least 20 trading days (whether or not consecutive), including at least one of the five trading days immediately preceding the date on which the notice of redemption is provided, during any 30 consecutive trading day period ending on, and including, the trading day immediately preceding the date on which the applicable issuer provides notice of redemption, at a redemption price equal to 100 % of the principal amount to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date.

The following table sets forth the components of the outstanding Exchangeable Notes as of December 31, 2021 and 2020:

December 31, 2021 December 31, 2020

2022 Exchangeable Notes 2026 Exchangeable Notes 2030 Exchangeable Notes 2022 Exchangeable Notes 2026 Exchangeable Notes 2030 Exchangeable Notes

(In thousands)

Liability component:

Principal $ 100,500 $ 575,000 $ 575,000 $ 517,500 $ 575,000 $ 575,000

unamortized original issue discount 40,768 129,037 181,800

Net carrying value of the liability component $ 476,732 $ 445,963 $ 393,200

Equity component $ 70,363 $ 138,796 $ 189,213

unamortized debt issuance costs 573 7,130 8,638 6,511 8,700 9,627

Net carrying value included in current maturities of long-term debt, net $ 99,927 $ — $ — $ — $ — $ —

Net carrying value included in long-term debt, net $ — $ 567,870 $ 566,362 $ 510,989 $ 566,300 $ 565,373

MATCH GROUP, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

The following table sets forth interest expense recognized related to the Exchangeable Notes for the years ended December 31, 2021, 2020, and 2019:

Year Ended December 31, 2021

2 unchanged sentences

Contractual interest expense $ 3,525 $ 5,031 $ 11,500

Amortization of original issue discount 14,243 17,231 13,269

Amortization of debt issuance costs 2,939 1,570 989

4 unchanged sentences

Contractual interest expense $ 4,528 $ 5,031 $ 11,500

Amortization of original issue discount 13,256 9,759 7,413

Amortization of debt issuance costs 3,646 1,533 950

1 unchanged sentence

Year Ended December 31, 2019

2022 Exchangeable Notes

2022 Exchangeable Notes 2026 Exchangeable Notes 2030 Exchangeable Notes

(In thousands)

Contractual interest expense $ 4,528 $ 2,963 $ 6,772

Amortization of original issue discount 13,134

Amortization of debt issuance costs 3,578 897 550

Total interest expense recognized $ 8,106 $ 3,860 $ 7,322

Exchangeable Notes Hedge and Warrants

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

Exchangeable Notes Hedges and Warrants

In connection with the Exchangeable Notes offerings, the Company purchased call options allowing the Company to purchase initially (subject to adjustment upon the occurrence of specified events) the same number of shares that would be issuable upon the exchange of the applicable Exchangeable Notes at the price per share set forth below (the “Exchangeable Notes Hedge”), and sold warrants allowing the counterparty to purchase (subject to adjustment upon the occurrence of specified events) shares at the per share price set forth below (the “Exchangeable Notes Warrants”).

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The Exchangeable Notes Warrants have a dilutive effect on the Company’s common stock to the extent that the market price per share of the Company common stock exceeds their respective strike prices.

Following the Separation, the number of shares and the approximate equivalent exchange price per share for the related Exchangeable Notes Hedge were adjusted to reflect the conversion from Former IAC to Match Group.

The Exchangeable Notes Warrants also had adjustments in the number of shares and strike price per

MATCH GROUP, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

share to reflect the conversion from Former IAC to Match Group.

The following tables present details of the Exchangeable Notes Hedges and Warrants under the amended Match Group terms:

The following tables present details of the Exchangeable Notes Hedges and Warrants outstanding at December 31, 2021:

Number of Shares (a)

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

Redemption and exchanges of 2022 Exchangeable Notes and related note hedges and warrants

During the year ended December 31, 2021, $ 18.6 million aggregate principal amount of the 2022 Exchangeable Notes were presented for exchange, of which $ 15.6 million aggregate principal amount was not settled as of December 31, 2021.

The principal amount of this remaining $ 15.6 million is classified as “current maturities of long-term debt, net” and the fair value in excess of the principal value on the date of exchange is recorded as a current liability within “accrued expenses and other current liabilities.” These obligations were settled in January 2022.

See “Note 6—Financial Instruments” for additional information.

In connection with the 2022 Exchangeable Notes presented for exchange during the year ended December 31, 2021, we exercised 0.4 million underlying shares of the related 2022 Exchangeable Notes Hedges, which were valued based on the volume weighted average price of Match Group common stock over a 40-day measurement period.

During the year ended December 31, 2021, the Company received $ 6.6 million in cash related to these hedge settlements and a $ 32.1 million derivative asset is included in other current assets at December 31, 2021 with respect to the hedges that were still subject to the 40-day measurement period as of year-end.

On October 4, 2021, we repurchased $ 414.0 million aggregate principal amount of our outstanding 2022 Exchangeable Notes, pursuant to privately negotiated agreements executed on September 22, 2021, for approximately $ 1.5 billion, including accrued and unpaid interest on the repurchased notes, funded with (i) net proceeds of $ 879.0 million from a registered direct offering to the holders of the 2022 Exchangeable Notes being repurchased of 5,534,098 shares of our common stock at a price of $ 158.83 per share, (ii) approximately $ 420 million of net proceeds from the 3.625 % Senior Notes offering;

and (iii) net proceeds of approximately $ 201 million from the unwind of a proportionate amount of outstanding hedges and warrants, each representing 9.4 million underlying shares, corresponding to the 2022 Exchangeable Notes repurchased.

See “Note 6—Financial Instruments” for additional information.

MATCH GROUP, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Long-term debt maturities

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Total 3,975,500

Current maturities of long-term debt 100,500

Unamortized original issue discount 5,215

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In connection with equity compensation plans, the Exchangeable Notes, and warrants, 75.0 million shares of Match Group common stock are reserved at December 31, 2021.

MATCH GROUP, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Retirement of Treasury Stock

On June 30, 2020, prior to the Separation, Former IAC retired all Former IAC common stock and Class B common stock then held in treasury.

There are no shares of common stock held in treasury at December 31, 2020.

There are no shares of common stock held in treasury at December 31, 2021 and 2020.

Preferred Stock

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and (ii) 2.1584 shares of Match Group common stock, par value $ 0.001 per share.

MATCH GROUP, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Issuance of Common Stock

In July 2020, in connection with the Separation, Former IAC closed the sale of an additional 17.3 million newly issued Match Group common shares.

In July 2020, in connection with the Separation, Former IAC completed the sale of an additional 17.3 million newly issued Match Group common shares.

The proceeds of $ 1.4 billion, net of associated fees, were transferred directly to IAC.

In October 2021, we completed the sale of 5.5 million common shares.

The net proceeds of $ 879.0 million were used to repurchase $ 414.0 million aggregate principal amount of our outstanding 2022 Exchangeable Notes.

See “Note 7—Long-term Debt, net” for additional information on the redemption of a portion of the 2022 Exchangeable Notes.

MATCH GROUP, INC.

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Year Ended December 31, 2021

Foreign Currency Translation Adjustment Accumulated Other Comprehensive (Loss)

(In thousands)

Balance at January 1 $ ( 81,454 ) $ ( 81,454 )

Other comprehensive loss ( 142,300 ) ( 142,300 )

Balance at December 31 $ ( 223,754 ) $ ( 223,754 )

Year Ended December 31, 2020

Foreign Currency Translation Adjustment Unrealized (Loss) Gain on Available-For-Sale Security Accumulated Other Comprehensive (Loss) Income

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Amounts reclassified into earnings ( 168 ) — ( 168 )

( 168 ) — ( 168 )

Net current period other comprehensive income (loss)

40,487 ( 1 ) 40,486

Net period other comprehensive income (loss) 40,487 ( 1 ) 40,486

Allocation of accumulated other comprehensive loss related to the noncontrolling interests 628 — 628

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Balance at December 31 $ ( 136,349 ) $ — $ ( 136,349 )

Year Ended December 31, 2018

Foreign Currency Translation Adjustment Unrealized Gain (Loss) on Available-For-Sale Security Accumulated Other Comprehensive (Loss) Income

(In thousands)

Balance at January 1 $ ( 103,568 ) $ — $ ( 103,568 )

Other comprehensive (loss) income before reclassifications ( 25,230 ) 4 ( 25,226 )

Amounts reclassified into earnings ( 52 ) — ( 52 )

Net period other comprehensive (loss) income ( 25,282 ) 4 ( 25,278 )

Allocation of accumulated other comprehensive loss related to the noncontrolling interests 124 — 124

Balance at December 31 $ ( 128,726 ) $ 4 $ ( 128,722 )

At December 31, 2021, 2020 and 2019, there was no tax benefit or provision on the accumulated other comprehensive loss.

MATCH GROUP, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 10—EARNINGS PER SHARE

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$ 276,045 $ 276,045 $ 587,679 $ 587,679 $ 517,340 $ 517,340

Net earnings attributable to noncontrolling interests

Net loss (earnings) attributable to noncontrolling interests

1,169 1,169 ( 59,599 ) ( 59,599 ) ( 103,401 ) ( 103,401 )

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— ( 993 ) — ( 9,999 ) — ( 25,997 )

Interest on dilutive Exchangeable

Notes, net of income tax (b)

— 6,616 — 16,300 — 5,791

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

$ 277,214 $ 282,837 $ 528,080 $ 534,381 $ 413,939 $ 393,733

(Loss) earnings from discontinued operations, net of tax

Earnings (loss) from discontinued operations, net of tax

$ 509 $ 509 $ ( 366,070 ) $ ( 366,070 ) $ 49,187 $ 49,187

Net loss (earnings) attributable to noncontrolling interests of discontinued operations

Net earnings (loss) attributable to noncontrolling interests of discontinued operations

— — 319 319 ( 9,288 ) ( 9,288 )

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— — — ( 240 ) — ( 67 )

Net (loss) earnings from discontinued operations attributable to shareholders

Net earnings (loss) from discontinued operations attributable to shareholders

509 509 ( 365,751 ) ( 365,991 ) 39,899 39,832

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275,004 275,004 223,433 223,433 181,869 181,869

Dilutive securities (a)(b)(c)(d)

Dilutive securities (a)(c)(d)

— 13,866 — 12,157 — 10,129

Denominator for earnings per share—weighted average shares (a)(b)(c)(d)

Dilutive shares from Exchangeable Notes, if-converted (b)

— 15,970 — 20,430 — 9,784

Denominator for earnings per share—weighted average shares (a)(c)(d)

275,004 304,840 223,433 256,020 181,869 201,782

Earnings (loss) per share:

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and for discontinued operations, it was more dilutive for Former IAC to settle certain ANGI equity awards.

For the year ended December 31, 2018, for continuing operations it was more dilutive for Former IAC to settle certain Former Match Group equity awards;

and for discontinued operations it was more dilutive for Former IAC to settle certain ANGI equity awards.

(b) If the effect is dilutive, weighted average common shares outstanding include the incremental shares that would be issued upon the assumed exercise of stock options, warrants, and subsidiary denominated equity;

exchange of the Company’s Exchangeable Notes;

and vesting of restricted stock units.

(b) The Company uses the if-converted method for calculating the dilutive impact of the outstanding Exchangeable Notes.

For the year ended December 31, 2021, the Company adjusted net earnings from continuing operations attributable to Match Group, Inc.

shareholders for the cash interest expense, net of income taxes, incurred on the 2022 and 2026 Exchangeable Notes and dilutive shares were included for the same set of notes at the Match Group exchange rates.

For the year ended December 31, 2021 the 2030 Exchangeable Notes were not more dilutive under the if-converted method and therefore the weighted average 6.8 million shares related to the 2030 Exchangeable Notes are excluded from dilutive securities.

For the year ended December 31, 2020, the Company adjusted net earnings from continuing operations attributable to Match Group, Inc.

shareholders for the cash interest expense, net of income taxes, incurred on the 2022, 2026, and 2030 Exchangeable Notes and dilutive shares were included for the same set of notes at the Match Group exchange rates.

For the year ended December 31, 2019, the Company adjusted net earnings from continuing operations attributable to Match Group, Inc.

For the year ended December 31, 2019 the 2030 Exchangeable Notes were not more dilutive under the if-converted method and therefore the weighted average 2.5 million shares related to the 2030 Exchangeable Notes are excluded from dilutive securities.

(c) If the effect is dilutive, weighted average common shares outstanding include the incremental shares that would be issued upon the assumed exercise of stock options, warrants, and subsidiary denominated equity and vesting of restricted stock units.

For the years ended December 31, 2021, 2020, and 2019, 0.9 million, 13.4 million and 15.7 million potentially dilutive securities, respectively, are excluded from the calculation of diluted earnings per share because their inclusion would have been anti-dilutive.

(d) Market-based awards and performance-based stock units (“PSUs”) are considered contingently issuable shares.

Shares issuable upon exercise or vesting of market-based awards and PSUs are included in the denominator for earnings per share if (i) the applicable market or performance condition(s) has been met and (ii) the inclusion of the market-based awards and PSUs is dilutive for the respective reporting periods.

For the years ended December 31, 2021, 2020, and 2019, 1.0 million, 0.4 million, and 0.4 million market-based awards and PSUs, respectively, were excluded from the calculation of diluted earnings per share because the market or performance conditions had not been met.

(d) It is the Company's intention to settle the Exchangeable Notes through a combination of cash, equal to the face amount of the notes, and shares.

As a result of the Separation, the dilutive impact for the year ended December 31, 2020 was determined by calculating the dilutive impact for the period after the Separation using the Match Group average price and for the period prior to the Separation using the Former IAC average price.

The resulting dilutive impact for each period was then weighted proportionally.

The Exchangeable Notes are only dilutive for periods after the Separation during which the average price of Match Group’s common stock exceeded the approximate per share exchange price per $1,000 principal amount of $ 43.99 , $ 87.52 and $ 84.22 for the 2022 Exchangeable Notes, the 2026 Exchangeable Notes, and the 2030 Exchangeable Notes, respectively.

The average price of Match Group’s common stock was $ 119.08 for the six months ended December 31, 2020.

For periods prior to the Separation, the Company determined the dilutive impact of the Exchangeable Notes when the average price of Former IAC common stock exceeded the approximately per share exchange price per $1,000 principal amount of $ 152.18 , $ 302.77 and $ 291.35 for the 2022 Exchangeable Notes, the 2026 Exchangeable Notes, and the 2030 Exchangeable Notes, respectively.

The average price of Former IAC’s common stock was $ 235.09 for the six months ended June 30, 2020.

For the year ended December 31, 2020, the dilutive impact for the 2022 Exchangeable Notes, 2026 Exchangeable Notes, and 2030 Exchangeable Notes was 5.0 million, 0.9 million, and 1.0 million shares, respectively, after weighting the respective periods of 2020 as described above.

For the years ended December 31, 2019 and 2018, the average price of Former IAC’s common stock was $ 223.89 and $ 167.61 , respectively, and the dilutive impact of the 2022 Exchangeable Notes, which was the only series of Exchangeable Notes that was dilutive for those periods, was 2.4 million and 0.7 million shares, respectively.

MATCH GROUP, INC.

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Market-based awards outstanding generally vest over a two - to four-year period.

Stock-based compensation expense recognized in the consolidated statement of operations includes expense related to the Company’s stock options and RSUs, market-based RSUs and PSUs for which vesting is considered probable, equity instruments denominated in shares of subsidiaries, and instruments previously issued by Former IAC denominated in stock options, RSUs, and market-based awards of IAC held by Match Group employees.

The amount of stock-based compensation expense recognized is net of estimated forfeitures, as the expense recorded is based on awards that are ultimately expected to vest.

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(Shares and intrinsic value in thousands)

Former IAC options outstanding at January 1, 2020

4,887 $ 64.63

Activity between January 1, 2020 and June 30, 2020

Exercised ( 380 ) 51.73

Forfeited ( 10 ) 65.22

Former IAC options outstanding at June 30, 2020 prior to the Separation adjustment

Options outstanding as of June 30, 2020 representing Former IAC options converted into Match Group options in conjunction with the Separation (a)

Assumption of the 2015 and 2017 plans of the Former Match Group

Outstanding at June 30, 2020 after Separation adjustment and adoption of the 2015 and 2017 plans of Former Match Group 15,451 19.52

Activity between July 1, 2020 and December 31, 2020

Outstanding at January 1, 2021 7,425 $ 19.48

Converted sub-equity options 3 37.49

Increase due to acquisition 267 30.30

Exercised ( 2,926 ) 18.52

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______________________

(a) Immediately prior to the Separation, the vesting of all outstanding, unvested Former IAC stock options was accelerated, and all Former IAC options outstanding were converted into IAC options and Match Group options pursuant to the Employee Matters Agreement entered into on June 30, 2020 between Match Group and IAC.

Each Former IAC option outstanding converted into (i) one IAC stock option;

and (ii) 2.1584 Match Group stock options, which are reflected here.

The exercise price of each Former IAC option was allocated between the newly created options of IAC and Match Group based on the relative value of IAC and Match Group, respectively, to the Former IAC value at the close of business on the day of Separation.

The aggregate intrinsic value in the table above represents the difference between Match Group’s closing stock price on the last trading day of 2021 and the exercise price, multiplied by the number of in-the-money options that would have been exercised had option holders exercised their options on December 31, 2021.

The total intrinsic value of stock options exercised during the period from July 1, 2020 to December 31, 2020 is $ 737.9 million.

MATCH GROUP, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

In connection with the Separation, Match Group assumed all outstanding Former Match Group stock options on the same terms and conditions (including applicable vesting requirements).

Each assumed option was adjusted to reflect the $ 3.00 per share merger consideration paid to Former Match Group stockholders in connection with the Separation.

The total intrinsic value of stock options exercised during the year ended December 31, 2021 is $ 406.1 million.

The total intrinsic value of stock options exercised during the period from the Separation on July 1, 2020 to December 31, 2020 is $ 737.9 million.

The following table summarizes the information about stock options outstanding and exercisable at December 31, 2021:

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152 6.1 35.58 147 6.1 35.76

$ 40.01 to $ 50.00

306 7.6 46.49 173 6.2 49.12

There were no stock options granted by the Company during the years ended December 31, 2020 and 2019.

Cash received from Match Group stock option exercises for the period between July 1, 2020 and December 31, 2020 was $ 155.4 million.

No cash was received from stock option exercises for the year ended December 31, 2019 and the period from January 1, 2020 to June 30, 2020.

The Company discontinued the practice of net settling options as of July 1, 2020.

4,468 4.9 $ 20.58 4,193 4.7 $ 19.85

Cash received from Match Group stock option exercises for the years ended December 31, 2021 and 2020 was $ 58.4 million and $ 155.4 million, respectively.

No cash was received from stock option exercises for the year ended December 31, 2019.

MATCH GROUP, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Restricted Stock Units, Performance-Based Stock Units, and Market-Based Awards

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For PSU grants, the expense is measured at the grant date as the fair value of Match Group common stock and expensed as stock-based compensation over the vesting term if the performance targets are considered probable of being achieved.

MATCH GROUP, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Unvested RSUs, PSUs, and market-based awards outstanding at December 31, 2021 and changes during the year ended December 31, 2021 are as follows:

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Unvested at January 1, 2021 3,299 $ 63.02 550 $ 74.59 714 $ 19.34

Activity between January 1, 2020 and June 30, 2020

Granted 1,452 157.61 212 159.23 803 159.67

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Forfeited ( 436 ) 93.27 ( 221 ) 97.42 ( 146 ) 148.66

Converted to IAC awards, no longer outstanding at Match Group due to Separation ( 129 ) 158.27 — — ( 106 ) 146.49

Assumption of the 2015 and 2017 plans of the Former Match Group

3,464 58.52 355 53.00 912 21.11

Activity between July 1, 2020 and December 31, 2020

Granted 277 106.17 195 102.70 — —

Vested ( 304 ) 48.80 — — ( 111 ) 22.56

Forfeited ( 138 ) 67.99 — — ( 65 ) 23.84

Expired — — — — ( 30 ) 20.84

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(a) Represents the maximum shares issuable.

All RSUs, PSUs, and market-based awards outstanding immediately prior to the Separation were converted to IAC awards.

All expense, income tax benefits, and cash flow activity related to these awards is included in discontinued operations.

The weighted average fair value of RSUs and PSUs granted during the period between July 1, 2020 and December 31, 2020, based on market prices of Match Group’s common stock on the grant date, was $ 104.74 .

The total fair value of RSUs that vested during the period between July 1, 2020 and December 31, 2020 was $ 14.8 million.

No PSUs vested during the period between July, 1, 2020 and December 31, 2020.

There were no market-based awards granted during the period between July 1, 2020 and December 31, 2020.

The total fair value of market-based awards that vested during the period between July 1, 2020 and December 31, 2020 was $ 2.5 million.

In connection with the Separation, Match Group assumed the Former Match Group outstanding RSUs, PSUs, and Market-based awards on the same terms and conditions (including applicable vesting requirements).

Each assumed RSU, PSU, and Market-based award was adjusted to reflect the same adjustment Former Match Group stockholders received if they elected a fractional stock election instead of the $ 3.00 cash election in conjunction with the Separation.

The weighted average fair value of RSUs and PSUs granted during the years ended December 31, 2021 and 2020, based on market prices of Match Group’s common stock on the grant date, was $ 157.81 and $ 104.74 , respectively.

The total fair value of RSUs that vested during the years ended December 31, 2021 and 2020 was $ 67.5 million and $ 14.8 million, respectively.

No PSUs vested during the years ended December 31, 2021 and 2020.

There were 0.8 million market-based awards granted during the year ended December 31, 2021.

The vesting of the awards granted in the current period are dependent upon the Company’s total shareholder return relative to the Nasdaq 100 Total Return Index over the performance period.

There were no market-based awards granted during the year ended December 31, 2020.

The total fair value of market-based awards that vested during the years ended December 31, 2021 and 2020 was $ 11.1 million and $ 2.5 million, respectively.

Equity Instruments Denominated in Shares of Certain Subsidiaries

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These equity awards vest over a specified period of time or upon the occurrence of certain specified events.

The value of the stock settled stock

MATCH GROUP, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

appreciation rights is based on the equity value of these subsidiaries.

The value of the stock settled stock appreciation rights is based on the equity value of these subsidiaries.

Accordingly, these awards only have value to the extent the relevant business appreciates in value above the initial value utilized to determine the exercise price.

1 unchanged sentence

The fair value of the common stock of these subsidiaries is generally determined through a third-party valuation pursuant to the terms of the respective subsidiary equity plan.

These equity awards are settled on a net basis, with the award holder entitled to receive a payment in shares of Match Group common stock with a total value equal to the intrinsic value of the award at exercise.

These equity awards are settled on a net basis, with the award

MATCH GROUP, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

holder entitled to receive a payment in shares of Match Group common stock with a total value equal to the intrinsic value of the award at exercise.

The number of shares of Match Group common stock ultimately needed to settle these awards may vary significantly from the estimated number below as a result of movements in our stock price and/or a determination of fair value of the relevant subsidiary that differs from our estimate.

The expense associated with these equity awards is initially measured at fair value at the grant date and is expensed as stock-based compensation over the vesting term.

At December 31, 2020, the number of shares of Match Group common stock that would be required to settle these awards at current estimated fair values, including vested and unvested awards is 0.5 million shares.

At December 31, 2021, the number of shares of Match Group common stock that would be required to settle these awards at estimated fair values, including vested and unvested awards, net of an assumed 50 % withholding tax, is 1.0 million shares.

The withholding taxes, which would be paid by the Company on behalf of the employees at exercise, required to settle the vested and unvested awards at estimated fair values on December 31, 2021 is $ 126.9 million assuming a 50 % withholding tax rate.

The corresponding number of shares and withholding tax amount as of December 31, 2020 were 0.3 million shares and $ 39.6 million.

Employee Stock Purchase Plan

The Match Group, Inc.

2021 Global Employee Stock Purchase Plan (the "ESPP") was approved by the Company’s shareholders on June 15, 2021.

Under the ESPP, eligible employees may purchase the Company’s common stock at a 15 % discount of the stock price at the lower of the market price of our common stock on the date of commencement of the applicable offering period or on the last day of each six-month purchase period, subject to certain purchase limits.

Under the ESPP, employees purchased less than 0.1 million shares at an average price per share of $ 126.16 during the year ended December 31, 2021.

At December 31, 2021, there were 3.0 million shares available for future issuance under the ESPP.

At December 31, 2021, there is $ 3.0 million of unrecognized compensation cost, net of estimated forfeitures, related to the ESPP, which is expected to be recognized over a weighted average period of approximately 0.6 years.

Capitalization of Stock-Based Compensation

For the year ended December 31, 2020, $ 5.1 million of stock-based compensation was capitalized related to internal use software development.

No amounts were capitalized for the years ended December 31, 2019 and 2018.

For the years ended December 31, 2021 and 2020, $ 6.4 million and $ 5.1 million, respectively, of stock-based compensation was capitalized related to internal use software development.

No amounts were capitalized for the year ended December 31, 2019.

Modifications of awards

During the years ended December 31, 2021, 2020 and 2019, the Company modified certain equity awards and recognized modification charges in continuing operations of $ 10.2 million, $ 21.2 million and $ 7.1 million, respectively.

MATCH GROUP, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 12—GEOGRAPHIC INFORMATION

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The Company leases office space, data center facilities, and equipment used in connection with its operations under various operating leases, many of which contain escalation clauses.

One of these lease agreements relates to a property owned by IAC.

Through June 2021, one of these lease agreements related to a property owned by IAC.

See “Note 15—Related Party Transactions” for additional information on the intercompany lease agreement.

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(In thousands)

Right-of-use assets Right-of-use assets $ 85,009 $ 34,448

Right-of-use assets Other non-current assets $ 113,582 $ 85,009

Current lease liabilities Accrued expenses and other current liabilities $ 10,618 $ 7,143

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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

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.

Pursuant to the Transaction Agreement, we have agreed to indemnify IAC for matters relating to any business of Former Match Group, including indemnifying IAC for costs related to the matters described below.

MATCH GROUP, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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.

The official names of legal proceedings in the descriptions below (shown in italics) reflect the original names of the parties when the proceedings were filed as opposed to the current names of the parties following the separation of Match Group and IAC.

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654038/2018 (Supreme Court, New York County).

The complaint alleges that in 2017, the defendants:

The complaint alleged that in 2017, the defendants:

(i) wrongfully interfered with a contractually established process for the independent valuation of Tinder by certain investment banks, resulting in a substantial undervaluation of Tinder and a consequent underpayment to the plaintiffs upon exercise of their Tinder stock options, and (ii) then wrongfully merged Tinder into Former Match Group, thereby depriving certain of the plaintiffs of their contractual right to later valuations of Tinder on a stand-alone basis.

The complaint asserts claims for breach of contract, breach of the implied covenant of good faith and fair dealing, unjust enrichment, interference with contractual relations (as against Former Match Group only), and interference with prospective economic advantage, and seeks compensatory damages in the amount of at least $ 2 billion, as well as punitive damages.

The complaint asserted claims for breach of contract, breach of the implied covenant of good faith and fair dealing, unjust enrichment, interference with contractual relations (as against Former Match Group only), and interference with prospective economic advantage, and sought compensatory damages in the amount of at least $ 2 billion, as well as punitive damages.

On August 31, 2018, four plaintiffs who were still employed by Former Match Group filed a notice of discontinuance of their claims without prejudice, leaving the six former employees as the remaining plaintiffs.

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On July 13, 2020, the four former plaintiffs filed arbitration demands with the American Arbitration Association asserting the same valuation claims and on September 3, 2020, the four arbitrations were consolidated.

The four former plaintiffs’ request to stay the arbitration was denied on January 28, 2021, and arbitration is scheduled to begin on February 7, 2022.

On November 17, 2020, the defendants’ motion to stay the trial in Rad was denied.

Trial has been scheduled for November 2021.

We believe that the allegations against Former Match Group and Match Group in this lawsuit are without merit and will continue to defend vigorously against them.

Trial commenced on November 8, 2021.

On December 1, 2021, the parties entered into a Binding Global Settlement Agreement Term Sheet, pursuant to which we will pay $ 441 million in 2022 to settle all claims in trial and in arbitration.

FTC Lawsuit Against Former Match Group

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In connection with the Separation, the Company entered into certain agreements with IAC to govern the relationship between the Company and IAC following the Separation.

These agreements, in certain cases, supersede the agreements entered into between Former Match Group and Former IAC in connection with

MATCH GROUP, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Former Match Group’s IPO in November 2015 (the “IPO Agreements”) and include:

These agreements, in certain cases, supersede the agreements entered into between Former Match Group and Former IAC in connection with Former Match Group’s IPO in November 2015 (the “IPO Agreements”) and include:

a tax matters agreement;

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In addition to the agreements entered into at the time of the Separation, Match Group leases office space to IAC in a building owned by the Company in Los Angeles.

Match Group also leases office space from IAC in New York City on a month-to-month basis, which the Company expects to vacate in the first half of 2021.

For the year ended December 31, 2020, the Company received less than $ 0.1 million from IAC pursuant to the Los Angeles lease and the Company paid $ 1.1 million to IAC pursuant to the New York City lease.

Match Group has a payable to IAC of $ 3.4 million as of December 31, 2020, excluding items discussed in the “Tax Matters Agreement” section below.

Match Group also leased office space from IAC in New York City through June 2021.

For the year ended December 31, 2021, the Company received less than

MATCH GROUP, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

$ 0.1 million from IAC pursuant to the Los Angeles lease and the Company paid $ 0.3 million to IAC pursuant to the New York City lease.

Match Group has a receivable balance of $ 0.2 million due from IAC at December 31, 2021, excluding items discussed in the “Tax Matters Agreement” section below.

In July 2020, in connection with the Separation, the sale of 17.3 million newly issued shares of Match Group common stock was completed by IAC.

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At December 31, 2021, Match Group has an indemnification asset of $ 0.6 million included in “Other non-current assets” in the accompanying consolidated balance sheet for uncertain tax positions that related to Former IAC prior to the Separation.

For the year ended December 31, 2020, the Company paid IAC $ 20.9 million pursuant to the tax matters agreement related to income tax refunds received by the Company.

Additionally, the Company received $ 4.3 million from IAC under the tax matters agreement.

Transition Services Agreement

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

Pursuant to the transition services agreement, IAC continues to provide minimal services to Match Group that Former IAC had historically provided to Former Match Group.

Match Group also provides certain services to IAC that Former Match Group previously provided to Former IAC.

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Match Group and IAC also agreed to continue sharing certain services provided pursuant to certain third-party vendor contracts that were not replaced, amended, or divided prior to closing of the Separation.

MATCH GROUP, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

For the year ended December 31, 2020, the Company paid IAC $ 0.3 million related to services provided by IAC under the transitions services agreement.

Additionally, the Company received $ 2.4 million from IAC for services provided under the transitions services agreement.

For the year ended December 31, 2021, the Company paid IAC less than $ 0.1 million related to services provided by IAC under the transition services agreement.

Additionally, the Company received $ 7.6 million from IAC for services provided under the transition services agreement.

Employee Matters Agreement

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In addition, Match Group employees continued to participate in IAC’s U.S.

health and welfare plans, 401(k) plan and flexible benefits plan through December 31, 2020.

Match Group reimbursed IAC for the costs of such participation pursuant to the amended and restated employee matters agreement.

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

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

MATCH GROUP, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

For the year ended December 31, 2021, the Company paid IAC $ 0.1 million for the cost of IAC equity awards held by the Company’s employees upon vesting.

At December 31, 2020, the Company has accrued $ 1.3 million as the estimated cost due to IAC for IAC equity awards held by Match Group employees.

Additionally, the Company paid IAC $ 18.3 million for health and welfare plans and 401(k) plan, inclusive of employee contributions to both.

Other Agreements

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NOTE 16—BENEFIT PLANS

Pursuant to the Employee Matters Agreement with IAC, Match Group employees are eligible to participate in a retirement savings plan sponsored by IAC in the United States, which is qualified under Section 401(k) of the Internal Revenue Code.

Under the IAC Retirement Savings Plan (the “IAC Plan”), participating employees may contribute up to 50 % of their pre-tax earnings, but not more than statutory limits.

The employer match under the IAC Plan is 100 % of the first 10 % of a participant’s eligible earnings, subject to IRS limits on the Company’s matching contribution that a participant contributes to the IAC Plan.

Prior to July 2019, the employer match under the Plan was fifty cents for each dollar a participant contributed in the Plan, with a maximum contribution of 3 % of a participant’s eligible earnings.

Matching contributions under the Plan for the years ended December 31, 2020, 2019 and 2018 were $ 8.6 million, $ 5.8 million and $ 2.8 million, respectively.

Matching contributions are invested in the same manner as each participant’s voluntary contributions in the investment options provided under the IAC Plan.

Pursuant to the Match Group Retirement Savings Plan (the “Match Group Plan”), employees are eligible to participate in a retirement savings plan sponsored by the Company in the United States, which is qualified under Section 401(k) of the Internal Revenue Code.

Participating employees may contribute up to 75 % of their pre-tax earnings, but not more than statutory limits.

The employer match under the Match Group Plan is 100 % of the first 10 % of a participant’s eligible earnings, subject to IRS limits on the Company’s matching contribution that a participant contributes to the Match Group Plan.

The Company’s common stock is not an available investment option under the Match Group Plan.

Prior to January 1, 2021, Match Group employees were eligible to participate in a retirement savings plan sponsored by IAC in the United States pursuant to the Employee Matters Agreement with IAC (the “IAC Plan”).

Beginning January 1, 2021, all investments in the IAC plan were transferred to the Match Group Plan.

The employer match under the IAC plan was 100 % of the first 10 % of a participant’s eligible earnings.

Prior to July 2019, the employer match under the IAC Plan was fifty cents for each dollar a participant contributed in the Plan, with a maximum contribution of 3 % of a participant’s eligible earnings.

Matching contributions under the plans for the years ended December 31, 2021, 2020 and 2019 were $ 10.9 million, $ 8.6 million and $ 5.8 million, respectively.

The increase in matching contributions from 2019 to 2020 is primarily due to the aforementioned change of the Company’s matching contribution in the second half of 2019.

Matching contributions are invested in the same manner that each participant’s voluntary contributions are invested under the respective plans.

Under the IAC Plan and prior to the Separation, an available investment option was IAC common stock, but neither participant nor matching contributions were required to be invested in IAC common stock.

The increase in matching contributions in 2020 and 2019 is primarily due to the aforementioned change of the Company’s matching contribution in the second half of 2019.

Beginning January 1, 2021, all investments in the IAC Plan were transferred to the Match Group Retirement Savings Plan (the “Match Group Plan”).

The employer match under the Match Group Plan will continue to be 100 % of the first 10 % of a participant’s eligible earnings, subject to IRS limits on the Company’s matching contribution that a participant contributes to the Match Group Plan.

Under the Match Group Plan, the Company’s common stock is not an available investment option.

Internationally, Match Group also has or participates in various benefit plans, primarily defined contribution plans.

The Company’s contributions for these plans for the years ended December 31, 2021, 2020 and 2019 were $ 5.4 million, $ 3.8 million and $ 3.1 million, respectively.

MATCH GROUP, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Internationally, Match Group also has or participates in various benefit plans, primarily defined contribution plans.

The Company’s contributions for these plans for the years ended December 31, 2020, 2019 and 2018 were $ 3.8 million, $ 3.1 million and $ 2.8 million, respectively.

NOTE 17—CONSOLIDATED FINANCIAL STATEMENT DETAILS

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Buildings and building improvements 61,841 45,476

Leasehold improvements 40,895 28,711

Land 11,565 11,565

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Accrued expenses and other current liabilities:

Accrued advertising expense $ 46,788 $ 32,201

Accrued legal settlement $ 441,000 $ —

Accrued employee compensation and benefits 88,670 65,239

Accrued interest expense 26,922 22,236

Accrued advertising expense 47,686 57,140

Accrued non-income taxes 32,725 29,600

Accrued professional fees 15,616 22,728

Accrued interest expense 30,110 26,922

Other 128,175 52,847

Accrued expenses and other current liabilities $ 768,366 $ 231,748

MATCH GROUP, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Years Ended December 31,

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(In thousands)

Other income (expense), net $ 15,861 $ ( 2,026 ) $ 7,510

Other income, net in 2020 includes a legal settlement of $ 35.0 million and interest income of $ 2.7 million, partially offset by a loss on redemption of bonds of $ 16.5 million, expense of $ 3.4 million related to a mark-to-market adjustment pertaining to a liability classified equity instrument, and $ 0.6 million in net foreign currency losses in the period.

Other expense, net, in 2019 includes a $ 4.0 million impairment of an equity investment, expense of $ 1.7 million related to a mark-to-market adjustment pertaining to a liability classified equity instrument, and $ 0.9 million in net foreign currency losses in the period, partially offset by interest income of $ 4.4 million.

Other income, net in 2018 includes $ 5.3 million in net foreign currency exchange gains due primarily to a strengthening of the U.S.

dollar relative to the British Pound in the period and $ 4.9 million of interest income, partially offset by $ 2.1 million related to impairments of certain equity investments and $ 0.7 million related to a mark-to-market adjustment pertaining to a subsidiary denominated equity instrument.

Other (expense) income, net $ ( 465,038 ) $ 15,861 $ ( 2,026 )

Other expense, net, in 2021 includes a $ 441.0 million loss related to the former Tinder employee litigation settlement, a $ 14.6 million loss related to the changes in fair value of an embedded derivative arising from the repurchase of a portion of the 2022 Exchangeable Notes, a $ 5.2 million inducement expense arising from the repurchased 2022 Exchangeable Notes, and $ 1.8 million in net foreign currency losses, partially offset by $ 2.4 million of gains on the net settlement of the note hedges and warrants.

MATCH GROUP, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Other expense, net, in 2019 includes a $ 4.0 million impairment of an equity investment, expense of $ 1.7 million related to a mark-to-market adjustment pertaining to a liability classified equity instrument, and $ 0.9 million in net foreign currency losses, partially offset by interest income of $ 4.4 million.

Cash and Cash Equivalents and Restricted Cash

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Income tax refunds $ ( 13,840 ) $ ( 30,048 ) $ ( 2,589 )

Noncash issuance of common stock for the acquisition of Hyperconnect $ 890,851 $ — $ —

MATCH GROUP, INC.

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Operating income 189,258 209,914 220,590 231,917

Earnings from continuing operations 149,324 132,921 131,487 140,179

(Loss) earnings from discontinued operations ( 331,967 ) ( 34,611 ) 508 —

Net (loss) earnings attributable to Match Group, Inc.

shareholders ( 211,040 ) 66,441 132,581 140,579

Earnings (loss) from continuing operations (b)

173,848 140,020 130,901 ( 168,724 )

Earnings from discontinued operations — 509 — —

Net earnings (loss) attributable to Match Group, Inc.

shareholders (d)

174,250 140,895 131,210 ( 168,632 )

Per share information from continuing operations attributable to the Match Group, Inc.

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Operating income 137,372 195,594 200,167 212,582

Earnings from continuing operations 117,682 119,226 137,791 119,934

(Loss) earnings from discontinued operations ( 4,697 ) 27,565 21,981 4,338

Net earnings attributable to Match Group, Inc.

shareholders 88,695 113,467 128,544 100,425

Earnings from continuing operations (d)

157,534 141,397 140,113 148,635

(Loss) earnings from discontinued operations (c)

( 331,967 ) ( 34,611 ) 508 —

Net (loss) earnings attributable to Match Group, Inc.

shareholders (c)(d)

( 202,830 ) 74,917 141,207 149,035

Per share information from continuing operations attributable to the Match Group, Inc.

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$ 0.69 $ 0.61 $ 0.54 $ 0.56

Diluted (a)(d)

$ 0.61 $ 0.54 $ 0.47 $ 0.50

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$ ( 1.11 ) $ 0.41 $ 0.54 $ 0.56

Diluted (a)(c)

$ ( 1.00 ) $ 0.36 $ 0.47 $ 0.50

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(a) Quarterly per share amounts may not add to the related annual per share amount because of differences in the average common shares outstanding during each period.

NOTE 19—SUBSEQUENT EVENT

In February 2021, the Company entered into a definitive agreement to acquire Hyperconnect, Inc.

(“Hyperconnect”), a leading social discovery and video technology company based in Seoul, South Korea.

The acquisition is valued at approximately $ 1.725 billion, subject to customary adjustments for cash, debt-like items, and net working capital at the closing of the acquisition.

The Company has the option to pay up to 50 % of the consideration in common stock of the Company, with the remaining balance of the consideration paid in cash.

The Company expects to fund the cash portion of the consideration with cash on hand and its existing revolving credit facility.

The Company may also opt to use additional third-party financing.

The acquisition is anticipated to close in the second quarter of 2021, subject to customary closing conditions and receipt of certain regulatory approvals.

(b) Loss from continuing operations for the fourth quarter ended December 31, 2021 includes $ 441 million related to the former Tinder employee litigation settlement.

(c) The operations of Former IAC business other than Match Group are presented as discontinued operations as part of the Separation described in “Note 1—Organization.”

MATCH GROUP, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(d) The Company early adopted ASU No.

2020-06 as of January 1, 2021 on a fully retrospective basis.

The impact of adopting ASU No.

2020-06 on the quarter ended December 31, 2020 is as follows:

Quarter Ended December 31, 2020

Prior to the adoption of ASU No.

2020-06 After adoption of ASU No.

2020-06 Effect of adoption of ASU No.

(In thousands, except per share data)

Statement of operations impacts

Interest expense $ 43,306 $ 31,970 $ ( 11,336 )

Income tax provision $ ( 25,617 ) $ ( 28,497 ) $ ( 2,880 )

Net earnings from continuing operations $ 140,179 $ 148,635 $ 8,456

Net earnings per share from continuing operations:

Basic $ 0.53 $ 0.56 $ 0.03

Diluted $ 0.48 $ 0.50 $ 0.02

Weighted average dilutive shares outstanding

294,975 307,582 12,607

MATCH GROUP, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7A. Quantitative and Qualitative Disclosures About Market Risk